Document:

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                                                                   EXHIBIT 10.16

                             EMPLOYMENT AGREEMENT
                             --------------------

     THIS AGREEMENT is executed as of the 20/th/ day of July, 1999, by and
between INSYNQ, INC., a Washington corporation (the "Employer") with its
principal office located at 705 S. 9/th/ St., Suite 305, Tacoma, WA 98401-1996,
and Carey M. Holladay, individual (the "Employee") residing at 1538 Verbena Way,
Roseville, CA. These are the "Parties" to this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties hereby agree as follows:

     1.   Employment. The Employer shall employ the Employee, and the Employee
          ----------
accepts such employment by the Employer, upon the terms and conditions set forth
in this Agreement.

     2.   Position and Duties. The Employer and the Employee agree that the
          -------------------
Employee will be employed as the Senior Vice President of Business
Development/Marketing of the Employer, and that in this capacity the Employee's
principal duty shall be responsible for identifying and implementing new
business strategies, marketing/PR programs, and partnering opportunities,
including strategies alliances, technology and marketing alliances, for the
purpose of building overall brand awareness and generating revenue for Company.
The Employee shall have those additional duties and responsibilities described
in the Job Description attached to this Agreement as Exhibit "A," which is
incorporated by this reference. The Employee's duties may include management
of other sales and marketing personnel. The Employee agrees that she shall
perform her duties diligently and in a professional, competent, businesslike,
cooperative and courteous manner. The employment herein is on a full time basis,
and the Employee agrees that, during the Term of this Agreement, she shall not
be employed by or perform professional services for any other party without the
prior, written consent of the Employer.

     3.   Term. Subject to the further provisions of this Agreement, the term
          ----
of employment under this Agreement shall commence upon the date the Employer
receives its first installment of funding. (estimated July 8th, 1999) and shall
expire five (5) years from such date; provided, however, if funding is received
by July 8th, 1999, full time employment shall not commence until August 1, 1999.
Employee may commence part-time employment on or about July 15, 1999, on a
schedule agreed to by Employer.

     4.   Salary. For all of the duties to be performed by the Employee in any
          ------
capacity under this Agreement, the Employer will pay the Employee a base salary
of One Hundred Thirty Thousand Dollars ($130,000.00) per year, effective July 1,
1999, assuming commencement of this Agreement as described in section 3 above.
Employee's base salary shall increase by an amount not less than five percent
(5%) effective on July 1 of each year during the term of this Agreement; any
increase greater than five percent (5%) per year shall be determined by
Employers discretion. Salary shall be paid in bi-monthly installments, and shall
be subject to all withholding and employment tax deductions and payments
required by law.

     5.   Benefits. The Employer shall provide to the Employee the following
          --------
benefits:

          (a)  At such time as the Employer makes group health, group life
insurance, or group disability insurance available to any of its employees, it
shall make insurance of the same type available to the Employee and shall pay
for health care coverage for the Employee and the Employee's spouse and
dependent children. If group health insurance is not available on the
Commencement Date, the Employer shall pay the Employee's COBRA - related
expenses for health insurance covering the Employee and the Employee's spouse
and dependent children.

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          (b)  Three (3) weeks paid vacation (consisting of fifteen (15) working
days) during the first year of the Term of this Agreement, five (5) weeks paid
vacation during the second year and six (6) weeks during the third year of the
Term and any subsequent extension Terms. The period of vacation will be selected
by the Employee. The Employee shall give the Employer not less than sixty (60)
days advance notice of the dates of the Employee's proposed vacations. Unless
authorized in writing by the Employer in advance, unused vacation time shall not
be carried over from year to year. The Employee shall not be paid for unused
vacation. Vacation does not include sick leave or the following holidays:
          .  New Year's Day (January)
          .  Presidents Day (February)
          .  Memorial Day (May)
          .  Independence Day (July)
          .  Labor Day (September)
          .  Thanksgiving (November-Thursday & Friday)
          .  Christmas Day (December)
          .  2 Floating Holidays

          (c)  Paid sick leave of not more than fifty six (56) workday hours
during the first year of the Term, and not more than One Hundred and Twelve
(112) workday hours during each the second and third years of the Term. The
Employee shall not be paid for unused sick leave.

          (d)  The Employer may provide a qualified 401(k) profit sharing or
retirement plan for its employees, with the Employer contributing to such plan a
specified amount equal to a percentage of employee's salaries per month
specified in such plan, and permitting voluntary contributions by employees to
the plan, subject to any maximum contribution limitations imposed by law. At
such time as such a plan is made available to any employee, it shall be made
available to the Employee.

          (e)  Beginning with the calendar quarter ending September 30, 1999 and
continuing through the term of this Agreement, the Employer shall pay to the
Employee commissions on gross revenue the commission will be capped at ninety
thousand dollars (90,000) per year the commission terms and conditions are
described in Exhibit "B," which is attached to this Agreement and incorporated
by this reference.

          (f)  Upon commencement of employment as provided in Section 3 of this
Agreement, the Employee shall have an option to purchase fifty-five thousand
nine hundred (55,900) shares of common stock of the Employer, at One Dollar
($1.00) per share. The Employee may exercise this option at any time prior to a
termination of this Agreement, by tendering the purchase price for shares to the
Employer. This option shall not be transferable by the Employee (with the
exception as defined in this subsection (upon death of the employee)) this
option shall terminate immediately upon termination of this Agreement, except to
the extent exercised by the Employer prior to such termination. The shares
issued to the Employee pursuant to exercise of this option shall be restricted
as follows:

               (i)   The first twenty-seven thousand nine hundred fifty (27,950)
     shares acquired by the Employee pursuant to this option may not be
     transferred by the Employee for a period of two (2) years from the date of
     commencement of this Agreement under Section 3.

               (ii)  Any shares acquired by the Employee pursuant to this option
     in excess of twenty-seven thousand nine hundred fifty (27,950) shares may
     not be transferred by the

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     Employee for a period of three (3) years from the date of commencement of
     this Agreement under Section 3.

The restrictions described in subsections (i) and (ii) above shall expire as
follows and be of no further effect.

 .  upon the death of the Employee, the employees named heir and/or estate
   executor will have ten (30) working days form the death of the employee to
   exercise all stock related options.
 .  upon a change of control of the Employer as defined in Section 6(g), the
   employee will have ten (10) working day upon written receipt from employer to
   exercise all stock related options.
 .  upon a termination of this Agreement under Section 8. In connection with the
   option and the shares described in this Section 5(f), the Employee makes the
   warranties and representations contained in Exhibit "C," which is attached to
   this Agreement and incorporated by this reference.

          (g)  The Employee shall have an additional option to purchase Twenty-
Five Thousand Shares (25,000) shares of common stock of the Employer, on the
same terms and conditions as are described in Section 5(f), on each anniversary
of the Commencement Date during the term of this Agreement.

          (h)  The Employee shall have a monthly car allowance of Four Hundred
Fifty Dollars ($450.00) payable on the first day of each month beginning after
the Commencement Date.

          (i)  All benefits described in this Section 5 shall be subject to all
withholding and employment tax deductions and payments required by law.

     6.   Termination Upon Notice. This Agreement may be immediately
          -----------------------
terminated by written notice to the Employee upon the occurrence of any of the
following:
          (a)  Death of the Employee;

          (b)  Mutual agreement of the parties;

          (c)  Expiration of this Agreement;

          (d)  The Employee's inability, through sickness or other incapacity,
to perform his duties under this Agreement for a period in excess of One Hundred
and Twenty (120) consecutive days;

          (e)  Any act of dishonesty, or breach or default by the Employee of
any provision of Section 10.

          (f)  Conviction of a crime or imposition of a civil judgment based on
Employee's acts involving moral turpitude.

          (g)  A change of control of the Employer, which shall mean a transfer
of substantially all of the assets of the Employer, or a transfer of more than
fifty percent (50%) of the common stock of the Employer.

     7.   Termination After Notice. Notwithstanding any other provision of this
          ------------------------
Agreement, this Agreement may be terminated thirty (30) Days after the Employer
gives written notice to the Employee following the occurrence of any of the
following:

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          (a)  Breach by the Employee of any material provision of this
Agreement other than those of Section 6 above, including without limitation the
Employee's failure or refusal to perform his duties in the manner specified in
Section 2 above.

          (b)  Repeated actions or behavior by the Employee which has caused or
encouraged discontent among employees, suppliers or customers of the Employer,
or which interferes with agreements of the Employer, or which otherwise
adversely affect the Employer's business.

          (c)  Material violation by the Employee of a statutory or common law
duty of loyalty to the Employer.

          (d)  The Employee's material violation of any local, state or federal
law which impairs his ability to perform his duties under this Agreement, or
which in the good faith judgment of the Employer's Board of Directors adversely
affects the reputation or goodwill of the Employer.

     8.   Termination by Employer. Notwithstanding the provisions of Section 3,
          -----------------------
the Employer may terminate this Agreement for any reason other than those
provided in Sections 6 and 7. In such event, then the Employer shall continue to
pay the Employee base salary (Section 4), medical insurance (Section 5(a)),
bonus compensation (Section 5(e)), and retirement plan (if any) (Section 5(d)),
for a period of six (6) months following such termination.

     9.   Termination by Employee. Notwithstanding the provisions of Section 3,
          -----------------------
if the Employee's title, status, authority or responsibilities are materially
reduced, or if the Employee's base salary is reduced, the Employee may terminate
this agreement. In such event, then the Employer shall continue to pay the
Employee base salary (Section 4), medical insurance (Section 5(a)), bonus
compensation (Section 5(e)), and retirement plan (if any) (Section 5(d)), for a
period of six (6) months following such termination.

     10.  Property of Employer and Confidential Information.
          -------------------------------------------------

          (a)  Employee acknowledges and agrees that Insynq and Employer are the
sole originators and creators of the System, and that they have expended
considerable time and monies in its development and refinement. Employee
acknowledges and agrees that Employer is the exclusive, rightful, sole owner
of the System and all information and technology related thereto which has been
or will be in future developed by Employer, Employee, and other employees of
Employer.

          (b)  Employee further acknowledges and agrees that the System and all
information regarding the System which has in the past or may in future be
disclosed to Employee in any form, although they may contain elements which in
isolated form could be construed as previously known to Employee or as common
knowledge in the industry, also contain much proprietary and confidential
information and know-how ("Confidential Information") of Employer, and that the
System's elements and the System as a whole are unique, confidential Trade
Secrets (under the Washington Trade Secrets Act, Chapter 19 R.C.W.) and of great
proprietary value to Employer.

          (c)  Employee agrees that he shall use the Confidential Information
only for the purposes and in the manner specified by Employer, and shall take
all reasonable steps to safeguard and protect such Confidential Information from
unauthorized disclosure, including without limitation preventing unauthorized
access to Confidential Information stored electronically. Employee shall not at
any time during or after his employment by Employer disclose or disseminate
Confidential Information, nor shall he remove any such Confidential Information
from the Employer's offices, or make copies or replications of such Confidential
Information (except as may be necessary in the normal course of system security
or backup measures) without the prior, specific authorization of an Executive
Officer of Employer.

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          (d)  It is acknowledged and agreed that the nature of the System is
national and international in geographical scope. In consideration of the other
terms of this Agreement and an additional Five Hundred and no/100 Dollars
($500.00) in cash received by Employee at the time of execution of this
Agreement, Employee agrees that, during the Term of this Agreement, and for a
period of Two years (2 In addition the Employee shall not be employed in any
direct (hands-on) technical capacity by, or provide direct (hands-on) technical
advisory services to any business that competes with the System anywhere in the
world. Exhibit "D" contains a list of products and businesses which Employer and
Employee believe currently compete with the System, and which by this reference
specifically covered by this Agreement; Employer and Employee agree that other
products or businesses may compete with the System now or in the future, and
such additional competitors are also covered by this Agreement. Employer and
Employee agree that the restrictions placed upon Employee by this Agreement are
reasonable and necessary for the protection of Employer from competition and
unfair competition by Employee through use of Confidential Information and know-
how obtained or developed by Employee on behalf of Employer, and for which
Employee received just compensation, and further that such restrictions are
reasonably limited with respect to the activities they prohibit, their duration,
geographic scope and their effect upon Employee. Employee and Employer expressly
agrees that nothing in this Agreement shall prohibit Employee from obtaining
employment or work of the type for which he is qualified and accustomed, or
earning a livelihood for himself or his family and that the computer software
business is large, and Employee's technical skills are such that there are many
opportunities for him in business which do not compete with the System.

          (e)  Employee agrees that he shall not at any time during the Term
of this Agreement or after its expiration or termination work independently or
with others in the creation, developmentor operation of any system or services
which look like, copy or imitate those of Employer, or could reasonably be
confused with those of Employer, nor shall she make unauthorized use of the
Confidential Information for the benefit of himself or others.

          (f)  Employee agrees that her failure to act in utmost good faith and
abide by the terms and conditions of this Agreement could cause Employer
irreparable damage and harm not totally calculable in money, and for which
Employer would have no adequate remedy at law. Therefore, Employee agrees that,
in the event of any breach or default of any provision of this Agreement, or
threatened breach or default, Employer may, in addition to any other remedies it
may have at law or otherwise, apply to any court of competent jurisdiction for
the entry of an immediate order to restrain or enjoin the breach of these
provisions and to otherwise specifically enforce the provisions of this
Agreement.

          (g)  Employee agrees that, prior to the commencement of any employment
other than the employment by Employer, Employee shall furnish the new employer
with a copy of this section 8. Employee further agrees that Employer may advise
any new or prospective employer of the existence of this Agreement and may
furnish such employer with a copy of same.

     11.  Duties Upon Expiration or Termination. The Employee agrees that upon
          -------------------------------------
the expiration or termination of this Agreement, she shall promptly turn over to
the Employer all information in his possession or available to her, including
the Confidential Information, in whatever form regarding the System and the
Employee's work for the Employer.

     12.  Entire Agreement. This Agreement contains all of the oral and written
          ----------------
agreements between the parties as to the Employee's services. All prior
discussions, compensation, understandings, negotiations and agreements are
merged into this Agreement. Except for the termination provided above, this
Agreement may only be changed or rescinded by the written agreement of both the
Employer and Employee herein.

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     13.  Waiver. The waiver by either party of a breach or default of any
          ------
provision of this Agreement by the other shall not operate or be construed as a
waiver of any subsequent breach or default of the same or a different nature.

     14.  Benefit and Assignment. This Agreement shall be binding upon and inure
          ----------------------
to the benefit of the Employer, its successors and assigns. The rights and
benefits of the Employee under this Agreement are personal to him or her, and no
such right or benefit shall be subject to voluntary or involuntary alienation,
assignment or transfer, except as otherwise provided herein.

     15.  Modification, Severability. Any provision of this Agreement which is
          --------------------------
found by a court to be invalid, illegal or unenforceable shall be deemed
automatically modified to the extent to make it valid, legal and enforceable,
or, if it cannot be so modified, then stricken. The remaining provisions of this
Agreement shall remain in full force and effect

     16.  Governing Law. This Agreement shall be construed and governed in
          -------------
accordance with the laws of the state of Washington.

     17.  Notices. Any notice required or desired to be served, given or
          -------
delivered under this Agreement shall be in writing and shall be deemed to have
been validly serviced, given or delivered upon deposit in the United States mail
by registered or certified mail with proper postage prepaid and addressed to the
party to be notified at the addresses given above, or to such other address as
either party may hereafter designate by written notice to the other party.

     18.  Arbitration.
          -----------

          (a)  Arbitrator. As used herein, the term "Arbitrator" shall mean any
               ----------
natural person, not related to either party to this Agreement, or any person,
firm, employer or other business organization that controls, is controlled by,
or is under common control of any party to this Agreement. The Arbitrator must
have substantial experience involving the subject matter of the dispute.

          (b)  Arbitration Procedure. Except with respect to injunctive relief
               ----------- ---------
under Section 8 of this Agreement, any matter of disagreement, dispute or
controversy between the parties to this Agreement relative to, or arising out
of this Agreement, or Exhibits to this Agreement, if any, may be submitted by
either party to arbitration. The demand for arbitration shall be in writing;
shall be personally served on the other party, or sent by certified mail, return
receipt requested to the other party, and shall set forth the matter or matters
to be arbitrated. The parties shall then agree on an Arbitrator. In the
selection and appointment of the Arbitrator, the parties each agree to act in
good faith to name persons with experience and expertise in the subject matter
involved. If the parties cannot agree upon an arbitrator, then either party may
petition the Superior Court of Pierce County, Washington to appoint an
arbitrator to act pursuant to the terms of this Agreement.

          (c)  Manner of Conducting Arbitration. Any arbitration pursuant hereto
               --------------------------------
shall be in accordance with the Commercial Arbitration Rules of the American
Arbitration Association as then in effect. Arbitration may be entered in any
court having jurisdiction thereof, subject, however, to the provisions of
Chapter 7.04 of the Revised Code of Washington which are not in conflict with
said Rules, provided, however, if such Association is not then functioning, or
such Rules are not then in effect, arbitration shall be conducted in accordance
with the requirements of said Chapter 7.04, or such other provisions of the
statutory laws of the state of Washington as may be enacted in lieu of said
Chapter 7.04. All such arbitration proceedings shall take place in Tacoma,
Washington. In any such arbitration proceeding, each party shall have full
access to the relevant books and records of the other party and the power to
call for testimony the other party and all other rights to discovery afforded
under the then applicable Federal Rules of Court;

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          (d)  Decision of Arbitrator. The decision of the Arbitrator shall be
               ----------------------
given in writing and shall be binding and conclusive upon the parties.

          (e)  Fees. The fees and expenses of the Arbitrator shall be divided
               ----
equally between the parties to the dispute.

     19.  Attorneys' Fees. In the event of a dispute between the parties to this
          ---------------
Agreement, the losing party shall pay the prevailing party all its attorneys'
fees, costs, cost of investigation, costs of appeal and any costs of collection
of awards.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first written above.

INSYNQ, INC. (Employer)                 CAREY M. HOLLADAY (Employee)

By: /s/ John P. Gorst                   /s/ Carey Holladay
   -------------------------            -----------------------------
    Chief Executive Officer

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                                  EXHIBIT "A"

                                JOB DESCRIPTION
                                ---------------

Title:                 Senior Vice President of Business Development/Marketing
Reports:               President/COO
Status:                Exempt
Projected Start Date:  August 1, 1999
Job Family:            Employee Management

Position Overview:
-----------------

Responsible for identifying and implementing new business strategies,
     marketing/PR programs, and partnering opportunities, including strategic
     alliances, technology and marketing alliances, for the purpose of building
     overall brand awareness and generating revenue for Employer.

Position Description:
--------------------

Provide recommendation to CEO and President/COO with regard to business
     development strategies.
Assist with the expansion (profitability) of Employer's business plan, revenue
     projections and internal infrastructure as needed to include marketing and
     sales.
Assist with the implementation of the business plan and the production of
     subsequent revenue goals.
Promote business concepts internally to staff members.
Work in cooperation with other members of the Employee Management team to target
     companies that are both complementary and supportive of Employer's core
     competencies.
Identify, develop and implement new content and products to be offered from
     Employer's e-services site in order to achieve a favorable end user
     experience.
Develop business cases for working with each partner Employer and identify
     associated revenue and marketing opportunities that will be produced as a
     result.
In conjunction with CEO and President/COO negotiate and secure formal Contracts
     with each partner Employer.
Ensure partner compliance with contract terms and optimum profitability.
Work with marketing/PR staff to identify brand awareness strategy and set
     direction of associated tasks to build brand awareness.
Work with marketing/PR staff to write press releases, speaking biographies and
     synopsis' that continue to build Employer's brand awareness and correctly
     represent the business strategy.
with marketing staff to develop preliminary designs/content for marketing
     collateral.
Work with marketing staff in dealing with outside ad agencies/PR firms as
     needed.
Develop relationships with industry analysts in order to promote Employer and
     the ASP industry overall.
Serve as spokesperson, on an as needed basis, to promote brand awareness and
     strategy with the press and editorial staff for industry magazines and
     trade shows.
In conjunction with marketing and PR staff identify cost-effective leveraged
     marketing programs and associated revenue projections for each program.
Develop and implement a marketing analysis program in order to understand
     project revenue against actual revenue generated in order to adjust
     marketing programs.
Develop and implement a performance planning system for the sales team whereby
     reporting system will identify projected numbers against actual numbers.
Develop job descriptions for sales, marketing and support staff.
Work with the sales team to provide training and conceptual understanding of how
     to sell Employer's product/service lines.

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Identify  and recommend new distribution channels or vertical markets that could
     provide high growth revenue opportunities.
Perform  or direct market research to substantiate recommendations to enter a
     particular vertical market or distribution channel.

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                                  EXHIBIT "B"

                      Commission/Override Sales Agreement
                      -----------------------------------
                                      For
                                      ---
                                Carey Holladay
                                --------------

Position:           Sr. VP of Business Development and Marketing

Sales Commissions:  2% (gross revenues) and will be capped at Ninety Thousand
                    ($90,000) Dollars annually.

------------------------------------------------------------------------------
General Commission Terms and Conditions

1. This Commission/Override Agreement dated this 2Oth day of July 1999 is
   effective from the first day of employment and will supercede the interim
   commission agreement based on it's terms and conditions.

2. Commission will be paid on gross revenue on all business development
   activities that generate revenue for the Company. Such commission shall
   include not only partnerships developed and fostered by employee directly,
   but shall also include any and all partnerships developed and fostered by an
   employee of the business development team.

3. Gross revenue does not include any fees paid as royalties to third parties.
   In addition, commissions are not earned or paid on revenues generated through
   maintenance fees or support fees.

4. Employee and Company agree that the commission plan outlined herein shall be
   capped at Ninety Thousand ($90,000) dollars annually, with the anniversary
   date to be the first date of employment.

5. Insynq reserves the right, in its sole and absolute discretion, to
   periodically review and change/adjust commissions. Any such changes in
   commissions will be immediately applicable to all sales not fully executed.

6. Insynq reserves the right, in its sole and absolute discretion, to determine
   any commission splits and how monies are to be paid in the event that more
   than one person is involved in a sale.

7. Upon receipt of payment by a customer, Insynq will calculate the amount of
   any commission earned. Any commission or bonus owed will be paid to you on
   the last pay date of the month following receipt of monies from customer(s).

8. At termination of employment, no commission will be owed on any contracts
   where monies have not been received by Insynq. Nor will commission be earned
   or paid for ongoing or add-on business after termination of employment.

I have read this "Commission/Override Sales Agreement" and understand its terms.
This agreement accurately sets forth the manner in which I am to earn
commissions as the Sr. Vice President of Business Development and Marketing
Director of Business Development.
<PAGE>

                                  EXHIBIT "C"

                         REPRESENTATION AND WARRANTIES
                         -----------------------------

     Warranty of Investment Intent. Employee makes the following
     -----------------------------
representations, covenants and warranties:

     (a) Developmental Stages. Employee understands that the Employer is in the
         --------------------
developmental stages of its organization and operations. Employee further
understands that the technologies and services being developed by the Employer
are new, untested, and in the developmental stages, and that no markets for such
technologies and services have yet been developed or proven, and that the
business contemplated by the Employer is not fully developed and is unproven.
Employee has obtained such counsel and advice from Employee's own attorneys and
other advisors as the Employee deems necessary and appropriate in determining to
make this Agreement.

     (b) Receipt of Private Placement Memorandum and Without Reliance. Employee
         --------------------------- --------------------------------
acknowledges that Employee has received, read, and is familiar with the Private
Placement Memorandum dated _______________ attached to this Agreement as Exhibit
"A", and to have obtained such counsel and advice as Employee deems necessary
and appropriate in determining to make this Agreement. Employee understands that
the Employer's statements in the Private Placement Memorandum, including without
limitation its business plans, use of proceeds, interim financial statements,
and forward-looking pro forma information, as prepared by management without
audit, are good faith representations by the Employer, but Employee must
complete Employee's own investigation of the investment opportunity involved and
that the business contemplated by the Employer is unproven and thus there can be
no assurance of the success of the Employer, nor the accuracy of any of the
financial or business data provided, and Employee expressly does not rely upon
any of such representations in subscribing for shares.

     (c) Risks. Employee recognizes and acknowledges that Employee's investment
         -----
in the Employer involves speculative risks and other risks of loss which could
include the full loss of the entire investnent. Employee has taken full
cognizance of and understands the risk factors relative to Employee's purchase
of shares in the Employer. Employee is able to bear the economic risks of
Employee's investment in the Employer, including the risk of losing part or all
of Employee's investment, and the inability to sell or transfer the shares.

     (d) Investigation. Employee has been provided with all materials and
         -------------
information requested either by Employee, Employee's counsel, or others
representing Employee, including any information requested to verify any
information furnished. Where applicable, there has been direct communication
between the Employer and its representatives and Employee and Employee's
representatives and advisers. The Employer and its representatives have given
Employee and Employee's representatives and advisors the opportunity to ask such
questions concerning the Employer and the terms and conditions  of the Agreement
and to obtain all materials and information as Employee and Employee's
representatives and advisors have requested, and Employee has taken advantage
of this opportunity to the extent necessary for Employee to understand the risks
and merits  of the investment in shares ofthe Employer, all in accordance with
the advice and counsel Employee has obtained from Employee's own representatives
and advisors. Employee has made a decision to purchase based upon Employee's
investigation, advice and analysis.

     (e) Purchase Long-Term Investment. Employee is purchasing shares of the
         -----------------------------
Employer for Employee's own account and for investment purposes only. Employee
has no current intention, agreement or arrangement for the distribution,
transfer, assignment or resale of any of the shares. Employee does not intend to
divide Employee's participation with others or to resell or otherwise dispose of
any part of or all of

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the shares. Employee further acknowledges that unless the shares are
subsequently registered under the Securities Act of 1933 and the securities laws
of other states (the "Acts"), Employee may not resell, hypothecate, transfer,
assign, or make other dispositions of any of the shares except in a transaction
exempted or excepted from the registration requirements of the Acts. Employee
further understands that any attempt to transfer the shares, absent an effective
registration statement covering such transaction or a bona fide exemption, may
not be honored by the Employer, and that the Employer is under no obligation
either to register securities under the Acts, or to qualify for any exemption or
exception from the registration requirements under the Acts.

     (f) Not a Public Offering. Employee understands that the shares in the
         ---------------------
Employer are being offered and will be sold by the Employer to Employee in
reliance upon certain exemptions from the registration requirements of the Acts,
and not through a public offering of the securities.

     (g) There is No Market in the Employer's Securities. Employee acknowledges
         -----------------------------------------------
that there is no market for the shares ofthe Employer and that Employee may not
be able to sell or dispose ofthe shares. Employee realizes that these securities
must not be purchased unless Employee has sufficient liquid assets to assure
that the purchase will cause no serious financial difficulties to Employee and
that Employee can provide for other current and future personal, financial and
business needs. Employee is willing and able to bear the risk of such
nonliquidity.

     (h) Experienced, Sophisticated Investor. Employee and/or Employee's
         -----------------------------------
representative have such knowledge and experience in financial and business
matters and in investments that they are capable of evaluating the merits and
risks of Employee's investment in shares of the Employer. Employee and/or its
representative have obtained, in their judgment, sufficient information
relating to the Employer to permit Employee to properly evaluate the merits and
risks of the investment.

     (i) Reliance by the Employer on Disclosures. Employee understands that
         ---------------------------------------
Employee's representations in this Agreement will be expressly relied upon by
the Employer in connection with accepting this Agreement and  if the information
provided by Employee is incorrect, the consequences could constitute a violation
of the Acts which would also adversely affect Employee's investment, the
investment of other purchasers of shares, and the business plans and
arrangements of the Employer, its key personnel and affiliates.

     (j) Legend. Employee agrees and consents to the placing by the Employer
         ------
of the following legend on the certificates representing the shares to be
issued:

     The securities represented hereby have not been registered under United
     States federal or state securities laws and may not be offered for sale,
     sole or otherwise transferred or assigned for value, directly or
     indirectly, nor may the securities be transferred on the books of the
     Corporation, without registration of such securities under all applicable
     United States federal or state securities laws or compliance with an
     applicable exemption therefrom, such compliance, at the option of the
     Corporation, to be evidenced by an opinion of shareholder's counsel,
     acceptable to the Corporation, that no violation of such registration
     provisions would result from any proposed transfer or assignment.

                                       2
<PAGE>

                                  EXHIBIT "D"

                               PRODUCTS/BUSINESS
                               -----------------

     1.   The System. INSYNQ has developed and is continuing to improve a
          ----------
proprietary data utility services system that offers to individuals and smaller
businesses enhanced technological computer processing and communications
capabilities at substantially lower costs than heretofore available to them. The
INSYNQ System (hereinafter the "System") is defined, without having the effect
of limitation, asa data utilities services system using specialized equipment,
modified computer software and special technology whereby customers using
simplified or older technology computer equipment are enabled to access and use
powerful, high speed central computer servers, high capacity memory and data
storage facilities, internal and external computer networking capabilities,
internet, e-mail and other services, and to utilize bulk priced software
applications that have been specially modified by the Company to be useable in
such a network System; thereby creating a modem "virtual office"  of up to date
computer technology, processing, memory, storage capacity and communications and
networking capabilities that is less costly to the user than installing the
internal equipment, systems and software that would otherwise be required to
obtain some or all of the enhanced business capabilities described above. This
is the System with which Employee is familiar, and for which Employee shall be
employed as Technical Services Director.

     2.   Competitive Products or Businesses Know to Employee and Employer.
          ----------------------------------------------------------------

                                       1<PAGE>

                                                                   EXHIBIT 10.17

                             EMPLOYMENT AGREEMENT

          This Employment Agreement (this "Agreement") is entered into as of
June 28, 2000 ("Effective Date") between XCEL MANAGEMENT, INC., a Utah
corporation with its principal offices located at 1101 Broadway Plaza, Tacoma,
Washington 98402 (the "Company"), and William G. Hargin, a resident of
Washington (the "Employee").

     In consideration of the promises and the terms and conditions set forth in
this Agreement, the parties agree as follows:

     1.   Position. During the term of this Agreement, the Company will employ
          --------
the Employee, and the Employee will serve the Company in the capacity of
Executive Vice President of Marketing, with a transition to President on or
before October 1, 2000. The Employee will report directly to John P. Gorst, the
Company's Chief Executive Officer and Chairman.

     2.   Duties. The Employee will perform duties described in Exhibit "2,"
          ------
attached to this Agreement and incorporated by this reference, together with
such additional duties assigned by the Chief Executive Officer or Board of
Directors.

     3.   Exclusive Service. The Employee will devote substantially all his
          -----------------
working time and efforts to the business and affairs of the Company. The
foregoing shall not, however, preclude the Employee: (a) from engaging in
appropriate civic, charitable or religious activities; (b) from serving on the
boards of directors of other entities, with the consent of the Company, which
consent shall not be unreasonably withheld; or (c) from providing incidental
assistance to family members on matters of family business, so long as the
foregoing activities and service do not conflict with the Employee's
responsibilities to the Company.

     4.   Term of Agreement.
          -----------------

          4.1  Initial Term. The Company agrees to continue the Employee's
               ------------
employment, and the Employee agrees to remain in the employ of the Company,
pursuant to the terms of this Agreement for a period of three (3) years after
the Effective Date, unless the Employee's employment is earlier terminated
pursuant to the provisions of this Agreement.

          4.2  Renewal. The term of this Agreement shall be extended
               -------
automatically, without further action of either party, as of three (3) years
after the Effective Date and on each succeeding anniversary of that date, for
terms of one (1) year, unless on or before ninety (90) days prior to the last
day of the term of this Agreement or any extension thereof, the Company or

                                       1
<PAGE>

the Employee shall notify the other in writing of its intention not to renew
this Agreement, in which case the Employee's employment shall terminate at the
end of the original term or any extension thereof. If either party notifies the
other of its intention not to renew this Agreement less than ninety (90) days
prior to the end of the term of this Agreement or any extension thereof, then
such termination shall be effective ninety (90) days from such notice. No notice
of non-renewal may be given by either party after a renewal term has commenced.
Any such renewal shall be upon such terms and conditions set forth in this
Agreement, unless otherwise agreed between the Company and the Employee. The
notice of non-renewal by either party shall in no way constitute a breach of
this Agreement.

     5.   Compensation and Benefits.
          -------------------------

          5.1  Base Salary. During the Employment Period, the Company will pay
               -----------
Employee the compensation set forth in Exhibit 1 hereto, and will be payable as
earned in accordance with the Company's customary payroll practice.

          5.2  Additional Benefits. The Employee will be eligible to participate
               -------------------
in the Company's employee benefit plans of general application, including
without limitation pension and profit-sharing plans, 401k program, stock option,
incentive or other bonus plans, life, health, disability, accident, vision and
dental insurance programs, paid vacations and sabbatical leave plans, and
similar plans or programs, in accordance with the rules established for
individual participation in any such plan. The Employee will also be entitled to
reasonable holidays and illness days with full pay in accordance with the
Company's policy from time to time in effect. The Employee will be entitled to
the same benefits extended to members of the senior executive staff of the
Company, including but not limited to vacation accrual. Additional benefits are
set forth in Exhibit 1 hereto.

          5.3  Additional Stock Options. On the Effective Date, the Employee
               ------------------------
shall be granted a compensatory stock option for 150,000, shares of the
Company's restricted Common Stock at an exercise price per share of $6.00 (the
"Initial Option").

          (a)  The Initial Option. The Initial Option shall be vested as to
               ------------------
25,000 shares on the Effective Date. As to the remaining 125,000 shares and
provided the Employee continues to be engaged under this Agreement on each of
the vesting dates, the remainder of the Initial Option shall vest in the
following manner: 25,000 shares on the one year anniversary of the Effective
Date (June 28, 2001), and thereafter 1/24 of the remaining shares subject to the
Initial Option each month the Employee continues to be engaged under this
Agreement. The Initial Option shall be fully vested on the third anniversary
of the Effective Date.

          (b)  The Initial Option cannot be transferred by the Employee except
in the event of his death, and must be exercised by the Employee (or in the
event of his death, by his estate or such other designee) within ten (10) years
from the Effective Date. Forms of permissible consideration to purchase the
shares of restricted common stock on exercise of the Initial Option shall be
cash, cashless exercise (also called net zero transaction), recourse promissory
note and such other forms of consideration with which other executives have or
are given the opportunity to purchase shares. In the event that the number of
outstanding shares of the Company's common stock is changed by a stock dividend,
recapitalization, stock split or similar change in the capital

                                       2
<PAGE>

structure of the Company without consideration, then the number of shares
subject to the Initial Option will be proportionately adjusted.

          5.4  Legal Expenses. The Company shall promptly reimburse the
               --------------
Employee for all reasonable legal expenses incurred by the Employee in
connection with the preparation of this Agreement, up to a maximum of $500.

          5.5  Expenses. The Company will reimburse monthly the Employee for all
               --------
reasonable and necessary expenses incurred by the Employee in connection with
the Company's business.

     6. Termination.
        -----------

          6.1  Events of Termination. The Employee's employment with the
               ---------------------
Company shall terminate upon any one of the following:

          (a)  Thirty (30) days after the date of a written notice sent to the
Employee stating the Company's determination made in good faith that it is
terminating the Employee for "Cause" as defined under Section 6.2 below
("Termination for Cause"); or

          (b)  Thirty (30) days after the date of a written notice sent to the
Employee stating the Company's determination made in good faith that, due to a
mental or physical incapacity, the Employee has been unable to perform his
duties under this Agreement for a period of not less than six (6) consecutive
months ("Termination for Disability"); or

          (c)  Upon the Employee's death ("Termination Upon Death"); or

          (d)  Upon the date of a written notice sent to the Company stating the
Employee's determination made in good faith of "Constructive Termination" by the
Company, as defined under Section 6.3 below ("Constructive Termination"); or

          (e)  Thirty (30) days after the date of a notice sent to the Employee
stating that the Company is terminating his employment, without Cause, which
notice can only be given by the Company at any time after the Effective Date at
the Company's sole discretion, for any reason or for no reason ("Termination
Without Cause"); or

          (f)  The date of a notice sent to the Company from the Employee
stating that the Employee is electing to terminate his employment with the
Company ("Voluntary Termination").

          6.2  "Cause" Defined. For purposes of this Agreement, "Cause" for the
               ---------------
Employee's termination will exist at any time after the occurrence of one or
more of the following events:

                                       3
<PAGE>

          (a)  Any willful act or acts of dishonesty undertaken by the Employee
intended to result in substantial gain or personal enrichment of the Employee at
the expense of the Company; or

          (b)  Any willful act of gross misconduct which is materially and
demonstrably injurious to the Company. No act, or failure to act, by the
Employee shall be considered "willful" if done, or omitted to be done, by him in
good faith and in the reasonable belief that his act or omission was in the best
interest of the Company and/or required by applicable law.

          6.3  "Constructive Termination" Defined. "Constructive Termination"
               ----------------------------------
shall mean:

          (a)  A material reduction in the Employee's salary, bonuses, or
benefits not agreed to by the Employee;

          (b)  A material change in the Employee's responsibilities not agreed
to by the Employee;

          (c)  The Company's failure to comply in any material respect with any
material term of this Agreement after thirty (30) days written notice of the
Employee's claim of such failure; or

          (d)  A requirement that the Employee relocate to an office that would
increase the Employee's one-way commute distance by more than thirty (30) miles.

          6.4  "Termination Without Cause" shall mean:
               ---------------------------

          (a)  Termination of the Employee's employment with the Company for any
reason other than Cause; or

          (b)  Termination of the Employee's employment with the Company for any
reason following a Change in Control. "Change in Control" shall mean the
occurrence of any of the following events: (i) a merger or consolidation
involving the Company in which the shareholders of the Company immediately prior
to such merger or consolidation own less than fifty percent (50%) of the voting
power of the surviving corporation; (ii) the sale of all, or substantially all,
of the assets of the Company; (iii) any "person" or "group" (as defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) directly
or indirectly of securities representing more than fifty percent (50%) of the
voting power of the Company then outstanding; or (iv) less than a majority of
the Board of Directors are persons who were either nominated for election by the
Board of Directors or were elected by the Board of Directors.

     7. Effect of Termination.
        ---------------------

                                       4
<PAGE>

          7.1  Termination for Cause or Voluntary Termination. In the event of
               ----------------------------------------------
any termination of the Employee's employment pursuant to Section 6.1(a) or
Section 6.1(f), the Company shall immediately pay to the Employee the
compensation and benefits accrued and otherwise payable to the Employee under
Section 5 through the date of termination. The Employee's rights under the
Company's benefit plans of general application shall be determined under the
provisions of those plans.

          7.2  Termination for Disability. In the event of termination of
               --------------------------
employment pursuant to Section 6.1(b):

          (a)  The Company shall immediately pay to the Employee the
compensation and benefits accrued and otherwise payable to the Employee under
Section 5 through the date of termination;

          (b)  For three (3) months after the termination of the Employee's
employment, the Company shall pay the Employee: (i) his salary under Section
5.1 above at the Employee's then-current salary, less applicable withholding
taxes, payable on the Company's normal payroll dates during that period; (ii)
healthcare premium for a period of three months;

          (c)  The Employee shall receive other benefit payments as provided in
the Company's standard benefit plans, and

          (d)  The Employee shall become fully and immediately vested in the
entire balance of his Initial Option under Section 5.3 above.

          7.3  Termination Upon Death. In the event of termination of employment
               ----------------------
pursuant to Section 6.1(c), all obligations of the Company and the Employee
shall cease, except the Company shall immediately pay to the Employee (or to the
Employee's estate) the compensation and benefits accrued and otherwise payable
to the Employee under Section 5 through the date of termination, and the
Employee shall become fully and immediately vested in the entire balance of his
Initial Option under Section 5.3 above.

          7.4  Constructive Termination or Termination Without Cause. In the
               -----------------------------------------------------
event of any termination of this Agreement pursuant to Section 6.1(d) or Section
6.1(e):

          (a)  The Company shall immediately pay to the Employee the
compensation and benefits accrued and otherwise payable to the Employee under
Section 5 through the date of termination;

          (b)  For six (6) months after the termination of the Employee's
employment, the Company shall pay the Employee: (i) his salary under Section 5.1
above at the Employee's then-current salary, less applicable withholding taxes,
payable on the Company's normal payroll dates during that period; (ii)
healthcare premium for a period of three months.

                                       5
<PAGE>

          (c)  If the termination occurs within the first (12) twelve months
following the Effective Date, in addition to the option for 25,000 shares vested
on the Effective Date, the Employee shall be vested in such number of shares of
the Initial Option provided in Section 5.3 equal to the product of 125,000
multiplied by the result of dividing the number of months the Employee has
provided services to the Company by twelve.

          (d)  If the termination occurs for any reason after a Change in
Control, then in addition to the foregoing benefits, the remainder of the
Initial Option provided in Section 5.3 shall, as of the date of employment
termination, be immediately vested in full and shall remain exercisable for the
periods specified in Section 5.3; provided, that if the total amount of the
benefits available to the Employee under this Section 7.4, either alone or
together with other payments which the Employee has the right to receive from
the Company, would constitute a "parachute payment" as defined in Section 280G
of the Internal Revenue Code (the "Code"), then the Employee will receive
whichever provides him with the greater economic benefit: (i) the total amount
of such benefits; or (ii) the largest amount that would result in no portion of
such benefits being subject to the excise tax imposed by Section 4999 of the
Code. The determination of which of the foregoing would provide the greatest
economic benefit to the Employee shall be made by an independent accounting firm
the fees for which determination shall be paid by the Company.

     8.   Nondisclosure. The Employee acknowledges that during the course of his
          -------------
employment by the Company, the Company will provide, and the Employee will
acquire, knowledge of special and unique value with respect to the Company's
business operations, including, by way of illustration, the Company's existing
and contemplated product line, trade secrets, compilations, business and
financial methods or practices, plans, hardware and software technology
products, systems, programs, projects and know-how, pricing, cost of providing
service and equipment, operating and maintenance costs, marketing and selling
techniques and information, customer data, customer names and addresses,
customer service requirements, supplier lists, and confidential information
relating to the Company's policies, employees, and/or business strategy (all of
such information herein referenced to as the "Confidential Information"). The
Employee recognizes that the business of the Company is dependent upon
Confidential Information and that the protection of the Confidential Information
against unauthorized disclosure or use is of critical importance to the Company.
The Employee agrees that, without prior written authorization of the Chief
Executive Officer of the Company, the Employee will not, during his employment,
divulge to any person, directly or indirectly, except to the Company or its
officers and agents or as reasonably required in connection with the Employee's
duties on behalf of the Company, or make any independent use of, except on
behalf of the Company, any of the Company's Confidential Information, whether
acquired by the Employee during his employment or not. The Employee further
agrees that the Employee will not, at any time after his employment has ended,
use or divulge to any person directly or indirectly any Confidential
Information, or use any Confidential Information in subsequent employment of any
nature. If the Employee is subpoenaed, or is otherwise required by law to
testify concerning Confidential Information, the Employee agrees to notify the
Company upon receipt of a subpoena, or upon belief that such testimony shall be
required. This nondisclosure provision shall survive the

                                       6
<PAGE>

termination of this Agreement for any reason. The Employee acknowledges that the
Company would not employ the Employee but for his covenants and promises
contained in this Section 8.

     9.   Return of Documents. The Employee agrees that if the Employee's
          -------------------
relationship with the Company is terminated (for whatever reason), the Employee
shall not remove or take with the Employee, but will leave with the Company or
return to Company, all Confidential Information, records, files, data,
memoranda, reports, customer lists, customer information, product information,
price lists, documents and other information, in whatever form (including on
computer disk), and any and all copies thereof, or if such items are not on the
premises of the Company, the Employee agrees to return such items immediately
upon the Employee's termination or the request of the Company. The Employee
acknowledges that all such items are and remain the property of the Company.

     10.  No Interference or Solicitation. The Employee agrees that during his
          -------------------------------
employment, and for a period of six (6) months following the termination of his
employment (for whatever reason), that neither he nor any individual,
partner(s), limited partnership, corporation or other entity or business with
which he is in any way affiliated, including, without limitation, any partner,
limited partner, director, officer, shareholder, employee, or agent of any such
entity or business, will: (i) request, induce or attempt to influence, directly
or indirectly, any employee of the Company to terminate their employment with
the Company (this is not intended to preclude or prevent the Employee from
performing normal personnel management functions); or (ii) employ any person who
as of the date of this Agreement was, or after such date is or was, an employee
of the Company. The Employee further agrees that during the period beginning
with the commencement of the Employee's engagement with the Company and ending
six (6) months after the termination of the Employee's employment with the
Company (for whatever reason), he shall not, directly or indirectly, as an
employee, agent, consultant, stockholder, director, partner or in any other
individual or representative capacity of the Company or of any other person,
entity or business, solicit or encourage any present or future customer,
supplier, contractor, partner or investor of the Company to terminate or
otherwise diminish his, her or its relationship with the Company. This provision
shall survive the termination of this Agreement for any reason.

     11.  Non-Competition. In consideration of the numerous mutual promises
          ---------------
contained in the Agreement between the Company and the Employee, including,
without limitation, those involving Confidential Information, and in order to
protect the Company's Confidential Information and to reduce the likelihood of
irreparable damage which would occur in the event such information is provided
to or used by a competitor of the Company, the Employee agrees that during his
employment and for an additional period of six (6) months immediately following
the termination of his employment, whether voluntary or involuntary (the "Non-
Competition Term"), not to, directly or indirectly, either through any form of
ownership or as a director, officer, principal, agent, employee, employer,
adviser, consultant, shareholder, partner, or in any individual or
representative capacity whatsoever, without the prior written consent of the
Company (which consent may be withheld in its sole discretion): (i) compete for
or solicit business related to application service provider services for or on
behalf of any person or business entity with a place of business in the United
States or Canada; (ii) own, operate, participate in, undertake any employment
with or have any interest in any entity with a place of business in the United
States or Canada in the business of marketing and selling of application

                                       7
<PAGE>

service provider services to persons or business entities, except owning
publicly traded stock for investment purposes only in which the Employee owns
less than 5%; (iii) compete for or solicit application service provider services
business from any customer of the Company (or its successors by merger); or (iv)
use in any competition, solicitation, or marketing effort any Confidential
Information, any proprietary list, any information concerning customers of the
Company.

     If, during any period within the Non-Competition Term, the Employee is not
in compliance with the terms of this Section 11, the Company shall be entitled
to, among other remedies, compliance by the Employee with the terms of this
Section 11 for an additional period equal to the period of such noncompliance.
For purposes of this Agreement, the term "Non-Competition Term" shall also
include this additional period. The Employee hereby acknowledges that the
geographic boundaries, scope of prohibited activities and the time duration of
the provisions of this Section 11 are reasonable and are no broader than are
necessary to protect the legitimate business interests of the Company.

     This non-competition provision shall survive the termination of the
Employee's employment and can only be revoked or modified by a writing signed by
the parties which specifically states an intent to revoke or modify this
provision. The Employee acknowledges that the Company would not employ him but
for his covenants or promises contained in this Section 11.

     12.  Reformation of Section 11. The Company and the Employee agree and
          --------------------------
stipulate that the agreements and covenants not to compete contained in Section
11 hereof are fair and reasonable in light of all of the facts and circumstances
of the relationship between the Employee and the Company; however, the Employee
and the Company are aware that in certain circumstances courts have refused to
enforce certain agreements not to compete. Therefore, in furtherance of, and not
in derogation of the provisions of Section 11, the Company and the Employee
agree that in the event a court should decline to enforce the provisions of
Section 11, that Section 11 shall be deemed to be modified or reformed to
restrict the Employee's competition with the Company or its affiliates to the
maximum extent, as to time, geography and business scope, which the court shall
find enforceable; provided, however, in no event shall the provisions of Section
11 be deemed to be more restrictive to the Employee than those contained herein.

     12.  Injunctive Relief. The Employee acknowledges and agrees that the
          -----------------
agreements and covenants contained in this Agreement are essential to protect
the Confidential Information, business, and goodwill of the Company. The
Employee further acknowledges that the breach of any of the agreements contained
herein, including, without limitation, the confidentiality covenants specified
in Section 8, the non-solicitation covenants specified in Section 10, and the
non-competition covenants contained in Section 11, will give rise to irreparable
injury to the Company, inadequately compensable in damages. Accordingly, the
Company shall be entitled to injunctive relief to prevent or cure breaches or
threatened breaches of the provisions of this Agreement and to enforce specific
performance of the terms and provisions hereof in any court of competent
jurisdiction, in addition to any other legal or equitable remedies which may be
available. The Employee further acknowledges and agrees that in the event of the
termination of the Employee's employment with the Company, whether voluntary or
involuntary, that the

                                       8
<PAGE>

enforcement of a remedy hereunder by way of injunction shall not prevent the
Employee from earning a reasonable livelihood. The Employee further acknowledges
and agrees that the covenants contained herein are necessary for the protection
of the Company's legitimate business interests and are reasonable in scope and
content.

     13.  Miscellaneous
          -------------

          13.1  Indemnification and Errors and Omissions Insurance. The
                --------------------------------------------------
Company agrees to indemnify and defend the Employee on terms no less favorable
than any indemnification agreement the Company has at any time during the term
of this Agreement with an executive or officer of the Company.

          13.2  Arbitration. The Employee and the Company shall submit to
                -----------
mandatory binding arbitration in any controversy or claim arising out of, or
relating to, this Agreement or any breach hereof. Such arbitration shall be
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association in effect at that time, and judgment upon the
determination or award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitrator is hereby authorized to award to the
prevailing party the costs (including reasonable attorneys' fees and expenses)
of any such arbitration.

          13.3  Severability. If any provision of this Agreement shall be found
                ------------
by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the parties hereby waive such provision to the extent that
it is found to be invalid or unenforceable and to the extent that to do so would
not deprive one of the parties of the substantial benefit of its bargain. Such
provision shall, to the extent allowable by law and the preceding sentence, be
modified by such arbitrator or court so that it becomes enforceable and, as
modified, shall be enforced as any other provision hereof, all the other
provisions continuing in full force and effect.

          13.4  No Waiver. The failure by either party at any time to require
                ---------
performance or compliance by the other of any of its obligations or agreements
shall in no way affect the right to require such performance or compliance at
any time thereafter. The waiver by either party of a breach of any provision
hereof shall not be taken or held to be a waiver of any preceding or succeeding
breach of such provision or as a waiver of the provision itself. No waiver of
any kind shall be effective or binding, unless it is in writing and is signed by
the party against whom such waiver is sought to be enforced.

          13.5  Assignment. This Agreement and all rights hereunder are
                ----------
personal to the Employee and may not be transferred or assigned by the Employee
at any time. The Company may assign its rights, together with its obligations
hereunder, to any parent, subsidiary, affiliate or successor, or in connection
with any sale, transfer or other disposition of all or substantially all of its
business and assets, provided, however, that any such assignee assumes the
Company's obligations hereunder.

                                       9
<PAGE>

          13.6  Withholding. All sums payable to the Employee hereunder shall be
                -----------
reduced by all federal, state, local and other withholding and similar taxes and
payments required by applicable law.

          13.7  Entire Agreement. This Agreement constitutes the entire and
                ----------------
only agreement between the parties relating to employment of the Employee with
the Company, and this Agreement supersedes and cancels any and all previous
contracts, arrangements or understandings with respect thereto.

          13.8  Amendment. This Agreement may be amended, modified, superseded,
                ---------
cancelled, renewed or extended only by an agreement in writing executed by both
parties hereto.

          13.9  Notices. All notices and other communications required or
                -------
permitted under this Agreement shall be in writing and hand delivered, sent by
telecopier, sent by registered first class mail, postage pre-paid, or sent by
nationally recognized express courier service. Such notices and other
communications shall be effective upon receipt if hand delivered or sent by
telecopier, five (5) days after mailing if sent by mail, and one (1) day after
dispatch if sent by express courier, to the following addresses, or such other
addresses as any party shall notify the other parties:

          If to the Company:

               XCEL MANAGEMENT, INC.
               Attn:  John P. Gorst
               1101 Broadway Plaza
               Tacoma, Washington 98402

          If to the Employee:
               William G. Hargin
               ______________________

               ______________________

          13.10 Binding Nature. This Agreement shall be binding upon, and
                --------------
inure to the benefit of, the successors and personal representatives of the
respective parties hereto.

          13.11 Headings. The headings contained in this Agreement are for
                --------
reference purposes only and shall in no way affect the meaning or interpretation
of this Agreement. In this Agreement, the singular includes the plural, the
plural includes the singular, the masculine gender includes both male and female
referents, and the word "or" is used in the inclusive sense.

          13.12 Counterparts. This Agreement may be executed in two or more
                ------------
counterparts, each of which shall be deemed to be an original but all of which,
taken together, constitute one and the same agreement.

                                       10
<PAGE>

          13.13 Governing Law. This Agreement and the rights and obligations
                -------------
of the parties hereto shall be construed in accordance with the laws of the
State of Washington, without giving effect to the principles of conflict of
laws.

          13.14 Attorneys' Fees. In the event of any claim, demand or suit
                ---------------
arising out of or with respect to this Agreement, the prevailing party shall be
entitled to reasonable costs and attorneys' fees, including any such costs and
fees upon appeal.

          IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the date first above written.

"THE COMPANY"                           "EMPLOYEE"

XCEL MANAGEMENT, INC.

By: /s/ John P. Gorst                   /s/ William G. Hargin
    ----------------------              -------------------------

John P. Gorst                           William G. Hargin
Chief Executive Officer & Chairman

                                       11
<PAGE>

                                   EXHIBIT 1
                                      TO
                             EMPLOYMENT AGREEMENT

                              Additional Benefits
                              -------------------

Reference Section 5.1

Employee to receive an annual salary of $140,000, which will automatically
increase at a rate of 15 percent per year.

Employee to receive one (1) month base signing bonus, payable immediately upon
signing.

Employee to receive, if transition to President of Insynq, Inc. does not occur
on or before October 1, 2000, an additional 50,000 Stock Options at an exercise
price of $3.00 per share following the planned 2 for 1 stock split, vesting
immediately.

Bonus goals:

     80% probability of earning at least $15,000 bonus per quarter
     40% probability of earning at least $21,250 bonus per quarter
     20% probability of earning at least $26,250 per quarter

Bonus Equation:

Employee to receive the larger amount produced by either of the following two
Quarterly Bonus equations (i.e., to mitigate the risk associated with quarterly
fluctuations):

       1. Quarterly Bonus =  1400 x Average Stock Price*, defined as the
                             average of each trading day's High and Low stock
                             price during the last month of the quarter
       2. Quarterly Bonus =  (Current Quarter Sales)/(Previous Quarter Sales)
                             X 13000,
                             with a minimum
                             (Current Quarter Sales)/(Previous Quarter Sales)
                             ratio of 1.20 before this bonus is available

Bonuses are payable at the end of each fiscal quarter with a cap of $35,000 per
quarter.

* Average Stock Price is based upon pre-split Stock Prices. If stock splits
  occur, the multiplier will double with each stock split.

Reference Section 5.2
<PAGE>

Employee and Employee's family to receive subsidized Health, Life, Disability,
and Dental insurance through the Company.

Employee to receive a life insurance premium reimbursement on policy up to
$500,000 in value.

Employee to receive $600 per month auto allowance.

Employee to receive 10 days of non-holiday, paid flex time to accrue upon
signing.
<PAGE>

                                   EXHIBIT 2
                                      TO
                             EMPLOYMENT AGREEMENT

Position: Executive Vice President of Marketing

Reporting to: President

Responsibilities:
  1.  Executive Committee: The V.P. of Marketing will serve as a voting member
      -------------------
      of the company's Executive Committee, which will:
        a. consist of all V.P. and higher employees within the company,
        b. hold formal meetings from time to time,
        c. meet with an estimated frequency of once per quarter.
  2.  Annual Planning
      ---------------
        a. Marketing Plan: On the business day closest to October 15 each year
           --------------
           (or a mutually agreeable day in this timeframe, as will be the case
           for all dates in this exhibit), the V.P of Marketing will provide the
           President with a proposed Annual Marketing Plan for the following
           fiscal year, which begins in January. This Marketing Plan will be
           broken into Quarterly Goals, and will be discussed following the
           October proposal, with a goal of finalizing the Marketing Plan each
           year by the end of the first week in December.
        b. Annual Budget: On the business day closest to October 15 each year,
           -------------
           the V.P of Marketing will provide the President with a proposed
           Budget for the following fiscal year, which begins in January. This
           Budget will be broken into Quarterly Goals, and will be discussed
           following this proposal, with a goal of finalizing the Budget each
           year by the end of the first week in December. If a quarterly
           increase the budget is expected due to a change in plans, this
           (these) change(s) must be approved by the President.
        c. 2000 Annual Plan: The portions of the Marketing, Advertising, and
           ----------------
           Distribution plans set forth in the InsynQ Business Plan that have
           not yet been implemented by InsynQ will be revisited by the V.P. of
           Marketing. Recommended changes will be proposed and approved the
           President and CEO for the year 2000.
  3.  Marketing Expenditures: The V.P. of marketing has sign-off authority on
      ----------------------
      any marketing expenditures that fall within quarterly budgets outlined
      above.
  4.  Staffing:
      --------
        a. The V.P. of Marketing is responsible for outlining and proposing the
           staffing requirements within the Marketing Department. The October
           proposal will include a staffing section for the coming year; and
           staffing plans will be proposed to the President periodically, as
           necessary, throughout the year.
<PAGE>

        b. Direct Reports: All personnel within the Marketing Department (not
           --------------
           including sales people) will report to the V.P. of Marketing. The
           V.P. of Marketing will be responsible for hiring, and/or terminating
           employees within the Marketing Department, as well as providing these
           employees with Quarterly Performance Appraisals.

  5.  The Four P's--Product, Price, Place, and Promotions:
      ---------------------------------------------------
        a. Product: The V.P. of Marketing is responsible--in cooperation with
           -------
           Engineering, R & D, Sales, the President, and the CEO--to assist in
           product development plans.
        b. Price: The V.P. of Marketing is responsible--in cooperation with
           -----
           Sales, the President, and the CEO--to plan and propose pricing
           strategies on products and services that the company is planning to
           offer.
        c. Place: The V.P. of Marketing will cooperate with the V.P of Sales--as
           -----
           well as the President, and the CEO--in developing Distribution and
           Representation strategies for the company's products and services.
        d. Promotions: The V.P. of Marketing is responsible to develop and
           ----------
           implement the company's promotional plan, which should include
           Response and Revenue metrics that will be reported to the Executive
           Committee at the first EC meeting of each quarter. (First report to
           be in Q1-2001.)
        e. Customer Relationship Management (CRM): The V.P. of Marketing will
           --------------------------------------
           cooperate with the V.P of Sales--as well as the President, and the
           CEO--in selecting and implementing a Customer Relationship Management
           system. Significant consideration will be given to improving the
           existing CRM implementation, although it is very likely that a
           replacement may be necessary as budget becomes available.
<PAGE>

                                   EXHIBIT 3
                                      TO
                             EMPLOYMENT AGREEMENT

Additional benefits that will be received immediately following transition to
President, if this option is exercised:

          Stock Option #2. On the Effective Date, the Employee shall be granted
          ---------------
a compensatory stock option for 100,000 shares of the Company's restricted
Common Stock at an exercise price per share of $3.00 per share following the
planned 2 for 1 split ("Option #2"). The provisions of Sections 5.3, 6 and 7 of
the Employment Agreement will also apply to Option #2.

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