IMAGING TECHNOLOGIES CORPORATION AND SUBSIDIARIES
EXHIBIT 10(C)
SHARE PURCHASE AGREEMENT
DATED DECEMBER 1, 2000
BY AND BETWEEN
ELB XXXXX.XXX, LLC
AND
XXXXXX XXXXX
AND
BET TRUST
AND
XXXX XXXXXXX
AND
XXXXXXXXXXXX.XXX, INC.
AND
XXXXX X. COEUR-XXXXXX, AS ESCROW AGENT
AND
IMAGING TECHNOLOGIES CORPORATION
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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"), XXXXXX XXXXX ("Marks"), BET TRUST ("BET"),
XXXX XXXXXXX ("Xxxxxxx"), and Xxxxx X. Coeur-Xxxxxx, as Escrow Agent ("Escrow
Agent")(Marks, BET Trust, Xxxxxxx, and Escrow Agent are sometimes referred to as
an "Individual Seller" and, collectively with ELB are sometimes referred to as
"Sellers"), XXXXXXXXXXXX.XXX, INC., a California corporation ("EA"), and IMAGING
TECHNOLOGIES CORPORATION, a Delaware corporation ("ITEC").
RECITALS
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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, Xxxxxxx 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:
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,
XxxXxxxxxxxx.xxx, 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:
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(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.
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.
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;
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(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
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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 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.
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(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.
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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.
(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.
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 ("XxxXxxxxxxxx.xxx" and "xxxx0x.xxx"), 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
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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, Xxxxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxxx 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").
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 Xxxx Xxxxxxx, 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 Xxxx Xxxxxxx has been completely and finally
satisfied by the issuance of EA shares to Xxxx Xxxxxxx 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.
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ARTICLE IV
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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 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. Xxxxxxx owns 500,000 EA Shares.
Escrow Agent holds for the benefit of Xxxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxxx
Labrouve and Xxxxx Xxxxxx 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.
ARTICLE V
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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.
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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 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
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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 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
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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, 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;
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(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;
(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;
(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
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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
Xxxxxx 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.
ARTICLE VII
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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:
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
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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
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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.
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.
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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 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 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.
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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;
(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.
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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 XXXXXXXXXXXX.XXX, INC.
By: _____________________________
By: ________________________________
Name:____________________________
Name:________________________________
Title:___________________________
Title:_______________________________
XXXXXX XXXXX
ITEC, INC.
By: _________________________________
-------------------------------
Name:________________________________
Title: _____________________________
XXXX XXXXXXX
BET TRUST
-------------------------------
By:_________________________________
Trustee
---------------------------------------
Xxxxx X. Coeur- Xxxxxx, as Escrow Agent
14
EXHIBITS
A Sellers' Investor's Representation Agreement
SCHEDULES
3.3(b) Disclosure of EA Ownership Interests; Officers and Managers of EA3.4 Consents
3.5(a) EA Unaudited Interim Financial Statements
3.5(b) EA Liabilities
3.7 EA Interim Changes
3.8 EA Assets
3.9 ELB Lease for Office Premises
3.10 EA Leased Assets
3.11 EA Proprietary Information
3.14 EA Litigation
3.16 EA AR Aging Schedule
5.6 ITEC Litigation
5.8 ITEC Financial Statements
10.2 Notice Addresses
15
