UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM
8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported): |
July 9, 2008 |
En Pointe
Technologies, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
(State or
other jurisdiction of incorporation)
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000-28052 |
75-2467002 |
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(Commission File Number) |
(I.R.S.
Employer Identification No.) |
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18701 Figueroa
Street
Gardena,
California
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90248 |
(Address
of principal executive offices) |
(Zip
Code) |
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Registrant’s
telephone number, including area code |
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_____________________Not
Applicable____________________
Former
name or former address, if changed since last report
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material
Definitive Agreement.
On July
9, 2008, En Pointe Technologies Sales, Inc. (“Seller”), a wholly-owned
subsidiary of En Pointe Technologies, Inc., entered into a Limited
Liability Company Purchase Agreement (the “Purchase Agreement”) with Allied
Digital Services Ltd (“Purchaser”) to sell a majority interest in its
wholly-owned subsidiary, En Pointe Global Services, LLC (“EPGS”). In
connection with the transaction, Seller transferred a majority of its
I.T. service business, including related employees and contracts, to
EPGS. Purchaser is a publicly traded corporation on the Bombay Stock
Exchange in India. Purchaser will acquire from Seller an 80.5%
interest in EPGS for $10 million in cash and 745,000 shares of Purchaser's
restricted stock. As of July 9, 2008, such stock was valued at
approximately $14 million and has a one year lockup from the date of
issuance. The Seller will retain the remaining 19.5% interest in
EPGS.
Closing
is set to take place after certain conditions are met. Conditions to
closing include, among other things, Purchaser delivering to Seller $8 million
in cash within twelve days of signing and within three days thereafter Seller
transferring 27,587 Series A Units of EPGS, representing an approximate 27.6%
interest, to the Purchaser. In addition, the
Seller must transfer working net assets of not less than $1 million to
EPGS.
Immediately
following closing, Purchaser and Seller will make capital contributions to
EPGS in the amounts of $4,025,000 and $975,000,
respectively. EPGS and Seller will have continuing obligations
after closing including a business referral arrangement, license agreements, a
services agreement and mutual noncompete.
An escrow
arrangement has been established for the benefit of each
party. Within seven days following the closing, Seller will deposit
52,913 Series A Units of EPGS, representing an approximate 52.9% interest, with
the escrow agent. Within 75 days following the signing of the purchase
agreement or the closing, the Purchaser will deliver to the escrow
agent $2 million in cash and either (i) 745,000 shares of the Purchaser's
stock or (ii) $13,345,000 in cash. The amounts deposited by Purchaser
into escrow are available to compensate Purchaser solely for indemnification
obligations of Seller relating to any shortfall in target revenues of
EPGS. The EPGS target revenues are $30.0 million for the 12 month
period ending June 30, 2009. Any shortfall in the target revenues
would result in a downwards adjustment to the purchase price via escrow
calculated on a ratio of 30:29, so that for each $30 shortfall Purchaser would
get damages of $29. The balance of the cash and/or shares of
Purchaser’s stock held in escrow will be released to Seller 14 months after the
closing of the transaction provided that there are no pending claims by the
Purchaser. If Purchaser fails to fund the escrow with the cash and
shares of stock described above in a timely manner or the shares of stock are
not freely tradable after the expiration of the one year lockup, Seller may
elect at its sole discretion to receive a pro rata release of the Series A Units
back from escrow in satisfaction of such amounts. The balance of the
Series A Units held in escrow will be released to Purchaser 12 months after the
closing of the sale provided that there are no pending claims by
Seller.
Under
separate agreements between EPGS and Seller, EPGS will lease one floor
of the En Pointe Technologies, Inc. headquarters building in Gardena, California
and will pay Seller directly for the rental costs of the Rancho Cucamonga,
California configuration center as well as several branch
offices.
There
will be continuity of management as the service employees of Seller will
initially continue in their same capacities and will operate
autonomously. The CEO of En Pointe Technologies, Inc., Bob Din, will
also serve on the board of EPGS as a representative of Seller.
The
foregoing summaries of the terms of the Purchase Agreement and the escrow
agreement are subject to, and qualified in their entirety by, such documents
attached hereto as Exhibits 10.70 and 10.71, respectively, and are incorporated
herein by reference. A copy of the press release announcing the
transaction is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Item 5.02
Departure of Directors or Principal Officers.
In
conjunction with the Purchase Agreement reported in Item 1.01, three executive
officers, Messrs. Kevin B. Schatzle, Senior Vice President of Sales, Richard R.
Emil, Vice President of Services, and David Mochalski, Vice President of Sales
have terminated employment effective July 1, 2008 with En Pointe Technologies
Sales, Inc. and have transferred their employment to En Pointe Global Services,
LLC.
Item 9.01 Financial Statements and
Exhibits.
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(a)
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Financial
statements of business acquired. |
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(b) |
Pro
forma financial information. |
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(c) |
Shell
Company Transactions. |
(d)
Exhibits:
Exhibit
| 10.70 |
Limited
Liability Company Purchase agreement between En Pointe Technologies Sales,
Inc. and Allied Digital Services Ltd., dated July 9,
2008 |
| 10.71 |
Escrow Agreement
by and among En Pointe Technologies Sales, Inc., Allied Digital Services
Ltd., and U.S. Bank National
Association, dated July 9, 2008 |
| 99.1 |
Press
release dated July 9, 2008. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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En
Pointe Technologies, Inc. |
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July 15,
2008 |
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By: |
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/s/ Robert A.
Mercer____________ |
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Name: Robert A.
Mercer |
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Title: Corporate
Secretary |