Exhibit 10.13
AMENDED AND RESTATED CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made as of the 3rd day of
June, 2004, by and among GK Intelligent Systems, Inc., a Delaware corporation,
having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
(Company), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual and resident of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Consultant".) This agreement supercedes and takes
precedence over a previous agreement signed by the two parties on March 26th,
2004, and is made in light of the following recitals which are a material part
hereof.
Recitals:
A. Consultant is a consultant, experienced with both technology and financing
of small-cap companies generally. Accordingly, notwithstanding Consultant's
familiarity with securities law, neither Consultant nor the Company desires
that Consultant furnish any legal services but only information, evaluation
and analysis.
B. Consultant has knowledge and experience to provide such information,
evaluation, analysis as the Company believes can assist it in furthering
execution of its business model.
C. The Company desires to retain the services of the Consultant for those
consulting services regarding the functions and operations of the Company as
more fully set forth in that confidential schedule of services and
deliverables attached hereto as Schedule A which services are incorporated
herein by reference and referred to herein as the "Consultant Services"
D. The Consultant Services shall be bona fide services to the Company and
will not be in connection with the offer or sale of securities in a capital
raising transaction and will not directly or indirectly promote or maintain a
market for the Company's securities.
E. Consultant desires to provide the Consultant Services to and consult with
the Board of Directors, the officers of the Company, and the administrative
staff, and to undertake for the Company, consultations and recommendations in
conformity with such Consultant upon the terms and conditions provided herein
including but not limited to the compensation promised herein.
NOW THEREFORE, for and in consideration of good and valuable consideration, in
hand paid, including, but not limited to the mutual promises set forth herein,
the receipt and sufficiency of which is acknowledged by each party hereto, the
parties hereby agree as follows:
1. Recitals Govern. The parties desire to enter into this agreement for
purposes of carrying out the above recitals and intentions set forth above and
this Agreement shall be construed in light thereof.
2. Stock only for Services. The parties desire to memorialize their agreement
to adhere to Securities Act Release No. 33-7646, dated February 26, 1999
regarding registration of securities on Form S-8, a copy of which is attached
hereto as Exhibit A and incorporated herein by reference. No duty, obligation,
engagement or other thing imposed on either the Company or the Consultant
hereunder shall be construed to impose any duty, obligation or other
engagement in violation of the letter or spirit of said release.
3. Consulting Services. The Consultant agrees to provide the Consultant
Services to the Company during the "Term" (as hereinafter defined). Consultant
agrees to provide such information, evaluation and analysis, in accordance
with the Consultant Services as will assist in maximizing the effectiveness of
Client's business model both relative to its business model and to its present
and contemplated operations. The Consultant shall personally provide the
Consultant Services and the Company understands that the nature of the
services to be provided are part time and that the Consultant will be engaged
in other business and consulting activities during the term of this Agreement.
3.a Conflicts. The Company waives any claim of conflict and acknowledges that
Consultant has owned and continues to own and has consulted with and continues
to consult with interests in competitive businesses which might compete but
for location.
3.b Confidential Information. The consultant agrees that any information
received by the consultant during any furtherance of the consultant's
obligations in accordance with this contract, which concerns the personal,
financial or other affairs of the company will be treated by the consultant in
full confidence and will not be revealed to any other persons, firms or
organizations. In connection herewith, Consultant and the Company have entered
into that Confidentiality Agreement in the form attached hereto as Schedule B.
3.c Role of Consultant. Consultant shall be available to consult with the
Board of Directors, the officers of the Company, and the heads of the
administrative staff, at reasonable times, concerning matters pertaining to
the organization of the administrative staff, the fiscal policies of the
Company, the relationship of the Company with its employees or with any
organization representing its employees, and, in general, the important
problems of concern in the business affairs of the Company all in fulfillment
of the Consultant Services. Consultant shall not represent the Company, its
Board of Directors, its officers or any other members of the Company in any
transactions or communications nor shall Consultant make claim to do so.
3.d Liability. With regard to the services to be performed by the Consultant
pursuant to this Agreement, the Consultant shall not be liable to the Company,
or to anyone who may claim any right due to any relationship with the Company,
for any acts or omissions in the performance of services on the part of the
Consultant or on the part of the agents or employees of the Consultant, except
when said acts or omissions of the Consultant are due to willful misconduct or
gross negligence. The Company shall hold the Consultant free and harmless from
any obligations, costs, claims, judgments, attorneys' fees, and attachments
arising from or growing out of the services rendered to the Company pursuant
to the terms of this agreement or in any way connected with the rendering of
services, except when the same shall arise due to the willful misconduct or
gross negligence of the Consultant and the Consultant is adjudged to be guilty
of willful misconduct or gross negligence by a court of competent
jurisdiction.
4. Term. The term of this Agreement shall commence as of the date hereof and
shall continue for a period of one (1) year from that date, unless sooner
terminated as provided herein. It is understood that this Agreement shall not
automatically renew and no obligations to renew are implied notwithstanding
continued efforts to fulfill terms and conditions incomplete as of the
termination of this Agreement. This Agreement and the duties and obligations
of the Consultant may be terminated by either party giving thirty (30) days'
prior written notice to the other but the compensation and any previously
incurred and approved expenses shall be deemed earned by and due to
Consultant.
5. Compensation. In consideration of the execution of the Agreement, and the
performance of his obligations hereunder, and in lieu of cash compensation on
an hourly basis, the Consultant shall receive a fee of Three Million,
Forty-Four thousand, four hundred forty-four, (3,044,444) registered common
shares of the Company (hereinafter, the "Shares"). The Shares will be, prior
to delivery to Consultant, registered pursuant to valid and effective
registration statements under either Form SB-2 or S-8 and the Company agrees
that the Shares shall be freely tradable and that the existence of any
restriction, buy-sell or other limitation under state or Federal securities
laws including but not limited to Rule 144 of the Securities Act of 1933
and/or the limitations on manner of sale imposed under the Securities and
Exchange Act of 1934 shall be lifted and/or waived by the Company prior to
delivery of the Shares. The Shares shall be tendered within Twenty (20) days
of the effective date of this Agreement.
6. Expenses. The Company shall pay or reimburse the Consultant for all
reasonable travel, business and miscellaneous expenses incurred by the
Consultant in performing its duties under this Agreement, subject to prior
approval.
7. Control as to Time and Place and Manner where Services Will Be Rendered,
Independent Contractor. It is anticipated the Consultant will spend up to 250
hours in fulfilling its obligations under this Agreement. The particular
amount of time may vary from day to day or week to week. The Consultant shall
not be entitled to any additional compensation except where the Consultant
performs more than 250 hours, subject to the prior written approval of the
Company, whereupon the Consultant will be paid at the rate of$150 per hour for
work performed in accordance with this Agreement. If additional work is
approved, the Consultant will submit an itemized statement setting forth the
time spent and services rendered, and the Company will pay the Consultant the
amounts due as indicated by statements submitted by the Consultant within ten
(10) days of receipt. Both the Company and the Consultant agree that the
Consultant will act as an independent contractor in the performance of its
duties under this Agreement. The Consultant will perform most services in
accordance with this Agreement at a location and at times chosen in
Consultant's discretion. The Company may from time to time request that the
Consultant arrange for the services of others but Consultant shall choose and
contract with same. All costs to the Consultant for those services will be
paid by the Company but in no event shall the Consultant employ others without
the prior authorization of the Company. Accordingly, the Consultant shall be
responsible for payment of all taxes including Federal, State and local taxes
arising out of the Consultant's activities in accordance with this Agreement,
including by way of illustration but not limitation, Federal and state income
tax, Social Security tax, unemployment insurance taxes, and any other taxes or
business license fee as required. Except as otherwise may be agreed, the
Consultant shall at all times be in an independent contractor, rather than a
co-venturer, agent, employee or representative of the Company.
8. Representations and Warranties. The Company represents and warrants that
(i) the shares being issued and/or sold pursuant to option are authorized to
be issued by the Company; (ii) The Company has full right, power, and
corporate authority to execute and enter into this Agreement, and to execute
all underlying documents and to bind such entity to the terms and obligations
hereto and to the underlying documents and to deliver the interests and
consideration conveyed thereby, same being authorized by power and authority
vested in the party signing on behalf of the Company; (iii) the Company has
and will have full right, power, and authority to sell, transfer, and deliver
the shares being issued and/or sold pursuant to option; (iv) the Company has
no knowledge of any adverse claims affecting the subject shares and there are
no notations of any adverse claims marked on the certificates for same; and
(v) upon receipt, Consultant or his nominee will acquire the shares being
issued and/or sold pursuant to option, free and clear of any security
interests, mortgage, adverse claims, liens, or encumbrances of any nature or
description whatsoever, subject only to matters pertaining to the sale of
securities generally including but not limited to the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder, or any state
statute, rule, or regulation relating to the sale of securities (collectively,
"Securities Laws"). In the event that Consultant accepts shares not yet
subject to a valid registration statement (notwithstanding or waiving the
Company's obligations to deliver shares duly and properly registered),
Consultant represents and warrants to the Company that he will acquire same
for investment and not with a view to the sale or other distribution thereof
and will not at any time sell, exchange, transfer, or otherwise dispose of
same under circumstances that would constitute a violation of Securities Laws.
Each party acknowledges the creation, modification and/or transfer of
securities and represents and warrants to all others that it has reviewed the
transaction with counsel and that no registration or representations are
required and that all rights of recourse or rescission resulting from such
transfer, to the extent permitted by law, are waived and each party represents
and warrants to all others that no marketing of securities to the public has
occurred. Each of the warranties, representations, and covenants contained in
this Agreement by any party thereto shall be continuous and shall survive the
delivery of Consultant Services, the Compensation and the termination of this
Agreement.
9. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in
accordance of the rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrator(s) shall be entered in any court
having jurisdiction thereof. For that purpose and the resolution of any other
claim hereunder, the parties hereto consent to the jurisdiction and venue of
an appropriate court located in Jefferson County, State of Florida. In the
event that litigation results from or arises out of this Agreement or the
performance thereof, the parties agree to reimburse the prevailing party's
reasonable attorney's fees, court costs, and all other expenses, whether or
not taxable by the court as costs, in addition to any other relief to which
the prevailing party may be entitled. In such event, no action shall be
entertained by said court or any court of competent jurisdiction if filed more
than one year subsequent to the date the cause(s) of action actually accrued
regardless of whether damages were otherwise as of said time calculable.
10. Notices. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or delivered by Facsimile or delivered
personally to the address written above or to such other address of which the
addressee shall have notified the sender in writing. Notices mailed in
accordance with this section shall be deemed given when mailed.
11. Binding Effect, Assignment and Succession. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of his, her or its respective heirs, personal
representatives, successors, and assigns, whether so expressed or not. Except
for assignment of the options as provided above, no party to this Agreement
may, however, assign his rights hereunder or delegate his obligations
hereunder to any other person or entity without the express prior written
consent of the other parties hereto.
12. Entire Agreement and Interpretation. This Agreement, including any
exhibits and schedules hereto, constitutes and contains the entire agreement
of the Company and the Consultant with respect to the provision of Consultant
Services and Compensation and supersedes any prior agreement by the parties,
whether written or oral. It may not be changed orally but only by an agreement
in writing signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought. The waiver of a breach of any
term or condition of this Agreement must be in writing and signed by the party
sought to be charged with such waiver, and such waiver shall not be deemed to
constitute the waiver of any other breach of the same or of any other term or
condition of this agreement. This Agreement shall be construed in accordance
with and governed by the laws of the State of Florida without regard to its
rules and laws regarding conflicts of laws and each of the parties hereto
irrevocably submit to the exclusive jurisdiction of any Florida State or
United States Federal court sitting in Palm Beach County, Florida over any
action or proceeding arising out of or relating to this Agreement. The parties
hereto further waive any objection to venue in the State of Florida and any
objection to an action or proceeding in the State of Florida on the basis
forum non conveniens.
13. Miscellaneous. The section headings contained in this Agreement are
inserted as a matter of convenience and shall not be considered in
interpreting or construing this Agreement. This Agreement may be executed
concurrently in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the remaining
provisions. Time is of the essence of this Agreement and the obligations of
the parties hereto.
IN WITNESS WHEREOF, the Company and the Consultant have executed this
Agreement as of the day and year first written above.
Company: Consultant:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
GK INTELLIGENT SYSTEMS, INC. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Exhibit A
Adoption of Securities Act Release No. 33-7646, dated February 26, 1999
Regarding Registration of Securities on Form S-8
Purpose - To clarify that S-8 is not available to consultants who directly or
indirectly promote or maintain a market for the issuer's securities, declaring
that these persons take from an issuer with a view to distribution and are
therefore "statutory underwriters" (who presumably would not have an exemption
for the resale of securities issued in these types of transactions [Section
4(1) of the Securities Act of 1933, as amended (the" Act"), the exemption
relied upon for secondary sales of securities, is not available to "issuers,
underwriters or dealers" in securities]).
Background
As of April 7, 1999, the availability of S-8's streamlined registration
process was restricted to deter the abuse of the Form to make sales to the
general public through so-called "consultants" and "advisors," and to
eliminate registration on the Form to "stock promoters." S-8 eliminated a need
to file a prospectus that duplicated information usually available to plan
participants who were being compensated by the issuance of securities rather
than cash, and it reflected the Commission's distinction between offerings
made to employees for compensatory reasons and offerings made for capital
raising. The Commission reasoned that the relationship of the employee to the
issuer provided the employee with a familiarity of the issuer's business
sufficient to justify the abbreviated disclosure, which would not be adequate
in a capital raising transaction. The 1990 amendment included "consultants"
whom the Commission found no reason to distinguish from regular employees, for
bona fide non-capital raising services rendered.
Abuses
Since 1990, the Form has been used to distribute securities to the public
without the protections to investors of registration under
Section 5 of the Act. Securities are often issued to so-called "consultants"
for nominal services, with pre-arrangements for exercise and distribution to
the public in the underlying markets. Often the options granted are exercised
to provide funds to the issuer or the proceeds of the sales are for the
payment of debts of the issuer that are not related to any services provided
by the consultants.
The initial registration of the shares underlying these options did not
register the public "capital raising" transaction which actually takes place
via the secondary sales. In these instances, the employee or consultant acts
as a conduit to the public, and the shares are not actually issued as
compensation for services, for which the Form is solely intended. Securities
have also been issued to consultants whose services are to promote the
issuer's securities. This practice invites fraud by providing inexpensive
compensation to person who hype the securities of the issuer and expand the
issuer's market through resales by these and other persons. Through its recent
amendments to Form S-8, the Commission has sought to curb these practices,
while maintaining. to the extent possible, the initial intent of the Form,
i.e., the registration of compensatory transactions between the issuer and
consultants and advisors who render bona fide services outside of "capital
raising" circumstances, as well as to traditional employees.
Amendments
The Form's availability is for employees or employees or subsidiaries,
pursuant to any employee benefit plan. An "employee" is defined to include a
consultant or advisor who provides bona fide services to the issuer other than
in capital raising transactions. Like the traditional employee, the consultant
or advisor must be a natural person, and there must be a contract between the
issuer and the consultant or advisor. The Commission has determined that
"capital raising" includes (i) compensation for any service that directly or
indirectly promotes or maintains a market for the issuer's securities, or (ii)
where the securities are issued to persons who act as conduits for a
distribution to the general public. Securities issued to persons who promote
the issuer's securities are outside the intent of the Form. Securities cannot
be issued to anyone who directly or indirectly promotes or maintains a market
in the issuer's securities. Issuers cannot use the Form for the issuance of
securities to consultants and advisors whose services related to potential
capital restructuring because this service is a predicate to "capital raising"
and market maintenance; however, services rendered in structuring the
compensation scheme would be included under the Form. Public relations
services are also prohibited as the Commission believes these services enhance
and expand the market of the issuer and its securities.
Rule 701 Amendments
As of April 7, 1999, the Commission amended Rule 701 to harmonize the
definition of "consultants and advisors" permitted to use the Rule to the
narrower definition of Form S-8. As revised. securities promoters will clearly
be excluded from the scope of persons eligible to use Rule 701.
SCHEDULE A TO CONSULTING AGREEMENT
SCHEDULE OF SERVICES AND DELIVERABLES
Consultant shall provide the following Strategic Services:
1. Business Development and Planning: Develop an in-depth familiarization with
the Corporation's business objectives and bring to its attention potential or
actual opportunities that meet those objectives or logical extensions thereof.
Alert the Corporation to new or emerging high potential forms of production
and distribution that could either be acquired or developed internally.
Comment on the Corporation's corporate development including such factors as
position in competitive environment, financial performances vs. competition,
strategies, operational viability, etc. Identify prospective suitable merger
or acquisition partners for the Corporation, perform appropriate diligence
investigations with respect thereto, advise the Corporation with respect to
the desirability of pursuing such prospects, and assist the Corporation in any
negotiations which may ensue therefrom.
2. Corporate Strategic Analysis: Evaluate business strategies and recommend
changes where appropriate.
3. Critically evaluate the Corporation's performance in view of its corporate
planning and business objectives.
4. Strategic Contacts and formation of Strategic alliances and Introduction to
strategic partners and other alliance candidates;
5. Strategic consulting regarding high level product planning, market
development, marketing and intellectual property planning; Business
development
6. Introduction to prospective customers for the Company's products or
services.
7. The consultant will consult with the officers and employees of the company
concerning matters relating to the management and organization of the company,
their financial policies, the terms and conditions of employment, and
generally any matter arising out of the business affairs of the Company.
