EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of the 16th day of December 2009 (the "Agreement Date"), by and among
FLORHAM CONSULTING CORP., a Delaware corporation ("Florham"); EII ACQUISITION
CORP., a Delaware corporation ("Mergerco"); EDUCATIONAL INVESTORS, INC., a
Delaware corporation ("EII"); SANJO SQUARED, LLC, a Delaware limited liability
company ("Sanjo"); KINDER INVESTMENTS, LP, a Delaware limited partnership
("Kinder"); XXXXXX X. XXXXXX, an individual ("Xxxxxx"); and XXXX XXXXXX, an
individual ("Xxxxxx").
Recitals
A. As used in this Agreement: (a) Sanjo and Kinder are hereinafter
sometimes collectively referred to as the "EII Common Shareholders;"(b) Xxxxxx
and Xxxxxx are hereinafter sometimes collectively referred to as the "EII
Stockholder Option Holders;" (c) the EII Common Shareholders and the EII
Stockholder Option Holders are hereinafter sometimes collectively referred to as
the "EII Securityholders;" and (d) Florham, Mergerco, EII and the EII
Securityholders are hereinafter sometimes individually referred to as a "Party"
and collectively referred to as the "Parties."
B. The Board of Directors of (i) Florham and Mergerco, and (ii) the Board
of Directors of EII; and each of the other Parties hereto all deem it necessary
and advisable to enter into this Agreement, pursuant to which, inter alia,
Mergerco will will be merged with and into EII with EII as the surviving
corporation of such merger (the "Merger").
C. The Board of Directors of each of Florham, Mergerco and EII
(collectively, the "Boards of Directors"), the General Partner of Kinder (the
"Kinder General Partner"), and the Board of Managers of Sanjo (the "Sanjo Board
of Managers"), each deems the Merger advisable and in the best interest of said
Persons and their respective shareholders, partners and members, and the Boards
of Directors, the Kinder General Partner and the Sanjo Board of Managers have
each approved and adopted the form, terms and provisions of this Agreement and
the Merger.
D. By their execution and delivery of this Agreement, each of the EII
Securityholders deems the Merger advisable and in their best interests and the
EII Securityholders have each approved and adopted the form, terms and
provisions of this Agreement and the Merger.
Agreement
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the Parties agree as follows:
ARTICLE I. - THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the General Corporation Law of the State
of Delaware (the "Delaware Corporation Law"), Mergerco shall be merged with
and into EII at the Effective Time. Following the Effective Time, the
separate corporate existence of Mergerco shall cease and EII shall continue
as the surviving corporation of the Merger (the "Surviving Corporation")
and shall succeed to and assume all the rights and obligations of Mergerco
in accordance with the Delaware Corporation Law.
1.2 Effective Time. Subject to the provisions of this Agreement, as soon as
practicable on or after the Closing Date, the Parties shall file a
certificate of merger or other appropriate documents (in any such case, the
"Certificate of Merger") executed in accordance with the relevant
provisions of the Delaware Corporation Law and shall make all other filings
or recordings required under the Delaware Corporation Law. The Merger shall
become effective at such time as the Certificate of Merger is duly filed
with the the Delaware Secretary of State, or at such other time as Florham
and EII shall agree should be specified in the Certificate of Merger (the
time the Merger becomes effective being referred to herein as the
"Effective Time").
1.3 Effects of the Merger. The Merger shall have the effects set forth in the
applicable provisions of the Delaware Corporation Law.
1.4 Certificate of Incorporation and Bylaws.
(a) The Certificate of Incorporation of EII as in effect immediately following
the Effective Time shall be the certificate of incorporation of the
Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The bylaws of EII as in effect immediately following the Effective Time
shall be the bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
1.5 Directors. The board of directors of EII immediately prior to the Effective
Time shall constitute the entire members of be the board of directors of
the Surviving Corporation until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the
case may be.
1.6 Officers. The officers of EII immediately prior to the Effective Time shall
constitute all of the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
1.7 Effect on Capital Stock. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any outstanding
securities of EII, Mergerco or Florham, the holders of all of the issued
and outstanding shares of EII Common Stock and EII Options (as hereinafter
defined) shall receive the following consideration (the "Merger
Consideration"):
(a) Florham Common Stock. Each issued and outstanding share of common stock of
Florham, $0.0001 par value per share (the "Florham Common Stock") shall
remain issued and outstanding following the Effective Time of the Merger,
except as otherwise provided in Section 1.7(g) below.
(b) EII Treasury Stock. Each share of EII's common stock, par value $0.001 per
share ("EII Common Stock") that is held in the treasury of EII or by any
wholly owned subsidiary of EII and each share of EII Common Stock that is
owned by Florham shall automatically be cancelled and returned and shall
cease to exist and no consideration shall be delivered in exchange
therefor.
(c) Outstanding EII Common Stock. As at the Effective Time, by virtue of the
Merger, and without any action on the part of the holders of any shares of
EII Common Stock or any shares of capital stock of Florham or the Surviving
Corporation, each of the 16,666,667 full shares of EII Common Stock that is
issued and outstanding as at the Effective Time of the Merger (other than
shares of EII Common Stock to be cancelled pursuant to Section 1.7(b) or
Section 1.7(g) hereof), shall be converted into the right to receive:
(i) 0.36 of a share of Florham Common Stock (the "Common Stock Exchange
Ratio"); and
(ii) 0.015 shares of Series A Preferred Stock of Florham ("Florham
Preferred Stock"), which shall contain the rights, privileges and designations
set forth on the Certificate of Designations annexed hereto as Exhibit A and
made a part hereof ("Certificate of Designation"); each of which 250,000 shares
of Florham Preferred Stock shall, automatically upon the filing by Florham of an
amendment to its certificate of incorporation increasing its authorized shares
of Florham Common Stock to not less than 50,000,000 shares, be converted, on the
basis of 49.11333 shares of Florham Common Stock for each outstanding share of
Florham Preferred Stock (the "Florham Preferred Exchange Ratio" and together
with the Common Stock Exchange Ratio, the "Exchange Ratios") into an aggregate
of 12,278,332 shares of Florham Common Stock.
As of the Effective Time, all the issued and outstanding shares of EII
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of EII Common Stock shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration,
without interest.
(d) Outstanding EII Stockholder Options. As at the Effective Time, by
virtue of the Merger and without any action on the part of the EII Stockholder
Option Holders, each of the 2,333,334 outstanding options to purchase shares of
EII Common Stock held by the EII Stockholder Option Holders ("EII Stockholder
Options") shall be converted into an option, subject to the terms and conditions
of the Capitalization Table annexed hereto as Exhibit B and made a part hereof
(the "Florham Stockholder Options"), entitling the holder(s) to purchase
1.0967002 shares of Florham Common Stock (the "Florham Stockholder Option
Exchange Ratio"), or an aggregate of 2,997,648 shares of Florham Common Stock
(the "Florham Stockholder Option Shares"), at an exercise price of $0.228 per
share of Florham Common Stock (the "Tier I Exercise Price) or $0.41 per share of
Florham Common Stock (the "Tier II Exercise Price"); provided, that such Florham
Stockholder Options may be exercised (at either the Tier I Exercise Price or the
Tier II Exercise Price, as applicable) only in the event and to the extent that
Florham achieves the consolidated net income before taxes depreciation and
amortization per outstanding share of Florham Common Stock (the "Per Share
EBTDA") for the fiscal years set forth on set forth on the Capitalization Table
annexed hereto as Exhibit B and made a part hereof..
(e) Outstanding EII Management Xxxxxxx.Xx at the Effective Time, by virtue
of the Merger and without any action on the part of any of the holders thereof,
each of the outstanding options to purchase shares of EII Common Stock (not to
exceed 300,000 EII options as at the Effective Time of the Merger) that have
been granted by EII to members of the management of and consultants to EII and
its Subsidiary prior to the Effective Time of the Merger (collectively, the "EII
Management Options") shall be converted into an option, subject to the terms and
conditions set forth on the Capitalization Table annexed hereto as Exhibit B and
made a part hereof (the "Florham Management Options"), entitling the holder(s)
to purchase 1.0967 shares of Florham Common Stock (the "Florham Management
Option Exchange Ratio"), or an aggregate of 329,010 of Florham Common Stock (the
"Florham Management Option Shares"), at an exercise price of $0.50 per share of
Florham Common Stock (the "Florham Management Option Price").
(f) Outstanding EII Directors and Consultants Options. As at the Effective
Time, by virtue of the Merger and without any action on the part of any of the
holders thereof, each of the outstanding options to purchase shares of EII
Common Stock (not to exceed 400,000 EII options as at the Effective Time of the
Merger) that have been granted by EII to certain directors and consultants to
EII and its Subsidiary (the "EII Directors and Consultants Options") shall be
converted into an option, subject to the terms and conditions set forth on the
Capitalization Table annexed hereto as Exhibit B and made a part hereof (the
"Florham Directors and Consultants Options"), entitling the holder(s) to
purchase 1.0967 shares of Florham Common Stock (the "Florham Directors and
Consultants Option Exchange Ratio"), or an aggregate of 439,040 shares of
Florham Common Stock (the "Florham Directors and Consultants Option Shares"), at
an exercise price of $0.41 per share of Florham Common Stock (the "Florham
Directors and Consultants Option Price").
(g) Florham Common Stock Owned by EII. As at the Effective Time, each
issued and outstanding share of Florham Common Stock, if any, that is owned of
record by EII immediately prior to the Effective Time of the Merger shall
automatically be cancelled and returned and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(h) Mergerco Common Stock. As at the Effective Time each of the 100 issued
and outstanding share of Mergerco common stock, without part value ("Mergerco
Common Stock") that is owned of record by Florham immediately prior to the
Effective Time of the Merger shall automatically be cancelled and returned and
shall cease to exist and shall be replaced by one (1) full share of the EII, as
the Surviving Corporation of the Merger (the "Surviving Corporation Common
Stock"), which Surviving Corporation Common Stock shall be issued to Florham.
(i) Florham Fully-Diluted Common Stock. Notwithstanding the foregoing, it
is the intention of the Parties hereto that all of the EII Securityholders, as
the holders of up to 19,000,000 shares of the "EII Fully-Diluted Common Stock"
(defined herein as the sum of (i) the 16,666,667 outstanding shares of EII
Common Stock, and (ii) the maximum of 2,333,333 shares of EII Common Stock
issuable upon exercise of the EII Stockholder Options) shall own and be entitled
own of record Merger Consideration consisting of not less than 95.0% of the
Florham Fully-Diluted Common Stock (as hereinafter defined) immediately after
giving effect to the Effective Time of the Merger. Accordingly, it is expressly
understood and agreed that in the event that the aggregate number of shares of
Florham Fully-Diluted Common Stock immediately prior to the Effective Time of
the Merger be less than or greater than an aggregate of 1,096,700 shares of
Florham Fully-Diluted Common Stock, then and in such event, the aforesaid
Exchange Ratios shall be appropriately adjusted so that immediately after the
Effective Time of the Merger, all of the holders of EII Fully-Diluted Common
Stock immediately prior to the Effective Time of the Merger shall own and be
entitled to own of record 95.0% of the Florham Fully-Diluted Common Stock
immediately after giving effect to the Effective Time of the Merger and the
holders of the outstanding shares of Florham Common Stock immediately prior to
the Effective Time of the Merger shall own 5.0% of the Florham Fully-Diluted
Common Stock immediately after giving effect to the Effective Time of the
Merger.
The foregoing shares and percentages of Florham Fully-Diluted Common Stock
shall be subject to equitable pro-rata dilution upon the issuance of any
additional shares of Florham Common Stock or other securities convertible into
or exercise or exchangeable for additional shares of Florham Common Stock
following the Effective Time of the Merger, including, without limitation (i)
the TDI Shares (as hereinafter defined), and (ii) the shares of Florham Common
Stock issuable upon exercise of the Florham Management Options and the Florham
Directors and Consultants Options.
1.8 Exchange of EII Instruments.
(a) Florham shall designate Xxxxxxx Xxxx LLP or another a person reasonably
acceptable to EII to act as exchange agent in the Merger (the "Exchange Agent"),
and, from time to time on, prior to or after the Effective Time, Florham shall
make available, or cause the Surviving Corporation to make available, to the
Exchange Agent (i) all shares of Florham Common Stock, Florham Preferred Stock
and Florham Stockholder Options constituting the Merger Consideration, and (ii)
all Florham Management Options, Florham Directors and Consultants Options, and
(iii) the TDI Shares issuable pursuant to the TDI Purchase Agreement, all as
forth on the Capitalization Table annexed hereto as Exhibit B and made a part
hereof (collectively, the "Florham Securities") in amounts and at the times
necessary for the delivery of the said Merger Consideration and other Florham
Securities to be delivered upon surrender of certificates representing the (A)
shares of EII Common Stock, EII Stockholder Options, EII Management Options and
EII Directors and Consultants Options (collectively, "EII Securities") converted
into such Florham Securities pursuant to Section 1.7, and (B) the TDI Shares
issuable pursuant to the TDI Purchase Agreement.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall deliver the Florham Securities to each holder of record of
the EII Securities and the TDI Equity Owners, represented by the applicable
number and type of Florham Securities, in exchange for certificates and other
instruments and agreements representing all, and not less than all, of the
outstanding shares of EII Common Stock, EII Stockholder Options, EII Management
Options and EII Directors and Consultants Options (collectively, the "EII
Instruments"), duly endorsed for cancellation, and the EII Instruments so
surrendered shall forthwith be canceled. In addition, on the Effective Date, EII
shall confirm to the Exchange Agent that it has acquired from the TDI Equity
Owners 100% of the "Subject Interests" (as defined in the TDI Purchase
Agreement, and when the TDI Shares are calculated and determined following the
Effective Date pursuant to the TDI Purchase Agreement, upon receipt of such TDI
Shares from Florham, the Exchange Agent shall cause the TDI Shares, to be
delivered to the TDI Equity Owners. In the event any EII Instruments shall have
been lost, stolen or destroyed, Florham may, in its discretion and as a
condition precedent to the delivery of the Florham Securities in respect of the
EII Instruments, require the owner of such lost, stolen or destroyed EII
Instrument to deliver a affidavit or bond in such amount or form as it may
reasonably direct as indemnity against any claim that may be made against
Florham, the Surviving Corporation or the Exchange Agent.
(c) All Merger Consideration and other Florham Securities delivered upon
the surrender of EII Securities in accordance with the terms of this Section 1.8
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the applicable EII Securities represented by such EII Instruments. At the
Effective Time, the stock transfer books and note register of EII shall be
closed, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of any of the EII Securities that
are outstanding immediately prior to the Effective Time. If, after the Effective
Time, EII Instruments are presented to the Surviving Corporation or the Exchange
Agent for any reason, they shall be canceled and exchanged as provided in this
Section 1.8.
1.9 Holders of Record of EII Securities.
Holders of record of shares of EII Common Stock as at the Effective Time of
the Merger shall be entitled to receive shares of Florham Common Stock and
Florham Preferred Stock, as Merger Consideration as of the Effective Time of the
Merger. Persons who are holders of EII Stockholder Options, EII Management
Options and EII Directors and Consultants Options as at the Effective Time of
the Merger shall only be entitled to their pro-rata portion of the Florham
Stockholder Options, Florham Management Options and EII Directors and
Consultants Options (collectively, the "Florham Options") in connection with the
Merger, as provided herein.
1.10 Closing.
The closing of the Merger (the "Closing") will take place at the offices of
Xxxxxxx Xxxx LLP, counsel to EII, at its office in New York, New York, within
ten days following the delivery of satisfaction or waiver of the conditions
precedent set forth in Section 4 or at such other date as Florham and the EII
shall agree (the "Closing Date"), but in no event shall the Closing Date occur
later than December 31, 2009 , unless such date shall be extended by mutual
agreement of Florham and EII to not later than March 31, 2010 (the "Outside
Closing Date"). Notwithstanding the foregoing, no Party who is in breach of its
obligations, covenants or commitments under this Agreement may unilaterally
postpone or terminate the Closing of the transactions contemplated hereby. On
the Closing Date the Parties shall consummate the Merger and cause the
Certificate of Merger to be filed at such Closing with the Secretary of State of
the State of Delaware.
1.11 Change of Corporate Name.
Promptly following the Effective Time of the Merger, pursuant to the
Florham Restated Charter, Florham shall change its corporate name to
"EDUCATIONAL INVESTORS CORP." or such other corporate name as shall be
acceptable to the EII.
ARTICLE II - CERTAIN DEFINITIONS
In addition to the terms defined in the Recitals, in Article I above or
elsewhere in this Agreement, wwhen used in this Agreement, the following terms
shall have the meanings set forth below:
"Acquisition Shares" means the number of shares of Florham Common Stock
with a deemed value of $800,000 that are issuable to the TDI Equity Owners
following the Effective Date pursuant to the TDI Purchase Agreement.
"Applicable Law" means any domestic or foreign law, statute, regulation,
rule, policy, guideline or ordinance applicable to the businesses of the Parties
and/or the Merger.
"Affiliate" means any one or more Person controlling, controlled by or
under common control with any other Person or their affiliate.
"Business Day" shall mean any day, excluding Saturday, Sunday and any other
day on which national banks located in New York, New York shall be closed for
business.
"Capitalization Table" shall mean the capitalization of EII prior to the
Merger and of Florham following consummation of the Merger, as is set forth on
Exhibit B annexed hereto and made a part hereof.
"Closing Date" shall mean the date upon which the Merger shall be
consummated.
"Dollar" and "$" means lawful money of the United States of America.
"EII Common Stock" means the 20,000,000 shares of common stock, 0.001 par
value per share, of EII authorized pursuant to its certificate of incorporation,
as amended, through the Closing Date.
"EII Common Stockholders" means the collective reference to Sanjo and
Kinder.
"EII Directors' and Consultants' Options shall mean options to purchase
400,000 shares of EII Common Stock to each of Xxxxx Xxxxx, Xxxxxxx Xxxx and Xxx
Xxxxxxxx, as directors of EII, and Xxxxxxxx Xxxxxx, as a consultant to EII, at
an exercise price of $0.50 per share to be issued by EII prior to the Effective
Time of the Merger.
"EII Fully-Diluted Common Stock" means, as at any point in time, the
maximum aggregate number shares of EII Common Stock that (a) are issued and
outstanding as at the Effective Time of the Merger, plus (b) all additional
shares of EII Common Stock that are issuable upon the exercise of all
outstanding EII Stockholder Options. As at the Agreement Date, there are an
aggregate of 19,000,001 shares of EII Fully-Diluted Common Stock are issued and
outstanding. The term "EII Fully-Diluted Common Stock" shall not mean or include
any shares of EII Common Stock issuable upon exercise o any EII Management
Options or EII Directors and Consultants Options.
"EII Group" shall mean the collective reference to (i) EII, (ii) EII's
existing wholly-owend subsidiary Valley Anesthesia, Inc. ("Valley") and (iii)
TDI
"EII Management Options shall mean options to purchase up to 300,000 shares
of EII Common Stock to the EII Management Option Holders.
"EII Management Option Holders: shall be those Persons designated by the
board of directors of EII entitled to receive EII Management Options, as set
forth on a schedule to be provided to Florham by EII to Florham prior to the
Effective Date.
"EII Options" shall mean collective reference to the the EII Stockholder
Options, the EII Management Options and the EII Directors' and Consultants'
Options.
"EII Option Holders" shall mean the collective reference the holders of the
EII Options.
"EII Stockholder Option Holders" means the collective reference to Xxxxxx
and Xxxxxx.
"EII Securityholders" means the collective reference to the EII Common
Stockholders and the EII Stockholder Option Holders.
"Escrow Shares" means the number of shares of Florham Common Stock with a
deemed value of $100,000 placed in escrow and issuable to the TDI Equity Owners
pursuant to the TDI Purchase Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Florham Common Stock" shall mean all shares of common stock of Florham,
$0.0001par value per share, as may be authorized for issuance pursuant to its
certificate of incorporation, as the same may hereafter be amended or modified.
Florham Directors and Consultants Options" means the 439,040 options to be
issued to the holders of EII Directors and Consultants Options pursuant to
Section 1.7(f) above.
"Florham Fully-Diluted Common Stock" means, as at the Effective Time of the
Merger and the Closing Date (a) the aggregate number shares of Florham Common
Stock that are issued and outstanding; plus (b) the sum of (i) all additional
shares of Florham Common Stock that are issuable upon the exercise of all of the
Florham Warrants or other securities that are then exercisable for or
convertible into Florham Common Stock, (ii) all shares of Florham Common Stock
included in the Merger Consideration, (iii) all shares of Florham Common Stock
issuable upon conversion of the Florham Preferred Stock included in the Merger
Consideration, and (iv) all shares of Florham Common Stock issuable upon
exercise of the Florham Stockholder Options included in the Merger
Consideration; provided, however, that the term "Florham Fully-Diluted Common
Stock" shall not mean or include:
(A) the issuance of the Acquisition Shares and the Escrow Shares issued to
the TDI Equity Owners pursuant to the TDI Purchase Agreement, or
(B) any shares of Florham Common Stock issuable upon the exercise of any
Florham Management Options; or
(C) any shares of Florham Common Stock issuable upon the exercise of any
Florham Directors and Consultants Options, or
(D) any shares of Florham Common Stock or other securities convertible into
or exercisable or exchangeable for Florham Common Stock that is issued for any
business purpose following the Effective Time of the Merger.
Subject to adjustment as provided in Section 1.7(i) above, as at the
Closing Date and the Effective Time of the Merger, there will be an aggregate of
up to 21,934,000 shares of Florham Fully-Diluted Common Stock that would be
issued and outstanding, after giving pro forma effect to:
(i) the issuance of all 6,000,000 shares of Florham Common Stock at the
Effective Time of the Merger to the EII Common Shareholders;
(ii) the issuance of up to a maximum of 12,378,333 additional shares of
Florham Common Stock following the Effective Time of the Merger to the EII
Common Shareholders upon automatic conversion of the Florham Preferred Stock;
(iii) the issuance of up to a maximum of 2,558,968 shares of Florham Common
Stock to the EII Stockholder Option Holders following the Effective Time of the
Merger upon exercise of the Florham Stockholder Options;
(iv) the 166,700 shares of Florham Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger; and
(v) the issuance of up to 930,000 shares of Florham Common Stock that are
issuable upon the exercise of the Florham Warrants.
"Florham Management Options" means the 548,800 options to be issued to the
EII Management Option Holders pursuant to Section 1.7(e) above.
"Florham Principal Stockholder" shall have the meaning set forth in Section
4.3(a) of this Agreement.
"Florham Restated Charter" shall mean the amended and restated certificate
of incorporation of Florham in the form of Exhibit C annexed hereto and made a
part hereof.
"Florham Securities" shall have the meaning defined in Section 1.8(a) of
this Agreement.
"Florham Warrants" means the warrants expiring on June 30, 2016 entitling
the holder(s) to purchase up to 930,000 shares of Florham Common Stock at an
exercise price of $0.05 per share.
"GAAP" means generally accepted accounting principles in the United States
of America as promulgated by the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board or any successor
Institutes concerning the treatment of any accounting matter.
"Kinder" means Kinder Investments, LP, a Delaware limited partnership.
"Kinder General Partner" meansNesher LLC, a New York limited liability
company, whose managing member is Xxx Xxxxxxxx.
"Knowledge" means the knowledge of the Person in question, after reasonable
inquiry.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset.
"Material Adverse Effect" with respect to any Person or group of Persons
means any event, change or effect that has or would have a materially adverse
effect on the financial condition, business or results of operations of such
entity or group of entities, taken as a consolidated whole.
"Merger Consideration" shall mean the collective reference to: (a) all
shares of Florham Common Stock and Florham Preferred Stock issued to EII Common
Stockholders as at the Effective Time of the Merger pursuant to this Agreement,
and (b) all Florham Options issued to holders of EII Stockholder Options as at
the Effective Time of the Merger pursuant to this Agreement.
"Person" means any individual, corporation, partnership, trust or
unincorporated organization or a government or any agency or political
subdivision thereof.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means:
(i) any income, alternative or add-on minimum tax, gross receipts tax,
sales tax, use tax, ad valorem tax, transfer tax, franchise tax, profits tax,
license tax, withholding tax, payroll tax, employment tax, excise tax, severance
tax, stamp tax, occupation tax, property tax, environmental or windfall profit
tax, custom, duty or other tax, impost, levy, governmental fee or other like
assessment or charge of any kind whatsoever together with any interest or any
penalty, addition to tax or additional amount imposed with respect thereto by
any governmental or Tax authority responsible for the imposition of any such tax
(domestic or foreign), and
(ii) any liability for the payment of any amounts of the type described in
clause (i) above as a result of being a member of an affiliated, consolidated,
combined or unitary group for any Taxable period, and
(iii) any liability for the payment of any amounts of the type described in
clauses (i) or (ii) above as a result of any express or implied obligation to
indemnify any other person.
"Tax Return" means any return, declaration, form, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TDI" means Training Direct, LLC, a Connecticut limited liability company.
"TDI Equity Owners" means the collective reference to Xxxxxx Xxxxxx and TD
Investments, LLC.
"TDI Purchase Agreement" mean the Interest Purchase Agreement, dated of
even date herewith, among Florham, EII, TDI, and the TDI Equity Owners in the
form of Exhibit D annexed hereto and made a part hereof.
"TDI Shares" shall mean the collective reference to the Acquisition Shares
and the Escrow Shares, and represented by an aggregate number of shares of
Florham Common Stock having a value of $900,000 (to be calculated following the
Effective Date of the Merger in accordance with the TDI Purchase Agreement), of
which (a) 66.7% of such shares of Florham Common Stock shall be issued directly
to the TDI Equity Owners and shall represent the Acquisition Shares, and (b)
33.3% of such shares of Florham Common Stock shall be placed in escrow and shall
represent the Escrow Shares, all as contemplated by the TDI Purchase Agreement.
ARTICLE III -. REPRESENTATIONS AND WARRANTIES OF
EII AND THE EII SECURITY STOCKHOLDERS.
EII and the EII Securityholders hereby, jointly and severally, represent
and warrant to Florham as follows:
3.1 Organization and Good Standing: Ownership of Shares. EII is a corporation
duly organized and validly existing under the laws of the State of
Delaware. There are no outstanding subscriptions, rights, options, warrants
or other agreements obligating EII to issue, sell or transfer any stock or
other securities of EII except for the EII Options referred to on Exhibit C
attached hereto and made a part hereof.
3.2 Corporate Authority. Each of the EII Securityholders individually has the
power and authority, and EII has the corporate power to enter into this
Agreement and to perform their respective obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transaction contemplated hereby have been duly authorized by the Board of
Directors of EII and has been authorized by the EII Securityholders. The
execution and performance of this Agreement will not constitute a material
breach of any agreement, indenture, mortgage, license or other instrument
or document to which EII or any of the EII Securityholders is a party and
will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to EII any of the EII Securityholers or their
respective properties. The execution and performance of this Agreement will
not violate or conflict with any provision of the certificate of
incorporation or by-laws of EII.
3.3 EII Capitalization.
(a) As at the Agreement Date and as at the Closing Date, the EII
Securityholders are and shall be the Persons set forth on Exhibit B, and are and
on the Closing Date shall be, the owners of record and beneficially of 100% of
the issued and outstanding shares of EII Common Stock and EII Stockholder
Options. All issued and outstanding EII Securities are owned free and clear of
all rights, claims, liens and encumbrances, and have not been sold, pledged,
assigned or otherwise transferred except pursuant to this Agreement.
(b) As at the Closing Date, except for the EII Options, there shall be no
shares of EII Common Stock issuable upon conversion of any outstanding EII
securities or upon exercise of any rights, options or warrants to purchase or
otherwise receive EII Common Stock or other EII securities.
3.4 Financial Statements, Books and Records.
(a) EII has furnished to Florham all audited and unaudited balance sheet,
income statement, statement of cash flows and stockholders equity and notes
thereto of each of (i) EII, (ii) its subsidiary Valley Anesthesia, Inc.
("Valley") and (iii) TDI through and including September 30, 2009 (the
"Financial Statements"). The Financial Statements fairly represent the financial
position of the EII Group as at such dates and the results of their operations
for the periods then ended. The Financial Statements were prepared in accordance
with generally accepted accounting principles applied on a consistent basis with
prior periods except as otherwise stated therein and except that the unaudited
Financial Statements may not include all footnotes normally included under such
generally accepted accounting principles. The books of account and other
financial records of each member of the EII Group are in all respects complete
and correct in all material respects and are maintained in accordance with good
business and accounting practices.
(b) The Financial Statements of the EII Group have been or are capable of
being audited in accordance with generally accepted accounting principles and
Regulation S-X, as promulgated under the Securities Act of 1933, as amended.
3.5 Access to Records. The TDI Agreement and all exhibits thereto, and the
corporate financial records, minute books and other documents and records
of the EII Group have been made available to Florham prior to the Closing
hereof.
3.6 No Material Adverse Changes. Except as otherwise described on Schedule 3.6
hereto, since September 30, 2009, there has not been:
(a) any material adverse change in the financial position of any member of
the EII Group, except changes arising in the ordinary course of business, which
changes will in no event materially and adversely affect the financial position
of the EII Group;
(b) any damage, destruction or loss materially affecting the assets,
prospective business, operations or condition (financial or otherwise) of the
EII Group whether or not covered by insurance;
(c) any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of EII capital stock;
(d) any sale of an asset (other than in the ordinary course of business) or
any mortgage or pledge by the EII Group of any properties or assets; or
(e) adoption of any pension, profit sharing, retirement, stock bonus, stock
option or similar plan or arrangement except for the EII Management Options and
EII Directors' and Consultants' Options.
3.7 Taxes. As of September 30, 2009, the EII Group has filed all material tax,
governmental and/or related forms and reports (or extensions thereof) due
or required to be filed and has (or will have) paid or made adequate
provisions for all taxes or assessments which had become due as of the
Closing Date, and there are no deficiency notices outstanding.
3.8 Compliance with Laws. Except as set forth on Schedule 3.8, the EII Group
has complied with all federal, state, county and local laws, ordinances,
regulations, inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business which, if not complied with, would
materially and adversely affect the business of the EII Group.
3.9 No Breach. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not:
(a) violate any provision of the Articles of Incorporation or By-Laws of
the EII Group;
(b) violate, conflict with or result in the breach of any of the terms of,
result in a material modification of, otherwise give any other contracting party
the right to terminate, or constitute (or with notice or lapse of time, or both
constitute) a default under any contract or other agreement to which the EII
Group is a party or by or to which it or any of its assets or properties may be
bound or subject;
(c) violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, the EII
Group or upon the properties or business of the EII Group; or
(d) violate any statute, law or regulation of any jurisdiction applicable
to the transactions contemplated herein which could have a materially adverse
effect on the business or operations of the EII Group.
3.10 Actions and Proceedings. the EII Group is not a party to any material
pending litigation or, to its knowledge, any governmental investigation or
proceeding not reflected in the Financial Statements, and to its best
knowledge, no material litigation, claims, assessments or Non-governmental
proceedings are threatened against the EII Group .
3.11 Disclosure. EII has (and at the Closing it will have) disclosed in writing
to Florham all events, conditions and facts materially affecting the
business, financial conditions or results of operation of EII all of which
have been set forth herein. EII has not now and will not have, at the
Closing, withheld disclosure of any such events, conditions, and facts
which they have knowledge of or have reasonable grounds to know may exist.
3.12 Authority to Execute and Perform Agreements. EII has the full legal right
and power and all authority and approval required to enter into, execute
and deliver this Agreement and to perform fully its obligations hereunder.
This Agreement has been duly executed and delivered and is the valid and
binding obligation of EII and each of the EII Securityholders enforceable
in accordance with its terms, except as may be limited by bankruptcy,
moratorium, insolvency or other similar laws generally affecting the
enforcement of creditors' rights. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
the performance by EII and each of the EII Securityholders of this
Agreement, in accordance with its respective terms and conditions will not:
(a) require the approval or consent of any governmental or regulatory body
or the approval or consent of any other person;
(b) conflict with or result in any breach or violation of any of the terms
and conditions of, or constitute (or with any notice or lapse of time or both
would constitute) a default under, any order, judgment or decree applicable to
EII or any of the EII Securityholders, or any instrument, contract or other
agreement to which EII is a party or by or to which EII or any of the EII
Securityholders is bound or subject; or
(c) result in the creation of any lien or other encumbrance on the assets
or properties of EII or any of the EII Securityholders.
3.13 Brokers or Finders. No broker's or finder's fee will be payable by the EII
Group in connection with the transactions contemplated by this Agreement,
nor will any such fee be incurred as a result of any actions by the EII
Group or any of the EII Securityholders, or TDI members or managers..
3.14 Tangible Assets. the EII Group has full ownership or leasehold title and
interest in all machinery, equipment, furniture, leasehold improvements,
fixtures, projects, owned or leased by the EII Group, any related
capitalized items or other tangible property material to the business of
the EII Group (the "Tangible Assets"). Except as disclosed in the Financial
Statements. the EII Group holds all rights, title and interest in all the
Tangible Assets owned or leased by them, free and clear of all liens,
pledges, mortgages, security interests, conditional sales contracts or any
other encumbrances. All of the Tangible Assets are in good reasonable
condition and repair and are usable in the ordinary course of business of
the EII Group.
3.15 Insurance. Each of the EII Group maintains adequate insurance required for
the operation of its business.
3.16 Operations of the EII Group. Except as disclosed on Schedule 3.16 hereto,
from the date of their most recent Financial Statements, no member of the
EII Group has not and will not have:
(a) incurred any indebtedness for borrowed money, except in the ordinary
course of their business;
(b) declared or paid any dividend or declared or made any distribution of
any kind to any shareholder, or made any direct or indirect redemption,
retirement, purchase or other acquisition of any shares in its capital stock;
(c) made any loan or advance to any shareholder, officer, director,
employee, consultant, agent or other representative or made any other loan or
advance otherwise than in the ordinary course of business;
(d) except in the ordinary course of business, incurred or assumed any
indebtedness or liability (whether or not currently due and payable);
(e) disposed of any assets of the EII Group except in the ordinary course
of business; or
(f) increased, terminated, amended or otherwise modified any plan for the
benefit of employees of the EII Group.
3.17 Full Disclosure. No representation or warranty by eii or the EII
Securityholders in this Agreement or in any document or schedule to be
delivered by them pursuant hereto, and no written statement, certificate or
instrument furnished or to be furnished by EII or the EII Securityholders
pursuant hereto or in connection with the negotiation, execution or
performance of this Agreement contains or will contain any untrue statement
of a material fact or omits or will omit to state any fact necessary to
make any statement herein or therein not materially misleading or necessary
to a complete and correct presentation of all material aspects of the
business of the EII Group.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF FLORHAM
Florham hereby represents and warrants to EII and the EII Securityholders,
as follows:
4.1 Organization and Good Standing. Each of Florham and Mergerco is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Florham has the corporate power to own its
own property and to carry on its business as now being conducted and is
duly qualified to do business in any jurisdiction where so required except
where the failure to so qualify would have no material negative impact.
Mergerco has been formed solely for the purpose of consummating the Merger,
and has conducted no business and has no assets or liabilities.
4.2 Corporate Authority. Each of Florham and Mergerco has the corporate power
to enter into this Agreement and to perform their respective obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors and stockholders of Florham and
Mergerco as required by Delaware law. The execution and performance of this
Agreement will not constitute a material breach of any agreement,
indenture, mortgage, license or other instrument or document to which
Florham or Mergerco is a party and will not violate any judgment, decree,
order, writ, rule, statute, or regulation applicable to Florham, Mergerco
or their properties. The execution and performance of this Agreement will
not violate or conflict with any provision of the respective Certificate of
Incorporation or by-laws of Florham or Mergerco.
4.3 Florham Capitalization.
(a) As of the date of this Agreement, the authorized, issued and
outstanding securities of Florham are set forth on its SEC Report in the form of
its Form 10-Q quarterly report as at September 30, 2009 and for the nine (9)
months then ended. Xxxxx Xxxxxxx (the "Florham Principal Stockholder" currently
owns an aggregate of 53,600 of the issued and outstanding shares of Florham
Common Stock.
(b) On the Closing Date and immediately prior to the Effective Time of the
Merger, after giving effect to the transaction contemplated by Section 6.6
hereof, there shall be issued and outstanding an aggregate of not more than
166,700 shares of Florham Common Stock and not more than 930,000 Florham
Warrants..
4.4 Florham Financial Statements.
(a) The Form 10K of Florham for the fiscal year ended December 31, 2008
includes the audited balance sheet, statement of operations and statement of
cash flows of Florham as at December 31, 2008 and for the fiscal year then ended
(the "Florham 2008 Audited Financial Statements"). The Form 10Q of Florham for
the nine months ended September 30, 2009, includes the unaudited balance sheet,
statement of operations and statement of cash flows of Florham as at September
30, 2009 and for the nine months then ended (the "Florham 2009 Financial
Statements"). Except as set forth on the Florham Balance Sheet as at September
30, 2009 or otherwise disclosed on Schedule 4.4, as at September 30, 2009 and
for all periods subsequent thereto, Florham has no other material assets and has
incurred no other material liabilities, debts or obligations, whether fixed,
contingent or otherwise required to be set forth on a balance sheet prepared in
accordance with GAAP. The books of account and other financial records of
Florham are in all respects complete and correct in all material respects and
are maintained in accordance with good business and accounting practices.
(b) Florham has no material operating assets or material liabilities, and
has not conducted any trade or business activities whatsoever, other than as set
forth in Florham's "SEC Reports" (as defined below or on Schedule 4.4 annexed
hereto.
4.5 No Material Adverse Changes. Since September 30, 2009:
(a) except for indebtedness and other liabilities not to exceed $10,000 in
the aggregate that will be outstanding as at the Closing Date, there have not
been any liabilities or other indebtedness incurred by Florham;
(b) there has not been any material adverse changes in the financial
position of Florham except changes arising in the ordinary course of business,
which changes will in no event materially and adversely affect the financial
position of Florham, and will be consistent with the representations made by
Florham hereunder.
(c) there has not been any damage, destruction or loss materially affecting
the assets, prospective business, operations or condition (financial or
otherwise) of Florham whether or not covered by insurance;
(d) there has not been any declaration setting aside or payment of any
dividend or distribution with respect to any redemption or repurchase of Florham
capital stock;
(e) there has not been any sale of an asset (other than in the ordinary
course of business) or any mortgage pledge by Florham of any properties or
assets; or
(f) there has not been adoption or modification of any pension, profit
sharing, retirement, stock bonus, stock option or similar plan or arrangement.
(g) there has not been any loan or advance to any shareholder, officer,
director, employee, consultant, agent or other representative or made any other
loan or advance otherwise than in the ordinary course of business;
(h) there has not been any increase in the annual level of compensation of
any executive employee of Florham;
(i) except in the ordinary course of business, Florham has not entered into
or modified any contract, agreement or transaction; and
(j) Florham has not issued any equity securities or rights to acquire
equity securities.
4.6 Taxes. Florham has timely filed all material tax, governmental and/or
related forms and reports (or extensions thereof) due or required to be
filed and has paid or made adequate provisions for all taxes or assessments
which have become due as of the Closing Date, and there are no deficiencies
outstanding.
4.7 Compliance with Laws. Florham has complied with all federal, state, county
and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decrees applicable to it or its business, which, if
not complied with, would materially and adversely affect the business of
Florham or the trading market for the Florham Shares and specifically, and
Florham has complied with provisions for registration under the Securities
Act of 1933 and all applicable blue sky laws in connection with its public
stock offering and there are no outstanding, pending or threatened stop
orders or other actions or investigations relating thereto.
4.8 Actions and Proceedings. Florham is not a party to any material pending
litigation or, to its knowledge, any governmental proceedings are
threatened against Florham.
4.9 Periodic Reports; Listing of Shares.
(a) Florham is current in the filing of all forms or reports with the
Securities and Exchange Commission ("SEC"), and has been a reporting company
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All
such reports and statements filed by Florham with the SEC (collectively, "SEC
Reports") did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstance under which they were made, not
misleading.
(b) The shares of Florham Common Stock are listed for trading on the FINRA
OTC Bulletin Board stock exchange. No stop order, suspension notice or other
communications or notice from FINRA or other governmental agency or authority
has been received by Florham or its Affiliates, which could reasonably be
expected to result in the possibility that such shares of Florham Common Stock
could be delisted from trading on such stock exchange.
4.10 Disclosure. Florham has (and at the Closing it will have) disclosed in
writing to EII all events, conditions and facts materially affecting the
business, financial conditions or results of operation of Florham all of
which have been set forth herein. Florham has not now and will not have, at
the Closing, withheld disclosure of any such events, conditions, and facts
which they have knowledge of or have reasonable grounds to know may exist.
4.11 Access to Records. The corporate financial records, minute books, and other
documents and records of Florham have been made available to EII prior to
the Closing hereof.
4.12 No Breach. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not:
(a) violate any provision of the Articles of Incorporation or By-Laws of
Florham;
(b) violate, conflict with or result in the breach of any of the terms of,
result in a material modification of, otherwise give any other contracting party
the right to terminate, or constitute (or with notice or lapse of time or both
constitute) a default under, any contract or other agreement to which Florham is
a party or by or to which it or any of its assets or properties may be bound or
subject;
(c) violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, Florham
or upon the securities, properties or business to Florham; or
(d) violate any statute, law or regulation of any jurisdiction applicable
to the transactions contemplated herein.
4.14 Brokers or Finders. No broker's or finder's fee will be payable by Florham
in connection with the transactions contemplated by this Agreement, nor
will any such fee be incurred as a result of any actions of Florham.
4.15 Authority to Execute and Perform Agreements. Florham has the full legal
right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered and is the
valid and binding obligation of Florham enforceable in accordance with its
terms, except as may be limited by bankruptcy, moratorium, insolvency or
other similar laws generally affecting the enforcement of creditors'
rights. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby and the performance by Florham of
this Agreement, in accordance with its respective terms and conditions will
not:
(a) require the approval or consent of any governmental or regulatory body or
the approval or consent of any other person;
(b) conflict with or result in any breach or violation of any of the terms
and conditions of, or constitute (or with any notice or lapse of time or both
would constitute) a default under, any order, judgment or decree applicable to
Florham, or any instrument, contract or other agreement to which Florham is a
party or by or to which Florham is bound or subject; or
(c) result in the creation of any lien or other encumbrance on the assets
or properties of Florham.
4.16 Full Disclosure. No representation or warranty by Florham in this Agreement
or in any document or schedule to be delivered by them pursuant hereto, and
no written statement, certificate or instrument furnished or to be
furnished by Florham pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state any fact
necessary to make any statement herein or therein not materially misleading
or necessary to complete and correct presentation of all material aspects
of the business of Florham.
ARTICLE V - CONDITIONS PRECEDENT
5.1 Conditions Precedent to the Obligations of EII and the EII Securityholders.
All obligations of EII and the EII Securityholders under this Agreement are
subject to the fulfillment, prior to or as of the Closing Date, as
indicated below, of each of the following conditions; any one of which may
be waived at Closing by Sanjo and Kinder, as representative of all of the
EII Securityholders (the "EII Securityholders Representatives):
(a) The representations and warranties by or on behalf of Florham contained
in this Agreement or in any certificate or document delivered pursuant to the
provisions hereof shall be true in all material respects at and as of Closing
Date as though such representations and warranties were made at and as of such
time.
(b) Florham shall have performed and complied in all material respects,
with all covenants, agreements, and conditions set forth in, and shall have
executed and delivered all documents required by this Agreement to be performed
or complied with or executed and delivered by it or him prior to or at the
Closing, including obtaining the Majority Consents contemplated by Section
6.5(a) below.
(c) On the Closing Date, an executive officer of Florham shall have
delivered to EII a certificate, duly executed by such Person and certifying,
that to the best of such Person's knowledge and belief, the representations and
warranties of Florham set forth in this Agreement are true and correct in all
material respects.
(d) On or before the Closing, the Certificate of Merger shall have been
duly filed with the Secretary of State of the State of Delaware, and the
Effective Time of the Merger shall have occurred.
(e) At the Closing, all instruments and documents delivered to EII and the
EII Securityholders pursuant to provisions hereof shall be reasonably
satisfactory to legal counsel for EII.
(f) At the Closing, all conditions to consummation of the transactions
contemplated by the TDI Agreement shall have been fulfilled or satisfied to the
reasonable satisfaction of the EII Securityholders.
(g) Florham shall have issued to the EII Securityholders or the Exchange
Agent (to be held on behalf of the EII Securityholders and other recipients
pending delivery of their EII Securities) the Florham Common Stock, Florham
Preferred Stock and Florham Options.
(h) As at the Closing Date, other than a maximum of $10,000 and other
liabilities disclosed in Florham's Form 10-Q for the quarter and nine months
ended September 30, 2009, Florham shall have no outstanding expenses,
obligations, liabilities or contingencies of any kind.
(i) Immediately prior to the Effective Time of the Merger, other than the
Florham Warrants, there shall not be issued or committed to be issued any
warrants, stock options, stock rights or other commitments of any character
relating to the issued or unissued shares of either Common Stock or preferred
stock of Florham.
(j) At the Closing, the Merger Consideration and other Florham Securities
to be issued and delivered hereunder will, when so issued and delivered,
constitute valid and legally issued Florham Securities that are fully paid and
non-assessable.
(j) At the Closing, Florham shall assume the obligations under the existing
employment employment among EII and each of Xxxxxx and Xxxxxx.
5.2 Conditions Precedent to the Obligations of Florham. All obligations of
Florham under this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions (any one of which may be
waived at Closing by Florham):
(a) The representations and warranties by EII and the EII Securityholders
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of the
Closing as though such representations and warranties were made at and as of
such time;
(b) EII and the EII Securityholders shall have performed and complied with,
in all material respects, with all covenants, agreements, and conditions set
forth in, and shall have executed and delivered all documents required by this
Agreement to be performed or complied or executed and delivered by them prior to
or at the Closing;
(d) Not later than five (5) Business Days prior to the Closing Date, EII
and the EII Securityholders shall have caused to have been delivered to Florham
the combined and consolidated balance sheets of each member of the EII Group
(EII, Valley and TDI) as at September 30, 2009 and December 31, 2008 and the
related statement of operations, statements of cash flows and statements of
stockholders' equity of each member of the EII Group for each of the two (2)
fiscal years ended December 31, 2008, together with the notes thereto, as
audited by one or more independent auditing firms that are certified by the
Public Company Accounting Oversight Board ("PBAOC") (the "Required Financial
Statements") which Required Financial Statements shall (to the extent required)
have been audited in accordance with Regulation S-X, as promulgated under the
Securities Act of 1933, as amended.
(e) On or before the Closing, the Certificate of Merger shall have been
duly filed with the Secretary of State of the State of Delaware and the
Effective Time of the Merger shall have occurred.
(f) On or before the Closing, all conditions precedent to closing of the
transactions contemplated by the TDI Purchase Agreement shall have been
fulfilled or satisfied to the reasonable satisfaction of Florham.
(h) On the Closing Date, EII shall have delivered to Florham a certificate,
duly executed by it President or Chief Financial Officer and certifying, that to
the best of such Person's knowledge and belief, the representations and
warranties of EII set forth in this Agreement are true and correct in all
material respects.
(i) At the Closing, all instruments and documents to be delivered to
Florham, including the EII Securities, pursuant to the provisions hereof shall
be reasonably satisfactory to legal counsel for Florham.
(j) Florham shall have received legal or other assurances reasonably
satisfactory to it that the key executive employees of EII shall have elected to
continue their employment with EII subsequent to the Effective Time of the
Merger.
ARTICLE VI - COVENANTS
6.1 Corporate Examinations and Investigations. Prior to the Closing Date, the
Parties acknowledge that they have been entitled, through their employees
and representatives, to make such investigation of the assets, properties,
business and operations, books, records and financial condition of the
other as they each may reasonably require. No investigations, by a party
hereto shall, however, diminish or waive any of the representations,
warranties, covenants or agreements of the party under this Agreement.
6.2 Further Assurances. The Parties shall execute such documents and other
papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall use its best efforts to fulfill
or obtain the fulfillment of the conditions to the Closing, including,
without limitation, the execution and delivery of any documents or other
papers, the execution and delivery of which are necessary or appropriate to
the Closing.
6.3 Confidentiality. In the event the transactions contemplated by this
Agreement are not consummated, Florham, the EII Securityholders and EII
agree to keep confidential any information disclosed to each other in
connection therewith for a period of three (3) years from the date hereof;
provided, however, such obligation shall not apply to information which:
(i) at the time of the disclosure was public knowledge;
(ii) is required to be disclosed publicly pursuant to any applicable federal or
state securities laws;
(iii) after the time of disclosure becomes public knowledge (except due to the
action of the receiving party);
(iv) the receiving party had within its possession at the time of
disclosure; or
(v) is ordered disclosed by a Court of proper jurisdiction.
6.4 Consent to Merger and Voting of Shares. By their execution of this
Agreement, each of the EII Securityholders (subject only to satisfaction of
the conditions precedent set forth in Section 5.1), on one hand, and the
Florham Principal Stockholder (subject only to satisfaction of the
conditions precedent set forth in Section 5.2), on the other hand, do
hereby irrevocably and unconditionally covenant and agree, to consent to
the Merger, the amendment to the Florham Restated Charter and all other
transactions contemplated hereby and (if legally required) vote all of
their voting shares of EII Common Stock and all of their voting shares of
Florham Common Stock IN FAVOR of the Merger, the Florham Restated Charter
and all other transactions contemplated hereby.
6.5 Information Statement and Proxy Statement.
(a) Prior to the Effective Time of the Merger Florham shall obtain the
written consent of holders (including the Florham Principal Stockholder) of a
majority of the outstanding Florham Common Stock immediately prior to the Merger
to the Merger and the other transactions contemplated by this Agreement (the
"Majority Consent").
(b) Immediately following the Effective Time of the Merger, Florham shall
prepare and file with the SEC an information statement under Rule 14C of the
Securities and Exchange Act of 1934, as amended (the "Information Statement")
ratifying and approving each of: (i) the Merger and other transactions
contemplated hereby, (ii) the Florham Restated Charter, and (iii) the Florham
Stock Option Plan (as defined in Section 6.8 below), and mail such Information
Statement to stockholders of record prior to the Effective Time of the Merger.
6.6 Boards of Directors. At the Effective Time of the Merger, the initial Board
of Directors of Florham shall consist of five (5) Persons, all of whom
shall be Persons designated by the EII Securityholders. In addition, three
(3) of such directors shall be independent directors (as defined in the
Sarbanes Oxley Act of 2002 or rules of the stock exchange on which Florham
trades, and one of whom shall be a financial expert).
6.7 Lock-up Agreements. On the Effective Time of the Merger, each of the EII
Securityholders shall execute and deliver to Florham identical agreements
(the "Lock-up Agreements"), pursuant to which the EII Securityholders shall
agree not to effect any public sales of their Florham Common Stock for a
minimum of 12 months from the Effective Time of the Merger.
6.8 Stock Option Plan. At the Effective Time of the Merger, the board of
directors of Florham and the EII Securityholders shall approve consent to
the establishment of an incentive stock option plan for key employees,
directors, consultants and others providing services to Florham, pursuant
to which up to 1,500,000 shares of Florham Common Stock shall be authorized
for issuance upon such terms and conditions as shall be recommended by the
compensation committee and approved by a majority of the members of the
board of directors (the "Florham Stock Option Plan").
6.9 Indemnification of Officers and Directors. It is the intention of the
Parties that Florham shall indemnify its officers and directors to the
fullest extent permitted by Delaware law. In such connection, the Parties
agree not to amend the certificates of incorporation or by-laws of either
Florham if such amendment shall have the effect of reducing, terminating or
otherwise adversely affecting the indemnification rights and privileges
applicable to officers and directors of each of Florham, as the same are in
effect immediately prior to the Effective Time of the Merger.
6.10 Expenses. It is understood and agreed that following the execution of this
Agreement, any and all expenses with respect to any filings, documentation
and related matters with respect to the consummation of the transactions
contemplated hereby shall be the sole responsibility of EII, and neither
Florham nor the Florham Principal Stockholder shall be responsible for any
such expenses or fees associated with such filings; provided, however, that
Florham shall fully cooperate and execute all required documents as
indicated.
6.11 Specific Performance. Each of Florham and the Florham Principal Stockholder
acknowledge and agree that, absent only a breach by EII and the EII
Securityholders of their representations and warrants or the failure on the
part of EII or the EII Securityholders to perform any of their covenants
and agreements contained herein, if Florham or the Florham Principal
Stockholder shall fail or refuse to timely perform their respective
covenants and agreements contained herein (including those set forth in
Section 5) that would make it impossible or impracticable for EII to
consummate by the Outside Closing Date the Merger contemplated hereby, EII
and the EII Securityholders would have no adequate remedy at law.
Accordingly, each of Florham and the Florham Principal Stockholder do
hereby agree that, in addition to any other remedies available to it or
them at law or in equity, EII and the EII Securityholders or their legal
representative may seek and obtain from any federal or state court of
competent jurisdiction in New York, New York, specific performance of this
Agreement. Each of Florham and the Florham Principal Stockholder do hereby
consent to the jurisdiction of such federal or state court of competent
jurisdiction in New York, New York.
6.12 Registration of Florham Warrant Shares. As soon as practicable following
the Effective Time of the Merger, Florham shall file a registration
statement (the "Registration Statement") with the Securities and Exchange
Commission (the "SEC") and use its best efforts to cause such Registration
Statement to be declared effective by the SEC to register for resale the
Florham Common Stock issued and outstanding prior to the Effective Time of
the Merger and the Florham Common Stock issuable upon exercise of the
Florham Warrants (the "Florham Warrant Shares").
ARTICLE VII - TERMINATION.
7.1 Termination by the Parties. If the Closing has not occurred by the close of
business on March 31, 2010, then any Party hereto may thereafter terminate
this Agreement by written notice to such effect, to the other Parties
hereto, without liability of or to any Party to this Agreement or any
shareholder, director, officer, employee or representative of such Party,
unless the reason for Closing having not occurred is:
(a) such terminating Party's willful breach of the provisions of this
Agreement, or
(b) if all of the conditions to such terminating Party's obligations set
forth in Article V and Article VI have been satisfied or waived in writing by
the date scheduled for the Closing, and, notwithstanding such satisfaction or
waiver, such terminating Party fails or refuses to close the transactions
contemplated by this Agreement.
ARTICLE VIII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.1 Notwithstanding any right of either Party to investigate the affairs of the
other party and its Shareholders, each Party has the right to rely fully
upon representations, warranties, covenants and agreements of the other
Parties contained in this Agreement or in any document delivered to one by
the other or any of their representatives, in connection with the
transactions contemplated by this Agreement. Notwithstanding the foregoing,
all of the representations and warranties of the Parties to this Agreement
shall terminate as at the Effective Time of the Merger.
ARTICLE IX - DISPUTE RESOLUTION; NON-COMPETITION.
9.1 Resolution of Disputes. Except as otherwise provided in Section 6.10 above
or in Section 9.2 below, any dispute arising under this Agreement which
cannot be resolved among the Parties shall be submitted to final and
binding arbitration in accordance with the then prevailing rules and
regulations of the American Arbitration Association (the "AAA"), located in
New York, New York. There shall be three arbitrators, one selected by the
claimant, one selected by the respondent and the third arbitrator selected
by the AAA. The decision and award of the arbitrators shall be final and
binding upon all Parties and may be enforced in any federal or state court
of competent jurisdiction. Service of process on any one or more Parties in
connection with any such arbitration may be made by registered or certified
mail, return receipt requested or by email or facsimile transmission. Costs
of arbitration shall allocated by the arbitrators, and in the absence of
any such allocation, shall be paid by the losing party
9.2 Non-Competition, Non-Solicitation and Non-Disclosure.
(a) General. In order to induce Florham to enter into this Agreement and to
consummate the transactions contemplated hereby, each the EII Securityholders
hereby acknowledges that he or it is a beneficiary of the Florham Common Stock,
and the EII Securityholders hereby, jointly and severally, covenant and agree as
follows:
(i) Each of Sanjo, Xxxxxx and Xxxxxx (collectively, the "EII Executive
Securityholders") and their respective Affiliates shall not for a period of five
(5) years from and after the Closing Date: (A) directly or indirectly acquire or
own in any manner any interest in any person, firm, partnership, corporation,
association or other entity which engages or plans to engage in a business that
competes with the business conducted by each member of the EII Group as
conducted on the Closing Date (the "Business") in any State of the United States
which any member of the EII Group conducts its Business (the "Territory"); (B)
be employed by or serve as an employee, agent, officer, director of, or as a
consultant to, any person, firm, partnership, corporation, association or other
entity which competes or plans to compete in any way with the Business; (C)
utilize his or its special knowledge of the Business and his or its
relationships with customers, suppliers and others to compete with the Business
conducted by the EII Group; provided, however, that nothing herein shall be
deemed to prevent any EII Executive Securityholder or his or its Affiliates from
acquiring through market purchases and owning, solely as an investment, less
than five (5%) percent in the aggregate of the equity securities of any class of
any issuer whose shares are registered under 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended, and are listed or admitted for trading on any
United States national securities exchange or are quoted on the National
Association of Securities Dealers Automated Quotation System, or any similar
system of automated dissemination of quotations of securities prices in common
use, so long as such EII Executive Securityholder or his or its Affiliates is
not a member of any "control group" (within the meaning of the rules and
regulations of the United States Securities and Exchange Commission) of any such
issuer.
Each of the EII Executive Securityholders acknowledges and agrees that (a)
the covenants provided for in this Section 9.2(a) are reasonable and necessary
in terms of time, area and line of business to protect the EII Group's good will
and trade secrets, (b) such covenants are reasonable and necessary in terms of
time, area and line of business to protect the legitimate business interests of
each of Florham and the EII Group, which include their interests in protecting
their (x) valuable confidential business information, (y) substantial
relationships with clients, supplier and customers, and (z) customer goodwill
associated with the ongoing Business. The EII Executive Securityholders and
their Affiliates expressly authorizes the enforcement of the covenants provided
for in this Section 9.2(a) by (A) Florham, (B) EII, and (C) any successors to
the Business of Florham or EII. To the extent that the covenants provided for in
this Section 9.2(a) may later be deemed by a court to be too broad to be
enforced with respect to its duration or with respect to any particular activity
or geographic area, the court making such determination shall have the power to
reduce the duration or scope of the provision, and to add or delete specific
words or phrases to or from the provision. The provision as modified shall then
be enforced.
(ii) The EII Executive Securityholders and their Affiliates shall not for a
period of five (5) years from the Closing Date, directly or indirectly, for
themselves or for any other person, firm, corporation, partnership, association
or other entity (including the EII Executive Securityholders), (i) attempt to
employ or enter into any contractual arrangement with any employee or former
employee of the Business then being conducted by the EII Group, unless such
employee or former employee has not been employed by the Business then being
conducted by the EII Group for a period in excess of one year, and/or (ii) call
on or solicit any of the actual or targeted prospective customers or clients of
the Business, nor shall the EII Executive Securityholders or his or its
Affiliates make known the names and addresses of such customers or any
information relating in any manner to the EII Group's trade or business
relationships with such customers.
(iii) The EII Executive Securityholders and their Affiliates shall not at
any time (except internally among the EII Executive Securityholders) divulge,
communicate, use to the detriment of Florham or the EII Group, or for the
benefit of any other Person or Persons, or misuse in any way, any "Confidential
Information" (as hereinafter defined) pertaining to the Business. Any
Confidential Information or data now known or hereafter acquired by the EII
Executive Securityholders or their Affiliates with respect to the Business shall
be deemed a valuable, special and unique asset of Florham and the EII Group and
is received by the EII Executive Securityholders in confidence and as a
fiduciary, and the EII Executive Securityholders and their Affiliates shall
remain a fiduciary to Florham and the EII Group with respect to all of such
information. As used herein the term "Confidential Information" shall mean all
information or material that has or could have commercial value or other utility
in the Business of Florham and its Subsidiaries. Confidential Information also
includes all information of which unauthorized disclosure could be detrimental
to the interests of Company or its subsidiaries or affiliates whether or not
such information is identified as confidential information by Florham and its
Subsidiaries. By example and without limitation, Confidential Information
includes, but is not limited to, any and all information of the following or
similar nature, whether or not reduced to writing: customer lists, customer and
supplier identities and characteristics, agreements, marketing knowledge and
information, sales figures, pricing information, marketing plans and business
plans, strategies, forecasts, financial information, budgets, software, research
papers, projections, procedures, routines, quality control and manufacturing
procedures, processes, formulas, trade secrets, innovations, inventions,
discoveries, improvements, research or development and test results,
specifications, data, know-how, formats, plans, sketches, specifications,
drawings, models, and any other information or procedures that are treated as or
designated secret or confidential by Florham and its Subsidiaries or its
customers or potential customers. Notwithstanding the foregoing, "Confidential
Information" shall not mean or include information that: (a) was in the
recipient's possession prior to its being furnished to the recipient under the
terms of this Agreement, provided the source of that information was not known
by the recipient to be bound by a confidentiality agreement with or other
continual, legal or fiduciary obligation of confidentiality to Florham and its
Subsidiaries; (b) is now, or hereafter becomes, through no act or failure to act
on the part of recipient, generally known to the public; (c) is rightfully
obtained by the recipient from a third party, without breach of any obligation
to Florham or its Subsidiaries; or (d) is independently developed by Recipient
without use of or reference to the Confidential Information.
(b) Injunction. It is recognized and hereby acknowledged by the Parties
hereto that a breach or violation by any EII Executive Securityholders or any of
its or his Affiliates of any or all of the covenants and agreements contained in
this Section 9.2 may cause irreparable harm and damage to Florham in a monetary
amount which may be virtually impossible to ascertain. As a result, the EII
Executive Securityholders recognizes and hereby acknowledges that Florham or any
one or more member of the EII Group shall be entitled to an injunction from any
court of competent jurisdiction enjoining and restraining any breach or
violation of any or all of the covenants and agreements contained in this
Section 9.2 by such EII Executive Securityholder and/or any of his or its
Affiliates, and that such right to injunction shall be cumulative and in
addition to whatever other rights or remedies that Florham or any member of the
EII Group may possess hereunder, at law or in equity. Nothing contained in this
Section 9.2 shall be construed to prevent Florham or the EII Group from seeking
and recovering from a EII Executive Securityholders or its or his Affiliates
damages sustained by it as a result of any breach or violation by such EII
Executive Securityholder or its or his Affiliates of any of the covenants or
agreements contained herein.
ARTICLE X - MISCELLANEOUS
10.1 Waivers. The waiver of a breach of this Agreement or the failure of any
party hereto to exercise any right under this Agreement shall in no way
constitute waiver as to future breach whether similar or dissimilar in
nature or as to the exercise of any further right under this Agreement.
10.2 Amendment. This Agreement may be amended or modified only by an instrument
of equal formality signed by the Parties or the duly authorized
representatives of the respective Parties.
10.3 Assignment. This Agreement is not assignable except by operation of law.
10.4 Notice. Until otherwise specified in writing, the mailing addresses, email
addresses, and fax numbers of the Parties of this Agreement shall be as
follows:
To: Florham AND MERGERCO:
Florham Consulting Corp.
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx, CEO
Fax: 000-000-0000
Email: xxxxxxxx@xxx.xxx
with a copy to: Xxxxxxxx Xxxxxx, Esq.
00 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000 0000
Email: xxxxxxxxxxxxxx@xxxxxxx.xxx
To: EII and the EII Securityholders:
Educational Investors, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx, President
Fax: (000) 000 0000
Email: xxxxxxxx@xxx.xxxx.xxx
with a copy to: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxx, LLP
0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
email: xxxxxx@xxxxxxxxxxx.xxx
Any notice or statement given under this Agreement shall be deemed to have
been given 3 business days after delivery to the US mail system if sent by
registered mail, one business day after delivery, if sent by recognized
overnight courier, or when given if sent by facsimile (with receipt retained),
addressed or faxed to the other party at the address or facsimile number
indicated above or at such other address or facsimile number which shall have
been furnished in writing to the addressor in the manner set forth in this
Section 10.4.
10.5 Governing Law. This Agreement shall be construed, and the legal relations
between the Parties determined, in accordance with the laws of the State of
New York, thereby precluding any choice of law rules which may direct the
application of the laws of any other jurisdiction.
10.6 Publicity. No publicity release or announcement concerning this Agreement
or the transactions contemplated hereby shall be issued by any Party hereto
at any time from the signing hereof without advance approval in writing of
the form and substance by the other Parties.
10.7 Entire Agreement. This Agreement (including the Schedules to be attached
hereto) and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the Parties with respect to the transactions contemplated
hereby, and supersedes all prior agreements, written or oral, with respect
hereof.
10.8 Headings. The headings in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.
10.9 Severability of Provisions. The invalidity or unenforceability of any term,
phrase, clause, paragraph, restriction, covenant, agreement or provision of
this Agreement shall in no way affect the validity or enforcement of any
other provision or any part thereof.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original
copy hereof, but all of which together shall consider but one and the same
document.
10.11 Facsimile and PDF Signatures. This Agreement may be executed and delivered
by facsimile and/or electronic pdf signatures; each of which shall have the
same effect as an original signature.
10.12 Binding Effect. This Agreement shall be binding upon the Parties hereto
and inure to the benefit of the Parties, their respective heirs,
administrators, executors, successors and assigns.
[the balance of this page intentionally left blank - signature pages follow]
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date
first above written.
ATTEST: FLORHAM CONSULTING CORP.
(a Delaware corporation)
/s/ Xxxxxxxx Xxxxxx
_________________________ /s/ Xxxxx Xxxxxxx
Xxxxxxxx Xxxxxx By: ________________________________
Assistant Secretary Xxxxx Xxxxxxx, President
ATTEST: EII ACQUISITION CORP.
(a Delaware corporation)
/s/ Xxxxxx X. Xxxxxx
______________________ By: __________________________
Secretary Xxxxxx X. Xxxxxx, CEO
President and CEO
ATTEST: EDUCATIONAL INVESTORS, INC.
(a Delaware corporation)
/s/ Xxxxxx X. Xxxxxx
______________________ By: __________________________
Secretary Xxxxxx X. Xxxxxx, CEO
President and CEO
EII SECURITYHOLDERS:
SANJO SQUARED, LLC
/s/ Xxxxxx X. Xxxxxx
By:_______________________________
Xxxxxx X. Xxxxxx, Manager
KINDER INVESTMENTS, LP
By: Nesher, LLC.
(general partner)
/s/ Xxx Xxxxxxxx
By:_______________________________
Xxx Xxxxxxxx, Managing Member
/s/ Xxxxxx X. Xxxxxx
_____________________________________
XXXXXX X. XXXXXX
/s/ Xxxx Xxxxxx
_____________________________________
XXXX XXXXXX
CAPITALIZATION TABLE
Exhibit B
-------------------------------------------------- ------------------- --- --------------------------- ------------------------
Owning Group EII Securities Florham Shares post % of Fully-Diluted
Reverse merger Floham Common Stock
(A) at Effective Time
and (B) thereafter
assuming issuance of
all Shares in this
Exhibit B
-------------------------------------------------- ------------------- --- --------------------------- ------------------------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
(A) (B)
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Xxx Xxxxxx-EII Stockholder options 1,166,667 1,279,484 5.8% 5.2%
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Xxxx Xxxxxx-EII Stockholder Options 1,166,667 1,279,484 5.8% 5.2%
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Sanjo Squared, LLC--common stock 6,666,667 7,311,333 (1) 33.3% 29.8%
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Kinder Investments--common stock 10,000,000 10,966,999(2) 50.0% 44.8%
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Subtotal 19,000,001 20,837,300 95.0% --
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Existing Florham shares--fully diluted 1,096,700 (3) 5.0% 4.5%
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Florham Fully-Diluted Common Stock 21,934,000 100.00%
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Outstanding Management Options 300,000 329,010 (4) 1.3%
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Outstanding Directors and 400,000 439,040 (5) 1.8%
Consultants Options
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Acquisition Shares issuable 1,200,000 (6) 4.9%
to TDI Equity Owners
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Escrow Shares issuable to TDI Equity Owners 600,000 (6) 2.5%
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
-------------------------------------------------- ------------------- --- --------------------------- ------------ -----------
Total Florham Fully-Diluted Shares 24,502,050 100.0%
after exercise of all Florham Options and
Release of all Escrow Shares
-------------------------------------------------- ------------------- --- =========================== ============ ===========
(1) Includes 2,400,000 shares of common stock and 100,000 shares of Series
A Preferred Stock, ("Series A Preferred Stock") each of which shares of Series A
Preferred Stock shall be converted, on the basis of 49.11333 shares of Florham
Common Stock for each share of Series A Preferred Stock (an aggregate of
4,911,333 shares of Florham Common Stock) automatically upon the filing by the
Company of an amendment to its certificate of incorporation increasing its
authorized shares of Florham Common Stock to not less than 50,000,000 shares.
(2) Includes 3,600,000 shares of Florham Common Stock and 150,000 shares of
Series A Preferred Stock, which automatically converts into an aggregate of
7,366,999 shares of Florham Common Stock upon the filing by the Company of an
amendment to its certificate of incorporation increasing its authorized shares
of Florham Common Stock to not less than 50,000,000 shares.
(3) Consists of 166,700 outstanding shares of Florham Common Stock and
930,000 shares of Florham Common Stock issuable upon exercise of all Florham
Warrants.
(4) At an exercise price of $0.50 per share.
(5) At an exercise price of $0.41 per share.
(6) Assumes the Discounted VWAP for the twenty Trading Days after the
Effective Date is $0.50 per share.
Terms of EII Stockholder Options and Florham Stockholder Options
Option Exercise Prices and exercise targets:
Florham following
TierI EII Merger
Option Exercise Price $ 0.25 $ 0.228
EBTDA per share hurdle
for year ending 12/31/10 $ 0.04 $ 0.036
for year ending 12/31/11 $ 0.06 $ 0.055
for year ending 12/31/12 $ 0.10 $ 0.091
for year ending 12/31/13 $ 0.12 $ 0.109
for year ending 12/31/14 $ 0.15 $ 0.137
Tier II
$ 0.45 $ 0.410
Option Exercise Price
EBTDA per share hurdle
$ 0.06 $ 0.055
for year ending 12/31/10
for year ending 12/31/11 $ 0.10 $ 0.091
for year ending 12/31/12 $ 0.15 $ 0.137
for year ending 12/31/13 $ 0.18 $ 0.164
for year ending 12/31/14 $ 0.21 $ 0.191
