EXHIBIT 4.3

CANADIAN SECURITY AGREEMENT


Dated October 18, 2005


From


THE GRANTORS REFERRED TO HEREIN


AS GRANTORS


To


CITICORP USA, INC.


AS AGENT









TABLE OF CONTENTS

	
  
Section
  	
   
 	
   
 	
  
Page
  
	
  


  	
   
 	
  


  
	
  
SECTION 1
  	
  
GRANT OF SECURITY
  	
   
 	
  3  

	
   
  	
  
 
  	
   
 	
   
 
	
  
SECTION 2
  	
  
SECURITY FOR OBLIGATIONS
  	
   
 	
  7  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 3
  	
  
GRANTORS REMAIN LIABLE
  	
   
 	
  8  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 4
  	
  
DELIVERY AND CONTROL OF SECURITY COLLATERAL
  	
   
 	
  9  

	
   
  	
  
 
  	
   
 	
   
 
	
  
SECTION 5
  	
  
MAINTAINING THE ACCOUNT COLLATERAL
  	
   
 	
  10  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 6
  	
  
REPRESENTATIONS AND WARRANTIES
  	
   
 	
  10  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 7
  	
  
FURTHER ASSURANCES
  	
   
 	
  14  

	
   
  	
  
 
  	
   
 	
   
 
	
  
SECTION 8
  	
  
AS TO EQUIPMENT AND INVENTORY
  	
   
 	
  15  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 9
  	
  
INSURANCE
  	
   
 	
  16  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 10
  	
  
POST-CLOSING CHANGES; COLLECTIONS ON ASSIGNED   AGREEMENTS AND RECEIVABLES
  	
   
 	
  17  

	
   
  	
  
 
  	
   
 	
   
 
	
  
SECTION 11
  	
  
AS TO INTELLECTUAL PROPERTY COLLATERAL
  	
   
 	
  18  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 12
  	
  
VOTING RIGHTS; DIVIDENDS; ETC.
  	
   
 	
  19  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 13
  	
  
AS TO THE ASSIGNED AGREEMENTS
  	
   
 	
  20  

	
   
  	
  
 
  	
   
 	
   
 
	
  
SECTION 14
  	
  
AS TO LETTER-OF-CREDIT RIGHTS
  	
   
 	
  21  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 15
  	
  
TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES
  	
   
 	
  22  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 16
  	
  
AGENT APPOINTED ATTORNEY IN FACT
  	
   
 	
  22  

	
   
  	
  
 
  	
   
 	
   
 
	
  
SECTION 17
  	
  
AGENT MAY PERFORM
  	
   
 	
  23  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 18
  	
  
THE AGENT’S DUTIES
  	
   
 	
  23  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 19
  	
  
REMEDIES
  	
   
 	
  24  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  SECTION 20
  	
  
INDEMNITY AND EXPENSES
  	
   
 	
  26  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 21
  	
  
AMENDMENTS; WAIVERS; ADDITIONAL GRANTORS; ETC.
  	
   
 	
  27  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 22
  	
  
CONFIDENTIALITY; NOTICES; REFERENCES.
  	
   
 	
  27  












- ii -

	
  SECTION 23
  	
  
CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE   CREDIT AGREEMENT
  	
   
 	
  28  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 24
  	
  
RELEASE; TERMINATION
  	
   
 	
  29  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 25
  	
  
CURRENCY AND JUDGEMENT CURRENCY
  	
   
 	
  29  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  SECTION 26
  	
  
EXECUTION IN COUNTERPARTS
  	
   
 	
  30  

	
  
 
  	
  
 
  	
   
 	
   
 
	
  
SECTION 27
  	
  
GOVERNING LAW
  	
   
 	
  30  






	
  
Schedules
  	
  
 
  	
   
 
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule I
  	
  
-
  	
  
Investment Property
  
	
  Schedule II
  	
  
-
  	
  
Pledged Deposit Accounts
  
	
  
Schedule III
  	
  
-
  	
  
Receivables and Agreement Collateral
  
	
  
Schedule IV
  	
  
-
  	
  
Intellectual Property
  
	
  
Schedule V
  	
  
-
  	
  
Location, Chief Executive Office, Type of   Organization, Jurisdiction of Organization and Organizational Identification   Number
  
	
  
Schedule VI
  	
  
-
  	
  
Changes in Name, Location, Etc.
  
	
  
Schedule VII
  	
  
-
  	
  
Letters of Credit
  
	
  
Schedule VIII
  	
  
-
  	
  
Equipment Locations
  
	
  Schedule IX
  	
  
-
  	
  
Inventory Locations
  
	
  
Schedule X
  	
  
-
  	
  
Collateral Reserved for Sale
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Exhibits
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Exhibit A
  	
  
-
  	
  
Form of Consent and Agreement
  
	
  
Exhibit B
  	
  
-
  	
  
Form of Intellectual Property Security Agreement
  
	
  
Exhibit C
  	
  
-
  	
  
Form of Intellectual Property Security Agreement   Supplement
  
	
  Exhibit D
  	
  
-
  	
  
Form of Security Agreement Supplement
  











CANADIAN SECURITY AGREEMENT


                    CANADIAN SECURITY AGREEMENT dated October 18, 2005 (the “Agreement”) made by Kodak Graphic Communications Canada Company, a Nova Scotia unlimited liability company (the “Borrower”), and the other Persons listed on the signature pages hereof, or which at any time execute and deliver a Canadian Security Agreement Supplement in substantially the form attached hereto as Exhibit C (the Borrower and such Persons so listed being, collectively, the “Grantors”), to Citicorp USA, Inc., as Agent (in such capacity, together with any successor Agent appointed pursuant to Article VIII of the Credit Agreement (as hereinafter defined), the “Agent”) for the Secured Parties (as hereinafter defined).


PRELIMINARY STATEMENTS


(1)                Eastman Kodak Company and the Borrower have entered into a Credit Agreement dated as of October 18, 2005 (said Credit Agreement, as it may hereafter be amended, amended and restated, supplemented or otherwise modified from time to time, being the “Credit Agreement”) with the Lenders and the Agents (each as defined therein).


(2)                Each Grantor is the owner of the shares of stock or other equity interests (the “Initial Pledged Equity”) set forth opposite such Grantor’s name on and as otherwise described in Part I of Schedule I hereto and issued by the Persons named therein and of the indebtedness owed to such Grantor (the “Initial Pledged Debt”) set forth opposite such Grantor’s name on and as otherwise described in Part II of Schedule I hereto and issued by the obligors named therein.


(3)                Each Grantor is the owner of the deposit accounts (the “Pledged Deposit Accounts”) set forth opposite such Grantor’s name on Schedule II hereto.


(4)                It is a condition precedent to the making of Advances by the Lenders under the Credit Agreement that the Grantors shall have granted the security interests contemplated by this Agreement.  Each Grantor will derive substantial direct or indirect benefit from the transactions contemplated by this Agreement, the Credit Agreement and the other Loan Documents.


(5)                Terms defined in the Credit Agreement and not otherwise defined in this Agreement are used in this Agreement as defined in the Credit Agreement.  Further, unless otherwise defined in this Agreement or in the Credit Agreement, terms defined in the PPSA (as defined below) are used in this Agreement as such terms are defined in the PPSA.  “PPSA” means the Personal Property Security Act as in effect from time to time in the Province of British Columbia; provided that, if the validity, perfection or the effect of perfection or non-perfection or the priority of the security interest in any Collateral is governed by the Personal Property Security Act as in effect in a jurisdiction other than the Province of British Columbia, “PPSA” means the Personal Property Security Act as in effect from time to time
in such other jurisdiction for purposes of the provisions hereof relating to such validity, perfection, effect of perfection or non-perfection or priority.









- 2 -


                    NOW, THEREFORE, in consideration of the premises and in order to induce the Lenders to make Advances under the Credit Agreement, each Grantor hereby agrees with the Agent for the ratable benefit of the Secured Parties as follows:


SECTION 1   GRANT OF SECURITY


(1)                Each Grantor hereby grants to the Agent, for the ratable benefit of the Secured Parties, a security interest and a security interest is taken in such Grantor’s right, title and interest in and to all of such Grantor’s present and future undertaking and property (collectively, the “Collateral”) including, without limitation, all its present and after acquired personal property and the following, in each case, as to each type of property, whether now owned or hereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising, provided, however, in no event shall any lien or security interest be created in any asset which is, or hereafter becomes, a “Principal Property” or consists of the capital stock or other equity interest in an entity which is, or hereafter becomes, a
“Restricted Subsidiary” as such terms are defined in the Indenture (as defined in the Credit Agreement), and provided, further, that notwithstanding anything herein to the contrary, in no event shall the Collateral include or the security interest granted under this Section 1 hereof attach to: (A) any assets of any Grantor located outside of Canada, (B) any lease, license, contract, or agreement or other property right, to which any Grantor is a party or of any of its rights or interests thereunder if and for so long as the grant of such security interest shall constitute or result in:  (x) the abandonment, invalidation, unenforceability or other impairment of any right, title or interest of any Grantor therein, or (y) in a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract, agreement or other property right, (C) any of the outstanding capital stock of a CFC in excess of 65% of the voting power of all classes of
capital stock of such CFC entitled to vote, (D) any real property or fixture, or (E) the last day of the term of any lease or any agreement therefor now held or hereafter acquired by a Grantor, but should the Agent enforce its security interest therein the Grantor will thereafter stand possessed of such last day and must hold it in trust to assign the same to any person acquiring such term in the course of the enforcement of such security interest:


	
  
(a)
  	
  
all equipment in all of its forms, including,   without limitation, all machinery, tools, motor vehicles, vessels, aircraft   and furniture (excepting all fixtures), all parts thereof and all accessions   thereto and all other tangible personal property which is not Inventory or   consumer goods (as hereafter defined) (any and all such property being the “Equipment”);
  
	
   
 	
  
 
  	
  
 
  
	
  
(b)
  	
  
all inventory as defined in the PPSA in all of its   forms, including, without limitation, (i) all raw materials, work in process,   finished goods and materials used or consumed in the manufacture, production,   preparation or shipping thereof, (ii) goods in which such Grantor has an   interest in mass or a joint or other interest or right of any kind   (including, without limitation, goods in which such Grantor has an interest   or right as consignee) and (iii) goods that are returned to or repossessed or   stopped in transit by such Grantor, and all accessions thereto and products   thereof and documents therefor, (any and all such property being the “Inventory”);
  











- 3 -

	
  
(c)
  	
  
all accounts, as defined in the PPSA instruments   (including, without limitation, promissory notes), deposit accounts, general   intangibles (including, without limitation, payment intangibles) and other   obligations of any kind owing to Grantors, whether or not arising out of or   in connection with the sale or lease of goods or the rendering of services   and whether or not earned by performance (any and all such instruments,   deposit accounts, general intangibles and other obligations to the extent not   referred to in clause (g) or (h) below, being the “Receivables”, subject to   restrictions on assignment and/or all such supporting obligations, security   agreements, Liens, leases, letters of credit and other contracts owing to   Grantors or supporting the obligations owing to the Grantors under the   Receivables being the “Related Contracts”);
  
	
   
 	
  
 
  	
  
 
  
	
  
(d)
  	
  
all chattel paper as defined in the PPSA, warehouse   receipts, bills of lading and other documents of title, whether negotiable or   not;
  
	
   
 	
  
 
  	
  
 
  
	
  
(e)
  	
  
all coins or bills or other medium of exchange   adopted for use as part of the currency of Canada or of any foreign government;
  
	
   
 	
   
  	
  
 
  
	
  
(f)
  	
  
the following (the “Security Collateral”):
  
	
   
 	
  
 
  	
  
 
  
	
  
 
  	
  
(i)
  	
  
the Initial Pledged Equity and the certificates, if   any, representing the Initial Pledged Equity, and all dividends,   distributions, return of capital, cash, instruments and other property from   time to time received, receivable or otherwise distributed in respect of or   in exchange for any or all of the Initial Pledged Equity and all warrants,   rights or options issued thereon or with respect thereto;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
the Initial Pledged Debt and the instruments, if   any, evidencing the Initial Pledged Debt, and all interest, cash, instruments   and other property from time to time received, receivable or otherwise   distributed in respect of or in exchange for any or all of the Initial   Pledged Debt;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iii)
  	
  
all additional shares of stock and other equity   interests from time to time acquired by such Grantor in any manner of the   issuers of such Pledged Equity or of other Material Subsidiaries of such   Borrower other than more than 65% of the equity in any CFC, (such shares   and other equity interests, together with the Initial Pledged Equity, being   the “Pledged Equity”),   and the certificates, if any, representing such additional shares or other   equity interests, and all dividends, distributions, return of capital, cash,   instruments and other property from time to time received, receivable or   otherwise distributed in respect of or in exchange for any or all of such   shares or other equity interests and all warrants, rights or options issued   thereon or with respect thereto;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iv)
  	
  
all additional indebtedness from time to time owed   to such Grantor (such indebtedness, together with the Initial Pledged Debt,   being the “Pledged   Debt”) and the instruments, if any, evidencing such   indebtedness, and all interest, cash, instruments and other property from   time to time received, receivable or otherwise distributed in respect of or   in exchange for any or all of such indebtedness;
  









- 4 -

	
  
 
  	
  
(v)
  	
  
subject to restrictions on assignment and/or   transfer, all security entitlements or commodity contracts carried in a   securities account or commodity account, all security entitlements with   respect to all financial assets from time to time credited to the Pledged   Deposit Accounts and all financial assets, and all dividends, distributions,   return of capital, interest, cash, instruments and other property from time   to time received, receivable or otherwise distributed in respect of or in   exchange for any or all of such security entitlements or financial assets and   all warrants, rights or options issued thereon with respect thereto; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(vi)
  	
  
subject to restrictions on assignment and/or   transfer, all other investment property (including, without limitation, all   (A) securities, whether certificated or uncertificated, (B) security   entitlements, (C) securities accounts, (D) commodity contracts and (E)   commodity accounts, but excluding any equity interest in any Affiliate   excluded from the Pledged Equity) in which such Grantor has now, or acquires   from time to time hereafter, any right, title or interest in any manner, and   the certificates or instruments, if any, representing or evidencing such   investment property, and all dividends, distributions, return of capital,   interest, cash, instruments and other property from time to time received,   receivable or otherwise distributed in respect of or in exchange for any or   all of such investment property and all warrants, rights or options issued   thereon or with respect thereto;
  
	
   
  	
  
 
  	
  
 
  
	
  
(g)
  	
  
subject to restrictions on assignment and/or   transfer, each Hedge Agreement to which such Grantor is now or may hereafter   become a party, in each case as such agreements may be amended, amended and   restated, supplemented or otherwise modified from time to time (collectively,   the “Assigned Agreements”),   including, without limitation, (i) all rights of such Grantor to receive   moneys due and to become due under or pursuant to the Assigned Agreements,   (ii) all rights of such Grantor to receive proceeds of any insurance,   indemnity, warranty or guarantee with respect to the Assigned Agreements,   (iii) claims of such Grantor for damages arising out of or for breach of or   default under the Assigned Agreements and (iv) the right of such Grantor to   terminate the Assigned Agreements, to perform thereunder and to compel   performance and otherwise exercise all remedies thereunder (all such   Collateral being the “Agreement
Collateral”);
  
	
   
 	
  
 
  	
  
 
  
	
  
(h)
  	
  
the following (collectively, the “Account   Collateral”):
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(i)
  	
  
the Pledged Deposit Accounts and all funds and financial   assets from time to time credited thereto (including, without limitation, all   cash equivalents), and all certificates and instruments, if any, from time to   time representing or evidencing the Pledged Deposit Accounts;
  











- 5 -

	
  
 
  	
  
(ii)
  	
  
all promissory notes, certificates of deposit,   cheques and other instruments from time to time delivered to or otherwise   possessed by the Agent for or on behalf of such Grantor in substitution for   or in addition to any or all of the then existing Account Collateral; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iii)
  	
  
all interest, dividends, distributions, cash,   instruments and other property from time to time received, receivable or   otherwise distributed in respect of or in exchange for any or all of the then   existing Account Collateral;
  
	
   
  	
  
 
  	
  
 
  
	
  
(i)
  	

  
  the following (collectively, the “Intellectual   Property Collateral”):

	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(i)
  	
  
all patents, patent applications, utility models and   statutory invention registrations, all inventions claimed or disclosed   therein and all improvements thereto, other than those patents and related   rights currently contemplated to be sold by any Grantor listed on Schedule IV   attached hereto (“Patents”);
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
all trademarks, service marks, domain names, trade   dress, logos, designs, slogans, trade names, business names, corporate names   and other source identifiers, whether registered or unregistered, together,   in each case, with the goodwill symbolized thereby (“Trademarks”);
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iii)
  	
  
all copyrights, including, without limitation,   copyrights in computer software, internet web sites and the content thereof,   whether registered or unregistered (“Copyrights”); all confidential and proprietary   information, including, without limitation, know-how, trade secrets,   manufacturing and production processes and techniques, inventions, research   and development information, databases and data, including, without   limitation, technical data, financial, marketing and business data, pricing   and cost information, business and marketing plans and customer and supplier   lists and information (collectively, “Trade Secrets”), and all other intellectual,   industrial and intangible property of any type, including, without   limitation, industrial designs and integrated circuit topographies;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iv)
  	
  
except as set forth above, all registrations and   applications for registration for any of the foregoing, including, without   limitation, those registrations and applications for registration, together   with all reissues, divisions, continuations, continuations-in-part,   extensions, renewals and reexaminations thereof;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(v)
  	
  
subject to restrictions on assignment and/or   transfer, all agreements, permits, consents, orders and franchises relating   to the license, development, use or disclosure of any of the foregoing to   which such Grantor, now or hereafter, is a party or a beneficiary (“IP Agreements”);   and
  











- 6 -

	
  
 
  	
  
(vi)
  	
  
subject to restrictions on assignment and/or   transfer, any and all claims for damages and injunctive relief for past,   present and future infringement, dilution, misappropriation, violation,   misuse or breach with respect to any of the foregoing, with the right, but   not the obligation, to sue for and collect, or otherwise recover, such   damages;
  
	
  
 
  	
  
 
  	
  
 
  
	
  (j)
  	
  
all proceeds of, collateral for, income, royalties   and other payments now or hereafter due and payable with respect to, and   supporting obligations relating to, any and all of the Collateral (including,   without limitation, proceeds, collateral and supporting obligations that   constitute property of the types described in clauses (a) through (i) of this   Section 1) and, to the extent not otherwise included, all (A) payments under   insurance (whether or not the Agent is the loss payee thereof), or any   indemnity, warranty or guaranty, payable by reason of loss or damage to or   otherwise with respect to any of the foregoing Collateral, and (B) cash; and
  
	
   
 	
  
 
  	
  
 
  
	
  
(k)
  	
  
all books, papers, accounts, invoices, documents and   other records in any form evidencing or relating to any of the property   described in this Section 1 and all contracts, instruments and other rights and   benefits in respect thereof and all replacements of, substitutions for and   increases, additions and accessions to any of the property described in this Section 1.
  




(2)                The Grantors each acknowledge that (i) value has been given, (ii) it has rights in the Collateral (other than after-acquired Collateral), (iii) it has not agreed to postpone the time of attachment of the security interests granted hereby, (iv) security interests granted hereby in Collateral in which it acquires an interest after the execution of this Agreement attach when it acquires such interest, and (v) it has received a duplicate copy of this Agreement. 


SECTION 2   SECURITY FOR OBLIGATIONS

                    This Agreement secures, in the case of each Grantor, the payment and performance of all obligations of such Grantor and the Subsidiaries of the Company now or hereafter existing under the Loan Documents, all agreements and other documents relating to any treasury management services provided by any of the Lenders and their Affiliates to the Company and any of its Subsidiaries, all agreements evidencing any other obligations of the Company and any of the Subsidiaries owing to any of the Lenders and their Affiliates including, without limitation, all letters of credit issued by any of the Lenders and their Affiliates for the benefit of the Company or any of its Subsidiaries, all Hedge Agreements entered into with the Company or any of its Subsidiaries by any of the Lenders and their Affiliates, and each agreement or instrument delivered by any Grantor


or Subsidiary or the Company
pursuant to any of the foregoing, as the same may be amended from time to time in accordance with the provisions thereof (“Secured Agreements”), whether direct or indirect, absolute or contingent, and whether for principal, reimbursement obligations, interest, fees, premiums, penalties, indemnifications, contract causes of action, costs, expenses or otherwise (all such obligations being the “Secured Obligations”) owing to the Agent, the Lenders and their respective Affiliates that are party to any Secured Agreement (the “Secured Parties”).  Without limiting the generality of the foregoing, this Agreement secures, as to each Grantor, the payment of all









- 7 -


amounts that constitute part of the Secured Obligations and would be owed by such Grantor or Subsidiary of the Company, as applicable, to any Secured Party under the Loan Documents or Security Agreements but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving any of the Loan Parties and other Subsidiaries of the Company.


SECTION 3   GRANTORS REMAIN LIABLE

	
  
(a)
  	
  
Anything herein to the contrary notwithstanding, (a)   each Grantor shall remain liable under the contracts and agreements included   in such Grantor’s Collateral to perform all of its duties and obligations   thereunder to the extent set forth therein to the same extent as if this   Agreement had not been executed, (b) the exercise by the Agent of any of the   rights hereunder shall not release any Grantor from any of its duties or   obligations under the contracts and agreements included in the Collateral and   (c) no Secured Party shall have any obligation or liability under the   contracts and agreements included in the Collateral by reason of this   Agreement or any other Loan Document, nor shall any Secured Party be   obligated to perform any of the obligations or duties of any Grantor   thereunder or to take any action to collect or enforce any claim for payment   assigned hereunder.
  
	
   
 	
  
 
  
	
  
(b)
  	
  
The security interest granted hereby does not and   will not extend to, and Collateral will not include, any agreement, right,   franchise, licence or permit (the “Contractual Rights”) to which a Grantor is   a party or of which the Grantor has the benefit, to the extent that the   creation of the security interest herein would constitute a breach of the   terms of or permit any person to terminate the Contractual Rights, but such   Grantor must hold its interest therein in trust for the Agent and will assign   the Contractual Rights to the Agent on behalf of the Secured Parties   forthwith upon obtaining the consent of the other party thereto.  Each Grantor agrees that it will, upon the   request of the Agent, following the occurrence and during the continuance of   an Event of Default, use its reasonable best efforts to obtain any consent   required to permit any Contractual Rights to be subjected to the security   interest.
  










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SECTION 4   DELIVERY AND CONTROL OF SECURITY COLLATERAL

	
  
(a)
  	
  
All certificates or instruments representing or   evidencing existing Security Collateral shall be delivered to and held by or   on behalf of the Agent pursuant hereto and shall be in suitable form for   transfer by delivery, or shall be accompanied by duly executed instruments of   transfer or assignment in blank, all in form and substance reasonably   satisfactory to the Agent except to the extent that such transfer or   assignment is (x) prohibited by applicable law or (y) subject to certain   corporate actions by the holders or issuers of non-US Initial Pledged Equity   which have not occurred as of the Effective Date and governmental approvals   or consents to pledge or transfer with respect to non-US Material   Subsidiaries which have not yet been obtained as to which Grantor shall use   commercially reasonable efforts to complete as soon as practicable after the   date hereof.
  
	
   
 	
  
 
  
	
  
(b)
  	
  
With respect to any Security Collateral representing   interests in Material Subsidiaries in which any Grantor has any right, title   or interest and that constitutes an uncertificated security, such Grantor   will use commercially reasonable efforts to cause the issuer thereof to agree   in an authenticated record with such Grantor and the Agent that, upon notice   from the Agent that an Event of Default has occurred and is continuing, such   issuer will comply with instructions with respect to such Security Collateral   originated by the Agent without further consent of such Grantor, such   authenticated record to be in form and substance reasonably satisfactory to   the Agent.  Upon the request of the   Agent upon the occurrence and during the continuance of an Event of Default,   each Grantor will notify each issuer of certificated Security Collateral as   provided in Section 4(e) below.
  
	
   
 	
   
  
	
  
(c)
  	
  
With respect to any securities or commodity account,   any Security Collateral that constitutes a security entitlement as to which   the financial institution acting as Agent hereunder is not the securities   intermediary, upon the request of the Agent upon the occurrence and during   the continuance of an Event of Default the relevant Grantor will use its   commercially reasonable efforts to cause the securities intermediary with   respect to such security or commodity account or security entitlement to   identify in its records the Agent as the entitlement holder thereof.
  
	
   
 	
  
 
  
	
  
(d)
  	
  
Upon the request of the Agent upon the occurrence   and during the continuance of an Event of Default, each Grantor shall cause   the Security Collateral to be registered in the name of the Agent or such of   its nominees as the Agent shall direct, subject only to the revocable rights   specified in Section 12(a).  In addition, the   Agent shall have the right upon the occurrence and during the continuance of   an Event of Default to convert Security Collateral consisting of financial assets   credited to any securities account to Security Collateral consisting of   financial assets held directly by the Agent, and to convert Security   Collateral consisting of financial assets held directly by the Agent to   Security Collateral consisting of financial assets credited to any securities   or commodity account.
  











- 9 -

	
  
(e)
  	
  
Upon the request of the Agent upon the occurrence   and during the continuance of an Event of Default, each Grantor will notify   each issuer of Security Collateral granted by it hereunder that such Security   Collateral is subject to the security interest granted hereunder.
  




SECTION 5   MAINTAINING THE ACCOUNT COLLATERAL


                    So long as any Advance or any other payment obligation of any Loan Party of which the Borrower has notice under any Loan Document shall remain unpaid, or any Lender shall have any Commitment: 

	
  
(a)
  	
  
Upon request of the Agent made upon the occurrence   and during the continuance of an Event of Default, each Grantor will promptly   enter into an agreement with the financial institution holding the Pledged   Account pursuant to which such financial institution shall agree with such   Grantor and the Agent to, upon notice from the Agent, comply with   instructions originated by the Agent directing the disposition of funds in   such deposit account without the further consent of such Grantor, such   agreement to be in form and substance reasonably satisfactory to the Agent (a   “Deposit   Account Control Agreement”), and instruct each Person obligated at   any time to make any payment to such Grantor for any reason (an “Obligor”)   to make such payment to such a Pledged Deposit Account.
  
	
   
 	
   
  
	
  
(b)
  	
  
Upon notice from the Agent that an Event of Default   has occurred and is continuing, each Grantor agrees to terminate any or all   Pledged Deposit Accounts and Deposit Account Control Agreements upon request   by the Agent.
  
	
   
 	
  
 
  
	
  
(c)
  	
  
The Agent may, at any time and without notice to, or   consent from, the Grantor, transfer, or direct the transfer of, funds from   the Pledged Deposit Accounts to satisfy the Grantor’s obligations under the   Loan Documents if an Event of Default shall have occurred and be   continuing.  As soon as reasonably   practicable after any such transfer, the Agent agrees to give written notice   thereof to the applicable Grantor.
  




SECTION 6   REPRESENTATIONS AND WARRANTIES

	
   
 	
  
Each Grantor represents and warrants as follows:
  
	
   
 	
  
 
  	
  
 
  
	
  (a)
  	
  
Such Grantor’s exact legal name, place of business,   chief executive office, the province in which it has tangible personal   property, type of organization, jurisdiction of formation as of the date   hereof is set forth in Schedule V hereto.    Within the twelve months preceding the date hereof, such Grantor has   not changed its name, location, place of business, chief executive office,   type of organization, jurisdiction of organization or organizational   identification number from those set forth in Schedule V hereto except as set   forth in Schedule VI hereto.
  











- 10 -

	
  
(b)
  	
  
Such Grantor is the owner of the Collateral granted   or purported to be granted by it free and clear of any Lien, claim, option or   right of others, except for the security interest created under this   Agreement or Liens permitted under the Credit Agreement (other than pursuant   to Section 5.02(a)(vii) of the Credit Agreement).  No effective financing statement or other instrument similar in   effect covering all or any part of such Collateral or listing such Grantor or   any trade name of such Grantor as debtor is on file in any recording office,   except such as may exist on the date of this Agreement, have been filed in   favour of the Agent relating to the Loan Documents or are otherwise permitted   under the Credit Agreement.
  
	
   
 	
  
 
  	
  
 
  
	
  (c)
  	
  
All Equipment of such Grantor having a value in   excess of $10,000,000 and Inventory of such Grantor having a value in excess   of $10,000,000 as of the date hereof is located at the places specified   therefor in Schedule VIII  and   Schedule IX hereto, respectively.    Such Grantor has exclusive possession and control of its Inventory,   other than Inventory stored at any leased premises or warehouse.
  
	
   
 	
  
 
  	
  
 
  
	
  
(d)
  	
  
None of the Receivables or Agreement Collateral is   evidenced by a promissory note or other instrument in excess of $10,000,000   that has not been delivered to the Agent.    All such Receivables or Agreement Collateral valued in excess of   $10,000,000 is listed on Schedule III attached hereto.
  
	
   
 	
  
 
  	
  
 
  
	
  
(e)
  	
  
All Security Collateral consisting of certificated   securities and instruments with an aggregate fair market value in excess of   $10,000,000 for all such Security Collateral of the Grantors have been   delivered to the Agent.
  
	
   
 	
  
 
  	
  
 
  
	
  (f)
  	
  
If such Grantor is an issuer of Security Collateral,   such Grantor confirms that it has received notice of the security interest   granted hereunder.
  
	
   
 	
  
 
  	
  
 
  
	
  
(g)
  	
  
The Pledged Equity pledged by such Grantor hereunder   has been duly authorized and validly issued and is fully paid and non   assessable.  The Pledged Debt pledged   by such Grantor hereunder has been duly authorized, authenticated or issued   and delivered, is the legal, valid and binding obligation of the issuers   thereof and, if  evidenced by any   promissory notes, such promissory notes have been delivered to the Agent, and   is not in default.
  
	
   
 	
  
 
  	
  
 
  
	
  
(h)
  	
  
The Initial Pledged Equity pledged by such Grantor   constitutes 65% of the issued   and outstanding equity interests of the issuers thereof indicated on Part I   of Schedule I hereto.  The Initial   Pledged Debt constitutes all of the outstanding Debt for Borrowed Money owed   to such Grantor by the issuers thereof as indicated on Part II of Schedule I   hereof.
  
	
   
 	
  
 
  	
  
 
  
	
  (i)
  	
  
Such Grantor has no investment property with a   market value in excess of $10,000,000 as of the date hereof, other than the   investment property listed on Part III of Schedule I hereto.
  
	
   
 	
  
 
  	
  
 
  
	
  
(j)
  	
  
The Assigned Agreements to which such Grantor is a   party have been duly authorized, executed and delivered by such Grantor and,   to such Grantor’s knowledge, any material Assigned Agreements are in full   force and effect and are binding upon and enforceable against all parties   thereto in accordance with their terms.
  











- 11 -

	
  
(k)
  	
  
Such Grantor has no material deposit accounts   subject to the grant or security in Section 1 of this Agreement as of the date   hereof, other than the Pledged Deposit Accounts listed on Schedule II hereto.
  
	
   
 	
  
 
  	
  
 
  
	
  (l)
  	
  
Such Grantor is not a beneficiary or assignee under   any letter of credit with a stated amount in excess of $10,000,000 and issued   by a United States or Canadian financial institution as of the date hereof,   other than the letters of credit described in Schedule VII hereto.
  
	
   
 	
  
 
  	
  
 
  
	
  
(m)
  	
  
This Agreement creates in favour of the Agent for   the benefit of the Secured Parties a valid security interest in the   Collateral granted by such Grantor under this Agreement, securing the payment   of the Secured Obligations except to the extent that control or possession by   the Agent is required for the creation of the security interest; all filings   and other actions necessary to perfect the security interest in the   Collateral granted by such Grantor have been duly made or taken and are in   full force and effect other than (i) federal registration which may be   necessary to perfect the Agent’s security interest with respect to Collateral   consisting of vessels, rolling stock or aircraft; and (ii) actions necessary to transfer and prior approval of or filings   with any governmental entity required in connection with any interest in   Pledged Equity; provided however,   that the Agent will receive a security interest, but not a first
priority   security interest, in (1) Collateral consisting of any securities or   commodity account, (2) Account Collateral maintained with a financial   institution other than the Agent, (3) assets encumbered by Liens on the date   of this Agreement, (4) Collateral evidenced by a certificate of title or   consisting of vessels or aircraft, (5) collateral subject to Liens permitted   by the terms of the Credit Agreement, (6) Collateral with an aggregate book   value of less than $10,000,000 and (7) other Collateral to the extent   consented to by Agent and approved by the Required Lenders (collectively, the   “Specified   Collateral”).
  
	
   
 	
   
  	
  
 
  
	
  
(n)
  	
  
No authorization or approval or other action by, and   no notice to or filing with, any governmental authority or regulatory body or   any other third party is required for (i) the grant by such Grantor of the   security interest granted hereunder or for the execution, delivery or   performance of this Agreement by such Grantor, (ii) the perfection or   maintenance of the security interest created hereunder (including the first   priority nature of such security interest in Collateral other than the   Specified Collateral), except for (A) the filing of financing statements   under the PPSA, which financing statements have been duly filed and are in   full force and effect, (B) subject to certain corporate actions by the holders   or issuers of non-US Initial Pledged Equity which have not occurred as of the   Effective Date, necessary to transfer or assign, (C) the actions described in Section 4 with respect to the Security Collateral, (D) federal filings which may be
necessary in respect of vessels, rolling stock or aircraft, or (iii) the exercise by the Agent of   its voting or other rights provided for in this Agreement or the remedies in   respect of the Collateral pursuant to this Agreement, except as set forth   above and as may be required in connection with the disposition of any   portion of the Security Collateral by laws affecting the offering and sale of   securities generally.
  











- 12 -

	
  (o)
  	
  
The Inventory that has been produced or distributed   by such Grantor has been produced in compliance with all requirements of   applicable law except where the failure to so comply would not have a   Material Adverse Effect.
  
	
   
 	
  
 
  	
  
 
  
	
  
(p)
  	
  
As to itself and its Intellectual Property   Collateral:
  
	
   
 	
  
 
  	
  
 
  
	
   
 	
  
(i)
  	
  
To the Borrower’s knowledge, the operation of such   Grantor’s business as currently conducted or as contemplated to be conducted   and the use of the Intellectual Property Collateral in connection therewith   do not conflict with, infringe, misappropriate, dilute, misuse or otherwise   violate the intellectual property rights of any third party.
  
	
   
 	
  
 
  	
  
 
  
	
   
 	
  
(ii)
  	
  
Such Grantor is the exclusive owner of all right,   title and interest in and to Patents, Trademarks and Copyrights contained in   the Intellectual Property Collateral, except as set forth in Schedule IV hereto   with respect to co-ownership of certain Patents, and such Grantor is entitled   to use all such Intellectual Property Collateral in accordance with   applicable law, subject to the terms of the IP Agreements.
  
	
   
 	
   
  	
  
 
  
	
   
 	
  
(iii)
  	
  
The Intellectual Property Collateral set forth on   Schedule IV hereto includes all of the registered patents, patent   applications, domain names, trademark registrations and applications,   copyright registrations and applications owned by such Grantor as of the date   set forth therein.
  
	
   
 	
  
 
  	
  
 
  
	
   
 	
  
(iv)
  	
  
The issued Patents and registered Trademarks   contained in the Intellectual Property Collateral have not been adjudged   invalid or unenforceable in whole or part, and to the knowledge of the   Borrower, are valid and enforceable, except to the extent Grantor has ceased   use of any such registered Trademarks.
  
	
   
 	
  
 
  	
  
 
  
	
   
 	
  
(v)
  	
  
Such Grantor has made or performed all filings,   recordings and other acts and has paid all required fees and taxes, as deemed   necessary by Grantor in its reasonable business discretion, to maintain and   protect its interest in each and every material item of Intellectual Property   Collateral owned by such Grantor in full force and effect.
  
	
   
 	
   
  	
  
 
  
	
   
 	
  
(vi)
  	
  
No claim has been asserted and is pending by any   Person challenging or questioning the use of any Intellectual Property   Collateral or the validity of effectiveness of any such Intellectual Property   Collateral, nor does the Borrower know of any valid basis for any such claim,   except, in either case, for such claims that in the aggregate are not reasonably   expected to have a Material Adverse Effect.    The use of such Intellectual Property Collateral by the Borrower and   its Subsidiaries does not infringe on the rights of any Person, except for   such claims and infringements that, in the aggregate, are not reasonably   expected to have a Material Adverse Effect.    The consummation of the transactions contemplated by the Loan   Documents will not result in the termination or impairment of any of the   Intellectual Property Collateral.
  











- 13 -

	
   
 	
  
(vii)
  	
  
With respect to each IP Agreement: (A) to the   knowledge of the Borrower, such IP Agreement is valid and binding and in full   force and effect; (B) such IP Agreement will not cease to be valid and   binding and in full force and effect on terms identical to those currently in   effect as a result of the rights and interest granted herein, nor will the   grant of such rights and interest constitute a breach or default under such   IP Agreement or otherwise give any party thereto a right to terminate such IP   Agreement; (C) such Grantor has not received any notice of termination or   cancellation under such IP Agreement within the six months immediately   preceding the date of this Canadian Security Agreement; (D) within the six   months immediately preceding the date of this Canadian Security Agreement,   such Grantor has not received any notice of a breach or default under such IP   Agreement, which breach or default has not been cured; and (E) neither such
Grantor nor, to such Grantor’s knowledge, any other party to such IP Agreement   is in breach or default thereof in any material respect, and no event has   occurred that, with notice or lapse of time or both, would constitute such a   breach or default or permit termination or modification under such IP   Agreement, in each case except as would not reasonably be expected to have a   Material Adverse Effect.
  
	
   
 	
   
  	
  
 
  
	
   
 	
  
(viii)
  	
  
To the Borrower’s knowledge, none of the material   Trade Secrets of such Grantor has been used, divulged, disclosed or   appropriated to the detriment of such Grantor for the benefit of any other   Person other than such Grantor within the past two years.
  




SECTION 7   FURTHER ASSURANCES

	
  
(a)
  	
  
Each Grantor agrees that from time to time, in   accordance with the terms of this Agreement at the expense of such Grantor   and at the reasonable request of the Agent, such Grantor will promptly   execute and deliver, or otherwise authenticate, all further instruments and   documents, and take all further action that may be reasonably necessary or   desirable, or that the Agent may reasonably request, in order to perfect and   protect any pledge or security interest granted or purported to be granted by   such Grantor hereunder or to enable the Agent to exercise and enforce its   rights and remedies hereunder with respect to any Collateral of such Grantor.  Without limiting the generality of the   foregoing, each Grantor will, at the reasonable request of the Agent,   promptly with respect to the Collateral of such Grantor:  (i) mark conspicuously each document   included in Inventory, each chattel paper included in Receivables each   Assigned
Agreement and, at the request of the Agent, each of its records   pertaining to such Collateral with a legend, in form and substance reasonably   satisfactory to the Agent, indicating that such document, Assigned Agreement   or Collateral is subject to the security interest granted hereby; (ii) if any   such Collateral shall be evidenced by a promissory note or other instrument   or chattel paper, deliver and pledge to the 
  









- 14 -

	
   
 	
  
Agent hereunder such note or instrument or chattel   paper duly endorsed and accompanied by duly executed instruments of transfer   or assignment, all in form and substance reasonably satisfactory to the   Agent; (iii) file such financing statements or amendments thereto, and such   other instruments or notices, as may be reasonably necessary or desirable, or   as the Agent may reasonably request, in order to perfect and preserve the   security interest granted or purported to be granted by such Grantor   hereunder; (iv) at the request of the Agent, take all action to ensure that   the Agent’s security interest is noted on any certificate of title related to   any Collateral evidenced by a certificate of title; and (v) deliver to the   Agent evidence that all other actions that the Agent may deem reasonably necessary   or desirable in order to perfect and protect the security interest granted or   purported to be granted by such Grantor under this Agreement
has been taken.
  
	
   
 	
  
 
  
	
  
(b)
  	
  
Each Grantor hereby authorizes the Agent to file one   or more financing statements, and amendments thereto, including, without   limitation, one or more financing statements indicating that such financing   statements cover all assets or all personal property (or words of similar   effect) of such Grantor in Canada other than assets now or hereafter   constituting Principal Properties or the equity of Restricted Subsidiaries,   or any real property or fixtures, regardless of whether any particular asset   described in such financing statements falls within the scope of the PPSA.  A photocopy or other reproduction of this   Agreement shall be sufficient as a financing statement where permitted by   law.  Each Grantor ratifies its   authorization for the Agent to have filed such financing statements or   amendments filed prior to the date hereof.
  
	
   
 	
   
  
	
  
(c)
  	
  
Each Grantor will furnish to the Agent from time to   time statements and schedules further identifying and describing the   Collateral of such Grantor and such other reports in connection with such   Collateral as the Agent may reasonably request, all in reasonable detail.
  




SECTION 8   AS TO EQUIPMENT AND INVENTORY 

	
  
(a)
  	
  
Each Grantor will keep its Equipment having a value   in excess of $10,000,000 and Inventory having a value in excess of   $10,000,000 (other than Inventory sold in the ordinary course of business) at   the places therefor specified in Schedule VIII and Schedule IX, respectively,   or, upon 30 days’ prior written notice to the Agent, at such other places   designated by such Grantor in such notice.
  
	
   
 	
  
 
  
	
  
(b)
  	
  
Each Grantor will pay promptly when due all property   and other taxes, assessments and governmental charges or levies imposed upon,   and all claims (including, without limitation, claims for labor, materials   and supplies) against, its Equipment and Inventory, except to the extent   payment thereof is not required by Section 5.01(b) of the Credit   Agreement.  In producing its   Inventory, each Grantor will comply with all requirements of applicable law,   except where the failure to so comply will not have a Material Adverse   Effect.
  










- 15 -


SECTION 9   INSURANCE

	
  
(a)
  	
  
Each Grantor will, at its own expense, maintain or   cause to be maintained, insurance with respect to its Equipment and Inventory   in such amounts, against such risks, in such form and with such insurers, as   shall be customary for similar businesses of the size and scope of the   Borrower on a consolidated basis, provided however that the Grantor may self   insure to the extent consistent with prudent business practice.  Each policy of each Grantor for liability   insurance shall provide for all losses to be paid on behalf of the Agent and   such Grantor as their interests may appear, and each policy for property   damage insurance shall provide for all losses, except for losses of less than   $25,000,000 per occurrence, to be paid directly to the Agent.  So long as no Event of Default shall have   occurred and be continuing, all property damage insurance payments received   by the Agent in connection with any loss, damage or destruction of Inventory


  will be released by the Agent to the applicable Grantor.  Each such policy shall in addition (i)   name such Grantor and the Agent as insured parties thereunder (without any   representation or warranty by or obligation upon the Agent) as their   interests may appear, (ii) provide that there shall be no recourse against   the Agent for payment of premiums or other amounts with respect thereto and   (iii) provide that at least 10 days’ prior written notice of cancellation or   of lapse shall be given to the Agent by the insurer.  Each Grantor will, if so requested by the   Agent, deliver to the Agent certificates of insurance evidencing such   insurance and, as often as the Agent may reasonably request, a report of a   reputable insurance broker or the insurer with respect to such   insurance.  Further, each Grantor   will, at the request of the Agent, duly execute and deliver instruments of   assignment of such insurance policies to comply with the requirements of Section 1(g) and cause



the insurers to acknowledge notice of such assignment.
  
	
   
 	
   
  
	
  
(b)
  	
  
Reimbursement under any liability insurance   maintained by any Grantor pursuant to this Section 9 may be paid directly to the   Person who shall have incurred damages covered by such insurance.  In case of any loss involving damage to   Equipment or Inventory when subsection (c) of this Section 9 is not applicable, the   applicable Grantor, to the extent determined to be in the business interest   of such Grantor, will make or cause to be made the necessary repairs to or   replacements of such Equipment or Inventory, and any proceeds of insurance   properly received by or released to such Grantor shall be used by such   Grantor, except as otherwise required hereunder or by the Credit Agreement,   to pay or as reimbursement for the costs of such repairs or replacements or,   if such Grantor determines not to repair or replace such Equipment or Inventory,   shall prepay the principal amount of the Comprehensive Guaranteed Obligations   in the manner and in the amount


 required


by Section 2.10(b) of the Credit   Agreement to the same extent as if such insurance proceeds constituted Net   Cash Proceeds.
  
	
   
 	
  
 
  
	
  
(c)
  	
  
So long as no Event of Default shall have occurred   and be continuing, all insurance payments received by the Agent in connection   with any loss, damage or destruction of any Inventory or Equipment will be   released by the Agent to the applicable Grantor.  Upon the occurrence and during the continuance of any Event of   Default, all insurance payments in respect of such Equipment or Inventory   shall be paid to the Agent and shall, in the Agent’s sole discretion, 
  











- 16 -

	
  
 
  	
  
(i) be released to the applicable Grantor for the   repair, replacement or restoration thereof, (ii) be held as additional   Collateral hereunder or applied as specified in Section 20(b) or (iii) be released to   prepay the principal amount of the Comprehensive Guaranteed Obligations in   the manner and in the amount required by Section 2.10(b) of the Credit   Agreement to the same extent as if such insurance payments constituted Net   Cash Proceeds.
  




SECTION 10   POST-CLOSING CHANGES; COLLECTIONS ON ASSIGNED AGREEMENTS AND RECEIVABLES

	
  
(a)
  	
  
No Grantor will change its name, place of business,   chief executive office, type of organization, jurisdiction of formation or   province in which it has tangible personal property from those set forth in   Schedule V of this Agreement without first giving at least 15 Business Days   prior written notice to the Agent and taking all action reasonably required   by the Agent for the purpose of perfecting or protecting the security   interest granted by this Agreement.    Each Grantor will hold and preserve its records relating to the   Collateral, including, without limitation, the Assigned Agreements and   Related Contracts, and will permit representatives of the Agent at any time   during normal business hours to inspect and make abstracts from such records   and other documents to the extent provided in Section 5.01(e) of the Credit   Agreement.
  
	
   
 	
   
  
	
  
(b)
  	
  
Except as otherwise provided in this subsection (b),   each Grantor will continue to collect, at its own expense, all amounts due or   to become due such Grantor under the Assigned Agreements and Receivables.  In connection with such collections, such   Grantor may take (and, at the Agent’s direction, will take) such action as   such Grantor or the Agent may deem necessary or advisable to enforce   collection of the Assigned Agreements and Receivables; provided, however, that the Agent shall have the right at any time,   upon the occurrence and during the continuance of an Event of Default and   upon written notice to such Grantor of its intention to do so, to notify the   Obligors under any Assigned Agreements and Receivables of the assignment of   such Assigned Agreements to the Agent and to direct such Obligors to make   payment of all amounts due or to become due to such Grantor thereunder   directly to the Agent and, upon such
notification and at the expense of such   Grantor, to enforce collection of any such Assigned Agreements and   Receivables, to adjust, settle or compromise the amount or payment thereof,   in the same manner and to the same extent as such Grantor might have done,   and to otherwise exercise all rights with respect to such Assigned Agreements   and Receivables.  After receipt by any   Grantor of the notice from the Agent referred to in the proviso to the   preceding sentence, (i) all amounts and proceeds (including, without   limitation, instruments) received by such Grantor in respect of the Assigned   Agreements and Receivables of such Grantor shall be received in trust for the   benefit of the Secured Parties, shall be segregated from other funds of such   Grantor and shall be forthwith paid over to the Agent in the same form as so   received (with any necessary endorsement) to be deposited in a Pledged   Deposit Account and applied as provided in Section 20(b) of this Agreement or to prepay   the
Comprehensive Guaranteed Obligations in the manner and in the amount
  









- 17 -

	
   
 	
  
required by Section 2.10(b) of the Credit
Agreement to the same extent as if such payments constituted Net Cash Proceeds
and (ii) such Grantor will not adjust, settle or compromise the amount or
payment of any Receivable or amount due on any Assigned Agreement, release
wholly or partly any Obligor thereof or allow any credit or discount thereon
other than credits or discounts given in the ordinary course of
business.
 




SECTION 11   AS TO INTELLECTUAL PROPERTY COLLATERAL

	
  
(a)
  	
  
With respect to each item of its Intellectual   Property Collateral material to the business of the Borrower and its   Subsidiaries, each Grantor agrees to take, at its expense, all commercially   reasonable steps as determined in Grantor’s reasonable discretion, including,   without limitation, in the Canadian Intellectual Property Office and any   other governmental authority, to (i) maintain the validity and enforceability   of such Intellectual Property Collateral and maintain such Intellectual   Property Collateral in full force and effect, and (ii) pursue the   registration and maintenance (in accordance with the exercise of such   Grantor’s reasonable business discretion) of each patent, trademark, or   copyright registration or application, now or hereafter included in such   Intellectual Property Collateral of such Grantor, including, without   limitation, the payment of required fees and taxes, the filing of responses   to office actions issued


by the Canadian Intellectual Property Office or   other governmental authorities, the filing of applications for renewal or   extension, the filing of divisional, continuation, continuation-in-part,   reissue and renewal applications or extensions, the payment of maintenance   fees and the participation in interference, reexamination, opposition,   cancellation, infringement and misappropriation proceedings, in each case   except where the failure to so file, register or maintain is not reasonably   likely to have a Material Adverse Effect.    No Grantor shall, without the written consent of the Agent, which   shall not be unreasonably withheld or delayed, discontinue use of or   otherwise abandon any such material Intellectual Property Collateral, or   abandon any right to file an application for patent, trademark, or copyright,   unless such Grantor shall have determined that such use or the pursuit or   maintenance of such Intellectual Property Collateral is no longer necessary   or desirable
in the conduct of such Grantor’s business and that the loss   thereof would not be reasonably likely to have a Material Adverse Effect.
  
	
   
 	
   
  
	
  
(b)
  	
  
Until the termination of the Credit Agreement, each   Grantor agrees to provide, annually to the Agent an updated Schedule of its   Patents, Trademarks and registered Copyrights.
  
	
   
 	
  
 
  
	
  
(c)
  	
  
In the event that any Grantor becomes aware that any   item of the Intellectual Property Collateral is being infringed or   misappropriated by a third party, such Grantor shall take such commercially   reasonable actions determined in its reasonable discretion, at its expense,   to protect or enforce such Intellectual Property Collateral, including,   without limitation, suing for infringement or misappropriation and for an   injunction against such infringement or misappropriation.
  











- 18 -

	
  
(d)
  	
  
Each Grantor shall take all reasonable steps which   it deems appropriate under the circumstances to preserve and protect each   item of its material Trademarks included in the Intellectual Property   Collateral, including, without limitation, maintaining substantially the   quality of any and all products or services used or provided in connection   with any of the Trademarks, consistent with the general quality of the   products and services as of the date hereof, and taking all steps reasonably   necessary to ensure that all licensed users of any of the Trademarks use such   consistent standards of quality.
  
	
   
 	
   
  
	
  
(e)
  	
  
With respect to its Intellectual Property   Collateral, upon the reasonable request of Agent made upon the occurrence and   during the continuance of an Event of Default, each Grantor agrees to execute   or otherwise authenticate an agreement, in substantially the form set forth   in Exhibit A hereto or otherwise in form and substance satisfactory to the   Agent (an “Intellectual   Property Security Agreement”), for recording the security   interest granted hereunder to the Agent in such Intellectual Property   Collateral with the Canadian Intellectual Property Office and any other   governmental authorities necessary to register, file or record the security   interest hereunder in such Intellectual Property Collateral.
  
	
   
 	
  
 
  
	
  
(f)
  	
  
Upon the occurrence and during the continuance of an   Event of Default, each Grantor and each entity which executes a Canadian   Security Agreement Supplement shall execute and deliver to the Agent with   such written notice, or otherwise authenticate, an agreement substantially in   the form of Exhibit B hereto or otherwise in form and substance satisfactory   to the Agent (an “IP Security Agreement Supplement”) covering such   Intellectual Property, which IP Security Agreement Supplement shall be   recorded with the Canadian Intellectual Property Office and any other   governmental authorities necessary to register, file or record the security   interest hereunder in such Intellectual Property.
  




SECTION 12   VOTING RIGHTS; DIVIDENDS; ETC.


	
  
(a)
  	
  
So long as no Default under Section 6.01(a) or (f)   of the Credit Agreement shall have occurred and be continuing:
  
	
   
 	
  
 
  	
  
 
  
	
   
 	
  
(i)
  	
  
Each Grantor shall be entitled to exercise any and   all voting and other consensual rights pertaining to the Security Collateral   of such Grantor or any part thereof for any purpose.
  
	
   
 	
  
 
  	
  
 
  
	
   
 	
  
(ii)
  	
  
Each Grantor shall be entitled to receive and retain   any and all dividends, interest and other distributions paid in respect of   the Security Collateral of such Grantor if and to the extent that the payment   thereof is not otherwise prohibited by the terms of the Loan Documents; provided, however, that any and all dividends, interest and other   distributions paid or payable in the form of instruments or certificates in   respect of, or in exchange for, any Security Collateral, shall be promptly   delivered to the Agent to hold as Security Collateral and shall, if received   by such Grantor, be received in trust for the benefit of the Secured Parties,   be segregated from the other property or funds of such Grantor and be   promptly delivered to the Agent as Security Collateral in the same form as so   received (with any necessary endorsement).
  









- 19 -

	
   
 	
  
(iii)
  	
  
The Agent will execute and deliver (or cause to be   executed and delivered) to each Grantor all such proxies and other   instruments as such Grantor may reasonably request for the purpose of   enabling such Grantor to exercise the voting and other rights that it is   entitled to exercise pursuant to paragraph (i) above and to receive the   dividends or interest payments that it is authorized to receive and retain   pursuant to paragraph (ii) above.
  
	
   
 	
  
 
  	
  
 
  
	
  
(b)
  	
  
Upon the occurrence and during the continuance of a   Default under Section 6.01(a) or (f) of the Credit Agreement:
  
	
   
 	
  
 
  	
  
 
  
	
   
 	
  
(i)
  	
  
All rights of each Grantor (x) to exercise or   refrain from exercising the voting and other consensual rights that it would   otherwise be entitled to exercise pursuant to Section 12(a)(i) shall, upon notice to such   Grantor by the Agent, cease and (y) to receive the dividends, interest and   other distributions that it would otherwise be authorized to receive and   retain pursuant to Section 12(a)(ii) shall automatically cease, and all such rights shall   thereupon become vested in the Agent for the benefit of the Secured Parties,   which shall thereupon have the sole right to exercise or refrain from   exercising such voting and other consensual rights and to receive and hold as   Security Collateral such dividends, interest and other distributions.
  
	
   
 	
   
  	
  
 
  
	
   
 	
  
(ii)
  	
  
All dividends, interest and other distributions that   are received by any Grantor contrary to the provisions of paragraph (i) of   this Section 12(b) shall be received in trust for the benefit of the Secured Parties,   shall be segregated from other funds of such Grantor and shall be promptly   paid over to the Agent as Security Collateral in the same form as so received   (with any necessary endorsement).
  




SECTION 13   AS TO THE ASSIGNED AGREEMENTS 

	
  
(a)
  	
  
Each Grantor will at its expense:
  
	
   
 	
  
 
  	
  
 
  
	
   
 	
  
(i)
  	
  
perform and observe all terms and provisions of the   Assigned Agreements to be performed or observed by it to the extent   consistent with its past practice or reasonable business judgement, maintain   the Assigned Agreements to which it is a party in full force and effect,   enforce the Assigned Agreements to which it is a party in accordance with the   terms thereof and take all such action to such end as may be requested from   time to time by the Agent; and
  
	
   
 	
   
  	
  
 
  
	
   
 	
  
(ii)
  	
  
furnish to the Agent promptly upon receipt thereof   copies of all notices of defaults in excess of $50,000,000 received by such   Grantor under or pursuant to the Assigned Agreements to which it is a party,   and from time to time (A) furnish to the Agent such information and reports   regarding 
  











- 20 -

	
   
 	
  
 
  	
  
the Assigned Agreements and such other Collateral of   such Grantor as the Agent may reasonably request and (B) upon request of the   Agent, make to each other party to any Assigned Agreement to which it is a   party such demands and requests for information and reports or for action as   such Grantor is entitled to make thereunder.
  
	
   
 	
  
 
  	
  
 
  
	
  
(b)
  	
  
Each Grantor hereby consents on its behalf and on   behalf of its Subsidiaries to the assignment and pledge to the Agent for   benefit of the Secured Parties of each Assigned Agreement to which it is a   party by any other Grantor hereunder.
  
	
   
 	
   
  	
  
 
  
	
  
(c)
  	
  
Each Grantor agrees, upon the reasonable request of   Agent, to instruct each other party to each Assigned Agreement to which it is   a party, that all payments due or to become due under or in connection with   such Assigned Agreement will be made directly to a Pledged Deposit Account.
  
	
   
 	
  
 
  	
  
 
  
	
  
(d)
  	
  
All moneys received or collected pursuant to   subsection (c) above shall be (i) released to the applicable Grantor on the   terms set forth in Section 5 so long as no Event of Default shall have occurred and   be continuing or (ii) if any Event of Default shall have occurred and be   continuing, applied as provided in Section 19(4).
  




SECTION 14   AS TO LETTER-OF-CREDIT RIGHTS

	
  
(a)
  	
  
Except as otherwise permitted by the Credit   Agreement and this Agreement, each Grantor, by granting a security interest   in its Receivables consisting of letter-of-credit, hereby assigns to the   Agent such rights (including its contingent rights) to the proceeds of all   Related Contracts consisting of letters of credit of which it is or hereafter   becomes a beneficiary or assignee.    Upon request of the Agent, each Grantor will promptly use commercially   reasonable efforts to cause the issuer of each letter-of-credit with a stated   amount in excess of $10,000,000 and each nominated person (if any) with   respect thereto to consent to such assignment of the proceeds thereof   pursuant to a consent in form and substance reasonably satisfactory to the   Agent and deliver written evidence of such consent to the Agent.
  
	
   
 	
   
  
	
  
(b)
  	
  
Upon the occurrence and during the continuance of an   Event of Default, each Grantor will, promptly upon request by the Agent, (i)   notify (and such Grantor hereby authorizes the Agent to notify) the issuer   and each nominated person with respect to each of the Related Contracts   consisting of letters of credit that the proceeds thereof have been assigned   to the Agent hereunder and any payments due or to become due in respect   thereof are to be made directly to the Agent or its designee and (ii) arrange   for the Agent to become the transferee beneficiary of letter of credit.
  











- 21 -


SECTION 15   TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES

	
  
(a)
  	
  
Each Grantor agrees that it will not (i) sell,   assign or otherwise dispose of, or grant any option with respect to, any of   the Collateral, other than (A) sales, assignments and other dispositions of   Collateral, and options relating to Collateral, in the ordinary course of   business as currently conducted, (B) sales, assignments and other   dispositions of, and options relating to, Collateral listed on Schedule X   hereto, (C) sales, assignments and other dispositions of Collateral as   permitted under the terms of the Credit Agreement, provided, that sales,   assignments and other dispositions of Collateral to Subsidiaries that are not   Loan Parties shall be for fair value determined in accordance with generally   accepted accounting principles, and the proceeds of any Collateral sold,   assigned or disposed of in accordance with the proviso to this clause (C)   shall be sold at fair market value and for consideration consisting of cash   and shall, to the


extent that such cash proceeds exceed US $50,000,000 in any   fiscal year, such excess shall be used to prepay the principal amount of the   Comprehensive Guaranteed Obligations in the manner and in the amount required   by Section 2.10(b) of the Credit Agreement to the same extent as if such cash   proceeds constituted Net Cash Proceeds and (D) to any other Grantor, or (ii)   create or suffer to exist any Lien upon or with respect to any of the   Collateral of such Grantor except for the pledge, assignment and security   interest created under this Agreement and Liens permitted under the Credit   Agreement.
  
	
   
 	
   
  
	
  
(b)
  	
  
Subject to the terms of the Credit Agreement and   this Agreement, each Grantor agrees that it will (i) cause each issuer of the   Pledged Equity pledged by such Grantor not to issue any equity interests or   other securities in addition to or in substitution for the Pledged Equity   issued by such issuer except to such Grantor or its Affiliates, and (ii)   pledge hereunder, promptly upon its acquisition (directly or indirectly)   thereof, any and all additional equity interests or other securities as   required by Section 5.01(i) of the Credit Agreement from time to time   acquired by such Grantor in any manner.
  




SECTION 16   AGENT APPOINTED ATTORNEY IN FACT


                    Each Grantor hereby irrevocably appoints the Agent such Grantor’s attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time, upon the occurrence and during the continuance of an Event of Default, in the Agent’s discretion, to take any action and to execute any instrument that the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:

	
  
(a)
  	
  
to obtain and adjust insurance required to be paid   to the Agent pursuant to Section 9,
  
	
   
 	
  
 
  
	
  (b)
  	
  
to ask for, demand, collect, sue for, recover,   compromise, receive and give acquittance and receipts for moneys due and to   become due under or in respect of any of the Collateral,
  
	
   
 	
  
 
  
	
  
(c)
  	
  
to receive, endorse and collect any drafts or other   instruments, documents and chattel paper, in connection with clause (a) or   (b) above, and
  











- 22 -

	
  
(d)
  	
  
to file any claims or take any action or institute   any proceedings that the Agent may deem necessary or desirable for the   collection of any of the Collateral or otherwise to enforce compliance with   the terms and conditions of any Assigned Agreement or the rights of the Agent   with respect to any of the Collateral.
  




SECTION 17   AGENT MAY PERFORM


                    If any Grantor fails to perform any agreement contained herein, the Agent may, but without any obligation to do so, upon notice to the Borrower with a copy to the Company of at least five Business Days in advance and if the Borrower fails to cure within such period, itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by such Grantor under Section 20.


SECTION 18   THE AGENT’S DUTIES

	
  
(a)
  	
  
The powers conferred on the Agent hereunder are   solely to protect the Secured Parties’ interest in the Collateral and shall   not impose any duty upon it to exercise any such powers.  Except for the safe custody of any   Collateral in its possession and the accounting for moneys actually received   by it hereunder, the Agent shall have no duty as to any Collateral, as to   ascertaining or taking action with respect to calls, conversions, exchanges,   maturities, tenders or other matters relative to any Collateral, whether or   not any Secured Party has or is deemed to have knowledge of such matters, or   as to the taking of any necessary steps to preserve rights against any   parties or any other rights pertaining to any Collateral.  The Agent shall be deemed to have   exercised reasonable care in the custody and preservation of any Collateral   in its possession if such Collateral is accorded treatment substantially   equal to that which it
accords its own property.
  
	
   
 	
  
 
  
	
  
(b)
  	
  
Anything contained herein to the contrary   notwithstanding, the Agent may from time to time, when the Agent deems it to   be necessary, appoint one or more of its Affiliates (or, with the consent of   the Borrower, any other Persons) subagents (each a “Subagent”) for the Agent   hereunder with respect to all or any part of the Collateral.  In the event that the Agent so appoints   any Subagent with respect to any Collateral, (i) the assignment and pledge of   such Collateral and the security interest granted in such Collateral by each   Grantor hereunder shall be deemed for purposes of this Canadian Security   Agreement to have been made to such Subagent, in addition to the Agent, for   the ratable benefit of the Secured Parties, as security for the Secured   Obligations of such Grantor, (ii) such Subagent shall automatically be   vested, in addition to the Agent, with all rights, powers, privileges,   interests and remedies of the Agent
hereunder with respect to such   Collateral, and (iii) the term “Agent,” when used herein in relation to any   rights, powers, privileges, interests and remedies of the Agent with respect   to such Collateral, shall include such Subagent; provided, however,   that no such Subagent shall be authorized to take any action with respect to   any such Collateral unless and except to the extent expressly authorized in   writing by the Agent.
  










- 23 -


SECTION 19   REMEDIES


(1)                If any Event of Default shall have occurred and be continuing and such Event of Default has resulted in the acceleration of the Secured Obligations, which acceleration has not been rescinded or otherwise terminated:

	
  
(a)
  	
  
the Agent may exercise in respect of the Collateral,   in addition to other rights and remedies provided for herein or otherwise   available to it, all the rights and remedies of a secured party upon default   under the PPSA (whether or not the PPSA applies to the affected Collateral);
  
	
   
 	
  
 
  
	
  
(b)
  	
  
the Agent may by appointment in writing appoint a   receiver or receiver and manager (each herein referred to as the “Receiver”)   of the Collateral (which term when used in this Section 19 will include the whole or   any part of the Collateral) and may remove or replace such Receiver from time   to time or may institute proceedings in any court of competent jurisdiction   for the appointment of a Receiver of the Collateral; and the term “Agent”   when used in this Section 19 will include any Receiver so appointed and the agents,   officers and employees of such Receiver; and the Agent will not be in any way   responsible for any misconduct or negligence of any such Receiver;
  
	
   
 	
   
  
	
  
(c)
  	
  
the Agent may take possession of the Collateral and   require the Grantors to assemble the Collateral and deliver or make the   Collateral available to the Agent at such place or places as may be specified   by the Agent;
  
	
   
 	
  
 
  
	
  
(d)
  	
  
the Agent may take such steps as it considers   desirable to maintain, preserve or protect the Collateral;
  
	
   
 	
  
 
  
	
  
(e)
  	
  
the Agent may enforce any rights of the Grantors in   respect of the Collateral by any manner permitted by applicable law;
  
	
   
 	
  
 
  
	
  
(f)
  	
  
the Agent may withdraw, or cause the direct   withdrawal, of all funds with respect to the Account Collateral;
  
	
   
 	
  
 
  
	
  
(g)
  	
  
the Agent may sell, lease or otherwise dispose of   the Collateral at public auction, by private tender, by private sale or   otherwise either for cash or upon credit upon such terms and conditions as   the Agent may determine and without notice to the Grantors unless required by   law;
  
	
   
 	
   
  
	
  
(h)
  	
  
the Agent may accept the Collateral in satisfaction   of the Secured Obligations upon notice to the Grantors of its intention to do   so in the manner required by applicable law;
  
	
   
 	
  
 
  
	
  
(i)
  	
  
the Agent may, consistent with Section 5.01(e) of   the Credit Agreement on a non-exclusive basis, occupy any premises owned or   leased by any of the Guarantors where the Collateral or any part thereof is   assembled or located for a reasonable period in order to effectuate its   rights and remedies hereunder or under law, without obligation to such   Grantor for rental in respect of such occupation;
  











- 24 -

	
  
(j)
  	
  
the Agent may charge on its own behalf and pay to   others all reasonable amounts for expenses incurred and for services rendered   in connection with the exercise of the rights and remedies of the Agent   hereunder, including, without limiting the generality of the foregoing,   reasonable legal, Receiver and accounting fees and expenses, and in every   such case the amounts so paid together with all costs, charges and expenses   incurred in connection therewith, including interest thereon at such rate as   the Agent deems reasonable, will be added to and form part of the Secured   Obligations hereby secured; and
  
	
   
 	
   
  
	
  
(k)
  	
  
to the extent permitted by law, the Agent may   discharge any claim, lien, mortgage, charge, security interest, encumbrance   or any rights of others that may exist or be threatened against the   Collateral, and in every such case the amounts so paid together with costs,   charges and expenses incurred in connection therewith will be added to the   Secured Obligations hereby secured.
  




(2)                The Agent may (i) grant extensions of time, (ii) take and perfect or abstain from taking and perfecting security, (iii) give up securities, (iv) accept compositions or compromises, (v) grant releases and discharges, and (vi) release any part of the Collateral or otherwise deal with the Grantors, debtors of the Grantors, sureties and others and with the Collateral and other security as the Agent sees fit without prejudice to the liability of the Grantors to the Agent or the Agent’s rights hereunder.


(3)                The Agent will not be liable or responsible for any failure to seize, collect, realize, or obtain payment with respect to the Collateral and is not bound to institute proceedings or to take other steps for the purpose of seizing, collecting, realizing or obtaining possession or payment with respect to the Collateral or for the purpose of preserving any rights of the Agent, the Grantors or any other person, in respect of the Collateral.


(4)                Any cash held by or on behalf of the Agent and all cash proceeds received by or on behalf of the Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Agent, be held by the Agent as collateral for, and/or then or at any time thereafter shall be applied (after payment of any amounts payable to the Agent pursuant to Section 20) in whole or in part by the Agent for the ratable benefit of the Secured Parties against, all or any part of the Secured Obligations, in the following manner:


	
  
 
  	
  
(i)
  	
  
first, paid to the Agent for any amounts then owing to the Agent in its   capacity as such pursuant to Section 9.04 of the Credit Agreement or   otherwise under the Loan Documents, including all expenses of any Receiver   hereunder; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
second, ratably (A) paid to the Secured Parties for any amounts then   owing to them, in their capacities as such, under the Secured Agreements (other than in respect of undrawn Letters   of Credit) ratably in accordance with the amounts then owing to the   Secured Parties, and (B) deposited as   Collateral in the L/C Cash Deposit Account as required by Section 6.02 of the   Credit Agreement.
  











- 25 -


Any surplus of such cash or cash proceeds held by or on the behalf of the Agent and remaining after payment in full of all the Secured Obligations shall be paid over to the applicable Grantor or to whomsoever may be lawfully entitled to receive such surplus.


(5)                All payments received by any Grantor under or in connection with any Assigned Agreement or otherwise in respect of the Collateral shall be received in trust for the benefit of the Agent, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Agent in the same form as so received (with any necessary endorsement).


(6)                Subject to the provisions of Section 9.05 of the Credit Agreement, the Agent may, without notice to any Grantor except as required by law and at any time or from time to time, charge, set off and otherwise apply all or any part of the Secured Obligations against any funds held with respect to the Account Collateral or in any other deposit account.


(7)                In the event of any sale or other disposition of any of the Intellectual Property Collateral of any Grantor, the goodwill symbolized by any Trademarks subject to such sale or other disposition shall be included therein, and such Grantor shall supply to the Agent or its designee, to the extent practicable, such Grantor’s know-how and expertise, and documents and things relating to any Intellectual Property Collateral subject to such sale or other disposition, and such Grantor’s customer lists and other records and documents relating to such Intellectual Property Collateral and to the manufacture, distribution, advertising and sale of products and services of such Grantor.


(8)                In each case under this Agreement in which the Agent takes any action with respect to the Collateral, including proceeds, the Agent shall provide to the Borrower such records and information regarding the possession, control, sale and any receipt of amounts with respect to such Collateral as may be reasonably requested by the Borrower as a basis for the preparation of the Borrower’s financial statements in accordance with GAAP. 


SECTION 20   INDEMNITY AND EXPENSES


	
  
(a)
  	
  
Each Grantor agrees to indemnify, defend and save   and hold harmless each Secured Party and each of their Affiliates and their   respective officers, directors, employees, trustees, agents and advisors   (each, an “Indemnified   Party”) from and against, and shall pay on demand, any and   all claims, damages, losses, liabilities and expenses (including, without   limitation, reasonable fees and expenses of counsel) that may be incurred by   or asserted or awarded against any Indemnified Party, in each case arising   out of or in connection with or resulting from this Agreement (including,   without limitation, enforcement of this Agreement), except to the extent such   claim, damage, loss, liability or expense is found in a final, non-appealable   judgement by a court of competent jurisdiction to have resulted from such   Indemnified Party’s gross negligence or willful misconduct.
  











- 26 -

	
  
(b)
  	
  
Each Grantor will upon demand pay to the Agent the   amount of any and all reasonable expenses, including, without limitation, the   reasonable fees and expenses of its counsel and of any experts and agents,   that the Agent may incur in connection with (i) the custody, preservation,   use or operation of, or the sale of, collection from or other realization   upon, any of the Collateral of such Grantor, (ii) the exercise or enforcement   of any of the rights of the Agent or the other Secured Parties hereunder or   (iii) the failure by such Grantor to perform or observe any of the provisions   hereof.
  



SECTION 21   AMENDMENTS; WAIVERS; ADDITIONAL GRANTORS; ETC.

	
  
(a)
  	
  
No amendment or waiver of any provision of this   Agreement, and no consent to any departure by any Grantor herefrom, shall in   any event be effective unless the same shall be in writing and signed by the   Agent and, with respect to any amendment, the Borrower on behalf of the   Grantors, and then such waiver or consent shall be effective only in the   specific instance and for the specific purpose for which given.  No failure on the part of the Agent or any   other Secured Party to exercise, and no delay in exercising any right   hereunder, shall operate as a waiver thereof; nor shall any single or partial   exercise of any such right preclude any other or further exercise thereof or   the exercise of any other right.
  
	
   
 	
  
 
  
	
  
(b)
  	
  
Upon the execution and delivery by any Person of a   security agreement supplement in substantially the form of Exhibit C hereto   (each a “Canadian   Security   Agreement Supplement”), such Person shall be referred to as   an “Additional   Grantor” and shall be and become a Grantor hereunder, and   each reference in this Agreement and the other Loan Documents to “Grantor”   shall also mean and be a reference to such Additional Grantor, each reference   in this Agreement and the other Loan Documents to the “Collateral” shall also   mean and be a reference to the Collateral granted by such Additional Grantor   and each reference in this Agreement to a Schedule shall also mean and be a   reference to the schedules attached to such Canadian Security Agreement   Supplement.
  



SECTION 22   CONFIDENTIALITY; NOTICES; REFERENCES.

	
  
(a)
  	
  
The confidentiality provisions of Section 9.08 of   the Credit Agreement shall apply to all information received by the Agent or   any Lender under this Agreement.
  
	
   
 	
  
 
  
	
  
(b)
  	
  
All notices and other communications provided for   hereunder shall be delivered as provided in Section 9.02 of the Credit   Agreement.
  
	
   
 	
  
 
  
	
  
(c)
  	
  
The definitions of certain terms used in this   Agreement are set forth in the following locations:
  





	
  
 
  	
  
Account Collateral
  	
  
Section 1(f)
  
	
   
  	
  
Additional Grantor
  	
  
Section 21(b)
  
	
  
 
  	
  
Agreement
  	
  
Preamble
  
	
  
 
  	
  
Agreement Collateral
  	
  
Section 1(e)
  
	
  
 
  	
  
Assigned Agreements
  	
  
Section 1(e)
  
	
  
 
  	
  
Borrower
  	
  
Preamble
  
	
  
 
  	
  
Canadian Security Agreement Supplement
  	
  
Section 21(b)
  











- 27 -

	
   
  	
  
Collateral
  	
  
Section 1
  
	
  
 
  	
  
Contractual Rights
  	
  
Section 3(b)
  
	
  
 
  	
  
Copyrights
  	
  
Section 1(i)(iii)
  
	
  
 
  	
  
Credit Agreement
  	
  
Recitals A(1)
  
	
  
 
  	
  
Deposit Account Control Agreement
  	
  
Section 5(a)
  
	
  
 
  	
  
Equipment
  	
  
Section 1(a)
  
	
  
 
  	
  
Grantor, Grantors
  	
  
Preamble
  
	
  
 
  	
  
Initial Pledged Equity
  	
  
Recitals A(2)
  
	
   
  	
  
Initial Pledged Debt
  	
  
Recitals A(2)
  
	
  
 
  	
  
Intellectual Property Collateral
  	
  
Section 1(g)
  
	
  
 
  	
  
Inventory
  	
  
Section 1(b) above
  
	
  
 
  	
  
IP Agreements
  	
  
Section 1(i)(v)
  
	
  
 
  	
  
Obligor
  	
  
Section 5(a)
  
	
  
 
  	
  
Patents
  	
  
Section 1(i)(i)
  
	
  
 
  	
  
Pledged Debt
  	
  
Section 1(f)(ii) above
  
	
  
 
  	
  
Pledged Deposit Accounts
  	
  
Recitals A(3)
  
	
   
  	
  
Pledged Equity
  	
  
Section 1(f)(i)
  
	
  
 
  	
  
PPSA
  	
  
Recitals A(6)
  
	
  
 
  	
  
Receivables
  	
  
Section 1(c)
  
	
  
 
  	
  
Receiver
  	
  
Section 19(b)
  
	
  
 
  	
  
Related Contracts
  	
  
Section 1(c)
  
	
  
 
  	
  
Secured Agreements
  	
  
Section 2
  
	
  
 
  	
  
Secured Obligations
  	
  
Section 2
  
	
  
 
  	
  
Secured Parties
  	
  
Section 2
  
	
   
  	
  
Security Collateral
  	
  
Section 1(f)
  
	
  
 
  	
  
Specified Collateral
  	
  
Section 6(m)
  
	
  
 
  	
  
Trademarks
  	
  
Section 1(i)(ii)
  
	
  
 
  	
  
Trade Secrets
  	
  
Section 1(i)(ii)
  




SECTION 23   CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE CREDIT AGREEMENT


                    This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the latest of (i) the payment in full in cash of the Secured Obligations, and (ii) the Termination Date, (b) be binding upon each Grantor, its successors and assigns and (c) inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Secured Parties and their respective successors, permitted transferees and permitted assigns.  Without limiting the generality of the foregoing clause (c), to the extent permitted in Section 9.07 of the Credit Agreement, any Lender may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes,


if any, held by it) to any permitted transferee, and such permitted transferee shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise.









- 28 -


SECTION 24   RELEASE; TERMINATION

	
  
(a)
  	
  
Upon any sale, lease, transfer or other disposition   of any item of Collateral of any Grantor in accordance with the terms of the   Loan Documents, or upon any    Subsidiary ceasing to be a Material Subsidiary, the security interests   granted under this Agreement by such Grantor shall immediately terminate and   automatically be released and Agent will promptly deliver at the Grantor’s   request to such Grantor all certificates representing any Pledged Equity   released and all notes and other instruments representing any Pledged Debt,   Receivables or other Collateral, and Agent will, at such Grantor’s expense,   promptly execute and deliver to such Grantor such documents as such Grantor   shall reasonably request to evidence the release of such item of Collateral   from the assignment and security interest granted hereby; provided, however, that (i) no such documents shall be required unless   such Grantor shall have delivered to
the Agent, at least five Business Days   prior to the date such documents are required by Grantor, a written request   for release describing the item of Collateral and the consideration to be   received in the sale, transfer or other disposition and any expenses in   connection therewith, together with a form of release for execution by the   Agent and a certificate of such Grantor to the effect that the transaction is   in compliance with the Loan Documents and (ii) the proceeds of any such sale,   lease, transfer or other disposition required to be applied, or any payment   to be made in connection therewith, in accordance with Section 2.10(b) of the   Credit Agreement shall, to the extent so required, be paid or made to, or in accordance   with the instructions of, the Agent when and as required under Section   2.10(b) of the Credit Agreement.
  
	
   
 	
   
  
	
  
(b)
  	
  
Upon the latest of (i) the payment in full in cash   of the Advances and each other payment obligation of any Loan Party of which   the Borrower has knowledge under any Loan Document, and (ii) the Termination   Date, the pledge and security interest granted hereby shall terminate   immediately and automatically and all rights to the Collateral shall revert   to the applicable Grantor and the Agent will promptly deliver to Grantors all   certificates representing any Pledged Equity or Pledged Debt, Receivables or   other Collateral.  Upon any such   termination, the Agent will, at the applicable Grantor’s expense, promptly   execute and deliver to such Grantor such documents as such Grantor shall   reasonably request to evidence such termination.
  




SECTION 25   CURRENCY REFERENCES


                    Unless expressly stated otherwise, all references in this Agreement to “$”, “Dollars” or “Cdn. $” are to the lawful money of Canada and any references to “United States Dollars”, “US Dollars” or “US$” are to the lawful money of the United States of America.









- 29 -


SECTION 26   EXECUTION IN COUNTERPARTS


                    This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement.


SECTION 27   GOVERNING LAW This Agreement shall be governed by, and construed in accordance with, the laws of the Province of British Columbia.


                    IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.


[Remainder of page intentionally left blank]









- 30 -

	
  
1959 Upper Water Street,
  	
  
 
  	
  
 
  
	
  
Halifax, Nova Scotia B3J 3N2
  	
  
KODAK GRAPHIC COMMUNICATIONS CANADA COMPANY
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
/s/ William G. Love
  
	
   
  	
   
  	
  


  
	
   
  	
  Title:  
  	
  Treasurer