**Exhibit 10.78**

 

**CROWN MEDIA HOLDINGS, INC.2005 RESTRICTED STOCK UNIT AGREEMENT**

** **

THIS RESTRICTED STOCK UNIT AGREEMENT (the “Agreement”)is made and entered into as of August               ,2005 (the “Grant Date”), by and between Crown Media Holdings, Inc. aDelaware corporation (“Crown”) and David Evans (“Executive”) pursuant to theterms and conditions of the Amended and Restated Crown Media Holdings, Inc.2000 Long Term Incentive Plan (the “Plan”). Capitalized terms not defined inthis Amended Agreement shall have the meanings set forth in the Plan.

 

1.                          Awardof Restricted Stock Units.

 

(a)                     GeneralAward. Pursuant to the Plan, Crown awards to Executive 115,000 RestrictedStock Units (“RSUs”), each unit corresponding to one share of Crown CommonStock (as defined in the Plan), subject to the terms and conditions set forthin this Agreement and the Plan. A copy of the Plan has been delivered to theExecutive. By signing below, the Executive agrees to be bound by all theprovisions of the Plan. Each RSU constitutes an unsecured promise of Crown todeliver either a share of Common Stock or cash in an amount equivalent to oneshare of Common Stock to Executive on the Delivery Date (as defined below). Asa holder of RSUs, Executive has only the rights of a general unsecured creditorof Crown.

 

(b)                    Typesof RSUs. Of the total 115,000 RSUs granted to Executive, 57,500 shall bedeemed to be Employment RSUs and 57,500 shall be deemed to be Performance RSUs.The applicable provisions of this Agreement shall be specified by type of RSU,and if not so specified, shall apply to all RSUs granted hereunder.

 

2.                          Vesting

 

(a)                     EmploymentRSUs. Subject to continued employment with Crown and/or its affiliates asof each three month anniversary of the Grant Date (unless one of the eventsenumerated in Section 4 of this Agreement shall have occurred) theEmployment RSUs shall vest and become nonforfeitable in equal one-thirdinstallments (or its nearly equal installments as practicable) on each of November 18,2005, February 18, 2006 and May 18, 2006. In the event of a Change inControl, subject to the Executive’s continued employment with Crown as of thedate of the Change in Control (unless one of the events enumerated in Section 4of this Agreement shall have occurred), all unvested Employment RSUs shallvest. Each of November 18, 2005, February 18, 2006 and May 18,2006, the date immediately prior to that on which a Change in Control occursand the date on which any one of the events in Section 4 occurs shall be a“Vesting Date.”

 

(b)                    PerformanceRSUs.

 

(i) *RegularVesting.*Subject to continued employment with Crown and/or itsaffiliates, the Performance RSUs shall vest and become nonforfeitable in their

 

----

 

entirety only upon May 18, 2006 and only if theaverage of the Fair Market Value (as defined below) of the Common Stock for theimmediately preceding 60 business days including the Vesting Date (or, if suchVesting Date does not fall on a business day, as of the business dayimmediately preceding the Vesting Date) equals or exceeds $14.00 (USD). May 18,2006 shall be a “Vesting Date.” Section 4, Acceleration of Vesting, shallnot apply to Performance RSUs.

 

(ii) *Vestingupon a Change in Control.*The date on which a Change in Controloccurs shall be a “Vesting Date.” In the event of a Change in Control (subjectto the Executive’s continued employment with Crown as of the date of the Changein Control or upon an Executive’s involuntary Termination of Employment withoutCause within 90 days prior to the date on which a Change in Control occurs),all unvested Performance RSUs shall vest and be settled immediately prior tothe Change in Control only if the average of the Fair Market Value (as definedbelow) of the Common Stock for the immediately preceding 60 business daysincluding the Vesting Date (or, if such Vesting Date does not fall on abusiness day, as of the business day immediately preceding the Vesting Date)equals or exceeds $10.00 (USD).

 

3.                         Settlementof RSU Award.

 

(a)                     Settlement.Subject to any cancellation of the Employment RSUs pursuant to Section 4,Crown shall deliver to Executive on the Delivery Date, at Crown’s sole,absolute and unfettered discretion, either: (1) the number of shares ofCommon Stock corresponding to such RSUs; or (2) cash in an amount equal tothe number of shares of Common Stock corresponding to such RSUs multiplied bythe average of the Fair Market Value (as defined below) of the Common Stock forthe immediately preceding 14 business days including the Vesting Date (or, ifsuch Vesting Date does not fall on a business day, as of the business dayimmediately preceding the Vesting Date) unless Executive has otherwise electedto defer receipt of such award in accordance with Committee authorization orpursuant to the terms of a nonqualified plan adopted by Crown. Crown shall havesole, absolute and unfettered discretion in determining whether to delivershares of Common Stock or cash in an amount equivalent to the number of sharesof Common Stock on the Vesting Date.

 

(b)                    Changein Control Settlement. Notwithstanding Section 3(a), in the event of aChange in Control, Section 10(c) of the Plan shall apply to RSUs.RSUs settled under Section 3(a) shall use the Change in Control Pricepursuant to Section 10(c) of the Plan applicable to non-IncentiveStock Option holders.

 

(c)                     Dividendand Stock Split Equivalents. For so long as Executive holds RSUs, at thetime any dividend is paid with respect to a share of Common Stock or anyforward stock split occurs, Crown shall credit to the RSU award of theExecutive on the same date (or as soon as practicable thereafter) in respect ofeach RSU hold by the Executive as of the record date for such dividend or splitan amount at Crown’s sole, absolute and unfettered discretion, in cash, CommonStock, or other property, or in a

 

----

 

combination thereof, in each case having a value equal to the dividendor split, subject to any deferral election by Executive in accordance withCommittee authorization or pursuant to the terms of a nonqualified plan adoptedby Crown. Such amounts shall vest and shall be paid on a*pro rata*basis at the same time as theunderlying Employment or Performance RSU award with which such dividend orstock split is associated is settled.

 

4.                          Terminationof RSUs and Non-Delivery Upon Certain Other Events, Acceleration of Vesting.

 

Executive’s rights with respect to any outstandingunvested RSUs shall immediately terminate and no payment shall be made inrespect of such RSUs if prior to the Vesting Date Executive experiences aTermination of Employment (as defined in the Plan). Notwithstanding theforegoing, any outstanding unvested Employment RSUs shall vest immediately uponan Executive’s Termination of Employment by reason of: (1) the death ofthe Executive; (2) the Disability of the Executive; or (3) an Executive’sinvoluntary Termination of Employment without Cause within 90 days prior to thedate on which a Change in Control occurs.

 

5.                         Definitions.For purposes of this Agreement:

 

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

 

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

 

6.                         WithholdingTax.

 

Executive may be subject to withholding taxes asa result of the settlement of RSUs. Unless the Committee permits otherwise,Executive shall pay to Crown in cash, promptly when the amount of suchobligations become determinable, all applicable federal, state, local andforeign withholding taxes that Crown determines result from such settlement.Unless the Committee otherwise determines and subject to such rules andprocedures as the Committee may establish, Executive may make anelection to have shares of Stock withheld by Crown or to tender any suchsecurities to Crown to pay the amount of tax that Crown in its discretiondetermines to be required so to be withheld by Crown upon settlement of RSUs,subject to satisfying any applicable requirements for compliance with Section 16(b) ofthe Exchange Act. Any shares of Stock or other securities so withheld ortendered will be valued as of the date they are withheld or tendered, providedthat Stock shall be valued at Fair Market Value on such date. Unless otherwisepermitted by the Committee, the value of shares withheld or tendered may notexceed the minimum federal, state, local and foreign withholding taxobligations as computed by Crown.

 

----

 

7.                         Non-transferability.

 

No RSUs shall be assignable or otherwise transferableby Executive. During the life of Executive any elections with respect to RSUs may bemade only by Executive or Executive’s guardian or legal representative.

 

8.                         Counterparts.

 

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

 

9.                         GoverningLaw.

 

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

 
|   |   |   | CROWN  MEDIA HOLDINGS, INC. |
|--------|--------|--------|----------------------------------|
|   |   |   |                             |
|   |   |   |                             |
|   |   |   |                             | By: |   /s/  Charles Stanford |   |
|   |   |   |                             |   |   |
|   |   |   |                             | Name: |   Charles  Stanford |   |
|   |   |   |                             |   |   |
|   |   |   |                             | Title: |     EVP |   |
|   |   |   |                             |   |   |
|   |   |   |                             |   |   |
|   |   |   |                             | /s/  David Evans |   |
|   |   |   |                             | EXECUTIVE |
|        |        |        |                                  |  |  |  |  |  |

 

----