EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and executed by and between GK Intelligent Systems,
Inc., a Delaware Corporation, with its principal place of business in Houston,
Xxxxxx County, Texas (hereinafter called the "Corporation" or "GKIS"), and J.
Xxxxx Xxxxxxx, of Houston, Texas (hereinafter called "Xxxxxxx" or
"Professional"). Collectively, the Corporation and Xxxxxxx shall be referred to
as "the parties."
W I T N E S S E T H:
WHEREAS, Xxxxxxx desires to perform legal and managerial services on
behalf of the Corporation and act as its General Counsel and Vice President as
an employee of the Corporation, including the performance personally of such
services as he and/or the Corporation's Board of Directors deem necessary; and
WHEREAS, the Board of Directors of the Corporation desires to employ
Xxxxxxx in such capacities under the terms of this Agreement;
THEREFORE, the parties mutually agree as follows:
ARTICLE I
EMPLOYMENT
1.1 CONDITIONS OF EMPLOYMENT: The Corporation hereby employs Xxxxxxx and
Xxxxxxx accepts such employment as General Counsel and Vice President, to render
professional services on behalf of the Corporation, subject to the supervision
and direction of the Corporation's CEO and Board of Directors and subject to the
law of the Corporation as given in the Articles of Incorporation and the Bylaws.
1.2 TERM OF EMPLOYMENT: The term of employment shall commence on or after
the execution of this Agreement but not later than July 6, 1998, to be set out
in Xxxxxxx'x notice to the Board. This agreement shall continue until
termination by either party as provided in Article IV.
ARTICLE II
DUTIES
2.1 DEVOTION OF EFFORT: Xxxxxxx agrees to devote sufficient time,
attention, and skill to the performance of his duties as an employee of the
Corporation as set out and authorized by the Board of Directors. During the term
of this Agreement, he shall not render services on his own or
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on behalf of any party other than the Corporation (save and except for Xxx Xxxx
("MCE") and Jaralaubos Xxxxxxxxxx) unless otherwise authorized by the Board of
Directors.
2.2 DESCRIPTION OF DUTIES. Xxxxxxx will provide legal, administrative and
managerial services as General Counsel and Vice President, all as directed by
the management of GKIS.
ARTICLE III
COMPENSATION
3.1 COMPENSATION AND BENEFITS.
a. MONTHLY SALARY. As compensation for the services to be rendered
hereunder, GKIS will pay to Xxxxxxx a monthly salary in an amount equal
to Twenty Thousand Eight Hundred Thirty-Three and 33/100 ($20,833.33).
The monthly salary shall be paid in semi-monthly payments of one-half the
monthly amount each on the first and fifteenth day of each month with
respect to the immediately preceding month, commencing on the fifteenth
day of, or the first day of the first month after, the month in which
employment commences hereunder, whichever comes first after the
employment date.
b. BONUS OPTIONS FOR SHARES OF CORPORATION COMMON STOCK. In addition
to the monthly salary and any other benefits available to all employees,
including standard incentive qualified stock options, GKIS will grant to
Xxxxxxx incentive stock options (or non-qualified stock options or
warrants, as appropriate) for a total of six hundred thousand (600,000)
shares of GKIS restricted common stock (the "Bonus Options"), with
one-forty-eighth (or options for 12,500 shares) of such grant vesting
monthly for four years so long as Xxxxxxx remains an employee of the
Corporation, an affiliate or subsidiary. Contingent upon the Agreement
remaining in force as a result of such continued employment, Bonus Options
for twelve thousand five hundred (12,500) restricted shares will vest and
be exercisable on the thirtieth day following the close of each of the
forty-eight months following the month in which this agreement is
executed. Except for the delayed vesting of their exercisability, this
grant of stock options shall be governed by and subject to the GK
INTELLIGENT SYSTEMS, INC. 1995 INCENTIVE STOCK OPTION PLAN, as set out in
a separate incentive stock option agreement executed concurrently with
this agreement by the parties . The number of shares shall also be
adjusted as provided in Section 7.1 of such Plan. For all purposes related
to the Grant of these options, the Board of Directors of GKIS has
determined that the date of such grant is date of execution of this
agreement and the Fair Market Value per share as of the date of such grant
is the closing price on the day this agreement is executed. If the market
is not open on the execution date, then the Fair Market Value shall be the
closing price for the first day the market is open after the execution of
this agreement. Except as set out in paragraph 4.2 below, termination of
this agreement will not cause the forfeiture of the Bonus Options for
those months prior to termination in
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which the vesting requirements were met.
c. CONTINGENT IMMEDIATE VESTING OF BONUS OPTIONS. The Corporation
agrees that Xxxxxxx will be entitled to receive immediate accelerated
vesting of his outstanding unvested Bonus Options if his employment with
the Corporation is terminated prior to termination of this agreement due
to any one or more of the following events:
(i) Xxxxxxx'x employment is terminated by the Corporation
without Cause;
(ii) Xxxxxxx resigns within ninety days after his job responsibilities,
duties, and/or status within the Corporation have been materially
changed;
(iii) Xxxxxxx resigns or his employment is terminated within 180 days
after there is a Change in Control of the Corporation;
(iv) Xxxxxxx resigns his employment after becoming Disabled or his
employment is terminated after he becomes Disabled;
(v) Xxxxxxx resigns his employment because of a decision of the Board
of Directors to establish his Compensation at an amount less than 75%
of the greater of (a) his annual salary in effect on the Effective Date
or (b) his annual salary in effect during the preceding calendar year,
and such resignation is tendered within ninety days after he is
notified of such decision; or
(vi) Xxxxxxx dies during the term of this Agreement.
d. EMPLOYEE BENEFIT PLANS. Xxxxxxx shall be entitled to participate in
all employee benefit plans to be established by the Board of Directors on
the same terms and conditions as all other employees similarly situated,
including reimbursement of reasonable moving expenses as approved by GKIS
management.
3.2 GUARANTEED BONUS. In addition to the compensation set out in 3.1
above, the Corporation will pay Xxxxxxx a cash bonus of not less than one
hundred thousand dollars ($100,000.00) at the end of his first year of
continuous employment under this agreement.
ARTICLE IV
TERMINATION OF AGREEMENT
4.1 TERMINATION FOR DISABILITY. If Xxxxxxx, during the term of this
Agreement, shall fail to perform his duties hereunder as a result of DISABILITY,
as defined in 4.4 below, the Corporation shall have the right to terminate this
Agreement and the employment hereunder as of a date to be specified in a written
notice of termination sent to Xxxxxxx, such date to be not less than thirty
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(30) days following receipt of said notice.
4.2 TERMINATION FOR CAUSE: If Xxxxxxx shall (1) be convicted of a felony
or (2) engage in conduct as defined under CAUSE, all as set out in 4.4 below,
the Corporation shall have the right to terminate this contract and employment
hereunder in the manner as set out in 4.4 and upon notice given in the manner
specified in 4.1. In the event of termination under this Article 4.2, Xxxxxxx
shall not be eligible to receive unexercised stock option compensation for the
year in which termination occurs, nor shall he be entitled to receive any
deferred compensation credited to his account but not yet paid.
4.3 UNILATERAL TERMINATION: Either party hereto may terminate this
Agreement and employment hereunder effective as of a date to be specified in a
written notice of termination, such date to be not less than thirty (30) days
after delivery of the notice.
4.4 DEFINITIONS: For purposes of this agreement, the following definitions
shall apply:
"TERMINATION DATE" shall mean the date on which Professional ceases to be
an employee of the Corporation irrespective of the cause or manner in
which employment ends.
"EFFECTIVE DATE" shall mean June 23, 1998.
"DISABLED" OR "DISABILITY" shall mean a determination by independent
competent medical authority that Professional is unable to perform his
duties and that in all reasonable medical likelihood such inability will
continue for a period in excess of 180 days. Unless otherwise agreed by
Xxxxxxx and the Board of Directors, the independent medical authority
shall be selected by Xxxxxxx and the Corporation each selecting a board
certified licensed physician and the two physicians selected shall
designate an independent medical authority, whose determination of
Disability shall be binding upon the Corporation and Xxxxxxx.
"CAUSE" shall mean: (1) Professional's conviction of a felony or any other
criminal act involving moral turpitude; (2) deliberate and intentional
continuing refusal by Professional to substantially perform his duties and
obligations under this agreement (except by reason of incapacity due to
illness or accident) if Professional (a) shall have either failed to
remedy such alleged breach within fifteen days from the date written
notice is given by the Chairman of the Corporation demanding that
Professional remedy such alleged breach, or (b) shall have failed to take
reasonable steps in good faith to that end during such fifteen day period,
provided, with respect to (b) that, after the end of such fifteen day
period, there shall have been delivered to Professional a certified copy
of a resolution of the Board of Directors of the Corporation, adopted by a
Supermajority Vote, finding that Professional was guilty of conduct set
forth in clause (2) and specifying the particulars thereof in detail, and
that Professional has failed to take reasonable steps in good faith to
remedy such alleged breach; or (3) upon a finding by a Supermajority Vote
that Professional had engaged in willful fraud or defalcation either of
which involved material
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funds or other assets of the Corporation.
"SUPERMAJORITY VOTE" shall mean the affirmative vote of not less than
two-thirds of the members of the Board of Directors who are not employees
of the Corporation taken at a meeting of the Board of Directors at which
Professional is given an opportunity to be heard (with counsel).
"CHANGE IN CONTROL" shall mean and shall be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Corporation, any trustee or other fiduciary
holding securities under any employee benefit plan of the Corporation, or
any Corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of
Stock of the Corporation), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 30% of more of the combined
voting power of the Corporation's then outstanding securities; (b) during
any period of two consecutive years (not including any period prior to the
adoption of the Plan), individuals who at the beginning of such period
constitute the Board of Directors, and any new director (other than a
director designated by a person who has entered into an agreement with the
Corporation to effect a transaction described in clause (a), (c), or (d)
of this Paragraph) whose election by the Board of Directors or nomination
for election by the Corporation's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of the two year period or whose election or
nomination for election was previously so approved, cease for any reason
to constitute at least a majority of the Board of Directors; (c) the
stockholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than a merger or
consolidation which would result in voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that a
merger or consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no person acquires more than
30% of the combined voting power of the Corporation's then outstanding
securities shall not constitute a Change in Control of the Corporation; or
(d) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition
by the Corporation of all or substantially all of the Corporation's
assets.
ARTICLE V
DEATH OF EMPLOYEE
5.1 DEATH. If Xxxxxxx shall die during the term of this Agreement, his
legal representative shall be entitled to receive his compensation as provided
in Article III hereof.
ARTICLE VI
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ILLNESS OR INCAPACITY
6.1 INABILITY TO PERFORM DUTIES. If Xxxxxxx becomes disabled, his salary
payments may be reduced or terminated by the Corporation at its absolute
discretion. Xxxxxxx'x full salary shall be reinstated upon his return to
full-time employment and the full discharge of his duties hereunder. This
section shall in no way limit the rights or obligations of the Corporation under
Articles III and IV hereof.
ARTICLE VII
LEAVES OF ABSENCE
7.1 PAID LEAVE. Leaves of absence with full payment of salary may be
granted to Xxxxxxx for attendance at professional conventions, continuing
education institutes in his profession and other professional or business
activities, as approved by the Corporation, with full or partial payment of
expenses at its sole discretion.
7.2 UNPAID LEAVE. Unpaid leave of absence may be granted at the sole
discretion of the Corporation for any other reasons upon request by Xxxxxxx.
ARTICLE VIII
VACATIONS
8.1 PAID VACATION. Xxxxxxx shall be entitled to a vacation, the length of
which as determined by the Board of Directors or the President of the
Corporation, during which time his salary shall be paid in full. Xxxxxxx shall
take his vacation at such time or times as shall be approved by the corporation.
ARTICLE IX
EXPENSES
9.1 EXPENSES REIMBURSED. During the period of his employment, Xxxxxxx will
be reimbursed for his reasonable expenses in accordance with general policy of
the Corporation as adopted by the Board of Directors from time to time. In
addition to such reimbursement expenses, Xxxxxxx shall incur and pay in the
course of his employment by the Corporation certain other necessary expenses as
a Vice President and General Counsel, for which he will be required personally
to pay but for which the Corporation shall reimburse or otherwise compensate
him, including, but not limited to the following: automobile and transportation
expenses; educational expenses incurred for the purpose of maintaining or
improving Xxxxxxx'x professional skills, club dues, and the expenses of
membership in civic groups, professional societies, and fraternal organizations,
and all other items of reasonable and necessary professional expenses incurred
by Xxxxxxx in the performance of the services in which Xxxxxxx has been engaged
on behalf of the Corporation.
ARTICLE X
SUCCESSION
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10.1 ASSUMPTION BY SUCCESSOR TO CORPORATION. The Corporation will not
consolidate or merge into or with another corporation, or transfer all or
substantially all of its assets to another corporation, unless such corporation
(hereinafter referred to as "Successor Corporation") shall assume this
Agreement. Upon such assumption Xxxxxxx and the Successor Corporation shall
become obligated to perform the terms and conditions hereof, and the term
"Corporation" as used in this Agreement shall be deemed to refer to such
Successor Corporation; provided, however, Xxxxxxx'x duties shall be such as
prescribed by the Board of Directors of the Successor Corporation.
ARTICLE XI
PROPERTY RIGHTS OF PARTIES
11.1 TRADE SECRETS. During the term of employment, Xxxxxxx will have
access to and become familiar with various trade secrets, consisting of
formulas, devices, secret inventions, processes, and compilation of information,
records, and specifications, owned by the Corporation and regularly used in the
operation of the business of the Corporation. Xxxxxxx shall not disclose any
such trade secrets, directly or indirectly, nor use them in any way, either
during the term of this Agreement or at any time thereafter, except as required
in the course of his or her employment. All files, records, documents, drawings,
specifications, equipment, and similar times relating to the business of the
Corporation, whether or not prepared by Xxxxxxx shall remain the exclusive
property of the Corporation and shall not be removed from the premises of the
Corporation under any circumstances without the prior written consent of the
Corporation.
11.2 RETURN OF CORPORATION'S PROPERTY. On the termination of employment or
whenever requested by the Corporation, Xxxxxxx shall immediately deliver to the
Corporation all property in Xxxxxxx'x possession or under Xxxxxxx'x control
belonging to the Corporation in good condition, ordinary wear and tear excepted.
11.3 OWNERSHIP OF WORK PRODUCT. The parties agree as follows:
A. PROPERTY OF GKIS. Xxxxxxx agrees that all intellectual property
including but not limited to all ideas and concepts contained in computer
programs and software, documentation or other literature or illustrations
that are conceived, developed, written, or contributed by Xxxxxxx pursuant
to this Agreement, either individually or in collaboration with others,
shall belong to and be the sole property of GKIS.
B. WORKS MADE FOR HIRE. Xxxxxxx agrees that all rights in all works
prepared or performed by Xxxxxxx pursuant to this Agreement, including
patent rights and copyrights applicable to any of the intellectual
property described in Subparagraph (a) above, shall belong exclusively to
GKIS and shall constitute "works made for hire" for purposes of copyright
law.
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C. PROPERTY OF XXXXXXX. The provisions of this Paragraph XI shall not
be construed to assign to GKIS any of Xxxxxxx'x rights in any invention
for which no equipment, supplies, facilities, or trade secret information
of GKIS was used, or that was developed entirely prior to this Agreement,
or that does not result from any work performed by Xxxxxxx for GKIS.
ARTICLE XII
NO COMPETITION BY PROFESSIONAL
12.1 NO COMPETING ACTIVITIES. During the term of this Agreement and for a
period of three years (six months if following termination by GKIS for any cause
other than as set out in 4.2 above) following termination of same, Xxxxxxx shall
not, directly or indirectly, either as an employee, employer, consultant, agent,
Principal, Partner, Stockholder, corporate officer, director, or in any other
individual or representative capacity, engage or participate in any business
whatsoever that is in direct competition in any manner whatsoever with the core
products and technologies (SMART ONE Trainer and its derivatives, SMART
ENTERPRISE, DOORWAYS, SMART SUPPORT, SMART PERFORM or other CARNOT derived
products, and their successors and any other subsequent core businesses) of this
Corporation within North America, unless a Court of competent Jurisdiction shall
determine that the scope and/or time of this agreement renders it unenforceable,
in which case the scope and/or time shall be reduced to that which the Court
deems reasonable and enforceable. This provision shall not be construed to
prevent Xxxxxxx from accepting employment in the areas of the private practice
of law, or the performance of legal, administrative or management functions
which do not utilize any of the Corporation's core technologies or products,
either directly or for other entities so long as they do not compete directly
with such core technologies or products.
ARTICLE XIII
NOTICES
13.1 NOTICES: Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by mail to his residence,
in the case of Xxxxxxx, or to its principal office, in the case of the
Corporation.
ARTICLE XIV
WAIVER OF BREACH
14.1 NONWAIVER OF SUBSEQUENT BREACH. The waiver by any party hereto of a
breach of any provision of this agreement shall not operate or be construed as a
waiver of any subsequent breach by an party.
ARTICLE XV
AMENDMENT
15.1 WRITTEN AMENDMENT. No amendment or modification of this Agreement
shall be
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deemed effective unless or until executed in writing by the parties hereto with
the same formality attending execution of this Agreement.
ARTICLE XVI
CHOICE OF LAW
16.1 TEXAS LAW. This Agreement, having been executed and delivered in the
State of Texas, its validity, interpretation, performance and enforcement will
be governed by the laws of that state.
EXECUTED in counterparts, each of which shall be deemed an original,
effective the __ day of June, 1998.
-----------------------------------
J. Xxxxx Xxxxxxx
`GK INTELLIGENT SYSTEMS, INC.:
By:________________________________
Xxxx X. Xxxxxxx, CEO and Chairman
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