Exhibit 10.2

EXECUTION COPY

GENERAL SECURITY AGREEMENT

This General Security Agreement dated as of March 31, 2010 (the “Security
Agreement”), is made by Blockbuster Canada Co., an unlimited liability
corporation incorporated under the laws of the Province of Nova Scotia (the
“Guarantor”) to and in favour of Home Trust Company (the “Collateral Trustee”)
for the benefit of certain movie studios (each, a “Studio” and collectively the
“Studios”) beneficiaries of that certain Collateral Trust Agreement, dated as of
the date hereof (as the same may be amended, modified, supplemented, extended,
renewed, revised, restated, amended and restated or replaced from time to time,
the “Collateral Trust Agreement”), among the Guarantor, the Studios and the
Collateral Trustee (the “Secured Parties”).

WHEREAS the Guarantor has incurred certain obligations to the Secured Parties
pursuant to that certain Guarantee of Blockbuster Canada Co., dated as of the
date hereof (as the same may be amended, modified, supplemented, extended,
renewed, revised, restated or replaced from time to time, the “Guarantee”), made
by the Guarantor in favour of the Collateral Trustee for the benefit of the
Studios;

WHEREAS, Guarantor is an indirect wholly-owned subsidiary of Blockbuster Inc.
(“Blockbuster”) and, like Blockbuster, relies heavily for the continued
viability of its business upon products that are provided to it by the Studios.
Accordingly, as a result of the Studios entering into, and extending trade
credit under, the Trade Agreements (as such term is defined in the Collateral
Trust Agreement) with Blockbuster, the Guarantor will receive substantial
benefits, both direct and indirect, through the agreement of the Studios, as set
forth in the Trade Agreements, to provide Guarantor and Blockbuster with the
extended payment terms and products that are essential to their business,
including, but not limited to, titles such as “Alvin and the Chipmunks: The
Squeakquel”, “Avatar”, “The Blind Side”, “Bounty Hunter”, “Invictus”, “Legion”
and “Sherlock Holmes”; and

WHEREAS, in consideration of the substantial benefits that it will receive, both
directly and indirectly, from the Studios in connection with the Trade
Agreements, Guarantor has agreed to guarantee all of the present and future
obligations and liabilities of Blockbuster under the Trade Agreements, and grant
a security interest in certain of its assets to secure its obligations
hereunder.

NOW THEREFORE, in consideration of the foregoing promises and the sum of Ten
Dollars ($10.00) in lawful money of Canada now paid by the Collateral Trustee to
the Guarantor and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged) the parties hereto agree as
follows:

 

1. SECURITY INTEREST

 

  (a)

To secure the payment and performance of the Secured Obligations (as hereinafter
defined) and all renewals, extensions, restructurings and refinancing thereof,
the Guarantor hereby grants, assigns, transfers, mortgages, hypothecates and
charges in favour of, and grants a continuing security interest to, the
Collateral Trustee for the benefit of the Secured Parties, as and by way of a
fixed and specific mortgage and charge,

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and grants to the Collateral Trustee for the benefit of the Secured Parties a
security interest in, subject to paragraph 1(c), all of the present and
after-acquired personal property of the Guarantor, whether now owned by or owing
to, or hereafter acquired by or arising in favour of the Guarantor (including
under any trade names, styles or derivations thereof), and regardless of where
located, and particularly including, without limitation, all present and
after-acquired assets, property and undertaking of the kinds hereinafter
described (all of which being hereafter collectively referred to as the
“Collateral”):

 

  (i) all of its present and future tangible personal property, including,
without limitation, machinery, equipment, plant, vehicles, tools, fixtures and
furniture now owned and hereafter acquired, or in which the Guarantor, now or
hereafter, has any beneficial interest, as well as all additions, accretions,
attachments, accessions, parts, replacements, substitutions and renewals
thereof, and including, without limitation, all goods now or hereafter
comprising part of the inventory of the Guarantor, which includes but is not
limited to, the assets of the Guarantor which in accordance with generally
accepted accounting principles consistently applied, would be classified as
inventory upon the Guarantor’s balance sheet, and for greater certainty includes
all raw materials, work-in-process and finished goods wherever situate, whether
purchased or manufactured;

 

  (ii) all intangibles owned by the Guarantor, including, without limitation,
all contractual rights, contracts, agreements, options, permits, licences,
consents, approvals, authorizations, orders, judgments, certificates, rulings,
insurance policies, agricultural and other quotas, subsidies, franchises,
immunities, privileges, and benefits as well as all goodwill, patents, trade
marks (including all business and goodwill associated therewith), trade names,
trade secrets, inventions, processes, copyrights, industrial designs, integrated
circuit topographies and other industrial or intellectual property, including
the trademarks, copyrights and patents, and applications therefore and all
shares, stock, warrants, rights, bonds, debentures, debenture stock, instruments
or other securities, money, letters of credit, advices of credit, cheques and
goodwill now or hereafter owned by the Guarantor together with renewals thereof,
substitutions therefor, accretions thereto and all rights and claims in respect
thereof;

 

  (iii) all accounts, including deposit accounts in banks, credit unions, trust
companies and similar institutions, debts, claims, dues, moneys, demands and
choses in action of every nature and kind howsoever arising which now are or
which may at any time hereafter be due, owing or accruing due to or owned by the
Guarantor, and also all securities, bills, notes, letters of credit and other
documents now held or owned or which may be hereafter taken, held or owned by
the Guarantor or anyone on behalf of the Guarantor in respect of the said
accounts, debts, claims, dues, moneys, demands and choses in action or any part
thereof, and also all claims of any kind which the Guarantor now has or may
hereafter have, including, but not limited to, claims against the Crown and
claims under insurance policies;

 

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  (iv) all chattel paper, warehouse receipts, instruments, bills of lading and
other documents of title, whether negotiable or non-negotiable, now or hereafter
owned by the Guarantor;

 

  (v) all inventory of whatever kind and wherever situated now owned or
hereafter acquired or reacquired by the Guarantor including, without limiting
the generality of the foregoing, all goods, merchandise, raw materials, goods or
work in process, finished goods, other tangible personal property held for sale,
lease or resale or that have been leased or consigned to or by the Guarantor or
furnished or to be furnished under contracts for service or used or consumed in
the business of the Guarantor;

 

  (vi) all rights, contracts (including, without limitation, rights and
interests arising thereunder or subject thereto), instruments, agreements,
licences, permits, consents, leases, policies, approvals, development
agreements, building contracts, performance bonds, purchase orders, plans and
specifications all of which may or may not be personal property but may be
rights which the Guarantor has interests in, all as may be amended, modified,
supplemented, replaced or restated from time to time;

 

  (vii) all rents, present or future, under any lease or agreement to lease any
part of the lands of the Guarantor or any building, erection, structure or
facility now or hereafter constructed or located on such lands, income derived
from any tenancy, use or occupation thereof and any other income and profit
derived therefrom;

 

  (viii) with respect to the personal property described in paragraphs 1(a)(i)
to 1(a)(vii) inclusive, all books, accounts, invoices, letters, papers,
documents, disks, and other records in any form, electronic or otherwise,
evidencing or relating thereto and all contracts, securities, bills, notes,
instruments, writings and other documents and other rights and benefits in
respect thereof; and

 

  (ix) with respect to the personal property described in paragraphs 1(a)(i) to
1(a)(viii) inclusive, personal property in any form, or fixtures directly or
indirectly arising from any dealing with such property, or that indemnifies or
compensates for such property destroyed or damaged, and proceeds whether of the
same type, class or kind as the original proceeds, and all substitutions and
replacements of the personal property secured hereby.

 

  (b) The grants, assignments, transfers, mortgages, hypothecation, charges and
security interests to and in favour of the Collateral Trustee for the benefit of
the Secured Parties herein created are collectively called the “Security
Interest”.

 

  (c)

The Security Interest granted hereby shall not extend or apply to, and the
Collateral shall not include: (i) cash and cash equivalents and all deposit and
securities accounts (except to the extent that the foregoing are proceeds of
Collateral), (ii) assets requiring perfection through control or similar
agreements, (iii) letter-of-credit rights, (iv) owned or leased real property,
(v) vehicles and other assets subject to certificates of title, (vi) interests
in

 

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joint ventures and non-wholly-owned subsidiaries that cannot be pledged without
the consent of one or more third parties, (vii) the capital stock of immaterial
subsidiaries, (viii) the last day of the term of any lease or agreement
therefor; however, the Guarantor will hold such last day in trust for the
Collateral Trustee for the benefit of the Secured Parties and upon the
enforcement of the Security Interest the Guarantor will assign the same as
directed by the Collateral Trustee; or (x) any agreement, right, franchise,
license or permit (collectively, the “Contractual Rights”) to which the
Guarantor is a party or of which the Guarantor has the benefit of, to the extent
that the creation of the Security Interest would constitute a breach of the
terms of or permit any person to terminate the Contractual Rights for failure to
obtain the consent or waiver of that person.

 

  (d) The terms “accessions”, “accounts”, “chattel paper”, “documents of title”,
“equipment”, “goods”, “instruments”, “intangibles”, “inventory”, “investment
property”, “money”, “proceeds”, and “securities”, including any singular or
plural variation thereof whenever used herein shall be interpreted pursuant to
the respective meanings given to such words in the Personal Property Security
Act (Ontario), as amended from time to time, which Act, including amendments
thereto and any Act substituted therefor and amendments thereto is herein
referred to as the “PPSA”.

 

  (e) Any reference hereinafter to the “Collateral” shall, unless the context
otherwise requires, be deemed a reference to the “Collateral or any part
thereof”.

 

2. OBLIGATIONS SECURED

The Security Interest granted hereby secures payment and satisfaction of any and
all obligations and liability of the Guarantor to the Secured Parties pursuant
to the Guarantee (the “Secured Obligations”).

 

3. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR

The Guarantor represents and warrants and so long as this Security Agreement
remains in effect shall, in the case of clauses (b), (d) and (e), covenant:

 

  (a) the Guarantor has the power to grant the Security Interest upon which it
purports to grant hereunder;

 

  (b) the Collateral is owned by the Guarantor free and clear of any and all
liens, security interests, charges or other encumbrances other than Permitted
Liens (as defined in the Collateral Trust Agreement);

 

  (c) the Guarantor’s business operations, its records, and the Collateral are
all located at the locations specified in Schedule “A” attached hereto and at
other locations of retail stores of the Guarantor from time to time;

 

  (d) Guarantor has not and will not authorize any security agreement, financing
statement, equivalent security or lien instrument or continuation statement
covering all or any part of the Collateral except such as may have been filed
(i) by the Guarantor in favor of the Collateral Trustee pursuant to this
Security Agreement, and (ii) in connection with any other Permitted Liens or
(iii) disclosed to the Collateral Trustee in writing as on the date hereof; and

 

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  (e) this Security Agreement is effective to create a valid and continuing lien
and, upon the filing of the appropriate financing statements naming the
Guarantor as “debtor” and the Collateral Trustee as “secured party” and
describing the Collateral as set forth herein, a perfected lien in favor of the
Collateral Trustee on the portion of the Collateral that comprises Collateral
under the PPSA, with respect to which a lien may be perfected by filing
financing statements pursuant to the PPSA. Such lien is prior to all other
liens, except Permitted Liens. All action by the Guarantor necessary to perfect
the Security Interest has been duly taken. Other than filing of the necessary
PPSA financing statements, no authorization, approval or consent is required to
be obtained from any governmental authority or other Person for the grant of the
security interest herein on the portion of the Collateral that comprises
Collateral under the PPSA, the perfection thereof or, except as otherwise
expressly set forth in the Collateral Trust Agreement, the exercise by each of
the Studios of their rights and remedies hereunder.

 

4. COVENANTS OF THE GUARANTOR

So long as this Security Agreement remains in effect, the Guarantor covenants
and agrees:

 

  (a) to notify the Collateral Trustee promptly of any change in the information
contained herein or in the Schedules hereto relating to the Guarantor, the
Guarantor’s business or the Collateral including without limitation:

 

  (i) any change in the name of the Guarantor;

 

  (ii) any change in the place of business of the Guarantor or, if the Guarantor
has more than one place of business, in the chief executive office of the
Guarantor; and

 

  (iii) any change in the location of the Collateral.

 

  (b) to keep the Collateral in good order, condition and repair (ordinary wear
and tear and casualty and condemnation excepted) and not to use the Collateral
in violation of the provisions of this Security Agreement or any policy insuring
the Collateral or any applicable statute, law, by-law, rule, regulation or
ordinance.

 

  (c)

to do, execute, acknowledge and deliver such financing statements and further
assignments, transfers, documents, acts, matters and things as may be reasonably
requested by the Collateral Trustee of or with respect to the Collateral in
order to give effect to this Security Agreement and to pay all costs for
searches and filings in connection therewith; and, after the occurrence of an
Event of Default (as hereinafter defined) under this Security Agreement, the
Guarantor hereby appoints the Collateral Trustee or any officer or manager from
time to time of the

 

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Collateral Trustee the attorney of the Guarantor (with full power of
substitution and delegation) to sign all documents and take such action as may
be required to give effect to this provision.

 

  (d) to carry on and conduct the business of the Guarantor in an efficient
manner and so as to protect and preserve the Collateral and to keep, in
accordance with generally accepted accounting principles, consistently applied,
proper books of account for the Guarantor’s business as well as accurate and
complete records concerning the Collateral, and mark any and all such records
and the Collateral at the Collateral Trustee’s request so as to indicate the
Security Interest and to deliver to the Collateral Trustee from time to time
promptly upon request (and in the case of clause (i) only on the date hereof):

 

  (i) a customary legal opinion from counsel to the Guarantor and in respect of
corporate power and capacity, authorization, execution, delivery and
enforceability of this Security Agreement and each of the documents
contemplated under or pursuant to the Collateral Trust Agreement and/or this
Security Agreement and in respect of such other matters as the Collateral
Trustee and/or the Studios (or any one of them) or their respective counsel may
reasonably request.

 

  (ii) copies of any documents of title, instruments, chattel paper, securities
and any other investment property constituting, representing or relating to the
Collateral;

 

  (iii) all policies and certificates of insurance relating to the Collateral;
and

 

  (iv) such information concerning the Collateral, the Guarantor and the
Guarantor’s business and affairs as the Collateral Trustee may reasonably
request.

 

  (e) until all of the Secured Obligations have been discharged in full,
the Guarantor will provide the Collateral Agent and each of the Studios with the
following financial and other reports:

 

  (i) Annual audited financial statements (consisting of a balance sheet, a
statement of income and loss, a statement of changes in financial position and a
statement of shareholders’ equity) of the Guarantor, together with management
discussion and analysis and the auditor’s final management letter within 90 days
of the Guarantor’s fiscal year end;

 

  (ii) Quarterly interim unaudited financial statements (consisting of a balance
sheet, a statement of income and loss, a statement of cash flow and a statement
of shareholders’ equity) of the Guarantor for the first three fiscal quarters of
each fiscal year, together with management discussion and analysis within 45
days of period end and a quarterly compliance certificate stating that it is in
compliance with all covenants of this Security Agreement;

 

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  (iii) Monthly interim unaudited financial statements (consisting of a balance
sheet, a statement of income and loss, a statement of cash flow and a statement
of shareholders’ equity) of the Guarantor for the first two months of each
fiscal quarter within 30 days of each such month end;

 

  (iv) Monthly aged lists of inventory, to be provided on the last Wednesday of
each month during the term of this Security Agreement, with all calculations
made as of the end of each such preceding month and signed by an officer of the
Guarantor, with a trailing comparison against the monthly aged list of inventory
prepared for the preceding 3 months;

 

  (v) such other reports and information as the Collateral Agent and the Studios
may reasonably request from time to time; and

 

  (vi) The Guarantor shall cause its senior management to hold meetings with the
Studios with such representatives of the Guarantor as the Studios may reasonably
request, via telephone or in-person, on a quarterly basis to discuss the
financial performance and projections of the Guarantor at reasonable times and
upon reasonable notice to be mutually agreed by the Guarantor and the Studios.

 

5. VERIFICATION OF COLLATERAL

The Collateral Trustee shall have the right at any time and from time to time to
verify the existence and state of the Collateral in any manner the Collateral
Trustee may, acting reasonably, consider appropriate and the Guarantor agrees to
furnish all assistance and information and to perform all such acts as the
Collateral Trustee may reasonably request in connection therewith and for such
purpose to grant to the Collateral Trustee or its agents access to all places
where the Collateral may be located and to all premises occupied by the
Guarantor.

 

6. COLLECTION OF ACCOUNTS

After the occurrence of an Event of Default (as hereinafter defined) under this
Security Agreement, the Collateral Trustee may notify all or any account debtors
of the Security Interest and may also direct such account debtors to make all
payments on accounts, chattel paper and instruments forming part of the
Collateral to the Collateral Trustee. The Guarantor acknowledges that any
payments on accounts, chattel paper and instruments forming part of the
Collateral or other proceeds of the Collateral received by the Guarantor from
account debtors or other parties, whether before or after notification of this
Security Interest to account debtors and whether before or after the occurrence
of an Event of Default under this Security Agreement, shall be received and held
by the Guarantor in trust for the Collateral Trustee and shall be turned over to
the Collateral Trustee upon request.

 

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7. DISPOSITION OF AMOUNTS

Subject to any applicable requirements of the PPSA, the Collateral Trust
Agreement and to the rights of the Collateral Trustee or any Receiver (as
hereinafter defined) under this Security Agreement or the PPSA or other
provisions of law to make deductions in respect of costs, charges and expenses
or to apply costs, charges and expenses as a first or prior charge on the
proceeds of realization, collection or disposition of the Collateral, all
amounts collected or received by the Collateral Trustee or any Receiver pursuant
to or in exercise of any right it possesses with respect to the Collateral shall
be applied on account of the Secured Obligations in such manner as the
Collateral Trustee deems best or, at the option of the Collateral Trustee, may
be held unappropriated in a collateral account or released to the Guarantor, all
without prejudice to the liability of the Guarantor or the rights of the
Collateral Trustee or any Receiver hereunder, and any surplus shall be accounted
for as required by law.

 

8. EVENTS OF DEFAULT

The occurrence of any one or more of the following events, after the expiry of
any applicable cure period set out below, shall constitute a default (an “Event
of Default”) under this Security Agreement:

 

  (a) the Guarantor does not observe or perform any of the Guarantor’s
obligations under paragraph 3(b), (d) and (e) and under paragraph 4 this
Security Agreement or any other agreement or document existing at any time
between the Guarantor and the Collateral Trustee within 10 business days after
written notice of such default from the Collateral Trustee to the Guarantor;

 

  (b) any representation, warranty or statement made by or on behalf of the
Guarantor to the Collateral Trustee, in this Security Agreement or otherwise in
writing, is untrue in any material respect when made;

 

  (c) the Guarantor ceases to carry on in the normal course all or any material
part of the Guarantor’s business;

 

  (d) if (i) the Guarantor shall not be owned, directly or indirectly, by
Blockbuster (as defined in the Collateral Trust Agreement) or (ii) the Guarantor
shall sell all or substantially all of its assets;

 

  (e)

if the Guarantor or Blockbuster or any subsidiary of the Guarantor or
Blockbuster becomes insolvent or bankrupt, or makes or files a proposal, a
notice of intention to make a proposal or an assignment for the benefit of
creditors under the Bankruptcy and Insolvency Act (Canada) or comparable
legislation in Canada or any other jurisdiction, including, without limitation,
under or pursuant to the Companies’ Creditors Arrangement Act (Canada); if the
Guarantor makes a bulk sale of its assets or if a petition in bankruptcy is
filed against the Guarantor and same is not vacated, stayed, set aside or
diligently contested by the Guarantor in good faith in proceedings before a
court of competent jurisdiction within 20 days of the date thereof; or, if the
Guarantor is a corporation, proceedings

 

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are initiated under any legislation by or against the Guarantor seeking its
liquidation, winding-up, dissolution or reorganization or any arrangement or
composition of its debts and same is not vacated, stayed, set aside or
diligently contested by the Guarantor in good faith in proceedings before a
court of competent jurisdiction within 20 days of the date thereof.
Notwithstanding the aforementioned and for greater certainty, any default
arising under this paragraph 8(a)(e) may be cured if and only if the Studios
receive, within 20 days of any such filing, Agreed Critical Vendor Status (as
such term is defined in the Collateral Trust Agreement);

 

  (f) a Receiver (as hereinafter defined), trustee, custodian or other similar
official is appointed in respect of the Guarantor or any material part of the
Collateral;

 

  (g) the Guarantor fails to repay any indebtedness of the Guarantor for
borrowed money within any applicable grace period after becoming due or such
indebtedness is accelerated by the holder thereof because of a default and the
total amount of such indebtedness unpaid or accelerated exceeds $10.0 million;

 

  (h) any Person holding a security interest in respect of any part of the
Collateral takes possession of all or any material part of the Collateral, or a
distress, execution or other similar process is levied against all or any
material part of the Collateral; or

 

  (i) the Guarantor challenges or threatens in writing the validity or
enforceability of this Security Agreement or the Security Interests created by
this Security Agreement.

 

9. REMEDIES

 

  (a)

Upon the occurrence of an Event of Default under this Security Agreement or at
any time thereafter and in accordance with applicable law, the Collateral
Trustee may appoint or reappoint by instrument in writing or court order, any
person or persons, whether an officer or officers or an employee or employees of
the Collateral Trustee or not, to be a receiver or receivers (hereinafter called
a “Receiver”, which term when used herein shall include a receiver and manager)
of the Collateral (including any interest, income or profits therefrom) and may
remove any Receiver so appointed and appoint another in his stead. Any such
Receiver shall, so far as concerns responsibility for his acts, be deemed the
agent of the Guarantor and not the Collateral Trustee, and the Collateral
Trustee shall not be in any way responsible for any misconduct, negligence, or
nonfeasance on the part of any such Receiver, his servants, agents or employees.
The Collateral Trustee may from time to time fix the Receiver’s remuneration.
Subject to the provisions of the instrument appointing him, any such Receiver
shall have power to take possession of the Collateral, to preserve the
Collateral or its value, to carry on or concur in carrying on all or any part of
the business of the Guarantor and to

 

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sell, lease or otherwise dispose of or concur in selling, leasing or otherwise
disposing of the Collateral (in its existing condition or after any repair,
processing or preparation for disposition) in such manner, at such time or times
and place or places, for such consideration and upon such terms and conditions
as to the Receiver may seem reasonable including terms for deferred payment. To
facilitate the foregoing powers, any such Receiver may, to the exclusion of all
others, including the Guarantor, enter upon, use and occupy all premises owned
or occupied by the Guarantor wherein the Collateral may be situate, maintain
Collateral upon such premises, borrow money on a secured or unsecured basis and
use the Collateral directly in carrying on the Guarantor’s business or as
security for loans or advances or other credit to enable him to carry on the
Guarantor’s business or otherwise, as such Receiver shall, in his discretion,
determine. Except as may be otherwise directed by the Collateral Trustee, all
amounts received from time to time by such Receiver in carrying out his
appointment shall be received in trust for and paid over to the Collateral
Trustee. Every such Receiver may, in the discretion of the Collateral Trustee,
be vested with all or any of the rights and powers of the Collateral Trustee.

 

  (b) Upon an Event of Default or at any time thereafter, the Collateral Trustee
may make application to a court of competent jurisdiction for the appointment of
a Receiver.

 

  (c) Upon an Event of Default or at any time thereafter, the Collateral Trustee
may, either directly or through its agents or nominees, exercise any or all of
the powers and rights which could be available to a Receiver appointed pursuant
to the foregoing subclause (a).

 

  (d) The Collateral Trustee may take possession of, collect, demand, sue on,
enforce, recover and receive the Collateral and give valid and binding receipts
and discharges therefor and in respect thereof and, upon an Event of Default or
at any time thereafter, the Collateral Trustee may sell, lease or otherwise
dispose of the Collateral (in its existing condition or after any repair,
processing, or preparation for disposition) in such manner, at such time or
times and place or places, for such consideration and upon such terms and
conditions as to the Collateral Trustee may seem reasonable including terms for
deferred payment.

 

  (e)

In addition to those rights granted herein and in any other agreement now or
hereafter in effect between the Guarantor and the Collateral Trustee and in
addition to any other rights the Collateral Trustee or any Receiver may have at
law or in equity, the Collateral Trustee shall have, both before and after an
Event of Default, all rights and remedies of a secured party under the PPSA and
the Receiver shall have all rights and remedies of a secured party under and to
the extent provided in the PPSA. Provided always, that the Collateral Trustee or
any Receiver shall not be liable or accountable for any failure to exercise its
remedies, take possession of, collect, enforce, realize, sell, lease, or
otherwise dispose of the Collateral or to institute any proceedings for such
purposes. Furthermore, neither the Collateral Trustee nor any Receiver shall
have any obligation to take any steps

 

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to preserve rights against other parties to any Security, Instrument or chattel
paper whether the Collateral or proceeds and whether or not in the Collateral
Trustee’s or Receiver’s possession and shall not be liable or accountable for
failure to do so.

 

  (f) The Guarantor acknowledges that the Collateral Trustee or any Receiver may
take possession of the Collateral wherever it may be located and by any method
permitted by law and the Guarantor agrees upon request from the Collateral
Trustee or any such Receiver to assemble and deliver possession of the
Collateral at such place or places as directed.

 

  (g) The Guarantor agrees to pay all costs, charges and expenses reasonably
incurred by the Collateral Trustee or any Receiver whether directly or for
services rendered (including reasonable solicitor’s and auditor’s costs and
other legal expenses and Receiver remuneration), in operating any accounts of
the Guarantor with the Collateral Trustee, in discharging or satisfying any
encumbrances, borrowings, taxes and other outgoings affecting the Collateral, in
keeping in good standing any encumbrances on the Collateral ranking in priority
to any Security Interest created by this Security Agreement, in preparing or
enforcing this Security Agreement, in taking custody of, holding, preserving,
repairing, processing, preparing for sale, lease or other disposition and
selling, leasing or otherwise disposing of the Collateral, in carrying on the
business of the Guarantor and in enforcing or collecting the Secured
Obligations; and the Guarantor further agrees that all such costs, charges and
expenses, together with any amounts owing as a result of any borrowing by the
Collateral Trustee or any Receiver, as permitted hereby, shall be a first and
prior charge on the proceeds of realization, collection or disposition of the
Collateral and shall be secured hereby.

 

  (h) The Collateral Trustee will give the Guarantor such notice or notices, if
any, with respect to the disposition of the Collateral as may be required by the
PPSA.

 

  (i) The Receiver or the Collateral Trustee shall have power to make any sale,
lease or other disposition of the Collateral as contemplated above in the name
and on behalf of the Guarantor or otherwise and the Receiver or any officer or
manager from time to time of the Collateral Trustee is hereby appointed the
irrevocable attorney of the Guarantor (with full powers of substitution and
delegation) for the purpose of making any such sale, lease or other disposition
and of executing agreements or documents and taking such action required to
complete the same.

 

  (j) All remedies of the Collateral Trustee at law and hereunder shall be
cumulative and not in the alternative.

 

10. MISCELLANEOUS

 

  (a)

The Guarantor hereby authorizes the Collateral Trustee to file such financing
statements and other documents and do such acts, matters and things from time to
time (including completing and adding or supplementing schedules hereto
identifying the Collateral or identifying the locations at which the Guarantor’s

 

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business is carried on and the Collateral and records relating thereto are
situate) as the Collateral Trustee may deem appropriate to perfect and continue
the Security Interest, to protect and preserve the Collateral and to realize
upon the Security Interest and the Guarantor hereby irrevocably constitutes and
appoints any officer or manager from time to time of the Collateral Trustee the
true and lawful attorney of the Guarantor, with full power of substitution and
delegation, to do any of the foregoing in the name of the Guarantor whenever and
wherever it may be deemed necessary or expedient.

 

  (b) Upon the Guarantor’s failure to perform any of its obligations hereunder,
the Collateral Trustee may, but shall not be obligated to, perform any or all of
such obligations, and the Guarantor shall pay to the Collateral Trustee,
forthwith upon written demand therefor, an amount equal to the expense incurred
by the Collateral Trustee in so doing plus interest thereon from the date such
expense is incurred until it is paid at the rate of five per cent (5%) per
annum, without duplication, which amount and interest thereon shall be included
in the Secured Obligations.

 

  (c) The Collateral Trustee may grant extensions of time and other indulgences,
take and give up security, accept compositions, compound, compromises, settle,
grant releases and discharges and otherwise deal with the Guarantor, debtors of
the Guarantor, sureties and others and with the Collateral and other security as
the Collateral Trustee may see fit without prejudice to the liability of the
Guarantor or the Collateral Trustee’s right to hold and realize the Security
Interest. Furthermore, the Collateral Trustee may demand, collect and sue on the
Collateral in either the Guarantor’s or the Collateral Trustee’s name, at the
Collateral Trustee’s option, and may endorse the Guarantor’s name on any and all
cheques, commercial paper, and any other instruments pertaining to or
constituting the Collateral.

 

  (d) No delay or omission by the Collateral Trustee in exercising any right or
remedy hereunder or with respect to the Secured Obligations shall operate as a
waiver thereof or of any other right or remedy, and no single or partial
exercise thereof shall preclude any other or further exercise thereof or the
exercise of any other right or remedy. Furthermore, the Collateral Trustee may
remedy any default by the Guarantor hereunder or with respect to the Secured
Obligations in any reasonable manner without waiving the default remedied and
without waiving any other prior or subsequent default by the Guarantor. No
remedy herein conferred upon or reserved to the Collateral Trustee is intended
to be exclusive of any other remedy, but each and every such remedy shall be
cumulative and shall be in addition to every other right and remedy given
hereunder or now existing or hereafter to exist at law, in equity or by statute
or pursuant to any other agreement or instrument between the Guarantor and the
Collateral Trustee that may be in effect from time to time.

 

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  (e) The Guarantor waives protest of any Instrument constituting Collateral at
any time held by the Collateral Trustee on which the Guarantor is in any way
liable and notice of any other action taken by the Collateral Trustee.

 

  (f) In any action brought by an assignee of any interest of the Collateral
Trustee in this Security Agreement and the Security Interest or any part thereof
to enforce any rights hereunder, the Guarantor shall not assert against the
assignee any set-off, claim or defence which the Guarantor now has or hereafter
may have against the Collateral Trustee.

 

  (g) Except for any supplements or other schedules which may be added hereto
pursuant to the provisions hereof, no modification, variation or amendment of
any provision of this Security Agreement shall be made except by a written
Agreement executed by the parties hereto and no waiver of any provision hereof
shall be effective unless in writing.

 

  (h) Unless otherwise specified herein, all notices, requests, demands or other
communications given to the Guarantor, the Studios and the Collateral Trustee
shall be sufficiently given if given in accordance with Section 6.1 of the
Collateral Trust Agreement and will be effective as set forth therein.

 

  (i) This Security Agreement and the Security Interest created hereby are in
addition to and not in substitution for any other security now or hereafter held
by the Collateral Trustee and is, and is intended to be a continuing Security
Agreement and Security Interest.

 

  (j) This Security Agreement shall not merge in any subsequent security or be
taken to be a substitute for any security of any nature whatsoever held by the
Collateral Trustee from the Guarantor. It is further agreed that the taking of
this Security Agreement shall not operate as a merger of the remedies of the
Collateral Trustee for payment, satisfaction or performance of the Secured
Obligations or of the remedies of the Collateral Trustee under any other
agreement and notwithstanding this Security Agreement and anything herein
contained the said remedies shall remain available and be capable of enforcement
against the Guarantor and all other persons liable in respect thereof in the
same manner and to the same extent as if this Security Agreement had not been
made.

 

  (k) The headings used in this Security Agreement are for convenience only and
are not to be considered as part of this Security Agreement and do not in any
way limit or amplify the terms and provisions of this Security Agreement.

 

  (l) When the context so requires, the singular number shall be read as if the
plural were expressed and vice versa and any reference to gender shall include
the masculine, feminine, and neuter gender.

 

  (m)

Whether or not the transactions contemplated by the Collateral Trust Agreement
are completed, the Guarantor hereby covenants and agrees to pay on written
request by the Collateral Trustee or the Studios, as the case may be, as
provided

 

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below from time to time all reasonable expenses incurred by the Collateral
Trustee or any Studio in connection with the Collateral Trust Agreement, the
Security Documents (as defined in the Collateral Trust Agreement); reasonable
legal expenses in connection with the preparation and interpretation of the
Collateral Trust Agreement and/or any of the Security Documents, including,
without limitation, the preparation of waivers and partial discharges in
connection with any of the Security Documents; and all legal expenses (on a
solicitor and his own client basis) in connection with the production and
enforcement of the rights, title and interests in or arising from the Collateral
Trust Agreement and/or any of the Security Documents. The Guarantor hereby
irrevocably and unconditionally covenants and agrees to pay any such amount
within 15 days after receipt of a written request from the Collateral Trustee or
the Studios, as the case may be, accompanied by reasonably detailed invoices for
payment of any such amount.

 

  (n) The Guarantor shall, at its expense, promptly execute and deliver or cause
to be executed and delivered to the Collateral Trustee upon request from time to
time all such other and further documents, agreements, certificates and
instruments in compliance with this Security Agreement, or if necessary or
desirable to more fully record or evidence the obligations intended to be
entered into herein, or to make any recording or file any notice.

 

  (o) In the event any provisions of this Security Agreement, as amended from
time to time, shall be deemed invalid or void, in whole or in part, by any Court
of competent jurisdiction, the remaining terms and provisions of this Security
Agreement shall remain in full force and effect.

 

  (p) The Security Interest created hereby is intended to attach (i) to existing
Collateral when this Security Agreement is signed by the Guarantor and delivered
to the Collateral Trustee, and (ii) to Collateral subsequently acquired by the
Guarantor immediately upon the Guarantor acquiring any rights in such
Collateral. The Guarantor and the Collateral Trustee do not intend to postpone
the attachment of any Security Interest created by this Security Agreement.

 

  (q)

This Security Agreement and the transactions evidenced hereby shall be governed
by and construed in accordance with the laws of the Province of Ontario and the
laws of Canada applicable therein as the same may from time to time be in
effect, including, where applicable, the PPSA. The Guarantor and the Collateral
Trustee irrevocably consent and submit to the non-exclusive jurisdiction of the
Ontario Superior Court of Justice and waive any objection based on venue or
forum non conveniens with respect to any action instituted therein arising under
this Security Agreement or in any way connected with or related or incidental to
the dealings of the parties hereto in respect of this Security Agreement or the
transactions related hereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that the Collateral Trustee shall have the right to
bring or respond to any action or proceeding against the Guarantor or its
respective property in the courts of any

 

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other jurisdiction which the Collateral Trustee deems necessary or appropriate
in order to realize on the Collateral or to otherwise enforce its rights
against the Guarantor or its respective property).

 

  (r) Time shall be of the essence of this Security Agreement.

 

  (s) This Security Agreement shall enure to the benefit of and be binding upon
the Collateral Trustee and the Guarantor and their respective successors and
assigns; provided the Guarantor will not assign this Security Agreement without
the Collateral Trustee’s prior written consent.

 

  (t) Notwithstanding anything herein to the contrary, to the extent that the
provisions of the PPSA impose obligations upon or restrict the rights or
remedies herein contained operating in favour of the Collateral Trustee, and
which have been waived or varied by the Guarantor herein, whether expressly or
by implication, but which are by the provisions of the PPSA incapable of waiver
or variance by the Guarantor, the provisions of the PPSA shall govern and the
affected provisions hereof shall be deemed to be amended to the extent necessary
to give effect to the said provisions of the PPSA without in any way affecting
any other provision or provisions herein.

 

  (u) The Guarantor hereby acknowledges receipt of a copy of this Security
Agreement.

 

  (v) This Security Agreement may be executed in any number of counterparts and
by different parties in separate counterparts, each of which when so executed
shall be deemed by be an original and all of which taken together shall
constitute one and the same agreement. Delivery by facsimile or by electronic
transmission in portable document format (PDF) of an executed counterpart of
this Security Agreement is as effective as delivery of an originally executed
counterpart of this Security Agreement.

 

  (w) The parties hereby agree and acknowledge that if there exists any conflict
or inconsistency between the provisions of this Security Agreement and the
provisions of the Collateral Trust Agreement, the provision of the Collateral
Trust Agreement shall govern and prevail to the extent of such conflict or
inconsistency.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF the Guarantor has executed this Security Agreement as of the
date first above written.

 

BLOCKBUSTER CANADA CO. Per:  

/s/ Steve Medlar

  Name:   Steve Medlar   Title:   Vice President and Chief Financial Officer I
have authority to bind the Corporation

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SCHEDULE “A”

GUARANTOR’S LOCATIONS

 

1. Location of Guarantor’s Place of Business:

401 The West Mall, Suite 1100

Toronto, Ontario

M9C 5J5

 

2. Locations of Records relating to Collateral:

401 The West Mall, Suite 1100

Toronto, Ontario

M9C 5J5

 

3. Locations of Collateral:

Retail stores of the Guarantor from time to time

172 Bethridge Road, Toronto, Ontario, M9W 1N3