Document:

Unassociated Document

     

    

      EXECUTION

       

    

    AMENDMENT
      NUMBER 1
      TO TRUST AGREEMENT

     

    THIS
      AMENDMENT NUMBER 1, dated as of March 30, 2007 (this “Amendment”),
      by
      and between MORGAN STANLEY CAPITAL I INC., a Delaware corporation, as depositor
      (the “Depositor”),
      and
      LASALLE BANK NATIONAL ASSOCIATION, a national banking association, as trustee
      (the “Trustee”),
      is to
      the Trust Agreement, dated as of February 1, 2007 (as amended, modified or
      otherwise supplemented from time to time in accordance with the terms thereof,
      the “Trust
      Agreement”),
      by
      and between the Depositor and the Trustee, and acknowledged by Morgan Stanley
      Mortgage Capital Inc., a New York corporation, as seller (the “Seller”).

     

     

    WITNESSETH:

     

    WHEREAS,
      the Depositor and the Trustee have previously entered into the Trust Agreement;
      and

     

    WHEREAS,
      the parties desire to amend the Trust Agreement in order to modify certain
      provisions of the Trust Agreement;

     

    NOW
      THEREFORE, in consideration of the premises and mutual covenants herein
      contained, the parties hereto hereby agree as follows:

     

    SECTION
      1.  Defined
      Terms.
      Capitalized terms used in this Amendment and not otherwise defined herein shall
      have the meanings assigned thereto in the Trust Agreement.

     

    SECTION
      2.  Full
      Force and Effect.
      Other
      than as specifically modified hereby, the Trust Agreement shall remain in full
      force and effect in accordance with the terms and provisions thereof and is
      hereby ratified and confirmed by the parties hereto.

     

    SECTION
      3.  Amendment
      to the Trust Agreement.
      Pursuant to Section 10.03 of the Trust Agreement, the parties hereto hereby
      agree to amend the Trust Agreement as follows:

     

    (a) Section
      1.01 of the Trust Agreement is amended by deleting the definition of “Servicer”
in its entirety and replacing it with the following:

     

    “Servicer:
      The
      Servicer under the Servicing Agreement, and its respective successors and
      assigns. On March 30, 2007, GMAC assigned all of its rights and obligations
      under the Servicing Agreement to Saxon.”

     

    (b) Section
      1.01 of the Trust Agreement is amended by deleting the definition of “Servicing
      Agreement” in its entirety and replacing it with the following:

     

    “Servicing
      Agreement:
      The
      Servicing Agreement listed in Exhibit E hereto.”

     

    (c) Section
      1.01 of the Trust Agreement is amended by adding the following definition in
      appropriate alphabetical order:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Saxon:
      Saxon
      Mortgage Services, Inc., a Texas corporation.”

     

    SECTION
      4.  Representations,
      Warranties and Covenants.
      (a)
      The
      Depositor hereby confirms that each of its representations, warranties,
      agreements and covenants set forth in the Trust Agreement are true and correct
      as of the date first written above with the same effect as though each had
      been
      made as of such date, except to the extent that any of such covenants expressly
      relate to earlier dates.

     

    (b)  The
      Depositor hereby represents and warrants that (i) it is duly authorized to
      and
      this Amendment has been duly authorized, executed and delivered by all requisite
      corporate and, if required, equityholder
      action, (ii) the execution, delivery and performance by it of this Amendment
      shall not (1) result in the breach of, or constitute (alone or with notice
      or
      with the lapse of time or both) a default under, any material indenture,
      agreement or instrument to which it or any of its affiliates are a party or
      (2)
      violate (A) any provision of law, statute, rule or regulation, or certificate
      or
      organizational documents or other constitutive documents of it, (B) any order
      of
      any governmental authority or (C) any provision of any material indenture,
      agreement or other instrument to which it or any of its affiliates, are a party
      or by which any of them or any of their property is or may be bound and (iii)
      this amendment constitutes its legal, valid and binding obligation, enforceable
      against it (subject, as to the enforcement of remedies, to applicable
      bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
      creditors’ rights generally and to general principles of equity).

     

    SECTION
      5.  Effectiveness
      of Amendment.

     

    (a)  This
      Amendment shall become effective as of the date first written
      above.

     

    (b)  This
      Amendment shall be binding upon and inure to the benefit of the parties hereto
      and their respective successors and assigns.

     

    (c)  Upon
      receipt of an Opinion of Counsel reasonably acceptable in form and substance
      to
      the Trustee and after the execution and delivery hereof, (i) this Amendment
      shall be a part of the Trust Agreement, and (ii) each reference in the Trust
      Agreement to “this Agreement” and “hereof”, “hereunder” or words of like import,
      and each reference in any other document to the Trust Agreement shall mean
      and
      be a reference to the Trust Agreement as amended or modified
      hereby.

     

    SECTION
      6.  Execution
      in Counterparts.
      This
      Amendment may be executed by the parties hereto in separate counterparts, each
      of which shall be deemed to be an original and all of which shall constitute
      together but one and the same agreement. A facsimile counterparty shall be
      effective as an original.

     

    SECTION
      7.  Governing
      Law.
      THIS
      AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
      THE
      STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
      HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO
      CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK (OTHER THAN SECTION 5-1401
      OF
      THE NEW YORK GENERAL OBLIGATIONS LAW).

     

    
      
         

      

      
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    [SIGNATURE
      PAGES FOLLOW]

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
      executed and delivered by their respective officers thereunto duly authorized,
      all as of the day and year first above written.

     

    
      
        	
                MORGAN
                  STANLEY CAPITAL I INC.,

                as
                  Depositor

                 

                 

                By:
                  /s/
                  Val
                  Kay                                            
                  

                Name:
                  Val Kay

                Title:
                  Vice President

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
       

      
        
          	
                  
                    LASALLE
                      BANK NATIONAL ASSOCIATION,

                    as
                      Trustee

                     

                     

                    By:
                      /s/
                      Susan L
                      Feld                                                 

                    Name:
                      Susan L. Feld

                    Title:
                      Assistant Vice
                      PresidentExhibit
      10.44

     

    January
      10, 2006

     

    Mr.
      Gary
      De Laurentiis

    Chief
      Executive Officer 

    Itec
      Environmental Group, Inc.

    5300
      Claus Road

    Riverbank,
      CA 95367

     

    Dear
      Mr.
      De Laurentiis:

    

    We
      are
      pleased to confirm the understanding and agreement under which KW Securities,
      Inc. (“KWS”)
      is
      engaged by Itec Environmental Group, Inc. (the “Company”)
      to act
      as placement agent in connection with the private placement of the Company’s
      securities (the “Agreement”).

    

    1.  Engagement.
      The
      Company hereby engages KWS as its non-exclusive placement agent in connection
      with the placement, on a “best efforts” basis, of equity or equity-related
      securities of the Company (the “Securities”),
      on
      terms
      mutually acceptable to KWS and the Company (the “Proposed
      Offering”).
      KWS
      hereby accepts the engagement as placement agent for the Proposed Offering
      subject to, among other things, the satisfactory completion of KWS’s due
      diligence investigation and the non-occurrence of any material adverse change
      in
      the business, prospects or financial condition of the Company, and on the terms
      more fully set forth in this Agreement. This Agreement shall not give rise
      to
      any commitment by KWS or any other entity to purchase any securities of the
      Company. KWS provides no guarantee that the Proposed Offering or any other
      financing transaction will ever be completed or, if completed, as to the terms
      of the Proposed Offering or such other transaction. KWS shall serve as placement
      agent for a term of eighteen (18) months (the “Placement
      Period”).

    

    2.  Services.
      As
      placement agent for the Proposed Offering, KWS shall, to the extent required
      or
      appropriate in connection with the Proposed Offering, 

    

    (a)  advise
      the Company on the structure and the terms of the Proposed
      Offering;

    

    (b)  assist
      the Company in preparing the investment documents and/or private placement
      memorandum used in the Proposed Offering;

     

    
      
        
        

      

      
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    (c)  contact
      potential investors who might participate in the Proposed Offering, coordinate
      follow-up activities with potential investors, and in general supervise the
      investment consideration and placement process; and

    

    (d)  assist
      the Company in negotiating the terms of the Proposed Offering.

    

    3.  Compensation
      and Expenses.
      

    

    (a)  For
      acting as placement agent in connection with the Proposed Offering, KWS shall
      be
      entitled to receive, and the Company shall pay to KWS (or its designee(s)),
      the
      following (collectively, the “Compensation”):

    

    (i)  a
      warrant
      (the “Placement
      Warrant”)
      to
      purchase that number of shares of common stock of the Company equal to the
      greater of (i) the aggregate of three (3) shares of common stock for each One
      Dollar ($1.00) raised in the Proposed Offering, a form of the Placement Warrant
      is attached hereto as Exhibit
      A.
      A
      Placement Warrant shall be issued at the closing based on the number of
      Securities sold at such closing. The terms of the Placement Warrant shall be
      set
      forth in the form of Placement Warrant provided to the Company prior to the
      first closing of the Proposed Offering (but, at a minimum, the Placement Warrant
      shall be exercisable from time to time, in whole or in part, during the ten
      (10)
      year period commencing on the initial closing of the Proposed Offering, and
      shall contain registration rights and anti-dilution provisions satisfactory
      to
      KWS and its counsel).

    

    (b)  Whether
      or not the Proposed Offering is consummated, the Company shall reimburse KWS
      for
      all of its out-of-pocket costs and expenses incurred in connection with its
      services hereunder, including, but not limited to, fees and expenses of its
      legal counsel and other professional advisors, travel expenses, data gathering
      and due diligence expenses, document reproduction and shipping expenses, the
      expenses related to meals or other expenses of meeting with potential investors
      or others, tombstone preparation expenses, and other placement related expenses.
      The foregoing costs and expenses will be paid by the Company to KWS promptly
      upon receipt by the Company of each invoice from KWS relating thereto setting
      forth in reasonable detail the items requiring reimbursement or payment, along
      with reasonable proof of the same. All expenses shall be pre-approved by the
      Company.

    

    4.  Board
      Representation.
      Upon
      the date of this Agreement, KWS shall have the right to appoint a designee
      to
      the Company’s Board of Directors (the “Board”).
      This
      right shall terminate on the third anniversary of the date of this Agreement.
      The Company shall nominate KWS’s designee for election to the Board at any and
      all times that the shareholders of the Company take action (whether by meeting
      or written consent) to elect members of the Board and shall use best efforts
      to
      secure the designee’s election to the Board.

    

    5.  Cooperation.
      The
      Company shall cooperate with KWS in connection with the performance of its
      due
      diligence related to its engagement hereunder and shall make available to KWS
      the Company’s management, employees, directors, accountants, counsel and other
      outside advisors, consultants, service providers, vendors and customers and
      such
      documents, books, records, studies and other information as it shall reasonably
      request in this respect. KWS’s willingness to proceed with the proposed
      transaction is subject to satisfactory results of its on-going due
      diligence.

     

    
      
        
        

      

      
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    6.  Negotiation;
      PPM.
      The
      Proposed Offering shall commence immediately upon the Company’s finalization, in
      conjunction with KWS, of a private placement memorandum (the “PPM”),
      subscription documents and other necessary materials. Such PPM and related
      documentation (collectively, the “Offering
      Materials”)
      initially shall be drafted by the Company and include all customary and
      necessary representations, warranties, disclosures and other Company information
      and shall include audited
      financial statements of the Company. The Company shall represent and warrant
      in
      writing to KWS that all such representations and warranties are true, complete
      and correct, and that the Offering Materials do not contain any untrue statement
      of a material fact or omit to state a material fact necessary to be stated
      therein in order to make the information presented not misleading. The Company
      shall be responsible for amending or supplementing the Offering Materials as
      necessary to correct any untrue statement of a material fact or any omission
      to
      state a material fact necessary to make the statements therein not misleading.
      The Company will not use any Offering Materials to which KWS reasonably objects.
      

    

    7.  Offering
      to Prospective Investors; Compliance with Securities Laws.
      The
      Company reserves the right to reject an investment from any prospective
      investor. The Company and KWS each agrees to conduct the Proposed Offering
      in a
      manner intended to qualify for the exemption from the registration requirements
      of Section 5 of the Securities Act of 1933, as amended (the “Act”)
      provided by Section 4(2) of the Act and/or Regulation D promulgated thereunder.
      The Company agrees that the Proposed Offering is to be limited to “Accredited
      Investors” as such defined is defined in Regulation D; therefore the Company and
      KWS each agrees to limit offers to sell, and solicitations of offers to buy,
      Securities to persons reasonably believed by it to be “Accredited Investors” as
      so defined. The Company and KWS each agrees to conduct the Proposed Offering
      in
      a manner intended to comply with the registration or qualification requirements,
      or available exemptions therefrom, of applicable state “bluesky” laws and
      applicable securities laws of other relevant jurisdictions. KWS will be
      responsible, at the expense of the Company, for registering or qualifying the
      offer and sale of the Securities under applicable state “bluesky” laws, or
      securing exemptions from such registration or qualification requirements, and
      the Company will cooperate with KWS in connection therewith. The Company will
      not, for a period of six months following the last closing date of the Proposed
      Offering, offer for sale or sell any securities unless, in the opinion of
      counsel to the Company, reviewed by counsel to KWS, who advise KWS that it
      may
      rely thereupon, such offering will not cause the issuance of the Securities
      in
      the Proposed Offering to be subject to the registration or qualification
      requirements of applicable federal securities laws, state “bluesky” laws or the
      securities laws of any other jurisdiction (by integration with any other
      offering of securities or otherwise). 

    

    8.  Indemnification.
      The
      Company shall indemnify and hold harmless KWS in accordance with KWS’s standard
      indemnification agreement (a copy of which is attached hereto and is incorporate
      by reference herein), which shall be executed by the Company concurrently
      herewith.

     

    
      
        
        

      

      
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    9.  No
      Brokers.
      The
      Company represents and warrants to KWS that there are no brokers,
      representatives or other persons who have an interest in the compensation
      payable to KWS pursuant to the terms of this Agreement.

    

    10.  Successors
      and Assigns; Binding Effect.
      The
      benefits of this Agreement shall, together with the separate indemnity
      agreement, inure to the benefit of the respective successors and assigns of
      the
      parties hereto and of the indemnified parties hereunder and their successors
      and
      assigns and representatives, and the obligations and liabilities assumed in
      this
      Agreement by the parties hereto shall be binding upon their respective
      successors and assigns. Neither the Company on the one hand, nor KWS on the
      other hand, shall assign its interest in this Agreement without the prior
      written consent of the other party, which consent shall not be unreasonably
      withheld. The Company acknowledges that in rendering its services hereunder,
      KWS
      will be using and relying on the information provided to it by the Company
      and
      does not assume responsibility for the accuracy or completeness of any such
      information. 

    

    11.  Confidentiality.
      

    

    (a)  Except
      as
      contemplated by the terms of this Agreement or as may be required by law or
      order of applicable regulatory authority (including the National Association
      of
      Securities Dealers Regulation, Inc.), KWS shall keep confidential and shall
      not
      disclose to any third party any confidential or proprietary information of
      the
      Company made available to it in connection with its engagement hereunder. Any
      information that is confidential or proprietary shall be identified as such
      to
      KWS by the Company, either in writing or orally (and then confirmed as such
      in
      writing), at the time such information is disclosed by the Company to KWS.
      KWS
      will use such confidential information only in connection with its engagement
      hereunder; provided, however, such confidentiality obligation shall not extend
      to (i) any information available to or in the possession of KWS prior to the
      date of its disclosure to KWS by or on behalf of the Company, (ii) any
      information generally available to the public, or (iii) any information which
      becomes available to KWS on a non-confidential basis from a third party who
      is
      not bound by a confidentiality obligation to the Company; and provided, further,
      such confidential information may be disclosed to KWS’s officers, directors,
      employees, consultants, agents, advisors or representatives in connection with
      the engagement hereunder provided that such persons are made aware of the
      obligations under this Section 11.

    

    (b)  Any
      written or oral advice, analyses or reports provided by KWS to the Company
      in
      connection with its engagement hereunder are exclusively for the information
      of
      the Board of Directors and management of the Company (including the Company’s
      attorneys, accountants and other professional advisors) and may not be disclosed
      (in any form whatsoever) to or relied upon by any other party without the
      express prior written consent of KWS. Any description of or reference to KWS
      in
      the Offering Materials must be approved by KWS in writing prior to use, which
      approval will not be unreasonably withheld.

    

    12.  Closing
      Matters.
      The
      Company will, at the closing of the Proposed Offering, provide KWS with a copy
      of the same favorable opinion of its counsel as is furnished to the investors
      participating in such closing (if such an opinion is provided as part of the
      transaction), together with a letter from such counsel that its opinion to
      investors may be relied upon by KWS as if addressed to it. In addition, at
      the
      closing, the Company will provide KWS and participating investors with
      certificates of officers of the Company and such other representatives,
      warranties, undertakings, and other documents as KWS or its counsel may
      reasonably request, in form and substance satisfactory to KWS and its counsel.
      The essence of this requirement will be to confirm compliance with securities
      laws, to confirm information provided to investors, and to confirm that the
      terms of the Proposed Offering to which investors subscribed remain as presented
      to them.

     

    
      
        
        

      

      
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    13.  Miscellaneous.
      

    

    (a)  This
      Agreement may not be amended or modified except in writing signed by the
      parties.

    

    (b)  This
      Agreement and the transactions contemplated hereby shall be governed as to
      validity, interpretation, construction, effect and in all other respects by
      the
      internal laws of the State of California. Each of KWS and the Company (i) agrees
      that any legal suit, action or proceeding arising out of or relating to this
      Agreement and/or the transactions contemplated hereby, including without
      limitation, any such legal suit, action or proceeding against any present or
      former officer, partner, employee or agent of KWS, each of whom is intended
      to
      be a third-party beneficiary of the agreement contained in this Section, shall
      be instituted exclusively in California Supreme Court or in the United States
      District Court for the Southern District of California, (ii) waives any
      objection which it may have or hereafter to the venue of any such suit, action
      or proceeding, and (iii) irrevocably consents to the jurisdiction of the
      California Supreme Court, and the United States District Court for the Southern
      District of California in any such suit, action or proceeding. Each of KWS
      and
      the Company further agrees to accept and acknowledge service of any and all
      process which may be served in any such suit, action or proceeding in the
      California Supreme Court or in the United States District Court for the Southern
      District of California, and agrees that (x) service of process upon the Company
      mailed by certified mail to the Company’s address on the first page of this
      Agreement shall be deemed in every respect effective service of process upon
      the
      Company in any such suit, action or proceeding, and (y) service of process
      upon
      KWS mailed by certified mail to 1001 Bayhill Drive, Suite 170, San Bruno, CA
      94066 and shall be deemed in every respect effective service process upon KWS
      in
      any such suit, action or proceeding.

    

    (c)  Notwithstanding
      anything herein to the contrary, the representations, warranties and covenants
      set forth herein will remain in full force and effect regardless of any
      investigation made by or on behalf of KWS or any other entity or persons and,
      along with the compensation, reimbursement, future services, indemnification,
      contribution and confidentiality provisions hereof, shall survive this Agreement
      and KWS’s engagement hereunder.

    

    (d)  If
      KWS
      incurs legal or other costs in collecting amounts due to it hereunder, such
      costs shall be reimbursed by the Company.

    

    (e)  The
      captions in this Agreement are used for convenience only and shall not be
      considered in interpreting this Agreement.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (f)  This
      Agreement may be executed in counterparts, all of which together shall
      constitute one binding agreement between KWS and the Company. Signatures on
      documents delivered by facsimile/telecopier shall be deemed original
      signatures.

    

    (g)  All
      references herein to the date of this Agreement shall be deemed to mean the
      date
      on which this Agreement is countersigned by the Company as set forth
      below.

    

    (h)  This
      Agreement, together with the Exhibit hereto, contains the entire agreement
      between the Company and KWS concerning the subject matter hereof and supersedes
      any prior understanding or agreement with respect thereto. Any waiver of any
      right or obligation hereunder must be in writing signed by the party against
      whom enforcement is sought.

    

    If
      the
      terms of our engagement as set forth in this Agreement are satisfactory to
      you,
      kindly sign and date the enclosed copy of this Agreement and indemnification
      agreement and return them to the undersigned. If this Agreement is not executed
      by the Company within ten (10) days of the date hereof it shall cease to be
      a
      valid offer by KWS to act as the exclusive placement agent to the Company and
      it
      shall be deemed withdrawn.

     

    
      	 	 

              Very
                truly yours,

            
	 	 	 
	 	
              KW
                SECURITIES, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              

              Name:
                 Lawrence
                A. Krause

            
	 	Title:
              
	 	
              
                

              

              Date:
                January 10, 2006

            

    

       

    ACCEPTED
      AND AGREED

     

    ITEC
      ENVIRONMENTAL GROUP, INC.:

    

    
      	 	 	 	 
	By:
              	 	 	
            
	
              
                

              

              Name:
                Gary De Laurentiis

            	 	 	
            
	
              Title:
                President and CEO

            	 	 	
            
	 Date:
              January 10, 2006	 	 	 

    

     

    
      
        
        

      

      
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    Exhibit
      A

    Form
      of
      Warrant

    

    WARRANT

    

    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 IN ACCORDANCE WITH THE PROVISIONS OF REGULATION
      S
      UNDER THE ACT, 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 ________ Shares of Common Stock

     

    
      ITEC
        ENVIRONMENTAL
        GROUP,
        INC.

    

    

    Date
      of
      Issuance: ________, 2006

    

    No.
      _______

    

    THIS
      CERTIFIES that, for value received, ___________________________________, 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. 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,
      (b) a
      check in the amount of the aggregate exercise price for the Warrant Shares
      being
      purchased, and (c) 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, (ii) the check mentioned above, and (iii) 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
      shares of Common Stock specified in such notice, provided this Warrant has
      vested on or prior to the date such notice is delivered. Each certificate
      representing Warrant Shares shall bear the legend or legends required by
      applicable securities laws as well as such other legend(s) the Company requires
      to be included on certificates for its Common Stock. 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 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. All shares of Common
      Stock
      issued upon the exercise of this Warrant shall be validly issued, fully paid,
      and nonassessable. 

    

    The
      Warrant shall expire on _________________ (the “Expiration Date”). The Investor
      may exercise the warrant at any time prior to the Expiration Date. The Company
      has no restriction on the sale or transfer of the Warrant or Warrant Shares;
      however, the Investor is required to comply with all state and U.S. laws and
      regulations relating to security sales and transfers.

    

    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. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    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 this Warrant, in
      whole, in accordance with and subject to the terms and conditions set forth
      in
      the Subscription Agreement and then 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.

    

    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 _______ shares of the Company’s Common Stock,
      as adjusted in accordance with this Agreement. 

    

    8.
       Exercise
      Price; Adjustment of Warrants.
      

    

    a.
       Determination
      of Exercise Price.
      The per
      share purchase price (the “Exercise Price”) for each of the Warrant Shares
      purchasable under this Warrant shall be equal to $0.06. 

     

    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.
       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.
      

    

    d. 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. 

    

    e.
       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. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    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. 

    

    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 purchase the kind and amount of shares of stock and other securities
      and property receivable upon such reclassification, capital reorganization
      or
      other change, by a holder by the number of shares of common stock which might
      have been purchased upon exercise of this warrant immediately prior to such
      reclassification or change. Any such provision shall include provisions for
      adjustment which shall be as nearly equivalent as may be practicable to the
      adjustments provided for in this warrant. The foregoing provisions of this
      Section 12 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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    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., 5300 Claus Road, Riverbank, California 95367, or at such other address
      as
      the Company may designate by notice to each of the Investors in accordance
      with
      the provisions of this Section; and (ii) if to the Warrant holder, at the
      address indicated on the signature page hereof, or at such other addresses
      as
      such 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 a majority in interest of the Holders. 

    

    g.
       Entire
      Agreement.
      This
      Agreement, the Memorandum (including the appendices and schedules thereto)
      by
      and between the Company and the Holder, constitute the entire agreement among
      the parties hereto with respect to the subject matter hereof and thereof and
      supersede all prior agreements, understandings, negotiations and discussions,
      whether oral or written, of the parties hereto. 

    

    IN
      WITNESS WHEREOF, the undersigned hereby sets is hand and seal this ___ day
      of
      _________, 2006. 

     

    
      	
              Itec
                Environmental Group, Inc.

            	 	 	 
	 	 	 	 
	By:
              	 	 	
            
	
              
                

              

              Name:
                Gary De Laurentiis

            	 	 	
            
	
              
                Title:
                  President and Chief Executive Officer

              

            	 	 	
            

    

     

    Investor
      Name: ____________________________________

    

    Investor
      Address: __________________________________

    

    _________________________________________________

    

    _________________________________________________

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    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”) and herewith encloses either payment of
      $____________ or instructions regarding the manner of exercise permitted under
      Section 1 of the Warrant, in full payment of the purchase price of such shares
      being purchased.

    

    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. 

            

    

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    

    Itec
      Environmental Group, Inc.

    P.O.
      Box
      760

    Riverbank,
      CA 95367

    Tel:
      (209) 863-8076

    Fax:
      (209)
      863-9839

    

    December
      1, 2006

     

    Mr.
      Lawrence Krause

    KW
      Securities Corporation

    1001
      Bayhill Drive, Suite 170

    San
      Bruno, CA 94066

    

    Re:
      Amendment to Engagement Agreement

    

    Dear
      Mr.
      Krause,

    

    This
      agreement (the “Amended
      Engagement Agreement”)
      amends
      that certain engagement agreement dated January 10, 2006 (the “Agreement”)
      by and
      between KW Securities Corporation, (“KW”)
      and
      Itec Environmental Group, Inc., a Delaware corporation (“Itec”).
      A
      copy of the Agreement is attached hereto as Exhibit
      A.
      The
      amendment is as follows:

    

    
      	1.  	
              Compensation
                and Expenses.
                Section 3(a)(i) shall be deleted in its entirety and substituted
                therefore
                shall be the following: 

            

    

    

    (i)  a
      warrant (the “Placement
      Warrant”)
      to purchase that number of shares of common stock of the Company pursuant to
      the
      following:

    

    (A)  for
      the initial Five Million Dollars ($5,000,000) raised under the Proposed
      Offering, KW shall receive one (1) warrant share for each One Dollar ($1.00)
      raised by KW with a strike price of $0.06 per share/cashless;

    

    (B)  for
      the remaining amount raised under the Proposed Offering, up to a maximum of
      Four
      Million Dollars ($4,000,000), KW shall receive 1.875 warrant shares for each
      One
      Dollar ($1.00) raised by KW with a strike price of $0.06 per share/cashless;
      and

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    (C)  in
      connection with the Arbor Malone, LLC investment of Two Million Three Hundred
      Thousand Dollars ($2,300,000), KW shall receive four million (4,000,000) warrant
      shares with a strike price of $0.06 per share/cashless.

    

    A
      Placement Warrant shall be issued at the closing based on the number of
      Securities sold at such closing. The terms of the Placement Warrant shall be
      set
      forth in the form of Placement Warrant provided to the Company prior to the
      first closing of the Proposed Offering (but, at a minimum, the Placement Warrant
      shall be exercisable from time to time, in whole or in part, during the ten
      (10)
      year period commencing on the initial closing of the Proposed Offering, and
      shall contain registration rights and anti-dilution provisions satisfactory
      to
      KWS and its counsel). A form of the Placement Warrant is attached hereto as
      Exhibit
      A.

    

    This
      Amended Engagement Agreement and the Agreement, as attached hereto as
Exhibit
      A,
      contain
      all of the terms and conditions agreed upon by Itec and KW relating to the
      subject matter of this Amended Engagement Agreement and supersedes all prior
      agreements, negotiations, correspondence, undertakings, and communications
      of
      the parties, whether oral or written, respecting this subject
      matter.

    

    Except
      as
      specifically amended hereby, the Agreement shall remain in full force and effect
      as originally written. This Amended Engagement Agreement shall be deemed to
      be
      incorporated in and a part of the Agreement. 

    

    The
      titles and subtitles of the sections of this Amended Engagement Agreement 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 Amended Engagement Agreement shall have the specific meanings set forth
      in
      the Agreement.

    

    If
      the
      foregoing accurately sets forth your understanding concerning this matter,
      please acknowledge your concurrence by signing this letter in the space
      indicated below. 

    

    
      	 	Very
              truly yours,
	 	 	 
	 	ITEC ENVIRONMENTAL GROUP, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:
                Rodney S. Rougelot

            
	 	
              Title:
                Chief Executive Officer

            

    

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    AGREED
      AND ACCEPTED:

    

    Dated:
      December ____, 2006

    

    KW
      SECURITIES CORPORATION

     

    
      
        	 	 	 	 
	By:
                	 	 	
              
	
                
                  
                    

                  

                  Name:
                    Lawrence Krause

                

              	 	 	
              
	
                
                  
                    Title:
                      Principal

                  

                

              	 	 	
              

      

    

     

    
      
        
        

      

      
        14

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