Exhibit 10.4


 


DEBENTURE REDEMPTION
AGREEMENT


 


This Debenture
Redemption Agreement (“Agreement”)
is entered into as of January 9, 2009 by and between                         
(“Holder”) and Iteris, Inc. (“Iteris” or the “Company”).


 


RECITALS


 


WHEREAS, Holder
holds a 6% Convertible Debenture dated May 19, 2004 in the principal
amount of $                  
(the “Debenture”); and


 


WHEREAS, the
parties hereto have reached certain agreements with respect to the redemption
of the above-described debenture.


 


NOW, THEREFORE,
in consideration of the foregoing and the mutual promises and agreements
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:


 


1.             Debenture
Redemption.


 


1.1.          The Company agrees to redeem from Holder,
and Holder agrees to sell back to the Company, the Debenture for a payment of                         
($                  )
(the “Redemption Price”).  In addition to the payment of the Redemption
Price, the Company shall pay at the Closing (as defined below) all accrued but
unpaid interest on the Debenture as of the date of Closing.


 


1.2.          The redemption of the Debenture (the “Redemption”) shall take place at the
offices of Dorsey & Whitney LLP, 38 Technology Drive, Suite 100,
Irvine, California 92618, at 1:00 P.M. Pacific Time on January 9,
2009, or at such other time and place as the Company and Holder mutually agree
orally or in writing (which time and place are designated as the “Closing”).  At the Closing, Holder shall deliver to the
Company the original of the Debenture against payment by the Company of the
amounts set forth in Section 1.1 by check, wire transfer or any
combination thereof.  Notwithstanding the
foregoing, Holder acknowledges and agrees that, upon and as of the payment by
the Company of the amounts set forth in Section 1.1, whether or not
Holder has delivered and surrendered the original of the Debenture to the
Company, the Debenture shall be deemed null and void and cancelled in its
entirety and Holder shall have no further rights with respect to or under the
Debenture, whether such rights shall have accrued prior to or after the date
hereof.


 


2.             Representations
and Warranties.  Holder hereby
represents, warrants and acknowledges as follows:


 


2.1.          As of the date hereof, the principal
amount outstanding under the Debenture is                         
($                  )
and the accrued but unpaid interest outstanding under the Debenture is                         
($                  ).


 

















 


2.2.          Holder is
the sole record and beneficial owner of the Debenture.  Upon payment of the amounts set forth in Section 1.1,
the Company will acquire good and valid title to the Debenture, free and
clear of all liens, security interests, pledges, claims and encumbrances
of every kind, nature and description incurred or created by Holder.


 


2.3.          Holder has the full right and power to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.  The execution, delivery and performance of
this Agreement by Holder, and the consummation of the transactions contemplated
hereby, (i) have been duly authorized by all requisite organizational
action of Holder and (ii) do not and will not conflict with any law
applicable to Holder or any of its properties or assets or any provisions of
Holder’s organizational documents or contracts, agreements or other instrument
to which Holder is a party or by which any of its properties or assets may be
bound.


 


2.4.          Holder is an experienced and
sophisticated investor, having such knowledge and experience in business and
financial matters and investing as to be able to protect its own interests and
assess the risks and merits of the Redemption. 
Holder has independently determined the advisability of entering into
this Agreement and is entering into this Agreement of its own volition, and is
not relying on any representations or statements of the Company or its
officers, directors, shareholders, employees, agents, attorneys and
representatives except for those representations and statements expressly set
forth herein.


 


2.5.          Holder has had the opportunity to
consult with counsel of its choice regarding the meaning and legal effect of
this Agreement, and regarding the advisability of making the agreements
provided for herein, and fully understands the same.


 


3.             Release.  The following release shall be effective upon
the Company’s payment of the amounts set forth in Section 1.1.


 


3.1.          Other than the obligations, covenants,
representations and warranties provided for in this Agreement, Holder, for
itself and its predecessors, successors, heirs, agents and assigns
(individually and collectively, the “Releasing Parties”),
hereby waives, releases, and forever discharges Iteris and its predecessors,
successors, assigns, officers, directors, shareholders, employees, agents,
attorneys and representatives, past and present, (collectively, the “Iteris Released Parties”) of and
from any and all rights, claims, debts, liabilities, demands, obligations,
promises, damages, causes of action and claims for relief of any kind, manner,
nature and description, known or unknown, which any of the Releasing Parties
have, may have had, might have asserted, may now have or assert, or may
hereafter have or assert against the Iteris Released Parties, or any of them,
related to or arising under the Redemption and Holder’s purchase and ownership
of the Debenture.  Holder represents and
warrants that it has not filed any claims, charges, complaints or actions
against the Company and has not assigned or transferred to any person or entity
any of the claims Holder is releasing in this Agreement.


 


3.2.          The Releasing Parties acknowledge and
agree that the foregoing release includes in its effect all claims that they do
not know or suspect to exist in their favor as of the date hereof, and the
Releasing Parties expressly waive any statute, legal doctrine or other similar
limitation upon the effect of general releases. 
In particular, the Releasing Parties waive any and 


 


2

















 


all rights and benefits conferred upon them
by Section 1542 of the California Civil Code, which states as follows:


 


A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.


 


4.             Governing Law.  This
Agreement shall in all respects be interpreted, enforced, and governed by and
under the internal laws of the State of Delaware, without giving effect to any
choice of law or conflict of law principles.


 


5.             Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the subject matter and supersedes
all prior oral or written communications, understandings and agreements with
respect thereto.


 


6.             Headings.  The use of headings in this
Agreement is merely for convenience and such headings shall not be used in
construing any provisions of this Agreement.


 


7.             Interpretation.  Each party has had the opportunity to
negotiate modifications to the language of this Agreement and agrees that, in
any dispute regarding the interpretation or construction of this Agreement, no
presumption shall operate in favor of or against any party by virtue of its
role in drafting or not drafting the terms and conditions set forth herein.


 


8.             Severability.  If any part, term or provision of this
Agreement is held by a court to be void or voidable, illegal, unenforceable,
invalid or otherwise in conflict with law, (i) the remaining provisions or
applications of this Agreement shall not be affected and the rights and
obligations of the parties shall be construed and enforced as if this Agreement
did not contain the particular term or provision held to be invalid and (ii) such
provision shall be amended to conform as nearly as possible, and only to the
extent required, to applicable law.


 


9.             Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all such
counterparts together shall constitute but one and the same instrument.  A photocopy or facsimile signature may be
used as an original.


 


[Signature Page Follows]


 


3

















 


IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective as of the date first indicated above.


 


	
  Iteris, Inc.

  	
   

  	
  [                            ]  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  



 


4

















 


Schedule for Exhibit 10.4


 


Iteris, Inc.
entered into a Debenture Redemption Agreement with the following Holders, each
substantially identical to this Exhibit 10.4 except as noted below:


 


	
  Holder

  	
   

  	
  Principal Amount

  of Debenture

  	
   

  	
  Redemption Price

  	
   

  	
  Principal

  Outstanding

  	
   

  	
  Accrued But

  Unpaid Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Irvin R. Kessler

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  	
  $

  	
  980,000.00

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  	
  $

  	
  1,479.45

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Provident Premier Master Fund Ltd.

  	
   

  	
  $

  	
  500,000.00

  	
   

  	
  $

  	
  490,000.00

  	
   

  	
  $

  	
  500,000.00

  	
   

  	
  $

  	
  737.70