CROWN MEDIA HOLDINGS INC
EX-10.1 $50,000,000 PROMISSORY NOTE
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<TYPE>EX-10.1
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<FILENAME>d89363ex10-1.txt
<DESCRIPTION>EX-10.1 $50,000,000 PROMISSORY NOTE
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                                                                    EXHIBIT 10.1

                                 PROMISSORY NOTE


Amount:  $50,000,000                        Date:  July 10, 2001
                                                   Wilmington, Delaware

SECTION 1. PROMISE TO PAY.

         SECTION 1.1 For value received, Crown Media, Inc., a Delaware
         corporation (hereafter called "Maker"), hereby promises to pay on
         demand to the order of HC Crown Corporation, a Delaware corporation
         ("Payee"), at such place as Payee may, from time to time specify in
         writing, the principal amount outstanding under this Note together with
         all accrued interest.

         SECTION 1.2 The extension of funds under this Note is subject to the
         sole discretion of Payee and the principal amount outstanding under
         this Note shall note exceed Fifty Million Dollars ($50,000,000).

SECTION 2. INTEREST.

         During the term of this Note, interest on the outstanding balance
         hereunder shall accrue and be payable at 130% of the short-term
         Applicable Federal Rate ("AFR"). This rate will be adjusted monthly
         based on the rate appearing in the CCH FEDERAL TAX WEEKLY periodical.
         Interest will be compounded on an annual basis.

SECTION 3. REPAYMENT.

         SECTION 3.1 Subject to Maker's right of prepayment as set forth herein,
         the obligation evidenced by this Note shall be repaid on the basis of
         interest only installments. Such payments shall accrue as of the end of
         each calendar quarter occurring during the term hereof and shall be
         paid on or before forty-five (45) days after the end of each such
         calendar quarter. Maker shall pay to Payee a single principal payment
         (together with all accrued and unpaid interest) as of the Maturity
         Date.

         SECTION 3.2 Maker shall have the privilege, without premium or penalty,
         at any time and from time to time, to prepay this Note in whole or in
         part.

         SECTION 3.3 In the event Maker fails to pay any sum under the term
         hereof within fifteen (15) days after the same becomes due, a late
         charge of five percent (5%) per month of the amount past due shall,
         along with the past due amount, be due and payable to Payee.

SECTION 4. RESPECTING INTEREST.

         In the event the interest provisions of this Note shall result, because
         of (a) the reduction of principal, or (b) any other reason related or
         unrelated to such interest provisions at any time during the life of
         the loan or any combination of (a) and (b), in an effective rate of
         interest which, for any period of time, exceeds the limits of the usury
         or any other law applicable to the loan evidenced hereby, all sums in
         excess of those lawfully collectible as interest for the period in
         question shall, without further agreement or notice between or by any
         party hereto, be applied to principal immediately upon receipt of such
         monies by Payee with the same force and effect as though Maker had
         specifically designated such extra sums to be so applied to principal
         and Payee had agreed to accept such extra payment(s) as a premium-free
         prepayment.





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SECTION 5. INFORMATION.

    Maker shall deliver to Payee not later than 15 days after written request:

         (i)      A balance sheet of Maker as of the end of the most recently
                  ended fiscal year together with the consolidated statements of
                  income corresponding to the same; and

         (ii)     A balance sheet of Maker as of the end of the most recently
                  ended fiscal quarter (together with the consolidated
                  statements of income corresponding to such period), and, if
                  Payee so requests, each such statement shall be certified by
                  the chief financial officer or the chief accounting officer of
                  Maker as to fairness of presentation, generally accepted
                  accounting principles and consistency (subject only to normal
                  year-end adjustments).

SECTION 6. EVENTS OF DEFAULT.

         Each of the following shall constitute an event of default hereunder
         (an "Event of Default"):

         (i)      The failure of Maker to make any payment of interest hereunder
                  when the same is due and payable or to pay the principal
                  balance in the lump sum or balloon payment when the same is
                  due and payable, and such failure to pay continued for a
                  period of ten (10) days ore more after written notice thereof
                  from Payee;

         (ii)     The failure of Maker to provide timely financial information
                  or certification as required by Section 5 if such failure
                  continues for a period of thirty (30) days or more after such
                  information or certification is due and Payee has made a
                  written demand upon Maker for the same; or

         (iii)    A determination by Payee from time to time that a substantial
                  or materially adverse change in the financial condition of
                  Maker has occurred, whereupon default may be declared
                  immediately without notice or opportunity to cure by Maker.

SECTION 7.  REMEDIES.

         Upon the occurrence of an Event of Default and at any time thereafter
during the continuance of such Event of Default hereunder, Payee shall have the
right to declare the entire unpaid amount of principal and interest hereunder
immediately due and payable in full without presentation, demand or protest,
each of which is hereby waived by Maker.

SECTION 8. WAIVERS.

         SECTION 8.1 The failure by Payee to exercise any right or remedy
         available hereunder in the Event of Default shall in no event be
         construed as a waiver or release of the same. Likewise, Payee shall, by
         any act or omission or commission, be deemed to waive any right
         hereunder unless such waiver is evidenced in writing and signed by
         Payee, and then only to the extent specifically set forth in such
         writing. Moreover, a waiver with respect to any one event shall not be
         construed as continuing or as a bar to or waiver of Payee's rights or
         remedies with respect to any subsequent event.


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         SECTION 8.2 Maker expressly waives presentment for payment, notice of
         dishonor, protest, notice of protest, diligence of collection, and each
         other notice of any kind, and hereby consents to any number of renewals
         or extensions of time for payment hereof, which renewals and extensions
         shall not affect the liability of Maker.

         SECTION 8.3 Maker hereby waives and releases all errors, defects and
         imperfections in any proceeding instituted by Payee under the terms
         hereof as well as all benefits that might accrue to Maker by virtue of
         any present or future laws exempting any property, real, personal or
         mixed, or any part of the proceeds arising from any sale of such
         property, from attachment, levy or sale under execution, or providing
         for any stay of execution, exemption from civil process, or extension
         of time for payment; and Maker agrees that any real estate that may be
         levied upon pursuant to a judgment obtained by virtue hereof, or any
         writ of execution issued thereon, may be sold upon any such writ in
         whole or in part or in any other manner desired by Payee.

SECTION 9. NOTICES.

         Each notice required to be given to any party hereunder shall be in
         writing and shall be deemed to have been sufficiently given for all
         purposes when sent by certified or registered mail, return receipt
         requested, to the party at its respective address as follows:

                MAKER:    Crown Media, Inc.
                          6430 S. Fiddlers Green Circle
                          Englewood, Colorado 80111
                          Attn: Mike Conger

                PAYEE:    HC Crown Corporation
                          103 Foulk Road, Suite 214
                          Wilmington, DE 19803
                          Attn: David C. Eppes, Vice President and Controller

SECTION 10. ASSIGNABILITY.

         SECTION 10.1 This Agreement shall be binding upon and inure to the
         benefit of Maker and Payee and their respective successors and assigns;
         provided, however, that this Agreement, or any portion thereof, may not
         be assigned by Maker without the written consent of Payee, which
         consent shall not be unreasonably withheld.

         SECTION 10.2 In order to accomplish the intent and purpose of Section
         10.1, the terms "Maker" and "Payee" shall include, as applicable, each
         respective successor and assign of each.

SECTION 11. MODIFICATIONS.

         This Note may be modified only by means of an agreement in writing
signed by Maker and Payee.

SECTION 12. GOVERNING LAW.

         This Note shall be governed by and construed according to the laws of
the State of Delaware without regard to the conflict of laws provisions thereof.


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SECTION 13. HEADINGS.

         The heading preceding the text of each Section hereof is inserted
solely for convenience of reference and shall not constitute a part of this
Note, nor shall the same affect the meaning, construction of effect hereof.

SECTION 14. SEVERABILITY.

         If any provision of this Note or the application thereof is declared by
a court of competent jurisdiction to be invalid or unenforceable, the remaining
provision hereof shall be unaffected and remain valid and enforceable to the
fullest extent permitted by law.

                           [SIGNATURE ONLY TO FOLLOW]


                  IN WITNESS WHEREOF, the undersigned officer of Maker has
executed this Note as of the day and year first above written intending such act
to be the act and deed of Maker and thereby legally binding Maker to the terms
hereof.


                                                CROWN MEDIA, INC.

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



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