EXHIBIT 10.12
[EN POINTE TECHNOLOGIES LETTERHEAD]
Writer's Direct Dial: (000) 000-0000
Writer's Direct Fax: (000) 000-0000
September 15, 1997
Xx. Xxxxxx X. XxXxxxx, CEO
XXXXXXXX.XXX
0000 Xxxx Xxxxx Xxx.
Garden Level
Corona del Mar, California 92625
Re: XXXXXXXX.XXX
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Dear Xx. XxXxxxx:
This letter when executed in duplicate expresses the agreement of
Xxxxxxxx.Xxx ("Shopping") and En Pointe Technologies, Inc. ("En Pointe") in
concluding a series of transactions, as follows:
1. En Pointe will make an investment in Shopping in the form of a loan.
The loan is a loan of six hundred thousand dollars ($600,000.00) due the earlier
of nine (9) months from the date of issuance or on the closing of the initial
public offering, and bearing interest at the rate of 10% per annum,
subordinated, linked to five (5) year warrants for the purchase of 399,600
shares of common stock at an exercise price of two dollars and twenty-five cents
($2.25) per share. The other terms of the loan and the warrants will be the same
as those for all other loan investors in Shopping.
2. En Pointe will grant Shopping a license to En Pointe's proprietary EPIC
software in the form in which the EPIC software exists as of the October 1, 1997
production date. This license will be an unlimited user, worldwide license for a
term of five (5) years. In exchange for this five (5) year license, Shopping
will pay En Pointe two hundred and fifty
Xx. Xxxxxx X. XxXxxxx, CEO
XXXXXXXX.XXX
September 15, 1997
Page 2
thousand (250,000) shares valued at three dollars ($3.00) per share; half of
these shares would be subject to a twelve (12) month standstill, the other half
of the shares would be subject to a twenty-four (24) month standstill.
Additionally, at the end of the initial five (5) year license term, Shopping
will have a option to a renewed license for an additional five (5) year period
at fair market value for such license. In the event that the parties were not
able to agree on fair market value at the time of exercise of option, the fair
market value would be determined by binding arbitration to be completed within
thirty (30) days of either party's request for same. During the term of the
license, Shopping will pay En Pointe an annual maintenance and upgrades fee of
one hundred thousand dollars ($100,000.00). The initial annual fee is to be
paid concurrent with the funding of the initial loan by En Pointe, in the
form of certified funds.
3. [*]Gross profit margin for non-En Pointe manufactured hardware,
software or peripherals will be gross sales price less invoice costs to En
Pointe. For any En Pointe manufactured computer hardware, software, peripherals
gross profit margin is defined [*]. All payments for computer hardware, software
and peripherals will be paid in full by Shopping to En Pointe within [*] of the
date the product is shipped.
4. En Pointe will provide customization services to the EPIC software
including, but not limited to, customization for purchase order and invoice
modules, and the likes, [*] Shopping will have an unlimited license to such
customization for its own internal use; En Pointe will retain ownership to all
such customization. Shopping will pay En Pointe each quarter, in advance, an
estimate of the customization services to be rendered to it. Any shortfall will
be paid by Shopping to En Pointe within fifteen (15) days of the close of any
quarter; any excess will be refunded by En Pointe to Shopping within fifteen
(15) days of the close of any quarter. The initial quarterly estimate is sixty
thousand dollars ($60,000.00). Said initial estimate is to be paid concurrent
with the funding of the initial loan by En Pointe, in the form of certified
funds.
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[*] Confidential Treatment Requested.
Xx. Xxxxxx X. XxXxxxx, CEO
XXXXXXXX.XXX
September 15, 1997
Page 3
5. [*]Any shortfall would be paid by Shopping to En Pointe within fifteen
(15) days of the close of any quarter, any excess would be refunded by En Pointe
to Shopping within fifteen (15) days of the close of any quarter. The initial
quarterly estimate is fifty thousand dollars ($50,000.000). Said initial
estimate is to be paid concurrent with the funding of the initial loan by En
Pointe, in the form of certified funds.
6. [*]
7. Shopping may make no offer of employment to any En Pointe employee or
to the employee of any En Pointe subcontractor within three (3) years of the
last date of any employee's employment with En Pointe, or the En Pointe
subcontractor, absent written consent therefore from En Pointe. In the event
that Shopping does hire any such employee, Shopping will pay En Pointe, as
liquidated damages, eighteen (18) months of salary of said employee.
8. [*]
9. The parties agree that any information concerning the transactions
herein shall remain confidential, provided however that the parties may disclose
information concerning the proposed transactions to the public or governmental
agencies if written consent thereto from the other party has been obtained or,
if in the judgment of their respective legal counsel such disclosure is
necessary to comply with applicable law.
10. En pointe will not use any of Shopping's customer name databases or
information regarding Shopping's customers contained in any Shopping's customer
name databases, nor will En Pointe solicit any of Shopping's customers by using
any data culled from any of Shopping's customer name databases. All products
will be shipped under the name Xxxxxxxx.Xxx, to the extent possible.
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[*] Confidential Treatment Requested.
Xx. Xxxxxx X. XxXxxxx, CEO
XXXXXXXX.XXX
September 15, 1997
Page 4
11. This agreement is subject to approval by En Pointe's Board of
Directors.
If you agree with the foregoing, please sign where indicated on each copy
of this letter and return one copy to us. Thank you. If you have any questions,
please contact me at (000) 000-0000 to discuss the matter further.
Sincerely,
/s/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx
General Counsel
JJS/kmd
AGREED AGREED
XXXXXXXX.XXX EN POINTE TECHNOLOGIES, INC.
BY /s/ XXXXXX X. XXXXXXX BY /s/ XXX XXX
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9/15/97 9/15/97
