EXHIBIT 2
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT is entered into as of the 11 day of October,
1996, by and between Work Recovery, Inc., a Colorado corporation ("WRI"), and
Xxxxxx Inc., an Illinois corporation ("Xxxxxx").
STATEMENT OF BACKGROUND INFORMATION
WRI has previously filed for relief pursuant to Chapter 11 of Title 11 of
the United States Code (the "Reorganization"). In connection with the
reorganization, WRI has filed an Amended Plan of Reorganization dated October 4,
1996 (the "Plan of Reorganization") which contemplates infusion of additional
working capital. WRI is currently seeking confirmation of the Plan of
Reorganization by the Bankruptcy Court, and in connection therewith has
submitted an Amended Disclosure Statement on October 4, 1996 (the "Disclosure
Statement"). In addition, WRI is in need of additional working capital of
$500,000 prior to confirmation of the Plan of Reorganization.
WRI has previously entered into a Loan Agreement dated as of May 17, 1996
(the "Loan Agreement") with Recovery Lender, L.L.C. ("Recovery Lender"),
pursuant to which Recovery Lender has agreed to loan WRI up to an aggregate
principal amount of $5,000,000. The Loan Agreement provides for, among other
things, the right for Recovery Lender to convert into common stock of WRI, as
reorganized, on the basis of one percent (1%) of the Reorganized WRI's issued
and outstanding stock (on a fully diluted basis, giving effect to all stock
issuances, but excluding warrants, pursuant to the Reorganization Plan) for each
$100,000 of indebtedness under the Loan Agreement. In addition, WRI previously
entered into a Loan Agreement dated February 26, 1996 with Xxxxxx (the "Initial
Xxxxxx Loan Agreement"), pursuant to which Xxxxxx loaned WRI $500,000 (the
"Initial Xxxxxx Loan").
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. Investment by Xxxxxx. Xxxxxx hereby agrees to invest the aggregate sum
of $1,500,000 in WRI pursuant to the terms and conditions of this Agreement (the
"Investment"). The Investment shall consist of a $500,000 loan, upon the terms
and conditions specified in Section 2 below, and a $1,000,000 acquisition of
common stock in WRI in accordance with the provisions of Section 3 set forth
below.
2. The New Xxxxxx Loan.
2.1 Loan of $500,000. Xxxxxx agrees to loan WRI the sum of $500,000
(the "New Xxxxxx Loan").
2.2 Terms of New Xxxxxx Loan. Subject to Section 2.3 below, the New
Xxxxxx Loan shall be made generally on the same terms and conditions as set
forth in Sections 2 and 3 of the Loan Agreement, including, without limitation,
conversion rights similar to those set forth in Section 2.8 thereof, and the
covenants set forth in Section 6 of the Loan Agreement and the default
provisions of Section 7 shall be applicable.
2.3 Modifications to Terms of Loan Agreement. The following provisions
apply, notwithstanding any provision to the contrary in the Loan Agreement or
related documentation:
2.3.1 Security Interest in Intellectual Property. Any limitations
on the security interest in WRI's intellectual property granted to Recovery
Lender pursuant to the Loan Agreement or any related documents, shall be
eliminated. Pursuant to the terms of the Intercreditor Agreement, Xxxxxx, to the
extent of the New Xxxxxx Loan, and Recovery Lender shall each have liens of
equal priority, on WRI's intellectual property and all other collateral granted
to Recovery Lender pursuant to the terms of the Loan Agreement (collectively,
the "Collateral"). As will be provided in the Intercreditor Agreement, any
amounts realized from the foreclosure of Allsup's and Recovery Lender's
respective security interests in the Collateral shall be apportioned between
Xxxxxx and Recovery Lender pro rata based upon the outstanding principal
balances of their respective loans, excluding the Initial Xxxxxx Loan.
2.3.2 Future Borrowings. Prior to the Effective Date of the Plan
of Reorganization, WRI agrees not to borrow any additional monies without first
complying with the Right of First Refusal provisions in Section 4.5 below.
2.4 Conditions Precedent to Closing of New Xxxxxx Loan. Allsup's
obligation to make the New Xxxxxx Loan shall be conditioned upon satisfaction of
the following contingencies:
2.4.1 Execution of Intercreditor Agreement. Execution of an
Intercreditor Agreement by and among Xxxxxx, WRI and Recovery Lender (the
"Intercreditor Agreement"), in form satisfactory to Xxxxxx, the terms of which
effectuate the provisions of Section 2.3.1 above.
2.4.2 Bankruptcy Court Approval. Approval of the terms of the New
Xxxxxx Loan by the Bankruptcy Court.
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2.5 Closing. The closing on the New Xxxxxx Loan (the "Initial
Closing") will be held on or before two (2) days after approval of this
Agreement by the Bankruptcy Court, or soon thereafter as practicable after the
satisfaction of the various conditions precedent to such loan as set forth
herein (the "Initial Closing Date"). At the Initial Closing, the parties of this
Agreement will exchange certificates and other instruments and documents in
order to determine whether the conditions precedent to Initial Closing have been
satisfied. Upon such determination, Xxxxxx shall disburse the proceeds from the
New Xxxxxx Loan to WRI.
3. Acquisition of Shares of WRI.
3.1 Acquisition of Shares. Subject to satisfaction of the conditions
precedent set forth below, Xxxxxx agrees to acquire the "Target Number of
Shares" from WRI or the Reorganized Debtor under the Debtor's Approved Plan (the
"Subject Shares") for the purchase price of $1,000,000 (the "Purchase Price").
For purposes of this Agreement, the "Target Number of Shares" shall be the
number of shares of WRI's common stock that, when combined with the number of
shares of WRI's common stock to be issued to Xxxxxx in connection with (a) the
Initial Xxxxxx Loan and (b) the New Xxxxxx Loan, will provide Xxxxxx with
ownership of 17.5% of the outstanding common stock of WRI immediately after the
Effective Date of the Plan of Reorganization or to be distributed under the Plan
of Reorganization after the Effective Date. In addition, on the Effective Date
of the Plan of Reorganization, Xxxxxx will be issued warrants to purchase up to
300,000 shares of the common stock of WRI (the "Xxxxxx Warrants") upon the terms
and conditions set forth in Section 5.3 of the Plan of Reorganization.
3.2 Conditions Precedent to Acquisition of Stock. Allsup's agreement
to acquire the Subject Shares shall be conditioned upon satisfaction of the
following conditions:
3.2.1 Confirmation of Plan of Reorganization. Entry of an order
in the Reorganization confirming the Plan of Reorganization, with such
modifications thereto as Xxxxxx approves in the exercise of its reasonable
discretion, on or before March 1, 1997, which order shall be final and not
appealable.
3.2.2 No Material Changes. There shall not have occurred any
material adverse change in WRI's financial condition, business or assets, or
material failure to meet the Company's projected cash flows, as set forth in the
Disclosure Statement.
In the event that the foregoing conditions precedent are not satisfied
on or before March 1, 1997, Allsup's obligation to acquire the Subject Shares
shall terminate.
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3.3 Payment of Purchase Price. The Purchase Price will be paid to WRI
in cash in full at Closing.
3.4 Closing.
3.4.1 Time, Place and Manner of Closing . Unless this Agreement
has otherwise been terminated, the closing (the "Purchase Closing") will be held
on the Effective Date of the Plan of Reorganization, but in no event earlier
than January 3, 1997, or such earlier date as agreed to by Xxxxxx. At the
Purchase Closing, the parties to this Agreement will exchange certificates and
other instruments and documents in order to determine whether the terms and
conditions of this Agreement have been satisfied. Upon such determination, and
upon payment of the Purchase Price, WRI shall issue to Xxxxxx the certificate(s)
evidencing the Subject Shares.
3.4.2 Standby Letter of Credit. Within ten (10) days after
execution of this Agreement by the parties, Xxxxxx shall deliver to WRI a
standby letter of credit from a bank and in a form reasonably acceptable to WRI
(the "Letter of Credit") pursuant to which WRI shall have the unconditional
right to require payment of the Purchase Price in the event that Xxxxxx fails
pay the Purchase Price to WRI at the Purchase Closing as required pursuant to
this Section 3. WRI shall pay for the cost of obtaining the Letter of Credit in
an amount not in excess of 1.5% per annum based upon the face amount of the
Letter of Credit and the number of days for which the Letter of Credit is
issued, plus customary costs of issuance. In the event that Allsup's obligation
to purchase the Subject Shares is terminated as provided in Section 3.2 above,
the Letter of Credit shall be released to Xxxxxx.
3.5 Piggyback Registration.
3.5.1 Allsup's Right to Require Registration. At such time that
WRI proposes to register any of its securities under the Securities Act (other
than a registration effected solely to implement an employee benefit plan, a
transaction to which Rule 145 of the Commission is applicable or any other form
or type of registration in which shares of WRI held by Xxxxxx ("Registrable
Securities") cannot be included pursuant to Commission rule of practice), WRI
will give written notice to Xxxxxx of such intention to register any of the
securities of the WRI. If such registration is proposed to be on a form which
permits inclusion of the Registrable Securities, upon the written request
(stating the intended method of disposition of such securities) of Xxxxxx, WRI
will, subject to the limits contained in this Section 3.5.1, use its best
efforts to cause all such Registrable Securities of Xxxxxx to be registered
under the Securities Act and qualified for sale under certain state blue sky
laws, all to the extent requisite to permit such sale or other disposition by
Xxxxxx of the Registrable Securities so registered. Notwithstanding the above,
however, if the underwriter managing such registration notifies Xxxxxx in
writing that market or economic conditions limit the amount of securities which
may reasonably
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be expected to be sold, Xxxxxx will be allowed to register its Registrable
Securities pro rata based on the aggregate number of shares of securities being
registered in the applicable registration.
3.5.2 Registration Procedures. If and whenever WRI is required by
the provisions of this Section 3.5 to use its best efforts to effect the
registration of any of its securities under the Securities Act, WRI will, as
expeditiously as possible:
(a) prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for the period of at least
ninety (90) days;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration statement
whenever the seller or sellers of such securities shall desire to sell or
otherwise disclose of the same, but only to the extent provided in this Section
3.5;
(c) furnish to each seller such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such seller may
reasonably request in order to facilitate the public sale or other disposition
of the securities owned by such seller;
(d) use every reasonable effort to register or qualify the
securities covered by such registration statement under such other securities or
state blue sky laws of such jurisdictions as WRI's Board of Directors may
reasonably determine, and do any and all other acts and things which may be
necessary under such securities or blue sky laws to enable such seller to
consummate the public sale or other disposition in such jurisdictions of the
securities owned by such seller, provided, however, that in no event shall WRI
be obligated to qualify to do business in any jurisdiction where it is not at
the time so qualified or to take any action that would subject it to the service
of process of suits other than those arising out of the offer or sale of the
Registrable Securities covered by such registration statement in any
jurisdiction where it is not at the time so subject;
(e) before filing the registration statement or prospectus
or amendments or supplements thereto, furnish to one counsel selected by the
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holders of Registrable Securities copies of such documents proposed to be filed
which shall be subject to the reasonable approval of such counsel; and
(f) furnish to each prospective seller a signed counterpart,
addressed to the prospective seller, of (i) an opinion of counsel for WRI, dated
the effective date of the registration statement, and (ii) a "comfort" letter
signed by the independent public accountants who have certified WRI's financial
statements included in the registration statement, covering substantially the
same matters with respect to the registration statement (and the prospectus
included therein) and (in the case of the accountants' letter) with respect to
events subsequent to the date of financial statements, as are customarily
covered (at the time of such registration) in opinions of WRI's counsel and in
accountants' letter delivered to the underwriters in underwritten public
offerings of securities. Provided, however, notwithstanding any other provisions
of this Agreement, WRI shall not in any event be required to use its best
efforts to maintain the effectiveness of any such registration statement for a
period in excess of ninety (90) days (or at the request of the selling holders,
an additional 90 days).
3.5.3 Expenses. WRI shall pay for the following listed expenses
incurred in effecting the registration provided for in this Section 3.5, namely
expenses for: (a) registration and filing fees, (b) printing expenses, (c)
underwriting expenses other than fees, commissions or discounts, (d) expenses of
any audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any jurisdictions pursuant to
Section 3.5.2(d) hereof, (e) WRI's legal fees, and (f) legal fees of Xxxxxx; all
of which expenses (which specifically exclude Allsup's broker's fees) are
hereinafter referred to as "Registration Expenses". Xxxxxx shall pay the fees
and expenses of its own legal counsel, brokerage commissions and other expenses
which are not specifically included in the definition of Registration Expenses.
3.5.6 Indemnification
(a) Indemnification by WRI. In the event of any registration
of any of WRI's securities under the Securities Act pursuant to this Article 11,
WRI shall indemnify and hold harmless (i) Xxxxxx, (ii) the officers, directors,
trustees and partners of Xxxxxx, (iii) each underwriter (as defined in the
Securities Act), (iv) each other Person who participates in the offering of such
securities, and (v) each other Person, if any, who controls (within the meaning
of the Securities Act) Xxxxxx, underwriter or participating Person (individually
and collectively the "Indemnified Person") against any losses, claims, damages
or liabilities (collectively the "liability"), joint or several, to which such
Indemnified Person may become subject under the Securities Act or any other
statute or at common law, insofar as such liability (or action in respect
thereof) arises out of or is based upon (i) any alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which such securities are registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or (ii) any alleged omission
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to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading. Except as otherwise provided in
paragraph (c) of this Section 3.5.6, WRI shall reimburse each such indemnified
Person in connection with investigating or defending any such liability;
provided, however, that WRI shall not be liable to any indemnified Person in any
such case to the extent that any such liability arises out of or is based upon
any alleged untrue statements or alleged omissions made in such registration
statement, preliminary or final prospectus, or amendment or supplement thereto
in reliance upon and in conformity with information fished in writing to WRI by
such Person specifically for use therein; and provided further, that WRI shall
not be required to indemnify any Person against any liability arising from any
untrue or misleading statement or omission contained in any preliminary
prospectus if such deficiency is corrected in the final prospectus, or for any
liability which arises out of the failure of any Person to deliver a prospectus
as required by the Act, regardless of any investigation made by or on behalf of
such Indemnified Person and shall survive transfer of such securities by Xxxxxx.
(b) Indemnification by Xxxxxx. Xxxxxx shall, by acceptance
thereof, indemnify and hold harmless WRI, the directors, officers, trustees and
partners of WRI, each underwriter and each other Person, if any, who controls
WRI or such underwriter (individually and collectively also the "Indemnified
Person"), against any liability, joint or several, to which any such Indemnified
Person may become subject under the Securities Act or any other state or at
common law, in so far as such liability (or actions in respect thereof) arises
out of or is based upon (i) the disposition by Xxxxxx of such Registrable
Securities in violation of the provisions of this Section 3.5, or (ii) any
alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which securities were registered
under the Securities Act at the request of such holder, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or (iii) any alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement therein not misleading,
in the case of (ii) and (iii) to the extent, but only to the extent, that such
alleged untrue statement or alleged omission was made in such registration
statement, preliminary or final prospectus, amendment or supplement thereto in
reliance upon and in conformity with information furnished in writing to WRI by
Xxxxxx specifically for use therein. Xxxxxx shall reimburse any Indemnified
Person for any legal fees incurred in investigating or defending any such
liability; provided, however, that Xxxxxx shall not be required to indemnify any
Person against any liability arising from any untrue or misleading statement or
omission contained in any preliminary prospectus if such deficiency is corrected
in the final prospectus or for any liability which arises out of the failure of
any Person to deliver a prospectus as required by the Securities Act.
(c) Procedure for Indemnification. In the event Xxxxxx or
other person receives a complaint, claim or other notice of any liability or
action, giving rise to a claim for indemnification under paragraphs (a) or (b)
of this
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Section 3.5.6, the Person claiming indemnification under such paragraphs shall
promptly notify the Person against whom indemnification is sought of such
complaint, notice, claim or action, and such indemnifying Person shall have the
right to investigate and defend any such loss, claim, damage, liability or
action. The Person claiming indemnification shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
but the fees and expenses of such counsel shall not be at the expense of the
Person against whom indemnification is sought (unless the indemnifying party
fails to promptly defend, in which case the fees and expenses of such separate
counsel shall be borne by the Person against whom indemnification is sought). In
no event shall a Person against whom indemnification is sought be obligated to
indemnify any Person for any settlement of any claim or action effected without
the indemnifying Persons' prior written consent.
3.5.7 Termination of Registration. Notwithstanding the foregoing
provisions of this Section 3.5, the rights to registration and the designation
of Allsup's Common Stock as Registrable Securities shall terminate as to any
particular securities when such securities shall have been lawfully sold by
Xxxxxx to a registration statement or Rule 144.
3.5.8 Consent to Be Bound. Each subsequent holder of Registrable
Securities must consent in writing to be bound by the terms and conditions of
this Section 3.5 in order to acquire the rights granted pursuant to Section 3.5.
3.5.8 Amendments. The provisions of this Section 3.5 may be
amended, and WRI may take any action herein prohibited. or omit to perform any
act herein required to be performed by it, only if WRI has obtained the written
consent of Xxxxxx.
3.5.9 Assignability of Registration Rights. Subject to Section
3.5.7 hereof, the registration rights set forth in this Section 3.5 are
assignable to each assignee as to each share of Registrable Securities conveyed
in accordance herewith who agrees in writing to be bound by the terms and
conditions of this Agreement and who (a) after such transfer owns at least
100,000 shares of Registrable Securities (as adjusted to reflect stock splits,
stock dividends, or other recapitalizations), or (b) is a shareholder of Xxxxxx.
3.5.10 Designation of Underwriter. In the case of any
registration effected pursuant to this Section 3.5, WRI shall have the right to
designate the managing underwriter, subject to the approval of Xxxxxx, which
approval will not be unreasonably withheld.
3.5.11 Lock-Up Provision. Upon receipt of a written request by
WRI or by its underwriters, Xxxxxx will not sell, sell short, grant an option to
buy, or
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otherwise dispose of Registrable Securities or other securities of WRI (except
for any such shares included in the registration) for a period of one hundred
fifty (150) days after WRI has completed the sale of stock pursuant to the
registration in question. WRI may impose stop-transfer instructions with respect
to the shares (or securities) subject to the foregoing restriction until the end
of said 150-day period.
4. Additional Covenants. The parties hereby covenant and agree as follows:
4.1 Appointment of Xxxxx Xxxxxxxxxxxx as a Director of WRI. WRI agrees
to take, on or before the date of the Purchase Closing, such actions as may be
necessary to appoint Xx. Xxxxx Xxxxxxxxxxxx to the Board of Directors of WRI and
the Audit Committee of WRI's Board of Directors, with such appointment to be
effective as of the date of the Purchase Closing. Allsup's obligations under
this Agreement are expressly conditioned upon the foregoing appointments.
4.2 Appointment of Xxxxxx X. Xxxxxx, Xx. as Chief Financial Officer.
WRI agrees that Xxxxxx X. Xxxxxx, Xx., currently the acting Chief Financial
Officer of WRI, will be retained as Chief Financial Officer of WRI; pursuant to
an employment agreement between Xx. Xxxxxx and WRI which would be subject to
review and approval by the Compensation Committee of WRI's Board of Directors.
4.3 Further Effort into Joint Marketing Agreement. WRI and Xxxxxx
agree to explore ways in which the goals of the Joint Marketing Program dated
April 8, 1996 between Xxxxxx and WRI will be realized, including, without
limitation, putting additional effort and concentration into each party's
obligations thereunder.
4.4 Support for WRI's Efforts. Xxxxxx agrees to take, or refrain from
taking, the following actions:
4.4.1 Support for Plan of Reorganization. Provided that the
Bankruptcy Court approves the Disclosure Statement, Xxxxxx shall endorse,
approve and actively support confirmation of the Plan of Reorganization.
Notwithstanding the above, Xxxxxx shall not be required to support any amendment
to the Plan of Reorganization that it has not previously approved.
4.4.2 No Disparagement. Neither Xxxxxx nor its officers,
directors or employees shall not make any disparaging comments, verbally or in
writing, with respect to WRI or its current officers, directors or management
team prior to the date of confirmation of the Plan of Reorganization.
4.4.3 No Takeover Attempt. For a period of four (4) years
commencing with the date of this Investment Agreement, Xxxxxx shall not,
directly or
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indirectly through any third party or parties, attempt or assist any third party
or parties in their attempt of, any takeover of WRI, whether through acquisition
of WRI shares or through a proxy solicitation, without the prior written consent
of WRI. Allsup's agreement hereunder shall be reflected in any Form 13D filed by
Xxxxxx in connection with its acquisition of shares in WRI, including, without
limitation, the Subject Shares or any shares acquired through conversion of the
Initial Xxxxxx Loan or the New Xxxxxx Loan.
4.4.4 Replacement of Current Management of WRI. Xxxxxx shall not,
for a period of four (4) years commencing with this Investment Agreement, seek
the removal, or assist any third party or parties in seeking the removal, by
proxy solicitation or otherwise, or any current officer or director of WRI or
any other member of WRI's management team.
4.4.5 Exercise of Business Judgment. Notwithstanding the
provisions of Sections 4.4.3 or 4.4.4 above, Xxxxxx, as a shareholder of WRI,
and Xxxxx Xxxxxxxxxxxx, as a director of WRI, shall be entitled to take such
actions as deemed necessary in the exercise of their business judgment or in the
fulfillment of any fiduciary duty that may exist, with respect to the operations
of WRI.
4.5 Right of First Refusal to Provide Additional Financing. In the
event that, prior to confirmation of the Plan of Reorganization, WRI seeks to
borrow any monies in addition to the New Xxxxxx Loan, Xxxxxx and Recovery LP
Lender shall have a right of first refusal, on a pro rata basis, based upon the
respective principal balances due Recovery Lender under the Loan Agreement and
Xxxxxx pursuant to the Initial Xxxxxx Loan and the New Xxxxxx Loan, to provide
such financing. WRI will not secure any such additional financing without first
providing Xxxxxx and Recovery Lender with written notice of WRI's intention to
obtain such additional financing, and the terms applicable to such financing.
Xxxxxx and Recovery Lender shall have ten (10) days after receipt of such
written notice from WRI to commit to providing the requested financing upon the
same terms and conditions as specified in the written notice. In the event that
either Xxxxxx or Recovery Lender, but not both, elect to provide such financing,
the party electing to provide such financing shall have the right to provide all
of the requested financing. In the event that Xxxxxx and Recovery Lender
collectively fail to notify WRI within said ten (10) day period of its election
to provide the full amount of such financing, then WRI is automatically
permitted to pursue said financing from third parties upon the terms and
conditions specified in WRI's notice to Xxxxxx and Recovery Lender. The
provisions of this Section 4.5 will be incorporated into the Intercreditor
Agreement.
4.6 Prohibition Against Grant of Security Interest. WRI shall not
grant, prior to the date of confirmation of the Plan of Reorganization, any
security interest in WRI's assets to any third party, other than in connection
with a financing permitted by Section 4.5 above.
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4.7 Approval of Plan of Reorganization. WRI agrees to seek
confirmation of the Plan of Reorganization as expeditiously as reasonably
practicable, after taking into account all required notices.
5. WRI's Representations and Warranties. As a material inducement to
Recovery Lender and Xxxxxx to enter into this Agreement, WRI represents and
warrants that:
5.1 Organization and Corporate Power. WRI is a corporation duly
incorporated and validly existing under the laws of Colorado and it is qualified
to do business in every jurisdiction in which its ownership of property or
conduct of business requires it to qualify. WRI has all requisite corporate
power and authority and all material licenses, permits, and authorizations
necessary to own and operate its properties and to carry on its business as now
conducted. The copies of the WRI's Articles of Incorporation and other
organizational documents have been furnished to Xxxxxx reflect all amendments
made thereto at any time prior to the date of this Agreement and are correct and
complete.
5.2 Authorization. The making and performance by WRI of this Agreement
and the transactions described herein have been duly authorized by all necessary
corporate action; provided, however, that approval of this Agreement by the
Bankruptcy Court shall be required.
5.3 Enforceability. This Agreement constitutes the legal and binding
obligation of WRI, enforceable against WRI in accordance with its terms.
6. Representations of Xxxxxx. Xxxxxx represents and warrants as follow:
6.1 Adequate Disclosure; Access to Information. As a result of its
independent due diligence investigation, it is familiar with and fully aware of
WRI's business operations and financial condition.
6.2 Speculative Investment; Ability to Assume Financial Risk. It is
aware of and understands that the Investment is a speculative investment which
involves a high degree of risk of loss by it of its entire investment. It is
able to assume the economic risks of the Investment and could absorb a complete
loss on such investment without significantly affecting its financial condition.
6.3 No Representations. It is not relying on representations
concerning WRI, express or implied, other than those set forth herein and in the
Plan of Reorganization and the Disclosure Statement.
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6.4 Legends. It is aware and agrees that all certificates for the
Subject Shares shall bear a legend describing transfer restrictions requiring
compliance with state and federal securities laws. Xxxxxx agrees that it will
not dispose of any of the Subject Shares unless it has delivered to WRI an
opinion of counsel in form acceptable to the WRI that the proposed disposition
does not violate applicable federal or state blue sky securities laws.
6.5 Accredited Investor. It is an accredited investor as defined in
Regulation D, Rule 501(a) (17 C.F.R. 230.501(a)).
6.6 Additional Information. It has had the opportunity, at minimal
inconvenience, to ask questions of and obtain from WRI any additional
information, to the extent possessed or obtainable without unreasonable effort
or expense, necessary to evaluate the merits and risks of the Investment. There
is no additional information that it wishes to obtain from WRI or from any other
source with respect to the Investment.
6.7 Sole Party in Interest. Except as otherwise indicated, it is the
sole party in interest in making the Investment, and is making the New Allsup
Loan and acquiring the Subject Shares solely for investment for its own account
or as indicated and have no present agreement, understanding or arrangement to
subdivide, sell, assign, or transfer any part or all of the New Allsup Loan, the
Subject Shares or the Allsup Warrants to any other person.
7. Miscellaneous Provisions.
7.1 Severability. Should any one or more of the provisions hereunder
be determined to be illegal or unenforceable, all other provisions hereof shall
be given effect separately therefrom and shall not be affected thereby.
7.2 Notices and Bank Accounts. Any notice or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been given upon delivery if personally delivered or when sent if sent by
facsimile or two days after mailing by certified mail, postage prepaid, and
addressed as follows, and any disbursements or payment in connection with the
Investment shall be deemed delivered upon deposit of immediately available funds
to the accounts indicated below:
It to Allsup: Allsup Inc.
000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Acct:
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If to WRI: Work Recovery, Inc.
0000 X. Xxxxxxx, Xxxxx 00
Xxxxxx, XX 00000
Acct:
Each of the above addressees may change its address or bank account
information for purposes of this paragraph by providing notice of the new
address or bank account in the manner herein provided.
7.3 Choice of Law. It is the intention of the parties that the
internal laws of the State of Arizona (and not the laws of conflict) shall
govern the validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
7.4 Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
7.5 Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of either party shall bind and inure to the benefit of
their respective successors and assigns.
7.6 Definitions. All terms not otherwise defined herein shall have the
meanings assigned to such terms by the Plan of Reorganization.
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
WORK RECOVERY, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Its: President & CEO Acting
ALLSUP INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
------------------------------------
Its: C.O.O.
10/11/96
14
