Amendment to Domingue Loan Agreement AMENDMENT NO. 1 TO LOAN AGREEMENT
Exhibit
10.4
Amendment
to ▇▇▇▇▇▇▇▇ Loan Agreement
AMENDMENT
NO. 1 TO LOAN AGREEMENT
THIS
AMENDMENT NO. 1 TO LOAN AGREEMENT (this "Amendment"),
is
executed as of September 7, 2006, by and between Itec Environmental Group,
Inc.,
a Delaware corporation (the "Company"),
and
Arbor ▇▇▇▇▇▇, LLC, a Delaware limited liability company (the "Lender").
WHEREAS,
the Company and the Lender entered into a Loan Agreement on August 14, 2006
(the
“Loan
Agreement”)
pursuant to which the parties effected the First Closing thereunder at which
time Lender advanced an initial Loan in the amount of $1,000,000;
and
WHEREAS,
the Lender is willing to increase its loan commitment under the Loan Agreement
to an aggregate of $2,300,000; and
WHEREAS,
the Lender is willing to provide such additional financing on terms and
conditions as set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Lender,
intending to be legally bound, hereby amend the Loan Agreement as follows:
1.
Amendment to Section 2.1. The parties agree that the first sentence of Section
2.1 of the Loan Agreement is amended to read as follows:
“According
to the terms and subject to the conditions of this Agreement, the Lender shall
loan to the Company the aggregate amount of Two Million Three Hundred Thousand
Dollars ($2,300,000.00) (the "Loan").”
2.
Conditions
Precedent to the Loan.
Section
2.4 (b) of the Loan Agreement shall be amended to read as follows:
(b)
The
Company shall have duly authorized, executed, and delivered to the Lender a
security agreement in the form attached hereto as Exhibit
B
(the
“Security
Agreement”)
to
secure the repayment of the Loan and granting the Lender a continuing security
interest in all presently existing and hereafter acquired assets and property
of
the Company of whatever nature and wherever located which such Security Interest
shall be senior to all other security interests or Encumbrances against the
assets and property of the Company other than Senior Debt (as hereafter
defined). Lender shall be entitled to a security interest pari
passu on
a
pro-rata basis with the investors participating in private placement pursuant
to
the 2006 Private Placement Memorandum (the “PPM”)
of the
Company and, except as set forth above, Lender’s security interest shall be
senior to any other indebtedness of the Company, whether now existing or created
or incurred in the future. “Senior
Debt”
shall
mean all indebtedness for all principal,
fees, expenses, interest, penalties, post-bankruptcy petition interest, and
all
other amounts payable for money borrowed from banking or other financial
institutions or governmental lending facilities that is not convertible into
equity securities of the Company, including, but not limited to the $2,000,000
loan from the California Integrated Waste Management Board (the “CIWMB
Loan”)
and
the remaining amount due and owing under the forbearance agreement by and
between the Company and the Elevation Fund, LLC (the “Forbearance
Agreement”).
1
3.
Other
Indebtedness.
Section
3.8 of the Loan Agreement shall be amended to read as follows:
“3.8.
Other
Indebtedness.
On and
as of the date hereof and on and as of each Closing Date, the Company does
not
and will not have any outstanding Senior Debt other than the CIWMB Loan and
the
amount due and owning pursuant to the Forbearance Agreement. For so long as
the
Note (or any note issued upon transfer of the Note, in whole or in part) remains
outstanding, the Company shall not incur, create or enter into any agreement
to
incur or create indebtedness ranking on a parity or parri
passu
with the
Notes (“Parity
Indebtedness”),
other
than the investors participating in the financing under the Company’s 2006
Private Placement Memorandum and certain other lenders, identified in
Schedule
A
to the
Security Agreement, as defined below, without the prior written consent of
the
Lender, which consent shall not be unreasonably withheld.”
4.
Events
of Default.
Section
5.1(e) shall be amended to read as follows:
“(e)
The
Effective
Date
under the Rougelot Employment Agreement shall not have occurred on or prior
to
September 15, 2006 or ▇▇. ▇▇▇▇▇▇▇▇ shall no longer serve as the Chief Executive
Officer of the Company for any reason other than his death or disability,
Voluntary departure or removal for Cause (as such terms are defined in the
Rougelot Employment Agreement); and”
5.
Issuance
of Warrants.
The
first sentence of Section 6.1 shall be amended to read as follows:
“The
Company shall issue to the Lender one or more warrants to purchase a combined
total of twenty-three million (23,000,000) shares of common stock of the Company
in the form attached hereto as Exhibit
C
(referred to herein collectively as the “Warrant”).”
6.
Effect
of Amendment.
Except
as specifically amended hereby, the Loan Agreement shall remain in full force
and effect as originally written. This Amendment shall be deemed to be
incorporate in and a part of the Loan Agreement.
7.
Titles
and Subtitles; Defined Terms.
The
titles and subtitles of the Sections of this Amendment are used for convenience
only and shall not be considered in construing or interpreting this agreement.
Capitalized terms used but not otherwise defined in this Amendment shall have
the specific meanings set forth in the Loan Agreement.
2
IN
WITNESS WHEREOF, each of the parties has caused this Amendment No. 1 to Loan
Agreement to be signed in its name on the date first set forth
above.
|
ITEC
ENVIRONMENTAL GROUP, INC.
|
||
| |
|
|
| By: | ||
|
▇▇▇▇ ▇. De Laurentiis |
||
| Chief Executive Officer | ||
|
ARBOR
▇▇▇▇▇▇, LLC
|
||
| |
|
|
| By: | ||
| Name: |
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
|
| Title | Manager | |
3
Schedule
A
|
Secured
Party
|
Aggregate
Principal Amount of Note(s)
|
|
Itec
Capital Group, LLC
|
$3,022,500.00
|
|
Arbor
▇▇▇▇▇▇, LLC
|
$2,300,000.00
|
|
▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇▇
|
$500,000.00
|
|
▇▇
▇. ▇▇▇▇
|
$202,000.00
|
|
Total
|
$6,024,500.00
|
4
Exhibit
B
SECURITY
AGREEMENT
This
SECURITY AGREEMENT ("Security
Agreement")
is
dated as of September __, 2006 (the
"Effective
Date"),
by and
among
Itec
Environmental Group, Inc., a Delaware corporation (the
"Company"),
and the
parties listed in Schedule
A and B,
attached hereto (the “Secured
Parties”).
WHEREAS,
on the Effective Date, the Company received funds pursuant to certain loans
(collectively, the “Loans”
and
each individually, a “Loan”)
by the
Secured Parties; and
WHEREAS,
in order to induce Secured Parties to provide the Loans to the Company, the
Company agreed to grant to the Secured Parties a security interest in all of
the
Company’s assets to secure the amounts currently owing, and any additional
amounts which may be owing, by the Company pursuant to the agreements between
each of the Secured Parties and the Company that evidence the Loans (the
“Loan
Documents”).
NOW,
THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and parties listed
in
Schedule
A and B
attached
hereto, agree as follows:
1.
Defined
Terms.
The
following terms shall have the following meanings, unless the context otherwise
requires:
“Arbor
▇▇▇▇▇▇ Notes”
shall
mean the Secured Convertible Promissory Notes dated August 14, 2006 and
September __, 2006 issued by the Company to Arbor ▇▇▇▇▇▇, LLC (“Arbor
▇▇▇▇▇▇”)
in the
aggregate principal amount of $2,300,000.00.
“Baek
Note”
means
the Secured Convertible Promissory Note dated August 29, 2006 issued by the
Company to ▇▇ ▇. ▇▇▇▇ (“▇▇▇▇”)
in the
aggregate principal amount of $202,000.00.
"Code"
shall
mean the Uniform Commercial Code as in effect in the State of California on
the
Loan Closing Date.
"Collateral"
shall
have the meaning given such term in Section 2.
"Event
of Default"
shall
have the meaning given such term in each Note.
“Goldman
Note”
shall
mean the Secured Convertible Promissory Note dated July 27, 2006 issued by
the
Company to ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ (“▇▇▇▇▇▇▇”)
in the
aggregate principal amount of $500,000.00.
“Itec
Capital Group Notes”
shall
mean the Secured Convertible Promissory Note issued by the Company to each
of
investors participating in the offering described in the Company’s 2006 Private
Placement Memorandum as set forth on Schedule
B
hereto,
in the aggregate principal amount of $3,022,500.00.
5
“Note”
and
“Notes”
shall
mean the Arbor ▇▇▇▇▇▇ Notes, the Baek Note, the Goldman Note and the Itec
Capital Group Notes, individually and collectively, as the case may be.
"Obligations"
shall
mean the obligations of the Company under the Notes and the Loan Documents,
including all costs of collection.
“Senior
Debt”
shall
mean all
indebtedness for all principal,
fees, expenses, interest, penalties, post-bankruptcy petition interest, and
all
other amounts payable for money borrowed from banking or other financial
institutions or governmental lending facilities that is not convertible into
equity securities of the Company, including, but not limited to the $2,000,000
loan from the California Integrated Waste Management Board (the “CIWMB
Loan”).
2.
Grant
of Security Interest.
As
collateral security for the prompt and complete payment and performance when
due
of all the Obligations, the Company hereby grants to the Secured Parties a
security interest in all of the Company's right, title and interest in, to
and
under the following, whether now existing or hereafter acquired (all of which
collateral being hereinafter collectively called the “Collateral”);
provided, however, that the security interest granted hereby shall be
subordinate to the security interest to be granted or granted (as the case
may
be) by the Company in connection any Senior Debt. Secured Parties shall be
entitled to a security interest in the following:
ACCOUNTS
All
present and future accounts owned by the Company, including and together with
any and all contract rights, accounts receivable, security deposits (where
not
otherwise prohibited by law or agreement), and other rights of any kind to
receive payments for services rendered and goods supplied by the Company,
together with agreements, customer lists, client lists, and accounts, invoices,
agings, verification reports and other records relating in any way to such
accounts.
CONTRACTS
All
contracts, contract rights, royalties, license rights, leases, instruments,
undertakings, documents or other agreements in or under which the Company may
now or hereafter have any right, title or interest whether now existing or
hereinafter created and all forms of obligations owing to the Company arising
out of the sale or lease of goods, the licensing of technology or the rendering
of services by the Company, whether or not earned by performance, and any and
all credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by the Company.
EQUIPMENT,
FURNISHINGS AND MISCELLANEOUS PERSONAL PROPERTY
All
presently owned and hereafter acquired furniture, furnishings, equipment,
machinery, vehicles (including motor vehicles and trailers) computer hardware
and software, accounting or bookkeeping systems, client or customer lists and
information, data sheets and other records of any kind, wherever located, stored
or inventoried, which are used or which may be used in the Company’s business;
6
FIXTURES
All
materials used by the Company in connection with its business operations,
including, but not limited to, supplies, trade equipment, appliances, apparatus
and any other items, now owned or hereafter acquired by the Company, and now
or
hereafter attached to, or installed in (temporarily or permanently) any real
property now or in the future owned or leased by the Company;
GENERAL
INTANGIBLES
All
general intangibles and other personal property of the Company, now owned or
hereinafter acquired, including, without limitation, the following: (a) permits,
authorizations and approvals presently and hereafter issued by any federal,
state, municipal or local governmental or regulatory authority in favor of
the
Company; (b) all plans, specifications, renderings and other similar materials
presently owned or hereafter acquired by the Company; (c) all presently existing
and hereafter created contracts, leases, licenses and agreements to which the
Company is a party; (d) all presently and hereafter existing policies and
agreements of insurance in favor of the Company; (e) all presently and hereafter
existing equity contribution agreements and other equity financing arrangements
in favor of the Company; (f) all copyrights, chattel paper, electronic chattel
paper, licenses, money, insurance proceeds, contract rights, subscription lists,
mailing lists, licensing agreements, patents, trademarks, service marks, trade
styles, patents, patent applications, franchise agreements, blueprints,
drawings, purchase orders, customer lists, route lists, infringements, claims,
computer programs, computer discs, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payments of insurance and rights
to
payment of any kinds, trade names, refundable, returnable or reimbursable fees,
deposits or other funds or evidences of credit or indebtedness deposited by
or
on behalf of the Company with any governmental agencies, boards, corporations,
providers of utility services, public or private; (g) all presently existing
and
hereafter acquired computer programs, computer software and other electronic
systems and materials of any kind of the Company; (h) goodwill; and (i) all
other presently existing and hereafter acquired documents, accounts, general
intangibles and intangible personal property of any kind.
DOCUMENTS
All
documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
certificates of deposit, instruments, chattel paper, and electronic chattel
paper now owned or hereafter acquired and the Company’s books relating to the
foregoing.
COPYRIGHTS
All
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing.
7
PROCEEDS
All
of
the Company’s books and records relating to the foregoing and any and all
present and future accounts, general intangibles, chattel paper, electronic
chattel paper, products, accessions, replacements, betterments and substitutions
for any of the foregoing described property, and all proceeds arising from
or by
virtue of, or from the sale or disposition of, or collections with respect
to,
or insurance proceeds payable with respect to, or claims against any other
persons, corporations or other entities with respect to, all or any part of
the
foregoing described property and interests.
3.
Pro
Rata Distributions among Secured Parties.
It is
expressly agreed by the Secured Parties that all payments received by the
Company under or in connection with the any sale or liquidation of the
Collateral, subject to any Senior Debt, shall be divided among the Secured
Parties pari
passu
on a
pro-rata basis equal to the quotient of: (x) the unpaid principal amount of
the
Note held by each of the respective Secured Parties (without regard to
interest); divided by (y) the aggregate unpaid principal amount of all Notes
(without regard to interest).
4.
Rights
of Secured Parties; Limitations on Secured Parties’ Obligations.
It is
expressly agreed by the Company that, anything herein to the contrary
notwithstanding, the Company shall remain liable under each of its contracts
and
documents to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with and pursuant
to
the terms and provisions of its contracts and documents. Secured Parties shall
have no obligation or liability under any of the Company’s contracts and
documents by reason of or arising out of this Security Agreement or the granting
to Secured Parties of a security interest therein or the receipt by Secured
Parties of any payment relating to any of the Company’s contracts and documents
pursuant hereto, nor shall Secured Parties be required or obligated in any
manner to perform or fulfill any of the obligations of the Company under or
pursuant to any of its contracts and documents, or to make any payment, or
to
make any inquiry as to the nature or the sufficiency of any payment received
by
it or the sufficiency of any performance by any party under any of its contracts
and documents, or to present or file any claim, or to take any action to collect
or enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
5.
Representations
and Warranties.
The
Company hereby represents and warrants that the chief executive office and
chief
place of business of the Company is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and
the Company will not change such chief executive office and chief place of
business or remove such records unless the Company shall have given the Secured
Parties at least 10 days' prior written notice thereof.
6.
Covenants.
The
Company covenants and agrees with the Secured Parties that from and after the
date of this Security Agreement and until the Obligations are fully
satisfied:
(a)
Further
Documentation.
At any
time and from time to time, upon the written request of the Secured Parties,
and
at the sole expense of the Company, the Company will promptly and duly execute
and deliver any and all such further documents and take such further action
as
any Secured Party may reasonably request in carrying out the terms and
conditions of this Security Agreement and the rights and powers herein granted,
including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the security interests granted
hereby.
8
(b)
Continuous
Perfection.
The
Company will not change its name, identity or corporate structure in any manner
unless the Company shall have given the Secured Parties at least 10 days' prior
written notice thereof and shall have taken all action (or made arrangements
to
take such action substantially simultaneously with such change if it is
impossible to take such action in advance) necessary or reasonably requested
by
any Secured Party to amend any financing statement or continuation statement
filed with respect to the Collateral so that it is not misleading.
(c)
Insurance.
The
Company will insure the Collateral against such risks and hazards as other
companies similarly situated insure against, in amounts and under policies
which
it currently holds and under such additional or substituted amounts or policies
as it may from time to time determine, which shall be reasonably acceptable
to
the Secured Parties (providing that no cancellation of such insurance shall
be
effective without 30 days written notice to the Secured Parties and containing
loss payable clauses to the Secured Parties as their interest may appear) and
all premiums thereon shall be paid by the Company.
7.
Remedies,
Rights Upon Default.
(a)
In
addition to any other rights given to the Secured Parties hereunder, if an
Event
of Default shall occur and be continuing and any Secured Party shall have
declared the amounts owing under the Note(s) to be due and payable (or such
amounts shall have automatically, become due and payable), all payments received
by the Company under or in connection with any of the Collateral shall be
subject to the subordination provisions contained in the preceding Section
2,
held by the Company in trust for the Secured Parties, shall be segregated from
other funds of the Company and shall, if requested by any Secured Party
forthwith upon receipt by the Company be turned over to the Secured Parties,
in
the same form as received by the Company (duly endorsed by the Company to the
Secured Parties, if required).
9
(b)
If
any Event of Default shall occur and be continuing and subject to the
subordination provisions of the preceding Section 2, any Secured Party may
exercise in addition to all other rights and remedies granted to it in this
Security Agreement or in any other instrument or agreement securing, evidencing
or relating to the Obligations or at law or in equity, all rights and remedies
of a secured party under the Code. Without limiting the generality of the
foregoing, the Company expressly agrees that in any such event, the Secured
Parties, without demand of performance or other demand, (except the notice
specified below of time and place of public or private sale) to or upon the
Company or any other person may forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or sell or otherwise dispose
of and deliver said Collateral (or contract to do so), or any part thereof,
in
one or more parcels at public or private sale or sales, at any exchange broker's
board or at any of the Secured Parties’ offices or elsewhere at such prices as
it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Each Secured Party shall have the right upon
any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of said Collateral
so
sold, free of any right or equity of redemption, which equity of redemption
the
Company hereby releases. The Company further agrees, at any Secured Party’s
request, to assemble the Collateral, make it available to one or more of
the Secured Parties at places which a Secured Party shall reasonably select,
whether at the Company's premises or elsewhere. The Secured Parties shall apply
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care, safe keeping or otherwise
of
any or all of the Collateral or in any way relating to the rights of the Secured
Parties hereunder, including reasonable attorneys' fees and legal expenses,
to
the payment in whole or in part of the Obligations, the Company remaining liable
for any deficiency remaining unpaid after the application, and only after so
paying over such net proceeds and after the payment by the Secured Parties
of
any other amount required by any provision of law. To the extent permitted
by
applicable law, the Company waives all claims, damages, and demands against
the
Secured Parties arising out of the repossession, retention or sale of the
Collateral. The Company agrees that a Secured Party need not give more than
10
days notice of the time and place of any public sale or of the time after which
a private sale may take place and that such notice is reasonable notification
of
such matters. The Company shall remain liable for any deficiency if the proceeds
of any sale or disposition of the Collateral are insufficient to pay all amounts
to which a Secured Party is entitled.
(c)
The
Company hereby waives presentment, demand, protest or any notice (to the extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.
8.
Application
of Proceeds.
Subject
to the subordination provisions contained in the preceding Section 2, the
Proceeds of all sales and collections in respect of any Collateral shall be
applied as follows:
(a)
First, to the payment of the costs and expenses of such sales and collections,
the expenses of Secured Parties and the reasonable fees and expenses of counsel
to the Secured Parties;
(b)
Second, any surplus then remaining to the payment of the Obligations in such
order and manner consistent with the provisions of Section 3 above as the
Secured Parties may in their sole discretion determine; and
(c)
Third, any surplus then remaining shall be paid to the Company.
9.
Limitation
on Secured Parties’ Duty in Respect of Collateral.
Beyond
the use of reasonable care in the custody thereof, no Secured Party shall have
any duty as to any Collateral in their possession or control or in the
possession or control of any agent or nominee of it or any income thereon or
as
to the preservation of rights against prior Secured Parties or any other rights
pertaining thereto.
10.
Notices.
Any
notice, request or other communication required or permitted hereunder shall
be
in writing and shall be delivered personally or by facsimile (receipt confirmed
electronically) or shall be sent by a reputable express delivery service or
by
certified mail, postage prepaid with return receipt requested, addressed as
follows:
10
if to the Company, to:
Itec
Environmental Group, Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇.
De Laurentiis
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
if
to
Arbor ▇▇▇▇▇▇, to:
Arbor
▇▇▇▇▇▇, LLC
Attn:
▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
if
to
the Baek, to:
▇▇
▇.
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
if
to
the Goldman, to:
▇▇▇▇▇
and
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
if
to
Itec Capital Group, to:
See
Schedule
B.
A
party
hereto may change the above specified recipient or mailing address by notice
to
the other party given in the manner herein prescribed. All notices shall be
deemed given on the day when actually delivered as provided above (if delivered
personally or by facsimile, provided that any such facsimile is received during
regular business hours at the recipient's location) or on the day shown on
the
return receipt (if delivered by mail or delivery service).
11.
Severability.
Any
provision of this Security Agreement which is prohibited or unenforceable in
any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any
other jurisdiction.
11
12.
No
Waiver; Cumulative Remedies.
No
Secured Parties shall by any act, delay, omission or otherwise be deemed
to have
waived any of their rights or remedies hereunder and no waiver shall be
valid unless in writing, signed by the Secured Party, and then only to the
extent therein set forth. A waiver by a Secured Party of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right
or
remedy which the Secured Parties would otherwise have had on any future occasion
and shall not apply to any other Secured Party. No failure to exercise nor
any
delay in exercising on the part of a Secured Party, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single
or
partial exercise of any right, power or privilege hereunder preclude any
other
or future exercise thereof or the exercise or any other right, power or
privilege. The rights and remedies hereunder provided are cumulative and
may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law.
13.Successors
and Assigns.
This
Security Agreement and all obligations of the Company hereunder shall be binding
upon the successors and permitted assigns of the Company, and shall, together
with the rights and remedies of the Secured Parties hereunder, inure to the
benefit of each of the Secured Parties and their successors and permitted
assigns; provided that the Company may not assign any of its rights or
obligations hereunder without the prior written consent of each of the Secured
Parties.
14.
Waiver
and Amendment.
None of
the terms or provisions of this Security Agreement may be waived, altered,
modified or amended except by an instrument in writing, duly executed by the
Company and the Secured Party against whom such waiver, alteration, modification
or amendment is sought to be enforced.
15.
Governing
Law.
This
Security Agreement shall be governed by and construed in accordance with the
domestic laws of the State of California without giving effect to any choice
of
law or conflict of law provision or rule (whether of the State of California
or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California.
16.
Counterparts.
This
Security Agreement may be executed in separate counterparts each of which will
be an original and all of which taken together will constitute one and the
same
agreement.
17.
Facsimile.
This
Security Agreement may be executed using facsimiles of signatures, and a
facsimile of a signature shall be deemed to be the same, and equally
enforceable, as an original of such signature.
18.
Termination.
At such
time as the Obligations have been fully paid in cash, the security interest
created hereby shall automatically terminate, the Secured Parties shall take
all
such actions as may be requested by the Company to evidence such termination
and
to release the liens created hereby, at the Company's expense.
12
IN
WITNESS WHEREOF, each of the Secured Parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer as of
Effective Date.
| ITEC ENVIRONMENTAL GROUP, INC. | ||
| |
|
|
| By: | ||
|
▇▇▇▇ ▇. De Laurentiis |
||
| Chief Executive Officer | ||
|
SECURED
PARTY:
|
||
| |
|
|
| By: | ||
| Its: |
|
|
|
|
||
13
SCHEDULE
A
|
Secured
Party
|
Aggregate
Principal Amount of Note(s)
|
|
Itec
Capital Group, LLC
|
$3,022,500.00
|
|
Arbor
▇▇▇▇▇▇, LLC
|
$2,300,000.00
|
|
▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇▇
|
$500,000.00
|
|
▇▇
▇. ▇▇▇▇
|
$202,000.00
|
|
Total
|
$6,024,500.00
|
14
SCHEDULE
B
Itec
Capital Group, LLC Investors
|
Name
|
Address
|
City
|
State
|
Zip
Code
|
|
▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇ Trust
|
▇▇
▇▇▇ ▇▇▇▇
|
▇▇▇▇
▇▇▇▇▇ ▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
▇.▇.
▇▇▇ ▇▇▇
|
▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇
▇. ▇▇▇▇
|
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. #▇▇▇▇
|
▇▇▇▇▇▇
▇▇▇ ▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
▇▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
|
▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇ ▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
Benetti
Trust
|
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
|
▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
|
▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇. ▇▇. ▇
|
▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇▇
& ▇▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ #▇▇▇
|
▇▇▇▇▇▇▇
▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇
|
▇▇▇
▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇▇▇ & ▇▇▇▇ ▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
|
▇▇▇▇▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇
▇▇▇▇▇▇
|
[Currently
unknown]
|
CA
|
||
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇
|
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
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|
▇▇
|
▇▇▇▇▇
|
|
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▇. ▇▇▇▇▇▇ & ▇▇▇▇ ▇. ▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
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|
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|
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|
|
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▇. ▇▇▇▇▇▇▇▇▇
|
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|
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|
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|
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|
|
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|
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|
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|
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|
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|
|
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|
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|
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|
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|
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|
|
▇▇▇▇▇▇▇
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|
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|
▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
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▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
|
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|
▇▇
|
▇▇▇▇▇
|
|
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▇▇▇▇▇▇ Trust
|
▇▇▇▇
▇ ▇▇▇▇ ▇▇▇▇▇▇
|
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|
▇▇
|
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|
|
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|
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|
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|
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|
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|
|
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▇. ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
38
▇▇▇▇▇▇
|
▇▇▇▇▇▇▇
▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ & ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇
Trust
|
▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
|
▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
Family Trust
|
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇▇
|
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|
▇▇▇▇▇
|
|
▇▇▇▇▇▇▇
Family Trust
|
▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
Itec
Alaska Partnership
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ #▇▇
|
▇▇▇▇▇▇▇▇▇
|
▇▇
|
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|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
▇▇
▇▇▇ ▇▇▇▇
|
▇▇▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇
▇. ▇▇▇▇
|
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
▇.
▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇
|
▇▇▇
▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
and Campbell Loft
|
▇▇
▇▇▇ ▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
Family Revocable Trust
|
▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇.
|
▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇ ▇▇▇▇
|
▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇
& ▇▇▇▇ ▇▇▇▇▇
|
▇▇
▇▇▇▇▇▇▇▇ ▇▇.
|
▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇
▇▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇
Family Trust
|
▇.▇.
▇▇▇ ▇▇▇▇▇▇
|
▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇-▇▇▇▇
|
|
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇
|
▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
|
▇▇▇
▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
15
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇
▇▇▇▇
|
▇▇▇
▇▇ ▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇
|
▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
Saratoga
Capital Partners
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
▇▇▇
▇. ▇▇▇▇▇ ▇▇▇ ▇▇.
|
▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇
▇▇▇▇▇▇▇
|
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
|
▇▇▇▇▇▇
▇▇▇▇▇ ▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, DDS, MS
|
▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
▇▇▇
▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
Shamash
Family Trust
|
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇▇▇▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇▇
|
▇▇
▇▇▇▇▇ ▇▇▇▇
|
▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
Sirott
Family Trust
|
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
▇▇▇▇▇▇
▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇
▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇
|
▇▇▇▇▇▇
▇▇▇ ▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇
|
▇▇▇
▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇▇▇▇
Family Trust
|
▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. #▇▇▇
|
▇▇
▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇
Family Trust
|
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇
|
▇▇▇▇▇▇▇
|
▇▇
|
▇▇▇▇▇
|
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
▇.▇.
▇▇▇ ▇▇▇▇
|
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇
|
▇▇
|
▇▇▇▇▇
|
16
Exhibit
C
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933 (THE “ACT”) OR APPLICABLE STATE SECURITIES LAWS, AND THE TRANSFER
THEREOF IS PROHIBITED EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT
BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
Warrant
To Purchase 3,000,000 Shares of Common Stock
Itec
Environmental Group, inc.
Date
of
Issuance: August ___, 2006
No.
96
THIS
CERTIFIES that, for value received, Arbor ▇▇▇▇▇▇, LLC, or its assigns (in either
case, the “Holder”) is entitled to purchase, subject to the provisions of this
Warrant, from Itec Environmental Group, Inc., a Delaware corporation (the
“Company”), at the price per share set forth in Section 8 hereof, that number of
shares of the Company’s common stock (the “Common Stock”) set forth in Section 7
hereof. This Warrant is referred to herein as the “Warrant” and the shares of
Common Stock issuable pursuant to the terms hereof are sometimes referred to
herein as “Warrant Shares.”
1. Holder
Exercise of Warrant.
This
Warrant shall only be exercisable in whole. All shares of Common Stock issued
upon the exercise of this Warrant at the time of issuance will be validly
issued, fully paid, and nonassessable. To exercise this Warrant in whole, the
Holder shall deliver to the Company at its principal office, (a) a written
notice, in substantially the form of the exercise notice attached hereto as
Exhibit
A
(the
“Exercise Notice”), of the Holder’s election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased and
be
accompanied by a check for the full amount of the aggregate Exercise Price
(as
defined in Section 8(a) below) for the Warrant Shares so purchased and (b)
this
Warrant. The Company shall as promptly as practicable, and in any event within
twenty (20) days after delivery to the Company of (i) the Exercise Notice
together with payment of the Exercise Price, (ii) and this Warrant, execute
and
deliver or cause to be executed and delivered, in accordance with such notice,
a
certificate or certificates representing the aggregate number of Warrant Shares
specified in such notice. Each certificate representing Warrant Shares shall
bear the legend or legends required by applicable securities laws. The Company
shall pay all expenses and other charges payable in connection with the
preparation, issuance and delivery of such stock certificates except that,
in
case such stock certificates shall be registered in a name or names other than
the name of the Holder, funds sufficient to pay all stock transfer taxes, if
any, that are payable upon the issuance of such stock certificate or
certificates shall be paid by the Holder at the time of delivering the Exercise
Notice.
The
Holder shall also have the right to convert this Warrant or any portion thereof
(the "Conversion Right"), without payment by the Holder of the Exercise Price
in
cash or any other consideration (other than the surrender of rights to receive
Warrant Shares hereunder), into shares of Common Stock as provided in this
Section 1. Upon receipt by the Company of a duly executed and completed
Conversion Notice in the form attached hereto as Exhibit
B
for the
exercise of the Conversion Right with respect to a particular number of Warrant
Shares (the "Converted Warrant Shares"), the Company shall deliver to the Holder
(without payment by the Holder of the Exercise Price in cash or any other
consideration (other than the surrender of rights to receive Warrant Shares
hereunder)) that number of shares of Common Stock equal to the quotient obtained
by dividing: (x) the difference between (i) the product of (A) the Current
Market Price of a share of Common Stock multiplied by (B) the number of
Converted Warrant Shares and (ii) the product of (A) the Exercise Price
multiplied by (B) the number of the Converted Warrant Shares, in each case
as of
the Conversion Date, by (y) the Current Market Price of a share of Common Stock
on the Conversion Date. The term “Conversion Date” shall be the date a duly
executed and completed Conversion Notice is received by the Company. No
fractional Warrant Shares shall be issuable upon exercise of the Conversion
Right, and
if
the number of Warrant Shares to be issued determined in accordance with the
following formula is other than a whole number, the Company shall, at its
election, pay to the Holder an amount in cash equal to the Current Market Price
of the resulting fractional Warrant Share on the Conversion Date or round up
to
the next nearest whole share.
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The
term
"Current Market Price" for the shares of Common Stock as of a specified date
shall mean: (i) if the shares of Common Stock are publicly traded on such date,
the average closing price per share over the preceding 10 trading days as
reported on the principal stock exchange or quotation system on which the shares
of Common Stock are then listed or quoted; (ii) if the shares of Common Stock
are not so publicly traded on such date, the value determined in good faith
by
the Board of Directors of the Company; provided, that if Holder shall dispute
such value determined by the Board of Directors the value shall be the appraised
value per share of Common Stock as of such date determined by an investment
banking firm of recognized standing selected by the Company and reasonably
satisfactory to the Holder. In the event the appraised value is greater than
120% of the value of determined by the Board of Directors, the cost of such
appraisal shall be borne by the Company and in all other circumstances, the
cost
of such appraisal shall be borne by the Holder.
The
Warrant shall expire on August ___, 2010 (the “Expiration Date”). The Holder may
exercise the warrant at any time prior to the Expiration Date.
2. Reservation
of Shares.
The
Company hereby covenants that at all times during the term of this Warrant
there
shall be reserved for issuance such number of shares of its Common Stock as
shall be required to be issued upon exercise of this Warrant.
3.
Fractional
Shares.
This
Warrant may be exercised only for a whole number of shares of Common Stock,
and
no fractional shares or scrip representing fractional shares shall be issuable
upon the exercise of this Warrant.
4.
Transfer
of Warrant and Warrant Shares.
The
Holder may sell, pledge, hypothecate, or otherwise transfer (“Transfer”) this
Warrant, in whole or in part, only if such sale, pledge, hypothecation, or
transfer is made in compliance with the Act or pursuant to an available
exemption from registration under the Act relating to the disposition of
securities. Subject to the preceding sentence, the Company agrees to issue
to
any successor or transferee of Holder a new Warrant or Warrants of like tenor
promptly upon receipt of Holder’s notice of any such Transfer and shall issue to
Holder a new Warrant representing any portion hereof that is not so Transferred.
5.
Loss
of Warrant.
Upon
receipt by the Company of evidence satisfactory to it of the loss, theft, or
destruction of this Warrant, and of indemnification satisfactory to it, or
upon
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new warrant of like tenor.
6.
Rights
of the Holder.
No
provision of this Warrant shall be construed as conferring upon the Holder
the
right to vote, consent, receive dividends or receive notice other than as
expressly provided herein. Prior to exercise, no provision hereof, in the
absence of affirmative action by the Holder to exercise this Warrant, and no
enumeration herein of the rights or privileges of the Holder, shall give rise
to
any liability of the holder for the purchase price of any warrant shares or
as a
stockholder of the Company, whether such liability is asserted by the Company
or
by creditors of the Company.
7.
Number
of Warrant Shares.
This
Warrant shall be exercisable for 3,000,000 shares of the Company’s Common Stock,
as adjusted from time to time in accordance with this Agreement.
8.
Exercise
Price; Adjustment of Warrants.
a.
Exercise
Price.
The per
share purchase price (the “Exercise Price”) for each of the Warrant Shares
purchasable under this Warrant shall be equal to $0.12, as adjusted from time
to
time in accordance with this Agreement.
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b. Adjustment
for Mergers or Reorganization, etc.
In case
of any consolidation or merger of the Company with or into another corporation
or the conveyance of all or substantially all of the assets of the
Company to another corporation, this Warrant shall be exercisable into
the number of shares of stock or other securities or property to which a holder
of the number of shares of Common Stock of the Company deliverable upon exercise
of this Warrant would have been entitled upon such consolidation, merger or
conveyance; and, in any such case, appropriate adjustment (as determined by
the
Board of Directors of the Company) shall be made in the application of the
provisions herein set forth with respect to the rights and interest thereafter
of the holder of this Warrant, to the end that the provisions set forth herein
shall thereafter be applicable, as nearly as reasonable may be, in relation
to
any shares of stock or other property thereafter deliverable upon the exercise
of this Warrant.
c. Adjustment
in the Case of Certain Transactions or Events.
The Exercise Price shall be adjusted downward in the event the Company issues
Common Stock (or securities exercisable for or convertible into or exchangeable
for common stock) at a price below the Exercise Price, to a price equal to
such
issue price. The preceding adjustment shall be effective immediately at the
time
of the issuance of any security issued (or of any reduction in effective price
of any security). In addition, the Exercise Price and the number of Warrant
Shares issuable upon exercise hereof shall be appropriately adjusted in the
case
of stock splits, stock dividends, recapitalizations and the like.
d.
NO
IMPAIRMENT.
THE
COMPANY WILL NOT, THROUGH ANY REORGANIZATION, TRANSFER OF ASSETS, CONSOLIDATION,
MERGER, DISSOLUTION, ISSUE OR SALE OF SECURITIES OR ANY OTHER VOLUNTARY ACTION,
AVOID OR SEEK TO AVOID THE OBSERVANCE OR PERFORMANCE OF ANY OF THE TERMS TO
BE
OBSERVED OR PERFORMED HEREUNDER BY THE COMPANY, BUT WILL AT ALL TIMES IN GOOD
FAITH ASSIST IN THE CARRYING OUT OF ALL THE PROVISIONS OF THIS SECTION AND
IN
THE TAKING OF ALL SUCH ACTION AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO
PROTECT THE EXERCISE RIGHTS OF THE HOLDER OF THIS WARRANT AGAINST IMPAIRMENT.
e. Issue
Taxes.
The
Company shall pay issue taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on exercise of this Warrant, in whole;
provided, however, that the Company shall not be obligated to pay any transfer
taxes resulting from any transfer requested by any holder in connection with
any
such exercise.
f.
Reservation
of Stock Issuable Upon Conversion.
The
Company shall at all times reserve and keep available out of its authorized
but
unissued shares of common stock, solely for the purpose of effecting the
exercise of this Warrant, such number of its shares of common stock as shall
from time to time be sufficient to effect the exercise of this Warrant; and
if
at any time the number of authorized but unissued shares of common stock shall
not be sufficient to effect the exercise of this Warrant, the Company will
take
all appropriate corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of common stock to
such
number of shares as shall be sufficient for such purpose.
9. Certain
Distributions.
In case
the Company shall, at any time, prior to the Expiration Date, declare any
distribution of its assets to holders of its common stock as a partial
liquidation, distribution or by way of return of capital, other than as a
dividend payable out of earnings or any surplus legally available for dividends,
then the Holder shall be entitled, upon the proper exercise of this Warrant
in
whole prior to the effecting of such declaration, to receive, in addition to
the
shares of common stock issuable on such exercise, the amount of such assets
(or
at the option of the Company a sum equal to the value thereof at the time of
such distribution to holders of common stock as such value is determined by
the
Board of Directors of the Company in good faith), which would have been payable
to the Holder had it been a holder of record of such shares of common stock
on
the record date for the determination of those holders of Common Stock entitled
to such distribution.
10. Dissolution
or Liquidation.
In case
the Company shall, at any time prior to the Expiration Date, dissolve, liquidate
or wind up its affairs, the Holder shall be entitled, upon the proper exercise
of this Warrant in whole and prior to any distribution associated with such
dissolution, liquidation, or winding up, to receive on such exercise, in lieu
of
the shares of Common Stock to which the Holder would have been entitled, the
same kind and amount of assets as would have been distributed or paid to the
Holder upon any such dissolution, liquidation or winding up, with respect to
such shares of Common Stock had the Holder been a holder of record of such
share
of Common
Stock on the record date for the determination of those holders of Common Stock
entitled to receive any such dissolution, liquidation, or winding up
distribution.
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11.
Reclassification
or Reorganization.
In case
of any reclassification, capital reorganization or other change of outstanding
shares of common stock of the Company (other than a change in par value, or
from
par value to no par value, or from no par value to par value, or as a result
of
an issuance of common stock by way of dividend or other distribution or of
a
subdivision or combination), the Company shall cause effective provision to
be
made so that the Holder shall have the right thereafter by exercising this
Warrant, to receive the kind and amount of shares of stock and other securities
and property
receivable upon such reclassification, capital reorganization or other change,
that a holder of the number of shares of common stock which might have been
purchased upon exercise of this warrant immediately prior to such
reclassification or change would have received. Any such provision shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this warrant. The foregoing
provisions of this Section 11 shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of common
stock. in the event that in any such capital reorganization, reclassification,
or other change, additional shares of common stock shall be issued in exchange,
conversion, substitution or payment, in whole, for or of a security of the
company other than common stock, any amount of the consideration received upon
the issue thereof being determined by the board of directors of the company
shall be final and binding on the holder.
12.
Miscellaneous.
a.
Successors
and Assigns.
The
terms and conditions of this Agreement shall inure to the benefit of, and be
binding upon, the respective successors and assigns of the parties, except
to
the extent otherwise provided herein. 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.
b.
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California without regard to the principles of conflict of laws
thereof.
c. Counterparts;
Delivery by Facsimile.
This
Agreement may be executed 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. Delivery of this Agreement may be effected by facsimile.
d.
Titles
and Subtitles.
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.
e.
Notices.
Unless
otherwise provided, any notice required or permitted hereunder shall be given
by
personal service upon the party to be notified by certified mail, return receipt
requested and: (i) if to the Company, addressed to Itec Environmental Group,
Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address
as
the Company may designate by notice to the Holder in accordance with the
provisions of this Section; and (ii) if to the Holder, at the address indicated
on the signature page hereof, or at such other addresses as the Holder may
designate by notice to the Company in accordance with the provisions of this
Section.
f.
Amendments
and Waivers.
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
prospectively or retroactively), only with the written consent of the Company
and the Holder.
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IN
WITNESS WHEREOF, the undersigned hereby sets is hand and seal this ___ day
of
August, 2006.
Itec
Environmental Group, Inc.
By:
____________________________________
Name: ▇▇▇▇ De Laurentiis
Title: President and Chief Executive Officer
Holder
Name: ____________________________________
Holder
Address: __________________________________
_________________________________________________
_________________________________________________
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EXHIBIT
A
NOTICE
OF EXERCISE
(To
be
signed only upon exercise of the Warrant)
TO:
Itec
Environmental Group, Inc.
The
undersigned, hereby irrevocably elects to exercise the purchase rights
represented by the Warrant granted to the undersigned on ______________ and
to
purchase thereunder __________* shares of Common Stock of Itec Environmental
Group, Inc. (the “Company”).
Dated:
________________
_________________________________________
(Signature
must conform in all respects to name
of
holder
as specified on the face of the Warrant)
_________________________________________
(Please
Print Name)
_________________________________________
(Address)
*
Insert
here the number of shares being exercised, without making any adjustment for
additional Common Stock of the Company, other securities or property which,
pursuant to the adjustment provisions of the Warrant, may be deliverable upon
exercise.
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EXHIBIT
B
(FORM
OF
CONVERSION NOTICE TO BE EXECUTED
UPON
EXERCISE OF WARRANT)
CONVERSION
NOTICE
The
undersigned, the registered holder of Warrant No. _______ (the "Warrant"),
issued Itec Environmental Group, Inc. (the "Company"), hereby (1) irrevocably
elects to convert the Warrant into such number of shares of Common Stock of
the
Company as is determined pursuant to Section 1 of the Warrant, which conversion
shall be effected pursuant to the terms and conditions of the Warrant, and
(2)
directs that the certificates for such shares of Common Stock issuable upon
exercise of the Warrant be issued in the name of and
delivered
to:
_________________________________________________________________
whose
address is
_____________________________________________________________.
The
undersigned represents that the aforesaid shares of Common Stock are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with the distribution thereof and that the
undersigned has no present intention of distributing or reselling such
shares.
|
(Name)
|
||
|
(Address)
|
||
SIGNATURE:
Dated:
________________.
NOTICE:
The signature on this Conversion Notice must correspond with the name as written
upon the face of the Warrant, or upon an assignment form attached
hereto.
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