**Exhibit10.7**

SECURITYAND PLEDGE AGREEMENT

This Security and Pledge Agreement (this “Security and Pledge Agreement”)is entered into as of July 27, 2007, by and among (i) Crown Media Holdings,Inc., a Delaware corporation (“Crown Holdings”), and the subsidiaries of CrownHoldings listed as Guarantors (the “Guarantors”) on that certain Credit,Security, Guaranty and Pledge Agreement dated as of August 31, 2001 assubsequently amended among Crown Holdings, the Guarantors named therein, theLenders named therein and JPMorgan Chase as Agent (the “Credit Agreement”), (the“Guarantors” together with Crown Holdings shall be the “Borrowers”) and (ii)Hallmark Cards, Incorporated, a Missouri corporation (“Hallmark”) on behalf ofitself and as agent for each of HC Crown Corp., a Delaware corporation (“HCC”)and Hallmark Entertainment Holdings, Inc., a Delaware corporation (“HEHI” andtogether with Hallmark and HCC the “Hallmark Lenders”).

WHEREAS, the Borrowers are indebted to Hallmark Lenders pursuant to theobligations listed on Schedule A hereto in favor of one or more of the HallmarkLenders (collectively, the “Subject Obligations”);

WHEREAS, the Hallmark Lenders have been willing to defer certainpayments due under the Subject Obligations and have agreed to purchase from theBank Lenders certain obligations of the Borrowers, on the terms and subject tothe conditions set forth in that certain Waiver and Standby PurchaseAgreement between the parties dated as of March 21, 2006, as the same has beenand may be amended from time to time (the “Waiver Agreement”);

WHEREAS, the Borrowers are willing to further extend the terms of theWaiver Agreement subject to receiving a grant of security interest in theBorrowers as set forth herein;

NOW, THEREFORE, in consideration for the foregoing premises and themutual covenants and agreements contained herein, and for other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.             Definitions and Rules of Construction.

1.1           “Borrowers” shall be as defined in theintroductory paragraph.

1.2           “Cash Collateral Account” shall be as definedin the Credit Agreement.

1.3           “Collateral” shall mean with respectto each Borrower, all of such Borrower’s right, title and interest in and toall personal property, tangible and intangible, wherever located or situatedand whether now owned, presently existing or hereafter acquired or created,including, but not limited to, all goods, accounts, instruments, intercompanyobligations, contract rights, partnership and joint venture interests,documents, chattel paper, general intangibles, goodwill, equipment, machinery, 

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inventory,investment property, copyrights, trademarks, trade names, insurance proceeds,cash, deposit accounts and the Pledged Securities, and any proceeds thereof,products thereof or income therefrom, further including, but not limited to,all of such Borrower’s right, title and interest in and to each and every itemand type of Product, the scenario, screenplay or script upon which an item ofProduct is based, all of the properties thereof, tangible and intangible, andall domestic and foreign copyrights and all other rights therein and thereto,of every kind and character, whether now in existence or hereafter to be madeor produced, and whether or not in possession of such Borrower, including withrespect to each and every item of Product and without limiting the foregoinglanguage, each and all of the following particular rights and properties (tothe extent they are now owned or hereafter owned by such Borrower):

(i)            all scenarios,screenplays and/or scripts at every stage thereof;

(ii)           all common law and/orstatutory copyright and other rights in all literary and other properties(hereinafter called “said literary properties”) which form the basis ofsuch item of Product and/or which are or will be incorporated into such item ofProduct, all component parts of such item of Product consisting of saidliterary properties, all motion picture rights in and to the story, alltreatments of said story and said literary properties, together with allpreliminary and final screenplays used and to be used in connection with suchitem of Product, and all other literary material upon which such item ofProduct is based or from which it is adapted;

(iii)          all motion picturerights in and to all music and musical compositions used and to be used in suchitem of Product, if any, including, each without limitation, all rights torecord, rerecord, produce, reproduce or synchronize all of said music andmusical compositions in and in connection with motion pictures;

(iv)          all tangible personalproperty relating to such item of Product, including, without limitation, allexposed film, developed film, positives, negatives, prints, positive prints,answer prints, special effects, preparing materials (including interpositives,duplicate negatives, internegatives, color reversals, intermediates, lavenders,fine grain master prints and matrices, and all other forms of pre-printelements), sound tracks, cutouts, trims and any and all other physicalproperties of every kind and nature relating to such item of Product whether incompleted form or in some state of completion, and all masters, duplicates,drafts, versions, variations and copies of each thereof, in all formats whetheron film, videotape, disk or other optical or electronic media or otherwise andall music sheets and promotional materials relating to such item of Product(collectively, the “Physical Materials”);

(v)           all collateral, allied,subsidiary and merchandising rights appurtenant or related to such item ofProduct including, without limitation, the following rights:  all rights to produce remakes, sequels orprequels to such item of Product, based upon such item of Product, saidliterary properties or the theme 

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of such item of Product and/or the text or any part ofsaid literary properties; all rights throughout the world to broadcast,transmit and/or reproduce by means of television (including commerciallysponsored, sustaining and subscription or “pay” television) or by streamingvideo or by other means over the internet or any other open or closed physicalor wireless network or by any process analogous to any of the foregoing, nowknown or hereafter devised, such item of Product or any remake, sequel orprequel to the item of Product; all rights to produce primarily for televisionor similar use, a motion picture or series of motion pictures, by use of filmor any other recording device or medium now known or hereafter devised, basedupon such item of Product, said literary properties or any part thereof,including, without limitation, based upon any script, scenario or the like usedin such item of Product; all merchandising rights including, withoutlimitation, all rights to use, exploit and license others to use and exploitany and all commercial tie-ups of any kind arising out of or connected withsaid literary properties, such item of Product, the title or titles of suchitem of Product, the characters of such item of Product and/or said literaryproperties and/or the names or characteristics of said characters and includingfurther, without limitation, any and all commercial exploitation in connectionwith or related to such item of Product, any remake, sequel or prequel thereofand/or said literary properties;

(vi)          all statutorycopyrights, domestic and foreign, obtained or to be obtained on such item ofProduct, together with any and all copyrights obtained or to be obtained inconnection with such item of Product or any underlying or component elements ofsuch item of Product, including, in each case without limitation, allcopyrights on the property described in subparagraphs (i) through (v)inclusive, of this definition, together with the right to copyright (and allrights to renew or extend such copyrights) and the right to sue in the name ofany of the Credit Parties for past, present and future infringements ofcopyright;

(vii)         all insurance policiesand completion guaranties connected with such item of Product and all proceedswhich may be derived therefrom;

(viii)        all rights to distribute,sell, rent, license the exhibition of and otherwise exploit and turn to accountsuch item of Product, the Physical Materials, the motion picture rights in andto the story and/or other literary material upon which such item of Product isbased or from which it is adapted, and the music and musical compositions usedor to be used in such item of Product;

(ix)           any and all sums,proceeds, money, products, profits or increases, including money profits orincreases (as those terms are used in the UCC or otherwise) or other propertyobtained or to be obtained from the distribution, exhibition, sale or otheruses or dispositions of such item of Product or any part of such item ofProduct, including, without limitation, all sums, proceeds, profits, productsand increases, whether in money or otherwise, from the sale, rental orlicensing of such item of Product and/or any of the elements of such item ofProduct including, without limitation, from collateral, allied, subsidiary and 

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merchandising rights, and further including, withoutlimitation, all monies held in any Collection Account;

(x)            the dramatic,nondramatic, stage, television, radio and publishing rights, title and interestin and to such item of Product, and the right to obtain copyrights and renewalsof copyrights therein;

(xi)           the name or title ofsuch item of Product and all rights of such Borrower to the use thereof,including, without limitation, rights protected pursuant to trademark, servicemark, unfair competition and/or any other applicable statutes, common law, orother rule or principle of law;

(xii)          any and all contractrights and/or chattel paper which may arise in connection with such item ofProduct;

(xiii)         all accounts and/or otherrights to payment which such Borrower presently owns or which may arise infavor of such Borrower in the future, including, without limitation, any refundor rebate in connection with a completion guaranty or otherwise, all accountsand/or rights to payment due from Persons in connection with the distributionof such item of Product, or from the exploitation of any and all of thecollateral, allied, subsidiary, merchandising and other rights in connection withsuch item of Product;

(xiv)        any and all “generalintangibles” (as that term is defined in the UCC) not elsewhere included inthis definition, including, without limitation, any and all general intangiblesconsisting of any right to payment which may arise in connection with thedistribution or exploitation of any of the rights set out herein, and any andall general intangible rights in favor of such Borrower for services or otherperformances by any third parties, including actors, writers, directors, individualproducers and/or any and all other performing or nonperforming artists in anyway connected with such item of Product, any and all general intangible rightsin favor of such Borrower relating to licenses of sound or other equipment, orlicenses for any photograph or photographic or other processes, and any and allgeneral intangibles related to the distribution or exploitation of such item ofProduct including general intangibles related to or which grow out of theexhibition of such item of Product and the exploitation of any and all otherrights in such item of Product set out in this definition;

(xv)         any and all goodsincluding, without limitation, inventory (as that term is defined in the UCC)which may arise in connection with the creation, production or delivery of suchitem of Product and which goods pursuant to any production or distributionagreement or otherwise are owned by such Borrower;

(xvi)        all and each of therights, regardless of denomination, which arise in connection with the acquisition,creation, production, completion of production, delivery, distribution, orother exploitation of such item of Product, including, without limitation, anyand all rights in favor of such Borrower, the 

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ownership or control of which are or may becomenecessary or desirable, in the opinion of Hallmark, in order to completeproduction of such item of Product in the event that Hallmark exercises anyrights it may have to take over and complete production of such item ofProduct;

(xvii)       any and all documentsissued by any pledgeholder or bailee with respect to such item of Product orany Physical Materials (whether or not in completed form) with respect thereto;

(xviii)      any and all CollectionAccounts or other bank accounts established by such Borrower with respect tosuch item of Product;

(xix)         any and all rights ofsuch Borrower under any License Agreements or Platform Agreements relating tosuch item of Product; and

(xx)          any and all rights ofsuch Borrower under contracts relating to the production or acquisition of suchitem of Product.

1.4           “CollectionAccounts” shall be as defined in the Credit Agreement.

1.5           “CreditAgreement” shall be as defined in the introductory paragraph.

1.6           “Eventof Default” shall mean an occurrence of any of the following:  (i) any event constituting an Event ofDefault in the Credit Agreement; (ii) any event set forth in 2(c)(i)-(iv) ofthe Waiver Agreement; or (iii) any event constituting an Event of Defaultpursuant to any of the Subject Obligations.

1.7           “Guarantors”shall be as defined in the introductory paragraph.

1.8           “Lien”shall be as defined in the Credit Agreement.

1.9           “PledgedSecurities” shall mean all of the issued and outstanding capital stock or otherequity interests of each of the Guarantors directly or indirectly owned byCrown Holdings and all other equity securities or interests now owned orhereafter acquired by any of the Borrowers including without limitation thesecurities listed in Schedule B hereto and any proceeds as defined in Section9-102(a)(64) of the UCC related to any of the foregoing.

1.10         “Product”shall be as defined in the Credit Agreement and shall include but not belimited to those items of Product set forth on Schedule C hereto.

1.11         Unlessotherwise defined herein, capitalized terms shall be as defined in the WaiverAgreement.

2.             Security Interests.  TheBorrowers, as security for the due and punctual payment of the Subject Obligations(including interest thereon and interest accruing on and after the filing ofany petition in bankruptcy or of reorganization of the Borrower whether or notpost filing 

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interestis allowed in such proceeding), hereby mortgages, pledges, assigns, transfers,sets over, conveys and delivers to Hallmark (for the benefit of Hallmark andthe Hallmark Lenders) and grants to Hallmark (for the benefit of Hallmark andthe Hallmark Lenders) a security interest in the Collateral.

3.             Use of Collateral.  Solong as no Event of Default shall have occurred and be continuing, and subjectto the various provisions of each Subject Obligation, Borrowers may use theCollateral in any lawful manner except as otherwise provided hereunder.

4.             Collection Accounts and Cash CollateralAccount.

(a)           The Borrowers willmaintain or establish Collection Accounts and a Cash Collateral Account asdirected pursuant to the Credit Agreement. So long as no Event of Default is continuing the Borrowers shall havefull and unfettered access to the Collection Accounts and the Cash CollateralAccount.  A list of all CollectionAccounts and Cash Collateral Accounts of the Borrowers existing on the date hereofis attached as Schedule D.

(b)           The Borrowers willexecute such documentation as may be reasonably required by Hallmark in orderto effectuate Hallmark’s first and prior Lien upon all of the Borrowers’ rightsin and to the Collection Accounts, the Cash Collateral Account and all cash,documents, investments and securities from time to time held therein.  All cash, documents, instruments andsecurities from time to time on deposit in the Collection Account or CashCollateral Account, and all rights pertaining to investments of funds in the CollectionAccount or Cash Collateral Account, shall immediately and without any need forany further action on the part of any of the Borrowers, Hallmark or any HallmarkLender, become subject to the Lien set forth in this Section 4, be deemedCollateral for all purposes hereof and be subject to the provisions of thisSecurity and Pledge Agreement.

(c)           In the event a Borrowerreceives payment from any person or entity, which payment should have beenremitted directly to a Collection Account, such Borrower shall promptly remitsuch payment or proceeds to a Collection Account in accordance with the termsof the Credit Agreement.

(d)           All such CollectionAccounts and the Cash Collateral Account shall be maintained with JPMorganChase or with such other financial institutions as may be approved by Hallmark(subject to their willingness to execute appropriate documentation as requiredby this Section 4).

(e)           At any time during the continuation of an Event of Default, Hallmarkmay sell any documents, instruments and securities held in the CollectionAccounts or Cash Collateral Account and may immediately apply the proceedsthereof and any other cash held in the Collection Accounts or Cash CollateralAccount as set forth in this Security and Pledge Agreement.

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5.             Pledge ofSecurities.

5.1           Pledge.  Each Borrower, as security for the due andpunctual payment of the Subject Obligations (including interest accruing on andafter the filing of any petition in bankruptcy or of reorganization of theBorrower whether or not post filing interest is allowed in such proceeding)hereby pledges, hypothecates, assigns, transfers, sets over and delivers toHallmark for the benefit of Hallmark and the Hallmark Lenders, a securityinterest in all Pledged Securities now owned or hereafter acquired by it.

5.2           Covenant.  Each Borrower covenants that as a stockholderor equity owner of each of its respective Subsidiaries it will not take anyaction to allow any additional shares of common stock, preferred stock or otherequity securities of any of its respective Subsidiaries or any securitiesconvertible or exchangeable into common or preferred stock of such Subsidiariesto be issued, or grant any options or warrants, unless such securities arepledged to Hallmark (for the benefit of Hallmark and the Hallmark Lenders) assecurity for the Subject Obligations and such Borrower’s obligations (if any)under Article 10 hereof.

5.3           Voting Rights;Dividends.

(a)           The appropriateBorrower shall be entitled to exercise any and all voting and/or consensualrights and powers accruing to an owner of the Pledged Securities being pledgedby it hereunder or any part thereof for any purpose not inconsistent with theterms hereof, at all times, except as expressly provided in paragraph (c)below.

(b)           All dividends ordistributions of any kind whatsoever (other than cash dividends ordistributions paid while no Event of Default is continuing) received by aBorrower, whether resulting from a subdivision, combination, orreclassification of the outstanding capital stock of the issuer or received inexchange for Pledged Securities or any part thereof or as a result of anymerger, consolidation, acquisition, or other exchange of assets to which theissuer may be a party, or otherwise, shall be and become part of the PledgedSecurities pledged hereunder and shall immediately be delivered to Hallmark tobe held subject to the terms hereof.  Alldividends and distributions which are received contrary to the provisions ofthis subsection (b) shall be received in trust for the benefit of Hallmark andthe Hallmark Lenders, segregated from such Borrower’s own assets, and shall bedelivered to Hallmark.

(c)           Upon the occurrence andduring the continuance of an Event of Default and notice from Hallmark of thetransfer of such rights to Hallmark, all rights of a Borrower (i) toexercise the voting and/or consensual rights and powers which it is entitled toexercise pursuant to this Section and (ii) to receive and retain cashdividends and distributions shall cease, and all such rights shall thereuponbecome vested in Hallmark, which shall have the sole and exclusive right andauthority to exercise such voting and/or consensual rights and receive suchcash dividends and distributions until such time as all Events of Default havebeen cured.

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5.4           Remedies UponDefault.  If an Event of Defaultshall have occurred and be continuing, Hallmark and the Hallmark Lenders, maysell the Pledged Securities, or any part thereof, at public or private sale orat any broker’s board or on any securities exchange, for cash, upon credit orfor future delivery as Hallmark shall deem appropriate subject to the termshereof or as otherwise provided in the Uniform Commercial Code.  Hallmark shall be authorized at any such sale(if it deems it advisable to do so) to restrict to the full extent permitted byapplicable law the prospective bidders or purchasers to entities or persons whowill represent and agree that they are purchasing the Pledged Securities fortheir own account for investment and not with a view to the distribution orsale thereof, and upon consummation of any such sale, Hallmark shall have theright to assign, transfer, and deliver to the purchaser or purchasers thereofthe Pledged Securities so sold.  Eachsuch purchaser at any such sale shall hold the property sold absolutely, freefrom any claim or right on the part of any Borrower.  Hallmark shall give the Borrowers ten (10)days’ written notice of any such public or private sale, or sale at any broker’sboard or on any such securities exchange, or of any other disposition of thePledged Securities.  Such notice, in thecase of public sale, shall state the time and place for such sale and, in thecase of sale at a broker’s board or on a securities exchange, shall state theboard or exchange at which such sale is to be made and the day on which thePledged Securities, or portion thereof, will first be offered for sale at suchboard or exchange.  Any such public saleshall be held at such time or times within ordinary business hours and at suchplace or places as Hallmark may fix and shall state in the notice of suchsale.  At any such sale, the PledgedSecurities, or portion thereof, to be sold may be sold in one lot as anentirety or in separate parcels, as Hallmark may (in its sole and absolutediscretion) determine.  Hallmark shallnot be obligated to make any sale of the Pledged Securities if it shalldetermine not to do so, regardless of the fact that notice of sale of thePledged Securities may have been given. Hallmark may, without notice or publication, adjourn any public orprivate sale or cause the same to be adjourned from time to time byannouncement at the time and place fixed for sale, and such sale may, withoutfurther notice, be made at the time and place to which the same was soadjourned.  In case the sale of all orany part of the Pledged Securities is made on credit or for future delivery,the Pledged Securities so sold shall be retained by Hallmark until the saleprice is paid by the purchaser or purchasers thereof, but Hallmark shall notincur any liability in case any such purchaser or purchasers shall fail to takeup and pay for the Pledged Securities so sold and, in case of any such failure,such Pledged Securities may be sold again upon like notice.  At any sale or sales made pursuant to thisSection 5.4, Hallmark (on behalf of Hallmark and/or the Hallmark Lenders) maybid for or purchase, free from any claim or right of whatever kind, includingany equity of redemption, of the Borrowers, any such demand, notice, claim,right or equity being hereby expressly waived and released, any or all of thePledged Securities offered for sale, and may make any payment on the accountthereof by using any claim for moneys then due and payable to Hallmark (to theextent it consents) or any consenting Hallmark Lender by any Borrower as acredit against the purchase price; and Hallmark, upon compliance with the termsof sale, may hold, retain and dispose of the Pledged Securities without furtheraccountability therefor to any Borrower or any third party (other than the HallmarkLenders).  Hallmark shall in any suchsale make no representations or warranties with respect to the PledgedSecurities or any part thereof and shall not be chargeable with any of theobligations or liabilities of 

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the Borrowers with respect thereto.  Each Borrower hereby agrees that (i) itwill indemnify and hold Hallmark and the Hallmark Lenders harmless from andagainst any and all claims with respect to the Pledged Securities assertedbefore the taking of actual possession or control of the Pledged Securities byHallmark pursuant to this Security and Pledge Agreement, or arising out of anyact of, or omission to act on the part of, any Person prior to such taking ofactual possession or control by Hallmark (whether asserted before or after suchtaking of possession or control), or arising out of any act on the part of anyBorrower, its agents or Affiliates before or after the commencement of suchactual possession or control by Hallmark and (ii) Hallmark and the Hallmark Lendersshall have no liability or obligation arising out of any such claim.  As an alternative to exercising the power ofsale herein conferred upon it, Hallmark may proceed by a suit or suits at lawor in equity to foreclose upon the Collateral and Pledged Securities under thisSecurity and Pledge Agreement and to sell the Pledged Securities, or anyportion thereof, pursuant to a judgment or decree of a court or courts havingcompetent jurisdiction.

5.5           Securities Act.  In view of the position of each Borrower inrelation to the Pledged Securities pledged by it, or because of other presentor future circumstances, a question may arise under the Securities Act of 1933,as amended, as now or hereafter in effect, or any similar statute hereafterenacted analogous in purpose or effect (such Act and any such similar statuteas from time to time in effect being hereinafter called the “FederalSecurities Laws”), with respect to any disposition of the PledgedSecurities permitted hereunder.  EachBorrower understands that compliance with the Federal Securities Laws may verystrictly limit the course of conduct of Hallmark if Hallmark were to attempt todispose of all or any part of the Pledged Securities, and may also limit theextent to which or the manner in which any subsequent transferee of any PledgedSecurities may dispose of the same. Similarly, there may be other legal restrictions or limitationsaffecting Hallmark in any attempt to dispose of all or any part of the PledgedSecurities under applicable Blue Sky or other state securities laws, or similarlaws analogous in purpose or effect. Under applicable law, in the absence of an agreement to the contrary,Hallmark may perhaps be held to have certain general duties and obligations toa Borrower to make some effort towards obtaining a fair price even though the SubjectObligations may be discharged or reduced by the proceeds of a sale at a lesserprice.  Each Borrower waives to thefullest extent permitted by applicable law any such general duty or obligationto it, and the Borrowers will not attempt to hold Hallmark responsible forselling all or any part of the Pledged Securities at an inadequate price, evenif Hallmark shall accept the first offer received or shall not approach morethan one possible purchaser.  Withoutlimiting the generality of the foregoing, the provisions of this Section 5.5would apply if, for example, Hallmark were to place all or any part of thePledged Securities for private placement by an investment banking firm, or ifsuch investment banking firm purchased all or any part of the PledgedSecurities for its own account, or if Hallmark placed all or any part of thePledged Securities privately with a purchaser or purchasers.

5.6           Continuation andReinstatement.  Each Borrower furtheragrees that its pledge hereunder shall continue to be effective or bereinstated, as the case may be, if at any time payment, or any part thereof, ofany Subject Obligation is rescinded or must 

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otherwise be restored by Hallmark or the Hallmark Lendersupon the bankruptcy or reorganization of any Borrower or otherwise.

6.             Borrowers to Holdin Trust.  Upon the occurrence andduring the continuance of an Event of Default, each Borrower will, upon receiptby it of any revenue, income, profits or other sums in which a securityinterest is granted hereunder, payable pursuant to any agreement or otherwise,or of any check, draft, note, trade acceptance or other instrument evidencingan obligation to pay any such sum, hold the sum in trust for Hallmark (for thebenefit of Hallmark and the Hallmark Lenders), segregate such sum from its ownassets and forthwith, without any notice or demand whatsoever (all notices,demands, or other actions on the part of Hallmark or the Hallmark Lenders beingexpressly waived), endorse, transfer and deliver any such sums or instrumentsor both to Hallmark to be applied to the repayment of the Subject Obligationsin accordance with this Security and Pledge Agreement.

7.             Collections.  Upon the occurrence and during thecontinuance of an Event of Default, Hallmark may, in its sole discretion, inits name or in the name of any Borrower or otherwise, demand, sue for, collector receive any money or property at any time payable or receivable on accountof or in exchange for, or make any compromise or settlement deemed desirablewith respect to, any of the Collateral, but shall be under no obligation so todo, or Hallmark may extend the time of payment, arrange for payment ininstallments, or otherwise modify the terms of, or release, any of theCollateral, without thereby incurring responsibility to, or discharging orotherwise affecting any liability of, the Borrowers.  Hallmark will not be required to take anysteps to preserve any rights against prior parties to the Collateral.  If the Borrowers fail to make any payment ortake any action required hereunder, Hallmark may make such payments and takeall such actions as Hallmark reasonably deems necessary to protect Hallmark’s(for the benefit of itself and the Hallmark Lenders) security interests in theCollateral and/or the value thereof, and Hallmark is hereby authorized (withoutlimiting the general nature of the authority herein above conferred) to pay,purchase, contest or compromise any Liens (as defined in the Credit Agreement) thatin the judgment of Hallmark appear to be equal to, prior to or superior to thesecurity interests of Hallmark in the Collateral and any liens not expresslypermitted by the Credit Agreement.

8.             Possession, Saleof Collateral.  Upon the occurrenceand during the continuance of an Event of Default, Hallmark may enter upon thepremises of any Borrower or wherever the Collateral may be, and take possessionof the Collateral, and may demand and receive such possession from any person orentity who has possession thereof, and Hallmark may take such measures as itmay deem necessary or proper for the care or protection thereof, including theright to remove all or any portion of the Collateral, and with or withouttaking such possession may sell or cause to be sold, whenever Hallmark shalldecide, in one or more sales or parcels, at such prices as Hallmark may deembest, and for cash or on credit or for future delivery, without assumption ofany credit risk, all or any portion of the Collateral, at any broker’s board orat public or private sale, without demand of performance or notice of intentionto sell or of time or place of sale (except 7 days’ written notice to the Borrowerof the time and place of any such public sale or sales and such other noticesas may be required by applicable law and cannot be waived), and any Person maybe the purchaser of all or any portion of the Collateral so sold and thereafterhold the same absolutely, free (to the fullest extent permitted by applicable law)from any claim or right of whatever kind, including any equity of redemption,of any Borrower, any 

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such demand, notice,claim, right or equity being hereby expressly waived and released.  At any sale or sales made hereunder, Hallmarkmay bid for or purchase, free (to the fullest extent permitted by applicable law)from any claim or right of whatever kind, including any equity of redemption,of any Borrower, any such demand, notice, claim, right or equity being herebyexpressly waived and released, any part of or all of the Collateral offered forsale, and may make any payment on account thereof by using any claim for moneysthen due and payable to Hallmark the Hallmark Lenders by any Borrower hereunderas a credit against the purchase price.  Hallmarkshall in any such sale make no representations or warranties with respect tothe Collateral or any part thereof, and Hallmark shall not be chargeable withany of the obligations or liabilities of any Borrower.  Each Borrower hereby agrees (i) that it willindemnify and hold Hallmark and the Hallmark Lenders harmless from and againstany and all claims with respect to the Collateral asserted before the taking ofactual possession or control of the relevant Collateral by Hallmark hereunder,or arising out of any act of, or omission to act on the part of, any partyother than Hallmark prior to such taking of actual possession or control by Hallmark,or arising out of any act on the part of any Borrower, or its agents before orafter the commencement of such actual possession or control by Hallmark; and(ii) none of Hallmark or the Hallmark Lenders shall have any liability orobligation to any Borrowers arising out of any such claim except for acts by Hallmarkor the Hallmark Lenders of willful misconduct or gross negligence or acts nottaken in good faith.  Subject only to thelawful rights of third parties, any laboratory which has possession of any ofthe Collateral is hereby constituted and appointed by each Borrower aspledgeholder for Hallmark and, upon the occurrence and during the continuanceof an Event of Default, each such pledgeholder is hereby authorized to sell allor any portion of the Collateral upon the order and direction of Hallmark, andeach Borrower hereby waives any and all claims, for damages or otherwise, forany action taken by such pledgeholder in accordance with the terms of the UniformCommercial Code not otherwise waived hereunder. In any action hereunder, Hallmark shall be entitled to the appointmentof a receiver, without notice, to take possession of all or any portion of theCollateral and to exercise such powers as the court shall confer upon thereceiver.  Notwithstanding the foregoing,upon the occurrence and during the continuance of an Event of Default, Hallmarkshall be entitled to apply, without prior notice to any Borrower, any cash orcash items constituting Collateral in the possession of Hallmark to payment ofthe Subject Obligations.

9.             Application ofProceeds on Default.  Upon theoccurrence and during the continuance of an Event of Default, the balances inthe Collection Account(s) or the Cash Collateral Account, all other incomeearned on the Collateral, and all proceeds from any sale of the Collateral pursuanthereto shall be applied first toward payment of the reasonable out-of-pocketcosts and expenses paid or incurred by Hallmark in enforcing this Security Agreement,in realizing on or protecting any Collateral and in enforcing or collecting anySubject Obligations or any guaranty thereof, including, without limitation,court costs and the reasonable attorney’s fees and expenses incurred by Hallmark,and then to the payment in full of the Subject Obligations.  Any amounts remaining after such payment in fullshall be remitted to the appropriate Borrower or as a court of competentjurisdiction may otherwise direct.

10.           Power of Attorney.  Upon the occurrence and during thecontinuance of an Event of Default which is not waived in writing by Hallmark (a)each of the Borrowers does hereby irrevocably make, constitute and appoint Hallmarkor any of its officers or designees its true and 

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lawful attorney-in-factwith full power in the name of Hallmark to receive, open and dispose of allmail addressed to any Borrower, and to endorse any notes, checks, drafts, moneyorders or other evidences of payment relating to the Collateral that may comeinto the possession of Hallmark, with full power and right to cause the mail ofsuch Borrower to be transferred to Hallmark’s own offices or otherwise, and todo any and all other acts necessary or proper to carry out the intent of this SecurityAgreement and the grant of the security interests hereunder, and each of the Borrowershereby ratifies and confirms all that Hallmark or its substitutes shallproperly do by virtue hereof; (b) each of the Borrowers does hereby furtherirrevocably make, constitute and appoint Hallmark or any of its officers ordesignees its true and lawful attorney-in-fact in the name of Hallmark or any Borrower(i) to enforce all of such Borrower’s rights under and pursuant to allagreements with respect to the Collateral, all for the sole benefit of Hallmark,for the benefit of itself and the Hallmark Lenders, and to enter into suchother agreements as may be necessary or appropriate in the judgment of Hallmarkto complete the distribution or exploitation of any item of product which isincluded in the Collateral, (ii) to enter into and perform such agreements asmay be necessary in order to carry out the terms, covenants and conditions ofthe Waiver Agreement that are required to be observed or performed by such Borrower,(iii) to execute such other and further mortgages, pledges and assignments ofthe Collateral, and related instruments or agreements, as Hallmark mayreasonably require for the purpose of perfecting, protecting, maintaining orenforcing the security interests granted to Hallmark, for the benefit of itselfand the Hallmark Lenders, hereunder and under the Waiver Agreement, and (iv) todo any and all other things necessary or proper to carry out the intention ofthis Security Agreement and the grant of the security interests hereunder.  In the event Hallmark exercises the power ofattorney granted herein, Hallmark shall use reasonable efforts to providesubsequent written notice promptly to the Borrowers.  Each of the Borrowers hereby ratifies andconfirms in advance all that Hallmark as such attorney-in-fact or itssubstitutes shall properly do by virtue of this power of attorney.

11.           FinancingStatements, Direct Payments, Confirmation of Receivables and Audit Rights.  Each Borrower hereby authorizes Hallmark tofile Uniform Commercial Code financing statements (covering all of the propertyof such Borrower) and any amendments thereto or continuations thereof, and anyother appropriate security documents or instruments and to give any noticesnecessary or desirable to perfect the Lien of Hallmark (for the benefit ofitself and the Hallmark Lenders) on the Collateral, in all cases without the signaturesof the relevant Borrowers or to execute such items as attorney-in-fact for the Borrowers.  Each Borrower further authorizes Hallmark (i)upon the occurrence and during the continuance of an Event of Default, tonotify any account debtor that all sums payable to such Borrower relating tothe Collateral shall be paid directly to Hallmark; (ii) to confirm directlywith account debtors the amounts payable by them to such Borrower with regardto the Collateral and the terms of all accounts receivable; and (iii) toparticipate with such Borrower in the audits of its account debtors or torequest that such Borrower’s auditors confirm with account debtors the amountsand terms of all accounts receivable.  Hallmarkhereby agrees to provide the Borrower with copies of any notification orwritten requests sent by Hallmark to such account debtors at the same time asthe mailing of such documents.

12.           Further Assurances.  Upon the request of Hallmark, each Borrowerhereby agrees to duly and promptly execute and deliver, or cause to be dulyexecuted and delivered, at the cost 

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and expense of CrownHoldings, such further instruments as may be necessary or proper, in thejudgment of Hallmark, to carry out the provisions and purposes of this SecurityAgreement, and to do all things necessary, in the judgment of Hallmark, toperfect and preserve the Liens in the Collateral or any portion thereof of Hallmarkfor the benefit of itself and the Hallmark Lenders hereunder and under the WaiverAgreement.

13.           Termination andRelease.  The security interestsgranted under this Security and Pledge Agreement shall terminate when all the SubjectObligations have been indefeasibly fully paid and performed.  Upon request by Crown Holdings (and at thesole expense of the Crown Holdings) after such termination, Hallmark will takeall reasonable action and do all things reasonably necessary, includingexecuting Uniform Commercial Code terminations, termination letters to accountdebtors and copyright reassignments, to release the security interest grantedto it hereunder.

14.           Remedies NotExclusive.  The remedies conferredupon or reserved to Hallmark pursuant to this Security and Pledge Agreement areintended to be in addition to, and not in limitation of, any other remedy orremedies available to Hallmark.  Withoutlimiting the generality of the foregoing, Hallmark and the Lenders shall haveall rights and remedies of a secured creditor under Article 9 of the Uniform CommercialCode and under any other applicable law.

15.           Continuation andReinstatement.  Each Borrower furtheragrees that the security interest granted hereunder shall continue to beeffective or be reinstated, as the case may be, if at any time payment or anypart thereof of any Subject Obligation is rescinded or must otherwise berestored by Hallmark or the Hallmark Lenders upon the bankruptcy orreorganization of any Borrower or otherwise.

16.           Guaranty of SubjectObligations.

16.1         Guaranty.

(a)           Each of the Guarantors,jointly and severally, unconditionally and irrevocably guarantees to Hallmark andthe Hallmark Lenders the due and punctual payment and performance of the SubjectObligations (including interest accruing on and after the filing of anypetition in bankruptcy or of reorganization of the obligor whether or not postfiling interest is allowed in such proceeding). Each of the Guarantors further agrees that the Subject Obligations maybe increased, extended or renewed, in whole or in part, without notice orfurther assent from it (except as may be otherwise required herein), and itwill remain bound under this Section 16 notwithstanding any extension orrenewal of any Subject Obligation.

(b)           Each Guarantor waivespresentation to, demand for payment from and protest to, as the case may be,any Borrower or any other guarantor of any of the Subject Obligations, and alsowaives notice of protest for nonpayment, notice of acceleration and notice ofintent to accelerate.  The obligations ofeach 

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Guarantor hereunder shall not be affected by (i) thefailure of Hallmark or the Hallmark Lenders to assert any claim or demand or toenforce any right or remedy against the Borrowers or any other guarantor underthe provisions of any agreement or otherwise; (ii) any extension or renewal ofany provision hereof or thereof; (iii) the failure of Hallmark or the Hallmark Lendersto obtain the consent of such Guarantor with respect to any rescission, waiver,compromise, acceleration, amendment or modification of any of the terms orprovisions of this Security and Pledge Agreement or the Subject Obligations;(iv) the release, exchange, waiver or foreclosure of any security held by Hallmarkfor the Subject Obligations or any of them; (v) the failure of Hallmark or the HallmarkLenders to exercise any right or remedy against any Borrower or any otherguarantor of the Subject Obligations; (vi) any bankruptcy, reorganization,liquidation, dissolution or receivership proceeding or case by or against any Borroweror, any change in the corporate existence, structure, ownership or control ofany such Borrower or any other Borrower (including any of the foregoing arisingfrom any merger, consolidation, amalgamation, reorganization or similartransaction); or (vii) the release or substitution of any Guarantor or anyother guarantor of the Subject Obligations.

(c)           Each Borrower furtheragrees that this Section is a continuing guaranty, shall secure the Subject Obligationsand any ultimate balance thereof, notwithstanding that Crown Holdings or othersmay from time to time satisfy the Subject Obligations in whole or in part andthereafter incur further Subject Obligations, and constitutes a guaranty ofperformance and of payment when due and not just of collection, and waives anyright to require that any resort be had by Hallmark or any Hallmark Lender toany security held for payment of the Subject Obligations or to any balance ofany deposit, account or credit on the books of Hallmark or any Hallmark Lenderin favor of Crown Holdings, any Guarantor or any other person or entity.

(d)           Each Borrower herebyexpressly assumes all responsibilities to remain informed of the financialcondition of the other Borrowers, and any other guarantors of the Subject Obligationsand any circumstances affecting the Collateral or the ability of the Borrowersto perform under this Security Agreement.

(e)           Each Guarantor’s obligationsunder this Section shall not be affected by the genuineness, validity,regularity or enforceability of the Subject Obligations, the Notes or any otherinstrument evidencing any Subject Obligations, or by the existence, validity,enforceability, perfection, or extent of any collateral therefor or by anyother circumstance relating to the Subject Obligations which might otherwiseconstitute a defense to this Section.  Hallmarkand the Hallmark Lenders make no representation or warranty with respect to anysuch circumstances and have no duty or responsibility whatsoever to any Borrowerin respect to the management and maintenance of the Subject Obligations or anycollateral security for the Subject Obligations.

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16.2         NoImpairment of Guaranty.  Theobligations of each Borrower under this Section shall not be subject to anyreduction, limitation, impairment or termination for any reason (except paymentand performance in full of the Subject Obligations), including, withoutlimitation, any claim of waiver, release, surrender, alteration or compromise,and shall not be subject to any defense or set-off, counterclaim,recoupment or termination whatsoever by reason of the invalidity, illegality orunenforceability of the Subject Obligations or otherwise.  Without limiting the generality of theforegoing, the obligations of each Borrower under this Section shall not bedischarged or impaired or otherwise affected by the failure of Hallmark or any HallmarkLender to assert any claim or demand or to enforce any remedy under this SecurityAgreement or any other agreement, by any waiver or modification of anyprovision hereof or thereof, by any default, failure or delay, willful orotherwise, in the performance of the Subject Obligations, or by any other actor thing or omission or delay to do any other act or thing which may or mightin any manner or to any extent vary the risk of such Borrower or wouldotherwise operate as a discharge of such Borrower as a matter of law, unlessand until the Subject Obligations are paid in full.

16.3         Continuationand Reinstatement.

(a)           Each Borrower furtheragrees that its guaranty under this Section shall continue to be effective orbe reinstated, as the case may be, if at any time payment, or any part thereof,of any Subject Obligation is rescinded or must otherwise be restored by Hallmarkor the Hallmark Lenders upon the bankruptcy or reorganization of any Borrower,or otherwise.  In furtherance of theprovisions of this Section, and not in limitation of any other right which Hallmarkor the Hallmark Lenders may have at law or in equity against any Borrower, orany other person or entity by virtue hereof, upon failure of the Borrower topay any Subject Obligation when and as the same shall become due, whether atmaturity, by acceleration, after notice or otherwise, each Borrower herebypromises to and will, upon receipt of written demand by Hallmark on behalf ofitself, and/or the Hallmark Lenders, forthwith pay or cause to be paid to Hallmarkfor the benefit of itself, and/or the Hallmark Lenders (as applicable) in cashan amount equal to the unpaid amount of all the Subject Obligations withinterest thereon, and thereupon Hallmark shall assign such Subject Obligation,together with all security interests, if any, then held by Hallmark in respectof such Subject Obligation, to the Borrowers making such payment; suchassignment to be subordinate and junior to the rights of Hallmark on behalf ofitself and the Hallmark Lenders with regard to amounts payable by the Borrowerin connection with the remaining unpaid Subject Obligations and to be pro tantoto the extent to which the Subject Obligation in question was discharged by anyBorrower making such payments.

(b)           All rights of Borrower againstany other Borrower, arising as a result of the payment by such Borrower of anysums to Hallmark for the benefit of Hallmark, and/or the Hallmark Lenders ordirectly to the Hallmark Lenders hereunder by way of right of subrogation orotherwise, shall in all respects be subordinated and junior in right of paymentto, and shall not be exercised by such 

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Borrower until and unless, the prior final andindefeasible payment in full of all the Subject Obligations.  If any amount shall be paid to such Borrower forthe account of any other Borrower, such amount shall be held in trust for thebenefit of Hallmark segregated from such Borrower’s own assets and shallforthwith be paid to Hallmark on behalf of itself, and/or the Hallmark Lendersto be credited and applied to the Subject Obligations, whether matured orunmatured.

16.4         Limitation onGuaranteed Amount.  Notwithstandingany other provision of this Section, the amount guaranteed by each Borrowerunder this Section shall be limited to the extent, if any, required so that itsobligations under this Section shall not be subject to avoidance under Section548 of the Bankruptcy Code or to being set aside or annulled under anyapplicable law relating to fraud on creditors. In determining the limitations, if any, on the amount of any Borrower’sobligations under this Section pursuant to the preceding sentence, it is theintention of the parties hereto that any rights of subrogation or contributionwhich such Borrower may have under this Section, any other agreement orapplicable law shall be taken into account.

17.           Subordination.  ThisSecurity and Pledge Agreement and the security interests granted herein shallbe subject to the terms and conditions of that certain Amended and RestatedSubordination and Support Agreement dated as of July 27, 2007 among CrownHoldings, the guarantors, hallmark and JPMorgan Chase Bank as agent for thelending banks under the Credit Agreement.

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INWITNESS WHEREOF, the parties hereto have caused this Security and PledgeAgreement to be duly executed as of the day and the year first written.
|        | CROWN MEDIA HOLDINGS, INC.             |
|--------|----------------------------------------|
|   |                                   |
|   |                                   |
|   | By                                     | /s/ Charles L.  Stanford |   |
|   | Name: Charles L.  Stanford             |
|   | Title: Executive  Vice President       |
|   |                                   |
|   | GUARANTORS:                            |
|   | CROWN MEDIA  UNITED STATES, LLC        |
|   | CM INTERMEDIARY,  LLC                  |
|   | CITI TEEVEE, LLC                       |
|   | DOONE CITY  PICTURES, LLC              |
|   |                                   |
|   |                                   |
|   | By                                     | /s/ Charles L.  Stanford |   |
|   | Name: Charles L.  Stanford             |
|   | Title: Executive  Vice President       |
|   |                                   |
|   |                                   |
|   | HALLMARK CARDS,  INCORPORATED          |
|   |                                   |
|   |                                   |
|   | By                                     | /s/ Brian E.  Gardner |   |
|   | Name: Brian E.  Gardner                |
|   | Title: Executive  Vice President       |
|   |                                   |
|   | HC CROWN CORP.                         |
|   |                                   |
|   |                                   |
|   | By                                     | /s/ Brian E.  Gardner |   |
|   | Name: Brian E.  Gardner                |
|   | Title: Vice  President                 |
|   |                                   |
|   | HALLMARK  ENTERTAINMENT HOLDINGS, INC. |
|   |                                   |
|   |                                   |
|   | By                                     | /s/ Brian E.  Gardner |   |
|   | Name: Brian E.  Gardner                |
|   | Title: Vice  President                 |
|        |                                        |  |  |  |  |

 

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