Unassociated Document


    LOAN
      AGREEMENT

     

    THIS
      LOAN
      AGREEMENT (this "Agreement"),
      is
      executed as of July 21, 2006, by and between Itec Environmental Group, Inc.,
      a
      Delaware corporation (the "Company"),
      and
      Ji Y. Baek (the "Lender").

     

    WHEREAS,
      the Company wishes to borrow and the Lender wishes to lend $200,000 as a short
      term bridge loan; and

     

    WHEREAS,
      the Lender is willing to provide such financing on terms and conditions as
      set
      forth herein.

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements set forth
      herein, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the Company and the Lender,
      intending to be legally bound, agree as follows:

     

    ARTICLE
      1

    DEFINITIONS

     

    1.1 Defined
      terms.
      Certain
      capitalized terms used in this Agreement shall have the specific meanings
      defined below:

     

    “Business
      Day”
shall
      mean a day other than a Saturday, Sunday, or other day on which commercial
      banks
      are authorized or required by law to close.

     

    “Closing
      Date”
shall
      mean the date upon which the Loan is received by the Company.

     

    "Encumbrance"
      means
      any lien, charge, security interest, mortgage, deed of trust, pledge or other
      encumbrance of any nature whatsoever.

     

    “Interest
      Rate”
shall
      mean twelve percent (12%) per annum.

     

    "Proprietary
      Rights"
      means
      all patents, trademarks, service marks, copyrights, trade names and all
      registrations and applications and renewals for any of the foregoing and all
      goodwill associated therewith.

     

    ARTICLE
      2

    THE
      LOAN

     

    2.1 Loan.
      According to the terms and subject to the conditions of this Agreement, the
      Lender shall loan to the Company on the Closing Date in the aggregate amount
      of
      Two Hundred Thousand Dollars ($200,000) (the "Loan").
      The
      Loan shall be evidenced by a promissory note in the form attached hereto as
      Exhibit
      A
      ("Note"),
      duly
      executed on behalf of the Company and dated as of the Closing Date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.2 Interest.
      

     

    (a) Interest
      Rate.
      The
      Loan shall bear interest ("Interest")
      from
      the date of payment by the Lender until the Maturity Date at the Interest Rate
      (calculated on the basis of the actual number of days elapsed over a year of
      360
      days). Interest is payable by the Company on a monthly basis in arrears on
      the
      first Business Day of the month. 

     

    (b) Default
      Interest.
      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 rate
      per
      annum equal to the lower of eighteen percent (18%) or the maximum rate of
      interest permissible under applicable law at any time (the "Default
      Interest Rate").
      The
      term "Interest"
      shall
      include both the interest rate described in Section 2.3(a) and the Default
      Interest Rate.

     

    2.3 Maturity
      Date.
      Unless
      the Loan is earlier accelerated pursuant to the terms hereof or converted
      pursuant to the provisions of Section 4.1 hereof, the Loan and all accrued
      Interest thereon shall be due and payable in full on the date that is 30 days
      following the Closing Date (the “Maturity
      Date”).
      The
      Lender may, at the Lender's option, extend the Maturity Date on such terms
      and
      conditions as determined by the Lender in their sole discretion.

     

    ARTICLE
      3

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Organization,
      qualification and Authority.
      The
      Company is a corporation duly organized and validly existing under the laws
      of
      the State of Delaware, and is in good standing and duly qualified to do business
      as a foreign corporation in all jurisdictions where the operation of its
      business or the ownership of its properties make such qualification necessary.
      The Company has the requisite corporate power and authority to own, lease and
      operate its facilities and assets as presently owned, leased and operated,
      and
      to carry on its respective business as it is now being conducted. The Company
      has the requisite or individual right, power and authority to execute, deliver
      and carry out the terms of this Agreement and all documents and agreements
      necessary to give effect to the provisions of this Agreement and to consummate
      the transactions contemplated hereunder. The execution, delivery and
      consummation of this Agreement, and all other agreements and documents executed
      in connection herewith by the Company, have been duly authorized by all
      necessary action on the part of the Company. No other action, consent or
      approval on the part of the Company or any other person or entity, is necessary
      to authorize the Company's due and valid execution, delivery and consummation
      of
      this Agreement and all other agreements and documents executed in connection
      hereto. This Agreement and all other agreements and documents executed in
      connection herewith by the Company, upon due execution and delivery thereof,
      shall constitute the valid and binding obligations of the Company, enforceable
      in accordance with its terms, except as enforcement may be limited by
      bankruptcy, insolvency, reorganization or similar laws affecting creditors'
      rights generally and by general principles of equity.

     

    3.2 Compliance
      with Laws.
      The
      nature and transaction of the Company's business and operations and the use
      of
      its properties and assets do not, and during the term of this Agreement shall
      not, violate or conflict with in any material respect any applicable law,
      statute, ordinance, rule, regulation or order of any kind or
      nature.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    3.3 Absence
      of Conflicts.
      The
      execution, delivery and performance by the Company of this Agreement, and the
      transactions contemplated hereby, do not constitute a breach or default, or
      require consents under, any agreement, permit, contract or other instrument
      to
      which the Company is a party, or by which the Company is bound or to which
      any
      of the assets of the Company is subject, or any judgment, order, writ, decree,
      authorization, license, rule, regulation, or statute to which the Company is
      subject, and will not result in the creation of any lien upon any of the assets
      of the Company. 

     

    3.4 Litigation
      and Taxes.
      There
      is no
      litigation or governmental proceeding pending, or to the best knowledge of
      the
      Company after due inquiry, threatened, against the Company. The Company has
      duly
      filed all applicable income or other tax returns and has paid all material
      income or other taxes when due. There is no controversy or objection pending,
      or
      to the best knowledge of the Company after due inquiry, threatened in respect
      of
      any tax returns of the Company.

     

    3.5 Intellectual
      Property.
      No
      proceedings have been instituted or are pending or, to the Company’s knowledge,
      threatened which challenge the validity of the ownership by the Company of
      any
      such Proprietary Rights. The Company has not licensed anyone to use any such
      Proprietary Rights and, to the Company’s knowledge, there has been no use or
      infringement of any of such Proprietary Rights by any other person.

     

    3.6 Company's
      SEC Reports.
      The
      Company has timely filed with the Securities and Exchange Commission (the
“SEC”)
      all
      forms, reports, definitive proxy statements, schedules and registration
      statements (the “ Company
      SEC Reports”)
      required to be filed by it with the SEC pursuant to the Securities Act of 1933,
      as amended (the “Securities
      Act”),
      or
      the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”).
      As of
      their respective filing dates or, if amended, as of the date of the last
      amendment, none of the Company SEC Reports contained any untrue statement of
      a
      material fact or omitted to state any material fact required to be stated
      therein or necessary to make the statements made therein, in the light of the
      circumstances under which they were made, not misleading. The Company SEC
      Reports (including, without limitation, any financial statements and schedules
      included therein) when filed or, if amended, as of the date of the last
      amendment, complied in all material respects with the applicable requirements
      of
      the Securities Act and the Exchange Act.

     

    3.7 No
      Omissions or Misstatements.
      None of
      the information included in this Agreement, other documents or information
      furnished or to be furnished by the Company, or any of its representations,
      contains any untrue statement of a material fact or is misleading in any
      material respect or omits to state any material fact. Copies of all documents
      referred to in herein have been delivered or made available to the Lender and
      constitute true and complete copies thereof and include all amendments,
      schedules, appendices, supplements or modifications thereto or waivers
      thereunder.

     

    ARTICLE
      4

    CONVERSION

     

    4.1 Conversion
      Right.
      Lender
      in their sole discretion may convert, via written notice to the Company, the
      full amount, or some portion thereof, of the principal plus any interest payable
      under the Note and the Loan Agreement into a warrant and a convertible debenture
      pursuant to the terms of the 2006 Private Placement Memorandum (the “PPM”) of
      the Company.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    ARTICLE
      5

    DEFAULT

     

    5.1 Events
      of Default.
      The
      occurrence of any of the following events (each an “Event
      of Default”),
      not
      cured in the applicable cure period, if any, shall constitute and Event of
      Default of the Company:

     

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

     

    (b) the
      failure to make when due any payment described in this Agreement or the Note,
      whether on or after the Maturity Date, by acceleration or otherwise;
      and

     

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

     

    5.2 Effect
      of Default.
      Upon
      the occurrence of any Event of Default that is not cured within any applicable
      cure period, the Lender may elect, by written notice delivered to the Company,
      to take any or all of the following actions: (i) declare this Agreement
      terminated and the outstanding amounts under the Note to be forthwith due and
      payable, whereupon the entire unpaid Loan, together with 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 the Company, anything contained herein or in any
      of
      the Note 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. In addition, during the occurrence
      of
      any Event of Default, the Company shall not pay make any payment on any other
      outstanding indebtedness of the Company (other than indebtedness of the Company
      to which the Lender have agreed in writing to subordinate this Agreement and
      the
      Note hereunder). 

     

    ARTICLE
      6

    ISSUANCE
      OF STOCK

     

    6.1 Issuance
      of Warrants.
      The
      Company shall issue to the Lender two (2) warrants to purchase a combined total
      of six hundred thousand (600,000) shares of common stock of the Company in
      the
      forms attached hereto as Exhibit
      B and C
      (the
“Warrants”).
      The
      Warrants shall be immediately exercisable by the Lenders (or their assigns)
      on
      the Maturity Date and at an exercise price of Twelve Cents ($.12) per share.
      The
      Warrants shall be exercisable for a period of ten (10) years following the
      Maturity Date.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    6.2 Registration
      of Registrable Securities.
      The
      shares underlying the warrants shall be entitled to be registered pursuant
      to
      any registration statement filed by the Company, except for registrations filed
      on Form S-4 or Form S-8. Registration costs shall be borne by the Company.
      

     

    ARTICLE
      7

    COVENANTS

    


    7.1 Payment
      in Full upon Satisfaction of Certain Conditions.
      In the
      event that the Five Million Dollar ($5,000,000) financing contemplated in by
      the
      PPM is completed prior to the Maturity Date, the principle and 30 days accrued
      interest shall be repaid to Lender in full satisfaction of the Loan, subject
      to
      Lender’s right to conversion as described in Section 4.1.

    


    


    ARTICLE
      8

    MISCELLANEOUS

     

    8.1 Successors
      and Assigns; Third Party Beneficiary.
      Subject
      to the exceptions specifically set forth in this Agreement, the terms and
      conditions of this Agreement shall inure to the benefit of and be binding upon
      the respective executors, administrators, heirs, successors and permitted
      assigns of the parties. This Agreement may not be assigned (whether by operation
      of law or otherwise) by the Company without the prior written consent of the
      Lender. This Agreement may be assigned by the Lender without the consent of
      the
      Company.

     

    8.2 Titles
      and Subtitles.
      The
      titles and subtitles of the Sections of this Agreement are used for convenience
      only and shall not be considered in construing or interpreting this
      agreement.

     

    8.3 Notices.
      Any
      notice, request or other communication required or permitted hereunder shall
      be
      in writing and shall be delivered personally or by facsimile (receipt confirmed
      electronically) or shall be sent by a reputable express delivery service or
      by
      certified mail, postage prepaid with return receipt requested, addressed as
      follows:

     

    


    if
      to
      the Company, to:

    


    ITec
      Environmental Group, Inc.

    5300
      Claus Road, Box 760

    Riverbank,
      CA 95367

    Attn: Gary
      M.
      De Laurentiis

    Fax: (209)
      881-3529

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    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
      the Lender, to:

    


    Ji
      Y.
      Baek

    13700
      Marina Pointe Drive, Suite 1001

    Marina
      Del Rey, CA 90292 

    


    Either
      party hereto may change the above specified recipient or mailing address by
      notice to the other party given in the manner herein prescribed. All notices
      shall be deemed given on the day when actually delivered as provided above
      (if
      delivered personally or by facsimile, provided that any such facsimile is
      received during regular business hours at the recipient's location) or on the
      day shown on the return receipt (if delivered by mail or delivery
      service).

     

    8.4 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the domestic
      laws of the State of California without giving effect to any choice of law
      or
      conflict of law provision or rule (whether of the State of Colorado or any
      other
      jurisdiction) that would cause the application of the laws of any jurisdiction
      other than the State of California.

     

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

     

    8.6 Remedies.
      No
      delay or omission by the Lender in exercising any of its rights, remedies,
      powers or privileges hereunder or at law or in equity and no course of dealing
      between the Lender and the undersigned or any other person shall be deemed
      a
      waiver by the 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 the Lender or the exercise of any other right,
      remedy, power or privilege by the Lender. The rights and remedies of the 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.


     

    


     

    [the
      remainder of this page intentionally left blank]

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Company has caused this Loan Agreement to be signed in
      its
      name on the date first set forth above.

     

    


    
      	 	 	 
	 	ITEC
              ENVIRONMENTAL
              GROUP, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Gary
              M.
              De Laurentiis
	 	
              
Gary
              M. De Laurentiis
	 	Chief
              Executive Officer




    


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    


    IN
      WITNESS WHEREOF, the Lender has caused this Loan Agreement to be signed in
      its
      name on the date first set forth above.

    


    
      	 	 	 
	 	JI
              Y.
              BAEK
	 
 	 
 	 
 
	 	By:  	/s/ Ji
              Y.
              Baek
	 	
              
Name: Ji
              Y. Baek
	 	 




    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    


    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

    


    Riverbank,
      California

    July
      21,
      2006

    


    FOR
      VALUE
      RECEIVED, Itec Environmental Group, Inc., a Delaware corporation ("Borrower"),
      hereby promises to pay to the order of Ji Y. Baek (the "Lender")),
      in
      lawful money of the United States at the address of the Lender set forth herein,
      the principal amount of Two Hundred Thousand Dollars ($200,000) (the
“Loan”),
      together with Interest, as defined below. This Promissory Note ("Note")
      has
      been executed by Borrower on the date set forth above (the "Effective
      Date").
      Capitalized terms used but not defined herein shall have the meanings assigned
      to such terms in the Loan Agreement.

    


    1.  Interest.
      Interest shall accrue at twelve percent (12%) per annum on the outstanding
      principal amount of this Promissory Note. 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.
      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 the Lender on the Maturity
      Date.

    


    3.      Payments.
      Borrower will repay the Loan amount on the Maturity Date.

    


    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 the 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.      Borrower
      may prepay all or any part of the principal without penalty.

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    4.3.  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 the Lender at any time, provided that such transfer
      complies with applicable securities laws.

    


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

    


    7.1.  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; and

     

    7.2.  (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, the Lenders 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. 

    


    If
      an
      Event of Default occurs by Borrower, Borrower agrees to pay, in addition to
      the
      Loan and Interest payable thereon, reasonable attorneys' fees and any other
      reasonable costs incurred by the Lenders in connection with its pursuit of
      its
      remedies under this Note

    


    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 the Lender without the consent of Borrower.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    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 the Lenders a new promissory note of like tenor
      and
      denomination as this Note.

     

    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 (1) business day after being
      deposited with an overnight courier service, or (v) four (4) 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
      the Lender, to:

    


    Ji
      Y.
      Baek

    13700
      Marina Pointe Drive, Suite 1001

    Marina
      Del Rey, CA 90292 

    


    


    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 the Lender.

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    8.6 Remedies;
      Costs of Collection; Attorneys' Fees.
      No
      delay or omission by the Lender in exercising any of its rights, remedies,
      powers or privileges hereunder or at law or in equity and no course of dealing
      between the Lender and the undersigned or any other person shall be deemed
      a
      waiver by the 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 the Lender or the exercise of any other right,
      remedy, power or privilege by the Lender. The rights and remedies of the 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 the Lenders in connection with its pursuit of its remedies under
      this Note.

    


    *
      * * *
      *

    


    [Signature
      Page to Follow] 

     

     

     

     

    

 

    
      
        
        

      

      
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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:  	/s/ Gary
              De
              Laurentiis
	 	
              
Name:
              Gary De Laurentiis
	 	Title: 
               Chief Executive Officer


    

     

     

    
      	 	 	 
	 	LENDER:
	 
 	 
 	 
 
	 	By:  	/s/ Ji
              Y.
              Baek
	 	
              
Ji
              Y. Baek
	 	 


    

    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    Exhibit
      B

    


    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 300,000 Shares of Common Stock

    


    Itec
      Environmental Group, inc.

    


    Date
      of
      Issuance: July 21, 2006

    


    No.
      85

    


    THIS
      CERTIFIES that, for value received, Ji “Allison” Y. Baek, or her 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. 

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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 300,000 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. 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. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    f.
       Adjustment.
      The
      Exercise Price shall be adjusted downward in the event the Company issues common
      stock (or securities exercisable for or convertible into or exchangeable for
      common stock) at a price below the Exercise Price, to a price equal to such
      issue price.

    


    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 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. 

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    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. 

    


    IN
      WITNESS WHEREOF, the undersigned hereby sets is hand and seal this
      21st
      day of
      July, 2006. 

    


    


    Itec
      Environmental Group, Inc. 

    


    


    By:
      /s/
      Gary De Laurentiis

         
      Name: Gary De Laurentiis

         
      Title: President and Chief Executive Officer

    


    


    Investor
      Name: Ji “Allison” Y. Baek

    


    Investor
      Address: __________________________________

    


    _________________________________________________

    


    _________________________________________________

     

    
 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    


    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. 

    


    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        



    

    Exhibit
      C

            

    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 300,000 Shares of Common Stock

    


    Itec
      Environmental Group, inc.

    


    Date
      of
      Issuance: July 21, 2006

    


    No.
      86

    


    THIS
      CERTIFIES that, for value received, Ji “Allison” Y. Baek, or her 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. 

    


    
      
        
        

      

      
        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 300,000 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. 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

        
          

        

      

      
        
        

      

    

    f.
       Adjustment.
      The
      Exercise Price shall be adjusted downward in the event the Company issues common
      stock (or securities exercisable for or convertible into or exchangeable for
      common stock) at a price below the Exercise Price, to a price equal to such
      issue price.

    


    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 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. 

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    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. 

    


    IN
      WITNESS WHEREOF, the undersigned hereby sets is hand and seal this
      21st
      day of
      July, 2006. 

    


    


    Itec
      Environmental Group, Inc. 

    


    


    By:
      /s/
      Gary De Laurentiis

         
      Name: Gary De Laurentiis

         
      Title: President and Chief Executive Officer

    


    


    Investor
      Name: Ji “Allison” Y. Baek

    


    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”).

    


    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