UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
February 27, 1998
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Date of Report (Date of earliest event reported)
COMPUTER HORIZONS CORP.
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(Exact name of Registrant as specified in its Charter)
NEW YORK 0-7282 13-2638902
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation or Number)
organization)
49 OLD BLOOMFIELD AVENUE, MOUNTAIN LAKES, NEW JERSEY 07046-1495
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(Address of principal executive offices) (Zip Code)
(973) 299-4000
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to the Agreement and Plan of Merger, dated as of February 4, 1998,
by and among Computer Horizons Corp., a New York corporation ("Computer
Horizons"), PS Merger Corp., a New Jersey corporation ("Sub"), Princeton
Softech, Inc., a New Jersey corporation ("Princeton") and the stockholders of
Princeton (the "Stockholders"), the merger of Sub with and into Princeton (the
"Merger") was consummated on February 27, 1998. Pursuant to the Merger,
Princeton became a wholly-owned subsidiary of Computer Horizons, and each share
of common stock, no par value, of Princeton that was outstanding immediately
prior to the consummation of the Merger was converted into the right to receive
1.1626 shares of common stock, par value $.10 per share, of Computer Horizons
("Computer Horizons Common Stock"), subject to adjustment to ensure the issuance
of a whole number of shares of Computer Horizons Common Stock to each
Stockholder. As a result of the Merger, Computer Horizons Corp. issued to the
Stockholders a total of 954,213 shares of Computer Horizons Common Stock for all
of the outstanding shares of Princeton. 95,409 of such shares of Computer
Horizons Common Stock shall be held in escrow for the purpose of satisfying the
indemnification obligations of the Stockholders for certain breaches of
representations, warranties and covenants of the Stockholders and Princeton set
forth in the Merger Agreement. Subject to any claims for indemnification, such
escrowed shares shall be delivered to the Stockholders upon the first
anniversary of consummation of the Merger.
A copy of the Merger Agreement is filed as an exhibit hereto and is
incorporated herein by reference. The description of the Merger Agreement set
forth herein does not purport to be complete and is qualified in its entirety by
the provisions of the Merger Agreement. The Merger Agreement contains a list of
each of the exhibits thereto (the "Merger Agreement Exhibits"). The Merger
Agreement Exhibits do not contain information which is material to an investment
decision and have therefore not been attached to this filing, pursuant to Item
601 of Regulation S-K. The Company will supplementally furnish the Commission
with a copy of any of the Merger Agreement Exhibits upon request.
Princeton provides software utilities for the management of data and
applications within large organizations.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) and (b) Not Applicable.
(c) The following document is furnished as an Exhibit to this report
pursuant to Item 601 of Regulation S-K:
2. Agreement and Plan of Merger, dated as of February 4, 1998, by
and among Computer Horizons Corp., PS Merger Corp., Princeton
Softech, Inc. and the Stockholders of Princeton Softech, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMPUTER HORIZONS CORP.
Date: March 17, 1998 By: /s/William Murphy
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Name: William Murphy
Title: Chief Financial Officer
<PAGE>
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
by and among
COMPUTER HORIZONS CORP.,
PS MERGER CORP.,
PRINCETON SOFTECH, INC.,
and
THE STOCKHOLDERS OF PRINCETON SOFTECH, INC.
LISTED ON ANNEX 1 HERETO
Dated as of February 4, 1998
================================================================================
<PAGE>
TABLE OF EXHIBITS
Exhibit A Princeton Softech Employee Handbook
Exhibit B Form of Employment and Non-Compete Agreement
Exhibit C Form of Escrow Agreement
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of Affiliate Letter
Exhibit F Form of Stockholder Consent
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of February 4, 1998 (the
"Agreement"), among Computer Horizons Corp., a New York corporation ("CHC"), PS
Merger Corp., a New Jersey corporation ("Sub"), Princeton Softech, Inc., a New
Jersey corporation ("Princeton"), the stockholders of Princeton listed on Annex
1 hereto (collectively, the "Principal Stockholders") and the remaining
Stockholders (as defined herein), upon the delivery by each such Stockholder of
a counterpart signature page to this Agreement.
WITNESSETH:
WHEREAS, the Boards of Directors of CHC, Sub and Princeton have
determined that it is advisable and in the best interests of their respective
stockholders for CHC, Sub and Princeton to enter into a business combination
upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
CHC, Sub and Princeton have each approved the merger of Sub with and into
Princeton (the "Merger"), upon the terms and subject to the conditions set forth
herein, in accordance with the applicable provisions of the New York Business
Corporation Law (the "NYBCL"), in the case of CHC, and the New Jersey Business
Corporation Act (the "NJBCA"), in the case of Sub and Princeton;
WHEREAS, CHC, Sub and Princeton intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of reorganization
and that the Merger qualify as a tax-free reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations promulgated thereunder; and
WHEREAS, pursuant to the Merger, each outstanding share of common
stock, no par value, of Princeton ("Princeton Stock") shall be converted into
the right to receive CHC Stock (as defined herein), upon the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, CHC, Sub, Princeton and the Stockholders hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1. Defined Terms.
As used herein, the terms below shall have the following meanings:
"Actual Excess Stockholder Expenses" means the amount of any
Stockholder Expenses in Excess of $860,000.
"Affiliate" of a Person means any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreements Regarding Confidentiality and Proprietary Rights" means the
Princeton Softech, Inc. Employee Handbook signed by each of the Employees listed
on Schedule 3.18, each in substantially the form attached as Exhibit A hereto.
<PAGE>
"Ancillary Agreements" means the Escrow Agreement, the Employment and
Non-Compete Agreements, the Agreements Regarding Confidentiality and Proprietary
Rights, the Registration Rights Agreement, the Transmittal Letters and all other
agreements required hereunder to consummate the Merger.
"Assets" means the right, title and interest of Princeton or any of its
Subsidiaries in and to each of their respective properties, assets and rights of
any kind, whether tangible or intangible, real or personal, including without
limitation the right, title and interest in the following:
(a) all Contracts and Contract Rights;
(b) all Fixtures and Equipment;
(c) all Inventory;
(d) all Books and Records;
(e) all Proprietary Rights;
(f) all Permits;
(g) all return and other rights under or pursuant to
all warranties, representations and guarantees made by suppliers and other third
parties in connection with the Assets or services furnished to such Person;
(h) all cash, accounts receivable, deposits and prepaid
expenses; and
(i) all goodwill.
"Average Share Price" means, as of any date of determination, the
average of the closing prices of CHC Stock on the Nasdaq National Market as
reported in the Wall Street Journal on the trading days during a period of 45
calendar days ending on the day which is three calendar days prior to such date
of determination.
"Balance Sheet" means the consolidated balance sheet as of the Balance
Sheet Date.
"Balance Sheet Date" means December 31, 1997.
"Benefit Arrangement" means any employment, consulting, severance or
other similar contract, arrangement or policy (written or oral) and each plan,
arrangement, program, agreement or commitment (written or oral) providing for
insurance coverage (including, without limitation, any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, life, health or
accident benefits (including, without limitation, any "voluntary employees'
beneficiary association" as defined in Section 501(c)(9) of the Internal Revenue
Code providing for the same or other benefits) or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation or post-retirement insurance,
compensation or benefits which (a) is not a Welfare Plan, Pension Plan or
Multiemployer Plan, (b) is entered into, maintained, contributed to or required
to be contributed to, as the case may be, by Princeton or any ERISA Affiliate or
under which Princeton or any ERISA Affiliate may incur any liability, and (c)
covers any employee or former employee of Princeton or any ERISA Affiliate (with
respect to their relationship with such any entity).
<PAGE>
"Books and Records" means (a) all product, business and marketing
plans, sales and promotional literature and artwork relating to the Assets or
the Business, (b) all books, records, lists, ledgers, financial data, files,
reports, product and design manuals, plans, drawings, technical manuals and
operating records of every kind relating to the Assets or the Business
(including records and lists of customers, distributors, suppliers and
personnel) and (c) all telephone and fax numbers used in the Business, in each
case whether maintained as hard copy or stored in computer memory and whether
owned by Princeton or its Affiliates.
"Business" means the business and operations of Princeton and its
Subsidiaries, consisting of providing software utilities for the management of
data and applications within large organizations.
"CHC Stock" means the common stock, par value $.10 per share, of CHC.
"Closing" has the meaning set forth in Section 2.1(b).
"Closing Date" means the date of the Closing.
"Confidentiality Agreement" means that certain Non-Disclosure Agreement
dated as of December 1997 between CHC and Princeton.
"Consents" means any and all Permits and any and all consents,
approvals or waivers from third parties that are required for the consummation
of the transactions contemplated by this Agreement.
"Contract Rights" means all rights and obligations under the Contracts.
"Contracts" means all agreements, contracts, leases (whether for real
or personal property), purchase orders, undertakings, covenants not to compete,
employment agreements, confidentiality agreements, licenses, instruments,
obligations and commitments to which Princeton or any of its Subsidiaries is a
party or by which Princeton or any of its Subsidiaries or any of the Assets are
bound or affected, whether written or oral.
"Court Order" means any judgment, decision, consent decree, injunction,
ruling or order of any foreign, federal, state or local court or governmental
agency, department or authority that is binding on any Person or its property
under applicable law.
"Default" means (a) a breach of or default under any Contract, (b) the
occurrence of an event that with the passage of time or the giving of notice or
both would constitute a breach of or default under any Contract or (c) the
occurrence of an event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination, renegotiation or
acceleration under any Contract.
"Effective Average Share Price" means (a) $39.0909, if the Average
Share Price as of the Closing Date is less than or equal to $39.0909 per share,
(b) the Average Share Price, if the Average Share Price as of the Closing Date
is greater than $39.0909 per share and less than $43 per share or (c) $43, if
the Average Share Price as of the Closing Date is greater than or equal to $43
per share.
"Effective Time" has the meaning set forth in Section 2.2.
<PAGE>
"Employee Plans" means all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"Employees" means all officers and directors of Princeton or any of its
Subsidiaries and all other Persons employed by Princeton or any of its
Subsidiaries on a full or part-time basis as of the relevant date together with
all persons retained as "independent contractors" on or after the date hereof.
"Employment and Non-Compete Agreements" means the Non-Compete
Agreements to be entered into among CHC, Princeton and each of the Principal
Stockholders substantially in the form of Exhibit B hereof.
"Encumbrance" means any claim, lien, pledge, option, charge, easement,
security interest, deed of trust, mortgage, right-of-way, encroachment, building
or use restriction, conditional sales agreement, encumbrance or other right of
third parties, whether voluntarily incurred or arising by operation of law, and
includes any agreement to give any of the foregoing in the future, and any
contingent sale or other title retention agreement or lease in the nature
thereof.
"Environmental Claims" means all notices of violation, liens, claims,
demands, suits, or causes of action for any damage, including, without
limitation, personal injury, property damage (including, without limitation, any
depreciation or diminution of property values), lost use of property or
consequential damages, arising directly or indirectly out of Environmental
Conditions or Environmental Laws. By way of example only (and not by way of
limitation), Environmental Claims include (i) violations of or obligations under
any contract related to Environmental Laws or Environmental Conditions between
Princeton or any of its Subsidiaries and any other person, (ii) actual or
threatened damages to natural resources, (iii) claims for nuisance or its
statutory equivalent, (iv) claims for the recovery of response costs, or
administrative or judicial orders directing the performance of investigations,
responses or remedial actions under any Environmental Laws, (v) requirements to
implement "corrective action" pursuant to any order or permit issued pursuant to
the Resource Conservation and Recovery Act, as amended ("RCRA"), or similar
provisions of applicable state law, (vi) claims related to Environmental Laws or
Environmental Conditions for restitution, contribution, or indemnity, (vii)
fines, penalties or liens of any kind against property related to Environmental
Laws or Environmental Conditions, (viii) claims related to Environmental Laws or
Environmental Conditions for injunctive relief or other orders or notices of
violation from federal, state or local agencies or courts, and (ix) with regard
to any present or former employees, claims relating to exposure to or injury
from Environmental Conditions.
"Environmental Conditions" means the state of the environment,
including natural resources (e.g., flora and fauna), soil, surface water, ground
water, any drinking water supply, subsurface strata or ambient air, relating to
or arising out of the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping or threatened
release of Hazardous Substances by Princeton or its Subsidiaries or any of their
respective predecessors or successors in interest, or by their respective
agents, representatives, employees or independent contractors when acting in
such capacity on behalf of Princeton or any of its Subsidiaries. With respect to
Environmental Claims by third parties, Environmental Conditions also include the
exposure of persons to Hazardous Substances at the work place or the exposure of
persons or property to Hazardous Substances migrating from or otherwise
emanating from or located on property owned or occupied by Princeton or any of
its Subsidiaries.
<PAGE>
"Environmental Laws" means all applicable federal, state, district and
local laws, all rules or regulations promulgated thereunder, and all orders,
consent orders, judgments, notices, permits or demand letters issued,
promulgated or entered pursuant thereto, relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata), including, without
limitation, (i) laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, industrial materials, wastes or
other substances into the environment and (ii) laws relating to the
identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport or other handling of
pollutants, contaminants, chemicals, industrial materials, wastes or other
substances. Environmental Laws shall include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Toxic Substances Control Act, as amended, the Hazardous
Materials Transportation Act, as amended, RCRA, the Clean Water Act, as amended,
the Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the
Occupational Safety and Health Act, as amended, and all analogous laws
promulgated or issued by any state or other Governmental Authority.
"Environmental Reports" means any and all written analyses, summaries
or explanations, in the possession or control of Princeton or any of its
Subsidiaries, of (a) any Environmental Conditions in, on or about the properties
of Princeton or any of its Subsidiaries or (b) Princeton's or any of its
Subsidiaries' compliance with Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any entity which is (or at any relevant time
was) a member of a "controlled group of corporations" with, under "common
control" with, or a member of an "affiliated service group" with, or otherwise
required to be aggregated with, Princeton as set forth in Section 414(b), (c),
(m) or (o) of the Code.
"Escrow Agent" means the escrow agent under the Escrow Agreement, or
any successor agent designated in accordance with the terms of the Escrow
Agreement.
"Escrow Agreement" means the Escrow Agreement to be entered into among
CHC, Princeton, the Escrow Agent and the Stockholders substantially in the form
of Exhibit C hereof.
"Escrow Shares" has the meaning set forth in Section 2.11.
"Estimated Stockholder Expenses" has the meaning set forth in Section
2.13.
"Excess Stockholder Expenses" means the amount of any Estimated
Stockholder Expenses in excess of $860,000.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Ratio" means the result of dividing the Number of CHC Shares
by the Number of Princeton Shares.
"Financial Statements" means (a) the consolidated balance sheets of
Princeton and its Subsidiaries as of December 31, 1996 and 1995 and the related
consolidated statements of income, changes in stockholders' equity and cash
<PAGE>
flows, of Princeton and its Subsidiaries for the years then ended, together with
the report of Ernst & Young LLP thereon, and (b) the consolidated balance sheets
of Princeton and its Subsidiaries as of December 31, 1997 and the related
consolidated statements of income, changes in stockholders' equity and cash
flows, of Princeton and its Subsidiaries for the twelve months then ended.
"Facilities" means all plants, offices, manufacturing facilities,
stores, warehouses, administration buildings and all real property and related
facilities owned or leased by Princeton or any of its Subsidiaries, all as
identified or listed on Schedule 3.8(b).
"Fixtures and Equipment" means all of the furniture, fixtures,
furnishings, machinery, computer hardware, and other tangible personal property
owned by Princeton or any of its Subsidiaries, wherever located and including
any such Fixtures and Equipment in the possession of any of Princeton's or any
of its Subsidiaries' respective suppliers or other vendors.
"Former Properties" means all plants, offices, manufacturing
facilities, stores, warehouses, administration buildings and all real property
and related facilities owned, leased or operated by Princeton or any of its
Subsidiaries prior to the date hereof, but excluding Facilities.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession, which are applicable to the facts and
circumstances on the date of determination.
"Hazardous Substances" means all pollutants, contaminants, chemicals,
wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic or
otherwise hazardous substances or materials (whether solids, liquids or gases)
subject to regulation, control or remediation under Environmental Laws. By way
of example only, the term Hazardous Substances includes petroleum, urea
formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides,
herbicides, asbestos, sludge, slag, acids, metals, solvents and waste waters.
"HSR Act" means the Hart Scott Rodino Antitrust Improvements Act of
1976, as amended.
"Inventory" means all merchandise owned and intended for resale and all
raw materials, work in process, finished goods, wrapping, supply and packaging
items and similar items, whether or not located on the premises, on consignment
to a third party, or in transit or storage.
"knowledge" or "to the knowledge" of a party (or similar phrases) means
to the extent of matters (i) which are actually known by such party or (ii)
which, based on facts of which such party is aware, would be known to a
reasonable Person in similar circumstances. Each Person making a representation
or warranty (the "Maker") pursuant to this Agreement that is qualified as to the
knowledge of another Person shall be deemed to have breached such representation
or warranty if such representation or warranty is untrue or inaccurate at the
time it is made, regardless of whether the Maker had knowledge of the untruth or
inaccuracy of such representation or warranty.
"Liability" means any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
<PAGE>
or by any Person of any type, whether accrued, absolute, contingent, matured,
unmatured, liquidated, unliquidated, known or unknown.
"Material Adverse Effect" or "Material Adverse Change" or a similar
phrase means, with respect to any Person, (a) any material adverse effect on or
change with respect to (i) the business, operations, assets (taken as a whole),
liabilities (taken as a whole), condition (financial or otherwise) or results of
operations, of such Person and its Subsidiaries, taken as a whole, or (ii) the
right or ability of such Person or any of its Subsidiaries to consummate any of
the transactions contemplated hereby or (b) any event or condition which, with
the passage of time, the giving or receipt of notice or the occurrence or
nonoccurrence of any other circumstance, action or event, would reasonably be
expected to constitute a "Material Adverse Effect" on or "Material Adverse
Change" with respect to such Person.
"Merger Consideration" means (a) $43,000,000 less (b) the aggregate
amount of Excess Stockholder Expenses.
"Multiemployer Plan" means any "multiemployer plan," as defined in
Section 4001(a)(3) or 3(37) of ERISA, which (a) Princeton or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or,
after September 25, 1980, maintained, administered, contributed to or was
required to contribute to, or under which Princeton or any ERISA Affiliate may
incur any liability and (b) covers any employee or former employee of Princeton
or any ERISA Affiliate (with respect to their relationship with any such
entity).
"Number of CHC Shares" means that number of shares of CHC Stock
(rounded down to the nearest whole number) calculated by dividing (a) the Merger
Consideration by (b) the Effective Average Share Price as of the Closing Date.
"Number of Princeton Shares" means (a) the number of shares of
Princeton Stock issued and outstanding at the Effective Time plus (b) the number
of shares of Princeton Stock issuable upon exercise of all unexercised Princeton
Options outstanding at the Effective Time that are exercisable at the Effective
Time.
"Pension Plan" means any "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) which (a) Princeton or
any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, within the five years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute to, or under which
Princeton or any ERISA Affiliate may incur any liability (including, without
limitation, any contingent liability) and (b) covers any employee or former
employee of Princeton or any ERISA Affiliate (with respect to their relationship
with any such entity).
"Permitted Encumbrances" means (a) liens for Taxes or governmental
charges or claims (i) not yet due and payable, or (ii) being contested in good
faith, if a reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor, (b) statutory liens of landlords, liens
of carriers, warehousepersons, mechanics and materialpersons and other liens
imposed by law incurred in the ordinary course of business for sums (i) not yet
due and payable, or (ii) being contested in good faith, if a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor, (c) liens incurred or deposits made in connection with workers'
compensation, unemployment insurance and other similar types of social security
programs or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and return of
<PAGE>
money bonds and similar obligations, in each case in the ordinary course of
business, consistent with past practice, and (d) easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case, which do
not interfere with the ordinary conduct of business of Princeton and its
Subsidiaries and do not materially detract from the value of the property upon
which such encumbrance exists.
"Permits" means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, necessary or desirable for
the past, present or anticipated conduct or operation of the Business or
ownership of the Assets of such Person.
"Person" means any person or entity, whether an individual, trustee,
corporation, limited liability company, general partnership, limited
partnership, trust, unincorporated organization, business association, firm,
joint venture, governmental agency or authority or any similar entity.
"Princeton Material Adverse Effect" or "Princeton Material Adverse
Change" means a Material Adverse Effect with respect to Princeton, the Business
or the Assets.
"Princeton Options" means options to purchase Princeton Stock issued by
Princeton pursuant to the Princeton Stock Option Plans.
"Princeton Stock Option Plans" means (a) the 1991 Stock Option Plan,
(b) 1994 Stock Option Plan, (c) the 1996 Stock Option Plan and (d) the 1997
Stock Option Plan.
"Proprietary Rights" means all (a) U.S. and foreign patents, patent
applications, patent disclosures and improvements thereto, including petty
patents and utility models and applications therefor, (b) U.S. and foreign
trademarks, service marks, trade dress, logos, trade names and corporate names
and the goodwill associated therewith and registrations and applications for
registration thereof, (c) U.S. and foreign copyrights and registrations and
applications for registration thereof, (d) U.S. and foreign mask work rights and
registrations and applications for registration thereof, (e) Trade Secrets, (f)
other proprietary rights, (g) copies and tangible embodiments thereof (in
whatever form or medium) and (h) licenses granting any rights with respect to
any of the foregoing.
"Registration Rights Agreement" means the Registration Rights Agreement
to be entered into between CHC and the Stockholder Representative substantially
in the form of Exhibit D hereof.
"Regulations" means any laws, statutes, ordinances, regulations, rules,
notice requirements, court decisions, agency guidelines, principles of law and
orders of any foreign, federal, state or local government and any other
governmental department or agency, including without limitation energy, motor
vehicle safety, public utility, zoning, building and health codes, Environmental
Laws, occupational safety and health and laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours.
"Related Party" means (i) any of Princeton's officers, directors and
stockholders, and any officers, directors, partners, associates or relatives of
such officers, directors and stockholders, and (ii) any Person in which
Princeton or any Stockholder or any Affiliate, associate or relative of any such
Person has any direct or indirect interest.
<PAGE>
"Representative" of any Person means any officer, director, principal,
attorney, agent, employee or other representative of such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Stockholder Expenses" has the meaning set forth in Section 2.13.
"Stockholder Representative" has the meaning set forth in Section 2.12.
"Stockholders" means (a) the Principal Stockholders and (b) the other
holders immediately prior to the Effective Time of shares of Princeton Stock.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which at least 50% of the securities or interests having, by their terms,
ordinary voting power to elect members to the board of directors, or other
persons performing similar functions with respect to such corporation, is held,
directly or indirectly, by such Person, (b) any partnership or limited liability
company of which (i) such Person is a general partner or managing member or (ii)
such person possesses a 50% or greater interest in the total capital or total
income of such partnership or limited liability company.
"Tax Return" means any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including information
returns, any documents with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
"Taxes" mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, service, license, net worth, payroll, franchise and transfer
and recording, imposed by the Internal Revenue Service or any taxing authority
(whether domestic or foreign, including any federal, state, county, local or
foreign government or any subdivision or taxing agency thereof (including a U.S.
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies or other
assessments.
"Trade Secrets" means all trade secrets and confidential business
information (including ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
research and development information, software, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information).
"Transmittal Letter" has the meaning set forth in Section 2.7 hereof.
"Welfare Plan" means any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA, which (a) Princeton or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or under which
Princeton or any ERISA Affiliate may incur any liability and (b) covers any
employee or former employee of Princeton or any ERISA Affiliate (with respect to
their relationship with any such entity).
<PAGE>
1.2. Certain Additional Defined Terms.
Defined in
Term: Section:
---- -------
Actions....................................... 3.16
Affiliate Letter.............................. 5.5(a)
Agreement..................................... Recitals
Certificate of Merger......................... 2.2
Certificates.................................. 2.7(a)
CHC........................................... Recitals
CHC Closing Certificate....................... 6.1
CHC Indemnified Parties....................... 9.2(a)
CHC Material Adverse Affect................... 4.6
CHC Options................................... 4.2(b)
CHC Options Plan.............................. 2.6(d)
CHC Preferred Stock........................... 4.2(a)
CHC Securities................................ 4.2(a)
Claim......................................... 9.2(b)
Claim Notice.................................. 9.2(b)
Code.......................................... Recitals
Damage Threshold.............................. 9.5(a)
Damages....................................... 9.2(a)
Exchange Agent................................ 2.7(b)
Existing Employment Agreements................ 3.18(c)
Indemnified Party............................. 9.2(b)
Indemnifying Party............................ 9.2(b)
Information Statement......................... 5.7
International................................. 3.7(a)
International Stock........................... 3.7(b)
Leased Property............................... 3.8(c)
Majority Holders.............................. 2.12(a)
MainWare...................................... 5.8
Merger........................................ Recitals
Merger Shares................................. 2.6(a)
NJBCA......................................... Recitals
NYBCL......................................... Recitals
Pooling Letter................................ 8.1(g)
Princeton..................................... Recitals
Princeton Closing Certificate................. 7.1
Princeton Stock............................... Recitals
Principal Stockholders........................ Recitals
Proposed Acquisition Transaction.............. 5.4
Reformed Option............................... 2.6(d)
Salary Table.................................. 3.18(d)
SEC Reports................................... 4.5
Stockholder Consent........................... 5.6
Stockholder Indemnified Parties............... 9.2(a)
Stockholder's Closing Certificate............. 7.1
Surviving Corporation......................... 2.1(a)
Sub........................................... Recitals
Third-Party Claim............................. 9.2(b)
<PAGE>
1.3 Interpretation Provisions.
(a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and article, section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The term "or" is disjunctive but
not necessarily exclusive. The terms "include" and "including" are not limiting
and mean "including without limitation."
(b) References to agreements and other documents shall be
deemed to include all subsequent amendments and other modifications thereto.
(c) References to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(e) The language used in this Agreement shall be deemed to be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction shall be applied against either party.
(f) The annexes, schedules and exhibits to this Agreement are
a material part hereof and shall be treated as if fully incorporated into the
body of the Agreement.
ARTICLE 2.
THE MERGER; SUBSTITUTION OF STOCK OPTIONS
2.1 The Merger.
(a) Effective Time. At the Effective Time (as defined in
Section 2.2 hereof), and subject to and upon the terms and conditions of this
Agreement and the NJBCA, Sub shall be merged with and into Princeton, the
separate corporate existence of Sub shall cease, and Princeton shall continue as
the surviving corporation. Princeton as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated
pursuant to Section 11.1, and subject to the satisfaction or waiver, if
permissible, of the conditions set forth in Articles 6 and 7, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place (i)
at the offices of Latham & Watkins, 885 Third Avenue, New York, New York, as
promptly as practicable (and in any event within five business days) after
satisfaction or waiver, if permissible, of the conditions set forth in Articles
6 and 7 or (ii) at such other time, date or place as CHC and Princeton may
mutually agree.
2.2 Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Articles 6 and 7, the
parties hereto shall cause the Merger to be consummated by filing the articles
of merger as contemplated by the NJBCA (the "Certificate of Merger"), together
<PAGE>
with any required related documents, with the appropriate administrator, as
indicated in the NJBCA, in such form as required by, and executed in accordance
with the relevant provisions of, the NJBCA. The Merger shall be effective at the
time indicated in such Certificate of Merger (the "Effective Time").
2.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the NJBCA.
2.4 Articles of Incorporation; Bylaws.
(a) Articles of Incorporation. At the Effective Time, the
Certificate of Incorporation of Princeton shall be amended and restated in their
entirety as set forth in the Articles of Merger upon the filing thereof pursuant
to Section 2.2, and shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter duly amended in accordance with applicable law and
such Certificate of Incorporation.
(b) Bylaws. At the Effective Time, the Bylaws of Princeton, as
in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter duly amended in accordance with
applicable law, the Articles of Incorporation of the Surviving Corporation and
such Bylaws.
2.5 Directors and Officers. The directors of Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of Sub
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation and in accordance with
applicable law. Princeton shall cause each director and officer of Princeton to
tender his or her resignation prior to the Effective Time, with each such
resignation to be effective as of the Effective Time.
2.6 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any further action on the part of CHC, Sub, Princeton or
the Stockholders:
(a) Conversion of Securities.
(i) Each share of Princeton Stock issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive such number of validly issued, fully paid and nonassessable
shares of CHC Stock as equals the Exchange Ratio. The shares of CHC Stock issued
in connection with the Merger as a result of such conversion are sometimes
referred to herein as the "Merger Shares."
(ii) Each share of common stock, no par value, of Sub
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof,
automatically be converted into and thereafter represent one validly issued,
fully paid and nonassessable common share, no par value, of the Surviving
Corporation, so that thereafter CHC will be the sole and exclusive owner of the
outstanding capital stock of the Surviving Corporation.
<PAGE>
(b) Cancellation. Each share of Princeton Stock held in the
treasury of Princeton immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof,
automatically cease to be outstanding, be canceled and retired without payment
of any consideration therefor and cease to exist.
(c) Fractional Shares. No certificates or scrip representing
fractional shares of CHC Stock shall be issued in connection with the Merger,
and any fractional share interests will be canceled and thereafter will not
entitle the owner thereof to vote or to any rights as a stockholder of CHC. In
lieu thereof, each holder of shares of Princeton Stock who would otherwise have
been entitled to a fraction of a share of CHC Stock, upon surrender of all
certificates representing shares of Princeton Stock registered in the name of
such holder, will be paid the cash value of such fraction, which shall be equal
to such fraction multiplied by the Effective Average Share Price.
(d) Assumption of Princeton Options.
(i) At the Effective Time, each outstanding Princeton
Option granted under the Princeton Stock Option Plans, whether vested or
unvested, shall automatically, and without further action by CHC or the holder
of such Princeton Option, be converted into an option (the "Reformed Option") to
acquire shares of CHC Stock. Each Reformed Option shall be granted pursuant to
the Computer Horizons Corp. 1994 Incentive Stock Option and Appreciation Plan,
or, in CHC's sole discretion, a new option plan containing substantially similar
provisions and which is the subject of a registration statement filed no later
than 20 days following the Closing Date (in either case, the "CHC Option Plan");
provided, that the provisions of each such Reformed Option relating to the
expiration and date or dates of exercisability thereof shall be identical to
those of the Princeton Option that was converted into such Reformed Option (and
thus any portion of any Princeton Option that is or becomes exercisable at or
prior to the Effective Time shall remain exercisable to the same extent
following the Effective Time). The exercise price per share of CHC Stock under
each Reformed Option shall be equal to the exercise price of such Princeton
Option divided by the Exchange Ratio. The number of shares of CHC Stock subject
to each Reformed Option shall be equal to the number of shares of Princeton
Stock for which such Princeton Option was exercisable at the Effective Time
(whether or not then exercisable) multiplied by the Exchange Ratio.
(ii) As soon as practicable after the Effective Time
(but in any event within thirty (30) business days) CHC shall deliver to each
holder of an outstanding Reformed Option an appropriate notice setting forth
such holder's rights pursuant thereto.
2.7 Delivery of Certificates.
(a) Prior to the Closing, Princeton shall mail or otherwise
deliver to each holder of Princeton Stock a letter of transmittal in a form
reasonably satisfactory to CHC and Princeton, together with a duly executed
counterpart signature page to this Agreement and the Escrow Agreement
(collectively, the "Transmittal Letter"), and instructions for such holder's use
in effecting the surrender of the certificate or certificates evidencing such
Princeton Stock (the "Certificates") as provided in this Section 2.7 and the
execution and delivery by such Stockholder of this Agreement and the Escrow
Agreement.
(b) At the Effective Time, CHC shall deliver, and each holder
of Princeton Stock shall be entitled to receive, upon surrender to CHC or its
representatives of any Certificates for cancellation, together with a
<PAGE>
duly-executed Transmittal Letter, such number of shares of CHC Stock as equals
(A) the aggregate Merger Shares into which such Princeton Stock shall have been
converted in the Merger less (B) such number of shares as equals (1) the
aggregate number of Escrow Shares times (2) a fraction, the numerator of which
is the number of shares of Princeton Stock represented by such Certificate or
Certificates immediately prior to the Effective Time and the denominator of
which is the total number of shares of Princeton Stock issued and outstanding
immediately prior to the Effective Time.
(c) Upon surrender of each Certificate and delivery by CHC of
the number of Merger Shares in exchange therefor, such Certificates shall
forthwith be canceled. Until so surrendered, each Certificate shall be deemed
for all corporate purposes to evidence only the right to receive upon such
surrender the aggregate number of Merger Shares into which the Princeton Stock
represented thereby shall have been converted.
2.8 No Further Ownership Rights in Shares of Princeton Stock. The
shares of CHC Stock delivered upon the surrender for exchange of Princeton Stock
in accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Princeton Stock, and
there shall be no further registration of transfers of Princeton Stock which
were outstanding immediately prior to the Effective Time on the records of the
Surviving Corporation. If, after the Effective Time, the Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article 2.
2.9 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, CHC shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of CHC Stock as may be
required pursuant to Section 2.6; provided, however, that CHC may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against CHC with respect to the Certificates alleged to have been lost, stolen
or destroyed.
2.10 [Intentionally Omitted]
2.11 Escrow of Merger Shares. Notwithstanding the other provisions
of this Article 2, CHC shall deliver to the Escrow Agent that number of shares
of CHC Stock as equals (a) an amount equal to ten percent of the Merger
Consideration divided by (b) the Effective Average Share Price (the "Escrow
Shares"). The Escrow Shares together with any earnings on or accretions thereto
shall be held by the Escrow Agent pursuant to the terms of the Escrow Agreement.
Any CHC Indemnified Party (as defined in Section 9.2(a) hereof) shall be
entitled to delivery from the Escrow Agent of such number of shares of CHC Stock
as shall have a value equal to the amount due such CHC Indemnified Party
pursuant to Article 9 hereof. For purposes of this Section 2.11, the value of
shares of CHC Stock so delivered to any CHC Indemnified Party shall be equal to
the Effective Average Share Price. Except for Escrow Shares with a value
(determined in accordance with this Section 2.11) equal to the amount of any
Claims by CHC Indemnified Parties that may be pending at such time, the
Stockholders shall be entitled to delivery from the Escrow Agent on the first
anniversary of the Closing Date of any Escrow Shares that have not been
delivered to, and are not subject to outstanding Claims or required to have been
delivered to, CHC Indemnified Parties pursuant to this Section 2.11, Article 9
hereof or the Escrow Agreement on or prior to such date.
<PAGE>
2.12 Stockholder Representative.
(a) The parties agree that it is desirable to designate a
representative to act on behalf of holders of the Princeton Stock for certain
limited purposes, as specified herein (the "Stockholder Representative"). Prior
to the Closing Date the holders of a majority of the shares of Princeton Stock
held in the aggregate by the Principal Stockholders shall designate a Person
reasonably acceptable to CHC as the initial Stockholder Representative, and
approval of this Agreement by the holders of the Princeton Stock shall
constitute ratification and approval of such designation. The Stockholder
Representative may resign at any time, and the Stockholder Representative may be
removed by the vote of Persons which collectively own more than 50% of the
aggregate shares of Princeton Stock immediately prior to the Effective Time
("Majority Holders"). In the event that a Stockholder Representative has
resigned or been removed, a new Stockholder Representative shall be appointed by
a vote of Majority Holders, such appointment to become effective upon the
written acceptance thereof by the new Stockholder Representative.
(b) The Stockholder Representative shall have such powers and
authority as are necessary to carry out the functions assigned to it under this
Agreement; provided, however, that the Stockholder Representative will have no
obligation to act on behalf of the holders of the Princeton Stock, except as
expressly provided herein. Without limiting the generality of the foregoing, the
Stockholder Representative shall have full power, authority and discretion to
(i) estimate and determine the amounts of Stockholder Expenses in accordance
with Section 2.13 hereof (ii) make such determinations and take such actions as
are required to be made by the Stockholders with respect to the conditions and
other provisions contained in this Agreement including, without limitation, the
provisions of Article 9 hereof; (iii) exercise such other rights and powers
(subject to such other obligations) of the Stockholders as are set forth in this
Agreement, the Escrow Agreement and/or the Registration Rights Agreement, and
(iv) perform its obligations as set forth in, and in accordance with, the
Registration Rights Agreement and the Escrow Agreement. The Stockholder
Representative will have no liability to CHC, Princeton or the holders of any
equity securities of Princeton with respect to actions taken or omitted to be
taken in its capacity as Stockholder Representative, except with respect to any
liability resulting primarily from the Stockholder Representative's gross
negligence or willful misconduct. The Stockholder Representative will at all
times be entitled to rely on any directions received from the Majority Holders.
2.13 Stockholder Expenses. On or prior to the date which is three
(3) business days prior to the Closing Date, the Stockholder Representative will
provide to CHC a determination of the following fees and expenses that may be
incurred by the Company and the Stockholder Representative on behalf of the
holders of shares of Princeton Stock in connection with the preparation,
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby: (i) the fees and disbursements of outside
counsel and auditors to Princeton or any of its Subsidiaries and any other
agents, consultants and experts specially employed by Princeton, any of its
Subsidiaries and/or the Stockholder Representative in connection with the
transactions contemplated hereby, including without limitation, the Persons
listed on Schedule 2.13 hereof, (ii) one-half of the fees, if necessary,
incurred in connection with compliance by CHC and Princeton with the HSR Act and
(iii) the expenses of the Stockholder Representative incurred in such capacity
(collectively, the "Stockholder Expenses"). With respect to the Persons
described in clause (i) of the preceding sentence, the Stockholder
Representative shall deliver to CHC along with the statement of Stockholder
Expenses the written statement of each such Person setting forth the amounts
<PAGE>
payable by Princeton or any of its Subsidiaries to such Person with respect to
services rendered in connection with the transactions contemplated hereby,
whether or not any such amounts have been billed and/or paid by Princeton or any
such Subsidiary (the "Estimated Stockholder Expenses").
2.14 Tax Consequences. It is intended by the parties hereto that
the Merger shall constitute a reorganization within the meaning of Section
368(a) of the Code. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
U.S. Treasury Regulations.
2.15 Taking of Necessary Action; Further Action. Each of CHC, Sub,
Princeton and each Stockholder will take all such reasonable lawful action as
may be necessary or appropriate in order to effect the Merger in accordance with
this Agreement as promptly as practicable. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement, to vest CHC with full right, title and possession to
all the property, rights, privileges, power and franchises of Princeton and to
vest the Stockholders with full right, title and possession of the Merger
Shares, the officers and directors of Sub, CHC and Princeton immediately prior
to the Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF PRINCETON AND THE STOCKHOLDERS
As an inducement of CHC to enter into this Agreement, Princeton and
each Principal Stockholder hereby makes , and each Stockholder that is not a
Principal Stockholder, by virtue of such Stockholder's execution and delivery of
a Transmittal Letter in accordance with Section 2.7 hereof, makes, jointly and
severally, as of the date hereof and as of the Closing Date, the following
representations and warranties to CHC, except as otherwise set forth in written
disclosure schedules (the "Schedules") delivered to CHC prior to the date
hereof, a copy of which is attached hereto. The Schedules are numbered to
correspond to the various sections of this Article 3 setting forth certain
exceptions to the representations and warranties contained in this Article 3 and
certain other information called for by this Agreement. Unless otherwise
specified, no disclosure made in any particular Schedule shall be deemed made in
any other Schedule unless expressly made therein (by cross-reference or
otherwise), unless, and only to the extent, that it would fairly be understood
to contain information which also is applicable to another representation and
warranty in this Article 3.
3.1 Organization of Princeton. Princeton is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. Princeton has full corporate power and authority to conduct the
Business as it is presently being conducted and to own or lease, as applicable,
the Assets owned or leased by it. Princeton is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in which such
qualification is necessary under applicable law as a result of the conduct of
the Business or the ownership of its properties and where the failure to be so
qualified would have a Princeton Material Adverse Effect. Each jurisdiction in
which Princeton is qualified to do business as a foreign corporation is set
forth in Schedule 3.1.
<PAGE>
3.2 Capitalization of Princeton.
(a) As of the date of this Agreement, there are 10,000,000
shares of Princeton Stock authorized under its Articles of Incorporation,
820,812 of which are issued and outstanding. Princeton has no other capital
stock authorized, issued or outstanding. Schedule 3.2(a) sets forth the name of
each holder of shares of Princeton Stock, as well as the number of shares of
Princeton Stock held by each such holder.
(b) As of the date of this Agreement, 102,290 shares of
Princeton Stock are reserved for issuance upon the exercise of outstanding
Princeton Options. Schedule 3.2(b) sets forth the name of each holder of
Princeton Options, as well as the number of Princeton Options held by each such
holder, the number of Princeton Shares for which each such Princeton Option is
exercisable, the date upon which each such Princeton Option becomes exercisable
and the price per share of Princeton Stock for which each such Princeton Option
is exercisable (without taking into account whether or not such Princeton Option
is in fact exercisable on the date hereof).
(c) Except for the Princeton Options referred to above, there
are no outstanding options, warrants, convertible securities or rights of any
kind to purchase or otherwise acquire any shares of capital stock or other
securities of Princeton. Except for the aggregate of 102,290 shares of Princeton
Stock reserved for issuance upon exercise of the Princeton Options, no shares of
capital stock of Princeton are reserved for issuance.
(d) All outstanding shares of Princeton Stock are, and any
shares of Princeton Stock issued upon exercise of any Princeton Option will be,
validly issued, fully paid and non-assessable and not subject to any preemptive
rights created by statute, Princeton's Certificate of Incorporation or Bylaws or
any Contract. The Princeton Options have been, and the shares of Princeton Stock
have been or will be, issued in compliance with all federal and state corporate
and securities laws.
(e) Other than the transactions contemplated by this
Agreement, there is no outstanding vote, plan, pending proposal or right of any
Person to cause any redemption of Princeton Stock or the merger or consolidation
of Princeton with or into any other entity.
3.3 Stockholders' Agreements, Etc. Except as set forth on Schedule
3.3, there are no stockholder agreements, voting trusts, proxies or other
agreements or understandings with respect to or concerning the purchase, sale or
voting of the capital stock of Princeton.
3.4 Authorization. Princeton has all necessary corporate or other
power and authority to enter into this Agreement and the Ancillary Agreements to
which Princeton is a party and, except with respect to the approval of the
Merger by the holders of Princeton Stock as required by the NJBCA, has taken all
corporate or other action necessary to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by Princeton, and this Agreement
is, and upon execution and delivery each of the Ancillary Agreements to which
Princeton is a party will be, a valid and binding obligation of Princeton,
enforceable against Princeton in accordance with its terms, except that
enforceability may be limited by the effect of (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws relating
to or affecting the rights of creditors or (b) general principals of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
<PAGE>
3.5 Officers and Directors. Schedule 3.5 contains a true, correct
and complete list of all the officers and directors of Princeton and each of its
Subsidiaries.
3.6 Bank Accounts. Schedule 3.6 contains a list of all of
Princeton's and each of its Subsidiaries' bank accounts, safe deposit boxes, and
persons authorized to draw thereon or have access thereto.
3.7 Subsidiaries, Etc.
(a) Princeton Softech International, Inc., a Barbados
corporation ("International") is the only Subsidiary of Princeton. International
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation. International has full corporate
power and authority to conduct the Business as it presently is being conducted
and to own or lease, as applicable, the Assets owned or leased by it.
International is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which such qualification is necessary
under applicable law as a result of the conduct of the Business or the ownership
of its properties and where the failure to be so qualified would not have a
Material Adverse Effect on Princeton. International is not qualified to do
business as a foreign corporation in any jurisdiction.
(b) As of the date hereof there is an unlimited number of
shares of common stock, no par value ("International Stock"), of International
authorized under its Certificate of Incorporation, 100 of which are issued and
outstanding and are held, beneficially and of record, by Princeton.
International has no other capital stock authorized, issued or outstanding.
There are no outstanding options, warrants, convertible securities or rights of
any kind to purchase or otherwise acquire any shares of capital stock or other
securities of International. All outstanding shares of International Stock are
validly issued, fully paid and non-assessable and not subject to any preemptive
rights created by statute, International's Certificate of Incorporation or
Bylaws or any Contract. There is no outstanding vote, plan, pending proposal or
right of any Person to cause any redemption of International Stock or for the
merger or consolidation of International with or into any other entity.
3.8 Real Property.
(a) General. Princeton and each of its Subsidiaries leases all
real property necessary for the conduct of its business as presently conducted.
(b) Owned Real Property. Neither Princeton nor any of its
Subsidiaries owns any real property.
(c) Leased Real Property. Part (c) of Schedule 3.8 sets forth
all Leases pursuant to which Facilities are leased by Princeton or any of its
Subsidiaries (as lessee), true and correct copies of which have been delivered
to CHC. Such Leases constitute all Leases, subleases or other occupancy
agreements pursuant to which Princeton or any of its Subsidiaries occupy or use
Facilities. Princeton and its Subsidiaries have good and valid leasehold title
to, and enjoy peaceful and undisturbed possession of, all leased property
described in such Leases (the "Leased Property"), free and clear of any and all
Encumbrances other than any Permitted Encumbrances which would not permit the
termination of the Lease therefor by the lessor. With respect to each such
parcel of Leased Property (i) there are no pending or, to the knowledge of
Princeton or any of its Subsidiaries, threatened condemnation proceedings
relating to, or any pending or, to the knowledge of Princeton or any of its
<PAGE>
Subsidiaries, threatened Actions relating to, such Leased Property or any
portion thereof, (ii) none of Princeton, any of its Subsidiaries or, to the
knowledge of any of them, any third party has entered into any sublease,
license, option, right, concession or other agreement or arrangement, written or
oral, granting to any person the right to use or occupy such Leased Property or
any portion thereof or interest therein and (iii) neither Princeton nor any of
its Subsidiaries has received notice of any pending or threatened special
assessment relating to such Leased Property or otherwise has any knowledge of
any pending or threatened special assessment relating thereto. Each leased
Facility is supplied with utilities necessary for the operation of such
Facility.
With respect to each Lease listed on part (c) of Schedule 3.8, (i)
there has been no material default under any such Lease by Princeton or any
Subsidiary party thereto or, to the knowledge of Princeton and its Subsidiaries,
by any other party, (ii) the execution, delivery and performance of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby will not cause a material default under any such
Lease, (iii) such Lease is a valid and binding obligation of Princeton or such
Subsidiary, as the case may be, is in full force and effect with respect to
Princeton or such Subsidiary, as the case may be, and is enforceable against
Princeton or such Subsidiary, as the case may be, in accordance with its terms,
except as the enforceability thereof may be limited by (1) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect which affect the enforcement of creditors' rights
generally or (2) general principles of equity, whether considered in a
proceeding at law or in equity, (iv) no action has been taken by Princeton or
any Subsidiary party thereto, and no event has occurred which, with notice or
lapse of time or both, would permit termination, modification or acceleration by
a party thereto other than Princeton or any Subsidiary party thereto without the
consent of Princeton or such Subsidiary, as the case may be, under any such
Lease that is material to Princeton or such Subsidiary, as the case may be, (v)
no party has repudiated in writing any term thereof or threatened in writing to
terminate, cancel or not renew any such Lease that is material to Princeton or
any Subsidiary party thereto and (vi) Princeton or any Subsidiary party thereto
has not assigned, transferred, conveyed, mortgaged or encumbered any interest
therein or in any leased property subject thereto (or any portion thereof).
3.9 Personal Property.
(a) General. Princeton and each of its Subsidiaries owns or
leases all personal property Assets necessary for the conduct of its business as
presently conducted, and the personal property Assets (taken as a whole) are in
such operating condition and repair (subject to normal wear and tear) as is
necessary for the conduct of its business as presently conducted.
(b) Owned Personal Property. Princeton and each of its
Subsidiaries has good and marketable title to all such personal property owned
by it, free and clear of any and all Encumbrances other than Permitted
Encumbrances. With respect to each such item of personal property (i) there are
no Leases, subleases, licenses, options, rights, concessions or other
agreements, written or oral, granting to any party or parties the right of use
of any portion of such item of personal property (except licenses of Proprietary
Rights in the ordinary course of business), (ii) there are no outstanding
options or rights of first refusal in favor of any other party to purchase any
such item of personal property or any portion thereof or interest therein and
(iii) there are no parties (other than Princeton and its Subsidiaries) who are
in possession of or who are using any such item of personal property.
<PAGE>
(c) Leased Personal Property. Princeton and each of its
Subsidiaries has good and valid leasehold title to all of such Fixtures and
Equipment, vehicles and other tangible personal property Assets leased by it
from third parties, free and clear of any and all Encumbrances other than
Permitted Encumbrances which would not permit the termination of the lease
therefor by the lessor. Neither Princeton nor any of its Subsidiaries is a party
to any Lease for personal property involving annual payments in excess of
$25,000.
With respect to each Lease listed on part (c) of Schedule 3.9, (i)
there has been no material default under any such Lease by Princeton or any
Subsidiary party thereto or, to the knowledge of Princeton and its Subsidiaries,
by any other party, (ii) the execution, delivery and performance of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby will not cause a material default under any such
Lease, (iii) such Lease is a valid and binding obligation of Princeton or such
Subsidiary, as the case may be, is in full force and effect with respect to
Princeton or such Subsidiary, as the case may be, and is enforceable against
Princeton or such Subsidiary, as the case may be, in accordance with its terms,
except as the enforceability thereof may be limited by (1) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect which affect the enforcement of creditors' rights
generally or (2) general principles of equity, whether considered in a
proceeding at law or in equity, (iv) no action has been taken by Princeton or
any Subsidiary party thereto, and no event has occurred which, with notice or
lapse of time or both, would permit termination, modification or acceleration by
a party thereto other than Princeton or any Subsidiary party thereto without the
consent of Princeton or such Subsidiary, as the case may be, under any such
Lease that is material to Princeton or such Subsidiary, as the case may be, (v)
no party has repudiated in writing any term thereof or threatened in writing to
terminate, cancel or not renew any such Lease that is material to Princeton or
any Subsidiary party thereto and (vi) Princeton or any Subsidiary party thereto
has not assigned, transferred, conveyed, mortgaged or encumbered any interest
therein or in any leased property subject thereto (or any portion thereof).
3.10 Environmental Matters.
(a) Princeton and its Subsidiaries are in material compliance
with all Environmental Laws, including, without limitation, all Permits required
thereunder to conduct their business as currently being conducted or proposed to
be conducted. All such Permits are listed on Schedule 3.10. Neither Princeton
nor any Subsidiary has received any notice to the effect that, or otherwise has
knowledge that, (i) Princeton or any Subsidiary is not in compliance in any
material respect with, or is in violation of, any such Environmental Laws or
Permits required thereunder or (ii) any currently existing circumstances are
likely to result in a failure of Princeton or any Subsidiary to comply with, or
a violation by Princeton of, any such Environmental Laws or Permits required
thereunder. Neither Princeton nor any of its Subsidiaries has taken any action
during the previous five years that would, to the knowledge of Princeton, any of
its Subsidiaries or any Principal Stockholder, constitute a violation of any
Environmental Laws.
(b) There are no existing or, to the knowledge of Princeton or
any of its Subsidiaries, potential, Environmental Claims against Princeton or
any of its Subsidiaries, nor has any of them received any written notification
or otherwise has any knowledge, of any allegation of any actual, or potential
responsibility for, or any inquiry or investigation regarding, any disposal,
release or threatened release at any location of any Hazardous Substance
generated or transported by Princeton or any of its Subsidiaries.
<PAGE>
(c) To the knowledge of Princeton or any of its Subsidiaries,
(i) no underground tank or other underground storage receptacle for Hazardous
Substances is currently located on the Facilities, and there have been no
releases of any Hazardous Substances from any such underground tank or related
piping and (ii) there have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing, or dumping) of Hazardous Substances in
quantities exceeding the reportable quantities as defined under federal or state
law by Princeton or any of its Subsidiaries on, upon or into the Facilities
other than those authorized by Environmental Laws including, without limitation,
the Permits required thereunder. In addition, to the knowledge of Princeton or
any of its Subsidiaries, there have been no such releases by Princeton or any of
its Subsidiaries' corporate predecessors and no releases in quantities exceeding
the reportable quantities as defined under federal or state law on, upon, or
into any real property in the vicinity of any of the real properties of
Princeton or any of its Subsidiaries other than those authorized by
Environmental Laws which, through soil or ground water contamination, may have
come to be located on the properties of Princeton or any of its Subsidiaries.
(d) To the knowledge of Princeton or any of its Subsidiaries,
there are no PCBs or asbestos-containing materials located at or on the
Facilities.
(e) Neither Princeton nor any of its Subsidiaries is a party,
whether as a direct signatory or as successor, assign or third-party
beneficiary, or otherwise bound, to any Lease or other Contract (excluding
insurance policies disclosed on the Schedules) under which Princeton or any of
its Subsidiaries is obligated by or entitled to the benefits of, directly or
indirectly, any representation, warranty, indemnification, covenant, restriction
or other undertaking concerning Environmental Conditions.
(f) Neither Princeton nor any of its Subsidiaries has released
any other person from any claim under any Environmental Law or waived any rights
concerning any Environmental Condition.
(g) There are no consent decrees, consent orders, judgments,
judicial or administrative orders or agreements (other than Permits) with or
liens by, any Governmental Authority or quasi-governmental entity relating to
any Environmental Law which regulate, obligate or bind Princeton or any of its
Subsidiaries.
(h) Complete and accurate copies of the Environmental Reports,
as well as all other written environmental reports, audits or assessments which
have been conducted, either by Princeton, any of its Subsidiaries or any person
engaged by Princeton or any of its Subsidiaries for such purpose, at any
facility owned or formerly owned by Princeton or any of its Subsidiaries have
been made available to CHC and a list of all such reports, audits and
assessments is set forth on Schedule 3.10.
(i) Princeton and each of its Subsidiaries has submitted on a
timely basis all applications for operating permits required pursuant to Title V
of the Clean Air Act, and to the knowledge of Princeton and its Subsidiaries, no
additional capital expenditures will be required by Princeton or any of its
Subsidiaries for purposes of compliance with permitting conditions likely to be
imposed pursuant to Title V of the Clean Air Act.
<PAGE>
3.11 Contracts.
(a) Disclosure. Schedule 3.11 sets forth a complete and
accurate list of all of the Contracts of the following categories:
(i) Contracts not made in the ordinary course of
business;
(ii) Manufacturing or joint development agreements;
(iii) License agreements or royalty agreements,
whether Princeton is the licensor or licensee thereunder;
(iv) Confidentiality and non-disclosure agreements
(whether Princeton is the beneficiary or the obligated party thereunder);
(v) Customer orders or sales contracts under which
the customer is to make a payment after the date hereof of $10,000 or more;
(vi) Research agreements;
(vii) Contracts or commitments involving future
expenditures or Liabilities, actual or potential, in excess of $10,000 after the
date hereof or otherwise material to the Business or the Assets;
(viii) Contracts or commitments relating to
commission arrangements with others;
(ix) Employment contracts, consulting contracts and
severance agreements, including Contracts (A) to employ or terminate executive
officers or other personnel and other contracts with present or former officers
or directors of Princeton or (B) that will result in the payment by, or the
creation of any Liability of Princeton, the Stockholders or CHC to pay any
severance, termination, "golden parachute," or other similar payments to any
present or former personnel following termination of employment or otherwise as
a result of the consummation of the transactions contemplated by this Agreement;
(x) Indemnification agreements;
(xi) Promissory notes, loans, agreements, indentures,
evidences of indebtedness, letters of credit, guarantees, or other instruments
relating to an obligation to pay money, whether Princeton or any of its
Subsidiaries shall be the borrower, lender or guarantor thereunder (excluding
credit provided by Princeton or any of its Subsidiaries in the ordinary course
of business to purchasers of its products and obligations to pay vendors in the
ordinary course of business and consistent with past practice);
(xii) Contracts containing covenants limiting the
freedom of Princeton, or any of its Subsidiaries or any officer, director,
Employee or Affiliate of Princeton or any of its Subsidiaries, to engage in any
line of business or compete with any Person that relates directly or indirectly
to the Business;
(xiii) Any Contract with the federal, state or local
government or any agency or department thereof;
(xiv) Any Contract with a Related Party;
<PAGE>
(xv) Leases of real or personal property involving
annual payments of more than $10,000; and
(xvi) Any other Contract under which the consequences
of a default or termination would reasonably be expected to have a Material
Adverse Effect on Princeton, individually or in the aggregate.
Complete and accurate copies of all of the Contracts listed on Schedule
3.11, including all amendments and supplements thereto, have been made available
to CHC. Princeton has included as part of Schedule 3.11 a brief summary of the
material terms of each oral Contract.
(b) Absence of Defaults. All of the Contracts are valid,
binding and enforceable in accordance with their terms with no existing (or to
the knowledge of Princeton, any of its Subsidiaries or any of the Principal
Stockholders, threatened) Default or dispute. Princeton has fulfilled, or taken
all action necessary to enable it to fulfill when due, all of its material
obligations under each of such Contracts. To the knowledge of Princeton, any of
its Subsidiaries or any of the Principal Stockholders, all parties to such
Contracts have complied in all material respects with the provisions thereof, no
party is in Default thereunder and no notice of any claim of Default has been
given to Princeton, any of its Subsidiaries or any of the Principal
Stockholders. None of the Principal Stockholders, Princeton or any of its
Subsidiaries or any of its Subsidiaries has any reason to believe that the
products or services called for by any executory Contract cannot be supplied in
accordance with the terms of such Contract, including time specifications, and
has no reason to believe that any unfinished Contract will, upon performance by
Princeton or any of its Subsidiaries result in a loss to Princeton or any of its
Subsidiaries.
(c) Product Warranty. Neither Princeton nor any of its
Subsidiaries has committed any act, and there has been no omission, which may
result in, and there has been no occurrence which may give rise to, product
liability or Liability for breach of warranty (whether covered by insurance or
not) on the part of Princeton or any of its Subsidiaries, with respect to
products designed, manufactured, assembled, sold, repaired, maintained,
delivered or installed or services rendered prior to or on the Closing Date.
3.12 No Conflict or Violation; Consents. Except as set forth on
Schedule 3.12, none of the execution, delivery or performance of this Agreement
or any Ancillary Agreement, the consummation of the transactions contemplated
hereby or thereby, nor compliance by Princeton or any Principal Stockholder with
any of the provisions hereof or thereof, will (a) violate or conflict with any
provisionof the governing documents of Princeton, any of its Subsidiaries or any
Principal Stockholder, (b) violate, conflict with, or result in a breach of or
constitute a default (with or without notice of passage of time) under, or
result in the termination of, or accelerate the performance required by, or
result in a right to terminate, accelerate, modify or cancel under, or require a
notice under, or result in the creation of any Encumbrance upon any of its
respective assets under, any Contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest or other arrangement to which
Princeton, any of its Subsidiaries or any Principal Stockholder is a party or by
which Princeton, any of its Subsidiaries or any Principal Stockholder is bound
or to which any of its respective assets are subject, (c) violate any applicable
Regulation or Court Order or (d) impose any Encumbrance on any Assets or the
Business. Except as set forth on Schedule 3.12, no notices to, declaration,
<PAGE>
filing or registration with, approvals or Consents of, or assignments by, any
Persons (including any federal, state or local governmental or administrative
authorities) are necessary to be made or obtained by Princeton, any of its
Subsidiaries or any Principal Stockholder in connection with the execution,
delivery or performance of this Agreement or any Ancillary Agreement or the
consummation of the transactions contemplated hereby or thereby.
3.13 Permits. Schedule 3.13 sets forth a complete list of all
material Permits, all of which are as of the date hereof, and will be as of the
Closing Date, in full force and effect. Princeton has, and at all times has had,
all material Permits required under any applicable Regulation in its operation
of the Business or in its ownership of the Assets, and owns or possesses such
Permits free and clear of all Encumbrances. Neither Princeton nor any of its
Subsidiaries is in default, nor has Princeton, any of its Subsidiaries or any
Principal Stockholder received any notice of any claim of default, with respect
to any such Permit. Except as otherwise governed by law, all such Permits are
renewable by their terms or in the ordinary course of business without the need
to comply with any special qualification procedures or to pay any amounts other
than routine filing fees and, except as set forth on Schedule 3.13, will not be
adversely affected by the completion of the transactions contemplated by this
Agreement or the Ancillary Agreements.
3.14 Financial Statements; Books and Records. (a) The Financial
Statements are complete, are in accordance with the Books and Records, fairly
present the Assets and Liabilities of Princeton and its Subsidiaries and
financial condition and results of operations indicated thereby in accordance
with GAAP consistently applied throughout the periods covered thereby.
(b) Princeton and each of its Subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed with management's authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
authorization and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(c) The Books and Records, in reasonable detail, accurately
and fairly reflect the activities of Princeton and the Business and have been
provided to CHC for its inspection.
(d) Neither Princeton nor any of its Subsidiaries has engaged
in any transaction, maintained any bank account or used any corporate funds
except for transactions, bank accounts or funds which have been and are
reflected in the normally maintained Books and Records.
(e) The stock records and minute books of Princeton and each
of its Subsidiaries that are made available to CHC fully reflect all minutes of
meetings, resolutions and other material actions and proceedings of their
respective stockholders and boards of directors and all committees thereof, all
issuances, transfers and redemptions of capital stock of which Princeton, its
Subsidiaries or the Principal Stockholders are aware and contain true, correct
and complete copies of their respective Articles of Incorporation and Bylaws and
all amendments thereto through the date hereof.
3.15 Absence of Certain Changes or Events. Except as set forth on
Schedule 3.15, since the Balance Sheet Date there has not been any:
<PAGE>
(a) Material Adverse Change with respect to Princeton;
(b) failure to operate the Business in the ordinary course so
as to use its commercially reasonable efforts to preserve the Business intact
and to preserve the continued services of its Employees and the goodwill of
suppliers, customers and others having business relations with Princeton any of
its Subsidiaries or their respective Representatives;
(c) resignation or termination of any officer or Employee, or,
except as set forth the Salary Table, any increase in the rate of compensation
payable or to become payable to any officer, Employee or Representative of
Princeton or any of its Subsidiaries, including the making of any loan to, or
the payment, grant or accrual of any bonus, incentive compensation, service
award or other similar benefit to, any such Person, or the addition to,
modification of, or contribution to any Employee Plan (as defined below);
(d) payment, loan or advance of any amount to or in respect
of, or the sale, transfer or lease of any properties or the Assets to, or
entering into of any Contract with, any Related Party except (i) directors'
fees, (ii) compensation to Employees at the rates disclosed pursuant to Section
3.18(d) and (iii) forgiveness of loans in the amounts and to the individuals set
forth on Schedule 3.15;
(e) sale, assignment, license, transfer or Encumbrance of any
of the Assets, tangible or intangible, singly or in the aggregate, other than
sales of products and services in the ordinary course of business and consistent
with past practice;
(f) new Contracts, or extensions, modifications, terminations
or renewals thereof, except for Contracts entered into, modified or terminated
in the ordinary course of business and consistent with past practice;
(g) actual or threatened termination of any material customer
account or group of accounts or actual or threatened material reduction in
purchases or royalties payable by any such customer or occurrence of any event
that is likely to result in any such termination or reduction;
(h) disposition or lapsing of any Proprietary Rights of
Princeton or any of its Subsidiaries, in whole or in part, or any disclosure of
any trade secret, process or know-how to any Person not an Employee;
(i) change in accounting methods or practices by Princeton or
any of its Subsidiaries;
(j) revaluation by Princeton or any of its Subsidiaries of any
of the Assets, including writing off notes or accounts receivable other than for
which adequate reserves have been established;
(k) damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the Assets, the Business or the
prospects of Princeton or any of its Subsidiaries;
(l) declaration, setting aside or payment of dividends or
distributions in respect of any capital stock of Princeton or any of its
Subsidiaries or any redemption, purchase or other acquisition of any equity
securities of Princeton or any of its Subsidiaries;
<PAGE>
(m) issuance or reservation for issuance by Princeton or any
of its Subsidiaries of, or commitment of it to issue or reserve for issuance,
any shares of capital stock or other equity securities or obligations or
securities convertible into or exchangeable for shares of capital stock or other
equity securities;
(n) increase, decrease or reclassification of the capital
stock of Princeton or any of its Subsidiaries;
(o) amendment of the Certificate of Incorporation or Bylaws of
Princeton or any of its Subsidiaries;
(p) capital expenditure or execution of any lease or any
incurring of liability therefor by Princeton or any of its Subsidiaries,
involving payments in excess of $10,000 in the aggregate;
(q) failure to pay any material obligation of Princeton or any
of its Subsidiaries when due;
(r) cancellation of any indebtedness or waiver of any rights
of substantial value to Princeton or any of its Subsidiaries, except in the
ordinary course of business and consistent with past practice;
(s) indebtedness incurred by Princeton or any of its
Subsidiaries for borrowed money or any commitment to borrow money entered into
by Princeton or any of its Subsidiaries, or any loans made or agreed to be made
by Princeton or any of its Subsidiaries;
(t) liability incurred by Princeton or any of its Subsidiaries
except in the ordinary course of business and consistent with past practice, or
any increase or change in any assumptions underlying or methods of calculating
any bad debt, contingency or other reserves;
(u) payment, discharge or satisfaction of any Liabilities of
Princeton or any of its Subsidiaries other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of Liabilities reflected or reserved against in the Financial
Statements or incurred in the ordinary course of business and consistent with
past practice since the Balance Sheet Date;
(v) acquisition of any equity interest in any other Person; or
(w) agreement by Princeton or any of its Subsidiaries to do
any of the foregoing.
3.16 Liabilities. Neither Princeton nor any of its Subsidiaries has
any Liabilities or obligations (absolute, accrued, contingent or otherwise)
except (i) Liabilities which are reflected and properly reserved against in the
Financial Statements, (ii) Liabilities incurred in the ordinary course of
business and consistent with past practice since the Balance Sheet Date (all of
which liabilities do not exceed $50,000 in the aggregate) and (iii) liabilities
arising under the Contracts (other than obligations which are required to be
reflected on a balance sheet prepared in accordance with GAAP) set forth on
Schedule 3.11 or which are not required to be disclosed on such Schedule and
which have arisen or been incurred in the ordinary course of business. None of
the Liabilities described in this Section 3.16 relates to any breach of
Contract, breach of warranty, tort, infringement or violation of law or arose
out of any action, order writ, injunction, judgment or decree outstanding or
<PAGE>
claim, suit, litigation, proceeding, investigation or dispute (collectively,
"Actions"). The reserves set forth on the Balance Sheet for liabilities are
reasonable.
3.17 Litigation. There is no Action, pending or, to the knowledge
of Princeton, any of its Subsidiaries or any Principal Stockholder, threatened
or anticipated (i) against, relating to or affecting Princeton, any of its
Subsidiaries, any of the Assets or any of their respective officers and
directors as such, (ii) which seeks to enjoin or obtain damages in respect of
the transactions contemplated hereby or by the Ancillary Agreements or (iii)
with respect to which there is a reasonable likelihood of a determination which
would prevent Princeton or any of the Stockholders from consummating the
transactions contemplated hereby. To the knowledge of Princeton, any of its
Subsidiaries or any Principal Stockholder, there is no basis for any Action,
which if adversely determined against any Stockholder, Princeton, any of its
Subsidiaries, their respective directors or officers, or any other Person could
reasonably be expected to result in a loss to Princeton, any of its
Subsidiaries, or any of its Subsidiaries, individually or in the aggregate, in
excess of $10,000. There are presently no outstanding judgments, decrees or
orders of any court or any governmental or administrative agency against or
affecting Princeton, any of its Subsidiaries, the Business or any of the Assets.
Schedule 3.17 contains a complete and accurate description of all Actions since
December 31, 1993 to which Princeton or any of its Subsidiaries has been a party
or which relate to any of the Assets or their respective officers or directors
as such, or any such Actions which were settled prior to the institution of
formal proceedings, other than Actions brought by Princeton or any of its
Subsidiaries for collection of monies owed in the ordinary course of business.
No representation is made in this Section 3.17 with respect to matters covered
in Section 3.23 (Tax matters).
3.18 Labor Matters.
(a) Schedule 3.18 contains a complete list of Employees.
Neither Princeton nor any of its Subsidiaries is a party to any labor agreement
with respect to its Employees with any labor organization, group or association
and has not experienced any attempt by organized labor or its representatives to
make Princeton or any of its Subsidiaries conform to demands of organized labor
relating to its Employees or to enter into a binding agreement with organized
labor that would cover the Employees of Princeton or any of its Subsidiaries.
There is no unfair labor practice charge or complaint against Princeton or any
of its Subsidiaries pending before the National Labor Relations Board or any
other governmental agency arising out of Princeton's or any such Subsidiary's
activities, and none of Princeton, any of its Subsidiaries or any Principal
Stockholder has any knowledge of any facts or information which would give rise
thereto; there is no labor strike or labor disturbance pending or threatened
against Princeton or any of its Subsidiaries nor is any grievance currently
being asserted against it; and neither Princeton nor any of its Subsidiaries has
experienced a work stoppage or other labor difficulty. There are no material
controversies pending or, to the knowledge of Princeton, any of its Subsidiaries
or any Principal Stockholder, threatened between Princeton or any of its
Subsidiaries and any of their respective Employees, and none of Princeton, any
of its Subsidiaries or any Principal Stockholder is aware of any facts which
could reasonably result in any such controversy.
(b) Princeton and its Subsidiaries are each in material
compliance with all applicable Regulations respecting employment practices,
terms and conditions of employment, wages and hours, equal employment
<PAGE>
opportunity, and the payment of social security and similar taxes, and none of
them are engaged in any unfair labor practice. Neither Princeton nor any of its
Subsidiaries is liable for any claims for past due wages or any penalties for
failure to comply with any of the foregoing.
(c) Except with respect to the employment agreements set forth
on Attachment A to Schedule 3.11 (the "Existing Employment Agreements"), neither
Princeton nor any of its Subsidiaries has entered into any severance or similar
arrangement in respect of any present or former Employee that will result in any
obligation (absolute or contingent) of CHC, Princeton or any of its Subsidiaries
to make any payment to any present or former Employee following termination of
employment or upon consummation of the transactions contemplated by this
Agreement. Neither the execution and delivery of this Agreement or any Ancillary
Agreement nor the consummation of the transactions contemplated hereby or
thereby will result in the acceleration or vesting of any other rights of any
Person to benefits under any Employee Plans.
(d) Attached hereto as Schedule 3.18 is a list of the names of
all present Employees. Princeton has provided CHC with a table setting forth the
current salary or hourly wages and other compensation payable by Princeton or
any of its Subsidiaries to each of such Employees (the "Salary Table").
3.19 Employee Benefit Plans. (a) Schedule 3.19 contains a complete
list of Employee Plans. True and complete copies of each of the following
documents have been delivered by Princeton to CHC: (i) each Employee Plan (and,
if applicable, related trust agreements, annuity contracts or other funding
instruments) which covers or has covered employees of Princeton or any of its
Subsidiaries (with respect to their relationship with Princeton or any of its
Subsidiaries) and all amendments thereto, all summary plan descriptions, summary
of material modifications (as defined in ERISA) and all written interpretations
and descriptions thereof which Princeton or any of its Subsidiaries generally
has distributed to participants therein, the number of and a general description
of the level of employees covered by each Benefit Arrangement and a complete
description of any Employee Plan which is not in writing, (ii) the most recent
determination letter issued by the Internal Revenue Service and any opinion
letter issued by the Department of Labor with respect to each Pension Plan and
each voluntary employees' beneficiary association as defined under Section
501(c)(9) of the Code (other than a Multiemployer Plan) which covers or has
covered employees of Princeton or any of its Subsidiaries (with respect to their
relationship with Princeton or any of its Subsidiaries), (iii) for the three
most recent plan years, Annual Reports on Form 5500 Series required to be filed
with any governmental agency for each Pension Plan or Welfare Plan which covers
or has covered employees of Princeton or any of its Subsidiaries (with respect
to their relationship with Princeton or any of its Subsidiaries), (iv) all
actuarial reports prepared for the last three plan years for each Pension Plan
which covers or has covered employees of Princeton or any of its Subsidiaries
(with respect to their relationship with Princeton or any of its Subsidiaries),
and (v) a description setting forth the amount of any liability of Princeton or
any of its Subsidiaries as of the Closing Date for payments more than thirty
(30) calendar days past due with respect to any Welfare Plan.
(b)
(i) Pension Plans.
(A) No Pension Plan is subject to the
minimum funding requirements of ERISA. As of the last day of the last plan year
of each Pension Plan and as of the Closing Date, the "amount of unfunded benefit
liabilities" as defined in Section 4001(a)(18) of ERISA (but excluding from the
<PAGE>
definition of "current value" of "assets" of such Pension Plan, accrued but
unpaid contributions) did not and will not exceed zero. None of Princeton or any
ERISA Affiliate has engaged in, or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Section 4069 of ERISA.
None of Princeton or any ERISA Affiliate has, at any time, (1) ceased operations
at a facility so as to become subject to the provisions of Section 4062(e) of
ERISA, (2) withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA, or (3) ceased making contributions on or
before the Closing Date to any Pension Plan subject to Section 4064(a) of ERISA
to which Princeton or any ERISA Affiliate made contributions during the six
years prior to the Closing Date.
(B) Each Pension Plan and each related trust
agreement, annuity contract or other funding instrument which covers or has
covered employees or former employees of Princeton or any of its Subsidiaries
(with respect to their relationship with Princeton or any of its Subsidiaries)
which has been operated as a qualified plan (1) has received a favorable
determination letter (or is not required under applicable law to have received)
from the Internal Revenue Service stating that such Pension Plan and each
related trust is qualified and tax-exempt under the provisions of Code Sections
401(a) and 501(a) and (2) has been so qualified during the period from its
adoption to the date of such determination letter.
(C) Each Pension Plan and each related trust
agreement, annuity contract or other funding instrument which covers or has
covered employees or former employees of Princeton or any of its Subsidiaries
(with respect to their relationship with Princeton or any of its Subsidiaries)
currently complies in all material respects and has been maintained in
compliance in all material respects with its terms and, both as to form and in
operation, with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such plans, including, without
limitation, ERISA and the Code.
(ii) Multiemployer Plans. Neither Princeton nor
any ERISA Affiliate has any liability with respect to a Multiemployer Plan, and
no liability will arise or be imposed on Princeton or any ERISA Affiliate under,
or with respect to, any Multiemployer Plan.
(iii) Welfare Plans.
(A) Each Welfare Plan which covers or has
covered employees or former employees of Princeton or any of its Subsidiaries
(with respect to their relationship with Princeton or any of its Subsidiaries)
currently complies in all material respects and has been maintained in
compliance in all material respects with its terms and, both as to form and
operation, with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such Welfare Plan, including,
without limitation, ERISA and the Code.
(B) Except as required by Section 4980B of
the Code or Part 6 of Title 1, Subtitle B of ERISA, none of Princeton, any ERISA
Affiliate or any Welfare Plan has any present or future obligation to make any
payment to, or with respect to any present or former employee of Princeton or
any ERISA Affiliate pursuant to, any retiree medical benefit plan, or other
retiree Welfare Plan, and no condition exists which would prevent Princeton or
an ERISA Affiliate from amending or terminating any such benefit plan or such
Welfare Plan.
<PAGE>
(C) Each Welfare Plan which covers or has
covered employees or former employees of Princeton or any of its Subsidiaries
(with respect to their relationship with Princeton or any of its Subsidiaries)
and which is a "group health plan," as defined in Section 607(1) of ERISA,
presently complies in all material respects with and has been operated in
compliance in all material respects with provisions of Part 6 of Title I,
Subtitle B of ERISA and Sections 162(k) and 4980B of the Code at all times.
(D) Neither Princeton or any ERISA Affiliate
has, at any time, maintained, contributed to or had any obligation to maintain
or contribute to any Welfare Plan that is a "multiemployer plan," as defined in
Section 3(37) of ERISA.
(E) The insurance policies or other funding
instruments, if any, for each Welfare Plan provide coverage for each employee,
consultant, independent contractor or retiree of Princeton or any of its
Subsidiaries (and, if applicable, their respective dependents) who has been
advised by Princeton or any of its Subsidiaries, whether through an Employee
Plan or otherwise, that he or she is covered by such Welfare Plan.
(iv) Benefit Arrangements. Each Benefit
Arrangement presently complies and has been maintained in compliance in all
material respects with its terms and with the requirements prescribed by any and
all statutes, orders, rules and regulations which are applicable to such Benefit
Arrangement, including, without limitation, the Code. Except as provided by law
or in any employment agreement set forth on Schedule 3.19 or the Employment and
Non-Compete Agreements, the employment of all persons presently employed or
retained by Princeton or any of its Subsidiaries is terminable at will.
(v) Unrelated Business Taxable Income; Unpaid
Contributions. No Employee Plan (or trust or other funding vehicle pursuant
thereto) has incurred any liability under Code Section 511. Neither Princeton
nor any ERISA Affiliate has any liability for unpaid contributions under Section
515 of ERISA with respect to any Employee Plan.
(vi) Deductibility of Payments. There is no
contract, agreement, plan or arrangement covering any employee or former
employee of Princeton or any of its Subsidiaries (with respect to such
employee's relationship with Princeton or any of its Subsidiaries) that,
individually or collectively, requires the payment by Princeton or any of its
Subsidiaries of any amount (i) that is not deductible under Section 162(a)(1) or
404 of the Code or (ii) that is an "excess parachute payment" pursuant to
Section 280G of the Code.
(vii) Fiduciary Duties and Prohibited
Transactions. None of Princeton, any of its Subsidiaries or any plan fiduciary
of any Welfare Plan or Pension Plan has engaged in, or has any liability in
respect of, any transaction in violation of Sections 404 or 406 of ERISA or any
"prohibited transaction," as defined in Section 4975(c)(1) of the Code, for
which no exemption exists under Section 408 of ERISA or Section 4975(c)(2) or
(d) of the Code, or has otherwise violated the provisions of Part 4 of Title I,
Subtitle B of ERISA so as to create any liability of Princeton or any of its
Subsidiaries or any Employee Plan. Princeton and its Subsidiaries have not
participated in a violation of Part 4 of Title I, Subtitle B of ERISA by any
plan fiduciary of any Welfare Plan or Pension Plan, and Princeton and its
Subsidiaries have not been assessed any civil penalty under Section 502(l) of
ERISA.
<PAGE>
(viii) Litigation. There is no action, order, writ,
injunction, judgment or decree outstanding or claim (other than routine claims
for benefits), suit, litigation, proceeding, arbitration proceeding,
governmental audit or investigation relating to or seeking benefits under any
Employee Plan that is pending or, to the knowledge of Princeton or any of its
Subsidiaries, anticipated or threatened against Princeton, any ERISA Affiliate
or any Employee Plan.
(ix) No Amendments. Neither Princeton nor any
ERISA Affiliate has announced to employees, former employees, consultants or
directors an intention to create, or otherwisecreated, a legally binding
commitment to adopt any additional Employee Plan which is intended to cover
employees or former employees of Princeton or any of its Subsidiaries (with
respect to their relationship with Princeton or any of its Subsidiaries) or to
amend or modify any existing Employee Plan which covers or has covered employees
or former employees of Princeton or any of its Subsidiaries (with respect to
their relationship with Princeton or any of its Subsidiaries).
(x) Insurance Contracts. None of Princeton, any
or its Subsidiaries or any Employee Plan (other than a Multiemployer Plan) holds
as an asset of any Employee Plan any interest in any annuity contract,
guaranteed investment contract or any other investment or insurance contract
issued by an insurance company that is the subject of bankruptcy,
conservatorship or rehabilitation proceedings.
(xi) No Acceleration or Creation of Rights.
Except with respect to the Existing Employment Agreements, neither the execution
and delivery of this Agreement or the Ancillary Agreements by Princeton nor the
consummation of the transactions contemplated hereby or the related transactions
will result in the acceleration or creation of any rights of any person to
benefits under any Employee Plan (including, without limitation, the
acceleration of the vesting or exercisability of any stock options, the
acceleration of the vesting of any restricted stock, the acceleration of the
accrual or vesting of any benefits under any Pension Plan or the acceleration or
creation of any rights under any severance, parachute or change in control
agreement).
(xii) No Other Material Liability. No event has
occurred in connection with which Princeton, any of its Subsidiaries or any
Employee Plan, directly or indirectly, could be subject to any material
liability (A) under any statute, regulation or governmental order relating to
any Employee Plan or (B) pursuant to any obligation of Princeton or any of its
Subsidiaries to indemnify any person against liability incurred under any such
statute, regulation or order as they relate to the Employee Plans.
(xiii) Severance Arrangements. Except with respect
to the Existing Employment Agreements and the Employment and Non-Compete
Agreements, neither Princeton nor any of its Subsidiaries is a party to any
severance or similar arrangement in respect of any Employees that will result in
any obligation (absolute or contingent) of Princeton, any of its Subsidiaries or
CHC after the Closing to make any payment to any of such Employees following the
consummation of the transactions contemplated by this Agreement or termination
of employment.
3.20 Transactions with Related Parties. Except for employment
agreements and other compensation arrangements disclosed on Schedule 3.20, to
the knowledge of Princeton, any of its Subsidiaries or any Principal
Stockholder, no Related Party has (a) borrowed or loaned money or other property
<PAGE>
to Princeton or any of its Subsidiaries which has not been repaid or returned,
(b) any contractual or other claims, express or implied, of any kind whatsoever
against Princeton or any of its Subsidiaries or (c) any interest in any property
used by Princeton or any of its Subsidiaries.
3.21 Compliance with Law. Princeton and each of its Subsidiaries
has conducted the Business in material compliance with all applicable
Regulations and Court Orders. Neither Princeton, any of its Subsidiaries nor any
Principal Stockholder has received any notice to the effect that, or has
otherwise been advised that, Princeton or any of its Subsidiaries is not in
compliance with any such Regulations or Court Orders, and none of Princeton, any
of its Subsidiaries or any Principal Stockholder has any reason to anticipate
that any existing circumstances are likely to result in any material violation
of any of the foregoing.
3.22 Intellectual Property.
(a) General. Schedule 3.22 sets forth with respect to
Proprietary Rights of Princeton and its Subsidiaries: (i) for each patent and
patent application, including petty patents and utility models and applications
therefor, as applicable, the number, normal expiration date, title and priority
information for each country in which such patent has been issued, or, the
application number, date of filing, title and priority information for each
country, (ii) for each trademark, tradename or service mark, whether or not
registered, the date first used, the application serial number or registration
number, the class of goods covered, the nature of the goods or services, the
countries in which the names or mark is used and the expiration date for each
country in which a trademark has been registered, (iii) for each copyright for
which registration has been sought, whether or not registered, the date of
creation and first publication of the work, the number and date of registration
for each country in which a copyright application has been registered, (iv) for
each mask work, whether or not registered, the date of first commercial
exploitation and if registered, the registration number and date of
registration, (v) a description of all Trade Secrets and (vi) all such
Proprietary Rights in the form of licenses. True and correct copies of all
Proprietary Rights (including all pending applications, application related
documents and materials and written materials relating to Trade Secrets) owned,
controlled or used by or on behalf of Princeton or any of its Subsidiaries or in
which Princeton or any of its Subsidiaries has any interest whatsoever have been
provided or made available to CHC.
(b) Adequacy. The Proprietary Rights of Princeton and its
Subsidiaries are all those necessary for the normal conduct of the Business as
presently conducted and as presently contemplated, including the design,
manufacture and sale of all products currently under development, planned for
development or in production.
(c) Royalties and Licenses. Except with respect to the
Existing Employment Agreements, neither Princeton nor any of its Subsidiaries
has any obligation to compensate any Person for the use of any of its
Proprietary Rights nor, except in the ordinary course of business, has Princeton
or any of its Subsidiaries granted to any Person any license, option or other
rights to use in any manner any of its Proprietary Rights, whether requiring the
payment of royalties or not.
(d) Ownership. Princeton and each of its Subsidiaries owns or
has a valid right to use its Proprietary Rights, and such Proprietary Rights
will not cease to be valid rights of Princeton or any such Subsidiary by reason
<PAGE>
of the execution, delivery and performance of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated hereby or
thereby. The patents are valid and in full force and effect and are not subject
to any fines, maintenance fees or Actions falling due within 90 days after the
Closing Date.
(e) Absence of Claims. None of Princeton, any of its
Subsidiaries or any Principal Stockholder (A) has received any notice alleging,
or otherwise has knowledge of facts that might give rise to, invalidity with
respect to any of the Proprietary Rights of Princeton and its Subsidiaries or
(B) has received any notice of alleged infringement of any rights of others due
to any activity by Princeton or any such Subsidiary. To the knowledge of
Princeton, any of its Subsidiaries or any Stockholder, Princeton's or any such
Subsidiary's use of its Proprietary Rights in its past, current and planned
products do not and would not infringe upon or otherwise violate the valid
rights of any third party anywhere in the world. No other Person (i) has
notified Princeton, any of its Subsidiaries or any Principal Stockholder that it
is claiming any ownership of or right to use any of Princeton's or any such
Subsidiary's Proprietary Rights or (ii) to the knowledge of Princeton, any of
its Subsidiaries or any Stockholder, is infringing upon any such Proprietary
Rights in any way.
(f) Protection of Proprietary Rights. All of the pending
applications for Princeton's or any such Subsidiary's Proprietary Rights have
been duly filed and all other actions to protect such Proprietary Rights have
been taken. Princeton and each of its Subsidiaries has taken reasonable steps
necessary or appropriate (including, entering into appropriate confidentiality
and nondisclosure agreements with officers, directors, subcontractors,
Employees, licensees and customers in connection with the Assets or the
Business) to safeguard and maintain the secrecy and confidentiality of, and the
proprietary rights in, the Proprietary Rights that are material to the Business.
None of Princeton, any of its Subsidiaries or any Principal Stockholder has
knowledge of any breach of any such confidentiality or nondisclosure agreement
by any party thereto.
3.23 Tax Matters.
(a) Filing of Tax Returns. Princeton and each of its
Subsidiaries has timely filed with the appropriate taxing authorities all Tax
Returns in respect of Taxes required to be filed through the date hereof. The
Tax Returns filed are complete and accurate in all material respects. Except as
specified in Schedule 3.23, neither Princeton nor any of its Subsidiaries has
requested any extension of time within which to file Tax Returns in respect of
any Taxes. Princeton has delivered to CHC complete and accurate copies of
federal, state and local Tax Returns of Princeton and each of its Subsidiaries
(if separate Tax Returns were filed) for the years ended December 31, 1996, 1995
and 1994.
(b) Payment of Taxes. All Taxes due from Princeton and each of
its Subsidiaries, or for which any of them could be liable, in respect of
periods (or portions thereof) beginning before the Closing Date have been timely
paid or an adequate reserve (in conformity with GAAP) has been established
therefor, as set forth in Schedule 3.23 or the Financial Statements, and neither
Princeton nor any of its Subsidiaries has any material Liability for Taxes in
excess of the amounts so paid or reserves so established. All Taxes that
Princeton and each of its Subsidiaries is required by law to withhold or collect
have been duly withheld or collected and have been timely paid over to the
appropriate governmental authorities to the extent due and payable.
<PAGE>
(c) Audits, Investigations or Claims. No deficiencies for
Taxes of Princeton or any of its Subsidiaries have been claimed, proposed or
assessed by any taxing or other governmental authority. There are no pending or,
to the knowledge of Princeton, any of its Subsidiaries or any Principal
Stockholder, threatened audits, assessments or other Actions for or relating to
any Liability in respect of Taxes of Princeton, any of its Subsidiaries or any
Principal Stockholder, and there are no matters under discussion with any
governmental authorities, or known to Princeton, any of its Subsidiaries or any
Principal Stockholder, with respect to Taxes that are likely to result in an
additional Liability for Taxes. Audits of federal, state and local Tax Returns
by the relevant taxing authorities have been completed for the periods set forth
on Schedule 3.23 and, except as set forth in such Schedule, neither Princeton
nor any of its Subsidiaries has been notified that any taxing authority intends
to audit a Tax Return for any other period. No extension of a statute of
limitations relating to Taxes is in effect with respect to Princeton.
(d) Lien. There are no Encumbrances for Taxes (other than for
current Taxes not yet due and payable) on any of the Assets.
(e) Tax Elections. All elections with respect to Taxes
affecting Princeton, any of its Subsidiaries or their respective Assets as of
the date hereof are set forth on Princeton's or such Subsidiary's latest Tax
Returns or on Schedule 3.23. Neither Princeton nor any of its Subsidiaries (i)
has consented at any time under Section 341(f)(1) of the Code to have the
provisions of Section 341(f)(2) of the Code apply to any disposition of any
Assets; (ii) has agreed, or is required, to make any adjustment under Section
481(a) of the Code by reason of a change in accounting method or otherwise;
(iii) has made an election, or is required, to treat any Asset as owned by
another Person pursuant to the provisions of Section 168(f) of the Code or as
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code; (iv) directly or indirectly secures any debt the
interest on which is tax exempt under Section 103(a) of the Code; or (v) has
made any of the foregoing elections or is required to apply any of the foregoing
rules under any comparable state or local Tax provision.
(f) Prior Affiliated Groups. Neither Princeton nor any of its
Subsidiaries has ever been a member of an affiliated group of corporations
within the meaning of Section 1504 of the Code or any group that has filed a
combined consolidated or unitary state or local return.
(g) Tax Sharing Agreements. There are no Tax-sharing
agreements or similar arrangements (including indemnity arrangements) with
respect to or involving Princeton or any of its Subsidiaries, and, after the
Closing Date, neither Princeton nor any of its Subsidiaries shall be bound by
any such Tax-sharing agreements or similar arrangements or have any Liability
thereunder for amounts due in respect of periods prior to the Closing Date.
(h) Partnerships. Neither Princeton nor any of its
Subsidiaries has an interest in or is subject to any joint venture, partnership,
or other arrangement or contract which is treated as a partnership for federal
income tax purposes. Neither Princeton nor any of its Subsidiaries is a
successor to any other Person by way of merger, reorganization or similar
transaction.
(i) No Withholding. The transaction contemplated herein is not
subject to the tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code or of any other provision of law.
<PAGE>
3.24 Insurance. Schedule 3.24 contains a complete and accurate list
of all policies or binders of insurance (showing as to each policy or binder the
carrier, policy number, coverage limits, expiration dates, annual premiums, a
general description of the type of coverage provided and any pending claims
thereunder) of which Princeton or any of its Subsidiaries is the owner, insured
or beneficiary. All of such policies are sufficient for (i) compliance with all
Regulations and all of the Contracts, (ii) covering all reasonably foreseeable
damage to and liabilities or contingencies relating to Princeton's or any of its
Subsidiary's conduct of the Business and (iii) providing replacement cost
insurance coverage for all of the Assets, Fixtures and Equipment and all
leasehold improvements. Neither Princeton nor any of its Subsidiaries is in
default under any of such policies or binders, and none of them has failed to
give any notice or to present any claim under any such policy or binder in a due
and timely fashion. There are no facts known to Princeton, any of its
Subsidiaries or any Principal Stockholder upon which an insurer might be
justified in reducing or denying coverage or increasing premiums on existing
policies or binders. There are no outstanding unpaid claims under any such
policies or binders. Such policies and binders are in full force and effect on
the date hereof and shall be kept in full force and effect by Princeton through
the Closing Date.
3.25 Accounts Receivable. The accounts and notes receivable
reflected in the Balance Sheet, and all accounts or notes receivable arising
since the Balance Sheet Date, represent bona fide claims against debtors for
sales, services performed or other charges arising on or before the date of
recording thereof, and all the goods delivered and services performed which gave
rise to said accounts were delivered or performed in accordance with the
applicable orders, Contracts or customer requirements. To the knowledge of
Princeton, any of its Subsidiaries or any Principal Stockholder, all such
receivables are fully collectible in the ordinary course of business except to
the extent of an amount not in excess of the reserve for doubtful accounts
reflected on the Balance Sheet and additions to such reserves as reflected on
the Books and Records.
3.26 Inventory. The value at which the Inventory is shown on the
Balance Sheet has been determined in accordance with the normal valuation policy
of Princeton, consistently applied and in accordance with GAAP. The Inventory
(and the specific items acquired or manufactured subsequent to the Balance Sheet
Date) consists only of items of quality and quantity commercially usable and
salable in the ordinary course of business, except for any items of obsolete
material or material below standard quality, all of which have been written down
to realizable market value, or for which adequate reserves have been provided,
and the present quantity of all Inventory is reasonable in the present
circumstances of the Business. Schedule 3.26 contains a complete and accurate
list of all Inventory as of the Balance Sheet Date and the addresses at which
the Inventory is located.
3.27 Purchase Commitments and Outstanding Bids. As of the date of
this Agreement, the aggregate of all accepted and unfulfilled orders for the
sale of Inventory entered into by Princeton and its Subsidiaries does not exceed
$25,000, and the aggregate of all Contracts for the purchase of supplies by
Princeton and its Subsidiaries does not exceed $25,000, all of which orders and
Contracts were made in the ordinary course of business. There are no claims
against Princeton or any of its Subsidiaries to return in excess of an aggregate
of $10,000 of merchandise by reason of alleged overshipments, defective
merchandise or otherwise, or of merchandise in the hands of customers under an
understanding that such merchandise would be returnable. No outstanding purchase
<PAGE>
or outstanding lease commitment of Princeton or any of its Subsidiaries
presently is in excess of the normal, ordinary and usual requirements of the
Business or was made at any price in excess of the now current market price or
contains terms and conditions more onerous than those usual and customary in
Princeton's business. To the knowledge of Princeton, any of its Subsidiaries or
any Principal Stockholder, there is no outstanding bid, proposal, contract or
unfilled order of Princeton or any of its Subsidiaries which will or would, if
accepted, result in a net loss to Princeton or any of its Subsidiaries.
3.28 Customers and Suppliers. Schedule 3.28 sets forth a complete
and accurate list of the names and addresses of (i) the ten customers who
purchased from Princeton and its Subsidiaries the greatest dollar volume of
products or services during its last fiscal year and last fiscal quarter,
showing the approximate total sales in dollars to each such customer during such
fiscal year and quarter; and (ii) the ten suppliers with the greatest dollar
volume of sales to Princeton and its Subsidiaries during the last fiscal year
and during the last fiscal quarter, showing the approximate total purchases in
dollars by Princeton and its Subsidiaries from each such supplier during such
fiscal year. Since the Balance Sheet Date, there has been no Princeton Material
Adverse Change in the business relationship of Princeton or any of its
Subsidiaries with any customer or supplier named on Schedule 3.28. Neither
Princeton nor any of its Subsidiaries has received any written communication
from any customer or supplier named on Schedule 3.28 of any intention to return,
terminate or materially reduce purchases from or supplies to Princeton or any of
its Subsidiaries.
3.29 Brokers; Transaction Costs. Except for a financial services
advisory fee in the amount of $645,000 payable to First Albany Investment
Banking, none of Princeton, any of its Subsidiaries or any Stockholder has
entered into or will enter into any contract, agreement, arrangement or
understanding with any Person which will result in the obligation of CHC,
Princeton, any of its Subsidiaries or any of the Stockholders to pay any
finder's fee, brokerage commission or similar payment in connection with the
transactions contemplated hereby.
3.30 No Other Agreements to Sell Princeton or the Assets. None of
Princeton or any Stockholder has any legal obligation, absolute or contingent,
to any other Person to sell the Assets (other than Inventory in the ordinary
course of business) or to sell any capital stock of Princeton or any of its
Subsidiaries or to effect any merger, consolidation or other reorganization of
Princeton or any of its Subsidiaries or to enter into any agreement with respect
thereto, except pursuant to this Agreement.
3.31 Dissenters' Rights. Assuming the accuracy of the
representations of CHC set forth in Section 4.7 hereof, no holder of shares of
capital stock of Princeton shall be entitled to dissent from the Merger and
demand the payment of the fair value of such holder's shares of capital stock of
Princeton under the NJBCA with respect to the transactions contemplated hereby.
3.32 Accounting Treatment. Neither Princeton, any of its
Subsidiaries nor any Stockholder has taken any action that, to the knowledge of
Princeton, any of its Subsidiaries or any Principal Stockholder, would prevent
the Merger from qualifying for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations.
<PAGE>
3.33 Material Misstatements or Omissions.
(a) No representations or warranties by Princeton or any
Principal Stockholder in this Agreement or any Ancillary Agreement to which it
is a party or in any document, written information, exhibit, statement,
certificate or schedule heretofore or hereinafter furnished by Princeton or such
Principal Stockholder or any of its Representatives to CHC or Sub pursuant
hereto, or in connection with the transactions contemplated by this Agreement or
by such Ancillary Agreements contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary to
make the statements or facts contained therein not misleading.
(b) The information with respect to Princeton included in the
Information Statement will not, as of the date thereof, contain any untrue
statement of a material fact, or omit to state any material fact necessary to
make the statements or facts contained therein not misleading.
ARTICLE 3A
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
As an inducement of CHC to enter into this Agreement, each Principal
Stockholder, and each Stockholder that is not a Principal Stockholder, by virtue
of such Stockholder's execution and delivery of a Transmittal Letter in
accordance with Section 2.7 hereof, severally, and not jointly, represents and
warrants with respect to itself only to CHC and Sub as follows, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct:
3A.1 Authorization. Each Stockholder has all necessary power and
authority to enter into this Agreement and the Ancillary Agreements to which it
is a party and has taken all actions necessary to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. This Agreement has been duly executed and delivered by each
Stockholder and is, and upon the execution and delivery thereof each Ancillary
Agreement to which it is a party will be, a valid and binding obligation of each
Stockholder, enforceable against each Stockholder in accordance with its terms,
except that enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors or (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
3A.2 No Conflict or Violation; Consents. None of the execution,
delivery or performance of this Agreement or any Ancillary Agreement, the
consummation of the transactions contemplated hereby or thereby, nor compliance
by any Stockholder with any of the provisions hereof or thereof, will (a)
violate or conflict with any provision of the governing documents of any
Stockholder, (b) violate, conflict with, or result in a breach of or constitute
a default (with or without notice of passage of time) under, or result in the
termination of, or accelerate the performance required by, or result in a right
to terminate, accelerate, modify or cancel under, or require a notice under, or
result in the creation of any Encumbrance upon any of its respective assets
under, any Contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of indebtedness,
security interest or other arrangement to which any Stockholder is a party or by
which any Stockholder is bound or to which any of its assets are subject or (c)
violate any applicable Regulation or Court Order. Except as set forth on
<PAGE>
Schedule 3A.2, no notices to, declaration, filing or registration with,
approvals or Consents of, or assignments by, any Persons (including any federal,
state or local governmental or administrative authorities) are necessary to be
made or obtained by any Stockholder in connection with the execution, delivery
or performance of this Agreement or any Ancillary Agreement or the consummation
of the transactions contemplated hereby or thereby.
3A.3 Ownership of Princeton Stock; Title. The number of shares of
Princeton Stock held by each Stockholder are accurately set forth on Schedule
3.2(a) and all of such shares of Princeton Stock are lawfully owned of record
and, except as set forth on Schedule 3A.3, beneficially owned by such
Stockholder, free and clear of any Encumbrances. Except as set forth on Schedule
3A.3 and 3.3, the Princeton Shares held by such Stockholder are not subject to
any stockholder agreement, voting trust, proxy or other agreement or
understanding with respect to or concerning the purchase, sale or voting of such
Princeton Stock. Upon the acquisition in the Merger by CHC of the shares of
Princeton Stock presently held by such Stockholder, CHC shall acquire good title
to such shares of Princeton Stock, free and clear of all Encumbrances, other
than any Encumbrances created by Princeton.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF CHC
As an inducement of Princeton and each of the Stockholders to enter
into this Agreement, except as set forth on the CHC Schedule of Exceptions
attached to this Agreement, CHC represents and warrants to Princeton and the
Stockholders as follows, which representations and warranties are, as of the
date hereof, and will be, as of the Closing Date, true and correct:
4.1 Organization. CHC is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York. CHC has
full corporate power and authority to conduct its business as it is presently
being conducted and to own or lease, as applicable, the assets owned or leased
by it. CHC is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which such qualification is necessary
under applicable law as a result of the conduct of its business or the ownership
of its properties and where the failure to be so qualified would have a Material
Adverse Effect on CHC. Each jurisdiction in which CHC is qualified to do
business as a foreign corporation is set forth in Schedule 4.1. Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the state of New Jersey. Sub has not engaged in any business (other than in
connection with this Agreement and the transactions contemplated hereby) since
the date of its incorporation.
4.2 Capitalization.
(a) There are 60,000,000 shares of CHC Stock authorized under
its Articles of Incorporation, 27,100,399 of which were issued and outstanding
as of October 22, 1997; 200,000 authorized shares of Preferred Stock, $.10 par
value, of CHC ("CHC Preferred Stock" and together with the CHC Stock, the "CHC
Securities") authorized under its Articles of Incorporation, none of which were
issued and outstanding. CHC has no other stock authorized, issued or
outstanding.
(b) As of December 31, 1997, there were (i) 7,023,906 shares
of CHC Stock reserved for issuance upon the exercise of options granted or
available for grant under the CHC Option Plan (the "CHC Options"), (ii) CHC
<PAGE>
Options representing the right to purchase an aggregate of 1,468,906 shares of
CHC Stock outstanding and (iii) 5,555,000 shares of CHC Stock available for
future grants of CHC Options.
(c) Except for the CHC Options and shares of CHC Preferred
Stock listed above, and except for director options and warrants exercisable for
not mote than 200,000 shares, there are no outstanding options, warrants,
convertible securities or rights of any kind to purchase or otherwise acquire
any shares of capital stock or other securities of CHC. Except as set forth
above, no shares of capital stock of CHC are reserved for issuance.
(d) All outstanding shares of CHC Securities and any shares of
CHC Stock issued upon exercise of any CHC Option will be validly issued, fully
paid and non-assessable and not subject to any preemptive rights created by
statute, CHC's Articles of Incorporation or Bylaws or any Contract. The CHC
Options and the CHC Securities have been or will be issued in compliance with
all federal and state corporate and securities laws.
(e) Other than the transactions contemplated by this
Agreement, there is no outstanding vote, plan or pending proposal for any
redemption of stock of CHC or any merger or consolidation of CHC with or into
any other entity.
(f) The authorized capital stock of Sub consists of 1,000
shares of common stock, no par value, of which 1,000 shares are issued and
outstanding. All of such outstanding shares are owned by CHC and are validly
issued, fully paid and non-assessable.
4.3 Authorization. Each of CHC and Sub has all necessary corporate
power and authority to enter into this Agreement and the Ancillary Agreements to
which it is a party and has taken all action necessary to consummate the
transactions contemplated hereby and thereby and to perform its respective
obligations hereunder and thereunder. This Agreement has been duly executed and
delivered by each CHC and Sub, and this Agreement is, and upon execution and
delivery each of the Ancillary Agreements to which each of CHC and Sub is a
party will be, a valid and binding obligation of each of CHC and Sub enforceable
against each of CHC and Sub in accordance with its terms, except that
enforceability may be limited by the effect of (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors or (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
4.4 No Conflict or Violation; Consents. None of the execution,
delivery or performance of this Agreement or any Ancillary Agreement, the
consummation of the transactions contemplated hereby or thereby, nor compliance
by CHC or Sub with any of the provisions hereof or thereof, will (a) violate or
conflict with any provision of CHC's or Sub's governing documents to the extent
applicable, (b) violate, conflict with, or result in a breach of or constitute a
default (with or without notice of passage of time) under, or result in the
termination of, or accelerate the performance required by, or result in a right
to terminate, accelerate, modify or cancel under, or require a notice under, or
result in the creation of any Encumbrance upon any of its assets under, any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, security
interest or other arrangement to which CHC or Sub is a party or by which CHC or
Sub is bound or to which any of their respective assets are subject, (c) violate
any Regulation or Court Order applicable to CHC or Sub or (d) impose any
<PAGE>
Encumbrance on any assets of CHC or Sub. Except as set forth on Schedule 4.4, no
notices to, declaration, filing or registration with, approvals or Consents of,
or assignments by, any Persons (including any federal, state or local
governmental or administrative authorities) are necessary to be made or obtained
by CHC or Sub in connection with the execution, delivery or performance of this
Agreement or any Ancillary Agreement or the consummation of the transactions
contemplated hereby or thereby.
4.5 Reports and Financial Statements. CHC has timely filed all
reports required to be filed with the SEC pursuant to the Exchange Act or the
Securities Act (collectively, the "SEC Reports"), and has previously made
available to Princeton true and complete copies of all such SEC Reports. Such
SEC Reports, as of their respective dates, complied in all materials respects
with the applicable requirements of the Securities Act and the Exchange Act, as
the case may be, and none of such SEC Reports contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of CHC, including the notes thereto, included in the SEC
Reports have been prepared in accordance with GAAP consistently applied and
fairly present the consolidated financial condition of CHC as at the dates
thereof and consolidated results of operations and cash flows for the periods
then ended.
4.6 Absence of Certain Changes or Events. Since September 30,
1997, there has not been any fact, event, circumstance or change affecting or
relating to CHC and its subsidiaries which has had or is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on CHC (a "CHC
Material Adverse Effect"); provided, however, that a CHC Material Adverse Effect
shall not include any adverse effect following the date of this Agreement which
is solely attributable to (i) the announcement or pendency of the transactions
contemplated by this Agreement or (ii) changes in national economic conditions
or industry conditions generally.
4.7 Number of Holders of CHC Stock. There are no fewer than 1,000
holders of record of shares of CHC Stock.
4.8 S-3 Eligibility. CHC satisfies the registrant requirements set
forth in the general instructions for use of Form S-3 under the Securities Act.
4.9 Disclosure.
(a) No representation, warranty or other statement by CHC
herein contains an untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained herein not misleading.
(b) The information with respect to CHC included in the
Information Statement will not, as of the date thereof, contain any untrue
statement of a material fact, or omit to state any material fact necessary to
make the statements or facts contained therein not misleading.
ARTICLE 5.
ACTIONS BY PRINCETON, THE STOCKHOLDERS
AND CHC PRIOR TO THE CLOSING
Princeton, the Principal Stockholders, CHC and Sub, each as indicated
below, covenant as follows for the period from the date hereof through the
Closing Date:
<PAGE>
5.1 Conduct of Business. From the date hereof through the Closing,
Princeton and the Principal Stockholders shall, except as contemplated by this
Agreement, or as consented to by CHC in writing, operate the Business in the
ordinary course of business and in accordance with past practice and will not
take any action inconsistent with this Agreement, the Ancillary Agreements or
the consummation of the Closing. Without limiting the generality of the
foregoing, Princeton shall not and the Principal Stockholders shall not cause
Princeton and its Subsidiaries to, except as specifically contemplated by this
Agreement or as consented to by CHC in writing:
(a) incur any indebtedness for borrowed money, or assume,
guarantee, endorse (other than endorsements for deposit or collection in the
ordinary course of business), or otherwise become responsible for obligations of
any other Person;
(b) issue (except pursuant to outstanding Princeton Options) or
commit to issue any shares of its capital stock or any other securities or any
securities convertible into shares of its capital stock or any other securities,
including, without limitation, any options to acuire capital stock;
(c) pay or incur any obligation to pay any dividend on its capital
stock or make or incur any obligation to make any distribution or redemption
with respect to capital stock;
(d) make any change to Princeton's or any of its Subsidiaries'
Certificate of Incorporation or Bylaws;
(e) mortgage, pledge or otherwise encumber any Assets or sell,
transfer, license or otherwise dispose of any Assets except for the licensing of
Princeton's products and services in the ordinary course of business and
consistent with past practice;
(f) cancel, release or assign any indebtedness owed to it or any
claims or rights held by it, except in the ordinary course of business and
consistent with past practice;
(g) make any investment of a capital nature either by purchase of
stock or securities, contributions to capital, property transfer or otherwise,
or by the purchase of any property or assets of any other Person;
(h) terminate any material Contract or make any change in any
material Contract;
(i) enter into or modify any employment Contract, (ii) pay any
compensation to or for any Employee, officer or director other than in the
ordinary course of business and pursuant to existing employment arrangements,
(iii) pay or agree to pay any bonus, incentive compensation, service award or
other like benefit or (iv) enter into or modify any other Employee Plan;
(j) enter into or modify any Contract with a Related Party;
(k) declare any dividend or make any payment or distribution to
the Stockholders or redeem or purchase any shares of its capital stock;
(l) make any change in any method of accounting or accounting
practice;
<PAGE>
(m) fail to pursue the development and introduction of new
products and technology advances in connection with the Business on a basis
consistent with past practice;
(n) fail to comply with all Regulations applicable to the Assets
and the Business consistent with past practices;
(o) fail to use its commercially reasonable efforts to (i)
maintain the Business, (ii) retain the Employees so that such Employees will
remain available to CHC on and after the Closing Date (provided that Princeton
shall not be required by this Section 5.1(o) to enter into any employment
agreement with any Employee), (iii) maintain existing relationships with
suppliers and customers and others having business dealings with Princeton and
its Subsidiaries and (iv) otherwise to preserve the goodwill of the Business so
that such relationships and goodwill will be preserved on and after the Closing
Date; or
(p) do any other act which would cause any representation or
warranty of Princeton or Stockholders in this Agreement to be or become untrue
in any material respect or that is not in the ordinary course of business
consistent with past practice.
5.2 Investigation by CHC. Subject to the Confidentiality
Agreement, from the date hereof through the Closing Date, Princeton shall, and
shall cause Princeton's Subsidiaries and their respective officers, Employees
and Representatives to, afford the Representatives of the CHC and its Affiliates
access upon reasonable notice and at all reasonable times to its Business for
the purpose of inspecting the same, and to its officers, Employees and
Representatives, properties, Books and Records, Contracts and other Assets, and
shall furnish CHC and its Representatives, upon reasonable notice and in a
timely manner, all financial, operating and other data and information
(including with respect to Proprietary Rights) as CHC or its affiliates, through
their respective Representatives, may reasonably request.
5.3 Notification of Certain Matters. Princeton and the Principal
Stockholders shall give prompt notice to CHC of (i) the occurrence, or failure
to occur, of any event which occurrence or failure would be likely to cause any
representation or warranty of Princeton or any Stockholder contained in this
Agreement to be untrue or inaccurate in any material respect and (ii) any
material failure of Princeton or any Stockholder to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that such disclosure shall not be deemed to cure
any breach of a representation, warranty, covenant or agreement or to satisfy
any condition. Princeton and the Principal Stockholders shall promptly notify
CHC of any Default, the threat or commencement of any Action, or any development
that occurs before the Closing that could reasonably be expected to result in a
Princeton Material Adverse Effect.
5.4 No Mergers, Consolidations, Sale of Stock, Etc. Neither
Princeton nor any Principal Stockholder will, directly or indirectly, (a)
solicit any inquiries or proposals or enter into or continue any discussions,
negotiations or agreements relating to (i) the sale or exchange of Princeton's
or any of its Subsidiaries, capital stock, (ii) the merger of Princeton or any
of its Subsidiaries with, or the direct or indirect disposition of a significant
amount of the Assets or the Business to, any Person other than CHC or its
Affiliates or (iii) the licensing of Princeton's Proprietary Rights to any
<PAGE>
Person other than in the ordinary course of business consistent with past
practice or (b) provide any assistance or any information to or otherwise
cooperate with any Person in connection with any such inquiry, proposal or
transaction. Princeton and the Principal Stockholders hereby represent that
neither Princeton, any of its Subsidiaries nor any Principal Stockholder is now
engaged in discussions or negotiations with any party other than CHC with
respect to any transaction of the kind described in clauses (a) (i) through (a)
(iii) of the preceding sentence (a "Proposed Acquisition Transaction").
Princeton and each Principal Stockholder agrees not to, and to cause each of
Princeton's Subsidiaries not to, release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which any of them
is a party. Princeton and the Principal Stockholders shall (w) immediately
notify CHC (orally and in writing) if any offer is made, any discussions or
negotiations are sought to be initiated, any inquiry, proposal or contact is
made or any information is requested with respect to any Proposed Acquisition
Transaction, (x) promptly notify CHC of the terms of any proposal which it may
receive in respect of any such Proposed Acquisition Transaction, including,
without limitation, the identity of the prospective purchaser or soliciting
party, (y) promptly provide CHC with a copy of any such offer, if written, or a
written summary (in reasonable detail) of such offer, if not in writing, and (z)
keep CHC informed of the status of such offer and the offeror's efforts and
activities with respect thereto.
5.5 Pooling Accounting Treatment.
(a) Set forth on Schedule 5.5 is a list of all Persons who
are, in Princeton's reasonable judgment, "affiliates" of Princeton as defined in
Rule 144 under the Securities Act or for purposes of qualifying the Merger as a
pooling of interests under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations. Princeton and the Principal Stockholders
shall use diligent efforts in good faith to cause each such Person to deliver to
CHC and Sub on or prior to the Closing Date a written agreement substantially in
the form attached hereto as Exhibit F (an "Affiliate Letter").
(b) Princeton and the Principal Stockholders shall use
diligent efforts in good faith to cause the transactions contemplated by this
Agreement to be accounted for as a pooling of interests under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations, and to
have such accounting treatment accepted by Princeton's independent public
accountants, by CHC's public accountants, and by the SEC, respectively.
Princeton and each Principal Stockholder agree that none of them will take any
action that would cause such accounting treatment not to be obtained.
5.6 Princeton Shareholder Approval. Princeton agrees that it will
submit to the Principal Stockholders a written consent in lieu of a meeting of
such Principal Stockholders (the "Stockholder Consent") in substantially the
form attached hereto as Exhibit G, approving the execution, delivery and
performance by Princeton of this Agreement and each of the Ancillary Agreements
to which it is a party, and the consummation of the transactions contemplated
hereby and thereby. Each Principal Stockholder agrees that, immediately
following the execution and delivery of this Agreement, it will execute and
deliver to Princeton, with a copy to CHC, a counterpart to the Stockholder
Consent dated as of the date hereof. Princeton further agrees that it shall
provide the remaining holders of shares of Princeton Stock with the notice
required by Section 14A:5-6(2)(b) of the NJBCA.
<PAGE>
5.7 Information Statement. Promptly after the date hereof,
Princeton, the Principal Stockholders and CHC shall prepare for distribution to
the holders of Princeton Stock an information statement containing such
information regarding Princeton, CHC and the transactions contemplated hereby as
Princeton and CHC shall deem necessary and appropriate (in consultation with
their respective legal advisors and independent accountants) for such
information statement to comply with applicable law (the "Information
Statement"). Princeton and each of the Principal Stockholders agree that the
information provided by each of Princeton and each Principal Stockholder for
inclusion in the Information Statement shall not contain any untrue statement of
a material fact, or omit to state a material fact necessary to make the
statements or facts contained in the Information Statement not misleading. CHC
and Sub agree that the information provided by each of them for inclusion in the
Information Statement shall not contain any untrue statement of material fact,
or omit to state a material fact necessary to make the statements or facts
contained in the Information Statement not misleading. Each of Princeton, each
Principal Stockholder and CHC shall immediately advise the other parties of the
occurrence of any event which causes the information provided by it for
inclusion in the Information Statement to contain any untrue statement of a
material fact, or to omit to state a material fact necessary to make the
statements or facts contained in the Information Statement not misleading.
5.8 Proposed MainWare Acquisition. CHC and Princeton hereby
acknowledge that Princeton shall be permitted to enter into negotiations with
MainWare, Inc. ("MainWare") for the acquisition of the business presently
operated by MainWare through a purchase of all of the outstanding capital stock,
or all or substantially all of the assets, of MainWare, a merger or
consolidation involving MainWare or another similar form of acquisition. CHC and
Princeton hereby agree that, if and to the extent that the execution of an
agreement (including, without limitation, a letter of intent or similar
arrangement) with respect to any such acquisition and/or the consummation of any
such acquisition would result in any breach of a representation, warranty or
covenant contained in this Agreement by Princeton or any Stockholder, Princeton
and CHC shall negotiate in good faith with respect to any modification of, or
waiver of any such breach of, such representation, warranty or covenant to the
extent necessary to permit the execution of such agreement (or letter of intent
or similar arrangement) or the consummation of such acquisition, as the case may
be; provided, that CHC shall have the right, in its sole and absolute
discretion, to withhold its consent to any such modification of, or waiver of
any such breach of, any such representation, warranty or covenant for any reason
whatsoever or to require as a condition to its obligation to consummate the
Merger that any such agreement (or letter of intent or similar arrangement), if
entered into by Princeton, be terminated, regardless of whether such termination
results in the breach of such agreement (or letter of intent or other
agreement); and provided further, that the exercise by CHC of such right shall
not be considered an act of bad faith pursuant to, or otherwise result in any
violation by CHC of, this Section 5.8.
5.9 Further Assurances. Upon the terms and subject to the
conditions contained herein, the parties agree, in each case both before and
after the Closing, (i) to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement and the Ancillary Agreements, (ii) to use their respective best
efforts to cause the acquisition to qualify, and will not take any actions which
to their knowledge could reasonably be expected to prevent the acquisition from
qualifying, as a reorganization under the provisions of Section 368(a) of the
Code, (iii) to execute any documents, instruments or conveyances of any kind
<PAGE>
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder and thereunder and (iv) to cooperate with
each other in connection with the foregoing. Without limiting the foregoing, the
parties agree to use their respective reasonable efforts (A) to obtain any
necessary Consents (including, without limitation, all filings required to be
made under the HSR Act with respect to this Agreement and the transactions
contemplated hereby) (B) to give all notices to, and make all registrations and
filings with third parties, including submissions of information requested by
governmental authorities and (C) to fulfill all other conditions to this
Agreement. Notwithstanding the foregoing, (y) no amendment or modification shall
be made to any Contract to obtain any required Consent without the prior written
consent of CHC and (z) no party hereto or any of their respective Affiliates
shall be required to sell, transfer, divest or otherwise dispose of any of its
respective business, assets or properties in connection with this Agreement or
any of the transactions contemplated hereby.
ARTICLE 6.
CONDITIONS TO PRINCETON'S AND THE PRINCIPAL STOCKHOLDERS' OBLIGATIONS
The obligations of Princeton and the Principal Stockholders to effect
the Merger and complete the related transactions contemplated by this Agreement
are subject, in the discretion of Princeton and the Stockholder Representative,
on behalf of the Stockholders, to the satisfaction, on or prior to the Closing
Date, of each of the following conditions or the waiver of such conditions by
Princeton and the Stockholder Representative on behalf of the Stockholders:
6.1 Representations, Warranties and Covenants. All representations
and warranties of CHC and Sub contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date as if such
representations and warranties were made at and as of the Closing Date, and CHC
and Sub shall have performed in all material respects all agreements and
covenants required hereby to be performed by it prior to or at the Closing Date.
There shall be delivered to Princeton and the Stockholder Representative on
behalf of the Stockholders a certificate signed by a senior officer of CHC and
Sub to the foregoing effect ("CHC Closing Certificate").
6.2 Consents. All Consents, approvals and waivers from
governmental authorities and other parties necessary to permit CHC and Sub to
consummate the Merger as contemplated hereby and by the Ancillary Agreements
shall have been obtained. Princeton and the Stockholder Representative on behalf
of the Stockholders shall be satisfied that all approvals required under any
Regulations to permit CHC and Sub to carry out the transactions contemplated by
this Agreement and the Ancillary Agreements (including, without limitation, the
expiration or termination of the waiting period under the HSR Act, if
applicable) shall have been obtained.
6.3 No Court Orders. No Action by any court, governmental
authority or other Person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
by the Ancillary Agreements. There shall not be any Regulation or Court Order
that makes the acquisition of the Princeton Stock contemplated hereby illegal or
otherwise prohibited.
6.4 Closing Documents. CHC shall have delivered to the Stockholder
Representative on behalf of the Stockholders the documents and other items
described in Section 8.2 and such other documents and items as Princeton or the
Principal Stockholders may reasonably require.
<PAGE>
ARTICLE 7.
CONDITIONS TO CHC'S OBLIGATIONS
The obligations of CHC to effect the Merger and complete the related
transactions contemplated by this Agreement are subject, in the discretion of
CHC, to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, or the waiver of such conditions by CHC:
7.1 Representations, Warranties and Covenants. (a) All
representations and warranties of Princeton and each Stockholder contained in
this Agreement shall be true and correct at and as of the Closing Date as if
such representations and warranties were made at and as of the Closing Date
(except as set forth in clause (b) below), and Princeton and each of the
Principal Stockholders shall have performed in all material respects all
agreements and covenants required hereby to be performed prior to or at the
Closing Date. There shall be delivered to CHC a certificate signed by the
President and the Chief Financial Officer of Princeton ("Princeton Closing
Certificate") and each Principal Stockholder to the foregoing effect (each, a
"Stockholder's Closing Certificate").
(b) For purposes of the foregoing paragraph (a), the lists
required to be provided pursuant to the representations and warranties set forth
in Sections 3.5, 3.6, 3.8 3.10, 3.11, 3.13, 3.18 3.19, 3.24, 3.26 and 3.28 shall
be permitted to be updated as of the Closing Date, and such representations and
warranties shall be permitted to be modified by such updates to the extent, and
only to the extent, that any such changes reflect actions or inactions occurring
after the date hereof and that are not in violation of Section 5.1 hereof,
subject to the provisions of Section 7.12.
7.2 Consents. All Consents, approvals and waivers from
governmental authorities and other parties necessary to permit Princeton and the
Stockholders to consummate the Merger as contemplated hereby and by the
Ancillary Agreements and for the operation of the Business after the Closing
(including all required third party consents under the Contracts) shall have
been obtained. CHC shall be satisfied that all approvals required under any
Regulations to permit Princeton and the Stockholders to carry out the
transactions contemplated by this Agreement and the Ancillary Agreements
(including, without limitation, the expiration or termination of the waiting
period under the HSR Act, if applicable) shall have been obtained.
7.3 No Actions or Court Orders. No Action by any court,
governmental authority or other Person shall have been instituted or threatened
which questions the validity or legality of the transactions contemplated hereby
and by the Ancillary Agreements and which could reasonably be expected to damage
CHC, the Assets or the Business materially if the transactions contemplated
hereby or thereby are consummated, including any material adverse effect on the
right or ability of CHC to own, operate or transfer Princeton after the Closing.
There shall not be any Regulation or Court Order that makes the acquisition of
the Princeton Stock contemplated hereby illegal or otherwise prohibited or that
otherwise may have a Princeton Material Adverse Effect.
7.4 Closing Documents. Princeton and/or the Stockholders, as the
case may be, shall have delivered to CHC the documents and other items described
in Section 8.1 and such other documents and items as CHC may reasonably require.
7.5 Exemption under Federal and State Securities Laws. The
issuance of shares of CHC Stock in the Merger shall not violate any federal or
state securities laws.
<PAGE>
7.6 Princeton Balance Sheet. On the Closing Date, immediately
prior to the Closing, there shall be no indebtedness on Princeton's balance
sheet other than payables incurred by Princeton in the ordinary course of
business consistent with past practice. In addition, the aggregate amount of
cash, cash equivalents and accounts receivable on Princeton's balance sheet as
of the Closing Date shall exceed its accounts payable.
7.7 Completion of CHC Diligence. CHC shall have completed its
business and legal due diligence to its satisfaction, in its sole judgment;
provided, however, this condition shall be deemed satisfied or waived unless CHC
notifies Princeton in writing prior to February 27, 1998 that this condition has
not been met.
7.8 Stockholder Consent. The Principal Stockholders shall have
executed the Stockholder Consent and Princeton shall have taken all further
actions related to the due authorization of the Merger as may be required under
the NJBCA.
7.9 Delivery of Certificates. Each Stockholder shall have
delivered to CHC the Certificate or Certificates representing shares of
Princeton Stock held by such Stockholder, together with a duly executed
Transmittal Letter, (including counterpart signature pages to this Agreement and
the Escrow Agreement).
7.10 Board of Directors Approval. The Merger shall have been
approved by appropriate action of the Board of Directors of CHC.
7.11 Tax Matters.
(a) No new elections with respect to Taxes, or changes in
current elections with respect to Taxes, affecting Princeton or any of its
Subsidiaries shall have been made after the date of this Agreement without the
prior written consent of CHC, which consent shall not be unreasonably withheld.
(b) Princeton and each Stockholder surrendering Certificates
on the Closing Date in accordance with Section 2.7(b)(i) shall have provided CHC
with (i) all forms, certificates and/or other instruments required to pay the
transfer and recording taxes and charges arising from the transactions
contemplated by this Agreement, together with evidence satisfactory to CHC that
such transfer taxes and charges have been paid by Princeton or such Stockholder,
and (ii) a clearance certificate or similar document(s) which may be required by
any state taxing authority to relieve CHC of any obligation to withhold any
portion of the payments to such Stockholder pursuant to this Agreement.
7.12 Material Adverse Change. There shall not have been any
Princeton Material Adverse Change.
ARTICLE 8.
CLOSING
On the Closing Date at the Closing Place:
8.1 Deliveries by Princeton and the Stockholders to CHC. Princeton
and each Stockholder, as applicable, shall deliver (or cause to be delivered) to
CHC:
(a) the Ancillary Agreements, duly executed by each party thereto
other than CHC and Sub;
<PAGE>
(b) any Consents required to be obtained by Princeton or the
Principal Stockholders;
(c) the Princeton Closing Certificate and each of the
Stockholder's Closing Certificates;
(d) an opinion of Buchanan Ingersoll, counsel to Princeton and the
Stockholders, dated as of the Closing Date, in a form reasonably satisfactory to
CHC;
(e) a statement prepared in accordance with Section 1445 of the
Code and Treasury Regulations thereunder certifying that Princeton is not, and
was not at any time after January 1, 1993, a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code.
(f) a fully executed Affiliate Letter from each of the Persons
identified on Schedule 5.5 hereof;
(g) a letter (the "Pooling Letter"), dated the Closing Date, from
the independent certified public accountants of Princeton and CHC, which shall
be satisfactory to CHC in its sole discretion, stating without qualification
that the accounting for the business combination contemplated in this Agreement
and the Ancillary Agreements qualifies as a "pooling of interests" under Opinion
16 of the Accounting Principles of Board and applicable rules and regulations of
the SEC;
(h) the Stockholder Consent, duly executed by each of the
Principal Stockholders;
(i) all Certificates representing the shares of Princeton Stock to
be canceled in connection with the Merger on the Closing Date in accordance with
Section 2.7(b), together with a duly executed Transmittal Letter from each
holder thereof;
(j) confirmation from the Persons listed on Schedule 2.13 hereof
the amount of fees owed to each of them in respect of the transactions
contemplated hereby; and
(k) such other documents and certificates duly executed as may
reasonably be requested by CHC or Sub prior to the Closing Date.
8.2 Deliveries by CHC. CHC shall deliver to the Stockholder
Representative for the benefit of the Stockholders, to the Stockholders, or any
other appropriate Persons:
(a) the Ancillary Agreements to which CHC or Sub is a party, duly
executed by them;
(b) any Consents required to be obtained by CHC;
(c) the CHC Closing Certificate;
(d) an opinion of Latham & Watkins, counsel to CHC, dated as of
the Closing Date, in a form reasonably satisfactory to Princeton;
(e) the Merger Shares to be issued to each Stockholder
surrendering Certificates on the Closing Date in accordance with Section
2.7(b)(i);
<PAGE>
(f) cash in lieu of any fractional shares as provided in Section
2.6(c); and
(g) such other documents and certificates duly executed as may
reasonably be requested by Princeton or the Stockholder Representative prior to
the Closing Date.
ARTICLE 9.
INDEMNIFICATION
9.1 Survival of Representations, Etc. All statements contained in
this Agreement, any schedule or in any certificate or instrument of conveyance
delivered by or on behalf of the parties pursuant to this Agreement or in
connection with the transactions contemplated hereby, including, without
limitation, the Transmittal Letters, shall be deemed to be representations and
warranties by such party hereunder. The representations and warranties contained
herein shall survive the Closing Date (and claims based upon or arising out of
such representations and warranties, as well as any claims based upon or arising
out of any covenants and agreements herein or made hereunder, may be asserted at
any time before the date which shall be) until the first anniversary of the
Closing Date; provided, however, (a) Princeton's and the Stockholders'
representations and warranties in Section 3.23 (Taxes) and Section 3.10
(Environmental Matters) and Section 3.19 (ERISA) shall survive the Closing until
the expiration of all relevant statutes of limitation (including any extensions
thereof) and (b) the Stockholders' representations and warranties set forth in
Article 3A (Stockholders' Ownership of Stock) shall survive the Closing Date in
perpetuity. No investigation made by any of the parties hereto (whether prior
to, on or after the Closing Date) shall in any way limit the representations and
warranties of the parties. On the Closing Date all representations and
warranties contained in this Agreement and made by Princeton and the
Stockholders shall expire as to Princeton and thereafter will be deemed to have
been made exclusively by the Stockholders. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any claim made by such party in a writing received by the
other party prior to the expiration of the applicable survival period provided
herein.
9.2 Indemnification.
(a) General.
(i) Subsequent to the Closing, the Stockholders
shall, jointly and severally, indemnify CHC, its Affiliates, and each of their
respective, officers, directors, employees, stockholders and agents ("CHC
Indemnified Parties") against, and hold each of the CHC Indemnified Parties
harmless from any damage, claim, loss, cost, liability or expense, including
without limitation, interest, penalties, reasonable attorneys' fees and expenses
of investigation, diminution of value, response action, removal action or
remedial action (collectively "Damages") incurred by any such CHC Indemnified
Party, that are incident to, arise out of, in connection with, or related to,
whether directly or indirectly, (A) the breach of any warranty, representation,
covenant or agreement of Princeton or any Stockholder contained in this
Agreement or any schedule hereto or in any certificate or instrument of
conveyance (including, without limitation, any Transmittal Letter) delivered by
or on behalf of Princeton or any such holder pursuant to this Agreement or in
connection with the transactions contemplated hereby, other than any warranty or
<PAGE>
representation contained in Article 3A of this Agreement or (B) any Actual
Excess Stockholder Expenses that were not reflected as Estimated Stockholder
Expenses for purposes of calculating the Merger Consideration.
(ii) Subsequent to the Closing, each Stockholder
shall, severally and not jointly, indemnify the CHC Indemnified Parties against,
and hold each of the CHC Indemnified Parties harmless from, any Damages incurred
by such CHC Indemnified Party, that are incident to, arise out of, in connection
with, or related to, whether directly or indirectly, the breach of any warranty
or representation of such Stockholder contained in Article 3A of this Agreement,
or any warranty or representation of substantially similar subject matter to
those contained in Section 3A of this Agreement that are contained in any
schedule hereto or in any certificate or instrument of conveyance (including,
without limitation, any Transmittal Letter) delivered by or on behalf of such
holder pursuant to this Agreement or in connection with the transactions
contemplated hereby.
(iii) Subsequent to the Closing, CHC shall
indemnify the Stockholders their Affiliates, and each of their respective
partners, officers, directors, employees, stockholders and agents, as the case
may be ("Stockholder Indemnified Parties"), against, and hold each of the
Stockholder Indemnified Parties harmless from, any Damages incurred by such
Stockholder Indemnified Party, that are incident to, arise out of, in connection
with, or related to, whether directly or indirectly, the breach of any warranty,
representation, covenant or agreement of CHC or Sub contained in this Agreement,
any schedule or in any certificate or instrument of conveyance delivered by or
on behalf of CHC or Sub pursuant to this Agreement or in connection with the
transactions contemplated hereby.
The term "Damages" as used in this Section 9.2 is not limited to
matters asserted by third parties against Stockholder Indemnified Parties or CHC
Indemnified Parties, but includes Damages incurred or sustained by such persons
in the absence of third party claims.
(b) Procedure for Claims.
(i) If a claim for Damages (a "Claim") is to be
made by a person entitled to indemnification hereunder, the person claiming such
indemnification (the "Indemnified Party"), subject to clause (ii) below, shall
give written notice (a "Claim Notice") to the indemnifying person (the
"Indemnifying Party") (or, if the Indemnifying Party is a Stockholder or group
of Stockholders, the Stockholder Representative) as soon as practicable after
the Indemnified Party becomes aware of any fact, condition or event which may
give rise to Damages for which indemnification may be sought under this Section
9.2. The failure of any Indemnified Party to give timely notice hereunder shall
not affect rights to indemnification hereunder, except and only to the extent
that, the Indemnifying Party (or, if the Indemnifying Party is a Stockholder or
group of Stockholders, the Stockholder Representative) demonstrates actual
material damage caused by such failure. In the case of a Claim involving the
assertion of a claim by a third party (whether pursuant to a lawsuit or other
legal action or otherwise, a "Third-Party Claim"), if the Indemnifying Party
(or, if the Indemnifying Party is a Stockholder or group of Stockholders, the
Stockholder Representative) shall acknowledge in writing to the Indemnified
Party that the Indemnifying Party shall be obligated to indemnify the
Indemnified Party under the terms of its indemnity hereunder in connection with
such Third-Party Claim, then (A) the Indemnifying Party (or, if the Indemnifying
Party is a Stockholder or group of Stockholders, the Stockholder Representative)
shall be entitled and, if it so elects, shall be obligated at its own cost, risk
<PAGE>
and expense (or, if the Person making such election is the Stockholder
Representative, at the cost, risk and expense of the Stockholder or group of
Stockholders that is the Indemnifying Party), (1) to take control of the defense
and investigation of such Third-Party Claim and (2) to pursue the defense
thereof in good faith by appropriate actions or proceedings promptly taken or
instituted and diligently pursued, including, without limitation, to employ and
engage attorneys of its own choice reasonably acceptable to the Indemnified
Party to handle and defend the same, and (B) the Indemnifying Party (or, if the
Indemnifying Party is a Stockholder or group of Stockholders, the Stockholder
Representative) shall be entitled (but not obligated), if it so elects, to
compromise or settle such claim, which compromise or settlement shall be made
only with the written consent of the Indemnified Party, such consent not to be
unreasonably withheld. In the event the Indemnifying Party (or, if the
Indemnifying Party is a Stockholder or group of Stockholders, the Stockholder
Representative) elects to assume control of the defense and investigation of
such lawsuit or other legal action in accordance with this Section 9.2(b), the
Indemnified Party may, at its own cost and expense, participate in the
investigation, trial and defense of such Third-Party Claim; provided that, if
the named persons to a lawsuit or other legal action include both the
Indemnifying Party (or the Stockholder Representative acting on behalf of such
Indemnifying Party) and the Indemnified Party and the Indemnified Party has been
advised in writing by counsel that there may be one or more legal defenses
available to such Indemnified Party that are different from or additional to
those available to the Indemnifying Party (or the Stockholder Representative
acting on behalf of such Indemnifying Party), the Indemnified Party shall be
entitled, at the Indemnifying Party's cost, risk and expense, to separate
counsel of its own choosing. If the Indemnifying Party (or, if the Indemnifying
Party is a Stockholder or group of Stockholders, the Stockholder Representative)
fails to assume the defense of such Third-Party Claim in accordance with this
Section 9.2 within 10 calendar days after receipt of the Claim Notice, the
Indemnified Party against which such Third-Party Claim has been asserted shall
(upon delivering notice to such effect to the Indemnifying Party (or, if the
Indemnifying Party is a Stockholder or group of Stockholders, the Stockholder
Representative) have the right to undertake, at the Indemnifying Party's cost,
risk and expense, the defense, compromise and settlement of such Third-Party
Claim on behalf of and for the account of the Indemnifying Party; provided that
such Third-Party Claim shall not be compromised or settled without the written
consent of the Indemnifying Party (or, if the Indemnifying Party is a
Stockholder or group of Stockholders, the Stockholder Representative), which
consent shall not be unreasonably withheld. In the event the Indemnifying Party
(or, if the Indemnifying Party is a Stockholder or group of Stockholders, the
Stockholder Representative) assumes the defense of the claim, the Indemnifying
Party (or, if the Indemnifying Party is a Stockholder or group of Stockholders,
the Stockholder Representative) shall keep the Indemnified Party reasonably
informed of the progress of any such defense, compromise or settlement, and in
the event the Indemnified Party assumes the defense of the claim, the
Indemnified Party shall keep the Indemnifying Party (or, if the Indemnifying
Party is a Stockholder or group of Stockholders, the Stockholder Representative)
reasonably informed of the progress of any such defense, compromise or
settlement. The Indemnifying Party shall be liable for any settlement of any
Third-Party Claim effected pursuant to and in accordance with this Section 9.2
and for any final judgment (subject to any right of appeal), and the
Indemnifying Party agrees to indemnify and hold harmless each Indemnified Party
from and against any and all Damages by reason of such settlement or judgment.
(ii) Notwithstanding clause (i) above, in the
event that any Indemnified Party is a Stockholder Indemnified Party, any Claim
Notice, election or other notification or correspondence required pursuant to
such clause (i) shall only be valid if it is delivered by the Stockholder
<PAGE>
Representative to CHC or Princeton. Each Principal Stockholder hereby, and each
Stockholder that is not a Principal Stockholder by such Stockholder's execution
and delivery of a Transmittal Letter, irrevocably appoints the Stockholder
Representative as its agent and attorney-in-fact with respect to the matters set
forth in this Article 9, and hereby irrevocably grants to the Stockholder
Representative the authority to administer Claims on behalf of such Stockholder,
to exercise such other rights and powers as are set forth in this Agreement and
to enter into, and to bind such Stockholder with respect to, the settlement of
any such Claim. Each CHC Indemnified Party shall be entitled to rely on the
agreements and representations of, and notices and other correspondence from,
the Stockholder Representative as such agent and attorney-in-fact in connection
with any Claim by or against any Stockholder pursuant to this Article 9. For
purposes of this Section 9.2(b)(ii) the Stockholder Representative shall be
entitled to rely on the direction of (y) the Majority Holders, with respect to
any Claims pursuant to Section 9.2(a)(i), and (z) the Indemnifying Party, with
respect to any Claim pursuant to Section 9.2(a)(ii).
9.3 No Right of Contribution. After the Closing, no Stockholder
shall have any right of contribution against the Surviving Corporation for any
breach of any representation, warranty, covenant or agreement of Princeton. The
Stockholders and CHC shall be entitled to specific performance and injunctive
relief, without posting bond or other security, for the purpose of asserting
their respective rights under this Article 9. The remedies described in this
Article 9 shall be in addition to, and not in lieu of, any other remedies at law
or in equity that the parties may elect to pursue.
9.4 Escrow of Merger Shares. If the Escrow Agreement is in effect
at the time an assertion of indemnification is made by a CHC Indemnified Party,
the obligations of the Stockholders hereunder with respect to the Damages shall
be satisfied first by the distribution to the CHC Indemnified Party of Merger
Shares held pursuant to the Escrow Agreement and, only thereafter, by the
Stockholders directly.
9.5 Threshold; Limitations on Indemnity.
(a) Except with respect to the indemnification obligations set
forth in Section 9.2(a)(i)(B) hereof, the CHC Indemnified Parties shall not be
entitled to recover for any Damages until such time as the Damages claimed by
the CHC Indemnified Parties in the aggregate exceed $100,000 (the "Damage
Threshold"), at which time the CHC Indemnified Parties shall be entitled to be
indemnified against and compensated and reimbursed for all such Damages,
including the initial $100,000 thereof.
(b) The Stockholder Indemnified Parties shall not be entitled
to recover for any Damages until such time as the Damages claimed by the
Stockholder Indemnified Parties in the aggregate exceed the Damage Threshold, at
which time the Stockholder Indemnified Parties shall be entitled to be
indemnified against and compensated and reimbursed for all such Damages,
including the initial $100,000 thereof.
(c) No individual Stockholder shall be liable with respect to
the indemnification obligations set forth in Section 9.2(a)(i) or (ii) for any
amount in excess of the value of the Merger Shares acquired by such Stockholder
in connection with the Merger, based on a per-share value equal to the Effective
Average Share Price.
(d) The CHC Indemnified Parties shall not be liable, in the
aggregate, with respect to the indemnification obligations set forth in Section
9.2(a)(iii) for any amount in excess of the Merger Consideration.
<PAGE>
ARTICLE 10.
RESTRICTIVE COVENANTS
10.1 Non-Competition. If the Merger is consummated, neither any
Principal Stockholder nor any of his or its Affiliates shall, for a period of
three (3) years after the Effective Date, directly or indirectly, engage,
anywhere in the United States, in (i) the sale or offering or promoting for sale
of any product, process, good or service which is the same as, is functionally
similar to, or directly competes with, any product, process, good or service
which Princeton has sold or offered or promoted for sale within the five (5)
years preceding the Effective Date.
10.2 Non-Solicitation of Employees of CHC. If the Merger is
consummated, neither any Principal Stockholder nor any of his or its Affiliates
shall directly or indirectly, for himself or itself or on behalf of any other
individual or entity, hire any employee of CHC or any of its Subsidiaries,
including, without limitation, any employees of Princeton, or induce nor attempt
to induce any such employee to leave his or her employment with CHC or any of
its Subsidiaries, at any time within three (3) years from the Effective Date. If
the Merger is not consummated, neither Princeton, any Principal Stockholder nor
any of his or their respective Affiliates shall directly or indirectly, for
himself or itself or on behalf of any other individual or entity, induce any
such employee to leave his or her employment with CHC or any of its
Subsidiaries, at any time within one (1) year from the date of written notice of
termination of this Agreement.
10.3 Non-Solicitation or Interference with Customers and Suppliers
of CHC. If the Merger is consummated, neither any Principal Stockholder nor any
of his or its Affiliates shall, directly or indirectly, for himself or itself or
on behalf of any other individual or entity, solicit, divert, take away or
attempt to take away any of CHC's or any of its Subsidiaries' current customers
or suppliers or the business or patronage of any such customers or suppliers or
in any way knowingly interfere with, disrupt or attempt to disrupt any then
existing relationships between CHC or any of its Subsidiaries and any of their
current customers or suppliers at any time within three (3) years from the
Effective Date. If the Merger is not consummated, neither Princeton, any
Principal Stockholder nor any of their respective Affiliates shall, directly or
indirectly, for himself or itself or on behalf of any other individual or
entity, solicit, divert, take away or attempt to take away any current customers
or suppliers of CHC or any of its Subsidiaries made known in writing to
Princeton or such Principal Stockholder by CHC during the negotiation of this
Agreement or subsequent to its signing, or the business or patronage of any such
customers or suppliers or in any way knowingly interfere with or disrupt any
then existing relationships between CHC or any of its Subsidiaries, and any of
such customers or suppliers at any time within three (3) years from the date of
written notice of termination of this Agreement.
10.4 Non-Solicitation or Interference with Customers and Suppliers
of Princeton. If the Merger is not consummated, neither CHC nor any of its
Affiliates shall, directly or indirectly, for itself or on behalf of any other
individual or entity, solicit, divert, take away or attempt to take away any of
Princeton's current customers or suppliers made known in writing to CHC by
Princeton during the negotiation of this Agreement or subsequent to its signing,
or the business or patronage of any such customers or suppliers or in any way
knowingly interfere with, disrupt or attempt to disrupt any then existing
relationships between Princeton and any of such customers or suppliers at any
time within one (1) year from the date of written notice of termination of this
Agreement.
<PAGE>
10.5 Non-Solicitation of Employees of Princeton. If the Merger is
not consummated, neither CHC nor any of its Affiliates shall directly or
indirectly, for itself or on behalf of any other individual or entity, hire any
employee of Princeton or induce any such employee to leave his or her employment
with Princeton at any time within five (5) years from the date of written notice
of termination of this Agreement.
10.6 Acknowledgments. Each Principal Stockholder acknowledges that,
in view of the nature of Princeton's business and the business objectives of CHC
in acquiring Princeton, and the consideration paid in the Merger to the
Principal Stockholders therefor, the restrictions contained in this Article 10
are reasonably necessary to protect the legitimate business interests of CHC and
that any violation of such restrictions will result in irreparable injury to CHC
and the business CHC has acquired hereunder for which damages will not be an
adequate remedy. Each Principal Stockholder therefore acknowledges that, if any
such restrictions are violated, CHC shall be entitled to preliminary and
injunctive relief as well as to an equitable accounting of earnings, profits,
and other benefits arising from such violation.
ARTICLE 11.
MISCELLANEOUS
11.1 Termination.
(a) This Agreement may be terminated at any time prior to
Closing:
(i) By mutual written consent of CHC and
Princeton;
(ii) By CHC or Princeton if the Closing shall not
have occurred on or before April 1, 1998, other than due to a breach of this
Agreement by the party seeking to terminate;
(iii) By CHC if there is a material breach of any
representation or warranty set forth in Article 3 or 3A or any covenant or
agreement to be complied with or performed by Princeton or any Principal
Stockholder pursuant to the terms of this Agreement, so long as any such breach
is not caused by the action or inaction of CHC;
(iv) By CHC if CHC notifies Princeton in writing
prior to February 27, 1998 that it is not satisfied with its diligence review
pursuant to Section 7.7; or
(v) By Princeton if there is a material breach
of any representation or warranty set forth in Article 4 hereof or of any
covenant or agreement to be complied with or performed by CHC or Sub pursuant to
the terms of this Agreement, so long as any such breach is not caused by the
action or inaction of Princeton or any of the Principal Stockholders.
(b) In the event of termination of this Agreement:
(i) The provisions of the Confidentiality
Agreement shall continue in full force and effect; and
<PAGE>
(ii) No party hereto shall have any liability to
any other party to this Agreement, except for any willful breach of, or knowing
misrepresentation made in, this Agreement occurring prior to the proper
termination of this Agreement.
11.2 Certain Securities Laws Representations. Each Principal
Stockholder represents as follows with respect to the Merger Shares to be
acquired in connection with the Merger:
(a) (i) Such Principal Stockholder is an "accredited investor"
as such term is defined in Rule 501(a) promulgated under the Securities Act; or
(ii) Such Principal Stockholder has such knowledge and
experience in financial and business matters that he or she is capable of
evaluating the merits and risks of the investment in the Merger Shares;
(b) Such Principal Stockholder is receiving such shares for
investment for its own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof, other than as
contemplated hereby;
(c) Such Principal Stockholder has been given the opportunity
to obtain any information or documents relating to, and to ask questions and
receive answers about, CHC and the business and prospects of CHC which it deems
necessary to evaluate the merits and risks related to its investment in such
shares and to verify the information received, and such Principal Stockholder's
knowledge and experience in financial and business matters are such that it is
capable of evaluating the merits and risks of its receipt of such shares;
(d) Such Principal Stockholder's financial condition is such
that it can afford to bear the economic risk of holding the shares for an
indefinite period of time and has adequate means for providing for such
Principal Stockholder's current needs and contingencies and to suffer a complete
loss of its investment in such shares;
(e) All information that such Principal Stockholder has
provided to CHC concerning itself and its financial position is correct and
complete; and
(f) Such Principal Stockholder has been advised that (i) CHC's
issuance of shares to the Stockholders will not have been registered under the
Securities Act, (ii) such shares may need to be held indefinitely, and such
Principal Stockholder must continue to bear the economic risk of the investment
in such shares unless they are subsequently registered under the Securities Act
or an exemption from such registration is available, (iii) there may not be a
public market for such shares, (iv) when and if such shares may be disposed of
without registration in reliance on Rule 144 promulgated under the Securities
Act, such disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule, (v) if the Rule 144 exemption is not
available, public sale without registration will require compliance with an
exemption under the Securities Act and (vi) a restrictive legend in the
following form shall be placed on the certificates representing such shares:
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED
UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND QUALIFICATION UNDER THE STATE ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR
QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE
EXEMPTION AFFORDED BY RULE 144). UNLESS WAIVED BY COMPUTER HORIZONS CORP.,
COMPUTER HORIZONS CORP. SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS
TO THE AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AS A
PRECONDITION TO ANY SUCH TRANSFER.
11.3 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Princeton or any Principal Stockholder
without the prior written consent of CHC, or by CHC or Sub without the prior
written consent of Princeton or the Principal Stockholders.
11.4 Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to the
other shall be in writing and delivered in person or by courier, telegraphed,
telexed, sent by facsimile transmission, sent via overnight delivery service or
mailed by registered or certified mail (such notice to be effective upon
receipt), as follows:
If to a Principal Stockholder, to the address of such Principal
Stockholder as set forth on Annex 1 hereto.
If prior to the Closing, to Princeton:
Princeton Softech, Inc.
1060 State Road
Princeton, New Jersey 08540
Fax: (609) 497-0302
Attention: Bruce D. Haislip
With a copy to:
Buchanan Ingersoll
500 College Road East
Princeton, New Jersey 08540
Fax: (609) 520-0360
Attention: William J. Thomas
If to CHC or Sub or, if after the Closing, to the Surviving
Corporation:
Computer Horizons Corp.
49 Old Bloomfield Avenue
Mountain Lakes, New Jersey 07046
Fax: (973) 402-6293
Attention: Dennis M. DiVenuta, General Counsel
With a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Fax (212) 751-4864
Attention: Samuel A. Fishman
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
<PAGE>
11.5. Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of New York except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern.
11.6. Descriptive Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7. Entire Agreement; Amendments and Waivers. This Agreement,
together with all exhibits and schedules hereto, and the Confidentiality
Agreement, constitute the entire agreement among the parties pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
11.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.9. Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
11.10. Expenses. Except as otherwise provided in this Agreement, CHC
will be liable for its and Sub's expenses, and the Stockholders will be liable
for the Stockholder Expenses, incurred in connection with the negotiation,
preparation, execution and performance of this Agreement.
11.11. Publicity. Except as required by law or on advice of counsel,
neither party shall issue any press release or make any public statement
regarding the transactions contemplated hereby without the prior approval of the
other parties, and the parties hereto shall issue a mutually acceptable press
release as soon as practicable after the date hereof and after the Closing Date.
Notwithstanding the foregoing, CHC shall be permitted to make any public
statement without obtaining the consent of any other party hereto if (i) the
disclosure is required by law and (ii) CHC has first used its reasonable efforts
to consult with (but not to obtain the consent of) the other parties about the
form and substance of such disclosure.
11.12. No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation, except
as specifically set forth in Article 9 hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be duly executed on its behalf by its officer thereunto
duly authorized, as of the day and year first above written.
COMPUTER HORIZONS CORP.,
a New York corporation
By: /s/John J. Cassese
------------------
John J. Cassese
Its: President
PS MERGER CORP.,
a New Jersey corporation
By: /s/John J. Cassese
------------------
John J. Cassese
Its: President
PRINCETON SOFTECH, INC.,
a New Jersey corporation
By: /s/Joseph A. Allegra
--------------------
Joseph A. Allegra
Its: President
<PAGE>
THE PRINCIPAL STOCKHOLDERS
/s/ Joseph J. Allegra
-----------------
Joseph A. Allegra
/s/ Bruce D. Haislip
----------------
Bruce D. Haislip
/s/ Richard J. Parente
------------------
Richard J. Parente
/s/ Richard D. Specht
-----------------
Richard D. Specht
/s/ Don Cohen
---------
Don Cohen
/s/ Deborah Kebler
--------------
Deborah Kebler
/s/ David Hoeschele
---------------
David Hoeschele
/s/ Elaine Verna
------------
Elaine Verna
/s/ David Craig
-----------
David Craig
