PURCHASE
AND SALE AGREEMENT

     

    by
and among

     

    COHERENT,
INC.,

     

    STOCKERYALE,
INC. and

     

    STOCKERYALE
CANADA, INC.

    


    Dated
as of October 13, 2009



    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    TABLE
OF CONTENTS

     

    
      
        
          
            
              	 
      	 
      	
                      Page

                    
	 	 
	
                      ARTICLE I
      DEFINITIONS & INTERPRETATIONS

                    	
                      1

                    
	 
      	 
      	 
      
	
                      1.1

                    	
                      Certain
      Definitions

                    	
                      1

                    
	
                      1.2

                    	
                      Additional
      Definitions

                    	
                      11

                    
	
                      1.3

                    	
                      Certain
      Interpretations

                    	
                      13

                    
	 
      	 
      
	
                      ARTICLE II
      PURCHASE AND SALE

                    	
                      13

                    
	 
      	 
      	 
      
	
                      2.1

                    	
                      Transferred
      Assets

                    	
                      13

                    
	
                      2.2

                    	
                      Excluded
      Assets

                    	
                      14

                    
	
                      2.3

                    	
                      Assumed
      Liabilities

                    	
                      15

                    
	
                      2.4

                    	
                      Excluded
      Liabilities

                    	
                      16

                    
	
                      2.5

                    	
                      Consideration
      for Transferred Assets

                    	
                      17

                    
	
                      2.6

                    	
                      Sales
      and Use Taxes

                    	
                      18

                    
	
                      2.7

                    	
                      Bulk
      Transfer Laws

                    	
                      18

                    
	
                      2.8

                    	
                      Closing

                    	
                      18

                    
	
                      2.9

                    	
                      Non-Assignable
      Assets

                    	
                      21

                    
	
                      2.10

                    	
                      Closing
      Date Balance Sheet Adjustment

                    	
                      22

                    
	
                      2.11

                    	
                      Further
      Action

                    	
                      23

                    
	 
      	 
      
	
                      ARTICLE III
      REPRESENTATIONS AND WARRANTIES OF SELLER

                    	
                      23

                    
	 
      	 
      	 
      
	
                      3.1

                    	
                      Organization
      and Standing

                    	
                      24

                    
	
                      3.2

                    	
                      Authorization;
      Board Approval

                    	
                      24

                    
	
                      3.3

                    	
                      Non-contravention;
      Required Consents

                    	
                      25

                    
	
                      3.4

                    	
                      Controls;
      Compliance

                    	
                      25

                    
	
                      3.5

                    	
                      Business
      Financial Statements

                    	
                      26

                    
	
                      3.6

                    	
                      No
      Undisclosed Liabilities; Indebtedness

                    	
                      26

                    
	
                      3.7

                    	
                      Absence
      of Certain Changes

                    	
                      26

                    
	
                      3.8

                    	
                      Compliance
      with Laws and Orders

                    	
                      28

                    
	
                      3.9

                    	
                      Permits

                    	
                      29

                    
	
                      3.10

                    	
                      Litigation;
      Orders

                    	
                      29

                    
	
                      3.11

                    	
                      Material
      Contracts

                    	
                      29

                    
	
                      3.12

                    	
                      Taxes

                    	
                      32

                    
	
                      3.13

                    	
                      Employee
      Benefits

                    	
                      34

                    
	
                      3.14

                    	
                      Labor
      Matters

                    	
                      35

                    
	
                      3.15

                    	
                      Real
      Property

                    	
                      36

                    
	
                      3.16

                    	
                      Environmental
      Matters

                    	
                      38

                    
	
                      3.17

                    	
                      Sufficiency
      of Transferred Assets; Title to Transferred Assets

                    	
                      38

                    
	
                      3.18

                    	
                      Intellectual
      Property

                    	
                      38

                    
	
                      3.19

                    	
                      Insurance

                    	
                      41

                    
	
                      3.20

                    	
                      Government
      Contracts

                    	
                      41

                    
	
                      3.21

                    	
                      Brokers

                    	
                      42

                    
	
                      3.22

                    	
                      State
      Anti-Takeover Statutes

                    	
                      42

                    
	
                      3.23

                    	
                      Solvency

                    	
                      42

                    


            

          

        

      

    

     

    
      
         


      

      
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    TABLE
OF CONTENTS

    (continued)

     

    


    
      
        
          
            	 
      	 
      	
                    Page

                  
	 	 	 
	
                    3.24

                  	
                    Inventory
      and Product Warranties

                  	
                    43

                  
	
                    3.25

                  	
                    Disclosure

                  	
                    43

                  
	 
      	 
      
	
                    ARTICLE IV
      REPRESENTATIONS AND WARRANTIES OF BUYER

                  	
                    44

                  
	 
      	 
      	 
      
	
                    4.1

                  	
                    Organization

                  	
                    44

                  
	
                    4.2

                  	
                    Authorization;
      Board Approval

                  	
                    44

                  
	
                    4.3

                  	
                    Non-contravention;
      Required Consents

                  	
                    44

                  
	
                    4.4

                  	
                    Litigation

                  	
                    45

                  
	
                    4.5

                  	
                    Ownership
      of Securities

                  	
                    45

                  
	 
      	 
      
	
                    ARTICLE V
      INTERIM CONDUCT OF BUSINESS

                  	
                    45

                  
	 
      	 
      	 
      
	
                    5.1

                  	
                    Affirmative
      Obligations of Seller

                  	
                    45

                  
	
                    5.2

                  	
                    Negative
      Obligations of Seller

                  	
                    46

                  
	 
      	 
      
	
                    ARTICLE VI
      ADDITIONAL AGREEMENTS

                  	
                    48

                  
	 
      	 
      	 
      
	
                    6.1

                  	
                    Reasonable
      Best Efforts to Complete

                  	
                    48

                  
	
                    6.2

                  	
                    Anti-Takeover
      Laws

                  	
                    49

                  
	
                    6.3

                  	
                    Access;
      Notice and Consultation

                  	
                    49

                  
	
                    6.4

                  	
                    Confidentiality

                  	
                    51

                  
	
                    6.5

                  	
                    Public
      Disclosure

                  	
                    51

                  
	
                    6.6

                  	
                    Employee
      Matters

                  	
                    51

                  
	
                    6.7

                  	
                    Non-Solicitation

                  	
                    52

                  
	
                    6.8

                  	
                    Real
      Estate Matters

                  	
                    53

                  
	
                    6.9

                  	
                    Mail
      Handling

                  	
                    54

                  
	
                    6.10

                  	
                    Non-Solicitation
      of Employment

                  	
                    54

                  
	
                    6.11

                  	
                    Non-Competition

                  	
                    54

                  
	 
      	 
      
	
                    ARTICLE VII
      POST-CLOSING AGREEMENTS

                  	
                    54

                  
	 
      	 
      	 
      
	
                    7.1

                  	
                    Transfer
      of Cash Portion Among the Selling Entities

                  	
                    54

                  
	
                    7.2

                  	
                    Post-Closing
      Access and Cooperation

                  	
                    55

                  
	
                    7.3

                  	
                    2009
      – 2010 PARI R&D Grant

                  	
                    55

                  
	 
      	 
      
	
                    ARTICLE VIII
      TAX MATTERS

                  	
                    55

                  
	 
      	 
      	 
      
	
                    8.1

                  	
                    Returns;
      Indemnification; Liability for Taxes

                  	
                    55

                  
	
                    8.2

                  	
                    Refunds
      and Credits

                  	
                    56

                  
	
                    8.3

                  	
                    Cooperation

                  	
                    56

                  
	
                    8.4

                  	
                    Transferred
      Employees

                  	
                    56

                  
	
                    8.5

                  	
                    Conflicts

                  	
                    56

                  
	 
      	 
      
	
                    ARTICLE IX
      CONDITIONS TO THE ACQUISITION

                  	
                    57

                  
	 
      	 
      	 
      
	
                    9.1

                  	
                    Conditions
      to Each Party’s Obligations to Effect the Acquisition

                  	
                    57

                  
	
                    9.2

                  	
                    Additional
      Conditions to the Obligations of Buyer

                  	
                    57

                  
	
                    9.3

                  	
                    Additional
      Conditions to Seller’s Obligations to Effect the
    Acquisition

                  	
                    58

                  


          

        

      

    

     

    
      
         


      

      
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    TABLE
OF CONTENTS

    (continued)

    


    
      
        
          
            	 
      	
                    Page

                  
	 	 
	
                    ARTICLE X
      TERMINATION, AMENDMENT AND WAIVER

                  	
                    59

                  
	 
      	 
      	 
      
	
                    10.1

                  	
                    Termination

                  	
                    59

                  
	
                    10.2

                  	
                    Notice
      of Termination; Effect of Termination

                  	
                    60

                  
	
                    10.3

                  	
                    Fees
      and Expenses

                  	
                    61

                  
	
                    10.4

                  	
                    Amendment

                  	
                    61

                  
	
                    10.5

                  	
                    Extension;
      Waiver

                  	
                    61

                  
	 
      	 
      
	
                    ARTICLE XI
      INDEMNIFICATION

                  	
                    61

                  
	 
      	 
      	 
      
	
                    11.1

                  	
                    Indemnification
      by Seller

                  	
                    61

                  
	
                    11.2

                  	
                    Indemnification
      by Buyer

                  	
                    61

                  
	
                    11.3

                  	
                    Right
      to Indemnification; Cap; Basket

                  	
                    62

                  
	
                    11.4

                  	
                    Third-Party
      Claims

                  	
                    62

                  
	
                    11.5

                  	
                    Insurance

                  	
                    63

                  
	 
      	 
      
	
                    ARTICLE XII
      GENERAL PROVISIONS

                  	
                    63

                  
	 
      	 
      	 
      
	
                    12.1

                  	
                    Survival
      of Representations and Warranties

                  	
                    63

                  
	
                    12.2

                  	
                    Notices

                  	
                    63

                  
	
                    12.3

                  	
                    Assignment

                  	
                    64

                  
	
                    12.4

                  	
                    Entire
      Agreement

                  	
                    64

                  
	
                    12.5

                  	
                    Third
      Party Beneficiaries

                  	
                    65

                  
	
                    12.6

                  	
                    Severability

                  	
                    65

                  
	
                    12.7

                  	
                    Other
      Remedies

                  	
                    65

                  
	
                    12.8

                  	
                    Governing
      Law

                  	
                    65

                  
	
                    12.9

                  	
                    Specific
      Performance

                  	
                    65

                  
	
                    12.10

                  	
                    Consent
      to Jurisdiction

                  	
                    65

                  
	
                    12.11

                  	
                    WAIVER
      OF JURY TRIAL

                  	
                    66

                  
	
                    12.12

                  	
                    Counterparts

                  	
                    66

                  


          

        

      

    

     

    
      
         


      

      
        -iii-

        
          

        

      

      
         


      

    

     

    INDEX OF
EXHIBITS

     

    Exhibit
A              –           Form
of Transition Services Agreement

     

    Exhibit
B              –           Form
of Escrow Agreement

     

    INDEX OF
SCHEDULES

     

    
      
        
          	
                  Schedule
      1.1(jj)

                	
                  Montreal
      Sublease Terms

                
	 
      	 
      
	
                  Schedule
      1.1(pp)

                	
                  Schedule
      of Certain Permitted Liens

                
	 
      	 
      
	
                  Schedule
      2.1(a)

                	
                  Schedule
      of Transferred Tangible Property

                
	 
      	 
      
	
                  Schedule
      2.1(b)

                	
                  Schedule
      of Transferred Intellectual Property

                
	 
      	 
      
	
                  Schedule
      2.1(c)

                	
                  Schedule
      of Transferred Contracts

                
	 
      	 
      
	
                  Schedule
      2.1(d)

                	
                  Schedule
      of Transferred Permits

                
	 
      	 
      
	
                  Schedule
      2.1(h)

                	
                  Schedule
      of Other Transferred Assets

                
	 
      	 
      
	
                  Schedule
      2.2(b)

                	
                  Schedule
      of Excluded Tangible Personal Property

                
	 
      	 
      
	
                  Schedule
      2.2(c)

                	
                  Schedule
      of Excluded Registered Intellectual Property

                
	 
      	 
      
	
                  Schedule
      2.2(e)

                	
                  Schedule
      of Excluded Contracts

                
	 
      	 
      
	
                  Schedule
      2.2(f)

                	
                  Schedule
      of Excluded Permits

                
	 
      	 
      
	
                  Schedule
      2.2(h)

                	
                  Schedule
      of Excluded Claims

                
	 
      	 
      
	
                  Schedule
      2.2(i)

                	
                  Schedule
      of Excluded Books and Records

                
	 
      	 
      
	
                  Schedule
      2.2(n)

                	
                  Schedule
      of Other Excluded Assets

                
	 
      	 
      
	
                  Schedule
      2.3(b)

                	
                  Schedule
      of Assumed Claims

                
	 
      	 
      
	
                  Schedule
      2.3(c)

                	
                  Schedule
      of Assumed Accounts Payable

                
	 
      	 
      
	
                  Schedule
      2.3(e)

                	
                  Schedule
      of Assumed Liabilities

                
	 
      	 
      
	
                  Schedule
      2.4(h)

                	
                  Schedule
      of Other Excluded Liabilities

                
	 
      	 
      
	
                  Schedule
      6.4(b)

                	
                  Schedule
      of Transferred Disclosures

                
	 
      	 
      
	
                  Schedule
      9.2(f)

                	
                  Opinion
      of Counsel to
Seller

                


        

      

    


    
      
         


      

      
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                Schedule 9.2(g)

              	
                Schedule
      of Key Employees

              
	 
      	 
      
	
                Schedule
      9.2(h)

              	
                Schedule
      of Consents

              
	 
      	 
      
	
                Schedule 9.2(i)

              	
                Schedule
      of Released Liens

              
	 
      	 
      
	
                Schedule
      9.2(j)

              	
                Schedule
      of Certain Creditors (Payoff
Letter)

              


      

    

     

    
      
         


      

      
        -v-

        
          

        

      

      
         


      

    


    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.


    
      
         


      

      
        -2-

        
          

        

      

      
         


      

    

     

    (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).


    
      
         


      

      
        -5-

        
          

        

      

      
         


      

    

     

    (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.


    
      
         


      

      
        -6-

        
          

        

      

      
         


      

    

     

    (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.


    
      
         


      

      
        -7-

        
          

        

      

      
         


      

    

     

    (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.


    
      
         


      

      
        -8-

        
          

        

      

      
         


      

    

     

    (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.


    
      
         


      

      
        -9-

        
          

        

      

      
         


      

    

     

    (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.


    
      
         


      

      
        -10-

        
          

        

      

      
         


      

    

     

    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:

     

    
      
        
          
            
              
                	
                        Term

                      	 
      	
                        Section Reference

                      
	
                        2009-2010 PARI R&D
Grant

                      	 
      	
                        7.3

                      
	
                        Accounting Firm

                      	 
      	
                        2.10(d)

                      
	
                        Accounting Report

                      	 
      	
                        2.10(a)

                      
	
                        Agreed Adjustments

                      	 
      	
                        2.10(c)

                      
	
                        Agreement

                      	 
      	
                        Preamble

                      
	
                        Appraiser

                      	 
      	
                        2.5(c)

                      
	
                        Assumed Claims

                      	 
      	
                        2.3(b)

                      
	
                        Assumed Liability

                      	 
      	
                        2.3

                      
	
                        Assumed Liabilities

                      	 
      	
                        2.3

                      
	
                        Business Financial
    Statements

                      	 
      	
                        3.5

                      
	
                        Buyer

                      	 
      	
                        Preamble

                      
	
                        Buying Entity

                      	 
      	
                        2.5(c)

                      
	
                        Buying Entities

                      	 
      	
                        2.5(c)

                      
	
                        Buyer Indemnified Parties

                      	 
      	
                        11.1

                      
	
                        Cash Portion

                      	 
      	
                        2.5(a)

                      
	
                        Closing

                      	 
      	
                        2.8(a)

                      
	
                        Closing Date

                      	 
      	
                        2.8(a)

                      
	
                        Collective Bargaining
      Agreements

                      	 
      	
                        3.14(a)

                      
	
                        Confidentiality Agreement

                      	 
      	
                        6.4(a)

                      
	
                        Consent

                      	 
      	
                        3.3(b)

                      
	
                        Dispute Notice

                      	 
      	
                        2.10(b)

                      
	
                        EAR

                      	 
      	
                        3.8(a)

                      
	
                        Effective Time

                      	 
      	
                        2.8(c)

                      
	
                        Escrow Agreement

                      	 
      	
                        Recitals

                      
	
                        Excluded Asset

                      	 
      	
                        2.2

                      
	
                        Excluded Assets

                      	 
      	
                        2.2

                      
	
                        Excluded Liabilities

                      	 
      	
                        2.4

                      
	
                        Excluded Liability

                      	 
      	
                        2.4

                      
	
                        FAR

                      	 
      	
                        3.20(a)

                      
	
                        Financial Schedules Date

                      	 
      	
                        2.1(a)

                      
	
                        Incentives

                      	 
      	
                        3.12(n)

                      
	
                        Indemnified Parties

                      	 
      	
                        11.2

                      
	
                        Indemnity Basket

                      	 
      	
                        11.3(b)

                      
	
                        In-Licenses

                      	 
      	
                        3.18(h)

                      
	
                        IP-Licenses

                      	 
      	
                        3.18(i)

                      
	
                        ITAR

                      	 
      	
                        3.8(a)

                      
	
                        Leased Real Property

                      	 
      	
                        3.15(b)

                      
	
                        Leases

                      	 
      	
                        3.15(b)

                      
	
                        Material Contract

                      	 
      	
                        3.11(a)

                      


              

            

          

        

      

    


    
      
         


      

      
        -11-

        
          

        

      

      
         


      

    

     

    
      
        
          
            
              
                	
                        Term

                      	 
      	
                        Section
      Reference

                      
	
                        Material In-Licenses

                      	 
      	
                        3.18(h)

                      
	
                        Material IP-Licenses

                      	 
      	
                        3.18(i)

                      
	
                        Material Out-Licenses

                      	 
      	
                        3.18(i)

                      
	
                        Montreal Business

                      	 
      	
                        1.1(d)

                      
	
                        Montreal Business Financial
      Statements

                      	 
      	
                        3.5

                      
	
                        Montreal Interim Financial
      Statements

                      	 
      	
                        3.5

                      
	
                        Non-Assignable Asset

                      	 
      	
                        2.9(a)

                      
	
                        Out-Licenses

                      	 
      	
                        3.18(i)

                      
	
                        Potentially Insured Claims

                      	 
      	
                        11.5

                      
	
                        Pre-Closing Taxes

                      	 
      	
                        8.1(a)

                      
	
                        Pre Closing Tax Period

                      	 
      	
                        8.1(a)

                      
	
                        Preliminary Purchase Price
      Allocation

                      	 
      	
                        2.5(c)

                      
	
                        Purchase Price

                      	 
      	
                        2.5(a)

                      
	
                        Related Agreements

                      	 
      	
                        Recitals

                      
	
                        Salem Leased Property

                      	 
      	
                        6.8

                      
	
                        Seller

                      	 
      	
                        Preamble

                      
	
                        Seller Disclosure Schedule

                      	 
      	
                        Article III

                      
	
                        Seller Inventory

                      	 
      	
                        3.24(a)

                      
	
                        Seller Licensee

                      	 
      	
                        3.18(b)

                      
	
                        Seller Registered Intellectual
      Property

                      	 
      	
                        3.18(a)

                      
	
                        Selling Entities

                      	 
      	
                        2.5(c)

                      
	
                        Selling Entity

                      	 
      	
                        2.5(c)

                      
	
                        Seller Indemnified Parties

                      	 
      	
                        11.2

                      
	
                        SOF Business

                      	 
      	
                        1.1(d)

                      
	
                        SOF Business Financial
      Statements

                      	 
      	
                        3.5

                      
	
                        SOF Interim Financial
      Statements

                      	 
      	
                        3.5

                      
	
                        Straddle Period

                      	 
      	
                        8.1(a)

                      
	
                        Termination Date

                      	 
      	
                        10.1(b)

                      
	
                        Third Party Insurance

                      	 
      	
                        11.5

                      
	
                        Transfer Taxes

                      	 
      	
                        2.6

                      
	
                        Transferred Asset

                      	 
      	
                        2.1

                      
	
                        Transferred Assets

                      	 
      	
                        2.1

                      
	
                        Transferred Claims

                      	 
      	
                        2.1(e)

                      
	
                        Transferred Contracts

                      	 
      	
                        2.1(c)

                      
	
                        Transferred Intellectual
      Property

                      	 
      	
                        2.1(b)

                      
	
                        Transferred Permits

                      	 
      	
                        2.1(d)

                      
	
                        Transferred Tangible
    Property

                      	 
      	
                        2.1(a)

                      
	
                        Transition Services
    Agreement

                      	 
      	
                        Recitals

                      
	
                        Visible Lasers

                      	 
      	
                        6.11

                      


              

            

          

        

      

    


    
      
         


      

      
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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”);


    
      
         


      

      
        -13-

        
          

        

      

      
         


      

    

     

    (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:


    
      
         


      

      
        -14-

        
          

        

      

      
         


      

    

    
       

      (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”):


      
        
           


        

        
          -15-

          
            

          

        

        
           


        

      

       

      (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.


      
        
           


        

        
          -25-

          
            

          

        

        
           


        

      

       

      (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 Payoff Letter are paid in full at the Closing,
immediately after the Closing, neither Buyer nor SYC shall have any Indebtedness
of the type described in clauses (i), (ii), (iv) and (vii) in the definition
thereof.

       

      3.7          Absence of Certain
Changes.  Since June 30, 2009, except for actions expressly
contemplated by this Agreement, the Business has been conducted, in all material
respects, in the ordinary course consistent with past practice, and there has
not been or occurred any of the following with respect to the
Business:

       

      (a)         
any event, development, change, circumstance or condition that has had,
individually or in the aggregate, a Business Material Adverse Effect (whether or
not any events, developments, changes, circumstances or conditions occurring
prior to June 30, 2009 caused or contributed to the occurrence of such Business
Material Adverse Effect);


      
        
           


        

        
          -26-

          
            

          

        

        
           


        

      

       

      (b)           any
sale, transfer or other disposition of any of the Transferred Assets, except in
the ordinary course of business consistent with past practice and which are not,
individually or in the aggregate, material to the Business;

       

      (c)           any
damage, destruction or other casualty loss (whether or not covered by insurance)
with respect to any of the Transferred Assets;

       

      (d)           any
change in any method of accounting or accounting principles or practice, or Tax
election, except for any such change required by reason of a change in GAAP or
regulatory accounting principles;

       

      (e)           (i) any
incurrence or assumption of any long-term or short-term debt or issuance of any
debt securities except for short-term debt incurred to fund operations of the
Business in the ordinary course of business consistent with past practice,
(ii) any assumption, guarantee or endorsement of the obligations of any
other Person, (iii) any loan, advance or capital contribution to, or other
investment in, any other Person (other than customary loans or advances to
employees or direct or indirect wholly-owned Subsidiaries of Seller, in each
case in the ordinary course of business consistent with past practice) or
(iv) any mortgage or pledge of any assets, tangible or intangible, or any
creation of any Lien thereupon;

       

      (f)           any
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of any of the Selling
Entities;

       

      (g)           any
payment, discharge or satisfaction of any claim, Lien, obligation or Liability
of the Business, other than (i) Permitted Liens, (ii) the payment,
discharge or satisfaction of claims, Liens, obligations or Liabilities reflected
or reserved against in the Balance Sheet or (iii) in the ordinary course of
business;

       

      (h)           any
disposition of or lapse of any right to the use of any of the Transferred
Intellectual Property, or application therefor or any disposition of, or to
Seller’s Knowledge any disclosure of any Trade Secrets or other confidential
information constituting Transferred Intellectual Property to Persons not bound
by confidentiality obligations;

       

      (i)           the
making of any capital expenditure or commitment in excess of $10,000 for
additions to property, plant, equipment, intangible or capital assets or for any
other purpose, other than for emergency repairs or replacements and other than
commitments that may be canceled by Buyer without fee or penalty or any other
payment with 30 days notice or less;


      
        
           


        

        
          -27-

          
            

          

        

        
           


        

      

       

      (j)       
    any entry related to the Business, into any Collective
Bargaining Agreement, or any experience of any organized slowdown, work
interruption, strike or work stoppage;

       

      (k)           any
granting by Seller or SYC of any increase in compensation or fringe benefits to
any Business Employee, except for normal increases of cash compensation in the
ordinary course of business consistent with past practice (other than to
directors or officers of Seller), or any payment by Seller or SYC of any bonus
to any Business Employee, except for bonuses made in the ordinary course of
business consistent with past practice (other than to directors or officers of
Seller), or any granting by Seller or SYC of any increase in severance or
termination pay to any Business Employee or any entry by Seller or SYC into any
currently effective employment, severance, termination or indemnification
agreement with any Business Employee or any agreement with any Business Employee
the benefits of which are contingent or the terms of which are materially
altered upon the occurrence of the transactions contemplated hereby (other than
offer letters and letter agreements entered into in the ordinary course of
business consistent with past practice with Business Employees who are not
officers and are terminable “at will” without Seller or SYC incurring any
material liability or financial obligation) or any other change in the
compensation or benefits structure applicable to the Business Employees in a
manner that adversely affects in a material respect the cost structure of the
Business;

       

      (l)         
  any other transaction or Material Contract other than in the
ordinary course of business consistent with past practice; or

       

      (m)          any
Contract, whether in writing or otherwise, to take any of the actions identified
in this Section
3.7.

       

      3.8          Compliance with Laws and
Orders. 

       

      (a)           The
Business is being conducted in compliance with all applicable Laws and
Orders.  Seller and SYC, in operating the Business, have complied with
all U.S. export control Laws regarding any export of its products or technology,
including the Export Administration Regulations (“EAR”) maintained by
the U.S. Department of Commerce and the International Traffic in Arms
Regulations (“ITAR”) maintained by
the U.S. Department of State. The Business as currently conducted does not
require any of the Buying Entities to obtain a license from the U.S. Departments
of Commerce or State or an authorized body thereof under ITAR or EAR or other
legislation regulating the development, commercialization or export of
technology.

       

      (b)           Since
January 1, 2003, no Selling Entity has received any written notification, with
respect to the Business, from any Governmental Authority (i) asserting that
it is in material violation of any Law, (ii) threatening to revoke the
Transferred Permits, or (iii) requiring it (A) to enter into or
consent to the issuance of a cease and desist order, consent decree, written
agreement, commitment or memorandum of understanding, or (B) to adopt any
policy, procedure or resolution of its board of directors or similar undertaking
that restricts the conduct of the Business, or (iv) other than disclosed in
filings made by Seller with the SEC under the Exchange Act.


      
        
           


        

        
          -28-

          
            

          

        

        
           


        

      

       

      3.9          Permits. 

       

      (a)           The
Selling Entities have, and are in compliance in all material respects with the
terms of, all Transferred Permits, and no suspension or cancellation of any such
Transferred Permits is pending or, to the Knowledge of Seller,
threatened.

       

      (b)           The
Permits identified on Schedule 2.1(d) are
all of the Permits of Seller and SYC related to the Business and there are no
Permits necessary for the conduct of the Business as currently conducted which
have not been obtained by Seller or SYC.

       

      3.10        Litigation;
Orders. 

       

      (a)           There
is no Legal Proceeding with respect to the Business pending or, to the Knowledge
of Seller, threatened against Seller, SYC or any of their respective properties
that (i) involves an amount in controversy in excess of $10,000,
(ii) seeks material injunctive relief, (iii) seeks to impose any legal
restraint on or prohibition against or limit Seller’s or SYC’s (or, after the
Closing Date, Buyer’s or any of its Subsidiaries’) ability to operate the
Business substantially as it was operated immediately prior to the date of this
Agreement or (iv) would, individually or in the aggregate with all other
pending or threatened Legal Proceedings, have a Business Material Adverse
Effect.

       

      (b)           Neither
Seller nor SYC is subject to any outstanding Order.

       

      3.11        Material
Contracts. 

       

      (a)           For
purposes of this Agreement, a “Material Contract”
shall mean the following Contracts primarily relating to or used in the
Business:

       

      (i)           any
“material contract” (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC, other than those agreements and arrangements described in Item
601(b)(10)(iii));

       

      (ii)          any
employment or consulting Contract providing for an annual base compensation in
excess of $50,000;

       

      (iii)         any
Contract or plan, including any stock option plan, stock appreciation right plan
or stock purchase plan, any of the benefits of which will be increased, or the
vesting of benefits of which will be accelerated, by the consummation of the
transactions contemplated hereby 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;

       

      (iv)         any
Contract providing for indemnification (other than a Contract with a customer,
which is entered into by the Seller or SYC in the ordinary course of its
business and substantially similar to the indemnification provisions set forth
in other Contracts with customers, forms of which have been provided to or made
available to Buyer or any guaranty (in each case, under which Seller or SYC has
continuing obligations as of the date hereof);


      
        
           


        

        
          -29-

          
            

          

        

        
           


        

      

       

      (v)          any
Contract containing any covenant (A) limiting the right of Seller or SYC to
engage in any line of business, to make use of any material technology or to
compete with any Person in any line of business, (B) granting any exclusive
rights, (C) prohibiting Seller or SYC (or, after the Closing Date, Buyer or
any of its Subsidiaries) from engaging in business with any Person or levying a
fine, charge or other payment for doing so or (D) otherwise prohibiting or
limiting the right of Seller or SYC to distribute or offer any products or
services or to purchase or otherwise obtain any software, components, parts or
subassemblies in each case, other than any such Contracts that (x) may be
cancelled without material liability to Seller or SYC (or, after the Closing
Date, to Buyer or any of its Subsidiaries) upon notice of ninety (90) days or
less or (y) are not, individually or in the aggregate, material to the
Business;

       

      (vi)         any
Contract (A) relating to the disposition or acquisition by Seller or SYC
after the date of this Agreement of a material amount of assets or
(B) pursuant to which Seller or SYC will acquire any material ownership
interest in any other Person or other business enterprise other than Seller’s
Subsidiaries;

       

      (vii)        any
dealer, distributor, joint marketing or development Contracts (as measured by
continuing costs to be incurred by, and fees to be paid by, Seller or SYC) to
solely or jointly develop or market any product, technology or service, and
which may not be canceled without material liability to Seller or SYC upon
notice of thirty (30) days or less;

       

      (viii)       any
Material IP License;

       

      (ix)         any
Contract (A) containing any financial penalty for the failure by Seller or
SYC to comply with any support or maintenance obligation or (B) containing
any obligation to provide support or maintenance for Seller Products for any
period in excess of twelve (12) months, other than those obligations that are
terminable by Seller or SYC on no more than thirty (30) days notice without
material liability or financial obligation to Seller or SYC;

       

      (x)          any
Contracts containing any service obligation on the part of Seller or SYC, other
than (A) warranties provided in the ordinary course of business consistent with
past practice and (B) those obligations that are terminable by Seller or SYC on
no more than thirty (30) days notice without material liability or financial
obligation to Seller or SYC;

       

      (xi)         any
Contract authorizing another Person to provide support or maintenance to
customers of the Business, including distributors or resellers that are
obligated to provide such support or maintenance;


      
        
           


        

        
          -30-

          
            

          

        

        
           


        

      

       

      (xii)        any
Contract to license any third party to manufacture or reproduce any Seller
Products or any Contract to sell or distribute any Seller Products, except
(A) agreements with distributors or sales representatives in the ordinary
course of business consistent with past practice or (B) agreements allowing
internal copies made or to be made by end-user customers in the ordinary course
of business consistent with past practice;

       

      (xiii)       any
settlement Contract other than (A) releases immaterial in nature or amount
entered into with former employees or independent contractors of Seller in the
ordinary course of business or (B) settlement agreements for cash only
(which has been paid);

       

      (xiv)       any
Contract which grants any right of first refusal, right of first offer or
similar right with respect to any material assets, rights or
properties;

       

      (xv)        any
Contract which limits the payment of dividends;

       

      (xvi)       any
Contract which relates to a joint venture, partnership, limited liability
company agreement or other similar agreement or arrangement, or to the
formation, creation or operation, management or control of any partnership or
joint venture with any third parties;

       

      (xvii)      any
Contract which relates to an acquisition, divestiture, merger or similar
transaction and which contains representations, covenants, indemnities or other
obligations (including indemnification, “earn-out” or other contingent
obligations) that are still in effect;

       

      (xviii)     any
Contract entered into since December 31, 2008 or prior to such date which
remained unfilled and outstanding with a customer or purchase order from a
Customer, in each case providing for payments from that customer of $100,000 or
more;

       

      (xix)        any
Contract or subcontract still in effect that is subject to FAR;

       

      (xx)         any
other Contract that provides for payment obligations by Seller or SYC of $10,000
or more in any individual case that is not terminable by Seller or SYC (or,
after the Closing Date, by Buyer or any of its Subsidiaries) upon notice of
thirty (30) days or less without material liability to the Business and is not
disclosed pursuant to clauses (i) through (xix) above; and

       

      (xxi)        any
Contract, or group of Contracts with a Person (or group of affiliated Persons),
the termination or breach of which would have or would be reasonably expected to
have a material adverse effect on any material product or service offerings of
Seller or SYC or otherwise have a Business Material Adverse Effect and is not
disclosed pursuant to clauses (i) through (xx) above.


      
        
           


        

        
          -31-

          
            

          

        

        
           


        

      

       

      (b)           Section 3.11(b) of
the Seller Disclosure Schedule contains a complete and accurate list of all
Material Contracts to or by which Seller or SYC is a party or is bound, and
identifies each subsection of Section 3.11(a) that
describes such Material Contract.  True, correct and complete copies
of all of the Contracts identified on the Seller Disclosure Schedule and all
standard terms and conditions of purchase for customer purchase orders have been
made available to Buyer and its counsel prior to the date
hereof.  There are no Contracts between Seller and/or SYC on the one
hand, and any of Seller’s other Subsidiaries, on the other hand, related to the
Business.

       

      (c)           Each
Material Contract is valid and binding on Seller (and/or each such Subsidiary of
Seller party thereto) and is in full force and effect, and neither Seller nor
SYC, nor, to the Knowledge of Seller, any other party thereto, is in breach of,
or default under, any such Material Contract, and no event has occurred that
with notice or lapse of time or both would constitute such a breach or default
thereunder by Seller or SYC, or, to the Knowledge of Seller, any other party
thereto.

       

      3.12        Taxes. 

       

      (a)           All
material Tax Returns required by applicable Laws to be filed by or on behalf of
Seller and SYC have been filed in accordance with all applicable Laws, and all
such Tax Returns are true, correct and complete in all material
respects.

       

      (b)           Seller
and SYC have paid (or have had paid on its behalf) or has withheld and remitted
to the appropriate Governmental Authority all Taxes (including income Taxes,
withholding Taxes and estimated Taxes) due and payable without regard to whether
such Taxes have been assessed or has established in accordance with GAAP an
adequate accrual for all Taxes (including Taxes that are not yet due or payable)
through the end of the last period for which Seller and SYC ordinarily record
items on their respective books, and regardless of whether the liability for
such Taxes is disputed.  Seller has made available to Buyer complete
and accurate copies of all income, franchise, and foreign Tax Returns of Seller
and SYC and any amendments thereto, filed by or on behalf of Seller or SYC or
any member of a group of corporations including Seller or SYC for the taxable
years ending 2001 through 2008.

       

      (c)           There
are no Liens on the assets of Seller or SYC relating or attributable to Taxes,
other than (i) Liens for Taxes which are not yet delinquent, or (ii) Liens for
Taxes disclosed on Section 3.12(c) of
the Seller Disclosure Schedule 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.

       

      (d)           To
the extent applicable to the Transferred Assets or the Buyer’s ownership of the
Transferred Assets or operation of the Business, neither Seller nor SYC have
been delinquent in the payment of any Tax, nor is there any Tax deficiency
outstanding, assessed or proposed against Seller or SYC.


      
        
           


        

        
          -32-

          
            

          

        

        
           


        

      

       

      (e)           As
of the date of this Agreement, there are no Legal Proceedings now pending, or to
the Knowledge of Seller, threatened against or with respect to Seller or SYC
with respect to any Tax, and none of Seller or SYC knows of any audit or
investigation with respect to any Liability of Seller or SYC for Taxes, and
there are no agreements in effect to extend the period of limitations for the
assessment or collection of any Tax for which Seller or SYC may be
liable.

       

      (f)           Seller
and SYC have not executed any closing agreement pursuant to Section 7121 of
the Code or any predecessor provision thereof, or any similar Laws.

       

      (g)           Each
of Seller and SYC has disclosed on its Tax Returns all positions taken therein
that could give rise to a substantial understatement of federal income Tax
within the meaning of Section 6662 of the Code or any similar
Laws.

       

      (h)           Neither
Seller nor SYC have (i) ever been a party to a Contract or inter-company
account system in existence under which Seller or SYC has, or may at any time in
the future have, an obligation to contribute to the payment of any portion of a
Tax (or pay any amount calculated with reference to any portion of a Tax) of any
group of corporations of which Seller or SYC is or was a part (other than a
group the common Buyer of which is Seller) and (ii) any Liability for Taxes
of any Person (other than Seller or SYC) under Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign Law)
as a transferee or successor, by contract or otherwise.

       

      (i)           No
written claim has been made during the past five (5) years by any appropriate
Governmental Authority in a jurisdiction where neither Seller nor SYC filed Tax
Returns that it is or may be subject to any taxation by that
jurisdiction.

       

      (j)           Neither
Seller nor SYC has participated or engaged in transactions that constitute
“reportable transactions” as such term is defined in Treasury Regulations
Section 1.6011-4(b)(1) (other than such transactions that have been
properly reported or are not yet required to have been reported), or
transactions that constitute “listed transactions” as such term is defined in
Treasury Regulations Section 1.6011-4(b)(2).

       

      (k)           Neither
Seller nor SYC has agreed or is required to make any adjustments pursuant to
Section 481(a) of the Code or any similar Laws by reason of a change in
accounting method initiated by it or any other relevant party and neither Seller
nor SYC has any Knowledge that the appropriate Governmental Authority has
proposed any such adjustment or change in accounting method, nor is any
application pending with any appropriate Governmental Authority requesting
permission for any changes in accounting methods that relate to the business or
assets of Seller or SYC.

       

      (l)           Seller
and SYC will not be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of (i) any installment
sale or open transaction disposition made on or prior to the Closing Date or
(ii) any prepaid amount received on or prior to the Closing
Date.


      
        
           


        

        
          -33-

          
            

          

        

        
           


        

      

       

      (m)           Seller
and SYC have delivered or made available to Buyer complete and accurate copies
of all letter rulings, technical advice memoranda, and similar documents issued
since January 1, 1996, by a Governmental Authority relating to federal, state,
local or foreign Taxes due from or with respect to Seller or
SYC.  Seller will deliver to Buyer all materials with respect to the
foregoing for all matters arising after the date hereof through the Closing
Date.

       

      (n)           Section 3.12(n) of
the Seller Disclosure Schedule contains a complete and accurate list of each
jurisdiction in which Seller or SYC benefits from (i) exemptions from
taxation, Tax holidays, reduction in Tax rate or similar Tax reliefs and
(ii) other financial grants, subsidies or similar incentives granted by a
Governmental Authority, whether or not relating to Taxes (together with the Tax
incentives described in subclause (i), the “Incentives”) and
describes the details of such Incentives.  Seller and SYC are in full
compliance with all terms and conditions of any agreement or Order relating to
such Incentives in such jurisdictions where such Incentives are available, and
have received no written notice from any Governmental Authority claiming that
such Incentives were not, or will not in the future, be available.

       

      (o)           None
of the assets of Seller or SYC is treated as “tax exempt use property,” within
the meaning of Section 168(h) of the Code.

       

      (p)           Section 3.12(p) of
the Seller Disclosure Schedule contains a complete and accurate list of each
Subsidiary for which an election has been made pursuant to Section 7701 of
the Code and the Treasury regulations thereunder to be treated other than its
default classification for U.S. Federal income tax purposes.  Except
as disclosed on such Section, each Subsidiary will be classified for U.S.
Federal income tax purposes according to its default
classification.

       

      (q)           During
the two-year period ending on the date of this Agreement, neither Seller nor SYC
was a distributing corporation or a controlled corporation in a transaction
intended to be governed by Section 355 of the Code.

       

      3.13        Employee
Benefits. 

       

      (a)           Neither
Seller nor SYC nor any of their respective ERISA Affiliates has ever maintained,
participated in or contributed to (or been obligated to contribute to (i) a
Seller Employee Benefits Plan which was ever subject to Section 412 of the Code
or Title IV of ERISA, (ii) a “multiemployer plan” (as defined in Section
4001(a)(3) of ERISA), (iii) a “multiple employer plan” as defined in ERISA or
the Code, or (iv) a “funded welfare plan” within the meaning of Section 419 of
the Code.  No Seller Employee Benefits Plan is funded by, associated
with or related to a “voluntary employee’s beneficiary association” within the
meaning of Section 501(c)(9) of the Code.

       

      (b)           Each
Seller Employee Benefit Plan that is intended to be “qualified” under Section
401 of the Code has been maintained, operated and administered in compliance in
all material respects with its terms and with all applicable Laws and Collective
Bargaining Agreements, including the applicable provisions of ERISA, the Code
and the codes of practice issued by any Governmental Authority.  All
Seller Employee Benefit Plans have been made available to
Buyer.


      
        
           


        

        
          -34-

          
            

          

        

        
           


        

      

    

     

    (c)          To
the Knowledge of Seller, no event has occurred and there currently exists no
condition or set of circumstances in connection with which Seller or SYC could
be subject to any material liability under the terms of ERISA, the Code or codes
of practice issued by any Governmental Authority, Collective Bargaining
Agreement or any other applicable Laws.

     

    (d)          Neither
Seller nor any ERISA Affiliate has ever represented, promised or contracted
(whether in oral or written form) to any employee of Seller or its ERISA
Affiliates (either individually or to employees as a group) or any other person
that such employee(s) or other person would be provided with post-termination
benefits, except to the extent required by applicable Laws.

     

    (e)          Each
Seller Employee Benefit Plan that is intended to be “qualified” under Section
401 of the Code has received a favorable determination letter from the IRS to
such effect and, to the Knowledge of Seller, no fact, circumstance or event has
occurred or exists since the date of such determination letter that would
reasonably be expected to materially and adversely affect the qualified status
of any such plan.

     

    (f)          All
contributions, premiums and other payments required to be made with respect to
any Seller Employee Benefit Plan have been timely made, accrued or reserved for
in all material respects.

     

    (g)          The
country of citizenship of all of the Business Employees is listed on Section 3.13(g) of the Seller
Disclosure Schedule.

     

    (h)          Section 3.13(h) of the Seller
Disclosure Schedule lists each “disqualified individual” (as defined in Section
280G of the Code).  No payment or benefit which will or may be made by
Seller or its ERISA Affiliates with respect to any Transferred Employee who is a
disqualified individual will be characterized as a “parachute payment,” within
the meaning of Section 280G(b)(2) of the Code.  There is no contract,
agreement, plan or arrangement to which Seller or any ERISA Affiliate is a party
or by which it is bound to compensate any Transferred Employee who is a
disqualified individual for excise taxes which may be required pursuant to
Section 4999 of the Code.

     

    3.14           Labor
Matters.

     

    (a)          No
Selling Entity, with respect to the Business, is a party to any Contract or
arrangement between or applying to, one or more employees and a trade union,
works council, group of employees or any other employee representative body, for
collective bargaining or other negotiating or consultation purposes or
reflecting the outcome of such collective bargaining or negotiation or
consultation with respect to their respective employees with any labor
organization, union, group, association, works council or other employee
representative body, or is bound by any equivalent national or sectoral
agreement (“Collective
Bargaining Agreements”).  To the Knowledge of Seller, there are
no activities or proceedings by any labor organization, union, group or
association or representative thereof to organize any such
employees.  There are no lockouts, strikes, slowdowns, work stoppages
or, to the Knowledge of Seller, threats thereof by or with respect to any
Business Employees which would be material nor have there been any such
lockouts, strikes, slowdowns or work stoppages since December 31,
2004.  Seller and SYC are not, nor have they been since
December 31, 2004, a party to any redundancy agreements (including social
plans or job protection plans) with respect to the Business.


    
      
         


      

      
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    (b)          Seller
and SYC (i) have complied in all material respects with applicable Laws and
Orders relating to the employment of labor (including wage and hour Laws, Laws
prohibiting discrimination in employment and Laws relating to employee
notification and consultation, terms and conditions of employment practices,
including orders and awards relevant to the terms and conditions of service,
labor leasing, use of fixed-term contracts, supply of temporary staff, correctly
classifying independent contractors as contractors rather than employees, social
security filings and payments, secondment and expatriation rules, applicable
requirements in respect of staff representation, paid vacations and health and
safety at work of employees) in the conduct of the Business and Collective
Bargaining Agreements in connection with the Business and (ii) are not
liable for any arrears of wages or any taxes or any penalty for a failure to
comply with the foregoing.  Seller and SYC are not liable to any
Governmental Authority or fund governed or maintained by or on behalf of any
Governmental Authority for any material payment with respect to any social
security or other benefits or obligations for employees of the Business (save
for routine payments to be made in the ordinary course of business and
consistent with past practice).

     

    3.15           Real
Property.

     

    (a)          Neither
of Seller nor SYC owns any real property or have any right or option to own any
real property.  Neither Seller nor SYC has received any written notice
from any insurance company of any defects or inadequacies in any Leased Real
Property, or any part thereof which could adversely affect the insurability of
such property or the premiums for the insurance thereof, nor to the Knowledge of
Seller has any written notice been given by any insurer of any such property
requesting the performance of any repairs, alterations or other work with which
compliance has not been made. The Seller or SYC currently occupy all of the
Leased Real Property for the operation of the Business, and there are no other
parties occupying, or with a right to occupy, the Leased Real
Property.  The Montreal Subleased Property and the Salem Leased
Property is in good operating condition and repair and is suitable for the
conduct of the Business as it is presently conducted therein. There are no
pending, or, to the Knowledge of Seller, threatened, condemnation or eminent
domain actions or proceedings, or any special assessments or other activities of
any public or quasi-public body that are reasonably likely to have a Business
Material Adverse Effect.


    
      
         


      

      
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    (b)          Section 3.15(b)(i) of the Seller
Disclosure Schedule contains a complete and accurate list of all of the existing
material leases, subleases or other agreements (collectively, the “Leases”) under which
Seller or SYC uses or occupies or has the right to use or occupy, now or in the
future, any real property in connection with the Business or the Transferred
Assets (such property, the “Leased Real
Property”) including, with respect to each Lease, the name of the lessor
and the date of the Lease and each amendment thereto.  Seller has
heretofore made available to Buyer true, correct and complete copies of all
Leases (including all modifications, amendments, supplements, waivers,
guarantees thereof and side letters thereto).  Seller and/or SYC have
and own valid leasehold estates in the Leased Real Property, free and clear of
all Liens other than Permitted Liens.  Section 3.15(b)(ii) of the Seller
Disclosure Schedule contains a complete and accurate list of all of the existing
Leases granting to any Person, other than Seller or SYC, any right to use or
occupy, now or in the future, any of the Leased Real Property.  The
Leases are each in full force and effect in accordance with their respective
terms (except as such enforceability may be subject to Laws of general
application relating to bankruptcy, insolvency, and the relief of debtors and
rules of law governing specific performance, injunctive relief, or other
equitable remedies) and neither Seller nor SYC is in material breach of or
default under, or has received written notice of any material breach of or
default under, any material Lease, and, to the Knowledge of Seller, no event has
occurred that with notice or lapse of time or both would constitute a material
breach or default thereunder by Seller or SYC or any other party
thereto.  To Seller’s Knowledge, (i) there are no Laws, statutes,
rules, regulations or orders now in existence or under active consideration by
any Governmental Authority which could require the tenant of any Leased Real
Property to make any expenditure to modify or improve such Leased Real Property
to bring it into compliance therewith, and (ii) Seller shall not be
required to expend more than $10,000 in the aggregate under all Leases to
restore the Leased Real Property at the end of the term of the applicable Lease
to the condition required under the Lease (assuming the conditions existing in
such Leased Real Property as of the date hereof and as of the
Closing).

     

    (c)          The
transactions contemplated in this Agreement and the Closing hereunder will not
(i) require the consent of, or notice to any party under any Lease,
(ii) trigger any right of termination, recapture or permit the modification
of any right or obligation under any Lease, or (iii) otherwise cause Seller
or any Subsidiary to incur any material cost or expense in connection with any
Lease.  None of the Leases contain any provision requiring Seller or
SYC to continuously operate its business throughout the term of any such
Lease.


    
      
         


      

      
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    3.16           Environmental
Matters.  Neither Seller nor SYC in connection with the Business or
any of the Transferred Assets: (i) have received any written notice or
other communication of any alleged material claim, material violation of or
material liability under any Environmental Law which has not heretofore been
cured or for which there is any remaining material liability; (ii) have
disposed of, emitted, discharged, handled, stored, transported, used or released
any Hazardous Substances, distributed, sold or otherwise placed on the market
Hazardous Substances or any product containing Hazardous Substances, arranged
for the disposal, discharge, storage or release of any Hazardous Substances, or
exposed any employee or other individual to any Hazardous Substances so as to
give rise to any material liability or corrective or remedial obligation under
any Environmental Laws; (iii) have entered into any agreement that may
require it to guarantee, reimburse, pledge, defend, hold harmless or indemnify
any other party with respect to material liabilities arising out of
Environmental Laws or the Hazardous Materials Activities of Seller or SYC; or
(iv) have any Knowledge of any fact or circumstance that could involve
Seller or SYC in any environmental litigation or impose upon Seller or SYC any
material environmental liability.  Seller and SYC have delivered to
Buyer or made available for inspection by Buyer and its agents, representatives
and employees all material records in Seller’s and SYC’s possession concerning
the Hazardous Materials Activities of Seller and all environmental audits and
environmental assessments of any facility owned, leased or used at any time by
Seller or SYC conducted at the request of, or otherwise in the possession of
Seller or SYC.  There are no Hazardous Substances in, on, or under any
properties owned, leased or used at any time by Seller or SYC in connection with
the Business or the Transferred Assets such as could give rise to any material
liability or material corrective or remedial obligation of Seller or SYC under
any Environmental Laws.  Seller and SYC have been and are in
compliance in all material respects with all Environmental
Laws.  Seller and SYC have reviewed their obligations with respect to
the WEEE Directive and the REACH Directive and do not anticipate any material
liability related to compliance with these directives.  Section 3.16 of the Seller
Disclosure Schedule lists all Seller Products which are subject to the RoHS
Directive and China RoHS and identifies the process by which Seller and SYC have
determined that their products are in compliance with the RoHS Directive and
China RoHS.

     

    3.17           Sufficiency of Transferred
Assets; Title to Transferred Assets. 

     

    (a)          The
Transferred Assets and any rights or licenses granted or services provided
pursuant to any of the Related Agreements entered into pursuant to this
Agreement, constitute all of the rights, services, properties and assets (real,
personal and mixed, tangible and intangible) used in or necessary to conduct the
Business after the Closing as currently conducted.

     

    (b)          Each
Selling Entity has good and valid title or a valid leasehold interest in all of
the Transferred Assets held by such party, and none of the Transferred Assets is
subject to any Lien of any kind, except for Permitted Liens.  Upon the
Closing, the Selling Entities will convey to the Buying Entities good and valid
title to all Transferred Assets free and clear of Liens, other than Permitted
Liens.

     

    3.18           Intellectual
Property.

     

    (a)          Section 3.18(a) of the Seller
Disclosure Schedule sets forth as of the date hereof a true, complete and
correct list of all Registered Intellectual Property that is Transferred
Intellectual Property (collectively the “Seller Registered
Intellectual Property”).  Each item of Seller Registered
Intellectual Property is valid, enforceable and subsisting and has not expired
or been cancelled, or abandoned.  The Transferred Intellectual
Property includes all Seller Intellectual Property (i) that is related to the
Business or (ii) that, if not acquired by Buyer hereunder, would be infringed by
the conduct of the Business after the Closing.


    
      
         


      

      
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    (b)          Section 3.18(b) of the Seller
Disclosure Schedule lists each third party that is conducting any material
business or activities related to the Business under a Trademark or brand name
owned by, or licensed by, Seller or any Seller Subsidiary (each such entity a
“Seller
Licensee”).

     

    (c)          All
Transferred Intellectual Property is free and clear of any
Liens.  Neither Seller nor any of its Subsidiaries has transferred
ownership of, in whole or in part, or granted an exclusive license to, any third
party, of any Intellectual Property Rights that are, were or should be
Transferred Intellectual Property.

     

    (d)          Seller
and SYC have taken all reasonable steps to protect both (i) their
confidential information and Trade Secrets of the Business that they wish to, or
are required to, protect as such and (ii) any Trade Secrets, personal,
private or confidential information of any third parties provided to Seller or
SYC, or to which Seller or SYC has access in connection with the
Business.  Without limiting the foregoing, Seller and SYC have and
enforce a policy requiring each employee and contractor having access to
proprietary information or confidential information to execute a proprietary
information/confidentiality agreement, and all current and former employees and
contractors of Seller who have contributed to the development of Transferred
Intellectual Property have executed such an agreement.  There has been
no unauthorized disclosure by Seller, or SYC or to Seller’s Knowledge any Seller
Licensee, of any Trade Secrets, personal, private or confidential information,
of any third parties provided to any of them, or to which any of them has access
in connection with the Business.

     

    (e)          There
is no pending or, to Seller’s Knowledge, threatened (and at no time within the
three (3) years prior to the date of this Agreement has there been pending any)
Legal Proceeding before any Governmental Authority in any
jurisdiction alleging that (i) any activities, products, services or
conduct of the Business by Seller or SYC infringes, violates or constitutes the
unauthorized use of the Intellectual Property Rights of any third party, or
(ii) challenging the ownership, validity, enforceability or registerability
of any Transferred Intellectual Property or (iii) the activities, products,
services or conduct of a third party infringes, violates or constitutes the
unauthorized use of Transferred Intellectual Property.  Seller is not
party to any settlements, covenants not to sue, consents, decrees, stipulations,
judgments, or Orders resulting from Legal Proceedings which (i) restrict
Seller’s or SYC’s rights to use, license or transfer any Transferred
Intellectual Property, or (ii) restrict the conduct of the Business by
Seller or SYC in order to accommodate any third party’s Intellectual Property
Rights, or (iii) compel or require Seller or SYC to license or transfer any
Transferred Intellectual Property.  Neither Seller nor SYC has
received any notice from any third party that the operation of the Business by
Seller or SYC, or any act, product or service of Seller or SYC related to the
Business, infringes or misappropriates the Intellectual Property Rights of any
third party or constitutes unfair competition or trade practices under the Laws
of any jurisdiction.

     

    (f)          None
of the products, services or operations of the Business infringe upon, violate
or constitute the unauthorized use of any Intellectual Property Rights owned by
any third party or constitute unfair competition or trade practices under the
Laws of any jurisdiction.


    
      
         


      

      
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    (g)          Neither
Seller nor SYC has (i) granted, or is obligated to grant, access or rights
to any third party to Source Code that is material to the Business or
(ii) has distributed or is required to distribute any Source Code that is
material to the Business pursuant to an Open Source License.

     

    (h)          Section 3.18(h) of the Seller
Disclosure Schedule lists all Contracts pursuant to which a third party has
licensed to Seller or SYC any Intellectual Property Right that are related to
the operation of the Business (“In-Licenses”), other
than licenses for off-the-shelf software or other technology for an aggregate
fee of less than $5,000 per year or that are not otherwise material to the
Business (as required to be listed, the “Material
In-Licenses”).

     

    (i)          Section 3.18(i) of the Seller
Disclosure Schedule lists all Contracts pursuant to which Seller or SYC has
granted a third party any rights or licenses to any Transferred Intellectual
Property (“Out-Licenses”;
together with the In-Licenses, the “IP Licenses”) other
than non-exclusive licenses granted in the ordinary course (as required to be
listed, the “Material
Out-Licenses”; together with the Material In-Licenses, the “Material IP
Licenses”).

     

    (j)          Neither
this Agreement nor the transactions contemplated by this Agreement or the
Related Agreements, including any assignment to Buyer by operation of law as a
result of the transactions contemplated hereby or thereby of any Contracts to
which Seller or SYC is a party, will result in: (i) Buyer or any of its
Subsidiaries granting to any third party any right to or with respect to any
material Intellectual Property Rights owned by, or licensed to, Buyer or any of
its Subsidiaries prior to the Closing, or (ii) Buyer or any of its
Subsidiaries being bound by, or subject to, any non-compete or other material
restriction on the operation or scope of their respective businesses, or
(iii) the loss of any material rights or licenses to Seller or SYC under
any IP License or the granting to any third party of any material additional
rights not previously granted to the Transferred Intellectual Property, or (iv)
Buyer or any of its Subsidiaries being obligated to pay any royalties or other
material amounts, or offer any discounts, to any third party in excess of those
payable by, or required to be offered by, any of them, respectively, in the
absence of this Agreement or the transactions contemplated hereby.

     

    (k)          Any
collection, acquisition, use, storage, retention, transfer, distribution or
dissemination by Seller or SYC, or any Seller Licensee in connection with the
Business of any personally identifiable information or confidential information
of any third parties has been in compliance with all applicable Laws (including
all Laws of the U.S. and the E.U.) and Seller’s, SYC’s, and each Seller
Licensee’s privacy policies (including those privacy policies relating to (i)
the privacy of users of their products and services and all Internet websites
owned, maintained or operated by Seller or SYC or any Seller Licensees, and (ii)
the collection, acquisition, use, storage, retention, transfer, distribution or
dissemination of any personally identifiable information confidential
information of third parties collected by Seller or SYC), or by third parties
having authorized access to the records of Seller or SYC.  The
execution, delivery and performance of this Agreement complies with all
applicable Laws relating to privacy and the collection, acquisition, use,
storage, transfer, distribution or dissemination of personal information and
confidential information and with Seller’s, each of its Subsidiary’s and each
Seller Licensee’s privacy policies related to the Business.


    
      
         


      

      
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    3.19           Insurance.  The
Selling Entities have all material policies of insurance covering the Business,
the Business Employees and the Transferred Assets, including policies of
property, fire, workers’ compensation, products liability, directors’ and
officers’ liability and other casualty and liability insurance, which Seller
reasonably believes is adequate for the operation of the
Business.  All such insurance policies are in full force and effect,
no notice of cancellation has been received, and there is no existing default or
event which, with the giving of notice or lapse of time or both, would
constitute a default, by any insured thereunder.  There is no material
claim pending under any of such policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies and there
has been no threatened termination of, or material premium increase with respect
to, any such policies.

     

    3.20           Government
Contracts. 

     

    (a)          Neither
Seller nor SYC is currently in, and the execution and delivery of this Agreement
by Seller and the consummation of the transactions by the Selling Entities will
not result in, any material violation, breach or default of any term or
provision or trigger automatic or optional termination of (i) any Contract
with any Governmental Entity, (ii) any material subcontract issued at any
tier under a prime contract with any Governmental Entity, or (iii) any
material bid, proposal, offer or quotation relating to a Contract with any
Governmental Entity or a subcontract issued under a Contract with any
Governmental Entity. Neither Seller nor SYC is in any violation, breach or
default of any provision of any federal order, statute, rule or regulation
(including the Federal Acquisition Regulation (“FAR”), agency
supplements to the FAR, the Arms Export Control Act (22 U.S.C. 277 et seq.), and agency
export regulations) or any similar state or federal Law governing any Contract,
subcontract, bid, or proposal with any Governmental Entity, as applicable.
Neither Seller nor SYC has received a cure notice, a show cause notice or a stop
work notice, nor has Seller or SYC been threatened with termination for default
under any Contract or subcontract with any Governmental Entity. No request for
equitable adjustment by any of its vendors, suppliers or subcontractors against
Seller or SYC relating to Contracts or subcontracts involving any Governmental
Entity exists.

     

    (b)          There
is not pending, and neither Seller nor SYC has received written notice of, any
material claim by a Governmental Entity against Seller or SYC for any of the
following: (i) defective pricing, (ii) FAR and/or CAS noncompliance,
(iii) fraud, (iv) false claims or false statements,
(v) unallowable costs as defined in the FAR at Part 31, including those
that may be included in indirect cost claims for prior years that have not yet
been finally agreed to by the Governmental Entity, or (vi) any other
monetary claims relating to the performance or administration by Seller or any
Subsidiary of Contracts or subcontracts for any Governmental
Entity. 


    
      
         


      

      
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    (c)          Neither
Seller nor SYC has been suspended or debarred from bidding on contracts or
subcontracts with any Governmental Entity in connection with the conduct of its
business; no such suspension or debarment has been initiated or threatened.
There is no ongoing investigation, audit, prosecution, civil or administrative
proceeding or settlement negotiation by any Governmental Entity relating to the
Contracts or subcontracts with any Governmental Entity or the violation of any
federal, state or local order, statute, rule, or regulation relating to
Contracts with any Governmental Entity, subcontracts, or export
controls. 

     

    (d)          No
Governmental Entity has any rights with respect to any technical data or
computer software of Seller and SYC related to the Business. 

     

    (e)          The
Business Employees collectively hold all security clearances necessary for the
operation of their business as presently conducted in all material
respects. 

     

    (f)          Neither
Seller, SYC nor any subsidiary or affiliate thereof has received or accepted on
or prior to the Closing Date any money, funds, credit, or the like pursuant to
the 2009-2010 PARI R&D Grant.

     

    3.21           Brokers.  There
is no investment banker, broker, finder, agent or other Person that has been
retained by or is authorized to act on behalf of Seller or SYC who is entitled
to any financial advisor’s, brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement for which any of
Buyer or any of the Buying Entities could be liable.

     

    3.22           State Anti-Takeover
Statutes.  Subject to the accuracy of Buyer’s representation and
warranty in Section
4.5 of
this Agreement, the Seller Board has taken all necessary actions so that any
restrictions on business combinations set forth in the MBCA and any other
similar applicable statutory Law of the Commonwealth of Massachusetts are not
applicable to this Agreement and the transactions contemplated
hereby.

     

    3.23           Solvency.  As of
the Closing and immediately after giving effect to all of the transactions
contemplated by this Agreement, (a) the amount of the “fair saleable value” of
the assets of each of the Selling Entities will exceed (i) the value of all
Liabilities of such Selling Entity, including contingent and other liabilities
as of such date, and (ii) without duplication of liability in clause (i), the
amount that will be required to pay the probable Liabilities of such Selling
Entity on its existing debts (including contingent liabilities) as such debts
become absolute and matured, (b) each of the Selling Entities will not have, as
of such date, an unreasonably small amount of capital for the operation of the
businesses in which it is engaged or proposed to be engaged following the
Closing Date, and (c) each of the Selling Entities will be able to pay its
Liabilities, including contingent and other liabilities, as they
mature.  For purposes of the foregoing, terms shall be generally
defined in accordance with the applicable federal Laws governing determinations
of the solvency of debtors.


    
      
         


      

      
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    3.24           Inventory and Product
Warranties. 

     

    (a)          Section 3.24(a) of the Seller
Disclosure Schedule contains a complete and accurate listing of the types and
quantities of inventory for the Seller Products as of June 30, 2009 (the “Seller Inventory”),
and the valuation of such Seller Inventory at net book value based on the lower
of Seller’s cost or market as determined in accordance with GAAP consistent with
Seller’s past practices.

     

    (b)          All
Seller Inventory, as of June 30, 2009 and as of the Effective Time, was and is
located at the locations indicated in Section 3.24(b) of the Seller
Disclosure Schedule.  No Seller Inventory, as of June 30, 2009 and as
of the Effective Time, was and is located at any location other than the
locations indicated in Section 3.24(b) of the Seller
Disclosure Schedule.  None of the Seller Inventory is held by any
Person on consignment.

     

    (c)          The
Seller Inventory consists only of items of a quality and quantities useable and
saleable in the ordinary course of business, and there are no obsolete or
damaged items in the Seller Inventory.

     

    (d)          Section 3.24(d) of the Seller
Disclosure Schedule describes Seller’s standard warranties given with respect to
Seller Products.  Other than the standard warranties set forth in said
Section 3.24(d) of the Seller
Disclosure Schedule, Seller has no material warranty obligations with respect to
any of the Seller Products.  There are no threatened claims and, to
the knowledge of Seller, no facts or circumstances presently exist upon or with
respect to which a substantial number of claims could be based against Seller
for any Seller Products which are defective or otherwise fail to meet any of
Seller’s warranties.

     

    (e)          All
Seller Inventory is free and clear of all Liens, other than Permitted Liens, and
at the Closing shall be free and clear of all Liens and available for pick up by
common carrier within thirty (30) days after the Closing Date without any
storage costs or other charges to Buyer.

     

    3.25           Disclosure. 
None of the representations or warranties of Seller contained herein, none of
the information contained in the Schedules referred to in the Seller Disclosure
Schedule or other Schedules provided hereunder, and none of the other written
information or documents furnished or to be furnished to Buyer by Seller in
connection with or pursuant to the terms of this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact herein or therein necessary in order to make the statements
contained herein or therein not misleading.

     

    
      
        
        

      

      
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    ARTICLE IV

    REPRESENTATIONS
AND WARRANTIES OF BUYER

     

    Buyer
hereby represents and warrants to Seller and SYC as follows:

     

    4.1           Organization. 
Buyer is duly organized, validly existing and in good standing under the Laws of
the State of Delaware and has the requisite corporate power and authority to
conduct its business as it is presently being conducted and to own, lease or
operate its properties and assets.  Buyer 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, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Buyer Material
Adverse Effect.

     

    4.2           Authorization; Board
Approval. 

     

    (a)          Buyer
has all requisite corporate power and authority to execute and deliver this
Agreement and the Related Agreements to which it is or will be a party and to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder.  The execution and delivery of
this Agreement and the Related Agreements to which Buyer is a party by Buyer and
the consummation by Buyer of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
Buyer, and no other corporate or other action other proceeding on the part of
Buyer is necessary to authorize 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 Buyer and, assuming the due
authorization, execution and delivery by Seller, constitutes a legal, valid and
binding obligation of Buyer, enforceable against it in accordance with its
terms, except that such enforceability (i) may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar Laws
affecting or relating to creditors’ rights generally, and (ii) is subject
to general principles of equity.

     

    (b)          At
a meeting duly called and held on October 7, 2009, the Buyer Board approved this
Agreement and the transactions contemplated hereby.

     

    4.3           Non-contravention; Required
Consents. 

     

    (a)          The
execution, delivery or performance by Buyer of this Agreement, the consummation
by Buyer of the transactions contemplated hereby and the compliance by Buyer
with any of the terms hereof do not and will not (i) violate or conflict
with any provision of the certificates of incorporation or bylaws of Buyer or
(ii) 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 of
the terms, conditions or provisions of any Contract to which Buyer is a party or
by which Buyer or any of its properties or assets may be bound except in the
case of clause (ii) above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or Liens which would not, individually or in the
aggregate, have a Buyer Material Adverse Effect.


    
      
         


      

      
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      (b)          No
Consent of any Governmental Authority is required on the part of Buyer or any of
its Affiliates in connection with the execution, delivery and performance by
Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby, except as would not have a Buyer Material Adverse
Effect.

       

      4.4           Litigation. 
There are no Legal Proceedings pending or, to the knowledge of Buyer, threatened
against or affecting Buyer or any of its properties except for Legal Proceedings
that would not, individually or in the aggregate, have a Buyer Material Adverse
Effect.  Buyer is not subject to any outstanding Order, except for
Orders that would not, individually or in the aggregate with all other such
Orders, have a Buyer Material Adverse Effect.

       

      4.5           Ownership of
Securities. 
None of Buyer, its Subsidiaries, Associates or Affiliates owns or controls,
beneficially or of record, any Equity Interests of the Seller and none of Buyer,
its Subsidiaries, or current Associates or Affiliates has owned or controlled,
beneficially or of record any Equity Interests of Seller in the three years
prior to the date of this Agreement.

       

      ARTICLE V

      INTERIM
CONDUCT OF BUSINESS

       

      5.1           Affirmative Obligations of
Seller. 
Except (a) as expressly contemplated or permitted by this Agreement,
(b) as set forth in Section 5.1 of the
Seller Disclosure Schedule, or (c) as approved in advance by Buyer in
writing, at all times during the period commencing with the execution and
delivery of this Agreement and continuing until the earlier to occur of the
termination of this Agreement pursuant to Article X and
the Effective Time, Seller and SYC engaged in the Business shall (i) carry
on the 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 the debts and Taxes relating to the Business when due, in each
case subject to good faith disputes over such debts or Taxes, (iii) pay or
perform all material obligations relating to the Business when due and
(iv) use reasonable best efforts, consistent with past practices and
policies, to (A) preserve intact the present business organization of
Seller and SYC related to Business, (B) keep available the services of the
present officers and employees engaged in the Business and (C) preserve the
relationships with customers, suppliers, distributors, licensors and licensees
of Seller and SYC related to the Business and others which have significant
business dealings with Seller and SYC related to the Business.


      
        
          
          

           


        

        
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      5.2           Negative Obligations of
Seller. 
Except (i) as expressly contemplated or permitted by this Agreement,
(ii) as set forth in Section 5.2 of the
Seller Disclosure Schedule or (iii) as approved in advance by Buyer in
writing, at all times during the period commencing with the execution and
delivery of this Agreement and continuing until the earlier to occur of the
termination of this Agreement pursuant to Article X and
the Effective Time, Seller shall not (with respect to the Business), and shall
not permit any other Selling Entity (with respect to the Business) to, do any of
the following:

       

      (a)          propose
or adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of any of
the Selling Entities;

       

      (b)          (i)
incur or assume any (i) Indebtedness for which Buyer, any Buyer Entity would be
required to discharge following the Closing or (ii) mortgage or pledge any
of the Transferred Assets, tangible or intangible, or create, incur, assume or
suffer to exist any Lien thereupon;

       

      (c)          except
as may be required by applicable Laws, enter into, adopt, amend, modify or
terminate any bonus, profit sharing, compensation, severance, pension,
retirement, deferred compensation, employment, or other employee benefit
agreement, trust, plan, fund or other arrangement for the compensation, benefit
or welfare of any Business Employee in any manner or increase or decrease the
compensation or fringe benefits of any Business Employee, pay any bonus or
special remuneration (whether in cash, equity or otherwise) to any Business
Employee, or pay any benefit not required by any plan or arrangement as in
effect as of the date hereof;

       

      (d)          hire
any employees who would become Transferred Employees at Closing;

       

      (e)          terminate
any employees who would otherwise become Transferred Employees at Closing but
for such termination or otherwise cause any such employees to
resign;

       

      (f)          enter
into, amend or extend any Contracts with any independent contractors to provide
services to the Business;

       

      (g)          enter
into, amend, or extend any Collective Bargaining Agreement;

       

      (h)          acquire,
lease, or license any material assets that would be Transferred Assets at
Closing in any single transaction or series of related transactions, except
transactions pursuant to existing Contracts identified in Schedule 2.1(c) or on
the Seller Disclosure Schedule which are not material to the Business,
individually or in the aggregate;

       

      (i)          sell,
transfer or dispose of any of the Transferred Assets except
(i) transactions pursuant to existing Contracts identified in Schedule 2.1(c) or on
the Seller Disclosure Schedule which are not material to the Business,
individually or in the aggregate or (ii) in the ordinary course of business
consistent with past practice;


      
        
           


        

        
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      (j)          except
as may be required as a result of a change in applicable Laws or in GAAP, make
any change in any of the accounting principles or practices used by
it;

       

      (k)          (i) make
or change any Tax election, (ii) settle or compromise any material Tax
liability, (iii) file any amended Tax Return, or (iv) consent to any
extension or waiver of any limitation period with respect to any claim or
assessment for Taxes, in each case to the extent related to the Transferred
Assets;

       

      (l)          enter
into any IP Licenses or amend any IP Licenses or grant any release or
relinquishment of any rights under any IP Licenses, in each case, related to the
Business;

       

      (m)         (i) enter
into any lease or sublease of real property (whether as a lessor, sublessor,
lessee or sublessee) or (ii) modify, amend or exercise any right to renew
any lease or sublease of real property with respect to the
Business;

       

      (n)         grant
any exclusive rights with respect to any Transferred Intellectual Property,
divest any Transferred Intellectual Property, except if such divestiture or
divestures, individually or in the aggregate, are not material to Seller, or
materially modify Seller’s standard warranty terms for Seller Products or
services or amend or modify any product or service warranty in any manner that
is likely to be materially adverse to Seller or SYC;

       

      (o)          (i) acquire
(by merger, consolidation or acquisition of stock or assets) any other Person or
any equity interest therein, (ii) enter into any Contract which would
result in a Business Material Adverse Effect or (iii) authorize, incur or
commit to incur any new capital expenditure(s) which, individually or in the
aggregate, is or are material to the Business;

       

      (p)          settle
or compromise any pending or threatened Legal Proceeding or pay, discharge or
satisfy or agree to pay, discharge or satisfy any claim, liability or obligation
(absolute or accrued, asserted or unasserted, contingent or otherwise), other
than the settlement, compromise, payment, discharge or satisfaction of Legal
Proceedings, claims and other Liabilities the settlement, compromise, discharge
or satisfaction of which does not include any obligation to be performed in
connection with the Business or by Buyer or any of its Subsidiaries following
the Effective Time that is not, individually or in the aggregate, material to
the Business;

       

      (q)          except
as required by applicable Laws or GAAP, revalue in any material respect any of
the properties or assets of the Business including writing-off notes or accounts
receivable other than in the ordinary course of business consistent with past
practice;

       

      (r)          other
than in the ordinary course of business consistent with past practice, enter
into, renew, extend or terminate (i) any Material Contract or (ii) any
Transferred Contract; or make any material change in any such Material Contract
or agreement, contract, plan, arrangement or other transaction;


      
        
           


        

        
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      (s)         fail
to maintain in full force and effect any material Transferred
Permits;

       

      (t)          relocate
any employees engaged in the Business or any Transferred Tangible Property to
real property other than the Montreal Subleased Property or the Salem Leased
Property, or relocate other employees or personal property into the Montreal
Subleased Property or the Salem Leased Property; or

       

      (u)         enter
into a Contract to do any of the foregoing or knowingly take any action which
results or is reasonably likely to result in any of the conditions set forth in
Article IX
not being satisfied, or would make any of the representations or warranties of
Seller contained in this Agreement untrue or incorrect in any material respect
if made at such subsequent time, or that would materially delay such
consummation.

       

      ARTICLE VI

      ADDITIONAL
AGREEMENTS

       

      6.1           Reasonable Best Efforts to
Complete. 
Upon the terms and subject to the conditions set forth in this Agreement, each
of Buyer, Seller and SYC shall use its reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other party or parties hereto in doing, all things reasonably
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement,
including using its reasonable best efforts to:

       

      (a)          cause
the conditions set forth in Article IX to be
satisfied or fulfilled;

       

      (b)          obtain
all necessary or appropriate consents, waivers and approvals, and provide all
necessary notices, under any Contracts to which Seller, SYC or any of their
respective Subsidiaries is a party in connection with this Agreement and the
consummation of the transactions contemplated hereby;

       

      (c)          make
all necessary registrations, declarations and filings with Governmental
Authorities in connection with this Agreement and the consummation of the
transactions contemplated hereby, and obtain all necessary actions or
non-actions, waivers, clearances, consents, approvals, orders and authorizations
from Governmental Authorities in connection with this Agreement and the
consummation of the transactions contemplated hereby;

       

      (d)          execute
or deliver any additional instruments reasonably necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement; and


      
        
           


        

        
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      Notwithstanding
anything to the contrary herein, if the lessor under SYC’s Montreal leased
premises conditions its grant of a consent (including by threatening to exercise
a “recapture” or other termination right) upon, or otherwise requires in
response to a notice or consent request regarding this Agreement, the payment of
a consent fee, “profit sharing” payment or other consideration (including
increased rent payments), or the provision of additional security (including a
guaranty), the Selling Entities shall be solely responsible for making all such
payments or providing all such additional security.

       

      6.2           Anti-Takeover
Laws. 
In the event that any state anti-takeover or other similar statute or regulation
is or becomes applicable to this Agreement or any of the transactions
contemplated by this Agreement, Seller, at the direction of the Seller Board,
shall use its best efforts to ensure that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms and subject
to the conditions set forth in this Agreement, and otherwise to minimize the
effect of such statute or regulation on this Agreement and the transactions
contemplated hereby.

       

      6.3           Access; Notice and
Consultation. 

       

      (a)          Subject
to any restrictions imposed under applicable Laws, at all times during the
period commencing with the execution and delivery of this Agreement and
continuing until the earlier to occur of the termination of this Agreement
pursuant to
Article X and the Effective Time, Seller and SYC shall afford Buyer
and its accountants, legal counsel and other representatives reasonable access
during normal business hours, upon reasonable notice, to any assets, properties,
contracts, books, records and personnel of the Business as Buyer may reasonably
request; provided,
however, that no information or knowledge obtained by Buyer in any
investigation conducted pursuant to this Section 6.3 shall
affect or be deemed to modify any representation or warranty of Seller or SYC
set forth herein or the conditions to the obligations of Buyer to consummate the
transactions contemplated by this Agreement, or the remedies available to the
parties hereunder; and provided further, that the
terms and conditions of the Confidentiality Agreement shall apply to any
information provided to Buyer pursuant to this Section
6.3.

       

      (b)          At
all times during the period commencing with the execution and delivery of this
Agreement and continuing until the earlier to occur of the termination of this
Agreement pursuant to Article X and
the Effective Time:

       

      (i)           each
of Buyer, on the one hand, and Seller and SYC, on the other hand, shall promptly
notify the other upon becoming aware that any representation or warranty made by
such party in this Agreement has become untrue or inaccurate in any material
respect or that such party has breached or failed to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by such party under this Agreement.

       

      (ii)          Seller
and SYC shall promptly notify Buyer of (i) any notice or other
communication received by Seller or SYC from any third party, subsequent to the
date of this Agreement and prior to the Effective Time, alleging any material
breach of or material default under any Material Contract or any Transferred
Contract to which Seller, SYC or SYC is a party, or (ii) any notice or
other communication received by Seller or SYC from any third party, subsequent
to the date of this Agreement and prior to the Effective Time, alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement; provided, however, that no
such notification shall affect or be deemed to modify any representation or
warranty of Seller and SYC set forth herein or the conditions to the obligations
of Buyer to consummate the transactions contemplated by this Agreement or the
remedies available to the parties hereunder; and provided further, that the
terms and conditions of the Confidentiality Agreement shall apply to any
information provided to Buyer pursuant to this Section
6.3.


      
        
           


        

        
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      (iii)        Seller
and SYC shall consult in good faith on a reasonably regular basis with the
representatives of the Buyer to report material (individually or in the
aggregate) operational developments with respect to the Business, the general
status of relationships with customers, suppliers, distributors, licensors and
licensees of the Business and others which have significant business dealings
with the Business and the general status of ongoing operations pursuant to
procedures reasonably requested by such representatives with respect to the
Business. Seller and SYC acknowledge that any such consultation shall not
constitute a waiver by Buyer of any rights it may have under this Agreement, and
that the Buyer shall not have any liability or responsibility for any actions of
Seller or SYC or any of their respective representatives with respect to matters
that are the subject of such consultations.

       

      (iv)        Seller
shall promptly advise Buyer orally and in writing of any litigation commenced
after the date hereof against Seller or any of its directors by any Seller
stockholders (on their own behalf or on behalf of Seller) relating to this
Agreement or the transactions contemplated hereby and shall keep Buyer
reasonably informed regarding any such litigation.  Seller shall give
Buyer the opportunity to consult with Seller regarding the defense or settlement
of any such stockholder litigation and shall consider Buyer’s views with respect
to such stockholder litigation and shall not settle any such stockholder
litigation without the prior written consent of Buyer.

       

      (v)          Seller
shall make available to Buyer a copy of each report, schedule, proxy or
information statement, registration statement and other document proposed to be
filed by Seller with the SEC during such period pursuant to the requirements of
federal securities Laws or federal or state Laws a reasonable period of time
prior to the filing of such reports, schedules, proxy or information statements,
registration statements and other documents (and in any event at least two (2)
Business Days prior to the filing thereof with the SEC).

       

      (c)          Notwithstanding
anything to the contrary set forth in this Agreement, no information obtained
pursuant to the access granted or notification provided pursuant to this Section 6.3 shall be
deemed to (i) amend or otherwise modify in any respect any representation
or warranty of the party hereto providing such access or notice,
(ii) impair or otherwise prejudice in any manner rights of the party
receiving such access or notice to rely upon the conditions to the obligations
of such party to consummate the transactions contemplated by this Agreement, or
(iii) impair or otherwise limit the remedies available to the party
receiving such access or notice.


      
        
           


        

        
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      6.4           Confidentiality. 

       

      (a)          Buyer
and Seller hereby acknowledge that Buyer and Seller have previously executed a
Confidentiality Agreement, dated April 24, 2009 (as amended from time-to-time,
the “Confidentiality
Agreement”), which will continue in full force and effect in accordance
with its terms.  The parties hereby agree that the term “Proprietary
Information,” as used in the Confidentiality Agreement shall be deemed to
include (i) all exhibits, schedules, certificates and other documents
executed or delivered in connection with this Agreement, the other Related
Agreements and the consummation of the transactions contemplated hereby and
thereby, (ii) all proprietary and confidential information concerning
Seller and SYC, which includes all information with respect to the Business, and
(iii) all documents and materials contained in Seller’s data room, or
otherwise furnished or made available (directly or indirectly) to Buyer or its
Affiliates; provided,
however, that after the Closing, with respect to Buyer, the foregoing
shall not apply to such information that (1) is solely related to the
Transferred Assets or Assumed Liabilities and (2) is not also related to
any business or assets of Seller (or a Subsidiary thereof) not transferred to
Buyer (or a Subsidiary thereof) under this Agreement.  Following the
Closing, Seller and SYC shall (and shall cause their respective Subsidiaries to)
keep confidential and not disclose (other than to Buyer and its Subsidiaries)
any non-public information related to the Transferred Assets or Assumed
Liabilities.  In addition, notwithstanding any other provision of the
Confidentiality Agreement and this Agreement, Buyer and its Affiliates and
Seller and its Affiliates may include this Agreement and the other Related
Agreements in or as an exhibit to any report, form or registration statement
filed with or furnished to the SEC.

       

      (b)          Invention
Disclosures.  Seller and SYC shall treat as confidential and
not publicly disclose the Transferred Disclosures for so long as such
Transferred Disclosures remain unpublished by Buyer or its
Subsidiaries.

       

      6.5           Public
Disclosure. 
Each of Buyer and Seller shall consult with the other before issuing any press
release or making any public announcement or statement with respect to this
Agreement or the transactions contemplated hereby, and shall not issue any such
press release or make any such public announcement or statement without the
prior written consent of the other party hereto, which consent shall not be
unreasonably withheld; provided, however, that
either Buyer or Seller may, without the prior consent of the other, issue any
such press release or make any such public announcement or statement as may be
required by Law or, in the case of Buyer, the rules and regulations of the
Nasdaq, if such party first notifies and consults with the other regarding the
timing and substance of such public announcement or statement.

       

      6.6           Employee
Matters. 

       

      (a)          Seller
shall consult with Buyer (and consider in good faith the advice of Buyer) prior
to sending any notices or other communication materials to Business Employees
regarding this Agreement and the transactions contemplated hereby and Seller
shall not send any written notices or other written communication materials
(including via electronic mail) to Business Employees regarding this Agreement
or the transactions contemplated hereby without the prior written consent of
Buyer (which consent will not be unreasonably withheld).


      
        
           


        

        
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      (b)          From
and after the Effective Time, and to the extent permitted by applicable Law,
Buyer shall recognize the prior service with Seller or SYC of each Transferred
Employee in connection with all employee benefit plans, programs or policies of
Buyer or its Affiliates in which Transferred Employees are eligible to
participate following the Effective Time for purposes of eligibility and vesting
and determination of level of benefits (but not for purposes of benefit accruals
or benefit amounts under any defined benefit pension plan or to the extent that
such recognition would result in duplication of benefits), subject to any
applicable maximum accruals under Buyer’s employee benefit plans, programs or
policies of Buyer or its Affiliates.  From and after the hiring of
each Transferred Employee, Buyer shall use commercially reasonable efforts to:
(i) cause any pre-existing conditions or limitations and eligibility
waiting periods under any group health plans of Buyer or its Affiliates to be
waived with respect to Transferred Employees and their eligible dependents to
the extent such Transferred Employees and their eligible dependents were not
subject to such preexisting conditions and limitations and eligibility waiting
periods under the comparable Seller Employee Benefit Plan as of the time
immediately preceding the Closing; and (ii) provide each Transferred
Employee with credit for any deductibles paid under any Seller Employee Benefit
Plan that provides medical, dental or vision benefits in the plan year in effect
as of the Closing Date in satisfying any applicable deductible or out of pocket
requirements under any medical, dental or vision plans of Buyer or its
Subsidiaries that such employees are eligible to participate in after the
Effective Time to the same extent that such expenses were recognized under the
comparable Seller Employee Benefit Plan.  The provisions of this Section 6.6(b) are
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder, and nothing herein shall be deemed to amend any Seller
Employee Benefit Plan to reflect the terms of this Section
6.6(b).

       

      (c)          To
the extent any employment agreement of a Seller employee would permit such
employee to resign for “good reason” (as defined in the applicable employment
agreement) at any time on or after the date of the first public announcement of
this Agreement, Seller shall use commercially reasonable efforts to negotiate
and cause to be executed, to the fullest extent possible, individual amendments
or waivers, as applicable, to such employment agreements prior to the Closing
Date to prevent such employee from resigning for “good reason” at any time prior
to the Closing Date; provided, however, that any such
amendments or waivers shall be provided to Buyer for review prior to execution
and shall be in a form reasonably acceptable to Buyer.

       

      6.7           Non-Solicitation. 

       

      (a)          Seller
and SYC shall immediately cease any and all existing activities, discussions or
negotiations with any Persons conducted heretofore with respect to any Seller
Acquisition Proposal or Seller Acquisition Transaction.


      
        
           


        

        
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      (b)          At
all times during the period commencing with the execution and delivery of this
Agreement and continuing until the earlier to occur of the termination of this
Agreement pursuant to Article X and
the Effective Time, Seller and SYC shall not, nor shall Seller or SYC authorize
or permit any of their respective directors, officers or other employees,
controlled Affiliates, or any investment banker, attorney or other advisor or
representative retained by any of them to, directly or indirectly:

       

      (i)           solicit,
initiate, knowingly encourage or induce the making, submission or announcement
of, a Seller Acquisition Proposal;

       

      (ii)          furnish
to any Person (other than Buyer or any designees of Buyer) any non-public
information relating to Seller or SYC, or afford access to the business,
properties, assets, books or records of Seller or SYC to any Person (other than
Buyer or any designees of Buyer), or take any other action that is intended or
would be reasonably expected to assist or facilitate any inquiries or the making
of any proposal that constitutes or could lead to a Seller Acquisition Proposal
or Seller Acquisition Transaction;

       

      (iii)         participate
or engage in discussions or negotiations with any Person with respect to a
Seller Acquisition Proposal or Seller Acquisition Transaction;

       

      (iv)        approve,
endorse or recommend a Seller Acquisition Proposal or Seller Acquisition
Transaction;

       

      (v)         enter
into any letter of intent, memorandum of understanding or other Contract
contemplating or otherwise relating to a Seller Acquisition Proposal or Seller
Acquisition Transaction;

       

      (vi)        terminate,
amend or waive any rights under any “standstill” or other similar agreement
between Seller or SYC and any Person;

       

      (c)          Seller
shall promptly, and in all cases within twenty four (24) hours of its receipt,
advise Buyer orally and in writing of any receipt by any director, officer or
other employee, controlled Affiliate, or any investment banker, attorney or
other advisor or representative retained by Seller or SYC of (i) any Seller
Acquisition Proposal, (ii) any request for information that could lead to a
Seller Acquisition Proposal, or (iii) any inquiry with respect to, or which
could lead to, any Seller Acquisition Proposal, the terms and conditions of such
Seller Acquisition Proposal, request or inquiry, and the identity of the Person
or group making any such Seller Acquisition Proposal, request or inquiry, but
only to the extent such disclosure will not result in a breach of a
confidentiality obligation of Seller.

       

      6.8           Real Estate
Matters. 
Buyer intends to enter into a direct lease of a portion of Seller’s Salem leased
premises (the “Salem
Leased Property”) commencing on the Closing Date.  Prior to the
Closing Date, Buyer shall use commercially reasonable efforts, at Seller’s sole
cost, to enter into a termination agreement with the lessor of the Salem Leased
Property to terminate its lease as to the Salem Leased Property.  For
a period of thirty (30) days after the Closing, at no additional cost, Buyer
shall have the right to use, access and relocate Transferred Assets in other
portions of Seller’s Salem leased premises.


      
        
           


        

        
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      6.9           Mail
Handling. 
Effective as of the Closing Date, Buyer shall have the right to open all mail
and packages addressed to Seller or a Subsidiary and delivered to Buyer relating
to the Transferred Assets or the Assumed Liabilities.  To the extent
Buyer receives any mail or packages addressed to Seller or a Subsidiary and
delivered to Buyer not exclusively relating to the Transferred Assets or Assumed
Liabilities, Buyer shall promptly deliver such mail or packages to
Seller.

       

      6.10         Non-Solicitation of
Employment. 
For a period of five (5) years after the Closing Date, Seller and SYC shall not,
and shall cause their respective Subsidiaries to not, solicit for employment any
Transferred Employee; provided, however, that
Seller shall not be deemed to have breached this Section 6.10 in
connection with the results arising from Seller’s, SYC’s or any of their
respective Subsidiaries’ placement or distribution of general employment
advertising, internet postings, employee referrals, or other publications for
general circulation that are not targeted at the Transferred
Employees.  Notwithstanding anything in the immediately preceding
sentence to the contrary, for a period of five (5) years after the Closing Date,
Seller and SYC shall not hire any of the Transferred Employees unless such
Transferred Employee has not been employed by Buyer or any of its Subsidiaries
for a period of no less than six (6) months prior to such Transferred Employee’s
hire date with Seller or SYC.

       

      6.11         Non-Competition. 
Seller and SYC agree that for a period of five (5) years commencing on the
Closing Date, Seller and SYC will not and will cause their respective
Subsidiaries not to make, have made or distribute, each, on a worldwide
basis:

       

      (a)           any
Visible Lasers (“Visible Lasers” to be
defined  for purposes of this Section 6.11 as
400-850 nm) with power levels greater than 150mW;

       

      (b)           any
Visible Laser modules which are based upon SYC’s beam shaping optics, or
equivalent, which is owned or licensed to Seller, SYC or any of their respective
Subsidiaries;

       

      (c)           any
Visible Laser modules which are based upon SYC’s beam shaping optics capability,
or equivalent, which is owned or licensed to Seller, SYC or any of their
respective Subsidiaries;

       

      (d)           any
Visible Laser modules and systems to the bio-instrumentation marketplace;
and

       

      (e)           any
Visible Laser modules for existing applications to any of SYC’s customer
accounts as of the Closing Date.

       

      ARTICLE VII

      POST-CLOSING
AGREEMENTS

       

      7.1           Transfer of Cash Portion
Among the Selling Entities. 
Within the 12-month period immediately following the Closing, none of the
Selling Entities shall transfer, assign, convey or otherwise distribute to
Seller, any of its Subsidiaries or any other Person any of the Cash Portion
received by such Selling Entity in the transactions contemplated hereby if and
to the extent that any such transfer, assignment, conveyance or distribution
would have the effect of rendering such Selling Entity
Insolvent.


      
        
           


        

        
          -54-

          
            

          

        

        
           


        

      

    

     

    7.2           Post-Closing Access and
Cooperation. From and after the Closing, Seller and Buyer shall, and
shall cause its Subsidiaries to, give the other party and its Subsidiaries and
their representatives reasonable access, during normal business hours and upon
reasonable notice, to all books, documents, information, data, files and other
records relating to (i) the operation of the Business by Seller or SYC prior to
the Closing and the operation of the Business by any of the Buying Entities
after the Closing, as applicable, (ii) the ownership of the Transferred Assets
by the Seller Entities prior to the Closing and the ownership of the Transferred
Assets by the Buying Entities after the Closing, as applicable, and (iii) the
Assumed Liabilities, and to furnish copies thereof, which such party or its
Subsidiaries or their representatives reasonably request, including in
connection with Legal Proceedings.  Seller and Buyer shall not, and
shall not permit any other party to, destroy any such books, documents,
information, data, files and other records prior to the seventh (7th)
anniversary of the Closing, and in any event will not destroy or permit the
destruction of any such books, documents, information, data, files and other
records without providing the other party with notice detailing the contents of
such books, documents, information, data, files and other records, and providing
the other party with the opportunity to obtain such books, documents,
information, data, files and other records, at least 60 days prior to the
destruction thereof.

     

    7.3           2009 – 2010 PARI R&D
Grant. Within 30 days after the Closing, the Buyer shall deliver notice
to terminate the 2009-2010 Programme d’aide a la recherché industrielle (PARI)
R&D Grant (the “2009-2010 PARI R&D
Grant”).  In no event shall the Buyer accept, or permit any of
its Subsidiaries to accept, any funds from such 2009-2010 PARI R&D
Grant.

     

    ARTICLE VIII

    TAX
MATTERS

     

    8.1           Returns; Indemnification;
Liability for Taxes.

     

    (a)          Seller
shall prepare and file (or cause to be prepared and filed) on a timely basis all
Tax Returns with respect to Seller and SYC for all taxable periods ending on or
before the Closing Date and shall pay, and shall indemnify and hold Buyer
harmless against and from (A) all Taxes of Seller, SYC and their respective
Subsidiaries; (B) all Taxes relating to the Transferred Assets and the operation
of the Business for all taxable years or periods that end on or before the
Closing Date; (C) all Taxes for which Seller or SYC may be liable under
Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law); and (D) with respect to any taxable period
commencing before the Closing Date and ending after the Closing Date (a “Straddle Period”) all
Taxes relating to the Transferred Assets and the operation of the Business
attributable to the Tax period prior to and including the Closing Date (the
“Pre-Closing Tax
Period”) (the Taxes referred to in items (A), (B), (C) and (D) of this
sentence are referred to herein as “Pre-Closing
Taxes”).  For purposes of this Agreement, the portion of any
Tax that is attributable to a Pre-Closing Tax Period shall be (A) in the
case of a Tax that is not based on net income, gross income, premiums or gross
receipts, the total amount of such Tax for the period in question multiplied by
a fraction, the numerator of which is the number of days in the Pre-Closing Tax
Period, and the denominator of which is the total number of days in such
Straddle Period, and (B) in the case of a Tax that is based on any of net
income, gross income, premiums or gross receipts, the Tax that would be due with
respect to the Pre-Closing Tax Period if such Pre-Closing Tax Period were a
separate taxable period, except that exemptions, allowances, deductions or
credits that are calculated on an annual basis (such as the deduction for
depreciation or capital allowances) shall be apportioned on a per diem
basis.


    
      
         


      

      
        -55-

        
          

        

      

      
         


      

    

     

    (b)          Buyer
shall prepare and file (or cause to be prepared and filed) on a timely basis all
Tax Returns relating to the Transferred Assets or the operation of the Business
for periods ending after the Closing Date and shall pay and shall indemnify and
hold Seller harmless against and from (A) all Taxes relating to the
Transferred Assets and the operation of the Business for any taxable year or
period commencing after the Closing Date, and (B) all Taxes relating to the
Transferred Assets and operation of the Business for any Straddle Period other
than Pre-Closing Taxes.

     

    8.2           Refunds and Credits.
Any refunds and credits attributable to Pre-Closing Taxes shall be for the
account of Seller and any other refunds and credits shall be for the account of
Buyer.

     

    8.3           Cooperation. The
parties to this Agreement shall provide assistance to each other as reasonably
requested in preparing and filing Tax Returns and responding to Tax Contests,
provide reasonably detailed notice of any Tax Contest sufficient to apprise the
other party of the nature of the claim, make available to each other as
reasonably requested all relevant information, records, and documents, including
workpapers, relating to Taxes of the Company and any Company Subsidiary and
retain any books and records that could reasonably be expected to be necessary
or useful in connection with any preparation by any other party of any Tax
Return, or for any Tax Contest.  The Seller shall contact Buyer prior
to the disposition of any books and records described in this Section 8.3 and allow
Buyer to obtain such books and records within ten (10) days of such
notice.

     

    8.4           Transferred
Employees. At Buyer’s election, Buyer and Seller shall utilize the
alternate procedure set forth in Revenue Procedure 2004-53 with respect to wage
withholding for Transferred Employees.

     

    8.5           Conflicts. In the
event of a conflict between the provisions of this Article VIII
and any other section of this Agreement, this Article VIII
shall govern and control.


    
      
         


      

      
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    ARTICLE IX

    CONDITIONS
TO THE ACQUISITION

     

    9.1           Conditions to Each Party’s
Obligations to Effect the Acquisition. The respective
obligations of Buyer and Seller to consummate the transactions contemplated
hereby shall be subject to the satisfaction or waiver (where permissible under
applicable Laws) prior to the Effective Time, of each of the following
conditions:

     

    (a)          No Legal
Prohibition.  No Governmental Authority shall have
(i) enacted, issued, promulgated, entered, enforced or deemed applicable to
the transactions contemplated hereby any Law that is in effect and has the
effect of making any of the transactions contemplated by this Agreement illegal
or which has the effect of prohibiting or otherwise preventing the consummation
of any of the transactions contemplated by this Agreement, or (ii) issued or
granted, or threatened to issue or grant, any Order (whether temporary,
preliminary or permanent) that has (or would be reasonably expected to have) the
effect of making any of the transactions contemplated by this Agreement illegal
or which has (or would be reasonably expected to have) the effect of prohibiting
or otherwise preventing the consummation of any of the transactions contemplated
by this Agreement.

     

    9.2           Additional Conditions to the
Obligations of Buyer. The obligations of
Buyer to consummate the transactions contemplated hereby shall be subject to the
satisfaction or waiver prior to the Effective Time of each of the following
conditions, any of which may be waived exclusively by Buyer:

     

    (a)          Representations and
Warranties.  The representations and warranties of Seller and
SYC set forth in Section 3.2, Section 3.3, Section 3.7(a), Section 3.21 and
Section 3.22 of
this Agreement (i) shall have been true and correct as of the date of this
Agreement and (ii) shall be true and correct in all material respects on and as
of the Closing Date with the same force and effect as if made on and as of the
Closing Date (other than those representations and warranties which address
matters only as of a particular date, which shall have been true and correct in
all material respects only as of such particular date).  All other
representations and warranties of Seller and SYC set forth in this Agreement (i)
shall have been true and correct in all material respects as of the date of this
Agreement and (ii) shall be true and correct in all material respects on and as
of the Closing Date with the same force and effect as if made on and as of the
Closing Date (other than those representations and warranties which address
matters only as of a particular date, which shall have been true and correct in
all material respects only as of such particular date.

     

    (b)          Performance of Obligations
of Seller.  Seller shall have performed in all material
respects any obligations and complied in all material respects with any
covenants or other agreements of Seller to be performed or complied with by it
under this Agreement at or prior to the Effective Time.

     

    (c)          Officer’s
Certificate.  Buyer shall have received a certificate, validly
executed for and on behalf of Seller and in its name by the Chief Executive
Officer and Chief Financial Officer of Seller, certifying the satisfaction of
the conditions set forth in Section 9.2(a), Section 9.2(b) and
Section
9.2(d).


    
      
         


      

      
        -57-

        
          

        

      

      
         


      

    

     

    (d)          No Business Material Adverse
Effect.  No event, development, change, circumstance or
condition shall have occurred or exist that is continuing has had, individually
or in the aggregate, a Business Material Adverse Effect (whether or not any
events, developments, changes, circumstances or conditions occurring prior to
the execution and delivery of this Agreement caused or contributed to the
occurrence of such Business Material Adverse Effect).

     

    (e)          Related
Agreements.  Seller shall have executed and delivered to Buyer
the Related Agreements to which Seller is a party.

     

    (f)          Opinion.  Buyer
shall have received an opinion from counsel to Seller in the form of Schedule
9.2(f).

     

    (g)          Employee
Retention.  All of the employees identified on Schedule 9.2(g) shall
have executed and delivered to Buyer or one of its Subsidiaries offer letters
and other standard Buyer agreements related to employment effective as of the
Closing Date.

     

    (h)          Consents.  The
Consents identified on Schedule 9.2(h) shall
have been obtained and shall be in a form reasonably satisfactory to
Buyer.

     

    (i)          Release of Certain
Liens.  The Liens identified on Schedule 9.2(i) shall
have been properly released and Buyer shall have received evidence reasonably
satisfactory to it that such Liens have been properly released.

     

    (j)          Payoff
Letter.  Buyer shall have received a fully executed Payoff
Letter from the creditors of Seller and SYC identified on Schedule
9.2(j).

     

    (k)          Montreal
Sublease.  The Montreal Sublease shall have been entered into
and shall be in full force and effect as of the Closing Date.
 

     

    (l)          Salem Leased
Property. Buyer shall have entered into a direct lease of the Salem
Leased Property with the lessor thereof commencing on the Closing Date and
Seller’s lease as to the Salem Leased Property shall have
terminated.

     

    9.3           Additional Conditions to
Seller’s Obligations to Effect the Acquisition. The obligations of
Seller to consummate the transactions contemplated hereby shall be subject to
the satisfaction or waiver prior to the Effective Time of each of the following
conditions, any of which may be waived exclusively by Seller:


    
      
         


      

      
        -58-

        
          

        

      

      
         


      

    

     

    (a)          Representations and
Warranties.  The representations and warranties of Buyer set
forth in Section
4.2, and Section 4.3 of this
Agreement (i) shall have been true and correct as of the date of this Agreement
and (ii) shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if made on and as of the Closing
Date (other than those representations and warranties which address matters only
as of a particular date, which shall have been true and correct in all material
respects only as of such particular date).  All other representations
and warranties of Buyer set forth in this Agreement (i) shall have been true and
correct in all material respects as of the date of this Agreement and (ii) shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as if made on and as of the Closing Date (other than
those representations and warranties which address matters only as of a
particular date.

     

    (b)          Performance of Obligations
of Buyer.  Buyer shall have performed in all material respects
any obligations and complied in all material respects with any covenants or
other agreements of Buyer to be performed or complied with by it under this
Agreement at or prior to the Effective Time.

     

    (c)          Officer’s
Certificate.  Seller shall have received a certificate, validly
executed for and on behalf of Buyer and in its name by an executive officer of
Buyer, certifying the satisfaction of the conditions set forth in Section 9.3(a) and
Section
9.3(b).

     

    (d)          Related
Agreements.  Buyer shall have executed and delivered to Seller
the Related Agreements to which Buyer is a party.

     

    ARTICLE X

    TERMINATION,
AMENDMENT AND WAIVER

     

    10.1           Termination. This
Agreement may be terminated at any time prior to the Effective Time (it being
agreed that the party hereto terminating this Agreement pursuant to this Section 10.1 shall
give prompt written notice of such termination to the other party or parties
hereto):

     

    (a)          by
mutual written agreement of Buyer and Seller; or

     

    (b)          by
either Buyer or Seller, if the Closing shall not have occurred by January 31,
2010 (the “Termination
Date”); provided,
however, that the right to terminate this Agreement pursuant to this
Section 10.1(b)
shall not be available to any party hereto whose action or failure to fulfill
any obligation under this Agreement has been the principal cause of or resulted
in any of the conditions to the Closing set forth in Article IX
having failed to be satisfied on or before the Termination Date and such action
or failure to act constitutes a material breach of this Agreement;
or

     

    (c)          by
either Buyer or Seller if any Governmental Authority (i) shall have enacted,
issued, promulgated, entered, enforced or deemed applicable to any of the
transactions contemplated by this Agreement any Law that is in effect and has
the effect of making the consummation of any of the transactions contemplated by
this Agreement illegal or which has the effect of prohibiting or otherwise
preventing the consummation of any of the transactions contemplated by this
Agreement or (ii) shall have issued or granted any Order that is in effect and
has the effect of making any of the transactions contemplated by this Agreement
illegal or which has the effect of prohibiting or otherwise preventing the
consummation of any of the transactions contemplated by this Agreement, and such
Order has become final and non-appealable; or


    
      
         


      

      
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    (d)          by
Buyer in the event (i) of a breach of any covenant or agreement on the part of
Seller set forth in this Agreement or (ii) that any representation or warranty
of Seller set forth in this Agreement shall have been inaccurate when made or
shall have become inaccurate, in either case such that the conditions to the
Closing set forth in Section 9.2(a) or
Section 9.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation and warranty became inaccurate; provided, however, that
notwithstanding the foregoing, in the event that such breach by Seller or such
inaccuracies in the representations and warranties of Seller are curable by
Seller through the exercise of commercially reasonable efforts, then Buyer shall
not be permitted to terminate this Agreement pursuant to this Section 10.1(c) until
the earlier to occur of (A) the expiration of a fifteen (15) calendar day period
after delivery of written notice from Buyer to Seller of such breach or
inaccuracy, as applicable, or (B) the ceasing by Seller to exercise commercially
reasonable efforts to cure such breach or inaccuracy; or

     

    (e)          by
Seller in the event (i) of a breach of any covenant or agreement on the part of
Buyer set forth in this Agreement or (ii) that any of the representations and
warranties of Buyer set forth in this Agreement shall have been inaccurate when
made or shall have become inaccurate, in either case such that the conditions to
the Closing set forth in Section 9.3(a) or
Section 9.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation and warranty became inaccurate; provided, however, that
notwithstanding the foregoing, in the event that such breach by Buyer or such
inaccuracies in the representations and warranties of Buyer are curable by Buyer
through the exercise of commercially reasonable efforts, then Seller shall not
be permitted to terminate this Agreement pursuant to this Section 10.1(d) until
the earlier to occur of (A) the expiration of a fifteen (15) calendar day period
after delivery of written notice from Seller to Buyer of such breach or
inaccuracy, as applicable or (B) Buyer ceasing to exercise commercially
reasonable efforts to cure such breach or inaccuracy; or

     

    10.2           Notice of Termination;
Effect of Termination. Any proper
termination of this Agreement pursuant to Section 10.1 shall be
effective immediately upon the delivery of written notice of the terminating
party to the other party or parties hereto, as applicable.  In the
event of the termination of this Agreement pursuant to Section 10.1, this
Agreement shall be of no further force or effect without liability of any party
or parties hereto, as applicable (or any stockholder, director, officer,
employee, agent, consultant or representative of such party or parties) to the
other party or parties hereto, as applicable, except (a) for the terms of Section 6.5,
this Section
10.2, Section
10.3 and Article XII,
each of which shall survive the termination of this Agreement and (b) that
nothing herein shall relieve any party or parties hereto, as applicable, from
liability for any willful breach of, or fraud in connection with, this
Agreement.  In addition to the foregoing, no termination of this
Agreement shall affect the obligations of the parties hereto set forth in the
Confidentiality Agreement, all of which obligations shall survive termination of
this Agreement in accordance with their terms.


    
      
         


      

      
        -60-

        
          

        

      

      
         


      

    

     

    10.3           Fees and Expenses.
All fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party or parties, as
applicable, incurring such expenses whether or not the Closing
occurs.

     

    10.4           Amendment. Subject to
applicable Laws and subject to the other provisions of this Agreement, this
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of Buyer, Seller and
SYC.

     

    10.5           Extension; Waiver. At
any time and from time to time prior to the Effective Time, any party or parties
hereto may, to the extent legally allowed and except as otherwise set forth
herein, (a) extend the time for the performance of any of the obligations or
other acts of the other party or parties hereto, as applicable, (b) waive any
inaccuracies in the representations and warranties made to such party or parties
hereto contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions for the
benefit of such party or parties hereto contained herein.  Any
agreement on the part of a party or parties hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party or parties, as applicable.  Any delay in
exercising any right under this Agreement shall not constitute a waiver of such
right.

     

    ARTICLE XI

    INDEMNIFICATION

     

    11.1           Indemnification by
Seller. From and after the Closing Date, Seller shall indemnify and hold
harmless Buyer and its Subsidiaries and their respective Affiliates, Associates,
directors, officers, employees, agents and representatives, and each of the
heirs, executors, successors and assigns of any of the foregoing (the “Buyer Indemnified
Parties”) from and against any and all Losses suffered, incurred or
sustained by the Indemnified Parties (or any of them) relating to, arising out
of or in connection with (i) any of the Excluded Liabilities and the
ownership and operation of all businesses and operations of Seller, SYC and
their respective Subsidiaries other than the Business from and after the
Closing, (ii) any breach of or inaccuracy in the representations and warranties
of Seller and/or SYC, (iii) any breach of the covenants or other agreements of
Seller and/or SYC under this Agreement and (iv) any failure by Buyer and its
Subsidiaries to comply with all Laws relating to bulk transfers that are
applicable to the sale of the Transferred Assets.  The Escrow Fund
shall be available as partial security to compensate the Buyer Indemnified
Parties for the indemnification obligations of Buyer under this Section
11.1.

     

    11.2            Indemnification by
Buyer. From and after the Closing, Buyer shall indemnify and hold
harmless Seller, SYC and their respective Subsidiaries (including SYC) and their
respective Affiliates, Associates, directors, officers, employees, agents and
representatives, and each of the heirs, executors, successors and assigns of any
of the foregoing (the “Seller Indemnified
Parties” and collectively with the Buyer Indemnified Parties, the “Indemnified Parties”)
from and against any and all Losses suffered, incurred or sustained by the
Seller Indemnified Parties (or any of them) relating to, arising out of or in
connection with (a) any breach of the covenants or other agreements of Buyer and
any of the Buying Entities under this Agreement, or (b) any Assumed
Liabilities.


    
      
         


      

      
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    11.3           Right to Indemnification;
Cap; Basket. 

     

    (a)          
The right to obtain indemnification pursuant to this Article XI,
subject to the limitations set forth herein, shall be the Buyer’s and/or
Seller’s (as the case may be) sole and exclusive remedy for any breach by
Seller, SYC or Buyer (as the case may be) of the terms of this Agreement, or any
other claim or matter arising out of or relating to the subject matter of this
Agreement, except for claims arising from an intentional and willful breach of
this Agreement by Seller or SYC, or a breach by Seller or SYC based on fraud or
gross negligence; provided,
however, that, if the Closing does not occur, the Indemnified Parties
shall have no right to indemnification pursuant to the provisions of this Article XI or
otherwise for the breach by Seller, SYC or Buyer of the terms of this Agreement
for other than an intentional and willful breach of this Agreement, or a breach
based on fraud or gross negligence.  Except for (i) claims arising
from an intentional and willful breach of this Agreement, (ii) a breach based on
fraud or gross negligence or (iii) claims arising under clauses (i), (iii) or
(iv) of Section
11.1, in no event shall Seller, SYC or Buyer (as the case may be) be
obligated or liable to indemnify the Indemnified Parties in an aggregate amount
in excess of the Cash Portion.

     

    (b)          No
Buyer Indemnified Party shall be entitled to receive indemnification pursuant to
Section
11.1(ii) (other than intentional and willful breach of this Agreement, or
a breach based on fraud or gross negligence) unless and until the Losses for
which the Indemnified Parties are entitled to indemnification pursuant to this
Agreement (other than intentional and willful breach of this Agreement, or a
breach based on fraud) exceed one hundred thousand dollars ($100,000) in the
aggregate (the "Indemnity Basket"),
in which case the Indemnified Parties shall be entitled to recover the full
amount of such Losses.  The parties agree that there shall not be any
multiple recovery for any Losses pursuant to the indemnification provisions of
this Article XI or
otherwise.

     

    (c)          The
procedure for making a claim for indemnification pursuant to this Article XI shall
be as set forth in the Escrow Agreement.

     

    (d)          Unless
otherwise required by applicable law or GAAP, the parties agree that the payment
of any Losses will be treated as an adjustment to the Purchase Price for all Tax
purposes.

     

    11.4           Third-Party Claims.
If a claim by a third party for which a request for indemnification may be made
is made against an Indemnified Party, Buyer or Seller (as the case may be) shall
promptly notify the other party of such claim (and provide such other party with
copies of all relevant documents, including copies of any summons, complaint or
other pleading) and Seller shall be entitled at its expense to participate in,
but not to determine or conduct the defense of such claim.  Buyer
shall have the right in its sole discretion to conduct the defense of and to
settle any such claim; provided, however, that if Seller has not consented to
such settlement, such settlement shall not in and of itself be determinative of
whether or not the claim was an indemnifiable claim pursuant to this Article XI.


    
      
         


      

      
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    11.5           Insurance. In
furtherance and not in limitation of Section 11.1,
from and after the Closing Date, with respect to any Legal Proceeding relating
to the operations of the Business prior to the Closing for which Seller has
conducted and controlled the settlement or defense (“Potentially Insured
Claims”), and for which insurance policies with insurance providers
unaffiliated with Seller or its Affiliates (“Third Party
Insurance”) is potentially available, Buyer shall have access to such
Third Party Insurance and Seller or its Affiliates shall promptly pay to Buyer
any proceeds received by Sellers or its Affiliates from such insurance providers
from Third Party Insurance with respect to such Potentially Insured
Claim.  Seller shall conduct and control the settlement or defense of
any Potentially Insured Claim in reasonable consultation with Buyer and shall
take such reasonable actions requested by Buyer to facilitate Buyer’s access to
Third Party Insurance, and Buyer shall pay the costs of such settlement or
defense.

     

    ARTICLE XII

    GENERAL
PROVISIONS

     

    12.1           Survival of Representations
and Warranties.
The representations and warranties of Buyer set forth in this Agreement
and in any certificate delivered pursuant to this Agreement shall not survive
the Effective Time.  The representations and warranties of Seller set
forth in this Agreement and in any certificate delivered pursuant to this
Agreement shall survive until the 12-month anniversary of the Closing Date;
provided, however, that the
representations and warranties of Seller contained in: Section 3.2 shall survive
indefinitely;  Section 3.17 and Section 3.18 shall survive for three
(3) years from the Closing Date; and Section 3.12 and Section 3.16 shall survive
until the expiration of the applicable statute of limitations.

     

    12.2           Notices. All notices
and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or by commercial delivery service, or sent via telecopy
(receipt confirmed) to the parties at the following addresses or telecopy
numbers (or at such other address or telecopy numbers for a party as shall be
specified by like notice):

     

    (a)          if
to Buyer, to:

    


     Coherent,
Inc.

     5100
Patrick Henry Drive

     Santa
Clara, California 94054

     Attention:
General Counsel

     Facsimile:  (408)
764-4928

    


     with
a copy (which shall not constitute notice) to:



    
      
         


      

      
        -63-

        
          

        

      

      
         


      

    


     Wilson
Sonsini Goodrich & Rosati

     Professional
Corporation

     650
Page Mill Road

     Palo
Alto, California 94304-1050

     Attention:  David
Segre

     Telecopy
No.:  (650) 493-6811

    


     and
to:

    


     Wilson
Sonsini Goodrich & Rosati

     Professional
Corporation

     One
Market Street

     Spear
Tower, Suite 3300

     San
Francisco, California 94105-1126

     Attention:  Michael
Ringler

     Telecopy
No.:  (415) 947-2099.

     

    (b)          if
to Seller, to:

    


     StockerYale,
Inc.

     32
Hampshire Road

     Salem,
New Hampshire 03079

     Attention:  Chief
Executive Officer

     Facsimile:  (603)
898-8851

    


     with
a copy (which shall not constitute notice) to:

    


     BRL
Law Group LLC

     31
St. James Avenue, Suite 850

     Boston,
Massachusetts 02116

     Attention:
Thomas B. Rosedale

     Telecopy
No.:  (617) 399-6930.

     

    12.3           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 party; provided, however, that Buyer
may assign or delegation of its rights, obligations or liabilities under this
Agreement in whole or in part to one or more of its Subsidiaries of Buyer
without the consent of Seller if and so long as Buyer shall remain fully liable
for the performance of such obligations.  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.

     

    12.4           Entire Agreement.
This Agreement and the agreements, documents, instruments and certificates among
the parties hereto as contemplated by or referred to herein, including the
Seller Disclosure Schedule, and the Exhibits and Schedules hereto, 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; provided, however, the
Confidentiality Agreement shall not be superseded, shall survive any termination
of this Agreement and shall continue in full force and effect.


    
      
         


      

      
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    12.5           Third Party
Beneficiaries. This Agreement is not intended to, and shall not, confer
upon any other Person any rights or remedies hereunder.

     

    12.6           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 extent possible, the economic, business and other
purposes of such void or unenforceable provision.

     

    12.7           Other Remedies.
Except as otherwise provided herein, any and all remedies herein expressly
conferred upon a party will be deemed cumulative with and not exclusive of any
other remedy conferred hereby, or by law or equity upon such party, and the
exercise by a party of any one remedy will not preclude the exercise of any
other remedy.

     

    12.8           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.

     

    12.9           Specific Performance.
The parties hereto agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached.  It is accordingly
agreed that, in addition to any other remedy to which they are entitled at law
or in equity, the parties hereto shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction.

     

    12.10         Consent to
Jurisdiction. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction and venue of any state or federal court located within
New Castle County, State of Delaware in connection with any matter based upon or
arising out of this Agreement or the transactions contemplated hereby, 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 process.  Each party hereto hereby agrees not to commence any
legal proceedings relating to or arising out of this Agreement or the
transactions contemplated hereby in any jurisdiction or courts other than as
provided herein.


    
      
         


      

      
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    12.11        WAIVER OF JURY TRIAL.
EACH OF BUYER, SELLER AND SYC 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
BUYER, SELLER AND SYC IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.

     

    12.12        Counterparts. This
Agreement may be executed in one or more counterparts, 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 party, it being understood that all parties need not sign the same
counterpart.

     

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

     

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      COHERENT, INC.

                                    
	 
      	 
      
	
                                      By:

                                    	
                                      /s/
      John Ambroseo

                                    
	
                                      Name:

                                    	
                                      John
      Ambroseo

                                    
	
                                      Title:

                                    	
                                      CEO

                                    
	 
      	 
      
	
                                      STOCKERYALE,
      INC.

                                    
	 
      	 
      
	
                                      By:

                                    	
                                      /s/
      Mark Blodgett

                                    
	
                                      Name:

                                    	
                                      Mark
      Blodgett

                                    
	
                                      Title:

                                    	
                                      Chief
      Executive Officer

                                    
	 
      	 
      
	
                                      STOCKERYALE
      CANADA, INC.

                                    
	 
      	 
      
	
                                      By:

                                    	
                                      /s/
      Mark Blodgett

                                    
	
                                      Name:

                                    	
                                      Mark
      Blodgett

                                    
	
                                      Title:

                                    	
                                      Chief
      Executive
Officer

                                    


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    SIGNATURE
PAGE - PURCHASE AND SALE AGREEMENT