ITEX CORPORATION
EMPLOYMENT AGREEMENT
for
Xxxxxxx X. Xxxxxxxx
ITEX Corporation ("Employer") and Xxxxxxx X. Xxxxxxxx ("Employee") agree as
follows:
1. Employment. Employer employs Employee and Employee accepts employment with
Employer on the terms and conditions set forth in this Employment Agreement
("Agreement").
2. Position; Scope of Employment. Employee shall have the position of Chief
Financial Officer for Employer with all appropriate duties and authority of the
position. As Chief Financial Officer, Employee shall report directly to
Employer's President and Chief Executive Officer.
2.1. Entire Time and Effort. Employee shall devote Employee's full working
time, attention, abilities, skill, labor and efforts to the performance of her
employment. Employee shall not, except as provided below, directly or
indirectly, alone or as a member of a partnership or other organizational
entity, or as an officer of any corporation (other than any which are owned by
or affiliated with Employer) (i) be substantially engaged in or concerned with
any other commercial duties or pursuits, (ii) engage in any other business
activity that will interfere with the performance of Employee's duties under
this Agreement, except with the prior written consent of Employer, or (iii) join
the board of directors of any other corporation. Employer acknowledges that
Employee is currently involved in certain existing partnerships, family trusts
and/or other organizations consisting of ____None_________ ("Organizations").
These Organizations do not involve a substantial amount of Employee's time.
Employee agrees that he will terminate his relationships with such
Organizations, within 30 days of formal written notice by Employer, if it is
determined by Employer that such involvement adversely effects Employee's
ability to perform his responsibilities under this Agreement.
2.2. Rules and Regulations. Employee agrees to observe and comply with
Employer's rules and regulations as provided by Employer and as may be amended
from time to time by Employer and will carry out and perform faithfully such
orders, directions and policies of Employer. To the extent any provision of this
Agreement is contrary to an Employer rule or regulation, as such may be amended
from time to time, the terms of this Agreement shall control.
2.3. Limitations Upon Authority to Bind Employer. Employee shall not engage
in any of the following actions on behalf of Employer without the prior approval
of Employer: (i) borrow or obtain credit in any amount or execute any guaranty,
except for items purchased from vendors in the ordinary course of Employer's
operations; (ii) expend funds for capital equipment in excess of expenditures
expressly budgeted by Employer, if applicable, or in the event not budgeted, not
to exceed the amounts set forth in subparagraph (iii); (iii) sell or transfer
capital assets exceeding Ten Thousand Dollars ($10,000) in market value in any
single transaction or exceeding One-Hundred Thousand Dollars ($100,000) in the
aggregate during any one fiscal year; (iv) execute any lease for real or
personal property; or (v) exercise any authority or control over the management
of any employee welfare or pension benefit plan maintained by Employer or over
the disposition of the assets of any such plan. Employee shall also adhere to
approved Employer policy, as established by the Audit Committee of Employer's
Board of Director regarding trade transactions.
3. Term. The term of this Agreement shall be for a period of two (2) years which
shall commence on December 14, 2001 and end on December 14, 2003 unless
terminated earlier as provided below in section 5.
4. Compensation. Employer shall pay or provide compensation to Employee as set
forth in this section 4. All compensation of every description shall be subject
to the customary withholding tax and other employment taxes as required with
respect to compensation paid to an employee.
4.1. Salary and Bonus. Employer shall pay Employee an annual salary of One
Hundred Thirty-Two Thousand dollars ($132,000) per year commencing on November
16, 2001 ("Base Salary"). Employee's Base Salary shall be payable in accordance
with Employer's regular pay schedule, but not less frequently than twice per
month. Employee shall also be entitled to participate in bonus program(s) as may
be determined from time to time by Employer's Board of Directors.
4.2. Annual Review. On the date of the Employer's annual meeting of
stockholders, or within thirty (30) days thereafter, and on each subsequent
annual meeting of stockholders during the term of this Agreement, Employer shall
review the previous year's performance of Employee for the purpose of making
reasonable increases to Employee's Base Salary; provided that Employer shall not
be required to increase Employee's Base Salary, but may do so at its discretion.
4.3. Stock Option Grants. In addition to Base Salary provided for in
sections 4.1 and 4.2, Employee is eligible to receive an award of stock options
as may be determined from time to time by Employer's Compensation Committee
which consists of disinterested directors.
4.4. Vacation and Sick Leave. Employee shall be entitled to accrue up to
three (3) weeks vacation annually. Employee shall not be entitled to carry over
more that three (3) weeks of accrued vacation into the following calendar year,
with the exception of any accrued vacation earned as of the effective date of
this agreement, provided that the total vacation accrued for any calendar year,
including carry over from prior calendar years, may not exceed six (6) weeks..
Employee shall be entitled to sick leave in accordance with Employer's sick
leave policy, as amended from time to time.
4.5. Other Fringe Benefits. Employee shall participate in all of Employer's
fringe benefit programs in substantially the same manner and to substantially
the same extent as other similar employees of Employer, excluding only those
benefits expressly modified by the terms hereof and such other benefits as may
be approved by Employer's Board of Directors.
4.6. Expenses. Employee shall be reimbursed for her reasonable business
expenses; subject to the presentation of evidence of such expenses in accordance
with established policies adopted by Employer from time to time.
4.7. Compensation From Other Sources. Any proceeds that Employee shall
receive by virtue of qualifying for disability insurance, disability benefits,
or health or accident insurance shall belong to Employee. Employee shall not be
paid Base Salary in any period in which she receives benefits as determined and
paid under Employer's long-term disability policy. Benefits paid to Employee
under Employer's short-term disability policy shall reduce, by the same amount,
Base Salary payable to Employee for such period.
4.8 Trade Dollar Compensation. Employee shall receive trade dollar
compensation and may receive trade dollar advances in accordance with
established Company policies and as approved by the Company's Board of
Directors.
5. Early Termination. Employee's employment with Employer may be terminated
prior to the expiration of the term of this Agreement, upon any of the following
events: (i) the mutual agreement of Employer and Employee in writing; (ii) the
disability of Employee, which shall, for the purposes of this Agreement, mean
Employee's inability, for a period exceeding three (3) months as determined by a
qualified physician, and which qualifies Employee for benefits under Employer's
long-term disability policy, to perform in the usual manner the material duties
usually and customarily pertaining to Employee's long-term employment; (iii)
Employee's death; (iv) notice of termination by Employer for cause; (v)
Employer's cessation of business; (vi) written notice of termination by Employer
without cause upon fourteen (14) days' notice, subject to the provisions for
compensation upon early termination in section 5.3(b); or (vii) upon a Change in
Control (as defined below) of Employer (as defined in and under the
circumstances described in section 5.3(d)).
5.1. Definition of Cause. For purposes of this Agreement, any of the
following shall constitute cause: (i) willful or habitual breach of Employee's
duties; (ii) fraud or intentional material misrepresentation by Employee to
Employer or any others; (iii) theft or conversion by Employee; (iv) unauthorized
disclosure or other use of Employer's trade secrets, customer lists or
confidential information; (v) material breach of any of the provisions of this
Agreement; (vi) habitual misuse of alcohol or any nonprescribed drug or
intoxicant; (vii) conviction of a felony; or (viii) willful and material
violations of any other standards of conduct as set forth in Employer's employee
manual or as determined by the Company's Board of Directors. Employee will be
deemed to be "constructively terminated" if (i) Employee's responsibilities and
authority, benefits, salary or other compensation or working conditions are
materially reduced, or (ii) the Company requires that Employee relocate from the
Sacramento, California area, except in such instances where Employee agrees to
relocate. In the event Employee is constructively terminated Employee will be
deemed to be terminated without cause.
5.2. Damages. If Employer terminates Employee for cause, Employer shall be
entitled to damages and all other remedies to which Employer may otherwise be
entitled.
5.3. Compensation Upon Early Termination.
(a) If Employee resigns during the term of this Agreement, or if this
Agreement is terminated by Employer for cause thereafter, Employee shall be
entitled to all accrued but unpaid Base Salary and vacation pay accrued through
the date of delivery of notice of termination.
(b) If Employee is terminated without cause and not subject to the
provisions of paragraph 5.5(d), Employer shall pay to Employee as liquidated
damages and in lieu of any and all other claims which Employee may have against
Employer the greater of (i) Employee's annual base salary excluding any amounts
for benefits; or (ii) an amount equal to the then current per month Base Salary
multiplied by the number of calendar months remaining of the term of this
Agreement. Employer's payment pursuant to this subparagraph shall fully and
completely discharge any and all obligations of Employer to Employee arising out
of or related to this Agreement and shall constitute liquidated damages in lieu
of any and all claims which Employee may have against Employer not including any
obligation under the workers' compensation laws including Employer's liability
provisions. Additionally, any Stock Option Grants awarded under paragraph 4.3
which have not vested shall become fully vested at the time of termination
without cause.
(c) If Employee's employment is terminated as a result of death or total
disability, Employee shall be entitled to accrued but unpaid Base Salary to date
of termination. The date of termination shall be deemed the date of death or, in
the event of disability, the date Employee qualified for total disability
payments under Employer's long-term disability plan.
(d) If Employee's employment is terminated within one year of a Change in
Control of Employer, Employee shall be entitled to (i) a lump-sum payment equal
to greater of the Employee's Base Salary at the time or an amount equal to the
then current per month Base Salary multiplied by the number of calendar months
remaining of the term of this Agreement; (ii) any Stock Option Grants awarded
under paragraph 4.3 which have not vested shall become fully vested at the time
of termination under this paragraph; and (iii) any trade dollar advances made to
the Employee under paragraph 4.8 shall be forgiven. A "Change in Control" shall
mean an event involving one transaction or a related series of transactions in
which one of the following occurs: (i) Employer issues securities equal to 50%
or more of Employer's issued and outstanding voting securities, determined as a
single class, to any individual, firm, partnership or other entity, including a
"group" within the meaning of section 13(d)(3) of the Securities Exchange Act of
1934; (ii) Employer issues securities equal to 50% or more of the issued and
outstanding common stock of Employer in connection with a merger, consolidation
or other business combination; (iii) Employer is acquired in a merger or other
business combination transaction in which Employer is not the surviving company;
or (iv) all or substantially all of Employer's assets are sold or transferred.
For purposes of this Section 5.5(d), "termination" shall include constructive
termination, which shall be defined as i) Employee's responsibilities and
authority, benefits, salary or other compensation or working conditions are
materially reduced, or (ii) the Company requires that Employee relocate from the
Sacramento, California area, except in such instances where Employee agrees to
relocate. . (e)) Except as expressly provided in paragraph (d) above, all
compensation described in this section 5.3 shall be due and payable in
installments at least bi-weekly or at the time of the delivery of notice of
termination, at Employer's discretion.
6. Confidentiality. Employee shall not, at any time during the period of
employment or thereafter, make use of or disclose, directly or indirectly, to
any person any (i) trade secret or other confidential or secret information of
the Company or any of its subsidiaries, affiliates or its customers or brokers
or (ii) other technical, business, proprietary or financial information of the
Company or of any of its subsidiaries, affiliates or its customers or brokers
not available to the public generally or to the competitors of the Company, in
each case that Employee obtained such information as a result of Employee's
employment by the Company or any of its subsidiaries ("Confidential
Information") , except to the extent that such Confidential Information (a) is
used by Employee during the Employment Period in the proper performance of
Employee's duties pursuant to this Agreement, (b) becomes a matter of public
record or is published in a newspaper, magazine or other periodical available to
the general public than as a result of any act or omission of Employee outside
the proper performance of his duties pursuant to this Agreement, or (c) is
required to be disclosed by any law, regulation or order of any court or
regulatory commission, department or agency. Promptly following the termination
of Employee under the provisions of this Agreement, Employee shall surrender to
the Company all records, memoranda, notes, plans, reports, computer tapes and
software and other documents and data which constitute Confidential Information
which Employee may then possess or have under Employee's control (together with
all copies thereof).
7. Unfair Competition. During the term of this Agreement, Employee shall not,
directly or indirectly, whether as a partner, employee, creditor, stockholder,
or otherwise, promote, participate, or engage in any activity or other business
which is competitive in any way with Employer's business. The obligation of the
Employee not to compete with the Employer shall not prohibit the Employee from
owning or purchasing any corporate securities that are regularly traded on a
recognized stock exchange or on over-the-counter market.
8. Inventions; Ownership Rights. Employee agrees that all ideas, techniques,
inventions, systems, formulas, methods, discoveries, technical information,
programs, prototypes and similar developments ("Developments") developed,
created, discovered, made, written or obtained by Employee in the course of or
as a result, directly or indirectly, of performance of her duties hereunder, and
all related intellectual property, copyrights, patent rights, trade secrets and
other forms of protection thereof, shall be and remain the property of Employer.
Employee agrees to execute or cause to be executed such assignments and
applications, registrations and other documents and to take such other action as
may be requested by Employer to enable Employer to protect its rights to any
such Developments. If Employer requires Employee's assistance under this section
8.1 after termination of this Agreement, Employee shall be compensated for her
time actually spent in providing such assistance at an hourly rate equivalent to
the prevailing rate for such services and as agreed upon by the parties.
9. Arbitration. Any disputes regarding the rights or obligations of the parties
under this Agreement shall be conclusively determined by binding arbitration.
Any controversy or claim arising out of or relating to this contract, or the
breach thereof, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
10. Actions Contrary to Law. Nothing contained in this Agreement shall be
construed to require the commission of any act contrary to law, and whenever
there is any conflict between any provision of this Agreement and any
statute, law, ordinance, or regulation, contrary to which the parties have no
legal right to contract, then the latter shall prevail; but in such event,
the provisions of this Agreement so affected shall be curtailed and limited
only to the extent necessary to bring it within legal requirements.
11. Miscellaneous.
11.1. Notices. All notices and demands of every kind shall be personally
delivered or sent by first class mail to the parties at the addresses appearing
below or at such other addresses as either party may designate in writing,
delivered or mailed in accordance with the terms of this Agreement. Any such
notice or demand shall be effective immediately upon personal delivery or three
(3) days after deposit in the United States mail, as the case may be.
EMPLOYER: ITEX Corporation
0000 Xxxxxxx Xxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
EMPLOYEE: Xxxxxxx X. Xxxxxxxx
==================
11.2 Attorneys' Fees; Prejudgment Interest. If the services of an attorney
are required by any party to secure the performance hereof or otherwise upon the
breach or default of another party to this Agreement, or if any judicial remedy
or arbitration is necessary to enforce or interpret any provision of this
Agreement or the rights and duties of any person in relation thereto, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
other expenses, in addition to any other relief to which such party may be
entitled. Any award of damages following judicial remedy or arbitration as a
result of the breach of this Agreement or any of its provisions shall include an
award of prejudgment interest from the date of the breach at the maximum amount
of interest allowed by law.
11.3 Choice of Law, Jurisdiction, Venue. This Agreement is drafted to be
effective in the State of California, and shall be construed in accordance with
California law. The exclusive jurisdiction and venue of any legal action by
either party under this Agreement shall be the County of Sacramento, California.
11.4 Amendment, Waiver. No amendment or variation of the terms of this
Agreement shall be valid unless made in writing and signed by Employee and
Employer. A waiver of any term or condition of this Agreement shall not be
construed as a general waiver by Employer. Failure of either Employer or
Employee to enforce any provision or provisions of this Agreement shall not
waive any enforcement of any continuing breach of the same provision or
provisions or any breach of any provision or provisions of this Agreement.
11.5 Assignment; Succession. It is hereby agreed that Employee's rights and
obligations under this Agreement are personal and not assignable. This Agreement
contains the entire agreement and understanding between the parties to it and
shall be binding on and inure to the benefit of the heirs, personal
representatives, successors and assigns of the parties hereto.
11.6 Independent Covenants. All provisions herein concerning unfair
competition and confidentiality shall be deemed independent covenants and shall
be enforceable without regard to any breach by Employer unless such breach by
Employer is willful and egregious.
11.7 Entire Agreement. This document constitutes the entire agreement
between the parties, all oral agreements being merged herein, and supersedes all
prior representations. There are no representations, agreements, arrangements,
or understandings, oral or written, between or among the parties relating to the
subject matter of this Agreement that are not fully expressed herein.
11.8 Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement which can be given effect without the invalid provision shall continue
in full force and effect and shall in no way be impaired or invalidated.
11.9. Captions. All captions of sections and paragraphs in this Agreement
are for reference only and shall not be considered in construing this Agreement.
IN WITNESS WHEREOF, this agreement shall be effective as of the date first
written above.
EMPLOYER: ITEX Corporation
By:_______________________________________________
Xxxxxxx Xxxxx, Chairman of the Board
By:_______________________________________________
Xxxx Xxxxxxx, Chairman of the Compensation Committee
EMPLOYEE: By:______________________________________________
Xxxxxxx X. Xxxxxxxx
