EXHIBIT 4.1
CONSULTING SERVICES AGREEMENT
This Consulting Services Agreement (the "Agreement") is entered into this
5th day of November, 2003 by and between Stanton, Walker & Company, a New Jersey
corporation (hereinafter referred to as, "Consultant"), and GK Intelligent
Systems, Inc. (OTCBB: GKIG) (hereinafter referred to as, "Client"), a Delaware
corporation, (collectively referred to as the "Parties") with reference to the
following:
Preliminary Statement
A. The Client desires to be assured of the association and services of the
Consultant in order to avail itself of the Consultant's experience, skills,
abilities, knowledge, and background to facilitate long range strategic
planning, and to advise the Client in business and/or financial and
merger/acquisition matters and is therefore willing to engage Consultant upon
the terms and conditions set forth herein. Consultant desires to be assured, and
Client desires to assure Consultant, that, if Consultant associates with Client
and allocates its resources necessary to provide Client with its business
advisory and consulting services, Consultant will be paid the consideration
described herein and said consideration will be nonrefundable, regardless of the
circumstances.
Consultant agrees to be engaged and retained by Client and upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:
Engagement. Client hereby engages Consultant on a non-exclusive basis, and
Consultant hereby accepts the engagement to a become business and financial
Consultant to Client and to render such advice, consultation, information, and
services to the Directors and/or Officers of Client regarding general financial
and business matters including, but not limited to the following
1.1 Advice and Counsel. Consultant will provide advice and counsel regarding
Client's strategic business plans, strategy and negotiations with potential
business strategic partnering, corporate planning and or other general
business consulting needs as expressed by Client.
1.2 Client and/or Client's Affiliate Transaction Due Diligence. Consultant will
participate and assist Client in the due diligence process, where possible,
on all proposed financial transactions affecting Client of which Consultant
is notified in writing in advance, including conducting investigation of
and providing advice on the financial, valuation and stock price
implications of the proposed transaction(s).
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1.3 Ancillary Document Services. If necessary, Consultant will assist and
cooperate with Client in the development, editing and production of such
documents as are reasonably necessary to assist in any transaction covered
by this Agreement. However, this Agreement will not include the preparation
or procuring of legal documents or those documents normally prepared by an
attorney.
1.4 Mergers and Acquisitions. Consultant will provide assistance to Client, as
mutually agreed, in identifying merger and/or acquisition candidates,
assisting in any due diligence process, recommending transaction terms and
providing advice and assistance during negotiations, as needed. It is
expressly understood that Consultant shall have no power to bind Client to
any contract or transaction obligation. Additional compensation to
Consultant for the successful closing of any such merger or acquisition
shall be made pursuant to Section 1.4.a.ii. below.
a. Mergers and Acquisitions. Consultant agrees to introduce and/or assist
Client in acquiring, merging, and/or divesting on a non-exclusive
basis, from time to time, as Consultant deems appropriate in its sole
discretion. Consultant will introduce and/or assist the Client with
one or more parties who might be interested in (whether by way of
merger, consolidation, asset purchase, technology license, or
substantially similar transaction) either, (a) acquiring some or all
of Client's assets or, (b) selling some or all of their own assets to
Client and/or, (c) entering into some form of strategic alliance with
Client. In consideration of Consultant's services, Client agrees to
pay Consultant the fee set forth in paragraph 1.4.a.ii.
i. Performance by Consultant. Consultant shall be deemed to have
earned its entire fee under Section 1.4.a.ii upon, (i)
Consultant's introduction of any bona fide potential acquirer or
seller of assets or merger candidate or, (ii) upon materially
assisting Client with merger, acquisition and/or divestiture
efforts for an introduced or non-introduced merger, acquisition
and/or divestiture candidate and, (iii) the consummation of the
merger, acquisition, and/or divestiture by Client within 12
months from the date of such introduction or effort. Consultant
shall be entitled to receive a fee (as described in paragraph
1.4.a.ii., below) for each merger, acquisition and/or divestiture
by the Client. Each such obligation of Client to pay such fee
shall be deemed a separate agreement hereunder severable from
each of the other obligations to pay fees arising hereunder and
each obligation shall be separately enforceable as if separate
written agreements existed for each introduction and/or effort
made by Consultant.
ii. Amount and Payment of Consultant's Fee For Merger/Acquisition.
For a merger/acquisition entered into by Client as a result of
the efforts of, or an introduction of a bona fide
merger/acquisition candidate by Consultant during the term of
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this Agreement, Client shall pay Consultant, two and a half
percent (2.5%) of the total value of the transaction.
Note: Such percentage(s) shall be paid to Consultant in the same ratio
of cash and / or stock as the transaction. "Total value" shall
include, but is not limited to cash, cash equivalents, stock, and the
value of any consideration other than cash paid or received by Client.
All shares earned under this section that have not been registered
with the Securities and Exchange Commission shall be registered by
Client on Form S-8 or similar registration within 5 days of the
completion of the transaction. All costs in connection with the
registration shall be borne by Client.
b. Payment. In addition to the payment of the Engagement Fee, which is
due and payable upon the execution of this Agreement pursuant to the
terms of Section 2 below, each time a fee is due as specified in any
other provision of this Agreement, the fee amount, as specified
therein, shall be payable by Client to Consultant upon the closing of
the transaction. The fee due Consultant shall be in addition to any
fee or funds which may be payable to any other person or entity as a
result of the transaction.
Consultant makes no guarantee that it will be able to successfully
locate a merger or acquisition target and in turn consummate a merger
or acquisition transaction for client, or to successfully complete
such a transaction within client's desired time frame. Any comments
made regarding potential time frames or anything that pertains to the
outcome of client's needs are expressions of consultant's opinion
only, and for purposes of this agreement are specifically disavowed.
1.5 Standard of Performance. Consultant shall devote such time and efforts to
the affairs of the Client as is reasonably necessary to render the services
contemplated by this Agreement. Any work or task of Consultant provided for
herein which requires Client to provide certain information to assist
Consultant in completion of the work shall be excused (without effect upon
any obligation of Client) until such time as Client has fully provided all
information and cooperation necessary for Consultant to complete the work.
The services of Consultant shall not include the rendering of any legal
opinions or the performance of any work that is in the ordinary purview of
a certified public accountant, or other licensed professional. Consultant
cannot guarantee results on behalf of Client, but shall use commercially
reasonable efforts in providing the services listed above. If an interest
is communicated to Consultant regarding satisfying all or part of Client's
business and corporate strategic planning needs, Consultant shall notify
Client and advise it as to the source of such interest and any terms and
conditions of such interest.
2. Compensation to Consultant. As consideration for Consultant entering into
this Agreement, Client agrees to cause 900,000 shares of its common stock,
par value $.001 per share, to be issued to Xxxxxxx X. Xxxxxxx and Xxxxxxx
X. Xxxxxx, alter egos of Stanton, Walker & Company in equal quantities of
450,000 shares each. The issuance of said shares shall be registered with
the U.S. Securities and Exchange Commission on its Form S-8 or similar
registration (the "Engagement Fee"). The said shares shall be issued in two
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parts. The first issuance is 600,000 shares (300,000 shares to Xxxxxxx X.
Xxxxxxx and 300,000 shares to Xxxxxxx X. Xxxxxx) and shall take place
within 5 days of the effective date of the Form S-8 registration, which
registration shall be filed with the U.S. Securities and Exchange
Commission within 3 days of the date of this agreement. The second issuance
is 300,000 shares (150,000 shares to Xxxxxxx X. Xxxxxxx and 150,000 shares
to Xxxxxxx X. Xxxxxx) and shall take place not later than 30 days after the
first issuance.
Note: Consultant shall have no obligation to perform any duties provided
for herein if payment [cash and/or stock] is not received by consultant
within the time periods as stipulated above. In addition, consultant's
obligations under this agreement shall be become null and void if any
payment owing hereunder is not delivered within the time periods as
stipulated above. Furthermore, the receipt of any fees due to consultant
upon execution of this agreement are not contingent upon any prior
performance of any duties whatsoever described within this agreement.
Client expressly agrees that the engagement fee is deemed earned upon
execution of this agreement and is thereafter non-refundable and
non-cancelable.
2.1 Expenses. Client shall reimburse Consultant for reasonable expenses
incurred in performing its duties pursuant to this Agreement (including
printing, postage, express mail, photo reproduction, travel, lodging, and
long distance telephone and facsimile charges). Such reimbursement shall be
payable within seven days after Client's receipt of Consultant' invoice.
2.2 Additional Fees. Client and Consultant shall mutually agree upon any
additional fees that Client may pay in the future for services rendered by
Consultant under this Agreement. Such additional agreement(s) may, although
there is no requirement to do so, be attached hereto and made a part hereof
as Exhibits beginning with "A."
3. Indemnification. The Client agrees to indemnify and hold harmless
Consultant against any and all liability, loss and costs, expenses or
damages, including but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever or howsoever
caused by reason of any injury (whether to body, property, personal or
business character or reputation) sustained by any person or to any person
or property, arising out of any act, failure to act, neglect, any untrue or
alleged untrue statement of a material fact or failure to state a material
fact which thereby makes a statement false or misleading, or any breach of
any material representation, warranty or covenant by Client or any of its
agents, employees, or other representatives. Nothing herein is intended to
nor shall it relieve either party from liability for its own willful act,
omission or negligence. All remedies provided by law, or in equity shall be
cumulative and not in the alternative.
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4. Confidentiality.
4.1 Consultant and Client each agree to keep confidential and provide
reasonable security measures to keep confidential information where release
may be detrimental to their respective business interests. Consultant and
Client shall each require their employees, agents, affiliates, other
licensees, and others who will have access to the information through
Consultant and Client respectively, to first enter appropriate
non-disclosure Agreements requiring the confidentiality contemplated by
this Agreement in perpetuity.
4.2 Consultant will not, either during its engagement by the Client pursuant to
this Agreement or at any time thereafter, disclose, use or make known for
its or another's benefit any confidential information, knowledge, or data
of the Client or any of its affiliates in any way acquired or used by
Consultant during its engagement by the Client. Confidential information,
knowledge or data of the Client and its affiliates shall not include any
information that is, or becomes generally available to the public other
than as a result of a disclosure by Consultant or its representatives.
5. Miscellaneous Provisions.
5.1 Amendment and Modification. This Agreement may be amended, modified and
supplemented only by written agreement of Consultant and Client.
5.2 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. The obligations of either
party hereunder cannot be assigned without the express written consent of
the other party.
5.3 Governing Law; Venue. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the
laws of the State of New York, without regard to its conflict of law
doctrine. Client and Consultant agree that if any action is instituted to
enforce or interpret any provision of this Agreement, the jurisdiction and
venue shall be New York, New York.
5.4 Attorneys' Fees and Costs. If any action is necessary to enforce and
collect upon the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and costs, in addition to any other
relief to which that party may be entitled. This provision shall be
construed as applicable to the entire Agreement.
5.5 Survivability. If any part of this Agreement is found, or deemed by a court
of competent jurisdiction, to be invalid or unenforceable, that part shall
be severable from the remainder of the Agreement.
5.6 Facsimile Signatures. The Parties hereto agree that this Agreement may be
executed by facsimile signatures and such signature shall be deemed
originals. The Parties further agree that within ten (10) days following
the execution of this Agreement, they shall exchange original signature
pages.
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6. Arbitration. All disputes, controversies, or differences between client,
consultant or any of their officers, directors, legal representatives,
attorneys, accountants, agents or employees, or any customer or other
person or entity, arising out of, in connection with or as a result of this
agreement, shall be resolved through arbitration rather than through
litigation. With respect to the arbitration of any dispute, the undersigned
hereby acknowledge and agree that:
A. Arbitration is final and binding on the parties;
B. The parties are waiving their right to seek remedy in court, including
their right to jury trial;
C. Pre-arbitration discovery is generally more limited and different from
court proceeding;
D. The arbitrator's award is not required to include factual findings or
legal reasoning and any party's right of appeal or to seek
modification of ruling by the arbitrators is strictly limited;
E. This arbitration provision is specifically intended to include any and
all statutory claims which might be asserted by any party;
F. Each party hereby agrees to submit the dispute for resolution to the
American Arbitration Association, in Glen Rock, New Jersey within five
(5) days after receiving a written request to do so from the other
party;
G. If either party fails to submit the dispute to arbitration on request,
then the requesting party may commence an arbitration proceeding, but
is under no obligation to do so;
H. Any hearing scheduled after an arbitration is initiated shall take
place in Glen Rock, New Jersey;
I. If either party shall institute any court proceeding in an effort to
resist arbitration and be unsuccessful in resisting arbitration or
shall unsuccessfully contest the jurisdiction of any arbitration forum
located in Glen Rock, New Jersey, over any matter which is the subject
of this agreement, the prevailing party shall be entitled to recover
from the losing party its legal fees and any out-of-pocket expenses
incurred in connection with the defense of such legal proceeding or
its efforts to enforce its rights to arbitration as provided for
herein;
J. The parties shall accept the decision of any award as being final and
conclusive and agree to abide thereby;
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K. Any decision may be filed with any court as a basis for judgment and
execution for collection.
7. Term/Termination. This Agreement is for a term of six (6) months ending May
4, 2004.
8. Representations, Warrants and Covenants. The Client represents, warrants
and covenants to the Consultant as follows:
The Client has the full authority, right, power and legal capacity to enter
into this Agreement and to consummate the transactions that are provided
for herein. The execution of this Agreement by the Client and its delivery
to the Consultant, and the consummation by it of the transactions which are
contemplated herein have been duly approved and authorized by all necessary
action by the Client's Board of Directors and no further authorization
shall be necessary on the part of the Client for the performance and
consummation by the Client of the transactions which are contemplated by
this Agreement.
The business and operations of the Client have been and are being conducted
in all material respects in accordance with all applicable laws, rules and
regulations of all authorities that affect the Client or its properties,
assets, businesses or prospects. The performance of this Agreement shall
not result in any breach of, or constitute a default under, or result in
the imposition of any lien or encumbrance upon any property of the Client
or cause acceleration under any arrangement, agreement or other instrument
to which the Client is a party or by which any of its assets are bound. The
Client has performed in all respects all of its obligations which are, as
of the date of this Agreement, required to be performed by it pursuant to
the terms of any such agreement, contract or commitment.
9. Notices. Any notice or other communication required or permitted hereunder
must be in writing and sent by either (i) certified mail, postage prepaid,
return receipt requested and First Class mail; or (ii) overnight delivery
with confirmation of delivery; or (iii) facsimile transmission with an
original mailed by first class mail, postage prepaid, addressed as follows:
If to the Client: Xxxx X. Xxxxxxx
XX Intelligent Systems, Inc
0000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile No: (000) 000-0000
If to Consultant: Xxxxxxx X. Xxxxxx
Stanton, Walker & Company
00 Xxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No: (000) 000-0000
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or in each case to such other address and facsimile number as shall have
last been furnished by like notice. If mailing is impossible due to an
absence of postal service, and other methods of sending notice are not
otherwise available, notice shall be hand-delivered to the aforesaid
addresses. Each notice or communication shall be deemed to have been given
as of the date so mailed or delivered, as the case may be; provided,
however, that any notice sent by facsimile shall be deemed to have been
given as of the date sent by facsimile if a copy of such notice is also
mailed by first class mail on the date sent by facsimile; if the date of
mailing is not the same as the date of sending by facsimile, then the date
of mailing by first class mail shall be deemed to be the date upon which
notice given.
10. Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11. Preliminary Statement. The Preliminary Statement is incorporated herein by
this reference and made a material part of this Agreement.
**SIGNATURE PAGE FOLLOWS**
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed, all as of the day and year first above written.
CLIENT: GK INTELLIGENT SYSTEMS, INC.
/s/Xxxx X. Xxxxxxx
---------------------------------
Xxxx X. Xxxxxx
Title: President
Date: November 5, 2003
Consultant:
/S? Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
Its Managing Director
Date: November 5, 2003
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