EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is effective as of July 15,
2004, is by and between Stellar Software Network, Inc. , a Nevada Corporation,
with its principal place of business in Plano, Texas, hereinafter referred to
as (the "Employer" or the "Corporation"), and Xxxxx Xxxxxxx, hereinafter
referred to as (the "Employee").
ARTICLE 1.
TERM OF EMPLOYMENT
1.1 Term. The Employer hereby employs the Employee and the Employee
hereby accepts employment with the Employer from July 15, 2004 until July 14,
2006.
1.2 Renewal. This Agreement shall continue for successive one (1) year
terms, unless either party gives notice of termination in writing to the other
party at least ninety (90) days prior to the expiration date.
ARTICLE 2.
DUTIES OF EMPLOYEE
2.1 General Duties. The Employee agrees to serve as President of
Stellar Software Network Inc. (Stellar) and to perform diligently and to the
best of his abilities the duties and services pertaining to such office as set
forth in the Bylaws of Stellar that are currently in effect or as amended from
time to time, as well as such additional duties and services appropriate to
such office as the Board of Directors of Stellar ("Board of Directors") may
reasonably assign to Employee from time to time. Any action undertaken on
behalf of the Employer shall be done prudently and in good faith in
furtherance of the Employer's business and the business of Stellar.
2.2 Change in Duties. The duties of the Employee may be changed from
time to time by the mutual consent of the Employer and the Employee without
resulting in a rescission of this Agreement. Notwithstanding any such change,
the employment of the Employee shall be construed as continuing under this
Agreement as modified.
2.3 Devotion of Time to Employer's Business. The Employee shall use his
best efforts and shall devote his time and effort as required to competently
perform his duties.
ARTICLE 3.
COMPENSATION AND BENEFITS
3.1 Compensation. During the term of this Agreement, the Corporation
shall provide compensation to Employee in the following forms:
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(a) Base Salary. Employee shall receive an annual base salary of
one hundred twenty thousand dollars ($120,000), which amount shall be subject
to annual review by the Employer's Board of Directors and/or the Compensation
Committee of the Employer's Corporation for possible increases.
Bonus. During the Term of this Agreement, Employee, at the end of
each fiscal year, shall receive fifty percent (50%) of the increase over the
base fiscal year, 2003, of the audited earnings before tax.
(b) Stock Option. In addition to the Base Salary and Bonus set
forth above, and any other benefits available to all employees, the Employer's
parent company, GK Intelligent Systems, Inc. has granted to Employee an
Incentive Stock Option (ISO) pursuant to the GK Intelligent Systems, Inc. 2004
Employee Stock Option Plan, to purchase one-hundred thousand (100,000) shares
of GK Intelligent Systems, Inc. common stock (the "Stock Options"). Provided
that Employee remains an employee of the Employer, its parent company, an
affiliate or subsidiary, and contingent upon the Agreement remaining in force
as a result of such continued employment, said Stock Options will vest over
the two year period of time immediately following the date of this Agreement.
Fifty percent of the options will be vested at the end of the first twelve
months and fifty percent (50%) of the options will be vested at the end of the
second twelve months. This grant of the Stock Options shall be governed by and
subject to the GK Intelligent Systems, Inc., 2004 Stock Option Plan and the
separate Incentive Stock Option Agreement executed concurrently herewith. The
number of shares shall also be adjusted as provided in such Plan. For all
purposes related to the grant of these Stock Options, the Board of Directors
of GK Intelligent Systems, Inc. has determined that the date of such grant is
July 15, 2004 and the exercise price shall be the the Closing Price of the
Employer's common stock as quoted on the Nasdaq OTCBB as of July 14, 2004.
(c) Employee Benefit Plans. Employee shall be entitled to
participate in all employee benefit plans to be established by the Employer's
Board of Directors on the same terms and conditions as all other employees
similarly situated, including reimbursement of reasonable expenses as approved
by Employer's Board of Directors.
3.2 Benefits. During the term of this Agreement, Employee shall be
afforded the following benefits as incidences of his employment:
(a) Health and Other. Employee and, to the extent applicable,
Employee's family, dependents and beneficiaries, shall be allowed to
participate in all benefits, plans and programs, including improvements or
modifications of the same, which are now, or may hereafter be, available to
employees of the Employer generally. Such benefits, plans and programs may
include, without limitation, a profit sharing plan, a thrift plan, a health
insurance or health care plan, life insurance, disability insurance or a
pension plan. The Employer shall not, however, by reason of this paragraph be
obligated to institute, maintain, or refrain from changing, amending or
discontinuing, any such benefit plan or program, so long as such changes are
similarly applicable to employees of the Employer generally.
(b) Business and Entertainment Expenses. Subject to the
Employer's standard policies and procedures with respect to expense
reimbursement as applied to its executive employees generally, the Employer
will reimburse Employee for, or pay on behalf of Employee, reasonable and
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appropriate expenses incurred by Employee for business related purposes,
including dues and fees to approved industry and professional organizations,
and reasonable costs of entertainment incurred in connection with business
development. With regard to such expenses, the Employee shall:
(i) Keep an account book in which the Employee shall record
at or near the time that each expenditure is made:
(1) amount of the expenditure;
(2) the time, place and designation of the type of the
entertainment and travel, or other expense, or the date and
description of the gift (gifts made to one individual are not
to exceed a total of twenty-five dollars ($25.00) in any
taxable year;
(3) the business reason for the expenditure and the
nature of the business benefit derived or expected to be
derived as a result of the expenditure; and
(4) the names, occupations, addresses, and other
information concerning each person who was entertained or
given a gift sufficient to establish a business relationship
to the Employer;
(ii) Obtain documentary evidence (such as a receipt for paid
xxxx), which states sufficient information to establish the
amount, date, place and the essential character of the
expenditure, for each expenditure:
(1) Twenty-five dollars ($25.00) or more (except for
transportation charges if not readily available); and
(2) or lodging while traveling away from home. The
foregoing account book and documentary evidence shall be
delivered to the Employer whenever requested by the Employer
and shall thereafter be retained by the Employee.
3.3 Payroll and Deduction for Taxes. Employee shall receive all
compensation pursuant to this Agreement in accordance with the Employer's
customary payroll practices with respect to time and manner of payment. The
Employer shall have the right to deduct from the compensation due to the
Employee hereunder any and all sums required for social security and
withholding taxes and for any other federal, state or local tax or charges
which may not be in effect or hereafter enacted or required as a charge on the
compensation of the Employee.
ARTICLE 4.
PROPERTY RIGHTS OF THE PARTIES
4.1 Inventions, Copyrights, Patents and Trademarks. The Employee agrees
that he will promptly from time to time fully inform and disclose to the
Employer all inventions, designs, improvements, and discoveries which he now
has or may hereafter have during the term of this Agreement which pertain or
relate to the business of the Employer or to any experimental work carried on
by the Employer, whether conceived by the Employee alone or with others and
whether or not conceived during regular working hours.
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All such inventions, designs, improvements and discoveries shall be the
exclusive property of the Employer. The Employee shall assist the Employer to
obtain patents on all such inventions, designs, improvements, and discoveries
deemed patentable by things necessary to obtain patent letters, vest the
Employer with full and exclusive title thereto, and protect the same against
infringement by others.
4.2 Trade Secrets. The Employee during the term of employment under
this Agreement will have access to and become acquainted with various trade
secrets, consisting of devices, secret inventions, customer lists, customer
requirements and compilations of information, records and specifications,
which are owned by the Employer and which are regularly used in the operation
of the business of the Employer. The Employee shall not disclose any of the
aforesaid trade secrets, directly or indirectly or use them in any way, either
during the term of this Agreement or at any time hereafter, except as required
in the course of his employment. All files records, documents, drawings,
specifications, equipment, and similar items relating to the business of the
Employer, whether prepared by the Employee or otherwise coming into his
possession, shall remain the exclusive property of the Employer and shall not
be removed from the premises of the Employer under any circumstances
whatsoever without the prior written consent of the Employer.
4.3 Non Solicitation of Customers After Termination of Employment. The
Employee shall not, for a period of one year, following the termination of
this Agreement, for whatever reason, either directly or indirectly:
(a) Make known to any person, firm or corporation the names or
addresses of any of the customers of the Employer or any other information
pertaining to them; or
(b) Call on, solicit, or take away, or attempt to call on,
solicit, or take away any of the customers of the Employer on whom the
Employee called or with whom he became acquainted during his employment with
the Employer, either for himself or for any other person, firm, or
corporation.
4.4 Ownership of Employer and Customer Records. All Records of the
Employer and the accounts of customers and any other records and books
relating in any manner whatsoever to the customers of the Employer, whether
prepared by the Employee or otherwise coming into his possession, shall be the
exclusive property of the Employer regardless of who actually purchased the
original book or record. All such books and records shall be immediately
returned to the Employer by the Employee on any termination of his employment.
If the Employee purchases any such original book or record, he shall
immediately notify the Employer, who then shall immediately reimburse him.
4.5 Return of Employer's Property. On termination of employment or
whenever requested by the Employer, the Employee shall immediately deliver to
the Employer all property in his possession or under his control belonging to
the Employer including, but not limited to the equipment, supplies, records,
and other personal property under Employee's control, which is the Employer's,
in good condition, with ordinary wear and tear and damage by any cause beyond
the reasonable control of the Employee excepted.
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ARTICLE 5.
NON-COMPETITION
5.1 Non-Competition Agreement. In connection with this Employment
Agreement, Employee agrees that he shall not, either directly or indirectly,
either as an employee, employer, consultant, agent, principal, partner,
shareholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is similar
to and/or in competition in any manner whatsoever with the business of the
Employer within the area, herein called "designated area" consisting of the
State of Texas, for so long as Employee is employed by, or associated in any
manner with the Employer and for a period of one (1) year after the
termination of Employee's employment with the Employer.
5.2 Employee agrees not to solicit the customers of the Employer for
his personal account or the account of any other person or entity other than
the Employer at any time. The parties hereto agree that notwithstanding any
provisions of the Texas Codes that this covenant not to compete is enforceable
and necessary to protect the Employer's trade secrets including, but not
limited to, patent and trademark designs, suppliers and customer lists of the
Employer.
ARTICLE 6.
TERMINATION OF EMPLOYMENT
6.1 Termination. Subject to the notice and other provisions of this
Section 6.1, the Employer shall have the right to terminate the Executive's
employment with the Employer, and the Executive shall have the right to resign
from such employment, at any time and for no stated reason.
(a) Disability. The Employer shall have the right to terminate
the employment of the Executive under this Agreement for disability in the
event Executive suffers an injury, illness or incapacity lasting for a period
of more than six (6) months provided that after such six (6) month period the
Employer shall have given at least ten (10) days written notice of
termination; provided further, however, that if the Executive is eligible to
receive disability payments pursuant to a disability policy paid for by the
Employer, the Executive shall assign such benefits to the Employer for all
periods as to which he is receiving full payment under this agreement.
(b) Death. This Agreement shall terminate upon the death of
Executive.
(c) With Cause. The Employer may terminate this Agreement
effective upon delivery of written notice to Executive given at any time
(without any necessity for prior notice) if any of the following shall occur:
(1) Any material breach of Executive's obligations under this
Agreement not cured after ten (10) days notice from the
Employer's Board of Directors:
(2) Executive's gross negligence in the performance of his
duties hereunder;
(3) Executive has committed any of the following: (i) a
felony criminal conviction; (ii) any other criminal
conviction involving Executive's lack of honesty or moral
turpitude; (iii) drug or alcohol abuse; or (iv) acts of
dishonesty, gross carelessness or gross misconduct.
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In the event executive's employment with the Employer is terminated
pursuant to items 6.1(a), (b), or (c), Executive or his beneficiary shall be
entitled to receive all base compensation earned by Executive up to the date
of termination and all un-reimbursed expenses. For a termination by the
Employer without good cause, Executive shall be entitled to receive the base
salary rate for the remaining Employment Term and all un-reimbursed expenses.
6.2 Effect of Employer's Merger, Transfer of Assets or Dissolution.
This Agreement shall not be terminated by any merger or consolidation where
the Employer is not the consolidated or surviving corporation but shall be
terminated in the event of voluntary or involuntary dissolution of the
Employer. In the event of a merger, consolidation or sale the Employer shall
take all actions necessary to insure that such corporation or transferee is
bound by the provisions of this Agreement.
ARTICLE 7.
GENERAL PROVISIONS
7.1 Damages for Breach of Contract. In the event of a breach of this
Agreement by either the Employer or Employee resulting in damages to the other
party, the damaged party may recover from the breaching party, any and all
damages that may be sustained.
7.2 Governing Law, Jurisdiction and Venue. This Agreement is entered
into under, and shall be governed for all purposes by, the laws of the State
of Texas. Any suit by the Employer to enforce any right hereunder or to
obtain a declaration of any right or obligation hereunder may, at the sole
option of the Employer, be brought (i) in any court of competent jurisdiction
in the State of Texas or (ii) in any court of competent jurisdiction where
jurisdiction may be had over Employee. Employee hereby expressly consents to
the jurisdiction of the foregoing courts for such purposes and to the
appointment of the Secretary of State for the State of Texas as his agent for
service of process.
7.3 Notices. Any notices to be given hereunder by either party to the
other may be effected by personal delivery in writing by either registered or
certified mail, postage prepaid with return receipt requested. Mailed notices
shall be addressed to the parties at their last known address. Notices
delivered personally shall be deemed communicated as of five (5) days after
mailing.
7.4 No Waiver. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall (i) be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time or (ii) preclude insistence upon strict compliance in the
future.
7.5 Partial Invalidity and Severability. If a court of competent
jurisdiction determines that any provision of this Agreement is invalid or
unenforceable, then the invalidity or unenforceability of that provision shall
not affect the validity or enforceability of any other provision of this
Agreement, and all other provisions shall remain in full force and effect.
7.6 Assignment. This Agreement, and the rights and obligations of the
parties hereunder, are personal and neither this Agreement, nor any right,
benefit or obligation of either party hereto, shall be subject to voluntary or
involuntary assignment, alienation or transfer, whether by operation of law or
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otherwise, without the prior written consent of the other party except that
vested rights to payment shall be subject to devise, and shall descend in
accordance with applicable laws of inheritance.
7.7 Attorney's Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs, and necessary
disbursements in addition to any other relief to which he may be entitled.
7.8 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association, and
judgment on the award rendered may be entered in any court having jurisdiction
thereof.
7.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.
7.10 Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of the Employee by the Employer and contains all of the
covenants and agreements between the parties with respect to such employment
in any manner whatsoever. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, orally or otherwise,
have been made by any party, or anyone acting on behalf of any party, which
are not embodied herein, and that no other agreement, statement, or promise
not contained in this Agreement shall be valid and binding. Any modification
of this Agreement will be effective only if it is in writing signed by the
party to be charged.
*** SIGNATURE PAGE FOLLOWS***
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IN WITNESS WHEREOF, this Agreement is executed on the day and year first above
written.
EMPLOYER
STELLAR SOFTWARE NETWORK, INC.
/s/ Xxxx X. Xxxxxxx
-------------------------------
Xxxx X. Xxxxxxx, Vice President
EMPLOYEE
/s/ Xxxxx Xxxxxxx
-------------------------------
Xxxxx Xxxxxx
GK INTELLIGENT SYSTEMS, INC.
/s/ Xxxx X. Xxxxxxx
-------------------------------
By: Xxxx X. Xxxxxxx
Its: President and CEO
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