EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is executed as of the 10th day of
September, 1997, but effective as of the 1st day of October, 1997, by and
between Xxxxx Xxxxxx, an individual ("Employee"), and EN POINTE TECHNOLOGIES,
INC., a Delaware corporation and its subsidiary EN POINTE TECHNOLOGIES, INC., a
Delaware corporation (collectively, the "Company"), with reference to the
following facts:
A. Employee is an individual possessing unique management and executive
talents of value to the Company and has been the Vice President of Sales.
B. The Company desires to continue the employment of Employee as the
Senior Vice President of Sales of the Company, and Employee desires to accept
such employment, all on the terms and conditions set forth in this Agreement.
AGREEMENT
In consideration of the foregoing recitals and of the covenants and
agreements herein, the parties agree as follows:
1. The Company hereby engages Employee to perform the duties and render
the services set forth in Section 2 for a period commencing on October 1, 1997
(the "Start Date") and ending on the third anniversary of such date, (the
"Employment Period") and Employee hereby accepts said employment and agrees to
perform such services during the Employment Period. Unless this Agreement is
terminated pursuant to Section 4 or unless either party gives the other written
notice to the contrary at least six (6) months prior to an expiration date,
this Agreement, together with any changes which have occurred during the
employment period then expiring, shall automatically renew at the end of an
Employment Period for an additional one (1) year employment period.
2. DUTIES.
2.1 SENIOR VICE PRESIDENT OF SALES: Performing executive work of major
importance to the Company, with the primary focus being the profitable
management and profitable growth of the sales of the Company. During the
Employment Period, Employee shall devote his full business time and attention
to performing his duties as Senior Vice President of sales of the Company. He
shall 1) continue to build and supervise sales teams to profitably sell the
Company's products and services to customers in territories associated with all
of the Company's branches in the United States, including the headquarters
branch, and specifically including the Branch offices in the State of Texas,
(hereby collectively referred to as "the Branch Offices"); 2) manage the
overall direction, coordination, and evaluation of the Branch Offices to
achieve or exceed both the earnings-per-share and gross revenue targets of the
Company; 3) assist the Executive Vice President in formulating and
administering Company policies; 4) obtain profitable sales at the Branch
Offices; 5) review and analyze the activities, costs, operations of the Branch
Offices to define and to track their progress toward achieving their goals and
objectives; 6) carry out supervisory responsibilities in accordance with
Company policies, and applicable laws; 7) interview, hire and train sales
managers and staff; 9) plan, assign and direct the work of sales managers and
staff, appraise their performance, and reward and discipline them, and address
their complaints; 10) open new Branch Offices; 11) submit all required
documentation in a timely and accurate manner. The above description of duties
is non-exhaustive. Employee shall work out of the Company's headquarters
location and shall report to the Executive Vice President.
Employee recognizes that the Board of Directors of the Company may be
required under its fiduciary duty to the Company and to its stockholders to
eliminate the position of Senior Vice President of Sales of this Company or to
appoint a different person as such officer of this Company. The parties agree
however, that any such elimination or replacement of Employee by the Company,
other than pursuant to Section 2.2 or Section 4.1 or 4.2(a) or 4.3(b) hereof,
shall constitute a termination of Employee's employment hereunder by the
Company without cause.
2.2 CHANGE OF CONTROL. Notwithstanding the terms of Section 2.1
above, if the Company or a significant portion thereof is sold or merged or
undergoes a change of control transaction (as defined in the Company's Stock
Option Agreement, a copy of which is attached hereto as Exhibit A), this
Agreement shall survive consummation of such transaction and shall continue in
effect for the remainder of the Employment Period, but Employee shall serve as
an officer of the entity which succeeds to the business or a substantial
portion of the business of the Company, and in such case shall bear a suitable
title and perform the duties and functions of such office of such publicly
traded or privately held successor, consistent with those customarily performed
by an officer of such a unit, division or entity comparable to the then
business of the Company, unit, division or entity. Employee may be required to
accept greater or lesser responsibility by any successor, and agrees to fully
cooperate and assist in any resulting transition for up to the remainder of the
Employment Period; and any adjustments required of Employee to complete the
transition to any successor, unit, division or entity, shall not violate this
Agreement so long as "good reason" does not arise under Sections 4.6(b)(ii),
(iii) or (v). This Agreement shall apply to the automatic modification in
duties resulting from such transaction as set forth above, however,
notwithstanding the foregoing, Employee may exercise any "good reason" rights
she may have under Section 4.6(b)(iv).
2.3 CONFLICT OF INTEREST. Employee agrees that during the term of
employment and for a period of twelve (12) months thereafter, employee will
not, directly or indirectly, compete with the Company in any way, or usurp any
Company opportunity in any way, nor will employee act as an officer, director,
employee, consultant, shareholder, lender or agent of any entity which is
engaged in any business in which the Company is now engaged or in which the
Company becomes engaged during the term of employment. The Company is now
engaged in the business of reselling computer hardware, software and
peripherals, primarily to corporate and governmental accounts, and in the
business of selling computer systems consulting, help and maintenance services,
also primarily to corporate and governmental accounts. The Company is not now
engaged in the business of computer systems consulting along the lines engaged
in by "Big 5 Accounting" firms such as Xxxxxx Xxxxxxxx Consulting or KPMG
Consulting, or firms such as IBM Global Services or CSC consulting; the Company
is now engaged in the business of computer systems consulting along the lines
engaged in by EDS. The Company is not now engaged in the business of
manufacturing computers or their primary components, nor is it now in the
business of reselling computers to non-endusers. The Company may become
engaged in the business of final assembly of computers and may become engaged
in the business of catalog, mail-order or internet sales of computer hardware,
software and peripherals. Employee also agrees that during the term of
employment and for a period of twelve (12) months thereafter, Employee will
not, directly or indirectly, whether on his own
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behalf or on behalf of another, offer employment or a consulting assignment
to any Company employee, nor will Employee, nor Employee's employer, directly
or indirectly, whether on his own behalf or on behalf of another, actually
employ or grant a consulting assignment to any Company employee. Employee
also agrees that during the term of employment and for a period of twelve
(12) months thereafter, Employee will not, directly or indirectly, whether on
his own behalf or on behalf of another, contact or solicit any of Company's
clients to do business with any entity other than Company.
3. COMPENSATION. As compensation for his services to be performed
hereunder, the Company shall provide Employee with the following compensation
and benefits:
3.1 (a) BASE SALARY. Employee's base salary shall be $149,000.00
per year, subject to an annual increase (if any) in the sole discretion of the
Board, payable in accordance with the Company's payroll practices as in effect
from time to time, and subject to such withholding as is required by law.
(b) DRAW. For periods after October 1, 1997, Employee shall be
entitled to draw, as an advance against salary and bonuses, the amount of seven
thousand five hundred eighty-three dollars and thirty-three cents ($7,583.33)
per month. For periods after October 1, 1998, draw advanced shall be
RECOVERABLE against Employee's total compensation (I.E., if draw paid exceeds
Bonus earned, any negative balance which is not recovered from total
compensation WILL be carried forward.) Any negative draw balance accrued for
periods before October 1, 1997, is waived by Company.
3.2 BONUS. Bonus applicable to the fiscal year beginning October 1,
1997, shall be calculated as follows:
(a) BRANCHES BONUS. A one-time "Branches Bonus" at the rate of
$12,500.00 per fiscal quarter shall be paid in each quarter of the eighteen
(18) month period beginning October 1, 1997, in which a new branch office is
opened. In order to be considered opened each such new branch office must be
staffed with no less than one manager plus five (5) salespeople. This Branches
Bonus is subject to a global cap of $50,000.00, i.e., this Branches Bonus can
apply to no more than four (4) branches. This Branches Bonus shall be deemed
earned at the time an eligible branch is opened and shall be payable at the end
of each quarter in which an eligible branch is opened.
(b) OTHER BONUS. Additionally:
(i) in each quarter of the fiscal year beginning October
1, 1997, only Employee will receive a bonus of $25,000.00. This bonus shall be
payable at the end of each such quarter. This bonus is guaranteed.
(ii) in each quarter of the fiscal year beginning October
1, 1997, only, in which the Company meets or exceeds 125% of (i) the earnings
per share targets, or 150% of (ii) the gross revenue targets, as set forth in
the Xxxxxxx Companies analysts report, a copy of which is attached hereto as
Exhibit B, Employee will receive a bonus of $12,500.00. This bonus shall be
payable at the end of each such quarter. This bonus does not carry forward
from quarter to quarter,
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and is not pro-ratable, i.e., if targets are not met, none of this latter
bonus applies for the relevant quarter.
Bonus applicable to subsequent periods, if any, shall be in the sole
discretion of the Board of Directors, and is not guaranteed. If any bonus is
declared or paid, it shall be subject to such withholding as is required by
law.
3.3 BENEFITS.
(a) VACATION. Employee shall be entitled to vacation time as
has been accrued each pay period since his date of first hire, less any
vacation taken, as follows: (i) for years 1 to 5 sine his date of first hire,
3.34 hours accrued per pay period (24 pay periods per year), subject to 80
hours per year maximum; (ii) for years after year 5 since his date of first
hire, 5 hours accrued per pay period (24 pay periods per year), subject to 120
hours per year maximum. In the event Employee does not use such vacation, he
shall receive, upon termination of the Employment Period, vacation pay for all
unused vacation calculated as having accrued at the applicable base salary for
each relevant period of his employment. However, Employee shall endeavor to
take vacation time in the year in which it is allocated to him.
(b) BUSINESS EXPENSES. The Company shall reimburse Employee
for reasonable business expenses incurred by Employee in the course of
performing services for the company and in compliance with procedures
established from time to time by the Company in the amount of no more than
three thousand five hundred dollars ($3,500.00) per month. This reimbursement
shall occur on a monthly basis, and is subject to Employee providing original
documentation in support of all business expenses reimbursement sought.
(c) OTHER BENEFITS. Company shall provide Employee with such
employment benefits as 401(k) participation, automobile allowance, medical
insurance and disability insurance, on the terms and to the extent generally
provided by the Company to its senior executive employees. 401(k)
participation, medical insurance and disability insurance shall commence 90
days after the Start Date. The amount of automobile allowance provided by the
Company to Employee shall be $1,000.00 per month.
(d) OTHER PERSONS. The parties understand that other officers
and employees may be afforded payments and benefits and employment agreements
which differ from those of Employee in this Agreement; but Employee's
compensation and benefits shall be governed solely by the terms of this
Agreement, which shall supersede all prior understandings or agreements between
the parties concerning terms and benefits of employment of Employee with the
Company. Other officers or employees shall not become entitled to any benefits
under this Agreement.
4. TERMINATION.
4.1 TERMINATION BY REASON OF PERMANENT DISABILITY. The Employment
Period shall terminate upon the permanent disability (as defined below) of
Employee.
4.2 TERMINATION BY COMPANY.
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(a) The Company may terminate the Employment Period for "cause"
by written notice to Employee.
(b) The Company may terminate the Employment Period for any
other reason, with or without cause, by written notice to Employee.
4.3 TERMINATION BY EMPLOYEE.
(a) Employee may terminate the Employment Period for "good
reason" at any time by written notice to the Company.
(b) Employee may terminate the Employment Period for any other
reason by written notice to the Company.
4.4 SEVERANCE PAY.
(a) In the event the Employment Period is terminated by the
Company for any reason other than pursuant to Section 4.2(a) or Section 4.3(b)
hereof or if the Employment Period is terminated because of the permanent
disability of Employee pursuant to Section 4.1, upon the effectiveness of any
such termination, the Company shall be obligated to pay to Employee (or her
executors, administrators or assigns, as the case may be) all unpaid salary,
benefits and bonuses (if any) accrued through the date of effectiveness of such
termination and, in addition, a cash severance payment equal to one year's
total base salary, at the rates set forth herein, and such other benefits as
may be required by law.
(b) In the event the Employment Period is terminated by the
Company pursuant to Section 4.2(a) hereof, or the Employment Period is
terminated by Employee pursuant to Section 4.3(b) hereof, the Company shall
have no obligation to pay any severance pay to Employee. The Company shall,
however, be obligated to pay to Employee (or his executors, administrators or
assigns, as the case may be) all unpaid salary, benefits and bonuses (if any)
accrued through the date of termination and shall provide such other benefits
as may be required by law.
4.5 TERMINATION BENEFITS. In the event of termination of the
Employment Period pursuant to Section 4.2 or 4.3(a), the Company shall provide
Employee, Employee's spouse and children, if any, with such normal medical
insurance, on the terms and to the extent generally provided by the Company to
its executive employees of the level comparable to Employee, for a period of
one year from the date of the termination of the Employment Period.
4.6 CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) The term "cause" shall mean those acts identified in
Section 2924 of the California Labor Code, as that section exists on October 1,
1997, to wit, any willful breach of duty by the Employee in the course of his
employment, or in case of his habitual neglect of his duty or continued
incapacity to perform it.
(b) The term "good reason" shall mean the occurrence of one or
more of the following events without Employee's express written consent: (i)
removal of Employee from the position and responsibilities as set forth under
Section 2 above; (ii) a material reduction by the
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Company in the kind or level of employee benefits to which Employee is
entitled immediately prior to such reduction with the result that Employee's
overall benefit package is significantly reduced; (iii) the relocation of
Employee to a facility or a location outside of California; (iv) a change in
control of the Company, or, (v) any material breach by the Company of any
material provision of this Agreement which continues uncured for thirty (30)
days following written notice thereof.
(c) The term "permanent disability" shall mean Employee's
incapacity due to physical or mental illness, which results in Employee being
absent from the performance of his duties with the Company on a full-time basis
for a period of six (6) consecutive months. The existence or cessation of a
physical or mental illness which renders Employee absent from the performance
of his duties on a full-time basis shall, if disputed by the Company or
Employee, be conclusively determined by written opinions rendered by two
qualified physicians, one selected by Employee and one selected by the Company.
During the period of absence, but not beyond the expiration of the Employment
Period, Employee shall be deemed to be on disability leave of absence, with his
compensation paid in full. During the period of such disability leave of
absence, the Board of Directors may designate an interim officer with the same
title and responsibilities of Employee on such terms as it deems proper.
5. EMPLOYEE BENEFIT PLANS. Any employee benefit plans in which Employee
may participate pursuant to the terms of this Agreement shall be governed
solely by the terms of the underlying plan documents and by applicable law, and
nothing in this Agreement shall impair the Company's right to amend, modify,
replace, and terminate any and all such plans in its sole discretion as
provided by law. This Agreement is for the sole benefit of Employee and the
Company, and is not intended to create an employee benefit plan or to modify
the terms of any of the Company's existing plans.
6. MISCELLANEOUS.
6.1 ARBITRATION/GOVERNING LAW. To the fullest extent permitted by
law, any dispute, claim or controversy of any kind (including but not limited
to tort, contract and statute) arising under, in connection with, or relating
to this Agreement or Employee's employment, shall be resolved exclusively by
binding arbitration in Los Angeles County, California in accordance with the
commercial rules of the American Arbitration Association then in effect. The
Company and Employee agree to waive any objection to personal jurisdiction or
venue in any forum located in Los Angeles County, California. No claim,
lawsuit or action of any kind may be filed by either party to this Agreement
except to compel arbitration or to enforce an arbitration award; arbitration is
the exclusive dispute resolution mechanism between the parties hereto.
Judgment may be entered on the arbitrator's award in any court having
Jurisdiction. The validity, interpretation, effect and enforcement of this
Agreement shall be governed by the laws of the State of Texas.
6.2 ASSIGNMENT. This Agreement shall inure to the benefit of and
shall be binding upon the successors and the assigns of the Company, and all
such successors and assigns shall specifically assume this Agreement. Since
this Agreement is based upon the unique abilities of, and the Company's
personal confidence in Employee, Employee shall have no right to assign this
Agreement or any of his rights hereunder without the prior written consent of
the Company.
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6.3 SEVERABILITY. If any provision of this Agreement shall be found
invalid, such findings shall not affect the validity of the other provisions
hereof and the invalid provisions shall be deemed to have been severed
herefrom.
6.4 WAIVER OF BREACH. The waiver by any party of the breach of any
provision of this Agreement by the other party or the failure of any party to
exercise any right granted to it hereunder shall not operate or be construed as
the waiver of any subsequent breach by such other party nor the waiver of the
right to exercise any such right.
6.5 ENTIRE AGREEMENT. This instrument, together with the plans
referred to in Section 5, contains the entire agreement of the parties. It may
not be changed orally but only by an agreement in writing signed by the
parties.
6.6 NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and may be personally served or sent by United States mail,
and shall be deemed to have been given when personally served or two days after
having been deposited in the United States mail, registered or certified mail,
return receipt requested, with first-class postage prepaid and properly
addressed as follows. For the purposes hereof, the addresses of the parties
hereto (until notice of a change thereof is given as provided in this Section
6.6) shall be as follows:
If to Employee: Xxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000
If to the Company: En Pointe Technologies, Inc.
000 X. Xxxxxxxxx Xxxx., 00xx Xxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: CEO
6.7 HEADINGS. The paragraph and subparagraph headings herein are
for convenience only and shall not affect the construction hereof.
6.8 FURTHER ASSURANCES. Each of the parties hereto shall, from time
to time, and without charge to the other parties, take such additional actions
and execute, deliver and file such additional instruments as may be reasonably
required to give effect to the transactions contemplated hereby.
6.9 ATTORNEYS' FEES. In the event any party hereto commences
arbitration or legal action in connection with this Agreement, the prevailing
party shall be entitled to its attorneys' fees, costs and expenses reasonably
incurred in such action, and the amount thereof shall be included in any
judgment or award granted under Section 6.1.
6.10 COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
6.11 SEPARATE COUNSEL. The Company has been represented by counsel
in the negotiation and execution of this Agreement and has relied on such
counsel with respect to any
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matter relating hereto. The Employee has been invited to have her own
counsel review and negotiate this Agreement and Employee has either obtained
his own counsel or has elected not to obtain counsel.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of
the day and year first above written.
"EMPLOYEE" "COMPANY"
EN POINTE TECHNOLOGIES, INC., a Delaware
corporation
By:
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Xxxxx Xxxxxx
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