EXHIBIT 10.1

SECURITY AGREEMENT

SECURITY AGREEMENT, dated as of July 23, 2010 (this “Agreement”), made by GSI
Group Corporation (the “Company”) and each of the parties set forth on the
signature pages hereto (together with the Company, each a “Grantor” and
collectively, the “Grantors”), in favor of The Bank of New York Mellon Trust
Company, N.A., a national banking association, in its capacity as collateral
agent (in such capacity, the “Collateral Agent”) to each of the Noteholders
referred to below (together with the Collateral Agent, the “Secured Parties”).

W I T N E S S E T H:

WHEREAS, in connection with a Final Fourth Joint Plan of Reorganization dated
May 24, 2010 filed by the Company and certain of its domestic subsidiaries as
supplemented on May 27, 2010 and confirmed by the Bankruptcy Court of the
District of Delaware by order dated May 27, 2010 (the “Reorganization Plan”) and
pursuant to the terms of the Indenture dated July 23, 2010 (the “Indenture”)
entered into by the Company and the Guarantors (defined below), the Company
intends to issue certain 12.25% Senior Secured PIK Election Notes (as amended,
restated, supplemented, replaced, modified or otherwise changed from time to
time, collectively, the “Notes”), in partial satisfaction of the Note Claims (as
defined in the Reorganization Plan) to the holders of such Note Claims (together
with any other holders of the Notes from time to time, the “Noteholders”);

WHEREAS, each of the undersigned Grantors (other than the Company) (each a
“Guarantor” and collectively, the “Guarantors”) has agreed pursuant to the terms
of the Indenture to guarantee the Company’s obligations under the Indenture and
the Notes;

WHEREAS, it is a condition precedent to the effectiveness of the Reorganization
Plan that the Grantors execute and deliver this Agreement providing for the
grant of a first priority perfected security interest in all (except as provided
herein) of the property and assets of each Grantor to secure all of the
Company’s obligations under the Indenture and the Notes, and each Guarantor’s
obligations under the Indenture; and

WHEREAS, the Grantors have determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of,
the Grantors;

NOW, THEREFORE, in consideration of the premises and the agreements herein, each
Grantor agrees as follows:

SECTION 1. Definitions.

(a) Reference is hereby made to the Indenture and the Notes for a statement of
the terms thereof. All terms used in this Agreement and the recitals hereto
which are defined in the Indenture, the Notes or in Articles 8 or 9 of the
Uniform Commercial Code as in effect from time to time in the State of New York
(the “Uniform Commercial Code”), and which are not otherwise defined herein
shall have the same meanings herein as set forth therein; provided that terms
used herein which are defined in the Uniform Commercial Code as in effect in the
State of New York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as the
Collateral Agent may otherwise determine.

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(b) The following terms shall have the respective meanings provided for in the
Uniform Commercial Code: “Accounts”, “Cash Proceeds”, “Chattel Paper”,
“Commercial Tort Claim”, “Commodity Account”, “Commodity Contracts”, “Deposit
Account”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”,
“Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”,
“Noncash Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory Notes”,
“Security”, “Record”, “Security Account”, “Software”, and “Supporting
Obligations”.

(c) As used in this Agreement, the following terms shall have the respective
meanings indicated below, such meanings to be applicable equally to both the
singular and plural forms of such terms:

“Canadian Grantor” means a Grantor incorporated under the laws of Canada or any
political subdivision thereof.

“Capital Stock” means (i) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, and (ii) with respect
to any Person that is not a corporation, any and all partnership, membership or
other equity interests of such Person.

“Collateral” shall have the meaning set forth in Section 2.

“Copyright Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to use or sell any works covered by any copyright
(including, without limitation, all Copyright Licenses set forth in Part F of
Schedule I hereto).

“Copyrights” means all domestic copyrights, whether registered or not,
including, without limitation, all copyright rights throughout the universe
(whether now or hereafter arising) in any and all media (whether now or
hereafter developed), in and to all original works of authorship fixed in any
tangible medium of expression, acquired or used by any Grantor (including,
without limitation, all copyrights described in Part F of Schedule I hereto),
all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States), and
all renewals, extensions, restorations and reversions thereof.

“Event of Default” shall have the meaning set forth in the Notes.

“Foreign Subsidiary” shall have the meaning set forth in Section 2(a).

“GAAP” shall have the meaning set forth in Section 4(c).

“Governmental Authority” means any nation or government, any Federal, state,
city, town, municipality, county, local or other political subdivision thereof
or thereto and any department, commission, board, bureau, instrumentality,
agency or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.

 

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“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United
States Code) or under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.

“Intellectual Property” means the Copyrights, Trademarks, Trade Secrets and
Patents.

“Intellectual Property Offices” means, (i) with respect to United States
Copyrights or related Licenses, the United States Copyright Office, and
(ii) with respect to United States Trademarks and United States Patents or
related Licenses, the United States Patent and Trademark Office.

“Licenses” means the Copyright Licenses, the Trademark Licenses and the Patent
Licenses.

“Lien” means any mortgage, deed of trust, pledge, lien (statutory or otherwise),
security interest, charge or other encumbrance or security or preferential
arrangement of any nature, including, without limitation, any conditional sale
or title retention arrangement, any lease required under GAAP to be capitalized
on the balance sheet of such Person and any assignment, deposit arrangement or
financing lease intended as, or having the effect of, security.

“Material Adverse Effect” means (i) a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise) of any of
GSI Group Inc., GSI Group Corporation, or Excel Technology, Inc., or (ii) a
material adverse effect on the business, operations, properties, assets or
condition (financial or otherwise) of the Grantors taken as a whole.

“Obligations” shall have the meaning set forth in Section 3.

“Operating Right” shall have the meaning set forth in Section 5(f)(vi).

“Patent Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to manufacture, use or sell any invention covered by the
claims of any Patent (including, without limitation, all Patent Licenses set
forth in Part F of Schedule I hereto).

“Patents” means all domestic letters patent, design patents, utility patents,
industrial designs and inventions, now existing or hereafter acquired
(including, without limitation, all domestic letters patent, design patents,
utility patents, industrial designs, and inventions described in Part F of
Schedule I hereto), all applications, registrations and recordings thereof
(including, without limitation, applications, registrations and recordings in
the United States Patent and Trademark Office), and all reissues, divisions,
continuations, continuations in part and extensions or renewals thereof.

 

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“Perfection Requirement” shall have the meaning set forth in Section 4(i).

“Prescribed Operating Right” shall have the meaning set forth in
Section 5(f)(vi).

“Person” means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental
Authority.

“PPSA” means the Personal Property Security Act (New Brunswick) and the orders
and regulations thereto, as in effect from time to time.

“Receiver” means any receiver or receiver and manager for the Collateral or any
of the business, undertakings, property and assets of any Canadian
Grantor appointed by the Collateral Agent pursuant to this Security Agreement or
by a court on application by the Collateral Agent.

“Registered” with respect to Intellectual Property means currently issued,
registered, renewed with a governmental authority, or the subject of a pending
application therefor.

“Related Rights” shall have the meaning set forth in Section 5(f)(vi).

“Required Approvals” shall have the meaning set forth in Section 5(f)(vi).

“Secured Parties” means each of the Collateral Agent and the Noteholders.

“Trademark Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensor or licensee and providing for
the grant of any right concerning any Trademark, together with any goodwill
connected with and symbolized by any such trademark licenses, contracts or
agreements and the right to prepare for sale or lease and sell or lease any and
all Inventory now or hereafter owned by any Grantor and now or hereafter covered
by such licenses (including, without limitation, all Trademark Licenses
described in Part F of Schedule I hereto).

“Trademarks” means all domestic trademarks, service marks, collective marks,
certification marks, trade names, business names, d/b/a’s, Internet domain
names, trade styles, designs, logos and other source or business identifiers and
all general intangibles of like nature, now or hereafter owned, adopted,
acquired or used by any Grantor (including, without limitation, all domestic
trademarks, service marks, collective marks, certification marks, trade names,
business names, d/b/a’s, Internet domain names, trade styles, designs, logos and
other source or business identifiers described in Part F of Schedule I hereto),
all applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of any state
thereof), and all extensions or renewals thereof, together with all goodwill of
the business symbolized by such marks and all customer lists, formulae and other
records of any Grantor relating to the distribution of products and services in
connection with which any of such marks are used.

 

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“Trade Secrets” means all domestic trade secrets, confidential proprietary
information, and confidential know-how.

“Transaction Documents” means this Agreement, the Indenture and the Notes and
any other document entered into in connection therewith.

“ULC” means any unlimited company incorporated or otherwise constituted under
the laws of the Provinces of Alberta or Nova Scotia or any similar body
corporate formed under the laws of any other jurisdiction whose members may at
any time become responsible for any of the obligations of that body corporate.

“ULC Shares” means any member or shareholder interests in a ULC in which any
Grantor now or hereafter has rights, and (as the context so admits) any item or
part thereof.

SECTION 2. Grant of Security Interest. As collateral security for all of the
Obligations referred to below, each Grantor hereby pledges and assigns to the
Collateral Agent for the benefit of the Secured Parties, and grants to the
Collateral Agent for the benefit of the Secured Parties a continuing security
interest in, all personal property of each Grantor, wherever located and whether
now or hereafter existing and whether now owned or hereafter acquired, of every
kind and description, tangible or intangible (collectively, the “Collateral”),
including, without limitation, the following:

(a) all Accounts; (b) all Chattel Paper (whether tangible or electronic);
(c) the Commercial Tort Claims specified on Part D of Schedule I hereto; (d) all
Deposit Accounts, all cash and other property from time to time deposited
therein and the monies and property in the possession or under the control of
the Secured Parties or any affiliate, representative, agent or correspondent of
any Secured Party; (e) all Documents; (f) all Equipment; (g) all Fixtures;
(h) all General Intangibles (including, without limitation, all Payment
Intangibles); (i) all Goods; (j) all Instruments (including, without limitation,
Promissory Notes and each certificated Security); (k) all Inventory; (l) all
Investment Property; (m) all Copyrights, Patents and Trademarks, and all
Licenses; (n) all Letter-of-Credit Rights; (o) all Supporting Obligations;
(p) all other tangible and intangible personal property of each Grantor (whether
or not subject to the Uniform Commercial Code), including, without limitation,
all bank and other accounts and all cash and all investments therein, all
proceeds, products, offspring, accessions, rents, profits, income, benefits,
substitutions and replacements of and to any of the property of any Grantor
described in the preceding clauses of this Section 2 (including, without
limitation, any proceeds of insurance thereon and all causes of action, claims
and warranties now or hereafter held by each Grantor in respect of any of the
items listed above), and all books, correspondence, files and other Records,
including, without limitation, all tapes, desks, cards, Software, data and
computer programs in the possession or under the control of any Grantor or any
other Person from time to time acting for any Grantor, in each case, to the
extent of such Grantors rights therein, that at any time evidence or contain
information relating to any of the property described in the preceding clauses
of this Section 2 or are otherwise necessary or helpful in the collection or
realization thereof; and (q) all Proceeds, including all Cash Proceeds and
Noncash Proceeds, and products of any and all of the foregoing Collateral; in
each case howsoever any Grantor’s interest therein may arise or appear (whether
by ownership, security interest, claim or otherwise).

 

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Notwithstanding anything herein to the contrary, the term “Collateral” shall not
include: (a) the Capital Stock of any Subsidiary to the extent Rule 3-16 of
Regulation S-X (or any other law, rule or regulation) would require separate
financial statements of such Subsidiary to be filed with the SEC (or any other
governmental agency) due to the fact that such Capital Stock secures the Notes
subject to Section 10.06(b) of the Indenture; (b) in the case of a Subsidiary
organized under the laws of a jurisdiction other than the United States, any of
the states thereof or the District of Columbia (a “Foreign Subsidiary”), more
than up to 66  2/3% (or such greater percentage that, due to a change in
applicable law after the date hereof, (i) would not cause the undistributed
earnings of such Foreign Subsidiary as determined for United States federal
income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary’s United States parent and (ii) would not cause any material adverse
tax consequences) of the issued and outstanding shares of Capital Stock entitled
to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)), (c) ULC
Shares, (d) any lease, license, contract or agreement to which any Grantor is a
party, and any of its rights or interest thereunder, if and to the extent that a
security interest is prohibited by or in violation of (i) any law, rule or
regulation applicable to such Grantors, or (ii) the terms of any such lease,
license contract, or agreement (unless any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform
Commercial Code (or any successor provisions or provisions) of any relevant
jurisdiction or any other applicable law (including the Bankruptcy Code) or
principles of equity); provided, however, that the Collateral shall include (and
such security interest shall attach) immediately at such time as the contractual
or legal prohibition shall no longer be applicable and to the extent severable,
shall attach immediately to any portion of such lease, license, contract or
agreement not subject to the prohibitions specified in (i) or (ii) above;
provided further that the exclusions referred to in clause (d) of this section
shall not include any proceeds of any such lease, license, contract or
agreement, (e) any “intent-to-use” application for trademark or service mark
registration filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. §1051,
prior to the filing under Section 1(c) or Section 1(d) of the Lanham Act of a
“Statement of Use” or an “Amendment to Alleged Use” with respect thereto, solely
to the extent, if any, that, and solely during the period, if any, in which, the
grant of a security interest therein prior to such filing would impair the
validity or enforceability of any registration that issues from such
intent-to-use trademark or service mark application under applicable federal
law, or (f) any property located outside the United States (other than shares of
Capital Stock of Foreign Subsidiaries of any Grantor organized or formed in the
United States or Canada).

The Grantors agree that the pledge of the shares of Capital Stock acquired by a
Grantor of any and all Persons now or hereafter existing who is a Foreign
Subsidiary may be supplemented by one or more separate pledge agreements, deeds
of pledge, share charges, or other similar agreements or instruments, executed
and delivered by the relevant Grantors in favor of the Collateral Agent, which
pledge agreements will provide for the pledge of such shares of Capital Stock in
accordance with the laws of the applicable foreign jurisdiction. With respect to
such shares of Capital Stock, the Collateral Agent may, at any time and from
time to time, in its reasonable discretion, take actions in such foreign
jurisdictions that will result in the perfection of the Lien created in such
shares of Capital Stock.

Each Canadian Grantor agrees that value has been given, that such Grantor and
the Collateral Agent have not agreed to postpone the time for attachment of the
security interest granted hereunder and that such security interest is intended
to attach, as to all of the Collateral

 

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in which such Grantor now has rights, when such Grantor executes this Security
Agreement and, as to all Collateral in which such Grantor only has rights after
the execution of this Security Agreement, when such Grantor first has such
rights. For certainty, each Canadian Grantor confirms and agrees that the
security interest granted hereunder is intended to attach to all present and
future Collateral of such Grantor and each successor of such Grantor.

SECTION 3. Security for Obligations. The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, whether now existing or hereafter incurred (collectively, the
“Obligations”):

(a) (i) the payment by the Grantors, as and when due and payable (by scheduled
maturity, required prepayment, acceleration, demand or otherwise), of all
amounts from time to time owing by it in respect of the Indenture, the Notes and
the other Transaction Documents, including, without limitation, (A) all
principal of and interest on the Notes (including, without limitation, all
interest that accrues after the commencement of any Insolvency Proceeding of any
Grantor, whether or not the payment of such interest is unenforceable or is not
allowable due to the existence of such Insolvency Proceeding), and (B) all fees,
commissions, expense reimbursements, indemnifications and all other amounts due
or to become due under any of the Transaction Documents; and

(b) the due performance and observance by each Grantor of all of its other
obligations from time to time existing in respect of any of the Transaction
Documents, including without limitation, with respect to any obligations of any
Grantor to make an offer to purchase Notes.

SECTION 4. Representations and Warranties. Each Grantor represents and warrants
as of the date of this Agreement as follows:

(a) Part A of Schedule I hereto sets forth (i) the exact legal name of each
Grantor, (ii) the jurisdiction of incorporation, organization or formation and
the organizational identification number of each Grantor in such jurisdiction,
and (iii) all names (including trade names and similar appellations) presently
used by each Grantor or any of its divisions or other business units, and
(iv) all names (including former legal names and trade names or similar
appellations) used by each Grantor or any of its divisions or other business
units during the past five years.

(b) There is no pending or to such Grantor’s best knowledge, threatened action,
suit, proceeding or claim affecting any Guarantor before any Governmental
Authority or any arbitrator, or any order, judgment or award issued by any
Governmental Authority or arbitrator, in each case, that may adversely affect
the grant by any Grantor, or the perfection, of the security interest purported
to be created hereby in the Collateral, or the exercise by the Collateral Agent
of any of its rights or remedies hereunder.

(c) All Federal, state and local tax returns and other reports required by
applicable law to be filed by any Grantor have been filed, or extensions have
been obtained except where the failure to make such filing or obtain such
extension would not have a Material Adverse Effect, and all taxes, assessments
and other governmental charges imposed upon any Grantor or

 

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any property of any Grantor (including, without limitation, all federal income
and social security taxes on employees’ wages) and which have become due and
payable on or prior to the date hereof have been paid, except for any de minimus
amounts in respect of taxes, assessments and other governmental charges, where
such nonpayment would not have a Material Adverse Effect, and except to the
extent contested in good faith by proper proceedings which stay the imposition
of any penalty, fine or Lien resulting from the non-payment thereof and with
respect to which adequate reserves have been set aside for the payment thereof
in accordance with generally accepted accounting principles consistently applied
(“GAAP”).

(d) All Equipment, Fixtures, Goods and Inventory of each Grantor now existing
are, and all Equipment, Fixtures, Goods and Inventory, of each Grantor hereafter
existing (in each case, other than (i) any Equipment, Goods and Inventory in
transit or in the possession of third parties for repair, assembly or
refurbishment or deliverables in the possession of salespeople, and (ii) any
Equipment, Goods or Inventory having a value of less than $250,000 individually
or $1,000,000 in the aggregate) will be, located and/or based at the addresses
specified therefor in Part B of Schedule I hereto (it being understood that at
any one time no more than $1,000,000 of Equipment, Goods or Inventory shall be
at a location other than as set forth on Part B of Schedule I hereto as the same
may be supplemented in accordance with the terms hereof), except that each
Grantor will give the Collateral Agent written notice of any change in the
location of any such Collateral within 20 days of such change, other than to
locations set forth on Part B of Schedule I hereto (or a new Part B of Schedule
I delivered by the Grantors to the Collateral Agent from time to time). Each
Grantor’s chief place of business and chief executive office, the place where
each Grantor keeps its Records concerning Accounts and all originals of all
Chattel Paper are located at the addresses specified therefor in Part B of
Schedule I hereto. Part B of Schedule I hereto sets forth each location
previously maintained by any Grantor during the past four months for any of the
purposes listed in this clause (d) above. None of the Accounts is evidenced by
Promissory Notes or other Instruments. Set forth in Part E of Schedule I hereto
is a complete and accurate list, as of the date of this Agreement, of (i) each
Promissory Note, Security, Chattel Paper, letter of credit and other Instrument
owned by each Grantor (other than Promissory Notes, Securities, Chattel Paper,
letters of credit or Instruments which have a stated amount or fair market value
of less than $100,000 individually or $500,000 in the aggregate) and (ii) each
Deposit Account, Securities Account and Commodities Account of each Grantor,
together with the name and address of each institution at which each such
account is maintained, the account number for each such account and a
description of the purpose of each such account.

(e) Each Grantor has delivered or otherwise made available to the Collateral
Agent complete and correct copies of each material License described in Part F
of Schedule I hereto, including all schedules and exhibits thereto, which
represents all of the material Licenses existing on the date of this Agreement.
Each such License sets forth the entire agreement and understanding of the
parties thereto relating to the subject matter thereof, and there are no other
agreements, arrangements or understandings, written or oral, relating to the
matters covered thereby or the rights of such Grantor or any of its affiliates
in respect thereof. Each material License now existing is, and any material
License entered into in the future will be, the legal, valid and binding
obligation of the parties thereto, enforceable against such parties in
accordance with its terms, subject to the limitations on enforceability in
connection with bankruptcy, receivership and similar proceedings. No default
under any material License by any such party has occurred, nor does any defense,
offset, deduction or counterclaim exist thereunder in favor of any such party.

 

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Except as permitted by the Indenture, each Grantor owns and controls, or
otherwise possesses adequate rights to use, all material Intellectual Property,
which constitutes the only Intellectual Property used to conduct its business in
substantially the same manner as conducted as of the date hereof. Part F of
Schedule I hereto sets forth a true and complete list of all Registered
Copyrights, Registered Patents, Registered Trademarks and material Licenses
owned or used by each Grantor as of the date hereof. No Grantor has any material
Trade Secrets. If any Grantor develops material Trade Secrets after the date
hereof, the Grantor shall describe such Trade Secrets sufficiently so as to
clearly identify them. If such identification or description would be impossible
without making a public disclosure of such Trade Secrets, the Grantor shall
notify the Trustee and the Company and the Noteholders agree to use their best
efforts to identify the Trade Secrets sufficiently in order to create a security
interest in such Trade Secrets without making a public disclosure of the Trade
Secret information.

(f) To the best knowledge of each Grantor, no Grantor derives revenues from
Copyrights that are not registered with the United States Copyright Office,
except as set forth in Part G of Schedule I. To the best knowledge of each
Grantor, all such material Intellectual Property of each Grantor is subsisting
and in full force and effect, has not been adjudged invalid or unenforceable, is
valid and enforceable and has not been abandoned in whole or in part. Except as
set forth in Part H of Schedule I, no Intellectual Property (except for
Intellectual Property having a de minimus value) is the subject of any licensing
or franchising agreement. Each Grantor has no knowledge of any conflict with the
rights of others to any Intellectual Property (except for Intellectual Property
having a de minimus value) and, to the best knowledge of each Grantor, each
Grantor is not now infringing or in conflict with any such rights of others in
any material respect, and to the best knowledge of each Grantor, no other Person
is now infringing or in conflict in any material respect with any such
properties, assets and rights owned or used by each Grantor. No Grantor has
received any written notice that it is violating or has violated the trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity or other intellectual
property rights of any third party.

(g) Except as permitted by the Indenture, each Grantor is and will be at all
times the sole and exclusive owner of, or otherwise has and will have adequate
rights in, the Collateral free and clear of any Liens, except for Permitted
Liens. No effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any recording or filing
office, except such as may have been filed in favor of the Secured Parties
relating to this Agreement or the other Security Documents or in favor of the
holders of Permitted Liens with respect to such Permitted Liens.

(h) The exercise by the Collateral Agent of any of its rights and remedies
hereunder will not contravene in any material respect any law or any contractual
restriction binding on or otherwise affecting each Grantor or any of its
properties and will not result in or require the creation of any Lien, upon or
with respect to any of its properties.

 

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(i) No authorization or approval or other action by, and no notice to or filing
with, any Governmental Authority or other regulatory body, is required for
(i) the grant by each Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral, or (ii) the exercise by the
Collateral Agent of any of its rights and remedies hereunder, except (except
(A) for the filing under the PPSA, the Uniform Commercial Code, or Articles 8 or
9 of the Uniform Commercial Code as in effect in the applicable jurisdiction (if
such jurisdiction is any state of the United States other than New York) of the
financing statements described in Part C of Schedule I hereto (or a new Part C
of Schedule I delivered by the Grantors to the Collateral Agent from time to
time), all of which financing statements have been duly filed and are in full
force and effect or will be duly filed and in full force and effect, (B) with
respect to Deposit Accounts, and all cash and other property from time to time
deposited therein, or Commodity Contracts for the execution of a control
agreement with the depository institution or commodity intermediary with which
such account is maintained, each as provided in Section 5(i), (C) with respect
to the perfection of the security interest created hereby in the Intellectual
Property and Licenses, for the recording of the appropriate Assignment for
Security, substantially in the form of Exhibit A hereto in the applicable
Intellectual Property Office, (D) with respect to the perfection of the security
interest created hereby in Titled Collateral, for the submission of an
appropriate application requesting that the Lien of the Collateral Agent be
noted on the Certificate of Title or certificate of ownership, completed and
authenticated by the applicable Grantor, together with the Certificate of Title
or certificate of ownership, with respect to such Titled Collateral, to the
appropriate Governmental Authority, (E) with respect to the perfection of the
security interest created hereby in any Letter-of-Credit Rights, for the consent
of the issuer of the applicable letter of credit to the assignment of proceeds
as provided in the Uniform Commercial Code as in effect in the applicable
jurisdiction, (F) with respect to any action that may be necessary to obtain
control of Collateral constituting Deposit Accounts, Commodity Contracts,
Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, the
taking of such actions, and (G) the Collateral Agent having possession of all
Documents, Chattel Paper, Instruments and cash constituting Collateral
(subclauses (A), (B), (C), (D), (E), (F) and (G), each a “Perfection
Requirement” and collectively, the “Perfection Requirements”).

(j) This Agreement creates in favor of the Collateral Agent for the benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral, as security for the Obligations. The Perfection Requirements result
in the perfection of such security interests. Such security interests are, or in
the case of Collateral in which each Grantor obtains rights after the date
hereof, will be, perfected, first priority security interests, subject only to
Permitted Liens (as defined under the Indenture) and the Perfection
Requirements. Such recordings and filings and all other action necessary to
perfect and protect such security interest have been duly taken or will be taken
pursuant to Section 5(n), and, in the case of Collateral in which each Grantor
obtains rights after the date hereof, will be duly taken, except for the
Collateral Agent’s having possession of all Documents, Chattel Paper,
Instruments and cash constituting Collateral after the date hereof and the other
actions, filings and recordations described above, including the Perfection
Requirements.

(k) As of the date hereof, no Grantor holds any Commercial Tort Claims or has
knowledge of any pending Commercial Tort Claims, except for such Commercial Tort
Claims described in Part D of Schedule I hereto.

 

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(l) No Grantor owns any ULC Shares.

(m) Part I of Schedule I hereto sets forth for each Grantor a complete and
accurate list, as of the date of this Agreement, of (i) all real property owned
or leased by such Grantor, (ii) if such property is leased, the landlord and the
term of the lease, and (iii) if such property is held in fee, the holder of any
lien on such real property.

SECTION 5. Covenants as to the Collateral. So long as any of the Obligations
shall remain outstanding:

(a) Further Assurances. Each Grantor will at its expense, at any time and from
time to time, promptly execute and deliver all further instruments and documents
and take all further action as necessary or that the Collateral Agent may
reasonably request in order to: (i) perfect and protect the security interest
purported to be created hereby; (ii) enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder in respect of the Collateral; or
(iii) otherwise effect the purposes of this Agreement, including, without
limitation: (A) marking conspicuously all Chattel Paper and each material
License, indicating that such Chattel Paper, License or Collateral is subject to
the security interest created hereby, (B) delivering and pledging to the
Collateral Agent each Promissory Note, Security, Chattel Paper or other
Instrument, now or hereafter owned by any Grantor, duly endorsed and accompanied
by executed instruments of transfer or assignment, provided, however, that such
delivery and pledge requirement shall not apply to any Promissory Note,
Security, Chattel Paper or other Instrument having a face amount of less than
$100,000 individually or $500,000 in the aggregate, (C) executing and filing (to
the extent, if any, that any Grantor’s signature is required thereon) or
authenticating the filing of, such financing or continuation statements, or
amendments thereto, as may be necessary or that the Collateral Agent may
reasonably request in order to perfect and preserve the security interest
purported to be created hereby, (D) furnishing to the Collateral Agent from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral in each case
as the Collateral Agent may reasonably request, all in reasonable detail, (E) if
any Collateral in excess of $250,000 individually or $1,000,000 in the aggregate
shall be in the possession of a third party (it being understood that at any one
time no more than $1,000,000 of Collateral shall be at a location other than as
set forth on Schedule I hereto as the same may be supplemented in accordance
with the terms hereof), notifying such Person of the Collateral Agent’s security
interest created hereby and obtaining a written acknowledgment from such Person
that such Person holds possession of the Collateral for the benefit of the
Collateral Agent, (F) if at any time after the date hereof, any Grantor acquires
or holds any Commercial Tort Claim in excess of $100,000 individually or
$500,000 in the aggregate, promptly notifying the Collateral Agent in a writing
signed by such Grantor setting forth a brief description of such Commercial Tort
Claim and granting to the Collateral Agent a security interest therein and in
the proceeds thereof, which writing shall incorporate the provisions hereof,
(G) upon the acquisition after the date hereof by any Grantor of any motor
vehicle or other Equipment subject to a certificate of title or ownership (other
than a Motor Vehicle or Equipment that is subject to a purchase money security
interest), causing the Collateral Agent to be listed as the lienholder on such
certificate of title or ownership and delivering evidence of the same to the
Collateral Agent in accordance with Section 5(j) hereof; and (H) taking all
actions required by any earlier versions of the Uniform Commercial Code or by
other law, as applicable, in any relevant Uniform Commercial Code jurisdiction,
or

 

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by other law as applicable in any foreign jurisdiction. No Grantor shall acquire
or shall move to a location outside of the United States any assets that
currently are or typically would be acquired and held in the United States.

(b) Location of Equipment and Inventory. Other than any Inventory, or Equipment
in transit (or, in the case of Grantors’ motor vehicles, being used in the
ordinary course), or in the possession of third parties for repair, assembly or
refurbishment, each Grantor will keep the Equipment and Inventory (i) at the
locations specified therefor on Part B of Schedule I hereto, or (ii) at such
other locations set forth on Part B of Schedule I hereto (or a new Part B of
Schedule I delivered by the Grantors to Collateral Agent from time to time), or
(iii) at such other locations in the United States, provided that within 20 days
following the relocation of Equipment or Inventory to such other location or the
acquisition of Equipment or Inventory, such Grantor shall deliver to the
Collateral Agent a new Part B of Schedule I indicating such new locations.

(c) Condition of Equipment. Each Grantor will maintain or cause the Equipment
(necessary or useful to its business) to be maintained and preserved in good
condition, repair and working order, ordinary wear and tear excepted, and will
forthwith, or in the case of any loss or damage to any Equipment of any Grantor
within a commercially reasonable time after the occurrence thereof, make or
cause to be made all repairs, replacements and other improvements in connection
therewith which are necessary or desirable, consistent with past practice, or
which the Collateral Agent may request to such end. Any Grantor will promptly
furnish to the Collateral Agent a statement describing in reasonable detail any
such loss or damage in excess of $250,000 per occurrence to any Equipment.

(d) Taxes, Etc. Each Grantor agrees to pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof.

(e) Insurance.

(i) Each Grantor will, at its own expense, maintain insurance (including,
without limitation, commercial general liability and property insurance) in such
amounts, against such risks, in such form and with responsible and reputable
insurance companies or associations as is required by any Governmental Authority
having jurisdiction with respect thereto or as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated and in any event, in amount, adequacy and scope reasonably
satisfactory to the Collateral Agent. Each such policy for liability insurance
shall provide for all losses to be paid on behalf of the Collateral Agent and
any Grantor as their respective interests may appear, and each policy for
property damage insurance shall provide for all losses to be adjusted with, and
paid directly to, the Collateral Agent. Each such policy shall (A) name the
Collateral Agent as an additional insured party thereunder (without any
representation or warranty by or obligation upon the Collateral Agent) as their
interests may

 

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appear, (B) contain an agreement by the insurer that any loss thereunder shall
be payable to the Collateral Agent on its own account notwithstanding any
action, inaction or breach of representation or warranty, or endorsement by any
Grantor (or as specified in such insurer’s standard “acord” or other similar
form), (C) provide that there shall be no recourse against the Collateral Agent
for payment of premiums or other amounts with respect thereto, and (D) provide
that at least 30 days’ prior written notice of cancellation, lapse, expiration
or other adverse change shall be given to the Collateral Agent by the insurer.
Any Grantor will deliver to the Collateral Agent original or duplicate policies
of such insurance and a report of a reputable insurance broker with respect to
such insurance. Any Grantor will also execute and deliver instruments of
assignment of such insurance policies and cause the respective insurers to
acknowledge notice of such assignment.

(ii) Reimbursement under any liability insurance maintained by any Grantor
pursuant to this Section 5(e) may be paid directly to the Person who shall have
incurred liability covered by such insurance. So long as no Default or Event of
Default has occurred and is continuing, to the extent any proceeds of insurance
maintained by any Grantor pursuant to this Section 5(e) are paid to the
Collateral Agent but another Security Document (as defined in the Indenture)
permits the use of such funds by the Grantor, such proceeds shall be remitted to
such Grantor by the Collateral Agent for use in the manner described in such
Security Document. Upon the occurrence and during the continuance of any Default
or Event of Default, any proceeds of insurance maintained by any Grantor
pursuant to this Section 5(e) shall be paid to the Collateral Agent, and, the
Collateral Agent, may, at its option, require any Grantor to make or cause to be
made the necessary repairs to or replacements, and any proceeds of insurance
maintained by any Grantor and in possession of the Collateral Agent pursuant to
this Section 5(e) shall be paid by the Collateral Agent to any Grantor as
reimbursement for the costs of such repairs or replacements.

(f) Provisions Concerning the Accounts and the Licenses.

(i) Each Grantor will (A) give the Collateral Agent at least 30 days’ prior
written notice of any change in such Grantor’s name (including, for certainty,
the adoption of any French form of name by a Canadian Grantor), identity or
organizational structure, (B) maintain its jurisdiction of incorporation,
organization or formation as set forth in Part A of Schedule I hereto,
(C) immediately notify the Collateral Agent upon obtaining an organizational
identification number, if on the date hereof such Grantor did not have such
identification number, and (D) keep adequate records concerning the Accounts and
Chattel Paper.

(ii) Each Grantor will, except as otherwise provided in this subsection (f),
continue to collect, at its own expense, all amounts due or to become due under
the Accounts. In connection with such collections, any Grantor may (and, at the
Collateral Agent’s direction, will) take such action as any Grantor or the
Collateral Agent may deem necessary or advisable to enforce collection or
performance of the Accounts; provided, however, that the Collateral Agent shall
have the right at any time, upon the occurrence and during the continuance of an
Event of Default, to notify the account debtors or obligors under any Accounts
of the assignment of such Accounts to the Collateral Agent and to direct such
account debtors or obligors to make payment of all amounts due or to become due
to any Grantor thereunder directly to the Collateral Agent or its designated
agent and, upon such notification and at the

 

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expense of any Grantor and to the extent permitted by law, to enforce collection
of any such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as any Grantor might have
done. After receipt by any Grantor of a notice from the Collateral Agent that
the Collateral Agent has notified, intends to notify, or has enforced or intends
to enforce any Grantor’s rights against the account debtors or obligors under
any Accounts as referred to in the proviso to the immediately preceding
sentence, (A) all amounts and proceeds (including Instruments) received by any
Grantor in respect of the Accounts shall be received in trust for the benefit of
the Collateral Agent hereunder, shall be segregated from other funds of any
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary endorsement) to be applied as specified
in Section 7(b) hereof, and (B) no Grantor will adjust, settle or compromise the
amount or payment of any Account or release wholly or partly any account debtor
or obligor thereof or allow any credit or discount thereon. In addition, upon
the occurrence and during the continuance of an Event of Default, the Collateral
Agent may (in its sole and absolute discretion) direct any or all of the banks
and financial institutions with which any Grantor either maintains a Deposit
Account or a lockbox or deposits the proceeds of any Accounts to send
immediately to the Collateral Agent by wire transfer (to such account as the
Collateral Agent shall specify, or in such other manner as the Collateral Agent
shall direct) all or a portion of such securities, cash, investments and other
items held by such institution. Any such securities, cash, investments and other
items so received by the Collateral Agent shall be applied as specified in
accordance with Section 7(b) hereof.

(iii) Upon the occurrence and during the continuance of any breach or default
under any material License referred to in Part F of Schedule I hereto by any
party thereto other than any Grantor, each Grantor party thereto will, promptly
after obtaining knowledge thereof, give the Collateral Agent written notice of
the nature and duration thereof, specifying what action, if any, it has taken
and proposes to take with respect thereto and thereafter will take reasonable
steps to protect and preserve its rights and remedies in respect of such breach
or default, or will obtain or acquire an appropriate substitute License.

(iv) Each Grantor will, at its expense, promptly deliver to the Collateral Agent
a copy of each notice or other communication received by it by which any other
party to any material License referred to in Part F of Schedule I hereto
purports to exercise any of its rights or affect any of its obligations
thereunder, together with a copy of any reply by such Grantor thereto.

(v) Each Grantor will exercise promptly and diligently each and every right
which it may have under each material License (other than any right of
termination) and will duly perform and observe in all respects all of its
obligations under each material License and will, except as permitted by the
Indenture, take all action reasonably necessary to maintain such Licenses in
full force and effect. Except as permitted by the Indenture, no Grantor will,
cancel, terminate, amend or otherwise modify in any respect, or waive any
provision of, any material License referred to in Part F of Schedule I hereto.

(vi) Notwithstanding anything to the contrary contained in any other provision
of this Security Agreement, if any Grantor cannot lawfully grant the security
interest contemplated hereby in any General Intangibles, Intellectual Property
or Licenses or any rights

 

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related thereto (each, an “Operating Right”) because the terms of such Operating
Right prohibit the creation of the security interest contemplated hereby
therein, the Operating Right requires the consent of any Person which has not
been obtained or the grant of the security interest contemplated hereby therein
would contravene or is void under any applicable statute or regulation, that
Operating Right shall not, to the extent it would be illegal, void or result in
a material loss and expense to such Grantor (each, a “Prescribed Operating
Right”), be subject to the security interest contemplated hereby (save to the
extent provided below) unless and until such agreements, consents, waivers and
approvals as may be required to avoid such illegality, voidness or material loss
and expense have been obtained (“Required Approvals”). The security interest
contemplated hereby shall nonetheless immediately attach to any rights of such
Grantor arising under, by reason of, or otherwise in respect of such Prescribed
Operating Right, such as the right to receive payments thereunder and all
Proceeds thereof (“Related Rights”), to the extent and at the time such
attachment to the Related Rights (i) is not illegal, void and would not result
in a material loss and expense to such Grantor or (ii) in the case of Accounts,
such prohibition or restriction is not enforceable against third parties such as
the Collateral Agent.

(vii) To the extent not prohibited by applicable statute or regulation, each
Grantor will hold in trust for the Collateral Agent on behalf of and for the
rateable benefit of the Secured Parties, and provide the Secured Parties with
the benefits of, each Prescribed Operating Right and following the occurrence of
an Event of Default and while it is continuing, will enforce all Prescribed
Operating Rights at the direction of the Collateral Agent or at the direction of
such other Person (including any purchaser of Collateral from the Collateral
Agent or any Receiver) as the Collateral Agent may designate, provided that
until the security interest contemplated hereby becomes enforceable, such
Grantor shall, to the extent permitted by the Indenture, be entitled to receive
all Proceeds relating to the Prescribed Operating Rights, subject to the
security interest contemplated hereby.

(viii) Upon request from the Collateral Agent from time to time, each Grantor
shall use commercially reasonable efforts to obtain such Required Approvals as
the Collateral Agent shall specify as soon as reasonably practicable.

(ix) None of the Collateral of any Canadian Grantor shall include Consumer Goods
(as such term is defined in the PPSA).

(g) Transfers and Other Liens.

(i) No Grantor will sell, assign (by operation of law or otherwise), lease,
license, exchange or otherwise transfer or dispose of any of the Collateral,
except (A) Inventory in the ordinary course of business, (B) worn out or
obsolete assets, not necessary to the business, and (C) otherwise as permitted
pursuant to the terms of the Indenture.

(ii) No Grantor will create, suffer to exist or grant any Lien upon or with
respect to any Collateral other than a Permitted Lien.

(h) Intellectual Property.

(i) If applicable, any Grantor shall, upon the Collateral Agent’s written
request, duly execute and deliver the applicable Assignment for Security in the
form attached

 

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hereto as Exhibit A. Each Grantor (either itself or through licensees) will, and
will cause each licensee thereof to, take all action necessary to maintain all
of the material Intellectual Property in full force and effect, including,
without limitation, using the proper statutory notices and markings and using
the Trademarks on each applicable trademark class of goods in order to so
maintain the Trademarks in full force and free from any claim of abandonment for
non-use, and each Grantor will not (nor permit any licensee thereof to) do any
act or knowingly omit to do any act whereby any material Intellectual Property
may become invalidated; provided, however, that so long as no Event of Default
has occurred and is continuing, no Grantor shall have an obligation to use or to
maintain any Intellectual Property (A) that relates solely to any product or
work, that has been, or is in the process of being, discontinued, abandoned or
terminated, (B) that is being replaced with Intellectual Property substantially
similar to the Intellectual Property that may be abandoned or otherwise become
invalid, so long as the failure to use or maintain such Intellectual Property
does not materially adversely affect the validity of such replacement
Intellectual Property and so long as such replacement Intellectual Property is
subject to the Lien created by this Agreement or (C) that is substantially the
same as another Intellectual Property that is in full force, so long the failure
to use or maintain such Intellectual Property does not materially adversely
affect the validity of such replacement Intellectual Property and so long as
such other Intellectual Property is subject to the Lien and security interest
created by this Agreement. Each Grantor will cause to be taken all commercially
reasonable and necessary steps in any proceeding before each applicable
Intellectual Property Office to maintain each registration or application for
registration of the material Intellectual Property (for the avoidance of doubt,
other than any Intellectual Property described in the proviso to the immediately
preceding sentence), including, without limitation, filing of renewals,
affidavits of use, affidavits of incontestability and opposition, interference
and cancellation proceedings and payment of maintenance fees, filing fees, taxes
or other governmental fees. If any Intellectual Property (other than
Intellectual Property described in the proviso to the first sentence of
subsection (i) of this clause (h)) is infringed, misappropriated, diluted or
otherwise violated in any material respect by a third party, each Grantor shall
(x) upon learning of such infringement, misappropriation, dilution or other
violation, promptly notify the Collateral Agent and (y) to the extent any
Grantor shall deem commercially reasonable and appropriate under the
circumstances, promptly sue for infringement, misappropriation, dilution or
other violation, seek injunctive relief where appropriate and recover any and
all damages for such infringement, misappropriation, dilution or other
violation, or take such other actions as such Grantor shall deem appropriate
under the circumstances to protect such Intellectual Property. Each Grantor
shall furnish to the Collateral Agent from time to time upon its request
statements and schedules further identifying and describing the Registered
Intellectual Property, material Trade Secrets and material Licenses and such
other reports in connection with the Registered Intellectual Property, material
Trade Secrets and material Licenses, all in reasonable detail, following receipt
by the Collateral Agent of any such statements, schedules or reports, each
Grantor shall modify this Agreement by amending Parts F, G and H of Schedule I
hereto, as the case may be, to include any Registered Intellectual Property,
material Trade Secret and material License, as the case may be, which becomes
part of the Collateral under this Agreement and shall execute and authenticate
such documents and do such acts as shall be necessary or, in the reasonable
judgment of the Collateral Agent, desirable to subject such Intellectual
Property and material Licenses to the Lien and security interest created by this
Agreement. Notwithstanding anything herein to the contrary, upon the occurrence
and during the continuance of an Event of Default, no

 

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Grantor may abandon or otherwise permit any Intellectual Property to become
invalid without the prior written consent of the Collateral Agent, and if any
Intellectual Property is infringed, misappropriated, diluted or otherwise
violated in any material respect by a third party, each Grantor will take such
action as necessary or as the Collateral Agent shall deem appropriate under the
circumstances to protect such Intellectual Property.

(ii) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for the registration of any
Trademark or Copyright or the issuance of any Patent with any Intellectual
Property Office, or in any similar office or agency of the United States unless
it gives the Collateral Agent written notice within thirty (30) days of such
filing. Any Grantor shall execute, authenticate and deliver any and all
assignments, agreements, instruments, documents and papers necessary to evidence
the Collateral Agent’s security interest hereunder in such Intellectual Property
and the General Intangibles of any Grantor relating thereto or represented
thereby, and each Grantor hereby appoints the Collateral Agent its
attorney-in-fact to execute and/or authenticate and file all such writings for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed, and such power (being coupled with an interest) shall be irrevocable
until the indefeasible payment in full in cash of all of the Obligations in
full.

(i) Deposit, Commodities and Securities Accounts. Each Grantor shall cause each
bank and other financial institution with an account referred to in Part E of
Schedule I hereto to execute and deliver to the Collateral Agent a control
agreement, in form and substance reasonably satisfactory to the Collateral
Agent, duly executed by each Grantor and such bank or financial institution, or
enter into other arrangements in form and substance satisfactory to the
Collateral Agent, pursuant to which such institution shall irrevocably agree,
inter alia, that (i) it will comply at any time with the instructions originated
by the Collateral Agent to such bank or financial institution directing the
disposition of cash, Commodity Contracts, securities, Investment Property and
other items from time to time credited to such account, without further consent
of each Grantor, which instructions the Collateral Agent will not give to such
bank or other financial institution in the absence of a continuing Event of
Default, (ii) all Commodity Contracts, securities, Investment Property and other
items of each Grantor deposited with such institution shall be subject to a
perfected, first priority security interest in favor of the Collateral Agent,
(iii) any right of set off (other than recoupment of standard fees), banker’s
Lien or other similar Lien, security interest or encumbrance shall be fully
waived as against the Collateral Agent, and (iv) upon receipt of written notice
from the Collateral Agent during the continuance of an Event of Default, such
bank or financial institution shall immediately send to the Collateral Agent by
wire transfer (to such account as the Collateral Agent shall specify, or in such
other manner as the Collateral Agent shall direct) all such cash, the value of
any Commodity Contracts, securities, Investment Property and other items held by
it. Without the prior written consent of the Collateral Agent, each Grantor
shall not make or maintain any Deposit Account, Commodity Account or Securities
Account except for the accounts set forth in Part E of Schedule I hereto. The
provisions of this paragraph 5(i) shall not apply to (i) Deposit Accounts for
which the Collateral Agent is the depositary (ii) Deposit Accounts specially and
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of each Grantor’s salaried or hourly employees
and (iii) Deposit Accounts which individually and in the aggregate, have an
average monthly balance of $10,000 or less.

 

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(j) Motor Vehicles. With respect to any motor vehicles in excess of $100,000
individually or $500,000 in the aggregate which are covered by a certificate of
title under a statute which requires indication of a security interest on such
certificate as a condition of perfection thereof:

(i) Each Grantor shall deliver to the Collateral Agent originals of the
certificates of title or ownership for all such motor vehicles owned by it with
the Collateral Agent listed as lienholder, for the benefit of the Secured
Parties.

(ii) Each Grantor hereby appoints the Collateral Agent as its attorney-in-fact,
effective the date hereof and terminating upon the termination of this
Agreement, for the purpose of (A) executing on behalf of such Grantor title or
ownership applications for filing with appropriate state agencies to enable such
motor vehicles now owned or hereafter acquired by such Grantor to be retitled
and the Collateral Agent listed as lienholder thereof, (B) filing such
applications with such state agencies, and (C) executing such other documents
and instruments on behalf of, and taking such other action in the name of, such
Grantor as necessary or as the Collateral Agent may deem necessary or advisable
to accomplish the purposes hereof (including, without limitation, for the
purpose of creating in favor of the Collateral Agent a perfected Lien on such
motor vehicles and exercising the rights and remedies of the Collateral Agent
hereunder). This appointment as attorney-in-fact is coupled with an interest and
is irrevocable until all of the Obligations are indefeasibly paid in full in
cash.

(iii) So long as no Event of Default shall have occurred and be continuing, upon
the request of any Grantor, the Collateral Agent shall execute and deliver to
any Grantor such instruments as any Grantor shall reasonably request or as
otherwise provided for in the Indenture to remove the notation of the Collateral
Agent as lienholder on any certificate of title for any motor vehicle; provided,
however, that any such instruments shall be delivered, and the release
effective, only upon receipt by the Collateral Agent of a certificate from any
Grantor stating that such motor vehicle is to be sold or has suffered a casualty
loss (with title thereto in such case passing to the casualty insurance company
therefor in settlement of the claim for such loss) and the amount that any
Grantor will receive as sale proceeds or insurance proceeds.

(k) Control. Each Grantor hereby agrees to take any or all action that may be
necessary or that the Collateral Agent may reasonably request in order for the
Collateral Agent to obtain control in accordance with Sections 9-105, 9-106 and
9-107 of the Uniform Commercial Code with respect to the following Collateral
(other than any Electronic Chattel Paper, Investment Property and Letter of
Credit Rights having a value of less than, or having funds or other assets
credited thereto with a value of less than, $100,000 individually or $500,000 in
the aggregate): (i) Electronic Chattel Paper, (ii) Investment Property, and
(iii) Letter-of-Credit Rights.

(l) Inspection and Reporting. Each Grantor shall permit the Collateral Agent, or
any agent or representatives thereof or such professionals or other Persons as
the Collateral Agent may designate, during normal business hours, upon
reasonable request and after reasonable prior notice, in the absence of an Event
of Default and not more than once a year in the absence of an Event of Default,
(i) to examine and make copies of and abstracts from any

 

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Grantor’s records and books of account, (ii) to visit and inspect its
properties, (iii) to verify materials, leases, Instruments, Accounts, Inventory
and other assets of any Grantor from time to time, (iii) to conduct audits,
physical counts, appraisals and/or valuations, examinations at the locations of
any Grantor. Upon reasonable request, each Grantor shall also permit the
Collateral Agent, or any agent or representatives thereof or such professionals
or other Persons as the Collateral Agent may designate to discuss such Grantor’s
affairs, finances and accounts with any of its directors, officers, managerial
employees, independent accountants or any of its other representatives.

(m) Future Subsidiaries. If any Grantor shall hereafter create or acquire any
domestic Subsidiary, simultaneously with the creation or acquisition of such
Subsidiary, such Grantor shall (i) cause such Subsidiary to become a party to
this Agreement as an additional “Grantor” hereunder, (ii) such Grantor shall
deliver to Collateral Agent revised Schedules to this Agreement, as appropriate,
(iii) shall duly execute and deliver a guaranty of the Obligations in favor of
the Collateral Agent in form and substance reasonably acceptable to the
Collateral Agent, and (iv) shall duly execute and/or deliver such opinions of
counsel and other documents, in form and substance reasonably acceptable to the
Collateral Agent, as the Collateral Agent may reasonably request with respect
thereto, provided that any Grantor that acquires a subsidiary on or within two
days after the Closing Date shall have 10 Business Days in which to satisfy the
requirements of this Section 5(m). No Grantor shall create any ULC nor acquire
any ULC Shares.

(n) Leases. The last day of the term of any lease, oral or written, or any
agreement therefor, now held or hereafter acquired by a Canadian Grantor shall
be excepted from the security hereby constituted and shall not form part of the
Collateral but such Grantor shall stand possessed of such one day remaining upon
trust to assign and dispose of the same. If any such lease or agreement therefor
contains a provision which provides in effect that such lease or agreement may
not be assigned, sub-leased, charged or made the subject of any Lien without the
consent of the lessor, the application of the security hereby constituted to any
such lease or agreement shall be conditional upon such consent being obtained.
Each Canadian Grantor shall forthwith use commercially reasonable best efforts
to obtain, as soon as reasonably practicable, such consent for each such lease
or agreement that is material.

SECTION 6. Additional Provisions Concerning the Collateral.

(a) To the maximum extent permitted by applicable law, and for the purpose of
taking any action that is necessary or that the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, each
Grantor hereby (i) authorizes the Collateral Agent to execute any such
agreements, instruments or other documents in such Grantor’s name and to file
such agreements, instruments or other documents in such Grantor’s name and in
any appropriate filing office, (ii) authorizes the Collateral Agent at any time
and from time to time to file, one or more financing or continuation statements,
and amendments thereto, relating to the Collateral (including, without
limitation, any such financing statements that (A) subject to the Indenture,
describe the Collateral as “all assets” or “all personal property” (or words of
similar effect) or that describe or identify the Collateral by type or in any
other manner as the Collateral Agent may determine regardless of whether any
particular asset of such Grantor falls within the scope of Article 9 of the
Uniform Commercial Code or whether any particular asset of such

 

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Grantor constitutes part of the Collateral, and (B) contain any other
information required by Part 5 of Article 9 of the Uniform Commercial Code for
the sufficiency or filing office acceptance of any financing statement,
continuation statement or amendment, including, without limitation, whether such
Grantor is an organization, the type of organization and any organizational
identification number issued to such Grantor) and (iii) ratifies such
authorization to the extent that the Collateral Agent has filed any such
financing or continuation statements, or amendments thereto, prior to the date
hereof. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law. Each Canadian Grantor acknowledges
receipt of a copy of this Security Agreement and copies of the verification
statements pertaining to the financing statements filed under the PPSA by the
Collateral Agent in respect of this Security Agreement. To the extent permitted
by applicable law, each Grantor irrevocably waives the right to receive a copy
of each financing statement or financing change statement (or any verification
statement pertaining thereto) filed under the PPSA or under such other personal
property security statutes by the Collateral Agent in respect of this Security
Agreement or any other security agreement, and releases any and all claims or
causes of action it may have against any Secured Party for failure to provide
any such copy.

(b) Each Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time in the
Collateral Agent’s discretion, so long as an Event of Default shall have
occurred and is continuing, to take any action and to execute any instrument
necessary or advisable or which the Collateral Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement (subject to
the rights of each Grantor under Section 5 hereof), including, without
limitation, (i) to obtain and adjust insurance required to be paid to the
Collateral Agent pursuant to Section 5(e) hereof, (ii) to ask, demand, collect,
sue for, recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any Collateral, (iii) to receive,
endorse, and collect any drafts or other instruments, documents and chattel
paper in connection with clause (i) or (ii) above, (iv) to file any claims or
take any action or institute any proceedings necessary or advisable or which the
Collateral Agent may deem necessary or desirable for the collection of any
Collateral or otherwise to enforce the rights of the Secured Parties with
respect to any Collateral, and (v) to execute assignments, licenses and other
documents to enforce the rights of the Secured Parties with respect to any
Collateral. This power is coupled with an interest and is irrevocable until all
of the Obligations are indefeasibly paid in full in cash.

(c) For the purpose of enabling the Collateral Agent to exercise rights and
remedies hereunder, at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose, each
Grantor hereby grants to the Collateral Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to any Grantor) to use, assign, license or sublicense any
Intellectual Property now owned or hereafter acquired by such Grantor, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof. Notwithstanding
anything contained herein to the contrary, but subject to the provisions of the
Indenture that limit the right of any Grantor to dispose of its property, and
Section 5(g) and Section 5(h) hereof, so long as no Event of Default shall have
occurred and be

 

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continuing, any Grantor may exploit, use, enjoy, protect, license, sublicense,
assign, sell, dispose of or take other actions with respect to the Intellectual
Property in the ordinary course of its business. In furtherance of the
foregoing, unless an Event of Default shall have occurred and be continuing, the
Collateral Agent shall from time to time, upon the request of any Grantor,
execute and deliver any instruments, certificates or other documents, in the
form so requested, which such Grantor shall have certified are appropriate (in
such Grantor’s judgment) to allow it to take any action permitted above
(including relinquishment of the license provided pursuant to this clause (c) as
to any Intellectual Property. Further, upon the indefeasible payment in full in
cash of all of the Obligations, the Collateral Agent (subject to Section 10(e)
hereof) shall cooperate in taking all necessary steps and make all filings and
recordings to release and reassign to any Grantor all of the Collateral Agent’s
right, title and interest in and to the Intellectual Property, and the Licenses,
all without recourse, representation or warranty whatsoever. The exercise of
rights and remedies hereunder by the Collateral Agent shall not terminate the
rights of the holders of any licenses or sublicenses theretofore granted by each
Grantor in accordance with the second sentence of this clause (c). Each Grantor
hereby releases the Collateral Agent from any claims, causes of action and
demands at any time arising out of or with respect to any actions taken or
omitted to be taken by the Collateral Agent under the powers of attorney granted
herein other than actions taken or omitted to be taken by the Collateral Agent’s
own gross negligence or willful misconduct, as determined by a final
determination of a court of competent jurisdiction.

(d) If any Grantor fails to perform any agreement or obligation contained
herein, the Collateral Agent may itself perform, or cause performance of, such
agreement or obligation, in the name of such Grantor or the Collateral Agent,
and the expenses of the Collateral Agent incurred in connection therewith shall
be payable by such Grantor pursuant to Section 8 hereof and shall be secured by
the Collateral.

(e) The powers conferred on the Collateral Agent hereunder are solely to protect
its 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 Collateral
Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.

(f) Anything herein to the contrary notwithstanding (i) each Grantor shall
remain liable under the Licenses and otherwise with respect to any of the
Collateral to the extent set forth therein to perform all of its obligations
thereunder to the same extent as if this Agreement had not been executed,
(ii) the exercise by the Collateral Agent of any of its rights hereunder shall
not release any Grantor from any of its obligations under the Licenses or
otherwise in respect of the Collateral, and (iii) the Collateral Agent shall not
have any obligation or liability by reason of this Agreement under the Licenses
or with respect to any of the other Collateral, nor shall the Collateral Agent
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.

(g) Beyond the exercise of reasonable care in the custody thereof, the
Collateral Agent shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any income
thereon or as to preservation of rights against prior

 

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parties or any other rights pertaining thereto and the Collateral Agent shall
not be responsible for filing any financing or continuation statements or
recording any documents or instruments in any public office at any time or times
or otherwise perfecting or maintaining the perfection of any security interest
in the Collateral. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which it accords
its own property and shall not be liable or responsible for any loss or
diminution in the value of any of the Collateral, by reason of the act or
omission of any carrier, forwarding agency or other agent or bailee selected by
the Collateral Agent in good faith.

(h) The Collateral Agent shall not be responsible for the existence, genuineness
or value of any of the Collateral or for the validity, perfection, priority or
enforceability of the Liens in any of the Collateral, whether impaired by
operation of law or by reason of any of any action or omission to act on its
part hereunder, except to the extent such action or omission constitutes gross
negligence, bad faith or willful misconduct on the part of the Collateral Agent,
for the validity or sufficiency of the Collateral or any agreement or assignment
contained therein, for the validity of the title of the Company to the
Collateral, for insuring the Collateral or for the payment of taxes, charges,
assessments or Liens upon the Collateral or otherwise as to the maintenance of
the Collateral.

SECTION 7. Remedies Upon Event of Default. If any Event of Default shall have
occurred and be continuing:

(a) The Collateral Agent may exercise in respect of the Collateral, in addition
to any other rights and remedies provided for herein or otherwise available to
it, all of the rights and remedies of a secured party upon default under the
Uniform Commercial Code (whether or not the Uniform Commercial Code applies to
the affected Collateral), and also may (i) take absolute control of the
Collateral, including, without limitation, transfer into the Collateral Agent’s
name or into the name of its nominee or nominees (to the extent the Collateral
Agent has not theretofore done so) and thereafter receive, for the benefit of
the Collateral Agent, all payments made thereon, give all consents, waivers and
ratifications in respect thereof and otherwise act with respect thereto as
though it were the outright owner thereof, (ii) require each Grantor to, and
each Grantor hereby agrees that it will at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of its respective Collateral as
directed by the Collateral Agent and make it available to the Collateral Agent
at a place or places to be designated by the Collateral Agent that is reasonably
convenient to both parties, and the Collateral Agent may enter into and occupy
any premises owned or leased (if permitted by the lessor of such premises) by
any Grantor where the Collateral or any part thereof is located or assembled for
a reasonable period in order to effectuate the Collateral Agent’s rights and
remedies hereunder or under law, without obligation to any Grantor in respect of
such occupation, and (iii) without notice except as specified below and without
any obligation to prepare or process the Collateral for sale, (A) sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or
for future delivery, and at such price or prices and upon such other terms as
the Collateral Agent may deem commercially reasonable and/or (B) lease, license
or dispose of the Collateral or any part thereof upon such terms as the
Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to
the extent notice of sale or any other disposition of its respective Collateral
shall be required by

 

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law, at least ten (10) days’ notice to any Grantor of the time and place of any
public sale or the time after which any private sale or other disposition of its
respective Collateral is to be made shall constitute reasonable notification.
The Collateral Agent shall not be obligated to make any sale or other
disposition of any Collateral regardless of notice of sale having been given.
The Collateral 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. Each
Grantor hereby acknowledges that (i) any such sale of its respective Collateral
by the Collateral Agent or Receiver shall be made without warranty, (ii) the
Collateral Agent or Receiver may specifically disclaim any warranties of title,
possession, quiet enjoyment or the like, and (iii) such actions set forth in
clauses (i) and (ii) above shall not adversely affect the commercial
reasonableness of any such sale of Collateral. In addition to the foregoing,
(1) upon written notice to any Grantor from the Collateral Agent or Receiver
after and during the continuance of an Event of Default, such Grantor shall
cease any use of the Intellectual Property or any trademark, patent or copyright
similar thereto for any purpose described in such notice; (2) the Collateral
Agent or Receiver may, at any time and from time to time after and during the
continuance of an Event of Default, upon 10 days’ prior notice to such Grantor,
license, whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any of the Intellectual Property, throughout the universe
for such term or terms, on such conditions, and in such manner, as the
Collateral Agent or Receiver shall in its sole discretion determine; and (3) the
Collateral Agent or Receiver may, at any time, pursuant to the authority granted
in Section 6 hereof (such authority being effective upon the occurrence and
during the continuance of an Event of Default), execute and deliver on behalf of
such Grantor, one or more instruments of assignment of the Intellectual Property
(or any application or registration thereof), in form suitable for filing,
recording or registration in any country.

(b) Any cash held by the Collateral Agent or Receiver as Collateral and all Cash
Proceeds received by the Collateral Agent or Receiver in respect of any sale of
or collection from, or other realization upon, all or any part of the Collateral
shall be applied (after payment of any amounts payable to the Collateral Agent
or Receiver pursuant to Section 8 hereof) by the Collateral Agent or Receiver
against, all or any part of the Obligations in such order as the Collateral
Agent or Receiver shall elect, consistent with the provisions of the Indenture.
Any surplus of such cash or Cash Proceeds held by the Collateral Agent or
Receiver and remaining after the indefeasible payment in full in cash of all of
the Obligations shall be paid over to whomsoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall direct.

(c) In the event that the proceeds of any such sale, collection or realization
are insufficient to pay all amounts to which the Secured Parties are legally
entitled, each Grantor shall be liable for the deficiency, together with
interest thereon at the highest rate specified in the Notes for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees, costs,
expenses and other client charges of any attorneys employed by the Collateral
Agent or Receiver to collect such deficiency.

(d) Each Grantor hereby acknowledges that if the Collateral Agent or Receiver
complies with any applicable state, provincial, or federal law requirements in
connection with a disposition of the Collateral, such compliance will not
adversely affect the commercial reasonableness of any sale or other disposition
of the Collateral.

 

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(e) Neither the Collateral Agent nor any Receiver shall be required to marshal
any present or future collateral security (including, but not limited to, this
Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the Collateral Agent’s
or Receiver’s rights hereunder and in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that any Grantor lawfully
may, each Grantor hereby agrees that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede the enforcement of
the Collateral Agent’s or any Receiver’s rights under this Agreement or under
any other instrument creating or evidencing any of the Obligations or under
which any of the Obligations is outstanding or by which any of the Obligations
is secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, each Grantor hereby irrevocably waives the benefits of all such
laws.

(f) In addition to its other enforcement rights expressed herein or otherwise at
law, the Collateral Agent may appoint by instrument in writing one or more
Receivers of any Collateral of any Canadian Grantor. Any such Receiver shall
have the rights set out in paragraph (g) below. In exercising such rights, any
Receiver shall act as and for all purposes shall be deemed to be the agent of
such Grantor and no Secured Party shall be responsible for any act or default of
any Receiver. The Collateral Agent may remove any Receiver and appoint another
from time to time. No Receiver appointed by the Collateral Agent need be
appointed by, nor need its appointment be ratified by, or its actions in any way
supervised by, a court. If two or more Receivers are appointed to act
concurrently, they shall, unless otherwise expressly provided in the instrument
appointing them, so act severally and not jointly and severally. The appointment
of any Receiver or anything done by a Receiver or the removal or termination of
any Receiver shall not have the effect of constituting any Secured Party a
mortgagee in possession in respect of the Collateral.

(g) Any Receiver appointed by the Collateral Agent shall have such of the
following rights, powers, authorities and remedies as the Collateral Agent shall
grant to such Receiver in the instrument appointing such Receiver:

(i) any Receiver may exercise any rights, powers and remedies to which the
Collateral Agent is entitled;

(ii) any Receiver may at any time enter upon any premises owned, leased or
otherwise occupied by any Canadian Grantor or where any Collateral is located to
take possession of, disable or remove any Collateral, and may use whatever means
the Receiver considers advisable to do so;

(iii) any Receiver shall be entitled to immediate possession of Collateral and
the each Canadian Grantor shall forthwith upon demand by any Receiver deliver up
possession to a Receiver of any Collateral;

 

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(iv) any Receiver may carry on, or concur in the carrying on of, any of the
business or undertaking of any Canadian Grantor and may, to the exclusion of all
others, including each Canadian Grantor, enter upon, occupy and use any of the
premises, buildings, plant and undertaking of or occupied or used by
any Canadian Grantor and may use any of the Equipment and General Intangibles of
such Grantor for such time and such purposes as the Receiver sees fit. No
Receiver shall be liable to any Grantor for any negligence (other than gross
negligence, intentional misconduct or a violation of any applicable law) in so
doing or in respect of any rent, charges, costs, depreciation or damages in
connection with any such action; and

(v) any Receiver may have, enjoy and exercise all of the rights of and enjoyed
by each Canadian Grantor with respect to the Collateral or incidental,
ancillary, attaching or deriving from the ownership by any Canadian Grantor of
the Collateral, including the right to enter into agreements pertaining to
Collateral, the right to commence or continue proceedings to preserve or protect
Collateral and the right to grant or agree to Liens and grant or reserve profits
à prendre, easements, rights of ways, rights in the nature of easements and
licenses over or pertaining to the whole or any part of the Collateral.

(h) The Collateral Agent may, at any time, apply to a court of competent
jurisdiction for the appointment of a Receiver, or other official, who may have
powers the same as, greater or lesser than, or otherwise different from, those
capable of being granted to a Receiver appointed by the Collateral Agent
pursuant to this Security Agreement.

SECTION 8. Indemnity and Expenses.

(a) Each Grantor agrees, jointly and severally, to defend, protect, indemnify
and hold the Secured Parties and any Receiver harmless from and against any and
all claims, damages, losses, liabilities, obligations, penalties, fees, costs
and expenses (including, without limitation, reasonable legal fees, costs,
expenses, and disbursements of such Person’s counsel) to the extent that they
arise out of or otherwise result from this Agreement (including, without
limitation, enforcement of this Agreement), except to the extent caused by such
Person’s own gross negligence or willful misconduct, as determined by a final
judgment of a court of competent jurisdiction.

(b) Each Grantor agrees, jointly and severally, to pay to the Collateral Agent
and Receiver upon demand the amount of any and all costs and expenses, including
the reasonable fees, costs, expenses and disbursements of counsel for the
Collateral Agent, Receiver and of any experts and agents (including, without
limitation, any collateral trustee which may act as agent of the Collateral
Agent or Receiver), which the Collateral Agent or Receiver may incur in
connection with (i) the preparation, negotiation, execution, delivery,
recordation, administration, amendment, waiver or other modification or
termination of this Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization upon, any Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
or Receiver hereunder, or (iv) the failure by any Grantor to perform or observe
any of the provisions hereof.

(c) The benefits of this Section 8 shall survive the termination of this
Agreement.

 

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Section 9. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied, e-mailed or delivered, at its
address set forth on the signature pages below, and if to the Collateral Agent
to it, at its address specified on the signature pages below; or as to any such
Person, at such other address as shall be designated by such Person in a written
notice to all other parties hereto complying as to delivery with the terms of
this Section 9. All such notices and other communications shall be effective
(a) if sent by certified mail, return receipt requested, when received or three
days after deposited in the mails, whichever occurs first, (b) if telecopied or
e-mailed, when transmitted (during normal business hours) and confirmation is
received, and otherwise, the day after the notice or communication was
transmitted and confirmation is received, or (c) if delivered in person, upon
delivery.

SECTION 10. Resignation and Removal of the Collateral Trustee

(a) Resignation or Removal of Collateral Agent. Subject to the appointment of a
successor Collateral Agent as provided in Section 10(b) and the acceptance of
such appointment by the successor Collateral Agent:

(i) the Collateral Agent may resign at any time by giving not less than 45 days’
notice of resignation to each Noteholder and the Company, provided that such
notice period may be waived by each Noteholder and the Company; and

(ii) the Collateral Agent may be removed at any time, with or without cause, by
the Holders of a majority in principal amount of the outstanding Notes.

(b) Appointment of Successor Collateral Agent. Upon any such resignation or
removal, a successor Collateral Trustee may be appointed by the Holders of a
majority in principal amount of the outstanding Notes subject to the consent of
the Company, which shall not be unreasonably withheld. If no successor
Collateral Agent has been so appointed and accepted such appointment within 45
days after the predecessor Collateral Agent gave notice of resignation or was
removed, the retiring Collateral Agent may (at the expense of the Company), at
its option, appoint a successor Collateral Agent, or petition a court of
competent jurisdiction for appointment of a successor Collateral Agent, which
must be a bank or trust company:

(A) authorized to exercise corporate trust powers;

(B) having a combined capital and surplus of at least $100,000,000;

(C) maintaining an office in New York, New York; and

(D) that is not a Noteholder.

The Collateral Agent will fulfill its obligations hereunder until a successor
Collateral Agent meeting the requirements of this Section 10(b) has accepted its
appointment as Collateral Agent and the provisions of Section 10(c) have been
satisfied.

(c) Succession. When the Person so appointed as successor Collateral Agent
accepts such appointment:

(A) such Person will succeed to and become vested with all the rights, powers,
privileges and duties of the predecessor Collateral Agent, and the predecessor
Collateral Agent will be discharged from its duties and obligations hereunder;
and

 

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(B) the predecessor Collateral Agent will (at the expense of the Company)
promptly transfer all Liens and Collateral within its possession or control to
the possession or control of the successor Collateral Agent and will execute
instruments and assignments as may be necessary or reasonably requested by the
successor Collateral Agent or reasonably requested by Noteholders holding a
majority in aggregate principal amount of the Notes then outstanding to transfer
to the successor Collateral Agent all Liens interests, rights, powers and
remedies of the predecessor Collateral Agent in respect of the Security
Documents.

SECTION 11. Miscellaneous.

(a) No amendment of any provision of this Agreement shall be effective unless it
is in writing and signed by each Grantor and the Collateral Agent, and no waiver
of any provision of this Agreement, and no consent to any departure by each
Grantor therefrom, shall be effective unless it is in writing and signed by each
Grantor and the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

(b) No failure on the part of the Collateral Agent to exercise, and no delay in
exercising, any right hereunder or under any of the other Transaction Documents
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. The rights and remedies of the Secured Parties provided herein
and in the other Transaction Documents are cumulative and are in addition to,
and not exclusive of, any rights or remedies provided by law. The rights of the
Secured Parties under any of the other Transaction Documents against any party
thereto are not conditional or contingent on any attempt by such Person to
exercise any of its rights under any of the other Transaction Documents against
such party or against any other Person, including but not limited to, any
Grantor.

(c) Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

(d) This Agreement shall create a continuing security interest in the Collateral
and shall (i) remain in full force and effect until the indefeasible payment in
full in cash of the Obligations, and (ii) be binding on each Grantor and all
other Persons who become bound as debtor to this Agreement in accordance with
Section 9-203(d) of the Uniform Commercial Code and shall inure, together with
all rights and remedies of the Secured Parties hereunder, to the benefit of the
Secured Parties and their respective permitted successors, transferees and
assigns. Without limiting the generality of clause (ii) of the immediately
preceding sentence, without notice to any Grantor, the Secured Parties may
assign or otherwise transfer their rights and obligations under this Agreement
and any of the other Transaction Documents in accordance

 

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with the respective Transaction Documents, to any other Person and such other
Person shall thereupon become vested with all of the benefits in respect thereof
granted to the Secured Parties herein or otherwise. Upon any such assignment or
transfer, all references in this Agreement to the Secured Parties shall mean the
assignee of the Secured Parties. None of the rights or obligations of any
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Collateral Agent, and any such assignment or transfer
without the consent of the Collateral Agent shall be null and void.

(e) Upon the indefeasible payment in full in cash of the Obligations, (i) this
Agreement and the security interests created hereby shall terminate and all
rights to the Collateral shall revert to the respective Grantor that granted
such security interests hereunder, and (ii) the Collateral Agent will, upon any
Grantor’s request and at such Grantor’s expense, (A) return to such Grantor such
of the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof, and (B) execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse whatsoever.

(f) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR
THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.

(g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN
THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.

 

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(h) EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE
COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, ORAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.

(i) Each Grantor irrevocably consents to the service of process of any of the
aforesaid courts in any such action, suit or proceeding by the mailing of copies
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to any Grantor at its address provided herein, such
service to become effective 10 days after such mailing.

(j) Nothing contained herein shall affect the right of the Collateral Agent to
serve process in any other manner permitted by law or commence legal proceedings
or otherwise proceed against any Grantor or any property of any Grantor in any
other jurisdiction.

(k) Each Grantor irrevocably and unconditionally waives any right it may have to
claim or recover in any legal action, suit or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

(l) Section headings herein are included for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.

(m) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together constitute one in the same
Agreement.

(n) In connection with its execution and acting hereunder, the Collateral Agent
is entitled to all rights, privileges, protections, benefits, immunities and
indemnities provided to it as Trustee under the Indenture.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

-29-

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

 

GSI GROUP CORPORATION As the Issuer By:  

/s/ Michael Katzenstein

          Name:   Michael Katzenstein           Title:   Chief Restructuring
Officer GSI GROUP INC. As a Guarantor By:  

/s/ Michael Katzenstein

 

        Name:

  Michael Katzenstein  

        Title:

  Chief Restructuring Officer

MES INTERNATIONAL INC.

as a Guarantor

By:  

/s/ Michael Katzenstein

 

        Name:

  Michael Katzenstein  

        Title:

  Chief Restructuring Officer EXCEL TECHNOLOGY, INC. As a Guarantor By:  

/s/ Michael Katzenstein

 

        Name:

  Michael Katzenstein  

        Title:

  President

 

[Signature Page to Security Agreement]

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CAMBRIDGE TECHNOLOGY, INC., as a Guarantor By:  

/s/ Anthony Bellantuoni

          Name:   Anthony Bellantuoni           Title:   Director

CONTINUUM ELECTRO-OPTICS, INC.,

as a Guarantor

By:  

/s/ Anthony Bellantuoni

          Name:   Anthony Bellantuoni           Title:   Director

CONTROL LASER CORPORATION (D/B/A

BAUBLYS CONTROL LASER),

as a Guarantor

By:  

/s/ Anthony Bellantuoni

 

        Name:

  Anthony Bellantuoni  

        Title:

  Director

THE OPTICAL CORPORATION,

as a Guarantor

By:  

/s/ Anthony Bellantuoni

          Name:   Anthony Bellantuoni           Title:   Director

PHOTO RESEARCH, INC.,

as a Guarantor

By:  

/s/ Anthony Bellantuoni

          Name:   Anthony Bellantuoni           Title:   Director

QUANTRONIX CORPORATION,

as a Guarantor

By:  

/s/ Anthony Bellantuoni

          Name:   Anthony Bellantuoni           Title:   Director

SYNRAD, INC.,

as a Guarantor

By:  

/s/ Anthony Bellantuoni

          Name:   Anthony Bellantuoni           Title:   Director

MICROE SYSTEMS CORP.

as a Guarantor

By:  

/s/ Anthony Bellantuoni

          Name:   Anthony Bellantuoni           Title:   Director

 

[Signature Page to Security Agreement]

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THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Collateral Agent By:  

/s/ Leslie Lockhart

  Name:   Leslie Lockhart   Title:   Senior Associate

 

[Signature Page to Security Agreement]

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SCHEDULE I

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EXHIBIT A

GRANT OF SECURITY INTEREST

[TRADEMARKS] [PATENTS] [COPYRIGHTS]

WHEREAS,                                                               (the
“Grantor”) [holds all right, title and interest in and to, the trademarks and
service marks listed on the annexed Schedule 1A, which trademarks and service
marks are registered or applied for in the United States Patent and Trademark
Office (the “Trademarks”)] [holds all right, title and interest in the letter
patents, design patents and utility patents listed on the annexed Schedule 1A,
which patents are issued or applied for in the United States Patent and
Trademark Office (the “Patents”)] [holds all right, title and interest in the
copyrights listed on the annexed Schedule 1A, which copyrights are registered in
the United States Copyright Office (the “Copyrights”)];

WHEREAS, the Grantor has entered into an Amended and Restated Security
Agreement, dated as of              , 20     (as amended, restated or otherwise
modified from time to time the “Security Agreement”), The Bank of New York
Mellon Trust Company, N.A., a             , in its capacity as collateral agent
(the “Grantee”) to each of the Noteholders referred to below;

WHEREAS, pursuant to the Security Agreement, the Grantor has granted to the
Grantee for the benefit of the Holders (as defined in the Security Agreement) a
continuing security interest in all right, title and interest of the Grantor in,
to and under the [Trademarks, together with, among other things, the goodwill of
the business symbolized by the Trademarks] [Patents] [Copyrights] and the
applications and registrations thereof, and all proceeds thereof, including,
without limitation, any and all causes of action which may exist by reason of
infringement thereof and any and all damages arising from past, present and
future violations thereof (the “Collateral”), to secure the payment, performance
and observance of the “Obligations” (as defined in the Security Agreement);

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Grantor hereby grants to the Grantee for
the benefit of the Holders a continuing security interest in the Collateral to
secure the prompt payment and performance of the Obligations.

The Grantor does hereby further acknowledge and affirm that the rights and
remedies of the Grantee with respect to the Collateral are more fully set forth
in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.

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IN WITNESS WHEREOF, the Grantor has caused this Assignment to be duly executed
by its officer thereunto duly authorized as of             , 20    

 

[GRANTOR] By:  

 

  Name:   Title:

 

STATE OF  

 

            ss.:       COUNTY OF  

 

       

On this      day of             , 20    , before me personally came
                                        , to me known to be the person who
executed the foregoing instrument, and who, being duly sworn by me, did depose
and say that s/he is the                                          of
                                    , a
                                        , and that s/he executed the foregoing
instrument in the firm name of                                              ,
and that s/he had authority to sign the same, and s/he acknowledged to me that
he executed the same as the act and deed of said firm for the uses and purposes
therein mentioned.

 

 

 

ANNEX A TO ASSIGNMENT FOR SECURITY

[Trademarks and Trademark Applications]

[Patent and Patent Applications]

[Copyright and Copyright Applications]

Owned by