PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD, NY 11717
IMPORTANT NEWS FOR ITEX SHAREHOLDERS!
ANNUAL MEETING POSTPONED TO JANUARY 31, 2003 DUE TO NEW
INFORMATION ABOUT STEVEN WHITE AND LAKEMONT CAPITAL
THEY NEVER DISLOSED THEIR PRIOR CONSULTING RELATIONSHIP WITH A
COMPETITOR OF ITEX WHICH IS ACTIVELY ACQUIRING COMPANIES LIKE ITEX
INSTITUTIONAL SHAREHOLDER SERVICES, THE LEADING INDEPENDENT
PROXY VOTING SERVICE, SUPPORTS THE ELECTION OF YOUR BOARD'S SLATE
VOTE TODAY BY A TOLL-FREE TELEPHONE CALL
Your Board has postponed the Annual Meeting until January 31, 2003 to give the
shareholders more time to consider new information about Steven White and
Lakemont Capital that they have not disclosed to ITEX shareholders and that in
our opinion is very disturbing. January 31 is the latest date we can hold the
Annual Meeting under Nevada law and still use the December 2, 2002 record date
for purposes of determining eligibility to vote.
Your Board has distrusted the motivations of Mr. White and Lakemont Capital in
seeking control of your Company, as described below. We just learned of
information in a June 2002 news story that underscores our distrust and gives us
concern about their possible undisclosed future plans for ITEX and its
shareholders. Until a few months ago, Mr. White and Lakemont Capital had been
consultants to International Monetary Systems (IMS), the publicly traded owner
of the Continental Trade Exchange barter network. Mr. White and Lakemont were
retained by IMS to "augment their efforts in strategies and communications",
according to the release.
Not only is IMS a competitor of ITEX, it is actively acquiring trade exchanges,
such as ITEX. Among its recent acquisitions in California are Trade Systems
Interchange and Tradius Corporation. Donald Mardak, President and CEO of IMS is
quoted in the news story as saying, "We will continue doing acquisitions that
add to earnings and build the assets of the company."
In that story, Mr. Mardak stated that with his team, including Mr. White and
Lakemont in place, "....as we consolidate new trade exchanges into our family of
businesses, we hope to see exponential increases in ... profitability".
Shareholders may view this news story on the Internet at
www.internationalmonetary.com/press-clippings/summer-2002.php.
In our opinion, this information supplies additional reasons for our mistrust of
CASE and its motivations. Consider, Mr. White is the only stockholder among the
CASE members, and he owns only 250,000 shares, which he received from the
Company as consideration for consulting services. Further, we believe that CASE
has failed to disclose any credible plans, beyond its proposal to change
director compensation, to rebuild shareholder value. The expenses incurred by
the Company in connection with the proxy contest, we believe, will more than
offset any incremental value to shareholders in the near term which could result
from the dissidents' director compensation policy.
Remember, it was Steve White and Lakemont that proposed a $1 million line of
credit to ITEX which could have been convertible into ITEX stock, a transaction
turned down by your Board since it could have put White and Lakemont in a
position to acquire approximately a third of the Company's stock. Although
neither White nor IMS have approached ITEX to indicate a specific interest in
acquiring ITEX, in our opinion, with Steve White representing ITEX and having
advised IMS on corporate strategy, this raises the question. If they have no
intention of acquiring ITEX now or in the future, they should say so - simply
and directly. If they do not respond, shareholders should ask themselves why and
who is better qualified to represent ITEX shareholders: the current Board or the
hand picked nominees of a person who has provided strategic advice to a
competitor with a declared strategy of rolling up additional barter businesses.
You should also know that a partner at our outside auditors informed us that Mr.
White had told him that Mr. White intended to take ITEX private. Mr. White has
denied that this conversation ever took place.
We believe that if CASE and its nominees take control of ITEX that they will be
in a position to direct various actions, such as selling or spinning off assets,
taking the company private, or proposing that the company be acquired. Although
we are not aware that CASE has any such intentions, such actions might not be in
the best interests of all of the shareholders and could be very difficult, if
not impossible, for the shareholders to block.
Your Board continues to believe that the election of the CASE slate is not in
the best interests of the shareholders. We believe that the additional expenses
resulting from the proxy contest, which will include reimbursement of the
dissidents' expenses (including a $15,000 fee paid to Lakemont Capital) if the
dissidents are successful, together with the disruptive effects on the Company's
network of brokers and franchisees, many of whom have expressed concern about
the contest, and the distraction of management and the Board from the ongoing
efforts to rebuild value for all ITEX stockholders are adverse to the Company
and not in the best interests of the shareholders.
In addition, CASE wants you to believe that the outside directors received
compensation over a 22 month period in cash and trade dollars which cost ITEX
$424,498. In fact, the ITEX directors received actual cash compensation in an
aggregate amount of $282,498. Trade dollars are not reflected as assets,
liabilities, revenues and expenses in the Company's financial statements, and we
believe CASE's aggregation of trade dollars with cash compensation for purposes
of comparing the total to ITEX's cumulative profits for any period is
misleading. Although trade dollars have value, they have no cost to the Company
and do not affect the Company's income.
We are not alone in our belief that the election of the dissident slate would
not be in the best interests of the shareholders. Institutional Shareholder
Services (ISS), the nation's leading independent proxy voting and corporate
governance service, recently issued a report recommending shareholders support
your Board's slate. After noting the success to date of the turn-around and the
recent revision to Director compensation, the report stated "ISS DOES NOT SEE
THE BENEFITS OF TAKING THE RISK OF REPLACING THE BOARD AND WAITING FOR NEW
DIRECTORS TO DEVELOP A NEW STRATEGY...". (emphasis added)
As we have previously written, ITEX has posted three consecutive profitable
quarters after a long string of significant losses. Please support your Board's
efforts to continue turning ITEX around by voting in favor of our nominees by a
toll-free telephone call using the instructions below.
Your Board strongly urges you to reject the dissident effort to seize control of
your Board by voting your shares in favor of the Board's nominees through a
toll-free telephone call using the instructions below.
If you have any questions or require any assistance in voting your shares,
please call our proxy solicitor, Innisfree M&A Incorporated, toll-free at
1-888-750- 5834.
Thank you for your support.
Jeffrey L. Elder
Chairman of the Board
TOLL-FREE PROXYGRAM OPERATORS WHO ARE INDEPENDENT OF THE COMPANY
ARE AVAILABLE TO ASSIST YOU NOW!!!
INSTRUCTIONS
1. Call Toll-Free 1-877-880-9547, anytime, day or night.
2. Tell the operator that you wish to send a collect ProxyGram to ID No. 8852,
ITEX Corporation.
3. State your name, address and telephone number.
4. State the bank or broker at which your shares are held and your control
number as shown below:
Name:
Broker:
Control Number:
Number of Shares:
5. Give the operator your voting preferences, using the proxy text below.
ITEX CORPORATION
3400 COTTAGE WAY
SACRAMENTO, CALIFORNIA 95825
(916) 679-1111
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lewis "Spike" Humer and Daniela C. Calvitti as
proxies, each with full power to appoint substitutes, and hereby authorizes them
or either of them to represent and to vote as designated below, all the shares
of common stock of ITEX Corporation held of record by the undersigned as of
December 2, 2002, at the Annual Meeting of Stockholders to be held on Tuesday,
January 28, 2003 at 9:00 a.m., PST, at the Radisson Hotel, 500 Leisure Lane,
Sacramento, California 95815 and any adjournments or postponements thereof, and
hereby ratifies all that said attorneys and proxies may do by virtue hereof.
Proposal 1 To elect directors to serve for the ensuing year and until their
successors are elected.
INSTRUCTIONS: (TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S),GIVE
THAT INDIVIDUAL NOMINEE'S NAME TO THE OPERATOR).
Nominees
- --------
Jay Abraham ( ) FOR ( ) WITHHOLD AUTHORITY
William Bronston, M.D ( ) FOR ( ) WITHHOLD AUTHORITY
Daniela C. Calvitti ( ) FOR ( ) WITHHOLD AUTHORITY
John L. Dethman ( ) FOR ( ) WITHHOLD AUTHORITY
Jeffrey L. Elder ( ) FOR ( ) WITHHOLD AUTHORITY
Lewis "Spike" Humer ( ) FOR ( ) WITHHOLD AUTHORITY
Proposal 2 To approve the adoption of the ITEX Corporation 2003
Equity Incentive Plan
( ) FOR ( ) AGAINST ( ) ABSTAIN
Proposal 3 To approve ratification of the selection of Ehrhardt,
Keefe, Steiner & Hottman PC as independent auditors.
( ) FOR ( ) AGAINST ( ) ABSTAIN
Proposal 4 To transact such other business as may properly come before the
meeting and any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS ONE, TWO AND THREE.
THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT TO OTHER
BUSINESS WHICH PROPERLY MAY COME BEFORE THE MEETING, OR ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH.
Common Stock
Please give your name to the operator exactly as your name appears hereon. When
shares are held by joint tenants or more than one person, all owners should
sign. When signing as attorney, as executor, administrator, trustee, or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
