EX-10.13 12 v23215orexv10w13.txt EXHIBIT 10.13 EXHIBIT 10.13 March 29, 2004 Mr. Stuart Fuhlendorf Dear Stu: It gives me great pleasure to offer you the position of Chief Financial Officer and Vice President of Finance for Isilon Systems, Inc. ("Isilon" or the "Company"). We believe that you will add substantially to the team and contribute greatly to the ultimate success of the Company by providing Isilon with the same extraordinary leadership that you have demonstrated throughout your career. The Board of Directors, the existing Isilon team and I look forward to you joining the Company and helping us build Isilon into one of the most important companies driving the next generation of storage solutions. We understand and appreciate the nature of the commitment you are making to join Isilon, and we want you to do so with great confidence. You have the qualities that distinguish successful executives: leadership, high integrity, intelligence, action-oriented, and a desire to make a difference. We are extremely enthusiastic about your acceptance of this offer. The Company is pleased to offer you employment on the following terms: POSITION You will become Chief Financial Officer and Vice President of Finance of the Company, working out of the Company's headquarters office in Seattle, Washington. You will report to the President and Chief Executive Officer. By signing this letter agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company. START DATE Subject to fulfillment of any condition imposed by this letter agreement, you will begin this new position with the Company at a mutually agreed upon date. The Company would like you to begin your employment at Isilon no later than April 26, 2004. PROOF OF RIGHT TO WORK This offer of employment is contingent upon you presenting, in accordance with applicable law, verification of your identity and your legal right to work in the United States. In the event that you do not possess, or are unable to obtain authorization to accept employment in the United States, our offer of employment is withdrawn. COMPENSATION - BASE SALARY. You will be paid a monthly salary of $12,500, which is equivalent to $150,000 on an annual basis. Your salary will be payable in twenty-six equal payments, one payment every two weeks, pursuant to the Company's regular payroll policy and will be subject to applicable withholding taxes. - BONUS. Upon the successful achievement of mutually agreed upon Management by Objectives (MBOs), you will receive a quarterly bonus of $5,000. Your annual salary plus target bonuses will total annual OTE of $170,000. These bonuses will be paid quarterly following each quarter in which the mutually agreed upon MBOs are achieved. STOCK OPTIONS - INITIAL OPTION GRANT. In connection with the commencement of your employment, the Company will recommend that the Board of Directors grant you an option to purchase 700,000 shares (approximately 0.7% of the fully-diluted shares post-series C financing) of the Company's Common Stock with an exercise price equal to the fair market value on the date of the grant. These option shares will vest at the rate of 25% of the shares on the twelve (12) month anniversary of your Vesting Commencement Date (which will be the date your full-time employment with the Company commences) and the remaining shares will vest monthly thereafter at the rate of 1/48 of the total number of shares per month. Vesting will, of course, depend on your continued employment with the Company. The option will be an incentive stock option to the maximum extent allowed by the tax code and will be subject to the terms of the Company's 2001 Stock Option Plan and the Stock Option Agreement between you and the Company. - EARLY EXERCISE PROVISION. In connection with the commencement of your employment, the Company will recommend that the Board of Directors offer you the option of exercising your "Initial Option Grant", as described above, within 45 days of your option grant being approved by the Company's Board of Directors. Should you choose this early exercise elective: - You will be required to pay the full cost of exercising your options, to the Company, within 45 days of your option grant being approved by the Company's Board of Directors. - Initially all of your exercised shares will be subject to being repurchased by the company should your employment with the company be terminated for any reason. On the twelve (12) month anniversary of your Vesting Commencement Date (which will be the date your full-time employment with the company commences), 25% of your shares will be released from this repurchase agreement and the remaining shares will be released from this repurchase agreement at the rate of 1/48 of the total number of shares per month. Release of shares from this repurchase agreement will, of course, depend on your continued employment with the Company. Should the Company exercise its option to repurchase your shares, -2- the Company will repurchase them at a price equivalent to your original price per share. - The early exercise agreement will impose restrictions on unvested shares, including, but not limited to, limitations on transfer, voting privileges, and escrow of unvested shares. - EQUITY BONUS. Upon the six month anniversary of your employment with the Company, and the successful achievement of mutually agreed upon MBOs associated with those milestones, the Company will recommend that the Board of Directors grant you an option to purchase 150,000 shares, (approximately 0.15% of the then current fully-diluted shares) of the Company's Common Stock, which shall be subject to the Plan. Such options will have an exercise price equal to the fair market value on the date of the approval of such grant by the Board and shall vest monthly over four years from your Start Date. These shares will also be eligible for the Company's Early Exercise Provision described above. - SUBSEQUENT OPTION GRANTS. At the discretion of the Company's Board of Directors, you may be eligible to receive additional grants of stock options or purchase rights from time to time in the future, on such terms and subject to such conditions as the Board of Directors shall determine as of the date of such grant. BENEFITS - INSURANCE BENEFITS. The Company will provide you with standard medical and dental insurance benefits according to Company policy. - VACATION. You will be entitled to vacation according to Company policy. PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company's Proprietary Information and Invention Assignment Agreement, a copy of which is enclosed for your review and execution (the "Assignment Agreement"), prior to or on your Start Date. AT-WILL EMPLOYMENT Your employment with the Company will be on an "at will" basis, meaning that either you or the Company may terminate your employment at any time for any reason or no reason, without further obligation or liability. REFERENCE CHECKS This offer of employment is contingent upon satisfactory reference checks, to be conducted by Isilon. -3- ACCEPTANCE We are all delighted to be able to extend you this offer and look forward to working with you. To indicate your acceptance of the Company's offer, please sign and date this letter in the space provided below and return it to me, along with a signed and dated copy of the Assignment Agreement, on or before Wednesday, March 31, 2004 at 12:00 pm PST. This letter, together with the Assignment Agreement, set forth the terms of your employment with the Company and supersedes any prior representations or agreements, whether written or oral. This letter may not be modified or amended except by a written agreement, signed by the Company and by you. [SIGNATURE PAGE FOLLOWS] -4- Very truly yours, ISILON SYSTEMS, INC. By: /s/ Steve Goldman ------------------------------------ Steve Goldman President and CEO ACCEPTED AND AGREED: STUART FUHLENDORF /s/ Stuart Fuhlendorf ------------------------------------- Signature 3-30-04 Date Enclosure A: Proprietary Information and Invention Assignment Agreement Enclosure B: Isilon Systems' Travel and Entertainment Policy -5-