EXHIBIT 10.12


EMPLOYMENT AGREEMENT


Agreement, made as of this 24th day of July, 2006 (“Effective
Date”), between Crown Media Holdings, Inc., a Delaware corporation, with
offices at 12700 Ventura Boulevard, Los Angeles, California 91604 (“Employer”)
and Brian Stewart (“Employee”).


WHEREAS, Employer desires to continue to employ
Employee as provided herein and Employee desires to be employed by Employer
upon the terms and conditions set forth:


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


1.      Employment
Duties.


(a)    As of the
Effective Date, Employer and Employee agree to terminate any and all existing
agreements between them and agree to extend Employee’s employment pursuant to
the terms of this agreement (“Employment Agreement”).  Employee agrees to serve as Senior Vice
President, Finance.  Employee agrees to
serve in such capacity and perform responsibilities as shall be designated from
time to time by Employer, including as interim Chief Financial Officer.  Employee shall use Employee’s best efforts to
promote the interests of Employer and shall devote Employee’s full business
time, energy and skill exclusively to the business and affairs of Employer
during the “Term” (as “Term” is defined in Paragraph 2 below).


(b)    During the
course of Employee’s employment hereunder, Employer may create or utilize
subsidiary companies for the production and distribution of programming or to
conduct the other activities and businesses of Employer.  Employer shall have the right, without
additional compensation to Employee, to loan or make Employee available to any
subsidiary of Employer or company in common ownership with Employer to perform
services for any programming, property or project owned or controlled by
Employer or any such entity, provided that Employee’s services for any such
entity shall be consistent with Employee’s duties hereunder.  Employee further agrees that all the terms of
this Employment Agreement shall be applicable to Employee’s services for each
such entity.









 



2.      Term
of Employment.  The term of Employee’s
employment (“Term”) with Employer shall commence on the Effective Date and
shall end on the second anniversary of the Effective Date, unless terminated
earlier as provided in Paragraph 8 of this Agreement or extended by mutual
agreement of the parties.


3.      Compensation.


(a)    Salary.  As compensation for Employee’s services
hereunder, Employer shall pay to Employee a base salary at the rate of Three
Hundred Forty Thousand Dollars ($340,000) per year.  During the Term and any extensions, Employer
will consider an adjustment of Employee’s base salary on an annual basis.


(b)    Performance
Bonus.  Contingent on employment
through each year end; the end of the Term; or for termination of employment
pursuant to paragraph 8(b) below, following the end of each calendar year
during the Term, Employee will be paid a bonus, to be prorated for partial
calendar years within the Term, in an amount based on achievement of the financial
goals set forth in Schedule A, attached hereto. 
Such bonus will be paid to Employee on the date following the applicable
calendar year that Employer designates for payment of bonuses to its employees
in general.


(c)    RSUs.  Employer will award to Employee Restricted
Stock Units (“RSUs”) in an RSU agreement (attached as Schedule B) and pursuant
to the terms of and conditions of the Amended and Restated Crown Media
Holdings, Inc. 2000 Long Term Incentive Plan (attached as Schedule C).  Employee has also been granted RSUs under
prior agreements which are attached hereto as Schedule D (collectively, with
the Schedule B agreement, referred to herein as the “RSU Agreements’).


(d)    Withholding.  All payments of salary shall be made in
appropriate installments to conform with the regular payroll dates for salaried
personnel of Employer.  Employer shall be
entitled to deduct from each payment of compensation amounts required under
applicable laws or for participation in any employee benefit plans.


(e)    Expenses.  During the Term, Employer shall pay or
reimburse Employee on an accountable basis for all reasonable and necessary
out-of-pocket expenses for entertainment, travel, meals, hotel accommodations
and other expenditures incurred by Employee in connection with Employee’s
services to Employer in accordance with Employer’s expense account policies.



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(f)     Fringe
Benefits.  During the Term, Employee
shall be entitled to receive the following fringe benefits: (i) group
medical, dental, life and disability insurance as per Employer policy, and (ii)
any other fringe benefits on terms that are or may become available generally
to comparable employees of Employer.


4.      Place
of Employment.  During the Term,
Employee shall be required to perform Employee’s duties at the principal
offices of Employer, or such other location as may be mutually agreeable to
Employer and Employee, and Employee shall undertake a reasonable travel
required by Employer in connection with the performance of Employee’s duties
hereunder.


5.      Confidentiality,
Intellectual Property; Name and Likeness.


(a)    Employee
agrees that Employee will not during the Term or thereafter divulge to anyone
(other than Employer and its executives, representatives and employees who need
to know such information or any persons designated by Employer) any knowledge
or information of any type whatsoever designated or treated as confidential by
Employer 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.  Employee further agrees that
Employee will not disclose, publish or make use of any such knowledge or
information of a confidential nature (other than in the performance of Employee’s
duties hereunder) without the prior written consent of Employer.  This provision does not apply to information
which becomes available publicly without the fault of Employee or information
which Employee discloses in confidence to Employee’s own privileged representatives or is required to disclose in
legal proceedings, provided Employee gives advance notice to the Executive Vice
President, Legal and Business Affairs and General Counsel of Employer and an
opportunity to Employer to resist such disclosure in legal proceedings.


(b)    During the
Term, Employee will disclose to Employer all concrete proposals, plans,
scripts, treatments, and formats invented or developed by Employee during the
Term which relate directly or indirectly to the business of Employer or any of
its subsidiaries or affiliates including, without limitation, any proposals and
plans which 



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may be copyrightable,
trademarkable, patentable or otherwise exploitable.  Employee agrees that all such proposals,
plans, scripts, treatments and formats are and will be the property of
Employer.  Employee further agrees, at
Employer’s request, to do whatever is necessary or desirable to secure for the
Employer the rights to said proposals, plans, scripts, treatments, and formats,
whether by copyright, trademark, patent or otherwise and to assign, transfer
and convey the rights thereto to Employer at Employer’s expense.


(c)    Employer
shall have the right in perpetuity to use Employee’s name reasonably in
connection with credits for programming, properties and projects for which
Employee performs any services pursuant to this Agreement.


6.      Employee’s
Representations.  Employee represents
and warrants that Employee has the right to enter into this Agreement and is
not subject to any contract, commitment, agreement, arrangement or restriction
of any kind which would prevent Employee from performing Employee’s duties and
obligations hereunder.


7.      Non-Competition;
No Raid.


(a)    During the
Term, Employee shall not engage directly or indirectly, whether through
self-employment or as an employee, independent contractor, consultant, partner,
shareholder or otherwise, in a business or other endeavor which materially
interferes with any of Employee’s duties or obligations hereunder or which is
directly competitive with the business of the Employer or its subsidiaries,
including but not limited to the production, distribution or any other
exploitation of audiovisual television material (the “Other Business”).  In the event of a breach of this Paragraph
7(a) by Employee or a claim by Employee pursuant to this paragraph, both
Employer and Employee shall have all of the remedies available to Employer at
law or equity.  In the event time is of
the essence, notwithstanding paragraph 9 below, Employee and Employer agree
that temporary and permanent injunctive relief may be sought by either in a
court of law.


(b)    Employee
further 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, working
as an officer, policymaker or in high-level creative development or
distribution 



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(including without
limitation executive employees) for or rendering substantially full-time
services as Employer.


8.      Termination.


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


(i)     The death
of Employee;


(ii)    A serious
health condition of Employee that incapacitates Employee (as defined under the
Family Medical Leave Act) for a period exceeding an aggregate of twelve work
weeks during any twelve month period of the Term.  For purposes of counting the aggregate work
weeks, days properly designated by Employee as vacation days shall not be
counted;


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


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


(B)   Employee’s
conviction of any act which constitutes a felony under federal, state or local
laws or the law of any foreign country;


(C)   Employee’s
persistent and material failure or refusal after written notice of Employee’s
persistent refusal to perform after written notice, any of Employee’s duties
and responsibilities pursuant to this Agreement; or


(D)   Employee’s
dishonesty in non-trivial financial dealings with or on behalf of Employer, its
subsidiaries, affiliates and parent corporation or in connection with
performance of Employee’s duties hereunder.


(E)    Employee’s
material breach of any provision of this Agreement.


(b)    Employer
shall also have the right to terminate Employee prior to the expiration of the
Term in addition to pursuant to Paragraph 8(a) above by providing Employee with
written notice.  In the event of a
termination pursuant to this Paragraph 8(b), Employee shall not be entitled to
any further compensation or benefits except (1) as may be provided under the
RSU Agreements; (2) the greater of twelve (12) months base 



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salary or the remaining
base salary described in Paragraph 3(a) above for the balance of the Term (as
though no termination had occurred) (“Severance Period”), paid in a lump sum
and discounted at “prime” rate’s to present value at the time of payment; (3)
vested ERISA benefits (e.g., 401k plan); (4) benefits that may be required by
law (e.g., COBRA); and (5) prorata bonus through the date Employee’s job duties
end to be paid as provided in paragraph 3(b) above.  Employee shall have no obligation to seek
comparable employment and if Employee does accept other employment during the
Severance Period, there will be no offset by Employer against the amounts
payable under this Paragraph 8(b).  If
Employer terminates Employee under this Paragraph 8(b), Paragraph 7(a) shall
not apply from the date of termination.


(c)    In the
event that Employer terminates this Agreement due to any of the reasons set
forth in Paragraph 8(a) above, Employee shall be paid Employee’s salary through
the later of the expiration of the five (5) business days period referred to in
Paragraph 8(a) or the end of the month in which the termination event occurs,
after which Employer’s obligation to pay salary to Employee shall
terminate.  After making the payments
provided for in this sub-paragraph (c), Employer shall have no further
obligations to Employee pursuant to this Agreement, except (1) as may be
provided under the RSU Agreements; (2) vested ERISA benefits; or (3) benefits
that may be required by law (e.g., COBRA).


(d)    Upon
termination of this Agreement Employee shall promptly return all of Employer’s
records and property to Employer.


(e)    Upon
termination of Employee’s employment for any reason, Employee shall tender
Employee’s resignation from the Board of Directors of any of Employer’s
subsidiaries or affiliates on which Employee is serving, and Employer shall
accept such resignation forthwith.


9.      Arbitration.  Any dispute between the Employee and Employer
involving any provision of this Agreement of employment matter; including any
claim of discrimination under state and federal law, other than an action in
court requesting temporary or permanent injunctive relief as set forth in
paragraph 7 above, shall be resolved by arbitration under the employment rules
of the American Arbitration Association and in accordance with applicable law,
allowing all damages and remedies 



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available in a court
action.  Such arbitration shall be
conducted in the New York City metropolitan area before one (1) neutral
arbitrator who is a lawyer with expertise in employment law.  Employer shall pay the expenses of the
arbitration and each party shall pay its own legal fees and expenses.  The arbitrator shall provide a reasoned
opinion supporting his/her conclusion, including detailed findings of fact and
conclusions of law.  Such findings of
fact shall be final and binding on the parties, but such conclusions of law
shall be subject to appeal in any court of competent jurisdiction.  The parties further stipulate that the laws
of the state of New York shall apply to any dispute or action regarding this
Agreement.


10.    Assignment.  This Agreement is a personal contract and,
without the prior written consent of Employer, shall not be assignable by the
Employee.  The rights and obligations of
Employer may be assigned and such assignment shall bind in their entirety the
successors and assigns of Employer.  As
used 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 of substantially all of the assets or
business 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
the party against whom enforcement of any waiver, change, modification or discharge
is sought.  Paragraph headings are for
convenience of reference only and shall not be considered a part of this
Agreement.  If any clause in this
Agreement is found to be unenforceable, illegal or contrary to public policy,
the parties agree that this Agreement shall remain in full force and effect
except for such clause.


12.    Prior
Agreements.  This Agreement
supersedes and terminates all prior employment agreements between the parties;
provided, however, that in the event of a Change in Control as defined in
Schedule C attached hereto, the severance provided in the Severance Plan
(attached as Schedule E) will control for so long as the Plan is in
effect.  Subject to the foregoing
provision, this Employment
Agreement and the schedules attached hereto set out the full agreement between
the parties concerning Employee’s employment.



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13.    Notices.  Any notices or other communications required
or permitted hereunder shall be in writing and shall be deemed effective when
delivered in person or if mailed, by registered or certified mail, return
receipt requested, in which case the notice shall be deemed effective on the
date of deposit in the mails, postage prepaid, addressed to Employee at the
address for Employee appearing in Employer’s records.  Notices to Employer shall be addressed to its
Chief Executive Officer at the address first written above, with a copy to the
Executive Vice President of Legal and Business Affairs, Crown Media Holdings,
Inc., 12700 Ventura Blvd., Studio City, CA 
91604.  Either party may change
the address to which notices are to be addressed by notice in writing given to
the other in accordance with the terms hereof.


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


15.    Counterparts.  This Agreement may be signed in any number of
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute one instrument.


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


	
  

  	
  CROWN MEDIA HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Charles Stanford

  
	
   

  	
  Title

  	
  EVP, General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
  /s/ Brian Stewart

  
				



 



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