SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1 to
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 as filed April 17, 1998
Date of this Amended Report: April 27, 1998
ITEX CORPORATION
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(Exact name of registrant as specified in its charter)
NEVADA 0-18275 93-02292994
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
10300 S.W. Greenburg Road, Portland, Oregon 97223
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (503) 244-4673
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(Former name or address, if changed since last report.)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS
S.E.C. Ref. No. Description of Exhibit
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4.1 Certificate of Designation of Series A Preferred Stock and
Amendment
10.1 Form of Subscription Agreement between the Company and
the respective purchasers, as amended (amendment
inadvertently omitted from prior Form 8-K)
ITEM 9. Sale of Equity Securities Pursuant to Regulation S
On April 3, 1998, ITEX Corporation (the "Company") closed the sale of 53,500
shares of Series A Convertible Preferred Stock ("Series A Preferred Stock") at a
price of $100 per share in a non-registered private placement pursuant to
Regulation S under the Securities Act of 1933, as amended. The purchasers were a
small number of non-U.S. persons located out of the United States. The Company
realized net proceeds for the sale, after costs, totalling approximately
$4,800,000. The Company plans to use approximately $3,600,000 of the net
proceeds to acquire the remaining 50% common equity interest in Business
Exchange International Corporation ("BEI") which a subsidiary of the Company
does not already own, following which acquisition the Company's wholly-owned
subsidiary will own 100% of BEI. The remaining portion of the net proceeds will
be used for working capital and other general corporate purposes.
The Series A Preferred Stock is convertible into common stock at the lower of
the average bid price for the five trading days prior to the issuance of the
preferred stock or 80% of the average price of the common stock in public
trading for the five days prior to the conversion. The Series A Preferred Stock
may be converted into common stock at any time after 41 days from closing. The
Company has the right, but not the obligation, to redeem some or all of the
Series A Preferred Stolck if the market price of the Company's common stock is
$3.00 per share or less. The redemption price would be 118% of the amount
origianlly paid for the Series A Preferred Stock. The Series A Preferred Stock
earns dividends at a rate of 5% per annum, which may be paid in cash or common
stock at the discretion of the Company.
The purchasers of the Series A Preferred Stock have agreed not to sell at least
50% of the common stock received upon conversion until at least 75 days after
the date of acquisition. The Company has granted registration rights, under
limited conditions, to holders of the Series A Preferred Stock.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated this 27th day of April, 1998.
ITEX Corporation
By: /s/Joseph M. Morris
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Joseph M. Morris
Title: Senior Vice President & CFO
Exhibit 4.1
ITEX CORPORATION
(the "Corporation")
RESOLUTION OF THE BOARD OF DIRECTORS
FIXING THE NUMBER AND DESIGNATING THE RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHING TO THE SERIES A
PREFERRED STOCK
WHEREAS:
A. The Corporation's share capital includes 5,000,000 shares of Preferred
Stock par value, $.01 per share which Preferred Stock may be issued in
one or more series with the directors of the Corporation (the "Board")
being entitled by resolution to fix the number of shares in each series
and to designate the rights, privileges, restrictions and conditions
attaching to the share of each series; and
B. It is in the best interests of the Corporation for the Board to create a
first series of Class A Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED THAT:
The first series of the Class A Preferred Stock (the "Series A Shares")
of the Corporation shall consist of 65,000 shares and no more and shall
be designated as the Series A. Preferred Stock and in addition to the
preferences, rights, privileges, restrictions and conditions attaching to
all the Class A Preferred Stock as a class, the rights, privileges,
restrictions and conditions attaching to the Series A. Shares shall be as
follows:
Part 1 - Pre-emptive Rights.
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1.1 The Series A Shares shall not five their holders any pre-emptive rights
to acquire any other securities issued by the Corporation at any time in the
future.
Part 2 - Liquidation Rights.
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2.1 If the Corporation shall be voluntarily or involuntarily liquidated,
dissolved or wound up, at any times when any Series A Shares shall be
outstanding, the holders of the then outstanding Series A Shares shall have a
preference in the distribution of the Corporation's property available for
distribution to the holders of the Common Shares equal to $100.00 consideration
per Series Share, together with an amount equal to all unpaid dividends accrued
thereon, if any, to the date of payment of such distribution, whether or not
declared by the Board; provided, however, that the amalgamation of the
Corporation with any corporation or corporations, the sale or transfer by the
Corporation of all or substantially all of its property, or any reduction of the
authorized or issued capital of the Corporation of any class, whether now or
hereafter authorized, shall be deemed to be a liquidation of the Corporation
within the meaning of any of the provisions of this Part 2.
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2.2 Subject to the provisions of Part 6 hereof, all amounts to be paid as
preferential distributions to the holders of Series A Shares as provided in this
Part 2 shall be paid or set apart for payment before the payment or setting
apart for payment of any amount for, or the distribution of any of the
Corporation's property to the holders of Common Shares, whether now or hereafter
authorized, in connection with such liquidation, dissolution or winding up.
Part 3 - Dividends.
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3.1 Holders of record of Series A Shares, out of funds legally available
therefor and to the extent permitted by law, shall be entitled to receive
dividends on their Series A Shares, which dividends shall accrue at the rate per
share of 5% per annum of consideration paid for each Series A Share ($5.00 per
share per year for each full year) commencing on the date of the issuance
thereof, payable, at the option of the Corporation, (i) in cash or (ii) by the
issuance of that number of whole Common Shares computed by dividing the amount
of the dividend by the market price applicable to such dividend.
3.2 For the purposes of this Part 3 and Part 4 hereof, "market price" means
the average of the daily closing bid prices of Common Shares for a period of 5
consecutive trading days ending on the date on which any dividend becomes
payable or of any notice of redemption, as the case may be. The closing price
for each trading day shall be (i) for any period during which the Common Shares
shall be listed for trading on a national securities exchange, the last reported
bid price per share of Common Shares as reported by the primary stock exchange,
or the Nasdaq Stock Market, if the Common Shares are quoted on the Nasdaq Stock
Market or (ii) if last sales price information is not available, the average
closing bid price of Common Shares as reported by the Nasdaq Stock market, or if
not so listed or reported, then as reported by National Quotation Bureau,
Incorporated, or (iii) in the event neither clause (i) nor (ii) is applicable,
the average of the closing bid and ask prices as furnished by any member of the
National Association of Securities Dealers, Inc., selected from time to time by
the Corporation for that purpose.
3.3 Dividends on Series A Shares shall be cumulative, and no dividends or
other distributions shall be paid or declared and set aside for payment on the
Common Shares until full cumulative dividends on all outstanding Series A Shares
shall have been paid or declared and set aside for payment.
3.4 Dividends shall be payable in arrears, at the rate of $1.25 per share for
each full calendar quarter on each March 30, June 30, September 30 and December
31 of each calendar year, to the holder of record of the Series A Shares as they
appear in the securities register of the Corporation on such record dates not
more than 60 nor less than 10 days preceding the payment dates thereof, as shall
be fixed by the Board, provide, however, that the initial dividend for the
Series A Shares shall accrue for the period commencing on the date of the
issuance thereof to and including March 30, 1998.
3.5 If, in any quarter, insufficient funds are available to pay such
dividends as are then due and payable with respect to the Series A Shares and
all other classes and series in the capital of the Corporation ranking in parity
therewith (or such payment is otherwise prohibited by provisions of the GCL,
such funds as are legally available to pay such dividends shall be paid or
Common Shares will be issued as stock dividends to the holders of Series A
Shares and to the holders of any other series of Class A Preference Share then
outstanding as provided in Part 6 hereof, in accordance with the rights of such
other holder, and the balance of accrued by undeclared and/or unpaid dividends,
if any, shall be declared and paid on the next succeeding dividend date to the
extent that funds are then legally
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available for such purpose.
Part 4-Redemption.
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4.1 In the event the market price of the Common Stock for any 5 day
continuous period is below $3.00, the Corporation may, at its sole option, but
shall not be obligated to, redeem, in whole or in part, the then outstanding
Series A Shares at a price per share of U.S.$118 each (the "Redemption Price")
(such price to be adjusted proportionately in the event of any change of the
Series A Shares into a different number of Shares).
4.2 Five (5) days prior to any date stipulated by the Corporation for the
redemption of Series A. Shares (the "Redemption Date"), written notice (the
"Redemption Notice") shall be mailed to each holder of record on such notice
date of the Series A. Shares. The Redemption Notice shall state (i) the
Redemption Date of Such Shares (ii) the number of Series A Shares to be redeemed
from the holder to whom the Redemption Notice is addressed (iii) instructions
for surrender to the Corporation, in the manner and at the place designated of a
share certificate or share certificates representing the number of Series A
Shares to be redeemed from such holder and (iv) instructions as to how to
specify to the Corporation the number of Series A Shares to be redeemed as
provided in this Part 4 and the number of shares to be converted into Common
Shares as provided in Part 5 hereof.
4.3 Upon receipt of the Redemption Notice, any Eligible holder (as defined in
Section 5.2 hereof) shall have the right to convert into Common Shares that
number of Series A Shares not called for redemption in the Redemption Notice.
4.4 On or before the Redemption Date in respect of any Series A Shares, each
holder of such shares shall surrender the required certificate or certificates
representing such shares to the Corporation, in the manner and at the place
designated in the Redemption Notice, and upon the Redemption Date, the
Redemption Price for such shares shall be made payable, in the manner provided
in Section 5.5 hereof, to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered share
certificate shall be canceled and retired. if a share certificate is surrendered
and all the shares evidenced thereby are not being redeemed (as described
below), the Corporation shall cause Series A Shares which are not being redeemed
to be registered in the names of the persons whose names appear as the owners on
the respective surrendered share certificates and deliver such certificate to
such person.
4.5 On the Redemption Date in respect of any Series A Shares or prior
thereto, the Corporation shall deposit with any bank or trust company having a
capital and surplus of at least U.S.$50,000,000, as a trust fund, a sum equal to
the aggregate Redemption Price of all such shares called for redemption (less
the aggregate Redemption Price for those Series A Shares in respect of which the
Corporation has received notice from the Eligible holder thereof of its election
to convert Series A Shares into Common Shares), with irrevocable instructions
and authority to the bank or trust company to pay, on or after the Redemption
Date, the Redemption Price to the respective holders upon the surrender of their
share certificates. The deposit shall constitute full payment for the shares to
their holders, and from and after the date of the deposit the redeemed shares
shall be deemed to be no longer outstanding, and holders thereof shall cease to
be shareholders with respect to such shares and shall have no rights with
respect thereto except the rights to receive from the bank or trust company
payments of the Redemption Price of the shares, without interest, upon surrender
of their certificates thereof. Any
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fund so deposited and unclaimed at the end of one year following the Redemption
Date shall be released or repaid to the Corporation, after which the former
holders of shares called for redemption shall be entitled to receive payment of
the Redemption Price in respect of their shares only from the Corporation.
Part 5-Conversion.
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5.1 For the purposes of conversion, the Series A Shares shall be valued at
$100 per share ("Value"), and, if converted, the Series A Shares shall be
converted into such number of Common Shares of the Company's $.01 par value
(the "Conversion Shares") as is obtained by dividing the aggregate Value of the
shares of Series A Shares being so converted by the "Average Stock Price" per
share of the Conversion Shares (the "Conversion Price"), subject to adjustment
pursuant to the provisions of this Part 5. For purposes of this Part 5, the
"Average Stock Price" means the lower of (a) .80 of the average daily closing
bid prices of Common Shares for the period of 5 consecutive trading days
immediately preceding the date of the conversion of the Series A Shares or (b)
the average daily closing bid prices of Common Shares for the period of 5
consecutive trading days immediately preceding the date of subscription by the
holder.
5.2 Any holder of Series A Shares (an "Eligible Holder") may at any
time commencing 41 days after the issuance of any Series A Shares convert up to
100% of his holdings of Series A Shares in accordance with this part 5.
5.3 The conversion right granted by Section 5.2 hereof may be exercised only
by an Eligible Holder of Series A Shares, in whole or in part, by the surrender
of the share certificate or share certificates representing the Series A Shares
to be converted at the principal office of the Corporation (or at such other
place as the Corporation may designated in a written notice sent to the holder
by first-class mail, postage prepaid, at its address shown on the books of the
Corporation) against delivery of that number of whole Common Shares as shall be
computed by dividing (1) the aggregate Value of the of the Series A Shares so
surrendered, if any, by (2) the Conversion Price in effect at the date of the
conversion. AT the time of conversion of a Series A Shares, the Corporation
shall pay in cash to the holder thereof an amount equal to all unpaid dividends,
if any, accrued thereon to the date of conversion, or, at the Corporation's
option, issue that number of whole Common Shares which is equal to the product
of dividing the amount of such unpaid dividends by the Average Stock Price
whether or not declared by the Board. Each Series A share certificate
surrendered for conversion shall be endorsed by its holder. In the event of any
exercise of the conversion right of the Series A Shares granted herein (i) share
certificates representing the Common Shares purchased by virtue of such exercise
shall be delivered to such holder within 5 days of notice of conversion free of
restrictive legend or stop transfer orders, and (ii) unless the Series A Shares
has been fully converted, a new share certificate representing the Series A
Shares not so converted, if any, shall also be delivered to such holder within 5
days of notice of conversion. Any Eligible Holder may exercise its right to
convert the Series A Shares by telecopying an executed and completed Notice of
Conversion to the Corporation, and within 72 hours thereafter, delivering the
original Notice of Conversion and the certificate representing the Series A
Shares to the Corporation by express courier. Each date on which a Notice of
Conversion is telecopied to and received by the Corporation in accordance with
the provisions hereof shall be deemed a Conversion Date. The Corporation will
transmit the Common Shares certificates issuable upon conversion of any Series A
Shares (together with the certificates representing the Series A Shares not so
converted) to the Eligible Holder via express courier within
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three business days after the conversion date if the Corporation has received
the original Notice of Conversion and Series A Shares certificate being so
converted by such date.
5.4. All Common Shares which may be issued upon conversion of Series A Shares
will, upon issuance, be duly issued, fully paid and non-assessable and free from
all taxes, liens, and charges with respect to the issue thereof. At all times
that any Series A Shares are outstanding, the Corporation shall have authorized,
and shall have reserved for the purpose of issuance upon such conversion, a
sufficient number of Common Shares to provide for the conversion into Common
Shares of all Series A Shares then outstanding at the then effective Conversion
Price. Without limiting the generality of the foregoing, if, at any time, the
Conversion Price is decreased, the number of Common Shares authorized and
reserved for issuance upon the conversion of the Series A Shares shall be
proportionately increased.
5.5. The number of Common Shares issued upon conversion of Series A Shares and
the Conversion Price shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
5.5.1. Change of Designation of the Common Shares or the rights,
privileges, restrictions and conditions in respect of the Common Shares
or division of the Common Shares into Series. In the case of any
amendment to the Articles to change the designation of the Common Shares
or the rights, privileges, restrictions or conditions in respect of the
Common Shares or division of the Common Shares into series the rights of
the holders of the Series A Shares shall be adjusted so as to provide
that upon conversion thereof the holder of the Series A Shares being
converted shall procure, in lieu of each Common Share theretofore
issuable upon such conversion, the kind and amount of shares, other
securities, money and property receivable upon such designation, change
or division by the holder of one Common Share issuable upon such
conversion had conversion occurred immediately prior to such designation,
change or division. The Series A Shares shall be deemed thereafter to
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Part 5. The
provisions of this subsection 5.5.1. shall apply in the same manner to
successive reclassifications, changes, consolidations and mergers.
5.5.2. If the Corporation, at any time while any of the Series A Shares
are outstanding, shall pay a dividend payable in Common Shares, the
Conversion Price shall be adjusted, as of the date the Corporation shall
take a record of the holders of its Common Shares for the purpose of
receiving such dividend, (or if no such record is taken, as of the date
of payment of such dividend), to that price determined by multiplying the
Conversion Price therefor in effect by a fraction (1) the numerator of
which shall be the total number of Common Shares outstanding immediately
prior to such dividend, and (2) the denominator of which shall be the
total number of Common Shares outstanding immediately after such
dividend, (plus in the event that the Corporation paid cash for
fractional shares, the number of additional shares which would have been
outstanding had the Corporation issued fractional shares in connection
with said dividend.
5.6. Whenever the Conversion Price shall be adjusted pursuant to Section 5.5
hereof, the Corporation shall make a certificate signed by its President or a
Vice President and by its Treasurer, Assistant Treasurer, Secretary or Assistant
Secretary, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors made any
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determination hereunder), and the Conversion Price after giving effect to such
adjustment, and shall cause copies of such certificates to be mailed (by
first-class mail, postage prepaid) to each holder of Series A Shares at its
address shown on the books of the Corporation. The Corporation shall make such
certificate and mail it to each such holder promptly after each adjustment.
5.7 No fractional Common Shares shall be issued in connection with any
conversion of Series A Shares, but in lieu of such fractional shares, the
Corporation shall make a cash payment therefor equal in amount to the product of
the applicable fraction multiplied by the Conversion Price then in effect.
5.8. No Series A Shares which have been converted into Common Shares shall be
reissued by the Corporation: provided, however, that each such share, after
being retired and canceled, shall be restored to the status of an authorized but
unissued Class B Preference Share without designation as to series and may
thereafter be issued as a Class B Preference Share not designated a Series A
Share.
5.9. If the Common Stock trades below $3.00 per share for 5 consecutive
trading days and Holder elects to convert any or all of the Preferred Stock the
Corporation shall have 48 hours to notify the Holder of its intention to redeem
the portion of the Preferred Stock Holder is converting. If the Corporation so
elects it shall make payment to Holder within 5 days of notification and if the
Corporation fails to make payment timely Holder shall be entitled to receive the
Common Stock in accordance with Paragraph 5 herein.
Part 6 - Amendment.
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6.1 In addition to any requirement for a series vote pursuant to applicable
law in respect of any amendment to the rights, privileges, restrictions and
conditions attaching to the Series A Shares, the rights, privileges,
restrictions and conditions attaching to the Series A Shares may be amended only
if the Corporation has obtained the affirmative vote at a duly called and held
meeting of a majority of the Series A Shares or written consent by the holders
of a majority of the Series A Shares then outstanding.
Part 7 - Liquidated Damages.
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7.1 As set forth herein, the Company shall use all reasonable efforts to
issue and deliver, within seven (7) business days after the holder has fulfilled
all conditions and submitted all necessary documents duly executed and in proper
form required for conversion (the "Deadline"), to the holder or any party
receiving the Series A Shares by transfer from the holder at the address of the
holder on the books of the Company, a certificate or certificates for the number
of Shares of Common Stock to which the holder shall be entitled. It is
understood by both parties that such certificates must comply with the then
enacted SEC regulations governing this transaction. The Company understands that
a delay in the issuance of the Shares of Common Stock beyond the Deadline could
result in economic loss to the holder. As compensation to the holder for such
loss the Company agrees to pay as liquidated damages to the holder for late
issuance of Shares (not resulting from causes out of Company's control) upon
conversion in accordance with the following schedule (where "No. Business Days
Late" is defined as the number of business days beyond ten (10) business days
from the date of receipt by the Company and the transfer agent of a Notice of
Conversion of all necessary documentation duly executed and in proper form
required for conversion, including the original Series A stock certificate to be
converted, all in accordance with the Certificate of Designation, Subscription
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Agreement and the requirements of the transfer agent):
Liquidated Damages
No. Business Days Late per $100,000 of Stock
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1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
10 $5,000 + $1,000 each
Business Day Late beyond 10 days
The Company shall pay the holder any liquidated damages incurred under
this Section by check upon the earlier to occur of (i) issuance of the Shares to
the holder or (ii) each monthly anniversary of the receipt of the Company of
such holder=s Notice of Conversion.
7.2 The Company shall at all times reserve and have available all Common
Stock necessary to meet conversion of the Series A Shares by all holders of the
entire amount of Series A Shares then outstanding. If, at any time holder
submits a Notice of Conversion and the Company does not have sufficient
authorized but unissued shares of Common Stock available to effect, in full, a
conversion of the Series A Shares (a "Conversion Default", the date of such
default being referred to herein as the "Conversion Default Date"), the Company
shall issue to the holder all of the shares of Common Stock which are available,
and the Notice of Conversion as to any Series A shares requested to be converted
but not converted (the "Unconverted Series A Shares"), upon holder=s sole option
may be deemed null and void. The Company shall provide notice of such Conversion
Default ("Notice of Conversion Default") to all existing holders of outstanding
Series A Shares, by facsimile, within one (1) business day of such default (with
the original delivered by overnight or two day courier), and the holder shall
give notice to the Company by facsimile within five business days of receipt of
the original Notice of Conversion Default (with the original delivered by
overnight or two day courier) of its election to either nullify or confirm the
Notice of Conversion.
The Company agrees to pay to all holders of outstanding Series A Shares,
as liquidated damages, payments for a Conversion Default ("Conversion Default
Payments") in the amount of (N/365) x (.24) x the initial issuance price of the
outstanding and/or tendered but not converted Series A Shares held by each
holder where N = the number of days from the Conversion Default Date to the date
(the "Authorization Date") that the Company authorizes a sufficient number of
shares of Common Stock to effect conversion of all remaining Series A Shares.
The Company shall send notice ("Authorization Notice") to each holder of
outstanding Series A Shares that additional shares of Common Stock have been
authorized, the Authorization Date and the amount of holder's accrued Conversion
Default Payments. The accrued Conversion Default shall be paid in cash or shall
be convertible into Common Stock at the Conversion Rate, at the holder=s option,
payable as follow: (i) in the event holder elects to take such payment in cash,
cash payments shall be made to such holder of
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outstanding Series A Shares by the fifth day of the following calendar month, or
(ii) in the event holder elects to take such payment in stock, the holder may
convert such payment amount into common Stock at the conversion rate set forth
in the Certificate of Designations at anytime after the 5th day of the calendar
month following the month in which the Authorization Notice was received, until
the maturity date.
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Exhibit10.1
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THESE SECURITIES SUBSCRIBED FOR HEREUNDER HAVE NOT BEEN REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED ("THE ACT"), OR THE SECURITIES COMMISSION OF ANY STATE
UNDER ANY STATE SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER REGULATION S ("REGULATION S") PROMULGATED UNDER THE ACT.
THE SECURITIES MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE UNITED
STATES OR TO, OR FOR THE ACCOUNTS OR BENEFIT OF, U.S. PERSONS (AS SUCH TERM IS
DEFINED IN REGULATION S) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE
PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT
AND THOSE LAWS. NO HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY BE
CONDUCTED UNLESS IN ACCORDANCE WITH THE ACT.
March __, 1998
ITEX Corporation
10300 SW Greenburg Rd., Suite 370
Portland, OR 97223
Gentlemen:
1. Purchase and Sale. ITEX Corporation, a Nevada corporation (the
"Company"), has offered for sale outside the United States, pursuant to
Regulation S ("Regulation S") of the United States Securities Act of 1933, as
amended (the "Act"), shares of its convertible Series A Preferred Stock with the
rights and privileges set forth in the resolutions attached as Exhibit A to this
Agreement (the "Series A Preferred Stock"), having an aggregate value of up to
$4,500,000, at the purchase price of $100.00 per Share, (the "Offering"). The
undersigned purchaser (the "Purchaser") hereby tenders this subscription and
applies for the purchase of that number of shares of Series A Preferred Stock as
set forth below such Purchaser's name on the signature page hereof (the
"Shares"). Upon acceptance by the Company of subscriptions to purchase 45,000
shares (with an aggregate purchase price of $4,500,000) a closing shall be held
on or before March 15, 1998. Together with this Subscription Agreement, the
Purchaser is delivering to the Company the full amount of the purchase price for
the Shares by wire transfer to the escrow agent designated by the parties
("Escrow Agent") against delivery by the Company of the certificates
representing the Shares. Time is of the essence in connection with this
Subscription Agreement.
2. Use of Proceeds. The Company intends to use the proceeds of this
offering, net of costs and fees, for the purposes set forth in Exhibit B hereto.
3. Representations and Warranties of Purchaser. In order to induce the
Company to accept his subscription, the Purchaser hereby represents and warrants
to, and covenants with, the Company as follows:
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a. (i) The Purchaser is not a U.S. person as that term is
defined under Regulation S;
(ii) At the time the offer was made and the buy order
for the Series A Preferred Stock was originated, Purchaser was outside
the United States* and is outside of the United States as of the date
of the execution and delivery of this Agreement;
(iii) Purchaser is purchasing the Series A Preferred
Stock for its own account and not on behalf of any U.S. person or any
other person, and the transaction has not been and will not be
pre-arranged with a purchaser in the United States or as part of a
scheme or plan to evade the Registration Provisions of the Act and
Purchaser is acquiring the Series A Preferred Stock for investment
purposes and not with a view towards distribution and has no present
arrangement or intention to sell the Series A Preferred Stock or the
common stock issuable upon conversion of the Series A Preferred Stock;
(iv) The Purchaser represents and warrants and hereby
agrees that all offers and sales of the Series A Preferred Stock or of
the common stock issuable upon conversion thereof (collectively, the
"Securities") prior to the expiration of a period commencing on the
date hereof and ending 40 days after the date of closing (the
"Restricted Period") shall only be made in compliance with, and the
Purchaser shall take all reasonable efforts to ensure compliance with,
the safe harbor provisions contained in Regulation S, with which
Purchaser is familiar, or pursuant to the registration of such
securities under the Act or pursuant to an exemption from registration
under the Act, and that all offers and sales after the expiration of
the Restricted Period in the United States or to U.S. person shall be
made only pursuant to such a registration or to such exemption from
registration;
(v) The Purchaser represents and warrants and hereby
agrees that during the Restricted Period, the Purchaser shall not take
a short position or engage in hedging transaction directly or
indirectly with regard to the Securities;
(vi) The Purchaser acknowledges and agrees that the
Securities have not been registered under the Act and may not be
offered or sold in the United States or to U.S. Persons unless the
Securities are registered under the Act or an exemption from the
registration requirements of the Act is available.
(vii) The Purchaser is not an officer, director or
"affiliate" (as that term is defined in Rule 405 under the Act) of the
Company.
b. (i) The Purchaser has received and carefully reviewed
the Company's latest Annual Report to shareholders and its most recent
Annual Report on Form 10-K, as amended and its subsequent Quarterly
Reports on Form 10-Q and Reports on Form 8-K
- ----------
* See Appendix A atached hereto for definitions of "U.S.person"
and "United States" under Regulation S.
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<PAGE>
(collectively, the "SEC Reports"), and the certified copy of the
Certificate of Designation for the Series A Preferred Stock;
(ii) The Purchaser understands, agrees and acknowledges
that the Company intends to issue an additional 20,000 shares of its
Series A Preferred Stock in a separate offshore offering concurrent
herewith;
(iii) The Purchaser has had a reasonable opportunity to
ask questions of and receive answers from the Company concerning the
Company and the Offering, and all such questions, if any, have been
answered to the full satisfaction of the Purchaser;
(iv) The Purchaser is (a) an "accredited investor" (as
that term is defined in Rule 501(a) of the Act), (b) has such knowledge
and expertise in financial and business matters, (c) is capable of
evaluating the merits and risks involved in an investment in the
Securities, (d) acknowledges that an investment in the Securities
entails a number of very significant risks and funds should only be
invested by persons able to withstand the total loss of their
investment, and (e) is able to withstand the total loss of the
investment;
(v) Except as set forth in this Agreement, no
representations or warranties have been made to the Purchaser by the
Company or any agent, employee or affiliate of the Company and in
entering into this transaction the Purchaser is not relying upon any
information, other than that contained in this Agreement, the SEC
Reports and the results of independent investigation by the Purchaser;
(vi) The Purchaser understands that the Securities are
being offered and sold in part in reliance on specific exemptions from
the registration requirements of the United States Federal and State
securities laws and that the Company is relying upon the truth and
accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in
order to determine the applicability of such exemptions and the
suitability of the Purchaser to acquire the Securities, and the
Purchaser acknowledges that it is Purchaser's responsibility to satisfy
itself as to the full observance by this Offering and the sale of the
Securities to Purchaser of the laws of any jurisdiction outside the
United States and Purchaser has done so;
(vii) The Purchaser has full power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder; and this Agreement is a legally binding obligation of the
Purchaser enforceable against the purchaser in accordance with its
terms;
(viii) Purchaser understands that in the view of the
Securities and Exchange Commission (the "Commission") the statutory
basis for the exemption claimed for the transaction would not be
present if the Offering, although in technical compliance with
Regulation S, is part of a plan or scheme to evade the registration
provisions of the 1933 Act and Purchaser confirms that its purchase is
not part of any such plan or scheme. Purchaser is acquiring the
Securities for investment purposes and has no present intention
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<PAGE>
to sell the Securities in the United States or to a U.S. person or for
the account or benefit of a U.S. Persons; and
(ix) In connection with the Offering neither the
Purchaser nor any of its agents has engaged in any "directed selling
efforts" (as that term is defined in Regulation S) nor has the
Purchaser or to the best of its knowledge any of its agents conducted
any general solicitation relating to the Offering to persons residing
within the United States or to U.S. persons.
3. Representations of the Company. The Company represents and warrants:
a. The Company is a Reporting Issuer as defined by rule 902 of
Regulation S. The Company has filed all material required to be filed
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") during the twelve months
immediately preceding the date hereof. The common stock is approved for
quotation on the NASDAQ Small Cap market.
b. Offshore Transaction.
(i) The Company has not offered the Series A Preferred
Stock to any person in the United States or to any U.S. person as that
term is defined in Regulation S.
(ii) At the time the offer was made and the buy order
was received, the Company and/or its agents reasonably believed that
the purchaser in the Offering were outside of the United States and
were not U.S. persons; and
(iii) The Company reasonably believes that the purchase
of the Series A Preferred Stock pursuant to the Offering has not been
pre-arranged with a purchaser in the United States.
c. In connection with the Offering neither the Company nor any
of its agents has engaged in any "directed selling efforts" (as that
term is defined in Regulation S) nor has the Company or, to the best of
its knowledge, any of its agents conducted any general solicitation
relating to the Offering to persons residing within the United States
or to U.S. persons.
d. The execution, delivery and performance of this Agreement by
the Company and the performance of its obligations hereunder do not and
will not constitute a breach or violation of any of the terms and
provisions of, or constitute a default under or conflict with or
violate any provision of (i) the Company's Certificate of Incorporation
or By-laws, (ii) any indenture, mortgage, deed of trust, agreement or
other instrument to which the Company is a party or by which it or any
of its property is bound, (iii) any applicable statute or regulation,
(iv) or any judgment, decree or order of any court or governmental body
having jurisdiction over the Company or any of its property.
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<PAGE>
e. The Company is a corporation duly organized, validly existing
and in good standing under the laws of Nevada and is duly qualified as
a foreign corporation in all jurisdictions where the failure to be so
qualified would have a materially adverse effect on its business, taken
as a whole.
f. The execution, delivery and performance of this Agreement and
the consummation of the issuance of the Securities and the transactions
contemplated by this Agreement are within the Company's corporate
powers and have been duly authorized by all necessary corporate action
on behalf of the Company.
g. Except as disclosed in the SEC Reports, or as set forth on a
schedule attached hereto, there is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or foreign,
now pending or, to the knowledge of the Company, threatened, against or
affecting the Company, or any of its properties, which might result in
any material adverse change in the condition (financial or otherwise)
or in the earnings, business affairs or business prospects of the
Company, or which might materially and adversely affect the properties
or assets thereof.
h. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it or its
property may be bound; and neither the execution, nor the delivery by
the Company, nor the performance by the Company of its obligations
under, this Agreement or, the Series A Preferred stock will conflict
with or result in the breach or violation of any of the terms or
provisions of, or constitute a default or result in the creation or
imposition of any lien or charge on any assets or properties of the
Company under, any material indenture, mortgage, deed of trust or other
material agreement or instrument to which the Company is a party or by
which it is bound or any statute or the Certification of Incorporation
or Bylaws of the Company, or any decree, judgment, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties.
i. None of the Company's filings with the Commission since
January 1, 1997 contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
to make the statement therein in light of the circumstances under which
they were made, not misleading.
j. There has been no material adverse change in the financial
condition, earnings, business affairs or business prospects of the
Company since the date of the Company's most recent Quarterly Report on
Form 10-Q filed with the Commission.
k. The authorized capital stock of Company consists of
45,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock, of which 65,000 shares are designated as Series A Preferred
Stock. As of February 20, 1998, (i) 7,438,567 shares of Common Stock
were issued and outstanding, (ii) options (the "Options") to purchase
-5-
<PAGE>
3,445,730 shares of Common Stock were issued and outstanding and (iii)
warrants (the "Warrants") to purchase 1,467,848 shares of Common Stock
were issued and outstanding or required to be issued (not including
50,000 warrants to be issued in connection with the Offering). Except
for the shares of Series A Preferred Stock, the Options and the
Warrants, there are outstanding no securities of the Company, any
subsidiary or any third person convertible into or exercisable or
exchangeable for shares of Common Stock. There are no outstanding
obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of Common Stock or any Options
or Warrants.
l. As of the date hereof, the conduct of the business of the
Company complies in all material respects with all statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable
thereto. The Company has not received notice of any alleged violation
of any statute, law, regulation, ordinance, rule, judgment, order or
decree from any governmental authority which would materially adversely
affect the business of the Company.
m. There is no action pending for delisting of the Common Stock
nor is the Company aware of any threatened action relating thereto.
4. Resales.
a. Purchaser acknowledges and agrees that the Securities may and
will only be resold (i) in compliance with Regulation S; (ii) purchase
to a Registration Statement under the Act; or (iii) pursuant to an
exemption from registration under the Act.
b. Purchaser further acknowledges and agrees that with respect
to 50% of the shares of Common Stock issuable upon conversion of the
Series A Preferred Stock, it will not offer, sell or otherwise transfer
such shares until 75 days after the closing hereunder and issuance of
the Shares.
5. Acceptance of Subscriptions. The Purchaser understands that this
subscription is not binding upon the Company until the Company accepts it, which
acceptance is at the sole discretion of the Company and is to be evidenced by
the Company's execution of this Agreement where indicated. This Agreement shall
be null and void if the Company does not accept it as aforesaid. Upon acceptance
by the Company and receipt of the total purchase price, the Company will issue
one or more certificates for the full number of shares of Series A Preferred
Stock subscribed for.
6. Covenants of the Company. For so long as any Series A Preferred
Stock held by the Purchaser remain outstanding, the Company covenants and agrees
with the Purchaser that:
(a) It will reserve from its authorized but unissued shares of
Common Stock a sufficient number of shares of Common Stock to permit the
conversion in full of the outstanding Series A Preferred Stock.
-6-
<PAGE>
(b) It will use its best efforts to maintain the listing of its
Common Stock on the NASDAQ Small Cap Market.
(c) After the expiration of the Restricted Period, it will
cancel the stop transfer instructions previously given to its transfer
agent with respect to and will not place a restrictive legend on the
certificates representing shares of Common Stock issued upon conversion
of the Series A Preferred Stock.
7. Registration. If upon conversion of Series A Preferred Stock
effected by the Purchaser pursuant to the terms of this Agreement an the terms
of the Series A Preferred Stock the Company fails to issue certificates for
shares of Common Stock issuable upon such conversion (the "Underlying Shares")
to the Purchaser bearing no restrictive legend for any reason other than the
Company's reasonable good faith belief that the representations and warranties
made by the Purchaser in this Agreement or the Notice of Conversion were untrue
when made, then the Company shall be required, at the request of the Purchaser
and at the Company's expense, to effect the registration of the Underlying
Shares issuable upon conversion of the Series A Preferred Stock under the Act
and relevant Blue Sky laws as promptly as is practicable, pursuant to the terms
of the Registration Rights Agreement attached hereto as Exhibit C.
8. Indemnification.
a. The Purchaser agrees to indemnify the Company and hold it
harmless from and against any and all losses, damages, liabilities,
costs and expenses which it may sustain or incur in connection with the
breach by the Purchaser of any representation, warranty or covenant
made by it herein.
b. The Company agrees to indemnify the Purchaser and hold it
harmless from and against any and all losses, damages, liabilities,
costs and expenses which it may sustain or incur in connection with the
breach by the Company of any representation, warranty or covenant made
by it herein.
9. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
mailed by certified or registered mail, return receipt requested, postage
prepaid, as follows: If to the Purchaser, to the address set forth on the
signature page of this Agreement and if to the Company, to ITEX Corporation,
10300 SW Greenberg Rd., Suite 370, Portland, Oregon 97223 or to such other
address as the Company or the Purchaser shall have designated to the other by
like notice.
10. Restricted Period; Legend. The transaction restriction in
connection with this offshore offer and sale restrict Purchaser from offering
and selling the Series A Preferred Stock to U.S. persons or for the account or
benefit of a U.S. person for the Restricted Period. Rule 903(c)(2) governs the
Restricted Period. Purchaser understands and agrees that the Company will
instruct its transfer agent to place a stop transfer order on the Securities
which shall be effective to prohibit transfers of the Securities to U.S. persons
or for the account or benefit of U.S. persons during the Restricted Period.
Purchase further understands and agrees, with respect
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<PAGE>
to the certificates representing the Series A Preferred Stock, that such
certificates will bear the following legend: "The shares represented by this
certificate have been issued pursuant to Regulation S promulgated under the
Securities Act of 1933, as amended ("Act"), and have not been registered under
the Act or the securities commission of any state under state securities law.
These shares may not be offered, sold or otherwise transferred within the United
States or to, or for the account of a "U.S. Person" (as that term is defined in
Regulation S) unless the shares are registered under the Act and applicable
state securities laws, or such offers, sales and transfers are made pursuant to
available exemptions from the registration requirements of the Act and those
laws." Following the expiration of the Restricted Period, the Company will, at
the request of the Purchaser, cause its transfer agent to issue certificates
within 5 days representing the Series A Preferred Stock or the common stock as
may be applicable without any restrictive legend or stop transfer instructions.
11. Miscellaneous.
(a) Except as specifically referenced herein, this Agreement
constitutes the entire contract between the parties, and neither party
shall be liable or bound to the other in any manner by any warranties,
representations or covenants except as specifically set forth herein.
Any previous agreement among the parties related to the transactions
described herein is superseded hereby. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto. Nothing in
this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein.
(b) Buyer is an independent contractor, and is not the agent of
Seller. Buyer is not authorized to bind Seller, or to make any
representations or warranties on behalf of Seller.
(c) Seller makes no representations or warranty with respect to
Seller, its finances, assets, business prospects or otherwise. Buyer
will advise each purchaser, if any, and potential purchaser of the
Securities, of the foregoing sentence, and that such purchaser is
relying on its own investigation with respect to all such matters, and
that such purchaser will be given access to any and all documents and
Seller personnel as it may reasonably request for such investigation.
(d) All representations and warranties contained in this
Agreement by Seller and Buyer shall survive the closing of the
transactions contemplated by this Agreement.
(e) This Agreement shall be construed in accordance with the
laws of Oregon applicable to contracts made and wholly to be performed
within the State of Oregon and shall be binding upon the successors and
assigns of each party hereto. Subject to Section 10(f), buyer and
Seller hereby waive trial by jury and consent to exclusive jurisdiction
and venue in the State of New York. This Agreement may be executed in
counterparts, and the facsimile transmission of an executed counterpart
to this Agreement shall be effective as an original.
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<PAGE>
(f) Any controversy or claim relating to this Agreement
("Arbitrable Dispute") shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association (the "AAA") as such rules may be modified herein or as
otherwise agreed by the parties in controversy. The forum for
arbitration shall be New York, New York. Buyer and Seller agree to
submit to the jurisdiction of the New York Courts for purposes of
confirming any award.
12. Escrow Agent. Company and Buyer hereby appoint the Escrow Agent to
receive the proceeds of the sale of the Shares (the "Funds") and the
certificates representing the Shares (hereinafter referred to together as the
"Escrowed Property"), and to hold and disburse the Escrowed Property in
accordance with the terms of this Agreement and Escrow Agent accepts such
appointment on the following terms and conditions:
(a) It is specifically understood and agreed that the only
obligation of Escrow Agent hereunder is to disburse the Escrowed
Property pursuant to the terms hereof, and Escrow Agent shall have no
obligation to Company, Buyer or any other party whatsoever, including
but not limited to any party claiming by or through Company or Buyer
upon such disbursement.
(b) Escrow Agent shall not be under any duty to give the
Escrowed Property any greater degree of care than it gives its own
similar property, and it shall have no liability hereunder, whether for
negligence or otherwise, except for the intentional breach of its
duties hereunder. Escrow Agent shall have no duties or responsibilities
except those as expressly set forth herein, and no implied duties or
obligations may be read into this Agreement against the Escrow Agent.
(c) Escrow Agent may consult with counsel and shall be fully
protected, indemnified and held harmless with respect to any action
taken or omitted by Escrow Agent in good faith on advice of counsel.
(d) Escrow Agent makes no representation as to the validity,
value, genuineness or collectability of the Funds or of the Preferred
Stock or any other document or instrument held by or delivered to
Escrow Agent.
(e) Company and Buyer hereby unconditionally agree to indemnify
the Escrow Agent and hold it harmless from and against any and all
taxes (except those taxes duly payable by Escrow Agent as a result of
the compensation derived by Escrow Agent hereunder, but including any
other federal, state and local taxes of any kind and other governmental
charges), expenses, damages, actions, suits or other charges incurred
by or brought or assessed against Escrow Agent:
(i) for anything done or omitted by Escrow Agent in the
performance of its duties hereunder; or
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<PAGE>
(ii) on account of its acting in its capacity as Escrow
Agent or stakeholder hereunder, except as a result of its intentional
breach of its duties under this Agreement.
(f) The agreements contained herein shall survive any
termination of this Agreement and the duties of the Escrow Agent
hereunder.
[The remainder of this page is intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the Purchaser has executed this Offshore Securities
Subscription Agreement on the date set forth below.
SIGNATURE PAGE
- ----------------------------------- ------------------------------------
Print Name Print Name(s)
- ----------------------------------- ------------------------------------
Signature Signature(s)
----------------------------- ------------------------------------
Print Name and Title of
Person Signing
Date: , 1998
--------------
Number of Shares of Series A
Preferred Stock Subscribed for: ------------------
Purchase Price per Share: $100.00 U.S.
Total Purchase Price (Number of
Shares subscribed for multiplied
by $100 U.S. (Purchase Price per Share)): $ U.S.
-----------------
ITEX CORPORATION
By:
-------------------------------------------
Accepted this day of , 1998
-11-
<PAGE>
(Please print information below
exactly as you wish it to appear in
the records of the Company)
- ------------------------------------ ----------------------------------------
Name and capacity in which Taxpayer I.D. Number
subscription is made or other I.D. Number
Address:
- ------------------------------------
Number and Street
- ------------------------------------
City State Zip Code
Please indicate form of ownership (if applicable):
- ------------------------------------ ----------------------------------------
Tenants-In-Common Joint Tenants with Right of Survivorship
(Both Parties must sign above) (Both Parties must sign above)
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<PAGE>
APPENDIX "A"
Pursuant to Rule 902(o) and (p) of Regulation S, the terms "U.S.
Person" and "United States" are defined as follows:
(o) U.S. Person. (1) "U.S. Person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated under
the laws of the United States;
(iii) Any estate of which any executor or administrator is a U.S.
person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or breach of a foreign entity located in the United
States;
(vi) Any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized, incorporated
or (if an individual) resident in the United States; and
(vii) Any partnership or corporation if (A) organized or
incorporated under the laws of any foreign jurisdiction; and (B) formed by a
U.S. person principally for the purpose of investing in securities not
registered under the Securities Act of 1933, unless it is organized or
incorporated and owned, by accredited investors (as defined in Rule 501(a)) who
are not natural persons, estates or trusts.
(1) Notwithstanding paragraph (o)(1) of this rule, any
discretionary account or similar account (other than an estate or trust) held
for the benefit or account of a non-U.S. person by a dealer or other
professional fiduciary organized, incorporated, or (if an individual) resident
in the United States shall not be deemed a "U.S. person."
(2) Notwithstanding paragraph (o)(1), any estate of which
any professional fiduciary acting as executor or administrator is a U.S.
person shall not be deemed a U.S. person if:
(i) An executor or administrator of the estate who is not
a U.S. person has sole or shared investment discretion with respect to
the corpus of the estate; and
(ii) The estate is governed by foreign law.
(3) Notwithstanding paragraph (o)(1), any trust of which
any professional fiduciary acting as trustee is a U.S. person shall not be
deemed a U.S. person if a trustee who is not a U.S. person has sole or shared
investment discretion with respect to the trust assets, and no beneficiary
of the trust (and no settlor if the trust is revocable) is a U.S. person.
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<PAGE>
(4) Notwithstanding paragraph (o)(1), an employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country
shall not be deemed a U.S. person.
(5) Notwithstanding paragraph (o)(1), any agency or branch of a
U.S. person located outside the United States shall not be deemed a "U.S.
person" if:
(i) The agency or branch operates for valid business reasons;
and
(ii) The agency or branch is engaged in the business of
insurance or banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
(6) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, any other similar international
organizations, their agencies, affiliates and pension plans shall not be deemed
"U.S. persons."
(p) United States. "United States" means the United States of
America, its territories and possessions, any State of the United States, and
the District of Columbia.
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<PAGE>
EXHIBIT A
to
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
DESIGNATIONS OF SERIES A PREFERRED STOCK
-15-
<PAGE>
EXHIBIT B
to
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
USE OF PROCEEDS
The proceeds from the Offering, net of costs and fees, shall be used by the
Company to acquire the remaining 50% of the outstanding stock of Barter Exchange
International Corporation, a Nevada corporation.
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<PAGE>
ADDENDUM TO OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Addendum to Offshore Securities Subscription Agreement
("Addendum"), dated of even date with that certain Offshore Securities
Subscription Agreement, by and among, ITEX Corporation, a Nevada corporation
(the "Company"), and each of the Purchasers thereunder (the "Agreement"), has
been agreed to by the Company and each Purchaser (the "Parties") and amends and
supersedes the Agreement, but only to the extent set forth herein.
For good and valuable consideration, the sufficiency of which is
acknowledged, the Parties agree as follows:
1. Amendments.
----------
a. Securities Offered. Every reference in the Agreement to "45,000
shares" shall be amended to read "53,500 shares."
b. Aggregate Purchase Price. Every reference in the Agreement to
"$4,500,000" (being the aggregate purchase price or value of the
securities offered) shall be amended to read "$5,350,000."
c. Closing Date. The date of the closing set forth in Paragraph 1 of
the Agreement shall be changed from "March 15, 1998" to "April 7,
1998."
d. No Additional Shares. Subparagraph 3(b)(ii) shall be amended in
its entirety, as follows:
"The Company shall not, during the 180 day period after the
closing, issue any series of (i) debt securities convertible into
common stock, or (ii) preferred stock convertible into common
stock."
e. Governing Law. In subparagraph 11(e), "Oregon" shall be replaced
with "Nevada" wherever it occurs.
f. No Arbitration. Subparagraph 11(f) shall be deleted in its
entirety.
g. Use of Proceeds. Exhibit B shall be amended and restated in its
entirety, as follows:
"The proceeds from the Offering, net of costs and fees, shall be
used by the Company for general corporate purposes, including, to
acquire the remaining 50% of the outstanding stock of Barter
Exchange International Corporation, a Nevada corporation."
2. Miscellaneous.
-------------
a. This Addendum shall be construed in accordance with the laws of
Nevada applicable to contracts made and wholly to be performed
within the State of Oregon and shall be binding upon the
successors and assigns of each party hereto.
b. This Addendum may be executed in counterparts, and the facsimile
transmission of an executed counterpart to this Agreement shall be
effective as an original.
[The remainder of this page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Addendum to Offshore
Securities Subscription Agreement as of the date first set forth above.
ITEX Corporation
By:
------------------------------
name:
title:
[Purchasers must sign exactly as the Offshore Securities Subscription Agreement
was signed]
INDIVIDUAL PURCHASER:
- ---------------------------------
print name:
ENTITY PURCHASER:
name of entity:
------------------
- ---------------------------------
By:
Title:
