DEBT RESOLUTION AGREEMENT
THIS AGREEMENT is entered into effective the 20th day of March, 2002, at
Houston, Texas, Between GK INTELLIGENT SYSTEMS, INC., a Delaware corporation
("Corporation" or "GKIS") and XXXX X. XXXXXXX ("XXXXXXX").
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 to compensate XXXXXXX for accrued unpaid salary as
dictated by the terms and conditions of the Amended and Restated Employment
Agreement dated March 13, 1998 and its affiliated Addendum of same date signed
by both parties; and
WHEREAS, GKIS and KIMMONS desire for him to continue in his role as Chairman of
the Board of Directors, President and CEO of GKIS under the terms and conditions
of KIMMONS' existing employment agreement;
NOW, THEREFORE, in consideration of the premises, the parties agree as follows:
1. Compensation. GKIS agrees to issue XXXXXXX seven million (7,000,000)
shares of GK Intelligent Systems Common Stock as compensation-in-full
for seven hundred thousand ($700,000) dollars accrued unpaid salary as
specified by the terms and conditions of the Amended and Restated
Employment Agreement dated March 13, 1998 and its affiliated Addendum
of same date between GKIS and Xx. Xxxxxxx. The number of shares issued
is determined using the following formula: 35 months (i.e. May 15,
1999 to March 15, 2002) of non-payment times $20,000/month salary
times 10 shares for each dollar owed.
2. Additional Compensation. GKIS acknowledges that the issuance of the
Common Stock does not constitute repayment to XXXXXXX for additional
amounts which may be owed by GKIS under other terms of XXXXXXX'
employment agreement.
3. Rights Prior to Issue. XXXXXXX shall have no rights as a stockholder
with respect to the shares until such shares are issued.
4. 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, 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.
1
5. Amendment in Writing. No amendment, modification or change to this
agreement shall be binding unless in writing, signed by all the
parties hereto.
6. 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, assigns
(including remote, as well as immediate, successors to and assignees
of said parties).
7. Representations, Warranties and Agreements of KIMMONS. XXXXXXX
represents, warrants and agrees as follows:
a. No Registration. XXXXXXX 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.
KIMMONS 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. XXXXXXX acknowledges and agrees that he has
no preemptive rights with respect to the Shares to be conveyed
hereunder.
8. 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 is it 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.
2
b. 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 governmental authority, except as set
out in its filings with the SEC or otherwise disclosed to
KIMMONS.
c. 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 securing
any such indebtedness except as disclosed to XXXXXXX.
d. Governmental Agencies. GKIS will comply with the requirements of
all applicable laws, regulations, and requirements pertaining to
GKIS.
e. Information Provided. To the best of its knowledge, all
information provided by GKIS to XXXXXXX was and is accurate in
all material respects and did not or does not, to the best of
GKIS' knowledge, omit any information necessary to make such
information and documentation necessary.
f. Financial Statements. GKIS has delivered to XXXXXXX its audited
annual report for the fiscal year ended December 31, 1998, 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 prior to closing its doors on June
11th, 1999.
g. Licenses and Permits. GKIS has all licenses, permits, approvals,
consents, orders, rights and other authorizations necessary to
enable it to conduct its business as currently conducted.
h. No Undisclosed Liabilities. Except as set out in its audited
annual report or quarterly unaudited financial statements, and as
otherwise disclosed to KIMMONS, GKIS has no liabilities or
obligations.
i. 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' 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.
j. Status of Shares to be Issued. All issued Shares of capital stock
of GKIS are, and upon issuance to KIMMONS 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.
3
9. 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.
10. 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, on the written request of either party, be submitted to
arbitration, which will comply with and be governed by the provisions
of the Texas Civil Practice and Remedies Code, Section 171.000, et
seq., and the American Arbitration Association. Pursuant to Section
171.026(a) of the Texas Civil Practice and Remedies Code, arbitration
shall be conducted under the Commercial Arbitration Rules of the
American Arbitration Association in existence at the time of
arbitration. The cost and expenses, including attorney's fees and the
fees of arbitrators, shall be borne by the losing party or in such
proportion as the arbitrators shall determine.
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.
/S/ Xxxx X. Xxxxxxx
By: ______________________________
BOARD OF DIRECTORS
/S/ Xxxx Xxxxxx
By: ______________________________
BOARD OF DIRECTORS
/S/ Xxxxxxx Xxxxxxx
By: ______________________________
BOARD OF DIRECTORS
/S/ Xxxxx Xxxxxxx
By: ______________________________
BOARD OF DIRECTORS
/S/ Xxxx X. Xxxxxxxx
By: ______________________________
BOARD OF DIRECTORS
XXXX X. XXXXXXX, INDIVIDUAL
/S/ Xxxx X. Xxxxxxx
-------------------------------
XXXX X. XXXXXXX
4
