SC TO-C

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 11, 2008 (July 9, 2008)

GSI GROUP INC.

(Exact name of Registrant as specified in its charter)

New Brunswick, Canada	000-25705	98-0110412
(State or Other Jurisdiction of	(Commission File Number)	(IRS Employer
Incorporation)		Identification Number)

125 Middlesex Turnpike, Bedford, Massachusetts 01730

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (781) 266-5700

39 Manning Road, Billerica, Massachusetts 01821

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

x Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c)) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry Into a Material Definitive Agreement.

Merger Agreement

On July 9, 2008, GSI Group Inc., a New Brunswick corporation (“GSI”), and Eagle Acquisition Corporation, a Delaware corporation and an indirect wholly-owned subsidiary of GSI (“Purchaser”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Excel Technology, Inc., a Delaware corporation (“Excel”).

Pursuant to the Merger Agreement, Purchaser will (a)(i) commence a tender offer (the “Offer”) to purchase all of the outstanding shares of common stock, par value $0.001 per share, of Excel (“Excel Shares”) at a price of $32.00 per share, net to the holder thereof in cash without interest (the “Offer Price”) and (ii) subject to the satisfaction or waiver by Purchaser of the conditions to the Offer, accept for payment and pay for the Excel Shares tendered pursuant to the Offer, and (b) thereafter upon the terms and subject to the conditions set forth in the Merger Agreement, merge with and into Excel (the “Merger”), with Excel surviving the Merger and becoming an indirect wholly-owned subsidiary of GSI. At the effective time of the Merger, any remaining outstanding Excel Shares not tendered in the Offer will be converted into the right to receive the Offer Price. At the effective time of the Merger, each option to acquire Excel Shares granted under any of Excel’s option plans (an “Option”) outstanding and unexercised immediately prior to the effective time of the Merger, whether vested or unvested, will be terminated and will solely represent the right to receive the excess, if any, of the Offer Price over the per share exercise price of such Option, multiplied by the number of Excel Shares issuable upon exercise of such Option. All restrictions applicable to any restricted Excel Shares will lapse immediately prior to and contingent upon the effective time of the Merger, except to the extent such lapsing is waived by the holder of such restricted Excel Shares.

The Merger Agreement provides that Purchaser will commence the Offer promptly and in any event by July 23, 2008.

The obligation of Purchaser to accept for payment and pay for Excel Shares tendered in the Offer is subject to the satisfaction or waiver of the conditions to the Offer set forth in the Merger Agreement, including among others, (a) there having been validly tendered and not withdrawn prior to the expiration of the Offer that number of Excel Shares which, together with Excel Shares already owned by GSI, Purchaser or their subsidiaries, constitutes a majority of the then-outstanding Excel Shares on a fully diluted basis (which means the Excel Shares actually outstanding plus Excel Shares underlying certain securities which are then exercisable for Excel Shares) (the “Minimum Condition”) and (b) the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The Minimum Condition may not be waived by Purchaser without the prior written consent of Excel.

Under the Merger Agreement, GSI is required to provide to Purchaser on a timely basis the funds necessary to purchase any Excel Shares that Purchaser becomes obligated to purchase pursuant to the Offer. GSI and GSI Group Corporation, a Michigan corporation and a wholly-owned subsidiary of GSI (“GSI Sub”), have entered into a Securities Purchase Agreement (as defined below) with certain investors for the issuance and sale of $210,000,000 of Notes (as defined

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below) of GSI Sub and Warrants (as defined below) of GSI, the proceeds of which (the “Transaction Financing”), along with available cash, will be used to consummate the Offer and Merger. A description of the Securities Purchase Agreement is set forth below under “Financing Agreements.”

If the Offer is consummated, the closing of the Merger will be subject only to there being no legal impediment thereto and to adoption of the Merger Agreement by Excel’s stockholders if required under the Delaware General Corporation Law (the “DGCL”). The Merger Agreement provides that in the event GSI and Purchaser, or any other direct or indirect subsidiary of GSI, owns at least 90% of the outstanding Excel Shares following the completion of the Offer (or any subsequent offering period), including as result of exercising the Top-Up Option described below, they will take all necessary and appropriate action to cause the Merger to be completed by means of a “short form” merger in accordance with Section 253 of the DGCL, without a meeting of Excel’s shareholders, as soon as practicable after consummation of the Offer. The Merger Agreement also provides that if following consummation of the Offer the Merger cannot be effectuated by means of a “short-form” merger, if permitted by, and in accordance with, applicable law and Excel’s certificate of incorporation and by-laws, GSI and Purchaser, as stockholders of Excel holding a majority of the issued and outstanding Excel Shares, will, not earlier than twenty (20) days after any required information statement is first distributed to Excel’s stockholders, adopt by written consent the Merger Agreement without a meeting of stockholders pursuant to Section 228 of the DGCL.

In the Merger Agreement, Excel has granted to Purchaser a one-time option (the “Top-Up Option”) to purchase from Excel such number of authorized but unissued Excel Shares (the “Top-Up Excel Shares”) that, when added to the number of Excel Shares owned, directly or indirectly, by GSI or Purchaser following the consummation of the Offer, constitutes one share more than 90% of the Excel Shares outstanding immediately after giving effect to the issuance of the Top-Up Excel Shares. The Top-Up Option is exercisable only after Purchaser’s acceptance for payment and payment for Excel Shares in accordance with the terms of the Offer and only if GSI and Purchaser own, directly or indirectly, at least 80% of the then-outstanding Excel Shares. Any Top-Up Excel Shares purchased by Purchaser pursuant to the Top-Up Option will be purchased at a price per Share equal to the Offer Price and may be paid for with a promissory note. The purpose of the Top-Up Option is to enable Purchaser to acquire additional Excel Shares after consummation of the Offer such that it will be able to immediately effect a “short-form” merger.

Pursuant to the terms of the Merger Agreement, effective upon the purchase of a majority of then-outstanding Excel Shares pursuant to the Offer, GSI will be entitled to designate a number of directors, rounded up to the next whole number, on Excel’s board of directors and board committees equal to the product of (i) the total number of directors on Excel’s board of directors or board committee, as applicable, and (ii) the percentage that the number of Excel Shares beneficially owned by GSI and/or Purchaser bears to the number of Excel Shares then outstanding.

The Merger Agreement includes customary representations, warranties and covenants of GSI, Purchaser and Excel. Excel has agreed to operate its business in the ordinary course and consistent with past practice until the Merger is consummated. Excel has also agreed not to solicit, initiate or facilitate discussions with third parties regarding other proposals to acquire Excel and to certain restrictions on its ability to respond to any such proposals. The Merger Agreement also

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includes certain termination provisions for both Excel and GSI, including a termination provision for GSI in the case that Transaction Financing proceeds of at least $210,000,000 are not available, and provides that, in connection with the termination of the Merger Agreement under specified circumstances, one party (either Excel or GSI) may be required to pay the other a termination fee of $9,000,000. Except for the payment of such termination fee by either GSI or Excel, as applicable and if required by the terms of the Merger Agreement, none of GSI, Purchaser or Excel will have any liability for or remedy to collect monetary damages based on any breach of the Merger Agreement by any other party to the Merger Agreement.

A copy of the Merger Agreement is attached as Exhibit 2.1 to this report and is incorporated herein by reference. The foregoing description of the Merger Agreement is qualified in its entirety by reference to the Merger Agreement.

The Merger Agreement is attached as an exhibit to this report and is incorporated herein by reference to provide information regarding its terms. Except for its status as a contractual document that establishes and governs the legal relationship among the parties thereto with respect to the transaction described in this report, the Merger Agreement is not intended to be a source of factual, business or operational information about the parties. The Merger Agreement contains representations and warranties GSI, Purchaser and Excel made to each other as of specific dates. The assertions embodied in those representations and warranties were made principally for purposes of establishing the circumstances in which Purchaser may have the right not to consummate the Offer, or a party may have the right to terminate the Merger Agreement, and may be subject to important qualifications and limitations agreed to by GSI, Purchaser and Excel in connection with negotiating its terms. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to stockholders or may have been used for the purpose of allocating risk among GSI, Purchaser and Excel rather than establishing matters as facts. Investors in GSI’s securities are not third party beneficiaries under the Merger Agreement and should not rely on the representations and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties or any of their affiliates.

Tender and Support Agreement

In order to induce GSI and Purchaser to enter into the Merger Agreement, concurrently with the execution of the Merger Agreement, the following (comprising all of the) directors and executive officers of Excel, who collectively beneficially own (including Options and restricted Excel Shares) approximately 9% (based on Excel’s most recent filings with the Securities and Exchange Commission (the “SEC”)) of the currently outstanding Excel Shares, entered into a Tender and Support Agreement with GSI and Purchaser (the “Tender and Support Agreement”): Antoine Dominic, Alice Varisano, Steven Georgiev, James Donald Hill, Ira Lamel and Donald Weeden. In the Tender and Support Agreement, such stockholders have agreed, upon the terms and subject to the conditions set forth therein, to tender the Excel Shares held by them in the Offer and to vote (and such stockholders have granted Parent an irrevocable proxy to vote) in favor of the Merger if necessary to consummate the Merger and against alternative proposals to acquire Excel. The Tender and Support Agreement terminates automatically upon the earlier of consummation of the Merger or the termination of the Merger Agreement in accordance with its terms.

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The Tender and Support Agreement is attached as Exhibit 99.1 to this report and is incorporated herein by reference. The foregoing description of the Tender and Support Agreement is qualified in its entirety by reference to the Tender and Support Agreement.

Financing Agreements

Securities Purchase Agreement

On July 9, 2008, GSI and GSI Sub entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Tempo Master Fund LP, Hale Capital Partners, LP, Interlachen Convertible Investments Limited, Special Value Opportunities Fund, LLC, Special Value Expansion Fund, LLC, Special Value Continuation Partners, LP, Tennenbaum Opportunities Partners V, LP, Silver Oak Capital, L.L.C., Highbridge International LLC, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master Limited and Liberty Harbor Master Fund I, L.P. (collectively, the “Investors”). Pursuant to the Securities Purchase Agreement, the Investors agreed to purchase (1) $210,000,000 of 11.0% Senior Notes due 2013 of GSI Sub (the “Notes”), plus (2) 210,000 warrants (the “Warrants”) to purchase on the Closing Date (as defined below) the number of GSI common shares, no par value (the “GSI Common Shares”), resulting from the Warrant Coverage Calculation (as defined below), at an initial exercise price of $0.01 per GSI Common Share, for an aggregate of $210,000,000. Pursuant to the terms of the Securities Purchase Agreement, for each $1,000 aggregate principal amount of Notes purchased by an Investor, GSI will issue such Investor one Warrant which will be initially exercisable for the number of GSI Common Shares resulting from the division of $150 by the lesser of (x) the closing bid price of the GSI Common Shares on July 9, 2008, and (y) the volume weighted average price of the GSI Common Shares for the 10 trading day period immediately preceding the date of the issuance of the Warrants; provided, however, that if the aggregate number of GSI Common Shares to be issued upon the exercise of the 210,000 Warrants exceeds 19.9% of the number of the GSI Common Shares outstanding on the date of issuance of the Warrants (the “GSI Common Share Limit”), then the number of GSI Common Shares for which each Warrant is initially exercisable will equal 1/210 of the GSI Common Share Limit (the “Warrant Coverage Calculation”). The Notes are to be issued pursuant to the terms and conditions of the Indenture (as defined below) and the Warrants are to be issued pursuant to the terms and conditions of the Warrant Agreement (as defined below). The Notes and the Warrants will be issued and sold to the Investors concurrently with the consummation of the Offer (the “Closing Date”). The net proceeds of the issuance and sale of the Notes and the Warrants are to be used to acquire Excel Shares in the Offer and the Merger. The Purchase Agreement contains customary representations, warranties and closing conditions.

A copy of the Purchase Agreement is filed as Exhibit 10.1 hereto and is incorporated herein by reference. The foregoing description of the Securities Purchase Agreement is qualified in its entirety by reference to the Securities Purchase Agreement.

Neither GSI nor GSI Sub has had any prior material relationship with any Investor.

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Indenture for GSI Sub’s 11% Senior Notes Due 2013

On the Closing Date, GSI Sub will issue and sell $210,000,000 aggregate principal amount of Notes to the Investors. The Notes are to be issued pursuant to an indenture (the “Indenture”), to be dated the Closing Date, by and among GSI Sub, as Issuer, GSI, as a Guarantor, Purchaser, as a Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee.

The Notes will bear interest at a rate of 11.0% per annum, payable semi-annually in arrears in cash, and will mature in 2013. The Notes will be guaranteed by GSI, Purchaser, and all future U.S. subsidiaries of GSI (other than certain immaterial subsidiaries).

GSI Sub may not redeem any Note prior to the one year anniversary of the Closing Date. From the first to the third anniversary of the Closing Date, GSI Sub may, at its option, redeem up to 50% of the Notes at par plus accrued but unpaid interest. From the third to the fifth anniversary of the Closing Date, GSI may, at its option, redeem up to 100% of the Notes at par plus accrued but unpaid interest. Upon the occurrence of certain change of control events prior to the first anniversary of the Closing Date, each holder of Notes may require GSI Sub to repurchase all or a portion of its Notes pursuant to a make-whole formula. If such change of control events occur on and after the first anniversary of the Closing Date, each holder of Notes may require GSI Sub to purchase all or a portion of its Notes at a price of 101% of the principal amount, plus all accrued unpaid interest on the Notes purchased to (but excluding) the date of purchase. GSI Sub will also be required to make an offer to repurchase the Notes at 100% of principal amount, plus accrued and unpaid interest, if for any period of four consecutive fiscal quarters beginning with the first fiscal quarter ending on December 31, 2010, if net indebtedness (as defined in the Indenture) of GSI and certain of its subsidiaries is greater than five times consolidated cash flow (as defined in the Indenture) of GSI and certain of its subsidiaries.

The terms of the Notes will require GSI Sub, GSI and certain of GSI’s subsidiaries to comply with certain covenants that restrict some of their corporate activities, including the ability of GSI Sub, GSI and such subsidiaries to incur additional debt, pay dividends, create liens, make investments, sell assets, repurchase equity or subordinated debt, or engage in specified transactions with affiliates. Noncompliance with any of the covenants without cure or waiver would constitute an event of default under the Notes. An event of default resulting from a breach of a covenant may result, at the option of the note holders, in an acceleration of the principal and interest outstanding. The Notes also contain other customary events of default (subject to specified grace periods), including defaults based on events of bankruptcy and insolvency, and nonpayment of principal, interest or fees when due.

Neither the Notes nor the guarantees will be registered under the Securities Act or the securities laws of any jurisdiction and will be subject to certain restrictions on transfer. Neither GSI nor GSI Sub has agreed to file a registration statement with the SEC relating to the resale of the Notes, or the guarantees thereof, issuable to the Investors and neither GSI nor GSI Sub has an intention of doing so.

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The form of Indenture is filed as Exhibit 99.2 hereto and is incorporated herein by reference. The foregoing description of the Indenture and the Notes is qualified in its entirety by reference to such form of Indenture.

Warrant Agreement

On the Closing Date, GSI will issue and sell 210,000 Warrants to the Investors. The Warrants are to be issued pursuant to the Warrant Agreement (the “Warrant Agreement”), to be dated the Closing Date, by and among GSI and the Investors.

Each Warrant will be initially exercisable for the number of GSI Common Shares resulting from the Warrant Coverage Calculation described above under “Securities Purchase Agreement.” The initial exercise price of the Warrants is $0.01 per GSI Common Share. The Warrants will be exercisable at any time, in whole or in part, prior to the fifth anniversary of the Closing Date, but are subject to mandatory conversion, on a cashless basis, upon the effectiveness of the resale registration statement for the GSI Common Shares issuable upon exercise of the Warrants, which is to be filed pursuant to the Registration Rights Agreement (as defined below). The exercise price may be paid (i) in cash, or (ii) on a cashless basis (x) by instructing GSI to withhold a number of GSI Common Shares underlying the Warrants or (y) by surrendering to GSI the GSI Common Shares previously acquired by the holder, or a combination of the foregoing.

The Warrants will be issued in a private transaction in reliance upon the exemption from registration contained in Section 4(2) of the Securities Act. Accordingly, the Warrants may not be offered or sold in the United States without registration or an applicable exemption of registration requirements.

The form of Warrant Agreement is filed as Exhibit 99.3 hereto and is incorporated herein by reference. The foregoing description of the Warrants is qualified in its entirety by reference to the form of Warrant Agreement.

Registration Rights Agreement

On the Closing Date, simultaneously with the closing of the sale of the Notes and the Warrants to the Investors, GSI and the Investors will enter into a registration rights agreement (the “Registration Rights Agreement”) whereby, subject to the conditions set forth therein, GSI agrees to file a shelf registration statement with the SEC relating to the resale of the GSI Common Shares issuable upon exercise of the Warrants. The registration rights that will be granted in the Registration Rights Agreement are subject to customary restrictions such as blackout periods. The Registration Rights Agreement provides for certain monetary damages in the event that GSI does not (i) file the shelf registration statement within a specified time period, (ii) cause the shelf registration statement to become effective within a specified time period, or (iii) maintain the effectiveness of the shelf registration statement for a specified period, subject to certain exceptions.

The form of Registration Rights Agreement is filed as Exhibit 99.4 hereto and is incorporated herein by reference. The foregoing description of the Registration Rights Agreement is qualified in its entirety by reference to the form of Registration Rights Agreement.

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Item 2.02. Results of Operations and Financial Condition.

On July 10, 2008, GSI and Excel issued a joint press release which, in addition to announcing the execution of the Merger Agreement and the Securities Purchase Agreement described under Item 1.01 above and describing the transactions contemplated by these agreements, reaffirmed that GSI’s 2008 second quarter results will be slightly above the mid-point of the previously stated range with revenue expected between $64.0 million and $68.0 million and earnings per share of approximately two cents. A copy of the joint press release is attached as Exhibit 99.5 to this report.

Item 8.01 Other Events.

On July 10, 2008, GSI and Excel issued a joint press release announcing the execution of the Merger Agreement and the Securities Purchase Agreement and describing the transactions contemplated thereby. The joint press release is attached as Exhibit 99.5 and is incorporated by reference into this Item 8.01.

Additional Information

The tender offer for outstanding common stock of Excel referred to in this report has not yet been commenced. Neither this report, nor the description of the tender offer contained herein, is an offer to purchase nor a solicitation of an offer to sell securities of Excel. At the time the tender offer is commenced, GSI and Purchaser will file with the Securities and Exchange Commission (SEC) a Tender Offer Statement on Schedule TO containing an offer to purchase, forms of letters of transmittal and other documents relating to the tender offer, and Excel will file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the tender offer. These documents will be sent free of charge to the stockholders of Excel. These documents will contain important information about the tender offer, and stockholders of Excel are urged to read them carefully when they become available. Stockholders of Excel will be able to obtain a free copy of these documents (when they become available) and other documents filed by Excel or GSI with the SEC at the website maintained by the SEC at www.sec.gov. In addition, stockholders will be able to obtain a free copy of these documents (when they become available) from GSI by contacting GSI at 125 Middlesex Turnpike, Bedford, Massachusetts 01730, attention: Investor Relations, or from Excel by contacting Excel at 41 Research Way, East Setauket, New York 11733, attention: Investor Relations.

Forward Looking Information

Certain statements in, or incorporated by reference in, this report may constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934. These forward-looking statements may relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, tax issues and other matters. All statements contained or incorporated by reference in this report that do not relate to matters of

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historical fact should be considered forward-looking statements, and are generally identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “objective” and other similar expressions. Investors should not place undue reliance on the forward- looking statements contained or incorporated by reference in this report. Such statements are based on management’s beliefs and assumptions and on information currently available to management and are subject to risks, uncertainties and changes in condition, significance, value and effect. Some of the risks and uncertainties that may cause actual results to differ materially from those contained in the statements include the following: (a) the occurrence of any event, change or other circumstance that could result in the Offer not being consummated, including the conditions to the Offer not being satisfied, or in the termination of the Merger Agreement as a result of GSI’s external Transaction Financing described in this report being unavailable due to the non-satisfaction of the conditions contained in the Financing Agreements or the failure of the investors party thereto to fulfill their obligations thereunder, or as a result of other events set forth in the Merger Agreement which would entitle a party to terminate the Merger Agreement; (b) the inability to complete the transaction due to the failure to receive required regulatory or other approvals or to satisfy other conditions to the transaction; (c) the risk that the proposed transaction disrupts current plans and operations; (d) the risk that anticipated synergies and opportunities as a result of the transaction will not be realized; (e) difficulty or unanticipated expenses in connection with integrating Excel into GSI; (f) the risk that the acquisition does not perform as planned, including the risk that GSI will not achieve revenue projections; (g) the inability to retain key employees of either company and (h) changes in either company’s business between now and the completion of the Offer and the Merger. Other risks include the fact that each of the companies’ sales have been and are expected to continue to be dependent upon customer capital equipment expenditures, which are, in turn, affected by business cycles in the markets served by those customers. Other factors include volatility in the semiconductor industry, the risk of order delays and cancellations, the risk of delays by customers in introducing their new products and market acceptance of products incorporating subsystems supplied by the companies, risks of currency fluctuations, risks to the companies of delays in new products, our ability to continue to reduce costs and capital expenditures, our ability to focus R&D investment and integrate acquisitions, changes in applicable accounting standards, tax regulations or other external regulatory rules and standards, and other risks detailed in reports and documents filed by the companies with the SEC and by GSI with securities regulatory authorities in Canada. Such risks, uncertainties and changes in condition, significance, value and effect, many of which are beyond GSI’s control, could cause the companies actual results and other future events to differ materially from those anticipated. GSI does not, however, assume any obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibits 2.1, 10.1, 99.1, 99.2, 99.3, 99.4 and 99.5 (other than the first sentence of the seventh paragraph of Exhibit 99.5 which is furnished and not filed) are filed or deemed filed herewith:

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Exhibit Number	Description
2.1	Agreement and Plan of Merger dated as of July 9, 2008, by and among GSI Group Inc., Eagle Acquisition Corporation and Excel Technology, Inc.
10.1	Securities Purchase Agreement, dated as of July 9, 2008, by and among GSI Group Inc., GSI Group Corporation, Tempo Master Fund LP, Hale Capital Partners, LP, Interlachen Convertible Investments Limited, Special Value Opportunities Fund, LLC, Special Value Expansion Fund, LLC, Special Value Continuation Partners, LP, Tennenbaum Opportunities Partners V, LP, Silver Oak Capital, L.L.C., Highbridge International LLC, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master Limited and Liberty Harbor Master Fund I, L.P.
99.1	Tender and Support Agreement, dated as of July 9, 2008, by and among GSI Group Inc., Eagle Acquisition Corporation, Antoine Dominic, Alice Varisano, Steven Georgiev, James Donald Hill, Ira Lamel and Donald Weeden.
99.2	Form of Indenture (including the Forms of Notes), by and among GSI Group Corporation, as Issuer, GSI Group Inc., as a Guarantor, Eagle Acquisition Corporation, as a Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee.
99.3	Form of Warrant Agreement (including the Form of Warrant), by and among GSI Group Inc., Tempo Master Fund LP, Hale Capital Partners, LP, Interlachen Convertible Investments Limited, Special Value Opportunities Fund, LLC, Special Value Expansion Fund, LLC, Special Value Continuation Partners, LP, Tennenbaum Opportunities Partners V, LP, Silver Oak Capital, L.L.C., Highbridge International LLC, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master Limited and Liberty Harbor Master Fund I, L.P.
99.4	Form of Registration Rights Agreement, by and among GSI Group Inc., Tempo Master Fund LP, Hale Capital Partners, LP, Interlachen Convertible Investments Limited, Special Value Opportunities Fund, LLC, Special Value Expansion Fund, LLC, Special Value Continuation Partners, LP, Tennenbaum Opportunities Partners V, LP, Silver Oak Capital, L.L.C., Highbridge International LLC, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master Limited and Liberty Harbor Master Fund I, L.P.
99.5	Joint press release issued by GSI Group Inc. and Excel Technology, Inc., dated July 10, 2008.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GSI GROUP INC. (Registrant)
Date: July 11, 2008	By:  /s/  Robert L. Bowen                             Name: Robert L. Bowen         Title: Vice President and Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Description
2.1	Agreement and Plan of Merger dated as of July 9, 2008, by and among GSI Group Inc., Eagle Acquisition Corporation and Excel Technology, Inc.
10.1	Securities Purchase Agreement, dated as of July 9, 2008, by and among GSI Group Inc., GSI Group Corporation, Tempo Master Fund LP, Hale Capital Partners, LP, Interlachen Convertible Investments Limited, Special Value Opportunities Fund, LLC, Special Value Expansion Fund, LLC, Special Value Continuation Partners, LP, Tennenbaum Opportunities Partners V, LP, Silver Oak Capital, L.L.C., Highbridge International LLC, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master Limited and Liberty Harbor Master Fund I, L.P.
99.1	Tender and Support Agreement, dated as of July 9, 2008, by and among GSI Group Inc., Eagle Acquisition Corporation, Antoine Dominic, Alice Varisano, Steven Georgiev, James Donald Hill, Ira Lamel and Donald Weeden.
99.2	Form of Indenture (including the Forms of Notes), by and among GSI Group Corporation, as Issuer, GSI Group Inc., as a Guarantor, Eagle Acquisition Corporation, as a Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee.
99.3	Form of Warrant Agreement (including the Form of Warrant), by and among GSI Group Inc., Tempo Master Fund LP, Hale Capital Partners, LP, Interlachen Convertible Investments Limited, Special Value Opportunities Fund, LLC, Special Value Expansion Fund, LLC, Special Value Continuation Partners, LP, Tennenbaum Opportunities Partners V, LP, Silver Oak Capital, L.L.C., Highbridge International LLC, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master Limited and Liberty Harbor Master Fund I, L.P.
99.4	Form of Registration Rights Agreement, by and among GSI Group Inc., Tempo Master Fund LP, Hale Capital Partners, LP, Interlachen Convertible Investments Limited, Special Value Opportunities Fund, LLC, Special Value Expansion Fund, LLC, Special Value Continuation Partners, LP, Tennenbaum Opportunities Partners V, LP, Silver Oak Capital, L.L.C., Highbridge International LLC, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited, UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master Limited and Liberty Harbor Master Fund I, L.P.
99.5	Joint press release issued by GSI Group Inc. and Excel Technology, Inc., dated July 10, 2008.

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EX-2.1

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

GSI GROUP INC.,

EAGLE ACQUISITION CORPORATION,

AND

EXCEL TECHNOLOGY, INC.

Dated as of July 9, 2008

TABLE OF CONTENTS

		Page
ARTICLE I THE OFFER		2
1.1	The Offer	2
1.2	Company Consent; Schedule 14D-9	3
1.3	Stockholder Lists	4
1.4	Directors	4
1.5	Top-Up Option	5
ARTICLE II THE MERGER		6
2.1	The Merger	6
2.2	Closing; Effective Time	6
2.3	Effects of the Merger	6
2.4	Certificate of Incorporation; Bylaws	6
2.5	Directors and Officers	6
2.6	Stockholder Approval	6
2.7	Short-Form Merger	7
ARTICLE III EFFECT OF THE TRANSACTIONS ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS		7
3.1	Conversion of Securities	7
3.2	Treatment of Equity Awards	7
3.3	Dissenting Shares	8
3.4	Surrender of Shares	8
3.5	Withholding Taxes	9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY		10
4.1	Organization; Standing and Power; Organizational Documents; Subsidiaries	10
4.2	Capital Structure	11
4.3	Authority	12
4.4	No Conflict	13
4.5	Necessary Consents	13
4.6	SEC Filings; Financial Statements; Internal Controls	13
4.7	Absence of Certain Changes or Events	15
4.8	Taxes	17
4.9	Title to Properties	19
4.10	Intellectual Property	20
4.11	Restrictions on Business Activities	23
4.12	Governmental Authorizations	24
4.13	Litigation	24
4.14	Compliance with Law	24
4.15	Environmental Matters	24
4.16	Brokers’ and Finders’ Fees	25
4.17	Transactions with Affiliates	25
4.18	Employee Benefit Plans and Compensation	26
4.19	Contracts	29
4.20	Insurance	31

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		Page
4.21	Export Control Laws	31
4.22	Foreign Corrupt Practices Act	31
4.23	Schedule 14D-9; Offer Documents	32
4.24	Fairness Opinion	32
4.25	Takeover Statutes	32
4.26	Full Disclosure	32
4.27	Termination Agreements	32
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER		33
5.1	Organization	33
5.2	Authority; No Conflict; Necessary Consents	33
5.3	Financing	34
5.4	Brokers’ and Finders’ Fees	34
5.5	Interim Operations of Purchaser	34
ARTICLE VI CONDUCT BY THE COMPANY PRIOR TO THE EFFECTIVE TIME		34
6.1	Conduct of Business by the Company	34
ARTICLE VII ADDITIONAL AGREEMENTS		37
7.1	Information/Proxy Statement	37
7.2	Subsequent Filings	38
7.3	Acquisition Proposals	39
7.4	Confidentiality; Access to Information; No Modification of Representations, Warranties or Covenants	42
7.5	Public Disclosure	43
7.6	Regulatory Filings; Commercially Reasonable Efforts	43
7.7	Notification of Certain Matters	44
7.8	Third-Party Consents	44
7.9	Termination of 401(k) Plans	45
7.10	Indemnification	45
7.11	Section 16 Matters	46
7.12	Compensation Approvals	46
7.13	Financing	47
7.14	Termination Agreements	47
ARTICLE VIII CONDITIONS TO THE MERGER		48
8.1	Conditions to the Obligations of Each Party to Effect the Merger	48
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER		48
9.1	Termination by Mutual Agreement	48
9.2	Termination by Either Parent or the Company	48
9.3	Termination by the Company	48
9.4	Termination by Parent	49
9.5	Effect of Termination	50
9.6	Fees and Expenses	51
9.7	Amendment	52
9.8	Extension; Waiver	52

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		Page
ARTICLE X GENERAL PROVISIONS		53
10.1	Non-Survival of Representations and Warranties	53
10.2	Notices	53
10.3	Interpretation; Knowledge	54
10.4	Counterparts	55
10.5	Entire Agreement; Third-Party Beneficiaries	55
10.6	Severability	55
10.7	Other Remedies	55
10.8	Governing Law	56
10.9	Rules of Construction	56
10.10	Assignment	56
10.11	Waiver of Jury Trial	56
10.12	Disclosure Schedule	56
10.13	Parent Guarantee	56

Exhibit A	Tender and Support Agreement
Exhibit B	Conditions to the Offer

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INDEX OF DEFINED TERMS

Defined Term	Section
401(k) Plan	7.9
Acquisition Proposal	7.3(g)(i)
Action of Divestiture	7.6(d)
Affiliate	10.3(g)
Agreement	Preamble
Audit	4.8(a)
Business Day	10.3(h)
Certificates	3.4(b)
Certificates of Merger	2.2
Closing	2.2
Closing Date	2.2
COBRA	4.18(a)
Code	4.8(b)(vii)
Company	Preamble
Company Balance Sheet	4.6(b)
Company Board	Recitals
Company Board Recommendation	4.3(b)
Company Change of Recommendation	7.3(d)
Company Change of Recommendation Notice	7.3(d)(ii)
Company Common Stock	4.2(a)
Company Compensation Approvals	4.18(m)
Company Employee Plan	4.18(a)
Company Financials	4.6(b)
Company Financing Amount	7.14(b)
Company Financing Request	7.14(b)
Company Intellectual Property	4.10
Company Organizational Documents	4.1(b)
Company Preferred Stock	4.2(a)
Company Products	4.10
Company Registered Intellectual Property	4.10
Company Requisite Vote	4.3(a)
Company SEC Reports	4.6(a)
Company Termination Fee	9.5(a)
Compensation Arrangements	4.18(m)
Confidentiality Agreement	1.3
Contaminants	4.10(j)
Continuing Directors	1.4(b)
Contract	4.1(a)
Depositary	1.5(a)
DGCL	Recitals
Disclosure Schedule	ARTICLE IV
Dissenting Shares	3.3(a)
DOJ	4.5
DOL	4.18(a)
Effect	10.3(d)
Effective Time	2.2
Employee Agreement	4.18(a)
Employee/Service Provider	4.18(a)

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Defined Term	Section
Environmental Claim	4.15(a)
Environmental Laws	4.15(a)
ERISA	4.18(a)
ERISA Affiliate	4.18(a)
Exchange Act	1.1(a)(i)
Expiration Date	Exhibit B
Export Approvals	4.21(a)
FCPA	4.22
Financial Advisor	4.24
Financing	5.3
Foreign Antitrust Laws	4.5
FTC	4.5
Functional Breach	Exhibit B
GAAP	4.6(b)
Governmental Authorizations	4.12
Governmental Entity	4.5
HSR Act	4.5
Indemnified Parties	7.10(a)
Independent Directors	1.4(c)
Information Statement	7.1(a)
Intellectual Property	4.10
Intellectual Property Contracts	4.10(a)
Intellectual Property Rights	4.10
International Employee Plan	4.18(a)
IRS	4.18(a)
Knowledge	10.3(b)
Law	4.4
Lease Documents	4.9(b)
Leased Real Property	4.9(a)
Liens	4.1(c)
made available	10.3(c)
Material Adverse Effect	10.3(d)
Material Contract	4.19(a)
Materials of Environmental Concern	4.15(a)
Merger	Recitals
Merger Agreement	Exhibit B
Merger Consideration	3.1(a)
Minimum Tender Condition	Exhibit B
Nasdaq	1.1(a)(iii)
Necessary Consents	4.5
Offer	Recitals
Offer Conditions	1.1(a)(i)
Offer Documents	1.1(b)
Offer Price	Recitals
Open Source	4.10
Option	3.2(a)
Option Plans	4.2(b)
Outside Date	9.3(a)
Owned Real Property	4.9(a)
Parent	Preamble
Parent Termination Fee	9.5(b)

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Defined Term	Section
Parent’s 401(k) Plan	7.9
Paying Agent	3.4(a)
Pension Plan	4.18(a)
Permitted Liens	4.9(c)
Person	10.3(f)
Proxy Statement	7.1(a)
Purchase Time	1.5(a)
Purchaser	Preamble
Purchaser Material Adverse Effect	10.3(e)
Restricted Stock	3.2(a)
Schedule 14D-9	1.2(b)
Schedule TO	1.1(b)
SEC	1.1(a)(iii)
Securities Act	1.5(c)
Shares	Recitals
Shrink-Wrapped Code	4.10
Source Code	4.10
Special Meeting	2.6
Subsidiary	4.1(a)
Subsidiary Organizational Documents	4.1(b)
Superior Offer	7.3(g)(ii)
Surviving Corporation	2.1
Tax	4.8(a)
Tax Authority	4.8(a)
Tax Returns	4.8(a)
Taxes	4.8(a)
Tender and Support Agreement	Recitals
Termination Agreement	4.27
Top-Up Option	1.5(a)
Top-Up Shares	1.5(a)
Trade Secrets	4.10
Treasury Regulation	4.8(b)(vii)
Voting Debt	4.2(c)
WARN	4.18(a)

vi

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of July 9, 2008, by and among GSI Group Inc., a New Brunswick corporation (“Parent”), Eagle Acquisition Corporation, a Delaware corporation and indirect wholly owned subsidiary of Parent (“Purchaser”), and Excel Technology, Inc., a Delaware corporation (the “Company”).

RECITALS

WHEREAS, the Board of Directors of each of Parent, Purchaser and the Company have approved the acquisition of the Company by Parent on the terms and conditions set forth in this Agreement; and

WHEREAS, on the terms and subject to the conditions set forth herein, Purchaser has agreed to commence a tender offer (the “Offer”) to purchase all outstanding shares of common stock, par value $0.001 per share, of the Company (the “Shares”), at a price of $32.00 per Share, net to the seller in cash (such price, or any higher price as may be paid in the Offer in accordance with this Agreement, the “Offer Price”); and

WHEREAS, following consummation of the Offer, on the terms and subject to the conditions set forth herein Purchaser shall merge with and into the Company (the “Merger”) and each Share that is issued and outstanding immediately prior to the Effective Time (other than Shares held in the treasury of the Company or owned by Parent, Purchaser or any direct or indirect wholly-owned Subsidiary of Parent or the Company immediately prior to the Effective Time, which will be canceled with no consideration issued in exchange therefor, and other than Dissenting Shares) will be canceled and converted into the right to receive cash in an amount equal to the Offer Price, all upon the terms and conditions set forth herein; and

WHEREAS, the Board of Directors of the Company (the “Company Board”) has, on the terms and subject to the conditions set forth herein, unanimously (i) determined that the transactions contemplated by this Agreement are fair to, and in the best interests of, the stockholders of the Company, (ii) approved and declared advisable this Agreement and the transactions contemplated hereby, including the Offer and the Merger, in accordance with the Delaware General Corporation Law (the “DGCL”), and (iii) determined to recommend that the Company’s stockholders accept the Offer and tender their Shares to Purchaser and, to the extent applicable, adopt the “agreement of merger” (as such term is used in Section 251 of the DGCL) set forth in this Agreement; and

WHEREAS, the Board of Directors of Purchaser has, on the terms and subject to the conditions set forth herein, unanimously approved and declared advisable this Agreement and the transactions contemplated hereby, including the Offer and the Merger, and GSI Group Corporation, a Michigan corporation and a direct wholly-owned Subsidiary of Parent (in its capacity as the sole stockholder of Purchaser), has adopted the “agreement of merger” set forth in this Agreement, in each case, in accordance with the DGCL; and

WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to Parent’s willingness to enter into this Agreement, all current executive officers and members of the Company Board are entering into a tender and support agreement in the form attached hereto as Exhibit A (the “Tender and Support Agreement”); and

WHEREAS, Parent, Purchaser and the Company desire to make certain representations, warranties and agreements in connection with the Offer and the Merger and also to prescribe certain conditions to the Offer and the Merger;

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NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, do hereby agree as follows:

ARTICLE I

THE OFFER

1.1    The Offer. (a) (i) Provided that this Agreement shall not have been terminated in accordance with ARTICLE IX and that none of the events set forth in Paragraph 2 of Exhibit B hereto shall exist or have occurred, Purchaser shall, and Parent shall cause Purchaser to, promptly (but in no event later than ten Business Days following the date of this Agreement) commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) the Offer to purchase all outstanding Shares, at the Offer Price. The obligations of Purchaser to, and of Parent to cause Purchaser to, accept for payment and to pay for any Shares tendered pursuant to the Offer shall be subject to only those conditions set forth in Exhibit B (the “Offer Conditions”). Purchaser expressly reserves the right (but shall not be obligated) at any time or from time to time in its sole discretion to waive any Offer Condition or modify or amend the terms of the Offer, including an increase in the Offer Price, except that, without the prior written consent of the Company, Purchaser shall not (A) decrease the Offer Price or change the form of the consideration payable in the Offer, (B) decrease the number of Shares sought pursuant to the Offer, (C) amend or waive the Minimum Tender Condition (as defined in Exhibit B), (D) add to the conditions set forth on Exhibit B, (E) modify the conditions set forth on Exhibit B in a manner adverse to the holders of Shares, (F) extend the expiration of the Offer except as required or permitted by Section 1.1(a)(ii) or (iii), or (G) make any other change in the terms or conditions of the Offer which is adverse to the holders of Shares.

(ii) The initial expiration date of the Offer shall be the twentieth Business Day following (and including the day of) the commencement of the Offer. Subject to the terms and conditions of this Agreement, Purchaser may, without the consent of the Company, (A) extend the Offer for one or more periods of time of up to twenty Business Days per extension if at any scheduled expiration of the Offer any of the Offer Conditions are not satisfied, until such time as such Offer Conditions are satisfied or waived, (B) extend the Offer for one or more periods of time of up to twenty Business Days per extension, in order for Parent to secure or arrange for the availability of the Financing, or any alternative financing that would allow Purchaser to purchase and pay for the Shares pursuant to the Offer and pay the aggregate Merger Consideration, if, as of the date immediately preceding any scheduled expiration of the Offer, the Financing, or any such alternative financing as Parent may obtain, will not be available as of the scheduled expiration of the Offer, provided, however, Parent shall not be entitled to extend the Offer pursuant to this clause (B) beyond the Outside Date, (C) elect to provide a subsequent offering period for the Offer in accordance with Rule 14d-11 under the Exchange Act if at any scheduled expiration of the Offer, Purchaser shall not have accepted for payment pursuant to the Offer that number of Shares (not including any Shares tendered pursuant to procedures for guaranteed delivery) which, together with the number of Shares, if any, then owned beneficially by Parent, Purchaser or their Subsidiaries, constitutes at least 90% of the total number of then-outstanding Shares.

(iii) Subject to the terms and conditions of this Agreement, Purchaser shall (A) extend the Offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the “SEC”) or the staff thereof or the Nasdaq Stock Market (“Nasdaq”) applicable to the Offer, (B) extend the Offer on one or more occasions for periods determined by Purchaser of up to twenty Business Days per extension if, at any scheduled expiration of the Offer, all of the Offer Conditions have been satisfied or waived other than the Offer Condition set forth in Paragraph 1(b) of Exhibit B; and (C) to the extent requested in writing by the Company at least two Business Days prior to the scheduled expiration of the Offer, extend the Offer on one occasion (and, for the avoidance of doubt, Purchaser shall not be

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required to extend the Offer on more than one occasion pursuant to this clause (C)), for a period determined by the Company of up to twenty Business Days, if, at the then scheduled expiration of the Offer, any of the Offer Conditions, other than the Offer Condition set forth in Paragraph 1(b) of Exhibit B, are not satisfied; provided, however, that Purchaser shall not be required to extend the Offer (1) pursuant to clause (A), (B) or (C) beyond the Outside Date or (2) at any time that it is permitted to terminate this Agreement pursuant to ARTICLE IX.

(iv) Subject to the terms and conditions of this Agreement and to the satisfaction or waiver by Purchaser of the Offer Conditions as of the time of any scheduled expiration of the Offer, Purchaser shall, and Parent shall cause Purchaser to, accept for payment and pay for Shares validly tendered and not properly withdrawn pursuant to the Offer as soon as practicable after such scheduled expiration and Purchaser shall, and Parent shall cause Purchaser to, promptly accept and pay for all Shares as they are validly tendered during any subsequent offer period. Parent shall provide or cause to be provided to Purchaser on a timely basis the funds necessary to purchase any Shares that Purchaser becomes obligated to purchase pursuant to the Offer.

(b) On the date of commencement of the Offer, Parent and Purchaser shall file or cause to be filed with the SEC a Tender Offer Statement on Schedule TO (together with all amendments and supplements thereto, the “Schedule TO”) with respect to the Offer which shall contain the offer to purchase and related letter of transmittal and summary advertisement and other ancillary Offer documents and instruments pursuant to which the Offer will be made (collectively with any supplements or amendments thereto, the “Offer Documents”). The Company and its counsel shall be given a reasonable opportunity to review and comment on the Offer Documents prior to their filing with the SEC. Parent and Purchaser agree (i) to provide the Company with, and to consult with the Company regarding, any comments that may be received from the SEC or its staff with respect to the Offer Documents promptly after receipt thereof and prior to responding thereto and (ii) to provide the Company with any comments or responses thereto. If at any time prior to the Closing, any information relating to the Offer, the Merger, the Company, Parent, Purchaser or any of their respective Affiliates, directors or officers, should be discovered by the Company or Parent which should be set forth in an amendment or supplement to the Offer Documents, so that the Offer Documents shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party which discovers such information shall promptly notify the other party, and an appropriate amendment or supplement describing such information shall be filed with the SEC and disseminated to the stockholders of the Company, as and to the extent required by applicable Law or any applicable rule or regulation of any stock exchange.

1.2    Company Consent; Schedule 14D-9. (a) The Company hereby approves of and consents to the Offer.

(b) On the date the Offer Documents are filed, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the “Schedule 14D-9”) containing, subject to Section 7.3(d), the Company Board Recommendation. The Company hereby consents to the inclusion of the Company Board Recommendation in the Offer Documents and to the inclusion of a copy of the Schedule 14D-9 with the Offer Documents mailed or furnished to the Company’s stockholders. Parent and Purchaser shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 prior to its filing with the SEC. The Company agrees (i) to provide Parent and Purchaser with, and to consult with Parent and Purchaser regarding, any comments that may be received from the SEC or its staff with respect to the Schedule 14D-9 promptly upon receipt thereof and prior to responding thereto and (ii) to provide Parent and Purchaser with any comments or responses thereto. If at any time prior to the Closing, any information relating to the Offer, the Merger, the Company, Parent, Purchaser or any of their respective Affiliates, directors or officers, should be discovered by the Company or Parent which should be set forth in an amendment or supplement to the Schedule 14D-9, so that the Schedule 14D-9 shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party

3

which discovers such information shall promptly notify the other party, and an appropriate amendment or supplement describing such information shall be filed with the SEC and disseminated to the stockholders of the Company, as and to the extent required by applicable Law or any applicable rule or regulation of any stock exchange.

1.3    Stockholder Lists. In connection with the Offer, the Company shall cause its transfer agent to, promptly (but in any event on or before July 16, 2008), furnish Parent and Purchaser with mailing labels, security position listings and a listing or computer file containing the names and addresses of the record holders of the Shares as of the latest practicable date and shall furnish Parent and Purchaser with such information and assistance (including periodic updates of such information) as Parent or Purchaser or their agents may reasonably request in communicating the Offer to the record and beneficial holders of the Shares. Subject to the requirements of applicable Law, and except for such actions as are reasonably necessary to disseminate the Offer Documents and otherwise to perform its obligations hereunder, Purchaser shall hold all information and documents provided to it under this Section 1.3 in confidence in accordance with the non-disclosure agreement, dated May 16, 2008, between Parent and the Company (the “Confidentiality Agreement”), and shall use such information and documents only in connection with the Offer, and if this Agreement shall have been terminated Parent and Purchaser shall deliver to the Company all such information and documents (and all copies thereof).

1.4    Directors. (a) Promptly upon the purchase by Purchaser pursuant to the Offer of such number of Shares as represents at least a majority of the then-outstanding Shares, and from time to time thereafter, Purchaser shall be entitled to designate such number of directors, rounded up to the next whole number, on the Company Board as will give Purchaser representation on the Company Board equal to the product of (x) the total number of directors on the Company Board (after giving effect to any increase in the number of directors pursuant to this Section 1.4) and (y) the percentage that such number of Shares so purchased bears to the total number of Shares outstanding, and the Company shall, upon request by Purchaser, promptly increase the size of the Company Board or use its reasonable best efforts to secure the resignations of such number of directors as is necessary to provide Purchaser with such level of representation and shall cause Purchaser’s designees to be so elected or appointed. The Company shall also cause individuals designated by Purchaser to constitute the same percentage of each committee of the Company Board as the percentage of the entire Company Board represented by individuals designated by Purchaser. The Company’s obligations to appoint designees to the Company Board shall be subject to Section 14(f) of the Exchange Act. At the request of Purchaser, the Company shall take all actions necessary to effect any such election or appointment of Purchaser’s designees, including mailing to its stockholders the information required by Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder which, unless Purchaser otherwise elects, shall be so mailed together with the Schedule 14D-9. Parent and Purchaser will supply to the Company all information with respect to themselves and their respective officers, directors and Affiliates required by Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder.

(b) Following the election or appointment of Purchaser’s designees pursuant to Section 1.4(a) and prior to the Effective Time, any amendment or termination of this Agreement requiring action by the Company Board, any extension of time for the performance of any of the obligations or other acts of Parent or Purchaser under this Agreement, any waiver of compliance with any of the agreements or conditions under this Agreement that are for the benefit of the Company, any exercise of the Company’s rights or remedies under this Agreement, any action to seek to enforce any obligation of Parent or Purchaser under this Agreement (or any other action by the Company Board with respect to this Agreement or the Merger if such other action adversely affects, or could reasonably be expected to adversely affect, any of the holders of Shares other than Parent or Purchaser) may only be authorized by, and will require the authorization of, a majority of the directors of the Company then in office who are directors of the Company on the date hereof or their successors as appointed by such continuing directors (the “Continuing Directors”); provided, however, that if there shall be no Continuing Directors as a result of such individuals’ deaths, disabilities, resignations or refusal to serve, then such actions may be effected by majority vote of the Independent Directors, or, if no Independent Directors are then in office, by a majority vote of the Company Board.

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(c) In the event that Parent’s designees are elected or appointed to the Company Board pursuant to Section 1.4(a), until the Effective Time, (i) the Company Board shall have at least such number of directors as may be required by the Nasdaq rules or the federal securities laws who are considered independent directors within the meaning of such rules and laws (“Independent Directors”) and (ii) each committee of the Company Board that is required (or a majority of which is required) by the Nasdaq rules or the federal securities laws to be composed solely of Independent Directors shall be so composed; provided, however, that in such event, if the number of Independent Directors shall be reduced below the number of directors as may be required by such rules or laws for any reason whatsoever, the remaining Independent Director(s) shall be entitled to designate persons to fill such vacancies who shall be deemed to be Independent Directors for purposes of this Agreement or, if no other Independent Director then remains, the other directors shall designate such number of directors, as may be required by the Nasdaq rules and the federal securities laws, to fill such vacancies who shall not be stockholders or Affiliates of Parent or Purchaser, and such Persons shall be deemed to be Independent Directors for purposes of this Agreement.

1.5    Top-Up Option. (a) The Company hereby irrevocably grants to Purchaser an option (the “Top-Up Option”), exercisable only after Purchaser’s acceptance for payment of Shares validly tendered and not withdrawn as of the expiration date of the Offer and payment for such Shares in accordance with the terms of the Offer by depositing the aggregate purchase price therefor with the Depositary (the “Depositary”) for the Offer (the date and time of such deposit with the Depositary being referred to as the “Purchase Time”), and prior to the Effective Time, to purchase from the Company that number of Shares (the “Top-Up Shares”) equal to the number of Shares that, when added to the number of Shares owned directly or indirectly by Parent or Purchaser immediately following the consummation of the Offer, shall constitute one share more than 90% of the total Shares then outstanding (after giving effect to the issuance of the Top-Up Shares) at a price per Share equal to the Offer Price; provided, however, that (i) the Top-Up Option shall be exercisable only once, at such time as Parent and Purchaser, directly or indirectly, own at least 80% of the total number of Shares then outstanding and (ii) in no event shall the Top-Up Option be exercisable to the extent it would be exercisable for a number of Shares in excess of the Company’s then authorized and unissued shares of Common Stock (including as authorized and unissued shares of Common Stock, for purposes of this Section 1.5, any Shares held in the treasury of the Company).

(b) If Purchaser wishes to exercise the Top-Up Option, Parent or Purchaser shall deliver to the Company a notice setting forth (i) the number of Top-Up Shares that Purchaser wishes to purchase pursuant to the Top-Up Option, and (ii) the place and time at which the closing of the purchase of the Top-Up Shares is to take place. At the closing of the purchase of the Top-Up Shares, Purchaser shall pay the Company (which payment, except to the extent of the par value of the Top-Up Shares, may be in the form of a note) for the Top-Up-Shares against delivery of certificates therefor.

(c) Parent and Purchaser understand that the Shares that Purchaser may acquire upon exercise of the Top-Up Option will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and will be issued in reliance upon an exemption thereunder for transactions not involving a public offering. Parent and Purchaser represent and warrant to the Company that Purchaser is, and will be upon exercise of the Top-Up Option, an “accredited investor” (as defined in Rule 501 of Regulation D promulgated under the Securities Act). Purchaser agrees that the Top-Up Option and the Top-Up Shares to be acquired upon exercise thereof are being and will be acquired for the purpose of investment and not with a view to or for resale in connection with any distribution thereof within the meaning of the Securities Act. Any certificates evidencing Top-Up Shares may include any legends required by applicable securities laws.

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ARTICLE II

THE MERGER

2.1    The Merger. Upon the terms and subject to the conditions of this Agreement and in accordance with the DGCL, at the Effective Time, Purchaser shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Purchaser shall cease and the Company shall continue as the surviving corporation of the Merger (the “Surviving Corporation”).

2.2    Closing; Effective Time. Subject to the provisions of ARTICLE VIII, the closing of the Merger (the “Closing”) shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom, LLP, located at One Beacon Street, 31st Floor, Boston, Massachusetts, at 10:00 a.m. Eastern Time, as soon as practicable, but in no event later than the second Business Day, after the satisfaction or waiver of the conditions set forth in ARTICLE VIII (excluding conditions that, by their terms, cannot be satisfied until the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), or at such other place or on such other date as Parent and the Company may mutually agree. The date on which the Closing actually occurs is hereinafter referred to as the “Closing Date.” At the Closing, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the relevant provisions of the DGCL (the date and time of the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, or such later time as is specified in the Certificate of Merger and as is agreed to by the parties hereto, being hereinafter referred to as the “Effective Time”) and shall make all other filings or recordings required under the DGCL in connection with the Merger.

2.3    Effects of the Merger. The Merger shall have the effects set forth herein and in the applicable provisions of the DGCL. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and franchises of the Company and Purchaser shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and Purchaser shall become the debts, liabilities and duties of the Surviving Corporation.

2.4    Certificate of Incorporation; Bylaws. (a) At the Effective Time, the certificate of incorporation of the Company shall be amended and restated in its entirety to read as the certificate of incorporation of Purchaser in effect immediately prior to the Effective Time (except that Article I thereof shall read as follows: “The name of the Corporation is Excel Technology, Inc.”) and, as so amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with its terms and as provided by law.

(b) At the Effective Time, and without any further action on the part of the Company and Purchaser, the bylaws of the Company shall be amended and restated in their entirety so as to read as the bylaws of Purchaser as in effect immediately prior to the Effective Time (except that such bylaws shall be amended to reflect that the name of the Surviving Corporation shall be Excel Technology, Inc.), and, as so amended, shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with their terms and the certificate of incorporation of the Surviving Corporation and as provided by law.

2.5    Directors and Officers. The directors and officers of Purchaser immediately prior to the Effective Time shall be the directors and officers, respectively, of the Surviving Corporation, in each case until the earlier of his or her resignation or removal or until his or her successors are duly elected and qualified.

2.6    Stockholder Approval. Unless the Merger is consummated in accordance with Section 253 of the DGCL as contemplated by Section 2.7 of this Agreement, if permitted by applicable Law, the Company Organizational Documents and any applicable rule or regulation of any stock exchange, as soon as practicable following the consummation of the Offer, but not earlier than twenty days after the Information Statement is first distributed to the Company’s stockholders, Parent and Purchaser shall, as stockholders of the Company

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representing the Company Requisite Vote, adopt by written consent the “agreement of merger” (as such term is used in Section 251 of the DGCL) without a meeting of the stockholders of the Company. If required by Law, the Company Organizational Documents or any applicable rule or regulation of any stock exchange or otherwise, the Company, acting through the Company Board, shall, in accordance with applicable Law, duly call, give notice of, convene and hold a special meeting (the “Special Meeting”) of its stockholders as soon as practicable following the consummation of the Offer for the purpose of adopting the “agreement of merger” (as such term is used in Section 251 of the DGCL) set forth in this Agreement and include in the Proxy Statement the Company Board Recommendation; provided, that nothing herein shall be deemed to limit Section 7.3(d). Parent and Purchaser each agree that, at the Special Meeting, if such Special Meeting is required, all of the Shares acquired pursuant to the Offer or otherwise owned by Parent or Purchaser or Parent’s Subsidiaries will be voted in favor of the Merger.

2.7    Short-Form Merger. If, following the Offer and any subsequent offering period or the exercise of the Top-Up Option, Parent, Purchaser, or any other direct or indirect Subsidiary of Parent, shall own at least 90% of the outstanding shares of each class of capital stock of the Company, each of Parent, Purchaser and the Company shall (subject to Section 8.1) take all necessary and appropriate action to cause the Merger to become effective, as soon as practicable after the consummation of the Offer, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL.

ARTICLE III

EFFECT OF THE TRANSACTIONS ON THE CAPITAL STOCK

OF THE CONSTITUENT CORPORATIONS

3.1    Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Purchaser, the Company or the holders of any of the following securities, the following shall occur:

(a) each Share issued and outstanding immediately prior to the Effective Time, including shares of Restricted Stock which shall vest at the Effective Time (except to the extent such vesting is waived pursuant to the Termination Agreements and other than any Shares to be canceled pursuant to Section 3.1(b) and any Dissenting Shares), shall be converted into the right to receive the Offer Price in cash without interest (the “Merger Consideration”), payable to the holder thereof upon surrender of such Shares in the manner provided in Section 3.4;

(b) each Share held in the treasury of the Company and each Share owned by Parent, Purchaser or any direct or indirect wholly-owned Subsidiary of Parent or the Company immediately prior to the Effective Time shall be canceled and retired without any conversion thereof, and no payment or distribution shall be made with respect thereto; and

(c) each share of common stock of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Surviving Corporation.

3.2    Treatment of Equity Awards. (a) Substantially concurrently with the approval of this Agreement by the Company Board, the Compensation Committee of the Company Board has taken all actions so that (i) each option to acquire Shares granted under any Option Plan (an “Option”), whether vested or unvested, that is outstanding and unexercised immediately prior to the Effective Time shall, by virtue of the occurrence of the Effective Time and without any action on the part of Purchaser, the Company or the holder thereof, be terminated and shall solely represent the right to receive from the Company in exchange therefor, at the Effective Time or as soon as practicable thereafter, an amount in cash equal to the product of (A) the number of Shares subject to such Option and (B) the excess, if any, of the Offer Price, without interest, over the exercise price per Share subject to such Option and (ii) all restrictions applicable to any shares of restricted Company Common Stock (“Restricted Stock”) lapse immediately prior to and contingent upon the occurrence of the Effective Time. Pursuant to such

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action of the Compensation Committee of the Company Board, if the exercise price per Share of an Option is equal to or greater than the Offer Price, then by virtue of the occurrence of the Effective Time and without any action on the part of Purchaser, the Company or the holder thereof, the Option will be cancelled without payment of any consideration to the holder. At the Effective Time or as soon as practicable thereafter, Parent or Purchaser shall pay, or cause to be paid, to the holder of each Option that is outstanding and unexercised immediately prior to the Effective Time (except for those Options that are to be cancelled pursuant to the immediately preceding sentence) the amount in cash set forth in clause (i) of this Section 3.2(a).

(b) The Option Plan shall terminate as of the Effective Time, and any and all rights under any provisions in any other plan, program or arrangement, including any Company Employee Plan, providing for the issuance or grant of any other interest in respect of the capital stock of the Company (other than the right to receive the payment contemplated by Section 3.2(a)) shall be canceled as of the Effective Time, except that all administrative and other rights and authorities granted under the Option Plan to the Company, the Company Board or any committee or designee thereof shall remain in effect and shall reside with the Company following the Effective Time.

(c) The Company and Purchaser shall take any actions reasonably necessary to effectuate the provisions of this Section 3.2; it being understood that the intention of the parties is that, and the Company covenants and agrees with Parent and Purchaser that, immediately following the Effective Time no holder of an Option or share of Restricted Stock or any participant in any Company Employee Plan or other employee benefit arrangement of the Company shall have any right thereunder to acquire any capital stock (including any “phantom” stock or stock appreciation rights) of the Company, the Surviving Corporation or any of their Subsidiaries in respect of such Option or Restricted Stock or pursuant to such Company Employee Plan or other arrangement. Any notice which the Company shall deliver to the holders of Options or Restricted Stock or the participants in any other Company Employee Plan or other employee benefit arrangement of the Company setting forth such holders’ rights pursuant to this Agreement shall be reasonably acceptable to Parent.

3.3    Dissenting Shares. (a) Notwithstanding anything in this Agreement to the contrary, Shares that are issued and outstanding immediately prior to the Effective Time and which are held by holders of Shares that have properly demanded and perfected their rights to be paid the fair value of such Shares in accordance with Section 262 of the DGCL (the “Dissenting Shares”) shall not be converted into the right to receive the Merger Consideration, and the holders thereof shall be entitled to only such rights as are granted by Section 262 of the DGCL; provided, however, that if any such holder shall fail to perfect or shall effectively waive, withdraw or lose such holder’s rights under Section 262 of the DGCL, such holder’s Shares shall not constitute Dissenting Shares and instead shall thereupon be deemed to have been converted, at the Effective Time, into the right to receive the Merger Consideration, as set forth in Section 3.1 of this Agreement, without any interest thereon.

(b) The Company shall give Parent (i) prompt written notice of any appraisal demands received by the Company, withdrawals thereof and any other instruments served pursuant to Section 262 of the DGCL and received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to the exercise of appraisal rights under Section 262 of the DGCL. The Company shall not, except with the prior written consent of Parent or as otherwise required by applicable Law, make any payment with respect to any such exercise of appraisal rights or offer to settle or settle any such rights.

3.4    Surrender of Shares. (a) Prior to the Effective Time, Parent shall deposit (or cause to be deposited) with a bank or trust company designated by Parent and reasonably acceptable to the Company (the “Paying Agent”) sufficient funds to timely make all payments pursuant to Section 3.4(b). Such funds may be invested by the Paying Agent as directed by Purchaser or, after the Effective Time, the Surviving Corporation; provided, that such investments shall be in short-term obligations of the United States of America with maturities of no more than 30 days or guaranteed by the United States of America and backed by the full faith and credit of the United States of America or in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively. Any interest or income produced by such investments will be payable to the Surviving Corporation or Parent, as Parent directs.

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(b) Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each record holder, as of the Effective Time, of an outstanding certificate or certificates which immediately prior to the Effective Time represented Shares (the “Certificates”), a form of letter of transmittal (which shall be in customary form and shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting the surrender of the Certificates for payment of the Merger Consideration therefor. Upon surrender to the Paying Agent of a Certificate, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate, and such Certificate shall then be canceled. No interest shall be paid or accrued for the benefit of holders of the Certificates on the Merger Consideration payable in respect of the Certificates. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the Person requesting such payment shall have paid any transfer and other Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such Tax either has been paid or is not applicable. Until surrendered as contemplated by this Section 3.4(b), each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the applicable Merger Consideration as contemplated by this ARTICLE III.

(c) At any time following the date that is six months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) which have been made available to the Paying Agent and which have not been disbursed to holders of Certificates and thereafter such holders shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates.

(d) After the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares that were outstanding prior to the Effective Time. After the Effective Time, Certificates presented to the Surviving Corporation for transfer shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this ARTICLE III.

(e) In the event that any Certificate shall have been lost, stolen or destroyed, upon the holder’s compliance with the replacement requirements established by the Paying Agent, including, if necessary, the posting by the holder of a bond in customary amount as indemnity against any claim that may be made against it with respect to the Certificate, the Paying Agent will deliver in exchange for the lost, stolen or destroyed Certificate the applicable Merger Consideration payable in respect of the Shares represented by such Certificate pursuant to this ARTICLE III.

3.5    Withholding Taxes. Notwithstanding anything in this Agreement to the contrary, Parent, the Surviving Corporation, the Company and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to the Offer, the Merger or otherwise pursuant to this Agreement (including pursuant to Section 3.2(a)) any amount as may be required to be deducted and withheld with respect to the making of such payment under applicable tax Laws. To the extent that amounts are so properly withheld by the Paying Agent, the Surviving Corporation or Parent, as the case may be, and are paid to the appropriate Governmental Entity in accordance with applicable Law, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares or other Person in respect of which such deduction and withholding was made by the Paying Agent, the Surviving Corporation or Parent, as the case may be.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Purchaser, subject to the exceptions specifically disclosed in writing in the disclosure schedule supplied by the Company to Parent dated as of the date hereof (the “Disclosure Schedule”), as follows:

4.1    Organization; Standing and Power; Organizational Documents; Subsidiaries.

(a) Organization; Standing and Power. Each of the Company and each of its Subsidiaries is a corporation or other organization duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (except, in the case of good standing, for entities organized under the laws of any jurisdiction that does not recognize such concept) and each has the requisite power and authority to own, lease and operate its properties and to carry on its business as currently conducted. For purposes of this Agreement, “Subsidiary,” shall mean any corporation, association, business entity, partnership, limited liability company, joint venture or other Person of which such party, either alone or together with one or more Subsidiaries or by one or more Subsidiaries (i) directly or indirectly owns or controls securities or other interests representing 50% or more of the voting power of such Person or (ii) is entitled, by Contract or otherwise, to elect, appoint or designate directors constituting a majority of the members of such Person’s board of directors or other governing body. For purposes of this Agreement, “Contract” shall mean any written, oral or other agreement, contract, subcontract, settlement agreement, lease, binding understanding, instrument, note, option, warranty, purchase order, license, sublicense, insurance policy, benefit plan or legally binding, commitment or arrangement, undertaking of any nature, as in effect as of the date hereof or as may hereinafter be enforceable against the Company or its Subsidiaries.

(b) Organizational Documents. The Company has made available to Parent (i) a true and correct copy of the certificate of incorporation and bylaws of the Company, each as amended to date (collectively, the “Company Organizational Documents”) and (ii) the certificate of incorporation and bylaws, or like organizational documents, of each of its Subsidiaries (collectively, “Subsidiary Organizational Documents”), and each such instrument is in full force and effect. The Company is not in violation of any of the provisions of the Company Organizational Documents and each of its Subsidiaries is not in violation of its respective Subsidiary Organizational Documents.

(c) Subsidiaries. Section 4.1(c) of the Disclosure Schedule sets forth each Subsidiary of the Company. Except as set forth in Section 4.1(c) of the Disclosure Schedule, the Company is the direct or indirect owner of all of the outstanding shares of capital stock of, or other equity or voting interests in, each such Subsidiary and all such shares have been duly authorized, validly issued and are fully paid and nonassessable, free and clear of all pledges, claims, liens, charges, encumbrances, options and security interests of any kind or nature whatsoever (collectively, “Liens”), except for Permitted Liens and restrictions imposed by applicable securities laws. Other than the equity interests of the Subsidiaries of the Company, neither the Company nor any of its Subsidiaries owns any capital stock of, or other equity or voting interests of any nature in, or any interest convertible, exchangeable or exercisable for, capital stock of, or other equity or voting interests of any nature in, any other Person.

(d) Compensation Committee. The Compensation Committee of the Company Board is (and at all times since January 1, 2006 was, and at all times from the date of this Agreement to the first date on which the Purchaser’s designees constitute a majority of the Company Board pursuant to Section 1.4(a) will be) composed solely of Independent Directors.

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4.2    Capital Structure.

(a) Capital Stock. The authorized capital stock of the Company consists of: (i) 20,000,000 shares of common stock, par value $0.001 per share, of the Company (the “Company Common Stock”) and (ii) 2,000,000 shares of undesignated preferred stock, par value $0.001 per share (the “Company Preferred Stock”). As of the close of business on the day immediately preceding the date hereof: (i) 10,860,886 shares of Company Common Stock were issued and outstanding (excluding shares of Company Common Stock held by the Company in its treasury), (ii) no shares of Company Common Stock were issued and held by the Company in its treasury, (iii) no shares of Company Preferred Stock were issued or outstanding and (iv) 53,079 shares of Restricted Stock were granted by the Company but not yet issued. Since May 16, 2008, the Company has not issued any shares of Company Common Stock other than issuances of Company Common Stock upon the exercise of Options existing on May 16, 2008 in accordance with their terms as of such date or entered into any agreements or commitments of any character obligating it to issue any Company Common Stock. No shares of Company Common Stock are owned or held by any Subsidiary of the Company. All outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Company Organizational Documents, or any agreement to which the Company is a party or by which it is bound.

(b) Company Options. As of the close of business on the date immediately preceding the date hereof: 1,132,809 shares of Company Common Stock were issuable upon the exercise of Options under the Company’s 1990 Stock Option Plan, the Company’s 1998 Stock Option Plan, the Company’s 2004 Stock Option Plan and the Company’s 2006 Stock Option / Stock Issuance Plan (collectively, the “Option Plans”). No options to purchase Company stock are outstanding other than under the Option Plans. Since May 16, 2008, the Company has not granted any Options, shares of Restricted Stock, subscriptions, rights (including stock appreciation rights whether settled in cash or shares of Company Common Stock), warrants to acquire any shares of capital stock, restricted stock, restricted stock units, performance shares, performance share units or other equity based awards or entered into any agreements or commitments of any character obligating it to grant any such securities. Section 4.2(b)(i) of the Disclosure Schedule sets forth a list of each Option outstanding as of the close of business on the date immediately preceding the date hereof, including: (a) the name of the holder of such Option, (b) the number of shares of Company Common Stock subject to such Option, (c) the exercise price of such Option, (d) the date on which such Option was granted or issued, (e) the Option Plan under which such Option was issued, (f) the applicable vesting schedule, if any, and the extent to which such Option is vested and exercisable as of the such date; and (g) the date on which such Option expires. All options were granted, with a per share exercise price at least equal to the fair market value of one share of Company Common Stock as of the date of grant of such Option. All shares of Company Common Stock subject to issuance under the Option Plans, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as set forth in Section 4.2(b)(ii) of the Disclosure Schedule, there are no commitments or agreements of any character to which the Company is bound obligating the Company to accelerate the vesting or exercisability of any Option in connection with or as a result of the Offer or the Merger (whether alone or upon the occurrence of any additional or subsequent events). Except as set forth in Section 4.2(b)(iii) of the Disclosure Schedule, there are no outstanding or authorized stock appreciation, phantom stock, restricted stock, restricted stock unit, profit participation or other similar rights with respect to the Company.

(c) Voting Debt. No bonds, debentures, notes or other indebtedness of the Company or any of its Subsidiaries (i) having the right to vote on any matters on which stockholders may vote (or which is convertible into, or exchangeable for, securities having such right) or (ii) the value of which is any way based upon or derived from capital or voting stock of the Company, are issued or outstanding as of the date hereof (collectively, “Voting Debt”).

(d) Other Securities. Except as otherwise set forth in Section 4.2(b) or Section 4.2(d) of the Disclosure Schedule, there are no securities, options, warrants, calls, rights, contracts, commitments, agreements,

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instruments, arrangements, understandings, obligations or undertakings of any kind to which the Company or any of its Subsidiaries is a party or by which any of them is bound obligating (or purporting to obligate) the Company or any of its Subsidiaries to (including on a deferred basis) issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock, Voting Debt, other voting securities or any securities convertible into shares of capital stock, Voting Debt or other voting securities of the Company or any of its Subsidiaries, or obligating the Company or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, instrument, arrangement, understanding, obligation or undertaking. There are no outstanding Contracts to which the Company or any of its Subsidiaries is a party or by which any of them is bound obligating the Company or any of its Subsidiaries to (i) repurchase, redeem or otherwise acquire any shares of capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries or (ii) dispose of any shares of the capital stock of, or other equity or voting interests in, any of its Subsidiaries. The Company is not a party to any voting agreement with respect to shares of the capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries and there are no rights plans, anti-takeover plans or registration rights agreements with respect to any shares of the capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries to which the Company or any of its Subsidiaries is a party or by which any of them are bound. To the Company’s Knowledge, other than the Tender and Support Agreement and the irrevocable proxies granted pursuant to the Tender and Support Agreement, there are no irrevocable proxies and no voting agreements or voting trusts with respect to any shares of the capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries to which the Company or any of its Subsidiaries is a party or by which any of them are bound.

4.3    Authority.

(a) The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and no other corporate proceeding on the part of the Company is necessary to authorize this Agreement or to consummate the transactions so contemplated (other than, with respect to the Merger, adoption of the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement by the holders of at least a majority in combined voting power of the outstanding Shares (the “Company Requisite Vote”), and the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL). Subject to applicable requirements of the Exchange Act, the Company Requisite Vote may be obtained, without a meeting of the stockholders of the Company and without prior notice, by written consent signed by the holders of Company Common Stock representing the Company Requisite Vote. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by Parent and Purchaser, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and any implied covenant of good faith and fair dealing.

(b) The making of any offer and proposal and the taking of any other action by Parent or Purchaser in accordance with this Agreement and the transactions contemplated hereby have been consented to by the Company Board. The Company Board (at a meeting or meetings duly called and held) has unanimously: (i) determined that this Agreement, the Offer and the Merger are advisable and fair to and in the best interests of, the Company and its stockholders; (ii) adopted and approved this Agreement and the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement; (iii) directed that the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement be submitted to the stockholders of the Company for adoption (unless the Merger is consummated in accordance with Section 253 of the DGCL as contemplated by Section 2.7); and (iv) resolved to recommend (A) that the Company’s stockholders accept the Offer, tender their Shares to Purchaser pursuant to the Offer and (B) adoption of the

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“agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement by the stockholders of the Company (the “Company Board Recommendation”), which actions and resolutions have not, as of the date hereof, been subsequently rescinded, modified or withdrawn in any way.

4.4    No Conflict. The execution, delivery and performance of this Agreement by the Company, the consummation of the Offer, and the consummation by the Company of the Merger and the transactions contemplated by ARTICLE III, do not and will not, (a) conflict with or violate the Certificate of Incorporation or Bylaws of the Company, (b) assuming that all Necessary Consents have been obtained, and all filings described in Section 4.5 have been made, conflict with or violate any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, order, edict, decree, directive, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity (“Law”) or any Nasdaq rule or regulation applicable to the Company or by which any of its properties are bound or (c) (i) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default), or (ii) result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, or (iii) result in the creation of any Lien on any of the properties or assets of the Company, under any Contract to which the Company is a party or by which the Company or any of its properties are bound, except, in the case of clauses (b) and (c), for any such conflict, violation, breach, default, loss, right or other occurrence which would not constitute, individually or in the aggregate, a Material Adverse Effect.

4.5    Necessary Consents. No consent, waiver, approval, order or authorization of, or registration, declaration or filing with any supranational, national, state, municipal, local or foreign government, any instrumentality, subdivision, court, arbitral body, administrative agency or commission or other governmental authority or instrumentality or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority (a “Governmental Entity”) or any other Person is required to be obtained or made by the Company in connection with the execution and delivery of this Agreement or the consummation of the Offer and the Merger and other transactions contemplated hereby and thereby, except for (a) applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder (including the filing of the Information Statement or Proxy Statement), and state securities, takeover and “blue sky” laws, (b) the applicable requirements of the rules and regulations of Nasdaq, (c) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL, (d) the filing of the Notification and Report Forms with the United States Federal Trade Commission (“FTC”) and the Antitrust Division of the United States Department of Justice (“DOJ”) required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”) and the expiration or termination of the applicable waiting period under the HSR Act and such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings required under the foreign merger control regulations, antitrust or competition laws (“Foreign Antitrust Laws”), and (e) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not constitute, individually or in the aggregate, a Material Adverse Effect. The consents, approvals, orders, authorizations, registrations, declarations and filings set forth in (a) through (e) are referred to herein as the “Necessary Consents.”

4.6    SEC Filings; Financial Statements; Internal Controls.

(a) SEC Filings. The Company has timely filed all required registration statements, prospectuses, reports, schedules, forms, statements and other documents (including exhibits and all other information incorporated by reference) required to be filed by it with the SEC or Nasdaq since January 1, 2005. All such required registration statements, prospectuses, reports, schedules, forms, statements and other documents, as each of the foregoing have been amended since the time of their filing, (including those that the Company may file subsequent to the date hereof) are referred to herein as the “Company SEC Reports.” As of their respective dates, the Company SEC Reports (i) were prepared in accordance with, and complied in all material respects with, the requirements of the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act, or the Sarbanes-Oxley Act of 2002, as the case may be, and, in each case, the rules and regulations promulgated

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thereunder applicable to such Company SEC Reports as well as the rules and regulations of Nasdaq and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. None of the Company’s Subsidiaries is required to file any forms, reports or other documents with the SEC. The Company has made available to Parent complete and correct copies of all amendments and modifications effected prior to the date of this Agreement that have not yet been filed by the Company with the SEC but which are required to be filed and all Contracts and other documents that previously had been filed by the Company with the SEC and are currently in effect. The Company has made available to Parent true, correct and complete copies of all correspondence between the SEC, on the one hand, and the Company and any of its Subsidiaries, on the other, since January 1, 2005, including all SEC comment letters and responses to such comment letters by or on behalf of the Company. To the Company’s Knowledge, as of the date hereof, none of the Company SEC Documents is the subject of ongoing SEC review or outstanding SEC comment. Each of the principal executive officers of the Company and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company, as applicable) has made all certifications required by Rule 13a-14 or Rule 15d-14 under the Exchange Act or Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 with respect to the Company SEC Documents. For purposes of this Section 4.6(a), “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act of 2002.

(b) Financial Statements. Each of the consolidated financial statements (including, in each case, any related notes thereto) contained in the Company SEC Reports (the “Company Financials”), including in each Company SEC Report filed after the date hereof until the Closing: (i) complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, (ii) was prepared in accordance with United States generally accepted accounting principles applied on a consistent basis throughout the periods involved (“GAAP”) (except as may be indicated in the notes thereto) and (iii) fairly and accurately presented in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as at the respective dates thereof and the consolidated results of the Company’s operations and cash flows for the periods indicated, except that any unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which have not been or are not expected to be material in amount, individually or in the aggregate. The Company does not intend to correct or restate, and to the Company’s Knowledge, there is not any basis to correct or restate any of the Company Financials. The consolidated balance sheet of the Company and its consolidated subsidiaries as of March 28, 2008 contained in the Company SEC Reports is hereinafter referred to as the “Company Balance Sheet.”

(c) Undisclosed Liabilities. Except as disclosed in the Company Financials, since the date of the Company Balance Sheet, neither the Company nor any of its Subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of a nature required to be disclosed on a consolidated balance sheet or in the related notes to the consolidated financial statement prepared in accordance with GAAP, except for (i) liabilities incurred since the date of the Company Balance Sheet in the ordinary course of business consistent with past practice and (ii) liabilities incurred solely in connection with this Agreement or the transactions contemplated hereby. The Company has not had any dispute with any of its auditors regarding material accounting matters or policies during any of its past three full fiscal years or during the current fiscal year-to-date. The books and records of the Company and each Subsidiary have been, and are being, maintained in accordance with applicable legal and accounting requirements and the Company Financials are consistent with such books and records. Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar off-balance sheet Contract relating to any transaction or relationship between or among the Company or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose Person, on the other hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K of the SEC).

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(d) Internal Controls. The Company has established and maintains a system of internal controls over financial reporting required by Rules 13a-15(f) or 15d-15(f) of the Exchange Act sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of its consolidated financial statements in accordance with GAAP including policies and procedures that (i) require the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company and its Subsidiaries, (ii) provide reasonable assurance that material information relating to the Company and its Subsidiaries is promptly made known to the officers responsible for establishing and maintaining the system of internal controls, (iii) provide assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company and its Subsidiaries are being made only in accordance with appropriate authorizations of management and the Company Board, (iv) provide reasonable assurance that access to assets is permitted only in accordance with management’s general or specific authorization, (v) provide reasonable assurance that the reporting of assets is compared with existing assets at regular intervals and appropriate action is taken with respect to any differences, (vi) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its Subsidiaries and (vii) provide assurance that any significant deficiencies or material weaknesses in the design or operation of internal controls which are reasonably likely to materially and adversely affect the ability to record, process, summarize and report financial information, and any fraud, whether or not material, that involves the Company’s management or other employees who have a role in the preparation of financial statements or the internal controls utilized by the Company and its Subsidiaries, are adequately and promptly disclosed to the Company’s independent auditors and the audit committee of the Company Board. Neither the Company nor any of its Subsidiaries (including any Employee/Service Provider thereof) nor, to the Company’s Knowledge, the Company’s independent auditors have identified or been made aware of (i) any significant deficiency or material weakness in the system of internal controls utilized by the Company and its Subsidiaries, (ii) any fraud, whether or not material, that involves the Company’s management or other employees who have a role in the preparation of financial statements or the internal controls utilized by the Company and its Subsidiaries or (iii) any claim or allegation regarding any of the foregoing.

(e) The Company has established and maintains disclosure controls and procedures required by Rules 13a-15(f) or 15d-15(f) of the Exchange Act to ensure that all material information relating to the Company and its Subsidiaries required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management to allow timely decisions regarding required disclosure.

4.7    Absence of Certain Changes or Events. Since the date of the Company Balance Sheet through the date hereof, the Company has conducted its business in the ordinary course consistent with past practice and there has not been, accrued or arisen:

(a) any Material Adverse Effect;

(b) any acquisition by the Company or any Subsidiary of, or agreement by the Company or any Subsidiary to acquire by merging or consolidating with, or by purchasing any assets for an amount in excess of $100,000 or equity securities of, or by any other manner, any business or corporation, partnership, association or other business organization or division thereof; or other acquisition or agreement to acquire any assets for consideration in excess of $100,000 or any equity securities, or any solicitation of, or participation in, any negotiations with respect to any of the foregoing;

(c) any entry into, amendment or termination by the Company or any of its Subsidiaries of any Contract, agreement in principle, letter of intent, memorandum of understanding or similar agreement with respect to a joint venture, strategic partnership or alliance, or supply arrangement;

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(d) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, any of the Company’s or any of its Subsidiaries’ capital stock, or any purchase, redemption or other acquisition by the Company or any of its Subsidiaries of any of the Company’s or any of its Subsidiaries’ capital stock or any other securities of the Company or any options, warrants, calls or rights to acquire any such shares or other securities;

(e) any split, combination or reclassification of any of the Company’s or any of its Subsidiaries’ capital stock;

(f) except as set forth in Section 4.7(f) of the Disclosure Schedule, any granting by the Company or any of its Subsidiaries, whether orally or in writing, of any increase in additional compensation or benefits (i) to officers of the Company or any Subsidiary or (ii) to any non-officer employees of the Company or any Subsidiary whose annual base salary is in excess of $100,000 other than in the ordinary course of business consistent with past practice;

(g) except as set forth in Section 4.7(g) of the Disclosure Schedule, any change by the Company or any of its Subsidiaries of severance, termination or bonus policies and practices (excluding sales commissions) or any entry by the Company or any of its Subsidiaries into, or amendment of, any employment, severance, termination or indemnification agreement or any agreement the benefits of which are contingent or the terms of which are materially altered upon the occurrence of a transaction involving the Company of the nature contemplated hereby (either alone or upon the occurrence of additional or subsequent events);

(h) any amendment, termination or consent with respect to any Material Contract.

(i) any Contract entered into by the Company or any Subsidiary relating to its assets or business (including the acquisition or disposition of any assets or property) or any relinquishment by the Company or any of its Subsidiary of any Contract or other right, in each case having a stated contract amount or involving obligations or entitlements with a value of more than $1,000,000 in each individual case (other than Contracts with customers, distributors, material suppliers and representatives, or renewals of such existing contracts, each as entered into in the ordinary course of business, consistent with past practice);

(j) any material change by the Company in its accounting methods, principles or practices, except as required by concurrent changes in GAAP;

(k) any debt, capital lease or other debt or equity financing transaction by the Company or any of its Subsidiaries or entry into any agreement by the Company or any of its Subsidiaries in connection with any such transaction, except for capital leases entered into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material to the Company and its Subsidiaries taken as a whole;

(l) any grants of any material refunds, credits, rebates or other allowances by the Company or any of its Subsidiaries to any customer, reseller or distributor, in each case, other than in the ordinary course of business consistent with past practice;

(m) any material change in the level of product returns or policies relating to accounts receivable or reserves, bad debts or rights to accounts receivable experienced by the Company or any of its Subsidiaries;

(n) any material restructuring activities by the Company or any of its Subsidiaries, including any material reductions in force, or any material lease terminations or restructuring of material contracts;

(o) any sale, lease, license, encumbrance or other disposition of any properties or assets except the sale, lease, license or disposition of property or assets which are not material, individually or in the aggregate, to the business of the Company or any of its Subsidiaries or the license of current Company Products, in each case, in the ordinary course of business and in a manner consistent with past practice;

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(p) any loan, advance or capital contribution by the Company or any of its Subsidiaries to, or investment in, any Person other than (A) loans or advances to Employees/Service Providers in connection with business related travel and expenses, in each case in the ordinary course of business consistent with past practice or (B) loans, advances or capital contributions or investments by the Company to or in any wholly-owned Subsidiary, by any wholly-owned Subsidiary in the Company, or by a wholly-owned Subsidiary of the Company in any other wholly-owned Subsidiary of the Company;

(q) any material purchases of fixed assets or other long term assets other than in the ordinary course of business and in a manner consistent with past practice;

(r) except as set forth in Section 4.7(r) of the Disclosure Schedule, any amendment of any material Tax Returns, any adoption of or change in any material election in respect of Taxes, adoption or change in any accounting method in respect of Taxes, agreement or settlement of any closing agreement relating to an Audit, or consent to any waiver of the statutory period of limitations in respect of any Audit;

(s) any material revaluation, or any indication that such a revaluation is required under GAAP, by the Company of any of its assets, including, without limitation, writing down the value of long term or short-term investments, fixed assets, goodwill, intangible assets, deferred tax assets, or writing off notes or accounts receivable other than in the ordinary course of business consistent with past practice;

(t) any significant deficiency or material weakness identified in the system of internal controls utilized by the Company and its Subsidiaries; or

(u) any commencement or settlement of any lawsuit, any threat of any lawsuit or other proceeding by or against the Company or any Subsidiary.

4.8    Taxes.

(a) Definitions. “Tax” or “Taxes” means all Federal, state, local, and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto, imposed by any Tax Authority. “Tax Authority” means the IRS and any other domestic or foreign governmental authority responsible for the administration of any Taxes. “Audit” means any audit, assessment, claim, examination or other inquiry relating to Taxes by any Tax Authority or any judicial or administrative proceeding relating to Taxes. “Tax Returns” mean all federal, state, local, and foreign tax returns, declarations, statements, reports, schedules, forms, and information returns and any amendments thereto.

(b) Tax Returns and Audits.

(i) Except as set forth in Section 4.8(b)(i) of the Disclosure Schedule, the Company and each of its Subsidiaries has timely filed (or has had timely filed on its behalf) with the appropriate Tax Authorities all Tax Returns required to be filed by the Company and each of its Subsidiaries, and such Tax Returns are true, correct, and complete in all material respects.

(ii) Except as set forth in Section 4.8(b)(ii) of the Disclosure Schedule, all Taxes for which the Company or any of its Subsidiaries is or may be liable in respect of taxable periods (or portions thereof) ending on or before the Closing Date, whether or not shown (or required to be shown) on a Tax Return, have been timely paid, or in the case of Taxes not yet due and payable, an adequate accrual in accordance with GAAP specifically in respect of such Taxes has been established on the Company Financials. All liabilities for Taxes attributable to the period commencing on the date following the date of the Company Balance Sheet were incurred in the ordinary course of business and are consistent in type and amount with Taxes attributable to similar prior periods.

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(iii) Except for Permitted Liens, there are no liens for Taxes upon any property or assets of the Company or any of its Subsidiaries.

(iv) Except as set forth in Section 4.8(b)(iv) of the Disclosure Schedule, no Federal, state, local or foreign Audits are presently pending with regard to any Taxes or Tax Returns of the Company and its Subsidiaries and to the Knowledge of the Company, no such Audit is threatened.

(v) There are no outstanding requests, agreements, consents or waivers to extend the statutory period of limitations applicable to the assessment of any Taxes or deficiencies against the Company or any of its Subsidiaries, and no power of attorney granted by the Company or any of its Subsidiaries with respect to any Taxes is currently in force.

(vi) There are no Tax sharing, allocation, indemnification or similar agreements in effect as between the Company or any of its Subsidiaries or any predecessor or Affiliate of any of them and any other party under which the Company or any of its Subsidiaries could be liable for any material Taxes of any party other than the Company or any Subsidiary of the Company.

(vii) Neither the Company nor any of its Subsidiaries has (i) been a member of an affiliated group (within the meaning of Section 1504 of the Internal Revenue Code of 1986, as amended (the “Code”)) or an affiliated, combined, consolidated, unitary, or similar group for state, local or foreign Tax purposes, other than the group of which the Company is the common parent or (ii) any liability for or in respect of the Taxes of, or determined by reference to the Tax liability of, another Person (other than the Company or any of its Subsidiaries) under Section 1.1502-6 (or any similar provision of state, local or foreign Law) of the regulations promulgated under the Code (the “Treasury Regulation”), as a transferee or successor, by Contract or otherwise.

(viii) Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (x) in the two (2) years prior to the date of this Agreement or (y) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Offer or the Merger.

(ix) There are no outstanding options, warrants, securities convertible into stock or other contractual obligations that might be treated for Federal income tax purposes as stock or another equity interest in the Company or any of its Subsidiaries.

(x) Neither the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date under Section 481(c) of the Code (or any corresponding or similar provision of tax Law) or (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of tax Law) executed on or prior to the Closing Date.

(xi) Each of the Company and its Subsidiaries has disclosed on its Tax Returns all positions taken therein that could give rise to a substantial understatement of Taxes within the meaning of Section 6662 of the Code.

(xii) Neither the Company nor its Subsidiaries has entered into, has any liability in respect of, or has any filing obligations with respect to, any transaction that constitutes a “reportable transaction,” as defined in Section 1.6011-4(b)(1) of the Treasury Regulations.

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(xiii) All related-party transactions involving the Company or any of its Subsidiaries are at arm’s length in compliance with Section 482 of the Code and the Treasury Regulation promulgated thereunder and any similar provision of foreign, state and local law.

(xiv) Neither the Company nor its Subsidiaries is the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any taxing authority with respect to any material Taxes.

(xv) Neither the Company nor any of its Subsidiaries is a “United States real property holding corporation” as defined in Section 897 of the Code.

(xvi) The Company has made available to Parent correct and complete copies of (i) all U.S. federal Tax Returns of the Company and its Subsidiaries relating to taxable periods ending on or after January 1, 2006, filed through the date hereof and (ii) any audit report within the last three years relating to any material Taxes due from or with respect to the Company or any of its Subsidiaries.

4.9    Title to Properties.

(a) Properties. Section 4.9(a)(i) of the Disclosure Schedule sets forth a list of all real property currently owned by the Company or any of its Subsidiaries (the “Owned Real Property”). Section 4.9(a)(ii) of the Disclosure Schedule sets forth a list of all real property currently leased, licensed or subleased by the Company or any of its Subsidiaries or otherwise used or occupied by the Company or any of its Subsidiaries (the “Leased Real Property”). All Lease Documents are in full force and effect, are valid and effective in accordance with their respective terms, and there is not, under any of the Lease Documents, any existing breach, default or event of default (or event which with notice or lapse of time, or both, would constitute a default) by the Company or its Subsidiaries or, to the Company’s Knowledge, any third party under any of the Lease Documents, in each case subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the rights and remedies of creditors generally and to general principles of equity. Except as set forth on Section 4.9(a)(iii) of the Disclosure Schedule, (i) no parties other than the Company or any of its Subsidiaries have a right to occupy any material Owned Real Property or Leased Real Property and (ii) the Owned Real Property and the Leased Real Property is are compliance, in all material respects, with Law.

(b) Documents. The Company has made available to Parent true, correct and complete copies of all Contracts under which the Leased Real Property is currently leased, licensed, subleased used or occupied by the Company or any of its Subsidiaries (“Lease Documents”).

(c) Valid Title. The Company and each of its Subsidiaries have good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of their material tangible properties and assets, real, personal and mixed, reflected in the latest Company Financials included in the Company SEC Reports, free and clear of any Liens except (i) as reflected in the Company Balance Sheet and (ii) (A) statutory liens for Taxes or other payments that are not yet due and payable; (B) statutory liens to secure obligations to landlords, lessors or renters under leases or rental agreements; (C) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance or similar programs mandated by Law; (D) statutory liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for labor, materials or supplies and other like liens; and (E) statutory purchase money liens (clauses (A), (B), (C), (D) and (E) collectively, the “Permitted Liens”). The rights, properties and assets presently owned, leased or licensed by the Company and its Subsidiaries include all rights, properties and assets necessary to permit the Company and its Subsidiaries to conduct their business in all material respects in the same manner as their businesses have been conducted prior to the date hereof.

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4.10    Intellectual Property.

Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:

“Company Intellectual Property” shall mean any and all Intellectual Property and Intellectual Property Rights that are owned by, or purported to be owned by, the Company or its Subsidiaries.

“Company Products” shall mean all products and services developed or under development (and with respect to Section 4.10(b), including, but not limited to, the products and services that are listed on Section 4.10 of the Disclosure Schedule), owned, made, provided, distributed, imported, sold or licensed by or on behalf of the Company and any of its Subsidiaries.

“Company Registered Intellectual Property” shall mean any and all legal rights in, arising out of or associated with any applications (including written invention disclosures that have not yet been filed) for, or registrations or issuances or grants of, the Company Intellectual Property before or by any governmental authority responsible for issuing or registering any of the Intellectual Property or Intellectual Property Rights.

“Intellectual Property” shall mean any or all of the following (i) works of authorship including computer programs, source code and executable code, whether embodied in software, firmware or otherwise, documentation, designs, files and records, (ii) inventions (whether or not patentable), discoveries, improvements and technology, (iii) proprietary and confidential information, trade secrets and know how, (iv) databases, data compilations and collections and technical data, (v) logos, trade names, trade dress, trademarks and service marks, (vi) domain names, web addresses and sites, (vii) tools, methods and processes and (viii) schematics.

“Intellectual Property Rights” shall mean worldwide common law and statutory rights associated with (i) patents and patent applications, (ii) copyrights, copyright registrations and copyright applications and “moral rights,” (iii) trade and industrial secrets and confidential information (including customer lists, customer contact information, customer correspondence and customer licensing and purchasing histories relating to its current and former customers) (“Trade Secrets”), (iv) other proprietary rights relating to intangible intellectual property, (v) trademarks, trade names and service marks, (vi) divisions, continuations, renewals, reissuances and extensions of the foregoing (as applicable) and (vii) the right to enforce and recover remedies for any of the foregoing.

“Open Source” shall mean Intellectual Property or Intellectual Property Rights of the Company or its Subsidiaries, of a third party, or in the public domain, that constitutes open source, public source or freeware Intellectual Property, or any modification or derivative thereof, including any version of any software licensed pursuant to any GNU general public license or GNU lesser general public license or other software that is licensed pursuant to a license that purports to require the distribution of or access to Source Code or purports to restrict one’s ability to charge for distribution of or to use software for commercial purposes.

“Shrink-Wrapped Code” shall mean generally commercially available off-the-shelf software code or programs where available for a cost of not more than $10,000 for a perpetual license for a single user or work station (or $75,000 in the aggregate for all users and work stations).

“Source Code” shall mean computer software and code, in a form other than object code form, including related programmer comments and annotations, which may be printed out or displayed in human readable form.

(a) No Default/No Conflict. The consummation of the transactions contemplated by this Agreement will neither violate nor by their terms result in the breach, modification, cancellation, termination, suspension of, or acceleration of any payments with respect to, any Contract providing for the license or other use of Company

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Intellectual Property or the license or other use by the Company or its Subsidiaries of Intellectual Property or Intellectual Property Rights of a third party, in each case which is material to the business of the Company (“Intellectual Property Contracts”). Each of the Company and its Subsidiaries is in compliance with, and has not breached any term of any such Intellectual Property Contract and, to the Company’s Knowledge, all other parties to such Intellectual Property Contracts are in compliance with, and have not breached any term thereof. Following the Closing, the Surviving Corporation will be permitted to exercise all of the Company’s and its Subsidiaries’ rights under such Intellectual Property Contracts to the same extent the Company and its Subsidiaries would have been able to had the transactions contemplated by this Agreement not occurred and without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company or any of its Subsidiaries would otherwise be required to pay.

(b) No Infringement. Except as set forth in Sections 4.13(a) and 4.13(c) of the Disclosure Schedule, the operation of the business of the Company and its Subsidiaries as currently conducted, including the design, development, use, import, branding, advertising, promotion, marketing, manufacture and sale of the Company Products do not infringe or misappropriate, any Intellectual Property Rights of any third party, or violate any right to privacy or publicity of any third party or constitute unfair competition or trade practices under the laws of any jurisdiction.

(c) Notice. Except as set forth in Sections 4.13(a) and 4.13(e) of the Disclosure Schedule, neither the Company nor any of its Subsidiaries has received written notice from any third party claiming that the Company, any of its Subsidiaries, any Company Product or Company Intellectual Property infringes or misappropriates any Intellectual Property Rights of any third party, violates any rights to privacy or publicity or constitutes unfair competition or trade practices under the laws of any jurisdiction (nor does the Company have Knowledge of any basis therefor).

(d) No Third Party Infringers. Except as set forth in Section 4.10(d) of the Disclosure Schedule, to the Company’s Knowledge, no Person is infringing, misappropriating or otherwise violating any Company Intellectual Property. Within the past three years, neither the Company nor any of its Subsidiaries have asserted or threatened any claim against any Person alleging any infringement, misappropriation or violation of any Company Intellectual Property.

(e) Transaction. Neither this Agreement nor the transactions contemplated by this Agreement, including any assignment to the Surviving Corporation of any contracts or agreements to which the Company or any of its Subsidiaries is a party, will result in: (i) Parent, any of its Subsidiaries or the Surviving Corporation granting to any third party any incremental right to or with respect to any Intellectual Property Rights owned by, or licensed to, any of them, (ii) Parent, any of its Subsidiaries or the Surviving Corporation, being bound by, or subject to, any incremental non-compete or other incremental material restriction on the operation or scope of their respective businesses or (iii) Parent, any of its Subsidiaries or the Surviving Corporation being obligated to pay any incremental royalties or other material amounts, or offer any incremental discounts, to any third party. As used in Sections 4.10(e) and 4.10(i), an “incremental” right, non-compete, restriction, royalty or discount refers to a right, non-compete, restriction, royalty or discount, as applicable, in excess of the rights, non-competes, restrictions, royalties or discounts payable that would have been required to be offered or granted, as applicable, had the parties not entered into this Agreement or consummated the transactions contemplated hereby.

(f) Intellectual Property. The Company and its Subsidiaries have taken commercially reasonable steps to obtain, maintain and protect the Company Intellectual Property. Without limiting the foregoing, each of the Company and its Subsidiaries has, and enforces, a policy requiring each employee to execute confidentiality agreements which provide reasonable protection for trade secrets of the Company and its Subsidiaries. All current employees of the Company or any Subsidiary have executed a document entitled “Agreement to Protect Confidential Information and Non-Solicitation and Non-Competition Agreement,” the form of which is set forth in Section 4.10(f) of the Disclosure Schedule, and no party to any such agreement is in breach thereof.

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(g) No Order. There are no consents, settlements, judgments, injunctions, decrees, awards, stipulations, orders or similar litigation-related, inter partes or adversarial-related, or government-imposed obligations to which the Company or a Subsidiary is a party or are otherwise bound, that do or, to the Company’s Knowledge, may: (i) restrict the rights of the Company or any of its Subsidiaries to use, transfer, license or enforce any of its Intellectual Property Rights, (ii) restrict the conduct of the business of the Company or any of its Subsidiaries in order to accommodate a third party’s Intellectual Property Rights or (iii) grant any third party any right with respect to any Company Intellectual Property.

(h) Open Source. No Open Source has been used in, incorporated into, integrated or bundled with, or used in the development or compilation of, any Company Product.

(i) Source Code. Section 4.10(i) of the Disclosure Schedule identifies each Intellectual Property Contract pursuant to which the Company has deposited with an escrow agent or any other Person, any of its Source Code. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in a release of any Source Code owned by the Company or any of its Subsidiaries or the grant of incremental rights to a Person with regard to such Source Code. No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, or would reasonably be expected to, result in the disclosure or delivery by the Company, any of its Subsidiaries or any Person acting on their behalf to any Person of any Source Code owned by the Company or any of its Subsidiaries under any Contract, and no such Source Code has been disclosed, delivered or licensed to a third party.

(j) Software. To the Knowledge of the Company, all software incorporated within the Company Products is free of: (i) any material defects, including without limitation any material error or omission in the processing of any transactions and (ii) any disabling codes or instructions and any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus” or other software routines or hardware components that permit unauthorized access or the unauthorized disruption, impairment, disablement or erasure of such software (or any parts thereof) or data or other software of users (“Contaminants”).

(k) Information Technology. The Company and its Subsidiaries have taken commercially reasonable steps and implemented commercially reasonable procedures to ensure that information technology systems used in connection with the operation of the Company and its Subsidiaries are free from Contaminants. The Company and its Subsidiaries have appropriate disaster recovery plans, procedures and facilities for their businesses and have taken all commercially reasonable steps to safeguard the information technology systems utilized in the operation of the business of the Company and its Subsidiaries as it is currently conducted. To the Company’s Knowledge, there have been no unauthorized intrusions or breaches of the security of the information technology systems. The Company and its Subsidiaries have implemented any and all security patches or upgrades that are generally available for the Company’s information technology systems where, in the Company’s reasonable judgment, such patches or upgrades are required.

(l) Licenses-In. Other than (i) licenses to Shrink-Wrapped Code and (ii) non-disclosure agreements entered into in the ordinary course of business, Section 4.10(l) of the Disclosure Schedule lists all Contracts that are material to the business of the Company or its Subsidiaries to which the Company or any of its Subsidiaries is a party and under which the Company or any of its Subsidiaries has been granted or provided any rights to Intellectual Property or Intellectual Property Rights by a third party and sets forth, for each such Contract, any minimum purchase obligations and per unit royalty charges required of the Company or any of its Subsidiaries thereunder. All Contracts providing for the license or other use of Intellectual Property or Intellectual Property Rights by the Company or any of its Subsidiaries that are material to the business of the Company are fully paid-up, in full force and effect, and enforceable in accordance with their terms.

(m) Licenses-Out. Other than (i) written non-disclosure agreements and (ii) non-exclusive licenses and related agreements with respect thereto (including software and maintenance and support agreements) of current Company Products to end-users (in each case, pursuant to written agreements that have been entered into in the

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ordinary course of business that do not materially differ in substance from the Company’s standard form(s)), Section 4.10(m) of the Disclosure Schedule lists all Contracts providing for the license of or other use of Company Intellectual Property to which the Company or any of its Subsidiaries is a party. All Contracts providing for the license or other use of Company Intellectual Property that are material to the business of the Company or its Subsidiaries are in full force and effect, and enforceable in accordance with their terms.

(n) Trade Secrets. (i) The Company and its Subsidiaries have taken commercially reasonable steps to protect their Trade Secrets, and any Trade Secrets of third parties provided to the Company or any of its Subsidiaries, according to the laws of the applicable jurisdictions where such Trade Secrets are developed, practiced or disclosed, (ii) the Company and its Subsidiaries have used commercially reasonable efforts to enforce a policy requiring all personnel and third parties having access to such Trade Secrets to execute a written agreement which provides reasonable protection for such Trade Secrets, (iii) except pursuant to such agreements, there has been no disclosure by the Company or any of its Subsidiaries of any such Trade Secrets and (iv) to the Company’s Knowledge, no party to any such agreement is in breach thereof.

(o) Privacy. The Company and its Subsidiaries have complied with all applicable laws relating to privacy, data protection, and the collection and use of personal information, and the Company and its Subsidiaries have complied with their respective internal privacy policies and guidelines, if any, relating to privacy, data protection, and the collection and use of personal information. The Company and its Subsidiaries take reasonable measures to ensure that such information is protected against unauthorized access, use, modification, or other misuse. The execution, delivery and performance of this Agreement complies with all applicable laws relating to privacy and the Company’s and its Subsidiaries’ applicable privacy policies. True copies of the Company’s privacy policies and guidelines have been made available to Parent, and to the Company’s Knowledge, the Company and its Subsidiaries have at all times made all disclosure to users or customers required by applicable laws and none of such disclosures have been inaccurate in any material respect or materially misleading or deceptive or in violation of any applicable laws.

(p) Ownership of Intellectual Property Rights. Section 4.10(p) of the Disclosure Schedule lists all Company Registered Intellectual Property, identifying in each case the status, filing/grant dates, issuance/registration/application number, thereof. The Company or its Subsidiaries own all right, title, and interest (including the sole right to enforce) free and clear of all Liens, in and to all Company Intellectual Property, and with respect to the Company Registered Intellectual Property, are listed in the records of the appropriate United States, state or foreign authority as the sole owner for each item thereof.

(q) Validity and Enforceability. To the Company’s Knowledge, except as may be otherwise disclosed in Section 4.13, items 1 and 3, of the Disclosure Schedule, (i) the Company Intellectual Property is subsisting, in full force and effect, is valid and enforceable, and (in the case of Company Registered Intellectual Property) has not expired or been cancelled or abandoned; and (ii) all necessary registration, maintenance and renewal fees currently due have been made, and all necessary documents, recordations and certificates have been filed, for the purposes of maintaining such Company Registered Intellectual Property.

4.11    Restrictions on Business Activities. Except as set forth in Section 4.11 of the Disclosure Schedule, neither the Company nor any of its Subsidiaries is party to or bound by any Contract containing any covenant (a) limiting in any material respect the right of the Company or any of its Subsidiaries to engage or compete in any line of business, to make use of any material Company Intellectual Property or to compete with any Person, (b) granting any exclusive distribution rights, (c) providing “most favored nation” terms for Company Products, or (d) which otherwise adversely affects or would reasonably be expected to adversely affect the right of the Company and its Subsidiaries to sell, distribute or manufacture any Company Products or material Company Intellectual Property or to purchase or otherwise obtain any material software, components, parts or subassemblies.

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4.12    Governmental Authorizations. Each license, permit, grant, governmental consent or other authorization which is material to the operation of the Company’s or any of its Subsidiaries’ business as currently conducted (“Governmental Authorizations”), has been issued or granted to the Company or any of its Subsidiaries, as the case may be, and is in full force and effect in all material respects. Except as set forth in Section 4.12 of the Disclosure Schedule, as of the date hereof, neither the Company nor any of its Subsidiaries has received any written notification from a Governmental Entity regarding any pending suspension or cancellation of any of the Governmental Authorizations or, to the Company’s Knowledge, threatened suspension or cancellation.

4.13    Litigation. Section 4.13 of the Disclosure Schedule sets out each action, suit, claim or proceeding (i) pending against the Company, any of its Subsidiaries or any of their respective properties (tangible or intangible) or (ii) that has been settled, compromised or adjudicated since January 1, 2007. There is no action, suit, claim or proceeding pending or, to the Company’s Knowledge, threatened or reasonably anticipated against the Company, any of its Subsidiaries or any of their respective properties (tangible or intangible) in each case that, individually or in the aggregate, is reasonably likely to result in any material liability to the Company and its Subsidiaries, taken as a whole. There is no investigation or other proceeding pending or, to the Company’s Knowledge, threatened or reasonably anticipated against the Company, any of its Subsidiaries or any of their respective properties (tangible or intangible) by or before any Governmental Entity. There are not currently, nor, to the Company’s Knowledge, have there been since January 1, 2005, any internal investigations or inquiries being conducted by the Company, the Company Board (or any committee thereof) or any third party at the request of any of the foregoing concerning any financial, accounting, Tax, conflict of interest, illegal activity, fraudulent or deceptive conduct or other misfeasance or malfeasance issues.

4.14    Compliance with Law. Neither the Company nor any of its Subsidiaries is in violation or default in any material respect of any Laws or Nasdaq rule or regulation applicable to the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is bound or any of their respective properties is bound or affected. There is no agreement, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries which has or would reasonably be expected to have the effect of prohibiting or impairing any business practice of the Company or any of its Subsidiaries in such a way as to be material and adverse to the Company and its Subsidiaries, taken as a whole.

4.15    Environmental Matters.

(a) Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:

“Environmental Claim” means any claim, action, cause of action, suit, proceeding, investigation, order, demand or notice (in each instance in writing) by any Person alleging potential liability (including, without limitation, potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from (a) the presence, or release into the environment, of, or exposure to, any Material of Environmental Concern at any location, whether or not owned or operated by the Company or any of its Subsidiaries or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.

“Environmental Laws” mean all applicable federal, state, local and foreign laws, regulations, ordinances, and common law relating to pollution or protection of human health (to the extent relating to exposure to Materials of Environmental Concern) or protection of the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata, and natural resources), including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of, or exposure to, Materials of Environmental Concern.

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“Materials of Environmental Concern” means hazardous chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products, asbestos or asbestos-containing materials or products, polychlorinated biphenyls, lead or lead-based paints or materials, radon, toxic fungus, toxic mold, mycotoxins or other hazardous substances that would reasonably be expected to have an adverse effect on human health or the environment.

(b) Environmental Compliance. Except as would not reasonably be expected to result in a material liability to the Company or any of its Subsidiaries, the Company and its Subsidiaries are in compliance with the Environmental Laws, which compliance includes, but is not limited to, the possession by the Company and its Subsidiaries of all material permits and other governmental authorizations required under the Environmental Laws, and compliance with the terms and conditions thereof. Neither the Company nor any of its Subsidiaries has received any written communication, whether from a Governmental Entity, citizens group, employee or otherwise, that alleges that the Company or any of its Subsidiaries are not in such compliance.

(c) Environmental Liabilities. There is no material Environmental Claim pending or, to the Company’s Knowledge, threatened against the Company, any of its Subsidiaries or against any Person whose liability for any Environmental Claim the Company or any of its Subsidiaries have contractually retained or assumed. In addition, there has been no past or present release, emission, discharge, presence or disposal of any Material of Environmental Concern, that would reasonably be expected to form the basis of any material Environmental Claim against the Company, any of its Subsidiaries or against any Person whose liability for any Environmental Claim the Company or any of its Subsidiaries have contractually retained or assumed, or otherwise result in any material costs or liabilities under Environmental Law.

(d) Environmental Information. The Company has provided to Parent all material assessments, reports, data, results of investigations or audits that are in the possession or control of or the Company or its Subsidiaries regarding environmental matters pertaining to or the environmental condition of the business of the Company and its Subsidiaries, or the compliance (or noncompliance) by the Company and its Subsidiaries with any Environmental Laws.

(e) Environmental Obligations. Neither the Company nor any of its Subsidiaries is required under any Environmental Law by virtue of the transactions set forth herein and contemplated hereby or as a condition to the effectiveness of any transactions contemplated hereby, (i) to perform a site assessment for Materials of Environmental Concern, (ii) to remove or remediate Materials of Environmental Concern, (iii) to give notice to or receive approval from any Governmental Entity or (iv) to record or deliver to any Person any disclosure document or statement pertaining to environmental matters.

4.16    Brokers’ and Finders’ Fees. Except for fees payable to, and the indemnification of, Needham & Company, LLC pursuant to an engagement letter dated June 20, 2008, a copy of which has been provided to Parent, neither the Company nor any of its Subsidiaries has incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions, fees related to investment banking or similar advisory services or any similar charges in connection with this Agreement or any transaction contemplated hereby, nor has the Company or any of its Subsidiaries entered into any indemnification agreement or arrangement with any Person specifically in connection with this Agreement and the transactions contemplated hereby.

4.17    Transactions with Affiliates. Except as set forth in the Company SEC Reports, since the date of the Company’s last proxy statement filed with the SEC, no event has occurred that would be required to be reported by the Company pursuant to Item 404 of Regulation S-K promulgated by the SEC.

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4.18    Employee Benefit Plans and Compensation.

(a) Definitions. For all purposes of this Agreement, the following terms shall have the following respective meanings:

“Company Employee Plan” shall mean any plan, program, policy, practice, contract, agreement or other arrangement providing for compensation, severance, termination pay, deferred compensation, performance awards, stock or equity-related awards, welfare benefits, retirement benefits, fringe benefits or other employee benefits or remuneration of any kind, whether written, unwritten or otherwise, funded or unfunded, including each “employee benefit plan,” within the meaning of Section 3(3) of ERISA (whether or not subject to ERISA) which is or, in the past five years has been, maintained, contributed to, or required to be contributed to, by the Company, any of its Subsidiaries or any ERISA Affiliate for the benefit of any Employee/Service Provider, or with respect to which the Company, any of its Subsidiaries or any ERISA Affiliate has or may have any liability or obligation.

“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

“DOL” shall mean the United States Department of Labor.

“Employee/Service Provider” shall mean any current or former employee, including officers, consultants, independent contractors or directors of the Company, any of its Subsidiaries or any ERISA Affiliate, excluding consultants and independent contractors who are not individuals.

“Employee Agreement” shall mean each management, employment, severance, separation, settlement, consulting, contractor, change of control, relocation, repatriation, expatriation, loan, visa, work permit or other agreement, or contract (including, any offer letter which provides for any term of employment other than employment at will or any agreement providing for acceleration of Options or any other agreement providing for compensation or benefits) between the Company, any of its Subsidiaries or any ERISA Affiliate and any Employee/Service Provider pursuant to which the Company or any of its Subsidiaries has or may have any current or future liabilities or obligations.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” shall mean any other Person under common control with the Company or any of its Subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of the Code, and the regulations issued thereunder.

“International Employee Plan” shall mean each Company Employee Plan or Employee Agreement for the benefit of Employees/Service Providers who perform services outside the United States.

“IRS” shall mean the United States Internal Revenue Service.

“Pension Plan” shall mean each Company Employee Plan that is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

“WARN” shall mean the Worker Adjustment and Retraining Notification Act.

(b) Schedule. Section 4.18(b)(i) of the Disclosure Schedule contains an accurate and complete list of each Company Employee Plan and each Employee Agreement. Section 4.18(b)(ii) of the Disclosure Schedule sets forth a table setting forth the name and salary of each employee of the Company and each of its Subsidiaries whose base salary currently exceeds $100,000 per year as of the date hereof. Except as set forth in Section 4.18(b)(iii) of the Disclosure Schedule, to the Company’s Knowledge, no employee listed on Section 4.18(b)(ii) of the Disclosure Schedule intends to terminate his or her employment for any reason.

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Section 4.18(b)(iv) of the Disclosure Schedule contains an accurate and complete list of all Persons that have a consulting or advisory relationship with the Company or any of its Subsidiaries that is subject to ongoing obligations that could reasonably be expected to exceed $100,000 per year.

(c) Documents. The Company and each of its Subsidiaries have made available to Parent (i) correct and complete copies of all documents embodying each Company Employee Plan and each Employee Agreement including all amendments thereto and all related trust documents, (ii) the three most recent annual reports (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Company Employee Plan, (iii) if the Company Employee Plan is funded, the most recent annual and periodic accounting of Company Employee Plan assets, (iv) the most recent summary plan description together with the summary(ies) of material modifications thereto, if any, required under ERISA with respect to each Company Employee Plan, (v) all material written agreements and contracts relating to each Company Employee Plan, including administrative service agreements and group insurance contracts, (vi) all material communications to any Employee/Service Provider or Employees/Service Providers relating to any Company Employee Plan or any proposed Company Employee Plan, in each case, relating to any amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or other events which could result in any liability to the Company or any of its Subsidiaries, (vii) all material correspondence to or from any Governmental Entity relating to any Company Employee Plan, and (viii) the most recent IRS determination or opinion letter issued with respect to each Company Employee Plan.

(d) Employee Plan Compliance. The Company Employee Plans are in, and have been administered in, compliance with all applicable requirements of ERISA, the Code, and other applicable laws in all material respects and have been administered in accordance with their terms. Each Company Employee Plan that is intended to be qualified within the meaning of Section 401 of the Code has received a current favorable determination letter as to its qualification, and nothing has occurred that could reasonably be expected to adversely affect such qualification. No “prohibited transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred with respect to any Company Employee Plan. The Company and each of its Subsidiaries have timely made all contributions and other payments required by and due under the terms of each Company Employee Plan. Neither the Company nor any Subsidiary is party to any contract, agreement or arrangement that provides “nonqualified deferred compensation” subject to Section 409A of the Code.

(e) Claims.

(i) There are no pending or, to the Company’s Knowledge, threatened actions, suits, charges, complaints, claims or investigations against, concerning or with respect to any Company Employee Plans, other than ordinary and usual claims for benefits by participants and beneficiaries. Except as set forth in Section 4.18(e) of the Disclosure Schedule, each Company Employee Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms, without liability to Parent, the Company, any of its Subsidiaries or any ERISA Affiliate (other than ordinary administration expenses or with respect to benefits previously earned, vested or accrued thereunder).

(ii) There are no audits, inquiries, investigations or other proceedings of any nature pending or to the Company’s Knowledge, threatened by the IRS, DOL, or any other Governmental Entity with respect to any Company Employee Plan. Neither the Company, any of its Subsidiaries nor any ERISA Affiliate is subject to any penalty or Tax with respect to any Company Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 (including 4980B) of the Code.

(f) No Pension Plan. Neither the Company, nor any of its Subsidiaries nor any current or former ERISA Affiliate has ever maintained, established, sponsored, participated in or contributed to, any Pension Plan subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code.

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(g) Effect of Transaction; Parachute Payments; Executive Compensation Tax. Except as set forth Section 4.18(g) of the Disclosure Schedule, no Company Employee Plan or Employee Agreement exists that, as a result of the execution of this Agreement, stockholder approval of this Agreement, or the transactions contemplated by this Agreement (whether alone or in connection with any subsequent event(s)), will entitle any Employee/Service Provider to (i) compensation or benefits or any increase in compensation or benefits upon any termination of employment after the date of this Agreement, (ii) accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or result in any other material obligation pursuant to, any of the Company Employee Plans or Employee Agreements, (iii) limit or restrict the right of the Company to merge, amend or terminate any of the Company Employee Plans or (iv) result in payments under any of the Company Employee Plans or Employee Agreements that would not be deductible under Sections 280G of the Code. Section 4.18(g) of the Disclosure Schedule sets forth the amount of any funding required in connection with a Company Employee Plan or Employee Agreement in connection with the transactions contemplated hereby.

(h) Employment Matters. The Company and each of its Subsidiaries are in compliance in all material respects with all applicable Laws respecting employment, employment practices, terms, conditions and classifications of employment, employee safety and health, immigration status and wages and hours, and in each case, with respect to Employees/Service Providers (i) are not liable for any arrears of wages, severance pay or any Taxes or any penalty for failure to comply with any of the foregoing and (ii) are not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Entity, with respect to unemployment compensation benefits, social security or other benefits or obligations for Employees/Service Providers (other than routine payments to be made in the normal course of business and consistent with past practice), except as would not reasonably be expected to result in material liability. There are no actions, grievances, investigations, suits, claims, charges or administrative matters pending, or, to the Company’s Knowledge, threatened or reasonably anticipated against the Company, any of its Subsidiaries, or any of their Employees/Service Providers relating to any Employee/Service Provider.

(i) No Post-Employment Obligations. Except as set forth in Section 4.18(i) of the Disclosure Schedule, no Company Employee Plan or Employee Agreement provides post-termination or retiree life insurance, health or other employee welfare benefits to any person for any reason, except as may be required by COBRA or other applicable statute, and neither the Company nor any of its Subsidiaries has ever represented, promised or contracted (whether in oral or written form) to any Employee/Service Provider (either individually or to Employees/Service Providers as a group) or any other Person that such Employee(s)/Service Provider(s) or other Person would be provided with post-termination or retiree life insurance, health or other employee welfare benefits, except to the extent required by statute.

(j) Labor. No work stoppage, slowdown, lockout or labor strike against the Company or any of its Subsidiaries is pending as of the date of this Agreement, or to the Company’s Knowledge threatened nor has there been any such occurrence for the past three years. The Company has no Knowledge of any activities or proceedings of any labor union to organize any Employees/Service Providers. Except as would not reasonably be expected to result in a material liability or obligation, there are no actions, suits, claims, labor disputes or grievances pending or, to the Company’s Knowledge, threatened by or on behalf of any Employee/Service Provider against the Company or its Subsidiaries, including charges of unfair labor practices. Neither the Company nor any of its Subsidiaries is presently, nor has it been in the past, a party to, or bound by, any collective bargaining agreement or union contract with respect to Employees/Service Providers and no collective bargaining agreement is being negotiated by the Company or any of its Subsidiaries. Within the past year, neither the Company nor any of its Subsidiaries has incurred any liability or obligation under WARN or any similar state or local law that remains unsatisfied, and no terminations prior to the Closing Date shall result in unsatisfied liability or obligation under WARN or any similar state or local law. No Employee/Service Provider of the Company or any of its Subsidiaries has experienced an employment loss, as defined by the WARN Act or any similar applicable state or local law requiring notice to employees in the event of a closing or layoff, within ninety days prior to the date of this Agreement.

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(k) Works Council. Section 4.18(k) of the Disclosure Schedule sets forth a complete and accurate list of all foreign works’ councils to which the Company or any of its Subsidiaries are subject and the jurisdictions of each such works’ council or similar labor body. The consummation of the Offer and the Merger and the other transactions contemplated by this Agreement will not entitle any third party (including any labor union or labor organization) to any payments under any collective bargaining agreement or any labor agreement or require the Company or any of its Subsidiaries to consult with any works’ council or similar labor relations body. The Offer and the Merger will not be subject to review by local counsel.

(l) International Employee Plan. Each International Employee Plan has been established, maintained and administered in compliance with its terms and conditions and with the requirements prescribed by any and all statutory or regulatory laws that are applicable to such International Employee Plan. No International Employee Plan has unfunded liabilities, that as of the Effective Time, will not be offset by insurance or fully accrued. Except as required by law, no condition exists that would prevent the Company or Parent from terminating or amending any International Employee Plan at any time for any reason.

(m) Compensation Approvals. On or prior to the date hereof, except where required to be done by the Board of Directors of Parent and/or Purchaser, the Compensation Committee of the Company Board has (i) approved each Company Employee Plan or other arrangement, understanding or agreement, and each amendment or supplement thereto or modification thereof, pursuant to which any payments have been or are to be made or benefits have been or are to be granted to any officer, director or employee of the Company or any of its Subsidiaries, including the Termination Agreements referred to in Section 7.14 and the consulting agreement, dated as of the date hereof, by and between the Company and Dominics LLC (collectively, the “Compensation Arrangements”), as an “employment compensation, severance or other employee benefit arrangement” within the meaning of Rule 14d-10(d) under the 1934 Act and (ii) taken all other action necessary to satisfy the requirements of the nonexclusive safe harbor with respect to such Compensation Arrangements in accordance to Rule 14d-10(d) under the 1934 Act (the approvals and actions referred to in clauses (i) and (ii) above, the “Company Compensation Approvals”). All payments made or to be made and benefits granted or to be granted pursuant to such Compensation Arrangements (A) were, or will be, paid or granted as compensation for past services performed, future services to be performed, or future services to be refrained from being performed, by such officer, director or employee and (B) were not, and will not, be calculated based on the number of securities tendered or to be tendered in the Offer by such director, officer or employee. The Company Board has determined that each of the members of the Company’s Compensation Committee are, and the members of the Compensation Committee are, Independent Directors.

4.19    Contracts.

(a) Material Contracts. For purposes of this Agreement, “Material Contract” shall mean any of the following to which the Company or any of its Subsidiaries is a party or by which it or its assets are bound:

(i) any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the Company and its Subsidiaries;

(ii) any employment, contractor or consulting Contract with any executive officer or other Employee/Service Provider of the Company or any of its Subsidiaries providing for annual compensation in excess of $100,000 or member of the Company Board, other than those that are terminable by the Company or any of its Subsidiaries on no more than 30 days notice without liability or financial obligation to the Company or any of its Subsidiaries, or any collective bargaining agreement or contract with any labor union or other employee organization;

(iii) any Contract or plan, including, without limitation, any Company Employee Plan or Employee Agreement, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement

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(either alone or upon the occurrence of additional or subsequent events) or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement (either alone or upon the occurrence of additional or subsequent events);

(iv) any agreement of indemnification or any guaranty (other than any agreement of indemnification entered into in connection with the sale, license, maintenance, support or service of Company Products in the ordinary course of business);

(v) any Contract relating to the disposition or acquisition by the Company or any of its Subsidiaries of assets for consideration in excess of $100,000 or any interest in any other Person or business enterprise, in each case, other than in the ordinary course of business;

(vi) any material Lease Document;

(vii) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other Contracts relating to the borrowing of money or extension of credit in excess of $50,000, other than accounts receivable and payable in the ordinary course of business;

(viii) any Contract containing any material support, maintenance or service obligations on the part of the Company or any of its Subsidiaries, other than those obligations that are terminable by the Company or any of its Subsidiaries on no more than 30 days notice without liability or financial obligation to the Company or its Subsidiaries;

(ix) any settlement agreement which contains continuing material obligations of the Company or any of its Subsidiaries;

(x) any dealer, distributor, joint marketing or development agreement under which the Company or any of its Subsidiaries have continuing obligations to jointly market any product, technology or service and which may not be canceled without penalty to the Company or any of its Subsidiaries upon notice of 30 days or less, or any agreement pursuant to which the Company or any of its Subsidiaries have continuing obligations to jointly develop any Intellectual Property or Intellectual Property Rights that will not be owned, in whole or in part, by the Company or any of its Subsidiaries and which may not be terminated without penalty to the Company or any of its Subsidiaries upon notice of 30 days or less;

(xi) any Contract required to be disclosed in Section 4.10 of the Disclosure Schedule or any subsection thereof;

(xii) any Contract, or group of Contracts with a Person (or group of affiliated Persons), the termination or breach of which could reasonably be expected to have a Material Adverse Effect; or

(xiii) any other Contract with any obligations to make payments or entitlement to receive payments on behalf of the Company or any of its Subsidiaries of $500,000 or more (other than purchase orders in the ordinary course of business).

(b) Schedule. Section 4.19(b) of the Disclosure Schedule sets forth a list of all Material Contracts to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or by which any of their respective properties is bound or affected as of the date hereof, setting forth for each such Material Contract, the subsections of Section 4.19(a) applicable to such Material Contract.

(c) No Breach. All Material Contracts are valid and in full force and effect except to the extent they have previously expired in accordance with their terms or if the failure to be in full force and effect, individually or in the aggregate, would not reasonably be expected to be material to the Company and its Subsidiaries, taken

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as a whole. Neither the Company nor any of its Subsidiaries have violated any provision of, or committed or failed to perform any act which, with or without notice, lapse of time or both would constitute a default under the provisions of, any Material Contract, except in each case for those violations and defaults which, individually or in the aggregate, would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.

4.20    Insurance. Each of the Company and its Subsidiaries has policies of insurance and bonds of the type and in amounts customarily carried by Persons conducting businesses or owning assets similar to those of the Company and its Subsidiaries. The Company maintains directors’ and officers’ liability insurance policies, including entity or “Side C” coverage. There is no material claim pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums due and payable under all such policies and bonds have been paid and the Company and its Subsidiaries are otherwise in compliance in all material respects with the terms of such policies and bonds. To the Company’s Knowledge, there is no threatened termination of, or material premium increase with respect to, any such policies. Section 4.20 of the Disclosure Schedule contains an accurate and complete description of all material policies of fire, liability, workers’ compensation, environmental, directors’ and officers’ liability and other forms of insurance owned or held by the Company and each subsidiary. Section 4.20 of the Disclosure Schedule also identifies all risks that the Company and its Subsidiaries, and their respective Board of Directors or officers, have designated as being self-insured.

4.21    Export Control Laws. Except as set forth in Section 4.21 of the Disclosure Schedule, the Company and each of its Subsidiaries have at all times conducted their export transactions materially in accordance with (i) all applicable U.S. export and re-export controls, including the United States Export Administration Act and Regulations and Foreign Assets Control Regulations and (ii) all other applicable import/export controls in other countries in which the Company conducts business. Without limiting the foregoing:

(a) The Company and each of its Subsidiaries have obtained, and are in material compliance with, all export licenses, license exceptions and other consents, notices, waivers, approvals, orders, authorizations, registrations, declarations, classifications and filings with any Governmental Entity required for (i) the export and re-export of products, services, software and technologies and (ii) releases of technologies and software to foreign nationals located in the United States and abroad (“Export Approvals”);

(b) There are no pending or, to the Company’s Knowledge, threatened claims against the Company or any Subsidiary with respect to such Export Approvals;

(c) To the Company’s Knowledge, as of the date hereof, there are no actions, conditions or circumstances pertaining to the Company’s or any Subsidiary’s export transactions that have given rise to any material claims;

(d) No Export Approvals for the transfer of material export licenses to Parent, Purchaser or the Surviving Corporation are required; and

(e) Neither the Company nor any Subsidiary has made any voluntary self-disclosures to any Governmental Entity regarding the Company’s or any Subsidiary’s export transactions, and, to the Company’s Knowledge, there are no actions, conditions or circumstances pertaining to the Company’s or any Subsidiary’s export transactions for which the Company should make any such voluntary self-disclosures.

4.22    Foreign Corrupt Practices Act. To the Company’s Knowledge, neither the Company nor any of its Subsidiaries (including any of their officers, directors, agents, distributors, employees or other Person acting on behalf of the Company or its Subsidiaries) have, directly or indirectly, taken any action which would cause them to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any rules or regulations thereunder or any similar anti-corruption or anti-bribery Laws applicable to the Company or any of its

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Subsidiaries in any jurisdiction other than the United States (collectively, the “FCPA”), or, to the Company’s Knowledge, used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, made, offered or authorized any unlawful payment to foreign or domestic government officials or employees, whether directly or indirectly, or made, offered or authorized any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment, whether directly or indirectly. The Company has established reasonable internal controls and procedures intended to ensure compliance with the FCPA.

4.23    Schedule 14D-9; Offer Documents. None of the information supplied or to be supplied by or on behalf of the Company or any Affiliate of the Company for inclusion in the Offer Documents will, at the times such documents are filed with the SEC and are mailed to stockholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. The Schedule 14D–9 will not, at the time the Schedule 14D–9 is filed with the SEC and at all times prior to Purchase Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, no representation or warranty is made by the Company with respect to information supplied in writing by or on behalf of Parent, Purchaser or any Affiliate of Parent or Purchaser expressly for inclusion in the Offer Documents or the Schedule 14D-9. The Schedule 14D–9 will, at the time the Schedule 14D-9 is filed with the SEC, at the time it is mailed to the stockholders of the Company, and at the time any amendment or supplement thereto is filed with the SEC, comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations of the SEC thereunder.

4.24    Fairness Opinion. Prior to the execution of this Agreement, Needham & Company, LLC (the “Financial Advisor”) has delivered to the Company Board its oral opinion, to be confirmed in a written opinion, dated as of the date hereof, to the effect that, as of such date and based upon and subject to the matters set forth therein, the consideration to be received by holders of Shares in the Offer and the Merger is fair, from a financial point of view, to such holders. A true, correct and complete copy of the opinion will be delivered to Parent.

4.25    Takeover Statutes. The Company Board has taken all actions so that the restrictions contained in Section 203 of the DGCL applicable to a “business combination” (as defined in such Section 203), and any other similar Laws, will not apply to Parent, Purchaser or any other Subsidiary of Parent, including the execution, delivery or performance of this Agreement and the consummation of the Offer and the Merger and the other transactions contemplated hereby.

4.26    Full Disclosure. The Company has not failed to disclose to Parent or Purchaser any facts material to the business of the Company or its Subsidiaries, results of operations, prospects, assets, liabilities or condition (financial or otherwise). No representation or warranty by the Company in this Agreement and no statement by the Company in any document referred to herein (including, without limitation, the Company Financials and the Disclosure Schedules and Exhibits hereto), contains any untrue statement of a material fact or omits to state any material fact necessary, in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading.

4.27    Termination Agreements. Antoine Dominic and Alice Varisano, respectively, the Company’s Chief Executive Officer and Chief Financial Officer, have each entered into a termination agreement (“Termination Agreement”) with the Company, pursuant to which they are entitled to, and each will receive, the payments and benefits described in their respective Termination Agreements and disclosed in summary form in Section 4.18(g) of the Disclosure Schedule. Each of the Termination Agreements was approved by the Company’s Compensation Committee. The benefits provided for in the Termination Agreements are properly payable at the time provided therein to Mr. Dominic and Ms. Varisano in accordance with and pursuant to their respective employment agreements.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT

AND PURCHASER

Parent and Purchaser represent and warrant to the Company as follows:

5.1    Organization. Each of Parent and Purchaser (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized; and (ii) has the requisite power and authority to own, lease and operate its properties and to carry on its business as currently conducted.

5.2    Authority; No Conflict; Necessary Consents.

(a) Authority. Each of Parent and Purchaser has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by each of Parent and Purchaser and the consummation by each of Parent and Purchaser of the transactions contemplated hereby have been duly and validly authorized by all necessary action of Parent and Purchaser, and no other corporate proceedings on the part of Parent or Purchaser are necessary to authorize this Agreement, to perform their respective obligations hereunder, or to consummate the transactions contemplated hereby (other than the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL). This Agreement has been duly and validly executed and delivered by Parent and Purchaser and, assuming due authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding obligation of each of Parent and Purchaser enforceable against each of Parent and Purchaser in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and any implied covenant of good faith and fair dealing.

(b) No Conflict. The execution, delivery and performance of this Agreement by Parent and Purchaser, do not and will not (i) conflict with or violate the respective certificates of incorporation or bylaws of Parent or Purchaser, (ii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (vi) of Section 5.2(c) have been obtained, and all filings described in such clauses have been made, conflict with or violate any Law applicable to Parent or Purchaser or by which either of them or any of their respective properties are bound or (iii) (A) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or (B) result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, or (C) result in the creation of any Lien on any of the properties or assets of Parent or Purchaser under, any Contracts to which Parent, Purchaser or any of their respective Subsidiaries is a party or by which Parent, Purchaser or any of their respective Subsidiaries or any of their respective properties are bound, except, in the case of clauses (ii) and (iii), for any such conflict, violation, breach, default, acceleration, loss, right or other occurrence which would not constitute, individually or in the aggregate, a Purchaser Material Adverse Effect.

(c) Necessary Consents. The execution, delivery and performance of this Agreement by each of Parent and Purchaser and the consummation of the transactions contemplated hereby by each of Parent and Purchaser do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any Governmental Entity, except for (i) the applicable requirements, if any, of the Exchange Act and the rules and regulations promulgated thereunder, and state securities, takeover and “blue sky” laws, (ii) the applicable requirements of the HSR Act, (iii) the applicable requirements of Nasdaq, (iv) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL, (v) the applicable requirements of Foreign Antitrust Laws, and (vi) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not constitute, individually or in the aggregate, a Purchaser Material Adverse Effect.

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5.3    Financing. Parent and GSI Group Corporation have entered into definitive agreements with the investors party thereto to provide, or cause to be provided, financing in an aggregate amount of $210,000,000 to Parent, GSI Group Corporation or Purchaser (the “Financing”), which agreements permit Parent, GSI Group Corporation or Purchaser to use the proceeds of the Financing and unrestricted cash of Parent, GSI Group Corporation or Purchaser to consummate the Offer, the Merger and the other transactions contemplated by this Agreement. Immediately prior to the Purchase Time, excluding the proceeds of the Financing, Parent, GSI Group Corporation or Purchaser will have unrestricted cash equal to at least $150,000,000 available to apply to the payment for Shares accepted for payment pursuant to the Offer and the payment of the Merger Consideration.

5.4    Brokers’ and Finders’ Fees. Except for fees payable to UBS Securities LLC, neither Parent nor any of its Subsidiaries has incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions, fees related to investment banking or similar advisory services or any similar charges in connection with this Agreement or any transaction contemplated hereby.

5.5    Interim Operations of Purchaser. Purchaser was formed solely for the purpose of conducting the Offer and has not conducted and will not, prior to the Purchase Time conduct any activities other than the execution of this Agreement and the consummation of the transactions contemplated hereby.

ARTICLE VI

CONDUCT BY THE COMPANY PRIOR TO THE EFFECTIVE TIME

6.1    Conduct of Business by the Company.

(a) Ordinary Course. During the period from the date of this Agreement to the earliest of (i) such time as designees of Parent first constitute at least a majority of the Company Board pursuant to Section 1.4(a) and (ii) the Effective Time, the Company and each of its Subsidiaries shall, except to the extent that an authorized officer of Parent shall otherwise consent in writing, (i) carry on their business in the usual, regular and ordinary course, in substantially the same manner as heretofore conducted and in compliance with all applicable Laws, (ii) pay their debts when due, pay or perform other material obligations when due and (iii) use all reasonable efforts consistent with past practice to (x) preserve intact their present business organization, (y) keep available the services of their present Employees/Service Providers and (z) preserve their relationships with customers, suppliers, licensors, licensees, and others with which they have business dealings. In addition, the Company shall promptly notify Parent in writing of any occurrence of a Material Adverse Effect.

(b) Required Consent. Without limiting the generality of Section 6.1(a), except as expressly permitted by this Agreement, without the prior written consent of Parent, during the period from the date of this Agreement to the earliest of (i) such time as designees of Parent first constitute at least a majority of the Company Board pursuant to Section 1.4(a) and (ii) the Effective Time, the Company shall not do any of the following, and shall not permit any of its Subsidiaries to do any of the following:

(i) Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock, other than any such transaction by a wholly-owned Subsidiary of it that remains a wholly-owned Subsidiary of it after consummation of such transaction, in the ordinary course of business consistent with past practice;

(ii) Purchase, redeem or otherwise acquire, directly or indirectly, any shares of its capital stock or the capital stock of its Subsidiaries;

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(iii) Issue, deliver, sell, authorize, pledge or otherwise encumber any shares of capital stock, Voting Debt, other voting securities or any securities convertible into shares of capital stock, Voting Debt or other voting securities, or subscriptions, rights (including stock appreciation rights whether settled in cash or shares of Company Common Stock), warrants or options to acquire any shares of capital stock, Voting Debt, other voting securities or any securities convertible into shares of capital stock, Voting Debt or other voting securities, enter into other agreements or commitments of any character obligating it to issue any such securities or rights, or grant any restricted stock, restricted stock units, performance shares, performance share units or other equity based awards other than (A) issuances of Company Common Stock upon the exercise of Options existing on the date hereof in accordance with their present terms and (B) issuances of Company Common Stock upon the lapse of restrictions on or vesting of shares of Restricted Stock granted but not issued as of the date hereof, in accordance with the terms of such grants (subject to any waiver of such lapsing or vesting pursuant to the Termination Agreements).

(iv) Cause, permit or propose any amendments to the Company Organizational Documents or adopt any amendments to any of the Subsidiary Organizational Documents;

(v) Acquire or agree to acquire by merging or consolidating with, or by purchasing any equity or voting interest in or any assets of, or by any other manner, any business or any Person or division thereof;

(vi) Acquire or agree to acquire any assets that are material, individually or in the aggregate, to the business of the Company and its Subsidiaries, or in any event, for consideration in excess of $1,000,000 in any one case or in the aggregate, other than in the ordinary course of business consistent with past practice;

(vii) Enter into any agreement with respect to the formation of any joint venture, strategic partnership or alliance if it (i) would present a material risk of delaying the transactions contemplated by this Agreement, (ii) require the consent of the counterparty thereto to consummate the transactions contemplated by this Agreement or (iii) require the investment of at least $250,000 of assets or any equity of the Company or any of its Subsidiaries;

(viii)(A) Sell, lease, license, encumber, mortgage, pledge or otherwise dispose of any properties or assets that are material, individually or in the aggregate, to the business of the Company and its Subsidiaries, except current Company Products in the ordinary course of business and in a manner consistent with past practice, or (B) sell or otherwise dispose of any auction-rate securities other than as requested by Parent pursuant to Section 7.13 hereof;

(ix) Effect any material restructuring activities by the Company or any of its Subsidiaries with respect to their respective employees, including any material reductions in force;

(x) Make any loans, extensions of credit or financing, advances or capital contributions to, or investments in, or grant extended payment terms to any other Person, other than: (a) loans or investments by the Company or a wholly-owned Subsidiary of the Company to or in the Company or any wholly-owned Subsidiary of the Company, (b) subject to applicable Law, employee loans or advances for travel and entertainment expenses made in the ordinary course of business consistent with past practice, (c) extensions of credit or financing to, or extended payment terms for, customers made in the ordinary course of business consistent with past practice;

(xi) Except as required by concurrent changes in GAAP, international accounting standards or any Governmental Entity as concurred in by its independent auditors, make any change in its methods or principles of accounting or revalue any of its assets;

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(xii) Fail to file, on a timely basis, including allowable extensions, with the appropriate Governmental Entities, all Tax Returns required to be filed by or with respect to the Company and each of its Subsidiaries for taxable years or periods ending on or before the Closing Date and due on or prior to the Closing Date, or fail to timely pay or remit (or cause to be paid or remitted) any Taxes due in respect of such Tax Returns; provided that all such Tax Returns shall be true, correct and complete;

(xiii)(A) Change any financial or Tax accounting methods, policies or practices of the Company or any of its Subsidiaries, except as required by a change in GAAP or SEC rules, regulations or guidelines or applicable Law, (B) make, revoke, or amend any material Tax election of the Company or any of its Subsidiaries, (C) file any amended Tax Return of the Company or any of its Subsidiaries, (D) file any Tax Return showing an amount of Tax due in excess of $1,000,000, or any amendment to any Tax Return, which amendment requires a payment of an amount of Taxes in excess of $1,000,0000, unless copies of such Tax Return or amendment have first been delivered to Parent for its review at a reasonable time prior to filing, (E) enter into any closing agreement affecting any material Tax liability or refund of the Company or any of its Subsidiaries, (F) settle or compromise any material Tax liability or refund of the Company or any of its Subsidiaries, or (G) extend or waive the application of any statute of limitations regarding the assessment or collection of any Tax of the Company or any of its Subsidiaries.

(xiv) Except in the ordinary course of business consistent with past practice, enter into any licensing, distribution, supply, procurement, manufacturing, marketing, OEM, VAR or other similar contracts, agreements, or obligations which either (a) may not be canceled without penalty by the Company or its Subsidiaries upon notice of 30 days or less and which provide for express payments by or to the Company or its Subsidiaries in an amount in excess of $250,000 in any one year or (b) involve any exclusive terms of any kind which are binding on the Company or any of its Subsidiaries;

(xv) Cancel or terminate or allow to lapse without reasonable substitute policy therefor, or amend in any material respect or enter into, any material insurance policy, other than the renewal of existing insurance policies;

(xvi) Commence or settle any lawsuit, threat of any lawsuit or proceeding or other investigation by or, to the Company’s Knowledge, against the Company or any Subsidiary or relating to any of their businesses, properties or assets, other than settlements with prejudice entered into in the ordinary course of business and requiring of the Company and its Subsidiaries only the payment of monetary damages not exceeding $500,000 or involving ordinary course collection claims for accounts receivable due and payable to the Company;

(xvii) Except as required by Law or Contracts currently binding on the Company or its Subsidiaries, (1) except in the ordinary course of business consistent with past practice, increase in any manner the amount of compensation or fringe benefits of, pay or grant any bonus, change of control, severance, termination or similar pay or benefits to any Employee/Service Provider or director of the Company or any Subsidiary of the Company, (2) adopt, terminate or amend any Company Employee Plan or Employee Agreement or make any contribution, other than regularly scheduled contributions, to any Company Employee Plan, (3) waive any stock repurchase rights, accelerate, amend or change the period of vesting or exercisability of Options or equity or equity-based awards, or reprice any Options or equity or equity-based awards or authorize cash payments in exchange for any Options or equity or equity-based awards, or (4) enter into, modify or amend any Employee Agreement or indemnification agreement with any Employee/Service Provider or (5) enter into any collective bargaining agreement;

(xviii) Enter into any Contracts containing, or otherwise subject Purchaser, the Surviving Corporation or Parent to, any non-competition, exclusivity, “most favored nation,” unpaid future

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deliverables, service requirements outside the ordinary course of business or future royalty payments, or other material restrictions on the Company, Purchaser, the Surviving Corporation or Parent, or any of their respective businesses, following the Effective Time;

(xix) Provide any material refund, credit or rebate to any customer, reseller or distributor, in each case, other than in the ordinary course of business consistent with past practice;

(xx) Hire any non-officer employees other than in the ordinary course of business consistent with past practice or hire, elect or appoint any officers or elect any directors, except in accordance with the Company Organizational Documents with respect to director vacancies;

(xxi) Incur any indebtedness for borrowed money, except pursuant to Section 7.13 hereof, or guarantee any indebtedness of another Person in excess of $100,000, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another Person, enter into any “keep well” or other agreement to maintain any financial statement condition of any other Person or enter into any arrangement having the economic effect of any of the foregoing, other than loans by the Company to its wholly-owned Subsidiaries and other than indebtedness incurred in the ordinary course of business consistent with past practice;

(xxii)(A) Enter into any agreement to purchase or sell any interest in real property or grant any security interest in any real property except pursuant to Section 7.13 hereof, or (B) enter into any lease, sublease, license or other occupancy agreement with respect to any real property or alter, amend, modify or terminate any of the terms of any Lease Document;

(xxiii) Enter into, modify or amend in a manner adverse in any material respect to the Company or any of its Subsidiaries, or terminate any Material Contract, or waive, release or assign any material rights or claims thereunder, in each case, in a manner adverse in any material respect to the Company or any of its Subsidiaries;

(xxiv) Enter into any customer Contract that contains any material non-standard terms other than as is consistent with the Company’s past practice;

(xxv) Enter into any Contract that relates to or otherwise affects any material Intellectual Property or Intellectual Property Rights of Parent or any of its Affiliates or the Company and its Subsidiaries;

(xxvi) Dispose of, grant, transfer, or obtain, or permit to lapse any rights to, any material Intellectual Property or Intellectual Property Rights, or dispose of or disclose to any Person, other than representatives of Parent, any Trade Secrets; or

(xxvii) Take, commit, or agree (in writing or otherwise) or announce the intention to take, any of the actions described in Section 6.1(b) hereof, or take any other action, that would reasonably be expected to result in any of the Offer Conditions not to be satisfied.

ARTICLE VII

ADDITIONAL AGREEMENTS

7.1    Information/Proxy Statement.

(a) The parties will take all necessary action such that the letter to stockholders and information statement that may be provided to stockholders of the Company in connection with the Merger (including any amendments or supplements) and any schedules required to be filed with the SEC in connection therewith

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(collectively, the “Information Statement”) or, if required by applicable Law, the letter to stockholders, notice of meeting, proxy statement and form of proxy that may be provided to stockholders of the Company in connection with the Merger (including any amendments or supplements) and any schedules required to be filed with the SEC in connection therewith (collectively, the “Proxy Statement”) will not, at the time the Information Statement or Proxy Statement, as applicable, is first mailed and at the time of the Special Meeting, if one is held, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. The parties will take all necessary action such that the Information Statement or Proxy Statement, as applicable, will, at the time the such document is first mailed, at the time any amendment or supplement thereto is filed with the SEC, and at the time of the Special Meeting, if one is held, comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations of the SEC promulgated thereunder.

(b) Unless the Merger is consummated in accordance with Section 253 of the DGCL as contemplated by Section 2.7, as soon as practicable after the consummation of the Offer, the Company shall, subject to the prior review and approval of Parent and Purchaser (which approval shall not be unreasonably withheld) prepare and file with the SEC the Information Statement or, if required, the Proxy Statement in preliminary form as required by the Exchange Act and the rules and regulations promulgated thereunder. The Company shall obtain and furnish the information required to be included in the Information Statement or Proxy Statement, as applicable, shall provide Parent and Purchaser with, and consult with Parent and Purchaser regarding, any comments that may be received from the SEC or its staff with respect thereto, shall, subject to the prior review and approval of Parent and Purchaser (which approval shall not be unreasonably withheld), respond promptly to any such comments made by the SEC or its staff with respect to the Information Statement or Proxy Statement, as applicable, and shall cause the Information Statement or Proxy Statement, as applicable, in definitive form to be mailed to the Company’s stockholders at the earliest practicable date. If at any time prior to the Closing, any information relating to the Offer, the Merger, the Company, Parent, Purchaser or any of their respective Affiliates, directors or officers, should be discovered by the Company or Parent which should be set forth in an amendment or supplement to the Information Statement or Proxy Statement, as applicable, so that the Information Statement or Proxy Statement shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party which discovers such information shall promptly notify the other party, and an appropriate amendment or supplement describing such information shall be filed with the SEC and, if required, otherwise disseminated to the stockholders of the Company.

7.2    Subsequent Filings. Until the earliest of (i) such time as designees of Parent constitute a majority of the Company Board pursuant to Section 1.4(a) or (ii) the Effective Time, the Company will timely file or furnish with or to the SEC each form, report and other document required to be filed or furnished (as applicable) by the Company under the Exchange Act, and will promptly deliver to Parent copies of each form, report and document filed with the SEC. As of their respective dates, no report filed by the Company with the SEC pursuant to the requirements of the Exchange Act, shall contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited interim financial statements of the Company included in such reports, shall be prepared in accordance with GAAP applied on a consistent basis (except as may be indicated in the notes thereto) and shall fairly present, in all material respects, the financial position of the Company and its consolidated Subsidiaries as at the dates thereof and the results of their operations and changes in financial position for the periods then ended, in each case in accordance with GAAP (subject, in the case of unaudited financial statements, to normal and recurring year-end audit adjustments which are not, individually or in the aggregate, material in amount or significance, in each case as permitted by GAAP and the applicable rules and regulations promulgated by the SEC).

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7.3    Acquisition Proposals.

(a) No Solicitation. The Company agrees that none of the Company, any of its Subsidiaries or any of the Company’s or any of its Subsidiaries’ employees, officers or directors, or any investment banker, attorney or accountant retained by the Company or any of its Subsidiaries, shall, and that it shall use all reasonable efforts to cause the Company’s and its Affiliates, Subsidiaries’ other Employees/Service Providers, agents and representatives not to (and shall not authorize or permit any of them to), directly or indirectly: (i) solicit, initiate, encourage, knowingly facilitate or induce any inquiry with respect to, or the making, submission or announcement of, any Acquisition Proposal; (ii) participate or engage in any discussions or negotiations regarding, or furnish to any Person any nonpublic information with respect to, or take any other action to facilitate or encourage any inquiries or the making of any proposal that constitutes or would reasonably be expected to lead to, any Acquisition Proposal; (iii) approve, endorse, recommend or make or authorize any statement, recommendation or solicitation in support of any Acquisition Proposal; (iv) withdraw, amend or modify in a manner adverse to Parent, or propose to withdraw, amend or modify in a manner adverse to Parent its recommendation in favor of the adoption of the Agreement by the stockholders of the Company; (v) fail to reaffirm its recommendation in favor of the adoption of the Agreement by the stockholders of the Company within three Business Days of a written request to do so by Parent or (vi) execute or enter into, or propose to execute or enter into, any letter of intent or similar document or any contract, agreement or commitment contemplating or otherwise relating to any Acquisition Proposal or transaction contemplated thereby, except in the case of clauses (ii), (iii), (iv), (v) or (vi) to the extent specifically permitted pursuant to Sections 7.3(c) or 7.3(d). The Company and its Subsidiaries will immediately cease and cause to be terminated any and all existing activities, discussions or negotiations (including, without limitation, any such activities, discussions or negotiations conducted by Affiliates, directors, officers, employees, agents and representatives (including any investment banker, financial advisor, attorney, accountant or other representative) of the Company or any of its Subsidiaries) with any third parties conducted heretofore with respect to consideration of any Acquisition Proposal. The Company will exercise any rights under any confidentiality or non-disclosure agreements with any such third parties to require the return or destruction of non-public information provided prior to the date of this Agreement by the Company, its Subsidiaries or their agents and representatives to any such third parties.

(b) Notification of Unsolicited Acquisition Proposals. As promptly as practicable (and in any event no later than 24 hours) after receipt of any Acquisition Proposal or any request for nonpublic information or inquiry that could reasonably be expected to lead to an Acquisition Proposal or from any Person seeking to have discussions or negotiations with the Company relating to a possible Acquisition Proposal, the Company shall provide Parent with notice of such Acquisition Proposal, request or inquiry, including: (i) the material terms and conditions of such Acquisition Proposal, request or inquiry; (ii) the identity of the Person or group making any such Acquisition Proposal, request or inquiry; and (iii) a copy of all written materials provided by or on behalf of such Person or group in connection with such Acquisition Proposal, request or inquiry. The Company shall provide Parent with 48 hours prior notice (or such lesser prior notice as is provided to the members of the Company Board) of any meeting of the Company Board at which the Company Board is expected to consider any Acquisition Proposal or any such inquiry or to consider providing nonpublic information to any Person. The Company shall notify Parent, in writing, of any decision of the Company Board pursuant to Section 7.3(c), to consider such Acquisition Proposal, request or inquiry or to enter into discussions or negotiations concerning any Acquisition Proposal or to provide nonpublic information or data to any Person, which notice shall be given as promptly as practicable after such meeting (and in any event no later than 24 hours after such determination was reached and 24 hours prior to entering into any discussions or negotiations or providing any nonpublic information or data to any Person). The Company agrees that it shall promptly provide Parent with oral and written notice setting forth all such information as is reasonably necessary to keep Parent currently informed in all material respects of the status and material terms of any such Acquisition Proposal, request or inquiry (including any negotiations contemplated by this Section 7.3(b)) and shall promptly provide Parent a copy of all written materials subsequently provided to, by or on behalf of such Person or group in connection with such Acquisition Proposal, request or inquiry, to the extent not previously provided to Parent.

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(c) Superior Offers. Notwithstanding anything to the contrary contained in Section 7.3(a), in the event that the Company receives prior to the Purchase Time an unsolicited, bona fide written Acquisition Proposal from a third party that did not result from a breach of this Section 7.3 and that the Company Board has in good faith concluded, after consultation with its outside legal counsel and its financial advisor, that such Acquisition Proposal is, or is reasonably likely to result in, a Superior Offer, the Company may then (1) furnish nonpublic information to the third party making such Acquisition Proposal and (2) engage in negotiations with the third party with respect to such Acquisition Proposal; provided that:

(i) the Company complies with all of the terms of this Section 7.3;

(ii) prior to furnishing any nonpublic information or entering into any negotiations or discussions with such third party, (1) the Company receives from such third party an executed confidentiality agreement containing customary limitations on the use and disclosure of all nonpublic written and oral information furnished to such third party on the Company’s behalf in substantially the form of the Confidentiality Agreement and, in any event, no less restrictive to such third party than the Confidentiality Agreement is with respect to Parent and (2) contemporaneously with furnishing any such nonpublic information to such third party, the Company furnishes such nonpublic information to Parent (to the extent such nonpublic information has not been previously furnished to Parent); and

(iii) the Company Board reasonably determines in good faith, after consultation with outside legal counsel, that the failure to provide such information or enter into such discussion or negotiations would reasonably be expected to result in a breach of the Company Board’s fiduciary duties to the stockholders of the Company under applicable law.

(d) Company Change of Recommendation. Notwithstanding anything to the contrary contained in Section 7.3(a), prior to the Purchase Time, in response to the receipt of a Superior Offer, (x) the Company Board may withhold, withdraw, amend or modify the Company Board Recommendation, and, in the case of a Superior Offer that is a tender or exchange offer made directly to the stockholders of the Company, may recommend that the stockholders of the Company accept the tender or exchange offer, (y) the Company Board, the Company or its Subsidiaries (including each of their respective directors, officers, employees, agents or other representatives) may approve, endorse, or recommend a Superior Offer, or (z) the Company or any of its Subsidiaries may execute or enter into or propose to execute or enter into any letter of intent or similar document or any contract, agreement or commitment (which may be conditioned on the termination of this Agreement) contemplating or otherwise relating to any Superior Offer or transaction contemplated thereby (any of the foregoing actions, whether by the Company Board or a committee thereof, a “Company Change of Recommendation”), if all of the following conditions in clauses (i) through (v) are met:

(i) the Company Board determines in good faith, after consultation with the Company’s financial advisors and outside legal counsel, that a Superior Offer has been made and not withdrawn;

(ii) the Company shall have delivered to Parent written notice (a “Company Change of Recommendation Notice”) at least five Business Days prior to publicly effecting such Company Change of Recommendation which shall state expressly (A) that the Company has received a Superior Offer, (B) the final terms and conditions of the Superior Offer and the identity of the Person or group making the Superior Offer and (C) that the Company intends to effect a Company Change of Recommendation;

(iii) after delivering the Company Change of Recommendation Notice, the Company shall provide Parent with a reasonable opportunity to make such adjustments in the terms and conditions of this Agreement during such five-Business Day period, and negotiate in good faith with respect thereto during such five-Business Day period, as would enable the Company to proceed with its recommendation to stockholders in favor of the Offer and the Merger without making a Company Change of Recommendation;

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(iv) the Company Board shall have determined (A) after consultation with its financial advisor, that the terms of the Superior Offer are more favorable to the stockholders of the Company than the terms of the Offer (as they may be adjusted pursuant to paragraph (iii) above) and (B) after consultation with outside legal counsel, the failure to effect a Company Change of Recommendation would reasonably be expected to result in a breach of the Board of Directors’ fiduciary duties to the stockholders of the Company under applicable law; and

(v) the Company shall not have breached any of the provisions set forth in this Section 7.3.

(e) Compliance with Disclosure Obligations. Nothing contained in this Agreement shall prohibit the Company or its Boards of Directors from complying with Rules 14-a-9, 14d-9 and 14e-2(a) promulgated under the Exchange Act; provided, however, that the content of any such disclosure thereunder shall be governed by the terms of this Agreement. Without limiting the foregoing, the Company shall not effect a Company Change of Recommendation unless specifically permitted pursuant to the terms of Section 7.3(d).

(f) State Takeover Statute. The Company Board shall not, in connection with any Company Change of Recommendation, take any action to change the approval of the Company Board for purposes of causing any state takeover statute or other state law to be applicable to the transactions contemplated hereby. For the avoidance of doubt, this Section 7.3(f) shall not prohibit the Company from effecting a Company Change of Recommendation, under the circumstances and subject to the conditions set forth in this Section 7.3.

(g) Certain Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

(i) “Acquisition Proposal,” shall mean any bona fide offer or proposal relating to any transaction or series of related transactions involving: (a) any purchase from or acquisition by any Person or “group” (as defined under Section 13(d) of the Exchange Act and the rules and regulations thereunder) of more than a 15% interest in the total outstanding voting securities of the Company or any of its Subsidiaries, any tender offer or exchange offer that if consummated would result in any Person or group beneficially owning 15% or more of the total outstanding voting securities of the Company or any of its Subsidiaries, (b) any merger, consolidation, business combination or similar transaction involving the Company or any of its Subsidiaries, (c) any sale, lease (other than in the ordinary course of business consistent with past practice), exchange, transfer, license (other than in the ordinary course of business consistent with past practice), acquisition or disposition of more than 15% of the assets of the Company (including its Subsidiaries taken as a whole) or (d) any liquidation or dissolution of the Company (provided, however, that the transactions between Parent, Purchaser and the Company contemplated by this Agreement shall not be deemed an Acquisition Proposal); and

(ii) “Superior Offer,” shall mean a bona fide Acquisition Proposal by a third party that (A) provides for the purchase or acquisition of all of the issued and outstanding Shares for a per-Share consideration that is greater than the Offer Price (including, only if the per-Share consideration is not all cash, a determination by the Company Board in good faith to such effect) and (B) is on terms that the Company Board has in good faith concluded, after consultation with its financial advisor, taking into account the Person making the offer, the anticipated timing for consummation, any financing requirements, any governmental, regulatory or other approval requirements, and all other legal, financial, regulatory and other aspects of the Offer to be more favorable to the Company’s stockholders (in their capacities as stockholders) than the terms of the Agreement.

(h) Specific Performance. The parties hereto agree that irreparable damage would occur in the event that the provisions of this Section 7.3 were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed by the parties hereto that Parent shall be entitled to an immediate injunction or injunctions, without the necessity of proving the inadequacy of money damages as a remedy and

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without the necessity of posting any bond or other security, to prevent breaches of the provisions of this Section 7.3 and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in this Section 7.3 by any officer, director, agent, representative or Affiliate of the Company shall be deemed to be a breach of this Agreement by the Company.

7.4    Confidentiality; Access to Information; No Modification of Representations, Warranties or Covenants.

(a) Confidentiality. The parties acknowledge that the Company and Parent have previously executed the Confidentiality Agreement which will continue in full force and effect in accordance with its terms and each of Parent and the Company will hold, and will cause its respective directors, officers, employees, agents, Affiliates and advisors (including attorneys, accountants, consultants, bankers and financial advisors) to hold and keep confidential, any “Proprietary Information” (as defined in the Confidentiality Agreement) confidential in accordance with the terms of the Confidentiality Agreement.

(b) Access to Information. Subject to the Confidentiality Agreement and applicable Law, the Company shall afford Parent and its accountants, counsel and other representatives, reasonable access, off premises, during normal business hours to the books, analysis, projections, plans, systems, contracts, commitments and records of the Company and its Subsidiaries during the period prior to the Effective Time to obtain all information concerning the business of the Company and its Subsidiaries, including the status of product development efforts, properties, results of operations and personnel of the Company and its Subsidiaries (excluding only proprietary technical research and development data and other data that the Company determines in good faith is competitively sensitive and/or not required to prepare necessary regulatory filings, it being agreed that counsel making such regulatory filings shall have such access promptly upon a showing of need for regulatory purposes) and use all reasonable efforts to make available at all reasonable times during normal business hours to Parent and its representatives, the Presidents of its major subsidiaries and such other personnel requested by Parent that the Company believes will not disrupt the Company’s business (which access shall be arranged by the Company’s CEO or CFO), and its attorneys, accountants and other professionals for discussion of the Company and its Subsidiaries’ business, properties, prospects and personnel. During such period, the Company shall (and shall cause its Subsidiaries to), subject to any limitations imposed by law with respect to records of employees, furnish promptly to Parent at its request (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws and (b) all other information concerning its business, properties and personnel as Parent may reasonably request (excluding only proprietary technical research and development data and other data that the Company determines in good faith is competitively sensitive and/or not required to prepare necessary regulatory filings, it being agreed that counsel making such regulatory filings shall have such access promptly upon a showing of need for regulatory purposes). Notwithstanding anything else in this Section 7.4(b) to the contrary, the Chief Executive Officer of the Company shall arrange for the Chief Executive Officer of Parent to be granted reasonable access to the officers and managers of the Company’s Subsidiaries as reasonably requested by the Chief Executive Officer of Parent. Any information obtained from the Company or any of its Subsidiaries pursuant to the access contemplated by this Section 7.4 shall be subject to the Confidentiality Agreement. Nothing herein shall limit in any way the full and complete access of Parent and its representatives to the Company and its Subsidiaries following the Purchase Time, including, without limitation, access to all documents, data, properties, personnel or other information or Intellectual Property of the Company and its Subsidiaries.

(c) No Modification of Representations and Warranties or Covenants. No information or knowledge obtained in any investigation or notification pursuant to this Section 7.4 or Section 7.6, or otherwise shall affect or be deemed to modify any representation or warranty contained herein, the covenants or agreements of the parties hereto or the conditions to the obligations of the parties hereto under this Agreement.

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7.5    Public Disclosure. Without limiting any other provision of this Agreement, Parent and the Company will consult with each other before issuing, and provide each other the opportunity to review and comment upon and use all reasonable efforts to agree on any press release or public statement with respect to this Agreement and the transactions contemplated hereby, including the Offer, the Merger and any Acquisition Proposal and will not issue any such press release or make any such public statement prior to such consultation and (to the extent practicable) agreement, except as may be required by law or any requirement of Nasdaq.

7.6    Regulatory Filings; Commercially Reasonable Efforts.

(a) Regulatory Filings. Each of Parent, Purchaser and the Company shall coordinate and cooperate with one another and shall each use all reasonable efforts to comply with, and shall each refrain from taking any action that would impede compliance with, all Laws, and as promptly as practicable after the date hereof, each of Parent, Purchaser and the Company shall make all filings, notices, petitions, statements, registrations, submissions of information, application or submission of other documents required by any Governmental Entity in connection with the Offer and the Merger and the transactions contemplated hereby, including, without limitation: (i) Notification and Report Forms with the FTC and the DOJ as required by the HSR Act, which filings shall be made promptly following the date hereof; (ii) filings under any Foreign Antitrust Laws or other comparable pre-merger notification forms reasonably determined by Parent and the Company to be required by the merger notification or control laws of any applicable jurisdiction, as agreed by the parties hereto; and (iii) any filings required under the Securities Act, the Exchange Act, any applicable state or securities or “blue sky” laws and the securities laws of any foreign country, or any other Law relating to the Offer or the Merger. Each of Parent and the Company will cause all documents that it is responsible for filing with any Governmental Entity under this Section 7.6(a) to comply in all material respects with all applicable Laws. Parent, Purchaser and the Company each shall promptly supply the other with any information that may be required in order to effectuate any filings or application pursuant to this Section 7.6(a).

(b) Notification. Each of Parent, Purchaser and the Company will notify the other promptly upon the receipt of (i) any comments from any officials of any Governmental Entity in connection with any filings made pursuant hereto and (ii) any request by any officials of any Governmental Entity for amendments or supplements to any filings made pursuant to, or information provided to comply in all material respects with, any Laws. Whenever any event occurs that is required to be set forth in an amendment or supplement to any filing made pursuant to Section 7.6(a), Parent, Purchaser or the Company, as the case may be, will promptly inform the other of such occurrence and cooperate in filing with the applicable Governmental Entity such amendment or supplement. Any oral or written communication with the Governmental Entity in connection with any filings made pursuant hereto, shall be made jointly by the Company and Parent, except and to the extent such Governmental Entity objects to either the Company’s or Parent’s participation in such communication.

(c) Reasonable Efforts. Subject to the terms and conditions of this Agreement, prior to the Effective Time, each party will use its reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to, in the most expeditious manner practicable, (i) consummate and make effective the Offer, the Merger and the other transactions contemplated by this Agreement; provided, that nothing in this Section 7.6 shall require Parent or Purchaser to keep the Offer open beyond the expiration date set forth in the Offer (as it may be extended from time to time); (ii) obtain all necessary actions or nonactions, waivers, consents, approvals, orders and authorizations from Governmental Entities and the making of all necessary registrations, declarations, submissions and filings (including registrations, declarations, and filings with Governmental Entities, if any) and the taking of all commercially reasonable steps as may be necessary to avoid any suit, claim, action, investigation or proceeding by any Governmental Entity; (iii) defend any suits, claims, actions, investigations or proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby; and (iv) execute or deliver of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement; provided, however, that in no event shall this Section 7.6(c) require Parent to take any action that is reasonably likely to materially and adversely affect the

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benefits expected to be derived by Parent or its Affiliates as a result of the transactions contemplated hereby or would be reasonably expected to materially and adversely affect Parent or its Affiliates following the consummation of the Offer or the Merger. In connection with and without limiting the foregoing, the Company and its Board of Directors shall, if any takeover statute or similar Law is or becomes applicable to the Offer, the Merger, this Agreement or any of the transactions contemplated by this Agreement, use all commercially reasonable efforts to ensure that the Offer, the Merger and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such Law on the Offer, the Merger, this Agreement and the transactions contemplated hereby.

(d) No Divestiture. Notwithstanding anything in this Agreement to the contrary and except as set forth below, nothing contained in this Agreement shall require Parent or any Subsidiary or affiliate thereof to agree to any Action of Divestiture. The Company shall not, without the prior written consent of Parent, take or agree to take any Action of Divestiture. For purposes of this Agreement, an “Action of Divestiture” shall mean (i) any license, sale or other disposition or holding separate (through establishment of a trust or otherwise) of any shares of capital stock or of any business, assets or properties of Parent, its subsidiaries or Affiliates, or of the Company or its Subsidiaries, (ii) the imposition of any limitation on the ability of Parent, its Subsidiaries or Affiliates, or the Company or its Subsidiaries to conduct their respective businesses or own any capital stock or assets or to acquire, hold or exercise full rights of ownership of their respective businesses and, in the case of Parent, the businesses of the Company and its Subsidiaries or (iii) the imposition of any impediment on Parent, its Subsidiaries or Affiliates, or the Company or its Subsidiaries under any statute, rule, regulation, executive order, decree, order or other legal restraint governing competition, monopolies or restrictive trade practices.

7.7    Notification of Certain Matters.

(a) By the Company. The (i) Company shall give prompt notice to Parent of (A) any representation or warranty made by it contained in this Agreement becoming untrue or inaccurate, (B) any failure of the Company to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement or (C) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which could reasonably be expected to cause the failure of any of the Offer Conditions and (ii) Chief Executive Officer of the Company shall, from the date hereof through the Purchase Time, provide the Chief Executive Officer of Parent weekly updates on the general business condition of the Company; provided, however, that no such notification or update shall affect the representations or warranties of the Company or the conditions to the obligations of the parties under this Agreement; provided, further, that the delivery of any notice or update pursuant to this Section 7.7(a) shall not limit or otherwise affect the remedies available hereunder.

(b) By Parent. Parent shall give prompt notice to the Company of (i) any representation or warranty made by Parent or Purchaser contained in this Agreement becoming untrue or inaccurate, (ii) any failure of Parent to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement, (iii) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would reasonably be expected to result in the Financing, or any alternative financing as Parent may obtain, not being available for Purchaser to purchase and pay for the Shares pursuant to the Offer and to pay the aggregate Merger Consideration, provided, however, that no such notification shall affect the representations, warranties of Parent, Purchaser or the conditions to the obligations of the parties under this Agreement; provided, further, that the delivery of any notice pursuant to this Section 7.7(b) shall not limit or otherwise affect the remedies available hereunder.

7.8    Third-Party Consents. As soon as practicable following the date hereof, the Company will use all commercially reasonable efforts to obtain such material consents, waivers and approvals under any of its or its Subsidiaries’ respective Contracts required to be obtained in connection with the consummation of the transactions contemplated hereby as may be reasonably requested by Parent after consultation with the Company,

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including all consents, waivers and approvals set forth in Section 4.5 of the Disclosure Schedule. In connection with seeking such consents, waivers and approvals, the Company shall keep Parent informed of all material developments and shall, at Parent’s request, include Parent in any discussions or communications with any parties whose consent, waiver or approval is sought hereunder. Such consents, waivers and approvals shall be in a form acceptable to Parent.

7.9    Termination of 401(k) Plans. Effective as of no later than the day immediately preceding the Closing Date, each of the Company, its Subsidiaries and any ERISA Affiliate shall terminate any and all Company Employee Plans intended to include a Code Section 401(k) arrangement (each a “401(k) Plan”) unless Parent provides written notice to the Company that any such 401(k) plan shall not be terminated. Unless, no later than ten Business Days prior to the Closing Date, Parent provides such written notice to the Company, then the Company shall provide Parent with evidence that such 401(k) Plan(s) have been terminated (effective as of no later than the day immediately preceding the Closing Date) pursuant to resolutions of the Company Board, its Subsidiaries or such ERISA Affiliate, as the case may be. Parent shall take all reasonable steps necessary to permit each Employee/Service Provider who has received an eligible rollover distribution (as defined in Section 402(c)(4) of the Code) from each 401(k) Plan, if any, to roll such eligible rollover distribution as part of any lump sum distribution to the extent permitted by each 401(k) Plan into an account under Parent’s 401(k) plan (the “Parent’s 401(k) Plan”), to the extent permitted by Parent’s 401(k) Plan.

7.10    Indemnification.

(a) Indemnity. From and after the Purchase Time, Parent will and will cause the Company and the Surviving Corporation to indemnify and advance expenses to the Company and its directors, officers, employees and agents (the “Indemnified Parties”) against all claims, losses, liabilities, damages, judgments, inquiries, fines, amounts paid in settlement and reasonable fees, costs and expenses, including reasonable attorneys’ fees and disbursements, incurred in connection with any proceeding, whether civil, criminal, administrative or investigative, arising out of, pertaining to or in connection with the fact that the Indemnified Party is or was an officer, director, employee, fiduciary or agent of the Company, or of another entity if such service was at the request of or for the benefit of the Company, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent the Company or the Surviving Corporation, as applicable, is permitted to do so by Section 145 of the DGCL. The certificate of incorporation of the Surviving Corporation will contain provisions with respect to (i) exculpation that are at least as favorable to the Indemnified Parties as those contained in the certificate of incorporation and bylaws of the Company as in effect on the date hereof and (ii) indemnification and advancement of expenses that indemnify and provide for the advancement of expenses to the Indemnified Parties to the fullest extent permitted by Section 145 of the DGCL, which provisions will not, except as required by Law, be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of Indemnified Parties or any other person who, immediately prior to the Effective Time, was a director, officer, employee or agent of the Company.

(b) Insurance. Parent shall either (i) for a period of six years following the Purchase Time, maintain in effect (A) the Company’s currently existing directors’ and officers’ liability insurance policies with respect to matters existing or occurring at or prior to the Purchase Time (including the transactions contemplated hereby) or (B) directors’ and officers’ liability insurance policies with respect to matters existing , occurring or allegedly occurring at or prior to the Purchase Time (including the transactions contemplated hereby) having terms and conditions at least as favorable to the Indemnified Parties as the Company’s currently existing directors’ and officers’ liability insurance, provided, however, that in order to maintain the Company’s existing policies or provide equivalent coverage, neither Parent nor the Surviving Corporation shall be obligated to pay annual premiums in excess of 200% of the aggregate annual premium paid or payable by the Company for the policies the Company currently has in effect and, provided, further, that if the annual premium required to maintain the Company’s existing policies or provide equivalent coverage exceeds 200% of the annual premium paid or payable by the Company for the policies the Company currently has in effect, the Surviving Corporation or Parent shall be obligated to obtain policies with the greatest coverage available for an annual premium not in

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excess of 200% of the aggregate annual premium paid or payable by the Company for the policies the Company currently has in effect or (ii) purchase, or at the request of Parent (which request shall be made no later than two weeks prior to the Purchase Time) the Company shall purchase in a form reasonably acceptable to Parent, by the Purchase Time, and Parent shall cause the Surviving Corporation to maintain, tail policies to the current directors’ and officers’ liability insurance policies maintained on the date of this Agreement by the Company, which tail policies (A) shall not have an aggregate premium in excess of 200% of the aggregate annual premium paid or payable by the Company for the policies the Company currently has in effect (which amount is set forth in Section 7.10(b) of the Disclosure Schedule), (B) shall be effective for a period from at least the Purchase Time through and including the date six years after the Purchase Time with respect to claims arising from facts or events that existed or occurred prior to or at the Purchase Time, and (C) shall contain coverage that is at least as protective to such directors and officers as the coverage provided by such policies of the Company currently in effect (complete and accurate copies of which, or binders therefor have been made available to Parent); provided, however, that, if equivalent coverage under such tail policies cannot be obtained or can be obtained only by paying an aggregate premium in excess of 200% of such amount, Parent or the Company, as the case may be, shall only be required to obtain (and the Surviving Corporation shall only be required to maintain) as much coverage under such tail policies as can be obtained by paying an aggregate premium equal to 200% of such amount.

(c) The provisions of this Section 7.10 are intended to be for the benefit of, and will be enforceable by, each Indemnified Party, his or her heirs and his or her representatives and are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by contract or otherwise. In the event that the Surviving Corporation or any of its respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each case, proper provision shall be made so that the successors and assigns of the Surviving Corporation, as the case may be, honor the indemnification and other obligations set forth in this Section 7.10.

(d) The obligation of Parent and the Surviving Corporation under this Section 7.10 shall survive the consummation of the Merger and shall not be terminated or modified in any manner as to adversely affect any Indemnified Party to whom this Section 7.10 applies without the consent of such Indemnified Party (it being expressly agreed that the Indemnified Parties to whom Section 7.10 applies shall be third party beneficiaries of this Section 7.10, each of whom may enforce the provisions of this Section 7.10).

7.11    Section 16 Matters. Prior to the Purchase Time, the Company shall take all such steps as may be required (to the extent permitted under applicable law) to cause any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) resulting from the transactions contemplated by ARTICLE I of this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.

7.12    Compensation Approvals. Prior to the scheduled expiration date of the Offer (as it may be extended hereunder), the Company (acting through its Compensation Committee) will take all such steps as may be required to cause any Compensation Arrangements entered into by the Company or any of its Subsidiaries since January 1, 2007 to be approved or ratified (to the extent not previously so approved or ratified) as “employment compensation, severance or other employee benefit arrangement” by the Compensation Committee comprised solely of Independent Directors of the Company in accordance with Rule 14d-10(d)(2) under the Exchange Act for purposes of satisfying the requirements of the non-exclusive safe-harbor set forth in Rule 14d-10(d) of the Exchange Act. Prior to the Effective Time, neither the Company Board nor the Compensation Committee of the Company shall withdraw, nor permit the withdrawal of, the Company Compensation Approvals. Prior to the expiration date of the Offer, the Company will make available to Parent true and correct copies of all approvals and other actions taken with respect to the Company Compensation Approvals.

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7.13    Financing. The Company shall, and shall cause its Subsidiaries to, use its reasonable best efforts to have its and their representatives, including management, personnel, attorneys, financial advisors, accountants and other professionals, cooperate with Parent and its representatives in connection with the arrangements by Parent and Purchaser to obtain the Financing (or any alternative Financing as Parent may obtain) as may be reasonably requested by Parent (provided that such requested cooperation does not unreasonably interfere with the ongoing operations of the Company and its Subsidiaries or unreasonably interfere with or hinder or delay in any material aspect the performance by the Company of its other obligations hereunder), including (i) participation in meetings, drafting sessions and due diligence sessions, (ii) furnishing Parent and Purchaser and their financing sources with financial and other pertinent information regarding the Company as may be reasonably requested by Parent, (iii) assisting Parent and Purchaser and their financing sources in the preparation of (A) an offering document for any debt raised to complete the transactions contemplated by this Agreement and (B) materials for rating agency presentations, (iv) mortgaging or otherwise borrowing money against any Owned Real Property, the proceeds of which the Company will hold as cash in furtherance of the Financing and (v) reasonably facilitating the pledge of the Company’s assets as collateral; provided, however, that none of the Company or its Subsidiaries will be required in connection with the Financing or any alternative financing as Parent may obtain or with respect to clauses (iv) and (v) to pay any commitment or other similar fee (unless such commitment or fee is paid by Parent) or incur any other liability or expense (unless such expense is paid by Parent) that would accrue prior to the Purchase Time or consummate any of the transactions referred to in clauses (iv) and (v) prior to the Purchase Time. Prior to the Purchase Time, the Company shall (X), when requested by Parent, monetize (at then standard commercial terms at not less than 50% of face value) any auction-rate securities held by the Company or its Subsidiaries (Parent and Purchaser hereby acknowledging that the market for such auction-rate securities are illiquid at the present time) or (Y), if the market for such auction-rate securities becomes liquid (whereby such securities may be sold at no less than 100% of face value), monetize (at no less than 100% of face value) any auction-rate securities held by the Company or its Subsidiaries, and in the case of (X) or (Y), the proceeds of such monetization shall be used by the Company solely to first, pay at the Purchase Time amounts due under the Termination Agreements, and thereafter, to the extent of any remaining proceeds, pay the amounts described in item 1 of Section 4.7(f) of the Disclosure Schedule.

7.14    Termination Agreements.

(a) Parent and Purchaser acknowledge that they are aware of the fact that Mr. Dominic and Ms. Varisano entered into the Termination Agreements with the Company. Parent acknowledges that following the Purchase Time it and its Subsidiaries (including the Company following the Purchase Time) will not have positions available for Mr. Dominic and Ms. Varisano comparable to their respective current positions with the Company. Parent and Purchaser acknowledge and agree that, given the positions available, following the Purchase Time, Mr. Dominic and Ms. Varisano will have Good Reason (as defined in each such executive’s employment agreement) to terminate their employment with the Company and that Parent and Purchaser cannot or will not correct or cure such Good Reason event. Parent and Purchaser further acknowledge and confirm their understanding and agree that the Company will pay (if applicable, with funds advanced to the Company by or on behalf of Parent pursuant to Section 7.14(b)) at the Purchase Time in accordance with the respective Termination Agreements the amounts provided for therein to be so paid at such time, subject to any adjustments set forth therein, and will report, for federal income tax purposes, such payments consistent with the characterization thereof in the Termination Agreements. The Company shall not amend or terminate either Termination Agreement or waive any provisions therein without the prior written consent of Parent.

(b) If the Company reasonably determines within ten (10) Business Days prior to the Purchase Time that it will require funds in addition to its cash on hand to pay at the Purchase Time the amounts payable under the Termination Agreements, and such requirement is not primarily caused by a breach by the Company of its covenants in Section 6.1, then if requested in writing by the Company no later than five (5) Business Days prior to the Purchase Time (the “Company Financing Request”), at the Purchase Time Parent shall lend, or cause to be lent, to the Company (pursuant to a promissory note which shall mature on the first anniversary of the date of execution and delivery thereof and may be prepaid without premium or penalty) the cash amount specified in the

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Company Financing Request not exceeding $15,000,000 (the amount so specified not exceeding $15,000,000, the “Company Financing Amount”) for the sole purpose of paying amounts required to be paid at the Purchase Time pursuant to the Termination Agreements. If Parent is required to provide the Company Financing Amount pursuant to this Section 7.14(b), then at the Purchase Time it will deliver or cause to be delivered, by wire transfer of funds, the Company Financing Amount to an account previously designated by the Company to Parent. The Company shall use the Company Financing Amount solely for the purpose of paying amounts due at the Purchase Time under the Termination Agreements, and will provide or cause to be provided to Parent, within one Business Day after the Purchase Time, a written receipt from Mr. Dominic and Ms. Varisano or other written evidence of the receipt of such amounts.

ARTICLE VIII

CONDITIONS TO THE MERGER

8.1    Conditions to the Obligations of Each Party to Effect the Merger. The respective obligations of each party to effect the Merger shall be subject to the satisfaction (or waiver by the party entitled to the benefit thereof) at or prior to the Effective Time of each of the following conditions:

(a) Unless the Merger is consummated pursuant to Section 253 of the DGCL as contemplated by Section 2.7 of this Agreement, the “agreement of merger” (as such term is used in Section 251 of the DGCL) shall have been adopted by the Company Requisite Vote.

(b) No order, injunction or decree issued by any Governmental Entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger or any of the other transactions contemplated by this Agreement shall be in effect. No statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any Governmental Entity that prohibits or makes illegal consummation of the Merger.

(c) Purchaser shall have accepted for purchase and paid for the Shares tendered (and not withdrawn) pursuant to the Offer.

ARTICLE IX

TERMINATION, AMENDMENT AND WAIVER

9.1    Termination by Mutual Agreement. This Agreement may be terminated and the Offer and the Merger may be abandoned at any time prior to the Effective Time, notwithstanding adoption thereof by the stockholders of the Company, by mutual written consent of Parent and the Company.

9.2    Termination by Either Parent or the Company. This Agreement may be terminated and the Offer and the Merger may be abandoned by Parent or the Company by notice to the other party at any time prior to the Effective Time, notwithstanding adoption of this Agreement by the stockholders of the Company, if any court of competent jurisdiction or other Governmental Entity shall have issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Offer or the Merger and such order, decree, ruling or other action is or shall have become final and nonappealable; provided, however, that the party seeking to terminate this Agreement pursuant to this Section 9.2 shall have used its reasonable efforts to remove or reverse such order, decree, ruling or action.

9.3    Termination by the Company. This Agreement may be terminated and the Merger may be abandoned by the Company by notice to Parent at any time prior to the Purchase Time:

(a) if (i) the close of business on September 30, 2008 (which date and time (A) shall be extended to the close of business on October 31, 2008, if the Purchase Time shall not have occurred as a result of a failure of the

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Offer Condition set forth in Paragraph 1(b) of Exhibit B to be satisfied or (B) may be extended by mutual written agreement of Parent and the Company (such date and time, the “Outside Date”)) shall have occurred and Purchaser shall not have accepted for payment and paid for Shares pursuant to the Offer in accordance with the terms thereof on or before the Outside Date, (ii) the Offer shall have expired or been terminated and Purchaser shall not have accepted for payment and paid for Shares pursuant to the Offer in accordance with the terms thereof or (iii) Purchaser fails to purchase validly tendered Shares if required to do so pursuant to and in accordance with the terms of the Offer, in violation of the terms of this Agreement; provided, that the Company shall not have the right to terminate this Agreement pursuant to clauses (ii) or (iii) of this Section 9.3(a) if any of the events or circumstances referred to in such clauses (ii) or (iii) of this Section 9.3(a) directly or indirectly resulted from or was caused by the Company’s failure to comply in any material respect with any of its obligations, covenants, or agreements under this Agreement or by the failure of any representation or warranty of the Company contained in this Agreement to be true and correct;

(b) if the Company shall have entered into a definitive binding agreement with respect to a Superior Offer pursuant to and in compliance with Section 7.3 and the Company shall have paid Parent the Company Termination Fee described in Section 9.5(a); or

(c) if Parent or Purchaser shall have breached in any material respect any of the representations, warranties, covenants or agreements contained in this Agreement and such breach cannot be or has not been cured within ten days after the giving of written notice to Parent, except for any such breach which would not reasonably be expected to have a material adverse effect on Parent’s or Purchaser’s ability to consummate the Offer or the Merger; provided, however that the Company shall not have the right to terminate this Agreement pursuant to this Section 9.3(c) if it shall have materially breached this Agreement.

9.4    Termination by Parent. This Agreement may be terminated and the Merger may be abandoned by Parent by notice to the Company at any time prior to the Purchase Time, if:

(a)(i) due to a failure of any of the Offer Conditions to be satisfied at any scheduled expiration of the Offer, (A) the Outside Date shall have occurred and Purchaser shall not have accepted for payment Shares pursuant to the Offer in accordance with the terms thereof on or before the Outside Date, or (B) the Offer shall have expired or been terminated and Purchaser shall not have accepted for payment and paid for Shares pursuant to the Offer in accordance with the terms thereof; provided, that Parent shall not have the right to terminate this Agreement pursuant to clause (B) of this Section 9.4(a)(i) if any of the events or circumstances referred to in such clause (B) of this Section 9.4(a)(i) directly or indirectly resulted from or was caused by Parent’s failure to comply in any material respect with any of its obligations, covenants or agreements under this Agreement or by the failure of any representation or warranty of the Parent or Purchaser contained in this Agreement to be true and correct;

(ii)(A) a Change of Board Recommendation shall have been effected or the Company Board shall have failed to reaffirm the Company Board Recommendation within three Business Days of a written request to do so by Parent or (B) the Company shall have materially violated or breached any of its obligations in Section 7.3;

(iii) a Material Adverse Effect shall have occurred; or

(iv)(1) any Person or “group” (as defined under Section 13(d) of the Exchange Act and the rules and regulations thereunder) shall have become the beneficial owner (as that term is used in Rule 13d-3 under the Exchange Act) of more than 50% of the outstanding shares of Company Common Stock, other than pursuant to a definitive agreement approved by the Company Board (For the avoidance of doubt, nothing in this Section 9.4(a)(iv) shall limit Parent’s right to be paid the Company Termination Fee pursuant to Section 9.5(a)) or (2) pursuant any proxy solicitation by any Person, the directors of the Company on the date hereof cease to represent a majority of Company Board;

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(b) the agreements referred to in Section 5.3 shall have been terminated, breached or otherwise repudiated by the lenders party thereto or if Parent reasonably determines that the conditions to the availability of the Financing are not likely to be satisfied as of the scheduled expiration of the Offer or that the Financing, or any alternative financing as Parent may obtain, will not be available for Purchaser to purchase and pay for the Shares pursuant to the Offer and to pay the aggregate Merger Consideration; or

(c) at any such time the Company shall have breached any representation, warranty, covenant or other agreement contained in this Agreement which would give rise to the failure of the Offer Condition set forth in either Paragraph 2(d) or Paragraph 2(e) of Exhibit B to this Agreement to be satisfied and such breach cannot be or has not been cured within 10 days following receipt by the Company of written notice to such effect provided, however that Parent shall not have the right to terminate this Agreement pursuant to this Section 9.4(c) if it shall have materially breached this Agreement.

9.5    Effect of Termination. Except as provided in Section 9.5(a) or Section 9.5(b), in the event of termination of this Agreement and the abandonment of the Merger pursuant to this ARTICLE IX, this Agreement (other than the last sentence of Section 1.3, Section 7.4(a), the last sentence of Section 7.4(b) and ARTICLE IX and ARTICLE X) shall become void and of no effect with no liability on the part of any party (or of any of its directors, officers, employees, agents, legal and financial advisors or other representatives).

(a) In the event that this Agreement is terminated (i) by the Company pursuant to Section 9.3(b) or by Parent pursuant to Section 9.4(a)(ii)(A) or Section 9.4(a)(iv) or (ii) (A) by the Company pursuant to Section 9.3(a)(i) or Section 9.3(a)(ii) or (B) by Parent pursuant to Section 9.4(a)(i), in the case of either (A) or (B), due to a failure of the Offer Condition set forth in Paragraph 1(a) of Exhibit B to be satisfied at any scheduled expiration of the Offer and, with respect to clause (ii) only, (x) at any time on or after the date hereof and prior to such termination an Acquisition Proposal (whether or not conditional) shall have been publicly announced or any Person shall have publicly announced an intention (whether or not conditional) to make an Acquisition Proposal, and (y) within twelve months after the date of such termination, the Company consummates any transaction specified in the definition of “Acquisition Proposal” with such Person or any of its Affiliates; then in any such case, the Company shall pay Parent a termination fee of $9,000,000 (the “Company Termination Fee”), by wire transfer of immediately available funds to the account or accounts designated by Parent. Such payment shall be made (1) concurrently with, and as a condition precedent to, such termination in the case of a termination by the Company pursuant to Section 9.3(b) and (2) on the first Business Day following the date of such termination in the case of a termination by Parent pursuant to Section 9.4(a)(ii)(A) or Section 9.4(a)(iv) or (3) on the first Business Day after the consummation of the transaction referred to in clause (ii)(y) of this Section 9.5(a). Subject to and without limitation of Parent’s right to receive the Company Termination Fee if payable pursuant to the first two sentences of this Section 9.5(a) and to receive any amounts payable or reimbursable to Parent pursuant to Section 9.5(c) and the penultimate sentence of Section 9.6, Parent, Purchaser and their respective Affiliates shall have no remedy at law against the Company and its Affiliates, stockholders, directors, officers or agents, either before or after the termination of this Agreement, for any loss or damage suffered as a result of the failure of the Offer or the Merger or the other transactions contemplated by this Agreement to be consummated or for a breach or failure to perform or comply by the Company under or in connection with this Agreement. Without limitation of the immediately preceding sentence and for the avoidance of doubt, upon termination of this Agreement, except for Parent’s right to receive the Company Termination Fee if payable pursuant to the first two sentences of this Section 9.5(a) and to receive any amounts payable or reimbursable to Parent pursuant to Section 9.5(c) and the penultimate sentence of Section 9.6, neither the Company nor any of its Affiliates, stockholders, directors, officers or agents shall have any further liability or obligation relating to or arising out of or in connection with this Agreement or the transactions contemplated by this Agreement. Notwithstanding anything herein to the contrary, Parent and Purchaser agree that, in no event shall Parent, Purchaser or their respective Affiliates seek to recover, and they hereby waive any right to, any money damages or any other monetary recovery, monetary judgment or monetary damages of any kind, including consequential, indirect or punitive damages, in connection with this Agreement or the transactions contemplated hereby against the Company or its Affiliates, stockholders, directors, officers or agents (other than

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for payment if and when due of the Company Termination Fee pursuant to the first two sentences of this Section 9.5(a) and of any amounts payable or reimbursable to Parent pursuant to Section 9.5(c) and the penultimate sentence of Section 9.6). Notwithstanding anything else herein to the contrary, nothing in this Section 9.5(a) shall in any way limit Parent’s right, prior to the termination of this Agreement, to injunctive relief and specific performance as set forth in Section 10.7, including as provided in Section 7.3(h).

(b) If this Agreement is terminated by Parent pursuant to Section 9.4(b) or by the Company pursuant to Section 9.3(a)(iii), Parent shall promptly, and in any event within five Business Days after the date of such termination, pay the Company a termination fee of $9,000,000 (the “Parent Termination Fee”) by wire transfer of immediately available funds. Subject to and without limitation of the Company’s right to receive the Parent Termination Fee if payable pursuant to the first sentence of this Section 9.5(b), and to receive any amount payable to the Company pursuant to Section 9.5(c), the Company and its Affiliates shall have no remedy at law (except as set forth in Section 9.6 (to the extent set forth therein)) or in equity against Parent, Purchaser and their respective Affiliates, stockholders, directors, officers or agents, either before or after termination of this Agreement, for any loss or damage suffered as a result of the failure of the Offer or the Merger or the other transactions contemplated by this Agreement to be consummated or for a breach or failure to perform or comply by Parent or Purchaser under or in connection with this Agreement. Without limitation of the immediately preceding sentence and for the avoidance of doubt, upon termination of this Agreement, except for the Company’s right to receive the Parent Termination Fee if payable pursuant to the first sentence of this Section 9.5(b) and to receive any amount payable to the Company pursuant to Section 9.5(c), and except as provided in Section 9.6 (to the extent set forth therein), none of Parent, Purchaser or their respective Affiliates, stockholders, directors, officers or agents shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated by this Agreement, other than the obligations of Parent set forth in the last sentence of Section 1.3, in Section 7.4(a) and in the last sentence of Section 7.4(b). Notwithstanding anything herein to the contrary, the Company agrees that in no event shall the Company or any of its Affiliates seek to recover, and they hereby waive any right to, any money damages, equitable relief or any other recovery, judgment or damages of any kind, including consequential, indirect or punitive damages, in connection with this Agreement or the transactions contemplated hereby against Parent, Purchaser and their respective Affiliates, stockholders, directors, officers or agents, other than for payment if and when due of the Parent Termination Fee pursuant to the first sentence of this Section 9.5(b) and any amount payable to the Company pursuant to Section 9.5(c), and for payment of the fees and expenses of the Company incurred in connection with this Agreement, subject to and in accordance with Section 9.6.

(c) Each of the parties hereto acknowledges that the agreements contained in this Section 9.5 are an integral part of the transactions contemplated by this Agreement. In the event that the Company shall fail to pay the Company Termination Fee if and when due pursuant to the first two sentences of Section 9.5(a) or Parent shall fail to pay the Parent Termination Fee when due pursuant to the first sentence of Section 9.5(b), the Company or Parent, as the case may be, shall reimburse the other party for all reasonable costs and expenses actually incurred or accrued by such other party (including reasonable fees and expenses of counsel) in connection with the collection of the Parent Termination Fee or the Company Termination Fee, as applicable.

9.6    Fees and Expenses.

All of the Company’s fees and expenses incurred in connection with the transactions contemplated hereby, including, without limitation, fees of attorneys, investment bankers and accountants, incurred in connection with the transactions contemplated hereby, including those incurred in (a) negotiating and drafting the letter agreement dated May 16, 2008, by and between Parent and the Company, (b) the due diligence process, (c) negotiating and drafting this Agreement and ancillary documents, (d) the preparation and filing of HSR Act documentation, (e) obtaining a fairness opinion and (f) the printing and filing of documents shall be paid by Parent; provided, however, that exclusive of the cost of the preparation and filing of HSR Act documentation, the Company’s costs and expenses required to be paid (including those previously paid) by Parent shall not exceed $1,100,000, and; provided, further, that (i) in the event the transactions contemplated herein are not

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consummated because of the failure to obtain HSR Act approval after appropriate filings have been made on a timely basis, then the Company shall be responsible for the cost of the fairness opinion described in Section 4.23 or any other fairness opinion it receives in connection with the transactions contemplated hereby; (ii) if the Company Termination Fee is payable or paid by the Company pursuant to Section 9.5(a), then Parent shall not be responsible for any of the costs and expenses incurred by the Company in connection with the transactions contemplated hereby and (iii) and if the Parent Termination Fee is payable or paid by Parent pursuant to the first sentence of Section 9.5(b), the Company’s costs and expenses required to be paid (including those previously paid) by Parent pursuant to this Section 9.6 shall not exceed $500,000. The expenses payable by Parent pursuant to this Section 9.6 incurred by the Company prior to the date hereof shall be paid in no event later than five Business Days following the date hereof with respect to bills rendered to Parent prior to the date hereof. The expenses payable by Parent pursuant to this Section 9.6 incurred by the Company prior to the date hereof but billed to Parent on or after the date hereof shall be paid by Parent as billed but in no event later than five Business Days following the date billed. The expenses payable by Parent pursuant to this Section 9.6 incurred by the Company on or after the date hereof shall be paid by Parent as billed, but in no event later than a date that is no more than five Business Days after the date this Agreement is terminated. In the event a party hereto pays any expenses for which it is ultimately not responsible, then upon request for reimbursement the party who has received the benefit of such payment shall forthwith reimburse the other party within five Business Days after receiving such request. All other fees and expenses not identified in this Section 9.6 shall be paid by the party incurring such expenses whether or not the transactions contemplated by this Agreement are consummated.

9.7    Amendment. This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time, whether before or after adoption of this Agreement by the stockholders of the Company; provided, however, that, after Purchaser purchases any Shares pursuant to the Offer, no amendment shall be made which decreases the Merger Consideration. This Agreement may not be amended except by an instrument in writing signed by the parties hereto.

9.8    Extension; Waiver. At any time prior to the Effective Time, any party hereto may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto, and (iii) subject to the requirements of applicable Law, waive compliance by the other parties with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. The failure of any party to assert any rights or remedies shall not constitute a waiver of such rights or remedies.

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ARTICLE X

GENERAL PROVISIONS

10.1    Non-Survival of Representations and Warranties. The representations and warranties of the Company, Parent and Purchaser contained in this Agreement, or any instrument delivered pursuant to this Agreement, shall terminate at the Effective Time, and only the covenants that by their terms survive the Effective Time and this ARTICLE X shall survive the Effective Time.

10.2    Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (i) on the date of delivery if delivered personally and/or by messenger service, (ii) on the date of confirmation of receipt (or, the first Business Day following such receipt if the date is not a Business Day) of transmission by facsimile or (iii) on the date of confirmation of receipt (or, the first Business Day following such receipt if the date is not a Business Day) if delivered by a nationally recognized courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

(a) if to Parent or Purchaser, to:

GSI Group Inc.

125 Middlesex Turnpike

Bedford, MA 01730

Attention: General Counsel

Telephone No.: (781) 266-5700

Telecopy No.: (781) 266-5114

with copies to:

Skadden, Arps, Slate, Meagher & Flom LLP

One Beacon Street, 31st Floor

Boston, MA 02108

Attention: Kent A. Coit, Esq.

Telephone No.: (617) 573-4800

Telecopy No.: (617) 573-4822

(b) if to the Company, to:

Excel Technology, Inc.

41 Research Way

East Setauket, NY 11733

Attention: Chief Financial Officer

Telephone No.: (631) 784-6100

Telecopy No.: (631) 784-6101

with copies to:

Breslow & Walker, LLP

100 Jericho Quadrangle

Jericho, NY 11753

Attention: Howard S. Breslow, Esq.

Telephone No.: (576) 822-6505

Telecopy No.: (576) 822-6540

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10.3    Interpretation; Knowledge.

(a) When a reference is made in this Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement unless otherwise indicated. When a reference is made in this Agreement to Sections, such reference shall be to a section of this Agreement unless otherwise indicated. For purposes of this Agreement, the words “include,” “includes” and “including,” when used herein, shall be deemed in each case to be followed by the words “without limitation.” The table of contents, index of defined terms and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

(b) For purposes of this Agreement, the term “Knowledge” means, with respect to the Company, and with respect to any matter in question, the actual knowledge of any officer of the Company or of any president (or person holding a similar position) of a Subsidiary of the Company.

(c) For purposes of this Agreement, the term “made available” shall mean (i) that the Company has provided copies of or access to such materials to Parent or its representatives or (ii) that such material is publicly available on EDGAR.

(d) For purposes of this Agreement, the term “Material Adverse Effect,” means any change, event, violation, inaccuracy, circumstance or effect (any such item, an “Effect”), individually or when taken together with all other Effects that exist at the date of determination of the occurrence of the Material Adverse Effect, that has had or would reasonably be expected to have a material adverse effect on (a) the business (taken as a whole), financial condition, capitalization (taken as a whole), assets (taken as a whole) or liabilities (taken as a whole) of the Company or its Subsidiaries; provided, however, that no facts, circumstances, changes or effects resulting primarily from or arising primarily out of the following shall be deemed to be or constitute a Material Adverse Effect, and no facts, circumstances, changes or effects resulting primarily from or arising primarily out of the following shall be taken into account when determining whether a Material Adverse Effect has occurred: (i) general economic or political conditions in the countries in which the Company does business (except to the extent that the Company or its Subsidiaries are adversely affected disproportionately relative to other businesses in such countries); (ii) general market or economic conditions affecting the industry generally in which the Company and its Subsidiaries operate (except to the extent that the Company or its Subsidiaries are adversely affected disproportionately relative to the other participants in such industry); (iii) the condition of the financial or securities markets in the countries in which the Company does business (except to the extent the Company or its Subsidiaries are adversely affected disproportionately relative to other businesses in such countries); (iv) any change in the stock price or trading volume of the Company Common Stock in and of itself (it being understood that the facts or occurrences giving rise to such change in stock price or trading volume may be taken into account in determining whether there has been a Material Adverse Effect); (v) the announcement or pendency of this Agreement or any of the transactions contemplated hereby, including the Offer and the Merger (including any negative impact on relationships with employees of the Company or its Subsidiaries as a result of the announcement or performance of this Agreement); (vi) the failure of the Company to meet published projections of earnings, revenues or any other financial measure (regardless of whether such projections were made by the Company or independent third parties), in and of itself (it being understood that the facts or occurrences giving rise to such failure may be taken into account in determining whether there has been a Material Adverse Effect); (vii) changes in GAAP that take effect after the date of this Agreement (but not changes in the Company’s interpretation of GAAP); (viii) changes in any Law that takes effect after the date of this Agreement and is of general applicability and not specific to the Company or its business (except to the extent that the Company or its Subsidiaries are adversely affected disproportionately relative to the other businesses to which such Law is applicable); and (ix) acts of terrorism or war (whether or not declared) or natural disasters after the date hereof (provided that such effect does not affect the Company or its Subsidiaries in a disproportionate manner), or (b) the ability of the Company to consummate the Merger or any of the other transactions contemplated by this Agreement.

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(e) For purposes of this Agreement, the term “Purchaser Material Adverse Effect,” means any change, effect, event or occurrence that has a material adverse effect on the ability of Parent or Purchaser, on or before the Outside Date, to perform their respective obligations under this Agreement that are required to be performed on or before the Outside Date or to consummate the transactions contemplated by this Agreement on or before the Outside Date.

(f) For purposes of this Agreement, the term “Person” shall mean any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Entity.

(g) For purposes of this Agreement, the term “Affiliate” of a Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned Person;

(h) For purposes of this Agreement, the term “Business Day” means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized by law to close in New York, New York.

10.4    Counterparts. This Agreement may be executed in two or more counterparts, and by facsimile, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

10.5    Entire Agreement; Third-Party Beneficiaries. This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein, including the Disclosure Schedule and the Tender and Support Agreement and other Exhibits hereto (i) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, it being understood that the Confidentiality Agreement shall continue in full force and effect until the Closing and shall survive any termination of this Agreement and (ii) are not intended to confer upon any other Person any rights or remedies hereunder.

10.6    Severability. In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the greatest extent possible, the economic, business and other purposes of such void or unenforceable provision.

10.7    Other Remedies. The Company acknowledges and agrees that irreparable damage would occur to Parent and Purchaser in the event that the Company were to breach any of the provisions of this Agreement or were not to perform any of its covenants, obligations or agreements hereunder in accordance with the specific terms of this Agreement. It is accordingly agreed by the parties hereto that Parent and Purchaser shall be entitled to an immediate injunction or injunctions or order(s) of specific performance, without the necessity of proving the inadequacy of money damages as a remedy and without the necessity of posting any bond or other security, to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions thereof in any court of the United States or any state having jurisdiction. The Company acknowledges and agrees that it shall not be entitled to enforce specifically the terms and provisions of this Agreement or seek any other equitable remedy and that, as provided in Section 9.5(a), the sole right and remedy of the Company under or in connection with this Agreement shall be to receive the Parent Termination Fee if payable in accordance with the first sentence of Section 9.5(b) and to receive payment of expenses to the extent provided, and subject to the terms, conditions and limitations set forth in, Section 9.6.

55

10.8    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof. Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware) in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein, agrees that process may be served upon them in any manner authorized by the laws of the State of Delaware for such Persons and waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction, venue and such process.

10.9    Rules of Construction. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

10.10    Assignment. No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties, except that Parent may assign its rights and delegate its obligations hereunder to any of its Subsidiaries as long as Parent remains ultimately liable for all of Parent’s obligations hereunder. Any purported assignment in violation of this Section 10.10 shall be void. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

10.11    Waiver of Jury Trial. EACH OF PARENT, PURCHASER AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, PURCHASER OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

10.12    Disclosure Schedule. All capitalized terms not defined in the Disclosure Schedule shall have the meanings ascribed to them in this Agreement. Notwithstanding anything to the contrary set forth herein, the representations and warranties of the Company in this Agreement are made and given, and the covenants are agreed to, subject to the disclosures and exceptions set forth in the sections of the Disclosure Schedule corresponding to each such representation and warranty or covenant, or as otherwise set forth elsewhere in the Disclosure Schedule where it is readily apparent on its face from such disclosure that such information is applicable to such representation and warranty or covenant. The listing of any matter in the Disclosure Schedule shall expressly not be deemed to constitute an admission by the Company, or to otherwise imply, that any such matter is material, is required to be disclosed under this Agreement or falls within relevant minimum thresholds or materiality standards set forth in this Agreement. No disclosure in the Disclosure Schedule relating to any possible breach or violation of any Contract or Law shall be construed as an admission or indication that any such breach or violation exists or has actually occurred. All attachments to the Disclosure Schedule are incorporated by reference into the Disclosure Schedule. The information contained in the Disclosure Schedule is in all events subject to the Confidentiality Agreement.

10.13    Parent Guarantee. Parent agrees to take all action necessary to cause Purchaser or the Surviving Corporation, as applicable, to perform all of its respective agreements, covenants and obligations under this Agreement. Parent unconditionally guarantees to the Company the full and complete performance by Purchaser or the Surviving Corporation, as applicable, of its respective obligations under this Agreement and shall be liable for any breach of any representation, warranty, covenant or obligation of Purchaser or the Surviving Corporation, as applicable, under this Agreement, to the extent and subject to the limitations set forth in Section 9.5(b). This is a guarantee of payment and performance and not collectibility.

*****

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized respective officers as of the date first written above.

GSI GROUP INC.
By:	/s/ Sergio Edelstein
	Name: Dr. Sergio Edelstein Title:   President and Chief Executive Officer

EAGLE ACQUISITION CORPORATION
By:	/s/ Sergio Edelstein
	Name: Dr. Sergio Edelstein Title:   President

EXCEL TECHNOLOGY, INC.
By:	/s/ Antoine Dominic
	Name: Antoine Dominic Title:   Chief Executive Officer and President

Exhibit B

CONDITIONS TO THE OFFER

Capitalized terms used in this Exhibit B and not otherwise defined herein shall have the meanings assigned to them in the Agreement to which it is attached (the “Merger Agreement”).

1.    Notwithstanding any other provision of the Offer or the Merger Agreement, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to Purchaser’s obligation to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer), to pay for any Shares tendered in connection with the Offer and, subject to the terms of the Merger Agreement, may terminate or amend the Offer, unless, immediately prior to the expiration of the initial offering period for the Offer, as the same may be extended from time to time (the “Expiration Date”):

(a) there shall have been validly tendered (not including any Shares tendered pursuant to procedures for guaranteed delivery) in the Offer and not properly withdrawn that number of Shares which, together with the number of Shares, if any, then owned beneficially by Parent, Purchaser or their Subsidiaries, constitutes at least a majority of the total number of then-outstanding Shares on a fully diluted basis (which shall mean, as of any time, the number of Shares outstanding, together with all Shares (if any) which the Company would be required to issue pursuant to any then outstanding warrants, options, benefit plans or obligations or securities convertible or exchangeable into Shares or otherwise, but only to the extent then so exercisable, convertible or exchangeable) on the date Shares are accepted for payment (the “Minimum Tender Condition”); and

(b) the applicable waiting period under the HSR Act in respect of the transactions contemplated by this Agreement shall have expired or been terminated, and any required approvals or consents in respect of the transactions contemplated by this Agreement shall have been obtained under any applicable Foreign Antitrust Laws (and any applicable waiting periods thereunder have expired or been terminated).

2.    Additionally, notwithstanding any other provision of the Offer or the Merger Agreement, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to Purchaser’s obligation to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer), to pay for any Shares tendered in connection with the Offer and, subject to the terms of the Merger Agreement, including Section 1.1, may terminate or amend the Offer if any of the following conditions exist:

(a) there shall have been any Law, decree, judgment, order or injunction, promulgated, enacted, entered, enforced, issued or amended by any Governmental Entity that would, or is reasonably likely, directly or indirectly, to: (i) restrain, enjoin or otherwise prohibit the making or consummation of the Offer or the Merger or the transactions contemplated by ARTICLE III of the Merger Agreement or seeking to obtain from the Company, Parent or Purchaser any material damages; (ii) impose material limitations on the ability of Parent, Purchaser or any of their respective Subsidiaries or Affiliates to acquire or hold, transfer or dispose of, or effectively to exercise all rights of ownership of, some or all of the Shares including the right to vote the Shares purchased by it pursuant to the Offer on an equal basis with all other Shares on all matters properly presented to the stockholders of the Company; (iii) require, or condition any approval on, the divestiture by Parent, Purchaser or any of their respective Subsidiaries or Affiliates of any Shares, or require Purchaser, Parent, the Company, or any of their respective Subsidiaries or Affiliates to take, or condition any approval on, any Action of Divestiture; or (iv) cause a Material Adverse Effect.

(b) there shall be pending or threatened (and such threat shall not have been withdrawn), any action, proceeding or counterclaim by or before any Governmental Entity challenging the making or consummation of the Offer or the Merger or seeking, directly or indirectly, to result in any of the consequences referred to in clauses (i) through (iii) of Paragraph 2(a) above;

(c) a Material Adverse Effect shall have occurred;

(d) the Company shall have breached or failed to comply (i) in any material respect with any of its obligations, covenants, or agreements under the Merger Agreement which breaches or failures, individually or in the aggregate, could reasonably be expected to constitute a Functional Breach or (ii) with the covenants set for in Section 6.1(b)(i) through Section 6.1(b)(iv) of the Merger Agreement;

(e) (i) the representations and warranties set forth in Section 4.2 of the Merger Agreement shall not be true and correct in all material respects at any scheduled expiration of the Offer (except for any representation or warranty therein that is expressly made as of a specified date, in which case as of such specified date) or (ii) any other representations or warranties of the Company contained in the Merger Agreement shall not be true and correct at any scheduled expiration of the Offer (except for any representation or warranty that is expressly made as of a specified date, in which case as of such specified date) where the failure of such representation or warranty to be true and correct, individually or in the aggregate, could reasonably be expected to constitute a Functional Breach; provided, that, for purposes of Paragraph 2(e)(ii) all such representations and warranties shall be interpreted without giving effect to the words “materially” or “material” or to any qualification based on such terms or based on the defined term “Material Adverse Effect;”

(f) a Change of Board Recommendation shall have been effected or the Company Board shall have failed to reaffirm the Company Board Recommendation within three Business Days of a written request to do so by Parent; or

(g) the Merger Agreement shall have been terminated pursuant to its terms or shall have been amended pursuant to its terms to provide for such termination or amendment of the Offer;

which, in the sole judgment of Parent or Purchaser, in any case, makes it inadvisable to proceed with the Offer or with acceptance for payment or payment for Shares.

For the purposes of this Exhibit B a “Functional Breach” shall mean any breach of any representation or warranty of the Company, or any breach or failure to comply with any obligation, covenant or agreement of the Company, under the Merger Agreement which breach or failure could reasonably be expected to materially affect the business or operations of the Company or its Subsidiaries or the potential synergies which Parent anticipates to result from the transactions contemplated thereby in the periods following the consummation of the Offer or the Merger.

Immediately prior to the expiration of the Offer, the Company shall deliver to Parent a certificate executed on behalf of the Company by the Chief Executive Officer and Chief Financial Officer of the Company certifying that the conditions and events set forth in Paragraphs 2(d) and 2(e) of this Exhibit B shall not exist or have not occurred as of such time and date.

The conditions set forth in Paragraphs 1 and 2 of this Exhibit B are for the benefit of Parent and Purchaser and, regardless of the circumstances, may be asserted by Parent or Purchaser in whole or in part at any applicable time or from time to time prior to the Expiration Date, except that the conditions relating to receipt of any approvals from any Governmental Entity may be asserted at any time prior to the acceptance for payment of Shares, and any condition may be waived by Parent or Purchaser in its discretion in whole or in part at any applicable time or from time to time, in each case subject to the terms and conditions of the Merger Agreement and the applicable rules and regulations of the SEC. The failure of Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time.

EX-10.1

Exhibit 10.1

PURCHASE AGREEMENT

AMONG

GSI GROUP INC.,

GSI GROUP CORPORATION,

AND

PURCHASERS SET FORTH ON THE SIGNATURE PAGES HERETO

DATED AS OF JULY 9, 2008

TABLE OF CONTENTS

			Page
ARTICLE I PURCHASE AND SALE OF SECURITIES; WARRANT RATIO; TERMINATION FEE			3
	1.1	Closing	3
	1.2	Warrant Ratio	4
	1.3	Termination; Termination Fee	4
ARTICLE II REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS OF THE PURCHASERS			6
	2.1	Representations and Warranties	6
	2.2	Acknowledgements and Agreements	8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PARENT			10
	3.1	Exchange Act Reports	10
	3.2	Financial Statements	10
	3.3	Absence of Certain Changes	11
	3.4	Organization and Qualification	11
	3.5	Equity Capitalization	11
	3.6	Indebtedness and Other Contracts	12
	3.7	Solvency	12
	3.8	Authorization of Securities Documents and Merger Agreement	13
	3.9	Issuance of Guarantee	13
	3.10	Issuance of Warrants	13
	3.11	Issuance of Warrant Shares	14
	3.12	Transfer Taxes	14
	3.13	Form S-3	14
	3.14	No Conflicts	14
	3.15	Consents	14
	3.16	Title	15
	3.17	Insurance	15
	3.18	Regulatory Permits	15
	3.19	Legal Proceedings	15
	3.20	Intellectual Property Rights	16
	3.21	Environmental Laws	16
	3.22	Employee Relations	17
	3.23	ERISA Matters	17
	3.24	Taxes	17
	3.25	Foreign Corrupt Practices	18
	3.26	OFAC	18
	3.27	Conduct of Business	18
	3.28	Accountants	18
	3.29	Books and Records	19
	3.30	Internal Accounting and Disclosure Controls	19
	3.31	Securities Act Exemption; No General Solicitation	19

	3.32	No Integrated Offering	20
	3.33	Placement Agent	20
	3.34	Manipulation of Price	20
	3.35	Exemption from Investment Company Act; U.S. Real Property Holding Corporation Status	20
	3.36	Bank Holding Company	20
	3.37	Sarbanes-Oxley Act	21
	3.38	Transactions with Affiliates	21
	3.39	Application of Takeover Protections; Rights Agreement	21
	3.40	Disclosure	21
	3.41	No Rating	21
	3.42	Entire Agreement	21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE NOTE ISSUER			22
	4.1	Issuance of Notes	22
	4.2	Authorization of Securities Documents	22
	4.3	No Conflicts	22
	4.4	Consents	23
	4.5	Securities Act Exemption; No General Solicitation	23
	4.6	No Integrated Offering	23
	4.7	Placement Agent	23
	4.8	Exemption from Investment Company Act; U.S. Real Property Holding Corporation Status	24
	4.9	Entire Agreement	24
ARTICLE V COVENANTS AND ACKNOWLEDGMENTS OF THE PARENT AND THE NOTE ISSUER			24
	5.1	Form D	24
	5.2	Blue Sky Laws	24
	5.3	Reservation of Shares	24
	5.4	PORTAL	24
	5.5	No Integration Actions	25
	5.6	General Solicitation	25
	5.7	Investment Company Actions	25
	5.8	Use of Proceeds	25
	5.9	Fees and Expenses	25
	5.10	Disclosure of Transactions and Other Material Information	26
	5.11	Purchasers’ Trading Activity	26
	5.12	Arms’ Length Transaction	27
	5.13	Issue Price Determination	27
ARTICLE VI CLOSING CONDITIONS			27
	6.1	Conditions of the Parent and the Note Issuer to the Closing	27
	6.2	Conditions of the Purchasers to the Closing	28
ARTICLE VII INDEMNIFICATION			30
	7.1	Indemnification	30

ii

	7.2	Survival of Indemnification; Subsequent Purchasers	31
	7.3	Contribution	31
ARTICLE VIII MISCELLANEOUS			32
	8.1	Notices	32
	8.2	Successors and Assigns	32
	8.3	No Third Party Beneficiaries	32
	8.4	Survival	32
	8.5	Further Assurances	33
	8.6	Amendment and Waiver	33
	8.7	Counterparts	33
	8.8	Headings	33
	8.9	Governing Law	33
	8.10	Consent to Jurisdiction and Service of Process	33
	8.11	WAIVER OF JURY TRIAL	34
	8.12	Remedies	34
	8.13	Entire Agreement	35
	8.14	Severability	35
	8.15	Independent Nature of Purchasers’ Obligations and Rights	35

iii

PURCHASE AGREEMENT

This PURCHASE AGREEMENT (this “Agreement”), dated as of July 9, 2008 (the “Execution Date”), among GSI Group Inc., a company continued and existing under the laws of the Province of New Brunswick, Canada (the “Parent”), GSI Group Corporation, a Michigan corporation (the “Note Issuer”) and a wholly-owned subsidiary of the Parent, and the Purchasers set forth on the signature pages hereto (each, a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of July 9, 2008 (the “Merger Agreement”), by and among the Parent, Eagle Acquisition Corporation, a Delaware corporation (“EAC”) and a wholly-owned subsidiary of the Note Issuer, and Excel Technology, Inc., a Delaware corporation (the “Target”) (the “Merger Agreement”), pursuant to which (1) EAC intends to commence a tender offer (the “Offer”) to acquire all outstanding shares of common stock, par value $0.001 per share of Target (the “Target Shares”) at the price set forth in the Merger Agreement, subject to adjustment as described therein (the “Offer Price”), and, if a majority, on a fully diluted basis, of the Target Shares then outstanding are tendered and not withdrawn pursuant to the Offer at the expiration thereof (the “Initial Tendered Target Shares”) and the other conditions to the Offer set forth on Exhibit B to the Merger Agreement are satisfied or waived at such expiration, accept for payment (the “Acceptance”) and promptly pay for all of the Initial Tendered Target Shares with available cash and all of the net proceeds of the sale of the Securities (as defined below) to the Purchasers pursuant to this Agreement (the “Offering”), (2) to the extent that the Initial Tendered Target Shares, plus any Target Shares otherwise acquired by EAC or the Parent, constitute less than 90% of the Target Shares then outstanding, EAC may commence a subsequent offering period to purchase the remaining Target Shares at the Offer Price (any such offer, a “Subsequent Offer”), and accept for payment and pay for all of the Target Shares that are tendered and not withdrawn pursuant to any such Subsequent Offer, as it may be extended, as such Target Shares are tendered with a portion of the net proceeds of this Offering, and (3) to the extent that any of the Target Shares are acquired by EAC or the Parent pursuant to the Offer or any Subsequent Offers a merger of EAC with and into Target would be consummated in which the holders of any Target Shares not tendered in the Offer or any Subsequent Offer or otherwise acquired by EAC or the Parent would have the right to receive the Offer Price for each such Target Share (the “Merger”);

WHEREAS, upon the terms and conditions stated in this Agreement, (1) the Parent intends to issue and sell Warrants (as defined below) to the Purchasers and loan the net proceeds thereof to the Note Issuer, and (2) the Note Issuer intends to issue and sell Notes (as defined below) to the Purchasers and contribute the net proceeds of the sale of such Notes and the Parent’s sale of the Warrants to EAC in order that EAC may use such proceeds to acquire the Target Shares in connection with the proposed Offer, any Subsequent Offer and the Merger;

WHEREAS, (1) the Note Issuer has authorized the issuance of $210,000,000 aggregate principal amount of 11.0% Senior Notes due 2013 (the “Notes”), (2) each of the Parent and EAC have authorized their respective full and unconditional guarantee of the full and punctual payment of the interest and principal payments on the Notes (the “Initial Guarantees” and together with the Notes and the Warrants, the “Securities”), and (3) the Notes and the Initial

Guarantees are to be governed pursuant to the terms of an indenture, to be dated as of the Closing Date (as defined below), by and among the Note Issuer, the Parent, EAC and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), in substantially the form attached hereto as Exhibit A (the “Indenture”);

WHEREAS, the Parent has authorized the issuance of warrants (the “Warrants”) to purchase the common shares, no par value, of the Parent (the “Common Shares”) pursuant to and by the provisions of a Warrant Agreement, to be dated as of the Closing Date, by and between the Parent and the Purchasers, in substantially the form attached hereto as Exhibit B (the “Warrant Agreement”). Each Warrant (i) entitles the holder to purchase a number of Common Shares produced by the calculation set forth in Section 1.2 hereof, subject to certain adjustments set forth in the Warrant Agreement (all Common Shares issuable upon exercise of the Warrants, the “Warrant Shares”) for $0.01 per Common Share, subject to certain adjustments set forth in the Warrant Agreement, (ii) is subject to automatic exercise, on a cashless basis, on the date that the Shelf Registration Statement (as defined below) is declared effective, and (iii) expires at 5:00 p.m., New York City time on the fifth anniversary of the Closing Date.

WHEREAS, the Parent and the Purchasers intend to enter into a Registration Rights Agreement on the Closing Date, in substantially the form attached hereto as Exhibit C (the “Registration Rights Agreement” and together with this Agreement, the Indenture, the Notes, the Warrant Agreement and the Warrants, collectively the “Securities Documents”), pursuant to which the Parent will agree to (1) file with United States Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (the “Shelf Registration Statement”) providing for resales under the Securities Act of 1933, as amended (the “Securities Act”) of the Warrant Shares elected to be included in the Shelf Registration Statement, and (2) use its reasonable best efforts to (a) cause the Shelf Registration Statement to be declared effective by the time set forth in the Registration Rights Agreement, and (b) maintain the effectiveness of the Shelf Registration Statement for the time period set forth the Registration Rights Agreement;

WHEREAS, upon the terms and conditions stated in this Agreement, (1) the Note Issuer wishes to sell to the Purchasers an aggregate principal amount of Notes equal to $210,000,000, and (2) the Parent wishes to sell to the Purchasers an aggregate of 210,000 Warrants;

WHEREAS, upon the terms and conditions stated in this Agreement, each Purchaser wishes to, severally but not jointly, purchase (1) the principal amount of Notes set forth opposite such Purchaser’s name in column (C) on Schedule I hereto, and (2) the number of Warrants set forth opposite such Purchaser’s name in column (D) on Schedule I hereto;

WHEREAS, the Parent, the Note Issuer and each Purchaser are each executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act and Rule 506 of Regulation D (“Regulation D”) as promulgated by the Commission under the Securities Act.

2

NOW, THEREFORE, the Parent, the Note Issuer and each Purchaser hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF SECURITIES; WARRANT RATIO; TERMINATION FEE

1.1 Closing In reliance upon the Purchasers’ several representations, warranties and acknowledgements made in Article II hereof and subject to the satisfaction (or waiver) of the conditions set forth in Article VI hereof, (i) the Note Issuer agrees to issue and sell to each Purchaser, and each Purchaser severally, but not jointly, agrees to purchase from the Note Issuer the principal amount of Notes set forth opposite such Purchaser’s name in column (C) on Schedule I hereto (each, the “Purchaser’s Note Amount”), and (ii) the Parent agrees to issue and sell to each Purchaser, and each Purchaser severally, but not jointly, agrees to purchase from the Parent a number of Warrants equal to (x) the Purchaser’s Note Amount, divided by (y) 1,000, which number of Warrants is set forth opposite such Purchaser’s name in column (D) on Schedule I hereto (together, the “Closing”).

(b) Each Purchaser hereby agrees to pay $1,000 in exchange for (x) each $1,000 principal amount of Notes to be purchased by such Purchaser on the Closing Date, plus (y) each Warrant to be purchased by such Purchaser on the Closing Date.

(c) The Closing shall occur upon the date and time of the Acceptance (such date, the “Closing Date”), at which time each of the conditions set forth in Article VI hereof shall have been satisfied or waived by the applicable party hereto. The Closing shall occur at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York.

(d) On the Closing Date, each Purchaser shall pay, by wire transfer of immediately available funds in accordance with the Parent and the Note Issuer’s joint written wire instructions, an amount equal to the principal amount of Notes set forth opposite such Purchaser’s name in column (C) on Schedule I hereto in exchange for (x) the aggregate principal amount of Notes to be purchased by such Purchaser on the Closing Date, plus (y) the total number of Warrants to be purchased by such Purchaser on the Closing Date.

(e) The Notes to be issued and sold to the Purchasers on the Closing Date will be delivered to the Purchasers, or the Trustee as custodian for the Purchasers through the facilities of The Depository Trust Company (“DTC”), against payment by or on behalf of the Purchasers of the purchase price therefor by wire transfer in immediately available funds, by causing DTC to credit the applicable Notes to the accounts of the Purchasers through the facilities of DTC. Such Notes will be evidenced by one or more global securities in definitive form (the “Global Notes”) or by additional definitive securities and will be registered, in the case of the Global Notes, in the name of Cede & Co. as nominee of DTC, and in the other cases, in such names and in such denominations as the Purchasers shall request prior to 9:30 a.m., New York City time, on the Business Day (as defined below) preceding the Closing Date. Such Notes shall be made available to one counsel on behalf of the Purchasers for inspection and packaging not later than 9:30 a.m., New York City time, on the Business Day next preceding the Closing Date. For purposes of this Agreement, a “Business Day” means any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York.

3

(f) The Warrants to be issued and sold to the Purchasers on the Closing Date will be delivered to the Purchasers against payment by or on behalf of the Purchasers of the purchase price therefor by wire transfer in immediately available funds. Such Warrants will be evidenced by one or more securities in definitive form and will be registered in such names and in such denominations as the Purchasers shall request prior to 9:30 a.m., New York City time, on the second Business Day preceding the Closing Date. The Warrants shall be made available to one counsel on behalf of the Purchasers for inspection and packaging not later than 6:00 a.m., New York City time, on the Business Day next preceding the Closing Date.

1.2 Warrant Ratio

The parties hereto agree that each Warrant shall be initially exercisable for a number of Common Shares that is the result of dividing (x) $150 by (y) the lesser of (1) the closing bid price of Common Shares on the Trading Day (as defined below) immediately preceding the Parent’s issuance of a press release announcing the execution of the Merger Agreement (the “Announcement Date”), and (2) the Volume Weighted Average Price (as defined below); provided, however, that if the product of (x) the number of Common Shares resulting from such calculation, and (y) 210,000 exceeds 19.9% of the number of Common Shares outstanding on the Closing Date (the “Common Share Limit”), then each Warrant shall initially be exercisable for a number of Common Shares equal to (x) the Common Share Limit divided by (y) 210,000. For purposes of this Agreement, (i) “Principal Market” means The NASDAQ Stock Market LLC, (ii) “Trading Day” means a day on which securities listed on the Principal Market may be traded, (iii) “Volume Weighted Average Price” means the arithmetic average of the Weighted Average Price for each of the ten (10) Trading Days ending on the Trading Day immediately preceding the Closing Date, and (iv) “Weighted Average Price” means the dollar volume-weighted average price for the Common Shares on the Principal Market during the period beginning at 9:30:01 a.m., New York City time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York City time (or such other time as the Principal Market publicly announces is the official close of trading) as reported by Bloomberg through its “Volume at Price” functions.

1.3 Termination; Termination Fee This Agreement shall be terminated if the Closing shall not have occurred within 120 days following the Execution Date (the “Termination Date”); provided, however, that if the Merger Agreement has been terminated in accordance with its terms (the “Merger Termination”) prior to the Termination Date, then this Agreement shall be terminated on the Business Day following the effective date of the Merger Termination (the “Early Termination Date”). Paragraph (c) of this Section 1.3, Section 5.9 and Article VIII shall survive the termination of this Agreement on the Termination Date pursuant to this paragraph (a) of this Section 1.3. Paragraphs (b) and (c) of this Section 1.3, Section 5.9 and Article VIII shall survive the termination of this Agreement on the Early Termination Date pursuant to this paragraph (a) of this Section 1.3.

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(b) (i) Until the Termination Date, each of the Parent and the Note Issuer agrees to not solicit, enter into substantive discussion regarding, or enter into any agreements or non-binding agreements of understanding or intent with other parties regarding any other financing for which the use of the proceeds is substantially the use set forth in Section 5.8 hereof or which is intended as a substitute for the financing provided by the Purchasers to the Parent and the Note Issuer hereunder or to consummate the Offer or the Merger without consummating the sale of the Securities hereunder; provided, however, that (A) if any Purchaser (a “Defaulting Purchaser”) defaults on its obligation to purchase the amount of Securities set forth opposite its name on Schedule I hereto pursuant to paragraph (d) of Section 1.1 hereof (the “Default Securities”), the Parent and the Note Issuer may solicit and enter into an agreement with any of the nondefaulting Purchasers or any other Persons that is permitted by, but subject to, the terms and conditions set forth in clause (ii) of this paragraph (b), and (B) if the Merger Agreement is terminated prior to the Termination Date, the Parent and the Note Issuer may solicit and enter into an agreement with any of the Purchasers or any other Persons that is permitted by, but subject to, the terms and conditions set forth in clause (iii) of this paragraph (b).

(ii) Until the Termination Date, the Parent and the Note Issuer (A) agree to offer each Purchaser other than a Defaulting Purchaser (an “Eligible Purchaser”) the right, exercisable solely at each such Purchaser’s option, to purchase any or all of the Default Securities (the “Default Purchase Right”) before offering the Default Purchase Right to any other Person (a “Third Party Purchaser”), and (B) if any Eligible Purchaser elects not to exercise its Default Purchase Right (a “Declining Purchaser”), the Parent and the Note Issuer shall not offer the Default Purchase Right to any other Eligible Purchaser or any Third Party Purchaser on terms and conditions that are more favorable to such Eligible Purchaser or Third Party Purchaser than the terms and conditions initially presented to the Declining Purchaser without offering the same to the Declining Purchaser.

(iii) If the Merger Agreement is terminated and, prior to the Termination Date, the Parent or any of its affiliates propose to enter into transactions substantially similar to or intended as a substitute for the transactions contemplated by the Merger Agreement (a “Substitute Merger”) and any of the Parent or any of its affiliates require financing in order to consummate such Substitute Merger (the “Substitute Financing”), then, until the Termination Date, the Parent and the Note Issuer agree not to consummate such Substitute Merger without (A) offering each of the Purchasers the right, exercisable solely at each Purchaser’s option, to provide the Substitute Financing (the “Substitute Financing Right”) before offering the Substitute Financing Right to any other Person (a “Third Party Lender”), and (B) if any Purchaser elects not to provide the Substitute Financing (a “Declining Lender”), the Parent and the Note Issuer shall not offer the Substitute Financing Right to any other Purchaser or any Third Party Lender on terms and conditions that are more favorable to such Purchaser or Third Party Lender than the terms and conditions initially presented to the Declining Lender without offering the same to the Declining Lender.

(c) If the Closing has not occurred and this Agreement is terminated in accordance with paragraph (a) of this Section 1.3, the Parent and the Note Issuer agree, jointly and severally, to pay each Purchaser an amount in cash equal to the product of (x) the principal amount of Notes set forth opposite such Purchaser’s name in column (C) on

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Schedule I hereto, and (y) 2.0%, within five Business Days of such termination (the “Termination Fee”); provided, however, that no Termination Fee shall be payable to any Purchaser that defaults on its obligation to purchase the Securities as set forth in paragraph (d) of Section 1.1 hereof or commits any other material breach of this Agreement.

ARTICLE II

REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS OF THE PURCHASERS

2.1 Representations and Warranties

Each Purchaser represents and warrants, severally and not jointly, that:

(a) it is an “accredited investor” as defined in Regulation D promulgated under the Securities Act;

(b) it is a “qualified institutional buyer” as defined in Rule 144A promulgated under the Securities Act;

(c) it is acquiring the Securities and, upon exercise of the Warrants, it will acquire the Warrant Shares (other than those Warrant Shares surrendered pursuant to a cashless exercise of Warrants) for its own account, for investment purposes only and not with a view to any public sale or distribution thereof within the meaning of the Securities Act;

(d) it has made an independent decision to buy the Securities, based on the information available to it, which it has determined is adequate for that purpose, and it has not relied on any information (in any form, whether written or oral, other than the representations, warranties and acknowledgements of the Parent and the Note Issuer set forth in this Agreement) furnished by or on behalf of the Parent, the Note Issuer, any natural person, limited liability company, partnership, joint venture, corporation, trust, unincorporated organization, or government or any department or agency thereof (each, a “Person”) acting on behalf of the Parent or the Note Issuer or any other Purchaser in making that decision;

(e) to its knowledge, except for the transactions contemplated by the Merger Agreement and the Securities Documents, none of the Parent, the Note Issuer, any Person acting on behalf of the Parent or the Note Issuer or any other Purchaser has disclosed any material, non-public information regarding the Parent, any of its Subsidiaries (as defined below) or affiliates or the Target to the Purchaser (other than the Requesting Purchasers listed on Schedule II hereto); such Purchaser (other than the Requesting Purchasers listed on Schedule II hereto) has requested that such information not be disclosed to it;

(f) it has not given any investment advice or rendered any opinion to the Parent, the Note Issuer, any Person acting on behalf of the Parent, the Note Issuer or any other Purchaser as to whether the sale or purchase of the Securities is prudent or suitable, and it is not relying on any representation or warranty by the Parent or the Note Issuer

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(other than the representations, warranties and acknowledgements of the Parent and the Note Issuer set forth in this Agreement), or any Person acting on behalf of the Parent, the Note Issuer or any other Purchaser;

(g) it is a sophisticated investor with respect to the Securities, has adequate information concerning the Securities;

(h) by reason of its business or financial experience, it is capable of evaluating the merits and risks of the purchase of the Securities and the other transactions contemplated by the Securities Documents;

(i) it did not employ any broker or finder in connection with the transactions contemplated by this Agreement or the other Securities Documents;

(j) it is a resident of that jurisdiction specified below its address on Schedule I hereto;

(k) it is not a Canadian resident or acting for the account or benefit of a Canadian resident; the Securities were not offered or sold to it in Canada; and it was, at the time of agreeing to acquire the Securities, and is, outside Canada;

(l) this Agreement has been duly and validly authorized, executed and delivered on behalf of such Purchaser and constitutes the legal, valid and binding agreement of such Purchaser enforceable against such Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to, or affecting creditors’ rights generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), public policy, applicable law relating to indemnification and contribution and by an implied covenant of good faith and fair dealing;

(m) the Warrant Agreement and the Registration Rights Agreement have been duly and validly authorized and, on the Closing Date, will be duly and validly executed and delivered on behalf of such Purchaser, and the Warrant Agreement and the Registration Rights Agreement shall constitute the legal, valid and binding agreements of such Purchaser enforceable against such Purchaser in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to, or affecting creditors’ rights generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), public policy, applicable law relating to indemnification and contribution and by an implied covenant of good faith and fair dealing; and

(n) the execution, delivery and performance by such Purchaser of this Agreement and the Registration Rights Agreement and the consummation by such Purchaser of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Purchaser, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation

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of, any agreement, indenture or instrument to which such Purchaser is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Purchaser, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Purchaser to perform its obligations hereunder.

2.2 Acknowledgements and Agreements Each Purchaser acknowledges, severally and not jointly, that:

(i) neither the Note Issuer’s issuance and sale of the Notes to the Purchasers nor the Parent’s issuance of the Warrants or the Warrant Shares to the Purchasers (or any subsequent transferees of the Warrants) will be (A) registered under the Securities Act, or (B) qualified for sale under the securities laws of any province or territory of Canada;

(ii) the Securities and the Warrant Shares will be offered and sold to it in reliance upon specific exemptions from the registration requirements of Securities Act and U.S. state securities laws, and that the Parent and the Note Issuer are relying on the truth and accuracy of the representations, warranties and acknowledgements of such Purchaser set forth in this Article II in order to determine the availability of such exemptions and its eligibility to acquire the Securities and the Warrant Shares;

(iii) upon original issuance thereof, and until such time as the same is no longer required pursuant to (A) the applicable requirements of the Securities Act or (B) the Indenture, with respect to the Notes, and the Warrant Agreement, with respect to the Warrants and Warrant Shares, the certificates representing the Securities and all securities issued in exchange therefor, upon exercise thereof or in substitution thereof (including the Warrant Shares) shall bear legends stating that such securities have not been registered under the Securities Act or applicable state securities laws and that they may not be offered for sale, sold, transferred or assigned in the absence of an effective registration statement for the securities under the Securities Act or a valid exemption from the registration requirements of Securities Act.

(iv) if any Purchaser desires to sell or otherwise dispose of all or any part of the Securities or the Warrant Shares (other than pursuant to an effective registration statement under the Securities Act), it will deliver to the Parent or the Note Issuer, as applicable, (i) with reasonable assurance that such Securities or the Warrant Shares can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act, (or a successor rule thereto) (collectively, “Rule 144”) or (ii) an opinion of counsel, reasonably satisfactory in form and substance to the Parent or the Note Issuer, as applicable, that an exemption from registration under the Securities Act is available; and

(v) the Warrant Shares will be entitled to the benefits of the Registration Rights Agreement and may be sold pursuant to the Resale Registration Statement.

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(b) Each Purchaser acknowledges and agrees, severally and not jointly, that (i) for a period ending 90 days after the date of issuance of the Securities, it will not resell any of the Securities or Warrant Shares in Canada or to anyone known to it to be a Canadian resident, and (ii) it will not resell any of the Securities or Warrant Shares in Canada or to anyone known to it to be a Canadian resident unless permitted by and in accordance with applicable securities laws of the provinces and territories of Canada.

(c) Each Purchaser acknowledges and agrees, severally and not jointly, that (i) certain business plans, financial projections and details of certain operations and related matters of the Parent, its Subsidiaries and the Target have not been made known to it, and that the foregoing may constitute material, nonpublic information relating to the Parent, its Subsidiaries or the Target, (ii) it has not had access to the information customarily made available to an underwriter of an offering of securities by the Parent, its Subsidiaries or the Target other than publicly available information and the Merger Agreement and the transactions contemplated thereby, (iii) neither the Parent nor the Note Issuer will be required to provide it with any pro forma financial statements reflecting the Parent and the Target’s combined results of operations, and (iv) none of the Parent, the Note Issuer or any of their respective affiliates shall have any liability whatsoever with respect to the nondisclosure of the information described in the preceding clauses (i), (ii) or (iii), whether before or after the date of this Agreement.

(d) Each Purchaser acknowledges and agrees, severally and not jointly, that the issue price of the Notes and the Warrants for purposes of section 1273 of the Internal Revenue Code of 1986, as amended (including the regulations and published interpretations thereunder, the “Code”) and section 1.1273-2(h)(2) of the Treasury Regulations shall be equal to the amount determined by the Parent and the Note Issuer in accordance with Section 5.13. Each Purchaser acknowledges and agrees, severally and not jointly, to be bound by such determination solely for all Federal, state, local or foreign income tax and other purposes, and shall not take any position inconsistent therewith unless required by applicable law.

(e) Each Purchaser acknowledges and agrees, severally and not jointly, that it has neither sought nor received any information from the Parent or the Note Issuer with respect to the potential consequences of an investment in the Securities pursuant to the taxation laws and regulations of the United States, Canada or any other applicable jurisdiction or any subdivision of the foregoing jurisdictions; and that none of the Parent, the Note Issuer or their respective affiliates shall have any responsibility whatsoever with respect to the nondisclosure of such information to the Purchasers, whether before or after the date of this Agreement.

(f) Each Purchaser agrees, severally and not jointly, to provide written notice to the Parent and the Note Issuer of the confirmation of its commitment set forth in Section 1.1 on the Business Day preceding the Closing Date.

(g) Each Purchaser agrees, severally and not jointly, to desist from purchasing or selling, long and/or short, any securities of the Parent, or “derivative” securities based on any securities issued by the Parent during the period (i) from the

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Execution Date until the filing of the Merger/Financing Form 8-K with the Commission, and (ii) in which the Volume Weighted Average Price is determined in accordance with Section 1.3 hereof (together, the “Restricted Periods”). In addition, the Requesting Purchasers listed on Schedule II hereto agree to desist from engaging any transactions in any of the Parent’s securities, except in accordance with applicable federal and state securities and other applicable laws.

(h) The Requesting Purchasers listed on Schedule II hereto agree not to request that any information furnished by the Parent, any of its Subsidiaries or any Person acting on their behalf to the Purchasers (other than the Merger Agreement and the Securities Documents) be filed with the Commission or otherwise made publicly available.

(i) Subject to the satisfaction of each of the conditions set forth in Section 6.2 on or before the Closing Date, each Purchaser agrees, severally and not jointly, to execute the Securities Documents to which it is a party and deliver the same to the Parent and the Note Issuer.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PARENT

The Parent represents and warrants that:

3.1 Exchange Act Reports During the one (1) year prior to the date hereof, the Parent has timely filed all reports required to be filed by it with the Commission pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “Exchange Act Reports”). The Exchange Act Reports when filed with the Commission together, where applicable, with any amendments thereto, conformed in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission thereunder, and none of such reports when filed with the Commission contained an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

3.2 Financial Statements As of their respective dates, the financial statements of the Parent included in the Exchange Act Reports complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with accounting principles generally accepted in the United States, consistently applied, during the periods involved (except (a) as may be otherwise indicated in such financial statements or the notes thereto, or (b) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial condition of the Parent as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

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3.3 Absence of Certain Changes There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Parent and its Subsidiaries, taken as a whole, from that set forth in the most recent Exchange Act Reports.

3.4 Organization and Qualification The Parent and each of its Subsidiaries has been duly organized and is validly existing and in good standing as a corporation or other business entity under the laws of its jurisdiction of organization and is duly qualified to do business and in good standing as a foreign corporation or other business entity in each jurisdiction in which its ownership or lease of property or the conduct of its businesses requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the condition (financial or otherwise), operations, results of operations, shareholders’ equity, properties, assets or business of the Parent and its Subsidiaries individually or taken as a whole or on the authority or ability of the Parent or the Note Issuer or any of the guarantors of the Notes to perform their respective obligations under the Securities Documents (a “Material Adverse Effect”). The Parent and each of its Subsidiaries have all power and authority necessary to own or hold its properties and to conduct the businesses in which it is engaged. The Parent has no Subsidiaries except as set forth in Schedule 3.4 hereto. For purposes of this Agreement, “Subsidiaries” means any corporation, partnership, limited liability company, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, owned, controlled or held, or (b) that is, at the time any determination is made, otherwise controlled, by the Parent or one or more subsidiaries of the Parent. For the avoidance of doubt, neither the Target nor any of its subsidiaries shall constitute a Subsidiary of the Parent as of the Execution Date or prior to or as of the Closing Date.

3.5 Equity Capitalization As of the Execution Date, the authorized share capital of the Parent consists of an unlimited number of Common Shares. As of the Execution Date, (i) 41,607,460 Common Shares are issued and outstanding, (ii) approximately 3,000,000 Common Shares are reserved for issuance pursuant to the Parent’s 2006 Equity Incentive Plan (the “Equity Incentive Plan”), and (iii) no Common Shares are reserved for issuance pursuant to securities other than the Equity Incentive Plan and the Warrants) exercisable or exchangeable for, or convertible into, Common Shares. All of the issued shares of the Parent’s authorized share capital have been duly authorized and validly issued and are fully paid and non-assessable and were issued not in violation of any preemptive right, resale right, right of first refusal or similar right. All of the Parent’s options, warrants and other rights to purchase or exchange any securities for the Parent’s shares have been duly authorized and validly issued. All of the issued shares of each Subsidiary has been duly authorized and validly issued, are fully paid and non-assessable and are owned directly or indirectly by the Parent, free and clear of all liens, encumbrances, equities or claims, except for such liens, encumbrances, equities or claims as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as disclosed in the Exchange Act Reports or the Parent’s Definitive Proxy Statement filed with the Commission on April 14, 2008 (the “2008 Proxy”) or pursuant to the

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Equity Incentive Plan or the Securities Documents, (i) none of the Common Shares are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Parent; (ii) there are no outstanding options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of the Parent or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Parent or any of its Subsidiaries is or may become bound to issue additional Common Shares of the Parent or any of its Subsidiaries or options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of the Parent or any of its Subsidiaries; (iii) there are no agreements or arrangements under which the Parent or any of its Subsidiaries is obligated to register the sale of any of their securities under the Securities Act; (v) there are no outstanding securities or instruments of the Parent or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Parent or any of its Subsidiaries is or may become bound to redeem a security of the Parent or any of its Subsidiaries; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; and (vii) the Parent does not have any share appreciation rights or “phantom share” plans or agreements or any similar plan or agreement. True, correct and complete copies of the Parent’s Certificate and Articles of Continuance, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), and the Parent’s Bylaw No. 1, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into, or exercisable or exchangeable for, Common Shares and the material rights of the holders thereof in respect thereto have been filed with the Commission.

3.6 Indebtedness and Other Contracts Except as disclosed in Schedule 3.6 hereto, neither the Parent nor any of its Subsidiaries, has any outstanding Indebtedness (as defined in the Indenture). The Exchange Act Reports include as exhibits all contracts or other documents required to be filed as exhibits thereto pursuant to Item 601(b) of Regulation S-K of the General Rules and Regulations of the Commission. Neither the Parent nor any of its Subsidiaries is in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect. Other than the Indenture and the Notes, neither the Parent nor any of its Subsidiaries is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Parent’s officers, has or would reasonably be expected to have, a Material Adverse Effect.

3.7 Solvency

As of the date hereof and after giving effect to the sale of the Securities (but prior to the consummation of the Offer and the Merger), the Parent, on a consolidated basis, is not and will not, be Insolvent (as defined below). For purposes of this Agreement, “Insolvent” means, with respect to any Person (i) the present fair saleable value of such Person’s assets is less than the amount required to pay such Person’s total Indebtedness, (ii) such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature, or (iv) such Person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.

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3.8 Authorization of Securities Documents and Merger Agreement The Parent has all requisite corporate power and authority to execute, deliver and perform its obligations under the Indenture, the Warrant Agreement, the Warrants, the Registration Rights Agreement, this Agreement and the Merger Agreement. The Indenture, the Warrant Agreement, the Warrants, the Registration Rights Agreement, this Agreement and the Merger Agreement have been duly and validly authorized by the Parent, and upon their execution and delivery and (assuming due authorization, execution and delivery by the Trustee, the Note Issuer and EAC of the Indenture, by the Purchasers of this Agreement, Warrant Agreement and the Registration Rights Agreement and by EAC and the Target of the Merger Agreement) will constitute the valid and binding agreements of the Parent, enforceable against the Parent in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to, or affecting creditors’ rights generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), public policy, applicable law relating to indemnification and contribution and by an implied covenant of good faith and fair dealing.

3.9 Issuance of Guarantee The Parent has all requisite corporate power and authority to execute, issue and perform its obligations under the Guarantee included in the Indenture. The Guarantee been duly authorized by the Parent and, when the Indenture is duly executed by the Parent and the other parties thereto in accordance with its terms, the Guarantee will be validly issued, free from all taxes, liens, and charges with respect to the issue thereof, and will constitute a valid and binding obligation of the Parent, enforceable against the Parent in accordance with the terms of the Indenture, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to, or affecting creditors’ rights generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), public policy, applicable law relating to indemnification and contribution and by an implied covenant of good faith and fair dealing.

3.10 Issuance of Warrants The Parent has all requisite corporate power and authority to execute, issue, sell and perform its obligations under the Warrants. The Warrants have been duly authorized by the Parent and, when duly executed by the Parent in accordance with the terms of the Warrant Agreement, upon delivery to the Purchasers against payment therefor in accordance with the terms hereof, will be validly issued, free from all taxes, liens, and charges with respect to the issue thereof, and will constitute valid and binding obligations of the Parent entitled to the benefits of the Warrant Agreement, enforceable against the Parent in accordance with their terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to, or affecting creditors’ rights generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), public policy, applicable law relating to indemnification and contribution and by an implied covenant of good faith and fair dealing.

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3.11 Issuance of Warrant Shares The Parent has all the requisite corporate power and authority to reserve for issuance and to issue and deliver the Warrant Shares issuable upon exercise of the Warrants. The Warrant Shares have been duly and validly authorized by the Parent and, when issued upon exercise of the Warrants in accordance with the terms of the Warrant Agreement, will be free from all taxes, liens, and charges with respect to the issue thereof, and validly issued, fully paid and non-assessable, and the issuance of the Warrant Shares will not be subject to any preemptive or similar rights.

3.12 Transfer Taxes On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Securities to be sold to each Purchaser hereunder, if any, will be, or will have been, fully paid or provided for by the Parent or the Note Issuer.

3.13 Form S-3 The Parent is eligible to register the Warrant Shares for resale by the Purchasers using Form S-3 promulgated under the Securities Act. The Parent is not, and has never been, an issuer identified in Rule 144(i)(1) under the Securities Act.

3.14 No Conflicts The issue and sale of the Securities, the issuance and delivery of any Warrant Shares, the execution, delivery and performance by the Parent of the Securities Documents, the application of the proceeds from the sale of the Securities, and the consummation of the transactions contemplated hereby and thereby, will not (a) conflict with or result in a breach or violation of any of the terms or provisions of, impose any lien, charge or encumbrance upon any property or assets of the Parent or its Subsidiaries, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, license, lease or other agreement or instrument to which the Parent or any of its Subsidiaries is a party or by which the Parent or any of its Subsidiaries is bound or to which any of the property or assets of the Parent or any of its Subsidiaries is subject, (b) result in any violation of the provisions of the charter or by-laws or similar organizational document of the Parent or any of its Subsidiaries or (c) result in any violation of any statute or any judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Parent or any of its Subsidiaries or any of their properties or assets, including federal and state securities laws and regulations and the applicable rules and regulations of the Principal Market, except, with respect to clauses (a) and (c), such conflicts, breaches, defaults, violations or liens that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

3.15 Consents No consent, approval, authorization or order of, or filing, registration or qualification with any court or governmental agency or body having jurisdiction over the Parent or any of its Subsidiaries (including the Principal Market) is required for the execution, delivery, issuance, sale and performance of the Securities, the issuance and delivery of the Warrant Shares, the execution, delivery and performance by the Parent of the Securities Documents, the application of the proceeds from the sale of the Securities as described in Section 5.8, except for (a) the filing by the Parent with the Commission of the Resale Registration Statement, (b) the filing by the Parent with the Commission of a Form D (pursuant to Regulation D under the Securities Act) with respect to the sale of the Securities to the Purchasers, and (c) such consents, approvals, authorizations, orders, filings, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Purchasers. The Parent is unaware of any facts

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or circumstances which might prevent the Parent from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence. The Parent is not in violation of the applicable requirements of the Principal Market and has no knowledge of any facts that could reasonably be expected to lead to delisting or suspension of the Common Shares in the foreseeable future.

3.16 Title The Parent and each of its Subsidiaries has good and marketable title to all real and personal property owned by them, in each case free and clear of all liens, encumbrances and defects, except such as do not materially affect the value of such property or interfere with the use made and proposed to be made of such property by the Parent and any of its Subsidiaries; and all assets held under lease by the Parent or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases, with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Parent and its Subsidiaries.

3.17 Insurance The Parent and each of its Subsidiaries carry, or are covered by, insurance from insurers of recognized financial responsibility in such amounts and covering such risks as is reasonably adequate for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries. All policies of insurance of the Parent and its Subsidiaries are in full force and effect; the Parent and its Subsidiaries are in compliance with the terms of such policies in all material respects; and neither the Parent nor any of its Subsidiaries has received notice from any insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made to continue such insurance. Neither the Parent nor any such Subsidiary has been refused any insurance coverage sought or applied for. Neither the Parent nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

3.18 Regulatory Permits The Parent and each of its Subsidiaries have such permits, licenses, patents, franchises, certificates of need and other approvals or authorizations of governmental or regulatory authorities (“Permits”) as are necessary under applicable law to own their properties and conduct their businesses in the manner described in the Exchange Act Reports, except for any of the foregoing that would not reasonably be expected to have a Material Adverse Effect; each of the Parent and its Subsidiaries has fulfilled and performed all of its obligations with respect to the Permits in all material respects, and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other impairment of the rights of the holder or any such Permits, except for any of the foregoing that would not reasonably be expected to have a Material Adverse Effect.

3.19 Legal Proceedings Except as set forth in Schedule 3.19 hereto, there are no actions, suits, proceedings, inquiry or investigation before or by the Principal Market, any court, public board, government agency, self-regulatory organization or body pending against or affecting the Parent or any of its Subsidiaries, any property or assets of the Parent or any of its Subsidiaries or any of the Parent’s or its Subsidiaries’ officers or directors in their capacities as such, whether of a civil or criminal nature or otherwise that would, individually or in the

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aggregate, reasonably be expected to have a Material Adverse Effect; and to the Parent’s knowledge, no such proceedings are threatened or contemplated by any governmental authority or other Person, except such proceedings that would not reasonably be expected to have a Material Adverse Effect.

3.20 Intellectual Property Rights The Parent and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, original works of authorship, trade secrets and other intellectual property rights and all applications related thereto (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted, except where the failure to have such Intellectual Property Rights would not reasonably be expected to have a Material Adverse Effect. None of the Parent’s or its Subsidiaries’ Intellectual Property Rights have expired, terminated or been abandoned, or are expected to expire, terminate or be abandoned, within three years from the date of this Agreement, except where such expiration, termination or abandonment would not reasonably be expected to have a Material Adverse Effect. The Parent does not have any knowledge of any infringement by the Parent or any of its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the knowledge of the Parent, being threatened, against the Parent or any of its Subsidiaries regarding its Intellectual Property Rights. The Parent is unaware of any facts or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Parent and its Subsidiaries have taken reasonable measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.

3.21 Environmental Laws The Parent and each of its Subsidiaries (a) are, and at all times prior were, in compliance with any and all applicable Canadian and U.S. federal, state, local and foreign laws, regulations, ordinances, rules, orders, judgments, decrees, permits or other legal requirements relating to the protection of human health and safety, the environment, natural resources or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), which compliance includes obtaining, maintaining and complying with all permits and authorizations and approvals required by Environmental Laws to conduct their respective businesses and (b) have not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except in the case of clause (a) or (b) where such non-compliance with or liability under Environmental Laws would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and neither the Parent nor any of its Subsidiaries has been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or any other similar Environmental Law, except with respect to any matters that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. The Parent and each of its Subsidiaries (i) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (ii) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i) and (ii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

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3.22 Employee Relations No labor disturbance by the employees of the Parent or any of its Subsidiaries exists or, to the knowledge of the Parent and each of its Subsidiaries, is imminent that would reasonably be expected to have a Material Adverse Effect. The Parent and its Subsidiaries believe that their relations with their employees are good. Neither the Chief Executive Officer nor the Chief Financial Officer of the Parent has notified the Parent that such officer intends to leave the Parent or otherwise terminate such officer’s employment with the Parent. To the Parent’s knowledge, neither the Chief Executive Officer or the Chief Financial Officer of the Parent is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Parent or any of its Subsidiaries to any liability with respect to any of the foregoing matters.

3.23 ERISA Matters The Parent and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Parent and each of its Subsidiaries are in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ERISA”); no “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Parent or any of its Subsidiaries would have any liability; the Parent and its Subsidiaries have not incurred and do not expect to incur liability under (a) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (b) Sections 412 or 4971 of the Code; each “pension plan” for with the Parent and its Subsidiaries would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification; and the Parent and each of its Subsidiaries have not incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other than for payment of premiums in the ordinary course of business).

3.24 Taxes The Parent and each of its Subsidiaries (a) has filed all federal, state, local and foreign income and franchise tax returns and all other tax returns, reports and declarations required to be filed by any jurisdiction to which it is subject through the date hereof, subject to permitted extensions, other than as set forth on Schedule 3.24 hereto, (b) has paid all Taxes that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith, (c) has set aside on its books provision reasonably adequate for the payment of all Taxes for periods subsequent to the periods to which such returns, reports or declarations apply. No Tax deficiency has been determined adversely to the Parent or any of its Subsidiaries, nor does the Parent have any knowledge of any Tax deficiencies in any material amount or that would, in the aggregate, reasonably be expected to have a Material Adverse Effect. For purposes of this Agreement, “Tax” (and, with correlative meaning, “Taxes”) means all taxes, charges, fees, levies or other similar assessments or liabilities, including without limitation income, gross receipts, ad valorem, premium, value added, excise, real property, personal property, sales, use, services, withholding, employment, payroll and franchise taxes imposed by the United States or any state, local or foreign government, or any agency thereof, or

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other political subdivision of the United States or any such government, and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to, or incurred in connection with any Tax or any contest or dispute thereof.

3.25 Foreign Corrupt Practices Neither the Parent nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person associated with or acting on behalf of the Parent or any of its Subsidiaries, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee, except for any of the foregoing that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

3.26 OFAC Neither the Parent nor any of its Subsidiaries nor, to the knowledge of the Parent, any director, officer, agent, employee or affiliate of the Parent or any of its Subsidiaries is currently subject to any material U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Parent has not and will not lend, contribute or otherwise make available funds to any Subsidiary, joint venture partner or other Person, for the purpose of financing the activities of any Person which, to the knowledge of the Parent, was, at the time of such transaction, subject to any U.S. sanctions administered by OFAC.

3.27 Conduct of Business Neither the Parent nor any of its Subsidiaries (a) is in violation of its charter or by-laws or any certificate of designation, preferences or rights of any other outstanding series of preferred shares of the Parent (or similar organizational documents), (b) is in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant, condition or other obligation contained in any indenture, mortgage, deed of trust, loan agreement, license or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject or (c) is in violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over it or its property or assets or has failed to obtain or maintain any license, permit, certificate, franchise or other governmental authorization or permit necessary to the ownership of its property or to the conduct of its business, except in the case of clauses (b) and (c), to the extent any such conflict, breach, violation or default would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. During the two (2) years prior to the Execution Date, (i) the Common Shares have been designated for quotation on the Principal Market, (ii) trading in the Common Shares has not been suspended by the Commission or the Principal Market, and (iii) the Parent has received no communication, written or oral, from the Commission or the Principal Market regarding the suspension or delisting of the Common Shares from the Principal Market.

3.28 Accountants Ernst & Young LLP, who have certified certain financial statements of the Parent included in the Exchange Act Reports, were independent public accountants as required by the Securities Act and the rules and regulations thereunder during the periods covered by the financial statements on which they reported contained or incorporated by reference in the Exchange Act Reports.

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3.29 Books and Records The Parent and each of its Subsidiaries (a) makes and keeps accurate books and records and (b) maintains and has maintained effective internal control over financial reporting as defined in Rule 13a-15 under the Exchange Act and a system of internal accounting controls sufficient to provide reasonable assurance that (1) transactions are executed in accordance with management’s general or specific authorization, (2) transactions are recorded as necessary to permit preparation of its or their financial statements in conformity with accounting principles generally accepted in the United States and to maintain accountability for its assets and liabilities, (3) access to its assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (4) the reported accountability for its assets and liabilities is compared with existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any differences.

3.30 Internal Accounting and Disclosure Controls The Parent and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Parent has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act) that are effective in ensuring that the information required to be disclosed by the Parent in the reports that it files or submits under the Exchange Act is accumulated and communicated to management of the Parent, including the principal executive officer and principal financial officer of the Parent, as appropriate to allow timely decisions regarding required disclosure.

(b) During the twelve (12) months prior to the date hereof, (i) neither the Parent nor any of its Subsidiaries have been advised of any significant deficiency in the design or operation of internal controls that could adversely affect the ability of the Parent to record, process, summarize and report financial data, or any material weaknesses in internal controls, except for such significant deficiencies that have been remediated, and (ii) there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

3.31 Securities Act Exemption; No General Solicitation Assuming that the Purchasers’ representations and warranties in Article II are true, the purchase and sale of the Securities pursuant hereto is, and the issuance and sale of the Warrant Shares upon exercise of the Warrants in the manner contemplated by the Warrant Agreement will be, exempt from the registration requirements of the Securities Act. No form of general solicitation or general advertising within the meaning of Regulation D was used by the Parent or any of its Subsidiaries, or affiliates or representatives in connection with the offer and sale of the Securities.

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3.32 No Integrated Offering Neither the Parent nor any other Person acting on behalf of the Parent has offered, sold or issued to any Person any securities under circumstances that would require registration of any of the Securities under the Securities Act or that would be integrated with the offering of the Securities contemplated by this Agreement pursuant to the Securities Act, the rules and regulations thereunder or the interpretations thereof by the Commission. The Parent will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Securities Act), of any Securities or any substantially similar security issued by the Parent, within six months subsequent to the date on which the distribution of the Securities has been completed (as notified to the Parent by the Purchasers), is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Securities in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration provisions of the Securities Act.

3.33 Placement Agent The Parent acknowledges that it has engaged UBS Securities LLC, as placement agent in connection with the sale of the Securities (the “Agent”). Other than the Agent, neither the Parent nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the sale of the Securities.

3.34 Manipulation of Price The Parent has not, and to its knowledge no one acting on its behalf has, directly or indirectly, (a) taken, directly or indirectly, any action designed to or that has constituted or that could reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Parent in connection with or to facilitate the sale or resale of the Securities, or (b) other than actions taken by the Agent, sold, bid for, purchased, or paid or agreed to pay any compensation for soliciting purchases of, the Securities (other than the Agent).

3.35 Exemption from Investment Company Act; U.S. Real Property Holding Corporation Status Neither the Parent nor any of the Subsidiaries is, or after giving effect to the offer and sale of the Securities and the application of the proceeds therefrom will be, an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (the “Investment Company Act”). Neither the Parent nor the Note Issuer is, nor have they ever been, a U.S. real property holding corporation within the meaning of Section 897 of the Code.

3.36 Bank Holding Company Neither the Parent nor any of its Subsidiaries or Affiliates are subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”), or to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Parent nor any of its Subsidiaries or Affiliates own or control, directly or indirectly, five percent or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or any entity that is subject to the BHCA or to regulation by the Federal Reserve. Neither the Parent nor any of its Subsidiaries or Affiliates exercise a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA or to regulation by the Federal Reserve.

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3.37 Sarbanes-Oxley Act The Parent is in compliance in all material respects with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof.

3.38 Transactions with Affiliates None of the officers or directors of the Parent or any of its Subsidiaries is presently a party to any transaction with the Parent or any of its Subsidiaries that is required to be disclosed in the Exchange Act Reports pursuant to Item 404 of Regulation S-K under the General Rules and Regulations of the Commission that are not so disclosed.

3.39 Application of Takeover Protections; Rights Agreement The Parent and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation or any certificates of designations or the laws of the Province of New Brunswick, Canada which is or could become applicable to any Purchaser as a result of the transactions contemplated by this Agreement, including, without limitation, the Parent’s issuance of the Warrants and any Purchaser’s ownership of the Warrants. Except for the Parent’s Shareholders Rights Plan disclosed in the 2008 Proxy, the Parent has not adopted a stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Shares or a change in control of the Parent.

3.40 Disclosure None of the Parent, any of its Subsidiaries or any Person acting on their behalf has provided any of the Purchasers (other than the Requesting Purchasers listed on Schedule II hereto) or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information except for the Merger Agreement and the Securities Documents. Except for the Merger Agreement, the Securities Documents and the transactions contemplated thereby, no event or circumstance has occurred or information exists with respect to the Parent or any of its Subsidiaries or either of their respective businesses, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Parent but which has not been so publicly announced or disclosed.

3.41 No Rating

No securities issued or guaranteed by the Parent or the Note Issuer have been rated by any “nationally recognized statistical rating organization”, as such term is defined for purposes of Rule 436(g)(2) under the Securities Act.

3.42 Entire Agreement

Neither the Parent nor the Note Issuer has, directly or indirectly, made any agreements with any Purchasers relating to the terms or conditions of the transactions contemplated by the Securities Documents except as set forth in the Securities Documents.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE NOTE ISSUER

The Note Issuer represents and warrants that:

4.1 Issuance of Notes The Note Issuer has all requisite corporate power and authority to execute, issue, sell and perform its obligations under the Notes. The Notes have been duly authorized by Note Issuer and, when duly executed by the Note Issuer in accordance with the terms of the Indenture, assuming due authentication of the Notes by the Trustee, upon delivery to the Purchasers against payment therefor in accordance with the terms hereof, will be validly issued, free from all taxes, liens and charges with respect to the issue thereof, and will constitute valid and binding obligations of Note Issuer entitled to the benefits of the Indenture, enforceable against the Note Issuer in accordance with their terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to, or affecting creditors’ rights generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), public policy, applicable law relating to indemnification and contribution and by an implied covenant of good faith and fair dealing.

4.2 Authorization of Securities Documents The Note Issuer has all requisite corporate power and authority to execute, deliver and perform its obligations the Indenture, the Notes and this Agreement. The Indenture, the Notes and this Agreement have been duly and validly authorized by the Note Issuer, and upon their execution and delivery and (assuming due authorization, execution and delivery by the Trustee, the Parent and EAC of the Indenture, due authentication of the Notes by the Trustee and due authorization, execution and delivery by the Purchasers of this Agreement) will constitute the valid and binding agreements of the Note Issuer, enforceable against the Note Issuer in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to, or affecting creditors’ rights generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), public policy, applicable law relating to indemnification and contribution and by an implied covenant of good faith and fair dealing.

4.3 No Conflicts The issue and sale of the Notes, the execution, delivery and performance by the Note Issuer of the Indenture and this Agreement, the application of the proceeds from the sale of the Notes, and the consummation of the transactions contemplated hereby and thereby, will not (a) conflict with or result in a breach or violation of any of the terms or provisions of, impose any lien, charge or encumbrance upon any property or assets of the Note Issuer or its subsidiaries, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, license, lease or other agreement or instrument to which the Note Issuer or any of its subsidiaries is a party or by which the Note Issuer or any of its subsidiaries is bound or to which any of the property or assets of the Note Issuer or any of its subsidiaries is subject, (b) result in any violation of the provisions of the charter or by-laws or similar organizational document of the Note Issuer or any of its subsidiaries or (c) result in any violation of any statute or any judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Note Issuer or any of its subsidiaries or any of their properties or

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assets (including federal and state securities laws and regulations), except, with respect to clauses (a) and (c), such conflicts, breaches, defaults, violations or liens that, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the condition (financial or otherwise), operations, results of operations, shareholders’ equity, properties, assets or business of the Note Issuer and its subsidiaries individually or taken as a whole, or a material adverse effect on the performance by the Note Issuer of its obligations under the Indenture or this Agreement or the consummation of any of the transactions contemplated hereby or thereby.

4.4 Consents No consent, approval, authorization or order of, or filing, registration or qualification with any court or governmental agency or body having jurisdiction over the Note Issuer is required for the execution, delivery, issuance, sale and performance of the Notes, the execution, delivery and performance by the Indenture and this Agreement, the application of the proceeds from the sale of the Notes as described in Section 5.8, except for (a) the filing by the Parent with the Commission of the Resale Registration Statement, (b) the filing by the Parent with the Commission of a Form D (pursuant to Regulation D under the Securities Act) with respect to the sale of the Securities to the Purchasers, and (c) such consents, approvals, authorizations, orders, filings, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Notes by the Purchasers. The Note Issuer is unaware of any facts or circumstances which might prevent the Parent from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.

4.5 Securities Act Exemption; No General Solicitation Assuming that the Purchasers’ representations and warranties in Article II are true, the purchase and sale of the Notes pursuant hereto is exempt from the registration requirements of the Securities Act. No form of general solicitation or general advertising within the meaning of Regulation D was used by the Note Issuer or any of its subsidiaries, or affiliates or representatives in connection with the offer and sale of the Securities.

4.6 No Integrated Offering Neither the Note Issuer nor any other Person acting on behalf of the Note Issuer has offered, sold or issued to any Person any securities under circumstances that would require registration of any of the Securities under the Securities Act or that would be integrated with the offering of the Securities contemplated by this Agreement pursuant to the Securities Act, the rules and regulations thereunder or the interpretations thereof by the Commission. The Note Issuer will take reasonable precautions designed to ensure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Securities Act), of any Securities or any substantially similar security issued by the Note Issuer, within six months subsequent to the date on which the distribution of the Securities has been completed (as notified to the Note Issuer by the Purchasers), is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Securities in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration provisions of the Securities Act.

4.7 Placement Agent Other than the Agent, neither the Note Issuer nor any of its subsidiaries has engaged any placement agent or other agent in connection with the sale of the Securities.

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4.8 Exemption from Investment Company Act; U.S. Real Property Holding Corporation Status Neither the Note Issuer nor any of its subsidiaries is, or after giving effect to the offer and sale of the Securities and the application of the proceeds therefrom will be, an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act. Neither the Parent nor the Note Issuer is, nor have they ever been, a U.S. real property holding corporation within the meaning of Section 897 of the Code.

4.9 Entire Agreement

The Note Issuer has not, directly or indirectly, made any agreements with any Purchasers relating to the terms or conditions of the transactions contemplated by the Securities Documents except as set forth in the Securities Documents.

ARTICLE V

COVENANTS AND ACKNOWLEDGMENTS

OF THE PARENT AND THE NOTE ISSUER

The Parent and the Note Issuer covenant, jointly and severally, to the Purchasers (and their direct and indirect transferees) as follows:

5.1 Form D The Parent and the Note Issuer agree to file Forms D with respect to the sale of the Notes and the Warrants, respectively, when and as required under Regulation D.

5.2 Blue Sky Laws The Parent and the Note Issuer shall, on or before the Closing Date, take such action as they shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification); provided that in connection therewith neither the Parent nor the Note Issuer shall be required to (a) qualify as a foreign corporation in any jurisdiction in which it would not otherwise be required to so qualify, (b) file a general consent to service of process in any such jurisdiction or (c) subject itself to taxation in any jurisdiction in which it would not otherwise be subject. The Parent and the Note Issuer shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing.

5.3 Reservation of Shares The Parent shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, free of pre-emptive rights, after the Closing Date, a number of Common Shares sufficient for the purpose of enabling the Parent to satisfy all obligations to issue the Warrant Shares upon exercise of all of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth in the Warrants or the Warrant Agreement).

5.4 PORTAL The Parent will use its reasonable best efforts to cause the Notes to be designated as PORTAL securities in accordance with the rules and regulations adopted by the Financial Industry Regulatory Authority (“FINRA”) relating to trading in the Private Offerings, Resales and Trading through Automated Linkages (PORTAL) Market^SM (“PORTAL”) of the FINRA and to permit the Notes to be eligible for clearance and settlement through DTC.

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5.5 No Integration Actions None of the Parent, any of its affiliates (as defined in Rule 501(b) under the Securities Act) or any Person acting on behalf of the Parent or such affiliate will sell, offer for sale or solicit offers to buy in respect of any security (as defined in the Securities Act) that would be integrated with the sale of the Securities in a manner that would require the registration under the Securities Act of the sale to the Purchasers or require equityholder approval under the rules and regulations of the Principal Market and the Parent will take all action that is appropriate or necessary to assure that its offerings of other securities will not be integrated for purposes of the Securities Act or the rules and regulations of the Principal Market with the issuance of Securities contemplated hereby.

5.6 General Solicitation None of the Parent, any of its affiliates (as defined in Rule 501(b) under the Securities Act) or any Person acting on behalf of the Parent or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.

5.7 Investment Company Actions The Parent will take such steps as shall be reasonably necessary to ensure that the Parent does not become an “investment company” within the meaning of such term under the Investment Company Act.

5.8 Use of Proceeds The Parent and the Note Issuer will cause all of the proceeds of the sale of the Securities, net of Offering-related expenses (including the Agent’s fee and the payments to be made pursuant to Section 5.9 hereof) to be contributed to EAC and cause EAC to use all such proceeds to acquire Target Shares in connection with the proposed Offer, any Subsequent Offer and the Merger.

5.9 Fees and Expenses Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Parent and the Note Issuer shall pay or cause to be paid all costs and expenses incident to the performance of their obligations hereunder, including without limitation, all fees, costs and expenses (i) incident to the preparation, issuance, execution, authentication and delivery of the Securities, including any expenses of the Trustee, (ii) incurred in connection with the registration or qualification and determination of eligibility for investment of the Securities under the laws of such jurisdictions as the Purchasers may reasonably designate, (iii) in connection with the admission of the Notes for trading in PORTAL, and (iv) any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Purchaser) relating to or arising out of the transactions contemplated hereby.

The Parent and the Note Issuer agree, jointly and severally, to reimburse the Purchasers for the reasonable, sufficiently documented legal fees and disbursements billed by each of Schulte, Roth & Zabel LLP, and Milbank, Tweed, Hadley & McCloy LLP in connection with each such firm’s engagement as legal counsel to one or more Purchasers with respect to this

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Offering, subject to a maximum of $75,000 for each such firm (the “Reimbursable Purchaser’s Expenses”). The Parent and the Note Issuer agree to pay the Reimbursable Purchaser’s Expenses promptly after bills representing the Reimbursable Purchaser’s Expenses are submitted by one of more Purchasers to them.

5.10 Disclosure of Transactions and Other Material Information On or prior to the Business Day following the Execution Date, the Parent shall issue a press release describing the Merger Agreement and the Offering. On or prior to 9:30 a.m., New York City time, on the Business Day following the issuance of such press release, the Parent shall file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Securities Documents and the Merger Agreement in the form required by the Exchange Act and attaching as exhibits to such filing true and correct copies of all of the Securities Documents and the Merger Agreement, which copies may include the names of the Purchasers and may omit schedules and exhibits (including all attachments, the “Merger/Financing Form 8-K”). From and after the filing of the Merger/Financing Form 8-K with the Commission, no Purchaser shall be in possession of any material, nonpublic information furnished by the Parent, any of its Subsidiaries or any of its respective officers, directors, employees or agents. Except as a holder of Notes may request pursuant to Section 4.20 of the Indenture, the Parent shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide any Purchaser with any material, nonpublic information regarding the Parent or any of its Subsidiaries from and after the filing of the Merger/Financing Form 8-K with the Commission without the express written consent of such Purchaser.

5.11 Purchasers’ Trading Activity

(a) Except during the Restricted Periods, neither the Parent nor its Subsidiaries will request that any Purchaser (other than the Requested Purchaser as specifically provided in this Agreement) desist from purchasing or selling, long and/or short, any securities of the Parent, or any “derivative” securities based on securities issued by the Parent or hold any of the Securities for any minimum or other specific period of time.

(b) The Parent understands that one or more Purchasers, and the counterparties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common Shares. The Parent further understands that one or more Purchasers may engage in hedging and/or trading activities at various times, including, without limitation from and after the filing of the Merger/Financing Form 8-K (other than during the Restricted Periods), and that such hedging and/or trading activities, if any, can reduce the value of existing shareholders’ interest in the Parent both at and after the time the hedging and/or trading activities are being conducted.

(c) The Parent and the Note Issuer, jointly and severally, acknowledge and agree that the representation and warranty by each Purchaser set forth in paragraph (c) of Section 2.1 hereof (i) does not constitute an agreement by any Purchaser to hold any of the Securities for any minimum or other specific period of time; or (ii) limit any Purchaser’s right to dispose of the Securities at any time in accordance with or pursuant to a registration statement under the Securities Act or an available exemption from registration under the Securities Act.

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(d) The acknowledgements and agreements set forth in this Section 5.11 are subject to such Purchaser’s compliance with all applicable federal and state securities laws.

5.12 Arms’ Length Transaction

The Parent acknowledges and agrees that (i) each Purchaser is acting solely in the capacity of an arm’s length purchaser of the Securities, (ii) no Purchaser is acting as a financial advisor or fiduciary of the Parent or any of its Subsidiaries (or in any similar capacity) with respect to the Securities Documents and the transactions contemplated hereby and thereby, (iii) any advice given by a Purchaser or any of its representatives or agents in connection with the Securities Documents and the transactions contemplated hereby and thereby is merely incidental to such Purchaser’s purchase of the Securities, and (iv) the Parent’s decision to enter into the Securities Documents has been based solely on the independent evaluation by the Parent and its representatives.

5.13 Issue Price Determination

No later than 10 Business Days following the Closing Date, the Parent and the Note Issuer shall notify each Purchaser of the issue price of the Notes and the Warrants. The Parent and the Note Issuer shall determine the respective issue prices by implementing the valuation standards set forth under section 25.2512-2 of the Treasury Regulations, and the Internal Revenue Service pronouncements and other U.S. federal income tax authorities related thereto, and shall consult with a nationally recognized public accounting firm in making such determination. The Parent and the Note Issuer agree to be bound by such determination for all Federal, state, local or foreign income tax and other purposes, and shall not take any position inconsistent therewith unless required by applicable law.

ARTICLE VI

CLOSING CONDITIONS

6.1 Conditions of the Parent and the Note Issuer to the Closing The obligation of the Parent and the Note Issuer to issue and sell the Securities to each of the Purchasers at the Closing hereunder is subject to the satisfaction, at or before the Closing Date, of the Parent of each of the following conditions, provided that these conditions are for the sole benefit of the Parent and the Note Issuer and may be waived by the Parent at any time in its sole discretion by providing each Purchaser with prior written notice thereof:

(a) Each Purchaser shall have executed each of the Securities Documents to which it is a party and delivered the same to the Parent and the Note Issuer.

(b) Each Purchaser shall have paid, by wire transfer of immediately available funds in accordance with the Parent and the Note Issuer’s joint written wire instructions, an amount equal to the principal amount of Notes set forth opposite such Purchaser’s name in column (C) on Schedule I hereto in exchange for (x) the aggregate principal amount of Notes to be purchased by such Purchaser on the Closing Date, plus (y) the total number of Warrants to be purchased by such Purchaser on the Closing Date.

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(c) The representations and warranties of each Purchaser shall be true and correct as of the date when made and as of the Closing as though made at that time (except for representations and warranties that speak as of a specific date), and each Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by each Purchaser at or prior to the Closing Date.

(d) EAC shall have accepted for payment the Initially Tendered Target Shares in accordance with the terms and conditions of the Offer.

6.2 Conditions of the Purchasers to the Closing The Purchasers’ obligation to purchase and pay for the Securities shall be subject to the satisfaction of each of the following conditions on or before the Closing Date:

(a) The representations and warranties of the Parent and the Note Issuer contained in this Agreement are true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) on the Closing Date as though made on that date (or, to the extent such representations and warranties specifically relate to an earlier date, that such representations and warranties were true, correct and complete on and as of such earlier date).

(b) The Parent and the Note Issuer shall have performed and complied with all agreements, covenants and conditions contained in this Agreement.

(c) The Purchasers shall have received opinions in form and substance satisfactory to the Purchasers, dated the Closing Date, from New Brunswick, Michigan and New York legal counsel for the Parent covering customary legal matters relating to the transactions contemplated hereby as the Purchasers may reasonably request (excluding any request for a “negative assurance letter” regarding the contents of any of the Exchange Act Reports or any other disclosure by the Parent).

(d) On or before the Closing Date, the Parent and the Note Issuer shall deliver to the Purchasers the following documents:

(i) Copies of the Securities Documents, duly executed by each of the Parent and the Note Issuer to the extent a party thereto.

(ii) A certificate, dated the Closing Date, and signed by the Chief Executive Officer, the Chief Financial Officer or any Executive Vice President of the Parent certifying as to the matters set forth in paragraphs (a) and (b) of this Section 6.2 with respect to the Parent.

(iii) A certificate, dated the Closing Date, and signed by the Chief Executive Officer, the Chief Financial Officer or any Executive Vice President of the Note Issuer certifying as to the matters set forth in paragraphs (a) and (b) of this Section 6.2 with respect to the Note Issuer.

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(iv) A certificate evidencing the formation and good standing of the Parent and the Note Issuer issued by their respective jurisdictions of incorporation as of a date within ten (10) days of the Closing Date.

(v) A certificate, executed by the Secretary of the Parent and dated as of the Closing Date, as to (i) the resolutions as to authorization and validity as adopted by the Parent’s board of directors in a form reasonably acceptable to such Purchaser, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the Closing.

(vi) A certificate, executed by the Secretary of the Note Issuer and dated as of the Closing Date, as to (i) the resolutions as to authorization and validity as adopted by the board of directors or sole shareholder of the Note Issuer, as applicable, in a form reasonably acceptable to such Purchaser, (ii) the Note Issuer’s certificate of Incorporation and (iii) the Note Issuer’s bylaws, each as in effect at the Closing.

(vii) Such other documents or certificates as one counsel for the Purchasers may reasonably request.

(e) The Parent and the Note Issuer shall have received all governmental and regulatory approvals and consents, if any, necessary for the issuance and sale of the Securities. If any such governmental and regulatory approvals and consents are necessary, the Parent and the Note Issuer shall deliver to counsel to the Purchasers evidence of the receipt of such governmental and regulatory approvals and consents.

(f) The Parent and the Note Issuer shall have duly executed and delivered to such Purchaser the Notes and the Warrants, respectively, being purchased by such Purchaser at the Closing pursuant to this Agreement.

(g) The Common Shares (i) shall be designated for quotation or listed on the Principal Market and (ii) shall not have been suspended, as of the Closing Date, by the Commission or the Principal Market from trading on the Principal Market nor shall suspension by the Commission or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the Commission or the Principal Market or (B) by falling below the minimum maintenance requirements of the Principal Market.

(h) The Note Issuer shall have caused the Notes to be eligible for (i) acceptance for clearance and settlement through the facilities of the DTC, (ii) trading on PORTAL and (iii) trading in “street name” by DTC.

(i) The applicable waiting period under the HSR Act (as defined in the Merger Agreement) in respect of the Offer shall have expired or been terminated. The Parent and the Note Issuer shall deliver to each Purchaser a certificate of one of its officers as to such expiration or termination.

(j) EAC shall have accepted for payment the Initially Tendered Target Shares in accordance with the terms and conditions of the Offer.

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(k) There shall have been no amendments to the Merger Agreement that add any material Restricted Payments (as defined in the Indenture) or Affiliate Transactions (as defined in the Indenture).

(l) The Parent and the Note Issuer shall have received an aggregate of $190,000,000 from the Purchasers; provided, however, that no Purchaser may assert that all of the conditions set forth in this Section 6.2 have not been satisfied if the only such condition not satisfied is the condition set forth in this paragraph (l) and the reason therefor is such Purchaser’s breach of its obligations set forth in Section 1.1 hereof.

ARTICLE VII

INDEMNIFICATION

7.1 Indemnification The Parent and the Note Issuer (together, the “Indemnifying Parties”) shall, jointly and severally, indemnify and hold harmless the Purchasers, each other holder of the Securities and all of their respective affiliates, shareholders, partners, members, officers, directors, employees and direct or indirect investors, agents, representatives, controlling persons, successors, heirs and assigns (collectively, the “Indemnified Parties”) and save and hold each of them harmless against and pay on behalf of or reimburse such party as and when incurred for any loss (but not including any diminution in value of the Securities), liability, demand, claim, action, cause of action, cost, damage, deficiency, penalty, fine or expense, whether or not arising out of any claims by or on behalf of the Indemnifying Parties or any of their Subsidiaries or any third party, including interest, penalties, and reasonable attorneys’ fees and expenses of one counsel to the Indemnified Parties (or such additional counsel as may reasonably be required by reason of a conflict of interest among or between Indemnified Parties) and all amounts paid in investigation, defense or settlement of any of the foregoing (collectively, “Losses”) which any such party may suffer, sustain or become subject to, as a result of, in connection with, relating or incidental to or by virtue of (a) any misrepresentation or breach of any of the Indemnifying Parties’ representations or warranties contained in this Agreement; (b) any non-fulfillment or material breach of any of the Indemnifying Parties’ covenants or agreements contained in this Agreement; or (c) any claim arising out of, relating to, resulting from or caused by any transaction, status, event, condition, occurrence or situation relating to, arising out of or in connection with (i) the execution, delivery and performance of any of the Securities Documents, or (ii) any actions taken by or omitted to be taken by any of the Indemnified Parties in connection with any Securities Document; provided, however, that no Indemnified Party shall be entitled to such rights and remedies to the extent that such Losses occur as a result of the willful misconduct, bad faith, the gross negligence or wrongful acts or omissions on the part of any Indemnified Party, as finally determined by a court of competent jurisdiction.

(b) If any action shall be brought against any Indemnified Party in respect of which indemnity may be sought pursuant to this Agreement, such Indemnified Party shall promptly notify the Indemnifying Parties in writing, and the Indemnifying Parties shall have the right to assume the defense thereof with counsel of their own

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choosing. Any Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party except to the extent that (i) the employment thereof has been specifically authorized by the Indemnifying Parties in writing, (ii) the Indemnifying Parties have failed after a reasonable period of time following such Indemnified Party’s written request that it do so, to assume such defense and to employ counsel, or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Indemnifying Parties and the position of such Indemnified Party. The failure of an Indemnified Party to deliver written notice to the Indemnifying Parties within a reasonable time of the delivery of notice of any such action, to the extent prejudicial to its ability to defend such action, shall relieve the Indemnifying Parties of any liability to such Indemnified Party under this Section 7.1 with respect to such action, but the omission so to deliver written notice to the Indemnifying Parties will not relieve the Indemnifying Parties of any liability that it may have to such Indemnified Party otherwise than under this Section 7.1 or with respect to any other action unless the failure to provide notice of the first action materially prejudices the Indemnified Parties in the second action. The Indemnifying Parties will not be liable to any Indemnified Party under this Agreement (i) for any settlement by an Indemnified Party effected without the Indemnifying Parties’ prior written consent; or (ii) to the extent that a Loss is attributable to (A) such Indemnified Party’s willful misconduct, bad faith, the gross negligence, wrongful actions or omissions or (B) the breach of any of the representations, warranties, covenants or agreements made by the related Purchaser in this Agreement or in the other Securities Documents.

7.2 Survival of Indemnification; Subsequent Purchasers All indemnification rights hereunder shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, regardless of any investigation, inquiry or examination made for or on behalf of, or any knowledge of the Purchasers, their advisors and/or any of the Indemnified Parties or the acceptance by the Indemnifying Parties of any certificate or opinion, and shall inure to the benefit of any Purchaser in accordance with the terms hereof notwithstanding such Person’s assignment or transfer of its Securities.

7.3 Contribution If for any reason the indemnity provided for in this Article VII is unavailable to any Indemnified Party or is insufficient to hold each such Indemnified Party harmless from all such Losses arising with respect to the transactions contemplated by this Agreement, then the Parent shall contribute to the amount paid or payable for such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Parties and the Indemnified Party as well as any relevant equitable considerations. In addition, the Indemnifying Parties agree to reimburse any Indemnified Party upon demand for all reasonable expenses (including legal counsel fees) incurred by such Indemnified Party in connection with investigating, preparing or defending any such action or claim; provided, however, that such Indemnified Party is determined to be entitled to be indemnified hereunder with respect to such claim. The indemnity, contribution and expenses reimbursement obligations that the Indemnifying Parties have under this Article VII shall be in addition to any liability that the Indemnifying Parties may otherwise have at law or in equity. The Indemnifying Parties further agree that the indemnification and reimbursement commitments set forth in this Agreement shall apply whether or not the Indemnified Party is a formal party to any such lawsuits, claims or other proceedings.

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ARTICLE VIII

MISCELLANEOUS

8.1 Notices All notices and other communications provided for or permitted hereunder shall be made by hand-delivery, first-class mail, telecopier or overnight air courier guarantying next day delivery:

(a) if to any Purchaser, to the address set forth opposite such Purchaser’s name in column (B) of Schedule I hereto or as otherwise provided in writing to the Parent, with a copy to such Purchaser’s legal representative, the name and address of which is set forth opposite such Purchaser’s name in column (E) of Schedule I hereto, or as otherwise provided in writing to the Parent;

(b) if to the Parent or the Note Issuer, to it at 125 Middlesex Turnpike, Bedford, Massachusetts 01730, Attention: General Counsel, Telecopier No.: (781) 266-5115; with a copy (which shall not constitute notice) to Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York 10036, Attention: Michael J. Zeidel, Esq., Telecopier: 212-735-2000.

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guarantying next day delivery. The parties may change the addresses to which notices are to be given by giving five days’ prior notice of such change in accordance herewith.

8.2 Successors and Assigns This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Securities. The Parent shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the holders of at least a majority of the aggregate principal amount of the Notes issued and issuable hereunder. Prior to the Closing, a Purchaser may assign some or all of its rights and obligations hereunder without the consent of the Parent or the Note Issuer to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), in which event such assignee shall be deemed to be a Purchaser hereunder with respect to such assigned rights and obligations hereunder.

8.3 No Third Party Beneficiaries This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

8.4 Survival The representations, warranties, acknowledgements, agreements and covenants contained in Articles II, III, IV and V hereof shall survive the Closing and delivery of the Securities and the exercise of the Warrants.

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8.5 Further Assurances Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

8.6 Amendment and Waiver No provision of this Agreement may be amended other than by an instrument in writing signed by the Parent, the Note Issuer and Purchasers (or, if applicable, their transferees) representing (a) at least a majority of the aggregate principal amount of the Notes to be sold pursuant to this Agreement, and (b) a majority of the Warrants to be sold pursuant to this Agreement; provided, however, that no amendment that would adversely affect the economic rights set forth in this Agreement (including, without limitation, any modification of paragraph (b) of Section 1.1, Section 1.2, the Termination Date or the Termination Fee) may be made without the consent of each Purchaser (or, if applicable, its transferee). No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No amendment shall be effective to the extent that it applies to less than all the Purchasers (or, if applicable, their transferees). No consideration shall be offered or paid to any Purchaser (or, if applicable, its transferee) to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all Purchasers (or, if applicable, their transferees).

8.7 Counterparts This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

8.8 Headings The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

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

8.10 Consent to Jurisdiction and Service of Process ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE PARENT OR THE NOTE ISSUER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER SECURITIES DOCUMENTS, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, PARENT AND THE NOTE ISSUER FOR THEMSELVES AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY

(I) ACCEPT GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;

(II) WAIVE ANY DEFENSE OF FORUM NON CONVENIENS;

(III) AGREE THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, PARENT OR THE NOTE ISSUER, AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 8.1 HEREOF;

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(IV) AGREE THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER PARENT AND THE NOTE ISSUER IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;

(V) AGREE THAT PURCHASERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST PARENT AND THE NOTE ISSUER IN THE COURTS OF ANY OTHER JURISDICTION; AND

(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 8.10 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.

8.11 WAIVER OF JURY TRIAL THE PARENT, THE NOTE ISSUER AND THE PURCHASERS HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. The parties hereto each acknowledge that this waiver is a material inducement for them to enter into a business relationship that they have already relied on the waiver in entering into this Agreement and that each will continue to rely on the waiver in their related future dealings. The parties hereto further warrant and represent that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 8.11 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

8.12 Remedies Each Purchaser shall have all rights and remedies set forth herein and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Parent and the Note Issuer recognize that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Securities Documents, any remedy at law may prove to be inadequate relief to the Purchasers. The Parent and the Note Issuer therefore agree that the Purchasers shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.

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8.13 Entire Agreement The Securities Documents are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. The Securities Documents supersede all prior agreements and understandings between the parties with respect to such subject matter. Nothing in any of the Securities Documents shall confer upon any other Person other than the parties hereto any right, remedy or claim under this Agreement.

8.14 Severability In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

8.15 Independent Nature of Purchasers’ Obligations and Rights The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement. Nothing contained herein or in any other Securities Documents, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Securities Documents. Each Purchaser confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Securities Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

GSI GROUP INC.
By:	/s/ Sergio Edelstein
Name:	Sergio Edelstein
Title:	President and Chief Executive Officer
GSI GROUP CORPORATION
By:	/s/ Daniel J. Lyne
Name:	Daniel J. Lyne
Title:	Secretary

PURCHASERS:

SPECIAL VALUE CONTINUATION PARTNERS, L.P.

By: Tennenbaum Capital Partners, LLC

Its: Investment Manager

SPECIAL VALUE EXPANSION FUND, LLC

By: Tennenbaum Capital Partners, LLC

Its: Investment Manager

TENNENBAUM OPPORTUNITIES PARTNERS V, LP

By: Tennenbaum Capital Partners, LLC

Its: Investment Manager

SPECIAL VALUE OPPORTUNITIES FUND, LLC

By: Tennenbaum Capital Partners, LLC

Its: Investment Manager

Each of the above by:

/s/ Mark Holdsworth

Name: Mark Holdsworth

Title: Managing Partner

TEMPO MASTER FUND LP
By:	/s/ Donald P. McCarthy
Name:	Donald P. McCarthy
Title:	CFO

HALE CAPITAL PARTNERS, LP
By:	/s/ Martin M. Hale, Jr.
Name:	Martin M. Hale, Jr.
Title:	Chief Executive Officer

INTERLACHEN CONVERTIBLE INVESTMENTS LIMITED
By:	/s/ Gregg T. Colburn
Name:	Gregg T. Colburn
Title:	Authorized Signatory

SILVER OAK CAPITAL, L.L.C.
By:	/s/ Fred Berger
Name:	Fred Berger
Title:	Manager

HIGHBRIDGE INTERNATIONAL LLC
By: HIGHBRIDGE CAPITAL MANAGEMENT, LLC,
its Trading Manager
By:	/s/ Adam J. Chill
	Adam J. Chill, Managing Director

UBS O’CONNOR LLC F/B/O: O’CONNOR GLOBAL CONVERTIBLE ARBITRAGE MASTER LIMITED
By:	/s/ Andrew Martin
Name:	Andrew Martin
Title:	Managing Director
UBS O’CONNOR LLC F/B/O: O’CONNOR GLOBAL CONVERTIBLE ARBITRAGE II MASTER LIMITED
By:	/s/ Andrew Martin
Name:	Andrew Martin
Title:	Managing Director

LIBERTY HARBOR MASTER FUND I, L.P.
By: Liberty Harbor I GP, LLC
Its General Partner
By:	/s/ Brendan McGovern
Name:	Brendan McGovern
Title:	Vice President

SCHEDULE I

PURCHASERS

(A) Name	(B) Address and Facsimile No.	(C) Principal Amount of Notes		(D) Number of Warrants	(E) Name, Address and Facsimile No. of Legal Representative
Tempo Master Fund LP	Don McCarthy, CFO JD Capital, Two Greenwich Plaza, 2nd Floor, Greenwich CT 06830 Fax: 203-485-8920	$	15,000,000	15,000	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: (213) 892-4711
Hale Capital Partners, LP	Hale Fund Management 304 Newbury Street, Ste. 329 Boston, MA 02115 Attn: Anthony Cirurgiao and Martin Hale Fax: 212 629 2027 anthony@halefunds.com martin@halefunds.com	$	5,000,000	5,000	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: (213) 892-4711
Interlachen Convertible Investments Limited	Interlachen Capital Group LP Attn: Gregg T. Colburn and Legal 800 Nicollet Mall, Suite 2500 Minneapolis, MN 55402 Fax: (612) 659-4457	$	15,000,000	15,000	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: (213) 892-4711

(A) Name	(B) Address and Facsimile No.	(C) Principal Amount of Notes		(D) Number of Warrants	(E) Name, Address and Facsimile No. of Legal Representative
Special Value Opportunities Fund, LLC	2951 28th Street, Suite 1000 Santa Monica, CA 90405 Fax: (310) 566-1010	$	11,875,000	11,875	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: (213) 892-4711
Special Value Expansion Fund, LLC	2951 28th Street, Suite 1000 Santa Monica, CA 90405 Fax: (310) 566-1010	$	5,581,250	5581.25	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: 213-892-4711
Special Value Continuation Partners, LP	2951 28th Street, Suite 1000 Santa Monica, CA 90405 Fax: (310) 566-1010	$	4,750,000	4,750	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: (213) 892-4711
Tennenbaum Opportunities Partners V, LP	2951 28th Street, Suite 1000 Santa Monica, CA 90405 Fax: (310) 566-1010	$	25,293,750	25,293.75	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: (213) 892-4711

(A) Name	(B) Address and Facsimile No.	(C) Principal Amount of Notes		(D) Number of Warrants	(E) Name, Address and Facsimile No. of Legal Representative
Silver Oak Capital, L.L.C.	Attn: Gary I. Wolf 245 Park Avenue - 26th Floor New York, NY 10167 Fax: 212-867-6395 gwolf@angelogordon.com thutfilz@angelogordon.com	$	10,000,000	10,000	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: (213) 892-4711
Highbridge International LLC	Attn: Adam Chill, Managing Director Highbridge Capital Management, LLC 9 West 57th Street, 27th Floor New York, New York 10019 Fax: (212) 751-0755 adam.chill@highbridge.com	$	47,500,000	47,500	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: (213) 892-4711
UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited	Rob Murray UBS Alternative and Quantitative Investments LLC UBS Tower One North Wacker Drive Chicago, IL. 60606 Fax: (312) 525-6271 Robert-A.Murray@ubs.com	$	13,500,000	13,500	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: (213) 892-4711 with additional copy to: DL-ubsoc-corpact@ubs.com

(A) Name	(B) Address and Facsimile No.	(C) Principal Amount of Notes		(D) Number of Warrants	(E) Name, Address and Facsimile No. of Legal Representative
UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master Limited	Rob Murray UBS Alternative and Quantitative Investments LLC UBS Tower One North Wacker Drive Chicago, IL. 60606 Fax: (312) 525-6271 Robert-A.Murray@ubs.com	$	1,500,000	1,500	Milbank, Tweed, Hadley & McCloy LLP Attn: Melainie K. Mansfield 601 S. Figueroa St., 30th Floor Los Angeles, CA 90017 Fax: (213) 892-4711 With additional copy to: DL-ubsoc-corpact@ubs.com
Liberty Harbor Master Fund I, L.P.	c/o Liberty Harbor I GP, LLC 1 New York Plaza New York, NY 10004 Attn: Brendan McGovern Fax: (646) 835-3510	$	55,000,000	55,000	Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 Attn: Eleazer N. Klein, Esq. Fax: (212) 593-5955 With additional copies to: am-cred-midoffice@ny.email.gs.com and jonathan.lamm@gs.com
	TOTAL:	$	210,000,000	210,000

SCHEDULE II

Requesting Purchasers

Special Value Opportunities Fund, LLC

Special Value Expansion Fund, LLC

Special Value Continuation Partners, LP

Tennenbaum Opportunities Partners V, LP

EXHIBIT A

FORM OF INDENTURE

[Refer to Exhibit 99.2 of this Form 8-K]

EXHIBIT B

FORM OF WARRANT AGREEMENT

[Refer to Exhibit 99.3 of this Form 8-K]

EXHIBIT C

FORM OF REGISTRATION RIGHTS AGREEMENT

[Refer to Exhibit 99.4 of this Form 8-K]

EX-99.1

Exhibit 99.1

TENDER AND SUPPORT AGREEMENT

TENDER AND SUPPORT AGREEMENT (this “Agreement”), dated as of July 9, 2008, by and among GSI Group Inc., a New Brunswick corporation (“Parent”), Eagle Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of Parent (“Purchaser”), and each of the individuals or entities listed on a signature page hereto (each, a “Stockholder”).

WHEREAS, each Stockholder beneficially owns the shares of common stock, par value $0.001 per share, of Excel Technology Inc., a Delaware corporation (the “Company”), set forth opposite such Stockholder’s name on Schedule A (all such shares set forth on Schedule A, together with any shares of Company Common Stock that are hereafter issued to or otherwise acquired or beneficially owned by any Stockholder, including pursuant to the exercise of Options by such Stockholders or the removal of restrictions on Restricted Stock held by such Stockholders being referred to herein as the “Subject Shares”);

WHEREAS, as a condition to their willingness to enter into the Agreement and Plan of Merger (the “Merger Agreement”) dated as of the date hereof, among Parent, Purchaser and the Company, Parent and Purchaser have required that each Stockholder, and in order to induce Parent and Purchaser to enter into the Merger Agreement each Stockholder (in such Stockholder’s capacity as a holder of the Subject Shares) has agreed to, enter into this Agreement; and

WHEREAS, capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement;

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

ARTICLE I

AGREEMENT TO TENDER

Section 1.1. Agreement to Tender. Each Stockholder shall validly tender or cause to be validly tendered in the Offer all of such Stockholder’s Subject Shares pursuant to and in accordance with the terms of the Offer. As promptly as practicable, but in any event no later than ten Business Days after the commencement of the Offer, each Stockholder shall (i) deliver to the depositary designated in the Offer (the “Depositary”) (A) a letter of transmittal with respect to its Subject Shares complying with the instructions set forth therein and the terms of the Offer, (B) a certificate or certificates representing such Subject Shares or an “agent’s message” (or such other evidence, if any, of transfer as the Depositary may reasonably request) in the case of a book-entry transfer of any uncertificated Subject Shares and (C) all other documents or instruments required

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to be delivered by other stockholders of the Company pursuant to the terms of the Offer, and/or (ii) instruct its broker or such other Person that is the holder of record of any Subject Shares beneficially owned by such Stockholder to tender such Subject Shares pursuant to and in accordance with the terms of the Offer. Each Stockholder agrees that, once its Subject Shares are tendered, such Stockholder (i) shall promptly notify Parent that such Subject Shares have been tendered and (ii) will not withdraw any of such Subject Shares from the Offer, unless and until (A) the Offer shall have expired or been terminated by Purchaser in accordance with the terms of the Merger Agreement or (B) this Agreement shall have been terminated in accordance with its terms. The obligations of each Stockholder under this Section 1.1 are several and not joint with any other Stockholder.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

Each Stockholder represents and warrants to Parent and Purchaser as to itself, severally and not jointly, as follows:

Section 2.1. Authorization; Binding Agreement. Such Stockholder has full power and authority to execute, deliver and perform this Agreement.

Section 2.2. Non-Contravention. The execution, delivery and performance by such Stockholder of this Agreement and the consummation by such Stockholder of the transactions contemplated hereby do not and will not (i) violate any Law applicable to such Stockholder, (ii) require any consent or other action by any Person under, constitute a default under, or give rise to any right of termination, cancellation or acceleration or to a loss of any benefit to which such Stockholder is entitled under, any Law or any provision of any agreement or other instrument binding on such Stockholder or (iii) result in the imposition of any Lien on any asset of such Stockholder, in the case of each of clauses (i) through (iii) such as would impair or adversely affect such Stockholder’s ability to perform its obligations hereunder.

Section 2.3. Ownership of Subject Shares; Total Shares. Such Stockholder is the record or beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of its Subject Shares and, as of the date of Purchaser’s acceptance of the shares of Company Common Stock in the Offer, such Subject Shares will be free and clear of any Lien and any other limitation or restriction (including any restriction on the right to vote or otherwise transfer such Subject Shares), except as provided hereunder or pursuant to any applicable restrictions on transfer under the Securities Act. The tender of such Stockholder’s Subject Shares to Purchaser, and Purchaser’s acceptance and payment for such Subject Shares, pursuant to the terms of the Offer will effectively vest in Purchaser good and marketable title to such Subject Shares. The Subject Shares listed on Schedule A opposite such Stockholder’s name constitute all of the shares of Company Common Stock beneficially owed by such Stockholder as of the date hereof.

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Section 2.4. Voting Power. Such Stockholder has full voting power, and full power of disposition, full power to issue instructions with respect to the matters set forth herein and full power to agree to all of the matters set forth in this Agreement, in each case with respect to all of such Stockholder’s Subject Shares. None of such Stockholder’s Subject Shares are subject to any voting trust or other agreement or arrangement with respect to the voting of such shares, except as provided hereunder.

Section 2.5. Absence of Litigation. With respect to such Stockholder, as of the date hereof, there is no action, suit, investigation or proceeding pending against, or, to the knowledge of such Stockholder, threatened against or affecting, such Stockholder or any of its properties or assets (including such Stockholder’s Subject Shares) that could reasonably be expected to impair the ability of such Stockholder to perform its obligations hereunder or to consummate the transactions contemplated hereby on a timely basis.

Section 2.6. Opportunity to Review; Reliance. Such Stockholder has had the opportunity to review this Agreement and the Merger Agreement with counsel of his or its own choosing. Such Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon such Stockholder’s execution, delivery and performance of this Agreement.

Section 2.7. Finders’ Fees. No investment banker, broker, finder or other intermediary is entitled to a fee or commission from Parent, Purchaser, the Company or the Surviving Corporation in respect of this Agreement based upon any arrangement or agreement made by or on behalf of such Stockholder in his capacity as such.

ARTICLE III

ADDITIONAL COVENANTS OF THE STOCKHOLDERS

Each Stockholder hereby covenants and agrees as to itself, severally and not jointly, as follows:

Section 3.1. Voting of Subject Shares. At every meeting of the stockholders of the Company called, and at every adjournment or postponement thereof, or as part of or in connection with any action by written consent in lieu of meeting of stockholders of the Company, the Stockholders shall, or shall cause the holder of record on any applicable record date to, vote, or express consent or dissent with respect to, the Subject Shares (to the extent that any of the Subject Shares are not purchased in the Offer) (i) in favor of (A) approval and adoption of the Merger Agreement and each of the other transactions contemplated by the Merger Agreement, and (B) approval of any proposal to adjourn or postpone the meeting to a later date if there are not sufficient votes for the approval and adoption of the Merger Agreement on the date on which such meeting is held, and (ii) against (A) any agreement or arrangement related to or in furtherance of any Acquisition Proposal, (B) any liquidation, dissolution, recapitalization, extraordinary dividend or other significant corporate reorganization of the Company or any of its Subsidiaries, (C) any other transaction the consummation of which would reasonably be expected to

3

impede, interfere with, prevent or materially delay the Offer or the Merger or that would reasonably be expected to dilute materially the benefits to Parent of the transactions contemplated by the Merger Agreement, or (D) any action, proposal, transaction or agreement that would reasonably be expected to result in (x) a breach of any covenant, representation or warranty or other obligation or agreement of the Company under the Merger Agreement or of such Stockholder under this Agreement or (y) the failure of any Offer Condition to be satisfied, and (iii) in favor of any other matter necessary for consummation of the transactions contemplated by the Merger Agreement, which is considered at any such meeting of stockholders, and in connection therewith to execute any documents reasonably requested by Parent that are necessary or appropriate in order to effectuate the foregoing.

Section 3.2. Irrevocable Proxies. Each Stockholder, revoking (or causing to be revoked) any proxies that he or it has heretofore granted, hereby irrevocably appoints Parent as attorney-in-fact and proxy for and on behalf of such Stockholder, for and in the name, place and stead of such Stockholder, to: (i) attend any and all stockholder meetings of the Company with respect to the matters set forth in Section 3.1; (ii) vote, express consent or dissent or issue instructions to the record holder to vote, express consent or dissent with respect to such Stockholder’s Subject Shares in accordance with the provisions of Section 3.1 at any such meeting; and (iii) grant or withhold, or issue instructions to the record holder to grant or withhold, consistent with the provisions of Section 3.1, all written consents with respect to such Subject Shares. The foregoing proxy shall be deemed to be a proxy coupled with an interest, is irrevocable (and as such shall survive and not be affected by the death, incapacity, mental illness or insanity of such Stockholder) and shall not be terminated by operation of Law or upon the occurrence of any other event other than the termination of this Agreement pursuant to Section 4.2. Each Stockholder hereby affirms that the irrevocable proxy set forth in this Section 3.2 is given in connection with and granted in consideration of and as an inducement to Parent entering into the Merger Agreement and that such irrevocable proxy is given to secure the obligations of the Stockholder under Section 3.1 hereof. The irrevocable proxy set forth in this Section 3.2 is executed and intended to be irrevocable, subject, however, to automatic termination, upon the termination of this Agreement pursuant to Section 4.2.

Section 3.3. No Transfers or Other Inconsistent Arrangements.

(a) Except as provided hereunder or under the Merger Agreement, such Stockholder shall not, directly or indirectly, (i) sell (including short sell), assign, transfer, tender or otherwise dispose of (including by gift) (each a “Transfer”) any of such Stockholder’s Subject Shares, (ii) create or permit to exist any Lien on any such Subject Shares, (iii) enter into any contract with respect to any transfer of such Subject Shares or any interest therein, (iv) grant or permit the grant of any proxy, power of attorney or other authorization in or with respect to such Subject Shares, (v) deposit or permit the deposit of such Subject Shares into a voting trust or enter into a voting agreement or arrangement with respect to such Subject Shares or (vi) take or permit any other action that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or otherwise make any representation or warranty of such Stockholder herein untrue or incorrect.

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(b) Such Stockholder shall not request that the Company register the Transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of such Stockholder’s Subject Shares, unless such Transfer is made in compliance with this Agreement. Such Stockholder hereby authorizes Parent to direct the Company to impose stop orders to prevent the Transfer of any of such Stockholder’s Subject Shares on the books of the Company in violation of this Agreement.

Section 3.4. No Exercise of Appraisal Rights. Such Stockholder agrees not to exercise any appraisal rights or dissenter’s rights in respect of its Subject Shares that may arise with respect to the Merger.

Section 3.5. Documentation and Information. Such Stockholder (i) consents to and authorizes the publication and disclosure by Parent of its identity and holdings of Subject Shares, the nature of its commitments and obligations under this Agreement (including, for the avoidance of doubt, the disclosure of this Agreement) and any other information, in each case that Parent reasonably determines is required to be disclosed by applicable law in any press release, the Offer Documents, the Information Statement or Proxy Statement or any other disclosure document in connection with the Offer, the Merger and any transactions contemplated by the Merger Agreement and (ii) agrees promptly to give to Parent any information it may reasonably require for the preparation of any such disclosure documents. Such Stockholder agrees to promptly notify Parent of any required corrections with respect to any written information supplied by it specifically for use in any such disclosure document, if and to the extent that any such information shall have become false or misleading in any material respect.

Section 3.6. Notices of Certain Events. Such Stockholder shall notify Parent of any development occurring after the date hereof that causes, or that would reasonably be expected to cause, any breach of any of the representations and warranties of such Stockholder set forth in Article II.

Section 3.7 Street Name Subject Shares. Such Stockholder shall deliver notice to each financial intermediary or other Person through which such Stockholder holds Subject Shares that informs such Person of such Stockholder’s obligations under this Agreement and that informs such Person that such Person may not act in disregard of such obligations without the prior written consent of Parent.

ARTICLE IV

MISCELLANEOUS

Section 4.1. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be given, (i) if to Parent, Purchaser or the Company, in accordance with the provisions of the Merger Agreement and (ii) if to a Stockholder, to his, her or its address set forth on a signature

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page hereto, with copies to Breslow & Walker LLP, 100 Jericho Quadrangle, Jericho, New York 11753, Facsimile: (516) 822-6544, Attention: Howard S. Breslow, Esq., or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to each other party hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt.

Section 4.2. Termination. Except as otherwise specifically provided herein, this Agreement shall terminate automatically, without any notice or other action by any Person, upon the earlier of (i) the Effective Time and (ii) the termination of the Merger Agreement in accordance with its terms.

Section 4.3. Amendments and Waivers. Any provision of this Agreement may be amended or waived if such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 4.4. Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense.

Section 4.5. Binding Effect; Benefit; Assignment. The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any person other than the parties hereto and their respective successors and assigns. No party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto, except that each of Parent and Purchaser may transfer or assign its rights and obligations under this Agreement, in whole or from time to time in part, to one or more of its Affiliates at any time; provided, that such transfer or assignment shall not relieve Parent or Purchaser of any of its obligations hereunder.

Section 4.6. Governing Law; Venue; Waiver of Jury Trial.

(a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules of such state.

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(b) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Delaware Court of Chancery, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated by this Agreement, and each of the parties hereby irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in such courts, (ii) agrees that any claim in respect of any such action or proceeding may be heard and determined in such court, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding in any such court, and (iv) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in such court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other place of competent jurisdiction by suit on the judgment or in any other manner provided by Law. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 4.1. Nothing in this Agreement shall affect the right of any party to this Agreement to serve process in any other manner permitted by Law.

(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING UNDER OR CONCERNING THIS AGREEMENT OR ANY ACTION OR PROCEEDING ARISING OUT OF OR CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR PROCEEDING.

Section 4.7. Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, and by facsimile, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by each other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).

Section 4.8. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to its subject matter.

Section 4.9. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Entity to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

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Section 4.10. Specific Performance. The parties hereto agree that each of Parent and Purchaser would be irreparably damaged if for any reason any Stockholder fails to perform any of its obligations under this Agreement and that each of Parent and Purchaser would not have an adequate remedy at law for money damages in such event. Accordingly, each of Parent and Purchaser shall be entitled, as their sole remedy under this Agreement for breaches by the Stockholders, to specific performance and injunctive and other equitable relief to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in the State of Delaware or any Delaware state court.

Section 4.11. Headings. The Section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 4.12. No Presumption. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

Section 4.13. Further Assurances. Parent and each Stockholder will execute and deliver, or cause to be executed and delivered, all further documents and instruments and use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws and regulations, to perform their respective obligations under this Agreement.

Section 4.14. Interpretation. Unless the context otherwise requires, as used in this Agreement: (i) “or” is not exclusive; (ii) “including” and its variants mean “including, without limitation” and its variants; (iii) words defined in the singular have the parallel meaning in the plural and vice versa; (iv) words of one gender shall be construed to apply to each gender; and (v) the terms “Article”, “Section” and “Schedule” refer to the specified Article, Section or Schedule of or to this Agreement.

Section 4.15 Stockholder Capacity. Notwithstanding any other provision of this Agreement, nothing set forth herein shall restrict any officer or director of the Company, acting in such capacity, in the exercise of such officer’s or director’s fiduciary duties to the Company’s stockholders, but no such officer shall take any action that would cause the Company to breach the Merger Agreement or any agreements contemplated thereby.

[SIGNATURE PAGE FOLLOWS]

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The parties are executing this Agreement on the date set forth in the introductory clause.

GSI GROUP INC.
By:	/s/    Sergio Edelstein
Name: Title:	Dr. Sergio Edelstein President and Chief Executive Officer
EAGLE ACQUISITION CORPORATION
By:	/s/    Sergio Edelstein
Name: Title:	Dr. Sergio Edelstein President
STOCKHOLDERS
/s/    Antoine Dominic
Name: Address:	Antoine Dominic 30 Legend Circle, Melville, NY 11757
/s/    Steven Georgiev
Name: Address:	Steven Georgiev 142 Arlington Street, Winchester, MA 01890
/s/    James Donald Hill
Name: Address:	James Donald Hill 2 Bridgeworth Lane, Sherman, CT 06784
/s/    Ira J. Lamel
Name: Address:	Ira J. Lamel 34 Hazelwood Drive, Jericho, NY 11753
/s/    Alice Varisano
Name: Address:	Alice Varisano 85 Melanie Lane, Syasset, NY 11791
/s/    Donald E. Weeden
Name: Address:	Donald E. Weeden 85 Middle River Road, Danbury, CT 06811

Signature Page to

Tender and Support Agreement

SCHEDULE A

Name	Number of Subject Shares (including shares subject to Options and shares of Restricted Stock)
Antoine Dominic	569,1101
James Donald Hill	395,1002
Steven Georgiev	20,0003
Ira J. Lamel	60,0004
Alice Varisano	45,7195
Donald E. Weeden	50,0006

¹ Includes 62,293 shares of Company Common Stock, 489,792 Options and 17,025 shares of Restricted Stock

² Includes 128,433 shares of Company Common Stock and 266,667 Options

³ Includes 20,000 Options

⁴ Includes 60,000 Options

⁵ Includes 40,000 Options and 5,719 shares of Restricted Stock

⁶ Includes 50,000 Options

Schedule A to

Tender and Support Agreement

EX-99.2

Exhibit 99.2

GSI GROUP CORPORATION,

THE GUARANTORS

named herein

and

The Bank of New York Mellon Trust Company, N.A., as Trustee

FORM OF INDENTURE

Dated as of —, 2008

11% Senior Notes due 2013

CROSS-REFERENCE TABLE

TIA Section	Indenture Section
310(a)(1)	7.10
(a)(2)	7.10
(a)(3)	N.A.
(a)(4)	N.A.
(a)(5)	N.A.
(b)	7.08; 7.10; 11.02
(b)(1)	7.10
(c)	N.A.
311(a)	7.11
(b)	7.11
(c)	N.A.
312(a)	2.06
(b)	11.03
(c)	11.03
313(a)	7.06
(b)(1)	N.A.
(b)(2)	7.06
(c)	7.06; 11.02
(d)	7.06
314(a)	4.02; 4.04; 11.02
(b)	N.A.
(c)(1)	11.04
(c)(2)	11.04
(c)(3)	N.A.
(d)	N.A.
(e)	11.05
(f)	N.A.
315(a)	7.01(b)
(b)	7.05; 11.02
(c)	7.01(a)
(d)	7.01(c)
(e)	6.12
316(a) (last sentence)	2.10
(a)(1)(A)	6.05
(a)(1)(B)	6.04
(a)(2)	N.A.
(b)	6.08
(c)	8.04
317(a)(1)	6.09
(a)(2)	6.10
(b)	2.05; 7.12
318(a)	11.01

N.A. means Not Applicable

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture

TABLE OF CONTENTS

		Page
ARTICLE One
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01.	Definitions	1
SECTION 1.02.	Other Definitions	26
SECTION 1.03.	Incorporation by Reference of Trust Indenture Act	27
SECTION 1.04.	Rules of Construction	27
ARTICLE Two
THE NOTES
SECTION 2.01.	Amount of Notes	28
SECTION 2.02.	Form and Dating	28
SECTION 2.03.	Execution and Authentication	29
SECTION 2.04.	Registrar and Paying Agent	29
SECTION 2.05.	Paying Agent To Hold Money in Trust	30
SECTION 2.06.	Holder Lists	30
SECTION 2.07.	Transfer and Exchange	30
SECTION 2.08.	Replacement Notes	31
SECTION 2.09.	Outstanding Notes	31
SECTION 2.10.	Treasury Notes	31
SECTION 2.11.	Temporary Notes	32
SECTION 2.12.	Cancellation	32
SECTION 2.13.	Defaulted Interest	32
SECTION 2.14.	CUSIP Number	32
SECTION 2.15.	Deposit of Moneys	33
SECTION 2.16.	Book-Entry Provisions for Global Notes	33
SECTION 2.17.	Special Transfer Provisions	35
SECTION 2.18.	Computation of Interest	36
ARTICLE Three
REDEMPTION
SECTION 3.01.	Election To Redeem; Notices to Trustee	36
SECTION 3.02.	Selection by Trustee of Notes To Be Redeemed	36
SECTION 3.03.	Notice of Redemption	37
SECTION 3.04.	Effect of Notice of Redemption	38
SECTION 3.05.	Deposit of Redemption Price	38
SECTION 3.06.	Notes Redeemed in Part	38
ARTICLE Four
COVENANTS
SECTION 4.01.	Payment of Notes	38

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SECTION 4.02.	Reports	39
SECTION 4.03.	Waiver of Stay, Extension or Usury Laws	39
SECTION 4.04.	Compliance Certificate; Notice of Default	40
SECTION 4.05.	Taxes	40
SECTION 4.06.	Limitations on Additional Indebtedness	40
SECTION 4.07.	[Intentionally left blank]	42
SECTION 4.08.	Limitations on Restricted Payments	42
SECTION 4.09.	Limitations on Asset Sales	45
SECTION 4.10.	Limitations on Transactions with Affiliates	47
SECTION 4.11.	Limitations on Liens	48
SECTION 4.12.	Conduct of Business	49
SECTION 4.13.	Additional Note Guarantees	49
SECTION 4.14.	Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries	49
SECTION 4.15.	Limitations on Designation of Unrestricted Subsidiaries	51
SECTION 4.16.	Limitations on Sale and Leaseback Transactions	52
SECTION 4.17.	Maintenance of Properties; Compliance with Law	52
SECTION 4.18.	Legal Existence	53
SECTION 4.19.	Change of Control Offer	53
SECTION 4.20.	Trigger Event	54
ARTICLE Five
Successor corporation
SECTION 5.01.	Limitations on Mergers, Consolidations, Etc.	54
SECTION 5.02.	Successor Person Substituted	56
ARTICLE Six
DEFAULTS AND REMEDIES
SECTION 6.01.	Events of Default	56
SECTION 6.02.	Acceleration and Default Rate	58
SECTION 6.03.	Other Remedies	58
SECTION 6.04.	Waiver of Past Defaults and Events of Default	58
SECTION 6.05.	Control by Majority	58
SECTION 6.06.	Limitation on Suits	59
SECTION 6.07.	No Personal Liability of Directors, Officers, Employees and Stockholders	59
SECTION 6.08.	Rights of Holders To Receive Payment	59
SECTION 6.09.	Collection Suit by Trustee	59
SECTION 6.10.	Trustee May File Proofs of Claim	60
SECTION 6.11.	Priorities	60
SECTION 6.12.	Undertaking for Costs	60
SECTION 6.13.	Restoration of Rights and Remedies	61
ARTICLE Seven
TRUSTEE
SECTION 7.01.	Duties of Trustee	61

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SECTION 7.02.	Rights of Trustee	62
SECTION 7.03.	Individual Rights of Trustee	64
SECTION 7.04.	Trustee’s Disclaimer	64
SECTION 7.05.	Notice of Defaults	64
SECTION 7.06.	Reports by Trustee to Holders	64
SECTION 7.07.	Compensation and Indemnity	64
SECTION 7.08.	Replacement of Trustee	65
SECTION 7.09.	Successor Trustee by Consolidation, Merger, Etc.	66
SECTION 7.10.	Eligibility; Disqualification	66
SECTION 7.11.	Preferential Collection of Claims Against Issuer	66
SECTION 7.12.	Paying Agents	66
ARTICLE Eight
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 8.01.	Without Consent of Holders	67
SECTION 8.02.	With Consent of Holders	68
SECTION 8.03.	Compliance with Trust Indenture Act	69
SECTION 8.04.	Revocation and Effect of Consents	69
SECTION 8.05.	Notation on or Exchange of Notes	69
SECTION 8.06.	Trustee To Sign Amendments, Etc.	70
ARTICLE Nine
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 9.01.	Discharge of Indenture	70
SECTION 9.02.	Legal Defeasance	71
SECTION 9.03.	Covenant Defeasance	71
SECTION 9.04.	Conditions to Legal Defeasance or Covenant Defeasance	71
SECTION 9.05.	Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous Provisions	72
SECTION 9.06.	Reinstatement	73
SECTION 9.07.	Moneys Held by Paying Agent	73
SECTION 9.08.	Moneys Held by Trustee	73
ARTICLE Ten
GUARANTEE OF NOTES
SECTION 10.01.	Guarantee	74
SECTION 10.02.	Execution and Delivery of Guarantee	75
SECTION 10.03.	Limitation of Guarantee	75
SECTION 10.04.	Release of Guarantor	75
SECTION 10.05.	Waiver of Subrogation	76

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ARTICLE Eleven
MISCELLANEOUS
SECTION 11.01.	Trust Indenture Act Controls	76
SECTION 11.02.	Notices	77
SECTION 11.03.	Communications by Holders with Other Holders	78
SECTION 11.04.	Certificate and Opinion as to Conditions Precedent	78
SECTION 11.05.	Statements Required in Certificate and Opinion	78
SECTION 11.06.	Rules by Trustee and Agents	78
SECTION 11.07.	Business Days; Legal Holidays	79
SECTION 11.08.	Governing Law	79
SECTION 11.09.	No Adverse Interpretation of Other Agreements	79
SECTION 11.10.	No Recourse Against Others	79
SECTION 11.11.	Successors	79
SECTION 11.12.	Multiple Counterparts	80
SECTION 11.13.	Table of Contents, Headings, Etc.	80
SECTION 11.14.	Separability	80
SECTION 11.15.	Acts of Holders. Record Dates	80
SECTION 11.16.	Failure or Indulgence Not Waiver	81
EXHIBITS
Exhibit A.	Form of Note	A-1
Exhibit B.	Form of Legend for Rule 144A Notes and Other Notes That Are Restricted Notes	B-1
Exhibit C.	Form of Legend for Regulation S Note	C-1
Exhibit D.	Form of Legend for Global Note	D-1
Exhibit E.	Form of Certificate To Be Delivered in Connection with Transfers to Non-QIB Accredited Investors	E-1
Exhibit F.	Form of Certificate To Be Delivered in Connection with Transfers to Pursuant to Regulation S	F-1
Exhibit G.	Form of Guarantee	G-1

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INDENTURE, dated as of —, 2008, among GSI GROUP CORPORATION, a Michigan corporation, as issuer (the “Issuer”), GSI Group Inc., a company continued and existing under the laws of the Province of New Brunswick, Canada and the owner of all outstanding shares of voting capital stock of the Issuer (the “Parent”), Eagle Acquisition Corporation, a Delaware corporation (“EAC”), as a Guarantor (as hereinafter defined), and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

WHEREAS, the Issuer, the Parent and each Guarantor has duly authorized the execution and delivery of this Indenture to provide for the issuance of the Notes (as hereinafter defined) to be issued as this Indenture provides;

WHEREAS, the Parent and the Guarantors have duly authorized the full and unconditional guarantee of the Notes, and to provide the general terms and conditions of the Notes and the guarantee of same, the Parent and the Guarantors have duly authorized the execution and delivery of this Indenture; and

WHEREAS, each of the Issuer, the Parent and the Guarantors jointly and severally represents that all acts and things necessary to make the Notes, when executed by the Issuer and authenticated and delivered by the Trustee as in this Indenture provided, and issued, the valid, binding and legal obligation of the Issuer, will, at the time of such execution, authentication and delivery, have been done and performed and the execution and delivery by the Issuer, the Parent and each Guarantor of this Indenture and the issue hereunder of the Notes have in all respects been duly authorized; and the Issuer, the Parent and each Guarantor, in the exercise of legal right and power in it vested, is executing and delivering this Indenture and proposes to make, execute, issue, and deliver the Notes.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders.

ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. Definitions.

“Acquired Indebtedness” means (1) with respect to any Person that becomes a Restricted Subsidiary after the Initial Issue Date, Indebtedness of such Person and its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary that was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary and (2) with respect to the Parent, the Issuer or any Restricted Subsidiary, any Indebtedness of a Person (other than the Parent, the Issuer or a Restricted Subsidiary) existing at the time such Person is merged with or into the Issuer or a Restricted Subsidiary, or Indebtedness expressly assumed by the Parent, the Issuer or any Restricted Subsidiary in connection with the acquisition of an asset or assets from another Person, which Indebtedness was not, in any case, incurred by such other Person in connection with, or in contemplation of, such merger or acquisition; provided, however, that Indebtedness of such acquired Person which is redeemed or otherwise repaid at the time of or substantially contemporaneously with the consummation of the transactions by which such acquired Person merges with or into or becomes a Restricted Subsidiary of such specified Person shall not be Acquired Indebtedness.

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“Adjusted Net Assets” of the Parent or of a Guarantor at any date shall mean the lesser of the amount by which (x) the fair value of the property of the Parent or such Guarantor exceeds the total amount of liabilities, including, without limitation, contingent liabilities (after giving effect to all other fixed and contingent liabilities), but excluding liabilities under the Guarantee, of the Parent or such Guarantor at such date and (y) the present fair salable value of the assets of the Parent or such Guarantor at such date exceeds the amount that will be required to pay the probable liability of the Parent or such Guarantor on its debts and all other fixed and contingent liabilities (after giving effect to all other fixed and contingent liabilities and after giving effect to any collection from any Subsidiary of the Parent or such Guarantor in respect of the obligations of such Guarantor under the Guarantee), excluding Indebtedness in respect of the Guarantee, as they become absolute and matured.

“Affiliate” of any Person means any other Person which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person. For purposes of Section 4.10, Affiliates shall be deemed to include, with respect to any Person, any other Person (1) which beneficially owns or holds, directly or indirectly, 10% or more of any class of the Voting Stock of the referenced Person, (2) of which 10% or more of the Voting Stock is beneficially owned or held, directly or indirectly, by the referenced Person or (3) with respect to an individual, any immediate family member of such Person. For purposes of this definition, “control” of a Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

“Agent” means any Registrar, Paying Agent or agent for service or notices and demands.

“amend” means to amend, supplement, restate, amend and restate or otherwise modify, including successively, and “amendment” shall have a correlative meaning.

“Annual Report” means an annual report on Form 10-K filed with the Commission under the Exchange Act.

“Applicable Premium” means, with respect to any Note on any Redemption Date, the greater of:

(1) 1.0% of the principal amount of the Note; or

(2) the excess of: (a) the present value at such Redemption Date of (i) the redemption price of the Note at [the one year anniversary of the Initial Issue Date] plus (ii) all required interest payments due on the Note through [the one year anniversary of the Initial Issue Date] (excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over (b) the principal amount of the Note.

“asset” means any asset or property.

“Asset Acquisition” means:

(1) an Investment by the Parent or any Restricted Subsidiary (including the Issuer) in any other Person if, as a result of such Investment, such Person shall become a Restricted Subsidiary, or shall be merged with or into the Parent or any Restricted Subsidiary (including the Issuer), or

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(2) the acquisition by the Parent or any Restricted Subsidiary (including the Issuer) of all or substantially all of the assets of any other Person or any division or line of business of any other Person.

“Asset Sale” means any sale, issuance, conveyance, transfer, lease, assignment or other disposition by the Parent or any Restricted Subsidiary (including the Issuer) to any Person other than the Parent or any Restricted Subsidiary (including the Issuer) (including by means of a Sale and Leaseback Transaction or a merger or consolidation) (collectively, for purposes of this definition, a “transfer”), in one transaction or a series of related transactions, of any assets of the Parent or any of its Restricted Subsidiaries (including the Issuer), that (i) have a Fair Market Value in excess of $5.0 million, or (ii) for aggregate consideration in excess of $5.0 million, other than in the ordinary course of business. For purposes of this definition, the term “Asset Sale” shall not include:

(1) transfers of cash or Cash Equivalents or any Margin Stock;

(2) transfers of assets (including Equity Interests) that are governed by and made in accordance with Section 5.01;

(3) Permitted Investments and Restricted Payments permitted under Section 4.08;

(4) the creation of or realization on any Permitted Lien;

(5) transfers of damaged, worn-out or obsolete equipment or assets that, in the Parent’s or the Issuer’s reasonable judgment, are no longer used or useful in the business of the Parent, the Issuer or its Restricted Subsidiaries;

(6) sales or grants of licenses or sublicenses to use the patents, trade secrets, know-how and other intellectual property, and licenses, leases or subleases of other assets, of the Parent or any Restricted Subsidiary (including the Issuer) to the extent not materially interfering with the business of Parent and the Restricted Subsidiaries;

(7) the surrender or waiver of contract rights or the settlement, release or surrender of contract or tort claims; and

(8) any exchange of property with a substantially equivalent Fair Market Value.

(9) sale of the Parent’s General Optics business made pursuant to agreements in effect on the Initial Issue Date.

“Attributable Indebtedness,” when used with respect to any Sale and Leaseback Transaction, means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded semiannually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale and Leaseback Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalitalized Lease Obligation”.

“Auction Rate Securities” means securities issued by State or local governments of the United States or political subdivisions thereof, the applicable interest rate on which is under normal circumstances subject to adjustments based on periodic remarketing or other auction process (commonly referred to as auction rate securities).

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“Bankruptcy Law” means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.

“Board of Directors” means, with respect to any Person, (i) in the case of any corporation, the Board of Directors of such Person (or any duly authorized committee thereof), (ii) in the case of any limited liability company, the board of managers of such Person (or any duly authorized committee thereof), (iii) in the case of any partnership, the board of directors of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing or, in each case, other than for purposes of the definition of “Change of Control,” any duly authorized committee of such body. Notwithstanding anything to the contrary contained herein, for so long as the Parent is the sole stockholder of the Issuer, any determination to be made by the Issuer may be made by the Parent.

“Board Resolution” means a copy of a resolution certified pursuant to an Officers’ Certificate to have been duly adopted by the Board of Directors of the Parent or the Issuer and to be in full force and effect, and delivered to the Trustee.

“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions in the City of New York are authorized or required by law to close.

“Capitalized Lease” means a lease required to be capitalized for financial reporting purposes in accordance with GAAP.

“Capitalized Lease Obligations” of any Person means the Obligations of such Person to pay rent or other amounts under a Capitalized Lease, and the amount of such Obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Cash Equivalents” means:

(1) marketable direct obligations issued or fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) maturing within 360 days of the date of acquisition thereof;

(2) demand and time deposits and certificates of deposit or acceptances, maturing within 360 days of the date of acquisition thereof, of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500 million and is rated “A” (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor;

(3) commercial paper maturing no more than 270 days from the date of creation thereof issued by a corporation that is not the Issuer or an Affiliate of the Issuer, and is organized under the laws of any State of the United States of America or the District of Columbia and rated at least A 1 by S&P or at least P 1 by Moody’s;

(4) repurchase obligations with a term of not more than ten days for underlying securities of the types described in clause (1) above entered into with any commercial bank meeting the specifications of clause (2) above;

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(5) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within 360 days from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s;

(6) in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by them from time to time; and

(7) money market or other mutual funds substantially all of whose assets comprise securities of the types described in clauses (1) through (5) above.

“Change of Control” means the occurrence of any of the following events:

(1) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), is or becomes the beneficial owner (as defined in Rules 13d 3 and 13d 5 under the Exchange Act, except that for purposes of this clause that person or group shall be deemed to have “beneficial ownership” of all securities that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock representing 50% or more of the voting power of the total outstanding Voting Stock of Parent;

(2) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with or as replaced by any new directors whose election to such Board of Directors or whose nomination for election by the stockholders of the Issuer was approved by a vote of the majority of the directors of the Issuer then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Issuer;

(3) (a) all or substantially all of the assets of the Parent and the Restricted Subsidiaries (including the Issuer) are sold or otherwise transferred to any Person other than a Wholly-Owned Restricted Subsidiary or (b) the Parent or the Issuer consolidates or merges with or into another Person or any Person consolidates or merges with or into the Parent, in either case under this clause (3), in one transaction or a series of related transactions in which immediately after the consummation thereof Persons beneficially owning (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, Voting Stock representing in the aggregate a majority of the total voting power of the Voting Stock of the Parent immediately prior to such consummation do not beneficially own (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, Voting Stock representing a majority of the total voting power of the Voting Stock of the Parent or the surviving or transferee Person;

(4) the Parent ceases to own 100% of the Equity Interests of the Issuer; or

(5) the Parent or the Issuer shall adopt a plan of liquidation or dissolution or any such plan shall be approved by the stockholders of the Parent or the Issuer.

For purposes of this definition, a Person shall not be deemed to have beneficial ownership of securities subject to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement.

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“Consolidated Amortization Expense” for any period means the amortization expense of the Parent and the Restricted Subsidiaries (including the Issuer) for such period, determined on a consolidated basis in accordance with GAAP.

“Consolidated Cash Flow” for any period means, without duplication, the sum of the amounts for such period of:

(1) Consolidated Net Income; plus

(2) in each case only to the extent (and in the same proportion) deducted in determining Consolidated Net Income and with respect to the portion of Consolidated Net Income attributable to any Restricted Subsidiary only if a corresponding amount would be permitted at the date of determination to be distributed to the Parent by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders,

(a) Consolidated Income Tax Expense;

(b) Consolidated Amortization Expense (but only to the extent not included in Consolidated Interest Expense);

(c) Consolidated Depreciation Expense;

(d) Consolidated Interest Expense;

(e) all other non-cash items reducing Consolidated Net Income (excluding any non-cash charge that results in an accrual of a reserve for cash charges in any future period) for such period;

(f) any reasonable expenses or charges relating to an equity offering, Permitted Investment, acquisition, disposition, recapitalization or the Incurrence of Indebtedness permitted to be Incurred by this Indenture (including a refinancing) (whether or not successful), and in each case, deducted, and not added back, in computing Consolidated Net Income; and

(g) restructuring charges related to the integration of Target not to exceed $10.0 million to the extent not otherwise added back in computing Consolidated Net Income.

in each case determined on a consolidated basis in accordance with GAAP; minus

(3) the aggregate amount of all non-cash items, determined on a consolidated basis, to the extent such items increased Consolidated Net Income for such period.

“Consolidated Depreciation Expense” for any period means the depreciation expense of the Parent and the Restricted Subsidiaries (including the Issuer) for such period, determined on a consolidated basis in accordance with GAAP.

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“Consolidated Income Tax Expense” for any period means the provision for taxes of the Parent and the Restricted Subsidiaries (including the Issuer), determined on a consolidated basis in accordance with GAAP.

“Consolidated Interest Expense” for any period means the sum, without duplication, of the total interest expense of the Parent and the Restricted Subsidiaries (including the Issuer) for such period, determined on a consolidated basis in accordance with GAAP and including, without duplication:

(1) imputed interest on Capitalized Lease Obligations and Attributable Indebtedness,

(2) commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations, bankers’ acceptance financing and receivables financings,

(3) the net costs associated with Hedging Obligations related to interest rates,

(4) amortization of debt discount or premium, and debt issuance costs, including commitment fees,

(5) the interest portion of any deferred payment obligations,

(6) capitalized interest,

(7) the product of (a) all dividend payments on any series of Disqualified Equity Interests of the Parent or any Preferred Stock of any Restricted Subsidiary (including the Issuer) (other than any such Disqualified Equity Interests or any Preferred Stock held by the Issuer or a Wholly-Owned Restricted Subsidiary or to the extent paid in Qualified Equity Interests), multiplied by (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of the Parent and the Restricted Subsidiaries (including the Issuer), expressed as a decimal,

(8) all interest payable with respect to discontinued operations,

(9) all interest on any Indebtedness described in clause (7) or (8) of the definition of Indebtedness;

(10) non cash interest expense; and

(11) cash contributions to any employee stock ownership plan or trust to pay interest or fees to any Person (other than the Parent) in connection with Indebtedness Incurred by such plan or trust.

“Consolidated Leverage Ratio” means as of any date of determination the ratio of (i) the aggregate principal amount of the Consolidated Total Debt of the Parent and the Restricted Subsidiaries (including the Issuer) on a consolidated basis as of the date of incurrence, to (ii) Consolidated Cash Flow of the Parent and the Restricted Subsidiaries (including the Issuer) for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination and as to which financial statements are internally available; provided, however, that

(1) if since the beginning of such period the Parent or any of the Restricted Subsidiaries (including the Issuer) shall have made any Asset Disposition, Consolidated Cash Flow for the Parent for such period shall, on a pro forma basis, be reduced by an amount equal to the Consolidated Cash Flow (if positive) attributable to the assets which are the subject of such Asset Disposition for such period;

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(2) if since the beginning of such period the Parent or any of the Restricted Subsidiaries (including the Issuer) (by merger or otherwise) shall have made an Asset Acquisition, Consolidated Cash Flow for the Issuer for such period shall be calculated after giving pro forma effect thereto (including the incurrence of any Indebtedness) as if such Asset Acquisition occurred on the first day of such period;

(3) if since the beginning of such period any Person that subsequently became a Restricted Subsidiary of the Parent or was merged with or into the Parent or any of the Restricted Subsidiaries (including the Issuer) since the beginning of such period shall have made any Asset Disposition or Asset Acquisition that would have required an adjustment pursuant to clause (1) or (2) above if made by the Parent or any of the Restricted Subsidiaries (including the Issuer) during such period, Consolidated Cash Flow for such period for the Parent shall be calculated after giving pro forma effect thereto as if such Asset Disposition or Asset Acquisition occurred on the first day of such period; and

(4) Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to any Indebtedness incurred since the beginning of such period that remains outstanding and to the Indebtedness giving rise to the need to calculate Consolidated Leverage Ratio (and after giving pro forma effect to the use of proceeds thereof) as if all such Indebtedness had been incurred or repaid on the first day of such period.

For purposes of this definition, whenever pro forma effect is to be given to an Asset Acquisition or Asset Disposition, including the amount of Consolidated Cash Flow relating thereto, the pro forma calculations shall be determined in accordance with GAAP and Regulation S-X under the Securities Act.

“Consolidated Net Assets” means, as of any date, the total amount of assets of the Parent and the Restricted Subsidiaries (including the Issuer) on a consolidated basis at the end of the fiscal quarter immediately preceding such date, less current liabilities, as determined in accordance with GAAP.

“Consolidated Net Income” for any period means the net income (or loss) of the Parent and its Restricted Subsidiaries (including the Issuer) for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication:

(1) the net income (or loss) of any Person that is not a Restricted Subsidiary, except to the extent that cash in an amount equal to any such income has actually been received by the Parent or the Issuer or, subject to clause (3) below, any Restricted Subsidiary during such period;

(2) except to the extent includible in the consolidated net income of the Parent pursuant to the foregoing clause (1), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Parent, the Issuer or any Restricted Subsidiary or (b) the assets of such Person are acquired by the Parent, the Issuer or any Restricted Subsidiary;

(3) the net income of any Restricted Subsidiary during such period to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument,

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judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary during such period, except that the Parent’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining Consolidated Net Income;

(4) unrealized gains and losses with respect to Hedging Obligations;

(5) the cumulative effect of any change in accounting principles;

(6) other than for purposes of calculating the Restricted Payments Basket, any extraordinary or non-recurring gain (or extraordinary or non-recurring loss), together with any related provision for taxes on any such extraordinary or non-recurring gain (or the tax effect of any such extraordinary or non-recurring loss), realized by the Issuer or any Restricted Subsidiary during such period; and

(7) non-cash compensation expense.

In addition, any return of capital with respect to an Investment that increased the Restricted Payments Basket pursuant to clause (3)(d) of the first paragraph of Section 4.08 or decreased the amount of Investments outstanding pursuant to clause (11) of the definition of “Permitted Investments” shall be excluded from Consolidated Net Income for purposes of calculating the Restricted Payments Basket.

For purposes of this definition of “Consolidated Net Income,” “nonrecurring” means any gain or loss as of any date that is not reasonably likely to recur within the two years following such date; provided that if there was a gain or loss similar to such gain or loss within the two years preceding such date, such gain or loss shall not be deemed nonrecurring.

“Consolidated Net Worth” means, with respect to any Person as of any date, the consolidated stockholders’ equity of such Person, determined on a consolidated basis in accordance with GAAP, less (without duplication) (1) any amounts thereof attributable to Disqualified Equity Interests of such Person or its Subsidiaries or any amount attributable to Unrestricted Subsidiaries and (2) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within twelve months after the acquisition of such business) subsequent to the Initial Issue Date in the book value of any asset owned by such Person or a Subsidiary of such Person.

“Consolidated Total Debt” means at any date of determination the aggregate amount of all Indebtedness of the Parent or any of its Restricted Subsidiaries then outstanding of the type specific in clauses (1),(2), (3), (4), (5), (6), (7), (8), (9) and (11) of the definition thereof to the extent shown or required by GAAP to be shown as a liability on a consolidated balance sheet of the Parent and the Restricted Subsidiaries as of such date.

“Corporate Trust Office” means the principal office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at: The Bank of New York Mellon Trust Company, N.A., 222 Berkeley Street, 2nd Floor; Boston, MA 02116, Fax 617.351.2401, Attention: Corporate Trust Administration, or such other address as the Trustee may designate form time to time by notice to the Holders and the Issuer, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Issuer).

“Credit Facilities” means one or more debt, commercial paper or credit facilities (which may be outstanding at the same time) with commercial banks providing for revolving credit loans, term

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loans, notes, receivables financing or letters of credit and, in each case, as such agreements may be amended, refinanced, refunded, replaced or otherwise restructured, in whole or in part from time to time (including extending the maturity of, increasing the amount of available borrowings under, extending the purpose to include acquisition, working capital and other facilities of, changing the conditions and basis of borrowing of, combining the seniority of, changing the covenants and other provisions of, and adding Subsidiaries as additional borrowers or guarantors, or otherwise restructuring all or any portion of the Indebtedness under such agreement or agreements or any successor or replacement agreement or agreements and whether with the same or any other agent, lender or group of lenders), including (i) any related notes, letters of credit, guarantees, collateral documents, instruments and other agreements executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time, and (ii) any notes, guarantees, collateral documents, instruments and other agreements executed in connection with any such amendment, modification, renewal, refunding, replacement or refinancing.

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

“Default” means (1) any Event of Default or (2) any event, act or condition that, after notice or the passage of time or both, would be an Event of Default.

“Default Rate” means, upon a declaration of acceleration in accordance with Section 6.02, an additional 2.0% over the interest rate on the principal of and an increase of 2.0% per annum above the amount of all accrued and unpaid interest on the Notes.

“Depository” means, with respect to the Notes issued in the form of one or more Global Notes, The Depository Trust Company or another Person designated as Depository by the Issuer, which Person must be a clearing agency registered under the Exchange Act.

“Designation” has the meaning given to this term in Section 4.15.

“Designation Amount” has the meaning given to this term in Section 4.15.

“Disqualified Equity Interests” of any Person means any class of Equity Interests of such Person that, by its terms, or by the terms of any related agreement or of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed by such Person, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the date which is 91 days after the final maturity date of the Notes; provided, however, that any class of Equity Interests of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Equity Interests that are not Disqualified Equity Interests, and that is not convertible, puttable or exchangeable for Disqualified Equity Interests or Indebtedness, will not be deemed to be Disqualified Equity Interests so long as such Person satisfies its obligations with respect thereto solely by the delivery of Equity Interests that are not Disqualified Equity Interests; provided, further, however, that any Equity Interests that would not constitute Disqualified Equity Interests but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests are convertible, exchangeable or exercisable) the right to require the Issuer to redeem such Equity Interests upon the occurrence of a change in control or an asset sale occurring prior to the 91st day after the final maturity date of the Notes shall not constitute Disqualified Equity Interests if the change of control or asset sale provisions applicable to such Equity Interests are no more favorable, taken as a whole, to such holders than the provisions of Sections 4.19 and 4.09, respectively,

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and such Equity Interests specifically provide that the Issuer will not redeem any such Equity Interests pursuant to such provisions prior to the Issuer’s purchase of the Notes as required pursuant to the provisions of Sections 4.19 and 4.09, respectively.

“Equity Interests” of any Person means (1) any and all shares or other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such Person and (2) all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such Person.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, with respect to any asset, the price (after taking into account any liabilities relating to such asset) that would be negotiated in an arm’s-length transaction for cash between a willing seller and a willing and able buyer, neither of which is under any compulsion to complete the transaction. Fair Market Value (other than of any asset with a public trading market) in excess of $12.5 million shall be determined by the Board of Directors of the Parent or the Issuer acting reasonably and in good faith and shall be evidenced by a board resolution delivered to the Trustee.

“Foreign Subsidiary” means, with respect to any Person, any Restricted Subsidiary of such Person that is not organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the Initial Issue Date.

“guarantee” means a direct or indirect guarantee by any Person of any Indebtedness of any other Person and includes any obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services (unless such purchase arrangements are on arm’s-length terms and are entered into in the ordinary course of business), to take-or-pay, or to maintain financial statement conditions or otherwise); or (2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); “guarantee,” when used as a verb, and “guaranteed” have correlative meanings.

“Guarantors” means (i) each Restricted Subsidiary which is a Subsidiary of the Issuer (other than a Foreign Subsidiary) on the Initial Issue Date, and (ii) each other Person that is required to, or at the election of the Issuer does, become a Guarantor by the terms of this Indenture after the Initial Issue Date, in each case, until such Person is released from its Note Guarantee in accordance with the terms of this Indenture. Neither MicroE Systems International, Inc. nor MicroE Systems Corp. shall be required to be a Guarantor on the Initial Issue Date or thereafter, provided that such entities are dissolved, liquidated or merged with and into another Restricted Subsidiary not later than December 31, 2008. Additionally, General Scanning Securities Corp. shall not be required to be a Guarantor on the Initial Issue Date or thereafter, provided that such entity has assets of less than $2.5 million.

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“Hedging Obligations” of any Person means the obligations of such Person under swap, cap, collar, forward purchase or similar agreements or arrangements dealing with interest rates, currency exchange rates, commodities or commodity prices, either generally or under specific contingencies.

“Heirs” means, with respect to any individual, such individual’s estate, spouse, lineal relatives (including adoptive descendants), administrator, committee or other personal representative or other estate planning vehicle and any custodian or trustee for the benefit of any spouse or lineal relatives (including adoptive descendants) of such individual.

“Holder” means any registered holder, from time to time, of the Notes.

“Immaterial Subsidiary” means, any Subsidiary of the Parent that owns less than 2% of Consolidated Net Assets and generates less than 2% of Consolidated Net Income.

“incur” means, with respect to any Indebtedness or Obligation, incur, create, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to such Indebtedness or Obligation; provided that (1) the Indebtedness of a Person existing at the time such Person became a Restricted Subsidiary shall be deemed to have been incurred by such Restricted Subsidiary and (2) neither the accrual of interest nor the accretion of original issue discount or the accretion of principal or the payment of interest in the form of additional Indebtedness or accumulation of dividends on any Equity Interests shall be deemed to be an incurrence of Indebtedness.

“Incurrence Leverage Ratio” has the meaning set forth in the proviso in the first paragraph of Section 4.06.

“Indebtedness” of any Person at any date means, without duplication:

(1) all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof);

(2) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments (other than letter of credit obligations entered into in the ordinary course of business, to the extent such letter of credit are not drawn upon, or if and to the extent drawn upon, such drawing is reimbursed no later than the fifth Business Day following the receipt by such Person of a demand or reimbursement following payment on the letter of credit);

(3) all reimbursement obligations of such Person in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions (except to the extent such letter of credit or other transaction is not drawn upon, or if and to the extent drawn upon, such drawing is reimbursed no later than the fifth Business Day following the receipt by such Person of a demand for reimbursement following payment on such letter of credit or other transaction, or extends to a trade payable and is satisfied no later than the tenth Business Day after it is drawn upon);

(4) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred by such Person in the ordinary course of business in connection with obtaining goods, materials or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery or title thereto;

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(5) the maximum fixed redemption or repurchase price of all Disqualified Equity Interests of such Person;

(6) all Capitalized Lease Obligations of such Person;

(7) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person;

(8) all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided that Indebtedness of the Parent or its Subsidiaries that is guaranteed by the Parent or the Parent’s Subsidiaries shall only be counted once in the calculation of the amount of Indebtedness of the Parent and its Subsidiaries on a consolidated basis;

(9) all Attributable Indebtedness;

(10) to the extent not otherwise included in this definition, Hedging Obligations of such Person; and

(11) all obligations of such Person under conditional sale or other title retention agreements relating to assets purchased by such Person.

The amount of any Indebtedness which is incurred at a discount to the principal amount at maturity thereof as of any date shall be deemed to have been incurred at the accreted value thereof as of such date. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (7), the lesser of (a) the Fair Market Value of any asset subject to a Lien securing the Indebtedness of others on the date that the Lien attaches and (b) the amount of the Indebtedness secured. The principal amount of the Indebtedness under any Hedging Obligations at any time shall be equal to the amount payable as a result of the termination of the arrangement or agreement for such Hedging Obligations at such time. For purposes of clause (5), the “maximum fixed redemption or repurchase price” of any Disqualified Equity Interests that do not have a fixed redemption or repurchase price shall be calculated in accordance with the terms of such Disqualified Equity Interests as if such Disqualified Equity Interests were redeemed or repurchased on any date on which an amount of Indebtedness outstanding shall be required to be determined pursuant to this Indenture.

“Indenture” means this Indenture as amended, restated or supplemented from time to time.

“Independent Director” means a director of the Parent or the Issuer who is independent with respect to the transaction at issue.

“Independent Financial Advisor” means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the reasonable judgment of the Parent’s or the Issuer’s Board of Directors, qualified to perform the task for which it has been engaged and disinterested and independent with respect to the Issuer and its Affiliates.

“Initial Issue Date” means —, 2008, the date on which the Initial Notes are originally issued.

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“Initial Notes” means $210,000,000 million aggregate principal amount of Notes issued under this Indenture on the Initial Issue Date.

“Institutional Accredited Investor” means an institution that is an “accredited investor” as that term is defined in Rule 501(a)(1), (2), (3) or (7) promulgated under the Securities Act.

“interest” means, with respect to the Notes, interest on the Notes.

“Interest Payment Dates” means each — and —, commencing —, 2009.

“Investments” of any Person means:

(1) all direct or indirect investments by such Person in any other Person in the form of loans, advances or capital contributions or other credit extensions constituting Indebtedness of such other Person, and any guarantee of Indebtedness of any other Person;

(2) all purchases (or other acquisitions for consideration) by such Person of Indebtedness, Equity Interests or other securities of any other Person (other than any such purchase that constitutes a Restricted Payment of the type described in clause (2) of the definition thereof);

(3) all other items that would be classified as investments on a balance sheet of such Person prepared in accordance with GAAP (including, if required by GAAP, purchases of assets outside the ordinary course of business); and

(4) the Designation of any Subsidiary as an Unrestricted Subsidiary.

Except as otherwise expressly specified in this definition, the amount of any Investment (other than an Investment made in cash) shall be the Fair Market Value thereof on the date such Investment is made. The amount of Investment pursuant to clause (4) shall be the Designation Amount determined in accordance with Section 4.15. If the Issuer or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary, or any Restricted Subsidiary issues any Equity Interests, in either case, such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary, the Issuer shall be deemed to have made an Investment on the date of any such sale or other disposition equal to the Fair Market Value of the Equity Interests of and all other Investments in such Restricted Subsidiary retained. Notwithstanding the foregoing, purchases or redemptions of Equity Interests or Indebtedness of the Parent shall be deemed not to be Investments.

“Issuer” means the party named as such in the first paragraph of this Indenture until a successor replaces such party pursuant to Article Five and thereafter means the successor.

“Issuer Request” means any written request signed in the name of the Issuer by the Chairman of the Board of Directors, any Vice Chairman, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer or the Treasurer of the Issuer or the Parent and attested to by the Secretary or any Assistant Secretary of the Issuer.

“Lien” means, with respect to any asset, any mortgage, deed of trust, lien (statutory or other), pledge, lease, easement, restriction, covenant, charge, security interest or other encumbrance of any kind or nature in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement.

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“Margin Stock” means the shares of common stock, par value $0.001 per share of the Target that are owned by the Parent or any Restricted Subsidiary; provided, however, that such shares shall cease to be Margin Stock when the securities no longer constitute “margin stock” pursuant to Regulation U of the Federal Reserve Board.

“Moody’s” means Moody’s Investors Service, Inc. and its successors.

“Net Available Proceeds” means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents, net of

(1) reasonable brokerage commissions and other reasonable fees and expenses (including reasonable fees, discounts and expenses of legal counsel, accountants and investment banks, consultants and placement agents) of such Asset Sale;

(2) provisions for taxes payable as a result of such Asset Sale (after taking into account any available tax credits or deductions and any tax sharing arrangements);

(3) amounts required to be paid to any Person (other than the Issuer or any Restricted Subsidiary and other than under a Credit Facility) owning a beneficial interest in the assets subject to the Asset Sale or having a Lien thereon;

(4) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets sold at the time of, or within 60 days after the date of, such Asset Sale; and

(5) appropriate amounts to be provided by the Issuer or any Restricted Subsidiary, as the case may be, as a reserve required in accordance with GAAP against any adjustment in the sale price of such asset or assets or liabilities associated with such Asset Sale and retained by the Parent or any Restricted Subsidiary (including the Issuer), as the case may be, after such Asset Sale, including pensions and other postemployment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale; provided, however, that any amounts remaining after adjustments, revaluations or liquidations of such reserves shall constitute Net Available Proceeds.

“Net Indebtedness” means, at any date, the Consolidated Total Debt of the Parent and the Restricted Subsidiaries (including the Issuer) determined on a consolidated basis, less cash and Cash Equivalents of the Parent and the Restricted Subsidiaries (including the Issuer) determined on a consolidated basis.

“Non-Recourse Debt” means Indebtedness of an Unrestricted Subsidiary:

(1) as to which neither the Issuer nor any Restricted Subsidiary (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender;

(2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than any Credit Facility or the Notes) of the Issuer or any Restricted Subsidiary to declare a default on the other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and

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(3) as to which the lenders have been notified in writing that they will not have any recourse to the Equity Interests or assets of the Issuer or any Restricted Subsidiary.

“Non-U.S. Person” means a Person who is not a U.S. person, as defined in Regulation S.

“Notes” means the 11% Senior Notes due [one day prior to fifth anniversary of issuance date], 2013 issued by the Issuer, treated as a single class of securities, as amended from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture.

“Obligation” means any principal, interest, penalties, fees, indemnification, reimbursements, costs, expenses, damages and other liabilities payable under the documentation governing any Indebtedness.

“Offer” has the meaning set forth in the definition of “Offer to Purchase.”

“Offer Expiration Date” has the meaning set forth in the definition of “Offer to Purchase.”

“Offer to Purchase” means a written offer (the “Offer”) sent by or on behalf of the Parent or the Issuer by first-class mail, postage prepaid, to each Holder at its address appearing in the register for the Notes on the date of the Offer offering to purchase up to the principal amount of Notes specified in such Offer at the purchase price specified in such Offer (as determined pursuant to this Indenture). Unless otherwise required by applicable law, the Offer shall specify an expiration date (the “Offer Expiration Date”) of the Offer to Purchase, which shall be not less than 30 days nor more than 60 days after the date of such Offer, and a settlement date (the “Purchase Date”) for purchase of Notes to occur no later than three Business Days after the Offer Expiration Date. The Offer shall contain all the information required by applicable law to be included therein. The Offer shall also contain information concerning the business of the Parent and its Subsidiaries which the Parent or the Issuer in good faith believes will enable such Holders to make an informed decision with respect to the Offer to Purchase. The Offer shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Offer to Purchase. The Offer shall also state:

(1) the Section of this Indenture pursuant to which the Offer to Purchase is being made;

(2) the Offer Expiration Date and the Purchase Date;

(3) the aggregate principal amount of the outstanding Notes offered to be purchased by the Parent or the Issuer pursuant to the Offer to Purchase (including, if less than 100%, the manner by which such amount has been determined pursuant to the Section of this Indenture requiring the Offer to Purchase) (the “Purchase Amount”);

(4) the purchase price to be paid by the Parent or the Issuer for each $1,000 aggregate principal amount of Notes accepted for payment (the “Purchase Price”);

(5) that the Holder may tender all or any portion of the Notes registered in the name of such Holder and that any portion of a Note tendered must be tendered in minimum denominations of $2,000 and integral multiples of $1,000 principal amount;

(6) the place or places where Notes are to be surrendered for tender pursuant to the Offer to Purchase;

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(7) that interest on any Note not tendered or tendered but not purchased by the Issuer pursuant to the Offer to Purchase will continue to accrue;

(8) that on the Purchase Date the Purchase Price will become due and payable upon each Note being accepted for payment pursuant to the Offer to Purchase and that interest thereon shall cease to accrue on and after the Purchase Date;

(9) that each Holder electing to tender all or any portion of a Note pursuant to the Offer to Purchase will be required to surrender such Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, at the place or places specified in the Offer prior to the close of business on the Offer Expiration Date (such Note being, if the Issuer so requires, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuer duly executed by, the Holder thereof or its attorney duly authorized in writing);

(10) that Holders will be entitled to withdraw all or any portion of Notes tendered if the Issuer receives, not later than the close of business on the fifth Business Day preceding the Offer Expiration Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder tendered, the certificate number of the Note the Holder tendered and a statement that such Holder is withdrawing all or a portion of its tender;

(11) that (a) if Notes in an aggregate principal amount less than or equal to the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer to Purchase, the Issuer shall purchase all such Notes and (b) if Notes in an aggregate principal amount in excess of the Purchase Amount are tendered and not withdrawn pursuant to the Offer to Purchase, the Issuer shall purchase Notes having an aggregate principal amount equal to the Purchase Amount on a pro rata basis (with such adjustments as may be deemed appropriate so that only Notes in an aggregate principal amount of $2,000 or greater and integral multiples of $1,000 shall be purchased); and

(12) that in the case of any Holder whose Note is purchased only in part, the Issuer shall execute and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unpurchased portion of the Note so tendered.

An Offer to Purchase shall be governed by and effected in accordance with the provisions above pertaining to any Offer.

On or before the Purchase Date, the Issuer shall (i) accept for payment Notes or portions thereof tendered and not withdrawn pursuant to the Offer, (ii) deposit with the Trustee U.S. Dollars sufficient to pay the Purchase Price, plus accrued interest, if any, of all Notes to be purchased through and including the Purchase Date and (iii) deliver to the Trustee Notes so accepted together with an Officers’ Certificate stating the Notes or portions thereof being purchased by the Issuer. The Trustee shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the Purchase Price, plus accrued interest, if any, thereon.

“Officer” means any of the following of the Parent or the Issuer: the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary.

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“Officers’ Certificate” means a certificate signed on behalf of a Person by two Officers of such Person.

“Opinion of Counsel” means a written opinion reasonably satisfactory in form and substance to the Trustee from legal counsel, which counsel is reasonably acceptable to the Trustee, stating the matters required by Section 11.05 and delivered to the Trustee.

“Parent” has the meaning set forth in the introductory paragraph to this Agreement.

“Pari Passu Indebtedness” means any Indebtedness of the Parent, the Issuer or any Guarantor that ranks pari passu in right of payment with the Notes or the Note Guarantees, as applicable (without giving effect to any security interest).

“Permitted Business” means the businesses engaged in by the Parent and its Subsidiaries on the Initial Issue Date and businesses that are reasonably related thereto or reasonable extensions thereof.

“Permitted Investments” means (each of which shall be given independent effect in whole or in part):

(1) (i) Investments by the Parent or any Restricted Subsidiary (including the Issuer) in (a) the Parent or any Restricted Subsidiary (including the Issuer), or (b) any Person that will become immediately after such Investment a Restricted Subsidiary or that will merge or consolidate into the Issuer or any Restricted Subsidiary;

(2) Investments in the Parent by any Restricted Subsidiary (including the Issuer);

(3) loans and advances to directors, employees and officers of the Parent and the Restricted Subsidiaries for bona fide business purposes and to purchase Equity Interests of the Parent not in excess of $10.0 million at any one time outstanding;

(4) Hedging Obligations entered into for bona fide hedging purposes of the Parent, the Issuer or any Restricted Subsidiary not for the purpose of speculation;

(5) cash and Cash Equivalents;

(6) accounts and notes receivables owing to the Parent, the Issuer or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Issuer or any such Restricted Subsidiary deems reasonable under the circumstances;

(7) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers or any exchange of such investment with the issuer thereof or taken in settlement of or other resolution of claims or disputes;

(8) Investments received in connection with an Asset Sale that was made in compliance with Section 4.09;

(9) lease, utility and other similar deposits in the ordinary course of business;

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(10) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Parent, the Issuer or any Restricted Subsidiary or in satisfaction of judgments;

(11) other Investments made after the Initial Issue Date in an aggregate amount not to exceed the greater of $15.0 million or 3.5% of the Consolidated Net Assets at any one time outstanding (with each Investment being valued as of the date made and without regard to subsequent changes in value); provided that no Investment made in reliance on this clause (11) shall be made in any Person that is the direct or indirect holder of more than 25% of the outstanding Equity Interests of the Parent;

(12) Investments of the Parent, the Issuer and the Restricted Subsidiaries to the extent outstanding on the Initial Issue Date;

(13) Payroll, travel and similar advances to cover matters that are expected at the time of such advance ultimately to be treated as an expense; and

(14) any assets, capital stock or other securities to the extent acquired for capital stock, other than Disqualified Equity Interests.

The amount of Investments outstanding at any time pursuant to clause (11) above shall be deemed to be reduced:

(a) upon the disposition or repayment of or return on any Investment made pursuant to clause (11), by an amount equal to the return of capital with respect to such Investment to the Issuer or any Restricted Subsidiary (to the extent not included in the computation of Consolidated Net Income); and

(b) upon a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, by an amount equal to the lesser of (x) the Fair Market Value of the Issuer’s proportionate interest in such Subsidiary immediately following such Redesignation, and (y) the aggregate amount of Investments in such Subsidiary that increased (and did not previously decrease) the amount of Investments outstanding pursuant to clause (11).

“Permitted Liens” means the following types of Liens:

(1) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Parent, the Issuer or the Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;

(2) Liens of landlords, carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof and rights to offset and set-off;

(3) Liens incurred or deposits made in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory or regulatory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money), in each case incurred in the ordinary course of business;

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(4) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods, incurred in the ordinary course of business;

(5) judgment Liens not giving rise to an Event of Default so long as such Liens are adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which the proceedings may be initiated has not expired;

(6) easements, rights-of-way, zoning restrictions, title irregularities and other similar charges, restrictions or encumbrances in respect of real property which do not, in the aggregate, impair in any material respect the ordinary conduct of the business of the Parent, the Issuer and the Restricted Subsidiaries taken as a whole;

(7) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other assets relating to such letters of credit and products and proceeds thereof;

(8) Liens encumbering deposits made to secure obligations arising from contractual or warranty requirements of the Parent, the Issuer or any Restricted Subsidiary, including rights of offset and set-off;

(9) lenders’ Liens, rights of set-off and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more of accounts maintained by the Parent, the Issuer or any Restricted Subsidiary, in each case granted in the ordinary course of business in favor of the lender or lenders with which such accounts are maintained, securing amounts owing to such lender with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;

(10) leases or subleases, and licenses or sublicenses, granted to others that do not materially interfere with the ordinary course of business of the Parent, the Issuer or any Restricted Subsidiary;

(11) Liens arising from filing Uniform Commercial Code financing statements regarding operating leases;

(12) Liens securing all of the Notes and Liens securing any Note Guarantee;

(13) Liens in favor of lenders under any Credit Facility secured pursuant to clause (16) below securing Hedging Obligations entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary not for the purpose of speculation;

(14) Liens existing on the Initial Issue Date;

(15) Liens in favor of the Issuer or a Guarantor;

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(16) Liens securing Indebtedness under any Credit Facility incurred pursuant to clause (1) of Section 4.06; provided that such liens are only secured by the Parent’s, the Issuer’s and/or any Restricted Subsidiary’s inventory, accounts receivable, and general intangibles, support obligations, documents, and books and records relating thereto;

(17) [Intentionally left blank];

(18) Liens securing Acquired Indebtedness permitted to be incurred under this Indenture; provided that the Liens do not extend to assets not subject to such Lien at the time of acquisition (other than improvements thereon and substitutions and replacements thereto) and are no more favorable to the lienholders than those securing such Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Parent, the Issuer or a Restricted Subsidiary;

(19) Liens on assets of a Person existing at the time such Person is acquired or merged with or into or consolidated with the Parent, the Issuer or any such Restricted Subsidiary (and not created in anticipation or contemplation thereof); provided that the Liens do not extend to assets not subject to such Lien at the time of such acquisition, merger or consolidation (other than improvements thereon and substitutions and replacements thereto) and are no more favorable to the lienholders than those in effect prior to such acquisition, merger or consolidation with the Parent, the Issuer or any such Restricted Subsidiary;

(20) Liens to secure Refinancing Indebtedness of Indebtedness secured by Liens referred to in the foregoing clauses (12), (14), (18) and (19); provided that in the case of Liens securing Refinancing Indebtedness of Indebtedness secured by Liens referred to in the foregoing clauses (14), (18) and (19), such Liens do not extend to any additional assets (other than improvements thereon and replacements thereof);

(21) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(22) Liens securing Indebtedness incurred pursuant to clause (4), (7) and (12) of Section 4.06, provided that, in the case of (12), such liens shall attach only to the related Auction Rate Securities; and

(23) Liens arising in connection with the placement by the Parent, Issuer or any Restricted Subsidiary of a reasonable amount of cash (as determined in good faith by the Parent’s or the Issuer’s Board of Directors) in escrow against any obligations permitted pursuant to clause (11) of Section 4.06 (other than with respect to obligations incurred or assumed in connection with the acquisition, disposition, issuance or redemption of Equity Interests of the Parent); and

(24) Liens with respect to Margin Stock.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind.

“Physical Notes” means certificated Notes in registered form in substantially the form set forth in Exhibit A.

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“Plan of Liquidation” with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise): (1) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (2) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition of all or substantially all of the remaining assets of such Person to holders of Equity Interests of such Person.

“Preferred Stock” means, with respect to any Person, any and all preferred or preference stock or other equity interests (however designated) of such Person whether now outstanding or issued after the Initial Issue Date.

“principal” means, with respect to the Notes, the principal of, and premium, if any, on the Notes.

“Private Placement Legend” means the legend initially set forth on the Rule 144A Notes and Other Notes that are Restricted Notes in the form set forth in Exhibit B.

“Purchase Agreement” means the Agreement and Plan of Merger made and entered into as of July 9, 2008, by and among the Parent, EAGLE ACQUISITION CORPORATION, a Delaware corporation and wholly owned subsidiary of the Issuer, and the Target.

“Purchase Amount” has the meaning set forth in the definition of “Offer to Purchase.”

“Purchase Date” has the meaning set forth in the definition of “Offer to Purchase.”

“Purchase Money Indebtedness” means Indebtedness, including Capitalized Lease Obligations, of the Parent, the Issuer or any Restricted Subsidiary incurred for the purpose of financing all or any part of the purchase price or improvement of property, plant or equipment purchased, constructed or improved at any time after the Initial Issue Date and used in the business of the Parent, the Issuer or any Restricted Subsidiary or the cost of installation, construction or improvement thereof and fees and other obligations incurred in connection therewith, as amended or otherwise restructured (other than pursuant to a refinancing); provided, however, that (1) the amount of such Indebtedness shall not exceed such purchase price or cost and (2) such Indebtedness shall be incurred within 90 days after such acquisition of such asset by the Parent, the Issuer or such Restricted Subsidiary or such installation, construction or improvement.

“Purchase Price” has the meaning set forth in the definition of “Offer to Purchase.”

“Qualified Equity Interests” of any Person means Equity Interests of such Person other than Disqualified Equity Interests; provided that such Equity Interests shall not be deemed Qualified Equity Interests to the extent sold or owed to a Subsidiary of such Person or financed, directly or indirectly, using funds (1) borrowed from such Person or any Subsidiary of such Person until and to the extent such borrowing is repaid or (2) contributed, extended, guaranteed or advanced by such Person or any Subsidiary of such Person (including, without limitation, in respect of any employee stock ownership or benefit plan). Unless otherwise specified, Qualified Equity Interests refer to Qualified Equity Interests of the Parent.

“Qualified Institutional Buyer” or “QIB” shall have the meaning specified in Rule 144A promulgated under the Securities Act.

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“Quarterly Report” means a quarterly report on Form 10-Q filed with the Commission under the Exchange Act.

“redeem” means to redeem, repurchase, purchase, defease (including a covenant defeasance), retire, discharge or otherwise acquire or retire for value; and “redemption” shall have a correlative meaning; provided that this definition shall not apply for purposes of Section 3.01.

“Redemption Date” when used with respect to any Note to be redeemed means the date fixed for such redemption pursuant to the terms of the Notes.

“Redemption Price” means the price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon, if any, to, but not including, the Redemption Date.

“refinance” means to refinance, repay, prepay, replace, renew or refund.

“Refinancing Indebtedness” means Indebtedness of the Parent, the Issuer or a Restricted Subsidiary incurred in exchange for, or the proceeds of which are used to redeem or refinance in whole or in part, any Indebtedness of the Parent, the Issuer or any Restricted Subsidiary (the “Refinanced Indebtedness”); provided that:

(1) the principal amount (and accreted value, in the case of Indebtedness issued at a discount) of the Refinancing Indebtedness does not exceed the principal amount (and accreted value, as the case may be) of the Refinanced Indebtedness plus the amount of accrued and unpaid interest on the Refinanced Indebtedness, any premium paid to the holders of the Refinanced Indebtedness and expenses incurred or to be paid in connection with the incurrence of the Refinancing Indebtedness;

(2) the obligor of Refinancing Indebtedness does not include any Person (other than the Parent, the Issuer or any Restricted Subsidiary) that is not an obligor of the Refinanced Indebtedness;

(3) if the Refinanced Indebtedness was subordinated in right of payment to the Notes or the Note Guarantees, as the case may be, then such Refinancing Indebtedness, by its terms, is subordinate in right of payment to the Notes or the Note Guarantees, as the case may be, at least to the same extent as the Refinanced Indebtedness;

(4) the Refinancing Indebtedness has a final stated maturity either (a) no earlier than the Refinanced Indebtedness being repaid or amended or (b) 121 days after the maturity date of the Notes; and

(5) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the Notes has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Refinanced Indebtedness being repaid that is scheduled to mature on or prior to the maturity date of the Notes.

“Regulation S” means Regulation S promulgated under the Securities Act.

“Responsible Officer” when used with respect to the Trustee, means an officer or assistant officer assigned to the corporate trust department of the Trustee (or any successor group of the Trustee)

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with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

“Restricted Note” has the same meaning as “Restricted Security” set forth in Rule 144(a)(3) promulgated under the Securities Act; provided that the Trustee shall be entitled to request and conclusively rely upon an Opinion of Counsel with respect to whether any Note is a Restricted Note.

“Restricted Payment” means any of the following:

(1) the declaration or payment of any dividend or any other distribution on Equity Interests of the Parent or any Restricted Subsidiary (including the Issuer) or any payment made to the direct or indirect holders (in their capacities as such) of Equity Interests of the Parent or any Restricted Subsidiary (including the Issuer), including, without limitation, any payment in connection with any merger or consolidation involving the Issuer but excluding (a) dividends or distributions payable solely in Qualified Equity Interests or through accretion or accumulation of such dividends on such Equity Interests and (b) in the case of Restricted Subsidiaries (including the Issuer), dividends or distributions payable to the Parent or to a Restricted Subsidiary (including the Issuer) and pro rata dividends or distributions payable to minority stockholders of any Restricted Subsidiary (including the Issuer);

(2) the redemption of any Equity Interests of the Parent or any Restricted Subsidiary (including the Issuer), including, without limitation, any payment in connection with any merger or consolidation involving the Parent but excluding any such Equity Interests held by the Parent or any Restricted Subsidiary (including the Issuer);

(3) any Investment other than a Permitted Investment; or

(4) any payment or redemption prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Subordinated Indebtedness (other than any Subordinated Indebtedness owed to and held by the Parent, the Issuer or any Restricted Subsidiary).

“Restricted Subsidiary” means any Subsidiary of the Parent (including the Issuer) other than an Unrestricted Subsidiary.

“Rule 144” means Rule 144 promulgated under the Securities Act.

“Rule 144A” means Rule 144A promulgated under the Securities Act.

“S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc., and its successors.

“Sale and Leaseback Transactions” means, with respect to any Person, an arrangement with any bank, insurance company or other lender or investor or to which such lender or investor is a party, providing for the leasing by such Person of any asset of such Person which has been or is being sold or transferred by such Person to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such asset.

“SEC” means the U.S. Securities and Exchange Commission.

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“Secretary’s Certificate” means a certificate signed by the Secretary of the Parent or the Issuer.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” of the Parent as defined in Regulation S-X promulgated pursuant to the Securities Act as such Regulation is in effect on the Initial Issue Date.

“Subordinated Indebtedness” means Indebtedness of the Parent, the Issuer or any Restricted Subsidiary that is expressly subordinated in right of payment to the Notes or the Note Guarantees, respectively.

“Subsidiary” means, with respect to any Person:

(1) any corporation, limited liability company, association or other business entity of which more than 50% of the total voting power of the Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person (or a combination thereof); and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof).

Unless otherwise specified, “Subsidiary” refers to a Subsidiary of the Issuer.

“Target” means Excel Technology, Inc.

“Tax” (and, with correlative meaning, “Taxes”) means all taxes, charges, fees, levies or other similar assessments or liabilities, including without limitation income, gross receipts, ad valorem, premium, value-added, excise, real property, personal property, sales, use, services, withholding, employment, payroll and franchise taxes imposed by the United States or any state, local or foreign government, or any agency thereof, or other political subdivision of the Unites States or any such government, and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to, or incurred in connection with any Tax or any contest or dispute thereof.

“Trigger Event” has the meaning given to this term in Section 4.20.

“Trigger Event Measuring Period” has the meaning given to this term in Section 4.20.

“Trigger Event Offer Date” has the meaning given to this term in Section 4.20.

“Trigger Event Payment Date” has the meaning given to this term in Section 4.20.

“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939, as amended.

“Trustee” means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means the successor.

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“Unrestricted Subsidiary” means (1) any Subsidiary that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Parent or the Issuer in accordance with Section 4.15 and (2) any Subsidiary of an Unrestricted Subsidiary.

“U.S. Government Obligations” means direct non-callable obligations of, or guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States are pledged.

“Voting Stock,” with respect to any Person, means securities of any class of Equity Interests of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock or other relevant equity interest has voting power by reason of any contingency) to vote in the election of members of the Board of Directors of such Person.

“Weighted Average Life to Maturity,” when applied to any Indebtedness at any date, means the number of years obtained by dividing (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity (but not including any redemption offer upon an asset sale, change of control or other similar obligation), in respect thereof by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (2) the then outstanding principal amount of such Indebtedness.

“Wholly-Owned Restricted Subsidiary” means a Restricted Subsidiary of which 100% of the Equity Interests (except for directors’ qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) are owned directly by the Issuer or through one or more Wholly-Owned Restricted Subsidiaries.

SECTION 1.02. Other Definitions.

The definitions of the following terms may be found in the sections indicated as follows:

Term	Defined in Section
“Affiliate Transaction”	4.10
“Agent Members”	2.16(a)
“Business Day”	11.07
“Change of Control Date”	4.19
“Change of Control Offer”	4.19
“Change of Control Payment Date”	4.19
“Change of Control Purchase Price”	4.19
“Covenant Defeasance”	9.03
“Designation”	4.15
“Designation Amount”	4.15
“Event of Default”	6.01
“Excess Proceeds”	4.09
“Global Notes”	2.16(a)
“Legal Defeasance”	9.02
“Legal Holiday”	11.07
“Incurrence Leverage Ratio”	4.06
“Note Guarantee”	10.01
“Other Notes”	2.02
“Paying Agent”	2.04

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Term	Defined in Section
“Permitted Indebtedness”	4.06
“Redesignation”	4.15
“Registrar”	2.04
“Regulation S Global Note”	2.16(a)
“Regulation S Notes”	2.02
“Restricted Global Note”	2.16(a)
“Restricted Payments Basket”	4.08
“Restricted Period”	2.16(f)
“Rule 144A Notes”	2.02

SECTION 1.03. Incorporation by Reference of Trust Indenture Act.

Whenever this Indenture refers to a provision of the TIA, the portion of such provision required to be incorporated herein in order for this Indenture to be qualified under the TIA is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings:

“indenture securities” means the Notes.

“indenture securityholder” means a Holder or Noteholder.

“indenture to be qualified” means this Indenture.

“indenture trustee” or “institutional trustee” means the Trustee.

“obligor on the indenture securities” means the Issuer, the Guarantors or any other obligor on the Notes.

All other terms used in this Indenture that are defined bAQQy the TIA, defined in the TIA by reference to another statute or defined by SEC rule have the meanings therein assigned to them.

SECTION 1.04. Rules of Construction.

Unless the context otherwise requires:

(1) a term has the meaning assigned to it herein, whether defined expressly or by reference;

(2) “or” is not exclusive;

(3) words in the singular include the plural, and in the plural include the singular;

(4) words used herein implying any gender shall apply to both genders;

(5) “herein,” “hereof” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or Subsection;

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(6) unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP as in effect from time to time, applied on a basis consistent with the most recent audited consolidated financial statements of the Issuer; and

(7) “$,” “U.S. Dollars” and “United States Dollars” each refer to United States dollars, or such other money of the United States that at the time of payment is legal tender for payment of public and private debts.

ARTICLE TWO

THE NOTES

SECTION 2.01. Amount of Notes.

The Trustee shall authenticate Initial Notes for original issue on the Initial Issue Date in the aggregate principal amount not to exceed $210,000,000. The Officers’ Certificate shall specify the amount of Notes to be authenticated, the date on which the Notes are to be authenticated, and the names and delivery instructions for each Holder of the Notes.

Upon receipt of a written order of the Issuer in the form of an Officers’ Certificate, the Trustee shall authenticate Notes in substitution for Notes originally issued to reflect any name change of the Issuer.

SECTION 2.02. Form and Dating.

The Notes and the Trustee’s certificate of authentication with respect thereto shall be substantially in the form set forth in Exhibit A, which is incorporated in and forms a part of this Indenture. The Notes may have notations, legends or endorsements required by law, rule or usage to which the Issuer is subject. Without limiting the generality of the foregoing, Notes offered and sold to Qualified Institutional Buyers in reliance on Rule 144A (“Rule 144A Notes”) shall bear the legend and include the form of assignment set forth in Exhibit B, Notes offered and sold in offshore transactions in reliance on Regulation S (“Regulation S Notes”) shall bear the legend and include the form of assignment set forth in Exhibit C, and Notes offered and sold to Institutional Accredited Investors in transactions exempt from registration under the Securities Act not made in reliance on Rule 144A or Regulation S (“Other Notes”) may be represented by a Restricted Global Note or, if such an investor may not hold an interest in the Restricted Global Note, a Physical Note, in each case, bearing the Private Placement Legend. Each Note shall be dated the date of its authentication.

The terms and provisions contained in the Notes shall constitute, and are expressly made, a part of this Indenture and, to the extent applicable, the Issuer, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and agree to be bound thereby.

The Notes may be presented for registration of transfer and exchange at the offices of the Registrar.

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SECTION 2.03. Execution and Authentication.

Two Officers shall sign, or one Officer shall sign and one Officer (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to, the Notes for the Issuer by manual or facsimile signature.

If an Officer whose signature is on a Note was an Officer at the time of such execution but no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Note shall have been authenticated and delivered hereunder but never issued and sold by the Issuer, and the Issuer shall deliver such Note to the Trustee for cancellation as provided in Section 2.12, for all purposes of this Indenture such Note shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

The Trustee may appoint an authenticating agent reasonably acceptable to the Issuer to authenticate the Notes. Unless otherwise provided in the appointment, an authenticating agent may authenticate the Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Issuer and Affiliates of the Issuer. Each Paying Agent is designated as an authenticating agent for purposes of this Indenture.

The Notes shall be issuable only in registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000.

SECTION 2.04. Registrar and Paying Agent.

The Issuer shall maintain an office or agency (which shall be located in the Borough of Manhattan in The City of New York, State of New York) where Notes may be presented for registration of transfer or for exchange (the “Registrar”), and an office or agency where Notes may be presented for payment (the “Paying Agent”) and an office or agency where notices and demands to or upon the Issuer, if any, in respect of the Notes and this Indenture may be served. The Registrar shall keep a register of the principal amount of the Notes (and stated interest therein) and of their transfer and exchange. If and for so long as the Trustee is not the Registrar, the Trustee shall have the right to inspect the register of the Notes during regular business hours. The Issuer may have one or more additional Paying Agents. The term “Paying Agent” includes any additional Paying Agent. Neither the Issuer nor any Affiliate thereof may act as Paying Agent.

The Issuer shall enter into an appropriate agency agreement, which shall incorporate the provisions of the TIA, with any Agent that is not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuer shall notify the Trustee of the name and address of any such Agent. If the Issuer fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such and shall be entitled to appropriate compensation in accordance with Section 7.07. The Issuer or any wholly owned Subsidiary may act as Paying Agent, Registrar, co-registrar or transfer agent.

The Issuer initially appoints the Trustee as Registrar, Paying Agent and Agent for service of notices and demands in connection with the Notes and this Indenture.

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SECTION 2.05. Paying Agent To Hold Money in Trust.

Prior to each due date of the principal or interest on any Notes, the Issuer shall deposit with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due. Each Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of principal of or premium or interest on the Notes (whether such money has been paid to it by the Issuer or any other obligor on the Notes or the Guarantors), and the Issuer and the Paying Agent shall notify the Trustee in writing of any default by the Issuer (or any other obligor on the Notes) in making any such payment. Money held in trust by the Paying Agent need not be segregated except as required by law and in no event shall the Paying Agent be liable for any interest on any money received by it hereunder. The Issuer at any time may require the Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed and the Trustee may at any time during the continuance of any Event of Default specified in Section 6.01(1) or (2), upon written request to the Paying Agent, require such Paying Agent to pay forthwith all money so held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon making such payment, the Paying Agent shall have no further liability for the money delivered to the Trustee.

SECTION 2.06. Holder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders. If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at least five Business Days before each Interest Payment Date, and at such other times as the Trustee may reasonably request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders.

SECTION 2.07. Transfer and Exchange.

Subject to Sections 2.16 and 2.17, when Notes are presented to the Registrar with a request from the Holder of such Notes to register a transfer or to exchange them for an equal principal amount of Notes of other authorized denominations, the Registrar shall register the transfer as requested if the requirements of this Indenture are met. Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Registrar, duly executed by the Holder thereof or his attorneys duly authorized in writing. To permit registrations of transfers and exchanges, the Issuer shall issue and execute and the Trustee shall authenticate new Notes (and the Guarantors shall execute the guarantee thereon) evidencing such transfer or exchange at the Registrar’s request. No service charge shall be made to the Holder for any registration of transfer or exchange. The Issuer may require from the Holder payment of a sum sufficient to cover any transfer taxes or other governmental charge that may be imposed in relation to a transfer or exchange, but this provision shall not apply to any exchange pursuant to Section 2.11, 3.06, 4.09, 4.19 or 8.05 (in which events the Issuer shall be responsible for the payment of such taxes). The Registrar shall not be required to exchange or register a transfer of any Note for a period of 15 days immediately preceding the mailing of notice of redemption of Notes to be redeemed or of any Note selected, called or being called for redemption except the unredeemed portion of any Note being redeemed in part.

Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of the beneficial interests in such Global Note may be effected only through a book entry system maintained by the Holder of such Global Note (or its agent), and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry.

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Each Holder of a Note agrees to indemnify the Issuer and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder’s Note in violation of any provision of this Indenture and/or applicable U.S. Federal or state securities law.

Except as expressly provided herein, neither the Trustee nor the Registrar shall have any duty to monitor the Issuer’s compliance with or have any responsibility with respect to the Issuer’s compliance with any Federal or state securities laws.

SECTION 2.08. Replacement Notes.

If a mutilated Note is surrendered to the Registrar or the Trustee, or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a replacement Note (and the Guarantors shall execute the guarantee thereon) if the Holder of such Note furnishes to the Issuer and the Trustee evidence reasonably acceptable to them of the ownership and the destruction, loss or theft of such Note and if the requirements of Section 8-405 of the New York Uniform Commercial Code as in effect on the date of this Indenture are met. If required by the Trustee or the Issuer, an indemnity bond shall be posted by such Holder, sufficient in the judgment of both to protect the Issuer, the Guarantors, the Trustee or any Paying Agent from any loss that any of them may suffer if such Note is replaced. The Issuer and the Trustee may charge such Holder for their out of pocket expenses in replacing such Note (including, without limitation, attorneys’ fees and disbursements). Every replacement Note shall constitute a contractual obligation of the Issuer.

SECTION 2.09. Outstanding Notes.

The Notes outstanding at any time are all Notes that have been authenticated by the Trustee except for (a) those cancelled by it, (b) those delivered to it for cancellation, (c) to the extent set forth in Sections 9.01 and 9.02, on or after the date on which the conditions set forth in Section 9.01 or 9.02 have been satisfied, those Notes theretofore authenticated and delivered by the Trustee hereunder and (d) those described in this Section 2.09 as not outstanding. Subject to Section 2.10, a Note does not cease to be outstanding because the Issuer or one of its Affiliates holds the Note.

If a Note is replaced pursuant to Section 2.08, it ceases to be outstanding unless the Trustee and the Issuer receive proof satisfactory to them that the replaced Note is held by a bona fide purchaser in whose hands such Note is a legal, valid and binding obligation of the Issuer.

If the Paying Agent segregates and holds in trust, in its capacity as such, on any redemption date or maturity date, money sufficient to pay all accrued interest and principal with respect to the Notes payable on that date and is not prohibited from paying such money to the Holders thereof pursuant to the terms of this Indenture, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue.

SECTION 2.10. Treasury Notes.

In determining whether the Holders of the required principal amount of Notes have concurred in any declaration of acceleration or notice of default or direction, waiver or consent or any amendment, modification or other change to this Indenture, Notes owned by the Issuer or any other Affiliate of the Issuer shall be disregarded as though they were not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent or any amendment, modification or other change to this Indenture, only Notes as to which a Responsible Officer of the Trustee has received an Officers’ Certificate stating that such Notes are so owned shall be so disregarded. Notes so owned which have been pledged in good faith shall not be disregarded if the

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pledgee established to the satisfaction of the Trustee the pledgee’s right so to act with respect to the Notes and that the pledgee is not the Issuer, a Guarantor, any other obligor on the Notes or any of their respective Affiliates.

SECTION 2.11. Temporary Notes.

Until definitive Notes are prepared and ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Issuer considers appropriate for temporary Notes. Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as definitive Notes.

SECTION 2.12. Cancellation.

The Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall (subject to the record-retention requirements of the Exchange Act) dispose of such cancelled Notes in its customary manner. The Trustee shall deliver a certificate of such disposal to the Issuer upon its request therefor. The Issuer may not reissue or resell, or issue new Notes to replace, Notes that the Issuer has redeemed or paid, or that have been delivered to the Trustee for cancellation.

SECTION 2.13. Defaulted Interest.

If the Issuer defaults on a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent permitted by law) any interest payable on the defaulted interest, in accordance with the terms hereof, to the Persons who are Holders on a subsequent special record date, which date shall be at least five Business Days prior to the payment date. The Issuer shall fix such special record date and payment date in a manner satisfactory to the Trustee. The Issuer shall promptly mail to each Holder a notice that states the special record date, the payment date and the amount of defaulted interest, and interest payable on defaulted interest, if any, to be paid. The Issuer may make payment of any defaulted interest in any other lawful manner not inconsistent with the requirements (if applicable) of any securities exchange on which the Notes may be listed and, upon such notice as may be required by such exchange, if, after written notice given by the Issuer to the Trustee of the proposed payment pursuant to this sentence, such manner of payment shall be deemed practicable by the Trustee.

SECTION 2.14. CUSIP Number.

The Issuer in issuing the Notes may use a “CUSIP” number, ISIN and “Common Code” number (in each case if then generally in use), and if so, such CUSIP number, ISIN and Common Code number shall be included in notices of redemption or exchange as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness or accuracy of such number either as printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Issuer shall promptly notify, and in any event within 10 Business Days, the Trustee of any such CUSIP number, ISIN and Common Code number used by the Issuer in connection with the issuance of the Notes and of any change in the CUSIP number, ISIN and Common Code number.

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SECTION 2.15. Deposit of Moneys.

Prior to 10:00 a.m., New York City time, on each Interest Payment Date and maturity date, the Issuer shall have deposited with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such Interest Payment Date or maturity date, as the case may be, in a timely manner which permits the Trustee to remit payment to the Holders on such Interest Payment Date or maturity date, as the case may be. The principal and interest on Global Notes shall be payable to the Depository or its nominee, as the case may be, as the sole registered owner and the sole holder of the Global Notes represented thereby. The principal and interest on Physical Notes shall be payable, either in person or by mail, at the office of the Paying Agent.

SECTION 2.16. Book-Entry Provisions for Global Notes.

(a) Rule 144A Notes initially shall be represented by one or more notes in registered, global form without interest coupons (collectively, the “Restricted Global Note”). Regulation S Notes initially shall be represented by one or more notes in registered, global form without interest coupons (collectively, the “Regulation S Global Note,” and, together with the Restricted Global Note and any other global notes representing Notes, the “Global Notes”). The Global Notes shall bear legends as set forth in Exhibit D. The Global Notes initially shall (i) be registered in the name of the Depository or the nominee of such Depository, in each case for credit to an account of an Agent Member, (ii) be delivered to the Trustee as custodian for such Depository and (iii) bear legends as set forth in Exhibit B with respect to Restricted Global Notes and Exhibit C with respect to Regulation S Global Notes.

Members of, or direct or indirect participants in, the Depository (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository, or the Trustee as its custodian, or under the Global Notes, and the Depository may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner of the Global Notes for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note.

(b) Transfers of Global Notes shall be limited to transfer in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in the Global Notes may be transferred or exchanged for Physical Notes in accordance with the rules and procedures of the Depository and the provisions of Section 2.17. In addition, a Global Note shall be exchangeable for Physical Notes if (i) the Depository (x) notifies the Issuer that it is unwilling or unable to continue as depository for such Global Note and the Issuer thereupon fails to appoint a successor depository within 90 days thereof or (y) has ceased to be a clearing agency registered under the Exchange Act and the Issuer thereupon fails to appoint a successor depository within 90 days thereof or (ii) there shall have occurred and be continuing an Event of Default with respect to the Notes. In all cases, Physical Notes delivered in exchange for any Global Note or beneficial interests therein shall be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depository (in accordance with its customary procedures).

(c) In connection with any transfer or exchange of a portion of the beneficial interest in any Global Note to beneficial owners pursuant to paragraph (b), the Registrar shall (if one or more Physical Notes are to be issued) reflect on its books and records the date and a decrease in the principal amount of the Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Issuer shall execute, and the Trustee shall upon receipt of a written order from the Issuer authenticate and make available for delivery, one or more Physical Notes of like tenor and amount.

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(d) In connection with the transfer of Global Notes as an entirety to beneficial owners pursuant to paragraph (b), the Global Notes shall be deemed to be surrendered to the Trustee for cancellation, and the Issuer shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depository in writing in exchange for its beneficial interest in the Global Notes, an equal aggregate principal amount of Physical Notes of authorized denominations.

(e) Any Physical Note constituting a Restricted Note delivered in exchange for an interest in a Global Note pursuant to paragraph (b), (c) or (d) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section 2.17, bear the Private Placement Legend or, in the case of the Regulation S Global Note, the legend set forth in Exhibit C, in each case, unless the Issuer determines otherwise in compliance with applicable law.

(f) On or prior to the 40th day after the later of the commencement of the offering of the Notes represented by the Regulation S Global Note and the issue date of such Notes (such period through and including such 40th day, the “Restricted Period”), a beneficial interest in a Regulation S Global Note may be transferred to a Person who takes delivery in the form of an interest in the corresponding Restricted Global Note only upon receipt by the Trustee of a written certification from the transferor to the effect that such transfer is being made (i)(a) to a Person whom the transferor reasonably believes is a Qualified Institutional Buyer in a transaction meeting the requirements of Rule 144A or (b) pursuant to another exemption from the registration requirements under the Securities Act which is accompanied by an Opinion of Counsel regarding the availability of such exemption and (ii) in accordance with all applicable securities laws of any state of the United States or any other jurisdiction.

(g) Beneficial interests in the Restricted Global Note may be transferred to a Person who takes delivery in the form of an interest in the Regulation S Global Note, whether before or after the expiration of the Restricted Period, only if the transferor first delivers to the Trustee a written certificate to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available).

(h) Any beneficial interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in another Global Note shall, upon transfer, cease to be an interest in such Global Note and become an interest in such other Global Note and, accordingly, shall thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest.

(i) The Holder of any Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

(j) None of the Issuer or the Trustee nor any agent of the Issuer or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Note or maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

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SECTION 2.17. Special Transfer Provisions.

(a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S. Persons. The following provisions shall apply with respect to the registration of any proposed transfer of a Note constituting a Restricted Note to any Institutional Accredited Investor which is not a QIB or to any Non U.S. Person:

(i) the Registrar shall register the transfer of any Note constituting a Restricted Note, whether or not such Note bears the Private Placement Legend, if (x) the requested transfer is after the first anniversary of the date such Note is issued or such other date as such Note shall be freely transferable under Rule 144 as certified in an Officers’ Certificate or (y) (1) in the case of a transfer to an Institutional Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the proposed transferee has delivered to the Registrar a certificate substantially in the form of Exhibit E hereto or (2) in the case of a transfer to a Non-U.S. Person (including a QIB), the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit F hereto; provided that in the case of any transfer of a Note bearing the Private Placement Legend for a Note not bearing the Private Placement Legend, the Registrar has received an Officers’ Certificate authorizing such transfer; and

(ii) if the proposed transferor is an Agent Member holding a beneficial interest in a Global Note, upon receipt by the Registrar of (x) the certificate, if any, required by paragraph (i) above and (y) instructions given in accordance with the Depository’s and the Registrar’s procedures,

whereupon (a) the Registrar shall reflect on its books and records the date and (if the transfer does not involve a transfer of outstanding Physical Notes) a decrease in the principal amount of a Global Note in an amount equal to the principal amount of the beneficial interest in a Global Note to be transferred, and (b) the Registrar shall reflect on its books and records the date and an increase in the principal amount of a Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note transferred or the Issuer shall execute and the Trustee shall authenticate and make available for delivery one or more Physical Notes of like tenor and amount.

(b) Transfers to QIBs. The following provisions shall apply with respect to the registration or any proposed registration of transfer of a Note constituting a Restricted Note to a QIB (excluding transfers to Non-U.S. Persons):

(i) the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on such Holder’s Note stating, or has otherwise advised the Issuer and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on such Holder’s Note stating, or has otherwise advised the Issuer and the Registrar in writing, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and

(ii) if the proposed transferee is an Agent Member, and the Notes to be transferred consist of Physical Notes which after transfer are to be evidenced by an interest in the Global Note, upon receipt by the Registrar of instructions given in accordance with the Depository’s and the Registrar’s procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note in an amount equal to the principal amount of the Physical Notes to be transferred, and the Trustee shall cancel the Physical Notes so transferred.

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(c) Private Placement Legend. Upon the registration of transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the registration of transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend unless (i) it has received the Officers’ Certificate required by paragraph (a)(i)(y) of this Section 2.17, (ii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Issuer and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (iii) such Note has been sold pursuant to an effective registration statement under the Securities Act and the Registrar has received an Officers’ Certificate from the Issuer to such effect.

(d) General. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture.

The Registrar shall retain for a period of two years copies of all letters, notices and other written communications received pursuant to Section 2.16 or this Section 2.17. The Issuer shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable notice to the Registrar.

SECTION 2.18. Computation of Interest.

Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.

ARTICLE THREE

REDEMPTION

SECTION 3.01. Election To Redeem; Notices to Trustee.

If the Issuer elects to redeem Notes pursuant to paragraph 6 of the Notes, at least 45 days prior to the Redemption Date (unless a shorter notice shall be agreed to in writing by the Trustee), the Issuer shall notify the Trustee in writing of the Redemption Date, the principal amount of Notes to be redeemed and the redemption price, and deliver to the Trustee an Officers’ Certificate stating that such redemption will comply with the conditions contained in paragraph 6 of the Notes. Notice given to the Trustee pursuant to this Section 3.01 may not be revoked after the time that notice is given to Holders pursuant to Section 3.03. As set forth in paragraph 6 of the Notes, up to 50% of the aggregate principal amount of the Notes may be redeemed in whole or in part, at any time, on or after the first anniversary of the Initial Issue Date and prior to the third anniversary of the Initial Issue Date at the Redemption Price. At any time after the third anniversary of the Initial Issue Date, all or any of the Notes may be redeemed from time to time at the Redemption Price.

SECTION 3.02. Selection by Trustee of Notes To Be Redeemed.

In the event that less than all of the Notes are to be redeemed pursuant to a redemption made pursuant to paragraph 6 of the Notes, selection of the Notes for redemption shall be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not then listed on a national security exchange, on a pro rata basis, by lot; provided, however, that no Notes of a principal amount of $2,000 or less shall be redeemed

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in part. If a partial redemption is made pursuant to the second paragraph of paragraph 6 of the Notes, selection of the Notes or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to the procedures of the Depository), unless that method is otherwise prohibited. The Trustee shall promptly notify the Issuer of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. The Trustee may select for redemption portions of the principal of the Notes that have denominations larger than $2,000. For all purposes of this Indenture unless the context otherwise requires, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Issuer may acquire Notes by means other than redemption, whether pursuant to an Issuer tender offer, open market purchase or otherwise, provided such acquisition does not otherwise violate the other terms of this Indenture.

SECTION 3.03. Notice of Redemption.

At least 30 days, and no more than 60 days, before a Redemption Date, the Issuer shall mail, or cause to be mailed, a notice of redemption by first-class mail to each Holder of Notes to be redeemed at his or her last address as the same appears on the registry books maintained by the Registrar pursuant to Section 2.04, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a satisfaction and discharge of this Indenture. If the Issuer mails such notice to Holders, it shall mail a copy of such notice to the Trustee at the same time.

The notice shall identify the Notes to be redeemed (including the CUSIP numbers ISIN and Common Code numbers, if any thereof) and shall state:

(1) the Redemption Date;

(2) the redemption price and the amount of premium (or the manner of calculation the redemption price and/or premium) and accrued interest to be paid;

(3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date and upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued;

(4) the name and address of the Paying Agent;

(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(6) that unless the Issuer defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;

(7) the provision of paragraph 6 of the Notes, as the case may be, pursuant to which the Notes called for redemption are being redeemed; and

(8) the aggregate principal amount of Notes that are being redeemed.

At the Issuer’s written request made at least ten Business Days prior to the date on which notice is to be given, the Trustee shall give the notice of redemption prepared by the Issuer, in the Issuer’s name and at the Issuer’s sole expense. In such event, the Issuer shall provide the Trustee with the information required by this Section 3.03.

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SECTION 3.04. Effect of Notice of Redemption.

Once the notice of redemption described in Section 3.03 is mailed, Notes called for redemption become due and payable on the Redemption Date and at the redemption price, including any premium, plus interest accrued to the Redemption Date. Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price, including any premium, plus interest accrued to the Redemption Date, provided that if the Redemption Date is after a regular record date and on or prior to the Interest Payment Date, the accrued interest shall be payable to the Holder of the redeemed Notes registered on the relevant record date, and provided, further, that if a Redemption Date is a Legal Holiday, payment shall be made on the next succeeding Business Day and no interest shall accrue for the period from such Redemption Date to such succeeding Business Day. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.

SECTION 3.05. Deposit of Redemption Price.

On or prior to 10:00 A.M., New York City time, on each Redemption Date, the Issuer shall deposit with the Paying Agent in immediately available funds money sufficient to pay the redemption price of, including premium, if any, and accrued interest on all Notes to be redeemed on that date other than Notes or portions thereof called for redemption on that date which have been delivered by the Issuer to the Trustee for cancellation. Promptly after the calculation of the Redemption Price, the Issuer will give the Trustee and any Paying Agent written notice thereof.

On and after any Redemption Date, if money sufficient to pay the redemption price of, including premium, if any, and accrued interest on Notes called for redemption shall have been made available in accordance with the preceding paragraph, the Notes called for redemption will cease to accrue interest and the only right of the Holders of such Notes will be to receive payment of the redemption price of and, subject to the first proviso in Section 3.04, accrued and unpaid interest on such Notes to the Redemption Date. If any Note surrendered for redemption shall not be so paid, interest will be paid, from the Redemption Date until such redemption payment is made, on the unpaid principal of the Note and any interest not paid on such unpaid principal, in each case, at the rate and in the manner provided in the Notes.

SECTION 3.06. Notes Redeemed in Part.

Upon surrender of a Note that is redeemed in part, the Issuer shall execute and the Trustee shall authenticate for the Holder thereof a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

ARTICLE FOUR

COVENANTS

SECTION 4.01. Payment of Notes.

The Issuer shall pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and this Indenture. An installment of principal or interest shall be considered paid on the date it is due if the Trustee or Paying Agent holds on that date money designated for and sufficient to pay such installment.

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The Issuer shall pay interest on overdue principal (including post-petition interest in a proceeding under any Bankruptcy Law), and overdue interest, to the extent lawful, at the rate specified in the Notes.

If a Holder fails to provide the Trustee and the Issuer with appropriate tax certifications providing an exemption from the applicable withholding tax (which, in respect of United States federal income tax laws, includes (i) an Internal Revenue Service Form W-9 for U.S. persons or its successor form, or (ii) an appropriate Internal Revenue Service Form W-8 for non-U.S. persons or the applicable successor form), the Issuer shall be entitled to withhold an amount from interest and/or principal payments to be made to such Holder pursuant to this Section 4.01 that equals the applicable withholding tax. Any installment of principal or interest due pursuant to this Section 4.01 shall be considered fully paid even if such amount is withheld from the installment otherwise due to such Holder.

SECTION 4.02. Reports.

(a) Whether or not required by the SEC, so long as any Notes are outstanding, the Issuer will file with the SEC (unless the SEC will not accept such a filing) within the time periods specified in the SEC’s rules and regulations, unless already publicly available on the SEC’s EDGAR filing system, the Issuer (a) will furnish (without exhibits) to the Trustee for delivery to the Holders of Notes and (b) post on its website or otherwise make available to prospective purchasers of the Notes:

(1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Issuer were required to file such forms, including a “Management’s discussion and analysis of financial condition and results of operations” and, with respect to the annual information only, a report on the annual financial statements by the Issuer’s independent auditors; and

(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Issuer were required to file such reports.

(b) Notwithstanding the foregoing, it is understood that for so long as the Issuer is exempt from the reporting requirements of Section 13(a) or 15(d) of the Exchange Act and the Parent files with the SEC and provides (unless already public on the Commission’s EDGAR filing system) the Trustee and Holders with such annual reports and such information, documents and other reports as are specified in Section 13 and 15(d) of the Exchange Act and applicable to a corporation subject to such Sections (such information, documents and reports to be so filed with the SEC and provided at the times specified for the filing of such information, documents and reports under such Sections), the Issuer shall not be required to file such information, documents and reports with the SEC or provide such information, documents and reports to the Trustee and the Holders as otherwise required pursuant to this Section 4.02.

(c) So long as any Notes remain outstanding, the Issuer shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

SECTION 4.03. Waiver of Stay, Extension or Usury Laws.

Each of the Parent, the Issuer and the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, or plead (as a defense or otherwise) or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law which would prohibit or forgive any of the Parent, the Issuer and the Guarantors from paying all or

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any portion of the principal of, premium, if any, and/or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that they may lawfully do so) each of the Parent, the Issuer and the Guarantors hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 4.04. Compliance Certificate; Notice of Default.

(a) The Issuer or the Parent shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of the Parent and its Subsidiaries during such fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Parent, the Issuer and the Guarantors have kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, the Parent, the Issuer and the Guarantors have kept, observed, performed and fulfilled each and every covenant contained in this Indenture and are not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default shall have occurred, describing all such Defaults of which he or she may have knowledge and what action they are taking or propose to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Parent, the Issuer and the Guarantors are taking or propose to take with respect thereto.

(b) The Issuer shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default, an Officers’ Certificate specifying such Default and what action the Parent, the Issuer and the Guarantors are taking or propose to take with respect thereto.

(c) The Issuer’s fiscal year currently ends on December 31. The Issuer shall provide written notice to the Trustee of any change in its fiscal year. Failure to provide any such Notice will not constitute a Default under this Indenture.

SECTION 4.05. Taxes.

The Parent, the Issuer and the Guarantors shall, and shall cause each of their Subsidiaries to, pay prior to delinquency all material Taxes except as contested in good faith and by appropriate proceedings.

SECTION 4.06. Limitations on Additional Indebtedness.

The Parent shall not, and shall not permit any Restricted Subsidiary (including the Issuer) to, directly or indirectly, incur any Indebtedness; provided that the Parent, the Issuer or any Guarantor may incur additional Indebtedness if, after giving pro forma effect thereto (including the application of the net proceeds therefrom), the Consolidated Leverage Ratio would not exceed 3.00 to 1.00 (the “Incurrence Leverage Ratio”).

Notwithstanding the above, each of the following, which shall be given independent effect in whole or in part, shall be permitted (the “Permitted Indebtedness”):

(1) Indebtedness of the Parent and any Restricted Subsidiary (including the Issuer) under any Credit Facility, in an aggregate principal amount at any time outstanding not to exceed $20,000,000;

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(2) the Initial Notes and the Note Guarantees in respect thereof (including any future Note Guarantee);

(3) Indebtedness of the Parent and the Restricted Subsidiaries (including the Issuer) to the extent outstanding on the Initial Issue Date after giving effect to the intended use of proceeds of the Initial Notes (other than Indebtedness referred to in clause (1), (2) or (5)) in an amount not to exceed $3.0 million;

(4) Indebtedness under Hedging Obligations entered into for bona fide hedging purposes of the Parent or any Restricted Subsidiary (including the Issuer) not for the purpose of speculation; provided that the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;

(5) Indebtedness of the Parent owed to a Restricted Subsidiary (including the Issuer) and Indebtedness of any Restricted Subsidiary (including the Issuer) owed to the Parent or any other Restricted Subsidiary (including the Issuer); provided, however, that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Parent, the Issuer or a Restricted Subsidiary, the Parent, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (5);

(6)(a) Indebtedness in respect of bid, performance, completion, guarantee, surety and similar bonds and assurances issued for the account of the Parent or any Restricted Subsidiary (including the Issuer) in the ordinary course of business, including guarantees or obligations of the Parent or any Restricted Subsidiary (including the Issuer) with respect to letters of credit supporting such bid, performance, completion, guarantee or surety obligations (in each case other than for an obligation for money borrowed); and (b) Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business in respect of (i) workers’ compensation claims or self-insurance, (ii) other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims or self-insurance or (iii) for regulatory or insurance purposes;

(7) Purchase Money Indebtedness and/or Attributable Debt, in an aggregate amount not to exceed at any time outstanding 10% of the Parent’s and its Restricted Subsidiaries (including the Issuer) Consolidated Net Assets;

(8) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds; provided, however, that such Indebtedness is extinguished within five Business Days of the Parent or a Restricted Subsidiary (including the Issuer), as the case may be, being notified of such overdraft;

(9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;

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(10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Incurrence Leverage Ratio or clause (2) or (3) above or this clause (10);

(11) Indemnification, adjustment of purchase price, earn-out or similar obligations, in each case incurred or assumed in connection with the acquisition or disposition of any business or assets of the Parent or any Restricted Subsidiary (including the Issuer) or the acquisition, disposition, issuance or redemption of Equity Interests of the Parent or a Restricted Subsidiary (including the Issuer), other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Equity Interests for the purpose of financing or in contemplation of any such acquisition; provided that in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause (11) shall at no time exceed the gross proceeds or value of the consideration actually received by the Issuer and the Restricted Subsidiaries (including the Issuer) in connection with such disposition;

(12) Indebtedness of the Parent or any Restricted Subsidiary (including the Issuer) that is attributable to or secured by Auction Rate Securities; provided that the holder of such Indebtedness shall not have any recourse for the payment thereof except to the proceeds of the Auction Rate Securities securing such Indebtedness;

(13) Indebtedness of the Parent or any Restricted Subsidiary (including the Issuer) in an aggregate amount not to exceed $10.0 million at any time outstanding;

(14) Indebtedness consisting of Guarantees of Indebtedness otherwise permitted to be Incurred; and

(15) Acquired Indebtedness; provided, however, that at the time that Restricted Subsidiary was acquired by the Issuer or the Parent or otherwise became a Restricted Subsidiary and after giving effect to the incurrence of that Indebtedness, the Issuer or the Parent would have been able to incur $1.00 of additional Indebtedness pursuant to the Incurrence Leverage Ratio.

For purposes of determining compliance with this Section 4.06, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (15) above or is entitled to be incurred pursuant to the Incurrence Leverage Ratio, the Issuer shall, in its sole discretion, classify such item of Indebtedness and may divide and classify such Indebtedness in more than one of the types of Indebtedness described, and may later reclassify any item of Indebtedness as having been Incurred pursuant to the Incurrence Leverage Ratio or pursuant to any of clauses (1) through (15) above (provided that at the time of reclassification it meets the criteria in such category or categories). Notwithstanding the foregoing, any Indebtedness Incurred pursuant to the Incurrence Leverage Ratio must have a greater Weighted Average Life to Maturity than the Notes and a stated maturity that is later than the stated maturity of the Notes.

SECTION 4.07. [Intentionally left blank].

SECTION 4.08. Limitations on Restricted Payments.

The Parent shall not, and shall not permit any Restricted Subsidiary (including the Issuer) to, directly or indirectly, make any Restricted Payment if at the time of such Restricted Payment:

(1) a Default shall have occurred and be continuing or shall occur as a consequence thereof;

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(2) the Parent cannot incur $1.00 of additional Indebtedness pursuant to the Incurrence Leverage Ratio; or

(3) the amount of such Restricted Payment, (the amount so expended, if other than in cash, to be determined in good faith by the Board of Directors) when added to the aggregate amount of all other Restricted Payments made after the Initial Issue Date (other than Restricted Payments made pursuant to clauses (2), (3), (4), (7) or (8) of the next paragraph), exceeds the sum (the “Restricted Payments Basket”) of (without duplication):

(a) 50% of Consolidated Net Income of the Parent and its Restricted Subsidiaries (including the Issuer) for the period (taken as one accounting period) commencing on the first day of the fiscal quarter in which the Initial Issue Date occurs to and including the last day of the fiscal quarter ended immediately prior to the date of such calculation for which consolidated financial statements are internally available (or, if such Consolidated Net Income shall be a deficit, minus 100% of such aggregate deficit), plus

(b) 100% of the aggregate net cash proceeds received by the Parent either (x) as contributions to the common equity of the Parent after the Initial Issue Date or (y) from the issuance and sale of Qualified Equity Interests after the Initial Issue Date, other than (A) any such proceeds which are used to redeem Notes in accordance with Section 6(b) of the Notes or (B) any such proceeds or assets received from a Subsidiary, plus

(c) the aggregate amount by which Indebtedness incurred by the Parent or any Restricted Subsidiary (including the Issuer) subsequent to the Initial Issue Date is reduced on the Parent’s balance sheet upon the conversion or exchange into Qualified Equity Interests of the Parent (less the amount of any cash, or the fair value of assets, distributed by the Parent or any Restricted Subsidiary to a Person other than the Parent or a Restricted Subsidiary upon such conversion or exchange), plus

(d) in the case of the disposition or repayment of or liquidated return on any Investment that was treated as a Restricted Payment made after the Initial Issue Date, an amount (to the extent not included in the computation of Consolidated Net Income) equal to the lesser of (i) 100% of the aggregate amount received by the Parent or any Restricted Subsidiary (including the Issuer) in cash or other property (valued at the Fair Market Value thereof) as the return of capital with respect to such Investment and (ii) the amount of such Investment that was treated as a Restricted Payment, in either case, less the cost of the disposition of such Investment and net of taxes, plus

(e) upon a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the lesser of (i) the Fair Market Value of the Parent’s proportionate interest in such Subsidiary immediately following such Redesignation, and (ii) the aggregate amount of the Parent’s Investments in such Subsidiary to the extent such Investments prior to such Redesignation had reduced the Restricted Payments Basket and were not previously repaid or otherwise reduced.

The foregoing provisions, which shall be given independent effect in whole or in part, shall not prohibit:

(1) the payment by the Parent or any Restricted Subsidiary (including the Issuer) of any dividend within 60 days after the date of declaration thereof, if on the date of declaration the payment would have complied with the provisions of this Indenture;

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(2) the redemption of any Equity Interests of the Parent or any Restricted Subsidiary (including the Issuer) in exchange for, or out of the proceeds of the substantially concurrent issuance and sale of, Qualified Equity Interests or of a substantially concurrent capital contribution to the Parent; provided that any proceeds from the issuance and sale of such Qualified Equity Interests shall be excluded from the calculation of the Restricted Payments Basket;

(3) the redemption of Subordinated Indebtedness of the Parent or any Restricted Subsidiary (including the Issuer) (a) in exchange for, or out of the proceeds of the substantially concurrent issuance and sale of, Qualified Equity Interests, (b) in exchange for, or out of the proceeds of the substantially concurrent incurrence of, Refinancing Indebtedness permitted to be incurred under Section 4.06 and the other terms of this Indenture or (c) upon a Change of Control or in connection with an Asset Sale to the extent required by the agreement governing such Subordinated Indebtedness, but only if the Issuer shall have complied with Section 4.09 and Section 4.19 and purchased all Notes validly tendered pursuant to the relevant offer prior to redeeming such Subordinated Indebtedness; provided that any proceeds from the issuance and sale of such Qualified Equity Interests shall be excluded from the calculation of the Restricted Payments Basket;

(4) repurchases of Equity Interests deemed to occur upon the exercise of stock options, warrants and other similar rights to acquire Equity Interests if the Equity Interests represent a portion of the exercise price thereof, or payments made pursuant to the “Buy-In” provisions of the warrants (or any successor warrants thereto) issued on the Initial Issuance Date;

(5) the repurchase of Equity Interests of the Parent (including options, warrants or other rights to acquire such Equity Interests) from employees, former employees, directors, former directors, officers, former officers, consultants or former consultants of the Parent or any of its Subsidiaries (or Heirs or other permitted transferees of any of the foregoing), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors of the Parent (or such direct or indirect parent) under which such individuals purchase or sell or are granted the option to purchase or sell, such Equity Interests in an aggregate amount that shall not exceed $2.5 million in any calendar year, with unused amounts being carried forward to the next calendar year, plus the aggregate cash proceeds from any payments on insurance policies in which the Parent or any of its Subsidiaries is the beneficiary with respect to any directors, officers or employees of the Parent and its Subsidiaries which proceeds are used to purchase the Equity Interests of the Parent or any Restricted Subsidiary (including the Issuer) held by any of such directors, officers or employees; or

(6) Restricted Payments in an amount such that the sum of the aggregate amount of Restricted Payments made pursuant to this clause (6) after the Initial Issue Date does not exceed $10.0 million;

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(7) the declaration and payment of dividends to holders of any class or series of Disqualified Stock or of any Preferred Stock of a Restricted Subsidiary (including the Issuer) Incurred in accordance with Section 4.06; and

(8) transactions pursuant to, in connection with, or contemplated by the Purchase Agreement.

provided that no issuance and sale of Qualified Equity Interests used to make a payment pursuant to clause (2) or (3)(a) above shall increase the Restricted Payments Basket.

SECTION 4.09. Limitations on Asset Sales.

The Parent shall not, and shall not permit any Restricted Subsidiary (including the Issuer) to, directly or indirectly, consummate any Asset Sale unless:

(1) the Parent or such Restricted Subsidiary (including the Issuer) receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets included in such Asset Sale; and

(2) at least 75% of the total consideration in such Asset Sale consists of cash or Cash Equivalents.

For purposes of clause (2), the following shall be deemed to be cash:

(a) the amount (without duplication) of any Indebtedness (other than Subordinated Indebtedness), accounts payable and accrued expenses of the Parent or such Restricted Subsidiary (including the Issuer) that is expressly assumed by the transferee in such Asset Sale and, in the case of any such Indebtedness, with respect to which the Issuer or such Restricted Subsidiary (including the Issuer), as the case may be, is unconditionally released by the holder of such Indebtedness, and, in the case of any such accounts payable and accrued expenses, that are paid in full, satisfied or discharged within 90 days of such assumption;

(b) the amount of any notes, obligations or securities received from such transferee that are within 90 days converted by the Parent or such Restricted Subsidiary (including the Issuer) to cash (to the extent of the cash actually so received); and

(c) the Fair Market Value of (i) any fixed assets (other than securities) received by the Parent or any Restricted Subsidiary (including the Issuer) to be used by it in a Permitted Business, (ii) Qualified Equity Interests in a Person that is a Restricted Subsidiary or in a Person engaged in a Permitted Business that shall become a Restricted Subsidiary immediately upon the acquisition of such Person by the Parent or a Restricted Subsidiary (including the Issuer) or (iii) a combination of (i) and (ii).

If at any time any non-cash consideration received by the Parent or any Restricted Subsidiary (including the Issuer), as the case may be, in connection with any Asset Sale is repaid or converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then the date of such repayment, conversion or disposition shall be deemed to constitute the date of an Asset Sale hereunder and the Net Available Proceeds thereof shall be applied in accordance with this Section 4.09.

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If the Parent or any Restricted Subsidiary (including the Issuer) engages in an Asset Sale, the Parent or such Restricted Subsidiary (including the Issuer) shall, no later than 365 days following the consummation thereof, apply all or any of the Net Available Proceeds therefrom to:

(1) satisfy all mandatory repayment obligations under any Credit Facility arising by reason of such Asset Sale, and in the case of any such repayment under any Credit Facility, effect a permanent reduction in the availability under such Credit Facility;

(2) repay any Indebtedness which was secured by the assets sold in such Asset Sale;

(3) (A) invest (or enter into a definitive agreement to invest) all or any part of the Net Available Proceeds thereof in fixed assets to be used by the Parent or any Restricted Subsidiary (including the Issuer) in a Permitted Business, (B) acquire (or enter into a definitive agreement to acquire) Qualified Equity Interests in a Person that is a Restricted Subsidiary or in a Person engaged in a Permitted Business that shall become a Restricted Subsidiary immediately upon the consummation of such acquisition, (C) capital expenditures, or (D) a combination of (A), (B) and (C); and/or

(4) make a Net Proceeds Offer (and redeem Pari Passu Indebtedness) in accordance with the procedures described below and in this Indenture; provided, however, that if the Net Available Proceeds from such Asset Sale are greater than $50.0 million, the Parent or Restricted Subsidiary shall, no later than 30 days following the consummation thereof, apply such Net Available Proceeds to item 2 above and/or to commence a Net Proceeds Offer and shall not apply the Net Available Proceeds for any other purpose set forth above.

The amount of Net Available Proceeds not applied or invested as provided in this paragraph for Asset Sales will constitute “Excess Proceeds.”

When the aggregate amount of Excess Proceeds equals or exceeds $10.0 million, the Parent or the Issuer shall make an Offer to Purchase from all Holders and, if applicable, redeem (or make an offer to do so) any Pari Passu Indebtedness of the Parent or the Issuer or any Guarantor the provisions of which require the Parent or the Issuer or any Guarantor to redeem such Indebtedness with the proceeds from any Asset Sales (or offer to do so), in an aggregate principal amount of Notes and such Pari Passu Indebtedness equal to the amount of such Excess Proceeds as follows:

(1) the Parent or the Issuer shall (a) make an Offer to Purchase (a “Net Proceeds Offer”) to all Holders in accordance with the procedures set forth in this Indenture, and (b) redeem (or make an offer to do so) any such other Pari Passu Indebtedness, pro rata in proportion to the respective principal amounts of the Notes and such other Indebtedness required to be redeemed, the maximum principal amount of Notes and Pari Passu Indebtedness that may be redeemed out of the amount (the “Payment Amount”) of such Excess Proceeds;

(2) the offer price for the Notes shall be payable in cash in an amount equal to 100% of the principal amount of the Notes tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid interest thereon, if any, to, but not including, the date such Net Proceeds Offer is consummated (the “Offered Price”), in accordance with the procedures set forth in this Indenture and the redemption price for such Pari Passu Indebtedness (the “Pari Passu Indebtedness Price”) shall be as set forth in the related documentation governing such Indebtedness;

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(3) if the aggregate Offered Price of Notes validly tendered and not withdrawn by Holders thereof exceeds the pro rata portion of the Payment Amount allocable to the Notes, Notes to be purchased shall be selected on a pro rata basis; and

(4) upon completion of such Net Proceeds Offer in accordance with the foregoing provisions, the amount of Excess Proceeds with respect to which such Net Proceeds Offer was made shall be deemed to be zero.

To the extent that the sum of the aggregate Offered Price of Notes tendered pursuant to a Net Proceeds Offer and the aggregate Pari Passu Indebtedness Price paid to the holders of such Pari Passu Indebtedness is less than the Payment Amount relating thereto (such shortfall constituting a “Net Proceeds Excess”), the Parent or the Issuer may use the Net Proceeds Excess, or a portion thereof, for general corporate purposes, subject to the provisions of this Indenture.

The Parent and the Issuer shall comply with applicable tender offer rules, including the requirements of Rule 14e 1 under the Exchange Act and any other applicable laws and regulations in connection with the purchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.09, the Parent and the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.09 by virtue of this compliance. The Issuer’s obligation to make an Offer to Purchase shall be satisfied if a third party makes the offer in the manner and at the times otherwise in compliance with the requirements herein.

SECTION 4.10. Limitations on Transactions with Affiliates.

The Parent shall not, and shall not permit any Restricted Subsidiary (including the Issuer) to, directly or indirectly, in one transaction or a series of related transactions, sell, lease, transfer or otherwise dispose of any of its assets to, or purchase any assets from, or enter into any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (an “Affiliate Transaction”), involving aggregate consideration or value in excess of $2.5 million, unless:

(1) such Affiliate Transaction is on terms that are no less favorable to the Parent or the Issuer or the relevant Restricted Subsidiary than those that would reasonably have been obtained in a comparable transaction at such time on an arm’s-length basis by the Parent, the Issuer or that Restricted Subsidiary from a Person that is not an Affiliate of the Parent, the Issuer or that Restricted Subsidiary; and

(2) the Parent or the Issuer delivers to the Trustee:

(a) with respect to any Affiliate Transaction involving aggregate payments or value in excess of $10.0 million, an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (1) above and a Secretary’s Certificate which sets forth and authenticates a resolution that has been adopted by a majority of the Independent Directors approving such Affiliate Transaction; and

(b) with respect to any Affiliate Transaction involving aggregate payments or value of $35.0 million or more, the certificates described in the preceding clause (a) and a written opinion as to the fairness of such Affiliate Transaction to the Parent, the Issuer or such Restricted Subsidiary from a financial point of view issued by an Independent Financial Advisor to the Board of Directors of the Parent or the Issuer.

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The foregoing restrictions shall not apply to:

(2) transactions between or among (a) the Parent and one or more Restricted Subsidiaries (including the Issuer) or (b) Restricted Subsidiaries (including the Issuer);

(3) director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, stock option and other benefit plans and reimbursement or advancement of out-of-pocket expenses, and director’s and officer’s liability insurance) and indemnification arrangements, in each case approved by the Board of Directors;

(4) the granting and performance of registration rights;

(5) Restricted Payments which are made in accordance with Section 4.08 and Permitted Investments;

(6) any transaction with a joint venture or similar entity which would constitute an Affiliate Transaction solely because the Issuer or a Restricted Subsidiary owns an equity interest in or otherwise controls such joint venture or similar entity and none of the other holders of equity interest of such entity is an Affiliate of the Parent or any Restricted Subsidiary;

(7) (a) any transaction with an Affiliate where the only consideration paid by the Issuer or any Restricted Subsidiary is Qualified Equity Interests or (b) the issuance or sale of any Qualified Equity Interests.

(8) any transaction arising out of agreements or instruments in existence on the Issue Date (and any amendments thereto, so long as such amendment is not materially adverse to the holders of the Notes, taken as a whole) and any payments made pursuant thereto;

(9) any transaction with any Person who is not an Affiliate immediately before the consummation of such transaction that becomes an Affiliate as a result of such transaction;

(10) transactions with Affiliates solely in their capacity as holders of Indebtedness or Capital Stock of the Parent or any of its Subsidiaries, where such Affiliates receive the same consideration as non-Affiliates in such transaction; and

(11) transactions pursuant to, in connection with, or contemplated by the Purchase Agreement.

SECTION 4.11. Limitations on Liens.

The Parent shall not, and shall not permit any Restricted Subsidiary (including the Issuer) to, directly or indirectly, create, incur, assume or permit or suffer to exist any Lien (other than Permitted Liens) of any nature whatsoever against any assets of the Parent or any Restricted Subsidiary (including the Issuer) (including Equity Interests of a Restricted Subsidiary), whether owned at the Initial Issue Date or thereafter acquired, which Lien secures Indebtedness, unless contemporaneously therewith:

(1) in the case of any Lien securing an obligation that ranks pari passu with the Notes or a Note Guarantee, effective provision is made to secure the Notes or such Note Guarantee, as the case may be, at least equally and ratably with or prior to such obligation with a Lien on the same collateral; and

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(2) in the case of any Lien securing an obligation that is subordinated in right of payment to the Notes or a Note Guarantee, effective provision is made to secure the Notes or such Note Guarantee, as the case may be, with a Lien on the same collateral that is prior to the Lien securing such subordinated obligation,

in each case, for so long as such obligation is secured by such Lien. In the event holders are no longer entitled to such a Lien, the Lien shall be released without any further action by the holders of the Notes.

SECTION 4.12. Conduct of Business.

The Parent shall not, and shall not permit any Restricted Subsidiary (including the Issuer) to, engage in any business other than a Permitted Business.

SECTION 4.13. Additional Note Guarantees.

If, after the Initial Issue Date, (a) the Parent or any Restricted Subsidiary (including the Issuer) shall acquire or create another Subsidiary (other than a Foreign Subsidiary or a Subsidiary that has been designated an Unrestricted Subsidiary or an Immaterial Subsidiary), (b) any Unrestricted Subsidiary is Redesignated a Restricted Subsidiary or (c) any Foreign Subsidiary or Immaterial Subsidiary guarantees any Indebtedness of the Issuer or the Parent (other than pursuant to paragraph 1 of the definition of Permitted Indebtedness), then, in each such case, the Parent and the Issuer shall cause such Restricted Subsidiary to:

(1) execute and deliver to the Trustee (a) a supplemental indenture in form and substance reasonably satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall unconditionally guarantee all of the Issuer’s obligations under the Notes and this Indenture and (b) a notation of guarantee in respect of its Note Guarantee; and

(2) deliver to the Trustee one or more Opinions of Counsel that such supplemental indenture (a) has been duly authorized, executed and delivered by such Restricted Subsidiary and (b) constitutes a valid and legally binding obligation of such Restricted Subsidiary in accordance with its terms.

SECTION 4.14. Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries.

The Parent shall not, and shall not permit any Restricted Subsidiary (including the Issuer) to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary (including the Issuer) to:

(a) pay dividends or make any other distributions on or in respect of its Equity Interests;

(b) make loans or advances or pay any Indebtedness or other obligation owed to the Parent or any other Restricted Subsidiary (including the Issuer); or

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(c) transfer any of its assets to the Parent or any other Restricted Subsidiary (including the Issuer);

except for:

(1) encumbrances or restrictions existing under or by reason of applicable law, regulation or order;

(2) encumbrances or restrictions existing under this Indenture, the Notes and the Note Guarantees;

(3) non-assignment or subletting provisions of any contract or any lease entered into in the ordinary course of business;

(4) restrictions relating to any Lien permitted under this Indenture that affects only Property subject to such Lien;

(5) restrictions imposed on assets to be sold under any agreement to sell assets (including capital stock) permitted under this Indenture to any Person pending the closing of such sale;

(6) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired;

(7) any other agreement governing Indebtedness entered into after the Initial Issue Date that contains encumbrances and restrictions that are not in the good faith and reasonable judgment of the Parent’s or the Issuer’s Board of Directors, materially more restrictive, taken as a whole, with respect to any Restricted Subsidiary than those in effect on the Initial Issue Date with respect to that Restricted Subsidiary pursuant to agreements in effect on the Initial Issue Date;

(8) customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements entered into in the ordinary course of business;

(9) Purchase Money Indebtedness incurred in compliance with Section 4.06 that impose restrictions of the nature described in clause (c) above on the acquired assets financed by such Purchase Money Indebtedness;

(10) restrictions on cash or other deposits or net worth imposed by suppliers or landlords under contracts entered into in the ordinary course of business;

(11) encumbrances or restrictions contained in Indebtedness permitted to be incurred under this Indenture; provided that any such encumbrances or restrictions do not, in the good faith and reasonable judgment of the Parent’s or the Issuer’s Board of Directors, materially impair the Parent’s or the Issuer’s ability to make payment on the Notes when due;

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(12) encumbrances on property at the time such property was acquired by the Parent, the Issuer or any Restricted Subsidiary, so long as such restriction relates solely to the property so acquired;

(13) encumbrances or restrictions existing under agreements existing on the Initial Issue Date and as in effect on that date; and

(14) any encumbrances or restrictions imposed by any amendments, restatements, renewals, replacements, refundings or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (13) above or any amendments, restatements, renewals, replacements, refundings or refinancings thereof; provided that such amendments, restatements, renewals, replacements, refundings or refinancings are not, in the good faith and reasonable judgment of the Parent’s or the Issuer’s Board of Directors, materially more restrictive, taken as a whole, with respect to such encumbrances and restrictions than those prior to such amendment, restatement, renewal, replacement, refunding or refinancing.

SECTION 4.15. Limitations on Designation of Unrestricted Subsidiaries.

The Parent and the Issuer may designate any Subsidiary (including any newly formed or newly acquired Subsidiary) of the Parent as an “Unrestricted Subsidiary” under this Indenture (a “Designation”) only if:

(1) no Default shall have occurred and be continuing at the time of or after giving effect to such Designation; and

(2) the Parent or the Issuer would be permitted to make, at the time of such Designation, (a) a Permitted Investment or (b) an Investment pursuant to the first paragraph of Section 4.08, in either case, in an amount (the “Designation Amount”) equal to the Fair Market Value of the Parent’s proportionate interest in such Subsidiary on such date.

No Subsidiary shall be Designated as an “Unrestricted Subsidiary” unless such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) is a Person with respect to which neither the Parent, nor the Issuer nor any Restricted Subsidiary has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve the Person’s financial condition or to cause the Person to achieve any specified levels of operating results; and

(3) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Issuer or any Restricted Subsidiary, except for any guarantee given solely to support the pledge by the Issuer or any Restricted Subsidiary of the Equity Interests of such Unrestricted Subsidiary, which guarantee is not recourse to the Issuer or any Restricted Subsidiary.

The Issuer may redesignate an Unrestricted Subsidiary as a Restricted Subsidiary (a “Redesignation”) only if:

(3) no Default shall have occurred and be continuing at the time of and after giving effect to such Redesignation; and

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(4) all Liens, Indebtedness and Investments of such Unrestricted Subsidiary outstanding immediately following such Redesignation would, if incurred or made at such time, have been permitted to be incurred or made for all purposes of this Indenture.

All Designations and Redesignations must be evidenced by resolutions of the Board of Directors of the Parent or the Issuer, delivered to the Trustee, certifying compliance with the foregoing provisions.

SECTION 4.16. Limitations on Sale and Leaseback Transactions.

The Parent shall not, and shall not permit any Restricted Subsidiary (including the Issuer) to, directly or indirectly, enter into any Sale and Leaseback Transaction; provided that the Parent or any Restricted Subsidiary (including the Issuer) may enter into a Sale and Leaseback Transaction if:

(1) the Parent or such Restricted Subsidiary (including the Issuer) could have (a) incurred the Indebtedness in the amount of the Attributable Indebtedness attributable to such Sale and Leaseback Transaction pursuant to Section 4.06 and (b) incurred a Lien to secure such Indebtedness without equally and ratably securing the Notes pursuant to Section 4.11;

(2) the gross cash proceeds of such Sale and Leaseback Transaction are at least equal to the Fair Market Value of the asset that is the subject of such Sale and Leaseback Transaction; and

(3) the transfer of assets in such Sale and Leaseback Transaction is permitted by, and the Issuer or the applicable Restricted Subsidiary applies the proceeds of such transaction in accordance with, Section 4.09.

SECTION 4.17. Maintenance of Properties; Compliance with Law.

(a) The Parent shall, and shall cause each of its Restricted Subsidiaries (including the Issuer) to, at all times cause all properties used or useful in the conduct of their business to be maintained and kept in good condition, repair and working order (reasonable wear and tear excepted), and shall cause to be made all reasonably necessary repairs, renewals, replacements, necessary betterments and necessary improvements thereto, all as in the judgment of the Parent or the Issuer may be reasonably necessary so that the business carried on in connection therewith may be properly conducted, provided that nothing in this Section shall prevent the Parent, the Issuer or any Restricted Subsidiary from discontinuing the use, operation or maintenance of any of such properties or disposing of any of them, if such discontinuance or disposal is, in the reasonable judgment of the Parent or the Issuer, desirable in the conduct of the business of the Parent, the Issuer or any Restricted Subsidiary.

(b) The Issuer shall, and shall cause each of its Subsidiaries to, comply with all statutes, laws, ordinances or government rules and regulations to which they are subject, non-compliance with which would materially adversely affect the business, earnings, properties, assets or financial condition of the Parent and its Subsidiaries taken as a whole.

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SECTION 4.18. Legal Existence.

Subject to Article Five, the Parent and the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence, and the corporate, partnership or other existence of each Restricted Subsidiary (including the Issuer), in accordance with the respective organizational documents (as the same may be amended from time to time) of each Restricted Subsidiary and the rights (charter and statutory), licenses and franchises of the Parent and its Restricted Subsidiaries (including the Issuer); provided that the Parent and the Issuer shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries (including the Issuer) if the Board of Directors of the Parent or the Issuer shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Parent and its Restricted Subsidiaries (including the Issuer), taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders.

SECTION 4.19. Change of Control Offer.

Upon the occurrence of a Change of Control, unless the Issuer shall have given a notice of redemption for 100% of the aggregate principal amount of Notes outstanding, the Issuer shall be obligated to make an offer (the “Change of Control Offer”), and shall purchase, on a Business Day (the “Change of Control Payment Date”) not more than 60 nor less than 30 days following the occurrence of the Change of Control, all of the then outstanding Notes at a purchase price (the “Change of Control Purchase Price”) (a) prior to the one (1) year anniversary of the Initial Issue Date equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the Change of Control Payment Date, plus the Applicable Premium and (b) on and after the one (1) year anniversary of the Initial Issue Date, equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the Change of Control Payment Date. The Change of Control Offer shall contain the information required by an Offer to Purchase and shall otherwise meet the requirements of an Offer to Purchase except as otherwise provided to the contrary in this Section 4.19. The Change of Control Offer shall remain open for at least 20 Business Days and until the close of business on the Change of Control Payment Date.

Within 30 days following the date upon which a Change of Control occurs (the “Change of Control Date”), the Issuer shall send, by first-class mail, a notice to each Holder, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. The notice to the Holders shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Change of Control Offer.

Any amounts remaining after the purchase of Notes pursuant to a Change of Control Offer shall be returned by the Trustee to the Issuer.

The Issuer’s obligation to make a Change of Control Offer shall be satisfied if a third party (including the Parent) makes the Change of Control Offer in the manner and at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Issuer and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer.

The Issuer shall comply with applicable tender offer rules, including the requirements of Rule 14e l under the Exchange Act and any other applicable laws and regulations in connection with the purchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions under this Section 4.19, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.19 by virtue of this compliance.

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SECTION 4.20. Trigger Event.

If for any period of four consecutive fiscal quarters (each, a “Trigger Event Measuring Period”), beginning with the fiscal quarter ending December 31, 2010, Net Indebtedness of the Parent and the Restricted Subsidiaries (including the Issuer) is greater than five times Consolidated Cash Flow of the Parent and the Restricted Subsidiaries (including the Issuer) for such Trigger Event Measuring Period (a “Trigger Event”), then not later than 50 days after the end of such Trigger Event Measuring Period (or 95 days in the case of a Trigger Event Measuring Period ending with the fourth quarter of a fiscal year) (the “Trigger Event Offer Date”), the Issuer shall be obligated to make an Offer to Purchase all of the then outstanding Notes, and any such repurchase pursuant to this Section 4.20 shall be made on a Business Day (the “Trigger Event Payment Date”) not more than 60 nor less than 30 days following the Trigger Event Offer Date, at a purchase price equal to 100% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest, if any, to the Trigger Event Payment Date. In the event an Annual Report or Quarterly Report, as applicable, is not filed on or before the Trigger Event Offer Date with respect to any Trigger Event Measuring Period, then, on or before the Trigger Event Offer Date, (i) for purposes of determining whether a Trigger Event has occurred for any such Trigger Event Measuring Period, Net Indebtedness and Consolidated Cash Flow will be calculated and based on internally available information of the Parent or the Issuer on and for the applicable date and periods, which shall be provided to a Holder upon its request and (ii) on or before the Trigger Event Offer Date, the Parent shall publicly disclose whether or not a Trigger Event has occurred with respect to the applicable Trigger Event Measuring Period.

ARTICLE FIVE

SUCCESSOR CORPORATION

SECTION 5.01. Limitations on Mergers, Consolidations, Etc. The Issuer shall not, directly or indirectly, in a single transaction or a series of related transactions, (a) consolidate or merge with or into another Person, or sell, lease, transfer, convey or otherwise dispose of or assign all or substantially all of the assets of the Issuer or the Issuer and the Restricted Subsidiaries (taken as a whole) or (b) adopt a Plan of Liquidation unless, in either case:

(1) either:

(a) the Issuer will be the surviving or continuing Person; or

(b) the Person formed by or surviving such consolidation or merger or to which such sale, lease, conveyance or other disposition shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the “Successor”) is a corporation, limited liability company or limited partnership organized and existing under the laws of any State of the United States of America, the District of Columbia and the Successor expressly assumes, by agreements in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Issuer under the Notes and this Indenture;

(2) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (1)(b) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, no Default shall have occurred and be continuing; and

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(3) immediately after and giving effect to such transaction and the assumption of the obligations set forth in clause (1)(b) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, (a) the Consolidated Net Worth of the Issuer or the Successor, as the case may be, would be at least equal to the Consolidated Net Worth of the Issuer immediately prior to such transaction or (b) the Issuer or the Successor, as the case may be, could incur $1.00 of additional Indebtedness pursuant to the Incurrence Leverage Ratio.

For purposes of this Section 5.01, any Indebtedness of the Successor which was not Indebtedness of the Issuer immediately prior to the transaction shall be deemed to have been incurred in connection with such transaction.

Except as provided in Section 10.04, neither Parent nor any Guarantor may consolidate with or merge with or into another Person, unless:

(A) either:

(i) the Parent or such Guarantor will be the surviving or continuing Person; or

(ii) the Person formed by or surviving any such consolidation or merger is the Parent or another Guarantor or assumes, by agreements in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Parent or such Guarantor under the Note Guarantee of such Guarantor and this Indenture; and

(B) immediately after giving effect to such transaction, no Default shall have occurred and be continuing.

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries, the Equity Interests of which constitute all or substantially all of the properties and assets of the Issuer, will be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer.

Upon any consolidation, combination or merger of the Parent, the Issuer or a Guarantor, or any transfer of all or substantially all of the assets of the Parent or the Issuer in accordance with the foregoing, in which the Issuer or such Guarantor is not the continuing obligor under the Notes or its Note Guarantee, the surviving entity formed by such consolidation or into which the Parent, the Issuer or such Guarantor is merged or the Person to which the conveyance, lease or transfer is made will succeed to, and be substituted for, and may exercise every right and power of, the Parent, the Issuer or such Guarantor under this Indenture, the Notes and the Note Guarantees with the same effect as if such surviving entity had been named therein as the Parent, the Issuer or such Guarantor and, except in the case of a lease, the Parent, the Issuer or such Guarantor, as the case may be, will be released from the obligation to pay the principal of and interest on the Notes or in respect of its Note Guarantee, as the case may be, and all of the Parents, the Issuer’s or such Guarantor’s other obligations and covenants under the Notes, this Indenture and its Note Guarantee, if applicable.

The foregoing provisions (other than clause (B)) shall not apply to any transaction or series of transactions which constitute an Asset Sale if Parent has complied with the covenant described under Section 4.09.

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Notwithstanding the foregoing, (1) any Restricted Subsidiary may consolidate with, merge with or into or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all of its assets to the Parent, the Issuer or another Restricted Subsidiary and (2) the Parent, the Issuer or any Restricted Subsidiary may merge with and into the Target, or vice versa, provided that the provisions of (A)(ii) above will still be required to be satisfied.

SECTION 5.02. Successor Person Substituted.

Upon any consolidation or merger, or any transfer of all or substantially all of the assets of the Issuer or any Restricted Subsidiary in accordance with Section 5.01, the successor entity formed by such consolidation or into which the Issuer is merged or to which such transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer or such Restricted Subsidiary under this Indenture with the same effect as if such successor entity had been named as the Issuer or such Restricted Subsidiary herein, and thereafter the predecessor entity shall be relieved of all obligations and covenants under this Indenture and the Notes.

ARTICLE SIX

DEFAULTS AND REMEDIES

SECTION 6.01. Events of Default.

Each of the following shall be an “Event of Default:”

(1) failure by the Issuer to pay interest on any of the Notes when it becomes due and payable and the continuance of any such failure for 30 days;

(2) failure by the Issuer to pay to Holders the principal on or any other amount (other than interest) in respect of any of the Notes when it becomes due and payable, whether at stated maturity, upon redemption, upon purchase, upon acceleration or otherwise, including pursuant to any Change of Control Offer or any offer to purchase in connection with an Asset Sale or Trigger Event;

(3) failure by the Issuer to comply with Section 5.01 or in respect of its obligations to make a Change of Control Offer, or an offer to redeem or repurchase the Notes, if required, upon an Asset Sale or Trigger Event;

(4) failure by Parent or the Issuer to comply with any other agreement or covenant in this Indenture and continuance of this failure for 45 days (other than Section 4.02 which shall be 60 days) after notice of the failure has been given to the Issuer by the Trustee or by the Holders of at least 25% of the aggregate principal amount of the Notes then outstanding;

(5) default under any mortgage, indenture or other instrument or agreement under which there may be issued or by which there may be secured or evidenced Indebtedness of the Issuer or any Restricted Subsidiary, whether such Indebtedness now exists or is incurred after the Initial Issue Date, which default:

(a) is caused by a failure to pay at final maturity principal on such Indebtedness within the applicable express grace period and any extensions thereof, or

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(b) that has resulted in the acceleration of such Indebtedness prior to its express final maturity, and

in each case, the principal amount of such Indebtedness, together with any other Indebtedness with respect to which an event described in clause (a) or (b) has occurred and is continuing, aggregates $20.0 million or more;

(6) one or more judgments or orders that exceed $20.0 million in the aggregate (net of amounts covered by insurance or bonded) for the payment of money have been entered by a court or courts of competent jurisdiction against the Parent, the Issuer or any Restricted Subsidiary and such judgment or judgments have not been satisfied, discharged, bonded (by providing insurance, letters of credit or other financial assurance), stayed or stayed pending appeal, annulled or rescinded within 60 days of being entered;

(7) the Issuer, the Parent or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(a) commences a voluntary case,

(b) consents to the entry of an order for relief against it in an involuntary case,

(c) consents to the appointment of a Custodian of it or for all or substantially all of its assets, or

(d) makes a general assignment for the benefit of its creditors;

(8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(a) is for relief against the Issuer, the Parent or any Significant Subsidiary as debtor in an involuntary case,

(b) appoints a Custodian of the Issuer, the Parent or any Significant Subsidiary or a Custodian for all or substantially all of the assets of the Issuer or any Significant Subsidiary, or

(c) orders the liquidation of the Issuer, the Parent or any Significant Subsidiary,

and the order or decree remains unstayed and in effect for 60 days; or

(9) any Note Guarantee of any Significant Subsidiary or the Parent ceases to be in full force and effect (other than in accordance with the terms of such Note Guarantee and this Indenture) or is declared null and void and unenforceable or found to be invalid or any Guarantor denies its liability under its Note Guarantee (other than by reason of release of a Guarantor from its Note Guarantee in accordance with the terms of this Indenture and the Note Guarantee).

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SECTION 6.02. Acceleration and Default Rate.

If an Event of Default (other than an Event of Default specified in clause (7) or (8) of Section 6.01), shall have occurred and be continuing, the Trustee, by written notice to the Issuer, or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding by written notice to the Issuer and the Trustee, may declare all amounts owing under the Notes to be due and payable immediately. Upon such declaration of acceleration, the aggregate principal of and accrued and unpaid interest on the outstanding Notes, plus the Default Rate, shall immediately become due and payable; provided, however, that after such acceleration, but before a judgment or decree based on such acceleration, the Holders of a majority in aggregate principal amount of such outstanding Notes may rescind and annul such acceleration if (a) the rescission would not conflict with any order or decree, (b) the Issuer has paid or deposited with the Trustee a sum sufficient to pay all principal, premium or interest (including additional interest) that has become due otherwise than by such declaration of acceleration, all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 7.07 and (c) all Events of Default, other than the nonpayment of accelerated principal and interest, have been cured or waived as provided in this Indenture. If an Event of Default specified in clause (7) or (8) of Section 6.01 occurs, all outstanding Notes shall become due and payable without any further action or notice. No such rescission shall affect any subsequent default or impair any right consequent thereon.

SECTION 6.03. Other Remedies.

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of, or premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture and may take any necessary action requested of it as Trustee to settle, compromise, adjust or otherwise conclude any proceedings to which it is a party.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. Any costs associated with actions taken by the Trustee under this Section 6.03 shall be reimbursed to the Trustee by the Issuer.

SECTION 6.04. Waiver of Past Defaults and Events of Default.

Subject to Sections 6.02, 6.08 and 8.02, the Holders of a majority in aggregate principal amount of the Notes then outstanding have the right to waive any existing Default or compliance with any provision of this Indenture or the Notes[, other than (a) a Default or Event of Default in the payment of the principal of, or premium, if any, or interest or additional interest on, any Note, or in the payment of the Change of Control Purchase Price (or accrued and unpaid interest, if any, payable as herein provided, upon repurchase upon Change of Control), (b) a Default or Event of Default described in clause (7) or (8) of Section 6.01, or (c) any Default or Event of Default in respect of any provision of this Indenture or the Notes which, under Section 8.02, cannot be modified or amended without the consent of the Holder of each outstanding Notes affected]. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.

SECTION 6.05. Control by Majority.

The Holders of a majority in aggregate principal amount of the Notes then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the

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Trustee or exercising any trust or power conferred on the Trustee by this Indenture. The Trustee, however, may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines may be unduly prejudicial to the rights of another Holder not taking part in such direction, and the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, determines that the action so directed may not lawfully be taken or if the Trustee in good faith shall, by a Responsible Officer, determine that the proceedings so directed may result in costs and expenses of the Trustee for which it has no source of payment or recovery or involve it in personal liability; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

SECTION 6.06. Limitation on Suits.

No Holder will have any right to institute any proceeding with respect to this Indenture or for any remedy thereunder, unless the Trustee:

(1) has failed to act for a period of 60 days after receiving written notice of a continuing Event of Default by such Holder and a request to act by Holders of at least 25% in aggregate principal amount of Notes outstanding;

(2) has been offered indemnity satisfactory to it in its reasonable judgment; and

(3) has not received from the Holders of a majority in aggregate principal amount of the outstanding Notes a direction inconsistent with such request.

However, such limitations do not apply to a suit instituted by a Holder of any Note for enforcement of payment of the principal of or interest on such Note on or after the due date therefor (after giving effect to the grace period specified in clause (1) of Section 6.01).

SECTION 6.07. No Personal Liability of Directors, Officers, Employees and Stockholders.

No director, officer, employee, incorporator or stockholder of the Issuer will have any liability for any obligations of the Issuer under the Notes or this Indenture or of any Guarantor under its Note Guarantee or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes and the Note Guarantees.

SECTION 6.08. Rights of Holders To Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal of, or premium, if any, and interest of the Note on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder.

SECTION 6.09. Collection Suit by Trustee.

If an Event of Default in payment of principal, premium or interest specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer or any Guarantor (or any other obligor on the Notes) for the whole amount of unpaid principal and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate set forth in the Notes.

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SECTION 6.10. Trustee May File Proofs of Claim.

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Issuer or any Guarantor (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same after deduction of its charges and expenses to the extent that any such charges and expenses are not paid out of the estate in any such proceedings and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan or reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceedings.

SECTION 6.11. Priorities.

If the Trustee collects any money pursuant to this Article Six, it shall pay out the money in the following order:

FIRST: to the Trustee for amounts due under Section 7.07;

SECOND: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest as to each, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes; and

THIRD: to the Issuer or, to the extent the Trustee collects any amount directly from any Guarantor, to such Guarantor.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.11.

SECTION 6.12. Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.12 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.08 or a suit by Holders of more than 10% in principal amount of the Notes then outstanding.

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SECTION 6.13. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every case, subject to any determination in such proceeding, the Issuer, the Guarantors, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

ARTICLE SEVEN

TRUSTEE

SECTION 7.01. Duties of Trustee.

(a) If an Event of Default actually known to a Responsible Officer of the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the same circumstances in the conduct of his or her own affairs.

(b) Except during the continuance of an Event of Default:

(1) The Trustee need perform only those duties that are specifically set forth in this Indenture and no others.

(2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture, but, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform on their face to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(1) This paragraph does not limit the effect of paragraph (b) of this Section 7.01.

(2) The Trustee shall not be liable for any error of judgment made in good faith, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.

(3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to the terms hereof.

(4) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its rights, powers or duties if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risk or liability is not reasonably assured to it.

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(d) Whether or not therein expressly so provided, paragraphs (a), (b), (c) and (e) of this Section 7.01 shall govern every provision of this Indenture that in any way relates to the Trustee.

(e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it in its sole discretion against any loss, liability, expense or fee.

(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer and the Parent. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by the law.

(g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.01 and to the provision of the TIA.

SECTION 7.02. Rights of Trustee.

Subject to Section 7.01:

(1) The Trustee may rely on any document reasonably believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.

(2) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel, or both, which shall conform to the provisions of Section 11.05. The Trustee shall be protected and shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion.

(3) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed by it with due care.

(4) The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers; provided that the Trustee’s conduct does not constitute negligence or willful misconduct.

(5) The Trustee may consult with counsel of its selection, and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(6) The Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Section 6.01(1) or 6.01(2) or (ii) any Event of Default of which the Trustee shall have received written notification or otherwise obtained actual knowledge. In the absence of such notice, the Trustee may conclusively assume there is no Default except as aforesaid.

(7) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture, and may refuse to perform any duty or exercise any such rights or powers, unless it shall have been offered reasonable security or indemnity satisfactory to it against the cost, expenses and liabilities which may be incurred by it in connection with such exercise of its rights or powers.

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(8) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate (including any Officers’ Certificate), statement, instrument, opinion (including any Opinion of Counsel), notice, request, direction, consent, order, bond, debenture, note, other evidence of Indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, upon reasonable notice to the Issuer, to examine the books, records, and premises of the Issuer, personally or by agent or attorney, at the sole cost of the Issuer. Except with respect to Sections 4.01, 4.02 (subject to paragraph 12 below) and 4.04, the Trustee shall have no duty to inquire as to the performance of the Issuer’s and the Guarantors’ covenants set forth herein.

(9) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

(10) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as duties hereunder.

(11) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder.

(12) Delivery of reports, information and documents to the Trustee under Section 4.02 is for informational purposes only and the Trustee’s receipt of the foregoing shall not constitute constructive notice of any information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as which the Trustee is entitled to rely exclusively on the Officers’ Certificate).

(13) In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(14) The Trustee may request that the Issuer deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

(15) In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

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SECTION 7.03. Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may make loans to, accept deposits from, perform services for or otherwise deal with either the Issuer or any Guarantor, or any Affiliates thereof, with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee, however, shall be subject to Sections 7.10 and 7.11.

SECTION 7.04. Trustee’s Disclaimer.

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes or any Guarantee, it shall not be accountable for the Issuer’s or any Guarantor’s use of the proceeds from the sale of Notes or any money paid to the Issuer or any Guarantor pursuant to the terms of this Indenture and it shall not be responsible for the use or application of money received by any Paying Agent other than the Trustee. The Trustee shall not be responsible for any statement in the Notes, Note Guarantee, this Indenture or any other document in connection with the sale of the Notes other than its certificate of authentication.

SECTION 7.05. Notice of Defaults.

The Trustee shall, within 30 days after the occurrence of any Default with respect to the Notes, give the Holders notice of all uncured Defaults thereunder known to it; provided, however, that, except in the case of an Event of Default in payment with respect to the Notes or a Default in complying with Section 5.01, the Trustee shall be protected in withholding such notice if and so long as a committee of its Responsible Officers in good faith determines that the withholding of such notice is in the interests of the Holders.

SECTION 7.06. Reports by Trustee to Holders.

If required by TIA § 313(a), within 60 days after May 15 of any year, commencing May 15, 2009, the Trustee shall mail to each Holder a brief report dated as of such May 15 that complies with TIA § 313(a). The Trustee also shall comply with TIA § 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA § 313(c) and TIA § 313(d).

Reports pursuant to this Section 7.06 shall be transmitted by mail:

(1) to all Holders of Notes, as the names and addresses of such Holders appear on the Registrar’s books; and

(2) to such Holders of Notes as have, within the two years preceding such transmission, filed their names and addresses with the Trustee for that purpose.

A copy of each report at the time of its mailing to Holders shall be filed with the SEC and each stock exchange on which the Notes are listed. The Issuer shall promptly notify the Trustee, and in any event within 10 Business Days, when the Notes are listed on any stock exchange and of any delisting thereof.

SECTION 7.07. Compensation and Indemnity.

The Issuer and the Guarantors shall pay to the Trustee and Agents from time to time reasonable compensation for their services hereunder (which compensation shall not be limited by any provision

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of law in regard to the compensation of a trustee of an express trust). The Issuer and the Guarantors shall reimburse the Trustee and Agents upon request for all out-of-pocket disbursements, expenses and advances incurred or made by them in connection with their duties under this Indenture, including the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

The Issuer and the Guarantors shall jointly and severally indemnify each of the Trustee and any predecessor Trustee and each of the Agents for, and hold each of them harmless against, any and all loss, damage, claim, liability or expense, including without limitation taxes (other than taxes based on the income of the Trustee or such Agent) and reasonable attorneys’ fees and expenses incurred by each of them in connection with the acceptance or performance of its duties under this Indenture including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder (including, without limitation, settlement costs). The Trustee or Agent shall notify the Issuer and the Guarantors in writing promptly of any claim asserted against and received by the Trustee or Agent for which it may seek indemnity. However, the failure by the Trustee or Agent to so notify the Issuer and the Guarantors shall not relieve the Issuer and Guarantors of their obligations hereunder except to the extent the Issuer and the Guarantors are prejudiced thereby.

Notwithstanding the foregoing, the Issuer and the Guarantors need not reimburse the Trustee for any expense or indemnify it against any loss or liability determined to have been caused by the Trustee through its own negligence, bad faith or willful misconduct. To secure the payment obligations of the Issuer and the Guarantors in this Section 7.07, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee except such money or property held in trust to pay principal of and interest on particular Notes. The obligations of the Issuer and the Guarantors under this Section 7.07 to compensate and indemnify the Trustee, Agents and each predecessor Trustee and to pay or reimburse the Trustee, Agents and each predecessor Trustee for expenses, disbursements and advances shall survive the resignation or removal of the Trustee and the satisfaction, discharge or other termination of this Indenture, including any termination or rejection hereof under any Bankruptcy Law.

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(7) or (8) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.

For purposes of this Section 7.07, the term “Trustee” shall include any trustee appointed pursuant to this Article Seven.

SECTION 7.08. Replacement of Trustee.

The Trustee may resign by so notifying the Issuer and the Guarantors in writing. The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by notifying the Issuer and the removed Trustee in writing and may appoint a successor Trustee with the Issuer’s written consent, which consent shall not be unreasonably withheld. The Issuer may remove the Trustee at its election if:

(1) the Trustee fails to comply with Section 7.10;

(2) the Trustee is adjudged a bankrupt or an insolvent;

(3) a receiver or other public officer takes charge of the Trustee or its property; or

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(4) the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer shall promptly appoint a successor Trustee. If a Trustee is removed with or without cause, all fees and expenses (including the reasonable fees and expenses of counsel) of the Trustee incurred in the administration of the trust or in performing the duties hereunder shall be paid to the Trustee.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the Holders of a majority in principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Immediately following such delivery, the retiring Trustee shall, subject to its rights and receipt of any amounts due under Section 7.07, transfer all property held by it as Trustee to the successor Trustee, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuer obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

SECTION 7.09. Successor Trustee by Consolidation, Merger, Etc.

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another entity, subject to Section 7.10, the successor entity without any further act shall be the successor Trustee; provided such entity shall be otherwise qualified and eligible under this Article Seven.

SECTION 7.10. Eligibility; Disqualification.

This Indenture shall always have a Trustee who satisfies the requirements of TIA §§ 310(a)(1) and (2) in every respect. The Trustee (together with its corporate parent) shall have a combined capital and surplus of at least $100,000,000 as set forth in the most recent applicable published annual report of condition. The Trustee shall comply with TIA § 310(b), including the provision in § 310(b)(1).

SECTION 7.11. Preferential Collection of Claims Against Issuer.

The Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.

SECTION 7.12. Paying Agents.

The Issuer shall cause each Paying Agent other than the Trustee to execute and deliver to it and the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 7.12:

(A) that it will hold all sums held by it as agent for the payment of principal of, or premium, if any, or interest on, the Notes (whether such sums have been paid to it by the Issuer or by any obligor on the Notes) in trust for the benefit of Holders or the Trustee;

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(B) that it will at any time during the continuance of any Event of Default, upon written request from the Trustee, deliver to the Trustee all sums so held in trust by it together with a full accounting thereof; and

(C) that it will give the Trustee written notice within three (3) Business Days of any failure of the Issuer (or by any obligor on the Notes) in the payment of any installment of the principal of, premium, if any, or interest on, the Notes when the same shall be due and payable.

ARTICLE EIGHT

AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 8.01. Without Consent of Holders.

The Issuer and the Trustee may amend, waive or supplement this Indenture, the Note Guarantees or the Notes without prior notice to or consent of any Holder:

(1) to provide for the assumption of the Issuer’s or a Guarantor’s obligations to the Holders pursuant to Section 5.01;

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(3) to cure any ambiguity, defect, mistake or inconsistency, so long as the effect thereof is not materially adverse, taken as a whole, to the Holders;

(4) to add Note Guarantees with respect to the Notes or to secure the Notes;

(5) to release any Guarantor from any of its obligations under its Note Guarantee or this Indenture (solely to the extent permitted by this Indenture);

(6) to qualify or maintain the qualification of this Indenture under the TIA; or

(7) to add to the covenants of the Issuer or a Guarantor for the benefit of the Holders of the Notes or to surrender any right or power herein conferred upon the Issuer or a Guarantor with respect to the Notes.

The Trustee is hereby authorized to join with the Issuer and the Guarantors in the execution of any supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects its own rights, duties or immunities under this Indenture.

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SECTION 8.02. With Consent of Holders.

This Indenture or the Notes may be amended with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any existing Default under, or compliance with any provision of, this Indenture may be waived (other than any continuing Default in the payment of the principal or interest on the Notes) with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of a majority in aggregate principal amount of the Notes then outstanding; provided that, without the consent of each Holder affected, no amendment or waiver may:

(1) reduce, or change the maturity of, the principal of any Note;

(2) reduce the rate of or extend the time for payment of interest on any Note;

(3) reduce any premium payable upon optional redemption of the Notes or change the date on which any Notes are subject to redemption (other than provisions relating to the purchase of Notes described in Sections 4.09 and 4.19, except that if a Change of Control, Asset Sale (which requires an offer) or Trigger Event has occurred, no amendment or other modification of the obligation of the Issuer to make a Change of Control Offer relating to such Change of Control, Asset Sale (which requires an offer) or Trigger Event shall be made without the consent of each Holder of the Notes affected);

(4) make any Note payable in money or currency other than that stated in the Notes;

(5) modify or change any provision of this Indenture or the related definitions to affect the ranking of the Notes or any Note Guarantee in a manner that adversely affects the Holders;

(6) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver to this Indenture or the Notes;

(7) impair the rights of Holders to receive payments of principal of or interest on the Notes on or after the due date therefor or to institute suit for the enforcement of any payment on the Notes;

(8) release any Guarantor that is a Significant Subsidiary from any of its obligations under its Note Guarantee or this Indenture, except as otherwise permitted by this Indenture; or

(9) make any change in this Section 8.02.

After an amendment, supplement or waiver under this Section 8.02 becomes effective, the Issuer shall mail to the Holders a notice briefly describing the amendment, supplement or waiver.

Upon the written request of the Issuer, accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the receipt by the Trustee of evidence reasonably satisfactory to the Trustee of the consent of the Holders as aforesaid and upon receipt by the Trustee of the documents described in Section 8.06, the Trustee shall join with the Issuer and the Guarantors in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture, in which case the Trustee may, but shall not be obligated to, enter into such supplemental indenture.

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It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

The Issuer shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of their terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waiver or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

SECTION 8.03. Compliance with Trust Indenture Act.

Every amendment or supplement to this Indenture or the Notes shall comply with the TIA as then in effect.

SECTION 8.04. Revocation and Effect of Consents.

Until an amendment, supplement, waiver or other action becomes effective, a consent to it by a Holder of a Note is a continuing consent conclusive and binding upon such Holder and every subsequent Holder of the same Note or portion thereof, and of any Note issued upon the transfer thereof or in exchange therefor or in place thereof, even if notation of the consent is not made on any such Note. Any such Holder or subsequent Holder, however, may revoke the consent as to his Note or portion of a Note, if the Trustee receives the written notice of revocation before the date the amendment, supplement, waiver or other action becomes effective.

The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement, or waiver. If a record date is fixed, then, notwithstanding the preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only such Persons, shall be entitled to consent to such amendment, supplement, or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date unless the consent of the requisite number of Holders has been obtained.

After an amendment, supplement, waiver or other action becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (1) through (10) of Section 8.02. In that case the amendment, supplement, waiver or other action shall bind each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note.

SECTION 8.05. Notation on or Exchange of Notes.

If an amendment, supplement, or waiver changes the terms of a Note, the Trustee (in accordance with the specific written direction of the Issuer) shall request the Holder of the Note (in accordance with the specific written direction of the Issuer) to deliver it to the Trustee. In such case, the Trustee shall place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Issuer or the Trustee so determines, the Issuer in exchange for the Note shall issue, the Guarantors shall endorse, and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

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SECTION 8.06. Trustee To Sign Amendments, Etc.

The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article Eight if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing or refusing to sign such amendment, supplement or waiver the Trustee shall be provided with and, subject to Section 7.01, shall be fully protected in relying conclusively upon an Officers’ Certificate and an Opinion of Counsel stating, in addition to the matters required by Section 11.04, that such amendment, supplement or waiver is authorized or permitted by this Indenture and all conditions precedent required hereunder to such amendment, supplement or waiver have been satisfied.

ARTICLE NINE

DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 9.01. Discharge of Indenture.

The Issuer may terminate its obligations and the obligations of the Parent and the Guarantors under the Notes, the Note Guarantees and this Indenture, except the obligations referred to in the last paragraph of this Section 9.01, if the Parent or the Issuer has paid or caused to be paid all sums payable by it under this Indenture, and

(1) all the Notes that have been authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust) have been delivered to the Trustee for cancellation, or

(2)

(a) all Notes not delivered to the Trustee for cancellation otherwise (i) have become due and payable, (ii) will become due and payable at the maturity date, within one year or (iii) have been or are to be called for redemption within one year pursuant to paragraph 6 of the Notes, and, in the case of (i), or (ii), or (iii), the Parent or the Issuer has irrevocably deposited or caused to be deposited with the Trustee as trust funds, in trust solely for the benefit of the Holders, U.S. legal tender, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient (without consideration of any reinvestment of interest) to pay and discharge the entire Indebtedness (including all principal and accrued interest) on the Notes not theretofore delivered to the Trustee for cancellation, or

(b) the Parent or the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or on the date of redemption, as the case may be.

In addition, if required by the Trustee, the Parent and the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent to the satisfaction and discharge of this Indenture have been complied with.

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After such delivery, the Trustee shall acknowledge in writing the discharge of the Issuer’s, the Parent’s and the Guarantors’ obligations under the Notes, the Guarantees and this Indenture except for those surviving obligations specified below.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Issuer in Sections 7.07, 9.07 and 9.08 shall survive such satisfaction and discharge.

SECTION 9.02. Legal Defeasance.

The Issuer may at its option, by Board Resolution of the Board of Directors of the Issuer, be discharged from its obligations with respect to the Notes and the Guarantors discharged from their obligations under the Note Guarantees on the date the conditions set forth in Section 9.04 are satisfied (hereinafter, “Legal Defeasance”). For this purpose, such Legal Defeasance means that the Issuer shall be deemed to have paid and discharged the entire indebtedness represented by the Notes and to have satisfied all its other obligations under such Notes and this Indenture insofar as such Notes are concerned (and the Trustee, at the expense of the Issuer, shall, subject to Section 9.06, execute instruments in form and substance reasonably satisfactory to the Trustee and Issuer acknowledging the same), except for the following, which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of outstanding Notes to receive payments in respect of the principal of and interest on such Notes when such payments are due solely from the trust funds described in Section 9.04 and as more fully set forth in such Section, (B) the Issuer’s obligations with respect to such Notes under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.11 and 4.18, (C) the rights, powers, trusts, duties, and immunities of the Trustee hereunder (including claims of, or payments to, the Trustee under or pursuant to Section 7.07) and (D) this Article Nine. Subject to compliance with this Article Nine, the Issuer may exercise its option under this Section 9.02 with respect to the Notes notwithstanding the prior exercise of its option under Section 9.03 with respect to the Notes.

SECTION 9.03. Covenant Defeasance.

At the option of the Issuer, pursuant to a Board Resolution of the Board of Directors of the Issuer, (x) the Issuer and the Guarantors shall be released from their respective obligations under Sections 4.02 (except for obligations mandated by the TIA), 4.05 through 4.17, inclusive, 4.19 and clause (3) of the first paragraph of Section 5.01 and (y) Section 6.01(4), (5), (6) and (9) shall no longer apply with respect to the outstanding Notes on and after the date the conditions set forth in Section 9.04 are satisfied (hereinafter, “Covenant Defeasance”). For this purpose, such Covenant Defeasance means that the Issuer and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section or portion thereof, whether directly or indirectly by reason of any reference elsewhere herein to any such specified Section or portion thereof or by reason of any reference in any such specified Section or portion thereof to any other provision herein or in any other document, but the remainder of this Indenture and the Notes shall be unaffected thereby.

SECTION 9.04. Conditions to Legal Defeasance or Covenant Defeasance.

The following shall be the conditions to application of Section 9.02 or Section 9.03 to the outstanding Notes:

(1) the Issuer must irrevocably deposit with the Trustee, as trust funds, in trust solely for the benefit of the Holders, U.S. legal tender, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient (without consideration of any reinvestment of interest) in the opinion of a nationally recognized firm of independent public accountants selected by the Issuer, to pay the principal of and interest on the Notes on the stated date for payment or on the redemption date of premium, if any, the principal or installment of principal of or interest on the Notes,

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(2) in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that:

(a) the Issuer has received from, or there has been published by the Internal Revenue Service, a ruling, or

(b) since the date hereof, there has been a change in the applicable U.S. federal income tax law,

in either case to the effect that, and based thereon this Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred,

(3) in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the Covenant Defeasance had not occurred,

(4) no Default shall have occurred and be continuing on the date of such deposit (other than a Default resulting from the borrowing of funds to be applied to (x) such deposit, (y) similar contemporaneous deposits to redeem or defease other Indebtedness and (z) costs related thereto),

(5) the Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute (a) a Default under this Indenture or (b) a default under any other material agreement or instrument to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound (other than any such Default or default resulting solely from the borrowing of funds to be applied to (x) such deposit, (y) similar contemporaneous deposits to redeem or defease other Indebtedness and (z) costs related thereto),

(6) the Issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes have been complied with as required by this Indenture.

If the funds deposited with the Trustee to effect Covenant Defeasance are insufficient to pay the principal of and interest on the Notes when due, then the Issuer’s obligations and the obligations of Guarantors under this Indenture will be revived and no such defeasance will be deemed to have occurred.

SECTION 9.05. Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous Provisions.

All money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee pursuant to Section 9.04 in respect of the outstanding Notes shall be held in trust and

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applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent, to the Holders of such Notes, of all sums due and to become due thereon in respect of principal, premium, if any, and accrued interest, but such money need not be segregated from other funds except to the extent required by law.

The Issuer, the Parent and the Guarantors shall (on a joint and several basis) pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 9.04 or the principal, premium, if any, and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.

Anything in this Article Nine to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuer from time to time any money or U.S. Government Obligations held by it as provided in Section 9.04 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

SECTION 9.06. Reinstatement.

If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 9.01, 9.02 or 9.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s and each Guarantor’s obligations under this Indenture, the Notes and the Note Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article Nine until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 9.01, 9.02 or 9.03, as the case may be; provided that if the Issuer or the Guarantors have made any payment of principal of, premium, if any, or accrued interest on any Notes because of the reinstatement of their obligations, the Issuer or the Guarantors, as the case may be, shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

SECTION 9.07. Moneys Held by Paying Agent.

In connection with the satisfaction and discharge of this Indenture, all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon written demand of the Issuer, be paid to the Trustee, or if sufficient moneys have been deposited pursuant to Section 9.04, to the Issuer (or, if such moneys had been deposited by the Guarantors, to such Guarantors), and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

SECTION 9.08. Moneys Held by Trustee.

Subject to applicable law, any moneys deposited with the Trustee or any Paying Agent or then held by the Issuer or the Guarantors in trust for the payment of the principal of, or premium, if any, or interest on any Note that are not applied but remain unclaimed by the Holder of such Note for one year after the date upon which the principal of, or premium, if any, or interest on such Note shall have respectively become due and payable shall be repaid to the Issuer (or, if appropriate, the Guarantors), or if such moneys are then held by the Issuer or the Guarantors in trust, such moneys shall be released from such trust; and the Holder of such Note entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Issuer and the Guarantors for the payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided that the

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Trustee or any such Paying Agent, before being required to make any such repayment, may, at the expense of the Issuer and the Guarantors, either mail to each Holder affected, at the address shown in the register of the Notes maintained by the Registrar pursuant to Section 2.04, or cause to be published once in a newspaper published in the English language, customarily published each Business Day and of general circulation in the City of New York, New York, a notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing or publication, any unclaimed balance of such moneys then remaining will be repaid to the Issuer. After payment to the Issuer or the Guarantors or the release of any money held in trust by the Issuer or any Guarantors, as the case may be, Holders entitled to the money must look only to the Issuer and the Guarantors for payment as general creditors unless applicable abandoned property law designates another Person.

The Trustee shall promptly and, in any event, no later that five (5) Business Days, pay to the Issuer (or if appropriate, the Guarantors) after request therefore any excess money held in respect of the Notes at such time in excess of the amounts required to pay any of the Issuer’s Obligations then owing with respect to the Notes.

ARTICLE TEN

GUARANTEE OF NOTES

SECTION 10.01. Guarantee.

Subject to the provisions of this Article Ten, the Parent and each Guarantor, by execution of this Indenture, jointly and severally, unconditionally guarantees (each a “Note Guarantee” and collectively the “Note Guarantees”) to each Holder (i) the due and punctual payment of the principal of and interest on each Note, when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal of and interest on the Notes, to the extent lawful, and the due and punctual payment of all other Obligations and due and punctual performance of all obligations of the Issuer to the Holders or the Trustee all in accordance with the terms of such Note, this Indenture, and (ii) in the case of any extension of time of payment or renewal of any Notes or any of such other Obligations with respect to the Notes, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, at stated maturity, by acceleration or otherwise. The Parent and each Guarantor, by execution of this Indenture, agrees that its obligations hereunder shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any such Note or this Indenture, any failure to enforce the provisions of any such Note, this Indenture, any waiver, modification or indulgence granted to the Issuer with respect thereto by the Holder of such Note, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or such Guarantor.

The Parent and each Guarantor hereby waives diligence, presentment, demand for payment, filing of claims with a court in the event of merger or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest or notice with respect to any such Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Note Guarantee will not be discharged as to any such Note except by payment in full of the principal thereof and interest thereon. The Parent and each Guarantor hereby agrees that, as between the Parent or such Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such Obligations as provided in Article Six, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Parent and each Guarantor for the purpose of this Note Guarantee.

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SECTION 10.02. Execution and Delivery of Guarantee.

To further evidence the Note Guarantee set forth in Section 10.01, the Parent and each Guarantor hereby agrees that a notation of such Note Guarantee, substantially in the form included in Exhibit G hereto, shall be endorsed on each Note authenticated and delivered by the Trustee and such Note Guarantee shall be executed by either manual or facsimile signature of an Officer or an Officer of a general partner, as the case may be, of the Parent and each Guarantor. The validity and enforceability of any Note Guarantee shall not be affected by the fact that it is not affixed to any particular Note.

The Parent and each of the Guarantors hereby agrees that its Note Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee.

If an officer of the Parent or a Guarantor whose signature is on this Indenture or a Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which such Note Guarantee is endorsed or at any time thereafter, such Guarantor’s Note Guarantee of such Note shall be valid nevertheless.

The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of any Note Guarantee set forth in this Indenture on behalf of the Parent and the Guarantor.

SECTION 10.03. Limitation of Guarantee.

The obligations of the Parent and each Guarantor are limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of the Parent or such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of the Parent or such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of the Parent or such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. The Parent and each Guarantor that makes a payment or distribution under a Guarantee shall be entitled to a contribution from each other Guarantor in a pro rata amount based on the Adjusted Net Assets of the Parent and each Guarantor.

SECTION 10.04. Release of Guarantor.

Guarantor shall be released from its obligations under its Note Guarantee and its obligations under this Indenture:

(1) in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the Equity Interests of such Guarantor then held by the Issuer and the Restricted Subsidiaries, in each case in accordance with the terms of this Indenture; or

(2) if such Guarantor is designated as an Unrestricted Subsidiary or otherwise ceases to be a Restricted Subsidiary, in each case in accordance with the provisions of this Indenture, upon effectiveness of such designation or when such Guarantor first ceases to be a Restricted Subsidiary, respectively; or

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(3) upon satisfaction and discharge of this Indenture or payment in full of the principal of, premium, if any, accrued and unpaid interest on the Notes and all other Obligations that are then due and payable;

and in each such case, the Issuer has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to such transactions have been complied with and that such release is authorized and permitted hereunder.

The Trustee shall execute any documents reasonably requested by the Issuer or a Guarantor in order to evidence the release of such Guarantor from its obligations under its Note Guarantee endorsed on the Notes and under this Article Ten.

SECTION 10.05. Waiver of Subrogation.

The Parent and each Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Issuer that arise from the existence, payment, performance or enforcement of the Parent’s or such Guarantor’s obligations under its Note Guarantee and this Indenture, including, without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any Holder of Notes against the Issuer, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Issuer, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or Notes on account of such claim or other rights. If any amount shall be paid to the Parent’s or any Guarantor in violation of the preceding sentence and the Notes shall not have been paid in full, such amount shall have been deemed to have been paid to the Parent or such Guarantor for the benefit of, and held in trust for the benefit of, the Holders, and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied upon the Notes, whether matured or unmatured, in accordance with the terms of this Indenture. The Parent and each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 10.05 is knowingly made in contemplation of such benefits.

ARTICLE ELEVEN

MISCELLANEOUS

SECTION 11.01. Trust Indenture Act Controls.

If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. If any provision of this Indenture modifies any TIA provision that may be so modified, such TIA provision shall be deemed to apply to this Indenture as so modified. If any provision of this Indenture excludes any TIA provision that may be so excluded, such TIA provision shall be excluded from this Indenture.

The provisions of TIA §§ 310 through 317 that impose duties on any Person (including the provisions automatically deemed included unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein.

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SECTION 11.02. Notices.

Except for notice or communications to Holders, any notice or communication shall be given in writing and delivered in person, sent by facsimile, delivered by commercial courier service or mailed by first-class mail, postage prepaid, addressed as follows:

If to the Issuer or any Guarantor:

GSI GROUP CORPORATION

125 Middlesex Turnpike

Bedford, Massachusetts 01730

Attention: Chief Financial Officer

Fax Number: [                    ]

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Attention: Michael J. Zeidel, Esq.

Fax Number: 917-777-3259

If to the Trustee:

The Bank of New York Mellon Trust Company, N.A.

222 Berkeley Street, 2nd Floor

Boston, Massachusetts 02116

Attention: Vaneta Bernard

Fax Number: 617-351-2401

Such notices or communications shall be effective when received and shall be sufficiently given if so given within the time prescribed in this Indenture.

The Parent, the Issuer, the Guarantors or the Trustee by written notice to the others may designate additional or different addresses for subsequent notices or communications.

Any notice or communication mailed to a Holder shall be mailed by first-class mail, postage prepaid, to the Holder’s address shown on the register kept by the Registrar.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication to a Holder is mailed in the manner provided above, it shall be deemed duly given, whether or not the addressee receives it.

In case by reason of the suspension of regular mail service, or by reason of any other cause, it shall be impossible to mail any notice as required by this Indenture, then such method of notification as shall be made with the approval of the Trustee shall constitute a sufficient mailing of such notice.

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SECTION 11.03. Communications by Holders with Other Holders.

Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Parent, the Issuer, the Guarantors, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

SECTION 11.04. Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Parent, the Issuer or any Guarantor to the Trustee to take any action or refrain from taking any action under this Indenture (other than the authentication of the Notes on the Initial Issuance Date), the Issuer or such Guarantor shall furnish to the Trustee:

(1) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05) stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05) stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

SECTION 11.05. Statements Required in Certificate and Opinion.

Each certificate and opinion with respect to compliance by or on behalf of the Parent, the Issuer or any Guarantor with a condition or covenant provided for in this Indenture (other than the Officers’ Certificate required by Section 3.01 or 4.04) shall comply with the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture and shall include:

(1) a statement that the Person making such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of such Person, it or he has made such examination or investigation as is necessary to enable it or him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4) a statement as to whether or not, in the opinion of such Person, such covenant or condition has been complied with; provided, however, that with respect to such matters of fact an Opinion of Counsel may rely on an Officers’ Certificate or certificate of public officials, and provided further that an Opinion of Counsel may have customary qualifications for opinions of the type required.

SECTION 11.06. Rules by Trustee and Agents.

The Trustee may make reasonable rules for action by or meetings of Holders. The Registrar and Paying Agent may make reasonable rules for their functions.

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SECTION 11.07. Business Days; Legal Holidays.

A “Business Day” is a day that is not a Legal Holiday. A “Legal Holiday” is a Saturday, a Sunday or other day on which (i) commercial banks in the City of New York are authorized or required by law to close or (ii) the New York Stock Exchange is not open for trading. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

SECTION 11.08. Governing Law.

This Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed within the State of New York.

SECTION 11.09. No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret another indenture, loan, security or debt agreement of the Issuer or any Subsidiary thereof. No such indenture, loan, security or debt agreement may be used to interpret this Indenture.

SECTION 11.10. No Recourse Against Others.

No recourse for the payment of the principal of or premium, if any, or interest, on any of the Notes, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Parent, the Issuer or any Guarantor in this Indenture or in any supplemental indenture, or in any of the Notes, or because of the creation of any Indebtedness represented thereby, shall be had against any stockholder, officer, director or employee, as such, past, present or future, of the Parent, the Issuer or any Guarantor or of any successor corporation of the Parent, the Issuer or any Guarantor or against the property or assets of any such stockholder, officer, employee or director, either directly or through the Parent, the Issuer or any Guarantor, or any successor corporation of the Parent, the Issuer or any Guarantor, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the Notes are solely obligations of the Parent, the Issuer and the Guarantors, and that no such personal liability whatever shall attach to, or is or shall be incurred by, any stockholder, officer, employee or director of the Parent, the Issuer or any Guarantor, or any successor corporation thereof, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or the Notes or implied therefrom, and that any and all such personal liability of, and any and all claims against every stockholder, officer, employee and director, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of the Notes. It is understood that this limitation on recourse is made expressly for the benefit of any such shareholder, employee, officer or director and may be enforced by any of them.

SECTION 11.11. Successors.

All agreements of the Parent, the Issuer and the Guarantors in this Indenture and the Notes shall bind their respective successors. All agreements of each of the Trustee, any additional trustee and any Paying Agents in this Indenture shall bind its successor.

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SECTION 11.12. Multiple Counterparts.

The parties may sign multiple counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of them together represent one and the same agreement.

SECTION 11.13. Table of Contents, Headings, Etc. The table of contents, cross-reference Section and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

SECTION 11.14. Separability.

Each provision of this Indenture shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purpose of this Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 11.15. Acts of Holders. Record Dates.

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as an “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section.

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee reasonably deems sufficient.

(c) The Issuer may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Issuer prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 7.01) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action.

(d) The ownership of the Notes shall be proved by the register of the Notes.

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(e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Notes shall bind every future Holder of the same Notes and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Notes.

SECTION 11.16. Failure or Indulgence Not Waiver.

No failure or delay on the part of any Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

Section 11.15 Waiver of Jury Trial.

EACH OF THE ISSUER, THE PARENT THE GUARANTOR AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY

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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed all as of the date and year first written above.

GSI GROUP CORPORATION

By:

Name:

Title:

GSI GROUP INC.,

as a Guarantor

By:

Name:

Title:

S-1

Guarantors:

EAGLE ACQUISITION CORPORATION,

as a Guarantor

By:

Name:

Title:

S-2

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Trustee

By:

Name:

Title:

S-3

EXHIBIT A

		CUSIP
GSI GROUP CORPORATION
No.	$

11% SENIOR NOTE DUE 2013

GSI GROUP CORPORATION, a Michigan corporation (the “Company”), for value received, promises to pay to [            ] or registered assigns the principal sum of $ dollars on [one day prior to fifth anniversary of issuance date], 2013.

Interest Payment Dates: — and —.

Record Dates: — and —.

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

A-1

IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by its duly authorized officers.

GSI GROUP CORPORATION

By:

Name:

Title:

By:

Name:

Title:

Dated: Certificate of Authentication

This is one of the 11% Senior Notes due 2013 referred to in the within-mentioned Indenture.

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee

By:

Name:

Title:

Dated:

A-2

[FORM OF REVERSE OF NOTE]

GSI GROUP CORPORATION

11% SENIOR NOTE DUE 2013

THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR UNITED

STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE, AMOUNT OF OID, ISSUE

DATE AND YIELD TO MATURITY OF THIS NOTE MAY BE OBTAINED BY CONTACTING: GSI

Group Corporation, 125 Middlesex Turnpike, Bedford, Massachusetts 01730

Attention Robert Bowen; rbowen@gsig.com

1. Interest. GSI GROUP CORPORATION, a Michigan corporation (the “Issuer”), promises to pay, until the principal hereof is paid or made available for payment, interest on the principal amount set forth on the face hereof at a rate of 11% per annum. Interest hereon will accrue from and including the most recent date to which interest has been paid or, if no interest has been paid, from and including [insert applicable issue date] to but excluding the date on which interest is paid. Interest shall be payable in arrears on each — and — commencing on [insert applicable issue date]. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Issuer shall pay interest on overdue principal and on overdue interest (to the full extent permitted by law) at a rate equal to the Default Rate.

2. Method of Payment. The Issuer will pay interest hereon (except defaulted interest) to the Persons who are registered Holders at the close of business on — or — next preceding the interest payment date (whether or not a Business Day). Holders must surrender Notes to a Paying Agent to collect principal payments. The Issuer will pay principal and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Interest may be paid by check mailed to the Holder entitled thereto at the address indicated on the register maintained by the Registrar for the Notes, provided, however, that payments on a certificated Note will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

3. Paying Agent and Registrar. Initially, The Bank of New York Mellon Trust Company, N.A. (the “Trustee”) will act as a Paying Agent and Registrar. The Issuer may appoint and change any Paying Agent or Registrar or co-Registrar without notice. The Issuer or any of its Affiliates may act as Paying Agent or Registrar.

4. Indenture. The Issuer issued the Notes under an Indenture dated as of — , 2008 (the “Indenture”) among the Parent as defined in the Indenture, the Issuer, the Guarantors (as defined in the Indenture) and the Trustee. This is one of an issue of Notes of the Issuer issued, or to be issued, under the Indenture. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb), as amended from time to time. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of them. Capitalized and certain other terms used herein and not otherwise defined have the meanings set forth in the Indenture.

5. [Intentionally Omitted]

6. Optional Redemption.

(a) The Issuer, at its option, may redeem up to 50% of the aggregate principal amount of the Notes, (including any Notes issued after the Initial Issue Date) in whole or in part, at any time on or after the first anniversary of the Initial Issue Date upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon, if any, to, but not including, the Redemption Date.

A-3

(b) At any time on or after the third anniversary of the Initial Issue Date, the Issuer, at its option, may redeem up to 100% of the aggregate principal amount of the Notes (including any Notes issued after the Initial Issue Date), in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon, if any, to, but not including, the Redemption Date.

(c) In the event of a redemption of fewer than all of the Notes, the Trustee shall select the Notes to be redeemed in compliance with the requirements of the principal national securities exchange, if any, while such Notes are listed, or if such Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or in such other manner as the Trustee shall deem fair and equitable. The Notes will be redeemable in whole or in part upon not less than 30 nor more than 60 days’ prior written notice, mailed by first-class mail to a Holder’s last address as it shall appear on the register maintained by the Registrar of the Notes. On and after any redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption unless the Issuer shall fail to redeem any such Note.

7. Trigger Event. If for any period of four consecutive fiscal quarters (each, a “Trigger Event Measuring Period”), beginning with the fiscal quarter ending December 31, 2010, Net Indebtedness of the Parent and the Restricted Subsidiaries (including the Issuer) is greater than five times Consolidated Cash Flow of the Parent and the Restricted Subsidiaries (including the Issuer) for such Trigger Event Measuring Period (a “Trigger Event”), then not later than 50 days after the end of such Trigger Event Measuring Period (or 95 days in the case of a Trigger Event Measuring Period ending with the fourth quarter of a fiscal year) (the “Trigger Event Offer Date”), the Issuer shall be obligated to make an Offer to Purchase all of the then outstanding Notes, and any such repurchase pursuant to Section 4.20 shall be made on a Business Day (the “Trigger Event Payment Date”) not more than 60 nor less than 30 days following the Trigger Event Offer Date, at a purchase price equal to 100% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest, if any, to the Trigger Event Payment Date. In the event an Annual Report or Quarterly Report, as applicable, is not filed on or before the Trigger Event Offer Date with respect to any Trigger Event Measuring Period, then, on or before the Trigger Event Offer Date, (i) for purposes of determining whether a Trigger Event has occurred for any such Trigger Event Measuring Period, Net Indebtedness and Consolidated Cash Flow will be calculated and based on internally available information of the Parent or the Issuer on and for the applicable date and periods, which shall be provided to a Holder upon its request and (ii) on or before the Trigger Event Offer Date, the Parent shall publicly disclose whether or not a Trigger Event has occurred with respect to the applicable Trigger Event Measuring Period.

8. Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at his registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a satisfaction and discharge of the Indenture. On and after the Redemption Date, unless the Issuer defaults in making the redemption payment, interest ceases to accrue on Notes or portions thereof called for redemption.

9. Offers To Purchase. The Indenture provides that upon the occurrence of a Change of Control or an Asset Sale and subject to further limitations contained therein, the Issuer shall make an offer to purchase outstanding Notes in accordance with the procedures set forth in the Indenture.

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10. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay to it any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes or portion of a Note selected for redemption, or register the transfer of or exchange any Notes for a period of 15 days before a mailing of notice of redemption.

11. Persons Deemed Owners. The registered Holder of this Note may be treated as the owner of this Note for all purposes.

12. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee will pay the money back to the Issuer at its written request. After that, Holders entitled to the money must look to the Issuer for payment as general creditors unless an “abandoned property” law designates another Person.

13. Amendment, Supplement, Waiver, Etc. The Parent, the Issuer, the Guarantors and the Trustee (if a party thereto) may, without the consent of the Holders of any outstanding Notes, amend, waive or supplement the Indenture or the Notes for certain specified purposes, including, among other things, curing ambiguities, defects or inconsistencies, maintaining the qualification of the Indenture under the Trust Indenture Act of 1939, as amended, and making any change that does not materially and adversely affect the rights of any Holder. Other amendments and modifications of the Indenture or the Notes may be made by the Parent, the Issuer, the Guarantors and the Trustee with the consent of the Holders of not less than a majority of the aggregate principal amount of the outstanding Notes, subject to certain exceptions requiring the consent of the Holders of the particular Notes to be affected.

14. Successor Corporation. When a successor corporation assumes all the obligations of its predecessor under the Notes and the Indenture and the transaction complies with the terms of Article Five of the Indenture, the predecessor corporation will, except as provided in Article Five, be released from those obligations.

15. Defaults and Remedies. Events of Default are set forth in the Indenture. Subject to certain limitations in the Indenture, if an Event of Default (other than an Event of Default specified in Section 6.01(7) or (8) ) occurs and is continuing, the Trustee or the Holders of not less than 25% in aggregate principal amount of the outstanding Notes may, by written notice to the Trustee and the Issuer, and the Trustee upon the request of the Holders of not less than 25% in aggregate principal amount of the outstanding Notes shall, declare all principal of and accrued interest (in addition to the Default Rate) on all Notes to be immediately due and payable and such amounts shall become immediately due and payable. If an Event of Default specified in Section 6.01(7) or (8) occurs, the principal amount of and interest on all Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal, premium, if any, or interest on the Notes or a default in the observance or performance of any of the obligations of the Issuer under Article Five of the Indenture) if it determines that withholding notice is in their best interests.

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16. Trustee Dealings with Issuer. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its Affiliates, as if it were not Trustee.

17. Discharge. The Issuer’s obligations pursuant to the Indenture will be discharged, except for obligations pursuant to certain sections thereof, subject to the terms of the Indenture, upon the payment of all the Notes or upon the irrevocable deposit with the Trustee of United States dollars or U.S. Government Obligations sufficient to pay when due principal of and interest on the Notes to maturity or redemption, as the case may be.

18. Guarantees. The Note will be entitled to the benefits of certain Note Guarantees made for the benefit of the Holders. Reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and obligations thereunder of the Guarantors, the Trustee and the Holders.

19. Authentication. This Note shall not be valid until the Trustee signs the certificate of authentication on the other side of this Note.

20. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed within the State of New York. The Trustee, the Issuer, the Guarantors and the Holders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture or the Notes.

21. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:

GSI GROUP CORPORATION

125 Middlesex Turnpike

Bedford, Massachusetts 01730

Attention: Chief Financial Officer

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ASSIGNMENT

I or we assign and transfer this Note to:

(Insert assignee’s Social Security or tax I.D. number)

(Print or type name, address and zip code of assignee)

and irrevocably appoint:

Agent to transfer this Note on the books of the Issuer. The Agent may substitute another to act for him.

Date:	Your Signature:
		(Sign exactly as your name appears on the other side of this Note)

Signature Guarantee:

SIGNATURE GUARANTEE

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

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OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have all or any part of this Note purchased by the Issuer pursuant to Section 4.09, Section 4.19 or Section 4.20 of the Indenture, check the appropriate box:

¨ Section 4.09 ¨ Section 4.19 ¨ Section 4.20

If you want to have only part of the Note purchased by the Issuer pursuant to Section 4.09, Section 4.19 or Section 4.20 of the Indenture, state the amount you elect to have purchased:

$
	(multiple of $1,000)

Date:

	Your Signature:
		(Sign exactly as your name appears on the face of this Note)
Signature Guaranteed

SIGNATURE GUARANTEE

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

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EXHIBIT B

[FORM OF LEGEND FOR 144A NOTES AND OTHER NOTES

THAT ARE RESTRICTED NOTES]

THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF GSI GROUP CORPORATION THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION (1)(A) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), PURCHASING FOR ITS OWN ACCOUNT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN “INSTITUTIONAL ACCREDITED INVESTOR”) THAT IS PURCHASING AT LEAST $100,000 OF NOTES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN INSTITUTIONAL ACCREDITED INVESTOR (AND BASED UPON AN OPINION OF COUNSEL IF GSI GROUP CORPORATION SO REQUESTS) OR (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, PROVIDED THAT IN THE CASE OF A TRANSFER UNDER CLAUSE (E) SUCH TRANSFER IS SUBJECT TO THE RECEIPT BY THE TRUSTEE (AND GSI GROUP CORPORATION, IF IT SO REQUESTS) OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO GSI GROUP CORPORATION OR ANY OF ITS SUBSIDIARIES OR (3) UNDER AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND THE INDENTURE GOVERNING THE NOTES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. IF ANY RESALE OR OTHER TRANSFER OF ANY NOTE IS PROPOSED TO BE MADE UNDER CLAUSE (A)(1)(D) ABOVE WHILE THESE TRANSFER RESTRICTIONS ARE IN FORCE, THEN THE TRANSFEROR SHALL DELIVER A LETTER FROM THE TRANSFEREE TO GSI GROUP CORPORATION AND THE TRUSTEE WHICH SHALL PROVIDE, AMONG OTHER THINGS, THAT THE TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR AND THAT IT IS ACQUIRING THE SECURITIES FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT.

[FOR RESTRICTED NOTES THAT ARE NOT GLOBAL NOTES

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NOTWITHSTANDING THE FOREGOING, THE NOTES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE NOTES PROVIDED THAT ANY RECIPIENT AGREES TO THE TRANSFER RESTRICTIONS HEREIN.]

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[FORM OF ASSIGNMENT FOR 144A NOTES AND OTHER NOTES

THAT ARE RESTRICTED NOTES]

I or we assign and transfer this Note to:

(Insert assignee’s Social Security or tax I.D. number)

(Print or type name, address and zip code of assignee)

and irrevocably appoint:

Agent to transfer this Note on the books of the Issuer. The Agent may substitute another to act for him.

[Check One]

[  ] (a)	This Note is being transferred in compliance with the exemption from registration under the Securities Act provided by Rule 144A thereunder.
	or
[  ] (b)	This Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture.

If neither of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been satisfied.

Date:	Your Signature:
	(Sign exactly as your name appears on the face of this Note)

Signature Guarantee:

SIGNATURE GUARANTEE

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

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TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:
	NOTICE: To be executed by an executive officer

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EXHIBIT C

[FORM OF LEGEND FOR REGULATION S NOTE]

THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF GSI GROUP CORPORATION THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION (1)(A) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), PURCHASING FOR ITS OWN ACCOUNT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN “INSTITUTIONAL ACCREDITED INVESTOR”) THAT IS PURCHASING AT LEAST $100,000 OF NOTES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN INSTITUTIONAL ACCREDITED INVESTOR (AND BASED UPON AN OPINION OF COUNSEL IF GSI GROUP CORPORATION SO REQUESTS) OR (E) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, PROVIDED THAT IN THE CASE OF A TRANSFER UNDER CLAUSE (E) SUCH TRANSFER IS SUBJECT TO THE RECEIPT BY THE TRUSTEE (AND GSI GROUP CORPORATION, IF IT SO REQUESTS) OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO GSI GROUP CORPORATION OR ANY OF ITS SUBSIDIARIES OR (3) UNDER AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND THE INDENTURE GOVERNING THE NOTES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE EVIDENCED HEREBY OF THE RE-SALE RESTRICTIONS SET FORTH IN (A) ABOVE. IF ANY RESALE OR OTHER TRANSFER OF ANY NOTE IS PROPOSED TO BE MADE UNDER CLAUSE (A)(1)(D) ABOVE WHILE THESE TRANSFER RESTRICTIONS ARE IN FORCE, THEN THE TRANSFEROR SHALL DELIVER A LETTER FROM THE TRANSFEREE TO GSI GROUP CORPORATION AND THE TRUSTEE WHICH SHALL PROVIDE, AMONG OTHER THINGS, THAT THE TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR AND THAT IT IS ACQUIRING THE SECURITIES FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT.

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[FORM OF ASSIGNMENT FOR REGULATION S NOTE]

I or we assign and transfer this Note to:

(Insert assignee’s Social Security or tax I.D. number)

(Print or type name, address and zip code of assignee)

and irrevocably appoint:

Agent to transfer this Note on the books of the Issuer. The Agent may substitute another to act for him.

[Check One]

[  ] (a)	This Note is being transferred in compliance with the exemption from registration under the Securities Act provided by Rule 144A thereunder.
	or
[  ] (b)	This Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture.

If neither of the foregoing boxes is checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been satisfied.

Date:	Your Signature:
	(Sign exactly as your name appears on the face of this Note)
Signature Guarantee:

SIGNATURE GUARANTEE

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

C-2

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:
	NOTICE: To be executed by an executive officer

C-3

EXHIBIT D

[FORM OF LEGEND FOR GLOBAL NOTE]

Any Global Note authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Note) in substantially the following form:

This Note is a Global Note within the meaning of the Indenture dated as of •, 2008 relating to the Notes and is registered in the name of a depository or a nominee of a depository. This Note is not exchangeable for Notes registered in the name of a person other than the depository or its nominee except in the limited circumstances described in the Indenture, and no transfer of this Note (other than a transfer of this Note as a whole by the depository to a nominee of the depository or by a nominee of the depository to the depository or another nominee of the depository) may be registered except in the limited circumstances described in the Indenture.

Unless this certificate is presented by an authorized representative of the Depository Trust Company (a New York corporation) (“DTC”) to the issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of CEDE & CO. or in such other name as it requested by an authorized representative of DTC (and any payment is made to CEDE & CO. or such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any Person is wrongful inasmuch as the registered owner hereof, CEDE & CO., has an interest herein.

D-1

EXHIBIT E

Form of Certificate To Be

Delivered in Connection with

Transfers to Non-QIB Accredited Investors

[            ]

[            ]

[            ]

Attention: [            ]

Ladies and Gentlemen:

In connection with our proposed purchase of 11% Senior Notes due 2013 (the “Notes”) of GSI Group Corporation, a Michigan corporation (the “Issuer”), we confirm that:

1. We understand that any subsequent transfer of the Notes is subject to certain restrictions and conditions set forth in the Indenture dated as of [            ], 2008 relating to the Notes and we agree to be bound by, and not to resell, pledge or otherwise transfer the Notes except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

2. We understand that the Notes have not been registered under the Securities Act or any other applicable securities laws, have not been and will not be qualified for sale under the securities laws of any non-U.S. jurisdiction and that the Notes may not be offered, sold, pledged or otherwise transferred except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Notes, we will do so only (i) to the Issuer or any subsidiary thereof, (ii) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined in Rule 144A), (iii) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Notes, (iv) outside the United States to persons other than U.S. persons in offshore transactions meeting the requirements of Rule 904 of Regulation S under the Securities Act, (v) pursuant to the exemption form registration provided by Rule 144 under the Securities Act (if applicable) or (vi) pursuant to an effective registration statement, and we further agree to provide to any person purchasing any of the Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein.

3. We understand that, on any proposed resale of any Notes, we will be required to furnish to you and the Issuer such certifications, legal opinions and other information as you and the Issuer may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.

4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting each are able to bear the economic risk of our or their investment, as the case may be.

E-1

5. We are acquiring the Notes purchased by us for our account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

6. We are not acquiring the Notes with a view toward the distribution thereof in a transaction that would violate the Securities Act or the securities laws of any state of the United States or any other applicable jurisdiction.

You are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

Very truly yours,

[Name of Transferee]

By:

Name:

Title:

Date:

E-2

EXHIBIT F

Form of Certificate To Be Delivered

in Connection with Transfers

Pursuant to Regulation S

[            ]

[            ]

[            ]

Attention: Corporate Trust Services

Re: GSI Group Corporation, a Michigan corporation (the “Issuer”)

11% Senior Notes due 2013 (the “Notes”)

Dear Sirs:

In connection with our proposed sale of $             aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, we represent that:

(1) the offer of the Notes was not made to a U.S. person or to a person in the United States;

(2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;

(3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 904(a) of Regulation S;

(4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and

(5) we have advised the transferee of the transfer restrictions applicable to the Notes.

F-1

You are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S.

Very truly yours,

[Name of Transferee]

By:

Name:

Title:

F-2

EXHIBIT G

NOTATION OF GUARANTEE

Each of the undersigned (the “Guarantors”) hereby jointly and severally unconditionally guarantees, to the extent set forth in the Indenture dated as of •, 2008 by and among GSI Group Corporation, as issuer, the Guarantors, as guarantors, and •, as Trustee (as amended, restated or supplemented from time to time, the “Indenture”), and subject to the provisions of the Indenture, (a) the due and punctual payment of the principal of, and premium, if any, and interest on the Notes, when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on overdue principal of, and premium and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Issuer to the Holders or the Trustee, all in accordance with the terms set forth in Article Ten of the Indenture, and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

The obligations of the Guarantors to the Holders and to the Trustee pursuant to this Guarantee and the Indenture are expressly set forth in Article Ten of the Indenture, and reference is hereby made to the Indenture for the precise terms and limitations of this Guarantee. Each Holder of the Note to which this Guarantee is endorsed, by accepting such Note, agrees to and shall be bound by such provisions.

[Signatures on Following Pages]

G-1

IN WITNESS WHEREOF, each of the Guarantors has caused this Guarantee to be signed by a duly authorized officer.

[                    ]

By:

Name:

Title:

[                    ]

By:

Name:

Title:

G-2

EX-99.3

Exhibit 99.3

FORM OF WARRANT AGREEMENT

DATED AS OF —, 2008

AMONG

GSI GROUP INC.

AND

THE HOLDERS

LISTED ON SCHEDULE I HERETO

TABLE OF CONTENTS

		PAGE
ARTICLE I DEFINITIONS		1
1.1	DEFINITIONS	1
1.2	RULES OF CONSTRUCTION	6
ARTICLE II ISSUANCE OF WARRANTS AND RESERVATION OF WARRANT SHARES		6
2.1	ISSUANCE OF WARRANTS TO INITIAL HOLDERS; WARRANT AGREEMENT	6
2.2	RESERVATION OF WARRANT SHARES	7
ARTICLE III CERTAIN ADMINISTRATIVE PROVISIONS		7
3.1	FORM OF WARRANT; REGISTER	7
3.2	EXCHANGE OF WARRANTS FOR WARRANTS	9
3.3	MECHANICS OF TRANSFER OF WARRANTS	10
ARTICLE IV EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES		10
4.1	EXERCISE OF WARRANTS; EXPIRATION	10
4.2	EXCHANGE FOR WARRANT SHARES	10
4.3	EXERCISE AT EFFECTIVE TIME	11
4.4	ISSUANCE OF WARRANT SHARES	12
ARTICLE V ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES		13
5.1	GENERAL	13
5.2	DISTRIBUTIONS, SUBDIVISIONS AND COMBINATIONS	14
5.3	CAPITAL REORGANIZATION, CAPITAL RECLASSIFICATION, MERGER, ETC	14
5.4	PURCHASE RIGHTS	15
5.5	MISCELLANEOUS	16
ARTICLE VI COVENANTS OF THE ISSUER		16
6.1	NOTICES OF CERTAIN ACTIONS	16
6.2	MERGER AND CONSOLIDATION OF THE ISSUER	17
6.3	NO AVOIDANCE	17
6.4	SALE OF WARRANTS	17
ARTICLE VII MISCELLANEOUS		18
7.1	NOTICES	18
7.2	NO VOTING RIGHTS; LIMITATION OF LIABILITY	18
7.3	AMENDMENTS AND WAIVERS	18
7.4	REMEDIES	19
7.5	BINDING EFFECT	19
7.6	COUNTERPARTS	19

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7.7	GOVERNING LAW; JURISDICTION AND VENUE	19
7.8	WAIVER OF JURY TRIAL	20
7.9	BENEFITS OF THIS AGREEMENT	20
7.10	HEADINGS	21
7.11	AGGREGATION OF WARRANTS AND WARRANT SHARES	21
7.12	SEVERABILITY	21
Schedule I	Holders
Exhibit A	Form of Warrant
Annex A	Exercise Form
Annex B	Exchange Form
Annex C	Assignment Form

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This WARRANT AGREEMENT (this “Agreement”), dated as of — , 2008, between the Initial Holders listed on Schedule I hereto (the “Initial Holders”) and GSI Group Inc., a company continued and existing under the laws of the Province of New Brunswick, Canada (the “Issuer”)

WHEREAS, the Issuer, GSI Group Corporation, a Michigan corporation (“U.S. Sub”) and the Initial Holders have entered into a Purchase Agreement dated July 9, 2008 (the “Purchase Agreement”), pursuant to which (i) U.S. Sub is issuing and selling to the Initial Holders $210,000,000 aggregate principal amount of U.S. Sub’s 11% Senior Notes due 2013 (the “Notes”), the obligations of which shall be fully and unconditionally guaranteed by the Issuer, and (ii) the Issuer is issuing and selling to the Initial Holders up to — Warrants (as defined below) to purchase up to — Common Shares (as defined below); and

WHEREAS, this Agreement sets forth terms and conditions applicable to the Warrants.

NOW, THEREFORE, the parties to this Agreement hereby agree as set forth below.

ARTICLE I

DEFINITIONS

1.1 DEFINITIONS.

(a) Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Purchase Agreement.

(b) The following terms shall have the meanings set forth below.

“Affiliate” of any Person means any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with such Person. The term “control” (including the terms “controlled by” and “under common control with”) as used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” shall mean this Agreement, together with all schedules and exhibits attached hereto, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

“Assignment Form” means the assignment form attached as Annex C to a Warrant.

“Authorized Share Failure” has the meaning given to such term in Section 2.2.

“Bloomberg” means Bloomberg Financial Markets.

“Board” means the board of directors of the Issuer or any duly authorized committee thereof.

“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions in New York are authorized or required by law to close. “Buy-In” has the meaning given to such term in Section 4.4(g).

“Buy-In Price” has the meaning given to such term in Section 4.4(g).

“Cash” means money, currency or a credit balance in a demand deposit account.

“Closing Bid Price” means, for any security as of any date, the last closing bid price, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price, then the last bid price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the average of the bid prices, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid of such security on such date shall be the fair market value as mutually determined by the Issuer and the Holder. All such determinations are to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

“Common Shares” means the common shares of the Issuer, no par value.

“Company Distribution” has the meaning given to such term in Section 5.4(b).

“Convertible Securities” means any Share Capital, evidence of Indebtedness or other Securities or rights convertible into or exchangeable for Common Shares (including the Warrants).

“Delivery Date” has the meaning given to such term in Section 4.4(a).

“Distribution” means, in respect of any Person, (a) the payment or making of any dividend or other distribution of Property in respect of Share Capital of such Person or (b) the redemption or other acquisition of any Share Capital of such Person.

“DTC” means The Depository Trust Company.

“Effective Time” has the meaning given to such term in Section 4.3.

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“Eligible Market” means the Principal Market, the American Stock Exchange, The New York Stock Exchange, Inc., The NASDAQ Global Market or The NASDAQ Capital Market.

“Encumbrance” means any mortgage, pledge, hypothecation, claim, charge, security interest, encumbrance, option, lien, put or call right, right of first offer or refusal, proxy, voting right or other restrictions or limitations of any nature whatsoever, whether or not filed, recorded or otherwise perfected under applicable law, other than (a) those resulting from taxes which have not yet become delinquent or (b) minor liens and encumbrances that do not materially detract from the value of the property or materially impair the operations of a Person or materially interfere with the use of such property or asset.

“Exchange Form” means the exchange form attached as Annex B to a Warrant.

“Exercise Form” means the exercise form attached as Annex A to a Warrant.

“Exercise Number” has the meaning given to such term in Section 4.2.

“Exercise Price” means $0.01 per Warrant Share, subject to change from time to time in the manner provided in Article V.

“Expiration Time” means, with respect to any Holder, the earlier of (i) 5:00 p.m., Eastern daylight time, on the fifth anniversary of the date of this Agreement, or —, 2013 and (ii) the Effective Time.

“Fair Market Value” means the fair market value of such Property or Security as determined by the Board in the good faith exercise of its reasonable business judgment; provided, however, that if Holders of at least two-thirds of the then outstanding Warrants object to such determination by the Board by delivery of written notice to the Issuer within thirty days of the date of determination, the Issuer and such Holders shall, within the thirty days after the delivery of such notice, attempt in good faith to resolve the objection. If the Issuer and such Holders are unable to resolve the objection within the foregoing time period provided, the matter shall be arbitrated by an investment bank of nationally recognized standing to be agreed upon by the Issuer and the Holders (the “Independent Auditor”). The determination of the fair market value of such Property or Security by the Independent Auditor shall be final, binding and non-appealable. The Issuer and the Holders shall instruct the Independent Auditor to render its decision within thirty days of its selection. The fees and expenses of the Independent Auditor shall be borne by the party whose position was the farthest to the final resolution as determined by the Independent Auditor. Notwithstanding the foregoing, if such Security is Publicly Traded or quoted at the time of determination, the Fair Market Value of such Security shall be the (x) in the case of calculations identified herein as “single-day Fair Market Value,” the closing trading price of such security as of the trading day immediately prior to the date of determination, and (y) in all other cases, the volume weighted average trading price of such Security for the prior ten trading days immediately prior to the date of determination.

“Fundamental Transaction” has the meaning given to such term in Section 5.3(a).

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“Governing Documents” means as to any Person, its articles or certificate of incorporation and by-laws, its partnership agreement, its certificate of formation and operating agreement and/or the other organizational or governing documents of such Person.

“Governmental Authority” means (a) the government of the United States of America or any state or other political subdivision thereof, (b) the government of Canada or any province or other political subdivisions thereof, (c) any government or political subdivision of any other jurisdiction in which the Issuer or any of the Subsidiaries conducts business, or which properly asserts jurisdiction over any and all real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by the Issuer or the Subsidiaries, (d) any entity properly exercising executive, legislative, judicial, regulatory or administrative functions of any such government or (e) any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.

“Holder” means with respect to any Warrant, the holder of such Warrant as set forth in the Warrant Register.

“Indenture” means that certain indenture, dated as of the date hereof, by and among the Issuer, as the guarantor of the Notes (as defined in the Purchase Agreement), U.S. Sub, certain subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A. as trustee, in substantially the form attached to the Purchase Agreement as Exhibit A.

“Initial Holders” has the meaning set forth in the preamble to this Agreement.

“Issuer” has the meaning set forth in the preamble to this Agreement.

“Notes” has the meaning given to such term in the preamble to this Agreement.

“Options” means any warrants, options or other rights to subscribe for or to purchase (a) Common Shares or (b) Convertible Securities.

“Other Equity Documents” means the (a) the Warrant, (b) the Purchase Agreement, and (c) the Registration Rights Agreement.

“Other Equity Securities” means any Share Capital, other than the Common Shares, Convertible Securities or Options.

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

“Principal Market” means The NASDAQ Global Select Market.

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

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“Publicly Traded” means, with respect to any Security, that such Security is (a) listed on a U.S. securities exchange or (b) traded in the U.S. over-the-counter market, which trades are reported by the National Quotation Bureau, Incorporated or a similar successor organization.

“Purchase Agreement” has the meaning given to such term in the preamble to this Agreement.

“Purchase Rights” has the meaning given to such term in Section 5.4(a).

“Registration Rights Agreement” means that certain registration rights agreement, dated as of the date hereof, by and among the Issuer and the Initial Holders.

“Required Reserve Amount” has the meaning given to such term in Section 2.2.

“Requisite Holders” means, as of any date of determination, Holders holding Warrants representing at least a majority of the Warrant Shares that are issuable upon exercise of Warrants then outstanding; provided that any Warrants held by the Issuer or its Affiliates shall not be counted in either the numerator or the denominator of the calculation of Requisite Holders.

“Security” or “Securities” has the meaning set forth in Section 2(l) of the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended.

“Share Capital” means any and all shares, interests, participations or other equivalents (however designated) of share capital of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights, or options to purchase or other arrangements or rights to acquire any of the foregoing.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax, penalties and any similar liabilities with respect thereto.

“Total Amount” has the meaning given to such term in Section 4.1(b).

“Trading Day” means any day on which the Common Shares are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Shares, then on the principal securities exchange or securities market on which the Common Shares are then traded; provided that “Trading Day” shall not include any day on which the Common Shares are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Shares are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

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“Transfer” means any sale, transfer, assignment, or other disposition of any interest in, with or without consideration, any security, including any disposition of any security or of any interest therein which would constitute a sale thereof within the meaning of the Securities Act.

“Warrant” has the meaning given to such term in Section 3.1(a).

“Warrant Register” has the meaning given to such term in Section 3.1(b).

“Warrant Shares” has the meaning set forth in a Warrant.

1.2 RULES OF CONSTRUCTION.

The definitions in Section 1.1 shall apply equally to the singular and plural forms of the terms defined. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole, including the schedules and exhibits, as the same may from time to time be amended, restated, supplemented or otherwise modified, and not to any particular section, subsection, paragraph, subparagraph or clause contained in this Agreement. All references to sections, schedules and exhibits mean the sections of this Agreement and the schedules and exhibits attached to this Agreement, except where otherwise stated. The title of and the section and paragraph headings in this Agreement are for convenience of reference only and shall not govern or affect the interpretation of any of the terms or provisions of this Agreement. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. Any reference to any term contained in any other agreement or other document shall be deemed to be a reference to such term in the applicable agreement or document as in effect as of the date hereof, unless the Requisite Holders have consented to any amendment of such applicable agreement since the date hereof, in which case such reference shall be deemed to be a reference to such term in the applicable agreement or document, as amended through the date of the most recent consent by the Requisite Holders. The language used in this Agreement has been chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

ARTICLE II

ISSUANCE OF WARRANTS AND RESERVATION OF WARRANT SHARES

2.1 ISSUANCE OF WARRANTS TO INITIAL HOLDERS; WARRANT AGREEMENT.

The Issuer shall issue, sell and deliver the Warrants to the Initial Holders in accordance with the Purchase Agreement. The provisions of this Agreement shall apply to all Warrants (and, to the extent applicable, Warrant Shares), and each Holder that is not a party to this Agreement, by its acceptance of a Warrant, agrees to be bound by the applicable provisions hereof.

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2.2 RESERVATION OF WARRANT SHARES.

From and after the date hereof, the Issuer shall at all times have authorized, and reserve and keep available, free from preemptive or similar rights, for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon the exercise or exchange of each Warrant, the number of authorized but unissued Warrant Shares issuable upon exercise or exchange of all outstanding Warrants. The Issuer shall take all actions reasonably necessary to ensure that Warrant Shares shall be duly authorized and, when issued upon exercise or exchange of any Warrant in accordance with the terms hereof, shall be validly issued, fully paid and non-assessable, free and clear of all Encumbrances (other than those created by the Holder thereof) and preemptive or similar rights. If at any time while any Warrants remain outstanding the Issuer does not have a sufficient number of authorized and unreserved Common Shares to satisfy its obligation to reserve for issuance upon exercise of all outstanding Warrants (the “Required Reserve Amount”) at least a number of Common Shares equal to the number of Common Shares as shall from time to time be necessary to effect the exercise of all Warrants then outstanding (an “Authorized Share Failure”), then the Issuer shall promptly take all action reasonably necessary to increase the Issuer’s authorized Common Shares to an amount sufficient to allow the Issuer to reserve the Required Reserve Amount for all Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as reasonably practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than seventy-five (75) days after the occurrence of such Authorized Share Failure, the Issuer shall hold a meeting of its shareholders for the approval of an increase in the number of authorized Common Shares. In connection with such meeting, the Issuer shall provide each shareholder with a proxy statement and shall use its reasonably best efforts to solicit its shareholders’ approval of such increase in authorized Common Shares and shall cause its Board to recommend to the shareholders that they approve such proposal.

ARTICLE III

CERTAIN ADMINISTRATIVE PROVISIONS

3.1 FORM OF WARRANT; REGISTER.

(a) Each Warrant issued hereunder in accordance with the Purchase Agreement shall be in the form of Exhibit A attached hereto (each, a “Warrant”) and shall be executed on behalf of the Issuer by the Chief Executive Officer, Chief Financial Officer, President, any Vice President or the Chief Operating Officer of the Issuer. Upon initial issuance, each Warrant shall be dated as of the date of signature thereof by the Issuer. Irrespective of any adjustments in the Exercise Price or the number or kind of Share Capital or other Property issuable upon the exercise of the Warrants, any Warrants theretofore or thereafter issued may, as a matter of form, continue to express the same Exercise Price and the same number of Warrant Shares issuable upon the exercise of such Warrants as were stated in the Warrants initially issued pursuant the Purchase Agreement.

(b) Each Warrant issued, exchanged or transferred hereunder shall be registered in a warrant register (the “Warrant Register”). The Warrant Register shall set forth (i) the number of each Warrant, (ii) the name and address of the Holder thereof, (iii) the original number of Warrant Shares purchasable upon the exercise thereof, (iv) the number of Warrant

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Shares purchasable upon the exercise thereof, as adjusted from time to time in accordance with this Agreement and (v) the Exercise Price for each Warrant Share, as adjusted from time to time in accordance with this Agreement. The Warrant Register will be maintained by the Issuer and will be available for inspection by any Holder at the principal office of the Issuer or such other location as the Issuer may designate to the Holders in the manner set forth in Section 7.1. The Issuer shall be entitled to treat the Holder of any Warrant as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other Person.

(c) Each Holder understands that the certificates or other instruments representing the Warrants and, until such time as the resale of the Warrant Shares have been registered under the Securities Act as contemplated by the Registration Rights Agreement and sold pursuant to such registration statement, the certificates representing the Warrant Shares, except as set forth below, shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND [NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) A VALID EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID ACT, WHICH MAY REQUIRE AN OPINION OF COUNSEL AT THE OPTION OF THE ISSUER, OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

In addition to the foregoing legend, the Warrants shall bear the following legend:

ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN (I) THE PURCHASE AGREEMENT, DATED —, 2008, AMONG THE ISSUER, GSI GROUP CORPORATION AND THE PURCHASERS LISTED ON THE SIGNATURE PAGES THERETO, AND (II) THE WARRANT AGREEMENT, DATED AS OF —, 2008, AMONG THE ISSUER AND THE INITIAL HOLDERS LISTED ON THE SIGNATURE PAGES THERETO. COPIES OF SUCH AGREEMENTS MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER HEREOF.

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The first legend set forth above shall be removed and the Issuer shall issue a stock certificate without such legend to a requesting holder of the Warrant Shares upon which it is stamped or at the Issuer’s discretion issue to such holder by electronic delivery at the applicable balance account at The Depository Trust Company (“DTC”), if, unless otherwise required by state securities laws, (i) such Warrant Shares are registered for resale pursuant to an effective registration statement under the Securities Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Issuer with an opinion of counsel, in a form reasonably acceptable to the Issuer, to the effect that such sale, assignment or transfer of the Warrant Shares may be made without registration under the applicable requirements of the Securities Act, or (iii) such holder provides the Issuer with assurances reasonably acceptable to the Issuer that the holder it is not an affiliate of the Issuer and has not been an affiliate for the prior 90 days that the Warrant Shares can be sold, assigned or transferred pursuant to Rule 144. The Issuer shall be responsible for the fees of its transfer agent and all DTC fees associated with the issuance. Any request by a holder for the removal of the legend will be deemed to include a representation by such holder that the holder will only resell such Warrant Shares pursuant to an effective registration statement or pursuant to a valid exemption from registration.

3.2 EXCHANGE OF WARRANTS FOR WARRANTS.

(a) The Holder may exchange any Warrant issued hereunder for another Warrant of like kind and tenor representing in the aggregate the right to purchase the same number and class or series of Warrant Shares that could be purchased pursuant to the Warrant being so exchanged. In order to effect an exchange permitted by this Section 3.2, the Holder shall deliver to the Issuer such Warrant accompanied by a written request signed by the Holder thereof specifying the number and denominations of Warrants to be issued in such exchange and, subject to the transfer restrictions contained in the Other Equity Documents, the names in which such Warrants are to be issued. As promptly as practicable but in any event within five Business Days of receipt of such a request, the Issuer shall, without charge, issue, register and deliver to the Holder thereof each Warrant to be issued in such exchange and make any necessary changes to the Warrant Register.

(b) Upon receipt of evidence reasonably satisfactory to the Issuer (an affidavit of the Holder being satisfactory) of the ownership and the loss, theft, destruction or mutilation of any Warrant, and in the case of any such loss, theft or destruction, upon receipt of an indemnity bond reasonably satisfactory to the Issuer or, in the case of any such mutilation, upon surrender of such Warrant, the Issuer shall, without charge, issue, register and deliver in lieu of such Warrant a new Warrant of like kind representing the same rights represented by, and dated the date of, such lost, stolen, destroyed or mutilated Warrant. Any such new Warrant shall constitute an original contractual obligation of the Issuer, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by any Person.

(c) The Issuer shall pay all expenses and Taxes (other than any applicable income or income-based, capital gains or similar Taxes payable by a Holder of a Warrant) attributable to an exchange of a Warrant pursuant to this Section 3.2; provided, however, that the Issuer shall not be required to pay any Tax that may be payable in respect of any Transfer involved in the issuance of any Warrant in a name other than that of the Holder of the Warrant being exchanged.

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3.3 MECHANICS OF TRANSFER OF WARRANTS.

(a) Subject to the further provisions of this Agreement and the Other Equity Documents, each Warrant may be Transferred, in whole or in part, by the Holder thereof by delivering to the Issuer such Warrant accompanied by a properly completed, duly executed, Assignment Form. As promptly as practicable but in any event within five (5) Business Days of receipt of such Assignment Form, the Issuer shall, without charge, issue, register and deliver to the Holder thereof a new Warrant of like kind and tenor representing in the aggregate the right to purchase the same number of Warrant Shares that could be purchased pursuant to the Warrant being Transferred.

(b) At the request of the Issuer, any Person to whom a Warrant is Transferred in accordance with this Article III shall execute and deliver to the Issuer a joinder in the form of Annex C to the Warrant pursuant to which such Person agrees to become a party to, and to be bound by the terms of and entitled to the benefits under this Agreement.

ARTICLE IV

EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES

4.1 EXERCISE OF WARRANTS; EXPIRATION.

(a) On any Business Day between 9 a.m. and 5 p.m. New York time on or prior to the Expiration Time, a Holder may exercise a Warrant, in whole or in part, by delivering to the Issuer such Warrant accompanied by a properly completed Exercise Form and consideration in the form set forth in Section 4.1(b) in an aggregate amount equal to the product of (x) the Exercise Price and (y) the number of Warrant Shares being purchased. Any partial exercise of a Warrant shall be for a whole number of Warrant Shares only.

(b) Upon exercise of a Warrant, in whole or in part, pursuant to this Section 4.1, the Holder thereof shall deliver to the Issuer the aggregate Exercise Price:

(i) by wire transfer of immediately available funds to a bank account designated by the Issuer or a certified check payable to the Issuer;

(ii) by surrender of a number Warrant Shares having a Fair Market Value equal to the aggregate Exercise Price; or

(iii) a combination of the methods set forth in clauses (i) and (ii).

(c) A Warrant shall terminate and become void as of the earlier of (x) the Expiration Time and (y) the date such Warrant is exercised in full.

4.2 EXCHANGE FOR WARRANT SHARES.

(a) On any Business Day between 9 a.m. and 5 p.m. New York time on or prior to the Expiration Time, a Holder may exchange a Warrant, in whole or in part, for Warrant Shares by delivering to the Issuer such Warrant accompanied by a properly completed Exchange Form. The number of Warrant Shares to be received by a Holder upon such exchange shall be

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equal to the number of Warrant Shares allocable to the portion of the Warrant being exchanged (the “Exercise Number”), as specified by such Holder in the Exchange Form, minus a number of Warrant Shares equal to the quotient obtained by dividing (i) the product of (x) the Exercise Price and (y) the Exercise Number by (ii) the Fair Market Value of one Warrant Share as of the Delivery Date.

(b) The Issuer and each Holder intend that if any Holder exercises such Holder’s Warrant by surrendering Warrant Shares as contemplated by Section 4.1(b)(ii), Section 4.2 or Section 4.3 hereof, such method of exercise shall be treated for U.S. federal income tax purposes as a “reorganization” pursuant to Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended. The Issuer and each Holder intend that such Holder (and its direct and indirect beneficial owners) will neither realize nor recognize any taxable income or gain as a result of its exercise of the Warrant by such method. None of the parties hereto will take any position in their respective Tax or other financial or accounting filings that are contrary to or inconsistent with the foregoing.

4.3 EXERCISE AT EFFECTIVE TIME.

(a) If the Warrant has not been exercised in full prior to the time and date as of which the shelf registration statement covering all Warrant Shares issuable upon exercise of the Warrants, as contemplated hereby, filed pursuant to the Registration Rights Agreement becomes effective (the “Effective Time”), the Warrant shall be deemed to be automatically exercised at the Effective Time, on a cashless basis, with no action required on the part of the Holder in accordance with the immediately following sentence. At the Effective Time, the number of Warrant Shares to be received by a Holder shall be equal to the aggregate number of Warrant Shares into which the Warrant held by the Holder immediately prior to the Effective Time was exercisable (the “Total Number”) minus a number of Warrant Shares equal to the quotient obtained by dividing (i) the product of (x) the Exercise Price and (y) the Total Number by (ii) the Fair Market Value of one Warrant Share as of the date of the Effective Time.

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4.4 ISSUANCE OF WARRANT SHARES.

(a) Issuance of Warrant Shares. If the Warrant is exercised pursuant to Section 4.1 or 4.2, as promptly as practicable but in any event within three (3) Trading Days following the delivery date (the “Delivery Date”) of (i) an Exercise Form or Exchange Form in accordance with Section 4.1 or 4.2, (ii) the related Warrant and (iii) any required payment of the Exercise Price, the Issuer shall, without charge, upon compliance with the applicable provisions of this Agreement, issue to such Holder one or more stock certificates or other appropriate evidence of ownership of the aggregate number of Warrant Shares to which the Holder of such Warrant is entitled and the other Securities or Property (including any Cash) to which such Holder is entitled, in such denominations, and registered or otherwise placed in, or payable to the order of, such name as may be directed in writing by such Holder. If the Warrant is exercised pursuant to Section 4.3, as promptly as practicable but in any event within three (3) Trading Days following the Effective Time, the Issuer shall, without charge, issue to such Holder one or more stock certificates or transmit electronically to such Holder the aggregate number of Warrant Shares to which the Holder of such Warrant is entitled through the Deposit Withdrawal Agent Commission System of DTC, and deliver the other Securities or Property (including any Cash) to which such Holder is entitled, in such denominations, and registered or otherwise placed in, or payable to the order of such Holder. The Issuer shall deliver such stock certificates or evidence of ownership and any other Securities or Property (including any Cash) to the Person entitled to receive the same, together with an amount in Cash in lieu of any fraction of a Warrant Share (or fractional interest in any other Security), as hereinafter provided.

(b) Partial Exercise or Exchange. If a Holder shall exercise or exchange a Warrant for less than all of the Warrant Shares that could be purchased or received thereunder, the Issuer shall issue, register and deliver to the Holder, as promptly as reasonably practicable but in any event within five Business Days following the Delivery Date, a new Warrant evidencing the right to purchase the remaining Warrant Shares. In the case of an exchange pursuant to Section 4.2, the number of remaining Warrant Shares shall be the original number of Warrant Shares subject to the Warrant so exchanged reduced by the Exchange Number. Each Warrant surrendered pursuant to Section 4.1 or 4.2 shall be cancelled.

(c) Fractional Shares. The Issuer shall not be required to issue fractional Warrant Shares or fractional units of any other Security upon the exercise or exchange of a Warrant. If any fraction of a Warrant Share or fractional unit of any other Security would be issuable on the exercise or exchange of any Warrant, the Issuer may, in lieu of issuing such fraction of a Warrant Share or fractional unit, pay to such Holder for any such fraction an amount in Cash equal to the product of (x) such fraction and (y) the Fair Market Value for one Warrant Share or for a unit of such other Security, as the case may be, as of the Delivery Date.

(d) Expenses. The Issuer shall pay all expenses and Taxes attributable to the initial issuance of Warrant Shares upon the exercise or exchange of a Warrant, other than (i) any Tax that may be payable in respect of any Transfer involved in the issuance of any Warrant or any certificate for, or any other evidence of ownership of, Warrant Shares in a name other than that of the Holder of the Warrant being exercised or exchanged and (ii) any applicable income or income-based, capital gains or similar Taxes payable by a Holder of a Warrant.

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(e) Record Ownership. To the extent permitted by Applicable Laws, the Person in whose name any certificate for Warrant Shares or other evidence of ownership of any other Security is issued upon exercise or exchange of a Warrant shall for all purposes be deemed to have become the holder of record of such Warrant Shares or other Security on the Delivery Date, irrespective of the date of delivery of such certificate or other evidence of ownership (subject, in the case of any exercise to which Section 5.3(a) applies, to the consummation of a transaction upon which such exercise is conditioned), notwithstanding that the transfer books of the Issuer shall then be closed or that such certificates or other evidence of ownership shall not then actually have been delivered to such Person.

(f) Listings. The Issuer shall from time to time take all action that may be reasonably necessary so that any Warrant Shares, immediately upon their issuance upon exercise or exchange of Warrants, will be listed on the principal securities exchange, quotation system and market within the United States of America, if any, on which other Securities of the Issuer of the same class or type are then listed or quoted.

(g) Issuer’s Failure to Timely Deliver Securities. In addition to all other remedies available to the Holder, if within three (3) full Trading Days after the Issuer’s receipt of the facsimile copy of an Exercise Form or Exchange Form and the receipt by the Issuer of the Exercise Price, if applicable, following the Delivery Date the Issuer shall fail to issue and deliver a certificate to the Holder and register such Common Shares on the Issuer’s share register or credit the Holder’s balance account with DTC for the number of Common Shares to which the Holder is entitled upon the Holder’s exercise or exchange hereunder, and if on or after the Delivery Day the Holder purchases (in an open market transaction or otherwise) Common Shares to deliver in satisfaction of a sale by the Holder of Common Shares issuable upon such exercise that the Holder anticipated receiving from the Issuer (a “Buy-In”), then the Issuer shall, within three (3) full Trading Days after the Holder’s request and in the Issuer’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the Common Shares so purchased (the “Buy-In Price”), at which point the Issuer’s obligation to deliver such certificate (and to issue such Common Shares) or credit such Holder’s balance account with DTC shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Shares or credit such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Common Shares, times (B) the Closing Bid Price on the date of exercise.

ARTICLE V

ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES

5.1 GENERAL.

The Exercise Price and the number and kind of Warrant Shares issuable upon exercise of each Warrant shall be subject to adjustment from time to time in accordance with this Article V.

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5.2 DISTRIBUTIONS, SUBDIVISIONS AND COMBINATIONS.

(a) If, at any time after the Closing Date, the Issuer shall:

(i) make a Distribution in Common Shares; or

(ii) combine its outstanding Common Shares into a smaller number of Common Shares;

then (A) the number of Warrant Shares issuable upon exercise of each Warrant shall be adjusted so as to equal the number of Warrant Shares that the Holder of such Warrant would have held immediately after the occurrence of such event if the Holder had exercised such Warrant for Common Shares immediately prior to the occurrence of such event (or, in the case of clause (i), the record date therefor) and (B) in the case of (ii), the Exercise Price shall be adjusted to be equal to the product of (x) the Exercise Price immediately prior to the occurrence of such event and (y) a fraction (1) the numerator of which is the number of Warrant Shares issuable upon exercise of such Warrant immediately prior to the adjustment in clause (A) and (2) the denominator of which is the number of Warrant Shares issuable upon exercise of such Warrant immediately after the adjustment in clause (A). An adjustment made pursuant to this Section 5.2(a) shall become effective immediately after the occurrence of such event retroactive to the record date, if any, for such event.

(b) If, at any time after the Closing Date, the Issuer shall subdivide, split or reclassify its outstanding Common Shares into a larger number of Common Shares, the number of Warrant Shares issuable upon exercise of each Warrant shall be adjusted so as to equal the number of Warrant Shares that the Holder of such Warrant would have held immediately after the occurrence of such event if the Holder had exercised such Warrant for Common Shares immediately prior to the occurrence of such event. An adjustment made pursuant to this Section 5.2(b) shall become effective immediately after the occurrence of such event retroactive to the record date, if any, for such event.

5.3 CAPITAL REORGANIZATION, CAPITAL RECLASSIFICATION, MERGER, ETC.

(a) If, at any time after the Closing Date, (i) there shall be (A) any capital reorganization or any reclassification of the Share Capital of the Issuer (other than a change in par value or as a result of a stock dividend, or as a result of a Distribution or subdivision, split-up or combination of Common Shares to which Section 5.2 applies); (B) any consolidation, merger or business combination of the Issuer with another Person; (C) any sale or conveyance by the Issuer of all or substantially all of its assets or Property to another Person; (D) any conversion (statutory or otherwise) of the Issuer from a corporation to a different form of entity; (E) any purchase, tender or exchange offer by a Person that is accepted by the holders of more than 50% of the outstanding Common Shares (not including any Common Shares held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer); (F) any consummation of a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires

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more than 50% of the outstanding Common Shares (not including any Common Shares held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination); or (G) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) that become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Shares (each, a “Fundamental Transaction”) and (ii) the Fundamental Transaction shall be effected in such a way that holders of Common Shares shall be entitled to receive Securities, Cash or other Property with respect to or in exchange for Common Shares, then the Issuer shall cause effective provision to be made so that, in lieu of the number of Warrant Shares issuable upon exercise of such Warrant, effective as of the effective date of such event retroactive to the record date, if any, of such event, such Warrant shall be exercisable for the kind and number of Securities, Cash or other Property to which a holder of such number of Warrant Shares would have been entitled upon such event. In any such case, if necessary, the provisions of this Agreement and the Warrants with respect to the rights and interests thereafter of the Holders of the Warrants shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to any Securities, Cash or other Property thereafter deliverable upon the exercise of the Warrants.

(b) The provisions of this Section 5.3 shall not operate as a waiver of any restriction on any of the actions or transactions described above that may be contained in any other agreement or instrument, including the Other Equity Documents.

5.4 PURCHASE RIGHTS.

In addition to any adjustments pursuant to Section 5.2 above:

(a) If at any time the Issuer grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of Common Shares (the “Purchase Rights”), then the Holders will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights that the applicable Holder could have acquired if the applicable Holder had held the number of Common Shares acquirable upon complete exercise of such Holder’s Warrant (without regard to any limitations on the exercise of such Warrant) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the grant, issue or sale of such Purchase Rights.

(b) If the Issuer shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Shares (other than a dividend or distribution as to which an adjustment would be made pursuant to Section 5.2(a)), by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Company Distribution”), at any time after the issuance of the Warrants, then, in each such case, the Holders will be entitled to receive, upon the terms applicable to such Company Distribution, the aggregate Company Distribution that the applicable Holder would have received if the applicable Holder

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had held the number of Common Shares acquirable upon complete exercise of such Holder’s Warrant (without regard to any limitations on the exercise of such Warrant) immediately before the date on which a record is taken for the dividend or other distribution of its assets (or rights to acquire its assets) of such Company Distribution, or, if no such record is taken, the date as of which the record holders of Common Shares are to be determined for the dividend or other distribution of its assets (or rights to acquire its assets) of such Company Distribution.

5.5 MISCELLANEOUS.

(a) Notice; Adjustment Rules. Whenever the Exercise Price or the number of Warrant Shares shall be adjusted as provided in this Article V, the Issuer shall provide to each Holder a statement, signed by the Chief Executive Officer, Chief Financial Officer, President, any Executive Vice President or the Chief Operating Officer of the Issuer, describing in detail the facts requiring such adjustment and setting forth a calculation of the Exercise Price and the number of Warrant Shares applicable to each Warrant after giving effect to such adjustment. All calculations under this Article V shall be made to the nearest one thousandth of a cent ($.00001) or to the nearest one-thousandth of a share, as the case may be. Adjustments pursuant to this Article V shall apply to successive events or transactions of the types covered thereby. Notwithstanding any other provision of this Article V, no adjustment shall be made to the number of Warrant Shares or to the Exercise Price if such adjustment represents less than 1% of the number of Warrant Shares previously required to be so delivered, but any lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to 1% or more of the number of Warrant Shares to be so delivered.

ARTICLE VI

COVENANTS OF THE ISSUER

6.1 NOTICES OF CERTAIN ACTIONS.

In the event that the Issuer proposes to:

(a) authorize the issuance to holders of Share Capital of the Issuer of rights or warrants to subscribe for or purchase Share Capital of the Issuer;

(b) authorize a Distribution to any holder of evidences of its Indebtedness, Cash or other Property;

(c) become a party to any consolidation or merger for which approval of any holders of Share Capital of the Issuer will be required, or to a conveyance or transfer of all or substantially all the Property of the Issuer;

(d) effect any capital reorganization or reclassification of any Share Capital of the Issuer (other than a change in par value);

(e) commence a voluntary or involuntary dissolution, liquidation or winding up of the Issuer; or

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(f) take any other action which would result in an adjustment in the Exercise Price or the number of Warrant Shares issuable upon exercise of the Warrants;

then the Issuer shall provide a written notice to each Holder stating (A) the date as of which the holders of record of Share Capital of the Issuer to be entitled to receive any such rights or Distributions are to be determined, (B) the material terms of any such consolidation or merger and the expected effective date thereof or (C) the material terms of any such conveyance, transfer, reorganization, reclassification, dissolution, liquidation or winding up, and the date as of which it is expected that holders of record of shares of Share Capital of the Issuer will be entitled to exchange their Share Capital of the Issuer for Securities or other Property, if any, deliverable upon such conveyance, transfer, reorganization, reclassification, dissolution, liquidation or winding up. Such notice shall be given not later than seven (7) Business Days prior to the effective date (or the applicable record date, if earlier) of such event.

6.2 MERGER AND CONSOLIDATION OF THE ISSUER.

The Issuer will not (i) merge or consolidate with or into any other Person or (ii) sell, transfer or lease all or substantially all of its assets or Property (in either case in a transaction in connection with which holders of Share Capital of the Issuer shall be entitled to receive with respect to or in exchange for such Share Capital, Securities of the successor or purchasing Person, Cash or other Property), unless, to the extent applicable, the successor or purchasing Person expressly assumes, by supplemental agreement, the due and punctual performance and observance of each and every covenant and condition of this Agreement and the Registration Rights Agreement to be performed and observed by the Issuer.

6.3 NO AVOIDANCE.

The Issuer will not, by amendment of its Governing Documents or through any reorganization, Transfer of Properties, consolidation, merger, dissolution, issue or sale of Securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Issuer. The Issuer shall at all times in good faith assist in the carrying out of all the provisions of this Agreement and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holders hereunder against impairment.

6.4 SALE OF WARRANTS.

In any merger, consolidation, reorganization, repurchase or reclassification or similar transaction, in which holders of Share Capital of the Issuer sell or otherwise Transfer Share Capital of the Issuer held by them, the Issuer will cause the transaction to be structured to permit the Holders to deliver Warrants in connection with any such transaction without requirement for exercise thereof as a condition to participation and for consideration not less than the consideration such Holders would have received had such Holders exercised their Warrants immediately prior thereto, less any applicable Exercise Price.

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ARTICLE VII

MISCELLANEOUS

7.1 NOTICES.

All notices and other communications provided for or permitted hereunder shall be made by hand-delivery, first-class mail, telecopier or overnight air courier guarantying next day delivery:

If to the Issuer, to:

125 Middlesex Turnpike

Bedford, Massachusetts 01730

Attention: General Counsel

Telephone No.: (781) 266-5786

Telecopier No.: (781) 266-5115

With a copy to:

Michael J. Zeidel, Esq.

Skadden, Arp, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Telephone: 212-735-3259

Telecopier: 917-777-3259

If to any Holder, to such Holder’s address as set forth on Schedule I hereto.

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next business day after timely delivery to the courier, if sent by overnight air courier guarantying next day delivery. The parties may change the addresses to which notices are to be given by giving five days’ prior notice of such change in accordance herewith.

7.2 NO VOTING RIGHTS; LIMITATION OF LIABILITY.

Except as otherwise provided herein or in the Other Equity Documents, no Warrant shall entitle the holder thereof to any voting rights or any other rights as a stockholder of the Issuer, as such. No provision hereof, in the absence of affirmative action by the Holder to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder shall give rise to any liability of such Holder for the Exercise Price of Warrant Shares acquirable by exercise hereof or as an equity holder of the Issuer.

7.3 AMENDMENTS AND WAIVERS.

(a) Written Document. Any provision of this Agreement may be amended or waived, but only pursuant to a written agreement signed by the Issuer and the Requisite Holders,

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provided that no such amendment or modification shall without the written consent of each Holder affected thereby (i) shorten the Expiration Time of any Warrant, (ii) increase the Exercise Price of any Warrant, (iii) change any of the provisions of this Section 7.3(a) or the definition of Requisite Holders or any other provision hereof specifying the number or percentage of Holders required to waive, amend, or modify any rights hereunder or required to make any determination or grant any consent hereunder or otherwise to act with respect to this Agreement or any Warrants, (iv) change any of the provisions of Article V, (v) increase the obligations of any Holder or (vi) change any provision of Section 4.1, 4.2 or 4.3.

(b) No Waiver. No failure on the part of any Holder to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or the Warrants shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or the Warrant preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

7.4 REMEDIES.

Each Holder shall have all rights and remedies reserved for such Holder pursuant to this Agreement, all rights and remedies which such Holder has been granted at any time under any other agreement or instrument and all of the rights and remedies such Holder may have at law or in equity. The remedies provided herein are cumulative and not exclusive. Any Person having any rights under any provision of this Agreement will be entitled to enforce such rights specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or equity.

7.5 BINDING EFFECT.

Subject to the limitations set forth in this Agreement and the Other Equity Documents, each Holder shall have the right to assign or otherwise Transfer its rights under this Agreement or any Warrants or Warrant Shares held by it. The Issuer shall not assign its rights or obligations hereunder without the prior written consent of the Requisite Holders. This Agreement shall be binding upon and inure to the benefit of the Issuer, each Holder and their successors and permitted assigns.

7.6 COUNTERPARTS.

This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

7.7 GOVERNING LAW; JURISDICTION AND VENUE.

(a) ALL QUESTIONS CONCERNING THE CONSTRUCTION, INTERPRETATION AND VALIDITY OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

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(b) THE PARTIES TO THIS AGREEMENT AGREE THAT JURISDICTION AND VENUE IN ANY ACTION BROUGHT BY ANY PARTY HERETO PURSUANT TO THIS AGREEMENT SHALL EXCLUSIVELY LIE IN ANY FEDERAL OR STATE COURT LOCATED IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK. BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE JURISDICTION OF SUCH COURTS FOR THEMSELVES AND IN RESPECT OF THEIR PROPERTY WITH RESPECT TO SUCH ACTION. THE PARTIES HERETO IRREVOCABLY AGREE THAT VENUE WOULD BE PROPER IN SUCH COURT, AND HEREBY WAIVE ANY OBJECTION THAT SUCH COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH ACTION.

(c) THE ISSUER HEREBY AGREES THAT SERVICE UPON IT BY REGISTERED OR CERTIFIED MAIL (RETURN RECEIPT REQUESTED) SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE HOLDERS TO BRING PROCEEDINGS AGAINST THE ISSUER IN THE COURTS OF ANY OTHER JURISDICTION.

7.8 WAIVER OF JURY TRIAL.

EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY OTHER EQUITY DOCUMENT OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT OR ANY OTHER EQUITY DOCUMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHTS TO TRIAL BY JURY.

7.9 BENEFITS OF THIS AGREEMENT.

Nothing in this Agreement shall be construed to give to any Person other than the Issuer and each Holder of a Warrant or a Warrant Share any legal or equitable right, remedy or claim hereunder.

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7.10 HEADINGS.

The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

7.11 AGGREGATION OF WARRANTS AND WARRANT SHARES.

All Warrants and Warrant Shares held or acquired by any Person and its Affiliates shall be aggregated together for purposes of measuring any numerical thresholds used in determining the availability to such Person and its Affiliates, taken collectively, of rights under this Agreement and the applicability of obligations and restrictions under this Agreement.

7.12 SEVERABILITY.

If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

* * * *

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IN WITNESS WHEREOF, each party hereto has caused this Warrant Agreement to be duly executed and delivered by its authorized signatory, all as of the date and year first above written.

ISSUER:
GSI GROUP INC.
By:
Name:
Title:
INITIAL HOLDERS:
HIGHBRIDGE INTERNATIONAL LLC
By:	HIGHBRIDGE CAPITAL MANAGEMENT, LLC,
its Trading Manager
By:
	Adam J. Chill, Managing Director
TEMPO MASTER FUND LP
By:
Name:
Title :
SILVER OAK CAPITAL, L.L.C
By:
Name:
Title :

INTERLACHEN CONVERTIBLE INVESTMENTS LIMITED
By:
Name:	Gregg T. Colburn
Title :
SPECIAL VALUE CONTINUATION PARTNERS, L.P.
By:	Tennenbaum Capital Partners, LLC
Its:	Investment Manager
SPECIAL VALUE EXPANSION FUND, LLC
By:	Tennenbaum Capital Partners, LLC
Its:	Investment Manager
TENNENBAUM OPPORTUNITIES PARTNERS V, LP
By:	Tennenbaum Capital Partners, LLC
Its:	Investment Manager
SPECIAL VALUE OPPORTUNITIES FUND, LLC
By:	Tennenbaum Capital Partners, LLC
Its:	Investment Manager
Each of the above by:
Name:
Title :

Hale Capital Partners, LP
By:
Name:	Martin M. Hale, Jr.
Title:	Chief Executive Officer
LIBERTY HARBOR MASTER FUND I, L.P.
By:	Liberty Harbor I GP, LLC
its:	General Partner
By:
Name:
Title:
UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited
By:
Name:	Andrew Martin
Title:	Managing Director
UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master Limited
By:
Name:	Andrew Martin
Title:	Managing Director

Schedule I

Name and Address of Holder

With a copy to:

Exhibit A

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) A VALID EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID ACT, WHICH MAY REQUIRE AN OPINION OF COUNSEL AT THE OPTION OF THE ISSUER, OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN (I) THE PURCHASE AGREEMENT, DATED —, 2008, AMONG THE ISSUER, GSI GROUP CORPORATION AND THE PURCHASERS LISTED ON THE SIGNATURE PAGES THERETO, AND (II) THE WARRANT AGREEMENT, DATED AS OF —, 2008, AMONG THE ISSUER AND THE INITIAL HOLDERS LISTED ON THE SIGNATURE PAGES THERETO. COPIES OF SUCH AGREEMENTS MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE ISSUER HEREOF.

A-1

GSI GROUP INC.

No. —, 2008

COMMON SHARES PURCHASE WARRANT

THIS CERTIFIES that, for value received, — (the “Holder”), or its assigns, is entitled to purchase from GSI Group Inc., a New Brunswick corporation (the “Issuer”), — common shares (“Warrant Shares”), no par value, of the Issuer, at the price (the “Exercise Price”) of $0.01 per share, at any time or from time to time during the period commencing on the date hereof and ending at 5:00 p.m., Eastern daylight time, on —, 2013 (the “Expiration Time”); provided, however, that if the Warrant has not been exercised in full prior to the time and date as of which any shelf registration statement filed pursuant to the Registration Rights Agreement becomes effective (the “Effective Time”), the Warrant shall be deemed to be automatically exercised at the Effective Time, on a cashless basis, with no action required on the part of the Holder in accordance with Section 4.3 of the Warrant Agreement.

The Holder may exercise all or any part of such rights at any time or from time to time prior to the Expiration Time, subject to the automatic exercise of this Warrant at the Effective Time.

This Warrant has been issued pursuant to the Warrant Agreement dated as of —, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the “Warrant Agreement”), among the Issuer and the Holders named therein, and is subject to the terms and conditions, and the Holder is entitled to the benefits, thereof. A copy of the Warrant Agreement is on file and may be inspected at the principal executive office of the Issuer. The Holder of this certificate, by acceptance of this certificate, agrees to be bound by the provisions of the Warrant Agreement. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Warrant Agreement.

SECTION 1. Exercise of Warrant. On any day on or prior to the Expiration Time, the Holder may exercise this Warrant, in whole or in part, in the manner set forth in Article IV of the Warrant Agreement, subject to the automatic exercise of this Warrant at the Effective Time.

SECTION 2. Exercise Price. The Exercise Price is subject to adjustment from time to time as set forth in the Warrant Agreement.

SECTION 3. Exchange of Warrant. On any day on or prior to the Expiration Time, subject to the automatic exercise of this Warrant at the Effective Time, the Holder may exchange this Warrant, in whole or in part, for Warrant Shares by delivering to the Issuer this Warrant accompanied by a properly completed Exchange Form in the form of Annex B attached hereto. The number of Warrant Shares to be received by the Holder upon such exchange shall be determined as set forth in the Warrant Agreement.

SECTION 4. Transfer. Subject to the limitations set forth or referred to in the Warrant Agreement, this Warrant may be Transferred by the Holder by delivery to the Issuer of this Warrant accompanied by a properly completed Assignment Form in the form of Annex C attached hereto.

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SECTION 5. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Issuer will issue a new Warrant of like denomination and tenor upon compliance with the provisions set forth in the Warrant Agreement.

SECTION 7. Successors. All of the provisions of this Warrant by or for the benefit of the Issuer or the Holder shall bind and inure to the benefit of their respective successors and permitted assigns.

SECTION 8. Headings. Section headings in this Warrant have been inserted for convenience of reference only and shall not affect the construction of, or be taken into consideration in interpreting, this Warrant.

SECTION 9. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS EXCEPT TO THE EXTENT THAT THE NEW YORK CONFLICTS OF LAWS PRINCIPLES WOULD APPLY THE APPLICABLE LAWS OF THE STATE OF THE ISSUER’S ORGANIZATION TO INTERNAL MATTERS RELATING TO ENTITIES SUCH AS THE ISSUER ORGANIZED THEREUNDER).

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IN WITNESS WHEREOF, the undersigned has caused this Warrant to be executed by its duly authorized officers and this Warrant to be dated as of the date first set forth above.

GSI GROUP INC.

By:

Name:

Title:

Annex A to the Warrant

EXERCISE FORM

[To be signed upon exercise of a Warrant]

TO GSI GROUP INC.

The undersigned, being the Holder of the attached Warrant, hereby elects to exercise, pursuant to Section 4.1 of the Warrant Agreement referred to in such Warrant, the purchase right represented by such Warrant for, and to purchase thereunder              common shares (the “Warrant Shares”) of GSI Group Inc., a New Brunswick corporation (the “Issuer”) and to make payment in full for the Warrant Shares so purchased by payment of $             by:

[    ] wire transfer of immediately available funds to a bank account to be designated by the Issuer,

[    ] a certified check payable to the Issuer; and/or

[    ] surrender of common shares of the Issuer having a Fair Market Value equal $                    .

The undersigned hereby requests that the certificates or other evidence of ownership for such shares be issued in the name of, and be delivered to,                                          ,whose address is                                                                                                           .

The undersigned warrants to the Issuer that the undersigned (a) is not acquiring the Warrant Shares with a view to Transferring such Warrant Shares in violation of the Securities Act of 1933, as amended (the “Securities Act”) and (b) acknowledges that the issuance of the Warrant Shares has not been registered under the Securities Act and that the Warrant Shares may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption therefrom is available.

Dated:
	Name:
	Title:

Annex B to the Warrant

EXCHANGE FORM

[To be signed upon exchange of a Warrant]

TO GSI GROUP INC.

The undersigned, being the Holder of the within Warrant, hereby elects to exchange, pursuant to Section 4.2 of the Warrant Agreement referred to in such Warrant, the portion of such Warrant representing the right to purchase              common shares (“Warrant Shares”) of GSI Group Inc., a New Brunswick corporation (the “Issuer”). The undersigned hereby requests that the certificates or evidence of ownership for the number of shares issuable in such exchange pursuant to such Section 4.2 be issued in the name of, and be delivered to,                                         , whose address is                                                                                                   .

The undersigned warrants to the Issuer that the undersigned (a) is not exchanging the Warrant Shares with a view to Transfer such Warrant Shares in violation of the Securities Act of 1933, as amended (the “Securities Act”) and (b) acknowledges that the issuance of the Warrant Shares has not been registered under the Securities Act and that the Warrant Shares may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption therefrom is available.

Dated:
	Name:
	Title:

Annex C to the Warrant

ASSIGNMENT FORM

[To be signed only upon transfer of a Warrant]

For value received, the undersigned hereby sells, assigns and transfers unto                                         , all of the rights represented by the within Warrant to purchase                                          common shares of GSI Group Inc., a New Brunswick corporation (the “Issuer”), to which such Warrant relates, and appoints                                          attorney to transfer such Warrant on the books of the Issuer, with full power of substitution in the premises.

Dated:
	Name:
	Title:

By executing and delivering this Assignment Form to the Issuer, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the provisions of the Warrant Agreement dated as of —, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the “Warrant Agreement”), among the Issuer and the Holders, in the same manner as if the undersigned were an original signatory to the Warrant Agreement.

The undersigned agrees that he, she or it shall be a “Holder,” as such term is defined in the Warrant Agreement.

Dated:
	Signature of transferee
	Print Name of transferee
	Address
	Facsimile
	Telephone

EX-99.4

Exhibit 99.4

FORM OF REGISTRATION RIGHTS AGREEMENT

DATED AS OF —, 2008

AMONG

GSI GROUP INC.

AND

THE PURCHASERS

LISTED ON THE SIGNATURE PAGES HERETO

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of —, 2008, among the Purchasers listed on the signature pages hereto and GSI Group Inc., a company continued and existing under the laws of New Brunswick (the “Company”).

The Purchasers own or have the right to acquire up to an aggregate of — Warrants (as hereinafter defined) to acquire up to an aggregate of — shares of Common Shares (as hereinafter defined), subject to certain anti-dilution adjustments, of the Company pursuant to the terms of the Purchase Agreement (as hereinafter defined). The Company and the Purchasers deem it to be in their respective best interests to set forth their rights in connection with public offerings and sales of Common Shares and are entering into this Registration Rights Agreement in connection with the Purchase Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations hereinafter set forth, the Company and the Purchasers hereby agree as follows:

SECTION 1. Certain Definitions. For purposes of this Registration Rights Agreement, the following terms shall have the following respective meanings:

“Business Day” means any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York.

“Commission” means the United States Securities and Exchange Commission.

“Common Shares” has the meaning ascribed to such term in the Purchase Agreement.

“Continuing Registration Delay Payment” has the meaning assigned thereto in Section 2(d) hereof.

“Delay Payments” has the meaning assigned thereto in Section 2(d) hereof.

“Effective Time” means the time and date as of which the Commission declares the Shelf Registration Statement effective or as of which the Shelf Registration Statement otherwise becomes effective.

“Effectiveness Deadline” has the meaning assigned thereto in Section 2(a) hereof.

“Effectiveness Failure” has the meaning assigned thereto in Section 2(a) hereof.

“Electing Holder” means any holder of Registrable Securities that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(a)(ii) or 3(a)(iii) hereof and the instructions set forth on the Notice and Questionnaire.

“Eligible Market” means the Principal Market, the American Stock Exchange, The New York Stock Exchange, Inc., The NASDAQ Global Market or The NASDAQ Capital Market.

“Exchange Act” means the Securities Exchange Act of 1934, or any successor thereto, as the same shall be amended from time to time.

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“Exchange Act Reports” has the meaning ascribed to such term in the Purchase Agreement.

“Filing Deadline” has the meaning assigned thereto in Section 2(a) hereof.

“Filing Failure” has the meaning assigned thereto in Section 2(d) hereof.

“FINRA” has the meaning assigned thereto in Section 4(a) hereof.

The term “holder” means each of the Purchasers and other persons who acquire Registrable Securities from time to time (including any permitted successors or assigns), in each case for so long as such person owns any Registrable Securities.

“Initial Registration Delay Payment” has the meaning assigned thereto in Section 2(d) hereof.

“Inspectors” has the meaning assigned thereto in Section 3(a)(xvii) hereof.

“Maintenance Period” has the meaning assigned thereto in Section 2(a) hereof.

“Maintenance Failure” has the meaning assigned thereto in Section 2(d) hereof.

“Merger” has the meaning ascribed to such term in the Purchase Agreement.

“Notice and Questionnaire” means a Notice of Registration Statement and Selling Securityholder Questionnaire substantially in the form of Exhibit A hereto.

The term “person” means a corporation, association, partnership, organization, limited liability company, limited partnership, limited liability partnership, or other similar entity, individual, government or political subdivision thereof or governmental agency.

“Principal Market” has the meaning set forth in the Purchase Agreement.

“Purchase Agreement” means that certain Purchase Agreement, dated as of July 9, 2008, among the Company, GSI Group Corporation and the Purchasers, as may be amended, modified or supplemented from time to time.

“Purchasers” means the Purchasers named on the signature pages to the Purchase Agreement.

“Records” has the meaning assigned thereto in Section 3(a)(xvii) hereof.

“Registrable Securities” means the Securities; provided, however, that a Security shall cease to be a Registrable Security upon the earliest to occur of the following: (i) a Shelf Registration Statement registering such Security under the Securities Act has been declared or becomes effective and such Security has been sold or otherwise transferred by the holder thereof pursuant to and in a manner contemplated by such effective Shelf Registration Statement; (ii) such Security is sold pursuant to Rule 144 under circumstances in which any legend borne by such Security relating to restrictions on transferability thereof, under the Securities Act or

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otherwise, is removed by the Company; (iii) such Security is eligible to be sold to the public by a non-affiliate of the Company without restriction pursuant to Rule 144 (or any successor rule) and without the requirement to be in compliance with Rule 144(c)(1) (or any successor rule); or (iv) such Security shall cease to be outstanding.

“Registered Securities” has the meaning assigned thereto in Section 2(d) hereof.

“Registration Expenses” has the meaning assigned thereto in Section 4 hereof.

“Required Holders” means the holders of at least a majority of the Registrable Securities.

“Review Notice” means the oral or written notification by the Commission to the Company or its legal counsel that the Shelf Registration Statement or any one or more Exchange Act Reports that are or will be incorporated by reference therein will be subject to the review of the Commission in whole or in part.

“Rule 144,” “Rule 405” and “Rule 415” mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

“Securities” means, collectively, (i) the Common Shares of the Company issued and issuable upon exercise of the Warrants and (ii) any capital stock of the Company issued or issuable, with respect to the Warrants or the Securities as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitations on exercises of the Warrants.

“Securities Act” means the Securities Act of 1933, or any successor thereto, as the same shall be amended from time to time.

“Shelf Registration” has the meaning assigned thereto in Section 2(a) hereof.

“Shelf Registration Statement” has the meaning assigned thereto in Section 2(a) hereof.

“Suspension Period” has the meaning assigned thereto in Section 3(d) hereof.

“Warrants” has the meaning ascribed to such term in the Purchase Agreement.

Unless the context otherwise requires, any reference herein to a “Section” or “clause” refers to a Section or clause, as the case may be, of this Registration Rights Agreement, and the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Registration Rights Agreement as a whole and not to any particular Section or other subdivision. Capitalized terms used herein but not defined herein shall have the meaning assigned to such terms in the Purchase Agreement.

SECTION 2. Registration Under the Securities Act.

(a) The Company shall file under the Securities Act as soon as reasonably practicable, but no later than 45 days after the consummation of the Merger (the “Filing Deadline”), a “shelf” registration statement providing for the registration of, and the sale on a

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continuous or delayed basis by the holders of, all, but not less than all, of the Registrable Securities, pursuant to Rule 415 or any similar rule that may be adopted by the Commission (such filing, the “Shelf Registration” and such registration statement, the “Shelf Registration Statement”); provided, however, that no holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement or to use the prospectus forming a part thereof for resales of Registrable Securities unless such holder is an Electing Holder. The Company agrees to use reasonable best efforts to cause the Shelf Registration Statement to become or be declared effective no later than 60 days after the consummation of the Merger unless the Company (or its legal counsel) receives a Review Notice, in which case such 60-day period shall be a 90-day period (in either case, the “Effectiveness Deadline”). Subject to Section 3(d), the Company agrees to use reasonable best efforts to keep such Shelf Registration Statement continuously effective until the earlier of (i) the date which is twelve (12) months after the Effective Time and (ii) the date on which there are no Registrable Securities (the “Maintenance Period”). The Company further agrees to use reasonable best efforts to, after the Effective Time of the Shelf Registration Statement, promptly upon the request of any holder of Registrable Securities that is not then an Electing Holder, to take any action reasonably necessary to enable such holder to use the prospectus forming a part thereof for resales of Registrable Securities, including, without limitation, any action necessary to identify such holder as a selling securityholder in the Shelf Registration Statement, provided, however, that nothing in this sentence shall relieve any such holder of the obligation to return a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(a)(iii) hereof; provided further that each holder shall promptly furnish additional information reasonably required to be disclosed in order to make information previously furnished to the Company by such holder not misleading. The Shelf Registration Statement shall contain (except if otherwise mutually agreed to by the Company by the Required Holders) the “Selling Securityholders” and “Plan of Distribution” sections in substantially the form attached hereto as Exhibit B. The Company further agrees to supplement or make amendments to the Shelf Registration Statement, including without limitation, any post effective amendments, as and when required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or rules and regulations thereunder for shelf registration. By 9:30 a.m. New York time on the second Business Day following the Effective Time of the Shelf Registration Statement or the post effective amendment, as applicable, the Company shall file with the Commission in accordance with Rule 424 under the Securities Act the final prospectus to be used in connection with sales pursuant to such Shelf Registration Statement.

(b) The Company shall use reasonable best efforts to take all actions reasonably necessary to ensure that the transactions contemplated herein are effected as so contemplated in Section 2(a) hereof, and to submit to the Commission, within five Business Days after the Company learns that no review of the Shelf Registration Statement will be made by the staff of the Commission or that the staff has no further comments on the Shelf Registration Statement, as the case may be, a request for acceleration of effectiveness (or post effective amendment, if applicable) of the Shelf Registration Statement to a time and date not later than 48 hours after the submission of such request.

(c) Any reference herein to a registration statement or prospectus as of any time shall be deemed to include any document incorporated, or deemed to be incorporated,

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therein by reference as of such time and any reference herein to any post-effective amendment to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time. Any reference to a prospectus as of any time shall include any supplement thereto, preliminary prospectus, or any free writing prospectus in respect thereof.

(d) If (i) the Shelf Registration Statement is (A) not filed with the Commission on or before the Filing Deadline (a “Filing Failure”) or (B) not declared effective by the Commission on or before the Effectiveness Deadline, (an “Effectiveness Failure”); (ii) at any time during the Maintenance Period sales of Registrable Securities required to be included on the Shelf Registration Statement pursuant to Section 2(a) hereof (the “Registered Securities”) cannot be made (other than during a Suspension Period (as defined in Section 3(d)) or during the period after a post-effective amendment is filed, and prior to the effectiveness thereof, to include information at the request of an Electing Holder) pursuant to the Shelf Registration Statement because the Shelf Registration Statement is not effective at such time or the Company shall have failed to maintain the listing of the Common Shares on an Eligible Market (a “Maintenance Failure and, together with a Filing Failure and an Effectiveness Failure, a “Failure”), then the Company shall pay to each Electing Holder that continues to hold Registrable Securities on the date of such Failure (i) an amount in cash equal to one percent (1%) of the product of (x) $the “issue price” of the Warrants determined in accordance with Section 5.13 of the Purchase Agreement, minus $0.01 (the “Warrant Share Value”), and (y) the aggregate amount of Registered Securities held by such Electing Holder on the date of such Failure (the “Initial Registration Delay Payment”), and (ii) for each additional thirty-day period in which one or more Failures are continuing at the completion of such thirty-day period, the Company shall pay to each Electing Holder that continues to hold Registrable Securities on such thirtieth day an amount in cash equal to one percent (1%) of the product of (x) the Warrant Share Value, and (y) the aggregate amount of Registered Securities held by such Electing Holder on each successive thirtieth day that any Failure continues (the “Continuing Registration Delay Payment” and, together with the Initial Registration Delay Payment, the “Delay Payments”). Notwithstanding anything to the contrary in this Section 2, each Electing Holder will only be entitled to receive a Delay Payment for one Failure at any one time even if two or more Failures are ongoing at any one time. Delay Payments shall be due and payable on the fifth (5^th) Business Day after the Failure giving rise to the Initial Registration Delay Payment, and if any Failure is ongoing thereafter, then on the first day of each successive thirty (30) day period that such Failure is continuing; provided, however, that Delay Payments shall cease to accrue or be payable on and after the later of (i) the date that is twelve (12) months after the Effective Time of the Shelf Registration Statement and (ii) the date on which each of the Registrable Securities has ceased to be a Registrable Security. Additionally, no Maintenance Failure will be deemed to have occurred as a result of the Shelf Registration Statement ceasing to be effective during the period beginning on the six month anniversary of the Effective Time and ending on the last day of the Maintenance Period provided that the Company otherwise continues to satisfy the information requirements of Rule 144(c)(1).

(e) Neither the Company nor any Subsidiary (as defined in the Purchase Agreement) or affiliate thereof shall identify any holder as an underwriter in any public disclosure or filing with the Commission, the Principal Market or an Eligible Market and any

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holder being deemed an underwriter by the Commission shall not relieve the Company of any obligations it has under this Agreement or any other Transaction Document (as defined in the Purchase Agreement); provided, however, that the foregoing shall not prohibit the Company from including the disclosure found in the “Plan of Distribution” section attached hereto as Exhibit B in the Shelf Registration Statement; provided, further, that the Company will not be obligated to pay any Registration Delay Payment as a result of any Failure due to any dispute between a holder and the Commission regarding such holder’s status as an underwriter. Notwithstanding anything to the contrary, to the extent a holder is required to be identified as an underwriter in a Shelf Registration Statement, such holder shall have the right to withdraw from the Shelf Registration Statement, at any time, without being so named.

(f) In no event shall the Company include any securities other than Registrable Securities on any Shelf Registration Statement without the prior written consent of the Required Holders.

(g) If at any time during which Registrable Securities are outstanding there is not an effective Shelf Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to the holder written notice of such determination and if, within five (5) Business Days after receipt of such notice, the holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities the holder requests to be registered. Notwithstanding the foregoing, if the managing underwriter of the public underwritten offering determines in its reasonable discretion that the success of the offering will be jeopardized without a limitation on the number of shares to be underwritten, the managing underwriter may in its reasonable discretion limit the Registrable Securities or other securities to be distributed through such underwriting pro rata (other than any securities being offered by the Company), and if necessary, exclude all selling stockholders. If the holder disapproves of the terms of any such underwriting, it may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Notwithstanding anything to the contrary, to the extent a holder is required to be identified as an underwriter in a Shelf Registration Statement, such holder shall have the right to withdraw from the Shelf Registration Statement, at any time, without being so named.

SECTION 3. Registration Procedures.

The following provisions shall apply to the filing of the Shelf Registration Statement:

(a) The Company shall:

(i) prepare and file with the Commission within the time periods specified in Section 2(a), a Shelf Registration Statement on any form which may be utilized by the Company and which shall register all of the Registrable Securities for resale by the holders

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thereof in accordance with such method or methods of disposition (but which shall not include an underwritten offering as to which the Company needs to assist) as may be specified by such of the holders as, from time to time, may be Electing Holders and use reasonable best efforts to cause such Shelf Registration Statement to become effective as soon as reasonably practicable but in any case within the time periods specified in Section 2(a);

(ii) not more than 5 Business Days after the consummation of the Merger, mail the Notice and Questionnaire to the holders of Registrable Securities; no holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement as of the Effective Time, and no holder shall be entitled to use the prospectus forming a part thereof for resales of Registrable Securities at any time, unless such holder has returned a completed and signed Notice and Questionnaire to the Company by the deadline for response set forth therein; provided, however, holders of Registrable Securities shall have at least 20 calendar days from the date on which the Notice and Questionnaire is first mailed to such holders to return a completed and signed Notice and Questionnaire to the Company;

(iii) after the Effective Time of the Shelf Registration Statement, upon the request of any holder of Registrable Securities that is not then an Electing Holder, send a Notice and Questionnaire to such holder, and, upon return of such Notice and Questionnaire from such Holder, use reasonable best efforts to include such holder’s Registrable Securities in the Shelf Registration Statement as soon as practicable but in any event within five days following receipt by the Company of such Notice and Questionnaire; provided that the Company shall not be required to take any action to name such holder as a selling securityholder in the Shelf Registration Statement or to enable such holder to use the prospectus forming a part thereof for resales of Registrable Securities until such holder has returned a completed and signed Notice and Questionnaire to the Company;

(iv) as soon as reasonably practicable prepare and file with the Commission such amendments and supplements to such Shelf Registration Statement (including without limitation, any required post effective amendments) and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Shelf Registration Statement for the period specified in Section 2(a) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Shelf Registration Statement, including without limitation, to promptly include any Electing Holder to be named as a selling security holder therein;

(v) comply with the provisions of the Securities Act with respect to the disposition of all of the Registrable Securities covered by such Shelf Registration Statement in accordance with the intended methods of disposition by the Electing Holders provided for in such Shelf Registration Statement;

(vi) provide (A) one representative of the Electing Holders and (B) not more than one counsel (“Legal Counsel”) for all the Electing Holders the opportunity to participate in the preparation of such Shelf Registration Statement, each prospectus included therein or filed with the Commission and each amendment or supplement thereto (but not including any documents incorporated by reference), in each case subject to customary confidentiality restrictions. The Company shall (A) permit Legal Counsel to review and

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comment upon (i) a Shelf Registration Statement at least five (5) Business Days prior to its filing with the Commission and (ii) all amendments and supplements to all Shelf Registration Statements (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any similar or successor reports) within a reasonable number of days prior to their filing with the Commission, and (B) give due consideration to any comments Legal Counsel provides with respect to any Shelf Registration Statement or amendment or supplement thereto. The Company shall furnish to Legal Counsel, without charge, (i) copies of any correspondence from the Commission or the staff of the Commission to the Company or its representatives relating to any Shelf Registration Statement, (ii) promptly after the same is prepared and filed with the Commission, one copy of any Shelf Registration Statement and any amendment(s) thereto, including financial statements and schedules, and, if requested by a holder and unavailable on EDGAR, all documents incorporated therein by reference and all exhibits to such Shelf Registration Statement and (iii) upon the effectiveness of any Shelf Registration Statement, one copy of the prospectus included in such Shelf Registration Statement and all amendments and supplements thereto. The Company shall reasonably cooperate with Legal Counsel in performing the Company’s obligations pursuant to this Section 3(vi);

(vii) for a reasonable period prior to the filing of such Shelf Registration Statement, and throughout the period specified in Section 2(a), make available between 9 a.m. and 5 p.m. on any Business Day at the Company’s principal place of business or such other reasonable place for inspection by the persons referred to in Section 3(a)(vi) who shall certify to the Company that they have a current intention to sell the Registrable Securities pursuant to the Shelf Registration such financial and other information and books and records of the Company, and cause the officers, employees, counsel and independent certified public accountants of the Company to be available to respond to such inquiries, as shall be reasonably necessary, in the judgment of the respective counsel referred to in such Section, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that each such party shall be required to maintain in confidence and not to disclose to any other person any information or records reasonably designated by the Company as being confidential, until such time as (A) such information becomes a matter of public record other than through a breach of this provision by such person or by an Electing Holder (but excluding by virtue of its inclusion in such registration statement or otherwise by the Company), or (B) such person shall be required so to disclose such information pursuant to a subpoena or order of any court or other governmental agency or body having jurisdiction over the matter (provided such person agrees that it will give prompt notice to the Company and allow the Company, at its expense, to promptly undertake appropriate action and to prevent disclosure of such information deemed confidential), or (C) such information is required to be set forth in such Shelf Registration Statement or the prospectus included therein or in an amendment to such Shelf Registration Statement or an amendment or supplement to such prospectus in order that such Shelf Registration Statement, prospectus, amendment or supplement, as the case may be, complies with applicable requirements of the federal securities laws and the rules and regulations of the Commission and does not contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

(viii) promptly notify each of the Electing Holders, and if requested by any such Electing Holder, confirm such advice in writing, (A) when such Shelf Registration

9

Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Shelf Registration Statement or any post-effective amendment, when the same has become effective, (B) of any comments by the Commission and by the blue sky or securities commissioner or regulator of any state with respect thereto or any request by the Commission for amendments or supplements to such Shelf Registration Statement or prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, or (E) if at any time when a prospectus is required to be delivered under the Securities Act, that such Shelf Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder or contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

(ix) use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement or any post-effective amendment thereto at the earliest practicable date;

(x) if requested by any Electing Holder, promptly incorporate in a prospectus supplement or post-effective amendment such information as is required by the applicable rules and regulations of the Commission and as such Electing Holder specifies should be included therein relating to the terms of the sale of such Registrable Securities, including information with respect to the amount of Registrable Securities being sold by such Electing Holder, the name and description of such Electing Holder the offering price of such Registrable Securities and any compensation payable in respect thereof, and make all required filings of such prospectus supplement or post-effective amendment promptly after notification of the matters to be incorporated in such prospectus supplement or post-effective amendment; provided, however, that any suspension of the Shelf Registration Statement caused by the Company filing a post-effective amendment to incorporate information pursuant to this Section 3(a)(x) shall not be deemed a Failure under this Agreement;

(xi) if requested by any Electing Holder, furnish to such Electing Holder and the respective counsel referred to in Section 3(a)(vi) a conformed copy of such Shelf Registration Statement, each such amendment and supplement thereto (in each case, if so requested, including all exhibits thereto and documents incorporated by reference therein) and such number of copies of such Shelf Registration Statement (excluding exhibits thereto and documents incorporated by reference therein unless specifically so requested by such Electing Holder) and of the prospectus included in such Shelf Registration Statement, in conformity in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder, and such other documents, as such Electing Holder may reasonably request in order to facilitate the offering and disposition of the Registrable Securities owned by such Electing Holder and to permit such Electing Holder to satisfy the prospectus delivery requirements of the Securities Act; and subject to Section 3(b) below, the

10

Company hereby consents to the use of such prospectus and any amendment or supplement thereto by each such Electing Holder, in each case in the form most recently provided to such person by the Company, in connection with the offering and sale of the Registrable Securities covered by the prospectus or any supplement or amendment thereto;

(xii) (A) register or qualify the Registrable Securities to be included in such Shelf Registration Statement under such securities laws or blue sky laws of all applicable jurisdictions in the United States, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions during the period the Shelf Registration is required to remain effective under Section 2(a) above and for so long as may be necessary to enable any such Electing Holder to complete its distribution of Securities pursuant to such Shelf Registration Statement and (C) take any and all other actions as may be reasonably necessary to enable each such Electing Holder to consummate the disposition in such jurisdictions of such Registrable Securities; provided, however, that the Company shall not be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(a)(xii), (2) consent to general service of process in any such jurisdiction or become subject to taxation in any such jurisdiction or (3) make any changes to its articles of incorporation or by-laws or other governing documents or any agreement between it and its stockholders;

(xiii) unless any Registrable Securities shall be in book-entry only form, reasonably cooperate with the Electing Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates, if so required by any securities exchange upon which any Registrable Securities are listed, shall be penned, lithographed or engraved, or produced by any combination of such methods, on steel engraved borders, and which certificates shall not bear any restrictive legends;

(xiv) comply with all applicable rules and regulations of the Commission, and make generally available to its securityholders as soon as reasonably practicable but in any event not later than ninety (90) days after the close of the period covered thereby, if requested, an earning statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Company, Rule 158 thereunder);

(xv) in the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form reasonably acceptable to the Required Holders and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Shelf Registration Statement then in effect until such time as a Shelf Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission.

(xvi) if any holder is required under applicable securities laws to be described in the Shelf Registration Statement as an underwriter or a holder believes that it could reasonably be deemed to be an underwriter of Registrable Securities, at the reasonable request of such holder, the Company shall furnish to such holder, on such date as a holder may reasonably

11

request (i) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the holders, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Shelf Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the holders; provided, however, that the holder shall pay all fees and expenses relating to any letter or opinion requested by such holder pursuant to this Section 3(a)(xvi).

(xvii) if any holder is required under applicable securities laws to be described in the Shelf Registration Statement as an underwriter, or a holder believes that it could reasonably be deemed to be an underwriter of Registrable Securities, the Company shall make available for inspection by (i) such holder, (ii) Legal Counsel and (iii) one firm of accountants or other agents retained by the Investors (collectively, the “Inspectors”), all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector, and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree to hold in strict confidence and shall not make any disclosure (except to an Investor) or use of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Shelf Registration Statement or is otherwise required under the Securities Act, (b) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this Agreement. Each Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company and any holder) shall be deemed to limit the holders’ ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations.

(b) In the event that the Company would be required, pursuant to Section 3(a)(viii)(C), (D) or (E) above, to notify the Electing Holders, the Company shall promptly prepare and furnish to each of the Electing Holders a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of Registrable Securities, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. Each Electing Holder agrees that upon receipt of any notice from the Company pursuant to Section 3(a)(viii)(C), (D) or (E) hereof, such Electing Holder shall forthwith discontinue the disposition of Registrable Securities pursuant to the Shelf Registration Statement applicable to such Registrable Securities until such Electing Holder shall have received copies of such amended or supplemented prospectus, and if so

12

directed by the Company, such Electing Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Electing Holder’s possession of the prospectus covering such Registrable Securities at the time of receipt of such notice.

(c) In the event of a Shelf Registration, in addition to the information required to be provided by each Electing Holder in its Notice and Questionnaire, the Company may require such Electing Holder to furnish to the Company such additional information regarding such Electing Holder and such Electing Holder’s intended method of distribution of Registrable Securities as may be required in order to comply with the Securities Act. Each such Electing Holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Electing Holder to the Company or of the occurrence of any event in either case that could cause the prospectus to contain an untrue statement of a material fact regarding such Electing Holder or such Electing Holder’s intended method of disposition of such Registrable Securities or omits to state any material fact regarding such Electing Holder or such Electing Holder’s intended method of disposition of such Registrable Securities required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to such Electing Holder or the disposition of such Registrable Securities, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. If an Electing Holder fails to provide to the Company any information required to be provided pursuant to this Section 3(c) within fifteen (15) days after the Electing Holder became aware of the inaccuracy, omission or required change, the Company may suspend the use of the Shelf Registration Statement and the prospectus contained therein until such time as the Electing Holder provides the required information to the Company and such period will not be deemed to be a Suspension Period (as defined below) hereunder.

(d) Notwithstanding any other provision of this Agreement, the Company may for any valid business reasons (other than avoidance of its obligations hereunder), including without limitation, a potential material acquisition, divestiture of assets or other material corporate transaction, notify holders of Registrable Securities in writing that the Shelf Registration Statement is no longer effective or the prospectus included therein is no longer usable for offers and sales of Securities for a period not to exceed 45 consecutive days and 60 days in the aggregate during any twelve-month period; provided, that the Company promptly thereafter complies with the requirements of Section 2(b) hereof, if applicable, and provided further that, if a post-effective amendment is required by applicable law to be filed with the Commission to cause a Electing Holder to be named as a selling security holder in the Shelf Registration Statement or to correct any information previously provided by an Electing Holder or to change other information requested by an Electing Holder to be included therein, the period of time between the filing and the effectiveness of any such post effective amendment shall be permitted and shall not deemed to be a Suspension Period hereunder so long as the Company uses its reasonable best efforts promptly to file such post effective amendment. The first day of any Suspension Period must be at least five trading days after the last day of any prior Suspension Period. Each holder agrees that upon receipt of

13

any notice from the Company pursuant to this Section 3(d), it will discontinue use of the prospectus contained in the Shelf Registration Statement until receipt of copies of the supplemented or amended prospectus relating thereto or until advised in writing by the Company that the use of the prospectus contained in the Shelf Registration Statement may be resumed (any such period, a “Suspension Period”).

SECTION 4. Registration Expenses.

(a) The Company agrees to bear and to pay or cause to be paid promptly all expenses incident to the Company’s performance of or compliance with this Registration Rights Agreement, including (a) all Commission and any Financial Industry Regulatory Authority (“FINRA”) registration, filing and review fees and expenses (b) all fees and expenses in connection with the qualification of the Securities for offering and sale under the State securities and blue sky laws referred to in Section 3(a)(xii) hereof and determination of their eligibility for investment under the laws of all jurisdictions, including reasonable fees and disbursements of not more than one counsel for the Electing Holders in connection with such qualification and determination, (c) all expenses relating to the preparation, printing, production, distribution and reproduction of each registration statement required to be filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the expenses of preparing the Securities for delivery and the expenses of printing or producing blue sky memoranda and all other documents in connection with the offering, sale or delivery of Securities to be disposed of (including certificates representing the Securities), (d) messenger, telephone and delivery expenses relating to the offering, sale or delivery of Securities and the preparation of documents referred in clause (c) above, (e) internal expenses (including all salaries and expenses of the Company’s officers and employees performing legal or accounting duties), (f) fees, disbursements and expenses of counsel and independent certified public accountants of the Company (including the expenses of any opinions required by or incident to such performance and compliance), (g) reasonable fees, disbursements and expenses of one counsel for the Electing Holders retained in connection with a Shelf Registration, as selected by the Electing Holders of at least a majority in aggregate principal amount of the Registrable Securities held by Electing Holders (which counsel shall be reasonably satisfactory to the Company with Milbank, Tweed, Hadley & McCloy LLP or Schulte Roth & Zabel LLP deemed reasonably satisfactory), and (h) fees, expenses and disbursements of any other persons, including special experts, retained by the Company in connection with such registration (collectively, the “Registration Expenses”). Notwithstanding the foregoing, the holders of the Registrable Securities being registered shall pay all agency fees and commissions and underwriting discounts and commissions attributable to the sale of such Registrable Securities and the fees and disbursements of any counsel or other advisors or experts retained by such holders (severally or jointly), other than the counsel and experts specifically referred to above.

SECTION 5. Indemnification.

(a) Indemnification by the Company. The Company will indemnify and hold harmless each of the Electing Holders, the directors, officers, partners, members, employees, agents, representatives of, and each person, if any, who controls any of the

14

Electing Holders within the meaning of the Securities Act or the Exchange Act included in a Shelf Registration Statement against any losses, claims, damages or liabilities, joint or several, to which such holder may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Shelf Registration Statement under which such Registrable Securities were registered under the Securities Act, or any preliminary, final or free writing prospectus contained therein or furnished by the Company to any such Electing Holder or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse such holder, such Electing Holder for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable to any such person in any such case to the extent that any such loss, claim, damage or liability (x) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, or preliminary, final or free writing prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by any such person for use therein or (y) arises from such person’s use of the Shelf Registration Statement or prospectus or any amendments or supplements thereto (i) during a Suspension Period or (ii) that occurs prior to such person being named in the Shelf Registration Statement.

(b) Indemnification by the Holders. Each Electing Holder agrees, severally and not jointly, to (i) indemnify and hold harmless the Company, against any losses, claims, damages or liabilities to which the Company or such other holders of Registrable Securities may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary, final or free writing prospectus contained therein or furnished by the Company to any such Electing Holder, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Electing Holder expressly for use therein, and (ii) reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that no such Electing Holder shall be required to undertake liability to any person under this Section 5(b) for any amounts in excess of the dollar amount of the net proceeds to be received by such Electing Holder from the sale of such Electing Holder’s Registrable Securities pursuant to such registration.

(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party under subsection (a) or (b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 5, notify such indemnifying party in writing of the commencement of such action; but the omission so

15

to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under the indemnification provisions of or contemplated by Section 5(a) or 6(b) hereof to the extent the indemnifying party is not materially prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

(d) Contribution. If for any reason the indemnification provisions contemplated by Section 5(a) or Section 5(b) are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 5(d) were determined by pro rata allocation (even if the holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 5(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5(d), no holder shall be required to contribute any amount in excess of the amount by which the dollar amount of the net proceeds received by such holder from the sale of any Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) exceeds the amount of any damages which such holder has otherwise been required to pay by reason

16

of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The holders’ obligations in this Section 5(d) to contribute shall be several in proportion to the principal amount of Registrable Securities registered by them and not joint.

(e) The obligations of the Company under this Section 5 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each holder and each person, if any, who controls any holder within the meaning of the Securities Act; and the obligations of the holders contemplated by this Section 5 shall be in addition to any liability which the respective holder may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company (including any person who, with his consent, is named in any registration statement as about to become a director of the Company) and to each person, if any, who controls the Company within the meaning of the Securities Act.

SECTION 6. Rule 144.

The Company covenants to the holders of Registrable Securities that until such date as the Registrable Securities cease to be Registrable Securities, to the extent it shall be required to do so under the Exchange Act, the Company shall timely file the reports required to be filed by it under the Exchange Act or the Securities Act (including the reports under Section 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144) and the rules and regulations adopted by the Commission thereunder, and shall take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144, as such Rule may be amended from time to time, or any similar or successor rule or regulation hereafter adopted by the Commission. Promptly upon receipt of a request from any holder of Registrable Securities in connection with that holder’s sale pursuant to Rule 144, the Company shall deliver to such holder a written statement as to whether it has complied with such requirements. The Company shall within two (2) Business Days confirm orally and in writing to the Holder the number of Common Shares then outstanding.

SECTION 7. Miscellaneous.

(a) Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if the Company fails to perform any of its obligations hereunder and that the Purchasers and the holders from time to time of the Registrable Securities may be irreparably harmed by any such failure, and accordingly agree that the Purchasers and such holders, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of the Company under this Registration Rights Agreement in accordance with the terms and conditions of this Registration Rights Agreement, in any court of the United States or any State thereof having jurisdiction.

17

(b) Notices. All notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, if delivered personally, by facsimile or by courier, or three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested) as follows: If to the Company, to it at GSI Group Inc., 125 Middlesex Turnpike, Bedford, Massachusetts 01730, Attention: General Counsel; with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York 10036, Attention: Michael J. Zeidel, Esq., and if to a holder, to the address of such holder set forth in the security register or other records of the Company, or to such other address as the Company or any such holder may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

(c) Parties in Interest. All the terms and provisions of this Registration Rights Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and the holders from time to time of the Registrable Securities and the respective successors and assigns of the parties hereto and such holders. In the event that any transferee of any holder of Registrable Securities shall acquire Registrable Securities, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any further writing or action of any kind, be deemed a beneficiary hereof for all purposes and such Registrable Securities shall be held subject to all of the terms of this Registration Rights Agreement, and by taking and holding such Registrable Securities such transferee shall be entitled to receive the benefits of, and be conclusively deemed to have agreed to be bound by all of the applicable terms and provisions of this Registration Rights Agreement. If the Company shall so request, any such successor, assign or transferee shall agree in writing to acquire and hold the Registrable Securities subject to all of the applicable terms hereof.

(d) Survival. The respective indemnities, agreements, representations, warranties and each other provision set forth in this Registration Rights Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any holder of Registrable Securities, any director, officer or partner of such holder or any director, officer or partner thereof, or any controlling person of any of the foregoing, and shall survive delivery of and payment for the Registrable Securities pursuant to the Purchase Agreement and the transfer and registration of Registrable Securities by such holder and the consummation of the transactions contemplated herein.

(e) Governing Law. This Registration Rights Agreement shall be governed by and construed in accordance with the laws of the State of New York.

(f) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF COURTS OF UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, OR THE STATE OF NEW YORK, AND ANY APPELLATE COURT THEREFROM, FOR THE RESOLUTION OF ANY AND ALL DISPUTES, CONTROVERSIES, CONFLICTS, LITIGATION OR ACTIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE SUBJECT MATTER HEREOF AND

18

AGREES NOT TO COMMENCE ANY LITIGATION OR ACTIONS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE SUBJECT MATTER HEREOF IN ANY OTHER COURT.

(g) Headings. The descriptive headings of the several Sections and paragraphs of this Registration Rights Agreement are inserted for convenience only, do not constitute a part of this Registration Rights Agreement and shall not affect in any way the meaning or interpretation of this Registration Rights Agreement.

(h) Entire Agreement; Amendments. This Registration Rights Agreement and the other writings referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Registration Rights Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Registration Rights Agreement may be amended and the observance of any term of this Registration Rights Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by the Company and the holders of at least a majority of the Registrable Securities at the time outstanding. Each holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any amendment or waiver effected pursuant to this Section 7(h), whether or not any notice, writing or marking indicating such amendment or waiver appears on such Registrable Securities or is delivered to such holder.

(i) Inspection. For so long as this Registration Rights Agreement shall be in effect, this Registration Rights Agreement and a complete list of the names and addresses of all the holders of Registrable Securities shall be made available for inspection and copying on any Business Day between 9 a.m. and 5 p.m. by any holder of Registrable Securities for proper purposes only (which shall include any purpose related to the rights of the holders of Registrable Securities under the Securities and this Agreement) at the offices of the Company at the address thereof set forth in Section 7(c) above.

(j) Counterparts. This Registration Rights Agreement may be executed by the parties in counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. If the foregoing is in accordance with your understanding, please sign and return to us counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Purchasers, this letter and such acceptance hereof shall constitute a binding agreement among the Purchasers and the Company.

(k) Assignment of Registration Rights. The rights under this Agreement shall be automatically assignable by the holders to any transferee of all or any portion of such holder’s Registrable Securities if: (i) the holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or

19

assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act or applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall have been made in accordance with the applicable requirements of the Purchase Agreement.

(l) Independent Nature of the Purchasers. The obligations of each Investor hereunder are several and not joint with the obligations of any other holder, and no provision of this Agreement is intended to confer any obligations on any holder vis-à-vis any other holder. Nothing contained herein, and no action taken by any holder pursuant hereto, shall be deemed to constitute the holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the holders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated herein.

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Very truly yours,

GSI GROUP INC.

By:

Name:

Title:

Accepted as of the date hereof:
INITIAL HOLDERS:
HIGHBRIDGE INTERNATIONAL LLC
By:	HIGHBRIDGE CAPITAL MANAGEMENT, LLC,
its Trading Manager
By:
	Adam J. Chill, Managing Director
TEMPO MASTER FUND LP
By:
Name:
Title :
SILVER OAK CAPITAL, L.L.C
By:
Name:
Title :

INTERLACHEN CONVERTIBLE INVESTMENTS LIMITED

By:
Name:	Gregg T. Colburn
Title :

SPECIAL VALUE CONTINUATION PARTNERS, L.P.

By:	Tennenbaum Capital Partners, LLC
Its:	Investment Manager
SPECIAL VALUE EXPANSION FUND, LLC
By:	Tennenbaum Capital Partners, LLC
Its:	Investment Manager

TENNENBAUM OPPORTUNITIES PARTNERS V, LP

By:	Tennenbaum Capital Partners, LLC
Its:	Investment Manager

SPECIAL VALUE OPPORTUNITIES FUND, LLC

By:	Tennenbaum Capital Partners, LLC
Its:	Investment Manager
Each of the above by:
Name:
Title :

S-2

Hale Capital Partners, LP
By:
Name:	Martin M. Hale, Jr.
Title:	Chief Executive Officer
LIBERTY HARBOR MASTER FUND I, L.P.
By:	Liberty Harbor I GP, LLC
its:	General Partner
By:
Name:
Title:

UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited

By:
Name:	Andrew Martin
Title:	Managing Director

UBS O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master Limited

By:
Name:	Andrew Martin
Title:	Managing Director

S-3

EXHIBIT A

GSI GROUP INC.

INSTRUCTION TO DTC PARTICIPANTS

(Date of Mailing)

URGENT - IMMEDIATE ATTENTION REQUESTED

DEADLINE FOR RESPONSE: [DATE]*

The Company is in the process of registering the Securities under the Securities Act of 1933 for resale by the beneficial owners thereof. In order to have their Securities included in the registration statement, beneficial owners must complete and return the enclosed Notice of Registration Statement and Selling Securityholder Questionnaire.

* Not less than 20 calendar days from date of mailing.

GSI GROUP INC.

Notice of Registration Statement

and

Selling Securityholder Questionnaire

(Date)

Reference is hereby made to the Registration Rights Agreement (the “Registration Rights Agreement”) among GSI GROUP INC. (the “Company”), and the Purchasers named therein. Pursuant to the Registration Rights Agreement, the Company will file with the United States Securities and Exchange Commission (the “Commission”) a registration statement (the “Shelf Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Company’s Common Shares (the “Securities”). A copy of the Registration Rights Agreement is attached hereto. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

Each beneficial owner of Registrable Securities (as defined below) is entitled to have the Registrable Securities beneficially owned by it included in the Shelf Registration Statement. In order to have Registrable Securities included in the Shelf Registration Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire (“Notice and Questionnaire”) must be completed, executed and delivered to the Company’s counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]. Beneficial owners of Registrable Securities who do not complete, execute and return this Notice and Questionnaire by such date (i) will not be named as Selling Securityholders in the Shelf Registration Statement and (ii) may not use the Prospectus forming a part thereof for resales of Registrable Securities.

Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and related Prospectus.

The term “Registrable Securities” is defined in the Registration Rights Agreement.

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ELECTION

The undersigned holder (the “Selling Securityholder”) of Registrable Securities hereby elects to include in the Shelf Registration Statement the Registrable Securities beneficially owned by it and listed below in Item (3). The undersigned, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement, including, without limitation, Section 5 of the Registration Rights Agreement, as if the undersigned Selling Securityholder were an original party thereto.

The Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

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QUESTIONNAIRE

(1)	(a)	Full Legal Name of Selling Securityholder:
	(b)	Full Legal Name of Registered Holder (if not the same as in (a) above) of Registrable Securities Listed in Item (3) below:
	(c)	Full Legal Name of DTC Participant (if applicable and if not the same ( as (b) above) Through Which Registrable Securities Listed in Item (3) below are Held:

(2)	Address for Notices to Selling Securityholder:
	Telephone:
	Fax:
	Contact Person

(3)	Beneficial Ownership of Securities:
	Except as set forth below in this Item (3), the undersigned does not beneficially own any Securities.
	(a)	Number of shares of Registrable Securities beneficially owned:
	(b)	Number of shares of Securities other than Registrable Securities beneficially owned:
	(c)	Number of shares of Registrable Securities which the undersigned wishes to be included in the Shelf Registration Statement:

(4)	Beneficial Ownership of Other Securities of the Company:
	Except as set forth below in this Item (4), the undersigned Selling Securityholder is not the beneficial or registered owner of any other securities of the Company, other than the Securities listed above in Item (3).
	State any exceptions here:

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(5)	Relationships with the Company:
	Except as set forth below, neither the Selling Securityholder nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
	State any exceptions here:
(6)	Plan of Distribution:
	Except as set forth below, the undersigned Selling Securityholder intends to distribute the Registrable Securities listed above in Item (3) only as follows (if at all): Such Registrable Securities may be sold from time to time directly by the undersigned Selling Securityholder or, alternatively, through broker-dealers or agents. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales (which may involve crosses or block transactions) may be effected in (i) transactions on any national securities exchange or quotation service on which the Registered Securities may be listed or quoted at the time of sale, (ii) transactions in the over-the-counter market, (iii) transactions otherwise than on such exchanges or services or in the over-the-counter market, (iv) transactions through the writing of options, whether such options are listed on an options exchange or otherwise, (v) ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers, (vi) block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction, (vii) purchases by a broker-dealer as principal and resale by the broker-dealer for its account, (viii) an exchange distribution in accordance with the rules of the applicable exchange, (ix) privately negotiated transactions, (x) short sales, (xi) sales pursuant to Rule 144, (xii) broker-dealers may agree with the Selling Securityholders to sell a specified number of such shares at a stipulated price per share, (xiii) a combination of any such methods of sale or (xiv) any other method permitted pursuant to applicable law. In connection with sales of the Registrable Securities or otherwise, the Selling Securityholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities in the course of hedging the positions they assume. The Selling Securityholder may also sell Registrable Securities short and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities.
	State any exceptions here:

By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules and regulations thereunder, particularly Regulation M.

In the event that the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item (3) above after the date on which such information is provided to the

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Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Registration Rights Agreement.

By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and related Prospectus. The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation of the Shelf Registration Statement and related Prospectus.

All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing, by hand-delivery, first-class mail, or air courier guaranteeing overnight delivery as follows:

(i) To the Company:

GSI Group Inc.

125 Middlesex Turnpike

Bedford, Massachusetts 01730

Attention: General Counsel

Telephone No.: (978) 439-5511

Telecopier No.: —

(ii) With a copy to:

Skadden, Arp, Slate, Meagher & Flom LLP

Four Times Square,

New York, New York 10036

Attention: Michael J. Zeidel, Esq.

Telephone: 617-573-4815

Telecopier: 617-305-4815

Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Company’s counsel, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the Selling Securityholder (with respect to the Registrable Securities beneficially owned by such Selling Securityholder and listed in Item (3) above. This Agreement shall be governed in all respects by the laws of the State of New York.

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IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated:
	Selling Securityholder
	(Print/type full legal name of beneficial owner of Registrable Securities)

By:

Name:

Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY’S COUNSEL AT:

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EXHIBIT B

SELLING SECURITYHOLDERS

The shares of common stock being offered by the Selling Securityholders are those issuable to the Selling Securityholders upon exercise of the warrants. For additional information regarding the issuances of the warrants, see “Private Placement of Warrants” above. We are registering the common shares in order to permit the Selling Securityholders to offer the shares for resale from time to time. Except for the ownership of the warrants, the Selling Securityholders have not had any material relationship with us within the past three years.

The table below lists the Selling Securityholders and other information regarding the beneficial ownership of the common shares by each of the Selling Securityholders. The second column lists the number of common shares beneficially owned by each Selling Securityholder, based on its ownership of the warrants, as of             , 2008, assuming exercise of all of the warrants held by the Selling Securityholders on that date.

The third column lists the common shares being offered by this prospectus by the Selling Securityholders.

In accordance with the terms of a registration rights agreements with the holders of the warrants, this prospectus generally covers the resale of at least the sum of (i) the maximum number of common shares issued and issuable upon exercise of the warrants, determined as if the outstanding warrants were exercised, as applicable, in full, as of the Trading Day immediately preceding the date this registration statement is initially filed with the SEC. The fourth column assumes the sale of all of the shares offered by the Selling Securityholders pursuant to this prospectus.

The Selling Securityholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”

Name of Selling Securityholder	Number of Common Shares Owned Prior to Offering	Maximum Number of Common Shares to be Sold Pursuant to this Prospectus	Number of Common Shares Owned After Offering
[        ] (1)			0
[        ] (2)			0
[Other Purchasers] (3)

(1)

(2)

(3)

PLAN OF DISTRIBUTION

We are registering the common shares issuable upon exercise of the warrants to permit the resale of these common shares by the holders of the warrants from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the Selling Securityholders of the common shares. We will bear all fees and expenses incident to our obligation to register the common shares.

The Selling Securityholders may sell all or a portion of the common shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the common shares are sold through underwriters or broker-dealers, the Selling Securityholders will be responsible for underwriting discounts or commissions or agent’s commissions. The common shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions,

• on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

• in the over-the-counter market;

• in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

• through the writing of options, whether such options are listed on an options exchange or otherwise;

• ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

• block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

• an exchange distribution in accordance with the rules of the applicable exchange;

• privately negotiated transactions;

• short sales;

• sales pursuant to Rule 144;

• broker-dealers may agree with the Selling Securityholders to sell a specified number of such shares at a stipulated price per share;

• a combination of any such methods of sale; and

• any other method permitted pursuant to applicable law.

If the Selling Securityholders effect such transactions by selling common shares to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the Selling Securityholders or commissions from purchasers of the common shares for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the common shares or otherwise, the Selling Securityholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the common shares in the course of hedging in positions they assume. The Selling Securityholders may also sell common shares short and deliver common shares covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The Selling Securityholders may also loan or pledge common shares to broker-dealers that in turn may sell such shares.

The Selling Securityholders may pledge or grant a security interest in some or all of the warrants, or common shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the common shares from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of Selling Securityholders to include the pledgee, transferee or other successors in interest as Selling Securityholders under this prospectus. The Selling Securityholders also may transfer and donate the common shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The Selling Securityholders and any broker-dealer participating in the distribution of the common shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the common shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of common shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the Selling Securityholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.

Under the securities laws of some states, the common shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the common shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

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There can be no assurance that any Selling Securityholders will sell any or all of the common shares registered pursuant to the shelf registration statement, of which this prospectus forms a part.

The Selling Securityholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the common shares by the Selling Securityholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the common shares to engage in market-making activities with respect to the common shares. All of the foregoing may affect the marketability of the common shares and the ability of any person or entity to engage in market-making activities with respect to the common shares.

We will pay all expenses of the registration of the common shares pursuant to the registration rights agreement, estimated to be $[            ] in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that a selling securityholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the Selling Securityholders against liabilities, including some liabilities under the Securities Act, in accordance with the registration rights agreements, or the Selling Securityholders will be entitled to contribution. We may be indemnified by the Selling Securityholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the Selling Securityholder specifically for use in this prospectus, in accordance with the related registration rights agreement, or we may be entitled to contribution.

Once sold under the shelf registration statement, of which this prospectus forms a part, the common shares will be freely tradable in the hands of persons other than our affiliates.

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EX-99.5

Exhibit 99.5

GSI Group Signs Definitive Agreement to Acquire Excel Technology

BEDFORD, MA July 10, 2008: GSI Group Inc., (Nasdaq: GSIG) and Excel Technology Inc. (Nasdaq: XLTC) announced today that they have entered into a definitive agreement for GSI to acquire Excel in an all-cash transaction for $32.00 per share, or approximately $360 million, before fees and transaction costs. The offer price represents a 30.2% premium to the average Excel closing share price over the last 30 trading days.

The acquisition will be effected through a cash tender offer for all outstanding shares of Excel common stock at a price of $32.00 per share, followed by a second-step merger in which any untendered shares will be acquired at the same per share price. The boards of directors of both companies have unanimously approved the transaction. The tender offer is expected to commence on or about July 23, 2008. Subject to customary conditions and regulatory approvals, GSI expects that the transaction will close in the 3^rd quarter.

GSI intends to pay the aggregate purchase price through a combination of available cash and external financing. GSI and its wholly owned subsidiary, GSI Group Corporation, have entered into definitive agreements with various investors to provide, subject to customary conditions, financing of $210 million for the transaction through the issuance of senior unsecured notes and warrants. On a non-GAAP cash basis, excluding the impact of any acquisition and purchase accounting related charges, the transaction is expected to be accretive to GSI for the full year 2009.

“This acquisition constitutes a major step in the execution of our strategy to expand our presence in our most attractive markets,” said Dr. Sergio Edelstein, President and CEO of GSI. “GSI and Excel have a set of uniquely complementary products, technologies, and distribution channels, which will enable the combined company to provide customers with a significantly broader set of solutions.”

Mr. Antoine Dominic, President and Chief Executive Officer of Excel commented; “As the industry evolves, geographical reach and breadth of product offerings become paramount. By joining forces, GSI and Excel will be in a very strong position to accelerate new product introductions and global market penetration. Although Excel has performed quite well independently over the years, this combination rewards our shareholders, creates opportunities for employees and offers more solutions for our customers.”

For the twelve months ended December 31, 2007, Excel reported revenues of $160.0 million and net income of $17.7 million. For the same period, GSI Group Inc. reported revenues of $317.8 million and net income of $19.0 million.

GSI reaffirmed that its second quarter results will be slightly above the midpoint of the previously stated range with revenue expected between $64.0 million and $68.0 million

and earnings per share of approximately two cents. The company expects to release its full second quarter earnings on Thursday, July 31^st, 2008.

UBS Investment Bank acted as exclusive financial advisor and placement agent to GSI Group, Inc. in connection with the transaction. Needham & Company, LLC provided a fairness opinion to Excel’s Board of Directors.

GSI Group has scheduled a conference call for July 10^th at 8:30 a.m. EDT. Investors can access to the conference call by dialing (706) 634-5123. A replay will be available after the call ends at (706) 645-9291, passcode: 54069322. A live audio webcast of the call will be made available at www.gsig.com and a replay will be available for fourteen days after the call ends.

Note: Non-GAAP differs from GAAP presentation due to the exclusion of the following non-cash expenses: restructuring charges, stock based compensation (123R) expense, amortization of intangibles, amortization of purchase accounting inventory write-up, non-cash interest expense, amortization of financing fees, and the related tax adjustment for these items.

About GSI Group Inc.

GSI Group Inc. supplies precision technology to the global medical, electronics, and industrial markets and semiconductor systems. GSI Group Inc.’s common shares are listed on Nasdaq (GSIG).

Forward Looking Information

Certain statements in, or incorporated by reference in, this press release may constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934. These forward-looking statements may relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, tax issues and other matters. All statements contained or incorporated by reference in this press release that do not relate to matters of historical fact should be considered forward-looking statements, and are generally identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “objective” and other similar expressions. Investors should not place undue reliance on the forward- looking statements contained or incorporated by reference in this press release. Such statements are based on management’s beliefs and assumptions and on information currently available to management and are subject to risks, uncertainties and changes in condition, significance, value and effect. Some of the risks and uncertainties that may cause actual results to differ materially from those contained in the statements include the following: (a) the occurrence of any event, change or other circumstance that could result in the tender offer not being consummated, including the conditions to the tender offer not being satisfied, or in the termination of the definitive merger agreement as a result of GSI’s external financing described in this press release being unavailable due to the non-satisfaction of the conditions contained in the definitive

financing agreements or the failure of the investors party thereto to fulfill their obligations thereunder, or as a result of other events set forth in the merger agreement which would entitle a party to terminate the merger agreement; (b) the inability to complete the transaction due to the failure to receive required regulatory or other approvals or to satisfy other conditions to the transaction; (c) the risk that the proposed transaction disrupts current plans and operations; (d) the risk that anticipated synergies and opportunities as a result of the transaction will not be realized; (e) difficulty or unanticipated expenses in connection with integrating Excel into GSI; (f) the risk that the acquisition does not perform as planned, including the risk that GSI will not achieve revenue projections; (g) the inability to retain key employees of either company and (h) changes in either company’s business between now and the completion of the tender offer and the merger. Other risks include the fact that each of the companies’ sales have been and are expected to continue to be dependent upon customer capital equipment expenditures, which are, in turn, affected by business cycles in the markets served by those customers. Other factors include volatility in the semiconductor industry, the risk of order delays and cancellations, the risk of delays by customers in introducing their new products and market acceptance of products incorporating subsystems supplied by the companies, risks of currency fluctuations, risks to the companies of delays in new products, our ability to continue to reduce costs and capital expenditures, our ability to focus R&D investment and integrate acquisitions, changes in applicable accounting standards, tax regulations or other external regulatory rules and standards, and other risks detailed in reports and documents filed by the companies with the United States Securities and Exchange Commission and by GSI with securities regulatory authorities in Canada. Such risks, uncertainties and changes in condition, significance, value and effect, many of which are beyond GSI’s control, could cause the companies actual results and other future events to differ materially from those anticipated. GSI does not, however, assume any obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

About Excel Technology

Founded in 1985, Excel and its wholly owned subsidiaries manufacture and market photonics-based solutions, consisting of laser systems and electro-optical components, primarily for industrial/commercial and scientific applications.

Excel’s “Safe Harbor” Statement Under the Private Securities Litigation Reform Act

This news release contains forward-looking statements, which are based on current expectations, including the effect of the merger on employees, investors and customers. Actual results could differ materially from those discussed or implied in the forward-looking statements as a result of various factors including the risks associated with integration of the two companies following the closing of the transaction, future economic, competitive, regulatory, and market conditions, future business decisions, and those factors discussed in Excel’s Form 10-K for the year ended December 31, 2007. In light of the significant uncertainties inherent in such forward-looking statements, readers are cautioned not to place undue reliance on these forward-looking statements, which

speak only as of the date hereof. Excel undertakes no obligation to update these forward-looking statements as a result of events or circumstances after the date hereof or to reflect the occurrence of anticipated events.

Additional Information

The tender offer for outstanding common stock of Excel described in this press release has not yet been commenced. The description contained herein is neither an offer to purchase nor a solicitation of an offer to sell securities of Excel. At the time the tender offer is commenced, GSI and Purchaser intend to file a Tender Offer Statement on Schedule TO containing an offer to purchase, forms of letters of transmittal and other documents relating to the tender offer, and Excel intends to file a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the tender offer. GSI, Purchaser and Excel intend to mail these documents to the stockholders of Excel. These documents will contain important information about the tender offer, and stockholders of Excel are urged to read them carefully when they become available. Stockholders of Excel will be able to obtain a free copy of these documents (when they become available) and other documents filed by Excel or GSI with the SEC at the website maintained by the SEC at www.sec.gov. In addition, stockholders will be able to obtain a free copy of these documents (when they become available) from GSI by contacting GSI at 125 Middlesex Turnpike, Bedford, Massachusetts 01730, attention: Investor Relations, or from Excel by contacting Excel at 41 Research Way, East Setauket, New York 11733, attention: Investor Relations.