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EXHIBIT 10.9
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment") dated as of
November 15, 1999, is entered into by and among FutureLink Corp., a Delaware
corporation, (the "Company") the successor-in-interest to FutureLink
Distribution Corp., a Colorado corporation, and Xxxxxxx X. Xxxxxx, Xx. (the
"Borrower") in order to amend the Loan Agreement entered into between the
Company and the Borrower on July 15, 1999, which became effective August 1, 1999
(the "Loan Agreement"). All capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Loan Agreement unless the
context otherwise requires.
RECITALS
WHEREAS, pursuant to the Loan Agreement and the Promissory
Note (the "Note") executed in connection therewith, the Company loaned the
Borrower Two Million Dollars ($2,000,000) to be used, and which has been used,
to purchase common stock of the Company (the "Loan");
WHEREAS, the Company and the Borrower desire to amend Article
6 of the Loan Agreement relating to default, realization and repayment of the
Indebtedness (which includes all outstanding principal and interest due
thereon);
WHEREAS, the Company and the Borrower entered into an
Employment Agreement dated July 15, 1999 and effective August 1, 1999 (the
"Employment Agreement"), which, among other things, sets forth the terms of the
Loan Agreement;
WHEREAS, concurrently with this Amendment, the Company and the
Borrower shall amend the Employment Agreement to conform to the amendments set
forth herein; and
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained the parties hereto agree as
follows:
AGREEMENT
1. Article 6 of the Loan Agreement is hereby deleted in its entirety
and replaced with the following:
"6.1. Since the effective date of the Loan Agreement, $250,000
of the Loan has been forgiven, which forgiveness was effective
October 1, 1999. Hereafter, so long as the Borrower remains
employed by the Company under the Employment Agreement, (a)
$,500,000 of the principal amount of the original Loan shall
be forgiven on April 1, 2000 on account of the period between
October 1, 1999 and March 31, 2000 (the "First Forgiveness
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Period"), and (2) the remaining $1,250,000 of principal shall
be forgiven on July 1, 2001, on account of the period between
April 1, 2000 and July 1, 2001 (the "Second Forgiveness
Period"). Furthermore, the annual interest payable by the
Borrower in accordance with Article 3 hereof which accrued
during a particular Forgiveness Period shall be forgiven
annually, such that the interest accrued from August 1, 1999
to December 31, 1999 shall be forgiven as at December 31, 1999
should the Borrower remain employed by the Company at such
time. The forgiveness of any Indebtedness shall constitute a
benefit of employment to the Borrower and shall be subject to
deductions required by law, which deductions may be set-off
against other amounts owed to the Borrower by the Company."
"6.2. Should the employment of the Borrower be terminated by
the Company for other than just cause and prior to the
Indebtedness being forgiven or repaid under the terms of this
Agreement, the Indebtedness shall be reduced pro rata for each
full month of service completed by the Borrower within the
Forgiveness Period during which the Borrower was terminated,
and such amount shall be reduced from the total Indebtedness.
For example, should the Borrower be terminated without cause
by the Company on July 1, 2000, Seven Hundred and Fifty
Thousand Dollars ($750,000) would be forgiven by the Company,
which is the pro rata portion of the One Million Dollar
($1,000,000) annual forgiveness for the First Forgiveness
Period, based on the nine month period between October 1, 1999
(the start of the First Forgiveness Period) and June 30, 2000
(the date of the last full month prior to termination)."
"6.3. Should the Company terminate the Borrower with just
cause under the Employment Agreement, prior to the
Indebtedness being forgiven or repaid under the terms of this
Agreement, such event shall immediately constitute an Event of
Default hereunder, and the entire Indebtedness shall become
immediately due and payable."
"6.4. Should the Borrower voluntarily terminate his employment
with the Company, prior to the Indebtedness being forgiven or
repaid under the terms of this Agreement, the Indebtedness
shall be reduced pro rata for each fiscal quarter of service
completed by the Borrower during the applicable Forgiveness
Period, as of the date of termination, and such amount shall
be reduced from the total Indebtedness. For example, should
the Borrower resign on August 1, 2000, Seven Hundred and Fifty
Thousand Dollars ($750,000) would be
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forgiven by the Company, which is the pro rata portion of the
One Million Dollar ($1,000,000) annual forgiveness for the
First Forgiveness Period, based on the three full fiscal
quarters between October 1, 1999 (the start of the First
Forgiveness Period) and June 30, 2000 (the end of the most
recent fiscal quarter)."
"6.5. Upon termination of the Borrower under Section 6.2, 6.3
or 6.4 above, any escrowed Common Stock shall be immediately
seized by the Company from the Trustee under the Escrow
Agreement as the primary Security for the remaining
Indebtedness, and the Indebtedness shall be reduced by the
fair market value of the Common Stock seized which shall be
the average closing trading price of the Common Stock on the
Nasdaq National Market for the five trading days immediately
preceding the date of such termination."
"6.6. The Borrower shall be personally liable to the Company
for any Indebtedness remaining after the Company has exhausted
its remedy under Section 6.5 above, and in accordance with
Section 5.2 hereof, the Borrower shall have ten (10) Business
Days to repay such remaining Indebtedness by either (1)
delivering to the Company a certified check, bank draft or
wire transfer for all or a portion of the remaining
Indebtedness, or (2) delivering to the Company shares of
Common Stock of the Company which shall reduce such remaining
Indebtedness by the fair market value of the Common Stock
delivered which shall be the average closing trading price of
the Common Stock on the Nasdaq National Market for the five
trading days immediately preceding the date of the Borrower's
termination of employment."
"6.7 Upon any other termination of the Loan Agreement by
mutual consent of the parties, any escrowed Common Stock shall
be immediately seized by the Company from the Trustee under
the Escrow Agreement as the primary Security for the remaining
Indebtedness, and the Indebtedness shall be reduced by the
fair market value of the Common Stock seized which shall be
the average closing trading price of the Common Stock on the
Nasdaq National Market for the five trading days immediately
preceding the date of such termination."
2. No amendment, alteration, modification or waiver of any provision
hereof shall be valid unless in writing and signed by both parties hereto.
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3. The waiver by either party hereto of a breach or violation of any
term or provision of this Agreement by the other party hereto shall not operate
or be construed as a waiver of any subsequent breach or violation. The
invalidity of any one or more words, phrases, sentences, paragraphs, clauses or
sections contained in this Agreement shall not affect the enforceability of the
remaining portion(s) of this Agreement or any part thereof, all of which are
inserted conditionally on their being valid in law, and, in the event that any
one or more of the words, phrases, sentences, paragraphs, clauses or sections
contained in this Agreement shall be declared invalid by a court of competent
jurisdiction, this Agreement shall be construed as if such invalid word or
words, phrase or phrases, sentence or sentences, paragraph or paragraphs, clause
or clauses, or section or sections had not been inserted into this Agreement.
4. The parties hereto shall respectively do all acts and things and
execute all documents reasonably required to give effect to this Agreement.
5. This Agreement shall be governed by, interpreted and enforced in
accordance with the laws of the State of California and the parties hereto
expressly attorn to the jurisdiction of the courts of Orange County, the State
of California.
6. The division of this Agreement into Sections and other portions is
for convenience of reference only and shall not affect the construction and
interpretation of this Agreement.
7. This Agreement may be executed in one or more counterparts each of
which together shall constitute the entire agreement.
[Signatures on the following page]
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[Signature Page to First Amendment to Loan Agreement]
IN WITNESS WHEREOF the Company and the Borrower have executed this
Agreement as of the date first above written.
FUTURELINK CORP.
By: /s/ XXXXXXX XXXXX
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Print Name: Xxxxxxx X. Xxxxx
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Print Title: VP Administration
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By: /s/ XXXX X.X. XXXXX
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Print Name: Xxxx X.X. Xxxxx
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Print Title: VP & Secretary
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/s/ X. X. XXXX /s/ XXXXXXX X. XXXXXX, XX.
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Witness XXXXXXX X. XXXXXX, XX.
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