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 |_| ss.240.14a-11(c)
or |_| ss.240.14a-12
ITEX CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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or the Form or Schedule and the date of its filing.
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4) Date Filed:
ii
ITEX CORPORATION
3400 Cottage Way
Sacramento, California 95825
(916) 679-1111
To the Stockholders of ITEX Corporation:
You are invited to attend the Annual Meeting of Stockholders of ITEX
Corporation (the "Company") to be held on Wednesday, April 4, 2001, at 9:00
a.m., PST, at the Howard Johnson Hotel, 3343 Bradshaw Road, Sacramento,
California, 95827.
The Notice of the Annual Meeting of Stockholders and Proxy Statement
contain the matters to be considered and acted upon, and you should read that
material carefully.
The Proxy Statement contains important information concerning (i) the
election of the Board of Directors, and (ii) other matters that properly come
before the meeting, including adjournment of the meeting. I urge you to give
these matters your close attention since they are of great importance to the
Company and its stockholders.
We hope you will be able to attend the meeting, but, if you cannot do
so, it is important that your shares are voted at the meeting. Accordingly, we
urge you to mark, sign, date and return the enclosed proxy promptly. You may, of
course, withdraw your proxy if you attend the meeting and choose to vote in
person, or by notifying us.
Sincerely,
/s/ COLLINS M. CHRISTENSEN
-------------------------------------
Collins M. Christensen
President and Chief Executive Officer
February 26, 2001
iii
ITEX CORPORATION
3400 Cottage Way
Sacramento, California 95825
(916) 679-1111
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 4, 2001
NOTICE IS GIVEN that the Annual Meeting of Stockholders of ITEX
Corporation, a Nevada corporation (the "Company"), will be held on Wednesday,
April 4, 2001, at 9:00 a.m., PST, at the Howard Johnson Hotel, 3343 Bradshaw
Road, Sacramento, California, 95827, for the following purposes, all of which
are discussed in the Proxy Statement:
1. To elect eight (8) directors to serve one year terms or until their
successors have been elected and qualified; and
2. To transact such other business that may properly come before the
meeting, or any adjournments of the meeting.
Only Stockholders of record at the close of business on February 26,
2001 are entitled to notice of, and to vote at, the Annual Meeting of
Stockholders.
By Order of the Board of Directors
/s/ ROBERT I. HARRIS
-----------------------------------
Robert I. Harris
Secretary
February 26, 2001
YOU ARE CORDIALLY INVITED TO ATTEND ITEX CORPORATION'S ANNUAL MEETING OF
STOCKHOLDERS. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE
NUMBER YOU OWN. EVEN IF YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING YOU ARE
URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING, YOU MAY VOTE EITHER IN PERSON OR
BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY
TIME PRIOR TO THE MEETING.
1
PROXY STATEMENT
of
ITEX CORPORATION
3400 Cottage Way
Sacramento, California 95825
(916) 679-1111
Information Concerning the Solicitation of Proxies
This Proxy Statement is furnished to the Stockholders of ITEX
Corporation (the "Company") in connection with the solicitation of proxies on
behalf of the Company's Board of Directors for use at the Company's Annual
Meeting of Stockholders (the "Meeting"). The Meeting will be held on Wednesday,
April 4, 2001, at 9:00 a.m., PST, at the Howard Johnson Hotel, 3343 Bradshaw
Road, Sacramento, California, 95827. A copy of the Company's Annual Report for
the year ended July 31, 2000 has been sent with this Proxy Statement.
Only Stockholders of record on February 26, 2001 are entitled to vote
at the Meeting.
The proxy solicited, if signed by you and returned to the Company, will
be voted at the Meeting per your instructions. If no contrary instructions are
given, each proxy received will be voted "FOR" the nominees for the Board of
Directors and at the proxy holder's discretion, on such other matters, if any,
which may come before the Meeting (including any proposal to adjourn the
Meeting). Any Stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Company written notice of its
revocation addressed to Secretary, ITEX Corporation, 3400 Cottage Way,
Sacramento, California 95825, (ii) submitting a properly signed proxy bearing a
later date, or (iii) appearing at the Meeting and giving the Secretary notice of
his or her intention to vote in person prior to submission of any matter to
vote.
The Company will bear the entire cost of preparing and mailing these
proxy materials. Copies of proxy materials will be furnished to brokerage
houses, fiduciaries and custodians to be forwarded to beneficial owners of the
Company's Common Stock. In addition to the solicitation of proxies through this
Proxy Statement, some of the officers, directors, employees and agents of the
Company may, without additional compensation, solicit proxies by telephone or
personal interview, the cost of which the Company will also pay.
This Proxy Statement and form of proxy were first mailed to
Stockholders on or about March 9, 2001.
Record Date and Voting Rights
The Company is authorized to issue up to 45,000,000 shares of common
stock, par value $0.01 and 5,000,000 shares of Preferred Stock, par value $0.01,
of which 65,000 has been designated Series A Preferred Stock. As of December 10,
2000, there were 16,170,065 shares of common stock and no shares of Series A
Preferred Stock issued and outstanding. The record date for determination of
Stockholders who are entitled to notice of and to vote at the Meeting is
February 26, 2001.
Each share of common stock is entitled to one vote at the Annual
Meeting, except with respect to the election of directors. In elections of
directors, California law (which applies due to the location of the Company's
operations) provides that a stockholder, or his or her proxy, may cumulate
votes; that is, each stockholder has that number of votes equal to the number of
shares owned, multiplied by the number of directors to be elected, and the
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stockholder may cumulate such votes for a single candidate, or distribute such
votes among as many candidates as he or she deems appropriate. However, a
stockholder may cumulate votes only for a candidate or candidates whose names
have been properly placed in nomination prior to the voting, and only if the
stockholder has given notice at the meeting, prior to the voting, of his or her
intention to cumulate votes for the candidates in nomination. The Company's
designated proxy holders (the "Proxy Holders") have discretionary authority to
cumulate votes represented by the proxies received in the election of directors.
The Proxy Holders intend to vote all proxies received by them in such manner as
will assure the election of as many of the nominees described under "Election of
Directors" as possible. The eight (8) nominees receiving the highest number of
votes will be elected to the Board. With respect to any other matter that
properly comes before the meeting, the Proxy Holders will vote in accordance
with their own discretion.
The majority of the outstanding shares of Common Stock of the Company
entitled to vote must be represented in person or by proxy at the Meeting to
constitute a quorum for the transaction of business. The directors shall be
elected by a plurality of the voting shares of Common Stock, present in person
or represented by proxy at the Meeting and entitled to vote. All other matters
require approval by a majority of the shares of Common Stock present or
represented by proxy and voting at the meeting. Under Nevada law, abstentions
and broker non-votes will be counted for purposes of determining quorum to open
the meeting. Broker non-votes, however, will not be counted for purposes of
calculating voting shares, but abstentions will be counted toward calculating
voting shares.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Bylaws ("Bylaws") currently provide for the annual
election of all directors. The authorized number of directors of the Company is
neither less than two (2) nor more than nine (9). The Board of Directors has
fixed the number of directors to be elected at the Annual Meeting at eight (8),
as provided in the Bylaws.
In the event that any of the nominees should unexpectedly decline or be
unavailable to act as a director, the enclosed proxy may be voted for a
substitute nominee to be designated by the Board of Directors. The Board of
Directors has no reason to believe that any nominee will become unavailable and
has no present intention to nominate any person in lieu of those named below.
Nominees for Director
The following table lists the persons nominated by the Board of
Directors for election as directors and also lists certain information with
respect to those persons.
AMOUNT OF OWNERSHIP
NOMINEE AGE SINCE OWNERSHIP(1) PERCENTAGE
- -------------------------------------------- --- ------ --------------- -----------
Collins M. Christensen 43 1999 2,511,580(2) 15.1%
William Bronston, M.D. 62 New - *%
Daniela C. Calvitti 44 New 49,500(3) *%
Jay Abraham 52 New - *%
Jeffrey L. Elder 53 New - *%
Gerry Harris 68 New 5,000 *%
3
AMOUNT OF OWNERSHIP
NOMINEE AGE SINCE OWNERSHIP(1) PERCENTAGE
- -------------------------------------------- --- ------ --------------- -----------
Lewis A. Humer, Jr. 42 2000 467,550(4) 2.8%
John L. Dethman 52 New - *%
Officers and Directors as a group (8) 3,097,130(5) 18.2%
- -------------------------------------------- --- ------ --------------- -----------
Footnotes to Table
* Less than 1%.
(1) The Ownership includes only options exercisable on or before March 19,
2000. The total outstanding includes shares assumed to be issued upon the
exercise of options for percentage ownership computation.
(2) Includes 2,111,580 shares of Common Stock and options to purchase 400,000
shares of Common Stock.
(3) Includes 24,500 shares of Common Stock and options to purchase 25,000
shares of Common Stock.
(4) Includes 107,550 shares of Common Stock and options to purchase 360,000
shares of Common Stock.
(5) Includes 6,000 shares of Common Stock and 25,000 options to purchase shares
of Common Stock owned by Mr. Larson, 25,000 options to purchase shares of
Common Stock owned by Mr. R. Harris and 12,500 options owned by Mr.
Castoro.
Background of Nominees
Collins M. Christensen has been the President, Chief Executive Officer and
Director of the Company since 1999. Mr. Christensen was appointed President and
Chief Executive Officer of the Company on May 21, 1999. Prior to becoming
President of the Company, he was the owner of a cellular telephone company and a
limousine service. In 1995, he became an independent licensed broker for the
Company and formed and operated an office in Sacramento, California. That office
was acquired by the Company in May 1999.
William Bronston, M.D., served as a Medical Consultant for the California
Department of Rehabilitation from 1985 to 2000. Dr. Bronston served as the Chief
Executive Officer of Tower Youth, a model telecommunications, media and
performing arts youth center and leadership project.
Daniela C. Calvitti is the Chief Financial Officer of the Company and has
served since October 2000. Prior to joining the Company, Ms. Calvitti served as
Vice President, Financial Operations with Foundation Health Systems. Ms.
Calvitti holds a B.S. from Miami University of Ohio.
Jay Abraham, has been the Chief Executive Officer of Abraham Consulting,
which provides marketing consulting services, since 1995. Mr. Abraham is the
author of the book, Getting Everything You Can Out of All You've Got.
Jeffrey L. Elder, served as the Senior Vice President and Chief Financial
Officer of Endosonics Corporation from May 2000 to October 2000. From 1998 to
May 2000, Mr. Elder was a Senior Consultant and Senior Vice President of
Foundation Health Systems, Inc. Prior to that, he served as Foundation Health
Systems, Inc.'s Chief Financial Officer and Director from 1989 to 1998. Mr.
Elder is a certified public accountant. Mr. Elder earned his B.A from Ohio
University, Athens, Ohio.
Gerry Harris, is the Vice President of Operations for North Main Street
Company, where he oversees the management of six hotels located in California
and Missouri. Mr. Harris has over thirty years of experience in the hotel and
food and beverage industry.
Lewis A. Humer, Jr. is the Chief Operating Officer and a Director and has
been since 2000. Mr. Humer joined the Company in March 1999 as Director of
Training and, in June 1999, he was named Vice President of Operations. Prior to
joining the Company, Mr. Humer was a Vice President of Operations and an
4
Operations Manager for two manufacturing companies. In 2000, he was named Vice
President of Operations and Chief Operating Officer.
John L. Dethman, is a Director, Secretary, Chief Operating Officer and
Chief Financial Officer of New Technologies, Inc., a computer forensics
software, training and consulting company. Mr. Dethman is a part-time Chief
Financial Officer of Zoobles Enterprises, LCC, a company that specializes in
Children's education and entertainment television and videos. Also, Mr. Dethman
provides financial consulting services to start-up companies. Mr. Dethman is a
certified public accountant. He received his B.S. from Oregon State University.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR ALL NOMINEES FOR THE
BOARD OF DIRECTORS.
EXECUTIVE COMPENSATION OF MANAGEMENT, OWNERSHIP OF CERTAIN
STOCKHOLDERS, AND CERTAIN RELATED TRANSACTIONS
The following table lists the Company's executive officers during fiscal
year 2000.
POSITIONS WITH OFFICE HELD
NAME THE COMPANY AGE SINCE(1)
- -------------------------- ----------------------------------- ----- ------------
Collins M. Christensen President & Chief Executive Officer 43 1999(2)
Lewis A. Humer, Jr. Chief Operating Officer 42 1999(3)
Robert I. Harris General Counsel and Secretary 53 2000
Notes to Table
(1) Calendar year.
(2) Mr. Christensen served the Company since 1995 as an independent licensed
broker.
(3) Includes service as Director of Training for the Company.
The following table lists the Company's new executive officers who joined
the Company in fiscal year 2001.
POSITIONS WITH OFFICE HELD
NAME THE COMPANY AGE SINCE(1)
- ---------------------- ------------------------------------- ----- -------------
Daniela C. Calvitti Chief Financial Officer 44 2000
John Castoro Vice President, Corporate Offices 42 2000
Dan Larson Vice President, Marketing and Media 39 2000(2)
Notes to Table
(1) Calendar year.
(2) Mr. Larson also previously served as the General Manager of the Company's
Sacramento Branch from 1996 until he assumed the role as Vice President,
Marketing and Media.
Executive officers are elected annually by the Board of Directors and serve
at the pleasure of the Board. Messrs. Christensen, Humer and Harris have entered
into employment agreements with the Company. There is no family relationship
between any of the officers and directors.
The biographies of Messrs. Christensen, Humer and Ms. Calvitti can be found
on pages 3-4.
5
Robert I. Harris, Esq. is the Company's Secretary and General Counsel. Mr.
Harris joined the Company in May 2000 as General Counsel. In July 2000, he
became the Secretary of the Company. Prior to joining the Company, Mr. Harris
was in private practice in Sacramento for 20 years.
John Castoro, has served as the Company's Vice President of Corporate
Offices since October 2000. Prior to joining the Company as Vice President of
Corporate Offices, Mr. Castoro worked as a Vice President of one of the leading
independent exchanges in the United States, located in New York. There, he
managed both for sales and trading. Prior to that, Mr. Castoro was a broker for
the Company for three years.
Dan Larson, has served as the Company's Vice President of Marketing and
Media since November 2000. Prior to that he served as the General Manager of the
Company's Sacramento Office. Mr. Larson also served as the General Manager of
the Sacramento offices of the California Trade Exchange for three years prior to
the Company's merger with California Trade Exchange in 1999.
Certain Legal Proceedings
Claim of Terry Neal for Indemnity
On December 1, 2000, the Company received a demand from attorneys for Terry
Neal, founder and former Chief Executive Officer of the Company, claiming a
right for indemnity for fines and attorneys' fees Mr. Neal is alleged to have
incurred in connection with an SEC investigation and civil suit brought by the
Securities and Exchange Commission ("SEC") related to certain activities of Mr.
Neal that occurred while he was a consultant to the Company in fiscal years
prior to the fiscal year ended July 31, 1998. The claim also includes the right
to indemnity for attorneys' fees incurred in his defense of the ITEX litigation
as well as the right to indemnity for attorneys' fees incurred in his defense of
the Kagan matter. The Company believes that any liability that may result from
the two latter matters has been adequately provided for. The Company denies any
liability to indemnify Mr. Neal for SEC related expenses and fines, and believes
his other claims are excessive. The Company will vigorously defend against these
claims.
Board Meetings
During the fiscal year ended July 31, 2000, the Board held a total of 3
meetings. The Compensation Committee held a total of 3 meetings, during the
fiscal year ended June 30, 2000. The Audit Committee met 3 times. The Company
does not have a Nominating Committee. Existing members of the Board attended all
of the meetings of the Board of Directors and of the committees upon which each
member also served.
Board Committees
The Company currently has a Compensation Committee and an Audit Committee.
The Company does not have a Nominating Committee.
At fiscal year end, the Audit Committee consisted of two non-employee
directors, Mr. Nelson and Dr. Ames. After the Annual Meeting, Mr. Nelson and Dr.
Ames will no longer serve as directors and the Board will appoint new members to
the Audit Committee. The Audit Committee reviews the Company's internal
accounting procedures, consults with and reviews the services provided by the
Company's independent accountants and makes recommendations to the Board of
Directors regarding the selection of independent accountants. A copy of the
Audit Committee's Charter is attached as Exhibit A.
6
The Compensation Committee consisted of three non-employee directors, Mr.
Nelson and Drs. Ames and Padbury. After the Annual Meeting, Mr. Nelson and Drs.
Ames and Padbury will no longer serve as directors and the Board will appoint
new members to the Compensation Committee. The Compensation Committee reviews
and recommends to the Board the salaries, incentive compensation and benefits of
the Company's officers and employees and administrators, the Company's stock
plans and employee benefit plans. The Committee strives to ensure that the
Company's executive compensation programs enable the Company to attract and
retain key people and motivate them to achieve or exceed certain key objectives
of the Company by making individual compensation directly dependent on the
Company's achievement of certain financial goals, such as profitability and
asset management and provide rewards for exceeding those goals.
Audit Committee Report
The Audit Committee reviews the Company's internal accounting procedures,
consults with and reviews the services provided by the Company's independent
accountants and makes recommendations to the Board of Directors regarding the
selection of independent accountants. In fulfilling its oversight
responsibilities, the Committee has reviewed and discussed the audited financial
statements with management and discussed with the independent auditors the
matters required to be discussed by SAS 61. Management is responsible for the
financial statements and the reporting process, including the system of internal
controls. The independent auditors are responsible for expressing an opinion on
the conformity of those audited financial statements with generally accepted
accounting principles.
The Committee discussed with the independent auditors, the auditors'
independence from the management of the Company and received written disclosures
and the letter from the independent accountants required by Independence
Standards Board Standard No. 1.
After the review and discussions mentioned above, the Committee
recommended to the Board that the audited financial statement be included in the
Company's Annual Report on Form 10-K and Form 10-K/A.
Respectfully Submitted,
ITEX Audit Committee,
Dr. Evans B. Ames
Robert Nelson
Executive Compensation
The following table summarizes all compensation earned by or paid to
our Chief Executive Officer and the Company's four other most highly compensated
executive officers whose total annual compensation for services rendered in all
capacities for 1998, 1999 and 2000 exceeded $100,000.
7
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation earned by or paid to
our Chief Executive Officer. The Company's four other most highly compensated
executive officers whose total annual compensation for services rendered in all
capacities for 1998, 1999 and 2000 exceeded $100,000.
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS PAYOUTS
--------------------------------------------- ---------------------------------- -----------------------
OTHER RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL ANNUAL STOCK UNDERLYING LTIP COMPENSA-
POSITION YEAR SALARY BONUS COMP. AWARD(S) OPTIONS/SARs PAYOUTS TION
- --------------------------- -------- ----------- ----------- ------------ ----------------- ---------------- ----------- -----------
Collins M. Christensen, 1998 C C C C C C C
President & Chief
Executive Officer 1999 $ 35,385 C $1,200 (1) C C C C
2000 $190,986 $169,427 $4,800 (1) $140,000 200,000
- --------------------------- -------- ----------- ----------- ------------ ----------------- ---------- ----------- -----------
Lewis A. Humer, Jr., 1998 C C C C C C C
Chief Operating Officer
1999 $ 18,462 C $1,200 (1) C C C C
2000 $ 84,441 $ 97,000 $4,800 (1) $ 35,000 300,000 C C
- ---------------------------
Footnotes
(1) Represents $400 per month automobile allowance.
Employment Agreements
In May 2000, the Company and Mr. Christensen entered into an employment
agreement whereby Mr. Christensen agreed to serve as President and Chief
Executive Officer of the Company and receive compensation equal to $260,000 per
year and a $400 per month automobile allowance, subject to annual increases as
may be determined by the Board of Directors. Mr. Christensen is eligible to
receive quarterly bonuses of 15% of net quarterly revenues. Net quarterly
revenues are equal to total quarterly revenues, less general operating expenses
and taxes (excluding capital investments, purchases and depreciable expense
items). Additional bonuses may be offered as compensation determined by the
Board of Directors and its Compensation Committee. The agreement grants Mr.
Christensen options to purchase up to 200,000 shares of Common Stock at a price
of $0.75 per share expiring May 21, 2003. The employment agreement may be
terminated by mutual consent of the Company and Mr. Christensen or by the
Company with cause. The employment agreement expires by its terms on May 21,
2003.
In May 2000, the Company entered into an employment agreement with Mr.
Humer whereby Mr. Humer agreed to serve as Chief Operating Officer and receive
compensation equal to $120,000 and a $400 per month automobile allowance,
subject to annual increases as may be determined by the Board of Directors. Mr.
Humer is eligible to receive quarterly bonuses of 7.5% of net quarterly
revenues. Net quarterly revenues are equal to total quarterly revenues less
general operating expenses and taxes (excluding capital investments, purchases
and depreciable expense items). Additional bonuses may be offered as
compensation determined by the Board of Directors and its Compensation
Committee. The agreement grants Mr. Humer options to purchase up to 200,000
shares of Common Stock at a price of $0.75 per share expiring July 25, 2003. The
employment agreement may be terminated by mutual consent of the Company and Mr.
Humer or by the Company with cause. The employment agreement expires by its
terms on May 21, 2002.
In May 2000, the Company entered into an employment agreement with Mr.
Harris whereby Mr. Harris agreed to serve as General Counsel and receive
compensation equal to $120,000 per year, subject to annual increases as may be
8
determined by the Board of Directors. Mr. Harris is eligible to receive bonuses
based on his performance and the attainment of objectives established by the
Company. The agreement grants Mr. Harris options to purchase up to 100,000
shares of Common Stock vesting over a four year term, with 25% vesting
immediately, at a price of $1.00 per share expiring May 1, 2010. In addition,
the employment agreement provides that in the event of the acquisition of the
Company, all of Mr. Harris' options will vest immediately, unless they are
assumed by the successor corporation. The employment agreement is "at will" and
may be terminated at any time by Company or Mr. Harris with or without cause.
Options Granted in Last Fiscal Year
The following table provides information relating to stock options granted
during the year ended July 31, 2000.
Individual Grants
Number of
Securities Percent of Total
Underlying Options Granted
Options to Employees in Exercise Base
Name Granted Fiscal Year Price ($/sh) Expiration Date
------------------------ ----------- ------------------- ---------------- ------------------
Collins M. Christensen 200,000 25% $0.75 5/1/03
Lewis A Humer, Jr. 200,000 38% $0.75 5/1/03
100,000 $1.50 2/21/05
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
There were no options exercised during the year ended July 31, 2000 by
executive officers.
Ten-Year Options/SAR Repricings
There was no repricing of options for the fiscal year ended July 31, 2000.
Directors Compensation
Outside Members of the Board of Directors receive compensation of $20,000
annually, payable monthly in advance. On January 2 of each year, all currently
serving Directors receive a grant of 2,500 shares of the Company's Common Stock.
In addition, outside directors receive $750 per meeting with the chair of a
committee receiving $1,000 per committee meeting.
1996-7 Key Employee's Incentive Stock Option Plan
The Company's 1996-7 Key Employee's Incentive Stock Option Plan ("1996-7
Plan") was approved by the Company's Board in December 1996 and ratified by the
stockholders in February 1998. A total of 755,000 shares were approved by the
stockholders for issuance under option agreements, subject to the 1996-7 Plan
The 1996-7 Plan permits the grant of stock options to employees, officers,
directors, consultants and advisors. The purpose of the 1996-7 Plan is to
9
attract, motivate and retain key personnel who can contribute materially to the
Corporation's growth and success and to give personnel a greater personal stake
in the success of the Company.
The 1998 Incentive Stock Option Plan
The Company's 1998 Incentive Stock Option Plan (the "1998 Plan") was
approved by the Company's Board on September 3, 1997 and approved by the
stockholders in February 1998. A total of 965,000 shares were approved by the
stockholders for issuance under option agreements, subject to the 1998 Plan.
The 1998 Plan permits the grant of stock options to employees, officers and
certain directors. The purpose of the Plan is to attract the best available
personnel to the Company and to give employees, officers and certain directors
of the Company a greater personal stake in the success of the Company.
Principal Stockholders
The following table sets forth certain information as of December 10, 2000,
with respect to the beneficial ownership of the Company's Common Stock for each
person known to the Company to own beneficially 5% or more of the outstanding
shares of the Company's Common Stock. The table on page 2 of this Proxy
Statement sets forth, as of February 1, 2001, certain information with respect
to the beneficial ownership of shares of the Company's Common Stock by all
directors and executive officers of the Company individually, and all directors
and executive officers of the Company as a group. As of December 10, 2000, there
were 16,170,065 shares of common stock issued and outstanding.
Name and Address of Stockholder Number of Shares Percent
- ------------------------------- ---------------- -------
Collins M. Christensen 2,511,580 14%
Certain Related Transactions
In 1998 and 1999, the Company had transactions that related to Terry Neal,
the Company's founder and its former Chairman and Chief Executive Officer, as
outlined below. The Company has not engaged in any transactions with Mr. Neal
since his termination.
On March 30, 1998, the Company agreed to issue 250,000 shares of
unregistered common stock in exchange for the retirement of outstanding warrants
to purchase 1,011,000 shares of common stock. The warrants to be retired had
exercise prices ranging from $3.50 per share to $6.12 per share, with expiration
dates ranging from June 29, 2000 to April 11, 2006. The warrants were held by
Wycliff Fund Inc. ("Wycliff") and The Bailey Mutual Fund, Inc. ("Bailey"). Mr.
Terry Neal, the founder of the Company and the former Chairman and Chief
Executive Officer represented Wycliff and Bailey in this transaction. The
transaction was completed and the shares of common stock were issued on July 22,
1999. As a result of this transaction, $1,000,000 was charged to expense in the
Company's financial statements.
In July 1999, when the Company needed working capital, Vern O. Curtis, who
was at that time Chairman of the Board of Directors, and Collins M. Christensen,
who is President, CEO and a Director of the Company, loaned a total of $480,000
to the Company. The transactions were structured as convertible notes bearing
interest at 10% per annum. The Company paid those notes in full together with
accrued interest in January 2000. The conversion privilege was never exercised.
10
Compliance with Section 16 of the Securities Exchange Act of 1934
Based solely upon a review of Forms 3, 4 and 5 delivered to the Company as
filed with the Securities and Exchange Commission ("Commission"), all directors
and officers of the Company failed to timely file all required reports pursuant
to Section 16(a) of the Securities Exchange Act of 1934. The failure to file
reports resulted from changes in management, changes in outside legal counsel
and relocation of corporate operations to California. The Company has been
informed that all required reports will be filed prior to the Annual Meeting,
and the Company has instituted new procedures to insure timely filing in the
future, including engagement of new securities counsel.
OTHER MATTERS
Relationship with Independent Auditors
The Company has retained the firm of Ehrhardt, Keefe, Steiner & Hottman
PC as independent auditors of the Company for the fiscal year ending July 31,
2000. The Company expects a representative of Ehrhardt, Keefe, Steiner & Hottman
PC to be present at the Annual Meeting of Stockholders and the representative
will have an opportunity to make a statement if he desires to do so. Such
representative will be available to respond to appropriate questions.
Audit Fees
The aggregate fees billed for professional services rendered for the audit
of the Company's annual financial statements and the review of the financial
statements included in the Company's quarterly reports on Form 10-Q for the
fiscal year ended July 30, 2000 were $93,971.
All Other Fees
The aggregate fees billed for all other professional services rendered
by the Company's independent auditor, including tax services, for the fiscal
year ended July 30, 2000 were $345,690.
Transfer Agent
OTR, Inc., located at 317 SW Alder St., Suite 1120, Portland, Oregon,
97264, phone (503) 235-0375, is the transfer agent for the Company's Common
Stock.
Action on Other Matters
The Board of Directors of the Company knows of no other matters that may,
or are likely, to be presented at the Meeting. However, in such event, the
persons named in the enclosed form of proxy will vote such proxy in accordance
with their best judgement in such matters pursuant to discretionary authority
granted in the proxy.
Stockholder Proposals
Stockholder proposals to be included in the Company's Proxy Statement and
Proxy for its 2002 Annual Meeting must meet the requirements of Rule 14a-8
promulgated by the Commission and must be received by the Company no later than
July 10, 2001.
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Additional Information
Each Stockholder has received the Company's 2000 Annual Report containing
the Company's 2000 audited financial statements, including the report of its
independent public accountants. Upon receipt of a written request, the Company
will furnish to any Stockholder, without charge, a copy of the Company's 2000
Form 10-K and Form 10-K/A as filed with the SEC under the Securities Exchange
Act of 1934 (including the financial statements and the schedules thereto and a
list briefly describing the exhibits thereto). Stockholders should direct any
request to the ITEX Corporation, 3400 Cottage Way, Sacramento, California 95825,
Attention: Investor Relations.
ITEX CORPORATION
By Order of the Board of Directors
ROBERT I. HARRIS
----------------------------------
Robert I. Harris,
Secretary
Sacramento, California
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ITEX CORPORATION
3400 Cottage Way, Sacramento, California 95825
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Messrs. Collins M. Christensen and Lewis A.
Humer, Jr., and each of them, as proxies with the power to appoint his or their
successor, and hereby authorizes them to represent and to vote, as designated
below, all the shares of common stock of ITEX Corporation (the "Company"), held
of record by the undersigned on February 26, 2001, at the Annual Meeting of
Stockholders to be held on April 4, 2001, at 9:00 a.m. (PST), at the Howard
Johnson Hotel, 3343 Bradshaw Road, Sacramento, California, 95827, and at any and
all adjournments thereof.
1. Election of Directors.
FOR all nominees listed below ____ WITHOUT AUTHORITY ____
(except as marked to the contrary below) (to vote for all Nominees below)
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.)
Collins M. Christensen William Bronson, M.D. Daniela C. Calvitti
Jay Abraham Jeffery L. Elder Gerry Harris
Lewis A. Humer, Jr. John L. Dethman
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting, including adjournment.
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 the nominees and FOR Proposal Two and in the discretion of the
proxies for any other matter that is presented.
Please sign exactly as your name appears on the share certificates. When shares
are held by joint tenants, both should sign. When signing as attorney, 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.
------------------------- ----------------------------
Name (Print) Name (Print) (if held jointly)
Dated: ------------------------- ----------------------------
Signature Signature (if held jointly)
------------------------- ----------------------------
------------------------- ----------------------------
(Address) (Address)
Common Stock
I will ___ will not ___ attend the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.