Exhibit No. 3
Form 10-SB
Cluster Technology Corp.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") effective as of
the 2nd day of November, 1998, is mad and entered into by and
between CLUSTER TECHNOLOGY CORP., a Delaware corporation ( the
"Company" or "Employer") and XXX XXXXXX ("Employee") who is
appointed to the position of President & CEO.
Recitals
A. Employer is a company, which directly or through its
subsidiaries develops, manufactures, and/or markets health and
related consumer products and services;
B. Employee has been engaged in and has experience in the
above-designated business and the necessary experience with
management of a public company;
C. The Company desires to provide for the employment of
Employee, to clearly set forth the relationship between the
parties, and to restrict Employee from using certain confidential
information and from competing with the Employer in the future.
Agreement
NOW THEREFORE, in consideration of the foregoing recitals
which are incorporated as a part of this Agreement, and of the
mutual covenants contained herein and the mutual benefits to be
derived hereunder, the parties agree as follows:
1. Employment. Employer hereby employs Employee to
perform those duties generally described in this Agreement, and
Employee hereby accepts and agrees to such employment on the
terms and conditions hereinafter set forth.
2. Duties: Employer hereby employer Employee to serve in
such offices and perform those duties as shall, from time to
time, be determined by Employer's board of directors. Employee
agrees to serve as an executive officer of the Employer or any of
its subsidiary corporations without compensation except as set
forth herein. Employee shall devote substantially all of his
working time and efforts to the business of Employer and any
other of Employer's parent and subsidiary corporations, if any,
and shall not during the term of this Agreement be engaged in any
other substantial business activities which will significantly
interfere or conflict with the performance of his duties
hereunder. Employee agrees that he will at all times faithfully,
industriously, and to the best of his ability, experience, and
talents, perform all of the duties that may be required of and
from him pursuant to the express and explicit terms hereof.
3. Term. The term of this Agreement shall
commence on the date hereof and continue through January 1st,
2002.
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4. Compensation For all services rendered by the
Employee during the Initial Term, Employer shall pay to Employee
a salary of $10,000 per month for the period ending December
31,1998 and then $14,167 per month for the six-month period
ending June 1st ,1999. On or before June 1st, 1999, the Employee
and the Board of Directors shall convene to evaluate the current
salary compensation of the Employee. Any review of salary and
subsequent increases shall be at the best interest of the Company
and mutually agreed between the Employee and the Board of
Directors. Salary for any year during the term of this Agreement
shall be payable monthly in accordance with the payroll
procedures established by Employer for all its employees. The
salary to Employee shall be subject to withholding and other
applicable taxes.
5. Bonus Compensation. The Company proposes to engage in
the business of manufacturing and selling of equipment consisting
of the DRS System for decompression of the lower back, which
typically sells for $90,000. For each sale of the DRS System,
within North America and Greece beginning with and including the
month of November 1998, the Company shall pay to the Employee a
bonus. The bonuses shall be paid on the first payroll following
the month end, or within 15 days following the end of each such
month during the term of this Agreement. The bonus compensation
is equal to the product, which is obtained by multiplying the
number of DRS Systems sold during the calendar month then ended
by $2,000. For purposes of this Agreement, a DRS System sale is
defined as those Systems that have been fully funded. Should any
DRS System be sold at either a discount, the same percentage
discount shall be applied to the bonus compensation payable in
respect of the DRS System. All such payments shall be subject to
withholding and other applicable taxes.
6. Automobile Allowance. The Company shall pay $1250
per month payable on the first pay-period of every month for use
in leasing or purchasing a car for the Employee's use. This
number has been grossed up from $1,000 and all such payments
shall be subject to withholding and other applicable taxes.
7. Employment Benefits. Employer shall provide, life,
short-term disability, health and medical insurance for Employee
in a form and program to be chosen by Employer for its fulltime
employees. Employee shall be entitled to participate in all of
Employer's benefit plans including but not limited to, long-term
disability insurance, any stock option, medical, dental, life
insurance, retirement, pension, profit sharing, or other plan as
in effect from time to time on the same basis as other employees.
8. Working Facilities Employer will provide to Employee
at Employer's principal offices suitable offices and facilities
appropriate for his position and suitable for the performance of
his responsibilities.
9. Expenses. Employer shall bear the cost of all expenses
reasonably incurred by the Employee in performing his duties
under this Agreement. The payment of such expenses shall, at the
option of Employer, be by direct payment to the provider of
services or goods in question, or by the reimbursement of
Employee for the same. Employer will reimburse Employee for
expenses incurred in connection with Employer's business,
including, but not limited to, expenses for travel, lodging
meals, beverages, entertainment, and other items on
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Employee's
periodic presentation of an account of such expenses. Employee
agrees to submit such documentation as may be necessary to
substantiate the deductibility of the foregoing expenses for
income tax purposes which are permitted under the Internal
Revenue Code. Employee agrees to keep such records as are
required under the Internal Revenue Code and the Regulations
thereunder to enable substantiation of each of the said
expenditures and reimbursements. In the event a dispute should
arise regarding any matter set forth in this paragraph 9, the
determination shall be final and binding on all parties hereto.
10. Covenant Not to Compete. During the period of this
Agreement, and for a period of one year after termination of this
Agreement, except in the event of breach of this Agreement by
Employer, Employee agrees that he will not directly or indirectly
engage in, assist perform services for, establish or open, or
have any equity interest (other than ownership of 10% or less of
the outstanding stock of any corporation listed on the New York
or American Stock Exchange or included in the National
Association of Securities Dealers Automated Quotation system), in
any person, firm corporation, or business entity (whether as an
employee, officer director, agent security holder, creditor
consultant, or otherwise), that engages in the business in which
Employer or any of its subsidiaries is engaged, or any other
activity or business in which Employer or any of its subsidiaries
is engaged or in which it expressly proposes to become engaged at
the termination of this Agreement, within any territory or area
in which Employer or any of its subsidiaries is at present
conducting business and also any territories and areas in which
Employer or any of its subsidiaries where Employee knows that
Employer or any of its subsidiaries intends to extend and carry
on business by expansion of its or their activities. This
covenant not to compete shall not be construed as restricting
Employee's right to own shares in any company or limited
partnership or business entity, provided they do not perform
services for, or participate in any way in the management of, a
business entity which competes in the manner outlined above. The
parties intend that the covenant contained in this paragraph
shall be construed as a series of separate covenants, one for
each market area in which Employer or any of its subsidiaries
provides goods and/or services. Except for geographic coverage,
each such separate covenant shall be deemed identical in terms to
the covenants contained in this paragraph. If in any judicial
proceeding, a court shall refuse to enforce any of the separate
covenants deemed included in this paragraph, then the
unenforceable covenants shall be deemed eliminated from these
provisions for the purpose of those proceedings to the extent
necessary to permit the remaining separate covenants (meaning the
remaining market areas) to be enforced. This covenant shall
survive the termination of this Agreement.
11. Non-Disclosure of Information. In further
consideration of employment and the continuation of employment by
Employer, Employee agrees as follows:
(a) Employee will not, directly or indirectly, during or after
the term:
(i) use for his own benefit or give to any
person not authorized by Employer to receive or use
such information, except for the sole benefit of
Employer, any of Employer's proprietary data,
information, marketing or installation plans,
procedures, results, methods, ideas, processes, or
research and development;
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(ii) use for his own benefit or give to any
person not authorized by Employer to receive it, any
plans or specifications, customer lists, data, study,
table, report, written technical information, or the
like owned by Employer, or any copy thereof, or
(iii) use for his own benefit or give to any
persons not authorized by Employer to receive
it any information that is not generally
known to anyone other than Employer, or that
is designated by Employer as "Limited",
"Private", or "Confidential", or similarly
designated.
(b) Employee will keep himself informed of Employer's
policies and procedures for safeguarding Employer's
property, including proprietary data and information, and
will strictly comply with those policies and procedures at
all time. He will not, except when authorized by Employer,
remove any of Employer's property from Employer's premises.
He will return to Employer, immediately upon termination of
employment, all of Employer's property in his possession or
control.
12. Disability If Employee is unable to perform his
services by reason of illness or incapacity for a period of more
than six consecutive months, the compensation thereafter payable
to him during the second consecutive six-month period, one-fourth
of the salary Employee would have received for a six-month period
provided for in paragraphs 4 and 5; provided, however, that no
such compensation shall be payable after the termination of this
Agreement. Notwithstanding the foregoing, if such illness or
incapacity does not cease to exist within such 18-consecutive-
month period, as determined by a physician selected by the
Employer and Employer may thereupon terminate this Agreement. If
Employee desires to return to work, but there is a dispute as to
whether he is able to perform his duties hereunder, the issue
shall be submitted to arbitration as provided in paragraph 26
hereof.
13. Termination for Cause. Except as set forth in the
foregoing paragraph or due to the death of Employee, Employer may
not terminate this Agreement during its term without a showing
the Employee has materially breached its terms, Employee has been
grossly negligent in the performance of his duties, Employee has
failed to meet standards established by Employer for the
performance of his duties, or Employee has engaged in material
willful or gross misconduct in the performance of his duties
hereunder.
14. Termination Upon Transfer of Business. Notwithstanding
any provision of this Agreement to the contrary, Employee may
terminate this Agreement, including the covenant not to compete,
upon the happening of any of the following events:
(a) The sale by Employer of substantially all of its assets
to a single purchaser or to a group of associated purchasers;
(b) or The sale, exchange, or other disposition to a single
entity or group of entities under common control in one
transaction or series of related transactions of greater than 50%
of the outstanding shares of Employer's common stock;
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(c) or The decision by Employer to terminate its business and
liquidate its assets;
(d) or The merger or consolidation of Employer in a
transaction in which the shareholders of the Employer immediately
prior to such merger or consolidation receive less than 50
percent of the outstanding voting shares of the new or continuing
corporation. In the event Employee elects to terminate this
Agreement, as a condition precedent to the happened in of any of
the events noted above, Employer shall make as single sum payment
to Employee as provided in paragraph 15 of this Agreement.
In the event Employee does not elect to terminate this
Agreement upon the happening of any of the events noted above,
and as a result of such event, Employer is not the surviving
entity, then the provisions of this Agreement shall inure to the
benefit of and be binding upon the surviving or resulting entity.
If as a result of the merger, consolidation, transfer of assets,
or other event listed above, the duties of Employee are
increased, then the compensation of Employee provided for in
paragraph 4 of this Agreement shall be reasonably adjusted upward
to compensate for the additional duties and responsibilities
assumed.
15. Termination Payment. In the event that the Employee's
employment is terminated by the Employer during the term hereof
for reasons other than cause as defined paragraph 13, or is
terminated by Employer as provided in paragraph 14, the Employee
shall be compensated by the Employer through a single sum payment
of $200,000.
16. Death During Employment. If the Employee dies during
the term of the employment, Employer shall pay to the estate of
Employee the compensation which would otherwise be payable to
Employee up to the end of the month in which his death occurs.
17. Nontransferability. Neither Employee, his spouse, his
designated contingent beneficiary, nor their estates shall have
any right to anticipate, encumber, or dispose of any payment due
under this Agreement. Such payments and other rights are
expressly declared nonassignable and nontransferable except as
specifically provided herein.
18. Indemnification. Employer shall indemnify Employee and
hold him harmless from liability for acts or decisions made by
him while performing services for Employer to the greatest extent
permitted by applicable law. Employer shall also use its best
efforts to obtain coverage for Employee under any insurance
policy now in force or hereafter obtained during the term of this
Agreement insuring officers and directors of Employer, in amounts
acceptable to employee, against such liability.
19. Assignment. This Agreement may not be assigned by
either party without the prior written consent of the other
party.
20. Entire Agreement. This Agreement is and shall be
considered to be the only agreement or understanding between the
parties hereto with respect to the employment of Employee by
Employer. All negotiations, commitments, and understandings
acceptable to both parties have been incorporated herein. No
letter, telegram, or communication passing between the parties
hereto shall be deemed a part of this Agreement; nor shall it
have the effect of
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modifying or adding to this agreement unless
it is distinctly stated in such letter, telegram, or
communication that it is to constitute a part of this Agreement
and is to be attached as a rider to this Agreement and is signed
by the parties to this Agreement.
21. Modification of Contract. This Agreement cannot be
modified by tender, acceptance or endorsement of any instrument
of payment, including check. Any words contained in an
instrument of payment modifying this contract, including a waiver
or release of any claims, or a statement referring to paying in
full is void. This Agreement can only be modified in a separate
writing, other than an instrument of payment, signed by the
parties.
22. Counterparts and Headings. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute one
and the same instrument. All headings in this Agreement are
inserted for convenience of reference and shall not affect its
meaning or interpretation.
23. Cooperation. The parties shall deal with each other in
good faith, good faith meaning honesty in fact and the observance
of all commercial standards of fair dealing and usage's of trade
which are regularly observed within the industry.
24. No Strict Construction. The language used in this
Agreement shall be deemed to be the language chosen by the
parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any party.
25. Notices. Any notice, request, instruction, report or
other document to be given to the parties shall be in writing and
delivered personally or sent by certified mail, postage prepaid,
if to Xxx Xxxxxx: 0000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
if to Cluster Technology Corp: 000 Xxxxxxxxxxxxx
Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
or at such other address as any party shall specify to the other
party in writing.
26. Arbitration. In the event of dispute or controversy
between the parties as to the performance hereof, this Agreement
shall be and remain in full force and effect and all terms hereof
shall continue to be complied with by both parties, it shall be
submitted to two arbitrators, one to be appointed by each, and if
those arbitrators do not agree, they select a third interested
and competent person to act with them, and the decision of the
three, or a majority of them, shall be final and conclusive. If
either party does not appoint an arbitrator as aforesaid within
90 days after receipt of notice to the other that it desires
arbitration, which notice shall state the name and address of the
arbitrator appointed by such other, and does not within such
period furnish to such other party the name and address of the
second arbitrator, then the arbitrator first named shall appoint
a disinterested and competent arbitrator for the party thus
defaulting, and the two arbitrators so appointed shall select a
third to act with them as aforesaid and with like effect.
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Cost
or arbitration shall be borne by the parties equally. Judgment
upon the reward rendered may be entered in any court having
jurisdiction thereof.
27. Enforcement. Employee acknowledges that any remedy at
law for breach of paragraph 10 and 11 would be inadequate,
acknowledges that Employer would be irreparably damaged by an
actual or threatened breach thereof, and agrees that Employer
shall be entitled to an injunction restraining Employee from any
actual or threatened breach of paragraphs 10 and 11 as well as
any further appropriate equitable relief without any bond or
other security being required. In addition to the foregoing,
each of the parties hereto shall be entitled to any remedies
available in equity or by statute with respect to the breach of
the terms of this Agreement by the other party.
28. Governing Law. This Agreement shall be governed by
and interpreted in accordance with the laws of the state of
Florida.
29. Severability. If and to the extent that any court of
competent jurisdiction holds any provision or any part thereof of
this Agreement to be invalid or unenforceable, such holding shall
in no way affect the validity of the remainder of this Agreement.
30. Waiver. No failure by an party to insist upon the
strict performance of any covenant, duty, agreement, or condition
of this Agreement or to exercise any right or remedy consequent
upon a breach hereof shall constitute a waiver of any such
breach or of any other covenant, agreement, term, or condition.
IN WITNESS WHEREOF, the parties have executed this
Agreement at Heathrow, Florida, the day and year first above
written.
CLUSTER TECHNOLOGY CORP.: EMPLOYEE:
/s/ Duly Authorized Director, Xxxxxx Xxxxxx /s/ Xxx Xxxxxx
/s/ Duly Authorized Director, Xxxxx Xxxxxxxx
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