Exhibit No. 6
Form 10-SB
Cluster Technology Corp.
AGREEMENT
THIS AGREEMENT made effective the 11th day of November,
1998, by and between CLUSTER TECHNOLOGY CORP., a Delaware
corporation (hereinafter referred to as the "Company"), and XXXX
XXXXXXX (hereinafter referred to as "Xxxxxxx").
WITNESSETH:
WHEREAS, the Company and Xxxxxxx are the parties to an
Employment Agreement consisting of that certain Employment
Agreement dated effective December 1, 1996, and that certain
Addendum to Employment Agreement dated effective July 1, 1997,
pursuant to which the Company employed Xxxxxxx pursuant to the
terms, provisions and conditions set forth therein, and
WHEREAS, pursuant to said Employment Agreement, Xxxxxxx has
served, and continues to serve, as a member of the Board of
Directors and as President of the Company, and
WHEREAS, the term of Xxxxxxx'x employment by the Company
pursuant to said Employment Agreement began on December 1, 1996,
and continues through December 31, 2001, and
WHEREAS, said Employment Agreement specifies and sets forth
the salary to be paid to Xxxxxxx during the term of his
employment, including $317,400 for the one-year period ending
December 31, 1998; $365,010 for the one-year period ending
December 31, 1999; $419,761.50 for the one-year period ending
December 31, 2000; and $500,000 for the one-year period ending
December 31, 2001, and
WHEREAS, said Employment Agreement specifies and sets forth
bonus compensation to be paid by the Company to Xxxxxxx during
the term of his employment, and
WHEREAS, said Employment Agreement specifies and sets forth
certain expenses to be paid by the Company for the benefit of
Xxxxxxx and/or to be reimbursed to Xxxxxxx by the Company, and
further set forth benefits to be provided to Xxxxxxx by the
Company and/or to which Xxxxxxx may be entitled, and
WHEREAS, the sum of $512,000.00 is due and owing to Xxxxxxx
by the Company as, and for accrued and unpaid salary, and
WHEREAS, Xxxxxxx has over the years loaned substantial sums
of money to the Company, by way of direct loans, deferred
compensation, and other credit facilities, which have
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been
evidenced from time to time by certain promissory notes payable
to Xxxxxxx by the Company upon demand, and
WHEREAS, Xxxxxxx has caused a line of credit for the Company
at the Xxxxxxx Bank, with a limit of $50,000.00, and has
personally guaranteed payment of the same, and
WHEREAS, during the term of his employment, Xxxxxxx has
taken actions with regard to the operation of the Company and its
business, and the business of the Company's subsidiaries, and has
taken other actions on behalf of the Company and/or the Company's
subsidiaries, with the approval and at the direction of the
Company, and
WHEREAS, the Company has granted to Xxxxxxx certain options
to purchase shares of the Company's stock, and
WHEREAS, said Employment Agreement specifies and sets forth
provisions restricting Xxxxxxx'x ability to compete with the
Company and/or to disclose certain information with regard to the
Company, and
WHEREAS, said Employment Agreement provides that the Company
shall indemnify and hold Xxxxxxx harmless from and against
liability for acts or decisions made by Xxxxxxx while providing
services for the Company, and
WHEREAS, said Employment Agreement provides that should said
Employment Agreement be terminated by the Company for any reason
other than cause, as cause is defined therein, that the Company
shall pay to Xxxxxxx a single sum payment of an amount equal to
two (2) years salary plus the sum of the four (4) bonus payments
made or due Xxxxxxx immediately preceding the date of
termination, and
WHEREAS, the Board of Directors consists of three (3)
members, to-wit: Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxxxxx,
and
WHEREAS, Xxxxx Xxxxxxxx and Xxxxxx Xxxxxxx, as members of
the Board of Directors, have indicated their desire to terminate
said Employment Agreement without cause, and
WHEREAS, Xxxxxxx is a shareholder of the Company, currently
holding and owning 1,150,00 shares, and
WHEREAS, the Company and Xxxxxxx each desire to act in the
best interests of the Company, and, consequently have reached
certain agreements with regard to said Employment Agreement and
other issues between Xxxxxxx and the Company, and
WHEREAS, the Company and Xxxxxxx are desirous of setting
forth said agreements in writing hereinbelow, it is, therefore,
IN CONSIDERATION of the covenants set forth below, and other
valuable consideration acknowledged,
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MUTUALLY AGREED as follows:
1. Recitals. The recitals set forth above are true and
correct as applicable to the parties, and are incorporated into
this Agreement as a material part hereof.
2. Termination of Employment Agreement. Subject to the
terms, provisions, conditions, obligations and rights contained
in this Agreement, the Employment Agreement described in the
above recitals shall be terminated immediately upon execution of
this Agreement by all parties hereto, except as certain
provisions thereof may be referenced and incorporated into this
Agreement as a material part hereof, and the parties shall
hereafter be governed by the terms, provisions, conditions,
obligations and rights set forth herein. Notwithstanding the
mutual agreement of the parties hereto to so terminate said
Employment Agreement, the parties acknowledge and agree that no
cause exists for said termination, as cause is defined in said
Employment Agreement, or for any other cause.
3. Corporate Resignations. Upon the execution of this
Agreement by all parties, Xxxxxxx shall execute and deliver to
the Company his resignation as a member of the Board of Directors
and as President of the Company. Said resignation shall be of a
form as attached hereto as Exhibit "A".
4. Severance Compensation. The Company shall pay to
Xxxxxxx xxxxxxxxx compensation as follows:
a. The Company shall pay to Xxxxxxx the sum of Two Hundred
Thousand Dollars ($200,000.00), which said sum represents an
amount of salary compensation. The entire sum is owed to
Xxxxxxx by the Company upon the execution of this Agreement
by the parties, and shall become subject of a Promissory
Note which shall be executed and delivered to Xxxxxxx by the
Company in a principal amount equal to said $200,000.00 plus
the amount of Loans and/or accrued salary to be paid to
Xxxxxxx pursuant to Paragraph 5, below (hereinafter the
"Note"). The Note shall provide for interest at the rate of
ten percent (10%) per annum, and shall provide for twelve
consecutive monthly payments of principal and interest in
the amount of Forty Thousand Dollars ($40,000.00) each,
beginning the I 11th day of December, 1998, and continuing
on the 11th day of each subsequent consecutive month
thereafter until the 11th day of November, 1999; thereafter,
one-sixth of the remaining unpaid principal shall be paid on
the 11th day of each consecutive month, beginning December
11, 1999, plus all accrued interest due based upon the
entire remaining unpaid principal at the time of each said
payment, all payments being first applied to interest and
then to principal. Said payments shall be the full gross
amounts set forth above, and there shall be no deductions
therefrom, whether for payroll taxes, payroll related
deductions, or otherwise. Upon failure by the Company to
make any such payment when due, or upon any other default by
the Company of any of its obligations pursuant to this
Agreement, Xxxxxxx, at his option, may declare all remaining
payments to be due and payable in full. Any waiver by
Xxxxxxx of any late payment or other default shall not
constitute a waiver or release by Xxxxxxx of any
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subsequent
failure to make such a payment or other default by the
Company. A copy of said Note is attached hereto as Exhibit
"B".
b. In addition to payment to Xxxxxxx of other amount set
forth in this Agreement, the Company shall also pay to
Xxxxxxx the sum of $26,400.00, which represents an amount
equal to the sum of the last four (4) bonuses paid to
Xxxxxxx immediately preceding the date of this Agreement.
The entire sum is owed to Xxxxxxx by the Company upon the
execution of this Agreement by the parties, and shall be
paid in full within fourteen (14) days of the effective date
of this Agreement. Xxxxxxx, may declare the entire amount
remaining unpaid to be due and payable in full upon any
default by the Company pursuant to this Agreement. No
waiver, forgiveness or release of any failure to make a
timely payment by the Company, or any other default, shall
constitute a waiver, forgiveness or release of any
subsequent failure to pay, or other default, by the Company.
5. Payment of Loans and/or Accrued Salary. The parties
agree that over the past three years Xxxxxxx, has made
substantial loans to the Company and has deferred payment of
salary, the total of which is the amount of $512,000.00. The
parties agree that the Company, as Maker, shall execute and
deliver the Note described in Paragraph 4(a) of this Agreement,
above, the principal amount of which includes the amounts due
pursuant to this Paragraph 5, and the amounts due pursuant to
said Paragraph 4(a), in favor of Xxxxxxx, as Payee, which said
note shall supercede and replace any and all existing promissory
notes executed by the Company in favor of Xxxxxxx. The terms of
said Note shall be as set forth in the Note attached hereto as
Exhibit "B", and as described in Paragraph 4(a), above.
6. Payment of Credit Line. Xxxxxxx has caused a line of
credit to be established for the benefit of the Company at
Xxxxxxx Bank. The limit of said line of credit is $50,000.00, and
Xxxxxxx has personally guaranteed payment of the same. The
Company shall, within fourteen (14) days of the effective date of
this. Agreement, pay any and all amounts due under said line of
credit, and shall close said account, thereby releasing Xxxxxxx
as a guarantor.
7. Payment of Credit Card Expenses. The parties agree that
Xxxxxxx has permitted the company to utilize his credit cards for
travel expenses and other business expenses; specifically, the
American Express Corporate (Greystone International, Inc.) Card
No. 0000 000000 00000, and the American Express Platinum Card No.
0000 000000 00000. The Company shall immediately cease all use of
said credit cards as of the effective date of this Agreement, and
shall immediately pay when due all charges against said cards
incurred for the benefit of the Company.
8. Removal From Personal Obligations. Within fourteen (14)
days of the effective date of this Agreement, the Company shall
cause Xxxxxxx to be removed and released from any and all debts
or obligations for which he has personally guaranteed performance
or payment by the Company, including, but not limited to,
equipment leases, real property leases, vehicle leases, purchase
contracts, loans, notes, contracts of any nature, office
furniture and/or equipment leases or contracts, and any and all
other obligations of the Company for which Xxxxxxx has any
personal liability or potential liability.
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9. Stock Options. Xxxxxxx is hereby granted options to
purchase shares of the Company's Stock as follows:
x. Xxxxxxx has previously been granted an option to purchase
250,000 shares of the common stock of the Company at an
exercise purchase price of $2.38 per share. Said option
shall remain valid, and the date by which Xxxxxxx must
exercise said option is hereby extended to two years from
the effective date of this Agreement.
b. Additionally, as long as there is any outstanding
obligation to Xxxxxxx by the Company pursuant to this
Agreement, whether payments of amounts due or otherwise,
Xxxxxxx shall be granted an option to purchase 125,000
shares of the Company's common stock at an exercise purchase
price of $2.38 per share should any obligation of the
Company to Xxxxxxx be outstanding at the conclusion of the
first year from the effective date of this Agreement. Said
option shall be exercisable within two (2) years of the date
said option is so granted.
10. Stock Share Dilution. As long as there is any
outstanding obligation to Xxxxxxx by the Company pursuant to this
Agreement, no officer or Director of the Company may hold or own,
or be the beneficial owner, any shares of the Company's stock,
including the acquisition of any such shares by the exercise of
any stock options or warrants (other than, pursuant to an option
based upon a performance package for the President), except as
the same may be held and owned by any such officer or Director as
of the effective date of this Agreement, or except as the same
may be purchased at full market value. Additionally, prior to any
stock offering, public, private or otherwise, or prior to any
financing arrangement or credit facility which includes stock
options or conversion provisions which may result in a dilution
of the Company's stock, each shareholder shall be offered the
option to purchase shares or provide said financing in a
percentage equal to the percentage of ownership by any such
shareholder of the Company's stock at the time of said
offer, or in a greater percentage should other shareholders
decline to so purchase shares or otherwise provide such
financing.
11. Covenant Not to Compete. During the period of this
Agreement, and for a period of one (1) year following the
termination of this Agreement, except in the event of breach of
this Agreement by the Company, Xxxxxxx 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 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 any business in which the Company or any of its
subsidiaries is engaged, within any territory or area in which
the Company or any of its subsidiaries is at present conducting
business, or in any territories in which Xxxxxxx knows at the
time of this Agreement that the Company or any of its
subsidiaries currently intend to establish a business by
expansion of their activities, unless such activity by Xxxxxxx
also serves to benefit the Company or is pursuant to a
distribution an/or licensing agreement with the Company. 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 the
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Company 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 above. If in any judicial proceeding, a
court shall refuse to enforce any of the separate covenants
described above, than the unenforceable covenants shall be deemed
eliminated from these provisions to the extent necessary to
permit the remaining covenants (meaning the remaining market
areas) to be enforced. This covenant shall survive the
termination of this Agreement.
12. Non-Disclosure of Information. In further consideration
of this Agreement, Xxxxxxx agrees that he will not, either during
the term of this Agreement or thereafter:
a. use for his own benefit or give to any person not
authorized by the Company to receive or use the same, except
for the sole benefit of the Company, any of the Company's
proprietary data, information, marketing or installation
plans, procedures, results, methods, ideas, processes or
research and development, or
b. use for his own benefit or give to any person not
authorized to receive it, any plans or specifications,
customer lists, data, study, table, report, written
technical information, or the like, owned by the Company, or
any copy thereof, or
c. Use for his own benefit or give to any persons not
authorized by the Company
to receive it, any information that is generally not known
to anyone other than the
Company, or that is designated by the Company as "Limited",
"Private", or
"Confidential", or is similarly designated.
13. Indemnification and Hold Harmless. The Company
shall indemnify and hold
Xxxxxxx harmless from and against any liability, claim, action,
proceeding, enforcement action, causes of action, suits, damages,
executions, securities claims or actions or enforcement (both
public and private) and demands of any nature whatsoever, whether
pending, accrued, known or unknown at the time of this Agreement
, whether the same are made by a person, business entity or other
entity, a governmental agency or entity, or a quasi-governmental
agency or entity, resulting from any action, lack of action,
decision, negligence or alleged negligence, or act of any nature
whatsoever, done while he served as president and/or Director of
the Company, or resulting from or drawing out of his service as
president and/or Director of the Company, or as a result of any
personal guaranty. Said indemnification and hold harmless shall,
include a vigorous defense by the Company at the Company's
expense, and, further, the Company shall pay all expenses
incurred or to be incurred by Xxxxxxx as a result of any matter
against which he is to be indemnified and held harmless,
including, but not limited to, attorney's fees paid to an
attorney of Xxxxxxx'x choosing, related legal expenses,
investigative expenses, discovery costs, and related office
expenses.
14. Security. All of the Company's obligations under this
Agreement and the Promissory Note shall be secured by an
appropriate -security interest executed by the Company and each
of its subsidiaries, granting to Xxxxxxx a security interest in
any and all proprietary interest, contracts, licenses and/or
rights in and to the Xxxxxx Pain Program, the Xxxxxx DRS System,
the Xxxxxx PCU Unit, or and additions, replacements, accessions,
improvements,
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extension, or substitutions thereto, including,
without limitation, intellectual property related to the same,
copyright, trademarks, patents, technology, working drawings and
specifications, test reports, research, advertising materials,
franchise rights, and all related assets, whether now existing,
later developed or later acquired. The Company shall execute, and
cause all of its subsidiaries to executed, and deliver to Xxxxxxx
any documents or instruments necessary to enable Xxxxxxx to
perfect and otherwise establish and protect the security interest
granted herein, including, but not limited to documents for
filing with the United States Trademark and Patent Office, UCC-1
Financing Forms, and the Security Agreement attached to this
Agreement as Exhibit "C". Should the Company, or any of its
subsidiaries, fail or refuse to execute any such document, the
Company hereby irrevocably grants Xxxxxxx its power of attorney
to execute any such document on behalf of the Company, and to
bind the Company, and/or its subsidiaries, as fully thereby as if
the Company had so executed any such document.
15. Sale of Assets, Merger or Reorganization by Company.
The Company and Xxxxxxx agree that the security interest granted
herein in the concepts and/or products is a major consideration
received by Xxxxxxx for entry by Xxxxxxx into this Agreement,
consequently, the Company shall not sell, transfer, assign or
otherwise dispose of its ownership and proprietary interests in
the concepts and/or products, all as described above, including
merger and/or reorganization, without disclosing the existence,
terms and provisions of this Agreement to any such proposed
transferee, and requiring that the continuation of this
Agreement, by way of assignment to and acceptance by any such
transferee, pursuant to all its terms, be a condition of any such
assignment, sale or other transfer, and, further, that this said
requirement be binding upon any such transferee and any and all
subsequent transferee, surviving corporation or entity, or
successor entity, and/or successors in interest.
16. Waivers and Releases. Except for the obligations and
covenants created by this Agreement, each party hereby releases
and discharges the other of and from all manner of action and
actions, causes of action, suits, debts, sums of money, accounts,
damages, judgments, executions, claims and demands whatsoever, in
law or in equity, which each party may have ever had, or may have
against the other, upon or for any reason whatsoever, whether
pending, accrued, known or unknown, from the beginning of time
trough the effective date of this Agreement.
17. Corporate Resolution. The Directors of the Company, as
a precondition to the execution of this Agreement by Xxxxxxx,
shall deliver to Xxxxxxx a true copy of a corporate resolution of
the Directors approving the entry of the Company into this
Agreement, and authorizing Xxxxxx Xxxxxxx and Xxxxx Xxxxxxxx, as
Directors, to execute this Agreement and all related documents on
behalf of the Company, and to bind the Company thereby.
18. Stock Offerings. Beginning April 1, 1999, as long as
Xxxxxxx is owed any amounts pursuant to this Agreement, in the
event the Company should make any stock offerings, whether
public, private or otherwise, ten percent (10%) of all monies
raised pursuant to any such stock offering shall be paid to
Xxxxxxx to retire indebtedness owed to him pursuant to this
Agreement.
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19. Governing Law and Venue. This Agreement shall be
governed and interpreted pursuant to the Laws of Florida. The
venue for any proceeding pursuant this Agreement shall be in
Seminole County, Florida.
20. Entire Agreement. This Agreement constitutes the entire
agreement between the parties regarding the subject matter
herein, superceding all prior agreements, oral, written or
otherwise, with regard to said subject matter.
21. Amendments. This Agreement may not be modified or
amended except by a written instrument or document executed by
all parties.
22. Attorneys Fees and Costs. In the event of any action or
proceeding to enforce this Agreement, or in the event of breach
thereof, the prevailing party in any such action shall recover
reasonable attorneys fee and cost incurred as a result of any
such action or proceeding, including appeals, from the non-
prevailing party.
23. Facsimile and/or Counterpart Execution. The parties
agree that this Agreement may be executed in multiple
counterparts, and such counterparts when executed by all parties
shall be considered to constitute a valid binding agreement. The
parties further agree that this Agreement, or any such
counterparts, may be executed by an original signature of a
party, or by a facsimile (telefax) signature, which shall be
considered to be an original signature, and shall be valid and
binding.
24. Default. Upon default by the Company of any obligation
under this Agreement, the Security Agreement, and/or the
Promissory Note, Xxxxxxx may declare all sums due to him pursuant
to this Agreement to be due and payable in full immediately.
IN WITNESS WHEREOF, The parties have executed this Agreement
below, effective
the date and year first set forth above.
WITNESSES:
/s/ As to Xxxxxxx /s/ Xxxx Xxxxxxx
Cluster Technology Corp. and its
subsidiaries, Universal Pain
Technology, Inc., Universal Pain
Clinics, Inc., and Professional
Distribution Systems, Inc.
/s/ As to the Company /s/ Xxxxxx Xxxxxxx,
Director
/s/ Xxxxx Xxxxxxxx, Director
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RESIGNATION
In accordance with that certain Agreement, dated effective
November 11, 1998, by and between the undersigned and Cluster
Technology Corp., pursuant to which an agreement was made to
terminate without cause the Employment Agreement of the
undersigned with Cluster Technology Corp., the undersigned hereby
submits his resignation as President and as a member of the Board
of Directors of Cluster Technology Corp., and also as any officer
or Director of any and all subsidiaries of Cluster Technology
Corp., all said resignations being effective November 11, 1998.
/s/ Xxxx Xxxxxxx.
EXHIBIT NO. A
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PROMISSORY NOTE
$712,000.00 Orlando,
Florida
November 11,
1998
FOR VALUE RECEIVED, the undersigned maker, CLUSTER
TECHNOLOGY CORP., a Delaware corporation, 000 Xxxxxxxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000 ("Maker"), does
hereby promise to pay to the order of XXXX XXXXXXX ("Payee"), the
principal sum of Seven Hundred and Twelve Thousand and No/100
Dollars ($712,000.00), together with simple interest thereon from
date hereof at the rate of ten percent (10%) per annum, both
principal and interest being payable in lawful money of the
United States of America; said principal and interest to be
payable as follows:
Twelve consecutive monthly payments of principal and
interest in the amount of Forty Thousand Dollars
($40,000.00) each, beginning on the 11th day of
December, 199 8, and continuing on the 11th day of each
subsequent consecutive month thereafter until November
11, 1999; thereafter, one-sixth of the remaining unpaid
principal shall be paid on the 11th day of each
subsequent consecutive month, beginning December 11,
1999, plus all accrued interest due based upon the
entire remaining unpaid principal at the time of each
such payment. All payments shall first be applied to
interest and then to principal.
Maker hereby waives demand, protest and notice of maturity,
non-payment or protest and all requirements necessary to hold
Maker liable as Maker hereof. Failure to make any payment of
interest when due, or principal when due, shall constitute a
default, and upon such default Payee may declare the entire
unpaid principal and unpaid accrued interest due and payable
immediately.
Maker further agrees to pay all costs of collection,
including reasonable attorney's fees, in the event the principal
of this note, or any portion of the principal, or any interest
thereon, is not paid when due. This note is pre-payable, in full
or in part, without penalty. All payments due hereunder shall be
payable at the address directed by Payee.
MAKER:
CLUSTER TECHNOLOGY CORP.
WITNESSES:
/s/ /s/ Xxxxxx Xxxxxxx, Director
/s/ /s/ Xxxxx Xxxxxxx, Director
EXHIBIT NO. B
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SECURITY AGREEMENT
CLUSTER TECHNOLOGY CORP., a Delaware corporation, and its
wholly owned subsidiaries, UNIVERSAL PAIN TECHNOLOGY, Inc., a
Florida corporation; UNIVERSAL PAIN CLINICS, INC., a Florida
corporation; and PROFESSIONAL DISTRIBUTION SYSTEMS, INC., jointly
and severally, whose addresses are 000 Xxxxxxxxxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000, referred to herein jointly
and severally as the "Debtor" and XXXX XXXXXXX whose address is
0000 Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000, referred to herein
as the "Secured Party", do hereby agree effective the 111 day of
November, 1998, as follows:
1. Security Interest. Debtor, and each of them, hereby
grants to Secured Party a continuing and unconditional security
interest (the "Security Interest") in the following (all of which
is collectively referred herein as the "Collateral"):
Any and all proprietary interest, contracts creating
proprietary interests, licenses and/or rights in and to
the Xxxxxx Pain Program, the Xxxxxx DRS System, the
Xxxxxx PCU Unit, or any additions, replacements,
accessions, improvements, extensions, or substitutions
thereto, including, without limitation, intellectual
property related to the same, copyrights, trademarks,
patents, technology, working drawings and
specifications, test reports, research, advertising
materials, franchise rights, and all related assets,
whether now existing, later developed or later
acquired.
2. Indebtedness Secured. This Agreement and the Security
Interest shall secure the performance of all obligations, of
Debtor pursuant to that certain Agreement by and between the
Debtor and Secured Party, dated effective November 11, 1998, and
that certain promissory note of even date, in the principal
amount of $712,000.00, executed by Debtor in favor of Secured
Party.
3. Warranties of Debtor. The Debtor and each of them,
warrants, and so long as this Agreement remains in force, shall
be deemed continuously to warrant as follows:
(a) Debtor has no knowledge of any liens or encumbrances
which could attach the collateral, except for the security
interest created hereby;
(b) Debtor has full power and authority to enter into this
agreement and any person signing it on behalf of Debtor does so
with Debtor's full authority;
(c) Information which the Debtor has supplied or hereafter
supplies to the Secured Party is true and correct.
(d) Cluster Technology Corp. is a lawfully established
Delaware corporation in good standing, and all of its wholly
owned subsidiaries are corporations in good standing in
State of their respective incorporation.
EXHIBIT NO. C
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4. Covenants of Debtor. For so long as this Agreement is
in force, and the Debtor's obligations pursuant to the DML
Agreement remain in force, Debtor and each of them, does covenant
with the Secured Party as follows:
(a) Debtor will defend the Collateral against the claims of
all other persons;
(b) Debtor will keep the Collateral free from all other
liens and encumbrances which are superior in priority to that of
the Secured Party.
(c) Debtor will not sell, transfer, lease or otherwise
dispose of the Collateral or any interest therein, unless said
sale, transfer, lease or other transfer is subject to the terms
and provisions of this Security Agreement and the November 11,
1998, Agreement and Promissory Note.
(d) Debtor will keep the Collateral in force and in good
standing with all governing authorities;
(e) Debtor will not use the Collateral in violation of any
provision of this Agreement any insurance policy affecting the
Collateral, or any applicable law or regulation;
(f) Debtor will permit the Secured Party or its agents to
inspect the Collateral and the premises in which it is used, at
all reasonable times and in any reasonable manner;
(g) Debtor will execute and deliver the Secured Party any
financing statements or other documents reasonably requested by
Secured Party if Debtor defaults on payments when due;
(h) Debtor will pay all taxes, and other charges of every
nature which may be levied or assessed against the Collateral,
before any interest or penalties accrue;
(i) Debtor will do all things necessary to keep the
Collateral operational and to maintain this Security Agreement;
(j) Debtor will maintain adequate broad-form casualty
insurance on the insurable Collateral and shall deliver certified
copies of required insurance policies to the Secured Party;
(k) Debtor will pay its obligations to secured party
promptly when due. Debtor will also repay to secured party
immediately and without demand, all of the expenses incurred by
secured party, including reasonable attorney's fees and legal
expenses, which the secured party incurs under this agreement,
together with interest at the highest legal rate from the date of
expenditure, including all appellate proceedings.
5. Default. Any of the following shall constitute an event
of default ("Default").
(a) the failure to perform any obligation of Debtor under
the November 11, 1998, Agreement or the promissory note
referenced above, or this Security Agreement;
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(b) the filing by or against the Debtor or any of them, of
a petition in bankruptcy;
(c) any attachment or levy against the Collateral or any
other occurrence which inhibits the Secured Party's free access
to the Collateral or jeopardizes the Secured Party's interest in
the Collateral;
6. Rights of Secured Party. The nature of the Collateral
is such that delays in asserting the rights of the Secured Party
in the event of Default may seriously impair the value of the
Collateral. Therefore, to the maximum extent permitted by law, as
may be liberally construed, Debtor does hereby grant to Secured
Party the following rights:
(a) Secured Party may file any financing statement or other
document relating to the Collateral which the Secured Party deems
appropriate, without Debtor's signature thereon;
(b) Debtor hereby appoints the Secured Party as Debtor's
attorney-in-fact to execute such documents and to perform all
other acts which the Secured Party deems appropriate to perfect
and to continue perfection of the Security Interest and to do any
act which the Debtor is obligated to do under this agreement and
to exercise rights under this agreement which the debtor is
entitled to exercise;
(c) Upon any Default the Secured Party may (but shall not
be obligated to) perform any duty of Debtor hereunder, and Debtor
shall immediately reimburse the Secured Party upon demand for any
expenses incurred by the Secured Party thereby;
(d) Secured Party may declare any part of the Indebtedness
to be due immediately, without notice, upon the happening of any
Default;
(e) Upon the happening of any Default, the Secured Party's
rights with respect to the Collateral shall be those of a Secured
Party under the Uniform Commercial Code and/or any other
applicable law of the United States or the State of Florida; and,
(f) The Secured Party may assign any or all of its rights
or interests under the November 11, 1998, Agreement and
promissory note referenced above, or this Security Agreement,
with the approval of the Debtor, which shall not be unreasonably
withheld.
7. Notice. Any notice hereunder shall be sufficient if
mailed by or certified mail (return receipt requested) or hand-
delivered to Debtor or Creditor at either of the addresses set
forth above.
8. Costs. Debtor shall pay all costs and expenses incurred
by Secured Party in enforcing this Agreement, including (but not
limited to) reasonable attorney fees, whether suit is brought or
not and whether incurred in connection with collection, trial,
appeal or otherwise.
9. Repossession. Debtor hereby expressly grants to Secured
Party the right to physically repossess the Collateral, by any
reasonable means.
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10. Waiver of Notice and Hearing. If any default by Debtor
hereunder is not cured within Twenty-One (21) days after receipt
of written notice thereof, Debtor hereby waives any other or
further rights Debtor may have to notice and a hearing before
possession of Collateral, or any part thereof, is sought by the
Secured Party whether by self-help replevin, attachment,
foreclosure, or otherwise.
11. Miscellaneous Provisions:
(a) No delay or omission by the Secured Party in exercising
any right hereunder shall operate as a waiver of that or any
other right.
(b) The terms "Secured Party" and "Debtor" as used in this
Agreement shall include the heirs, personal representatives, and
successors or assigns (if permitted) of those parties.
(c) This Agreement may not be modified or amended except in
writing signed by the Debtor and by the Secured Party.
(d) This Agreement shall be construed under the laws of the
State of Florida. Venue shall be in Seminole County, Florida.
(e) This Security Agreement is a continuing Agreement which
shall remain in force until all obligations of Debtors pursuant
to the November 11, 1998, Agreement and the Promissory Note
referenced above have been performed.
(f) No party to this agreement shall be discharged by any
extension of time, additional advances and notes, renewals and
extensions of the taking of further security, releasing security,
extinguishment of the security interest as to all or any party of
the Collateral, or any other act except a release or discharge of
the secured interest upon the full payment of the obligations
secured by this agreement including charges, expenses, fees,
costs and interest.
(g) Any failure by the Secured Party to exercise any right
set forth in this agreement shall not constitute a waiver
thereof. Nothing in this agreement or in the obligations secured
by it shall preclude any other remedy by action or otherwise for
the enforcement of this agreement or the payment in fall of the
obligations secured by it.
DEBTORS: WITNESSES:
CLUSTER TECHNOLOGY CORP.
and its subsidiaries, Universal Pain Technology,
Inc., Universal Pain Clinics, Inc., and
Professional Distribution Systems, Inc.
/s/ Xxxxxx Xxxxxxx, Director /s/
/s/ Xxxxx Xxxxxxxx, Director
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"SECURED PARTY": WITNESS:
/s/ Xxxx Xxxxxxx /s/
E-69
ADDENDUM TO AGREEMENT, SECURITY AGREEMENT
AND PROMISSORY NOTE
THIS ADDENDUM to Agreement made by and between CLUSTER
TECHNOLOGY CORP., a Delaware corporation (hereinafter "Company"),
and XXXX XXXXXXX (hereinafter "Xxxxxxx").
WITNESSETH:
WHEREAS, the parties entered into that certain Agreement
dated effective November 11, 1998, which provided, among other
things, for the termination of Xxxxxxx'x Employment Agreement
with Cluster, the payment of certain sums of money to Xxxxxxx (or
for Xxxxxxx'x benefit) by Cluster, the execution of a Promissory
Note by Cluster in favor of Xxxxxxx, the xxxxx of a security
interest in favor of Xxxxxxx in certain defined assets of
Cluster, and other matters and obligations of the parties, and
WHEREAS, said Security Agreement was executed by the parties
to be effective November 11, 1998, and
WHEREAS, said Promissory Note was executed bearing the
effective date of November 11, 1998, and providing for certain
monthly payment on the 11th day of each month, and
WHEREAS, certain obligations of Cluster are to be performed
with defined time periods from the effective date of said
Agreement, and
WHEREAS, certain events have occurred which cause the
parties to desire to amend the effective date of said Agreement,
the Security Agreement and the Promissory Note, and
WHEREAS, the parties have reached certain agreements with
regard to the effective date of said Agreement, and are desirous
of setting forth the same in writing below, it is, therefore,
IN CONSIDERATION of the Agreement, the covenants set forth
herein, and other valuable consideration acknowledged,
MUTUALLY AGREED as follows:
1. Recitals. The foregoing recitals are true and correct
as applicable to the respective parties, and the same are
incorporated herein as a material part hereof.
2. Merger. This Addendum and said Agreement are hereby
merged and shall be deemed to be one document; in the event of
conflict between the provisions of said Agreement and those of
this Addendum, this Addendum shall be controlling.
3. Effective Date. The effective date of said Agreement
shall for all purposes be considered to be November 17, 1998.
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4. Promissory Note. The effective date of said Promissory
Note, executed as provided in said Agreement, shall be considered
for all purposes to be November 17, 1998, and the payments due
thereunder shall be on the 17th day each month described therein,
rather than the 11th day of each month. The parties, at the
parties' option, may execute a substitute note bearing dates as
provided above, however, failure to do so shall not invalidate
the existing Promissory Note, which shall remain in full force
and effect until any such substitute note is executed.
5. Security Agreement. The effective date of said Security
Agreement, executed as provided in said Agreement, shall for all
purposes be deemed to be November 17, 1998, rather than November
11, 1998.
6. Agreement Effective. Except as modified by this
Addendum, said Agreement, Promissory Note and Security Agreement
shall remain in full force and effect in all respects, and the
parties remain fully bound thereby.
IN WITNESS WHEREOF, the parties have executed this Addendum
effective the 24th day of November, 1998.
WITNESSES:
/s/ /s/ Xxxx Xxxxxxx
Cluster Technology Corp. and
its subsidiaries, Universal
Pain Technology, Inc.,
Universal Pain Clinics, Inc.,
and Professional Distribution
Systems, Inc.
/s/ /s/ Xxxxxx Xxxxxxx, Director
/s/ /s/ Xxxxx Xxxxxxxx, Director
EF-72
