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EXHIBIT 10.10
FUTURELINK DISTRIBUTION CORP.
LOAN AGREEMENT
This Agreement dated the 15th day of July, 1999 and effective August 1, 1999
BETWEEN:
FUTURELINK DISTRIBUTION CORP., a body
corporate incorporated under the laws of the
State of Colorado, with offices in ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter referred to as
"FutureLink" or the "Company")
OF THE FIRST PART
- and -
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing in
Annandale, Virginia (hereinafter referred to
as the "Borrower")
OF THE SECOND PART
WHEREAS the Borrower has accepted an offer of employment from the Company
to become FutureLink's Executive Vice-President Sales and Marketing;
AND WHEREAS a term of both the offer of employment and formal employment
agreement to be entered into between the Borrower and the Company is that the
Company shall lend to the Borrower funds with which to purchase shares of
FutureLink common stock from the Company's treasury;
AND WHEREAS the Borrower wishes to enter into an arrangement with the
Company to repay the loan upon the expiry of a reasonable period of time;
AND WHEREAS the Company wishes to ensure that an arrangement exists to
forgive the principal amount of the loan and interest payable thereon on the
basis set forth below;
NOW THEREFORE this Agreement witnesseth that in consideration of the
premises and of the mutual covenants and agreements herein contained the
parties hereto agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 In this Agreement, unless specifically defined otherwise or unless the
context otherwise requires, the terms set forth below shall have the following
meanings:
"Agreement" means this agreement and includes all schedules attached
hereto, all of which are incorporated herein by reference and form a part
hereof and all amendments, modifications and supplements hereto and the
terms "herein", "hereof", "hereunder", "Pursuant hereto" and like terms
refer to this Agreement;
"Business Day" means any day of the week other than a Saturday, Sunday or
a statutory or civic holiday generally observed in the City of Irvine,
California;
"Common Stock" means the shares of common stock of the Company, $0.0001
par value, purchased by the Borrower with the Purchase Price funds
advanced by the Company as the Loan hereunder, which shares will be
issued by the Company in the name of the Borrower at Market Price and
deposited into escrow under the Escrow Agreement;
"Employment Agreement" means the employment agreement dated the date
hereof and effective August 1, 1999 between the Company and the Borrower;
"Escrow Agreement" means the agreement dated as of August 1, 1999 among
the Company, the Borrower and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Sosnovitch, Barristers &
Solicitors, as "Trustee", whereby the Common Stock is deposited in escrow
to be held by the Trustee and only released in accordance with the terms
thereof;
"Event of Default" means the occurrence of any one or more of the events
described in Section 5.1 hereof;
"Indebtedness" means, at any time, all of the outstanding indebtedness,
whether for principal, interest or otherwise, and liability of the
Borrower to the Company arising under this Agreement;
"Loan" means the funds advanced by the Company to the Borrower as the
Purchase Price paid to FutureLink for the Common Stock, to be issued from
the Company's treasury at Market Price in accordance with the provisions
of the Employment Agreement and this Agreement;
"Market Price" means the five (5) day average of the closing bid and ask
prices for FutureLink's common stock as quoted on the over-the-counter
bulletin board regulated by the National Association of Securities
Dealers (NASD-OTC-BB) for the five days preceding the date of this
Agreement (expressed as a "per share" value);
"Note" means the promissory note in the principal amount of Two Million
($2,000,000.00) Dollars in the form attached hereto as Exhibit "A" to be
separately executed and delivered by the Borrower concurrently with the
Borrower's execution of this Agreement;
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"Purchase Price" means the price paid by the Company to acquire the
Common Stock, as more particularly set forth in Schedule "B" hereto,
being the sum of Two Million ($2,000,000.00) Dollars;
"Security" means the Common Stock, which has been pledged hereunder by
the Borrower as security for the Loan by the Company; and
"$" and "Dollar" means United States Dollars.
1.2 The division of this Agreement into Articles, Sections, Subsections and
other portions and the insertion of headings in this Agreement are for
convenience of reference only and shall not affect the construction and
interpretation of this Agreement.
1.3 The recitals to this Agreement form part hereof and are to be construed and
interpreted as such.
1.4 Words importing the singular number only shall include the plural and vice
versa, words importing the use of any gender shall include all genders and
words importing persons shall include firms and corporations and vice versa, as
the context may require.
ARTICLE 2
LOAN
2.1 Subject to the terms and conditions of this Agreement, the Company agrees
to lend to the Borrower Two Million ($2,000,000) Dollars as an advance of funds
to purchase the Common Stock and the Borrower agrees to borrow from the Company
the Purchase Price of $2,000,000.
2.3 The Company's obligation to issue the Common Stock in the name of the
Borrower is subject to and conditional upon the satisfaction of the following
conditions precedent:
(a) the Borrower shall have executed and delivered to the Company
the Employment Agreement, this Agreement and the Note, the Escrow
Agreement and a subscription for the Common Stock;
(b) all of the representations and warranties of the Borrower
contained in this Agreement being true and correct; and
(c) there being no subsisting Event of Default.
2.4 Upon satisfaction of all of the conditions precedent contained in Section
2.3 hereof and provided that these conditions precedent continue to be
satisfied, the Company agree to issue the Common Stock into the possession of
the Trustee appointed in accordance with the Escrow Agreement, to be held in
accordance with the terms of that agreement.
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ARTICLE 3
INTEREST
3.1 The Borrower shall pay simple, non-compounded interest on the total amount
of the Indebtedness outstanding, from time to time, at a fixed rate of five and
five-eighths (5.625%) per cent per annum (the "Specified Rate"). Such interest
shall be payable in accordance with the terms of Article 4 hereof and shall
continue to accrue until the entire Indebtedness has been repaid and satisfied
by the Borrower or forgiven by the Company.
3.2 All overdue interest payments shall bear interest at the Specified Rate
from and including their due dates to the date of their payment in full.
3.3 To the maximum extent permitted by law, interest shall be paid at the
Specified Rate, before as well as after default, maturity and judgment.
ARTICLE 4
TERM
4.1 The Borrower covenants and agrees to repay all Indebtedness to the Company
on or before August 1, 2001.
ARTICLE 5
DEFAULT / REALIZATION / REPAYMENT
5.1 Notwithstanding the provisions of Section 4.1 hereof, above, and subject to
Sections 6.2 and 6.3 hereof, the Borrower covenants and agrees that the entire
amount of the Indebtedness, including the entire outstanding principal amount
of the Loan and all interest accrued thereon, shall immediately become due and
the Company shall be free, at its option, to pursue all of its rights and
remedies under this Agreement and the Note and the Employment Agreement
(including immediate repossession and cancellation of the Security) for the
full amount of all such Indebtedness, upon the occurrence of any one of the
following events (each of which events being herein referred to as an "Event of
Default"):
(a) should any of the representations or warranties contained in
this Agreement be or become untrue or incorrect;
(b) should the borrower breach any of his covenants or obligations
contained in this Agreement or the Note;
(c) should any third party purport to attach or seize the
Security;
(d) should the Borrower become insolvent or bankrupt or become
subject to the provisions of the Bankruptcy Act (Canada) or make a
general assignment for the benefit of his creditors or should a
trustee in bankruptcy be appointed in respect of the assets of the
Borrower or any substantial portion thereof;
(e) should the Borrower voluntarily terminate the Employment
Agreement; or
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(f) should the Company terminate the Borrower's employment with the
Company with just cause.
5.2 The Borrower shall have the right to repay the Indebtedness in whole or in
part without any notice, bonus or penalty whatsoever for a period of ten (10)
Business Days following the date the Company terminates the Borrower's
employment under the Employment Agreement without cause. The failure of the
Borrower to so repay the loan within the ten (10) Business Day limitation will
also constitute an Event of Default, with the Company entitled to the same
remedies as provided in section 5.1 hereof.
ARTICLE 6
FORGIVENESS OF INDEBTEDNESS
6.1 In accordance with the terms of the Employment Agreement, so long as the
Borrower remains employed by the Company under the Employment Agreement,
$250,000 of the principal amount of the original Loan shall be forgiven on the
day following the last day of each of the said eight fiscal quarters hereafter,
being October 1, 1999, January 1, 2000, April 1, 2000, July 1, 2000, October 1,
2000, January 1, 2001, April 1, 2001 and July 1, 2001. Furthermore, the
annual interest payable by the Borrower in accordance with Article 3 hereof
shall be forgiven at the end of each annual period hereafter when due 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 without
cause prior to the Indebtedness being forgiven or repaid under the terms of
this Agreement, the Indebtedness shall become immediately due and payable to
the Company by the Borrower. However, in accordance with Section 5.2 hereof,
the Borrower shall have ten (10) Business Days to repay all or any portion of
the Indebtedness, to be paid by certified check, bank draft or wire transfer.
If, at the end of ten (10) Business Days following termination of the
Borrower's employment, any Indebtedness remains outstanding, the Borrower shall
be deemed to have defaulted on such Indebtedness and the Company shall be
entitled to seize the Security, being the Common Stock still held in escrow in
accordance with the Escrow Agreement, from the Trustee and cancel such Common
Stock. The parties hereto agree that value per share of any Common Stock
seized and cancelled by the Company in accordance with this Section 6.2 shall
be the Market Price originally paid by the Borrower for such Common Stock,
regardless of the then current market price of the Company's common stock on
the date of the Borrower's termination of employment or the date the Company
realizes on the Security. The Indebtedness shall be reduced by the value of
the Common Stock seized and cancelled, as valued in accordance with the above,
and any accrued and unpaid interest shall be waived by the Company in these
circumstances.
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6.3 Should the Borrower voluntarily terminate his employment with the Company
or be terminated by the Company with just cause under the Employment Agreement,
such event shall immediately constitute an Event of Default hereunder and any
escrowed Common Stock shall be immediately seized by the Company from the
Trustee under the Escrow Agreement as Security for the Indebtedness and the
Indebtedness shall be reduced by the value of the Common Stock seized and
cancelled. The parties hereto agree that value per share of any Common Stock
seized and cancelled by the Company in accordance with the above shall be
identical to the Market Price originally paid by the Borrower for the Common
Stock, regardless of the then current market price of the Company's common
stock on the date of Borrower's voluntary termination or termination for Cause
and/or the date the Company realized on the Security.
ARTICLE 7
BORROWER'S REPRESENTATIONS AND WARRANTIES
7.1 The Borrower represents and warrants to the Company, with the knowledge
that upon each of which representations and warranties the Company are
specifically relying upon in entering into this Agreement, as follows:
(a) the Borrower has full capacity to execute and deliver this
Agreement and the Note and to observe and perform his obligations
hereunder fully in accordance with their terms;
(b) this Agreement and the Note have been duly executed and
delivered by the Borrower;
(c) this Agreement and the Note constitute valid and binding
obligations of the Borrower;
(d) the execution, delivery and performance by the Borrower of
this Agreement and the Note will not result in the breach by the
Borrower of any contract to which the Borrower is a party or by
which he is bound; and
(e) the execution, delivery and performance of this Agreement and
the Note does not require the consent or approval of any third
person or, if any such consent or approval is required, such
consent or approval has been duly and validly obtained by the
Borrower.
7.2 No investigation by the Company or its agents nor the results of any such
investigation shall in any way affect, diminish, limit or terminate any of the
representations or warranties of the Borrower set forth herein.
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ARTICLE 8
COVENANTS
8.1 The Borrower covenants and agrees with the Company that until payment in
full of the Indebtedness, it will not sell, assign, transfer, convey, mortgage,
pledge, charge or otherwise dispose of or encumber the Common Stock, or any
proceeds or benefits issuing or which may issue from the Common Stock to any
third person, and that the Borrower shall not commence any legal proceedings or
initiate any other action to challenge or interfere with or adversely affect
the Company' rights under this Agreement or the Company' ability to retake
possession of the Security and/or to realize upon same (and to thereafter
cancel the Common Stock which forms the Security hereunder).
ARTICLE 9
DEFAULT
9.1 Upon the occurrence of any Event of Default, the Company may immediately
inform the Trustee under the Escrow Agreement to take any and all actions
necessary to transfer possession of the Common Stock to the Company, upon
taking possession of the Common Stock, the Company shall be free to cancel the
Common Stock on its books as attorney for the Borrower, the Borrower hereby
irrevocably appointing the Company as his attorney to effect any transfers on
his behalf necessary to give effect to the provisions of this Agreement, and
the Company may commence such legal action(s) or other proceeding(s) as the
Company, in its sole discretion, deems expedient, all without notice,
presentation, demand or protest, all of which the Borrower hereby expressly
waives.
9.2 This Agreement and the Note or any modification, partial or complete
discharge, dealing, act or omission by or on the part of the Company or any
action commenced or order obtained in relation to all or any of the foregoing
shall not operate or be deemed to operate so as to suspend, merge, affect or in
any way prejudice any of the rights of the Company hereunder, under the Note or
under the Employment Agreement or be deemed to operate as the release,
discharge or in any way suspend this Agreement or the Note.
9.3 Nothing contained in or arising in relation to this Agreement or the Note
shall in any way obligate, bind or require the Company to enforce all or any of
their rights under this Agreement or the Note and the Company shall not be
obligated, bound or required to collect or cause to be collected any amount at
any time owing in respect of this Agreement or the Note, and any lack of action
on the part of the Company to enforce their rights or collect any amount owing
under this Agreement shall not operate as a waiver of the Borrower's
obligations under this Agreement and the Note.
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ARTICLE 10
NOTICE
10.1 Any notice, payment, communication or document (hereinafter collectively
referred to as "Notice") required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have properly been given by one
party to the other when delivered by hand, mailed by first class certified or
registered mail, postage prepaid, or transmitted by telecopier. Any Notice
delivered by hand shall be deemed to be received by the other party on the
Business Day of delivery, any Notice mailed as provided for above shall be
deemed to have been received by the other party on the third (3rd) Business Day
following the date of mailing, while any Notice transmitted by telecopier (fax)
shall be deemed to have been received by the other party on the date of
transmission, if that date is a Business Day, otherwise it shall be deemed to
have been received on the Business Day following the date of transmission.
10.2 Any Notice required or permitted to be given under this Agreement shall be
sent to the following addresses or telecopier (fax) numbers:
To the Company:
FUTURELINK DISTRIBUTION CORP.
▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Secretary
To the Borrower:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
ARTICLE 11
ASSIGNMENT AND ENUREMENT
11.1 The Company shall have the right to assign to a parent, affiliate or
subsidiary organization any of its rights or obligations, in whole or in part,
arising pursuant to this Agreement without prior notice to or permission of the
Borrower.
11.2 The Borrower agrees that he has no right to assign, nor shall he assign,
in whole or in part, any of his rights or obligations arising pursuant to this
Agreement, except with the express prior written consent of the Company or
their assignee(s) or successor(s).
11.3 The provisions of this Agreement shall enure to the benefit of the parties
hereto and shall be binding upon them, their legal representatives, heirs,
their successors and permitted assigns.
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ARTICLE 12
GENERAL
12.1 This Agreement, together with the Note, the Employment Agreement and the
Escrow Agreement, constitutes the entire agreement between the parties hereto
and supersedes any and all prior written or oral agreements or understandings.
In the case of any conflict between the terms of this Agreement and the
Employment Agreement, the terms of the Employment Agreement shall prevail.
12.2 No amendment, alteration, modification or waiver of any provision hereof
shall be valid unless in writing and signed by both parties hereto.
12.3 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.
12.4 The parties hereto shall respectively do all acts and things and execute
all documents reasonably required to give effect to this Agreement.
12.5 Time shall be of the essence of this Agreement.
12.6 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 the State of California.
IN WITNESS WHEREOF the Company and the Borrower have executed this
Agreement as of the date first above written.
FUTURELINK DISTRIBUTION CORP.
Per: /s/ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
Per: /s/ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer
/s/ ▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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