ITEC ENVIRONMENTAL GROUP, INC. COMMON STOCK PURCHASE AGREEMENT
ITEC
ENVIRONMENTAL GROUP, INC.
This
Common Stock Purchase Agreement (this “Agreement”)
is
entered into as of November ____, 2005 between Itec Environmental Group,
Inc., a
Delaware corporation
(the “Company”)
and
the undersigned purchasers (each a “Purchaser”
and
collectively, the “Purchasers”)
set
forth on the Schedule of Purchasers attached hereto as Exhibit
A
(the
“Schedule
of Purchasers”).
The
parties hereby agree as follows:
SECTION
1
AUTHORIZATION
AND SALE OF SECURITIES
1.1 Authorization.
The
Company has, or before the Closing (as defined in Section 2.1) will
have,
duly authorized the sale and issuance pursuant to the terms and conditions
hereof of shares of its Common Stock (the “Shares”)
having
the rights, restrictions, privileges and preferences set forth in the Company’s
Certificate of Incorporation, as amended (the “Company’s
Charter”).
1.2 Sale
of Securities.
(a) At
the
Closing (as defined in Section 2.1), the Company will issue and sell to each
Purchaser, and each Purchaser agrees, severally and not jointly, to purchase
from the Company, the number of Shares set forth opposite the Purchaser’s name
on the Schedule of Purchasers at a purchase price of $0.17 per share.
(b) Each
Purchaser shall have the option, severally and not jointly, to purchase from
the
Company, the number of Option Shares set forth opposite the Purchaser’s name on
the Schedule of Purchasers, at a purchase price of $0.17 per share, exercisable
by written notice of exercise delivered to the Company, with payment of the
purchase price, at any time prior to 60 days after (i) receipt from the Company
of written notice that the Company has satisfied the condition
in Section 5.4 and (ii) the Purchaser is satisfied with Section 5.8 hereto.
(c) Payment
of the purchase price for Shares purchased pursuant to subparagraphs (a)
or (b)
above will be made by the Purchaser by (a) check, (b) wire transfer,
or
(c) cancellation of indebtedness of the Company to the Purchaser
representing the aggregate purchase price of the Shares that the Purchaser
is
acquiring.
SECTION
2
CLOSING;
DELIVERY
2.1 Closing.
The
closing of the purchase by the Purchaser and the sale by the Company of the
Shares (the “Closing”)
shall
be held at the offices of DLA ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ US LLP at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ on November ____, 2005 (the
“Closing
Date”),
or at
such other time and place as the Company and the Purchasers purchasing in
the
aggregate more than fifty percent (50%) of the Shares being sold hereto may
agree either in writing or orally.
2.2 Delivery.
At the
Closing, the Company will issue to the Purchaser a certificate in the
Purchaser’s name representing the Shares purchased by the Purchaser, against
payment of the purchase price therefor.
SECTION
3
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
as
set forth in the Schedule of Exceptions attached hereto as Exhibit B
(the
“Schedule
of Exceptions”),
the
Company hereby represents and warrants to each Purchaser as
follows:
3.1 Organization
and Standing.
The
Company is a corporation duly organized and existing under the laws of the
State
of Delaware and
is in
good standing under such laws. The Company has the requisite corporate power
to
own and operate its properties and assets, and to carry on its business as
presently conducted. The Company has made available to the Purchasers true,
correct and complete copies of the Company’s Certificate of Incorporation and
Bylaws, each as amended to date. The Company is duly qualified to do business
as
a foreign corporation and is in good standing in every jurisdiction in which
the
failure to so qualify would have a material adverse effect on the operations
or
financial condition of the Company.
3.2 Corporate
Power.
The
Company has all requisite corporate power to enter into this Agreement and
the
Investor Rights Agreement attached hereto as Exhibit
C
(the
“Rights
Agreement”)
to
sell the Shares hereunder and to carry out and perform its other obligations
under the terms of this Agreement and the Rights Agreement.
3.3 Capitalization.
Immediately prior to the Closing, the capitalization of the Company will
consist
of the following:
(a) A
total
of 750,000,000 authorized shares of Common Stock, of which 49,346,794 shares
will be issued and outstanding; a total of 10,000,000 authorized shares of
Preferred Stock, none of which will be issued and outstanding. All of the
outstanding shares of Common Stock have been duly authorized, fully paid
and are
nonassessable and issued in compliance with all applicable federal and state
securities laws.
(b) The
Company does not have reserved shares of its Common Stock for issuance to
employees, directors and officers of, and consultants to, the Company under
any
stock option plan. In addition, there are outstanding warrants to purchase
the
number of shares of Common Stock as provided in the Schedule
3.3
attached
hereto. Except as set forth in this Section 3.3 or the Schedule of Exceptions
hereto, the Company has no obligation (contingent or otherwise) to
(i) issue any subscription, warrant, option, convertible security
or other
such right or to issue or distribute to holders of any shares of its capital
stock any evidences of indebtedness of the Company or (ii) purchase,
redeem
or otherwise acquire any shares of its capital stock or any interest therein
or
to pay any dividend or make any other distribution in respect thereof.
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Following
the Closing, the rights, preferences and privileges of the Common Stock will
be
as set forth in the Company’s Charter and
as
provided by law.
3.4 Authorization.
All
corporate action on the part of the Company and its directors and shareholders
necessary for the authorization, execution, delivery and performance of this
Agreement and the Rights Agreement (the “Transaction
Documents”)
and
the authorization, sale, issuance and delivery of the Shares and the performance
of the Company’s obligations hereunder has been taken or will be taken prior to
the Closing.
(a) This
Agreement, when executed and delivered by the Company, will constitute a
valid
and binding obligation of the Company enforceable in accordance with its
terms,
subject to (i) laws of general application relating to specific
performance, injunctive relief or other equitable remedies, (ii) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors’ rights generally and
(iii) federal or state laws limiting enforceability of the indemnification
provisions in the Rights Agreement.
(b) When
issued, sold and delivered in accordance with the terms of this Agreement
for
the consideration provided for herein, the Shares shall be duly authorized,
validly issued, fully paid and non-assessable and shall be free of any liens
or
encumbrances, other than restrictions on transfer under the Transaction
Documents and applicable state and federal securities laws.
(c) No
shareholder of the Company has any right of first refusal or any preemptive
rights in connection with the issuance and sale of the Shares which will
not
have been waived prior to the Closing.
3.5 Subsidiaries.
As of
the date hereof, the Company does not presently own or control, directly
or
indirectly, any equity interest in any other corporation, partnership, trust,
joint venture, association or other entity.
3.6 Governmental Consents.
No
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority by the Company is required in connection with the
consummation of the transactions contemplated by this Agreement except:
(i) such other qualifications or filings under the Securities Act
of 1933,
as amended, and the regulations thereunder (the “Securities
Act”),
(ii) the filing of a Notice of Transaction pursuant to
Section 25102(f) of the California Corporate Securities Law of 1968,
as
amended, and the rules thereunder (the “California
Securities Law”),
and
(iii) all other applicable securities laws as may be required in connection
with the transactions contemplated by this Agreement. All such qualifications
and filings will, in the case of qualifications, be effective on the Closing
and
will, in the case of filings, be made within the time prescribed by law.
3.7 Compliance with Laws
and Other Instruments; No Conflicts.
The
Company is not in violation or default of any provisions of its Company’s
Charter or Bylaws, as amended to date or, to its knowledge, any applicable
laws,
regulations, judgments, decrees or orders of the United States of America
and
all states, foreign countries or other governmental bodies and agencies having
jurisdiction over the Company’s business or properties, other than violations of
laws, regulations, judgments, decrees or orders that could not reasonably
be
expected to have a material adverse effect on the business, property, financial
condition or results of operations of the Company (a “Material
Adverse Effect”).
The
Company is not in breach of or default under or, to its knowledge, alleged
to be
in breach of or default under, any material lease, license, contract, agreement,
instrument or obligation to which it is a party or its properties are subject,
and the Company does not know of any condition or circumstances that, currently
or after notice or the lapse of time, is likely to result in a breach of,
default under or loss of material benefits under any such lease, license,
contract, agreement, instrument or obligation, other than breaches or defaults
that could not reasonably be expected to have a Material Adverse Effect.
The
execution, delivery and performance of the Transaction Documents on the part
of
the Company, and the issuance and sale of the Shares pursuant hereto, will
not
result in any such violation or default and will not accelerate performance
under the terms of any agreement or instrument.
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3.8 Registration Rights.
Except
as provided in the Rights Agreement, the Company has not granted or agreed
to
grant to any person or entity any rights (including piggyback registration
rights) to have any securities of the Company registered with the United
States
Securities and Exchange Commission (“SEC”)
or any
other governmental authority.
3.9 Litigation.
There
is no litigation, action, suit or proceeding, or governmental inquiry or
investigation, pending, or, to the best of the Company’s knowledge, threatened
in writing, against the Company which might result in Material Adverse Effect.
The Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by
the
Company currently pending or which the Company intends to initiate.
3.10 Financial
Statements.
The
audited balance sheet and statements of operations and cash flows as of and
for
the year ended 2004 and its unaudited balance sheet and statements of operations
and cash flows for 2005 (the “Financial
Statements”)
have
been prepared in accordance with generally accepted accounting principles
(“GAAP”)
applied on a consistent basis throughout the relevant period, except that
the
unaudited Financial Statements do not contain the footnotes required by GAAP.
The Financial Statements fairly present the financial condition and operating
results of the Company as of the dates, and for the periods, indicated therein,
subject to normal year-end audit adjustments. Except as set forth in the
Financial Statements, the Company has no liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to the Financial Statements and (ii) obligations under
contracts
and commitments incurred in the ordinary course of business and not required
under GAAP to be reflected in the Financial Statements, which, individually
or
in the aggregate, are not material to the financial condition or operating
results of the Company.
3.11 Absence
of Certain Changes.
Since
October 30, 2005 and at all times up to the Closing, there has not been any
event or condition of any character which has had a Material Adverse Effect
on
including, but not limited to:
(a) any
change in the assets, liabilities, financial condition or operating results
of
the Company from the Financial Statements, except changes in the ordinary
course
of business which have not been in the aggregate had a Material Adverse
Effect;
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(b) any
damage, destruction, or loss, whether or not covered by insurance, materially
and adversely affecting the assets, financial condition, properties, operating
results or business of the Company;
(c) any
change or amendment to a material contract or arrangement by which the Company
or any of its assets or properties is bound or subject;
(d) any
satisfaction or discharge of any lien, claim or encumbrance or payment of
any
obligation by the Company, except a satisfaction, discharge or payment made
in
the ordinary course of business that it is not material to the assets,
properties, financial condition, operating results or business of the
Company;
(e) any
sale,
assignment or transfer of any patents, trademarks, copyrights, trade secrets
or
other intangible assets, except a sale, assignment or transfer made in the
ordinary course of business that is not material to the assets, properties,
financial condition, operating results or business of the Company;
3.12 Taxes.
The
Company has timely filed or has obtained presently effective extensions with
respect to all federal, state, county, local and foreign tax returns which
are
required to be filed by it. All filed returns are true and correct in all
material respects and all taxes shown thereon to be due have been timely
paid
with exceptions not material
to the Company.
3.13 Property
and Assets.
The
Company has good and marketable title to all of its material properties and
assets, and good title to its leasehold estates, in each case subject to
no
mortgage, pledge, lien, security interest, lease, charge or encumbrance,
other
than liens resulting from taxes which have not yet become delinquent and
liens
and encumbrances which do not in any case materially detract from the value
of
the property subject thereto or materially impair the operations of the Company,
and which have not arisen otherwise than in the ordinary course of
business.
3.14 Intellectual
Property.
To its
knowledge, the Company owns or possesses sufficient legal rights to all patents,
trademarks, service marks, trade names, copyrights, trade secrets, information
and other proprietary rights (collectively “Intellectual
Property Rights”)
necessary for its business as now conducted, without any known infringement
of
the rights of others. Except as set forth in the Schedule of Exceptions,
the
Company is not bound by or a party to any options, licenses or agreements
of any
kind with respect to the Intellectual Property Rights of the Company or any
other person or entity, other than licenses or agreements relating to the
Company’s use rights regarding “off the shelf” or standard products. The Company
has received no written notice
that it is infringing upon, violating or otherwise acting adversely to, or
that
by conducting its business as proposed it would infringe upon, violate or
otherwise act adversely to, the right or claimed right of any person or entity
under or with respect to any Intellectual Property Rights or licenses of
third
parties. The Company is not aware of any violation by a third party of any
of
the Company’s Intellectual Property Rights. Except as disclosed in the Schedule
of Exceptions, to its knowledge, the Company is not obligated or under any
liability to make payments by way of royalties, fees or otherwise to any
owner,
licensor of, other claimant to, or party to any option, license or agreement
of
any kind with respect to, any Intellectual Property Rights except for
commercially available software which the Company licenses on standard terms.
5
3.15 Insurance.
The
Company maintains insurance with respect to its properties and business of
the
kinds and in the amounts not less than are customarily obtained by corporations
of established reputation engaged in the same or similar business and similarly
situated, including, without limitation, insurance against loss, damage,
fire,
theft and public liability.
3.16 Material
Contracts and Obligations.
The
Schedule of Exceptions lists all contracts and agreements (a) with expected
receipts or expenditures in excess of $25,000, (b) involving a license or
grant
of rights to or from the Company involving patents, trademarks, copyrights
or
other proprietary information applicable to the business of the Company,
(c) providing for indemnification by the Company with respect to
infringements of proprietary rights, (d) between the Company and any
officer, director or 10%-or-greater shareholder
other than agreements entered into in the ordinary course of business, or
(e)
involving any loans or advances by the Company to any officer, director or
employee which are outstanding as of the date of the Closing. All such contracts
and agreements are legally binding, valid, and in full force and effect in
all
material respects.
3.17 Employees.
Each
current officer and consultant of the Company has executed and delivered
a
Proprietary Information and Inventions Agreement and all of such agreements
are
in full force and effect. Except as set forth on the Schedule of Exceptions,
to
the Company’s knowledge, no employee, officer or consultant of the Company is in
violation of such Proprietary Information and Inventions Agreement. The Company
is not a party to or bound by any currently effective written employment
contract with any of its employees, other than those that are terminable
at
will.
3.18 ERISA.
The
Company does not have or otherwise contribute to or participate in any employee
benefit plan subject to the Employee Retirement Income Security Act of
1974.
3.19 Books
and Records.
The
minute books of the Company contain complete and accurate records of all
meetings and other corporate actions of its shareholders and its Board of
Directors and committees thereof. The stock ledger of the Company is complete
and reflects all issuances, transfers, repurchases and cancellations of shares
of capital stock of the Company.
3.20 Securities
Law Exemptions.
Based
in part on the accuracy of the representations and warranties of the Purchasers
contained in Section 4 hereof, the offer, sale and issuance of the
Shares
and the Conversion Shares are and will be exempt from the registration
requirements of the Securities Act, and the registration, permit or
qualification requirements of any applicable state securities laws. Neither
the
Company nor any agent on its behalf has solicited or will solicit any offers
to
sell or has offered to sell or will offer to sell any part of the Shares
to any
person or persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act or any state securities
law.
3.21 Disclosures.
Neither
this Agreement nor any Exhibit hereto, when read together, 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 contained herein
or
therein, in light of the circumstances under which they were made, not
misleading.
6
3.22 Permits.
The
Company has all permits, licenses, and any similar authority necessary for
the
conduct of its business as now being conducted by it, the lack of which would
have a Material Adverse Effect on the Company, and believes it can obtain,
without undue burden or expense, any similar authority for the conduct of
its
business as presently planned to be conducted. The Company is not in default
in
any material respect under any of such permits, licenses or other similar
authority.
3.23 Environmental
and Safety Laws.
To its
knowledge, the Company is not in violation of any applicable statute, law
or
regulation relating to the environment or occupational health and safety,
and to
its knowledge, no material expenditures are or will be required in order
to
comply with any such existing statute, law or regulation.
SECTION
4
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
Each
Purchaser hereby represents and warrants as follows:
4.1 Authorization.
This
Agreement constitutes the Purchaser’s valid and legally binding obligation,
enforceable in accordance with its terms except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization or other laws
of
general application relating to or affecting the enforcement of creditors’
rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies. The Purchaser has full power and authority
to enter into this Agreement.
4.2 Investment.
The
Purchaser is acquiring the Shares for investment for the Purchaser’s own account
and not with the view to the public resale or distribution thereof within
the
meaning of the Securities Act, and such Purchaser has no present intention
of
selling, granting any participation in, or otherwise distributing the
Securities. No other person has a direct or indirect beneficial interest,
in
whole or in part, in such Securities. The Purchaser understands that the
Securities have not been registered under the Securities Act by reason of
a
specific exemption thereunder, which depends upon, among other things, the
bona
fide nature of the Purchaser’s investment intent as expressed
herein.
4.3 Relationship
to Company; Sophistication; Experience.
The
Purchaser either (i) has a preexisting business or personal relationship
with the Company and/or any of its officers, directors or controlling persons
or
(ii) such Purchaser, either alone or with his or her purchaser
representative(s), has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the prospective
investment in the Shares. Each purchaser representative, if any, in connection
with the Purchaser’s investment in the Securities, has confirmed in writing the
specific details of any and all past, present or future relationships, actual
or
contemplated, between the Purchaser or the Purchaser’s affiliates and the
Company or any of the Purchaser’s affiliates.
7
4.4 Restrictions
on Transfer.
The
Purchaser acknowledges that the Securities must be held indefinitely unless
subsequently registered under the Securities Act or the Company receives
an
opinion of counsel satisfactory to the Company that such registration is
not
required. The Purchaser is aware of the provisions of Rule 144 promulgated
under
the Securities Act which permit limited resale of stock purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the stock, the availability
of certain current public information about the Company, the resale occurring
not less than one year after a party has purchased and paid for the stock
to be
sold, the sale being through a “broker’s transaction” or a transaction directly
with a “market maker” and the number of shares of the stock being sold during
any three-month period not exceeding specified limitations. The Purchaser
further acknowledges and understands that the Company may not be satisfying
the
current public information requirement of Rule 144 at the time the Purchaser
wishes to sell the Securities and, if so, the Purchaser would be precluded
from
selling the Securities under Rule 144 even if the one year minimum holding
period has been satisfied.
4.5 No
Public Market.
The
Purchaser understands that no public market now exists for the Securities,
that
there can be no assurance that a public market will ever exist for the
Securities and that the Company is under no obligation to register the
Securities.
4.6 Exemption
from Registration.
The
Purchaser further acknowledges that, in the event all of the requirements
of
Rule 144 are not met, compliance with another registration exemption will
be
required; and that, although Rule 144 is not exclusive, the staff of the
SEC has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and other than pursuant to
Rule
144 will have a substantial burden of proof in establishing that an exemption
from registration is available for such offers or sales, that such persons
and
the brokers who participate in the transactions do so at their own risk,
and
that, therefore, there is no assurance that any exemption from registration
under the Securities Act will be available or, if available, will allow such
person to dispose of, or otherwise transfer, all or any portion of the
Securities.
4.7 Access
to Information.
The
Purchaser has had an opportunity to discuss the Company’s business, management
and financial affairs with the Company’s management and the opportunity to
inspect Company facilities and such books and records and material contracts
as
the Purchaser deemed necessary to its determination to purchase the
Shares.
4.8 Purchaser’s
Liquidity.
The
Purchaser (i) has no need for liquidity in the Purchaser’s investment,
(ii) is able to bear the substantial economic risks of an investment
in the
Securities for an indefinite period and (iii) at the present time,
can
afford a complete loss of such investment. The Purchaser’s current commitments
to illiquid investments is not disproportionate to the Purchaser’s net worth,
and the Purchaser’s investment in the Securities will not cause such commitment
to become disproportionate.
4.9 Offer
and Sale.
The
Purchaser understands that the sale of the Securities has not been registered
under the Securities Act in reliance upon an exemption therefrom. The Purchaser
was not offered or sold the Securities, directly or indirectly, by means
of any
form of general solicitation or general advertisement, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio
or
(ii) any seminar or other meeting whose attendees had been invited
by
general solicitation or general advertising.
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4.10 Risks.
The
Purchaser is aware that the Securities are highly speculative and that there
can
be no assurance as to what return, if any, there may be. The Purchaser is
aware
that the Company may issue additional securities in the future which could
result in the dilution of the Purchaser’s ownership interest in the
Company.
4.11 Reliance.
The
Purchaser has relied only upon the information provided to him or her in
writing
by the Company, or information from books and records of the Company. No
oral
representations have been made or oral information furnished to Purchaser
or his
or her advisor(s) by the Company in connection with the offering of
Shares which
were not contained therein or were inconsistent therewith.
4.12 Investment
Entity.
The
Purchaser, if a corporation, partnership, trust or other entity, is authorized
and otherwise duly qualified to purchase and hold the Securities; such entity
has its principal place of business as set forth on the signature page hereof;
and such entity has not been formed for the specific purpose of acquiring
the
Shares. The Purchaser, if an individual, is at least 21 years of age.
4.13 Accredited
Investor.
The
Purchaser is an accredited investor as defined in Rule 501(a) of Regulation
D
promulgated under the Securities Act.
4.14 Foreign
Purchasers.
If the
Purchaser is not a citizen of the U.S. such Purchaser hereby represents that
such Purchaser is satisfied as to the full observance of the laws of such
Purchaser’s jurisdiction in connection with any invitation to subscribe for the
Securities or any use of this Agreement, including (i) the legal requirements
with such Purchaser’s jurisdiction for the purchase of the Securities, (ii) any
foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, and (iv) the
income tax and other tax consequences, if any, which may be relevant to the
purchase, holding, redemption, sale, or transfer of the Securities. Such
Purchaser’s subscription and payment for, and continued ownership of, the
Securities will not violate any applicable securities or other laws of such
Purchaser’s jurisdiction.
SECTION
5
CONDITIONS TO PURCHASERS’
OBLIGATIONS AT CLOSING
The
obligations of each Purchaser under Section 2 of this Agreement are
subject
to the fulfillment or waiver, on or before the Closing, of each of the following
conditions: the waiver of which shall not be effective against any Purchaser
unless waived by the Purchaser’s of more than fifty percent (50%) of the
Shares sold
at
any Closing, which consent may be given by written, oral or telephone
communication to the Company or its counsel:
5.1 Representations and Warranties True.
Each of
the representations and warranties of the Company contained in
Section 3
shall
have been true and correct in all material respects when made and shall be
true
and correct in all material respects on and as of the Closing Date with the
same
effect as though such representations and warranties had been made on and
as of
the Closing Date.
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5.2 Performance
of Obligations; Consents and Waivers.
The
Company shall have performed and complied in all material respects with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing
Date
and shall have obtained all approvals, consents and qualifications necessary
to
complete the purchase and sale described herein.
5.3 Rights
Agreement.
The
Purchasers and the Company shall have entered into the Rights Agreement in
substantially the form attached hereto as Exhibit C.
5.4 Liens
and Indebtedness.
The
Company will successfully restructure the financings held by Capital Growth
Financial and Elevation Fund such that each outstanding indebtedness will
have
its expiration delayed by 120 days from the date of the original agreement
for
each party’s debt instrument.
5.5 Compliance
Certificate.
The
Company shall have delivered to the Purchasers a certificate dated as of
the
Closing, signed by the Company’s President, certifying that all the conditions
set forth in this Section 5 have been satisfied, and stating that there shall
have been no adverse change in the business, affairs, operations, properties,
assets or conditions of the Company since the date of the Financial
Statements.
5.6 Closing
Documents.
The
Company shall have delivered to counsel for the Purchasers all of the following
documents:
(a) Certified
copies of the resolutions duly adopted by the Company’s board of directors
authorizing the execution, delivery and performance of the Transaction
Documents, and each of the other agreements contemplated hereby, the issuance
and sale of the Securities and the consummation of all other transactions
contemplated by this Agreement;
(b) Certified
copies of the Company’s Charter and
the
Company’s bylaws, each as in effect as of the Closing; and
(c) Certificates
of good standing issued by the secretary of state for each state where the
Company is authorized to do business.
5.7 Right
of First Offer Agreement.
The
Company shall have delivered a Right of First Offer Agreement to ▇▇▇▇
▇▇▇▇▇▇.
5.8 Due
Diligence.
Purchasers shall have completed a satisfactory due diligence examination
of the
books, business, assets and liabilities of the Company and the results of
such
examination shall be satisfactory to Purchasers.
10
SECTION
6
CONDITIONS
TO COMPANY’S OBLIGATIONS AT CLOSING
The
Company’s obligation to sell and issue the Shares at the Closing is subject to
the fulfillment of the following conditions, any of which may be waived by
the
Company:
6.1 Representations
and Warranties.
The
representations and warranties made by each Purchaser in Section 4
hereof
shall have been true and correct when made and shall be true and correct
on the
Closing Date as if made on and as of such Closing Date.
6.2 Consents
and Waivers.
The
Company shall have obtained any and all consents and waivers necessary or
appropriate for consummation of the transactions contemplated by this
Agreement.
6.3 Rights
Agreement.
The
Purchasers and the Company shall have entered into the Rights Agreement in
substantially the same form attached hereto as Exhibit
C.
SECTION
7
RESTRICTIONS
ON TRANSFERABILITY OF SECURITIES
7.1 Restrictions
on Transferability.
The
Securities shall not be transferable except upon the conditions specified
in
this Section 7. The Purchaser will cause any proposed transferee of
the
Securities held by the Purchaser to agree to take and hold such Securities
subject to the provisions and upon the conditions specified in this
Section 7.
7.2 Restrictive
Legends.
Each
certificate representing the Securities, and any other securities issued
in
respect of the Securities upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event (except as otherwise
permitted by the provisions of this Section 7), shall be stamped or
otherwise imprinted with legends in substantially the following
form:
(a) “THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH
ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144
UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
OF
THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH
SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.”
(b) Any
other
legends required by applicable state securities laws.
11
The
Company need not register a transfer of legended Securities and may also
instruct its transfer agent not to register the transfer of the Securities,
unless the conditions specified in each of the foregoing legends are
satisfied.
7.3 Removal
of Legend and Transfer Restrictions.
Any
legend endorsed on a certificate pursuant to subsection 7.2(a) and the stop
transfer instructions with respect to such legended Securities shall be removed,
and the Company shall issue a certificate without such legend to the holder
of
such Securities, if such Securities are registered under the Securities Act
and
a prospectus meeting the requirements of Section 10 of the Securities
Act
is available or if such holder satisfies the requirements of Rule
144(k).
SECTION
8
MISCELLANEOUS
8.1 Entire
Agreement; Amendment.
This
Agreement and the exhibits to this Agreement constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and any and all other written or oral agreements relating
to
the subject matter hereof existing between the parties hereto are expressly
superseded hereby. Any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the party against whom enforcement of any such amendment or waiver
is
sought; provided, however, that the beneficial owners of a majority of the
Securities then outstanding may, with the Company’s written consent, execute
such amendment or waiver on behalf of all of the Purchasers other than any
Purchaser that the amendment or waiver treats in a materially adverse manner
relative to the other Purchasers. Any amendment or waiver effected in accordance
with this Section 8.1 shall be binding upon the Company and the Purchaser
and each future holder of the securities purchased hereunder.
8.2 Governing
Law.
This
Agreement shall be governed in all respects by the internal laws of the State
of
California, without reference to principles of choice of law.
8.3 Survival.
Unless
otherwise set forth in this Agreement, the representations, warranties covenants
and agreements made herein shall survive the execution and delivery of this
Agreement and the Closing for a period of one (1) year following the Closing.
8.4 Successors
and Assigns.
Except
as otherwise provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto. Nothing in this Agreement, express
or
implied, is intended to confer upon any party other than the parties hereto
or
their respective successors and assigns any rights, remedies, obligations
or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
8.5 Notices,
Etc.
All
notices and other communications required or permitted hereunder shall be
in
writing and shall be deemed effectively given (i) upon actual delivery to
the
party to be notified, (ii) 24 hours after confirmed facsimile transmission,
or
(iii) one business day after deposit with a recognized overnight courier,
addressed (a) if to the Purchaser, at the Purchaser’s address set forth on
the Schedule of Purchasers, or at such other address as the Purchaser shall
have
furnished to the Company in writing upon 10 days’ notice, (b) if to any
other holder of any Securities, at such address as such holder shall have
furnished the Company in writing upon 10 days’ notice or, until any such holder
so furnishes an address to the Company, to and at the address of the last
holder
of such Securities who has so furnished an address to the Company or (c) if
to the Company, at the address set forth in the signature page, or at such
other
address as the Company shall have furnished to the Purchaser upon 10 days’
notice.
12
8.6 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
enforceable against the parties actually executing such counterparts, and
all of
which together shall constitute one instrument.
8.7 Titles
and Subtitles; References.
The
titles and subtitles used in this Agreement are used for convenience only
and
are not to be considered in construing or interpreting this Agreement. All
references in this Agreement to sections, paragraphs, exhibits and schedules
shall, unless otherwise provided, refer to sections and paragraphs hereof
and
exhibits and schedules attached hereto, all of which exhibits and schedules
are
incorporated herein by this reference.
8.8 No Finder’s Fees.
Each
party represents that it neither is nor will be obligated for any finder’s or
broker’s fee or commission in connection with this transaction. Each Purchaser
agrees to indemnify and to hold harmless the Company from any liability for
any
commission or compensation in the nature of a finders’ or broker’s fee (and any
asserted liability) for which the Purchaser or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless each Purchaser from any liability for any commission or
compensation in the nature of a finder’s or broker’s fee (and any asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
8.9 Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, the parties agree to renegotiate such provision in good faith.
In the event that the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then such provision(s) shall be excluded
from
this Agreement and the balance of the Agreement shall be interpreted as if
such
provision(s) were so excluded and shall be enforceable in accordance with
its
terms.
8.10 Expenses.
The
Company shall bear all respective fees and expenses, including legal fees
incurred in connection with the negotiation and consummation of this Agreement.
The Company shall pay, from the purchase price hereto, the reasonable fees
and
expenses of DLA ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ LLP US, up to a maximum of $2,500.00,
incurred with respect to the negotiation, execution, delivery and performance
of
this Agreement; provided that such fees and expenses are presented to the
Company in a reasonably detailed invoice.
8.11 Delays
or Omissions.
No
delay or omission to exercise any right, power or remedy accruing to any
Purchaser, upon any breach or default of the Company under this Agreement,
shall
impair any such right, power, or remedy, nor shall it be construed to be
a
waiver of any such breach or default, or any acquiescence therein, or of
or in
any similar breach or default thereafter occurring; nor shall any waiver
of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind of character on a Purchaser’s part of
any breach or default under this Agreement, or any waiver on a Purchaser’s part
of any provisions or conditions of this Agreement must be in writing and
shall
be effective only to the extent specifically set forth in such writing and
that
all remedies, either under this Agreement, or by law or otherwise afforded
to a
Purchaser, shall be cumulative and not alternative.
13
8.12 Attorney
Fees.
Notwithstanding any other provision herein, if any action at law or in equity
is
necessary to enforce or interpret the terms of this Agreement or the exhibits
hereto, the prevailing party shall be entitled to reasonable attorneys’ fees,
costs and disbursements in addition to any other relief to which such party
may
be entitled.
8.13 Exculpation
Among Purchasers.
Each
Purchaser acknowledges that it is not relying upon any person, firm or
corporation, other than the Company and its officers and directors, in making
its investment or decision to invest in the Company. Each Purchaser agrees
that
no Purchaser nor the respective controlling persons, officers, directors,
partners, agents, or employees of any Purchaser shall be liable to any other
Purchaser for any action heretofore or hereafter taken or omitted to be taken
by
any of them in connection with the purchase of the Securities.
8.14 Confidentiality.
This
Agreement and all of its terms are confidential, and said confidentiality
is of
the essence of this Agreement. Accordingly, the parties hereto and their
agents,
attorneys, advisors and assigns shall keep confidential and not disclose,
publicize, or knowingly permit, authorize, or instigate disclosure or
publication of this Agreement or its terms or contents to any person, firm,
organization, or entity of any type, whether public or private, for any reason,
except to attorneys, accountants and other advisors or as required by law.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
14
IN
WITNESS WHEREOF, the parties hereto have executed this Common Stock Purchase
Agreement as of the date first set forth above.
|
ITEC
ENVIRONMENTAL GROUP, INC.,
a
Delaware Corporation
|
||
| |
|
|
| By: |
|
|
| Name: |
|
|
| Title: |
|
|
| Address: |
|
|
|
|
||
|
|
||
COUNTERPART
SIGNATURE PAGE TO
|
PURCHASER:
|
||
| |
|
|
| Name: |
(Please print or type) |
|
| Signature: |
|
|
| Address: |
|
|
|
|
||
| Facsimile: |
|
|
Exhibit
A
- Schedule of Purchasers
Exhibit
B
- Schedule of Exceptions
Exhibit
C
- Investor Rights Agreement
Exhibit
A
SCHEDULE
OF PURCHASERS
|
Name
and Address
|
No.
of Shares
|
Aggregate
Purchase
Price
|
||||||
|
▇▇▇▇
▇▇▇▇▇▇
Address:
|
1,029,411
|
|
$175,000.00
|
|||||
|
|
||||||||
|
|
||||||||
|
Total
|
1,029,411
|
|
$175,000.00
|
|||||
|
Name
and Address
|
No.
of Option Shares
|
Aggregate
Option
Price
|
|||||
|
▇▇▇▇
▇▇▇▇▇▇
|
7,794,117
|
|
$1,325,000.00
|
||||
|
Total
|
7,794,118
|
|
$1,325,000.00
|
||||
Exhibit
B
SCHEDULE
OF EXCEPTIONS
3.3
(b)
Company
Stock and Warrants
See
capitalization Table which Company believes is accurate and without material
omission.
3.3
(b)
Stock
Option Plan
Company
adopted an Employee Stock Option Plan in 2005 which authorized 15,000,000
shares
for employee compensation programs. None of these shares have been issued
or
options granted thereon.
|
3.8
|
Registration
Rights
|
See
attached Schedule 3.8.
|
3.13
|
Liens
on Assets
|
(a) In
connection with a loan to Company in the amount of $2,000,000 from the
California Integrated Waste Management Board (CIWMB), the Company has granted
to
the CIWMB a first position lien in all Company equipment.
In
connection with a loan to Company in the amount of $600,000 from The Elevation
Fund LLC, the Company granted a second position lien in all Company equipment
and a blanket lien on all other assets.
SCHEDULE
3.8: ITEC WARRANTS
|
#
|
Name |
#
of shares
|
Registration Rights
|
Date
|
|||||
|
1
|
|
▇.
▇▇▇▇▇▇▇▇▇▇▇▇
|
|
2,457,370
|
|
Piggy
Back
|
|
2/15/05
|
|
|
2
|
|
▇.
▇▇▇▇▇▇▇▇▇▇▇▇
|
|
2,000,000
|
|
Piggy
Back
|
|
4/15/05
|
|
|
3
|
|
▇.
▇▇▇▇▇▇▇▇
|
|
1,000,000
|
|
Piggy
Back
|
|
4/15/05
|
|
|
4
|
|
▇.
▇▇▇▇
|
|
500,000
|
|
Piggy
Back
|
|
4/15/05
|
|
|
5
|
|
▇.
▇▇▇▇▇
|
|
250,000
|
|
Piggy
Back
|
|
4/15/05
|
|
|
6
|
|
▇.
▇▇▇▇▇▇▇▇
|
|
500,000
|
|
Piggy
Back
|
|
4/21/05
|
|
|
7
|
|
G.
Kankis
|
|
500,000
|
|
Piggy
Back
|
|
4/21/05
|
|
|
8
|
|
Dormition
Skete
|
|
100,000
|
|
None
|
|
6/8/05
|
|
|
9
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Trust
|
|
500,000
|
|
None
|
|
6/8/05
|
|
|
10
|
|
Dormition
Skete
|
|
1,000,000
|
|
None
|
|
7/1/05
|
|
|
11
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Trust
|
|
500,000
|
|
None
|
|
6/30/05
|
|
|
12
|
|
Royal
Mortgage Corp
|
|
300,000
|
|
Piggy
Back
|
|
7/11/05
|
|
|
13
|
|
Elevation
Fund
|
|
8,500,000
|
|
See
*
|
|
8/1/05
|
|
|
14
|
|
CGF
Fund I
|
|
1,418,439
|
|
See
*
|
|
8/4/05
|
|
|
15
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Trust
|
|
500,000
|
|
None
|
|
8/19/05
|
|
|
16
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Trust
|
|
320,000
|
|
None
|
|
9/19/05
|
|
|
17
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Trust
|
|
300,000
|
|
None
|
|
8/19/05
|
|
|
18
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Trust
|
|
40,000
|
|
None
|
|
8/19/05
|
IN
PROCESS OF DRAFTING: NEXT RESOLUTION
|
#
|
Name |
#
of shares
|
Registration
Rights
|
||||
|
19
|
|
▇▇▇▇▇
▇▇▇▇▇▇
|
|
850,000
|
|
1
demand and unlimited piggy back
|
|
|
20
|
|
▇.
▇▇▇▇
|
|
1,000,000
|
|
Piggyback
|
|
|
21
|
|
▇.
▇▇▇▇▇▇▇▇▇▇▇▇
|
|
19,500,000
|
|
Piggyback
|
|
|
22
|
|
Saratoga
Capital Partners
|
|
500,000
|
|
Piggyback
|
|
|
23
|
|
▇.
▇▇▇▇▇
|
|
250,000
|
|
Piggyback
|
|
|
24
|
|
▇.
▇▇▇▇▇▇▇▇
|
|
500,000
|
|
Piggyback
|
|
NOT
IN POSSESSION OF EXECUTED COPY: SENT TO ITEC
|
|
KW Securities |
|
100,000
|
|
See
*
|
|
OPTION TO RECEIVE WARRANTS: CGF INDIVIDUAL INVESTORS
| XX |
|
Individual Investors1 |
|
500,000
|
|
See
*
|
|
*
The
Company shall prepare and, as soon as practicable, but in no event later
than 75
days following the closing date of the Private Placement (the “Filing
Deadline”),
file
with the Securities and Exchange Commission
(the “SEC”)
a
registration statement on Form SB-2 covering the resale of all shares of
Common
Stock underlying the Warrant (the “Registrable
Securities”).
1 If
the
Loan is not converted into common stock pursuant to the Promissory Notes,
identified above as Capital Growth Financial Investors, Itec shall issue
to the
lenders on a pro-rata basis warrants to purchase in the aggregate 500,000
shares
of common stock of Itec, at an exercise price of $0.13 per share.
Exhibit
C
INVESTOR
RIGHTS AGREEMENT