CHANGE IN CONTROL AGREEMENT
THIS
CHANGE IN CONTROL AGREEMENT (“Agreement”) is entered into as of ________, 2008,
by and between __________ (“Employee”), and ITEX, Corporation
(“ITEX”).
RECITALS
A.
Employee is a valued member of ITEX’s team whose continued diligence and best
efforts in the execution of Employee’s duties ITEX wishes to incentivize and
encourage.
B.
ITEX
has determined that one measure to achieve this end is to provide for Employee’s
financial security in the form of a severance payment and other benefits in
the
event of the termination of Employee’s employment under certain
conditions.
C.
ITEX
and Employee desire to memorialize the terms and conditions of such severance
as
set forth herein.
AGREEMENT
NOW,
THEREFORE, the parties agree as follows:
1.
Definitions.
As used
herein, the following terms shall have the described meanings:
(a)
“Award” means the grant of ITEX Corporation restricted stock, stock incentive or
an option to purchase ITEX Corporation common stock to Employee under the
Plan.
(b)
“Award Agreement” means a written agreement between ITEX and Employee relating
to an Award under the Plan.
(c)
“Cause” means willful, reckless or negligent misconduct with respect to, or that
is harmful to, ITEX or any of its officers, directors, employees, clients,
partners, insurers, or other third parties, including without limitation, acts
of dishonesty, fraud, unauthorized use or disclosure of confidential information
or trade secrets or other misconduct, in each case as determined by ITEX in
its
sole and absolute discretion.
(d)
“Change in Control” shall mean any of the following:
(i)
a
consolidation or merger of ITEX pursuant to which:
(1)
ITEX
is not the continuing or surviving corporation, (2) the shareholders of the
target entity acquire as a consequence of such consolidation or merger
securities of ITEX representing more than 50% of the combined voting power
of
ITEX’s then outstanding securities, or (3) shares of ITEX’s outstanding capital
stock are converted into cash, securities or other property, in each instance
other than a consolidation or merger of ITEX in which ITEX’s shareholders
immediately prior to the consolidation or merger have the same proportionate
ownership of voting capital stock of the surviving corporation immediately
after
the consolidation or merger; or
(ii)
the
sale, transfer or other disposition of all or substantially all of the assets
of
ITEX; or
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(iii) the
individuals who are incumbent directors as of the date of this Agreement cease
for any reason to constitute a majority of the members of the Board;
(iv)
the
closing of a transaction in which any person has either acquired outright or
acquired the right to acquire, beneficial ownership of securities of ITEX
representing more than 50% of the combined voting power of ITEX’s then
outstanding securities, and for this purpose the terms “person” and “beneficial
ownership” shall have the meanings provided in Section 13(d) of the Securities
Exchange Act of 1934, as amended, or related rules promulgated by the Securities
and Exchange Commission; or
(v)
a
reduction in force by ITEX that includes Employee’s position that is made a
formal or informal prior condition of, or occurs within one calendar year
following, a transaction described in Sections 1(d)(i) - (iv) hereof;
or
(vi)
the
voluntary or involuntary closure and winding up of ITEX’s business and related
affairs.
(e)
“Good
Reason” means the occurrence of any of the following events or conditions
without Employee’s written consent:
(i)
ITEX
is subject to a Change in Control and thereafter there occurs a change in
Employee’s responsibilities that from a reasonable and objective standard
represent a substantial reduction in Employee’s responsibilities as in effect
immediately prior thereto, and which is not remedied promptly after receipt
of
written notice thereof from Employee; or
(ii)
ITEX
is subject to a Change of Control and thereafter requires Employee to be based
at any place outside a 50-mile radius of his place of employment prior to such
Change in Control, except for reasonably required travel on ITEX’S business that
is not materially greater than such travel requirements prior to the change
in
control.
(f)
“Plan” means the ITEX Corporation 2004 Equity Incentive Plan.
2.
Term
and Termination.
ITEX
employment of Employee is on an “at will” basis and nothing in this Agreement
shall be interpreted or construed as a promise or contract of employment for
a
particular term or period. ITEX may terminate Employee’s employment at any time
with or without Cause and without notice. Employee may terminate his employment
at any time with or without Cause upon ten (10) business days prior written
notice to ITEX; provided that no such notice must be given, but in such event
Employee’s then accrued but unused vacation pay, or if accrued vacation pay is
insufficient, the severance payment herein contemplated, shall be reduced by
a
number equal to the difference between the required notice period and the actual
number of business days notice given by Employee, if any. For purposes of the
foregoing notice deficit provision, a business day shall equal an eight (8)
hour
accrual.
3.
Severance.
(a)
Termination
by ITEX.
Upon
termination of Employee’s employment by ITEX in the event of a Change in Control
within one (1) year from the Change in Control event, ITEX shall continue to
pay
Employee his base salary for the period described in Section 3(c) hereof;
provided,
however,
that no
such severance shall be due in the event such termination is for Cause. For
purposes of Sections 3(a) and (b), the base salary rate used to calculate the
severance payment herein contemplated shall be the highest rate of such base
salary received by Employee in the immediately preceding 12 month
period.
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(b)
Termination
by Employee.
Upon
Employee’s termination of his employment for Good Reason within one (1) year
from the Change in Control event, ITEX shall continue to pay Employee his base
salary for the period described in Section 3(c) hereof.
(c)
Severance
Period.
Employee shall be entitled to receive his then base salary as severance for
a
period of _______ (____) months (“Severance Period”) from the effective date of
termination, which Severance Period is subject to reduction as set forth below
in this section. Such severance shall be paid in substantially equal increments
at normal semi-monthly payroll intervals, or at such intervals and amounts
as
the parties may otherwise agree. Benefits otherwise receivable by the Employee
pursuant to this Section 3(c) shall be reduced if Employee has been
continuously employed by ITEX during the first six months after the Change
in
Control event, by reducing the Severance Period by one month for each full
month
of ITEX employment completed after the initial six-month period.
(d)
Medical
Benefits.
At
Employee’s election, Employee may continue to participate in ITEX’s medical and
dental benefit plans governed by the Comprehensive Omnibus Budget Reconciliation
Act (“COBRA”) for the time period provided in COBRA. ITEX shall pay the cost of
such coverage at the level in effect for Employee as of the effective date
of
termination during the Severance Period. Employee shall pay the entire cost
of
such coverage thereafter. Benefits otherwise receivable by the Employee pursuant
to this Section 3(d) shall terminate when medical benefits are received by
or made available to the Employee by another employer during the Severance
Period (and Employee agrees to notify the Company promptly if he or she becomes
an employee of another employer).
4. Release
Agreement. Employee
acknowledges and agrees that the Company’s payment of the severance compensation
pursuant to Sections 3 and 4 of this Agreement shall be deemed to constitute
a
full settlement and discharge of any and all obligations of the Company to
Employee arising out of this Agreement, Employee’s employment with the Company
or the termination of Employee’s employment with the Company, except for any
vested rights Employee may have under any insurance, stock option or equity
compensation plan or any other employee benefit plans sponsored by the
Company. Employee further acknowledges and agrees that as a condition
to receiving any of the severance compensation pursuant to Section 3 or 4
of this Agreement, Employee will execute and deliver to the Company a release
agreement in form and substance reasonably satisfactory to the Company pursuant
to which Employee will release and waive any and all claims against the Company
(and its officers, directors, shareholders, employees and representatives)
arising out of this Agreement, Employee’s employment with the Company, and the
termination of Employee’s employment with the Company (as applicable under the
relevant Section above), including without limitation claims under all federal,
state and local laws; provided, however, that such Release Agreement shall
not
affect or relinquish (a) any vested rights Employee may have under any
insurance, stock option or equity compensation plan, or other employee benefit
plan sponsored by the Company, (b) any claims for reimbursement of business
expenses incurred prior to the employment termination date, or (c) any
rights to severance compensation under Section 3 or 4 of this
Agreement.
5. Miscellaneous.
5.1
Waiver.
No
waiver of any provision of this Agreement shall be valid unless in writing
signed by the waiving party, nor shall any waiver or failure to enforce any
right in one instance constitute or be deemed a continuing waiver of that right
or of any other right under this Agreement in any other instance.
5.2
Assignment
Prohibited.
Employee may not assign any of his rights nor delegate any of his duties
hereunder. ITEX may assign this Agreement and delegate its duties hereunder
in
connection with any merger, consolidation or sale of assets, or to any of its
affiliates at any time owned by, or under common
ownership with, ITEX. The rights and obligations of the parties shall bind
and
inure to the benefit of their respective, successors, permitted assigns, heirs
and personal representatives.
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5.3
Choice
of Law and Jurisdiction.
ITEX
and Employee intend this Agreement to be governed by and enforced to the
greatest extent permitted by the laws of the State of Washington without regard
to its conflict of law principles to the contrary. The parties agree to submit
to the personal jurisdiction of the state and federal courts sitting in King
County, Washington, and agree that any action, suit or proceeding in connection
with this Agreement or concerning any aspect of Employee’s employment shall be
brought in such courts to the exclusion of all other forums.
5.4
Severability.
If any
provision of this Agreement is held to be invalid or unenforceable to any
extent, it shall nevertheless be enforced to the fullest extent allowed by
law
in that and other contexts, and the validity and force of the remainder of
this
Agreement shall not be affected.
5.5
No
Mitigation.
The
Company agrees that if the Employee’s employment with the Company terminates
during the Term of this Agreement, the Employee is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the
Employee by the Company pursuant to this Agreement. Further, except as expressly
provided otherwise herein, the amount of any payment or benefit provided for
in
this Agreement (other than Section 3(d)) shall not be reduced by any
compensation earned by the Employee as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Employee to the Company, or otherwise.
5.6
Other
Amounts Due.
Except
as expressly provided otherwise herein, the payments and benefits provided
for
in this Agreement are in addition to and not in lieu of amounts and benefits
that are earned by the Employee prior to his Termination of Employment. The
Company shall pay the Employee any compensation earned through the Employment
Termination Date but not previously paid the Employee. Further the Employee
shall be entitled to any other amounts or benefits due the Employee in
accordance with any contract, plan, program or policy of the Company or any
of
its affiliates. Amounts that the Employee is entitled to receive under any
plan,
program, contract or policy of the Company or any of its affiliates at or
subsequent to the Employee’s Termination of Employment shall be payable or
otherwise provided in accordance with such plan, program, contract or policy,
except as expressly modified herein.
5.7
Notices.
All
notices required or permitted hereunder shall be given in writing and delivered
in person, transmitted by facsimile, delivered via overnight courier or sent
by
registered or certified mail, postage prepaid and return receipt requested,
to
the parties at their respective addresses and facsimile numbers, or to such
other address/number as a party may subsequently specify in writing. Notice
shall be deemed effective upon the earlier of actual receipt, which if by
facsimile shall be deemed conclusively determined by electronic confirmation
of
delivery, the next day following deposit with a national commercial delivery
service if sent by overnight courier, or the third business day after the date
on which said notice was sent by any other method described above.
5.8
Complete
Agreement.
This
Agreement comprises the entire agreement between the parties. It may be changed
only by further written agreement, signed by both parties. It supersedes and
merges within it all prior agreements or understandings between the parties,
whether written or oral. In interpreting or construing this Agreement, the
fact
that one or the other of the parties may have drafted this Agreement or any
provision shall not be given any weight or relevance.
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5.9
Attorney’s
Fees and Costs.
The
prevailing party in any claim, suit or proceeding brought to interpret or
enforce the terms of this Agreement shall be entitled to an award of its
attorney’s fees and costs incurred in every stage of such claim, suit or
proceeding, including appeal.
Signed
by
the parties as of the date first written above.
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ITEX
CORPORATION
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EMPLOYEE
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By:
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Xxxxxx
Xxxxx
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Chief
Executive Officer
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