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CERTIFICATE
OF DESIGNATION,
PREFERENCES
AND RIGHTS
of
SERIES
A CONVERTIBLE PREFERRED STOCK
of
FLORHAM
CONSULTING CORP.
(Pursuant
to Section 151 of the
Delaware
General Corporation Law)
FLORHAM CONSULTING CORP., a
corporation organized and existing under the laws of the State of Delaware (the
"Corporation"),
the certificate of incorporation of which was filed in the office of the
Secretary of State of Delaware on February 9, 2005, hereby certifies that the
Board of Directors of the Corporation (the "Board of Directors"
or the "Board"), pursuant to
authority of the Board of Directors as required by Section 151 of the Delaware
General Corporation Law, and in accordance with the provisions of its
Certificate of Incorporation and Bylaws, each as amended and restated through
the date hereof, has and hereby authorizes a series of the Corporation's
previously authorized 250,000 shares of preferred stock, par value $0.0001 per
share (the "Preferred
Stock"), and hereby states the designation and number of shares, and
fixes the relative rights, preferences, privileges, powers and restrictions
thereof, as follows:
I.
DESIGNATION AND AMOUNT
The
designation of this series, which consists of up to Two Hundred and Fifty
Thousand (250,000) shares of Preferred Stock, is the Series A Preferred Stock
(the "Series A
Preferred Stock") and the stated value amount shall be One Cent ($0.01)
per share (the "Stated
Value ").
II.
CERTAIN DEFINITIONS
Unless otherwise defined in this
Certificate of Designations, all capitalized terms, when used herein, shall have
the same meaning as is defined in the Merger Agreement. For
purposes of this Certificate of Designation, in addition to the other terms
defined herein, the following terms shall have the following
meanings:
A “Affiliates” of any particular Person means any
other Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by or under common control with such Person.
For purposes of this definition, “ control ” (including the terms “ controlling,” “controlled
by” and “under
common control with”)
means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
B. "Business Day" means
any day, other than a Saturday or Sunday, or a day on which banking institutions
in the State of New York are authorized or obligated by law, regulation or
executive order to close.
C.
“Common Stock”
means the common stock of the Corporation, par value $0.0001 per share, together
with any securities into which the common stock may be
reclassified.
D. "Conversion Date"
means a date which shall be the Business Day immediately following the filing of
the Florham Restated Charter with the Secretary of State of the State of
Delaware.
E. “Conversion Shares”
means 49.11333 shares of Common Stock for each of the 250,000 outstanding shares
of Series A Preferred Stock, or an aggregate of 12,278,333 Conversion
Shares.
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F. “Fully-Diluted Common
Stock” shall mean (a) the aggregate number shares of Corporation Common
Stock that are issued and outstanding on the Effective Date of the Merger, plus
the sum of (i) all additional shares of 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 Common Stock, (ii) all shares of Common
Stock included in the Merger Consideration, (ii) all shares of Common Stock
issuable upon conversion of these shares of Series A Preferred Stock included in
the Merger Consideration, and (iii) all shares of Common Stock issuable upon
exercise of the Florham Stockholder Options included in the Merger
Consideration. The term “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 Common Stock issuable upon the exercise of any Florham Management
Options; or
(c) any
shares of Common Stock issuable upon the exercise of any Directors and
Consultants Options, or
(d) any
shares of Common Stock or other securities convertible into or exercisable or
exchangeable for Common Stock that is issued for any business purpose following
the Effective Time of the Merger.
G. “Holder” shall mean
the collective reference to Sanjo Squared LLC and Kinder Investments, LP, their
respective Affiliates or any one or more holder(s) of shares of Series A
Preferred Stock.
H. “Issuance Date" means
one (1) Business Day following the filing of this Series A Certificate of
Designation with the Secretary of State of the State of Delaware.
I.
“Merger Agreement”
shall mean that certain Agreement and Plan of Merger, dated as of December 16,
2009, by and among the Corporation, EII Acquisition Corp., Educational
Investors, Inc., Sanjo Squared, LLC, Kinder Investments, LP, Joseph J. Bianco
and Anil Narang.
J.
“Stated
Value” means One Cent ($0.01) per share of Series A Preferred
Stock.
III.
DIVIDENDS
A Holders
of Series A Preferred Stock shall be entitled to receive dividends when, as and
if declared by the Board of Directors of the Corporation. No cash
dividends or distributions shall be declared or paid or set apart for payment on
the Common Stock unless such cash dividend or distribution is likewise declared,
paid or set apart for payment on the Series A Preferred Stock in an amount equal
to the dividend or distribution that would be payable if all of the issued and
outstanding shares of the Series A Preferred Stock had been fully converted into
Common Stock on the day immediately prior to the date which shall be the
earliest to occur of the declaration, payment, or distribution or such
dividend.
B. No
dividends or distributions shall be declared or paid or set apart for payment on
the Series A Preferred Stock unless full and (if applicable) cumulative
dividends have been or are contemporaneously declared, paid or set apart for
payment on all Senior Securities (as hereinafter defined) in accordance with the
respective terms of the Certificates of Designations for such Senior
Securities.
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C. Dividends
on the Series A Preferred Stock are prior and in preference to any declaration
or payment of any dividend or other distribution (as defined below) on any
outstanding shares of Junior Securities (as hereinafter defined).
IV.
CONVERSION
A. Automatic
Conversion.
On the Conversion Date, all 250,000 shares of Series A Preferred Stock shall
automatically
and without any further action on the part of any Holder or the Corporation, be
converted into all, and not less than all, of the 12,278,333 Conversion Shares
(the "Conversion").
B. Mechanics of
Conversion. Immediately following the Conversion Date, the Corporation
shall promptly send, via facsimile, a confirmation to each Holder stating that
the Notice of Conversion has been received, the date upon which the Corporation
expects to deliver the Common Stock issuable upon such conversion and the name
and telephone number of a contact person at the Corporation regarding the
conversion. The Corporation shall not be obligated to issue shares of
Common Stock upon a conversion unless either the Series A Preferred Stock
Certificates are delivered to the Corporation as provided above, or the Holder
notifies the Corporation that such Series A Preferred Stock Certificates have
been lost, stolen or destroyed and delivers appropriate documentation to the
Corporation.
(i) Delivery of Common Stock
Upon Conversion. Upon the surrender of Series A Preferred Stock
Certificates, the Corporation (itself, or through its transfer agent, as
appropriate) shall, no later than the later of (a) the fifth (5th) Business Day
following the Conversion Date and (b) the Business Day immediately following the
date of such surrender (or, in the case of lost, stolen or destroyed
certificates, after provision of indemnity pursuant to Article XI B) (the "Delivery Period"),
issue and deliver (i.e., deposit with a nationally recognized overnight courier
service portage prepaid) to the Holder or its nominee (x) that number of shares
of Common Stock issuable upon conversion of such shares of Series A Preferred
Stock being converted and (y) a certificate representing the number of shares of
Series A Preferred Stock not being converted, if any. In addition, if
the Corporation's transfer agent is participating in the Depository Trust
Corporation ("DTC") Fast Automated
Securities Transfer program, and so long as the certificates therefor do not
bear a legend (pursuant to the terms of the Securities Purchase Agreement) and
the Holder thereof is not then required to return such certificate for the
placement of a legend thereon (pursuant to the terms of the Merger Agreement),
the Corporation shall cause its transfer agent to promptly electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting
the account of the Holder or its nominee with DTC through its Deposit Withdrawal
Agent Commission system ("DTC
Transfer"). If the aforementioned conditions to a DTC Transfer
are not satisfied, the Corporation shall deliver as provided above to the Holder
physical certificates representing the Common Stock issuable upon conversion.
Further, a Holder may instruct the Corporation to deliver to the Holder physical
certificates representing the Common Stock issuable upon conversion in lieu of
delivering such shares by way of DTC Transfer.
(ii) Taxes. The
Corporation shall pay any and all taxes that may be imposed upon it respect to
the issuance and delivery of the shares of Common Stock upon the conversion of
the Series A Preferred Stock.
(iii) No Fractional
Shares. If any conversion of Series A Preferred Stock would
result in the issuance of a fractional share of Common Stock (aggregating all
shares of Series A Preferred Stock being converted pursuant to a given Notice of
Conversion), such fractional share shall be payable in cash based upon the
Series A Series A Conversion Price per share, and the number of shares of Common
Stock issuable upon conversion of the Series A Preferred Stock shall be the next
lower whole number of shares. If the Corporation elects not to, or is
unable to, make such a cash payment, the Holder shall be entitled to receive, in
lieu of the final fraction of a share, one whole share of Common
Stock.
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V.
RESERVATION OF SHARES OF COMMON STOCK
Immediately
following the Corporation’s filing of the Florham Restated Charter authorizing
an increase to its authorized Common Stock, the Corporation shall
reserve an appropriate number of Conversion Shares from its authorized but
unissued shares of Common Stock for issuance upon conversion of the Series A
Preferred Stock (including any shares that may be issuable in connection with
the adjustment provisions of this Certificate of Designations), and, thereafter,
the number of authorized but unissued shares of Common Stock so reserved (the
"Reserved
Amount") shall at all times be sufficient to provide for the full
conversion of all of the Series A Preferred Stock (including any shares that may
be issuable in connection with the adjustment provisions of this Certificate of
Designations).
VI.
RANK
All
shares of the Series A Preferred Stock shall rank senior to the Corporation's
Common Stock and any other class of securities which is specifically designated
as junior to the Series A Preferred Stock (collectively, with the Common Stock,
the "Junior
Securities”) as to distribution of assets upon liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary.
VII.
LIQUIDATION PREFERENCE
A. In
the event of any liquidation, dissolution or winding up of the Corporation,
either voluntary or involuntary, distributions to the stockholders of the
Corporation shall be made in the following manner:
(i) After
payment or provision for payment of any distribution on the Series A Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any of the assets or surplus funds of the Corporation to the holders of the
Common Stock by reason of their ownership of such stock, an amount equal to the
sum of (x) $0.01 for each share of Series A Preferred Stock then held by them
(the "Series A
Liquidation Preference Price"), and (y) an amount equal to all unpaid
dividends on the Series A Preferred Stock, if any. If upon the
occurrence of a liquidation, dissolution or winding up of the Corporation the
assets and funds thus distributed among the holders of the Series A Preferred
Stock shall be insufficient to permit the payment to such holders of the full
liquidation preference amount based on the Series A Liquidation Preference
Price, then the entire assets and funds of the Corporation legally available for
distribution shall be distributed ratably among the holders of the Series A
Preferred Stock in proportion to the preferential amount each such holder is
otherwise entitled to receive.
(ii) After
setting apart or paying in full the preferential amounts due pursuant to Section VII (A)(i)
above, the remaining assets of the Corporation available for distribution to
stockholders, if any, shall be distributed to the holders of the Common Stock on
a pro rata basis, based on the number of shares of Common Stock then held by
each Holder.
VIII.
ADJUSTMENTS
The
Series A Conversion Price and the number of Conversion Shares shall be subject
to adjustment as follows:
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A. Subdivision or Combination
of Common Stock. If the Corporation at any time subdivides (by
any stock split, stock dividend, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable hereunder
into a greater number of shares, then, after the date of record for effecting
such subdivision, the Conversion Shares issuable upon conversion of the Series A
Preferred Stock will be proportionately increased. If the Corporation
at any time combines (by any reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a smaller number of shares, then, after the date of
record for effecting such combination, the Conversion Shares issuable
upon conversion of the Series A Preferred Stock will be proportionately
reduced.
B. Consolidation, Merger or
Sale. In case of any consolidation of the Corporation with, or
merger of the Corporation into any other corporation, or in case of any sale or
conveyance of all or substantially all of the assets of the Corporation other
than in connection with a plan of complete liquidation of the Corporation, then
as a condition of such consolidation, merger or sale or conveyance, adequate
provision will be made whereby each Holder of the Series A Preferred Stock will
have the right to acquire and receive upon conversion of the Series A Preferred
Stock in lieu of the shares of Common Stock immediately theretofore acquirable
upon the conversion of the Series A Preferred Stock, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of shares of Common Stock immediately theretofore acquirable and
receivable upon conversion of the Series A Preferred Stock had such
consolidation, merger or sale or conveyance not taken place. In any
such case, the Corporation will make appropriate provision to insure that the
provisions of this Article VIII Section C hereof will thereafter be applicable
as nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the conversion of the Series A Preferred Stock. The
Corporation will not effect any consolidation, merger or sale or conveyance
unless prior to the consummation thereof, the successor corporation (if other
than the Corporation) assumes by written instrument the obligations under this
Article VIII Section C and the obligations to deliver to each Holder of the
Series A Preferred Stock such shares of stock, securities or assets as, in
accordance with the foregoing provisions, each Holder may be entitled to
acquire.
D. Distribution of
Assets. In case the Corporation shall declare or make any
distribution of its assets (including cash) to holders of Common Stock as a
partial liquidating dividend, by way of return of capital or otherwise, then,
after the date of record for determining shareholders entitled to such
distribution (on an “as converted” basis, as though all Series A Preferred Stock
had been converted into Common Stock immediately prior to the dividend
declaration date), each Holder of the Series A Preferred Stock shall be entitled
upon conversion of the Series A Preferred Stock for the purchase of any or all
of the shares of Common Stock subject hereto, to receive the amount of such
assets which would have been payable to such Holder had such Holder been the
holder of such shares of Common Stock on the record date for the determination
of shareholders entitled to such distribution.
E. Minimum Ownership of
Fully-Diluted Common Stock. Notwithstanding anything to
the contrary, express or implied, contained in this Certificate of Designation,
as at the Conversion Date, the Holders, Joseph Bianco (“Bianco”) and Anil Narang
(“Narang”) shall own and be entitled to own as Merger Consideration pursuant to
the Merger Agreement, not less than 95.0% of the Fully-Diluted Common Stock
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 Fully-Diluted Common Stock
immediately prior to the Effective Time of the Merger shall be less than or
greater than an aggregate of 1,096,700 shares of Fully-Diluted Common Stock,
then and in such event, the aggregate number of Conversion Shares issuable upon
the automatic conversion of the Series A Preferred Stock shall be appropriately
adjusted so that immediately after the Conversion Date, all of the Holders,
Bianco and Narang shall own and be entitled to own of record in the aggregate
95.0% of the Fully-Diluted Common Stock immediately after giving effect to the
Effective Time of the Merger and the holders of the outstanding shares of Common
Stock immediately prior to the Effective Time of the Merger shall own 5.0% of
the Fully-Diluted Common Stock immediately after giving effect to the Effective
Time of the Merger.
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F. Notice of
Adjustment. Upon the occurrence of any event which requires
any adjustment of the number of Conversion Shares, then, and in each such case,
the Corporation shall give notice thereof to the Holders of the Series A
Preferred Stock, which notice shall state the number of Conversion Shares
resulting from such adjustment and the increase or decrease in the number of
Conversion Shares, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based. Such calculation
shall be certified by the Chief Financial Officer of the
Corporation.
IX.
VOTING RIGHTS
A. Class Voting
Rights. Holders of the Series A
Preferred Stock shall vote together as a separate class on all matters which
impact the rights, value or conversion terms, or ranking of the Series A
Preferred Stock, as provided herein.
B. General Voting Rights with
Common Stock. Subject at
all times to the provisions of this Article IX, except as otherwise required
by law or as set forth herein, the Holder of each share of Series A Preferred
Stock shall be entitled to cast, at any regular or special meeting of
stockholders of the Corporation or in connection with the solicitation of any
written consent of stockholders of the Corporation, that number of votes as
shall be equal to the number of Conversion Shares into which such share of
Series A Preferred Stock could be converted at the record date for determination
of the stockholders entitled to vote on such matters, or, if no such record date
is established, at the date such vote is taken or any written consent of
stockholders is solicited, such votes to be counted together with all other
shares of stock of the Corporation having general voting power and not counted
separately as a class. Holders of Series A Preferred Stock shall be
entitled to notice of any stockholders' meeting in the same manner and at the
same time as holders of Common Stock, and in accordance with the Bylaws of the
Corporation.
X.
PROTECTION PROVISIONS
Prior to
the Conversion Date, without the unanimous prior written consent of the Holders
of the Series A Preferred Stock, the Corporation shall not:
(a) make
any amendment or modification of the Corporation’s Certificate of Incorporation
or by-laws in any manner which has or could reasonably be expected to have, an
adverse effect on the rights, privileges and designations of the Series A
Preferred Stock;
(b) issue
any additional shares of Series A Preferred Stock, Common Stock or other
securities of the Corporation, except as contemplated by the Merger Agreement;
or
(c) amend
or modify in any manner this Series A Certificate of
Designation.
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XI.
MISCELLANEOUS
A. Cancellation of Series A
Preferred Stock If any shares of Series A Preferred Stock are converted
pursuant to this Series A Certificate of Designations, the shares so converted
or redeemed shall be canceled, shall return to the status of authorized, but
unissued Series A Preferred Stock of no designated series, and shall not be
issuable by the Corporation as Series A Preferred Stock.
B. Lost or Stolen
Certificates. Upon receipt by the Corporation of (i) evidence of the
lost, theft, destruction or mutilation of any Series A Preferred Stock
Certificate(s) and (ii) (y) in the case of loss, theft or destruction, indemnity
(without any bond or other security) reasonably satisfactory to the Corporation,
or (z) in the case of mutilation, the Series A Preferred Stock Certificate(s)
(surrendered for cancellation), the Corporation shall execute and deliver new
Series A Preferred Stock Certificate(s) of like tenor and
date. However, the Corporation shall not be obligated to reissue such
lost, stolen, destroyed or mutilated Series A Preferred Stock Certificate(s) if
the Holder contemporaneously requests the Corporation to convert such Series A
Preferred Stock.
C Waiver
Notwithstanding any provision in this Certificate of Designation to the
contrary, any provision contained herein and any right of the Holders of Series
A Preferred Stock granted hereunder may be waived as to all shares of Series A
Preferred Stock (and the Holders thereof) upon the written consent of all of the
Holders.
[REMAINDER
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IN WITNESS WHEREOF, the
undersigned declares under penalty of perjury under the laws of the State of
Delaware that he has read the foregoing Certificate of Designation and knows the
contents thereof, and that he is duly authorized to execute the same on behalf
of the Corporation, this 23rd day of
December 2009.
| FLORHAM CONSULTING CORP. | |
|
By:
|
/s/ David Stahler
|
|
Name: David
Stahler
|
|
|
Title: Chief
Executive
Officer
|
|
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