Document:

EX 10.1

    EXHIBIT
      10.1

    

    EMPLOYMENT
      AGREEMENT

    

    This
      Employment Agreement dated as of October 6, 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
Mario
      Sandoval
      (“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
      interests 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      canceled and void and/or are deemed to be superseded by this final written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 effective on or
      before October 19, 2006 (the “Effective
      Date”).
      Executive’s employment shall be deemed to have commenced on or before November
      6, 2006 and shall continue until terminated in accordance with Section 5 hereof
      (the “Employment
      Term”).
      This
      Agreement shall be deemed definitive upon the Effective Date.

    

    
      
        2.2. 
          Position
          and Primary Responsibility.
          

      

    

    

    (a) The
      Executive shall serve as Chief Operating Officer and Executive Vice President
      of
      Operations.

    

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

    

    2.3. 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

      
        
           

        

        
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    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 4, 8 and 10 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 this Section 3.1 and/or 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 an executive, for any position other
      than the Chief Executive Officer position, with an annual base salary that
      exceeds the Base Salary (the “New
      Executive Salary”),
      then
      Executive’s Base Salary shall be increased to a Base Salary equal to a salary no
      less than five percent (5%) more than the New Executive Salary. In no event
      shall Executive’s Base Salary be (i) decreased pursuant to the preceding
      sentence; or (ii) increased to a total dollar amount greater than the Chief
      Executive Officer’s base salary. 

    

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

    

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

    

    3.4. Cash
      Bonuses.
      Executive shall be eligible for a bonus entitlement during each calendar year
      (or portion thereof) of the Employment Term of no less than fifty percent (50%)
      but 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

      
        
           

        

        
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    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 15th
      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 five percent (5%) of the Common
      Stock
      Equivalents (as defined below) (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”).
      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).

    

    (b) The
      Company, at its expense, has engaged an independent appraiser to determine
      the
      fair market value per share (the “Appraised
      Value”)
      of
      Common Stock issuable to Executive under this Section 3.6, at the respective
      dates of issuance 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

    
      
         

      

      
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    ___________($___________),
      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) the 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) Executive1s 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 five percent (5%) 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 (10) 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 five percent (5%) 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; and

    

    (z) the
      Restricted Shares and Initial Options (if any) shall vest on the following
      schedule (i) the number of Restricted Shares equal to two and one half percent
      (2.5%) of the total number of Common Stock Equivalents outstanding on the
      Original Issue Date shall vest immediately upon issuance (the “Initially
      Vested Shares”);
      (ii)
      the number of Restricted Shares (or all of the remaining unvested Restricted
      Shares that Executive then holds if such number is less than one and one quarter
      percent (1.25%) 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 one and one quarter percent (1.25%)
      of
      the total number of Common Stock Equivalents outstanding on such date), in
      the
      aggregate, equaling one and one quarter percent (1.25%) of the total number
      of
      Common Stock Equivalents outstanding on and as of the True Up Date shall vest
      on
      such date and (iii) any remaining unvested Restricted Shares and Initial Options
      as of the True Up Date shall vest 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) 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 True Up Date. 

    

    (d) Subject
      to Section 3.6(b) 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
      five percent (5%) of the Common Stock Equivalents outstanding on the True Up
      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 (i) the sum of the number
      of
      Restricted Shares plus the Initial Option Shares from (ii) a number of shares
      that equals five percent (5%) of the Common Stock Equivalents outstanding on
      the
      True Up 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 (i) a number
      of
      shares that equals five percent (5%) of the Common Stock Equivalents outstanding
      on the True Up Date (ii) 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.

    

    (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

      
        
           

        

        
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    such
      shares on any and all trading markets or stock exchanges as the Company1s 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
      C
      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
      A.

    

    3.7 Relocation
      Expenses. In
      connection with the employment of Executive, the Company shall provide
      relocation expenses in the amount of One Hundred Thousand Dollars $100,000
      (the
“Relocation
      Expenses”)
      in
      connection with Executive’s move to a new permanent residence. The Relocation
      Expenses shall be paid to Executive on June ___, 2007. Executive shall only
      receive Relocation Expenses upon completion of Executive’s relocation to a new
      permanent residence.

     

    (a) Executive
      may, at his discretion, elect to convert, via written notice to the Company
      within thirty (30) days of the Effective Date, the full amount of the Relocation
      Expenses into six (6) Units, as defined in and pursuant to the terms of the
      Company's 2006 Private Placement Memorandum (attached hereto as Exhibit
      B).
      Each
      Unit
      shall consist of (a) a ten percent (10%) convertible debenture in the initial
      principal amount of Twenty-Five Thousand Dollars ($25,000) and (b) a warrant
      to
      purchase seventy five thousand (75,000) shares of restricted common stock of
      the
      Company at an exercise price of Six Cents ($0.06) per share.

    

    (b) In
      the
      event that Executive is terminated pursuant to Section 5 prior to the first
      anniversary of the Effective Date, the Relocation Expenses or the conversion
      of
      the Relocation Expenses shall be subject to forfeiture.

      
        
           

        

        
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    3.8 Travel
      Expenses. In
      connection with the employment of Executive, the Company shall provide travel
      expenses in the amount of Two Thousand Dollars ($2,000) (the “Travel
      Expenses”)
      every
      month for Executive’s costs of traveling from Denver, Colorado to the Company’s
      offices in Riverbank, California through the duration of the Employment Term.
      

    

    3.9 Temporary
      Housing. The
      Company will employ its best efforts to locate and procure temporary housing
      (the “Temporary
      Housing”),
      satisfactory to both the Company and the Executive, at no cost to the Executive
      for the exclusive use of the Executive while working at the Company’s Riverbank,
      California offices. The Temporary Housing will be made available to the
      Executive no later than thirty (30) days beyond the effective date of the
      Agreement and will be provided through the duration of the Employment Term.
      

    

    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. 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”):

    

    5.1. 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 5.1 being referred to herein as
      termination for “Death
      or Disability”).
      Upon
      the Death of Executive, Executive’s heirs or assigns shall be entitled to (i)
      fifty percent (50%) of the Base Salary and (ii) on pro-rated amount of any
      and
      all outstanding Executive Shares that Executive is entitled to receive from
      the
      Effective Date to the date of Death (the “Earnings
      Entitlement”).
      In
      the event Executive commits suicide, Executive’s heirs or assigns shall not be
      entitled to the Earnings Entitlement.

    

    5.2. 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 5.2 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. 

      
        
           

        

        
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    5.3. 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
      5.3 being referred to herein as “Voluntary”
      termination).

    

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

    

    5.5. 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 5.5 being referred to herein as termination “Without
      Cause”).

    

    5.6. Other
      Remedies.
      Termination pursuant to Section 5.2 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 5.4
      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.

    

    5.7. Salary
      Continuation During Disability.
      Notwithstanding Section 5.1 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

      
        
           

        

        
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    (including,
      without limitation, bonuses, options and vesting) herein, for the duration
      of
      the disability, or six (6) months, whichever is less. 

    

    6. Severance
      and Termination.

    

    6.1. 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 5.1 above, or Executive’s Voluntary termination of
      employment hereunder in accordance with Section 5.3 above, or a termination
      of
      Executive’s employment hereunder for Cause in accordance with Section 5.4 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 the Earnings Entitlement 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 15.1 below. Provided further, in the event of a termination of
      Executive’s employment hereunder for Cause in accordance with Section 5.4 above,
      Executive shall tender back to the Company all unexercised options granted
      to
      Executive by the Company in connection with Executive’s employment.

    

    6.2. 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 5.2 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

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

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

    

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

    

    (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).

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

    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 6.2 shall be made no earlier than six (6) months after the
      Termination Date.

    

    7. Severance
      Conditioned on Release of Claims.
      The
      Company’s obligation to provide Executive with the Severance Payments set forth
      in Section 6.2 is contingent upon Executive’s execution of a release of claims
      in favor of the Company. Any release of claims shall not include any
      independently verifiable criminal acts or civil fraud committed by either the
      Company and/or its officers or directors.

    

    8. Non-competition,
      Non-solicitation.
       

    

    8.1 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.

    

    8.2 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.

    

    8.3 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.

    

    8.4 Public
      Investments.
      The
      provisions of Section 8.1 through 8.3, 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.

    

    9. 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

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

    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.

    

    10. Confidential
      Information and Trade Secrets.

    

    10.1
       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). 

    

    10.2 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-

          
            

          

        

        
           

        

      

    11.
       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.

    

    12.
       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 Bylaws 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.

    

    13.
       Notice.
      All
      notices and other communications under this Agreement shall be in writing and
      shall be delivered personally or mailed by registered or certified mail, return
      receipt requested, and shall be deemed given when so delivered or mailed, to
      a
      party at his or its address as follows (or at such other address as a party
      may
      designate by notice given hereunder):

    

    

    If
      to
      Executive:

    Mario
      Sandoval

    _______________________

    _______________________

    

    With
      a
      copy to:

    _______________________

    _______________________

    _______________________

    _______________________

    

    If
      to the
      Company:

    Itec
      Environmental Group, Inc.

    P.O.
      Box
      760

    Riverbank,
      CA 95367 

    

      With
      a
      copy to:

    David
      M.
      Otto

    The
      Otto
      Law Group, PLLC

    601
      Union
      St., Suite 4500

    Seattle,
      WA 98101

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

    14.
       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.

    

    15.
       Miscellaneous.

    

    15.1 Post
      Termination Obligations.
      Notwithstanding the termination of Executive’s employment hereunder, the
      provision(s) of Section(s) “3.6(e),” “5,” “6,” “7,” “9,” “10,” “12” and “14”
shall survive the Termination Date.

    

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

    

    15.3 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

      
        
           

        

        
          -14-

          
            

          

        

        
           

        

      

    are
      deemed to be severable, so that unenforceability or invalidity of any single
      provision will not affect the remaining provision(s).

    

    15.4 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.

    

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

    

    15.6 Variation.
      Subject
      to Section 15.8, 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.

    

    15.7 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.

    

    15.8 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.

    

    15.9 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.

    

    15.10 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.

    

    15.11 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. 

    

    15.12 Section
      409A Matters.
      It is
      the intention of the parties that no payment or entitlement pursuant to this
      Agreement will give rise to any adverse tax consequences to the Executive under
      26 U.S.C. § 409A (“409A”).
      The
      Agreement shall be interpreted to that end and, consistent with that objective
      and notwithstanding any provision herein to the contrary, the Company shall
      indemnify Executive from any adverse tax consequences, penalties and/or interest
      thereon that may arise under 409A, and the Company may unilaterally take any
      action it

      
        
           

        

        
          -15-

          
            

          

        

        
           

        

      

    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]

      
        
           

        

        
          -16-

          
            

          

        

        
           

        

      

    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:

    

    MARIO
      SANDOVAL

    

    

    

    _____________________________________

    Mario
      Sandoval

      
        
           

        

        
          -17-

          
            

          

        

        
           

        

      

    Exhibit
      A

    

    Restricted
      Stock Agreement

    

    This
      Restricted Stock Agreement (the “Agreement”)
      is
      made and entered into as of October 6, 2006 (the “Effective
      Date”)
      by and
      between Itec Environmental Group, Inc., a Delaware corporation (the
“Company”),
      and
      Mario Sandoval (“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 October 6, 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 that amount of shares (the “Shares”) of the Company’s
      common stock (“Common Stock”) equal to five percent (5%) of total number of
      Common Stock Equivalents (as
      defined in the Employment Agreement).
      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
      A
      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.

      
        
           

        

        
          -18-

          
            

          

        

        
           

        

      

    3. Repurchase
      and Vesting.

    

    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 and a half percent (2.5%) of the total number
      of
      Common Stock Equivalents
      outstanding
      on the
      Original Issue Date (as
      defined in the Employment Agreement)
      shall
      vest immediately upon issuance (the “Initially
      Vested Shares”);
      (ii)
      the number of Shares (or all of the remaining unvested Shares that Stockholder
      then holds if such number is less than one and one quarter percent (1.25%)
      of
      the total number of Common Stock Equivalents
      outstanding on such date)
      equaling one and one quarter percent (1.25%) of the total number of Common
      Stock
      Equivalents
      outstanding
      on and
      as of the True Up Date (as defined in the Employment Agreement) shall vest
      on
      such date and (iii) any remaining unvested Shares as of the True Up Date shall
      vest 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. 

    

    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
      B

      
        
           

        

        
          -19-

          
            

          

        

        
           

        

      

    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
      C
      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 with the 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,

      
        
           

        

        
          -20-

          
            

          

        

        
           

        

      

    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.

    

    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)

      
        
           

        

        
          -21-

          
            

          

        

        
           

        

      

    -
      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.

               

               

              By:
                ________________________________

              Its:
                ________________________________

            	
              STOCKHOLDER

               

               

              ______________________________

              Name:
                Mario Sandoval

            

    

    

    

    LIST
      OF EXHIBITS

    

    Exhibit
      A: Stock
      Power and Assignment of Uncertificated Securities

    

    Exhibit
      B: Irrevocable
      Proxy

    

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

    
      
        
           

        

        
          -22-

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
      A

    

    Stock
      Power and Assignment

    of
      Uncertificated Securities

    

    FOR
      VALUE
      RECEIVED and pursuant to that certain Restricted Stock Agreement dated as of
      October ____, 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)

     

    

    Instructions:
      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.

    
      
        
           

        

        
          -23-

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
      B

    

    Irrevocable
      Proxy

    

    THE
      UNDERSIGNED STOCKHOLDER, being the owner of     
      shares
      of common stock (the “Stock”) of ITEC ENVIRONMENTAL GROUP, INC. (the “Company”)
      does hereby grant to      
      an
      irrevocable and unlimited proxy (the “Proxy”) and hereby appoints      
      his
      attorney-in-fact to vote the Stock in connection with any shareholder meeting
      of
      the Company. 

    

    IN
      WITNESS WHEREOF, I have executed this proxy this __________ day
      of
      _______________,
      2006.

    

     

    

    STOCKHOLDER

     

     

    ___________________________________

    (Signature)

     

     

    ___________________________________

    (Please
      Print Name)

    
      
         

      

      
        -24-

        
          

        

      

      
         

      

    

     

    EXHIBIT
      C

    

    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.

    
      
         

      

      
        -25-

        
          

        

      

      
         

      

    

    Exhibit
      B

    Private
      Placement Memorandum

    
      
         

      

      
        -26-

        
          

        

      

      
         

      

    

    Schedule
      C

     

     

     

    
      
         

      

      
        -27-EXHIBIT
      4.1

    

    INTREPID
      TECHNOLOGY & RESOURCES, INC.

    2006
      CONSULTANT’S COMPENSATION PLAN

     

     

    ARTICLE
      1

    Purpose
      and Adoption of Plan

     

    1.1  Purpose.
      The purpose of the Intrepid Technology & Resources 2006 Consultant’s
      Compensation Plan (the “Plan”) is to compensate those consultants who provide
      services to Intrepid Technology & Resources, Inc. (the “Company”), and
      accept as payment for such services shares of the Company’s common stock $.005
      par value.

     

    1.2  Adoption.
      The Plan has been approved by the Board of Directors of the Company to be
      effective as of October 16, 2006 (the “Effective Date”) and shall remain in
      effect until terminated by the Board of Directors of the Company or all the
      common stock reserved for issuance under the Plan has been utilized as payment
      for consultant services pursuant to the Plan.

     

    ARTICLE
      2

    Definitions

     

    For
      the
      purposes of this Plan, the following terms shall have the following
      meanings:

     

    2.1  Agreement.
      Means a written agreement between the Company and a consultant who has agreed
      to
      participate in the Plan and take shares as payment for services.

     

    2.2  Administrator.
      Means the Chief Executive Officer of the Company.

     

    ARTICLE
      3

    Administration

     

    3.1  Administrator.
      The Plan shall be administrated by the Administrator, who shall have exclusive
      and final authority in each determination or other action affecting the Plan
      and
      the participants. The Administrator shall have sole discretionary authority
      to
      interpret the Plan, to establish and modify administrative rules and impose
      such
      conditions and restrictions as he deems appropriate and to fix a number of
      shares to be issued a participant pursuant to the Plan.

     

    ARTICLE
      4

    Shares

     

    4.1  Number
      of
      Shares Issuable. The total number of shares issued under the Plan shall be
      8,000,000 shares of the Company’s common stock, subject to adjustment in
      accordance with Section 4.2.

     

    4.2  Adjustment.
      The number and kind of shares available for issuance subsequently granted under
      the Plan and the maximum number of shares with respect to which shares may
      be
      issued shall be appropriately adjusted to reflect any stock dividends, stock
      split, combination or exchange of shares, merger, consolidation, or other change
      in capitalization with a similar substantive effect upon the Plan. The
      Administrator shall have sole power and discretion to determine the amount
      of
      adjustment to be made in each case.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    ARTICLE
      5

    Participation

     

    5.1  Eligible
      Participants. Participants in the Plan shall be non-employee consultants to
      the
      Company and its subsidiaries as the Administrator in his sole discretion may
      designate from time to time. In order to be eligible, a participant must enter
      into a written consulting agreement with the Administrator on behalf of the
      Company for the providing of such services and agree to become a participant
      in
      the Plan and accept shares of common stock for such services as provided in
      such
      consulting agreement.

     

    ARTICLE
      6

    Miscellaneous

     

    6.1  Governing
      Law. All determinations made and actions taken pursuant to the Plan shall be
      governed by the laws of the State of Idaho

     

    6.2  Captions
      (Section Headings) used in the Plan should not be deemed to limit, characterized
      or effect any provisions of the Plan. 

     

    6.3  Severability.
      Whenever possible, each provision and plan and every contract thereunder shall
      be interpreted in a manner as to be effected and valid under applicable
      law.

     

    ARTICLE
      7

    Amendment
      and Termination

     

    7.1  The
      Board
      of Directors shall have complete power and authority to amend and terminate
      the
      Plan at any time without authorization or approval of the Company’s shareholders
      provided that no termination or amendment may, without the consent of the
      participant, alter or amend an outstanding contract. No shares issued under
      the
      Plan shall be affected after such termination and any shares issued prior to
      the
      termination of the Plan shall be treated as if such Plan had not been
      terminated.

     

    

      
        
           

        

        
          2

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