Document:

Unassociated Document

    Exhibit
      10.6

    Rodney
      S.
      Rougelot Employment Agreement

    

    EMPLOYMENT
      AGREEMENT

    

    This
      Employment Agreement dated as of July 31, 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
Rodney
      S. Rougelot
      (“Executive”)
      (referred to collectively herein as the “Parties”).

     

    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      canceled and void and/or are deemed to be superseded by this final written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 or such later date as the company satisfied to the reasonable
      satisfaction of Executive the conditions set for on Schedule 2.1 hereto (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) President and Chief Executive
      Officer, and (ii) as a Director of the Company. Contemporaneously with the
      execution and delivery of this Agreement, the Company shall effectuate all
      such
      action as shall be required to procure the appointment of Executive as President
      and Chief Executive Officer, and as a member of the Board of Directors, of
      the
      Company.

    
 

    
      
        
        

      

      
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    (b) Executive,
      as Chief Executive Officer, shall have general supervision, direction and
      control of the business and affairs of the Company. Accordingly, all officers
      of
      the Company other than the Chief Executive Officer shall perform their duties
      under the direction of, and subject to, the authority of the Chief Executive
      Officer. 

     

    (c) In
      connection with the employment of Executive, Executive
      shall have all of the powers and duties of the Chief Executive Officer, as
      prescribed by the Bylaws of the Company in effect on the date hereof; and,
      without limitation, shall have general supervision, direction and control of
      the
      business and affairs of the Company, and of each and every subsidiary of the
      Company, and discretionary power, subject to board approval, to hire officers
      of
      the Company
      and its
      subsidiaries.
      The
      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
      5.1,
      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 Three Hundred Thousand Dollars ($300,000.00) (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. In the event that the Company hires a chief operating officer
      (“COO”)
      with
      an annual base salary that exceeds Two Hundred Seventy Three Thousand Dollars
      ($273,000.00), Executive’s Base Salary shall be increased to be at least 10%
      more than the COO’s base salary. For purposes of clarity, in no event shall
      Executive’s Base Salary be decreased pursuant to the preceding sentence.

     

    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.

    
 

    
      
        
        

      

      
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    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. The Company further agrees to provide Executive with a laptop
      computer and such other further technological tools and services as Executive
      may reasonably request in performing his duties under this Agreement.

     

    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.

     

    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 (“Common
      Stock”),
      of
      the Company and (y) grants of “incentive
      stock options” (as defined under Section 422 of the Internal Revenue Code of
      1986, as amended (the
      “Code”)),
      exercisable over a period of ten (10) years after grant with respect to shares
      of Common Stock, in the aggregate covering the lower of (i) eight percent (8%)
      of the Common Stock Equivalents (as defined below) or (ii) twenty eight million
      (28,000,000) shares of Common Stock (the “Executive
      Shares”)
      (such
      number of shares appropriately adjusted for any subsequent stock dividends,
      stock splits, combinations, reclassifications and the like), as required by
      this
      Section 3.6 and subject to adjustment as set forth in Section 3.6(d) below
      on
      the first anniversary of the Effective Date (the “True
      Up Date”).
      Executive
      shall
      be
      entitled to
      receive
      additional equity awards (the “Additional
      Equity Awards”)
      in
      accordance with Schedule
      A,
      attached
      hereto and incorporated herein. Any Additional Equity Awards shall be
      disregarded for all purposes under this Section 3.6, including, but not limited
      to any adjustments to the number of Executive Shares issued or issuable to
      Executive hereunder. For purposes hereof, “Common
      Stock Equivalents”
      shall  mean the number of shares of Common Stock then outstanding,
      plus the
      total
      maximum aggregate number of shares that are issuable pursuant to any
      rights to subscribe for or purchase, and any options or
      warrants for
      the
      purchase of, shares of Common Stock, plus the
      total
      maximum aggregate number of shares that are issuable pursuant to any
      stock
      or securities convertible into or exchangeable for shares of Common Stock and
      any options
      or
      warrants
      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). 

     

    
      
        
        

      

      
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    (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 (such date of
      issuance, the “Original
      Issue Date”)
      , the
      Company shall issue and deliver to Executive the following equity
      awards:

     

    (x) A
      number
      of shares of Common Stock (the “Restricted
      Shares”),
      as
      determined by Executive with an aggregate Appraised Value of up to
      Seven
      Hundred Fifty Thousand ($750,000.00),
      such
      shares to be subject
      to repurchase
      by the Company at a purchase price per share equal to the Taxable Amount Per
      Share (as defined below). ;
      “Taxable
      Amount Per Share”
shall
      mean the quotient obtained by dividing (i) product of (1) the aggregate amount
      of income tax that Executive realizes pursuant to applicable federal, state
      and
      local tax laws as a result of receipt of the Restricted Shares multiplied by
      (2)
      Executive’s marginal tax rate with respect to such income under applicable
      federal, state and local tax laws, divided by (ii) the total number of
      Restricted Shares issued to Executive (as appropriately adjusted to reflect
      stock splits, stock dividends and the like). 

     

    (y) If
      the
      Restricted Shares do not equal eight percent (8%) of the Common Stock
      Equivalents outstanding on the Original Issue Date, then the Company shall
      issue
      incentive stock options (the “Initial
      Options”)
      exercisable, over a period of ten years after grant at a price per share equal
      to the Appraised Value per share of Common Stock on the date of grant,
      determined by such appraiser as aforesaid, exercisable for that number of shares
      of Common Stock (the “Initial
      Option Shares”)
      equal
      to the difference obtained by subtracting (i) the number of Restricted Shares
      from (ii) that
      number of shares equal to eight percent (8%) of the Common Stock Equivalents
      outstanding on the Original Issue Date.
      The
      Initial Options
      shall
      also be subject to such additional terms and conditions (without, however,
      any
      additional conditions to exercisability as aforesaid) as shall be mutually
      acceptable to the Company and Executive, in their respective reasonable
      discretion.

    
 

    
      
        
        

      

      
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    (z) The
      Restricted Shares and Initial Options (if any) shall vest on the following
      schedule (i) the number of Restricted Shares equal to two percent (2%) of the
      total number of Common Stock Equivalents
      outstanding
      on the
      Original Issue Date shall vest immediately upon issuance (the “Initially
      Vested Shares”);
      (ii)
      if the Financing (as defined below) is completed prior to the True Up Date,
      then
      that number of Restricted Shares (or all of the remaining unvested Restricted
      Shares that Executive then holds if such number is less than two percent (2%)
      of
      the total number of Common Stock Equivalents
      outstanding on such date)
      plus
      Initial Options (if the remaining unvested Restricted Shares that Executive
      then
      holds is less than two percent (2%) of the total number of Common Stock
      Equivalents
      outstanding on such date),
      in the
      aggregate, equaling two percent (2%) of the total number of Common Stock
      Equivalents
      outstanding
      on and
      as of the closing date of the Financing shall vest on such date; (iii) the
      number of Restricted Shares (or all of the remaining unvested Restricted Shares
      that Executive then holds if such number is less than two percent (2%) of the
      total number of Common Stock Equivalents
      outstanding on such date)
      plus
      Initial Options (if the remaining unvested Restricted Shares that Executive
      then
      holds is less than two percent (2%) of the total number of Common Stock
      Equivalents
      outstanding on such date),
      in the
      aggregate, equaling two percent (2%) of the total number of Common Stock
      Equivalents
      outstanding
      on and
      as of the True Up Date shall vest on such date and (iv) any remaining unvested
      Restricted Shares and Initial Options as of the True Up Date shall vest ratably
      on a monthly basis such that all of the remaining unvested Restricted Shares
      and
      Initial Options shall be fully vested
      on the
      second anniversary of the Effective Date (provided that all of the unvested
      Restricted Shares and Initial Options shall become fully vested upon a
“Change-of-Control” (as
      defined below).

     

    (c) In
      the
      event that the Company does not complete a Financing (as defined below) prior
      to
      the True Up Date, Executive shall forfeit (in accordance with Section 3.6(d)(y)
      below) rights to that number of Executive Shares , if any, necessary to reduce
      the total amount of Executive Shares subject to this Agreement to six percent
      (6%) of the Common Stock Equivalents on the True Up Date. “Financing”
shall
      mean any transaction or series of transactions that close on or prior to the
      True Up Date in which the Company receives at least Eight Million Dollars
      ($8,000,000) (or such other amount as mutually agreed upon dollar amount by
      the
      Parties). In addition, the Restricted Shares other than the Initially Vested
      Shares shall be subject to an irrevocable proxy exercisable by the Board of
      Directors of the Company (with Executive abstaining) until the earlier to occur
      of (i) the closing of the Financing, or (ii) the True Up Date.

     

    (d) Subject
      to Section 3.6(c) above, on the True Up Date the total number of Executive
      Shares shall be adjusted pursuant to this Section 3.6(d) (the “True
      Up”)
      so
      that after giving effect to the True Up the Executive Shares shall represent
      either (i) eight percent (8%) of the Common Stock Equivalents outstanding on
      the
      True Up Date if the Financing has closed by such date or (ii) six percent (6%)
      of the Common Stock Equivalents outstanding on the True Up Date if the Financing
      has not closed by such date. 

     

    
 

    
      
        
        

      

      
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    (x) In
      the
      event that Executive is entitled to receive additional Executive Shares pursuant
      to the True Up, the Company shall grant Executive additional
      incentive
      stock options (the “Additional
      Options”) exercisable,
      over a period of ten (10) years after grant at a price per share equal to the
      fair market value per share of Common Stock on the date of grant determined
      by
      the appraiser as aforesaid, with respect to a number of shares of Common Stock
      (the “Additional
      Option Shares”)
      equal
      to the difference,
      if
      any,
      obtained
      by subtracting (x) the sum of the number of Restricted Shares plus the Initial
      Option Shares from (y) a number of shares that equals eight percent (8%) of
      the
      Common Stock Equivalents outstanding on the True Up Date if the Financing has
      closed by such date or six percent (6%) of the Common Stock Equivalents
      outstanding on the True Up Date if the Financing has not closed by such
      date.
      The
      Additional Options shall vest and become exercisable on a
      monthly
      basis such that the Additional Options shall be fully vested
      on the
      second anniversary of the Effective Date (provided that all such options shall
      become immediately exercisable upon a Change-of Control),
      such
      options to be subject to such additional terms and conditions as heretofore
      determined with respect to the Initial Options, applied mutatis mutandis. 

     

    (y) In
      the
      event that number of Executive Shares are to be reduced pursuant to the True
      Up,
      Executive shall forfeit Initial Options and/or Restricted Shares representing
      the right to purchase the difference obtained from subtracting (x) a number
      of
      shares that equals eight percent (8%) of the Common Stock Equivalents
      outstanding on the True Up Date if the Financing has closed by such date or
      six
      percent (6%) of the Common Stock Equivalents outstanding on such date if the
      Financing has not closed by such date from (y) the sum of the number of
      Restricted Shares plus the Initial Option Shares. In the event Executive must
      forfeit Initial Options or Restricted Shares pursuant to clause (c) or (d)
      of
      this Section 3.6, Executive shall first forfeit unexercised Initial Options
      (pro
      rata across vested and unvested Initial Options), then, to the extent additional
      shares must be forfeited by the Executive to reach the applicable percentage,
      the Company shall have the right to repurchase from Executive any shares issued
      upon exercise of the Initial Options at a purchase price equal to the exercise
      price paid by Executive or Restricted Shares at the Taxable Amount Per Share,
      as
      applicable, and the Executive shall forfeit, waive or forego any claim of right,
      title or interest to such shares.

     

    (e) The
      Company shall cooperate with the appraiser selected hereunder in all reasonable
      respects and furnish to such appraiser all information and data reasonably
      requested thereby. The Company shall further cooperate with Executive in the
      making by Executive of a timely election under Section 83(b) of the Code with
      respect to the Restricted Shares. Executive shall submit a copy to the Company
      of any such election if made.

     

    
      
        
        

      

      
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    (f) On
      or
      prior to the first anniversary of the date hereof
      (or as
      soon as reasonably practicable following a termination for Good Reason or
      Without Cause),
      the
      Company shall, at its expense, register with the Securities and Exchange
      Commission pursuant to one
      or
      more effective registration statements under the
      Securities Act of 1933, as amended, in
      the
      manner prescribed by Executive, any and all shares now owned or hereafter
      acquired by Executive (the “Registrable
      Securities”),
      including all Restricted Shares, Initial Option Shares,
      Additional Option Shares, and
      shall
      maintain the effectiveness
      and currency
      of each
      such
      registration statement, including any related prospectus until the resale of
      such shares by Executive or any successor thereof; and shall take all such
      further action (including, without limitation, any registration of such shares
      under applicable state securities laws
      and the
      listing of such shares on any and all trading markets or stock exchanges as
      the
      Company’s Common Shares may trade from time to time)
      as
      shall permit the resale of such shares, or any portion thereof, as aforesaid.
      The Company shall from  

    time
      to
      time furnish to Executive sufficient copies of any such prospectus, and any
      supplements thereto, so as to permit the resale of such shares, or any portion
      thereof, in the manner prescribed by Executive. In addition, prior to the grant
      of the Initial Options, the Company shall enter into an additional agreement
      with Executive extending to Executive incidental registration rights covering
      the resale of the Registrable Securities on terms no less favorable to Executive
      than have then been extended to any other stockholder of the
      Company.
      The
      Company shall pay the costs and expenses incurred by Executive in connection
      with any such registration, including the reasonable legal fees and expenses
      that Executive may incur in connection therewith. The obligations of the Company
      pursuant to this Section 3.6(f) are referred to herein as the “Registration
      Obligations.”

     

    (g) On
      or
      prior to the True Up Date, the Company and Executive shall have concurred,
      in
      their respective reasonable discretion, on the terms and conditions of a
      long-term equity incentive award program pursuant to which Executive and the
      other members of executive management of the Company shall be entitled to grants
      of shares of Common Stock based upon achievement of specified performance
      objectives.

     

    (h) Prior
      to
      the issuance of the Executive Shares, the Company shall adopt a new equity
      incentive plan (the “Equity
      Plan”),
      the
      terms and scope of which shall be approved by the shareholders of the Company
      and sufficient to provide for the issuance to the Executive Shares, the
      additional equity awards contemplated by Schedule A hereto and the Additional
      Options.

     

    (i) The
      Restricted Shares shall be issued pursuant to a Restricted Stock Agreement,
      a
      form of which is attached hereto as Exhibit
      C.

     

    4. 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”).

     

    5. Representations.

     

    5.1. Executive
      Representations.
      Executive hereby represents and warrants that:

    
 

    
      
        
        

      

      
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    (a) His
      employment with the Company under the terms of this Agreement will not conflict
      with any continuing duty(ies) or obligation(s) Executive has with any other
      person(s), firm(s) and/or entity(ies). Executive also represents that he has
      not
      brought to the Company (during the period before or after the Effective Date
      of
      this Agreement) any confidential material(s) and/or document(s) of any former
      employer(s), or any confidential information or property belonging to
      other(s).

     

    (b) During
      the Employment Term, he will promptly disclose to the Board of Directors of
      the
      Company any direct interest (greater than five percent (5%)) he
      holds
      in any
      business that
      provides
      service(s) and/or product(s) to the Company (whether as a principal,
      stockholder, lender, employee, director, officer, partner, venturer, consultant
      or otherwise).

     

    5.2. Company
      Representations.
      The
      Company hereby represents and warrants that:

     

    (a) The
      execution and delivery by the Company of this Agreement, the performance by
      the
      Company of its covenants and agreements under this Agreement, and the
      consummation by the Company of the transactions contemplated by this Agreement
      have been duly authorized by all necessary corporate action. When
      executed and delivered by the Company, this Agreement shall constitute the
      valid
      and legally binding obligation of the Company enforceable against the Company
      in
      accordance with its terms.

     

    (b) Neither
      the execution and delivery of this Agreement by the Company nor the consummation
      by the Company of the transactions contemplated in this Agreement will violate
      any provision of the Restated Certificate of Incorporation or By-laws of the
      Company or
      any
      law, rule regulation, writ, judgment, injunction, decree, determination, award
      or other order of any court, governmental agency or instrumentality binding
      upon
      the Company, or conflict with or result in any breach of or event of termination
      or right of acceleration under any of the terms of, or the creation or
      imposition of any mortgage, deed of trust, pledge, lien, security interest
      or
      other charge or encumbrance of any nature pursuant to, the terms of any contract
      or agreement to which the Company is a party or by which the Company or any
      of
      its properties or assets is bound. No consent, approval, notice to or other
      authorization of any governmental body, agency or instrumentality, or any other
      person or entity, is required for the execution, delivery and performance of
      this Agreement by the Company (other than notices heretofore timely delivered).
      

     

    (c) The
      Restricted Shares, Initial Option Shares and Additional Option Shares, when
      issued and delivered in accordance with the terms of this Agreement, shall
      be
      validly issued, fully paid and non-assessable shares of Common Stock, free
      and
      clear of any mortgages, deeds of trust, pledges, liens, security interests
      or
      any charges or encumbrances of any nature (other than the restrictions on the
      Restricted Shares expressly contemplated hereunder). There are no preemptive
      rights
      with regard to the issuance of the Restricted Shares, Initial Option Shares
      and
      Additional Option Shares to the Executive.

     

     

    
      
        
        

      

      
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      (d) The
        number of shares and type of all authorized, issued and outstanding capital
        stock, options and other securities of the Company (whether or not presently
        convertible into or exercisable or exchangeable for shares of capital stock
        of
        the Company) is set forth in the SEC Reports (as defined below). All of the
        outstanding shares of capital stock of the Company are duly authorized,
        validly issued, fully paid and non-assessable, have been issued in compliance
        in
        all material respects with all applicable federal and state securities laws,
        and
        none of such outstanding shares was issued in violation of any preemptive
        rights
        or similar rights to subscribe for or purchase any capital stock of the Company.
        Except as specified in the SEC Reports and Schedule
        B,
        attached hereto and incorporated herein, there are no outstanding options,
        warrants or other rights to subscribe to, calls or commitments of any character
        whatsoever relating to, or securities, rights or obligations convertible
        into or
        exchangeable for, or giving any person or entity any right to subscribe for
        or
        acquire, any shares of the Company’s capital stock, or contracts, commitments,
        understandings or arrangements by which the Company or any subsidiary is
        or may
        become bound to issue additional shares of capital stock of the Company,
        or
        options, securities or rights convertible or exchangeable into shares of
        capital
        stock of the Company. Except for customary adjustments as a result of stock
        dividends, stock splits, combination of shares, reorganizations,
        recapitalizations, reclassifications or other similar events, there are no
        anti-dilution or price adjustment provisions contained in any security issued
        by
        the Company (or in any agreement providing rights to security holders of
        the
        Company) and the issuance of the Restricted Shares, Initial Option Shares
        and
        Additional Option Shares will not, immediately or with the passage of time,
        obligate the Company to issue shares of Common Stock or other securities
        to any
        person or entity and will not, result in a right of any holder of securities
        to
        adjust the exercise, conversion, exchange or reset price under such securities.
        

    

     

    (e) The
      Company has filed all reports required to be filed by it under the Securities
      Exchange Act of 1934, as amended (the “Exchange
      Act”),
      including pursuant to Section 13(a) or 15(d) thereof, for the two years
      preceding the date hereof (the foregoing materials being collectively referred
      to herein as the “SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. As
      of
      the date hereof, the Company is not aware of any event (other than the
      transactions contemplated by this Agreement) that requires the filing of a
      Form
      8-K after the Effective Date. As of their respective dates, or to the extent
      corrected by a subsequent restatement, the SEC Reports complied in all material
      respects with the requirements of the Securities Act and the Exchange Act and
      the rules and regulations of the Commission promulgated thereunder, and none
      of
      the SEC Reports, when filed, contained any untrue statement of a material fact
      or omitted to state a material fact required to be stated therein or necessary
      in order to make the statements therein, in light of the circumstances under
      which they were made, not misleading.

     

    (f) The
      financial statements of the Company included in the SEC Reports comply in all
      material respects with applicable accounting requirements and the rules and
      regulations of the Commission with respect thereto as in effect at the time
      of
      filing (or to the extent corrected by a subsequent restatement). Such financial
      statements have been prepared in accordance with generally accepted accounting
      principles in the United States (“GAAP”)
      applied on a consistent basis during the periods involved, except as may be
      otherwise specified in such financial statements or the notes thereto and except
      that unaudited financial statements may not contain all footnotes required
      by
      GAAP, and fairly present in all material respects the financial position of
      the
      Company and its consolidated subsidiaries taken as a whole as of and for the
      dates thereof and the results of operations and cash flows for the periods
      then
      ended, subject, in the case of unaudited statements, to normal, year-end audit
      adjustments. 

    
 

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
 

    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”);
      

     

    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 4 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 at all or in a reasonably acceptable manner the
      responsibilities, functions and duties attached to his position with the
      Company, including, but not limited to helping to complete a
      Financing;
       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, excluding refusal to perform his duties at all, Executive
      shall have sixty (60) days (thirty (30) days in the case of subsection (iii)
      of
      this Section 6.4) to cure the behavior upon which the threatened termination
      is
      based.

    
 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    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”).

     

    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.

     

    6.8. Forfeiture
      of Unvested Shares upon Termination.
      In the
      event that this Agreement is terminated pursuant to the provisions of Sections
      6.3 or 6.4, the Executive shall forfeit, waive or forego any claim to right,
      title or interest in any unvested shares issued pursuant the Agreement, subject
      to any repurchase requirement set forth in Section 3.6 and immediately remit
      any
      issued, forfeited shares to the Company for immediate cancellation (against
      payment of the purchase price therefore in the case of Restricted Shares).
      

     

    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. 

    
 

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

    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
      6.4 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:

     

    (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

     

     

    
 

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
 

    (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 Combinationbeing 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

     

    (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 Payment 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.

    
 

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

     

    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.

     

    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.

    
 

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

     

    
      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.

     

    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):

    
 

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

     

    
      	 	If to Executive:	 	Rodney S.
              Rougelot
	 	 	 	542 46th
              Avenue
	 	 	 	
              San
                Francisco, CA 94121

            
	 	 	 	 
	 	With a copy to:	 	Gary J. Kocher
	 	 	 	
              Preston
                Gates & Ellis LLP

            
	 	 	 	925 Fourth Avenue
	 	 	 	
              Suite
                2900

            
	 	 	 	
              Seattle,
                WA 98104

            
	 	 	 	 
	 	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

    

    
       

    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(f),”
      “5,”
“7,”
      “9,” “10,” “11,” “13” and “15” shall survive the Termination Date.

     

     

    
      
        
        

      

      
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      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 9 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.

    

     

    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.

    
 

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
 

    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. 

     

    16.12 Expenses.
      The
      Company agrees to reimburse Executive for fees and expenses incurred by
      Executive in connection with the preparation of this Agreement, including
      reasonable attorneys fess, up to a maximum amount of Fifteen Thousand Dollars
      ($15,000).

     

    16.13
      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.

     

    [Signature
      page to follow]

    
 

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
 

    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:

    

    RODNEY
      S.
      ROUGELOT

    

    

    _____________________________________

    Rodney
      S. Rougelot

    

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    Schedule
      2.1

    

     

    
      	 	
              ·

            	
              Coloris
                commission deal documented to reasonable satisfaction of
                Executive

            

    

     

    
      	 	
              ·

            	
              Gary
                D. Contract written and detailed to reasonable satisfaction of Executive
                to include, but not limited to, the following terms - cut options,
                assume
                title of CTO, salary, severance, duties, goals to remove guarantee
                of
                CIWMB Loan 

            

    

     

    
      	 	
              ·

            	
              Documentation
                of term changes for KWS investors to Knight investor terms
                

            

    

     

    
      	 	
              ·

            	
              Delivery
                to Executive of detailed financial statements at and as of July 31
                which
                will reflect all accrued liabilities through such date, including
                detailed
                AP (including all legal fees incurred through such date), liabilities,
                cap
                table, off BS liabilities i.e., George Gitschel,
                etc...

            

    

     

    
      	 	
              ·

            	
              Confirmation
                from Coloris and KWS that they are not entitled to receive commission
                for
                Executive's funding contacts from date of Agreement forward.
                

            

    

     

    
      	 	
              ·

            	
              Increase
                in D&O policy in scope and amount reasonable acceptable to Executive.
                

            

    

     

    
      	 	
              ·

            	
              Amendment
                to the Certificate of Incorporation to provide for maximum indemnification
                and limitation of liability to directors and officers under Delaware
                law.

            

    

     

    
      	 	
              ·

            	
              Completion
                of the information on Schedule B hereto to include specific details
                relating to the amounts and other details on the shares and other
                securities issuable to the individuals and entities listed theron,
                to the
                reasonable satisfaction of Executive.

            

    

    

    

    
 

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    
 

    SCHEDULE
      A

    

    ADDITIONAL
      EQUITY AWARDS

    

    

    Capitalized
      terms used but not defined in this Schedule A have the meanings assigned to
      them
      in the Employment Agreement to which this Schedule A is attached (the
“Agreement”).
      

     

    Executive
      shall be entitled to additional equity awards (the “Additional
      Equity Awards”)
      in the
      event that the Company successfully receives new investment after the Effective
      Date in one or a series of transactions from Executive, parties that Executive
      introduced to the Company, and/or parties that were not stockholders of the
      Company prior to the date of the Agreement (“New
      Funding”).
      In
      the event such New Funding in the aggregate equals or exceeds $1.0 million
      but
      is less than $6.0 million, the Additional Equity Awards will equal one percent
      (1.0%) of the number of Common Stock Equivalents outstanding on the date of
      issuance (subject to adjustment as set forth below). In the event such New
      Funding in the aggregate equals or exceeds $6.0 million, such additional equity
      awards will equal, in the aggregate, two percent (2.0%) of the number of Common
      Stock Equivalents outstanding on the date of issuance (subject to adjustment
      as
      set forth below). Such awards shall be issued by the Company at the time of
      closing of the transaction that gives rise to the Company’s obligation hereunder
      and shall be in the form of grants of incentive stock options exercisable over
      a
      period of ten (10) years after grant at
      a
      price per share equal to the fair market value per share of Common Stock on
      the
      date of grant determined by the appraiser as set forth in the
      Agreement.
      In the
      event that, after the date of the issuance of any such Additional Equity Award
      and on or prior to the True Up Date, the Company issues additional securities
      such that the number of Common Stock Equivalents is increased, the amount of
      shares subject to such Additional Equity Award(s) shall be increased so that
      they reflect the specified percentage(s) on and as of the True Up Date. The
      Company’s Registration Obligations shall apply to any shares issued as
      Additional Equity Awards hereunder and the Company shall use best efforts to
      register such shares in accordance with the provisions of Section 3.6(f) of
      the
      Agreement. 

    
 

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
 

    SCHEDULE
      B

    

    · Cambridge
      Capital Partners promissory note, or its assigns.

    · Settlement
      with George Gitschel.

    · EnviroPlastics
      Hungary settlement.

    · Forbearance
      Agreement with the Elevation Fund.

    · Forbearance
      Agreement with Capital Growth Financial.

    · David
      Coloris consulting fees.

    · KW
      Securities fees related to the 2005 Private Placement Memorandum (“KW
      PPM”).

    · Investors
      pursuant to the KW PPM.

    · The
      Otto
      Law Group, PLLC, or its assigns.

    · Saratoga
      Capital Partners, or its assigns.

    
 

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
 

    SCHEDULE
      C

    RESTRICTED
      STOCK AGREEMENT

    Restricted
      Stock Agreement

    

    This
      Restricted Stock Agreement (the "Agreement")
      is
      made and entered into as of August __, 2006 (the "Effective
      Date")
      by and
      between Itec Environmental Group, Inc., a Delaware corporation (the
      "Company"),
      and
      Rodney S. Rougelot ("Stockholder").

    

    RECITALS

    

    
      	
              A.

            	
              The
                Company’s Board of Directors (the "Board")
                has authorized and approved the issuance of shares of the Company’s common
                stock to Stockholder subject to the restrictions set forth herein
                and
                pursuant to the terms hereof.

            

    

    

    
      	
              B.

            	
              The
                shares provided for in this Agreement are to be issued pursuant to
                and in
                connection with Stockholder’s Employment Agreement with the Company dated
                as of July __, 2006 (the “Employment
                Agreement”).
                Capitalized terms used but not defined herein, have the meanings
                assigned
                to them in the Employment
                Agreement.

            

    

    

    NOW,
      THEREFORE, in consideration of the mutual benefits hereinafter provided, and
      each intending to be legally bound, the Company and Director hereby agree as
      follows:

    

    1. Issuance
      of Shares.Subject
      to the restrictions, terms and conditions of this Agreement, the Company hereby
      issues to Stockholder [l]
      ([l])
      shares
      (the "Shares") of the Company’s common stock ("Common Stock"). As used in this
      Agreement, the term "Shares" refers to the Shares issued hereunder and includes
      all securities received (i) in replacement of the Shares, (ii) as a
      result of stock dividends or stock splits in respect of the Shares, and
      (iii) in replacement of the Shares in a recapitalization, merger,
      reorganization or the like.

    

    2. Delivery.

    

    2.1 Deliveries
      by Stockholder.
      Stockholder
      hereby delivers to the Company (i) this Agreement; and (ii) four (4)
      copies of a blank Stock Power and Assignment of Uncertificated Securities in
      the
      form of Exhibit
      1
      attached
      hereto (the "Stock
      Powers"),
      all of
      which are executed by Stockholder (and Stockholder’s spouse or domestic partner,
      if any).

    

    2.2 Deliveries
      by the Company.
      Upon
      its
      receipt of all of the documents to be executed and delivered by Stockholder
      to
      the Company under Section 2.1, the Company will issue the Shares in the name
      of
      Stockholder on the books and records of the Company and send to Stockholder
      any
      notice required by the Delaware General Corporation Law for the issuance of
      uncertificated shares. At such time as the Shares become Vested Shares (as
      defined below), the Company shall issue certificates representing such
      Shares.

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

    3. Repurchase
      and Vesting.

    

    (a) 3.1 Repurchase
      Right for Unvested Shares.
      As
      of the
      Effective Date, all of the Shares are "Unvested
      Shares",
      and
      shall be restricted and subject to repurchase at the Taxable Amount Per Share
      (as
      defined in the Employment Agreement) based
      on
      the following vesting schedule (shares
      that have vested are referred to herein as “Vested
      Shares”):
      (i) the
      number of Shares equal to two percent (2%) of the total number of Common Stock
      Equivalents (as
      defined in the Employment Agreement) outstanding
      on the
      Original Issue Date (as
      defined in the Employment Agreement)
      shall
      vest immediately upon issuance (the “Initially
      Vested Shares”);
      (ii)
      if the Financing (as
      defined in the Employment Agreement) is
      completed prior to the True Up Date (as
      defined in the Employment Agreement),
      then
      that number of Shares (or all of the remaining unvested Shares that Executive
      then holds if such number is less than two percent (2%) of the total number
      of
      Common Stock Equivalents
      outstanding on such date)
      equaling two percent (2%) of the total number of Common Stock
      Equivalents
      outstanding
      on and
      as of the closing date of the Financing shall vest on such date; (iii) the
      number of Shares (or all of the remaining unvested Shares that Executive then
      holds if such number is less than two percent (2%) of the total number of Common
      Stock Equivalents
      outstanding on such date)
      equaling two percent (2%) of the total number of Common Stock
      Equivalents
      outstanding
      on and
      as of the True Up Date shall vest on such date and (iv) any remaining unvested
      Shares as of the True Up Date shall vest ratably on a monthly basis such that
      all of the remaining unvested Shares shall be fully vested
      on the
      second anniversary of the Effective Date (provided that all of the unvested
      Shares shall
      become
      fully vested upon a “Change-of-Control”
      (as
      defined
      in the Employment Agreement). Stockholder
      agrees not to sell, assign, transfer, pledge, hypothecate, or otherwise dispose
      of, by operation of law or otherwise, such Unvested Shares except as permitted
      by this Agreement. 

    

    3.2 Adjustments.
      The
      number of Shares that are Vested Shares or Unvested Shares will be equitably
      adjusted for any stock split, combination, stock dividend, merger,
      consolidation, reorganization, recapitalization, or any other change in
      corporate structure or other transaction not involving the receipt of
      consideration by the Company occurring after the Effective Date.

    

    4. Accelerated
      Vesting.
      Stockholder’s
      Unvested Shares shall immediately vest upon the occurrence of a
      Change-of-Control. 

     

    5. Restricted
      Securities.
      Stockholder
      acknowledges and understands that Stockholder may not transfer any Shares unless
      such Shares are registered under the Securities Act and qualified under
      applicable state securities laws or unless, in the opinion of counsel to the
      Company, exemptions from such registration and qualification requirements are
      available. Stockholder understands that only the Company may file a registration
      statement with the Securities and Exchange Commission (the "SEC")
      and
      that the Company is obligated under the Employment Agreement to do
      so. 

    

    6. Restrictions
      on Transfers.
      Stockholder agrees not to voluntarily transfer, assign, grant a lien or security
      interest in, pledge, hypothecate, encumber or otherwise dispose of
      (collectively, a "Transfer")
      any of
      the Unvested Shares. 

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    

    7. Rights
      as Stockholder; Proxy.
      Subject
      to the terms and conditions of this Agreement, Stockholder will have all of
      the
      rights of a holder of Common Stock with respect to the Shares from and after
      the
      date that Stockholder delivers an executed copy of this Agreement until such
      time as Stockholder Transfers the Shares or they are repurchased by the Company.
      All Unvested Shares shall be subject to an irrevocable proxy in the form
      attached as Exhibit
      2
      hereto
      exercisable by the Board of Directors of the Company (with Stockholder
      abstaining) until such time as the shares become Vested Shares.

    

    8. Tax
      Consequences.
      STOCKHOLDER
      UNDERSTANDS THAT STOCKHOLDER MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT
      OF
      STOCKHOLDER’S ACQUISITION OR DISPOSITION OF THE SHARES. Stockholder hereby
      acknowledges that Stockholder has been informed that, unless an election is
      filed by the Stockholder with the Internal Revenue Service (and, if necessary,
      the proper state taxing authorities), within
      30 days
      of the
      acquisition of the Shares, electing pursuant to Section 83(b) of the Internal
      Revenue Code (and similar state tax provisions, if applicable) to be taxed
      currently on the fair market value on the date of acquisition of the Shares,
      there will be a recognition of taxable income to the Stockholder equal to the
      fair market value of the Shares at the time they are considered transferable
      or
      no longer subject to substantial risk of forfeiture or repurchase for nominal
      consideration. Stockholder
      represents that he has consulted any tax adviser(s) that he deems advisable
      in
      connection with his acquisition of the Shares and the filing of the election
      under Section 83(b) and similar tax provisions.
      A
      form of
      Election under Section 83(b) is attached hereto as Exhibit
      3
      for
      reference.
      STOCKHOLDER HEREBY ASSUMES ALL RESPONSIBILITY FOR FILING OR NOT FILING SUCH
      ELECTION AND PAYING ANY TAXES RESULTING FROM FILING OR FAILING TO FILE SUCH
      ELECTION.

    

    9. Compliance
      with Laws and Regulations.
      The
      issuance and transfer of the Shares will be subject to and conditioned upon
      compliance by the Company and Stockholder with all applicable state and federal
      laws and regulations and with all applicable requirements of any stock exchange
      or automated quotation system on which the Company’s securities may be listed or
      quoted at the time of such issuance or transfer.

    

    10. Successors
      and Assigns.
      The
      Company may assign any of its rights under this Agreement. This Agreement shall
      be binding upon and inure to the benefit of the successors and assigns of the
      Company. Subject
      to the restrictions on transfer herein set forth, this Agreement will be binding
      upon Stockholder and Stockholder’s heirs, executors, administrators, successors
      and assigns.

    

    11. Governing
      Law; Jurisdiction.
      This
      Agreement shall be interpreted in accordance plain meaning of its terms and
      under the laws of the State of California. Any controversy between the Company
      and Stockholder 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
      Stockholder 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.

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    

     

    12. Notices.
      Any
      notice required to be given or delivered to the Company shall be in writing
      and
      addressed to the Corporate Secretary of the Company at its principal corporate
      offices. Any notice required to be given or delivered to Stockholder hereunder
      shall be in writing and addressed to Stockholder at the last address Stockholder
      provided to the Company. All notices shall be deemed effectively given upon
      personal delivery, three (3) days after deposit in the United States mail by
      certified or registered mail (return receipt requested), one (1) business day
      after its deposit with any return receipt express courier (prepaid), or on
      the
      business day that it is sent by fax to the fax number last provided by
      Stockholder to the Company, but only if (A) the receiving fax device immediately
      generates a message, printed by the sending fax device, that confirms receipt,
      and (B) receipt of the fax is confirmed by a telephone call between sender
      and
      recipient.

    

    13. Further
      Instruments.
      The
      parties agree to execute such further instruments and to take such further
      action as may be reasonably necessary to carry out the purposes and intent
      of
      this Agreement.

    

    14. Headings.
      The
      captions and headings of this Agreement are included for ease of reference
      only
      and will be disregarded in interpreting or construing this
      Agreement. All
      references herein to Sections will refer to Sections of this
      Agreement.

    

    15. Entire
      Agreement.
      This
      Agreement, the Employment Agreement and the other agreements specifically
      referenced herein contain the entire understanding of the parties regarding
      the
      subject matter of this Agreement and such other agreements and supersede all
      prior and contemporaneous negotiations and agreements, whether written or oral,
      between the parties with respect to the subject matter of this Agreement and
      such other agreements.

    

    (the
      remainder of this page left intentionally blank)

    

    

    

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    

    -
      SIGNATURE PAGE -

    RESTRICTED
      STOCK AGREEMENT

    

    IN
      WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
      duly authorized representative and Stockholder has executed this Agreement
      as of
      the Effective Date.

     

     

     

    
      	ITEC ENVIRONMENTAL
              GROUP,
              INC.	 	STOCKHOLDER
	 	 	 	 
	 	 	 	 
	By:
              	 	 	 
	Its:
              	 	 	
              Name:
                Rodney S. Rougelot

            

    

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    

    LIST
      OF EXHIBITS

    

    Exhibit
      1: Stock
      Power and Assignment of Uncertificated Securities

    

    Exhibit
      2: Irrevocable
      Proxy

    

    Exhibit
      3: Election
      under Section 83(b) of the Internal Revenue Code

    

    

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    EXHIBIT
      1

    

    Stock
      Power and Assignment

    of
      Uncertificated Securities

    

    FOR
      VALUE
      RECEIVED and pursuant to that certain Restricted Stock Agreement dated as of
      August l,
      2006
      (the "Agreement"),
      the
      undersigned hereby sells, assigns and transfers unto ITEC ENVIRONMENTAL GROUP,
      INC., a Delaware corporation (the "Company"),
      _______________ uncertificated shares of the Common Stock of the Company,
      standing in the undersigned’s name on the books of the Company delivered
      herewith, and does hereby irrevocably constitute and appoint the Secretary
      of
      the Company as the undersigned’s attorney-in-fact, with full power of
      substitution, to transfer said stock on the books of the Company. 

    

    Dated:
      _____________________

     

     

    
 

    
      	 	
              STOCKHOLDER

            	 
	 	 	 
	 	 	 
	 	
              (Signature)

            	 
	 	 	 
	 	 	 
	 	
              (Please
                Print Name)

            	 
	 	 	 
	 	 	 
	 	(Spouse’s or Domestic 	 
	 	
              Partner’s
                Signature) 

            	 
	 	 	 
	 	 	 
	 	(Please Print Spouse’s or 	 
	 	
              Domestic
                Partner’s Name)

            	 

    

    
 

    Instruction:
      Please
      do
not
      fill in
      any blanks other than the signature line. The purpose of this Stock Power and
      Assignment of Uncertificated Securities is to enable the Company and/or its
      assignee(s) to acquire the shares upon repurchase by the Company as set forth
      in
      the Agreement without requiring additional signatures on the part of Stockholder
      or Stockholder’s Spouse or Domestic Partner.

    

    
 

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    
 

    EXHIBIT
      2

    

    Irrevocable
      Proxy

    

    
 

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
 

    EXHIBIT
      3

    

    Section
      83(b) Election

    

    The
      undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal
      Revenue Code, to include in gross income for the taxpayer’s current taxable year
      of the fair market value of the property described below at the time of transfer
      as compensation for services.

    

    
      	
              (1)

            	
              The
                taxpayer who performed the services to Itec Environmental Group,
                Inc. (the
                “Company”):

            

    

    

    
      	 	
              Name:
                

            

    

    
      	 	
              Address:
                

            

    

    
      	 	
              Social
                Security No.: 

            

    

    

    
      	
              (2)

            	
              The
                property with respect to which the election is made is [l]
                shares of the Common Stock (the “Shares”)
                of the “Company.

            

    

    

    
      	
              (3)

            	
              The
                property was transferred on
                __________________.

            

    

    

    
      	
              (4)

            	
              The
                taxable year for which the election is made is the calendar year
                _____.

            

    

    

    
      	
              (5)

            	
              The
                Shares are subject to the following restrictions: the shares are
                subject
                to vesting based upon continued service as an employee of the Company.
                The
                restrictions described herein are set forth in the Restricted Stock
                Agreement between the Company and taxpayer dated
                ________________.

            

    

    

    
      	
              (6)

            	
              The
                fair market value of a Share at the time of transfer (determined
                without
                regard to any restriction other than a restriction which by its terms
                will
                never lapse) was $____ per Share.

            

    

    

    
      	
              (7)

            	
              No
                consideration was paid by the taxpayer for the
                Shares.

            

    

    

    
      	
              (8)

            	
              A
                copy of this statement was furnished to the Company for whom taxpayer
                rendered the services underlying the transfer of such
                shares.

            

    

    

    
      	
              (9)

            	
              This
                statement is executed on
                ___________________.

            

    

    

    

    _______________________________   
___________________________________

    Taxpayer 
Spouse
      or
      Domestic Partner (if any)

    

    This
      election must be filed with the Internal Revenue Service Center with which
      the
      Stockholder files his or her federal income tax returns and must be filed within
      30 days after the date of acquisition. This filing should be made by registered
      or certified mail, return receipt requested. The Stockholder must retain two
      copies of the completed form for filing with his or her federal and state tax
      returns for the current tax year and an additional copy for his or her
      records.

    

    
 

    
      
        
        

      

      
        31Exhibit
      10.7

    Mutual
      Settlement and Release

    

    MUTUAL
      SETTLEMENT AND RELEASE AGREEMENT

    AMONG

    ROSE
      WASTE SYSTEMS, INC., GEORGE GITSCHEL, 

    ITEC
      ENVIRONMENTAL GROUP, INC., AND ITEC ACQUISITIONS, INC. 

    

    Come
      now
      George Gitschel, an individual (“Gitschel”),
      Rose
      Waste Systems, Inc., a California corporation (“Rose”),
      Itec
      Environmental Group, Inc., a Delaware corporation, (“Itec”)
      and
      Itec Acquisitions, Inc., a Delaware corporation (“Merger”)
      (collectively referred to at times herein as the “parties”)
      and
      enter into this mutual settlement and release agreement (“Agreement”)
      for
      the express purpose of resolving all of the differences among the parties
      relating to or stemming from the claims of Rose and Gitschel on the one hand
      against Itec and Merger on the other against one another.

    

    This
      Agreement is entered into in light of the following facts:

    

    A. Rose
      supplied certain equipment to Itec in accordance with the terms and conditions
      of a written agreement among Rose, Machinex, and Itec.

    

    B. Rose
      supplied certain additional goods and services to Itec at the request of and
      for
      the benefit of Itec. Collectively, the goods and services provided to Itec
      by
      Rose are referred to as the ‘Equipment.”

    

    C. Itec
      has
      paid Rose for approximately 90% of the amount due with respect to the Machinex
      and Getecha equipment packages supplied by Rose to Itec.

    

    D. Rose
      loaned Itec $37,000, in January 2006, which sum Itec has not repaid to Rose
      (the
“Loan”).

    

    E. On
      May
      17, 2006, Rose filed suit against Itec in civil action No. 380417, filed in
      the
      Superior Court of the State of California, Stanislaus County (the “Rose
      Litigation”).

    

    F. Itec
      has
      no claims against Rose with respect to the Equipment.

    

    G. Gitschel,
      Rose, Itec and Merger executed an
      Agreement and Plan of Merger By and Among Itec Environmental Group, Inc., Itec
      Acquisitions, Inc. and Rose Waste
      Systems, Inc. on
      May
      25, 2005
      by the
      terms of which Rose was to be merged into Itec (the ‘Merger
      Agreement”).

    

    H. Joe
      Aldridge and Itec executed a Stock Purchase Agreement (the “Aldridge Agreement”)
      by the terms of which Itec was to undertake certain performance that would,
      inter alia, benefit Gitschel.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    I. On
      June
      30, 2006, Gitschel filed suit against Itec and Merger in civil action No.
      381562, filed in the Superior Court of California, County of Stanislaus County
      (the “Gitschel Litigation”).

    

    J. Itec
      is
      seeking capital financing from outside sources of from $5,000,000
      to
      $12,000,000 (the “Financing”). Itec expects to receive the Financing within
      thirty days from the date hereof but does not warrant that the Financing will
      be
      forthcoming. Itec plans to use the Financing to, inter alia, pay all sums due
      to
      Rose hereunder.

    

    K. Itec,
      Rose and Gitschel are knowledgeable participants in the recycling processing
      business.

    

    In
      light
      of the foregoing, and without admitting any of the allegations of the Rose
      Litigation or the Gitschel Litigation, the parties agree as
      follows:

    

    1. Conditional
      Dismissal of Rose Litigation and Gitschel Litigation.
      Itec and
      Merger hereby agree to accept service of the summons, complaint and all other
      pleadings related to the Gitschel Litigation. Itec hereby acknowledges it was
      properly served with the summons and complaint related to the Rose Litigation,
      on May 18, 2006. Itec and Merger further agree to submit to the jurisdiction
      of
      the Superior Court of California, Stanislaus County with respect to the Gitschel
      Litigation. Itec further agrees to submit to the jurisdiction of the Superior
      Court of California, Stanislaus County with respect to the Rose Litigation.
      Upon
      the general appearance of Itec in the Rose Litigation and of Itec and Merger
      in
      the Gitschel Litigation, Rose and Gitschel shall notify the court of this
      Agreement as to both lawsuits and will request a conditional dismissal of the
      Rose Litigation and the Gitschel Litigation subject to Itec’s and Merger’s
      performance of their obligations under this Agreement. Upon dismissal, the
      Superior Court of California, County of Stanislaus shall retain jurisdiction
      of
      the Rose Litigation and Gitschel Litigation to enforce this settlement agreement
      pursuant to California Code of Civil Procedure Sections 664.6, et
      seq.

    

    2. Itec
      Payment to Rose.
      Itec
      shall pay Rose the total sum of $300,000 (the “Settlement Amount”) payable,
      subject to Section 3, below, in six installments of $50,000 commencing due
      on
      August 30,
      2006 and
      due on the 30th
      day of
      each month thereafter until the entire $300,000 shall have been paid in full.
      The Settlement Amount includes and discharges the Loan amount.

    

    3. Acceleration
      of Payment of Settlement Amount.
      Upon
      Itec’s achievement of its Financing (receipt of an aggregate amount of
      $5,000,000 or more in capital or subordinated debt from one or more persons
      after July 1, 2006), Itec shall forthwith pay the balance of the Settlement
      Amount that is theretofore unpaid to Rose.

    

    4. Itec
      Shares.
      Itec
      shall deliver to Gitschel 2,564,103 shares of Itec’s undiluted common stock
      forthwith upon execution of this Agreement. These shares shall be delivered
      with
      Piggyback Registration rights.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    5. Mutual
      Commercial Cooperation. Itec
      and
      Rose shall cooperate with one another to find and exploit business
      opportunities. Rose may, from time to time, present Itec with business
      opportunities such as opportunities to acquire raw materials for its processing
      and/or new or improved equipment, opportunities for new business relationships,
      and other business opportunities (“Business Opportunities”). In each instance,
      Itec and Rose shall agree upon the consideration due to Rose with respect to
      the
      Business Opportunity and Itec shall have no duty to compensate Rose except
      in
      the event that Rose and Itec agree upon seeking a Business Opportunity for
      Itec
      and upon a payment to Rose for services rendered in that effort. The parties
      acknowledge that Rose expects to be compensated for its efforts with respect
      to
      Business Opportunities upon Itec’s successful closing on each such Business
      Opportunity.

    

    6. Public
      Statements - No Disparagement.
      No party
      hereto shall make any disparaging statements regarding any other party hereto
      with regard to the matters leading up to this Agreement.

    

    7. Mutual
      Release. The
      parties hereto agree to release and discharge each other, and each of their
      respective partners, agents, employees, attorneys, representatives, and the
      successors, heirs and assigns of any of the preceding, from all sums of money,
      claims, demands, contracts, actions, debts, controversies, agreements, damages
      and causes of action whatsoever, whether known or unknown, suspected or
      unsuspected by them, which they now own, hold, have or claim to have or at
      any
      time heretofore owned, held or claimed to have held against each other, by
      reason of any matter or thing alleged or referred to, or in any way connected
      with, arising out of or related to any of the matters, acts, events or
      occurrences alleged or referred to in any of the pleadings on file in the Action
      or otherwise, except for the right to enforce Defendant's obligations to
      Plaintiff as set forth hereinabove. Notwithstanding the foregoing, this Release
      does not release claims Plaintiff may have against Defendant’s extended family
      but does release any claims Plaintiff may have against Defendant’s
      spouse.
      Upon
      delivery of the Itec Shares to Gitschel as provided at Section 4, above, the
      Merger Agreement is and shall be terminated and of no further force or
      effect.

    

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

    

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

    

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

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    10. No
      Waiver or Disclaimer of Warranties. The
      parties hereto agree that execution of this Agreement or any contemporaneous
      or
      subsequent agreements thereto do not constitute Itec’s waiver of its right as
      purchaser to exercise any and all warranties, express or implied, recognized
      by
      law in connection with its purchase of equipment and/or services from Rose.
      Furthermore, the parties hereto agree that that execution of this Agreement
      or
      any contemporaneous agreements thereto do not operate in any way to disclaim
      any
      and all warranties by Rose owing to Itec, whether express or implied, recognized
      by law, in connection with equipment and/or services provided by
      Rose.

    

    (i) Further,
      Gitschel and Rose do hereby affirmatively undertake, on a “best efforts” basis,
      to repair or have repaired, at no cost to Itec, any damaged, malfunctioning
      or
      non conforming equipment, including but not limited to, the Machinext/Pellenc
      Optical Sorter. 

    

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

    

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

    

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

    

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

    

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

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

    

    

    17. Ownership
      of Claim and Further Assurances.
      Rose
      warrants and represents that it is the sole and only obligor of all sums to
      be
      paid hereunder and that, upon payment of all said sums, Itec shall not be
      obligated to any person or entity for sums due for the purchase of the Equipment
      purchased from Rose pursuant to Machinex Technologies Inc.’s proposals
      MTI00253-2 and MTI00253-3 (Rose Invoices Nos. 112041 and 112070), for Getecha,
      Inc. invoices numbered 21351, 21352, and 21584 (Rose invoices Nos. 112034,
      112037, and 112102), and for the Equipment received by Itec and reflected on
      Rose Invoices Nos. 112072, 112098, 112108, 112101, 112099, 112100, and 112123.
      Rose indemnifies Itec against any claim by Getecha, Inc. and/or Machinex
      Technologies, Inc and/or against any third party for payment of amounts over
      and
      above the amounts heretofore paid and to be paid pursuant to this Agreement
      for
      the Equipment reflected in the invoices specified in the preceding sentence.
      

    

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

    

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

    

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

    

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

    

    22. Security
      Agreement as to goods obtained from Machinex Technologies,
      Inc.
      Itec
      confirms that Machinex Technologies, Inc.’s proposals MTI00253-2, MTI00253-3
      grant a valid and enforceable security interest to Machinex Technologies, Inc.
      and Rose in
      the
      goods which are the subject of these proposals under the California Commercial
      Code, and that such security interest secures Itec’s performance of this
      Agreement. In the event of a failure of Itec to perform any obligation under
      this Agreement, Rose
      may (in
      addition to any other remedies at law or otherwise) elect to foreclose upon
      said
      security interest by written notification to the agent for service of process
      (as identified by the Secretary of State of California’s web site) for Itec,
via
      certified first class U.S. mail. Itec further agrees to provide Rose
with
      immediate and unrestricted right to possession and title to the goods identified
      in the Machinex Technologies, Inc.’s proposals MTI00253-2 and MTI00253-3. Itec
      further agrees to waive all bonding, undertaking, or security requirements
      (applicable by law or contract) of Rose prior
      or
      subsequent to Rose’s
      taking
      of possession of the goods identified in the Machinex Technologies, Inc.’s
      proposals MTI00253-2 and MTI00253-3. This agreement shall similarly apply to
      any
      successors in interest to the goods identified in the Machinex Technologies,
      Inc.’s proposals MTI00253-2 and MTI00253-3. Each
      of
      the security interests referenced in this Section 21 shall be terminated upon
      payment in full of the amounts due hereunder by Itec. Rose shall cause
      termination statements to be filed as may be required to terminate such security
      interests. 
      

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    23. Security
      Agreement as to goods obtained from Getecha, Inc.
      Itec
      confirms that Getecha, Inc. invoices numbered 21351, 21352, and 21584, grant
      a
      valid and enforceable security interest to Rose Waste Systems, Inc. in the
      goods
      which are the subject of these proposals under the California Commercial Code,
      and that such security interest secures Itec’s performance of this Agreement. In
      the event of a failure of Itec to perform any obligation under this Agreement,
      Rose Waste Systems, Inc. may (in addition to any other remedies at law or
      otherwise) elect to foreclose upon said security interest by written
      notification to the agent for service of process (as identified by the Secretary
      of State of California’s web site) for Itec, via certified first class U.S.
      mail. Itec further agrees to provide Rose Waste Systems, Inc. with immediate
      and
      unrestricted right to possession and title to the goods identified in Getecha,
      Inc. invoices numbered 21351, 21352, and 21584. Itec further agrees to waive
      all
      bonding, undertaking, or security requirements (applicable by law or contract)
      of Rose Waste Systems, Inc. prior or subsequent to Rose Waste Systems, Inc.’s
      taking of possession of the goods identified in Getecha, Inc. invoices numbered
      21351, 21352, and 21584. This agreement shall similarly apply to any successors
      in interest to the goods identified in Getecha, Inc. invoices numbered 21351,
      21352, and 21584.
      Each
      of
      the security interests referenced in this Section 22 shall be terminated upon
      payment in full of the amounts due hereunder by Itec. Rose shall cause
      termination statements to be filed as may be required to terminate such security
      interests. 

    

    [Signature
      page to follow]

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

     

    
      	Dated:	 	 	 	 
	 	 	 	George Gitschel	 
	 	 	 	 	 
	Dated:	 	 	Rose
              Waste Systems	 
	 	 	 	 	 
	 	 	 	By George Gitschel	 
	 	 	 	
              Its
                President

            	 
	 	 	 	 	 
	Dated:	 	 	Itec
              Environmental Group	 
	 	 	 	 	 
	 	 	 	By Gary DeLaurentiis	 
	 	 	 	Its President	 
	Dated:	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	Dated:	 	 	 Itec
              Acquisitions, Inc.	 
	 	 	 	 	 
	 	 	 	
              By
                Gary DeLaurentiis

            	 
	 	 	 	
              Its
                President

            	 

    

     

     

    
 

    
      
        
        

      

      
        7

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