1
EXHIBIT 10.81
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of December 4, 2000, by and between FUTURELINK CORP., a Delaware corporation
("Company"), and Howard E. Taylor ("Executive").
I
EMPLOYMENT
1.1 Position and Duties. The Company hereby engages and employs
Executive as President and Chief Executive Officer, reporting to the Company's
Board of Directors (the "Board"), and Executive hereby agrees to such employment
with the Company, on the terms set forth in this Agreement.
The Board may provide such additional designations of title to Executive
as the Board, in its discretion, may deem appropriate. Executive shall perform
the duties and functions of a similarly situated president and chief executive
officer in a publicly owned company, in accordance with this Agreement and the
directions of the Board and applicable law.
1.2 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; or (b) managing his personal investments and affairs;
provided however, that such additional activities do not materially interfere
with the proper performance of his duties and responsibilities under this
Agreement.
II
COMPENSATION AND BENEFITS
2.1 Base Salary. For all services to be rendered by Executive under this
Agreement, the Company agrees to pay Executive an annual base salary of three
hundred twenty-five thousand dollars ($325,000.00) payable in accordance with
the normal payroll practices of the Company. Executive's salary will be reviewed
for possible increase on an annual basis, in the Board's sole and absolute
discretion.
2.2 Bonus. Executive will be eligible for an annual performance bonus
(the "Annual Performance Bonus") of two hundred fifty thousand dollars
($250,000.00), paid in cash on an annual basis within forty-five (45) days after
the end of the fiscal year. The Annual Performance Bonus will be earned by
Executive if the Company achieves mutually agreed upon corporate performance
targets established in writing between Executive and the Board prior to the
commencement of the fiscal year. In addition to the Annual Performance Bonus,
Executive will be eligible for a one time performance-based bonus consisting of
a grant of an option to acquire two hundred thousand (200,000) shares of the
Company's common stock which shall vest on December 31, 2001 if the Company
achieves mutually agreed upon corporate performance targets established in
writing between Executive and the Board prior to the commencement of the fiscal
year, but if not vested on December 31, 2001 will, in any event, vest on
December 31, 2004 provided Executive is still employed by the Company on that
date.
2
2.3 Other Benefits. The Company shall provide to Executive the following
benefits:
(a) An annual vacation leave of four (4) weeks per calendar year at
full pay pay, which shall accrue, year-to-year, up to the
accrual limits established by company policy.
(b) The Executive shall be entitled to participate to the same
extent as similarity situated Executives in the Company's
employee benefits plan as may be in effect at any given time,
subject to satisfying any insurability requirements established
by the carrier or carriers that provide the benefits, provided,
however, that the Company will obtain and maintain at its own
expense a life insurance policy on Executive in the face amount
of one million dollars ($1,000,000.00) for the benefit of a
beneficiary or beneficiaries to be designated by Executive.
(c) The Executive will receive a grant of an option to acquire up
to two million five hundred thousand (2,500,000) shares of
common stock. The exercise price of the option shares will be
set based on the closing price of the company's common stock on
December 1, 2000. Two million (2,000,000) of the shares shall
vest in increments of 250,000 shares on the first day of each
quarter for eight consecutive quarters commencing on January 1,
2001. The remaining five hundred thousand (500,000) shares
shall vest on January 1, 2003. All other terms and conditions
pertaining to such options will be governed by the Year 2000
Corporate Stock Option Plan, which is attached as Exhibit "A"
to this Agreement, and any subsequent amendments thereto.
(d) The Company agrees to cover Executive under its Directors and
Officers Liability Insurance Policy at no cost to Executive.
(e) Executive shall be paid a signing bonus in the amount of
$650,000, to be paid in two equal installments of $325,000
each, on January 1, 2001 and on April 1, 2001. In the event
that Executive voluntarily terminates his employment within
twelve (12) months after December 4, 2000, Executive shall,
within thirty (30) days of termination of Executive's
employment, repay the signing bonus to the Company on a pro
rata basis for each month remaining in the initial twelve (12)
month period.
2.4 Expense Reimbursement. The Company shall reimburse Executive in
accordance with the Company's policies for reimbursement for all actual and
reasonable business expenses incurred by Executive in promoting the business of
the Company, provided that (a) such expenditures are of a nature qualifying them
as legitimate business deductions, (b) Executive furnishes to the Company
adequate records and other documentary evidence reasonably required by the
Company to substantiate such expenditures, and (c) such expenses qualify for
reimbursement under the Company's expense reimbursement policy. Notwithstanding
the foregoing, Executive shall be reimbursed for Executive's reasonable travel
and living expenses arising as a result of Executive's activities under this
Agreement.
2
3
III
TERM AND TERMINATION OF AGREEMEMENT
3.1 Term. This Agreement takes effect December 1, 2000 and shall have an
initial term of twenty-four (24) months, unless earlier terminated by either
party. Within ninety (90) days after the end of the initial term, Executive and
Company shall, in good faith, attempt to renegotiate the terms of this
Agreement. All of the terms and conditions of this Agreement shall remain in
effect during this ninety (90) day renegotiation period unless a new agreement
is executed sooner. In the event that Executive and Company are unable to agree
on mutually acceptable terms for a new agreement, this Agreement shall
automatically expire ninety (90) days after the end of the initial term. Upon
expiration Company shall have no further obligation to Executive and Executive
shall not be entitled to any further compensation other than amounts earned by
Executive prior to the expiration date and unpaid as of the expiration date.
3.2 Termination by Executive. Executive has the right to terminate this
Agreement and the Executive's employment hereunder by providing the Company with
written notice, which shall provide for an effective date of termination (the
"Voluntary Termination Date"). The Executive shall receive the remuneration,
benefits and expenses contemplated by this Agreement with respect to periods
prior to such Voluntary Termination Date and any options to acquire common stock
which may have vested up to and including the Voluntary Termination Date and the
Executive shall not be entitled to any other remuneration, reimbursement or
payment except as otherwise provided in this Agreement.
3.3 Termination by Company. The Company has the right to terminate this
Agreement and the Executive's employment hereunder at any time without Cause (as
defined below) by providing the Executive with written notice setting forth the
effective date of termination (the "Company Termination Date").
(a) In the event the Company terminates the Executive's employment
without Cause, the Company shall pay a severance payment to the
Executive no later than thirty (30) days following the Company
Termination Date, or at such other time as is mutually agreed
upon between the Company and the Executive. The severance
payment shall not be less than the total of:
(i) an amount equal to Executive's monthly base salary as of
the Company Termination Date multiplied by six (6); plus
(ii) an amount equal to the insurance premium contributions
paid on behalf of the Executive under 2.3 (b) for
coverage during the month immediately prior to the
Company Termination Date, multiplied by six (6); plus
(iii) an amount equal to one half of the Annual Performance
Bonus.
3
4
Provided however, that effective December 4, 2002, the severance
payment shall be reduced to not less than the total of:
(i) an amount equal to Executive's monthly base salary as of
the Company Termination Date multiplied by three (3);
plus
(ii) an amount equal to the insurance premium contributions
paid on behalf of the Executive under 2.3 (b) for
coverage during the month immediately prior to the
Company Termination Date, multiplied by three (3); plus
(iii) an amount equal to one quarter of the Annual Performance
Bonus.
(b) Executive acknowledges that other than the foregoing severance
payment and the accelerated vesting of stock options as
provided in subsection 3.3(d), below, the Executive will not be
entitled to any further compensation or notice arising out of
the termination without Cause by the Company of the Executive's
employment.
(c) 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 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, gross insubordination or gross 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 VI, Article VII
or Article VIII of this Agreement.
(d) Upon a termination without Cause by the Company, the Company
agrees that it will accelerate the vesting dates pursuant to
any and all stock option agreements outstanding between
Executive and the Company (the "Option Agreements") granting
Executive the right for a period of ninety (90) days commencing
on the Company Termination Date to purchase that number of
shares for which options have been granted which are not yet
vested, and which are scheduled to vest within twelve (12)
months following the Company Termination Date, irrespective of
whether or not the vesting requirements set forth in the
Company's Stock Option Plan or the Option Agreements have been
satisfied. Any Option Agreements and any and all rights the
Executive has or may have pursuant to any Option Agreements
shall terminate and otherwise be extinguished on the date
ninety-one (91) days following the Company Termination Date. In
the event that any of the terms of such options are not
ascertainable or in the event that applicable securities
legislation precludes the acceleration of the vesting dates in
the manner described herein, the Company agrees to compensate
the Executive by way of a cash payment with that amount of
money to which the Executive would have been entitled if
Executive had exercised any such option on the Company
Termination Date at the price pursuant to the Option Agreements
and sold the securities on the NASDAQ Stock Market or other
markets on which the Company's common stock is listed for
trading, less the aggregate exercise price of such options. The
price used to determine such cash payment shall be based upon
the average trading price of the Company's common stock during
the last five trading days preceding the Company Termination
Date. In the event the foregoing cannot be determined, then the
market price shall be established by a qualified independent
valuator approved by the independent members of the Board of
Directors of the Company. In the further event that such
average trading price or current market price does not exceed
the exercise price, no amount shall be payable by the Company
under this Section.
4
5
IV
RELEASE
4.1 Release. In the event of termination in accordance with section 3.3
above, and as a condition to the payments to the Executive described therein and
the additional provisions of this Agreement, the Executive agrees to execute a
release agreement (in a form satisfactory to the Company) forever releasing and
discharging the Company and its officers, directors, employees, agents and
representatives, from any and all obligations to pay any further amounts or
benefits to the Executive with respect to the Executive's employment or the
termination thereof.
V
CHANGE OF CONTROL
5.1 Change of Control. In the event of a Change of Control (defined as
meaning any of the following events: (i) consummation of any merger or
consolidation of the Company in which the Company is not the continuing or
surviving corporation and the shareholders of the Company immediately prior to
such merger or consolidation own less than 51% of the surviving company; or (ii)
consummation of any sale, lease, exchange, or other transfer, whether voluntary
or involuntary, in one transaction or a series of related transactions, of all
or substantially all of the Company's assets, other than a transfer of the
Company's assets to a majority-owned subsidiary corporation; or (iii) a change
in ownership of 60% or more of the Company's then outstanding capital stock, in
one or more of a series of related transactions occurring within a period of
four (4) months, in which one or more person(s) acquires 60% or more of the
Company's then outstanding capital stock), occurs and in the further event that:
(a) Executive's employment with the Company is terminated by the
Company other than for "Cause" as that term is defined under
this Agreement within six (6) months of the date of a Change of
Control; or
(b) Executive does not continue to be employed by the Company at
the same title, or with the same level of responsibility or
compensation or with benefits at least commensurate with the
Executive's existing level of responsibility and compensation
immediately prior to the Change of Control and Executive elects
in a written notice to the Company within six (6) months of the
date of a Change of Control to treat the Executive's employment
as being terminated as a result of such reduction(s), with the
termination of Executive's employment being effective as of the
date such written notice is delivered to the Company;
then the Company agrees to accelerate the vesting dates pursuant to the Option
Agreements granting Executive the right for a period of ninety (90) days
commencing on the Voluntary Termination Date to purchase that number of shares
for which options have been granted which are not yet vested or exercised,
irrespective of whether or not the vesting requirements set forth in the
Company's Stock Option Plan or the Option Agreements have been satisfied. For
the purposes of this section, the "Voluntary Termination Date" shall be the date
upon which Executive provides the notice described in Section 3.2 of this
Agreement. Any Option Agreements and any and all rights Executive has or may
have pursuant to any Option Agreements shall terminate and otherwise be
extinguished on the date ninety-one (91) days
5
6
following the Voluntary Termination Date. In the event that any of the terms of
such option are not ascertainable or in the event that applicable securities
legislation precludes the acceleration of the vesting dates in the manner
described herein, the Company agrees to compensate Executive by way of a cash
payment with that amount of money which Executive would have been entitled to if
Executive had exercised any such option on the Voluntary Termination Date at the
price pursuant to the Option Agreements and sold the securities on The NASDAQ
Stock Market or other markets on which the Company's common stock is listed for
trading. The price used to determine such cash payment shall be based upon the
average trading price of the Company's common stock during the last five trading
days preceding the Voluntary Termination Date. In the event the foregoing cannot
be determined, then the market price shall be established by a qualified
independent valuator approved by the independent members of the Board of
Directors of the Company. In the further event that such average trading price
or current market price does not exceed the exercise price, no amount shall be
payable by the Company under this Section.
VI
NONDISCLOSURE OF INFORMATION
AND NON-SOLICITATION OF EMPLOYEES
6.1 Nondisclosure of Confidential Information. Except in the performance
of Executive's 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, strategies and other information of a proprietary
nature to the extent that such information has not been publicly disseminated by
the Company, other than through a breach hereof or through other lawful means.
6.2 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 Executive's employment by
the Company, and which are then in Executive's care, custody, or control.
6.3 Non-Solicitation. Executive agrees that, so long as Executive is
employed by the Company and for a period of two (2) years after termination of
Executive's employment for any reason, Executive shall not, without the
Company's written consent (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.
6
7
VII
NON-COMPETE
7.1 No Competition. Executive agrees that given the extent and nature of
the Confidential Information Executive obtains during the course of Executive's
employment, it would be inevitable that such Confidential Information would be
disclosed or utilized by Executive should Executive obtain employment from, or
other become associated with, an entity or person that is engaged in any
business competitive with that of the Company. In order to protect the
Confidential Information Executive obtains during the course of Executive's
employment, Executive agrees that, so long as Executive is employed by the
Company and for a period of one (1) year after Executive's employment is
terminated, Executive shall not, without the prior written consent of the
Company, which shall not be unreasonably or without justification withheld,
either directly or indirectly, including without limitation through a
partnership, joint venture, corporation or other entity or as a consultant,
director or employee, engage in any business competitive with that of the
Company.
The parties hereto agree that both the scope and nature of the covenant
and the duration for which the covenant not to compete set forth in this Article
VII is to be effective are reasonable in light of all facts and circumstances.
In the event that any provision of this Agreement, including without limitation
any provision of this Article VII, shall to any extent be held invalid,
unreasonable or unenforceable, in any circumstances, the parties hereto agree
that the remainder of this Agreement and the application of such provision of
this Agreement to other circumstances shall be valid and enforceable to the
fullest extent permitted by law. If any provision, or any part thereof, is held
to be unenforceable because of the scope or duration of or the area covered by
such provision, the parties hereto agree that the court making such
determination shall have the power, and is hereby asked by the parties, to
reduce the scope, duration and/or areas of such provisions (and to substitute
appropriate provisions for any such unenforceable provisions) in order to make
such provisions enforceable to the fullest extent permitted by law, and/or to
delete specific words and phrases, and such modified provisions shall then be
enforceable and shall be enforced.
VIII
TRADE SECRETS AND NON-SOLICITATION
8.1 Executive hereby represents and warrants that during the term of
this Agreement, except to the extent permitted by contract, law or equity,
Executive shall not (a) use or disclose legally protected trade secrets or other
confidential information obtained by Executive during the course of Executive's
employment with prior employers, (b) engage in any competitive business
activities, enter into any business relationships, or solicit any business in
violation of any agreement entered into with a prior employer, or (c) violate
any other negative covenants imposed on Executive during the course of
Executive's employment with a prior employer, including, but not limited to,
covenants not to solicit the employment of persons employed by prior employers
of Executive.
7
8
IX
TERMINATION FOR CAUSE
9.1 Notwithstanding any other provision of this Agreement, the Company
may terminate this Agreement and the Executive's employment hereunder forthwith
for Cause without any further notice or payment. In the event of termination for
Cause, Executive shall forfeit all right to any compensation, bonuses, unvested
stock options, and any other payments provided however, that Executive shall be
entitled to the compensation, bonuses and reimbursements earned prior to the
date of termination for Cause.
X
MISCELLANEOUS
10.1 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 a written decision within thirty (30) days 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 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.
10.2 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.
10.3 Governing Law. This Agreement shall be construed and enforced in
accordance with the substantive laws and decisions of the State of California,
without regard to its choice of laws provisions.
10.4 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.
10.5 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.
10.6 Severability. If any provision of this Agreement, or any word,
phrase, clause, sentence or other portion thereof (including, without
limitation, any geographic and temporal restrictions and provisions contained in
this Agreement), is held by a court of competent jurisdiction to be invalid,
void or unenforceable for any reason, such provision or portion thereof will be
modified or deleted in such a manner as to make this Agreement, as modified,
legal and enforceable to the fullest extent permitted under applicable laws.
8
9
10.7 Representation by Counsel. Executive acknowledges that Executive
has been represented by legal counsel in connection with this Agreement and has
consulted with such legal counsel.
10.8 Counterparts. This Agreement may be executed in counterparts, all
of which taken together will constitute one validly executed and enforceable
instrument.
10.9 References. This Agreement is conditional upon completion of
satisfactory business references and background verification in the sole
discretion of the Company.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
"COMPANY" "EXECUTIVE"
FUTURELINK CORP.
/s/ PHILIP R. LADOUCEUR /s/ HOWARD E. TAYLOR
- -------------------------------------- --------------------------------
By: Philip R. Ladouceur, Howard E. Taylor
Its: Chairman of the Board
/s/ RICHARD M. WHITE
- --------------------------------------
By: Richard M. White
Its: Executive Vice President,
Chief Financial Officer
9