EXHIBIT 10.5
EMPLOYMENT AGREEMENT
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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
XXXXXX X. XXXXXXX, of Sugar Land, 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 accounting and related management
services on behalf of the Corporation and act as Accounting Manager 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 Accounting Manager, to render professional
services on behalf of the Corporation, subject to the supervision and direction
of the Corporation's officers 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 May 1, 1998, to be set out in
XXXXXXX'x notice to the Board, and 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 on behalf of
any party other than the Corporation unless otherwise authorized by the Board of
Directors. For purposes of this Article II the Board specifically authorizes
XXXXXXX to continue working on behalf of the existing clients of his CPA
practice on a limited basis at such time or times as will not interfere with his
duties to GKIS , and such work is deemed not to
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be in competition with GKIS for purposes of Article XII of this Agreement.
2.2 DESCRIPTION OF DUTIES. XXXXXXX will provide accounting services
related to the filing of Forms 10Q and 10K, as well as preparation and
maintenance of related working papers, assistance in preparation of audit
working papers for use by the Corporation's independent auditors, and assistance
to GKIS management in the formulation, implementation and ongoing administration
of the Corporation's accounting system, books and records, including the
management of the personnel engaged in the various accounting and related
clerical functions of such record keeping tasks, all as directed by the
management of GKIS. Xxxxxxx shall also perform such duties on a part-time basis
from the date of this agreement until May 1, 1998 on an hourly basis, and shall
be compensated at the rate of $40.00 per hour upon presentation of an invoice
therefor, unless Xxxxxxx notifies the Board and commences full-time employment
sooner than such date.
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
Eight Thousand Three Hundred Thirty-Three and 33/100 Dollars ($8,333.33).
The monthly salary, shall be paid in semi-monthly payments of one-half the
monthly amount each on the first and fifteenth day of each month with
respect to the immediately preceding month, commencing on the fifteenth day
of, or the first day of the first month after, the month in which
employment commences hereunder, whichever comes first after the employment
date
b. BONUS OPTIONS FOR SHARES OF CORPORATION COMMON STOCK. In addition
to the monthly salary and any other benefits available to all employees,
including standard incentive qualified stock options, GKIS will grant to
XXXXXXX incentive stock options for one hundred thousand (100,000) shares
of GKIS restricted common stock (the "Bonus Options"), with one-fourth of
such grant vesting annually for four years so long as XXXXXXX remains an
employee of the Corporation, an affiliate or subsidiary. Contingent upon
the Agreement remaining in force as a result of such continued employment,
Bonus Options for twenty-five thousand (25,000) restricted shares will vest
and be exercisable on the thirtieth day following the close of each of the
first, second, third and fourth years following the month in which this
agreement is executed. Except for the delayed vesting of their
exercisability, this grant of stock options shall be governed by and
subject to the GK INTELLIGENT SYSTEMS, INC. 1995 INCENTIVE STOCK OPTION
PLAN, as set out in a separate incentive stock option agreement executed
concurrently with this agreement by the parties. The number of shares
shall also be adjusted as provided in Section 7.1 of such Plan. For all
purposes related to the Grant of these options, the Board of Directors of
GKIS has determined that
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the date of such grant is March 13, 1998 and the Fair Market Value per
share as of the date of such grant is Thirty One and 25/100 Cents ($.3125).
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 which the vesting requirements were met.
c. 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.
d. INITIAL GRANT OF SHARES. As additional compensation for the
services to be rendered hereunder, GKIS will grant to XXXXXXX Twenty
Thousand (20,000) shares of GKIS common restricted stock (the "Initial
Shares"), issued immediately upon execution of this agreement or as soon
thereafter as is practicable. The effective date of this grant will be
March 13, 1998, the date of the agreement between the parties as to
employment and compensation. The agreed value of the Initial Shares shall
be $.3125 per share, the closing price for freely trading shares as of that
date.
3.2 DISALLOWED COMPENSATION. If the Internal Revenue Service shall find
that XXXXXXX'x salary constitutes unreasonable or excessive compensation,
XXXXXXX agrees to repay to GKIS any amount disallowed to it as deductions that
results in an increase in its tax liability for such year.
ARTICLE IV
TERMINATION OF AGREEMENT
4.1 ILLNESS OR OTHER INCAPACITY. If XXXXXXX, during the term of this
Agreement, shall fail to perform his duties hereunder as a result of illness or
other incapacity shall continue for a period of more than six months, 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 (30) days following receipt of
said notice.
4.2 CONDUCT. If XXXXXXX 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 or her services; conduct herself 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 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
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termination, such date to be not less than thirty (30) days after delivery of
the notice.
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
ILLNESS OR INCAPACITY
6.1 INABILITY TO PERFORM DUTIES. If XXXXXXX is unable to perform his duties
hereunder by reason of illness or incapacity of any kind for a period of more
than six months, 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 of the
Corporation under Article 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
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employment by the Corporation certain other necessary expenses as Director of
Research and Development, 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
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:
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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.
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 public accounting or
private accounting, administrative or information technology functions
considered generic to industry, and which do not utilize any of the
Corporation's core technologies or products.
ARTICLE XIII
NOTICES
13.1 NOTICES. Any notice required or permitted to be given under this
Agreement
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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 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 13th day of March, 1998.
/s/ XXXXXX X. XXXXXXX
___________________________________
XXXXXX X. XXXXXXX
GK INTELLIGENT SYSTEMS, INC.:
By: /s/ Xxxx X. Xxxxxxx
________________________________
Xxxx X. Xxxxxxx, CEO and Chairman
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