Exhibit 10.89
DEBT REPAYMENT AGREEMENT
This Agreement (the "Agreement") is made this 23rd day of April, 1997, by
and between Sparta Surgical Corporation, a Delaware corporation, having its
principal offices at 7068 Xxxx Center Parkway, Xxxxxx Xxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxxxx 00000 (the "Company"), and Xxxxxx X. Xxxxxx, President,
Chief Executive Officer and Chairman of the Board of the Company ("Xxxxxx").
WHEREAS, Xxxxxx is presently indebted to the Company in the amount of
approximately $590,400, which consists of the amount of approximately
$210,000.00 owing from him to the Company pursuant to a non-interest bearing
promissory note, the amount of $222,419.00 owing from him to the Company
pursuant to a promissory note, bearing interest at the rate of six percent (6%)
per annum (the "Interest Bearing Note") and the amount of approximately
123,994.00 owing as an account receivable of the Company, as the amounts owing
on such obligations may be increased or decreased from time to time (the
"Debt"); and
WHEREAS, Xxxxxx has offered to repay the Debt in the manner provided for
herein out of his future salary and has agreed to permit the Company to pay such
amounts directly in the manner provided herein and the Company and Xxxxxx agree
as follows:
1. Repayment. Xxxxxx agrees to repay the Debt by permitting the Company to
deduct the following percentage of his annual base salary (as such term is used
in Section 4 (a) of Xxxxxx'x Employment Agreement with the Company dated April
8, 1996 (the "Employment Agreement") during each year of the term of his
Employment Agreement:
Period Percentage Deducted
4/8/1997 - 4/7/1998 Ten percent (10%)
4/8/1998 - 4/7/1999 Fifteen percent (15%)
4/8/1999 - 4/7/2000 Twenty percent (20%)
4/8/2000 - 4/7/2001 Thirty percent (30%)
4/8/2001 - 4/7/2002 Thirty Five percent (35%)
4/8/2002 - 4/7/2003 Forty percent (40%)
4/9/2003 - 4/7/2004 Forty percent (40%)
Such deductions (each being a "Debt Reduction Deduction") shall be made and
applied against the Debt on each of Xxxxxx'x regular pay dates during such term.
In the event that the entire amount of the Debt is satisfied for any reason
(including in the event of the termination of Xxxxxx'x employment pursuant to
Section 4 (g) of the Employment Agreement) Xxxxxx shall be entitled to receive
any amounts owing to him under the Employment Agreement without the Debt
Reduction Deduction being taken.
2. Modification of Certain Terms of the Debt. In consideration of Xxxxxx'x
entering into this Agreement, the Company agrees that (i) the due date for each
portion of the Debt shall be extended to April 7, 2004; (ii) all interest owing
under the Interest Bearing Note shall be waived; and (iii) the terms of the
Interest Bearing Note shall be modified so that the Interest Bearing Note no
longer requires the payment of any interest.
3. Payment of Tax Liability. The Company agrees to pay to Xxxxxx, as
additional compensation, the amount of (i) any federal, state and local income
or excise taxes that Xxxxxx must pay as a result of the Debt Reduction
Deduction, the waiver of interest on the Interest Bearing Note and as to any
imputed interest on the Interest Bearing Note hereafter; and (ii) an additional
sum of money, as compensation for any federal, state and local income or excise
taxes payable upon payments made pursuant to this Section 3, including any such
taxes upon payments pursuant to this subsection (ii), the intention being that
payments pursuant to this subsection (ii) shall equal such amount as is required
to entirely repay any cost to Xxxxxx for such taxes. Payment of any amounts
pursuant to this Section 3 shall be calculated at the highest marginal tax rate
as to which Xxxxxx might be subject for the tax year in which the income form
the forgiveness of such of the Indebtedness is recognized, regardless of
Xxxxxx'x actual marginal rates.
4. Notice: Any notices required to be given pursuant to the provisions of
this Agreement shall be in writing and delivered by hand delivery, express
delivery service or by certified mail return receipt requested to the parties at
the following addresses:
Company: Sparta Surgical Corporation
0000 Xxxx Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Xxxxxx: Xxxxxx X. Xxxxxx
0000 Xxxx Xxxxx
Xxx Xxxxx, XX 00000
5. Successors; Binding Effect.
(a) The Company shall require any successor (whether direct or indirect by
purchase of assets, purchase or exchange of stock, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to Xxxxxx, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall result in total forgiveness of the Debt. As used in this Agreement,
"Company" shall mean Sparta Surgical Corporation and any successor to the
business and/or assets of Sparta Surgical Corporation which executes and
delivers the agreement provided for in this Section 5 (a) or which otherwise
becomes bound by all of the terms and provisions of this Agreement by operation
of law.
(b) This Agreement and all rights of Xxxxxx hereunder shall inure to the
benefit of an be enforceable by the administrators, successors, heirs,
distributees, devisees and legatees of Xxxxxx.
6. Arbitration. At the election of Xxxxxx, any dispute respecting this
Agreement, whether commenced by the Company or Xxxxxx may be resolved by
arbitration before a three person panel of independent arbitrators pursuant to
the Commercial Rules of the American Arbitration Association ("AAA"). Any
arbitration compelled pursuant to this section shall be held at the AAA office
nearest to Xxxxxx'x residence at the time such action is commenced. Xxxxxx shall
be entitled to a stay of any legal proceeding instituted against by the Company
in the event that an election to arbitrate pursuant to this Section is made.
7. Attorney's Fees and Litigation. In any litigation or arbitration
relating to this Agreement the Company shall bear all costs any attorney's fees
of both parties.
8. Authority. Each party represents that its undersigned representative or
corporate officer has all requisite power and authority to enter into this
agreement and to execute any and all instruments and documents on its behalf
necessary to and in performance of their respective obligations hereunder.
9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed original, but all of which together
shall constitute one and the same instrument.
10. Severability. If any provisions of this Agreement shall be held to be
invalid or unenforceable to any extent or in any application, then the remainder
of this Agreement and such term and condition, except to such extent or in such
application, shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest extent
and in the broadest application permitted by law.
11. Headings. The paragraph headings contained herein are for convenience
and reference only, and shall be given no effect in the interpretation of any
term or condition of this Agreement.
12. Miscellaneous. This Agreement is entered into and shall be construed
under the laws of the State of California applicable to contracts made and to be
entirely performed within that State. In the event that, notwithstanding Section
6 hereof , any litigation relating to this Agreement is held to be permissible,
the venue thereof shall be in the appropriate court with jurisdiction over the
matter in dispute for the county in which Xxxxxx resides at the time of the
filing of the lawsuit in question. This Agreement shall be amended, modified or
terminated only by an instrument in writing, signed by the party or parties to
be charged. This Agreement is the entire agreement of the parties relating to
the subject matter herof and supersedes all previous written or oral agreements.
IN WITNESS WHEREOF the parties have executed this Agreement under seal the
day and year first above written.
SPARTA SURGICAL CORPORATION
By its Board of Directors with
Xxxxxx abstaining
/s/ Xxxxx X. Xxxx /s/ Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxx, Director Xxxxxxx X. Xxxxxxx, Director
XXXXXX:
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
