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EXHIBIT 2.1
AGREEMENT AND PLAN OF RECAPITALIZATION
THIS AGREEMENT AND PLAN OF RECAPITALIZATION, dated as of January 26,
1998 (the "Agreement"), is made by and among Xx. Xxxxxxx X. Xxxxxxx ("Xx.
Xxxxxxx"), Xxx. Xxxxxx Xxxxxxx ("Xxx. Xxxxxxx"), ICARUS Corporation, a Maryland
corporation ("ICARUS MD"), ICARUS Services Limited, a private limited company
organized under the laws of the United Kingdom ("ICARUS UK")(ICARUS MD and
ICARUS UK are referred to collectively herein as the "Operating Companies"), and
ICARUS International, Inc., a Maryland corporation ("Hold Co"). All of the
aforesaid entities are collectively referred to herein as the "Parties," or
individually, as a "Party."
WITNESSETH:
WHEREAS, Xx. Xxxxxxx and Xxx. Xxxxxxx beneficially own ninety-seven
percent and three percent, respectively, of the issued and outstanding shares
of capital stock of each of ICARUS MD and Hold Co and Xx. Xxxxxxx is the sole
owner of all of the issued and outstanding shares of capital stock of ICARUS
UK; and
WHEREAS, the Boards of Directors of ICARUS MD and ICARUS UK have
determined that it is in the best interests of the Operating Companies and
their subsidiaries for the Operating Companies to be reorganized into a holding
company form of ownership in accordance with the terms and conditions of this
Agreement (the "Recapitalization"); and
WHEREAS, the capitalization of ICARUS MD consists of one class of
capital stock, $.01 par value per share (the "MD Stock"), the number of shares
of which are authorized to be issued is one million (1,000,000), of which one
hundred one thousand one hundred and three (101,103) shares are issued and
outstanding and owned beneficially and of record by Xx. Xxxxxxx and five
thousand six hundred and three (5,603) shares are issued and outstanding and
owned beneficially and of record by Xxx. Xxxxxxx;
WHEREAS, the capitalization of ICARUS UK consists of one class of
shares of L1 each (the "UK Stock"), the number of shares of which are
authorized to be issued is five thousand (5,000), of which two thousand eight
hundred and eighty-nine (2,889) shares are issued and outstanding and owned
beneficially and of record by Xx. Xxxxxxx and one (1) share is issued and
outstanding and owned beneficially and of record by Xxx. Xxxxxxx;
WHEREAS, the capitalization of Hold Co consists of common stock and
preferred stock; the number of shares of common stock, $.01 par value per share
("Hold Co Common Stock"), which are authorized to be issued is twenty million
(20,000,000), of which nine hundred and seventy (970) shares are issued and
outstanding and owned beneficially and of record by Xx. Xxxxxxx and thirty (30)
shares are issued and outstanding and owned beneficially and of record by Xxx.
Xxxxxxx; and the number of shares of preferred stock,
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$.01 par value per share, which are authorized to be issued is five million
(5,000,000) in the aggregate, and one hundred (100) shares of the Series A
Preferred Stock (the "Hold Co Preferred Stock"), of which no shares are issued
and outstanding as of the date of this Agreement;
WHEREAS, the Recapitalization provided for herein is to be accomplished
through the transfers by Xx. Xxxxxxx and Xxx. Xxxxxxx of all of their capital
stock of ICARUS UK and ICARUS MD to Hold Co in exchange for a certain number of
shares of the common and preferred stock of Hold Co, subject to the consummation
of the initial public offering of the shares of Hold Co Common Stock; and
WHEREAS, the Recapitalization provided for herein is intended to
result in no recognition of gain or loss to the Operating Companies or to Mr.
and Xxx. Xxxxxxx upon the transfer of the capital stock of the Operating
Companies by Mr. and Xxx. Xxxxxxx to Hold Co, pursuant to Section 351(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code") and
pursuant to Section 135 of the Taxation of Chargeable Gains Act of 1992 (the
"UK Tax Code");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, and in accordance with the applicable provisions
of Maryland law and pursuant to the applicable provisions of the Code and the
UK Tax Code and the regulations promulgated thereunder, the Parties hereby
agree that upon the consummation of this Agreement, Xx. Xxxxxxx and Xxx.
Xxxxxxx will own individually ninety-seven percent and three percent,
respectively, of Hold Co, which corporation will wholly-own directly the
Operating Companies. The terms and conditions of the Recapitalization shall be
as follows:
ARTICLE I
THE RECAPITALIZATION
SECTION 1.1 RECAPITALIZATION PROCEDURE.
a. (i) On the day prior to the Closing Date of this
Agreement (as defined in Section 1.3, below), Xx. Xxxxxxx shall transfer,
deliver and convey to Hold Co all of the shares of the UK Stock owned by him,
properly endorsed for transfer, and Xxx. Xxxxxxx shall transfer, deliver and
convey to Hold Co all of the shares of the UK Stock owned by her, accompanied
by a stock transfer form duly completed and signed.
(ii) On the Closing Date of this Agreement, Xx.
Xxxxxxx shall transfer, deliver and convey to Hold Co all of the shares of the
MD Stock owned by him, properly endorsed for transfer, and Xxx. Xxxxxxx shall
transfer, deliver and convey to Hold Co all of
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the shares of the MD Stock owned by her, accompanied by a stock transfer form
duly completed and signed.
b. In consideration of the receipt of all of the issued
and outstanding shares of the UK Stock and the MD Stock, Hold Co shall issue to:
(i) Xx. Xxxxxxx 2,909,030 duly authorized, validly issued, fully paid and
non-assessable shares of Hold Co Common Stock in consideration of the MD Stock
and ninety-seven (97) duly authorized, validly issued fully paid and
non-assessable shares of the Hold Co Preferred Stock in consideration of the UK
Stock; and (ii) Xxx. Xxxxxxx 89,970 duly authorized, validly issued, fully paid
and non-assessable shares of Hold Co Common Stock in consideration of the MD
Stock and three (3) duly authorized, validly issued, fully paid and
non-assessable shares of the Hold Co Preferred Stock in consideration of the UK
Stock.
c. Hold Co shall not issue a certificate for shares of
Hold Co Common Stock or Hold Co Preferred Stock, and neither Xx. Xxxxxxx nor
Xxx. Xxxxxxx shall be entitled to participate in any dividend or distribution
payable to holders of record of Hold Co Common Stock or Hold Co Preferred
Stock, unless and until Mr. and Xxx. Xxxxxxx (as the case may be) shall have
properly surrendered to Hold Co the certificates representing all of their
shares of the UK Stock and the MD Stock, properly endorsed.
d. If the certificates representing shares of the UK
Stock or the MD Stock owned by Xx. Xxxxxxx or Xxx. Xxxxxxx has been lost,
destroyed, stolen or is otherwise missing, he or she shall receive certificates
representing the shares of Hold Co Common Stock and Hold Co Preferred Stock to
which he or she is entitled in accordance with, and upon compliance with, the
conditions set forth in the respective Bylaws of ICARUS MD and ICARUS UK and
the law applicable thereto.
e. The parties hereto acknowledge and agree that Xx.
Xxxxxxx and Xxx. Xxxxxxx hereby waive all rights to dissent or seek the payment
of the fair value of their shares pursuant to Section 3-202 of the Maryland
General Corporation Law.
f. If, following the date of this Agreement, Hold Co
shall change the number of outstanding shares of Hold Co Common Stock or Hold
Co Preferred Stock as a result of a revaluation of Hold Co in the initial
public offering process, a dividend, stock split, a reclassification or other
subdivision or combination of outstanding shares or as a result of the issuance
of shares of Hold Co Common Stock or of Hold Co Preferred Stock, and if the
record date of such event occurs prior to the Closing Date, then unless waived
in writing by Xx. Xxxxxxx and by Xxx. Xxxxxxx, an appropriate and proportionate
adjustment shall be made to the number of shares of Hold Co Common Stock or
Hold Co Preferred Stock so as to appropriately and proportionately increase or
decrease the number of shares of Hold Co Common Stock or Preferred Stock to be
issued hereunder.
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SECTION 1.2 RESULTS OF RECAPITALIZATION.
a. On the Closing Date, immediately subsequent to the
consummation of the Recapitalization procedure set forth in Section 1.1, above:
(a) Xx. Xxxxxxx shall own ninety seven percent (97%) of the issued and
outstanding Hold Co Common Stock and ninety seven (97%) of the issued and
outstanding Hold Co Preferred Stock; (b) Xxx. Xxxxxxx shall own three percent
(3%) of the issued and outstanding Hold Co Common Stock and three percent (3%)
of the issued and outstanding Hold Co Preferred Stock; and (c) Hold Co shall
own: (i) one hundred percent (100%) of the issued and outstanding shares of
ICARUS UK and shall be the direct parent corporation of ICARUS UK; and (ii) one
hundred percent (100%) of the issued and outstanding shares of ICARUS MD and
shall be the direct parent corporation of ICARUS MD.
b. The status of shares of Hold Co Common Stock
outstanding immediately prior to the Closing Date shall not be affected by the
Recapitalization.
c. The Articles of Incorporation and Bylaws of Hold Co
and the Operating Companies in effect on the Closing Date shall be the Articles
of Incorporation and Bylaws of Hold Co and the Operating Companies,
respectively, immediately after the Closing Date until amended pursuant to the
respective provisions thereof.
d. The Board of Directors and officers of Hold Co and
the Operating Companies immediately prior to the Closing Date shall be the
Board of Directors and Officers of Hold Co and the Operating Companies,
respectively, immediately thereafter until changed pursuant to the terms and
conditions of the Articles of Incorporation and Bylaws of the respective
corporations.
SECTION 1.3 CLOSING.
The closing ("Closing") of this Agreement shall take place at
the offices of ICARUS MD, or at such other place as Xx. Xxxxxxx shall designate,
on a date and at a time specified by Xx. Xxxxxxx ("Closing Date") after the
receipt of all required approvals, consents or authorizations and after
expiration of any and all required waiting periods and shall be conditioned
upon, and occur immediately prior to, the successful consummation of the initial
public offering of the Hold Co Common Stock. The transactions shall be deemed
to be effective as of the Closing Date. At the Closing, all of the parties
hereto shall take such actions (including the exchange of certain closing
documents and the issuance of certificates representing shares of Hold Co Common
Stock and Hold Co Preferred Stock) as may be required herein and as shall
otherwise be required by law to consummate the transactions contemplated hereby
and to make them effective.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF
XX. XXXXXXX AND XXX. XXXXXXX
Xx. Xxxxxxx and Xxx. Xxxxxxx hereby represent and warrant to the other
Parties hereto that to the best of their knowledge and belief:
SECTION 2.1 ACCREDITED INVESTOR STATUS AND OWNERSHIP OF
SHARES.
Xx. Xxxxxxx and Xxx. Xxxxxxx are "accredited investors" as
defined by Regulation D promulgated under the Securities Act of 1933, as
amended and each of them owns and has an unqualified right to and shall
transfer to Hold Co at the Closing, good, valid and marketable title to the
shares of the UK Stock and the MD Stock, free and clear of all liens and other
encumbrances. Other than this Agreement, such shares of the UK Stock and the
MD Stock are not subject to any voting trust, agreement or understanding,
whether written or oral, including without limitation, any mortgage, indenture,
note, guarantee, lease, license, contract, deed of trust, purchase, sale or
other agreement, together with any amendments thereto (a "Contract"), including
any Contract restricting or otherwise relating to the voting or disposition of
such shares.
SECTION 2.2 SELLERS' AUTHORITY.
Each of Xx. Xxxxxxx and Xxx. Xxxxxxx has the requisite
individual power, capacity and authority under the laws of the State of
Maryland to approve, execute, deliver and perform this Agreement and the other
instruments and documents required or contemplated hereby.
SECTION 2.3 BINDING EFFECT: NO VIOLATION; CONSENTS.
This Agreement constitutes, and, when executed and delivered,
the other documents and instruments to be executed and delivered by each of Xx.
Xxxxxxx and Xxx. Xxxxxxx pursuant hereto will constitute, valid and binding
agreements of each of Xx. Xxxxxxx and Xxx. Xxxxxxx, enforceable in accordance
with their respective terms, and neither the execution and delivery of this
Agreement or the other documents and instruments to be executed and delivered
by each of Xx. Xxxxxxx and Xxx. Xxxxxxx pursuant hereto, nor the consummation
by each of Xx. Xxxxxxx and Xxx. Xxxxxxx of the transactions contemplated hereby
or thereby will violate any statute or law or any rule, regulation, order,
writ, injunction, judgment or decree of any court or governmental authority
applicable to such individual. No consent, approval, authorization or action
by, notice to or filing with any governmental authority or any other person is
required with respect to Xx. Xxxxxxx or
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Xxx. Xxxxxxx in connection with the execution, delivery and performance of this
Agreement, and other documents and instruments to be executed and delivered by
such individuals pursuant hereto or the consummation by Xx. Xxxxxxx or Xxx.
Xxxxxxx of the transactions contemplated hereby or thereby.
SECTION 2.4 LITIGATION.
There are no claims, actions, suits, proceedings or
investigations pending or threatened by or against either of Xx. Xxxxxxx or
Xxx. Xxxxxxx with respect to the Operating Companies, the shares of capital
stock of the Operating Companies or the transactions contemplated hereby, at
law or in equity, before any federal, state, municipal or other governmental
department, commission, board, agency, instrumentality or authority or court,
tribunal, arbitrator or similar panel of any jurisdiction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF
HOLD CO, ICARUS MD AND ICARUS UK
Hold Co, ICARUS MD and ICARUS UK hereby represent and warrant to the
other Parties as follows:
SECTION 3.1 DUE ORGANIZATION.
Each of Hold Co and Operating Companies is a corporation or
private limited company, as the case may be, validly existing, and in good
standing under the laws of the jurisdiction of its respective incorporation or
organization and has all requisite corporate or organizational power and
authority to carry on its business as now conducted and as proposed to be
conducted through the Closing and to execute, deliver and perform this
Agreement and the other instruments and documents to be executed and delivered
in connection herewith and to carry out the transactions contemplated hereby
and thereby.
SECTION 3.2 DUE AUTHORIZATION.
The execution, delivery, and performance of this Agreement and
the execution and delivery of the other instruments and documents required or
contemplated hereby and the consummation of the transactions contemplated
hereby by each of Hold Co and the Operating Companies have been, or will, prior
to the Closing Date, be duly and validly authorized by the Board of Directors
and all shareholders, or other applicable governing authority, of each of Hold
Co and the Operating Companies.
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SECTION 3.3 BINDING EFFECT; NO VIOLATION; CONSENTS.
This Agreement constitutes, and, when executed and delivered,
the other documents and instruments to be executed and delivered by Hold Co and
each applicable Operating Companies pursuant hereto will constitute, valid and
binding agreements of each such company enforceable in accordance with their
respective terms, and neither the execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by each
applicable company pursuant hereto, nor the consummation by each such company
of the transactions contemplated hereby or thereby will (i) violate or conflict
with or result in any breach of any provision of its Articles or Certificate of
Incorporation or other comparable organizational or governing documents, or
Bylaws, or (ii) violate any statute or law or any rule, regulation, order,
writ, injunction, judgment or decree of any court or governmental authority,
excluding from the foregoing clause (ii) such violations which, in the
aggregate, could not reasonably be expected to have a material adverse effect
on the applicable company. No consent, approval, authorization or action by,
notice to, or filing with, any governmental authority or any other person is
required in connection with the execution, delivery and performance of this
Agreement, the other documents and instruments to be executed and delivered by
Hold Co and the Operating Companies pursuant hereto or the consummation by Hold
Co and the Operating Companies of the transactions contemplated hereby or
thereby, except (in the case of consents, approvals and notices required under
Contracts) where the failure to obtain such consents and approvals and give
such notices could not reasonably be expected to have a material adverse
effect.
SECTION 3.4 LITIGATION.
There are no claims, actions, suits, proceedings or
investigations pending or threatened by or against Hold Co or any of the
Operating Companies, at law or in equity, before any federal, state, municipal
or other governmental department, commission, board, agency, instrumentality or
authority or court, tribunal, arbitrator or similar panel of any jurisdiction
which could have the effect of delaying, hindering, preventing or prohibiting
the transactions contemplated hereby.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 APPROVALS.
Prior to the Closing Date, this Agreement shall be approved in
writing by the unanimous written consent of the stockholders of Hold Co, ICARUS
MD and ICARUS UK,
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by all required governmental authorities and by any third-party whose approval,
authorization or consent is reasonably deemed to be necessary by the Parties.
SECTION 4.2 TAX OPINION.
Prior to the Closing Date, the Parties hereto shall have
received an opinion of Xxxxx Xxxxxxxx LLP substantially to the effect that:
(a)(i) for U.S. federal income tax purposes, consummation of the
Recapitalization will constitute a transfer of property to a corporation
controlled by the transferors in exchange for stock as set forth in Section 351
of the Code; (ii) that no taxable gain will be recognized by any Party to the
Recapitalization upon the consummation of this Agreement; (iii) that the basis
of the Hold Co Common Stock and the Hold Co Preferred Stock received by Xx.
Xxxxxxx and Xxx. Xxxxxxx will be the same as the basis in the UK Stock and MD
Stock surrendered by them therefore; (ii) that, if the Hold Co Common Stock and
Hold Co Preferred Stock is a capital asset in the hands of Xx. Xxxxxxx and Xxx.
Xxxxxxx at the effective time of the Recapitalization, then the holding period
of the Hold Co Common Stock and Hold Co Preferred Stock received by them in the
Recapitalization will include the holding period of the UK Stock and MD Stock
surrendered therefore; and, (b)(i) for UK income tax purposes, the transfer of
shares of UK Stock in exchange for Hold Co Preferred Stock will not constitute
a taxable disposal for UK tax purposes. In rendering such opinion, Xxxxx
Xxxxxxxx LLP may rely upon representations contained in certificates of the
Parties.
SECTION 4.3 TERMINATION.
This Agreement may be terminated by any of the Parties only if
the initial public offering of the Hold Co Common Stock does not occur by June
30, 1998, hereto by a notice in writing delivered to the other Parties without
obligation or liability to any other Party.
SECTION 4.4 EXPENSES.
The expenses associated with this Recapitalization shall be
paid by ICARUS MD for all of the Parties.
SECTION 4.5 AMENDMENT; WAIVER.
(a) This Agreement may be amended or modified at any time
and in any respect by the mutual written agreement of all of the Parties
hereto.
(b) Any of the terms or conditions of this Agreement
which may be legally waived may be waived in writing at any time by any Party
hereto which is, or the stockholders of which are, entitled to the benefit
thereof.
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SECTION 4.6 FURTHER ASSURANCE.
Each of the Parties hereto agrees to furnish to the others
such further assurances with respect to the matters contemplated herein and
their respective agreements, covenants, representations and warranties
contained herein as such other Parties may reasonably request.
SECTION 4.7 HEADINGS AND CAPTIONS.
Headings and captions of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part hereof.
SECTION 4.8 SEVERABILITY OF PROVISIONS.
The invalidity or unenforceability of any term, phrase,
clause, paragraph, restriction, covenant, agreement or other provision hereof
shall in no way affect the validity or enforceability of any other provision or
part hereof.
SECTION 4.9 GOVERNING LAW.
This Agreement is made pursuant to, and shall be construed and
be governed by, the laws of the State of Maryland and of the United States, and
with respect to ICARUS UK, the laws of England.
SECTION 4.10 ALL TERMS INCLUDED.
This Agreement sets forth all terms, conditions, agreements
and understandings of the Parties with respect to the Recapitalization.
SECTION 4.11 COUNTERPARTS.
This Agreement may be executed in several identical
counterparts, each of which together shall constitute a single instrument. In
making proof of the Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
SECTION 4.12 ASSIGNMENT.
The rights and obligations of the Parties hereto may not be
assigned without the prior written consent of the other Parties. This
Agreement shall be binding upon, and shall inure to the benefit of, the Parties
and their respective heirs, personal representatives, successors and permitted
assignees.
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IN WITNESS WHEREOF, the Parties have executed, or have caused this
Agreement to be duly executed on their behalf by their officers thereunto duly
authorized, all as of the date first above written, intending to be legally
bound one to the other and that this Agreement be a contract under seal.
ICARUS INTERNATIONAL, INC.
Attest: /s/ By: /s/
---------------------------- ----------------------------------------------
Xxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxx
Secretary President
[CORPORATE SEAL]
ICARUS CORPORATION
Attest: /s/ By: /s/
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Xxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxx
Secretary President
[CORPORATE SEAL]
ICARUS SERVICES LIMITED
Attest: /s/ By: /s/
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Xxxxxxx X. Xxxxxxx
Chairman
[CORPORATE SEAL]
XXXXXXX X. XXXXXXX
Attest: /s/ By: /s/ (Seal)
---------------------------- ---------------------------------------
Xxxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXX
Attest: /s/ By: /s/ (Seal)
---------------------------- ---------------------------------------
Xxxxxx X. Xxxxxxx
