EXHIBIT 10.90
RESTATED DEBT REPAYMENT AGREEMENT
This Agreement (the "Agreement") is made effective as of the 15th day of
May, 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 was, on the date of a Debt Repayment Agreement previously
entered into between the Company and himself (the "Original Agreement"),
indebted to the Company in the amount of approximately $556,413.00, which
consisted 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");
WHEREAS, the Company and Xxxxxx are desireous of entering into this
Agreement in place of and in lieu of the Original Agreement, with the Original
Agreement being hereafter null and void and of no effect; 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 has agreed to
such arrangement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and Xxxxxx
agree as follows:
1. Repayment. Xxxxxx agrees to repay the Debt by paying to the Company the
following amounts 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 Annual Payment Amount
5/15/1997 - 4/7/1998 $50,000.00 (less amounts previously paid)
4/8/1998 - 4/7/1999 $50,000.00
4/8/1999 - 4/7/2000 $55,000.00
4/8/2000 - 4/7/2001 $60,000.00
4/8/2001 - 4/7/2002 $60,000.00
4/8/2002 - 4/7/2003 $65,000.00
4/8/2003 - 4/7/2004 $70,000.00
4/8/2004 - 4/7/2005 $70,000.00
4/8/2005 - 4/7/2006 Balance outstanding on 4/8/2005
Such annual amounts (each being a "Debt Reduction Payment") shall be repaid
by Xxxxxx in twelve equal installments payable on the first date of each month
(commencing July 1, 1997) during the year to which such Debt Reduction Payment
pertains. 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 Payments being deducted, offset or otherwise deemed owing.
2. Modification of Certain Terms of the Debt; Application of Payments. 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,
2006; (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. All
payments made pursuant to this Agreement shall be applied first to interest
owing on the Debt and to such portion of the Debt which represents accrued
interest owing from Xxxxxx to the Company (together representing approximately
$319,209 in accrued interest) and thereafter to principal.
3. Payment of Tax Liability. The Company agrees to pay to Xxxxxx each
month, as additional compensation, the estimated amount of (i) any federal,
state and local income or excise taxes that Xxxxxx must pay for such month on
his salary with respect to amounts being repaid to the Company as a monthly
installment against the Debt Reduction Payment, as a result of any 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 from
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 Corporate Park, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Xxxxxx: Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
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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 the 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 and 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 and 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.
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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 which 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 shall inure to the benefits of the parties and their
successors in interest. This Agreement is the entire agreement of the parties
relating to the employment of Xxxxxx by the Company 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/ Xxxx X. Xxxx /s/ Xxxxxxx X. Xxxxxxx
Xxxx X. Xxxx, Director Xxxxxxx X. Xxxxxxx, Director
XXXXXX:
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Individually
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