EXHIBIT 10(Y)
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT ("Agreement"), dated as of May 17, 2002, is by and
among Imaging Technologies Corporation, a corporation organized under the laws
of the State of Delaware, U.S.A. ("ITEC" or "Buyer"), on the one hand; Dream
Canvas, Inc. (the "Seller"); and its parent corporation, Value Creation, Inc.
("VCI"), both corporations organized under the laws of Japan.
Buyer, Seller, and Company may be referred to collectively as the "Parties."
R E C I T A L S
A. Whereas, all of the issued and outstanding capital stock ("Shares) of Dream
Canvas Technology, Inc. ("DCT" or the "Company") are held by Seller; and
B. Whereas, upon the terms and conditions set forth below, Seller desires to
sell and Buyer desires to purchase all of the Shares, such that, following such
transaction, the Company will be a 100% owned subsidiary of Buyer;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the Parties hereto
agree as follows:
ARTICLE 1
SALE AND PURCHASE OF THE SHARES
1.1 Sale of the Shares. Subject to the terms and conditions herein set forth,
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and on the basis of the representations, warranties and agreements herein
contained, Seller shall sell and transfer to Buyer the Shares.
1.2 Consideration. Buyer shall issue to the Seller two million (2,000,000)
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shares of ITEC common stock. The ITEC common stock will be duly and validly
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issued, fully paid, and non-assessable and will not be registered for sale to
the public with the U.S. Securities and Exchange Commission (the "SEC"). A
certificate representing the ITEC common stock shall be delivered to the Seller
within seven (7) business days after the issuance becomes due. The Seller shall
deliver to the Buyer at the Closing, as defined herein, a certificate
representing the Shares. The consideration payable under this section 1.2
collectively constitutes the "Purchase Price".
1.2.2 Rule 144 Reporting. With a view to making available to the Sellers the
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benefits of certain rules and regulations of the SEC that may permit the sale of
the common stock to the public without registration, ITEC agrees to use its best
efforts to (a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144; and (b) file with the SEC in a timely
manner all reports and other documents required of ITEC under the Securities
Exchange Act of 1934, as amended.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
For purposes of this Agreement, the term "Material Adverse Effect" means any
change or effect that is or is reasonably likely to be materially adverse to the
business, assets (including tangible assets), financial condition, or results of
operations of the entity. Except as disclosed in a document referring
specifically to the representations and warranties in this Agreement that
identifies by section number the section and subsection to which such disclosure
relates and is delivered by the Party making the representations and warranties
to the others prior to the execution of this Agreement (the "Disclosure
Schedules"), the Parties represent and warrant as of the date hereof and as of
the Closing, as follows:
2.1 Representations and Warranties of Buyer. Buyer represents and warrants to
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the Seller that:
2.1.1 Organization, Standing, Power. Buyer is a corporation organized and in
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good standing in the State of Delaware, U.S.A., with all requisite power,
franchises, licenses, permits, and authority to own its properties and assets
and to carry on its business as it has been and is being conducted. Buyer is
duly qualified and in good standing to do business in each jurisdiction in which
a failure to so qualify would have a Material Adverse Effect on Buyer.
2.1.2 Authority. The Buyer has all requisite power and authority to enter into
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this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery by the Buyer of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Buyer. This Agreement has been duly executed and
delivered by the Buyer to the Seller and constitutes a valid and binding
obligation of the Buyer enforceable in accordance with its terms, except that
such enforceability may be subject to: (a) bankruptcy, insolvency,
reorganization, or other similar laws relating to enforcement of creditors'
rights generally; and (b) general equitable principles. Subject to the
satisfaction of the conditions set forth in Article 3 below, the execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby will not, conflict with or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation, or acceleration of any obligation, or
to loss of a material benefit under, or the creation of a lien, pledge, security
interest, charge, or other encumbrance on any assets of either the Company or
Seller (any such conflict, violation, default, right, loss, or creation being
referred to herein as a "Violation") pursuant to any loan or credit agreement,
note, bond, mortgage, indenture, contract, lease, or other agreement, or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule, or regulation applicable to Buyer's respective
properties or assets, other than in the case of any such Violation which
individually or in the aggregate would not have a Material Adverse Effect on the
Buyer.
2.2 Representations and Warranties of the Seller and VCI. Seller and VCI
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represent and warrant to the Buyer that:
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2.2.1 Organization, Standing, Power. The Company is a corporation duly
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organized, validly existing, and in good standing under the laws of Japan. It
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has all requisite corporate power, franchises, licenses, permits, and authority
to own its properties and assets and to carry on its business as it has been and
is being conducted. The Company is duly qualified and in good standing to do
business in each jurisdiction in which a failure to so qualify would have a
Material Adverse Effect on the Company. The Company was formed in June 2002.
The Seller is the sole shareholder of the Company. The Seller has transferred
to the Company all of the assets, facilities, bank accounts and banking
relationships, and all other items that Seller utilized in conducting the
business described in Exhibit A hereto; and, in so doing, has fully equipped the
Company to continue in such business operations. All employees necessary for
the continued conduct of such business operations have become employees of the
Company. All required benefit plans have been implemented for such employees.
2.2.2 Authority. The Seller and VCI have all requisite power and authority to
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enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by the Seller and VCI of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the parts of the Seller and VCI. This
Agreement has been duly executed and delivered by the Seller and VCI to Buyer
and constitutes a valid and binding obligation of the Seller and VCI,
enforceable in accordance with its terms, except that such enforceability may be
subject to: (a) bankruptcy, insolvency, reorganization, or other similar laws
relating to enforcement of creditors' rights generally; and (b) general
equitable principles.
2.2.3 Capitalization of the Company.
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(a) All of the capital stock of the Company that is currently issued and
outstanding is held by Seller.
(b) There are no options, warrants, rights, calls, commitments, plans,
contracts, or other agreements of any character granted or issued by the
Company, by Seller, or by VCI which provide for the purchase, issuance, or
transfer of any additional shares of the capital stock of the Company, nor are
there any outstanding securities granted or issued by the Company, or by Seller,
or by VCI that are convertible into any shares of the equity securities of the
Company, and none is authorized. There are no outstanding bonds, debentures,
notes, or other indebtedness the holders of which have the right to vote (or
convertible or exercisable into securities having the right to vote) with
holders of the Company's capital stock on any matter.
(c) None of the Company, or Seller or VCI is a party or subject to any agreement
or understanding, and, to the best of their knowledge, there is no agreement or
understanding between any persons and/or entities, which affects or relates to
the voting or giving of written consents with respect to any security or by a
shareholder or director of the Company.
(d) None of the Company, or Seller or VCI has granted or agreed to grant any
stock registration rights to any person or entity.
2.2.4 Subsidiaries. There are no Subsidiaries of the Company. "Subsidiary" or
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"Subsidiaries" means all corporations, trusts, partnerships, associations, joint
ventures, or other Person of which the Company or any Subsidiary of the Company
owns not less than twenty percent (20%) of the voting securities or other equity
or of which the Company or any Subsidiary of the Company possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies, whether through ownership of voting shares, management contracts, or
otherwise.
2.2.5 No Defaults. The Company has not received notice that it would be, with
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the passage of time, in default or violation of any term, condition, or
provision of: (i) their Articles of Incorporation or Bylaws; (ii) any judgment,
decree, or order applicable to the Company; or (iii) any loan or credit
agreement, note, bond, mortgage, indenture, contract, agreement, lease, license,
or other instrument to which the Company is now a party or by which it or any of
its properties or assets may be bound, except for defaults and violations which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
2.2.6 Financial Statements. The Company has furnished Buyer with a true and
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complete copy of its internal financial statements (the "Financial Statements"),
which comply as to form in all material respects with all applicable accounting
requirements with respect thereto and fairly present the financial positions and
known liabilities of the Company as at the dates thereof and the results of its
operations and cash flows for the periods then ended. There has been no change
in the Company's accounting policies or the methods of making accounting
estimates or changes in estimates that are material to the Financial Statements,
except as described in the notes thereto.
2.2.7 Absence of Undisclosed Liabilities. The Company has no liabilities or
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obligations (whether absolute, accrued, or contingent) except: (i) liabilities
that are accrued or fully and completely reserved against in its Balance Sheets;
or (ii) additional liabilities reserved against since its inception that have
arisen in the ordinary course of business, are accrued or reserved against its
books and records, and that have been disclosed to Buyer.
2.2.8 Absence of Changes. Since inception, the Company has conducted its
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business in the ordinary course and there has not been: (i) any Material Adverse
Effect on the business, financial condition, liabilities, or assets of the
Company or any development or combination of developments of which management of
the Company has knowledge which is reasonably likely to result in such an
effect; (ii) any damage, destruction, or loss, whether or not covered by
insurance, having a Material Adverse Effect on the Company; (iii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock, or property) with respect to the capital stock of the
Company; (iv) any increase or change in the compensation or benefits payable or
to become payable by the Company to any of its employees, except in the ordinary
course of business consistent with past practice; (v) any sale, lease,
assignment, disposition, or abandonment of a material amount of property of the
Company, except in the ordinary course of business; (vi) any increase or
modification in any bonus, pension, insurance, or other employee benefit plan,
payment, or arrangement made to, for, or with any of their employees; (vii) the
granting of stock options, restricted stock awards, stock bonuses, stock
appreciation rights, and similar equity based awards; (viii) any resignation or
termination of employment of any officer of the Company; and the Company does
not know of the impending resignation or termination of employment of any such
officer; (ix) any merger or consolidation with another entity, or acquisition of
assets from another entity except in the ordinary course of business; (x) any
loan or advance by the Company to any person or entity, or guaranty by the
Company of any loan or advance; (xi) any amendment or termination of any
contract, agreement, or license to which the Company is a party, except in the
ordinary course of business; (xii) any mortgage, pledge, or other encumbrance of
any asset of the Company; (xiii) any waiver or release of any right or claim of
the Company, except in the ordinary course of business; (xiv) any write off as
uncollectible any note or account receivable or portion thereof; or (xv) any
agreement by the Company to do any of the things described in this Section
2.3.5.
2.2.9 Patents and Trademarks. The Company has sufficient title and ownership of
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all patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights, and processes (collectively, "Intellectual
Property") necessary for its businesses as now conducted without any conflict
with or infringement of the rights of others. The Intellectual Property owned
by the Company is listed in the Disclosure Schedules. There are no outstanding
options, licenses, or agreements of any kind relating to the Intellectual
Property, nor is the Company bound by or a party to any options, licenses, or
agreements of any kind with respect to the Intellectual Property of any other
person or entity. The Company has not received any communications alleging that
it has violated or, by conducting its business as proposed, would violate any of
the Intellectual Property of any other person or entity. The Company is not
aware that any of the Company's employees is obligated under any contract
(including licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted. Neither the execution or
delivery of this Agreement, nor the carrying on of the Company's business by its
employees, nor the conduct of the Company's business as proposed, will, to the
best of the Seller's and Company' knowledge, conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
contract, covenant, or instrument under which any of such employees is now
obligated. The Company does believe that it is or will be necessary to utilize
any inventions of any of the Company's employees (or people it currently intends
to hire) made prior to their employment by the Company.
2.2.10 Compliance with Other Instruments. The Company is not in violation or
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default of any provision of its certificate of incorporation or bylaws, or of
any instrument, judgment, order, writ, decree, or contract to which it is a
party or by which it is bound, or of any provision of any statute, rule, or
regulation which may be applicable to Company.
Subject to the satisfaction of the conditions set forth in Article 3 below, the
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation, revocation,
non-renewal or acceleration of any obligation, material permit, license, and
authorization or to loss of a material benefit under, or the creation of a lien,
pledge, security interest, charge, or other encumbrance on any assets of the
Company, the Seller or VCI (any such conflict, violation, default, right, loss,
or creation being referred to herein as a "Violation") pursuant to: (i) any
provision of the organizational documents of the Company; or (ii) any loan or
credit agreement, note, bond, mortgage, indenture, contract, lease, or other
agreement, or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule, or regulation applicable to each
of the Company and Seller's respective properties or assets, other than in the
case of any such Violation which individually or in the aggregate would not
have a Material Adverse Effect on either the Company or the Seller.
2.2.11 Employee Benefit Plans. There are no employee benefit plans (including
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without limitation all plans which authorize the granting of stock options,
restricted stock, stock bonuses, or other equity based awards) covering active,
former, or returned employees of the Company.
2.2.12 Other Personal Property. The books and records of the Company contain a
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complete and accurate description, and specify the location, of all trucks,
automobiles, machinery, equipment, furniture, supplies, and other tangible
personal property owned by, in the possession of, or used by the Company in
connection with its business. No personal property used by the Company in
connection with its business is held under any lease, security agreement,
conditional sales contract, or other title retention or security arrangement.
2.2.13 Properties and Liens. The Company owns, free and clear of any liens,
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claims, charges, options, or other encumbrances, all of its tangible and
intangible property, real and personal, whether or not reflected in the
Financial Statements (except that sold or disposed of in the ordinary course of
business since the date of such statements) and all such property acquired since
the date of such statements. All real property and tangible personal property
of the Company is in good operating condition and repair, ordinary wear and tear
excepted.
2.2.14 Inventory. The inventories of the Company shown on the Financial
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Statements and inventories acquired by it subsequent to the date of the
Financial Statements consist solely of items of a quality and quantity usable
and salable in the normal course of business, with the exception of obsolete
materials and materials below standard quality, all of which have been written
down in the books of the Company to net realizable market value or have been
provided for by adequate reserves. Except for sales made in the ordinary course
of business, all inventory is the property of the Company. No items are subject
to security interests, except as set forth in the Disclosure Schedules. The
value of the inventories has been determined on a first-in, first-out basis
consistent with prior years.
2.2.15 Major Contracts. The Company is not a party or subject to:
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(a) Any union contract, or any employment contract or arrangement providing for
future compensation, written or oral, with any officer, consultant, director, or
employee which is not terminable by the Company on 30 days' notice or less
without penalty or obligations to make payments related to such termination;
(b) Any joint venture contract, partnership agreement or arrangement or any
other agreement which has involved or is expected to involve a sharing of
revenues with other persons or a joint development of products with other
persons;
(c) Any manufacture, production, distribution, sales, franchise, marketing, or
license agreement, or arrangement by which products or services of the Company
are developed, sold, or distributed;
(d) Any material agreement, license, franchise, permit, indenture, or
authorization which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, accelerated, terminated, impaired, or
adversely affected by reason of the execution of this Agreement, or the
consummation of the transactions contemplated hereby or thereby;
(e) Any material agreement, contract, or commitment that requires the consent of
another person for the Company to enter into or consummate the transactions
contemplated by this Agreement;
(f) Except for object code license agreements for the Company executed in the
ordinary course of business, any indemnification by the Company with respect to
infringements of proprietary rights; or
(g) Any contract containing covenants purporting to materially limit the
Company's freedom to compete in any line of business in any geographic area.
2.2.16 Questionable Payments. Neither the Company nor any director, officer,
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employee, or agent of the Company, has: (i) made any payment or provided
services or other favors in any country in order to obtain preferential
treatment or consideration by any governmental entity with respect to any aspect
of the business of the Company; or (ii) made any political contributions that
would not be lawful under the laws of any country or any jurisdiction within any
country. Neither the Company, nor any director, officer, employee, or agent of
the Company, has been or is the subject of any investigation by any governmental
entity in connection with any such payment, provision of services, or
contribution.
2.2.17 Leases in Effect. All real property leases and subleases as to which the
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Company is a party and any amendments or modifications thereof (each a "Lease"
and, collectively, the "Leases") are listed in the Disclosure Schedules and are
valid, in full force and effect and enforceable, and there are no existing
defaults on the part of the Company and the Company has received nor given
notice of default or claimed default with respect to any Lease, nor is there any
event that with notice or lapse of time, or both, would constitute a default
thereunder. Except as set forth on the Disclosure Schedules, no consent is
required from the Company under any Lease in connection with the completion of
the transactions contemplated by this Agreement, and the Company has not
received notice that any party to any Lease intends to cancel, terminate, or
refuse to renew the same or to exercise any option or other right thereunder,
except where the failure to receive such consent, or where such cancellation,
termination, or refusal would not have a Material Adverse Effect on the Company.
2.2.18 Taxes.
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(a) All taxes, assessments, fees, penalties, interest, and other governmental
charges with respect to the Company which have become due and payable since
inception, or with respect to the Seller in connection with the business
operations of the Company, have been paid in full or adequately reserved against
by the Company, and all taxes, assessments, fees, penalties, interest, and other
governmental charges which have become due and payable have been paid in full or
adequately reserved against on its books of account and such books are
sufficient for the payment of all unpaid taxes, fees, and assessments, and all
interest and penalties thereon with respect to the periods then ended and for
all periods prior thereto;
(b) There are no agreements, waivers, or other arrangements providing for an
extension of time with respect to the assessment of any tax or deficiency
against the Company, nor are there any actions, suits, proceedings,
investigations, or claims now pending against the Company in respect of any tax
or assessment, or any matters under discussion with any authority relating to
any taxes or assessments, or any claims for additional taxes or assessments
asserted by any such authority; and
(c) There are no liens for taxes upon the assets of the Company except for taxes
that are not yet payable. The Company has withheld all taxes required to be
withheld in respect of wages, salaries, and other payments to all employees,
officers, and directors and timely paid all such amounts withheld to the proper
taxing authority.
2.2.19 Disputes and Litigation. There is no suit, claim, action, litigation, or
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proceeding pending or threatened against or affecting the Company or any of its
properties, assets, or business or to which the Company is a party, in any court
or before any arbitrator of any kind or before or by any governmental entity,
which would, if adversely determined, individually or in the aggregate, have a
Material Adverse Effect on the Company, nor is there any judgment, decree,
injunction, rule, or order of any governmental entity or arbitrator outstanding
against the Company, respectively, and having, or which, insofar as reasonably
can be foreseen, in the future could have, any such effect. There is no
investigation pending or threatened against any of the Company before any
governmental department, commission, board, bureau, agency, instrumentality, or
other governmental entity.
2.2.20 Compliance with Laws. The Company's business is not being conducted in
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violation of, or in a manner which could cause liability under any applicable
law, rule, or regulation, judgment, decree, or order of any governmental entity,
except for any violations or practices, which, individually or in the aggregate,
have not had and will not have a Material Adverse Effect on the Company. The
Company has all franchises, permits, licenses, and any similar authority
necessary for the conduct of its business as now being conducted by it, the lack
of which could materially and adversely affect the business, properties,
prospects, or financial condition of the Company and believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as it is planned to be conducted. The Company is not in default in any
material respect under any of such franchises, permits, licenses, or other
similar authority. A true and complete list of all such franchises, permits,
and licenses held by the Company is set forth in the Disclosure Schedules.
2.2.21 Insurance. The Company has or shall obtain fire and casualty insurance
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policies, with extended coverage, sufficient in amount (subject to reasonable
deductibles) to allow it to replace any of its properties that might be damaged
or destroyed within 45 days of the execution of this Agreement.
2.2.22 Minute Books. The minute books of the Company provided to Buyer contain
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a complete summary of all meetings of directors and shareholders since the time
of incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.
2.2.23 Governmental Consents. Any consents, approvals, orders, or
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authorizations of or registrations, qualifications, designations, declarations,
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or filings with or exemptions by (collectively "Consents"), any court,
administrative agency, or commission, or other governmental authority or
instrumentality which may be required by or with respect to the Company in
connection with the execution and delivery of this Agreement or the consummation
by the Company of the transactions contemplated hereby, except for such Consents
which if not obtained or made would not have a Material Adverse Effect on the
Company for the transactions contemplated by this Agreement, are the
responsibility of the Company. The Company hereby represents and warrants that
such Consents have been obtained by them.
2.2.24 Certain Agreements. Neither the execution and delivery of this Agreement
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nor the consummation of the transactions contemplated hereby will: (i) result in
any payment (including, without limitation, severance, unemployment
compensation, parachute payment, bonus, or otherwise), becoming due to any
director, employee, or independent contractor of the Company, from any other
Person under any agreement or otherwise; (ii) materially increase any benefits
otherwise payable under any agreement; or (iii) result in the acceleration of
the time of payment or vesting of any such benefits.
2.2.25 Recent Transactions. Neither the Company nor any director, officer,
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employee, or agent of the Company, is participating in any discussions or
intends to engage in any discussion: (i) with any representative of any
corporation or corporations regarding the consolidation or merger of the Company
with or into any such corporation or corporations; (ii) with any corporation,
partnership, association, or other business entity or any individual regarding
the sale, conveyance, or disposition of all or substantially all of the assets
of the Company or a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company is disposed of; or
(iii) regarding any other form of acquisition, liquidation, dissolution, or
winding up of the Company.
2.2.26 Related Party Transactions. No employee, officer, or director of the
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Company, the Seller or VCI, nor member of his or her immediate family is
indebted to the Company, nor is the Company indebted (or committed to make loans
or extend or guarantee credit) to any of them. None of such persons has any
direct or indirect ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business relationship, or
any firm or corporation that competes with the Company, except that employees,
officers, or directors of the Company, the Seller and VCI and members of their
immediate families may own stock in publicly traded companies that may compete
with the Company. No member of the immediate family of any officer or director
of the Company, the Seller and VCI is directly or indirectly interested in any
material contract with the Company.
2.2.27 Disclosure. To the extent it would have a Material Adverse Effect, no
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representation or warranty made by the Seller or VCI in this Agreement, nor any
document, written information, statement, financial statement, certificate, or
exhibit prepared and furnished or to be prepared and furnished by the Company,
the Seller or VCI or its representatives pursuant hereto or in connection with
the transactions contemplated hereby, when taken together, contains any untrue
statement of a material fact, or omits to state a material fact necessary to
make the statements or facts contained herein or therein not misleading in light
of the circumstances under which it were furnished.
2.3 Reliance. The foregoing representations and warranties are made by each
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Party with the knowledge and expectation that the Parties are placing reliance
thereon.
ARTICLE 3
CONDITIONS PRECEDENT
3.1 Conditions to Each Party's Obligations. The respective obligations of each
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Party hereunder shall be subject to the satisfaction prior to or at the Closing
of the following conditions:
(a) No Restraints. No statute, rule, regulation, order, decree, or injunction
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shall have been enacted, entered, promulgated, or enforced by any court or
governmental entity of competent jurisdiction, which enjoins or prohibits the
consummation of this Agreement and shall be in effect.
(b) Legal Action. There shall not be pending or threatened in writing any
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action, proceeding, or other application before any court or governmental entity
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challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain any material
damages or that would cause any of the transactions contemplated by this
Agreement to be rescinded following consummation.
(c) Governmental Approvals. All Consents of governmental entities legally
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required by the Parties for the transactions contemplated by this Agreement
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shall have been filed, occurred, or been obtained, other than such Consents, the
failure of which to obtain would not have a Material Adverse Effect on the
consummation of the transactions contemplated by this Agreement.
(d) Consents of Other Third Parties. The Parties shall have received and
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delivered to the appropriate other Parties or Party all requisite consents and
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approvals of all lenders, lessors, and other third parties whose consent or
approval is required in order for the Parties to consummate the transactions
contemplated by this Agreement, or in order to permit the continuation after the
Closing of the business activities of the Company in the manner such business is
presently carried on by it. Each Party shall have received copies of any
necessary written consent(s) to this Agreement and the transactions contemplated
herein.
3.2 Conditions to Seller's Obligations. The obligations of Seller shall be
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subject to the satisfaction prior to or at the Closing of the following
conditions unless waived by Seller:
(a) Representations and Warranties of Buyer. The representations and warranties
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of Buyer set forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing as though made on and as of the Closing,
except: (i) as otherwise contemplated by this Agreement; or (ii) in respects
that do not have a Material Adverse Effect on the Parties or on the benefits of
the transactions provided for in this Agreement. Seller shall have received a
certificate signed by Buyer to such effect on the Closing.
(b) Performance of Obligations of Buyer. Buyer shall have performed all
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agreements and covenants required to be performed by it under this Agreement
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prior to the Closing, except for breaches that do not have a Material Adverse
Effect on the Parties or on the benefits of the transactions provided for in
this Agreement. Seller shall have received a certificate signed by Buyer to
such effect on the Closing.
3.3 Conditions to Buyer's Obligations. The obligations of Buyer shall be
------------------------------------
subject to the satisfaction prior to or at the Closing of the following
--
conditions unless waived by Buyer:
--
(a) Representations and Warranties of Seller and VCI. The representations and
-------------------------------------------------
warranties of Seller and VCI set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing as though made on
and as of the Closing, except: (i) as otherwise contemplated by this Agreement;
or (ii) in respects that do not have a Material Adverse Effect on the Parties or
on the benefits of the transactions provided for in this Agreement. Buyer shall
have received certificates signed by Seller and on behalf of VCI to such effect
on the Closing.
(b) Performance of Obligations of Seller, VCI and the Company. Seller, VCI and
---------------------------------------------------------
the Company shall have performed all agreements and covenants required to be
performed by them under this Agreement prior to the Closing, except for breaches
that do not have a Material Adverse Effect on the Parties or on the benefits of
the transactions provided for in this Agreement. Buyer shall have received
certificates signed by Seller on behalf of VCIto such effect on the Closing.
(c) Banking Relationships. The officers and directors of the Company shall
-----------------------
execute a letter(s) or other a document(s) acceptable to the Buyer informing all
banks or other financial institutions of the change in control of the Company
and that the Company will inform such financial institutions of the officers who
will act on behalf of the Company with respects to Company accounts.
(e) Material Adverse Change. Since the date hereof and through Closing, there
------------------------
shall not have occurred any change, occurrence, or circumstance in Seller or the
Company having or reasonably likely to have, individually or in the aggregate,
in the reasonable judgment of Buyer, a Material Adverse Effect on the Parties or
on the transactions contemplated by this Agreement.
ARTICLE 4
CLOSING AND DELIVERY OF DOCUMENTS
4.1 Time and Place. The closing of the transactions contemplated by this
----------------
Agreement shall take place at the offices of Buyer, no later than May 22, 2002,
--
or at such other time and place as the Parties mutually agree upon in writing
(which time and place are hereinafter referred to as the "Closing" or the
"Closing Date").
4.2 Deliveries by Seller. At Closing, Seller shall make the following
----------------------
deliveries to Buyer:
-----
(a) A stock certificate or certificates representing the Shares as set forth in
Section 1.1 above;
(b) Certificates executed by Seller and VCI certifying that: (i) all Seller's
and VCI's representations and warranties under this Agreement are true as of the
Closing, as though each of those representations and warranties had been made on
that date; and (ii) Seller and VCI have performed all agreements and covenants
required to be performed by them under this Agreement prior to the Closing,
except for breaches that do not have a Material Adverse Effect on the Parties or
on the benefits of the transactions provided for in this Agreement;
(c) Originals of letters to banks and financial institutions in the form
acceptable to the Buyer;
(d) Certified resolutions of the Board of Directors of the Seller, in form
satisfactory to counsel for Buyer, authorizing the execution and performance of
this Agreement; and
(e) The minute book and corporate records of the Company.
4.3 Deliveries by Buyer. At Closing, Buyer shall deliver to Seller a certificate
-------------------
executed by Buyer certifying that:
(a) Buyer's representations and warranties under this Agreement are true as of
the Closing, as though each of those representations and warranties had been
made on that date; and
(b) Buyer has performed all agreements and covenants required to be performed by
it under this Agreement prior to the Closing, except for breaches that do not
have a Material Adverse Effect on the Parties or on the benefits of the
transactions provided for in this Agreement;
(c) the Purchase price to Seller in accordance with Section 1.2.
ARTICLE 5
INDEMNIFICATION
5.1 Seller and VCI's Indemnity Obligations.
------------------------------------------
(a) Upon receipt of notice thereof (provided that such notice is received within
the survival period set forth in Section 7.4, if applicable), Seller and VCI
shall, jointly and severally, indemnify, defend, and hold harmless Buyer from
any and all claims, demands, liabilities, damages, deficiencies, losses,
obligations, costs and expenses, including attorney fees and any costs of
investigation that Buyer shall incur or suffer, that arise, result from or
relate to: (i) any breach of, or failure by Seller or VCI to perform, any of
their representations, warranties, covenants, or agreements in this Agreement or
in any schedule, certificate, exhibit, or other instrument furnished or to be
furnished by Seller, VCI and/or the Company under this Agreement; and (ii) the
employment of any of the Company's employees which is in violation of any law,
regulation, or ordinance of any governmental entity either under the conduct of
its business.
(b) If liabilities or claims that arise, result from, or relate to the items set
forth in Section 5.1(a)(i) or (ii) become known and claims are made upon VCI
and/or the Seller for occurrences prior to the Closing, Buyer shall have the
right to offset the liabilities and claims against the unpaid balance of the
Purchase Price owing to Sellers, or to seek recourse against VCI, at the
election of the Buyer. Neither Seller nor VCI shall have a right of subrogation
or contribution against the other.
(c) Buyer shall notify promptly Seller and VCI of the existence of any claim,
demand, or other matter to which Seller and VCI's indemnification obligations
would apply, and shall give each of them a reasonable opportunity (but in any
event not less than 15 days after receipt of notice) to assume the defense of
the same at their own expense and with counsel of their own selection, provided
that Buyer shall at all times also have the right to retain separate co-counsel
at its sole cost and expense and fully participate in the defense, provided
further that the Buyer shall not consent to the entry of any judgment or enter
into any settlement with respect to such claim, demand, or other matter without
the prior written consent of the Seller. If Seller and VCI, within a reasonable
time after this notice, fails to defend, Buyer shall have the right, but not the
obligation, to undertake the defense of, and, with the written consent of Seller
and VCI, to compromise or settle the claim, demand, or other matter on behalf,
for the account, and at the risk, of Seller and VCI.
5.2 Buyer's Indemnity Obligations.
-------------------------------
(a) Upon receipt of notice thereof (provided that such notice is received within
the survival period set forth in Section 7.4, if applicable), Buyer shall
indemnify, defend, and hold harmless Seller from any and all claims, demands,
liabilities, damages, deficiencies, losses, obligations, costs, and expenses,
including attorney fees and any costs of investigation that Seller shall incur
or suffer, that arise, result from or relate to any breach of, or failure by
Buyer to perform any of its representations, warranties, covenants, or
agreements in this Agreement or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by Buyer under this Agreement.
(b) Upon receipt of notice thereof, Buyer shall indemnify, defend, and hold
harmless Seller from any and all claims, demands, liabilities, damages,
deficiencies, losses, obligations, costs, and expenses, including attorney fees
and any costs of investigation that Seller shall incur or suffer, that arise,
result from or relate to the conduct of the business of the Company subsequent
to the Closing. The indemnification in favor of Seller hereunder is in addition
to and not in lieu of any statutory or other contractual rights of
indemnification.
(c) Seller shall notify promptly Buyer of the existence of any claim, demand or
other matter to which Buyer's indemnification obligations would apply, and shall
give it a reasonable opportunity to defend the same at its own expense and with
counsel of its own selection, provided that Seller shall at all times also have
the right to fully participate in the defense. If Buyer, within a reasonable
time after this notice, fails to defend, Seller shall have the right, but not
the obligation, to undertake the defense of, and, with the written consent of
Buyer, to compromise or settle the claim or other matter on behalf, for the
account, and at the risk, of Buyer.
ARTICLE 6
DEFAULT, AMENDMENT AND WAIVER
6.1 Default. Upon a breach or default under this Agreement by any of the
--------
Parties (following the cure period provided herein), the non-defaulting party
--
shall have all rights and remedies given hereunder or now or hereafter existing
at law or in equity or by statute or otherwise; provided, however, that Section
5.1 sets forth the sole and exclusive remedy of any Party against any other
Party for a breach or default under this Agreement or for any claim, demand, or
matter which arises, results from, or relates to the Agreement. Notwithstanding
the foregoing, in the event of a breach or default by any Party hereto in the
observance or in the timely performance of any of its obligations hereunder
which is not waived by the non-defaulting Party, such defaulting Party shall
have the right to cure such default within 15 days after receipt of notice in
writing of such breach or default.
6.2 Waiver and Amendment. Any term, provision, covenant, representation,
-----------------------
warranty, or condition of this Agreement may be waived, but only by a written
--
instrument signed by the party entitled to the benefits thereof. The failure or
delay of any party at any time or times to require performance of any provision
hereof or to exercise its rights with respect to any provision hereof shall in
no manner operate as a waiver of or affect such party's right at a later time to
enforce the same. No waiver by any party of any condition, or of the breach of
any term, provision, covenant, representation, or warranty contained in this
Agreement, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or waiver of any
other condition or of the breach of any other term, provision, covenant,
representation, or warranty. No modification or amendment of this Agreement
shall be valid and binding unless it be in writing and signed by all Parties
hereto.
ARTICLE 7
MISCELLANEOUS
7.1 Expenses. Whether or not the transactions contemplated hereby are
---------
consummated, each of the Parties hereto shall bear all taxes of any nature and
-----
all fees and expenses relating to or arising from its compliance with the
various provisions of this Agreement and such party's covenants to be performed
hereunder, and except as otherwise specifically provided for herein, each of the
Parties hereto agrees to pay all of its own expenses (including, without
limitation, attorneys and accountants' fees, and printing expenses) incurred in
connection with this Agreement, the transactions contemplated hereby, the
negotiations leading to the same and the preparations made for carrying the same
into effect, and all such taxes, fees, and expenses of the Parties hereto shall
be paid prior to Closing.
7.2 Notices. Any notice, request, instruction, or other document required by
--------
the terms of this Agreement, or deemed by any of the Parties hereto to be
desirable, to be given to any other party hereto shall be in writing and shall
be given by facsimile, personal delivery, overnight delivery, or mailed by
registered or certified mail, postage prepaid, with return receipt requested, to
the following addresses:
To Buyer:
Imaging Technologies Corporation
15175 Innovation Drive
San Diego, CA 92128
Attn: Brian Bonar, CEO
Telephone: 858-613-1300
Fax: 858-613-1311
To the Seller:
Dream Canvas, Inc.
Palais Ginza Building 10F, 6-10-16 Ginza
Chuo-ku, Tokyo, 10400061 JAPAN
Telephone: 03-5537-7585
Fax: 03-5537-7586
To VCI:
Value Creation, Inc.
The persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. If notice is given by facsimile, personal delivery,
or overnight delivery in accordance with the provisions of this Section, said
notice shall be conclusively deemed given at the time of such delivery. If
notice is given by mail in accordance with the provisions of this Section, such
notice shall be conclusively deemed given seven days after deposit thereof in
the United States mail.
7.3 Entire Agreement. This Agreement, together the Schedules or the Exhibits
-----------------
hereto, sets forth the entire agreement and understanding of the Parties hereto
with respect to the transactions contemplated hereby, and supersedes all prior
agreements, arrangements and understandings related to the subject matter
hereof. No understanding, promise, inducement, statement of intention,
representation, warranty, covenant, or condition, written or oral, express or
implied, whether by statute or otherwise, has been made by any party hereto
which is not embodied in this Agreement, schedules, or exhibits hereto, or the
written statements, certificates, or other documents delivered pursuant hereto
or in connection with the transactions contemplated hereby, and no party hereto
shall be bound by or liable for any alleged understanding, promise, inducement,
statement, representation, warranty, covenant, or condition not so set forth.
7.4 Survival of Representations. All statements of fact (including financial
-----------------------------
statements) contained in the schedules, exhibits, the certificates, or any other
instrument delivered by or on behalf of the Parties hereto, or in connection
with the transactions contemplated hereby, shall be deemed representations and
warranties by the respective party hereunder. All representations, warranties,
agreements, and covenants hereunder shall survive the Closing and remain
effective regardless of any investigation or audit at any time made by or on
behalf of the Parties or of any information a party may have in respect hereto;
provided, however, that the representations and warranties of the Parties shall
remain effective only for a period of two years following the Closing.
Consummation of the transactions contemplated hereby shall not be deemed or
construed to be a waiver of any right or remedy possessed by any party hereto,
notwithstanding that such party knew or should have known at the time of Closing
that such right or remedy existed, except in accordance with section 6.1.
7.5 Incorporated by Reference. The schedules, exhibits, and all documents
---------------------------
(including, without limitation, all financial statements) delivered as part
-
hereof or incident hereto are incorporated as a part of this Agreement by
reference.
7.6 Remedies Cumulative. Except as otherwise noted, no remedy herein conferred
-------------------
upon the Parties is intended to be exclusive of any other remedy and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
7.7 Execution of Additional Documents. Each Party hereto shall make, execute,
----------------------------------
acknowledge, and deliver such other instruments and documents, and take all such
other actions as may be reasonably required in order to effectuate the purposes
of this Agreement and to consummate the transactions contemplated hereby.
7.8 Finders' and Related Fees. Each of the Parties hereto is responsible for,
--------------------------
and shall indemnify the other against, any claim by any third party to a fee,
commission, bonus, or other remuneration arising by reason of any services
alleged to have been rendered to or at the instance of said party to this
Agreement with respect to this Agreement or to any of the transactions
contemplated hereby.
7.9 Governing Law. This Agreement has been negotiated and executed in the State
-------------
of California, U.S.A., and shall be construed and enforced in accordance with
the laws of such state, without regard to its conflicts of laws provisions.
7.10 Forum. Each of the Parties hereto agrees that any action or suit which may
-----
be brought by any party hereto against any other party hereto in connection with
this Agreement or the transactions contemplated hereby may be brought only in a
federal or state court in San Diego, California, U.S.A.
7.11 Professional Fees. In the event any Party hereto shall commence legal
------------------
proceedings against the other to enforce the terms hereof, or to declare rights
hereunder, as the result of a breach of any covenant or condition of this
Agreement, the prevailing party in any such proceeding shall be entitled to
recover from the losing party its costs of suit, including reasonable attorneys'
fees, accountants' fees, and experts' fees.
7.12 Binding Effect and Assignment. This Agreement shall inure to the benefit
------------------------------
of and be binding upon the Parties hereto and their respective heirs, executors,
administrators, legal representatives, and assigns.
7.13 Counterparts; Facsimile Signatures. This Agreement may be executed
------------------------------------
simultaneously in one or more counterparts, each of which shall be deemed an
-
original, but all of which together shall constitute one and the same
instrument. The Parties agree that facsimile signatures of this Agreement when
transmitted by one party to another party shall be deemed a valid and binding
execution of this Agreement by the sending party.
7.14 Representation. All Parties to this Agreement have been given the
--------------
opportunity to consult with counsel of their choice regarding their rights under
-
this Agreement.
7.15 Language. The original and official version of this Agreement, all exhibits
--------
and attachments to it, and all documents relating to it shall be in the English
language and all business between the Parties shall be conducted in the English
language.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of the
date first written hereinabove.
BUYER:
Imaging Technologies Corporation
______________________________________
By: Brian Bonar, President and CEO
SELLER:
Dream Canvas, Inc.
_______________________________________
By: Fumihiko Ugajin,
Chief of Section, Business Development Department,
Development Planning Division
VCI:
Value Creation, Inc.
________________________________________
By: