Document:

Exhibit 10.6

 

SERVICE
AGREEMENT

 

THIS AGREEMENT is made on this 24th day of January 2006.

 

BETWEEN:

 

MONTPELIER REINSURANCE LTD., whose registered office is situate at Crown House,
4 Par-la-Ville Road, Hamilton Bermuda (the “Company”); and

 

William Pollett

“The Palms”

4 Overock Hill

Pembroke, HM 05

Bermuda

 

WHEREAS the parties desire to record the terms
and conditions upon which the Employee is employed by the Company.

 

NOW THEREFORE in consideration of the mutual
covenants and promises herein contained

 

IT IS HEREBY AGREED as follows:

 

1.             Interpretation

 

1.1           In this Agreement unless the context otherwise
requires the following words and expressions shall have the following meanings:

 

this “Agreement” means this service agreement and includes all schedules hereto;

 

the “Board” means the board of directors of the Company;

 

the “Companies Act” means the Companies Act 1981;

 

“Group Company” means and includes any company which is from time to time a holding
company (as defined by Section 86 of the Companies Act, but irrespective
of whether it is a Bermuda company or an overseas company) of the Company, a
subsidiary company (as so defined) of the Company, a subsidiary company (as so
defined) of a holding company (as so defined) of the Company or in which the
Company owns at least 50% of the issued share capital;

 

the “Parties” means the parties to this Agreement;

 

 

1.2           In this Agreement unless the context otherwise requires:

 

1.2.1        references to statutory provisions shall be construed
as references to those provisions as amended or re-enacted or as their
application is modified by other provisions from time to time and shall include
references to any provisions of which they are re-enactments (whether with or
without modification); and

 

1.2.2        references to clauses and schedules are references to
clauses hereof and schedules hereto; references to sub-clauses or paragraphs
are, unless otherwise stated, references to sub-clauses of the clause or
paragraphs of the schedule in which the reference appears;

 

1.2.3        references to the singular shall include the plural
and vice versa and references to the masculine shall include the feminine
and/or neuter and vice versa; and

 

1.2.4        references to persons shall include companies,
partnerships, associations and bodies of persons, whether incorporated or
unincorporated.

 

2.             Appointment

 

Subject to, and conditional
upon, initial and continued permission being granted to work and reside in
Bermuda by the Bermuda Department of Immigration of the Ministry of Home
Affairs, the Company hereby appoints
the Employee and the Employee hereby agrees to serve the Company as Treasurer
at the level of Senior Vice President subject to the terms and conditions
hereinafter contained.

 

3.             Term

 

The
appointment of the Employee hereunder began on February 1st 2006 and shall
continue unless and until terminated in accordance with the provisions
hereinafter contained.

 

4.             Duties and Responsibilities

 

During the continuance of his employment
hereunder:

 

4.1           The Employee shall perform such duties and exercise
such powers in relation to the business of the Company or of any Group Company
as may from time to time reasonably be assigned to or vested in him by the
Board and shall give to the Board such information regarding the affairs of the
Company and any Group Company as it shall require and at all times and in all
respects conform to and comply with the reasonable directions and regulations
made by the Board. The Employee shall perform such services for any Group
Company (without further remuneration except as otherwise agreed) and shall
accept such offices in any such Group Companies as the Board may reasonably
require.

 

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4.2           The Employee shall well and faithfully serve the
Company and the Group Companies and use his best endeavours to promote develop
and extend their businesses and interests giving at all times the full benefit
of his knowledge, expertise, technical skill and ingenuity.

 

4.3           The Employee shall not without the consent of the
Board directly or indirectly engage in any other business or be concerned or
interested in any other business of a similar nature to or which would or might
compete with the business for the time being carried on by the Company or any
Group Company save that he may (but without prejudice to clause 4.2) be
interested as a holder or beneficial owner of not more than 5% of any class of
stock, shares or debentures in any company (other than the Company, in which
case, such limit shall not apply) whose stock, shares or debentures are listed
or dealt in on an appointed stock exchange (as defined in the Companies Act).

 

5.             Remuneration and Reimbursement

 

5.1           The Company shall pay to the Employee by
way of remuneration for his services hereunder a salary at the rate (subject as
hereinafter provided) of US$ 250,000 per annum. Such salary shall be inclusive
of any director’s fees payable to the Employee by the Company or any Group
Company and accordingly either the Employee shall pay over or procure to be
paid over to the Company all such fees received or receivable by him or his
remuneration hereunder shall be reduced pro tanto.  The said salary shall be payable by equal
monthly instalments in arrears on the day appointed by the Board for the payment
of employees’ salaries or pro rata where the Employee is only employed
hereunder during part of the month. The Compensation Committee of the Company’s
Board, subject to ratification by the Board, may increase or reduce the
Employee’s salary on each anniversary of the date of this Agreement, but not
below the amount of the Employee’s starting salary.

 

5.2           The Company shall also pay to the Employee all
reasonable travelling hotel and other out-of-pocket expenses which are properly
incurred by him in or about the performance of his duties hereunder and for
which vouchers (if so required) are provided to the reasonable satisfaction of
the Board.

 

5.3           The Company
will pay for two business-class round-trip flights to the United Kingdom per
annum for the Employee and his family.

 

5.4           The Employee shall be entitled to participate in:

 

(i)            the Company’s Medical, Dental and Vision Plans and
other insurance plans from time to time subject to the provisions of the
Company’s insurance plans in effect at the time;

 

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(ii)           a suitable pension arrangement in accordance with
Bermuda law (“Pension Plan”) from time to time subject to the provisions of
such pension plan in effect at the time, provided, however, that in the event
the Executive should leave the Company of his own accord within 12 months of
the date of this Agreement first written above he will forfeit all
contributions to the Pension Plan made by the Company on his behalf;

 

(iii)          the Company’s Annual Bonus Plan and Long Term
Incentive Plan subject to the provisions of such plan in effect at the time;

 

(iv)          subsidized parking and gym membership;

 

(v)           Reasonable tax advisory services at the Company’s
cost; and

 

(vi)          Any other employment benefit plans generally available
to Employees in the Company of the Employee’s stature, to the extent not
duplicative of benefits otherwise provided by the Company.

 

The details of these benefits, plans and
schemes are set out in separate documents, copies of which will be provided on
request.  The benefits, plans and schemes
may be changed at the Company’s discretion.

 

5.5           During the Employee’s appointment under this Agreement, he
shall receive a housing allowance in Band A.

 

5.6           The Employee
agrees that the Company may deduct from his pay any sums which the Employee may
owe the Company including, without limitation, any overpayments or loans made
to him by the Company or losses suffered by the Company as a result of the
Employee’s breach of this Agreement.

 

6.             Normal Hours and Holidays

 

The Employee shall conform to such hours of
work as may from time to time reasonably be required of him and shall not be
entitled to receive any additional remuneration for work outside his normal
hours.  In addition to the usual public holidays the Employee shall,
subject as mentioned in the Schedule, be entitled to 25 days holiday in each
year to be taken at such time or times as may be approved by the Chief
Financial Officer of the Company.  Five days’ holiday entitlement may be
carried forward to the next succeeding year with the consent of the Chief
Financial Officer.  Any remaining, unused holiday entitlement is
forfeited.  The entitlement to holiday (and on termination of employment
holiday pay in lieu of holiday) accrues pro rata throughout each year, provided
that fractions of days shall be disregarded in calculating entitlement to
holiday or payment in lieu of holiday.

 

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7.             Confidentiality

 

7.1           The Employee shall not either during the continuance
of his employment hereunder (otherwise than in the proper performance of his
duties hereunder) or at any time after the determination thereof divulge to any
person whomsoever and shall use his reasonable endeavours to prevent the
publication or disclosure of any trade secret or other confidential information
concerning the business, finances, accounts, dealings, transactions or affairs
of the Company or any Group Company or of any of their respective clients
entrusted to him or arising or coming to his knowledge during the course of his
employment hereunder or otherwise.

 

7.2           The Employee shall upon the termination of his
employment hereunder immediately deliver up to the Company all fee schedules,
lists of clients, correspondence and other documents, papers and property
belonging to the Company or any Group Company or related to any of the matters
referred to in clause 7.1 which may have been prepared by him or have come into
his possession in the course of his employment hereunder and shall not retain
any copies thereof.

 

8.             Change of Status

 

8.1           If, before the expiration or determination of this
Agreement, the employment of the Employee hereunder shall be terminated by
reason of the liquidation of the Company or for the purpose of reconstruction
or amalgamation, and he shall be offered employment with any concern or
undertaking resulting from such reconstruction or amalgamation on terms and
conditions not less favourable (financially and in personal status) than the
terms of this Agreement, then he shall have no claim against the Company in respect
of the termination of his employment hereunder save in respect of accrued
benefits.

 

8.2           Unless this agreement has been terminated under clause
9, if for any reason the Employee shall either:

 

8.2.1        at the Company’s request resign as a director of the
Company or any Group Company; or

 

8.2.2        be removed from office as a director of the Company or
any Group Company;

 

then, notwithstanding his so ceasing to be a
director, this Agreement shall not automatically terminate and thereupon (and
without any claim against the Company in respect of such loss of office) the
Employee’s employment hereunder shall continue for the remaining period of this
Agreement and all the terms and conditions of this Agreement shall with the
necessary variations apply to the Employee’s employment but in any event, the
Employee’s basic annual salary will not at any time be less than the Employee’s
starting salary under this agreement.

 

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9.             Termination

 

9.1           Without prejudice to clauses 9.3 or 9.5
the Employee or the Company may terminate the Employment by giving to the other
party not less than 6 months’ written notice.

 

9.2           Without prejudice to its rights to
terminate the Employment under clause 9.1 or its rights to suspend the Employee,
the Company may at its sole discretion terminate the Employment with immediate
effect at any time and whether or not notice has been given by either party to
terminate the Employment by giving notice in writing to the Employee and if it
does so the Company shall pay the Employee within five business days of the
Termination Date, in lieu of notice under clause 9.1, a lump sum equal to the
salary in the amount it would have paid to the Employee if the Employment had
terminated in accordance with clause 9.1.

 

9.3           This Agreement shall be subject to
termination by the Company by summary notice in writing without pay in lieu of
notice:

 

9.3.1                        if the Employee’s application for permission to
work and reside in Bermuda is refused or the Employee’s work permit and/or
permission to reside is revoked, and or a renewal application is refused

 

9.3.2                        if the Employee shall become of unsound mind or be or
become a patient for the purpose of any statute relating to mental health;

 

9.3.3                        if the Employee shall at any time be prevented by
illness or accident from performing his duties for a period of 6 consecutive
months or if he shall be absent from his duties by reason of illness or
accident for more than 180 working days in any consecutive twelve months
(provided that any such periods may be extended at the sole discretion of the
Board);

 

9.3.4                        other than by written
notice, if the Employee terminates his employment for any reason prior to the
expiration of this Agreement other than in accordance with the clause 9.1 or if
the Employee shall have failed or neglected efficiently and diligently to
discharge his duties hereunder having received a written warning for the
misconduct within the previous 6 months or shall have committed any serious
breach of his obligations hereunder or shall have been guilty of conduct
tending to bring himself or the Company or any Group Company into disrepute or
calculated or likely to affect prejudicially the interests of the Company or
any Group Company or shall have committed an act of bankruptcy or compounded
with his creditors generally.

 

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9.4           The termination by the Company of this
Agreement shall be without prejudice to any claim which the Company may have
for damages arising from any breach thereof by the Employee giving rise to such
termination.

 

9.5           The normal retirement age for employees
of the Company is 60 years of age.  The
Employee’s Employment will terminate automatically without notice on his 60th birthday.

 

9.6           This Agreement shall not, save as
hereinbefore set out in this Clause, be subject to termination by notice or
otherwise by the Company or by the Executive.

 

9.7           Until this Agreement is terminated
pursuant to clause 9.3, the Employee shall remain entitled to receive his
salary payable hereunder in full notwithstanding illness or other incapacity.

 

9.8           After notice of termination has been
given by either party or if the Employee seeks to resign without notice or by
giving shorter notice than that required under this Agreement then provided the
Company continues to pay the Executive the contractual benefits in accordance
with this Agreement, the Company has at its discretion the right for the notice
period or balance of the notice period (the “Garden Leave Period”) then
outstanding until the termination date of this Agreement to:

 

9.8.1                        exclude the Employee from the Company’s premises
and require the Employee not to attend at the Company’s premises; and/or

 

9.8.2                        require the Employee to carry out no duties; and/or

 

9.8.3                        require the Employee not to communicate or deal with
employees, agents, consultants, clients or other representatives of the
Company;

 

Provided always that the
maximum permitted Garden Leave Period shall be six months.

 

10.           Consequence of Termination

 

10.1         Upon the termination of this Agreement howsoever
arising, the Employee shall at any time or from time to time thereafter upon
the request of the Company resign, without claim for compensation for loss of
office, as a director of the Company and such offices held by him in any of the
Group Companies as may be so requested and should he fail to do so, the Company
is hereby irrevocably authorised to appoint some person in his name and on his
behalf to sign and do any documents or things necessary or requisite to give
effect thereto.

 

10.2         Notwithstanding anything else to the contrary herein,
should the Company terminate this Agreement:

 

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(a) pursuant to clause
9.3.1, then the Employee shall be entitled to receive three months salary by
way of repatriation expenses together with three months accommodation allowance
at the rate set out in clause 5.5 and reimbursement of a one way business class
air fare for himself and his family to the [United States/United
Kingdom/Canada], and all other payments under this Agreement shall immediately
cease and the Company shall have no further obligations to the Employee
arising hereunder;

 

(b)  pursuant to clause 9.3.2 or clause 9.3.3, then the Employee shall continue to receive his salary
for a period of 12 months following the termination of this Agreement and the Company
shall have no further obligations to the Employee arising hereunder;

 

(c) pursuant to
clause 9.3.4, then all payments under this Agreement shall immediately cease
and the Company shall have no further obligations to the Employee arising
hereunder.

 

11.           Non-Competition

 

11.1         Since the Employee has obtained in the course of his
employment prior to the date hereof and is likely to obtain in the course of
his employment hereunder knowledge of the trade secrets and also other
confidential information in regard to the business of the Company and of any
Group Company with which he becomes associated, the Employee hereby agrees with
the Company that in addition to the restrictions contained in clause 4.3 he
will not in Bermuda, the United States or the European Economic Community
(excluding the UK):

 

11.1.1      during the period of 6 months following the
termination of his employment hereunder (howsoever caused) either on his own
account or for any other person, firm or company directly or indirectly be
engaged in or concerned with any business or undertaking which is engaged in or
carries on in Bermuda, the United States or the European Economic Community
(excluding the UK) any insurance business which competes or seeks to compete
with the business carried on by the Company or any other Group Company at the
date of termination.

 

11.1.2      During the period of 12 months following the
termination aforesaid either on his own account or for any other person, firm
or company directly or indirectly solicit, interfere with or endeavour to
entice away from the Company or any Group Company the custom of any person,
firm or company who at the date of termination aforesaid or who in the period
of 12 months immediately prior to such date was a customer or client of or in
the habit of dealing with the Company or any Group Company or who at such date
was to his knowledge negotiating with the Company or any Group Company in
relation to all or part of its business.

 

11.1.3      During the period of 12 months following the
termination aforesaid either on his own account or for any other person, firm
or company solicit the services of or 

 

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endeavour to entice away
from the Company or any Group Company any director, employee or consultant of
the Company or any Group Company (whether or not such person would commit any
breach of his contract of employment or engagement by reason of leaving the
service of such company) nor shall the Employee knowingly employ or aid or
assist in or procure the employment by any other person, firm or company of any
such person.

 

11.2         While the restrictions aforesaid are considered by the
Parties to be reasonable in all the circumstances it is agreed that if any of
such restrictions shall, taken together, be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the legitimate
interests of the Company or any Group Company but would be adjudged reasonable
if part of the wording thereof were deleted or modified the said restrictions
shall apply with such words deleted or modified.

 

11.3         The Employee hereby agrees that he will at the request
and cost of the Company enter into a direct agreement or undertaking with any
Group Company whereby he will accept restrictions and provisions corresponding
to the restrictions and provisions herein contained (or such of them as may be
appropriate in the circumstances) in relation to such services and such area
and for such period as such company or companies may reasonably require for the
protection of its or their legitimate interests provided that the terms of such
restrictions and provisions will not be more onerous than the restrictions and
provisions of this agreement.

 

12.           Untrue Statements

 

The Employee shall not knowingly at any time
make any untrue statement in relation to the Company or any Group Company and
in particular shall not after the determination of his employment hereunder
wrongfully represent himself as being employed by or connected with the Company
or any Group Company.

 

13.           Schedule

 

The provisions set out in the schedule hereto
shall apply as if incorporated in this Agreement.

 

14.           Intellectual Property

 

The Employee may make discover or create
Intellectual Property in the course of his duties under this Agreement and
agrees that in this respect he has a special obligation to further the
interests of the Company.

 

Subject to the provisions of the Patents Act
1977 the Registered Designs Act 1949 and the Copyright Designs and Patents Act
1988 if at any time during his employment under this Agreement the Employee
makes or discovers or participates in the making or 

 

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discover of any Intellectual
Property relating to or capable of being used in the business for the time
being carried on by the Company or any Group Companies full details of the
Intellectual Property shall immediately be communicated by him to the Company
and shall be the absolute property of the Company.  At the request and expense of the Company the
Employee shall give and supply all such information data drawings and
assistance as may be requisite to enable the Company to exploit the
Intellectual Property to the best advantage and shall execute all documents and
to all things which may be necessary or desirable for obtaining patent or other
protection for the Intellectual Property in such parts of the world as may be
specified by the Company and for vesting the same in the Company or as it may
direct.

 

The Employee irrevocable
appoints the Company to be his agent in his name and on his behalf to sigh
execute or do any such instrument or thing and generally to use his name for
the purpose of giving to the Company (or its nominee) the full benefit of the
provisions of this clause and in favour of any third party a certificate in
writing signed by any director or the secretary of the Company that any
instrument or act falls within the authority conferred by this clause shall be
conclusive evidence that such is the case.

 

If the Intellectual Property
is not the property of the Company the Company shall subject to the provisions
of the Patents Act 1977 have the right to acquire for itself or its nominee his
rights in the Intellectual Property within 3 months after disclosure pursuant
to this clause on fair and reasonable terms to be agreed or settled by a single
arbitrator.

 

The Employee waives all of
his moral rights (as defined in the Copyright, Designs and Patents Act 1988) in
respect of any acts of the Company or any acts of third parties done with the
Company’s authority in relation to any Intellectual Property which is the
property of the Company by virtue of this clause.

 

Rights and obligations under
this clause shall continue in force after termination of this Agreement in
respect of Intellectual Property made during the Employee’s Employment under
this Agreement and shall be binding upon his representatives.

 

15.             Dispute Resolution and Disciplinary Procedures

 

If the Employee has a
grievance regarding the Employment he should, in the first instance, speak to
the Chief Financial Officer.  If the
grievance is not resolved to his satisfaction, he should then refer to the
dispute resolution procedure, which will be provided to him with his letter of
employment.

 

The disciplinary procedures
applicable to the Employee will be provided to him with his letter of
employment.

 

The dispute resolution and
grievance procedures do not form part of this Agreement.

 

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16.           Delegation

 

The Company may at any time and from time to
time delegate its power and authority under this Agreement to any Group Company
and such delegation (or the revocation thereof) shall be effective upon the
Company’s giving written notice of the same to the Employee.

 

17.           Notices

 

Notices may be given by either Party by
pre-paid first class post or by hand delivery addressed to the other Party at
(in the case of the Company) its registered office for the time being and (in
the case of the Employee) his last known address.  Any such notice given by post shall be deemed
to have been served on the second week day after despatch (public holidays
excepted) and any notice so given by hand shall be deemed to have been served
when delivered if delivered during normal business hours or, if delivered
outside such hours, at the next time after delivery when normal business hours
commence

 

18.           Miscellaneous

 

The expiration or termination of this Agreement
howsoever arising shall not operate to affect such of the provisions hereof as
are expressed or intended to remain in full force and effect notwithstanding
such termination.

 

If any of the clauses, conditions, covenants or
restrictions of this Agreement or any deed or document emanating from it shall
be found to be void but would be valid if some part thereof were deleted or
modified, then such clause, condition, covenant or restriction shall apply with
such deletion or modification as may be necessary to make it valid and
effective.

 

This Agreement shall be binding and ensure for
the benefit of the successors of the Parties but shall not be assignable.

 

This Agreement (together with any documents
referred to herein) constitutes the whole agreement between the Parties
relating to its subject matter.

 

The headings in this Agreement are inserted for
convenience only and shall not affect the construction of this Agreement.

 

This Agreement may be executed in counterparts
each of which when executed and delivered shall constitute an original but all
such counterparts together shall constitute one and the same instrument.

 

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No provision in this
Agreement may be amended unless such amendment is agreed to in writing, signed
by the Employee and by a duly authorised officer of the Company.  No waiver by either Party of any breach by
the other Party of any condition or provision of this Agreement to be performed
by such other Party shall be deemed a waiver of a similar or dissimilar condition
or provision at the same or any prior or subsequent time.  Any waiver must be in writing and signed by
the Employee or a duly authorised officer of the Company, as the case may be.

 

This Agreement shall be
governed by and construed in accordance with the laws of Bermuda and the
Parties hereby irrevocably submit to the non-exclusive jurisdiction of the
courts of Bermuda.

 

 

IN WITNESS WHEREOF, the Parties have executed
this Agreement as of the date first written above.

 

 

	
  SIGNED by:

  	
  /s/ MONTPELIER REINSURANCE LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by:

  	
  /s/ WILLIAM POLLETT

  	
   

  

 

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THE SCHEDULE

 

1.             Hours of Work:  
The Employee shall conform to such hours of work as may reasonably be
required of him for the proper performance of his duties hereunder and shall
not be entitled to receive any additional remuneration for work outside his
normal hours.

 

2.             Medical and Other Insurance:  The Employee will be entitled to participate
in the Company medical insurance plan and other insurance plans from time to
time subject to the provisions of the company’s insurance plans in effect at
the time.

 

3.             Pension Provisions: 
The Employee will be entitled to participate in the Company’s pension
plan from time to time subject to the provisions of such pension plan in effect
at the time.

 

4.             Incentive Plans: 
The Employee will be entitled to participate in the Montpelier Annual
Incentive Plan, the Montpelier Long-Term Incentive Plan and any other incentive
plan for which the Employee is eligible, from time to time subject to the
provisions of such plans in effect at the time.

 

5.             Employee Handbook: The Employee shall adhere to the
Company’s Employee Handbook, a copy of which has been given to the
Employee.  The Handbook contains details
of Company policies and procedures and descriptions of disciplinary and
grievance procedures, dress code and other matters relevant to the Employee’s
employment.  The Company reserves the
right to vary the Handbook from time to time.

 

13Exhibit 10.1

 

EMPLOYMENT
AGREEMENT

 

Agreement, made as of May 7, 2009 (“Effective
Date”), between Crown Media Holdings, Inc., a Delaware corporation, with
offices at 12700 Ventura Boulevard, Los Angeles, California 91604 (“Employer”)
and William Abbott (“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 continue serving as Executive Vice President, National Advertising
Sales until June 1, 2009, at which time he will become and serve as
President and Chief Executive Officer. 
Additionally, Employee agrees to serve in such other capacities and
perform responsibilities as shall be designated from time to time by
Employer.  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 December 31, 2011, unless terminated earlier as
provided in Paragraph 8 of this Agreement; provided, however,
that if neither party provides notice to the other by June 30 of the last
year of the then current Term, then the Agreement shall automatically renew for
one additional year.

 

3.             Compensation.

 

(a)            Salary.  As
compensation for Employee’s services hereunder, Employer shall pay to Employee
a base salary at the annual rate of Six Hundred Seventy Thousand Dollars
($670,000) per 

 

1

 

year.  During the Term and any extensions, Employer
will consider an adjustment of Employee’s base salary in June of each
year.

 

(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 pro rated
for partial calendar years within the Term, in an amount based on achievement
of criteria outlined by the Compensation Committee of Employer, which criteria
shall be the same as that established for the senior management team.  The target bonus will be 60% of base salary
for the applicable period with a payout range of 0-150%.  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, but in no event later than March 15.

 

(c)            LTI.  Employer will
award to Employee Long Term Incentive (“LTI”) in a Long Term Incentive
Compensation Agreement (attached as Schedule A) 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 B).  Employee has also been granted RSUs under a
prior agreement which is attached hereto as Schedule C (collectively, with the
Schedule A agreement, referred to herein as the “Incentive 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 for its senior executive personnel.  When Employee is required by Employer for
business reasons to travel by air, Employer shall have the option to upgrade to
business class air accommodations if such fare does not exceed $100 more than
the coach fare.

 

(f)             Fringe Benefits.  During the
Term, Employee shall be entitled to receive the following fringe benefits
pursuant to plans which may be amended from time to time:

 

(i) group medical, dental, life and disability
insurance as per Employer policy;

 

(ii) an allowance of Thirteen Thousand Dollars
($13,000) per year for an automobile; and

 

(iii) any other fringe benefits on terms that are
or may become available generally to senior executives of Employer.  Employee shall also be entitled to four (4) weeks
paid vacation for each year of the Term, subject to accrual and usage as
outlined in Employer’s policies, as may be amended from time to time.

 

2

 

4.             Place of Employment.  During the
Term, Employee shall be required to perform Employee’s duties at the Employer’s
office in New York City or at such other principal location in the New York
metropolitan area (or such other location as may be mutually agreeable to
Employer and Employee), and Employee shall undertake all 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 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 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.

 

3

 

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”).  Both parties
recognize that the services to be rendered hereunder by Employee are special,
unique and extraordinary in character. 
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.  Notwithstanding Paragraph 9 below, Employee
and Employer agree that temporary and permanent injunctive relief may be sought
by either in a court of law to enforce this Paragraph 7(a) and Paragraph 7(b) below.

 

(b)            Employee further agrees that during the Term and for a
period of one year thereafter, Employee will not:

 

(i)            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 (including without limitation executive
employees) for or rendering substantially full-time services as such to
Employer;

 

(ii)           publicly disparage Employer or its Board
of Directors, individually or collectively, or

 

(iii)          interfere
with Employer’s relationships with suppliers, customers, or other organizations
or individuals with which Employer has a business relationship or is pursuing a
business relationship during the Term.

 

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 (12) work weeks during any twelve
(12) 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. 
In the case of termination by virtue of either the death or disability
of Employee, Employee or his heirs will be paid any bonuses which Employee has
earned and which are attributable to periods prior to the effective date of
termination, such payment to occur on the date such bonus would normally be
paid;

 

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

 

(A)          The use of a controlled substance and/or alcohol,
either of which materially interfere with Employee’s performance of Employee’s
services under this Agreement;

 

4

 

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

 

(C)           Employee’s persistent failure or refusal after written
notice to perform any of Employee’s duties and responsibilities pursuant to
this Agreement as determined by the Board of Directors;

 

(D)          Employee’s dishonesty in 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; or

 

(F)           Employee’s voluntary resignation.

 

In the event of termination under Paragraph 8(a)(iii),
solely for purposes of Paragraph 7, the Term shall not be deemed terminated and
shall continue until the first to occur of twelve (12) months from termination
or December 31, 2011.

 

(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 Incentive Agreements; (2) twelve
(12) months base salary, paid in a lump sum and discounted at “prime rate” 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) pro
rata 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, 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 Subparagraph (c), Employer shall have no further obligations to Employee
pursuant to this Agreement, except (1) as may be provided under the
Incentive 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 not
retain any business records or documents (including electronic) relating to any
activity of Employer or any of its parent, subsidiary or affiliated companies,
shall not disseminate any such information in any format, and shall return any
business records, documents and property (including electronic) belonging to
Employer or its 

 

5

 

parents, subsidiaries and
affiliates.  This includes all
information that the Employee may have in hard copy or on any electronic media
(such as CD, DVD, thumb drives, portable hard drives, home computer, etc.).

 

(e)            Upon termination of Employee’s employment for any
reason, Employee shall tender Employee’s resignation from the Board of
Directors of Employer or 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 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 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.           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.

 

6

 

13.           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.

 

14.           Laws.  The laws of
the state of New York shall apply to this Agreement and the employment
relationship without the application of any conflict of law provisions.

 

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/ Donald J. Hall, Jr.

  
	
   

  	
  Title:

  	
  Co-Chairman of the Board

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ William J. Abbott

  
	
   

  	
  William Abbott

  

 

7

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