Document:

exhibit49.htm

    
      

        
           

           

          
             

            
              EXECUTION
VERSION

            

          

        

        Exhibit
(4.9)

         

        

         

        

         

        

         

        

         

        

         

        SECURITY
AGREEMENT

         

        Dated
October 18, 2005

         

        

         

        Amended
and Restated as of March 31, 2009

         

        

         

        From

         

        

         

        The
Grantors referred to herein

         

        

         

        as
Grantors

         

        

         

        to

         

        

         

        Citicorp
USA, Inc.

         

        

         

        as Agent

         

        
          
            
               

            

             

          

          
             

            
            

          

          
             

          

        

        T A B L E  O F  C O N T E N T S

         

        Section Page

         

        
          
            	
                    Section
      1. Grant of
      Security                                                                                                                                   
      2

                  

          

        

         

        
          
            	
                    Section
      2. Security for
      Obligations                                                                                                                       
      6

                  

          

        

         

        
          
            	
                    Section
      3. Grantors Remain
      Liable                                                                                                                         6

                  

          

        

         

        
          
            	
                    Section
      4. Delivery and Control of Security
      Collateral                                                                                       6

                  

          

        

         

        
          
            	
                    Section
      5. Maintaining the Account
      Collateral                                                                                                   7

                  

          

        

         

        
          
            	
                    Section
      6. Representations and
      Warranties                                                                                                   
           8

                  

          

        

         

        
          	
                  Section
      7. Further Assurances

                	
                  12

                

        

         

        
          	
                  Section
      8. As to Equipment and Inventory

                	
                  13

                

        

         

        
          	
                  Section
      9. Insurance

                	
                  13

                

        

         

        
          
            	
                    Section
      10. Post-Closing Changes; Collections on Assigned Agreements and
      Receivables                   14

                  

          

        

         

        
          	
                  Section
      11. As to Intellectual Property Collateral

                	
                  15

                

        

         

        
          	
                  Section
      12. Voting Rights; Dividends; Etc.

                	
                  16

                

        

         

        
          	
                  Section
      13. As to the Assigned Agreements

                	
                  17

                

        

         

        
          	
                  Section
      14. As to Letter-of-Credit Rights

                	
                  18

                

        

         

        
          	
                  Section
      15. Transfers and Other Liens; Additional Shares

                	
                  18

                

        

         

        
          	
                  Section
      16. Agent Appointed Attorney in Fact

                	
                  19

                

        

         

        
          	
                  Section
      17. Agent May Perform

                	
                  19

                

        

         

        
          	
                  Section
      18. The Agent’s Duties

                	
                  19

                

        

         

        
          	
                  Section
      19. Remedies

                	
                  20

                

        

         

        
          	
                  Section
      20. Indemnity and Expenses

                	
                  22

                

        

         

        
          	
                  Section
      21. Amendments; Waivers; Additional Grantors; Etc.

                	
                  22

                

        

         

        
          	
                  Section
      22. Confidentiality; Notices; References.

                	
                  23

                

        

         

        
          
            	
                    Section
      23. Continuing Security Interest; Assignments Under the Credit
      Agreement                              23

                  

          

        

         

        
          	
                  Section
      24. Release; Termination

                	
                  24

                

        

         

        
          	
                  Section
      25. Execution in Counterparts

                	
                  24

                

        

         

        
          
             

          

          
             

            
            

          

          
             

          

        

        
          	
                  Section
      26. Governing Law

                	
                  24

                

        

         

         

        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 Intellectual Property Security Agreement

        Exhibit
B                        - 
      Form of Intellectual Property Security
Agreement Supplement

        Exhibit
C                        -        Form
of Security Agreement Supplement

         

        
          
             

          

          
             

            
            

          

          
             

          

        

        SECURITY
AGREEMENT

         

        SECURITY
AGREEMENT dated October 18, 2005, amended and restated as of March 31, 2009
(this "Agreement")
made by Eastman Kodak Company, a New Jersey corporation (the “Borrower”),
and the other Persons listed on the signature pages hereof, or which at any time
execute and deliver a 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) The
Borrower has entered into a Credit Agreement dated as of October 18, 2005, which
was amended and restated as of March 31, 2009 (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) The
Company is the owner of a L/C Cash Deposit Account (as defined in the Credit
Agreement) created in accordance with the Credit Agreement and subject to the
security interest granted under this Agreement on terms and conditions
acceptable to the Agent.

         

        (5) It is a
condition precedent to the making of Advances and the issuance of additional
Letters of Credit by the Lenders under the Credit Agreement that the Grantors
shall have granted the security interest 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.

         

        (6) 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 Article 8 or 9 of the UCC (as defined below) are used in this
Agreement as such terms are defined in such Article 8 or 9.  “UCC” means
the Uniform Commercial Code as in effect from time to time in the State of New
York; provided that, if
perfection or the effect of perfection or non perfection or the priority of the
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, “UCC” means
the Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non perfection or priority.

         

        
          
             

          

          
             

            
            

          

          
             

          

        

        (7) NOW,
THEREFORE, in consideration of the premises and in order to induce the Lenders
to make Advances and issue Letters of Credit 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

         

        Each
Grantor hereby grants to the Agent, for the ratable benefit of the Secured
Parties, a security interest in such Grantor’s right, title and interest in and
to the following, in each case, as to each type of property described below,
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)
to the extent that any lien or security interest in such asset created under
this Agreement would require that the notes or other debt securities issued
pursuant to the Indenture be equally and ratably secured by such assets under
the terms of the Indenture, 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 the United States, (B) any deposit account
for taxes, payroll, employee benefits or similar items and any other account or
financial asset in which such security interest would be unlawful or in
violation of any Plan or employee benefit agreement, (C) any lease,
license, contract, or agreement or other property right (including any United
States of America intent-to-use trademark or service mark application), 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, (D) 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, or (E) any real property
or fixture (collectively, the “Collateral”):

         

        (a) all
equipment in all of its forms, including, without limitation, all machinery,
tools, motor vehicles, vessels, aircraft and furniture (excepting all fixtures),
and all parts thereof and all accessions thereto, including, without limitation,
computer programs and supporting information that constitute equipment within
the meaning of the UCC (any and all such property being the “Equipment”);

         

        (b) all
inventory 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, including, without limitation,
computer programs and supporting information that constitute inventory within
the meaning of the UCC (any and all such property being the “Inventory”);

         

        
          
             

          

          
            2

            
              

            

          

          
             

          

        

        (c) all
accounts, 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 (d), (e) or (f) below, being the “Receivables”,
subject to restrictions on assignment and/or transfer, and 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) 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, provided that not more than 65% of the
equity in any CFC shall be subject to the pledge hereunder (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;

         

        (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

         

        
          
             

          

          
            3

            
              

            

          

          
             

          

        

        (vi) time
credited to the L/C Cash Deposit Account 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

         

        (vii) 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;

         

        (e) 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 guaranty 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”);

         

        (f) the
following (collectively, the “Account
Collateral”):

         

        (i) the
Pledged Deposit Accounts, the L/C Cash Deposit Account 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 or the
L/C Cash Deposit Account;

         

        (ii) all
promissory notes, certificates of deposit, checks 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

         

        
          
             

          

          
            4

            
              

            

          

          
             

          

        

        (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;
and

         

        (g) 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 the Company or any other 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 mask
works;

         

        (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

         

        (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;

         

        (h) 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

         

        
          
             

          

          
            5

            
              

            

          

          
             

          

        

        (i) obligations
that constitute property of the types described in clauses (a) through (g) 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.

         

        Section
2. Security for
Obligations

         

        This
Agreement secures, in the case of each Grantor, the payment of all obligations
of such Grantor and the Subsidiaries of the Company now or hereafter existing
under (a) the Loan Documents, and (b) as disclosed to the Agent from time to
time and in an amount not to exceed $100,000,000 in the aggregate, as to each
Lender and its Affiliates, for so long as such Lender is a party to the Credit
Agreement, 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 its 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 of the
Company pursuant to any of the foregoing, as the same may be amended from time
to time in accordance with the provisions thereof (the Loan Documents and the
documents described in this clause (b) are the “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 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 Secured 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

         

        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.

         

        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

         

        
          
             

          

          
            6

            
              

            

          

          
             

          

        

        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 effects to complete as soon as practicable after the
date hereof.

         

        (b) With
respect to any Security Collateral representing interest 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 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 other 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 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 or the L/C Cash Deposit 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 or the L/C Cash Deposit
Account.

         

        (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
Company has notice under any Loan Document shall remain unpaid, any Letter of
Credit shall be outstanding or any Lender shall have any
Commitment:

         

        
          
             

          

          
            7

            
              

            

          

          
             

          

        

        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 or the L/C Cash Deposit
Account.

         

        (a) 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.

         

        (b) 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 or the L/C
Cash Deposit Account 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, chief executive office, type of organization,
jurisdiction of organization and organizational identification number 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, 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.

         

        (b) Such
Grantor is the legal and beneficial 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 favor 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 third party warehouse.

         

        
          
             

          

          
            8

            
              

            

          

          
             

          

        

        (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, as of the date
hereof, 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.

         

        (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.

         

        (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 financial
institution as of the date hereof, other than the letters of credit described in
Schedule VII hereto.

         

        (m) This
Agreement creates in favor 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

         

        
          
             

          

          
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        (n) (i)
actions necessary to obtain control of Collateral as provided in Sections 9-104,
9-105, 9-106 and 9-107 of the UCC; (ii) actions necessary to perfect the Agent’s
security interest with respect to Collateral evidenced by a certificate of title
or Collateral consisting of vessels or aircraft and (iii) 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”).

         

        (o) 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 and continuation statements under the UCC, which financing statements
have been duly filed and are in full force and effect, (B) the recordation of
the Intellectual Property Security Agreement with respect to certain registered
copyrights attached thereto, which has been delivered for recording and is in
full force and effect, and the actions described in Section 4 with respect to
the Security Collateral, (C) subject to certain corporations actions by the
holders or issuers of Non-U.S. Initial Pledged Equity which have not occurred as
of the Effective Date, necessary to transfer or assign and (D) the governmental
filings required to be made or approvals obtained prior to the creation of
security interest in any Pledged Equity issued by a non-US Person and any
filings or approvals require prior to realizing on any such Pledged Equity, (E)
the control of certain assets as provided in Sections 9-104, 9-105, 9-106 and
9-107 of the UCC, or (F) 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.

         

        (p) 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.

         

        (q) As to
itself and its Intellectual Property Collateral:

         

        (i) 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,

         

        
          
             

          

          
            10

            
              

            

          

          
             

          

        

        (ii) misuse or
otherwise violate the intellectual property rights of any third party, except as
are not expected to have a Material Adverse Effect.

         

        (iii) 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.

         

        (iv) 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.

         

        (v) 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 Company, are valid and enforceable, except to the extent
Grantor has ceased use of any such registered Trademarks.

         

        (vi) 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.

         

        (vii) 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 Company 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
Company 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.

         

        (viii) With
respect to each IP Agreement: (A) to the knowledge of the Company, 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 Security Agreement;
(D) within

         

        
          
             

          

          
            11

            
              

            

          

          
             

          

        

        (ix) the six
months immediately preceding the date of this 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.

         

        (x) To the
Company’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 Agent hereunder such note
or instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Agent; (iii) file such financing or continuation 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 or
continuation 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 the United States 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

         

        
          
             

          

          
            12

            
              

            

          

          
             

          

        

        (c) statements
falls within the scope of the UCC.  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, continuation statements or amendments filed
prior to the date hereof.

         

        (d) 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.

         

        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 Company 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(h) 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

         

        
          
             

          

          
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        (c) 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, treat the loss
or damage as a disposition under Section 5.02(e)(v) of the Credit
Agreement.

         

        (d) 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,
(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 19(b) or (iii) be released to the
Agent Sweep Account and applied as provided in Section 2.18(h) of the Credit
Agreement.

         

        Section
10. Post-Closing Changes;
Collections on Assigned Agreements and Receivables

         

        (a)  No
Grantor will change its name, type of organization, jurisdiction of organization
or organizational identification number 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.  If any Grantor does not have an organizational
identification number and later obtains one, it will forthwith notify the Agent
of such organizational identification number.

         

        (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,

         

        
          
             

          

          
            14

            
              

            

          

          
             

          

        

        (c) including,
without limitation, those set forth in Section 9-607 of the
UCC.  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 indorsement) to be
deposited in the Agent Sweep Account in the United States and either
(A) released to such Grantor so long as no Event of Default shall have
occurred and be continuing or (B) if any Event of Default shall have
occurred and be continuing, applied as provided in Section 19(b) of
this Agreement or as provided in Section 2.18(h) of the Credit Agreement, 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 Company 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 U.S. Patent and
Trademark Office, the U.S. Copyright 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 U.S. Patent and Trademark
Office, the U.S. Copyright Office or other governmental authorities, the filing
of applications for renewal or extension, the filing of affidavits under
Sections 8 and 15 of the U.S. Trademark Act, 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,

         

        
          
             

          

          
            15

            
              

            

          

          
             

          

        

        (d) 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.

         

        (e) 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.

         

        (f) 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
U.S. Patent and Trademark Office, the U.S. Copyright Office, and any other
governmental authorities necessary to perfect the security interest hereunder in
such Intellectual Property Collateral.

         

        (g) Upon the
occurrence of and during the continuance of an Event of Default, each entity
which executes a Security Agreement Supplement as Grantor 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 U.S. Patent and
Trademark Office, the U.S. Copyright Office and any other governmental
authorities necessary to perfect 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 (e) 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 indorsement).

         

        
          
             

          

          
            16

            
              

            

          

          
             

          

        

        (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 (e)
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
indorsement).

         

        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 judgment, 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 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.

         

        
          
             

          

          
            17

            
              

            

          

          
             

          

        

        (iii) 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.

         

        (b) 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.

         

        (c) 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(b).

         

        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 rights to the Agent, 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 (as defined in Section 5-102 of the UCC) (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.

         

        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 or 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 such proceeds shall consist of cash 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.

         

        
          
             

          

          
            18

            
              

            

          

          
             

          

        

        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, indorse and collect any drafts or other instruments, documents and
chattel paper, in connection with clause (a) or (b) above, and

         

        (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 Company of at least five
Business Days in advance and if the Company 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.

         

        
          
             

          

          
            19

            
              

            

          

          
             

          

        

        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 Company, 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 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.

         

        Section
19. Remedies

         

        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 UCC (whether or not the UCC
applies to the affected Collateral) and also may:  (i) require each
Grantor to, and each Grantor hereby agrees that it will at its expense and upon
request of the Agent forthwith, assemble all or part of the Collateral as
directed by the Agent and make it available to the Agent at a place and time to
be designated by the Agent that is reasonably convenient to both parties; (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Agent may deem commercially reasonable; (iii) occupy,
consistent with Section 5.01(e) of the Credit Agreement, on a non-exclusive
basis any premises owned or leased by any of the Grantors 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 in respect of such occupation; and (iv) exercise any and all rights
and remedies of any of the Grantors under or in connection with the Collateral,
or otherwise in respect of the Collateral, including, without limitation, (A)
any and all rights of such Grantor to demand or otherwise require payment of any
amount under, or performance of any provision of, the Assigned Agreements, the
Receivables and the other Collateral, (B) withdraw, or cause or direct the
withdrawal, of all funds with respect to the Account Collateral, and (C)
exercise all other rights and remedies with respect to the Assigned Agreements,
the Receivables and the other Collateral, including, without limitation, those
set forth in Section 9-607 of the UCC.  Each Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten days’ notice to
such Grantor of the time and place of any public sale, or of the time after
which any private sale is to be made shall constitute reasonable
notification.  The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given.

         

        
          
             

          

          
            20

            
              

            

          

          
             

          

        

        (b) The Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.

         

        (c) 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;
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.

         

        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.

         

        (d) 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 indorsement).

         

        (e) 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.

         

        (f) 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.

         

        
          
             

          

          
            21

            
              

            

          

          
             

          

        

        (g) (f)           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 Company
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 Company as a basis for the preparation of the company'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 judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party’s gross
negligence or willful misconduct.

         

        (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 Company 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 “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 Security Agreement Supplement.

         

        
          
             

          

          
            22

            
              

            

          

          
             

          

        

        (c) Confidentiality;
Notices; References.

         

        (d)  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)

                
	
                  Agreement

                	
                  Preamble

                
	
                  Agreement
      Collateral

                	
                  Section
      1(e)

                
	
                  Assigned
      Agreements

                	
                  Section
      1(e)

                
	
                  Borrower

                	
                  Preamble

                
	
                  Collateral

                	
                  Section
      1

                
	
                  Copyrights

                	
                  Section
      1 (g)(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)

                
	
                  IP
      Agreements

                	
                  Section
      1(g)(v)

                
	
                  Obligor

                	
                  Section
      5(a)

                
	
                  Patents

                	
                  Section
      1(g)(i)

                
	
                  Pledged
      Debt

                	
                  Section
      1(d)(iv)

                
	
                  Pledged
      Deposit Accounts

                	
                  Recitals
      A(3)

                
	
                  Pledged
      Equity

                	
                  Section
      1(d)(iii)

                
	
                  Receivables

                	
                  Section
      1(c)

                
	
                  Related
      Contracts

                	
                  Section
      1(c)

                
	
                  Secured
      Agreements

                	
                  Section
      2

                
	
                  Secured
      Obligations

                	
                  Section
      2

                
	
                  Secured
      Parties

                	
                  Section
      2

                
	
                  Security
      Collateral

                	
                  Section
      1(d)

                
	
                  Specified
      Collateral

                	
                  Section
      6(m)

                
	
                  Trademarks

                	
                  Section
      1(g)(iii)

                
	
                  Trade
      Secrets

                	
                  Section
      1(g)(iii)

                
	
                  UCC

                	
                  Recitals
      A(6)

                

        

        

         

        Section
22. Continuing Security
Interest; Assignments Under the Credit Agreement

         

        This
Agreement shall create a continuing security interest in the Collateral and
shall (a) except as otherwise provided in Section 9.14 of the Credit
Agreement, remain in full force

         

        
          
             

          

          
            23

            
              

            

          

          
             

          

        

        and
effect until the latest of (i) the payment in full in cash of the Secured
Obligations, (ii) the Termination Date and (iii) the termination or
expiration of all Letters of Credit, (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.

         

        Section
23. 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 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.

         

        (b) As
provided in Section 9.14(b) of the Credit Agreement, 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
24. 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
25. Governing
Law

         

        This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York.

         

        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]

         

        
          
             

          

          
            24

            
              

            

          

          
             

          

        

         

        

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

           

          
            	
                     
      

                  	
                    EASTMAN
      KODAK COMPANY

                  

          

           

          
            
              	
                       
      

                    	
                      By/s/ William G.
      Love

                    

            

          

           

          
            	
                     
      

                  	
                    Name:
      William G. Love

                  

          

           

          
            	
                     
      

                  	
                    Title:
      Treasurer

                  

          

           

          
            	
                     
      

                  	
                    KODAK
      CANADA INC.

                  

          

           

          
            
              	
                       
      

                    	
                      By/s/ William G.
      Love

                    

            

          

           

          
            	
                     
      

                  	
                    Name:
      William G. Love

                  

          

           

          
            	
                     
      

                  	
                    Title:
      Assistant Treasurer

                  

          

           

          CREO
MANUFACTURING AMERICA LLC

           

          KODAK
AVIATION LEASING LLC

           

          
            
              	
                       
      

                    	
                      By/s/ William G.
      Love

                    

            

          

           

          
            	
                     
      

                  	
                    Name:
      William G. Love

                  

          

           

          
            	
                     
      

                  	
                    Title:
      Manager

                  

          

           

          EASTMAN
GELATINE CORPORATION

           

          EASTMAN
KODAK INTERNATIONAL CAPITAL COMPANY, INC.

           

          FAR EAST
DEVELOPMENT LTD.

           

          FPC
INC.

           

          KODAK
(NEAR EAST), INC.

           

          KODAK
AMERICAS, LTD.

           

          KODAK
IMAGING NETWORK, INC.

           

          KODAK
PORTUGUESA LIMITED

           

          KODAK
REALTY, INC.

           

          LASER
EDIT, INC.

           

          LASER-PACIFIC
MEDIA CORPORATION

           

          PACIFIC
VIDEO, INC.

           

          PAKON,
INC.

           

          QUALEX
INC.

           

          
            
              	
                       
      

                    	
                      By/s/ William G.
      Love

                    

            

          

           

          
            	
                     
      

                  	
                    Name:
      William G. Love

                  

          

           

          
            	
                     
      

                  	
                    Title:
      Treasurer

                  

          

           

          KODAK
PHILIPPINES LTD.

           

          NPEC
INC.

           

          
            
              	
                       
      

                    	
                      By/s/ William G.
      Love

                    

            

          

           

          
            	
                     
      

                  	
                    Name:
      William G. Love

                  

          

           

          
            	
                     
      

                  	
                    Title:
      Assistant Treasurer

                  

          

           

          
            
               

            

            
               25exhibit410.htm

    

      
        
           

        

         

        
           

          
            EXECUTION
COPY

          

        

      

      Exhibit
(4.10)

       

      

       

      

       

      

       

      CANADIAN
SECURITY AGREEMENT

       

      

       

      Dated
October 18, 2005

       

      Amended
and Restated as of March 31, 2009

       

      

       

      From

       

      

       

      THE
GRANTORS REFERRED TO HEREIN

       

      AS
GRANTORS

       

      

       

      To

       

      

       

      CITICORP
USA, INC.

       

      AS
AGENT

       

      
        
           

        

        
           

          
            

          

        

        
           

          
            TABLE
OF CONTENTS

            

            Page

             

            

          

        

      

      
        	
                SECTION 1

              	
                GRANT
      OF SECURITY 

              	
                2

              

      

       

      
        	
                SECTION
      2

              	
                SECURITY
      FOR OBLIGATIONS 

              	
                6

              

      

       

      
        	
                SECTION
      3

              	
                GRANTORS
      REMAIN LIABLE 

              	
                7

              

      

       

      
        	
                SECTION
      4

              	
                DELIVERY
      AND CONTROL OF SECURITY COLLATERAL 

              	
                7

              

      

       

      
        	
                SECTION
      5

              	
                MAINTAINING
      THE ACCOUNT COLLATERAL 

              	
                9

              

      

       

      
        	
                SECTION
      6

              	
                REPRESENTATIONS
      AND WARRANTIES 

              	
                9

              

      

       

      
        	
                SECTION
      7

              	
                FURTHER
      ASSURANCES 

              	
                13

              

      

       

      
        	
                SECTION
      8

              	
                AS
      TO EQUIPMENT AND INVENTORY 

              	
                14

              

      

       

      
        	
                SECTION
      9

              	
                INSURANCE 

              	
                14

              

      

       

      
        	
                SECTION
      10  

              	
                POST-CLOSING
      CHANGES; COLLECTIONS ON ASSIGNED AGREEMENTS AND
      RECEIVABLES                       
      16

              

      

       

      
        	
                SECTION
      11  

              	
                AS
      TO INTELLECTUAL PROPERTY
      COLLATERAL                                                                                                         17

              

      

       

      
        	
                SECTION
      12  

              	
                VOTING
      RIGHTS; DIVIDENDS;
      ETC                                                                                                                                    
      18

              

      

       

      
        	
                SECTION
      13  

              	
                AS
      TO THE ASSIGNED
      AGREEMENTS                                                                                                                              
      19

              

      

       

      
        	
                SECTION
      14  

              	
                AS
      TO LETTER-OF-CREDIT
      RIGHTS                                                                                                                                   20

              

      

       

      
        	
                SECTION
      15  

              	
                SECTION
      15TRANSFERS AND OTHER LIENS; ADDITIONAL
      SHARES                                                                     20

              

      

       

      
        	
                SECTION
      16  

              	
                SECTION
      16AGENT APPOINTED ATTORNEY IN
      FACT                                                                                                
      21

              

      

       

      
        	
                SECTION
      17  

              	
                AGENT
      MAY
      PERFORM                                                                                                                                                        
      21

              

      

       

      
        	
                SECTION
      18  

              	
                THE
      AGENT'S
      DUTIES                                                                                                                                                            
      21

              

      

       

      
        	
                SECTION
      19  

              	
                REMEDIES                                                                                                                                                                                 
      22

              

      

       

      
        	
                SECTION
      20  

              	
                INDEMNITY
      AND
      EXPENSES                                                                                                                                               
      25

              

      

       

      
        	
                SECTION
      21  

              	
                AMENDMENTS;
      WAIVERS; ADDITIONAL GRANTORS;
      ETC                                                                                     25

              

      

       

      
        	
                SECTION
      22  

              	
                CONFIDENTIALITY;
      NOTICES;
      REFERENCES                                                                                                                 
      26

              

      

       

      
        	
                SECTION
      23  

              	
                CONTINUING
      SECURITY INTEREST; ASSIGNMENTS UNDER THE CREDIT
      AGREEMENT                                 
      27

              

      

       

      
        	
                SECTION
      24  

              	
                RELEASE;
      TERMINATION                                                                                                                                                    
      27

              

      

       

      
        	
                SECTION
      25  

              	
                CURRENCY
      REFERENCES                                                                                                                                                      
      28

              

      

       

      
        	
                SECTION
      26  

              	
                EXECUTION
      IN
      COUNTERPARTS                                                                                                                                       
      28

              

      

       

      
        	
                SECTION
      27  

              	
                GOVERNING
      LAW THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN

                ACCORDANCE
      WITH, THE LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS
      

                OF
      CANADA APPLICABLE
      THEREIN                                                                                                                             
         28

              

      

       

      
        
          
            
              	 
      	
                      -i-

                    	 
      

            

            

          

           

        

        
           

          
            

          

        

        
           

          
            TABLE
OF CONTENTS

            (continued)

             

             

            

          

        

      

      
        
          	
                  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

      
        
          
            
              	 
      	
                      -ii-

                    	 
      

            

            

          

           

        

        
           

          
            

          

        

        
           

        

      

      CANADIAN
SECURITY AGREEMENT

       

      CANADIAN SECURITY AGREEMENT dated
October 18, 2005, as amended and restated as of March 31, 2009 (the "Agreement") made by Kodak
Canada Inc., an Ontario corporation (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 Kodak Graphic Communications Canada Company entered into a
Credit Agreement dated as of October 18, 2005 with the Lenders and the Agents
(each as defined therein) as the same has been amended and restated by that
certain Amended and Restated Credit Agreement dated as of the date hereof
entered into by Eastman Kodak Company and the Borrower with the Lenders and the
Agents (each as defined therein) (said Amended and Restated Credit Agreement, as
it may hereafter be amended, amended and restated, supplemented or otherwise
modified from time to time, being the "Credit
Agreement").

       

      (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 and unless
the context otherwise requires, all the terms used in this Agreement without
initial capitals, which are defined in the PPSA (as defined below) or the STA
(as defined below), have the same meanings in this Agreement as in the PPSA or
the STA, as applicable.  "PPSA" means the Personal Property Security
Act as in effect from time to time in the Province of Ontario; 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 Ontario,
"PPSA" means the Personal Property Security
Act as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                         
- 2 -

          

        

      

      (6) relating
to such validity, perfection, effect of perfection or non-perfection or
priority.  "STA" means the Securities Transfer Act,
2006, S.O. 2006, c.8.

       

      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 (or, for
certainty, the Pledged Equity, or Security 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, or (F) any capital stock or assets of
1680382 Ontario Limited:

       

      
        	
                (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 (as hereafter
      defined) or consumer goods (any and all such property being the "Equipment");

              

      

       

      
        	
                (b)  

              	
                all
      inventory 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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                         
- 3 -

          

        

      

      
        	
                (c)  

              	
                transit
      by such Grantor, and all accessions thereto and products thereof and
      documents therefor, (any and all such property being the "Inventory");

              

      

       

      
        	
                (d)  

              	
                all
      accounts, 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");

              

      

       

      
        	
                (e)  

              	
                all
      chattel paper, warehouse receipts, bills of lading and other documents of
      title, whether negotiable or not;

              

      

       

      
        	
                (f)  

              	
                all
      coins or bills or other medium of exchange adopted for use as part of the
      currency of Canada or of any foreign
government;

              

      

       

      
        	
                (g)  

              	
                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;

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                         - 4 -

          

        

      

      
        	
                (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;

              

      

       

      
        	
                (v)  

              	
                subject
      to restrictions on assignment and/or transfer, all security entitlements
      or commodity or futures contracts carried in a securities account or
      commodity or futures 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 or futures contracts and (E) commodity or futures
      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;

              

      

       

      
        	
                (h)  

              	
                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");

              

      

       

      
        	
                (i)  

              	
                the
      following (collectively, the "Account
      Collateral"):

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                        
- 5 -

          

        

      

      
        	
                (j)  

              	
                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;

              

      

       

      
        	
                (i)  

              	
                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

              

      

       

      
        	
                (ii)  

              	
                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;

              

      

       

      
        	
                (k)  

              	
                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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                        
- 6 -

          

        

      

      
        	
                (vi)  

              	
                Grantor,
      now or hereafter, is a party or a beneficiary ("IP Agreements");
      and

              

      

       

      
        	
                (vii)  

              	
                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;

              

      

       

      
        	
                (l)  

              	
                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

              

      

       

      
        	
                (m)  

              	
                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 (a) the Loan Documents, and (b) as disclosed to the
Agent from time to time and in an amount not to exceed $100,000,000 in the
aggregate, as to each Lender and its Affiliates, for so long as such Lender is a
party to the Credit Agreement, 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 (the Loan Documents and the
documents described in this clause (b) are the

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                        
- 7 -

          

        

      

      "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 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.

              

      

       

       

      
        	
                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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                        
- 8 -

          

        

      

      
        	
                (b)  

              	
                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.

              

      

       

      
        	
                (c)  

              	
                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.

              

      

       

      
        	
                (d)  

              	
                With
      respect to any securities or commodity or futures 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 or futures account or security
      entitlement to identify in its records the Agent as the entitlement holder
      thereof.

              

      

       

      
        	
                (e)  

              	
                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 or
      futures account.

              

      

       

      
        	
                (f)  

              	
                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.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                        
- 9 -

          

        

      

      
        	
                (g)  

              	
                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:

       

      
        	
                (h)  

              	
                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.

              

      

       

      
        	
                (i)  

              	
                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.

              

      

       

      
        	
                (j)  

              	
                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
      5  

              	
                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.

              

      

       

      
        	
                (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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 10 -

          

        

      

      
        	
                (c)  

              	
                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.

              

      

       

      
        	
                (d)  

              	
                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 third party
      warehouse.

              

      

       

      
        	
                (e)  

              	
                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.

              

      

       

      
        	
                (f)  

              	
                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.

              

      

       

      
        	
                (g)  

              	
                If
      such Grantor is an issuer of Security Collateral, such Grantor confirms
      that it has received notice of the security interest granted
      hereunder.

              

      

       

      
        	
                (h)  

              	
                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.

              

      

       

      
        	
                (i)  

              	
                The
      Initial Pledged Equity pledged by such Grantor constitutes, as of the date
      hereof, 100% 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.

              

      

       

      
        	
                (j)  

              	
                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.

              

      

       

      
        	
                (k)  

              	
                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.

              

      

       

      
        	
                (l)  

              	
                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.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                        - 11 -

          

        

      

      
        	
                (m)  

              	
                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.

              

      

       

      
        	
                (n)  

              	
                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 or futures 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").

              

      

       

      
        	
                (o)  

              	
                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.

              

      

       

      
        	
                (p)  

              	
                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.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 12 -

          

        

      

      
        	
                (q)  

              	
                As
      to itself and its Intellectual Property
  Collateral:

              

      

       

      
        	
                (i)  

              	
                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 except as are not expected to have a
      Material Adverse Effect.

              

      

       

      
        	
                (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
      6  

              	
                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 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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 14 -

          

        

      

      
        	
                (b)  

              	
                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.

              

      

       

      
        	
                (c)  

              	
                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.

              

      

       

      
        	
                (d)  

              	
                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
      7  

              	
                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.

              

      

       

       

      
        	
                SECTION
      8  

              	
                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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 15 -

          

        

      

      
        	
                (b)  

              	
                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.

              

      

       

      
        	
                (c)  

              	
                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,
      treat the loss or damage as a disposition under Section 5.02(e)(v) of the
      Credit Agreement.

              

      

       

      
        	
                (d)  

              	
                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, (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 the Agent Sweep Account and applied as
      provided in Section 2.18(h) of the Credit
  Agreement.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 16 -

          

        

      

      
        	
                (e)  

              	
                POST-CLOSING
      CHANGES; COLLECTIONS ON ASSIGNED AGREEMENTS AND
  RECEIVABLES

              

      

       

      
        	
                (f)  

              	
                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.

              

      

       

      
        	
                (g)  

              	
                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 the Agent Sweep Account in
      Canada and applied as provided in Section 20(b) of this Agreement or as
      provided in Section 2.18(h) of the Credit Agreement 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.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 17 -

          

        

      

      
        	
                (h)  

              	
                AS
      TO INTELLECTUAL PROPERTY COLLATERAL

              

      

       

      
        	
                (i)  

              	
                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.

              

      

       

      
        	
                (j)  

              	
                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.

              

      

       

      
        	
                (k)  

              	
                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.

              

      

       

      
        	
                (l)  

              	
                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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 18 -

          

        

      

      
        	
                (m)  

              	
                reasonably
      necessary to ensure that all licensed users of any of the Trademarks use
      such consistent standards of
quality.

              

      

       

      
        	
                (n)  

              	
                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.

              

      

       

      
        	
                (o)  

              	
                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
      9  

              	
                VOTING
      RIGHTS; DIVIDENDS; ETC.

              

      

       

      
        	
                (a)  

              	
                So
      long as no Default under Section 6.01(a) or (e) 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).

              

      

       

      
        	
                (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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 19 -

          

        

      

      
        	
                (iv)  

              	
                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 (e) 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
      10  

              	
                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
      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.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 20 -

          

        

      

      
        	
                (iii)  

              	
                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.

              

      

       

      
        	
                (b)  

              	
                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.

              

      

       

      
        	
                (c)  

              	
                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(6).

              

      

       

       

      
        	
                SECTION
      11  

              	
                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.

              

      

       

       

      
        	
                SECTION
      12  

              	
                TRANSFERS
      AND OTHER LIENS; ADDITIONAL SHARES

              

      

       

      
        	
                (a)  

              	
                Each
      Grantor agrees that it will not (i) sell, assign or dispose of Collateral
      except as permitted under the terms of the Credit Agreement, 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.

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                        
- 21 -

          

        

      

      
        	
                (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
      13  

              	
                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

              

      

       

      
        	
                (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
      14  

              	
                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
      15  

              	
                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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 22 -

          

        

      

      
        	
                (b)  

              	
                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.

              

      

       

      
        	
                (c)  

              	
                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.

              

      

       

       

      
        	
                SECTION
      16  

              	
                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;

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 23 -

          

        

      

      
        	
                (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;

              

      

       

      
        	
                (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

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 24 -

          

        

      

      (3) security
as the Agent sees fit without prejudice to the liability of the Grantors to the
Agent or the Agent's rights hereunder.

       

      (4) 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.

       

      (5) 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.

              

      

       

      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.

       

      (6) 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).

       

      (7) 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.

       

      (8) 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

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 25 -

          

        

      

      (9) Property
Collateral and to the manufacture, distribution, advertising and sale of
products and services of such Grantor.

       

      (10) 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
      17  

              	
                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.

              

      

       

      
        	
                (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
      18  

              	
                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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 26 -

          

        

      

      
        	
                (c)  

              	
                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
      19  

              	
                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)

              
	
                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(5)

              
	
                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)

              
	
                STA/Recitals

              	
                Recitals
      A(6)

              
	
                Trademarks

              	
                Section
      1(i)(ii)

              
	
                Trade
      Secrets

              	
                Section
      1(i)(ii)

              

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        
                                     
- 27 -

        

      

       

       

      
        	
                SECTION
      20  

              	
                CONTINUING
      SECURITY INTEREST; ASSIGNMENTS UNDER THE CREDIT
  AGREEMENT

              

      

       

      This Agreement shall create a
continuing security interest in the Collateral and shall (a) except as otherwise
provided in Section 9.14 of the Credit Agreement, 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.

       

       

      
        	
                SECTION
      21  

              	
                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

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

          
                                       
- 28 -

          

        

      

      
        	
                (b)  

              	
                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.

              

      

       

      
        	
                (c)  

              	
                As
      provided in Section 9.14(b) of the Credit Agreement, 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
      22  

              	
                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.

       

       

      
        	
                SECTION
      23  

              	
                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
      24  

              	
                GOVERNING
      LAW THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
      THE LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA
      APPLICABLE THEREIN.

              

      

       

      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]

       

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        
                                                                                                                          
- 29 -

       

       

       

      

        6
Monogram Place, Suite
200                                                                                                KODAK
CANADA INC.

        Toronto,
Ontario, M9R 0A1

        

        Facsimile:
416.761.4399

        
          	
                  Attention:
      Legal Department

                	
                  By

                	
                  /s/ William G.
      Love

                	 

        

        Name:
William G. Love

        Title:
Assistant Treasurer

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