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EXHIBIT 10.12
ADDENDUM NO. 1 dated October 8, 1999 to the Employment Agreement dated
effective June 1, 1999,
BETWEEN:
FUTURELINK DISTRIBUTION CORP., a corporation incorporated pursuant to
the laws of the State of Colorado, with its head office in Irvine,
California (hereinafter referred to as "the Company")
OF THE FIRST PART
- and -
XXXXXX X. XXXXXXXXX, an individual resident in Calgary, Alberta
(hereinafter referred to as "the Officer")
OF THE SECOND PART
WHEREAS the Officer has served as Executive Chairman of the Company
since June 1, 1999 in accordance with an Employment Agreement between the
parties made effective that date (the "Employment Agreement");
AND WHEREAS on August 30, 1999, the Officer was named interim Chief
Executive Officer ("CEO") and President of the Company by the Company's Board of
Directors;
AND WHEREAS the Officer has since resigned as President but continues
to serve as CEO:
AND WHEREAS the Company wishes to modify the terms of the Employment
Agreement by way of this Amending Agreement to reflect the Officer's status as
Executive Chairman and CEO such that the specific terms of this Amending
Agreement shall modify or supersede the Employment Agreement;
THEREFORE, for and in consideration of the sum of $10.00 now paid by
each party to the other party (the receipt and sufficiency of which is hereby
acknowledged by each of the parties hereto) and the mutual covenants and
agreements hereinafter contained, the parties hereto covenant and agree, each
with the other, that the Employment Agreement is amended as follows:
1. EXECUTIVE CHAIRMAN AND CEO
Section 2 of the Employment Agreement is deleted in its entirety and
the following is substituted therefor:
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2. EXECUTIVE CHAIRMAN & CEO
The Company agrees to employ the Officer during the term of
the Agreement as Executive Chairman and CEO of the Company, with power
and authority to manage, supervise and direct all aspects of the
Company's business and affairs, with an emphasis on public and private
financings, mergers and acquisitions, regulatory compliance and general
corporate strategy, and to undertake such other duties as may from time
to time be assigned to or vested in the Officer by the Board of
Directors of the Company, subject always to the control and direction
of the Board of Directors of the Company.
The Officer agrees, during the term of this Agreement, to
devote his full business time, attention and abilities to the business
and affairs of the Company and to serve the Company faithfully and use
the Officer's best efforts to promote the interests of the Company. The
Officer shall be free to assume non-executive and non-management roles
with other organizations, including without limitation serving on the
Boards of Directors of companies and non-profit (community) activities
that are not affiliated with the Company, but shall provide the Company
with notice of such other commitments.
2. REMUNERATION
Section 3 of the Employment Agreement is deleted in its entirety and
the following is substituted therefor:
3. REMUNERATION
(a) Effective October 1, 1999, the Company agrees to pay the
Officer a base salary of $200,000.00 (U.S.) per annum. The
Company agrees to review the Officer's base salary annually
(such review to be completed by May 1st of each year of this
Agreement) and agrees that following each such review, the
then current base salary may be increased to reflect the
Officer's performance, the Company's performance and other
relevant factors;
(b) In addition to the foregoing, the Company shall pay to the
Officer an Annual Performance Bonus in an amount up to
$400,000.00 (U.S.) per annum. The Annual Performance Bonus
shall be comprised of a maximum of two Bonus Interval
Performance Payments and shall be based on the Officer's
performance, the Company's performance and other relevant
factors, including the following:
(A) the Annual Performance Bonus shall be based on two
separate six month intervals (the "Bonus Intervals"),
being July 1 to December 31 and January 1 to June 30,
hereafter;
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(B) in the event that the Company achieves its
capitalization and revenue objectives as set forth in
the Company's Business Plan for the applicable
period, as approved by the Board of Directors before
or during the Bonus Interval in question, the Company
shall pay to the Officer a Bonus Interval Performance
Payment of $100,000.00 (US) within sixty (60) days of
the end of the Bonus Interval; and
(C) in the event that the Company exceeds the
capitalization and revenue objects set forth in the
Company's Business Plan for the Bonus Interval in
question by more than 20%, the Company shall pay to
the Officer a further Bonus Interval Performance
Payment of an additional $100,000.00 (US), also to be
paid within sixty (60) days of the end of the Bonus
Interval.
3. NOTICE
Any notice or other instrument which may be required or permitted to be
delivered or served on the other party to the Employment Agreement, as amended,
shall be sufficiently given to or served on such party if in writing and
delivered by hand in a sealed envelope addressed to such party and left, during
normal business hours, at the following addresses:
(a) if to the Officer:
XXXXXX X. XXXXXXXXX
000 Xxxxxx Xxxxx Xxxxx X.X.
Xxxxxxx, XX X0X 0X0
(b) if to the Company:
FUTURELINK DISTRIBUTION CORP.
Xxxxx 000, 0 Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: President
with a copy to:
Xxxx Xxxxxxxx Xxxxxxxx & Xxxxxx LLP
17th Floor, 000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx
Attention: Xxxxxxx X. Xxxxx
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Either the Company or the Officer may, by notice delivered in
accordance with this section, change the address for notices set out above.
4. NO CHANGE OF CONTROL
The Officer hereby acknowledges that neither the Company's proposed
acquisition of Executive LAN Management, Inc. d.b.a. Micro Visions or the
proposed private placement financing of approximately $50,000,000 to be placed
by Xxxxxx Xxxxxx Xxxxxxxx for the Company constitute a "Change of Control" under
the terms of the Employment Agreement.
The parties hereto have duly executed this Amending Agreement to the
Employment Agreement as of the 8th day of October 1999.
FUTURELINK DISTRIBUTION CORP.
Per: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx
President and Chief Operating Officer
Per: /s/ X. Xxxxxxx
-------------------------------------
Xxxxx Xxxxxxx
Executive Vice-President and
Chief Financial Officer
/s/ K.B. Xxxxx /s/ Xxxxxx X. Xxxxxxxxx
----------------------------- -------------------------------------
Witness as to the signature of XXXXXX X. XXXXXXXXX
XXXXXX X. XXXXXXXXX
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THIS AGREEMENT made effective the first day of June, 1999.
BETWEEN:
FUTURELINK DISTRIBUTION CORP., a corporation incorporated pursuant to
the laws of the State of Colorado, with a head office in Calgary,
Alberta (hereinafter referred to as "the Company")
OF THE FIRST PART
- and -
XXXXXX X. XXXXXXXXX, an individual resident in Calgary, Alberta
(hereinafter referred to as "the Officer")
OF THE SECOND PART
WHEREAS the Officer has been offered employment with the Company as
Executive Chairman pursuant to the provisions of verbal and written offers of
employment, the terms of which the Company and the Officer wish to supersede by
this Agreement;
AND WHEREAS the Board of Directors of the Company recognizes that the
Officer will make valuable contributions to the productivity and profitability
of the Company and that the Officer has specific expertise relating to and an
extensive knowledge of the business of the Company and its affiliated or
associated companies and that it is in the best interests of the Company to
secure the future employment of the Officer with the Company pursuant to the
provisions of this Agreement;
AND WHEREAS the Company and the Officer have agreed that the employment
of the Officer by the Company will be in accordance with the provisions of this
Agreement;
THEREFORE, for and in consideration of the sum of $10.00 now paid by
each party to the other party (the receipt and sufficiency of which is hereby
acknowledged by each of the parties hereto) and the mutual covenants and
agreements hereinafter contained, the parties hereto covenant and agree, each
with the other, as follows:
1. DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the following meanings:
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"CHANGE OF CONTROL" means:
(i) any change in the registered holdings and/or beneficial
ownership of the outstanding Common Shares of the Company
which results in:
(A) a Person or group of Persons "acting jointly or in
concert" (as defined in the Securities Act, S.A.,
1981, c. S-6.1, as amended from time to time); or
(B) an "affiliate" or "associate" (as defined in the
Business Corporations Act, S.A. 1981, c. B-15, as
amended from time to time) of such Person or group of
Persons
being in a position to exercise effective control of the
Company which, for the purposes of this clause, shall be
deemed to be any Person or group of Persons holding, owning or
controlling, directly or indirectly, more than 50% of the
outstanding Common Shares of the Company; or
(ii) Incumbent Directors no longer constituting a majority of the
Company's Board of Directors; or
(iii) the sale, lease or transfer of all or substantially all of the
Company's assets to any other Person or Persons; or
(iv) any determination by the majority of Incumbent Independent
Directors of the Company that a Change of Control has occurred
or is about to occur and any such determination shall be
binding and conclusive for all purposes of this Agreement;
"COMMON SHARES" means the shares of the Company's common stock which
are entitled to one vote per share at any meeting of the shareholders
of the Company;
"COMPENSATION" means the salary and all benefits which the Officer is
receiving or entitled to at the time of Change of Control, including
but not limited to bonuses, stock options, pension benefits, medical
plan benefits, vacation pay and any insurance premiums paid by the
Company for the Officer;
"INCUMBENT DIRECTORS" shall mean, at any time, those persons who were
directors of the Company as of the date hereof and continue to be at
such time and any other person who is a director at such time whose
election, or nomination for election , as a director by the Company's
shareholders, was approved by a majority of the Incumbent Directors at
the time of such election. The approval referred to in this definition
may be by either a specific vote or by approval of the proxy statement
of the Company in which such person is a nominee for director, without
objection to such nomination;
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"INCUMBENT INDEPENDENT DIRECTORS" shall mean, at any time, the
Incumbent Directors at such time who are not employees and officers of
the Company;
"PERSON" includes an individual, a partnership, a corporation and any
other entity or association;
"TERMINATION DATE" means:
(i) the effective date that the Officer's employment with the
Company is terminated by the Company without just cause; or
(ii) the date that the Officer provides to the Company written
notice of election to treat the Officer's employment as
terminated as contemplated by subsections 9(a)(ii) and
9(a)(iii) of this Agreement; and
"THIS AGREEMENT" and terms such as "HEREOF", "HEREIN" and similar
expressions mean this Agreement, as amended, supplemented or modified
in writing from time to time.
2. EXECUTIVE CHAIRMAN
The Company agrees to employ the Officer during the term of the
Agreement as Executive Chairman of the Company, with power and authority to
manage, supervise and direct the non-operational and public company aspects of
the Company's business and affairs, with an emphasis on public and private
financings, mergers and acquisitions, regulatory compliance and general
corporate strategy, and to undertake such other duties as may from time to time
be assigned to or vested in the Officer by the Board of Directors of the
Company, subject always to the control and direction of the Board of Directors
of the Company.
The Officer agrees, during the term of this Agreement, to devote the
majority of the Officer's working time, attention and abilities to the business
and affairs of the Company and to serve the Company faithfully and use the
Officer's best efforts to promote the interests of the Company. The Officer
shall be free to assume non-executive and non-management roles with other
organizations, but shall provide the Company with notice of such other
commitments.
3. REMUNERATION
(a) The Company agrees to pay the Officer a base salary of
$180,000.00 (U.S.) per annum. The Company agrees to review the
Officer's base salary annually (such review to be completed by
May 1st of each year of this Agreement) and agrees that
following each such review, the then current base salary may
be increased to reflect the Officer's performance, the
Company's performance and other relevant factors;
(b) In addition to the foregoing, the Company shall pay to the
Officer an Annual Performance Bonus in an amount up to
$360,000.00 (U.S.) per annum. The Annual
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Performance Bonus shall be comprised of a maximum of two Bonus
Interval Performance Payments and shall be based on the
Officer's performance, the Company's performance and other
relevant factors, including the following:
(i) the Annual Performance Bonus shall be based on two
separate six month intervals (the "Bonus Intervals"),
being July 1 to December 31 and January 1 to June 30,
hereafter;
(ii) in the event that the Company achieves its
capitalization and revenue objectives as set forth in
the Company's Business Plan for the applicable
period, as approved by the Board of Directors before
or during the Bonus Interval in question, the Company
shall pay to the Officer a Bonus Interval Performance
Payment of $90,000.00 (US) within sixty (60) days of
the end of the Bonus Interval; and
(iii) in the event that the Company exceeds the
capitalization and revenue objects set forth in the
Company's Business Plan for the Bonus Interval in
question by more than 20%, the Company shall pay to
the Officer a further Bonus Interval Performance
Payment of an additional $90,000.00 (US), also to be
paid within sixty (60) days of the end of the Bonus
Interval.
4. BENEFITS
The Officer shall be entitled to participate 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.
5. EXPENSES
(a) The Company agrees that during the term of this Agreement the
Officer shall be reimbursed by the Company for all travelling
and other expenses actually and properly incurred by the
Officer in connection with the Officer's duties hereunder. The
Officer shall furnish to the Company statements and vouchers
for all such expenses in accordance with the Company's
reimbursement policy as established from time to time;
(b) The Company agrees that during the term of this Agreement the
Company shall pay to or on behalf of the Officer parking fees
for a location designated by the Company.
6. VACATION
During each year of the term of this Agreement the Officer shall be
entitled to five (5) weeks vacation provided that the timing of such vacation in
any year is subject to the reasonable direction of the Board of Directors of the
Company.
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7. STOCK OPTIONS
Subject to approval by relevant regulatory bodies and pursuant to
applicable securities legislation, the Company may during the term of this
Agreement grant options to purchase the shares of the Company as the
Compensation Committee of the Board of Directors may determine.
8. CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION
The Officer agrees as a condition of the Officer's employment hereunder
to execute the Confidentiality and Non-Competition Agreement which is attached
hereto as Schedule "A".
9. CHANGE OF CONTROL
In the event:
(a) a Change of Control occurs and in the further event that:
(i) the Officer's employment with the Company is
subsequently or contemporaneously terminated by the
Company without just cause within six (6) months of
the date of a Change of Control; or
(ii) the Officer does not continue to be employed by the
Company at a level of responsibility or a level of
Compensation at least commensurate with the Officer's
existing level of responsibility and Compensation
immediately prior to the Change of Control and the
Officer elects in a written notice to the Company
within six (6) months of the date of a Change of
Control to treat the Officer's employment as being
terminated as a result of either such reduction with
the said termination being effective as at the date
of the said written notice; or
(iii) the Officer elects in a written notice to the Company
within three (3) months of the date of a Change of
Control to terminate the Officer's employment
effective as at the date of the said written notice;
then the Company agrees to:
(b) pay to the Officer within one month following the Termination
Date, or at such other time as is mutually agreed upon between
the Company and the Officer, a settlement payment equal to the
total of:
(i) an amount equal to the product of the monthly salary
to which the Officer was entitled at the Termination
Date multiplied by twelve (12); plus
(ii) an amount equal to the product of the Company's
monthly premium contributions paid on behalf of the
Officer immediately prior to the
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Xxxxxxxxxxx Date relating to the Company's employee
benefits plan multiplied by twelve (12); plus
(iii) an amount equal to the most recent Annual Performance
Bonus paid by the Company to the Officer prior to the
Termination Date conditional upon the said payment of
the most recent bonus having been made within the
period of twelve (12) months immediately prior to the
Termination Date;
(c) accelerate the vesting dates pursuant to any stock option
agreements between the Officer and the Company (the "Option
Agreement") to allow the Officer to exercise the option to
purchase shares granted thereby, with regard to that number of
shares in respect of which such option has not previously been
exercised, for a period of three (3) months commencing on the
Termination Date or the expiry time of such Option Agreement,
whichever occurs first. Any Option Agreement and any and all
rights the Officer has or may have pursuant to any Option
Agreement shall terminate and otherwise be extinguished on the
date three (3) months following the 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
the Officer by way of a cash payment with that amount of money
which the Officer would have been entitled to if he had
exercised any such option on the Termination Date at the price
pursuant to the Option Agreement and sold the securities on
the NASDAQ Stock Exchange or, if the said shares are not
listed thereon or are listed on another Canadian of U.S. stock
exchange, on such stock exchange which the said shares are
listed as may be selected for such purpose by the Company's
Board of Directors, or if the said shares are not listed on
any stock exchange, then on the over-the-counter market. The
said trading price shall be based upon the weighted average
trading price of the Company's shares sold on the said
exchange or market, as the case may be, during the last five
days preceding the Termination Date on which the subject
securities were traded. In the event the foregoing cannot be
determined, then the current market price of the said shares
shall be established by a qualified independent valuer
approved by the independent members of the Board of Directors
of the Company. In the further event that such weighted
average trading price or current market price does not exceed
the exercise price, no compensation is payable by either party
with respect to the Option Agreement; and
(d) provide, at the Company's expense, relocation and financial
counselling to the Officer at a cost not to exceed $10,000.00
with the Officer having the right, in the Officer's sole and
absolute discretion, to receive payment of $10,000.00 in lieu
of the said relocation and financial counselling services.
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10. TERM AND TERMINATION OF AGREEMENT
(a) Subject to the provisions of section 9 of this Agreement
pertaining to a Change of Control situation or the provisions
of section 14 pertaining to a termination for just cause, this
Agreement shall continue and remain in full force until
terminated by either the Company or the Officer in accordance
with the provisions outlined below;
(b) The Officer shall have the right to terminate this Agreement
and the Officer's employment hereunder by providing the
Company with written notice to that effect which notice shall
provide for a Termination Date which is effective one month
after the giving of the notice. The Officer shall receive the
Remuneration, Benefits and Expenses contemplated by this
Agreement up to and including the effective Termination Date
and the Officer shall not be entitled to any other
remuneration, reimbursement or payment whatsoever;
(c) The Company shall have the right to terminate this Agreement
and the Officer's employment hereunder at any time without
just cause by providing the Officer with written notice to
that effect which notice shall provide for a Termination Date
which is effective as of the date of the said notice and the
Company shall, at the same time, do the following:
(i) pay to the Officer within one month following the
Termination Date, or at such other time as is
mutually agreed upon between the Company and the
Officer, a settlement payment equal to the total of:
(1) an amount equal to the product of the
monthly base salary to which the Officer was
entitled at the Termination Date multiplied
by twelve (12); plus
(2) an amount equal to the product of the
Company's monthly premium contributions paid
on behalf of the Officer immediately prior
to the Termination Date relating to the
Company's employee benefits plan multiplied
by twelve (12);
(3) an amount equal to the most recent Annual
Performance Bonus paid by the Company to the
Officer prior to the Termination Date
conditional upon the said payment of the
most recent bonus having been made within
the period of twelve (12) months immediately
prior to the Termination Date;
(ii) provide, at the Company's expense, relocation and
financial counselling to the Officer at a cost not to
exceed $10,000.00 with the Officer having the right,
in the Officer's sole and absolute discretion, to
receive payment of $10,000.00 in lieu of the said
relocation and financial counselling services;
(d) The employment of the Officer by the Company shall be deemed
to be terminated by the Company pursuant to subsection 10(c)
if the Company unilaterally changes the
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terms of the employment relationship such that the Officer
does not continue to be employed by the Company at a level of
responsibility or a level of Compensation at least
commensurate with the Officer's existing level of
responsibility and Compensation immediately prior to the said
change and the Officer elects in a written notice to the
Company to treat the Officer's employment as being terminated
as a result of either such reduction with the said termination
being effective as at the date of the said written notice.
11. RELEASE
In consideration of the payment to the Officer of the aforesaid amounts
and the additional provisions of this Agreement, the Officer agrees to tender
the Officer's immediate resignation in a form satisfactory to the Company acting
reasonably and forever release and discharge the Company from any and all
obligations to pay any further amounts or benefits to the Officer with respect
to the Officer's employment or the termination thereof.
12. DUTY TO MITIGATE
The Officer shall be under no duty to mitigate the Officer's losses
with respect to the termination of the Officer's employment with the Company.
13. SUBSEQUENT EMPLOYMENT
The Officer shall not be bound in any manner whatsoever to rebate to
the Company nor to forgive any claim against the Company with respect to any
amounts or benefits payable hereunder in the event of the Officer's subsequent
reemployment in any manner whatsoever.
14. TERMINATION FOR CAUSE
Notwithstanding the other provisions of this Agreement, the Company
shall be entitled to terminate this Agreement and the Officer's employment
hereunder forthwith for just cause without any further notice or payment in lieu
of notice. In the event of such termination for just cause, the other provisions
of this Agreement shall not apply.
15. PRIOR AGREEMENTS/ENTIRE AGREEMENT
It is acknowledged and agreed by the Company and the Officer that this
Agreement, including the attached Schedule, constitutes the entire agreement
between the parties and that any and all prior agreements, written or verbal,
express or implied, between the parties relating to or in any way connected with
the employment of the Officer by the Company are hereby rendered null and void
and are superseded by the terms of this Agreement.
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16. APPLICABLE LAWS
This Agreement shall be construed in accordance with the laws in effect
in the Province of Alberta and the parties hereto hereby attorn to the Courts of
the Province of Alberta and, if applicable, the Courts of Canada.
17. FURTHER ASSURANCES
Each of the parties shall from time to time and at all times do all
such further acts and execute and deliver all such further deeds and documents
as shall be reasonably required in order to fully perform the terms of this
Agreement.
18. ENUREMENT
This Agreement shall enure to the benefit of and be binding upon the
parties and their respective heirs, executors, administrators, successors and
assigns.
19. NOTICE
Any notice or other instrument which may be required or permitted to be
delivered or served on the other party hereto shall be sufficiently given to or
served on such party if in writing and delivered by hand in a sealed envelope
addressed to such party and left, during normal business hours, at the following
addresses:
(a) if to the Officer:
XXXXXX X. XXXXXXXXX
000 Xxxxxx Xxxxx Xxxxx X.X.
Xxxxxxx, XX
X0X 0X0
(b) if to the Company:
FUTURELINK DISTRIBUTION CORP.
000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, XX
X0X 0X0
Attention: Corporate Secretary
with a copy to:
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Code Xxxxxx Xxxxxxxx
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx X. Xxxxxx
Either the Company or the Officer may, by notice delivered in
accordance with this section, change the address for notices set out above.
The parties hereto have duly executed this Agreement as of the date
first above written.
FUTURELINK DISTRIBUTION CORP.
Per: /s/ X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
/s/ Xxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------- -------------------------------------
Witness as to the signature of XXXXXX X. XXXXXXXXX
XXXXXX X. XXXXXXXXX
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SCHEDULE "A"
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS AGREEMENT made effective this first day of June, 1999.
BETWEEN:
FUTURELINK DISTRIBUTION CORP., a body corporate, incorporated under the
laws of the State of Colorado and with a head office in Calgary,
Alberta (hereinafter referred to as the "Company")
- and -
XXXXXX X. XXXXXXXXX, an individual resident in Calgary, Alberta
(hereinafter referred to as the "Officer")
WHEREAS the Company, either directly or through its affiliated or
associated companies, carries on business consisting principally of computer
utility services that include Application Service Provision, computer
infrastructure management, computer network outsourcing and IT business
consulting;
AND WHEREAS the Officer has been a director of the Company and the
Company has recently made an offer of employment to the Officer as Executive
Chairman, which offer has been accepted, necessitating a formal employment
agreement between the Officer and the Company, which includes this Agreement;
AND WHEREAS the Company and the Officer both agree that it is
reasonable and necessary for the Officer to execute and deliver this Agreement
concurrent with the Officer's acceptance of the new position;
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NOW THEREFORE in consideration of the sum of ten ($10.00) dollars now
paid by each party to the other, the receipt and sufficiency of which is hereby
acknowledged, and for other good and valuable consideration, the Officer hereby
covenants and agrees with the Company as follows:
CONFIDENTIALITY
1. The Officer acknowledges that in the course of employment, the Officer will
receive, have access to and be entrusted with information which is strictly
confidential, not publicly known, has value from not being publicly known, and
is subject to efforts of the Company or its affiliated or associated companies
to maintain its confidentiality. This information shall include, but shall not
be limited to:
(1) existing and prospective business opportunities, including all
ventures considered by the Company, whether or not they are
pursued;
(2) information regarding the development, marketing, sale and
maintenance of computer utility services that include
Application Service Provision ("ASP"), computer infrastructure
management, IT business consulting, out-sourced computer
network management and all other related services;
(3) financial and marketing strategies relating to ASP, including
existing and prospective acquisitions, mergers, business
arrangements, sales arrangements, contracts and concepts;
(4) information regarding acquisition financing and partnerships,
including existing and prospective financing concepts and
co-ventures;
(5) customer information, including customer names, addresses,
contacts, and details of pricing, budgeting, marketing and
supply strategies and information;
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(6) supplier information, including supplier names, addresses,
contacts and details of supply contracts;
(7) financial information, including the Company's business plans,
financial statements, and accounting records;
(h) matters of a business nature or of a technical nature,
including, but not limited to: corporate strategies; marketing
research, strategies and methods; product research and
development; business systems, policies and procedures;
strategic ideas; inventions (whether patentable or not); and
computer systems, software and databases;
(i) concepts, strategies, research methodologies and other related
ideas and processes which form the basis for the proposals
which the Company or its affiliated or associated companies
prepare for customers;
(j) information that the Company or its affiliated or associated
companies acquires during the course of completing projects
for its customers, including information regarding clients or
customers, their competitors and their marketplace;
(k) concepts and technical and other information regarding the
development and maintenance of the computer hardware and
software of the Company or its affiliated or associated
companies and their suppliers.
All such information and the documents or records containing information
furnished to or received by the Officer, together with any and all analyses,
compilations, studies or other documents prepared or obtained by the Officer
which contains or otherwise reflects such information, shall be hereinafter
referred to as the "Information".
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2. Information as hereinbefore defined does not include the following:
(1) knowledge or documents within the public domain at the time of
its use or disclosure;
(2) knowledge or documents already possessed by the Officer prior
to becoming a Director or commencing employment with the
Company;
(3) knowledge or documents independently received by the Officer
without obligation or confidence from a third party which do
not relate to the Officer's employment; or
(4) knowledge or documents required to be disclosed pursuant to an
order from a court of competent jurisdiction.
3. The Officer acknowledges and agrees:
(1) that the Information embodies creative efforts and has been
obtained and developed at significant effort or cost to the
Company or its affiliated or associated companies;
(2) that the Information is commercially valuable;
(3) that the Information is the exclusive property of the Company
or its affiliated or associated companies;
(4) that the Company or its affiliated or associated companies
have the right to maintain the confidentiality of the
Information and such rights constitute proprietary rights
which the Company is entitled to protect; and
(5) that use or disclosure, either directly or indirectly, of the
Information by or to anyone, but particularly to the public or
competitors of the Company or its affiliated or
19
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associated companies, could be highly detrimental to the
interests of the Company or its affiliated or associated
companies.
4. The Officer agrees, during the course of employment and after termination of
the employment relationship for any reason or by any means, to keep confidential
and refrain from using or disclosing, directly or indirectly, any of the
Information for any purpose other than carrying out the Officer's duties for the
Company. Without limiting the generality of the foregoing, the Officer shall
not:
(1) use the Information for the Officer's personal benefit or the
benefit of any third party;
(2) use the Information in any way detrimental to the Company or
its affiliated or associated companies;
(3) copy, disclose, divulge, publish, transcribe or transfer the
Information in any manner whatsoever in whole or in part
except as is required to perform the Officer's duties as an
Officer of the Company;
(4) disclose that the Information has been made available to the
Officer; or
(5) disclose that the Officer's engagement with the Company
enables the Officer to have access to the Information.
5. The Officer shall:
(1) take precautions to maintain the confidentiality of the
Information; and
(2) use the Officer's best efforts to prevent any person from
making unauthorized use of the Information.
20
-6-
6. The Officer agrees that all matters comprising the Information which are
made, devised, or worked on by the Officer during the course of the Officer's
employment with the Company are the sole and exclusive property of the Company
and that the Officer has no proprietary rights therein.
7. The Officer agrees that the Officer shall disclose and assign to the Company
as its exclusive property all proprietary rights, patent rights, copyrights,
trade secrets, confidential information and any other intellectual or industrial
proprietary rights relating to the business and operations of the Company or its
affiliated or associated companies, or relating to the Information, which: are
developed or conceived (whether alone or with others) during the Officer's
employment with the Company or are suggested by any work that the Officer may do
for the Company or its affiliated or associated companies, or are otherwise made
through the use of any of the Company's or its affiliated or associated
companies' time, facilities, materials, or services.
8. The Officer agrees that the Officer shall execute, during and after the
Officer's employment with the Company, any necessary papers, and provide other
proper assistance, at the Company's expense, to enable the Company or its
affiliated or associated companies to obtain any patents, copyrights or other
legal protection for any of the Company's or its affiliated or associated
companies' proprietary rights, intellectual property or Information. In the
event that any concept, invention, discovery or design developed by the Officer
for the Company is patented, developed, registered or published, the Company
shall acknowledge the Officer as the author or co-author, as the case may be.
9. The Officer agrees that the Information is the sole and exclusive property of
the Company and that immediately upon termination, or at any time upon demand of
the Company, the Officer shall return or supply to the Company any and all
Information in the Officer's possession, any analysis or derivative work
relating to the Information, and no copies of the Information, analysis or
derivative work shall be made or retained.
00
-0-
XXXXXXXX AGAINST COMPETITION
10. The Officer acknowledges that by reason of employment with the Company, the
Officer will develop a close working relationship with the Company's or its
affiliated or associated companies' customers, suppliers, agents, and other
similar parties, gaining knowledge of the Company's or its affiliated or
associated companies' methods of operation, and acquire and be exposed to
Information, all of which would cause irreparable harm and injury to the Company
or its affiliated or associated companies if made available to a competitor or
if used for competitive purposes.
11. The Officer agrees that the Company has a material interest in protecting
the relationships it has developed with its customers, suppliers, agents, and
other similar parties against impairment by competitive activities of a former
officer and employee.
12. During the period of employment with the Company and for a period of twelve
(12) months after the termination of the Officer's employment with the Company,
whether with or without proper notice or just cause, the Officer shall not:
(1) either directly or indirectly, as principal, agent, owner,
partner, shareholder, director, officer, employee or
otherwise, own, operate, be engaged in, be concerned with the
operation of or directly or indirectly have any financial or
other interest in any business operation, whether a
proprietorship, partnership, joint venture or corporation or
otherwise, carrying on or engaged in a business which competes
with the business of the Company or its affiliated or
associated companies anywhere in Calgary, Alberta; Tampa,
Florida; Los Angeles, California; Irvine, California; Phoenix,
Arizona; Atlanta, Georgia; Raleigh-Durham, North Carolina; Las
Vegas, Nevada; Houston, Texas and Seattle, Washington and
within a fifty (50) kilometre radius of the municipal
boundaries of the said cities and anywhere within any other
city in the Province of Alberta and the states of Florida,
California, Nevada, Washington, Arizona, Georgia, Texas and
North Carolina and within a fifty (50) kilometre radius
22
-8-
of the said other city or cities where the Company actively
provides work or services for customers at the time of the
said termination of the Officer's employment;
(2) call upon, solicit or attempt to solicit, or be interested in
or connected, either directly or indirectly, with any business
operation that calls upon, solicits or attempts to solicit any
customer or prospective customer of the Company or its
affiliated or associated companies anywhere in Calgary,
Alberta; Tampa, Florida; Los Angeles, California; Irvine,
California; Phoenix, Arizona; Atlanta, Georgia;
Raleigh-Durham, North Carolina; Las Vegas, Nevada; Houston,
Texas and Seattle, Washington and within a fifty (50)
kilometre radius of the said cities and anywhere within any
other city in the Province of Alberta and the states of
Florida, California, Nevada, Washington, Arizona, Georgia,
Texas and North Carolina and within a fifty (50) kilometre
radius of the said other city or cities where the Company
actively provides work or services for customers at the time
of the said termination of the Officer's employment; or
(3) either directly or indirectly, contact any of the clients or
suppliers anywhere in Calgary, Alberta; Tampa, Florida; Los
Angeles, California; Irvine, California; Phoenix, Arizona;
Atlanta, Georgia; Raleigh-Durham, North Carolina; Las Vegas,
Nevada; Houston, Texas and Seattle, Washington and within a
fifty (50) kilometre radius of the municipal boundaries of the
said cities and anywhere within any other city in the Province
of Alberta and the states of Florida, California, Nevada,
Washington, Arizona, Georgia, Texas and North Carolina and
within a fifty (50) kilometre radius of the said other city or
cities where the Company actively provides work or services
for customers at the time of the said termination of the
Officer's employment which the Officer contacted, served or
developed on behalf of the Company or its affiliated or
associated companies during the Officer's employment with the
purpose or intent of competing with the Company or its
affiliated or associated companies.
23
-9-
(4) solicit, hire, or retain any other employee of the Company or
its affiliated or associated companies so as to cause or
otherwise encourage such employee to cease his or her
employment with the Company or its affiliated or associated
companies.
13. The Officer agrees and acknowledges that the foregoing time and geographic
limitations in paragraph 12 are reasonable and properly required for the
adequate protection of the business interests of the Company or its affiliated
or associated companies, and in the event that any limits with respect to
capacities, activities, time periods or geographic areas are found to be
unreasonable by a court of competent jurisdiction, then the Officer agrees to be
bound to such reduced limits with respect to capacities, activities, time
periods or geographic areas as the said court deems to be reasonable.
14. The Officer understands and agrees that the restrictions and covenants
contained in paragraph 12 constitute a material inducement to the Company to
enter into this Agreement and to employ the Officer, and that the Company would
not enter into this Agreement absent such inducement.
MISCELLANEOUS
15. The Officer understands, acknowledges, covenants and agrees that compliance
with the terms and conditions of this Agreement is necessary to protect the
Information and the economic position of the Company or its affiliated or
associated companies and that in the event of a breach or a threatened breach by
the Officer of any of the provisions of this Agreement, the Company, in addition
to and not in limitation of any other rights, remedies or damages available to
it at law or in equity, shall be entitled to an injunction in order to prevent
or to restrain any such breach or threatened breach by the Officer, or by any of
the Officer's agents, representatives, employees or advisors and any and all
persons directly or indirectly acting for or on behalf of the Officer.
24
-10-
16. The Company may exercise any remedies herein agreed to at such times and in
such order as it may choose and such remedies shall be cumulative and may be
exercised independently or jointly as decided by the Company.
17. In the event that the Company retains counsel in order to enforce its rights
under this Agreement and a court of competent jurisdiction determines the
Officer is in breach of this Agreement, the Company shall be entitled to
recover, in addition to any other relief available, its related expenses and
costs on a solicitor and client basis.
18. This Agreement shall be construed and enforced in accordance with the laws
of the Province of Alberta and each of the parties hereto hereby irrevocably
attorns to the jurisdiction of the courts of the Province of Alberta.
19. No waiver by or on behalf of the Company of any breach by the Officer of any
of the provisions of this Agreement shall take effect or be binding upon the
Company unless the same is expressed in writing, and signed by a duly authorized
representative of the Company and, in any event, any waiver so expressed shall
not limit or affect the Company's rights with respect to any other or future
breach by the Officer of any provision of this Agreement.
20. No delay, or failure, of the Company to exercise any right hereunder, and no
partial or single exercise thereof, shall be deemed to constitute a waiver of
such right, or any other rights hereunder. Any consent by the Company, or any
waiver of, or breach of any express or implied term of this Agreement, shall not
constitute a consent to, waiver of, or excuse of any subsequent or other breach
of any expressed or implied term of this Agreement.
21. All the clauses of this Agreement are distinct and severable and if any
clause shall be held illegal or void, it shall not affect the validity or
legality of the remaining clauses of this Agreement. If any clause or part
thereof shall be held illegal or void, the parties shall negotiate in good faith
a modification of such clause, so as to maintain, insofar as is practical and
lawful, the intent of such clause.
25
-11-
22. The covenants by the Officer in this Agreement shall survive notwithstanding
termination of employment for any reason whatsoever.
23. The recitals to this Agreement form part hereof and are to be construed and
interpreted as such.
24. The captions and headings used in this Agreement are for convenience only
and do not constitute substantive matter to be considered and construed in the
terms of this Agreement.
25. The within Agreement contains the entire agreement between the parties with
respect to the matters herein and any agreements, verbal representations or
warranties made by any of the parties prior to the date hereof with respect to
the matters herein are hereby rendered null and void.
26. Time shall be of the essence in this Agreement.
27. Any word used in this Agreement is deemed to include the masculine, feminine
or neuter form thereof as the context so requires.
28. This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
29. The Officer acknowledges and agrees that the Officer has carefully read and
considered the provisions of this Agreement and, having done so, agrees that the
restrictions set forth are fair and reasonable and are reasonably required for
the protection of the Company or its affiliated or associated companies.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first above written.
26
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FUTURELINK DISTRIBUTION CORP.
Per: /s/ X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx,
President and Chief Executive Officer
SIGNED, SEALED AND DELIVERED
in the presence of:
/s/ Xxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------- -------------------------------------
Witness XXXXXX X. XXXXXXXXX
