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PURCHASE AND SALE AGREEMENT
by and among
COHERENT, INC.,
STOCKERYALE, INC. and
STOCKERYALE CANADA, INC.
Dated as of October 13, 2009
TABLE OF CONTENTS
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TABLE OF CONTENTS (continued)
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TABLE OF CONTENTS (continued)
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INDEX OF EXHIBITS
Exhibit A – Form of Transition Services Agreement
Exhibit B – Form of Escrow Agreement
INDEX OF SCHEDULES
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is made and entered into as of October 13, 2009 by and among Coherent, Inc., a Delaware corporation (together with Coherent International LLC, “ Buyer ”), StockerYale, Inc., a Massachusetts corporation (the “ Seller ”), and StockerYale Canada, Inc., a corporation incorporated under the Canada Business Corporations Act (“ SYC ”). All capitalized terms that are used in this Agreement shall have the respective meanings ascribed thereto in Article I .
WITNESSETH:
WHEREAS, Seller and SYC are engaged in the Business.
WHEREAS, Seller and SYC wish to sell to Buyer (and one or more of its Subsidiaries), and Buyer (and one or more of its Subsidiaries) wishes to purchase from Seller and SYC, all of the Transferred Assets, and Buyer is willing to assume the Assumed Liabilities, all upon the terms and subject to the conditions set forth in this Agreement.
WHEREAS, the respective Boards of Directors of Buyer, Seller and SYC have approved this Agreement and the transactions contemplated hereby.
WHEREAS, concurrently with the execution hereof (but subject to and effective only upon the Closing), (i) Seller, SYC and Buyer (and one or more of its Subsidiaries) are entering into a Transition Services Agreement substantially in the form attached hereto as Exhibit A (the “ Transition Services Agreement ”), and (ii) Seller and Buyer (and one or more Subsidiaries) are entering into an Escrow Agreement substantially in the form attached hereto as Exhibit B (the “ Escrow Agreement ”) and together with the Transition Services Agreement, the “ Related Agreements ”).
NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and intending to be legally bound hereby, Buyer, Seller and SYC hereby agree as follows:
ARTICLE I DEFINITIONS & INTERPRETATIONS
1.1 Certain Definitions . For all purposes of and under this Agreement, the following capitalized terms shall have the following respective meanings:
(a) “ Affiliate ” shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common control with such Person. For purposes of the immediately preceding sentence, the term “control” (including, with correlative meanings, the terms “controlling,” “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 ownership of voting securities, by contract or otherwise.
(b) “ Associate ” shall have the meaning ascribed to such term in Rule 12b-2 under the Exchange Act.
(c) “ Balance Sheet ” shall mean the unaudited balance sheet of Seller related to the SOF Business (as defined below) and SYC related to the Montreal Business (as defined below), each as of June 30, 2009.
(d) “ Business ” shall mean Seller’s specialty optical fiber division (“ SOF Business ”) and SYC’s business (the “ Montreal Business ”).
(e) “ Business Day ” shall mean any day, other than a Saturday, Sunday or any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in the State of New York are authorized or required by Laws or other governmental action to close.
(f) “ Business Employees ” shall mean all employees (i) of SYC and (ii) of the Seller or its Subsidiaries who devote a substantial portion of their time to the Business.
(g) “ Business Material Adverse Effect ” shall mean any adverse effect that is, or is reasonably likely to be, materially adverse to the (i) business, operations, properties, assets (including intangible assets), condition (financial or otherwise), or results of operations of the Business, or (ii) ability of Seller and SYC to consummate the transactions contemplated hereby, including the Related Agreements and any other documents delivered or entered into in connection herewith; provided, however, that for purposes of clause (i) above, in no event shall any of the following, alone or in combination, be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been or shall be, a Business Material Adverse Effect: (A) any effect directly related to the announcement or pendency of the transactions expressly contemplated by this Agreement; (B) any effect that results from changes affecting any of the industries in which Seller and SYC operate generally which do not have a disproportionate adverse impact on Seller and SYC, taken as a whole; (C) any effect that results from changes affecting the United States or Canadian economy generally which do not have a disproportionate adverse impact on Seller, SYC and their respective Subsidiaries, taken as a whole; and (D) any effect that results from changes affecting the general worldwide economic or capital market conditions which to do not have a disproportionate adverse impact on Seller and SYC, taken as a whole.
(h) “ Buyer Board ” shall mean the board of directors of Buyer.
(i) “ Buyer Material Adverse Effect ” shall mean, with respect to Buyer, any adverse effect that is, or is likely to be, materially adverse to the ability of Buyer and its Subsidiaries to consummate the transactions contemplated hereby, including the Related Agreements and any other documents delivered or entered into in connection herewith.
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(j) “ Code ” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.
(k) “ Contract ” shall mean any contract, subcontract, agreement, commitment, note, bond, mortgage, indenture, lease, license, sublicense, permit, franchise or other instrument, obligation or binding arrangement or understanding of any kind or character, whether oral or in writing.
(l) “ Documented Invention Disclosures ” shall mean those documents styled as “Invention Disclosures,” created by an employee of Seller or SYC and provided to Seller’s or SYC’s patent departments or similar departments serving such function prior to the Closing for consideration of whether to seek a patent on the invention disclosed therein and which are related to the Business.
(m) “ Employment Liabilities ” shall mean all Liabilities arising (A) out of Seller’s and SYC’s (i) use of independent contractors prior to the Closing or (ii) employment or service relationships with any Person prior to the Closing, and (B) under the Worker Adjustment and Retraining Notification Act (or other similar law) for any employee termination conducted by Seller and SYC.
(n) “ Environmental Law ” shall mean any and all Laws, relating to the protection of the environment (including ambient air, surface water, groundwater or land) or human health as affected by the environment or Hazardous Substances or otherwise relating to the production, use, emission, storage, treatment, transportation, recycling, disposal, discharge, release, labeling or other handling of any Hazardous Substances or any products or wastes containing any Hazardous Substances including any Laws related to product take-back or content requirements, or the investigation, clean-up or other remediation or analysis of Hazardous Substances, including the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Resource Recovery and Conservation Act of 1976, the Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials Transportation Act, the Clean Water Act, European Union Directive 2002/96/EC on waste electrical and electronic equipment (“ WEEE Directive ”), European Union Directive 2002/95/EC on the restriction on the use of hazardous substances (“ RoHS Directive ”), China’s Administrative Measures on the Control of Pollution Caused by Electronic Information Products (“ China RoHS ”), and Directive 2006/121/EC of the European Parliament and of the Council of 18 December 2006 on the Registration, Evaluation, Authorisation and Restriction of Chemicals, as amended (“ REACH Directive ”).
(o) “ Equity Interest ” shall mean capital stock, membership interests, options, warrants, stock appreciation rights, or rights to subscribe for, calls or other instruments exercisable for, or convertible into, the capital stock, membership interests or similar equity interests of any Person.
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(p) “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder, or any successor statue, rules and regulations thereto.
(q) “ ERISA Affiliate ” includes any trade or business (whether or not incorporated) which would be treated as a single employer with Seller or SYC under Section 414 of the Code.
(r) “ Escrow Fund ” shall mean the escrow fund established under the Escrow Agreement.
(s) “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.
(t) “ Final Allocation ” shall mean the allocation of the Purchase Price for the Transferred Assets as finally determined pursuant to Section 2.5(c) .
(u) “ GAAP ” shall mean generally accepted accounting principles in the United States, consistently applied.
(v) “ Governmental Authority ” shall mean any government, any governmental or regulatory entity or body, department, commission, board, agency or instrumentality, and any court, tribunal or judicial body, in each case whether federal, state, county, provincial, and whether local or foreign.
(w) “ Hazardous Substance ” shall mean any substance, material or waste that is characterized or regulated under any Environmental Law as “hazardous,” “pollutant,” “contaminant,” “toxic” or words of similar meaning or effect, or is otherwise a danger to health, reproduction or the environment, including petroleum and petroleum products, polychlorinated biphenyls and asbestos.
(x) “ Hazardous Materials Activities ” shall mean the transportation, transfer, recycling, storage, use, treatment, manufacture, removal, remediation, release, exposure of others to, labeling or marking, sale, or distribution of any Hazardous Substance or any product or waste containing a Hazardous Substance, or product manufactured with ozone depleting substances, including, without limitation, any required labeling, payment of waste fees or charges (including so-called e-waste fees) and compliance with any product take-back or product content requirements.
(y) “ Indebtedness ” shall mean, with respect to the Seller and SYC, (i) all indebtedness for borrowed money, (ii) all indebtedness evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations to pay the deferred purchase price of property or services (other than accounts payable incurred in the ordinary course of business determined in accordance with GAAP), (iv) all obligations with respect to capital leases, (v) all obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, (vi) all reimbursement and other payment obligations, contingent or otherwise, in respect of letters of credit and similar surety instruments, and (vii) all guaranty obligations with respect to the types of Indebtedness listed in clauses (i) through (vi) above.
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(z) “ Intellectual Property Rights ” shall mean common law and statutory rights anywhere in the world arising under or associated with (i) patents, patent applications and inventors’ certificates, (ii) copyrights, copyright registrations, copyright applications and “moral” rights, (iii) the protection of trade and industrial secrets and confidential information (“ Trade Secrets ”), (iv) trademarks, trade names, service marks, brand names, certifications, domain names and URLs (“ Trademarks ”), (v) other proprietary rights relating or with respect to the protection of technology, (vi) divisions, continuations, renewals, reissuances and extensions of the foregoing (as applicable) and (vii) analogous rights anywhere in the world to those set forth above.
(aa) “ Invention Disclosures ” shall mean both Documented Invention Disclosures and Undocumented Invention Disclosures.
(bb) “ IRS ” shall mean the United States Internal Revenue Service or any successor thereto.
(cc) “ Knowledge ” of Seller, with respect to any matter in question, shall mean the actual knowledge of any of the directors and executive officers of Seller, SYC and general managers of Seller and SYC providing services to the Business, or the knowledge that any of the foregoing persons would reasonably be expected to have after making due inquiry of those persons who would reasonably be expected to have actual knowledge of the matter in question.
(dd) “ Law ” shall mean any and all applicable federal, state, local, municipal, foreign or other law, statute, treaty, constitution, principle of common law, resolution, ordinance, code, edict, decree, directive, guidance, order, rule, regulation, ruling or requirement issues, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
(ee) “ Legal Proceeding ” shall mean any action, claim, suit, litigation, proceeding (public or private), arbitration, criminal prosecution, audit or investigation whether or not before any Governmental Authority.
(ff) “ Liabilities ” shall mean any liability, indebtedness, obligation or commitment of any kind, nature or character (whether accrued, absolute, contingent, matured, unmatured or otherwise and whether or not required to be recorded or reflected on a balance sheet under GAAP).
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(gg) “ Lien ” shall mean (i) any lien, pledge, hypothecation, charge, mortgage, deed of trust, security interest, assignment for security, collateral assignment, encumbrance, claim, infringement, interference, option, right of first refusal, preemptive right, community property interest or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset), (ii) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to any asset or (iii) any agreement to give any of the foregoing described in clause (i) or (ii) or other preferential arrangement having the practical effect of any of the foregoing described in clause (i) or (ii).
(hh) “ Losses ” shall mean any and all deficiencies, judgments, settlements, demands, claims, actions or causes of action, assessments, Liabilities, losses, damages, interest, fines, penalties, costs and expenses (including reasonable legal, accounting and other costs and expenses) incurred in connection with investigating, defending, settling or satisfying any and all demands, claims, actions, causes of action, suits, proceedings, assessments, judgments or appeals.
(ii) “ MBCA ” shall mean the Massachusetts Business Corporation Act, or any successor statute thereto.
(jj) “ Montreal Sublease ” shall mean a sublease entered into by SYC, as sublandlord, and Buyer, as subtenant, for SYC’s Montreal leased premises (the “ Montreal Subleased Property ”), in the form of Schedule 1.1(jj) .
(kk) “ Net Assets at Closing ” shall mean the difference between the value of the Transferred Assets and Assumed Liabilities determined in accordance with GAAP and in a manner consistent with the Business Financial Statements for the Business on the Closing Date and does not reflect the Excluded Assets and Excluded Liabilities and decreases in the value of fixed assets or intangible assets of the Business resulting from depreciation and amortization of goodwill after June 30, 2009, as determined pursuant to Section 2.10 .
(ll) “ Open Source License ” shall mean any license, including, but not limited to, the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL) the Sun Industry Standards License (SISL) and the Apache License, requiring software or other material to be distributed as “free software”, “open source software” or under similar licensing or distribution terms.
(mm) “ Order ” shall mean any judgment, decision, decree, injunction, ruling, writ, assessment or order of any Governmental Authority that is binding on any Person or its property under applicable Laws.
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(nn) “ Payoff Letter ” means a letter from a creditor of Seller or SYC that indicates the principal amount of Indebtedness for borrowed money owed by the aforementioned to such creditor, accrued and unpaid interest thereon and the amount necessary to be paid at the Closing or within five days of the Closing in order to pay off the Indebtedness in full, which letter includes instructions for making such payment.
(oo) “ Permit ” shall mean any permit, license, authorization, consent, approval or franchise from a Governmental Authority.
(pp) “ Permitted Liens ” shall mean any or all of the following: (a) (i) Liens for Taxes and other similar governmental charges and assessments which are not yet due and payable or (ii) Liens for Taxes being contested in good faith by any appropriate proceedings for which adequate reserves have been established in accordance with GAAP, such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and the failure to make payment pending such contest would not have a Business Material Adverse Effect; (b) Liens of landlords and liens of carriers, warehousemen, mechanics and materialmen and other like Liens arising in the ordinary course of business for sums not yet due and payable; (c) statutory Liens, licenses, charges, adverse claims, security interests or encumbrances of any nature whatsoever existing as of the Closing Date and claimed or held by any Governmental Authority that are related to obligations arising in the ordinary course of business that are not due or delinquent; (d) security given in the ordinary course of business as of the Closing Date to any public utility, Governmental Authority or other statutory or public authority; (e) Liens imposed on the underlying fee interest in leased property that are identified on Schedule 1.1(pp) ; and (f) assets of customers of the Seller and SYC identified on Schedule 1.1(pp) that are in the Seller’s and SYC’s possession and in accordance with GAAP are treated as assets of the Seller or SYC, while title to such assets remains with such customers.
(qq) “ 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 Authority.
(rr) “ Pre-Closing Hazardous Materials Activities ” shall mean any Hazardous Materials Activity conducted on the Business Facilities prior to the Closing Date or otherwise occurring prior to the Closing Date in connection with the conduct of the Business.
(ss) “ Pre-Existing Contamination ” shall mean the presence on or before the Closing Date of any Hazardous Substance in the soil, groundwater, surface water, air or building materials of the Business Facilities.
(tt) “ Registered Intellectual Property ” shall mean applications, registrations and filings for Intellectual Property Rights that have been registered, filed, certified or otherwise perfected or recorded with or by any state, government or other public or quasi-public legal authority.
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(uu) “ Sarbanes-Oxley Act ” shall mean the Sarbanes-Oxley Act of 2002.
(vv) “ SEC ” shall mean the United States Securities and Exchange Commission or any successor thereto.
(ww) “ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules or regulations thereto.
(xx) “ Seller Acquisition Proposal ” shall mean any offer or proposal (other than any offer or proposal by Buyer) relating to any Seller Acquisition Transaction.
(yy) “ Seller Acquisition Transaction ” shall mean any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving:
(i) any acquisition or purchase from Seller or any of its Subsidiaries by any Person or “group” (as defined in or under Section 13(d) of the Exchange Act), directly or indirectly, of voting securities of Seller or any of its Subsidiaries representing, in the aggregate, ten percent (10%) or more of the total voting power of any class or series of any then outstanding voting securities of Seller or any of its Subsidiaries, or any tender offer or exchange offer that if consummated would result in any Person or “group” (as defined in or under Section 13(d) of the Exchange Act) beneficially owning voting securities of Seller or any of its Subsidiaries representing, in the aggregate, ten percent (10%) or more of the total voting power of any class or series of any then outstanding voting securities of Seller or any of its Subsidiaries;
(ii) any merger, consolidation, business combination or other similar transaction involving Seller or any of its Subsidiaries pursuant to which the stockholders of Seller immediately preceding such transaction hold, in the aggregate, less than ninety percent (90%) of the equity or other similar interests in the surviving or resulting entity of such transaction;
(iii) any sale, lease (other than in the ordinary course of business), exchange, transfer, license (other than in the ordinary course of business), acquisition or disposition of (A) ten percent (10%) or more of the assets of Seller, SYC and their respective Subsidiaries taken as a whole (measured by the lesser of book or fair market value thereof), or (B) assets of Seller, SYC and their respective Subsidiaries, taken as a whole, generating or representing, in the aggregate, ten percent (10%) or more of the consolidated revenues, operating income or net income of Seller, SYC and their respective Subsidiaries, taken as a whole;
(iv) any liquidation, dissolution, recapitalization or other significant corporate reorganization of Seller or any of its Subsidiaries; or
(v) any combination of the foregoing.
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(zz) “ Seller Board ” shall mean the Board of Directors of Seller.
(aaa) “ Seller Employee Benefit Plans ” shall mean (i) all “employee benefit plans” (as defined in Section 3(3) of ERISA), whether or not subject to ERISA and (ii) all other employment, bonus, stock option, stock purchase or other equity-based, benefit, incentive compensation, profit sharing, savings, retirement (including early retirement and supplemental retirement), disability, insurance, vacation, incentive, deferred compensation, supplemental retirement, termination, retention, change of control and other similar fringe, welfare or other employee benefit plans, programs, agreements, contracts, policies or arrangements (whether or not in writing) maintained or contributed to for the benefit of or relating to any current or former employee or director of Seller or SYC or any of their respective ERISA Affiliates, or with respect to which Seller or SYC has any material Liability.
(bbb) “ Seller Intellectual Property ” shall mean any and all Intellectual Property Rights that are owned or purported to be owned by, or held in the name of, Seller or SYC.
(ccc) “ Seller Product ” shall mean all products, technologies and services developed (including products, technologies and services under development), owned, made, provided, distributed, imported, sold or licensed by or on behalf of Seller or SYC.
(ddd) “ Seller’s Retained Environmental Liabilities ” means any Liability to indemnify, defend or reimburse any Person with respect to: (i) a Pre-Existing Contamination; (ii) the migration at any time prior to or after the Closing Date of Pre-Existing Contamination to any other real property, or the soil, groundwater, surface water, air or building materials thereof; (iii) any Pre-Closing Hazardous Materials Activity; (iv) the exposure of any person prior to the Closing Date to Pre-Existing Contamination or to Hazardous Substances in the course of or as a consequence of any Pre-Closing Hazardous Materials Activities, without regard to whether any health effect of the exposure has been manifested as of the Closing Date; (v) the violation of any Environmental Laws by the Seller (in connection with the Business) or any Subsidiary or any of their respective agents, employees, predecessors in interest, contractors, invitees or licensees prior to the Closing Date or in connection with any Pre-Closing Hazardous Materials Activities prior to the Closing Date; and (vi) any actions or proceedings brought or threatened by any third party with respect to any of the foregoing.
(eee) “ Source Code ” shall mean software and code, which may be printed out or displayed in human readable form or from which object or other executable code can be derived by compilation or otherwise.
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(fff) “ Subsidiary ” of any Person shall mean (i) a corporation more than fifty percent (50%) of the combined voting power of the outstanding voting stock of which is owned, directly or indirectly, by such Person or by one of more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries thereof, (ii) a partnership of which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the general partner and has the power to direct the policies, management and affairs of such partnership, (iii) a limited liability company of which such Person or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the managing member and has the power to direct the policies, management and affairs of such company or (iv) any other Person (other than a corporation, partnership or limited liability company) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof.
(ggg) “ Tax ” shall mean (i) any and all federal, state, local and foreign taxes, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts, (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of being or ceasing to be a member of an affiliated, consolidated, combined or unitary group for any period (including any liability under Treasury Regulation Section 1.1502-6 or any comparable provision of foreign, state or local Law) and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) as a result of any express or implied obligation to indemnify any other Person or as a result of any obligations under any agreements or arrangements with any other Person with respect to such amounts and including any liability for taxes of a predecessor entity.
(hhh) “ Tax Returns ” shall mean all returns, declarations, reports, estimates, statements and other documents required to be filed in respect of any Taxes, including any amendments or attachments thereto.
(iii) “ Transferred Disclosures ” shall mean (i) the Documented Invention Disclosures listed on Schedule 6.4(b) , (ii) the Undocumented Invention Disclosures (including Undocumented Invention Disclosures between the date of this Agreement and the Closing Date), and (iii) all other Invention Disclosures that come into existence between the date of this Agreement and the Closing Date by employees of Seller or SYC employed in the Business.
(jjj) “ Transferred Employees ” shall mean all employees (i) of any of the Selling Entities who are offered and accept employment by Buyer or any Subsidiary of Buyer and (ii) of any of the Selling Entities outside the U.S., who remain or become employees of Buyer or any Subsidiary of Buyer as required by applicable Laws.
(kkk) “ Undocumented Invention Disclosures ” means those patentable inventions (other than the Documented Invention Disclosures) that were first conceived and described in a writing by an employee of Seller or SYC in the two-year period prior to Closing and related to the Business.
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1.2 Additional Definitions . The following capitalized terms shall have the respective meanings ascribed thereto in the respective sections of this Agreement set forth opposite each of the capitalized terms below:
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1.3 Certain Interpretations .
(a) Unless otherwise indicated, all references herein to Sections, Articles, Annexes, Exhibits or Schedules, shall be deemed to refer to Sections, Articles, Annexes, Exhibits or Schedules of or to this Agreement, as applicable.
(b) Unless otherwise indicated, the words “include,” “includes” and “including,” when used herein, shall be deemed in each case to be followed by the words “without limitation.”
(c) Unless otherwise indicated, all references herein to dollars or “$” shall mean and refer to U.S. denominated dollars.
(d) The table of contents and headings set forth in this Agreement are for convenience of reference purposes only and shall not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision hereof.
(e) Unless otherwise indicated, all references herein to the Subsidiaries of a Person shall be deemed to include all direct and indirect Subsidiaries of such Person unless otherwise indicated or the context otherwise requires.
(f) 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, 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.
ARTICLE II
PURCHASE AND SALE
2.1 Transferred Assets . Upon the terms and subject to the conditions set forth in this Agreement (including the terms of Section 2.2 ), at the Closing, Seller and SYC shall (and shall cause one or more of their respective Subsidiaries to) irrevocably sell, transfer, convey, assign and deliver to Buyer or one or more of its Subsidiaries, and Buyer shall (and, if applicable, shall cause one or more of its Subsidiaries to) irrevocably purchase from Seller, SYC and their respective Subsidiaries, in each case free and clear of all Liens other than Permitted Liens, all right, title and interest of Seller, SYC and their respective Subsidiaries as of the Closing in and to all assets, properties and rights of Seller, SYC and its Subsidiaries that are primarily used or held for use in, or primarily related to, the Business, wherever located (each, a “ Transferred Asset ” and collectively, the “ Transferred Assets ”), including the following:
(a) the tangible personal property identified on Schedule 2.1(a) which is dated as of October 9, 2009 (the “ Financial Schedules Date ”) and the tangible personal property and trade fixtures owned by Seller or SYC and located at the Montreal Subleased Property and Salem Leased Property, as well as the tangible personal property that is primarily used or held for use in, or primarily related to, the Business that has been acquired by Seller, SYC and their respective subsidiaries during the period of time between the Financial Schedules Date and the Closing (collectively, the “ Transferred Tangible Property ”);
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(b) all Seller Intellectual Property that (i) would be infringed or misappropriated absent a license by the operation of the Business in the manner conducted prior to the Closing or (ii) was created by any employee of or consultant to the Business, including the Registered Intellectual Property identified on Schedule 2.1(b) (collectively, whether or not identified on Schedule 2.1(b) , the “ Transferred Intellectual Property ”), together with all goodwill of the Business associated with any Trademarks included therewith, and the right to all past and future damages arising from any third party infringement or other violation of such Transferred Intellectual Property;
(c) all contracts identified on Schedule 2.1(c) (collectively, whether or not identified on Schedule 2.1(c) , the “ Transferred Contracts ”), together with all rights and benefits thereunder;
(d) all Permits identified on Schedule 2.1(d) (collectively, whether or not identified on Schedule 2.1(d) , the “ Transferred Permits ”), together with all rights thereunder;
(e) all claims, actions, causes of action, choses in action, rights of recovery, rights of setoff, rights of recoupment, rights of indemnification and all other similar rights of any kind or nature (the “ Transferred Claims ”);
(f) all accounts receivable and prepaid expenses;
(g) copies of all books and records and originals of all ledgers, files, documents and correspondence, customer, supplier, advertiser, circulation and other lists (including subscriber lists), invoices and sales data, and studies, reports and other printed or written materials or data owned by Seller and SYC as of the Closing that relate to the Business; and
(h) the other assets identified on Schedule 2.1(h) .
2.2 Excluded Assets . Notwithstanding anything to the contrary set forth in Section 2.1 or elsewhere in this Agreement, Seller and SYC shall not (and shall not cause any of their respective Subsidiaries) sell, transfer, convey, assign and deliver to Buyer or any of its Subsidiaries any assets, properties and rights of Seller, SYC or any of their respective Subsidiaries other than the Transferred Assets, and Buyer shall not purchase (or cause any of its Subsidiaries to purchase) from Seller, SYC or any of their respective Subsidiaries any assets, properties or rights of Seller, SYC or any of their respective Subsidiaries other than the Transferred Assets. Without limiting the generality of the foregoing, for all purposes of and under this Agreement, “Transferred Assets” shall not include any assets, properties or rights of Seller or any of its Subsidiaries other than the Transferred Assets (each, an “ Excluded Asset ” and collectively, the “ Excluded Assets ”), and shall expressly exclude the following, in each case whether or not used or held for use in, necessary for or that primarily relate to the Business:
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(a) all Equity Interests and the corporate charter and bylaws, qualifications to transact business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books, records and ledgers, blank stock certificates and other documents relating to organization, maintenance and existence of any Subsidiaries of Seller;
(b) the tangible personal property identified on Schedule 2.2(b) ;
(c) the Registered Intellectual Property identified on Schedule 2.2(c) ;
(d) all interests in real property other than pursuant to the Montreal Sublease;
(e) the Contracts identified on Schedule 2.2(e) ;
(f) the Permits identified on Schedule 2.2(f) ;
(g) all insurance policies;
(h) the claims, actions, causes of action, choses in action, rights of recovery, rights of setoff, rights of recoupment and rights of indemnification identified in Schedule 2.2(h) , as well as all claims, actions, causes of action, choses in action, rights of recovery, rights of setoff, rights of recoupment and rights of indemnification that directly relate to or arise out of any Excluded Assets or Excluded Liabilities;
(i) the books, records, ledgers, files, documents and correspondence, all customer, supplier, advertiser, circulation and other lists (including subscriber lists), all invoices and sales data, and all studies, reports and other printed or written materials or data identified in Schedule 2.2(i) ;
(j) all assets of and rights under any Seller Employee Benefit Plans;
(k) all cash and cash equivalents;
(l) all refunds for Taxes; and
(m) all rights of Seller and SYC under this Agreement, the Related Agreements and any other agreements, contracts, certificates or instruments executed and delivered by Seller or SYC in connection with this Agreement and the transactions contemplated hereby; and
(n) the other assets identified on Schedule 2.2(n) .
2.3 Assumed Liabilities . Upon the terms and subject to the conditions set forth in this Agreement (including the terms of Section 2.4 ), at the Closing, Buyer shall (or shall cause one or more of its Subsidiaries to) irrevocably assume from Seller and SYC, and Seller and SYC shall irrevocably assign to Buyer or one or more of its Subsidiaries, only the following Liabilities of Seller and SYC as of the Closing that relate to the Business (each, an “ Assumed Liability ” and collectively, the “ Assumed Liabilities ”):
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(a) all Liabilities of Seller and SYC under the Transferred Contracts identified on Schedule 2.1(c) ;
(b) all Liabilities of Seller and SYC arising out of or in connection with the third party claims, actions, causes or action, choses in action, rights of recovery, rights of setoff, rights of recoupment and rights of indemnification against Seller and SYC identified on Schedule 2.3(b) (collectively, the “ Assumed Claims ”);
(c) all accounts payable related to the Business identified on Schedule 2.3(c) which is dated as of the Financial Schedules Date, as well as accounts payable to the extent related to the Business that have arisen during the period of time between the Financial Schedules Date and the Closing;
(d) all Liabilities that arise after the Closing with respect to periods commencing after the Closing relating to the Transferred Employees;
(e) the Liabilities identified on Schedule 2.3(e) .
2.4 Excluded Liabilities . Buyer shall not assume (and shall not cause any of its Subsidiaries to assume) from Seller, SYC or any of their respective Subsidiaries any Liabilities other than the Assumed Liabilities. Without limiting the generality of the foregoing, for all purposes of and under this Agreement, “Assumed Liabilities” shall not include any Liabilities of Seller, SYC or any of their respective Subsidiaries other than the Assumed Liabilities (each, an “ Excluded Liability ” and collectively, the “ Excluded Liabilities ”), and shall expressly exclude the following, in each case whether or not related to the Business:
(a) all Liabilities that relate to or arise out of any Excluded Assets or other Excluded Liabilities;
(b) all Liabilities under the Seller Employee Benefit Plans and all Employment Liabilities;
(c) all Liabilities of Seller, SYC and their respective Subsidiaries for Taxes payable by Seller, SYC and their respective Subsidiaries, including Taxes that are the Liability of Seller, SYC and their respective Subsidiaries pursuant to and in accordance with the terms of Section 2.6 and Article VIII ;
(d) all Liabilities of Seller, SYC and their respective Subsidiaries arising out of or in connection with any third party claims, actions, causes or action, choses in action, rights of recovery, rights of setoff, rights of recoupment and rights of indemnification against Seller, SYC and their respective Subsidiaries other than the Assumed Claims;
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(e) all Liabilities of Seller and SYC for fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby;
(f) Seller’s Retained Environmental Liabilities;
(g) all Liabilities of Seller, SYC and any of their respective Subsidiaries under this Agreement and any other agreements, contracts, certificates or instruments executed and delivered by Seller, SYC or any of their respective Subsidiaries in connection with this Agreement and the Transactions contemplated hereby; and
(h) the Liabilities identified on Schedule 2.4(h) .
2.5 Consideration for Transferred Assets .
(a) Consideration . The aggregate purchase price (the “ Purchase Price ”) for the Transferred Assets shall consist of (i) $15,000,000 in cash (the “ Cash Portion ”), (ii) the amount, if any, payable by Buyer or Seller in accordance with Section 2.10(f) hereof and (iii) assumption of the Assumed Liabilities.
(b) Payment in Full . (A) The delivery of the Cash Portion by Buyer (or one or more of its Subsidiaries), (i) minus the sum of the deposit of $750,000 of the Cash Portion in the Escrow Fund, (ii) plus the amount, if any, payable by Buyer or Seller in accordance with Section 2.10(f) (which may be a positive or negative number, which will result in an increase or a decrease in the cash amount paid, as applicable) and (iii) minus the payment of the amounts set forth in the Payoff Letter, and (B) the assumption of the Assumed Liabilities by Buyer (or one or more of its Subsidiaries) pursuant to and in accordance with the terms of this Agreement shall constitute payment in full for all of the Transferred Assets. At or immediately following the Closing, Buyer will deposit $750,000 in the Escrow Fund.
(c) Allocation of Transferred Assets, Assumed Liabilities and Purchase Price . Within 60 days following the Closing Date, Buyer shall prepare a schedule setting forth Buyer (if applicable) and each Subsidiary of Buyer that will be purchasing Transferred Assets and/or assuming Assumed Liabilities pursuant to this Agreement (each, a “ Buying Entity ” and collectively, the “ Buying Entities ”) and which Transferred Assets such Buying Entities are purchasing and which Assumed Liabilities such Buying Entities are assuming. Prior to the Closing, Seller shall prepare a schedule setting forth Seller and each Subsidiary of Seller that will be selling any Transferred Assets and/or assigning any Assumed Liabilities pursuant to this Agreement (each, a “ Selling Entity ” and collectively, the “ Selling Entities ”) and which Transferred Assets such Selling Entities are selling and which Assumed Liabilities such Selling Entities are assigning. Within 60 days following the Closing Date, Buyer shall deliver to Seller a preliminary purchase price allocation among the Transferred Assets in accordance with Section 1060 of the Code (the “ Preliminary Purchase Price Allocation ”). Within five (5) days after Seller's receipt of the Preliminary Purchase Price Allocation, the Preliminary Purchase Price Allocation shall be adjusted by the parties (or if the parties cannot agree within five (5) days, by a nationally or regionally recognized valuation firm mutually acceptable to Buyer and Seller (the “ Appraiser ”)). The decision of the Appraiser with regard to the allocation of the Purchase Price among the Transferred Assets shall be final and binding on the Buying Entities and the Selling Entities, and the costs of the Appraiser shall be shared equally by the Buyer and Seller. Each of Buyer and Seller, when reporting the transactions consummated hereunder in its own Tax Returns shall allocate the Purchase Price paid or received, as the case may be, in a manner that is consistent with the Final Allocation. Additionally, each of Buyer and Seller will comply with, and furnish the information required by, Section 1060 of the Code, and any regulation thereunder.
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2.6 Sales and Use Taxes . Seller and SYC shall bear and pay any and all sales, use, goods and services, value added, transfer and other similar taxes arising out of the transfer of the Transferred Assets to Buyer or its designees pursuant hereto (the “ Transfer Taxes ”). To the extent permitted by applicable Law, Buyer shall cooperate with Seller and SYC in minimizing such Transfer Taxes. To the extent any Tax authority provides notice to Buyer of an audit of the Transfer Taxes, Buyer shall promptly notify Seller or any successor thereto and Seller and SYC or any successor thereto shall promptly assume responsibility for such audit and shall bear and pay when due any additional Transfer Taxes (plus interest and penalties determined to be due thereon) ultimately assessed with respect to the transfer of the Transferred Assets to Buyer or its designee pursuant hereto. Buyer shall cause its Subsidiary, Coherent International LLC, to be the purchaser of the Transferred Assets of the Montreal Business. Buyer represents that Coherent International LLC has made the appropriate registrations in the province of Quebec to obtain Goods and Services Tax and Quebec Sales Tax identification numbers and has obtained such identification numbers from the competent authorities. SYC will, and Buyer shall cause Coherent International LLC to, undertake to file the joint elections provided for under subsection 167(1) of the Excise Tax Act (Canada) and article 75 of An Act respecting the Quebec sales tax with the competent authorities by the due date for such filing.
2.7 Bulk Transfer Laws . Buyer and Seller shall waive, to the fullest extent permitted by applicable Law, any and all bulk transfer or similar Laws that may apply to the transactions contemplated by this Agreement. Notwithstanding the foregoing, Seller shall indemnify and hold Buyer and each of its designees who acquire Transferred Assets harmless from and against any and all Losses incurred by Buyer or such designee in respect of any such bulk transfer or similar Laws and Buyer’s or such designee’s noncompliance therewith or waiver thereof.
2.8 Closing .
(a) Closing Place, Time and Date. Unless this Agreement is earlier terminated pursuant to Section 10.1 , the closing of the transactions contemplated by this Agreement (the “ Closing ”) shall be held at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California at 10:00 a.m. PDT on the date which is two (2) Business Days following the satisfaction or waiver (to the extent permitted hereunder) of the conditions set forth in Article IX (other than those conditions that by their terms are not capable of being satisfied or waived until the Closing, but subject to the satisfaction or waiver (to the extent permitted hereunder) of such conditions at the Closing), or at such other place and such other location, time and/or date as the parties hereto shall mutually agree. For all purposes of and under this Agreement, “ Closing Date ” shall mean and refer to the actual date on which the Closing shall occur pursuant to this Agreement.
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(b) Closing Deliveries .
(i) At the Closing, Seller shall deliver, or cause to be delivered, to Buyer or its designees the following:
a) the Transferred Assets;
b) such executed deeds, bills of sale, assignments or other instruments of transfer and assignment, and releases (including releases or terminations of Liens on the Transferred Assets other than Permitted Liens) as are reasonably necessary to consummate the sale and transfer of the Transferred Assets contemplated by this Agreement, all in form and substance reasonably satisfactory to Buyer and its counsel;
c) the copy of resolutions of the Seller Board and the board of directors of SYC authorizing the execution, delivery and performance of this Agreement, the Related Agreements and each other agreement, document or certificate to which it is a party and is required to be delivered pursuant hereto or in connection herewith and authorizing the consummation of the transactions contemplated hereby and thereby by Seller and SYC and a certificate of the secretary or clerk of Seller, dated the Closing Date, to the effect that such resolutions were duly adopted and are in full force and effect;
d) duly executed counterparts to each of the Related Agreements and the Montreal Sublease;
e) certificates satisfying the requirements of Treasury Regulation § 1.1445-2(b) that exempt the Buyer Entities from any requirement to withhold Taxes under Code § 1445; and
f) any and all other documents, instruments, certificates and agreements contemplated by Article IX , by the Related Agreements or as Buyer may reasonably request in order to effectively transfer to Buyer or its designees all of the Transferred Assets pursuant hereto to the fullest extent permitted by applicable Law.
(ii) At the Closing, Buyer shall deliver, or cause to be delivered, to Seller or SYC (as Seller may direct) the following:
a) an amount in cash equal to the Cash Portion (subject to the adjustments set forth in Section 2.5(b) above), payable in immediately available funds by wire transfer to an account designated by Seller to Buyer in writing not later than two Business Days prior to the Closing Date;
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b) duly executed counterparts to each of the Related Agreements and Montreal Sublease;
c) such executed assignment and assumption instruments as are reasonably necessary to consummate the assumption of the Assumed Liabilities contemplated by this Agreement, all in form and substance reasonably satisfactory to Seller and its counsel;
d) the copy of resolutions of the Buyer Board, or the board of directors of its designees as may be appropriate, authorizing the execution, delivery and performance of this Agreement, and each other agreement, document or certificate to which it is a party and is required to be delivered pursuant hereto or in connection herewith and authorizing the consummation of the transactions contemplated hereby and thereby by Buyer and a certificate of the secretary of Buyer, dated the Closing Date, to the effect that such resolutions were duly adopted and are in full force and effect; and
e) any and all other instruments, certificates and agreements contemplated by Article IX , by the Related Agreements or as Seller may reasonably request in order to effectively make Buyer or one or more of its designees responsible for all Assumed Liabilities pursuant hereto to the fullest extent permitted by applicable Law.
(c) Effective Time . The effective date of the transfer of the Transferred Assets from Seller to Buyer or its designees pursuant hereto shall be the close of business on the day immediately preceding the Closing Date (the “ Effective Time ”). From and after the Effective Time, the Business shall be conducted and the Transferred Assets shall be held for the account and benefit, and at the risk, of Buyer or its designees, as applicable.
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2.9 Non-Assignable Assets .
(a) Notwithstanding anything to the contrary set forth in this Agreement or any Related Agreement, this Agreement shall not constitute an agreement to assign any Contract or Permit that would otherwise be a Transferred Asset under this Agreement, or any benefit arising thereunder or resulting therefrom, if and to the extent that an attempted assignment, transfer or conveyance thereof, without the consent of a party thereto (other than Seller, SYC or any of their respective Subsidiaries) or Governmental Authority, as the case may be, would constitute a breach or other contravention thereof or in any way adversely affect the rights of Buyer or any of its designees thereunder (each, a “ Non-Assignable Asset ”). Prior to the Closing, Seller and SYC shall, and shall cause each of their respective Subsidiaries to, use all commercially reasonable efforts to obtain the consent of any Persons and Governmental Authorities that may be required in order to assign, transfer and convey all of the Transferred Contracts and Transferred Permits to Buyer or its designees pursuant to this Agreement. If such consent is not obtained prior to the Closing, or if an attempted assignment, transfer or conveyance thereof would be ineffective or would adversely affect the rights thereunder so that Buyer would not receive substantially all such rights, (i) Seller shall, and shall cause each other Selling Entity to, continue to use reasonable best efforts to obtain the consent of any Persons or Governmental Authorities that may be required to assign, transfer or convey each Non-Assignable Asset to Buyer or its designees, and (ii) Seller and Buyer shall cooperate in a mutually agreeable arrangement under which Buyer would obtain the benefits and assume the obligations thereunder in accordance with this Agreement, including by subcontracting, sub-licensing or sub-leasing to Buyer, or under which Seller would enforce for the benefit of Buyer, with Buyer assuming Seller’s obligations, any and all rights of Seller against a third party thereto. Seller shall promptly pay to Buyer when received all monies received by Seller in respect of such Non-Assignable Assets or any benefit arising thereunder, except to the extent the same represents an Excluded Asset. To the extent the benefits therefrom and obligations thereunder have been provided by alternative arrangements as provided above, any such Non-Assignable Asset shall be deemed to be a Transferred Asset, provided that Buyer shall not be responsible for any Liabilities (i) arising out of a claim of breach of such Non-Assignable Asset due to the establishment of the alternative arrangements, or (ii) arising out of such Non-Assignable Asset as a result of Seller’s action without Buyer’s approval in a manner inconsistent with the alternative arrangements.
(b) In furtherance and not in limitation of Section 2.9(a) , in the event that Seller is unable to obtain any required consent to the transfer at Closing to the Buyer of any Non-Assignable Asset and Seller and Buyer have failed to agree on alternate arrangements to an assignment reasonably satisfactory to Buyer, then (i) Seller shall remain a party to and shall continue to be bound by such Non-Assignable Asset, (ii) Buyer shall pay, perform and discharge fully all of the obligations of Seller thereunder from and after the Closing Date, upon the terms and subject to the conditions of such Non-Assignable Asset, (iii) Seller shall, without further consideration therefor, pay, assign and remit to Buyer promptly all monies, rights and other consideration received in respect of such Non-Assignable Asset on and after the Closing Date, and (iv) Seller shall, without further consideration therefor, exercise and exploit its rights and options under such Non-Assignable Asset in the manner and only to the extent directed by Buyer. If and when any consent shall be obtained following the Closing Date with respect to the transfer by Seller to Buyer of any such Non-Assignable Asset or such Non-Assignable Asset shall otherwise become assignable following the Closing Date, Seller shall promptly assign all of its rights and obligations thereunder to Buyer, without further consideration therefor, and Buyer shall, without further consideration therefor, assume such rights and obligations, to the fullest extent permitted. The existence of the provisions of this Section 2.9 shall not reduce or otherwise adversely affect any party’s ability to enforce any of its rights under this Agreement.
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2.10 Closing Date Balance Sheet Adjustment .
(a) As promptly as practicable, and in any event not later than sixty (60) days after the Closing Date, Buyer shall prepare and deliver to Seller a written statement (the “ Accounting Report ”) setting forth Buyer’s good faith calculation of the Net Assets at Closing, which shall be based on Buyer’s review of the financial and other books and records of Seller, SYC and their respective Subsidiaries and such other documents as Buyer and Seller shall mutually agree.
(b) Seller shall have the right to review the Accounting Report and, within thirty (30) days after the date of receipt of such Accounting Report, may deliver to Buyer a certificate (a “ Dispute Notice ”) setting forth its objections, if any, to the Accounting Report, together with a summary of the reasons therefor and calculations which, in its view, are necessary to eliminate such objections. If Seller does not object within such thirty (30) day period, the determination of Net Assets at Closing as set forth in the Accounting Report shall be final and binding.
(c) If Seller objects to the Accounting Report within such thirty (30) day period, Buyer and Seller shall negotiate in good faith and use their reasonable best efforts to resolve such objections by written agreement (the “ Agreed Adjustments ”) within fifteen (15) days of receipt by Buyer of the Dispute Notice. If Buyer and Seller resolve such objections, the Accounting Report, as adjusted by the Agreed Adjustments, shall be the final and binding determination of the Net Assets at Closing.
(d) If any such objections are not resolved by Agreed Adjustments within such fifteen (15) day period, then Buyer and Seller shall submit such unresolved objections to the national office of a nationally recognized accounting firm that is mutually acceptable to Buyer and Seller and that is not the current independent registered public accounting firm of either Buyer or Seller (the “ Accounting Firm ”). The Accounting Firm shall act as an expert, not as an arbitrator, and shall be directed by Buyer and Seller to resolve such objections based solely on the written submissions of Buyer and Seller. The Accounting Firm shall investigate only those items which are in dispute and shall not assign a value to any item that is (i) greater than the greatest value for such item claimed by either of Buyer or Seller or (ii) lower than the lowest value for such item claimed by either of Buyer or Seller. The parties shall instruct the Accounting Firm to render its determination within 30 days of the referral of such matter thereto and to deliver written reports to each of Buyer and Seller setting forth its resolution of such unresolved objections. The Accounting Report, after giving effect to any Agreed Adjustments and to the resolution of disputed matters by the Accounting Firm, shall be the final and binding determination of Net Assets at Closing.
(e) The parties shall make available to the other parties to this Agreement and, if applicable, the Accounting Firm, (i) such books, records and other information (including work papers) as any of the foregoing may reasonably request to prepare or review the Accounting Report or any matters submitted to the Accounting Firm and (ii) those of its employees and representatives who were primarily responsible for the preparation of the Accounting Report or the Dispute Notice, as the case may be. The fees and expenses of the Accounting Firm hereunder shall be paid by the party whose calculation or estimate of disputed items on an aggregate basis represents the greatest difference from the Accounting Firm’s determination of those items on an aggregate basis.
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(f) If Net Assets at Closing is greater than $4,561,072, and such difference is greater than $150,000, then Buyer shall promptly (and in any event within five (5) Business Days) pay such amount in excess of $150,000 to the Seller up to a maximum of $500,000 and (ii) if $4,561,072 is greater than the Net Assets at Closing, then Seller shall promptly (and in any event within five (5) Business Days) pay such amount in excess of $150,000 to the Buyer.
2.11 Further Action . Seller shall, at any time and from time to time after the Closing Date, upon the request of Buyer, do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all such further deeds, assignments, transfers and other instruments of transfer and conveyance as may be required for the assigning, recording, transferring, granting and conveying to Buyer or its successors and assigns, or for aiding and assisting in collecting and reducing to possession, any or all of the Transferred Assets.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
Except, with respect to any Section or subsection of this Article III , as set forth in the corresponding Section or subsection of the disclosure schedule delivered by Seller and SYC to Buyer on the date of this Agreement (the “ Seller Disclosure Schedule ”), Seller and SYC hereby represent and warrant to Buyer as is set forth in this Article III . The number and section references in the Seller Disclosure Schedule shall correspond to the numbered and lettered paragraphs in the Agreement. Information disclosed in a particular section or subsection of the Seller Disclosure Schedule shall be deemed to be disclosed and incorporated into any other section or subsection of the Seller Disclosure Schedule where such disclosure would otherwise be appropriate, but only to the extent that it is reasonably apparent from the express language of such disclosure that it applies to such other section or subsection. Headings, captions and cross-references in the Seller Disclosure Schedule are for convenience of reference only and shall in no way modify, limit or affect, or be considered in construing or interpreting any information provided herein. The information contained in the Seller Disclosure Schedule is as of the date of the Agreement, but shall not alter the date as of which any representation or warranty is made pursuant to the Agreement. The inclusion of any information on any part of the Seller Disclosure Schedule shall not be deemed to be an admission or acknowledgement by the Seller, SYC or any of their respective Subsidiaries that such information is material or that such information includes any act or omission outside the ordinary course of business of the Seller or SYC. Nothing in the Seller Disclosure Schedule constitutes an admission of liability or obligation of the Seller or SYC or an admission against the interests of the Seller or SYC.
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3.1 Organization and Standing . Each Selling Entity (i) is a corporation or other legal entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its respective organization (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States), (ii) has the requisite corporate power and authority to carry on its respective business as it is presently being conducted and to own, lease or operate its respective properties and assets, and (iii) is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary (to the extent the “good standing” concept is applicable in the case of any jurisdiction outside the United States), except in any jurisdictions other than the State of New Hampshire, the city of Montreal or the province of Quebec, where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Business Material Adverse Effect. No Selling Entity is in violation of its certificate of incorporation, bylaws or other applicable constituent documents in any material respect.
3.2 Authorization; Board Approval .
(a) Each Selling Entity has all requisite corporate or other organizational power and authority to execute and deliver this Agreement and any Related Agreement to which it will be a party, to consummate the transactions contemplated by this Agreement and the Related Agreements and to perform its obligations hereunder and thereunder. The execution and delivery by each Selling Entity of this Agreement and the Related Agreements to which it will be a party and the consummation by each Selling Entity of the transactions contemplated by this Agreement and the Related Agreements have been duly authorized by all necessary corporate action on the part of each Selling Entity, and no additional corporate or other actions or proceedings on the part of any Selling Entity is necessary to authorize, adopt or approve this Agreement and the Related Agreements and the transactions contemplated hereby and thereby. This Agreement has been, and each of the Related Agreements upon their execution and delivery will be, duly executed and delivered by each Selling Entity party thereto and, assuming the due authorization, execution and delivery by Buyer, constitutes a legal, valid and binding obligation of each such Selling Entity, enforceable against such Selling Entity in accordance with its terms, except that such enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting or relating to creditors’ rights generally and (b) is subject to general principles of equity.
(b) On October 7, 2009, by unanimous written consent of the entire Board of Directors of the Seller, the Seller Board unanimously approved this Agreement and the transactions contemplated hereby, including the transfer of the Transferred Assets. As of the date hereof, the Seller Board has not rescinded or modified in any way the foregoing determinations and actions.
(c) No action on the part of the stockholders of Seller is required to approve the sale of the Transferred Assets contemplated hereby. The approval of the sole stockholder of SYC is required to approve the sale of the Transferred Assets contemplated hereby.
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3.3 Non-contravention; Required Consents .
(a) The execution, delivery and performance of this Agreement and the Related Agreements by each Selling Entity party thereto, the consummation by each Selling Entity of the transactions contemplated by this Agreement and the Related Agreements and the compliance by each Selling Entity with any of the terms hereof and thereof do not and will not (i) violate or conflict with any provision of the certificates of incorporation or bylaws or other constituent documents of any of the Selling Entities, (ii) subject to obtaining such Consents identified in Section 3.3(a)(ii) of the Seller Disclosure Schedule, violate, conflict with, or result in the breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, any Contract to which any of the Selling Entities is a party or by which any of the Selling Entities or any of their respective properties or assets may be bound, (iii) violate or conflict with any Law or Order applicable to any of the Selling Entities or by which any of their properties or assets are bound or (iv) result in the creation of any Lien upon any of the Transferred Assets, except in the case of each of clauses (ii), (iii) and (iv) above, for such violations, conflicts, breaches, defaults, terminations, accelerations or Liens which would not, individually or in the aggregate, have a Business Material Adverse Effect.
(b) No consent, approval, Order or authorization of, or filing or registration with, or notification to (any of the foregoing being a “ Consent ”), any Governmental Authority is required on the part of any of the Selling Entities in connection with the execution, delivery and performance of this Agreement and the Related Agreements by each Selling Entity party thereto, the consummation by each Selling Entity of the transactions contemplated by this Agreement and the Related Agreements and the compliance by each Selling Entity with any of the terms hereof and thereof.
3.4 Controls; Compliance .
(a) Seller and SYC have established and maintain, adhere to and enforce a system of internal accounting controls which are effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of 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 Seller and SYC, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of Seller and SYC are being made only in accordance with appropriate authorizations of management and Seller Board and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of Seller and SYC that could have a material effect on Seller’s financial statements. Except as Seller has disclosed in its quarterly and annual reports filed with the SEC (all of which have been remediated), neither Seller nor SYC (including any employee thereof) nor Seller’s independent auditors has identified or been made aware of (A) any significant deficiency or material weakness in the system of internal accounting controls utilized by Seller and SYC, (B) any fraud, whether or not material, that involves Seller’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by Seller and SYC or (C) any claim or allegation regarding any of the foregoing.
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(b) Seller has established and maintains disclosure controls and procedures required by Rules 13a-15(e) or 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by Seller 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 Seller’s management to allow timely decisions regarding required disclosure.
3.5 Business Financial Statements . Section 3.5 of the Seller Disclosure Schedule sets forth the following financial statements with respect to the Business: (i) unaudited balance sheet and income statement as of and for the years ended December 31, 2007 and 2008 for the SOF Business (the “ SOF Business Financial Statements ”); and (ii) unaudited balance sheet and income statement for the six-month period ended June 30, 2009 for the SOF Business (“ SOF Interim Financial Statements ”); (iii) the unaudited balance sheet and income statement as of and for the years ended December 31, 2007 and 2008 for the Montreal Business (the “ Montreal Business Financial Statements ”); and (iv) unaudited balance sheet and income statement as of and for the six-month period ended June 30, 2009 for the Montreal Business (“ Montreal Interim Financial Statements ” and together with the SOF Business Financial Statements, SOF Interim Financial Statements and Montreal Business Financial Statements, the “ Business Financial Statements ”). The Business Financial Statements have been prepared in accordance with GAAP applied on a consistent basis (except as may be noted therein), and present fairly, in all material respects, the financial position and the results of operations of the SOF Business and the Montreal Business as of the respective dates thereof or for the periods then ended, except that such financial statements do not include footnotes that would be required by GAAP.
3.6 No Undisclosed Liabilities; Indebtedness . There are no Liabilities related to the Business of any nature other than (a) Liabilities that are fully accrued or otherwise reserved against in the Balance Sheet, (b) Liabilities under this Agreement, (c) Liabilities incurred in connection with the transactions contemplated by this Agreement, (d) executory obligations under any Transferred Contract, and (e) other Liabilities that have not, individually or in the aggregate, had a Business Material Adverse Effect. Assuming that the amounts set forth in the | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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