Document:

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                                                                    EXHIBIT 10.4

             FORM OF LIMITED GUARANTEE AGREEMENT AND ACKNOWLEDGEMENT

         LIMITED GUARANTEE AGREEMENT AND ACKNOWLEDGEMENT, dated as of August 31,
2001(this "Agreement") made by HALLMARK CARDS, INCORPORATED (the "Guarantor"),
in favor of THE CHASE MANHATTAN BANK, as Agent on behalf of the Lenders and the
Issuing Bank referred to below (the "Agent"). Reference is made to the Credit,
Security, Guaranty and Pledge Agreement dated as of August 31, 2001 (as the same
may be amended, supplemented or otherwise modified, renewed, replaced or
extended from time to time, the "Credit Agreement"), by and among CROWN MEDIA
HOLDINGS, INC. ("Crown Media"), its subsidiaries which are parties thereto from
time to time, the lenders which are parties thereto from time to time (such
persons and their successors and assigns being hereinafter referred to as the
"Lenders") and THE CHASE MANHATTAN BANK, as Agent and Issuing Bank. Capitalized
terms used herein but not otherwise defined have the meanings given to them in
the Credit Agreement.

                                   WITNESSETH:

         WHEREAS, Guarantor is, directly or indirectly, the owner of all the
membership interests of Hallmark Entertainment Distribution, LLC ("Seller");

         WHEREAS, Seller and Crown Media have entered into a Purchase and Sale
Agreement dated as of April 10, 2001 (such agreement as amended through the date
hereof being hereinafter referred to as the "Purchase Agreement") pursuant to
which the Seller is selling to Crown Media various rights relating to a library
of 702 titles (the "Library");

         WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans and to participate in Letters of Credit issued by the
Issuing Bank, in each case upon the terms and subject to the conditions set
forth therein;

         WHEREAS, up to $120,000,000 of the loans made pursuant to the Credit
Agreement will be used by Crown Media to pay the cash portion of the Purchase
Price under the Purchase Agreement;

         WHEREAS, HC Crown Corporation ("HC Crown") is a wholly owned subsidiary
of the Guarantor and the Guarantor indirectly owns approximately 51.6% of the
outstanding shares of common stock of Crown Media and will after the
consummation of the sale contemplated by the Purchase Agreement indirectly own
between approximately 66.7% and 67.7% of such shares.

         WHEREAS, the Guarantor has entered into or will simultaneously with the
execution hereof be entering into a Subordination and Support Agreement (as
amended from time to time, the "Subordination Agreement") with Crown Media, the
subsidiaries of Crown Media which are parties to the Credit Agreement and the
Agent, pursuant to which the Guarantor has, among other things, agreed to cause
HC Crown to make certain advances to Crown Media pursuant to the terms of a
Promissory Note dated as of August 31, 2001 in the amount of $150 million

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executed by each of Crown Media, HC Crown, Crown Media International, Inc. and
Crown Media United States, LLC (the HC/Crown Media Loan Agreement);

         WHEREAS, in order to induce the Lenders to enter into the Credit
Agreement, Hallmark Entertainment Inc. ("HEI") has entered into or will
simultaneously with the execution thereof be entering into a Hallmark Inducement
Agreement (the "Inducement Agreement") with the Agent, pursuant to which HEI
has, among other things, agreed to indemnify the Agent (for the benefit of the
Lenders) for any defects in the chain of title of any films which make up part
of the Library;

         WHEREAS, the Guarantor will derive substantial benefit from the making
of the Loans and issuance of the Letters of Credit;

         WHEREAS, it is a condition precedent to the obligations of the Lenders
to make the Loans and participate in the Letters of Credit that the Guarantor
shall have executed and delivered the Subordination Agreement and this Agreement
to the Agent.

NOW, THEREFORE, in consideration of the premises and to induce (i) the Agent,
the Issuing Bank and the Lenders to enter into the Credit Agreement, (ii) the
Issuing Bank to issue Letters of Credit, and (iii) the Lenders to make their
respective Loans and to participate in the Letters of Credit, the Guarantor
hereby agrees with the Agent, for the benefit of itself, the Issuing Bank and
the Lenders, as follows:

SECTION 1. ACKNOWLEDGEMENT.

         1.01 BACKUP OBLIGATIONS. To avoid any doubt as to the enforceability of
the HC/Crown Media Loan Agreement and to support the performance of HC Crown
thereunder, the Guarantor is executing this Agreement to reflect its obligation
to the Agent (for the benefit of itself, the Issuing Bank and the Lenders), to
make advances under this Agreement to the extent not made under the HC/Crown
Media Loan Agreement.

         1.02 MAXIMUM LIABILITY OF GUARANTOR UNDER THIS LIMITED GUARANTEE. The
maximum liability of the Guarantor under the terms of this Agreement shall be
the amount by which $150 million exceeds the sum of (a) aggregate principal
amount (but not accrued and unpaid interest or any claims for expenses or other
amounts other than principal advances) outstanding under the HC/Crown Media Loan
Agreement at the time that written demand for payment is made hereunder by the
Agent on the Guarantor for payment plus (b) the Net Cash Proceeds theretofore
used to make Restricted Payments permitted pursuant to Section 6.5(vii) of the
Credit Agreement (the "Maximum Liability"). For the avoidance of doubt, Net Cash
Proceeds used to reduce the commitment to make loans under the HCC Promissory
Note shall be considered "Restricted Payments" for purposes of the preceding
sentence.

         1.03 NATURE OF ADVANCES SUBSEQUENT TO COMMENCEMENT OF A PROCEEDING. The
parties hereto acknowledge that the Guarantor may (whether before or subsequent
to the commencement of a proceeding under the Bankruptcy Code with regard to
Crown Media), satisfy its obligations hereunder by having HC Crown make loans to
Crown Media pursuant to the HC/Crown Media Loan Agreement. Any such loans
whether made prior or subsequent to the commencement of a proceeding against or
by Crown Media under the Bankruptcy Code shall as

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between the Guarantor, the Agent, the Issuing Bank and the Lenders, be subject
to the subordination terms contained in the Subordination Agreement.

SECTION 2. GUARANTEE.

         2.01 AGREEMENT TO PAY THE OBLIGATIONS. The Guarantor irrevocably and
unconditionally guarantees to the Agent (for the benefit of itself, the Issuing
Bank and the Lenders) the due and punctual payment of, and performance of, all
of the Obligations of Crown Media under the Credit Agreement, as and when the
same shall become due, whether at stated maturity, by acceleration or otherwise,
including interest accruing on and after the filing of any petition in
bankruptcy or of reorganization of Crown Media or any of its subsidiaries
whether or not post-filing interest is allowed in such proceeding; provided,
however, that (i) the maximum aggregate amount of the liability of the Guarantor
hereunder shall be the Maximum Liability computed pursuant to Section 1.02
hereof and (ii) the Maximum Liability shall be reduced on a Dollar for Dollar
basis by the principal amount of any loans made by HC Crown to Crown Media under
the terms of the written HC/Crown Media Loan Agreement subsequent to the date of
written demand for payment hereunder, but only to the extent such loans are not
directly or indirectly repaid by Crown Media or any of its subsidiaries. Such
maximum guaranteed amount in effect from time to time is referred to as the
"Guaranteed Amount."

         2.02 WAIVERS. The Guarantor waives presentation to, demand for payment
from and protest to, as the case may be, Crown Media, or any other guarantor of
any of the Obligations, and also waives notice of protest for nonpayment, notice
of acceleration and notice of intent to accelerate. The obligations of the
Guarantor hereunder shall not be affected by (a) the failure of the Agent, the
Issuing Bank or any Lender to assert any claim or demand or to enforce any right
or remedy against Crown Media, or any other guarantor of any of the Obligations
or otherwise; (b) any extension or renewal of any provision hereof or of the
Credit Agreement; (c) the failure of the Agent, the Issuing Bank or the Lenders
to obtain the consent of the Guarantor with respect to any rescission, waiver,
compromise, acceleration, amendment or modification of any of the terms or
provisions of the Credit Agreement and/or the HC/Crown Loan Agreement; (d) the
release, exchange, waiver or foreclosure of any security held by the Agent for
the Obligations or any of them, or otherwise; or (e) the release or substitution
of any other guarantor of the Obligations.

         2.03 GUARANTEE OF PERFORMANCE AND OF PAYMENT. The Guarantor further
agrees that this guarantee constitutes a guarantee of performance and of payment
when due and not just of collection, and waives any right to require that any
resort be had by the Agent, the Issuing Bank or any Lender to any security held
for payment of the Obligations or to any balance of any deposit, account or
credit on the books of the Agent, the Issuing Bank or any Lender in favor of
Crown Media or any other Person.

         2.04 DUTY TO KEEP INFORMED. The Guarantor expressly assumes all
responsibilities to remain informed of the financial condition of Crown Media,
and any other guarantors of the Obligations and any circumstances affecting the
Collateral, or the ability of Crown Media to perform under the Credit Agreement.

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         2.05 LIABILITY ABSOLUTE. The Guarantor's obligations hereunder shall
not be affected by the genuineness, validity, regularity or enforceability of
the Obligations, the Notes or any other instrument evidencing any Obligations,
or by the existence, validity, enforceability, perfection, or extent of any
collateral therefor or by any other circumstance relating to the Obligations
which might otherwise constitute a defense hereto other than indefeasible
repayment in full of the Obligations. The Agent, the Issuing Bank and the
Lenders make no representation or warranty with respect to any such
circumstances and have no duty or responsibility whatsoever to the Guarantor in
respect to the management and maintenance of the Obligations or any collateral
for the Obligations.

         2.06 NO IMPAIRMENT OF AGREEMENT, ETC. The obligations of the Guarantor
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason (except payment and performance in full of the
Obligations), including, without limitation, any claim of unenforceability of
the Subordination Agreement and/or the HC/Crown Media Loan Agreement, waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
the Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Agent, the Issuing Bank or any Lender to assert
any claim or demand or to enforce any remedy under this Agreement or any other
agreement, by any waiver or modification of any provision hereof or thereof, by
any default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
the Guarantor or would otherwise operate as a discharge of the Guarantor as a
matter of law, unless and until the Obligations are indefeasibly paid in full,
the Commitments have terminated and each outstanding Letter of Credit has
expired or otherwise been terminated.

         2.07 CONTINUATION AND REINSTATEMENT; SUBROGATION.

                  (a) The Guarantor further agrees that its guarantee hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Obligation is rescinded or must
otherwise be restored by the Agent, the Issuing Bank or the Lenders upon the
bankruptcy or reorganization of Crown Media or otherwise.

                  (b) All rights of the Guarantor against Crown Media arising as
a result of the payment by the Guarantor of any sums hereunder by way of right
of subrogation or otherwise, shall in all respects be subordinated and junior in
right of payment to, and shall not be exercised by the Guarantor until and
unless the prior final and indefeasible payment in full of all the Obligations.
If any amount shall be paid to the Guarantor for the account of Crown Media,
such amount shall be held in trust for the benefit of the Agent, the Issuing
Bank and the Lenders segregated from the Guarantor's own assets, and shall
forthwith be paid to the Agent on behalf of itself, the Issuing Bank and the
Lenders to be credited and applied to the Obligations, whether matured or
unmatured.

         2.08 SEPARATE ACTION. The obligations of the Guarantor hereunder are
independent of the obligations of Crown Media, and any other guarantor of the
Obligations, and a separate

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action or actions may be brought and prosecuted against the Guarantor whether or
not any action is brought against Crown Media or any of such other guarantors
and whether or not such Persons are joined in any such action or actions.

         2.09 BANKRUPTCY, ETC.

                  (a) So long as any Obligations remain outstanding, the
Guarantor shall not, without the prior written consent of the Agent, commence or
join with any other Person in commencing any bankruptcy, reorganization or
insolvency proceedings of or against Crown Media or any of its subsidiaries. The
obligations of the Guarantor hereunder shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any proceeding, voluntary or
involuntary, involving the bankruptcy, insolvency, receivership, reorganization,
liquidation or arrangement of Crown Media or any of its subsidiaries or by any
defense which such Person(s) may have by reason of any such bankruptcy,
insolvency, receivership, reorganization, liquidation or arrangement proceeding,
or by reason of any order, decree or decision of any court or administrative
body resulting from any such proceeding.

                  (b) The Guarantor acknowledges and agrees that any interest on
any portion of the Obligations which accrues after the commencement of any
proceeding referred to in paragraph (a) above (or, if interest on any portion of
the Obligations ceases to accrue by operation of law by reason of the
commencement of said proceeding, such interest as would have accrued on such
portion of the Obligations if said proceedings had not been commenced) shall be
included in the Obligations because it is the intention of the Guarantor that
the Obligations which are guaranteed by the Guarantor pursuant hereto should be
determined without regard to any rule of law or order which may relieve Crown
Media of any portion of such Obligations. The Guarantor will permit any trustee
in bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay the Agent, or allow the claim of the Agent in
respect of, any such interest accruing after the date on which such proceeding
is commenced.

         2.10 NOTICE OF EVENTS. As soon as the Guarantor obtains knowledge
thereof, the Guarantor shall give the Agent immediate written notice of any
condition or event which has resulted in a material adverse change in the
financial condition of the Guarantor, Crown Media or a breach of or
noncompliance with any term, condition or covenant contained herein, the Credit
Agreement, or any other document delivered pursuant hereto or thereto.

SECTION 3. REPRESENTATIONS AND WARRANTIES.

         In order to induce the Agent to accept this Agreement and to induce the
Agent, the Issuing Bank and the Lenders to enter into the Credit Agreement and
to make the Loans and to issue (and participate in) Letters of Credit
thereunder, the Guarantor hereby represents and warrants to the Agent that the
following statements are true and correct:

         3.01 ORGANIZATION; POWERS; AUTHORIZATION; ENFORCEABILITY.

                  (a) The Guarantor is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, has the
power and authority to carry on its business as now conducted and hereafter
proposed to be conducted and is duly qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.

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                  (b) The Guarantor has full power and authority to conduct its
business as now conducted and to execute, deliver and perform this Agreement.

                  (c) The Guarantor has taken all necessary corporate and legal
action to authorize this Agreement on the terms and conditions set forth herein
and to authorize the execution, delivery and performance hereof.

                  (d) This Agreement has been duly executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the rights of creditors generally and subject to general
principles of equity (whether considered in a proceeding in equity or law).

         3.02 NO LEGAL BAR TO THIS AGREEMENT. The execution, delivery and
performance by the Guarantor of this Agreement, (a) do not require any consent
or approval of, registration or filing with, or any other action by, any
Governmental Authority or other Person, (b) do not and will not violate any
Applicable Law or the charter, by-laws or other organizational documents of the
Guarantor or any order of any Governmental Authority applicable to the Guarantor
or any of its properties or assets, (c) will not violate, be in conflict with,
or result in a breach of or constitute (with due notice or lapse of time) a
default under, or create any right to terminate, any material indenture, bond,
note or other agreement or instrument evidencing or governing any Indebtedness
or any other material agreement or instrument binding upon the Guarantor or its
assets, or give rise to a right thereunder to require any payment to be made by
the Guarantor and (d) will not result in the creation or imposition of any Lien
on any material asset of the Guarantor.

SECTION 4. MISCELLANEOUS.

         4.01 DEFAULT. The occurrence of any of the following events shall
constitute a default under this Agreement: (a) any representation or warranty
made by the Guarantor hereunder shall prove to have been false or misleading in
any material respect when made or delivered, or (b) the Guarantor shall fail to
perform of its obligations hereunder.

         4.02 SURVIVAL OF WARRANTIES. All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and the Credit Agreement and any increase in the Commitments under the
Credit Agreement.

         4.03 NOTICES. All notices and other communications shall be provided in
a manner authorized by Section 13.1 of the Credit Agreement to the relevant
party at its address set forth in such Section 13.1, or on the signature pages
hereto or to such other address as any party hereto may hereafter indicate in
writing.

         4.04 SEVERABILITY. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity, illegality or unenforceability of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.

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         4.05 AMENDMENTS AND WAIVERS. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
the Guarantor therefrom, shall in any event be effective without the written
concurrence of the Agent and, in the case of any such amendment or modification,
the Guarantor. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.

         4.06 HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only, shall not constitute a part
of this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

         4.07 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE GUARANTOR HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS TO BE FULLY PERFORMED WITHIN THE STATE OF NEW YORK.

         4.08 SUCCESSORS AND ASSIGNS. The Agreement constitutes the continuing
obligation of the Guarantor and shall be binding upon the Guarantor and its
successors and assigns. The Agreement shall inure to the benefit of the Agent,
the Issuing Bank, the Lenders and their respective successors and assigns. The
Guarantor shall not assign this Agreement or any of the rights or obligations of
the Guarantor hereunder without the prior written consent of the Agent. The
terms and provisions of this Agreement shall inure to the benefit of any
transferee, assignee or participant of any Loan or Letter of Credit transferred,
assigned or conveyed in accordance with the provisions of the Credit Agreement,
and in the event of such transfer or assignment the rights and privileges herein
conferred upon the Agent shall automatically extend to and be vested in such
transferee, assignee or participant, all subject to the terms and conditions
hereof.

         4.09 AGENT. Written notice of resignation by, or removal of the Person
acting as the Agent pursuant to Article 12.11 of the Credit Agreement shall also
constitute resignation by, or removal of, such Person as the Agent under this
Agreement; and appointment of a successor Agent pursuant to Article 12.11 of the
Credit Agreement shall also constitute appointment of a successor Agent under
this Agreement. Upon acceptance of the appointment of a Person as a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Agent
under this Agreement, and the retiring or removed Agent under this Agreement
shall promptly (i) transfer to such successor Agent all sums held hereunder,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Agent under this
Agreement, and (ii) take such other actions as may be necessary or appropriate
in connection with the assignment to such successor Agent of the rights created
hereunder, whereupon such retiring or removed Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Agent's resignation or removal hereunder as Agent, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Agent hereunder.

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         4.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.

                  (a) The Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court for the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Creditor Party may
otherwise have to bring any action or proceeding relating to this Agreement
against the Guarantor or its properties in the courts of any jurisdiction.

                  (b) The Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which the Guarantor may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
in any court referred to in paragraph (a) of this Section. The Guarantor hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

                  (c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 4.03. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

         4.11 WAIVER OF JURY TRIAL.

         TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED,
THE GUARANTOR HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT, THE SUBJECT MATTER HEREOF, THE CREDIT AGREEMENT OR
THE SUBJECT MATTER THEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE GUARANTOR ACKNOWLEDGES
THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THE PROVISIONS OF
THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH OTHER PARTIES HAVE
RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND OTHER
FUNDAMENTAL DOCUMENTS. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION 4.11 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
GUARANTOR TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.

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         4.12 WAIVER WITH RESPECT TO DAMAGES.

         THE GUARANTOR ACKNOWLEDGES THAT NONE OF THE AGENT, THE ISSUING BANK OR
ANY LENDER HAS ANY FIDUCIARY RELATIONSHIP WITH, OR FIDUCIARY DUTY TO, THE
GUARANTOR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
FUNDAMENTAL DOCUMENT. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR
SHALL NOT ASSERT, AND THE GUARANTOR HEREBY WAIVES, ANY CLAIMS AGAINST ANY
INDEMNITEE ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN
CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT, ANY OTHER FUNDAMENTAL
DOCUMENT, ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, ANY LOAN OR LETTER OF CREDIT OR THE
USE OF PROCEEDS THEREOF.

         4.13 FURTHER ASSURANCES. At any time or from time to time, upon the
request of the Agent, the Guarantor shall execute and deliver such further
documents and do such other acts and things as the Agent may reasonably request
in order to effect fully the purposes of this Agreement

         4.14 RIGHT OF SETOFF. If a default hereunder shall have occurred and be
continuing, and after such time as the Guarantor has been provided with notice
of such default, each Lender and each of its Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Guarantor
against any of and all the Obligations now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Lender under this Section are in addition to other
rights and remedies (including other rights of setoff) which such Lender may
have.

         4.15 COUNTERPARTS. This Agreement may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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                  IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly executed and delivery by its duly authorized officer as of
the day and year first above written.

                                        HALLMARK CARDS, INCORPORATED

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

                                        THE CHASE MANHATTAN BANK,
                                        as Agent

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

                                       10<PAGE>   1
                                                                   EXHIBIT 10.5

                          HALLMARK INDUCEMENT AGREEMENT

               HALLMARK INDUCEMENT AGREEMENT dated as of August 31, 2001 (as
amended, supplemented or otherwise modified, renewed or replaced from time to
time, this "Hallmark Inducement Agreement") between (i) HALLMARK ENTERTAINMENT,
INC., a Delaware corporation ("Hallmark") and (ii) THE CHASE MANHATTAN BANK, a
New York banking corporation (in its capacity as Agent under the Credit
Agreement (as defined below), the "Agent").

               WHEREAS, pursuant to that certain Credit, Security, Guaranty and
Pledge Agreement dated as of August 31, 2001 (as such agreement may be amended,
supplemented or otherwise modified, or renewed, replaced or extended from time
to time, the "Credit Agreement") among Crown Media Holdings, Inc., a Delaware
corporation, as Borrower (the "Borrower"), the Borrower's subsidiaries parties
thereto, the Lenders parties thereto (the "Lenders"), the Issuing Bank and the
Agent, the Lenders have agreed to make loans (the "Loans") to and to participate
in letters of credit (the "Letters of Credit") issued on behalf of the Borrower;
and

               WHEREAS, Hallmark is, directly or indirectly, the largest
shareholder of the Borrower and will derive substantial benefit from the making
of the Loans to, and the issuance of Letters of Credit on behalf of, the
Borrower; and

               WHEREAS, to induce the Lenders and the Agent to enter into the
Credit Agreement and the other Fundamental Documents contemplated thereby to
which the Lenders or the Agent are parties, and to induce the Lenders to make
the Loans and to participate in Letters of Credit issued on behalf of the
Borrower pursuant to the terms thereof, Hallmark and the Agent desire to enter
into this Hallmark Inducement Agreement.

               NOW, THEREFORE, in consideration of the above premises, the
parties hereto agree as follows:

               SECTION 1. Definitions. When used in this Hallmark Inducement
Agreement:

               "HEDC" shall mean Hallmark Entertainment Distribution, LLC.

               "HEDC License Agreements" shall mean (i) the Amended and Restated
Program License Agreement dated as of January 1, 2001 between HEDC and Crown
Media International Inc. and (ii) the Amended and Restated Program License
Agreement dated as of January 1, 2001 between HEDC and Crown Media United States
LLC pursuant to which each of Crown Media International Inc. and Crown Media
United States LLC is required to license substantially all television motion
pictures and miniseries owned by HEDC for foreign and domestic territories,
respectively.

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               "HEDC Purchase Agreement" shall mean the Purchase and Sale
Agreement dated as of April 10, 2001 between Hallmark Entertainment
Distribution, LLC and the Borrower (as the same has been amended) pursuant to
which the Borrower is acquiring rights in the Library as more fully set forth
therein.

               "Inducement Default" shall mean a breach by Hallmark of any of
its obligations under this Hallmark Inducement Agreement.

               "Library" shall mean the seven hundred two titles in which the
Borrower is to obtain certain rights pursuant to the HEDC Purchase Agreement.

               "Obligations" shall mean the Obligations, as such term is defined
in the Credit Agreement and any obligations under any extensions, renewals or
refinancings of the Credit Agreement.

               "Service Agreement" shall mean the Service Agreement(s) referred
to in Section 6.5 of the Credit Agreement.

               All terms used but not otherwise defined herein shall have the
respective meanings assigned to them in the Credit Agreement. All terms used but
not otherwise defined herein or in the Credit Agreement shall have, where
appropriate, their respective definitions as set forth in the Uniform Commercial
Code as in effect in the State of New York.

               SECTION 2. Representations and Warranties of Hallmark. Hallmark
hereby represents and warrants to the Agent that:

               (a) Hallmark is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is in good
standing as a foreign corporation in all jurisdictions where the nature of its
properties or business so requires and where a failure to be in good standing as
a foreign corporation would have a material adverse effect on the business,
assets or condition, financial or otherwise of Hallmark;

               (b) Hallmark has the corporate power to (x) own its respective
properties and carry on its businesses as now being conducted and (y) execute,
deliver and perform its obligations under this Hallmark Inducement Agreement;

               (c) the execution, delivery, and performance of this Hallmark
Inducement Agreement will not constitute a violation by Hallmark of any
provision of Applicable Law or any order of any court or other agency of the
United States, or any state thereof applicable to Hallmark or any of its
properties or assets, or any provision of the Articles of Incorporation or
By-Laws of Hallmark, or any provision of any material agreement, indenture,
bond, note or other similar instrument to which Hallmark is a party or by which
Hallmark or its properties or assets is bound, and will not be in conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under or create any right to terminate any such agreement, indenture,
bond, note or other instruments;

               (d) after giving effect to the sale of the Library, neither
Hallmark nor its Subsidiaries (i) has any claim against the Borrower other than
general, unsecured claims, (ii) has

                                      -2-
<PAGE>   3

any security interest in the assets of the Borrower or any of its Subsidiaries,
or (iii) holds any right of reversion from the Borrower with regard to any
Purchased Asset (as that term is defined in the HEDC Purchase Agreement);

               (e) the execution, delivery and performance of this Hallmark
Inducement Agreement will not result in the creation or imposition of any Lien,
charge or encumbrance of any nature whatsoever upon any of the properties or
assets of Hallmark;

               (f) except for filings with the United Sates Copyright Office
which are expressly contemplated hereby, no authorizations, approvals,
registrations or filings with any governmental or public regulatory body or
authority of the United States, or any state thereof is required for the
execution, delivery and performance by Hallmark of this Hallmark Inducement
Agreement;

               (g) this Hallmark Inducement Agreement, when executed, will
constitute the legal, valid and binding obligation of Hallmark, enforceable in
accordance with its terms, subject, as to the enforcement of remedies, to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity;

               (h) there are no actions, suits or other proceedings at law or in
equity by or before any arbitrator, arbitration panel or any Governmental
Authority (including, but not limited to, matters relating to environmental
liability) or any investigation of the affairs of, or to the knowledge of
Hallmark threatened litigation action or other proceedings against or affecting,
Hallmark or of any of its properties or rights which could materially and
adversely affect its ability to perform its commitments hereunder and Hallmark
is not in default with respect to any order, writ, injunction, decree, rule or
regulation of any Governmental Authority binding upon it;

               (i) Hallmark is not in default in the performance, observance or
fulfillment of any of its obligations, covenants or conditions contained in any
agreement or instrument which would materially and adversely affect its ability
to perform its commitments hereunder; and

               (j) this Hallmark Inducement Agreement does not, at the time
furnished or delivered, contain any untrue statement of a material fact or omit
to state a material fact, under the circumstances under which it was made,
necessary in order to make the statements contained herein or therein not
misleading (considered in the context of all other information provided to the
Agent).

               SECTION 3. Covenants of Hallmark. Hallmark hereby covenants and
agrees that it will:

               (a) do or cause to be done all things necessary to (x) preserve,
renew and keep in full force and effect its corporate existence, rights,
licenses, permits and franchises required to conduct its business and (y) comply
in all material respects with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, any Governmental Authority;

               (b) promptly upon obtaining knowledge of (i) any Inducement
Default, (ii) any material adverse change in its condition or operations,
financial or otherwise, (iii) any action

                                      -3-
<PAGE>   4

or event which might materially and adversely affect the performance of its
obligations hereunder, give written notice thereof to the Agent specifying the
nature and period of existence of any such condition or event and what action
it, as applicable, has taken, is taking and proposes to take with respect
thereto;

               (c) promptly upon obtaining knowledge of (i) the institution of,
or threat of, any action, suit, proceeding, investigation or arbitration by any
Governmental Authority or other Person against it, or (ii) any material
development in any such action, suit, proceeding, investigation or arbitration
(whether or not previously disclosed to the Agent), which, in either case (1)
would, if adversely determined, reasonably be expected to have a materially
adverse effect on the performance of Hallmark's obligations hereunder or on the
title to the Library being transferred pursuant to the HEDC Purchase Agreement
or (2) seeks to enjoin or otherwise prevent it from performing its obligations
hereunder, give written notice thereof to the Agent and provide such other
information as may be available to it (without waiver of any applicable
evidentiary privilege) to enable the Agent to evaluate such matters and,
additionally upon request promptly give notice of the status thereof; and

               (d) do or cause to be done all things necessary to register
HEDC's copyright interest in all titles in the Library with the United States
Copyright Office.

               SECTION 4. Clarifications of HEDC Purchase Agreement. Hallmark
confirms that, as provided for under the HEDC Purchase Agreement:

               (a) the Pre-2001 License Agreements (as such term is defined in
the HEDC Purchase Agreement) do not include any extensions or renewals thereof
and at such time as the current term of each such agreement has terminated in
accordance with its terms, to the extent that HEDC has any residual rights in
the rights licensed thereunder, such rights shall revert, without encumbrances,
other than those permitted under the HEDC Purchase Agreement (as modified
hereby), directly to the Borrower;

               (b) all rights and obligations with respect to all sale and
leaseback transactions shall remain with HEDC, including the right to repurchase
all materials and rights in all titles subject to such sale and leaseback
transactions at the end of each respective lease term, and HEDC shall exercise
such repurchase rights in accordance with the terms of each such transaction at
its or Hallmark's expense and deliver the title to all such titles to the
Borrower without encumbrances other than those in favor of guilds for residuals;
and

               (c) included within the rights being transferred by HEDC to the
Borrower with regard to the Library are all claims against third parties that
Hallmark or any of its Subsidiaries has, including but not limited to,
representations and warranties to title, infringement, etc., but shall not
include rights relating to the Pre-2001 License Agreements.

               SECTION 5. Commitments of Hallmark. In addition to any other
agreement, commitment or undertaking of Hallmark set forth herein, Hallmark
commits that it shall:

               (a) ensure that HEDC shall not exercise its option under Section
10.2 of the HEDC Purchase Agreement to satisfy any portion of its liability for
the breach of representations and warranties thereunder by surrendering shares
of its Class A Stock to the Borrower;

                                      -4-
<PAGE>   5

               (b) for a period of 24 months following the Closing Date,
indemnify the Lenders for any financial loss that the Borrower may suffer as a
direct result of defects in the rights transferred to the Borrower in and to any
of the titles in the Library (the "Library Loss"). Such loss shall be determined
by the value, as set forth on the valuation of the Library delivered to the
Agent pursuant to Section 4.1 of the Credit Agreement, of the rights granted in
any titles that are part of the Library which rights Crown Media is unable to
sell, license or otherwise transfer to third parties as a result of such defect
in ownership. Hallmark may satisfy such indemnity obligation by: (i) purchasing
pro rata from the Lenders a subordinated participation in the outstanding Loans
under the Credit Agreement in an amount equal to the amount of the Library Loss
or (ii) to the extent (x) there are no Loans outstanding, (y) the Library Loss
is greater than the amount of Loans outstanding or (z) the Borrower otherwise
elects, providing a loan to the Borrower in an amount equal to the amount of the
Library Loss (or, if applicable, such lesser amount that represents the
difference in the amount of Loans the Guarantor has purchased pursuant to clause
(i) hereof and the Library Loss) which loan shall be subordinated to the claims
of the Agent, the Issuing Bank and the Lenders on terms substantially similar to
those set forth in the HCC Promissory Note;

               (c) for a period of 24 months following the Closing Date, take
(or cause the Borrower and/or the Borrower's Subsidiaries to take) any and all
such actions as may be reasonably necessary or appropriate (or as may be
reasonably requested by the Agent) (i) to clarify the chain of title for any of
the titles in the Library so as to ensure that the Borrower (and/or its
Subsidiaries) may realize the economic value therein which is intended to be
conveyed pursuant to the HEDC Purchase Agreement, including (without limitation)
by duly recording in the United States Copyright Office, in the name of HEDC,
ownership of rights in and to each item of Product included in the Library and
(ii) to release (and/or cause to be released) any Liens relating to any item of
Product included in the Library which were granted to secure production
financings or any other Indebtedness (except such Liens relating to tax benefit
transactions where the continuing obligations of the Borrower (or its
Subsidiaries) have been guaranteed by Hallmark Cards, Incorporated) and
terminate (or cause to be terminated) any related Uniform Commercial Code
financing statements and copyright security interest filings.

               (d) indemnify the Borrower for any and all claims the guilds may
bring against the Borrower for non-payment of residuals relating to all Pre-2001
License Agreements and with regard to any other revenue realized by HEDC or any
of its affiliates other than the Borrower prior to the sale of the Library and
acknowledges that (i) HEDC's obligation to pay the residuals relating to the
Pre-2001 License Agreements and any other revenue realized by HEDC or any of its
affiliates other than the Borrower prior to the sale of the Library is not part
of the Assumed Liabilities (as such term is defined in the HEDC Purchase
Agreement) and (ii) notwithstanding any assumption agreements signed by the
Borrower in favor of the guilds, such obligations have been retained by Hallmark
or HEDC provided, however, that this provision is not intended to limit
Hallmark's contractual obligations to the Borrower regarding payment of guild
residuals as set forth in the Service Agreement; and

               (e) ensure, consistent with the intent of the HEDC License
Agreements, that all Product produced by or for Hallmark or any of its
Subsidiaries (other than Product developed for theatrical release, or Product
produced and broadcast in connection with the Hallmark Hall of Fame trademark)
will be made available to the Borrower consistent with the terms of the HEDC

                                      -5-
<PAGE>   6

License Agreements, and Hallmark shall be liable to the Borrower for any damages
suffered as a result of the lack of availability of Product.

               SECTION 6. Subrogation. Hallmark agrees that no payment or
distribution to the Agent pursuant to the provisions of this Hallmark Inducement
Agreement shall entitle Hallmark to exercise any rights of subrogation in
respect thereof until the Obligations shall have been indefeasibly paid in full
in cash and the Total Commitment shall have been terminated.

               SECTION 7. Indemnity by Hallmark. In addition to any other
indemnification obligations of Hallmark set forth herein, Hallmark agrees to
indemnify and hold harmless the Agent and the Lenders to the fullest extent
permitted by applicable law for any and all losses suffered by the Agent and the
Lenders because of a breach or breaches of any of the representations or
warranties made by Hallmark under this Hallmark Inducement Agreement.

               SECTION 8. Obligations Absolute.

               (a) The obligations of Hallmark under this Hallmark Inducement
Agreement are direct, absolute and unconditional and shall not be affected or
impaired in any way by reason of (i) the lack of (or the extent of) prior
enforcement by the Agent or the Lenders or any other Person or (ii) any
modification, limitation or discharge of any obligation arising out of or by
virtue of any bankruptcy, arrangement, reorganization or similar proceeding for
relief of debtors under federal or state law hereinafter initiated by or against
the Borrower or any of its Subsidiaries.

               (b) The obligations of Hallmark hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason (other than
payment or satisfaction), including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense (other than payment or satisfaction, or a defense based on the statute
of limitations) or set-off, counterclaim, recoupment or termination whatsoever,
by reason of the invalidity, illegality or unenforceability of the Obligations
or otherwise. Without limiting the generality of the foregoing, the obligations
of Hallmark hereunder shall not be discharged or impaired or otherwise affected
by the failure of the Borrower or the Agent to assert any claim or demand or to
enforce any remedy hereunder or under the Credit Agreement, any other
Fundamental Document or any other agreement, by any waiver or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of Hallmark or would otherwise operate as
a discharge of Hallmark as a matter of law.

               (c) The obligations of Hallmark hereunder shall not be affected
by (i) any extension or renewal of any provision hereof or of any other
Fundamental Document or any other agreement; (ii) any rescission, waiver,
compromise, acceleration, amendment or modification of any of the terms or
provisions of the Credit Agreement, any other Fundamental Document or any other
agreement; or (iii) the release, exchange, waiver or foreclosure of any security
held by the Agent or any Lender for the Obligations or any of them.

                                      -6-
<PAGE>   7

               (d) The obligations of Hallmark hereunder shall not be affected
by any lack of due execution, validity or enforceability of the Obligations, the
Credit Agreement, any other Fundamental Document or any instrument or document
evidencing any of the Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
circumstance relating to any of the Obligations (other than payment or
satisfaction) which might otherwise constitute a defense to Hallmark's
obligations hereunder. Neither the Agent nor any Lender makes any representation
or warranty in respect to any such circumstances or has any duty or
responsibility whatsoever to Hallmark in respect to the management and
maintenance of the Obligations or any collateral securing any of the
Obligations.

               (e) Hallmark further agrees that its obligations hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by the Agent, the Issuing Bank or any Lender upon the bankruptcy or
other reorganization of the Borrower, Hallmark or any other person or entity.

               SECTION 9. Remedies Not Exclusive. The remedies conferred upon or
reserved to the Agent in this Hallmark Inducement Agreement are intended to be
in addition to, and not in limitation of, any other remedy or remedies available
to the Agent.

               SECTION 10. Termination. The obligations of Hallmark under this
Hallmark Inducement Agreement shall terminate when the Obligations have been
indefeasibly paid in full and the Total Commitment shall have terminated.

               SECTION 11. Further Assurances. Hallmark agrees that it will,
from time to time on request of the Agent, duly execute and deliver, or cause to
be duly executed and delivered, at the cost and expense of Hallmark, such
further instruments as may be required in the reasonable judgment of the Agent
to carry out the provisions and purposes of this Hallmark Inducement Agreement.

               SECTION 12. Notice. Notices or other communication herein
required or permitted to be given shall be in writing and may be personally
served, sent by facsimile, certified or registered mail and shall be deemed to
have been given when delivered in person, upon receipt of facsimile or five
Business Days after deposit in the mail, registered or certified return receipt
requested, with postage prepaid and properly addressed. All notices under this
Hallmark Inducement Agreement shall be in accordance with and at the address or
facsimile number set forth below their respective names on the signature pages
of this Hallmark Inducement Agreement.

               SECTION 13. Non-Waiver of Rights and Remedies. No delay or
failure on the part of the Agent in the exercise of any right or remedy shall
operate as a waiver thereof, no single or partial exercise by the Agent of any
right or remedy shall preclude other or further exercise thereof or the exercise
of any other right or remedy and no course of dealing between the parties shall
operate as a waiver of any right or remedy of the Agent.

                                      -7-
<PAGE>   8

               SECTION 14. Governing Law. This Hallmark Inducement Agreement
shall be governed by, and construed and enforced in accordance with, the laws of
the State of New York applicable to contracts to be fully performed within the
State of New York.

               SECTION 15. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, HALLMARK HEREBY WAIVES, AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS HALLMARK INDUCEMENT
AGREEMENT OR THE SUBJECT MATTER HEREOF OR ANY OTHER FUNDAMENTAL DOCUMENT, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR
TORT OR OTHERWISE. HALLMARK ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE AGENT
THAT THE PROVISIONS OF THIS SECTION 15 CONSTITUTE A MATERIAL INDUCEMENT UPON
WHICH THE AGENT HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS
HALLMARK INDUCEMENT AGREEMENT AND ANY OTHER FUNDAMENTAL DOCUMENT. THE AGENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF HALLMARK TO THE WAIVER OF ITS RIGHTS TO TRIAL BY
JURY.

               SECTION 16. Severability. This Hallmark Inducement Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Hallmark Inducement Agreement shall
be prohibited by or invalidated under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Hallmark Inducement Agreement and the parties hereto agree to negotiate in good
faith a provision to replace the ineffective provision, such provision to be as
similar in effect and intent as the ineffective provision as permissible.

               SECTION 17. No Third Party Beneficiaries This Hallmark Inducement
Agreement is entered into solely for the benefit of the Agent and there shall be
no third party beneficiaries hereof, including but not limited to, the Borrower.

               SECTION 18. Amendments. This Hallmark Inducement Agreement may
not be amended except by a writing signed by the parties hereto.

               SECTION 19. Successors and Assigns. The rights and privileges of
the Agent hereunder shall inure to the benefits of its successors and assigns,
and the obligations of Hallmark shall be binding on Hallmark's successors and
assigns.

               SECTION 20. Counterparts. This Hallmark Inducement Agreement may
be executed simultaneously in any number of counterparts, all of which taken
together will constitute one agreement. Any party hereto may execute this
Hallmark Inducement Agreement by signing any such counterpart.

                                      -8-
<PAGE>   9

               IN WITNESS WHEREOF, Hallmark and the Agent have caused this
Hallmark Inducement Agreement to be duly executed as of the date and year first
above written.

                                       HALLMARK ENTERTAINMENT, INC.

                                       By:   /s/ Judith Whittaker
                                             ----------------------------------
                                       Name:
                                       Title:
                                       Address:

                                       With a copy of all notices to:

                                                  Address:

<PAGE>   10

                                       THE CHASE MANHATTAN BANK, AS AGENT

                                       By:  /s/ Garret J. Verdone
                                            -----------------------------------
                                       Name: Garret J. Verdone
                                       Title: Senior Vice President
                                       Address:  270 Park Avenue
                                                 New York, New York  10017
                                                 Attention: Joan Fitzgibbon
                                                 Facsimile: 212-270-4584

                                       With a copy of all notices to:

                                       Address:  JP Morgan Securities Inc.
                                                 1800 Century Park East
                                                 Los Angeles, California 90067
                                                 Attention:  Clark Hallren
                                                 Facsimile:  310-788-5628

<PAGE>   11

                                                                SCHEDULE 2(h)

                  Signature Pages to Hallmark Inducement Agreement for Insomnia

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