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.
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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.
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(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 12,278,333 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 2,558,968 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 $0.50 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
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 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”).
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(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
438,680 shares of Florham Common Stock (the “Florham Directors and Consultants
Option Shares”), at an exercise price of $0.50 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 19,000,001 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 2,333,334 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.
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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.
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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 $600,000 that
are issuable to the TDI Equity Owners following the Effective Date pursuant to
the TDI Purchase Agreement.
“Applicable Law” means any
domestic or foreign law, statute, regulation, rule, policy, guideline or
ordinance applicable to the businesses of the Parties and/or the
Merger.
“Affiliate” means
any one or more Person controlling, controlled by or under common control with
any other Person or their affiliate.
“Business Day” shall mean any
day, excluding Saturday, Sunday and any other day on which national banks
located in New York, New York shall be closed for business.
“Capitalization Table” shall
mean the capitalization of EII prior to the Merger and of Florham following
consummation of the Merger, as is set forth on Exhibit
B annexed hereto and made a part hereof.
“Closing Date” shall mean the
date upon which the Merger shall be consummated.
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“Dollar” and “$” 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 $300,000 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, $0.0001 par value per share, as may
be authorized for issuance pursuant to its certificate of incorporation, as the
same may hereafter be amended or modified.
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“Florham Directors and Consultants
Options” means the 438,680 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 12,278,333 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.
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“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
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(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) 66.6% of such
shares of Florham Common Stock shall be issued directly to the TDI Equity Owners
and shall represent the Acquisition Shares, and (b) 33.4% 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.
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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;
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(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.
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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);
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(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..
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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;
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(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;
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(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.
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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.
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(j) At
the Closing, Florham shall assume the obligations under the existing 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 (“PCAOB”) (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.
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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:
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(i)
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at
the time of the disclosure was public
knowledge;
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(ii)
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is
required to be disclosed publicly pursuant to any applicable federal or
state securities laws;
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(iii)
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after
the time of disclosure becomes public knowledge (except due to the action
of the receiving party);
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(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.
- 20
-
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
Common Stock. 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 (i) the Florham Common Stock issued and outstanding prior to
the Effective Time of the Merger; and (ii) the Florham Common Stock issuable
upon exercise of the Florham Warrants (the “Florham Warrant
Shares”).
- 21
-
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:
- 22
-
(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.
- 23
-
(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.
- 24
-
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::
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.
- 25
-
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]
- 26
-
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
|
|||
|
Xxxxxxxx
Xxxxxx
|
By:
|
/s/
Xxxxx Xxxxxxx
|
|
|
Assistant
Secretary
|
Xxxxx
Xxxxxxx, President
|
||
|
ATTEST:
|
EII
ACQUISITION CORP.
|
||
|
(a
Delaware corporation)
|
|||
|
/s/ Xxxxxx Xxxxx
|
By:
|
/s/ Xxxxxx X. Xxxxxx
|
|
|
Secretary
|
Xxxxxx
X. Xxxxxx, CEO
|
||
|
President
and CEO
|
|||
|
ATTEST:
|
EDUCATIONAL INVESTORS, INC. | ||
| (a Delaware corporation) | |||
|
/s/ Xxxxxx Xxxxx
|
By:
|
/s/ Xxxxxx X. Xxxxxx
|
|
|
Secretary
|
Xxxxxx
X. Xxxxxx, CEO
|
||
|
President
and CEO
|
|||
| EII SECURITYHOLDERS: | |||
| SANJO SQUARED, LLC | |||
|
By:
|
/s/ Xxxxxx X. Xxxxxx
|
||
|
Xxxxxx
X. Xxxxxx, Manager
|
|||
|
KINDER
INVESTMENTS, LP
|
|||
|
By:
Nesher, LLC.
|
|||
|
(general
partner)
|
|||
|
By:
|
/s/ Xxx Xxxxxxxx
|
||
|
Xxx
Xxxxxxxx, Managing Member
|
|||
|
/s/ Xxxxxx X. Xxxxxx
|
|||
|
XXXXXX
X. XXXXXX
|
|||
|
/s/ Xxxx Xxxxxx
|
|||
|
XXXX
XXXXXX
|
|||
- 27
-
CAPITALIZATION
TABLE
Exhibit
B
|
Owning
Group
|
EII
Securities
|
Florham
Shares post
Reverse
merger
|
%
of Fully-Diluted
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 | 10,967,000 | (2) | 50.0 | % | 44.8 | % | |||||||||
|
Subtotal
|
19,000,001 | 20,837,301 | 95.0 | % | — | |||||||||||
|
Existing
Florham shares—fully diluted
|
1,096,700 | (3) | 5.0 | % | 4.5 | % | ||||||||||
|
Florham
Fully-Diluted Common Stock
|
21,934,001 | 100.00 | % | |||||||||||||
|
Outstanding
Management Options
|
300,000 | 329,010 | (4) | 1.3 | % | |||||||||||
|
Outstanding
Directors and Consultants
Options
|
400,000 | 438,680 | (4) | 1.8 | % | |||||||||||
|
Acquisition
Shares issuable to
TDI Equity Owners
|
1,200,000 | (5) | 4.9 | % | ||||||||||||
|
Escrow
Shares issuable to TDI Equity Owners
|
600,000 | (5) | 2.5 | % | ||||||||||||
|
Total
Florham Fully-Diluted Shares after
exercise of all Florham Options and Release of all Escrow
Shares
|
24,501,691 | 100.0 | % | |||||||||||||
(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 7,367,000
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.
- 28
-
(5) Assumes
the Discounted VWAP for the twenty Trading Days after the Effective Date is
$0.50 per share.
- 29
-
Terms
of EII Stockholder Options and Florham Stockholder Options
Option
Exercise Prices and exercise targets:
|
TierI
|
EII
|
Florham following
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
|
||||||||
|
Option
Exercise Price
|
$ | 0.45 | $ | 0.50 | ||||
|
EBTDA
per share hurdle
|
||||||||
|
for
year ending 12/31/10
|
$ | 0.06 | $ | 0.055 | ||||
|
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 | ||||
- 30
-
