-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ha0bgskuI49aui8NIKADpIQUapWOgil1+tQ6gubM4Gpw1EewSoienL03eNrWLgHt l2HR/9Zmos0zRpzCowkTqg== 0000910680-01-500033.txt : 20010502 0000910680-01-500033.hdr.sgml : 20010502 ACCESSION NUMBER: 0000910680-01-500033 CONFORMED SUBMISSION TYPE: S-2/A PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20010501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMAGING TECHNOLOGIES CORP/CA CENTRAL INDEX KEY: 0000725394 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 330021693 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-2/A SEC ACT: SEC FILE NUMBER: 333-55874 FILM NUMBER: 1619166 BUSINESS ADDRESS: STREET 1: 15175 INNOVATION DRIVE CITY: SAN DIEGO STATE: CA ZIP: 92128 BUSINESS PHONE: 6196131300 FORMER COMPANY: FORMER CONFORMED NAME: PERSONAL COMPUTER PRODUCTS INC DATE OF NAME CHANGE: 19920703 S-2/A 1 f666588_9.txt PRE-EFFECTIVE AMENDMENT NO. 1 ================================================================================ AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 2001 COMMISSION FILE NO.: 333-55874 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- IMAGING TECHNOLOGIES CORPORATION (Exact Name of Registrant As Specified In Its Charter)
Delaware 5045 33-0021693 (State of Incorporation) (Primary Standard Industrial (IRS Employer I.D. Number) Classification Code Number)
15175 INNOVATION DRIVE SAN DIEGO, CALIFORNIA 92128 (858) 613-1300 ----------------------------------- (Address, including zip code and telephone number, including area code of registrant's principal executive offices) BRIAN BONAR, CHIEF EXECUTIVE OFFICER IMAGING TECHNOLOGIES CORPORATION 15175 INNOVATION DRIVE SAN DIEGO, CALIFORNIA 92128 (858) 613-1300 (Name, address and telephone number of Agent for Service) Copy to: CHRISTOPHER S. AUGUSTE, ESQ. JENKENS & Gilchrist Parker Chapin LLP 405 Lexington Avenue, 9th Floor New York, New York 10174 Tel: (212) 704-6000 Fax: (212) 704-6288 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time, at the discretion of the selling shareholders after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If the registrant elects to deliver its latest Form 10-K, as amended, to security holders or a complete and legible facsimile thereof, pursuant to Item 11.(a)(1) of this Form, check the following box. [X] If the registrant elects to deliver its latest Form 10-Q, as amended, to the security holder or a complete and legible facsimile thereof, pursuant to Item 11.(a)(2)(ii) of this Form, check the following box. [X] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [_]
CALCULATION OF REGISTRATION FEE ================================ ==================== ============================ ============================ =================== Title of Each Class of Amount To Be Proposed Maximum Offering Proposed Maximum Aggregate Amount of Securities To Be Registered Registered Price Per Share(1)(2) Offering Price(1) Registration Fee(4) - -------------------------------- -------------------- ---------------------------- ---------------------------- ------------------- Common Stock, par value $0.005 25,000,000 shares $.087 $2,175,000 $65.25 per share.................... ================================ ==================== ============================ ============================ ===================
(1) Estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(c) under the Securities Act of 1933, as amended. (2) Estimate based on the average of the high and low prices of the Registrant's common stock as reported by the OTC Bulletin Board on April 26, 2001 pursuant to Rule 457(c) promulgated under the Securities Act of 1933, as amended. (3) This Registration Statement shall also cover any additional shares of common stock which become issuable in connection with the shares registered for sale hereby as a result of any stock dividend, stock split, recapitalization or other similar transaction which results in an increase in the number of the Registrant's outstanding shares of common stock. (4) $816.20 was paid on February 20, 2001 for 22,000,000 shares to be registered and $65.25 is being paid for the additional 3,000,000 shares being registered herein. WE WILL AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY WHICH MAY DELAY ITS EFFECTIVE DATE UNTIL WE FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING ACCORDING TO SECTION 8(A), MAY DETERMINE. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED MAY __, 2001 PROSPECTUS IMAGING TECHNOLOGIES CORPORATION 25,000,000 shares of common stock o The shares of common stock offered by this prospectus are being sold by the stockholders listed in the section of this prospectus called "Selling Security Holders". We will not receive any proceeds from the sale of these shares. o Concurrently with this offering, we are registering the offering of 20,000,000 shares of our common stock pursuant to a prospectus for a primary offering. We will commence selling shares under that prospectus immediately upon effectiveness of the registration statement of which the prospectus is a part. o Our common stock is traded on the OTC Bulletin Board under the symbol "ITEC". o On April 26, 2001, the closing bid price of our common stock on the OTC Bulletin Board was $.0880. THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS. -------------------------------------------------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------------------------------------------- The date of this prospectus is May __, 2001 TABLE OF CONTENTS
Forward-Looking Statements...............................................................................3 Prospectus Summary.......................................................................................3 The Offering.............................................................................................4 Risk Factors.............................................................................................5 Use of Proceeds.........................................................................................13 Selling Security Holders................................................................................13 Plan of Distribution....................................................................................16 Description of Securities...............................................................................17 Information With Respect to the Registrant..............................................................17 Material Changes........................................................................................17 Where You Can Find More Information.....................................................................18 Incorporation of Certain Documents by Reference.........................................................18 Disclosure of Commission Position on Indemnification for Securities and Liabilities.....................19 Experts ...............................................................................................19 Legal Opinions..........................................................................................19 Financial Information...................................................................................19
FORWARD-LOOKING STATEMENTS This prospectus contains some forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements can generally be identified by the use of forward-looking words like "may," "will," "expect," "anticipate," "intend," "estimate," "continue," "believe" or other similar words. Similarly, statements that describe our future expectations, objectives and goals or contain projections of our future results of operations or financial condition are also forward-looking statements. Our future results, performance or achievements could differ materially from those expressed or implied in these forward-looking statements as a result of certain factors, including those listed under the heading "Risk Factors" and in other cautionary statements in this prospectus. Prospectus Summary This summary highlights information in this document. You should carefully review the more detailed information and financial statements included in this document. The summary is not complete and may not contain all of the information you may need to consider before investing in our common stock. We urge you to carefully read this document, including the "Risk Factors" and the financial statements and their accompanying notes. THE COMPANY Our wholly-owned direct and indirect subsidiaries include EduAdvantage.com, Inc., a Delaware corporation, DealSeekers.com, Inc., a Delaware corporation, Personal Computer Products, Inc., a California corporation, NewGen Imaging Systems, Inc., a California corporation, Prima Inc., a California corporation, Color Solutions, Inc., a California corporation, McMican Corporation, a California corporation, ITEC Europe, Ltd., a company registered under the laws of the United Kingdom and Advanced Matrix Technology Accel UK Ltd., a company registered under the laws of the United Kingdom. We develop, manufacture, and distribute high-quality digital imaging solutions. We produce a wide range of printers and other imaging products for use in graphics and publishing, digital photography and other niche business and technical markets. Beginning with a core technology in the design and development of controllers for non-impact printers and multifunction peripherals, we have expanded our product offerings to include monochrome and color printers, external print servers, digital image storage devices, and software to improve the accuracy of color reproduction. Our new generation of products incorporate advanced printer and imaging controller technologies to produce faster, enhanced image output at competitive prices. Our ColorBlind(R) Color Management software is a suite of applications, utilities and tools designed to create, edit and apply industry standard ICC (International Color Consortium) profiles that produce accurate color rendering across a wide range of peripheral devices. "ColorBlind Aware" is being recognized as an industry standard for color accuracy as manufacturers integrate ColorBlind's Color Management resources into their product designs. We benefit from technology alliances with industry partners to develop the next generation of embedded printer controller and digital imaging technology. We produce printer controllers that provide modularity and performance advantages for our OEM customers. Our customers benefit by outsourcing their engineering development and manufacturing to us, thus achieving faster time-to-market. Effective December 1, 2000, we acquired all of the outstanding shares of Eduadvantage.com., a California corporation that is primarily engaged in an internet-based business. In December of 2000, we also signed a definitive agreement to purchase 75% of the stock of Pen Interconnect, Inc. However, in February of 2001, we terminated the transaction and retained a $75,000 convertible note which is convertible into common stock of Pen Interconnect, Inc. In November of 2000, we entered into an agreement to acquire a majority interest in Quality Photographic Imaging (formerly known as Quick Pix, Inc.), a Nevada corporation that is primarily enagaged in the -3- business of offering services to produce final color visuals. This transaction remains pending as it is subject to the approval of Quality Photographic Imaging's shareholders. We were incorporated in March, 1982 under the laws of the State of California, and reincorporated in May, 1983 under the laws of the State of Delaware. Our principal executive offices are located at 15175 Innovation Drive, San Diego, California 92128. Our main phone number is (858) 613-1300. Personal Computer Products, Inc., ColorBlind and Xtinguisher are trademarks of ours. This Prospectus also includes names and trademarks of companies other than us. GOING CONCERN CONSIDERATIONS At December 31, 2000, and for the three months then ended, we had a net loss, negative working capital and a decline in net worth which raises substantial doubt about our ability to continue as a going concern. Our losses have resulted primarily from an inability to achieve product sales and contract revenue targets due to insufficient working capital. Our ability to continue operations will depend on positive cash flow, if any, from future operations and on our ability to raise additional funds through equity or debt financing. We have reduced and/or discontinued some of our operations and, if we are unable to raise or obtain needed funding, we may be forced to discontinue operations. At December 31, 2000, our net loss was $3,962,000, our negative working capital was $14,362,000 and our increase in net worth was $31,000. Specific steps that we have taken to address these problems include obtaining working capital through the issuance and sale of the convertible debenture, of which this registration statement relates, and through a primary offering under a separate shelf registration statement, reduction in overhead costs through such actions as a recent reduction in our work force, the restructuring of our lease to reduce rent payments, transferring some parts production offshore and rebuilding our distribution channels. THE OFFERING CONVERTIBLE NOTE PURCHASE AGREEMENT We entered into a convertible note purchase agreement on December 12, 2000 with Amro International, S.A., Balmore Funds, S.A. and Celeste Trust Reg. Pursuant to this agreement, we sold to each of the purchasers convertible promissory notes in the aggregate principal amount of $850,000 bearing interest at the rate of eight percent (8%) per annum, due December 12, 2003, each convertible into shares of our common stock. Interest shall be payable, at the option of the purchasers, in cash or shares of our common stock. Each note is convertible into such number of shares of our common stock as is determined by dividing (a) that portion of the outstanding principal balance of the note by (b) the conversion price. The conversion price equals the lesser of (x) $.059 and (y) 70% of the average of the 3 lowest closing bid prices during the 30 trading days prior to the conversion date. See the section entitled "Selling Security Holders" for examples of how this formula works at various prices and the dilutive effect on our stockholders. Additionally, we issued a warrant to each of the purchasers to purchase shares of our common stock at an exercise price equal to $.0887 per share. The purchasers may exercise the warrants through December 12, 2005. Shares issuable upon exercise of any of the warrants by the purchasers are not being registered under the registration statement of which this prospectus is a part and may not be resold to the public through this prospectus. Amro International, S.A., Balmore Funds, S.A. and Celeste Trust Reg. are "underwriters" within the meaning of the Securities Act in connection with their resale of shares of our common stock under this prospectus. AGREEMENT WITH AMERICAN INDUSTRIES, INC. On February 2, 1999, a complaint was filed against us in Multnomah County Circuit Court in Oregon, entitled American Industries, Inc., et. al. v. Imaging Technologies, Inc., et. al., 99-02-01129. The complaint alleged claims for violations of the Oregon securities law, breach of contract and warranties, fraud, negligent misrepresentation and negligence. On March 1, 2001, ITEC and its chief executive officer, Brian Bonar, entered -4- into an agreement and release with American Industries, Inc., Ellison Carl Morgan, the Ellison Carl Morgan Revocable Trust, the 2030 Investors 401K and the 2030 Investors LLC. Pursuant to this agreement, we agreed to issue to American Industries shares of our common stock in the amount of $100,000, based upon the average of the closing bid prices of our common stock over the 10 trading days ending 5 days preceding the date of the filing of this registration statement, of which this prospectus is a part. AGREEMENT WITH ARTIFEX SOFTWARE, INC. On October 25, 2000, we entered into a second OEM amendment with Artifex Software, Inc. on October 25, 2000. Pursuant to this agreement, we agreed to issue to Artifex 1,200,000 shares of our common stock as a one-time license fee for the distribution of Artifex's products. Securities offered by selling security holders Common Stock(1)(3) 25,000,000 Equity Securities Outstanding2 Common Stock 159,878,731(3) Preferred Stock 420.5 Warrants 6,229,559(4) Options 682,185(4) (1) 1,360,093 shares of common stock being registered and included in this prospectus is in connection with the agreements with American Industries, Inc. and Artifex Software, Inc. According to the terms of the convertible note purchase agreement between the various investors and us, the remaining shares of common stock being registered and included in this prospectus is 200% of the number of shares of common stock needed to effect conversion of the Notes as of April 26, 2001 under the convertible note purchase agreement. (2) The total number of equity shares outstanding as of April 26, 2001. (3) The total number of shares of common stock does not include shares of common stock issuable upon the exercise of warrants associated with series D convertible preferred stock and series E convertible preferred stock. (4) The warrants were issued to employees, consultants, finders and private placement investors. The exercise prices of the warrants range from $.01 to $6.25. The options were issued in connection with our stock option plans and/or in connection with some of our employment agreements. The exercise prices of the options range from $.35 to $8.45 per share. RISK FACTORS AN INVESTMENT IN SHARES OF ITEC COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE PURCHASING ANY ITEC SHARES. EXCEPT FOR HISTORICAL INFORMATION, THE INFORMATION CONTAINED IN THIS PROSPECTUS AND IN OUR SEC REPORTS ARE "FORWARD-LOOKING" STATEMENTS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED OR IMPLIED IN SUCH FORWARD-LOOKING STATEMENTS. THE RISKS DESCRIBED BELOW ADDRESS SOME OF THE FACTORS THAT MAY AFFECT OUR FUTURE OPERATING RESULTS AND FINANCIAL PERFORMANCE. IF WE ARE UNABLE TO SECURE FUTURE CAPITAL, WE WILL BE UNABLE TO CONTINUE OUR OPERATIONS. If we are unable to secure future capital, we will be unable to continue our operations. Our business has not been profitable in the past and it may not be profitable in the future. We may incur losses on a quarterly or annual basis for a number of reasons, some within and others outside our control. See "Potential Fluctuation in Our Quarterly Performance." The growth of our business will require the commitment of substantial capital resources. -5- If funds are not available from operations, we will need additional funds. We may seek such additional funding through public and private financing, including debt or equity financing. Adequate funds for these purposes, whether through financial markets or from other sources, may not be available when we need them. Even if funds are available, the terms under which the funds are available to us may not be acceptable to us. Insufficient funds may require us to delay, reduce or eliminate some or all of our planned activities. If our quarterly performance continues to fluctuate, it may have a negative impact on our business. Our quarterly operating results can fluctuate significantly depending on a number of factors, any one of which could have a negative impact on our results of operations. The factors include: o the timing of product announcements and subsequent introductions of new or enhanced products by us and by our competitors, o the availability and cost of components, o the timing and mix of shipments of our products, o the market acceptance of our new products, o seasonality, o currency fluctuations, o changes in our prices and in our competitors' prices, o price protection offered to distributors and OEMs for product price reductions, o the timing of expenditures for staffing and related support costs, o the extent and success of advertising, o research and development expenditures, and o changes in general economic conditions. We may experience significant quarterly fluctuations in revenues and operating expenses as we introduce new products. In addition, our component purchases, production and spending levels are based upon our forecast of future demand for our products. Accordingly, any inaccuracy in our forecasts could adversely affect our financial condition and results of operations. Demand for our products could be adversely affected by a slowdown in the overall demand for computer systems, printer products or digitally printed images. Our failure to complete shipments during a quarter could have a material adverse effect on our results of operations for that quarter. Quarterly results are not necessarily indicative of future performance for any particular period. SINCE OUR COMPETITORS HAVE GREATER FINANCIAL AND MARKETING RESOURCES THAN WE DO, WE MAY EXPERIENCE A REDUCTION IN MARKET SHARE AND REVENUES. The markets for our products are highly competitive and rapidly changing. Some of our current and prospective competitors have significantly greater financial, technical, manufacturing and marketing resources than we do. Our ability to compete in our markets depends on a number of factors, some within and others outside our control. These factors include: o the frequency and success of product introductions by us and by our competitors, o the selling prices of our products and of our competitors' products, o the performance of our products and of our competitors' products, -6- o product distribution by us and by our competitors, o our marketing ability and the marketing ability of our competitors, and o the quality of customer support offered by us and by our competitors. A key element of our strategy is to provide competitively priced, quality products. We cannot be certain that our products will continue to be competitively priced. We have reduced prices on certain of our products in the past and will likely continue to do so in the future. Price reductions, if not offset by similar reductions in product costs, will reduce our gross margins and may adversely affect our financial condition and results of operations. IF WE ARE UNABLE TO DEVELOP AND MANUFACTURE NEW PRODUCTS IN A TIMELY MANNER, WE MAY EXPERIENCE A SIGNIFICANT DECLINE IN SALES AND REVENUES WHICH MAY HURT OUR ABILITY TO CONTINUE OPERATIONS. The markets for our products are characterized by rapidly evolving technology, frequent new product introductions and significant price competition. Consequently, short product life cycles and reductions in product selling prices due to competitive pressures over the life of a product are common. Our future success will depend on our ability to continue to develop and manufacture competitive products and achieve cost reductions for our existing products. In addition, we monitor new technology developments and coordinate with suppliers, distributors and dealers to enhance our existing products and lower costs. Advances in technology will require increased investment in product development to maintain our market position. If we are unable to develop and manufacture new, competitive products in a timely manner, our financial condition and results of operations will be adversely affected. IF THE MARKET'S ACCEPTANCE OF OUR PRODUCTS CEASES TO GROW, WE MAY NOT GENERATE SUFFICIENT REVENUES TO CONTINUE OUR OPERATIONS. The markets for our products are relatively new and are still developing. We believe that there has been growing market acceptance for color printers, color management software and supplies. We cannot be certain, however, that these markets will continue to grow. Other technologies are constantly evolving and improving. We cannot be certain that products based on these other technologies will not have a material adverse effect on the demand for our products. If our products are not accepted by the market, we will not generate sufficient revenues to continue our operations. IF OUR SUPPLIERS CEASE LICENSING THEIR PRODUCTS TO US, WE MAY HAVE TO REDUCE OUR WORK FORCE OR CEASE OPERATIONS. At present, many of our products use technology licensed from outside suppliers. We rely heavily on these suppliers for upgrades and support. In the case of our font products, we license the fonts from outside suppliers, who also own the intellectual property rights to the fonts. Our reliance on third-party suppliers involves many risks, including our limited control over potential hardware and software incompatibilities with our products. Furthermore, we cannot be certain that all of the suppliers of products we market will continue to license their products to us, or that these suppliers will not license their products to other companies simultaneously. IF WE ACQUIRE COMPLEMENTARY BUSINESSES, WE MAY NOT BE ABLE TO EFFECTIVELY INTEGRATE THEM INTO OUR CURRENT OPERATIONS, WHICH WOULD ADVERSELY AFFECT OUR OVERALL FINANCIAL PERFORMANCE. In order to grow our business, we may acquire businesses that we believe are complementary. To successfully implement this strategy, we must identify suitable acquisition candidates, acquire these candidates on acceptable terms, integrate their operations and technology successfully with ours, retain existing customers and maintain the goodwill of the acquired business. We may fail in our efforts to implement one or more of these tasks. Moreover, in pursuing acquisition opportunities, we may compete for acquisition targets with other companies with similar growth strategies. Some of these competitors may be larger and have greater financial and other resources than we do. Competition for these acquisition targets likely could also result in increased prices of acquisition targets and a diminished pool of companies available for acquisition. Our overall financial performance will be materially and adversely affected if we are unable to manage internal or acquisition-based growth effectively. -7- Acquisitions involve a number of risks, including: o integrating acquired products and technologies in a timely manner; o integrating businesses and employees with our business; o managing geographically-dispersed operations; o reductions in our reported operating results from acquisition-related charges and amortization of goodwill; o potential increases in stock compensation expense and increased compensation expense resulting from newly-hired employees; o the diversion of management attention; o the assumption of unknown liabilities; o potential disputes with the sellers of one or more acquired entities; o our inability to maintain customers or goodwill of an acquired business; o the need to divest unwanted assets or products; and o the possible failure to retain key acquired personnel. Client satisfaction or performance problems with an acquired business could also have a material adverse effect on our reputation, and any acquired business could significantly under perform relative to our expectations. We are currently facing all of these challenges and our ability to meet them over the long term has not been established. As a result, we cannot be certain that we will be able to integrate acquired businesses, products or technologies successfully or in a timely manner in accordance with our strategic objectives, which could have a material adverse effect on our overall financial performance. In addition, if we issue equity securities as consideration for any future acquisitions, existing stockholders will experience ownership dilution and these equity securities may have rights, preferences or privileges superior to those of our common stock. See "Future Capital Needs." IF OUR VENDORS ARE NOT ABLE TO CONTINUE TO SUPPLY GOODS AND SERVICES AT APPROPRIATE PRICES TO MEET THE PROJECTED MARKET DEMAND FOR OUR PRODUCTS, IT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL PERFORMANCE. We presently outsource the production of some of our manufactured products through a number of vendors located in California. These vendors assemble products, using components purchased by us from other sources or from their own inventory. The terms of supply contracts are negotiated separately in each instance. Although we have not experienced any difficulty over the past several years in engaging contractors or in purchasing components, our present vendors may not have sufficient capacity to meet projected market demand for our products and alternative production sources may not be available without undue disruption. Certain components used in our products are only available from single sources. Although alternative suppliers are readily available for many of our components, for some components the process of qualifying replacement suppliers, replacing tooling or ordering and receiving replacement components could take several months and cause substantial disruption to our operations. Any significant increase in component prices or decrease in component availability could have a material adverse effect on our business and overall financial performance. IF WE ARE FOUND TO BE INFRINGING ON A COMPETITOR'S INTELLECTUAL PROPERTY RIGHTS OR IF WE ARE REQUIRED TO DEFEND AGAINST A CLAIM OF INFRINGEMENT, WE MAY BE REQUIRED TO REDESIGN OUR PRODUCTS OR DEFEND A LEGAL ACTION AT SUBSTANTIAL COSTS TO US. We currently hold no patents. Our software products, hardware designs, and circuit layouts are copyrighted. However, copyright protection does not prevent other companies from emulating the features and benefits provided by our software, hardware designs or the integration of the two. We protect our software source code as trade secrets and make our proprietary source code available to OEM customers only under limited circumstances and specific security and confidentiality constraints. In many product hardware designs, we develop application-specific integrated circuits (ASICs) which encapsulate proprietary technology and are installed on the circuit board. This can serve to significantly reduce the risk of duplication by competitors, but in no way ensures that a competitor will be unable to replicate a feature or the benefit in a similar product. -8- Competitors may assert that we infringe their patent rights. If we fail to establish that we have not violated the asserted rights, we could be prohibited from marketing the products that incorporate the technology and we could be liable for damages. We could also incur substantial costs to redesign our products or to defend any legal action taken against us. We have obtained U.S. registration for several of our trade names or trademarks, including: PCPI, NewGen, ColorBlind, LaserImage, ColorImage, ImageScript and ImageFont. These trade names are used to distinguish our products in the marketplace. IF THE PRESENT ECONOMIC CRISIS IN ASIA CONTINUES, OUR ACCOUNTS RECEIVABLES IN ASIA WILL NOT BE COLLECTIBLE AND WILL HAVE A NEGATIVE IMPACT ON OUR CONTINUED OPERATIONS AND OVERALL FINANCIAL PERFORMANCE. We conduct business globally. Accordingly, our future results could be adversely affected by a variety of uncontrollable and changing factors including: o foreign currency exchange fluctuations; o regulatory, political or economic conditions in a specific country or region; o the imposition of governmental controls; o export license requirements; o restrictions on the export of critical technology; o trade restrictions; o changes in tariffs; o government spending patterns; o natural disasters; o difficulties in staffing and managing international operations; and o difficulties in collecting accounts receivable. In addition, the laws of certain countries do not protect our products and intellectual property rights to the same extent as the laws of the United States. In our 1998 fiscal year, we experienced contract cancellations and the write-off of significant receivables related to continuing economic deterioration in foreign countries, particularly in Asia. Any or all of these factors could have a material adverse impact on our business and overall financial performance. We intend to pursue international markets as key avenues for growth and to increase the percentage of sales generated in international markets. In our 2000, 1999 and 1998 fiscal years, sales outside the United States represented approximately 2%, 56% and 57% of our net sales, respectively. We expect sales outside the United States to continue to represent a significant portion of our sales. As we continue to expand our international sales and operations, our business and overall financial performance may be adversely affected by the factors stated above. IF IT BECOMES NECESSARY TO WRITE OFF ACCOUNTS RECEIVABLE FOR CUSTOMERS IN ASIA, AS WE DID IN FISCAL 1998, OUR FINANCIAL PERFORMANCE WOULD BE ADVERSELY AFFECTED. In our 1998 fiscal year, we experienced contract cancellations and the write-off of significant receivables related to continuing economic deterioration in foreign countries, particularly in Asia. Although we have not had to write off any significant accounts receivable of customers in Asia since that time, if it should become necessary to do once again, our financial performance would be adversely affected. IF ALL OF THE LAWSUITS CURRENTLY FILED WERE DECIDED AGAINST US AND/OR ALL THE JUDGMENTS CURRENTLY OBTAINED AGAINST US WERE TO BE IMMEDIATELY COLLECTED, WE WOULD HAVE TO CEASE OUR OPERATIONS. On or about October 7, 1999, the law firms of Weiss & Yourman and Stull, Stull & Brody made a public announcement that they had filed a lawsuit against us and certain current and past officers and/or directors, alleging violation of federal securities laws during the period of April 21, 1998 through October 9, 1998. On or about November 17, 1999, the lawsuit, filed in the name of Nahid Nazarian Behfarin, on her own behalf and others purported to be similarly situated, was served on us. A motion to dismiss the lawsuit was granted on February 16, 2001 on our behalf and those individual defendants that have been served. However, on or about March 19, 2001, -9- an amended complaint was filed on behalf of Nahid Nazarian Behfarin, Peter Cook, Stephen Domagala and Michael S. Taylor, on behalf of themselves and others similarly situated. On or about March 20, 2001, we once again filed a motion to dismiss the case along with certain other individual defendants. The motion is pending. We believe these claims are without merit and we intend to vigorously defend against them on our behalf as well as on behalf of the other defendants. The defense of this action has been tendered to our insurance carriers. Throughout fiscal 1999, 2000 and 2001, and through the date of this filing, approximately fifty trade creditors have made claims and/or filed actions alleging the failure of us to pay our obligations to them in a total amount exceeding $3 million. These actions are in various stages of litigation, with many resulting in judgments being entered against us. Sevral of those who have obtained judgments have filed judgment liens on our assets. These claims range in value from less than one thousand dollars to just over one million dollars, with the great majority being less than twenty thousand dollars. Should we be required to pay the full amount demanded in each of these claims and lawsuits, we may have to cease our operations. However, to date, the superior security interest held by Imperial Bank has prevented nearly all of these trade creditors from collecting on their judgments. IF OUR OPERATIONS CONTINUE TO RESULT IN A NET LOSS, NEGATIVE WORKING CAPITAL AND A DECLINE IN NET WORTH, AND WE ARE UNABLE TO OBTAIN NEEDED FUNDING, WE MAY BE FORCED TO DISCONTINUE OPERATIONS. For several recent periods, up through the fiscal quarter ended December 31, 2000, we had a net loss, negative working capital and a decline in net worth which raises substantial doubt about our ability to continue as a going concern. Our losses have resulted primarily from an inability to achieve product sales and contract revenue targets due to insufficient working capital. Our ability to continue operations will depend on positive cash flow, if any, from future operations and on our ability to raise additional funds through equity or debt financing. Although we have reduced our work force and discontinued some of our operations, if we are unable to achieve the necessary product sales or raise or obtain needed funding, we may be forced to discontinue operations. IF OUR WORLDWIDE DISTRIBUTORS REDUCE OR DISCONTINUE SALES OF OUR PRODUCTS, OUR BUSINESS MAY BE MATERIALLY AND ADVERSELY AFFECTED. Our products are marketed and sold through a distribution channel of value added resellers, manufacturers' representatives, retail vendors, and systems integrators. We have a network of dealers and distributors in the United States and Canada, in the European Community and on the European Continent, as well as a growing number of resellers in Africa, Asia, the Middle East, Latin America, and Australia. We support our worldwide distribution network and end-user customers through centralized manufacturing, distribution, and repair operations headquartered in San Diego. As of February 9, 2001, we directly employed 8 individuals involved in marketing and sales activities. Our sales are principally made through distributors which may carry competing product lines. These distributors could reduce or discontinue sales of our products which could materially and adversely affect us. These independent distributors may not devote the resources necessary to provide effective sales and marketing support of our products. In addition, we are dependent upon the continued viability and financial stability of these distributors, many of which are small organizations with limited capital. These distributors, in turn, are substantially dependent on general economic conditions and other unique factors affecting our markets. We believe that our future growth and success will continue to depend in large part upon our distribution channels. Our business could be materially and adversely affected if our distributors fail to pay amounts to us that exceed reserves we have established. AS A COMPANY IN THE TECHNOLOGY INDUSTRY AND DUE TO THE VOLATILITY OF THE STOCK MARKETS GENERALLY, OUR STOCK PRICE COULD FLUCTUATE SIGNIFICANTLY IN THE FUTURE. The market price of our common stock historically has fluctuated significantly. Our stock price could fluctuate significantly in the future based upon any number of factors such as: o general stock market trends; o announcements of developments related to our business; o fluctuations in our operating results; o a shortfall in our revenues or earnings compared to the estimates of securities analysts; -10- o announcements of technological innovations, new products or enhancements by us or our competitors; o general conditions in the computer peripheral market and the imaging markets we serve; o general conditions in the worldwide economy; o developments in patents or other intellectual property rights; and o developments in our relationships with our customers and suppliers. In addition, in recent years the stock market in general, and the market for shares of technology stocks in particular, have experienced extreme price fluctuations which have often been unrelated to the operating performance of affected companies. Similarly, the market price of our common stock may fluctuate significantly based upon factors unrelated to our operating performance. IF AN OPERATIONAL RECEIVER IS REINSTATED TO CONTROL OUR OPERATIONS, WE MAY NOT BE ABLE TO CARRY OUT OUR BUSINESS PLAN. On August 20, 1999, at the request of Imperial Bank, our primary lender, the Superior Court, San Diego appointed an operational receiver to us. On August 23, 1999, the operational receiver took control of our day-to-day operations. Through further equity infusion, primarily in the form of the exercise of warrants to purchase our common stock, operations have continued, and on June 21, 2000, the Superior Court, San Diego issued an order dismissing the operational receiver as a part of a settlement of litigation with Imperial Bank pursuant to the Settlement Agreement effective as of June 20, 2000. The Settlement Agreement requires that we make monthly payments of $150,000 to Imperial Bank until the indebtedness is paid in full. However, in the future, without additional funding sufficient to satisfy Imperial Bank and our other creditors, as well as providing for our working capital, there can be no assurances that an operational receiver may not be reinstated. If an operational receiver is reinstated, we will not be able to expand our products nor will we have complete control over sales policies or the allocation of funds. UPON THE CONVERSION OF THE OUTSTANDING NOTES AND OUTSTANDING PREFERRED STOCK AND UPON EXERCISE OF OUTSTANDING OPTIONS AND WARRANTS, THE ISSUANCE OF COMMON STOCK WILL RESULT IN MUCH DILUTION, OR A LOWER BOOK VALUE PER SHARE, TO ANY INVESTOR FOLLOWING THIS OFFERING. The issuance of our reserved shares would dilute the equity interest of existing stockholders and could have an adverse effect on the market price of our common stock. As of April 26, 2001, we had 6,911,744 shares of common stock reserved for possible future issuances upon, among other things, conversion of preferred stock and exercise of outstanding options and warrants. Under the convertible note purchase agreement to which this registration statement relates, the amount of common stock issuable to each of the purchasers upon conversion of the notes is based on a formula that is tied to the market price of our common stock prior to the date of conversion of the notes. Accordingly, the issuance of some or all of the common stock upon conversion of the notes could result in dilution of the per share value of our common stock held by current investors. The lower the average trading price of our common stock at the time of conversion, the greater the number of shares of common stock that can be issued. Accordingly, this causes a greater risk of dilution. The perceived risk of dilution may cause the purchasers under the convertible note purchase agreement as well as other ITEC stockholders to sell their shares, which would contribute to the downward movement in the stock price of our common stock. We may seek additional financing, which would result in the issuance of additional shares of our capital stock and/or rights to acquire additional shares of our capital stock. Additional issuances of capital stock would result in a reduction of current stockholders' percentage interest in ITEC. Furthermore, if the exercise price of any outstanding or issuable options or warrants or the conversion ratio of any preferred stock is lower than the price per share of common stock at the time of the exercise or conversion, then the price per share of common stock would decrease because the number of shares of common stock outstanding would increase without a corresponding increase in the dollar amount assigned to stockholders' equity. -11- The addition of a substantial number of shares of common stock into the market or by the registration of any other of our securities under the Securities Act may significantly and negatively affect the prevailing market price for our common stock. Furthermore, future sales of shares of common stock issuable upon the exercise of outstanding warrants and options may have a depressive effect on the market price of the common stock, as these warrants and options would be more likely to be exercised at a time when the price of the common stock is in excess of the applicable exercise price. The sale or issuance of any shares of preferred stock having rights superior to those of the common stock may result in a decrease in the value or market price of the common stock. The issuance of preferred stock could have the effect of delaying, deferring or preventing a change of ownership without further vote or action by the stockholders and may adversely affect the voting and other rights of the holders of common stock. Our board of directors currently is authorized to issue up to 100,000 shares of preferred stock. The board has the power to establish the dividend rates, preferential payments on our liquidation, voting rights, redemption and conversion terms and privileges for any series of preferred stock. THE DELISTING OF OUR COMMON STOCK FROM THE NASDAQ SMALLCAP MARKET HAS MADE IT MORE DIFFICULT TO RAISE FINANCING AND THERE IS LESS LIQUIDITY FOR OUR COMMON STOCK AS A RESULT. The Nasdaq SmallCap Market and Nasdaq Marketplace Rules require an issuer to evidence a minimum of $2,000,000 in net tangible assets, a $35,000,000 market capitalization or $500,000 in net income in the latest fiscal year or in two of the last three fiscal years, and a $1.00 per share bid price, respectively. On October 21, 1999, Nasdaq notified us that we no longer complied with the bid price and net tangible assets/market capitalization/net income requirements for continued listing on The Nasdaq SmallCap Market. At a hearing on December 2, 1999, a Nasdaq Listing Qualifications Panel also raised public interest concerns relating to our financial viability. While the Panel acknowledged that we were in technical compliance with the bid price and market capitalization requirements, the Panel was of the opinion that the continued listing of our common stock on The Nasdaq Stock Market was no longer appropriate. This conclusion was based on the Panel's concerns regarding our future viability. Our common stock was delisted from The Nasdaq Stock Market effective with the close of business on March 1, 2000. As a result of being delisted from The Nasdaq SmallCap Market, stockholders may find it more difficult to sell our common stock. This lack of liquidity also may make it more difficult for us to raise capital in the future. Trading of our common stock is now being conducted over-the-counter through the NASD Electronic Bulletin Board and covered by Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend these securities to persons other than established customers and accredited investors must make a special written suitability determination for the purchaser and receive the purchaser's written agreement to a transaction prior to sale. Securities are exempt from this rule if the market price is at least $5.00 per share. The Securities and Exchange Commission adopted regulations that generally define a "penny stock" as any equity security that has a market price of less than $5.00 per share. Additionally, if the equity security is not registered or authorized on a national securities exchange or the Nasdaq and the issuer has net tangible assets under $2,000,000, the equity security also would constitute a "penny stock." Our common stock does constitute a penny stock because our common stock has a market price less than $5.00 per share, our common stock is no longer quoted on Nasdaq and our net tangible assets do not exceed $2,000,000. As our common stock falls within the definition of penny stock, these regulations require the delivery, prior to any transaction involving our common stock, of a disclosure schedule explaining the penny stock market and the risks associated with it. Furthermore, the ability of broker/dealers to sell our common stock and the ability of stockholders to sell our common stock in the secondary market would be limited. As a result, the market liquidity for our common stock would be severely and adversely affected. We can provide no assurance that trading in our common stock will not be subject to these or other regulations in the future, which would negatively affect the market for our common stock. -12- IF WE ARE UNABLE TO SELL ALL OF THE SHARES OFFERED BY US, OR IF WE ARE UNABLE TO SELL THOSE SHARES AT ANTICIPATED FIXED PRICES, WE WILL BE UNABLE TO RAISE THE AMOUNT OF CAPITAL NEEDED TO SUCCESSFULLY EXECUTE OUR BUSINESS PLAN. We are simultaneously registering 22 million shares of common stock that have been issued or are issuable to selling security holders and will be attempting to raise capital at a fixed price(s) through the sale of 20 million shares of common stock offered by us. As a result, we may have difficulty selling the shares offered by us because the selling security holders may sell their shares for a price below our fixed offering price. The registration of the significant amount of shares offered by the selling security holders may also impact the total amount of shares that we will be able to sell. If we are unable to sell all of the shares offered by us at a sufficient fixed price(s), we will be unable to raise the amount of capital needed to successfully execute our business plan. USE OF PROCEEDS The selling security holders are selling all of the shares covered by this prospectus for their own account. Accordingly, we will not receive any proceeds from the resale of the shares. We will bear all expenses relating to this registration. SELLING SECURITY HOLDERS CONVERTIBLE NOTE PURCHASE AGREEMENT The shares being offered by Amro International, S.A., Balmore Funds, S.A. and Celeste Trust Reg. consist of shares of common stock upon conversion of the notes pursuant to the Convertible Note Purchase Agreement. The natural persons who exercise sole or shared voting or investment power over the shares of common stock that Amro International, S.A will sell are H.U. Bochofen and Michael Klee. Amro International, S.A. is primarily engaged in the business of investing in public entities. The address of Amro International, S.A. is c/o Ultra Finance, Grossmuenster Platz, #6, Zurich, Switzerland CN822. The natural person who exercises sole voting or investment power over the shares of common stock that Balmore Funds, S.A. will sell is Gisela Kindle, Director. Balmore Funds, S.A. is primarily engaged in the business of investment advising. The address of Balmore Funds, S.A. is c/o Trident Chambers, P.O. Box 146, Roadstown Tortola, BVI. The natural person who exercises sole voting or investment power over the shares of common stock that Celeste Trust Reg. will sell is Thomas Hackl, Representative. Celeste Trust Reg. is primarily engaged in the business of investment advising. The address of Celeste Trust Reg. is Trevisa - Treuhand - Anstalt, Landstrase 8, 9496 Furtentums, Balzers Lichenstein. During the past three years, we have not had any relationship with Amro International, S.A or Celeste Trust Reg. In January of 1999, we entered into a securities purchase agreement with Balmore Funds, S.A. whereby Balmore was issued series D preferred stock which was converted into 3,500,000 shares of our common stock. Additionally, we issued Balmore a warrant to purchase 1,750,000 shares of our common stock. Pursuant to the convertible note purchase agreement, Amro International S.A., Balmore Funds, S.A. and Celeste Trust Reg have registration rights to which this registration statement relates which requires us to register the shares upon the conversion of the notes, and failure to register such shares by a specified date results in liquidated damages in favor of the purchasers. The purchasers also have prepayment rights upon an event of default, upon a major corporate transaction, or upon certain other triggering events. AGREEMENT WITH AMERICAN INDUSTRIES, INC. AND AGREEMENT WITH ARTIFEX SOFTWARE, INC. The shares being offered by American Industries, Inc. consist of shares of common stock issued pursuant to the agreement and release dated March 1, 2001. The natural person who exercises sole voting or investment power -13- over the shares of common stock that American Industries, Inc. will sell is its President, Howard Hedinger. American Industries, Inc. is primarily engaged in the business of metals distribution and investments. The address of American Industries, Inc. is 1750 N.W. Front Avenue, Suite 106, Portland, OR 97209. The shares being offered by Artifex Software, Inc. consist of shares of common stock issued pursuant to the second OEM amendment dated October 25, 2001. The natural person who exercises sole voting or investment power over the shares of common stock that Artifex Software, Inc. will sell is Miles Jones. Artifex Software, Inc. is primarily engaged in the business of software development. The address of Artifex Software, Inc. is 101 Lucas Valley Road, #110, San Rafel, CA 94903. The registration statement is a part of the prospectus being filed. The shares offered in this prospectus by Amro International, S.A., Balmore Funds, S.A. and Celeste Trust Reg. are based on the various rights contained in the convertible note purchase agreement between the various purchasers and us. The shares offered in this prospectus by American Industries, Inc. are based on the various rights contained in the settlement and release. The shares offered in this prospectus by Artifex Software, Inc. are based on the various rights contained in the second OEM amendment. For additional information about the convertible note purchase agreement, settlement and release and second OEM amendment, see "The Offering." The following table identifies the selling security holders based upon information provided to us as of April 26, 2001, with respect to the shares beneficially held by or acquirable by, the selling security holders, and the shares of common stock beneficially owned by the selling security holders which are not covered by this prospectus. Neither the selling security holders nor their respective affiliates have held any position, office, or other material relationship with us.
Selling Security Holders' Table --------------------- ----------------- ---------------- --------------------- ------------------ Percent of Common Shares Common Shares Total Number Of Total Number Of Owned Prior To Owned Prior to Shares To Be Shares Owned Name Of Investor Offering Offering Registered following Offering ---------------- -------------- --------------- ------------------ ------------------ --------------------- ----------------- ---------------- --------------------- ------------------ Amro International, 0 0 10,401,559 0 S.A. --------------------- ----------------- ---------------- --------------------- ------------------ Balmore Funds, S.A. 0 0 7,801,169 0 --------------------- ----------------- ---------------- --------------------- ------------------ Celeste Trust Reg. 0 0 5,437,179 0 --------------------- ----------------- ---------------- --------------------- ------------------ American Industries, 0 0 1,160,093 0 Inc. --------------------- ----------------- ---------------- --------------------- ------------------ Artifex Software, Inc. 40,000 .025% 1,200,000 0 --------------------- ----------------- ---------------- --------------------- ------------------
EFFECTS ON MARKET PRICE AND DILUTION TO COMMON STOCKHOLDERS RESULTING FROM CONVERSION OF THE NOTES Since the outstanding principal amount of the notes converts at a floating rate based on a discount to the market price of the common stock, the lower the stock price when the holder converts, the more shares of common stock the holder gets. When the selling securityholder converts and then sells the common stock, the common stock price may decrease due to the additional shares in the market. This could allow the selling securityholders to convert the notes into greater amounts of common stock, the sales of which would further depress the stock price. -14- The significant downward pressure on the price of the common stock as the selling securityholder converts and sells material amounts of common stock could encourage short sales by the selling securityholder or others. This could place further downward pressure on the price of the common stock. The conversion of the notes may result in substantial dilution to the interests of other holders of common stock since each holder of the notes may ultimately convert and sell the full amount issuable on conversion. DESCRIPTION OF FLOATING CONVERSION FEATURE AND EXAMPLES OF HOW THIS CONVERSION FEATURE WORKS Each note is convertible into such number of shares of our common stock as is determined by dividing (a) that portion of the outstanding principal balance of the note by (b) the conversion price. The conversion price equals the lesser of (x) $.059 and (y) 70% of the average of the 3 lowest closing bid prices during the 30 trading days prior to the conversion date. For example, if all of the note holders convert the full $850,000 and the average closing bid price for the 3 trading days having the lowest closing bid prices during the 30 trading days prior to the conversion date is $.05, the note holders will own an aggregate of 24,285,714 shares of our common stock (70% of $.05 equals $.035 and 850,000 divided by .035 equals 24,285,714). If all of the note holders convert the full $850,000 and the average closing bid price for the 3 trading days having the lowest closing bid prices during the 30 trading days prior to the conversion date is $.15, the note holders will own an aggregate of 8,095,238 shares of our common stock (70% of $.15 equals $.105 and 850,000 divided by .105 equals 8,095,238). If all of the note holders convert the full $850,000 and the average closing bid price for the 3 trading days having the lowest closing bid prices during the 30 trading days prior to the conversion date is $.25, the note holders will own an aggregate of 4,857,143 shares of our common stock (70% of $.25 equals $.175 and 850,000 divided by .175 equals 4,857,143). The following table illustrates the differences in the dilutive effect on our common stock at various market prices assuming the aggregate amount of all of the outstanding notes were converted simultaneously:
---------------------- ------------------ ----------------- -------------------- Market Price of Number of Shares --------------- ---------------- shares of common convertible upon Percentage of total ---------------- ---------------- ------------------- stock underlying the exercise of the outstanding common -------------------- --------------- ------------------ Convertible Notes Conversion Price Notes stock ----------------- ---------------- ----- ----- ---------------------- ------------------ ----------------- -------------------- $.05 $.035 24,285,714 18.2% ---------------------- ------------------ ----------------- -------------------- $.10 $.07 12,142,857 9.1% ---------------------- ------------------ ----------------- -------------------- $.15 $.105 8,095,238 6.1% ---------------------- ------------------ ----------------- -------------------- $.20 $.14 6,071,429 4.6% ---------------------- ------------------ ----------------- -------------------- $.25 $.175 4,857,143 3.6% ---------------------- ------------------ ----------------- -------------------- $.50 $.35 2,428,571 1.8% ---------------------- ------------------ ----------------- -------------------- $.75 $.525 1,619,048 1.2% ---------------------- ------------------ ----------------- --------------------
-15- PLAN OF DISTRIBUTION The shares may be sold or distributed from time to time by the selling security holders or by pledgees, donees or transferees of, or successors in interest to, the selling security holders, directly to one or more purchasers (including pledgees) or through brokers, dealers or underwriters who may act solely as agents or may acquire shares as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods: o ordinary broker transactions, o transactions involving cross or block trades or otherwise on the OTC Bulletin Board, o purchases by brokers, dealers or underwriters as principal and resale by such purchasers for their own accounts pursuant to this prospectus, o "at the market" to or through market makers or into an existing market for the common stock, o in other ways not involving market makers or established trading markets, including direct sales to purchasers or sales effected through agents, o through transactions in options, swaps or other derivatives (whether exchange listed or otherwise), or o any combination of the foregoing, or by any other legally available means. In addition, the selling security holders may enter into hedging transactions with broker-dealers who may engage in short sales of shares in the course of hedging the positions they assume with the selling security holders. The selling security holders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. The selling security holders are "underwriters" within the meaning of the Securities Act in connection with the sale of the common stock offered hereby. Broker-dealers who act in connection with the sale of the common stock may also be deemed to be underwriters. Profits on any resale of the common stock as a principal by such broker-dealers and any commissions received by such broker-dealers may be deemed to be underwriting discounts and commissions under the Securities Act. Any broker-dealer participating in such transactions as agent may receive commissions from the selling security holders (and, if they act as agent for the purchaser of our common stock, from such purchaser). Broker-dealers may agree with the selling security holders to sell a specified number of shares of our common stock at a stipulated price per share, and, to the extent such a broker-dealer is unable to do so acting as agent for any of the selling security holders, to purchase as principal any unsold common stock at the price required to fulfill the broker-dealer commitment to any of the selling security holders. Broker-dealers who acquire common stock as principal may thereafter resell the common stock from time to time in transactions (which may involve crosses and block transactions and which may involve sales to and through other broker-dealers, including transactions of the nature described above) in the over-the-counter market, in negotiated transactions or otherwise, at market prices prevailing at the time of the sale or at negotiated prices, and in connection with such resales may pay to or receive from the purchasers of such common stock commissions computed as described above. We will not receive any proceeds from the sale of the common shares pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be $17,816.20. -16- We have informed the selling security holders that certain anti-manipulative rules contained in Regulation M under the Securities Exchange Act of 1934, as amended, may apply to their sales of the common stock. In addition, we have informed the selling security holders of the need for delivery of copies of this prospectus. The selling security holders may also use Rule 144 under the Securities Act, to sell the shares if they meet the criteria and conform to the requirements of such rule. DESCRIPTION OF SECURITIES COMMON STOCK Holders of the common stock are entitled to one vote for each share held in the election of directors and in all other matters to be voted on by shareholders. Stockholders have cumulative voting rights in the election of directors. Holders of common stock are entitled to receive dividends as may be declared from time to time by our board of directors out of funds legally available. In the event of liquidation, dissolution or winding up, holders of common stock are to share in all assets remaining after the payment of liabilities. The holders of common stock have no preemptive or conversion rights and are not subject to further calls or assessments. There are no redemption or sinking fund provisions applicable to the common stock. The rights of the holders of the common stock are subject to any rights that may be fixed for holders of preferred stock. All of the outstanding shares of common stock are fully paid and non-assessable. INFORMATION WITH RESPECT TO THE REGISTRANT The information required to be disclosed in the registration statement pertaining to this prospectus is incorporated by reference, including, among other documents, our latest Form 10-K and Form 10-Q, which are both being delivered with this prospectus. See "Documents Incorporated by Reference", "Prospectus Summary", "Risk Factors" and "Material Changes." MATERIAL CHANGES SIGNIFICANT TRANSITIONAL PHASE AND IMPORTANT SHORT-TERM OPERATIONAL AND LIQUIDITY CHALLENGES We have had operational and liquidity challenges for the past two years, characterized by declining sales and net operating losses. Furthermore, in August 1999, and continuing until June 2000, our operations were controlled by a court-appointed operational receiver, which restricted our ability to conduct normal business operations. The presence of the court-appointed operational receiver for ten months of fiscal 2000 resulted in the capture of all sales revenue by the receiver in favor of the creditor, Imperial Bank. During this period, we were not able to expand our products nor did we have complete control over sales policies or the allocation of funds. Additionally, many of our traditional customers elected to cease doing business with us, which resulted in significantly reduced revenues and associated cash flows to operate the business. Our minimum operating capital requirements to meet payroll and overhead expenses were met due to the sale of equity securities and the exercise of warrants by certain of our employees. Shortfalls in income related to our OEM business, which traditionally represented the most profitable part of the business, were related to the election by these customers to either discontinue development projects already underway, or to cancel plans to manufacture contract-related products that would have generated royalty income for us. The component of our business has, traditionally, been volatile and we have not been able to accurately forecast revenues and profits from this business sector. In light of the above, we elected to shift our business model, which had been reliant on engineering and royalty revenues from OEM customers who would incorporate our technologies into their products, to one focused on product sales of our printer and software products. Our ongoing financial difficulties, however, have -17- compromised this strategy to the extent that there has been a shortage of capital for ongoing product development and marketing. In order to address these difficulties, we have endeavored to enter into strategic acquisitions, which may provide revenues and profits to us. In December 2000, we acquired, for stock and debt assumption, EduAdvantage, Inc., an internet-based reseller of software and other computer products to the education market. The net effect of the acquisition was an increase in our sales on a consolidated basis. Also, in December 2000, we announced that we had agreed to acquire a majority interest in Quality Photographic Imaging, Inc. ("QPI"). However, this transaction is pending subject to the approval of QPI shareholders. In December 2000, we also announced that we would acquire a 75 percent interest in Pen Interconnect, Inc. However, in February of 2001, we terminated the transaction and retained a $75,000 convertible note which is convertible into common stock of Pen Interconnect, Inc. APPOINTMENT AND REMOVAL OF OPERATIONAL RECEIVER On August 20, 1999, at the request of Imperial Bank, our primary lender, the Superior Court, San Diego appointed an operational receiver to us. On August 23, 1999, the operational receiver took control of our day-to-day operations. Through further equity infusion, primarily in the form of the exercise of warrants to purchase our common stock, operations have continued, and on June 21, 2000, the Superior Court, San Diego issued an order dismissing the operational receiver as a part of a settlement of litigation with Imperial Bank pursuant to the Settlement Agreement effective as of June 20, 2000. The Settlement Agreement requires that we make monthly payments of $150,000 to Imperial Bank until the indebtedness is paid in full. However, in the future, without additional funding sufficient to satisfy Imperial Bank and our other creditors, as well as providing for our working capital, there can be no assurances that an operational receiver may not be reinstated. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy the materials we file at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the SEC's regional offices at 7 World Trade Center, 13th Floor, New York, New York 10048; and at Citicorp Center, 500 West Madison Street, Room 1400, Chicago, Illinois 60661-2511. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Rooms. Our filings are also available to the public from the SEC's World Wide Web site on the Internet at http://www.sec.gov. This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this Prospectus. We incorporate by reference the documents listed below: 1. Our Annual Report on Form 10-K for the fiscal year ended June 30, 2000 (as amended by Form 10-K/A filed on October 30, 2000); 2. Our Quarterly Reports on Form 10-Q for the fiscal quarters ended December 31, 2000, September 30, 2000, March 31, 2000, December 31, 1999, July 31, 1999 and March 31, 1999; and 3. Our Current Report on Form 8-K filed January 19, 2001. This prospectus is being accompanied by a copy of our latest Form 10-K, as amended and our latest Form 10-Q, as amended. You may request a copy of these filings, without charge, by telephone at (858) 613-1300 or by writing to us at the following address: -18- Imaging Technologies Corporation Attn: Philip J. Englund, Secretary 15175 Innovation Drive San Diego, California 92128 DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Section 145 of the Delaware General Corporation Law permits indemnification of officers and directors of the Registrant under certain conditions and subject to certain limitations. Section 145 of the Delaware General Corporation Law also provides that a corporation has the power to purchase and maintain insurance on behalf of its officers and directors against any liability asserted against such person and incurred by him or her in such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of Section 145 of the Delaware General Corporation Law. Article X of the Bylaws of the Registrant provides that the Registrant shall indemnify its officers, directors and employees. The rights to indemnity thereunder continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of the person. In addition, expenses incurred by a director or officer in defending any action, suit or proceeding by reason of the fact that he or she is or was a director or officer of the Registrant shall be paid by the Registrant unless such officer, director or employee is adjudged liable for negligence or misconduct in the performance of his or her duties. Article Seventh of the Registrant's Certificate of Incorporation provides that the Registrant shall indemnify all persons whom it may indemnify pursuant to Section 145 of the Delaware General Corporation Law to the full extent permitted by such Section 145. INDEMNIFICATION FOR LIABILITIES UNDER THE SECURITIES ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING US ACCORDING TO THE PROVISIONS IN OUR ARTICLES OF INCORPORATION, WE HAVE BEEN INFORMED THAT IN THE OPINION OF THE SEC, THIS INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE EXPERTS The financial statements incorporated herein by reference to our Annual Report on Form 10-K for the year ended June 30, 2000 have been so incorporated in reliance on the report of Boros & Farrington APC, independent accountants, given on the authority of said firm as experts in auditing and accounting. LEGAL OPINIONS For the purpose of this offering, Jenkens & Gilchrist Parker Chapin LLP is our counsel in regard to this registration statement. FINANCIAL INFORMATION The following financial statements should be read in conjunction with the financial statement information contained in and incorporated by reference from our most recent report on Form 10-K, as amended, which is being furnished with this prospectus. -19-
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE SEC. YOU SHOULD RELY ON THE INFORMATION OR REPRESENTATIONS PROVIDED IN THIS PROSPECTUS. WE HAVE AUTHORIZED NO ONE TO PROVIDE YOU 25,000,000 SHARES WITH DIFFERENT INFORMATION. THE SELLING SECURITY HOLDERS DESCRIBED IN THIS PROSPECTUS ARE NOT MAKING IMAGING TECHNOLOGIES CORPORATION AN OFFER IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE COMMON STOCK INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS PROSPECTUS. ---------------- TABLE OF CONTENTS ---------------- Page ---- ----------------- Forward-Looking Statements........................3 PROSPECTUS Prospectus Summary................................3 ----------------- The Offering......................................4 Risk Factors......................................5 Use of Proceeds..................................13 Selling Security Holders.........................13 Plan of Distribution.............................16 Description of Securities........................17 Information With Respect to the Registrant.......17 Material Changes.................................17 Where You Can Find More Information..............18 Incorporation of Certain Documents by Reference..18 Disclosure of Commission Position on Indemnification for Securities and Liabilities19 Experts ........................................19 Legal Opinions...................................19 IMAGING TECHNOLOGIES CORPORATION Financial Information............................19 15175 INNOVATION DRIVE SAN DIEGO, CALIFORNIA 92128 (858) 613-1300 May __, 2001
PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table shows the estimated expenses in connection with the issuance and distribution of the common stock being registered: SEC registration fees .....................................$65.25 Legal fees and expenses................................$25,000.00 Accounting fees and expenses...........................$ 2,000.00 Miscellaneous...............................................$0.00 ---------- TOTAL $27,065.25 ========== ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law permits indemnification of officers and directors of the Registrant under certain conditions and subject to certain limitations. Section 145 of the Delaware General Corporation Law also provides that a corporation has the power to purchase and maintain insurance on behalf of its officers and directors against any liability asserted against such person and incurred by him or her in such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of Section 145 of the Delaware General Corporation Law. Article X of the Bylaws of the Registrant provides that the Registrant shall indemnify its officers, directors and employees. The rights to indemnity thereunder continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of the person. In addition, expenses incurred by a director or officer in defending any action, suit or proceeding by reason of the fact that he or she is or was a director or officer of the Registrant shall be paid by the Registrant unless such officer, director or employee is adjudged liable for negligence or misconduct in the performance of his or her duties. Article Seventh of the Registrant's Certificate of Incorporation provides that the Registrant shall indemnify all persons whom it may indemnify pursuant to Section 145 of the Delaware General Corporation Law to the full extent permitted by such Section 145. INDEMNIFICATION FOR LIABILITIES UNDER THE SECURITIES ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING US ACCORDING TO THE PROVISIONS IN OUR ARTICLES OF INCORPORATION, WE HAVE BEEN INFORMED THAT IN THE OPINION OF THE SEC, THIS INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE ITEM 16. EXHIBITS. (a) Exhibits EXHIBIT DESCRIPTION 3(a) Certificate of Incorporation of the Company, as amended, and currently in effect. See also below (Incorporated by reference to Exhibit 3(a) to 1988 Form 10-K) * 3(b) Certificate of Amendment of Certificate of Incorporation of the Company, filed February 8, 1995, as amended, and currently in effect (Incorporated by reference to Exhibit 3(b) * to 1995 Form 10-K) 3(c) Certificate of Amendment of Certificate of Incorporation of the Company, filed May 23, 1997, as amended, and currently in effect (Incorporated by reference to 1997 Form 10-K)* 3(d) Certificate of Amendment of Certificate of Incorporation, filed January 12, 1999, as amended and currently in effect (Incorporated by reference to Form 10-Q for the period ended December 31, 1998) * 3(e) Certificate Eliminating Reference to Certain Series of Shares of Stock from the Certificate of Incorporation, filed January 12, 1999, as amended and currently in effect (Incorporated by reference to Form 10-Q for the period ended December 31, 1998)* 3(f) By-Laws of the Company, as amended, and currently in effect (Incorporated by reference to Exhibit 3(b) to 1987 Form 10-K)* 4(a) Amended Certificate of Designation of Imaging Technologies Corporation with respect to the 5% Convertible Preferred Stock (Incorporated by reference to Exhibit 4(d) to 1987 Form 10-K)* 4(b) Amended Certificate of Designation of Imaging Technologies Corporation with respect to the 5% Series B Convertible Preferred Stock (Incorporated by reference to Exhibit 4(b) to 1988 Form 10-K)* 4(c) Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of Imaging Technologies Corporation (Incorporated by reference to Exhibit 4(c) to 1998 Form 10-K)* 4(d) Certificate of Designation, Powers, Preferences and Rights of the Series of Preferred Stock to be Designated Series D Convertible Preferred Stock, filed January 13, 1999 (Incorporated by reference to Form 10-Q for the period ended December 31, 1998)* 4(e) Certificate of Designation, Powers, Preferences and Rights of the Series of Preferred Stock to be Designated Series E Convertible Preferred Stock, filed January 28, 1999 (Incorporated by reference to Form 10-Q for the period ended December 31, 1998)* 5 Legal Opinion of Jenkens & Gilchrist Parker Chapin LLP ** 10(a.1) 1988 Stock Option Plan for the Company (Incorporated by reference to Exhibit 10(g) to 1989 Form 10-K)* 10(a.2) Amendment and Restatement of 1988 Stock Option Plan (Incorporated by reference to Exhibit 10(d) to 1991 Form 10-K)* 10(a.3) Forms of Standard Non-Qualified and Incentive Stock Option Agreement for 1988 Stock Option Plan (Incorporated by reference to Exhibit 10(e) to 1991 Form 10-K)* 10(b) Reference is made to the various stock options and warrants granted in 1996 to directors and executive officers of the Company as described in Notes 6 and 7 to the 1996 Financial Statements (Incorporated by reference to Forms S-8 dated February 12, 1996, File Nos. 333-00871, 333-00873 and 333-00879)* 10(c.1) Consulting Agreement, dated April 1, 1994, between the Company and Irwin Roth (Incorporated by reference to Exhibit 10(az) to 1994 Form 10-KSB)* 10(c.2) Amendment to Consulting Agreement dated June 12, 1998 between the Company and Irwin Roth (Incorporated by reference to Exhibit 10(g.3) to 1998 Form 10-K)* 10(d.1) Warrant Purchase Agreement, dated September 17. 1993, between the Company and Robinson International, Ltd. (Incorporated by reference to Exhibit 10(ar) to 1994 Form 10-KSB)* 10(d.2) Warrant Certificate for 250,000 Warrants to Purchase Shares of Common Stock of the Company at $1.50 per share dated September 17, 1993, between the Company and Robinson International, Ltd. (Incorporated by reference to Exhibit 10(as) to 1994 Form 10-KSB)* 10(d.3) Warrant Certificate for 250,000 Warrants to Purchase Shares of Common Stock of the Company at $1.00 per share dated September 17, 1993, between the Company and Robinson International, Ltd. (Incorporated by reference to Exhibit 10(at) to 1994 Form 10KSB)* 10(e) ITEC/MEl License Agreement dated September 30, 1994 between the Company and Matsushita Electric Industrial Co., Ltd. (Incorporated by reference to Exhibit 10(aac) to 1994 Form 10-KSB)* 10(f) Form of Standard Warrant Agreement dated January 3, 1996 issued to Harry J. Saal as described in Note 6 to the 1996 Financial Statements (Incorporated by reference to Exhibit 10(o) to 1996 Form 10-KSB)* 10(g) Form of Standard Warrant and Consulting Agreement issued to consultants as described in Note 6 to the 1996 Financial Statements (Incorporated by reference to Form S-8 dated May 9, 1996, File Number 333-03375)* 10(h) Warrant to Purchase Stock between Imperial Bank and the Company dated June 23, 1998 (Incorporated by reference to Exhibit 10(w) to 1998 Form 10-K)* 10(i) Form of Warrant to Purchase Common Stock between buyers and the Company dated August 21,1997 (Incorporated by reference to Exhibit 10(z) to 1998 Form 10-K)* 10(j) Securities Purchase Agreement dated as of January 13, 1999, by and among the Company and the applicable parties named therein (Incorporated by reference to Exhibit 10.3 to Form 10-Q for the period ended December 31, 1998)* 10(k) Registration Rights Agreement dated as of January 13, 1999, by and among the Company and the applicable parties named therein (Incorporated by reference to Exhibit 10.4 to Form 10-Q for the period ended December 31, 1998)* 10(l) Form of Warrant to Purchase Shares of Common Stock of the Company at $.875 per share dated January 13, 1999, between the Company and each of the applicable parties named in Exhibit 10(j) hereto (Incorporated by reference to Exhibit 10.5 to Form 10-Q for the period ended December 31, 1998)* 10(m) Securities Purchase Agreement dated as of February 2, 1999, by and among the Company and the applicable parties named therein (Incorporated by reference to Exhibit 10.6 to Form 10-Q for the period ended December 31, 1998)* 10(n) Registration Rights Agreement dated as of February 2, 1999, by and among the Company and the applicable parties named therein (Incorporated by reference to Exhibit 10.7 to Form 10-Q for the period ended December 31, 1998)* 10(o) Form of Warrant to Purchase Shares of Common Stock of the Company at $.875 per share dated February 2, 1999, between the Company and each of the applicable parties named in Exhibit 10(n) hereto (Incorporated by reference to Exhibit 10.8 to Form 10-Q for the period ended December 31, 1998)* 10(p) Exchange Agreement dated as of February 19, 1999, by and among the Company and the applicable parties named therein (Incorporated by reference to Exhibit 10.9 to Form 10-Q for the period ended December 31, 1998)* 10(q) Form of Warrant to Purchase 50,000 shares of Common Stock of ITEC at $1.50 per share, * dated March 5, 1999, between ITEC and Carmel Mountain Environmental L.L.C. (Incorporated by reference to Exhibit 4.9 to Amendment No. 2 to Form S-3 filed July 16, 1999, File No. 333-77629)* 10(r) Form of Warrant to Purchase 50,000 Shares of Common Stock of ITEC at $1.50 per share dated March 5, 1999, between ITEC and Carmel Mountain #8 Associates, L.P. (Incorporated by reference to Exhibit 4.10 to Amendment No. 2 to Form S-3 filed July 16, 1999, File No. 333-77629)* 10(s) Form of Warrant to Purchase 5,000 Shares of Common Stock of ITEC at $1.50 per share, dated March 5, 1999 between ITEC and John P. Mulder (Incorporated by reference to Exhibit 4.12 to Amendment No. 2 to Form S-3 filed July 16, 1999, File No. 333-77629)* 10(t) Form of Warrant to Purchase 5,000 Shares of Common Stock of ITEC at $1.50 per share, dated March 5, 1999 between ITEC and Steve Tiritilli (Incorporated by reference to Exhibit 4.13 to Amendment No. 2 to Form S-3 filed July 16, 1999, File No. 333-77629)* 10(u) Common Stock Purchase Agreement (Incorporated by reference to Exhibit 10.1 to the Company's Report on Form 10-Q for the period ended September 30, 1998)* 10(v) Form of Subordinated Note Purchase Agreement (Incorporated by reference to Exhibit 10.2 to the Company's Report on Form 10-Q for the period ended September 30, 1998)* 10(w) Registration Rights Agreement (Incorporated by reference to Exhibit 10.6 to the Company's Report on Form 10-Q for the period ended September 30, 1998)* 10(x) Form of Convertible Subordinated Promissory Note (Incorporated by reference to Exhibit 10.4 to the Company's Report on Form 10-Q for the period ended September 30, 1998)* 10(y) Form of Common Stock Purchase Warrant (Incorporated by reference to Exhibit 10.12 to the Company's Report on Form 10-Q for the period ended September 30, 1998)* 10(z) Form of Common Stock Purchase Warrant (Incorporated by reference to Exhibit 10.9 to the Company's Report on Form 10-Q for the period ended September 30, 1998)* 10(aa) Form of Common Stock Purchase Warrant (Incorporated by reference to Exhibit 10.5 to the Company's Report on Form 10-Q for the period ended September 30, 1998)* 10(ab) Form of Warrant to Purchase 60,000 Shares of Common Stock of ITEC at $2.50 per share, dated June 23, 1998, between ITEC and Imperial Ban. (Incorporated by reference to Exhibit 4.40 to Amendment No. 2 to Form S-3 filed July 16, 1999, File No. 333-77629)* 10(ac) Standard Industries/Commercial Single-Tenant Lease-Net, dated February 22, 1999 and addendum thereto, dated March 5, 1999, by and between Carmel Mountain #8 Associates, L.P. and ITEC (Incorporated by reference to Exhibit 10.10 to Form 10-Q for the period ended March 31, 1999) 10(ad) 1999 Special Compensation Plan for certain directors, officers and employees of the Company (Incorporated by reference to Form S-8, filed June 18, 1999) 10(ae) Form of Restated and Amended Common Stock Purchase Warrants relating to Exhibit 10(bt) above (Incorporated by reference to Form S-8, filed June 18, 1999)* 10(af) Form of Compensation Agreement relating to Exhibit 10(ad) above (Incorporated by reference to Form S-8, filed June 18, 1999)* 10(ag) Consulting Agreement dated July 1, 1999 between Howard Schraub and the Company (Incorporated by reference to Form S-8, filed August 4, 1999)* 10(ah) Consulting Agreement dated July 1, 1999 between George Furla and the Company (Incorporated by reference to Form S-8, filed August 4, 1999)* 10(ai) Consulting Agreement dated July 1, 1999 between Franz Herbert and the Company. (Incorporated by reference to Form S-8, filed August 4, 1999)* 10(aj) Consulting Agreement dated July 1, 1999 between Peter Benz and the Company (Incorporated by reference to Form S-8, filed September 22, 1999)* 10(ak) Consulting Agreement dated July 1, 1999 between Richard Kaplan and the Company (Incorporated by reference to Form S-8, filed September 22, 1999)* 10(al) Convertible Note Purchase Agreement dated December 12, 2000 by and among certain Purchasers and the Company (Incorporated by reference to Form 8-K, filed January 19, 2001)* 10(am) Settlement Agreement dated June 20, 2000 between Imperial Bank and the Company** 10(an) Agreement and Release dated March 1, 2001 among American Industries, Inc., Ellison Carl Morgan, the Ellison Carl Morgan Revocable Trust, the 2030 Investors 401K and the 2030 Investors LLC, and Imaging Technologies, Inc. and Brian Bonar** 10(ao) OEM Agreement dated July 1, 1999 by and between Artifex Software Inc. and the Company** 10(ap) First OEM Amendment dated September 7, 1999 by and between Artifex Software Inc. and the Company** 10(aq) Second OEM Amendment dated October 25, 2000 by and between Artifex Software Inc. and the Company** 10(ar) Share Purchase Agreement dated December 1, 2000 by and between ELB Group.com, LLC, Robert Marks, BET Trust, Carl Perkins, Eduadvantage.com, Inc., Brent H. Coeur-Barron, as escrow agent, and the Company** 21 List of Subsidiaries of the Company (Incorporated by reference to Form 10-K, filed June 30, 1999)* 23 Consent of Independent Accountants ** * Exhibit is incorporated by reference only and a copy is not included in this Form S-2 filing. ** Filed herewith. (B) REPORTS ON FORM 8-K Form 8-K filed July 28, 2000. Form 8-K filed January 19, 2001. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned Registrant hereby undertakes to deliver or cause to be delivered with the Prospectus, to each person to whom the Prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the Prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the Prospectus, to deliver, or cause to be delivered to each person to whom the Prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the Prospectus to provide such interim financial information. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, Delaware General Corporation Law or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefor, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered hereunder, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-2 and has duly caused this Pre-Effective Amendment No. 1 to Form S-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on the 30th day of April 2001. IMAGING TECHNOLOGIES CORPORATION By:/s/ Brian Bonar ---------------------------- Brian Bonar Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective Amendment No. 1 to Form S-2 has been signed by the following persons in the capacities and on the dates indicated. By:/s/ Brian Bonar ---------------------------- Name: Brian Bonar Title: Acting Chief Financial Officer Date: April 30, 2001 By: /s/ Christopher W. McKee ---------------------------- Name: Christopher W. McKee Title: Acting Principal Accounting Officer Date: April 30, 2001 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints, jointly and severally, Brian Bonar and Philip J. Englund, and each of them acting individually, as his attorney-in-fact, each with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any and all amendments to this Registration Statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title --------- ----- /s/ Brian Bonar Chief Executive Officer April 30, 2001 - ------------------------------ and Director Brian Bonar (Principal Executive Officer) /s/ Robert A. Dietrich - ------------------------------ Director April 30, 2001 Robert A. Dietrich /s/ Eric W. Gaer - ------------------------------ Director April 30, 2001 Eric W. Gaer /s/ Richard H. Green - ------------------------------ Director April 30, 2001 Richard H. Green /s/ Stephen J. Fryer - ------------------------------ Director April 30, 2001 Stephen J. Fryer
EX-5 2 ex5.txt JENKENS & GILCHRIST PARKER CHAPIN OPINION EXHIBIT 5 LEGAL OPINION OF JENKENS & GILCHRIST PARKER CHAPIN LLP [Letterhead of Jenkens & Gilchrist Parker Chapin LLP] May 1, 2001 Imaging Technologies Corporation 15175 Innovation Drive San Diego, California 92128 Dear Sirs: We have examined the Registration Statement on Form S-2 filed by you with the Securities and Exchange Commission on February 20, 2001 (Registration No. 333-55874), as amended (the "Registration Statement"), in connection with the registration under the Securities Act of 1933, as amended, of up to 25,000,000 shares of your common stock, par value $.005 per share (the "Shares"). The Shares are being registered for resale by Amro International, S.A., Balmore Funds, S.A. , Celeste Trust Reg., American Industries, Inc. and Artifex Software, Inc. The Shares being sold by Amro International, S.A., Balmore Funds, S.A. and Celeste Trust Reg. are issuable by the Company pursuant to a Convertible Note Purchase Agreement, dated as of December 12, 2000, between the Company, on the one hand, and Amro International, S.A., Balmore Funds, S.A. and Celeste Trust Reg., on the other hand (the "Note Purchase Agreement"). The Shares being sold by American Industries, Inc. are issuable by the Company pursuant to an Agreement and Release dated March 1, 2001 by and among the Company, American Industries, Inc. and certain other parties thereto (the "Agreement and Release"). The Shares being sold by Artifex Software, Inc. are issuable by the Company pursuant to an OEM Amendment dated October 25, 2000 between the Company and Artifex Software, Inc. (the "OEM Amendment"). As your legal counsel in connection with these transactions, we have examined the proceedings taken and are familiar with the proceedings proposed to be taken by you in connection with the sale and issuance of the Shares. It is our opinion that upon conclusion of the proceedings being taken or contemplated by us, as your counsel, to be taken prior to the issuance of the Shares, the Shares, when issued in the manner described in the Registration Statement, the Note Purchase Agreement, the Agreement and Release or the OEM Amendment, as applicable, will be validly issued, fully paid and non-assessable. We consent to the use of this opinion as an exhibit to the Registration Statement and further consent to the use of our name under the caption "Legal Matters" in the prospectus constituting part of the Registration Statement. Very truly yours, /s/ Jenkens & Gilchrist Parker Chapin LLP ----------------------------------------- JENKENS & GILCHRIST PARKER CHAPIN LLP EX-10 3 f713000_1.txt EXHIBIT 10(AM) SETTLEMENT AGREEMENT EXHIBIT 10(am) Settlement Agreement This Settlement Agreement ("Settlement Agreement") is entered into as of June ___, 2000, and is made by and between Imperial Bank ("Bank"), on the one hand, and Imaging Technologies Corporation, Prima International, Newgen Systems Acquisition Corporation, ITEC Europe Limited, AMT Accel U.K. Limited, McMican Corporation, and Color Solutions, Inc. (collectively, and jointly and severally, "ITEC"), on the other hand. This Settlement Agreement is made with reference to the following facts: Recitals -------- A. The Bank and ITEC are parties to that certain litigation currently pending as Case No. 728735 in the Superior Court of the state of California for the County of San Diego, known as Imperial Bank, Plaintiff, v. Imaging Technologies Corporation, et al., Defendants (the "Litigation"). B. The Bank initiated the Litigation against ITEC by filing its original complaint on March 5, 1999. The Bank's complaint in the Litigation alleges causes of action against ITEC for (i) breach of credit agreements; (ii) money lent; (iii) foreclosure of personal property security interest; (iv) appointment of a receiver; and (v) injunctive relief. By order entered August 20, 1999, the court appointed Michael D. Myers (the "Receiver") as an operating receiver for ITEC. C. ITEC desires: (i) to restructure the Existing Indebtedness (as defined below) but not extinguish, limit or otherwise impair the Bank's security interest in the collateral securing those obligations; and (ii) to repay the Existing Indebtedness in full in accordance with the terms herein. The Bank desires full repayment of the Existing Indebtedness. D. Based upon each party's independent review of the existing facts, circumstances and legal contentions surrounding ITEC's obligations to the Bank, and subject to all terms of this Settlement Agreement, the parties hereto desire to finally and conclusively settle and compromise all claims between them concerning the subject matter of this Settlement Agreement. NOW, THEREFORE, in consideration of (i) the above recitals and the mutual promises contained in this Settlement Agreement; (ii) the execution of this Settlement Agreement and all documents required to be executed in accordance with this Settlement Agreement (including, but not limited to the Stipulated Judgment and mutual release described below (collectively, the "Settlement Documents")); (iii) the satisfaction of all conditions precedent set forth in section V below; and (iv) for other and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is hereby agreed as follows: I. ACKNOWLEDGEMENT OF EXISTING INDEBTEDNESS AND THE LOAN DOCUMENTS. ---------------------------------------------------------------- A. ITEC acknowledges and agrees that ITEC is a party to the following (collectively, the "Loan Documents"): (i) Security and Loan Agreement and an Addendum to Security and Loan Agreement dated as of June 23, 1998, in an amount not to exceed $3,500,000; (ii) Security and Loan Agreement and an Addendum to Security and Loan Agreement dated as of June 23, 1998, in an amount not to exceed $1,000,000; (iii) Security and Loan Agreement and an Addendum to Security and Loan Agreement dated as of June 23, 1998, in an amount not to exceed $2,500,000 (the documents referred to in (i), (ii) and (iii) hereof shall collectively be referred to as the "Loan and Security Agreements"); and (iv) that certain promissory note dated as of June 23, 1998, in the original principal amount of $2,500,000 ("Note"). B. ITEC and acknowledges and agrees that ITEC agreed to repay all amounts advanced by the Bank to ITEC pursuant to the Loan Documents, together with interest thereon at the applicable rates set forth in the Loan Documents, together with all applicable fees and charges set forth in the Loan Documents. C. ITEC acknowledges and agrees that as security for, inter alia, ITEC's obligations under the Loan Documents, ITEC intended to grant and granted to the Bank a first priority security interest in all ITEC's personal property (collectively, the "Collateral") including, but not limited to, accounts, equipment, inventory, intellectual property and general intangibles by the certain Loan and Security Agreements. ITEC warrants and represents that: (i) the security interests granted by the Loan and Security Agreements were granted to secure ITEC's obligations under the Loan Documents; and (ii) ITEC intended that the Loan Documents would provide the Bank with a first priority, duly authorized, valid, binding, continuing and perfected lien on the Collateral granted thereunder. ITEC further acknowledges and agrees that ITEC made, executed and delivered to the Bank, as secured party, UCC-1 Financing Statements (together with all supplements and amendments, the "Financing Statements"), which were duly filed in the office of the California Secretary of State. 2 D. ITEC and the Bank entered into a Forbearance Agreement dated as of November 4, 1998 (the "Forbearance Agreement"), which provided for an initial forbearance through the close of business on January 15, 1999, subject to certain terms and conditions. The Forbearance Agreement was continued in force and effect pursuant to letter agreements between and among the Bank and ITEC, and has since expired by its terms. The Bank initiated the Litigation by filing its complaint on March 5, 1999. E. ITEC acknowledges and agrees that there is presently a balance due, owing and unpaid from ITEC to the Bank under the Loan Documents as of June 2, 2000, in the aggregate principal amount of $4,687,505.80, together with accrued interest thereon, calculated according to the terms and conditions set forth in the Loan Documents, through and including June 2, 2000, in the amount of $360,401.98, together with late fees in the amount of $8,674.83; together with all of the Bank's costs and fees, including attorneys' fees in the amount of $194,832.21, pursuant to the terms of the Loan Documents; F. The accrued interest in the foregoing Section I.E was calculated at the non-default rate of interest specified under the Loan Documents. ITEC acknowledges and agrees that interest shall and does continue to accrue, at the default rate of interest set forth in the Loan Documents through the Effective Date of this Settlement Agreement (defined in Section II.C below) (the aggregate amount owed by ITEC to the Bank pursuant to the Loan Documents, including without limitation, all amounts presently due and owing under the Loan and Security Agreements and the Note (including principal, interest, costs and attorneys' fees), together with interest which continues to accrue through the Effective Date of this Settlement Agreement, is hereinafter referred to as the "Existing Indebtedness"); interest shall not accrue after the Effective Date of this Settlement Agreement unless an Event of Default (defined in Section II.G below) has occurred. ITEC acknowledges and agrees that the Bank has the right to charge the default rate of interest under the Loan Documents from March 6, 1999 through the Effective Date of this Settlement Agreement, and further acknowledges and agrees that the Bank has the right to include such default interest in the calculation of the Existing Indebtedness if an Event of Default should occur. G. Unless and until ITEC has complied with, and fully satisfied, each and every term and condition of the Settlement Agreement and the Settlement Documents, ITEC remains fully liable to the Bank for the entire amount of the Existing Indebtedness; and 3 H. This Settlement Agreement does not constitute an accord, modification, satisfaction, novation, waiver or release by Bank of any obligations between the Bank and any other person or entity other than ITEC. II. SETTLEMENT TERMS. ----------------- A. Upon ITEC's performance of all terms and conditions of this Settlement Agreement and the Settlement Documents, ITEC and the Bank hereby agree that ITEC will have fully satisfied its obligations to the Bank owing under the Existing Indebtedness. ITEC hereby acknowledges and agrees that if it fails to comply with each and every obligation imposed by this Settlement Agreement and/or the Settlement Documents, an Event of Default under Section VII of this Settlement Agreement shall occur, and shall entitle the Bank to exercise the remedies set forth in Section VIII below. B. ITEC acknowledges and agrees that it is a condition precedent to any obligations of the Bank hereunder that ITEC shall have made the following voluntary payments (each, a "Settlement Deposit" and collectively, the "Settlement Deposits") into a segregated account for the benefit of the Bank, which may be the trust account of the law firm, Feldhake, August and Roquemore, which shall hold said Settlement Deposits for the benefit of the Bank pending execution of this Settlement Agreement by all parties. By executing this Settlement Agreement, ITEC consents to (i) the immediate release of all Settlement Deposits to the Bank on the Effective Date of this Settlement Agreement, and (ii) the application of said Settlement Deposits by the Bank to principal, interest and fees in such order as the Bank deems appropriate in its discretion. The amounts to be paid are as follows: 1. $450,000 upon execution of the term sheet relating to this Settlement Agreement. The Bank acknowledges that ITEC made this deposit on May 18, 2000. 2. If the Effective Date of this Settlement Agreement has not occurred by May 31, 2000, and if the parties have consented in writing to extend the date by which the Effective Date of this Settlement Agreement must occur, then on June 1, 2000 ITEC shall make an additional Settlement Deposit in the amount of $150,000 into the same segregated account. C. The Effective Date shall be deemed to have occurred when: (i) this Settlement Agreement, the Amended and Restated Security Agreement, and the Stipulated Judgment have been duly executed and delivered in sufficient counterparts to provide fully executed copies of 4 this Settlement Agreement to all parties and fully executed copies of said other Settlement Documents to the Bank; and (ii) ITEC has paid all payments required in Section II.B. D. By execution of this Settlement Agreement, ITEC agrees to pay the Existing Indebtedness in full on the following terms: 1. On the first day of each calendar month, beginning June 1, 2000, ITEC shall make monthly payments to the Bank in the amount of $150,000 per month, which payments shall continue until the Existing Indebtedness has been fully paid. 2. Absent the Bank's prior written consent, which consent shall not be unreasonably withheld, ITEC shall not sell, liquidate or otherwise dispose of any Bank collateral asset(s) other than in the normal course of business, unless ITEC first provides written certification to the Bank that (i) ITEC will receive fair and adequate consideration for such sale, liquidation or other disposition; (ii) the Bank's collateral will not be diminished by the proposed sale, liquidation or other disposition; and (iii) the Bank shall have a perfected, first priority security interest in all proceeds thereof. ITEC shall execute such documents as may be required by the Bank with respect to the Bank's security interest in such proceeds. E. ITEC shall execute the following Settlement Documents: 1. A Stipulated Judgment in the principal amount of $4,687,505.80 plus accrued interest and fees through the Effective Date of this Settlement Agreement. The Stipulated Judgment shall include a judgment for possession of the Bank's collateral and shall provide for the appointment of a post-judgment receiver. Michael D. Myers shall be designated as the post-judgment receiver. A copy of the Stipulated Judgment is attached hereto as Exhibit A and incorporated herein by this reference; 2. An Amended and Restated Security Agreement, a copy of which is attached hereto as Exhibit B and incorporated herein by this reference. F. The Stipulated Judgment will be held by the Bank, and will be recorded and executed only in the event ITEC should default on its obligations under the Settlement Agreement and the Settlement Documents, which default is not cured within ten (10) business days after written notice to ITEC and its counsel. 5 G. An "Event of Default" shall have occurred if ITEC fails to cure any default under the Settlement Agreement and/or the Settlement Documents within ten (10) business days after written notice to ITEC and its counsel specifying such default(s). H. Managerial control and possession of ITEC's assets (except such cash as the Receiver may require for the payment of claims, without liquidation of assets, for normal business operations of the receivership estate from the date of execution of the Term Sheet pertaining to this Settlement Agreement through the Effective Date of this Settlement Agreement, or incurred within thirty (30) days prior to the execution of the Term Sheet, or as otherwise ordered by the court or agreed by the parties) shall be relinquished to ITEC by the Receiver on the Effective Date of this Settlement Agreement. The Receiver shall proceed to file his final report and to obtain a court order discharging him from his duties. I. The Bank and ITEC shall stipulate to (i) the Receiver's immediate relinquishment of managerial control and possession of ITEC's assets as set forth above, and (ii) the conditional dismissal of the litigation, to include a retention of jurisdiction for purposes of receiving the Receiver's final report and discharging the Receiver. The conditional dismissal shall be subject to being set aside nunc pro tunc for entry of the Stipulated Judgment in the event of an uncured default, with an automatic dismissal with prejudice provision upon completion of the payment terms set forth herein. J. From and after the Effective Date of this Settlement Agreement, provided no Event of Default has occurred hereunder, proceeds of future deposits into the existing sweep account(s) will immediately be transferred to the ITEC general account and will not be used as payment on the Existing Indebtedness. III. AFFIRMATIVE COVENANTS. ---------------------- A. By execution of this Settlement Agreement and the Amended and Restated Security Agreement, ITEC reaffirms and ratifies all security interests previously granted to the Bank. From and after the Effective Date of this Settlement Agreement, the terms of the Amended and Restated Security Agreement shall control all such security interests. B. ITEC covenants, acknowledges and agrees that the Bank has relied upon the representations and warranties made by ITEC in this Settlement Agreement and that such reliance was and is reasonable. 6 C. ITEC covenants and agrees that it shall give written notice to the Bank in reasonable detail of the occurrence of any Event of Default (as defined in section VII) within five (5) business days of such occurrence, or any condition, event or act which, with the giving of notice or the passage of time or both, would constitute an Event of Default under this Settlement Agreement or any of the Settlement Documents. IV. REPRESENTATIONS AND WARRANTIES. ------------------------------- A. No representation or warranty of ITEC contained in this Settlement Agreement or in any of the Settlement Documents misstates any material facts or omits to state a material fact, the absence of which makes such representation, warranty or statement misleading. B. ITEC has and hereby does represent and warrant that this Settlement Agreement, the Settlement Documents, and ITEC's performance thereunder, do not and will not constitute a breach or otherwise violate any of ITEC's contracts, other obligations or, to the best of ITEC's knowledge, applicable law. C. ITEC has and hereby does represent and warrant that ITEC has not received any notice of violation with respect to any order, writ, injunction, decree or demand of any court or other governmental or regulatory authority. D. ITEC has and hereby does represent and warrant that ITEC is not bound by any contractual obligation that would adversely affect the ability of ITEC to perform its obligations under this Settlement Agreement or the Settlement Documents. E. ITEC has and hereby does represent and warrant that there are no names under which ITEC does business other than the actual and fictitious business names set forth for ITEC in the first paragraph of this Settlement Agreement (identifying the Parties) except as follows: DealSeekers.com. V. CONDITIONS PRECEDENT. - -- --------------------- A. This Settlement Agreement shall not be binding upon the Bank unless and until the following conditions are precedent ("Conditions Precedent") are met in a timely fashion, or are waived in writing by the Bank: 7 1. ITEC shall have executed and delivered this Settlement Agreement and all pertinent Settlement Documents to the Bank by no later than May 31, 2000. 2. ITEC shall have made the payments described in Section II.B. VI. RELEASE OF CLAIMS. - --- ------------------ A. As used herein, the term "Released Matters means and refers to any and all claims or conduct arising out of or relating to the origination, negotiation, administration, servicing and/or enforcement of the Loan Documents, including without limitation defaults thereunder, if any, and as to all claims or conduct arising out of or relating to or in any way connected with the Litigation, of whatever kind or nature and whenever or however arising. B. Except as expressly provided otherwise in this Settlement Agreement and the Settlement Documents and instruments effectuating same, and as necessary for the full and proper enforcement of this Settlement Agreement, ITEC, for itself, its employees, representatives, shareholders, predecessors, subsidiaries and/or affiliates, parents, successors-in-interest, transferees, assigns, officers, directors, managers, servants, employees, insurers, underwriters, attorneys, partners and agents, now and in the future, and all persons acting by, through, under or in concert with them, hereby release and discharge the Bank and its past, present and future administrators, affiliates, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, parents, shareholders, subsidiaries and successors, and each of them; and each of their respective administrators, affiliates, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, shareholders, subsidiaries and successors, and each of them; and all persons acting by, through, under or in concert with one or more of them, from any and all manner of actions, liabilities, liens, debts, damages, suits, judgments, executions, demands and claims of any kind, nature and/or description arising out of, related to or in any way connected with the Released Matters. C. Except as expressly provided otherwise in this Settlement Agreement and the instruments effectuating same, and as necessary for the full and proper enforcement of this Settlement Agreement, the Bank, for itself, its executors, administrators, employees, representatives, shareholders, predecessors, subsidiaries and/or affiliates, parents, successors-in-interest, transferees, assigns, officers, directors, managers, servants, employees, insurers, underwriters, attorneys, partners and agents, now and in the future, and all persons acting by, 8 through, under or in concert with them, hereby releases and discharges ITEC, its past, present and future administrators, affiliates, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, shareholders, subsidiaries and successors, and each of them; and each of their respective administrators, affiliates, agents, assigns, attorneys, directors, employees, executors, heirs, officers, parents, partners, predecessors, representatives, shareholders, subsidiaries and successors, and each of them; and all persons acting by, through, under or in concert with one or more of them, from any and all manner of actions, liabilities, liens, debts, damages, suits, judgments, executions, demands and claims of any kind, nature and/or description arising out of, related to or in any way connected with the Released Matters. D. The undersigned, and each of them, understand and have been advised by their legal counsel of the provisions of Section 1542 of the California Civil Code, which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." E. The undersigned, and each of them, understand and hereby waive the provisions of Civil Code Section 1542 and declare that they realize they may have damages they presently know nothing about and that, as to them, they have been released pursuant to this Mutual Release. The undersigned, and each of them, also declare they understand that the parties they are releasing would not have agreed to compromise their respective claims if this Settlement Agreement did not cover damages and their results which may not yet have manifested themselves or may be unknown to or not anticipated at the present time.
___________________ _________________________ _____________________ ________________________________ Imperial Bank Imaging Technologies Corp. Prima International Newgen Systems Acquisition Corp. ___________________ _________________________ _____________________ ________________________________ ITEC Europe Limited AMT Accel U.K. Limited McMican Corporation Color Solutions, Inc.
F. NOTWITHSTANDING ANYTHING IN THE FOREGOING PARAGRAPH TO THE CONTRARY, THE RELEASES OF ITEC AND THE BANK PROVIDED FOR HEREIN DO NOT AND SHALL NOT RELATE OR BE DEEMED TO RELATE TO THEIR RESPECTIVE OBLIGATIONS DESCRIBED IN THIS SETTLEMENT AGREEMENT AND THE SETTLEMENT DOCUMENTS. 9 G. The undersigned, and each of them, further understand, acknowledge and agree that, except for this Settlement Agreement and the Settlement Documents described herein, the within release is not conditioned upon nor related to any other agreements or future business transactions between the undersigned. H. The undersigned, and each of them, represent and warrant that they alone are the owners of the claims hereby compromised and that they have not heretofore assigned or transferred, nor purported to assign or transfer, to any person or entity ("Person") any of the Released Matters. The undersigned, and each of them, further agree to indemnify and hold harmless each other from all liability, claims, demands, damages, costs, expenses, and attorneys fees incurred by any of them as the result of any Person asserting any such assignment or transfer of any rights or claims. I. The undersigned, and each of them, represent and warrant that none of the Released Matters is subject to any purported or actual lien, security interest, encumbrance or contractual or other right of any third party, and the undersigned, and each of them, agree to indemnify and hold harmless each other (and each of their affiliates, officers, directors, shareholders, partners, parents, subsidiaries, employees, agents, representatives, attorneys, principals, associates, successors and assigns) from all liability, claims, demands, damages, costs, expenses and attorneys fees incurred by any of them as the result of any Person asserting the existence of any of the foregoing. VII. EVENTS OF DEFAULT. - ---- ------------------ A. In addition to any other Events of Default set forth in this Settlement Agreement or in the Settlement Documents, an "Event of Default" shall have occurred if any one or more of the following events occurs which affects, or purports to affect, the Bank's rights or ITEC's obligations under this Settlement Agreement or the Settlement Documents and such event is not cured within ten (10) business days of written notice thereof: 1. ITEC shall fail to pay when due any payment required under this Settlement Agreement, or fail to perform any covenant, agreement or other obligation contained in this Settlement Agreement or the Settlement Documents; or 10 2. Any representation or warranty made under this Settlement Agreement or the Settlement Documents shall prove to be untrue or inaccurate in any material respect as of the date on which such representation or warranty is made or certificate is provided; or 3. ITEC shall claim that this Settlement Agreement or any of the other Settlement Documents are not legal, valid, binding agreements enforceable against any party executing same, or attempt in any way to terminate or declare ineffective or inoperative any Settlement Document, or in any way whatsoever cease to give or provide the respective liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby; or 4. ITEC fails to provide the Bank with copies of all SEC filings at the time they are filed; or 5. ITEC shall do any of the following acts or violate any other term or provision of this Settlement Agreement or the Settlement Documents: (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor or liquidator of all or a substantial part of its assets; (ii) file a voluntary petition in bankruptcy court or admit in writing that it is unable to pay its debts as they become due; (iii) make a general assignment for the benefit of creditors; (iv) file a petition or answer seeking reorganization or take advantage of any bankruptcy or insolvency laws; (v) file an answer admitting any of the material allegations of, or consent to, or default in answering a petition filed against them in any bankruptcy, reorganization or insolvency proceeding; or (vi) take any action for the purpose of effecting any of the foregoing; provided, however, that if ITEC is current on its payments to the Bank and is continuing to perform its payment obligations hereunder, an Event of Default under this subparagraph shall not have occurred; or 6. Any of the following acts or events occur: (i) an order for relief, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition seeking reorganization of ITEC; or (ii) an order shall be entered by any court of competent jurisdiction or other competent authority appointing a receiver, custodian, trustee, intervenor or liquidator for ITEC as to all or substantially all of its assets, and such order, judgment or decree shall continue unstead in effect for a period of ninety (90) days; or (iii) an involuntary petition seeking bankruptcy, reorganization or receivership shall be filed against ITEC and order for relief is entered thereon; provided, however, that if ITEC is current on its 11 payments to the Bank and is continuing to perform its payment obligations hereunder, an Event of Default under this subparagraph shall not have occurred. B. Upon the occurrence of an Event of Default, the Existing Indebtedness shall be immediately due and payable. VIII. REMEDIES. --------- If an Event of Default shall occur under this Settlement Agreement or the Settlement Documents or any other agreement referenced herein or executed in connection herewith, the Bank may exercise, at its election and without notice of demand, protest or presentment (which notice of demand, protest and presentment is hereby expressly waived), in addition to all the rights and remedies granted to it in this Settlement Agreement or in the Settlement Documents, any or all of the following: A. Immediately file an ex parte application with the Court, and the Bank shall be entitled to an order (i) entering the Stipulated Judgment against ITEC for immediate payment of all amounts due and owing under the Loan Documents as quantified by this Settlement Agreement; and (ii) appointing a receiver with respect to any or all of the Collateral pending foreclosure hereunder or for the sale of any or all of the Collateral under the order of a court of competent jurisdiction or under other legal process. B. Proceed to enforce payment of the Existing Indebtedness by executing on the Stipulated Judgment provided for herein, and otherwise enforcing its rights hereunder to the maximum extent permitted by law; C. Upon the occurrence of any Event of Default, and prior to or after an application by the Bank under Section VIII.B above, and without regard to whether judgment was entered: 1. The Bank may exercise its rights to declare the Existing Indebtedness immediately due and payable; 2. The Bank may proceed to enforce payment of the Existing Indebtedness, and exercise any or all of the rights and remedies afforded to the Bank by the California Uniform Commercial Code, the California Civil Code, the California Code of Civil Procedure or otherwise possessed by the Bank including, but not limited to, judicially or non-judicially foreclosing on the 12 Collateral, and in accordance with Bank's rights under Section 664.6 of the California Code of Civil Procedure; 3. The Bank may, to the fullest extent permitted by law, (i) sell the Collateral or any interest therein at public or private sale for cash or upon credit and for immediate or future delivery; 4. Either personally, or by means of a court-appointed receiver, the Bank may enter onto the premises where the Collateral is located and take possession of all or any of the Collateral and exclude therefrom ITEC and all others claiming under ITEC, and perform any acts necessary or appropriate to care for, maintain, preserve and protect the Collateral. In the event the Bank demands or attempts to take possession of the Collateral in the exercise of any rights hereunder, ITEC promises and agrees to turn over promptly and to deliver complete possession thereof to the Bank; D. As permitted by law, the Bank may make such payments and do such acts as the Bank may deem necessary to protect its security interest in the Collateral, including, without limitation, paying, purchasing, contesting or compromising any encumbrance, charge or lien which is prior to or superior to the security interests granted hereunder and, in exercising any such powers or authority, to pay all expenses incurred in connection therewith; E. The Bank may notice ITEC's accounts receivable; F. The Bank may set-off accounts of ITEC, provided that, the Bank shall only set-off such accounts five (5) business days after either (i) freezing ITEC's Bank Accounts, or (ii) providing notice to ITEC. Upon written confirmation from the Bank's operations department that any account of ITEC has been frozen at the Bank's request, the Bank shall send notice by facsimile of the action taken, but the Bank shall not be responsible if the facsimile is not received; G. To the fullest extent provided by law, obtain specific performance by ITEC of any covenant or undertaking of ITEC herein; H. Enforce any of the rights and remedies available to it under this Settlement Agreement or the Settlement Documents, or according to applicable law. 13 All rights and remedies granted to the Bank hereunder are cumulative, and the Bank shall have the right to exercise any one or more of such rights and remedies alternatively, successively or concurrently as the Bank may in its sole and absolute discretion, deem advisable. IX. REVIVAL CLAUSE. --------------- Notwithstanding any provision in this Settlement Agreement to the contrary, this Settlement Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against ITEC for liquidation or reorganization, should ITEC become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of ITEC's property and assets, and shall continue to be effective or be reinstated, as the case may be, if ITEC's performance under the Settlement Agreement, or the incurring of any debt or the payment of money or transfer of property made to the Bank by or on behalf of ITEC, should for any reason subsequently be declared to be "fraudulent" and/or "preferential" and/or "voidable" within the meaning of any applicable state or federal law relating to creditor's rights, including, without limitation, fraudulent conveyances, fraudulent transfers, preferences or otherwise voidable or recoverable payments of money or transfers of property, in whole or in part, for any reason (collectively, "Voidable Transfers") under the Bankruptcy Code or any other federal or state law. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Existing Indebtedness shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. In the event that this Settlement Agreement or any of the Settlement Documents should be determined to constitute a Voidable Transfer, the liability of ITEC under the Loan Documents and all of Bank's rights and remedies under the Loan Documents, shall automatically be revived, reinstated and restored and shall exist as though such Voidable Transfer had never been made. 14 X. NOTICE. ------- All notices to the Bank shall be addressed as follows: To: Imperial Bank 9920 South La Cienega Boulevard, Suite 623 Inglewood, California 90301 Attention: Mr. Larry King Telephone: (310) 417-5977 Telecopier: (310) 338-6160 Copy: Pillsbury Madison & Sutro LLP 101 W. Broadway, Suite 1800 San Diego, California 92101 Fax No.: (619) 236-1995 Attn: Sue J. Hodges, Esq. All notices to ITEC shall be addressed as follows: To: Imaging Technologies Corporation 15175 Innovation Drive San Diego, California 92128 Attention: President and General Counsel Telephone: (858) 613-1300 Telecopier: (858) 207-6505 Copy: Feldhake, August & Roquemore 600 Anton, Suite 1730 Costa Mesa, California 92626 Telephone: (714) 438-3885 Telecopier: (714) 438-3888 Attn: Lisa Roquemore, Esq. Unless otherwise specifically provided herein, all notices, consents, directions, approvals, instructions, requests and other communications required or permitted by the terms 15 hereof to be given shall be in writing, and any such notice shall become effective five (5) business days after being deposited in the mails, certified or registered, with appropriate postage prepaid for first-class mail or, if delivered by hand or in the form of a telex or telegram or by telecopy, when received, and shall be directed to the address or telecopier number set forth above. From time to time any party hereto may designate a new address for purposes of notice hereunder by notice to the other party hereto. XI. AUTHORITY. ---------- Each party hereto represents and warrants to each other party that (i) it has authority to execute this Settlement Agreement and the Settlement Documents; (ii) the execution, delivery and performance of this Settlement Agreement and the Settlement Documents does not require the consent or approval of any person, entity, governmental body, trust, trustor or other authority; (iii) this Settlement Agreement and the Settlement Documents are valid, binding and legal obligations of the undersigned enforceable in accordance with their terms, and do not contravene or conflict with any other agreement, indenture or undertaking to which any party hereto is a party; (iv) each party hereto is the sole and lawful owner of all right, title, and interest in and to every claim and other matter which the party purports to settle or compromise herein; and (v) no assignment or pledge of the claims which are the subject matter of this Settlement Agreement has been made, and no attorney, person, persons, entity, entities, creditor and/or judgment creditor has a lien upon any cause of action described in the Litigation, or has taken any action to obtain such a lien. Each party hereto agrees to indemnify and forever hold each other harmless from any loss arising from the express breach of the warranties set forth herein by any attorney, person, persons, entity or entities, creditor or judgment creditor, whether by way of subrogation, assignment, pledge or otherwise of a claim or claims covering the subject matter of this Settlement Agreement. XII. PAYMENT OF EXPENSES. -------------------- In the event any action (whether or not in a court proceeding) shall be required to interpret, implement, modify, or enforce the terms and provisions of this Settlement Agreement and/or the Settlement Documents, or to declare rights under same, the prevailing party in such action shall recover from the losing party all of its fees and costs, including, but not limited to, the reasonable attorneys' fees and costs (if applicable) of the prevailing party's outside counsel and the allocated costs of such party's in-house counsel. 16 XIII. GOVERNING LAW. -------------- This Settlement Agreement shall be construed and interpreted in accordance with and shall be governed by the laws of the State of California except as they may be preempted by federal law. XIV. SUCCESSORS AND ASSIGNS. ----------------------- This Settlement Agreement and the Settlement Documents shall be binding on and inure to the benefit of all of the parties hereto, and upon the heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, and each of them; provided, however, that ITEC shall not transfer or assign its rights and obligations under this Settlement Agreement or any of the Settlement Documents without the prior express written consent of the Bank, which consent may be withheld for any reason whatsoever, and any transfer or assignment without such consent shall be void. Except as provided for herein, the Bank may sell, transfer, negotiate, assign or grant participations in all or a portion of its rights in the Note, in this Settlement Agreement, and in the Settlement Documents to any person or entity without prior notice to ITEC, provided, however, that any such assignee shall be bound by the terms and provisions of this Settlement Agreement and the Settlement Documents. XV. COMPLETE AGREEMENT OF THE PARTIES. ---------------------------------- This Settlement Agreement and the Settlement Documents constitute the entire agreement between the Bank and ITEC arising out of, related to or connected with the subject matter of this Settlement Agreement. Any supplements, modifications, waivers or terminations of this Settlement Agreement and/or the Settlement Documents shall not be binding unless executed in writing by the parties to be bound thereby. No waiver of any provision of this Settlement Agreement and/or the Settlement Documents shall constitute a waiver of any other provisions of this Settlement Agreement and/or the Settlement Documents (whether similar or not), nor shall such waiver constitute a continuing waiver unless otherwise expressly so provide. XVI. EXECUTION IN COUNTERPARTS. -------------------------- This Settlement Agreement may be executed in any number of counterparts each of which, when so executed and delivered, shall be deemed an original, and all of which together shall constitute but one and the same agreement. 17 XVII. SEVERABILITY. ------------- In the event that any term or provision of this Settlement Agreement contradicts any term or provision of any other document, instrument or agreement between the parties, including, but not limited to, any of the Settlement Documents, the terms of this Settlement Agreement shall control. If any provision of this Settlement Agreement shall be invalid, illegal or otherwise unenforceable, such provision shall be severable from all other provisions of this Settlement Agreement, and the validity, legality and enforceability of the remaining provisions of this Settlement Agreement shall not be adversely affected or impaired, and shall thereby remain in full force and effect unless the effect thereof would materially alter the benefits and/or burdens of this Settlement Agreement to the Bank and/or ITEC. XVIII. HEADINGS. --------- All headings contained herein are for convenience purposes only, and shall not be considered when interpreting this Settlement Agreement. XIX. CONTINUING COOPERATION. ----------------------- The parties hereto shall cooperate with each other in carrying out the intent of this Settlement Agreement and executing all documents, pleadings and agreements as are reasonably required to effectuate the terms of this Settlement Agreement. XX. CONSULTATION WITH COUNSEL. -------------------------- Each party hereto acknowledges that (i) it has been represented by counsel of its own choice at each stage in the negotiation of this Settlement Agreement and the Settlement Documents, and during the prosecution of the Litigation; (ii) it has relied solely on such counsel's advice throughout all of the negotiations which preceded the execution of this Settlement Agreement and the Settlement Documents, and in connection with the preparation and execution of this Settlement Agreement and the Settlement Documents; (iii) such counsel has read and approved this Settlement Agreement and the Settlement Documents; (iv) such counsel has advised such party concerning the validity and effectiveness of this Settlement Agreement and the Settlement Documents, and the transactions to be consummated in accordance therewith; and (v) each party hereto is freely and voluntarily entering into this Settlement Agreement and the Settlement Documents. 18 AGREED AND ACCEPTED: IMAGING TECHNOLOGIES CORPORATION By:____________________________________ Title:___________________________________ PRIMA INTERNATIONAL By:____________________________________ Title:___________________________________ NEWGEN SYSTEMS ACQUISITIONS CORPORATION By:____________________________________ Title:___________________________________ ITEC EUROPE LIMITED By:___________________________________ Title:__________________________________ AMT ACCEL UK LIMITED By:___________________________________ Title:_________________________________ MCMICAN CORPORATION By:___________________________________ Title:__________________________________ 19 COLOR SOLUTIONS, INC. By:__________________________________ Title:_________________________________ IMPERIAL BANK By:___________________________________ Title:__________________________________ APPROVED AS TO FORM: PILLSBURY MADISON & SUTRO LLP By:_____________________________ Attorneys for Imperial Bank FELDHAKE, AUGUST & ROQUEMORE By:______________________________ Attorneys for Imaging Technologies Corporation, Prima International, Newgen Systems Acquisitions Corporation, ITEC Europe Limited, AMT Accel UK Limited, McMican Corporation, and Color Solutions, Inc. 20 EX-10 4 f712854_1.txt EXHIBIT 10(AN) AGREEMENT AND RELEASE EXHIBIT 10(an) AGREEMENT AND RELEASE This is an Agreement and Release ("Agreement and Release") among American Industries, Inc. ("AI"), Ellison Carl Morgan ("Morgan"), the Ellison Carl Morgan Revocable Trust ("Morgan Trust"), the 2030 Investors 401K and the 2030 Investors LLC (collectively "Plaintiffs"), Imaging and Technologies, ("ITEC") and Brian Bonar ("Bonar ") (collectively "Defendants"). RECITALS: A. On February 2, 1999, Plaintiffs filed a complaint against Defendants, among others, in Multnomah County Circuit Court in Oregon. The case is titled, American Industries. Inc., et. al. v. Imaging Technologies. Inc., et. al., 99-02-01129. The complaint alleged claims for violations of the Oregon Securities Law, Breach of Contract and Warranties, Fraud, Negligent Misrepresentation and Negligence. B. Prior to trial, Al reached partial settlement agreements with ITEC on certain claims arising out of AI's purchase of a $950,000 Non-Convertible Subordinated Promissory Note from ITEC and AI's decision to provide ITEC with irrevocable letters of credit totaling $1.5 million, of which ITEC's suppliers and creditors drew $1,202,328. C. On September 1, 1999, the Multnomah County Circuit Court entered a Partial Judgment in favor of AI and against ITEC for $1,203,967, less payments already made; in settlement of AI's claims arising out of the irrevocable letter of credit. The outstanding amount of the judgment against ITEC and Bonar in the above-named case as of January 25, 2001, is $812,791.74, including interest. Interest is accruing on the judgment at nine percent (9%) per annum. D. Following a trial in Multnomah County on the remaining claims that had not been settled, the jury returned a verdict for defendants ITEC and Bonar. On May 16, 2000, the court issued a Final Judgment in favor of ITEC and Bonar. E. Following entry of Final Judgment, Defendants petitioned the court for an award of attorney fees as the prevailing party under ORS 59.115(10). Plaintiffs opposed the motion. The trial court has not issued an order with respect to the outstanding petition. F. On June 13, 2000, Plaintiffs filed a Notice of Appeal of the Final Judgment entered in favor of Defendants. The parties have not filed briefs on appeal and there remain disputed issues on appeal. G. Plaintiffs and Defendants desire to finally and forever settle and terminate the litigation. including all appeals, between them as well as all disputes and any outstanding grievances or complaints of any kind and to resolve and terminate in a manner satisfactory to the parties as shown by the provisions of this Agreement and Release, all claims of every kind that each party has or had against the other arising to date. REPRESENTATIONS, WARRANTIES, COVENANTS AND CONDITIONS 1. The Recitals above are incorporated herein by reference. 2. AI shall credit ITEC $140,000 for attorney fees and any costs in the above-named case against the judgment in favor of Plaintiffs. Such credit shall be the sole source of payment of the attorney fees and costs. -1- 3. Within forth-five (45) days following the effective date after this Agreement and Release, ITEC will cause to be filed with the Securities and Exchange Commission (SEC) a registration statement for shares of its common stock to include for AI a number of shares equal to, the quotient of One Hundred Thousand Dollars ($100,000.) divided by the average of the closing prices for ITEC's common stock over the ten (10) trading days ending five (5) trading days preceding the date of such filing. Within ten (10) business days following the effectiveness of the registration statement so filed, ITEM will deliver to AI registered and freely-tradable shares of common stock (fully paid and non-assessable) in the amount included in said registration statement for AI. Within ninety (90) days following the effective date of this Agreement and Release, ITEC will complete the necessary corporate actions to either reduce the number of Shares of its common stock outstanding or increase the number of authorized common shares in a number at least equal to the Remaining Settlement Shares, as that term is defined below. Within forty-five (45) days following the effective date of such corporate actions, ITEC will cause to be filed with the SEC a registration statement for shares of its common stock to include for AI a number of shares equal to one hundred twenty-five percent (125%) of the Remaining Settlement Shares, defined for purposes of this Agreement and Release as the quotient of the total amount due AI pursuant to this Agreement and Release (such amount having been reduced by the $100,000 for which common shares were issued as provided above and by the $140,000 credit in paragraph 2 above) divided by the average of the closing prices for ITEC's common stock over the ten (10) trading days ending five (5) trading days preceding the date of such filing (the Second Registration Statement). At its option, AI may elect from time to time after the effectiveness of the Second Registration Statement, to receive a number of shares of ITEC common stock to satisfy a portion, rather than the entire amount, remaining to be owed by ITEC under this Agreement and Release (a Partial Settlement Request); or AI may request delivery of a sufficient number of shares of ITEC common stock to satisfy the full balance due under this Settlement and Release, provided that, in each such election, AI shall elect to satisfy an amount of the obligation equal to at least the lesser of One Hundred Thousand Dollars ($100,000) or the entire remaining unpaid balance of the indebtedness. ___ Each such request must be made in a writing delivered to the President of ITEC, with a copy to the General Counsel of ITEC. Within ten (10) business days following the receipt of a request for such delivery of shares, ITEC will deliver to AI registered and freely-tradable shares of its common stock (fully paid and non-assessable) in an; amount equal to the lesser of (a) the quotient of the dollar value requested divided by the average of the closing prices for ITEC's common stock over the ten (10) trading days ending five (5) trading days preceding the date of the receipt of such request; or (b) the number of remaining shares registered for AI in the Second Registration Statement. If an insufficient number of shares to satisfy the request remains available for delivery to AI from those registered in the Second Registration Statement, then ITEC will (i) promptly file with the SEC another registration statement including the number of shares for AI equal to (a) minus (b) above; (ii) verify and/or promptly undertake any necessary corporate action to assure that such number of shares to be so registered will not cause ITEC to exceed its authorized number of common shares; and (iii) deliver that number of registered and freely-tradable shares of its common stock (fully paid and non-assessable) within ten (10) business days following the effectiveness of that registration statement. 4. Notwithstanding any other provisions of this Agreement and Release to the contrary, the debt owed by ITEC to AI (and the judgment related thereto) shall not be deemed discharged, satisfied or reduced in any respect (other than the $140,000) credit provided for in paragraph 2 of this Agreement) unless and until AI shall have received delivery of the fully paid, non-assessable, registered and freely tradable shares of ITEC common stock required to be delivered hereunder, and then only to the extent of such delivery. Interest shall continue to accrue on any unsatisfied portion of the judgment until fully satisfied. 5. Plaintiffs and defendants hereby release each of the parties to this Release from any and all claims for attorney fees and costs in the above-named case and hereby covenant to dismiss all claims now in existence, with prejudice and without attorney fees or costs to any party. -2- 6. Plaintiffs and defendants hereby waive their rights to appeal the judgment in the above- named case and hereby covenant to dismiss all claims now in existence, with prejudice and without attorney fees or costs to any party. 7. In consideration of, and subject to, the conditions set forth in this Agreement and Release, Plaintiffs and Defendants hereby mutually and generally release, acquit, and forever discharge each other, each party's officers, directors, employees, partners, agents, attorneys, accountants, representatives, insurers, affiliates and assigns (collectively, the "Released Persons") from any and all debts, claims, liabilities, causes of action, losses, damages, attorney fees, claims for contribution, claims for indemnity and claims of any other kind or nature whatsoever, whether known or unknown, arising from or in any way related to the following any and all liabilities, demands, claims, suits, actions, charges, damages, judgment or levies or executions, whether known or unknown, liquidated or unliquidated, arising from the beginning of time to and including the Effective Date of this Agreement and Release. 8. This Agreement and Release is not to be construed as an admission of liability by any party, and each party expressly acknowledges that liability is and has been expressly denied by the other party. 9. This Agreement and Release shall be interpreted, and the rights and liabilities of the parties determined, in accordance with the laws of the State of Oregon. The venue of any dispute arising out of or related to this Agreement and Release shall be in Multnomah County, Oregon. 10. Without limiting the provision herein that Oregon law applies to this agreement, Defendants acknowledge and agree that they have been informed by their attorneys that they are familiar with and hereby expressly waive the provisions of and any and all rights under section 1542 of the Civil Code of the State of California, and any similar statute, code, law or regulation of any state of the United States, or of the United Slates, to the fullest extent that they may waive such rights and benefits. Section 1542 provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." 11. This Agreement and Release is the product of negotiations and mediation among the parties and any enforcement will be interpreted in a neutral manner and not more strongly for or against any party based upon the source of the draftsmanship. 12. This Agreement and Release may be executed in several counterparts, each of which will be an original, but all of which shall constitute one and the same Agreement and Release. 13. This Agreement and Release contains the entire Agreement and Release among the parties and fully supersedes any and all prior negotiations, agreements, or representations, written or oral, between the parties with respect to the subject matter thereof and hereof. 14. This Agreement and Release shall not be altered, amended or modified in any respect except by a writing duly executed by all parties hereto. 15. Each of the parties to this Agreement and Release represents and warrants that: a. This Agreement and Release is freely and voluntarily executed; such party has not executed this Agreement and Release under any duress or undue influence by any person or entity. b. This Agreement and Release is duly authorized, validly executed, and delivered. Such party has the full right, power, legal capacity and authority to enter into and perform its -3- obligations hereunder and no approval or consent of any other person is necessary in connection herewith. c. Such party relies solely on its own judgment and the judgment of its counsel in making this Agreement and Release and has not been influenced to any extent in making this Agreement and Release by any representation or statements made by any other person. d. Such party expressly assumes the risk of any mistake of fact and of any facts proven to be other than or different from the facts now known to the parties to this Agreement and Release or believed by them to exist. e. It is the expressed intent of the parties to this Agreement and Release to settle and adjust all controversies relating to the Released Claims finally and forever, without regard to which party may or may not be correct with respect to any issue of fact or law. 16. The Effective Date of this Agreement and Release shall be the date on which the last signature is received by ITEC. 17. If any party files a lawsuit, arbitration demand or other proceeding to enforce any term of this Agreement and Release, through declaration, injunction, specific enforcement or otherwise, or for damages arising our of a violation of any term of this Agreement and Release, the prevailing party in such lawsuit shall be entitled to its attorneys' fees and costs incurred, including fees and costs in trial and on appeal. Date: March 1, 2001 -4-
PLAINTIFFS: AMERICAN INDUSTRIES, INC. 2030 INVESTORS 401K By By -------------------------------------------- Its Its ------------------------------------------- 2030 INVESTORS, LLC ELLISON CARL MORGAN REVOCABLE TRUST By By -------------------------------------------- Its Its ------------------------------------------- ELLISON CARL MORGAN By By -------------------------------------------- Its Its ------------------------------------------- DEFENDANTS: IMAGING TECHNOLOGIES, INC. BRIAN BONAR By --------------------------------------------- Its
-5- EX-10 5 f712851_1.txt EXHIBIT 10(AO) OEM AGREEMENT EXHIBIT 10(ao) OEM AGREEMENT This OEM Agreement ("Agreement") is made and entered into effective as of the 1st day of July, 1999, by and between Artifex Software Inc., a California corporation with its principal place of business located at San Rafael, California ("Supplier") and ITEC, with its principal place of business located at San Diego, California ("Distributor"). Distributor intends to create and offer licenses for a product Host and/or Embedded PCL interpreter and supporting host products, a general description of which appears in Exhibit B hereto, and which will incorporate certain software licensed by Supplier, a general description of which appears in Exhibit A hereto (the "Software"), and associated documentation (the "Documentation", as defined in Section 2.3 hereof) (collectively, the "Product"). Supplier wishes to grant to Distributor the right to incorporate the Software in the Product and distribute copies of the Software as incorporated in the Product, and Distributor wishes to acquire same. NOW, THEREFORE, the parties hereto agree as follows: 1. General Terms and Conditions. (a) Grant of License to Distributor. Subject to the terms and conditions contained in this Agreement, Supplier hereby grants to Distributor and Distributor hereby accepts for the term of this Agreement the license rights described below. Such rights shall not be subcontracted, sublicensed, assigned or otherwise transferred, except with the prior written consent of Supplier, or as may be otherwise set forth in Section 16 hereof or Section D-1 of Exhibit D hereto. Supplier grants to Distributor a non -exclusive, nontransferable, license and right throughout the world to: (i) modify the source code for the Software to produce such changes to the source code as may be necessary to ensure compatibility with the Product; (ii) reproduce copies of the object code (binary)version of the Software and the Documentation provided (in whole or in part) as modified under (i) above (such copies to be referred to collectively herein as "Licensed Copies"), provided that each unit of any Product incorporating the Software (A) shall incorporate the Software into the Product in such a way that the Software shall not be available to the user on a stand-alone or independent basis, (B) shall comply with Section l(e) below, and (C) shall comply with either Section l(f) below (in the case of demonstration copies) or Section D-2 of Exhibit D hereto (in the case of all other copies) (such copies to be referred to collectively herein as "Licensed Copies"); and (iii) market and distribute the Licensed Copies directly and through Distributor's Third Party Resellers (as defined in subsection (c) below). No right is granted to distribute the source code for the Software. (b) Ownership of Modifications. Any modifications, adaptations or derivative works made from the source code for the Software will be owned as set forth in this section. For the purposes of this section, a "Bug" is a reproducible defect in the Software that causes the Software to fail to conform to its written specifications; a "Bug Fix" is a modification to the source code of the Software that removes a Bug. All Bug Fixes made by Distributor shall be reported by Distributor to Supplier and will be owned by Supplier and licensed to Distributor subject to this Agreement. Distributor agrees to assign, and hereby does assign and transfer, all right, title and interest in such Bug Fixes, including all intellectual property rights therein, to Supplier. All other modifications, adaptations, and derivative works of the source code licensed under this Agreement made by Distributor shall be owned by Distributor. (c) Third Party Resellers. Distributor shall have the right to appoint Third Party Resellers subject to the conditions hereafter in subsection (e) to market and distribute the Product, provided that Distributor shall have executed a written sub-distribution agreement with each such Third Party Reseller, which sub-distribution agreement shall contain (i) provisions set forth in Section D-3.4 of Exhibit D hereto (Records) and Sections 1(d) (Export Control), 1(e) (End -Users; Notices), 6 (Product Warranty), 7 (Distributor Disclaimer), 9 (Proprietary Rights), 10 (Confidentiality), 12 (Effect of Termination), 14 (Governing Law), and 18.4 (Government Restricted Rights) hereof, (ii) a provision prohibiting such Third Party Reseller from sublicensing the rights granted to it in that agreement, and (iii) an express acknowledgment by such Third Party Resellers that if this Agreement shall terminate for any reason, then such sub-distribution agreements shall automatically terminate without further action on the part of Distributor or Supplier. End user licenses granted during the term shall survive any such termination. Distributor shall remain responsible for all of its obligations under this Agreement notwithstanding any sub-distribution agreement. Distributor will use its best efforts to ensure that all Third Party Resellers abide by the terms of the sub-distribution agreements between Distributor and such Third Party Resellers, and, upon Supplier's request, will keep Supplier apprised of its activities to enforce such provisions with particular Third Party Resellers as they pertain to the Software. In addition, Distributor shall ensure that Supplier will have the right to enforce such agreements as a third party beneficiary, and Distributor agrees that (i) Supplier may join Distributor as a named plaintiff in any suit brought by Distributor against Third Party Resellers relating to the Software and (ii) Distributor will take such other actions, give such information and render such aid, as may be reasonably necessary to allow Supplier to bring and prosecute such suits. (d) Export Control. Distributor agrees that it and its Third Party Resellers will comply with all relevant laws regarding export of the Software and of the immediate product (including processes and services) produced directly by use of the Software. Distributor will indemnify Supplier and hold it harmless from any claim that Distributor or its Third Party Resellers have breached this section. (e) End-Users Notices. Distributor shall ensure that each end -user of the Product is bound by a software license agreement that includes provisions substantially similar to those of Exhibit C hereto and that is applied to both the Software and the Documentation. Distributor shall use its best efforts to ensure that all Third Party Resellers also comply with this requirement. Distributor shall reproduce, on each copy of the Product and any documentation supplied with the Product, wherever a copyright notice including the Distributor's own name appears, the copyright notice(s) specified in Exhibit A hereto. Upon Supplier's request, Distributor will keep Supplier apprized of its activities to enforce such end user license agreements with particular end users as they pertain to the Software. In addition, Distributor shall ensure that Supplier will have the right to enforce such agreements as a third party beneficiary, and Distributor agrees that (i) Supplier may join Distributor as a named plaintiff in any suit brought by Distributor against end users and (ii) Distributor will take such other actions, give such information and render such aid, as may be reasonably necessary to allow Supplier to bring and prosecute such suits. (f) Demonstration Copies. Subject to the other terms and conditions hereof, Distributor shall have the right to provide fully functional demonstration copies of the Product to end users at a charge covering only shipping, handling, and media costs. The number of such demonstration copies distributed in any given calendar year shall not exceed fifty (50) or five percent (5%) of the total number of Licensed Copies distributed within that year, whichever is greater. Distributor warrants that all such copies will -2- cease to function within a fixed period after their first use, such period not to exceed 60 days. Such copies shall be exempt from the payment provisions of Section D-3.1(a) of Exhibit D hereto. 2. Deliverables and Shipping. 2.1 Deliverables. Supplier shall provide to Distributor the source code for the Software and any per-copy identifying information specified in Section D-2 of Exhibit D hereto. The version of the Software initially provided to Distributor shall be as identified in Exhibit A hereto, with bug fixes and enhancements as of the effective date of this Agreement. Distributor shall make binary copies of the Software from the source code (as modified pursuant to l(a)(i)above) for incorporation in the Product and shall package the binary code of the Software indivisibly with the Product, in a manner that complies with Section D-2 of Exhibit D hereto and with the copyright notice provisions of Exhibit A hereto. 2.2 Upgrades. Provision of upgrades of the Software by Supplier to Distributor, if any, shall be governed by Section E-l of Exhibit E hereto. 2.3 Documentation. Supplier will provide manual text in either electronic form or printed hard copy form including artwork if appropriate (collectively, "Documentation") with which Distributor may create product manual(s). Supplier reserves the right to review and suggest changes to the form, content and packaging of such product manuals and Distributor agrees to consider all reasonable changes requested by Supplier. 2.4 Shipping. Shipment is F.O.B. Supplier. 3. Fees, Payment, Reports, and Records. 3.1 Fees. In consideration for the rights granted hereunder, Distributor agrees to pay Supplier amounts as specified in Section D-3.1 of Exhibit D hereto. 3.2 License Fee Change. Supplier reserves the right to change its license fees for the Software at its discretion from time to time by giving Distributor at least one hundred eighty (180) days prior written notice of any such change. Supplier agrees not to make any such change affecting copies of the Software distributed hereunder for at least one year from the effective date of the Agreement. 3.3 Price Reference. Distributor agrees not to refer to the Software as free or imply the Software is included free, or refer to other Supplier product prices in relation to the Software or make any other similar claims, whether via advertising or packaging or any other form of communication, printed, verbal or otherwise, without Supplier's prior written agreement. Distributor's making of any such claim shall be deemed a material breach of this Agreement. 3.4 Payment. Distributor shall pay Supplier as described in Section D-3.2 of Exhibit D hereto. Amounts due shall be considered paid when Supplier is in receipt of the due amount or upon confirmation of receipt by a bank designated by Supplier. From and after the date of any default hereunder, until such default is cured, a late payment fee shall accrue daily on such unpaid amounts at the rate of one and one-half percent (1.5%) per month or the maximum rate permitted by law, whichever is lower. 3.5 Reports. Distributor shall provide Supplier with reports as described in Section D-3.3 of Exhibit D hereto. 3.6 Records. Distributor shall keep records as described in Section D-3.4 of Exhibit D hereto. -3- 4. Marketing Considerations. 4.1 Reasonable Efforts. Distributor shall use reasonable efforts to market and distribute the Product through its sales channel(s). 4.2 Co-Marketing. From time to time during the term of this Agreement, Distributor and Supplier may identify and implement mutually agreed upon co-marketing programs, including advertisements in trade and other publications. 4.3 Publicity. Distributor and Supplier shall have the right to make the following public statement regarding the present Agreement: [Distributor] has licensed [Supplier's [Software]product for use in [Distributor]'s [Product] product. This shall be the sole exception to the provisions of Section 10 below. 5. Support. Provision of support by Supplier to Distributor hereunder, if any, shall be governed by Section E-2 of Exhibit E hereto. Supplier shall have no support obligation to Distributor or any other party except as defined in that section. 6. Supplier Warranty. Supplier warrants that (i) it has the right and authority to enter into this Agreement and to license the Software to Distributor in accordance with the terms hereof, and as of the date hereof, is not aware of any claim that the Software infringes any rights of any third party; and (ii) the performance of the terms of this Agreement and of Supplier's duties to Distributor hereunder will not breach any separate agreement or arrangement by which Supplier is bound. EXCEPT AS SET FORTH IN THIS SECTION 6, THE SOFTWARE AND DOCUMENTATION ARE PROVIDED TO DISTRIBUTOR "AS IS". SUPPLIER DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF NON-INFRINGEMENT OF THIRD PARTY RIGHTS AND THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL SUPPLIER BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL OR SPECIAL DAMAGES, INCLUDING LOSS OF PROFITS, INCURRED BY DISTRIBUTOR, DISTRIBUTOR'S SUBLICENSEES, END-USERS OR THIRD PARTY RESELLERS, OR ANY OTHER PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT OR BASED ON A WARRANTY, EVEN IF SUPPLIER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 7. Distributor Disclaimer. Distributor shall not make, or authorize any of its sub-licensees (if permitted hereunder) or any Third Party Reseller or other person or entity to make, any representation or warranty whatsoever with regard to the Software on behalf of Supplier. Distributor may make such a warranty on its own behalf, but Supplier shall have no liability with respect to such warranty. Distributor shall indemnify and hold Supplier harmless from and against any claim based on any warranty or representation made by or on behalf of Distributor, its sub-licensees and/or Third Party Resellers. 8. Indemnification. 8.1 Proprietary Rights. Supplier will indemnify Distributor against a claim that the Software as delivered to Distributor and used within the scope of this Agreement infringes a United States copyright -4- issued as of the date hereof or involves misappropriation of trade secrets by Supplier ("Claim"), and Supplier will indemnify Distributor for any damages finally awarded by a court of competent jurisdiction based upon a Claim, provided that: (i) Distributor notifies Supplier in writing within thirty (30) days of any Claim, (ii) Supplier has sole control of the defense and all related settlement negotiations and (iii) Distributor provides Supplier with the assistance, information and authority necessary to perform the above. Reasonable out-of-pocket expenses incurred by Distributor in providing such assistance will be reimbursed by Supplier. Supplier shall have no liability for any claim of infringement based on use of a superseded or altered version of the Software, or based on use of any part of the Product that was not supplied to Distributor by Supplier, or based on use of the Software in combination with any software or hardware not supplied by Supplier if use of the Software alone would not have given rise to the Claim. This Section states Distributor's exclusive remedy and Supplier's entire liability for any infringement. 8.2 Other Indemnity. Distributor shall be responsible for and shall indemnify and hold Supplier harmless from any and all losses, liability, damages or expenses, including reasonable attorneys' fees, arising out of or incurred, in connection with (i) Distributor's, or any of its sub-licensees' or any Third Party Resellers' or any of Distributor's or such sub-licensees' or Third Party Resellers' end-user's marketing, distribution, use or sublicensing of the Software, and (ii) any unauthorized representation, warranty or agreement, express or implied, made by Distributor or any of its sub-licensees or Third Party Resellers or their respective sub-licensees (if permitted hereunder) to or with any other party with respect to the Software. 8.3 Limitation of Liability. SUPPLIER'S LIABILITY HEREUNDER FOR ANY REASON WHATSOEVER, INCLUDING SECTION 8.1, SHALL NOT EXCEED THE AMOUNT ACTUALLY PAID BY DISTRIBUTOR TO SUPPLIER. 9. Proprietary Rights. 9.1 Ownership. Except as provided in Paragraph 1(b), above, Distributor acknowledges that as between Distributor and Supplier, Supplier controls all right, title, and interest in the Software and Documentation and any other software owned or licensed by Supplier hereunder. Except as expressly provided herein, Supplier does not grant to Distributor any other right or license, either express or implied, in the Software, Documentation, or any other software provided by Supplier hereunder. Distributor shall not reverse engineer, modify, adapt, translate or create derivative works based on the Software or knowingly permit any third party to do any of the foregoing, except as permitted by Section 1(a)(i) hereof. 9.2 Use of Trademarks. Distributor shall not use any acronym, trademark, trade name, or other marketing name listed in Exhibit A hereto, unless under a separate arrangement with Supplier. Distributor shall not adopt, use or register any acronym, trademark, trade name or other marketing name of Supplier or any confusingly similar work or symbol as part of Distributor's own name or the name of any of its affiliates or the name of any product it markets. 10. Confidentiality. (a) Confidential Information. The term "Confidential Information" shall refer to any information provided to one party by the other party marked with a proprietary, confidential or other similar notice or orally disclosed to one party as proprietary by the other party and followed by a writing within thirty (30) days of such oral disclosure indicating said information was confidential. Confidential Information shall not include information which (i) is or becomes generally known or available through no act or failure to act by the receiving party; (ii) is already known by the receiving party at the time of -5- receipt as evidenced by its records; (iii) is hereafter furnished to the receiving party by a third party, as a matter of right and without restriction on disclosure; (iv) is disclosed by written permission of the party for whom such information is confidential or (v) is required to be disclosed by court order or law. Except as provided in Section 4.3 hereof, the contents of this Agreement shall be deemed Confidential Information. (b) Limitations on Disclosure. Each party shall keep confidential and not disclose to any third party or use for its own benefit, except as expressly permitted herein, or for the benefit of any third party, any Confidential Information. Supplier shall not unreasonably withhold permission for Distributor to disclose the contents of this Agreement to a third party in connection with a potential acquisition or merger of Distributor, provided that any such third party shall have previously agreed in writing to be bound by the provisions of this Section 10. 11. Term and Termination. 11.1 Term. This Agreement and the licenses granted hereunder shall remain in effect for so long as any proprietary rights in the Software are enforceable under the laws of any jurisdiction, unless earlier terminated as set forth below. 11.2 Termination by Supplier. Supplier may terminate this Agreement and the licenses granted hereunder upon written notice (i) if Distributor fails to pay in full any payments hereunder when due and further fails to pay such outstanding amounts to Supplier within ten (10) days after receipt of written notice from Supplier specifying such failure to pay in full or (ii) for any other material breach of this Agreement by Distributor which Distributor fails to cure within thirty (30) days following written notice from Supplier to Distributor specifying such breach. 11.3 Termination by Distributor. Distributor may terminate this Agreement and the licenses granted hereunder with or without cause at any time upon thirty (30) days' written notice to Supplier. 12. Effect of Termination. 12.1 Reversion of Rights. Except as set forth below, in the event of termination of this Agreement for any cause, all rights granted to Distributor hereunder automatically revert to Supplier. 12.2 Surviving Obligations. The following Sections shall survive termination of this Agreement for any cause: l(b), 3, 7, 9, 10, and 12-18. Termination or expiration of this Agreement shall not affect any other rights of either party which may have accrued up to the date of such termination or expiration. 12.3 Required Actions of Distributor. Upon termination or expiration of this Agreement, Distributor shall: (i) cease, and cause all Third Party Resellers to cease, marketing and distributing any product incorporating the Software and refrain thereafter from representing itself as a distributor of the Software or using any Supplier trademark (if such use had been permitted); (ii) return to Supplier or immediately destroy all stationery, advertising materials and other printed material in its or any of its Third Party Resellers' possession or under its control containing or bearing any Supplier trademark; (iii) take all appropriate steps to remove and cancel its listing in telephone books, directories, public records or elsewhere, which state or indicate that Distributor or any of its Third Party Resellers is a distributor of the Software; and (iv) return to Supplier all Confidential Information and other materials received from Supplier and all copies thereof. -6- 12.4 Retained Copy for Support. Notwithstanding the foregoing, Distributor may retain one copy of the Software and use such copy solely for the purpose of providing support to end users of the Product. 12.5 Right to Distribute Stock on Hand. Notwithstanding the foregoing, upon termination of this Agreement for any cause other than a breach by Distributor, Distributor shall notify Supplier of the number of units of Product Distributor has in stock at the time of such termination. Provided that Supplier receives such notification within ten (10) business days after such termination, Distributor shall have the right to distribute such stock on hand for a period of six (6) months, subject to the payment of license fees pursuant to Section 3 hereof and any other amounts due hereunder. At the end of such six (6) month period, or, if Supplier does not receive such notification within ten (10) business days after termination, or, if the Agreement was terminated due to Distributor's breach, at the end of such ten (10) business days period, Distributor shall destroy all copies of all Products incorporating the Software and all copies of the Software within its possession or control (except as provided in Section 12.4 hereof) and shall promptly notify Supplier in writing of such destruction. 13. Independent Parties. The parties are independent contractors. Neither party is an employee, agent, co-venturer or legal representative of the other party for any purpose. Neither party shall have the authority to enter into any contracts in the name of or on behalf of the other party. 14. Governing Law. This Agreement is made in accordance with and shall be governed and construed under the laws of the State of California, excluding its choice of law rules and excluding the 1980 United Nations Convention on Contracts for the International Sale of Goods. In any legal action relating to this Agreement, Distributor agrees to the exercise of jurisdiction over it by a state or federal court in the County of Marin, California, and to such venue. 15. Notice. All notices, including notices of address change, required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been received (a) when received if hand delivered, (b) five (5) days after being sent by first class U.S. mail, (c) two (2) business days after being sent by express mail or (d) when received if sent by confirmed telecopy, in each case addressed to the first address first set forth above or such other address as the parties may designate. 16. Non-Assignability; Binding on Successors. Any attempted assignment of its rights or delegation of its obligations under this Agreement, whether by operation of law or otherwise, by Distributor shall be void without the prior written consent of Supplier, which shall not be unreasonably withheld. A change of ownership of Distributor shall be deemed an assignment. This Agreement shall be binding upon, and inure to the benefit of, the successors, executors, heirs, representatives, administrators and permitted assigns of the parties hereto. 17. Force Majeure. Neither party shall be liable to the other for its failure to perform any of its obligations under this Agreement, except for payment obligations, during any period in which such performance is delayed because rendered impracticable or impossible due to circumstances beyond its reasonable control, including without limitation earthquakes, governmental regulation, fire, flood, labor difficulties, civil -7- disorder, and all acts of God, provided that the party experiencing the delay promptly notifies the other party of the delay. 18. Miscellaneous. 18.1 Severability. In the event any provision of this Agreement is held to be invalid or unenforceable, such provision shall be changed and interpreted so as to best accomplish the objectives of the original provision to the fullest extent allowed by law and the remaining provisions of this Agreement will remain in full force and effect. 18.2 Waiver. Any waiver (express or implied) by either party of any breach of this Agreement shall not constitute a waiver of any other or subsequent breach. 18.3 Purchase Orders. This Agreement alone sets forth Distributor's rights with respect to the Software. All different or additional terms or conditions in any Distributor purchase order or similar document shall be null and void. 18.4 Government Restricted Rights. For U.S. government users, the Software and any related documentation are deemed to be "commercial computer software" and "commercial computer software documentation", respectively, pursuant to DFAR Section 227.7202 and FAR Section 12.2 12(b), as applicable. Any use, modification, reproduction, release, performing, displaying or disclosing of the Software and/or any related documentation by the U.S. Government shall be governed solely by the terms of this Agreement and shall be prohibited except to the extent expressly permitted by the terms of this Agreement. Any technical data provided that is not covered by the above provisions is deemed to be "technical data-commercial items" pursuant to DFAR Section 227.7015(a). Any use, modification, reproduction, release, performing, displaying, or disclosing of such technical data shall be governed by the terms of DFAR Section 227.7015(b). Use, duplication or disclosure by any foreign government is subject to equivalent restrictions as defined in that country's laws and/or regulations. 18.5 Entire Agreement, Amendment. This Agreement and the Exhibits attached hereto constitute the final, complete and exclusive agreement between the parties and supersede all previous or contemporaneous agreements or representations, written or oral, with respect to the subject matter of this Agreement. This Agreement may not be modified or amended except in a writing signed by a duly authorized representative of each party. IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be signed and delivered by its duly authorized officer or representative as of the date first set forth above. SUPPLIER DISTRIBUTOR Artifex Software Inc. - --------------------- ---------------------------------- By: By: ----------------------------------- ------------------------------ Name: Miles Jones Name: ---------------------------- Title: President Title: ---------------------------- Date: Date: -------------------------------- ---------------------------- -8- Exhibit A General Description of the Software The Software licensed under the present agreement includes: Software A: - - A driver that produces PCL5e output under MSWindows95 and/or MSWindowsNT Software B: - - An interpreter that is compatible with the PCL5e language for HP LJSsi - - An interpreter that is compatible with the PCL5c language for the HP Color LaserJet - - An interpreter that is compatible with the PCLXL language for the HP LJ5si - - A library of C procedures that implements the graphics capabilities that appear as primitive operations in the PostScript language; The initial version of the Software delivered to Distributor shall be version 5.55. Trademarks Supplier has registered the trademark Artifex in connection with its products and services. Supplier has trademarked the name Aladdin Ghostscript; Supplier may also use this name internally for the Software. PCL is a trademark of Hewlett Packard Company Copyright Notices "Portions Copyright (C) 1988, 1998 Aladdin Enterprises. All rights reserved." "This software is based in part on the work of the Independent JPEG Group." "Portion Copyright(C)1999 -- Zenographics, Inc. All rights reserved." Exhibit B Description of the Product ITEC products may be comprised of any of the following configuration: 1. Printer controller systems implementing either PCL (any version) in conjunction with Adobe Postscript. 2. Printer controller systems implementing either PCL (any version) in conjunction with Artifex Postscript. 3. Printer controller systems implementing PCL (only). 4. Artifex PDF interpreters in conjunction with items 2 or 3 above. 5. Host based Postscript color management. Exhibit C END USER NOTICES TERMS OF END USER SUBLICENSES All end user license agreements for the Product will contain at a minimum the following terms: (1) Only a personal, nontransferable, and nonexclusive right to use the Product is granted to such end user; (2) Artifex Software Inc. retains all title to the Software as incorporated in the Product, and all copies thereof, and no title to the Software, or any intellectual property in the Software, is transferred to such end user; (3) The end user may not copy (i) the Product, except for one (1) copy for backup or archival purposes only, and only as necessary to use the Product; or (ii) any documentation accompanying the Product. All such copies are the proprietary information of Distributor and its licensers and suppliers and are subject to their copyrights; (4) The end user agrees not to reverse engineer, decompile, or otherwise attempt to derive source code from the Product; (5) Artifex Software Inc. is an intended third party beneficiary of the end user sublicense and is entitled to enforce it in its own name directly against the end user; (6) ARTIFEX SOFTWARE INC. WILL NOT BE LIABLE TO THE END USER FOR ANY GENERAL, SPECIAL, DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, OR OTHER DAMAGES ARISING OUT OF THE LICENSE OF THE PRODUCT EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; (7) Upon termination of the license, the end user will return all copies of the Product to Distributor; (8) Government Restricted Rights. For U.S. government users, the Software and any related documentation are deemed to be "commercial computer software" and "commercial computer software documentation", respectively, pursuant to DFAR Section 227.7202 and FAR Section 12.212(b), as applicable. Any use, modification, reproduction, release, performing, displaying or disclosing of the Software and/or any related documentation by the U.S. Government shall be governed solely by the terms of this Agreement and shall be prohibited except to the extent expressly permitted by the terms of this Agreement. Any technical data provided that is not covered by the above provisions is deemed to be "technical data-commercial items" pursuant to DFAR Section 227.7015(a). Any use, modification, reproduction, release, performing, displaying, or disclosing of such technical data shall be governed by the terms of DFAR Section 227.7015(b). Use, duplication or disclosure by any foreign government is subject to equivalent restrictions as defined in that country's laws and/or regulations. (9) Artifex Software Inc. makes no warranties, express, implied or statutory, regarding the Product and the Software, including without limitation the implied warranties of merchantability and fitness for a particular purpose, or their equivalent under the laws of any jurisdiction. Artifex Software Inc. may be referred to as Distributor's licenser or supplier. The notices in paragraphs (2), (4), (6) and (9), shall be in bold, capital letters and be conspicuous to end users. Exhibit D D-l. Right to Sublicense. Subject to Distributor's payment obligations in Section 3 of this Agreement, Distributor may sublicense its right to publish and distribute copies of the Product incorporating the Software set forth in Section 1(a)(iii), provided that any agreement granting such rights shall contain provisions substantially the same as those set forth in Sections 1(c), 1(d), 1(e), 7, 9.1, 10, 11, 12, and 18.4 hereof, and provided, further, that no such sub-licensee shall have any right to modify the Software or sublicense the rights granted to it by Distributor. Supplier shall have no warranty or other obligations to any such sublicensee, and Distributor shall indemnify and hold Supplier harmless from and against any claim arising out of any such sublicense, such sub-licensee's actions, or any warranties made by or on behalf of Distributor to such sub-licensee. With respect to sub-licensees, the Software is provided "AS IS" without warranty of any kind. D-2. Marking of Copies. Subject to Distributor's payment obligations hereunder, no identification of individual copies is required under this Agreement. D-3. Fees, Payment, Reports, and Records D-3.1 Fees. (a) Per Unit License Fee. For each unit of the Product incorporating the Software A plus Software B distributed by or on behalf of Distributor or its sub-licensees hereunder, Distributor shall pay to Supplier at Supplier's principal place of business (without deduction or offset except as authorized by Supplier) an amount of $16.00 per unit. For each unit of the Product incorporating the Software A distributed by or on behalf of Distributor or its sub-licensees hereunder, Distributor shall pay to Supplier at Supplier's principal place of business (without deduction or offset except as authorized by Supplier) an amount of $4.00 distributed per unit. For each unit of the Product incorporating the Software B Distributed by or on behalf of Distributor or its sub-licensees hereunder, Distributor shall pay to Supplier at Supplier's principal place of business (without deduction or offset except as authorized by Supplier) an amount of $12.00 per unit. Such fees are exclusive of, and Distributor shall pay for, shipping, any sales, use, property, value added or similar taxes, federal, state, or local, or other charges imposed on or with respect to the Software or its delivery, use or possession, except taxes based upon the net income of Supplier. (b) Initial Order. Distributor hereby submits to Supplier a binding purchase order for two thousand (2,000) units of the Software; the fee for these units shall be due and payable as of the effective date of the present Agreement. (c) Major Version Fee. Distributor shall receive new Major Versions without additional charge. (d) Optional Continued Support Fee. Should Distributor choose to no longer distribute the Product and Distributor wishes to continue to receive support from Supplier, Distributor shall pay Supplier the amount of $1,000 per quarter in advance of the quarter in which Distributor wishes to receive such support. (e) Technology Access Fee. Distributor agrees to pay Supplier the amount of $15.000 as a technology access fee; this amount shall be due and payable as of the effective date of this Agreement. (f) Quarterly Minimum Fee. Within 30 days after the end of each calendar quarter Distributor shall pay to Supplier the per unit licenses fees in Exhibit D-3.I(a) above or $5,000, whichever is greater. D-3.2 Payment. (a) Fee Due Date. The license fee for a given unit of the Software shall be incurred when Distributor or its sub-licensee ships the corresponding unit of the Product, or when Distributor receives payment for the corresponding unit of the Product, whichever is sooner. (b) Quarterly Payment. Within 30 days after the end of each calendar quarter, Distributor shall pay Supplier all license fees incurred during that quarter per subsection (a) immediately above, less credit for any amounts actually paid by Distributor within that quarter for returned units of the Product, unless Supplier agrees to other terms in advance in writing. (c) Payment Currency and Instrument. All payments hereunder shall be in U.S. dollars, by check drawn on a U.S. bank. D-3.3. Reports. Payment of license fees shall be accompanied by a report which sets forth on a month-by-month basis the total number of units of the Product distributed by Distributor, its sub-licensees, and its Third Party Resellers during such quarter by each U.S. postal zip code or as may otherwise be agreed to in writing between Distributor and Supplier, and the total amount due to Supplier. D-3.4. Records. Distributor shall keep accurate books and records of all units of the Software made and distributed hereunder. An independent certified public accountant selected by Supplier may, upon ten (10) day's written notice and during normal business hours and with minimal disruption to Distributor's operations, inspect and audit the records of Distributor with respect to sales of the Product. Such accountant's activities shall be subject to a non-disclosure agreement between the accountant and Distributor and any information gleaned by the accountant and conveyed to Supplier shall be subject to Section 10 hereof. If, upon performing such audit, it is determined that Distributor has underpaid Supplier by an amount greater than ten percent (10%) of the payments due Supplier in the period being audited, Distributor will bear all reasonable expenses and costs of such audit in addition to its obligation to make full payment in accordance with the terms of this Agreement. Exhibit E (Upgrades and support) E-1. Upgrades. (a) Version Numbering. From time to time, Supplier may release new versions of the Software. Each version shall be identified by three integers A.B.C or two integers A.B (equivalent to A.B.0). The integer A identifies the "Major Version" of the Software; the integer B identifies the "Minor Version"; the integer C identifies the "Incremental Version". Successive Incremental Versions denote bug fixes or minor improvements with no significant changes in specification; successive Minor Versions denote significant new features within the framework of an existing specification; successive Major Versions denote architectural changes in or additions to the specification. (b) New Versions. Supplier shall notify Distributor promptly when a new version becomes available. At Distributor's request, Supplier shall deliver the new version to Distributor. For new Incremental and Minor versions, Distributor will have the same rights with respect to the new version as with respect to the version(s) delivered previously at no additional charge. For new Major Versions, Distributor may evaluate the new version internally for a period of 60 days at no charge; after that time, Distributor shall either destroy or return all copies of the new version to Supplier, or pay Supplier an amount or amounts specified in Section D-3.1(c) of Exhibit D hereto, in exchange for which Distributor will have the same rights with respect to the new Major Version as with respect to the version(s) delivered previously. E-2 Support and Engineering Services. (a) Definition of Support. "Support" under this Agreement means Supplier using its commercially reasonable efforts to fix documented and reproducible failures of the Software to perform as specified in its written specifications. Supplier shall have no other support obligation to Distributor in connection with the Software. (b) Distribution Support Period. During the period starting with the initial delivery of the source code of the Software to Distributor hereunder and continuing for as long as the Distributor is current in its obligation for Per unit license fees (Exhibit D-3.1(a) and Quarterly minimum fees (Exhibit D-3.1(f), Supplier shall provide Support to Distributor free of charge. (c) Continued Support. For each calendar quarter after Distributor no longer wishes to distribute the Product, and Distributor wishes Supplier to provide Support (" Continued Support"), Distributor shall pay Supplier the Continued Support Fee specified in Section D-3.1(d) of Exhibit D hereto. This support fee shall be payable at the end of the quarter before the quarter in which Continued Support is desired. Supplier shall have no obligation to provide Continued Support until it receives the Continued Support Fee. (d) Support for Previous Major Versions. Supplier shall cease providing Support for any Major Version of the Software one year after Supplier has released a subsequent Major Version. (e) Engineering Services. Supplier shall have no obligation hereunder to provide Distributor with engineering services other than the Support set forth above. EX-10 6 f712863_1.txt EXHIBIT 10(AP) FIRST OEM AMENDMENT EXHIBIT 10(ap) FIRST OEM AMENDMENT This First Amendment ("Amendment")is made and entered into as of the 7th day of September, 1999 by and between Artifex Software Inc., with its principal place of business located at San Rafael, California ("Supplier"), and Itec Corporation, with its principal place of business located at San Diego, California ("Distributor"). The text of this Amendment shall consist of the text of the existing OEM Agreement of July 1, 1999 between Artifex Software Inc. "Supplier" and Itec Corporation "Distributor", with the following exceptions: Replace Section l(a)(ii)(b) in its entirety with the following: " (ii)(b) reproduce copies of the object code (binary) versions of the Software, and/or the Documentation provided (in whole or in part) as modified under (i) above (such copies to be referred to collectively herein as "Licensed Copies"), provided that each unit of any Product incorporating the Software shall: (1) Software A: shall incorporate Software A into the Product in such a way that Software A shall be available to the user on a stand-alone or independent basis, Software B: shall incorporate Software B into the Product in such a way that Software B shall not be available to the user on a stand-alone or independent basis, Software C: shall incorporate Software C into the Product in such a way that Software C shall not be available to the user on a stand-alone or independent basis, (2) comply with Section l(e) below, and (3) comply with either Section l(f) below (in the case of demonstration copies) or Section D-2 of Exhibit D hereto (in the case of all other copies) (such copies to be referred to collectively herein as "Licensed Copies");" Replace Exhibit A in its entirety with the following: " Exhibit A General Description of the Software The Software licensed under the present agreement includes: Software A (Windows drivers): - A driver that produces PCLSe, PCLSc, or PCLXL output under MS Windows 95/98 and/or MS Windows NT -1- Software B (PCL): Supplier has registered the trademark Artifex in connection with its products and services. Aladdin Enterprises has trademarked the name Aladdin Ghostscript; Supplier may also use this name internally for the Software. PostScript is a trademark of Adobe Systems, Incorporated. PCL is a trademark of Hewlett Packard Company Copyright Notices "Portions Copyright (C) 1988, 1998 Aladdin Enterprises. All rights reserved." "This software is based in part on the work of the Independent JPEG Group." "Portions Copyright (c) 1993 Soft Horizons. All rights reserved." end of Exhibit A" Replace Exhibit D-3.1(a)in its entirety with the following: "D-3.1 Fees. (a) Per Unit License Fee. Software A plus Software B (Windows drivers plus PCL). For each unit of the Product incorporating the Software A plus Software B distributed by or on behalf of Distributor or its sublicensees hereunder, Distributor shall pay to Supplier at Supplier's principal place of business (without deduction or offset except as authorized by Supplier) an amount of $16.00 per unit. Distributor shall only distribute Software A in association with distributions of Software B. Distributor shall not distribute Software A independently of Software B. Software B only (PCL) For each unit of the Product incorporating the Software B distributed by or on behalf of Distributor or its sublicensees hereunder, Distributor shall pay to Supplier at Supplier's principal place of business (without deduction or offset except as authorized by Supplier) an amount of $12.00 per unit. Software C with or without Software A and/or Software B (PostScript and/or PDF with or without Windows drivers and PCL) For each unit of the Product incorporating the Software C sold by or on behalf of Distributor or its sublicensees hereunder, Distributor shall pay to Supplier at Supplier's principal place of business (without deduction or offset except as authorized by Supplier) the amount of two -2- percent (2.0%)of Distributor's selling price of the corresponding unit of Product, or $25, whichever is greater. In the case of a Product sold through a Third Party Reseller, the "selling price(s)" shall be the unit price(s) paid to Distributor or sublicensee by such Third Party Resellers. Such prices are exclusive of, and Distributor shall pay for, shipping, any sales, use, property, value added or similar taxes, federal, state, or local, or other charges imposed on or with respect to the Software or its delivery, use or possession, except taxes based upon the net income of Supplier." All other terms and conditions of the existing OEM Agreement shall apply to the licensing of Ghostscript (the Software). IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be signed and delivered by its duly authorized officer or representative as of the date first set forth above. SUPPLIER DISTRIBUTOR Artifex Software Inc. ITEC By:______________________ By:______________________________ Name: Miles Jones Name:_____________________________ Title: President Title:____________________________ Date:___________________________ Date:_____________________________ -3- EX-10 7 f713003_1.txt EXHIBIT 10(AQ) SECOND OEM AMENDMENT EXHIBIT 10(aq) SECOND OEM AMENDMENT This Second Amendment ("Amendment") is made and entered into as of the 25th day of October 2000 by and between Artifex Software Inc., with its principal place of business located at San Rafael, California ("Supplier"), and ITEC, with its principal place of business located at San Diego, California ("Distributor"). The text of this Amendment shall consist of the text of the existing OEM Agreement of July 1, 1999 and the First OEM Amendment of September 7, 1999 between Artifex Software Inc. "Supplier" and ITEC "Distributor", with the following exceptions: Replace Exhibit D in its entirety with the following: EXHIBIT D D-1. Right to Sublicense. Subject to Distributor's payment obligations in Section 3 of this Agreement, Distributor may sublicense its right to publish and distribute copies of the Product incorporating the Software set forth in Section 1(a)(iii), provided that any agreement granting such rights shall contain provisions substantially the same as those set forth in Sections 1(c), 1(d), 1(e), 7, 9.1, 10, 11, 12, and 18.4 hereof, and provided, further, that no such sublicensee shall have any right to modify the Software or sublicense (other than an end-user license of the unmodified Software with terms consistent with those required by this Paragraph) the rights granted to it by Distributor. Supplier shall have no warranty or other obligations to any such sublicensee, and Distributor shall indemnify and hold Supplier harmless from and against any claim arising out of any such sublicense, such sublicensee's actions, or any warranties made by or on behalf of Distributor to such sublicensee. With respect to sublicensees, the Software is provided "AS IS" without warranty of any kind. D-2. Marking of Copies. Subject to Distributor's payment obligations hereunder, no identification of individual copies is required under this Agreement. D-3. Fees, Payments, Reports, and Records. D-3.1 Fees. (a) License Fee. Distributor shall pay Supplier a one-time license fee of One million, two hundred thousand (1,200,000) shares of Distributor's common stock or Five hundred thousand dollars ($500,000). The number of shares of Distributor's common stock to be delivered hereunder shall be adjusted for any splits, stock dividends paid, etc. from the effective date of this Amendment to the date that such common stock is actually delivered to Supplier. Supplier shall have the right to have its shares delivered hereunder registered, at the expense of Distributor, with any appropriate registration statement filed by Distributor. Distributor agrees to file with the Securities and Exchange Commission a registration statement including the shares delivered hereunder within no more than One hundred eighty (180) days from the effective date of this Amendment. Upon Supplier's receipt of the license fee, Distributor's license hereunder shall become fully paid-up and royalty free. Such fee is exclusive of, and Distributor shall pay for, shipping, any sales, use, property, value added or similar taxes, federal, state, or local, or other charges imposed on or with respect to the Software or its delivery, use or possession, except taxes based upon the net income of Supplier. (b) Prepaid License Fees. No prepaid license fees are due under this Agreement. (c) Major Version Fee. There is no Major Version fee due under this Agreement. (d) Continued Support Fee. For each year of Continued Support, Distributor shall pay Supplier the amount of Twenty thousand dollars ($20,000), to be paid quarterly as provided in Paragraph D-3.2(a), below. (e) Technology Access Fee. There is no technology access fee due under this Agreement. D-3.2 Payment. (a) Fee Due Dates. Payment under section D-3.1(a) shall be due and payable on the effective date of this Amendment Payment under section D-3.1(d) shall be due on the first day of the quarter for which Continued Support is to be provided. (b) Invoices; Prompt Payment. Supplier shall invoice Distributor as the fees set forth in section D-3.1(d) becomes due. Distributor shall pay within thirty (30) days of the invoice's date unless Supplier agrees to other terms in advance in writing. (c) Payment Currency and Instrument. All payments hereunder shall be in U.S. dollars, by check drawn on a U.S. bank. D-3.3. Reports. This Agreement does not require Distributor to provide Supplier with any reports. D-3.4. Records. This Agreement does not require Distributor to keep any specific records. All other terms and conditions of the existing OEM Agreement shall apply to the licensing of Ghostscript (the Software). IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be signed and delivered by its duly authorized officer or representative as of the date first set forth above. SUPPLIER DISTRIBUTOR Artifex Software Inc. Imaging Technologies Corporation By:___________________ By:__________________________ Name: Miles Jones Name: Brian Bonar Title: President Title: CEO Date:_________________ Date:_________________ EX-10 8 f713006_1.txt EXHIBIT 10(AR) SHARE PURCHASE AGREEMENT EXHIBIT 10(ar) SHARE PURCHASE AGREEMENT Dated December 1, 2000 by and between ELB GROUP.COM, LLC AND ROBERT MARKS AND BET TRUST AND CARL PERKINS AND EDUADVANTAGE.COM, INC. AND BRENT H. COEUR-BARRON, AS ESCROW AGENT AND IMAGING TECHNOLOGIES CORPORATION SHARE PURCHASE AGREEMENT ------------------------ THIS SHARE PURCHASE AGREEMENT (this "Agreement") is made and entered into as of the 1st day of December, 2000, by and between ELB GROUP, LLC, a California limited liability company ("ELB"), ROBERT MARKS ("Marks"), BET TRUST ("BET"), CARL PERKINS ("Perkins"), and Brent H. Coeur-Barron, as Escrow Agent ("Escrow Agent")(Marks, BET Trust, Perkins, and Escrow Agent are sometimes referred to as an "Individual Seller" and, collectively with ELB are sometimes referred to as "Sellers"), EDUADVANTAGE.COM, INC., a California corporation ("EA"), and IMAGING TECHNOLOGIES CORPORATION, a Delaware corporation ("ITEC"). RECITALS WHEREAS, ELB owns 2,475,000 shares of common stock of EA currently outstanding ("EA Shares"); WHEREAS, Marks owns 25,000 EA Shares; WHEREAS, BET owns 500,000 EA Shares; WHEREAS, Perkins owns 500,000 EA Shares; WHEREAS, Escrow Agent holds 250,000 EA Shares on behalf and for the benefit of certain employees of a wholly-owned subsidiary of EA; WHEREAS, EA is engaged in the business of owning and operating a web-based computer software and hardware reseller business based in Culver City, California (the "Business"); WHEREAS, the Sellers desire to sell to ITEC the EA Shares, and ITEC desires to purchase the same, subject to the terms and conditions hereof. AGREEMENT NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements herein contained, and other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged, the parties agree as follows: 1 ARTICLE I --------- SALE OF EA SHARES 1.1. Sale of EA Shares. Upon the terms and subject to the conditions hereof (including the Recitals, which are incorporated herein by reference), each Seller hereby agrees to sell, transfer and deliver to ITEC, and ITEC agrees to buy, on the Closing Date (as defined in Section 2.1 below) and effective as of the Effective Date (as defined in Section 1 below), all of the rights, title and interest of each such Seller in and to the EA Shares. 1.2 No Liabilities. ITEC is not acquiring or assuming any debts, liabilities or obligations of any type related to the EA Shares; however, ITEC acknowledges and agrees that the wholly-owned subsidiary of EA, EduAdvantage.com, LLC ("EduAdvantage"), has certain obligations which will remain the obligation of such subsidiary and EA. 1.3 Additional Actions. If, at any time after the Closing (as defined in Section 2.1 below), ITEC shall consider or be advised that any further assignments or assurances in law or any other acts are necessary or desirable to vest, perfect or confirm, of record or otherwise, in ITEC good and merchantable title to the EA Shares, each Seller shall, and hereby agrees to, execute and deliver all such deeds, assignments and assurances in law and to do all acts reasonably necessary or proper to vest, perfect or confirm title to and possession of such EA Shares in ITEC. 1.4 Consideration. The consideration (the "Consideration") for the EA Shares of each Seller is one share of common stock of ITEC ("ITEC Share") for each EA Share held by a Seller. For all purposes under this Agreement, in the event of any stock split, stock combination (whether by reclassification of shares, recapitalization or otherwise), repurchase, or declaration of a dividend, or other distribution with respect to ITEC Shares that becomes effective between the date of this Agreement and the Closing Date, the Consideration shall be adjusted to reflect such stock split, stock combination, repurchase, dividend or other distribution as follows: (i) In the event of a stock split, stock combination, repurchase, stock dividend or stock distribution, the Consideration shall be adjusted in the reasonable discretion of ITEC's Board of Directors; provided, however, that the Individual Sellers and EA shall have the right to disapprove any such adjusted Consideration by giving ITEC a joint notice of such disapproval (a "Disapproval Notice) within ten (10) business days after receipt of notice of ITEC's Board of Directors' determination of the adjusted Consideration and the calculations therefor (the "Disapproval Notice Period"). The Representatives shall be deemed to have approved the adjusted Consideration if ITEC does not receive a Disapproval Notice within the Disapproval Notice Period. (ii) In the event of a cash dividend or cash distribution, the Consideration shall be adjusted by (A) multiplying the ITEC Share Closing Price immediately prior to the cash dividend or cash distribution by the number of ITEC Shares issued and outstanding, (B) subtracting the amount of the cash dividend or cash distribution, and then (C) dividing by the number of shares of ITEC Shares issued and outstanding. 2 ARTICLE II THE CLOSING 2.1 Closing. The Closing of the purchase of the EA Shares (the "Closing") will occur on the later of (i) December 4, 2000 or (ii) such other date as the parties may agree (the "Closing Date"). The Closing shall be effective as of December 1, 2000 (the "Effective Date"). For accounting purposes, the Closing shall be deemed consummated as of 12:01 a.m. on the Effective Date. The Closing may be consummated by exchange of signature pages by facsimile transmission, with the originals thereof to be delivered by mail to each respective party as soon thereafter as practicable. 2.2 Deliveries by ITEC. ITEC shall deliver the following at the Closing: (a) Instructions to ITEC's transfer agent requesting share certificates representing, in the aggregate, 3,500,000 ITEC Shares and issued in the name of each of the Sellers or their assignees; (b) an Officer's Certificate as to (i) the accuracy at Closing of all of ITEC's representations and warranties as if made at and as of the Closing Date, (ii) the fulfillment of all of ITEC's agreements and covenants to be performed at or before the Closing Date, and (iii) the satisfaction of all Closing conditions to be satisfied by ITEC; (c) certified copies of resolutions adopted by ITEC's Board of Directors approving the execution, delivery and performance of this Agreement and approving all of the transactions contemplated by this Agreement; and (d) such other instruments or documents as may be necessary or appropriate to carry out the transactions contemplated hereby. 2.3 Deliveries by Individual Sellers. At the Closing, the Individual Sellers shall each deliver the following: (a) A certificate of each Individual Seller as to (i) the accuracy at Closing of all representations and warranties of each Individual Seller as if made at and as of the Closing Date (unless otherwise provided), ( ii) the fulfillment of all of such Individual Seller's agreements and covenants to be performed at or before the Closing Date, and (iii) the satisfaction of all Closing conditions to be satisfied by such Individual Seller; (b) an Investor's Representation Agreement substantially in the form attached hereto as Exhibit A, together with a certificate representing such Individual Seller's EA Shares, executed by each Individual Seller; and (c) such other endorsements, instruments or documents as may be necessary or appropriate to carry out the transactions contemplated hereby. 3 2.4 Deliveries by ELB. At the Closing, ELB shall deliver the following: (a) Certified copies of the resolutions adopted by the Board of Managers of ELB approving the execution, delivery and performance of this Agreement and approving all of the transactions contemplated by this Agreement; (b) a good standing certificate for ELB as of a recent date from the Secretary of State of California; and (c) such other endorsements, instruments or documents as may be necessary or appropriate to carry out the transactions contemplated hereby; (d) an Investor's Representation Agreement substantially in the form attached hereto as Exhibit A. 2.5 Deliveries by EA. At the Closing, EA shall deliver the following: (a) Certified copies of the resolutions adopted by the EA Board approving the execution, delivery and performance of this Agreement and approving all of the transactions contemplated by this Agreement; (b) a good standing certificate for EA as of a recent date from the Secretary of State of California; (c) a certificate executed by an officer of EA certifying as to the accuracy at Closing of all the representations and warranties of EA as if made at and as of the Closing Date, the fulfillment of all the agreements and covenants of EA to be performed at or before the Closing Date, and the satisfaction of all Closing conditions to be satisfied by EA; (d) the minute books, bylaws and stock records of EA, certified as true and correct by the secretary of EA.; and (e) such other endorsements, instruments or documents as may be reasonably necessary or appropriate to carry out the transactions contemplated hereby. ARTICLE III REPRESENTATIONS AND WARRANTIES REGARDING EA ELB and EA represent and warrant to ITEC as of the Closing Date (unless otherwise provided) as follows: 3.1 Authority. Each of ELB and EA has all of the requisite right, power and authority, without the consent of any other person or entity, to execute and deliver this Agreement and the 4 agreements to be executed and delivered hereby and to carry out the transactions contemplated hereby and thereby. All actions required to be taken by EA to authorize the execution, delivery and performance of this Agreement and all agreements and transactions contemplated hereby have been duly and properly taken. 3.2 Validity. This Agreement and the other agreements and other documents to be delivered at the Closing by EA have been duly executed and delivered by EA and constitute valid and binding obligations of EA enforceable in accordance with their respective terms. The execution and delivery of this Agreement and the other agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby will not (immediately, or upon notice, with the passage of time, or both) result in the creation of any lien, charge or encumbrance of any kind or the termination or acceleration of any indebtedness or other obligation of EA, and are not prohibited by, do not and will not violate or conflict with any provision of, and do not and will not constitute a default under or a breach of (i) the articles of incorporation or bylaws of EA, (ii) any contract, agreement or other instrument to which EA is a party or by which EA is bound, (iii) any order, decree or judgment of any court or governmental agency binding upon EA, or (iv) any law, rule or regulation applicable to EA. 3.3 Due Organization and Ownership. (a) EA is a corporation duly organized, validly existing and in good standing under the laws of California, and has full power and authority and all requisite rights, licenses and permits to carry on the Business as it is presently conducted by EA. EA is a web-based business with its primary office in the State of California. (b) No shares of common stock of EA other than the 3,500,000 EA Shares currently issued and outstanding have been granted or sold by EA. Except as set forth on Schedule 3.3(b) all of the EA Shares have been duly and validly authorized and granted or sold and there are no contributions, capital calls or other amounts outstanding with respect to any EA Shares. The EA Shares were not issued in violation of any preemptive or other right of any person. There are no outstanding options, rights, warrants, conversion rights or other agreements or commitments to which EA is a party or binding upon EA for the sale or transfer by EA of any interest in EA. The EA shareholders are the sole record owners of the EA Shares. The persons listed on Schedule 3.3(b) are the only officers or directors of EA. 3.4 Consents. Except as described on Schedule 3.4, no approval, authorization, registration, consent, order or other action of or filing with any person, including any court, administrative agency or other governmental authority, is required for (i) the execution and delivery of this Agreement or the agreements contemplated hereby, or (ii) the consummation of the transactions contemplated hereby and thereby. 3.5 Financial Statements. (a) The unaudited initial balance sheet for EA at and as of December 1, 2000 (i) is attached hereto as Schedule 3.5(a); the unaudited balance sheet and income statement of EduAdvantage at and for the nine-month period ended September 30, 2000 are attached hereto as Schedule 3.5(a) and (ii) are accurate and complete. 5 (b) To the knowledge of ELB, EA is not subject to any liability or obligation (whether absolute, accrued, contingent or otherwise and whether matured or unmatured) other than liabilities and obligations described on Schedule 3.5(b). 3.6 Books and Records. The books of account and other records (financial and otherwise) of EA are complete and correct and are maintained in accordance with good business practices. 3.7 Interim Change. Except as described in reasonable detail on Schedule 3.7, since December 1, 2000 (unless otherwise stated), EA has operated its business only in the ordinary course, consistent with past practices, and there has not been any of the following in connection with EA: (a) Any material adverse change in the financial condition, assets, liabilities, personnel, prospects or business affairs of EA in its relationships with suppliers, vendors, customers, representatives, employees or others, nor has there been the occurrence of any event or condition which could reasonably be expected to have such an effect; (b) any declaration or payment of any dividend or other distribution; (c) any forgiveness, cancellation, write-off or write-down of debts or claims, or waiver of any rights related to EA other than in the ordinary course of business; (d) any increase or decrease in the compensation, benefits or method or rate of reimbursement paid, payable or to become payable by EA to any employee, independent contractor or other person who renders services in connection with EA or its business, or any payments of compensation other than salary to any of such employees; (e) any incurrence of debt other than trade payables incurred in the ordinary course of business; (f) since December 1, 2000, any entry into any material agreement, commitment, or transaction in excess of ten thousand dollars ($10,000) or any capital expenditure in excess of five thousand dollars ($5,000) by EA; (g) any incurrence of any security interest, lien, charge, encumbrance or claim on, or any damage or loss to, any of the assets of EA; (h) any change in the method of operation or practices of EA, including any change in the accounting, billing or invoicing procedures of EA; (i) any sale, transfer or disposal by or for EA or purchase by or for EA of any properties or assets, except in the ordinary course consistent with past practices; or (j) any agreement, commitment or understanding by EA to do any of the foregoing. 6 3.8 Assets. EA is the sole legal and equitable owner of all right, title and interest in all of the issued and outstanding Membership Interests of EduAdvantage, and EduAdvantage owns or otherwise controls the contracts, assets, leases, accounts receivable, trademarks, patents and other intellectual property, two domain names ("EduAdvantage.com" and "soft4u.com"), all client lists, records and marketing materials, including copyrights related thereto, the computer servers and other equipment used in the conduct of the Business and described on Schedule 3.8 (the "Assets"). EduAdvantage has good and marketable title to the Assets, and such Assets are not and will not be subject to any pledge, option, escrow, hypothecation, lien, security interest, financing statement, lease, license, easement, right of way, encumbrance or other restriction of any kind. All of the Assets, whether owned or leased by EduAdvantage, are in good operating condition and repair (reasonable wear and tear excepted) and are suitable for the purposes for which they are presently being used. Except as set forth on Schedule 3.8, the Assets will furnish ITEC and its successors and assigns with all of the capacity and rights to operate EA in the same manner as it is presently being operated by EA and to otherwise conduct the Business in the same manner as presently conducted (although ITEC shall be entitled to change the operations of EA after Closing). 3.9 Real Estate. EA does not own any real property. ELB will grant to EA a license to occupy its current premises for up to six (6) months in exchange for the payment of rent and expenses of occupancy to ELB on the same terms and conditions on which ELB occupies its office premises, the lease for which is attached hereto as Schedule 3.9. 3.10 Personal Property Leases. Except as described on Schedule 3.10, EA does not lease any of the personal property that is used in the Business. Schedule 3.10 sets forth an accurate, correct and complete list of all office furnishings and other personal property leased by EA (the "Leased Assets"). 3.11 Trade Secrets, Know-How and Proprietary Information. Schedule 3.11 contains a list of all information in the nature of trade secrets, know-how or proprietary information, including but not limited to, software, copyrighted and copyrightable material, electronic data processing systems, program specifications and technical information relating to or used by EA (the "Proprietary Information"). The Proprietary Information does not violate or infringe upon any trade secret rights, patents, trademarks or copyrights of any other person. Except as set forth on Schedule 3.11, the Proprietary Information is owned exclusively by EA and no other person or entity has any claim thereto or rights therein. 3.12 Employees; Independent Contractors. (a) EA has no employees. ELB has previously consented to ITEC's recruitment of Marks, Michael Geisen, Andra Savery and Natalia Labrouve. (b) ELB will supply to ITEC, upon request, the names and addresses of any independent contractors previously providing services to EA or EduAdvantage. 3.13 Taxes. EA has not been required to file any returns, declarations and reports or information returns and statements (collectively, "Returns"). 7 3.14 Litigation. Except as set forth in Schedule 3.14, EA is not engaged in, or a party to, or to the best of ELB's knowledge, threatened with, any suit, action, proceeding, or investigation or legal, administrative, arbitration or other method of settling disputes, and no officer of ELB knows, anticipates or has notice of any basis for any such action. EA has not received notice of any investigation, suit or proceeding threatened or contemplated by any foreign, federal, state or local government or regulatory authority including, without limitation, those involving EA's employment notices or policies or compliance with environmental regulations. EA and the Assets are not subject to any order, decree or judgment of any court or governmental agency or instrumentality. 3.15 Brokers. None of the Sellers has retained any broker or finder, other than Carl Perkins, or incurred any liability or obligation for any brokerage fees, commissions or finder's fees with respect to this Agreement or the transactions contemplated hereby. Any and all liabilities or obligations of any individual or entity to Carl Perkins has been completely and finally satisfied by the issuance of EA shares to Carl Perkins and to BET Trust. 3.16 Accounts Receivable. Within two (2) days following Closing, EA shall have delivered an accounts receivable aging schedule, which shall be attached hereto as Schedule 3.16. Except as set forth on Schedule 3.16, no accounts or notes receivable from any entity are in excess of ninety (90) days outstanding. 3.17 Disclosure. Neither this Agreement nor any attachment, schedule, certificate or other statement delivered pursuant to this Agreement in or in connection with the transactions contemplated hereby contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make the statements and information contained herein or therein, in light of the circumstances in which they were made, not misleading. Each schedule delivered pursuant to this Agreement is accurate and complete. To ELB's knowledge, there is no information necessary to enable a prospective purchaser of EA to make an informed decision with respect to the purchase of EA which has not been expressly disclosed to ITEC in this Agreement or in writing in connection with ITEC's due diligence process. ARTICLE IV ---------- REPRESENTATIONS AND WARRANTIES OF INDIVIDUAL SELLERS Each Individual Seller, jointly and severally (unless otherwise stated), represents and warrants to ITEC as of the date hereof and as of the Closing Date as follows: 4.1 Authority. Each Individual Seller has all of the requisite right, power and authority, without the consent of any other person or entity, to execute and deliver this Agreement and the agreements to be executed and delivered hereby and to carry out the transactions contemplated hereby and thereby. All actions required to be taken by each Individual Seller to authorize the execution, delivery and performance of this Agreement and all agreements and transactions contemplated hereby have been duly and properly taken. 4.2 Validity. This Agreement and the other agreements and other documents to be delivered at the Closing by the Individual Sellers have been duly executed and delivered by the 8 Sellers, as the case may be, and constitute valid and binding obligations of each Individual Seller, as the case may be, enforceable in accordance with their respective terms. 4.3 EA Ownership. For purposes of this Section 4.3 only, each Individual Seller represents and warrants to ITEC as to himself or herself only, as of the date hereof and as of the Closing Date as follows: Marks owns 25,000 EA Shares. BET Trust owns 500,000 EA Shares. Perkins owns 500,000 EA Shares. Escrow Agent holds for the benefit of Robert Marks, Michael Geisen, Natalia Labrouve and Andra Savery a total of 250,000 EA Shares pursuant to four separate escrow agreements between EA, the Escrow Agent and each individual. There are no outstanding options, rights, warrants, conversion rights or other agreements or commitments to which any Individual Sellers is a party or binding upon any Individual Seller for the sale or transfer by any Individual Seller of any interest in EA. The Individual Sellers are the beneficial owners of their respective EA Shares as set forth above and have good and marketable title to such EA Shares and by virtue of the sale contemplated by this Agreement, shall convey to ITEC good and marketable title to such EA Shares, free and clear of any liens, encumbrances, pledges, security interests, restrictive agreements, options, rights of first refusal, transfer restrictions, conditional sales agreements, voting trust arrangements, voting agreements, or claims or interests of third parties of any nature whatsoever. 9 ARTICLE V --------- REPRESENTATIONS AND WARRANTIES OF ITEC ITEC hereby represents and warrants to the Sellers as of the date hereof as follows: 5.1 Authority. ITEC has all requisite right, power and authority, without the consent of any other person or entity, to execute and deliver this Agreement and the agreements to be executed and delivered at Closing and to carry out the transactions contemplate hereby and thereby. All actions required to be taken by ITEC to authorize the execution, delivery and performance of this Agreement and all agreements and transactions contemplated hereby have been duly and properly taken. 5.2 Validity. This Agreement has been, and the agreements and other documents to be delivered at Closing by ITEC and will be, duly executed and delivered by ITEC and constitute valid and binding obligations of ITEC, enforceable in accordance with their respective terms. The execution and delivery of this Agreement and the other agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby do not and will not violate or conflict with any provision of, and do not and will not constitute a default under or a breach of (i) the Articles of Incorporation or Bylaws of ITEC, (ii) any contract, agreement or other instrument to which ITEC is a party, (iii) any order or judgment of any court or governmental agency or (iv) any law, rule or regulation applicable to ITEC. 5.3 Consents. No approval, authorization, registration, consent, order or other action of or filing with any person, including any court, administrative agency or other governmental authority is required for the execution and delivery by ITEC of this Agreement or the agreements contemplated hereby or the consummation of the transactions contemplated hereby and thereby. 5.4 Due Organization. ITEC is a corporation duly organized and validly existing under the laws of the State of Delaware, and has full corporate power and authority to carry on the business in which it is engaged. 5.5 ITEC Shares. The ITEC Shares to be issued pursuant to this Agreement have been duly authorized by all necessary corporate action of ITEC and when delivered hereunder will be validly issued, fully paid and nonassessable. The ITEC Shares will be issued pursuant to exemptions under the applicable federal and state securities laws. 5.6 Litigation. Except as set forth in Schedule 5.6, ITEC is not engaged in, or a party to, or to the best of its knowledge, threatened with, any suit, action, proceeding, or investigation or legal, administrative, arbitration or other method of settling disputes, which (if determined adversely to ITEC) would materially and adversely affect (i) the ability of ITEC to perform hereunder or under any other agreement, document or instrument required to be executed and delivered by ITEC in connection with the consummation of the transactions contemplated hereby or (ii) the ITEC Shares to be delivered pursuant to this Agreement, and ITEC neither knows, anticipates or has notice of any 10 basis for any such action. Except as set forth in Schedule 5.6, ITEC has not received notice of any investigation, suit or proceeding threatened or contemplated by any foreign, federal, state or local government or regulatory authority including, without limitation, those involving their respective employment notices or policies or compliance with environmental regulations, which would have a material adverse effect on ITEC. Except as set forth in Schedule 5.6, ITEC is not subject to any order, decree or judgment of any court or governmental agency or instrumentality, which would have a material adverse effect on ITEC. Except as set forth in Schedule 5.6, ITEC has not received notice of any adverse finding or determination in connection with any review conducted by any entity, commission, board or agency which would have a material adverse effect on ITEC. 5.7 Brokers. ITEC has not retained any broker or finder or incurred any liability or obligation for any brokerage fees, commissions or finder's fees with respect to this Agreement or the transactions contemplated hereby. 5.8 Financial Statements. The unaudited financial statements for ITEC as of September 30, 2000: (i) are attached hereto as Schedule 5.8 (the "ITEC Financial Statements"); (ii) are accurate, correct and complete; (iii) fairly present the financial condition and results of operations of ITEC as of the dates and for the periods indicated; and (iv) are prepared in accordance with GAAP except for (A) the fact that interim financial statements are subject to year-end adjustments and (B) any exceptions that may be indicated in the notes to such ITEC Financial Statements. ARTICLE VI ---------- COVENANTS Each Seller, ELB and ITEC, as applicable, hereby agrees to keep, perform and fully discharge the following covenants and agreements. 6.1 Continued Assistance. Each Seller shall cooperate in an orderly transfer of the EA Shares and the continuation of the Business by ITEC or its successor or assigns as described in this Section 6.1. From time to time, at ITEC's request and without further consideration, the Sellers shall execute, acknowledge and deliver such documents, instruments or assurances and take such other action as ITEC may reasonably request to more effectively assign, convey and transfer the EA Shares. In addition, ELB will honor its obligations under the Software License Agreement, a copy of which is attached hereto as Exhibit B, entered into contemporaneously with this Agreement and will provide any additional information regarding the Business not provided at Closing; provided, however, that the Parties agree that ITEC has the opportunity to hire the four (4) employees of ELB necessary to operate the Business. 6.2 Certain Payments. Each Seller shall promptly pay when due and fully discharge (i) any income, excise, employment, sales or use taxes imposed on such Seller as a result of the sale of its EA Shares to ITEC and (ii) any taxes of the State of California as a result of such transaction. 6.3 Confidentiality. After the Closing, except as may be required for tax purposes or other regulatory purposes or as an employee or officer of ELB, no Seller, nor any of their affiliates nor any of their respective successors and assigns shall (a) publish or disclose any document, database or 11 other media embodying any confidential or proprietary know-how which is used solely in the conduct of the Business to any third person or (b) use, publish or disclose any information concerning ITEC, its affiliates, the Assets, EA, the customers of EA, or the terms of this Agreement or any of the transactions contemplated thereby, except information which: (i) is or becomes generally available to the public or publicly known other than as a result of disclosure in breach of any obligation of confidentiality; (ii) is disclosed pursuant to the requirement of a governmental agency or court of competent jurisdiction or as otherwise required under applicable law (but only after notice of such required disclosure is first given to ITEC); (iii) is permitted to be disclosed or utilized in accordance with the terms of an agreement with ITEC or (iv) constitutes know-how retained by ELB for use in its continued operations, including consulting services involving its past, present and future clients and customers. Notwithstanding the foregoing, ELB shall have the right, acting on behalf of EduAdvantage, to notify any creditor of EduAdvantage regarding the pendency of this transaction if such notification is required by any agreement between EduAdvantage and such creditor. ELB shall, concurrently with notification of such creditor, deliver a copy of such notice to ITEC. 6.4 Conduct of Sellers. Between the date hereof and the Closing Date, no Seller shall: (a) Pledge, mortgage, encumber or subject to any lien or security interest the EA Shares; (b) offer (or entertain any offer) to sell or transfer all or any part of the EA Shares to any other person or entity; (c) enter into any material agreement relating to the EA Shares; or (d) enter into any agreement or commitment to do any of the foregoing. 6.5 Conduct of EA and the EA Board. Between the date hereof and the Closing Date, EA and the EA Board shall not permit the EA Articles of Incorporation to be amended to allow any EA Shareholder to: (a) Pledge, mortgage, encumber or subject to any lien or security interest the EA Shares; (b) offer (or entertain any offer) to sell or transfer all or any part of the EA Shares to any other person or entity; (c) enter into any material agreement relating to the EA Shares; or (d) enter into any agreement or commitment to do any of the foregoing. 6.6 Supplements. If any representation, warranty or statement of any Seller or ELB, 12 or any schedule delivered to ITEC shall become incorrect prior to the Closing Date, the Sellers or ELB, as applicable, shall promptly deliver to ITEC a supplement in order that said representation, warranty, statement, or schedule, as so supplemented, shall be true and correct. 6.7 Restrictions on Transfer. None of the Sellers have a present intention to dispose of the ITEC Shares, and each Seller further agrees that it will not directly or indirectly sell, assign, transfer, give, pledge, encumber or otherwise dispose of any interest in the EA Shares, as applicable, prior to the Closing Date and will not directly or indirectly sell, assign, transfer, give, pledge, encumber or otherwise dispose of any economic or other interest in the ITEC Shares acquired. 6.8 Conditions to Closing. Sellers, EA, and ITEC agree to use their commercially reasonable efforts to satisfy the Closing conditions set forth herein by December 7, 2000, or earlier if possible. 6.9 Affirmative Covenants of EA prior to Closing. From the date of this Agreement until Closing Date, EA shall: (a) Use commercial best efforts to preserve intact its business organization, licenses, permits, government programs, private programs and customers; (b) maintain all business development efforts, including without limitation, diligently pursuing business opportunities of the Business and preserving relationships with prospects of EA; and (c) perform in all material respects all obligations under agreements. 6.10 Negative Covenants of EA. From the date of this Agreement until the Closing Date, EA will not, without the prior written consent of ITEC, do any of the following: (a) Take any action which would (i) adversely affect the ability of any party hereto to obtain any consents required for the transactions contemplated thereby, or (ii) adversely affect the ability of any party hereto to perform its covenants and agreements; (b) make any distribution related to earnings any payment of cash to any shareholder of EA other than normal payments made in the ordinary course of business consistent with past practices; (c) impose on any material asset, or suffer the imposition on any material asset of, any lien or permit any such lien to exist; (d) sell, pledge or encumber, or enter into any contract to sell, pledge or encumber, any interest in the Assets; (e) purchase, lease or otherwise acquire any assets or properties, whether real or personal, tangible or intangible, or sell, lease or otherwise dispose of any assets or properties, whether real or personal, tangible or intangible, except in the ordinary course of business and consistent with past practices; 13 (f) grant any increase in compensation or benefits to the employees or officers; pay any severance or termination pay or any bonus other than pursuant to written policies or written contracts in effect as of the date hereof and disclosed on the schedules hereto, unless such action is first approved in writing by ITEC's Chief Executive Officer; (g) enter into or amend any employment contract (unless such amendment is required by law) that EA does not have the unconditional right to terminate without liability (other than liability for services already rendered), at any time on or after the Closing; (h) make any significant change in any tax or accounting methods or systems of internal accounting controls, except as may be appropriate to conform to changes in tax laws or regulatory accounting requirements or GAAP; (i) commence any litigation other than in accordance with past practice, settle any litigation involving any liability for material money damages or restrictions upon the Business; (j) except in the ordinary course of business and which is not material, modify, amend or terminate any material contract, or waive, release, compromise or assign any material rights or claims; (k) make or commit to make any capital expenditure, or enter into any lease of capital equipment as lessee or lessor; (l) take any action, or omit to take any action, which would cause any of the representations and warranties contained herein to be or become untrue or incorrect; or (m) make any loan to any person or increase the aggregate amount of any loan currently outstanding to any person that would be payable following the Closing. 6.11 Affirmative Covenants of ITEC prior to Closing. From the date of this Agreement until Closing Date, ITEC shall: (a) use commercial best efforts to preserve intact its business organization, licenses, permits, government programs, private programs and customers; 14 (b) maintain all business development efforts, including without limitation, diligently pursuing business opportunities of its business and preserving relationships with prospects of ITEC; and (c) perform in all material respects all obligations under agreements. 6.12 Negative Covenants of ITEC. From the date of this Agreement until the Closing Date, ITEC will not, without the prior written consent of EA, do any of the following: (a) Take any action which would (i) adversely affect the ability of any party hereto to obtain any consents required for the transactions contemplated thereby, or (ii) adversely affect the ability of any party hereto to perform its covenants and agreements; (b) impose, or suffer the imposition, on any material asset of any lien or permit any such lien to exist, in either case which would have a material adverse impact on ITEC; or (c) enter into any agreement or commitment to do any of the foregoing. 6.13 Covenants of ITEC after Closing. After Closing, ITEC agrees to do the following: (a) ITEC will contact each creditor of EduAdvantage to notify each such creditor of the change in ownership and use its commercially reasonable best efforts to pay or compromise the obligations of EA and EduAdvantage. ITEC further agrees to use its best efforts to obtain releases from each creditor not later than sixty (60) days after Closing and, to the extent ITEC obtains a release of liability from any creditor, ITEC shall ensure that such release names ELB, its affiliates, officers, directors, members and managers as a released party. ITEC and ELB further agree that money damages is inadequate to compensate ELB for a breach of this Section 6.13(a) and, accordingly, ELB shall have the right to seek specific performance of this Section 6.13(a) by requiring ITEC to cause EA and EduAdvantage to pay such creditors in full. (b) ITEC will use its commercially reasonable efforts to allocate working capital, including equity investment or credit facilities of not less than $1,000,000 during the one year period commencing at Closing. (c) ITEC will use its commercially reasonable efforts to cause Ingram Micro to cancel the personal guarantees, if any, of any of the current officers or Members of ELB. (d) ITEC will promptly notify Sellers of any proposed registration of common stock of ITEC, whether issued or proposed to be issued, and will use its commercially reasonable efforts, subject to the approval of the underwriters of any such registration and offering, to include the EA Shares delivered to Sellers in connection with this Agreement to be included in any such registration, other than the registrations to be filed for (i) the convertible debenture or (ii) the equity line of credit currently contemplated by ITEC. In addition to the foregoing, ITEC will, to the extent commercially reasonable, initiate such registration on or prior to June 1, 2001. 15 ARTICLE VII ----------- CONDITIONS PRECEDENT TO OBLIGATIONS OF ITEC Each and all of the obligations of ITEC to consummate the transactions contemplated by this Agreement are subject to fulfillment prior to or at the Closing of the following conditions: 7.1 Accuracy of Warranties and Performance of Covenants. The representations and warranties of the Sellers and EA contained herein shall be accurate in all respects as if made on and as of the Closing Date. The the Sellers and EA shall have performed all of the obligations and complied with each and all of the covenants, agreements and conditions required to be performed or complied with by any of them on or prior to the Closing Date 7.2 No Pending Action. No action, suit, proceeding or investigation before any court, administrative agency or other governmental authority shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated hereby, cause such transactions to be rescinded, or which might affect the right of ITEC or its affiliates to own, operate or control EA. 7.3 Condition of EA. EA shall not have been adversely affected in any way by any act of God, fire, flood, accident, war, labor disturbance, legislation, or other event or occurrence, whether or not covered by insurance, and there shall have been no change in the assets or the business of EA or EA's financial condition, properties or prospects, which would have a material adverse effect thereon. 7.4 Satisfaction of Counsel. All corporate and other actions and proceedings in connection with the transactions contemplated hereby and all documents incidental thereto, and all other related legal matters, shall be reasonably satisfactory in form and substance to counsel for ITEC, and ITEC shall have received all such resolutions, documents and instruments, or copies thereof, certified if requested, as its counsel shall have reasonably requested. 7.5 No Material Adverse Change. There shall have been no change, circumstance or occurrence that has had or would have a material adverse effect on the business, operations, properties, condition (financial or otherwise) or prospects of EA. ARTICLE VIII ------------ CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS Each and all of the obligations of the Sellers and EA to consummate the transactions contemplated by this Agreement are subject to fulfillment prior to or at the Closing of the following conditions: 16 8.1 Accuracy of Warranties and Performance of Covenants. The representations and warranties of ITEC contained herein shall be accurate in all respects as if made on and as of the Closing Date. ITEC shall have performed all of the obligations and complied with each and all of the covenants, agreements and conditions required to be performed or complied with, on or prior to Closing Date. 8.2 No Pending Action. No action, suit, proceeding or investigation before any court, administrative agency or other governmental authority shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated hereby or cause such transactions to be rescinded. 8.3 Satisfaction of Counsel. All corporate and other actions and proceedings in connection with the transactions contemplated hereby and all documents incidental thereto, and all other related legal matters, shall be reasonably satisfactory in form and substance to counsel for Sellers, and the Sellers shall have received all such resolutions, documents and instruments, or copies thereof, certified if requested, as its counsel shall have reasonably requested. 8.4 Approval of Sale and Merger. The Members of ELB and the shareholders of EA shall have approved by the requisite vote the Sellers' sale of the EA Shares as contemplated by Article I. ARTICLE IX ---------- SURVIVAL AND INDEMNIFICATION 9.1 Survival. All representations, warranties, covenants and agreements contained in this Agreement or in any document delivered pursuant hereto shall be deemed to be material and to have been relied upon by the parties hereto. All representations and warranties contained in this Agreement shall survive the Closing for the applicable statute of limitations period, and all representations, warranties and covenants to be made or performed after the Closing shall survive the Closing until made or performed and for the applicable statute of limitations period after their due date. The indemnity obligations of each party to this Agreement shall terminate (absent fraud or intentional misrepresentation) one year from the Closing Date. Any claim for indemnification that is asserted within one year of the Closing Date shall survive until resolved or judicially determined. The representations and warranties contained in this Agreement shall not be affected by any investigation, verification or examination by any party hereto or by anyone on behalf of any such party. 17 9.2 Indemnification. (a) By the Sellers and ELB. (i) Individual Sellers. Each Individual Seller, jointly and severally, shall hold harmless and defend ITEC and its successors and assigns from and against any and all Claims related to, caused by or arising from (A) any misrepresentation or breach of warranty set forth in Article IV or failure to fulfill any covenant or agreement of Individual Sellers set forth in this Agreement, or any other misrepresentation, breach of warranty or failure to fulfill a covenant or agreement by the Individual Sellers contained in any agreement or other document delivered pursuant hereto, or (B) any and all Claims of third parties made based upon facts alleged that, if true, would have constituted such a misrepresentation, breach or failure. (ii) ELB. ELB shall hold harmless and defend ITEC and its successors and assigns from and against any and all Claims related to, caused by or arising from (A) any misrepresentation or breach of warranty set forth in this Agreement or failure to fulfill any covenant or agreement of ELB set forth in this Agreement, or any other misrepresentation, breach of warranty or failure to fulfill a covenant or agreement by ELB contained in any agreement or other document delivered pursuant hereto, or (B) any and all Claims of third parties made based upon facts alleged that, if true, would have constituted such a misrepresentation, breach or failure. (b) By ITEC. ITEC shall indemnify, hold harmless and defend each Seller, and their representatives, officers, members, managers, directors, affiliates, successors and assigns, from and against any and all Claims related to, caused by or arising from (i) any misrepresentation, breach of warranty or failure to fulfill any covenant or agreement of ITEC contained herein or in any agreement or other document delivered pursuant hereto, or (ii) any and all Claims of third parties made based upon facts alleged that, if true, would constitute such a misrepresentation, breach or failure. ITEC's obligations under this Section 9.2(b) shall include the express obligation to pay on behalf of EduAdvantage, or cause EduAdvantage to pay the obligations of EduAdvantage as of Closing. (c) Notice of Claim. The party seeking indemnification under this Article IX (the "Indemnified Party") shall give prompt written notice to the indemnifying party (the "Indemnifying Party") of the facts and circumstances giving rise to any Claim, provided, however, that an Indemnified Party's failure to give such notice shall not impair or otherwise affect such Indemnified Party's right to indemnification except to the extent that the Indemnifying Party demonstrates actual damage caused by such failure. All rights contained in this Article IX are cumulative and are in addition to all other rights and remedies which are otherwise available, pursuant to the terms of this Agreement or applicable law. All indemnification rights shall be deemed to apply in favor of the indemnified party's officers, directors, representatives, subsidiaries, affiliates, successors and assigns. 9.3 Defense Against Asserted Claims. The Indemnified Party shall not settle or compromise any Claim by a third party for which the Indemnified Party is entitled to indemnification hereunder without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld), unless legal action shall have been instituted against 18 the Indemnified Party and the Indemnifying Party shall not have taken control of such suit within fifteen (15) days after notification thereof as provided herein. In connection with any Claim giving rise to indemnification hereunder resulting from or arising out of any Claim by a person other than the Indemnified Party, the Indemnifying Party shall, upon written notice to the Indemnified Party, assume the defense of any such Claim without prejudice to the right of the Indemnifying Party thereafter to contest its obligation to indemnify the Indemnified Party in respect to the claims asserted therein. If the Indemnifying Party assumes the defense of any such Claim, the Indemnifying Party shall select counsel to conduct the defense in such Claims and at its sole cost and expense shall take all steps necessary in the defense or settlement thereof. The Indemnifying Party shall not consent to a settlement of, or the entry of any judgment arising from, any Claim, without the prior written consent of the Indemnified Party, unless the Indemnifying Party admits in writing its liability to hold the Indemnified Party harmless from and against any losses, damages, expenses and liabilities arising out of such settlement. The Indemnified Party shall be entitled to participate in the defense of any such action with its own counsel and at its own expense. If the Indemnifying Party does not assume the defense of any such Claim resulting therefrom in accordance with the terms hereof, the Indemnified Party may defend such Claim in such a manner as it may deem appropriate, including settling such Claim after giving notice of the same to the Indemnifying Party on such terms as the Indemnified Party may deem appropriate, and in any action by the Indemnified Party seeking indemnification from the Indemnifying Party in accordance with the provisions of this Section, the Indemnifying Party shall not be entitled to question the manner in which the Indemnified Party defended such Claim or the amount or nature of any such settlement. In the event of a Claim by a third party, the Indemnified Party shall cooperate with the Indemnifying Party in the defense of such action (including making a personal contact with the third party if deemed beneficial) and the relevant records of party shall be made available on a timely basis. ARTICLE X --------- GENERAL PROVISIONS 10.1 Amendments and Waiver. No amendment, waiver or consent with respect to any provision of this Agreement shall in any event be effective, unless the same shall be in writing and signed by the parties hereto and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given. 10.2 Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be delivered in person or sent by overnight courier or by first class prepaid certified mail to the addresses set forth on Schedule 10.2: (a) Any party may change its address for receiving notice by written notice given to the others named on Schedule 10.2. Overnight notices shall be deemed given on the day of scheduled delivery and mailed notices shall be deemed given three (3) business days after the date of mailing. 10.3 Expenses. Each party to this Agreement shall pay its own costs and expenses in connection with the transactions contemplated hereby. If any action is brought by any party to 19 enforce any provision of this Agreement, the prevailing party shall be entitled to recover court costs and reasonable attorneys' fees from the non-prevailing party. 10.4 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10.5 Benefit. This Agreement shall bind and inure to the benefit of the parties named herein and their respective successors and assigns. No party hereto may assign any rights, benefits, duties or obligations under this Agreement without the prior written consent of the other parties. 10.6 Entire Transaction. This Agreement and the exhibits, schedules and other documents referred to herein contain the entire understanding among the parties with respect to the transactions contemplated hereby and supersede all other agreements, understandings and undertakings among the parties with respect to the subject matter hereof. 10.7. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal substantive laws of the State of California, without regard to conflicts of laws principles. 10.8 Waiver. Any party's lack of enforcement of any provision of this Agreement shall not be construed as a waiver of any such provision and the nonbreaching party may elect to enforce any such provision in the event of past, repeated or continuing breach. No waiver in one or more instances of any of the provisions of this Agreement shall be deemed a continuing waiver or a waiver of any other provision. 10.9 Other Rules of Construction. References in this Agreement to sections, schedules and exhibits are to sections of, and schedules and exhibits to, this Agreement unless otherwise indicated. Words in the singular include the plural and in the plural include the singular and all words in any gender shall extend to and include all genders. The word "or" is not exclusive. The word "including" shall mean "including, without limitation". The section and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 10.10 Announcements. ITEC shall be entitled to notify suppliers, clients, investors, governmental agencies and others of the completion of the transactions contemplated by this Agreement. If requested by ITEC, Sellers shall reasonably (a) assist ITEC in communicating with suppliers and clients, and (b) jointly issue a statement, mailing or press release with ITEC. 10.11 Partial Invalidity. In the event that any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 10.12 Termination. This Agreement may be terminated at any time prior to the Closing: (a) by mutual consent of the Sellers, EA and ITEC; 20 (b) by the Sellers, on the one hand, or ITEC, on the other hand, if there has been a material misrepresentation or material breach on the part of ITEC, on the one hand, or the Sellers, on the other hand, in their respective representations, warranties, or agreements set forth in this Agreement; or (c) by the Sellers, on the one hand, or ITEC, on the other hand, if any of the conditions precedent to closing of such terminating party has not been fulfilled through no fault of the terminating party (and such terminating party has not elected to waive such condition precedent) on or before December 8, 2000. Termination of this Agreement shall not serve to relieve any party of any responsibility or obligation for any breach of this Agreement occurring prior to such termination. [SIGNATURES FOLLOW ON NEXT PAGE] -------------------------------- 21 IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly and validly executed all as of the date first written above. ELB GROUP, LLC EDUADVANTAGE.COM, INC. By: __________________________ By: __________________________ Name:_________________________ Name:_________________________ Title:________________________ Title:________________________ ITEC, INC. ROBERT MARKS By: __________________________ By: __________________________ Name:_________________________ Name:_________________________ Title:________________________ Title:________________________ BET TRUST CARL PERKINS By:_________________________________ ______________________________ Trustee - ---------------------------------------- Brent H. Coeur- Barron, as Escrow Agent 22 EXHIBITS -------- A Sellers' Investor's Representation Agreement B Software License Agreement EX-23 9 ex23.txt CONSENT OF BOROS & FARRINGTON APC EXHIBIT 23 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the incorporation by reference in this Pre-Effective Amendment No. 1 to Registration Statement on Form S-2 of Imaging Technologies Corporation of our report dated October 10, 2000, which appears on Page F-1 of Form 10-K for the year ended June 30, 2000, and to the reference to our firm under the caption "Experts" in the Prospectus. /s/ Boros & Farrington APC - -------------------------- BOROS & FARRINGTON APC San Diego, California April 30, 2001 -----END PRIVACY-ENHANCED MESSAGE-----