EXHIBIT 10.1
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CONSULTING AGREEMENT
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THIS AGREEMENT is entered into effective the 10th day of November, 1998, at
Houston, Texas, between GK INTELLIGENT SYSTEMS, INC., a Delaware corporation
("Corporation" or "GKIS") and XXXXXX X. XXXX ("Xxxx").
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 Xxxx consult with GKIS on the establishment of
retail distribution for the Company's products in the global marketplace and/or
introduce GKIS to parties who may be interested in GKIS's products and make
himself reasonably available to mentor and advise the directors, officers and
management of GKIS; and
WHEREAS, GKIS desires that Xxxx become an advisor and mentor to the
directors, officers and management of GKIS in all phases of retail product
distribution as well as global marketing developments which could effect GKIS's
business; and
WHEREAS, Xxxx desires to acquire an equity interest in the Corporation's
common stock; and
WHEREAS, GKIS considers it to be in its best interest that Xxxx assume a
position as a member of the GKIS Board of Directors;
NOW, THEREFORE, in consideration of the premises, the parties agree as
follows:
1. AGREEMENT TO PROVIDE CONSULTING SERVICES. Xxxx agrees to provide
consulting services as requested from time to time by GKIS and to help
GKIS establish market opportunities and retail distribution for its
products/services in the domestic and international marketplace, making
himself reasonably available to mentor and advise GKIS directors,
officers and management periodically during the term of this Agreement.
2. POSITION ON GKIS BOARD OF DIRECTORS. The Corporation, acting through
its existing Board of Directors, will appoint Xxxx as a member of the
Board of Directors. Upon election by the Board of Directors, Xxxx
agrees to assume a position on the GKIS Board and to serve diligently
as a member thereof, faithfully performing all fiduciary duties as a
director of the Corporation.
3. COMPENSATION. As compensation for the services to be rendered
hereunder, GKIS will pay Xxxx up to Fifty Thousand Dollars ($50,000) as
follows: on any date on which Xxxx elects to exercise the Option (as
defined herein) the Company will pay Xxxx an amount equal to the number
of shares for which such election is made multiplied by five cents
($0.05).
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4. OPTION GRANT.
(a) Option Grant. Effective as of the effective date of this Agreement,
Xxxx shall be granted an option ("Option") to purchase the one
million (1,000,000) shares of GKIS common stock (the "Option
Shares") with an exercise price of $0.05 per Option Share. Subject
to its earlier termination as provided below, the Option shall
expire on the 10th anniversary of the effective date of this
Agreement.
(b) Option Vesting. Commencing on November 30, 1998, and continuing on
the last day of each calendar month during the term of this
Agreement, one-twelfth of the Option Shares shall become
exercisable; provided, however, that if this Agreement is
terminated prior to the end of a calendar month, no Option Shares
shall vest for that month. Notwithstanding the foregoing, in the
event Xxxx dies during the term of this Agreement or the
Corporation terminates this Agreement for any reason other than
pursuant to Section 12.b. or Section 12.d., the Option shall become
immediately exercisable in full.
(c) Payment of Exercise Price. To the extent the Option is exercisable,
Xxxx may exercise the Option from time to time by a notice in
writing of such exercise delivered to the Corporation, attention
Secretary, at its principal corporate offices. The date of exercise
shall be the date the notice is hand delivered or mailed to the
Corporation, whichever is applicable. An election to exercise the
Option shall be accompanied by the tender of the full exercise
price of the shares for which the election is made. Payment may be
made, in Xxxx'x discretion, (i) in cash or check, (ii) shares of
GKIS stock already-owned by Xxxx, (iii) a "cashless-broker"
exercise in accordance with a Corporation-established policy or
program for the same, (iv) notice from Xxxx for the Corporation to
withhold a number of shares from the Option excise having an
aggregate fair market value on such date not exceeding the
aggregate exercise price, or (v) any combination of the foregoing.
(d) Registration Rights. Shares acquired by Xxxx upon any exercise of
the Option shall be subject to registration rights no less
favorable to Xxxx than the registration rights provided by the
Corporation to any other stockholder with a comparable or greater
number of shares.
(e) Transferability of Option. Xxxx may transfer all or any part of the
Option by gift to one or more of his immediate family members or
related family trusts or similar entities, in his discretion. If
transferred, the Option (and any shares acquired upon exercise)
shall be subject to the same provisions of this Agreement as if
held or owned, as the case may be, by Xxxx.
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5. RIGHTS PRIOR TO ISSUE. Xxxx shall have no rights as a stockholder with
respect to the Option Shares until GKIS has received full payment of
the purchase price and the Option Shares have been issued.
6. PRIOR AGREEMENTS. 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. ASSIGNMENT. This Agreement is for personal services by Xxxx and shall
not be assignable by Xxxx. This Agreement may be assigned by GKIS and
shall inure to the benefit of the successors and assigns of GKIS.
9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF XXXX. Xxxx represents,
warrants and agrees as follows:
a. No Registration. Xxxx is aware that the Shares have not been
registered nor is registration contemplated under the Securities
Act of 1933, and accordingly, that the Initial 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. Xxxx agrees
that any certificates evidencing the Initial 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 Initial Shares in a
manner consistent with the foregoing.
b. No Preemptive Rights. Xxxx acknowledges and agrees that he has no
preemptive rights with respect to the Shares to be purchased
hereunder.
c. Exchange Act Filings. Xxxx acknowledges and agrees that he has read
and understands the Corporation's Annual Report on Form 10K-SB for
the fiscal year ended May 31, 1998.
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
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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.
b. Acknowledgment of Xxxx'x Fiduciary Obligations to Third Parties.
GKIS understands, acknowledges and agrees that Xxxx is an officer
or director of other corporations, and thus may have a fiduciary
relationship towards one or more third parties, including his own
businesses and that, in such capacity, Xxxx is subject to certain
ethical and business constraints with respect to certain materials
or information of third parties which may be confidential, trade
secret, proprietary or otherwise subject to restrictions on its use
or dissemination by Xxxx. GKIS acknowledges and agrees that it will
not constitute a breach of this agreement for Xxxx to comply with
these obligations to their full legal, moral and ethical
limitations.
11. TERM OF AGREEMENT. The term of this Agreement shall be for one (1) year
from the date of this Agreement, unless terminated by either party
pursuant to the provisions contained herein.
12. TERMINATION OF AGREEMENT. This Agreement shall be automatically
terminated upon the death of Xxxx and may be terminated by the parties
as follows:
a. Illness or Other Disability. If Xxxx, during the term of this
Agreement, shall fail to perform his duties hereunder as a result
of illness or other disability which shall continue for a period of
more than eight (8) weeks, the Corporation shall have the right to
terminate this Agreement and remove Xxxx from the Board of
Directors effective as of a date to be specified in written notice
of termination sent to Xxxx.
b. Conduct. If Xxxx shall use liquor or drugs to an extent which has a
visible detrimental effect on his services to the Corporation, or
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 Agreement and remove Xxxx from the Board of
Directors effective as of a date to be specified in written notice
of termination sent to Xxxx.
c. Unilateral Termination by Xxxx. Xxxx may terminate this Agreement
and his obligations hereunder effective as of a date to
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be specified in written notice of termination sent to the
Corporation, such date not to be more than ten (10) days after
delivery of the notice.
d. Termination for Cause Other than Conduct. The Corporation may
terminate this Agreement and remove Xxxx from the Board of
Directors at any time if the Board of Directors determines that
Xxxx has breached his fiduciary duties to the Corporation or failed
to perform his duties hereunder 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 not more than ten (10) days after delivery of the notice.
13. NOTICES. All notices required hereunder shall be in writing and shall
be sent via certified mail, postage prepaid, if to GKIS, in care of
President, 0000 Xxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx, 00000, and if to
Xxxx, in care of Xxxxxx X. Xxxx, 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx
00000. Notices shall be effective upon deposit in the United States
mail.
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 that cannot be resolved amicably among
the parties, such dispute shall, on the written request of either
party, be submitted to arbitration. Such arbitration shall be binding
and shall be conducted under the Commercial Arbitration Rules of the
American Arbitration Association in effect at the time of arbitration.
The cost and expenses, including attorney's fees and the fees of the
arbitrators, shall be borne by the losing party or in such
proportions as the arbitrators shall determine. All arbitration
proceedings hereunder shall be held in Houston, Texas.
16. CONFIDENTIAL INFORMATION. Xxxx shall hold in fiduciary capacity for the
benefit of GKIS all information, knowledge and data of a secret or
confidential nature relating to GKIS or any of its affiliated
companies, and their respective businesses, which shall have been
obtained by Xxxx during the term of this Agreement and which shall not
be or become public knowledge (other than by acts by Xxxx or
representatives of Xxxx in violation of this Agreement). After
termination of this Agreement, Xxxx 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.
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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: /s/ Xxxx Xxxxxxx
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XXXX XXXXXXX, C.E.O.
/s/ Xxxxxx X. Xxxx
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XXXXXX X. XXXX
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