Unassociated Document


    THE
      SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE UNITED
      STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE
      PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED
      BY
      THE REGISTERED HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON
      STATUTORY EXEMPTIONS UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE
      SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
      ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
      1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT.

     

    


    


    PROMISSORY
      NOTE

    


    Oakdale,
      California

    August
      ___, 2005

    


    FOR
      VALUE
      RECEIVED, ITec Environmental Group, Inc., a Delaware corporation ("Borrower"),
      hereby promises to pay to the order of ___________________ ("Lender"),
      in
      lawful money of the United States at the address of Lender set forth herein,
      the
      principal amount of $______________ (the “Loan”),
      together with Interest. This Promissory Note ("Note")
      has
      been executed by Borrower on the date set forth above (the "Effective
      Date")
      pursuant to the Loan Agreement entered into as of the date hereof between Lender
      and Borrower (the "Loan
      Agreement").
      Capitalized terms use but not defined herein shall have the meanings assigned
      to
      such terms in the Loan Agreement.

    


    1.  Interest.
      The
      Loan shall bear interest at the Interest Rate from the Effective Date and
      continuing until payment in full of the Loan. Upon the occurrence of an Event
      of
      Default and for so long as such Event of Default continues, Interest shall
      accrue on the outstanding Loan amount at the Default Interest Rate.


    


    2.  Maturity
      Date.
      Subject
      to Section 3, all or any portion of the Loan, all accrued Interest thereon
      and
      all other sums due hereunder, shall be due and payable on demand by Lender
      on
      the Maturity Date.

    


    3.  Conversion.
      In
      Lender’s discretion, at any time prior to the consummation of the Private
      Placement, Lender may convert all or any portion of the outstanding principal
      amount of this Note as provided in Section 8.7(a) of the Loan Agreement of
      even
      date herewith.

    


    4.  Application
      of Payments.
      

    


    4.1.  Except
      as
      otherwise expressly provided herein, payments under this Note shall be applied
      (i) first to the repayment of any sums incurred by Lender for the payment of
      any
      expenses in enforcing the terms of this Note, (ii) then to the payment of the
      Default Interest Rate, (iii) then to the payment of the Interest Rate, and
      (iv)
      then to the reduction of the Loan.

    


    4.2.  Upon
      payment in full of the Loan and applicable accrued and unpaid Interest thereon,
      this Note shall be marked "Paid in Full" and returned to Borrower.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.  Waiver
      of Notice.
      Borrower hereby waives diligence, notice, presentment, protest and notice of
      dishonor.

    


    6.  Transfer.
      This
      Note may be transferred by Lender at any time, provided that such transfer
      complies with applicable securities laws.

    


    7.  Events
      of Default.
      The
      occurrence of any of following events (each an "Event
      of Default"),
      not
      cured in any applicable cure period, shall constitute an Event of Default of
      Borrower:

    


    7.1.  The
      failure to make when due any payment described in this Note or the Loan
      Agreement, whether on or after the Maturity Date, by acceleration or otherwise;
      and

    


    7.2.  A
      breach
      of any representation, warranty, covenant or other provision of this Note or
      the
      Loan Agreement, which, if capable of being cured, is not cured within three
      days
      following notice thereof to the Company;

     

    7.3.  (i)
      The
      application for the appointment of a receiver or custodian for Borrower or
      the
      property of Borrower, (ii) the entry of an order for relief or the filing of
      a
      petition by or against Borrower under the provisions of any bankruptcy or
      insolvency law, (iii) any assignment for the benefit of creditors by or against
      Borrower, or (iv) the insolvency of Borrower.

    


    Upon
      the
      occurrence of any Event of Default that is not cured within any applicable
      cure
      period, if any, Lender may elect, by written notice delivered to Borrower,
      to
      take at any time any or all of the following actions: (i) declare this Note
      to
      be forthwith due and payable, whereupon the entire unpaid Loan, together with
      all accrued and unpaid Interest thereon (including the Default Interest Rate),
      and all other cash obligations hereunder, 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 Borrower, anything contained herein
      to the contrary notwithstanding, and (ii) exercise any and all other remedies
      provided hereunder or available at law or in equity. 

    


    8.  Miscellaneous.

    


    8.1.  Successors
      and Assigns.
      Subject
      to the exceptions specifically set forth in this Note and the Loan Agreement,
      the terms and conditions of this Note shall inure to the benefit of and be
      binding upon the respective executors, administrators, heirs, successors and
      permitted assigns of the parties. This Note (or a portion hereof) may be
      assigned by Lender without the consent of Borrower.

     

    8.2.  Loss
      or Mutilation of Note.
      Upon
      receipt by Borrower of evidence satisfactory to Borrower of the loss, theft,
      destruction or mutilation of this Note, together with indemnity reasonably
      satisfactory to Borrower, in the case of loss, theft or destruction, or the
      surrender and cancellation of this Note, in the case of mutilation, Borrower
      shall execute and deliver to Lender a new promissory note of like tenor and
      denomination as this Note.

     

    
      
         

      

      
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    8.3.  Notices.
      Any
      notice, demand, offer, request or other communication required or permitted
      to
      be given pursuant to the terms of this Note shall be in writing and shall be
      deemed effectively given the earlier of (i) when received, (ii) when delivered
      personally, (iii) one business day after being delivered by facsimile (with
      receipt of appropriate confirmation), (iv) one business day after being
      deposited with an overnight courier service, or (v) four days after being
      deposited in the U.S. mail, First Class with postage prepaid, and addressed
      to
      the recipient at the addresses set forth below unless another address is
      provided to the other party in writing:

    


    If
      to
      Borrower, to:

    


    ITec
      Environmental Group, Inc.

    5300
      Claus Road, Box 760

    Riverbank,
      CA 95367

    Attn: Gary
      M.
      De Laurentiis

    Fax: (209)
      881-3529

    


    with
      a
      copy to:

    


    The
      Otto
      Law Group, PLLC

    601
      Union
      Street, Suite 4500

    Seattle,
      WA 98101

    Attn:
       David
      M.
      Otto

    Fax: (206)
      262-9513

    


    if
      to
      Lender, to:

    


    As
      set
      forth on the Schedule

    of
      Lenders in the Loan Agreement

     

    8.4 Governing
      Law.
      This
      Note shall be governed in all respects by the laws of the State of California
      as
      applied to agreements entered into and performed entirely within the State
      of
      California by residents thereof, without regard to any provisions thereof
      relating to conflicts of laws among different
      jurisdictions.

    


    8.5 Waiver
      and Amendment.
      Any
      term of this Note may be amended, waived or modified only with the written
      consent of Borrower and Lender.

    


    8.6 Remedies;
      Costs of Collection; Attorneys' Fees.
      No
      delay or omission by Lender in exercising any of its rights, remedies, powers
      or
      privileges hereunder or at law or in equity and no course of dealing between
      Lender and the undersigned or any other person shall be deemed a waiver by
      Lender of any such rights, remedies, powers or privileges, even if such delay
      or
      omission is continuous or repeated, nor shall any single or partial exercise
      of
      any right, remedy, power or privilege preclude any other or further exercise
      thereof by Lender or the exercise of any other right, remedy, power or privilege
      by Lender. The rights and remedies of Lender described herein shall be
      cumulative and not restrictive of any other rights or remedies available under
      any other instrument, at law or in equity. If an Event of Default occurs,
      Borrower agrees to pay, in addition to the Loan and Interest payable thereon,
      reasonable attorneys' fees and any other reasonable costs incurred by Lender
      in
      connection with its pursuit of its remedies under this Note.

     

    *
      * * *
      * 


    
      
        
           

        

         

      

      
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    IN
      WITNESS WHEREOF, Borrower has caused this Note to be signed on the Effective
      Date.

    


    


    BORROWER:

    


    ITEC
      ENVIRONMENTAL GROUP, INC.

    


    


    By: _______________________________ 

            Gary
      M.
      De Laurentiis 

      Chief
      Executive Officer

     

    


    
      
         

      

      
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