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Unassociated Document

    

      ITEC
        ENVIRONMENTAL GROUP, INC.

      

      INVESTOR
        RIGHTS AGREEMENT

      

      This
        Investor Rights Agreement (this “Agreement”)
        is
        made and entered into as of November ____, 2005 (the “Effective
        Date”)
        by and
        among Itec Environmental Group, Inc., a Delaware corporation (the “Company”)
        and
        the purchasers of Common Stock (the “Securities”)
        set
        forth on the Schedule of Purchasers to that certain Common Stock Purchase
        Agreement dated as of the date hereof (the “Purchasers”
        or the
“Investors”).

      

      RECITALS

      

      WHEREAS,
        in order to induce the Company to enter into that certain Common Stock Purchase
        Agreement (the “Purchase
        Agreement”)
        and to
        induce the Investors to invest in the Company pursuant to the Purchase
        Agreement, the parties hereto desire to enter into this Agreement and to
        provide
        registration and other rights to the Investors.

      

      NOW,
        THEREFORE, in consideration of the foregoing recitals and the mutual promises
        hereinafter set forth, the parties hereto agree as follows:

      

      AGREEMENT

      1. REGISTRATION
        RIGHTS.

      

      1.1 Definitions.
        For
        purposes of this Section 1:

      

      (a) Registration.
        The
        terms “register,”“registered,”
        and
“registration”
        refer
        to a registration effected by preparing and filing a registration statement
        in
        compliance with the Securities Act of 1933, as amended (the “Securities
        Act”),
        and
        the declaration or ordering of effectiveness of such registration
        statement.

      

      (b) Registrable
        Securities.
        The
        term “Registrable Securities”
        means:
        (i) any and all shares of the Company’s common stock (“Common
        Stock”)
        issued
        or issuable upon the conversion of Securities issued under the Purchase
        Agreement and (ii) any shares of Common Stock issued as (or issuable
        upon
        the conversion or exercise of any warrant, right or other security which
        is
        issued as) a dividend or other distribution with respect to, in exchange
        for or
        in replacement of, all such shares of Common Stock described in clause (i)
        of this subsection (b); excluding
        in all
        cases, however, any Registrable Securities sold by a person in a transaction
        in
        which rights under this Section 1 are not assigned in accordance with
        this
        Agreement or any Registrable Securities sold to the public or sold pursuant
        to
        Rule 144 promulgated under the Securities Act (“Excluded
        Shares”).

      

      (c) Registrable
        Securities Then Outstanding.
        “Registrable
        Securities then outstanding”
        shall
        mean the number of shares of Common Stock which are Registrable Securities
        and
        (1) are then issued and outstanding or (2) are then issuable
        pursuant
        to the exercise or conversion of then outstanding and then exercisable options,
        warrants or convertible securities.

      

      
        
          
          

        

        
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      (d) Holder.
        For
        purposes of this Section 1 and Section 2 hereof, the term
“Holder”
        or
“Holders”
        means
        any person or persons owning of record Registrable Securities that have not
        been
        sold to the public or pursuant to Rule 144 promulgated under the Securities
        Act or any assignee of record of such Registrable Securities to whom rights
        under this Section 1 have been duly assigned in accordance with this
        Agreement; provided,
        however,
        that
        for purposes of this Agreement, a record holder of Securities convertible
        into
        such Registrable Securities shall be deemed to be the Holder of such Registrable
        Securities. 

      

      (e) Form S-3.
        The
        term “Form S-3”
        means
        such form under the Securities Act as is in effect on the date hereof or
        any
        successor registration form under the Securities Act subsequently adopted
        by the
        SEC (as defined below) which permits inclusion or incorporation of substantial
        information by reference to other documents filed by the Company with the
        SEC.

      

      (f) SEC.
        The
        term “SEC”
        means
        the United States Securities and Exchange Commission.

      

      1.2 Piggyback Registrations.
        The
        Company shall notify all Holders of Registrable Securities in writing at
        least
        thirty (30) days prior to filing any registration statement under the Securities
        Act for purposes of effecting a public offering of securities of the Company
        (including, but not limited to, registration statements relating to secondary
        offerings of securities of the Company, but excluding
        registration statements relating to any registration under any employee benefit
        plan or a corporate reorganization) and will afford each such Holder an
        opportunity to include in such registration statement all or any part of
        the
        Registrable Securities then held by such Holder. Each Holder desiring to
        include
        in any such registration statement all or any part of the Registrable Securities
        held by such Holder shall, within twenty (20) days after receipt of the
        above-described notice from the Company, so notify the Company in writing,
        and
        in such notice shall inform the Company of the number of Registrable Securities
        such Holder wishes to include in such registration statement. If a Holder
        decides not to include all of its Registrable Securities in any registration
        statement thereafter filed by the Company, such Holder shall nevertheless
        continue to have the right to include any Registrable Securities in any
        subsequent registration statement or registration statements as may be filed
        by
        the Company with respect to offerings of its securities, all upon the terms
        and
        conditions set forth herein.

      

      (a) Underwriting.
        If a
        registration statement under which the Company gives notice under this
        Section 1.2 is for an underwritten offering, then the Company shall
        so
        advise the Holders of Registrable Securities. In such event, the right of
        any
        such Holder’s Registrable Securities to be included in a registration pursuant
        to this Section 1.2 shall be conditioned upon such Holder’s participation
        in such underwriting and the inclusion of such Holder’s Registrable Securities
        in the underwriting to the extent provided herein. All Holders proposing
        to
        distribute their Registrable Securities through such underwriting shall enter
        into an underwriting agreement in customary form with the managing underwriter
        or underwriter(s) selected for such underwriting. Notwithstanding any other
        provision of this Agreement, if the managing underwriter(s) determine(s)
        in good
        faith that marketing factors require a limitation of the number of shares
        to be
        underwritten, then the managing underwriter(s) may exclude shares (including
        Registrable Securities) from the registration and the underwriting, and the
        number of shares that may be included in the registration and the underwriting
        shall be allocated, first,
        to the
        Company, and second,
        to each
        of the Holders requesting inclusion of their Registrable Securities in such
        registration statement on a pro rata basis based on the total number of
        Registrable Securities then held by each such Holder. If any Holder disapproves
        of the terms of any such underwriting, such Holder may elect to withdraw
        therefrom by written notice to the Company and the underwriter, delivered
        at
        least ten (10) business days prior to the effective date of the registration
        statement. Any Registrable Securities excluded or withdrawn from such
        underwriting shall be excluded and withdrawn from the registration. For any
        Holder which is a partnership or corporation, the partners, retired partners
        and
        shareholders of such Holder, or the estates and family members of any such
        partners and retired partners and any trusts for the benefit of any of the
        foregoing persons shall be deemed to be a single “Holder,” and any pro rata
        reduction with respect to such “Holder” shall be based upon the aggregate amount
        of shares carrying registration rights owned by all entities and individuals
        included in such “Holder,” as defined in this sentence.

      

      
        
          
          

        

        
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      (b) Expenses.
        All
        expenses incurred in connection with a registration pursuant to this
        Section 1.2 (excluding underwriters’ and brokers’ discounts and
        commissions), including, without limitation all federal and “blue sky”
        registration and qualification fees, printers’ and accounting fees, fees and
        disbursements of counsel for the Company and the reasonable fees and
        disbursements of one (1) counsel for the selling Holder or Holders shall
        be
        borne by the Company.

      

      1.3 Obligations
        of the Company.
        Whenever required to effect the registration of any Registrable Securities
        under
        this Agreement, the Company shall, as expeditiously as reasonably
        possible:

      

      (a) prepare
        and file with the SEC a registration statement with respect to such Registrable
        Securities and use its best efforts to cause such registration statement
        to
        become effective, and, upon the request of the Holders of a majority of the
        Registrable Securities registered thereunder, keep such registration statement
        effective for up to ninety (90) days;

      

      (b) prepare
        and file with the SEC such amendments and supplements to such registration
        statement and the prospectus used in connection with such registration statement
        as may be necessary to comply with the provisions of the Securities Act with
        respect to the disposition of all securities covered by such registration
        statement;

      

      (c) furnish
        to the Holders such number of copies of a prospectus, including a preliminary
        prospectus, in conformity with the requirements of the Securities Act, and
        such
        other documents as they may reasonably request in order to facilitate the
        disposition of the Registrable Securities owned by them that are included
        in
        such registration;

      

      (d) use
        its
        best efforts to register and qualify the securities covered by such registration
        statement under such other securities or Blue Sky laws of such jurisdictions
        as
        shall be reasonably requested by the Holders, provided that the Company shall
        not be required in connection therewith or as a condition thereto to qualify
        to
        do business or to file a general consent to service of process in any such
        states or jurisdictions;

      

      
        
          
          

        

        
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      (e) in
        the
        event of any underwritten public offering, enter into and perform its
        obligations under an underwriting agreement, in usual and customary form,
        with
        the managing underwriter(s) of such offering (it being understood and agreed
        that, as a condition to the Company’s obligations under this clause (e),
        each Holder participating in such underwriting shall also enter into and
        perform
        its obligations under such an agreement);

      

      (f) notify
        each Holder of Registrable Securities covered by such registration statement
        at
        any time when a prospectus relating thereto is required to be delivered under
        the Securities Act of the happening of any event as a result of which the
        prospectus included in such registration statement, as then in effect, includes
        an untrue statement of a material fact or omits to state a material fact
        required to be stated therein or necessary to make the statements therein
        not
        misleading in the light of the circumstances then existing; and

      

      (g) furnish,
        at the request of any Holder requesting registration of Registrable Securities,
        on the date that such Registrable Securities are delivered to the underwriters
        for sale, if such securities are being sold through underwriters, or, if
        such
        securities are not being sold through underwriters, on the date that the
        registration statement with respect to such securities becomes effective,
        (i) an opinion, dated as of such date, of the counsel representing
        the
        Company for the purposes of such registration, in form and substance as is
        customarily given to underwriters in an underwritten public offering and
        reasonably satisfactory to a majority in interest of the Holders requesting
        registration, addressed to the underwriters, if any, and to the Holders
        requesting registration of Registrable Securities and (ii) a “comfort”
        letter dated as of such date, from the independent certified public accountants
        of the Company, in form and substance as is customarily given by independent
        certified public accountants to underwriters in an underwritten public offering
        and reasonably satisfactory to a majority in interest of the Holders requesting
        registration, addressed to the underwriters, if any, and to the Holders
        requesting registration of Registrable Securities.

      

      1.4 Furnish
        Information.
        It
        shall be a condition precedent to the obligations of the Company to take
        any
        action pursuant to Section 1.2 hereof that the selling Holders shall
        furnish to the Company such information regarding themselves, the Registrable
        Securities held by them and the intended method of disposition of such
        securities as shall be required to timely effect the registration of their
        Registrable Securities.

      

      1.5 Delay
        of Registration.
        No
        Holder shall have any right to obtain or seek an injunction restraining or
        otherwise delaying any such registration as the result of any controversy
        that
        might arise with respect to the interpretation or implementation of this
        Section 1.

      

      1.6 Indemnification.
        In the
        event any Registrable Securities are included in a registration statement
        under
        Section 1.2 hereof:

      

      (a) By
        the
        Company.
        To the
        extent permitted by law, the Company will indemnify and hold harmless each
        Holder, the partners, officers and directors of each Holder, any underwriter
        (as
        defined in the Securities Act) for such Holder and each person, if any, who
        controls such Holder or underwriter within the meaning of the Securities
        Act or
        the Securities Exchange Act of 1934, as amended, (the “Exchange
        Act”),
        against any losses, claims, damages, or liabilities (joint or several) to
        which
        they may become subject under the Securities Act, the Exchange Act or other
        federal or state law, insofar as such losses, claims, damages, or liabilities
        (or actions in respect thereof) arise out of or are based upon any of the
        following statements, omissions or violations (collectively a “Violation”):

      

      
        
          
          

        

        
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      (i) any
        untrue statement or alleged untrue statement of a material fact contained
        in
        such registration statement, including any preliminary prospectus or final
        prospectus contained therein or any amendments or supplements
        thereto;

      

      (ii) the
        omission or alleged omission to state therein a material fact required to
        be
        stated therein, or necessary to make the statements therein not misleading;
        or

      

      (iii) any
        violation or alleged violation by the Company of the Securities Act, the
        Exchange Act, any federal or state securities law or any rule or regulation
        promulgated under the Securities Act, the Exchange Act or any federal or
        state
        securities law in connection with the offering covered by such registration
        statement;

      

      and
        the
        Company will reimburse each such Holder, partner, officer or director,
        underwriter or controlling person for any legal or other expenses reasonably
        incurred by them, as incurred, in connection with investigating or defending
        any
        such loss, claim, damage, liability or action; provided,
        however,
        that
        the indemnity agreement contained in this subsection 1.6(a) shall
        not apply
        to amounts paid in settlement of any such loss, claim, damage, liability
        or
        action if such settlement is effected without the consent of the Company
        (which
        consent shall not be unreasonably withheld), nor shall the Company be liable
        in
        any such case for any such loss, claim, damage, liability or action to the
        extent that it arises out of or is based upon a Violation which occurs in
        reliance upon and in conformity with written information furnished expressly
        for
        use in connection with such registration by such Holder, partner, officer,
        director, underwriter or controlling person of such Holder.

      

      (b) By
        Selling Holders.
        To the
        extent permitted by law, each selling Holder will indemnify and hold harmless
        the Company, each of its directors, each of its officers who have signed
        the
        registration statement, each person, if any, who controls the Company within
        the
        meaning of the Securities Act, any underwriter and any other Holder selling
        securities under such registration statement or any of such other Holder’s
        partners, directors or officers or any person who controls such Holder within
        the meaning of the Securities Act or the Exchange Act, against any losses,
        claims, damages or liabilities (joint or several) to which the Company or
        any
        such director, officer, controlling person, underwriter or other such Holder,
        partner or director, officer or controlling person of such other Holder may
        become subject under the Securities Act, the Exchange Act or other federal
        or
        state law, insofar as such losses, claims, damages or liabilities (or actions
        in
        respect thereto) arise out of or are based upon any Violation, in each case
        to
        the extent (and only to the extent) that such Violation occurs in reliance
        upon
        and in conformity with written information furnished by such Holder expressly
        for use in connection with such registration; and each such Holder will
        reimburse any legal or other expenses reasonably incurred by the Company
        or any
        such director, officer, controlling person, underwriter or other Holder,
        partner, officer, director or controlling person of such other Holder in
        connection with investigating or defending any such loss, claim, damage,
        liability or action; provided,
        however,
        that
        the indemnity agreement contained in this subsection 1.6(b) shall not apply
        to
        amounts paid in settlement of any such loss, claim, damage, liability or
        action
        if such settlement is effected without the consent of the Holder, which consent
        shall not be unreasonably withheld; and provided further,
        that
        the total amounts payable in indemnity by a Holder under this Section 1.6(b)
        in
        respect of any Violation shall not exceed the net proceeds received by such
        Holder in the registered offering out of which such Violation
        arises.

      

      
        
          
          

        

        
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      (c) Notice.
        Promptly after receipt by an indemnified party under this Section 1.6
        of
        notice of the commencement of any action (including any governmental action),
        such indemnified party will, if a claim in respect thereof is to be made
        against
        any indemnifying party under this Section 1.6, deliver to the indemnifying
        party a written notice of the commencement thereof and the indemnifying party
        shall have the right to participate in, and, to the extent the indemnifying
        party so desires, jointly with any other indemnifying party similarly noticed,
        to assume the defense thereof with counsel mutually satisfactory to the parties;
        provided,
        however,
        that an
        indemnified party shall have the right to retain its own counsel, with the
        fees
        and expenses to be paid by the indemnifying party, if representation of such
        indemnified party by the counsel retained by the indemnifying party would
        be
        inappropriate due to actual or potential conflict of interests between such
        indemnified party and any other party represented by such counsel in such
        proceeding. The failure to deliver written notice to the indemnifying party
        within a reasonable time of the commencement of any such action, if prejudicial
        to its ability to defend such action, shall relieve such indemnifying party
        of
        any liability to the indemnified party under this Section 1.6, but
        the
        omission so to deliver written notice to the indemnifying party will not
        relieve
        it of any liability that it may have to any indemnified party otherwise than
        under this Section 1.6.

      

      (d) Defect
        Eliminated in Final Prospectus.
        The
        foregoing indemnity agreements of the Company and Holders are subject to
        the
        condition that, insofar as they relate to any Violation made in a preliminary
        prospectus but eliminated or remedied in the amended prospectus on file with
        the
        SEC at the time the registration statement in question becomes effective
        or the
        amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the
“Final
        Prospectus”),
        such
        indemnity agreement shall not inure to the benefit of any person if a copy
        of
        the Final Prospectus (i) was furnished to the indemnified party and
        (ii) was not furnished to the person asserting the loss, liability,
        claim
        or damage at or prior to the time such action is required by the Securities
        Act.

      

      (e) Contribution.
        In
        order to provide for just and equitable contribution to joint liability under
        the Securities Act in any case in which either (i) any Holder exercising
        rights under this Agreement, or any controlling person of any such Holder,
        makes
        a claim for indemnification pursuant to this Section 1.6 but it is
        judicially determined (by the entry of a final judgment or decree by a court
        of
        competent jurisdiction and the expiration of time to appeal or the denial
        of the
        last right of appeal) that such indemnification may not be enforced in such
        case
        notwithstanding the fact that this Section 1.6 provides for indemnification
        in such case, or (ii) contribution under the Securities Act may be
        required
        on the part of any such selling Holder or any such controlling person in
        circumstances for which indemnification is provided under this Section 1.6;
        then, and in each such case, the Company and such Holder will contribute
        to the
        aggregate losses, claims, damages or liabilities to which they may be subject
        (after contribution from others) in such proportion so that such Holder is
        responsible for the portion represented by the percentage that the public
        offering price of its Registrable Securities offered by and sold under the
        registration statement bears to the public offering price of all securities
        offered by and sold under such registration statement, and the Company and
        other
        selling Holders are responsible for the remaining portion; provided,
        however,
        that,
        in any such case, (A) no such Holder will be required to contribute
        any
        amount in excess of the public offering price of all such Registrable Securities
        offered and sold by such Holder pursuant to such registration statement and
        (B) no person or entity guilty of fraudulent misrepresentation (within
        the
        meaning of Section 11(f) of the Securities Act) will be entitled to
        contribution from any person or entity who was not guilty of such fraudulent
        misrepresentation.

      

      
        
          
          

        

        
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      (f) Survival.
        The
        obligations of the Company and Holders under this Section 1.6 shall
        survive
        the completion of any offering of Registrable Securities in a registration
        statement, and otherwise.

      

      1.7 Rule 144
        Reporting.
        With a
        view to making available the benefits of certain rules and regulations of
        the
        SEC which may at any time permit the sale of the Registrable Securities to
        the
        public without registration, after such time as a public market exists for
        the
        Common Stock of the Company, the Company agrees to:

      

      (a) make
        and
        keep public information available, as those terms are understood and defined
        in
        Rule 144 under the Securities Act, at all times after the effective
        date of
        the first registration under the Securities Act filed by the Company for
        an
        offering of its securities to the general public;

      

      (b) use
        its
        best efforts to file with the SEC in a timely manner all reports and other
        documents required of the Company under the Securities Act and the Exchange
        Act
        (at any time after it has become subject to such reporting requirements);
        and

      

      (c) as
        long
        as a Holder owns any Registrable Securities, to furnish to the Holder forthwith
        upon request a written statement by the Company as to its compliance with
        the
        reporting requirements of said Rule 144 (at any time after ninety
        (90) days
        after the effective date of the first registration statement filed by the
        Company for an offering of its securities to the general public), and of
        the
        Securities Act and the Exchange Act (at any time after it has become subject
        to
        the reporting requirements of the Exchange Act), a copy of the most recent
        annual or quarterly report of the Company and such other reports and documents
        of the Company as a Holder may reasonably request in availing itself of any
        rule
        or regulation of the SEC allowing a Holder to sell any such securities without
        registration (at any time after the Company has become subject to the reporting
        requirements of the Exchange Act).

      

      1.8 Termination
        of the Company’s Obligations.
        The
        Company shall have no obligations pursuant to Section 1.2 with respect
        to:
        (i) any request or requests for registration made by any Holder on
        a date
        more than two (2)
        years
        after the closing date of the first firmly underwritten public offering of
        Common Stock of the Company pursuant to a Registration Statement filed with,
        and
        declared effective by, the SEC under the Securities Act, on the terms and
        conditions approved by the Board of Directors and in which the Company receives
        gross proceeds of at least $10 million before deduction of underwriting
        discounts and expenses (an “Initial
        Public Offering”)
        or
        (ii) any Registrable Securities proposed to be sold by a Holder in
        a
        registration pursuant to Section 1.2 if, in the opinion of counsel
        to the
        Company, all such Registrable Securities proposed to be sold by a Holder
        may be
        sold in a three-month period without registration under the Securities Act
        pursuant to Rule 144 under the Securities Act.

      

      
        
          
          

        

        
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      1.9 Limitations
        on Subsequent Registration Rights.
        From
        and after the date of this Agreement, the Company shall not, without the
        prior
        written consent of the Holders of a majority of the Registrable Securities
        then
        outstanding, enter into any agreement with any holder or prospective holder
        of
        any securities of the Company that provides such holder or prospective holder
        with registration rights superior to the registration rights provided to
        the
        Investors pursuant to this Section 1.

      

      2. ASSIGNMENT
        AND AMENDMENT.

      

      2.1 Assignment.
        Notwithstanding anything herein to the contrary, the registration rights
        of a
        Holder under Section 1 and the information rights under Section 3
        may
        be assigned only to (i) a party who acquires all the Registrable Securities
        or (ii)(A) a shareholder, partner, member, or beneficiary of such
        Holder;
        (B) a spouse, child, parent or beneficiary of the estate of such Holder
        or
        (C) a trust for the benefit of the persons set forth in (A) or (B);
        provided,
        however,
        that no
        party may be assigned any of the foregoing rights unless the Company is given
        written notice by the assigning party at the time of such assignment stating
        the
        name, address and tax identification number of the assignee and identifying
        the
        securities of the Company as to which the rights in question are being assigned;
        and provided further
        that any
        such assignee shall receive such assigned rights subject to all the terms
        and
        conditions of this Agreement, including without limitation the provisions
        of
        this Section 2.

      

      2.2 Amendment
        of Rights.
        Any
        provision of this Agreement may be amended and the observance thereof may
        be
        waived (either generally or in a particular instance and either retroactively
        or
        prospectively), only with the written consent of the Company and Investors
        (and/or any of their permitted successors or assigns) holding shares of
        Registrable Securities and/or Common Stock. Any amendment or waiver effected
        in
        accordance with this Section 2.2 shall be binding upon each Investor,
        each
        Holder, each permitted successor or assignee of such Investor or Holder and
        the
        Company.

       

      3. INFORMATION
        AND BOARD RIGHTS.

      

      3.1 Financial
        Statements and Reports.
        So long
        as the Investors continue to hold Registrable Securities: As soon as practicable
        after the end of each fiscal year of the Company, and in any event within
        one
        hundred fifty (150) days thereafter, an unaudited consolidated balance sheet
        of
        the Company and its subsidiaries, if any, as of the end of such year and
        unaudited consolidated statements of income, shareholders’ equity and cash flows
        for such year, which year-end financial reports shall be in reasonable detail
        prepared in accordance with generally accepted accounting principles;
        and

      

      3.2 Board
        of Directors.
        At each
        election of directors of the Company, the parties hereby consent and agree
        to
        vote in favor of the following persons all shares of outstanding voting capital
        stock of the Company now held or subsequently acquired by the parties to
        elect:
        (i) Gary De Laurentiis, (ii) an individual selected by Gary de Laurentiis,
        (iii)
        Chester Aldridge, (iv) David Baker or his nominee and (v) Lance J. Baller.
        If
        any vacancy shall occur on the Board of Directors, all parties hereto shall
        take
        all necessary actions, including the holding of a meeting of the shareholders
        if
        required, to insure that the composition of the Board of Directors remains
        as
        set forth herein. The obligations set forth in this Section 3.3 shall
        terminate upon the closing of the Initial Public Offering.

      

      
        
          
          

        

        
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      3.3 Termination.
        The
        covenants set forth in this Section 3 shall terminate and be of no
        further
        force and effect after the closing of the Company’s Initial Public
        Offering.

      

      4. GENERAL
        PROVISIONS.

      

      4.1 Notices.
        All
        notices and other communications required or permitted hereunder shall be
        in
        writing and shall be deemed effectively given (i) upon actual delivery to
        the
        party to be notified, (ii) 24 hours after confirmed facsimile transmission,
        or
        (iii) one business day after deposit with a recognized overnight courier,
        addressed (a) if to the Purchaser, at the Purchaser’s address set forth on
        the Schedule of Purchasers in the Purchase Agreement, or at such other address
        as the Purchaser shall have furnished to the Company in writing upon 10 days’
        notice, (b) if to any other holder of any Registrable Securities,
        at such
        address as such holder shall have furnished the Company in writing upon 10
        days’
        notice or, until any such holder so furnishes an address to the Company,
        to and
        at the address of the last holder of such Registrable Securities who has
        so
        furnished an address to the Company or (c) if to the Company, at the
        address set forth in the signature page, or at such other address as the
        Company
        shall have furnished to the Purchaser upon 10 days’ notice.

      

      4.2 Entire
        Agreement.
        This
        Agreement, together with all the exhibits hereto, constitutes and contains
        the
        entire agreement and understanding of the parties with respect to the subject
        matter hereof and supersedes any and all prior negotiations, correspondence,
        agreements, understandings, duties or obligations between the parties respecting
        the subject matter hereof.

      

      4.3 Governing
        Law.
        This
        Agreement shall be governed in all respects by the internal laws of the State
        of
        California, without reference to principles of choice of law.

      

      4.4 Severability.
        If one
        or more provisions of this Agreement are held to be unenforceable under
        applicable law, the parties agree to renegotiate such provision in good faith.
        In the event that the parties cannot reach a mutually agreeable and enforceable
        replacement for such provision, then such provision(s) shall be excluded
        from
        this Agreement and the balance of the Agreement shall be interpreted as if
        such
        provision(s) were so excluded and shall be enforceable in accordance with
        its
        terms.

      

      4.5 Third
        Parties.
        Nothing
        in this Agreement, express or implied, is intended to confer upon any person,
        other than the parties hereto and their successors and assigns, any rights
        or
        remedies under or by reason of this Agreement.

      

      4.6 Successors
        and Assigns.
        Subject
        to the provisions of Section 2.1, the provisions of this Agreement
        shall
        inure to the benefit of, and shall be binding upon, the successors and permitted
        assigns of the parties hereto.

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      4.7 Captions.
        The
        captions to sections of this Agreement have been inserted for identification
        and
        reference purposes only and shall not be used to construe or interpret this
        Agreement. All references in this Agreement to sections, paragraphs, exhibits
        and schedules shall, unless otherwise provided, refer to sections and paragraphs
        hereof and exhibits and schedules attached hereto, all of which exhibits
        and
        schedules are incorporated herein by this reference.

      

      4.8 Counterparts.
        This
        Agreement may be executed in any number of counterparts, each of which shall
        be
        enforceable against the parties actually executing such counterparts, and
        all of
        which together shall constitute one instrument.

      

      4.9 Costs
        and Attorneys’ Fees.
        Notwithstanding any other provision herein, if any action at law or in equity
        is
        necessary to enforce or interpret the terms of this Agreement or the exhibits
        hereto, the prevailing party shall be entitled to reasonable attorneys’ fees,
        costs and disbursements in addition to any other relief to which such party
        may
        be entitled.

      

      4.10 Aggregation of Stock.
        All
        shares held or acquired by affiliated entities or persons shall be aggregated
        together for the purpose of determining the availability of any rights under
        this Agreement.

      

      

      

      

      

      [REST
        OF
        THIS PAGE INTENTIONALLY LEFT BLANK]

      

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

      IN
        WITNESS WHEREOF, the parties hereto have executed this Investor Rights Agreement
        as of the date and year first above written.

       

      
        	 	
                ITEC
                  ENVIRONMENTAL GROUP, INC.,

                a
                  Delaware corporation

                 

              
	 	
                By:
                  

              	
                 

                
                  

                

              
	 	
                Name:
                  

              	
                 

                
                  

                

              
	 	
                Title:
                  

              	
                 

                
                  

                

              
	 	
                Address:
                       

              	
                 

                
                  

                

              

      

      

      

      Solely
        as
        to Section 3.2:

       

      
        	
                Gary
                  DeLaurentiis

              	 	
                George
                  Gitschel

                 

              
	
                Signed:
                  

              	
                 

                
                  

                   

              	 	
                Signed:
                  

              	
                

                 
	
                Printed:
                  

              	
                 

                
                  

                    

              	 	
                Printed:
                  

              	
                

                 
	
                Title
                  
(if applicable): 

              	
                 

                
                  

                    

              	 	
                Title
                  
(if applicable): 

              	
                

                 
	
                Address:
                  

              	
                 

                
                  

                    

              	 	
                Address:
                  

              	
                

                 
	 	
                 

                
                  

                   

              	 	 	
                

                 
	 	 

                

              	 	 	
                

                 

      

      

       

      SIGNATURE
        PAGE TO INVESTOR RIGHTS
        AGREEMENT

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

      

      COUNTERPART
        SIGNATURE PAGE TO

      INVESTOR
        RIGHTS AGREEMENT

      

      

         

        
          	 	
                  INVESTOR:

                   

                   

                
	 	
                  
                    Signed:
                      

                  

                	
                   

                  
                    

                  

                
	 	
                  Printed:
                    

                	
                   

                  
                    

                  

                
	 	
                  
                    Title
                      
(if applicable): 

                  

                	
                   

                  
                    

                  

                
	 	 	 
	 	
                  Address:
                         

                	
                   

                  
                    

                  

                
	 	 	
                   

                  
                    

                     

                
	 	 	
                   

                  
                    

                     

                

        

        

        
 

      

      

      SIGNATURE
        PAGE TO INVESTOR RIGHTS AGREEMENTUnassociated Document

    

      COVENANT
        TO ADJUST

       

      This
        Covenant to Adjust (this “Agreement”) is entered into as of November ___, 2005,
        by and between ITEC ENVIRONMENTAL GROUP, INC., a Delaware corporation (the
        “Company”) and each certain purchaser (each a “Purchaser” and together the
“Purchasers”) with reference to the following:

       

      The
        Company is issuing Common Stock (the “Common Stock”) to the Purchasers pursuant
        to that certain Common Stock Purchase Agreement (“Purchase Agreement”) for a
        negotiated price of $0.14 per share (the “Original Purchase
        Price”).

      

      NOW,
        THEREFORE, the
        parties agree as follows:

      

      1. The
        Original Purchase Price shall be adjusted as follows:

      

      
        	 	
                (i)

              	
                If
                  the Efficiency Condition (as defined in the Purchase Agreement)
                  is not
                  satisfied on or prior to January 1, 2006, the Original Purchase
                  Price
                  shall be reduced to $0.12 per share.

              

      

      

      
        	 	
                (ii)

              	
                If
                  the Efficiency Condition is not satisfied on or prior to February
                  1, 2006,
                  the Original Purchase Price shall be reduced to $0.10 per
                  share.

              

      

      

      
        	 	
                (iii)

              	
                If
                  the Efficiency Condition is not satisfied on or prior to March
                  1, 2006,
                  the Original Purchase Price shall be reduced to $0.08 per
                  share.

              

      

       

      2. Any
        reduction in the Original Purchase Price with respect to any Purchaser shall
        be
        implemented, at the option of such Purchaser: (i) without reducing such
        Purchaser’s aggregate purchase price, by the issuance of addition shares, or
        (ii) without increasing the number of shares purchased by such Purchaser,
        by the
        refund of the excess Original Purchaser Price theretofore paid.

      

      IN
        WITNESS WHEREOF, the parties have executed this Agreement as of the date
        first
        written above.

       

      
        
           

          
            
              	 	 	 
	 	
                      ITEC
                        ENVIRONMENTAL GROUP, INC.,

                      a
                        Delaware Corporation

                    
	 
 	 
 	 
 
	 	By:  	
                       

                      
                        

                      

                       

                    
	 	Name:	
                       

                      
                        

                         

                    
	 	Title: 	
                       

                      
                        

                         

                    
	 	
                    

            

             

            
              
                	 	 	 
	 

                        AGREED
                          AND ACCEPTED:

                      	 
	 
 	 
 	 
 
	PURCHASER:	
                         

                        
                          

                        

                         

                      	
                         

                         

                      
	 	 	 
	By:  	
                         

                        
                          

                        

                         

                      	
                         

                         

                      
	Name:	
                         

                        
                          

                        

                         

                      	
                         

                         

                      
	Title:

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