"Security Agreement - FUTURELINK CORP - 2-12-2001"
EXHIBIT 10.80 SECURITY AGREEMENT This SECURITY AGREEMENT (this "Agreement"), is entered into as of December 13, 2000, among FOOTHILL CAPITAL CORPORATION, a California corporation ("Secured Party"), FUTURELINK CORP., a Delaware corporation ("Parent") and each of its Subsidiaries identified on the signature pages hereof (such Subsidiaries, together with Parent, each a "Debtor" and collectively, jointly and severally, the "Debtors"). WHEREAS, Borrower and Secured Party are, contemporaneously herewith, entering into the Loan Agreement; WHEREAS, Parent indirectly owns one hundred percent (100%) of the issued and outstanding stock of Borrower; and WHEREAS, Debtors and certain other Persons identified therein have executed that certain General Continuing Guaranty, of even date herewith, in favor of Secured Party (the "Guaranty"), respecting certain obligations of Borrower owing to Secured Party under the Loan Agreement; WHEREAS, each Debtor desires to secure its obligations under the Subsidiary Loan Documents to which it is party by granting to Secured Party security interests in the Collateral as set forth herein; and WHEREAS, each Debtor will benefit by virtue of the loan from Secured Party to Borrower. NOW THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and each intending to be bound hereby, Secured Party and each Debtor agree as follows: 1. DEFINITIONS AND CONSTRUCTION. 1.1. Definitions. All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. As used in this Agreement, the following terms shall have the following definitions: "Accounts" means all of each Debtor's now owned or hereafter acquired right, title, and interest with respect to "accounts" (as that term is defined in the Code), and any and all supporting obligations in respect thereof. "Agreement" means this Security Agreement and any extensions, riders, supplements, notes, amendments, or modifications to or in connection with this Security Agreement. "Borrower" means FutureLink Europe Limited, a corporation organized under the laws of England and Wales. "Collateral" means each of the following: the Accounts; Debtor's Books; the Equipment; the General Intangibles; the Inventory; the Investment Property; the Negotiable Collateral; any money, or other assets of each Debtor which now or hereafter come into the possession, custody, or control of Secured Party; and the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the Collateral, and any and all Accounts, Debtor's Books, Equipment, General Intangibles, Inventory, Investment Property, Negotiable Collateral, money, deposit accounts, or other tangible or intangible property resulting from the sale, exchange, collection, or other disposition of any of the foregoing, or any portion thereof or interest therein, and the proceeds thereof. "Debtor's Books" means each Debtor's now owned or hereafter acquired books and records (including all of its Records indicating, summarizing, or evidencing its assets (including the Collateral) or liabilities, all of its Records relating to its business operations or financial condition, and all of its goods or General Intangibles related to such information). "Debtor" and "Debtors" are defined in the preamble to this Agreement. "Equipment" means all of each Debtor's now owned or hereafter acquired right, title, and interest with respect to equipment, machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles (including motor vehicles), tools, parts, goods (other than consumer goods, farm products, or Inventory), wherever located, including all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing. "Event of Default" has the meaning ascribed to it in Section 6. "General Intangibles" means all of each Debtor's now owned or hereafter acquired right, title, and interest with respect to general intangibles (including payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and tax refund claims), and any and all supporting obligations in respect thereof, and any other personal property other than goods, Accounts, Investment Property, and Negotiable Collateral. "Guaranty" has the meaning set forth in the recitals to this Agreement. -2- "Indebtedness" means (a) all obligations of a Person for borrowed money, (b) all obligations of a Person evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations of a Person in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all obligations of a Person under Capital Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of a Person, irrespective of whether such obligation or liability is assumed, (e) all obligations of a Person for the deferred purchase price of assets (other than trade debt incurred in the ordinary course of a Person's business and repayable in accordance with customary trade practices), and (f) any obligation of a Person guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse to a Person) any obligation of any other Person. "Inventory" means all each Debtor's now owned or hereafter acquired right, title, and interest with respect to inventory, including goods held for sale or lease or to be furnished under a contract of service, goods that are leased by such Debtor as lessor, goods that are furnished by such Debtor under a contract of service, and raw materials, work in process, or materials used or consumed in such Debtor's business. "Investment Property" means all of each Debtor's now owned or hereafter acquired right, title, and interest with respect to "investment property" as that term is defined in the Code, and any and all supporting obligations in respect thereof. "Loan Agreement" means that certain Loan Agreement, dated as of even date herewith, between Borrower and Secured Party. "Negotiable Collateral" means all of each Debtor's now owned and hereafter acquired right, title, and interest with respect to letters of credit, letter of credit rights, instruments, promissory notes, drafts, documents, and chattel paper (including electronic chattel paper and tangible chattel paper), and any and all supporting obligations in respect thereof. "Secured Obligations" shall mean all liabilities, obligations, or undertakings owing by each Debtor to Secured Party of any kind or description arising out of or outstanding under, advanced or issued pursuant to, or evidenced by the Guaranty, the other Subsidiary Loan Documents, or this Agreement, irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, voluntary or involuntary, whether now existing or hereafter arising, and including all interest (including interest that accrues after the filing of a case under the Bankruptcy Code) and any and all costs, fees (including reasonable attorneys fees), and expenses which Debtor is required to pay pursuant to any of the foregoing, by law, or otherwise. "Secured Party's Liens" means the Liens granted by each Debtor to Secured Party under this Agreement or the other Subsidiary Loan Documents. -3- 1.2. Code. Any terms used in this Agreement which are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein. 1.3. Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term "including" is not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Section, subsection, clause, schedule, and exhibit references are to this Agreement unless otherwise specified. Any reference in this Agreement or in any of the other Subsidiary Loan Documents to this Agreement or any of the other Subsidiary Loan Documents shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, and supplements, thereto and thereof, as applicable. In the event of a direct conflict between the terms and provisions of this Agreement and the Loan Agreement, it is the intention of the parties hereto that both such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of the Loan Agreement shall control and govern; provided, however, that the inclusion herein of additional obligations on the part of a Debtor and supplemental rights and remedies in favor of Secured Party, in each case in respect of the Collateral, shall not be deemed a conflict with the Loan Agreement. 1.4. Schedules and Exhibits. All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference. 2. CREATION OF SECURITY INTEREST. 2.1. Grant of Security Interest. Each Debtor hereby grants to Secured Party a continuing security interest in all currently existing and hereafter acquired or arising Collateral in order to secure the Secured Obligations. Secured Party's security interests in the Collateral shall attach to all Collateral without further act on the part of Secured Party or such Debtor. Anything contained in this Agreement or any other Subsidiary Loan Document to the contrary notwithstanding, except to the extent permitted in the Parent Loan Agreement, no Debtor has authority, express or implied, to dispose of any item or portion of the Collateral. 2.2. Negotiable Collateral. In the event that any Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral, and if and to the extent that perfection or priority of Secured Party's security interest is dependent on or enhanced by possession, each Debtor, immediately upon the request of Secured Party, shall endorse and deliver physical possession of such Negotiable Collateral to Secured Party. 2.3. Collection of Accounts, General Intangibles, Negotiable Collateral. At any time after the occurrence and during the continuation of an Event of -4- Default, Secured Party or Secured Party's designee may (a) notify Account Debtors of each Debtor that the Accounts, chattel paper, or General Intangibles have been assigned to Secured Party or that Secured Party has a security interest therein, or (b) collect the Accounts, chattel paper, or General Intangibles directly and charge the collection costs and expenses to Borrower's Loan Account. Each Debtor agrees that it will hold in trust for Secured Party, as Secured Party's trustee, any Collections that it receives and immediately will deliver said Collections to Secured Party or a Cash Management Bank in their original form as received by such Debtor. 2.4. Delivery of Additional Documentation Required. At any time upon the request of Secured Party, each Debtor shall execute and deliver to Secured Party, any and all financing statements, original financing statements in lieu of continuation statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, and all other documents (the "Additional Documents") that Secured Party may request in its Permitted Discretion, in form and substance satisfactory to Secured Party, to perfect and continue perfected or better perfect the Secured Party's Liens in the Collateral (whether now owned or hereafter arising or acquired), to create and perfect Liens in favor of Secured Party in any Real Property acquired after the date hereof, and in order to fully consummate all of the transactions contemplated hereby and under the other Subsidiary Loan Documents. To the maximum extent permitted by applicable law, each Debtor authorizes Secured Party to execute any such Additional Documents in such Debtor's name and authorizes Secured Party to file such executed Additional Documents in any appropriate filing office. In addition, on such periodic basis as Secured Party shall require, each Debtor shall (a) provide Secured Party with a report of all new patentable, copyrightable, or trademarkable materials acquired or generated by such Debtor during the prior period, (b) cause all patents, copyrights, and trademarks acquired or generated by such Debtor that are not already the subject of a registration with the appropriate filing office (or an application therefor diligently prosecuted) to be registered with such appropriate filing office in a manner sufficient to impart constructive notice of such Debtor's ownership thereof, and (c) cause to be prepared, executed, and delivered to Secured Party supplemental schedules to the applicable Subsidiary Loan Documents to identify such patents, copyrights, and trademarks as being subject to the security interests created thereunder. 2.5. Power of Attorney. Each Debtor hereby irrevocably makes, constitutes, and appoints Secured Party (and any of Secured Party's officers, employees, or agents designated by Secured Party) as such Debtor's true and lawful attorney, with power to: (a) if such Debtor refuses to, or fails timely to execute and deliver any of the documents described in Section 2.4, sign the name of such Debtor on any of the documents described in Section 2.4; (b) at any time that an Event of Default has occurred and is continuing, sign such Debtor's name on any invoice or bill of lading relating to the Collateral, drafts against Account Debtors, or notices to Account Debtors; (c) send requests for verification of Accounts; (d) endorse such Debtor's name on any Collection item that may come into Secured Party's possession; (e) at any time that an Event of Default has occurred and is continuing, make, settle, and adjust all claims under such Debtor's policies of insurance and make all determinations and decisions with respect to such policies of insurance; and (f) at -5- any time that an Event of Default has occurred and is continuing, settle and adjust disputes and claims respecting the Accounts, chattel paper, or General Intangibles directly with Account Debtors, for amounts and upon terms which Secured Party determines to be reasonable, and Secured Party may cause to be executed and delivered any documents and releases which Secured Party determines to be necessary. The appointment of Secured Party as each Debtor's attorney, and each and every one of Secured Party's rights and powers, being coupled with an interest, is irrevocable until all of the Secured Obligations have been fully and finally repaid and performed and Secured Party's obligation to extend credit under the Loan Agreement is terminated. 2.6. Right to Inspect. Secured Party (through any of its officers, employees, or agents) shall have the right, from time to time hereafter to inspect each Debtor's Debtor's Books and to check, test, and appraise the Collateral in order to verify each Debtor's financial condition or the amount, quality, value, condition of, or any other matter relating to, the Collateral. 3. [INTENTIONALLY OMITTED] 4. [INTENTIONALLY OMITTED] 5. [INTENTIONALLY OMITTED] 6. EVENTS OF DEFAULT. Any one or more of the following events shall constitute an event of default (each, an "Event of Default") under this Agreement: (a) The occurrence of an Event of Default (as defined in the Loan Agreement); (b) If a Debtor fails or neglects to perform, keep, or observe, in any material respect, any term, provision, condition, covenant, or agreement contained in this Agreement or in the Guaranty, or in any other present or future agreement between a Debtor and Secured Party; (c) If any material portion of a Debtor's assets is attached, seized, subjected to a writ or distress warrant, levied upon, or comes into the possession of any third Person; (d) If a notice of Lien, levy, or assessment is filed of record with respect to any of a Debtor's assets by the United States, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, or if any taxes or debts owing at any time hereafter to any one or more of such entities becomes a Lien, whether choate or otherwise, upon any of such Debtor's assets and the same is not paid before such payment is delinquent; -6- (e) If a judgment or other claim becomes a Lien or encumbrance upon any material portion of a Debtor's properties or assets; (f) If there is a default in any material agreement to which a Debtor is a party and such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by the other party thereto, irrespective of whether exercised, to accelerate the maturity of such Debtor's obligations thereunder, to terminate such agreement, or to refuse to renew such agreement pursuant to an automatic renewal right therein; (g) If Debtor makes any payment on account of Indebtedness that has been contractually subordinated in right of payment to the payment of the Secured Obligations, except to the extent such payment is permitted by the terms hereof and by the subordination provisions applicable to such Indebtedness; (h) If any misstatement or misrepresentation exists now or hereafter in any warranty, representation, statement, or Record made to Secured Party by a Debtor or any officer, employee, agent, or director of a Debtor, or if any such warranty or representation is withdrawn; or (i) If this Agreement or any other Subsidiary Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby or thereby. 7. SECURED PARTY'S RIGHTS AND REMEDIES. 7.1. Rights and Remedies. Upon the occurrence of an Event of Default, the security hereby constituted shall become enforceable and, in addition to all other rights and remedies available to Secured Party as provided hereafter, Secured Party may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by each Debtor: (a) Proceed directly and at once, without notice, against each Debtor to collect and recover the full amount or any portion of the Secured Obligations, without first proceeding against Borrower, or against any security or collateral for the Secured Obligations; (b) Without notice to any Debtor and regardless of the acceptance of any security or collateral for the payment hereof, appropriate and apply toward the payment of the Secured Obligations (i) any indebtedness due or to become due from Secured Party to a Debtor and (ii) any moneys, credits or other property belonging to a Debtor at any time held by or coming into the possession of Secured Party; (c) May exercise in respect of the Collateral, in addition to other rights and remedies provided for herein and the Guaranty or otherwise available to it, all the -7- rights and remedies available to it at law (including those of a secured party under the Code) or in equity; (d) Settle or adjust disputes and claims directly with Account Debtors for amounts and upon terms which Secured Party considers advisable, and in such cases, Secured Party will credit Borrower's Loan Account with only the net amounts received by Secured Party in payment of such disputed Accounts after deducting all Lender Expenses incurred or expended in connection therewith; (e) Cause each Debtor to hold all returned Inventory in trust for Secured Party, segregate all returned Inventory from all other property of such Debtor or in such Debtor's possession and conspicuously label said returned Inventory as the property of Secured Party; (f) Without notice or demand upon any Debtor, make such payments and do such acts as Secured Party considers necessary or reasonable to protect its security interest in the Collateral. each Debtor agrees to assemble the Collateral if Secured Party so requires, and to make the Collateral available to Secured Party as Secured Party may designate. Each Debtor authorizes Secured Party to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Secured Party's determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any of a Debtor's owned premises, such Debtor hereby grants Secured Party a license to enter into possession of such premises and to occupy the same, without charge, for up to one hundred twenty (120) days in order to exercise any of Secured Party's rights or remedies provided herein, at law, in equity, or otherwise; (g) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Secured Party is hereby granted a license or other right to use, without charge, each Debtor's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of advertising for sale and selling any Collateral, and Debtor's rights under all licenses and all franchise agreements shall inure to Secured Party's benefit; (h) Sell all or any part of the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including a Debtor's premises) as Secured Party determines is commercially reasonable. It is not necessary that the Collateral be present at any such sale; (i) Secured Party shall give notice of the disposition of the Collateral as follows: -8- (i) Secured Party shall give the applicable Debtor a notice in writing of the time and place of public sale, or, if the sale is a private sale or some other disposition other than a public sale is to be made of the Collateral, then the time on or after which the private sale or other disposition is to be made; and (ii) The notice shall be personally delivered or mailed, postage prepaid, to the applicable Debtor as provided in Section 10, at least 10 days before the earliest time of disposition set forth in the notice; no notice needs to be given prior to the disposition of any portion of the Collateral that is perishable or threatens to decline speedily in value or that is of a type customarily sold on a recognized market; (j) Secured Party may credit bid and purchase at any public sale; (k) Secured Party may seek the appointment of a receiver or keeper to take possession of all or any portion of the Collateral or to operate same and, to the maximum extent permitted by law, may seek the appointment of such a receiver without the requirement of prior notice or a hearing; (l) Secured Party shall have all other rights and remedies available at law or in equity or pursuant to any other Subsidiary Loan Document; and (m) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by the Debtors. Any excess will be returned, without interest and subject to the rights of third Persons, by Secured Party to the applicable Debtor. 7.2. Remedies Cumulative. Secured Party's rights and remedies under this Agreement, the Subsidiary Loan Documents, and all other agreements shall be cumulative. Secured Party shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Secured Party of one right or remedy shall be deemed an election, and no waiver by Secured Party of any Event of Default on a Debtor's part shall be deemed a continuing waiver. No delay by Secured Party shall constitute a waiver, election, or acquiescence by it. 8. TAXES AND EXPENSES REGARDING THE COLLATERAL. If a Debtor fails to pay any monies (whether taxes, rents, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, Secured Party, in its sole discretion and without prior notice to any Debtor, may do any or all of the following: (a) make payment of the same or any part thereof; (b) set up such reserves in Borrower's Loan Account as Secured Party deems necessary to protect Secured Party from the exposure -9- created by such failure; or (c) in the case of the failure to comply with Section obtain and maintain insurance policies insuring such Debtor's ownership and use of the Collateral, and take any action with respect to such policies as Secured Party deems prudent. Any amounts paid or deposited by Secured Party shall constitute Lender Expenses, shall immediately become additional Secured Obligations, shall bear interest at the applicable rate described in the Subsidiary Loan Document, and shall be secured by the Collateral. Any payments made by Secured Party shall not constitute an agreement by Secured Party to make similar payments in the future or a waiver by Secured Party of any Event of Default under this Agreement. Secured Party need not inquire as to, or contest the validity of, any such expense, tax, security interest, encumbrance, or lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing. Secured Party shall use its best efforts to provide notice to each Debtor of any action taken by it under this Section 8. 9. WAIVERS; INDEMNIFICATION. 9.1. Demand; Protest; etc. To the extent permitted by law, each Debtor waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Secured Party on which such Debtor may in any way be liable. 9.2. Secured Party's Liability for Collateral. So long as Secured Party complies with its obligations, if any, under Section 9207 of the Code, Secured Party shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person. All risk of loss, damage, or destruction of the Collateral shall be borne by the Debtors. 9.3. Indemnification. Each Debtor agrees to defend, indemnify, save, and hold Secured Party and its officers, employees, and agents harmless against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other Person, and (b) all losses (including attorneys fees and disbursements) in any way suffered, incurred, or paid by Secured Party as a result of or in any way arising out of, following, or consequential to transactions with Borrower or any Debtor, whether under this Agreement, the other Subsidiary Loan Documents or otherwise, but excluding any obligations, demands, claims, liabilities, and losses caused by Secured Party's gross negligence or willful misconduct. This provision shall survive the termination of this Agreement. 10. NOTICES. All notices and other communications hereunder to Secured Party shall be in writing and shall be mailed, sent or delivered in accordance with the Loan Agreement and all notices and other communications hereunder to a Debtor shall be -10- in writing and shall be mailed, sent or delivered in care of Borrower in accordance with the Loan Agreement. 11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF SECURED PARTY, IN ANY OTHER COURT IN WHICH SECURED PARTY SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH DEBTOR AND SECURED PARTY WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11. EACH DEBTOR AND SECURED PARTY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH DEBTOR AND SECURED PARTY REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 12. DESTRUCTION OF DEBTOR'S DOCUMENTS. All documents, schedules, agings, or other papers delivered to Secured Party may be destroyed or otherwise disposed of by Secured Party four (4) months after they are delivered to or received by Secured Party, unless the applicable Debtor requests, in writing, the return of said documents, schedules or other papers and makes arrangements, at such Debtor's expense, for their return. 13. GENERAL PROVISIONS. 13.1. Effectiveness. This Agreement shall be binding and deemed effective when executed by each Debtor and accepted and executed by Secured Party. -11- 13.2. Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that no Debtor may assign this Agreement or any rights or duties hereunder without Secured Party's prior written consent and any prohibited assignment shall be absolutely void. No consent to an assignment by Secured Party shall release a Debtor from its Secured Obligations. Secured Party may assign this Agreement and its rights and duties hereunder and no consent or approval by any Debtor is required in connection with any such assignment. Secured Party reserves the right to sell, assign, transfer, negotiate, or grant participations in all or any part of, or any interest in Secured Party's rights and benefits hereunder. In connection therewith, Secured Party may disclose all documents and information which Secured Party now or hereafter may have relating to the Debtors or the Debtors' business. To the extent that Secured Party assigns its rights and obligations to a third Person, Secured Party thereafter shall be released from such assigned obligations to each Debtor and such assignment shall effect a novation between the Debtors and such third Person. 13.3. Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each section applies equally to this entire Agreement. 13.4. Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Secured Party or any Debtor, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto. 13.5. Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 13.6. Amendments in Writing. This Agreement can only be amended by a writing signed by Secured Party and each Debtor. 13.7. Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. 13.8. Revival and Reinstatement of Obligations. If the incurrence or payment of the Secured Obligations by a Debtor or the transfer by a Debtor to Secured -12- Party of any property of a Debtor should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors' rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, and other voidable or recoverable payments of money or transfers of property (collectively, a "Voidable Transfer"), and if Secured Party is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that Secured Party is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of Secured Party related thereto, the liability of the Debtors automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made. [signature page follows] -13- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. FUTURELINK CORP., a Delaware corporation By: /s/ Corey E. Fischer Title: Vice President FUTURELINK MICRO VISIONS CORP., a Delaware corporation By: /s/ Corey E. Fischer Title: Vice President FUTURELINK ASYNC CORP., a Delaware corporation By: /s/ Corey E. Fischer Title: Vice President FUTURELINK PLEASANTON CORP., a Delaware corporation By: /s/ Corey E. Fischer Title: Vice President FUTURELINK MADISON CORP., a Delaware corporation By: /s/ Corey E. Fischer Title: Vice President FUTURELINK VSI CORP., a Maryland corporation By: /s/ Corey E. Fischer Title: Vice President FOOTHILL CAPITAL CORPORATION, a California corporation By: /s/ William Shiao Title: Vice President S-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. 2.3 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-toyear, 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 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 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 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 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 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 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 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 -------------------------------------By: Philip R. Ladouceur, Its: Chairman of the Board /s/ HOWARD E. TAYLOR -------------------------------Howard E. Taylor /s/ RICHARD M. WHITE -------------------------------------By: Richard M. White Its: Executive Vice President, Chief Financial Officer 9 EXHIBIT 10.83 FUTURELINK CORP. HOWARD E. TAYLOR YEAR 2000 STOCK OPTION PLAN AND AGREEMENT THIS STOCK OPTION PLAN AND AGREEMENT (the "Agreement") by and between FUTURELINK CORP., a Delaware corporation (the "Company"), and HOWARD E. TAYLOR ("Employee") is entered into effective as of the 4th day of December, 2000. RECITALS 1. Pursuant to that certain Employment Agreement dated as of December 4, 2000 by and between the Company and Employee (the "Employment Agreement"), and as an inducement to Employee to enter into the Employment Agreement, the Company has agreed to grant Employee options to purchase an aggregate of up to 2,700,000 shares of the Company's common stock; 2. Of such options, options to purchase 500,000 have been granted to Employee pursuant to the Company's Second Amended and Restated Stock Option Plan (the "Plan") and those options are governed by the terms and conditions thereof and a separate option agreement evidencing such grant; 3. The Company desires to fulfill it obligations to grant Employee options to purchase the remaining 2,200,000 shares as provided for in the Employment Agreement by granting such options pursuant to this Agreement; and 4. The parties desire to set forth the terms and conditions governing the options granted hereunder. NOW, THEREFORE, the parties hereto agree as follows: 1. Grant. The Company hereby grants to Employee the right to purchase up to 2,200,000 shares of the Company's common stock at a price of $0.8125 per share, on the terms and conditions set forth herein. The options granted hereunder are not intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code, as amended, and are not granted pursuant to the Plan. Employee agrees that Employee and any other person who may be entitled hereunder to exercise these options shall be bound by all terms and conditions of this Agreement. This Agreement and the grant of the options herein shall not be effective unless and until Employee commences full-time employment with the Company pursuant to the terms of the Employment Agreement. If Employee does not commence full-time employment with the Company pursuant to the terms of the Employment Agreement, this Agreement and the options granted hereunder shall be null and void, and the parties hereto shall be deemed to have no rights or obligations whatsoever under this Agreement. 2. Vesting. Except as specifically set forth in Section 3 hereof, and provided that Employee continues to be employed by the Company at such times, the options granted herein shall vest and become exercisable at the following times and in the following amounts: (a) options to purchase 1,500,000 shares of the Company's common stock shall vest in equal installments of 187,500 shares on the first day of each calendar quarter for the eight (8) consecutive calendar quarters beginning on January 1, 2001; (b) options to purchase 500,000 shares of the Company's common stock shall vest on January 1, 2003; and (c) options to purchase 200,000 shares of the Company's common stock shall vest on January 1, 2004; provided, however, that if the Company has achieved certain corporate performance objectives by December 31, 2001, which objectives shall be established by Employee and the Company's board of directors prior to January 1, 2001, then the options to purchase such 200,000 shares shall vest on December 31, 2001. The Company's board of directors in its sole and absolute discretion shall determine whether or not such performance objectives are achieved, and such determination shall be made within ninety (90) days after December 31, 2001. 3. Termination of Employment. (a) Termination by Reason of Employee's Death or Disability. If Employee's employment is terminated by Employee's death or "disability" (as such term is defined in the Company's long-term disability policy), Employee or Employee's estate, as the case may be, shall have the right, for a period of six (6) months following such death or disability, to exercise this option, but only with respect to the number of shares for which the option was exercisable on the date of Employee's death or disability and to the extent not previously exercised. (b) Termination by Employee. If Employee voluntarily terminates his employment with the Company, other than as set forth in paragraph (e)(ii) of this Section 3, this Agreement and all rights granted hereunder shall terminate as of the date of such voluntary termination. (c) Termination for Cause. If the Company terminates Employee's employment with the Company for "Cause" (as defined in the Employment Agreement), this Agreement and all rights granted hereunder shall terminate immediately as of the date of such termination. (d) Termination Without Cause. In the event the Company terminates Employee's employment without "Cause" (as such term is defined in the Employment Agreement), and other than as a result of a Change of Control as set forth in paragraph (e)(i) of this Section 3, then Employee shall have the right, for a period of ninety (90) days commencing with the Company Termination Date (as defined in the Employment Agreement), to exercise all options that were vested as of such Company -2- Termination Date, to the extent such options have not previously been exercised. In the event Employee executes a release in a form satisfactory to Company, as required by Section 4.1 of the Employment Agreement, forever releasing and discharging the Company, its officers, directors, employees, agents and representatives from any and all obligations to pay any further amounts or benefits to Employee in connection with his employment or the termination thereof, then all options that were scheduled to vest within twelve (12) months following the Company Termination Date shall accelerate and become immediately exercisable. (e) Termination Upon Change of Control. Upon a Change of Control (as such term is defined in Section 5.1 of the Employment Agreement), and the occurrence of either of the events set forth in subparagraphs (a) or (b) of Section 5.1 of the Employment Agreement, then the vesting of all options granted pursuant to this Agreement shall accelerate, regardless of whether the vesting requirements set forth herein have been satisfied, and Employee shall have the right, for a period of ninety (90) days following the termination of Employee's employment, to exercise this option with respect to all shares, to the extent not previously exercised. This Agreement and all rights granted hereunder shall terminate and otherwise be extinguished on the 91st day following such termination. (f) Termination for Any Other Reason. If Employee's employment is terminated for any reason other than as set forth above, this Agreement and all rights granted hereunder shall terminate as of the date of such termination. 4. Exercise. This option may be exercised in whole or in part on the terms and conditions contained herein by Employee giving the Company ten (10) days' prior written notice of Employee's election to exercise, which notice shall specify the number of shares to be purchased and the price to be paid therefor, and by delivering cash or check in the amount of the aggregate purchase price payable to the Company. 5. Effect of Exercise. Upon the exercise of all or any part of these options, the number of shares of common stock subject to the options granted pursuant to this Agreement shall be reduced by the number of shares with respect to which such exercise is made. 6. Expiration. The options granted hereunder shall expire, to the extent not previously exercised or earlier terminated pursuant to Section 3 hereof, upon the tenth (10th) anniversary of the date the option was granted. 7. Transferability. This option shall be transferable only by will or by the laws of descent and distribution to the estate (or other personal representative) of Employee and shall be exercisable during Employee's lifetime only by Employee. Except as otherwise provided herein, any attempt at alienation, assignment, pledge, hypothecation, transfer, sale, attachment, execution or similar process, whether voluntary or involuntary, with respect to all or any part of this option or any right under this Agreement, shall be null and void. -3- 8. Withholding Requirements. In the event the Company determines that it is required to withhold state or federal income taxes as a result of the exercise of these options, Employee shall be required, as a condition to the exercise hereof, to make arrangements satisfactory to the Company to enable it to satisfy such withholding requirements. 9. Rights as a Stockholder. Employee, or any permitted transferee of Employee, shall have no rights as a stockholder with respect to any shares covered by these options until the date of the issuance of a stock certificate for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as provided in Section 10 of this Agreement. This Agreement shall not confer upon Employee any right of continued employment by the Company or interfere in any way in the Company's right to terminate Employee. 10. Recapitalization. The number of shares of common stock covered by this option and the exercise price thereof shall be proportionately adjusted for any increase or decrease in the number of issued shares of common stock resulting from a subdivision or consolidation of such shares or the payment of a stock dividend (but only of common stock) or any other increase or decrease in the number of issued shares of common stock effected without receipt of consideration by the Company. If the Company is the surviving corporation in any merger or consolidation, this option shall pertain and apply to the securities to which a holder of the number of shares of common stock subject to the option would have been entitled. The foregoing adjustments shall be made by the Company's board of directors, whose determination shall be conclusive and binding on the Company and Employee. 11. Securities Act and Other Regulatory Requirements. This option is not exercisable, in whole or in part, and the Company is not obligated to sell any shares of the Company's common stock subject to this option, if such exercise or sale, in the opinion of counsel for the Company, would violate the Securities Act of 1933 (the "Securities Act") (or any other federal or state statutes having similar requirements) as it may be in effect at that time. Employee acknowledges and agrees that the options granted to Employee pursuant to this Agreement are being acquired for investment purposes only and not with a view to any public distribution thereof. The certificates evidencing any shares issued pursuant to these options shall bear such restrictive legends as required by federal or state law. Employee agrees not to offer to sell or otherwise dispose of the shares of the Company's common stock acquired upon the exercise of these options in violation of the registration requirements of the Securities Act or any applicable securities laws. 12. Notices. Any notice or other communication required or permitted hereunder or by law shall be validly given or made only if in writing and delivered in person to an officer or duly authorized representative of the other party, or deposited in the United States mail, duly certified or registered, return receipt requested, postage prepaid, and addressed to the party to whom intended. If sent to the Company, it shall be -4- addressed in care of the General Counsel, FutureLink Corp., 2 South Pointe Drive, Lake Forest, California 92630, and if sent to Employee, it shall be addressed to Employee's address on file with the Company on the date of such notice. If sent by mail, notice shall be deemed given two days after deposit of such notice in the mail and in accordance with this section. Any party may from time to time, by written notice to the other, designate a different address for notice which shall be substituted for that specified above. 13. Choice of Law; Counterparts. This Agreement, and all rights and obligations hereunder, shall be governed by the laws of the State of California. This Agreement may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. 14. Arbitration; Venue. The parties hereto agree that any disputes or controversies relating to or arising out of this Agreement shall be resolved exclusively by arbitration, in accordance with the procedures set forth in Section 10.1 of the Employment Agreement. The venue for any such proceeding shall be as set forth in Section 10.5 of the Employment Agreement. 15. Successor. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, beneficiaries, executors and administrators. 16. Paragraph Headings; Employment. Paragraph headings are for convenience only and are not part of the context. This Agreement shall not obligate the Company or any affiliate to employ Employee for any period of time, nor does this Agreement constitute a contract or agreement for employment. IN WITNESS WHEREOF, this Agreement is executed as of the date first written above. FUTURELINK CORP., a Delaware corporation By: /s/ PHILIP R. LADOUCEUR -----------------------------Name: Philip R. Ladouceur ---------------------------Title: Chairman --------------------------- EMPLOYEE: /s/ HOWARD E. TAYLOR ---------------------------------Howard E. Taylor -5- EXHIBIT 15.1 FEBRUARY 8, 2001 The Board of Directors and Stockholders FutureLink Corp. We are aware of the incorporation by reference in Amendment No. 1 to Form SB-2 on Form S-3 Registration Statement of FutureLink Corp. for the registration of approximately 60,000,000 shares of its common stock of our report dated August 30, 1999 relating to the unaudited financial statements of CN Networks, Inc. as of September 30, 1998 and 1999 and for the nine months then ended. /s/ MORELAND & DAVIS ---------------------------Moreland & Davis EXHIBIT 15.2 [M. JEVAHIRIAN & CO. LETTERHEAD] February 8, 2001 The Board of Directors and Stockholders FutureLink Corp. We are aware of the incorporation by reference in Amendment No. 1 to Form SB-2 on Form S-3 Registration Statement of FutureLink Corp. for the registration of approximately 60,000,000 shares of its common stock of our report dated February 3, 2000 relating to the unaudited combined financial statements of ASYNC TECHNOLOGIES, INC. and ASYNC TECHNICAL INSTITUTE, INC. as of September 30, 1998 and 1999 and for the nine months then ended. /s/ M. JEVAHIRIAN & CO. -------------------------------M. Jevahirian & Co. EXHIBIT 23.2 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 14, 2000, except for Note 13, as to which the date is April 29, 2000, Note 16, as to which the date is June 29, 2000, and Note 1, as to which the date is December 15, 2000, in Amendment No. 1 to the Registration Statement on Form SB-2 filed on Form S-3 and related Prospectus of FutureLink Corp. for the registration of 60,830,378 shares of its common stock. /s/ ERNST & YOUNG LLP Orange County, California February 8, 2001 EXHIBIT 23.3 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated January 28, 2000, with respect to the financial statements of Vertical Software, Inc. incorporated by reference in Amendment No. 1 to the Registration Statement on Form SB-2 filed on Form S-3 and related Prospectus of FutureLink Corp. for the registration of 60,830,378 shares of its common stock. /s/ ERNST & YOUNG LLP McLean, Virginia February 8, 2001 EXHIBIT 23.4 CONSENT OF JOEL E. SAMMETT & CO., INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated February 14, 2000, with respect to the financial statements of MICROLAN SYSTEMS, INC. "DBA" MADISON TECHNOLOGY GROUP, MADISON CONSULTING RESOURCES, INC. and MADISON CONSULTING RESOURCES NJ, INC. incorporated by reference in Amendment No. 1 to the Registration Statement on Form SB-2 filed on Form S-3 and related Prospectus of FutureLink Corp. for the registration of 60,830,378 shares of its common stock. Very truly yours, JOEL E. SAMMETT & CO. /s/ Franklin M. Jacobson New York, New York 10005 February 8, 2001 EXHIBIT 23.5 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated November 17, 1999, with respect to the financial statements of Executive LAN Management, Inc., dba MicroVisions, incorporated by reference in Amendment No. 1 to the Registration Statement on Form SB-2 filed on Form S-3 and related Prospectus of FutureLink Corp. for the registration of 60,830,378 shares of its common stock. /s/ ERNST & YOUNG LLP Orange County, California February 8, 2001 EXHIBIT 23.6 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated August 30, 1999, with respect to the financial statements of CN Networks dba Computer Networks incorporated by reference in Amendment No. 1 to the Registration Statement on Form SB-2 filed on Form S-3 and related Prospectus of FutureLink Corp. for the registration of 60,830,378 shares of its common stock. /s/ MORELAND & DAVIS Alameda County, California February 8, 2001 EXHIBIT 23.7 CONSENT OF M. JEVAHIRIAN & CO., INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated February 3, 2000, with respect to the combined financial statements of ASYNC TECHNOLOGIES, INC. and ASYNC TECHNICAL INSTITUTE, INC. incorporated by reference in Amendment No. 1 to the Registration Statement on Form SB-2 filed on Form S-3 and related Prospectus of FutureLink Corp. for the registration of 60,830,378 shares of its common stock. /s/ M. JEVAHIRIAN & CO. Birmingham, Michigan February 8, 2001 EXHIBIT 23.8 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 28, 2000, with respect to the financial statements of KNS Holdings Limited incorporated by reference in Amendment No. 1 to the Registration Statement on Form SB-2 filed on Form S-3 and related Prospectus of FutureLink Corp. for the registration of 60,830,378 shares of its common stock. /s/ ERNST & YOUNG Reading, England February 8, 2001