EXHIBIT 10.4
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,
▇▇▇▇▇▇ County, Texas (hereinafter called the "Corporation"), and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, of Houston, Texas (hereinafter called "▇▇▇▇▇▇▇▇"). Collectively, the
Corporation and ▇▇▇▇▇▇▇▇ shall be referred to as "the parties." This Agreement
modifies and supersedes the previous agreements between the parties.
W I T N E S S E T H:
WHEREAS, ▇▇▇▇▇▇▇▇ desires to perform software design and programming
services on behalf of the Corporation and act as Product Manager, Smart
Enterprise for related software support and necessary research and development
services as an employee of the Corporation, including the performance personally
of such services as she and/or the Corporation's Board of Directors deem
necessary; and
WHEREAS, the Board of Directors of the Corporation desires to employ
▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ accepts such employment, as Product Manager, Smart Enterprise, 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 with the
date of this Agreement and shall continue until termination by either party as
provided in Article IV.
ARTICLE II
DUTIES
2.1 DEVOTION OF EFFORT. ▇▇▇▇▇▇▇▇ agrees to devote sufficient time,
attention, and skill to the performance of her duties as an employee of the
Corporation as set out and authorized by the Board of Directors. During the
term of this Agreement, she shall not render services on her own
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or on behalf of any party other than the Corporation unless otherwise authorized
by the Board of Directors.
ARTICLE III
COMPENSATION
3.1 COMPENSATION AND BENEFITS.
a. MONTHLY SALARY. As compensation for the services to be rendered
hereunder, GKIS will pay to ▇▇▇▇▇▇▇▇ a monthly salary in an amount equal to
Eight Thousand Three Hundred Thirty-Three Dollars and Thirty-Three Cents
($8,333.33). The monthly salary shall be paid in semi-monthly payments of
one-half the monthly amount each on the first and fifteenth day of each
month with respect to the immediately preceding month, commencing on the
first day of the first month after the month in which this agreement is
executed. Effective with the seventh full month of her employment, GKIS
will increase Heinsohn's monthly salary, contingent on the satisfactory
performance of her duties as determined by the President or Board of
Directors in their sole discretion.
b. BONUS OPTIONS FOR SHARES OF CORPORATION COMMON STOCK. In addition
to the monthly salary and any other benefits available to all employees,
including standard incentive qualified stock options, GKIS will grant to
▇▇▇▇▇▇▇▇ incentive stock options for One Hundred Thousand (100,000) shares
of GKIS common stock (the "Bonus Options"). Contingent upon the Agreement
remaining in force, options for Twenty-Five Thousand (25,000) shares will
vest and be exercisable on the thirtieth day following the close of each of
the first, second, third and fourth years following the month in which this
agreement is executed. Except for the delayed vesting of their
exercisability, this grant of stock options shall be governed by and
subject to the GK INTELLIGENT SYSTEMS, INC. 1995 INCENTIVE STOCK OPTION
PLAN, as set out in a separate Incentive Stock Option Agreement executed by
the parties concurrently with the execution of this Employment Agreement.
The number of shares shall also be adjusted as provided in Section 7.1 of
such Plan. For all purposes related to the Grant of these options, the
Board of Directors of GKIS has determined that the date of such grant is
March 13, 1998 and the Fair Market Value per share as of the date of such
grant is Thirty One and 25/100 Cents ($.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 years prior to termination in
which the vesting requirements were met.
c. BONUS SHARES. In addition to the monthly salary and Bonus Options
granted above, and effective with the date of this agreement, GKIS will
issue to ▇▇▇▇▇▇▇▇ Eighty Thousand Shares of the Corporation's restricted
Common Stock (the "Shares"). ▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇ acknowledges and agrees that she has no
preemptive rights with respect to the Shares to be conveyed hereunder and
further 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. As
soon as practicable after the date of this agreement, GKIS shall tender the
Shares to ▇▇▇▇▇▇▇▇, provided that if any law or regulation requires the
Corporation to take any action with respect to the Shares before the
issuance thereof, then the date of delivery for such shares shall be
extended for the period necessary to take such action.
d. EMPLOYEE BENEFIT PLANS. ▇▇▇▇▇▇▇▇ 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.
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3.2 DISALLOWED COMPENSATION. If the Internal Revenue Service shall find
that Heinsohn's salary constitutes unreasonable or excessive compensation,
▇▇▇▇▇▇▇▇ agrees to repay to the Corporation any amount disallowed to the
Corporation as deductions that results in an increase in its tax liability for
any tax year.
ARTICLE IV
TERMINATION OF AGREEMENT
4.1 ILLNESS OR OTHER INCAPACITY. If ▇▇▇▇▇▇▇▇, during the term of this
Agreement, shall fail to perform her 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 ▇▇▇▇▇▇▇▇, such date to be not less than thirty (30) days following receipt of
said notice.
4.2 CONDUCT. If ▇▇▇▇▇▇▇▇ 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 her or her services; conduct herself publicly or
privately in a manner which offends against decency or causes her 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 4.1,
▇▇▇▇▇▇▇▇ shall not be eligible to receive bonus compensation for the year in
which termination occurs, nor shall she be entitled to receive any deferred
compensation credited to her 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 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 ▇▇▇▇▇▇▇▇ shall die during the term of this Agreement, her
legal representative shall be entitled to receive her compensation as provided
in Article III hereof.
ARTICLE VI
ILLNESS OR INCAPACITY
6.1 INABILITY TO PERFORM DUTIES. If ▇▇▇▇▇▇▇▇ is unable to perform her
duties hereunder by reason of illness or incapacity of any kind for a period of
more than six months, her salary payments may be reduced or terminated by the
Corporation at its absolute discretion. Heinsohn's full salary shall be
reinstated upon her return to full-time employment and the full discharge of her
duties hereunder. This section shall in no way limit the rights of the
Corporation under Article IV hereof.
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ARTICLE VII
LEAVES OF ABSENCE
7.1 PAID LEAVE. Leaves of absence with full payment of salary may be
granted to ▇▇▇▇▇▇▇▇ for attendance at professional conventions, continuing
education institutes in her 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 ▇▇▇▇▇▇▇▇.
ARTICLE VIII
VACATIONS
8.1 PAID VACATION. ▇▇▇▇▇▇▇▇ 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 her salary shall be paid in full. ▇▇▇▇▇▇▇▇ shall
take her vacation at such time or times as shall be approved by the corporation.
ARTICLE IX
EXPENSES
9.1 EXPENSES REIMBURSED. During the period of her employment, ▇▇▇▇▇▇▇▇
will be reimbursed for her 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, ▇▇▇▇▇▇▇▇ shall incur and pay in the
course of her employment by the Corporation certain other necessary expenses as
Senior Systems Analyst for which she will be required personally to pay but for
which the Corporation shall reimburse or otherwise compensate her, including,
but not limited to the following: automobile and transportation expenses;
educational expenses incurred for the purpose of maintaining or improving
Heinsohn's 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 ▇▇▇▇▇▇▇▇ in
the performance of the services in which ▇▇▇▇▇▇▇▇ 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
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another corporation, unless such corporation (hereinafter referred to as
"Successor Corporation") shall assume this Agreement. Upon such assumption
▇▇▇▇▇▇▇▇ 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, Heinsohn's 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, ▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇ 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 her 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 ▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇▇ shall immediately deliver to
the Corporation all property in Heinsohn's possession or under Heinsohn's
control belonging to the Corporation in good condition, ordinary wear and tear
excepted.
11.3 OWNERSHIP OF WORK PRODUCT. ▇▇▇▇▇▇▇▇ agrees that:
(a) 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 ▇▇▇▇▇▇▇▇ pursuant to this Agreement, either individually
or in collaboration with others, shall belong to and be the sole property
of GKIS.
(b) ▇▇▇▇▇▇▇▇ agrees that all rights in all works prepared or
performed by ▇▇▇▇▇▇▇▇ 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) The provisions of this Paragraph shall not be construed to assign
to GKIS any of Heinsohn's 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 ▇▇▇▇▇▇▇▇ 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 following termination of same ▇▇▇▇▇▇▇▇ 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, Smart Enterprise, Smart Agent,
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 ▇▇▇▇▇▇▇▇ from
accepting employment in the area of Microsoft Access programming, system
analysis and administration or information technology functions considered
generic to the industry, not utilizing any of the Corporation's core
technologies or products.
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ARTICLE XIII
NOTICES
13.1 NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by mail to her residence,
in the case of ▇▇▇▇▇▇▇▇, 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, this
the 13th day of March, 1998.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
______________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
GK INTELLIGENT SYSTEMS, INC.:
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO and Chairman
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