<PAGE>   1
                                                                    EXHIBIT 10.3


                                             SUBORDINATION AND SUPPORT
                                        AGREEMENT dated as of August 31, 2001
                                        among (i) CROWN MEDIA HOLDINGS, INC., a
                                        Delaware corporation (the "Obligor"),
                                        (ii) the subsidiaries of the Obligor
                                        which are parties to the Credit
                                        Agreement from time to time (the "Other
                                        Debtors"), (iii) HALLMARK CARDS
                                        INCORPORATED, a Missouri corporation
                                        ("Hallmark Cards" and, together with its
                                        subsidiaries (other than the Obligor and
                                        its subsidiaries), the "Subordinated
                                        Creditors"), and (iv) THE CHASE
                                        MANHATTAN BANK, as agent for the Lenders
                                        and the Issuing Bank referred to in the
                                        Credit Agreement (the "Agent").


                             Introductory Statement


                  Pursuant to the terms of a Credit, Security, Guaranty and
Pledge Agreement dated as of August 31, 2001 among the Obligor, the Guarantors
which are parties thereto from time to time, the Lenders parties thereto from
time to time and the Agent (such agreement as hereinafter amended, supplemented
or otherwise modified, or renewed, replaced or extended from time to time being
referred to as the "Credit Agreement") the Lenders have agreed, subject to the
terms and conditions thereof, to make loans (the "Loans") to, and to participate
in letters of credit (the "Letters of Credit") issued on behalf of, the Obligor.
The Credit Agreement, the Notes referred to therein, the Letters of Credit and
the other documents, instruments and agreements contemplated thereby as they may
be amended, supplemented or otherwise modified, renewed, replaced or extended
from time to time, shall hereinafter be referred to as the "Senior Obligation
Documents." For purposes of this Agreement, unless otherwise defined herein,
capitalized terms used herein shall have the respective meanings given to such
terms in the Credit Agreement.

                  Hallmark Cards is the ultimate parent of the largest
shareholder of the Obligor. Hallmark Cards has previously, through HC Crown
Corp., a wholly owned subsidiary, made loans or otherwise extended credit to the
Obligor or Other Debtors, and may from time to time hereafter make or cause the
Subordinated Creditors to make additional loans or other extensions of credit to
the Obligor or Other Debtors. The term "Subordinated Obligations" shall include:
(a) all obligations of the Obligor and the Other Debtors to repay the principal
amount of such loans or other extensions of credit referred to in the preceding
sentence (including but not limited to those made pursuant to Section 6 below),
including all interest thereon, fees in relation thereto and all other amounts
payable to the Subordinated Creditors in connection therewith; (b) the rights of
any Subordinated Creditor to receive any payment or other amount from the
Obligor

<PAGE>   2

and/or any Other Debtor in connection with the Schedule 1.5 Obligations (as
defined in the Credit Agreement), including (without limitation) as the result
of any guarantee of such obligations; and (c) any rights that any Subordinated
Creditor has to collateral (other than licensed trademark, service mark,
tradename or service name rights) under security agreements entered into in
connection with the Trademark License Agreements dated as of August 1, 1999 and
March 27, 2001 (but, for clarification, the term "Subordinated Obligations"
shall not include any amounts payable under the Amended HEDC License Agreements
or the service agreement(s) referred to in Section 6.5 of the Credit Agreement).
Any promissory note (including, but not limited to, the Promissory Note dated as
of August 31, 2001 (the "Promissory Note") between Obligor as borrower and HC
Crown Corp. as lender) or other document evidencing any obligation referred to
in the preceding sentence (including the HEDC Purchase Agreement to the extent
it relates to the Schedule 1.5 Obligations), as well as any replacements or
substitutes therefor and any related loan agreement, security agreement or any
other related agreement are hereinafter referred to as "Junior Obligation
Documents." For purposes hereof, the "Amended HEDC License Agreements" shall
mean (a) the Amended and Restated Program License Agreement dated as of January
1, 2001, between HEDC and Crown Media US and (b) the Amended and Restated
Program License Agreement dated as of January 1, 2001 between HEDC and Crown
Media.

                  In order to induce the Agent and the Lenders to enter into the
Credit Agreement, the Subordinated Creditor has agreed, subject to the
provisions of this Subordination Agreement, that the Subordinated Obligations
shall be subordinate to the Senior Obligations (as hereinafter defined) and to
the support obligation provided below.

                  NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:

1. Agreement to Subordinate. The Subordinated Creditor agrees that the
Subordinated Obligations are and shall be subordinate and subject in right of
payment, to the extent and in the manner hereinafter set forth, to the prior
payment in full of the Senior Obligations and that any guarantees, security
interests, mortgages and other liens securing payment of the Subordinated
Obligations are and shall be subordinate, to the fullest extent permitted by law
and as hereinafter set forth, to any guarantees, security interests, mortgages
and other liens securing payment of the Senior Obligations, notwithstanding the
perfection, order of perfection or failure to perfect, any such security
interest or other lien, or the filing or recording, order of filing or
recording, or failure to file or record this Agreement or any instrument or
other document in any filing or recording office in any jurisdiction. The term
"Senior Obligations" shall mean all obligations of the Obligor and the Other
Debtors under the Senior Obligation Documents including, without limitation,
whether outstanding at the date hereof or hereafter incurred or created, all
obligations to pay principal, premium, if any, interest (including, without
limitation, interest accruing after the commencement of any bankruptcy,
insolvency, reorganization or similar proceedings with respect to any such
Person whether or not determined to be an allowed claim in any such proceeding),
charges, costs, expenses and fees including, without limitation, the
disbursements and reasonable fees of counsel to the Agent or the Lenders, all
obligations to reimburse or indemnify the Agent or the Lenders in any way, and
all renewals, extensions, restructurings, refinancings or refunding of any
indebtedness under the Senior


                                      - 2 -
<PAGE>   3
Obligation Documents in the nature of a "workout" or otherwise. This Agreement
may be enforced by the Agent or by any other holder of the Senior Obligations
including, but not limited to, holders of Senior Obligations issued as a result
of a renewal, extension, restructuring, refinancing or refunding.

                  The expressions "prior payment in full," "payment in full,"
"paid in full" or any other similar term(s) or phrase(s) when used herein with
respect to Senior Obligation Documents shall mean the indefeasible payment in
full, in cash, of all of the Senior Obligations.

2.       Restrictions on Payment of the Subordinated Obligations, Etc.

         (a) Except as otherwise set forth herein, the Subordinated Creditors
will not ask, demand, sue for, take or receive, directly or indirectly, from the
Obligor, the Other Debtors or any affiliate thereof, in cash or other property,
by set-off, by realizing upon collateral, foreclosing on any lien or otherwise,
exercise of any remedies or rights under the Junior Obligation Documents or by
executions, garnishments, levies, attachments or by any other action relating to
the Subordinated Obligations, or in any other manner, payment of, or additional
security for, all or any part of the Subordinated Obligations unless and until
the Senior Obligations shall have been paid in full. Neither the Obligor nor any
of the Other Debtors will make any payment on any of the Subordinated
Obligations, or take any other action, in contravention of the provisions of
this Agreement.

         (b) So long as none of the events contemplated by Section 3(a) hereof
shall have occurred, the Obligor may make payments on the Subordinated
Obligations to the extent (but only to the extent) permitted by Section 6.5 of
the Credit Agreement.

         (c) Hallmark Cards further acknowledges and agrees that, except as
otherwise set forth herein, the Subordinated Creditors will not accept any
security for the Subordinated Obligations unless and until the Obligations have
been paid in full.

3.       Additional Provisions Concerning Subordination. Hallmark Cards and the
Obligor agree as follows:

         (a) In the event of (i) any dissolution, winding up, liquidation or
reorganization of the Obligor or any Other Debtor (whether voluntary or
involuntary and whether in bankruptcy, insolvency or receivership proceedings,
or upon an assignment for the benefit of creditors or proceedings for voluntary
or involuntary liquidation, dissolution or other winding up of the Obligor or
any Other Debtor, whether or not involving insolvency or bankruptcy, or any
other marshalling of the assets and liabilities of the Obligor or any Other
Debtor or otherwise); or (ii) any Event of Default or an event which with notice
and/or passage of time would constitute an Event of Default (as such term is
defined in the Credit Agreement), or any default, demand for payment or
acceleration of maturity regarding the Subordinated Obligations:

                  (i) all Senior Obligations (including, but not limited to, the
obligation to provide cash collateral for outstanding L/C Exposure) shall first
be paid to the Agent for the benefit of the Lenders and the Issuing Bank in full
before any payment or distribution is made upon the principal of or interest on
or any fees, costs, charges or expenses in connection with the


                                      - 3 -
<PAGE>   4
Subordinated Obligations, and before any other action described in Section 2 or
7 hereof is taken by the Subordinated Creditors; and

                  (ii) any payment or distribution of assets of the Obligor or
any Other Debtor, whether in cash, property or securities, to which any of the
Subordinated Creditors would be entitled except for the provisions hereof, shall
be paid or delivered by the Obligor or any Other Debtor, or any receiver,
trustee in bankruptcy, liquidating trustee, disbursing agent, agent or other
person making such payment or distribution, directly to the Agent for the
benefit of the Lenders and the Issuing Bank, to the extent necessary to pay in
full all Senior Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution to the Agent for the benefit of the Lenders
and the Issuing Bank before any payment or distribution is made to the
Subordinated Creditors;

         (b) In any proceeding referred to or resulting from any event referred
to in subsection (a) of this Section 3 commenced by or against the Obligor or
any Other Debtor:

                  (i) The Agent may, and is hereby irrevocably authorized and
empowered (in its own name or in the name of the appropriate Subordinated
Creditors or otherwise), but shall have no obligation to, (i) demand, sue for,
collect and receive every payment or distribution referred to in subsection (a)
of this Section 3 and give acquittance therefor, (ii) file claims and proofs of
claim in respect of the Subordinated Obligations and (iii) take such other
action as the Agent may deem necessary or advisable for the exercise or
enforcement of any of the rights or interests of the Agent and the Lenders and
the Issuing Bank hereunder; provided, however, that the Agent hereby agrees to
provide Hallmark Cards with prior written notice, to the extent reasonably
possible, in the event the Agent waives or compromises any claim in respect of
the Subordinated Obligations; and

                  (ii) The Subordinated Creditors will duly and promptly take
such action as the Agent may reasonably request to collect the Subordinated
Obligations for the account of the Agent or the Lenders and the Issuing Bank and
to file appropriate claims or proofs of claim with respect thereto, to execute
and deliver to the Agent such powers of attorney, assignments or other
instruments as the Agent may request in order to enable it to enforce any and
all claims with respect to the Subordinated Obligations, and to collect and
receive any and all payments or distributions which may be payable or
deliverable upon or with respect to the Subordinated Obligations;

         (c) All payments or distributions upon or with respect to the
Subordinated Obligations which are received by the Subordinated Creditors
contrary to the provisions of this Agreement shall be deemed to be the property
of the Agent, shall be received in trust for the benefit of the Agent, shall be
segregated from other funds and property held by the Subordinated Creditors and
shall be forthwith paid over to the Agent in the same form as so received (with
any necessary endorsement) to be applied to the payment or prepayment of the
Senior Obligations until the Senior Obligations shall have been paid in full;

         (d) The Subordinated Creditors hereby waive any requirement for
marshalling of assets by the Agent in connection with any foreclosure of any
lien of the Agent, the Lenders or the Issuing Bank under the Senior Obligation
Documents;


                                      - 4 -
<PAGE>   5

         (e) The Subordinated Creditors shall not take any action to impair or
otherwise adversely affect the foreclosure of, or other realization of the
rights of the Agent or the Lenders and the Issuing Bank under the Senior
Obligation Documents; and

         (f) The Agent is hereby authorized to demand specific performance of
this Agreement at any time when the Subordinated Creditors shall have failed to
comply with any of the provisions of this Agreement, and the Subordinated
Creditors hereby irrevocably waive any defense based on the adequacy of a remedy
at law which might be asserted as a bar to such remedy of specific performance.

4. Subrogation. The Subordinated Creditors agree that no payment or distribution
to the Agent for the benefit of the Lenders and the Issuing Bank pursuant to the
provisions of this Agreement shall entitle the Subordinated Creditors to
exercise any rights of subrogation in respect thereof until the Senior
Obligations shall have been paid in full.

5. Legend. The Subordinated Creditors and the Obligor will cause each promissory
note evidencing any of the Subordinated Obligations, any replacement thereof and
any mortgage or security document relating thereto to include or have endorsed
thereon the following provision:

                  "The indebtedness evidenced by this instrument is subordinated
                  to other indebtedness pursuant to, and to the extent provided
                  in, and is otherwise subject to the terms of, the
                  Subordination and Support Agreement dated as of August 31,
                  2001 as amended or supplemented by and among Crown Media
                  Holdings, Inc., various of its subsidiaries, The Chase
                  Manhattan Bank, as Agent for various Lenders and the Issuing
                  Bank, and Hallmark Cards Incorporated."

6. Obligation to Provide Support Amount.

         (a) Until the Total Commitment shall terminate and the Senior
Obligations are paid in full, Hallmark Cards agrees (i) to cause all of the
Schedule 1.5 Obligations which have been novated to the Borrower and/or its
Subsidiaries (i.e., those with respect to which any Credit Party has contractual
obligations owing directly to unaffiliated third parties) to be paid in full to
such third parties in accordance with their terms and (ii) to cause HC Crown
Corp. to advance up to $150,000,000 under the HCC Promissory Note (irrespective
of whether any "Event of Default" (as defined in the HCC Promissory Note) exists
at the time of any requested advance, but subject to reduction of such
commitment amount as a result of the application of Net Cash Proceeds in the
manner contemplated by Section 6.5 (vii)(x) of the Credit Agreement in
connection with a reduction of HC Crown Corp.'s funding commitment) (the
"Support Amount") to the Obligor to the extent necessary to enable the Obligor
to meet its cash needs including, but not limited to, the repayment of the
Senior Obligations, provided that the Obligor has theretofore borrowed the full
amount then available to it under the Credit Agreement after giving effect to
all the provisions of the Credit Agreement that restrict or limit such
availability.

         (b) Notwithstanding any provision to the contrary contained in the
Promissory Note, HC Crown Corp. shall, up to the maximum amounts provided
therein, be obligated to


                                      - 5 -
<PAGE>   6
advance the Support Amount whether or not an event of default shall have
occurred under either the Promissory Note or under the Credit Agreement.

         (c) The release of any of the Subordinated Creditors from the
obligations set forth in this Section 7 shall not affect the other provisions of
this Agreement including but not limited to the subordination provisions
contained herein.

7. Negative Covenants of the Subordinated Creditors. So long as any of the
Senior Obligations shall remain outstanding, the Subordinated Creditors will
not, without the prior written consent of the Agent:

         (a) Sell, assign, pledge, encumber or otherwise dispose of any
instrument evidencing the Subordinated Obligations or any collateral securing
the Subordinated Obligations unless such sale, assignment, pledge, encumbrance
or other disposition is made expressly subject to this Agreement and the other
party to such sale, assignment, pledge, encumbrance or other disposition
consents in writing to be bound by the terms hereof;

         (b) Permit the terms of the Junior Obligation Documents or collateral
securing any Subordinated Obligations to be changed in any way which would limit
or impair these subordination provisions, or accept any collateral.

         (c) Declare all or any portion of the Subordinated Obligations due and
payable prior to the date fixed therefor or realize upon, or otherwise exercise
any remedies with respect to, any collateral securing the Subordinated
Obligations or take any other action described in Section 2 hereof; or

         (d) Commence, or join with any entity other than the Agent and/or the
Lenders in commencing any proceeding referred to in subsection (a) of Section 3
hereof.

8. Obligations Unconditional. All rights and interests of the Agent hereunder,
and all agreements and obligations of the Subordinated Creditors, the Obligor
and the Other Debtors hereunder, shall remain in full force and effect
irrespective of:

         (a) Any lack of validity or enforceability of any Senior Obligation
Document or any other agreement or instrument relating thereto;

         (b) Any change in the time, manner or place of payment of, or in any
other term of, all or any of the Senior Obligations, or any other amendment or
waiver of or any consent to departure from any Senior Obligation Document;

         (c) Any exchange, release or nonperfection of any collateral, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any of the Senior Obligations; or

         (d) Any other circumstances which might otherwise constitute a defense
available to, or a discharge of, either the Obligor or any Other Debtor in
respect of the Senior Obligations or of the Subordinated Creditors, the Obligor
or any Other Debtor in respect of this


                                      - 6 -
<PAGE>   7
Agreement and the other Fundamental Documents other than the payment in full of
the Senior Obligations.

9. Present Subordinated Obligations. Hallmark Cards hereby represents and
warrants that there are no outstanding Subordinated Obligations, except as
disclosed on Schedule 1 hereto.

10. Additional Agreements and Waivers by the Subordinated Creditors. The
Subordinated Creditors agree that neither the Agent nor the Issuing Bank or any
Lender shall have any liability or obligation to the Subordinated Creditors on
account of exercise of the rights and remedies of the Agent, the Issuing Bank
and/or the Lenders under any Senior Obligation Document. The Subordinated
Creditors waive the right to commence or pursue any legal action (whether suit,
counterclaim, cross claim or other action) on account of exercise of the rights
and remedies of the Agent, the Issuing Bank and/or the Lenders under any Senior
Obligation Document and alleging or based on a theory of breach of fiduciary
obligations of the Agent, the Issuing Bank and/or the Lenders, equitable
subordination of claims of the Agent, the Issuing Bank and/or the Lenders
against the Obligor or any Other Debtor, conflicts of interest by the Agent, the
Issuing Bank and/or the Lenders or similar theories premised in any such case on
the exercise of control or influence on management by the Agent, the Issuing
Bank and/or the Lenders, actual management or control of the Obligor or any
Other Debtor by the Agent, the Issuing Bank and/or the Lenders, voting any of
the stock of the Obligor or an Other Debtor, or other pursuit of rights or
remedies by the Agent, the Issuing Bank and/or the Lenders under any Senior
Obligation Document.

11. Further Assurances. The Subordinated Creditors, the Obligor and the Other
Debtors will, at their own expense and at any time and from time to time,
promptly execute and deliver all further instruments and documents, and take all
further action that the Agent may reasonably request, in order to perfect or
otherwise protect any right or interest granted or purported to be granted
hereby or to enable the Agent to exercise and enforce its rights and remedies
hereunder. The Subordinated Creditors further authorize the Agent to file UCC
financing statements and any amendments thereto or continuations thereof with
regard to the Subordinated Obligations.

12. Expenses. The Obligor agrees to pay to the Agent, upon demand, the amount of
any and all reasonable expenses, including the reasonable fees and expenses of
counsel for the Agent, which the Agent may incur in connection with the exercise
or enforcement of any of the rights or interests of the Agent or the Lenders
hereunder.

13. Notice. All demands, notices and other communications which any party hereto
may desire or may be required to give to any other party hereunder shall be in
writing (including telegraphic communication) and shall be mailed, telecopied,
telegraphed or delivered to such other party at its address as follows:


                                      - 7 -
<PAGE>   8

         (a)      to the Agent at:

                  The Chase Manhattan Bank
                  1166 Avenue of the Americas
                  Floor 17
                  New York, New York 10036
                  Attn.:   Garrett J. Verdone
                           Senior Vice President
                  Facsimile:  (212) 899-2893


                  with a courtesy copy to:

                  J.P. Morgan Securities Inc.
                  1800 Century Park East
                  Suite 400
                  Los Angeles, CA  90067
                  Attn:  P. Clark Hallren
                  Facsimile:  (310) 788-5628

         (b)      to the Obligor or an Other Debtor to it at:

                  Crown Media Holdings
                  6430 S. Fiddlers Green Circle
                  Suite 500
                  Greenwood Village, CO  80111
                  Attn:  Charles Stanford, Esq.
                  Facsimile:  (303) 221-3779

         (c)      to the Subordinated Creditors at:

                  Hallmark Cards Incorporated
                  2501 McGee, P.O. 419126, Mail Drop # 339
                  Kansas City, MO 64108
                  Attn:  General Counsel
                  Fax:  (816) 274-7171

or to any such party at such other address as shall be designated by such party
in a written notice to each other party, complying as to delivery with the terms
of this Section 13. All such demands, notices, and other communications shall be
effective when received or five business days after mailing, whichever is
earlier.

14. SERVICE OF PROCESS. THE SUBORDINATED CREDITORS (A) HEREBY IRREVOCABLY SUBMIT
TO THE JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW YORK AND THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF
OR BASED UPON THIS AGREEMENT OR THE SUBJECT


                                      - 8 -
<PAGE>   9
MATTER HEREOF BROUGHT BY THE AGENT OR ITS SUCCESSORS OR ASSIGNS AND (B) HEREBY
WAIVE AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN
ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT THEY ARE NOT SUBJECT
PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT THEIR PROPERTY IS
EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (C) HEREBY WAIVE IN ANY SUCH
ACTION, SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS (EXCEPT FOR COMPULSORY
COUNTERCLAIMS). THE SUBORDINATED CREDITORS AND THE OBLIGOR AND THE OTHER DEBTORS
HEREBY CONSENT TO SERVICE OF PROCESS BY REGISTERED MAIL AT THE ADDRESS TO WHICH
NOTICES ARE TO BE GIVEN. THE SUBORDINATED CREDITORS AGREE THAT SUBMISSION TO
JURISDICTION AND CONSENT TO SERVICE OF PROCESSES BY MAIL IS MADE FOR THE EXPRESS
BENEFIT OF THE AGENT. FINAL JUDGMENT AGAINST THE SUBORDINATED CREDITORS IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS (A) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR
TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF
ANY INDEBTEDNESS OR LIABILITY OF THE SUBORDINATED CREDITORS THEREIN DESCRIBED,
OR (B) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER
JURISDICTION; PROVIDED, HOWEVER, THAT THE AGENT MAY AT ITS OPTION BRING SUIT, OR
INSTITUTE OTHER JUDICIAL PROCEEDINGS, AGAINST THE SUBORDINATED CREDITORS OR ANY
OF THEIR ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY
COUNTRY OR PLACE WHERE THE SUBORDINATED CREDITORS OR THEIR ASSETS MAY BE FOUND.

15.      Miscellaneous.

         (a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Subordinated Creditors, the Obligor
and the Agent, and no waiver of any provision of this Agreement, and no consent
to any departure therefrom, shall be effective unless it is in writing and
signed by the Agent, and any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

         (b) No failure on the part of the Agent to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.

         (c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction, shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or invalidity without invalidating
the remaining portions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.


                                      - 9 -
<PAGE>   10
         (d) This Agreement shall be binding on the Subordinated Creditors and
the Obligor, the Other Debtors and their respective successors and assigns
including without limitation any holders of the instruments evidencing the
Subordinated Obligations.

         (e) This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

         (f) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts to be fully
performed within the State of New York.

         (g) Hallmark Cards agrees that it shall take whatever action is
necessary to bind each of the Subordinated Creditors to the terms of this
Agreement including, but not limited to, obtaining the agreement of such other
Subordinated Creditors to the Submission to Jurisdiction provisions contained in
Section 14 hereof. Hallmark Cards, Incorporated agrees to be responsible to the
Agent for the performance by the other Subordinated Creditors of their
obligations hereunder.

         (h) This Agreement is intended for the sole benefit of the Agent, the
Lenders, the Issuing Bank and their respective successors and assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person, any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.


                                     - 10 -
<PAGE>   11


                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.

                                    CROWN MEDIA HOLDINGS, INC.




                                    By:   /s/ William J. Aliber
                                          --------------------------------------
                                          Name: William J. Aliber
                                          Title: Executive Vice President and
                                          Chief Financial Officer


                                          GUARANTORS:

                                          CROWN MEDIA INTERNATIONAL, INC.
                                          CROWN MEDIA INTERNATIONAL (SINGAPORE)
                                            INC.
                                          CROWN ENTERTAINMENT LIMITED
                                          CROWN MEDIA INTERNATIONAL (HK)
                                            LIMITED
                                          CROWN MEDIA DISTRIBUTION, LLC
                                          HEN LLC
                                          HEN (L) LTD.
                                          HM HOLDINGS OF DELAWARE LLC
                                          CROWN MEDIA UNITED STATES LLC
                                          HM INTERMEDIARY LLC
                                          CITI TEEVEE LLC


                                     - 11 -
<PAGE>   12

                                          DOONE CITY PICTURES LLC
                                          HALLMARK INDIA PRIVATE, LTD.



                                          By: /s/ William J. Aliber
                                              ---------------------------------
                                              Name: William J. Aliber
                                              Title:


                                          HALLMARK CARDS, INCORPORATED





                                          By: /s/ Robert J. Druten
                                              ----------------------------------
                                              Name: Robert J. Druten
                                              Title:


                                          THE CHASE MANHATTAN BANK, as Agent





                                          By: /s/ Garret J. Verdone
                                              ----------------------------------
                                              Name: Garret J. Verdone
                                              Title: Senior Vice President


                                     - 12 -
<PAGE>   13

                                                                      SCHEDULE 1


                 CURRENTLY OUTSTANDING SUBORDINATED OBLIGATIONS