Exhibit 10.4
AMENDED SETTLEMENT AGREEMENT
AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release (the "Agreement") is dated for
reference purposes this 20th day of June, 2003. The Parties agree as follows:
1. Parties. The Parties to this Agreement are as follows:
(a) Xxxxxxx Xxxxxxxxxxx, individually ("Xxxxxxxxxxx").
(b) ITEX Corporation, a Nevada corporation ("ITEX")
2. Definitions. As used in this Agreement, the following capitalized terms
have the following meanings:
(a) "Closing" has the meaning given it in paragraph 28 below.
3. Purpose. The Parties enter into this Agreement to settle all claims,
counterclaims and controversies between them that arise out of the
relationships between ITEX and Xxxxxxxxxxx including, without limitation,
the following:
- Xxxxxxxxxxx'x previous employment with the Company, the termination of that
employment, and all events through and including the date of this Agreement
- Certain transactions between the Company and Xxxxxxxxxxx, or actions taken
by Xxxxxxxxxxx, including without limitation the purchase and sale of
California Trade Exchange to ITEX, trade dollar usage, Xxxxxx Inc, Maxx
loan, bonuses, stock option grants, and salaries
- Xxxxxxxxxxx'x claims for reimbursement of personal expenses incurred on
behalf of ITEX
- Xxxxxxxxxxx'x claims for reimbursement of amounts previously spent on legal
and professional fees
- Trade dollar expenditures made by Xxxxxxxxxxx without authorization
- Trade dollar expenditures made by ITEX on behalf of Xxxxxxxxxxx without
authorization.
4. Consideration. ITEX shall allow Xxxxxxxxxxx to retain the cash and trade
dollar compensation paid or used during his term. Xxxxxxxxxxx'x options are
cancelled pursuant to this Agreement or the original stock option
agreement.
(a) ITEX shall continue to pay Xxxxxxxxxxx $5,000 per month for 18 months
beginning April 7, 2003 and each month thereafter on the first of each
month, for a total of $90,000 (the "Balance"). The Balance is payable
without interest, so long as monthly payments are made within 7 days
of the scheduled monthly payment date. If any payment is made after 7
days of the scheduled monthly payment date, interest shall accrue on
the unpaid Balance at the rate of 10% percent per annum until paid
from the date of the default. If payment defaults and payment is not
paid within 7 days of the scheduled date, the full amount of unpaid
principal will be due and payable, pursuant to attached Promissory
Note. ITEX shall have the privilege of prepaying the balance in whole
or in part, without penalty or premium at any time prior to default.
15
(b) ITEX will quit claim deed 20 lots located outside Montreal, Canada
from existing inventory with free and clear title. Xxxxxxxxxxx will
choose the lots from ITEX inventory. Xxxxxxxxxxx will pay any legal,
filing, title, recording or closing costs associated with lots. Lots
are sold `as-is' with respect to the physical condition of each lot.
ITEX will execute any and all documents necessary to transfer
ownership of the lots to Xxxxxxxxxxx or an entity designated by
Xxxxxxxxxxx to take title to the lots.
(c) Xxxxxxxxxxx acknowledges and agrees that he is not due any additional
shares, options or other compensation from ITEX in any form
whatsoever, other than what is stated here, including claims for
reimbursement of $28,000 in expenses incurred on behalf of ITEX and
claims for reimbursement of $60,000 in attorneys fees incurred in the
course of his being terminated as Chief Executive Officer of ITEX.
(d) Any and all ITEX trade accounts are closed and any balance due either
party is hereby revoked. Xxxxxxxxxxx is not allowed ITEX trade
accounts for two years, including any and all accounts in the name of
Collie, Xxxxxxx or Xxxx Xxxxxxxxxxx or any and all personal or
business accounts referenced to these individuals or their children
(e) Xxxxxxxxxxx will not sell more than 225,000 shares of the shares now
owned by Xxxxxxxxxxx, in the open market in any 30-day period.
Further, he will give written notice to ITEX or its assigns, of its
first right of refusal to purchase any or all of these shares offered
at the preceding 5-day trailing average closing price. ITEX will have
3 days to tender a cashier's check to Xxxxxxxxxxx. If it fails to make
timely tender, Xxxxxxxxxxx will be free to sell the shares, in
accordance with the provisions of Rule 144 or any other SEC rule. ITEX
will cooperate in the removal of the Rule 144 restriction from any
shares upon demand made after the expiration of six months from the
date of his resignation from the Board of Directors of ITEX.
Notwithstanding the above provisions, Xxxxxxxxxxx may sell an
unlimited number of shares in a private non-open market transaction of
the shares he presently owns, subject to compliance with Rule 144 and
any other SEC rule. However, Xxxxxxxxxxx must first give ITEX 3 days
written notice to tender a cashier's check to Xxxxxxxxxxx for the same
price and the same number of shares that Xxxxxxxxxxx has negotiated
for a private sale. The provisions of this paragraph will only be
operative for the 18-month period commencing with the execution of
this agreement. After the expiration of 18 months, Xxxxxxxxxxx will be
free to sell the shares subject to these restrictions at any time
without any notice to ITEX, in accordance with the provisions of Rule
144 or any other SEC rule. Nothing in this paragraph shall be
construed to limit Xxxxxxxxxxx'x right to buy and sell shares not
presently owned by him on the open market or otherwise, subject to SEC
rules. For purpose of the notices required of Xxxxxxxxxxx in this
paragraph, it will be sufficient written notice for Xxxxxxxxxxx to
provide e-mail notice addressed to both Xxxxxx Xxxxx at
xxxxxx@xxxxxxxxx.xxx, and Xxxxxxx Xxxxxxxxx at
xxxxxx@xxxxxxxxxxxxxxxx.xxx.
(f) Return of Personal Property. ITEX agrees that it will promptly, within
two (2) business days, return to Xxxxxxxxxxx any of his personal
property in its possession, including his wing back chairs.
5. Authority. Each of the Parties hereto represents and warrants that such
party has full authority to enter into each and every provision of this
agreement.
6. Fair Consideration. Each of the Parties hereto agree and stipulate that
this Agreement is entered into based upon the mutual benefits to be derived
and weighing the risks and costs of future litigation. In the event of the
bankruptcy or any insolvency proceeding of any party hereto, all Parties
will cooperate in providing to the appropriate court, receiver or trustee,
information regarding this settlement not subject to privilege.
7. Mutual Releases. ITEX hereby releases Xxxxxxxxxxx and Xxxxxxxxxxx hereby
releases ITEX from all Released Claims.
(a) "Released Claims" means any and all claims, demands, causes of action,
actions, rights, liabilities, contract obligations, damages, attorneys'
fees, costs, torts, suits, debts, sums of money, accountings, reckonings,
bills, covenants, controversies, agreements, promises, variances,
trespasses, extents and executions whatsoever, at law or in equity or
otherwise, whether direct or indirect, known or unknown, which the
releasing Parties now own or hold, or have at any time heretofore owned or
held, or may in the future own or hold, against the persons and entities
they are releasing or any of them, in any capacity, which both (i) are
related in any way, directly or indirectly, to Xxxxxxxxxxx'x relationship
or contact with ITEX and/or the Parties, and (ii) are or may be based upon
any facts, acts, omissions, conduct, purchases, representations, contracts,
agreements, events, causes or matters of any kind occurring or existing at
any time on or before the date of this Agreement.
(b) "Released Claims" includes, without limitation, all claims alleged or that
could have been alleged pursuant to paragraph 3 above, and all claims
related to or arising out of Xxxxxxxxxxx'x relationship as an employee,
consultant, board member, and stockholder of ITEX and any alleged promises
or wrongdoing by the Parties.
(c) Notwithstanding the foregoing, these releases shall not extend to any
claims that arise out of this Agreement, nor shall this release extend to
any claim Xxxxxxxxxxx and his wife Xxxx Xxxxxxxxxxx may have from the
non-payment of the obligation secured by real property owned by Xxxx
Xxxxxxxxxxx on Knightsbridge Lane. Furthermore, these releases shall not
extend to any claim for indemnity or contribution that Xxxxxxxxxxx may have
in the future arising from any suit or claim of third parties against
Xxxxxxxxxxx for any act or omission performed by him as an officer or
director of ITEX or California Trade Exchange.
(d) These releases extend to and inure to the benefit of the Parties hereto and
the following Additional Released Parties: all of the Parties' past and
present shareholders, officers, directors, agents, employees,
representatives, partners, attorneys, accountants, insurers, employee
benefit plans, parents, subsidiaries, affiliates, marital communities,
predecessors, successors, transferees, assigns, and related entities
thereof, and all past and present shareholders, officers, directors,
agents, employees, marital communities, representatives, partners,
attorneys and accountants of any of those persons and entities.
(e) These releases shall bind the Parties hereto and their respective heirs,
survivors, legatees, executors, personal representatives, receivers,
trustees, insurers, marital communities, successors, subrogees, transferees
and assigns.
(f) The Parties represent and warrant that they have full right, power and
authority to enter into these releases, that they own or have the right to
release each and all of the Released Claims that they purport to release,
and that they have not transferred any interest in any Released Claims to
any third party.
(g) The Parties represent, warrant and agree: (i) that they understand they are
releasing potentially unknown claims, except as provided in subparagraph
(c); (ii) that these releases are fairly and knowingly made; (iii) that
they are aware that they have limited knowledge with respect to certain of
the Released Claims; and (iv) that THE PARTIES SPECIFICALLY ALLOCATE THE
RISK OF ANY MISTAKE BY ANY PARTY IN ENTERING INTO THIS AGREEMENT TO THE
PARTY OR PARTIES WHO LATER CLAIM THEY WERE MISTAKEN.
(h) The Parties hereby waive any and all rights which they may have under or
pursuant to (i) the provisions of section 1542 of the Civil Code of the
State of California and/or (ii) the provisions of any other similar
statutory, regulatory or common law of any state, or of the United States.
Section 1542 of the Civil Code of the State of California provides:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor.
The Parties understand fully the statutory language of section 1542 of the
Civil Code of the State of California and, having been so apprised, nevertheless
release all unknown Released Claims as provided above.
Notwithstanding the provisions of section 1542 of the Civil Code of The
State of California, Xxxxxxxxxxx releases and discharges The Company (including
any predecessor, parent, subsidiaries, branches, and/or affiliates; and its or
their shareholders, officers, directors, agents, employees, attorneys,
successors, and assigns) from any and all claims, known or unknown, asserted or
not, arising from, by reason of, or related to, Xxxxxxxxxxx'x employment with
the Company, the termination of that employment, and all events through and
including the date of this Agreement. This release includes, but is not limited
to, any claim under any federal, state, or local law, or other authority,
including claims arising under any federal or California state statutes
pertaining to wages, conditions of employment, or discrimination in employment,
including the Civil Rights Act of 1991, the Age Discrimination in Employment Act
(29 U.S.C. ss. 621, et seq.) the Older Worker Benefit Protection Act, Title VII
of the Civil Rights Act of 1964, the Americans with Disabilities Act (42 U.S.C.
ss.12101), the Fair Labor Standards Act (29 U.S.C. ss.201, et seq.), the
California Fair Employment and Housing Act, and any applicable contract, tort,
or other common law theories under local, state, or federal law.
(i) THE PARTIES FULLY UNDERSTAND THAT THEY ARE GIVING UP ALL OF THEIR
RIGHTS AND CLAIMS OF ANY KIND AGAINST EACH OTHER, KNOWN OR UNKNOWN
EXCEPT AS OTHERWISE NOTED.
8. Extinguishment of Liability to Xxxxxxxxxxx Only. This Agreement is entered
into for the benefit of Xxxxxxxxxxx only and does not inure to the benefit
of any other person who may be jointly and severally responsible to ITEX.
This release is intended to reserve to ITEX or a right of action or of
contribution against any entity other than Xxxxxxxxxxx.
9. Confidential Information and Trade Secrets. Confidentiality is an essential
component of this Agreement. Xxxxxxxxxxx agrees that he will not discuss
the facts, terms or amount of this Agreement or any of the underlying
allegations of facts leading to this Agreement with any third party except
as may be required by law. Provided, however, that Xxxxxxxxxxx may disclose
the confidential information to his spouse, attorneys, accountant or tax
advisor if they agree to abide by the confidentiality provision of this
Agreement. Xxxxxxxxxxx further acknowledges that during the course of his
duties with the Company, he handled confidential information of the Company
and its affiliates. Xxxxxxxxxxx agrees he will retain in the strictest
confidence all confidential matters which relate to the Company or its
affiliates, including, without limitation, pricing lists, business plans,
financial projections and reports, business strategies, internal operating
procedures and other confidential business information from which the
Company derives an economic or competitive advantage or from which the
Company might derive such advantage in its business, whether or not labeled
"secret" or "confidential," and not to disclose directly or indirectly or
use by him in any way, either during the term of this Agreement or at any
time thereafter except as permitted by law. Xxxxxxxxxxx shall not disclose
to any others or take or use for Xxxxxxxxxxx'x own purposes or purposes of
any others at any time, any of the Company's trade secrets, including
without limitation, confidential information; customer lists; information
concerning current or any future and proposed work, services or products;
the fact that any such work, services or products are planned, under
consideration, or in production, as well as any description thereof,
computer programs, computer software, or any other definition of a trade
secret under California or federal law. Xxxxxxxxxxx agrees that these
restrictions shall also apply to (i) trade secrets belonging to third
parties in the Company's possession and (ii) trade secrets, if any,
conceived, originated, discovered or developed by Xxxxxxxxxxx during the
term of his employment.
10. No Disparagement. The Parties and their employees, agents and
representatives shall refrain from disparaging each other or each other's
businesses or any of its agents, officers, directors or other employees.
11. Non-Interference; No Solicitation. Xxxxxxxxxxx agrees not to interfere with
any of the Company's contractual obligations with others. Furthermore,
Xxxxxxxxxxx agrees during a period of two years after the date of this
Agreement, he shall not, without the Company's express written consent, on
his behalf or on behalf of another: (i) directly or indirectly solicit the
business of any client, customer, creditor or licensee of the Company, or
(ii) hire employees of the Company, other than clerical employees, in any
location where the Company does business. Xxxxxxxxxxx acknowledges that
this Paragraph 11 is a reasonable and necessary measure deigned to protect
the proprietary information and goodwill of the Company.
12. Notice of Default and Enforcement. This Agreement shall not be filed with
any court to enforce its terms except as provided below. In the event any
party, acting in good faith, believes another party has violated the terms
of this Agreement, the aggrieved party shall give the believed offending
party notice of the alleged violation by sending a detailed written
statement of the same to the attorney for the offending party by certified
mail, return receipt requested. This notice is intended to invite a
resolution by the Parties of any dispute prior to the institution of
litigation. For purposes of this paragraph, the identities and addresses of
the Parties' or their attorneys are as set out in the following paragraph.
The identity or address of the attorney for any party may be changed for
purposes of this paragraph by written notice to the attorney for the other
party, sent certified mail, return receipt requested.
13. Notices. All notices, requests, demands and other communications called for
or contemplated by this Agreement shall be in writing, and shall be deemed
to have been duly given by mailing the same by first-class mail, postage
prepaid; by delivering the same by hand; or by sending the same by telex or
telecopy, to the following addresses, or to such other addresses as the
Parties may designate by written notice in the manner aforesaid, provided
that communications that are mailed shall not be deemed to have been given
until three business days after mailing:
To Xxxxxxxxxxx:
Xxxxxxx Xxxxxxxxxxx,
0000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
With copy to xxxxxx@xxxxxxxx.xxx
And to his attorney:
Xxxxxx X. Xxxxxx, Esq.
0000 Xxxxxxx Xxx
Xxxxxxxxxx, XX 00000
With copy to xxxxxx@xxxxx.xxx
To ITEX:
ITEX Corporation
c/o Xxxxx Xxxxx
0000 Xxxxxxx Xxx
Xxxxxxxxxx, XX 00000
14. Authority. The Parties each represent and warrant that they have full power
and actual authority to enter into this Agreement and to carry out all
actions required of them by this Agreement. All persons executing this
Agreement in representative capacities represent and warrant that they have
full power and authority to bind their respective corporations,
partnerships and/or marital communities.
15. No Admission of Liability. The execution of this Agreement shall not
constitute an admission of liability or responsibility by any signatory.
16. Governing Law. This Agreement shall be interpreted and enforced according
to the laws of the state of Nevada.
17. Consent to Jurisdiction and Venue. All Parties shall submit and not object
to jurisdiction and venue in the Sacramento County Superior Court, state of
California, in connection with any claims arising out of this Agreement.
18. Binding Effect; Assignability. This Agreement, including the documents
executed pursuant to the Exhibits hereto, shall bind and inure to the
benefit of the Parties hereto and their respective heirs, survivors,
legatees, executors, personal representatives, receivers, trustees,
insurers, marital communities, successors, subrogees, transferees and
assigns.
19. No Third-Party Beneficiaries. Except as expressly provided herein this
Agreement is for the benefit of the Parties hereto only and is not intended
to benefit any other person or entity, and no person or entity not a party
to this Agreement shall have any third-party beneficiary or other rights
whatsoever hereunder.
20. Attorneys' Fees. Should it be necessary for any party to this Agreement to
initiate legal proceedings to adjudicate any issues arising hereunder or
under any document executed pursuant to the Exhibits attached hereto, the
party or Parties to such legal proceedings who substantially prevail shall
be entitled to reimbursement of their attorneys' fees, costs, expenses and
disbursements (including the fees and expenses of expert and fact
witnesses) reasonably incurred or made by the substantially prevailing
Parties in preparing to bring suit, during suit, on appeal, on petition for
review, and in enforcing any judgment or award, from the party or Parties
who do not substantially prevail.
21. Severability. This Agreement, and/or the documents executed pursuant to the
Exhibits hereto, do not violate any federal or state statute, rule,
regulation or common law known; but any provision which is found to be
invalid or in violation of any statute, rule, regulation or common law
shall be considered null and void, with the remaining provisions remaining
viable and in effect. Notwithstanding the foregoing, the Parties
acknowledge and agree that this Agreement, the releases provided for above
are each necessary to this settlement; without any of these the Parties
would not agree to this settlement.
22. Cooperation in Execution of Documents. The Parties agree properly and
promptly to execute and deliver any and all additional documents that may
be necessary or desirable to render this Agreement and/or the documents
executed pursuant to the Exhibits attached hereto legally and practically
effective. This paragraph shall not require the execution of any document
that expands, alters or in any way changes the terms of this Agreement.
23. Headings Not Controlling. The paragraph headings included herein are for
reference only and are not a part of this Agreement. The headings shall not
control or alter the meaning of this Agreement as set forth in the text.
24. Counterparts. This Agreement may be executed in any number of identical
counterparts, notwithstanding that all Parties have not signed the same
counterpart, with the same effect as if all Parties had signed the same
document. All counterparts shall be construed as and shall constitute one
and the same agreement.
25. Equal Participation in Drafting. The Parties have participated and had an
equal opportunity to participate in the drafting of this Agreement. No
ambiguity shall be construed against any party based upon a claim that that
party drafted the ambiguous language.
26. Waiver. A waiver of any provision of this Agreement shall operate as a
waiver only for the specific occasion as to which the waiver is given, and
the provisions of this Agreement shall otherwise continue to be fully
effective and operable as to any other occasion or occasions.
27. Time of the Essence. Time is of the essence with regard to this Agreement.
28. Closing. Closing of this Agreement ("Closing") shall occur in the offices
of ITEX Corporation, and shall be timely only if it occurs on or before
June 20, 2003. Closing means the time when all documents and funds required
to be delivered under this Agreement have been delivered to the Sacramento
office of ITEX. Costs of Closing shall be borne by ITEX. All
representations and warranties made in this Agreement, and in the documents
executed pursuant to the Exhibits to this Agreement, shall survive Closing.
If Closing does not timely occur the non-defaulting party shall have the
right to enforce the terms of this Agreement.
29. Statute of Limitations. All claims or causes of action arising out of this
Agreement must be brought within 24 months after they accrue. Failure to
bring suit within this time period shall be a complete bar to any such
claims or causes of action.
30. Complete Agreement. This Agreement is the final and complete expression of
the agreement of the Parties. This Agreement may not be modified,
interpreted, amended, waived or revoked orally, but only by a writing
signed by all Parties. This Agreement supersedes and replaces all prior
agreements, discussions and representations, all of which are merged into,
and superseded by, this Agreement. Notwithstanding the foregoing, nothing
in this agreement concerns the rights of Xxxxxxxxxxx and his wife, Xxxx
Xxxxxxxxxxx with respect to the obligation secured by real property owned
by Xxxx Xxxxxxxxxxx located on Knightsbridge Way, Sacramento County
California. Also, nothing in this agreement is intended to modify
Xxxxxxxxxxx'x rights to indemnity and contribution should some third party
bring suit against him for any act performed while an officer or director
of ITEX. No party is entering into this Agreement in reliance on any oral
or written promises, inducements, representations, understandings,
interpretations or agreements other than those contained in this Agreement
and the Exhibits hereto.
31. Full Understanding; Independent Legal Counsel. The Parties each
acknowledge, represent and agree that they have read this Agreement and the
Exhibits attached; that they fully understand the terms thereof; that they
have been fully advised by their legal counsel, accountants and other
advisors with respect thereto; and that they are executed by them upon the
advice and recommendation and with the approval of their independent legal
counsel.
/s/ Xxxxxxx Xxxxxxxxxxx
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Xxxxxxx Xxxxxxxxxxx, Individually
ITEX CORPORATION
/s/ Xxxxxx Xxxxx
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By: Xxxxxx Xxxxx
Chairman of Board
ITEX Corporation
