Exhibit 10.19
INCENTIVE AGREEMENT
THIS AGREEMENT is made effective as of August 10, 1998 by and between
SPECTRUM MEDICAL INDUSTRIES, INC., SPECTRUM LABORATORIES, INC, each a California
corporation (jointly referred to hereinafter as "SPECTRUM") and F. Xxxxx
Xxxxxxxx ("XXXXXXXX"), residing at 26541 Xxxxxx, Xxxxxxx Xxxxx, XX 00000 and Xxx
X. Xxxxxxxx, Chairman and CEO of SPECTRUM ("XXXXXXXX"), residing at 000 Xxxxxxx
Xxxx, Xxx Xxxxxxx, XX 00000-0000.
RECITALS
To retain XXXXXXXX as an employee of SPECTRUM, SPECTRUM desires to
grant to XXXXXXXX certain employment incentives, and XXXXXXXX is willing to
remain in the employ of SPECTRUM on the terms and conditions set forth herein.
DEFINITION. The "EVENT" is defined as the sale or acquisition or
merger of SPECTRUM with another entity, regardless whether or not SPECTRUM
remains the surviving entity. The merger of SPECTRUM MEDICAL INDUSTRIES, INC.,
and SPECTRUM LABORATORIES. INC., or any of SPECTRUM LABORATORIES, INC., or any
of SPECTRUM's wholly owned subsidiaries or vice versa is excluded from to
definition of the "EVENT".
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and conditions contained herein, XXXXXXXX and XXXXXXXX agree as
follows:
1. Effective as of the date specified herein above, SPECTRUM and
XXXXXXXX agree to xxxxx XXXXXXXX an option for XXXXXXXX to
acquire undiluted three percent interest (undiluted 3%) in
SPECTRUM of the issued and outstanding shares of SPECTRUM at a
price of $0.12 per share per current fair market price vested
immediately. The option can be exercised at anytime over a
ten(10) year period in whole or in part. Said option shall
contain a cashless exercise provision. Upon exercise of the
option SPECTRUM and XXXXXXXX shall complete the process to
make XXXXXXXX the registered owner of such shares of common
stock of SPECTRUM, including any other class or classes of
stock that have rights of conversion to common shares of
SPECTRUM. XXXXXXXX hereby acknowledges that he shall be
responsible for any tax consequences to him after the transfer
of ownership of shares as stipulated above.
2. Effective as the date hereof, SPECTRUM and XXXXXXXX further
agree to xxxxx XXXXXXXX an option for XXXXXXXX to acquire
undiluted one percent interest
(undiluted 1.0%) in SPECTRUM of the issued and outstanding
shares of SPECTRUM at a price of $0.12 per share (current fair
market price), for each two (2) years that XXXXXXXX remain in
the employ of SPECTRUM. Such option vests on the second
anniversary of this agreement for an undiluted one percent
(1%) and on the fourth anniversary for an additional one
percent (1%). The option is for a period of ten (10) years.
The option can be exercised at any time over a ten (10) year
period in whole or in part. Said option shall contain a
cashless exercise provision. Upon exercise of the option
SPECTRUM and XXXXXXXX shall complete the process to make
XXXXXXXX the registered owner of such shares of common stock
of SPECTRUM, including any other class or classes of stock
that have rights of conversion to common shares of SPECTRUM.
XXXXXXXX hereby acknowledges that he shall be responsible for
any tax consequences to him after to transfer of ownership of
shares as stipulated above.
3. Effective as of to hereof, SPECTRUM and XXXXXXXX further agree
to make a "payment-in-kind" equal to five percent (5.0%) of
the net sales proceeds in the event SPECTRUM is acquired by or
merges with another entity as long as XXXXXXXX is employed by
the SPECTRUM. Such "payment-in-kind" to XXXXXXXX shall be made
in the same United Status currency or common stock of the
acquiring entity, or a combination thereof, on the same date
as the effective date of the EVENT. In the event of such
payment, all unexercised options are canceled and XXXXXXXX,
shall sell all shares acquired upon exercise of the options
back to SPECTRUM for $.12 per share, the exercise price of the
option.
4. Effective as of the date specified herein above, SPECTRUM and
XXXXXXXX further agree that XXXXXXXX shall not be terminated
prior to the effective dare of the "EVENT" if an "EVENT" is
forthcoming, for any reason other than "cause" as defined
below. For purposes of this AGREEMENT, termination for "cause"
shall mean (a) termination for dishonesty relating to
SPECTRUM's funds or assets, (b) conviction of a felony
involving SPECTRUM, (c) willful unauthorized disclosure of a
trade secret or other confidential information of SPECTRUM,
(d) habitual insobriety or drug addiction, or (e) continuation
of
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conduct which materially damages SPECTRUM after notice and an
opportunity to cure.
IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of
the day and year first above written.
For "SPECTRUM" For "XXXXXXXX"
SPECTRUM MEDICAL INDUSTRIES, INC. F. Xxxxx Xxxxxxxx
and SPECTRUM LABORATORIES, INC. 00000 Xxxxxx
Xxxxxx Xxxxx, XX 00000-0000 Xxxxxxx Xxxxx, XX 00000
By: /s/ Xxx X. Xxxxxxxx By: /s/ F. Xxxxx Xxxxxxxx
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Xxx X. Xxxxxxxx, Chairman and CEO F. Xxxxx Xxxxxxxx
For "XXXXXXXX"
Xxx X. Xxxxxxxx
000 Xxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
/s/ Xxx X. Xxxxxxxx
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Xxx X. Xxxxxxxx
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