textech_sb2-ex1007.htm


    EXHIBIT
      10.7

     

    THIS
      WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
      BEEN
      REGIS­TERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  EXCEPT
      AS OTHERWISE SET FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS
      OF
      SEPTEMBER 28, 2006, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD,
      TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRA­TION
      STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN
      FORM,
      SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE
      TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
      PURSUANT TO RULE 144 OR REGULATION S UNDER SUCH ACT.

     

    Right
      to
      Purchase 900,000 Shares of Common Stock, par value $.00001 per
      share

     

    STOCK
      PURCHASE WARRANT

     

    THIS
      CERTIFIES THAT, for value
      received, AJW Partners, LLC or its registered assigns, is entitled to purchase
      from Textechnologies
      Inc., a Delaware corporation (the “Company”), at any time or from time to
      time during the period specified in Paragraph 2 hereof, 1,800,000 fully
      paid and nonassessable shares of the Company’s Common Stock, par value $.00001
      per share (the “Common Stock”), at an exercise price per share equal to $1.00
      (the “Exercise Price”).  The term “Warrant Shares,” as used herein,
      refers to the shares of Common Stock purchasable hereunder.  The
      Warrant Shares and the Exercise Price are subject to adjustment as provided
      in
      Paragraph 4 hereof.  The term “Warrants” means this Warrant and the
      other warrants issued pursuant to that certain Securities Purchase Agreement,
      dated September 28, 2006, by and among the Company and the Buyers listed on
      the
      execution page thereof (the “Securities Purchase Agreement”).

     

    This
      Warrant is subject to the following terms, provisions, and
      conditions:

     

    1.           
      Manner of Exercise;
      Issuance of Certificates; Payment for Shares.

     

    Subject
      to the provisions hereof, this Warrant may be exercised by the holder hereof,
      in
      whole or in part, by the surrender of this Warrant, together with a completed
      exercise agreement in the form attached hereto (the “Exercise Agreement”), to
      the Company during normal business hours on any business day at the Company’s
      principal executive offices (or such other office or agency of the Company
      as it
      may designate by notice to the holder hereof), and upon (i) payment to the
      Company in cash, by certified or offi­cial bank check or by wire transfer
      for the account of the Company of the Exercise Price for the Warrant Shares
      specified in the Exercise Agreement or (ii) if the resale of the Warrant Shares
      by the holder is not then registered pursuant to an effective registration
      statement under the Securities Act of 1933, as amended (the “Securities Act”),
      delivery to the Company of a written notice of an election to effect a “Cashless
      Exercise” (as defined in Section 11(c) below) for the Warrant Shares specified
      in the Exercise Agreement.  The Warrant Shares so purchased shall be
      deemed to be issued to the holder hereof or such holder’s designee, as the
      record owner of such shares, as of the close of business on the date on which
      this Warrant shall have been surrendered, the completed Exercise Agreement
      shall
      have been delivered, and payment shall have been made for such shares as set
      forth above.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
              Certificates
                for the Warrant Shares so purchased, representing the aggregate number
                of
                shares specified in the Exercise Agreement, shall be delivered to
                the
                holder hereof within a reasonable time, not exceeding five (5) business
                days, after this Warrant shall have been so exercised. The certificates
                so
                delivered shall be in such denominations as may be requested by the
                holder
                hereof and shall be registered in the name of such holder or such
                other
                name as shall be designated by such holder. If this Warrant shall
                have
                been exercised only in part, then, unless this Warrant has expired,
                the
                Company shall, at its expense, at the time of delivery of such
                certificates, deliver to the holder a new Warrant representing the
                number
                of shares with respect to which this Warrant shall not then have
                been
                exercised. In addition to all other available remedies at law or
                in
                equity, if the Company fails to deliver certificates for the Warrant
                Shares within five (5) business days after this Warrant is exercised,
                then
                the Company shall pay to the holder in cash a penalty (the “Penalty”)
                equal to 2% of the number of Warrant Shares that the holder is entitled
                to
                multiplied by the Market Price (as hereinafter defined) for each
                day that
                the Company fails to deliver certificates for the Warrant
                Shares.  For example, if the holder is entitled to 100,000
                Warrant Shares and the Market Price is $2.00, then the Company shall
                pay
                to the holder $4,000 for each day that the Company fails to deliver
                certificates for the Warrant Shares.  The Penalty shall be paid
                to the holder by the fifth day of the month following the month in
                which
                it has accrued. 

            


    

     

    Notwithstanding
      anything in this Warrant to the contrary, in no event shall the holder of this
      Warrant be entitled to exercise a number of Warrants (or portions thereof)
      in
      excess of the number of Warrants (or portions thereof) upon exercise of which
      the sum of (i) the number of shares of Common Stock beneficially owned by the
      holder and its affiliates (other than shares of Common Stock which may be deemed
      beneficially owned through the ownership of the unexercised Warrants and the
      unexercised or unconverted portion of any other securities of the Company
      (including the Notes (as defined in the Securities Purchase Agreement)) subject
      to a limitation on conversion or exercise analogous to the limitation contained
      herein) and (ii) the number of shares of Common Stock issuable upon exercise
      of
      the Warrants (or portions thereof) with respect to which the determination
      described herein is being made, would result in beneficial ownership by the
      holder and its affiliates of more than 4.9% of the outstanding shares of Common
      Stock.  For purposes of the immediately preceding sentence, beneficial
      ownership shall be determined in accordance with Section 13(d) of the Securities
      Exchange Act of 1934, as amended, and Regulation 13D-G thereunder, except as
      otherwise provided in clause (i) of the preceding
      sentence.  Notwithstanding anything to the contrary contained herein,
      the limitation on exercise of this Warrant set forth herein may not be amended
      without (i) the written consent of the holder hereof and the Company and (ii)
      the approval of a majority of shareholders of the Company.

     

    2.           
      Period of
      Exercise.

     

    
      	
              This
                Warrant is exercisable at any time or from time to time on or after
                the
                date on which this Warrant is issued and delivered pursuant to the
                terms
                of the Securities Purchase Agreement and before 6:00 p.m., New York,
                New
                York time on the seventh (7th)
                anniversary of the date of issuance (the “Exercise Period”).
                

            


    

     

    
      
        
        

      

      
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    3.           
      Certain Agreements
      of
      the Company.

     

    
      	
              The
                Company hereby covenants and agrees as follows:


            


    

     

    (a)           
      Shares
      to
      be Fully Paid.  All Warrant
      Shares will, upon issuance in accordance with the terms of this Warrant, be
      validly issued, fully paid, and nonassessable and free from all taxes, liens,
      and charges with respect to the issue thereof.

     

    (b)           
      Reservation
      of Shares.  During the
      Exercise Period, the Company shall at all times have authorized, and reserved
      for the purpose of issuance upon exercise of this Warrant, a suf­ficient
      number of shares of Common Stock to provide for the exercise of this
      Warrant.

     

    (c)           
      Listing.  The
      Company shall
      promptly secure the listing of the shares of Common Stock issuable upon exercise
      of the Warrant upon each national securities exchange or automated quotation
      system, if any, upon which shares of Common Stock are then listed (subject
      to
      official notice of issuance upon exercise of this Warrant) and shall maintain,
      so long as any other shares of Common Stock shall be so listed, such listing
      of
      all shares of Common Stock from time to time issuable upon the exercise of
      this
      Warrant; and the Company shall so list on each national securities exchange
      or
      automated quotation system, as the case may be, and shall maintain such listing
      of, any other shares of capital stock of the Company issuable upon the exercise
      of this Warrant if and so long as any shares of the same class shall be listed
      on such national securities exchange or automated quotation system.

     

    (d)           
      Certain
      Actions Prohibited.  The Company
      will
      not, by amendment of its charter or 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 by it hereunder,
      but will at all times in good faith assist in the carrying out of all the
      provisions of this Warrant and in the taking of all such action as may
      reasonably be requested by the holder of this Warrant in order to protect the
      exercise privilege of the holder of this Warrant against dilu­tion or other
      impairment, consistent with the tenor and purpose of this
      Warrant.  Without limiting the general­ity of the foregoing, the
      Company (i) will not increase the par value of any shares of Common Stock
      receivable upon the exercise of this Warrant above the Exercise Price then
      in
      effect, and (ii) will take all such actions as may be necessary or appropriate
      in order that the Company may validly and legally issue fully paid and
      nonassessable shares of Common Stock upon the exercise of this
      Warrant.

     

    (e)           
      Successors
      and Assigns.  This Warrant
      will
      be binding upon any entity succeeding to the Company by merger, consolidation,
      or acquisition of all or sub­stantially all the Company’s
      assets.

     

    4.           
      Antidilution
      Provisions.

     

    During
      the Exercise Period, the Exercise Price and the number of Warrant Shares shall
      be subject to adjustment from time to time as provided in this Paragraph
      4.

     

    In
      the
      event that any adjustment of the Exercise Price as required herein results
      in a
      fraction of a cent, such Exercise Price shall be rounded up to the nearest
      cent.


    
      
        
        

      

      
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    (a)           
      Adjustment
      of Exercise Price and Number of Shares upon Issuance of Common Stock.  Except as
      otherwise provided in Paragraphs 4(c) and 4(e) hereof, if and whenever on or
      after the date of issuance of this Warrant, the Company issues or sells, or
      in
      accordance with Paragraph 4(b) hereof is deemed to have issued or sold, any
      shares of Common Stock for no consideration or for a consideration per share
      (before deduction of reasonable expenses or commissions or underwriting
      discounts or allowances in connection therewith) less than the Market Price
      on
      the date of issuance (a “Dilutive Issuance”), then immediately upon the Dilutive
      Issuance, the Exercise Price will be reduced to a price determined by
      multiplying the Exercise Price in effect immediately prior to the Dilutive
      Issuance by a fraction, (i) the numerator of which is an amount equal to the
      sum
      of (x) the number of shares of Common Stock actually outstanding immediately
      prior to the Dilutive Issuance, plus (y) the quotient of the aggregate
      consideration, calculated as set forth in Paragraph 4(b) hereof, received by
      the
      Company upon such Dilutive Issuance divided by the Market Price in effect
      immediately prior to the Dilutive Issuance, and (ii) the denominator of which
      is
      the total number of shares of Common Stock Deemed Outstanding (as defined below)
      immediately after the Dilutive Issuance.

     

    (b)           
      Effect
      on
      Exercise Price of Certain Events.  For purposes
      of
      determining the adjusted Exercise Price under Paragraph 4(a) hereof, the
      following will be applicable:

     

    (i)           
      Issuance
      of Rights or Options.  If the Company
      in
      any manner issues or grants any warrants, rights or options, whether or not
      immediately exercisable, to subscribe for or to purchase Common Stock or other
      securities convertible into or exchangeable for Common Stock (“Convertible
      Securities”) (such warrants, rights and options to purchase Common Stock or
      Convertible Securities are hereinafter referred to as “Options”) and the price
      per share for which Common Stock is issuable upon the exercise of such Options
      is less than the Market Price on the date of issuance or grant of such Options,
      then the maximum total number of shares of Common Stock issuable upon the
      exercise of all such Options will, as of the date of the issuance or grant
      of
      such Options, be deemed to be outstanding and to have been issued and sold
      by
      the Company for such price per share.  For purposes of the preceding
      sentence, the “price per share for which Common Stock is issuable upon the
      exercise of such Options” is determined by dividing (i) the total amount, if
      any, received or receivable by the Company as consideration for the issuance
      or
      granting of all such Options, plus the minimum aggregate amount of additional
      consideration, if any, payable to the Company upon the exercise of all such
      Options, plus, in the case of Convertible Securities issuable upon the exercise
      of such Options, the minimum aggregate amount of additional consideration
      payable upon the conversion or exchange thereof at the time such Convertible
      Securities first become convertible or exchangeable, by (ii) the maximum total
      number of shares of Common Stock issuable upon the exercise of all such Options
      (assuming full conversion of Convertible Securities, if
      applicable).  No further adjustment to the Exercise Price will be made
      upon the actual issuance of such Common Stock upon the exercise of such Options
      or upon the conversion or exchange of Convertible Securities issuable upon
      exercise of such Options.


    
      
        
        

      

      
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    (ii)           
      Issuance
      of Convertible Securities.  If the Company
      in
      any manner issues or sells any Convertible Securities, whether or not
      immediately convertible (other than where the same are issuable upon the
      exercise of Options) and the price per share for which Common Stock is issuable
      upon such conversion or exchange is less than the Market Price on the date
      of
      issuance, then the maximum total number of shares of Common Stock issuable
      upon
      the conversion or exchange of all such Convertible Securities will, as of the
      date of the issuance of such Convertible Securities, be deemed to be outstanding
      and to have been issued and sold by the Company for such price per
      share.  For the purposes of the preceding sentence, the “price per
      share for which Common Stock is issuable upon such conversion or exchange” is
      determined by dividing (i) the total amount, if any, received or receivable
      by
      the Company as consideration for the issuance or sale of all such Convertible
      Securities, plus the minimum aggregate amount of additional consideration,
      if
      any, payable to the Company upon the conversion or exchange thereof at the
      time
      such Convertible Securities first become convertible or exchangeable, by (ii)
      the maximum total number of shares of Common Stock issuable upon the conversion
      or exchange of all such Convertible Securities.  No further adjustment
      to the Exercise Price will be made upon the actual issuance of such Common
      Stock
      upon conversion or exchange of such Convertible Securities.

     

    (iii)           
      Change
      in
      Option Price or Conversion Rate.  If there is
      a
      change at any time in (i) the amount of additional consideration payable to
      the
      Company upon the exercise of any Options; (ii) the amount of additional
      consideration, if any, payable to the Company upon the conversion or exchange
      of
      any Convertible Securities; or (iii) the rate at which any Convertible
      Securities are convertible into or exchangeable for Common Stock (other than
      under or by reason of provisions designed to protect against dilution), the
      Exercise Price in effect at the time of such change will be readjusted to the
      Exercise Price which would have been in effect at such time had such Options
      or
      Convertible Securities still outstanding provided for such changed additional
      consideration or changed conversion rate, as the case may be, at the time
      initially granted, issued or sold.

     

    (iv)           
      Treatment
      of Expired Options and Unexercised Convertible Securities.  If, in any
      case,
      the total number of shares of Common Stock issuable upon exercise of any Option
      or upon conversion or exchange of any Convertible Securities is not, in fact,
      issued and the rights to exercise such Option or to convert or exchange such
      Convertible Securities shall have expired or terminated, the Exercise Price
      then
      in effect will be readjusted to the Exercise Price which would have been in
      effect at the time of such expiration or termination had such Option or
      Convertible Securities, to the extent outstanding immediately prior to such
      expiration or termination (other than in respect of the actual number of shares
      of Common Stock issued upon exercise or conversion thereof), never been
      issued.

     

    (v)           
      Calculation
      of Consideration Received.  If any Common
      Stock, Options or Convertible Securities are issued, granted or sold for cash,
      the consideration received therefor for purposes of this Warrant will be the
      amount received by the Company therefor, before deduction of reasonable
      commissions, underwriting discounts or allowances or other reasonable expenses
      paid or incurred by the Company in connection with such issuance, grant or
      sale.  In case any Common Stock, Options or Convertible Securities are
      issued or sold for a consideration part or all of which shall be other than
      cash, the amount of the consideration other than cash received by the Company
      will be the fair value of such consideration, except where such consideration
      consists of securities, in which case the amount of consideration received
      by
      the Company will be the Market Price thereof as of the date of
      receipt.  In case any Common Stock, Options or Convertible Securities
      are issued in connection with any acquisition, merger or consolidation in which
      the Company is the surviving corporation, the amount of consideration therefor
      will be deemed to be the fair value of such portion of the net assets and
      business of the non-surviving corporation as is attributable to such Common
      Stock, Options or Convertible Securities, as the case may be.  The
      fair value of any consideration other than cash or securities will be determined
      in good faith by the Board of Directors of the Company.


    
      
        
        

      

      
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    (vi)           
      Exceptions
      to Adjustment of Exercise Price.  No adjustment
      to
      the Exercise Price will be made (i) upon the exercise of any warrants, options
      or convertible securities granted, issued and outstanding on the date of
      issuance of this Warrant; (ii) upon the grant or exercise of any stock or
      options which may hereafter be granted or exercised under any employee benefit
      plan, stock option plan or restricted stock plan of the Company now existing
      or
      to be implemented in the future, so long as the issuance of such stock or
      options is approved by a majority of the independent members of the Board of
      Directors of the Company or a majority of the members of a committee of
      independent directors established for such purpose; or (iii) upon the exercise
      of the Warrants.

     

    (c)           
      Subdivision
      or Combination of Common Stock.  If the Company
      at
      any time subdivides (by any stock split, stock dividend, recapitalization,
      reorganization, reclassification or otherwise) the shares of Common Stock
      acquirable hereunder into a greater number of shares, then, after the date
      of
      record for effecting such subdivision, the Exercise Price in effect immediately
      prior to such subdivision will be proportionately reduced.  If the
      Company at any time combines (by reverse stock split, recapitalization,
      reorganization, reclassification or otherwise) the shares of Common Stock
      acquirable hereunder into a smaller number of shares, then, after the date
      of
      record for effecting such combination, the Exercise Price in effect immediately
      prior to such combination will be proportionately increased.

     

    (d)           
      Adjustment
      in Number of Shares.  Upon each
      adjustment of the Exercise Price pursuant to the provisions of this Paragraph
      4,
      the number of shares of Common Stock issuable upon exercise of this Warrant
      shall be adjusted by multiplying a number equal to the Exercise Price in effect
      immediately prior to such adjustment by the number of shares of Common Stock
      issuable upon exercise of this Warrant immediately prior to such adjustment
      and
      dividing the product so obtained by the adjusted Exercise Price.

     

    (e)           
      Consolidation,
      Merger or Sale.  In case of
      any
      consolidation of the Company with, or merger of the Company into any other
      corporation, or in case of any sale or conveyance of all or substantially all
      of
      the assets of the Company other than in connection with a plan of complete
      liquidation of the Company, then as a condition of such consolidation, merger
      or
      sale or conveyance, adequate provision will be made whereby the holder of this
      Warrant will have the right to acquire and receive upon exercise of this Warrant
      in lieu of the shares of Common Stock immediately theretofore acquirable upon
      the exercise of this Warrant, such shares of stock, securities or assets as
      may
      be issued or payable with respect to or in exchange for the number of shares
      of
      Common Stock immediately theretofore acquirable and receivable upon exercise
      of
      this Warrant had such consolidation, merger or sale or conveyance not taken
      place.  In any such case, the Company will make appropriate provision
      to insure that the provisions of this Paragraph 4 hereof will thereafter be
      applicable as nearly as may be in relation to any shares of stock or securities
      thereafter deliverable upon the exercise of this Warrant.  The Company
      will not effect any consolidation, merger or sale or conveyance unless prior
      to
      the consummation thereof, the successor corporation (if other than the Company)
      assumes by written instrument the obligations under this Paragraph 4 and the
      obligations to deliver to the holder of this Warrant such shares of stock,
      securities or assets as, in accordance with the foregoing provisions, the holder
      may be entitled to acquire.


    
      
        
        

      

      
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    (f)           
      Distribution
      of Assets.  In case the
      Company shall declare or make any distribution of its assets (including cash)
      to
      holders of Common Stock as a partial liquidating dividend, by way of return
      of
      capital or otherwise, then, after the date of record for determining
      shareholders entitled to such distribution, but prior to the date of
      distribution, the holder of this Warrant shall be entitled upon exercise of
      this
      Warrant for the purchase of any or all of the shares of Common Stock subject
      hereto, to receive the amount of such assets which would have been payable
      to
      the holder had such holder been the holder of such shares of Common Stock on
      the
      record date for the determination of shareholders entitled to such
      distribution.

     

    (g)           
      Notice
      of
      Adjustment.  Upon the
      occurrence of any event which requires any adjustment of the Exercise Price,
      then, and in each such case, the Company shall give notice thereof to the holder
      of this Warrant, which notice shall state the Exercise Price resulting from
      such
      adjustment and the increase or decrease in the number of Warrant Shares
      purchasable at such price upon exercise, setting forth in reasonable detail
      the
      method of calculation and the facts upon which such calculation is
      based.  Such calculation shall be certified by the Chief Financial
      Officer of the Company.

     

    (h)           
      Minimum
      Adjustment of Exercise Price.  No adjustment
      of
      the Exercise Price shall be made in an amount of less than 1% of the Exercise
      Price in effect at the time such adjustment is otherwise required to be made,
      but any such lesser adjustment shall be carried forward and shall be made at
      the
      time and together with the next subsequent adjustment which, together with
      any
      adjustments so carried forward, shall amount to not less than 1% of such
      Exercise Price.

     

    (i)           
      No
      Fractional Shares.  No fractional
      shares of Common Stock are to be issued upon the exercise of this Warrant,
      but
      the Company shall pay a cash adjustment in respect of any fractional share
      which
      would otherwise be issuable in an amount equal to the same fraction of the
      Market Price of a share of Common Stock on the date of such
      exercise.

     

    (j)           
      Other
      Notices.  In case at
      any
      time:

     

    (i)           
      the Company shall declare any dividend upon the Common Stock payable in shares
      of stock of any class or make any other distribution (including dividends or
      distributions payable in cash out of retained earnings) to the holders of the
      Common Stock;

     

    (ii)           
      the Company shall offer for subscription pro rata to the holders of the Common
      Stock any additional shares of stock of any class or other rights;

     

    (iii)           there
      shall be any capital reorganiza­tion of the Company, or reclassification of
      the Common Stock, or consolidation or merger of the Company with or into, or
      sale of all or substan­tially all its assets to, another corporation or
      entity; or

     

    (iv)           
      there shall be a voluntary or involun­tary dissolution, liquidation or
      winding up of the Company;


    
      
        
        

      

      
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    then,
      in
      each such case, the Company shall give to the holder of this Warrant (a) notice
      of the date on which the books of the Company shall close or a record shall
      be
      taken for determining the holders of Common Stock entitled to receive any such
      divi­dend, distribution, or subscription rights or for determining the
      holders of Common Stock entitled to vote in respect of any such reorganization,
      reclassification, consolidation, merger, sale, dissolution, liquidation or
      winding-up and (b) in the case of any such reorganization, reclassification,
      consolidation, merger, sale, dissolution, liquidation or winding-up, notice
      of
      the date (or, if not then known, a reasonable approximation thereof by the
      Company) when the same shall take place.  Such notice shall also
      specify the date on which the holders of Common Stock shall be entitled to
      receive such dividend, distribution, or subscription rights or to exchange
      their
      Common Stock for stock or other securities or property deliverable upon such
      reorganization, re­classification, consolidation, merger, sale, dissolution,
      liquidation, or winding-up, as the case may be.  Such notice shall be
      given at least 30 days prior to the record date or the date on which the
      Company’s books are closed in respect thereto.  Failure to give any
      such notice or any defect therein shall not affect the validity of the
      proceedings referred to in clauses (i), (ii), (iii) and (iv) above.

     

    (k)           
      Certain
      Events.  If any event
      occurs of the type contemplated by the adjustment provisions of this Paragraph
      4
      but not expressly provided for by such provisions, the Company will give notice
      of such event as provided in Paragraph 4(g) hereof, and the Company’s Board of
      Directors will make an appropriate adjustment in the Exercise Price and the
      number of shares of Common Stock acquirable upon exercise of this Warrant so
      that the rights of the holder shall be neither enhanced nor diminished by such
      event.

     

    (l)           
      Other
      Events.  In the event
      the closing price for the Common Stock closed below $1.25 after such time as
      the
      Registration Statement is declared effective, the warrant exercise price shall
      be ratcheted down in the following manner:  fifteen (15) business days
      after the Registration Statement is declared effective the exercise price shall
      become 115% of the trailing 5 day volume weighted average price of the Common
      Stock (“VWAP”); thirty
      (30) business days after the Registration Statement is declared effective the
      exercise price shall become 115% of the trailing 5 day VWAP; forty-five (45)
      business days after the Registration Statement is declared effective the
      exercise price shall become 115% of the trailing 5 day VWAP; and sixty (60)
      business days after the Registration Statement is declared effective the
      exercise price shall become 125% of the trailing 5 day
      VWAP.  Notwithstanding anything in this subsection to the contrary, in
      the event the Common Stock is trading above $.75 at any time during these
      periods, the exercise price shall remain $1.00 and not be subject to any change
      whatsoever.

     

    (m)           
      Certain
      Definitions.

     

    (i)           
      “Common
      Stock Deemed Outstanding” shall mean
      the number of
      shares of Common Stock actually outstanding (not including shares of Common
      Stock held in the treasury of the Company), plus (x) pursuant to Paragraph
      4(b)(i) hereof, the maximum total number of shares of Common Stock issuable
      upon
      the exercise of Options, as of the date of such issuance or grant of such
      Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the maximum
      total number of shares of Common Stock issuable upon conversion or exchange
      of
      Convertible Securities, as of the date of issuance of such Convertible
      Securities, if any.


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    (ii)           
      “Market
      Price,” as of any
      date, (i) means the average of the last reported sale prices for the shares
      of
      Common Stock on the OTCBB for the five (5) Trading Days immediately preceding
      such date as reported by Bloomberg, or (ii) if the OTCBB is not the principal
      trading market for the shares of Common Stock, the average of the last reported
      sale prices on the principal trading market for the Common Stock during the
      same
      period as reported by Bloomberg, or (iii) if market value cannot be calculated
      as of such date on any of the foregoing bases, the Market Price shall be the
      fair market value as reasonably determined in good faith by (a) the Board of
      Directors of the Company or, at the option of a majority-in-interest of the
      holders of the outstanding Warrants by (b) an independent investment bank of
      nationally recognized standing in the valuation of businesses similar to the
      business of the corporation. The manner of determining the Market Price of
      the
      Common Stock set forth in the foregoing definition shall apply with respect
      to
      any other security in respect of which a determination as to market value must
      be made hereunder.

     

    (iii)           
      “Common
      Stock,” for
      purposes of this Paragraph 4, includes the Common Stock, par value $.00001
      per
      share, and any additional class of stock of the Company having no preference
      as
      to dividends or distributions on liquidation, provided that the shares
      purchasable pursuant to this Warrant shall include only shares of Common Stock,
      par value $.00001 per share, in respect of which this Warrant is exercisable,
      or
      shares resulting from any subdivision or combination of such Common Stock,
      or in
      the case of any reorganization, reclassification, consolidation, merger, or
      sale
      of the character referred to in Paragraph 4(e) hereof, the stock or other
      securities or property provided for in such Paragraph.

     

    5.           
      Issue
      Tax.

     

    
      	
              The
                issuance of certificates for Warrant Shares upon the exercise of
                this
                Warrant shall be made without charge to the holder of this Warrant
                or such
                shares for any issuance tax or other costs in respect thereof, provided
                that the Company shall not be required to pay any tax which may be
                payable
                in respect of any transfer involved in the issuance and delivery
                of any
                certificate in a name other than the holder of this Warrant.
                

            


    

     

    6.           
      No Rights or
      Liabilities as a Shareholder.

     

    
      	
              This
                Warrant shall not entitle the holder hereof to any voting rights
                or other
                rights as a shareholder of the Company. No provision of this Warrant,
                in
                the absence of affirmative action by the holder hereof to purchase
                Warrant
                Shares, and no mere enumeration herein of the rights or privileges
                of the
                holder hereof, shall give rise to any liability of such holder for
                the
                Exercise Price or as a shareholder of the Company, whether such liability
                is asserted by the Company or by creditors of the Company.
                

            


    

     

    7.           
      Transfer, Exchange,
      and Replacement of Warrant.

     

    (a)           
      Restriction
      on Transfer.  This Warrant
      and
      the rights granted to the holder hereof are transferable, in whole or in part,
      upon surrender of this Warrant, together with a properly executed assignment
      in
      the form attached hereto, at the office or agency of the Company referred to
      in
      Paragraph 7(e) below, pro­vided, however, that any transfer or
      assignment shall be subject to the conditions set forth in Paragraph 7(f) hereof
      and to the applicable provisions of the Securities Purchase
      Agreement.  Until due presentment for registration of transfer on the
      books of the Company, the Company may treat the registered holder hereof as
      the
      owner and holder hereof for all purposes, and the Company shall not be affected
      by any notice to the con­trary.  Notwithstanding anything to the
      contrary contained herein, the registration rights described in Paragraph 8
      are
      assignable only in accordance with the provisions of that certain Registration
      Rights Agreement, dated September 28, 2006, by and among the Company and the
      other signatories thereto (the “Registration Rights
      Agreement”).


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    (b)           
      Warrant
      Exchangeable for Different Denomina­tions.  This Warrant
      is
      exchangeable, upon the surrender hereof by the holder hereof at the office
      or
      agency of the Company referred to in Paragraph 7(e) below, for new Warrants
      of
      like tenor representing in the aggregate the right to purchase the number of
      shares of Common Stock which may be purchased hereunder, each of such new
      Warrants to represent the right to purchase such number of shares as shall
      be
      designated by the holder hereof at the time of such surrender.

     

    (c)           
      Replacement
      of Warrant.  Upon receipt
      of
      evidence reasonably satisfactory to the Company of the loss, theft, destruction,
      or mutilation of this Warrant and, in the case of any such loss, theft, or
      destruc­tion, upon delivery of an indemnity agreement reasonably
      satisfactory in form and amount to the Company, or, in the case of any such
      mutilation, upon surrender and cancellation of this Warrant, the Company, at
      its
      expense, will execute and deliver, in lieu thereof, a new Warrant of like
      tenor.

     

    (d)           
      Cancellation;
      Payment of Expenses.  Upon the
      surrender of this Warrant in connection with any trans­fer, exchange, or
      replacement as provided in this Paragraph 7, this Warrant shall be promptly
      canceled by the Company.  The Company shall pay all taxes (other than
      securities transfer taxes) and all other expenses (other than legal expenses,
      if
      any, incurred by the holder or transferees) and charges payable in connection
      with the preparation, execution, and delivery of Warrants pursuant to this
      Paragraph 7.

     

    (e)           
      Register.  The
      Company shall
      maintain, at its principal executive offices (or such other office or agency
      of
      the Company as it may designate by notice to the holder hereof), a register
      for
      this Warrant, in which the Company shall record the name and address of the
      person in whose name this Warrant has been issued, as well as the name and
      address of each transferee and each prior owner of this Warrant.

     

    (f)           
      Exercise
      or Transfer Without Registration.  If, at the
      time
      of the surrender of this Warrant in connection with any exercise, transfer,
      or
      exchange of this Warrant, this Warrant (or, in the case of any exercise, the
      Warrant Shares issuable hereunder), shall not be registered under the Securities
      Act of 1933, as amended (the “Securities Act”) and under applicable state
      securities or blue sky laws, the Company may require, as a condition of allowing
      such exercise, transfer, or exchange, (i) that the holder or transferee of
      this
      Warrant, as the case may be, furnish to the Company a written opinion of
      counsel, which opinion and counsel are acceptable to the Company, to the effect
      that such exercise, transfer, or exchange may be made without registration
      under
      said Act and under applicable state securities or blue sky laws, (ii) that
      the
      holder or transferee execute and deliver to the Company an investment letter
      in
      form and substance acceptable to the Company and (iii) that the transferee
      be an
“accredited investor” as defined in Rule 501(a) promulgated under the Securities
      Act; provided that no such opinion, letter or status as an “accredited investor”
shall be required in connection with a transfer pursuant to Rule 144 under
      the
      Securities Act.  The first holder of this Warrant, by taking and
      holding the same, represents to the Company that such holder is acquiring this
      Warrant for investment and not with a view to the distribution
      thereof.

     

    8.           
      Registration
      Rights.

     

    
      	
              The
                initial holder of this Warrant (and certain assignees thereof) is
                entitled
                to the benefit of such registration rights in respect of the Warrant
                Shares as are set forth in Section 2 of the Registration Rights
                Agreement. 

            


    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    9.           
      Notices.

     

    
      	
              All
                notices, requests, and other communications required or permitted
                to be
                given or delivered hereunder to the holder of this Warrant shall
                be in
                writing, and shall be personally delivered, or shall be sent by certified
                or registered mail or by recognized overnight mail courier, postage
                prepaid and addressed, to such holder at the address shown for such
                holder
                on the books of the Company, or at such other address as shall have
                been
                furnished to the Company by notice from such holder. All notices,
                requests, and other communications required or permitted to be given
                or
                delivered hereunder to the Company shall be in writing, and shall
                be
                personally delivered, or shall be sent by certified or registered
                mail or
                by recognized overnight mail courier, postage prepaid and addressed,
                to
                the office of David E. Price, Esq, General Counsel, at 13520 Oriental
                St,
                Rockville, Md 20853, or at such other address as shall have been
                furnished
                to the holder of this Warrant by notice from the Company. Any such
                notice,
                request, or other communication may be sent by facsimile, but shall
                in
                such case be subsequently confirmed by a writing personally delivered
                or
                sent by certified or registered mail or by recognized overnight mail
                courier as provided above. All notices, requests, and other communications
                shall be deemed to have been given either at the time of the receipt
                thereof by the person entitled to re­ceive such notice at the address
                of such person for purposes of this Paragraph 9, or, if mailed by
                registered or certified mail or with a recognized overnight mail
                courier
                upon deposit with the United States Post Office or such overnight
                mail
                courier, if postage is prepaid and the mailing is properly addressed,
                as
                the case may be. 

            


    

     

    10.           
      Governing
      Law.

     

    
      	
              THIS
                WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE
                WITH
                THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
                TO BE
                PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
                OF
                CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE
                JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
                NEW
                YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE
                AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS
                CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE
                DEFENSE
                OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
                BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED
                BY
                FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE
                OF
                PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN
                SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
                PERMITTED BY LAW.  BOTH PARTIES AGREE THAT A FINAL
                NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE
                AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT
                OR IN
                ANY OTHER LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN
                ANY DISPUTE ARISING UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR ALL
                FEES
                AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY
                IN CONNECTION WITH SUCH DISPUTE. HOWEVER, ALL PARTIES
                HERETO AGREE
                THAT PRIOR TO THE FILING OF ANY SUIT IN THE COURTS OF NEW YORK THAT
                THEY
                SHALL FIRST AGREE TO ARBITRATION BY CHOOSING AN ARTIBRATOR IN NEW
                YORK WHO
                SHALL HAVE FULL AUTHORITY TO HEAR, ADJUDGE AND ISSUE ANY FINDINGS
                HE FINDS
                REASONABLE

            


    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    11.           
      Miscellaneous.

     

    (a)           
      Amendments.  This
      Warrant and
      any provision hereof may only be amended by an instrument in writing signed
      by
      the Company and the holder hereof.

     

    (b)           
      Descriptive
      Headings.  The descriptive
      headings of the several paragraphs of this Warrant are in­serted for
      purposes of reference only, and shall not affect the meaning or construction
      of
      any of the provisions hereof.

     

    (c)           
      Cashless
      Exercise.  Notwithstanding
      anything to the contrary contained in this Warrant, if the resale of the Warrant
      Shares by the holder is not then registered pursuant to an effective
      registration statement under the Securities Act, this Warrant may be exercised
      by presentation and surrender of this Warrant to the Company at its principal
      executive offices with a written notice of the holder’s intention to effect a
      cashless exercise, including a calculation of the number of shares of Common
      Stock to be issued upon such exercise in accordance with the terms hereof (a
      “Cashless Exercise”).  In the event of a Cashless Exercise, in lieu of
      paying the Exercise Price in cash, the holder shall surrender this Warrant
      for
      that number of shares of Common Stock determined by multiplying the number
      of
      Warrant Shares to which it would otherwise be entitled by a fraction, the
      numerator of which shall be the difference between the then current Market
      Price
      per share of the Common Stock and the Exercise Price,  and the
      denominator of which shall be the then current Market Price per share of Common
      Stock.  For example, if the holder is exercising 100,000 Warrants with
      a per Warrant exercise price of $0.75 per share through a cashless exercise
      when
      the Common Stock’s current Market Price per share is $2.00 per share, then upon
      such Cashless Exercise the holder will receive 62,500 shares of Common
      Stock.

     

    (d)           
      Remedies.  The
      Company acknowledges that a
      breach by it of its obligations hereunder will cause irreparable harm to the
      holder, by vitiating the intent and purpose of the transaction contemplated
      hereby.  Accordingly, the Company acknowledges that the remedy at law
      for a breach of its obligations under this Warrant will be inadequate and
      agrees, in the event of a breach or threatened breach by the Company of the
      provisions of this Warrant, that the holder shall be entitled, in addition
      to
      all other available remedies at law or in equity, and in addition to the
      penalties assessable herein, to an injunction or injunctions restraining,
      preventing or curing any breach of this Warrant and to enforce specifically
      the
      terms and provisions thereof, without the necessity of showing economic loss
      and
      without any bond or other security being required.

    


     

    


     

    


     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the
      Company has caused this Warrant to be signed by its duly authorized
      officer.

     

    TEXTECHNOLOGIES
      INC.

    


    


    


    By:
/s/
      Peter
      Maddocks                                            
 

    Peter
      Maddocks

    Chief
      Executive Officer

    


     

    Dated
      as
      of September 28, 2006


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    FORM
      OF EXERCISE AGREEMENT

     

    


     

    Dated:  ________
      __, 200_

     

    


     

    To:           
      ______________________

     

    


     

    The
      undersigned, pursuant to the provisions set forth in the within Warrant, hereby
      agrees to purchase ________ shares of Common Stock covered by such Warrant,
      and
      makes pay­ment herewith in full therefor at the price per share provided by
      such Warrant in cash or by certified or official bank check in the amount of,
      or, if the resale of such Common Stock by the undersigned is not currently
      registered pursuant to an effective registration statement under the Securities
      Act of 1933, as amended, by surrender of securities issued by the Company
      (including a portion of the Warrant) having a market value (in the case of
      a
      portion of this Warrant, determined in accordance with Section 11(c) of the
      Warrant) equal to $_________.  Please issue a certificate or
      certifi­cates for such shares of Common Stock in the name of and pay any
      cash for any fractional share to:

     

    


    
    

    
      	 	
              Name: ______________________________

              


              


              Signature:

              Address:____________________________

                             
                ____________________________  

            


    

     

    


    
      	
               

            	
              Note:

            	
              The
                above signature should correspond exactly with the name on the face
                of the
                within Warrant, if applicable. 

            


    

    


     

    and,
      if
      said number of shares of Common Stock shall not be all the shares purchasable
      under the within Warrant, a new Warrant is to be issued in the name of said
      undersigned covering the balance of the shares purchasable thereunder less
      any
      frac­tion of a share paid in cash.


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    FORM
      OF ASSIGNMENT

    


     

    


     

    FOR
      VALUE RECEIVED, the
      undersigned hereby sells, assigns, and transfers all the rights of the
      undersigned under the within Warrant, with respect to the number of shares
      of
      Common Stock covered thereby set forth hereinbelow, to:

    


     

    Name
      of
      Assignee                                                                          
     Address                                                                  
                          
No of
      Shares

     

    


     

    


     

    


     

    ,
      and
      hereby irrevocably constitutes and appoints ___________________________________
      as agent and attorney-in-fact to trans­fer said Warrant on the books of the
      within-named corporation, with full power of substitution in the
      premises.

     

    


     

    Dated:                      
      ________ __, 200_

     

    
      


      
      

      
        	 In
                the
                presence of:	
                ______________________________________

                 

                Name: _________________________________

                


                


                Signature:
                  ______________________________

                
                  Title
                    of Signing Officer or Agent (if any):

                                    
                    ______________________________

                  Address:  ______________________________

                                   
                    ______________________________

                

                 

              


      

      
         

        
          	
                   

                	
                  Note:

                	
                  The
                    above signature should correspond exactly with the name on the
                    face of the
                    within Warrant, if applicable. 

                


        

         

         

        15