Exhibit 10.02
STOCK ESCROW AGREEMENT
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THIS ESCROW AGREEMENT, dated as of this 5th day of November , 1999, between
and among Xxxxxx X. Xxxxxx, in his capacity as President and Chief Executive
Officer (the "Escrow Agent") of Sparta Surgical Corporation, a Delaware
corporation ("Sparta"), Sparta Xxxxx Electrosurgical, Inc. ("Sparta Xxxxx") and
Xxxxxx X. Xxxxxx ("Xxxxxx").
WITNESSETH THAT:
WHEREAS, Xxxxxx has agreed to provide certain personal guaranty on behalf
of Sparta Xxxxx as attached on Schedule A hereto (and the generated benefits the
Company, shareholders and its overall business and operations), which provides
Xxxxxx to guaranty a loan facility in the amount of $250,000 to Bank of America
(even though he is not required to do so) pursuant to attached Board Resolution
dated November 5, 1999.
WHEREAS, Sparta and Sparta Xxxxx are issuing to Xxxxxx on or about the date
hereof, 400,000 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 by
the Escrow Agent for the benefit of Sparta and Sparta Xxxxx until the expiration
of this Agreement, in which case such shares shall be released back to Sparta
and Sparta Xxxxx, or until the occurrence of an earlier condition of release to
Xxxxxx, 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 provide the personal
guaranty on behalf of Sparta and Sparta Xxxxx, and each party's entering into
this Agreement, the parties hereto, intending to be legally bound, agree as
follows:
1. Xxxxxx, Sparta and Sparta Xxxxx hereby appoint Xxxxxx X. Xxxxxx as the
Escrow Agent for the purposes herein.
2. This Agreement shall be effective for a period of three (3) years from
the date hereof (the "Term").
Xxxxxx X. Xxxxxx
Stock Escrow Agreement
_________________ 1999
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3. The securities being placed in escrow subject to this Agreement shall
include: (a) the 400,000 shares of Common Stock being issued to Xxxxxx (to be
held in his name and as to which Xxxxxx shall be considered the owner for
purposes of Rule 144 under the Securities Act of 1933) on or about the date
hereof, (b) any stock or cash dividends that may be paid thereon during the term
of this Agreement, (c) any additional securities issued through, or by reason of
stock split or reverse split (for the sole purpose of keeping the Escrowed
Securities from becoming diluted by such issuances), and (d) any other dividends
or distributions of any kind with respect to the securities being held subject
to escrow under this Agreement. All of the foregoing shall be collectively
referred to herein as the "Escrowed Securities".
Any dividends or distributions of any kind with respect to the Escrowed
Securities that may be paid during the terms of this Agreement shall be paid to
the Escrow Agent and held pursuant to the terms hereof. Such dividends or
distributions of any kind with respect to the Escrowed Securities shall be
available for distribution in accordance with the provisions of Paragraph 5
hereof.
4. Upon issuance the certificates evidencing the Escrowed Securities shall
be delivered to the Escrow Agent for deposit pursuant to the terms hereof.
5. The Escrowed Securities shall be held in escrow hereunder until the end
of the Term, in which case they shall be released and assigned over to Xxxxxx
upon the occurrence of any of the following conditions:
(a) Up to 100% of the Escrowed Securities in the event that Sparta
has not repaid its loan facility of $250,000 to Bank of America
or any other lender by November 5, 2002, then upon Xxxxxx'x
providing the Escrow Agent with written notice of his intention
that such event be grounds for the release of the Escrowed Shares
from escrow (which notice may be given at any time, in the sole
discretion of Xxxxxx, during the Term);
(b) Upon any "change in control" of Sparta. A "change in control"
occurs upon the occurrence of one of the following events, but
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Xxxxxx X. Xxxxxx
Stock Escrow Agreement
_________________ 1999
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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 in
defined in Sections 13 (d) and 14 (d) (2) of the Exchange Act)
who is not currently an owner of the 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 lease 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;
(c) Upon the termination of Xxxxxx'x employment with Sparta for any
reason (including his resignation), or Xxxxxx'x being terminated
as President, Chief Executive Officer or Chairman of Sparta, upon
Xxxxxx'x providing the Escrow Agent with written notice of his
intention that such event be grounds for the release of the
Escrowed Shares from escrow (which notice may be given at any
time, in the sole discretion of Xxxxxx, during the Term); and
(d) 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 the Escrow
Agent with written notice of this intention that such event be
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Xxxxxx X. Xxxxxx
Stock Escrow Agreement
_________________ 1999
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grounds for the release of the Escrowed Shares from escrow (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 Escrowed
Securities shall remain in escrow pursuant to this Agreement. Upon receipt by
the Escrow Agent of the required written notice by Xxxxxx which states that one
of the conditions referred to in subparagraphs (a) through (d) of this Paragraph
5 have occurred (which absent any actual knowledge on the part of the Escrow
Agent to the contrary shall be accepted as absolute grounds for release
hereunder), the Escrowed securities shall be released by the Escrow Agent to
Xxxxxx. Following the release of Escrowed Securities. hereunder, this Agreement
shall terminate and the Escrow Agent shall be relieved of all responsibility
hereunder.
6. During the existence of this Agreement, the parties securities may not
in any way be offered for sale, sold, transferred, assigned or in any other
manner disposed of, except in this Agreement.
7. During the Term of until such time as all of the released to Xxxxxx,
Xxxxxx shall retain full voting power over 400,000 shares.
8. This Agreement shall inure to the benefit of and be Sparta Xxxxx, and
its successors and assigns, and Reiner representatives or assigns. agree that
the Escrowed pledged, hypothecated, as expressly provided for
9. A legend in substantially the following form has been or will be
placed upon any certificate or other document evidencing the Escrowed
Securities:
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Xxxxxx X. Xxxxxx
Stock Escrow Agreement
_________________ 1999
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The securities evidenced by this certificate are subject to
restrictions on their sale, pledge, or other transfer as set forth in
a certain Stock Escrow Agreement dated November 5, 1999 by and among
Sparta Surgical Corporation ("Sparta") and Sparta Xxxxx
Electrosurgical, Inc. ("Sparta Xxxxx"), Xxxxxx X. Xxxxxx and the
Escrow Agent (as defined thereunder). Sparta and Sparta Xxxxx will
furnish to the record owner of this certificate a copy of said
Agreement without charge upon written request to Sparta and Sparta
Xxxxx at its principal place of business. The rights of the holder of
this certificate are subject to all of the terms and conditions of
such Agreement, by which the holder, by the acceptance of this
certificate, agrees to be bound.
Stop transfer instructions to Sparta's transfer agent have been or will be
placed with respect to the Escrowed Securities so as to restrict their sale,
pledge or other transfer. The foregoing legend and stop transfer instruction
will be placed with respect to any new certificate or document issued upon the
presentment of any original certificates or other documents evidencing the
Escrowed Securities. Upon the release Securities from the escrow hereunder, the
Escrow Agent and/or to notify Sparta's transfer agent to remove the legend set
forth evidencing those of the Escrowed Securities being released and the
transfer agent shall be entitled to rely upon such notification in so doing.
10. Sparta agrees to indemnify and hold harmless the Escrow Agent and
Xxxxxx from any costs, damages, expenses, losses or claims, including attorneys
fees, which the Escrow Agent or Xxxxxx may incur or sustain as a result of or
arising out of this Agreement or the Escrow Agent's or Xxxxxx'x duties relating
thereto, and agrees to pay such costs, damages, expenses, losses or claims to
the Escrow Agent on demand.
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Xxxxxx X. Xxxxxx
Stock Escrow Agreement
_________________ 1999
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IN WITNESS WHEREOF, Sparta, Xxxxxx and the Escrow Agent have caused this
Escrow Agreement to be executed by their respective authorized agents.
ESCROW AGENT SPARTA SURGICAL CORPORATION
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxx X. Xxxx
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Xxxxxx X. Xxxxxx Xxxxx X. Xxxx, Director, duly authorized
SPARTA SURGICAL CORPORATION
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxx, Individually Xxxxxxx X. Xxxxxxx, Director, duly authorized
SPARTA SURGICAL CORPORATION
/s/ Xxxxxx X. Xxxxxx /s/ Xxxx Xxxx
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Xxxxxx X. Xxxxxx, Individually Xxxx Xxxx, Director, duly authorized
