AMENDED AND RESTATED
CONSULTING AGREEMENT
THIS AMENDED AND RESTATED CONSULTING 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 DICK MEADOR
("MEADOR") as an amendment to and restatement of the Consulting Agreement
executed by the same parties on March 14, 2002.
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 MEADOR consult with GKIS on the resurrection of the
company's operations in the domestic and international marketplace; and
WHEREAS, MEADOR desires to acquire an equity interest in the Corporation's
common stock; and GKIS considers it to be in its best interest that MEADOR
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. Upon election by consent of
the majority of the shares of GKIS, MEADOR agrees to assume a position
on the GKIS Board of Directors for the term of this agreement. In this
capacity, MEADOR agrees to act as an adviser to GKIS and mentor its
management, and to apprise GKIS of operational developments as MEADOR
in his sole discretion shall deem appropriate. In addition, MEADOR
agrees to help GKIS establish its initial operational infrastructure,
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 basis as parties mutually agree.
2. Position on GKIS Board of Directors. The Corporation, acting through
it existing Board of Directors, will appoint MEADOR as a member of the
Board of Directors for the term of this agreement.
3. Compensation. As compensation for the services to be rendered
hereunder, GKIS will issue MEADOR two hundred fifty thousand
post-split (250,000) shares of GKIS common restricted stock (the
"Initial Shares"), subtracting 100,000 shares which have already been
issued under the previous agreement, thus netting a total of 150,000
shares to be issued as soon thereafter as practicable. GKIS shall
tender the Initial Shares to MEADOR, provided that any law or
regulation requires the Corporation to take any action with respect to
the Initial Shares before the issuance thereof, then the date of
delivery for such shares shall be extended for the period necessary to
take such action.
1
4. Agreement to Relinquish. In the event of MEADOR's failure of
performance or early termination of this agreement as set out herein,
MEADOR agrees to return (relinquish) to GKIS any unvested Initial
Shares as defined herein. Each month during the term of this
agreement, one-twelfth of the 150,000 shares shall no longer be
subject to such required relinquishment to GKIS, or in other words,
such shares shall vest. The shares remaining after the previous
month's fractions of shares have vested shall be considered unvested.
The Initial Shares shall immediately and automatically vest upon
material breach by GKIS of this agreement or any of its warranties and
representations, without notice or action by MEADOR, and shall no
longer be subject to relinquishment.
5. Rights Prior to Issue. MEADOR shall have no rights as a stockholder
with respect to the Initial Shares until such shares are issued.
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, 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, assigns
(including remote, as well as immediate, successors to and assignees
of said parties).
9. Representations, Warranties and Agreements of MEADOR. MEADOR
represents, warrants and agrees as follows:
a. No Registration. MEADOR 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.
MEADOR 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. MEADOR acknowledges and agrees that he has
no preemptive rights with respect to the Shares to be conveyed
hereunder.
2
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 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.
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 MEADOR.
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 MEADOR.
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 MEADOR 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 MEADOR 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 in June,
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.
3
h. No Undisclosed Liabilities. Except as set out in its audited
annual report or quarterly unaudited financial statements, and as
otherwise disclosed to MEADOR, 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 MEADOR 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 in effect for twelve (12)
months, starting and counting the date of execution, 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 MEADOR, 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 six 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
MEADOR, such date to be not less than ten (10) days following
receipt of said notice. The Initial Shares shall be fully vested
as of the date of termination and will not be subject to return
to GKIS.
b. Conduct. If MEADOR 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 agreement 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 Initial
Shares shall cease, GKIS shall have no further obligation to
MEADOR under this agreement, and MEADOR shall relinquish all
unvested Initial Shares.
4
c. Unilateral Termination, if any, by MEADOR. MEADOR 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 ten (10) days after delivery of the notice, and all
vesting of the Initial Shares shall cease as of the end of the
month during which termination is effective, GKIS shall have no
further obligation to MEADOR under this agreement, and MEADOR
shall return to GKIS all unvested Initial Shares, unless
termination is the result of material breach by GKIS of the
provisions of this agreement.
d. Vesting of Initial Shares after Termination for Death or
Disability. If MEADOR shall die during the term of this
agreement, his legal representative or executor shall be entitled
to receive any compensation 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 Initial Shares shall
immediately vest and not be subject to relinquishment to GKIS.
e. Termination for Cause Other than Conduct. GKIS may terminate this
agreement during the initial term if the Board of Directors
determines that MEADOR has failed to perform his duties hereunder
for a period of at least six weeks, 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 ten (10) days
after delivery of the notice, provided that during such 10-day
(or greater) period MEADOR 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 MEADOR
shall be terminated for cause, and all vesting of Initial Shares
shall cease as of such date and MEADOR shall relinquish to GKIS
all unvested Initial Shares.
13. Notices. All notices required hereunder shall be sent via certified
mail, postage prepaid, if to GKIS, in care of Gary F. Kimmons, 2602
Yorktown Place, Houston, Texas, 77056, and if to MEADOR, in care of
Dick Meador, 4111 Bellefontaine, Houston, Texas, 77025.
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, 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.
5
16. Confidential Information. MEADOR 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 affiliated companies, and their
respective businesses, which shall have been obtained by MEADOR during
MEADOR's employment by GKIS or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by
MEADOR or representatives of MEADOR in violation of this agreement).
After termination of MEADOR's employment with GKIS, MEADOR 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.
/S/ Gary F. Kimmons
By: ______________________________
GARY F. KIMMONS, C.E.O.
/S/ Dick Meador
-------------------------------
DICK MEADOR
6