Document:

Exhibit
      10.4

    Amendment
      to Domingue Loan Agreement

    

    AMENDMENT
      NO. 1 TO LOAN AGREEMENT

    

    THIS
      AMENDMENT NO. 1 TO LOAN AGREEMENT (this "Amendment"),
      is
      executed as of September 7, 2006, by and between Itec Environmental Group,
      Inc.,
      a Delaware corporation (the "Company"),
      and
      Arbor Malone, LLC, a Delaware limited liability company (the "Lender").

     

    WHEREAS,
      the Company and the Lender entered into a Loan Agreement on August 14, 2006
      (the
“Loan
      Agreement”)
      pursuant to which the parties effected the First Closing thereunder at which
      time Lender advanced an initial Loan in the amount of $1,000,000;
      and

     

    WHEREAS,
      the Lender is willing to increase its loan commitment under the Loan Agreement
      to an aggregate of $2,300,000; and

     

    WHEREAS,
      the Lender is willing to provide such additional 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, hereby amend the Loan Agreement as follows:
      

     

    1.
      Amendment to Section 2.1. The parties agree that the first sentence of Section
      2.1 of the Loan Agreement is amended to read as follows: 

     

    “According
      to the terms and subject to the conditions of this Agreement, the Lender shall
      loan to the Company the aggregate amount of Two Million Three Hundred Thousand
      Dollars ($2,300,000.00) (the "Loan").”
      

     

    2.
      Conditions
      Precedent to the Loan.
      Section
      2.4 (b) of the Loan Agreement shall be amended to read as follows: 

     

    (b)
      The
      Company shall have duly authorized, executed, and delivered to the Lender a
      security agreement in the form attached hereto as Exhibit
      B
      (the
“Security
      Agreement”)
      to
      secure the repayment of the Loan and granting the Lender a continuing security
      interest in all presently existing and hereafter acquired assets and property
      of
      the Company of whatever nature and wherever located which such Security Interest
      shall be senior to all other security interests or Encumbrances against the
      assets and property of the Company other than Senior Debt (as hereafter
      defined). Lender shall be entitled to a security interest pari
      passu on
      a
      pro-rata basis with the investors participating in private placement pursuant
      to
      the 2006 Private Placement Memorandum (the “PPM”)
      of the
      Company and, except as set forth above, Lender’s security interest shall be
      senior to any other indebtedness of the Company, whether now existing or created
      or incurred in the future. “Senior
      Debt”
shall
      mean all indebtedness for all principal,
      fees, expenses, interest, penalties, post-bankruptcy petition interest, and
      all
      other amounts payable for money borrowed from banking or other financial
      institutions or governmental lending facilities that is not convertible into
      equity securities of the Company, including, but not limited to the $2,000,000
      loan from the California Integrated Waste Management Board (the “CIWMB
      Loan”)
      and
      the remaining amount due and owing under the forbearance agreement by and
      between the Company and the Elevation Fund, LLC (the “Forbearance
      Agreement”).

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    3.
      Other
      Indebtedness.
      Section
      3.8 of the Loan Agreement shall be amended to read as follows: 

     

    “3.8.
      Other
      Indebtedness.
      On and
      as of the date hereof and on and as of each Closing Date, the Company does
      not
      and will not have any outstanding Senior Debt other than the CIWMB Loan and
      the
      amount due and owning pursuant to the Forbearance Agreement. For so long as
      the
      Note (or any note issued upon transfer of the Note, in whole or in part) remains
      outstanding, the Company shall not incur, create or enter into any agreement
      to
      incur or create indebtedness ranking on a parity or parri
      passu
      with the
      Notes (“Parity
      Indebtedness”),
      other
      than the investors participating in the financing under the Company’s 2006
      Private Placement Memorandum and certain other lenders, identified in
Schedule
      A
      to the
      Security Agreement, as defined below, without the prior written consent of
      the
      Lender, which consent shall not be unreasonably withheld.”

     

    4.
      Events
      of Default.
      Section
      5.1(e) shall be amended to read as follows: 

     

    “(e)
      The
Effective
      Date
      under the Rougelot Employment Agreement shall not have occurred on or prior
      to
      September 15, 2006 or Mr. Rougelot shall no longer serve as the Chief Executive
      Officer of the Company for any reason other than his death or disability,
      Voluntary departure or removal for Cause (as such terms are defined in the
      Rougelot Employment Agreement); and” 

     

    5.
      Issuance
      of Warrants.
      The
      first sentence of Section 6.1 shall be amended to read as follows: 

     

    “The
      Company shall issue to the Lender one or more warrants to purchase a combined
      total of twenty-three million (23,000,000) shares of common stock of the Company
      in the form attached hereto as Exhibit
      C
      (referred to herein collectively as the “Warrant”).”
      

     

    6.
      Effect
      of Amendment.
      Except
      as specifically amended hereby, the Loan Agreement shall remain in full force
      and effect as originally written. This Amendment shall be deemed to be
      incorporate in and a part of the Loan Agreement. 

     

    7.
      Titles
      and Subtitles; Defined Terms.
      The
      titles and subtitles of the Sections of this Amendment are used for convenience
      only and shall not be considered in construing or interpreting this agreement.
      Capitalized terms used but not otherwise defined in this Amendment shall have
      the specific meanings set forth in the Loan Agreement.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, each of the parties has caused this Amendment No. 1 to Loan
      Agreement to be signed in its name on the date first set forth
      above.

     

    

    
      	 	 	 
	 	
              ITEC
                ENVIRONMENTAL GROUP, INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Gary
              M. De Laurentiis 
	 	Chief
              Executive Officer 

    

    
      	 	 	 
	 	
              ARBOR
                MALONE, LLC 

            
	 
 	 
 	 
 
	 	By:  	 
	 	Name: 	
              
Ronald
              M. Domingue
	 	Title  	Manager  

    

     

         

    
      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

    

    Schedule
      A

    

    
      	
              Secured
                Party

            	
              Aggregate
                Principal Amount of Note(s)

            
	
              Itec
                Capital Group, LLC 

            	
              $3,022,500.00

            
	
              Arbor
                Malone, LLC

            	
              $2,300,000.00

            
	
              Leroy
                and Lois Goldman

            	
              $500,000.00

            
	
              Ji
                Y. Baek

            	
              $202,000.00

            
	 	 
	
              Total
                

            	
              $6,024,500.00

            

    

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    Exhibit
      B

     

    SECURITY
      AGREEMENT

    

    This
      SECURITY AGREEMENT ("Security
      Agreement")
      is
      dated as of September __, 2006 (the
      "Effective
      Date"),
      by and
among
      Itec
      Environmental Group, Inc., a Delaware corporation (the
      "Company"),
      and the
      parties listed in Schedule
      A and B,
      attached hereto (the “Secured
      Parties”).

     

    WHEREAS,
      on the Effective Date, the Company received funds pursuant to certain loans
      (collectively, the “Loans”
and
      each individually, a “Loan”)
      by the
      Secured Parties; and

     

    WHEREAS,
      in order to induce Secured Parties to provide the Loans to the Company, the
      Company agreed to grant to the Secured Parties a security interest in all of
      the
      Company’s assets to secure the amounts currently owing, and any additional
      amounts which may be owing, by the Company pursuant to the agreements between
      each of the Secured Parties and the Company that evidence the Loans (the
“Loan
      Documents”).

     

    NOW,
      THEREFORE, for good and valuable consideration, the receipt of which is hereby
      acknowledged, the Company and parties listed
      in
Schedule
      A and B
      attached
      hereto, agree as follows:

     

    1.
      Defined
      Terms.
      The
      following terms shall have the following meanings, unless the context otherwise
      requires:

     

    “Arbor
      Malone Notes”
shall
      mean the Secured Convertible Promissory Notes dated August 14, 2006 and
      September __, 2006 issued by the Company to Arbor Malone, LLC (“Arbor
      Malone”)
      in the
      aggregate principal amount of $2,300,000.00. 

    

    “Baek
      Note”
means
      the Secured Convertible Promissory Note dated August 29, 2006 issued by the
      Company to Ji Y. Baek (“Baek”)
      in the
      aggregate principal amount of $202,000.00. 

    

    "Code"
      shall
      mean the Uniform Commercial Code as in effect in the State of California on
      the
      Loan Closing Date.

    

    "Collateral"
      shall
      have the meaning given such term in Section 2. 

    

    "Event
      of Default"
      shall
      have the meaning given such term in each Note.

    

    “Goldman
      Note”
shall
      mean the Secured Convertible Promissory Note dated July 27, 2006 issued by
      the
      Company to Leroy and Lois Goldman (“Goldman”)
      in the
      aggregate principal amount of $500,000.00.

    

    “Itec
      Capital Group Notes”
shall
      mean the Secured Convertible Promissory Note issued by the Company to each
      of
      investors participating in the offering described in the Company’s 2006 Private
      Placement Memorandum as set forth on Schedule
      B
      hereto,
      in the aggregate principal amount of $3,022,500.00.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    “Note”
and
      “Notes”
shall
      mean the Arbor Malone Notes, the Baek Note, the Goldman Note and the Itec
      Capital Group Notes, individually and collectively, as the case may be.

    

    "Obligations"
      shall
      mean the obligations of the Company under the Notes and the Loan Documents,
      including all costs of collection.

    

    “Senior
      Debt”
shall
      mean all
      indebtedness for all principal,
      fees, expenses, interest, penalties, post-bankruptcy petition interest, and
      all
      other amounts payable for money borrowed from banking or other financial
      institutions or governmental lending facilities that is not convertible into
      equity securities of the Company, including, but not limited to the $2,000,000
      loan from the California Integrated Waste Management Board (the “CIWMB
      Loan”).

    

    2.
      Grant
      of Security Interest.
      As
      collateral security for the prompt and complete payment and performance when
      due
      of all the Obligations, the Company hereby grants to the Secured Parties a
      security interest in all of the Company's right, title and interest in, to
      and
      under the following, whether now existing or hereafter acquired (all of which
      collateral being hereinafter collectively called the “Collateral”);
      provided, however, that the security interest granted hereby shall be
      subordinate to the security interest to be granted or granted (as the case
      may
      be) by the Company in connection any Senior Debt. Secured Parties shall be
      entitled to a security interest in the following:

     

    ACCOUNTS

     

    All
      present and future accounts owned by the Company, including and together with
      any and all contract rights, accounts receivable, security deposits (where
      not
      otherwise prohibited by law or agreement), and other rights of any kind to
      receive payments for services rendered and goods supplied by the Company,
      together with agreements, customer lists, client lists, and accounts, invoices,
      agings, verification reports and other records relating in any way to such
      accounts.

     

    CONTRACTS

     

    All
      contracts, contract rights, royalties, license rights, leases, instruments,
      undertakings, documents or other agreements in or under which the Company may
      now or hereafter have any right, title or interest whether now existing or
      hereinafter created and all forms of obligations owing to the Company arising
      out of the sale or lease of goods, the licensing of technology or the rendering
      of services by the Company, whether or not earned by performance, and any and
      all credit insurance, guaranties, and other security therefor, as well as all
      merchandise returned to or reclaimed by the Company.

     

    EQUIPMENT,
      FURNISHINGS AND MISCELLANEOUS PERSONAL PROPERTY

     

    All
      presently owned and hereafter acquired furniture, furnishings, equipment,
      machinery, vehicles (including motor vehicles and trailers) computer hardware
      and software, accounting or bookkeeping systems, client or customer lists and
      information, data sheets and other records of any kind, wherever located, stored
      or inventoried, which are used or which may be used in the Company’s business;

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    FIXTURES

     

    All
      materials used by the Company in connection with its business operations,
      including, but not limited to, supplies, trade equipment, appliances, apparatus
      and any other items, now owned or hereafter acquired by the Company, and now
      or
      hereafter attached to, or installed in (temporarily or permanently) any real
      property now or in the future owned or leased by the Company; 

     

    GENERAL
      INTANGIBLES

     

    All
      general intangibles and other personal property of the Company, now owned or
      hereinafter acquired, including, without limitation, the following: (a) permits,
      authorizations and approvals presently and hereafter issued by any federal,
      state, municipal or local governmental or regulatory authority in favor of
      the
      Company; (b) all plans, specifications, renderings and other similar materials
      presently owned or hereafter acquired by the Company; (c) all presently existing
      and hereafter created contracts, leases, licenses and agreements to which the
      Company is a party; (d) all presently and hereafter existing policies and
      agreements of insurance in favor of the Company; (e) all presently and hereafter
      existing equity contribution agreements and other equity financing arrangements
      in favor of the Company; (f) all copyrights, chattel paper, electronic chattel
      paper, licenses, money, insurance proceeds, contract rights, subscription lists,
      mailing lists, licensing agreements, patents, trademarks, service marks, trade
      styles, patents, patent applications, franchise agreements, blueprints,
      drawings, purchase orders, customer lists, route lists, infringements, claims,
      computer programs, computer discs, computer tapes, literature, reports,
      catalogs, design rights, income tax refunds, payments of insurance and rights
      to
      payment of any kinds, trade names, refundable, returnable or reimbursable fees,
      deposits or other funds or evidences of credit or indebtedness deposited by
      or
      on behalf of the Company with any governmental agencies, boards, corporations,
      providers of utility services, public or private; (g) all presently existing
      and
      hereafter acquired computer programs, computer software and other electronic
      systems and materials of any kind of the Company; (h) goodwill; and (i) all
      other presently existing and hereafter acquired documents, accounts, general
      intangibles and intangible personal property of any kind.

     

    DOCUMENTS

     

    All
      documents, cash, deposit accounts, securities, securities entitlements,
      securities accounts, investment property, financial assets, letters of credit,
      certificates of deposit, instruments, chattel paper, and electronic chattel
      paper now owned or hereafter acquired and the Company’s books relating to the
      foregoing.

     

    COPYRIGHTS

     

    All
      copyright rights, copyright applications, copyright registrations and like
      protections in each work of authorship and derivative work thereof, whether
      published or unpublished, now owned or hereafter acquired; all trade secret
      rights, including all rights to unpatented inventions, know-how, operating
      manuals, license rights and agreements and confidential information, now owned
      or hereafter acquired; all mask work or similar rights available for the
      protection of semiconductor chips, now owned or hereafter acquired; all claims
      for damages by way of any past, present and future infringement of any of the
      foregoing.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    PROCEEDS

     

    All
      of
      the Company’s books and records relating to the foregoing and any and all
      present and future accounts, general intangibles, chattel paper, electronic
      chattel paper, products, accessions, replacements, betterments and substitutions
      for any of the foregoing described property, and all proceeds arising from
      or by
      virtue of, or from the sale or disposition of, or collections with respect
      to,
      or insurance proceeds payable with respect to, or claims against any other
      persons, corporations or other entities with respect to, all or any part of
      the
      foregoing described property and interests.

    

    3.
      Pro
      Rata Distributions among Secured Parties.
      It is
      expressly agreed by the Secured Parties that all payments received by the
      Company under or in connection with the any sale or liquidation of the
      Collateral, subject to any Senior Debt, shall be divided among the Secured
      Parties pari
      passu
      on a
      pro-rata basis equal to the quotient of: (x) the unpaid principal amount of
      the
      Note held by each of the respective Secured Parties (without regard to
      interest); divided by (y) the aggregate unpaid principal amount of all Notes
      (without regard to interest).

     

    4.
      Rights
      of Secured Parties; Limitations on Secured Parties’ Obligations.
      It is
      expressly agreed by the Company that, anything herein to the contrary
      notwithstanding, the Company shall remain liable under each of its contracts
      and
      documents to observe and perform all the conditions and obligations to be
      observed and performed by it thereunder, all in accordance with and pursuant
      to
      the terms and provisions of its contracts and documents. Secured Parties shall
      have no obligation or liability under any of the Company’s contracts and
      documents by reason of or arising out of this Security Agreement or the granting
      to Secured Parties of a security interest therein or the receipt by Secured
      Parties of any payment relating to any of the Company’s contracts and documents
      pursuant hereto, nor shall Secured Parties be required or obligated in any
      manner to perform or fulfill any of the obligations of the Company under or
      pursuant to any of its contracts and documents, or to make any payment, or
      to
      make any inquiry as to the nature or the sufficiency of any payment received
      by
      it or the sufficiency of any performance by any party under any of its contracts
      and documents, or to present or file any claim, or to take any action to collect
      or enforce any performance or the payment of any amounts which may have been
      assigned to it or to which it may be entitled at any time or times.

     

    5.
      Representations
      and Warranties.
      The
      Company hereby represents and warrants that the chief executive office and
      chief
      place of business of the Company is 5300 Claus Road, Riverbank, CA 95367, and
      the Company will not change such chief executive office and chief place of
      business or remove such records unless the Company shall have given the Secured
      Parties at least 10 days' prior written notice thereof.

     

    6.
      Covenants.
      The
      Company covenants and agrees with the Secured Parties that from and after the
      date of this Security Agreement and until the Obligations are fully
      satisfied:

     

    (a)
      Further
      Documentation.
      At any
      time and from time to time, upon the written request of the Secured Parties,
      and
      at the sole expense of the Company, the Company will promptly and duly execute
      and deliver any and all such further documents and take such further action
      as
      any Secured Party may reasonably request in carrying out the terms and
      conditions of this Security Agreement and the rights and powers herein granted,
      including, without limitation, the filing of any
      financing or continuation statements under the Uniform Commercial Code in effect
      in any jurisdiction with respect to the security interests granted
      hereby.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (b)
      Continuous
      Perfection.
      The
      Company will not change its name, identity or corporate structure in any manner
      unless the Company shall have given the Secured Parties at least 10 days' prior
      written notice thereof and shall have taken all action (or made arrangements
      to
      take such action substantially simultaneously with such change if it is
      impossible to take such action in advance) necessary or reasonably requested
      by
      any Secured Party to amend any financing statement or continuation statement
      filed with respect to the Collateral so that it is not misleading.

     

    (c)
      Insurance.
      The
      Company will insure the Collateral against such risks and hazards as other
      companies similarly situated insure against, in amounts and under policies
      which
      it currently holds and under such additional or substituted amounts or policies
      as it may from time to time determine, which shall be reasonably acceptable
      to
      the Secured Parties (providing that no cancellation of such insurance shall
      be
      effective without 30 days written notice to the Secured Parties and containing
      loss payable clauses to the Secured Parties as their interest may appear) and
      all premiums thereon shall be paid by the Company.

     

    7.
      Remedies,
      Rights Upon Default. 

     

    (a)
      In
      addition to any other rights given to the Secured Parties hereunder, if an
      Event
      of Default shall occur and be continuing and any Secured Party shall have
      declared the amounts owing under the Note(s) to be due and payable (or such
      amounts shall have automatically, become due and payable), all payments received
      by the Company under or in connection with any of the Collateral shall be
      subject to the subordination provisions contained in the preceding Section
      2,
      held by the Company in trust for the Secured Parties, shall be segregated from
      other funds of the Company and shall, if requested by any Secured Party
      forthwith upon receipt by the Company be turned over to the Secured Parties,
      in
      the same form as received by the Company (duly endorsed by the Company to the
      Secured Parties, if required).

     

    

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    (b)
      If
      any Event of Default shall occur and be continuing and subject to the
      subordination provisions of the preceding Section 2, any Secured Party may
      exercise in addition to all other rights and remedies granted to it in this
      Security Agreement or in any other instrument or agreement securing, evidencing
      or relating to the Obligations or at law or in equity, all rights and remedies
      of a secured party under the Code. Without limiting the generality of the
      foregoing, the Company expressly agrees that in any such event, the Secured
      Parties, without demand of performance or other demand, (except the notice
      specified below of time and place of public or private sale) to or upon the
      Company or any other person may forthwith collect, receive, appropriate and
      realize upon the Collateral, or any part thereof, and/or may forthwith sell,
      lease, assign, give option or options to purchase, or sell or otherwise dispose
      of and deliver said Collateral (or contract to do so), or any part thereof,
      in
      one or more parcels at public or private sale or sales, at any exchange broker's
      board or at any of the Secured Parties’ offices or elsewhere at such prices as
      it may deem best, for cash or on credit or for future delivery without
      assumption of any credit risk. Each Secured Party shall have the right upon
      any
      such public sale or sales, and, to the extent permitted by law, upon any such
      private sale or sales, to purchase the whole or any part of said Collateral
      so
      sold, free of any right or equity of redemption, which equity of redemption
      the
      Company hereby releases. The Company further agrees, at any Secured Party’s
      request, to assemble the Collateral, make it available to one or more of
      the Secured Parties at places which a Secured Party shall reasonably select,
      whether at the Company's premises or elsewhere. The Secured Parties shall apply
      the net proceeds of any such collection, recovery, receipt, appropriation,
      realization or sale, after deducting all reasonable costs and expenses of every
      kind incurred therein or incidental to the care, safe keeping or otherwise
      of
      any or all of the Collateral or in any way relating to the rights of the Secured
      Parties hereunder, including reasonable attorneys' fees and legal expenses,
      to
      the payment in whole or in part of the Obligations, the Company remaining liable
      for any deficiency remaining unpaid after the application, and only after so
      paying over such net proceeds and after the payment by the Secured Parties
      of
      any other amount required by any provision of law. To the extent permitted
      by
      applicable law, the Company waives all claims, damages, and demands against
      the
      Secured Parties arising out of the repossession, retention or sale of the
      Collateral. The Company agrees that a Secured Party need not give more than
      10
      days notice of the time and place of any public sale or of the time after which
      a private sale may take place and that such notice is reasonable notification
      of
      such matters. The Company shall remain liable for any deficiency if the proceeds
      of any sale or disposition of the Collateral are insufficient to pay all amounts
      to which a Secured Party is entitled.

     

    (c)
      The
      Company hereby waives presentment, demand, protest or any notice (to the extent
      permitted by applicable law) of any kind in connection with this Security
      Agreement or any Collateral.

     

    8.
      Application
      of Proceeds.
      Subject
      to the subordination provisions contained in the preceding Section 2, the
      Proceeds of all sales and collections in respect of any Collateral shall be
      applied as follows:

     

    (a)
      First, to the payment of the costs and expenses of such sales and collections,
      the expenses of Secured Parties and the reasonable fees and expenses of counsel
      to the Secured Parties;

     

    (b)
      Second, any surplus then remaining to the payment of the Obligations in such
      order and manner consistent with the provisions of Section 3 above as the
      Secured Parties may in their sole discretion determine; and

     

    (c)
      Third, any surplus then remaining shall be paid to the Company.

     

    9.
      Limitation
      on Secured Parties’ Duty in Respect of Collateral.
      Beyond
      the use of reasonable care in the custody thereof, no Secured Party shall have
      any duty as to any Collateral in their possession or control or in the
      possession or control of any agent or nominee of it or any income thereon or
      as
      to the preservation of rights against prior Secured Parties or any other rights
      pertaining thereto.

     

    10.
      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:

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

                   
      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

     

    if
      to
      Arbor Malone, to:

    

    Arbor
      Malone, LLC

    Attn:
      Mr.
      Ronald S. Domingue

    600
      Seminole Drive

    Winter
      Park, FL 32789

     

    if
      to
      the Baek, to:

    

    Ji
      Y.
      Baek

    13700
      Marina Pointe Drive, Suite 1001

    Marina
      Del Rey, CA 90292

    

    if
      to
      the Goldman, to:

    

    Leroy
      and
      Lois Goldman 

    23808
      Ladrillo Street 

    Woodland
      Hills, CA 91376

    

    if
      to
      Itec Capital Group, to:

    

    See
      Schedule
      B.

    

    

    A
      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).

    11.
      Severability.
      Any
      provision of this Security Agreement which is prohibited or unenforceable in
      any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

     

    

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    
      12.
        No
        Waiver; Cumulative Remedies.
        No
        Secured Parties shall by any act, delay, omission or otherwise be deemed
        to have
        waived any of their rights or remedies hereunder and no waiver shall be
        valid unless in writing, signed by the Secured Party, and then only to the
        extent therein set forth. A waiver by a Secured Party of any right or remedy
        hereunder on any one occasion shall not be construed as a bar to any right
        or
        remedy which the Secured Parties would otherwise have had on any future occasion
        and shall not apply to any other Secured Party. No failure to exercise nor
        any
        delay in exercising on the part of a Secured Party, any right, power or
        privilege hereunder, shall operate as a waiver thereof, nor shall any single
        or
        partial exercise of any right, power or privilege hereunder preclude any
        other
        or future exercise thereof or the exercise or any other right, power or
        privilege. The rights and remedies hereunder provided are cumulative and
        may be
        exercised singly or concurrently, and are not exclusive of any rights and
        remedies provided by law. 

    

     

    13.Successors
      and Assigns.
      This
      Security Agreement and all obligations of the Company hereunder shall be binding
      upon the successors and permitted assigns of the Company, and shall, together
      with the rights and remedies of the Secured Parties hereunder, inure to the
      benefit of each of the Secured Parties and their successors and permitted
      assigns; provided that the Company may not assign any of its rights or
      obligations hereunder without the prior written consent of each of the Secured
      Parties.

     

    14.
      Waiver
      and Amendment.
      None of
      the terms or provisions of this Security Agreement may be waived, altered,
      modified or amended except by an instrument in writing, duly executed by the
      Company and the Secured Party against whom such waiver, alteration, modification
      or amendment is sought to be enforced.

     

    15.
      Governing
      Law.
      This
      Security 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 California
      or
      any other jurisdiction) that would cause the application of the laws of any
      jurisdiction other than the State of California.

     

    16.
      Counterparts.
      This
      Security Agreement may be executed in separate counterparts each of which will
      be an original and all of which taken together will constitute one and the
      same
      agreement.

     

    17.
      Facsimile.
      This
      Security Agreement may be executed using facsimiles of signatures, and a
      facsimile of a signature shall be deemed to be the same, and equally
      enforceable, as an original of such signature.

     

    18.
      Termination.
      At such
      time as the Obligations have been fully paid in cash, the security interest
      created hereby shall automatically terminate, the Secured Parties shall take
      all
      such actions as may be requested by the Company to evidence such termination
      and
      to release the liens created hereby, at the Company's expense.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, each of the Secured Parties hereto has caused this Security
      Agreement to be executed and delivered by its duly authorized officer as of
      Effective Date.

     

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

    

    

    

     

    
      	 	 	 
	 	
              SECURED
                PARTY: 

            
	 
 	 
 	 
 
	 	By:  	 
	 	Its:	
              
  
	 	 	
              
 

    

           

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    SCHEDULE
      A

    

    

    
      	
              Secured
                Party

            	
              Aggregate
                Principal Amount of Note(s)

            
	
              Itec
                Capital Group, LLC 

            	
              $3,022,500.00

            
	
              Arbor
                Malone, LLC

            	
              $2,300,000.00

            
	
              Leroy
                and Lois Goldman

            	
              $500,000.00

            
	
              Ji
                Y. Baek

            	
              $202,000.00

            
	 	 
	
              Total
                

            	
              $6,024,500.00

            

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    SCHEDULE
      B

    

    Itec
      Capital Group, LLC Investors

    

    
      	
              Name

            	
              Address

            	
              City

            	
              State

            	
              Zip
                Code

            
	
              Allen
                and Judy Adler Trust

            	
              PO
                Box 3644

            	
              Rcho
                Santa Fe

            	
              CA
                

            	
              92067

            
	
              Jeffrey
                D. Alpert

            	
              P.O.
                Box 528

            	
              Ross

            	
              CA

            	
              94957

            
	
              Ji
                Y. Baek

            	
              13700
                Marina Pointe Dr. #1001

            	
              Marina
                del Rey

            	
              CA

            	
              90292

            
	
              Craig
                R. Barone

            	
              1645
                W. School Unit 403

            	
              Chicago

            	
              IL

            	
              60657

            
	
              Brandon
                Barrera

            	
              1149
                Cole Ave

            	
              Los
                Angeles

            	
              CA

            	
              90038

            
	
              Robert
                Belli

            	
              5655
                Anza Street

            	
              San
                Francisco

            	
              CA

            	
              94121

            
	
              Benetti
                Trust

            	
              80
                Mount Vernon Ln.

            	
              Atherton

            	
              CA

            	
              94027

            
	
              Gil
                Bensimon or Danielle Krause Simon

            	
              32
                Union Park Street Apt. No. 2

            	
              Boston

            	
              MA

            	
              02118

            
	
              Maurice
                & Paula Benard

            	
              15300
                Ventura Blvd., Ste #315

            	
              Sherman
                Oaks

            	
              CA

            	
              91403

            
	
              Amy
                Blanchard & Jerry Ivers

            	
              147
                Normandy Ct

            	
              San
                Carlos

            	
              CA

            	
              94070

            
	
              Jordan
                Lee & Judy Bloom

            	
              315
                Barbara Way

            	
              Hillsborough

            	
              CA

            	
              94010

            
	
              Phil
                Brodie

            	
              [Currently
                unknown]

            	 	
              CA

            	 
	
              Thomas
                A. Brown

            	
              854
                East Terrace Avenue

            	
              Fresno

            	
              CA

            	
              93704

            
	
              Douglas
                R. Curtis & Mary P. Curtis

            	
              110
                Highland Avenue

            	
              Los
                Gatos

            	
              CA

            	
              95030

            
	
              Mark
                S. Devereaux

            	
              324
                Bretano Way

            	
              Greenbrae

            	
              CA

            	
              94904

            
	
              Paul
                Dittmeier

            	
              762
                W. Mountain Rd.

            	
              Sparta

            	
              NJ

            	
              07871

            
	
              Ronald
                Domingue

            	
              600
                Seminole Drive

            	
              Winter
                Park

            	
              FL

            	
              32789

            
	
              Michael
                J. Edwards

            	
              3439
                North Greenview Avenue

            	
              Chicago

            	
              IL

            	
              60657

            
	
              Douglas
                & Jennifer Flentge

            	
              378
                Faas Ranch Road

            	
              New
                Castle

            	
              CO

            	
              81647

            
	
              Joel
                Frazin Trust

            	
              2008
                C West Willow

            	
              Chicago

            	
              IL

            	
              60647

            
	
              Michael
                Frazin

            	
              395
                Landis Lane

            	
              Deerfield

            	
              IL

            	
              60015

            
	
              Clayton
                S. Friedman & Terri E. Friedman

            	
              38
                Vernon

            	
              Newport
                Coast

            	
              CA

            	
              92657

            
	
              Leroy
                H. Goldman & Lois H. Goldman

            	
              23808
                Ladrillo Street

            	
              Woodland
                Hills

            	
              CA

            	
              91367

            
	
              Todd
                S. Greenhalgh

            	
              112
                Clifford Terrace

            	
              San
                Francisco

            	
              CA

            	
              94117

            
	
              Hart
                Trust

            	
              25421
                Via Alcira

            	
              Valencia

            	
              CA

            	
              91355

            
	
              Hughes
                Family Trust

            	
              1543
                Cole Street

            	
              San
                Francisco

            	
              CA

            	
              94117

            
	
              Hurwich
                Family Trust

            	
              260
                Sea View Avenue

            	
              Piedmont

            	
              CA

            	
              94610

            
	
              Itec
                Alaska Partnership

            	
              10250
                Jamestown Drive #21

            	
              Anchorage

            	
              AK

            	
              99507

            
	
              Richard
                O. Johnson

            	
              PO
                Box 1448

            	
              Zanesville

            	
              OH

            	
              43702

            
	
              Susan
                G. Kief

            	
              1012A
                Mission Street

            	
              S.
                Pasadena

            	
              CA

            	
              91030

            
	
              Charles
                J. Lidman

            	
              4311
                Vista De La Tierra

            	
              Del
                Mar

            	
              CA

            	
              92014

            
	
              Andrew
                and Campbell Loft

            	
              37
                Elm Avenue

            	
              San
                Anselmo

            	
              CA

            	
              94960

            
	
              Losson
                Family Revocable Trust

            	
              90
                Valley Hill Dr.

            	
              Moraga

            	
              CA

            	
              94556

            
	
              Kelly
                Luthringshausen

            	
              323
                The Lane

            	
              Hinsdale

            	
              IL

            	
              60521

            
	
              Fred
                & Ruth Lynch

            	
              25
                Cromwell Dr. 

            	
              Chester

            	
              NJ

            	
              07930

            
	
              Mark
                Miller

            	
              1698
                Massachusetts Avenue

            	
              Cambridge

            	
              MA

            	
              02138

            
	
              Nave
                Family Trust

            	
              P.O.
                Box 572529

            	
              Tarzana

            	
              CA

            	
              91357-2529

            
	
              Johnathan
                Nicholas

            	
              1154
                Washington Street #3

            	
              Boston

            	
              MA

            	
              02118

            
	
              Andrew
                Paul IRA

            	
              216
                Emerald Ave

            	
              San
                Carlos

            	
              CA

            	
              94070

            

    

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    
      	
              Carol
                A. Pochini

            	
              501
                Portola Road, Box 8174

            	
              Portola
                Valley

            	
              CA

            	
              94028

            
	
              Jim
                Rose

            	
              109
                El Pinar

            	
              Los
                Gatos

            	
              CA

            	
              95032

            
	
              Rodney
                S. Rougelot

            	
              542
                46th Avenue

            	
              San
                Francisco

            	
              CA

            	
              94121

            
	
              Arthur
                L. Ruoff

            	
              216
                Texas Lane

            	
              Ithaca

            	
              NY

            	
              14850

            
	
              Saratoga
                Capital Partners

            	
              601
                Union Street, Suite 4500

            	
              Seattle

            	
              WA

            	
              98101

            
	
              Lee
                S. Schwartz

            	
              458
                N. Green Bay Rd.

            	
              Waukegan

            	
              IL

            	
              60085

            
	
              Ronald
                E. Schweitzer

            	
              261
                Roycroft Avenue

            	
              Long
                Beach

            	
              CA
                

            	
              90803

            
	
              Barry
                Seidman

            	
              16631
                Avenido Molino Viejo

            	
              Rancho
                Santa Fe

            	
              CA

            	
              92067

            
	
              Charles
                M. Spitz, DDS, MS

            	
              50
                South San Mateo Drive, Suite 160

            	
              San
                Mateo

            	
              CA

            	
              94401

            
	
              Shamash
                Family Trust

            	
              1770
                Forest View Avenue

            	
              Hillsborough

            	
              CA

            	
              94010

            
	
              Danielle
                Simon

            	
              32
                Union Park

            	
              Boston

            	
              MA

            	
              02118

            
	
              Sirott
                Family Trust

            	
              20
                Midvale Court

            	
              Walnut
                Creek

            	
              CA

            	
              94597

            
	
              Dane
                Solomon

            	
              100
                North Harper Avenue

            	
              Los
                Angeles

            	
              CA

            	
              90048

            
	
              Norma
                L. Taylor

            	
              13200
                Marina Pointe Drive #531

            	
              Marina
                del Rey

            	
              CA

            	
              90292

            
	
              Elissa
                R. Wellikson

            	
              765
                Campbell Ave

            	
              Los
                Altos

            	
              CA

            	
              94024

            
	
              Whittaker
                Family Trust

            	
              8070
                La Jolla Shores Dr. #508

            	
              La
                Jolla

            	
              CA

            	
              92037

            
	
              Wong
                Family Trust

            	
              1119
                Alomar Way

            	
              Belmont

            	
              CA

            	
              94002

            
	
              Arnold
                Zousmer

            	
              P.O.
                Box 9906

            	
              Rancito
                Santa Fe

            	
              CA

            	
              92067

            

    

    

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    Exhibit
      C

    

    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 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 3,000,000 Shares of Common Stock

    

    Itec
      Environmental Group, inc.

    

    Date
      of
      Issuance: August ___, 2006

    

    No.
      96

    

    THIS
      CERTIFIES that, for value received, Arbor Malone, LLC, 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. All shares of Common Stock issued
      upon the exercise of this Warrant at the time of issuance will be validly
      issued, fully paid, and nonassessable. 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
      be
      accompanied by a check for the full amount of the aggregate Exercise Price
      (as
      defined in Section 8(a) below) for the Warrant Shares so 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
      together with payment of the Exercise Price, (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 Warrant Shares
      specified in such notice. Each certificate representing Warrant Shares shall
      bear the legend or legends required by applicable securities laws. 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, if
      any, 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. 

    

    The
      Holder shall also have the right to convert this Warrant or any portion thereof
      (the "Conversion Right"), without payment by the Holder of the Exercise Price
      in
      cash or any other consideration (other than the surrender of rights to receive
      Warrant Shares hereunder), into shares of Common Stock as provided in this
      Section 1. Upon receipt by the Company of a duly executed and completed
      Conversion Notice in the form attached hereto as Exhibit
      B
      for the
      exercise of the Conversion Right with respect to a particular number of Warrant
      Shares (the "Converted Warrant Shares"), the Company shall deliver to the Holder
      (without payment by the Holder of the Exercise Price in cash or any other
      consideration (other than the surrender of rights to receive Warrant Shares
      hereunder)) that number of shares of Common Stock equal to the quotient obtained
      by dividing: (x) the difference between (i) the product of (A) the Current
      Market Price of a share of Common Stock multiplied by (B) the number of
      Converted Warrant Shares and (ii) the product of (A) the Exercise Price
      multiplied by (B) the number of the Converted Warrant Shares, in each case
      as of
      the Conversion Date, by (y) the Current Market Price of a share of Common Stock
      on the Conversion Date. The term “Conversion Date” shall be the date a duly
      executed and completed Conversion Notice is received by the Company. No
      fractional Warrant Shares shall be issuable upon exercise of the Conversion
      Right, and
      if
      the number of Warrant Shares to be issued determined in accordance with the
      following formula is other than a whole number, the Company shall, at its
      election, pay to the Holder an amount in cash equal to the Current Market Price
      of the resulting fractional Warrant Share on the Conversion Date or round up
      to
      the next nearest whole share. 

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    The
      term
      "Current Market Price" for the shares of Common Stock as of a specified date
      shall mean: (i) if the shares of Common Stock are publicly traded on such date,
      the average closing price per share over the preceding 10 trading days as
      reported on the principal stock exchange or quotation system on which the shares
      of Common Stock are then listed or quoted; (ii) if the shares of Common Stock
      are not so publicly traded on such date, the value determined in good faith
      by
      the Board of Directors of the Company; provided, that if Holder shall dispute
      such value determined by the Board of Directors the value shall be the appraised
      value per share of Common Stock as of such date determined by an investment
      banking firm of recognized standing selected by the Company and reasonably
      satisfactory to the Holder. In the event the appraised value is greater than
      120% of the value of determined by the Board of Directors, the cost of such
      appraisal shall be borne by the Company and in all other circumstances, the
      cost
      of such appraisal shall be borne by the Holder. 

    

    The
      Warrant shall expire on August ___, 2010 (the “Expiration Date”). The Holder may
      exercise the warrant at any time prior to the Expiration Date. 

    

    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. 

    

    4.
       Transfer
      of Warrant and Warrant Shares.
      The
      Holder may sell, pledge, hypothecate, or otherwise transfer (“Transfer”) this
      Warrant, in whole or in part, 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. Subject to the preceding sentence, the Company agrees to issue
      to
      any successor or transferee of Holder a new Warrant or Warrants of like tenor
      promptly upon receipt of Holder’s notice of any such Transfer and shall issue to
      Holder a new Warrant representing any portion hereof that is not so Transferred.
      

    

    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 3,000,000 shares of the Company’s Common Stock,
      as adjusted from time to time in accordance with this Agreement. 

    

    8.
       Exercise
      Price; Adjustment of Warrants.
      

    

    a.
       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, as adjusted from time
      to
      time in accordance with this Agreement. 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    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. Adjustment
      in the Case of Certain Transactions or Events.
      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. The preceding adjustment shall be effective immediately at the
      time
      of the issuance of any security issued (or of any reduction in effective price
      of any security). In addition, the Exercise Price and the number of Warrant
      Shares issuable upon exercise hereof shall be appropriately adjusted in the
      case
      of stock splits, stock dividends, recapitalizations and the like. 

    

    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. 

    

    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. 

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    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 receive the kind and amount of shares of stock and other securities
      and property
      receivable upon such reclassification, capital reorganization or other change,
      that 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 would have received. 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 11 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 the Holder in accordance with the
      provisions of this Section; and (ii) if to the Holder, at the address indicated
      on the signature page hereof, or at such other addresses as the 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 the Holder. 

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

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

    

    

    Itec
      Environmental Group, Inc. 

    

    

    By:
      ____________________________________

          
      Name: Gary De Laurentiis

          
      Title: President and Chief Executive Officer

    

    

    Holder
      Name: ____________________________________

    

    Holder
      Address: __________________________________

    

    _________________________________________________

    

    _________________________________________________

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    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. 

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    (FORM
      OF
      CONVERSION NOTICE TO BE EXECUTED

    UPON
      EXERCISE OF WARRANT)

    

    CONVERSION
      NOTICE

    

    The
      undersigned, the registered holder of Warrant No. _______ (the "Warrant"),
      issued Itec Environmental Group, Inc. (the "Company"), hereby (1) irrevocably
      elects to convert the Warrant into such number of shares of Common Stock of
      the
      Company as is determined pursuant to Section 1 of the Warrant, which conversion
      shall be effected pursuant to the terms and conditions of the Warrant, and
      (2)
      directs that the certificates for such shares of Common Stock issuable upon
      exercise of the Warrant be issued in the name of and 

    

    delivered
      to:
      _________________________________________________________________

    

    whose
      address is
      _____________________________________________________________.

    

    The
      undersigned represents that the aforesaid shares of Common Stock are being
      acquired for the account of the undersigned for investment and not with a view
      to, or for resale in connection with the distribution thereof and that the
      undersigned has no present intention of distributing or reselling such
      shares.

     

     

    
      	 	 	 
	 	
              (Name)

            	 
	 	 	 
	 	
              (Address)

            	 
	 	 	 

    

    

    
 

    SIGNATURE:

    

    Dated:
      ________________.

    

     

    
      
        

      

    NOTICE:
      The signature on this Conversion Notice must correspond with the name as written
      upon the face of the Warrant, or upon an assignment form attached
      hereto.

    

    

    
      
        
        

      

      
        23Exhibit
      10.5

    Gary
      De
      Laurentiis Employment Agreement

    

    EMPLOYMENT
      AGREEMENT

    

    This
      Employment Agreement dated as of July 26, 2006 (“Agreement”)
      is
      made by and between Itec
      Environmental Group, Inc.,
      a
      corporation duly organized and existing under the laws of the State of Delaware
      (the “Company”),
      and
Gary
      De Laurentiis
      (“Executive”)
      (referred to collectively herein as the “Parties”).

    

     

    ARTICLE
      I

    RECITALS

    

    WHEREAS,
      the
      Company desires to hire Executive and Executive desires to become employed
      by
      the Company; and

    

    WHEREAS,
      the
      Company and Executive have determined that it is in their respective best
      interest to enter into this Agreement on the terms and conditions as set forth
      herein;

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants and promises contained
      herein, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties hereto hereby agree
      as
      follows:

    

    1. Nature
      of Agreement.
      Any and
      all prior oral understandings, offers, and/or representations (if any) with
      respect to the employment of Executive are deemed by the parties to be either
      canceled and void and/or are deemed to be superseded by this final written
      Agreement.

    

    2. Employment
      Terms and Duties.

    

    2.1. Term
      of Employment.
      The
      employment of Executive under this Agreement shall be deemed to have commenced
      on August 1, 2006 (the “Effective
      Date”),
      and
      shall continue until terminated in accordance with Section 6 hereof (the
“Employment
      Term”).
      

    

    2.2. Location.
      Executive agrees that he shall carry out his duties and obligations under the
      terms of this Agreement at: (a) such reasonably configured premises within
      the
      State of California as shall be identified by Executive (which shall, during
      the
      Employment Term, be rented by the Company for use hereunder by Executive),
      or
      (b) the Company’s principal office in Riverbank, California, as reasonably
      required by the Company from time to time. 

    

    
      	 	
              2.3.

            	
              Position
                and Primary Responsibility.
                

            

    

    

    (a) It
      is
      understood that Executive shall serve as (i) Chief Technology Officer, and
      (ii)
      as a Director of the Company.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (b)
       In
      connection with the employment of Executive, Company agrees that, during the
      Employment Term, neither the Restated Certificate of Incorporation, nor the
      Bylaws, of the Company shall at any time be amended in a manner inconsistent
      with the foregoing or the additional provisions of this Agreement.

    

    2.4. Exclusivity.
      Executive agrees to devote his full time, attention, energies, solely and
      exclusively in the performance of his duties under the terms of this Agreement.
      However, the expenditure of reasonable amounts of time for educational,
      charitable, or professional activities shall not be deemed a breach of this
      Agreement if those activities do not materially interfere with the services
      required under this Agreement, and shall not require the prior written consent
      of the Company’s Board of Directors. This Agreement shall not be interpreted to
      prohibit Executive from making passive personal investments or conducting
      private business affairs, or serving on the boards of directors of other
      companies or other entities, if those activities do not materially interfere
      with the services required under this Agreement and do not violate Sections
      5, 9
      and 11 of this Agreement. 

    

    3. Compensation.

    

    3.1. Base
      Salary.
      In
      consideration for the services rendered to the Company hereunder by Executive,
      the Company shall, during his employment, pay Executive a salary at the annual
      rate of Two Hundred and Ninety Thousand Dollars ($290,000.00) (as may be
      adjusted pursuant to section 3.5, the “Base
      Salary”),
      less
      statutory deductions and withholdings, payable to Executive on a bi-monthly
      basis.

    

    3.2. Payment.
      All
      compensation payable to Executive hereunder shall be subject to all applicable
      state and federal employment law(s); it being understood that Executive shall
      be
      responsible for the payment of all taxes resulting from a determination that
      any
      portion of the compensation and/or benefits paid/received hereunder is a taxable
      event to Executive; it being further understood that Executive shall hold the
      Company harmless from any governmental claim(s) for Executive’s personal tax
      liabilities, including interest or penalties, arising from any failure by
      Executive to pay his individual taxes when due.

    

    3.3. Reimbursement
      of Expenses.
      During
      the Employment Term, the Company shall reimburse Executive for all reasonable
      and necessary expenses incurred by Executive while performing his duties under
      this Agreement in accordance with the Company’s customary practices for its
      executive employees, subject to provision by Executive of documentation
      reasonably satisfactory to the Board of Directors. 

    

    3.4. Cash
      Bonuses.
      Executive shall have a bonus entitlement during each calendar year (or portion
      thereof) of the Employment Term of up to one hundred percent (100%) of his
      Base
      Salary for such year (or portion thereof). Within thirty (30) days of the
      Effective Date, the Company and Executive shall concur, within their respective
      reasonable discretion, on the criteria and procedures applicable to
      establishment of Executive’s entitlement to such amount for the then current
      calendar year; and, thereafter, within thirty (30) days prior to the
      commencement of each calendar year of the Employment Term, the Company and
      Executive shall concur, within their respective reasonable discretion, on the
      criteria and procedures applicable to establishment of
      Executive’s entitlement to such amount for the ensuing calendar year. Such
      criteria shall include, without limitation: (i) specified revenue targets for
      the Company during the applicable period; (ii) specified EBITDA targets for
      the
      Company during the applicable period (as defined pursuant to consensus between
      the Company and Executive); and (iii) such additional specified targets as
      the
      Company and Executive mutually determine. Any such cash bonuses shall be paid
      by
      the Company no later than March 15 of the taxable year commencing after the
      year
      in which the Executive’s right to such payment becomes
      vested.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    3.5. Compensation
      Review.
      It is
      understood and agreed that Executive’s performance will be reviewed by the
      Company’s Board of Directors at the end of each calendar year during which this
      Agreement is in force for the purpose of determining whether or not Executive’s
      Base Salary and/or cash bonuses should be increased; it being further understood
      that the decision to increase Executive’s compensation shall be at the sole and
      exclusive option of the Board of Directors.

    

    3.6. Equity
      Awards.
      

    

    (a) The
      Executive shall be entitled to a combination of (x) restricted grants of common
      stock, $.0.001 par value of the Company and (y) grants of warrants exercisable
      over a period of ten (10) years after grant with respect to shares of Common
      Stock, in the aggregate covering a number of shares equal to twenty-four million
      (24,000,000) shares common stock or “Common
      Stock Equivalents”
(as
      defined below) (the “Executive
      Shares”).
      For
      purposes hereof, “Common
      Stock Equivalents”
shall
      mean the number of shares of Common Stock then outstanding, plus any rights
      to
      subscribe for or purchase, and any options for the purchase of, shares of Common
      Stock, plus any stock or securities convertible into or exchangeable for shares
      of Common Stock and any options therefor (all of the foregoing calculated after
      giving effect to the operation of any and all provisions designed to protect
      against dilution contained in securities theretofore issued and other
      obligations theretofore entered into by the Company directly or indirectly
      triggered as a result of consummation of the transactions contemplated hereunder
      or any other event or circumstance). 

    

    (i) Executive
      acknowledges that as of the date of this Agreement, he has received/been issued
      a total of 17,953,208 shares of common stock or Common Stock
      Equivalents.

     

    (b) Promptly
      after the execution and delivery of this Agreement, the Company, at its expense,
      shall engage an independent appraiser mutually satisfactory to the Company
      and
Executive,
      in their respective reasonable discretion, to determine the fair market value
      per share (the “Appraised
      Value”)
      of
      Common Stock issuable to Executive under this Section 3.6, as at the respective
      dates of issuance of, respectively, of the Restricted Shares, the Initial
      Options and the Additional Options (as those terms are defined below). As soon
      as practicable after determination of the initial Appraised Value, but in any
      event within thirty (30) days of the date of this Agreement, the Company shall
      issue and deliver to Executive:

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (i) that
      amount in deferred compensation due and owing to Executive converted into shares
      of the Company’s common stock at a per share price equal to the Appraised Value
      (the “Deferred
      Compensation Shares”).
      Upon
      issuance of the Deferred Compensation Shares, Executive shall receive that
      number of shares such that in the aggregate Executive shall own twenty-four
      million (24,000,000) shares of common stock or Common Stock Equivalents, in
      satisfaction of the Executive Shares owed to Executive pursuant to this Section
      3.6. Further, Executive hereby agrees that any remaining deferred compensation
      due and owing to Executive by the Company shall be deemed to be waived, released
      or otherwise forgiven.

    

    (c) Upon
      satisfying the CIWMB Obligations, as defined in Section 4, Executive shall
      receive an additional two million (2,000,000) shares of the Company’s common
      stock (the “CIWMB
      Shares”).

    

    (d) In
      addition to any cash bonus offered to Executive pursuant to Section 3.4, the
      Company shall undertake to provide Executive a bonus, independent of Section
      3.4, equal to the Taxable Amount Per Share (as defined below). “Taxable
      Amount Per Share”
shall
      mean the quotient obtained by dividing (i) the aggregate amount of income tax
      that Executive pays pursuant to applicable federal, state and local tax laws
      as
      a result of receipt of the Deferred Compensation Shares divided by (ii) the
      total number of Deferred Compensation Shares issued to Executive (as
      appropriately adjusted to reflect stock splits, stock dividends and the
      like).

    

    4. California
      Integrated Waste Management Board Obligations. The
      Company shall satisfy or take action to assign or novate Executive’s personal
      guarantee with the California Integrated Waste Management Board (“CIWMB”),
      provided that Executive supplies the Company with the intellectual property,
      trade secrets, information and know-how associated with the operation of the
      Eco2
      Environmental
      System and the Company’s plant located in Riverbank, California (the
“CIWMB
      Obligations”).
      The
      CIWMB Obligations shall be deemed fulfilled upon the reasonable satisfaction
      of
      the Parties. 

    

    5. Benefits.
      Within
      sixty (60) days of the date of this Agreement, the Company and Executive shall
      determine, in their respective reasonable discretion, the terms of the
“Welfare
      Benefits”
(as
      hereinafter defined) to which Executive shall be entitled. For purposes hereof,
      “Welfare
      Benefits”
shall
      mean medical, prescription and dental plans, in no event less favorable than
      those applicable to any other executive of the Company, and in all events
      extending to (x) paid vacation per annum equal to four (4) weeks (accruing
      ratably each year) and eleven (11) paid holidays and (y) a non-accountable
      monthly allowance of Fifteen Hundred Dollars ($1,500) (the “Monthly
      Allowance”).

    

    6. Termination.
      Executive’s employment and this Agreement (except as otherwise provided
      hereunder) shall terminate upon the occurrence of any of the following, at
      the
      time set forth therefor (the “Termination
      Date”):

    

    6.1. Death
      or Disability.
      Immediately upon the death of Executive or after six (6) months of Executive’s
      inability to perform the essential functions of his duties, with or without
      reasonable
      accommodation (defined under applicable law), due to a mental or physical
      illness or incapacity (“Disability”)
      (termination pursuant to this Section 6.1 being referred to herein as
      termination for “Death
      or Disability”);
      
      

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    6.2. Termination
      for Good Reason.
      Immediately following notice of termination for “Good
      Reason”
(as
      defined below), specifying such Good Reason, given by Executive (termination
      pursuant to this Section 6.2 being referred to as termination for “Good
      Reason”).
      As
      used herein, “Good Reason” means (i) any reduction in Base Salary or other
      benefits specified hereunder; (ii) a substantial diminution or dilution of
      the
      responsibilities, functions and duties attached to the position with the Company
      held by Executive; (iii) the Company fails to provide any of the compensation
      or
      other benefits required hereunder; (iv) any representation made by the Company
      herein is materially untrue or the Company otherwise is in material breach
      of
      this Agreement; or (v) the Company and Executive fail to effectuate the matters
      contemplated by Sections 3.4, 3.6 or 5 within the respective periods
      contemplated thereunder. 

    

    6.3. Voluntary
      Termination.
      Thirty
      (30) days following Executive’s written notice to the Company of voluntary
      termination of employment other than for Good Reason; provided, however, that
      the Company may suspend, with no reduction in pay or benefits (including,
      without limitation, bonuses, options and vesting), Executive from his duties
      as
      set forth herein (including, without limitation, Executive’s position as a
      representative and agent of the Company) until the 30th
      day
      following Notice of Voluntary termination) (termination pursuant to this Section
      6.3 being referred to herein as “Voluntary”
      termination).

    

    6.4. Termination
      For Cause.
      Immediately following notice of termination for “Cause”
(as
      defined below), specifying such Cause, given by the Company (termination
      pursuant to this Section 6.4 being referred to herein as termination for
“Cause”).
      As
      used herein, “Cause”
means
      (i) termination based on Executive’s conviction or plea of “guilty” or “no
      contest” to any crime constituting a felony in the jurisdiction in which the
      crime constituting a felony is committed, or any other conviction by a court
      of
      competent jurisdiction for a violation of criminal law involving dishonesty
      that
      materially injures the Company (whether or not a felony); (ii) Executive’s
      substance abuse that in any manner that materially interferes with the
      performance of his duties; (iii) Executive’s failure to perform in any material
      respect the responsibilities, functions and duties attached to his position
      with
      the Company or a refusal to perform his duties at all or in a reasonably
      acceptable manner; or (iv) Executive’s material breach of this Agreement. The
      Board of Directors shall provide Executive thirty (30) days written notice
      of
      any determination to terminate Executive for Cause and shall afforded Executive
      the opportunity to be heard by the full Board of Directors. Notwithstanding
      any
      other provision in this Agreement, if Executive is terminated pursuant to
      subsections (ii), (iii) or (iv) of this Section 6.4 for poor job performance,
      excluding refusal to perform his duties, Executive shall have sixty (60) days
      to
      cure the behavior upon which the threatened termination is based.

    

    6.5. Termination
      Without Cause.
      Notwithstanding any other provisions contained herein, the Company may terminate
      Executive’s employment thirty (30) days following notice of termination without
      Cause given by the Company; provided, however, that during any such thirty
      (30)
      day notice period, the Company may suspend, with no reduction in pay or benefits
      (including, without limitation, bonuses, options and vesting), Executive from
      his duties as set forth
      herein (including, without limitation, Executive’s position as a representative
      and agent of the Company) (termination pursuant to this Section 6.5 being
      referred to herein as termination “Without
      Cause”).
      

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    6.6. Other
      Remedies.
      Termination pursuant to Section 6.2 above shall be in addition to and without
      prejudice to any other right or remedy to which Executive may be entitled at
      law, in equity, or under this Agreement. Termination pursuant to Section 6.4
      above shall be in addition to and without prejudice to any other right or remedy
      to which the Company may be entitled at law, in equity, or under this
      Agreement.

    

    6.7. Salary
      Continuation During Disability.
      Notwithstanding Section 6.1 above, if Executive suffers any physical or mental
      disability that would prevent the performance of his essential job duties,
      the
      Company agrees to pay Executive one hundred percent (100%) of Executive’s salary
      and other benefits (including, without limitation, bonuses, options and
      vesting), payable in the same manner as provided for the payment of salary
      and
      benefits (including, without limitation, bonuses, options and vesting) herein,
      for the duration of the disability, or six (6) months, whichever is less.

    

    7. Severance
      and Termination.

    

    7.1. Voluntary
      Termination,
      Termination for Cause, Termination for Death or Disability. In the case of
      a
      termination of Executive’s employment hereunder for Death in accordance with
      Section 6.1 above, or Executive’s Voluntary termination of employment hereunder
      in accordance with Section 6.3 above, or a termination of Executive’s employment
      hereunder for Cause in accordance with Section 6.4 above, (i) Executive shall
      not be entitled to receive payment of, and the Company shall have no obligation
      to pay, any severance or similar compensation attributable to such termination,
      other than Base Salary earned but unpaid, accrued but unused vacation to the
      extent required by the Company’s policies and any non-reimbursed expenses
      pursuant to Section 4 hereof incurred by Executive as of the termination date,
      and (ii) the Company’s obligations under this Agreement shall immediately cease
      except (x) as required by law and (y) as provided in Section 16.1 below.
      Provided further, in the event of a termination of Executive’s employment
      hereunder for Cause in accordance with Section 6.4 above, Executive shall tender
      back to the Company all unexercised options granted to Executive by the Company
      in connection with Executive’s employment. 

    

    7.2. Termination
      for Good Reason, Termination Without Cause.
      

    

    (a) In
      the
      case of a termination of Executive’s employment hereunder for Good Reason in
      accordance with Section 6.2 above, or Without Cause in accordance with Section
      7.4 above, the Company shall, within thirty (30) days of the Termination Date,
      pay Executive, in a lump-sum, cash in the amount (the “Severance
      Payment”)
      of the
      sum of fifty percent (50%) of his annual Base Salary; provided, however, that,
      in the event such termination of Executive’s employment follows a
“Change-of-Control” (as defined below), the Severance Payment shall be an amount
      equal to the sum of one hundred and fifty percent (150%) of his annual Base
      Salary. As used herein, “Change-of-Control”
      means:

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (i) the
      acquisition by any individual, entity or group (within the meaning of Section
      13(d)(3) or 14(d)(2) under the Exchange Act) of beneficial ownership (within
      the
      meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
      (20%) or more of the combined voting power of the outstanding voting securities
      of the Company entitled to vote generally in the election of directors;
      provided, however, that the following acquisitions shall not constitute a
      Change-of-Control: (w) any original issuance by the Company, (x) any acquisition
      by the Company after which the holders of the Company’s voting securities
      entitled to vote generally in the election of directors of the Company (the
      “Voting
      Stock”)
      outstanding immediately prior to consummation of such acquisition continue
      to
      hold at least fifty percent (50%) of the Company’s Voting Stock after such
      acquisition, (y) any acquisition by any employee benefit plan (or related trust)
      sponsored or maintained by the Company, or (z) any acquisition by any
      corporation pursuant to a transaction which complies with clauses (w), (x)
      and
      (y) immediately preceding; or

    

    (ii) individuals
      who, as of the date hereof, constitute the Board of Directors of the Company
      (the “Incumbent
      Board”)
      cease
      for any reason to constitute at least a majority of the Board of Directors
      of
      the Company unless they are replaced with a slate nominated by at least a
      majority of the Incumbent Board and further provided that any individual
      becoming a director subsequent to the date hereof whose election, or nomination
      for election by the Company's stockholders, was approved by a vote of at least
      a
      majority of the directors then comprising the Incumbent Board shall, for
      purposes of this sub-paragraph (ii), be considered as though such individual
      were a member of the Incumbent Board, but excluding, for this purpose, any
      such
      individual whose initial assumption of office occurs as a result of an actual
      or
      threatened election contest with respect to the election or removal of directors
      or other actual or threatened solicitation of proxies or consents by or on
      behalf of an individual, entity or group other than the Board of Directors
      of
      the Company acting by at least a majority thereof; or

    

    (iii) consummation
      of a reorganization, merger or consolidation or sale or disposition of all
      or
      substantially all of the assets of the Company (a “Business
      Combination”),
      in
      each case, unless, following such transaction: (x) all or substantially all
      of
      the individuals and entities who were the beneficial owners, respectively,
      of
      the outstanding voting securities of the Company entitled to vote generally
      in
      the election of directors immediately prior to such Business Combination
      beneficially own, directly or indirectly, more than fifty percent (50%) (20%
      in
      the case of any Business Combination being proposed and implemented by at least
      a majority of the Incumbent Board) of the Voting Stock of the corporation
      resulting from such Business Combination (including, without limitation, a
      corporation which as a result of such transaction owns the Company or all or
      substantially all of the Company's assets either directly or through one or
      more
      subsidiaries) in substantially the same proportions as their ownership,
      immediately prior to such Business Combination, of the outstanding Voting Stock,
      (y) no individual, entity or group beneficially owns, directly or indirectly,
      twenty percent (20%) or more of the Voting Stock of such corporation except
      to
      the extent that such ownership existed prior to the Business Combination, and
      (z) at least a majority of the members of the board of directors of the
      corporation resulting from such Business Combination were members of the
      Incumbent Board, or were nominated by at least a majority of the members of
      the
      Incumbent Board, at the time of the execution of the initial agreement, or
      by
      the action of the Board providing for such Business Combination;
      or

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (iv) approval
      by the stockholders of the Company of a complete liquidation or dissolution
      of
      the Company.

    

    (b) In
      addition, in the event Paragraph (a) immediately preceding applies, for six
      months after the Termination Date (or such longer period as may be provided
      by
      the terms of the appropriate plan, program, practice or policy), the Company
      shall continue Welfare Benefits to Executive and/or his family at least equal
      to
      those which would have been provided if Executive’s employment had not been
      terminated (provided, however, that such period shall be eighteen months in
      the
      event such Paragraph (a) applies following a Change-of-Control).

    

    Notwithstanding
      the foregoing, in the event Executive is a “specified employee” as defined in
      Section 409A(a)(2)(B)(i) of the Code, the payment of the Severance Payment
      under
      this Section 7.2 shall be made no earlier than six months after the Termination
      Date.

     

    8. Severance
      Not Conditioned on Release of Claims.
      The
      Company’s obligation to provide Executive with the Severance Payments set forth
      in Section 7.2 is not contingent upon Executive’s execution of a release of
      claims in favor of the Company.

    

    9. Non-competition,
      Non-solicitation.
       

    

    9.1 Non-Competition.
      Executive agrees that he shall not, during the Employment Term and for twelve
      (12) months subsequent thereto, without both the disclosure to and the written
      approval of the Board of Directors of the Company, directly or indirectly,
      engage or be interested in (whether as a principal, lender, employee, officer,
      director, partner, venturer, consultant or otherwise) any business(es) that
      is
      competitive with the business being conducted by the Company through the
      Termination Date, without the express written approval of the Board of
      Directors.

    

    9.2 Non-Solicitation.
      Executive agrees that he will not, without the prior written consent of the
      Company’s Board of Directors, for a period of twelve (12) months after the
      Termination Date, directly or indirectly disturb, entice, or in any other manner
      persuade, any employee(s) or consultant(s) of the Company to discontinue that
      person’s or firm’s relationship with the Company if the employee(s) and/or
      consultant(s) were employed by the Company at any time during the twelve (12)
      month period prior to the Termination Date.

    

    9.3 Customers.
      Executive agrees that he will not, for a period of twelve (12) months following
      the Termination Date, contact or solicit orders, sales or business from any
      customer of the Company so as to induce or attempt to induce such customer
      to
      cease doing business with the Company.

    

    9.4 Public
      Investments.
      The
      provisions of Section 9.1 through 9.3, inclusive, shall not be deemed breached
      by reason of Executive’s ownership of five percent (5%) or less of the equities
      of any entity with a class of publicly traded securities.

    

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    
      10. Inventions,
        Discoveries and Improvements. Any and all invention(s),
        discovery(ies) and improvement(s), whether protectible or unprotectible by
        patent, trademark, copyright or trade secret, made, devised, or discovered
        by
        Executive, whether by Executive alone or jointly with others, from the time
        of
        entering the Company’s employ until the earlier of the Termination Date of this
        Agreement or the actual date of termination of employment, relating or
        pertaining in any way to Executive’s employment with the Company, shall be
        promptly disclosed in writing to the Board of Directors of the Company, and
        become and remain the sole and exclusive property of the Company. Executive
        agrees to execute any assignments to the Company, or its nominee, of Executive’s
        entire right, title, and interest in and to any such inventions, discoveries
        and
        improvements and to execute any other instruments and documents requisite
        or
        desirable in applying for and obtaining patents, trademarks or copyrights
        at the
        cost of the Company, with respect thereto in the United States and in all
        foreign countries, that may be requested by the Company. Executive further
        agrees, whether or not then in the employment of the Company, to cooperate
        to
        the fullest extent and in the manner that may be reasonably requested by
        the
        Company in the prosecution and/or defense of any suit(s) involving claim(s)
        of
        infringement and/or misappropriation of proprietary rights relevant to
        patent(s), trademark(s), copyright(s), trade secret(s), processes, and/or
        discoveries involving the Company’s product(s); it being understood that all
        reasonable costs and expenses thereof shall be paid by the Company. The Company
        shall have the sole right to determine the treatment of disclosures received
        from Executive, including the right to keep the same as a trade secret, to
        use
        and disclose the same without a prior patent application, to file and prosecute
        United States and foreign patent application(s) thereon, or to follow any
        other
        procedure which the Company may deem appropriate. In accordance with this
        provision, Executive understands and is hereby further notified that this
        Agreement does not apply to an invention which the employee developed entirely
        on his own time without using the Company’s equipment, supplies, facilities, or
        trade secret information.

    

    

    11. Confidential
      Information and Trade Secrets.

    

    11.1
       Non-Disclosure.
      Executive hereby acknowledges that all confidential or proprietary trade,
      engineering, production, and technical data, information or “know-how”
including, but not limited to, customer lists, sales and marketing techniques,
      vendor names, purchasing information, processes, methods, investigations, ideas,
      equipment, tools, programs, costs, product profitability, plans, specifications,
      patent application(s), drawings, blueprints, sketches, layouts, formulas,
      inventions, processes and data, whether or not reduced to writing, used in
      the
      development and manufacture of the Company’s products and/or the performance of
      services, or in research or development, are the exclusive property of the
      Company, and shall be at all times, whether after the Effective Date or after
      the Termination Date, be kept strictly confidential and secret by Executive;
      it
      being understood, however, that information which was publicly known, or which
      is in the public domain, or which is generally known, shall not be subject
      to
      this restriction (and Executive’s duties of non-disclosure shall further not
      extend to (i) disclosures to other employees, executives, officers and/or
      directors of the Company, or as may be required or appropriate in connection
      with performance hereunder, and (ii) the requirements of legal process, subpoena
      or other court order). 

    

    11.2 Return
      of Property.
      Executive agrees not to remove from the Company’s office or copy any of the
      Company’s confidential information, trade secrets, books, records, documents or
      customer or supplier lists, or any copies of such documents, without the express
      written permission of the Board of Directors of the Company or as may be
      required or appropriate in connection
      with performance hereunder. Executive agrees, at the Termination Date, to return
      any property belonging to the Company, including, but not limited to, any and
      all records, notes, drawings, specifications, programs, data and other materials
      (or copies thereof) pertaining to the Company’s businesses or its product(s) and
      service(s), generated or received by Executive during the course of his
      employment with the Company.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    12.
       Information
      of Others.
      Executive agrees that the Company does not desire to acquire from Executive
      any
      secret or confidential information or “know-how” of others. Executive,
      therefore, specifically represents to the Company that he will not bring to
      the
      Company any materials, documents, or writings containing any such information.
      Executive represents and warrants that from the Effective Date of this Agreement
      he is free to divulge to the Company, without any obligation to, or violation
      of, the rights of others, information, practices and/or techniques which
      Executive will describe, demonstrate or divulge or in any other manner make
      known to the Company during Executive’s performance of services. Executive also
      agrees to indemnify and hold the Company harmless from and against any and
      all
      liabilities, losses, costs, expenses, damages, claims or demands for any
      violation of the rights of others as it relates to Executive’s misappropriation
      of secrets, confidential information, or “know-how” of others. Such
      indemnification will not apply in the event action by the Company is
      unsuccessful.

    

    13.
       Indemnification.
      The
      Company shall indemnify Executive in his capacity as director, officer and
      employee of the Company upon terms no less favorable to him than are contained
      under Article 7 of the Restated Certificate of Incorporation of the Company,
      and
      Article VI of the By-laws of the Company, as in effect on the date hereof.
      The
      Company shall extend to Executive the benefits of directors’ and officers’
liability insurance upon terms no less favorable than are extended to any other
      director or officer of the Company. Upon execution, the Company and Executive
      shall enter into an Indemnification Agreement in form and substance acceptable
      to Executive providing for the indemnification contemplated hereby.

    

    14.
       Notice.
      All
      notices and other communications under this Agreement shall be in writing and
      shall be delivered personally or mailed by registered or certified mail, return
      receipt requested, and shall be deemed given when so delivered or mailed, to
      a
      party at his or its address as follows (or at such other address as a party
      may
      designate by notice given hereunder):

     

     

     

    
      	 	If to Executive:	Gary De Laurentiis	 	 
	 	 	P.O. Box 760 	 	 
	 	 	Riverbank, CA 95367 	 	 
	 	 	 	 	 
	 	With
              a
              copy to: 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	If to the Company: 	Itec Environmental Group, Inc.	 	 
	 	 	P.O. Box 760 	 	 
	 	 	Riverbank, CA 95367  	 	 
	 	 	 	 	 
	 	With a copy to:	David M. Otto	 	 
	 	 	
              The
                Otto Law Group, PLLC

            	 	 
	 	 	
              601
                Union St., Suite 4500

            	 	 
	 	 	
              Seattle,
                WA 98101

            	 	 

    

    

          

    
       

      
        10

        
          

        

      

      
        
        

      

    

         

    15.
       Suit,
      Jurisdiction.
      Any
      controversy between the Company and Executive arising out of or relating to
      any
      of the terms, provisions or conditions of this Agreement shall be submitted
      to
      arbitration in accordance with the American Arbitration Association’s National
      Arbitration Rules for the Resolution of Employment Disputes. On the written
      request of either party for arbitration of such a claim pursuant to this
      paragraph, the Company and Executive shall both be deemed to have waived the
      right to litigate the claim in any federal or state court. To the extent that
      any claim or controversy arising out of this Agreement cannot be submitted
      to
      arbitration as set forth above, each party hereby agrees that any suit, action
      or proceeding with respect to this Agreement, and any transactions relating
      hereto, may be brought in the State of California, County of San Francisco,
      and
      each of the parties hereby irrevocably consents and submits to the jurisdiction
      of such Court(s) for the purpose of any such suit, action or proceeding. Each
      of
      the parties hereby waives and agrees not to assert, by way of motion, as a
      defense or otherwise, in any such suit, action or proceeding; any claim that
      it
      (he) is not personally subject to the jurisdiction of the above-named Court(s);
      and, to the extent permitted by applicable law, any claim that such suit, action
      or proceeding is brought in an inconvenient forum or that the venue of such
      suit, action or proceeding is improper or that this Agreement or any
      replacements hereof or thereof may not be enforced in or by such Court(s).
      The
      Company shall pay any and all costs associated with arbitration or court
      adjudication.

    

    16.
       Miscellaneous.

    

    16.1 Post
      Termination Obligations.
      Notwithstanding the termination of Executive’s employment hereunder, the
      provision(s) of Section(s) “3.6(e),” “6,” “7,” “8,” “10,” “11,” “13” and “15”
shall survive the Termination Date.

    

    16.2 Assignment.
      This
      Agreement shall be assigned to and inure to the benefit of, and be binding
      upon,
      any successor to substantially all of the assets and business of the Company
      as
      a going concern, whether by merger, consolidation, liquidation or sale of
      substantially all of the assets of the Company or otherwise. The Company will
      require any successor (whether direct or indirect, by purchase, merger,
      consolidation or otherwise) to all or substantially all of the business and/or
      assets of the Company to assume expressly and agree to perform this Agreement
      in
      the same manner and to the same extent that the Company would be required to
      perform it if no such succession had taken place; and, as used in this
      Agreement, "Company"
      shall
      mean the Company as hereinbefore defined and any successor to its business
      and/or assets as aforesaid which assumes and agrees to perform this Agreement
      by
      operation of law, or otherwise; provided that for purposes of Section 8 hereof,
      the term “Company” shall mean the Company as hereinbefore defined and any such
      transaction in which this Agreement is assigned to a successor may not expand
      or
      enlarge the scope of restrictions applicable to Executive pursuant to Section
      9
      hereof. Executive understands and agrees, however, that this Agreement is
      exclusive and personal to him only, and, as such, he will neither assign nor
      subcontract all or part of his undertaking(s) or obligation(s) under the terms
      of this Agreement.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    16.3 Severability.
      In the
      event that any provision of this Agreement shall be determined to be
      unenforceable or otherwise invalid, the balance of the provision(s) shall be
      deemed to be enforceable and valid; it being understood that all provision(s)
      of
      this Agreement are deemed to be severable, so that unenforceability or
      invalidity of any single provision will not affect the remaining
      provision(s).

    

    16.4 Headings.
      The
      Section(s) and paragraph heading(s) in this Agreement are deemed to be for
      convenience only, and shall not be deemed to alter or affect any provision
      herein.

    

    16.5 Interpretation
      of Agreement.
      This
      Agreement shall be interpreted in accordance plain meaning of its terms and
      under the laws of the State of California.

    

    16.6 Variation.
      Subject
      to Section 16.8, any changes in the Sections relating to salary, bonus, or
      other
      material condition(s) after the Effective Date of this Agreement shall not
      be
      deemed to constitute a new Agreement. All unchanged terms are to remain in
      force
      and effect.

    

    16.7 Collateral
      Documents.
      Each
      party hereto shall make, execute and deliver such other instrument(s) or
      document(s) as may be reasonably required in order to effectuate the purposes
      of
      this Agreement.

    

    16.8 Non-Impairment.
      This
      Agreement may not be amended or supplemented at any time unless reduced to
      a
      writing executed by each party hereto. No amendment, supplement or termination
      of this Agreement shall affect or impair any of the rights or obligations which
      may have matured thereunder.

    

    16.9 Execution.
      This
      Agreement may be executed in one or more counterpart(s), and each executed
      counterpart(s) shall be considered by the parties as an original.

    

    16.10 Legal
      Counsel.
      Executive represents to the Company that he has retained legal counsel of his
      own choosing, and was given sufficient opportunity to obtain legal counsel
      prior
      to executing this Agreement. Executive also represents that he has read each
      provision of this Agreement and understands its meaning.

    

    16.11 Transition.
      In the
      event that Executive’s employment with the Company terminates, Executive shall,
      through the last day of employment, and at the Company’s request, use
      Executive’s reasonable efforts (at the Company’s expense) to assist the Company
      in transitioning Executive’s duties and responsibility responsibilities to
      Executive’s successor and maintaining the Company’s professional relationship
      with all customers, suppliers, etc. Without limiting the generality of the
      foregoing, Executive shall cooperate and assist the Company, at the Company’s
      direction and instruction, during the transition period between any receipt
      of
      or giving of notice of the termination of employment and the final day of
      employment. 

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    16.12 Section
      409A Matters.
      It is
      the intention of the parties that no payment or entitlement pursuant to this
      Agreement will give rise to any adverse tax consequences to the Executive
      under 26 U.S.C. § 409A ("409A").
      The
      Agreement shall be interpreted to that end and, consistent with that objective
      and notwithstanding any provision herein to the contrary, the Company shall
      indemnify Executive from any adverse tax consequences, penalties and/or interest
      thereon that may arise under 409A, and the Company may unilaterally take any
      action it deems necessary or desirable to amend any provision herein to avoid
      the application of 409A if such action will only benefit the Executive. Should
      either party determine that there is a reasonable possibility that the text
      of
      this Agreement could give rise to such adverse tax consequences, the parties
      agree to negotiate in good faith to amend the Agreement to obviate the
      possibility of such consequences.

     

    If,
      at
      any time, the Company (or its direct or indirect parent) has a class of stock
      that is publicly traded on an established securities market or otherwise, the
      Company shall from time to time compile a list of “Specified Employees” as
      defined in, and pursuant to, Prop. Reg. § 1.409A-1(i) or any successor
      regulation. Notwithstanding any other provision herein, if the Executive is
      a
      Specified Employee on the date of his termination of employment, no payment
      of
      compensation under this Agreement shall be made to the Executive during the
      period lasting six months from the date of his termination of employment unless
      the Executive determines that there is no reasonable basis for believing that
      making such payment would cause the Executive to suffer any adverse tax
      consequences pursuant to 409A. If any payment to the Executive is delayed
      pursuant to the provisions of this paragraph, such payment instead shall be
      made
      on the first business day following the expiration of the six (6) month period
      referred to in the prior sentence.

    

    IN
      WITNESS WHEREOF, the parties hereto have set their hands and seals the day
      and
      year first above written.

    

    THE
      COMPANY:

    

    ITEC
      ENVIRONMENTAL GROUP, INC.

     

     

    By:
      _________________________________

    Its:
      _________________________________

    

    

    EXECUTIVE:

    

    GARY
      DE
      LAURENTIIS

    

    

    _____________________________________

    Gary
      De
      Laurentiis

    

    
      
        
        

      

      
        13

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