Document:

exv10w54

 

 

Exhibit
10.54

SECURITY AGREEMENT

     This SECURITY AGREEMENT (this “Agreement”) is made this 2nd day of August, 2006, among
Grantors listed on the signature pages hereof and those additional entities that hereafter become
parties hereto by executing the form of Supplement attached hereto as Annex 1
(collectively, jointly and severally, “Grantors” and each individually “Grantor”),
and WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the Lender Group and
the Bank Product Provider (together with its successors, “Agent”).

W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as amended,
restated, supplemented or otherwise modified from time to time, including all schedules thereto,
the “Credit Agreement”) among Bookham, Inc., a Delaware corporation, as Parent and each of
Parent’s Subsidiaries identified on the signature pages thereof (such Subsidiaries are referred to
hereinafter individually as a “Borrower” and collectively, jointly and severally, as the
“Borrowers”), the lenders party thereto as “Lenders” (“Lenders”), and Agent, the
Lender Group is willing to make certain financial accommodations available to Borrowers from time
to time pursuant to the terms and conditions thereof, and

     WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group and the Bank
Product Provider in connection with the transactions contemplated by this Agreement and the other
Loan Documents, and

     WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement and the other
Loan Documents and to induce the Lender Group to make financial accommodations to Borrowers as
provided for in the Credit Agreement, Grantors have agreed to grant a continuing security interest
in and to the Collateral in order to secure the prompt and complete payment, observance and
performance of, among other things, (a) all of the present and future obligations of Grantors
arising from this Agreement, the Credit Agreement, the Guaranties, and the other Loan Documents,
(b) all Bank Product Obligations, (c) all Obligations of each Borrower, including, all reasonable
attorneys fees and expenses and any interest, fees or expenses that accrue after the filing of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in
any Insolvency Proceeding, and (d) all Guarantied Obligations (as defined in each Guaranty) of each
Guarantor (in the case of each of clauses (a), (b), (c) and (d), plus reasonable attorneys fees and
expenses if the obligations represented thereunder are collected by law, through an
attorney-at-law, or under advice therefrom), by the granting of the security interests contemplated
by this Agreement (clauses (a), (b), (c), and (d) being hereinafter referred to as the “Secured
Obligations”), and

     NOW, THEREFORE, for and in consideration of the recitals made above and other good and
valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

     1. Defined Terms. All capitalized terms used herein (including in the preamble and
recitals hereof) without definition shall have the meanings ascribed thereto in the Credit
Agreement. Any terms used in this Agreement that are defined in the Code shall be construed and
defined as set forth in the Code unless otherwise defined herein or in the Credit Agreement;
provided, however, that to the extent that the Code is used to define any term herein and such term
is defined differently in different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern. In addition to those terms defined elsewhere in this Agreement,
as used in this Agreement, the following terms shall have the following meanings:

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               (a) “Bookham China” mans Bookham Technology (Shenzhen) (FFTZ), a corporation organized
under the laws of the People’s Republic of China.

               (b) “Books” means books and records (including each Grantor’s Records indicating,
summarizing, or evidencing such Grantor’s assets (including the Collateral) or liabilities, each
Grantor’s Records relating to such Grantor’s business operations or financial condition, and each
Grantor’s goods or General Intangibles related to such information).

               (c) “Chattel Paper” means chattel paper (as that term is defined in the Code) and
includes tangible chattel paper and electronic chattel paper.

               (d) “Code” means the California Uniform Commercial Code, as in effect from time to
time; provided, however, that in the event that, by reason of mandatory provisions of law, any or
all of the attachment, perfection, priority, or remedies with respect to Agent’s Lien on any
Collateral is governed by the Uniform Commercial Code or the Personal Property Security Act as
enacted and in effect in a jurisdiction other than the State of California, the term “Code” shall
mean the Uniform Commercial Code or the Personal Property Security Act as enacted and in effect in
such other jurisdiction solely for purposes of the provisions thereof relating to such attachment,
perfection, priority, or remedies.

               (e) “Collateral” has the meaning specified therefor in Section 2.

               (f) “Commercial Tort Claims” means commercial tort claims (as that term is defined in
the Code), and includes those commercial tort claims listed on Schedule 1 attached hereto.

               (g) “Copyrights” means copyrights and copyright registrations, including the copyright
registrations and recordings thereof and all applications in connection therewith listed on
Schedule 2 attached hereto and made a part hereof, and (i) all reissues, continuations,
extensions or renewals thereof, (ii) all income, royalties, damages and payments now and hereafter
due or payable under and with respect thereto, including payments under all licenses entered into
in connection therewith and damages and payments for past or future infringements or dilutions
thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof,
(iv) the goodwill of each Grantor’s business symbolized by the foregoing and connected therewith,
and (v) all of each Grantor’s rights corresponding thereto throughout the world.

               (h) “Copyright Security Agreement” means each Copyright Security Agreement among
Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product
Provider, in substantially the form of Exhibit A attached hereto, pursuant to which
Grantors have granted to Agent, for the benefit of the Lender Group and the Bank Product Provider,
a security interest in all their respective Copyrights.

               (i) “General Intangibles” means general intangibles (as that term is defined in the
Code) and, in any event, including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action, goodwill (including
the goodwill associated with any Trademark, Patent, or Copyright), Patents, Trademarks, Copyrights,
URLs and domain names, industrial designs, other industrial or Intellectual Property or rights
therein or applications therefor, whether under license or otherwise, programs, programming
materials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any royalty or licensing
agreements, including Intellectual Property Licenses, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports, catalogs, pension
plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund
claims, uncertificated securities, and any other personal property other than commercial tort
claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property,
Negotiable Collateral, and oil, gas, or other minerals before extraction.

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               (j) “Grantor” and “Grantors” has the meaning specified therefor in the
recitals to this Agreement.

               (k) “Intellectual Property” means any and all Intellectual Property Licenses, Patents,
Copyrights, Trademarks, the goodwill associated with such Trademarks, trade secrets and customer
lists.

               (l) “Intellectual Property Licenses” means rights under or interest in any patent,
trademark, copyright or other intellectual property, including software license agreements (other
than Shrink-Wrap Licenses) with any other party, whether the applicable Grantor is a licensee or
licensor under any such license agreement, including the license agreements listed on Schedule
3 attached hereto and made a part hereof, and the right to use the foregoing in connection with
the enforcement of the Lender Group’s rights under the Loan Documents, including the right to
prepare for sale and sell any and all Inventory and Equipment now or hereafter owned by any Grantor
and now or hereafter covered by such licenses.

               (m) “Intellectual Property Rights” means all of each Grantor’s rights, title and
interest in and to Intellectual Property.

               (n) “Investment Related Property” means (i) investment property (as that term is
defined in the Code), and (ii) all of the following regardless of whether classified as investment
property under the Code: all Pledged Interests, Pledged Operating Agreements, and Pledged
Partnership Agreements.

               (o) “Mortgages” means, individually and collectively, one or more mortgages, deeds of
trust, or deeds to secure debt, executed and delivered by a Grantor in favor of Agent, in form and
substance satisfactory to Agent, that encumber any portion of the Collateral consisting of Real
Property.

               (p) “Negotiable Collateral” means letters of credit, letter of credit rights,
instruments, promissory notes, drafts and documents (as that term is defined in the Code).

               (q) “Obligations” has the meaning specified therefor in the Credit Agreement.

               (r) “Patents” means patents and patent applications, including the patents and patent
applications listed on Schedule 4 attached hereto and made a part hereof, and (i) all
renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due or payable
under and with respect thereto, including payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the
right to sue for past, present and future infringements and dilutions thereof, and (iv) all of each
Grantor’s rights corresponding thereto throughout the world.

               (s) “Patent Security Agreement” means each Patent Security Agreement among Grantors,
or any of them, and Agent, for the benefit of the Lender Group and the Bank Product Provider, in
substantially the form of Exhibit B attached hereto, pursuant to which Grantors have
granted to Agent, for the benefit of the Lender Group and the Bank Product Provider, a security
interest in all their respective Patents.

               (t) “Personal Property Security Act” means for the Province of Ontario the Personal
Property Security Act (Ontario) (R.S.O. 1990, Chapter P.10) and for the other Provinces of Canada
the equivalent personal property security legislation.

               (u) “Pledged Companies” means, each Person listed on Schedule 5 hereto as a
“Pledged Company”, together with each other Person, all or a portion of whose Stock, is acquired or
otherwise owned by a Grantor after the Closing Date.

               (v) “Pledged Interests” means all of each Grantor’s right, title and interest in and
to all of the Stock now or hereafter owned by such Grantor (except for the Stock of Forthaven,
Ltd., a corporation

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organized under the laws of England and Wales and Bookham China), regardless of class or
designation, including, in each of the Pledged Companies, and all substitutions therefor and
replacements thereof, all proceeds thereof and all rights relating thereto, including any
certificates representing the Stock, the right to request after the occurrence and during the
continuation of an Event of Default that such Stock be registered in the name of Agent or any of
its nominees, the right to receive any certificates representing any of the Stock and the right to
require that such certificates be delivered to Agent together with undated powers or assignments of
investment securities with respect thereto, duly endorsed in blank by such Grantor, all warrants,
options, share appreciation rights and other rights, contractual or otherwise, in respect thereof
and of all dividends, distributions of income, profits, surplus, or other compensation by way of
income or liquidating distributions, in cash or in kind, and cash, instruments, and other property
from time to time received, receivable, or otherwise distributed in respect of or in addition to,
in substitution of, on account of, or in exchange for any or all of the foregoing.

               (w) “Pledged Interests Addendum” means a Pledged Interests Addendum substantially in
the form of Exhibit C to this Agreement.

               (x) “Pledged Note” has the meaning set forth in Section 5(g).

               (y) “Pledged Operating Agreements” means all of each Grantor’s rights, powers, and
remedies under the limited liability company operating agreements of each of the Pledged Companies
that are limited liability companies.

               (z) “Pledged Partnership Agreements” means all of each Grantor’s rights, powers, and
remedies under the partnership agreements of each of the Pledged Companies that are partnerships.

               (aa) “Proceeds” has the meaning specified therefor in Section 2.

               (bb) “Records” means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.

               (cc) “Security Interest” has the meaning specified therefor in Section 2.

               (dd) “Secured Obligations” has the meaning specified in the recitals to this Agreement.

               (ee) “Shrink-Wrap License” means an license for the use of generally commercially
available software where the user agrees to its terms by opening the package of or downloading such
software or similarly manifesting consent to the licensor’s standard terms.

               (ff) “Supporting Obligations” means Supporting Obligations (as such term is defined in
the Code), and includes letters of credit and guaranties issued in support of Accounts, Chattel
Paper, documents, General Intangibles, instruments, or Investment Related Property.

               (gg) “Trademarks” means trademarks, trade names, registered trademarks, trademark
applications, service marks, registered service marks and service mark applications, including the
trade names, registered trademarks, trademark applications, registered service marks and service
mark applications listed on Schedule 6 attached hereto and made a part hereof, and (i) all
renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due or payable
under and with respect thereto, including payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the
right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill of
each Grantor’s business symbolized by the foregoing and connected therewith, and (v) all of each
Grantor’s rights corresponding thereto throughout the world.

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               (hh) “Trademark Security Agreement” means each Trademark Security Agreement among
Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product
Provider, in substantially the form of Exhibit D attached hereto, pursuant to which
Grantors have granted to Agent, for the benefit of the Lender Group and the Bank Product Provider,
a security interest in all their respective Trademarks.

               (ii) “URL” means “uniform resource locator,” an internet web address.

               (jj) “Wuhan L/C” means an irrevocable commercial letter of credit reflecting a
Borrower as a beneficiary issued at the request of Wuhan as support for accounts with respect to
purchases of product by Wuhan from such Borrower.

     2. Grant of Security. Each Grantor hereby unconditionally grants, assigns, and
pledges to Agent, for the benefit of the Lender Group and the Bank Product Provider, a continuing
security interest (hereinafter referred to as the “Security Interest”) in all personal
property of such Grantor whether now owned or hereafter acquired or arising and wherever located,
including such Grantor’s right, title, and interest in and to the following, whether now owned or
hereafter acquired or arising and wherever located (the “Collateral”):

               (a) all of such Grantor’s Accounts;

               (b) all of such Grantor’s Books;

               (c) all of such Grantor’s Chattel Paper;

               (d) all of such Grantor’s interest with respect to any Deposit Account;

               (e) all of such Grantor’s Equipment and fixtures;

               (f) All of such Grantor’s General Intangibles;

               (g) all of such Grantor’s Inventory;

               (h) all of such Grantor’s Investment Related Property;

               (i) all of such Grantor’s Negotiable Collateral;

               (j) all of such Grantor’s rights in respect of Supporting Obligations;

               (k) all of such Grantor’s interest with respect to any Commercial Tort Claims;

               (l) all of such Grantor’s money, Cash Equivalents, or other assets of each such Grantor that
now or hereafter come into the possession, custody, or control of Agent or any other member of the
Lender Group;

               (m) all of the proceeds and products, whether tangible or intangible, of any of the foregoing,
including proceeds of insurance or commercial tort claims covering or relating to any or all of the
foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations,
money, or other tangible or intangible property resulting from the sale, lease, license, exchange,
collection, or other disposition of any of the foregoing, the proceeds of any award in condemnation
with respect to any of the property of Grantors, any rebates or refunds, whether for taxes or
otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and
the proceeds thereof, and all proceeds of any loss of,

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damage to, or destruction of the above, whether insured or not insured, and, to the extent not
otherwise included, any indemnity, warranty, or guaranty payable by reason of loss or damage to, or
otherwise with respect to any of the foregoing Collateral (the “Proceeds”). Without
limiting the generality of the foregoing, the term “Proceeds” includes whatever is receivable or
received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes proceeds of any
indemnity or guaranty payable to any Grantor or Agent from time to time with respect to any of the
Investment Related Property. Notwithstanding the foregoing the term Collateral shall not include
any rights or interest in any contract, lease, permit, license, charter or license agreement
covering personal property of a Grantor if under the terms of such contract lease, permit, license,
charter or license agreement, or applicable law with respect thereto, the valid grant of a security
interest or lien therein to Agent is prohibited as a matter of law or under the terms of such
contract (including where the violation of any such prohibition would result in the termination of
the applicable contract), lease, permit, license, charter or license agreement and such prohibition
has not been or is not waived or the consent of the other party to such contract, lease, permit
license, charter or license agreement has not been or is not otherwise obtained; provided, that,
the foregoing exclusion shall in no way be construed (a) to apply if any described prohibition is
unenforceable under Section 9-406, 9-407, or 9-408 of the Code or other applicable law, or (b) so
as to limit, impair or otherwise affect Agent’s continuing security interests in and liens upon any
rights or interests of a Grantor in or to monies due or to become due under any described contract,
lease permit, license, charter or license agreement (including any Accounts), or (c) to limit,
impair, or otherwise affect Agent’s continuing security interests in and liens upon any rights or
interest of a Grantor in and to any proceeds from the sale, license, lease, or other dispositions
of any such contract, lease, permit, license, charter, license agreement.

     3. Security for Obligations. This Agreement and the Security Interest created hereby
secures the payment and performance of all of the Secured Obligations, whether now existing or
arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts which constitute part of the Secured Obligations and would be owed by
Grantors, or any of them, to Agent, the Lender Group, the Bank Product Provider or any of them, but
for the fact that they are unenforceable or not allowable due to the existence of an Insolvency
Proceeding involving any Grantor.

     4. Grantors Remain Liable.

               (a) Anything herein to the contrary notwithstanding, (i) each of the Grantors shall remain
liable under the contracts and agreements included in the Collateral, including the Pledged
Operating Agreements and the Pledged Partnership Agreements, to perform all of the duties and
obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the
exercise by Agent or any other member of the Lender Group of any of the rights hereunder shall not
release any Grantor from any of its duties or obligations under such contracts and agreements
included in the Collateral, and (iii) none of the members of the Lender Group shall have any
obligation or liability under such contracts and agreements included in the Collateral by reason of
this Agreement, nor shall any of the members of the Lender Group be obligated to perform any of the
obligations or duties of any Grantors thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder. Until an Event of Default shall occur and be continuing,
except as otherwise provided in this Agreement, the Credit Agreement, or other Loan Documents,
Grantors shall have the right to possession and enjoyment of the Collateral for the purpose of
conducting the ordinary course of their respective businesses, subject to and upon the terms hereof
and of the Credit Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, it is the intention of the parties hereto that record and beneficial ownership of the
Pledged Interests, including all voting, consensual, and dividend rights, shall remain in the
applicable Grantor until the occurrence of an Event of Default and until Agent shall notify the
applicable Grantor of Agent’s exercise of voting, consensual, or dividend rights with respect to
the Pledged Interests pursuant to Section 15 hereof.

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               (b) Grantors shall be entitled to receive and retain any and all dividends and/or
distributions paid in respect of the Stock of the Pledged Companies; provided, however, that,
except as permitted under the Credit Agreement, any and all:

                         (i) dividends and distributions paid or payable other than in cash in respect of, and any and
all additional shares or instruments or other property received, receivable, or otherwise
distributed in respect of, or in exchange for the Stock of the Pledged Companies;

                         (ii) dividends and distributions paid or payable in cash in respect of any Stock of the
Pledged Companies in connection with a partial or total liquidation or dissolution, merger,
consolidation of any Pledged Company, or any exchange of stock, conveyance of assets, or similar
corporate reorganization;

                         (iii) cash paid with respect to, payable, or otherwise distributed on redemption of, or in
exchange for, any Stock of the Pledged Companies, and

                         (iv) after the occurrence and during the continuance of an Event of Default, all dividends and
distributions in respect of any Stock of the Pledged Companies (including cash dividends other than
those described in subparagraphs (ii) and (iii) above),

shall be forthwith delivered to Agent to hold as Collateral and shall, if received by Grantors, be
received in trust for the benefit of Agent, for the ratable benefit of the Lender Group and the
Bank Product Provider, be segregated from the other property or funds of Grantors, and be forthwith
delivered to Agent as Collateral in the same form as so received (with any necessary endorsement),
and, if deemed necessary by Agent, Grantors shall take such actions, including the actions
described in Section 6(h), as Agent may require.

     5. Representations and Warranties. Each Grantor hereby represents and warrants as
follows:

               (a) The exact legal name of each of the Grantors is set forth on the signature pages of this
Agreement or a written notice provided to Agent pursuant to Section 6.5 of the Credit
Agreement.

               (b) Schedule 7 attached hereto sets forth all Real Property owned by Grantors as of
the Closing Date.

               (c) As of the Closing Date, no Grantor has any interest in, or title to, any Copyrights,
Intellectual Property Licenses, Patents, or Trademarks except as set forth on Schedules 2, 3 ,
4 and 6, respectively, attached hereto. This Agreement is effective to create a valid and
continuing Lien on such Copyrights, Intellectual Property Licenses, Patents and Trademarks and,
upon filing of the Copyright Security Agreement with the United States Copyright Office and filing
of the Patent Security Agreement and the Trademark Security Agreement with the United State Patent
and Trademark Office, and the filing of appropriate financing statements in the jurisdictions
listed on Schedule 8 hereto, all action necessary or desirable to protect and perfect the
Security Interest in and to on each Grantor’s Patents, Trademarks, or Copyrights has been taken and
such perfected Security Interests are enforceable as such as against any and all creditors of and
purchasers from any Grantor.

               (d) This Agreement creates a valid security interest in the Collateral of each of Grantors, to
the extent a security interest therein can be created under the Code, securing the payment of the
Secured Obligations. Except to the extent a security interest in the Collateral cannot be
perfected by the filing of a financing statement under the Code, all filings and other actions
necessary or desirable to perfect and protect such security interest have been duly taken or will
have been taken upon the filing of financing statements listing each applicable Grantor, as a
debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor’s name on
Schedule 8 attached hereto. Upon the making of such filings, Agent shall have a first
priority perfected security interest in the Collateral of each Grantor (subject only to Permitted
Liens) to the

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extent such security interest can be perfected by the filing of a financing statement. All
action by any Grantor necessary to protect and perfect such security interest on each item of
Collateral has been duly taken.

               (e) Except for the Security Interest created hereby, each Grantor is and will at all times be
the sole holder of record and the legal and beneficial owner, free and clear of all Liens other
than Permitted Liens, of the Pledged Interests indicated on Schedule 5 as being owned by
such Grantor and, when acquired by such Grantor, any Pledged Interests acquired after the Closing
Date; (ii) all of the Pledged Interests are duly authorized, validly issued, fully paid and
nonassessable and the Pledged Interests constitute or will constitute the percentage of the issued
and outstanding Stock of the Pledged Companies of such Grantor identified on Schedule 5
hereto as supplemented or modified by any Pledged Interests Addendum or any Supplement to this
Agreement; (ii) such Grantor has the right and requisite authority to pledge, the Investment
Related Property pledged by such Grantor to Agent as provided herein; (iii) all actions necessary
or desirable to perfect, establish the first priority of, or otherwise protect, Agent’s Liens in
the Investment Related Collateral, and the proceeds thereof, have been duly taken, (A) upon the
execution and delivery of this Agreement; (B) upon the taking of possession by Agent of any
certificates constituting the Pledged Interests, to the extent such Pledged Interests are
represented by certificates, together with undated powers endorsed in blank by the applicable
Grantor; (C) upon the filing of financing statements in the applicable jurisdiction set forth on
Schedule 8 attached hereto for such Grantor with respect to the Pledged Interests of such
Grantor that are not represented by certificates, and (D) with respect to any Securities Accounts,
upon the delivery of Control Agreements with respect thereto; and (iv) each Grantor has delivered
to and deposited with Agent (or, with respect to any Pledged Interests created or obtained after
the Closing Date, will deliver and deposit in accordance with Sections 6(a) and 8
hereof) all certificates representing the Pledged Interests owned by such Grantor to the extent
such Pledged Interests are represented by certificates, and undated powers endorsed in blank with
respect to such certificates. None of the Pledged Interests owned or held by such Grantor has been
issued or transferred in violation of any securities registration, securities disclosure or similar
laws of any jurisdiction to which such issuance or transfer may be subject.

               (f) No consent, approval, authorization, or other order or other action by, and no notice to
or filing with, any Governmental Authority or any other Person is required for the grant of a
Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or for the
execution, delivery, or performance of this Agreement by such Grantor. No consent, approval,
authorization, or other order or action by, and no notice to or filing with, any Government
Authority is required for the exercise by Agent of the voting or other rights provided for in this
Agreement with respect to the Investment Related Property or the remedies in respect of the
Collateral pursuant to this Agreement, except as may be required in connection with such
disposition of Investment Related Property by laws affecting the offering and sale of securities
generally. No consent, approval, authorization, or other order or action by, and no notice to, any
Person is required for the exercise by Agent of the voting or other rights provided for in this
Agreement with respect to the Investment Related Property or the remedies in respect of the
Collateral pursuant to this Agreement. No Intellectual Property License to which any Grantor is a
party requires any consent for such Grantor to grant the security interest granted hereunder in
such Grantors’ right, title or interest in or to any such Intellectual Property Licenses.

               (g) There is no default, breach, violation or event of acceleration existing under any
promissory note (as defined in the Code) constituting Collateral and pledged hereunder (each a
“Pledged Note”) and no event has occurred or circumstance exists which, with the passage of time or
the giving of notice, or both, would constitute a default, breach, violation or event of
acceleration under any Pledged Note. No Grantor that is an obligee under a Pledged Note has waived
any default, breach, violation or event of acceleration under such Pledged Note.

               (h) Each Grantor shall have made all payments, filings and recordations necessary to protect
and maintain its interest in such Grantor’s Intellectual Property Rights in the United States or
any other jurisdiction that are material to the conduct of such Grantor’s business, including (i)
making all necessary

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registration, maintenance, and renewal fee payment and (ii) filing all necessary documents,
including all applications for registration of Copyrights, Patents and Trademarks that are material
to the conduct of such Grantor’s business.

               (i) Each Grantor has taken all actions reasonably necessary to protect the confidentiality of
any trade secrets, the source code of all computer software programs and applications of which it
is the owner and that are material to the conduct of its business, or other confidential
information relating to the Intellectual Property Rights that are material to the conduct of its
business, including (i) protecting the secrecy and confidentiality of its confidential information
and trade secrets by having and enforcing a policy requiring all current and former employees,
consultants, and contractors to execute appropriate confidentiality agreements and (ii) taking all
actions reasonably necessary to ensure that no trade secret falls or has fallen into the public
domain.

               (j) Each Grantor has and enforces a policy requiring all employees, consultants and
contractors to execute appropriate assignment agreements, pursuant to which each such employee,
consultant or contractor assigns to such Grantor all of its rights, including all Intellectual
Property Rights, in and to all ideas, inventions, processes, works of authorship and other work
products that relate to such Grantor’s business and that were conceived, created, authored or
developed during the term of such employee’s, consultant’s or contractor’s employment or engagement
by such Grantor. Other than as set forth in Schedules 2, 3, 4 and 6, no past or
present employee or contractor of any Grantor has any ownership interest, license, permission or
other right in or to any Intellectual Property Rights that are material to the conduct of any such
Grantor’s business, except that solely to the extent necessary for the conduct of their work for or
on behalf of any Grantor, (i) employees of each Grantor may have permission to use Intellectual
Property Rights and (ii) contractors may have permission to use or license rights in the
Intellectual Property.

               (k) No claim has been made and is continuing or threatened that the use by any Grantor of any
Intellectual Property Rights that are material to the conduct of its business is invalid or
unenforceable or that the use by such Grantor of any such Intellectual Property Rights does or may
violate the rights of any Person. To the best of each Grantor’s knowledge, there is currently no
infringement or unauthorized use of any item of Intellectual Property Rights contained on
Schedules 2, 3, 4 or 6.

     6. Covenants. Each Grantor, jointly and severally, covenants and agrees with Agent
and the Lender Group that from and after the date of this Agreement and until the date of
termination of this Agreement in accordance with Section 22 hereof:

               (a) Possession of Collateral. In the event that any Collateral, including proceeds,
is evidenced by or consists of Negotiable Collateral, Investment Related Property, or Chattel
Paper, and if and to the extent that perfection or priority of Agent’s Security Interest is
dependent on or enhanced by possession, the applicable Grantor, immediately upon the request of
Agent and in accordance with Section 8 hereof, shall execute such other documents and
instruments as shall be requested by Agent or, if applicable, endorse and deliver physical
possession of such Negotiable Collateral, Investment Related Property, or Chattel Paper to Agent,
together with such undated powers endorsed in blank as shall be requested by Agent;

               (b) Chattel Paper.

                         (i) Each Grantor shall take all steps reasonably necessary to grant Agent control of all
electronic Chattel Paper in accordance with the Code and all “transferable records” as that term is
defined in Section 16 of the Uniform Electronic Transaction Act and Section 201 of the federal
Electronic Signatures in Global and National Commerce Act as in effect in any relevant
jurisdiction;

                         (ii) If any Grantor retains possession of any Chattel Paper or instruments (which retention of
possession shall be subject to the extent permitted hereby and by the Credit Agreement), promptly

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upon the request of Agent, such Chattel Paper and instruments shall be marked with the
following legend: “This writing and the obligations evidenced or secured hereby are subject to the
Security Interest of Wells Fargo Foothill, Inc., as Agent for the benefit of the Lender Group and
the Bank Product Provider”;

               (c) Control Agreements.

                         (i) Except to the extent otherwise permitted by the Credit Agreement, each Grantor shall
obtain an authenticated Control Agreement, from each bank holding a Deposit Account for such
Grantor;

                         (ii) Except to the extent otherwise permitted by the Credit Agreement, each Grantor shall
obtain authenticated Control Agreements, from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial assets or commodities to
or for any Grantor;

               (d) Letter of Credit Rights. Each Grantor that is or becomes the beneficiary of any
one letter of credit, other than a Wuhan L/C, with a face amount of $100,000 or one or more
Grantors (individually or collectively) are or become the beneficiary of more than one letter of
credit, other than Wuhan L/Cs, with face amounts of $200,000 in the aggregate, such Grantor or
Grantors shall promptly (and in any event within 2 Business Days after becoming a beneficiary),
notify Agent thereof and, upon the request by Agent, enter into a tri-party agreement with Agent
and the issuer or confirmation bank with respect to letter-of-credit rights (as that term is
defined in the Code) assigning such letter-of-credit rights to Agent and directing all payments
thereunder to Agent’s Account, all in form and substance satisfactory to Agent, provided, however,
that solely with respect to Wuhan L/Cs, so long as no Event of Default has occurred and is
continuing, Grantors shall not be required to enter into the above referenced tri-party agreement;

               (e) Commercial Tort Claims. Each Grantor shall promptly (and in any event within 2
Business Days of receipt thereof), notify Agent in writing upon incurring or otherwise obtaining a
Commercial Tort Claim after the date hereof against any third party and, upon request of Agent,
promptly amend Schedule 1 to this Agreement, authorize the filing of additional financing
statements or amendments to existing financing statements and do such other acts or things deemed
necessary or desirable by Agent to give Agent a first priority, perfected security interest in any
such Commercial Tort Claim;

               (f) Government Contracts. If any Account or Chattel Paper in an amount of more than
$100,000 arises out of a contract or contracts with the United States of America or any department,
agency, or instrumentality thereof or if the aggregate amount of Accounts or Chattel Paper arising
out of contracts with the United States of America or any department, agency, or instrumentality
thereof exceed $250,000, Grantors shall promptly (and in any event within 2 Business Days of the
creation thereof) notify Agent thereof in writing and execute any instruments or take any steps
reasonably required by Agent in order that all moneys due or to become due under such contract or
contracts shall be assigned to Agent, for the benefit of the Lender Group and the Bank Product
Providers, and notice thereof given under the Assignment of Claims Act or other applicable law;

               (g) Intellectual Property.

                         (i) Upon request of Agent, in order to facilitate filings with the United States Patent and
Trademark Office or any similar office or agency in any jurisdiction and the United States
Copyright Office or any similar office or agency in any jurisdiction, each Grantor shall execute
and deliver to Agent one or more Copyright Security Agreements, Trademark Security Agreements, or
Patent Security Agreements to evidence Agent’s Lien on such Grantor’s Patents, Trademarks, or
Copyrights, and the General Intangibles of such Grantor relating thereto or represented thereby;

10

 

                         (ii) Each Grantor shall have the duty, to the extent necessary or economically desirable in
the operation of such Grantor’s business, (A) to promptly sue for infringement, misappropriation,
or dilution and to recover any and all damages for such infringement, misappropriation, or
dilution, (B) to prosecute diligently any trademark application or service mark application that is
part of the Trademarks pending as of the date hereof or hereafter until the termination of this
Agreement, (C) to prosecute diligently any patent application that is part of the Patents pending
as of the date hereof or hereafter until the termination of this Agreement, and (D) to take all
reasonable and necessary action to preserve and maintain all of such Grantor’s Trademarks, Patents,
Copyrights, Intellectual Property Licenses, and its rights therein, including the filing of
applications for renewal, affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings. Any expenses incurred in connection with the foregoing
shall be borne by the appropriate Grantor. Grantors will not register with the U.S. Copyright
Office any unregistered copyrights (whether in existence on the Closing Date or thereafter
acquired, arising, or developed) unless (i) Administrative Borrower provides Agent with written
notice of the applicable Grantor intent to register such copyrights not less than 30 days prior to
the date of the proposed registration, and (ii) prior to such registration, the applicable Grantor
execute and deliver to Agent an Copyright Security Agreement in the form of Exhibit A
hereto, or such other documentation as Agent deems necessary in order to perfect and continue
perfected Agent’s Liens on such copyrights following such registration. Each Grantor further
agrees not to abandon any Trademark, Patent, Copyright, or Intellectual Property License that is
necessary or economically desirable in the operation of such Grantor’s business without the prior
written consent of Agent;

                         (iii) Grantors acknowledge and agree that the Lender Group shall have no duties with respect
to the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Without limiting the
generality of this Section 6(g), Grantors acknowledge and agree that no member of the
Lender Group shall be under any obligation to take any steps necessary to preserve rights in the
Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any other Person, but
any member of the Lender Group may do so at its option from and after the occurrence and during the
continuance of an Event of Default, and all expenses incurred in connection therewith (including
reasonable fees and expenses of attorneys and other professionals) shall be for the sole account of
Borrowers and shall be chargeable to the Loan Account;

                         (iv) Each Grantor agrees to take all necessary steps, including making all necessary payments
and filings in connection with registration, maintenance, and renewal of each Grantor’s Patents and
Trademarks that are material to the conduct of each Grantor’s business;

                         (v) In no event shall any Grantor, either itself or through any agent, employee, licensee, or
designee, file an application for the registration of any Patent, Trademark, or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office or any similar office
or agency without giving Agent prior written notice thereof. Promptly upon any such filing, each
Grantor shall comply with Section 6(g)(i) hereof;

               (h) Investment Related Property.

                         (i) If: (a) Agent in its sole discretion requires that the Stock of Bookham China be pledged
as Collateral hereunder or (b) any Grantor shall receive or become entitled to receive any Pledged
Interests after the Closing Date, the applicable Grantor shall promptly (and in any event within 2
Business Days of receipt thereof) deliver to Agent a duly executed Pledged Interests Addendum
identifying such Pledged Interests;

                         (ii) All sums of money and property paid or distributed in respect of the Investment Related
Property which are received by any Grantor shall be held by the Grantors in trust for the benefit
of Agent segregated from such Grantor’s other property, and such Grantor shall deliver it forthwith
to Agent’s in the exact form received;

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                         (iii) Each Grantor shall promptly deliver to Agent a copy of each notice or other
communication received by it in respect of any Pledged Interests;

                         (iv) No Grantor shall make or consent to any amendment or other modification or waiver with
respect to any Pledged Interests, Pledged Operating Agreement, or Pledged Partnership Agreement, or
enter into any agreement or permit to exist any restriction with respect to any Pledged Interests
other than as permitted by the Loan Documents;

                         (v) Each Grantor agrees that it will cooperate with Agent in obtaining all necessary approvals
and making all necessary filings under federal, state, local, or foreign law in connection with the
Security Interest on the Investment Related Property or any sale or transfer thereof;

                         (vi) As to all limited liability company or partnership interests, issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, each Grantor hereby represents, warrants and
covenants that the Pledged Interests issued pursuant to such agreement (A) are not and shall not be
dealt in or traded on securities exchanges or in securities markets, (B) do not and will not
constitute investment company securities, and (C) are not and will not be held by such Grantor in a
securities account. In addition, none of the Pledged Operating Agreements, the Pledged Partnership
Agreements, or any other agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide or shall provide that such Pledged
Interests are securities governed by Article 8 of the Uniform Commercial Code as in effect in any
relevant jurisdiction;

               (i) Real Property; Fixtures. Each Grantor covenants and agrees that upon the
acquisition of any fee interest in Real Property it will promptly (and in any event within 2
Business Days of acquisition) notify Agent of the acquisition of such Real Property and will grant
to Agent, for the benefit of the Lender Group and the Bank Product Provider, a first priority
Mortgage on each fee interest in Real Property now or hereafter owned by such Grantor and shall
deliver such other documentation and opinions, in form and substance satisfactory to Agent, in
connection with the grant of such Mortgage as Agent shall request in its Permitted Discretion,
including title insurance policies, financing statements, fixture filings and environmental audits
and such Grantor shall pay all recording costs, intangible taxes and other fees and costs
(including reasonable attorneys fees and expenses) incurred in connection therewith. Each Grantor
acknowledges and agrees that, to the extent permitted by applicable law, all of the Collateral
shall remain personal property regardless of the manner of its attachment or affixation to real
property;

               (j) Transfers and Other Liens. Grantors shall not (i) sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the
Collateral, except expressly permitted by the Credit Agreement, or (ii) create or permit to exist
any Lien upon or with respect to any of the Collateral of any of Grantors, except for Permitted
Liens. The inclusion of Proceeds in the Collateral shall not be deemed to constitute Agent’s
consent to any sale or other disposition of any of the Collateral except as expressly permitted in
this Agreement or the other Loan Documents; and

               (k) Other Actions as to Any and All Collateral. Each Grantor shall promptly (and in
any event within 2 Business Days of acquiring or obtaining such Collateral) notify Agent in writing
upon (i) acquiring or otherwise obtaining any Collateral after the date hereof consisting of
Trademarks, Patents, Copyrights, Intellectual Property Licenses, Investment Related Property,
Chattel Paper (electronic, tangible or otherwise), documents (as defined in Article 9 of the
Code), promissory notes (as defined in the Code, or instruments (as defined in the Code) or (ii)
any amount payable under or in connection with any of the Collateral being or becoming evidenced
after the date hereof by any Chattel Paper, documents, promissory notes, or instruments and, in
each such case upon the request of Agent and in accordance with Section 8 hereof, promptly
execute such other documents, or if applicable, deliver such Chattel Paper, other documents or
certificates evidencing any Investment Related Property in accordance with Section 6 hereof
and do such other acts or things deemed necessary or desirable by Agent to protect Agent’s Security
Interest therein; and

12

 

     7. Relation to Other Security Documents. The provisions of this Agreement shall be
read and construed with the other Loan Documents referred to below in the manner so indicated.

               (a) Credit Agreement. In the event of any conflict between any provision in this
Agreement and a provision in the Credit Agreement, such provision of the Credit Agreement shall
control.

               (b) Patent, Trademark, Copyright Security Agreements. The provisions of the Copyright
Security Agreements, Trademark Security Agreements, and Patent Security Agreements are supplemental
to the provisions of this Agreement, and nothing contained in the Copyright Security Agreements,
Trademark Security Agreements, or the Patent Security Agreements shall limit any of the rights or
remedies of Agent hereunder.

     8. Further Assurances.

               (a) Each Grantor agrees that from time to time, at its own expense, such Grantor will promptly
execute and deliver all further instruments and documents, and take all further action, that may be
necessary or that Agent may reasonably request, in order to perfect and protect any Security
Interest granted or purported to be granted hereby or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any of the Collateral.

               (b) Each Grantor authorizes the filing by Agent financing or continuation statements, or
amendments thereto, and such Grantor will execute and deliver to Agent such other instruments or
notices, as may be necessary or as Agent may reasonably request, in order to perfect and preserve
the Security Interest granted or purported to be granted hereby.

               (c) Each Grantor authorizes Agent at any time and from time to time to file, transmit, or
communicate, as applicable, financing statements and amendments (i) describing the Collateral as
“all personal property of debtor” or “all assets of debtor” or words of similar effect, (ii)
describing the Collateral as being of equal or lesser scope or with greater detail, or (iii) that
contain any information required by part 5 of Article 9 of the Code for the sufficiency or filing
office acceptance. Each Grantor also hereby ratifies any and all financing statements or
amendments previously filed by Agent in any jurisdiction.

               (d) Each Grantor acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement filed in connection with
this Agreement without the prior written consent of Agent, subject to such Grantor’s rights under
Section 9-509(d)(2) of the Code.

     9. Agent’s Right to Perform Contracts. Upon the occurrence and during the continuance
of an Event of Default, Agent (or its designee) may proceed to perform any and all of the
obligations of any Grantor contained in any contract, lease, or other agreement and exercise any
and all rights of any Grantor therein contained as fully as such Grantor itself could.

     10. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints Agent
its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of
such Grantor or otherwise, at such time as an Event of Default has occurred and is continuing under
the Credit Agreement, to take any action and to execute any instrument which Agent may reasonably
deem necessary or advisable to accomplish the purposes of this Agreement, including:

               (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in connection with the Accounts or any other
Collateral of such Grantor;

13

 

               (b) to receive and open all mail addressed to such Grantor and to notify postal authorities to
change the address for the delivery of mail to such Grantor to that of Agent;

               (c) to receive, indorse, and collect any drafts or other instruments, documents, Negotiable
Collateral or Chattel Paper;

               (d) to file any claims or take any action or institute any proceedings which Agent may deem
necessary or desirable for the collection of any of the Collateral of such Grantor or otherwise to
enforce the rights of Agent with respect to any of the Collateral;

               (e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any Person obligated to such Grantor in respect of any Account of such Grantor;

               (f) to use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial
designs, Copyrights, advertising matter or other industrial or intellectual property rights, in
advertising for sale and selling Inventory and other Collateral and to collect any amounts due
under Accounts, contracts or Negotiable Collateral of such Grantor; and

               (g) Agent on behalf of the Lender Group shall have the right, but shall not be obligated, to
bring suit in its own name to enforce the Trademarks, Patents, Copyrights and Intellectual Property
Licenses and, if Agent shall commence any such suit, the appropriate Grantor shall, at the request
of Agent, do any and all lawful acts and execute any and all proper documents reasonably required
by Agent in aid of such enforcement.

     To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact
shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable until this Agreement is terminated.

     11. Agent May Perform. If any of Grantors fails to perform any agreement contained
herein, Agent may itself perform, or cause performance of, such agreement, and the reasonable
expenses of Agent incurred in connection therewith shall be payable, jointly and severally, by
Grantors.

     12. Agent’s Duties. The powers conferred on Agent hereunder are solely to protect
Agent’s interest in the Collateral, for the benefit of the Lender Group and the Bank Product
Provider, and shall not impose any duty upon Agent to exercise any such powers. Except for the
safe custody of any Collateral in its actual possession and the accounting for moneys actually
received by it hereunder, 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. Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its actual possession if such Collateral is accorded treatment
substantially equal to that which Agent accords its own property.

     13. Collection of Accounts, General Intangibles and Negotiable Collateral. At any
time upon the occurrence and during the continuation of an Event of Default, Agent or Agent’s
designee may (a) notify Account Debtors of any Grantor that the Accounts, General Intangibles,
Chattel Paper or Negotiable Collateral have been assigned to Agent, for the benefit of the Lender
Group and the Bank Product Provider, or that Agent has a security interest therein, and (b) collect
the Accounts, General Intangibles and Negotiable Collateral directly, and any collection costs and
expenses shall constitute part of such Grantor’s Secured Obligations under the Loan Documents.

     14. Disposition of Pledged Interests by Agent. None of the Pledged Interests existing
as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the
date of acquisition thereof will be, registered or qualified under the various federal or state
securities laws of the United States and

14

 

disposition thereof after an Event of Default may be restricted to one or more private
(instead of public) sales in view of the lack of such registration. Each Grantor understands that
in connection with such disposition, Agent may approach only a restricted number of potential
purchasers and further understands that a sale under such circumstances may yield a lower price for
the Pledged Interests than if the Pledged Interests were registered and qualified pursuant to
federal and state securities laws and sold on the open market. Each Grantor, therefore, agrees
that: (a) if Agent shall, pursuant to the terms of this Agreement, sell or cause the Pledged
Interests or any portion thereof to be sold at a private sale, Agent shall have the right to rely
upon the advice and opinion of any nationally recognized brokerage or investment firm (but shall
not be obligated to seek such advice and the failure to do so shall not be considered in
determining the commercial reasonableness of such action) as to the best manner in which to offer
the Pledged Interest or any portion thereof for sale and as to the best price reasonably obtainable
at the private sale thereof; and (b) such reliance shall be conclusive evidence that Agent has
handled the disposition in a commercially reasonable manner.

     15. Voting Rights.

               (a) Upon the occurrence and during the continuation of an Event of Default, (i) Agent may, at
its option, and with 2 Business Days prior notice to any Grantor, and in addition to all rights and
remedies available to Agent under any other agreement, at law, in equity, or otherwise, exercise
all voting rights, and all other ownership or consensual rights in respect of the Pledged Interests
owned by such Grantor, but under no circumstances is Agent obligated by the terms of this Agreement
to exercise such rights, and (ii) if Agent duly exercises its right to vote any of such Pledged
Interests, each Grantor hereby appoints Agent, such Grantor’s true and lawful attorney-in-fact and
IRREVOCABLE PROXY to vote such Pledged Interests in any manner Agent deems advisable for or against
all matters submitted or which may be submitted to a vote of shareholders, partners or members, as
the case may be. The power-of-attorney granted hereby is coupled with an interest and shall be
irrevocable.

               (b) For so long as any Grantor shall have the right to vote the Pledged Interests owned by it,
such Grantor covenants and agrees that it will not, without the prior written consent of Agent,
vote or take any consensual action with respect to such Pledged Interests which would materially
adversely affect the rights of Agent and the other members of the Lender Group with respect to the
Pledged Interests or the value of the Pledged Interests.

     16. Remedies. Upon the occurrence and during the continuance of an Event of Default:

               (a) Agent may exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and
remedies of a secured party on default under the Code or any other applicable law. Without
limiting the generality of the foregoing, each Grantor expressly agrees that, in any such event,
Agent without demand of performance or other demand, advertisement or notice of any kind (except a
notice specified below of time and place of public or private sale) to or upon any of Grantors or
any other Person (all and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the Code or any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors to, and each Grantor
hereby agrees that it will at its own expense and upon request of Agent forthwith, assemble all or
part of the Collateral as directed by Agent and make it available to Agent at one or more locations
where such Grantor regularly maintains Inventory, and (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at
any of Agent’s offices or elsewhere, for cash, on credit, and upon such other terms as Agent may
deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least 10 days notice to any of Grantors of the time and place of any public
sale or the time after which any private sale is to be made shall constitute reasonable
notification and specifically such notice shall constitute a reasonable “authenticated notification
of disposition” within the meaning of Section 9-611 of the Code. Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. Agent may adjourn

15

 

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.

               (b) Agent is hereby granted a license or other right to use, without liability for royalties
or any other charge, each Grantor’s labels, Patents, Copyrights, rights of use of any name, trade
secrets, trade names, Trademarks, service marks and advertising matter, URLs, domain names,
industrial designs, other industrial or intellectual property or any property of a similar nature,
whether owned by any of Grantors or with respect to which any of Grantors have rights under
license, sublicense, or other agreements, as it pertains to the Collateral, in preparing for sale,
advertising for sale and selling any Collateral, and each Grantor’s rights under all licenses and
all franchise agreements shall inure to the benefit of Agent.

               (c) Any cash held by Agent as Collateral and all cash proceeds received by Agent in respect of
any sale of, collection from, or other realization upon all or any part of the Collateral shall be
applied against the Secured Obligations in the order set forth in the Credit Agreement. In the
event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in
full, each Grantor shall remain jointly and severally liable for any such deficiency.

               (d) Each Grantor hereby acknowledges that the Secured Obligations arose out of a commercial
transaction, and agrees that if an Event of Default shall occur and be continuing Agent shall have
the right to an immediate writ of possession without notice of a hearing. Agent shall have the
right to the appointment of a receiver for the properties and assets of each of Grantors, and each
Grantor hereby consents to such rights and such appointment and hereby waives any objection such
Grantors may have thereto or the right to have a bond or other security posted by Agent.

     17. Remedies Cumulative. Each right, power, and remedy of Agent as provided for in
this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or
by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other
right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of
the exercise by Agent, of any one or more of such rights, powers, or remedies shall not preclude
the simultaneous or later exercise by Agent of any or all such other rights, powers, or remedies.

     18. Marshaling. Agent shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other assurances of
payment of, the Secured Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, however existing or arising. To the extent that it
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 Agent’s rights and remedies
under this Agreement or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by which any of the
Secured 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.

     19. Indemnity and Expenses.

               (a) Each Grantor agrees to indemnify Agent and the other members of the Lender Group from and
against all claims, lawsuits and liabilities (including reasonable attorneys fees) growing out of
or resulting from this Agreement (including enforcement of this Agreement) or any other Loan
Document to which such Grantor is a party, except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of the party seeking indemnification as determined by a
final non-appealable order of a court of

16

 

competent jurisdiction. This provision shall survive the termination of this Agreement and
the Credit Agreement and the repayment of the Secured Obligations.

               (b) Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge to
the Loan Account) all the Lender Group Expenses which Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or operation of, or, upon an
Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in
accordance with this Agreement and the other Loan Documents, (iii) the exercise or enforcement of
any of the rights of Agent hereunder or (iv) the failure by any of Grantors to perform or observe
any of the provisions hereof.

     20. Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no
consent to any departure by any of Grantors herefrom, shall in any event be effective unless the
same shall be in writing and signed by Agent, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No amendment of any
provision of this Agreement shall be effective unless the same shall be in writing and signed by
Agent and each of Grantors to which such amendment applies.

     21. Addresses for Notices. All notices and other communications provided for
hereunder shall be given in the form and manner and delivered to Agent at its address specified in
the Credit Agreement, and to any of the Grantors at their respective addresses specified in the
Credit Agreement or Guaranty, as applicable, or, as to any party, at such other address as shall be
designated by such party in a written notice to the other party.

     22. Continuing Security Interest: Assignments under Credit Agreement. This Agreement
shall create a continuing security interest in the Collateral and shall (a) remain in full force
and effect until the Obligations have been paid in full in cash in accordance with the provisions
of the Credit Agreement and the Commitments have expired or have been terminated, (b) be binding
upon each of Grantors, and their respective successors and assigns, and (c) inure to the benefit
of, and be enforceable by, Agent, and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any the Lender may, in accordance with the provisions
of the Credit Agreement, assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such the Lender herein or
otherwise. Upon payment in full in cash of the Obligations in accordance with the provisions of
the Credit Agreement and the expiration or termination of the Commitments, the Security Interest
granted hereby shall terminate and all rights to the Collateral shall revert to Grantors or any
other Person entitled thereto. At such time, Agent will authorize the filing of appropriate
termination statements to terminate such Security Interests. No transfer or renewal, extension,
assignment, or termination of this Agreement or of the Credit Agreement, any other Loan Document,
or any other instrument or document executed and delivered by any Grantor to Agent nor any
additional Advances or other loans made by any the Lender to any Borrower, nor the taking of
further security, nor the retaking or re-delivery of the Collateral to Grantors, or any of them, by
Agent, nor any other act of the Lender Group or the Bank Product Provider, or any of them, shall
release any of Grantors from any obligation, except a release or discharge executed in writing by
Agent in accordance with the provisions of the Credit Agreement. Agent shall not by any act,
delay, omission or otherwise, be deemed to have waived any of its rights or remedies hereunder,
unless such waiver is in writing and signed by Agent and then only to the extent therein set forth.
A waiver by Agent of any right or remedy on any occasion shall not be construed as a bar to the
exercise of any such right or remedy which Agent would otherwise have had on any other occasion.

17

 

     23. Governing Law.

               (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO
THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.

               (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO
BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. AGENT AND EACH GRANTOR
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING
IS BROUGHT IN ACCORDANCE WITH THIS SECTION 23(b).

               (c) AGENT AND EACH GRANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. AGENT AND EACH GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

     24. New Subsidiaries. To the extent required by Section 5.16 of the Credit
Agreement, any new direct or indirect Subsidiary (whether by acquisition or creation) of Grantor is
required to enter into this Agreement by executing and delivering in favor of Agent a supplement to
this Agreement in the form of Annex 1 attached hereto. Upon the execution and delivery of
Annex 1 by such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the
same force and effect as if originally named as a Grantor herein. The execution and delivery of
any instrument adding an additional Grantor as a party to this Agreement shall not require the
consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor hereunder.

     25. Agent. Each reference herein to any right granted to, benefit conferred upon or
power exercisable by the “Agent” shall be a reference to Agent, for the benefit of the Lender Group
and the Bank Product Provider.

     26. Miscellaneous.

               (a) This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be deemed to be an
original, and all of which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method
of transmission shall be

18

 

equally as effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or other electronic
method of transmission also shall deliver an original executed counterpart of this Agreement but
the failure to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis mutandis.

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

               (c) Headings used in this Agreement are for convenience only and shall not be used in
connection with the interpretation of any provision hereof.

               (d) The pronouns used herein shall include, when appropriate, either gender and both singular
and plural, and the grammatical construction of sentences shall conform thereto.

               (e) Unless the context of this Agreement or any other Loan Document clearly requires
otherwise, references to the plural include the singular, references to the singular include the
plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,”
“herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document
refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Loan Document, as the case may be. Section,
subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in any other Loan Document to any agreement,
instrument, or document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set
forth herein). Any reference herein or in any other Loan Document to the satisfaction or repayment
in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations that, at such time, are
allowed by the applicable Bank Product Provider to remain outstanding and that are not required by
the provisions of the Credit Agreement to be repaid or cash collateralized. Any reference herein
to any Person shall be construed to include such Person’s successors and assigns. Any requirement
of a writing contained herein or in any other Loan Document shall be satisfied by the transmission
of a Record and any Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.

19

 

     IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through
their duly authorized officers, as of the day and year first above written.

	 	 	 	 	 	 	 	 	 
	GRANTORS:	 	BOOKHAM, INC.,

a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

Chief Financial Officer	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BOOKHAM TECHNOLOGY PLC,

a limited liability company incorporated under

the laws of England and Wales
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

Director	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	NEW FOCUS, INC.,

a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BOOKHAM (US) INC.,

a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BOOKHAM (CANADA) INC.,

a federally incorporated Canadian corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

President	 	 	 	 

S-1

Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	 	 	ONETTA, INC.,

a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	IGNIS OPTICS INC.,

a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FOCUSED RESEARCH INC.,

a California corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	GLOBE Y. TECHNOLOGY, INC.,

a California corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BOOKHAM NOMINEES LIMITED,

a Company organized under the laws of

England and Wales
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve Abely	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Steve Abely

Director	 	 	 	 

S-2

Security Agreement

 

 

	 	 	 	 	 	 	 	 	 
	EXECUTED as a DEED by

	 	 	)	 	 	 	 	 
	BOOKHAM INTERNATIONAL

	 	 	)	 	 	 	 	 
	LTD.

	 	 	)	 	 	 	 	 
	In the presence of:

	 	 	)	 	 	Per:	 	/s/ Steve Abely
	 

	 	 	 	 	 		 	 
	 

	 	 	)	 	 	 	 	Director/Attorney-in-fact
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	/s/
Jacobin Zorin  

	 	 	)	 	 	 	 	 
	  Witness: Jacobin Zorin
	 	 	 	 	 	 	 	 
	  Name:
Secretary
	 	 	 	 	 	 	 	 
	  Address:
2584 Junction Avenue

                   San Jose, CA 95134
	 	 	 	 	 	 	 	 

S-3

Security Agreement

 

	 	 	 	 	 	 	 	 	 
	AGENT:	 	WELLS FARGO FOOTHILL, INC., as Agent
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Alex Hechler	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:

Title:
	 	Alex Hechler

Vice President	 	 	 	 

S-4

Security Agreement

 

SCHEDULE 1

COMMERCIAL TORT CLAIMS

Schedule 1

 

SCHEDULE 2

COPYRIGHTS

Schedule 2

 

SCHEDULE 3

INTELLECTUAL PROPERTY LICENSES

Schedule 3

 

SCHEDULE 4

PATENTS

Schedule 4

 

SCHEDULE 5

PLEDGED COMPANIES

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Name of Pledged	 	Number of	 	Class of	 	Percentage of	 	Certificate
	Name of Pledgor	 	Company	 	Shares/Units	 	Interests	 	Class Owned	 	Nos.
	Bookham, Inc., a
Delaware corporation

	 	Bookham Technology
plc, a limited
liability company
incorporated under
the laws of England
and Wales
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bookham, Inc.

	 	Bookham Nominees
Limited, a company
incorporated under
the laws of England
and Wales	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bookham Nominees

Limited

	 	Bookham Technology
plc, a limited
liability company
incorporated under
the laws of England
and Wales	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bookham Technology plc

	 	Bookham (US) Inc.,
a Delaware
corporation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bookham Technology plc

	 	New Focus Inc., a
Delaware
corporation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bookham Technology plc

	 	Bookham (Canada)
Inc., a federally
incorporated
Canadian
corporation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bookham Technology plc

	 	Bookham
International Ltd,
a corporation
organized under the
laws of the Cayman
Islands	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bookham Technology plc

	 	Bookham Technology
kk, a corporation
organized under the
laws of Japan	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bookham Technology plc

	 	Bookham
(Switzerland) AG, a
corporation
organized under the
laws of Switzerland	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bookham (US) Inc.

	 	Onetta, Inc., a
Delaware
corporation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Bookham (US) Inc.

	 	Ignis Optics Inc.,
a Delaware
corporation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	New Focus Inc.

	 	Focused Research Inc., a
California corporation	 	 	 	 	 	 	 	 

Schedule 5

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Name of Pledged	 	Number of	 	Class of	 	Percentage of	 	Certificate
	Name of Pledgor	 	Company	 	Shares/Units	 	Interests	 	Class Owned	 	Nos.
	New Focus Inc.

	 	Globe Y.
Technology, Inc., a
California
corporation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	New Focus, Inc.

	 	New Focus PSC,
Inc., a corporation
organized under the
laws of Barbados	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	New Focus, Inc.

	 	New Focus GmbH, a
corporation
organized under the
laws of Germany	 	 	 	 	 	 	 	 

 

Schedule 5

 

SCHEDULE 6

TRADEMARKS

Schedule 6

 

SCHEDULE 7

OWNED REAL PROPERTY

Schedule 7

 

SCHEDULE 8

LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS

	 	 	 
	Grantor

	 	Jurisdictions

Schedule 8

 

ANNEX 1 TO SECURITY AGREEMENT

FORM OF SUPPLEMENT

     Supplement No. ___(this “Supplement”) dated as of ___, 20___, to the
Security Agreement of even date herewith (as amended, restated, supplemented or otherwise modified
from time to time, the “Security Agreement”) by each of the parties listed on the signature
pages thereto and those additional entities that thereafter become parties thereto (collectively,
jointly and severally, “Grantors” and each individually “Grantor”) and WELLS FARGO
FOOTHILL, INC. in its capacity as Agent for the Lender Group and the Bank Product Provider
(together with the successors, “Agent”).

W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement, dated as of August 2, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”)
among Bookham, Inc., a Delaware corporation, as Parent and each of Parent’s Subsidiaries identified
on the signature pages thereof (such Subsidiaries are referred to hereinafter individually as a
“Borrower” and collectively, jointly and severally, as the “Borrowers”), the
lenders party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group is willing to
make certain financial accommodations available to Borrowers from time to time pursuant to the
terms and conditions thereof; and

     WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Security Agreement or the Credit Agreement; and

     WHEREAS, Grantors have entered into the Security Agreement in order to induce the Lender Group
to make certain financial accommodations to Borrowers; and

     WHEREAS, pursuant to Section 5.16 of the Credit Agreement, new direct or indirect
Subsidiaries of Parent, must execute and deliver certain Loan Documents, including the Security
Agreement, and the execution of the Security Agreement by the undersigned new Grantor or Grantors
(collectively, the “New Grantors”) may be accomplished by the execution of this Supplement
in favor of Agent, for the benefit of the Lender Group and the Bank Product Provider;

     NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, each New Grantor
hereby agrees as follows:

     1. In accordance with Section 24 of the Security Agreement, each New Grantor, by its
signature below, becomes a “Grantor” under the Security Agreement with the same force and effect as
if originally named therein as a “Grantor” and each New Grantor hereby (a) agrees to all of the
terms and provisions of the Security Agreement applicable to it as a “Grantor” thereunder and (b)
represents and warrants that the representations and warranties made by it as a “Grantor”
thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing,
each New Grantor, as security for the payment and performance in full of the Secured Obligations,
does hereby grant, assign, and pledge to Agent, for the benefit of the Lender Group and the Bank
Product Provider, a security interest in to all assets of such New Grantor including, all property
of the type described in Section 2 of the Security Agreement to secure the full and prompt
payment of the Secured Obligations, including, any interest thereon, plus reasonable attorneys’
fees and expenses if the Secured Obligations represented by the Security Agreement are collected by
law, through an attorney-at-law, or under advice therefrom. Schedule 1, “Commercial Tort
Claims”, Schedule 2, “Copyrights”, Schedule 3, “Intellectual Property Licenses”,
Schedule 4, “Patents”, Schedule 5, “Pledged Companies”, Schedule 6,
“Trademarks”, Schedule 7, “Owned Real Property,” and Schedule 8, “List of Uniform
Commercial Code Filing Jurisdictions” attached hereto supplement Schedule 1, Schedule
2, Schedule 3, Schedule 4, Schedule 5,

Annex 1 to Security Agreement
1

 

Schedule 6, Schedule 7, and Schedule 8 respectively, to the Security
Agreement and shall be deemed a part thereof for all purposes of the Security Agreement. Each
reference to a “Grantor” in the Security Agreement shall be deemed to include each New Grantor.
The Security Agreement is incorporated herein by reference.

     2. Each New Grantor represents and warrants to Agent, the Lender Group and the Bank Product
Provider that this Supplement has been duly executed and delivered by such New Grantor and
constitutes its legal, valid and binding obligation, enforceable against it in accordance with its
terms, except as enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws affecting creditors’ rights generally and
general principles of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).

     3. This Supplement may be executed in multiple counterparts, each of which shall be deemed to
be an original, but all such separate counterparts shall together constitute but one and the same
instrument. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission
shall be as effective as delivery of a manually executed counterpart hereof.

     4. Except as expressly supplemented hereby, the Security Agreement shall remain in full force
and effect.

     5. This Supplement shall be construed in accordance with and governed by the laws of the State
of California, without regard to the conflict of laws principles thereof.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

Annex 1 to Security Agreement
2

 

     IN WITNESS WHEREOF, each New Grantor and Agent have duly executed this Supplement to the
Security Agreement as of the day and year first above written.

	 	 	 	 	 	 	 	 	 
	NEW GRANTORS:	 	[Name of New Grantor]
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	[Name of New Grantor]
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	AGENT:	 	WELLS FARGO FOOTHILL, INC.
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Annex 1 to Security Agreement
3

 

EXHIBIT A

COPYRIGHT SECURITY AGREEMENT

     This COPYRIGHT SECURITY AGREEMENT (this “Copyright Security Agreement”) is made this
___day of ___, 20___, among Grantors listed on the signature pages hereof ( collectively,
jointly and severally, “Grantors” and each individually “Grantor”), and WELLS FARGO
FOOTHILL, INC., in its capacity as Agent for the Lender Group and the Bank Product Provider
(together with its successors, the “Agent”).

W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”)
among Bookham, Inc., a Delaware corporation, as Parent and each of Parent’s Subsidiaries identified
on the signature pages thereof (such Subsidiaries are referred to hereinafter individually as a
“Borrower” and collectively, jointly and severally, as the “Borrowers”), the
lenders party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group is willing to
make certain financial accommodations available to Borrowers pursuant to the terms and conditions
thereof; and

     WHEREAS, the members of the Lender Group are willing to make the financial accommodations to
Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that
Grantors shall have executed and delivered to Agent, for the benefit of the Lender Group and the
Bank Product Provider, that certain Security Agreement of even date herewith (including all
annexes, exhibits or schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the “Security Agreement”);

     WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to
Agent, for the benefit of the Lender Group and the Bank Product Provider, this Copyright Security
Agreement;

     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantors hereby agree as follows:

     1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have
the meanings given to them in the Security Agreement or the Credit Agreement.

     2. GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL. Each Grantor hereby grants to
Agent, for the benefit of the Lender Group and the Bank Product Provider, a continuing first
priority security interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired (collectively, the
“Copyright Collateral”):

               (a) all of such Grantor’s Copyrights and Copyright Intellectual Property Licenses to which it
is a party including those referred to on Schedule I hereto;

               (b) all reissues, continuations or extensions of the foregoing; and

               (c) all products and proceeds of the foregoing, including any claim by such Grantor against
third parties for past, present or future infringement or dilution of any Copyright or any
Copyright licensed under any Intellectual Property License.

Exhibit A
1

 

     3. SECURITY FOR OBLIGATIONS. This Copyright Security Agreement and the Security
Interest created hereby secures the payment and performance of all the Secured Obligations, whether
now existing or arising hereafter. Without limiting the generality of the foregoing, this
Copyright Security Agreement secures the payment of all amounts which constitute part of the
Obligations and would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank
Product Provider or any of them, whether or not they are unenforceable or not allowable due to the
existence of an Insolvency Proceeding involving any Grantor.

     4. SECURITY AGREEMENT. The security interests granted pursuant to this Copyright
Security Agreement are granted in conjunction with the security interests granted to Agent, for the
benefit of the Lender Group and the Bank Product Provider, pursuant to the Security Agreement.
Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to
the security interest in the Copyright Collateral made and granted hereby are more fully set forth
in the Security Agreement, the terms and provisions of which are incorporated by reference herein
as if fully set forth herein.

     5. AUTHORIZATION TO SUPPLEMENT. Grantors shall give Agent prompt notice in writing of
any additional United States copyright registrations or applications therefor after the date
hereof. Grantors hereby authorize Agent unilaterally to modify this Agreement by amending Schedule
I to include any future United States registered copyrights or applications therefor of Grantors.
Notwithstanding the foregoing, no failure to so modify this Copyright Security Agreement or amend
Schedule I shall in any way affect, invalidate or detract from Agent’s continuing security interest
in all Collateral, whether or not listed on Schedule I.

     6. COUNTERPARTS. This Copyright Security Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument. In proving this Copyright Security
Agreement or any other Loan Document in any judicial proceedings, it shall not be necessary to
produce or account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile transmission or by e-mail
transmission shall be deemed an original signature hereto.

     7. CONSTRUCTION. Unless the context of this Copyright Security Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the singular, references
to the singular include the plural, the terms “includes” and “including” are not limiting, and the
term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Copyright
Security Agreement or any other Loan Document refer to this Copyright Security Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular provision of this
Copyright Security Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Copyright Security Agreement unless
otherwise specified. Any reference in this Copyright Security Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders,
and supplements set forth herein). Any reference herein or in any other Loan Document to the
satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or
cash collateralization in accordance with the terms hereof) of all Obligations other than
unasserted contingent indemnification Obligations and other than any Bank Product Obligations that,
at such time, are allowed by the applicable Bank Product Provider to remain outstanding and that
are not required by the provisions of the Credit Agreement to be repaid or cash collateralized.
Any reference herein to any Person shall be construed to include such Person’s successors and
assigns. Any requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the information contained
therein.

Exhibit A
2

 

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

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ACCEPTED AND ACKNOWLEDGED BY:

WELLS FARGO FOOTHILL, INC., as Agent
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Exhibit A
3

 

SCHEDULE I

TO

COPYRIGHT SECURITY AGREEMENT

COPYRIGHT REGISTRATIONS

	 	 	 	 	 	 	 	 	 
	Grantor	 	Country	 	Copyright	 	Registration No.	 	Registration Date
	 

	 	 
	 	 
	 	 
	 	 

Schedule 1 to Copyright Security Agreement

 

EXHIBIT B

PATENT SECURITY AGREEMENT

     This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this ___day
of ___, 20___, among the Grantors listed on the signature pages hereof (collectively,
jointly and severally, “Grantors” and each individually “Grantor”), and WELLS FARGO
FOOTHILL, INC., in its capacity as administrative agent for the Lender Group and the Bank Product
Provider (together with its successors, “Agent”).

W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”)
among Bookham, Inc., a Delaware corporation, as Parent and each of Parent’s Subsidiaries identified
on the signature pages thereof (such Subsidiaries are referred to hereinafter individually as a
“Borrower” and collectively, jointly and severally, as the “Borrowers”), the
lenders party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group is willing to
make certain financial accommodations available to the Borrowers pursuant to the terms and
conditions thereof; and

     WHEREAS, the members of Lender Group are willing to make the financial accommodations to
Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that
the Grantors shall have executed and delivered to Agent, for the benefit of the Lender Group and
the Bank Product Provider, that certain Security Agreement of even date herewith (including all
annexes, exhibits or schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the “Security Agreement”);

     WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to
Agent, for the benefit of the Lender Group and the Bank Product Provider, this Patent Security
Agreement;

     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Grantor hereby agrees as follows:

     1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have
the meanings given to them in the Security Agreement or the Credit Agreement.

     2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby grants to
Agent, for the benefit of the Lender Group and the Bank Product Provider, a continuing first
priority security interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired (collectively, the
“Patent Collateral”):

               (a) all of its Patents and Patent Intellectual Property Licenses to which it is a party
including those referred to on Schedule I hereto;

               (b) all reissues, continuations or extensions of the foregoing; and

               (c) all products and proceeds of the foregoing, including any claim by such Grantor against
third parties for past, present or future infringement or dilution of any Patent or any Patent
licensed under any Intellectual Property License.

Exhibit B
1

 

     3. SECURITY FOR OBLIGATIONS. This Patent Security Agreement and the Security Interest
created hereby secures the payment and performance of all the Secured Obligations, whether now
existing or arising hereafter. Without limiting the generality of the foregoing, this Patent
Security Agreement secures the payment of all amounts which constitute part of the Obligations and
would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product Provider or
any of them, whether or not they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving any Grantor.

     4. SECURITY AGREEMENT. The security interests granted pursuant to this Patent
Security Agreement are granted in conjunction with the security interests granted to Agent, for the
benefit of the Lender Group and the Bank Product Provider, pursuant to the Security Agreement.
Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to
the security interest in the Patent Collateral made and granted hereby are more fully set forth in
the Security Agreement, the terms and provisions of which are incorporated by reference herein as
if fully set forth herein.

     5. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any new
patentable inventions or become entitled to the benefit of any patent application or patent for any
reissue, division, or continuation, of any patent, the provisions of this Patent Security Agreement
shall automatically apply thereto. Grantors shall give prompt notice in writing to Agent with
respect to any such new patent rights. Without limiting Grantors’ obligations under this
Section 5, Grantors hereby authorize Agent unilaterally to modify this Agreement by
amending Schedule I to include any such new patent rights of Grantors. Notwithstanding the
foregoing, no failure to so modify this Patent Security Agreement or amend Schedule I shall
in any way affect, invalidate or detract from Agent’s continuing security interest in all
Collateral, whether or not listed on Schedule I.

     6. COUNTERPARTS. This Patent Security Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument. In proving this Patent Security
Agreement or any other Loan Document in any judicial proceedings, it shall not be necessary to
produce or account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile transmission or by e-mail
transmission shall be deemed an original signature hereto.

     7. CONSTRUCTION. Unless the context of this Patent Security Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the singular, references
to the singular include the plural, the terms “includes” and “including” are not limiting, and the
term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Patent
Security Agreement or any other Loan Document refer to this Patent Security Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular provision of this Patent
Security Agreement or such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Patent Security Agreement unless otherwise
specified. Any reference in this Patent Security Agreement or in any other Loan Document to any
agreement, instrument, or document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set
forth herein). Any reference herein or in any other Loan Document to the satisfaction or repayment
in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations that, at such time, are
allowed by the applicable Bank Product Provider to remain outstanding and that are not required by

Exhibit B
2

 

the provisions of the Credit Agreement to be repaid or cash collateralized. Any reference herein
to any Person shall be construed to include such Person’s successors and assigns. Any requirement
of a writing contained herein or in any other Loan Document shall be satisfied by the transmission
of a Record and any Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.

[signature page follows]

Exhibit B
3

 

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

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ACCEPTED AND ACKNOWLEDGED BY:
	 
	 	 	 	 	 	 	 	 
	 	 	WELLS FARGO FOOTHILL, INC., as Agent
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Exhibit B
4

 

EXHIBIT C

Annex 1 to Pledge and Security Agreement

PLEDGED INTERESTS ADDENDUM

     This Pledged Interests Addendum, dated as of ___, 20___, is delivered pursuant to
Section 6 of the Security Agreement referred to below. The undersigned hereby agrees that
this Pledged Interests Addendum may be attached to that certain Security Agreement, dated as of
July ___, 2006 (as amended, restated, supplemented or otherwise modified from time to time, the
“Security Agreement”), made by the undersigned, together with the other Grantors named
therein, to Wells Fargo Foothill, Inc., as Agent. Initially capitalized terms used but not defined
herein shall have the meaning ascribed to such terms in the Security Agreement or the Credit
Agreement. The undersigned hereby agrees that the additional interests listed on this Pledged
Interests Addendum as set forth below shall be and become part of the Pledged Interests pledged by
the undersigned to the Agent in the Security Agreement and any pledged company set forth on this
Pledged Interests Addendum as set forth below shall be and become a “Pledged Company” under the
Security Agreement, each with the same force and effect as if originally named therein.

     The undersigned hereby certifies that the representations and warranties set forth in
Section 4 of the Security Agreement of the undersigned are true and correct as to the
Pledged Interests listed herein on and as of the date hereof.

	 	 	 	 	 	 	 	 	 
	 	 	[_______________________________________]	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Title	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Exhibit C
1

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Name of	 	 	 	 	 	 	 	 
	Name of	 	Pledged	 	Number of	 	Class of	 	Percentage of	 	Certificate
	Pledgor	 	Company	 	Shares/Units	 	Interests	 	Class Owned	 	Nos.
	 
	 	 	 	 	 	 	 	 	 	 

Exhibit C
2

 

EXHIBIT D

TRADEMARK SECURITY AGREEMENT

     This TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is made this ___day
of ___, 20___, among Grantors listed on the signature pages hereof (collectively, jointly
and severally, “Grantors” and each individually “Grantor”), and WELLS FARGO
FOOTHILL, INC., in its capacity as Agent for the Lender Group and the Bank Product Provider
(together with its successors, “Agent”).

W I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”)
among Bookham, Inc., a Delaware corporation, as Parent and each of Parent’s Subsidiaries identified
on the signature pages thereof (such Subsidiaries are referred to hereinafter individually as a
“Borrower” and collectively, jointly and severally, as the “Borrowers”), the
lenders party thereto as “Lenders” (“Lenders”) and Agent, the Lender Group is willing to
make certain financial accommodations available to Borrowers pursuant to the terms and conditions
thereof; and

     WHEREAS, the members of the Lender Group are willing to make the financial accommodations to
Borrowers as provided for in the Credit Agreement, but only upon the condition, among others, that
Grantors shall have executed and delivered to Agent, for the benefit of Lender Group and the Bank
Product Provider, that certain Security Agreement dated of even date herewith (including all
annexes, exhibits or schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the “Security Agreement”);

     WHEREAS, pursuant to the Security Agreement, Grantors are required to execute and deliver to
Agent, for the benefit of Lender Group and the Bank Product Provider, this Trademark Security
Agreement;

     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Grantor hereby agrees as follows:

     1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein have
the meanings given to them in the Security Agreement or the Credit Agreement.

     2. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Each Grantor hereby grants to
Agent, for the benefit of the Lender Group and the Bank Product Provider, a continuing first
priority security interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired (collectively, the
“Trademark Collateral”):

               (a) all of its Trademarks and Trademark Intellectual Property Licenses to which it is a party
including those referred to on Schedule I hereto;

               (b) all goodwill, trade secrets, proprietary or confidential information, technical
information, procedures, formulae, quality control standards, designs, operating and training
manuals, customer lists, and other General Intangibles with respect to the foregoing;

               (c) all reissues, continuations or extensions of the foregoing;

Exhibit D
1

 

               (d) all goodwill of the business connected with the use of, and symbolized by, each Trademark
and each Trademark Intellectual Property License; and

               (e) all products and proceeds of the foregoing, including any claim by such Grantor against
third parties for past, present or future (i) infringement or dilution of any Trademark or any
Trademark licensed under any Intellectual Property License or (ii) injury to the goodwill
associated with any Trademark or any Trademark licensed under any Intellectual Property License.

     3. SECURITY FOR OBLIGATIONS. This Trademark Security Agreement and the Security
Interest created hereby secures the payment and performance of all the Secured Obligations, whether
now existing or arising hereafter. Without limiting the generality of the foregoing, this
Trademark Security Agreement secures the payment of all amounts which constitute part of the
Obligations and would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank
Product Provider or any of them, whether or not they are unenforceable or not allowable due to the
existence of an Insolvency Proceeding involving any Grantor.

     4. SECURITY AGREEMENT. The security interests granted pursuant to this Trademark
Security Agreement are granted in conjunction with the security interests granted to Agent, for the
benefit of the Lender Group and the Bank Product Provider, pursuant to the Security Agreement.
Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to
the security interest in the Trademark Collateral made and granted hereby are more fully set forth
in the Security Agreement, the terms and provisions of which are incorporated by reference herein
as if fully set forth herein.

     5. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any new
trademarks, the provisions of this Trademark Security Agreement shall automatically apply thereto.
Grantors shall give prompt notice in writing to Agent with respect to any such new trademarks or
renewal or extension of any trademark registration. Without limiting Grantors’ obligations under
this Section 5, Grantors hereby authorize Agent unilaterally to modify this Agreement by
amending Schedule I to include any such new trademark rights of Grantors. Notwithstanding the
foregoing, no failure to so modify this Trademark Security Agreement or amend Schedule I shall in
any way affect, invalidate or detract from Agent’s continuing security interest in all Collateral,
whether or not listed on Schedule I.

     6. COUNTERPARTS. This Trademark Security Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such separate counterparts
shall together constitute but one and the same instrument. In proving this Trademark Security
Agreement or any other Loan Document in any judicial proceedings, it shall not be necessary to
produce or account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile transmission or by e-mail
transmission shall be deemed an original signature hereto.

     7. CONSTRUCTION. Unless the context of this Trademark Security Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the singular, references
to the singular include the plural, the terms “includes” and “including” are not limiting, and the
term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase
“and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Trademark
Security Agreement or any other Loan Document refer to this Trademark Security Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular provision of this
Trademark Security Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Trademark Security Agreement or in any other Loan Document to any agreement,
instrument, or document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set
forth herein). Any

Exhibit D
2

 

reference herein or in any other Loan Document to the satisfaction or repayment in full of the
Obligations shall mean the repayment in full in cash (or cash collateralization in accordance with
the terms hereof) of all Obligations other than unasserted contingent indemnification Obligations
and other than any Bank Product Obligations that, at such time, are allowed by the applicable Bank
Product Provider to remain outstanding and that are not required by the provisions of the Credit
Agreement to be repaid or cash collateralized. Any reference herein to any Person shall be
construed to include such Person’s successors and assigns. Any requirement of a writing contained
herein or in any other Loan Document shall be satisfied by the transmission of a Record and any
Record so transmitted shall constitute a representation and warranty as to the accuracy and
completeness of the information contained therein.

[signature page follows]

Exhibit D
3

 

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

	 	 	 	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ACCEPTED AND ACKNOWLEDGED BY:
	 
	 	 	 	 	 	 	 	 
	 

	 	WELLS FARGO FOOTHILL, INC., as Agent

	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 

	 	 	 	 

Exhibit D
4

 

SCHEDULE I

to

TRADEMARK SECURITY AGREEMENT

Trademark Registrations/Applications

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Application/	 	 
	Grantor	 	Country	 	Mark	 	Registration No.	 	App/Reg Date
	 
	 	 	 	 	 	 	 	 

Schedule 1 to Trademark Security Agreementexv10w1

 

EXHIBIT 10.1

May 18, 2006

Mr. John Rigali

1621 W. 25th Street #277

San Pedro, CA 90732

Dear John:

It is a pleasure to offer you the position of Chief Financial Officer and Vice President Finance at
Peerless Systems Corporation. This is an exempt position reporting to the Chief Executive Officer
as the leader of our Finance and Accounting team. We would like you to begin your employment
here on or before May 24, 2006. Plan to arrive at 10 AM on your first day and ask for Jan Bowler
in Human Resources. You may negotiate your regularly scheduled work hours with the Chief Executive
Officer. This offer is valid for 30 days from the date above.

The compensation package we are offering includes:

	 	•	 	Bi-Weekly Salary:   $6,923, ($180,000 annually)
	 
	 	•	 	Total Bonus             $95,000 (Semi-annual & Annual payments)
	 
	 	•	 	Benefits:                  Full Package
	 
	 	•	 	Stock Options:        25,000
	 
	 	•	 	Change of Control Agreement (see below)

Should your employment be affected by a Change in Control of the Company, you will receive
one-year’s base and bonus pay, along with company paid health insurance for up to one year.

“Change of Control” is defined solely as the approval by the stockholders of the Company and the
consummation of a re-organization, merger, consolidation, or sale or other disposition of all or
substantially all of the assets of the Company, in each case, with or to a corporation or other
person or entity.

Our benefits package currently includes medical, dental, vision, disability, group life insurance
and long term care plans as well as a 401(k) and a flexible spending (cafeteria) plan. Peerless
pays for the employee’s insurance and contributes toward family premiums. The 401(k) plan is
employee contributory with a company match of up to $2,000 per year. Peerless also provides two
weeks of paid vacation for salaried employees, increasing to three weeks after five years of
employment. In addition, you will be eligible for ten paid holidays and are allocated eight sick
days annually on January 1, prorated during your first year.

Subject to the approval of our Board of Directors and compliance with all state and federal
regulatory requirements, you will receive an option to purchase the number of shares set forth
above (the “Option”). The per share exercise price of the Option will be the closing

price of Peerless’ common stock on the last trading day immediately preceding the date your grant
is approved. You will be notified of the approval of your option grant.

 

 

John Rigali Offer

5/18/2006

Page Two

The Option will vest over a four-year period, subject to your continued employment with
Peerless. In particular, 25% will vest on the one-year anniversary of your first day of employment
and 25% thereafter on each subsequent anniversary of your first date of employment with Peerless.
In no event, however, will you continue to vest following your termination of employment. The
Option will be subject to the terms and conditions set forth in the Peerless option plan and the
option agreement.

The Bonus is normally paid out in two events each year and may be prorated in year one of your
employment. Bonuses are always contingent upon the achievement of both Company and individual
performance goals. To receive each bonus, you must be employed by Peerless at the time of the pay
out, estimated to be early March and November of each year. The BOD independent Compensation
Committee has full control of Officer salaries and bonuses.

John, while we sincerely hope your employment relationship with Peerless will be long and mutually
rewarding, we want to be clear that your employment is “at will” and there is no implied contract
for a specified period of time. During the first year of your employment there may be a change in
management. If this should occur, it may be that the new management may want to choose a different
CFO. While I expect that you will be acceptable to any new management, please be aware that this
change and a possible affect on your employment is possible.

Please indicate acceptance of our offer by signing and returning this letter on or before the
expiration date cited above. You may fax a signed copy, if you wish, to our confidential fax at
310/297-3286. (Please do not use the fax number printed on the letterhead.) Feel free to call if
you have questions. I look forward to working with you John, and hope that you will contribute and
grow at Peerless, to our mutual benefit.

Sincerely,

	 	 	 
	/s/ Howard Nellor
 

Howard Nellor

	 	 
	President and CEO
	 	 

	 	 	 	 	 	 	 	 	 
	Accepted:

	 	     /s/ John Rigali     
	 	 	 	Date:
	 	5/18/06

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