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MODIFICATION OF AGREEMENT
SECTION 1.01. On July 1, 2001 ITEX CORPORATION entered into a written FEE
PAID INDEPENDENT RETAIL BROKERAGE AGREEMENT with Xxxxx Xxxx to purchase a
non-exclusive franchise for the operation of a licensed ITEX broker office
servicing approximately 1000 members of the ITEX retail trade exchange who had
previously been members of XXXXXXX.XXX. After entering into the agreement the
parties discovered that the volume of combined trade volume at the time Xxxxx
Xxxx opened his office was substantially less than both the parties had
anticipated. Therefore, the parties instead of rescinding the agreement or
taking action for breach or misrepresentation, have decided to modify that
agreement as follows:
SECTION 1.02. Paragraph 5.17 which previously stated:
"5.17 AMOUNT OF FRANCHISE FEE. The amount of the franchise fee to be
paid by Xxxxx Xxxx is the sum of $400,000 (US). The fee will be payable
$160,000 (US) upon execution of this agreement and the balance paid in
installments of $6,666 (US) commencing July 31, 2001 and continuing
each month on the last day of each subsequent month. If any payment is
not received by the due date, the obligation will be deemed to be in
default, at the option of ITEX, and the entire unpaid balance of the
franchise fee shall be immediately due and payable. No interest shall
accrue on the unpaid balance unless there is a default, after which
time interest will accrue at the rate of 8% per annum."
IS REVISED TO STATE AS FOLLOWS:
5.17 AMOUNT OF FRANCHISE FEE. The amount of the franchise fee to be paid by
Xxxxx Xxxx is the sum of $250,000 (US). The fee will be payable for a term of
thirty-nine four-weekly installments of $6410.25 (US), commencing November 1,
2001. The balance shall accrue interest at the rate of 9% per annum and shall
all be due at the end of the term. Payments will be first credited to the
outstanding balance. Interest shall accrue on the outstanding balance, but will
not be paid until the end of the term. Because of his unforeseen expenditures
upon commencement of his business operations, Xxxxx Xxxx shall be entitled to a
credit of $18,000(CD) against accrued interest only. If Xxxxx Xxxx pays ITEX a
down payment in the minimum amount of $125,000(US) within 120 days of the date
of this modification, the provisions of this paragraph requiring interest to
accrue and be paid shall be null and void, and the remaining balance shall be
reamortized over the remaining term. If the down payment is made and interest is
unpaid, the $18,000(CD) credit shall be withdrawn and no credit will be given.
In the event of default, the remaining balance, together with any unpaid
interest if any be due, shall be immediately be due and payable.
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SECTION 2.02. Release
In consideration of the above provisions and mutual covenants contained herein,
the parties agree to release each other from all claims arising from the
circumstances described in Section 1.01. This is intended as a general release
of all claims relating to those circumstances, but in no way relieves either of
the parties of their mutual obligations under the original July 1, 2001
agreement or the other provisions of this modification. The parties waive the
provisions of California Civil Code Section 1542 which provides in pertinent
part: " 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."
SECTION 3.01. Contract payment amounts
Upon execution of this agreement, ITEX CORPORATION will pay to Xxxxx Xxxx by
wire transfer all sums that would otherwise have been payable under the original
July 1, 2001 through this date. For the six cycles commencing October 12, 2001,
Xxxxx Xxxx will be compensated as though Removed pursuant to Rule 24b-2 under
the Securities Exchange Act of 1934 of the clients assigned to his broker code
were on auto pay, pursuant to paragraph 2.3(e) of the July 1, 2001 agreement.
SECTION 4.01. Effect of decrease in cash collections
Cycle 2, Fiscal Year 2002, xxxx collected for all of the clients assigned to
Xxxxx Xxxx was Removed pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934. If future cash collections for two consecutive cycles fall below
Removed pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 of this
amount, all clients previously assigned for servicing by ITEX Corporation to
Xxxxx Xxxx shall be reassigned to other licensees or ITEX Corporate offices, at
the option of ITEX. Xxxxx Xxxx will not be entitled to any refund of any monies
paid pursuant to paragraph 5.17.
SECTION 5.01. Merger
This modification and the original July 1, 2001 Fee Paid Independent Retail
Brokerage Agreement are the only agreements between the parties. Any previous
verbal or written agreements are deemed merged into this agreement.
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SECTION 5.02 Facsimile signatures and counterparts
A facsimile signature is deemed to be legally enforceable by the parties. This
agreement may be executed in counter-parts.
September 17, 2001
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XXXXX XXXX
ITEX CORPORATION
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XXXXXXX X. XXXXXXXXXXX
President
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