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EXHIBIT 10.5
AGREEMENT AND PLAN OF RECAPITALIZATION
THIS AGREEMENT AND PLAN OF RECAPITALIZATION (the "Agreement"), dated as
of the ___ day of _______________, 1997 (the "Effective Date"), is entered into
by and among Hanover Capital Partners Ltd., a New York corporation having its
principal place of business at 00 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx
00000 (the "Company"), Xxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxxx X. Xxxxxxx
("Xxxxxxx"), Xxxxxx X. Xxxxxxxxx ("Xxxxxxxxx") and Xxxx X. Xxxxxxx ("Xxxxxxx").
Burchett, Mizerak, Xxxxxxxxx and Xxxxxxx are collectively referred to as the
"Shareholders," and each of Burchett, Mizerak, Xxxxxxxxx and Xxxxxxx is
individually referred to as a "Shareholder."
RECITALS
A. The Shareholders hold the numbers of issued and outstanding shares
of the Company's Class A Common Stock, $.01 par value per share ("Old Class A
Stock"), set forth opposite their respective names on the attached SCHEDULE 1.
B. The Shareholders desire to (i) amend the Company's Certificate of
Incorporation pursuant to a Certificate of Amendment in the form attached hereto
as EXHIBIT A (the "Certificate of Amendment"), and (ii) exchange their shares of
Old Class A Stock for 3,000 shares of the Company's Class A Common Stock, $.01
par value per share, to be authorized pursuant to the Certificate of Amendment
("New Class A Stock") and 97,000 shares of the Company's Series A Preferred
Stock, $.01 par value per share, to be authorized pursuant to the Certificate of
Amendment ("New Preferred Stock").
C. The Shareholders intend that the exchange of their shares of Old
Class A Stock for shares of New Class A Stock and New Preferred Stock will be
tax-free to them under Sections 354 and 1036 of the Internal Revenue Code of
1986, as amended (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
1. THE RECAPITALIZATION. As of _____________ (the "Closing Date"), (i)
the Company and the Shareholders shall cause the Certificate of Amendment to be
filed with the Secretary of State of the State of New York (and in any other
offices in which the Certificate of Amendment must be filed to become effective
and to permit the consummation of the transactions contemplated by this
Agreement), (ii) the Shareholders shall deliver to the Company for cancellation
their shares of Old Class A Stock, and (iii) the Company shall issue to the
Shareholders, in exchange for their shares of Old Class A Stock, the shares of
New Class A Stock and New Preferred Stock set forth opposite their
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respective names on the attached SCHEDULE 2. The exchange by the Shareholders of
their shares of Old Class A Stock for shares of New Class A Stock and New
Preferred Stock is intended to be a "reorganization" within the meaning of
Section 368(a)(1)(E) of the Code, and this Agreement is intended to constitute a
"plan of reorganization" for purposes of the regulations under Section 368 of
the Code.
2. APPROVAL OF THE RECAPITALIZATION. Before the Closing Date, the
Shareholders, in their respective capacities as shareholders and Directors of
the Company, shall approve (i) the filing of the Certificate of Amendment, and
(ii) the issuance by the Company of the shares of New Class A Stock and New
Preferred Stock to be issued to the Shareholders in exchange for their shares of
Old Class A Stock pursuant to Section 1 above.
3. LEGENDS ON CERTIFICATES. Upon original issuance, the
certificates representing the shares of New Class A Stock and New Preferred
Stock (and all securities issued in respect of such securities or in exchange
therefor or substitution thereof) shall bear a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR ASSIGNED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT. IN
ADDITION, THESE SECURITIES ARE SUBJECT TO THE TERMS AND
CONDITIONS, INCLUDING RESTRICTIONS ON TRANSFER, OF AN AMENDED
AND RESTATED SHAREHOLDERS' AGREEMENT, DATED AS OF JANUARY 1,
1996, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY AND WILL BE MAILED TO ANY PROPERLY INTERESTED PERSON
WITHOUT CHARGE WITHIN FIVE (5) DAYS AFTER THE COMPANY'S
RECEIPT OF A WRITTEN REQUEST THEREFOR.
4. SHAREHOLDERS' REPRESENTATIONS AND WARRANTIES. Each of the
Shareholders represents and warrants to the Company and the other Shareholders
as follows:
(a) The shares of Old Class A Stock set forth opposite his or
her name on SCHEDULE 1 are owned beneficially and of record by him or her, free
and clear of all liens, claims, charges and encumbrances whatsoever other than
pursuant to the Amended and
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Restated Shareholders' Agreement, dated as of January 1, 1996, among the
Shareholders and the Company.
(b) He or she is acquiring the shares of New Class A Stock and
New Preferred Stock set forth opposite his or her name on SCHEDULE 2 solely for
his or her own account and not with a view to, or in connection with, any
distribution thereof or any part thereof, or interest therein, in any
transaction which would be in violation of the registration requirements of the
securities laws of the United States of America or of any state securities laws.
(c) He or she (i) has been provided with any materials or
information that he or she has requested relating to the Company and its
affairs, (ii) has had the opportunity to ask questions of the Company's
management regarding the Company's prospects and the terms and conditions of the
transactions to be effected hereby, and (iii) has been advised by the Company,
and been given the opportunity, to retain separate counsel in connection with
the negotiation and documentation of the transactions to be effected hereby.
(d) All of the Shareholders' representations and warranties
under this Agreement are true, correct and complete and shall survive the
execution and delivery of this Agreement and the Closing Date.
5. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement sets forth
the entire understanding of the parties, and supersedes all prior agreements and
all other arrangements and communications, whether oral or written, with respect
to the subject matter hereof. Neither this Agreement nor any provision hereof
may be waived, modified, amended or terminated except by a written agreement
signed by all of the parties hereto. Waiver by a party hereto of any breach of
or failure to comply with any provision of this Agreement by any other party
shall not be construed as, or constitute, a continuing waiver of such provision,
or a waiver or any other breach of, or failure to comply with, any other
provision of this Agreement.
6. SEVERABILITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if the invalid
or unenforceable provision were omitted.
7. NOTICES. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be deemed to
have been duly given or made when delivered by hand or upon receipt after being
mailed by registered or certified mail, return receipt requested, with postage
prepaid, to the respective addresses set forth below:
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(a) For notices and communications to the Company:
Hanover Capital Partners Ltd.
00 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
(b) For notices and communications to the Shareholders, to the
respective addresses set forth on SCHEDULE 1 attached hereto.
All notices and other communications will be deemed given, unless earlier
received, (i) if sent by certified or registered mail, return receipt requested,
or by first-class mail, five calendar days after being deposited in the United
States mails, postage prepaid, (ii) if sent by United States Express Mail or
other express mail service, two calendar days (other than Sundays and federal
holidays) after being deposited therein, (iii) if sent by telegram or telecopy,
on the date sent provided confirmatory notice is sent by first-class mail,
postage prepaid, and (iv) if delivered by hand, on the date of receipt.
By notice complying with the foregoing provisions of this Section 8, each party
shall have the right to change the mailing address for future notices and
communications to such party.
8. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and to their
respective heirs, executors, administrators, legal representatives, successors
and permitted assigns; provided, however, that the rights under this Agreement
may not be assigned except as expressly provided herein.
9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the principles relating to conflicts of law, as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies.
10. HEADINGS. All headings and captions in this Agreement are for
purposes of reference only and shall not be construed to limit or affect the
substance of this Agreement.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and all signatures need
not appear on any one counterpart. The Company agrees that a copy of this
Agreement shall be kept at the principal office of the Company for inspection by
the Shareholders. Any Shareholder shall have the right to inspect said copy of
this Agreement and the books and records of the Company at reasonable times
after reasonable notice.
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12. DUE AUTHORITY. The Company represents and warrants to each of the
Shareholders that this Agreement has been duly authorized, executed and
delivered by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"COMPANY"
HANOVER CAPITAL PARTNERS LTD.
By:
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Xxxx X. Xxxxxxxx, President
SHAREHOLDERS:
"XXXXXXXX"
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Xxxx X. Xxxxxxxx
"XXXXXXX"
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Xxxxx X. Xxxxxxx
"XXXXXXXXX"
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Xxxxxx X. Xxxxxxxxx
"XXXXXXX"
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Xxxx X. Xxxxxxx
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SCHEDULE 1
Current Shareholdings
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Shareholder Shares Owned
----------- ------------
Xxxx X. Xxxxxxxx 91.532 shares of Old Class A
000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxx 24.964 shares of Old Class A
00 Xxxxxxx Xxx Xxxxx
Xxxxxxxx Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxx 24.964 shares of Old Class A
000 X. Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Xxxx X. Xxxxxxx 24.964 shares of Old Class A
0 Xxxxx Xxxx Xxxxx
Xxxxxx Xxxxxx, XX 00000
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SCHEDULE 2
Post-Transaction Shareholdings
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Shareholder Shares to be Owned
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Xxxx X. Xxxxxxxx 1,650 shares of New Class A Stock
53,350 shares of New Preferred Stock
Xxxxx X. Xxxxxxx 450 shares of New Class A Stock
14,550 shares of New Preferred Stock
Xxxxxx X. Xxxxxxxxx 450 shares of New Class A Stock
14,550 shares of New Preferred Stock
Xxxx X. Xxxxxxx 450 shares of New Class A Stock
14,550 shares of New Preferred Stock
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