EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is executed as of the 2nd day of
September, 1997, by and between Xxxxx Xxxxxx, an individual ("Employee"), and
EN POINTE TECHNOLOGIES, INC., a Delaware corporation ("Company"), with
reference to the following facts:
A. Employee is an individual possessing unique management and executive
talents of value to the Company.
B. The Company desires to employ Employee as the President 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 September 2,
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 PRESIDENT: Performing executive work of major importance to the
Company, with the primary focus being the profitable management and profitable
growth of the Company. During the Employment Period, Employee shall devote her
business time and attention to performing her duties as President of the
Company. Her duties shall include, but are not limited to: managing the
overall direction, coordination and evaluation of all functions at the
Corporate level; assisting the CEO in formulating and administering policies
for the Company; participating in formulating and administering company
policies and developing long range goals and objectives; negotiation with
established, third party and/or new vendors to achieve cost
containment/reduction; and, establishing or modifying operational systems to
improve management and profitability. Additionally, she shall perform such
duties as may reasonably be assigned to her by the Chief Executive Officer
("CEO") or Board of Directors of the Company. Employee's primary office shall
be at the Company's headquarters location and she shall report to the CEO.
If Employee so desires, the Company will nominate Employee for election to
the Board of Directors of the Company, as a member of the management slate at
each annual meeting of stockholders held during the Employment Period.
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 President 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 eighteen (18) 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.
3. COMPENSATION. As compensation for her services to be performed
hereunder, the Company shall provide Employee with the following compensation
and benefits:
3.1 BASE SALARY. Employee's base salary shall be $250,000.00 per
year, subject to an annual increase (if any) in the sole discretion of the
Board, payable in accordance with the
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Company's payroll practices as in effect from time to time, and subject to
such withholding as is required by law.
3.2 BONUS. Bonus applicable to the fiscal year beginning October 1,
1997, shall be calculated at the rate of $31,250.00 per fiscal quarter in which
the Company meets or exceeds both (i) earnings per share targets, and (ii)
gross revenue targets. Bonus applicable to the first two quarters only of the
fiscal year beginning October 1, 1997, shall be guaranteed, and shall be
payable at the end of each such quarter. Bonus applicable to the second two
quarters of the fiscal year beginning October 1, 1997, is not guaranteed, shall
be calculated as above, and shall be payable at the end of each such quarter.
Bonus applicable to subsequent years, if any, shall be in the sole discretion
of the Board of Directors. 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 four (4) weeks of
paid vacation during each year of the Employment Period consistent with the
Company's then policy for senior executive employees. Regardless of such
policy, however, Employee shall be entitled to a minimum of six (6) weeks of
fully paid vacation after the Employee has been employed by the Company for at
least six (6) years from the original date of employment with the Company. In
the event Employee does not use such vacation, she shall receive, upon
termination of the Employment Period, vacation pay for all unused vacation
calculated at the base salary rate set forth in Section 3.1 hereof. However,
Employee shall endeavor to take vacation time in the year in which it is
allocated to her.
(b) BUSINESS EXPENSES. The Company shall reimburse Employee
for all 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.
(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 $1,500.00 per month. In addition, should Employee
pursue a course of M.B.A. studies, Company will reimburse her for tuition for
said course of studies, in an amount not to exceed $45,000.00, net after tax.
(d) STOCK OPTIONS. Company shall grant Employee incentive
stock options for 275,000 shares of the Company, with the exercise price being
the market price at close of trading on the Start Date, and subject to the
other terms of the Company's stock option agreement, a copy of which is
attached hereto as Exhibit A. Vesting shall be as follows: one-third (1/3) of
the options three (3) months after Start Date, one-third (1/3) of the options
nine (9) months after Start Date, and one-third (1/3) of the options twenty-
seven (27) months after Start Date. The issuance of the options is subject to
shareholder approval of a modified Stock Option Plan and to approval by the
Company Board of Directors Compensation Committee, which approvals are to be
sought by no later than June 30, 1998.
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(e) 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.
(f) RELOCATION REIMBURSEMENT. Company shall reimburse Employee
for actual, documented relocation expenses not to exceed the gross amount of
$100,000.00 (this cap includes a tax gross-up for any such expenses taxable to
employee). Employee shall relocate her primary residence to the area of
Company's headquarters location within 2 years of September 2, 1997, unless
otherwise agreed to in writing by the parties.
4. TERMINATION.
4.1 TERMINATION BY REASON OF DEATH OR DISABILITY. The Employment
Period shall terminate upon the death or permanent disability (as defined
below) of Employee.
4.2 TERMINATION BY COMPANY.
(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 by Employee for
any reason other than pursuant to Section 4.3(b) hereof or if the Employment
Period is terminated because of the death or 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 eighteen (18) months' 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
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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 her 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 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 eighteen (18)
months 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 September
2, 1997, to wit, any willful breach of duty by the Employee in the course of
her employment, or in case of her habitual neglect of her duty or continued
incapacity to perform it. Notwithstanding the generality of the foregoing,
this definition shall not cause any derogation of any rights relating to
"permanent disability" as defined in 4.6(c) below.
(b) The term "good reason" shall mean the occurrence of one or
more of the following events: (i) removal of Employee from the position and
responsibilities as set forth under Section 2 above; (ii) a material reduction
by the 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 her 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 her 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 her
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
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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 California.
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 her rights hereunder without the prior written consent of
the Company.
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
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
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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 matter relating hereto. The Employee has been
invited to have her own counsel review and negotiate this Agreement and
Employee has either obtained her 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 Xxx Din, Chief Executive Officer
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