Exhibit 2.1
RESTRUCTURING AGREEMENT
This Restructuring Agreement ("Agreement") is dated as of the 16th day of
March, 2001 by and among Stanford Financial Group ("SFG"), TWS International,
Inc. ("TWSI"), Blue Sky Communications, Inc. ("Blue Sky"), Telecom Wireless
Solutions, Inc. ("TWS"), American Samoa Telecom, LLC ("AST"), and Xxxxx X.
Xxxxxx (an individual).
RECITALS
WHEREAS, SFG has been a principal source of financing for TWS and its
subsidiaries and presently holds various debt and equity interests in TWS and
its subsidiaries;
WHEREAS, TWS management believes that it would be in the best interest of
the various TWS companies and their stakeholders for TWS management to refocus
its efforts by separating operational and other responsibilities related to the
engineering services work of TWSI from those related to the TWS subsidiaries
that hold FCC licenses;
WHEREAS, SFG and TWS management have been engaged in discussions to
accomplish the refocusing efforts through the transactions described herein, the
end result of which will be that SFG will receive an additional 18% of the non-
voting equity of TWS in exchange for cash and certain of SFG's interests in Blue
Sky, TWS, and AST;
NOW, THEREFORE, in consideration of the mutual covenants and other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. (a) Xxxx Xxxxxx, will within 30 days of executing this Agreement, sell
to SFG 300,000 shares in TWS for $576,000 and shares held by SFG in
Blue Sky in an amount equal to 9.61% of the total issued and
outstanding shares of Blue Sky as of the date hereof. SFG will loan
Xxxx Xxxxxx an aggregate amount of up to $230,000 to cover any
resulting tax liability to Xx. Xxxxxx fifteen business days prior to
the due date of such tax liability. The loan will bear simple
interest at 6.0% per annum, payable annually, and will be secured by
40,000 TWS shares owned by Xxxx Xxxxxx and will be due upon the
earlier of 1) a TWS liquidity event (either Change in Control
(defined below) of TWS or IPO), or 2) 7/31/03. All shares
transferred to SFG shall be validly owned and free of any
encumbrances. For purposes of this Agreement, "Change in Control"
shall mean a sale of a majority of the assets of, or the transfer,
in any transaction or series of transactions, of a majority of the
voting equity of TWS.
(b) SFG will make a private offer to all TWS remaining shareholders to
purchase up to 950,001 shares of TWS common stock in exchange for
$1,824,000 plus 30.43% of the issued and outstanding stock of Blue
Sky held by SFG as of the date hereof All shares transferred to SFG
shall be validly owned and free of any encumbrances. Any
oversubscription to sell shall be handled pro-rata based on the
number of shares held by the non-SFG stockholders in TWS.
(c) Any undersubscription to sell shall be sold by Xxxx Xxxxxx up to a
maximum of 410,000 shares of TWS in exchange for $624,000 and 14.49%
of Blue Sky, in addition to the shares sold under 1(a) above.
SFG's offer under 1(b) and 1(c) includes an optional tax liability
assistance loan to be secured by additional TWS shares held by the
selling shareholders. SFG will loan to the purchasers an aggregate
amount of up to $730,000, secured by up to 127,000 shares of TWS
common stock, to cover any resulting tax liability. Funds under the
loan(s) will be transferred fifteen business days prior to the due
date of the tax liability. The loan will bear simple interest at
6.0% per annum,
CONFIDENTIAL
payable annually, and will be due upon the earlier of 1) a TWS
liquidity event (either Change in Control or IPO), or 2) 7/31/03.
Contemporaneous with the transfer, SFG shall exchange, on a
one-for-one basis, the TWS common stock acquired under sections 1(b)
and 1(c) for shares in a new class of TWS security to be called
Series A Non-Voting Preferred Stock ("Series A"). The Series A shall
have one-to-one tag-along rights in the event of a Change in Control
and shall be converted into TWS voting common, on a one-to-one
basis, in the event of an IPO or whenever the FCC's rules,
regulations or policies would so permit; provided such conversion
shall be limited to those number of shares as would not disqualify
OPM Auction Co. under the FCC rules from continuing to hold the FCC
licenses it currently holds and/or would not result in the
imposition of any unjust enrichment penalties under the FCC's rules,
relating to the FCC licenses it currently holds by reason of its
status as a "Small Business" under the FCC's rules (in either case,
for so long as such licenses are so held). Notwithstanding the
foregoing, SFG shall have the option, in its sole discretion, to
make any unjust enrichment payment necessary to enable the
conversion. Except as stated in this Section, Series A shall have no
conversion or voting rights and shall have all other rights with
voting common on a pari-passu basis.
2. SFG will immediately exchange with TWS 10% of the issued and outstanding
stock of Blue Sky held by SFG for 233,333 shares of Series A. All shares
transferred to SFG shall be validly owned and free of any encumbrances.
3. AST has borrowed $700,000 from SFG (the "Loan"). SFG will transfer the
Loan to TWS and TWS will, in return, issue to SFG 100,000 shares of TWS
voting common. TWS will offset its intercompany account with Blue Sky to
effect this transaction.
4. SFG is exchanging 1,000,000 common shares in TWS for an equal number of
Series A.
5. SFG will extinguish its $3,000,000 loan to TWS in exchange for 600,000
shares of Series A.
6. SFG will extend (i) the maturity of its two short term loans to TWS in the
aggregate principal amount of $500,000 and (ii) the term of the security
posted by SFG in the principal amount of $ 1 mil. for a line of credit
extended by Republic National Bank to TWS, until 12/31/01.
7. SFG will extend the maturity of SFG's convertible loan of Feb. 26, 1999 in
the original principal amount of $ 5 mil (current outstanding principal
balance is about $ 2.3 mil ) to TWS to the earlier of 1) the transfer or
sale of the West Virginia licenses owned by OPM or 2) 12/31/02. The loan
shall also be amended so that it is convertible into Series A and not into
TWS voting common.
8. TWS will lend Blue Sky 25% of the resulting cash of net proceeds from any
sale of the West Virginia and Bloomington, Illinois licenses indirectly
held by TWS, in an amount not to exceed $4 Million. "Net proceeds" means
proceeds realized from such sales LESS (i) brokerage fees and commissions
AND (ii) repayments by TWS of (w) the SFG loans in item # 6 hereof, and
(x) the loan extended to it by Xxxxxx Securities, Inc. in the principal
amount of $ 2.4 million and (y) the SFG loan in item # 7 hereof, to the
extent not converted. Loan is to be for 10 years with interest at 10% per
annum. Loan is to have right of conversion at 2 times $4 per share (the
current market value per share of Blue Sky). TWS reserves the right to
reevaluate this loan to Blue Sky should TWS not sell the licenses within
12 months of the execution of this Agreement.
9. TWS is to contribute USVI licenses to Blue Sky valued at $1,000,000 at $4
per share (equal to 250,000 shares of Blue Sky), however contribution
cannot take place until approved by FCC. TWS will use best efforts to make
this effective no later than 12/31/01.
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10. Promptly after receipt of net proceeds of the sale of the West Virginia
licenses, intercompany accounts between TWS and Blue Sky & their
respective subsidiaries will be settled at zero and management agreement
for services rendered between the companies will be signed and such fees
settled monthly.
11. Upon consummation of #1 above, TWS will cause two TWS Board members to
resign. The TWS Board will vote to appoint another SFG representative (so
that SFG will have 2 out of a total of 7 seats) and the final vacancy will
be filled with an outside director by simple majority vote of the TWS
Board.
12. Three-year Strategic Business plans for each of TWSI, Blue Sky, TWS, and
will be prepared and presented to the Board by no later than 4/30/01,
5/31/01, and 6/30/01, respectively.
13. TWS International, Inc. ("TWSI") will enter into a 3-year consulting
agreement with SFG in which SFG shall receive as compensation $600,000
($200,000 per year) and warrants for 150,000 shares of Series A (50,000
shares each year with all warrants issued up-front every year, exercisable
within 4 years, and at a strike price equal to $7 per share). SFG will
draft a consulting agreement, however its services are expected to cover
the areas of strategic direction, assistance in expansion into Latin
America and Europe, due diligence in acquisitions and other matters.
Agreement is renewable annually, however, if not renewed, then SFG will be
issued the remaining warrants up to the total of 150,000 shares. In
addition, the agreement shall include the following:
In the recitals, that:
o TWSI wishes to expand further into Latin America and Europe
(the "Regions").
o SFG's Capital Market Group management have over twenty five
years combined of experience in the telecom industry in these
Regions, principally in operating companies at a senior
management level, financing and mergers and acquisitions.
And in the agreement, that the services provided by SFG will be to
assist senior management with the following:
o Identification and analysis of expansion opportunities in
Latin America and Europe, via either potential acquisitions or
ventures with partners in the Regions.
o Negotiation of potential deals, acquisitions, joint ventures,
etc.
o Performing due diligence for potential deals, acquisitions,
joint ventures, etc.
o Analyzing operating issues throughout the worldwide
operations.
o Analyzing the implementation of business strategies included
in TWSI's Strategic and Business Plan.
o Evaluation and analysis of fund raising/financing
opportunities.
14. SFG will advise its attorneys to begin preparing definitive replacement
documents more clearly setting forth the parties rights and obligations,
as set out herein. Failure to execute a more definitive agreement will not
affect the validity of this Agreement, which shall remain in full force
and effect. To the extent that any actions contemplated herein require
shareholder approval or other consents required by law, all parties agree
to use best efforts take all action necessary to effect the intent of this
Agreement.
15. Items 1(a), 0, 0, 0, xxx 0 xxxxx xx completed not later than 20 days after
execution of this Agreement. In the event the remaining items above are
not completed within 60 days hereof, SFG shall have, unless the delay is
caused by SFG's breach, the right to terminate any remaining items if, in
the sole discretion of SFG, it is unable to realize the benefit of the
transactions contemplated herein.
CONFIDENTIAL
16. Nothing herein is intended to conflict with any FCC rules governing TWS or
its subsidiaries. In the event the parties disagree as to the effect of
any relevant FCC rules on the implementation of any part of this
Agreement, the parties shall cooperate in promptly requesting and
obtaining a written determination from the FCC which shall facilitate and
permit the affected part of the Agreement. As a contingent remedy to be
sought in the request for a determination, or in the event that the
parties agree that implementation of any provision of this agreement is
prohibited by FCC rules, the parties shall cooperate in promptly
requesting and obtaining a waiver of the relevant FCC rule(s) in order to
implement the affected provision with the FCC's approval. In the event
that neither a favorable determination nor a waiver is obtained, the
parties shall negotiate in good faith an alternative provision which shall
capture the parties' original intent and shall provide the party unable to
obtain the economic benefits intended by the affected part of the
agreement with those economic benefits in a manner compliant with the FCC
rules.
17. Any controversy or claim arising out of or relating to Items 1(b), 6, 7,
8, 9, 10, 12, 13 and 14 of this Agreement, or the breach thereof, shall be
settled by arbitration administered by the American Arbitration
Association ("AAA") in accordance with its Commercial Arbitration Rules,
and judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof. There shall be a panel of three
arbitrators and each Party shall have the right to appoint one arbitrator
from the list of arbitrators supplied to the Parties by the AAA who are
familiar with the telecommunications industry. The two arbitrators so
appointed shall appoint the third.
IN WITNESS WHEREOF, and intending to be legally bound hereby, each party has
executed this Agreement as of the date first set forth above.
TELECOM WIRELESS SOLUTIONS, INC STANFORD FINANCIAL GROUP
By: _______________________________ By: ____________________________________
Xxxxx X. Xxxxxx, President
Name: __________________________________
TWS INTERNATIONAL, INC. Title: _________________________________
By: _______________________________
Xxxxx X. Xxxxxx, President
AMERICAN SAMOA TELECOM, LLC
By: _______________________________
Xxxxx X. Xxxxxx, President
BLUE SKY COMMUNICATIONS, INC. XXXXX X. XXXXXX
By: _______________________________ ________________________________________
Xxxxx X. Xxxxxx, President (Individually)
[Signature Page to Restructuring Agreement]
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