**Exhibit
      10.3**


**MUTUAL
      SETTLEMENT AND RELEASE AGREEMENT**


**AMONG**


**EXCIPIO,
      S.A.,** **ITEC ENVIRONMENTAL GROUP, INC.,**


**AND
      ITEC CAPITAL GROUP, LLC**





This
      Mutual Settlement and Release Agreement is entered into this 6 th day of
      November 2006 (the “ **Agreement** ”)
      by and
      among Excipio S.A., a corporation created under the laws of the British Virgin
      Islands (“ **Excipio** ”),
      Itec
      Environmental Group, Inc., a Delaware corporation (“ **Itec** ”)
      and
      Itec Capital Group, LLC, a Washington limited liability company (“ **ICG** ”)
      (collectively referred to at times herein as the “ **Parties** ”
and
      individually as “ **Party** ”).
      This
      Agreement is entered into for the express purpose of resolving all of the
      differences among the Parties.





WHEREAS,
      the Parties agree that the consulting agreement by and between Excipio and
      ICG
      (the “ **Consulting
      Agreement** ”),
      dated
      February 6, 2006, contains terms relevant to this Agreement, a copy of which
      is
      attached hereto as Exhibit
      A ;





WHEREAS,
      the Parties agree that the funding agreement by and between ICG and Itec (the
      “ **Funding
      Agreement** ”),
      dated
      February 6, 2006, contain terms relevant to this Agreement, a copy of which
      is
      attached hereto as Exhibit
      B ;





NOW,
      THEREFORE, it is the desire of the Parties to state in writing the details
      of
      their Agreement. For good and valuable consideration between the Parties, the
      receipt of which is hereby acknowledged, it is mutually agreed as
      follows:





|1. | **Itec
              Cash Payments to Excipio**.
|-- | ------------------------------------------------




A.  The
      Parties hereby acknowledge that, as of the date of this Agreement, Excipio
      has
      received Three Hundred Eleven Thousand, Three Hundred Dollars ($311,300) for
      fees and expenses under the Funding Agreement and Consulting
      Agreement.





B.  Upon
      execution of this Agreement, Itec agrees to pay to Excipio, in settlement of
      all
      remaining fees and expenses owed to Excipio, the cash payments in the total
      sum
      of Four Hundred Twenty-Eight Thousand, Seven Hundred Dollars ($428,700) (the
      “ **Settlement
      Amount** ”)
      in
      accordance with the following schedule:





|i. | Two
              Hundred Thousand Dollars ($200,000) shall be paid within twenty-four
              (24)
              hours of the execution of this Agreement;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------




|ii. | Eighty
              Thousand Dollars ($80,000) shall be paid within forty-eight (48) hours
              of
              Itec receiving an additional One Million Dollars ($1,000,000) in
              additional financing; and
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|iii. | the
              remaining One Hundred Forty-Eight Thousand, Seven Hundred Dollars
              ($148,700) shall be paid in four (4) equal monthly installments of
              Thirty-Seven Thousand, One Hundred Seventy-Five Dollars ($37,175) and
              due
              upon the first day of each month beginning on the earlier of:
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





1





|1. | Itec
              receiving One Million Five Hundred Thousand Dollars ($1,500,000) in
              financing in addition to the One Million Dollars ($1,000,000) in financing
              described in Subsection 1(B)(ii) above; or
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|2. | February
              1, 2007.
|-- | -------------------------------




|2.**** | **Warrant
              Shares**.
|------ | ---------------------------------




A.  The
      Parties hereby acknowledge that, as of the date of this Agreement, Excipio
      has
      not been issued any warrant shares in connection with the Funding Agreement
      and
      Consulting Agreement.





B.  Upon
      execution of this Agreement, Itec shall issue to Excipio the following
      warrants:





|i. | a
              warrant to purchase one million four hundred forty thousand (1,440,000)
              shares of common stock with a strike price of Six Cents ($0.06) per
              share.
              A copy of this warrant is attached hereto asExhibit
              C;
              and
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|ii. | a
              warrant to purchase three million seven hundred forty-eight thousand
              (3,748,000) shares of common stock with a strike price of Twelve Cents
              ($0.12) per share. A copy of this warrant is attached hereto asExhibit
              D.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




3.  **Itec
      Shares of Common Stock** . Itec
      shall deliver to Excipio additional shares of Itec’s common stock forthwith
      pursuant to any Convertible Debt, as defined below, which converts on or before
      February 6, 2007 in an amount equal to the percentage of the Convertible Debt
      that converts during this period, multiplied by and up to a maximum of seven
      million three hundred eight-four thousand, six hundred fifteen (7,384,615).
      These shares shall be delivered with piggyback registration rights. For purposes
      of clarification, if one hundred percent (100%) of Convertible Debt is converted
      on or before February 6, 2007, Itec shall issue to Excipio seven million three
      hundred eight-four thousand, six hundred fifteen (7,384,615) shares to Excipio.
      If none of the Convertible Debt holders convert on or before February 6, 2007,
      Excipio shall receive zero (0) shares.





For
      purposes of this Agreement, “ **Convertible
      Debt** ”
shall
      mean the dollar amount of all of the convertible debentures that have been
      issued pursuant to (i) Itec’s 2006 private placement memorandum and (ii) certain
      short term bridge loans effected by Itec and totaling Three Million Dollars
      ($3,000,000).





2


4.  **Public
      Statements - No Disparagement.** No Party
      hereto shall make any disparaging statements regarding any other Party hereto
      with regard to the matters leading up to and at anytime after this
      Agreement.





5.  **Mutual
      Release.** Upon
      fulfillment of Sections 1, 2 and 3 of this Agreement, **** the
      Parties hereto agree to release and discharge each other, and each of their
      respective partners, agents, employees, attorneys, representatives, and the
      successors, heirs and assigns of any of the preceding, from all sums of money,
      claims, demands, contracts, actions, debts, controversies, agreements, damages
      and causes of action whatsoever, whether known or unknown, suspected or
      unsuspected by them, which they now own, hold, have or claim to have or at
      any
      time heretofore owned, held or claimed to have held against each other, by
      reason of any matter or thing alleged or referred to, or in any way connected
      with, arising out of or related to any of the matters, acts, events or
      occurrences alleged or referred to in the Agreement including, but not limited to the Consulting Agreement and the Funding
      Agreement .





6.  **Cancellation
      and Amendment of Agreements** .
      Upon
      fulfillment of Sections 1, 2 and 3 of the Agreement, the Parties hereto agree
      that:





|A. | the
              Consulting Agreement shall be cancelled in its entirety and any further
              remaining obligations existing under this Consulting Agreement shall
              be
              waived and dismissed; and
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|B. | the
              Funding Agreement shall be amended to reflect the settlement of fees
              and
              expenses due, owed and paid pursuant to this Agreement. Upon execution
              of
              this Agreement, no additional fees or expenses shall accrue or become
              due
              in accordance with the Funding Agreement.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




7.  **Release
      of Known and Unknown Claims.** The
      Parties acknowledge that there is risk that subsequent to the execution of
      this
      Agreement, one or more of the Parties will incur or suffer loss, damage or
      injury which is in some way caused by the matters referred to above, but which
      is unknown and unanswered at the time this Agreement is signed. Accordingly,
      the
      Parties hereby assume the above-mentioned risks and this Agreement shall apply
      to all unknown or unanticipated results of the transactions and occurrences
      hereinabove described, as well as those known and anticipated, and the parties
      do hereby waive any and all rights under California Civil Code Section 1542,
      which section reads as follows:





"A
      general release does not extend to claims which the creditor does not know
      or
      suspect to exist in his favor at the time of executing the release, which if
      known by him must have materially affected his settlement with the
      debtor."





8.  **Mutual
      Consideration.** Each
      of
      the agreements, releases, and other provisions of this Agreement is executed
      and
      entered into in consideration for and in reliance upon the due execution and
      enforceability of all other agreements, releases, and other provisions of this
      Agreement. The effectiveness and the validity of each agreement or other
      provision hereof is conditioned upon the effectiveness and validity of each
      of
      the other agreements, releases, and other provisions hereof.





3


9.  **Exclusive
      Representations.** The
      Parties hereto represent, warrant, and agree that upon executing and entering
      into this Agreement that they, and each of them, are not relying upon and have
      not relied upon any representation, promise, or statement made by anyone which
      is not recited, contained, or embodied in this Agreement. The parties, and
      each
      of them, understand, agree, and expressly assume the risk that any fact not
      recited, contained, or embodied in this Agreement may turn out hereafter to
      be
      other than, different from, or contrary to the facts now known to them or
      believed by them to be true, and further agree that this Agreement shall be
      effective in all respects notwithstanding, and shall not be subject to
      termination, modification, or rescission by reason of, any such difference
      in
      facts.





10.  **Reliance
      Upon Separate Legal Counsel.** The
      Parties to this Agreement are represented by counsel or have had the opportunity
      to seek legal advice with respect to the terms of this Agreement.





11.  **No
      Admission of Liability.** The
      Parties hereto understand and agree that by execution of this Agreement there
      is
      no admission of any liability of any nature whatsoever and that this settlement
      is made entirely as a compromise and for the purpose of settlement of a disputed
      claim.





12.  **Mutual
      Settlement Cooperation.** The
      Parties agree to execute and deliver all such other and additional instruments,
      notices, consents or other documents and to do all such other acts and things
      as
      may be reasonably necessary to carry out the terms of this
      Agreement.





13.  **Applicable
      Law.** This
      Agreement shall be governed and interpreted in accordance with the laws of
      the
      State of California.





14.  **Warranty** **and Indemnity.** Each
      Party represents and warrants that it has not assigned or transferred and will
      not assign or transfer to any other persons, firm, or corporation, in any
      manner, by way of subrogation or operation of law, or otherwise, any portion
      of
      any claim, right, demand action, or cause of action that it has or might have
      arising out of any of the matters referred to in this Agreement, nor any portion
      of any recovery or settlement to which it might be entitled. In the event that
      claim, demand, or suit should be made or instituted against any party or parties
      because of any such purported assignment, subrogation, or transfer, the Party
      from whom such purported assignment, subrogation, or transfer was alleged to
      have occurred agrees to indemnify and hold harmless the other party against
      such
      claim, suit, or demand, including necessary expenses of investigation,
      attorneys' fees and costs.




4


15. **Attorneys’
      Fees and Costs for Enforcement.** The
      Parties hereto agree that, if any action or dispute arises regarding enforcement
      of this Agreement, or any of the terms, covenants, or conditions hereof, whether
      the same shall proceed to judgment or not, the prevailing party shall be
      reimbursed for all reasonable expenses incurred in resolving such dispute,
      including attorneys' fees.





16.  **Binding
      Upon Successors.** This
      Agreement shall be binding upon the heirs, administrators, executors,
      successors, and assigns of the respective parties hereto, and any parent,
      subsidiary and affiliated entity of each Party.





17.  **Entire
      Agreement** .
      This
      Agreement supersedes any and all prior agreements, understandings or
      arrangements, whether written or oral, between the Parties. This Agreement
      contains the entire agreement between the Parties with respect to the subject
      matter hereof. There are no promises, agreements, conditions, undertakings,
      understandings, warranties, covenants or representa-tions, oral or written,
      express or implied, between them with respect to this Agreement or the matters
      described in this Agreement, except as set forth in this Agreement. Any such
      negotiations, promises, or understandings shall not be used to interpret or
      constitute this Agreement.





18.  **Events
      of Default.** The
      occurrence of any of the following events (each an “ **Event
      of Default** ”)
      not
      cured within the Cure Period (defined below), and results in any Party failing
      to fulfill its obligations under this Agreement, if any, shall constitute and
      Event of Default:





|A. | a
              breach of any provision, representation, warranty, understanding or
              other
              covenant of this Agreement, which is not cured within thirty (30) days
              following written notice thereof (the “**Cure
              Period**”)
              and
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|B. | (i)
              the application for the appointment of a receiver or custodian for
              Itec or
              the property of Itec, (ii) the entry of an order for relief or the
              filing
              of a petition by or against Itec under the provisions of any bankruptcy
              or
              insolvency law, (iii) any assignment for the benefit of creditors by
              or
              against Itec, or (iv) Itec becomes
              insolvent.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




**Effect
      of Default.** Upon the
      occurrence of any Event of Default that is not cured within the Cure Period,
      Excipio may elect, by written notice delivered to Itec, to take any or all
      of
      the following actions: (i) declare the outstanding amounts under the Agreement
      to be forthwith due and payable, whereupon the entire unpaid Settlement Amount
      shall become forthwith due and payable, without presentment, demand, protest
      or
      any other notice of any kind, all of which are hereby expressly waived by Itec,
      anything contained herein or in any of the Agreement to the contrary
      notwithstanding, and (ii) exercise any and all other remedies provided hereunder
      or available at law or in equity upon the occurrence and continuation of an
      Event of Default.





19.  **Counterparts
      and Facsimiles.** This
      Agreement may be executed in any number of counterparts, each of which shall
      constitute a duplicate original hereof. The Parties agree to accept facsimile
      copies of signatures as if originals.





20.  **Authority
      to Bind Corporate Parties.** The
      undersigned represent and warrant their authority to bind by their signature
      the
      corporate parties to this Agreement.





5


21.  **Consultation** .
      The
      Parties acknowledge that each has been advised to seek legal consultation
      regarding this Agreement and has either retained or had sufficient opportunity
      to retain such legal representation and hereby waives insufficiency of legal
      consultation or representation as a claim or defense in any action arising
      out
      of this Agreement.





22.  **Miscellaneous** .





|A. | If
              any term or provision of this Agreement or any application thereof
              shall
              be invalid or unenforceable, such term or provision shall be deemed
              to be
              severed and the remainder of this Agreement and any other application
              of
              such term or provision shall not be affected or invalidated
              thereby.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|B. | Except
              as otherwise provided in this Agreement, each Party will bear its own
              attorneys’ fees and costs incurred in this matter through the date of
              execution of this Agreement. Should any of the Parties institute any
              action or proceeding to enforce any provision of this Agreement, or
              for
              damages by reason of any alleged breach of any provision of this
              Agreement, or for a declaration of any party’s rights or obligations
              hereunder, or for any other judicial remedy, the prevailing party in
              such
              action or proceeding shall recover from the losing party all reasonable
              attorneys’ fees, costs and expenses incurred by the prevailing party in
              such action or proceeding.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|C. | All
              notices, demands and communications hereunder shall be in writing and
              personally delivered or sent by first class mail, certified or registered,
              postage prepaid, return receipt requested, addressed to the parties
              at the
              addresses below set forth, or at such other address as any Party shall
              have furnished to the other party in writing, or shall be given by
              telegram, telex, facsimile transmission, overnight courier or hand
              delivery, in any case to be effective when received, provided that
              actual
              receipt shall constitute notice regardless of method of
              delivery.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




If
                  to Excipio:
              Excipio
                  Group, S.A.13428
                  Maxella Ave., Suite 718Marina
                  del Rey, CA 90292:
              Attn
                  David ColorisFax:
                  (310) 745-7811If
                  to Itec:
              Itec
                  Environmental Group5300
                  Claus Road, Box 760Attn:
                  Rodney S. Rougelot, CEOFax:
                  (209) 881-352
   6
  If
                  to ICG:
              Itec
                  Capital Group, LLCc/o
                  The Otto Law Group, PLLC601
                  Union Street, Suite 4500Seattle,
                  WA 98101Attn:
                  David M. Otto, ManagerFax:
                  (206) 262-9513













[ *Remainder
      of page intentionally left blank* ]







7





IN
      WITNESS WHEREOF **,** the
      Parties have executed this Agreement on the date first above
      written.








**EXCIPIO
      GROUP, S.A.**











_____________________________


By:
      David
      Coloris


Its:
      Secretary








**ITEC
      ENVIRONMENTAL GROUP, INC.**











_____________________________


By:
      Rodney S. Rougelot


Its:
      Director & CEO








**ITEC
      CAPITAL GROUP, LLC**











_____________________________


By:
      David
      M. Otto


Its:
      Manager





8


**Exhibit
      A**


**Consulting
      Agreement**














9


**Exhibit
      B**


**Funding
      Agreement**














10


**Exhibit
      C**


**Form
      of Warrant**















11


**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 1,440,000  Shares
      of
      Common Stock





Itec
      Environmental Group, inc.





Date
      of
      Issuance: November 6, 2006





No.
      148





THIS
      CERTIFIES that, for value received, Excipio Group, S.A., 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 and
      (b) this Warrant. The Company shall as promptly as practicable, and in any
      event
      within twenty (20) days after delivery to the Company of (i) the Exercise
      Notice, (ii) and this Warrant, execute and deliver or cause to be executed
      and
      delivered, in accordance with such notice, a certificate or certificates
      representing the aggregate number of 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 April 15, 2015 (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.





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.





12


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 1,440,000  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.  Net
      Issue Exercise .
      In lieu
      of exercising this Warrant, the Holder may elect to receive Shares equal to
      the
      value of this Warrant (or the portion thereof being canceled) by surrender
      of
      this Warrant at the principal office of the Company together with notice of
      such
      election, in which event the Company shall issue to the Holder a number of
      Shares computed using the following formula:





X
      = Y
      (A-B)


-------


A





Where
      X  =
      the
      number of the Shares to be issued to the Holder.





Y   =
      the
      number of the Shares purchasable under this Warrant.





A   =
      the
      fair market value of one Share on the date of determination.





B   =
      the per
      share Exercise Price (as adjusted to the date of such calculation).





Fair
      Market Value .
      For
      purposes of this section, the per share fair market value of the Shares shall
      mean:





(i)  If
      the
      Company's Common Stock is publicly traded, the per share fair market value
      of
      the Shares shall be the average of the closing prices of the Common Stock as
      quoted on the Nasdaq National Market or the principal exchange on which the
      Common Stock is listed, or if not so listed then the fair market value shall
      be
      the average of the closing bid prices of the Common Stock as published in The
      Wall Street Journal, in each case for the fifteen (15) trading days ending
      five
      (5) trading days prior to the date of determination of fair market
      value;





(ii)  If
      the
      Company's Common Stock is not so publicly traded, the per share fair market
      value of the Shares shall be such fair market value as is determined in good
      faith by the Board of Directors of the Company after taking into consideration
      factors it deems appropriate, including, without limitation, recent sale and
      offer prices of the capital stock of the Company in private transactions
      negotiated at arm's length.




13


c.  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.





d.  NO
      IMPAIRMENT .
      THE
      COMPANY WILL NOT, THROUGH ANY REORGANIZATION, TRANSFER OF ASSETS, CONSOLIDATION,
      MERGER, DISSOLUTION, ISSUE OR SALE OF SECURITIES OR ANY OTHER VOLUNTARY ACTION,
      AVOID OR SEEK TO AVOID THE OBSERVANCE OR PERFORMANCE OF ANY OF THE TERMS TO
      BE
      OBSERVED OR PERFORMED HEREUNDER BY THE COMPANY, BUT WILL AT ALL TIMES IN GOOD
      FAITH ASSIST IN THE CARRYING OUT OF ALL THE PROVISIONS OF THIS SECTION AND
      IN
      THE TAKING OF ALL SUCH ACTION AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO
      PROTECT THE EXERCISE RIGHTS OF THE HOLDER OF THIS WARRANT AGAINST IMPAIRMENT.





e.  Issue
      Taxes .
      The
      Company shall pay issue taxes that may be payable in respect of any issue or
      delivery of shares of Common Stock on exercise of this Warrant, in whole;
      provided, however, that the Company shall not be obligated to pay any transfer
      taxes resulting from any transfer requested by any holder in connection with
      any
      such exercise.





f.  Reservation
      of Stock Issuable Upon Conversion .
      The
      Company shall at all times reserve and keep available out of its authorized
      but
      unissued shares of common stock, solely for the purpose of effecting the
      exercise of this Warrant, such number of its shares of common stock as shall
      from time to time be sufficient to effect the exercise of this Warrant; and
      if
      at any time the number of authorized but unissued shares of common stock shall
      not be sufficient to effect the exercise of this Warrant, the Company will
      take
      all appropriate corporate action as may, in the opinion of its counsel, be
      necessary to increase its authorized but unissued shares of common stock to
      such
      number of shares as shall be sufficient for such purpose.





g.  Ratchet
      Protection .
      In the
      event that the Company sells any shares of common stock, grants options or
      warrants to purchase any shares of its common stock, issues securities
      convertible into shares of its common stock or enters into any agreement to
      do
      any of the same (other than as compensation for employment or consulting
      services) at a price (the “Lower Price”) which is lower than the then Exercise
      Price, the Exercise Price shall be adjusted downward to the Lower Price. Any
      such adjustment shall apply for all such issuances.





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.





14


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 OF THE NUMBER OF SHARES OF COMMON STOCK WHICH MIGHT
      HAVE BEEN PURCHASED UPON EXERCISE OF THIS WARRANT IMMEDIATELY PRIOR TO SUCH
      RECLASSIFICATION OR CHANGE. ANY SUCH PROVISION SHALL INCLUDE PROVISION FOR
      ADJUSTMENTS WHICH SHALL BE AS NEARLY EQUIVALENT AS MAY BE PRACTICABLE TO THE
      ADJUSTMENTS PROVIDED FOR IN THIS WARRANT. THE FOREGOING PROVISIONS OF THIS
      SECTION 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.





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.





15





IN
      WITNESS WHEREOF, the undersigned hereby sets is hand and seal this 6 th day of
      November, 2006.








Itec
      Environmental Group, Inc.








By:
      ____________________________________


Name:
      Rodney S. Rougelot


Title:
      Chief Executive Officer








Investor
      Name: ____________________________________





Investor
      Address: __________________________________





_________________________________________________





_________________________________________________




16





**EXHIBIT
      A**





**NOTICE
      OF EXERCISE**





(To
      be
      signed only upon exercise of the Warrant)








To:
      Itec
      Environmental Group, Inc.








The
      undersigned, hereby irrevocably elects to exercise the purchase rights
      represented by the Warrant granted to the undersigned on ______________ and
      to
      purchase thereunder __________* shares of Common Stock of Itec Environmental
      Group, Inc. (the “Company”).





Dated:
      ________________











_________________________________________


(Signature
      must conform in all respects to name


of
      holder
      as specified on the face of the Warrant)











_________________________________________


(Please
      Print Name)








_________________________________________


(Address)








*
      Insert
      here the number of shares being exercised, without making any adjustment for
      additional Common Stock of the Company, other securities or property which,
      pursuant to the adjustment provisions of the Warrant, may be deliverable upon
      exercise.

















17


**Exhibit
      D**


**Form
      of Warrant**












18


**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 3,748,000 Shares of Common Stock





Itec
      Environmental Group, inc.





Date
      of
      Issuance: November 6, 2006





No.
      149





THIS
      CERTIFIES that, for value received, Excipio Group, S.A., 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 and
      (b) this Warrant. The Company shall as promptly as practicable, and in any
      event
      within twenty (20) days after delivery to the Company of (i) the Exercise
      Notice, (ii) and this Warrant, execute and deliver or cause to be executed
      and
      delivered, in accordance with such notice, a certificate or certificates
      representing the aggregate number of 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 April 15, 2010 (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.





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.





19


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 3,748,000 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 $0.12.





b.  Net
      Issue Exercise .
      In lieu
      of exercising this Warrant, the Holder may elect to receive Shares equal to
      the
      value of this Warrant (or the portion thereof being canceled) by surrender
      of
      this Warrant at the principal office of the Company together with notice of
      such
      election, in which event the Company shall issue to the Holder a number of
      Shares computed using the following formula:





X
      = Y
      (A-B)


-------


A





Where
      X  =
      the
      number of the Shares to be issued to the Holder.





Y   =
      the
      number of the Shares purchasable under this Warrant.





A   =
      the
      fair market value of one Share on the date of determination.





B   =
      the per
      share Exercise Price (as adjusted to the date of such calculation).





Fair
      Market Value .
      For
      purposes of this section, the per share fair market value of the Shares shall
      mean:





(i)  If
      the
      Company's Common Stock is publicly traded, the per share fair market value
      of
      the Shares shall be the average of the closing prices of the Common Stock as
      quoted on the Nasdaq National Market or the principal exchange on which the
      Common Stock is listed, or if not so listed then the fair market value shall
      be
      the average of the closing bid prices of the Common Stock as published in The
      Wall Street Journal, in each case for the fifteen (15) trading days ending
      five
      (5) trading days prior to the date of determination of fair market
      value;





(ii)  If
      the
      Company's Common Stock is not so publicly traded, the per share fair market
      value of the Shares shall be such fair market value as is determined in good
      faith by the Board of Directors of the Company after taking into consideration
      factors it deems appropriate, including, without limitation, recent sale and
      offer prices of the capital stock of the Company in private transactions
      negotiated at arm's length.




20


c.  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.





d.  NO
      IMPAIRMENT .
      THE
      COMPANY WILL NOT, THROUGH ANY REORGANIZATION, TRANSFER OF ASSETS, CONSOLIDATION,
      MERGER, DISSOLUTION, ISSUE OR SALE OF SECURITIES OR ANY OTHER VOLUNTARY ACTION,
      AVOID OR SEEK TO AVOID THE OBSERVANCE OR PERFORMANCE OF ANY OF THE TERMS TO
      BE
      OBSERVED OR PERFORMED HEREUNDER BY THE COMPANY, BUT WILL AT ALL TIMES IN GOOD
      FAITH ASSIST IN THE CARRYING OUT OF ALL THE PROVISIONS OF THIS SECTION AND
      IN
      THE TAKING OF ALL SUCH ACTION AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO
      PROTECT THE EXERCISE RIGHTS OF THE HOLDER OF THIS WARRANT AGAINST IMPAIRMENT.





e.  Issue
      Taxes .
      The
      Company shall pay issue taxes that may be payable in respect of any issue or
      delivery of shares of Common Stock on exercise of this Warrant, in whole;
      provided, however, that the Company shall not be obligated to pay any transfer
      taxes resulting from any transfer requested by any holder in connection with
      any
      such exercise.





f.  Reservation
      of Stock Issuable Upon Conversion .
      The
      Company shall at all times reserve and keep available out of its authorized
      but
      unissued shares of common stock, solely for the purpose of effecting the
      exercise of this Warrant, such number of its shares of common stock as shall
      from time to time be sufficient to effect the exercise of this Warrant; and
      if
      at any time the number of authorized but unissued shares of common stock shall
      not be sufficient to effect the exercise of this Warrant, the Company will
      take
      all appropriate corporate action as may, in the opinion of its counsel, be
      necessary to increase its authorized but unissued shares of common stock to
      such
      number of shares as shall be sufficient for such purpose.





g.  Ratchet
      Protection .
      In the
      event that the Company sells any shares of common stock, grants options or
      warrants to purchase any shares of its common stock, issues securities
      convertible into shares of its common stock or enters into any agreement to
      do
      any of the same (other than as compensation for employment or consulting
      services) at a price (the “Lower Price”) which is lower than the then Exercise
      Price, the Exercise Price shall be adjusted downward to the Lower Price. Any
      such adjustment shall apply for all such issuances.





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.





21


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 OF THE NUMBER OF SHARES OF COMMON STOCK WHICH MIGHT
      HAVE BEEN PURCHASED UPON EXERCISE OF THIS WARRANT IMMEDIATELY PRIOR TO SUCH
      RECLASSIFICATION OR CHANGE. ANY SUCH PROVISION SHALL INCLUDE PROVISION FOR
      ADJUSTMENTS WHICH SHALL BE AS NEARLY EQUIVALENT AS MAY BE PRACTICABLE TO THE
      ADJUSTMENTS PROVIDED FOR IN THIS WARRANT. THE FOREGOING PROVISIONS OF THIS
      SECTION 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.





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.





22





IN
      WITNESS WHEREOF, the undersigned hereby sets is hand and seal this 6 th day of
      November, 2006.








Itec
      Environmental Group, Inc.








By:
      ____________________________________


Name:
      Rodney S. Rougelot


Title:
      Chief Executive Officer








Investor
      Name: ____________________________________





Investor
      Address: __________________________________





_________________________________________________





_________________________________________________








23





**EXHIBIT
      A**





**NOTICE
      OF EXERCISE**





(To
      be
      signed only upon exercise of the Warrant)








To:
      Itec
      Environmental Group, Inc.








The
      undersigned, hereby irrevocably elects to exercise the purchase rights
      represented by the Warrant granted to the undersigned on ______________ and
      to
      purchase thereunder __________* shares of Common Stock of Itec Environmental
      Group, Inc. (the “Company”).





Dated:
      ________________











_________________________________________


(Signature
      must conform in all respects to name


of
      holder
      as specified on the face of the Warrant)











_________________________________________


(Please
      Print Name)








_________________________________________


(Address)








*
      Insert
      here the number of shares being exercised, without making any adjustment for
      additional Common Stock of the Company, other securities or property which,
      pursuant to the adjustment provisions of the Warrant, may be deliverable upon
      exercise.







24