EXHIBIT 10.9
CONSULTING AGREEMENT
THIS AGREEMENT is entered into on this 14th day of April, 1998, at
Houston, Texas, between GK INTELLIGENT SYSTEMS, INC., a Delaware corporation
("Corporation" or "GKIS") and XXXX X. XXXXX ("XXXXX").
WHEREAS, GKIS is in the business of providing artificial intelligence
based education, training and performance support and is based in Houston,
Texas; and
WHEREAS, GKIS desires that GRIBI consult with GKIS on the establishment of
retail distribution for the Company's products in the domestic and international
marketplace, including all aspects of the accounting and managerial systems and
requirements related thereto and and, when appropriate and time permits, make
himself reasonably available to mentor and advise the directors, officers and
management of GKIS and assist in the screening for and recruiting of a person to
fill the CFO and any other requested managerial positions; and
WHEREAS, GKIS desires that GRIBI become an advisor and mentor to the
management of GKIS in the management, accounting and financing of all phases of
retail product development, sourcing, scheduling and distribution; and
WHEREAS, GRIBI desires to acquire an equity interest in the
Corporation's common stock; and
WHEREAS, GKIS considers it to be in its best interest that GRIBI assume a
position on the GKIS Board of Directors;
NOW, THEREFORE, in consideration of the premises, the parties agree as
follows:
1. AGREEMENT TO PROVIDE CONSULTING SERVICES. Upon election by consent of a
majority the shareholders of GKIS, GRIBI agrees to assume a position on the GKIS
Board of Directors for the term of this agreement. In this capacity, GRIBI
agrees to act as an adviser to GKIS and mentor to its management, and subject to
any confidentiality obligations incumbent upon him, to apprise GKIS of financial
and management developments as GRIBI in his sole discretion shall deem
appropriate. In addition, GRIBI agrees to help GKIS establish financial,
accounting and managerial systems for the anticipated growth of the Corporation,
making himself reasonably available to mentor and advise GKIS directors,
officers and management periodically during the term of this agreement, all on a
part-time, consulting basis as the parties mutually agree.
2. POSITION ON GKIS BOARD OF DIRECTORS. The Corporation, acting through
its
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existing Board of Directors, will appoint GRIBI to the Board of Directors
for the term of this agreement.
3. COMPENSATION.
a. INITIAL GRANT OF OPTIONS. As compensation for the services to be
rendered hereunder and upon execution of this agreement, GKIS will grant
to GRIBI options (the "Options") to purchase Three Hundred Thousand
(300,000) shares of GKIS common restricted stock (the "Shares") for a
strike price $2.3125 per share. The effective date of this grant will be
the date of this agreement. The agreed fair market value of the Options
shall be $ 2.3125 per share, the closing price for freely trading shares
as of that date.
b. VESTING AND EXERCISE. One-twelfth of the Options, that is,
options for twenty-five thousand (25,000) shares, shall vest each month
during the term of this agreement, beginning with the month in which this
agreement is executed. Unvested Options may be subject to forfeiture or
cancellation for non-performance of this Agreement, as set out herein.
Vested Options will be exercisable on the sixtieth day following the close
of the month in which they vest. The options expire five years after the
end of the month in which they vest.
c. CONSULTING FEES. In addition to the Options, GKIS will pay GRIBI
One Thousand Five Hundred Dollars ($1,500.00) per day for specific
consulting services at such times and places as he and the Board agree
should be rendered to the Corporation. GKIS will also pay GRIBI's
necessary and ordinary expenses incurred in providing services under this
agreement. GKIS will pay these consulting fees and expenses upon
presentation of invoices together with usual and customary documentation.
The parties may execute additional written agreements as to such
consulting services and/or expenses as GRIBI or the Board may require.
4. ADJUSTMENTS TO OPTIONS.
a. ADJUSTMENTS IN GENERAL. The aggregate number or type of shares of
Common Stock with respect to which Options are granted hereunder, the
number or type of shares of Common Stock subject to each outstanding
Option, and the Option price per share for each such Option may all be
appropriately adjusted, as the Board may determine, for any increase or
decrease in the number of shares of issued Common Stock resulting from a
subdivision or consolidation of shares whether through reorganization,
recapitalization, consolidation, payment of a share dividend, or other
similar increase or decrease.
b. SALE, MERGER OR CONSOLIDATION. Subject to any required action by
the stockholders, if the Company shall be a party to a transaction
involving a sale of substantially all its assets, a merger, or a
consolidation, any Option granted hereunder shall pertain to and apply to
the securities to which a holder of Common Stock would be
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entitled to receive as a result of such transaction; provided, however,
that all unexercised Options may be canceled by the Company as of the
effective date of any such transaction by giving notice to the holders of
such Options of its intention to do so, and by permitting the exercise of
such Options during the 30-day period immediately after the date such
notice is given.
c. DISSOLUTION. In the case of dissolution of the Company, every
Option outstanding hereunder shall terminate; provided, however, that each
Option holder shall have 30 days' prior written notice of such event,
during which time each shall have a right to exercise his or her partly or
wholly unexercised Options.
d. DETERMINATION BY BOARD. On the basis of information known to the
Company, the Board shall make all determinations under this Section 4,
including whether a transaction involves a sale of substantially all the
Company's assets; and all such determinations shall be conclusive and
binding on the Company and all other persons.
5. ISSUANCE OF SHARES UNDER OPTIONS. The obligation of the Company to sell
and deliver Common Stock under Options (the "Shares") shall be subject to all
applicable laws, regulations, rules and approvals, including, but not by way of
limitation, the effectiveness of a registration statement under the Securities
Act of 1933, if deemed necessary or appropriate by the Board, of the Common
Stock reserved for issuance upon exercise of Options. In the case of officers or
other persons subject to Section 16(b) of the Securities Exchange Act of 1934,
the Board may at any time impose any limitations upon the exercise, delivery and
payment of any Option which, in the Board's discretion, are necessary in order
to comply with Section 16(b) and the rules and regulations thereunder. The
Option holder shall have no rights as a stockholder with respect to any Shares
covered by an Option, or exercised by the holder, until the date of delivery of
a stock certificate to the holder for such shares. No adjustment other than
pursuant to Section 4 hereof shall be made for dividends or other rights for
which the record date is prior to the date such stock certificate is delivered.
6. PRIOR AGREEMENTS. Except as set out herein, this Agreement supersedes
and is in lieu of any and all prior or contemporaneous agreements,
communications or understandings, whether written or unwritten, verbal or tacit,
or implied by prior dealings, between and among any of the parties, their
predecessors or affiliates with respect to the matters set out herein and
therein, respectively.
7. AMENDMENT IN WRITING. No amendment, modification or change to this
agreement shall be binding unless in writing, signed by all the parties hereto.
8. AGREEMENT BINDING. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, legatees,
administrators, executors, legal representatives, successors, and assigns
(including remote, as well as immediate, successors to
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and assignees of said parties).
9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF GRIBI. GRIBI represents,
warrants and agrees as follows:
a. NO REGISTRATION. GRIBI is aware that the Shares have not been
registered nor is registration contemplated under the Securities Act of
1933, and accordingly, that the Shares must be held indefinitely unless
they are subsequently registered under said Act or unless, in the opinion
of counsel for the Corporation, a sale or transfer may be made without
registration thereunder. GRIBI agrees that any certificates evidencing the
Shares may bear a legend restricting the transfer thereof consistent with
the foregoing and that a notation may be made in the records of the
Corporation restricting the transfer of the Shares in a manner consistent
with the foregoing.
b. NO PREEMPTIVE RIGHTS. GRIBI acknowledges and agrees
that he has no preemptive rights with respect to the Shares to be
conveyed hereunder.
10. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF GKIS. GKIS represents,
warrants and agrees as follows:
a. AUTHORITY. GKIS is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware, with full
corporate power and authority to carry on its business as it is now being
conducted, to own or hold under lease the properties and assets it now
owns or holds under lease, and to enter into and perform its obligations
under this Agreement. The execution and delivery of this Agreement and the
consummation of all the transactions contemplated thereby have been duly
authorized by all necessary corporate action on behalf of GKIS. The
persons signing on behalf of GKIS are duly authorized to do so and this
Agreement will be binding upon GKIS. GKIS is not subject to any lien or
encumbrance of any kind nor subject to any agreement, instrument, order,
or decree of any court or government body which would prevent consummation
of the transaction contemplated by this agreement.
b. TAX OBLIGATIONS. GKIS has filed all tax returns required to be
filed and paid all taxes and assessments due, including interest and
penalties (the "Taxes"). There are no unpaid Taxes that are or could
become a lien on the property or assets of GKIS, except for current Taxes
not yet due and payable or accrued payroll taxes which will be paid not
later than April 30, 1998.
c. NO SUITS PENDING. There are no actions, suits, or proceedings
pending, outstanding or threatened, against or affecting GKIS or any of
the assets, properties or business of GKIS at law or in equity, or before
or by any
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governmental authority, except as set out in its filings with the SEC or
otherwise disclosed to GRIBI.
d. NO VIOLATIONS OF LAWS. To the best of its knowledge, GKIS is not
in default or violation under any law, ordinance or regulation, or with
respect to any order, writ, injunction, decree, or demand of any court or
any governmental authority, or in the payment of any indebtedness for
borrowed money or under the terms or provisions of any agreement or
instrument evidencing or security any such indebtedness.
e. GOVERNMENTAL AGENCIES. GKIS will comply with the
requirements of all applicable laws, regulations, and
requirements pertaining to GKIS.
f. INFORMATION PROVIDED. To the best of its knowledge, all
information provided by GKIS to GRIBI was and is accurate in all material
respects and did not or does not, to the best of GKIS's knowledge, omit
any information necessary to make such information and documentation not
misleading.
g. FINANCIAL STATEMENTS. GKIS has delivered to GRIBI its audited
annual report for the fiscal year ended May 31, 1997, as set out in its
Form 10K-SB, and its latest unaudited quarterly financial statements, as
set out in its Form 10Q-SB. The financial statements present fairly the
financial position and results of operations of GKIS.
h. LICENSES AND PERMITS. GKIS has all licenses, permits, approvals,
consents, orders, rights and other authorizations which are necessary in
order to enable it to conduct its business as currently conducted.
i. NO UNDISCLOSED LIABILITIES. Except as set out in its audited
annual report or quarterly unaudited financial statements, GKIS has no
liabilities or obligations other than those incurred since November 30,
1997, in the ordinary course of business, consistent with prior practice
and not in the aggregate materially adverse.
j. NO CONFLICT WITH OTHER DOCUMENTS. Neither the execution and
delivery of this agreement nor the carrying out of this transaction will
result in any violation, termination or modification of, or be in conflict
with GKIS's charter documents or bylaws, any contract or agreement to
which GKIS is a party or is bound, or result in the creation of any lien
or encumbrance upon any of the properties or assets of GKIS.
k. ACKNOWLEDGMENT OF GRIBI'S FIDUCIARY OBLIGATIONS TO THIRD PARTIES.
GKIS understands, acknowledges and agrees that GRIBI was a high level
employee of COMPAQ COMPUTER CORPORATION and is an officer or director of
other corporations, and thus may have a fiduciary relationship towards one
or more third parties, including his former employer and that, in such
capacity,
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GRIBI is subject to certain ethical and business constraints with respect
to certain materials of third parties which may be confidential, trade
secret, proprietary or otherwise subject to restrictions on its use or
dissemination by GRIBI. GKIS acknowledges and agrees that it will not
constitute a breach of this agreement for GRIBI to comply with these
obligations to their full legal, moral and ethical limitations in GRIBI's
sole discretion. GKIS further understands and agrees that nothing
contained in this Agreement shall require GRIBI to take any action in
violation of any of the obligations described above.
l. STATUS OF SHARES TO BE ISSUED. All issued shares of capital stock
of GKIS are, and upon issuance to GRIBI in accordance with the terms of
this Agreement, the Shares will also be, duly authorized, validly issued
and fully-paid and non-assessable. The Shares to be issued by GKIS
hereunder are, and will be when issued, free and clear of all
encumbrances, except as set out in this agreement.
11. TERM OF AGREEMENT. This agreement shall be for one (1) year unless
terminated by either party pursuant to the provisions contained herein.
12. TERMINATION OF AGREEMENT. This agreement may be terminated as follows:
a. ILLNESS OR OTHER INCAPACITY. If GRIBI, during the term of this
Agreement, shall fail to perform his duties hereunder as a result of
illness or other incapacity which shall continue for a period of more than
twelve weeks, 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 GRIBI, such date to be not less than
thirty (30) days following receipt of said notice. Any remaining unvested
Options shall fully vest as of the date of termination.
b. CONDUCT. If GRIBI shall willfully violate any law; embezzle or
otherwise steal from the Corporation; use liquor or drugs to an extent
which has a visible detrimental effect on his services; conduct himself
publicly or privately in a manner which offends against decency or causes
him to be held in public ridicule or causes public scandal, the
Corporation shall have the right to terminate this contract and employment
hereunder upon notice given in the manner specified in 12.a. In the event
of termination under this Subparagraph 12.b., vesting of the Options shall
cease, GKIS shall have no further obligation to GRIBI under this
agreement, and unvested Options shall be canceled.
c. UNILATERAL TERMINATION, IF ANY, BY GRIBI. GRIBI 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. All vesting of the
Options shall cease as of the end of the
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month during which termination is effective, and unvested Options shall be
canceled. Upon the effective date of such termination, other than the
exercise of vested Options pursuant to the terms of this agreement, GKIS
shall have no further obligation to GRIBI under this agreement.
d. VESTING OF OPTIONS AFTER TERMINATION FOR DEATH OR DISABILITY. If
GRIBI shall die during the term of this Agreement, his legal
representative or executor shall be entitled to receive any compensation,
including Options, which is unpaid and accrued from the date of his last
payment until the date of his death, and this agreement shall terminate.
All unvested Options shall immediately vest upon GRIBI's death or
disability, as defined in subparagraph a. above. GRIBI or his legal
representative or executor, as appropriate, shall be entitled to exercise
vested options.
e. TERMINATION FOR CAUSE OTHER THAN CONDUCT. GKIS may terminate this
agreement during the initial term if the Board of Directors determines
that GRIBI has failed to perform his duties hereunder for a period of at
least six months, and such failure is not due to illness or disability.
Such termination shall be effective as of a date to be specified in a
written notice of termination, such date to be the end of a month not less
than thirty (30) days after delivery of the notice, provided that during
such 30-day (or greater) period GRIBI shall have opportunity to contest
such termination to a meeting of the entire Board of Directors and the
Board shall agree by a majority vote of its members that GRIBI shall be
terminated for cause, and all vesting of Options shall cease as of such
date. Unvested Options shall be canceled as of such date.
13. NOTICES. All notices required hereunder shall be sent via certified
mail, postage prepaid, if to GKIS, in care of Xxx Xxxxxxxx, Esq., 0000 Xxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx, 00000, and if to GRIBI, in care of Xxxx X.
Xxxxx, X.X. Xxx 000, Xxxxxxxxx, XxxXxxxxxxxx 00000-0000.
14. CHOICE OF LAW. The parties agree that this agreement shall be governed
by and interpreted in accordance with the laws of the State of Texas, excluding
any principle or provision thereof that would require application of the laws of
any other jurisdiction.
15. ARBITRATION. If the parties have any disagreement or dispute arising
in connection with this agreement or the subject matter of this agreement that
cannot be resolved amicably among the parties, such dispute shall be resolved in
the City of Houston, State of Texas, United States of America, in the English
language under the Rules of Civil Procedure of the State of Texas by one or more
arbitrators appointed in accordance with said rules.
16. CONFIDENTIAL INFORMATION. GRIBI shall hold in fiduciary capacity for
the benefit of GKIS all secret or confidential information, knowledge or data
relating to GKIS or any of its
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affiliated companies, and their respective businesses, which shall have been
obtained by GRIBI during GRIBI's employment by GKIS or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by GRIBI or representatives of GRIBI in violation of this Agreement). After
termination of GRIBI's employment with GKIS, GRIBI shall not, without the prior
written consent of GKIS or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than GKIS and those designated by it.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year set forth above.
GK INTELLIGENT SYSTEMS, INC
By:_____________________________
XXXX XXXXXXX, C.E.O.
--------------------------------
XXXX X. XXXXX
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