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EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of September 30, 1999, by and between FUTURELINK DISTRIBUTION CORP., a
Colorado corporation (the "Company"), and XXXX X. XXXXXX ("Executive").
I.
EMPLOYMENT
I.1 Position and Duties. The Company hereby engages and employs
Executive as President for the term set forth in this Agreement.
The Company's Board of Directors (the "Board") may provide such
additional designations of title to Executive as the Board, in its discretion,
may deem appropriate. Executive shall perform the executive duties and functions
related to the above positions, subject to the reasonable limitations of
authority set forth from time to time in the resolutions of the Board and
applicable law.
I.2 Best Efforts. Executive agrees to devote his full time and
attention to the Company, to use his best efforts to advance the business and
welfare of the Company, to render his services under this Agreement fully,
faithfully, diligently, competently and to the best of his ability, and not to
engage in any other employment activities. Notwithstanding anything herein to
the contrary, Executive shall not be precluded from (a) engaging in charitable
activities and community affairs; (b) managing his personal investments and
affairs, provided that such activities do not materially interfere with the
proper performance of his duties and responsibilities under this Agreement; or
(c) owning up to 1% of a publicly-held company engaged in the same or similar
business as the Company.
II.
COMPENSATION AND BENEFITS
II.1 Base Salary. For all services to be rendered by Executive under
this Agreement, the Company agrees to pay Executive an annual base salary of not
less than $200,000, less deductions required by law, payable in accordance with
the normal payroll practices of the Company.
II.2 Bonus. Within 10 days following each calendar quarter during the
term of this Agreement, the Company shall pay to Executive a minimum bonus of
$50,000 per quarter, and a discretionary performance bonus, as determined by the
board.
II.3 Other Benefits. The Company shall further provide to Executive the
following other benefits:
a) an annual vacation leave of a minimum of three (3) weeks per
calendar year at full pay;
b) a grant of options to purchase 100,000 shares of the Company's
Common Stock at $5.00 per share, vesting 50% on grant, and 25% annually
thereafter; and
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c) full participation, on a basis commensurate with his position
with the Company, in all plans of life, accident, disability and health
insurance that generally are made available to senior executives of the Company.
II.4 Expense Reimbursement. The Company shall promptly reimburse
Executive for all actual and reasonable business expenses incurred by Executive
in promoting the business of the Company, including expenditures for
entertainment, travel, or other expenses, provided that (a) such expenditures
are of a nature qualifying them as legitimate business deductions and (b)
Executive furnishes to the Company adequate records and other documentary
evidence reasonably required by the Company to substantiate such expenditures.
III.
TERMINATION AND SEVERANCE PAY
III.1 At Will. Executive and the Company acknowledge and agree that
Executive's employment with the Company is expressly "at-will" both during and
after the term of this Agreement. This means that either party may terminate
Executive's employment with or without cause. Any termination of Executive's
employment is, however, subject to the terms and provisions of this Agreement as
to severance pay and other obligations.
III.2 Involuntary Termination.
a) Severance Pay. In the event that Executive's employment with
the Company is terminated by the Company for Cause (as defined in Section 3.3),
Executive shall be entitled to no severance pay. In the event that Executive's
employment with the Company is terminated by the Company other than for Cause,
then in consideration of Executive's compliance with his obligations under
Article V and Article VI and Executive's execution of a general release in favor
of the Company, Executive shall be entitled to severance pay ("Severance Pay")
in the form of (i) monthly payments to Executive in the amount of Executive's
monthly base salary and minimum bonus as in effect on the date of termination,
payable in accordance with customary payroll practices, for 18 months following
such termination. Executive shall also be entitled to Severance Pay if his
employment is terminated for any reason by the Company, or its successors,
within eighteen months of a Corporate Transaction, as defined below in Section
3.4, or the transfer of Company stock consisting of more than fifty percent
(50%) of the total combined voting power of the Company's outstanding
securities. Executive acknowledges and agrees that in the event Executive
breaches any provision of Article V or Article VI, his right to receive
severance payments under this Section 3.2(a) shall automatically terminate.
b) Benefits. Following termination, Executive shall cease to be a
Company employee and shall not be entitled to any employee benefits. This shall
not preclude Executive from exercising his COBRA benefits under applicable law.
III.3 Cause. For purposes of this Agreement, "Cause" shall mean (i) the
willful refusal of Executive to comply with a lawful instruction of the Board;
(ii) an act or acts of personal dishonesty by Executive that were intended to
result in personal enrichment of
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Executive at the expense of the Company; (iii) Executive's conviction of any
felony involving an act of moral turpitude; or (iv) Executive's gross
negligence, gross incompetence, willful insubordination or misconduct,
intentional or persistent failure to perform stated duties or abide by the
Company's policies, or material breach of any provision of this Agreement,
including without limitation any representation or covenant contained in Article
V or Article VI of this Agreement.
III.4 Corporate Transaction. Corporate Transaction shall mean either of
the following transactions to which the Company is a party: a merger or
consolidation in which securities possessing more than fifty percent (50%) of
the total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such transaction, or the sale, transfer or other
disposition of all or substantially all of the Company's assets in complete
liquidation or dissolution of the Company.
III.5 Voluntary Termination.
a) Severance Pay. In the event Executive voluntarily terminates
his employment with the Company without Good Reason (as defined in Section 3.6),
Executive shall be entitled to no Severance Pay. In the event Executive
voluntarily terminates his employment with the Company for Good Reason (as
defined in Section 3.6), Executive shall be entitled to the Severance Pay set
forth in Section 3.2(a) if (i) Executive gives written notice of his resignation
within ninety (90) days of such Good Reason and advises, as part of such
resignation, that he is resigning because of the Good Reason, and (ii) the Good
Reason was other than for Cause.
For purposes of this Agreement, the Term "voluntarily terminates" shall
not include a resignation that is tendered by Executive pursuant to a direct
request for the Board. A resignation tendered by Executive pursuant to a direct
request of the Board shall, for purposes of this Agreement, be treated as an
involuntary termination, and Executive's entitlement to Severance Pay in
accordance with the provisions of Section 3.2(a) shall depend upon whether the
Board's request was based on Cause (as defined in Section 3.3).
III.6 Good Reason. For purposes of this Agreement, "Good Reason" shall
mean (i) the material reduction or material adverse modification of Executive's
authority or duties without his prior written consent (i.e., the substantial
diminution or adverse modification in Executive's title, status, overall
position, responsibilities, reporting relationship or general working
environment); (ii) any reduction in Executive's base compensation, bonus
potential or material reduction in employee benefits; or (iii) any requirement
to move Executive's principal place of employment from Orange County,
California.
III.7 Death. In the event of Executive's death, this Agreement shall
automatically terminate and shall be of no further force and effect. Termination
of Executive's employment as a result of his death shall not result in any
obligation by the Company to pay Severance Pay or other benefits to Executive's
estate or heirs.
III.8 Disability. In the event of Executive's Disability (as defined
below) during the term of this Agreement for any period of at least three (3)
consecutive months, the
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Company shall have the right, which may be exercised in its sole discretion, to
terminate this Agreement. In the event the Company does elect to terminate this
Agreement, Executive shall not be entitled to any Severance Pay at any time but
shall be entitled to normal disability benefits in accordance with the policies
established from time to time by the Company. For purposes of this Agreement,
"Disability" shall mean the inability of Executive to perform his employment
services hereunder by reason of physical or mental illness or incapacity as
determined by a physician chosen by the Company and reasonably satisfactory to
Executive or his legal representative.
IV.
TERM
IV.1 Term. Subject to the provisions of Article III hereof, the Term of
Executive's employment under this Agreement shall commence on the date hereof
and shall continue for two years from the date hereof, as such date may be
extended from time to time. After expiration of the initial two year period of
this Agreement, Executive's employment will automatically renew for a period of
one year, each year, on the same terms and conditions as are set forth herein,
unless either party gives the other notice of non-renewal at least six months
prior to the end of the initial term of employment, or for any year in which the
employment was renewed, whichever the case may be.
V.
NONDISCLOSURE OF INFORMATION
AND NON-SOLICITATION OF EMPLOYEES
V.1 Nondisclosure of Confidential Information. Except in the
performance of his duties hereunder, Executive shall not disclose to any person
or entity or use for his own direct or indirect benefit any Confidential
Information (as defined below) pertaining to the Company obtained by Executive
in the course of his employment with the Company. For purposes of this
Agreement, "Confidential Information" shall include the Company's products,
services, processes, suppliers, customers, customers' account, executives,
employees, financial, sales and distribution information, price lists, identity
and list of actual and potential customers, trade secrets, technical
information, business plans and strategies to the extent that such information
has not been publicly disseminated by the Company, other than through a breach
hereof.
V.2 Return of Information. Upon termination of Executive's employment,
Executive will deliver to the Company all customer lists, proposals, reports,
memoranda, computer software and programming, budgets and other financial
information, and other materials or records or writings of any type (including
any copies thereof and regardless of the medium in which the information exists)
made, used or obtained by Executive in connection with his employment by the
Company.
V.3 Employee Proprietary Information and Inventions Agreement.
Executive shall be subject to the provisions of the Company's Employee
Proprietary Information and Inventions Agreement, a copy of which is attached
hereto as Exhibit A and incorporated herein by this reference.
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V.4 Non-Solicitation. Executive agrees that, so long as he is employed
by the Company and for a period of two (2) years after termination of his
employment for any reason, he shall not (a) directly or indirectly solicit,
induce or attempt to solicit or induce any Company employee to discontinue his
or her employment with the Company, (b) usurp any opportunity of the Company
that Executive became aware of during his tenure at the Company or which is made
available to him on the basis of the belief that Executive is still employed by
the Company, or (c) directly or indirectly solicit or induce or attempt to
influence any person or business that is an account, customer or client of the
Company to restrict or cancel the business of any such account, customer or
client with the Company.
VI.
NONCOMPETITION
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VII.
MISCELLANEOUS
VII.1 Successors; Binding Agreement. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of the Company or by any
merger or consolidation, whether or not the Company is the surviving or
resulting corporation, or upon any transfer of all or substantially all of the
assets of the Company. In the event of any such merger, consolidation or
transfer of assets, the provisions of this Agreement shall bind and inure to the
benefit of the surviving or resulting corporation, or the corporation to which
such assets shall have been transferred, as the case may be; provided, however,
that the Company will require any successor to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
VII.2 Arbitration. Any disputes or controversy between the parties to
this Agreement, including allegations of fraud and misrepresentation arising
from or as a result of this Agreement, the resulting business dealings between
Company and Executive, Executive's employment or the termination thereof,
including any claims of discrimination or other claims under any federal, state,
or local law or regulation now in existence or hereinafter enacted concerning in
any way the subject of Executive's employment with Company or its termination,
shall be resolved, after the parties attempt informal resolution, exclusively by
arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association. All arbitration
hearings shall be held in Orange County, California within one hundred twenty
(120) days from the date arbitration is demanded by any of the parties and the
arbitrator shall render his/her written decision within thirty days (30) after
the arbitration hearing has concluded. The decision of the arbitrator shall be
final and binding on all parties, and may be entered as a judgment by any party
with any federal or state court of competent jurisdiction. The parties to the
arbitration hearing shall share any filing fees and arbitrator's fees which must
be paid in advance of the hearing equally; however, as set forth below the
prevailing party shall be entitled to recover from the losing party all costs
that it has incurred as a result of the arbitration hearing, including fees paid
to the arbitrator, travel costs and Attorneys' fees. This
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provision shall not alter the rights of the parties to seek and obtain the
provisional equitable remedies provided under any applicable state or federal
law. Executive represents, by his signature, that he is making a voluntary and
knowing waiver of his right to pursue any and all employment related claims in
court.
VII.3 No Waiver. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach thereof.
VII.4 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws and decisions of the State of California.
VII.5 Entire Agreement; Modifications. This Agreement represents the
entire agreement between the parties with respect to the matters set forth
herein and supersedes all prior agreements and understandings between the
parties relating to the employment of Executive by the Company, and it may not
be changed or terminated orally. No modification, termination, or attempted
waiver of any other provisions of this Agreement shall be valid unless in
writing signed by the party against whom the same is sought to be enforced.
VII.6 Jurisdiction; Venue. The parties do hereby agree and submit to
personal jurisdiction in the State of California for the purposes of any
proceedings brought to enforce or construe the terms of this Agreement or to
resolve any dispute or controversy relating to Executive's employment or arising
under, as a result of, or in connection with this Agreement, and do hereby agree
and stipulate that any such proceedings shall be venued and held in Orange
County, California.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
"COMPANY"
FUTURELINK CORP.
By: /s/ XXXXXXXXX XXXXXXX
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Name: Xxxxxxxxx Xxxxxxx
Title: Chief Financial Officer
"EXECUTIVE"
/s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx
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EXHIBITS
EXHIBIT A Employee Proprietary Information and Inventions Agreement
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