UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement
Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934
(Amendment No. )
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Preliminary
Proxy Statement
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for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to Rule 14a-12
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ITEX CORPORATION
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(Name of Registrant as Specified In
Its Charter)
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DAVID POLONITZA
WAYNE P. JONES
RICHARD POLONITZA
GRETA POLONITZA
KIRK ANDERSON
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(Name Of Person(S) Filing Proxy
Statement, If Other Than The Registrant)
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of Filing Fee (Check the appropriate box):
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(2)
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Aggregate
number of securities to which transaction applies:
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unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4)
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March 14, 2012
Dear Fellow
Stockholder:
Our
shareholder group, consisting of David Polonitza, Wayne Jones, Richard
Polonitza, Greta Polonitza, and Kirk Anderson (“
Polonitza Group
”) owns
an aggregate of 208,687 shares of common stock of the ITEX Corporation (“
ITEX
”), representing approximately 5.2% of the voting common stock outstanding of
the Company. We believe that ITEX’s two non-executive directors have
not acted in your best interests, as discussed in further detail in the
attached Proxy Statement. Shareholders who own the Common Stock as
of the close of business on March 16, 2012 ("
Record Date
")
will be entitled to vote at the annual meeting of stockholders scheduled to be
held at the Red Lion Hotel Fifth Avenue, 1415 Fifth Avenue, Seattle, WA 98101
on May 14, 2012, beginning at 3:30 PM local time (the “
Annual Meeting
”). We therefore seek your support at the Annual Meeting for the
following:
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1.
To elect the
our slate of two director nominees (the “
Nominees
”) to the Board of
Directors of ITEX (the “
Board
”) at the Annual Meeting; and
2.
To consider
and vote on a proposal to ratify the selection of Ehrhardt Keefe Steiner
& Hottman PC as the independent registered public accounting firm of ITEX
and its subsidiaries for the year ending July 31, 2012.
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The
Polonitza Group and the Nominees are soliciting proxies from shareholders to
elect two (2) directors to the Board. We are soliciting your
proxy in support of the election of Dr. Wayne P. Jones and David Polonitza to
ITEX’s Board.
We
urge you to carefully consider the information contained in the attached Proxy
Statement and then support our efforts by signing, dating and returning the
enclosed GOLD proxy card today. The attached Proxy Statement
and the enclosed GOLD proxy card are first being furnished to the
stockholders on or about March 15, 2012.
As
we are only soliciting your proxy in support of two candidates while the
Company has three Board members, if you as a shareholder vote using the
GOLD
proxy
card, you will be disenfranchised in your ability to fill the remaining one
seat on the Board. We will not exercise discretionary authority to fill the
remaining seat, and the remaining seat will be filled by the Company’s nominee
who receives the most votes. If our nominees are elected, we will control the
board of directors. Currently, we have no plans to fill any vacancies on
the board as a result of the election of our nominees.
If
you have already voted for the incumbent management slate you have every right
to change your vote by signing, dating and returning a later dated
GOLD
proxy card or by voting in person at the Annual Meeting.
Your
vote is important, no matter how many or how few shares you hold. If
your shares are held in the name of a brokerage firm, bank, or nominee, only
they can vote your shares, and only after receipt of your specific
instructions. Accordingly, please return the
GOLD
proxy
card in the envelope provided by your bank or broker or contact the person
responsible for your account and give instructions for such shares to be voted
for the Nominees. Every shareholder should be aware that if such
shareholder’s shares are held through a bank, brokerage firm or other nominee,
they will not be able to change their vote at the Annual Meeting, unless they
obtain a legal proxy from the bank, brokerage firm or other
nominee. Since this is a contested election for directors, there
will be broker non-votes. Broker non-votes occur when a bank or
brokerage firm holding shares on behalf of a shareholder does not receive
voting instructions from the shareholder by a specified date before the Annual
Meeting and the bank or brokerage firm is not permitted to vote those
undirected shares on specified matters under applicable stock exchange
rules. Thus, if you do not give your broker specific instructions,
your shares may not be voted on those matters and will not be counted in
determining the number of shares necessary for approval.
If
your shares are registered in more than one name, the
GOLD
proxy
card should be signed and dated by all such persons to ensure that all shares
are voted for the Nominees.
Holders
of record of shares of Common Stock on the Record Date are urged to submit a
proxy, even if such shares have been sold after that date. The
number of shares of Common Stock outstanding as of the Record Date is disclosed
in ITEX’s proxy statement. Each share of Common Stock is entitled to
one vote at the Annual Meeting.
If
you have any questions or need assistance in voting your shares, please call:
65 Locust Avenue, Third Floor,
New Canaan, CT 06840
Banks and Brokers call collect (203)
972-9300
Shareholders call toll free (877)
972-0090
enhanceitex@investor-com.com
The solicitation
is being made by David Polonitza, Wayne Jones, Richard Polonitza, Greta
Polonitza and Kirk Anderson not on behalf of the Board of ITEX.
YOU MAY HAVE
ALREADY RECEIVED, OR WILL SOON RECEIVE, A PROXY CARD FROM THE
COMPANY.
PLEASE RETURN ONLY THE ENCLOSED GOLD PROXY CARD AND DO
NOT RETURN ANY COMPANY PROXY CARD UNDER ANY CIRCUMSTANCES.
IF
YOU RETURN BOTH PROXY CARDS THERE IS A DANGER THAT YOUR SHARES WILL NOT BE
VOTED AS YOU DESIRE BECAUSE ONLY THE LATEST DATED PROXY CARD YOU SUBMIT COUNTS.
Important Notice Regarding the
Availability of Proxy Materials
for the Annual Meeting
This Proxy Statement and GOLD proxy card
are available at
www.icommaterials.com/enhanceitex
TABLE OF CONTENTS
LETTER
TO SHAREHOLDERS
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1
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BACKGROUND
OF THE SOLICITATION
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3
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REASONS
FOR THE SOLICITATION
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9
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ELECTION
OF NOMINEES
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14
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INFORMATION
ABOUT THE NOMINEES
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15
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SHARE
OWNERSHIP OF NOMINEES
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16
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WHO
CAN VOTE AT THE ANNUAL MEETING
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17
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HOW
TO VOTE BY PROXY
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17
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VOTING
AND PROXY PROCEDURES
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18
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INFORMATION
CONCERNING PERSONS WHO MAY SOLICIT PROXIES
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19
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AUDITORS
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19
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SOLICITATION
OF PROXIES; EXPENSES
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19
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CERTAIN
INFORMATION REGARDING THE POLONITZA GROUP
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20
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT
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22
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THE
BACKGROUND OF THE NOMINEES OF ITEX’S BOARD
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23
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COMMITTEE’S
OF ITEX’S BOARD
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24
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BOARD
POLICIES AND PRACTICES
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27
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EXECUTIVE
COMPENSATION
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28
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AUDIT
RELATED MATTERS
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29
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ADDITIONAL
INFORMATION
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30
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YOUR
VOTE IS IMPORTANT
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31
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PLEASE
CALL IF YOU HAVE QUESTIONS
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31
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ANNEX
A – INFORMATION ABOUT THE “PARTICIPANTS IN THE SOLICITATION”
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A-1
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LETTER TO SHAREHOLDERS
Dear Fellow ITEX
Shareholders,
The Polonitza
Group, led by David Polonitza, owns 208,687 shares, or approximately 5.2% of
outstanding voting stock of the Company. We have owned shares in ITEX
since 2004. We believe
substantial
appreciation of the stock
would have occurred if our plans presented during last year’s annual meeting
were initiated. Unfortunately, during the past year, the current Board of
Directors has demonstrated what we feel is an absolute disregard for the
interests in its public shareholders. At last year’s annual meeting 35% (which
was held in December 2010 –
18 months
from the currently scheduled 2011
Annual Meeting) of the votes were voted against the incumbent directors. This
we feel was an absolute shock to the Board. But instead of negotiating a
solution favorable to all parties, the Board decided to entrench themselves in
control by a series of what we feel are unethical and self-dealing
transactions.
For example:
1.
The Board
adopted a Poison Pill which blocked any outside shareholder from purchasing
over 15% of ITEX’s shares outstanding, while excluding shares which they
receive from stock grants.
2.
The Board
distributed a total of over
$1.6 million
in restricted stock to
employees, the CEO, and a member of ITEX’s board. In fact, the CEO still had a
vesting restricted stock plan that was due to fully vest in October 2012. These
new restricted shares added on to this plan, resulting in a vesting plan that concludes
in the year
2023
– yet he gets to vote all of these shares
from
the first day and receive dividend payments on these shares
!
3.
The Board then
“sold” 151,000 shares to franchisees financed by a $605,000 company loan for
$4.00 per share (which was below the then current market price of $4.25) but
the Board gets to vote these shares!
4.
A few days
after selling stock at $4.00 per share, the Company repurchased 92,125 shares
for $4.50 a share. In effect the Company bought
high and sold low
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The
net effect of these transactions was to boost the current Board of Directors
control of voting shares, to include insiders and employees of the Company,
from approximately 16% last year to now near to 30%. Meanwhile, all existing
outside shareholders saw their ownership stakes diluted. ITEX’s stock has
underperformed the all of the overall market major market and its peer company
since the 2010 Annual Meeting, while the Compensation Committee, headed by Eric
Best and John Wade, granted the CEO his largest yearly compensation package ever
since he has been with the Company, at over $1 million dollars for fiscal 2011,
up from over $428,093 during the prior year! In addition, John Wade himself
received total compensation from ITEX Corp. of over $110,000 during fiscal 2011!
This in a year where overall revenues were down 2.9% and net income decreasing
by over 25%!
The
Non-Executive Directors of ITEX, Eric Best and John Wade, are the sole members
of the Company’s Compensation Committee, and approved the amendments to the
Company’s 2004 Equity Incentive Plan, oversaw significant increases in
compensation while the Company’s operating performance declined, and
implemented the share distribution plan. The corporate actions that these two
directors approved appear to us to be one of the most brazen attempts at
Director entrenchment. When shareholder’s approved ITEX’s 2004 Equity Incentive
Plan, consisting of 400,000 shares, it took almost 5 years for the Board to
distribute these shares, while their non-shareholder approved amendment to the
plan,
adding another 400,000 to the plan, they distributed all of these
shares in
less than 7 weeks
. We believe that these Directors
should be replaced to ensure that there are no future corporate actions
performed by these two directors which we feel will lead to further destruction
of shareholder value.
We are
nominating two independent directors, Dr. Wayne Jones and myself, who will seek
to address ITEX’s governance and operational issues (the “Nominees”).
We believe that
ITEX is the leader in the barter industry but the Company’s governance issues
must be addressed, as these issues have now, in our opinion, significantly
impaired the intrinsic value of the Company. If elected at the 2011 Annual Meeting
of Shareholders, the nominees would endeavor to work to address the concerns
discussed above.
In addition, the
transactions referenced above are the subject of pending litigation.
Specifically on September 8, 2011, I filed a lawsuit, derivatively on behalf
of ITEX, against the existing directors of ITEX (
Polonitza v.
White (ITEX))
. The lawsuit continues to proceed in
the Superior Court of Washington, King County.
1
Our website,
www.enhanceitex.com, will be the primary channel over which we
will impart information on vital matters. We encourage shareholders
to visit our website regularly and to share their thoughts with us about the
ITEX Corporation. We appreciate your vote in this year’s election.
Sincerely
yours,
David
Polonitza
2
BACKGROUND OF THE SOLICITATION
On June 4, 2004,
Mr. David Polonitza first contacted ITEX Corp. through Alan Zimmelman, ITEX
Corporation’s Investor Relations contact.
Mr. Polonitza
continued to remain in contact with Alan Zimmelman to discuss general ITEX
Corporation information in 2004, 2005 and 2006.
On February 7,
2007, Mr. Polonitza sent a letter to ITEX’s board agreeing with their past
decisions to sell their Company-operated locations and to suggest that the
company examine returning capital to shareholders as there are few capital
requirements to run the business and a lack of acquisition candidates,
especially when compared to the valuation of ITEX’s shares at the time.
On July 30,
2007, ITEX Corp. announced a $3.15 million acquisition of more than 2,000
members of the Intagio Trading Network, which added newly acquired
corporate-owned and operated offices to ITEX’s franchisee-based Broker Network.
On October 5,
2007, after a conversation with Alan Zimmelman, Mr. David Polonitza sent an
email to Steven White, that the Company should explore expanding its board with
independent directors to better attract new shareholders, and additionally the
Company had too few members on the Audit Committee to be in compliance with
Nasdaq Marketplace Rule 4350(d) (2) (A) which requires that the Company's Audit
Committee be comprised of at least three members, each of whom are
independent. Mr. Polonitza stated that he had no desire to add a member to
ITEX’s board in an attempt to change the direction, operation, or vision of the
company. Mr. Polonitza did suggest a candidate to Mr. White if he was
ever interested in expanding the board. Mr. White responded to Mr. Polonitza on
October 5, 2007, stating: “You are correct in your assessment about
the audit committee structure and board requirements for NASDAQ.
I assure you, we will immediately expand the board with outside representation
as we get closer to the listing requirements” but indicated there were no
plans to do so at this time.
On November 1,
2007, Mr. David Polonitza filed a Schedule 13G with the SEC disclosing his
Group’s 5% ownership stake in ITEX Corporation.
On December 12,
2007, Western Sizzlin Corporation, a public company, announced its intention to
commence an exchange offer for all outstanding shares of ITEX.
On December 14,
2007, Mr. Polonitza attended the ITEX stockholder meeting. At the
board meeting, Mr. White commented on Mr. Polonitza’s suggestion for adding
independent board members, but that it could be an issue to discuss at future
annual meeting. Mr. Polonitza joined Steven White and Alan Zimmelman for dinner
after the stockholder meeting, and had general discussions about the Company to
include returns of capital to shareholders and introducing independent board
members.
On December 28,
2007, Mr. Polonitza converted his group’s Schedule 13G to a Schedule 13D as a
result of the material event of Western Sizzlin Corporation’s unsolicited
tender offer for ITEX Corp. The Schedule 13D stated that Mr. Polonitza intended
to have discussions with ITEX’s management regarding, among other things, the
tender offer, ITEX’s operating performance, and various means of enhancing
stockholder value over time.
On January 9,
2008, ITEX announced the purchase of a 15% equity stake in MyTypes.com, a
business blogging company for $30,000.
On January 10,
2008, Mr. Polonitza sent a letter to the ITEX Board of Directors, stating that
Mr. Biglari’s efforts to alter Steak n Shake’s Board of Directors coupled with
Steak n Shake’s deteriorating operating and financial performance currently
creates a degree of uncertainty with regards to an appropriate valuation of the
Western Sizzlin Corporation due to the significant amount of capital that
subsidiaries of the Western Sizzlin Corporation have invested in Steak N Shake
common stock.
On January 28,
2008, ITEX announced the purchase of The Barter Company (“ATX”) of Cleveland,
Ohio 400 member client list for $325,000.
3
On May 1, 2008,
ITEX Corporation retained Montgomery & Co. as its financial advisor to
assist ITEX’s Board of Directors and management in evaluating a range of
strategic plans and opportunities to enhance shareholder value. ITEX
stated on page 44 of their 10Q filed on June 3, 2008 that the Company intended
to disclose developments with respect to this process once the evaluation of
strategic alternatives had been completed or the Company had entered into a
material definitive agreement.
On August 7,
2008, ITEX announced the purchase of Intagio Media for $750,000.
On October 1,
2008, David Polonitza was contacted through email by Alan Zimmelman, regarding
setting up a phone conversation. Mr. Polonitza spoke with Mr. Zimmelman
the evening of October 1, 2008. In the course of the phone call between
them, Mr. Zimmelman outlined that ITEX had received a potential buyout offer
(the potential buyer’s name was not disclosed to Mr. Polonitza) and asked Mr.
Polonitza if he would sell his shares at around $1.00 per share (pre-split). He
also asked Mr. Polonitza if he would be interested in participating in a
going-private transaction with the management of ITEX. Mr. Polonitza indicated
that he was potentially interested, but that the price would have to be fair to
minority shareholders and much more due diligence would be necessary.
On October 4,
2008, Mr. Polonitza phoned Steven White and they discussed the conversation
that Mr. Polonitza had with Mr. Zimmelman. Mr. White in fact said that it could
be discussed further at the upcoming annual meeting.
On November 19,
2008, ITEX released its Annual Message From the Chairman. Within the message,
Mr. White, ITEX’s Chairman stated: “For a company of our size, being a public
company is disproportionately time consuming and expensive. Not only do we
pay out several hundred thousand dollars each year for legal, audit, filing and
support fees, we also devote hundreds of hours completing the work required for
disclosure requirements. We continually seek to balance our desire to create
value for stockholders with the need to use our resources wisely.” This was a
similar message that Mr. White had mentioned to Mr. Polonitza while Mr. White
discussed the possibility of taking ITEX private.
On December 12,
2008, Mr. Polonitza attended the ITEX stockholder meeting. Mr. Polonitza
briefly met with Alnesh Mohan and Sanjeev Parsad, at ITEX’s 2008 Annual
Meeting. Mr. White and Mr. Zimmelman invited Mr. Polonitza for dinner
after the stockholder meeting, where they had general discussions about the
performance of the Company and potential strategic alternatives to include Mr.
White’s exploration of taking ITEX private.
On December 19,
2008, ITEX filed an 8-K with the SEC modifying the Company’s bylaws to remove
the ability of shareholders to call a special meeting. The amendment to
ITEX’s bylaws to include removing shareholders ability to call a special
meeting, was not discussed at the 2008 Annual Meeting or with any member of the
Committee to Enhance ITEX prior to the 8-K filing by ITEX.
On January 22,
2009, consistent with Rahul Pagidipati’s philosophy of investing in undervalued
securities, Mr. Pagidipati contacted the Board of Directors of ITEX to gauge
their interest in exploring a variety of strategic alternatives. Mr. Pagidipati
believed his background and education could assist the Company. Mr. Pagidipati
added that he would like to set up a conference call to discuss any potential
future possibilities. Mr. Pagidipati received
no response
from his
email.
On May 15,
2009, Mr. Pagidipati called Mr. Polonitza to discuss ITEX Corp. Mr.
Polonitza had never spoken with Mr. Pagidipati prior to that occasion. The
conversation consisted of discussing ITEX’s governance, past capital
allocations, and operations.
On August 12, 2009, Mr. Polonitza received an unsolicited call from Mr. Sanjeev
Parsad, who identified himself as a holder of ITEX stock. Mr. Parsad and
Mr. Polonitza desired to discuss ITEX’s governance and other issues that he
observed taking place at ITEX Corp.
On August 19,
2009, Mr. Polonitza contacted Mr. White to discuss the Company’s direction.
Upon conclusion of the conversation, Mr. Polonitza concluded that the Company
did not intend to improve its governance, nor execute a transaction in a manner
that would be beneficial to all shareholders.
4
On September 12, 2009 Mr. Parsad, Mr. Polonitza, and Mr. Pagidipati met in
Chicago. The intent of the meeting was to determine the best way to
ensure ITEX Corp. was operating in a manner that maximized shareholder value.
On September 17, 2009, Mr. Polonitza sent a letter to ITEX nominating three
candidates for election as directors at the 2009 Annual Meeting. The three
nominees were Mr. David Polonitza, Mr. Alnesh Mohan, and Mr. Rahul Pagidipati.
Mr. Polonitza then phoned Mr. White to explain his desire to nominate
independent directors to ITEX’s Board and determine the possibility of
negotiating with the existing Board of Directors. Mr. White had no desire to
negotiate with Mr. Polonitza and concluded the conversation by saying: “You are
either with me or against me” to Mr. Polonitza.
On September 23,
2009, Mr. Polonitza, along with Mr. Pagidipati, Corner Market Capital and each
of the three entities affiliates combined to file a joint Schedule 13D.
Within the Schedule 13D, the “Polonitza Group” announced their intention to
submit nominees to the existing Board of Directors, the reason for the
nominations – the Group’s concerns regarding ITEX’s governance and capital
allocations, and backgrounds of each of the nominees.
On November 30,
2009, Eric Best, Chairman of the Nomination Committee sent a letter to Mr.
Polonitza detailing why the Company would not include his nominees on their
upcoming 2009 Annual Meeting slate.
On December 11,
2009, Alnesh Mohan and Sanjeev Parsad attended the ITEX shareholder
meeting. Mr. Parsad proceeded to inquire with ITEX’s Board regarding
a number of topics to include: capital needed to be returned to shareholders;
if the company was against returning capital to shareholders the company could
explore converting into a holding company structure; displeasure in the
board’s actions in removing the ability of shareholders to call a special
meeting; we were seeking to avoid a proxy fight and that a dialogue with the
board could help to alleviate concerns; ITEX’s stock over the past year had
traded in a range that was below what we felt was the Company’s intrinsic value
and were disappointed that no shares had been repurchased by the Company or
purchased by the Board; and we supported any endeavor that resulted in the
franchise network’s success. Mr. Parsad’s statements regarding capital
allocation were viewed unfavorably by members representing ITEX Corp, to
include a member of ITEX’s Corporate Counsel who stated that he had tried to
find compelling evidence that stock buybacks provide any benefit or value to
shareholders and most reports he found say they do not work. Mr. Parsad and
another shareholder at the meeting both commented on the fact that most
companies buy back stock at a price that is too high to provide value to their
shareholders, but at the proper price the exercise can create significant value
for shareholders.
On March 9,
2010, ITEX Corporation issued a press release announcing that its Board of
Directors had authorized the repurchase of up to $2.0 million of its
outstanding common stock.
On March 23,
2010, a letter was sent by the Polonitza Group to ITEX’s Board applauding
management for adopting our suggestion of authorizing a share repurchase
plan. Issues raised by the group included increasing franchise locations and
improving franchise profitability; improving corporate governance; providing
additional services to members, managing the SuperMedia relationship; managing
cash flow differently; separating the CEO and CFO positions; and improving
member retention rates. The letter was attached to a Schedule 13D filed by the
Group on April 6, 2010.
On April 1,
2010, Mr. White sent a letter to the Group. In the letter Mr. White
stated he did not desire to speak directly with any members of the Polonitza
Group, and to direct all future correspondence to Mr. Alan Zimmelman, the
Company’s communications director. Additionally, Mr. White noted if the
Polonitza Group was interested in selling all or a portion of its ITEX shares
to the Company, they should contact ITEX’s representative at Roth Capital, with
the representative’s name and phone number provided.
On April 6,
2010, the group amended its Schedule 13D to report it had owned 12.69% of the
outstanding shares of ITEX.
5
On April 12,
2010, ITEX Corporation filed an amendment to its Articles of Incorporation with
the Secretary of State of the State of Nevada that will effect a one-for-five
reverse stock split of its common stock.
On May 11, 2010,
the Board of Directors of ITEX Corporation declared a cash dividend in the
amount of $0.025 per share, payable on June 30, 2010 to stockholders of record
as of the close of business on June 15, 2010.
On June 14,
2010, Mr. Parsad sent an email to Mr. White requesting a conference call with
the full Board of Directors and members of the group, to include Rahul
Pagidipati, Mr. Polonitza, Mr. Mohan and Mr. Parsad. Mr. White requested that
we present an agenda for the meeting.
On June 16,
2010, the Polonitza Group emailed an agenda to Mr. White at his request, along
with a Memorandum of Understanding which outlined that the Polonitza Group
intended to continue to purchase shares in ITEX Corp. and was not seeking to
gain any material non-public information from the Board. The agenda included
the following topics: the potential to list ITEX’s common stock on the Nasdaq
Global Markets; Separation of Chief Financial Officer and Chief Executive
Officer duties; The Company’s capital structure and future dividend payouts;
ITEX’s Board of Directors composition; Franchisee support and growth plans;
SuperMedia agreement and relationship; and Polonitza Group voting.
On June 18,
2010, Mr. White emailed Mr. Parsad stating “Thank you for sending the agenda.
We do not enter into discussions with shareholders about confidential
topics” and recommending to us to communicate with the Company’s communications
director, Alan Zimmelman. Mr. Parsad responded to Mr. White’s email with the
following: “We were extending our hand to the board. We were hoping that
if we could agree on some key components of our common vision for ITEX, we
would have been agreeable to supporting current management without seeking any
board representation. It seems as though you guys are resistant to that
idea. I’ll cancel the conference call, and we’ll continue on our current
form of contact, either by letter or through Alan. We’ll leave it to the board
to decide what type of relationship they want with their largest shareholder
group.”
On
July 17, 2010, the Polonitza Group issued an open letter to shareholders
announcing its intention to explore alternatives at ITEX’s 2010 Annual Meeting.
On September 8, 2010, the Polonitza Group filed an amendment to its Schedule
13D, announcing the creation of “The Committee to Enhance ITEX”, the launch of
www.enhanceitex.com , and the filing of preliminary proxy materials providing
notice of its intent to nominate three directors in opposition to the slate of
directors nominated by the Board of Directors, Dr. Wayne P. Jones, Alnesh
Mohan, and Sidd Pagidipati. The Committee to Enhance ITEX also sent
a letter informing ITEX of its intention to solicit proxies to elect a slate of
three nominees, and demanded registered and beneficial stockholder information
under Rule 14a-7 under the Exchange Act.
On September 15,
2010, ITEX sent its stockholder information to the group as provided by Rule
14a-7 under the Exchange Act.
On October 6,
2010, ITEX filed its preliminary proxy statement with the SEC.
On October 18,
2010, the Committee to Enhance ITEX filed its preliminary proxy statement with
the SEC detailing its plan to payout of excess capital to shareholders through
dividends and share repurchases, list the Company on a Nasdaq exchange, and
hire a full-time CFO.
On October 20,
2010, ITEX Corp. files its 10-K for fiscal 2010. The 10-K states that the
agreement with Montgomery & Co. ended in 2009.
On October 20,
2010, the Committee to Enhance ITEX announced the mobilization of an executive
leadership team to prepare ITEX for a change in the Company’s management if
required.
6
On
December 10, 2010, the Company’s nominees are elected during the 2010 Annual
Meeting despite 35% of voting shareholders casting their vote for the Committee
to Enhance ITEX’s nominees.
From
December 20, 2010, David Polonitza contacted Stephen Tollefsen of of Tollefsen
Business Law and counsel of ITEX, in an attempt to discuss the issues raised
during the 2010 Annual Meeting. Through a number of telephonic
discussions over the subsequent days, it was made clear to Mr. Polonitza that
ITEX’s Board did not have a sincere desire to improve the governance of the
Company, and Mr. Polonitza concluded that further negotiations at that time
would not yield positive outcomes to outside shareholders of the Company.
On
February 14, 2011, the Board of Directors of ITEX Corporation approved an
amendment to the 2004 Equity Incentive Plan, adding an additional 400,000
shares to the plan.
On
March 11, 2011, the Board of Directors of the Company declared a dividend,
payable to stockholders of record on March 25, 2011 of one right per each share
of outstanding Common Stock of the Company, par value $0.01 per share, to
purchase 1/1000th of a share of Series A Junior Participating Preferred Stock,
par value $0.01 per share, of the Company, at a price of $15.00 per
share.
In
March 2011, the Company issued 197,000 restricted shares to 13 of the Company’s
employees, valued at the grant date stock price of $4.25 per share, with a
vesting period of 5 years from the date of grant. The fair value of these
shares as of the grant date was $837,000.
On
March 30, 2011, the Company issued 190,000 restricted shares to the Company’s
CEO, valued at the grant date stock price of $4.25 per share, with a vesting
period of 11.5 years from the date of grant. The fair value of these shares as
of the grant date was $808,000. The grant first vests 19 shares in
October 2013 and then another 19 shares vest annually in October of each
subsequent year.
On
March 30, 2011, the Company issued 5,000 restricted shares to a consultant who
is also a Board of Director, valued at the grant date stock price of $4.25 per
share, with a vesting period of one year from the date of grant. The fair value
of these shares as of the grant date was $21,000.
On
March 30, 2011, the Company sold 151,000 shares of its common stock for $4.00
per share to nineteen members of the ITEX Broker Network. The
aggregate purchase price of $605,000 is payable by six-year promissory notes
with interest accruing at 2.44% per annum, the applicable federal rate in
effect as of the closing. ITEX will be paid each operating cycle by reducing
broker commission checks over the term of the note. The Company has
recorded these notes receivable as contra-equity in the accompanying financial
statements. Until March 30, 2014, the purchased shares may not be
sold or transferred and are subject to the terms of a voting agreement, which
provides the shares will be voted in accordance with the recommendations of the
Board of Directors and an irrevocable proxy be given to the corporate secretary
of ITEX.
On
April 27, 2011, Mr. Polonitza sent a letter to the Board of Directors to seek
clarification on the details of corporate transactions that had been executed.
This letter was sent due to the Board of Directors due to the fact that though
ITEX had disclosed the general terms of the transactions taking place, the full
extent and details of the transactions, to include the terms of the restricted
share distribution and share sale to the franchisees until the Company’s filing
of its 10Q on June 7, 2011. The Board did not respond to Mr. Polonitza’s
letter.
On
August 20, 2011, Mr. Polonitza amended his Schedule 13D to reflect the change
in composition of his shareholder group. Paul Kim, Rahul Pagidipati,
Sidd Pagidipati, Pagidipati Family Limited Partnership, Drs. Devaiah and
Rudrama Pagidipati, Alnesh Mohan, Sanjeev Parsad, G. Andrew Cooke, MPIC Fund I,
LP, MPIC Canadian Limited Partnership, Corner Market Capital U.S., Inc., Corner
Market Management Inc., and Corner Market Capital Corporation, were deemed to
have left The Polonitza Group. The group now consisted of Mr. Polonitza,
Greta Polonitza, Richard Polonitza, Dr. Wayne Jones, and Kirk Anderson. The
existing members of the group ceased to use the name “Committee to Enhance
ITEX”.
On September
8, 2011, Mr. Polonitza filed a lawsuit related to the corporate actions
performed by the Company during fiscal 2011, derivatively on behalf
of ITEX, against the existing directors of ITEX (
Polonitza v.
White (ITEX))
.
7
On
September 12, 2011, the Polonitza Group filed an amendment to its Schedule 13D,
announcing the launch of www.enhanceitex.com , and the filing of preliminary
proxy materials providing notice of its intent to nominate two directors in
opposition to ITEX’s non-executive directors nominated by the Board of
Directors, Dr. Wayne P. Jones, and David Polonitza. Mr. Polonitza
also sent a letter informing ITEX of its intention to solicit proxies to elect
a slate of two nominees, and demanded registered and beneficial stockholder
information under Rule 14a-7 under the Exchange Act.
On
September 23, 2011, ITEX sent its stockholder information to the group as
provided by Rule 14a-7 under the Exchange Act.
On
October 17, 2011, ITEX files its 2011 10-K with the SEC.
On
December 1, 2011, ITEX declared in an 8-k filed with the SEC, that the 2011
Annual Meeting of Stockholders will be held on May 14, 2012 and that the record
date for shareholders eligible to vote at the meeting will be March 16, 2012.
On February
21, 2012, the Superior Court of Washington,
King County, issues an order denying the motion to dismiss in
Polonitza
v. White (ITEX).
On
March 2, 2012, the Polonitza Group filed an amendment to its Schedule 13D,
announcing the filing of preliminary proxy materials providing notice of its
intent to nominate two directors in opposition to ITEX’s directors nominated by
the Board of Directors, Dr. Wayne P. Jones, and David Polonitza. Mr. Polonitza
also sent a letter informing ITEX of its intention to solicit proxies to elect
a slate of two nominees.
8
REASONS FOR THE
SOLICITATION
o
ITEX’s
corporate actions since the 2010 Annual Meeting and Poor Corporate Governance
Despite over 35%
of shareholders voting against ITEX’s current set of Directors, the current
Board of Directors, specifically the Non-Executive Directors on the Company’s
Compensation Committee, ignored all calls for improved corporate governance and
in fact made the situation much worse in our opinion through the following
actions:
1. The Board adopted a Poison Pill without shareholder approval which blocked
any outside shareholder from purchasing over 15% of ITEX’s shares outstanding,
while excluding shares which they receive from stock grants.
1
2. The Board
then distributed over $1.6 million in restricted stock to employees, the CEO,
and a member of ITEX’s board. In fact, the CEO still had a vesting restricted
stock plan that was due to fully vest by October 2012. These new restricted
shares added on to this plan, resulting in a vesting plan that concludes in the
year 2023.
3. The Board then sold 151,000 shares to franchisees financed by a $605,000
loan for $4.00 per share (which was below the then current market price of
$4.25) but kept the voting rights of those shares for themselves until 2014.
2
4. A few days
after selling stock at $4.00 per share, the Company repurchased 92,125 shares
for $4.50 a share. In effect the Company bought high and sold low.
ITEX’s
Board of Directors consists of three members: Steven White, Eric Best, and John
Wade. Eric Best and John Wade are ITEX’s two Non-Executive Directors.
These Non-Executive directors have maintained non-ITEX business relationships
for many years in the following manner:
Each
of these Directors maintains business relationship with one another and ITEX
beyond their role of serving as a non-executive Director:
·
Eric Best was
the Chairman of Morse Best Inc., a company that had Steven White as one of its
three directors according to Morse Best’s registration data filed with the
State of Washington during ITEX’s fiscal 2010.
3
Morse Best had
received approximately $100,000 for consulting services while Eric Best has
been a member of ITEX’s Board. Eric Best is also the Chairman and CEO of
Mercent Corp. Mercent Corp. employs John Wade as its Director of Finance.
4
·
John Wade
serves as the Director of Finance for Mercent Corp. Eric Best is the
Chairman and CEO of Mercent Corp. Additionally, according to ITEX’s proxy
information for fiscal 2009, 2010 and 2011, ITEX retained Mr. Wade as a
consultant to assist with internal audit matters.
1
http://www.sec.gov/Archives/edgar/data/860518/000114420411014458/v214520_ex4-1.htm
2
http://www.sec.gov/Archives/edgar/data/860518/000114420411034292/v225177_10q.htm
3
http://www.sos.wa.gov/corps/search_detail.aspx?ubi=602079743
4
Source: http://www.mercent.com/management.aspx
9
o
Recent stock
price performance
ITEX’s
stock has significantly lagged all major indices and its only other direct
publicly traded competitor, IMS Barter, (a peer company identified by ITEX
Corp) over the past year.
ITEX vs. IMS
Barter - 1 yr. Chart (Feb 28, 2011 – Feb 29, 2012)
Source:
Nasdaq.com
ITEX vs. the Russell 2000 and the
S&P 500 - 1 yr. Chart (Feb 28, 2011 – Feb 29, 2012)
Source:
Nasdaq.com
10
o
Failure to
organically grow the Company
ITEX
Corp.’s Gross Association and Transaction Fees generated by Franchisees have
remained stagnant for the past four years. The Company’s attempt to grow its
top line revenue was partly focused on its web service agreements. Since
announcing this initiative in 2009, the Company was able to sign up only two
customers, SuperMedia and ITEX Latin America. The bulk of ITEX’s web service
agreement revenue originated from the SuperMedia agreement. On February
28, 2011, the agreement with the Company’s principal web services client,
SuperMedia, entered into in February 2009, was terminated. The web
services contract had been responsible for generating approximately 5% of the
Company’s total revenues for the six-months ending January 31, 2011. As disclosed
in the Company’s 10Q filed on March 10, 2011, due to this contract being
terminated by SuperMedia, ITEX will receive some web services revenue in the
third quarter of fiscal 2011, but they expected a reduction is gross revenues
in subsequent quarters.
o
Increases in
CEO compensation as overall Company revenues remain stagnant
Between fiscal 2010
to fiscal 2011, ITEX’s CEO’s total compensation, a responsibility of the
Company’s Compensation Committee, increased by over 140%, while the Company’s
Revenues decreased by 2.9% and Net Income decreased by over 25%. In addition,
John Wade, a member of the compensation committee, and an employee of Eric Best
at Mercent Corp., received over $110,000 in total compensation by ITEX during
Fiscal 2011.
Fiscal Year
|
FY 2007
|
FY 2008
|
FY 2009
|
FY 2010
|
FY 2011
|
|
|
|
|
|
|
ITEX Corp Total Revenue (in thousands)
|
$14,171
|
$15,964
|
$16,502
|
$16,925
|
$16,424
|
ITEX Corp Net Income (in thousands)
|
$4,504
|
$934
|
$607
|
$946
|
$701
|
|
|
|
|
|
|
CEO Total Compensation (in thousands)
|
$232
|
$267
|
$251
|
$428
|
$1,068
|
|
|
|
|
|
|
CEO Total Compensation as a % of Total
Revenue
|
1.6%
|
1.7%
|
1.5%
|
2.5%
|
6.5%
|
|
|
|
|
|
|
CEO Total Compensation as a % of Net
Income
|
5.2%
|
28.6%
|
41.3%
|
45.2%
|
154.4%
|
Source:
ITEX FY2007-2011 10K, Proxy Statement
Additionally, as
the Company’s stock price has remained flat over the past 5 years, the CEO’s
total compensation has continued to climb.
Source:
ITEX FY2007-2011 10K, Proxy Statement, Nasdaq.com
11
OUR PLAN TO
MAXIMIZE STOCKHOLDER VALUE
We believe that
ITEX is the leader in the retail barter industry and the core franchise
business can be revitalized with the help of our highly qualified director
nominees. If elected at the 2011 Annual Meeting of Shareholders, our
nominees would, subject to their fiduciary duties, endeavor to work to address
the concerns discussed above. A general outline of the initiatives that
our nominees would seek to implement is as follows:
·
Work to
undue the corporate actions taken by the current Board of Directors
If elected, our nominees will seek to
undue as many of the corporate actions as possible that the Directors has
performed during 2011 which we believe were done for entrenchment
purposes. In addition, on September 8, 2011, Mr. Polonitza filed a
lawsuit, derivatively on behalf of ITEX, against the existing directors
of ITEX (
Polonitza v. White (ITEX))
. The lawsuit is ongoing in
the Superior Court of Washington King County.
·
Link
Compensation practices to Company operating and stock performance.
If elected, our nominees will seek to
align compensation practices of ITEX with that of the Company’s overall
operating and stock performance. In our opinion based on the increasing total
compensation of the CEO compared to the operating and stock price performance
of ITEX, it does not appear that this is taking place.
·
Hire a CFO
to improve ITEX’s governance and allow for the CEO to focus on pursuing growth
opportunities
By
hiring a full-time CFO with prior experience in that position at a public
company, the Nominees, on being elected as members of the Board, will focus on
improving ITEX’s i
nternal control audits while
ensuring that the appropriate corporate governance standards are being
maintained. Additionally, the CFO will help shape the overall strategy and
direction of ITEX, and instill a financial approach and mindset throughout
the organization to help the business increase performance, develop a plan to
identify key process level controls, and assess the risks related to the
"in-scope" financial processes and key financial systems. The
expected cost to hire a full time chief financial officer is no more than
$175,000 on an annual basis. Additionally, by freeing up the CEO from his
duties as interim CFO, he can focus his time on pursuing growth opportunities
for ITEX Corp.
·
Expand ITEX’s
Board of Directors to Five Members
Due to the
Polonitza Group’s opinion that a three person board of directors is not
sufficient to properly fulfill their duties on the critical board committees
that must be comprised of independent members: the compensation committee and
the audit committee, we will expand the board to five directors. If successful,
the Polonitza Group intends to add two independent directors, one of which who
would be considered a financial expert to head the Company’s Audit Committee.
·
Focus on
organic growth
We will focus on
building ITEX’s ability to organically grow the ITEX member network by focusing
on franchising, improving the profitability of existing franchisees, ensuring
the integrity of the ITEX Marketplace, and increasing the recruitment of
national businesses and partners. On August 30, 2011, an ITEX competitor, IMS
Barter, announced the launch of a franchise division. ITEX needs to
ensure that their franchise offering is the best in the industry, focusing
valuable resources on its improvement and growth.
12
Our Nominees
have the experience and qualifications to address the Company’s strategic,
operational and governance deficiencies.
Our Nominees
possess the skill sets required to address the Company’s current needs:
·
Dr. Wayne P.
Jones
has been a Professor of Business at the University of Louisville,
College of Business & Public Administration, Louisville, Kentucky, since
1998. Dr. Jones has also been CEO of the University Group, a franchise
advisory firm, since 1998. Dr. Jones is past CEO of the Pizza Hut Franchise
Association, President of KFC Canada, Senior VP of Operations for Arby’s
Restaurants, and Vice President Marketing & Development for Tumbleweed
Restaurants, Inc. He also held executive and marketing positions at the
H.J. Heinz and General Mills companies. Dr. Jones is CEO and Managing
Director of The University Group, LTD, a management consultancy, and consults
with a wide range of clients. He is an active lecturer in Corporate
Strategy, New Venture Creation, New Product Development, Franchising and
Marketing Strategy. He is also a Certified Expert Witness in franchising
who serves as an Expert Witness in Marketing and Franchising cases. Dr.
Jones holds a Ph.D. from Marquette University and an MBA from the University of
Louisville. He brings significant business and franchise experience and he will
work to address ITEX’s franchise operations.
·
David
Polonitza
has been the Chief Operating Officer of AB Value Management LLC,
an investment management firm, since 2011. From 2002 to 2010, Mr.
Polonitza served in the United States Army, attaining the rank of Captain. Mr.
Polonitza has a Bachelor of Science degree in Economics from the U.S. Military
Academy at West Point and an MBA from the University of Louisville. He brings
significant organizational and strategic experience and he will work to address
ITEX’s governance issues.
There can
be no assurance that even if the Polonitza Group’s nominees are
elected, they will be able to successfully carry out the Polonitza Group’s
outlined plan to maximize shareholder value.
During 2009,
ITEX entered into a Change of Control Agreement with Mr. Steven White, ITEX’s
Chairman. If the Polonitza Group is successful in having its two
nominees elected to ITEX’s Board of Directors, Mr. White would
receive a lump sum payment equal to one times his base salary ($250,000 per
year) and immediate vesting of all his equity-based compensation (which could
result in additional accounting charges). Additionally, the Polonitza
Group is seeking reimbursement from ITEX of all expenses incurred by it in
connection with the successful nomination of directors and this
solicitation. Currently, the Polonitza Group estimates these costs
at $100,000. Additionally, the Polonitza Group plans to expand ITEX’s board
from the current three to five members by adding to fully independent board
members. The Polonitza Group intends to ensure that actions to improve the
governance of ITEX Corp. will be done in a manner that minimizes costs to
shareholders, and will change the compensation structure of the board to ensure
that in aggregate the total compensation for ITEX’s board of directors will not
exceed $90,000.
In aggregate,
ITEX’s current Board of Directors received total compensation in 2011, including
compensation received as a director of ITEX, an employee of ITEX, or through
service or consulting contracts with ITEX, of $1,209,730 according to ITEX’s 10-K
document filed on October 17, 2011. The Polonitza Group anticipates that
expanding ITEX’s board to five members, hiring a full-time CFO at a salary
commensurate with comparable public companies to ITEX (no greater than
$175,000), compensation related to Mr. White’s change of control agreement
related to his position on ITEX board of directors ($250,000), and reimbursing
the Polonitza Group for their expenses related to this all expenses incurred by
it in connection with the successful nomination of directors and this
solicitation will have a cash cost of no more than $555,000 in total.
The Polonitza
Group believes that cash expenditures related to executing its plan can be
funded by ITEX’s current cash on its balance sheet ($5.456 million as of October
31, 2011), and the anticipated annual net cash provided by operating
activities ($.452 million for the three months ending October 31, 2011). It is
the Polonitza Group’s opinion that implementing its plan will help to maximize
ITEX’s value for all shareholders.
13
ELECTION OF NOMINEES
When
you return the
GOLD
proxy card you are only voting for our
Nominees. Each of the Nominees has consented to being named in this
Proxy Statement and has agreed to serve as a director, if
elected. The information below concerning age and principal
occupation of the Nominees for at least the last five years has been furnished
by the respective Nominees. Except as described in this Proxy
Statement, none of the Nominees beneficially owns any Common Stock.
The
Polonitza Group does not expect that any of the Nominees will be unable to
stand for election or serve as a director, but if any vacancy in the slate of
the Nominees occurs for any reason (including if the ITEX Corporation makes or
announces any changes to the Bylaws or takes or announces any other action that
has, or if consummated would have, the effect of disqualifying any or all of
the Nominees), the shares represented by the
GOLD
proxy card
received by the Polonitza Group and not properly revoked will be voted
for the substitute candidate nominated by the Polonitza Group in
compliance with the rules of the SEC and any other applicable laws and, if
applicable, the Bylaws.
If the Polonitza Group lawfully identifies or nominates substitute nominees
before the Annual Meeting, the Polonitza Group will file an amended proxy
statement that identifies these substitute nominees, discloses whether such
nominees have consented to being named in the revised proxy statement, and
include all disclosure requirements required by Items 5(b) and 7 of Schedule
14A with respect to such nominees.
14
INFORMATION
ABOUT THE NOMINEES
Name
|
|
Age
|
|
Principal Occupation
|
Dr.
Wayne P. Jones
|
|
69
|
|
Professor,
Management Consultant
|
David
Polonitza
|
|
32
|
|
Chief
Operating Officer, AB Value Management, LLC
|
Dr. Wayne P. Jones
Dr.
Wayne P. Jones has been a Professor of Business at the University of
Louisville, College of Business & Public Administration, Louisville,
Kentucky, since 1998. Dr. Jones has also been CEO of the University
Group, a franchise advisory firm, since 1998. Dr. Jones is past CEO of the
International Pizza Hut Franchise Association, President of KFC Canada, Senior
VP of Operations for Arby’s Restaurants, Restaurant Division President for
Marcus Inc., Senior Vice President, Marketing & Development of Chi-Chi’s
Inc., and Founder and Vice President Marketing & Development for Tumbleweed
Restaurants, Inc. He also held executive and marketing positions at the
H.J. Heinz and General Mills companies. Dr. Jones is CEO and Managing
Director of The University Group, LTD, a management consultancy, and consults
with a wide range of clients. He is an active lecturer in Corporate
Strategy, New Venture Creation, New Product Development, Franchising and
Marketing Strategy. He is also a Certified Expert Witness in franchising
who serves as an Expert Witness in Marketing and Franchising cases. Dr.
Jones holds a Ph.D. from Marquette University and an MBA from the University of
Louisville. Dr. Jones brings significant business and franchising experience
and he will work to improve ITEX’s franchising, national partnerships, and
overall operations. Dr. Jones has not held any directorships at public
companies or registered investment companies at any time during the past five
years, nor any position in a firm that is a parent, subsidiary, or other
affiliate of ITEX.
Dr.
Jones has significant experience in franchising, with a proven track record in
growing and developing businesses. As such, Dr. Jones’s business
acumen would serve the Board well. Additionally, Dr. Jones possesses
the aptitude and experience to fully understand the legal responsibilities of a
director and the governance process of a public company, as well as the
personal qualities to be able to make a substantial active contribution to
Board deliberations, including intelligence, interpersonal and communication
skills, courage and inquisitiveness.
David Polonitza
Mr. David
Polonitza has been the Chief Operating Officer of AB Value Management LLC, an
investment management firm, since 2011. From 2002 to 2010, Mr. Polonitza
served in the United States Army, attaining the rank of Captain. Mr. Polonitza
has a Bachelor of Science degree in Economics from the U.S. Military Academy at
West Point and an MBA from the University of Louisville. He brings significant
organizational and strategic experience and he will work to address ITEX’s
governance issues. Mr. Polonitza has not held any position in a firm that is a
parent, subsidiary, or other affiliate of ITEX.
Mr.
Polonitza has significant organizational and strategic. As such, Mr.
Polonitza’s acumen would serve the Board well. Additionally, Mr.
Polonitza possesses the aptitude and experience to fully understand the legal
responsibilities of a director and the governance process of a public company,
as well as the personal qualities to be able to make a substantial active
contribution to Board deliberations, including intelligence, interpersonal and
communication skills, courage and inquisitiveness.
15
SHARE OWNERSHIP OF NOMINEES
The
following table contains a summary of the total number of shares of Common
Stock of ITEX beneficially owned by the Nominees as of the record date of the
2011 Annual Meeting.
The
address for each nominee is listed below. The information in the
following table has been furnished to us by the respective
Nominees. Percentage of beneficial ownership is based upon the
outstanding figure of 4,040,925 shares, which was disclosed by the Company
within its Preliminary Proxy Documents filed with the SEC on March 6, 2012:
Name and Address
|
|
Number of Shares Beneficially Owned
|
|
Percentage of Shares Beneficially
Owned
|
Dr.
Wayne Jones
555
South Floyd Street
Louisville,
Kentucky 45208
|
|
-0-
|
|
N/A
|
|
|
|
|
|
David
Polonitza
54B
Sandra Circle, Apt B1
Westfield,
NJ 07090
|
|
128,640
|
|
3.18%
|
|
|
|
|
|
|
|
|
|
|
All
nominees as a group (three persons)
|
|
128,640
|
|
3.18%
|
|
16
WHO CAN VOTE AT
THE ANNUAL MEETING
The
Record Date for determining shareholders entitled to notice of and to vote at
the Annual Meeting is March 16, 2012. Shareholders of ITEX as of the
Record Date are entitled to one vote at the Annual Meeting for each share of
Common Stock of ITEX, $0.01 par value per share, held on the Record
Date. It is anticipated that the proxy statement that will be filed
by ITEX will state the number of shares issued and outstanding on the Record
Date.
HOW TO VOTE BY PROXY
To
elect the Nominees to the Board, promptly complete, sign, date and mail the
enclosed
GOLD
proxy card in the enclosed postage-paid
envelope. Whether you plan to attend the Annual Meeting or not, we
urge you to complete and return the enclosed
GOLD
proxy
card. Please contact our proxy solicitor, InvestorCom, Inc. , toll
free at (877) 972-0090 if you require assistance in voting your
shares.
Properly
executed proxies will be voted in accordance with the directions indicated
thereon. If you sign the
GOLD
proxy card but do not
make any specific choices, your proxy will vote your shares as follows:
|
·
|
"FOR"
the election of our two Nominees to the Board of Directors of the
Company: Dr. Wayne P. Jones, and David Polonitza.
|
|
|
·
|
"FOR"
the ratification of the appointment of Ehrhardt Keefe Steiner &
Hottman PC as the Company's independent registered public accounting firm for
fiscal 2012.
|
|
|
·
|
In
the discretion of the proxy holders, on any other matters that may properly
come before the Annual Meeting.
|
|
|
|
|
|
|
|
|
|
|
Rule 14a-4(c)(3)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), governs our use of our discretionary proxy voting authority with
respect to a matter that is not known by us a reasonable time before our
solicitation of proxies. It provides that if we do not know, a
reasonable time before making our solicitation, that a matter is to be
presented at the meeting, then we are allowed to use our discretionary voting
authority when the proposal is raised at the meeting, without any discussion of
the matter in this Proxy Statement. If any other matters are
presented at the Annual Meeting for which we may exercise discretionary voting,
your proxy will be voted in accordance with the best judgment of the persons
named as proxies on the attached proxy card. At the time this Proxy
Statement was mailed, we knew of no matters which needed to be acted on at the
Annual Meeting, other than those discussed in this Proxy Statement.
If
any of your shares are held in the name of a brokerage firm, bank, bank nominee
or other institution on the Record Date, only that entity can vote your shares
and only upon its receipt of your specific
instructions. Accordingly, please contact the person responsible for
your account at such entity and instruct that person to execute and return the
GOLD
proxy
card on your behalf. You should also sign, date and mail the voting
instruction that your broker or banker sends you (or, if applicable, vote by following
the instructions supplied to you by your bank or brokerage firm, including
voting by telephone or via the Internet). Please do this for each
account you maintain to ensure that all of your shares are voted.
A
large number of banks and brokerage firms are participating in a program that
allows eligible shareholders to vote by telephone or via the
Internet. If a shareholder’s bank or brokerage firm is participating
in the telephone voting program or Internet voting program, then such bank or
brokerage firm will provide the shareholder with instructions for voting by
telephone or the Internet on the voting form. Telephone and Internet
voting procedures, if available through a shareholder’s bank or brokerage firm,
are designed to authenticate shareholders’ identities to allow shareholders to
give their voting instructions and to confirm that their instructions have been
properly recorded. Shareholders voting via the Internet should
understand that there might be costs that they must bear associated with
electronic access, such as usage charges from Internet access providers and
telephone companies. If a shareholder’s bank or brokerage firm does
not provide the shareholder with a voting form, but the shareholder instead
receives our
GOLD
proxy card, then such shareholder should mark our
GOLD
proxy card, date and sign it, and return it in the enclosed
envelope.
17
VOTING AND PROXY PROCEDURES
The
Board currently consists of three (3) individuals, each serving a term of one
year. Under the current structure, if elected, the Nominees would
each serve for a one-year term expiring in 2012 along with one of the existing
ITEX Directors. The Polonitza Group is focusing on the replacement of the
current Non-Executive Directors, namely Eric Best and John Wade, allowing for
the continuing service on the Board of ITEX’s Executive Director, Steven
White. Shareholders of ITEX are not permitted to cumulate their
votes for the election of directors.
As
we are only soliciting your proxy in support of two candidates while the
Company has three Board members, if you as a shareholder vote using the
GOLD
proxy card, you will be disenfranchised in your ability to fill the remaining
one seat on the Board. We will not exercise discretionary authority to fill the
remaining seat, and the remaining seat will be filled by the Company’s nominee
who receives the most votes. If our nominees are elected, we will control the
board of directors. Currently, we have no plans to fill any vacancies on
the board as a result of the election of our nominees.
The
presence, in person or by proxy, of 51 percent of the shares of Common
Stock outstanding entitled to vote at the Annual Meeting will constitute a
quorum. Proxies relating to "street name" shares that are
voted by brokers on some but not all of the matters before shareholders at the
Annual Meeting will be treated as shares present for purposes of determining
the presence of a quorum on all matters, but will not be entitled to vote at
the Annual Meeting on those matters as to which authority to vote is not given
to the broker ("broker non-votes"). Accordingly, broker
non-votes will not affect the outcome of the election of directors, and are not
counted in determining whether a matter requiring approval of a majority of the
shares present and entitled to vote has been approved.
At
this meeting, proxies relating to "street name" shares will not be
voted for the election of directors unless the shareholder gives instructions
on how to vote the shareholder’s shares.
The
election of the Nominees requires the affirmative vote of a plurality of the
votes present in person or represented by proxy at the Annual
Meeting. Assuming the presence of a quorum at the Annual Meeting,
all other proposals to be voted on at the Annual Meeting will require the
affirmative vote of a majority of the Common Stock present in person or
represented by proxy at the Annual Meeting.
THE
POLONITZA GROUP URGES YOU TO VOTE FOR THE ELECTION OF MESSRS. JONES, AND
POLONITZA AS DIRECTORS OF THE COMPANY BY SIGNING, DATING, AND MAILING THE
ENCLOSED
GOLD
PROXY CARD AS SOON AS POSSIBLE. PROXIES
SOLICITED BY THIS PROXY STATEMENT MAY BE EXERCISED ONLY AT THE ANNUAL MEETING
(AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF) IN ACCORDANCE WITH YOUR
INSTRUCTIONS AND WILL NOT BE USED FOR ANY OTHER MEETING.
Any
proxy may be revoked by you at any time prior to the time a vote is taken by
delivering to the Secretary of ITEX a notice of revocation bearing a later
date, by delivering a duly executed proxy bearing a later date or by attending
the Annual Meeting and voting in person (but attendance at the Annual Meeting
will not by itself constitute revocation of a prior delivered proxy).
Only
holders of record as of the close of business on the Record Date will be
entitled to vote at the Annual Meeting. If you were a shareholder of
record on the Record Date, you will retain your voting rights for the Annual
Meeting even if you sell your shares after the Record
Date. Accordingly, it is important that you vote the shares held by
you on the Record Date, or grant a proxy to vote such shares, even if you sell
such shares after the Record Date.
ALTHOUGH
YOU MAY VOTE MORE THAN ONCE, ONLY ONE PROXY WILL BE COUNTED AT THE ANNUAL
MEETING, AND THAT WILL BE YOUR LATEST-DATED, VALIDLY EXECUTED PROXY.
If
you have already sent a proxy to management of the Company, you can revoke that
proxy by signing, dating and mailing the
GOLD
proxy card or by
voting in person at the Annual Meeting.
IF
YOU SIGN THE
GOLD
PROXY CARD AND NO MARKING IS MADE, YOU WILL BE
DEEMED TO HAVE GIVEN A DIRECTION TO VOTE THE COMPANY COMMON STOCK REPRESENTED
BY THE
GOLD
PROXY CARD FOR THE ELECTION OF MESSRS. JONES AND
POLONITZA AS DIRECTORS OF THE COMPANY.
18
INFORMATION CONCERNING PERSONS WHO MAY
SOLICIT PROXIES
Under
the applicable regulations of the SEC, The Polonitza Group and each of the
Nominees are participants in the Polonitza Group’s solicitation of
proxies. Additional information regarding the participants in the
solicitation, including their beneficial ownership of Common Stock, is set
forth on Annex A to this Proxy Statement and is incorporated into this Proxy
Statement by reference. Information in this Proxy Statement about
each participant was provided by that participant.
In
connection with the engagement of InvestorCom, Inc. by the Polonitza Group as
proxy solicitor of the participants, the Polonitza Group anticipates that
certain employees of InvestorCom, Inc. may communicate in person, by telephone
or otherwise with a limited number of institutions, brokers or other persons
who are shareholders of ITEX for the purpose of assisting in the solicitation
of proxies for the Annual Meeting. Approximately 30 employees of
InvestorCom, Inc. will solicit holders of the Common Stock in connection with
the Annual Meeting.
AUDITORS
The
Polonitza Group has no objection to the ratification of the appointment of
Ehrhardt Keefe Steiner & Hottman PC as the independent registered public
accounting firm for ITEX for the fiscal year ending July 31, 2012.
SOLICITATION OF PROXIES; EXPENSES
Proxies
may be solicited by the Polonitza Group by mail, advertisement, telephone,
facsimile, telegraph, other electronic means and personal
solicitation. All written soliciting materials, including scripts to
be used in soliciting proxies over the telephone, will be filed under cover of
Schedule 14A. The Polonitza Group will bear the cost of this
solicitation. The Polonitza Group and employees of InvestorCom, Inc.
will directly contact shareholders of ITEX through various communication
channels. The Polonitza Group will seek reimbursement from ITEX of
all expenses incurred by it in connection with its nomination of directors and
this solicitation. We do not intend to submit the question of such
reimbursement to a vote of security holders of the ITEX. While no precise
estimate of the cost of solicitation can be made at the present time, the
Polonitza Group currently estimates that it will spend a total of approximately
$100,000 for its solicitation of proxies, including expenditures for attorneys,
solicitors and advertising, financial advisors, printing, transportation and
related expenses. As of March 3, 2012, the Polonitza Group had incurred
proxy solicitation expenses of approximately $15,000. In addition to
soliciting proxies by mail, proxies may be solicited in person or by telephone
or telecopy or through advertisements.
Banks,
brokerage houses, and other custodians and fiduciaries will be requested to
forward proxy solicitation material to their customers for whom they hold
shares and the Polonitza Group will reimburse them for their reasonable
out-of-pocket expenses.
The
Polonitza Group will also reimburse brokers, fiduciaries, custodians and other
nominees, as well as persons holding stock for others who have the right to
give voting instructions, for out-of-pocket expenses incurred in forwarding
this Proxy Statement and related materials to, and obtaining instructions or
authorizations relating to such materials from, beneficial owners of Common
Stock. The Polonitza Group will pay for the cost of these
solicitations, but these individuals will receive no additional compensation
for these solicitation services.
The
Polonitza Group expects to pay InvestorCom, Inc. up to $23,500 for its services
in connection with the solicitation of proxies for the Annual
Meeting.
19
CERTAIN INFORMATION REGARDING THE
POLONITZA GROUP
Each
member of the Polonitza Group is a participant in this solicitation.
Mr.
David Polonitza’s current address is 54B Sandra Circle, Apt B1, Westfield, NJ
07090. David Polonitza is Chief Operating Officer of AB Value Management LLC.
AB Value Management LLC’s address is 92 West Main Street, Freehold NJ 07728.
David Polonitza is the son of Richard Polonitza and Greta
Polonitza. David Polonitza is a citizen of the United States of
America.
Mr.
Wayne P. Jones’ current address is 2000 Indian Chute, Louisville, Kentucky,
40207, and current business address is 555 South Floyd Street, Louisville,
Kentucky 40202. Wayne P. Jones is a professor at the University of
Louisville. Wayne P. Jones is a citizen of the United States of America.
Mr.
Kirk Anderson’s current address is 7167 Lake Cove Drive, Alexandria, VA
22315. Kirk Anderson is a Network Engineer at Verizon Federal
Network Systems, 1300 North 17th Street, Suite 1200 Arlington, VA 22209. Kirk
Anderson is a citizen of the United States of America.
Mr.
Richard Polonitza’s current address is 23 Retford Avenue, Cranford, New Jersey,
07016. Richard Polonitza is retired. Richard Polonitza is the father
of David Polonitza and husband of Greta Polonitza. Richard Polonitza is a
citizen of the United States of America.
Mrs.
Greta Polonitza’s
current address is 23 Retford Avenue, Cranford,
New Jersey, 07016. Greta Polonitza is a retired teacher. Greta Polonitza is the
wife of Richard Polonitza, and the mother of David Polonitza. Greta Polonitza
is a citizen of the United States of America.
As
of the date hereof, each of the participants in this solicitation, as members
of a “group” for the purposes of Rule 13d-5(b)(1) of the 1934 Act, are deemed
to beneficially own an aggregate of 208,687 shares of Common Stock of the
Company, consisting of the following: (1) 128,640 shares held directly by
David Polonitza, (2) 71,645 shares held directly by Kirk Anderson, (3) 8,402 shares
held directly by Richard and Greta Polonitza. By virtue of the relationships
among the participants discussed above and the formation by them of a Section
13(d) group, all the participants, individually, are deemed to beneficially own
the 208,687 Shares owned in the aggregate by the Polonitza Group. For
information regarding purchases and sales of securities of the Company during
the past two years by the members of the Polonitza Group, see Annex A.
Annex
A lists certain information regarding the Polonitza Group including business
addresses, ownership of the Common Stock of ITEX and transactions in the Common
Stock during the past two years. As of the Record Date, the
Polonitza Group beneficially owned an aggregate of 208,687 shares of the Common
Stock, representing approximately 5.2% of the Company’s voting common stock
outstanding as of the record date for the 2011 Annual Meeting, March 16, 2012.
The participants, however, change or alter their respective investment
strategies at any time to increase or decrease their holdings in the Company.
The
Polonitza Group reviews its investment in ITEX on a continuing
basis. Depending upon overall market conditions, the Company’s
business, affairs and financial position, the price level of the Common Stock,
as well as other various factors, The Polonitza Group may take such actions
with respect to its investment in ITEX as it deems appropriate in light of the
circumstances existing from time to time. To date, these actions
have included engaging in on-going discussions with management, the Board of
Directors, other shareholders of the Company and other relevant parties
concerning the business and future plans of ITEX generally, and with regard to
strategies and actions that The Polonitza Group believes will encourage
management and the Board of Directors to maximize shareholder value as well as
enhance ITEX’s business, governance, and oversight.
The
Polonitza Group ’s actions may also include, without limitation, purchasing
additional shares of Common Stock in the open market, in privately negotiated
transactions or otherwise.
The
Polonitza Group has not, during the last 10 years, been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
20
Except
as set forth herein or in Annex A, neither The Polonitza Group has not within
the past year been, a party to any contract, arrangement or understanding with
any person with respect to any securities of ITEX including, but not limited
to, joint ventures, loan or option arrangements, puts or calls, guarantees
against loss or guarantees of profit, division of losses or profits, or the
giving or withholding of proxies.
There
are no material proceedings to which the Polonitza Group or any associate of
the Polonitza Group has been party to which is adverse to ITEX or any of its
subsidiaries or has a material interest adverse to the Company or any of its
subsidiaries. Derivatively on behalf of ITEX, Mr. David Polonitza is
pursuing a lawsuit against the existing directors of ITEX. Except as
described herein, neither Polonitza Group nor any of its respective associates
have any interest in the matters to be voted upon at the Annual Meeting, other
than an interest, if any, as a shareholder of ITEX.
Except
as described herein, in Annex A or The Polonitza Group ’s Schedule 13D filed
with the SEC, as amended, neither The Polonitza Group , nor any of its
respective associates: (i) has engaged in or has a direct or indirect
interest in any transaction or series of transactions since the beginning of
ITEX’s last fiscal, or in any currently proposed transaction to which ITEX or
any of its subsidiaries is a party where the amount involved was in excess of
$120,000; (ii) has been indebted to ITEX or any of its subsidiaries; (iii) has
borrowed any funds for the purpose of acquiring or holding any securities of
ITEX, or is presently, or has been within the past year, a party to any
contract, arrangement or understanding with any person with respect to either
any securities of ITEX, any future employment by ITEX or its affiliates, or any
future transaction to which ITEX or any of its affiliates will or may be a
party; or (iv) is the beneficial or record owner of any securities of ITEX
or any parent or subsidiary thereof.
The
Polonitza Group has not paid any compensation to Messrs. Jones or
Polonitza as a result of their becoming Nominees of The Polonitza Group at the
Annual Meeting. There are no other arrangements or understandings
with Messrs. Jones or Polonitza, other than as set forth herein and in The
Polonitza Group’s Schedule 13D filed with the SEC, as amended.
21
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information that has been provided to the
Company regarding the beneficial ownership as of March 2, 2012 of the Company’s
common stock by (a) each person who is known by the Company to be a beneficial
owner of more than five percent of the outstanding common stock of the Company,
(b) each director or director nominee of the Company, (c) each of the named executive
officers, and (d) all directors and executive officers of the Company as a
group.
Name and Address
(1)
Of Beneficial Owner
|
|
Shares
(2)
Beneficially
Owned
|
|
|
Percent
(3)
of Voting
Shares
|
|
|
|
|
|
|
|
|
Current
Directors and Executive Officers:
|
|
|
|
|
|
|
Steven
White
(4)
|
|
|
577,684
|
|
|
|
14.3
|
%
|
Eric
Best
|
|
|
25,000
|
|
|
|
*
|
|
John
Wade
(5)
|
|
|
57,000
|
|
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
All
current directors and executive officers as a group (3 persons)
|
|
|
659,684
|
|
|
|
16.3
|
%
|
Name and Address
(1)
Of Beneficial Owner
|
|
Shares
(2)
Beneficially
Owned
|
|
|
Percent
(3)
of Voting
Shares
|
|
Other
Beneficial Owners:
|
|
|
|
|
|
|
|
|
Western
Sizzlin Corporation
(6)
|
|
|
313,040
|
|
|
|
7.7
|
%
|
The
Polonitza Group
(7)
|
|
|
208,687
|
|
|
|
5.2
|
%
|
(1)
|
Except
as noted below, the business address of the current directors and executive
officers is c/o ITEX Corporation, 3326 – 160th Ave SE, Suite
100, Bellevue, WA 98008.
|
(2)
|
Beneficial
ownership is determined in accordance with the rules of the SEC. In computing
the number of shares beneficially owned and the percentage ownership of an
individual or group, any shares that the individual or group may acquire
within 60 days, including through the exercise of stock options or vesting of
restricted stock units, are deemed outstanding. These shares, however, are
not deemed outstanding for purposes of computing the ownership of any other
person. To our knowledge, except as indicated in the footnotes to this table
and subject to applicable community property laws, the stockholders named in
the table have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them.
|
(3)
|
Percentage
of beneficial ownership is based upon the outstanding figure of 4,040,925 shares,
which was disclosed by the Company within its Preliminary Proxy Materials
filed on March 6, 2012.
|
(4)
|
Mr.
White has 197,584 unvested restricted stock awards outstanding.
|
(4)
|
Mr.
Wade has 5,000 unvested restricted stock awards outstanding.
|
(6)
|
The address of Western Sizzlin
Corporation is 416 South Jefferson Street, Suite 600, Roanoke, Virginia
24011.
|
(7)
|
The
latest Schedule 13D filed by the Polonitza Group indicated that 208,687
shares are held by David Polonitza, Richard and Greta Polonitza, Kirk
Anderson and Dr. Wayne P. Jones. (the “Polonitza Group”). The
address of Mr. David Polonitza, chairman of the group’s nominating committee,
is 54B Sandra Circle, Apt B1, Westfield, NJ 07090
|
22
THE BACKGROUND OF THE NOMINEES OF ITEX’S
BOARD
Steven
White
has been a director of the Company and served as its Chairman since February
2003. Mr. White has served as CEO and Interim CFO of the Company since June
2003. Mr. White was President of Lakemont Capital, Ltd., a business advisory
firm from 2002 to 2004. He was the Chairman and CEO of Ubarter.com, a public
company. Ubarter.com was an on-line payment processor for cashless
transactions, originally founded by Mr. White in 1983 as Cascade Trade
Association. In June 2000, Mr. White directed the sale of Ubarter.com to
Network Commerce, an Internet-based technology infrastructure and services
company. From June 2000 to June 2001, Mr. White was a Senior Vice President of
Network Commerce.
Eric
Best
has been a director of the Company since February 2003. He is the founder
of MindCorps, an e-commerce systems integrator acquired by Amazon.com in 1999,
and Emercis, an e-commerce tools provider acquired by Impressa in 2000. At
Amazon.com, Mr. Best helped establish the company’s third-party seller programs
and early partnerships with leading retailers. He is currently founder and CEO
of Mercent, a software venture that enables customers such as GUESS?, Liz
Claiborne, and Crabtree & Evelyn to sell through leading online
merchandising channels. Mr. Best is also founder and Chairman of Seattle-based
Morse Best Innovation, a technical marketing agency serving clients such as
Microsoft, Lexmark, and WRQ. He is a graduate of Seattle Pacific University and
a member of the SPU Entrepreneurial Studies Council and Society of Fellows. Mr.
Best served as a director of Ubarter.com from 1999 to 2000.
John
A. Wade
has been a director of the Company since February 2003. He has served
since May 1998 as Chief Financial Officer of Aptimus, Inc., a leader in online
direct marketing located in Seattle, WA. Prior to joining Aptimus, Mr. Wade
served as the CFO and COO for Buzz Oates Enterprises, a real estate development
company. He also has worked as the controller for A&A Properties, Inc., an
asset management corporation and for Labels West, a manufacturing company; as
well as an auditor and taxation specialist at McGladrey and Pullen, an
international accounting firm. Mr. Wade has a Bachelor of Science degree in
business administration with a concentration in accounting from the San Diego State
University School of Business and has been a CPA since 1987. Mr. Wade served as
a director of Ubarter.com from 1999 to 2000.
Source:
http://www.itex.com/aboutus/boardofdirectors.asp
23
COMMITTEE’S OF ITEX’S BOARD
The Board of
Directors represents the interests of ITEX’s stockholders as a whole and is
responsible for directing the management of the business and affairs of
ITEX. ITEX’s Board of Directors is currently composed of three
members. Each director currently serves until the next annual
meeting of stockholders or until his successor is duly elected and
qualified. ITEX’s bylaws provide that the authorized number of
directors may be between three and five, with the exact number to be determined
by a majority of ITEX’s Board of Directors or stockholders.
The standing
committees of the Board of Directors of the Company are the Audit Committee and
the Compensation and Nominating Committee. ITEX’s Board of Directors
may establish other committees to facilitate the management of ITEX’s
business. Below is a description of each committee of the Board of
Directors.
Audit Committee
The Audit
Committee assists ITEX’s Board of Directors in its oversight of the quality and
integrity of ITEX’s accounting, auditing, and reporting practices. The
Audit Committee’s role includes discussing with management the Company’s
processes to manage business and financial risk, and for compliance with
applicable legal and regulatory requirements. The Audit Committee is
responsible for the appointment, replacement, compensation, and oversight of
the independent registered public accounting firm engaged to prepare and issue
audit reports on ITEX’s financial statements, and conferring with them
concerning the scope of their examination of the books and records of the
Company. The Audit Committee relies on the expertise and knowledge
of management and the independent accounting firm in carrying out its oversight
responsibilities. The specific responsibilities in carrying out the
Audit Committee’s oversight role are set forth in the ITEX Audit Committee
Charter, a copy of which is available on the investor relations portion of
ITEX’s website at
www.itex.com
.
The Audit
Committee consists of Messrs. Wade and Best.
Compensation and
Nominating Committee
The Compensation
Committee reviews retirement and benefit plans and salaries and incentive
compensation to be provided to ITEX’s executive personnel, employees, and
consultants, and recommends appropriate compensation and benefit
levels. The Compensation Committee also administers ITEX’s current
equity incentive plan, including recommending the issuance of grants and
options under the plan to ITEX’s employees, consultants and directors and, in
general, oversees general policy matters relating to any compensation plans,
including payroll, option, stock, medical and bonus plans.
In its function
as Nominating Committee, the Committee is responsible for identifying and
recommending to the Board of Directors qualified nominees to become board
members and considers stockholder recommendations for nominees to fill Board
positions if such recommendations are received. The
Nominating Committee also makes recommendations to the Board of Directors
regarding the size and composition of the Board, recommending Board committee
assignments, as well as carrying out the duties set forth in the ITEX
Nominating Committee Charter. The ITEX Nominating Committee Charter
is available on the investor relations portion of ITEX’s website at
www.itex.com
.
The Compensation
and Nominating Committee consists of Messrs. Wade and Best.
24
Meetings and
Committees of the Board
The Board of
Directors held nine meetings during fiscal 2011 which were attended by all
directors. There were four Audit Committee meetings during fiscal 2011 and two
Compensation & Nominating Committee meetings, which were attended by all
committee members. Directors are encouraged to attend the annual meetings of
ITEX stockholders. All current directors attended the last annual meeting of
stockholders. Below is a table that provides membership and meeting information
for each of the Board committees:
Name
|
|
Audit
|
|
Compensation
& Nominating
|
|
Mr.
Wade
|
|
*
|
|
|
|
Mr.
Best
|
|
|
|
*
|
|
Total
meetings in fiscal year 2011
|
|
4
|
|
2
|
|
|
|
|
|
|
|
*
Committee Chairperson
|
|
|
|
|
|
The standing
committees of the Board of Directors of the Company are the Audit Committee and
the Compensation and Nominating Committee. ITEX’s Board of Directors
may establish other committees to facilitate the management of ITEX’s
business. Below is a description of each committee of the Board of
Directors.
Director
Qualifications and Nominations
Minimum
Qualifications and Nominating Process
The
Nominating Committee has established certain minimum qualifications for
directors, including being able to read and understand basic financial
statements, being over 25 years of age, having business experience at a
policy-making level, and having high moral character. They should be
committed to enhancing stockholder value and should have sufficient time to
carry out their duties. Their service on other boards of public
companies should be limited to a number that permits them to perform
responsibly all director duties. The Committee retains the right to
modify these minimum qualifications from time to time.
The
Committee’s process for identifying and evaluating nominees is as follows: In
the case of incumbent directors whose terms of office are set to expire, the
Nominating Committee reviews the directors’ overall service to the Company
during their term, including the number of meetings attended, level of
participation, quality of performance, and any transactions of such directors
with the Company during their term. Upon receipt of a recommendation
from any source, including stockholders, the Committee will take into account
whether a Board vacancy exists or is expected or whether expansion of the Board
is desirable. In making this determination, the Committee may
solicit the views of all directors. If the Committee determines that
the addition of a director is desirable, it will assess whether the candidate
presented should be nominated for Board membership. The Committee
will use its network of contacts to compile a list of potential candidates,
which may include candidates that come to the attention of the Nominating
Committee through stockholders, search firms or other persons. While
the Committee may consider whatever factors it deems appropriate in its
assessment of a candidate for board membership, candidates nominated to serve
as directors should in the Committee’s judgment:
|
•
|
be
able to represent the interests of the Company and represent fairly and
equally all of its stockholders, and not be disposed by affiliation or
interest to advance or favor any particular individual, group or class of
stockholders or other constituency;
|
|
|
|
|
•
|
possess
the background and demonstrated ability to contribute to the Board’s
performance of its collective responsibilities, through senior executive
management or relevant professional experience;
|
|
|
|
|
•
|
Have
a basic understanding of the principal operational and financial objectives
and plans and strategies of the Company;
|
|
|
|
|
•
|
be
able to contribute to the collective functioning of the Board;
|
25
|
•
|
be
able to devote the time and attention necessary to serve effectively as a
director; and
|
|
•
|
be
able to attend Board meetings in person without an undue expense burden to
the Company.
|
The
Committee will consider whether the nominee must or should be independent,
which determination is based upon the Company’s charter and bylaws, applicable
securities laws, the rules and regulations of the SEC, applicable NASDAQ rules,
and the advice of counsel. The Committee may also take into
consideration whether a candidate’s background and skills meet any specific
needs of the Board that the Committee has identified. The Committee
will preliminarily assess the candidate’s qualifications with input from the
chief executive officer. If, based upon its preliminary assessment,
the Committee believes that a candidate is likely to meet the criteria for
Board membership, the chairman will advise the candidate of the Committee’s
preliminary interest and, if the candidate expresses sufficient interest, the
chairman, with the assistance of the corporate office, will arrange interviews
of the candidate with members of the Committee and with the chief executive
officer, either in person or by telephone. After the members of the
Committee and the chief executive officer have had the opportunity to interview
the candidate, the Committee will meet to consider whether to recommend to the
Board that it nominate the candidate for election to the Board.
The
Committee does not have a specific policy regarding the diversity of the Board.
Instead, the Nominating Committee considers the Board’s overall composition
when considering director candidates who satisfy the factors outlined above,
including whether the Board has an appropriate combination of professional
experience, skills, knowledge and variety of viewpoints and backgrounds in
light of the Company’s current and expected future needs. In addition, the
Nominating Committee believes that it is desirable for new candidates to contribute
to a variety of viewpoints on the Board, which may be enhanced by a mix of
different professional and personal backgrounds and experiences.
Stockholder
nominees
The
Nominating Committee will consider director candidates recommended by stockholders,
provided the recommendations include certain specified
information. In addition, to be timely the recommendation must be
received by the Corporate Secretary within the time period prescribed for
“Stockholder Proposals” for proposals other than matters brought under SEC Rule
14a-8.
26
BOARD POLICIES AND PRACTICES
Code
of Ethics
ITEX
has adopted a Code of Ethics that applies to ITEX’s executive officers,
including financial officers and other finance organization
employees. The Code of Ethics is available on the investor relations
portion of ITEX’s website at
www.itex.com
. ITEX’s
Board did not grant any waivers of any ethics policies in fiscal 2011 to ITEX’s
executive officers. If ITEX makes any substantive amendments to the
Code of Ethics or grant any waiver, including any implicit waiver, from a provision
of the code to ITEX’s executive officers, the Company will disclose the nature
of such amendment or waiver on that website or in a report on Form 8-K.
Director
Compensation Table
The
following table sets forth information concerning the compensation of the
Company’s non-employee directors for fiscal 2011.
N
ame
|
|
Fees Earned
or Paid in
Cash
|
|
|
All Other Compensation
|
|
|
Total
|
|
Eric
Best
|
|
$
|
30,000
|
|
|
$
|
0
|
|
|
$
|
30,000
|
|
John
A. Wade
|
|
$
|
30,000
|
|
|
$
|
81,250 (1)
|
|
|
$
|
111,250
|
|
(1)
|
The
amount includes consulting fees of $60,000 in cash and $21,250 in stock
awards.
|
Narrative to
Director Compensation Table
During
fiscal 2011, non-employee directors each received an annual Board retainer of
$30,000. No options or restricted stock awards were granted to non-employee
directors for services as a director. No additional payments were
made for committee service. No reimbursements were paid in fiscal
2011 for travel or other out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors or its committees and
Board-related activities. John Wade was retained by the Company as a
consultant to assist with internal audit matters, and was paid consulting fees
of $60,000 in cash and $21,250 in stock awards in 2011. Stock awards
for Mr. Wade reflect a restricted stock grant of 5,000 shares on March 30,
2011, valued at the grant date stock price of $4.25 per share. The stock award
vests over a one-year service period. Steven White is an officer of
the Company and did not receive separate compensation for services as a
director.
27
EXECUTIVE COMPENSATION
The
following table provides summary information about compensation received
by ITEX’s Chief Executive Officer (the “named executive officer”) for
the fiscal years ended July 31, 2011, July 31, 2010 and July 31,
2009. The named executive officer did not receive stock options
during fiscal years 2011, 2010 and 2009.
Summary
Compensation Table*
Name and Principal
Position
|
|
Year
|
|
Salary
|
|
|
Stock
Awards (1)
|
|
|
All Other
Compen-
sation (2)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
White, CEO and
|
|
2011
|
|
$
|
250,000
|
|
|
$
|
807,500
|
|
|
$
|
10,980
|
|
|
$
|
1,068,480
|
|
Interim
CFO
|
|
2010
|
|
$
|
235,577
|
|
|
$
|
132,600
|
|
|
$
|
59,916
|
|
|
$
|
428,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
|
Columns
in the Summary Compensation Table that were not relevant to the compensation
paid to the named executive officer were omitted.
|
(1)
|
The
amount represents the grant date fair value of stock awards, computed in
accordance with FASB ASC 718. The value is based on the closing
price of the Company’s common stock on the date of grant. Stock awards for
Mr. White in 2011 reflect a restricted stock grant of 190,000 shares
granted on March 30, 2011. The award vests over an 11.5 year period, for a
value of $70,217 per year. Stock awards for Mr. White in 2010
reflect a restricted stock grant of 39,000 shares granted on October 8, 2009. The
award vests equally over a 36-month period.
|
(2)
|
The
2011 amount includes $10,980 of dividends paid on unvested restricted stock.
The 2010 amount includes a “tax gross-up” amount of $57,247 paid as
reimbursement for taxes on income realized in connection with the grant of
stock awards, $650 of dividends paid on unvested restricted stock, and $2,019
for 401(k) matching contributions. No “tax gross-up” amounts were
paid in 2011.
|
|
The
above named executive officer did not receive stock option awards during fiscal
years 2011 and 2010. Executive officers are eligible to
participate in all of our employee benefit plans, in each case on the same
basis as other employees. Until December 31, 2009, employees were
eligible to receive matching 401(k) employer contributions of up to 6.0% of
their eligible compensation. The Company reimburses
executive officers for all reasonable business expenses incurred by the
officer in connection with the performance of the officer’s duties.
|
TRANSACTIONS WITH RELATED PERSONS
Other
than compensation arising from the employment relationship or transactions
involving our chief executive officer described above (See Item 11, “Executive
Compensation”), ITEX and its subsidiaries had no transactions during our last
fiscal year, nor are there any currently proposed transactions, in which ITEX
or its subsidiaries was or is to be a participant, the amount involved exceeded
$120,000, and any director or director nominee, executive officer, holder of
more than 5% of our common stock or any of their immediate family members, or
any promoter or control person, had a material direct or indirect interest.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires that ITEX’s
directors and executive officers, and persons who own more than ten percent of
our common stock, file with the SEC initial reports of ownership and reports of
changes in ownership of our common stock and other equity securities. Officers,
directors and greater-than-ten percent stockholders are required by the SEC
regulation to furnish us with copies of all Section 16(a) forms they
file. Specific due dates have been established by the SEC, and we
are required to disclose in this report any failure to file by those dates.
We
believe that except for the Pagidipati Family Partnership, which filed a report
covering a single transaction from March 2, 2011, three days late and a report
covering a single transaction July, 7 2010, thirty eight days late, while a
member of a shareholder group with an ownership of greater than ten percent of
ITEX’s common stock, due to an outstanding limit order purchase request of
stock being executed but not observed until three and thirty eight days
respectively after the trade, there has been compliance with all Section 16(a)
filing requirements applicable to our officers, directors and ten-percent
beneficial owners.
28
AUDIT RELATED MATTERS
Independent
Registered Public Accountants
The firm of Ehrhardt
Keefe Steiner & Hottman PC (“EKS&H”) has been selected as independent
registered public accountants for the Company
.
EKS&H has
been ITEX’s independent audit firm since 1998. Among other matters,
the Audit Committee concluded that current requirements for audit partner
rotation, auditor independence through limitation of services and other
regulations affecting the audit engagement process substantially assist in
maintaining auditor independence despite the long-term nature of EKS&H’s
services to ITEX. ITEX obtains tax services from another service
provider.
Fees
Paid to EKS&H (Audit and Non-Audit Fees)
The
following table presents fees for professional audit services rendered by
Ehrhardt Keefe Steiner & Hottman PC for the audit of ITEX’s annual
financial statements for the years ended July 31, 2011 and 2010, and the
reviews of the financial statements included in each of ITEX’s quarterly
reports on Form 10-Q during the fiscal years ended July 31, 2011 and 2010, and
fees billed for other services rendered by Ehrhardt Keefe Steiner & Hottman
PC during those periods.
Year Ended July 31
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
Audit
Fees
(1)
|
|
$
|
108,625
|
|
|
$
|
107,500
|
|
Audit
Related Fees
(2)
|
|
|
5,174
|
|
|
|
9,030
|
|
Tax
Fees
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
113,799
|
|
|
$
|
116,530
|
|
(1)
|
Audit
Fees include ITEX’s quarterly reviews and performance of ITEX’s annual audit.
|
(2)
|
Audit
Related Fees consist of assurance and related services that are reasonably
related to the performance of the audit or review of ITEX’s financial
statements. This category includes fees related to the performance of audits
and attest services not required by statute or regulations, and accounting
consultations regarding proposed transactions and acquisitions.
|
(3)
|
Tax
Fees consist of the aggregate fees billed for professional services rendered
by EKS&H for tax compliance, tax advice, and tax planning.
|
Pre-approval
Policies and Procedures
In
accordance with Audit Committee policy and the requirements of law, the Audit
Committee pre-approves all audit and permissible non-audit services provided by
the independent auditors. These services may include audit services,
audit-related services, tax services and other services. The Audit
Committee has approved all of the services provided by Ehrhardt Keefe Steiner
& Hottman PC referred to above. In some cases, the Audit
Committee provides pre-approval for up to a year, related to a particular defined
task or scope of work and subject to a specific budget. In other cases, a
designated member of the Audit Committee may have the delegated authority from
the Audit Committee to pre-approve additional services, and then must
communicate such pre-approvals to the full Audit Committee. The
independent auditors and management are required to periodically report to the
Audit Committee regarding the extent of services provided by the independent
auditors in accordance with this pre-approval, and the fees for the services
performed to date.
29
SHAREHOLDER
COMMUNICATION WITH ITEX’S BOARD OF DIRECTORS
You
may contact any of ITEX’s directors by writing to them c/o ITEX Corporation,
3326 – 160
th
Ave
SE, Suite 100, Bellevue, WA 98008. You may also send an
email to ITEX’s Board at board@itex.com. Each communication should
specify the applicable director or directors to be contacted as well as the
general topic of the communication. ITEX may initially receive and
process communications before forwarding them to the applicable
director. ITEX generally will not forward to the directors a
shareholder communication that is determined to be primarily commercial in
nature, that relates to an improper or irrelevant topic, or that requests general
information about ITEX. Concerns about accounting or auditing
matters or communications intended for non-management directors should be sent
to the attention of the Chair of the Audit Committee at the email address
above. ITEX’s directors may at any time review a log of all
correspondence received by ITEX that is addressed to the independent members of
the Board and request copies of any such correspondence.
INDEPENDENCE OF ITEX’S DIRECTORS
The
Board of Directors is composed of two non-executive outside directors, who the
current Board defines as “independent” and the Chairman and Chief Executive
Officer. Based on information supplied to it by the directors,
ITEX’s current Board has affirmatively determined that each of John Wade and
Eric Best is “independent” as defined by the NASDAQ Marketplace Rules, and that
Steven White, Chairman, Chief Executive Officer and Chief Financial Officer is
not.
ADDITIONAL INFORMATION
This
Proxy Statement includes quotations from previously published material
contained in periodicals and analysts reports, the source of which, including
the name of the author and publication and the date of publication, has been
cited when used. We did not seek the consent of the author or
publication to the use of any such material as proxy soliciting material, and
such material should not be viewed as indicating the support of such third
party for the views expressed in this Proxy Statement. We have not
directly or indirectly paid or proposed to make any payments or give any other
consideration in connection with the preparation, publication or republication
of any such material.
Certain
of the information contained in this Proxy Statement is based on publicly
available information filed by ITEX and other peer institutions with the
SEC. The Polonitza Group does not have any information that would
indicate that any information contained in this Proxy Statement that has been
taken from such documents is inaccurate or incomplete.
Some
of the statements in this Proxy Statement may constitute "forward-looking
statements," which for this purpose include all statements that are not of
historical facts. The actual future financial performance of ITEX
could differ materially from those anticipated by these forward-looking statements.
The
Polonitza Group is not aware of any other substantive matters to be considered
at the Annual Meeting. However, if any other matter should properly
come before the Annual Meeting, The Polonitza Group will vote all proxies held
by it in accordance with their best judgment, consistent with federal proxy
rules.
30
YOUR VOTE IS IMPORTANT
1.
|
Your
proxy is important no matter how many shares of Common Stock you
own. Be sure to vote on the
GOLD
proxy
card. The Polonitza Group urges you NOT to sign any proxy card
which is sent to you by ITEX or any other party.
|
2.
|
If
you have already submitted a proxy card to ITEX for the Annual Meeting, you
may change your vote to a vote "FOR" the election of the Nominees
and "Against" ITEX’s slate by signing, dating and returning the
enclosed
GOLD
proxy card, which must be dated after any proxy
card you may previously have submitted to ITEX.
Only your
latest dated proxy card for the Annual Meeting will count at the Annual
Meeting
.
|
3.
|
If
any of your shares are held in the name of a bank, broker or other nominee,
please contact the person responsible for your account and direct him or her
to vote on the
GOLD
proxy card "FOR" election of the
Nominees.
|
4.
|
If
you hold your shares in more than one type of account or your shares are
registered differently, you may receive more than one GOLD proxy
card. We encourage you to vote each
GOLD
proxy card
that you receive.
|
NO
MATTER HOW MANY OR HOW FEW SHARES YOU OWN WE ARE SEEKING YOUR
SUPPORT. PLEASE VOTE FOR MESSRS. JONES AND POLONITZA BY SIGNING,
DATING, AND MAILING THE
GOLD
PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE. ONLY YOUR LATEST DATED
PROXY COUNTS. EVEN IF YOU HAVE ALREADY RETURNED A PROXY TO ITEX’S
BOARD OF DIRECTORS, YOU HAVE EVERY LEGAL RIGHT TO REVOKE IT BY SIGNING, DATING,
AND MAILING THE ENCLOSED
GOLD
PROXY CARD OR BY VOTING IN PERSON AT
THE ANNUAL MEETING.
PLEASE CALL IF YOU HAVE QUESTIONS
If
you have any questions or require any assistance, please contact InvestorCom,
Inc., Inc., proxy solicitors for The Polonitza Group, at the following address
and telephone number:
65 Locust Avenue, Third Floor,
New Canaan, CT 06840
Banks and Brokers call collect (203)
972-9300
Shareholders call toll free (877)
972-0090
enhanceitex@investor-com.com
IT
IS IMPORTANT THAT YOU RETURN YOUR PROXY PROMPTLY. PLEASE SIGN AND
DATE YOUR GOLD PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE TO AVOID
UNNECESSARY EXPENSE AND DELAY. NO POSTAGE IS NECESSARY.
31
ANNEX A
INFORMATION ABOUT THE "PARTICIPANTS
IN THE SOLICITATION"
Under
applicable SEC regulations, The Polonitza Group and the Nominees are participants
in their solicitation of proxies from the Company’s shareholders to vote in
favor of the election of the Nominees to the Company’s Board.
The
Participants in the proxy solicitation are David Polonitza, Dr. Wayne P. Jones,
Richard Polonitza, Greta Polonitza, and Kirk Anderson (collectively, the
“Participants”).
Background
of the Nominees
The
following is the business address and, where applicable, the principal
occupation or employment of each of the Nominees:
Nominees:
Dr.
Wayne P. Jones
555
South Floyd Street
Louisville,
KY 40202
|
University
of Louisville - Professor (1998-present)
The
University Group, LTD - Chief Executive Officer (1998-present)
Tumbleweed
Restaurants, Inc. - Founding Partner/Vice President Marketing &
Development (1997-2000)
International
Pizza Hut Franchisee Association - CEO & Executive Director (1993-1997)
Marcus
Inc. – Restaurant Division President (1998-1991)
Chi-Chi’s
Inc. - Senior Vice President, Marketing & Development (1984-1988)
General
Mills, Inc. – Division Vice President (1983-1984)
Arby’s
Inc. – Senior Vice President of Operations (1979-1982)
Kentucky
Fried Chicken – Director Food Operations, Canada and Mexico (1969-1979)
H.J.
Heinz – Brand Manager (1965-1969)
|
|
|
David
Polonitza
92
West Main Street
Freehold,
NJ 07090
|
AB
Value Management LLC, an investment management firm - (2011-present)
US
Army – Officer (2002 –2010)
|
Within
the past ten years:
(i) None
of the participants has been convicted in a criminal proceeding (excluding traffic
violations or other minor offenses); found by a court of competent jurisdiction
in a civil action or by the Securities and Exchange Commission to have violated
any Federal or State securities law; or been found by a court of competent
jurisdiction in a civil action or by the Commodity Futures Trading Commission
to have violated any Federal commodities law;
(ii) No
petition under the Federal bankruptcy laws or any state insolvency law has
been filed by or against, and no receiver, fiscal agent or similar court
appointed officer has been appointed for the business or property of any
of the participants or (a) any partnership in which a participant was a general
partner, or (b) any corporation of which a participant was an executive officer,
in either case at or within two years before the time of such filing.
(iii) None
of the participants has been the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, that permanently or temporarily enjoined any of the following
activities: (a) acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity Futures
Trading Commission, or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity; (b) engaging in any type
of business practice; or (c) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of Federal or State securities laws or Federal commodities laws;
A-1
(iv) None
of the participants has been the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any Federal or State authority
barring, suspending or otherwise limiting for more than 60 days the right to
engage in any activity described in clause (a) of the immediately preceding
paragraph or the right to be associated with persons engaged in any such
activity;
(v) None
of the participants has been the subject of, or a party to, any Federal or
State judicial or administrative order, judgment, decree or finding, not
subsequently reversed, suspended or vacated, relating to an alleged violation
of (a) any Federal or State securities or commodities law or regulation; (b)
any law or regulation respecting financial institutions or insurance companies
including, but not limited to, a temporary or permanent injunction, order of
disgorgement or restitution, civil money penalty or temporary or permanent
cease-and-desist order, or removal or prohibition order; or (c)any law or
regulation prohibiting mail or wire fraud or fraud in connection with any
business entity; and
(vi) None
of the participants has been the subject of, or a party to, any sanction or
order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization, any registered entity, or any equivalent exchange, association,
entity or organization that has disciplinary authority over its member or
persons associated with a member.
A-2
Transactions in
Company Securities
Information
relating to any transactions in shares of the Common Stock by members of The
Polonitza Group during the past two years is reflected in the table
below. Dr. Wayne P. Jones, has not engaged in any transactions in
shares of the Common Stock during the past two years.
Party
|
Date of Purchase/Sale
|
Number of Shares of the Common Stock
|
Buy/Sell
|
Price Per Share
|
David Polonitza
|
2/10/2010
|
300
|
Buy
|
$3.80
|
|
2/17/2010
|
300
|
Buy
|
$3.60
|
|
3/19/2010
|
200
|
Buy
|
$4.05
|
|
4/19/2010
|
130
|
Buy
|
$4.50
|
|
6/17/2010
|
215
|
Buy
|
$4.60
|
|
6/30/2010
|
350
|
Buy
|
$4.40
|
|
9/24/2010
|
340
|
Buy
|
$4.76
|
|
1/24/2011
|
215
|
Buy
|
$4.52
|
|
3/23/2011
|
450
|
Buy
|
$4.35
|
|
|
|
|
|
Kirk Anderson
|
4/19/2010
|
260
|
Buy
|
$4.50
|
|
6/30/2010
|
375
|
Buy
|
$4.40
|
|
12/22/2010
|
250
|
Buy
|
$4.19
|
|
|
|
|
|
Richard and Greta Polonitza Jt Ten
|
2/17/2010
|
220
|
Buy
|
$3.62
|
|
12/22/2010
|
250
|
Buy
|
$4.19
|
|
|
|
|
|
Arrangements,
Interests and Transactions
No
participant in the solicitation by The Polonitza Group is, or was within the
past year, a party to any contract, arrangement or understanding with any
person with respect to any securities of the Company, including, but not
limited to, joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profit, division of losses or profits,
or the giving or withholding of proxies. The Polonitza Group has
agreed, however, to pay the expenses of the solicitation and, as discussed
under "Solicitation of Proxies; Expenses," expects to seek
reimbursement from the Company upon completion of the solicitation.
A-3
ITEX CORPORATION
COMMON STOCK PROXY
2011 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF
DAVID POLONITZA
WAYNE P. JONES
RICHARD POLONITZA
GRETA POLONITZA
KIRK ANDERSON
IN OPPOSITION TO THE BOARD OF DIRECTORS
OF
ITEX CORPORATION
____________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE
POLONITZA GROUP
THE BOARD OF DIRECTORS OF ITEX
CORPORATION
IS NOT SOLICITING THIS PROXY
PROXY
The undersigned
appoints [_____] and [_____], and each of them, attorneys and agents with full
power of substitution to vote all shares of common stock of ITEX Corporation
(the “Company”) which the undersigned would be entitled to vote if personally
present at the 2011 Annual Meeting of Stockholders of the Company scheduled to
be held at the Red Lion Hotel Fifth Avenue, 1415 Fifth Avenue, Seattle, WA
98101 on May 14, 2012, beginning at 3:30 PM local time, and including at any
adjournments or postponements thereof and at any meeting called in lieu thereof
(the “Annual Meeting”).
The undersigned
hereby revokes any other proxy or proxies heretofore given to vote or act with
respect to the shares of common stock of the Company held by the undersigned,
and hereby ratifies and confirms all action the herein named attorneys and
proxies, their substitutes, or any of them may lawfully take by virtue
hereof. If properly executed, this proxy will be voted as directed
on the reverse and in the discretion of the herein named attorneys and proxies
or their substitutes with respect to any other matters as may properly come
before the Annual Meeting that are unknown to The Polonitza Group a
reasonable time before this solicitation.
IF NO DIRECTION
IS INDICATED WITH RESPECT TO THE PROPOSALS ON THE REVERSE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
This proxy will
be valid until the sooner of one year from the date indicated on the reverse
side and the completion of the Annual Meeting.
Important Notice Regarding the
Availability of Proxy Materials
for the Annual Meeting
IMPORTANT: PLEASE SIGN, DATE AND MAIL
THIS PROXY CARD PROMPTLY!
CONTINUED AND TO BE SIGNED ON REVERSE
SIDE
[X] Please mark
vote as in this example
THE POLONITZA GROUP RECOMMENDS A VOTE
“FOR” THE NOMINEES LISTED IN PROPOSAL NO. 1 AND “FOR” PROPOSAL NO. 2
1
.
|
APPROVAL
OF THE POLONITZA GROUP’S PROPOSAL TO ELECT DIRECTORS:
|
|
FOR ALL
NOMINEES
|
WITHHOLD
AUTHORITY TO
VOTE FOR ALL
NOMINEES
|
FOR ALL
NOMINEES
EXCEPT
|
|
|
|
|
Nominees:
|
Wayne
P. Jones
David
Polonitza
|
[ ]
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NOTE: If you do
not wish for your shares to be voted “FOR” a particular nominee of the Polonitza
Group, mark the “FOR ALL NOMINEES EXCEPT” box and write the name(s) of the
nominee(s) you do not support on the line below. Your shares will be
voted for the remaining Polonitza Group nominee(s). You may also
withhold authority to vote for one or more additional candidates who have been
nominated by the Company by writing the name(s) of the nominee(s) below.
________________________________________________________________________
2
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APPROVAL
OF THE COMPANY’S PROPOSAL TO RATIFY THE SELECTION OF EHRHARDT KEEFE STEINER
& HOTTMAN PC AS THE COMPANY’S REGISTERED PUBLIC ACCOUNTING FIRM:
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FOR
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AGAINST
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ABSTAIN
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[
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DATED: ____________________________
____________________________________
(Signature)
____________________________________
(Signature, if
held jointly)
____________________________________
(Title)
WHEN SHARES ARE
HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH
SIGNING. PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY.
ITEX CORPORATION 2011
ANNUAL MEETING NOTICE:
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 2012
YOUR SHARES CANNOT BE VOTED WITHOUT YOUR
SPECIFIC INSTRUCTIONS
VOTING NOW ELIMINATES PHONE CALLS
Please forward your voting instructions
as soon as possible using one of the following methods:
Available 24 Hours – 7 Days a Week
Grafico Azioni ITEX (PK) (USOTC:ITEX)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni ITEX (PK) (USOTC:ITEX)
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Da Giu 2023 a Giu 2024