EXHIBIT (2)
STATE OF MISSISSIPPI
COUNTY OF LOWNDES
REORGANIZATION AGREEMENT
The parties to this agreement are:
The "Company", meaning the BLACK WARRIOR WIRELINE CORP., a Delaware
corporation.
The "Debt Holders", meaning the Pangaea Investment Consultants, Ltd.,
International Trust Company of Bermuda, Ltd., Xxxxxx Xxxxx Xxxxxxx & Co., Ltd.
and Mansfield Xxxxxxxxx & Co., Ltd., x/x Xxxxxxxxx Xxxxxxxxx & Xx., Xxx., Xxxxx
000, 00-Xxx-xx- ville Road, Xxxxxxxx XX-11, Bermuda (herein the "Bermuda
Group"), Xxxxxxx X. Xxxxxxx (herein the "Company President"), Xxxxx Xxxxx, Xxxxx
and Xxxxxxx Xxxx and Xxxxx Xxx Xxxxxxxx (herein sometimes the "Employee Group"),
Xxxxx Xxxxxxx (herein "Xxxxxxx"), X. Xxxxxxx Xxxx (herein "Xxxx"), Xxxxx
Xxxxxxxxx (herein "Xxxxxxxxx"), together with B. and E. Deeds.
1. Background.
1.1 The Company has the following debt, other than trade debt
incurred in the ordinary course of business, bank debt and equipment debt held
by lending institutions not related to the Company: $800,000 in debentures
bearing interest at the rate of 14% (held $450,000 by Xx. Xxxxxxx, $250,000 by
Xx. Xxxx and $100,000 by Xx. Xxxxxxxxx); $1,050,000 in debentures bearing
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interest at the rate of 13%, held by the Bermuda Group; $50,000 in debentures
bearing interest at the rate of 13%, held by B. and E. Deeds; $125,000 in
debentures bearing interest at the rate of 14% held by certain individuals who
are not joining in this agreement; $297,132.13 in debt held by the Employee
Group; and $400,000 in debt held by the Company President.
1.2 The Company is in default on all of the debt described in
Section 1.1.
1.3 Messrs. Xxxx, Xxxxxxx and Xxxxxxxxx have a case pending in
the U. S. District Court, SDNY, Case No. 95 CIV. 5620 against the Company
(herein the "Lawsuit").
2. Summary of Plan. On October 30, 1995, the Board of Directors of the
Company completed a 200 to 1 reverse stock split. Subject to satisfaction of the
conditions set forth below, and subject to the terms set forth below, the Debt
Holders shall exchange the Company's debt held by the Debt Holders, together
with any security held by the Debt Holders, for shares of the Company.
3. Reverse Stock Split. On October 30, 1995, the Company completed a
200 to 1 reverse stock split. Following the split the total outstanding and
issued shares of the Company were 70,846, more or less. All further references
to shares of the Company in this agreement shall be to post-split shares, which
shares are duly authorized, validly issued, fully paid and non-assessable.
4. Exchange of Debt for Shares. Subject to satisfaction of the
conditions set forth herein, and subject to the terms set forth
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herein, the Debt Holders, other than Xx. Xxxxxxxxx, shall exchange all of the
Company's debt held by such Debt Holders for shares in the Company according to
the schedule set forth in this Section 4, below. Said schedule assumes that all
debt holders of the Company, other than Xx. Xxxxxxxxx, holders of bank debt,
amounts owed to equipment lien holders, and trade debt incurred in the ordinary
course of business will ratify this agreement, thus satisfying certain of the
conditions set forth below. The schedule of debt exchanged and shares to be
issued to each Debt Holder is as follows:
Name of Amount of No. of
Debt Holder Principal Debt Shares
-------------- --------- --------
Mansfield Xxxxxxxxx $262,500 131,250
Pangaea Investment $262,500 131,250
International Trust $262,500 131,250
Xxxxxx X. Xxxxxxx $262,500 131,250
B. and E. Deeds $ 50,000 25,000
Xxxxx Xxxxxxx $450,000 225,000
X. Xxxxxxx Xxxx $250,000 125,000
Xxxxx Xxxxxxxxx $100,000* 50,000*
Xxxxxxx X. Xxxxxxx $400,000 200,000
Xxxxx X. Xxxxxxxx $127,342 63,671
Xxxxx Xxxxx $127,342 63,671
Xxxxx and Xxxxxxx Xxxx $ 42,447 21,223
In addition to the shares issued in exchange for the debt described
above, present shareholders will retain 70,846 shares, being the total amount of
their holdings following reverse stock split. Further, the Company anticipates
issuing up to 500,000 shares of stock through a private offering or offerings
within the twelve (12) months following the date of the exchange.
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*Note: Xxxxx Xxxxxxxxx will not agree to accept shares for his debt.
However, he has agreed to settle the debt according to the provisions of Section
9.2 hereof.
5. Exchange of Existing Warrants for New Warrants. Subject to
satisfaction of the conditions set forth below, certain of the Debt Holders
shall exchange warrants currently held by them for new warrants to be issued by
the Company ("New Warrants").
5.1 Existing Warrants to be exchanged. Mansfield Xxxxxxxxx, Pangaea
Investment, International Trust, and Xxxxxx X. Xxxxxxx currently hold warrants
issued in connection with the 13% Debentures of the Company. B. and E. Deeds,
Xxxxx Xxxxxxx, X. Xxxxxxx Xxxx and Xxxxx Xxxxxxxxx currently hold warrants
issued in connection with the 14% Debentures of the Company. All of the warrants
held by the Debt Holders listed in this Section 5.1 shall be exchanged for New
Warrants.
5.2 Classes of New Warrants. There shall be two classes of New
Warrants, as follows:
Class A Warrants, each of which shall entitle the warrant holder to
purchase additional shares in the Company at $3/share within four (4) years
after the issuance of said warrants. Class A Warrants shall not be redeemable by
the Company. Any Class A warrants not exercised prior to the expiration of 48
months following their issuance shall expire.
Class B Warrants may be exercised at any time within five (5) years
after their issuance. The exercise price for the first 36
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months shall be $3/share; for the next twelve (12) months shall be $4/share and
for the next twelve (12) months shall be $5/share. Class B Warrants may be
redeemed by the Company at a price of $.50 per warrant at any time and from time
to time when the common stock of the Company is trading in excess of twenty
percent (20%) above the exercise price of the warrant then in effect. For
purposes of determining whether the Company may exercise its redemption option,
the trading price shall be calculated based on the average between bid and ask
during the ninety (90) days preceding exercise of the redemption option by the
Company. Any Class B warrants not exercised prior to the expiration of sixty
(60) months following their issuance shall expire.
5.3 Exchange of Existing Warrants for New Warrants. The schedule of New
Warrants to be issued to each Debt Holder in exchange for all existing warrants
held by such Debt Holder is set forth below:
Name of No. of Class A No. of Class B
Debtholder Warrants Warrants
------------------ --------------- ---------------
Mansfield Xxxxxxxxx 39,375 39,375
Pangaea Investment 39,375 39,375
International Trust 39,375 39,375
Xxxxxx X. Xxxxxxx 39,375 39,375
B. and E. Deeds 7,500 7,500
Xxxxx Xxxxxxx 67,500 67,500
X. Xxxxxxx Xxxx 37,500 37,500
Xxxxx Xxxxxxxxx 15,000 15,000
6. Terms of Warrants. All of the warrants issued pursuant to paragraph
5 shall contain the following provisions, with the term "BWWC" as used below
having the same meaning as the Company:
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Determination of amount of Issued and Common Stock Outstanding
on a Fully Diluted Basis. For purposes of determining the
number of issued and outstanding shares of BWWC common stock
on a fully diluted basis outstanding on the date of exercise
of this warrant, the following rules shall apply:
(a) Shares of common stock issuable by way of
dividend or other distribution on any stock of BWWC shall be
deemed to have been issued and to be outstanding at the close
of business on the record date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution. Shares of common stock issued otherwise than as
a dividend, shall be deemed to have been issued and to be
outstanding at the close of business on the date of issue.
(b) The number of shares of BWWC common stock at any
time outstanding shall not include any shares then owned or
held by or for the account of BWWC, but shall include the
aggregate number of shares deliverable in respect of all
outstanding options, rights and convertible and exchangeable
securities at all time while such options, rights or
securities remain outstanding and unexercised, unconverted or
unexchanged, as the case may be, and thereafter to the extent
such options, rights or securities have been exercised.
converted or exchanged.
(c) In the case of any reorganization or
reclassification of the outstanding shares of BWWC common
stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a
result of a subdivision or combination) or in the case of any
consolidation of BWWC with, or merger of BWWC with another
corporation after which no securities of BWWC will be publicly
held, or in the case of any sale, lease or conveyance of all,
or substantially all, of the property, assets, business and
goodwill of BWWC as an entity, the holder of this warrant
shall thereafter have the right upon exercise to purchase the
kind and amount of shares of stock and other securities and
property
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receivable upon such merger, or sale by a holder of the number
of shares of BWWC common stock which the holder of this
warrant immediately prior to such reorganization,
reclassification, consolidation, merger, or sale, at the
warrant price (the kind, amount and price of such stock and
other securities to be subject to adjustment as herein
provided).
(d) In case BWWC shall, at any time prior to the
expiration of this warrant and prior to the exercise hereof,
dissolve, liquidate or wind up its affairs, the holder of this
warrant shall be entitled, upon the exercise thereof, to
receive, in lieu of the shares of BWWC common stock which he
would have been entitled to receive, the same kind and amount
of assets as would have been issued, distributed or paid to
him upon such shares of common stock of BWWC, had he been the
holder of recourse of such shares of BWWC common stock
receivable upon the exercise of this warrant on the record
date for the determination of those entitled to receive any
such liquidating distribution. After any such dissolution,
liquidation or winding up which shall result in any
distribution in excess of which shall result in any
distribution in excess of the warrant price provided for by
this warrant, the holder of this warrant may at his option
exercise the same without making payment of the aggregate
warrant price and in such case BWWC shall upon the
distribution to said warrant holder consider that the
aggregate warrant price has been paid in full to it and in
making settlement to said warrant holder, shall deduct from
the amount payable to such holder an amount equal to the
aggregate warrant price.
(e) Irrespective of any such adjustments in the
number or kind of shares purchasable upon exercise of this
warrant, this warrant may continue to express the same price
and number and kind of shares as originally issued.
(f) BWWC may retain a firm of independent public
accountants of recognized standing, approved by the holder
(who may be any such firm regularly employed by BWWC) to
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make any computation required under this section, and a
certificate signed by such firm shall be conclusive evidence
of the correctness of any computation made under this section.
Charges, Taxes and Expenses. The issuance of
certificates for shares of BWWC common stock upon any exercise
of this warrant shall be made without charge to the holder
hereof for any tax or other expense in respect to the issuance
of such certificates, all of which taxes and expenses shall be
paid by BWWC, and such certificates shall be issued only in
the name of the registered holder of this warrant.
"Piggyback Rights". If, at any time after the date
hereof, BWWC should propose to make any filing for the
registration of any of its securities either as an initial or
secondary public offering on any form of Registration
Statement (other than on Form S-8 or a successor form thereto)
in accordance with the provisions of the Securities Act of
1933, as amended, including in the term "Registration
Statement", Amendments and Post-Effective Amendments
(collectively, "Amendments") thereto, BWWC will give at least
sixty (60) days prior written notice thereof to the holder of
the warrants or the warrant shares and, provided that the
holder of such warrants exercises same and receives shares
issued as a result of such warrants (herein the "Warrant
Shares") then, at the request of the holder of the Warrant
Shares, the Company shall include such holder's Warrant Shares
in such Registration Statement or Amendments to the extent
that same may be included without, in the opinion of the
underwriter, materially adversely affecting the price
obtainable for securities of BWWC to be registered. BWWC will
bear all costs, fees, taxes and expenses of including such
holder's Warrant Shares in the Registration Statement or
Amendments, will furnish such holder with a reasonable number
of copies of the related prospectus or offering circular and
will keep such Registration Statement or Amendment "current"
(as that term is used) for a period of at least thirteen (13)
months from the effective
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date thereof. The holder and BWWC shall exchange all
reasonable representation information and indemnification
covenants.
7. Security Treatment of Shares and Warrants. Neither the shares or
warrants to be issued pursuant to this agreement, or any shares issued as a
result of the warrants (collectively the "Securities"), will be registered under
any state or federal securities laws. Subject to the other provisions of this
agreement, the Debt Holders each represent and warrant to the Company as
follows:
7.1 The Debt Holder understands that the Securities have not been
registered under the Securities Act of 1933, as amended (The "1933 Act"), or the
securities laws of any state or other jurisdiction.
7.2 The Debt Holder understands that the exchange of the Securities is
speculative in nature and has significant risk factors. The Debt Holder has such
knowledge and experience in financial and business matters, and in investments
in particular, that the Debt Holder is capable of evaluating the merits and
risks of its investment in the Securities, can bear the economic risks of such
investments (that is, can afford a complete loss of this investment and can hold
the Securities indefinitely), and has obtained, in its judgment, sufficient
information relating to the Company and it business to evaluate the merits and
risks of such investment.
7.3 The Debt Holder has had, if requested, an
opportunity to ask questions of and has received satisfactory
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answers from a person or persons acting on behalf of the Company concerning the
terms and conditions of the Debt Holder's exchange of the Securities, and all
such questions have been answered to the satisfaction of the Debt Holder.
7.4 The Debt Holder understands that no securities commission of any
state has made any finding or determination relating to the fairness of the
exchange of the Securities and that no such commission has recommended or
endorsed or will recommend or endorse the exchange of the Securities.
7.5 Assuming due execution and delivery by the Company of this
Agreement, this Agreement represents legal, valid and binding obligations
against the Debt Holders in accordance with its terms.
8. Tax Treatment. The Company makes no representation or warranty
regarding the treatment of this transaction for federal or state income or other
tax purposes. Each Debt Holder represents that he has consulted his own tax
counsel regarding such treatment.
9. Conditions. This Agreement in its entirety is subject to the
following conditions:
9.1 Ratification. A sufficient number of the Debt Holders of the
Company specified in Section 4 above shall join in this Agreement so as to make,
in the opinion of the Company's Board of Directors, the reorganization feasible.
9.2 Agreements with Messrs. Xxxx, Xxxxxxx and Xxxxxxxxx. X. Xxxxxxx
Xxxx, Xxxxx Xxxxxxx and X. Xxxxxxxxx shall enter into a separate agreement with
the company agreeing to
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dismissal, with prejudice of the Lawsuit. Messrs. Xxxx, Xxxxxxx and Xxxxxxxxx,
together with the Company, shall further enter into a mutual Pro Tanto release,
by which the Company shall acquire from Messrs. Xxxx, Xxxxxxx and Xxxxxxxxx all
claims related to the issuance of the 14% debentures held by Messrs. Xxxx,
Xxxxxxx and Xxxxxxxxx, including but not limited to the claims held by Messrs.
Xxxx, Xxxxxxx and Xxxxxxxxx against MidTex Corp., Xxxx Xxxxxx and Xxxxx
Xxxxxxxx.
The commitment by Messrs. Xxxx and Xxxxxxx to exchange their debentures
for shares of Common Stock of the Company, made by execution of this agreement,
is subject to the Company arranging to have a purchaser(s) purchase their
debentures or shares of Common Stock for the total sum of $350,000. This must
occur within 90 days of execution of this agreement, or Messrs. Xxxx and Xxxxxxx
are free from their commitment under this Agreement. At a simultaneous closing,
Messrs. Xxxx and Xxxxxxx will deliver their debentures for exchange into shares
of common stock and the purchaser(s) arranged by the Company will deliver good
funds in the amount of $225,000 to Xx. Xxxxxxx and $125,000 to Xx. Xxxx.
By execution of this Reorganization Agreement, Xx. Xxxxxxxxx and the
Company agree that, upon satisfaction of the conditions set forth in this
agreement, the Company shall: (i) purchase, or cause to be purchased, the
Debentures held by Xx. Xxxxxxxxx, together with all rights that attached
thereto, including but not limited to accrued interest, for the total sum of
$50,000; and (ii) purchase,
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or cause to be purchased, the New Warrants of Xx. Xxxxxxxxx for the total sum of
$15,000.
9.3 Agreement of Certain Investors to Sell. Messrs. Xxxxxxxx, Xxxxx and
Mr. and Xxx. Xxxx shall agree, in supplemental agreements, to sell all of the
shares received by them hereunder through the firm of Monetary Advancement
International, Inc. (of 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 10005) at the sales
price of $2 per share during the twelve (12) month period commencing on the date
of closing set forth in this Agreement.
9.4 Private Offering. The Company shall issue not less than 200,000
shares through a private offering at the price of $2/share, which shall be
utilized by the Company to meet its obligations pursuant to this Agreement, the
costs of the Agreement and utilize for further corporate purposes.
10. General Terms and Conditions.
10.1 Effective Date. The effective date of this agreement shall be
November 30, 1995, or such earlier date as mutually agreed by all parties
hereto.
10.2 Counterparts. This Reorganization Agreement may be executed in one
or more counterparts, such counterparts constituting a single integrated
agreement.
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COMPANY:
BLACK WARRIOR WIRELINE CORP.
ATTEST:
----------------------------- BY:
----------------------------- ----------------------------
Xxxx XxXxxx, Secretary Xxxxxxx X. Xxxxxxx,
President
DEBT HOLDERS:
PANGAEA INVESTMENT CONSULTANTS,
LTD.
ATTEST:
BY: BY:
--------------------------- ----------------------------
ITS: ITS:
--------------------------- ----------------------------
INTERNATIONAL COMPANY OF
BERMUDA, LTD.
ATTEST:
BY: BY:
--------------------------- ----------------------------
ITS: ITS:
--------------------------- ----------------------------
XXXXXX XXXXX XXXXXXX & CO.,
LTD.
ATTEST:
BY: BY:
--------------------------- ----------------------------
ITS: ITS:
--------------------------- ----------------------------
MANSFIELD XXXXXXXXX & CO., LTD.
ATTEST:
BY: BY:
--------------------------- -----------------------------
ITS: ITS:
--------------------------- -----------------------------
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----------------------------
XXXXXXX X. XXXXXXX
----------------------------
XXXXX XXX XXXXXXXX
----------------------------
XXXXX XXXXX
----------------------------
XXXXX XXXXXXX
----------------------------
X. XXXXXXX XXXX
---------------------------
XXXXX XXXXXXXXX
----------------------------
B. DEEDS
----------------------------
E. DEEDS
----------------------------
XXXXX XXXX
----------------------------
XXXXXXX XXXX
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