Exhibit 10.2

SECURITY AND PLEDGE AGREEMENT

THIS SECURITY AND PLEDGE AGREEMENT (this “Agreement”) is entered into as of
October 4, 2011 among NEWPORT CORPORATION, a Nevada corporation (the
“Borrower”), the other parties identified as “Obligors” on the signature pages
hereto and such other parties that may become Obligors hereunder after the date
hereof (together with the Borrower, individually an “Obligor”, and collectively
the “Obligors”) and BANK OF AMERICA, N.A., in its capacity as administrative
agent (in such capacity, the “Administrative Agent”) for the holders of the
Secured Obligations (defined below).

RECITALS

WHEREAS, pursuant to that certain Credit Agreement, dated as of the date hereof
(as amended, modified, supplemented, increased, extended, restated, renewed,
refinanced or replaced from time to time, the “Credit Agreement”) among the
Borrower, the Guarantors identified therein, the Lenders identified therein and
the Administrative Agent, the Lenders have agreed to make Loans and issue
Letters of Credit upon the terms and subject to the conditions set forth
therein; and

WHEREAS, this Agreement is required by the terms of the Credit Agreement.

NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

1. Definitions.

(a) Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement, and the following terms
shall have the meanings set forth in the UCC (defined below): Accession,
Account, Adverse Claim, As-Extracted Collateral, Chattel Paper, Commercial Tort
Claim, Consumer Goods, Deposit Account, Document, Electronic Chattel Paper,
Equipment, Farm Products, Financial Asset, Fixtures, General Intangible, Goods,
Instrument, Inventory, Investment Company Security, Investment Property,
Letter-of-Credit Right, Manufactured Home, Money, Proceeds, Securities Account,
Securities Intermediary, Security Entitlement, Security, Software, Supporting
Obligation and Tangible Chattel Paper.

(b) In addition, the following terms shall have the meanings set forth below:

“Collateral” has the meaning provided in Section 2 hereof.

“Copyright License” means any written agreement, naming any Obligor as licensor,
granting any right under any Copyright.

“Copyrights” means (a) all registered United States copyrights in all Works, now
existing or hereafter created or acquired, all registrations and recordings
thereof, and all applications in connection therewith, including, without
limitation, registrations, recordings and applications in the United States
Copyright Office, and (b) all renewals thereof.

“Excluded Accounts” shall mean, collectively, any deposit account, securities
account or other disbursement account which (a) is used exclusively for the
payment of payroll, payroll taxes, salary, benefits, trust, employee benefits,
withholding or escrow or fiduciary deposits, (b) is used solely as a zero
balance disbursement account or (c) contains, at all times, less than $500,000
for any one account and $1,000,000 in the aggregate for all such accounts.

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“Patent License” means any agreement, whether written or oral, providing for the
grant by or to an Obligor of any right to manufacture, use or sell any invention
covered by a Patent.

“Patents” means (a) all letters patent of the United States or any other country
and all reissues and extensions thereof, and (b) all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof.

“Pledged Equity” means, with respect to each Obligor, (i) 100% of the issued and
outstanding Equity Interests of each Domestic Subsidiary (other than a Foreign
Holding Company) of the Borrower that is directly owned by such Obligor and
(ii) 65% (or such greater percentage that, due to a change in an applicable Law
after the date hereof, in the Borrower’s good faith determination, such greater
percentage, (A) could not reasonably be expected to 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 (B) could not reasonably be expected to
cause any material adverse tax consequences) of the issued and outstanding
Equity Interests entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity Interests
not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2))
in each Foreign Subsidiary and each Foreign Holding Company of the Borrower that
is directly owned by such Obligor, including the Equity Interests of the
Subsidiaries owned by such Obligor to the extent set forth on Schedule 1(b)
hereto, in each case together with the certificates (or other agreements or
instruments), if any, representing such shares, and all options and other
rights, contractual or otherwise, with respect thereto, including, but not
limited to, the following:

(1) all Equity Interests representing a dividend thereon, or representing a
distribution or return of capital upon or in respect thereof, or resulting from
a stock split, revision, reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the holder thereof, or
otherwise in respect thereof, in each case to the extent provided in clauses
(i) and (ii) above; and

(2) in the event of any consolidation or merger involving the issuer thereof and
in which such issuer is not the surviving Person, all shares of each class of
the Equity Interests of the successor Person formed by or resulting from such
consolidation or merger, to the extent that such successor Person is a direct
Subsidiary of an Obligor, in each case to the extent provided in clauses (i) and
(ii) above.

“Secured Obligations” means, without duplication, (a) all Obligations and
(b) all costs and expenses incurred in connection with enforcement and
collection of the Obligations, including the fees, charges and disbursements of
counsel.

“Trademark License” means any agreement, written or oral, providing for the
grant by or to an Obligor of any right to use any Trademark.

“Trademarks” means (a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and the goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any state thereof or any other country or any political
subdivision thereof, or otherwise and (b) all renewals thereof.

 

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“UCC” means the Uniform Commercial Code as in effect from time to time in the
state of New York except as such term may be used in connection with the
perfection of the Collateral and then the applicable jurisdiction with respect
to such affected Collateral shall apply.

“Work” means any work that is subject to copyright protection pursuant to Title
17 of the United States Code.

2. Grant of Security Interest in the Collateral. To secure the prompt payment
and performance in full when due, whether by lapse of time, acceleration,
mandatory prepayment or otherwise, of the Secured Obligations, each Obligor
hereby grants to the Administrative Agent, for the benefit of the holders of the
Secured Obligations, a continuing security interest in, and a right to set off
against, any and all right, title and interest of such Obligor in and to all of
the following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Collateral”): (a) all Accounts; (b) all Chattel
Paper; (c) those certain Commercial Tort Claims set forth on Schedule 2(c)
hereto; (d) all Copyrights; (e) all Copyright Licenses; (f) all Deposit
Accounts; (g) all Documents; (h) all Equipment; (i) all Fixtures; (j) all
General Intangibles; (k) all Instruments; (l) all Inventory; (m) all Investment
Property; (n) all Letter-of-Credit Rights; (o) all Money; (p) all Patents;
(q) all Patent Licenses; (r) all Pledged Equity; (s) all Software; (t) all
Supporting Obligations; (u) all Trademarks; (v) all Trademark Licenses; and
(w) all Accessions and all Proceeds of any and all of the foregoing.

Notwithstanding anything to the contrary contained herein, the security
interests granted under this Agreement shall not extend to (i) any property
which, subject to the terms of Section 8.09 of the Credit Agreement, is subject
to a Lien of the type described in Section 8.01(i) of the Credit Agreement
pursuant to documents which prohibit such Obligor from granting any other Liens
in such property, (ii) any General Intangible, permit, lease, license, contract
or other Instrument of an Obligor to the extent the grant of a security interest
in such General Intangible, permit, lease, license, contract or other Instrument
in the manner contemplated by this Agreement, under the terms thereof or under
applicable Law, is prohibited and would result in the termination thereof or
give the other parties thereto the right to terminate, accelerate or otherwise
alter such Obligor’s rights, titles and interests thereunder (including upon the
giving of notice or the lapse of time or both); provided that (a) any such
limitation described in the foregoing clause (ii) on the security interests
granted hereunder shall only apply to the extent that any such prohibition could
not be rendered ineffective pursuant to the UCC or any other applicable Law
(including Debtor Relief Laws) or principles of equity and (b) in the event of
the termination or elimination of any such prohibition or the requirement for
any consent contained in any applicable Law, General Intangible, permit, lease,
license, contract or other Instrument, to the extent sufficient to permit any
such item to become Collateral hereunder, or upon the granting of any such
consent, or waiving or terminating any requirement for such consent, a security
interest in such General Intangible, permit, lease, license, contract or other
Instrument shall be automatically and simultaneously granted hereunder and shall
be included as Collateral hereunder, (iii) any United States trademark
application filed on the basis of an Obligor’s intent-to-use such mark, in each
case, unless and until evidence of the use of such trademark in interstate
commerce is submitted to the United States Patent and Trademark Office but only
if and to the extent that the granting of a security interest in such
application would result in the invalidation of such application or resulting
registration, provided, that, to the extent such application is excluded from
the Collateral, upon the submission of evidence of use of such trademark to the
United States Patent and Trademark Office, such trademark application shall
automatically be included in the Collateral, without further action on any
party’s part, (iv) any vehicles subject to certificate of title statutes,
(v) the Equity Interests of any direct Foreign Subsidiary of any Loan Party to
the extent not required to be pledged to secure the Obligations pursuant to
Section 7.14(a) of the Credit Agreement, (vi) cash collateral that is the
subject of a deposit or pledge constituting a Permitted Lien, but only to the
extent the agreements governing such deposit or pledge prohibit the existence of
a Lien therein in favor of the Administrative Agent and (vii) any interest in
real property (other than Fixtures, subject to clause (i) above).

 

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The Obligors and the Administrative Agent, on behalf of the holders of the
Secured Obligations, hereby acknowledge and agree that the security interest
created hereby in the Collateral (i) constitutes continuing collateral security
for all of the Secured Obligations, whether now existing or hereafter arising
and (ii) is not to be construed as an assignment of any Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks or Trademark Licenses.

3. Representations and Warranties. Each Obligor hereby represents and warrants
to the Administrative Agent, for the benefit of the holders of the Secured
Obligations, that:

(a) Ownership. Each Obligor is the legal and beneficial owner of its Collateral
and has the right to pledge, sell, assign or transfer the same. To the best of
such Obligor’s knowledge, there exists no Adverse Claim with respect to the
Pledged Equity of such Obligor.

(b) Security Interest/Priority. This Agreement creates a valid security interest
in favor of the Administrative Agent, for the benefit of the holders of the
Secured Obligations, in the Collateral of such Obligor and, when properly
perfected by filing, shall constitute a valid and perfected security interest in
such Collateral (including all uncertificated Pledged Equity consisting of
partnership or limited liability company interests that do not constitute
Securities), to the extent such security interest can be perfected by filing
under the UCC, free and clear of all Liens except for Permitted Liens. The
taking possession by the Administrative Agent of the certificated securities (if
any) evidencing the Pledged Equity and all other Instruments constituting
Collateral will perfect and establish the first priority of the Administrative
Agent’s security interest in all the Pledged Equity evidenced by such
certificated securities and such Instruments. With respect to any Collateral
consisting of a Deposit Account, Securities Entitlement or held in a Securities
Account, upon execution and delivery by the applicable Obligor, the applicable
Securities Intermediary and the Administrative Agent of an agreement granting
control to the Administrative Agent over such Collateral, the Administrative
Agent shall have a valid and perfected security interest in such Collateral,
free and clear of all Liens except for Permitted Liens.

(c) Types of Collateral. None of the Collateral consists of, or is the Proceeds
of, As-Extracted Collateral, Consumer Goods, Farm Products, Manufactured Homes
or standing timber.

(d) Accounts. (i) Each Account of the Obligors and the papers and documents
relating thereto are genuine and in all material respects what they purport to
be, (ii) each Account arises out of (A) a bona fide sale of goods sold and
delivered by such Obligor (or is in the process of being delivered) or
(B) services theretofore actually rendered by such Obligor to, the account
debtor named therein, (iii) no Account of an Obligor is evidenced by any
Instrument or Chattel Paper unless such Instrument or Chattel Paper, to the
extent requested by the Administrative Agent (subject to Section 4(a)), has been
endorsed over and delivered to, or submitted to the control of, the
Administrative Agent and (iv) the right to receive payment under each Account is
assignable after giving effect to the UCC.

(e) [Intentionally omitted].

(f) Authorization of Pledged Equity. All Pledged Equity is duly authorized and
validly issued, is fully paid and, to the extent applicable (other than any such
Pledged Equity that constitutes a limited liability company interest or other
analogous equity interest), nonassessable.

(g) No Other Equity Interests, Instruments, Etc. As of the date Schedule 1(b) is
revised in accordance with the terms of the Post-Closing Letter, (i) no Obligor
owns any certificated Equity Interests in any Subsidiary that are required to be
pledged and delivered to the

 

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Administrative Agent hereunder except as set forth on Schedule 1(b) hereto, and
(ii) no Obligor holds any Instruments, Documents or Tangible Chattel Paper
required to be pledged and delivered to the Administrative Agent pursuant to
Section 4(a)(i) of this Agreement other than as set forth on Schedule 3(g)
hereto. All such certificated securities, Instruments, Documents and Tangible
Chattel Paper have been delivered to the Administrative Agent.

(h) Partnership and Limited Liability Company Interests. Except as previously
disclosed to the Administrative Agent, none of the Collateral consisting of an
interest in a partnership or a limited liability company (i) is dealt in or
traded on a securities exchange or in a securities market, (ii) by its terms
expressly provides that it is a Security governed by Article 8 of the UCC,
(iii) is an Investment Company Security, (iv) is held in a Securities Account or
(v) constitutes a Security or a Financial Asset.

(i) [Intentionally omitted].

(j) Consents; Etc. Except for Pledged Equity of Subsidiaries that is acquired
pursuant to Permitted Acquisitions, provided that (x) such Subsidiary was not
created in anticipation of such Permitted Acquisition and (y) such restrictions
were not created in anticipation of such Permitted Acquisition, there are no
restrictions in any Organization Document governing any Pledged Equity or any
other document related thereto which would limit or restrict (i) the grant of a
Lien pursuant to this Agreement on such Pledged Equity, (ii) the perfection of
such Lien or (iii) the exercise of remedies in respect of such perfected Lien in
the Pledged Equity as contemplated by this Agreement. Except for (i) the filing
or recording of UCC financing statements, (ii) the filing of appropriate notices
with the United States Patent and Trademark Office and the United States
Copyright Office, (iii) obtaining control to perfect the Liens created by this
Agreement (to the extent required under Section 4(a) hereof), (iv) such actions
as may be required by Laws affecting the offering and sale of securities,
(v) such actions as may be required by applicable foreign Laws affecting the
pledge of the Pledged Equity of Foreign Subsidiaries and (vi) consents,
authorizations, filings or other actions which have been obtained or made, no
consent or authorization of, filing with, or other act by or in respect of, any
arbitrator or Governmental Authority and no consent of any other Person
(including, without limitation, any stockholder, member or creditor of such
Obligor), is required for (A) the grant by such Obligor of the security interest
in the Collateral granted hereby or for the execution, delivery or performance
of this Agreement by such Obligor, (B) the perfection of such security interest
(to the extent such security interest can be perfected by filing under the UCC,
the granting of control (to the extent required under Section 4(a) hereof) or by
filing an appropriate notice with the United States Patent and Trademark Office
or the United States Copyright Office) or (C) the exercise by the Administrative
Agent or the holders of the Secured Obligations of the rights and remedies
provided for in this Agreement.

(k) Commercial Tort Claims. As of the Closing Date, no Obligor has any
Commercial Tort Claims seeking damages in excess of $500,000 as to which such
Obligor has elected to pursue such claim other than as set forth on Schedule
2(c) hereto.

(l) Copyrights, Patents and Trademarks.

(i) To the best of each Obligor’s knowledge, each Copyright, Patent and
Trademark of such Obligor that is material to the business of the Obligors taken
as a whole is valid, subsisting, unexpired, enforceable and has not been
abandoned.

(ii) To the best of each Obligor’s knowledge, no holding, decision or judgment
has been rendered by any Governmental Authority that would limit, cancel or
question the

 

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validity of any Copyright, Patent or Trademark of any Obligor that is material
to the business of the Obligors taken as a whole.

(iii) No action or proceeding is pending seeking to limit, cancel or question
the validity of any Copyright, Patent or Trademark of any Obligor, or that could
reasonably be expected to have a material adverse effect on the value of any
Copyright, Patent or Trademark of any Obligor that is material to the business
of the Obligors taken as a whole.

(iv) All applications pertaining to the Copyrights, Patents and Trademarks of
each Obligor that are material to the business of the Obligors taken as a whole
have been duly and properly filed, and all registrations or letters pertaining
to such Copyrights, Patents and Trademarks have been duly and properly filed and
issued.

(v) No Obligor has made any assignment or agreement in conflict with the
security interest in the Copyrights, Patents or Trademarks of any Obligor that
are material to the business of the Obligors taken as a whole hereunder (except
as permitted under the Credit Agreement or hereunder).

4. Covenants. Each Obligor covenants that until such time as the Secured
Obligations arising under the Loan Documents have been paid in full (other than
contingent indemnification obligations for which no claim has been asserted) and
the Commitments have expired or been terminated, such Obligor shall:

(a) Instruments/Chattel Paper/Pledged Equity/Control.

(i) If any amount in excess of $250,000 payable under or in connection with any
of the Collateral shall be or become evidenced by any Instrument or Tangible
Chattel Paper, or if any property constituting Collateral shall be stored or
shipped subject to a Document, ensure that such Instrument, Tangible Chattel
Paper or Document is either in the possession of such Obligor at all times or,
if requested by the Required Lenders to perfect the Administrative Agent’s
security interest in such Collateral, is delivered to the Administrative Agent
duly endorsed in a manner satisfactory to the Administrative Agent. Such Obligor
shall ensure that any Collateral consisting of Tangible Chattel Paper in excess
of $250,000 individually or $1,000,000 in the aggregate is marked with a legend
acceptable to the Administrative Agent indicating the Administrative Agent’s
security interest in such Tangible Chattel Paper.

(ii) Deliver to the Administrative Agent within thirty (30) Business Days of the
receipt thereof by or on behalf of an Obligor, all certificates and instruments
constituting Pledged Equity. Prior to delivery to the Administrative Agent, all
such certificates constituting Pledged Equity shall be held in trust by such
Obligor for the benefit of the Administrative Agent pursuant hereto. All such
certificates representing Pledged Equity shall be delivered in suitable form for
transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in
Exhibit 4(a)(ii) hereto.

(iii) Execute and deliver all agreements, assignments, instruments or other
documents as reasonably requested by the Required Lenders for the purpose of
obtaining and maintaining control with respect to any Collateral consisting of
(i) the Blocked Account, (ii) Deposit Accounts (other than Excluded Accounts),
(iii) Investment Property, (iv) Letter-of-Credit Rights and (v) Electronic
Chattel Paper.

 

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(b) Filing of Financing Statements, Notices, etc. Each Obligor shall execute and
deliver to the Administrative Agent such agreements, assignments or instruments
(including affidavits, notices, reaffirmations and amendments and restatements
of existing documents, as the Administrative Agent may reasonably request) and
do all such other things as the Administrative Agent may reasonably deem
necessary or appropriate (i) to assure to the Administrative Agent its security
interests hereunder, including (A) such instruments as the Administrative Agent
may from time to time reasonably request in order to perfect and maintain the
security interests granted hereunder in accordance with the UCC, (B) with regard
to registered Patents and pending applications, a Notice of Grant of Security
Interest in Patents for filing with the United States Patent and Trademark
Office in the form of Exhibit 4(b)(i) hereto, (C) with regard to registered
Trademarks and pending applications, a Notice of Grant of Security Interest in
Trademarks for filing with the United States Patent and Trademark Office in the
form of Exhibit 4(b)(ii) hereto and (D) with regard to registered Copyrights, a
Notice of Grant of Security Interest in Copyrights in the form of
Exhibit 4(b)(iii) hereto (ii) to consummate the transactions contemplated hereby
and (iii) to otherwise protect and assure the Administrative Agent of its rights
and interests hereunder. Furthermore, each Obligor also hereby irrevocably
makes, constitutes and appoints the Administrative Agent, its nominee or any
other person whom the Administrative Agent may designate, as such Obligor’s
attorney in fact with full power and for the limited purpose to sign in the name
of such Obligor any financing statements, or amendments and supplements to
financing statements, renewal financing statements, notices or any similar
documents which in the Administrative Agent’s reasonable discretion would be
necessary or appropriate in order to perfect and maintain perfection of the
security interests granted hereunder (except with respect to Excluded Property),
such power, being coupled with an interest, being and remaining irrevocable
until such time as the Secured Obligations arising under the Loan Documents have
been paid in full (other than contingent indemnification obligations for which
no claim has been made) and the Commitments have expired or been terminated.
Each Obligor hereby agrees that a carbon, photographic or other reproduction of
this Agreement or any such financing statement is sufficient for filing as a
financing statement by the Administrative Agent without notice thereof to such
Obligor wherever the Administrative Agent may reasonably deem it necessary or
appropriate to file the same.

(c) Collateral Held by Warehouseman, Bailee, etc. If any Collateral exceeding a
value of $5,000,000 is at any time in the possession or control of a
warehouseman, bailee or any agent or processor of such Obligor and the
Administrative Agent so requests (i) notify such Person in writing of the
Administrative Agent’s security interest therein, (ii) instruct such Person to
hold all such Collateral for the Administrative Agent’s account and subject to
the Administrative Agent’s instructions and (iii) use reasonable best efforts to
obtain a written acknowledgment from such Person that it is holding such
Collateral for the benefit of the Administrative Agent.

(d) Treatment of Accounts. Not grant or extend the time for payment of any
Account, or compromise or settle any Account for less than the full amount
thereof, or release any person or property, in whole or in part, from payment
thereof, or allow any credit or discount thereon, other than as normal and
customary in the ordinary course of an Obligor’s business or as would not
reasonably be expected to have a Material Adverse Effect.

(e) Commercial Tort Claims. (i) Concurrently with the delivery of the Compliance
Certificate pursuant to Section 7.02(b) of the Credit Agreement, forward to the
Administrative Agent an updated Schedule 2(c) listing any and all Commercial
Tort Claims by or in favor of such Obligor seeking damages in excess of $500,000
as to which such Obligor has elected to pursue such claim and (ii) execute and
deliver such statements, documents and notices and do and cause to be done all
such things as may be required by the Administrative Agent, or required by

 

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Law to create, preserve, perfect and maintain the Administrative Agent’s
security interest in any Commercial Tort Claims initiated by or in favor of any
Obligor.

(f) Books and Records. Upon the request of the Required Lenders, mark its books
and records (and shall cause the issuer of the Pledged Equity of such Obligor to
mark its books and records) to reflect the security interest granted pursuant to
this Agreement.

(g) Nature of Collateral. At all times maintain the Collateral as personal
property and not affix any material portion of the Collateral to any real
property in a manner which would change its nature from personal property to
real property or a Fixture to real property, unless the Administrative Agent
shall have a perfected Lien on such Fixture or real property.

(h) Issuance or Acquisition of Equity Interests in Partnerships or Limited
Liability Companies. Not without executing and delivering, or causing to be
executed and delivered, to the Administrative Agent such agreements, documents
and instruments as the Administrative Agent may reasonably require, issue or
acquire any Pledged Equity consisting of an interest in a partnership or a
limited liability company that (i) is dealt in or traded on a securities
exchange or in a securities market, (ii) by its terms expressly provides that it
is a Security governed by Article 8 of the UCC, (iii) is an Investment Company
Security, (iv) is held in a Securities Account or (v) constitutes a Security or
a Financial Asset.

(i) Intellectual Property.

(i) Not do any act or omit to do any act whereby any Copyright that is material
to the business of the Obligors taken as a whole may become invalidated and
(A) not do any act, or omit to do any act, whereby any Copyright that is
material to the business of the Obligors taken as a whole may become injected
into the public domain; (B) notify the Administrative Agent immediately if it
knows that any Copyright that is material to the business of the Obligors taken
as a whole may become injected into the public domain or of any materially
adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any court or
tribunal in the United States or any other country) regarding an Obligor’s
ownership of any such Copyright or its validity; (C) take all necessary steps as
it shall deem appropriate under the circumstances, to maintain and pursue each
application (and to obtain the relevant registration) of each Copyright owned by
an Obligor that is material to the business of the Obligors taken as a whole and
to maintain each registration of each material Copyright owned by an Obligor
including, without limitation, filing of applications for renewal where
necessary; and (D) promptly notify the Administrative Agent of any material
infringement of any Copyright of an Obligor that is material to the business of
the Obligors taken as a whole of which it becomes aware and take such actions as
it shall reasonably deem appropriate under the circumstances to protect such
Copyright, including, where appropriate, the bringing of suit for infringement,
seeking injunctive relief and seeking to recover any and all damages for such
infringement.

(ii) Not make any assignment or agreement in conflict with the security interest
in the Copyrights of each Obligor hereunder (except as permitted by the Credit
Agreement).

(iii) (A) Continue to use each Trademark that is material to the business of the
Obligors taken as a whole on each and every trademark class of goods applicable
to its current line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (B) maintain

 

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as in the past the quality of products and services offered under such
Trademark, (C) employ such Trademark with the appropriate notice of
registration, if applicable, (D) not adopt or use any mark that is confusingly
similar or a colorable imitation of such Trademark; provided that the Borrower
may adopt or use such mark so long as the Borrower notifies the Administrative
Agent of such mark concurrently with the delivery of the Compliance Certificate
pursuant to Section 7.02(b) of the Credit Agreement so that the Administrative
Agent, for the ratable benefit of the holders of the Secured Obligations, may
obtain a perfected security interest in such mark pursuant to this Agreement,
and (E) use commercially reasonable efforts not to (and not to permit any
licensee or sublicensee thereof to) do any act or omit to do any act whereby any
such Trademark may become invalidated.

(iv) Not do any act, or omit to do any act, whereby any Patent that is material
to the business of the Obligors taken as a whole may become abandoned or
dedicated.

(v) Notify the Administrative Agent concurrently with the delivery of the
Compliance Certificate pursuant to Section 7.02(b) of the Credit Agreement if it
knows that any application or registration relating to any Patent or Trademark
that is material to the business of the Obligors taken as a whole may become
abandoned or dedicated, or of any materially adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office or any court or tribunal in any country) regarding such
Obligor’s ownership of any Patent or Trademark that is material to the business
of the Obligors taken as a whole or its right to register the same or to keep
and maintain the same.

(vi) Take all reasonable and necessary steps, in its reasonable business
judgment, including, without limitation, in any proceeding before the United
States Patent and Trademark Office, or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of each Patent and Trademark that is material to the business of
the Obligors taken as a whole, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of incontestability.

(vii) Promptly notify the Administrative Agent and the holders of the Secured
Obligations after it learns that any Patent or Trademark included in the
Collateral that is material to the business of the Obligors taken as a whole is
infringed, misappropriated or diluted by a third party and, if appropriate in
its reasonable business judgment, promptly sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution,
or to take such other actions as it shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark.

(viii) Not make any assignment or agreement in conflict with the security
interest in the Patents or Trademarks of each Obligor hereunder (except as
permitted by the Credit Agreement).

Notwithstanding the foregoing, the Obligors may, in their reasonable business
judgment, fail to maintain, pursue, preserve or protect any Copyright, Patent or
Trademark which is not material to their businesses taken as a whole.

(j) Blocked Account. Not use the cash maintained in the Blocked Account for any
purpose other than to repay the Convertible Notes when due or to repurchase the
Convertible

 

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Notes at or below par; provided, that no Obligor shall be permitted to use the
cash maintained in the Blocked Account to repay or repurchase the Convertible
Notes if any Event of Default under Section 9.01(a) or 9.01(f) of the Credit
Agreement then exists or would result therefrom.

5. Authorization to File Financing Statements. Each Obligor hereby authorizes
the Administrative Agent to prepare and file such financing statements
(including continuation statements) or amendments thereof or supplements thereto
or other instruments as the Administrative Agent may from time to time deem
necessary or appropriate in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC (including authorization to
describe the Collateral as “all personal property”, “all assets” or words of
similar meaning).

6. Advances. (i) Upon the occurrence and continuance of an Event of Default,
with prompt written notice thereafter to the Obligors, or (ii) upon the
occurrence and continuance of a Default (that has not matured into an Event of
Default), after the Administrative Agent has provided prior written notice to
the Obligors and the Obligors have failed to act within a reasonable period of
time thereafter, if with respect to this clause (ii), the Administrative Agent
reasonably determines that the taking of a particular action is required prior
to the expiration of any applicable cure period(s) in order to prevent an
impairment of its rights in and to any Collateral, then in either case, the
Administrative Agent may, at its sole option and in its sole discretion, perform
the same and in so doing may expend such sums as the Administrative Agent may
reasonably deem advisable in the performance thereof, including, without
limitation, the payment of any insurance premiums, the payment of any taxes, a
payment to obtain a release of a Lien or potential Lien, expenditures made in
defending against any adverse claim and all other expenditures which the
Administrative Agent may make for the protection of the security hereof or which
may be compelled to make by operation of Law. All such sums and amounts so
expended shall be repayable by the Obligors on a joint and several basis
promptly upon timely notice thereof and demand therefor, shall constitute
additional Secured Obligations and shall bear interest from the date said
amounts are expended at the Default Rate. No such performance of any covenant or
agreement by the Administrative Agent on behalf of any Obligor, and no such
advance or expenditure therefor, shall relieve the Obligors of any Default or
Event of Default. The Administrative Agent may make any payment hereby
authorized in accordance with any bill, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by an Obligor
in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.

7. Remedies.

(a) General Remedies. Upon the occurrence of an Event of Default and during
continuation thereof, the Administrative Agent shall have, in addition to the
rights and remedies provided herein, in the Loan Documents, in any other
documents relating to the Secured Obligations, or by Law (including, but not
limited to, levy of attachment, garnishment and the rights and remedies set
forth in the UCC of the jurisdiction applicable to the affected Collateral), the
rights and remedies of a secured party under the UCC (regardless of whether the
UCC is the law of the jurisdiction where the rights and remedies are asserted
and regardless of whether the UCC applies to the affected Collateral), and
further, the Administrative Agent may, with or without judicial process or the
aid and assistance of others, (i) enter on any premises on which any of the
Collateral may be located and, without resistance or interference by the
Obligors, take possession of the Collateral, (ii) dispose of any Collateral on
any such premises, (iii) require the Obligors to assemble and make available to
the Administrative Agent at the expense of the Obligors any Collateral at any
place and time designated by the Administrative Agent which is reasonably
convenient to both parties, (iv) remove any Collateral from any such premises
for the purpose of effecting sale or other disposition thereof,

 

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and/or (v) without demand and without advertisement, notice, hearing or process
of law, all of which each of the Obligors hereby waives to the fullest extent
permitted by Law, at any place and time or times, sell and deliver any or all
Collateral held by or for it at public or private sale (which in the case of a
private sale of Pledged Equity, shall be to a restricted group of purchasers who
will be obligated to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution or
resale thereof), at any exchange or broker’s board or elsewhere, by one or more
contracts, in one or more parcels, for Money, upon credit or otherwise, at such
prices and upon such terms as the Administrative Agent deems advisable, in its
sole discretion (subject to any and all mandatory legal requirements). Each
Obligor acknowledges that any such private sale may be at prices and on terms
less favorable to the seller than the prices and other terms which might have
been obtained at a public sale and, notwithstanding the foregoing, agrees that
such private sale shall be deemed to have been made in a commercially reasonable
manner and, in the case of a sale of Pledged Equity, that the Administrative
Agent shall have no obligation to delay sale of any such securities for the
period of time necessary to permit the issuer of such securities to register
such securities for public sale under the Securities Act of 1933. Neither the
Administrative Agent’s compliance with applicable Law nor its disclaimer of
warranties relating to the Collateral shall be considered to adversely affect
the commercial reasonableness of any sale. To the extent the rights of notice
cannot be legally waived hereunder, each Obligor agrees that any requirement of
reasonable notice shall be met if such notice, specifying the place of any
public sale or the time after which any private sale is to be made, is
personally served on or mailed, postage prepaid, to the Borrower in accordance
with the notice provisions of Section 11.02 of the Credit Agreement at least 10
days before the time of sale or other event giving rise to the requirement of
such notice. The Administrative 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 Obligor further acknowledges and agrees that any offer to
sell any Pledged Equity which has been (i) publicly advertised on a bona fide
basis in a newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent that such offer may be
advertised without prior registration under the Securities Act of 1933), or
(ii) made privately in the manner described above shall be deemed to involve a
“public sale” under the UCC, notwithstanding that such sale may not constitute a
“public offering” under the Securities Act of 1933, and the Administrative Agent
may, in such event, bid for the purchase of such securities. The Administrative
Agent shall not be obligated to make any sale or other disposition of the
Collateral regardless of notice having been given. To the extent permitted by
applicable Law, any holder of Secured Obligations may be a purchaser at any such
sale. To the extent permitted by applicable Law, each of the Obligors hereby
waives all of its rights of redemption with respect to any such sale. Subject to
the provisions of applicable Law, the Administrative Agent may postpone or cause
the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, to the extent permitted by Law, be made at the time and place to
which the sale was postponed, or the Administrative Agent may further postpone
such sale by announcement made at such time and place.

(b) Remedies Relating to Accounts. During the continuation of an Event of
Default, whether or not the Administrative Agent has exercised any or all of its
rights and remedies hereunder, (i) each Obligor will promptly upon request of
the Administrative Agent instruct all account debtors to remit all payments in
respect of Accounts to a mailing location selected by the Administrative Agent
and (ii) the Administrative Agent shall have the right to enforce any Obligor’s
rights against its customers and account debtors, and the Administrative Agent
or its designee may notify any Obligor’s customers and account debtors that the
Accounts of such Obligor have been assigned to the Administrative Agent or of
the Administrative Agent’s security interest therein, and may (either in its own
name or in the name of an Obligor or both) demand, collect (including without

 

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limitation by way of a lockbox arrangement), receive, take receipt for, sell,
sue for, compound, settle, compromise and give acquittance for any and all
amounts due or to become due on any Account, and, in the Administrative Agent’s
discretion, file any claim or take any other action or proceeding to protect and
realize upon the security interest of the holders of the Secured Obligations in
the Accounts. Neither the Administrative Agent nor the holders of the Secured
Obligations shall have any liability or responsibility to any Obligor for
acceptance of a check, draft or other order for payment of money bearing the
legend “payment in full” or words of similar import or any other restrictive
legend or endorsement or be responsible for determining the correctness of any
remittance. Furthermore, during the continuation of an Event of Default, (i) the
Administrative Agent shall have the right, but not the obligation, to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and the Obligors shall furnish all such
assistance and information as the Administrative Agent may require in connection
with such test verifications, (ii) upon the Administrative Agent’s request and
at the expense of the Obligors, the Obligors shall cause independent public
accountants or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts and (iii) the
Administrative Agent in its own name or in the name of others may communicate
with account debtors on the Accounts to verify with them to the Administrative
Agent’s satisfaction the existence, amount and terms of any Accounts.

(c) Deposit Accounts. Upon the occurrence of an Event of Default and during
continuation thereof, the Administrative Agent may prevent withdrawals or other
dispositions of funds in Deposit Accounts maintained with the Administrative
Agent.

(d) Access. In addition to the rights and remedies hereunder, upon the
occurrence of an Event of Default and during the continuance thereof, the
Administrative Agent shall have the right, subject to applicable Law, to enter
and remain upon the various premises of the Obligors without cost or charge to
the Administrative Agent, and use the same, together with materials, supplies,
books and records of the Obligors for the purpose of collecting and liquidating
the Collateral, or for preparing for sale and conducting the sale of the
Collateral, whether by foreclosure, auction or otherwise. In addition, the
Administrative Agent may, subject to applicable Law, remove Collateral, or any
part thereof, from such premises and/or any records with respect thereto, in
order to effectively collect or liquidate such Collateral.

(e) Nonexclusive Nature of Remedies. Failure by the Administrative Agent or the
holders of the Secured Obligations to exercise any right, remedy or option under
this Agreement, any other Loan Document, any other document relating to the
Secured Obligations, or as provided by Law, or any delay by the Administrative
Agent or the holders of the Secured Obligations in exercising the same, shall
not operate as a waiver of any such right, remedy or option. No waiver hereunder
shall be effective unless it is in writing, signed by the party against whom
such waiver is sought to be enforced and then only to the extent specifically
stated, which in the case of the Administrative Agent or the holders of the
Secured Obligations shall only be granted as provided herein. To the extent
permitted by Law, neither the Administrative Agent, the holders of the Secured
Obligations, nor any party acting as attorney for the Administrative Agent or
the holders of the Secured Obligations, shall be liable hereunder for any acts
or omissions or for any error of judgment or mistake of fact or law other than
their gross negligence or willful misconduct hereunder. The rights and remedies
of the Administrative Agent and the holders of the Secured Obligations under
this Agreement shall be cumulative and not exclusive of any other right or
remedy which the Administrative Agent or the holders of the Secured Obligations
may have.

 

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(f) Retention of Collateral. In addition to the rights and remedies hereunder,
the Administrative Agent may, upon the occurrence of an Event of Default and
during the continuance thereof, in compliance with Sections 9-620 and 9-621 of
the UCC or otherwise complying with the requirements of applicable Law of the
relevant jurisdiction, accept or retain the Collateral in satisfaction of the
Secured Obligations. Unless and until the Administrative Agent shall have
provided such notices, however, the Administrative Agent shall not be deemed to
have retained any Collateral in satisfaction of any Secured Obligations for any
reason.

(g) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Administrative
Agent or the holders of the Secured Obligations are legally entitled, the
Obligors shall be jointly and severally liable for the deficiency, together with
interest thereon at the Default Rate, together with the costs of collection and
the fees, charges and disbursements of counsel. Any surplus remaining after the
full payment and satisfaction of the Secured Obligations shall be returned to
the Obligors or to whomsoever a court of competent jurisdiction shall determine
to be entitled thereto.

8. Rights of the Administrative Agent.

(a) Power of Attorney. In addition to other powers of attorney contained herein,
each Obligor hereby designates and appoints the Administrative Agent, on behalf
of the holders of the Secured Obligations, and each of its designees or agents,
as attorney-in-fact of such Obligor, irrevocably and with power of substitution,
with authority to take any or all of the following actions upon the occurrence
and during the continuance of an Event of Default:

(i) to demand, collect, settle, compromise, adjust, give discharges and
releases, all as the Administrative Agent may reasonably determine;

(ii) to commence and prosecute any actions at any court for the purposes of
collecting any Collateral and enforcing any other right in respect thereof;

(iii) to defend, settle or compromise any action brought and, in connection
therewith, give such discharge or release as the Administrative Agent may deem
reasonably appropriate;

(iv) receive, open and dispose of mail addressed to an Obligor and endorse
checks, notes, drafts, acceptances, money orders, bills of lading, warehouse
receipts or other instruments or documents evidencing payment, shipment or
storage of the goods giving rise to the Collateral of such Obligor on behalf of
and in the name of such Obligor, or securing, or relating to such Collateral;

(v) sell, assign, transfer, make any agreement in respect of, or otherwise deal
with or exercise rights in respect of, any Collateral or the goods or services
which have given rise thereto, as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes;

(vi) adjust and settle claims under any insurance policy relating thereto;

(vii) execute and deliver all assignments, conveyances, statements, financing
statements, renewal financing statements, security agreements, affidavits,
notices and other agreements, instruments and documents that the Administrative
Agent may determine necessary in order to perfect (other than with respect to
Excluded Property) and maintain the

 

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security interests and liens granted in this Agreement and in order to fully
consummate all of the transactions contemplated therein;

(viii) institute any foreclosure proceedings that the Administrative Agent may
deem appropriate;

(ix) to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Collateral;

(x) to exchange any of the Pledged Equity or other property upon any merger,
consolidation, reorganization, recapitalization or other readjustment of the
issuer thereof and, in connection therewith, deposit any of the Pledged Equity
with any committee, depository, transfer agent, registrar or other designated
agency upon such terms as the Administrative Agent may reasonably deem
appropriate;

(xi) to vote for a shareholder resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged Equity into the name of
the Administrative Agent or one or more of the holders of the Secured
Obligations or into the name of any transferee to whom the Pledged Equity or any
part thereof may be sold pursuant to Section 7 hereof;

(xii) to pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against the Collateral;

(xiii) to direct any parties liable for any payment in connection with any of
the Collateral to make payment of any and all monies due and to become due
thereunder directly to the Administrative Agent or as the Administrative Agent
shall direct;

(xiv) to receive payment of and receipt for any and all monies, claims, and
other amounts due and to become due at any time in respect of or arising out of
any Collateral; and

(xv) do and perform all such other acts and things as the Administrative Agent
may reasonably deem to be necessary, proper or convenient in connection with the
Collateral.

This power of attorney is a power coupled with an interest and shall be
irrevocable until such time as the Secured Obligations arising under the Loan
Documents have been paid in full (other than contingent indemnification
obligations for which no claim has been made) and the Commitments have expired
or been terminated. The Administrative Agent shall be under no duty to exercise
or withhold the exercise of any of the rights, powers, privileges and options
expressly or implicitly granted to the Administrative Agent in this Agreement,
and shall not be liable for any failure to do so or any delay in doing so. The
Administrative Agent shall not be liable for any act or omission or for any
error of judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct. This power of attorney is conferred on
the Administrative Agent solely to protect, preserve and realize upon its
security interest in the Collateral.

(b) Assignment by the Administrative Agent. The Administrative Agent may from
time to time assign the Secured Obligations to a successor Administrative Agent
appointed in

 

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accordance with the Credit Agreement, and such successor shall be entitled to
all of the rights and remedies of the Administrative Agent under this Agreement
in relation thereto.

(c) The Administrative Agent’s Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Collateral while being held by
the Administrative Agent hereunder, the Administrative Agent shall have no duty
or liability to preserve rights pertaining thereto, it being understood and
agreed that the Obligors shall be responsible for preservation of all rights in
the Collateral, and the Administrative Agent shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering the
surrender of it to the Obligors. The Administrative Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which the Administrative Agent accords its own property, which shall be no
less than the treatment employed by a reasonable and prudent agent in the
industry, it being understood that the Administrative Agent shall not have
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any of the Collateral. In the event of a public or
private sale of Collateral pursuant to Section 7 hereof, the Administrative
Agent shall have no responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Collateral, whether or not the Administrative Agent has or is
deemed to have knowledge of such matters, or (ii) taking any steps to clean,
repair or otherwise prepare the Collateral for sale.

(d) Liability with Respect to Accounts. Anything herein to the contrary
notwithstanding, each of the Obligors shall remain liable under each of the
Accounts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Account. Neither the Administrative Agent nor
any holder of Secured Obligations shall have any obligation or liability under
any Account (or any agreement giving rise thereto) by reason of or arising out
of this Agreement or the receipt by the Administrative Agent or any holder of
Secured Obligations of any payment relating to such Account pursuant hereto, nor
shall the Administrative Agent or any holder of Secured Obligations be obligated
in any manner to perform any of the obligations of an Obligor under or pursuant
to any Account (or any agreement giving rise thereto), to make any payment, to
make any inquiry as to the nature or the sufficiency of any payment received by
it or as to the sufficiency of any performance by any party under any Account
(or any agreement giving rise thereto), to present or file any claim, to take
any action to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time or
times.

(e) Voting and Payment Rights in Respect of the Pledged Equity.

(i) So long as no Event of Default shall exist, each Obligor may (A) exercise
any and all voting and other consensual rights pertaining to the Pledged Equity
of such Obligor or any part thereof for any purpose not inconsistent with the
terms of this Agreement or the Credit Agreement and (B) receive and retain any
and all dividends (other than stock dividends and other dividends constituting
Collateral which are addressed hereinabove), principal or interest paid in
respect of the Pledged Equity to the extent they are allowed under the Credit
Agreement; and

(ii) During the continuance of an Event of Default, upon notice from the
Administrative Agent, (A) all rights of an Obligor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to clause (i)(A) above shall cease and all such rights shall thereupon
become vested in the Administrative Agent which shall then have the sole right
to exercise such voting and

 

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other consensual rights, (B) all rights of an Obligor to receive the dividends,
principal and interest payments which it would otherwise be authorized to
receive and retain pursuant to clause (i)(B) above shall cease and all such
rights shall thereupon be vested in the Administrative Agent which shall then
have the sole right to receive and hold as Collateral such dividends, principal
and interest payments, and (C) all dividends, principal and interest payments
which are received by an Obligor contrary to the provisions of clause (ii)(B)
above shall be received in trust for the benefit of the Administrative Agent,
shall be segregated from other property or funds of such Obligor, and shall be
forthwith paid over to the Administrative Agent as Collateral in the exact form
received, to be held by the Administrative Agent as Collateral and as further
collateral security for the Secured Obligations.

(f) Releases of Collateral. (i) If any Collateral shall be sold, transferred or
otherwise disposed of by any Obligor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Obligor, shall promptly execute and deliver to such Obligor all releases
and other documents, and take such other action, reasonably necessary for the
release of the Liens created hereby or by any other Collateral Document on such
Collateral. (ii) The Administrative Agent may release any of the Pledged Equity
from this Agreement or may substitute any of the Pledged Equity for other
Pledged Equity without altering, varying or diminishing in any way the force,
effect, lien, pledge or security interest of this Agreement as to any Pledged
Equity not expressly released or substituted, and this Agreement shall continue
as a Lien on all Pledged Equity not expressly released or substituted.

9. Application of Proceeds. Upon the acceleration of the Obligations pursuant to
Section 9.02 of the Credit Agreement, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the
Administrative Agent or any holder of the Secured Obligations in Money, will be
applied in reduction of the Secured Obligations in the order set forth in
Section 9.03 of the Credit Agreement.

10. Continuing Agreement.

(a) This Agreement shall remain in full force and effect until such time as the
Secured Obligations arising under the Loan Documents have been paid in full
(other than contingent indemnification obligations for which no claims has been
made) and the Commitments have expired or been terminated, at which time this
Agreement shall be automatically terminated and the Administrative Agent shall,
upon the request and at the expense of the Obligors, forthwith release all of
its liens and security interests hereunder and shall execute and deliver all UCC
termination statements and/or other documents reasonably requested by the
Obligors evidencing such termination.

(b) This Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any holder of the Secured Obligations as
a preference, fraudulent conveyance or otherwise under any Debtor Relief Law,
all as though such payment had not been made; provided that in the event payment
of all or any part of the Secured Obligations is rescinded or must be restored
or returned, all reasonable costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the Administrative Agent or
any holder of the Secured Obligations in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Secured
Obligations.

 

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11. Amendments; Waivers; Modifications, etc. This Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged or terminated
except as set forth in Section 11.01 of the Credit Agreement; provided that any
update or revision to Schedule 2(c) hereof delivered by any Obligor shall not
constitute an amendment for purposes of this Section 11 or Section 11.01 of the
Credit Agreement.

12. Successors in Interest. This Agreement shall be binding upon each Obligor,
its successors and assigns and shall inure, together with the rights and
remedies of the Administrative Agent and the holders of the Secured Obligations
hereunder, to the benefit of the Administrative Agent and the holders of the
Secured Obligations and their successors and permitted assigns.

13. Notices. All notices required or permitted to be given under this Agreement
shall be in conformance with Section 11.02 of the Credit Agreement.

14. Counterparts. This Agreement may be executed in any number of counterparts,
each of which where so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart. Delivery of executed counterparts of this Agreement by facsimile or
other electronic means shall be effective as an original.

15. Headings. The headings of the sections hereof are provided for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.

16. Governing Law; Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL. The
terms of Sections 11.14 and 11.15 of the Credit Agreement with respect to
governing law, submission to jurisdiction, venue and waiver of jury trial are
incorporated herein by reference, mutatis mutandis, and the parties hereto agree
to such terms.

17. Severability. If any provision of this Agreement is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

18. Entirety. This Agreement, the other Loan Documents and the other documents
relating to the Secured Obligations represent the entire agreement of the
parties hereto and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Loan Documents, any other documents relating to
the Secured Obligations, or the transactions contemplated herein and therein.

19. Other Security. To the extent that any of the Secured Obligations are now or
hereafter secured by property other than the Collateral (including, without
limitation, real property and securities owned by an Obligor), or by a
guarantee, endorsement or property of any other Person, then the Administrative
Agent shall have the right to proceed against such other property, guarantee or
endorsement during the continuance of any Event of Default, and the
Administrative Agent shall have the right, in its sole discretion, to determine
which rights, security, liens, security interests or remedies the Administrative
Agent shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or the
Secured Obligations or any of the rights of the Administrative Agent or the
holders of the Secured Obligations under this Agreement, under any other of the
Loan Documents or under any other document relating to the Secured Obligations.

20. Joinder. At any time after the date of this Agreement, one or more
additional Persons may become party hereto by executing and delivering to the
Administrative Agent a Joinder Agreement. Immediately upon such execution and
delivery of such Joinder Agreement (and without any further action),

 

17

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each such additional Person will become a party to this Agreement as an
“Obligor” and have all of the rights and obligations of an Obligor hereunder and
this Agreement and the schedules hereto shall be deemed amended by such Joinder
Agreement.

21. Rights of Required Lenders. All rights of the Administrative Agent
hereunder, if not exercised by the Administrative Agent, may be exercised by the
Required Lenders.

22. Consent of Issuers of Pledged Equity. Each issuer of Pledged Equity party to
this Agreement hereby acknowledges, consents and agrees to the grant of the
security interests in such Pledged Equity by the applicable Obligors pursuant to
this Agreement, together with all rights accompanying such security interest as
provided by this Agreement and applicable law, notwithstanding any
anti-assignment provisions in any operating agreement, limited partnership
agreement or similar organizational or governance documents of such issuer.

[remainder of page intentionally left blank]

 

18

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Each of the parties hereto has caused a counterpart of this Agreement to be duly
executed and delivered as of the date first above written.

 

OBLIGORS:   NEWPORT CORPORATION,   a Nevada corporation   By:  

/s/ Charles F. Cargile

  Name:   Charles F. Cargile   Title:   Senior Vice President and Chief
Financial Officer

Accepted and agreed to as of the date first above written.

BANK OF AMERICA, N.A., as Administrative Agent

 

By:  

/s/ Christine Trotter

Name:   Christine Trotter Title:   Assistant Vice President

 

19

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SCHEDULE 1(b)

PLEDGED EQUITY

Obligor: Newport Corporation

 

Name of Subsidiary

   Jurisdiction   

Number of Shares/Units
Owned

  

Number of Shares/Units
Pledged

   Certificate
Number    Percentage
Ownership
Pledged  

Birch Nantucket Holding Company, LLC*

   Delaware    1 membership unit    1 membership unit    Uncertificated      100
% 

Newport Domestic International Sales Corporation*

   California    unknown    unknown    unknown      100 % 

Newport Inspection Holdings, Inc.*

   Michigan    4,668 common shares    4,668 common shares         100 % 

Newport European Distribution Company*

   California    1,000 common shares    1,000 common shares         100 % 

Newport Finance Company I, LLC*

   Delaware    1 membership unit    1 membership unit    Uncertificated      100
% 

Newport Finance Company II, LLC*

   Delaware    1 membership unit    1 membership unit    Uncertificated      100
% 

Newport Government Systems, Inc.*

   California    unknown    unknown    unknown      100 % 

Newport Precision Optics Corporation*

   New York    100 common shares    100 common shares         100 % 

Spectra-Physics Optics Corporation*

   California    100 common shares    100 common shares         100 % 

Unique Equipment Company*

   Arizona    135,870 common shares    135,870 common shares    5      100 % 

Micro-Controle Holdings Ltd.

   United
Kingdom    10,000 ordinary shares    6,500 ordinary shares         65 % 

--------------------------------------------------------------------------------

Name of Subsidiary

   Jurisdiction   

Number of Shares/Units
Owned

  

Number of Shares/Units
Pledged

   Certificate
Number    Percentage
Ownership
Pledged  

Micro Controle Spectra-Physics S.A.S.

   France    62,665 shares    40,733 shares         65 % 

Newport Corporation (Barbados) SRL

   Barbados    99 quotas    64 quotas    1      65 % 

Newport Instruments Canada Corporation

   Canada    1 common share    TBD         65 % 

Newport Opto-Electronics Technologies (Singapore) Pte. Ltd.

   Singapore    1,052,788 ordinary shares    684,313 ordinary shares   
Uncertificated      65 % 

Newport Opto-Electronics Technologies (Wuxi) Company Limited

   China    USD 6,000,000 registered capital    USD 3,900,000 registered capital
   Uncertificated      65 % 

Newport Spectra-Physics BV

   Netherlands    400 shares    260 shares         65 % 

Newport Spectra-Physics Ltd.

   United
Kingdom    806,914 shares    524,495 shares         65 % 

Spectra-Physics K.K.

   Japan    80,000 shares    52,000 shares         65 % 

Newport Laser Holding GmbH

   Austria    Euro 35,000 share capital    Euro 22,750 share capital   
Uncertificated      65 % 

Ophir Optronics Ltd.

   Israel    1,000 ordinary shares    650 ordinary shares         65 % 

 

* Excluded Subsidiary

--------------------------------------------------------------------------------

SCHEDULE 2(c)

COMMERCIAL TORT CLAIMS

None.

--------------------------------------------------------------------------------

SCHEDULE 3(g)

INSTRUMENTS; DOCUMENTS; TANGIBLE CHATTEL PAPER

None.

--------------------------------------------------------------------------------

EXHIBIT 4(a)(ii)

IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to

the following Equity Interests of                                         , a
             corporation:

 

    

No. of Shares

 

Certificate No.

          

and irrevocably appoints                                                   its
agent and attorney-in-fact to transfer all or any part of such Equity Interests
and to take all necessary and appropriate action to effect any such transfer.
The agent and attorney-in-fact may substitute and appoint one or more persons to
act for him.

 

 

By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

EXHIBIT 4(b)(i)

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

PATENTS

United States Patent and Trademark Office

Ladies and Gentlemen:

Please be advised that pursuant to the Security and Pledge Agreement dated as of
October 4, 2011 (as the same may be amended, modified, extended or restated from
time to time, the “Agreement”) by and among the Obligors party thereto (each an
“Obligor” and collectively, the “Obligors”) and Bank of America, N.A., as
administrative agent (the “Administrative Agent”) for the holders of the Secured
Obligations referenced therein, the undersigned Obligor has granted a continuing
security interest in and continuing lien upon the patents and patent
applications shown below to the Administrative Agent for the ratable benefit of
the holders of the Secured Obligations:

PATENTS

 

Patent No.

  

Description of

Patent Item

  

Date of Patent

   See Schedule 1 attached hereto   

PATENT APPLICATIONS

 

Patent Applications No.

  

Description of

Patent Applied for

  

Date of

Patent Applications

   See Schedule 1 attached hereto   

--------------------------------------------------------------------------------

The undersigned Obligor and the Administrative Agent, on behalf of the holders
of the Secured Obligations, hereby acknowledge and agree that the security
interest in the foregoing patents and patent applications (i) may only be
terminated in accordance with the terms of the Agreement and (ii) is not to be
construed as an assignment of any patent or patent application.

 

Very truly yours,

 

[Obligor] By:  

 

Name:  

 

Title:  

 

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

 

By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

EXHIBIT 4(b)(ii)

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

TRADEMARKS

United States Patent and Trademark Office

Ladies and Gentlemen:

Please be advised that pursuant to the Security and Pledge Agreement dated as of
October 4, 2011 (as the same may be amended, modified, extended or restated from
time to time, the “Agreement”) by and among the Obligors party thereto (each an
“Obligor” and collectively, the “Obligors”) and Bank of America, N.A., as
Administrative Agent (the “Administrative Agent”) for the holders of the Secured
Obligations referenced therein, the undersigned Obligor has granted a continuing
security interest in and continuing lien upon the trademarks and trademark
applications shown below to the Administrative Agent for the ratable benefit of
the holders of the Secured Obligations:

TRADEMARKS

 

Trademark No.

  

Description of

Trademark Item

  

Date of Trademark

   See Schedule 1 attached hereto   

TRADEMARK APPLICATIONS

 

Trademark Applications No.

  

Description of

Trademark Applied for

  

Date of

Trademark Applications

   See Schedule 1 attached hereto   

--------------------------------------------------------------------------------

The undersigned Obligor and the Administrative Agent, on behalf of the holders
of the Secured Obligations, hereby acknowledge and agree that the security
interest in the foregoing trademarks and trademark applications (i) may only be
terminated in accordance with the terms of the Agreement and (ii) is not to be
construed as an assignment of any trademark or trademark application.

 

Very truly yours,

 

[Obligor] By:  

 

Name:  

 

Title:  

 

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

 

By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

EXHIBIT 4(b)(iii)

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

COPYRIGHTS

United States Copyright Office

Ladies and Gentlemen:

Please be advised that pursuant to the Security and Pledge Agreement dated as of
October 4, 2011 (as the same may be amended, modified, extended or restated from
time to time, the “Agreement”) by and among the Obligors party thereto (each an
“Obligor” and collectively, the “Obligors”) and Bank of America, N.A., as
administrative agent (the “Administrative Agent”) for the holders of the Secured
Obligations referenced therein, the undersigned Obligor has granted a continuing
security interest in and continuing lien upon the copyrights and copyright
applications shown below to the Administrative Agent for the ratable benefit of
the holders of the Secured Obligations:

COPYRIGHTS

 

Copyright No.

  

Description of

Copyright Item

  

Date of Copyright

   See Schedule 1 attached hereto   

COPYRIGHT APPLICATIONS

 

Copyright Applications No.

  

Description of

Copyright Applied for

  

Date of

Copyright Applications

   See Schedule 1 attached hereto   

--------------------------------------------------------------------------------

The undersigned Obligor and the Administrative Agent, on behalf of the holders
of the Secured Obligations, hereby acknowledge and agree that the security
interest in the foregoing copyrights and copyright applications (i) may only be
terminated in accordance with the terms of the Agreement and (ii) is not to be
construed as an assignment of any copyright or copyright application.

 

Very truly yours,

 

[Obligor] By:  

 

Name:  

 

Title:  

 

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

 

By:  

 

Name:  

 

Title: