Exhibit 10.95
AGREEMENT
THIS AGREEMENT, dated as of this 8th day of May, 1998, between and among
Xxxxxx X. Xxxxxx ("Xxxxxx") and Sparta Surgical Corporation, a Delaware
corporation ("Sparta");
WITNESSETH THAT:
WHEREAS, Xxxxxx has agreed to the cancellation of certain shares of the
common stock, $0.002 par value of Sparta (the "Common Stock") listed on Schedule
A hereto, which were to have been issued to him by Sparta for the consideration
set forth on such Schedule A (the "Shares");
WHEREAS, Sparta is issuing to Xxxxxx on or about the date hereof, 952,986
shares of Common Stock, which shares are being issued for the consideration set
forth on Schedule A hereto, and which shares are to be held in escrow pursuant
to the terms of a Stock Escrow Agreement of even date herewith (the "Escrow
Agreement"); and
WHEREAS, in consideration of Xxxxxx'x agreement to cancel the Shares and to
accept the issuance of shares of Sparta's Common Stock pursuant to the terms and
conditions of the Escrow Agreement, Sparta has agreed that certain indebtedness
owing from Xxxxxx to Sparta in the amount of approximately $522,000 (the
"Indebtedness") be forgiven upon the occurance of certain events, all upon the
terms set forth herein;
NOW, THEREFORE, in consideration of the mutual undertakings contained
herein and in consideration for Xxxxxx'x agreement to cancel the Shares before
issuance, and each party's entering into this Agreement and the Escrow
Agreement, the parties hereto, intending to be legally bound, agree as follows:
1. This Agreement shall be effective for a period of six (6) years from the
date hereof (the "Term").
2. During the Term, Sparta agrees that Xxxxxx shall be relieved of any
obligation to repay any of the Indebtedness upon the occurance of any the
following conditions:
(a) Upon any "change in control" of Sparta. A "change in control" occurs
upon the occurrence of one of the following events, but only if Xxxxxx
notifies Sparta in writing of his intention that such event be treated
as a change in control (which notice may be given at any time, in the
sole discretion of Xxxxxx, during the Term): (i) An event that would
be required to be reported in response to Item 5 (f) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of
1934 (the "Exchange Act"), or any successor thereof, assuming that
Sparta was a reporting company or was otherwise required to file
reports under the Exchange Act, (ii) Any "person" (as such term is
defined in Sections 13 (d) and 14 (d) (2) of the Exchange Act) who is
not currently an owner of securities of Sparta, is or becomes the
beneficial owner, directly or indirectly, of securities of Sparta
representing 20% or more of the combined voting power of Sparta's then
outstanding securities pursuant to a tender offer or otherwise, or
(iii) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of
Sparta cease for any reason to constitute at least a majority thereof
unless the election of each director, who was not a director at the
beginning of the period, was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the
beginning of the period;
(b) Upon the termination of Xxxxxx'x employment with Sparta for any
reason, upon Xxxxxx'x providing Sparta with written notice of his
intention that such event be grounds for forgiveness of the
Indebtedness (which notice may be given at any time, in the sole
discretion of Xxxxxx, during the Term);
(c) If (i) an order is entered for relief against Sparta, or declaring
that Sparta is insolvent, or resulting in a finding that Sparta is
insolvent, or if Sparta voluntarily files for bankruptcy, or if
similar relief is granted with respect to Sparta, under any law now or
hereafter in effect relating to bankruptcy, insolvency, relief of
debtors, protection of creditors; (ii) a receiver, trustee, custodian,
liquidator, assignee, sequestrator or other similar official is
appointed for such Sparta or for all or any substantial part of
Sparta's property; or (iii) if a proceeding is brought under the
federal bankruptcy code, Sparta fails to file a proper answer thereto
(including a request that the petitioner post adequate bond under
Section 303(e) of said code) within thirty days of receipt of notice
of said proceeding, upon Xxxxxx'x providing Sparta with written notice
of his intention that such event be grounds for forgiveness of the
Indebtedness (which notice may be given at any time, in the sole
discretion of Xxxxxx, during the Term); and
(d) In the event that Sparta has net sales in excess of $2.5 Million
during any fiscal year (as determined from Sparta's audited financial
statements), upon Xxxxxx'x providing Sparta with written notice of his
intention that such event be grounds for forgiveness of the
Indebtedness (which notice may be given at any time, in the sole
discretion of Xxxxxx, during the Term).
The parties agree and acknowledge that in the event Xxxxxx fails to provide
any of the written notices specified in subparagraphs (a) through (d), that the
condition shall not be considered to have occurred and that the Indebtedness
shall not be considered to have been forgiven. The parties hereto agree that
there is a substantial likelihood that one of the conditions set forth in
subparagraphs (a) through (d) may be satisfied and that it is appropriate for
Sparta to establish a reserve against repayment of the Indebtedness.
3. This Agreement shall inure to the benefit of and be binding upon Sparta,
and its successors and assigns, and Xxxxxx and his heirs, personal
representatives or assigns.
IN WITNESS WHEREOF, Sparta and Xxxxxx have caused this Agreement to be
executed by their respective authorized agents.
XXXXXX SPARTA SURGICAL CORPORATION
Xxxxxx X. Xxxxxx Xxxxx X. Xxxx
---------------------------- ---------------------------
Xxxxxx X. Xxxxxx Xxxxx Xxxx, Director,
duly authorized
Schedule A
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Date of Number of
Original Issuance Shares Consideration
----------------- ------ -------------
7/25/1997 80,000 Xxxxxx'x providing his personal guaranty
in an amount up to $250,000 as to the
obligations owing from Sparta to its
secured lender NationsCredit Commercial
Corporation
2/10/1998 198,000 Xxxxxx'x personally guarantying the
obligations owing from Sparta to Xxxx
Xxxxxxx for the purpose of obtaining a
reasonable settlement for Sparta in
litigation with Xxxxxxx and Xxxxxx'x
continued efforts to advance funding to
Sparta through $200,000 Credit Facility
between Xxxxxx and Sparta pursuant to
that certain agreement dated May 1997,
notwithstanding the unstable financial
condition of Sparta, and to otherwise
advance amounts to Sparta, thus
permitting Sparta to avoid a default
penalty with Xxxxxxx
2/19/1998 299,986 Xxxxxx'x giving personal guaranty as to
$715,000 of Sparta's indebtedness,
including: Lyon Credit, $100,000.00,
7/95, Computer Lease; J&C Resources,
$165,000.00, 12/17/96, Bridge Loan; J&C
Resources, $375,000.00, 3/17/97, Bridge
Loan; and Mercedes Benz, $ 75,000.00,
8/4/94, Company Auto Lease
2/25/1998 150,000 Xxxxxx'x increasing the amount of the
Credit Facility between he and Sparta to
$250,000, due to Sparta's continued
negative cash flow and loss from
operations
4/03/1998 75,000 Xxxxxx'x increasing the amount of the
Credit Facility between he and Sparta to
$300,000, due to Sparta's continued
negative cash flow and loss from
operations
4/09/1998 150,000 Xxxxxx'x increasing the amount of the
Credit Facility between he and Sparta to
$400,000, due to Sparta's continued
negative cash flow and loss from
operations
