<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
EN POINTE TECHNOLOGIES, INC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
February 13, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of En Pointe Technologies, Inc. (the "Company") to be held at
9:00 A.M. on Friday, March 6, 1998, in the Plaza Level Conference Room at the
Corporate Headquarters of En Pointe Technologies, Inc., 100 North Sepulveda
Boulevard, El Segundo, California 90245.
At the Annual Meeting you will be asked to elect five directors of the
Company and to approve the appointment of Coopers & Lybrand L.L.P. as the
Company's independent public accountants for the fiscal year ended September 30,
1998. All of these matters are described in detail in the accompanying Notice of
Annual Meeting and Proxy Statement. In addition, we will be pleased to report on
the affairs of the Company and a discussion period will be provided for
questions and comments of general interest to stockholders.
We look forward to greeting personally those stockholders who are able to be
present at the Annual Meeting. However, whether or not you plan to be with us at
the Annual Meeting, it is important that your shares be represented.
Accordingly, you are requested to sign and date the enclosed proxy and mail it
in the envelope provided at your earliest convenience.
Very truly yours,
Bob Din
Chief Executive Officer and Chairman
of the Board
of Directors
<PAGE>
EN POINTE TECHNOLOGIES, INC.
100 N. SEPULVEDA BOULEVARD, 19(TH) FLOOR
EL SEGUNDO, CALIFORNIA 90245
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 6, 1998
------------------------
To the Stockholders of
En Pointe Technologies, Inc.:
The 1998 Annual Meeting of Stockholders (the "Annual Meeting") of En Pointe
Technologies, Inc. (the "Company"), will be held at 9:00 A.M. on Friday, March
6, 1998, in the Plaza Level Conference Room at the Corporate Headquarters of En
Pointe Technologies, Inc., 100 North Sepulveda Boulevard, El Segundo, California
90245, for the following purposes as more fully described in the accompanying
Proxy Statement:
(1) To elect the five directors to the Board of Directors;
(2) To ratify the appointment of Coopers & Lybrand L.L.P. as independent
auditors of the Company for the fiscal year ending September 30, 1998;
and
(3) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors intends to present for election as directors the
nominees named in the accompanying Proxy Statement, whose names are incorporated
herein by reference.
Stockholders of record at the close of business on January 30, 1998 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof. All stockholders are cordially invited to attend the
Annual Meeting in person. Stockholders who are unable to attend the Annual
Meeting in person are requested to complete and date the enclosed form of proxy
and return it promptly in the envelope provided. No postage is required if
mailed in the United States. Stockholders who attend the Annual Meeting in
person may revoke their proxy and vote their shares in person. Stockholders
attending the meeting whose shares are held in the name of a broker or other
nominee who desire to vote their shares at the meeting should bring with them a
proxy or letter from that firm confirming their ownership of shares.
By Order of the Board of Directors
Robert Mercer
ASSISTANT SECRETARY
February 13, 1998
<PAGE>
EN POINTE TECHNOLOGIES, INC.
100 N. SEPULVEDA BOULEVARD, 19(TH) FLOOR
EL SEGUNDO, CALIFORNIA 90245
------------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 6, 1998
This Proxy Statement is furnished to the holders of Common Stock, par value
$.001 per share (the "Common Stock"), of En Pointe Technologies, Inc. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of the enclosed proxy for use at the Annual Meeting of Stockholders to
be held on Friday, March 6, 1998 (the "Annual Meeting"), or at any adjournment
thereof. The purposes of the Annual Meeting and the matters to be acted upon are
set forth in the accompanying Notice of Annual Meeting of Stockholders. As of
the date of this Proxy Statement, the Board of Directors is not aware of any
other matters which will come before the Annual Meeting. However, if any other
matters properly come before the Annual Meeting, the persons named as proxies
will vote on them in accordance with their best judgment.
Proxies for use at the Annual Meeting are being solicited by the Board of
Directors of the Company. Proxies will be mailed to shareholders on or about
February 13, 1998 and will be solicited chiefly by mail. The Company will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to the beneficial owners of
Common Stock and will reimburse them for their reasonable expenses in so doing.
Should it appear desirable to do so in order to ensure adequate representation
of shares at the Annual Meeting, officers, agents and employees of the Company
may communicate with stockholders, banks, brokerage houses and others by
telephone, facsimile or in person to request that proxies be furnished. All
expenses incurred in connection with this solicitation will be borne by the
Company. The Company has no present plans to hire special employees or paid
solicitors to assist in obtaining proxies, but reserves the option of doing so
if it should appear that a quorum at the Annual Meeting otherwise might not be
obtained.
REVOCABILITY AND VOTING OF PROXY
A proxy for use at the Annual Meeting and a return envelope for the proxy
are enclosed. Any stockholder who gives a proxy may revoke it at any time before
it is voted by delivering to the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the Annual Meeting. All proxies properly executed and returned will be voted
in accordance with the instructions specified thereon. If no instructions are
given, proxies will be voted FOR approval of Proposals Nos. 1 and 2 as set forth
in the accompanying Notice of Annual Meeting of Stockholders.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on January 30, 1998 are
entitled to notice of and to vote at the Annual Meeting or at any adjournment
thereof. On January 30, 1998, there were 5,855,040 shares of Common Stock
outstanding; each such share is entitled to one vote on each of the matters to
be presented at the Annual Meeting. The holders of a majority of the outstanding
shares of Common Stock, present in person or by proxy and entitled to vote, will
constitute a quorum at the Annual Meeting.
1
<PAGE>
Proxies marked "withheld" as to any director nominee or "abstain" as to a
particular proposal and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum. "Broker non-votes" are shares
held by brokers or nominees which are present in person or represented by proxy,
but which are not voted on a particular matter because instructions have not
been received from the beneficial owner. The effect of proxies marked "withheld"
as to any director nominee or "abstain" as to a particular proposal and broker
non-votes on Proposals Nos. 1 and 2 is discussed under each respective Proposal.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of January 30, 1998 by (i) each stockholder who is
known by the Company to own beneficially more than five percent of the Company's
outstanding Common Stock, (ii) each director and nominee for director of the
Company, (iii) each of the Company's executive officers named in the Summary
Compensation Table (see "Executive Compensation") and (iv) by all executive
officers and directors of the Company as a group. The information as to each
person or entity has been furnished by such person or group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
----------------------
NAME OF BENEFICIAL OWNER(1) NUMBER PERCENTAGE
- ---------------------------------------- --------- -----------
<S> <C> <C>
Attiazaz "Bob" Din(2)................... 743,619 12.7%
Naureen Din(2).......................... 726,952 12.4
Zubair Ahmed(3)......................... 935,796 16.0
Mark Briggs (Nominee for Director)...... * *
Verdell Garroutte....................... 6,667 *
Susan Bailey............................ 91,667 1.6
Javed Latif(4).......................... 66,667 1.1
Kevin Schatzle(5)....................... 66,667 1.1
Ellis Posner(6)......................... 16,667 *
Ali Mohyuddin Din(7).................... 311,551 5.3
Mediha M. Din(7)........................ 311,551 5.3
All executive officers and directors as
a group (9 persons)(8)................ 2,668,036 45.6
</TABLE>
- ------------------------
(1) Applicable percentage of ownership at January 30, 1998, is based upon
5,855,040 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and includes voting and investment power with respect to shares
shown as beneficially owned. Shares of Common Stock subject to options or
warrants currently exercisable or exercisable within 60 days of January 30,
1998 are deemed outstanding for computing the shares and percentage
ownership of the person holding such options or warrants, but are not deemed
outstanding for computing the percentage ownership of any other person or
entity. Except as otherwise indicated, the persons or entities listed below
have sole voting and investment power with respect to all shares shown as
beneficially owned by them.
(2) Bob and Naureen Din are married, and each may therefore be deemed to have a
beneficial interest in each other's shares of Common Stock. Does not include
311,551 shares of Common Stock owned of record by Mediha Din, Mr. and Mr.
Din's minor child. The address of Mr. and Mrs. Din is at the Company's
principal executive offices, 100 North Sepulveda Boulevard, 19th Floor, El
Segundo, California 90245. Mr. and Mrs. Din have each disclaimed beneficial
ownership in each other's shares. Includes 100,000 shares issuable pursuant
to options, of which 16,667 are exercisable within 60 days of January 30,
1998.
(3) The address of such stockholder is at the Company's principal executive
offices, 100 North Sepulveda Boulevard, 19th Floor, El Segundo, California
90245.
2
<PAGE>
(4) Includes 100,000 shares issuable pursuant to options, of which 16,667 are
exercisable within 60 days of January 30, 1998.
(5) Includes 100,000 shares issuable pursuant to options, of which 16,667 are
exercisable within 60 days of January 30, 1998.
(6) Includes 25,000 shares issuable pursuant to options, of which 3,334 are
exercisable within 60 days of January 30, 1998.
(7) Ali Mohyuddin Din and Mediha M. Din are the children of Bob and Naureen Din.
The address of such stockholders is at the Company's principal executive
offices, 100 North Sepulveda Boulevard, 19th Floor, El Segundo, California
90245.
(8) Includes 580,000 shares issuable pursuant to options, of which 53,334 are
exercisable within 60 days of January 30, 1998.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Currently, there are five (5) members of the Board of Directors. Directors
are elected at each annual stockholders' meeting to hold office until the next
annual meeting or until their successors are elected and have qualified. Unless
otherwise instructed, the proxy holders named in the enclosed proxy will vote
the proxies received by them for the five (5) nominees named below. All of the
nominees presently are directors of the Company.
If any nominee becomes unavailable for any reason before the election, the
enclosed proxy will be voted for the election of such substitute nominee or
nominees, if any, as shall be designated by the Board of Directors. The Board of
Directors has no reason to believe that any of the nominees will be unavailable
to serve.
The names and certain information concerning the eight (8) nominees for
election as directors are set forth below. THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
DIRECTORS
The nominees, their ages the year in which each first became a director of
the Company and their principal occupations or employment during the past five
years are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- -----------------------------------
<S> <C> <C>
Attiazaz "Bob" Din................. 45 Chairman of the Board and Chief
Executive Officer
Naureen Din........................ 43 Secretary and Director
Zubair Ahmed....................... 45 Director
Verdell Garroutte(1)............... 54 Director
Mark Briggs(1)..................... 41 Nominee for Director
</TABLE>
- ------------------------
(1) Member of Audit Committee and Compensation Committee
ATTIAZAZ "BOB" DIN is a founder of the Company and has served in various
capacities with the Company since its inception in January 1993. Mr. Din has
served as a director since April 1994, and as the Chairman of the Board and
Chief Executive Officer of the Company since January 1996. Mr. Din previously
served as the Company's President from April 1994 to September 1997. Prior to
founding the Company, from November 1985 to January 1993, Mr. Din served as
Chairman of the Board of Directors, President and
3
<PAGE>
Chief Executive Officer of InfoSystems Computer Center, a Southern
California-based reseller of computer products ("InfoSystems").
NAUREEN DIN is a founder of the Company and currently serves as Secretary
and as a director of the Company. Ms. Din previously served as President from
the Company's inception in January 1993 to April 1994, as Chief Executive
Officer from the Company's inception until January 1996 and as Chief Financial
Officer from the Company's inception until October 1995. Ms. Din was not
employed immediately prior to January 1993. Ms. Din is the wife of Bob Din.
ZUBAIR AHMED has been a director of the Company since April 1994. Mr. Ahmed
previously served as an Executive Vice President of the Company from April 1994
to December 1995 and as Director of Business Development of the Company from May
1993 to April 1994. From January 1989 to April 1993, Mr. Ahmed served as the
General Manager of Inter Equipment Establishment, a seller of heavy equipment.
VERDELL GARROUTTE has been a director of the Company since May 1996. Mr.
Garroutte has been serving as the Chief Executive Officer of First Source
International, Inc., a computer products reseller, since April 1997. Mr.
Garroutte was a corporate financial consultant from October 1994 to March 1997
as well as from June 1991 to December 1993. From May 1993 to October 1993, Mr.
Garroutte was employed by the Company as a part-time employee and consultant.
From January 1994 until September 1994, Mr. Garroutte served as the Chief
Financial Officer of Kelly Micro Systems, Inc., a manufacturer of memory
components for personal computers. From December 1985 until May 1991, Mr.
Garroutte served in various positions at Computerland Corporation, a personal
computer retailer, including Vice-President and Treasurer.
MARK BRIGGS is a nominee for the Board of Directors. Since January 1997, Mr.
Briggs has been the President and Chief Executive Officer of Softbank Services
Group, a leading outsourcer to the digital marketplace. From January 1993
through the end of 1996, Mr. Briggs served as the President and Chief Executive
Officer of Intelligent Electronics, Reseller Division.
The Board of Directors of the Company held two (2) meetings during the
fiscal year ended September 30, 1997. Each incumbent director attended at least
seventy-five percent (75%) of the aggregate of the number of meetings of the
Board and the number of meetings held by all committees of the Board on which he
served. Bob Din and Naureen Din are husband and wife. Javed Latif is the
brother-in-law of Bob Din. There are no other family relationships among any of
the directors or executive officers of the Company.
Throughout fiscal 1997 and the first six months of fiscal 1998, the Audit
Committee of the Board of Directors was composed of Mr. Verdell Garroutte and
Mr. Mansoor Ijaz, a retiring director. Assuming director-nominee Mark Briggs is
elected as a Director of the company at the annual meeting, the Audit Committee
of the Board of Directors will consist of Messrs. Garroutte and Briggs. The
functions of the Audit Committee include recommending to the Board of Directors
the retention of the independent auditors, reviewing the scope of the annual
audit undertaken by the Company's independent auditors and the progress and
results of their work, and reviewing the financial statements of the Company and
its internal accounting and auditing procedures. The Audit Committee did not
hold any meetings during fiscal 1997.
Throughout fiscal 1997 and the first six months of fiscal 1998, the
Compensation Committee of the Board of Directors was composed of Mr. Verdell
Garroutte and Mr. Mansoor Ijaz, a retiring director. Assuming director-nominee
Mark Briggs is elected as a Director of the company at the annual meeting, the
Compensation Committee of the Board of Directors will consist of Messrs.
Garroutte and Briggs. The functions of the Compensation Committee include
reviewing and approving executive compensation policies and practices, reviewing
salaries and bonuses for certain officers of the Company, administering the
Company's 1996 Stock Incentive Plan and Employee Stock Purchase Plan, subject to
the provisions set forth in each plan, and considering such other matters as may
be referred to the Compensation Committee
4
<PAGE>
by the Board of Directors from time to time. There was one (1) meeting of the
Compensation Committee during fiscal 1997.
DIRECTORS' COMPENSATION
The Company's directors do not receive cash compensation for attendance at
Board of Directors or committee meetings, but may be reimbursed for certain
expenses in connection with attendance at Board of Directors and committee
meetings.
The Company's 1996 Stock Incentive Plan provides that each non-employee
director of the Company shall automatically be granted a non-qualified option to
purchase 5,000 shares of Common Stock upon his or her election and reelection to
the Board of Directors so long as such reelection occurs at least twelve months
after his or her initial election to the Board of Directors of the Company. The
option price of such options shall be at 80% of the fair market value of the
Common Stock on the date such director is elected or reelected, as the case may
be, and shall become exercisable with respect to one-third ( 1/3) of the shares
subject to such option three (3) months after such election or reelection,
one-third ( 1/3) of such shares nine (9) months after such election or
reelection and the remaining one-third ( 1/3) of such shares twenty-seven (27)
months after such election or reelection. The term of such options shall be ten
years.
The Company does not have a nominating committee. Instead, the Board of
Directors, as a whole, identifies and screens candidates for membership on the
Company's Board of Directors.
VOTE REQUIRED
The five nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote for them,
a quorum being present, shall be elected as directors. Only votes cast "FOR" a
nominee will be counted, except that the accompanying proxy will be voted for
all nominees in the absence of instructions to the contrary. Broker non-votes
and proxies marked "withheld" as to one or more nominees will result in the
respective nominees receiving fewer votes. However, the number of votes
otherwise received by the nominee will not be reduced by such action.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the cash compensation paid or accrued to the most
highly compensated executive officers of the Company (the "Named Executive
Officers"), whose total annual salary and bonus exceeded $100,000 for the fiscal
years ended September 30, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION(1) -------------------
SECURITIES
FISCAL ---------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#)
- ------------------------------------------------------------ ----------- ---------- ---------- -------------------
<S> <C> <C> <C> <C>
Attiazaz Bob Din............................................ 1997 $ 437,500 $ 202,864(2) 50,000
Chairman of the Board and 1996 381,280 --
Chief Executive Officer 1995 231,000 22,250
Susan Bailey(3)............................................. 1997 $ 20,833 -- 275,000
President
Javed Latif................................................. 1997 $ 151,000 $ 81,001(4) 50,000
Executive Vice President 1996 125,833 126,300 50,000
1995 168,500 22,160 --
Kevin Schatzle.............................................. 1997 $ 150,000 $ 689,860(5) 50,000
Senior Vice President 1996 142,500 190,330 50,000
1995 178,000 -- --
Ellis Posner................................................ 1997 $ 123,000 $ 106,094(6) 10,000
Senior Vice President of Sales 1996 120,000 62,515 15,000
1995 122,000 8,339 --
</TABLE>
- ------------------------
(1) Does not include the value of perquisites and other personal benefits
granted to the Named Executive Officers which in the aggregate did not
exceed the lesser of $50,000 or 10% of such officer's salary and bonus.
(2) Consists of a pro-rated bonus payment (accrued from April 1, 1997) payable
pursuant to an April 1997 amendment to Mr. Din's employment agreement. See
"--Employment Agreements."
(3) Ms. Bailey was hired as the President of the Company in September 1997. See
"--Employment Agreements" for a description of the terms of the employment
agreement between the Company and Ms. Bailey.
(4) Consists of a pro-rated bonus payment (accrued from July 1, 1997) payable
pursuant to the establishment of a bonus plan for Mr. Latif in May 1997.
(5) Includes $627,860 of sales commission payments.
(6) Consists of a bonus payment payable pursuant to Mr. Posner's employment
agreement in effect for fiscal 1997.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth stock options granted to the Named Executive
Officers during fiscal 1997:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
PERCENT OF
NUMBER TOTAL POTENTIAL REALIZABLE VALUE
OF OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES FOR OPTION TERM
OPTIONS IN LAST EXERCISE EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
- ----------------------------------- ---------- ------------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Attiazaz "Bob" Din................. 50,000 9.3 $ 10.45 5/07 $ 298,725 $ 757,028
Susan Bailey....................... 275,000 51.2 14.38 9/07 2,486,099 6,302,454
Javed Latif........................ 50,000 9.3 9.50 5/07 298,725 757,028
Kevin Schatzle..................... 50,000 9.3 9.50 5/07 298,725 757,028
Ellis Posner....................... 10,000 1.9 9.50 5/07 59,745 151,406
</TABLE>
FISCAL 1997 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE- MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Attiazaz "Bob" Din........................................ 16,667 33,333 $ 191,621 $ 383,330
Susan Bailey.............................................. -- 275,000 -- $ 3,954,000
Javed Latif............................................... 50,000 50,000 $ 678,347 $ 626,653
Kevin Schatzle............................................ 50,000 50,000 $ 678,347 $ 626,653
Ellis Posner.............................................. 13,333 11,667 $ 178,995 $ 147,005
</TABLE>
- ------------------------
(1) Based on a per share price of $19.86, the closing price of the Common Stock
as reported on the Nasdaq National Market on September 30, 1997.
STOCK OPTION AND PURCHASE PLANS
1996 STOCK PLAN
The En Pointe Technologies, Inc. 1996 Stock Incentive Plan, as amended (the
"1996 Stock Plan") was adopted by the Company's Board of Directors and
stockholders in March 1996 and provides for the granting of "incentive stock
options," within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), nonstatutory options and rights to purchase
Common Stock. Incentive stock options may be granted only to employees of the
Company and its subsidiaries. Nonstatutory options and rights to purchase Common
Stock may be granted to employees and consultants to the Company and its
subsidiaries. A participant may not receive a grant of an option for or the
right to purchase more than 275,000 shares of Common Stock in any calendar year
period. The 1996 Stock Plan authorizes up to 960,000 shares of the Company's
Common Stock for issuance. If options or rights to purchase are forfeited or any
shares of Common Stock are required by the Company pursuant to an option or
right to purchase agreement, those shares are again available for grant under
the 1996 Stock Plan. The 1996 Stock Plan is administered by the Compensation
Committee of the Board of Directors (the "Compensation Committee"), which has
sole discretion and authority, consistent with the provisions of the 1996 Stock
Plan, to determine which eligible participants will receive options and/or
purchase rights, the time when options and/or purchase rights will be granted,
the terms of options and/or purchase granted and the number of shares which will
be subject to options and/or purchase rights granted under the 1996 Stock Plan.
However,
7
<PAGE>
there is a formula grant to non-employee directors. As of January 30, 1998 there
were 734,403 options outstanding under the 1996 Stock Plan. Of the outstanding
options, 186,116 were exercisable as of January 30, 1998.
The exercise price of incentive stock options is determined by the
Compensation Committee, but which must be not less than the fair market value of
a share of Common Stock on the date the option is granted (110% with respect to
optionees who own at least 10% of the outstanding Common Stock). Nonstatutory
options shall have such exercise price as determined by the Compensation
Committee, but which shall not be less than 80% of the fair market value per
share of Common Stock on the date the option is granted. The Compensation
Committee has the authority to determine the time or times at which options
granted under the 1996 Stock Plan become exercisable, provided that options
expire no later than ten years from the date of grant (five years with respect
to holders of incentive stock options who own at least 10% of the outstanding
Common Stock). Options and purchase rights are nontransferable, other than upon
death by will or the laws of descent and distribution.
A right to purchase Common Stock gives the offeree the right to purchase a
number of shares of Common Stock for a period and at a price (which may be less
than fair market value) all as determined by the Compensation Committee, and
subject to such other terms, conditions and restrictions as are established by
the Compensation Committee and set forth in the applicable stock purchase
agreement. As of January 30, 1998, no rights to purchase Common Stock had been
granted under the 1996 Stock Plan.
In the event of a "change in control" of the Company, all outstanding
options and rights to purchase Common Stock will become fully vested and
immediately exercisable. A change in control means generally (i) the acquisition
by a person or group of more than 50% of the outstanding securities of the
Company, (ii) a merger or consolidation in which the Company is not the
survivor, (iii) the sale or disposition of substantially all of the assets of
the Company, (iv) a liquidation or dissolution of the Company, or (v) or reverse
merger in which more than 50% of the combined voting power of the Company's
outstanding securities are transferred.
The Board of Directors may, in its discretion, amend or terminate the 1996
Stock Plan. However, no amendment or termination may adversely affect a
participant's rights as to prior grants. The Plan shall terminate in any event
on March 1, 2006.
EMPLOYEE STOCK PURCHASE PLAN
The En Pointe Technologies, Inc. Employee Stock Purchase Plan (the "Purchase
Plan") was adopted by the Board of Directors and stockholders in March 1996,
covering an aggregate of 250,000 shares of Common Stock. The Purchase Plan,
which is intended to qualify as an "employee stock purchase plan" under Section
423 of the Code, will be implemented by six-month offerings with purchases
occurring at six-month intervals. The Purchase Plan is administered by the
Compensation Committee. Employees are eligible to participate if they are
employed by the Company for at least 20 hours per week, are customarily engaged
for more than five months per calendar year and if they have been employed by
the Company or a designated subsidiary for at least 90 days. The Purchase Plan
permits eligible employees to purchase Common Stock through payroll deductions,
which may not exceed 20% of an employee's annual compensation. The maximum
number of shares of Common Stock that an employee may purchase during any
offering period is 2,500 and during any calendar year is $25,000 (determined
using the fair market value at the grant date). The price of Common Stock
purchased under the Purchase Plan will be 85% of the lower of the fair market
value of the Common Stock at the beginning of the six-month offering period or
the applicable purchase date. Employees may end their participation in the
offering at any time during the offering period, and participation ends
automatically upon termination of employment. The Board of Directors or may at
any time amend or terminate the Purchase Plan, except that no such amendment or
termination may adversely affect shares previously purchased under the Purchase
Plan, and amendments which (i) increase the number of shares that may be issued
under the Plan, (ii) materially modify eligibility
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requirements or (iii) materially increase the benefits accruing to participants,
must have stockholder approval. The Purchase Plan will terminate on October 31,
2006.
EMPLOYMENT AGREEMENTS
Mr. Din's employment agreement with the Company was originally entered into
as of March 1, 1996, and was amended in April 1997. This agreement provides for
an annual base salary of $500,000, plus, beginning in April 1997, a bonus equal
to 3.5% of the Company's pre-tax net income (if $4.5 million or greater) and
terminates on the later of (i) the fifth anniversary of the date the agreement
was entered into, or (ii) five years following the date on which either Mr. Din
or the Company gives a notice of non-renewal or termination. Upon termination of
Mr. Din's employment agreement by the Company for reason other than "cause", as
defined in the employment agreement, or by Mr. Din for "good reason", as defined
in the employment agreement, Mr. Din will be entitled to receive, as severance
pay, guaranteed monthly salary payments in the amount of Mr. Din's current
salary for a period of five years, plus the payment of certain additional
benefits, such as health insurance for the same term. However, Mr. Din's
agreement prohibits him from competing with the Company for five years following
the date of his termination. Pursuant to his employment agreement, Mr. Din is
obligated, subsequent to his termination, to offer first to the Company any
block of 50,000 shares or more of the Company's Common Stock offered by him or
his wife for sale, if offered for sale other than pursuant to an
over-the-counter or exchange transaction. Mr. Din's agreement also contains
confidentiality, intellectual property rights and dispute resolution provisions.
In fiscal 1996, the Company entered into employment agreements with each of
Javed Latif and Kevin Schatzle. Each of these agreements has a five-year term
ending in 2001, with an automatic three-year extension. Mr. Latif's and Mr.
Schatzle's agreements provide for annual base salaries of $151,000 and $150,000,
respectively. Mr. Schatzle receives an additional 10% of the applicable GMD as
commission on all business generated from the IBM account and the Northrop
Grumman account. Beginning in April 1997, Mr. Latif became entitled to a
quarterly bonus equal to 2.5% of the Company's pre-tax net income in that
quarter beginning on July 1, 1997. In addition, each of Mr. Latif and Mr.
Schatzle is entitled to receive a minimum of four weeks annual vacation, an
automobile allowance of at least $1,500 per month as well as medical and
disability insurance. The Board of Directors may also, at its discretion, award
each of Mr. Latif and Mr. Schatzle a bonus, with such bonus to be paid
consistent with executive bonus programs of the Company, if any, in existence
during any of Mr. Latif's or Mr. Schatzle's period of employment with the
Company. These agreements also provide for severance payments consisting of
twelve months' salary in the event that the Company terminates either of Mr.
Latif's or Mr. Schatzle's employment without "cause" (as defined in each of Mr.
Latif's or Mr. Schatzle's employment agreement) or if either of Mr. Latif or Mr.
Schatzle terminates his employment with the Company for "good reason" (as
defined in each of Mr. Latif's and Mr. Schatzle's employment agreement). These
agreements may be terminated by the Company with or without "cause." These
agreements contain additional provisions regarding benefits and dispute
resolution.
In September 1997, the Company entered into an employment agreement with
Susan Bailey, the Company's President. Ms. Bailey's agreement provides for an
annual base salary of $250,000. In addition, Ms. Bailey is entitled to a bonus
of $31,250 per fiscal quarter in which the Company meets or exceeds certain
financial targets. In addition, Ms. Bailey is entitled to four weeks paid
vacation per year, an accountable expense allowance, an automobile allowance not
to exceed $1,500 per month, and certain other employee benefits, such as medical
and disability insurance. Ms. Bailey is entitled to a guaranteed quarterly bonus
of $25,000 per quarter for the first and second fiscal quarters of her
employment with the Company. Ms. Bailey was also granted a stock option to
purchase 275,000 shares of Common Stock at an exercise price of $14.38, which
was the fair market value of the Common Stock on September 2, 1997, the date the
option was granted. Ms. Bailey's option becomes exercisable with respect to
one-third ( 1/3) of the shares subject to such option on December 2, 1997,
one-third ( 1/3) of the shares on May 2, 1997 and one-third ( 1/3) of the shares
on December 2, 1999. Ms. Bailey's employment agreement is scheduled to
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<PAGE>
terminate on September 2, 2000. The agreement may be terminated by the Company
with or without "cause" by written notice of the Company. In the event the
Company terminates her employment without "cause" or if Ms. Bailey terminates
her agreement for "good reason," the Company shall pay a cash severance payment
equal to eighteen (18) months' total base salary. Under the terms of the
agreement, Ms. Bailey is prohibited from competing with the Company for a period
of eighteen (18) months following the date of her termination. The agreement
contains additional provisions regarding benefits and dispute resolution.
Effective October 1, 1997, the Company entered into an employment agreement
with Ellis Posner, pursuant to which Mr. Posner is entitled to receive an annual
salary of $149,000 plus a monthly draw of $7,583 against any bonus payable to
Mr. Posner, an accountable expense allowance, an automobile allowance of $1,000
per month, up to three weeks of paid vacation per year and certain other
employee benefits such as medical and disability insurance. Mr. Posner is
entitled to a quarterly bonus based upon the number of new sales offices opened
each quarter, a guaranteed quarterly bonus of $25,000 and a quarterly bonus
based upon the Company meeting certain revenue targets. Mr. Posner's employment
agreement is scheduled to terminate on October 1, 2000. The agreement may be
terminated by the Company with or without "cause" by written notice of the
Company. In the event the Company terminates his employment without "cause" or
if Mr. Posner terminates his agreement for "good reason," the Company shall pay
a cash severance payment equal to twelve (12) months' total base salary. Under
the terms of the agreement, Mr. Posner is prohibited from competing with the
Company for a period of twelve (12) months following the date of his
termination. The agreement contains additional provisions regarding benefits and
dispute resolution.
OTHER COMPENSATION ARRANGEMENTS
401(k) PLAN
Effective as of July 1993, the Company adopted the En Pointe Technologies,
Inc. Employee Savings Plan (the "401(k) Plan"), which is a retirement profit
sharing plan that covers all U.S. employees of the Company who are 21 years old
or older and have completed six months of service. The 401(k) Plan provides that
employees may elect to defer, in the form of contributions to the 401(k) Plan,
up to 20% of the total compensation that would otherwise be paid to the
employee. However, the administrator of the 401(k) Plan has adopted a policy of
limiting the contributions of employees whose annual total compensation is equal
to or less than $66,000 up to 15% of total compensation, and limiting the
contributions of employees whose annual total compensation is greater than
$66,000 to up to 8% of total compensation that would otherwise be paid to the
employee, in either case not to exceed $9,500 in 1997 (subject to adjustment
annually as provided in the Code). The Company may make discretionary matching
contributions to the 401(k) Plan, but the Company has not made any contributions
to the 401(k) Plan to date. Contributions are held under a group annuity
contract and are invested in selected eligible investments. Employee
contributions are fully vested and nonforfeitable at all times.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during the fiscal year
ended September 30, 1997 consisted of Mansoor Ijaz and Verdell Garroutte,
neither of whom has served as an executive officer or employee of the Company or
any of its subsidiaries.
CERTAIN TRANSACTIONS
During the fiscal year ended September 30, 1997, the Company continued to
engage the services of a group of software programmers in Pakistan to write
code, and perform other software programming services relating to an upgrade of
the Company's proprietary information system. The group was managed by Dr.
Shahzad Munawwar, brother of Bob Din, from February 1997 until May 1997, at
which time
10
<PAGE>
Dr. Munawwar no longer was associated with this group. The total cost of this
operation, including payroll, depreciation, capitalized software costs, travel
and expenses was $665,808 in the fiscal year ended September 30, 1997. Until
February 1997, this group was operated as a branch operation of the Company.
Beginning on May 10, 1997, the Company entered into a Software Programming
Services Agreement with this group, at a monthly rate of approximately $42,500.
Management believes that the terms of this agreement are no less favorable than
those which can be obtained from an independent third party.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon its review of the copies of Forms 3 and 4 and amendments
thereto furnished to the Company, or written representations that no annual Form
5 reports were required, the Company believes that all filing requirements under
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") applicable to its directors, officers and any persons holding ten percent
(10%) or more of the Company's Common Stock were made with respect to the
Company's fiscal year ended September 30, 1997.
REPORT OF THE COMPENSATION COMMITTEE
The following report is submitted by the Compensation Committee of the Board
of Directors with respect to the executive compensation policies established by
the Compensation Committee and recommended to the Board of Directors and
compensation paid or awarded to executive officers for the fiscal year ended
September 30, 1997.
The Compensation Committee determines the annual salary, bonus and other
benefits, including incentive compensation awards, of the Company's senior
management and recommends new employee benefit plans and changes to existing
plans to the Company's Board of Directors. The salary and performance bonus of
Bob Din, the Company's Chief Executive Officer, is determined in accordance with
Mr. Din's Employment Agreement with the Company (see "Employment Agreements,"
above). The Compensation Committee met one (1) time during the fiscal year ended
September 30, 1997.
COMPENSATION POLICIES AND OBJECTIVES
The Company's executive compensation policy is designed to attract and
retain exceptional executives by offering compensation for superior performance
that is highly competitive with other well-managed organizations. The
Compensation Committee measures executive performance on an individual and
corporate basis.
There are three components to the Company's executive compensation program,
and each is consistent with the stated philosophy as follows:
- BASE SALARY. Base salaries for executives and other key employees are
determined by individual financial and non-financial performance, position
in salary range and general economic conditions of the Company. For
purposes of administering base pay, all executive positions are evaluated
and placed in appropriate salary grades. Salary range midpoint levels are
reviewed on an annual basis to ensure competitiveness with a peer group of
comparable computer software and systems companies. In recommending
salaries for executive officers, the Compensation Committee (i) reviews
the historical performance of the executives, and (ii) formally reviews
specific information provided by its accountants and other consultants, as
necessary, with respect to the competitiveness of salaries paid to the
Company's executives.
11
<PAGE>
- ANNUAL BONUS. Annual bonuses for executives and other key employees are
tied directly to the Company's financial performance as well as individual
performance. The purpose of annual cash bonuses are to reward executives
for achievements of corporate, financial and operational goals. Annual
cash bonuses are intended to reward the achievement of outstanding
performance. When certain objective and subjective performance goals are
not met, annual bonuses would be reduced or not paid.
- LONG-TERM INCENTIVES. The purpose of these plans is to create an
opportunity for executives and other key employees to share in the
enhancement of stockholder value through stock options. The overall goal
of this component of pay is to create a strong link between the management
of the Company and its stockholders through management stock ownership and
the achievement of specific corporate financial measures that result in
the appreciation of Company share price. Stock options are awarded if the
Company and individual goals are achieved or exceeded. The Compensation
Committee generally has followed the practice of granting options annually
on terms which provide that the options become exercisable in three (3)
equal installments over a 27-month period. The Compensation Committee
believes that this feature not only provides an employee retention factor
but also makes longer term growth in share prices important for those
receiving options.
FISCAL YEAR 1997 COMPENSATION
The Company is required to disclose its policy regarding qualifying
executive compensation deductibility under Section 162(m) of the Internal
Revenue Code of 1986, as amended, which provides that, for purposes of the
regular income tax and the alternative minimum tax, the otherwise allowable
deduction for compensation paid or accrued with respect to a covered employee of
a public corporation is limited to no more than $1 million per year. It is not
expected that the compensation to be paid to the Company's executive officers
for fiscal 1997 will exceed the $1 million limit per officer. The Company's 1996
Stock Incentive Plan are structured so that any compensation deemed paid to an
executive officer when he exercises an outstanding option under the plan, with
an exercise price equal to the fair market value of the option shares on the
grant date, will qualify as performance-based compensation that will not be
subject to the $1 million limitation.
The Compensation Committee of the
Board of Directors
Mansoor Ijaz
Verdell Garroutte
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THE COMPANY'S PREVIOUS
FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS
PROXY STATEMENT, IN WHOLE OR IN PART, THE FOREGOING REPORT AND THE PERFORMANCE
GRAPH ON PAGE 10 SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
12
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative stockholder return
on the Company's Common Stock with the cumulative total return of the Nasdaq
Stock Market (U.S.) Index and the Hambrecht & Quist Technology Index for the
period that commenced May 8, 1996, the date on which the Company's Common Stock
was first registered under the Exchange Act, and ended on September 30, 1997.
The Performance Graph is not necessarily an indicator of future price
performance. The graph assumes the reinvestment of all dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG EN POINTE TECHNOLOGIES, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX, AND
THE HAMBRECHT & QUIST TECHNOLOGY INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C>
EN POINTE TECHNOLOGIES, INC. NASDAQ STOCK MARKET (U.S.)
5/08/96 100 100
9/96 133 104
9/97 263 143
* $100 INVESTED ON 5/08/96 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
<CAPTION>
DOLLARS
<S> <C>
HAMBRECHT & QUIST TECHNOLOGY
5/08/96 100
9/96 100
9/97 150
* $100 INVESTED ON 5/08/96 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
</TABLE>
13
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Coopers & Lybrand L.L.P., independent
auditors, to audit the financial statements of the Company for the fiscal year
ending September 30, 1998, and recommends that stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Coopers & Lybrand L.L.P. has audited the Company's financial statements
annually since its fiscal year ended September 30, 1993. Its representatives are
expected to be present at the meeting with the opportunity to make a statement
if they desire to do so and are expected to be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at the 1999 Annual
Meeting of Stockholders and presentation in the Company's Proxy Statement with
respect to such meeting should arrange for such proposal to be delivered to the
Company at its principal place of business no later than October 17, 1998 in
order to be considered for inclusion in the Company's proxy statement relating
to that meeting. Matters pertaining to such proposals, including the number and
length thereof, eligibility of persons entitled to have such proposals included
and other aspects are regulated by the Securities Exchange Act of 1934, Rules
and Regulations of the Securities and Exchange Commission and other laws and
regulations to which interested persons should refer.
OTHER MATTERS
Management is not aware of any other matters to come before the meeting. If
any other matter not mentioned in this Proxy Statement is brought before the
meeting, the proxy holders named in the enclosed Proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
By Order of the Board of Directors
Bob Din
CHIEF EXECUTIVE OFFICER
February 13, 1998
The Annual Report to Stockholders of the Company for the fiscal year ended
September 30, 1997 is the Company's Annual Report on Form 10-K which was filed
with the Securities and Exchange Commission on December 29, 1997 and which is
being mailed concurrently with this Proxy Statement to all stockholders of
record as of January 30, 1998. The Annual Report is not to be regarded as proxy
soliciting material or as a communication by means of which any solicitation is
to be made.
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<PAGE>
PROXY
EN POINTE TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF THE STOCKHOLDERS--MARCH 6, 1998
The undersigned hereby nominates, constitutes and appoints Attiazaz "Bob"
Din and Zubair Ahmed, and each of them individually, the attorney, agent and
proxy of the undersigned, with full power of substitution, to vote all stock of
EN POINTE TECHNOLOGIES, INC. which the undersigned is entitled to represent and
vote at the 1997 Annual Meeting of Stockholders of the Company to be held at the
Plaza Level Conference Room at the Corporate Headquarters of En Pointe
Technologies, Inc., 100 North Sepulveda Boulevard, El Segundo, California 90245,
on March 6, 1998, at 9:00 a.m., and at any and all adjournments or postponements
thereof, as fully as if the undersigned were present and voting at the meeting,
as follows:
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 AND 2
------------------------------
1. Election of Directors
/ / FOR / / WITHHOLD AUTHORITY
all nominees listed below (EXCEPT to vote for all nominees
AS MARKED TO THE CONTRARY BELOW) listed below
Election of the following nominees as directors: Attiazaz "Bob" Din,
Naureen Din, Zubair Ahmed, Verdell Garroutte, and Mark Briggs
(INSTRUCTIONS: To withhold authority to vote for any nominee, print that
nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
<PAGE>
2. Ratification of Coopers & Lybrand L.L.P. as independent auditors:
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, on such other business as may properly come before the
meeting or any adjournment thereof.
IMPORTANT--PLEASE SIGN AND DATE AND RETURN PROMPTLY
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. WHERE NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED "FOR" THE
ELECTION OF THE DIRECTORS NAMED ON THE REVERSE SIDE OF THIS PROXY AND "FOR"
RATIFICATION OF COOPERS & LYBRAND LLP AS INDEPENDENT AUDITORS.
Date _______________________ , 1998
-----------------------------------
(Signature of stockholder)
Please sign your name exactly as it
appears hereon. Executors,
administrators, guardians, officers
of corporations and others signing
in a fiduciary capacity should
state their full titles as such.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN
AND RETURN THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
