Document:

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                                                                    EXHIBIT 10.4

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                           CROWN MEDIA HOLDINGS, INC.

                                       AND

                            THE HOLDERS NAMED HEREIN

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                  CONTINGENT APPRECIATION CERTIFICATE AGREEMENT

                          Dated as of December 17, 2001

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                                TABLE OF CONTENTS

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ARTICLE I.              DEFINITIONS............................................1

         SECTION 1.01.     Definitions of Terms................................1

ARTICLE II.             EXERCISE OF CERTIFICATE...............................16

         SECTION 2.01.     Exercise...........................................16

         SECTION 2.02.     Manner of Exercise.................................17

         SECTION 2.03.     Material Transaction Announcement..................20

         SECTION 2.04.     Payment of Taxes...................................20

         SECTION 2.05.     Fractional Shares..................................20

         SECTION 2.06.     Continued Validity.................................21

ARTICLE III.            TRANSFER, DIVISION AND COMBINATION....................21

         SECTION 3.01.     Transfer...........................................21

         SECTION 3.02.     Division and Combination...........................21

         SECTION 3.03.     Expenses...........................................22

         SECTION 3.04.     Maintenance of Books...............................22

ARTICLE IV.             ADJUSTMENT OF INDEX PRICE AND INDEX AMOUNT............22

         SECTION 4.01.     General............................................22

         SECTION 4.02.     Adjustment for Change in Capital Stock.............22

         SECTION 4.03.     Adjustment for Rights Issue........................23

         SECTION 4.04.     Adjustment for Other Distributions.................24

         SECTION 4.05.     Adjustment for Class A Common Stock Issue..........24

         SECTION 4.06.     Adjustment for Convertible Securities Issue........26

         SECTION 4.07.     Consideration Received.............................27

         SECTION 4.08.     Fair Value.........................................28

         SECTION 4.09.     When De Minimis Adjustment May Be Deferred.........28

         SECTION 4.10.     When No Adjustment Required........................28

         SECTION 4.11.     Notice of Adjustment...............................29

         SECTION 4.12.     When Issuance or Payment May Be Deferred...........29

         SECTION 4.13.     Adjustment in Index Amount.........................29

ARTICLE V.              NOTICE OF CERTAIN EVENTS..............................30

         SECTION 5.01.     Notice Events......................................30
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                                TABLE OF CONTENTS
                                   (CONTINUED)

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ARTICLE VI.           NO IMPAIRMENT................................................31

ARTICLE VII.          RESERVATION AND AUTHORIZATION OF CLASS A
                      COMMON STOCK; REGISTRATION WITH OR
                      APPROVAL OF ANY GOVERNMENTAL AUTHORITY.......................31

ARTICLE VIII.         TAKING OF RECORD; STOCK AND CERTIFICATE TRANSFER BOOKS.......32

ARTICLE IX.           RESTRICTIONS ON TRANSFERABILITY..............................32

         SECTION 9.03.     Restrictive Legend......................................33

         SECTION 9.04.     Permitted Transfers.....................................33

         SECTION 9.05.     Termination of Restrictions.............................34

ARTICLE X.            REGISTRATION RIGHTS..........................................34

         SECTION 10.01.    Required Registration...................................34

         SECTION 10.02.    Demand Registration.....................................35

         SECTION 10.03.    Piggy-back Registration.................................38

         SECTION 10.04.    Registration Procedures.................................39

         SECTION 10.05.    Allocation of Expenses..................................41

         SECTION 10.06.    Indemnification.........................................42

         SECTION 10.07.    Indemnification with Respect to Underwritten Offering...44

         SECTION 10.08.    Information by Holder...................................44

ARTICLE XI.           SUPPLYING INFORMATION........................................44

         SECTION 11.01.    Information by Company..................................44

         SECTION 11.02.    Reports by the Company..................................45

ARTICLE XII.          SUBORDINATION................................................45

         SECTION 12.01.    Agreement to Subordinate................................45

         SECTION 12.02.    Default on Senior Indebtedness..........................46

         SECTION 12.03.    Liquidation; Dissolution; Bankruptcy....................46

         SECTION 12.04.    Subrogation.............................................48

         SECTION 12.05.    Company to Effectuate Subordination.....................49

         SECTION 12.06.    Subordination May Not Be Impaired.......................49

ARTICLE XIII.         LOSS OR MUTILATION...........................................49

ARTICLE XIV.          OFFICE OF THE COMPANY........................................50
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                                TABLE OF CONTENTS
                                   (continued)

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ARTICLE XV.           LIMITATION OF LIABILITY.................................50

ARTICLE XVI.          MISCELLANEOUS...........................................50

         SECTION 16.01.    Nonwaiver and Expenses.............................50

         SECTION 16.02.    Notice Generally...................................50

         SECTION 16.03.    Indemnification....................................51

         SECTION 16.04.    Remedies...........................................52

         SECTION 16.05.    Undertaking to Pay Costs...........................52

         SECTION 16.06.    Successors and Assigns.............................53

         SECTION 16.07.    Amendment..........................................53

         SECTION 16.08.    Severability.......................................53

         SECTION 16.09.    Headings...........................................54

         SECTION 16.10.    Treatment of Units.................................54

         SECTION 16.11.    Governing Law......................................54

         SECTION 16.12.    Certain Securities Owned by Company Disregarded....54
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<PAGE>
                  CONTINGENT APPRECIATION CERTIFICATE AGREEMENT

                  CONTINGENT APPRECIATION CERTIFICATE AGREEMENT (this
"Agreement"), dated as of December 17, 2001, among Crown Media Holdings, Inc., a
Delaware corporation, and the Holders party hereto:

                  WHEREAS, the Company (as defined herein) has duly authorized
the execution and delivery of this Agreement to provide for the issuance of the
Certificates (as defined herein) entitling the Holder thereof to either the
right to receive a cash payment in the amount of the Minimum Return Amount (as
defined herein) or the right to purchase shares of Class A Common Stock (as
defined herein) of the Company, in each case on the terms and conditions set
forth in this Agreement;

                  WHEREAS, the Debentures (as defined herein) are issued under
the Indenture (as defined herein) and evidence loans made to the Company from
the proceeds from the issuance by Crown Media Trust, a Delaware statutory
business trust (the "Trust"), of the Preferred Securities (as defined herein)
and the Common Securities (as defined herein) of the Trust;

                  WHEREAS, the Certificates are to be issued together with the
Trust Securities of the Trust as units (the "Units"), each Unit being comprised
of one Trust Security and one Certificate (the Units, Trust Securities and
Certificates being referred to herein as the "Unit Securities"); and

                  WHEREAS, the Trust is subject to the Amended and Restated
Declaration of Trust, dated as of December 17, 2001, among the Company, as
Sponsor, the Trust and the trustees named therein (the "Declaration"), which
Declaration sets forth the terms and conditions of the Trust Securities (as
defined herein);

                  NOW, THEREFORE, in consideration of the premises and the
purchase of the Certificates by the Investors, it is mutually covenanted and
agreed as follows for the equal and ratable benefit of the holders of the
Certificates:

                                   ARTICLE I.

                                   DEFINITIONS

                  SECTION 1.01. Definitions of Terms.

                  The terms defined in this Section (except as in this Agreement
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Agreement shall have the respective meanings specified in this
Section and shall include the plural as well as the singular. Any reference to a
party hereto shall include the successors and permitted assigns of such party.

                  "Administrative Agent" means JPMorgan Chase Bank, and any
successor, as administrative agent under the Credit, Security, Guaranty, and
Pledge Agreement,

                                       1
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dated as of August 31, 2001, by and among, the Company, certain of its
Subsidiaries, the lenders referred to therein, JPMorgan Chase Bank (formerly
known as The Chase Manhattan Bank), as Arranger and Sole Bookrunner, Bank of
America, N.A., as Arranger and Syndication Agent, Citicorp USA, Inc. and
Deutsche Bank AG New York Branch, as Co-Arrangers and Documentation Agents,
together with the related documents thereto (including the term loans and
revolving loans thereunder, any guarantees and security documents), as amended.

                  "Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.

                  "Affiliation Agreement" means an agreement or series of
related agreements entered into by the Company or any of its subsidiaries in the
ordinary course of its business with a pay television or satellite television
provider in connection with the licensing and/or distribution of pay television
or satellite television programming.

                  "Agreement" has the meaning set forth in the recitals to this
Agreement.

                  "Applicable Securities" means, in relation to a Registration
Statement, the Certificate Shares identified in the related Demand Notice or
Piggy-back Notice.

                  "Bankruptcy Event" means (a) Hallmark Cards or the Company
pursuant to or within the meaning of any Bankruptcy Law (i) commences a
voluntary case, (ii) consents to the entry of an order for relief against it in
an involuntary case, (iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property or (iv) makes a general assignment
for the benefit of its creditors; (b) a court of competent jurisdiction enters
an order under any Bankruptcy Law that (i) is for relief against Hallmark Cards
or the Company in an involuntary case, (ii) appoints a Custodian of Hallmark
Cards or the Company or for all or substantially all of their respective
property, or (iii) orders the liquidation of Hallmark Cards or the Company, and
the order or decree remains unstayed and in effect for 90 days; or (c) Hallmark
Cards or the Company shall have, voluntarily or involuntarily, liquidated,
dissolved, wound-up its business or otherwise terminated its existence other
than in connection with a merger, consolidation or other business combination in
which the surviving entity continues to conduct the business of Hallmark Cards
or the Company, as the case may be.

                  "Bankruptcy Law" means Title 11, U.S. Code, or any successor
or similar federal or state law for the relief of debtors.

                  "Board of Directors" means the Board of Directors of the
Company or any duly authorized committee thereof acting within the scope of such
authorization.

                  "Business Day" means any day other than a day on which Federal
and State banking institutions in The Borough of Manhattan, the City of New York
are authorized or obligated by law, executive order or regulation to close.

                  "Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of, or interests in

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(however designated), equity of such Person, including any Preferred Stock but
excluding debt securities convertible into such equity.

                  "Cash Exercise" has the meaning set forth in Section 2.01(a)
hereof.

                  "Cashless Exercise" has the meaning set forth in Section
2.01(b) hereof.

                  "Certificate Amount" means the number of Certificates held by
each Investor as set forth on the signature pages hereof.

                  "Certificate Shares" means the shares of Class A Common Stock
purchased by the holders of the Certificates upon a Shares Exercise.

                  "Certificate Shares Price" means an amount equal to (i) the
number of shares of Class A Common Stock being purchased upon exercise of
Certificates, pursuant to Section 2.01 hereof, multiplied by (ii) the Index
Price.

                  "Certificates" means the Certificates issued pursuant to this
Agreement in the form attached as Exhibit A hereto, and all Certificates issued
upon transfer, division or combination of, or in substitution for, any thereof.
All Certificates shall at all times be identical as to terms and conditions and
date. All references to "Certificates represented by this Agreement" and similar
phrases in connection with Holders shall mean Certificates held of record by
such Holders.

                  "Change of Control" means the occurrence of any of the
following:

                                       3
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                           (i) the Permitted Holders cease to be the "beneficial
                  owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
                  Act, except that for purposes of this clause (i) the Permitted
                  Holders shall be deemed to have "beneficial ownership" of (A)
                  all shares that any such Permitted Holder has the right to
                  acquire, whether such right is exercisable immediately or only
                  after the passage of time and (B) any Voting Stock of the
                  Company held by any other Person (the "parent entity") so long
                  as the Permitted Holders beneficially own (as so defined),
                  directly or indirectly, in the aggregate a majority of the
                  voting power of the Voting Stock of the parent entity),
                  directly or indirectly, of a majority in the aggregate of the
                  total voting power of the Voting Stock of the Company, whether
                  as a result of issuance of securities of the Company,
                  conversion of shares of Class B Common Stock of the Company,
                  any merger, consolidation, liquidation or dissolution of the
                  Company, or any direct or indirect transfer of securities by
                  the Company or otherwise; provided however, that any shares
                  underlying any option or other agreement to reacquire economic
                  or voting control of shares of Capital Stock of the Company
                  entered into by a Permitted Holder in connection with the
                  sale, transfer or other disposition by such Permitted Holder
                  shall not constitute shares beneficially owned by such
                  Permitted Holder;

                           (ii) any Person or group other than a Permitted
                  Holder becomes the "beneficial owner" (as defined in Rules
                  13d-3 and 13d-5 under the Exchange Act, except that for
                  purposes of this clause (ii) such Person or group shall be
                  deemed to have "beneficial ownership" of (A) all shares that
                  any such Person or group has the right to acquire, whether
                  such right is exercisable immediately or only after the
                  passage of time and (B) any Voting Stock of the Company held
                  by any parent entity so long as the Person or group
                  beneficially owns (as so defined), directly or indirectly, in
                  the aggregate a majority of the voting power of the Voting
                  Stock of the parent entity), directly or indirectly, in the
                  aggregate of a majority of the total voting power of the
                  Voting Stock of the Company, whether as a result of issuance
                  of securities of the Company, conversion of shares of Class B
                  Common Stock of the Company, any merger, consolidation,
                  liquidation or dissolution of the Company, or any direct or
                  indirect transfer of securities by the Company or otherwise;
                  provided however, that any shares underlying any option or
                  other agreement to reacquire economic or voting control of
                  shares of Capital Stock of the Company entered into by such
                  Person in connection with the sale, transfer or other
                  disposition by such Person shall not constitute shares
                  beneficially owned by such Person;

                           (iii) individuals who on the Issue Date constituted
                  the Board of Directors (together with any new directors whose
                  election by such Board of Directors or whose nomination for
                  election by the stockholders of the Company was approved by a
                  vote of at least 66-2/3% of the Board of Directors then still
                  in office who were either directors on the Issue Date or whose
                  election or nomination for election was previously so
                  approved) cease for any reason to constitute a majority of the
                  Board of Directors then in office;

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                           (iv) the consummation by the Company of any
                  transaction that would constitute a "Rule 13e-3 transaction"
                  as defined in the Exchange Act; or

                           (v) the sale of all or substantially all the assets
                  of the Company (determined on a consolidated basis) to another
                  Person, other than a transaction following which the
                  transferee Person becomes a Subsidiary of the transferor of
                  such assets and such Subsidiary fully and unconditionally
                  guarantees the Company's obligations under the Debentures and
                  the Certificates.

                  "Change of Control Offer" means an offer by the Company to
purchase any and all Debentures following the occurrence of a Change of Control,
as provided in Section 3.02(b) of the Indenture.

                  "Change of Control Redemption" means a redemption by the
Company of the Debentures following the occurrence of a Change of Control, as
provided in Section 3.02(a) of the Indenture.

                  "Class A Common Stock" means (except where the context
otherwise indicates) the Class A Common Stock, par value $0.01 per share, of the
Company issued and outstanding on the Issue Date, and any capital stock into
which such Class A Common Stock may thereafter be changed, and shall also
include (i) capital stock of the Company of any other class (regardless of how
denominated) issued to the holders of shares of Class A Common Stock upon any
reclassification thereof which is also not preferred as to dividends or assets
over any other class of stock of the Company and which is not subject to
redemption and (ii) shares of Class A Common Stock of any successor or acquiring
corporation received by or distributed to the holders of Class A Common Stock of
the Company in the circumstances contemplated by Article V hereof.

                  "Class B Common Stock" means Class B Common Stock of the
Company, per value $0.01 per share, and any Capital Stock of the Company into
which such Class B Common Stock may thereafter be changed.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Commission" means the U.S. Securities and Exchange Commission
or, in the absence of the U.S. Securities and Exchange Commission, such other
federal agency then administering the Securities Act and other federal
securities laws.

                  "Common Securities" means that class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in the Declaration.

                                       5
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                  "Company" means Crown Media Holdings, Inc., a corporation duly
organized and existing under the laws of the State of Delaware and its
successors and assigns.

                  "Company Common Stock" means the Class A Common Stock and
Class B Common Stock.

                  "Company Notice" has the meaning set forth in Section 2.01(c)
hereof.

                  "controlling person" has the meaning set forth in Section
10.06 hereof.

                  "Current Market Price" means, in respect of the Class A Common
Stock on the date of determination, the weighted average, based on volume of
trading, of the daily market prices on each Trading Day during the period
specified. The daily market price for each such Trading Day shall be the average
of the high and low sales prices on such day on the principal stock exchange or
NASDAQ on which such Class A Common Stock is then listed or admitted to trading.

                  "Debentures" means the 6.75% Subordinated Debentures due 2007
of the Company issued pursuant to the Indenture.

                  "Declaration" has the meaning set forth in the recitals to
this Agreement.

                  "Demand" has the meaning set forth in Section 10.02(a) hereof.

                  "Demand Notice" has the meaning set forth in Section 10.02(a)
hereof.

                  "Demanding Holder" has the meaning set forth in Section
10.02(a).

                  "Disinterested Director" means, in connection with any
issuance of securities that gives rise to a determination of the Fair Value
thereof, each member of the Board of Directors who is not an officer, employee,
director or other Affiliate of the party to whom the Company is proposing to
issue the securities giving rise to such determination.

                  "Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder) or
upon the happening of any event:

                  (i)      matures or is mandatorily redeemable pursuant to a
                           sinking fund obligation or otherwise;

                  (ii)     is convertible or exchangeable at the option of the
                           holder for Indebtedness or Disqualified Stock; or

                  (iii)    is mandatorily redeemable or must be purchased upon
                           the occurrence of certain events or otherwise, in
                           whole or in part;

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<PAGE>

in each case on or prior to the first anniversary of the maturity of the
Debentures; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the maturity of the Debentures shall not constitute
Disqualified Stock if:

                  (i) the "change of control" provisions applicable to such
Capital Stock are not more favorable to the holders of such Capital Stock than
the terms applicable to the Debentures under this Indenture or otherwise; and

                  (ii) any such requirement only becomes operative after
compliance in full with such terms applicable to the Certificates, including the
purchase of any Certificates tendered pursuant thereto.

                  "Effective Time" means the date on which the Commission
declares a Registration Statement effective or on which a Registration Statement
otherwise becomes effective.

                  "Effectiveness Period" means as to a Registration Statement
the period during which such Registration Statement is effective.

                  "Election" means, with respect to a Registration, that the
Holder has delivered a completed and signed Notice and Questionnaire to the
Company in accordance with the provisions hereof and provided such other
information with respect to such Holder and its Applicable Securities as may be
required by the Company to enable such Holder to use the related Prospectus in
connection with sales of such Applicable Securities.

                  "Election Deadline" means December 15, 2007.

                  "Election Notice" has the meaning set forth in Section 2.02(a)
hereof.

                  "Event of Default" means any event specified in Section 6.01
of the Indenture, continued for the period of time, if any, therein designated.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

                  "Exercise Notice" has the meaning set forth in Section 2.02(a)
hereof.

                  "Exercise Period" has the meaning set forth in Section 2.02(a)
hereof.

                  "Expiration Date" means March 15, 2008.

                  "Fair Value" has the meaning set forth in Section 4.8 hereof.

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<PAGE>

                  "Fully Diluted Outstanding" means, when used with reference to
Capital Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Capital Stock Outstanding at such date and shares of
Capital Stock underlying other options, warrants or Certificates to purchase, or
securities convertible into, shares of such Capital Stock outstanding on such
date which would be deemed outstanding in accordance with GAAP for purposes of
determining book value or diluted net income per share.

                  "GAAP" means generally accepted accounting principles, as in
effect in the United States on the Issue Date.

                  "Hallmark Cards" means Hallmark Cards, Incorporated, a
Missouri corporation, and its successors and assigns.

                  "herein", "hereof" and "hereunder", and other words of similar
import, refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.

                  "Holder" means a Person in whose name or names the Certificate
or any Certificate Shares, as applicable, shall be registered on the books of
the Company kept for that purpose in accordance with the terms of this
Agreement.

                  "Indebtedness" means, with respect to any Person on any date
of determination (without duplication):

                  (a) indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
price of property or services purchased (other than amounts constituting trade
payables (payable within 90 days) arising in the ordinary course of business);

                  (b) obligations of such Person in respect of letters of
credit, acceptance facilities, or drafts or similar instruments issued or
accepted by banks and other financial institutions for the account of such
Person;

                  (c) obligations of such Person under any obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the stated maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty;

                  (d) deferred payment obligations of such Person resulting from
the adjudication or settlement of any litigation;

                  (e) obligations of such Person under synthetic leases or
financing leases (but not operating leases);

                                       8
<PAGE>

                  (f) obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock of such Person, or with
respect to any preferred stock of any Subsidiary of such Person, the principal
amount of such preferred stock to be determined in accordance with this
Agreement (but excluding, in each case, any accrued dividends);

                  (g) to the extent not otherwise included in this definition,
hedging obligations of such Person pursuant to any interest rate swap agreement,
interest rate cap agreement or other financial agreement or arrangement designed
to protect such Person against fluctuations in interest rates or foreign
exchange contract, or any currency swap agreement or other similar agreement
designed to protect such Person against fluctuations in currency values, in each
case entered into in the ordinary course of business for bona fide hedging
purposes and not for the purpose of speculation;

                  (h) obligations under the Debentures and Certificates; and

                  (i) indebtedness of others of the type described in clauses
(a) through (h) above which such Person has (i) directly or indirectly assumed
or guaranteed in connection with a guarantee or (ii) secured by a lien on the
assets of such Person, whether or not such Person has assumed such indebtedness
(provided, that if such Person has not assumed such indebtedness of another
Person then the amount of indebtedness of such Person pursuant to this clause
(i) for purposes of this Agreement shall be equal to the lesser of the amount of
the indebtedness of the other Person and the fair market value of the assets of
such Person which secure such other indebtedness).

Notwithstanding the foregoing, in connection with the purchase by the Company or
any Subsidiary of any business, the term "Indebtedness" shall exclude
post-closing payment adjustments to which the seller may become entitled to the
extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; provided,
however, that, at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 30 days thereafter.

                  The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date.

                  "Indemnified Party" has the meaning set forth in Section 10.06
hereof.

                  "Indemnifying Party" has the meaning set forth in Section
10.06 hereof.

                  "Indenture" means that certain Indenture, dated as of the
Issue Date, among the Company and JPMorgan Chase Bank, as Indenture Trustee, as
such instrument may from time to time be supplemented or amended.

                  "Indenture Trustee" means JPMorgan Chase Bank and, subject to
the provisions of Article VII of the Indenture, shall also include its
successors and assigns,

                                       9
<PAGE>

and, if at any time there is more than one Person acting in such capacity
hereunder, "Indenture Trustee" shall mean each such Person.

                  "Index Amount" means the number of Certificate Shares issuable
upon exercise of a Certificate, which shall initially be 38.261 shares per
Certificate, subject to adjustment as provided herein, as set forth on the face
of any Certificate.

                  "Index Price" means that price per Certificate Share initially
equal to $13.07 (120% of the weighted average, based on volume of trading, of
the average of the daily high and low market prices on each Trading Day for the
thirty Trading Days ending November 30, 2001), subject to adjustment as provided
herein.

                  "Intended Offering Notice" has the meaning set forth in
Section 10.03(a) hereof.

                  "Investment Company Act" means the Investment Company Act of
1940, as amended.

                  "Investment Company Event" means that the Regular Trustees
under the Declaration shall have received an opinion of a nationally recognized
independent counsel experienced in practice under the Investment Company Act
that, as a result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or
will be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the Issue Date.

                  "Issue Date" means December 17, 2001.

                  "Liquidation Event" means any voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Trust in connection
with which the Preferred Securities are redeemed or purchased in accordance with
the terms of the Declaration (or the Debentures are accelerated in accordance
with the Indenture).

                  "Majority Holders" means the Holders of Certificates
exercisable for more than 50% of the aggregate number of shares of Class A
Common Stock then purchasable upon exercise of all Certificates, whether or not
then exercisable.

                  "Mandatory Redemption" means redemption, in whole but not in
part, by the Trust of any and all of the Securities Outstanding on the Maturity
Date or as a result of acceleration of the Debentures upon the occurrence of an
Event of Default pursuant to Section 6.01 of the Indenture (or the maturity, by
acceleration or otherwise, of the Debentures following distribution thereof to
the Holders).

                  "Material Transaction Agreement" means an agreement relating
to a transaction or series of related transactions contemplating the acquisition
of a business or asset that is material to the Company and its subsidiaries,
taken as a whole, by the

                                       10
<PAGE>

Company or any of its subsidiaries, the merger of the Company or its successor
into another Person or any other transaction the consummation of which would
constitute a Change of Control.

                  "Maturity Date" means the date on which the Debentures mature
and on which the principal of such Debentures shall be due and payable together
with all accrued and unpaid interest thereon.

                  "Maximum Return Amount" means an amount equal to the fair
value of the Index Amount (determined as of the date of issuance of Certificate
Shares being issued upon a Shares Exercise) in excess of the aggregate Index
Price of such Certificate Shares, which together with all cash payments and
distributions that have been actually paid pursuant to the terms of the
corresponding Trust Security (or principal and interest paid on the
corresponding Debenture following a distribution of Debentures to the Holders)
comprising part of a Unit held by a Holder (but excluding any premium paid in
connection with a Change of Control Redemption, Change of Control Offer or
Optional Redemption pursuant to clause (ii) of the definition of Minimum Return
Amount or paragraph 4(d) of Exhibit A of the Declaration), provides an internal
rate of return with respect to the Unit equal to 25% (determined as of the date
of issuance of such Certificate Shares). For purposes of this definition, the
"fair value" of the Index Amount as of a specified date shall equal the product
of (i) the Current Market Price of the Class A Common Stock for the 20
consecutive Trading Days immediately preceding such date and (ii) the Index
Amount, subject to adjustment as provided herein. The Maximum Return Amount
shall be calculated in good faith by the Company, based on this definition or,
if contested in writing by Holders of more than 25% of the Certificates being
exercised, a nationally recognized investment banking, appraisal or valuation
firm, provided that the fees of such firm shall be borne, on the one hand by the
Company in proportion to the percentage of the amount in dispute determined by
such firm as owing to the Holders and on the other hand by the Holders in
proportion to the percentage of the amount in dispute determined by such firm as
not owing to the Holders.

                  "Minimum Return Amount" means (i) the amount (determined on
the date such amount is actually paid) which, when added to all cash payments
and distributions that have been actually paid pursuant to the terms of the
corresponding Trust Security (or principal and interest paid on the Debenture
following a distribution of Debentures to the Holders) comprising part of a Unit
held by a Holder (but excluding any premium paid in connection with a Change of
Control Redemption, Change of Control Offer or Optional Redemption pursuant to
clause (ii) below or paragraph 4(d) of Exhibit A to the Declaration), yields an
internal rate of return with respect to the Unit of the following, depending
upon the date of the Purchase Event or Liquidation Event, as applicable:

<Table>
<S>                                                                <C>
                Prior to December 15, 2004                         14.0%
                December 15, 2004 to December 14, 2005             15.0%
                December 15, 2005 to December 14, 2006             16.5%
                December 15, 2006 to Election Deadline             18.0%; plus

</Table>

                                       11
<PAGE>

                  (ii) in the event that (a) the Holder exercises the
Certificate in connection with a Change of Control Redemption, Change of Control
Offer or Optional Redemption or a Mandatory Redemption, (or is deemed to have
exercised under Section 2.02(a)) and (b) the Holder makes a Cash Exercise, an
amount for each Certificate exercised for cash as follows, depending on the
period during which such exercise and election are made:

<Table>
<S>                                                                <C>
                 December 15, 2003 to December 14, 2004            $100
                 December 15, 2004 to December 14, 2005            $ 75
                 December 15, 2005 to December 14, 2006            $ 50
                 December 15, 2006 to Election Deadline            $  0
</Table>

                  (iii) The Minimum Return Amount shall be calculated in good
faith by the Company, based on this definition or, if contested in writing by
Holders of more than 25% of the Certificates being exercised, a national
recognized investment banking, appraisal or valuation firm, provided that the
fees of such firm shall be borne, on the one hand by the Company in proportion
to the percentage of the amount in dispute determined by such firm as owing to
the Holders and on the other hand by the Holders in proportion to the percentage
of the amount in dispute determined by such firm as not owing to the Holders.
Any amounts owed but not previously paid under the terms of the Trust Security
or the Debenture, as applicable, shall, notwithstanding their inclusion in the
calculation of the Minimum Return Amount, only be paid under, to the extent
permitted under, the Declaration or Indenture, as applicable, and all such
obligations shall be deemed paid and fully satisfied under and in respect of
such Trust Security or Debenture, as applicable, at such time as such amounts
are paid under the Declaration or Indenture, as applicable.

                  "NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.

                  "NASDAQ" means the NASDAQ Stock Market.

                  "Non-Affiliate Sale" has the meaning set forth in Section
4.08(a) hereof

                  "Notice and Questionnaire" means a Notice of Registration
Statement and Selling Securityholder Questionnaire substantially in the form of
Exhibit E hereto.

                  "Notice Event" has the meaning set forth in Section 5.01
hereof.

                  "Optional Redemption" means a redemption by the Company of the
Debentures, at the Company's option, as provided in Section 3.01(a) of the
Indenture.

                  "Other Registering Stockholders" has the meaning set forth in
Section 10.03(b) hereof.

                  "Outstanding" means, when used with reference to Capital
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of such Capital Stock, except shares then owned or held by, or
for the account of, the

                                       12
<PAGE>

Company or any subsidiary or Affiliate thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of such Capital Stock.

                  "Participating Holder" has the meaning set forth in Section
10.03(a) hereof.

                  "Permitted Holders" means Hallmark Cards and its Affiliates.

                  "Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).

                  "Piggy-back Notice" has the meaning set forth in Section
10.03(a) hereof.

                  "Preferred Securities" means that class of preferred
securities representing undivided preferred beneficial interests in the assets
of Trust having such terms as are set forth in the Declaration.

                  "Preferred Securities Guarantee" means the guarantee
agreement, dated as of December 17, 2001, between the Company and JPMorgan Chase
Bank, as the initial Preferred Securities Guarantee Trustee thereunder in
respect of the Preferred Securities.

                  "Preferred Stock," as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.

                  "Prospectus" means the prospectus (including, without
limitation, any preliminary prospectus, any final prospectus and any prospectus
that discloses information previously omitted from a prospectus filed as part of
an effective Registration Statement in reliance upon Rule 430A under the
Securities Act or any successor rule thereto) included in a Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Applicable Securities covered
by a Registration Statement and by all other amendments and supplements to such
prospectus, including all material incorporated by reference in such prospectus
and all documents filed after the date of such prospectus by the Company under
the Exchange Act and incorporated by reference therein.

                  "Purchase Event" means any of a Change of Control Redemption,
a Change of Control Offer, an Optional Redemption, a Special Event Redemption or
a Mandatory Redemption.

                  "Registrable Securities" means (a) the shares of Class A
Common Stock acquired or received by the Holder pursuant to this Agreement and
the Certificates or

                                       13
<PAGE>

otherwise, and (b) any securities of the Company issued or issuable with respect
to any shares of Class A Common Stock referred to in subdivision (a) or (b) upon
conversion of such shares or by way of stock dividend or stock split or in
connection with a combination or conversion of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.

                  "Registration" means a registration under the Securities Act
effected pursuant to Section 10.01, Section 10.02 or Section 10.03 hereof.

                  "Registration Expenses" has the meaning set forth in Section
10.05 hereof.

                  "Registration Statement" means a registration statement filed
by the Company with the Commission for a public offering and sale of securities
of the Company under the Securities Act.

                  "Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.

                  "Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of December 17, 2001, by and among the Company, the Trust
and the Investors named therein.

                  "Senior Indebtedness" means (i) Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter incurred and (ii) accrued
and unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not post-filing interest is allowed in such proceeding), fees, expenses,
reimbursement obligations under letters of credit and any other "Obligations"
(as defined in the Credit Agreement) under the Credit Agreement, in each case of
clauses (i) and (ii) in respect of (A) Indebtedness of the Company for money
borrowed and (B) Indebtedness evidenced by debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable,
unless, in the case of clauses (i) and (ii), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Debentures and
the Certificates; provided, however, that Senior Indebtedness shall not include:
(a) any obligation of the Company to any Subsidiary of the Company; (b) any
liability for federal, state, local or other taxes owed or owing by the Company
or any Subsidiary of the Company (including payments pursuant to any tax sharing
agreement between the Company and any of its Subsidiaries, on the one hand, and
Hallmark Cards and any of its Subsidiaries, on the other hand); (c) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities); (d) any Indebtedness of the Company (and any accrued and unpaid
interest in respect thereof) which is subordinate or junior in any respect to
any other Indebtedness or other obligation of the Company; (e) that portion of
any Indebtedness which at the time of incurrence is incurred in violation of the
Indenture or this Agreement; or (f) obligations in respect of performance, bid
and surety bonds and completion guarantees provided by the Company or any
Subsidiary.

                                       14
<PAGE>

                  "Shares Exercise" has the meaning set forth in Section 2.01(a)
hereof.

                  "Special Event" means a Tax Event or an Investment Company
Event.

                  "Special Event Redemption" means the redemption by the Company
of any and all of the Outstanding Debentures, in whole but not in part, in the
event of a Special Event, at any time on or prior to December 14, 2003, as
provided in Section 3.01(b) of the Indenture.

                  "Subordination and Support Agreement" means the Subordination
and Support Agreement, dated as of December 17, 2001, by and among the Company,
the Trust, Hallmark Cards, the Indenture Trustee, the Property Trustee and the
Holders named therein.

                  "Subsidiary" means, with respect to any Person, (i) any
corporation at least a majority of whose outstanding Voting Stock shall at the
time be owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner.

                  "Tax Event" means that the Regular Trustees under the
Declaration shall have received an opinion of a nationally recognized
independent tax counsel experienced in such matters to the effect that on or
after the Issue Date, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority therefore
or therein, or (b) any amendment to, or change in, an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after the Issue Date, there is more than an insubstantial risk that (i) the
Trust is or will be within 90 days of the date thereof, subject to United States
federal income tax with respect to interest accrued or received on the
Debentures, (ii) the Trust is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of taxes, duties or other governmental
charges, or (iii) interest payable by the Company to the Trust on the Debentures
is not, or within 90 days of the date thereof will not be, deductible, in whole
or in part, by the Company for United States federal income tax purposes.

                  "Trading Day" means any day on which the principal stock
exchange or the NASDAQ on which the Class A Common Stock is then listed or
admitted to trading is open for normal trading.

                                       15
<PAGE>

                  "Transaction Documents" means this Agreement, the Securities
Purchase Agreement, the Certificates, the Indenture, the Debentures, the
Preferred Securities Guarantee, the Declaration, the certificates representing
the Trust Securities and the Subordination and Support Agreement.

                  "Transfer" means any transfer, hypothecation, assignment or
other disposition of any Certificate or Certificate Shares or of any interest in
either thereof, which would constitute a sale thereof within the meaning of the
Securities Act.

                  "Trust" has the meaning set forth in the recitals to this
Agreement.

                  "Trust Securities" means the Preferred Securities and the
Common Securities issued by the Trust.

                  "Underwriter" has the meaning set forth in Section 10.06
hereof.

                  "Unit" has the meaning set forth in the recitals to this
Agreement.

                  "Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.

                                  ARTICLE II.

                             EXERCISE OF CERTIFICATE

                  SECTION 2.01. Exercise.

                  (a) Subject to the terms and conditions hereof, each Holder
may elect the manner of exercise of one or more Certificates represented by this
Agreement for, at the Holder's election, either (i) a cash payment in the amount
of the Minimum Return Amount (the "Cash Exercise") determined on the date the
Trust redeems or purchases the Trust Securities (or the Company redeems or
purchases the Debentures or such Debentures mature or are accelerated, in each
case following a distribution of Debentures to the Holders) pursuant to a
Purchase Event or Liquidation Event, multiplied by the number of Certificates so
exercised, or (ii) the right to purchase the Index Amount of Certificate Shares
purchasable hereunder at the Index Price multiplied by the number of
Certificates so exercised (the "Shares Exercise"), which right to purchase may
be exercised on any Business Day on or after the date the Trust redeems or
purchases the corresponding Trust Securities (or the Company redeems or
purchases the corresponding Debentures or such Debentures mature or are
accelerated, in each case following a distribution of Debentures to the Holders)
pursuant to such Purchase Event or Liquidation Event until, but no later than,
the Expiration Date; provided, however, that in the case of clause (ii), the
Trust or the Company, as applicable, shall have paid all cash payments and
distributions required to be paid pursuant to the terms of the corresponding
Trust Security (or principal and interest paid on the corresponding Debenture
following a distribution of

                                       16
<PAGE>

Debentures to Holders). Holders may exercise one or more Certificates
represented by this Agreement in any combination of a Cash Exercise and a Shares
Exercise.

                  (b) In the case of a Shares Exercise, the Holder may elect to
exercise one or more Certificates represented by this Agreement, on a net basis,
such that without the exchange of any funds, the Holder receives (i) that number
of Certificate Shares otherwise issuable upon exercise of a Certificate less
(ii) that number of Certificate Shares having a fair market value equal to the
Certificate Shares Price that would otherwise have been paid by the Holder for
the Certificate Shares that otherwise would have been issued (the "Cashless
Exercise"), which Certificate Shares referred to in this clause (ii) shall
thereafter be cancelled. For purposes of the foregoing sentence, "fair market
value" of each Certificate Share shall be the Current Market Price of the Class
A Common Stock for the twenty consecutive Trading Days immediately preceding the
date which is the later of (i) the date on which the Exercise Notice is received
by the Company or (ii) the date of exercise set forth in the Exercise Notice
(which date shall be during the Exercise Period).

                  (c) The Company shall give the Holder an irrevocable notice
(the "Company Notice") not less than 45 nor more than 60 days prior to the date
on which the Trust expects to redeem or purchase the Trust Securities (or the
Company redeems or purchases the Debentures or such Debentures mature or are
accelerated, in each case following a distribution of Debentures to the Holders)
in connection with a Purchase Event or a Liquidation Event, which Company Notice
shall (i) specify the anticipated date of such redemption or purchase and the
date by which an Election Notice must be delivered pursuant to Section 2.02(a)
and (ii) set forth the calculation of the Minimum Return Amount and the number
of Certificate Shares for which each Certificate is exercisable, upon receipt by
the Company of the Certificate Shares Price, provided that, the number of
Certificate Shares need not be presented in the case of a Cashless Exercise.

                  SECTION 2.02. Manner of Exercise.

                  (a) In order to exercise Certificates represented by this
Agreement, a Holder shall deliver to the Company at its principal office at 6430
S. Fiddlers Green Circle, Suite 500, Greenwood Village, Colorado 80111, or at
the office or agency designated by the Company pursuant to Article XIV, within
30 days following receipt of the Company Notice, a notice of election (the
"Election Notice"), substantially in the form attached hereto as Exhibit B,
specifying the number of Certificates being elected for Cash Exercise and the
number of Certificates being elected for Shares Exercise. If the Company fails
to receive an Election Notice from any Holder within 30 days of receipt of the
Company Notice such Holder shall be deemed to have made a Cash Exercise with
respect to that number of Certificates held of record by such Holder exercisable
for that number of Certificate Shares equal to the number of Units corresponding
to the liquidation amount of the Preferred Securities (or the principal amount
of Debentures following distribution of the Debentures to the Holders) redeemed
or purchased. If the Company fails to receive a revocation of an Election Notice
prior to the redemption or purchase date giving rise to the Company Notice, the
election made in the Election Notice previously received by the Company shall be
deemed to have been irrevocably

                                       17
<PAGE>

made. In the event of a Cash Exercise, the Company shall pay all amounts due
pursuant to Sections 2.01(a) and 2.02(b) hereof. In the event of a Shares
Exercise, the Holder may exercise the Certificates with respect to which a
Shares Exercise has been elected, by providing a notice of exercise (the
"Exercise Notice") substantially in the form attached hereto as Exhibit C, to
exercise their Certificates at anytime on or after a Purchase Event or
Liquidation Event but not later than 5:00 P.M., New York time on the Expiration
Date (the "Exercise Period"), together with delivery of such Certificates to the
Company, which notice shall specify the number of shares of Class A Common Stock
to be purchased thereby and whether the Holder is electing the Cashless Exercise
or the payment of the Certificate Shares Price. Each Election Notice and
Exercise Notice shall be duly executed by each Holder or its agent or attorney.
Each Holder agrees to execute such amendments contemplated by Section 2.02(d)
hereof and/or receipts requested by the Company. In the event of a Shares
Exercise, (a) if the Company fails to receive an Exercise Notice from any Holder
on or before the Expiration Date, then such Holder shall be deemed to have made
a Cashless Exercise on the Expiration Date with respect to that number of
Certificates held of record by such Holder and (b) if the Company fails to
receive a revocation of an Exercise Notice prior to the Expiration Date, then
the election made in such Exercise Notice shall be deemed to have been
irrevocably made.

                  (b) The Company shall (i) in the event of a Cash Exercise,
deliver or cause to be delivered by wire transfer in immediately available
funds, an amount equal to the Minimum Return Amount, to the account specified by
the Holder in the Election Notice on the date the Trust redeems or purchases the
corresponding Trust Securities (or the Company redeems or purchases the
Debentures or such Debentures mature or are accelerated, in each case following
a distribution of Debentures to the Holders), or (ii) in the event of a Shares
Exercise, execute or cause to be executed and deliver or cause to be delivered
to Holder a certificate or certificates representing the aggregate number of
full shares of Class A Common Stock issuable upon such exercise, together with
cash in lieu of any fraction of a share, as hereinafter provided as promptly as
reasonably practicable following the delivery of an Exercise Notice, but in no
event earlier than the date on which the Trust redeems or purchases the
corresponding Trust Securities (or the Company redeems or purchases the
Debentures or such Debentures mature or are accelerated, in each case following
a distribution of Debentures to the Holders). Any stock certificate or
certificates so delivered shall be, to the extent possible, in such denomination
or denominations as such Holder shall request in the Exercise Notice and shall
be registered in the name of Holder or, subject to Article IX, such other name
as shall be designated in the Exercise Notice. In the case of a Cash Exercise,
the Certificates represented by this Agreement shall be deemed to have been
exercised on date of the earlier of the applicable Purchase Event or Liquidation
Event. In the case of a Shares Exercise, the Certificates represented by this
Agreement shall be deemed to have been exercised and such Certificate Shares
shall be deemed to have been issued, and Holder or any other Person so
designated to be named therein shall be deemed to have become a holder of record
of such Certificate Shares for all purposes, as of the date which is the later
of (i) the date on which the Exercise Notice is received by the Company or (ii)
the date of exercise set forth in the Exercise Notice (which date shall be
during the Exercise Period). All taxes required to be paid by Holder, if any,
pursuant to Section 2.04 prior to the issuance of such Certificate Shares shall
have been paid.

                                       18
<PAGE>

                  (c) If, in connection with a Purchase Event or Liquidation
Event, a Holder elects a Shares Exercise with respect to any Certificates held
by it pursuant to Section 2.01, the Holder and any future Holder thereof shall
permanently forego its right to receive the Minimum Return Amount with respect
to any such Certificates and shall instead retain solely the rights of Shares
Exercise under this Agreement with respect thereto, the obligations of which
shall thereafter be satisfied upon the Holder's exercise of such Certificates
solely by delivery to the Holder of Certificate Shares. Subsequent to a Purchase
Event in connection with which the Holder elects the Shares Exercise pursuant to
Section 2.01 or Section 2.02, the Holder shall have the right to exercise such
Holder's Certificates as provided in the foregoing sentence at any time during
the Exercise Period.

                  (d) If Certificates represented by this Agreement shall have
been exercised in part, the Company shall, as promptly as reasonably practicable
following the time of delivery of the certificate or certificates relating to
Certificate Shares deliver to Holder a new Certificate representing the
unpurchased shares of Class A Common Stock underlying the unexercised
Certificates. Notwithstanding any provision herein to the contrary, the Company
shall not be required to register shares in the name of any Person who acquired
Certificates or any Certificate Shares otherwise than in accordance with this
Agreement.

                  (e) In the case of a Shares Exercise, payment of the
Certificate Shares Price shall be made at the option of the Holder by (i)
certified or official bank check, (ii) by the surrender of shares of Class A
Common Stock of the Company with a Current Market Price for the twenty
consecutive Trading Days immediately preceding the date of such surrender equal
to the Certificate Shares Price for all shares then being purchased, (iii) the
Company's withholding of Certificate Shares (or the right to receive such number
of shares) pursuant to a Cashless Exercise, or (iv) any combination thereof,
duly endorsed by or accompanied by appropriate instruments of transfer duly
executed by Holder or by Holder's attorney duly authorized in writing.

                  (f) Upon the occurrence of a Bankruptcy Event, the Minimum
Return Amount shall be immediately due and payable without any further action by
the Holder; provided, that, if holders of the majority in aggregate principal
amount of the Debentures rescind and annul such declaration and its
consequences, pursuant to the provisions of the Indenture, the Minimum Return
Amount shall correspondingly cease to be immediately due and payable and shall
continue to be payable pursuant to the other provisions of this Agreement.

                  (g) In the event that the principal of and any accrued and
unpaid interest, if any, on Debentures becomes immediately due and payable in
accordance with the provisions of the Indenture, thereupon the Minimum Return
Amount shall also become immediately due and payable to the Holder without any
further action by the Holders; provided, that, if holders of the majority in
aggregate principal amount of the Debentures rescind and annul such declaration
and its consequences, pursuant to the provisions of the Indenture, the Minimum
Return Amount shall correspondingly cease to be immediately due and payable and
shall continue to be payable pursuant to the other provisions of this Agreement.

                                       19
<PAGE>

                  SECTION 2.03. Material Transaction Announcement.

                  If (a) within three months of an Optional Redemption in which
a Holder elects the Cash Exercise, the Company shall publicly announce the
actual or expected execution of a Material Transaction Agreement, and (b) the
Current Market Price for the 20 consecutive Trading Days immediately following
the date of such announcement shall exceed the Current Market Price for the 20
consecutive Trading Days immediately preceding the date of such announcement by
more than 15%, then the Company shall, within 30 days of such announcement, pay
any such Holder an amount, if any, by which (A) the product of (x) the Index
Amount of Certificate Shares that such Holder would have received if such Holder
had elected the Cashless Exercise in connection with such Optional Redemption
(in lieu of the Cash Exercise elected by such Holder) and (y) the Current Market
Price for the 20 consecutive Trading Days immediately following the date of such
announcement exceeds (B) the sum of the aggregate Minimum Return Amount with
respect to such Cash Exercise plus interest on such aggregate Minimum Return
Amount from the date such Holder elected the Cash Exercise to the 20th Trading
Day following the announcement of the Material Transaction Agreement at an
annual interest rate equal to 10%.

                  SECTION 2.04. Payment of Taxes.

                  All shares of Class A Common Stock issuable upon the exercise
of Certificates pursuant to the terms hereof shall be validly issued, fully paid
and nonassessable. The Company shall pay all reasonable expenses in connection
with, and all taxes and other governmental charges that may be imposed with
respect to, the issue or delivery thereof, unless such tax or charge is imposed
by law upon Holder, in which case such taxes or charges shall be paid by Holder.
The Company shall not be required, however, to pay any tax or other charge
imposed in connection with any transfer involved in the issue of any certificate
for shares of Class A Common Stock issuable upon exercise of Certificates in any
name other than that of Holder, and in such case the Company shall not be
required to issue or deliver any stock certificate until such tax or other
charge has been paid or it has been established to the satisfaction of the
Company that no such tax or other charge is due.

                  SECTION 2.05. Fractional Shares.

                  The Company shall not be required to issue a fractional share
of Class A Common Stock upon exercise of any Certificate. As to any fraction of
a share which the Holder of one or more Certificates, the rights under which are
exercised in the same transaction, would otherwise be entitled to purchase upon
such exercise, the Company shall combine all fractions into whole numbers and
pay a cash adjustment in respect of such final fraction in an amount equal to
the same fraction of the Current Market Price for the twenty consecutive Trading
Days immediately preceding the date of exercise.

                                       20
<PAGE>

                  SECTION 2.06. Continued Validity.

                  A holder of shares of Class A Common Stock issued upon the
exercise of Certificates represented by this Agreement, in whole or in part
(other than a holder who acquires such shares after the same have been publicly
sold pursuant to a Registration Statement under the Securities Act or sold
pursuant to Rule 144 thereunder), shall continue to be entitled, in its capacity
as a former Holder, with respect to such shares to all rights to which it would
have been entitled as a Holder under Articles X, XI and XV of this Agreement.
The Company shall, at the time of each exercise of Certificates represented by
this Agreement, in whole or in part, upon the request of the holder of the
shares of Class A Common Stock issued upon such exercise, acknowledge in
writing, in form reasonably satisfactory to such holder, its continuing
obligation to afford to such holder all such rights; provided, however, that if
such holder fails to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder all such rights.

                                  ARTICLE III.

                       TRANSFER, DIVISION AND COMBINATION

                  SECTION 3.01. Transfer.

                  Subject to compliance with Article IX, transfer of
Certificates represented by this Agreement and all rights hereunder, in whole or
in part, may be made and shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of Certificates represented by this
Agreement at the principal office of the Company referred to in Section 2.02(a)
or the office or agency designated by the Company pursuant to Article XIV,
together with a written assignment of such Certificates substantially in the
form of Exhibit D hereto duly executed by Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall,
subject to Article IX, execute and deliver a new Certificate or Certificates in
the name of the assignee or assignees and in the denomination specified in such
instrument of assignment, and shall issue to the assignor a new Certificate
evidencing the portion of any Certificate not so assigned, and this Certificate
shall promptly be cancelled. A Certificate, if properly assigned in compliance
with Article IX, may be exercised by a new Holder for the purchase of shares of
Class A Common Stock.

                  SECTION 3.02. Division and Combination.

                  Subject to Article IX, the Certificates represented by this
Agreement may be divided or combined with other Certificates upon presentation
hereof at the aforesaid office or agency of the Company, together with a written
notice specifying the names and denominations in which new Certificates are to
be issued, signed by Holder or its agent or attorney. Subject to compliance with
Section 3.01 and with Article IX, as to any transfer which may be involved in
such division or combination, the Company shall execute and deliver a
Certificate or Certificates to be divided or combined in accordance with such
notice.

                                       21
<PAGE>

                  SECTION 3.03. Expenses.

                  The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Certificates under this Article III.

                  SECTION 3.04. Maintenance of Books.

                  The Company agrees to maintain, at its aforesaid office or
agency, books for the registration and the registration of transfer of the
Certificates.

                                  ARTICLE IV.

                   ADJUSTMENT OF INDEX PRICE AND INDEX AMOUNT

                  SECTION 4.01. General.

                  The Index Price and Index Amount shall be adjusted, to the
extent necessary, from time to time (i) in connection with a Shares Exercise
such that the Index Price shall be increased so that the internal rate of return
with respect to the Unit corresponding to each Certificate being exercised will
be no more than the Maximum Return Amount with respect to such Certificate
Shares and (ii) upon the occurrence of the events enumerated in this Article IV.
For purposes of this Article IV and Article V only, "Class A Common Stock"
includes shares now or hereafter authorized of any class of common stock of the
Company (including the Class B Common Stock of the Company) and any other stock
of the Company, however designated, that has the right (subject to any prior
rights of any class or series of preferred stock) to participate in any
distribution of the assets or earnings of the Company without limit as to per
share amount. The Index Price will in no event be less than the par value of the
Class A Common Stock; provided, however, the foregoing minimum Index Price shall
not be applicable for purposes of determining adjustments to the number of
shares issuable upon exercise of a Certificate pursuant to Section 4.13.

                  SECTION 4.02. Adjustment for Change in Capital Stock.

                  (a) If the Company (i) pays a dividend in shares of Class A
Common Stock or makes a distribution on its Class A Common Stock in shares of
its Class A Common Stock, (ii) subdivides its outstanding shares of Class A
Common Stock into a greater number of shares, (iii) combines its outstanding
shares of Class A Common Stock into a smaller number of shares, (iv) makes a
distribution on its Class A Common Stock in shares of its capital stock other
than Class A Common Stock or (v) issues by reclassification of its Class A
Common Stock any shares of its capital stock, then the Index Price in effect
immediately prior to such action shall be proportionately adjusted so that the
holder of any Certificate thereafter exercised may receive the aggregate number
and kind of shares of capital stock of the Company which such holder would have
owned immediately following such action if such Certificate had been exercised
immediately prior to such action.

                                       22
<PAGE>

                  (b) The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution and immediately after
the effective date in the case of a subdivision, combination or
reclassification. If, after an adjustment, a holder of a Certificate upon
exercise of that Certificate may receive shares of two or more classes of
capital stock of the Company, the Company shall determine, in good faith, the
allocation of the adjusted Index Price between the classes of capital stock.
After such allocation, the exercise privilege and the Index Price of each class
of capital stock shall thereafter be subject to adjustment on terms comparable
to those applicable to Class A Common Stock in this Article IV. Such adjustment
shall be made successively whenever any event listed above shall occur.

                  SECTION 4.03. Adjustment for Rights Issue.

                  (a) If the Company distributes or sells any rights, options or
warrants to all existing holders of Class A Common Stock (other than to
officers, employees, consultants or directors of the Company and its
subsidiaries) entitling such holders to purchase shares of Class A Common Stock
at a price per share less than the Fair Value (as defined herein) per share on
that record date, the Index Price shall be adjusted in accordance with the
formula:

                                            O + N  x  P
                                                -------
                                                   M
                          E' =  E  x        -----------
                                                O  +  N

where:

                         E'  =   the adjusted Index Price.

                         E   =   the current Index Price.

                         O   =   the number of shares of Class A Common Stock
                                 outstanding on the record date.

                         N   =   the number of additional shares of Class A
                                 Common Stock issuable pursuant to such
                                 rights, options or warrants.

                         P   =   the price per share of the additional
                                 shares (combining the issue price, if
                                 any, of such rights, options or warrants
                                 plus the exercise price thereof).

                         M   =   the Fair Value per share of Class A
                                 Common Stock on the record date.

                                       23
<PAGE>

                  (b) The adjustment shall be made successively whenever shares
of Class A Common Stock are issued upon exercise of any such rights, options or
warrants are issued and shall become effective immediately after the date such
additional shares are issued.

                  SECTION 4.04. Adjustment for Other Distributions.

                  (a) If the Company distributes to all existing holders of its
Class A Common Stock any of its assets (including ordinary cash dividends) or
debt securities or any rights or warrants to purchase debt securities of the
Company, the Index Price shall be adjusted in accordance with the formula:

                                           M   -   F
                         E'   =    E   x   ---------
                                               M

where:

                         E'   =    the adjusted Index Price.

                         E    =    the current Index Price.

                         M    =    the Fair Value per share of Class A
                                   Common Stock on the record date mentioned
                                   below.

                         F    =    the fair market value on the record
                                   date of the assets, securities, rights or
                                   warrants to be distributed in respect of
                                   one share of Class A Common Stock as
                                   determined in good faith by the Board of
                                   Directors.

                  (b) The adjustment shall be made successively whenever any
such distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
distribution.

                  (c) This Section 4.04 does not apply to rights, options or
warrants referred to in Section 4.03 hereof.

                  SECTION 4.05. Adjustment for Class A Common Stock Issue.

                  (a) If the Company issues shares of Class A Common Stock for a
consideration per share less than the Fair Value per share on the date the
Company receives the consideration for such additional shares (other than to
officers, employees, consultants or directors of the Company and its
subsidiaries), the Index Price shall be adjusted in accordance with the formula:

                                       24
<PAGE>

                                             P
                                            ---
                                       O  +  M
                     E'   =   E  x     --------
                                          A

where

                     E'   =   the adjusted Index Price.

                     E    =   the then current Index Price.

                     O    =   the number of shares outstanding immediately
                              prior to the issuance of such additional shares.

                     P    =   the aggregate consideration received for the
                              issuance of such additional shares.

                     M    =   the Fair Value per share on the date of issuance
                              of such additional shares.

                     A    =   the number of shares outstanding immediately
                              after the issuance of such additional shares.

                  (b) The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately after such
issuance.

                  (c) This Section 4.05 does not apply to:

                                       25
<PAGE>

                           (i) any of the transactions described in Sections
                  4.02, 4.03 and 4.04,

                           (ii) the exercise of Certificates, or the conversion
                  or exchange of other securities convertible into or
                  exchangeable for shares of Class A Common Stock, the issuance
                  of which caused an adjustment to be made under Section 4.06,

                           (iii) Class A Common Stock upon the exercise of
                  rights, options or warrants issued to the holders of Class A
                  Common Stock for which an adjustment has been made pursuant to
                  Section 4.03, or

                           (iv) Class A Common Stock issued to shareholders of
                  any Person which merges into the Company, or with a subsidiary
                  of the Company, in proportion to the stock holdings of such
                  Person immediately prior to such merger, upon such merger.

                  SECTION 4.06. Adjustment for Convertible Securities Issue.

                  (a) If the Company issues any securities convertible into or
exchangeable for shares of Class A Common Stock (other than securities for which
adjustments are made pursuant to Sections 4.03 and 4.04) for a consideration per
share of Class A Common Stock initially deliverable upon conversion or exchange
of such securities less than the Fair Value per share on the date of issuance of
such securities, the Index Price shall be adjusted in accordance with this
formula:

                                            P
                                           ---
                                      O  +  M
                      E'  =   E  x   ---------
                                      O  +  D

where:

                      E'  =   the adjusted Index Price.

                      E   =   the then current Index Price.

                      O   =   the number of shares outstanding immediately
                              prior to the issuance of such securities.

                      P   =   the aggregate consideration received for the
                              issuance of such securities.

                      M   =   the Fair Value per share on the date of issuance
                              of such securities.

                      D   =   the maximum number of shares
                              deliverable upon conversion or in
                              exchange for such securities at the
                              initial conversion or exchange rate.

                                       26
<PAGE>

                  (b) The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately after such
conversion or exchange.

                  (c) If all of the Class A Common Stock deliverable upon
conversion or exchange of such securities have not been issued when such
securities are no longer outstanding, then the Index Price shall be readjusted
upon such conversion or exchange to the Index Price which would then be in
effect had the adjustment upon the issuance of such securities been made on the
basis of the actual number of shares of Class A Common Stock issued upon
conversion or exchange of such securities.

                  (d) This Section 4.06 does not apply to convertible securities
issued in lieu of Class A Common Stock to shareholders of any Person which
merges into the Company, or with a subsidiary of the Company, in proportion to
their stock holdings of such Person immediately prior to such merger, upon such
merger.

                  SECTION 4.07. Consideration Received.

                  For purposes of any computation respecting consideration
received pursuant to Sections 4.05 and 4.06, the following shall apply:

                  (a) in the case of the issuance of shares of Class A Common
Stock for cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Company for any underwriting or placement of the
issue or otherwise in connection therewith;

                  (b) in the case of the issuance of shares of Class A Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors including a majority of the
Disinterested Directors (irrespective of the accounting treatment thereof),
whose determination shall be conclusive, and described in a Board resolution
which shall be furnished to the Holders;

                  (c) in the case of the issuance of securities convertible into
or exchangeable for shares of Class A Common Stock, the aggregate consideration
received therefor shall be deemed to be the consideration received by the
Company for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the conversion or
exchange thereof (the consideration in each case to be determined in the same
manner as provided in clauses (a) and (b) of this Section 4.07); and

                  (d) in the case of the issuance of shares of Class A Common
Stock pursuant to rights, options or warrants which rights, options or warrants
were originally issued together with one or more other securities as part of a
unit at a price per unit, the consideration shall be deemed to be the fair value
of such rights, options or warrants at

                                       27
<PAGE>

the time of issuance thereof as determined in good faith by the Board of
Directors, including a majority of the Disinterested Directors, whose
determination shall be conclusive and described in a Board resolution plus the
additional minimum consideration, if any, to be received by the Company upon the
exercise, conversion or exchange thereof (as determined in the same manner as
provided in clauses (a) and (b) of this Section 4.07).

                  SECTION 4.08. Fair Value.

                  The "Fair Value" per security at any date of determination
shall be (i) in connection with a sale by the Company to a party that is not an
Affiliate of the Company in an arm's-length transaction (a "Non-Affiliate
Sale"), the price per security at which such security is sold and (ii) in
connection with any sale by the Company to an Affiliate of the Company, (A) the
Current Market Price of the Class A Common Stock for the twenty consecutive
Trading Days immediately preceding the date on which the Company entered into an
agreement to sell such security to such Affiliate, or (B) if the Class A Common
Stock is not listed on a nationally recognized stock exchange or quoted on any
inter-dealer system or, if it is otherwise not possible to calculate such
Current Market Price, the fair market value of such security determined (1) in
good faith by a majority of the Board of Directors, including a majority of the
Disinterested Directors, and approved in a Board resolution or (2) by a
nationally recognized investment banking, appraisal or valuation firm, in each
case, taking into account, among all other factors deemed relevant by the Board
of Directors or such investment banking, appraisal or valuation firm, the
trading price and volume of such security on any national securities exchange or
automated quotation system on which such security is traded.

                  SECTION 4.09. When De Minimis Adjustment May Be Deferred.

                  No adjustment in the Index Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Index
Price. Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article IV
shall be made to the nearest cent or to the nearest 1/100th of a share, as the
case may be.

                  SECTION 4.10. When No Adjustment Required.

                  With respect to the Certificates of any Holder, no adjustment
need be made for a transaction referred to in Section 4.02, 4.03, 4.04, 4.05,
4.06 or 4.07 hereof, if such Holder is to participate (without being required to
exercise its Certificates) in the transaction on the same basis and with notice
that the Board of Directors, determines to be fair and appropriate in light of
the basis and notice on which holders of Class A Common Stock participate in the
transaction. No adjustment need be made for (a) rights to purchase Class A
Common Stock pursuant to a Company plan for reinvestment of dividends or
interest or (b) a change in the par value or no par value of the Class A Common
Stock. To the extent the Certificates became convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash. Without limiting any other exception contained in this Article IV, and
in addition thereto,

                                       28
<PAGE>

no adjustment will be made for: (i) exercises or conversions of any rights,
warrants, options, or convertible securities outstanding on the date hereof;
(ii) Class A Common Stock issued to the Company's directors, employees or
consultants (or directors, employees or consultants of its subsidiaries) under
bona fide employee benefit plans adopted by the Board of Directors and approved
by the holders of Class A Common Stock when required by law, if such Class A
Common Stock would otherwise be covered by this Article IV (but only to the
extent that the aggregate number of shares excluded by this Article IV and
issued after the date of this Agreement shall not exceed 10% of the Class A
Common Stock outstanding at the time of the adoption of each such plan,
exclusive of anti-dilution adjustments thereunder); or (iii) Class A Common
Stock issued in a bona fide private placement through a placement agent which is
a member firm of the National Association of Securities Dealers, Inc. (except to
the extent that any discount from the current market price attributable to
restrictions on transferability of the Class A Common Stock, as determined in
good faith by the Board of Directors and described in a Board resolution, shall
exceed 10%), (iv) issuances of rights, warrants, options or convertible
securities as compensation in lieu of cash in connection with any financing
transaction including commercial bank facilities, bridge financing commitments
or arrangements or other issuances of primary debt obligations or securities or
(v) shares of Class A Common Stock issued pursuant to the most-favored-nation or
similar clause in any Affiliation Agreement.

                  SECTION 4.11. Notice of Adjustment.

                  Whenever the Index Price is adjusted, the Company shall
provide the notices required by Section 5.01 hereof.

                  SECTION 4.12. When Issuance or Payment May Be Deferred.

                  In any case in which this Article IV shall require that an
adjustment in the Index Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the Holder of any Certificate exercised after such record
date the Certificate Shares and other capital stock of the Company, if any,
issuable upon such exercise over and above the Certificate Shares and other
capital stock of the Company, if any, issuable upon such exercise on the basis
of the Index Price and (ii) paying to such Holder any amount in cash in lieu of
a fractional share pursuant to Section 2.06 hereof; provided, however, that the
Company shall deliver to such Holder a due bill or other appropriate instrument
evidencing such Holder's right to receive such additional Certificate Shares,
other capital stock and cash upon the occurrence of the event requiring such
adjustment.

                  SECTION 4.13. Adjustment in Index Amount.

                  Upon each adjustment of the Index Price pursuant to this
Article IV, each Certificate outstanding prior to the making of the adjustment
in the Index Price shall thereafter evidence the right to receive upon payment
of the adjusted Index Price that Index Amount (calculated to the nearest
hundredth) obtained from the following formula:

                                       29
<PAGE>

                                          E
                         N'  =    N x   -----
                                          E'

where

                         N'  =    the adjusted Index Amount.

                         N   =    the Index Amount prior to adjustment.

                         E'  =    the adjusted Index Price.

                         E   =    the Index Price prior to adjustment.

                                   ARTICLE V.

                            NOTICE OF CERTAIN EVENTS

                  SECTION 5.01. Notice Events. In the event (a "notice event")
that:

                  (a) the Company (i) pays a dividend in shares of Class A
common stock or makes a distribution on its Class A common stock in shares of
its Class A common stock, (ii) subdivides its outstanding shares of Class A
common stock into a greater number of shares, (iii) combines its outstanding
shares of Class A common stock into a smaller number of shares, (iv) makes a
distribution on its Class A common stock in shares of its capital stock other
than Class A common stock or (v) issues by reclassification of its Class A
common stock any shares of its capital stock,

                  (b) the Company distributes or sells any rights, options or
warrants to all existing holders of Class A Common Stock (other than to
officers, employees, consultants or directors of the Company and its
Subsidiaries) entitling such holders to purchase shares of Class A common stock
at a price per share less than the Fair Value per share on that record date,

                  (c) the Company distributes to all existing holders of its
Class A common stock any of its assets (including ordinary cash dividends), debt
securities or any rights or warrants to purchase debt securities of the Company,

                  (d) the Company issues shares of Class A common stock for a
consideration per share less than the Fair Value per share on the date the
Company receives the consideration for such additional shares (other than to
officers, employees, consultants or directors of the Company and its
subsidiaries),

                  (e) the Company issues any securities convertible into or
exchangeable for shares of Class A common stock (other than securities issued in
transactions described in clauses (b) and (c) above) for a consideration per
share of Class A common stock initially deliverable upon conversion or exchange
of such securities less than the Fair Value per share on the date of issuance of
such securities,

                                       30
<PAGE>

                  (f) of any liquidation or merger to which the Company is a
party and for which approval of any of the Company's stockholders is required,
other than a consolidation or merger in which the Company is a continuing
corporation and that does not result in any reclassification or change of the
shares of Class A Common Stock issuable upon the exercise of this Agreement,

                  (g) of the conveyance or transfer of the Company's properties
and assets, substantially as an entirety, or

                  (h) of the Company's voluntary or involuntary dissolution,
liquidation or winding-up,

then, in any such case, the Company shall cause to be mailed by certified mail
to the Holder, at least 20 days prior to the applicable record or effective date
hereinafter specified, other than with respect to Sections 5.01(d) and (e)
above, a notice stating the dates as of which (i) the holders of capital stock
of record to be entitled to receive any such rights, certificates or
distributions or to be entitled to vote on such Notice Event are to be
determined, (ii) such Notice Event is expected to become effective, and (iii),
if applicable, it is expected that Holders of record of Certificates shall be
entitled to exercise their Certificates in connection with such Notice Event.

                                   ARTICLE VI.

                                  NO IMPAIRMENT

                  The Company will (a) not increase the par value of any shares
of Class A Common Stock receivable upon the exercise of Certificates represented
by this Agreement above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Class A Common Stock upon the
exercise of Certificates represented by this Agreement, and (c) use its
reasonable best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Agreement.

                                  ARTICLE VII.

  RESERVATION AND AUTHORIZATION OF CLASS A COMMON STOCK; REGISTRATION WITH OR
                     APPROVAL OF ANY GOVERNMENTAL AUTHORITY

                  From and after the Issue Date, the Company shall at all times
reserve and keep available for issue upon the exercise of Certificates such
number of its authorized but unissued shares of Class A Common Stock as will be
sufficient to permit the exercise in full of all outstanding Certificates. All
shares of Class A Common Stock which shall be so issuable, when issued upon
exercise of any Certificate and payment therefor in

                                       31
<PAGE>

accordance with the terms of such Certificate, shall be duly and validly issued
and fully paid and nonassessable, and not subject to preemptive rights.

                  Subject to the last sentence of Section 4.01 hereof, before
taking any action which would result in an adjustment in the number of shares of
Class A Common Stock for which Certificates represented by this Agreement are
exercisable or in the Index Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.

                                 ARTICLE VIII.

             TAKING OF RECORD; STOCK AND CERTIFICATE TRANSFER BOOKS

                  In the case of all dividends or other distributions by the
Company to the holders of its Class A Common Stock with respect to which any
provision of Article IV refers to the taking of a record of such holders, the
Company will in each such case take such a record and will take such record as
of the close of business on a Business Day. The Company will not at any time,
except upon dissolution, liquidation or winding up of the Company, close its
stock transfer books or Certificate transfer books so as to result in preventing
or delaying the exercise or transfer of any Certificate.

                                   ARTICLE IX.

                         RESTRICTIONS ON TRANSFERABILITY

                  SECTION 9.01. No Separate Transfer

                  The Certificates comprising part of a Unit shall not be
Transferred separately from the Trust Security (or the Debenture following a
distribution of Debentures to the Holders) comprising part of such Unit on or
prior to the earlier of (a) the Expiration Date and (b) the date the Trust
redeems or purchases in full the corresponding Trust Securities (or the Company
redeems or purchases in full the corresponding Debentures or such Debentures are
paid at maturity upon acceleration or otherwise, in each case following a
distribution of Debentures to the Holders) pursuant to a Purchase Event or
Liquidation Event.

                  Each Holder, by its acceptance of the Certificates, shall be
deemed to have acknowledged, represented to and agreed with the Company that
such Holder understands and acknowledges that (1) the Certificates and
securities issuable pursuant thereto have not been registered under the
Securities Act or any other applicable securities laws and are not freely
transferable without registration under or an exemption from the Securities Act,
(2) the Certificates are being purchased for the account of the Holder without a
view to distribute, or for offer or sale in connection with any distribution of,
the Certificates in violation of the Securities Act or any other applicable
securities laws and (3) in the absence of registration, the Certificates can
only be transferred pursuant to an exemption under the Securities Act and upon
delivery of such

                                       32
<PAGE>

certifications and an opinion of counsel reasonably acceptable to the Company to
such effect and in accordance with any other applicable securities laws and that
such Holder will notify the transferee of such resale restrictions.

                  SECTION 9.02. Compliance

                  The Holder shall effect any Transfer of Certificates (or
Debentures following a distribution of Debentures to the Holders) represented
hereby, either as part of a Unit or separately (as provided in Section 9.01) in
accordance with the conditions specified in this Article IX, which conditions
are intended to ensure compliance with the provisions of the Securities Act with
respect to the Transfer of any Certificate or any Certificate Shares. Holder
agrees to be bound by the provisions of this Article IX.

                  SECTION 9.03. Restrictive Legend.

                  Prior to any Purchase Event or Liquidation Event and the
registration of the Certificate Shares underlying Certificates represented by
this Agreement in accordance with Article X, Certificates shall be stamped or
otherwise imprinted with a legend in substantially the following form:

"EACH HOLDER OF THE CERTIFICATES, BY ITS ACCEPTANCE HEREOF, WILL BE DEEMED TO
HAVE ACKNOWLEDGED, REPRESENTED TO AND AGREED WITH THE COMPANY THAT SUCH HOLDER
UNDERSTANDS AND ACKNOWLEDGES THAT (1) THE CERTIFICATES AND SECURITIES ISSUABLE
PURSUANT THERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER
APPLICABLE SECURITIES LAWS AND ARE NOT FREELY TRANSFERABLE WITHOUT REGISTRATION
UNDER OR AN EXEMPTION FROM THE SECURITIES ACT, (2) THE CERTIFICATES ARE BEING
PURCHASED FOR THE ACCOUNT OF THE HOLDER WITHOUT A VIEW TO DISTRIBUTE, OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION OF, THE CERTIFICATES IN
VIOLATION OF THE SECURITIES ACT OR ANY OTHER APPLICABLE SECURITIES LAWS AND (3)
IN THE ABSENCE OF REGISTRATION, THE CERTIFICATES CAN ONLY BE TRANSFERRED
PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT AND UPON DELIVERY OF SUCH
CERTIFICATIONS AND AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO
SUCH EFFECT AND IN ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS AND THAT
SUCH HOLDER WILL NOTIFY THE TRANSFEREE OF SUCH RESALE RESTRICTIONS."

                  SECTION 9.04. Permitted Transfers.

                  Subject to Section 9.01, and notwithstanding any other
provision to the contrary contained herein, at any time, Holder may transfer a
Certificate represented by this Agreement or all or a portion of the Certificate
Shares upon the exercise of Certificates to any Affiliate of the Holder that
agrees to be bound by the terms hereof.

                                       33
<PAGE>

                  SECTION 9.05. Termination of Restrictions.

                  Notwithstanding the foregoing provisions of Article IX (except
Section 9.01), the restrictions imposed by this Section upon the transferability
of the Certificates represented by this Agreement and the Certificate Shares and
the legend requirements of Section 9.01 shall terminate as to the Agreement, any
particular Certificate or share of Certificate Shares (i) when and so long as
such security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto or (ii) when the Company shall have received an
opinion of counsel reasonably satisfactory to it that such security may be
transferred without registration thereof under the Securities Act. Whenever the
restrictions imposed by Article IX (other than Section 9.01) shall terminate as
to this Agreement, as hereinabove provided, the Holder hereof shall be entitled
to receive from the Company, at the expense of the Company, an amendment to this
Agreement bearing the following legend in place of the restrictive legend set
forth hereon:

                           "THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN
                  AGREEMENT CONTAINED IN ARTICLE IX HEREOF (OTHER THAN SECTION
                  9.01) TERMINATED ON ________, 200_, AND ARE OF NO FURTHER
                  FORCE AND EFFECT."

All Certificates issued upon registration of transfer, division or combination
of, or in substitution for, any Certificate or Certificates entitled to bear
such legend shall have a similar legend endorsed thereon.

                                   ARTICLE X.

                               REGISTRATION RIGHTS

                  SECTION 10.01. Required Registration.

                  The Company shall (i) file with the Commission a Registration
Statement for the offering and resale of any and all Certificate Shares subject
to acquisition by the Holder upon exercise of the Certificates represented by
this Agreement in accordance herewith, and (ii) use its best efforts to cause
such Registration Statement to be declared effective, if the Certificates become
exercisable in connection with an Optional Redemption, on or prior to the first
day on which the Certificates are exercisable, and if the Certificates otherwise
become exercisable, no later than 90 days following the day on which the
Certificates become exercisable (the "Declaration Date") and, in either case,
keep such Registration Effective for a period of no less than 12 months,
provided, that if the Company postpones (or, if necessary or advisable,
withdraws) the filing, or delays the effectiveness, of a Registration Statement,
or fails to keep such Registration Statement continuously effective for any
period of time or does not amend or supplement the Registration Statement or
included Prospectus, then such period shall be added to such 12 month period;
provided further, that, the right of the Company pursuant to Section

                                       34
<PAGE>

10.02(b) shall not be available to the Company and shall not apply, during the
60 consecutive days immediately following the applicable Declaration Date.

                  SECTION 10.02. Demand Registration.

                  (a) In addition to Section 10.01, the Majority Holders as a
group, shall have the right (though such right need not be jointly exercised by
the Holders of the Certificates), on not more than one occasion in the aggregate
(except as provided in clause (d) below) (it being understood and agreed that
two or more Holders of Certificates may make a joint Demand hereunder or any
Holder of Certificates may join in a Demand made by any other Holder of
Certificates, and any such joint Demand or joining in of a Demand shall be
deemed to be a single Demand for all purposes hereof), and no more than once
during any six-month period, to require the Company to register for offer and
sale under the Securities Act (a "Demand") all or a portion of the Certificate
Shares held, or represented by Certificates held by such Holders, subject to the
restrictions set forth herein; provided that no Holders of Certificates shall be
entitled to make a Demand hereunder unless the aggregate offering price of the
securities to be offered in such Demand (net of underwriting discounts and
commissions) exceeds the amounts set forth below depending on the time such
Demand is exercised, as follows:

<Table>
<Caption>
                                                              Minimum Aggregate
              Date of Demand                                    Offering Price
              --------------                                  -----------------
<S>                                                           <C>

              Prior to December 15, 2004                          $ 50 million
              December 15, 2004 to December 14, 2005              $ 67 million
              December 15, 2005 to December 14, 2006              $ 84 million
              December 15, 2006 and thereafter                    $100 million
</Table>

                  As promptly as practicable after the Company receives from a
Holder of Certificates (together with any other Holder who elects to participate
in the registration requested under the Demand, the "Demanding Holder") a notice
pursuant to this Section 10.02(a) (a "Demand Notice"), a copy of which shall
have also been delivered to each of the other Holders of Certificates at the
same time as to the Company, demanding that the Company register for offer and
sale under the Securities Act Certificate Shares, subject to Section 10.02(b),
the Company shall (i) use all reasonable efforts to file as promptly as
reasonably practicable with the Commission a Registration Statement relating to
the offer and sale of the Applicable Securities on such form as the Company may
reasonably deem appropriate (provided that the Company shall not, unless the
Company otherwise determines, be obligated to register any securities on a
"shelf" Registration Statement or otherwise to register securities for offer or
sale on a continuous or delayed basis and the Company actually maintains such
"shelf" Registration Statement effective) and, thereafter, (ii) after the filing
of an initial version of the Registration Statement, use reasonable efforts to
cause such Registration Statement to be declared effective under the Securities
Act as promptly as practicable after the date of filing of such Registration
Statement; provided, however, that no Demanding Holder shall be entitled to be
named as a selling securityholder in the Registration Statement or to use the
Prospectus forming a

                                       35
<PAGE>

part thereof for resales of Certificate Shares unless such Demanding Holder has
made an Election. Subject to Section 10.02(b), the Company shall use reasonable
efforts to keep each Registration Statement continuously effective in order to
permit the Prospectus forming a part thereof to be usable by such Demanding
Holder or Holders for resales of Certificate Shares for an Effectiveness Period
ending on the earlier of (i) 30 days from the Effective Time of such
Registration Statement and (ii) such time as all of such Certificate Shares have
been disposed of by the selling Holders.

                  (b) The Company shall have the right to postpone (or, if
necessary or advisable, withdraw) the filing, or delay the effectiveness, of a
Registration Statement, or fail to keep such Registration Statement continuously
effective or not amend or supplement the Registration Statement or included
Prospectus, if the Company determines based upon the advice of counsel that it
would be advisable to not disclose in the Registration Statement a planned or
proposed financing, acquisition or other corporate transaction or other material
information, and the Company shall have determined in good faith that such
disclosure is not in the best interests of the Company and its stockholders;
provided that no one such postponement shall exceed 90 days in any six-month
period and all such postponements shall not exceed 180 days in the aggregate.
The Company shall advise each of the Demanding Holders in writing of any such
determination as promptly as practicable after such determination.

                  (c) In connection with an underwritten offering, if the
managing underwriter or underwriters advise the Company that in its or their
opinion the number of Applicable Securities subject to a Demand exceeds the
number which can be sold in such offering, the Company shall include in such
Registration the number of Applicable Securities that, in the opinion of such
managing underwriter or underwriters, can be sold in such offering (provided
that, in the event of a joint Demand, the Applicable Securities included shall
be allocated pro rata among the Demanding Holders on the basis of the relative
number of Applicable Securities each such Demanding Holder has requested to be
included in such Registration).

                  (d) The Company may include in any Registration requested
pursuant to Section 10.02(a) hereof other securities for sale for its own
account or for the account of another Person, subject to the provisions of the
following sentence. In connection with an underwritten offering, if the managing
underwriter or underwriters advise the Company that in its or their opinion the
number of Applicable Securities requested by the Demanding Holders, together
with other securities for sale for the account of the Company or any other
Person, to be registered exceeds the number which can be sold in such offering,
the Company shall include in such Registration the number of Applicable
Securities and other securities that, in the opinion of such managing
underwriter or underwriters, can be sold in such offering as follows: (i) first,
shares requested to be included in such underwritten offering by any
securityholder of the Company other than the Holder (each an "Other Registering
Stockholder") possessing contractual rights to have its shares included in such
offering prior to the Applicable Securities, on the date hereof, (ii) second,
the Applicable Securities requested to be registered by the Demanding Holder and
(iii) third, any other securities requested to be included in such Registration.
In the event that 20% or more of the Certificate Shares requested by the Holders
to be

                                       36
<PAGE>

included in such Demand initiated by the Holders are excluded therefrom and
securities held by other security holders (other than the Holders) are included
in such Demand, the Holders shall be entitled to exercise an additional Demand
in accordance with this Section 10.02.

                  (e) A Demanding Holder shall have the right to withdraw any
Demand (i) prior to the time the Registration Statement in respect of such
Demand has been declared effective, (ii) upon the issuance by the Commission or
any other governmental agency of a stop order, injunction or other order which
interferes with such Registration, (iii) upon the Company's availing itself of
Section 10.02(b), or (iv) if such Demanding Holder is prevented pursuant to
Section 10.02(c) or (d) from selling all of the Applicable Securities it
requested to be registered. Notwithstanding such request to withdraw the Demand,
the Registration requested by such Demanding Holder shall nonetheless be deemed
to have been effected (and, therefore, requested) for purposes of Section
10.02(a) hereof if such Demanding Holder withdraws any Demand (A) pursuant to
clause (i) of the preceding sentence after the Commission filing fee is paid
with respect thereto or (B) pursuant to clause (iv) of the preceding sentence in
circumstances where at least 50% of the Applicable Securities requested to be
included in such Registration by such Demanding Holder could have been included,
and in each case, (x) the Company has not availed itself of Section 10.02(b)
with respect to such Registration request or (y) the Company has availed itself
of Section 10.02(b) and the withdrawal request is not made within 10 days after
the termination of the suspension period occasioned by the Company's exercise of
its rights under Section 10.02(b). If a Demanding Holder withdraws a Demand but
the Company nevertheless determines to complete, within 30 days after such
withdrawal, the Registration so requested as to securities other than the
Applicable Securities, such Demanding Holder shall be entitled to participate in
such Registration pursuant to Section 10.03, but in such case the Intended
Offering Notice shall be required to be given to such Demanding Holder at least
five (5) consecutive Business Days immediately prior to the anticipated filing
date of the Registration Statement, or if such Registration Statement has
already been filed, within 10 consecutive Business Days immediately following
after receipt of the request to withdraw Demand from such Demanding Holder and
such Demanding Holder shall be required to give the Piggy-back Notice no later
than three (3) consecutive Business Days immediately after the Company's
delivery of such Intended Offering Notice.

                  (f) In the event that any Registration pursuant to this
Section 10.02 shall involve, in whole or in part, an underwritten offering, one
co-lead managing underwriter shall be selected by the Company and shall be
reasonably acceptable to the Demanding Holder, and the other co-lead underwriter
shall be selected by such Demanding Holder and shall be reasonably acceptable to
the Company, provided that, in the event of a joint Demand, the other co-lead
underwriter shall be selected by a majority in interest (by reference to the
number of Applicable Securities requested to be included in the Registration) of
the Demanding Holders, and shall be reasonably acceptable to the Company. Any
additional co-managing underwriters shall be selected by the Company.

                                       37
<PAGE>

                  SECTION 10.03. Piggy-back Registration.

                  (a) If at any time the Company intends to file on its behalf
or on behalf of any of its securityholders a Registration Statement under the
Securities Act in connection with a public underwritten offering of any
securities of the Company on a form and in a manner that would permit the
Registration for offer and sale under the Securities Act of Registrable
Securities, other than a Registration Statement on Form S-8 or Form S-4, then
the Company shall give written notice (an "Intended Offering Notice") of such
intention to each Holder then holding Certificates or Certificate Shares at
least 20 consecutive Business Days immediately prior to the anticipated filing
date of such Registration Statement. Such Intended Offering Notice shall offer
to include in such Registration Statement for offer to the public (or, in the
event such Registration Statement is filed in connection with the sale of
securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, to include in a public underwritten offering under such
Registration Statement) such number of Certificate Shares as each Holder may
request, subject to the conditions set forth herein, and shall specify, to the
extent then known, the number and class of securities proposed to be registered,
the proposed date of filing of such Registration Statement, any proposed means
of distribution of such securities, the proposed managing underwriter or
underwriters of such securities and a good faith estimate by the Company of the
proposed maximum offering price of such securities, as such price is proposed to
appear on the facing page of such Registration Statement. Each Holder shall
advise the Company in writing (such written notice being a "Piggy-back Notice")
not later than 10 Business Days immediately after the Company's delivery to such
Holder of the Intended Offering Notice, if such Holder desires to participate in
such offering. The Piggy-back Notice shall set forth the number of Certificate
Shares such Holder desires to have included in the Registration Statement and
offered to the public. Upon the request of the Company, each Holder electing to
include Certificate Shares in the Registration Statement (a "Participating
Holder") shall enter into such underwriting, custody and other agreements as are
customary in connection with registered secondary offerings or necessary or
appropriate in connection with the offering. No Participating Stockholder shall
be entitled to be named as a selling securityholder in the Registration
Statement or to use the Prospectus forming a part thereof for sales of
Certificate Shares unless such Participating Stockholder has made an Election.

                  (b) In connection with any such underwritten offering, if the
managing underwriter or underwriters advise the Company in writing that in its
or their opinion the number of securities proposed to be registered exceeds the
number that can be sold in such offering, the Company shall include in such
Registration the number of securities that, in the opinion of such managing
underwriter or underwriters, can be sold as follows: (i) first, the securities
that the Company proposes to sell or, if the Registration is in response to a
demand by any Other Registering Stockholder, any securities requested to be
included in such underwritten offering by such Other Registering Stockholder (in
the event of a joint demand, pro rata in proportion to the number of Applicable
Securities requested to be included by each of the Other Registering
Stockholders), (ii) second, securities requested to be included in such
Registration by any Other Registering Stockholders possessing contractual rights
to have its shares included in such offering

                                       38
<PAGE>

prior to the Applicable Securities on the date hereof, (iii) third, any
Applicable Securities requested to be included in such Registration by the
Holders and (iv) fourth, other securities requested to be included in such
Registration.

                  (c) The rights of each Holder pursuant to Sections 10.01 and
10.02 hereof and this Section 10.03 are cumulative, and the exercise of rights
under one such Section shall not exclude the subsequent exercise of rights under
the other such Section (except to the extent expressly provided otherwise
herein). Notwithstanding anything herein to the contrary, the Company may
abandon and/or withdraw any Registration as to which any right under this
Section 10.03 may exist at any time and for any reason without liability
hereunder. In such event, the Company shall notify each Holder to the extent
that it has delivered a Piggy-back Notice to such Holder to participate therein.

                  SECTION 10.04. Registration Procedures.

                  In connection with any Registration required pursuant to this
Article X, the Company shall:

                  (a) prepare and file with the Commission a Registration
Statement with respect to such Certificate Shares and cause that Registration
Statement to become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);

                  (b) prepare and file with the Commission any amendments and
supplements to the Registration Statement and the prospectus in connection
therewith as may be necessary to keep the Registration Statement effective until
the earliest of (i) one year from the effective date, and (ii) the sale of all
Certificate Shares covered thereby;

                  (c) furnish to the Holder such reasonable number of copies of
the prospectus, including each preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the Certificate Shares;

                  (d) use reasonable efforts to register or qualify the shares
of Class A Common Stock covered by the Registration Statement under the
securities or Blue Sky laws of such states as the Holder shall reasonably
request, and do any and all other reasonable acts that may be necessary or
desirable to enable the Holder to consummate the public sale or other
disposition in such states of the shares of Class A Common Stock; provided,
however, that the Company shall not be required in connection with this clause
(d) to (i) qualify as a foreign corporation or as a dealer in securities or (ii)
execute a general consent to service of process or subject itself to tax in any
jurisdiction;

                  (e) notify the Holder at any time when a prospectus relating
to the shares of Class A Common Stock is required to be delivered under the
Securities Act of the happening of any event of which the Company has knowledge
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein

                                       39
<PAGE>

or necessary to make the statements therein not misleading in the light of the
circumstances then existing. The Holder agrees upon receipt of such notice
forthwith to cease making offers and sales of shares of Class A Common Stock
pursuant to such Registration Statement or deliveries of the prospectus
contained therein for any purpose until the Company has prepared and furnished
such amendment or supplement to the prospectus as may be necessary so that, as
thereafter delivered to purchasers of such shares of Class A Common Stock, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;

                  (f) if the offering is underwritten and at the request of the
Holder, use reasonable efforts to furnish on the date that shares of Class A
Common Stock are delivered to the underwriters for sale pursuant to such
Registration: (i) an opinion dated such date of counsel representing the Company
for the purposes of such Registration, addressed to the underwriters and to such
Holder, stating that such Registration Statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act, (B) the Registration Statement, the related prospectus and each amendment
or supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements and the notes thereto and the schedules
and other financial and statistical data contained therein) and (C) to such
other effect as reasonably may be requested by counsel for the underwriters and
(ii) a letter dated such date from the independent certified public accountants
retained by the Company, addressed to the underwriters and to the Holder,
stating that they are independent certified public accountants within the
meaning of the Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the Registration Statement or
the prospectus, or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial matters
customarily covered by comfort letters (including information as to the period
ending no more than five (5) consecutive Business Days immediately prior to the
date of such letter) with respect to such Registration as such underwriters
reasonably may request;

                  (g) cause all shares of Class A Common Stock covered by such
Registration Statement to be listed on each securities exchange on which the
Class A Common Stock is then listed or quoted on the over-the-counter market
reported by the Nasdaq National Market or any comparable system on which the
Class A Common Stock is then quoted;

                  (h) in connection with an underwritten offering, if
applicable, use reasonable efforts cause its directors, officers and affiliates
to enter into customary lock up agreements;

                                       40
<PAGE>

                  (i) make available for inspection upon reasonable notice
during the Company's regular business hours by the Holder, any underwriter
participating in any distribution pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by the Holder or underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by and the Holder, underwriter, attorney,
accountant or agent in connection with such Registration Statement; and

                  (j) provide a CUSIP number for all shares of Class A Common
Stock covered by such Registration Statement not later than the effective date
of such Registration Statement and, if applicable, provide the Company's
transfer agent with printed certificates for such Certificate Shares which are
in a form eligible for deposit with DTC.

                  In connection with each Registration hereunder, any Holder
wishing to participate in such Registration or, if applicable, an underwritten
offering, shall (a) provide such information and execute such documents as may
reasonably be required in connection with such Registration, (b) agree to sell
shares of Class A Common Stock on the basis provided in any underwriting
arrangements, (c) complete and execute all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements, which arrangements shall not be
inconsistent herewith, and (d) keep confidential any notice of the Company
pursuant to Section 10.04(e) and the confidential information provided pursuant
to such notice by the Company in connection with any Registration pursuant to
this Article X, provided that such notice and confidential information shall be
kept confidential for a period of 15 days following receipt thereof; provided
that upon the expiration of such 15-day period, the Company shall be required to
publicly disclose the information in such notice.

                  In connection with each Registration covering an underwritten
public offering, the Company and the Holder agree to enter into a written
agreement with the managing underwriter selected in the manner herein provided
in such form and containing such provisions as are customary in the securities
business of such an arrangement between such underwriter and companies of the
Company's size and investment stature.

                  SECTION 10.05. Allocation of Expenses.

                  The Company shall bear the Registration Expenses (as defined
herein) in connection with the performance of its obligations under Section
10.01, 10.02 and 10.03. For purposes of this Section 10.03, the term
"Registration Expenses" shall mean all expenses incident to the Company's
performance of or compliance with any registration of Certificate Shares
pursuant to this Agreement, including without limitation, NASD fees, all fees
and expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants,

                                       41
<PAGE>

including the expenses of any special audits or "comfort" letters required by or
incident to such performance and compliance, premiums and other costs of
policies of insurance obtained by the Company against liabilities arising out of
the offering of Certificate Shares being registered, and the reasonable fees and
disbursements of counsel selected by the Holder (such legal fees and expenses
for all Holders as a group not to exceed an aggregate amount of $25,000 in
connection with any single registration), but excluding premiums and other costs
of policies of insurance obtained by any Holder or its agents or Underwriter
against liabilities arising out of the offering of the Certificate Shares being
registered, any fees and disbursements of Underwriters customarily paid by
sellers of securities who are not the issuers of such securities, all
underwriting discounts and commissions and transfer taxes, if any, and
registration and filing fees relating to the Certificate Shares being
registered. Each Holder shall bear all other expenses relating to any
registration or sale of Certificate Shares pro rata with the other Holders
participating therein, including any applicable underwriting discounts or
commissions and registration or filing fees with respect to the Certificate
Shares.

                  SECTION 10.06. Indemnification.

                  (a) In the event of Registration of any of the shares of Class
A Common Stock under the Securities Act pursuant to this Agreement, the Company
will indemnify and hold harmless the Holder, each of its directors, officers,
members or partners, each underwriter (if any) within the meaning of the
Exchange Act (an "Underwriter") of such shares of Class A Common Stock and each
other person, if any, who controls the Holder or Underwriter within the meaning
of the Securities Act or the Exchange Act (a "controlling person") against any
losses, claims, damages or liabilities, joint or several, to which the Holder or
Underwriter or controlling person may become subject under the Securities Act,
the Exchange Act, Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement under which such shares of Class A
Common Stock were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or (ii) the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or (iii) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any federal securities or
state Blue Sky law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any federal securities or Blue Sky law in connection
with the offering covered by such Registration Statement; and the Company will
reimburse the Holder or Underwriter and each such controlling person for any
legal or any other expenses reasonably incurred by the Holder or Underwriter or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus or prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of

                                       42
<PAGE>

such Holder, underwriter or controlling person specifically for use in the
preparation thereof or if such misstatement or omission was corrected in any
amendment or supplement provided to the Holder pursuant to Sections 10.04(b) and
(c) and the selling Holder failed to deliver such amendment or supplement.

                  (b) In the event of any Registration of any of the shares of
Class A Common Stock under the Securities Act pursuant to this Agreement, the
Holder will indemnify and hold harmless the Company, each of its directors and
officers, each Underwriter (if any) and each controlling person, if any, of the
Company or Underwriter against any losses, claims, damages or liabilities, joint
or several, to which the Company, such directors and officers, any Underwriter
or controlling persons may become subject under the Securities Act, Exchange
Act, Blue Sky laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement under which such shares of Class A Common Stock were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, (ii) any omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or (iii) any violation or alleged violation by the Holder of the
Securities Act, the Exchange Act, any federal securities or Blue Sky law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal securities or Blue Sky law in connection with the offering covered by
such Registration Statement, if, in each such case enumerated in clauses (i),
(ii) and (iii), the statement, omission or violation was made or occurred in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of the Holder, specifically for use in connection with
the preparation of such Registration Statement, prospectus, amendment or
supplement or if such misstatement or omission was corrected in any amendment or
supplement provided to the Holder pursuant to Section 10.04 and the Holder
failed to deliver such amendment or supplement, and the Holder will reimburse
the Company and each such director, officer or underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
the Company, such director, officer or underwriter or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the aggregate obligations of the
Holder hereunder shall be limited to an amount equal to the net proceeds to the
Holder of shares of Class A Common Stock sold as contemplated herein, minus any
amounts already paid to third parties in connection therewith.

                  (c) Each party entitled to indemnification under this Section
10.06 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); provided, further, that after notice from the
Indemnifying

                                       43
<PAGE>

Party to the Indemnified Party of its election to assume the defense of such
claim or litigation, the Indemnified Party shall be liable to the Indemnified
Party under this Section 10.06 for any legal expenses of only the joint counsel
selected by any such Indemnified Party or any other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof; and,
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 10.06. The Indemnified Party may participate in such defense
at such party's expense; provided, however, that the Indemnifying Party shall
pay such expense if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying Party, in the
defense of any such claim or litigation shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect of such claim or litigation, and no further obligation to indemnify
an Indemnified Party shall exist in connection with either of the following
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld: (i) judgment entered with the consent of the
Indemnified Person; or (ii) settlement of such claim or litigation.

                  SECTION 10.07. Indemnification with Respect to Underwritten
Offering.

                  In the event that shares of Class A Common Stock are sold
pursuant to a Registration Statement in an underwritten offering, the Company
will enter into an underwriting agreement containing customary representations
and warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary provisions with
respect to indemnification by the Company of the underwriters of such offering
and their controlling persons.

                  SECTION 10.08. Information by Holder.

                  Upon its inclusion in any Registration, the Holder shall
furnish to the Company such information regarding the Holder and the
distribution proposed by the Holder as the Company may reasonably request in
writing and as shall be required in connection with any registration,
qualification or compliance.

                                  ARTICLE XI.

                              SUPPLYING INFORMATION

                  SECTION 11.01. Information by Company.

                  The Company shall cooperate with each Holder of a Certificate
and each holder of restricted Class A Common Stock in supplying such information
as may be reasonably necessary for such holder to complete and file any
information reporting

                                       44
<PAGE>

forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Certificate or any Class A Common Stock transferred pursuant to Section 9.02.

                  SECTION 11.02. Reports by the Company.

                  At any time during which there shall be no Debentures
Outstanding and any Certificates Outstanding but not exercised, the Company
covenants and agrees that it will transmit by mail, first class postage prepaid
or reputable over-night delivery service that provides for evidence of receipt,
to the Holders, as their names and addresses appear upon the books and records
of the Company, within 15 days after the Company is required to file the same
with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations prescribe) that
the Company files with the Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then transmit by mail,
first class postage prepaid or reputable over-night delivery service that
provides for evidence of receipt, to the Holders, as their names and addresses
appear upon the books and records of the Company, such of the supplementary and
periodic information, documents and reports that may be required pursuant to
Section 13 of the Exchange Act, in respect of a security listed and registered
on a national securities exchange as may be prescribed from time to time in such
rules and regulations.

                                  ARTICLE XII.

                                  SUBORDINATION

                  SECTION 12.01. Agreement to Subordinate.

                  The Company covenants and agrees, and each Holder of
Certificates by such Holder' s acceptance thereof likewise covenants and agrees,
that all Certificates shall be issued subject to the provisions of this Article
XII; and each Holder of a Certificate, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions.

                  The payment by the Company of any and all amounts required
hereunder, including fees and expenses (other than fees and expenses under
Sections 10.05, 16.01 and 16.05 hereof), on all Certificates exercised shall, to
the extent and in the manner hereinafter set forth, be subordinated and junior
in right of payment to the prior payment in full of all Senior Indebtedness of
the Company, whether outstanding at the Issue Date or thereafter incurred.

                  No provision of this Article XII shall prevent the occurrence
of any Default or Event of Default hereunder, nor the rights of any Holder to
exercise such rights and remedies afforded to it under this Agreement with
respect to any provision of this Agreement.

                                       45
<PAGE>

                  SECTION 12.02. Default on Senior Indebtedness.

                  (a) In the event that (i) any payment of principal, interest
or any other payment due on any Senior Indebtedness is not paid by the Company
when due, any applicable grace period with respect to any such payment default
has ended and such default has not been cured, waived or ceased to exist, (ii)
any other default occurs and is continuing with respect to Senior Indebtedness
that permits holders of the Senior Indebtedness as to which such default relates
to accelerate its maturity and the Holders receive notice of such default (a
"Payment Blockage Notice") from the Company or any other Person permitted to
give such notice (including without limitation, any representative of any holder
of Senior Indebtedness); or (iii) in the event that the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default, then, in
any such case, no payment may be made in respect of a Cash Exercise. Such
payments may resume: (A) in the case of a payment default on any Senior
Indebtedness, upon the date on which such default is cured or waived; and (B) in
case of a nonpayment default, the earlier of the date on which that default is
cured or waived or 179 days after the date on which the applicable Payment
Blockage Notice is received. A new Payment Blockage Notice may be delivered if
180 days have elapsed since the delivery of the immediately prior Payment
Blockage Notice so long as such Payment Blockage Notice relates to a default
under Senior Indebtedness that has not been the subject of any prior Payment
Blockage Notice.

                  (b) In the event that, notwithstanding the foregoing, any
payment shall be received by any Holder when such payment is prohibited by the
preceding paragraph of this Section 12.02, such payment shall be deemed to be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Company and the
Holders in a written notice within 90 days of the date on which such payments
are disbursed by the Company of the amounts outstanding under the Senior
Indebtedness, plus accrued interest thereon, and only the amounts specified in
such notice to the Company and the Holders shall be paid to the holders of
Senior Indebtedness.

                  SECTION 12.03. Liquidation; Dissolution; Bankruptcy.

                  (a) Upon any payment by the Company or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution or winding-up or liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or to
become due on all Senior Indebtedness of the Company, shall first be paid in
full, or payment thereof provided for in cash in accordance with its terms,
before any payment is made by the Company in respect of the Certificates; and
upon any such dissolution or winding-up or liquidation or reorganization, any
payment by the Company or distribution of assets of the Company of any kind or
character pursuant to a Cash Exercise, whether in cash, property or securities,

                                       46
<PAGE>

to which the Holders of the Certificates would be entitled to receive from the
Company, except for the provisions of this Article XII, shall be paid by the
Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the Holders of the
Certificates under this Agreement if received by them or it, directly to the
holders of Senior Indebtedness of the Company (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, as
calculated by the Company) or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior Indebtedness in
full, in cash, after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Indebtedness, before any such payment or
distribution is made to or retained by the Holders of Certificates.

                  (b) In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character
pursuant to a Cash Exercise, whether in cash, property or securities, prohibited
by the foregoing, shall be received by the Holders of the Certificates before
all Senior Indebtedness of the Company is paid in full, or provision is made for
such payment in cash in accordance with its terms, such payment or distribution
shall be held in trust for the benefit of and shall be paid over or delivered to
the holders such Senior Indebtedness or their representative or representatives,
or to the trustee or trustees under any indenture pursuant to which any
instruments evidencing such Senior Indebtedness may have been issued, and their
respective interests may appear, as calculated by the Company, for application
to the payment of all Senior Indebtedness of the Company, remaining unpaid to
the extent necessary to pay such Senior Indebtedness in full in cash in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.

                  (c) For purposes of this Article XII, the words "cash,
property or securities" shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Article
XII with respect to the Certificates to the payment of all Senior Indebtedness
of the Company, that may at the time be outstanding, provided that (i) such
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any such reorganization or readjustment, and (ii) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation, amalgamation or
merger of the Company with or into, another corporation or the liquidation or
dissolution of the Company following the conveyance, transfer, lease or other
disposition of its property as an entirety, or substantially as an entirety, to
another corporation upon the terms and conditions provided for in Article X of
the Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 12.03 if such other corporation
shall, as a part of such consolidation, amalgamation, merger, conveyance,
transfer, lease or other disposition, comply with the conditions stated in
Article X of the Indenture.

                                       47
<PAGE>

                  SECTION 12.04. Subrogation.

                  (a) Subject to the payment in full of all Senior Indebtedness
of the Company, the rights of the Holders of the Certificates shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
pursuant to a Cash Exercise, applicable to such Senior Indebtedness until the
Minimum Return Amount payable with respect to any Certificates shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders for such Senior Indebtedness of any cash, property or securities to
which the Holders of the Certificates would be entitled except for the
provisions of this Article XII, and no payment over pursuant to the provisions
of this Article XII, to or for the benefit of the holders of such Senior
Indebtedness by Holders of the Certificates, shall, as between the Company, its
creditors other than holders of Senior Indebtedness of the Company, and the
Holders of the Certificates, be deemed to be a payment by the Company, to or on
account of such Senior Indebtedness. It is understood that the provisions of
this Article XII are and are intended solely for the purposes of defining the
relative rights of the Holders of the Certificates, on the one hand, and the
holders of such Senior Indebtedness on the other hand.

                  (b) Nothing contained in this Article XII or elsewhere in this
Agreement or in the Certificates is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company and the Holders of the Certificates, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders of the Certificates
the Minimum Return Amount in connection with a Cash Exercise as and when the
same shall become due and payable in accordance with the terms of this Agreement
and the Certificates, or is intended to or shall affect the relative rights of
the Holders of the Certificates and creditors of the Company, other than the
holders of Senior Indebtedness of the Company, nor shall anything herein or
therein prevent the Holder of any Certificate from exercising all remedies
otherwise permitted by applicable law upon default under this Agreement, subject
to the rights, if any, under this Article XII of the holders of such Senior
Indebtedness in respect of cash, property or securities of the Company, received
upon the exercise of any such remedy.

                  (c) Upon any payment or distribution of assets of the Company
referred to in this Article XII, the Holders of the Certificates shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Holders of the Certificates, for the
purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
XII.

                                       48
<PAGE>

                  SECTION 12.05. Company to Effectuate Subordination.

                  Each Holder of Certificates by such Holder's acceptance
thereof authorizes and directs the Company on such Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article XII.

                  SECTION 12.06. Subordination May Not Be Impaired.

                  (a) No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company, or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company, with the terms, provisions
and covenants of this Agreement, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with.

                  (b) Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness of the Company may, at
any time and from time to time, without the consent of or notice to the Holders
of the Certificates, without incurring responsibility to the Holders of the
Certificates and without impairing or releasing the subordination provided in
this Article XII or the obligations hereunder of the Holders of the Certificates
to the holders of such Senior Indebtedness, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, such Senior Indebtedness, or otherwise amend or
supplement in any manner such Senior Indebtedness or any instrument evidencing
the same or any agreement under which such Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing such Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of such Senior Indebtedness; and
(iv) exercise or refrain from exercising any rights against the Company and any
other Person.

                                 ARTICLE XIII.

                               LOSS OR MUTILATION

                  Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to the Company of the ownership of and the loss, theft,
destruction or mutilation of such Holder's Certificate and indemnity reasonably
satisfactory to the Company, and in case of mutilation upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a new
Certificate of like tenor to such Holder; provided, in the case of mutilation,
no indemnity shall be required if such Certificate in identifiable form is
surrendered to the Company for cancellation.

                                       49
<PAGE>

                                  ARTICLE XIV.

                              OFFICE OF THE COMPANY

                  As long as any of the Certificates remain outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where the Certificates may be presented for exercise,
registration of transfer, division or combination as provided in this Agreement.

                                  ARTICLE XV.

                             LIMITATION OF LIABILITY

                  No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Class A Common Stock, and no enumeration herein of
the rights or privileges of Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any Class A Common Stock or as a
stockholder of the Company (solely by virtue of holding a Certificate), whether
such liability is asserted by the Company or by creditors of the Company.

                                  ARTICLE XVI.

                                  MISCELLANEOUS

                  SECTION 16.01. Nonwaiver and Expenses.

                  No course of dealing or any delay or failure to exercise any
right hereunder on the part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder's rights, powers or remedies. If the Company fails to
make, when due, any payments provided for hereunder, or fails to comply with any
other provision of this Agreement, the Company shall pay to Holder such amounts
as shall be sufficient to cover any costs and expenses including, but not
limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise evaluating or enforcing any of its rights, powers or remedies
hereunder.

                  SECTION 16.02. Notice Generally.

                  Any notice, demand, request, consent, approval, declaration,
delivery or other communication hereunder to be made pursuant to the provisions
of this Agreement shall be sufficiently given or made if in writing and either
delivered in person with receipt acknowledged or by telecopy and confirmed by
telecopy answerback, with an original copy of same to be sent by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

                  (a) If to any Holder or holder of Certificate Shares, at its
last known address appearing on the books of the Company maintained for such
purpose.

                                       50
<PAGE>

                  (b) If to the Company at

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

                  with copies to:

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

                  and:

                  Wachtell, Lipton, Rosen & Katz
                  51 West 52nd Street
                  New York, NY  10019
                  Attn:    Eric S. Robinson, Esq.
                  Fax:     (212) 403-2000

or at such other address as may be substituted by notice given as herein
provided, and the Company shall notify the Administrative Agent of such other
address. The Company shall deliver to the Administrative Agent any notice that
the Company delivers pursuant to this Agreement. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Every notice, demand, request, consent, approval, declaration,
delivery or other communication hereunder shall be deemed to have been duly
given or served on the date on which personally delivered, with receipt
acknowledged, telecopied and confirmed by telecopy answerback, or three (3)
consecutive Business Days immediately after the same shall have been deposited
in the United States mail. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other communication to the
person designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.

                  SECTION 16.03. Indemnification.

                  The Company agrees (a) to indemnify and hold harmless the
Holders and their respective directors, officers, employees, trustees, agents
and affiliates (each, an "Indemnified Party") (to the full extent permitted by
Applicable Law) from and against any and all claims, demands, losses, judgments
and liabilities (including liabilities for penalties) of whatsoever nature, and
(b) to pay to the Indemnified Parties an amount equal to the amount of all costs
and expenses, including, but not limited to, the reasonable

                                       51
<PAGE>

fees and disbursements of one legal counsel for the Holders as a group, and any
out-of-pocket costs reasonably incurred by any Indemnified Party in appearing as
a witness or in otherwise complying with legal process served upon them, and
with regard to both (a) and (b), growing out of or resulting from (x) any
litigation or other proceedings by a Holder against the Company relating to (1)
the rights and remedies granted to the Holders under this Agreement or (2) the
legality, enforcement or exercise of any provision, right or remedy granted to
the Holders hereunder, or (y) any litigation or other proceedings relating to
any claim alleging that an Indemnified Party is liable in whole or in part in
respect of any action or inaction of the Company and its Subsidiaries or any of
their respective officers, directors, employees, predecessors, successors or
assignees under this Agreement under any theory of secondary liability,
including without limitation as an alleged aider and abettor, co-conspirator,
controlling person or principal, but in the case of (a) and (b) above, excluding
therefrom all claims demands, losses, judgments, liabilities (including
liabilities for penalties), costs and expenses growing out of or resulting from
(i) in the case of any Indemnified Party, the gross negligence or willful
misconduct of such Indemnified Party or (ii) claims, litigation or other
proceedings in which the Company (or, in the case of clause (y) above, the
Indemnified Party (other than fees and expenses under Section 16.03(b)) is the
prevailing party.

                  All indemnities contained in this Section 16.03 shall survive
the expiration or earlier termination of this Agreement and shall inure to the
benefit of any Person who was a Holder notwithstanding such Person's assignment
of all its obligations as to any actions taken or omitted to be taken by it
while it was a Holder.

                  SECTION 16.04. Remedies.

                  Each holder of Certificates and Certificate Shares, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under Article X of this Agreement. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of Article X of this Agreement and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.

                  SECTION 16.05. Undertaking to Pay Costs.

                  In connection with the offering, sale and issuance,
amendments, modifications and revisions of the Certificates initiated by the
Company, the Company shall pay all reasonable costs and expenses of one legal
counsel (together with any requisite local counsel) for all the Holders,
provided that, notwithstanding the foregoing, the Company shall be obligated
only to pay expenses of one lead counsel and any requisite local counsel.

                                       52
<PAGE>

                  SECTION 16.06. Successors and Assigns.

                  Subject to the provisions of Section 3.01 and Article IX, this
Agreement and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and assigns of
Holder. The provisions of this Agreement are intended to be for the benefit of
all Holders from time to time of this Agreement and, with respect to Article IX
hereof, holders of Certificate Shares, and shall be enforceable by any such
Holder or holder of Certificate Shares. The Company may not assign nor delegate
its obligations under this Agreement or under the Certificates except (x) as
permitted by Section 4.07 of the Indenture or (y) with respect to the Company's
obligations pursuant to a Cash Exercise, as permitted by Article X of the
Indenture.

                  SECTION 16.07. Amendment.

                  Any amendment or supplement to, or waiver of the provisions
of, this Agreement shall require the written consent of the Majority Holders of
the then outstanding Certificates affected by such amendment, supplement or
waiver, provided that the consent of each Holder of any Certificates affected is
required for any amendment pursuant to which the Index Price or the Minimum
Return Amount would be increased or decreased (other than pursuant to
adjustments provided for in the Certificates as provided in Article IV and as
amended by the Majority Holders).

                  Notwithstanding the foregoing, the Company may from time to
time and at any time amend this Agreement or the Certificates represented
hereby, without the consent of the Holders, for one or more of the following
purposes:

                  (a) to cure any ambiguity, defect, or inconsistency herein, or
in the Certificates in either case which does not adversely affect the rights of
any Holder;

                  (b) to comply with any requirement of the Commission in
connection with qualifying, or maintaining the qualification of this Indenture
under the Trust Indenture Act; and

                  (c) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Company.

                  SECTION 16.08. Severability.

                  Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid 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 Agreement.

                                       53
<PAGE>

                  SECTION 16.09. Headings.

                  The headings used in this Agreement are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this
Agreement.

                  SECTION 16.10. Treatment of Units.

                  Each Holder of Units consisting of Preferred Securities and
Certificates hereby agrees to treat, for United States federal income tax
purposes, the Preferred Securities and the related Certificates that comprise
the Units as unitary debt instruments that are subject to the United States
Treasury regulations governing contingent payment debt instruments.
Notwithstanding any other provision in this Agreement and the other applicable
Transactions Documents to the contrary, in the event that on or after the Issue
Date, (a) a Holder determines (and the Company agrees in writing, which
agreement shall not be unreasonably withheld) that there is a change in the laws
of the United States which change occurs on or after the Issue Date and would
require a Holder to characterize, for United States federal income tax purposes,
the Preferred Securities and the related Certificates that comprise the Units as
other than unitary debt instruments that are subject to the United States
Treasury regulations governing contingent payment debt instruments, or (b) there
is a "determination" within the meaning of Section 1313(a)(1) of the Code with
respect to a Holder that requires a Holder to characterize, for United States
federal income tax purposes, the Preferred Securities and the related
Certificates that comprise the Units as other than unitary debt instruments that
are subject to the United States Treasury regulations governing contingent
payment debt instruments, then that Holder shall not be bound pursuant to the
preceding sentence or the documents referred to in this sentence to treat, for
United States federal income tax purposes, the Preferred Securities and the
related Certificates that comprise the Units as unitary debt instruments that
are subject to the United States Treasury regulations governing contingent
payment debt instruments. In the event that the Debentures are distributed by
the Trust to holders of Securities, the above provisions of this Section 16.10
shall apply with respect to the Debentures so distributed in lieu of the
Preferred Securities.

                  SECTION 16.11. Governing Law.

                  This Certificate shall be governed by the laws of the State of
New York, without regard to the provisions thereof relating to conflict of laws.

                  SECTION 16.12. Certain Securities Owned by Company
Disregarded.

                  In determining whether the Holders of the requisite amount of
the Certificates have concurred in any direction, consent or waiver under this
Agreement, the Certificates that are owned by the Company or by any Affiliate
thereof shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination. The Certificates so owned that have been pledged in good
faith may be regarded as Outstanding for the purposes of this Section 16.12 so
long as the pledgee is not an Affiliate of the Company.

                                       54
<PAGE>

                  IN WITNESS WHEREOF, the Company and each Holder have executed
this Contingent Appreciation Certificate Agreement as of the day and year first
above written.

                                      CROWN MEDIA HOLDINGS, INC.

                                      By: /s/ William J. Aliber
                                          ---------------------------------
                                          Name:  William J. Aliber
                                          Title: Chief Financial Officer

                                       55
<PAGE>

                            INVESTORS

                            FARALLON CAPITAL PARTNERS, L.P.
                            By:  FARALLON PARTNERS, L.L.C., its General
                            Partner

                            By: /s/ William F. Duhamel
                                ------------------------------------------
                                Name:  William F. Duhamel
                                Title: Managing Member

                            FARALLON CAPITAL INSTITUTIONAL
                            PARTNERS, L.P.
                            By:  FARALLON PARTNERS, L.L.C., its General
                            Partner

                            By: /s/ William F. Duhamel
                                ------------------------------------------
                                Name:  William F. Duhamel
                                Title: Managing Member

                            FARALLON CAPITAL INSTITUTIONAL
                            PARTNERS II, L.P.
                            By:  FARALLON PARTNERS, L.L.C., its General
                            Partner

                            By: /s/ William F. Duhamel
                                ------------------------------------------
                                Name:  William F. Duhamel
                                Title: Managing Member

                                       56
<PAGE>

                            FARALLON CAPITAL INSTITUTIONAL
                            PARTNERS III, L.P.
                            By:  FARALLON PARTNERS, L.L.C., its General
                            Partner

                            By: /s/ William F. Duhamel
                                ------------------------------------------
                                Name: William F. Duhamel
                                Title:  Managing Member

                            RR CAPITAL PARTNERS, L.P.
                            By:  FARALLON PARTNERS, L.L.C., its General
                            Partner

                            By: /s/ William F. Duhamel
                                ------------------------------------------
                                Name: William F. Duhamel
                                Title:  Managing Member

                                       57
<PAGE>

                            DLJ INVESTMENT PARTNERS II, L.P.

                            By: /s/ Edward Tam
                                ------------------------------------------
                                Name: Edward Tam
                                Title: Principal

                            DLJ INVESTMENT PARTNERS, L.P.

                            By: /s/ Edward Tam
                                ------------------------------------------
                                Name: Edward Tam
                                Title: Principal

                            DLJIP II Holdings, L.P.

                            By: /s/ Edward Tam
                                ------------------------------------------
                                Name:  Edward Tam
                                Title: Principal

                                       58
<PAGE>

                            TORONTO DOMINION INVESTMENTS, INC.

                            By: /s/ Martha L. Gariepy
                                ------------------------------------------
                                Name:  Martha L. Gariepy
                                Title: Vice President

                                       59
<PAGE>

                            JOHN HANCOCK LIFE INSURANCE COMPANY

                            By: /s/ Stephen J. Blewitt
                                ------------------------------------------
                                Name:  Stephen J. Blewitt
                                Title: Managing Director

                            JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

                            By: /s/ Stephen J. Blewitt
                                ------------------------------------------
                                Name:  Stephen J. Blewitt
                                Title: Authorized Signatory

                            SIGNATURE 5 L.P.

                            By: /s/ Stephen J. Blewitt
                                ------------------------------------------
                                Name:  Stephen J. Blewitt
                                Title: Managing Director

                                       60
<PAGE>

                         TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

                         By: /s/ Estelle Simsolo
                             -----------------------------------------
                             Name:  Estelle Simsolo
                             Title: Director - Private Placement

                                       61
<PAGE>

                            NEW YORK LIFE INSURANCE COMPANY

                            By: /s/ S. Thomas Knoff
                                ------------------------------------------
                                Name:  S. Thomas Knoff
                                Title: Investment Vice President

                                       62
<PAGE>

                            ALLSTATE LIFE INSURANCE COMPANY

                            By: /s/ Ronald A. Mendel
                                ------------------------------------------
                                Name:  Ronald A. Mendel

                            By: /s/ Patricia W. Wilson
                                ------------------------------------------
                                Name:  Patricia W. Wilson

                            Authorized Signatories

                                       63
<PAGE>

                            MAGNETITE ASSET INVESTORS III L.L.C.

                            By: BLACKROCK FINANCIAL
                            MANAGEMENT, INC.
                            As Managing Member

                            By: /s/ Dennis M. Schaney
                                ------------------------------------------
                                Name:  Dennis M. Schaney
                                Title: Managing Director

                            MAGNETITE ASSET INVESTORS L.L.C.

                            By: BLACKROCK FINANCIAL
                            MANAGEMENT, INC.
                            As Managing Member

                            By: /s/ Dennis M. Schaney
                                ------------------------------------------
                                Name:  Dennis M. Schaney
                                Title: Managing Director

                                       64
<PAGE>

                            ARTHUR STREET FUND, L.P.

                            By: MLIM DivPEP I, LLC, its
                                  general partner

                                  By: MLIM Private Equity, L.P., its member
                                      manager

                                  By: Portfolio Administration &
                                      Management Ltd., its general partner

                            By: /s/  Piers W. W. Cheyne
                                ------------------------------------------
                                Name:  Piers W. W. Cheyne
                                Title: Vice President

                            ARTHUR STREET PORTFOLIO, L.P.

                            By: MLIM DivPEP I, LLC, its managing
                                  general partner

                                  By: MLIM Private Equity, L.P., its member
                                      manager

                                  By: Portfolio Administration &
                                      Management Ltd., its general partner

                            By: /s/ Piers W. W. Cheyne
                                ------------------------------------------
                                Name:  Piers W. W. Cheyne
                                Title: Vice President

                                       65
<PAGE>

                            VESEY STREET FUND, L.P.

                            By: MLIM DivPEP I, LLC, its
                                  general partner

                                  By: MLIM Private Equity, L.P., its member
                                      manager

                                  By: Portfolio Administration &
                                      Management Ltd., its general partner

                            By: /s/  Piers W. W. Cheyne
                                ------------------------------------------
                                Name:  Piers W. W. Cheyne
                                Title: Vice President

                            VESEY STREET PORTFOLIO, L.P.

                            By: MLIM DivPEP I, LLC, its managing
                                  general partner

                                  By: MLIM Private Equity, L.P., its member
                                      manager

                                  By: Portfolio Administration &
                                      Management Ltd., its general partner

                            By: /s/ Piers W. W. Cheyne
                                ------------------------------------------
                                Name:  Piers W. W. Cheyne
                                Title: Vice President

                                       66
<PAGE>

                            PASSAGE PORTFOLIO, L.P.

                            By: MLIM DivPEP I, LLC, its managing
                                  general partner

                                  By: MLIM Private Equity, L.P., its member
                                      manager

                                  By: Portfolio Administration &
                                      Management Ltd., its general partner

                            By: /s/ Piers W. W. Cheyne
                                ------------------------------------------
                                Name:  Piers W. W. Cheyne
                                Title:  Vice President

                                       67
<PAGE>

                            MONY LIFE INSURANCE COMPANY OF
                            AMERICA

                            By: /s/ Leonard Mazlish
                                ------------------------------------------
                                Name:  Leonard Mazlish
                                Title: Authorized Agent

                                       68
<PAGE>

                                    EXHIBIT A

                   FORM OF CONTINGENT APPRECIATION CERTIFICATE

No. [ ]                                                No. of Certificates: [__]

                       Contingent Appreciation Certificate

                           CROWN MEDIA HOLDINGS, INC.

EACH HOLDER OF THE CERTIFICATES, BY ITS ACCEPTANCE HEREOF, WILL BE DEEMED TO
HAVE ACKNOWLEDGED, REPRESENTED TO AND AGREED WITH THE COMPANY THAT SUCH HOLDER
UNDERSTANDS AND ACKNOWLEDGES THAT (1) THE CERTIFICATES AND SECURITIES ISSUABLE
PURSUANT THERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER
APPLICABLE SECURITIES LAWS AND ARE NOT FREELY TRANSFERABLE WITHOUT REGISTRATION
UNDER OR AN EXEMPTION FROM THE SECURITIES ACT, (2) THE CERTIFICATES ARE BEING
PURCHASED FOR THE ACCOUNT OF THE HOLDER WITHOUT A VIEW TO DISTRIBUTE, OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION OF, THE CERTIFICATES IN
VIOLATION OF THE SECURITIES ACT OR ANY OTHER APPLICABLE SECURITIES LAWS AND (3)
IN THE ABSENCE OF REGISTRATION, THE CERTIFICATES CAN ONLY BE TRANSFERRED
PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT AND UPON DELIVERY OF SUCH
CERTIFICATIONS AND AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO
SUCH EFFECT AND IN ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS AND THAT
SUCH HOLDER WILL NOTIFY THE TRANSFEREE OF SUCH RESALE RESTRICTIONS.

THE FOLLOWING INFORMATION IS PROVIDED PURSUANT TO UNITED STATES TREASURY
REGULATION SECTION 1.1275-3(b). EXCEPT AS OTHERWISE PROVIDED, EACH HOLDER OF A
PREFERRED SECURITY (OR A DEBENTURE FOLLOWING DISTRIBUTION OF THE DEBENTURES TO
THE HOLDERS) AND THIS CONTINGENT APPRECIATION CERTIFICATE AGREES TO TREAT, FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES, THE PREFERRED SECURITIES AND THE
RELATED CONTINGENT APPRECIATION CERTIFICATES THAT COMPRISE THE UNITS AS UNITARY
DEBT INSTRUMENTS THAT ARE SUBJECT TO THE UNITED STATES TREASURY REGULATIONS
GOVERNING CONTINGENT PAYMENT DEBT INSTRUMENTS AND SUCH UNITARY DEBT INSTRUMENTS
WILL BE TREATED AS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR UNITED STATES FEDERAL
INCOME TAX PURPOSES. THE HOLDER OF THIS CERTIFICATE MAY OBTAIN THE INFORMATION
DESCRIBED IN UNITED STATES TREASURY REGULATION SECTION 1.1275-3(b)(1)(i) FROM
THE COMPANY, AT THE FOLLOWING ADDRESS: c/o CROWN MEDIA HOLDINGS,

                                      A-1
<PAGE>

INC., 6430 SOUTH FIDDLERS GREEN CIRCLE, SUITE 500, GREENWOOD VILLAGE, CO, 80111,
ATTENTION: VICE PRESIDENT OF FINANCE ADMINISTRATION.

                  Capitalized terms not otherwise defined have the meaning
assigned thereto in the Contingent Appreciation Certificate Agreement dated as
of December 17, 2001, between Crown Media Holdings, Inc. (the "Company") and the
Holders party thereto (the "Agreement").

                  This Contingent Appreciation Certificate (this "Certificate")
certifies that [INVESTOR], or its registered assigns, is the registered holder
of the number of Certificates set forth above.

                  Subject to the terms and conditions of the Contingent
Appreciation Certificate Agreement, on the earlier of the date of a Purchase
Event or Liquidation Event, Holder may elect the manner of exercise of the
Certificates represented hereby, for, at the Holder's election, either (i) a
cash payment in the amount of the Minimum Return Amount (the "Cash Exercise")
determined on the date the Trust redeems or purchases the Preferred Securities
pursuant to such Purchase Event or Liquidation Event, multiplied by the number
of Certificates so exercised, or (ii) the right to purchase the Index Amount of
Certificate Shares purchasable hereunder at the Index Price multiplied by the
number of Certificates so exercised (the "Shares Exercise"), in whole or in
part, which right to purchase may be exercised on any Business Day on or after
the date the Trust redeems or purchases the Preferred Securities pursuant to
such Purchase Event or Liquidation Event until, but no later than, the
Expiration Date. Holder may exercise Certificates in any combination of Cash
Exercise and Shares Exercise.

                  The number of Certificate Shares issuable upon a Shares
Exercise of this Certificate is subject to adjustment upon the occurrence of
certain events set forth in the Agreement. No fractions of a share of Class A
Common Stock will be issued upon the exercise of any Certificate. The
Certificate Shares issuable pursuant to a Shares Exercise hereof are entitled to
the registration rights set forth in the Agreement.

                  No Certificate may be exercised after 5:00 p.m., New York City
time on the Expiration Date, and to the extent not exercised by such time such
Certificate shall become void.

                  Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.

                  By receipt of this Certificate, the Holder hereof agrees to be
bound by the terms of the Agreement and shall be entitled to the benefits
thereunder.

                  This Certificate is governed by the laws of the State of New
York, without regard to the provisions thereof relating to conflict of laws.

                                      A-2
<PAGE>

                  The Certificates are subordinated to Senior Indebtedness, as
defined in the Agreement. To the extent provided in the Agreement, Senior
Indebtedness must be paid in full before payments may be made with respect to
the Certificates. The Company agrees, and each Holder by accepting this
Certificate agrees, to the subordination provisions contained in the Agreement
and, further, each Holder authorizes the Company to give such subordination
provisions effect and appoints the Company as attorney-in-fact for such purpose.

                                      A-3
<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this Certificate to
be signed below.

Dated: December 17, 2001

                                       CROWN MEDIA HOLDINGS, INC.

                                       By:
                                           --------------------------------
                                           Name:
                                           Title:

                                      A-4
<PAGE>

                                    EXHIBIT B

                                 ELECTION NOTICE

Date:___________

                  The undersigned, registered holder (the "Holder") of __
Contingent Appreciation Certificates (the "Certificates") of Crown Media
Holdings, Inc. (the "Company") pursuant to that certain Contingent Appreciation
Certificate Agreement, dated as of December 14, 2001, between the Company, the
Holder and the other parties named therein (the "Agreement"), hereby elects
pursuant to Section 2.02(a) of the Agreement:

                  [ ]      with respect to _____ Certificates (the "Cash
                           Certificates"), a Cash Exercise and requests that
                           funds in an amount equal to the Minimum Return Amount
                           with respect to each Cash Certificate be delivered by
                           wire transfer in immediately available funds to the
                           following account:
                           ___________________________________; and/or

                  [ ]      with respect to _____ Certificates, a Shares
                           Exercise. A separate Exercise Notice shall be sent by
                           the Holder, to the extent the Holder elects to effect
                           the Shares Exercise, specifying the manner of
                           exercise.

                  All capitalized terms not otherwise defined herein shall have
the meaning ascribed thereto in the Agreement.

                                     -------------------------------------
                                     (Name of Registered Owner)

                                     -------------------------------------
                                     (Signature of Registered Owner)

                                     -------------------------------------
                                     (Street Address)

                                     -------------------------------------
                                     (City)     (State)         (Zip Code)

NOTICE:           The name of the Registered Owner on this subscription must
                  correspond with the name as written upon the transfer records
                  of the Company in every particular, without alteration or
                  enlargement or any change whatsoever.

                                      B-1
<PAGE>

                                    EXHIBIT C

                                 EXERCISE NOTICE

Date:___________

                  The undersigned, registered holder (the "Holder") of __
Contingent Appreciation Certificates (the "Certificates") of Crown Media
Holdings, Inc. (the "Company") pursuant to that certain Contingent Appreciation
Certificate Agreement, dated as of December 14, 2001, between the Company, the
Holder and the other parties named therein (the "Agreement"), hereby exercises
such Certificates effective as of [the date hereof/_______, 200_] for:

                  [ ]      the purchase of ______ shares of Class A Common Stock
                           of the Company at the Index Price and herewith makes
                           payment therefor, or

                  [ ]      the purchase of such number of shares of Class A
                           Common Stock of the Company issuable to the Holder by
                           way of Cashless Exercise of the Certificates,

                  all on the terms and conditions specified in the Agreement,
and requests that certificates for the shares of Class A Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _____________ whose address is
_________________ (and, if such shares of Class A Common Stock shall not include
all of the shares of Class A Common Stock issuable as provided in the Agreement,
that an amendment to the Agreement reflecting the balance of the shares of Class
A Common Stock issuable thereunder be delivered to the undersigned).

                  All capitalized terms not otherwise defined herein shall have
the meaning assigned thereto in the Agreement.

                                       -----------------------------------------
                                       (Name of Registered Owner)

                                       -----------------------------------------
                                       (Signature of Registered Owner)

                                       -----------------------------------------
                                       (Street Address)

                                       -----------------------------------------
                                       (City)       (State)         (Zip Code)

                                      C-1
<PAGE>

NOTICE: The name of the Registered Owner on this subscription must correspond
with the name as written upon the face of the transfer records of the Company in
every particular, without alteration or enlargement or any change whatsoever.

                                      C-2
<PAGE>

                                    EXHIBIT D

                                 ASSIGNMENT FORM

                  FOR VALUE RECEIVED the undersigned registered owner of
Contingent Appreciation Certificates (the "Certificates") of Crown Media
Holdings, Inc. (the "Company") pursuant to that certain Contingent Appreciation
Certificate Agreement (the "Agreement") hereby sells, assigns and transfers unto
the Assignee named below all of the rights of the undersigned under the
Agreement, with respect to the number of shares of Class A Common Stock set
forth below:

Name and Address of Assignee                       No. of Certificates and
                                                   Shares of Class A
                                                   Common Stock

SSN/TIN No.:
             -------------

and does hereby irrevocably constitute and appoint __________________________
attorney-in-fact to register such transfer on the books of the Company
maintained for the purpose, with full power of substitution in the premises.

Dated:                                      Print Name:
      --------------                                   -------------------------

                                            Signature:
                                                      --------------------------

                                            Witness:
                                                    ----------------------------

NOTICE:               The signature on this subscription must correspond with
                      the name as written upon the transfer records of the
                      Company in every particular, without alteration or
                      enlargement or any change whatsoever.

________________, as assignee, does hereby acknowledge receipt of a copy of the
Agreement and agrees to be bound by all of the terms thereof as a Holder of the
Certificates referenced above.

                                      D-1
<PAGE>

                                    EXHIBIT E

                                [NAME OF ISSUER]

                        Notice of Registration Statement
                                       and
                      Selling Securityholder Questionnaire

                                     [Date]

                  Reference is hereby made to the Contingent Appreciation
Certificate Agreement (the "Agreement") among the investors named therein
(collectively, the "Holders") and Crown Media Holdings, Inc., a Delaware
corporation (the "Company"). Pursuant to the Agreement, the Company [has filed]
with the United States Securities and Exchange Commission (the "Commission") a
registration statement on Form ____ (the "Registration Statement") for the
registration and resale under the Securities Act of 1933, as amended (the
"Securities Act"), of shares of Company Common Stock. All capitalized terms not
otherwise defined herein have the meanings ascribed thereto in the Agreement.

                  The Holder is entitled to have the Certificate Shares owned by
it included in the Registration Statement. In order to have Certificate Shares
included in the Registration Statement, this Notice of Registration Statement
and Selling Securityholder Questionnaire ("Notice and Questionnaire") must be
completed, executed and delivered to the Company's counsel at the address set
forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]. If the Holder
does not complete, execute and return this Notice and Questionnaire by such
date, the Holder (i) will not be named as a selling securityholder in the
Registration Statement and (ii) may not use the Prospectus forming a part
thereof for resales of Certificate Shares.

                  Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and related Prospectus.
Accordingly, the Holder is advised to consult its own securities law counsel
regarding the consequences of being named or not being named as a selling
securityholder in the Registration Statement and related Prospectus.

                                       E-1
<PAGE>

                                    ELECTION

                  The Holder (the "Selling Holder") hereby elects to include in
the Registration Statement the Certificate Shares beneficially owned by it and
listed below in Item (3). The Selling Holder, by signing and returning this
Notice and Questionnaire, agrees to be bound with respect to such Certificate
Shares by the terms and conditions of this Notice and Questionnaire.

                  The Selling Holder hereby provides the following information
to the Company and represents and warrants that such information is accurate and
complete in all material respects:

                                  QUESTIONNAIRE

(1)      Full Legal Name of Selling Securityholder:

(2)      Address for Notices to Selling Securityholder:

         Telephone:

         Fax:

         Contact Person:

(3) Except as set forth below in this Item (3), the undersigned does not
beneficially own any shares of any class of Company Common Stock.

                  (a) Number of Certificate Shares and shares of each class of
Company Common Stock beneficially owned: ___

                  (b) Number of Certificate Shares which the undersigned wishes
to be included in the Registration Statement: ___

(4)      Beneficial Ownership of Other Securities of the Company:

                  Except as set forth below in this Item (4), the undersigned
Selling Holder is not the beneficial or registered owner of any shares of any
class of Company Common Stock or any other securities of the Company, other than
the Certificate Shares and shares of Company Common Stock listed above in Item
(3).

                  State any exceptions here:

(5)      Relationships with the Company:

                                      E-2
<PAGE>

                  Except as set forth below, neither the Selling Holder nor any
of its affiliates, officers, directors or principal equity holders (5% or more)
has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.

                  State any exceptions here:

(6)      Plan of Distribution:

                  Except as set forth below, the undersigned Selling Holder
intends to distribute the Certificate Shares listed above in Item (3) only as
follows (if at all): Such Certificate Shares may be sold from time to time
directly by the undersigned Selling Holder or, alternatively, through
underwriters, broker-dealers or agents. Such Certificate Shares may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may involve crosses or
block transactions) (i) on any national securities exchange or quotation service
on which the Registered Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise than on
such exchanges or services or in the over-the-counter market, or (iv) through
the writing of options. In connection with sales of the Certificate Shares or
otherwise, the Selling Holder may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the Certificate
Shares in the course of hedging the positions they assume. The Selling Holder
may also sell Certificate Shares short and deliver Certificate Shares to close
out such short positions, or loan or pledge Certificate Shares to broker-dealers
that in turn may sell such Certificate Shares.

                  State any exceptions here:

                  By signing below, the Selling Holder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
provisions of the Exchange Act and the Rules and regulations, particularly
Regulation M.

                  By signing below, the Selling Holder consents to the
disclosure of the information contained herein in its answers to Items (1)
through (6) above and the inclusion of such information in the Registration
Statement and related Prospectus. The Selling Holder understands that such
information will be relied upon by the Company in connection with the
preparation of the Registration Statement and related Prospectus.

                  In accordance with the Selling Holder's obligation under the
Agreement to provide such information as may be required by law for inclusion in
the Registration Statement, the Selling Holder agrees to promptly notify the
Company of any inaccuracies or changes in the information provided herein which
may occur subsequent to the date hereof at any time while the Registration
Statement remains in effect. All notices hereunder and pursuant to the Agreement
shall be made in writing, by hand-delivery or air courier guaranteeing overnight
delivery as follows:

                                      E-3
<PAGE>

                  (i) To the Company:

                  [Name of Issuer]
                  [Address]

                  (ii) With a copy to:

                  [Company Counsel]
                  [Address]

                                      E-4
<PAGE>

                  Once this Notice and Questionnaire is executed by the Selling
Holder and received by the Company's counsel, the terms of this Notice and
Questionnaire, and the representations and warranties contained herein, shall be
binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Holders. This Agreement shall be governed in all
respects by the laws of the State of New York.

                                      E-5
<PAGE>

                  IN WITNESS WHEREOF, the undersigned, by authority duly given,
has caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.

Dated:
       -----------------------------

                                               Selling Holder

                                               By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:

                  [Company Counsel]
                  [Address]

                                       E-6<PAGE>
                                                                    EXHIBIT 10.5

                           CROWN MEDIA HOLDINGS, INC.,

                                     Issuer

                                       AND

                              JPMORGAN CHASE BANK,

                                Indenture Trustee

                                   ----------

                                    INDENTURE

                          Dated as of December 17, 2001

                                   ----------

                     6.75% Subordinated Debentures due 2007

<PAGE>

<Table>
<Caption>
Section of
Trust Indenture Act                                                                         Section of
of 1939, as amended                                                                         Indenture
-------------------                                                                         ----------
<S>                                                                                         <C>
310(a).................................................................................     7.09
310(b).................................................................................     7.08
                                                                                            7.10
310(c).................................................................................     Inapplicable
311(a).................................................................................     7.13(a)
311(b).................................................................................     7.13(b)
311(c).................................................................................     Inapplicable
312(a).................................................................................     5.01
                                                                                            5.02(a)
312(b).................................................................................     5.02(b)
312(c).................................................................................     5.02(c)
313(a).................................................................................     5.04(a)
313(b).................................................................................     5.04(b)
313(c).................................................................................     5.04(a)
                                                                                            5.04(b)
313(d).................................................................................     5.04(c)
314(a).................................................................................     5.03
314(b).................................................................................     Inapplicable
314(c).................................................................................     13.06
314(d).................................................................................     Inapplicable
314(e).................................................................................     13.06
314(f).................................................................................     Inapplicable
315(a).................................................................................     7.01(a)
                                                                                            7.02
315(b).................................................................................     6.07
315(c).................................................................................     7.01
315(d).................................................................................     7.01(b)
                                                                                            7.01(c)
315(e).................................................................................     6.07
</Table>

----------

*        This Cross-Reference Table does not constitute part of the Indenture
         and shall not have any bearing on the interpretation of any of its
         terms or provisions.

                                       i
<PAGE>

<Table>
<Caption>
Section of
Trust Indenture Act                                                                        Section of
of 1939, as amended                                                                        Indenture
-------------------                                                                        ----------
<S>                                                                                        <C>
316(a).................................................................................     6.06
                                                                                            8.04
316(b).................................................................................     6.04
316(c).................................................................................     8.01
317(a).................................................................................     6.02
317(b).................................................................................     4.03
318(a).................................................................................    13.08
</Table>

                                       ii
<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                               PAGE
<S>                   <C>                                                                                      <C>
ARTICLE I             INTERPRETATION AND DEFINITIONS.............................................................1

         SECTION 1.01.        Definitions of Terms...............................................................1

ARTICLE II            ISSUE, DESCRIPTION, TERMS AND EXECUTION AND REGISTRATION OF DEBENTURES....................19

         SECTION 2.01.        Principal Amount and Maturity.....................................................19

         SECTION 2.02.        Form of Securities and Payment....................................................19

         SECTION 2.03.        Interest..........................................................................19

         SECTION 2.04.        Denominations:  Provisions for Payment............................................20

         SECTION 2.05.        Execution and Authentication......................................................21

         SECTION 2.06.        Registration of Transfer..........................................................22

         SECTION 2.07.        Mutilated, Destroyed, Lost or Stolen Securities...................................23

         SECTION 2.08.        Cancellation......................................................................23

         SECTION 2.09.        Benefits of Indenture.............................................................24

         SECTION 2.10.        Authenticating Agent..............................................................24

ARTICLE III           REDEMPTION AND PURCHASE OF DEBENTURES.....................................................25

         SECTION 3.01.        Optional Redemption and Special Event Redemption..................................25

         SECTION 3.02.        Change of Control Redemption and Offer to Purchase................................25

         SECTION 3.03.        Notice of Redemption..............................................................25

         SECTION 3.04.        Payment Upon Redemption or Purchase...............................................26

         SECTION 3.05.        No Sinking Fund...................................................................27

ARTICLE IV            COVENANTS OF THE COMPANY..................................................................27

         SECTION 4.01.        Payment of Principal and Interest.................................................27

         SECTION 4.02.        Maintenance of Office or Agency...................................................27

         SECTION 4.03.        Paying Agent......................................................................28

         SECTION 4.04.        Limitations on Indebtedness.......................................................29

         SECTION 4.05.        Restricted Payments...............................................................30

         SECTION 4.06.        Limitation on Affiliate Transactions..............................................32

         SECTION 4.07.        Covenants as to the Trust.........................................................34

ARTICLE V             HOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE INDENTURE TRUSTEE.......................34

         SECTION 5.01.        Company to Furnish Indenture Trustee Names and Addresses of Holders...............34
</Table>

                                       i

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                               PAGE
<S>                   <C>                                                                                      <C>
         SECTION 5.02.        Preservation of Information; Communications With Holders..........................35

         SECTION 5.03.        Reports by the Company............................................................35

         SECTION 5.04.        Reports by the Indenture Trustee..................................................36

ARTICLE VI            REMEDIES OF THE INDENTURE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT.........................37

         SECTION 6.01.        Events of Default.................................................................37

         SECTION 6.02.        Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.........40

         SECTION 6.03.        Application of Amounts Collected..................................................41

         SECTION 6.04.        Limitation on Suits...............................................................42

         SECTION 6.05.        Rights and Remedies Cumulative; Delay or Omission Not Waiver......................43

         SECTION 6.06.        Control by Holders................................................................43

         SECTION 6.07.        Undertaking to Pay Costs..........................................................44

ARTICLE VII           CONCERNING THE INDENTURE TRUSTEE..........................................................45

         SECTION 7.01.        Certain Duties and Responsibilities of Indenture Trustee..........................45

         SECTION 7.02.        Certain Rights of Indenture Trustee...............................................46

         SECTION 7.03.        Indenture Trustee Not Responsible for Recitals or Issuance or Debentures..........48

         SECTION 7.04.        May Hold Debentures...............................................................48

         SECTION 7.05.        Amounts Held in Trust.............................................................48

         SECTION 7.06.        Compensation and Reimbursement....................................................48

         SECTION 7.07.        Reliance on Officer's Certificate.................................................49

         SECTION 7.08.        Disqualification; Conflicting Interests...........................................49

         SECTION 7.09.        Corporate Indenture Trustee Required; Eligibility.................................50

         SECTION 7.10.        Resignation and Removal; Appointment of Successor.................................50

         SECTION 7.11.        Acceptance of Appointment by Successor............................................51

         SECTION 7.12.        Merger, Conversion, Consolidation or Succession to Business.......................52

         SECTION 7.13.        Preferential Collection of Claims Against the Company.............................53

ARTICLE VIII          CONCERNING THE HOLDERS....................................................................53

         SECTION 8.01.        Evidence of Action by Holders.....................................................53

         SECTION 8.02.        Proof of Execution by Holders.....................................................54
</Table>

                                       ii
<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                               PAGE
<S>                   <C>                                                                                      <C>
         SECTION 8.03.        Who May be Deemed Owners..........................................................54

         SECTION 8.04.        Certain Securities Owned by Company Disregarded...................................54

         SECTION 8.05.        Actions Binding on Future Holders.................................................55

ARTICLE IX            SUPPLEMENTAL INDENTURES...................................................................55

         SECTION 9.01.        Supplemental Indentures Without the Consent of the Holders........................55

         SECTION 9.02.        Supplemental Indentures With Consent of the Holders...............................56

         SECTION 9.03.        Effect of Supplemental Indentures.................................................56

         SECTION 9.04.        Debentures Affected by Supplemental Indentures....................................57

         SECTION 9.05.        Execution of Supplemental Indentures..............................................57

         SECTION 9.06.        Consents..........................................................................57

ARTICLE X             SUCCESSOR CORPORATION.....................................................................58

         SECTION 10.01.       Company May Consolidate, Etc. ....................................................58

         SECTION 10.02.       Successor Corporation Substituted.................................................58

         SECTION 10.03.       Evidence of Consolidation, Etc. to Indenture Trustee..............................59

ARTICLE XI            SATISFACTION AND DISCHARGE................................................................59

         SECTION 11.01.       Satisfaction and Discharge of Indenture...........................................59

         SECTION 11.02.       Discharge of Obligations..........................................................60

         SECTION 11.03.       Deposited Amounts to be Held in Trust.............................................60

         SECTION 11.04.       Payment of Amounts Held by Paying Agents..........................................60

         SECTION 11.05.       Repayment to the Company..........................................................60

         SECTION 11.06.       Reinstatement.....................................................................61

ARTICLE XII           IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS...........................61

         SECTION 12.01.       No Recourse.......................................................................61

ARTICLE XIII          SUBORDINATION.............................................................................62

         SECTION 13.01.       Agreement to Subordinate..........................................................62

         SECTION 13.02.       Default on Senior Indebtedness....................................................62

         SECTION 13.03.       Liquidation; Dissolution; Bankruptcy..............................................63

         SECTION 13.04.       Subrogation.......................................................................64

         SECTION 13.05.       Indenture Trustee to Effectuate Subordination.....................................65

         SECTION 13.06.       Notice by the Company.............................................................65
</Table>

                                      iii
<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                               PAGE
<S>                   <C>                                                                                      <C>
         SECTION 13.07.       Rights of the Indenture Trustee; Holders of Senior Indebtedness...................66

         SECTION 13.08.       Subordination May Not Be Impaired.................................................66

ARTICLE XIV           EXPENSES..................................................................................67

         SECTION 14.01.       Payment of Expenses...............................................................67

ARTICLE XV            FORM OF DEBENTURE.........................................................................68

ARTICLE XVI           MISCELLANEOUS PROVISIONS..................................................................75

         SECTION 16.01.       Effect on Successors and Assigns..................................................75

         SECTION 16.02.       Actions by Successor..............................................................75

         SECTION 16.03.       Surrender of Company Powers.......................................................75

         SECTION 16.04.       Notices...........................................................................75

         SECTION 16.05.       Governing Law.....................................................................75

         SECTION 16.06.       Treatment of Debentures as Debt; Preservation of Grantor Trust Status.............76

         SECTION 16.07.       Compliance Certificates and Opinions..............................................76

         SECTION 16.08.       Payments on Business Days.........................................................76

         SECTION 16.09.       Conflict with Trust Indenture Act.................................................77

         SECTION 16.10.       Counterparts......................................................................77

         SECTION 16.11.       Separability......................................................................77

         SECTION 16.12.       Assignment........................................................................77

         SECTION 16.13.       Subordination and Support Agreement...............................................77
</Table>

                                       iv
<PAGE>

                  INDENTURE, dated as of December 17, 2001, between Crown Media
Holdings, Inc., a Delaware corporation (the "Company"), and JPMorgan Chase Bank,
a New York banking corporation, as trustee (the "Indenture Trustee"):

                  WHEREAS, the Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance of its 6.75% Subordinated
Debentures due 2007 (the "Debentures") as hereinafter provided, which Debentures
evidence loans made to the Company of the proceeds from the issuance by Crown
Media Trust, a Delaware statutory business trust (the "Trust"), of preferred
securities of the Trust (the "Preferred Securities") and the common securities
of the Trust (the "Common Securities," and together with the Preferred
Securities, the "Trust Securities"), and to provide the terms and conditions
upon which the Debentures are to be authenticated, issued and delivered;

                  WHEREAS, the Preferred Securities are to be issued together
with contingent appreciation certificates (the "Contingent Appreciation
Certificates") to either receive a cash payment in the amount of the Minimum
Return Amount (as defined herein) or shares of Class A Common Stock, par value
$0.01 (the "Class A Common Stock"), of the Company, issued by the Company, as
units (the "Units");

                  WHEREAS, the Trust is subject to the Amended and Restated
Declaration of Trust, dated as of December 17, 2001, among the Company, as
Sponsor, and the trustees named therein (the "Declaration"), which Declaration
sets forth the terms and conditions of the Trust Securities;

                  NOW, THEREFORE, in consideration of the premises and the
purchase of the Debentures by the Holders thereof, it is mutually covenanted and
agreed as follows for the equal and ratable benefit of the holders of the
Debentures:

                                   ARTICLE I

                         INTERPRETATION AND DEFINITIONS

                  SECTION 1.01. Definitions of Terms.

                  The terms defined in this Section (except as in this Indenture
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture shall have the respective meanings specified in this
Section and shall include the plural as well as the singular. All other terms
used in this Indenture that are defined in the Trust Indenture Act, or that are
by reference in such Act defined in the Securities Act (except as herein
otherwise expressly provided or unless the context otherwise requires), shall
have the meanings assigned to such terms in the Trust Indenture Act and in the
Securities Act as in force at the Issue Date. Any reference to a party hereto
shall include the successors and permitted assigns of such party.

                  Unless the context otherwise requires:

                  (a) capitalized terms used in this Indenture but not defined
in the preamble above have the respective meanings assigned thereto in this
Section 1.1;

                                       1
<PAGE>

                  (b) a term defined anywhere in this Indenture has the same
meaning throughout;

                  (c) all references to "the Indenture" or "this Indenture" are
to this Indenture as modified, supplemented or amended from time to time;

                  (d) all references in this Indenture to Articles and Sections
and Exhibits are to Articles and Sections of and Exhibits to this Indenture
unless otherwise specified;

                  (e) a term defined in the Trust Indenture Act has the same
meaning when used in this Indenture unless otherwise defined in this Indenture;
and

                  (f) a reference to the singular includes the plural and vice
versa.

                  "Acceleration Date" means any date on which Debentures become
due and payable pursuant to Section 6.01 hereof.

                  "Additional Interest" has the meaning specified in Section
2.03(c) hereof.

                  "Administrative Agent" means JPMorgan Chase Bank, and any
successor, as administrative agent under the Credit Agreement.

                  "Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder. For purposes of the
covenant described under Section 4.06 hereof, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 10% or more of the total voting
power of the Fully Diluted Outstanding Voting Stock of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.

                  "Affiliate Transaction" has the meaning set forth in Section
4.06 hereof.

                  "Assumed Obligations" means the obligations set forth in
Schedule 4.29(a) to the Securities Purchase Agreement.

                  "Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing:

                  (i)      the sum of the products of the numbers of years from
                           the date of determination to the dates of each
                           successive scheduled principal payment of or
                           redemption or similar payment with respect to such
                           Indebtedness multiplied by the amount of such
                           payment, by

                  (ii)     the sum of all such payments.

                                       2
<PAGE>

                  "Authenticating Agent" means an authenticating agent with
respect of the Debentures appointed with respect to the Debentures by the
Indenture Trustee pursuant to Section 2.10 hereof.

                  "Authorized Officer" of a Person means the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, any Assistant Secretary or any Vice-President of such
Person.

                  "Bankruptcy Law" means Title 11, U.S. Code, or any similar
successor or federal or state law for the relief of debtors.

                  "Board of Directors" means the Board of Directors of the
Company or any duly authorized committee thereof acting within the scope of such
authorization.

                  "Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification.

                  "Business Day" means any day other than a day on which Federal
and State banking institutions in The Borough of Manhattan, the City of New York
are authorized or obligated by law, executive order or regulation to close.

                  "Capital Lease Obligation" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.

                  "Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.

                  "Change of Control" means the occurrence of any of the
following:

                  (i)      the Permitted Holders cease to be the "beneficial
                           owner" (as defined in Rules 13d-3 and 13d-5 under the
                           Exchange Act, except that for purposes of this clause
                           (i) the Permitted Holders shall be deemed to have
                           "beneficial ownership" of (A) all shares that any
                           such Permitted Holder has the right to acquire,
                           whether such right is exercisable immediately or only
                           after the passage of time and (B) any Voting Stock of
                           the Company held by any other Person (the "parent
                           entity") so long as the Permitted Holders
                           beneficially own (as so defined), directly or
                           indirectly, in the aggregate a majority of the voting
                           power of the Voting Stock of the parent entity),
                           directly or indirectly, of a majority in the
                           aggregate of the total voting

                                       3
<PAGE>

                           power of the Voting Stock of the Company, whether as
                           a result of issuance of securities of the Company,
                           conversion of shares of Class B Common Stock of the
                           Company, any merger, consolidation, liquidation or
                           dissolution of the Company, or any direct or indirect
                           transfer of securities by the Company or otherwise;
                           provided however, that any shares underlying any
                           option or other agreement to reacquire economic or
                           voting control of shares of Capital Stock of the
                           Company entered into by a Permitted Holder in
                           connection with the sale, transfer or other
                           disposition by such Permitted Holder shall not
                           constitute shares beneficially owned by such
                           Permitted Holder;

                  (ii)     any Person or group other than a Permitted Holder
                           becomes the "beneficial owner" (as defined in Rules
                           13d-3 and 13d-5 under the Exchange Act, except that
                           for purposes of this clause (ii) such Person or group
                           shall be deemed to have "beneficial ownership" of (A)
                           all shares that any such Person or group has the
                           right to acquire, whether such right is exercisable
                           immediately or only after the passage of time and (B)
                           any Voting Stock of the Company held by any parent
                           entity so long as the Person or group beneficially
                           owns (as so defined), directly or indirectly, in the
                           aggregate a majority of the voting power of the
                           Voting Stock of the parent entity), directly or
                           indirectly, in the aggregate of a majority of the
                           total voting power of the Voting Stock of the
                           Company, whether as a result of issuance of
                           securities of the Company, conversion of shares of
                           Class B Common Stock of the Company, any merger,
                           consolidation, liquidation or dissolution of the
                           Company, or any direct or indirect transfer of
                           securities by the Company or otherwise; provided
                           however, that any shares underlying any option or
                           other agreement to reacquire economic or voting
                           control of shares of Capital Stock of the Company
                           entered into by a Person in connection with the sale,
                           transfer or other disposition by such Person shall
                           not constitute shares beneficially owned by such
                           Person;

                  (iii)    individuals who on the Issue Date constituted the
                           Board of Directors (together with any new directors
                           whose election by such Board of Directors or whose
                           nomination for election by the stockholders of the
                           Company was approved by a vote of at least 66-2/3% of
                           the Board of Directors then still in office who were
                           either directors on the Issue Date or whose election
                           or nomination for election was previously so
                           approved) cease for any reason to constitute a
                           majority of the Board of Directors then in office;

                  (iv)     the consummation by the Company of any transaction
                           that would constitute a "Rule 13e-3 transaction" as
                           defined in the Exchange Act; or

                  (v)      the sale of all or substantially all the assets of
                           the Company (determined on a consolidated basis) to
                           another Person, other than a transaction following
                           which the transferee Person becomes a Subsidiary of
                           the

                                       4
<PAGE>

                           transferor of such assets and fully and
                           unconditionally guarantees the Company's obligations
                           under the Debentures and the Contingent Appreciation
                           Certificates.

                  "Change of Control Offer" has the meaning specified in Section
3.01 hereof.

                  "Change of Control Redemption" has the meaning specified in
Section 3.01 hereof.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Commission" means the U.S. Securities and Exchange Commission
or, in the absence of the U.S. Securities and Exchange Commission, such other
federal agency then administering the Securities Act and other federal
securities laws.

                  "Common Securities" means that class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in the Declaration.

                  "Company" means Crown Media Holdings, Inc., a corporation duly
organized and existing under the laws of the State of Delaware, and, subject to
the provisions of Article X, its successors and assigns.

                  "Consolidated Adjusted Net Loss" for any period means the sum
of Consolidated Net Income plus depreciation and amortization expense of the
Company and its consolidated Subsidiaries (excluding amortization expense
attributable to a prepaid operating activity item that was paid in cash in a
prior period) for such period to the extent deducted in calculating such
Consolidated Net Income. Notwithstanding the foregoing, the provision for
depreciation and amortization of a Subsidiary shall be added to Consolidated Net
Income to compute Consolidated Adjusted Net Loss only to the extent (and in the
same proportion) that the net income of such Subsidiary was included in
calculating Consolidated Net Income.

                  "Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:

                  (i)      any net income of any Person (other than the Company)
                           if such Person is not a Subsidiary of the Company,
                           except that:

                           (a)      subject to the exclusion contained in clause
                                    (iv) below, the Company's equity in the net
                                    income of any such Person for such period
                                    shall be included in such Consolidated Net
                                    Income up to the aggregate amount of cash
                                    actually distributed by such Person during
                                    such period to the Company or any of its
                                    Subsidiaries as a dividend or other
                                    distribution (subject, in the case of a
                                    dividend or other distribution paid to a
                                    Subsidiary, to the limitations contained in
                                    clause (iii) below); and

                                       5
<PAGE>

                           (b)      the Company's equity in a net loss of any
                                    such Person for such period shall be
                                    included in determining such Consolidated
                                    Net Income;

                  (ii)     any net income (or loss) of any Person acquired by
                           the Company or any of its Subsidiaries in a pooling
                           of interests transaction for any period prior to the
                           date of such acquisition;

                  (iii)    any net income of any Subsidiary of the Company if
                           such Subsidiary is subject to restrictions, directly
                           or indirectly, on the payment of dividends or the
                           making of distributions by such Subsidiary, directly
                           or indirectly, to the Company, except that:

                           (a)      subject to the exclusion contained in clause
                                    (iv) below, the Company's equity in the net
                                    income of any such Subsidiary for such
                                    period shall be included in such
                                    Consolidated Net Income up to the aggregate
                                    amount of cash actually distributed by such
                                    Subsidiary during such period to the Company
                                    or another Subsidiary of the Company as a
                                    dividend or other distribution (subject, in
                                    the case of a dividend or other distribution
                                    paid to another Subsidiary of the Company,
                                    to the limitation contained in this clause);
                                    and

                           (b)      the Company's equity in a net loss of any
                                    such Subsidiary for such period shall be
                                    included in determining such Consolidated
                                    Net Income;

                  (iv)     any gain (but not loss) realized upon the sale or
                           other disposition of any assets of the Company, its
                           consolidated Subsidiaries or any other Person
                           (including pursuant to any sale-and-leaseback
                           arrangement) which is not sold or otherwise disposed
                           of in the ordinary course of business and any gain
                           (but not loss) realized upon the sale or other
                           disposition of any Capital Stock of any Person;

                  (v)      extraordinary gains or losses; and

                  (vi)     the cumulative effect of a change in accounting
                           principles.

                  Notwithstanding the foregoing, for the purposes of Section
4.05, there shall be excluded from Consolidated Net Income any repurchases,
repayments or redemptions of Investments, proceeds realized on the sale of
Investments or return of capital to the Company or a Subsidiary to the extent
such repurchases, repayments, redemptions, proceeds or returns increase the
amount of Restricted Payments permitted under Section 4.05(a)(ii)(D).

                  "Contingent Appreciation Certificate" has the meaning set
forth in the recitals hereto.

                                       6
<PAGE>

                  "Contingent Appreciation Certificate Agreement" means the
Contingent Appreciation Certificate Agreement, dated as of the Issue Date,
between the Company and the holders named therein.

                  "Corporate Trust Office" means the office of the Indenture
Trustee at which, at any particular time, its corporate trust business shall be
principally administered, which office at the Issue Date is located at 450 West
33rd Street, New York, NY 10001, Attention: Institutional Trust Services.

                  "Coupon Rate" has the meaning specified in Section 2.03(a).

                  "Credit Agreement" means the Credit, Security, Guaranty, and
Pledge Agreement, dated as of August 31, 2001, by and among, the Company,
certain of its Subsidiaries, the lenders referred to therein, JPMorgan Chase
Bank (formerly known as The Chase Manhattan Bank), as Arranger and Sole
Bookrunner, Bank of America, N.A., as Arranger and Syndication Agent, Citicorp
USA, Inc. and Deutsche Bank AG New York Branch, as Co-Arrangers and
Documentation Agents, together with the related documents thereto (including the
term loans and revolving loans thereunder, any guarantees and security
documents), as amended, extended, renewed, restated, supplemented or otherwise
modified (in whole or in part, and without limitation as to amount, terms,
conditions, covenants and other provisions) from time to time, and any agreement
(and related document) governing Indebtedness incurred to Refinance, in whole or
in part, the borrowings and commitments then outstanding or permitted to be
outstanding under such Credit Agreement or a successor Credit Agreement, whether
by the same or any other lender or group of lenders in accordance with Section
4.04 hereof.

                  "Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement designed
to protect such Person against fluctuations in currency values.

                  "Custodian" means any receiver, trustee, assignee, liquidator,
or similar official under any Bankruptcy Law.

                  "Debenture Register" has the meaning specified in Section
2.06.

                  "Debenture Registrar" has the meaning specified in Section
2.06.

                  "Debentures" means the Debentures authenticated and delivered
under this Indenture to be held by the Trust, a specimen certificate for such
Debentures being set forth in Article XV hereof.

                  "Declaration" means the Amended and Restated Declaration of
Trust of the Trust dated and effective as of the Issue Date.

                  "Default" means any event, act or condition which is, or after
notice or passage of time, or both, would constitute an Event of Default.

                                       7
<PAGE>

                  "Defaulted Interest" means any interest on the Debentures that
is payable, but is not punctually paid, or provided for, on any Interest Payment
Date.

                  "Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder) or
upon the happening of any event:

                  (i)      matures or is mandatorily redeemable pursuant to a
                           sinking fund obligation or otherwise;

                  (ii)     is convertible or exchangeable at the option of the
                           holder for Indebtedness or Disqualified Stock; or

                  (iii)    is mandatorily redeemable or must be purchased upon
                           the occurrence of certain events or otherwise, in
                           whole or in part;

in each case on or prior to the first anniversary of the Maturity Date of the
Debentures; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Maturity Date of the Debentures shall not constitute
Disqualified Stock if:

                           (a)      the "change of control" provisions
                                    applicable to such Capital Stock are not
                                    more favorable to the holders of such
                                    Capital Stock than the terms applicable to
                                    the Debentures under this Indenture or
                                    otherwise; and

                           (b)      any such requirement only becomes operative
                                    after compliance in full with such terms
                                    applicable to the Debentures, including the
                                    purchase of any Debentures tendered pursuant
                                    thereto.

                  "Distribution and Programming Agreements" means (i) that
certain Amended and Restated Program License Agreement, dated as of January 1,
2001, by and between Crown Media International, Inc. and Hallmark Entertainment
Distribution, LLC and that certain Amended and Restated Program License
Agreement, dated as of January 1, 2001, by and between Hallmark Entertainment
Distribution, LLC and Crown Media United States, LLC, as such agreements may be
amended, modified, renewed or otherwise revised, or (ii) any agreement or series
of related agreements entered into by the Company or any of its Subsidiaries in
the ordinary course of business in connection with the licensing and/or
distribution of pay television or satellite programming, as any such agreement
may be amended, modified, renewed or otherwise revised.

                  "Event of Default" means any event specified in Section 6.01
hereof, continued for the period of time, if any, therein designated.

                                       8
<PAGE>

                  "Exchange Act" means the Securities and Exchange Act of 1934,
as amended from time to time or any successor statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.

                  "Fully Diluted Outstanding" means, when used with reference to
Capital Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Capital Stock Outstanding at such date and other
options, warrants or Certificates to purchase, or securities convertible into,
shares of such Capital Stock outstanding on such date which would be deemed
outstanding in accordance with GAAP for purposes of determining book value or
net income per share.

                  "GAAP" means generally accepted accounting principles, as in
effect in the United States on the Issue Date.

                  "Governmental Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Governmental
Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of
such depositary receipt; provided, however, that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.

                  "Hallmark Cards" means Hallmark Cards, Incorporated, a
Missouri corporation, and its successors and assigns.

                  "Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement, in
each case entered into in the ordinary course of business for bona fide hedging
purposes and not for the purpose of speculation.

                  "herein", "hereof" and "hereunder", and other words of similar
import, refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.

                  "Holder" means a Person in whose name or names a Debenture
shall be registered on the books of the Company kept for that purpose in
accordance with the terms of this Indenture.

                  "incur" means issue, assume, guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall

                                       9
<PAGE>

be deemed to be incurred by such Person at the time it becomes a Subsidiary. The
term "incurrence" when used as a noun shall have a correlative meaning. The
accretion of principal of a non-interest bearing or other discount security
shall not be deemed the incurrence of Indebtedness.

                  "Indebtedness" means, with respect to any Person on any date
of determination (without duplication):

                  (i)      indebtedness of such Person for borrowed money
                           (whether by loan or the issuance and sale of debt
                           securities) or for the deferred purchase price of
                           property or services purchased (other than amounts
                           constituting trade payables (payable within 90 days)
                           arising in the ordinary course of business);

                  (ii)     obligations of such Person in respect of letters of
                           credit, acceptance facilities, or drafts or similar
                           instruments issued or accepted by banks and other
                           financial institutions for the account of such
                           Person;

                  (iii)    obligations of such Person under Capital Lease
                           Obligations;

                  (iv)     deferred payment obligations of such Person resulting
                           from the adjudication or settlement of any
                           litigation;

                  (v)      obligations of such Person under synthetic leases or
                           financing leases (but not operating leases);

                  (vi)     obligations of such Person with respect to the
                           redemption, repayment or other repurchase of any
                           Disqualified Stock of such Person, or with respect to
                           any Preferred Stock of any Subsidiary of such Person,
                           the principal amount of such Preferred Stock to be
                           determined in accordance with this Indenture (but
                           excluding, in each case, any accrued dividends);

                  (vii)    to the extent not otherwise included in this
                           definition, Hedging Obligations;

                  (viii)   obligations under the Debentures and Contingent
                           Appreciation Certificates; and

                  (ix)     indebtedness of others of the type described in
                           clauses (i) through (vii) above which such Person has
                           (a) directly or indirectly assumed or guaranteed in
                           connection with a guarantee or (b) secured by a Lien
                           on the assets of such Person, whether or not such
                           Person has assumed such indebtedness (provided, that
                           if such Person has not assumed such indebtedness of
                           another Person then the amount of indebtedness of
                           such Person pursuant to this clause (ix) for purposes
                           of this Indenture shall be equal to the lesser of the
                           amount of the indebtedness of the other Person

                                       10
<PAGE>

                           and the fair market value of the assets of such
                           Person which secure such other indebtedness).

Notwithstanding the foregoing, in connection with the purchase by the Company or
any Subsidiary of any business, the term "Indebtedness" shall exclude
post-closing payment adjustments to which the seller may become entitled to the
extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; provided,
however, that, at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 30 days thereafter.

                  The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date.

                  "Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended.

                  "Indenture Trustee" means JPMorgan Chase Bank and, subject to
the provisions of Article VII, shall also include its successors and assigns,
and, if at any time there is more than one Person acting in such capacity
hereunder, "Indenture Trustee" shall mean each such Person.

                  "Interest Payment Date" has the meaning specified in Section
2.03 hereof.

                  "Interest Rate Agreement" means in respect of a Person any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect such Person against fluctuations in
interest rates.

                  "Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the
lender) or other extensions of credit (including by way of guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by such Person. Except as otherwise provided
for herein, the amount of an Investment shall be its fair value at the time the
Investment is made and without giving effect to subsequent changes in value.

                  "Investment Company Event" means that the Regular Trustees
under the Declaration shall have received an opinion of a nationally recognized
independent counsel experienced in practice under the Investment Company Act
that, as a result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or
will be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the Issue Date.

                                       11
<PAGE>

                  "Issue Date" means December 17, 2001.

                  "Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).

                  "Maturity Date" means the date on which the Debentures mature
and on which the principal shall be due and payable together with all accrued
and unpaid interest thereon including Defaulted Interest and Additional
Interest, if any.

                  "Net Cash Proceeds" with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.

                  "Notice of Redemption" has the meaning specified in Section
3.03(a) hereof.

                  "Officer's Certificate" with respect to any Person, a
certificate signed by an Authorized Officer of such Person.

                  "Opinion of Counsel" means an opinion in writing of legal
counsel, who may be an employee of or counsel for the Company, that is delivered
to the Indenture Trustee in accordance with the terms hereof. Each such opinion
shall include the statements provided for in Section 16.07, if and to the extent
required by the provisions thereof.

                  "Optional Redemption" has the meaning specified in Section
3.01 hereof.

                  "Outstanding" when used with reference to the Debentures,
means, subject to the provisions of Section 8.04, as of any particular time, all
Debentures theretofore authenticated and delivered by the Indenture Trustee
under this Indenture, except (a) Debentures theretofore canceled by the
Indenture Trustee or any Paying Agent, or delivered to the Indenture Trustee or
any Paying Agent for cancellation or that have previously been canceled; (b)
Debentures for the payment or redemption of which cash or Governmental
Obligations in the necessary amount shall have been deposited in trust with the
Indenture Trustee or with any Paying Agent (other than the Company) or shall
have been set aside and segregated in trust by the Company (if the Company shall
act as its own Paying Agent); provided, however, that if such Debentures are to
be redeemed prior to the maturity thereof, notice of such redemption shall have
been given as in Article III provided, or provision satisfactory to the
Indenture Trustee shall have been made for giving such notice; and (c)
Debentures in lieu of or in substitution for which other Debentures shall have
been authenticated and delivered pursuant to the terms of Section 2.07. When
used with reference to Capital Stock, at any date as of which the number of
shares thereof is to be determined, all issued shares of Capital Stock, except
shares then owned or held by or for the account of the Company or any Subsidiary
or Affiliate thereof, and shall include all shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in
shares of Capital Stock.

                                       12
<PAGE>

                  "Paying Agent" means one or more Persons authorized by the
Company to pay interest, principal or any other payments on the Debentures.

                  "Permitted Holders" means Hallmark Cards and its Affiliates.

                  "Permitted Investment" means an Investment by the Company or
any Subsidiary in:

                  (i)      the Company, a Wholly Owned Subsidiary or a Person
                           that will, upon the making of such Investment, become
                           a Wholly Owned Subsidiary, HM Holdings of Delaware,
                           LLC, HM Intermediary, LLC or Hallmark India Private
                           Limited;

                  (ii)     another Person if as a result of such Investment such
                           other Person is merged or consolidated with or into,
                           or transfers or conveys all or substantially all its
                           assets to, the Company or a Wholly Owned Subsidiary;

                  (iii)    cash and Temporary Cash Investments;

                  (iv)     receivables owing to the Company or any Wholly Owned
                           Subsidiary if created or acquired in the ordinary
                           course of business and payable or dischargeable in
                           accordance with customary trade terms; provided,
                           however, that such trade terms may include such
                           concessionary trade terms as the Company or any such
                           Wholly Owned Subsidiary deems reasonable under the
                           circumstances;

                  (v)      payroll, travel and similar advances to cover matters
                           that are expected at the time of such advances
                           ultimately to be treated as expenses for accounting
                           purposes and that are made in the ordinary course of
                           business;

                  (vi)     loans or advances to employees made in the ordinary
                           course of business consistent with past practices of
                           the Company or such Wholly Owned Subsidiary;

                  (vii)    stock, obligations or securities received in
                           settlement of debts created in the ordinary course of
                           business and owing to the Company or any Wholly Owned
                           Subsidiary or in satisfaction of judgments;

                  (viii)   any Investment acquired by the Company or any of its
                           Subsidiaries (a) in exchange for any other Investment
                           or accounts receivable held by the Company or any
                           such Wholly Owned Subsidiary in connection with or as
                           a result of a bankruptcy, workout, reorganization or
                           recapitalization of the issuer of such other
                           Investment or accounts receivable or (b) as a result
                           of a foreclosure by the Company or any of its
                           Restricted Subsidiaries with respect to any secured
                           Investment or other transfer of title with respect to
                           any secured Investment in default;

                                       13
<PAGE>

                  (ix)     an Investment acquired by the Company or any of its
                           Subsidiaries as consideration in a single, one-time
                           strategic transaction involving the sale, lease,
                           transfer, merger, consolidation or other disposition
                           (or series of related sales, leases, transfers,
                           mergers or consolidations or dispositions) by the
                           Company or any of its Subsidiaries of a significant
                           portion of the business of the Company or any such
                           Subsidiary, which Investment relates to a business in
                           which the Company or any of its Subsidiaries was
                           engaged on the Issue Date;

                  (x)      any Investment in existence on the Issue Date; and

                  (xi)     other Investments in any Person having an aggregate
                           fair market value (measured on the date each such
                           Investment was made), when taken together with all
                           other Investments made pursuant to this clause (xi)
                           since the Issue Date, not to exceed $50.0 million.

                  "Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).

                  "Preferred Securities" means that class of preferred
securities representing undivided preferred beneficial interests in the assets
of the Trust and having such terms as are set forth in the Declaration.

                  "Preferred Securities Guarantee" means the guarantee
agreement, dated as of December 17, 2001, between of the Company and JPMorgan
Chase Bank, as the initial Preferred Securities Guarantee Trustee thereunder in
respect of the Preferred Securities.

                  "Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.

                  "principal" of the Debentures means the principal of the
Debentures plus the premium, if any, payable on the Debentures which is due or
overdue or is to become due at the relevant time.

                  "Property Trustee" means the entity performing the functions
of the Property Trustee of the Trust under the Declaration.

                  "Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.

                                       14
<PAGE>

                  "Refinancing Indebtedness" means Indebtedness that refinances
any Indebtedness of the Company or any Subsidiary of the Company existing on the
Issue Date or incurred in compliance with the Indenture, including Indebtedness
that refinances Refinancing Indebtedness; provided, however, that:

                  (i)      such Refinancing Indebtedness has a Stated Maturity
                           no earlier than the Stated Maturity of the
                           Indebtedness being Refinanced;

                  (ii)     such Refinancing Indebtedness has an Average Life at
                           the time such Refinancing Indebtedness is incurred
                           that is equal to or greater than the Average Life of
                           the Indebtedness being Refinanced;

                  (iii)    such Refinancing Indebtedness has an aggregate
                           principal amount (or if incurred with original issue
                           discount, an aggregate issue price) that is equal to
                           or less than the aggregate principal amount (or if
                           incurred with original issue discount, the aggregate
                           accreted value) then outstanding or committed (plus
                           fees and expenses and defeasance costs) under the
                           Indebtedness being Refinanced; and

                  (iv)     to the extent that the Indebtedness being Refinanced
                           constitutes Subordinated Obligations, such
                           Refinancing Indebtedness shall also constitute
                           Subordinated Obligations;

                  provided further, however, that Refinancing Indebtedness shall
not include Indebtedness of a Subsidiary that Refinances Indebtedness of the
Company.

                  "Regular Record Date" means for any Interest Payment Date, the
fifteenth day or next earlier Business Day if such fifteenth day is not a
Business Day, next preceding such Interest Payment Date.

                  "Responsible Officer" means, with respect to the Indenture
Trustee, any officer of the Indenture Trustee with direct responsibility for the
administration of this Indenture and also means, with respect to any particular
corporate trust matter, any other officer to whom such matter is referred based
on such officer's knowledge of any familiarity with particular matter.

                  "Restricted Payment" with respect to any Person means:

                  (i)      the declaration or payment of any dividends or any
                           other distributions of any sort in respect of its
                           Capital Stock (including any payment in connection
                           with any merger or consolidation involving such
                           Person) or similar payment to the direct or indirect
                           holders (in any such case in their capacity as such)
                           of its Capital Stock (other than dividends or
                           distributions payable solely in its Capital Stock
                           (other than Disqualified Stock) and dividends or
                           distributions payable solely to the Company or a
                           Subsidiary of the Company, and other than pro rata
                           dividends or other distributions made by a Subsidiary
                           that is not a Wholly Owned Subsidiary to minority

                                       15
<PAGE>

                           stockholders (or owners of an equivalent interest in
                           the case of a Subsidiary that is an entity other than
                           a corporation));

                  (ii)     the purchase, redemption or other acquisition or
                           retirement for value of any Capital Stock of the
                           Company held by any Person or of any Capital Stock of
                           a Subsidiary held by any Affiliate of the Company
                           (other than a Subsidiary), including the exercise of
                           any option to exchange any Capital Stock (other than
                           into Capital Stock of the Company that is not
                           Disqualified Stock);

                  (iii)    the purchase, repurchase, redemption, defeasance or
                           other acquisition or retirement for value prior to
                           scheduled maturity, scheduled repayment or scheduled
                           sinking fund payment of any Subordinated Obligations
                           of such Person (other than the purchase, repurchase
                           or other acquisition of Subordinated Obligations
                           purchased in anticipation of satisfying a sinking
                           fund obligation, principal installment or final
                           maturity, in each case due within one year of the
                           date of such purchase, repurchase or other
                           acquisition); or

                  (iv)     the making of any Investment (other than a Permitted
                           Investment) in any Person.

                  "Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.

                  "Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of December 17, 2001, by and among the Company, the Trust
and the Investors named therein.

                  "Senior Indebtedness" means (i) Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter incurred and (ii) accrued
and unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not post-filing interest is allowed in such proceeding), fees, expenses,
reimbursement obligations under letters of credit and any other "Obligations"
(as defined in the Credit Agreement) under the Credit Agreement, in the case of
each of clauses (i) and (ii), in respect of (A) Indebtedness of the Company for
money borrowed and (B) Indebtedness evidenced by debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable, unless, in the case of clauses (i) and (ii), in the instrument creating
or evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are not superior in right of payment to the
Debentures; provided, however, that Senior Indebtedness shall not include: (a)
any obligation of the Company to any Subsidiary of the Company; (b) any
liability for federal, state, local or other taxes owed or owing by the Company
or any Subsidiary of the Company (including payments pursuant to any tax sharing
agreement between the Company and any of its Subsidiaries, on the one hand, and
Hallmark Cards and any of its Subsidiaries, on the other hand); (c) any accounts

                                       16
<PAGE>

payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities); (d) any Indebtedness of the Company (and any accrued and unpaid
interest in respect thereof) which is subordinate or junior in any respect to
any other Indebtedness or other obligation of the Company; (e) that portion of
any Indebtedness which at the time of incurrence is incurred in violation of
this Indenture; or (f) obligations in respect of performance, bid and surety
bonds and completion guarantees provided by the Company or any Subsidiary.

                  "Special Event" means a Tax Event or an Investment Company
Event.

                  "Special Event Redemption" has the meaning set forth in
Section 3.01 hereof.

                  "Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).

                  "Subordinated Hallmark Obligations" has the meaning set forth
in the Subordination and Support Agreement.

                  "Subordinated Obligations" means any Indebtedness of the
Company (whether Outstanding on the Issue Date or thereafter incurred, including
the Subordinated Hallmark Obligations) which is subordinate or junior in right
of payment to the Debentures and the Contingent Appreciation Certificates
pursuant to a written agreement, executed by the Person to whom such
Indebtedness is owed, to that effect.

                  "Subordination and Support Agreement" means the Subordination
and Support Agreement, dated as of December 17, 2001, by and among the Company,
the Trust, Hallmark Cards, the Indenture Trustee, the Property Trustee and the
holders of Contingent Appreciation Certificates named therein.

                  "Subsidiary" means, with respect to any Person, (i) any
corporation at least a majority of whose outstanding Voting Stock shall at the
time be owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner.

                  "Tax Event" means that the Regular Trustees under the
Declaration shall have received an opinion of a nationally recognized
independent tax counsel experienced in such matters to the effect that on or
after the Issue Date, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority therefore
or therein, or (b) any amendment to, or change in, an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority, which

                                       17
<PAGE>

amendment or change is enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced or which action is taken,
in each case on or after the Issue Date, there is more than an insubstantial
risk that (i) the Trust is or will be within 90 days of the date thereof,
subject to United States federal income tax with respect to interest accrued or
received on the Debentures, (ii) the Trust is, or will be within 90 days of the
date thereof, subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest payable by the Company to the Trust on
the Debentures is not, or within 90 days of the date thereof will not be,
deductible, in whole or in part, by the Company for United States federal income
tax purposes.

                  "Temporary Cash Investments" means any of the following:

                  (i) marketable securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition,

                  (ii) time deposits, demand deposits, certificates of deposit,
acceptances or prime commercial paper or repurchase obligations for underlying
securities of the types described in clause (i) entered into with any commercial
bank organized under the laws of the United States or a state thereof having a
short-term deposit rating at the time of acquisition of at least A-2 or the
equivalent thereof by Standard & Poor's Ratings Services or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc.,

                  (iii) commercial paper issued by a corporation with a rating
at the time of acquisition of A-1 or A-2 or the equivalent thereof by Standard &
Poor's Ratings Services or P-1 or P-2 or the equivalent thereof by Moody's
Investors Service, Inc. and in each case maturing within twelve months after the
date of acquisition,

                  (iv) repurchase agreements and reverse repurchase agreements
with any bank meeting the requirements set forth in clause (ii) above relating
to marketable direct obligations issued or unconditionally backed by the full
faith and credit of the United States, in each case maturing within one year
from the date thereof, and

                  (v) marketable direct obligations issued by any state of the
United States or any agency or instrumentality thereof maturing within twelve
months from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings generally obtainable from either Standard
& Poor's Ratings Services or Moody's Investors Service, Inc.

                  "Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.

                  "Trust Securities" means Common Securities and Preferred
Securities issued by the Trust.

                  "Unit" has the meaning set forth in the recitals to this
Indenture.

                                       18
<PAGE>

                  "Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.

                  "Wholly Owned Subsidiary" means a Subsidiary all the Capital
Stock of which (other than directors' qualifying shares, investments by foreign
nationals mandated by applicable law and the minority interest held in Crown
Media United States LLC, a Delaware limited liability company, on the Issue
Date) is owned by the Company or one or more Wholly Owned Subsidiaries.

                                   ARTICLE II

                   ISSUE, DESCRIPTION, TERMS AND EXECUTION AND
                           REGISTRATION OF DEBENTURES

                  SECTION 2.01. Principal Amount and Maturity.

                  (a) The aggregate principal amount of Debentures that may be
authenticated and delivered under this Indenture is $273,196,000.

                  (b) The Maturity Date shall be December 15, 2007.

                  SECTION 2.02. Form of Securities and Payment.

                  The Debentures shall be issued in fully registered
certificated form. Each Debenture shall be dated the date of its authentication.
Principal and interest on the Debentures issued in certificated form shall be
payable and the transfer of such Debentures shall be registrable at the office
or agency of the Paying Agent designated by the Company; provided, however, that
payment of interest may be made at the option of the Company by check mailed to
the registered Holder at such address as shall appear in the Debenture Register.
The Company shall be required to maintain a Paying Agent in each place of
payment for the Debentures. Notwithstanding the foregoing, so long as the Holder
of any of the Debentures is the Property Trustee, the payment of the principal
of and interest on, such Debentures shall be made at such place and to such
account as may be designated by the Property Trustee.

                  SECTION 2.03. Interest.

                  (a) The Debentures shall bear interest at the rate of 6.75%
per annum (the "Coupon Rate") from the original date of issuance until the
principal thereof becomes due and payable, and on any overdue principal and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
Coupon Rate, payable quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year (each, an "Interest Payment Date"), commencing on March
15, 2002, to the Person in whose name such Debenture is registered, at the close
of business on the Regular Record Date for such Interest Payment Date. Interest
payments not paid when due shall accrue interest at the Coupon Rate on the
amount of accrued and unpaid interest (to the extent permitted by law). So

                                       19
<PAGE>

long as an Event of Default shall have occurred and be continuing (after, as
well as before, a judgment), the Company shall on each such date on which
Defaulted Interest is payable, pay interest, to the extent permitted by
applicable law, on any then unpaid amount of the Debentures Outstanding at a
rate equal to 8.75%, representing 2% per annum in excess of the Coupon Rate. The
term "interest" shall include Defaulted Interest and any Additional Interest.

                  (b) The amount of interest payable for any period shall be
computed on the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable for any
period shorter than a full quarterly period for which interest is computed,
shall be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Debentures
is not a Business Day, then payment of interest payable on such date shall be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.

                  (c) If at any time while the Property Trustee is the Holder of
any Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority
(in the case of the Property Trustee, attributable to its holding the
Debentures), then, in any case, the Company shall pay as additional interest
("Additional Interest") on the Debentures held by the Property Trustee, such
additional amounts as shall be required so that the net amounts received and
retained by the Trust and the Property Trustee after paying such taxes, duties,
assessments or other governmental charges shall be equal to the amounts the
Trust and the Property Trustee would have received had no such taxes, duties,
assessments or other government charges been imposed.

                  SECTION 2.04. Denominations: Provisions for Payment.

                  (a) The principal of and the interest on the Debentures shall
be payable in the coin or currency of the United States of America that at the
time of payment is legal tender for payment of public and private debt, at the
office or agency of the Paying Agent designated by the Company maintained for
that purpose in the Borough of Manhattan, the City and State of New York.

                  (b) Any Defaulted Interest shall forthwith cease to be payable
to the registered Holder on the relevant Regular Record Date by virtue of having
been such Holder and such Defaulted Interest shall be paid by the Company to the
Persons in whose names the Debentures are registered at the close of business on
a special record date for the payment of such Defaulted Interest, which shall be
fixed in the following manner: the Company shall notify the Indenture Trustee in
writing of the amount of Defaulted Interest proposed to be paid on the
Debentures and the date of the proposed payment, and at the same time the
Company shall deposit with the Indenture Trustee an amount of cash equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Indenture Trustee for such deposit
prior to the date of the proposed payment, such amount when deposited

                                       20
<PAGE>

to be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Indenture Trustee shall fix a
special record date for the payment of such Defaulted Interest which shall not
be more than 15 nor less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Indenture Trustee of the
notice of the proposed payment. The Indenture Trustee shall promptly notify the
Company of such special record date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the special record date therefor to be mailed, by first class mail postage
prepaid, to each Holder at his or her address as it appears in the Debenture
Register, not less than 10 days prior to such special record date. Notice of the
proposed payment of such Defaulted Interest and the special record date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to the
Persons in whose names the Debentures are registered on such special record
date.

                  SECTION 2.05. Execution and Authentication.

                  The Debentures shall be signed on behalf of the Company by,
its President, or one of its Vice Presidents, or its Treasurer, or one of its
Assistant Treasurers, or its Secretary, or one of its Assistant Secretaries.
Signatures may be in the form of a manual or facsimile signature. The Company
may use the facsimile signature of any Person who shall have been a President or
Vice President thereof, or of any Person who shall have been a Secretary or
Assistant Secretary thereof, notwithstanding the fact that at the time the
Debentures shall be authenticated and delivered or disposed of, such Person
shall have ceased to be the President or a Vice President, or the Secretary or
an Assistant Secretary of the Company. The Debentures shall be dated the date of
its authentication by the Indenture Trustee.

                  The Debentures shall not be valid until authenticated manually
by an authorized signatory of the Indenture Trustee, or by an Authenticating
Agent. Such signature shall be conclusive evidence that the Debentures so
authenticated has been duly authenticated and delivered hereunder and that the
Holder is entitled to the benefits of this Indenture.

                  At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Debentures to the Indenture
Trustee for authentication, together with a written order of the Company for the
authentication and delivery of such Debentures, signed by its President or any
Vice President and its Secretary or any Assistant Secretary, and the Indenture
Trustee in accordance with such written order shall authenticate and deliver
such Debentures.

                  In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Indenture Trustee shall be entitled to receive, and (subject to Section 7.01)
shall be fully protected in relying upon, an Opinion of Counsel stating that the
form and terms thereof have been established in conformity with the provisions
of this Indenture.

                  The Indenture Trustee shall not be required to authenticate
such Debentures if the issue of such Debentures pursuant to this Indenture will
affect the Indenture Trustee's own

                                       21
<PAGE>

rights, duties or immunities under the Debentures and this Indenture or
otherwise in a manner that is not reasonably acceptable to the Indenture
Trustee.

                  SECTION 2.06. Registration of Transfer.

                  (a) The Company shall keep, or cause to be kept, at its office
or agency designated in the Borough of Manhattan, the City and State of New
York, or such other location designated by the Company a register or registers
(herein referred to as the "Debenture Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall register the
Debentures and the transfers of Debentures as in this Article provided and which
at all reasonable times shall be open for inspection by the Indenture Trustee.
The registrar for the purpose of registering Debentures and transfer of
Debentures as herein provided shall be appointed as authorized by Board
Resolution (the "Debenture Registrar").

                  Upon surrender for registration of transfer of the Debentures
at the office or agency of the Company designated for such purpose, the Company
shall execute, the Indenture Trustee shall authenticate and such office or
agency shall deliver in the name of the transferee or transferees a new
Debenture for a like aggregate principal amount and other applicable terms and
conditions.

                  All Debentures presented or surrendered for registration of
transfer, as provided in this Section, shall be accompanied (if so required by
the Company or the Debenture Registrar) by a written instrument or instruments
of transfer, in form satisfactory to the Company or the Debenture Registrar,
duly executed by the registered Holder or by such Holder's duly authorized
attorney in writing.

                  (b) No service charge shall be made for any registration of
transfer of Debentures, or issue of new Debentures in case of redemption of any
Debentures, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge in relation thereto.

                  (c) The Company shall not be required (i) to issue or register
the transfer of any Debentures during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of all
the Debentures Outstanding and ending at the close of business on the day of
such mailing, nor (ii) to register the transfer of any Debentures called for
redemption.

                  (d) Each Holder of the Debentures, by its acceptance thereof,
will be deemed to have acknowledged, represented to and agreed with the Company
that such Holder understands and acknowledges that (1) the Debentures and
underlying securities have not been registered under the Securities Act or any
other applicable securities laws and are not freely transferable without
registration under or an exemption from the Securities Act, (2) the Debentures
are being purchased for the account of the Holder without a view to distribute,
or for offer or sale in connection with any distribution of, the Debentures in
violation of the securities act or any other applicable securities laws and (3)
in the absence of registration, the Debentures can only be transferred pursuant
to an exemption under the Securities Act and upon delivery of

                                       22
<PAGE>

such certifications and an opinion of counsel reasonably acceptable to the
Company to such effect and in accordance with any other applicable securities
laws and that such Holder will notify the transferee of such resale
restrictions.

                  SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Securities.

                  In case any Debenture shall become mutilated or be destroyed,
lost or stolen, the Company (subject to the next succeeding sentence) shall
execute, and upon the Company's request the Indenture Trustee (subject as
aforesaid) shall authenticate and deliver, a new Debenture, in exchange and
substitution for the mutilated Debenture, or in lieu of and in substitution for
the Debenture so destroyed, lost or stolen. In every case the applicant for a
substituted Debenture shall furnish to the Company and the Indenture Trustee
such indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and the Indenture Trustee evidence to their satisfaction of the
destruction, loss or theft of the applicant's Debenture and of the ownership
thereof. The Indenture Trustee shall authenticate any such substituted Debenture
and deliver the same upon the written request or authorization of any officer of
the Company. Upon the issuance of any substituted Debenture, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Indenture Trustee) connected therewith. In case any
Debenture that has matured or is about to mature shall become mutilated or be
destroyed, lost or stolen, the Company may, instead of issuing a substitute
Debenture, pay or authorize the payment of the same (without surrender thereof
except in the case of a mutilated Debenture) if the applicant for such payment
shall furnish to the Company and the Indenture Trustee indemnity as they may
require to save them harmless, and, in case of destruction, loss or theft,
evidence to the satisfaction of the Company and the Indenture Trustee of the
destruction, loss or theft of such Debenture and of the ownership thereof.

                  Every replacement Debenture issued pursuant to the provisions
of this Section shall constitute an additional contractual obligation of the
Company, whether or not the mutilated, destroyed, lost or stolen Debenture shall
be found at any time, or be enforceable by anyone, and shall be entitled to all
the benefits of this Indenture equally and proportionately with any and all
other Debentures duly issued hereunder. All Debentures shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.

                  SECTION 2.08. Cancellation.

                  All Debentures surrendered for the purpose of payment,
redemption or registration of transfer shall, if surrendered to the Company or
any Paying Agent, be delivered to the Indenture Trustee for cancellation, or, if
surrendered to the Indenture Trustee, shall be cancelled by it, and no
Debentures shall be issued in lieu thereof except as expressly required or
permitted by any of the provisions of this Indenture. On written request of the
Company at the

                                       23
<PAGE>

time of such surrender, the Indenture Trustee shall deliver to the Company
canceled Debentures held by the Indenture Trustee. In the absence of such
written request, the Indenture Trustee shall dispose of canceled Debentures in
accordance with its standard procedures and deliver a certificate of disposition
to the Company. If the Company shall otherwise acquire any of the Debentures,
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Debentures unless and until the same are
delivered to the Indenture Trustee for cancellation.

                  SECTION 2.09. Benefits of Indenture.

                  Nothing in this Indenture or in the Debentures, express or
implied, shall give or be construed to give to any Person, other than the
parties hereto and the Holders of the Debentures and the holders of the
Securities (and, with respect to the provisions of Article XIII, the holders of
Senior Indebtedness) any legal or equitable right, remedy or claim under or in
respect of this Indenture, or under any covenant, condition or provision herein
contained; all such covenants, conditions and provisions being for the sole
benefit of the parties hereto and of the Holders of the Debentures (and, with
respect to the provisions of Article XIII, the holders of Senior Indebtedness).

                  SECTION 2.10. Authenticating Agent.

                  So long as any of the Debentures remain Outstanding there may
be an Authenticating Agent for any or all such Debentures which the Indenture
Trustee shall have the right to appoint. Said Authenticating Agent shall be
authorized to act on behalf of the Indenture Trustee to authenticate Debentures
issued upon registration of transfer or partial redemption thereof or as a
result of mutilation, destruction, loss or theft of such Debentures, and
Debentures so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Indenture Trustee hereunder. All references in this Indenture to the
authentication of Debentures by the Indenture Trustee shall be deemed to include
authentication by an Authenticating Agent for Debentures. Each Authenticating
Agent shall be acceptable to the Company and shall be a corporation that has a
combined capital and surplus, as most recently reported or determined by it,
sufficient under the laws of any jurisdiction under which it is organized or in
which it is doing business to conduct a trust business, and that is otherwise
authorized under such laws to conduct such business and is subject to
supervision or examination by Federal or State authorities. If at any time any
Authenticating Agent shall cease to be eligible in accordance with these
provisions, it shall resign immediately.

                  Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Indenture Trustee and to the Company. The
Indenture Trustee may at any time (and upon request by the Company shall)
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon resignation,
termination or cessation of eligibility of any Authenticating Agent, the
Indenture Trustee may appoint an eligible successor Authenticating Agent
acceptable to the Company. Any successor Authenticating Agent, upon acceptance
of its appointment hereunder, shall

                                       24
<PAGE>

become vested with all the rights, powers and duties of its predecessor
hereunder as if originally named as an Authenticating Agent pursuant hereto.

                                  ARTICLE III

                      REDEMPTION AND PURCHASE OF DEBENTURES

                  SECTION 3.01. Optional Redemption and Special Event
                                Redemption.

                  (a) At any time on or after December 15, 2003, the Company
shall have the right to redeem (the "Optional Redemption") any and all of the
Debentures Outstanding, in whole but not in part, at a redemption price equal to
100% of the aggregate principal amount of the Debentures Outstanding, together
with any accrued and unpaid interest thereon to the date of redemption.

                  (b) At any time on or after the Issue Date and prior to
December 15, 2003, in the event of a Special Event, the Company shall have the
right to redeem (the "Special Event Redemption") any and all of the Debentures
Outstanding, in whole but not in part, at a redemption price equal to 100% of
the aggregate principal amount of the Debentures, together with any accrued and
unpaid interest thereon to the date of redemption.

                  SECTION 3.02. Change of Control Redemption and Offer to
                                Purchase.

                  (a) In the event of a Change of Control, the Company shall
have the right to redeem any and all of the Debentures Outstanding at a
redemption price per Debenture, depending on the period in which the Change of
Control occurs, equal to the following percentages per $1,000 aggregate
principal amount of Debentures Outstanding, together with any accrued and unpaid
interest to the date of redemption (a "Change of Control Redemption"):

                   December 15, 2001 to December 14, 2002        110.0%
                   December 15, 2002 to December 14, 2003        110.0%
                   December 15, 2003 and thereafter              100.0%

                  (b) In the event that the Company declines to exercise a
Change of Control Redemption with respect to all Debentures Outstanding within
five (5) days of a Change of Control, the Company shall be required to offer to
purchase any and all of the Debentures Outstanding at a price equal to the
redemption price that would have been payable upon a Change of Control
Redemption specified in clause (a) of this Section 3.02 (a "Change of Control
Offer"). In connection with any such Change of Control Offer, the Company
covenants and agrees that it shall purchase any and all Debentures that are
validly tendered by Holders thereof.

                  SECTION 3.03. Notice of Redemption.

                  (a) The election of the Company to redeem or offer to
purchase, as applicable, any Debentures pursuant to Section 3.01 or 3.02 shall
be evidenced by or pursuant to a Board Resolution. In case the Company shall
desire to exercise such right to redeem all, or offer to purchase any and all,
of the Debentures in accordance with Section 3.01 or 3.02, the Company

                                       25
<PAGE>

shall, or shall cause the Indenture Trustee to, give notice of such redemption
or offer to purchase, as applicable, to Holders of the Debentures to be redeemed
or purchased by mailing, first class mail postage prepaid, an irrevocable notice
of such redemption not less than 45 days and not more than 60 days before the
date fixed for redemption or purchase to such Holders at their last addresses as
they shall appear upon the Debenture Register (a "Notice of Redemption"). Any
such Notice of Redemption that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the registered
Holder receives the notice. In any case, failure to duly give such Notice of
Redemption to the Holder of any Debenture redeemed hereunder, or any defect in
the Notice of Redemption, shall not affect the validity of the proceedings for
the redemption or purchase of any other Debenture.

                  The Notice of Redemption shall specify the date fixed for
redemption or purchase and the redemption or purchase price (including any
premium) at which the Debentures are to be redeemed or purchased, and shall
state that payment of the redemption or purchase price of such Debentures to be
redeemed or purchased shall be made at the office or agency of the Company in
the Borough of Manhattan, The City of New York, upon presentation and surrender
of such Debentures that interest accrued to the date fixed for redemption or
purchase shall be paid as specified in said notice and that from and after said
date interest shall cease to accrue.

                  (b) The Company may, in accordance with Sections 3.01 and 3.02
and if and whenever it shall so elect, by delivery of instructions signed on its
behalf by its President or any Vice President, instruct the Indenture Trustee or
any Paying Agent to call all of the Debentures for redemption or purchase and to
give Notice of Redemption in the manner set forth in this Section, such notice
to be in the name of the Company or its own name as the Indenture Trustee or
such Paying Agent may deem advisable. In any case in which Notice of Redemption
is to be given by the Indenture Trustee or any such Paying Agent, the Company
shall deliver or cause to be delivered to, or permit to remain with, the
Indenture Trustee or such Paying Agent, as the case may be, such Debenture
Register, transfer books or other records, or suitable copies or extracts
therefrom, sufficient to enable the Indenture Trustee or such Paying Agent to
give any notice by mail that may be required under the provisions of this
Section.

                  (c) Notwithstanding the provisions of Sections 3.01 and 3.02,
prior to effecting any redemption or offer to purchase with respect to
Debentures being redeemed or purchased, the Company shall pay in full all
accrued and unpaid interest (including Defaulted Interest and Additional
Interest, if any) on all Debentures Outstanding so redeemed or purchased.

                  SECTION 3.04. Payment Upon Redemption or Purchase.

                  (a) If the giving of Notice of Redemption shall have been
completed as above provided, the Debentures to be redeemed or purchased
specified in such notice shall become due and payable on the date and at the
place stated in such notice at the redemption or purchase price, together with
interest accrued to the date fixed for redemption or purchase and interest on
such Debentures shall cease to accrue on and after the date fixed for redemption
or purchase, unless the Company shall default in the payment of such redemption
or purchase price and accrued interest with respect to any such Debenture, in
which case interest shall continue to accrue. On presentation and surrender of
such Debentures on or after the date fixed for redemption or

                                       26
<PAGE>

purchase at the place of payment specified in the notice, said Debentures shall
be paid and redeemed or purchased at the redemption price, together with
interest accrued thereon to the date fixed for redemption or purchase (but if
the date fixed for redemption or purchase is an Interest Payment Date, the
interest installment payable on such date shall be payable to the registered
Holder at the close of business on the applicable record date pursuant to
Section 2.03(a)).

                  If any Debenture called for redemption or offered to be
purchased shall not be so paid upon surrender thereof for redemption or
purchase, the principal shall, until paid, bear interest from the date fixed for
redemption or purchase at the rate prescribed therefor in the Debenture until
paid in full.

                  (b) The redemption or purchase price shall be paid prior to
12:00 noon, New York time, on the date of such redemption or purchase or at such
earlier time as the Company determines and specifies in the notice of redemption
or purchase, provided that the Company shall deposit with the Indenture Trustee
an amount sufficient to pay the redemption or purchase price by 10:00 a.m., New
York time, on the date such redemption or purchase price is to be paid.

                  SECTION 3.05. No Sinking Fund.

                  The Debentures are not entitled to the benefit of any sinking
fund.

                                   ARTICLE IV

                            COVENANTS OF THE COMPANY

                  SECTION 4.01. Payment of Principal and Interest.

                  The Company shall duly and punctually pay or cause to be paid
the principal of and interest on, the Debentures at the time and place and in
the manner provided herein.

                  SECTION 4.02. Maintenance of Office or Agency.

                  So long as the Debentures remain Outstanding, the Company
agrees to maintain an office or agency in the Borough of Manhattan, The City of
New York, with respect to such Debentures and at such other location or
locations as may be designated as provided in this Section 4.02, where (i)
Debentures may be presented for payment, (ii) Debentures may be presented as
hereinabove authorized for registration of transfer, and (iii) notices and
demands to or upon the Company in respect of the Debentures and this Indenture
may be given or served, such designation to continue with respect to such office
or agency until the Company shall, by written notice signed by an Authorized
Officer and delivered to the Indenture Trustee, designate some other office or
agency for such purposes or any of them. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, such presentations, notices and
demands may be made or served at the Corporate Trust Office of the Indenture
Trustee, and the Company hereby appoints the Indenture Trustee as its agent to
receive all such presentations, notices and demands.

                                       27
<PAGE>

                  SECTION 4.03. Paying Agent.

                  (a) If the Company shall appoint one or more Paying Agents for
the Debentures, other than the Indenture Trustee, the Company shall cause each
such Paying Agent to execute and deliver to the Indenture Trustee an instrument
in which such agent shall agree with the Indenture Trustee, subject to the
provisions of this Section 4.03:

                           (i) that it will hold all sums held by it as such
                  agent for the payment of the principal of and interest on, the
                  Debentures (whether such sums have been paid to it by the
                  Company or by any other obligor of such Debentures) in trust
                  for the benefit of the Persons entitled thereto;

                           (ii) that it will give the Indenture Trustee notice
                  of any failure by the Company (or by any other obligor of such
                  Debentures) to make any payment of the principal of and
                  interest on, the Debentures when the same shall be due and
                  payable;

                           (iii) that it will, at any time during the
                  continuance of any failure referred to in the preceding
                  paragraph (a)(ii) above, upon the written request of the
                  Indenture Trustee, forthwith pay to the Indenture Trustee all
                  sums so held in trust by such Paying Agent; and

                           (iv) that it will perform all other duties of Paying
                  Agent as set forth in this Indenture.

                  (b) If the Company shall act as its own Paying Agent with
respect to any of the Debentures, it shall on or before each due date of the
principal of or interest on, the Debentures, set aside, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
such principal or interest so becoming due on Debentures until such sums shall
be paid to such Persons or otherwise disposed of as herein provided and shall
promptly notify the Indenture Trustee of such action, or any failure (by it or
any other obligor on such Debentures) to take such action. Whenever the Company
shall have one or more Paying Agents for any of the Debentures, it will, prior
to each due date of the principal or interest on any Debentures, deposit with
the Paying Agent a sum sufficient to pay the principal or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal or interest, and (unless such Paying Agent is the Indenture
Trustee) the Company shall promptly notify the Indenture Trustee of this action
or failure so to act.

                  (c) Notwithstanding anything in this Section to the contrary,
(i) the agreement to hold sums in trust as provided in this Section 4.03 is
subject to the provisions of Section 11.05, and (ii) the Company may at any
time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or direct any Paying Agent to pay, to
the Indenture Trustee all sums held in trust by the Company or such Paying
Agent, such sums to be held by the Indenture Trustee upon the same terms and
conditions as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying

                                       28
<PAGE>

Agent to the Indenture Trustee, such Paying Agent shall be released from all
further liability with respect to such sums.

                  SECTION 4.04. Limitations on Indebtedness.

                  The Company shall not, and shall not permit any Subsidiary to,
incur, create, assume or suffer to exist any Indebtedness other than:

                  (a) the Indebtedness represented by the Credit Agreement and
the obligations related thereto; provided, however that, after giving effect to
any such incurrence, the aggregate principal amount of all Indebtedness incurred
under this clause (a) and outstanding at any time shall not exceed $320,000,000;

                  (b) Senior Indebtedness (in addition to Indebtedness incurred
pursuant to clause (a) above) not to exceed $50,000,000 at any time outstanding;

                  (c) ordinary trade payables which are not yet due and payable
and are not the result of a transaction which is essentially the borrowing of
money;

                  (d) Indebtedness owed to and held by the Company or a
Subsidiary; provided, however, that (1) any subsequent issuance or transfer of
any Capital Stock which results in any such Subsidiary ceasing to be a
Subsidiary or any subsequent transfer of such Indebtedness (other than to the
Company or a Subsidiary) shall be deemed, in each case, to constitute the
incurrence of such Indebtedness by the obligor thereon and (2) if the Company is
the obligor on such Indebtedness, such Indebtedness is expressly subordinated to
the prior payment in full in cash of all obligations with respect to the
Debentures;

                  (e) Indebtedness existing as of the Issue Date (other than
Indebtedness under clause (a) or (g) hereof);

                  (f) Indebtedness that constitutes Subordinated Hallmark
Obligations;

                  (g) the Debentures and Contingent Appreciation Certificates;

                  (h) Preferred Stock (other than Disqualified Stock) to the
extent classified as "indebtedness" under GAAP;

                  (i) Hedging Obligations;

                  (j) Refinancing Indebtedness in respect of Indebtedness
incurred pursuant to clause (d), (e), (f) or (g) or this clause (j);

                  (k) obligations in respect of performance, bid and surety
bonds and completion guarantees provided by the Company or any Subsidiary in the
ordinary course of business;

                                       29
<PAGE>

                  (l) Indebtedness constituting Subordinated Obligations owed to
and held by Hallmark Cards or its Subsidiaries in which no cash payment of
principal, premium, interest or otherwise is due or payable on or prior to 180
days after the Maturity Date;

                  (m) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business; provided, however, that
such Indebtedness is extinguished within two Business Days of its incurrence;
and

                  (n) Indebtedness of the Company, including Indebtedness in
respect of secured purchase money financings (including Capital Lease
Obligations), in an aggregate principal amount which, when taken together with
all other Indebtedness of the Company outstanding on the date of such incurrence
(other than Indebtedness permitted by clauses (a) through (m) above) does not
exceed $30,000,000; provided, however, that if such Indebtedness is not Senior
Indebtedness, then the Company shall not incur or permit to exist any Lien of
any nature whatsoever on any of its properties (including Capital Stock of a
Subsidiary), whether owned at the Issue Date or thereafter acquired, securing
such Indebtedness, without effectively providing that the Debentures shall be
secured equally and ratably with (or prior to) the obligations so secured for so
long as such obligations are so secured.

                  SECTION 4.05. Restricted Payments.

                  (a) The Company shall not, and shall not permit any
Subsidiary, directly or indirectly, to make a Restricted Payment if at the time
the Company or such Subsidiary makes such Restricted Payment:

                           (i) a Default shall have occurred and be continuing
                  (or would result therefrom); or

                           (ii) the aggregate amount of such Restricted Payment
                  and all other Restricted Payments since the Issue Date would
                  exceed the sum of (without duplication):

                                    (A) 50% of the Consolidated Net Income
                           accrued on a cumulative basis during the period
                           (treated as one accounting period) from the beginning
                           of the fiscal quarter immediately following the
                           fiscal quarter during which the Issue Date occurs to
                           the end of the most recent fiscal quarter ending at
                           least 45 days prior to the date of such Restricted
                           Payment (or, (1) in case such Consolidated Net Income
                           shall be a deficit, 100% of the Consolidated Adjusted
                           Net Loss, or, (2) to the extent such Consolidated
                           Adjusted Net Loss shall not be a deficit, zero); plus

                                    (B) 100% of the aggregate Net Cash Proceeds
                           received by the Company from the issuance or sale of
                           its Capital Stock (other than Disqualified Stock)
                           subsequent to the Issue Date (other than an issuance
                           or sale to a Subsidiary of the Company and other than
                           an issuance or sale to an employee stock ownership
                           plan or to a trust established by the

                                       30
<PAGE>

                           Company or any of its Subsidiaries for the benefit of
                           their employees) and 100% of any cash capital
                           contribution received by the Company from its
                           shareholders subsequent to the Issue Date; plus

                                    (C) the amount by which Indebtedness of the
                           Company is reduced upon the conversion or exchange
                           (other than by a Subsidiary of the Company),
                           including as a result of an exercise of the right to
                           receive shares of Class A Common Stock of the Company
                           under the Contingent Appreciation Certificates,
                           subsequent to the Issue Date of any Indebtedness of
                           the Company convertible or exchangeable for Capital
                           Stock (other than Disqualified Stock) of the Company
                           (less the amount of any cash, or the fair value of
                           any other property, distributed by the Company upon
                           such conversion or exchange); plus

                                    (D) an amount equal to the net reduction in
                           the Investments (other than Permitted Investments)
                           made by the Company or any Subsidiary in any Person
                           (other than the Company or any of its Wholly Owned
                           Subsidiaries) resulting from repurchases, repayments
                           or redemptions of such Investments by such Person,
                           proceeds realized on the sale of such Investment and
                           proceeds representing the return of capital
                           (excluding dividends and distributions), in each case
                           received by the Company or any such Subsidiary;
                           provided, however, that the foregoing amount shall
                           not exceed, in the case of any such Person, the
                           amount of Investments (excluding Permitted
                           Investments) previously made (and treated as a
                           Restricted Payment) by the Company or any such
                           Subsidiary in such Person; minus

                                    (E) an amount equal to any payments,
                           purchases, repurchases, redemptions, defeasances or
                           other acquisitions or retirements for value of
                           Assumed Obligations in excess of $40,000,000 (which
                           $40,000,000 or lesser amount is not paid with amounts
                           available pursuant to clauses (A) or (B) above) less
                           such payments, purchases, redemptions, defeasances or
                           other acquisitions or retirements for value, from
                           amounts available pursuant to clauses (A) or (B)
                           above.

                  (b) Subject to compliance with Section 4.05(a)(i) hereof, the
preceding provisions shall not prohibit:

                           (i) any Restricted Payment made out of the Net Cash
                  Proceeds of the substantially concurrent sale of, or made by
                  exchange for, Capital Stock of the Company (other than
                  Disqualified Stock and other than Capital Stock issued or sold
                  to a Subsidiary of the Company or an employee stock ownership
                  plan or to a trust established by the Company or any of its
                  Subsidiaries for the benefit of their employees) or a
                  substantially concurrent cash capital contribution received by
                  the Company from its shareholders; provided, however, that (A)
                  such Restricted Payment shall be excluded in the calculation
                  of the aggregate amount of

                                       31
<PAGE>

                  Restricted Payments and (B) the Net Cash Proceeds from such
                  sale or cash capital contribution (to the extent so used for
                  such Restricted Payment) shall be excluded from the
                  calculation of amounts under clause (ii)(B) of paragraph (a)
                  above;

                           (ii) any purchase, repurchase, redemption, defeasance
                  or other acquisition or retirement for value of Subordinated
                  Obligations made by exchange for, or out of the proceeds of
                  the substantially concurrent sale of, Indebtedness (other than
                  Senior Indebtedness) which is permitted to be incurred
                  pursuant to Section 4.04 or out of the Net Cash Proceeds (less
                  any such proceeds used to purchase, repurchase, redeem,
                  defease or otherwise acquire or retire for value any Assumed
                  Obligations) of the substantially concurrent sale of, or made
                  by exchange for, Capital Stock of the Company (other than
                  Disqualified Stock and other than Capital Stock issued or sold
                  to a Subsidiary of the Company or an employee stock ownership
                  plan or to a trust established by the Company or any of its
                  Subsidiaries for the benefit of their employees) or a
                  substantially concurrent cash capital contribution received by
                  the Company from its shareholders; provided, however, that (A)
                  such Restricted Payment shall be excluded in the calculation
                  of the aggregate amount of Restricted Payments and (B) the Net
                  Cash Proceeds from any such sale or such cash capital
                  contribution (to the extent so used for such Restricted
                  Payment) shall be excluded from the calculation of amounts
                  under clause (ii)(B) of paragraph (a) above; and provided,
                  further, that such purchase, repurchase, redemption,
                  defeasance or other acquisition or retirement for value shall
                  be excluded in the calculation of the amount of Restricted
                  Payments;

                           (iii) the payment from the proceeds from the issuance
                  of the Debentures of the obligations owed to Hallmark Cards or
                  its Affiliates as set forth in Schedule 2.3 to the Securities
                  Purchase Agreement on the Issue Date; or

                           (iv) dividends paid within 60 days after the date of
                  declaration thereof if at such date of declaration such
                  dividend would have complied with this covenant; provided,
                  however, that at the time of payment of such dividend, no
                  other Default shall have occurred and be continuing (or result
                  therefrom); provided further, however, that such dividend
                  shall be included in the calculation of the amount of
                  Restricted Payments.

                  SECTION 4.06. Limitation on Affiliate Transactions

                  (a) The Company shall not, and shall not permit any Subsidiary
to, enter into or permit to exist any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with, or for
the benefit of, any Affiliate of the Company (an "Affiliate Transaction")
unless:

                           (i) the terms of the Affiliate Transaction are no
                  less favorable to the Company or such Subsidiary than those
                  that could be obtained at the time of

                                       32
<PAGE>

                  the Affiliate Transaction in arm's-length dealings with a
                  Person who is not an Affiliate;

                           (ii) if such Affiliate Transaction (other than an
                  Affiliate Transaction relating to the execution of a
                  Distribution and Programming Agreement) involves an amount in
                  excess of $5.0 million, or, in the case of any Affiliate
                  Transaction relating to the execution of a Distribution and
                  Programming Agreement, an amount in excess of $15.0 million,
                  the terms of the Affiliate Transaction are set forth in
                  writing and a majority of the directors who are not employees
                  of the Company or employees or directors of such Affiliate and
                  who are disinterested with respect to such Affiliate
                  Transactions (the "independent directors") have determined in
                  good faith that the criteria set forth in clause (i) above are
                  satisfied and have approved the relevant Affiliate Transaction
                  as evidenced by a Board Resolution; provided, however, that if
                  the requisite number of independent directors to act cannot be
                  convened to act, the Company may instead obtain an opinion
                  described in clause (iii) below; and

                           (iii) if such Affiliate Transaction (other than any
                  Affiliate Transaction relating to the execution of a
                  Distribution and Programming Agreement) involves an amount in
                  excess of $25.0 million, or, in the case of an Affiliate
                  Transaction relating to the execution of a new Distribution
                  and Programming Agreement or a modification to or amendment
                  of, or other revision to, an existing Distribution and
                  Programming Agreement, an amount in excess of $75.0 million,
                  the Board of Directors shall have received a written opinion
                  from an investment banking firm, independent appraiser or
                  comparable professional, in any case of recognized national or
                  international prominence, that is not an Affiliate of the
                  Company to the effect that such Affiliate Transaction is fair,
                  from a financial standpoint, to the Company and its
                  Subsidiaries.

                  (b) The provisions of the preceding paragraph (a) shall not
prohibit:

                           (i) any regularly scheduled payments of dividends and
                  distributions on Capital Stock of the Company or any
                  Subsidiary of the Company permitted to be made pursuant to
                  Section 4.05, or payments on or with respect to the
                  Subordinated Hallmark Obligations;

                           (ii) any issuance of securities, or other payments,
                  awards or grants in cash, securities or otherwise pursuant to,
                  or the funding of, employment arrangements, stock options and
                  stock ownership plans for directors, officers, consultants and
                  employees of the Company approved by the Board of Directors;

                           (iii) the payment of reasonable fees to directors of
                  the Company and its Subsidiaries who are not employees of the
                  Company or its Subsidiaries;

                           (iv) any transaction with a Wholly Owned Subsidiary
                  which would constitute an Affiliate Transaction solely because
                  the Company or a Wholly

                                       33
<PAGE>

                  Owned Subsidiary owns an equity interest in or otherwise
                  controls such Wholly Owned Subsidiary;

                           (v) the issuance or sale of any Capital Stock (other
                  than Disqualified Stock) of the Company;

                           (vi) payments and performance of obligations in
                  connection with Distribution and Programming Agreements
                  executed in accordance with the requirements, if any, of the
                  preceding paragraph (a); and

                           (vii) payment and performance of obligations under or
                  in connection with any Affiliate Transaction pursuant to
                  agreements existing on the Issue Date (excluding any
                  amendments, modifications, renewals or other revisions to such
                  agreements).

                  SECTION 4.07. Covenants as to the Trust.

                  For so long as the Securities issued by the Trust remain
outstanding, the Company shall (i) maintain 100% direct or indirect ownership of
the Common Securities of the Trust; provided, however, that any permitted
successor of the Company under the Indenture may succeed to the Company's
ownership of the Common Securities and (ii) cause the Trust (a) to remain a
statutory business trust, (b) to observe all of its obligations under, including
to redeem all of the Trust Securities of the Trust to the extent that the Trust
has funds available to make any required payments as provided by, the
Declaration, and (c) to otherwise continue to be treated as a grantor trust for
United States federal income tax purposes.

                                   ARTICLE V

                           HOLDERS' LISTS AND REPORTS
                    BY THE COMPANY AND THE INDENTURE TRUSTEE

                  SECTION 5.01. Company to Furnish Indenture Trustee Names and
                                Addresses of Holders.

                  The Company shall furnish or cause to be furnished to the
Indenture Trustee (a) on a quarterly basis at least five Business Days prior to
each Regular Record Date a list, in such form as the Indenture Trustee may
reasonably require, of the names and addresses of the Holders of the Debentures
as of such Regular Record Date, provided that the Company shall not be obligated
to furnish or cause to furnish such list at any time that the list shall not
differ in any respect from the most recent list furnished to the Indenture
Trustee by the Company and (b) at such other times as the Indenture Trustee may
request in writing within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished; provided, however, that, in either
case, no such list need be furnished for the Debentures if the Indenture Trustee
shall be the Debenture Registrar; and provided further, that the Indenture
Trustee shall promptly upon receipt furnish any information required pursuant to
this Section 5.01 to the Property Trustee.

                                       34
<PAGE>

                  SECTION 5.02. Preservation Of Information; Communications With
                                Holders.

                  (a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, all information as to the names and addresses of
the Holders of the Debentures contained in the most recent list furnished
thereto as provided in Section 5.01 and as to the names and addresses of Holders
of the Debentures received by the Indenture Trustee in its capacity as the
Debenture Registrar (if acting in such capacity).

                  (b) The Indenture Trustee may destroy any list furnished to it
as provided in Section 5.01 upon receipt of a new list so furnished.

                  (c) Holders may communicate as provided in Section 312(b) of
the Trust Indenture Act with other Holders with respect to their rights under
this Indenture or under the Debentures.

                  SECTION 5.03. Reports by the Company.

                  (a) The Company covenants and agrees to file with the
Indenture Trustee, within 15 days after the Company is required to file the same
with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations prescribe) that
the Company files with the Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file with the
Indenture Trustee and the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports that may be
required pursuant to Section 13 of the Exchange Act, in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.

                  (b) The Company covenants and agrees to deliver to the
Indenture Trustee, within 30 days after the end of each quarterly period, an
Officer's Certificate stating that a review of the activities of the Company and
its Subsidiaries during the preceding quarterly period has been made under the
supervision of the signing officers with a view to determining whether each of
the Company and its Subsidiaries has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such officer
signing such certificate, to the best of his or her knowledge, whether the
Company has kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and whether the Company is in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
whether to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Debentures is prohibited or if such event has occurred,
a description of the event and what action the Company is taking or proposes to
take with respect thereto.

                                       35
<PAGE>

                  So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, year-end financial
statements delivered pursuant to Section 5.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article IV hereof or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.

                  The Company shall, so long as any of the Debentures are
outstanding, deliver to the Indenture Trustee, within five (5) Business Days of
any officer of the Company becoming aware of any Default or Event of Default, an
Officer's Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.

                  (c) The Company covenants and agrees to transmit by mail,
first class postage prepaid, or reputable over-night delivery service that
provides for evidence of receipt, to the Holders, as their names and addresses
appear upon the Debenture Register, within 30 days after the filing thereof with
the Indenture Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to subsections (a) and (b) of this
Section as may be required by rules and regulations prescribed from time to time
by the Commission.

                  (d) Notwithstanding anything contained herein to the contrary,
the Indenture Trustee shall promptly upon receipt furnish any information
required pursuant this Section 5.03 to the Property Trustee.

                  SECTION 5.04. Reports by the Indenture Trustee.

                  (a) On or before July 15 in each year in which any of the
Debentures are Outstanding, the Indenture Trustee shall transmit by facsimile
followed by mail, first class postage prepaid, to the Holders, as their names
and addresses appear upon the Debenture Register, a brief report dated as of the
preceding May 15, if and to the extent required under Section 313(a) of the
Trust Indenture Act.

                  (b) The Indenture Trustee shall comply with Section 313(b) and
313(c) of the Trust Indenture Act.

                  (c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Indenture Trustee with the Company.

                                       36
<PAGE>

                                   ARTICLE VI

                  REMEDIES OF THE INDENTURE TRUSTEE AND HOLDERS
                               ON EVENT OF DEFAULT

                  SECTION 6.01. Events of Default.

                  (a) Whenever used herein with respect to the Debentures,
"Event of Default" means any one or more of the following events that has
occurred and is continuing:

                           (i) the Company defaults in the payment of any
                  installment of interest upon any of the Debentures, as and
                  when the same shall become due and payable, and continuance of
                  such default for a period of 15 days;

                           (ii) the Company defaults in the payment of the
                  principal on any of the Debentures as and when the same shall
                  become due and payable whether at maturity, upon redemption,
                  by declaration or otherwise;

                           (iii) the Company fails to observe or perform any of
                  its covenants or agreements contained in Section 4.04 or
                  Section 4.05 of this Indenture for a period of 30 days after
                  the earlier of actual knowledge by an officer of the Company
                  or the date on which written notice of such failure, requiring
                  the same to be remedied and stating that such notice is a
                  "Notice of Default" hereunder, shall have been given to the
                  Company by the Indenture Trustee, by registered or certified
                  mail, or to the Company and the Indenture Trustee by the
                  Holders of at least 25% in principal amount of the Debentures
                  Outstanding;

                           (iv) the Company fails to observe or perform any
                  other of its covenants or agreements contained in this
                  Indenture, the Contingent Appreciation Certificate Agreement,
                  the Contingent Appreciation Certificates or the Preferred
                  Securities Guarantee for a period of 60 days after the earlier
                  of actual knowledge by an officer of the Company or the date
                  on which written notice of such failure, requiring the same to
                  be remedied and stating that such notice is a "Notice of
                  Default" hereunder, shall have been given to the Company by
                  the Indenture Trustee, by registered or certified mail, or to
                  the Company and the Indenture Trustee by the Holders of at
                  least 25% in principal amount of the Debentures Outstanding;

                           (v) Hallmark Cards or any of its Affiliates
                  terminates (or any such Person notifies the Company that it
                  intends to terminate) the right of the Company or any of its
                  Subsidiaries to use the "Hallmark" name or the "Crown" name in
                  their respective television services or on or with respect to
                  any cable, satellite or other television channels owned or
                  operated by the Company or any of its Subsidiaries.

                           (vi) Hallmark Cards or any of its Affiliates fails to
                  observe or perform any of its covenants or agreements
                  contained in the Subordination and

                                       37
<PAGE>

                  Support Agreement for a period of 30 days after the earlier of
                  actual knowledge by an officer of Hallmark Cards or an officer
                  of any of its Affiliates or the date on which written notice
                  of such failure, requiring the same to be remedied and stating
                  that such notice is a "Notice of Default," shall have been
                  given to Hallmark Cards and the Company by the Indenture
                  Trustee, by registered or certified mail, or to Hallmark
                  Cards, the Company and the Indenture Trustee by the Holders of
                  at least 25% in principal amount of the Debentures
                  Outstanding;

                           (vii) the Trust or any trustee of the Trust fails to
                  observe or perform any of its covenants or agreements
                  contained in the Declaration or the Preferred Securities or
                  otherwise established for a period of 30 days after the
                  earlier of actual knowledge by a trustee, the Trust or an
                  officer of the Company or the date on which written notice of
                  such failure, requiring the same to be remedied and stating
                  that such notice is a "Notice of Default," shall have been
                  given to the Trust by the Indenture Trustee, by registered or
                  certified mail, or to the Trust and the Indenture Trustee by
                  the Holders of at least 25% of the issued and outstanding
                  Preferred Securities;

                           (viii) the Holders of not less than 25% of the
                  Debentures (or holders of not less than 25% of the Preferred
                  Securities, if applicable) at the time Outstanding, as
                  determined in accordance with Section 8.04 hereof, shall
                  deliver a written notice to the Company and the Indenture
                  Trustee that any of the representations and warranties of the
                  Company contained in Article IV of the Securities Purchase
                  Agreement were not true and correct in all material respects
                  as of the Issue Date and the failure of such representation or
                  warranty to have been true and correct, individually or in the
                  aggregate, has resulted in a Material Adverse Effect (as
                  defined in the Securities Purchase Agreement);

                           (ix) Indebtedness of the Company or any Subsidiary is
                  not paid within any applicable grace period after final
                  maturity or is accelerated by the holders thereof because of a
                  default and the total amount of such Indebtedness unpaid or
                  accelerated exceeds $10 million;

                           (x) Hallmark Cards or the Company, pursuant to or
                  within the meaning of any Bankruptcy Law, (i) commences a
                  voluntary case, (ii) consents to the entry of an order for
                  relief against it in an involuntary case, (iii) consents to
                  the appointment of a Custodian of it or for all or
                  substantially all of its property or (iv) makes a general
                  assignment for the benefit of its creditors;

                           (xi) a court of competent jurisdiction enters an
                  order under any Bankruptcy Law that (i) is for relief against
                  Hallmark Cards or the Company in an involuntary case, (ii)
                  appoints a Custodian of Hallmark Cards or the Company or for
                  all or substantially all of their respective property, or
                  (iii) orders the liquidation of Hallmark Cards or the Company,
                  and the order or decree remains unstayed and in effect for 90
                  days;

                                       38
<PAGE>

                           (xii) the Trust shall have, voluntarily or
                  involuntarily, liquidated, dissolved, wound-up its business or
                  otherwise terminated its existence except in connection with
                  the redemption of all of the outstanding Securities of the
                  Trust; or

                           (xiii) Hallmark Cards or the Company shall have,
                  voluntarily or involuntarily, liquidated, dissolved, wound-up
                  its business or otherwise terminated its existence, other than
                  in connection with a merger, consolidation or other business
                  combination in which the surviving entity continues to conduct
                  the business of Hallmark Cards or the Company, as the case may
                  be.

                  (b) If an Event of Default occurs and is continuing, the
Indenture Trustee shall, upon direction from the holders of at least 25% in
principal amount of the Debentures Outstanding, declare the Debentures to be
immediately due and payable. If an Event of Default relating to clauses (x),
(xi) , (xii) or (xiii) above occurs and is continuing, the Debentures shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any holders of the Debentures or Preferred
Securities. Upon any Debentures becoming due and payable under this Section
6.01, whether automatically or by declaration, such Debentures will forthwith
mature and the entire unpaid principal amount of such Debentures plus all
accrued and unpaid interest thereon and (to the full extent permitted by
applicable law), shall be immediately due and payable, in each and every case
without presentment, demand, protest or further notice, all of which are hereby
waived. In addition, the Company acknowledges that, notwithstanding the
foregoing, if an Event of Default occurs and is continuing and such event is
attributable to the failure of the Company to (i) pay interest or principal on
the Debentures on the date such interest or principal is otherwise payable (or
in the case of redemption, on the redemption date), or (ii) comply with the
covenants set forth in Article IV of the Indenture, in each such case within the
applicable grace periods, if any, provided for in Section 6.01(a) above, then,
in each case, the holders of at least 25% in aggregate liquidation amount of the
Preferred Securities may institute a proceeding (or seek other remedies)
directly against the Company for enforcement of payment to such holders of the
principal of or interest on, an aggregate principal amount of such Debentures
equal to the aggregate liquidation amount of the Preferred Securities of such
holders on or after the respective due date specified in such Debentures.

                  (c) At any time after the principal of and any accrued and
unpaid interest, if any, on, the Debentures shall have been so declared due and
payable, and before any judgment or decree for the payment of the amounts due
shall have been obtained or entered as hereinafter provided, the Holders of a
majority in aggregate principal amount of the Debentures then Outstanding
hereunder, by written notice to the Company and the Indenture Trustee, may
rescind and annul such declaration and its consequences if: (i) the Company has
paid or deposited with the Indenture Trustee a sum sufficient to pay all matured
installments of interest upon all the Debentures and the principal on the
Debentures that shall have become due otherwise than by acceleration (with
interest upon such principal and, to the extent that such payment is enforceable
under applicable law, upon overdue installments of interest, at the rate per
annum expressed in the Debentures to the date of such payment or deposit) and
the amount payable to the Indenture Trustee under Section 7.06, and (ii) any and
all Events of Default under the

                                       39
<PAGE>

Indenture, other than the nonpayment of principal of on the Debentures that
shall not have become due by their terms, shall have been remedied or waived as
provided in Section 6.06.

                  No such rescission and annulment shall extend to or shall
affect any subsequent default or impair any right consequent thereon.

                  (d) In case the Indenture Trustee shall have proceeded to
enforce any right with respect to the Debentures under this Indenture and such
proceedings shall have been discontinued or abandoned because of such rescission
or annulment or for any other reason or shall have been determined adversely to
the Indenture Trustee, then and in every such case the Company and the Indenture
Trustee shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company and the Indenture
Trustee shall continue as though no such proceedings had been taken.

                  SECTION 6.02. Collection of Indebtedness and Suits for
                                Enforcement by Indenture Trustee.

                  (a) The Company covenants that (1) in case it shall default in
the payment of any installment of interest on the Debentures or (2) in case it
shall default in the payment of the principal of the Debentures when the same
shall have become due and payable, whether upon maturity of the Debentures, upon
redemption, by declaration or otherwise, then, upon demand of the Indenture
Trustee, the Company shall pay to the Indenture Trustee, for the benefit of the
Holders of the Debentures, the entire amount that then shall have been become
due and payable on the Debentures for principal or interest, or both, as the
case may be, with interest upon the overdue principal and (to the extent that
payment of such interest is enforceable under applicable law and, if the
Debentures are held by the Trust or the Indenture Trustee, without duplication
of any other amounts paid by the Trust or the Indenture Trustee in respect
thereof) upon overdue installments of interest; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, and the amount payable to the Indenture Trustee under Section 7.06.

                  (b) If the Company shall fail to pay such amounts forthwith
upon such demand, the Indenture Trustee, in its own name and as Indenture
Trustee of the Trust, shall, upon direction from the Holders of the requisite
percentage of aggregate principal amount of Debentures then Outstanding,
institute any action or proceedings at law or in equity for the collection of
the sums so due and unpaid, and may prosecute any such action or proceeding to
judgment or final decree, and may enforce any such judgment or final decree
against the Company or other obligor upon the Debentures and collect the amounts
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or other obligor upon the Debentures, wherever situated.

                  (c) In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, readjustment, arrangement, composition or judicial
proceedings affecting the Company or the creditors or property of either, the
Indenture Trustee shall, upon direction from the Holders of the requisite
percentage of aggregate principal amount of Debentures then Outstanding,
intervene in such proceedings and take any action therein that may be permitted
by

                                       40
<PAGE>

the court and shall (except as may be otherwise provided by law) be entitled to
file such proofs of claim and other papers and documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee and of the
Holders of the Debentures allowed for the entire amount due and payable by the
Company under the Indenture at the date of institution of such proceedings and
for any additional amount that may become due and payable by the Company after
such date, and to collect and receive any amounts or other property payable or
deliverable on any such claim, and to distribute the same after the deduction of
the amount payable to the Indenture Trustee under Section 7.06; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Holders of the Debentures to make such payments to the
Indenture Trustee, and, in the event that the Indenture Trustee shall consent to
the making of such payments directly to such Holders, to pay to the Indenture
Trustee any amount due thereto under Section 7.06.

                  (d) All rights of action and of asserting claims under this
Indenture, or under any of the terms established with respect to the Debentures,
may be enforced by the Indenture Trustee without the possession of any of the
Debentures, or the production thereof at any trial or other proceeding relative
thereto, and any such suit or proceeding instituted by the Indenture Trustee
shall be brought in its own name as Indenture Trustee of the Trust, and any
recovery of judgment shall, after provision for payment to the Indenture Trustee
of any amounts due under Section 7.06, be for the ratable benefit of the Holders
of the Debentures.

                  In case of an Event of Default hereunder, the Indenture
Trustee shall, upon direction from the Holders of the requisite percentage of
aggregate principal amount of Debentures then Outstanding, proceed to protect
and enforce the rights vested in it by this Indenture by such appropriate
judicial proceedings as the Indenture Trustee shall, subject to contrary
direction from the Holders of the requisite percentage of aggregate principal
amount of Debentures then Outstanding, deem most effectual to protect and
enforce any of such rights, either at law or in equity or in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in the Indenture or in aid of the exercise of any power granted in
this Indenture, or to enforce any other legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.

                  Nothing contained herein shall be deemed to authorize the
Indenture Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Debentures or the rights of any Holder thereof or to authorize the
Indenture Trustee to vote in respect of the claim of any Holder in any such
proceeding.

                  SECTION 6.03. Application of Amounts Collected.

                  Any amounts collected by the Indenture Trustee pursuant to
this Article with respect to the Debentures shall be applied in the following
order, at the date or dates fixed by the Indenture Trustee and, in case of the
distribution of such amounts on account of principal or interest, upon
presentation of the Debentures, and notation thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:

                                       41
<PAGE>

                           FIRST: To the payment of costs and expenses of
                  collection and of all amounts payable to the Indenture Trustee
                  under Section 7.06;

                           SECOND: To the payment of all Senior Indebtedness of
                  the Company if and to the extent required by Section 13.02;
                  and

                           THIRD: To the payment of the amounts then due and
                  unpaid upon the Debentures for principal and interest, in
                  respect of which or for the benefit of which such amounts have
                  been collected, ratably, without preference or priority of any
                  kind, according to the amounts due and payable on the
                  Debentures for principal and interest, respectively.

                  SECTION 6.04. Limitation on Suits.

                  (a) No Holder of any Debentures (nor any holder of Preferred
Securities acting in accordance with its rights under this Indenture) shall have
any right by virtue or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless (i) such Holder (or holder of
Preferred Securities, if applicable) previously shall have given to the
Indenture Trustee written notice of an Event of Default and of the continuance
thereof with respect to the Debentures specifying such Event of Default, as
hereinbefore provided; (ii) the Holders of not less than 25% in aggregate
principal amount of the Debentures then Outstanding (or holders of not less than
25% of the Preferred Securities Outstanding, if applicable) shall have made
written request upon the Indenture Trustee to institute such action, suit or
proceeding in its own name as Indenture Trustee hereunder; (iii) such Holder
shall have offered to the Indenture Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby; and (iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity, shall have failed to institute any such
action, suit or proceeding and (v) during such 60 day period, the Holders of a
majority in principal amount of the Debentures (or holders of a majority of the
Preferred Securities Outstanding, if applicable) do not give the Indenture
Trustee a direction inconsistent with the request.

                  (b) The limitation set forth in Section 6.04(a) shall not
apply to any suit instituted by a Holder (or holder of Preferred Securities, if
applicable) (i) for the enforcement of the payment of the principal of or
interest on the Debentures on or after the respective due date expressed in such
Debentures or established pursuant to this Indenture or (ii) pertaining to the
failure of the Company to comply for 30 days with its obligations and covenants
set forth in Section 4.04 or Section 4.05.

                  (c) Notwithstanding any payment made to such Holder (or holder
of Preferred Securities, if applicable) by the Company in connection with a
direct action, the Company shall remain obligated to pay the principal of or
interest on the Debentures held by the Trust or the Property Trustee, and the
Company shall be subrogated to the rights of the Holder (or holder of such
Preferred Securities, if applicable) with respect to payments on the Debentures
(or Preferred Securities, if applicable) to the extent of any payments made by
the Company to such Holder (or

                                       42
<PAGE>

holder of Preferred Securities, if applicable) in any direct action; provided,
however, that the Company shall not be permitted to exercise any rights of
subrogation until all obligations under the Preferred Securities and the
Contingent Appreciation Certificates shall have been repurchased, redeemed,
defeased or otherwise acquired or retired for value or paid in full.

                  (d) Notwithstanding anything contained herein to the contrary,
any other provisions of this Indenture, the right of any Holder of Debentures to
receive payment of the principal of and interest on the Debentures, as therein
provided, on or after the respective due dates expressed in the Debentures (or
in the case of redemption, on the redemption date), or to institute suit for the
enforcement of any such payment on or after such respective dates or redemption
date, shall not be impaired or affected without the consent of such Holder and
by accepting the Debentures hereunder it is expressly understood, intended and
covenanted by the taker and Holder of the Debentures with every other such taker
and Holder and the Indenture Trustee, that no one or more Holders of Debentures
shall have any right in any manner whatsoever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of the
Holders of any other of the Debentures, or to obtain or seek to obtain priority
over or preference to any other such Holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of the Debentures. For the protection and
enforcement of the provisions of this Section, each and every Holder and the
Indenture Trustee shall be entitled to such relief as can be given either at law
or in equity.

                  SECTION 6.05. Rights and Remedies Cumulative; Delay or
                                Omission Not Waiver.

                  (a) Except as otherwise provided in Section 2.07, all powers
and remedies given by this Article to the Indenture Trustee or to the Holders
shall, to the extent permitted by law, be deemed cumulative and not exclusive of
any other powers and remedies available to the Indenture Trustee or the Holders
of the Debentures, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture or otherwise established with respect to the Debentures.

                  (b) No delay or omission of the Indenture Trustee or of any
Holder of any of the Debentures to exercise any right or power accruing upon any
Event of Default occurring and continuing as aforesaid shall impair any such
right or power, or shall be construed to be a waiver of any such default or on
acquiescence therein; and, subject to the provisions of Section 6.04, every
power and remedy given by this Article or by law to the Indenture Trustee or the
Holders may be exercised from time to time, and as often as shall be deemed
expedient, by the Indenture Trustee or by the Holders.

                  SECTION 6.06. Control by Holders.

                  (a) The Holders of a majority in aggregate principal amount of
the Debentures at the time Outstanding, determined in accordance with Section
8.04, shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or exercising
any right, trust or power conferred on the Indenture Trustee with

                                       43
<PAGE>

respect to the Debentures (including, without limitation, with respect to the
provisions of Section 6.01 hereof); provided, however, that (i) such direction
shall not be in conflict with any rule of law or with this Indenture; and (ii)
subject to the provisions of Section 7.01, the Indenture Trustee shall have the
right to decline to follow any such direction if the Indenture Trustee in good
faith shall, by a Responsible Officer or Responsible Officers of the Indenture
Trustee, determine that the proceeding so directed would involve the Indenture
Trustee in personal liability or might be unduly prejudicial to the Holders not
involved in the proceeding. The Holders of a majority in aggregate principal
amount of the Debentures (or holders of a majority of the Preferred Securities,
if so permitted) at the time Outstanding affected thereby, determined in
accordance with Section 8.04, may on behalf of the Holders of all of the
Debentures waive any past Default in the performance of any of the covenants
contained herein and its consequences, except that a waiver of a Default in the
payment of the principal or interest on, any of the Debentures as and when the
same shall become due by the terms thereof otherwise than by acceleration
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal has been deposited with the Indenture
Trustee (in accordance with Section 6.01(d)) shall require the consent of each
affected Holder. Upon any such waiver, the Default covered thereby shall be
deemed to be cured for all purposes of this Indenture and the Company, the
Indenture Trustee and the Holders of the Debentures shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon. In the event the Holders of the Debentures fail to annul any
declaration and waive the Default, the holders of the majority of the aggregate
liquidation amount of the Preferred Securities shall have the right to waive any
past Default in the performance of any of the covenants contained herein and its
consequences to the extent such right is vested in the Holders of the Debentures
under this Section 6.06(a).

                  (b) The Company and the Indenture Trustee acknowledge that
pursuant to the Declaration, the holders of Preferred Securities are entitled,
in the circumstances and subject to the limitations set forth therein, to
commence a direct action as creditors with respect to any Event of Default under
the Indenture, the Debentures or the Preferred Securities Guarantee.

                  SECTION 6.07. Undertaking to Pay Costs.

                  All parties to this Indenture agree, and each Holder of the
Debentures by such Holder's acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement of
any right or remedy under this Indenture, or in any suit against the Indenture
Trustee for any action taken or omitted by it as Indenture Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Indenture Trustee, to any suit instituted by any Holder
(or holder of Preferred Securities, if applicable), or group of Holders, (or
group of holders of Preferred Securities, if applicable) holding more than 10%
in aggregate principal amount of the Debentures Outstanding, or to any suit
instituted by any Holder for the enforcement of the payment of the

                                       44
<PAGE>

principal of or interest on, the Debentures, on or after the respective due date
expressed in such Debentures or established pursuant to this Indenture.

                                  ARTICLE VII

                        CONCERNING THE INDENTURE TRUSTEE

                  SECTION 7.01. Certain Duties and Responsibilities of Indenture
                                Trustee.

                  (a) The Indenture Trustee, prior to the occurrence of an Event
of Default with respect to the Debentures and after the curing of all Events of
Default with respect to the Debentures that may have occurred, shall undertake
to perform with respect to the Debentures such duties and only such duties as
are specifically set forth in this Indenture, and no implied covenants shall be
read into this Indenture against the Indenture Trustee. In case an Event of
Default with respect to the Debentures has occurred (that has not been cured or
waived), the Indenture Trustee shall exercise with respect to the Debentures
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.

                  (b) No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:

                           (i) prior to the occurrence of an Event of Default
                  with respect to the Debentures and after the curing or waiving
                  of all such Events of Default that may have occurred:

                                    (A) the duties and obligations of the
                           Indenture Trustee shall be determined solely by the
                           express provisions of this Indenture, and the
                           Indenture Trustee shall not be liable with respect to
                           the Debentures except for the performance of such
                           duties and obligations as are specifically set forth
                           in this Indenture, and no implied covenants or
                           obligations shall be read into this Indenture against
                           the Indenture Trustee; and

                                    (B) in the absence of bad faith on the part
                           of the Indenture Trustee, the Indenture Trustee may
                           conclusively rely, as to the truth of the statements
                           and the correctness of the opinions expressed
                           therein, upon any certificates or opinions furnished
                           to the Indenture Trustee and conforming to the
                           requirements of this Indenture; but in the case of
                           any such certificates or opinions that by any
                           provision hereof are specifically required to be
                           furnished to the Indenture Trustee, the Indenture
                           Trustee shall be under a duty to examine the same to
                           determine whether they conform to the requirement of
                           this Indenture;

                           (ii) the Indenture Trustee shall not be liable for
                  any error of judgment made in good faith by a Responsible
                  Officer or Responsible Officers of

                                       45
<PAGE>

                  the Indenture Trustee, unless it shall be proved that the
                  Indenture Trustee, was negligent in ascertaining the pertinent
                  facts;

                           (iii) the Indenture Trustee shall not be liable with
                  respect to any action taken or omitted to be taken by it in
                  good faith in accordance with the direction of the Holders of
                  not less than a majority in principal amount of the Debentures
                  Outstanding relating to the time, method and place of
                  conducting any proceeding for any remedy available to the
                  Indenture Trustee, or exercising any trust or power conferred
                  upon the Indenture Trustee under this Indenture with respect
                  to the Debentures; and

                           (iv) None of the provisions contained in this
                  Indenture shall require the Indenture Trustee to expend or
                  risk its own funds or otherwise incur personal financial
                  liability in the performance of any of its duties or in the
                  exercise of any of its rights or powers, if there is
                  reasonable ground for believing that the repayment of such
                  funds or liability is not reasonably assured to it under the
                  terms of this Indenture or adequate indemnity against such
                  risk is not reasonably assured to it.

                  (c) Notwithstanding anything to the contrary contained herein,
the following Persons are hereby irrevocably authorized and empowered (in their
own names or otherwise) to take any actions required or allowed hereunder to be
taken with respect to the Debentures, including, without limitation, at any time
that an Event of Default has occurred and is continuing:

                           (i) the Indenture Trustee, upon direction by the
                  Holders of at least 25% of the aggregate principal amount of
                  Debentures Outstanding (or such greater number as may be
                  specified herein);

                           (ii) if the Indenture Trustee fails to promptly act
                  as directed in accordance with the foregoing clause, the
                  Property Trustee of the Trust, upon direction by the holders
                  of at least 25% of the Preferred Securities Outstanding (or
                  such greater number as may be specified herein); and

                           (iii) if the Property Trustee fails to promptly act
                  as directed in accordance with the foregoing clause, by the
                  holders of at least 25% of the Preferred Securities
                  Outstanding (or such greater number as may be specified
                  herein).

                  SECTION 7.02. Certain Rights of Indenture Trustee.

                  Except as otherwise provided in Section 7.01:

                  (a) The Indenture Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
security or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;

                                       46
<PAGE>

                  (b) Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Board Resolution or an
instrument signed in the name of the Company, by the President or any Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer thereof (unless other evidence in respect thereof is
specifically prescribed herein);

                  (c) The Indenture Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken or suffered
or omitted hereunder in good faith and in reliance thereon;

                  (d) If an Event of Default shall occur and be continuing, the
Indenture Trustee shall be under no obligation to exercise any of the rights,
powers, trusts or duties vested in it by this Indenture at the request, order or
direction of any of the Holders of Debentures or the holders of Preferred
Securities, pursuant to the provisions of this Indenture, unless such Holders of
Debentures or the holders of Preferred Securities shall have offered to the
Indenture Trustee reasonable indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; nothing contained herein
shall, however, relieve the Indenture Trustee of the obligation, upon the
occurrence of an Event of Default (that has not been cured or waived) to
exercise with respect to the Debentures such of the rights and powers vested in
it by this Indenture, and to use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs;

                  (e) The Indenture Trustee shall not be liable for any action
taken or omitted to be taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture, including, without limitation, taking any action which is
authorized or permitted by the terms of this Indenture, but which is prohibited
under Section 16.06;

                  (f) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, security, or other papers or documents, unless requested in
writing so to do by the Holders of not less than a majority in principal amount
of the Debentures Outstanding affected thereby (determined as provided in
Section 8.04); provided, however, that if the payment within a reasonable time
to the Indenture Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Indenture Trustee, not reasonably assured to the Indenture Trustee by the
security afforded to it by the terms of this Indenture, the Indenture Trustee
may require reasonable indemnity against such costs, expenses or liabilities as
a condition to so proceeding. The reasonable expense of every such examination
shall be paid by the Company or, if paid by the Indenture Trustee, shall be
repaid by the Company upon demand; and

                  (g) The Indenture Trustee may execute any of the rights,
powers or trusts hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.

                                       47
<PAGE>

                  (h) The Trustee shall not be charged with knowledge of any
Default or Event of Default with respect to the Debentures unless either

                           (i) a Responsible Officer of the Trustee shall have
                  actual knowledge of such Default or Event of Default; or

                           (ii) written notice of such Default or Event of
                  Default shall have been given to the Trustee by the Company or
                  by any Holder of the Debentures or any holder of Preferred
                  Securities.

                  SECTION 7.03. Indenture Trustee Not Responsible for Recitals
                                or Issuance or Debentures.

                  (a) The recitals contained herein and in the Debentures shall
be taken as the statements of the Company and the Indenture Trustee assumes no
responsibility for the correctness of the same.

                  (b) The Indenture Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the Debentures.

                  (c) The Indenture Trustee shall not be accountable for the use
or application by the Company of any of the Debentures or of the proceeds
thereof, or for the use or application of any amounts paid over by the Indenture
Trustee in accordance with any provision of this Indenture, or for the use or
application of any amounts received by any Paying Agent other than the Indenture
Trustee.

                  SECTION 7.04. May Hold Debentures.

                  The Indenture Trustee or any Paying Agent or Debenture
Registrar, in its individual or any other capacity, may become the owner or
pledgee of Debentures with the same rights it would have if it were not
Indenture Trustee, Paying Agent or Debenture Registrar.

                  SECTION 7.05. Amounts Held in Trust.

                  Subject to the provisions of Section 11.05, all amounts
received by the Indenture Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Indenture Trustee shall be under no liability for interest on any amounts
received by it hereunder except such as it may agree in writing with the Company
to pay thereon.

                  SECTION 7.06. Compensation and Reimbursement.

                  (a) The Company covenants and agrees to pay to the Indenture
Trustee, and the Indenture Trustee shall be entitled to, such compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), as the Company and the Indenture
Trustee may from time to time agree in writing, for all services rendered by it
in the execution of the Trust hereby created and in the exercise and performance
of any of the

                                       48
<PAGE>

powers and duties hereunder of the Indenture Trustee, and, except as otherwise
expressly provided herein, the Company shall pay or reimburse the Indenture
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Indenture Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all Persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Company also covenants to indemnify the
Indenture Trustee (and its officers, agents, directors and employees) for, and
to hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Indenture Trustee and arising out of
or in connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim of liability in the
premises.

                  (b) The obligations of the Company under this Section to
compensate and indemnify the Indenture Trustee and to pay or reimburse the
Indenture Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder. Such additional indebtedness shall be secured
by a lien prior to that of the Debentures upon all property and funds held or
collected by the Indenture Trustee as such, except funds held in trust for the
benefit of the Holders of the Debentures.

                  (c) Whenever the Indenture Trustee incurs expenses or renders
services in connection with an Event of Default specified in Section 6.01(a)(x)
or Section 6.01(a)(xi), the expenses (including the reasonable fees and expenses
of its counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable bankruptcy, insolvency or other
similar law.

                  (d) The provisions of this Section 7.06 shall survive the
resignation or removal of the Trustee and the termination of this Indenture.

                  SECTION 7.07. Reliance on Officer's Certificate.

                  Except as otherwise provided in Section 7.01, whenever in the
administration of the provisions of this Indenture the Indenture Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or suffering or omitting to take any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of negligence or bad faith on the part of the Indenture
Trustee, be deemed to be conclusively proved and established by an Officer's
Certificate delivered to the Indenture Trustee and such certificate, in the
absence of negligence or bad faith on the part of the Indenture Trustee, shall
be full warrant to the Indenture Trustee for any action taken, suffered or
omitted to be taken by it under the provisions of this Indenture upon the faith
thereof.

                  SECTION 7.08. Disqualification; Conflicting Interests.

                  If the Indenture Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Indenture Trustee and the Company shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.

                                       49
<PAGE>

                  SECTION 7.09. Corporate Indenture Trustee Required;
                                Eligibility.

                  There shall at all times be a Indenture Trustee with respect
to the Debentures issued hereunder which shall (i) be a "United States person"
under the Code and not be an Affiliate of the Company; and (ii) be a corporation
organized and doing business under the laws of the United States of America or
any State or Territory thereof or of the District of Columbia, or a corporation
or other Person permitted by the Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 250 million U.S.
dollars ($250,000,000), and subject to supervision or examination by Federal,
State, Territorial, or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority referred to
above, then for the purposes of this Section, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the Indenture Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Indenture Trustee shall resign immediately in
the manner and with the effect specified in Section 7.10.

                  SECTION 7.10. Resignation and Removal; Appointment of
                                Successor.

                  (a) The Indenture Trustee or any successor hereafter
appointed, may at any time resign by giving written notice thereof to the
Company and by transmitting notice of resignation by mail, first class postage
prepaid, to the Company and the Holders of the Debentures, as their names and
addresses appear upon the Debenture Register. Except as provided in paragraph
(c) below, upon receiving such notice of resignation, the Company shall promptly
appoint a successor trustee by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be delivered
to the resigning Indenture Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the mailing of such notice of resignation, the resigning
Indenture Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee with respect to the Debentures, or any Holder
of the Debentures who has been a bona fide Holder of the Debentures for at least
six months may on behalf of himself and all others similarly situated, petition
any such court for the appointment of a successor trustee. Such court may
thereupon after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.

                  (b) In case at any time any one of the following shall occur:

                           (i) the Indenture Trustee shall fail to comply with
                  the provisions of subsection (a) of Section 5.04 after written
                  request therefor by the Company or by any Holder who has been
                  a bona fide Holder of the Debentures for at least six months;
                  or

                           (ii) the Indenture Trustee shall cease to be eligible
                  in accordance with the provisions of Section 7.09 and shall
                  fail to resign after written request therefor by the Company
                  or by any such Holder; or

                                       50
<PAGE>

                           (iii) the Indenture Trustee shall become incapable of
                  acting, or shall be adjudged a bankrupt or insolvent, or
                  commence a voluntary bankruptcy proceeding, or a receiver of
                  the Indenture Trustee or of its property shall be appointed or
                  consented to, or any public officer shall take charge or
                  control of the Indenture Trustee or of its property or affairs
                  for the purpose of rehabilitation, conservation or
                  liquidation,

then, in any such case, the Company may remove the Indenture Trustee and appoint
a successor trustee by written instrument, in duplicate, executed by order of
the Board of Directors, one copy of which instrument shall be delivered to the
Indenture Trustee so removed and one copy to the successor trustee, or, unless
the Indenture Trustee's duty to resign is stayed as provided herein, any Holder
who has been a bona fide Holder of the Debentures for at least six months may,
on behalf of that Holder and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor trustee. Such court may thereupon after such notice,
if any, as it may deem proper and prescribe, remove the Indenture Trustee and
appoint a successor trustee.

                  (c) Notwithstanding anything contained herein to the contrary,
the Holders of a majority in aggregate principal amount of the Debentures at the
time Outstanding may at any time remove the Indenture Trustee by so notifying
the Indenture Trustee and may appoint a successor trustee.

                  (d) Any resignation or removal of the Indenture Trustee and
appointment of a successor trustee pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 7.11.

                  (e) Any successor trustee appointed pursuant to this Section
may be appointed and at any time there shall be only one Indenture Trustee with
respect to the Debentures.

                  SECTION 7.11. Acceptance of Appointment By Successor.

                  (a) In case of the appointment hereunder of a successor
trustee, every such successor trustee so appointed shall execute, acknowledge
and deliver to the Company and to the retiring Indenture Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Indenture Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Indenture Trustee; but, on the
request of the Company or the successor trustee, such retiring Indenture Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor trustee all the rights, powers, trusts and duties
of the retiring Indenture Trustee and shall duly assign, transfer and deliver to
such successor trustee all property and cash held by such retiring Indenture
Trustee hereunder.

                  (b) In case of the appointment hereunder of a successor
trustee, the Company, the retiring Indenture Trustee and each successor trustee
with respect to the Debentures shall execute and deliver an indenture
supplemental hereto wherein each successor trustee shall accept

                                       51
<PAGE>

such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor trustee all the rights, powers, trusts and duties of the retiring
Indenture Trustee, and (2) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the Trust hereunder by more than one Indenture Trustee; and upon the
execution and delivery of such supplemental indenture the resignation or removal
of the retiring Indenture Trustee shall become effective to the extent provided
therein, such retiring Indenture Trustee shall have no further responsibility
for the exercise of rights and powers or for the performance of the duties and
obligations vested in the Indenture Trustee under this Indenture, and each such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Indenture
Trustee with respect to the Debentures; but, on request of the Company or any
successor trustee, such retiring Indenture Trustee shall duly assign, transfer
and deliver to such successor trustee, to the extent contemplated by such
supplemental indenture, the property and cash held by such retiring Indenture
Trustee hereunder with respect to the Debentures.

                  (c) Upon request of any such successor trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor trustee all such rights, powers, trusts and
duties referred to in paragraph (a) or (b) of this Section, as the case may be.

                  (d) No successor trustee shall accept its appointment unless
at the time of such acceptance such successor trustee shall be qualified and
eligible under this Article.

                  (e) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Company shall transmit notice of the succession of
such trustee hereunder by mail, first class postage prepaid, to the Holders, as
their names and addresses appear upon the Debenture Register. If the Company
fails to transmit such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
transmitted at the expense of the Company.

                  SECTION 7.12. Merger, Conversion, Consolidation or Succession
                                to Business.

                  Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Indenture Trustee, shall be the successor of
the Indenture Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 7.08 and eligible under the provisions
of Section 7.09, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In case any Debentures shall have been authenticated, but not
delivered, by the Indenture Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Indenture Trustee may adopt
such authentication and deliver the Debentures so authenticated with the same
effect as if such successor Indenture Trustee had itself authenticated such
Debentures.

                                       52
<PAGE>

                  SECTION 7.13. Preferential Collection of Claims Against the
                                Company.

                  The Indenture Trustee shall comply with Section 311(a) of the
Trust Indenture Act, excluding any creditor relationship described in Section
311(b) of the Trust Indenture Act. A Indenture Trustee who has resigned or been
removed shall be subject to Section 311(a) of the Trust Indenture Act to the
extent included therein.

                                  ARTICLE VIII

                             CONCERNING THE HOLDERS

                  SECTION 8.01. Evidence of Action by Holders.

                  (a) Whenever in this Indenture it is provided that the Holders
(or holders of Preferred Securities, if applicable) of a majority or specified
percentage in aggregate principal amount of the Debentures (or Preferred
Securities, if applicable) may take any action (including the making of any
demand or request, the giving of any notice, consent or waiver or the taking of
any other action), the fact that at the time of taking any such action the
Holders (or holders of Preferred Securities, if applicable) of such majority or
specified percentage of such Debentures (or Preferred Securities, if applicable)
have joined therein may be evidenced by any instrument or any number of
instruments of similar tenor executed by such Holders (or holders of Preferred
Securities, if applicable) of the Debentures (or Preferred Securities, if
applicable) in Person or by agent or proxy appointed in writing.

                  (b) If the Company shall solicit from the Holders of
Debentures any request, demand, authorization, direction, notice, consent,
waiver or other action, the Company may, at its option, as evidenced by an
Officer's Certificate, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other action, but the Company shall have no obligation to do
so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other action may be given before or after
the record date, but only the Holders of record at the close of business on the
record date shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of Debentures Outstanding have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
Debentures Outstanding shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such Holders on the
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after the record
date.

                  (c) Notwithstanding anything to the contrary contained herein,
the following Persons are hereby irrevocably authorized and empowered (in their
own names or otherwise) to take any actions required or allowed hereunder to be
taken with respect to the Debentures, including, without limitation, at any time
that an Event of Default has occurred and is continuing:

                                       53
<PAGE>

                           (i) if the Indenture Trustee fails to promptly act as
                  directed in accordance with Section 7.01(c)(i), the Property
                  Trustee of the Trust, as initial Holder of the Debentures,
                  upon direction by the holders of at least 25% of the Preferred
                  Securities Outstanding (or such greater number as may be
                  specified in the Declaration); and

                           (ii) if the Property Trustee fails to promptly act as
                  directed in accordance with the foregoing clause, by the
                  holders of at least 25% of the Preferred Securities
                  Outstanding (or such greater number as may be specified in the
                  Declaration).

                  SECTION 8.02. Proof of Execution by Holders.

                  Subject to the provisions of Section 7.01, proof of the
execution of any instrument by a Holder (such proof will not require
notarization) or his agent or proxy and proof of the holding by any Person of
any of the Debentures shall be sufficient if made in the following manner:

                                    (A) The fact and date of the execution by
                           any such Person of any instrument may be proved in
                           any reasonable manner acceptable to the Indenture
                           Trustee.

                                    (B) The ownership of Debentures shall be
                           proved by the Debenture Register or by a certificate
                           of the Debenture Registrar.

                                    (C) The Indenture Trustee may require such
                           additional proof of any matter referred to in this
                           Section as it shall deem necessary.

                  SECTION 8.03. Who May be Deemed Owners.

                  Prior to the due presentment for registration of transfer of
any Debenture, the Company, the Indenture Trustee, any Paying Agent and any
Debenture Registrar may deem and treat the Person in whose name the Debentures
shall be registered upon the books of the Company as the absolute owner of such
Debenture (whether or not such Debenture shall be overdue and notwithstanding
any notice of ownership or writing thereon made by anyone other than the
Debenture Registrar) for the purpose of receiving payment of or on account of
the principal of and (subject to Section 2.04) interest on, such Debenture and
for all other purposes; and neither the Company nor the Indenture Trustee nor
any Paying Agent nor any Debenture Registrar shall be affected by any notice to
the contrary.

                  SECTION 8.04. Certain Securities Owned by Company Disregarded.

                  In determining whether the Holders of the requisite aggregate
principal amount of the Debentures (or holders of the requisite amount of
Preferred Securities, if applicable) have concurred in any direction, consent or
waiver under this Indenture, the Debentures (or Preferred Securities, if
applicable) that are owned by the Company or by any Affiliate thereof shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination, except

                                       54
<PAGE>

that for the purpose of determining whether the Indenture Trustee shall be
protected in relying on any such direction, consent or waiver, only the
Debentures (or Preferred Securities, if applicable) that a Responsible Officer
of the Indenture Trustee actually knows are so owned shall be so disregarded.
The Debentures (or Preferred Securities, if applicable) so owned that have been
pledged in good faith may be regarded as Outstanding for the purposes of this
Section, if the pledgee shall establish to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Debentures (or
Preferred Securities, if applicable) and that the pledgee is not an Affiliate of
the Company. In case of a dispute as to such right, any decision by the
Indenture Trustee taken upon the advice of counsel shall be full protection to
the Indenture Trustee. For purposes of this Section 8.04, Debentures held by the
Trust shall be deemed to be held by Holders of Securities.

                  SECTION 8.05. Actions Binding on Future Holders.

                  At any time prior to (but not after) the evidencing to the
Indenture Trustee, as provided in Section 8.01, of the taking of any action by
the Holders of the majority or percentage in aggregate principal amount of the
Debentures, any Holder of Debentures that is shown by the evidence to be
included in the Debentures the Holders of which have consented to such action
may, by filing written notice with the Indenture Trustee, and upon proof of
holding as provided in Section 8.02, revoke such action so far as concerns such
Debenture. Except as aforesaid any such action taken by the registered Holder of
any Debenture shall be conclusive and binding upon such Holder and upon all
future Holders and owners of such Debenture, and of any Debenture issued in
exchange therefor, on registration of transfer thereof or in place thereof,
irrespective of whether any notation in regard thereto is made upon such
Debenture. Any action taken by the Holders of the majority or percentage in
aggregate principal amount of the Debentures shall be conclusively binding upon
the Company, the Indenture Trustee and the Holders of all the Debentures.

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

                  SECTION 9.01. Supplemental Indentures Without the Consent of
                                the Holders.

                  In addition to any supplemental indenture otherwise authorized
by this Indenture, the Company and the Indenture Trustee may from time to time
and at any time enter into an indenture or indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act as then in effect),
without the consent of the Holders, for one or more of the following purposes:

                  (a) to cure any ambiguity, defect, or inconsistency herein, or
in the Debentures in either case which does not adversely affect the rights of
any Holder;

                  (b) to comply with Article X;

                  (c) to comply with any requirement of the Commission in
connection with qualifying, or maintaining the qualification of this Indenture
under the Trust Indenture Act;

                                       55
<PAGE>

                  (d) to provide for uncertificated Debentures in addition to
or, in place of, certificated Debentures; and

                  (e) to add to the covenants of the Company for the benefit of
the Holders of the Debentures or to surrender any right or power herein
conferred upon the Company.

                  The Indenture Trustee is hereby authorized to join with the
Company in the execution of any such supplemental indenture, and to make any
further appropriate agreements and stipulations that may be therein contained,
but the Indenture Trustee shall not be obligated to enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise.

                  Any supplemental indenture authorized by the provisions of
this Section may be executed by the Company and the Indenture Trustee without
the consent of the Holders of the Debentures at the time Outstanding,
notwithstanding any of the provisions of Section 9.02.

                  SECTION 9.02. Supplemental Indentures With Consent of the
                                Holders.

                  With the consent (evidenced as provided in Section 8.01) of
the Holders of not less than a majority in aggregate principal amount of the
Debentures affected by such supplemental indenture or indentures at the time
Outstanding, the Company, when authorized by Board Resolutions, and the
Indenture Trustee may from time to time and at any time enter into an indenture
or indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as then in effect) for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of modifying in any manner not
covered by Section 9.01 the rights of the Holders of the Debentures under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holders of each Debenture then Outstanding and affected
thereby, (i) extend the fixed maturity of the Debentures, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any interest payable upon redemption thereof or (ii)
reduce the aforesaid percentage of Debentures, the Holders of which are required
to consent to any such supplemental indenture.

                  The consent of the Holders of the Debentures affected under
this Section shall be required to approve the particular form and the substance
of any proposed supplemental indenture.

                  SECTION 9.03. Effect of Supplemental Indentures.

                  Upon the execution of any supplemental indenture pursuant to
the provisions of this Article or of Section 10.01, this Indenture shall be and
be deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Indenture Trustee, the Company and the Holders of Debentures
affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.

                                       56
<PAGE>

                  SECTION 9.04. Debentures Affected by Supplemental Indentures.

                  Debentures affected by a supplemental indenture, authenticated
and delivered after the execution of such supplemental indenture pursuant to the
provisions of this Article or of Section 10.01, may bear a notation in form
approved by the Company, as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Debentures so modified as to
conform, in the opinion of the Board of Directors of the Company, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Company, authenticated by the Indenture Trustee and delivered
in exchange for the Debentures then Outstanding.

                  SECTION 9.05. Execution of Supplemental Indentures.

                  Upon the request of the Company, accompanied by Board
Resolutions authorizing the execution of any such supplemental indenture, and
upon the filing with the Indenture Trustee of evidence of the consent of Holders
required to consent thereto as aforesaid, the Indenture Trustee shall join with
the Company in the execution of such supplemental indenture unless such
supplemental indenture affects the Indenture Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Indenture
Trustee may in its discretion but shall not be obligated to enter into such
supplemental indenture. The Indenture Trustee, subject to the provisions of
Section 7.01, may receive an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article is authorized or
permitted by, and conforms to, the terms of this Article and that it is proper
for the Indenture Trustee under the provisions of this Article to join in the
execution thereof; provided, however, that, except as may be required by the
Trust Indenture Act, such Opinion of Counsel need not be provided in connection
with the execution of a supplemental indenture that establishes the terms of the
Debentures.

                  Promptly after the execution by the Company and the Indenture
Trustee of any supplemental indenture pursuant to the provisions of this
Section, the Company, or at the request of the Company, the Indenture Trustee
shall transmit by mail, first class postage prepaid, a notice, setting forth in
general terms the substance of such supplemental indenture, to the Holders of
Debentures affected thereby as their names and addresses appear upon the
Debenture Register. Any failure of the Company or the Indenture Trustee to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.

                  SECTION 9.06. Consents.

                  Any consent made pursuant to this Article IX by a Holder of
Debentures that has transferred or has agreed to transfer its Debentures to the
Company, any Subsidiary or any Affiliate of the Company and has provided or has
agreed to provide such written consent as a condition to such transfer shall be
void and of no force or effect except solely as to such Holder, and any
amendments effected or waivers granted or to be effected or granted that would
not have been or would not be so effected or granted but for such consent (and
the consents of all other

                                       57
<PAGE>

holders of Debentures that were acquired under the same or similar conditions)
shall be void and of no force or effect except solely as to such Holder.

                                   ARTICLE X

                              SUCCESSOR CORPORATION

                  SECTION 10.01. Company May Consolidate, Etc.

                  The Company shall not consolidate, amalgamate, merge with or
into, or be replaced by any other Person (whether or not affiliated with the
Company), and shall not convey, transfer, lease or otherwise dispose of its
properties and assets as an entirety, or substantially as an entirety, to any
Person (whether or not affiliated with the Company) unless:

                  (a) in the event the Company consolidates, amalgamates or
merges with or into another Person (whether or not affiliated with the Company)
or conveys, transfers, leases or otherwise disposes of its properties and assets
as an entirety, or substantially as an entirety to any Person (whether or not
affiliated with the Company) (i) the successor Person is a corporation organized
under the laws of the United States or any state thereof or the District of
Columbia, and such successor corporation expressly assumes the Company's
obligations under this Indenture, the Declaration, the Debentures, the
Contingent Appreciation Certificates and the Preferred Securities Guarantee, or
(ii) in the event of a conveyance, transfer, lease or other disposition of the
Company's properties and assets as an entirety or substantially as an entirety
to any Person, such Person is or becomes a Subsidiary of the Company and fully
and unconditionally guarantees the obligations of the Company under the
Debentures and the Contingent Appreciation Certificates;

                  (b) immediately after giving effect thereto, no Event of
Default under this Indenture, and no event which, after notice or lapse of time
or both, would become an Event of Default under the Indenture, shall have
occurred and be continuing;

                  (c) in the case of the Debentures, any such transaction is
permitted under the Declaration and the Preferred Securities Guarantee and does
not give rise to any breach or violation of the Declaration or Preferred
Securities Guarantee; and

                  (d) the Company has delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger, continuance, conveyance, transfer or lease and any such
supplemental indenture complies with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with, and the Indenture Trustee, subject to Section 7.01, may rely upon such
Officer's Certificate and Opinion of Counsel as conclusive evidence that such
transaction complies with this Section 10.01.

                  SECTION 10.02. Successor Corporation Substituted.

                  (a) In case of any such consolidation, amalgamation, merger,
sale, conveyance, transfer, lease or other disposition in accordance with
Section 10.01 (other than in

                                       58
<PAGE>

accordance with Section 10.01(a)(ii)) and upon the assumption by the successor
corporation, by supplemental indenture executed and delivered to the Indenture
Trustee and satisfactory in form to the Indenture Trustee, of, (i) the due and
punctual payment of the principal of and interest on, all of the Debentures
Outstanding,(ii) the performance of all obligations under the Preferred
Securities Guarantees, and (iii) the due and punctual performance of all of the
covenants and conditions of this Indenture or be performed by the Company, such
successor corporation shall succeed to and be substituted for the Company with
the same effect as if it had been named as the Company herein, and thereupon the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Debentures.

                  (b) In case of any such consolidation, amalgamation, merger,
sale, conveyance, transfer, lease or other disposition such changes in
phraseology and form (but not in substance) may be made in the Debentures
thereafter to be issued as may be appropriate.

                  (c) Nothing contained in this Indenture or in any of the
Debentures shall prevent the Company from merging into itself or acquiring by
purchase or otherwise all or any part of the property of any other corporation
(whether or not affiliated with the Company).

                  SECTION 10.03. Evidence of Consolidation, Etc. to Indenture
                                 Trustee.

                  The Indenture Trustee, subject to the provisions of Section
7.01, may receive an Opinion of Counsel as conclusive evidence that any such
consolidation, amalgamation, merger, sale, conveyance, transfer, lease or other
disposition, and any such assumption, comply with the provisions of this
Article.

                                   ARTICLE XI

                           SATISFACTION AND DISCHARGE

                  SECTION 11.01. Satisfaction and Discharge of Indenture.

                  If at any time: (a) the Company shall have delivered to the
Indenture Trustee for cancellation all Debentures theretofore authenticated
(other than any Debentures that shall have been destroyed, lost or stolen and
that shall have been replaced or paid as provided in Section 2.07) and
Debentures for whose payment cash or Governmental Obligations have theretofore
been deposited in trust or segregated and held in trust by the Company (and
thereupon repaid to the Company or discharged from such trust, as provided in
Section 10.05); or (b) all such Debentures theretofore delivered to the
Indenture Trustee for cancellation shall have become due and payable, or are by
their terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Indenture
Trustee for the giving of notice of redemption, and the Company shall deposit or
cause to be deposited with the Indenture Trustee as trust funds the entire
amount in cash or Governmental Obligations sufficient or a combination thereof,
sufficient in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Indenture Trustee, to pay at maturity or upon redemption all Debentures not
theretofore delivered to the Indenture Trustee for cancellation, including
principal and interest due or to become due to such date of

                                       59
<PAGE>

maturity or date fixed for redemption, as the case may be, and if the Company
shall also pay or cause to be paid all other sums payable hereunder with respect
to such Debentures by the Company; then this Indenture shall thereupon cease to
be of further effect with respect to such Debentures except for the provisions
of Sections 2.04, 2.06, 2.07, 4.01, 4.02, 4.03 and 7.10, that shall survive
until the date of maturity or redemption date, as the case may be, and Sections
7.06 and 11.05, that shall survive to such date and thereafter, and the
Indenture Trustee, on demand of the Company and at the Company's cost and
expense, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture.

                  SECTION 11.02. Discharge of Obligations.

                  If at any time all such Debentures not heretofore delivered to
the Indenture Trustee for cancellation or that have not become due and payable
as described in Section 11.01 shall have been paid by the Company by depositing
irrevocably with the Indenture Trustee, as trust funds, cash or an amount of
Governmental Obligations sufficient to pay at maturity or upon redemption all
Debentures not theretofore delivered to the Indenture Trustee for cancellation,
including principal and interest due or to become due to such date of maturity
or date fixed for redemption, as the case may be, and if the Company shall also
pay or cause to be paid all other sums payable hereunder by the Company, then
after the date such cash or Governmental Obligations, as the case may be, are
deposited with the Indenture Trustee the obligations of the Company under this
Indenture shall cease to be of further effect except for the provisions of
Sections 2.04, 2.06, 2.07, 4,01, 4.02, 4,03, 7.06, 7.10 and 11.05 hereof that
shall survive until such Debentures shall mature and be paid. Thereafter,
Sections 7.06 and 11.05 shall survive.

                  SECTION 11.03. Deposited Amounts to be Held in Trust.

                  All cash or Governmental Obligations deposited with the
Indenture Trustee pursuant to Sections 11.01 or 11.02 shall be held in trust and
shall be available for payment as due, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent), to the Holders of
the Debentures for the payment or redemption of which such cash or Governmental
Obligations have been deposited with the Indenture Trustee.

                  SECTION 11.04. Payment of Amounts Held by Paying Agents.

                  In connection with the satisfaction and discharge of this
Indenture all cash or Governmental Obligations then held by any Paying Agent
under the provisions of this Indenture shall, upon demand of the Company, be
paid to the Indenture Trustee and thereupon such Paying Agent shall be released
from all further liability with respect to such cash or Governmental
Obligations.

                  SECTION 11.05. Repayment to the Company.

                  Any cash or Governmental Obligations deposited with any Paying
Agent or the Indenture Trustee, or then held by the Company in trust for payment
of principal of or interest on, the Debentures that are not applied but remain
unclaimed by the Holders of such Debentures for at least two years after the
date upon which the principal of or interest on, such Debentures shall have
respectively become due and payable, shall be repaid to the Company, on May 31
of

                                       60
<PAGE>

each year or (if then held by the Company) shall be discharged from such trust;
and thereupon the Paying Agent and the Indenture Trustee shall be released from
all further liability with respect to such cash or Governmental Obligations, and
the Holder of any of the Debentures entitled to receive such payment shall
thereafter, as an unsecured general creditor, look only to the Company for the
payment thereof.

                  SECTION 11.06. Reinstatement.

                  If the Trustee or Paying Agent is unable to apply any amounts
or Government Obligations in accordance with Sections 11.01 or 11.02 by reason
of any legal proceeding or by reason of any order or judgment or any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Debentures
shall be revived and reinstated as through no deposit had occurred pursuant to
Sections 11.01 or 11.02, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such cash or Government Obligations in
accordance with Sections 11.01 or 11.02, provided that, if the Company has made
any payment or principal of or interest on the Debentures because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Debentures to receive such payment from the cash or
Government Obligations held by the Trustee or Paying Agent, only after payment
in full of the obligations under the Contingent Appreciation Certificate
Agreement and Preferred Securities Guarantee.

                                  ARTICLE XII

                IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
                                  AND DIRECTORS

                  SECTION 12.01. No Recourse.

                  No recourse under or upon any obligation, covenant or
agreement of this Indenture, or of any Debenture or the Preferred Securities
Guarantee, or for any claim based thereon or otherwise in respect thereof, shall
be had against any incorporator, stockholder, officer or director, past, present
or future, as such, of the Company or of any predecessor or successor
corporation, either directly or through the Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Indenture and the obligations issued hereunder
are solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the incorporators, stockholders,
officers or directors as such, of the Company or of any predecessor or successor
corporation, or any of them, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any of the Debentures or implied therefrom;
and that any and all such personal liability of every name and nature, either at
common law or in equity or by constitution or statute, of, and any and all such
rights and claims against, every such incorporator, stockholder, officer or
director as such, because of the creation of the indebtedness hereby authorized,
or under or by reason of the obligations, covenants or agreements contained in
this Indenture or in any of the Debentures or

                                       61
<PAGE>

implied therefrom, are hereby expressly waived and released as a condition of,
and as a consideration for, the execution of this Indenture and the issuance of
such Debentures.

                                  ARTICLE XIII

                                  SUBORDINATION

                  SECTION 13.01. Agreement to Subordinate.

                  The Company covenants and agrees, and each Holder of
Debentures issued hereunder by such Holder' s acceptance thereof likewise
covenants and agrees, that all Debentures shall be issued subject to the
provisions of this Article XIII; and each Holder of a Debenture, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions.

                  The payment by the Company and all amounts required hereunder,
including fees (other than fees subject to Sections 14.01(a), (b) and (c)) and
expenses and the principal of and interest on, all Debentures issued hereunder
shall, to the extent and in the manner hereinafter set forth, be subordinated
and junior in right of payment to the prior payment in full of all Senior
Indebtedness of the Company, whether outstanding at the Issue Date or thereafter
incurred.

                  No provision of this Article XIII shall prevent the occurrence
of any Default or Event of Default hereunder, nor the rights of the Indenture
Trustee or any Holder to exercise such rights and remedies afforded to each of
them under this Indenture with respect to any provision of this Indenture other
than payment of principal and interest on the Debentures.

                  SECTION 13.02. Default on Senior Indebtedness.

                  In the event that (a) any payment of principal, interest or
any other payment due on any Senior Indebtedness is not paid by the Company when
due, any applicable grace period with respect to any such payment default has
ended and such default has not been cured, waived or ceased to exist, (b) any
other default occurs and is continuing with respect to Senior Indebtedness that
permits holders of the Senior Indebtedness as to which such default relates to
accelerate its maturity and the Indenture Trustee receives notice of such
default (a "Payment Blockage Notice") from the Company or any other Person
permitted to give such notice (including without limitation, any representative
of any holder of Senior Indebtedness); or (c) in the event that the maturity of
any Senior Indebtedness of the Company has been accelerated because of a
default, then, in any such case, no payment shall be made by the Company with
respect to the principal (including redemption) of or interest on, the
Debentures. Payments on the Debentures shall be resumed: (1) in the case of a
payment default on any Senior Indebtedness, upon the date on which such default
is cured or waived; and (2) in case of a nonpayment default, the earlier of the
date on which that default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received; provided, however,
that payments on the Debentures shall not resume if the maturity of any Senior
Indebtedness has been accelerated. A new Payment Blockage Notice may be
delivered if 180 days have elapsed since the delivery of the immediately prior
Payment Blockage Notice so long as such Payment

                                       62
<PAGE>

Blockage Notice relates to a default under Senior Indebtedness that has not been
the subject of any prior Payment Blockage Notice.

                  In the event that, notwithstanding the foregoing, any payment
shall be received by the Indenture Trustee or any Holder when such payment is
prohibited by the preceding paragraph of this Section 13.02, such payment shall
be deemed to be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that the holders of the Senior
Indebtedness (or their representative or representatives or a trustee) notify
the Indenture Trustee and the Company in a written notice within 90 days of the
date on which such payments are disbursed by the Indenture Trustee of the
amounts then outstanding under the Senior Indebtedness, plus accrued interest
thereon, and only the amounts specified in such notice to the Indenture Trustee
and the Company shall be paid to the holders of Senior Indebtedness.

                  SECTION 13.03. Liquidation; Dissolution; Bankruptcy.

                  Upon any payment by the Company or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due on all
Senior Indebtedness of the Company, shall first be paid in full, or payment
thereof provided for in cash in accordance with its terms, before any payment is
made by the Company, on account of the principal or interest on, the Debentures;
and upon any such dissolution or winding-up or liquidation or reorganization,
any payment by the Company or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, which the Holders of the
Debentures or the Indenture Trustee would be entitled to receive from the
Company, except for the provisions of this Article XIII, shall be paid by the
Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the Holders of the
Debentures or by the Indenture Trustee under this Indenture if received by them
or it, directly to the holders of Senior Indebtedness of the Company (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full in cash, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness,
before any such payment or distribution is made to or retained by the Holders of
Debentures or the Indenture Trustee.

                  In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Indenture Trustee or the Holders of the Debentures before all Senior
Indebtedness of the Company is paid in full, or provision is made for such
payment in cash in accordance with its terms, such payment or distribution shall
be held

                                       63
<PAGE>

in trust for the benefit of and shall be paid over or delivered to the holders
such Senior Indebtedness or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, and their respective
interests may appear, as calculated by the Company, for application to the
payment of all Senior Indebtedness of the Company, remaining unpaid to the
extent necessary to pay such Senior Indebtedness in full in cash in accordance
with its terms, after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Indebtedness.

                  For purposes of this Article XIII, the words "cash, property
or securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XIII with
respect to the Debentures to the payment of all Senior Indebtedness of the
Company, that may at the time be outstanding, provided that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation, amalgamation or merger
of the Company with or into, another corporation or the liquidation or
dissolution of the Company following the conveyance, transfer, lease or other
disposition of its property as an entirety, or substantially as an entirety, to
another corporation upon the terms and conditions provided for in Article X of
this Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 13.03 if such other corporation
shall, as a part of such consolidation, amalgamation, merger, conveyance,
transfer, lease or other disposition, comply with the conditions stated in
Article X of this Indenture. Nothing in Sections 13.01, 13.02 or in this Section
13.03 shall apply to claims of, or payments to, the Indenture Trustee under or
pursuant to Section 7.06 hereof.

                  SECTION 13.04. Subrogation.

                  Subject to the payment in full of all Senior Indebtedness of
the Company, the rights of the Holders of the Debentures shall be subrogated to
the rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company, applicable to such
Senior Indebtedness until the principal of and interest on, the Debentures shall
be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders for such Senior Indebtedness of any cash, property
or securities to which the Holders of the Debentures or the Indenture Trustee
would be entitled except for the provisions of this Article XIII, and no payment
over pursuant to the provisions of this Article XIII, to or for the benefit of
the holders of such Senior Indebtedness by Holders of the Debentures or the
Indenture Trustee, shall, as between the Company, its creditors other than
holders of Senior Indebtedness of the Company, and the Holders of the
Debentures, be deemed to be a payment by the Company, to or on account of such
Senior Indebtedness. It is understood that the provisions of this Article XIII
are and are intended solely for the purposes of defining the relative rights of
the Holders of the Debentures, on the one hand, and the holders of such Senior
Indebtedness on the other hand.

                                       64
<PAGE>

                  Nothing contained in this Article XIII or elsewhere in this
Indenture or in the Debentures is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company and the Holders of the Debentures, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Debentures the
principal of and interest on, the Debentures as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders of the Debentures and creditors of the
Company, other than the holders of Senior Indebtedness of the Company, nor shall
anything herein or therein prevent the Indenture Trustee or the Holder of any
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article XIII of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company, received upon the exercise of any such
remedy.

                  Upon any payment or distribution of assets of the Company
referred to in this Article XIII, the Indenture Trustee, subject to the
provisions of Section 7.01, and the Holders of the Debentures, shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidation trustee, agent or other Person making such payment or distribution,
delivered to the Indenture Trustee or to the Holders of the Debentures, for the
purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
XIII.

                  SECTION 13.05. Indenture Trustee to Effectuate Subordination.

                  Each Holder of Debentures by such Holder's acceptance thereof
authorizes and directs the Indenture Trustee on such Holder's behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article XIII and appoints the Indenture Trustee such Holder's
attorney-in-fact for any and all such purposes.

                  SECTION 13.06. Notice by the Company.

                  The Company shall give prompt written notice to a Responsible
Officer of the Indenture Trustee, with a copy to the Administrative Agent, of
any fact known to the Company that would prohibit the making of any payment of
monies to or by the Indenture Trustee in respect of the Debentures pursuant to
the provisions of this Article XIII. The Company shall deliver to the
Administrative Agent a copy of any notice delivered by the Company pursuant to
this Indenture. Notwithstanding the provisions of this Article XIII or any other
provision of this Indenture, the Indenture Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment of monies to or by the Indenture Trustee in respect of the Debentures
pursuant to the provisions of this Article XIII, unless and until a Responsible
Officer of the Indenture Trustee shall have received written notice thereof at
the Corporate Trust Office of the Indenture Trustee from the Company or a holder
or holders of Senior Indebtedness or from any trustee therefor; and before the
receipt of any such written notice, the Indenture Trustee, subject to the
provisions of Section 7.01, shall be entitled in all

                                       65
<PAGE>

respects to assume that no such facts exist; provided, however, that if the
Indenture Trustee shall not have received the notice provided for in this
Section 13.06 at least two Business Days prior to the date upon which by the
terms hereof any cash may become payable for any purpose (including, without
limitation, the payment of the principal of or interest on, any Debenture),
then, anything herein contained to the contrary notwithstanding, the Indenture
Trustee shall have full power and authority to receive such cash and to apply
the same to the purposes for which they were received, and shall not be affected
by any notice to the contrary that may be received by it within two Business
Days prior to such date.

                  The Indenture Trustee, subject to the provisions of Section
7.01, shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness of the Company
(or a trustee on behalf of such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a trustee on behalf of any such
holder or holders. In the event that the Indenture Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of such Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XIII, the Indenture Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Indenture
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article XIII, and if such evidence is not furnished, the Indenture Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.

                  SECTION 13.07. Rights of the Indenture Trustee; Holders of
                                 Senior Indebtedness.

                  The Indenture Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article XIII, in respect of any
Senior Indebtedness at any time held by it, to the same extent as any other
holder of Senior Indebtedness, and nothing in this Indenture shall deprive the
Indenture Trustee of any of its rights as such holder.

                  With respect to the holders of Senior Indebtedness of the
Company, the Indenture Trustee undertakes to perform or to observe only such of
its covenants and obligations as are specifically set forth in this Article
XIII, and no implied covenants or obligations with respect to the holders of
such Senior Indebtedness shall be read into this Indenture against the Indenture
Trustee. The Indenture Trustee shall not be deemed to owe any fiduciary duty to
the holders of such Senior Indebtedness and, subject to the provisions of
Section 7.01 of this Indenture, the Indenture Trustee shall not be liable to any
holder of such Senior Indebtedness if it shall pay over or deliver to Holders of
the Debentures, the Company or any other Person cash or assets to which any
holder of such Senior Indebtedness shall be entitled by virtue of this Article
XIII or otherwise.

                  SECTION 13.08. Subordination May Not Be Impaired.

                  No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall at
any time in any way be prejudiced

                                       66
<PAGE>

or impaired by any act or failure to act on the part of the Company, or by any
act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company, with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.

                  Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Indenture Trustee
or the Holders of the Debentures, without incurring responsibility to the
Holders of the Debentures and without impairing or releasing the subordination
provided in this Article XIII or the obligations hereunder of the Holders of the
Debentures to the holders of such Senior Indebtedness, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend
or supplement in any manner such Senior Indebtedness or any instrument
evidencing the same or any agreement under which such Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release
any Person liable in any manner for the collection of such Senior Indebtedness;
and (iv) exercise or refrain from exercising any rights against the Company and
any other Person.

                                  ARTICLE XIV

                                    EXPENSES

                  SECTION 14.01. Payment of Expenses.

                  In connection with the offering, sale and issuance,
modifications and revisions of the Debentures initiated by the Company, the
Company shall:

                  (a) pay for all costs and expenses relating to the offering,
sale and issuance, modifications and revisions of the Debentures and
compensation of the Indenture Trustee under the Indenture in accordance with the
provisions of Section 7.06 of this Indenture;

                  (b) pay for all costs and expenses of the Trust, including,
but not limited to, costs and expenses relating to the organization of the
Trust, the offering, sale and issuance of the Trust Securities, the fees and
expenses of the Property Trustee, the Delaware Trustee (as defined in the
Declaration), including such compensation for all services rendered by the
Trustees under the Declaration as may be mutually agreed upon in writing by the
Company and such Trustees as the case may be, and except as otherwise expressly
provided herein, to reimburse any Trustee upon its request for all reasonable
expenses (including counsel fees and expenses), disbursements and advances
incurred or made by such Trustees in accordance with the provisions of the
Declaration, except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith), the costs and expenses relating to
the operation of the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, governmental
filings, expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel
and telephone and other telecommunications expenses and costs and expenses
incurred in connection

                                       67
<PAGE>

with the acquisition, financing, and disposition of assets of the Trust; and,
further, each of the Property Trustee and Delaware Trustee shall have the right
to enforce this Section 14.01(b) with respect to its fees and expenses;

                  (c) pay all reasonable costs and expenses of legal counsel for
all holders of Preferred Securities, which costs and expenses such holders may
incur in connection with the enforcement of any of the rights or interests of
such holders hereunder or any workout, restructuring or similar transaction
involving the Company, provided that, notwithstanding the foregoing, the Company
shall be obligated to pay the reasonable costs and expenses of only one legal
counsel (together with any requisite local counsel); and

                  (d) pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) of the Trust and all
liabilities, costs and expenses with respect to such taxes of the Trust.

                                   ARTICLE XV

                                FORM OF DEBENTURE

                  The Debentures and the Indenture Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
form.

                           (FORM OF FACE OF DEBENTURE)

No.                                                              $
    -------------                                                 --------------

                           Crown Media Holdings, Inc.

                      6.75% SUBORDINATED DEBENTURE DUE 2007

EACH HOLDER OF THE DEBENTURES, BY ITS ACCEPTANCE HEREOF, WILL BE DEEMED TO HAVE
ACKNOWLEDGED, REPRESENTED TO AND AGREED WITH THE COMPANY AND THE TRUST THAT SUCH
HOLDER UNDERSTANDS AND ACKNOWLEDGES THAT (1) THE DEBENTURES AND UNDERLYING
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER
APPLICABLE SECURITIES LAWS AND ARE NOT FREELY TRANSFERABLE WITHOUT REGISTRATION
UNDER OR AN EXEMPTION FROM THE SECURITIES ACT, (2) THE DEBENTURES ARE BEING
PURCHASED FOR THE ACCOUNT OF THE HOLDER WITHOUT A VIEW TO DISTRIBUTE, OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION OF, THE DEBENTURES IN
VIOLATION OF THE SECURITIES ACT OR ANY OTHER APPLICABLE SECURITIES LAWS AND (3)
IN THE ABSENCE OF REGISTRATION, THE DEBENTURES CAN ONLY BE TRANSFERRED PURSUANT
TO AN EXEMPTION UNDER THE SECURITIES ACT AND UPON DELIVERY OF SUCH
CERTIFICATIONS AND AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO

                                       68
<PAGE>

THE COMPANY TO SUCH EFFECT AND IN ACCORDANCE WITH ANY OTHER APPLICABLE
SECURITIES LAWS AND THAT SUCH HOLDER WILL NOTIFY THE TRANSFEREE OF SUCH RESALE
RESTRICTIONS.

THE FOLLOWING INFORMATION IS PROVIDED PURSUANT TO UNITED STATES TREASURY
REGULATION SECTION 1.1275-3(b). THIS DEBENTURE HAS BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE HOLDER OF THIS
DEBENTURE MAY OBTAIN THE INFORMATION DESCRIBED IN UNITED STATES TREASURY
REGULATION SECTION 1.1275-3(b)(1)(i) FROM THE COMPANY, AT THE FOLLOWING ADDRESS:
c/o CROWN MEDIA HOLDINGS, INC., 6430 SOUTH FIDDLERS GREEN CIRCLE, SUITE 500,
GREENWOOD VILLAGE, CO. 80111, ATTENTION: VICE PRESIDENT OF FINANCE
ADMINISTRATION.

                  CROWN MEDIA HOLDINGS, INC., a Delaware corporation (the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to JPMorgan
Chase Bank, as property trustee of Crown Media Trust (the "Trust"), or
registered assigns, the principal sum of ____________________ Dollars on
December 15, 2007 and to pay interest on said principal sum from December 17,
2001 or from the most recent interest payment date to which interest has been
paid or duly provided for, quarterly in arrears on March 15, June 15, September
15 and December 15 of each year (each, an "Interest Payment Date"), commencing
March 15, 2002, at the rate of 6.75% per annum (the "Coupon Rate") until the
principal hereof shall have become due and payable, and on any overdue principal
and (without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum. Interest payments not paid when due shall accrue interest
at the Coupon Rate on the amount of accrued and unpaid interest (to the extent
permitted by law). So long as an Event of Default shall have occurred and be
continuing (after, as well as before, a judgment), the Company shall on each
such date on which Defaulted Interest is payable, pay interest, to the extent
permitted by applicable law, on any then unpaid amount of the Debentures
Outstanding at a rate equal to 8.75%, representing 2% per annum in excess of the
Coupon Rate.

                  This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Indenture Trustee.

                  The provisions of this Debenture are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.

                                       69
<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this instrument to
be executed.

Dated:  December 17, 2001

                                          CROWN MEDIA HOLDINGS, INC.

                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                       70
<PAGE>

                     (FORM OF CERTIFICATE OF AUTHENTICATION)

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Debentures described in the
within-mentioned Indenture.

JPMorgan Chase Bank, as Indenture Trustee

By:
    -------------------------------------
    Authorized Officer

                         (FORM OF REVERSE OF DEBENTURE)

                  This Debenture is one of a duly authorized series of
Debentures of the Company (the "Debentures"), issued under and pursuant to an
indenture (the "Indenture") dated as of December 17, 2001 among the Company, and
JPMorgan Chase Bank, a New York banking corporation, as Indenture Trustee (the
"Indenture Trustee"), to which Indenture thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Indenture Trustee, the Company and the Holders of
the Debentures. By the terms of the Indenture, the Debentures are limited in
aggregate principal amount as specified in said Indenture.

                  The amount of interest payable for any period shall be
computed on the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable for any
period shorter than a full quarterly period for which interest is computed,
shall be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on this Debenture
is not a Business Day, then payment of interest payable on such date shall be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. The interest installment so payable, and
punctually paid or duly provided for, for any period, will, as provided in the
Indenture, be paid to the Person in whose name this Debenture is registered, at
the close of business on the Regular Record Date for such interest installment.
Notwithstanding the foregoing, any Defaulted Interest shall be payable only to
the Person in whose name this Debenture is registered at the close of business
on a special record date to be fixed by the Indenture Trustee in accordance with
the provisions of the Indenture, for the payment of such Defaulted Interest,
notice whereof shall be given to the registered Holders of this Debenture not
less than 10 days prior to such special record date. The principal of and the
interest on, this Debenture shall be payable in the coin or currency of the

                                       71
<PAGE>

United States of America which at the time of payment is legal tender for
payment of public and private debt, at the office or agency of the Indenture
Trustee maintained for that purpose in the Borough of Manhattan, the City and
State of New York; provided, however, that payment of interest may be made at
the option of the Company by check mailed to the registered Holder at such
address as shall appear in the Debenture Register. Notwithstanding the
foregoing, so long as the Holder of this Debenture is the Property Trustee, the
payment of the principal of and interest on, this Debenture shall be made at
such place and to such account as may be designated in writing at least 10
Business Days prior to the applicable Regular Record Date by the Property
Trustee.

                  The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, whether outstanding on the
Issue Date or thereafter incurred, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Debenture,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Indenture Trustee on his or her behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided, and (c) appoints the Indenture Trustee as his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such Holder upon said provisions.

                  At any time on or after December 15, 2003, the Company shall
have the right to redeem (the "Optional Redemption") any and all of the
Debentures Outstanding, in whole but not in part at a redemption price equal to
100% of the aggregate principal amount of the Debentures Outstanding, together
with any accrued and unpaid interest thereon to the date of redemption.

                  At any time on or after the Issue Date and prior to December
15, 2003, in the event of a Special Event, the Company shall have the right to
redeem (the "Special Event Redemption") any and all of the Debentures
Outstanding, in whole but not in part at a redemption price equal to 100% of the
aggregate principal amount of the Debentures, together with any accrued and
unpaid interest thereon to the date of redemption.

                  In the event of a Change of Control, the Company shall have
the right to redeem any and all of the Debentures Outstanding at a redemption
price per Debenture, depending on the period in which the Change of Control
occurs, equal to the following percentages per $1,000 aggregate principal amount
of Debentures Outstanding, together with any accrued and unpaid interest to the
date of redemption (a "Change of Control Redemption"):

<Table>
<S>                                                                     <C>
                        December 15, 2001 to December 14, 2002          110.0%
                        December 15, 2002 to December 14, 2003          110.0%
                        December 15, 2003 and thereafter                100.0%
</Table>

                                       72
<PAGE>

                  In the event that the Company declines to exercise a Change of
Control Redemption with respect to all Debentures within five (5) days of a
Change of Control, the Company shall be required to offer to purchase any and
all of the Debentures Outstanding at a price equal to the redemption price that
would have been payable upon a Change of Control Redemption specified in the
immediately preceding paragraph (a "Change of Control Offer"). In connection
with any such Change of Control Offer, the Company covenants and agrees that it
shall purchase any and all Debentures that are validly tendered by Holders
thereof.

                  Any redemption shall be made upon not less than 30 days nor
more than 60 days notice before the date fixed for redemption at the redemption
price.

                  In case an Event of Default, shall have occurred and be
continuing, the principal of, and any accrued and unpaid interest, on, all of
the Debentures may be declared, and upon such declaration shall become,
immediately due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture. Upon any Debentures becoming due and
payable under Section 6.01 of the Indenture, whether automatically or by
declaration, such Debentures will forthwith mature and the entire unpaid
principal amount of such Debentures plus all accrued and unpaid interest thereon
(to the full extent permitted by applicable law), shall be immediately due and
payable, in each and every case without presentment, demand, protest or further
notice.

                  The Debentures are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid in full before the Debentures may be paid. The Company
agrees, and each Holder by accepting a Debenture agrees, to the subordination
provisions contained in the Indenture and authorizes the Indenture Trustee to
give it effect and appoints the Indenture Trustee as attorney-in-fact for such
purpose.

                  The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries to, among other things, incur
additional Indebtedness, make payments in respect of its Capital Stock or
certain Indebtedness and enter into transactions with Affiliates. Such
limitations are subject to a number of important qualifications and exceptions.
The Company must annually report to the Indenture Trustee on compliance with
such limitations.

                  The Indenture contains provisions permitting the Company and
the Indenture Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Debentures affected by such
supplemental indenture or indentures at the time Outstanding, to enter into
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner not covered by Section 9.01
of the Indenture the rights of the Holders of the Debentures; provided, however,
that no such supplemental indenture shall, without the consent of the Holders of
each Debenture Outstanding and affected thereby, (i) extend the fixed maturity
of any Debenture, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, or reduce any interest payable
upon the redemption thereof, or (ii) reduce the aforesaid percentage of
Debentures, the Holders of which are required to consent to any such
supplemental indenture. The Indenture also contains

                                       73
<PAGE>

provisions permitting the Holders of a majority in aggregate principal amount of
the Debentures at the time Outstanding affected thereby, determined in
accordance with Section 8.04 of the Indenture, on behalf of the Holders of all
of the Debentures, to waive any past Default in the performance of any of the
covenants contained in the Indenture, and its consequences, except that a waiver
of a Default in the payment of the principal of or interest on this Debenture
shall require the consent of each affected Holder. Any such consent or waiver by
the registered Holder of the Debenture (unless revoked as provided in this
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this Debenture and of any Debenture issued in exchange
herefor on registration of transfer thereof or in place hereof, irrespective of
whether any notation of such consent or waiver is made upon this Debenture.

                  No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on, this Debenture at the time and place and at the rate and in the
cash herein prescribed.

                  As provided in this Indenture and subject to certain
limitations therein set forth, the transfer of this Debenture is registrable by
the registered Holder hereof on the Debenture Register of the Company, upon
surrender of this Debenture for registration of transfer at the office or agency
of the Company in the Borough of Manhattan, The City and State of New York
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Debenture Registrar duly executed by the
registered Holder hereof or by such Holder's attorney duly authorized in
writing, and thereupon one or more new Debentures for a like aggregate principal
amount and other applicable terms and conditions will be issued to the
designated transferee or transferees. No service charge will be made for any
such registration of transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.

                  Prior to the due presentment for registration of transfer of
this Debenture, the Company, the Indenture Trustee, any Paying Agent and any
Debenture Registrar may deem and treat the registered Holder hereof as the
absolute owner hereof (whether or not this Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Debenture Registrar) for the purpose of receiving payment of or on
account of the principal hereof and interest due hereon and for all other
purposes, and neither the Company nor the Indenture Trustee nor any Paying Agent
nor any Debenture Registrar shall be affected by any notice to the contrary.

                  No recourse shall be had for the payment of the principal of
or the interest on, this Debenture, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, either
directly or through the Company of any predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issuance
hereof, expressly waived and released.

                                       74
<PAGE>

                  All capitalized terms used in this Debenture and not otherwise
defined herein shall have the meanings assigned thereto in the Indenture.

                                  ARTICLE XVI

                            MISCELLANEOUS PROVISIONS

                  SECTION 16.01. Effect on Successors and Assigns.

                  All the covenants, stipulations, promises and agreements in
this Indenture contained by or on behalf of the Company shall bind its
respective successors and assigns, whether so expressed or not.

                  SECTION 16.02. Actions by Successor.

                  Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the corresponding board, committee or officer of any corporation that
shall at the time be the lawful sole successor of the Company.

                  SECTION 16.03. Surrender of Company Powers.

                  The Company, by instrument in writing executed by authority of
2/3 (two-thirds) of its Board of Directors and delivered to the Indenture
Trustee, may surrender any of the powers reserved to the Company and thereupon
such power so surrendered shall terminate both as to the Company and as to any
successor corporation.

                  SECTION 16.04. Notices.

                  Except as otherwise expressly provided herein any notice or
demand that by any provision of this Indenture is required or permitted to be
given or served by the Indenture Trustee or by the Holders of Debentures, the
Property Trustee or the holders of the Preferred Securities to or on the Company
may be given or served by being deposited first class postage prepaid in a
post-office letterbox addressed (until another address is filed in writing by
the Company with the Indenture Trustee), as follows: Crown Media Holdings, Inc.
6430 S. Fiddlers Green Circle, Suite 500, Greenwood Village, Colorado 80111,
Attention: Chief Financial Officer. Any notice, election, request or demand by
the Company or any Holder to or upon the Indenture Trustee shall be deemed to
have been sufficiently given or made, for all purposes, if given or made in
writing at the Corporate Trust Office of the Indenture Trustee.

                  SECTION 16.05. Governing Law.

                  This Indenture and the Debentures shall be governed by and
construed in accordance with the laws of the State of New York, except to the
extent that the Trust Indenture Act shall be applicable.

                                       75
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                  SECTION 16.06. Treatment of Debentures as Debt; Preservation
                                 of Grantor Trust Status.

                  It is intended that the Debentures will be treated as
indebtedness and not as equity for federal income tax purposes. The provisions
of this Indenture shall be interpreted to further this intention.
Notwithstanding any other provision, neither this Indenture nor the Debentures
shall require or permit any action to be taken or power to be held that is
inconsistent with the status of the Trust as a grantor trust for United States
federal income tax purposes.

                  SECTION 16.07. Compliance Certificates and Opinions.

                  (a) Upon any application or demand by the Company to the
Indenture Trustee to take any action under any of the provisions of this
Indenture, the Company shall furnish to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel stating that in the opinion of such
officers and counsel all conditions precedent provided for in this Indenture
relating to the proposed action have been complied with, except that in the case
of any such application or demand as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.

                  (b) Each certificate or opinion provided for in this Indenture
and delivered to the Indenture Trustee with respect to compliance with a
condition or covenant in this Indenture shall include:

                           (i) a statement that the Person signing such
                  certificate or opinion has read the covenant or condition and
                  the definitions relating thereto;

                           (ii) a brief statement as to the nature and scope of
                  the examination or investigation upon which the statements or
                  opinions contained in the certificate or opinion are based;

                           (iii) a statement that each such officer or counsel
                  has made such examination or investigation under taken by each
                  such officer and counsel and as in the opinion of such officer
                  or counsel, is necessary to enable him to express an informed
                  opinion as to whether such covenant or condition has been
                  complied with; and

                           (iv) a statement as to whether, in the opinion of
                  such officer or counsel, such condition or covenant has been
                  complied with.

                  SECTION 16.08. Payments on Business Days.

                  In any case where the date of maturity of interest, principal
of the Debentures or the date of redemption thereof shall not be a Business Day,
then payment of interest, principal may be made on the next succeeding Business
Day with the same force and effect as if made on the nominal date of maturity or
redemption, and no interest shall accrue with respect to such payment for the
period after such nominal date.

                                       76
<PAGE>

                  SECTION 16.09. Conflict with Trust Indenture Act.

                  If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control only if
this Indenture shall be required by the Trust Indenture Act to be qualified
under that Act.

                  SECTION 16.10. Counterparts.

                  This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.

                  SECTION 16.11. Separability.

                  In case any one or more of the provisions contained in this
Indenture or in the Debentures shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
such Debentures, but this Indenture and such Debentures shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.

                  SECTION 16.12. Assignment.

                  The Company shall have the right at all times to assign any of
its respective rights or obligations under this Indenture to a direct or
indirect Wholly Owned Subsidiary thereof; provided, however, that, in the event
of any such assignment, the Company shall remain liable for all such
obligations. Subject to the foregoing, the Indenture is binding upon and inures
to the benefit of the parties thereto and their respective successors and
assigns. This Indenture may not otherwise be assigned by the parties thereto.

                  SECTION 16.13. Subordination and Support Agreement.

                  The Indenture Trustee is hereby authorized and directed to
execute and deliver the Subordination and Support Agreement and to perform the
duties and obligations of the Indenture Trustee thereunder.

                                       77
<PAGE>

                  IN WITNESS WHEREOF, the Company and Indenture Trustee have
executed this Indenture as of the day and year first above written.

                                       CROWN MEDIA HOLDINGS, INC.

                                       By:   /s/  William J. Aliber
                                             -----------------------------------
                                             Name:  William J. Aliber
                                             Title: Chief Financial Officer

                                       JPMORGAN CHASE BANK, as Indenture Trustee

                                       By:   /s/  Carol Ng
                                             -----------------------------------
                                             Name:  Carol Ng
                                             Title: Vice President

                                       78

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