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Exhibit 99.3
AGREEMENT
This Agreement (the "Agreement") is made as of January 18,
1996 by and among Work Recovery, Inc., a Colorado corporation ("WRI") and The
Team for New Management, L.L.C., A Delaware limited liability company (the
"Team").
RECITALS
A. WRI and the Team are parties to a letter of intent dated January 3, 1996
(the "LOI").
B. WRI has issued to the Team a letter dated January 16, 1996 (the "Interim
Agreement").
NOW THEREFORE, the parties agree as follows:
1. Board Meeting. It is anticipated that the Board of Directors of WRI, as
constituted as of the date hereof (the "Current Board"), and certain of its
individual members, will take the following actions at a meeting (the "Board
Meeting") held on January 17, 1996, including such later dates as to which the
Board Meeting was continued, such actions to be taken in the following order:
a. The Current Board will pass a resolution authorizing and
directing the officers of WRI to enter into this Agreement and authorizing and
directing the officers of WRI to enter into the Interim Management Services
Agreement (the "Interim Management Services Agreement") with the Team in the
form set forth as Exhibit A hereto.
b. The Current Board will elect the following officers of
WRI, to replace all persons currently holding such officer positions with WRI:
Acting Chair of the Board (subject to appointment to
the Board), President and CEO: Xxxxxx Xxxxx
Chief Operating Officer: to be held vacant at this time
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Acting Chief Financial Officer: Xxxxxx Xxxxx
c. The Current Board will adopt a resolution approving and
authorizing each person not serving on the Current Board who becomes a director
of WRI within the next year to receive the following:
i. Indemnification Agreements substantially in the
form previously granted to current directors and senior officers of WRI;
ii. if not an officer of WRI, $1,500 per Board or
Board committee meeting, plus expenses for meeting attendance;
iii. coverage under a directors' and officers'
insurance policy with maximum limits of not less than $5,000,000; and
iv. if not an officer of WRI, warrants on WRI common
stock exercisable for five years as follows:
100,000 warrants for serving as a director;
25,000 for each Committee membership; and
25,000 for each Committee Chair.
The exercise price of the warrants will be equal to the average closing bid
price of WRI's stock for the 20 trading day period commencing with the date
that is ten days prior to the earlier of: the date of the public announcement
of such person becoming a director, or the date of the first meeting of the
Board of Directors after the appointment or election of such director.
d. The Current Board will adopt a resolution approving such
persons as may be designated by the Team (the "Team Nominees"), which persons
may include some or all of Xxxxxx X. Xxxxx, Xxxx X. Xxxxxxx, M.D., Xxxxxx X. De
La Xxxx, Xxxxxx XxXxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, and Xxxxxx X.
Xxxxx, serving as directors of WRI and constituting a majority of the Board of
Directors of WRI.
e. The Current Board will adopt a resolution authorizing the
officers of WRI to enter into severance arrangements with Xx. Xxxxxx Xxxxxx and
Ms. Xxxxx Xxxxxx containing the terms set forth in the LOI with the following
change: severance will be one year's base salary paid out over 30 months, with
any unpaid amount
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payable in full if and when WRI reimburses the Team for its expenses through
January 2, 1996. Except for such agreements with Xx. Xxxxxx and Xx. Xxxxxx,
the Current Board also will adopt a resolution directing the officers of WRI to
cease payment of all amounts to former employees of WRI and its affiliates.
f. The Current Board will adopt a resolution authorizing,
subject to approval of the shareholders of WRI and negotiation with the Team of
a definitive Management Services Agreement to replace the Interim Management
Services Agreement, the following warrant package:
i. warrants, exercisable for five years, to
purchase three million shares of Common Stock of WRI at an exercise price of
$1.25 per share;
ii. warrants, exercisable for five years, to
purchase three million shares of the Common Stock of WRI at a price equal to
the average closing bid price of the Common Stock for the 20 trading day period
beginning ten days prior to the date hereof;
iii. warrants, exercisable for five years, to
purchase two million shares of Common Stock of WRI at an exercise price of $3
per share; and
iv. warrants, exercisable for five years, to
purchase two million shares of Common Stock of WRI at an exercise price of $5
per share.
The warrants would include the following provisions applicable to the
underlying shares of Common Stock:
(aa) the warrants will be issued as restricted
securities and initially will not be freely tradeable;
(bb) the warrants will carry unlimited piggyback
rights on all underwritten public offerings or registrations of outstanding
shares by the Company, subject to reasonable cutback pro rata with other
secondary sellers, as may be requested by the managing underwriters;
(cc) holders of the warrants will have the right to
participate pari passu with demand rights of other holders of shares of Common
Stock, including shares underlying any outstanding options or warrants; and
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(dd) the warrants will carry two demand registration
rights for which WRI will bear all expenses.
The warrant or stock option incentives (but excluding cash bonuses paid based on
stock price appreciation) for Xx. Xxxxxx Xxxxx as an officer and director of
WRI, along with similar stock incentives that WRI is anticipated to offer for a
new Chief Operating Officer and a Chief Financial Officer to be hired in the
next year will also come from, or cause a deduction from, this warrant package.
g. The Current Board will adopt a resolution authorizing,
subject negotiation with the Team of a definitive Management Services Agreement
to replace the Interim Management Services Agreement, reimbursement of the
Team's out-of-pocket expenses, incurred prior through and including January 2,
1996, in connection with or otherwise related to the Team's attempts to obtain
a change in control of WRI, including, without limitation, in connection with
preparing to mount a proxy solicitation to replace the Current Board, drafting
and filing preliminary proxy and solicitation materials with the Securities and
Exchange Commission, meeting with shareholders of WRI and brokers, performing
preliminary due diligence on WRI and its affiliates, obtaining WRI shareholder
lists and commencing litigation to compel the holding of a WRI shareholders'
meeting.
h. The Current Board will adopt a resolution establishing the
authorized size of WRI's Board of Directors at seven members.
i. The following members of the Current Board will submit
their resignations, effective immediately, resigning from all officer and
director positions with WRI and any and all entities affiliated with WRI
(except for Work Recovery Europe Limited): Xxxxxxxxxxx X. Xxxxxxx; Xxxxxxxx
X. Xxxxx and Xxxxxx X. Xxxxxxx.
j. The remaining members of the Current Board present at the
Board Meeting (including Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxxxx) will
appoint the following persons to fill vacancies on the Board of Directors:
Xxxxxx X. Xxxxx, Xxxxxx X. De La Xxxx, Xxxxxx
XxXxxxxxx and Xxxxxx X. Xxxxx
k. Continuation of the Board Meeting to January 22, 1996 at 2
p.m. at the offices of WRI.
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l. Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxxxx will submit
their resignations, effective immediately, resigning from all officer and
director positions with WRI and any and all entities affiliated with WRI.
Each of the foregoing actions may be made conditioned on the satisfaction of
the condition set forth in paragraph 2(c), below.
2. Subsequent Actions. The Team will execute and deliver the Interim
Management Services Agreement and the lawsuit filed in Colorado against WRI to
compel the holding of a shareholders' meeting will be dismissed, subject to
satisfaction of the following conditions:
a. Approval and adoption by the Current Board and its
relevant members of each of the resolutions and actions set forth in paragraph
1 on or before January 19, 1996, such resolutions to be in form and substance
acceptable to the Team.
b. No material adverse change in the business, financial
condition or prospects of WRI and its affiliates that becomes known to the Team
from and after January 4, 1996 through the date of execution of the Interim
Management Services Agreement.
c. The Company obtaining for the benefit of the Team Nominees
officer and director liability insurance with coverage of not less than
$5,000,000 in aggregate.
3. Miscellaneous.
a. All portions of the LOI and the Interim Agreement
constituting legally enforceable agreements will continue in full force and
effect. Except as set forth therein or herein, this Agreement constitutes the
entire agreement of the parties, superseding all prior agreements,
understandings and representations concerning the subject matter hereof.
b. This Agreement may be executed in counterparts. The
validity and enforceability of any provision hereof will be affected by a
finding that any particular provision is invalid or unenforceable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
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WORK RECOVERY, INC.
BY: /s/ Xxxxxx X. Xxxxxx
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ITS: Senior Vice President
TEAM FOR NEW MANAGEMENT, L.L.C.
BY: /s/ Xxxxxx X. Xxxxx
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ITS: Member
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