Document:

Unassociated Document

    THE
      SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE UNITED
      STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE
      PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED
      BY
      THE REGISTERED HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON
      STATUTORY EXEMPTIONS UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE
      SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
      ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
      1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT.

     

    

    

    PROMISSORY
      NOTE

    

    Oakdale,
      California

    August
      ___, 2005

    

    FOR
      VALUE
      RECEIVED, ITec Environmental Group, Inc., a Delaware corporation ("Borrower"),
      hereby promises to pay to the order of ___________________ ("Lender"),
      in
      lawful money of the United States at the address of Lender set forth herein,
      the
      principal amount of $______________ (the “Loan”),
      together with Interest. This Promissory Note ("Note")
      has
      been executed by Borrower on the date set forth above (the "Effective
      Date")
      pursuant to the Loan Agreement entered into as of the date hereof between Lender
      and Borrower (the "Loan
      Agreement").
      Capitalized terms use but not defined herein shall have the meanings assigned
      to
      such terms in the Loan Agreement.

    

    1.  Interest.
      The
      Loan shall bear interest at the Interest Rate from the Effective Date and
      continuing until payment in full of the Loan. Upon the occurrence of an Event
      of
      Default and for so long as such Event of Default continues, Interest shall
      accrue on the outstanding Loan amount at the Default Interest Rate.

    

    2.  Maturity
      Date.
      Subject
      to Section 3, all or any portion of the Loan, all accrued Interest thereon
      and
      all other sums due hereunder, shall be due and payable on demand by Lender
      on
      the Maturity Date.

    

    3.  Conversion.
      In
      Lender’s discretion, at any time prior to the consummation of the Private
      Placement, Lender may convert all or any portion of the outstanding principal
      amount of this Note as provided in Section 8.7(a) of the Loan Agreement of
      even
      date herewith.

    

    4.  Application
      of Payments.
      

    

    4.1.  Except
      as
      otherwise expressly provided herein, payments under this Note shall be applied
      (i) first to the repayment of any sums incurred by Lender for the payment of
      any
      expenses in enforcing the terms of this Note, (ii) then to the payment of the
      Default Interest Rate, (iii) then to the payment of the Interest Rate, and
      (iv)
      then to the reduction of the Loan.

    

    4.2.  Upon
      payment in full of the Loan and applicable accrued and unpaid Interest thereon,
      this Note shall be marked "Paid in Full" and returned to Borrower.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.  Waiver
      of Notice.
      Borrower hereby waives diligence, notice, presentment, protest and notice of
      dishonor.

    

    6.  Transfer.
      This
      Note may be transferred by Lender at any time, provided that such transfer
      complies with applicable securities laws.

    

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

    

    7.1.  The
      failure to make when due any payment described in this Note or the Loan
      Agreement, whether on or after the Maturity Date, by acceleration or otherwise;
      and

    

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

     

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

    

    Upon
      the
      occurrence of any Event of Default that is not cured within any applicable
      cure
      period, if any, Lender may elect, by written notice delivered to Borrower,
      to
      take at any time any or all of the following actions: (i) declare this Note
      to
      be forthwith due and payable, whereupon the entire unpaid Loan, together with
      all accrued and unpaid Interest thereon (including the Default Interest Rate),
      and all other cash obligations hereunder, shall become forthwith due and
      payable, without presentment, demand, protest or any other notice of any kind,
      all of which are hereby expressly waived by Borrower, anything contained herein
      to the contrary notwithstanding, and (ii) exercise any and all other remedies
      provided hereunder or available at law or in equity. 

    

    8.  Miscellaneous.

    

    8.1.  Successors
      and Assigns.
      Subject
      to the exceptions specifically set forth in this Note and the Loan Agreement,
      the terms and conditions of this Note shall inure to the benefit of and be
      binding upon the respective executors, administrators, heirs, successors and
      permitted assigns of the parties. This Note (or a portion hereof) may be
      assigned by Lender without the consent of Borrower.

     

    8.2.  Loss
      or Mutilation of Note.
      Upon
      receipt by Borrower of evidence satisfactory to Borrower of the loss, theft,
      destruction or mutilation of this Note, together with indemnity reasonably
      satisfactory to Borrower, in the case of loss, theft or destruction, or the
      surrender and cancellation of this Note, in the case of mutilation, Borrower
      shall execute and deliver to Lender a new promissory note of like tenor and
      denomination as this Note.

     

    8.3.  Notices.
      Any
      notice, demand, offer, request or other communication required or permitted
      to
      be given pursuant to the terms of this Note shall be in writing and shall be
      deemed effectively given the earlier of (i) when received, (ii) when delivered
      personally, (iii) one business day after being delivered by facsimile (with
      receipt of appropriate confirmation), (iv) one business day after being
      deposited with an overnight courier service, or (v) four days after being
      deposited in the U.S. mail, First Class with postage prepaid, and addressed
      to
      the recipient at the addresses set forth below unless another address is
      provided to the other party in writing:

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    If
      to
      Borrower, to:

    

    ITec
      Environmental Group, Inc.

    5300
      Claus Road, Box 760

    Riverbank,
      CA 95367

    Attn: Gary
      M.
      De Laurentiis

    Fax: (209)
      881-3529

    

    with
      a
      copy to:

    

    The
      Otto
      Law Group, PLLC

    601
      Union
      Street, Suite 4500

    Seattle,
      WA 98101

    Attn:
       David
      M.
      Otto

    Fax: (206)
      262-9513

    

    if
      to
      Lender, to:

    

    As
      set
      forth on the Schedule

    of
      Lenders in the Loan Agreement

     

    8.4 Governing
      Law.
      This
      Note shall be governed in all respects by the laws of the State of California
      as
      applied to agreements entered into and performed entirely within the State
      of
      California by residents thereof, without regard to any provisions thereof
      relating to conflicts of laws among different
      jurisdictions.

    

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

    

    8.6 Remedies;
      Costs of Collection; Attorneys' Fees.
      No
      delay or omission by Lender in exercising any of its rights, remedies, powers
      or
      privileges hereunder or at law or in equity and no course of dealing between
      Lender and the undersigned or any other person shall be deemed a waiver by
      Lender of any such rights, remedies, powers or privileges, even if such delay
      or
      omission is continuous or repeated, nor shall any single or partial exercise
      of
      any right, remedy, power or privilege preclude any other or further exercise
      thereof by Lender or the exercise of any other right, remedy, power or privilege
      by Lender. The rights and remedies of Lender described herein shall be
      cumulative and not restrictive of any other rights or remedies available under
      any other instrument, at law or in equity. If an Event of Default occurs,
      Borrower agrees to pay, in addition to the Loan and Interest payable thereon,
      reasonable attorneys' fees and any other reasonable costs incurred by Lender
      in
      connection with its pursuit of its remedies under this Note.

    *
      * * *
      * 

    
      
        
           

        

         

      

      
        3

        
          

        

      

      
         

        
        

      

    

    

    

    IN
      WITNESS WHEREOF, Borrower has caused this Note to be signed on the Effective
      Date.

    

    

    BORROWER:

    

    ITEC
      ENVIRONMENTAL GROUP, INC.

    

    

    By: _______________________________ 

            Gary
      M.
      De Laurentiis 

      Chief
      Executive OfficerUnassociated Document

    The
      securities represented by this Warrant and issuable upon exercise hereof have
      not been registered under the Securities Act of 1933, as amended (the "Act"),
      or
      under the provisions of any applicable state securities laws, but have been
      acquired by the registered holder hereof for purposes of investment and in
      reliance on statutory exemptions under the Act, and under any applicable state
      securities laws. These securities and the securities issued upon exercise hereof
      may not be sold, pledged, transferred or assigned, nor may this Warrant be
      exercised, except in a transaction which is exempt under the provisions of
      the
      Act and any applicable state securities laws or pursuant to an effective
      registration statement.

     

    COMMON
      STOCK PURCHASE WARRANT

     

    Date
      of
      Issuance: August ___, 2005Certificate
      No. W-____

     

    For
      value
      received, ITec Environmental Group, Inc., a Delaware corporation (the
      "Company"),
      hereby grants to ________________, and he/she/its transferees and assigns
      ("Buyer"),
      the
      right to purchase from the Company a total of ______________ shares of the
      Company's common stock, par value $.001 per share ("Common
      Stock"),
      at a
      price per share equal to $.13 (the "Initial
      Exercise Price").
      The
      exercise price and number of shares of Common Stock issuable upon exercise
      of
      this Warrant (the “Warrant
      Shares”)
      (and
      the amount and kind of other securities) shall be subject to adjustment as
      provided in Section 2 hereof. This Warrant is being issued in connection with
      the Loan Agreement between Buyer and the Company of even date herewith (the
      "Loan
      Agreement").
      Certain capital-ized terms used herein are defined in Section 4 hereof.

     

    This
      Warrant is subject to the following provisions: 

     

    SECTION
      1.   Exercise
      of Warrant.
      

     

    (a)  Terms
      of Warrants; Exercise Period.
      Subject
      to the terms of this Agreement, the Registered Holder shall have the right,
      commencing on the date hereof and expiring on the 10 year anniversary hereof
      (the "Expiration
      Date"),
      to
      exercise this Warrant, in whole or in part, and receive from the Company the
      number of Warrant Shares which the Registered Holder may at the time be entitled
      to receive on exercise of this Warrant and payment of the Exercise Price then
      in
      effect for the Warrant Shares. To the extent not exercised prior to the
      Expiration Date, this Warrant shall become void and all rights thereunder and
      all rights in respect thereof under this Agreement shall cease as of such
      time.

     

    (b)  Exercise
      Procedure.

     

    (i)  This
      Warrant shall be deemed to have been exer-cised on the date specified in a
      written notice from the Registered Holder to the Company (the "Exercise
      Time")
      and
      within three business days following the Exercise Time, the Registered Holder
      shall deliver the following to the Company: 

     

    (A)  a
      completed Exercise Agreement, as described in Section 1(c)
      below;

     

    (B)  this
      Warrant;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (C)  if
      this
      Warrant is not registered in the name of the Registered Holder, an Assignment
      or
      Assignments in the form set forth in Exhibit
      II
      hereto
      evidencing the assignment of this Warrant to the Registered Holder, in which
      case the Registered Holder shall have complied with the pro-visions set forth
      in
      Section 6 hereof; and

     

    (D)  a
      check
      payable to the Company in an amount equal to the product of the Exercise Price
      (as such term is de-fined in Section 2) multiplied by the number of Warrant
      Shares being purchased upon such exercise (the "Aggregate
      Exercise Price").

     

    (ii)  Certificates
      for Warrant Shares purchased upon exercise of this Warrant shall be delivered
      by
      the Company to the Registered Holder within five business days after the date
      of
      the Exercise Time. Unless this Warrant has expired or all of the purchase rights
      represented hereby have been exercised, the Company shall prepare a new Warrant,
      substantially identical hereto, representing the rights formerly represented
      by
      this Warrant that have not expired or been exercised and shall, within such
      five
      day period, deliver such new Warrant to the Person designated for delivery
      in
      the Exercise Agreement. 

     

    (iii)  The
      Warrant Shares issuable upon the exercise of this Warrant shall be deemed to
      have been issued to the Registered Holder at the Exercise Time, and the
      Registered Holder shall be deemed for all purposes to have become the record
      holder of such Warrant Shares at the Exercise Time. 

     

    (iv)  The
      Company shall not close its books against the transfer of this Warrant or of
      any
      Warrant Shares issued or issuable upon the exercise of this Warrant in any
      manner which interferes with the timely exercise of this Warrant. 

     

    (v)  The
      Company shall assist and cooperate with the Registered Holder or any Registered
      Holder required to make any governmental filings or obtain any governmental
      approvals prior to or in connection with any exercise of this
      Warrant.

     

    (vi)  The
      Company shall at all times reserve and keep available out of its authorized
      but
      unissued capital stock, solely for the purpose of issuance upon the exercise
      of
      this Warrant, the maximum number of Warrant Shares issuable upon the exercise
      of
      this Warrant. All Warrant Shares which are so issuable shall, when issued and
      upon the payment of the Exercise Price therefor, be duly and validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges. The
      Company shall take all such ac-tions as may be necessary to assure that all
      such
      Warrant Shares may be so issued without violation by the Company of any
      applica-ble law or governmen-tal regulation or any requirements of any domestic
      securities exchange upon which securities of the Company may be listed (except
      for official notice of issuance which shall be immediately deliv-ered by the
      Company upon each such issuance). 

     

    (c)  Exercise
      Agreement.
      Upon
      any exercise of this Warrant, the Registered Holder shall deliver an Exercise
      Agreement in the form set forth in Exhibit I
      hereto,
      except that if the Warrant Shares are not to be issued in the name of the Person
      in whose name this Warrant is registered, the Exercise Agreement shall also
      state the name of the Person to whom the certificates for the Warrant Shares
      are
      to be issued, and if the number of Warrant Shares to be issued does not include
      all the Warrant Shares purchasable here-under, it shall also state the name
      of
      the Person to whom a new Warrant for the unexer-cised portion of the rights
      hereunder is to be issued. Such Exercise Agreement shall be dated the actual
      date of execution thereof. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    SECTION
      2. Adjustment
      of Exercise Price and Number of Shares.
      The
      Exercise Price and the number of Warrant Shares shall be adjusted from time
      to
      time as follows:

     

    (a) Adjustment
      upon Issuance of Common Stock.
      If and
      whenever on or after the date of this Warrant, the Company issues or sells,
      or
      in accordance with this Section 2 is deemed to have issued or sold, any shares
      of Common Stock (including the issuance or sale of shares of Common Stock owned
      or held by or for the account of the Company but excluding Excluded Securities
      (as defined in the Loan Agreement of even date herewith)) for a consideration
      per share (the "New
      Securities Issuance Price")
      less
      than a price (the "Applicable
      Price")
      equal
      to the Exercise Price in effect immediately prior to such time (the foregoing,
      a
      "Dilutive
      Issuance"),
      then
      immediately after such issue or sale, the Exercise Price then in effect shall
      be
      reduced to an amount equal to the New Securities Issuance Price. Upon each
      such
      adjustment of the Exercise Price hereunder, the number of Warrant Shares shall
      be adjusted to the number of shares of Common Stock determined by multiplying
      the Exercise Price in effect immediately prior to such adjustment by the number
      of Warrant Shares acquirable upon exercise of this Warrant immediately prior
      to
      such adjustment and dividing the product thereof by the Exercise Price resulting
      from such adjustment. For purposes of determining the adjusted Exercise Price
      under this Section 2(a), the following shall be applicable:

     

    (b) Reorganization,
      Reclassification, Consolida-tion, Merger or Sale.
      In case
      of any reclassification, capital reorganization, consolidation, merger, sale
      of
      all or substan-tially all of the Company's assets to another Person or any
      other
      change in the Common Stock of the Company, other than as a result of a
      subdivision, combination, or stock dividend provided for in Section 2(c)
      below (any of which, a "Change
      Event"),
      then,
      as a condition of such Change Event, lawful provision shall be made, and duly
      executed documents evidencing the same from the Company or its successor shall
      be delivered to the Registered Holder, so that the Registered Holder shall
      have
      the right at any time prior to the expiration of this Warrant to purchase,
      at a
      total price equal to that payable upon the exercise of this Warrant (subject
      to
      adjustment of the Exercise Price as provided in Section 2), the kind and amount
      of shares of stock and other securities and property receivable in connection
      with such Change Event by a holder of the same number of shares of Common Stock
      as were purchasable by the Registered Holder immediately prior to such Change
      Event. In any such case appropriate provisions shall be made with respect to
      the
      rights and interest of the Registered Holder so that the provisions hereof
      shall
      thereafter be applicable with respect to any shares of stock or other securities
      and property deliverable upon exercise hereof, and appropriate adjustments
      shall
      be made to the purchase price per share payable hereunder, provided the
      aggregate purchase price shall remain the same.

     

    (c) Subdivisions,
      Combinations.
      If the
      Company shall at any time prior to the expiration of this Warrant (i) subdivide
      its Common Stock, by split-up or otherwise, or combine its Common Stock, or
      (ii)
      issue additional shares of its Common Stock or other equity securities as a
      dividend with respect to any shares of its Common Stock, the number of shares
      of
      Common Stock issuable on the exercise of this Warrant shall forthwith be
      proportionately increased in the case of a subdivision or stock, or
      proportionately decreased in the case of a combination. Appropriate adjustments
      shall also be made to the purchase price payable per share, but the aggregate
      purchase price payable for the total number of Warrant Shares purchasable under
      this Warrant (as adjusted) shall remain the same. Any adjustment under this
      Section 2(b) shall become effective at the close of business on the
      date
      the subdivision or combination becomes effective, or as of the record date
      of
      such dividend, or in the event that no record date is fixed, upon the making
      of
      such dividend.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (d)  Issuance
      of New Warrant.
      Upon
      the occurrence of any of the events listed in this Section 2 that results in
      an
      adjustment of the type, number or exercise price of the securities underlying
      this Warrant, the Registered Holder shall have the right to receive a new
      warrant reflecting such adjustment upon the Registered Holder tendering this
      Warrant in exchange. The new warrant shall otherwise have terms identical to
      this Warrant.

     

    (e)  Notices.
      

     

    (i)  The
      Company shall give written notice to the Regis-tered Holder of this Warrant
      at
      least 10 days prior to the date on which the Company closes its books or takes
      a
      record for determining rights to vote with respect to any event described
      in this Section 2 or any dissolu-tion or liquidation. 

     

    (ii)The
      Company shall also give written notice to the Registered Holder of this Warrant
      at least 10 days prior to the date on which any event described in this Section
      2 or any dissolution or liquidation shall take place.

     

    SECTION
      3. Registration
      Rights.
      

     

    (a)  The
      Company shall register the Registrable Securities in accordance with the terms
      set forth in Section 7.2 of the Loan Agreement.

     

    (b)  The
      Company shall furnish to each Registered Holder of such Registrable Securities
      such number of copies of such registration statement and of each such amendment
      and supplement thereto (in each case including each preliminary prospectus
      and
      summary prospectus) in conformity with the requirements of the Act, and such
      other documents as the Registered Holders may reasonably request in order to
      facilitate the disposition of the Registrable Securities by such Registered
      Holders.

     

    (c)  If
      the
      Company shall fail to comply with the provisions of Section 7.2 of the Loan
      Agreement, the Company shall, in addition to any other equitable or other relief
      available to the Registered Holder(s), be liable for any or all special and
      consequential damages sustained by the Registered Holder(s).

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (d)  The
      Company shall prepare and file with the SEC such amendments and supplements
      to
      such registration statement and the prospectus used in connection therewith
      as
      may be reasonably necessary to keep such registration statement effective for
      at
      least 12 months (or such longer period as permitted by the Act), and to comply
      with the provisions of the Act with respect to the disposition of all securities
      covered by such registration statement during such period in accordance with
      the
      intended methods of disposition by the Registered Holder or Registered Holders
      of Registrable Securities set forth in such registration statement. If at any
      time the SEC should institute or threaten to institute any proceedings for
      the
      purpose of issuing a stop order suspending the effectiveness of any such
      registration statement, the Company will promptly notify each Registered Holder
      of Registrable Securities and will use all reasonable efforts to prevent the
      issuance of any such stop order or to obtain the withdrawal thereof as soon
      as
      possible. The Company will use its good faith reasonable efforts and take all
      reasonably necessary action which may be required in qualifying or registering
      the Registrable Securities included in a registration statement for offering
      and
      sale under the securities or blue sky laws of such states as reasonably are
      required by the Registered Holder(s), provided that the Company shall not be
      obligated to execute or file any general consent to service of process or to
      qualify as a foreign corporation to do business under the laws of any such
      jurisdiction. The Company shall use its good faith reasonable efforts to cause
      such Registrable Securities covered by such registration statement to be
      registered with or approved by such other governmental agencies or authorities
      of the United States or any state thereof as may be reasonably necessary to
      enable the Registered Holder(s) thereof to consummate the disposition of such
      Registrable Securities.

     

    (e)  The
      Company shall indemnify the Registered Holder(s) of the Registrable Securities
      to be sold pursuant to any registration statement and each person, if any,
      who
      controls such Registered Holders within the meaning of Section 15 of the Act
      or
      Section 20(a) of the Exchange Act against all loss, claim, damage, expense
      or
      liability (including all expenses reasonably incurred in investigating,
      preparing or defending against any claim whatsoever) to which any of them may
      become subject under the Act, the Exchange Act or otherwise, arising from such
      registration statement.

     

    (f)  If
      requested by the Company prior to the filing of any registration statement
      covering the Registrable Securities, each of the Registered Holder(s) of the
      Registrable Securities to be sold pursuant to a registration statement, and
      their successors and assigns, shall severally, and not jointly, indemnify the
      Company, its officers and directors and each person, if any, who controls the
      Company within the meaning of Section 15 of the Act or Section 20(a) of the
      Exchange Act, against all loss, claim, damage or expense or liability (including
      all expenses reasonably incurred in investigating, preparing or defending
      against any claim whatsoever) to which they may become subject under the Act,
      the Exchange Act or otherwise, arising from written information furnished by
      such Registered Holder, or their successors or assigns, for specific inclusion
      in such registration statement, except that the maximum amount which may be
      recovered from each Registered Holder pursuant to this paragraph or otherwise
      shall be limited to the amount of net proceeds received by the Registered Holder
      from the sale of the Registrable Securities.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (g)  Nothing
      contained in this Agreement shall be construed as requiring the Registered
      Holder(s) to exercise their Warrants prior to the filing of any registration
      statement or the effectiveness thereof.

     

    (h)  The
      Company shall furnish to each Registered Holder participating in an offering
      and
      to the managing underwriter, if any, a signed counterpart, addressed to such
      Registered Holder or underwriter, of (i) an opinion of counsel to the
      Company, dated the effective date of such registration statement (and, if such
      registration includes an underwritten public offering, an opinion dated the
      date
      of the closing under the underwriting agreement), and (ii) a "Cold Comfort"
      letter dated the effective date of such registration statement (and, if such
      registration includes an underwritten public offering, a letter dated the date
      of the closing under the underwriting agreement) signed by the independent
      public accountants who have issued a report on the Company's financial
      statements included in such registration statement, in each case covering
      substantially the same matters with respect to such registration statement
      (and
      the prospectus included therein) and, in the case of such accountants' letter,
      with respect to events subsequent to the date of such financial statements,
      as
      are customarily covered in opinions of issuer's counsel and in accountants'
      letters delivered to underwriters in underwritten public offerings of
      securities.

     

    (i)  The
      Company shall deliver promptly to each Registered Holder participating in an
      offering and to the managing underwriter, if any, copies of all correspondence
      between the SEC and the Company, its counsel or auditors and all non-privileged
      memoranda relating to discussions with the SEC or its staff with respect to
      the
      registration statement and permit each Registered Holder and underwriter to
      do
      such investigation, upon reasonable advance notice, with respect to information
      contained in or omitted from the registration statement as it deems reasonably
      necessary to comply with applicable securities laws or rules of the NASD. Such
      investigation shall include access to books, records and properties and
      opportunities to discuss the business of the Company with its officers and
      independent auditors, all to such reasonable extent and at such reasonable
      times
      and as often as any such Registered Holder shall reasonably
      request.

     

    (j)  The
      Company shall not, directly or indirectly, enter into any merger, business
      combination or consolidation in which (i) the Company shall not be the surviving
      corporation and (ii) the shareholders of the Company are to receive, in whole
      or
      in part, capital stock or other securities of the surviving corporation, unless
      the surviving corporation shall, prior to such merger, business combination
      or
      consolidation, agree in writing to assume the obligations of the Company under
      this Agreement, and for that purpose references hereunder to "Registrable
      Securities"
      shall
      be deemed to include the securities which the Registered Holders would be
      entitled to receive in exchange for Registrable Securities under any such
      merger, business combination or consolidation, provided that to the extent
      such
      securities to be received are convertible into shares of Common Stock of the
      issuer thereof, then any such shares of Common Stock as are issued or issuable
      upon conversion of said convertible securities shall also be included within
      the
      definition of "Registrable
      Securities."

     

    (k)  All
      expenses incident to the Company's performance of or compliance with this
      Agreement, including without limitation all registration and filing fees, fees
      and expenses of compliance with securities or blue sky laws, printing expenses,
      messenger and delivery expenses, and fees and disbursements of counsel for
      the
      Company and all independent certified public accountants, underwriters
      (excluding discounts and commissions) and other Persons retained by the Company
      will be borne by the Company. In no event shall the Company be obligated to
      be
      pay any discounts or commissions with respect to the shares sold by any holder
      of Registrable Securities. In connection with each Registration Document, the
      Company will reimburse the holders of Registrable Securities covered by such
      registration for the reasonable fees and disbursements of one counsel chosen
      by
      the holders of a majority of the Registrable Securities initially requesting
      such registration.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    SECTION
      4. Definitions.
      The
      following terms have the meanings set forth below: 

     

    “Act”
      means
      the Securities Act of 1933, as amended.

     

    "Convertible
      Securities"
      means
      any evidence of indebtedness, shares or other securities convertible into or
      exchangeable for Common Stock.

     

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended.

     

    "Fair
      Market Value"
      shall
      be determined on a per Share basis as of the close of the business day preceding
      the date of exercise, which determination shall be made as follows: (a) if
      the
      Common Stock is listed on a national securities exchange or admitted to unlisted
      trading privileges on such an exchange or quoted on either the National Market
      System or the Small Cap Market of the automated quotation service operated
      by
      The Nasdaq Stock Market, Inc., the Fair Market Value shall be the last reported
      sale price of that security on such exchange or system on the day for which
      the
      current market price is to be determined or, if no such sale is made on such
      day, the average of the highest closing bid and lowest asked price for such
      day
      on such exchange or system; (b) if the Common Stock is not so listed or quoted
      or admitted to unlisted trading privileges, the Fair Market Value shall be
      the
      average of the last reported highest bid and lowest asked prices quoted on
      the
      Nasdaq Electronic Bulletin Board, or, if not so quoted, then by the National
      Quotation Bureau, Inc. on the last business day prior to the day for which
      the
      Fair Market Value is to be determined; or (c) if the Common Stock is not so
      listed or quoted or admitted to unlisted trading privileges and bid and asked
      prices are not reported, the Fair Market Value shall be determined by the
      Company's Board of Directors in its reasonable, good faith
      judgment.

     

    "Options"
      means
      rights, options, or warrants to subscribe for, purchase or otherwise acquire
      either Common Stock or Convertible Securities.

     

    "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof. 

     

    "Registered
      Holders"
      means,
      collectively, Buyer and each other holder of a Warrant or Warrant Shares, if
      any, reflected as such on the books of the Company.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    "Registrable
      Securities"
      means
      the Warrant Shares.

     

    "Warrant"
      means
      the right to purchase one or more Warrant Shares pursuant to the terms of this
      Warrant, as the same may be transferred, divided or exchanged pursuant to the
      terms hereof.

     

    "Warrant
      Shares"
      means
      shares of the Common Stock issuable upon exercise of the Warrant; provided,
      however, that if there is a change such that the securities issuable upon
      exercise of the Warrant are issued by an entity other than the Company or there
      is a change in the class of securities so issuable, then the term "Warrant
      Shares" shall mean shares of the security issuable upon exercise of the Warrant
      if such security is issuable in shares, or shall mean the equivalent units
      in
      which such security is issuable if such security is not issuable in
      shares.

     

    SECTION
      5.  No
      Voting Rights; Limitations of Liability.
      This
      Warrant shall not entitle the holder hereof to any voting rights or other rights
      as a stockholder of the Company. No provision hereof, in the absence of
      affirmative action by the Registered Holder to purchase Warrant Shares, and
      no
      enumeration herein of the rights or privileges of the Registered Holder shall
      give rise to any liability of such holder for the Exercise Price of Warrant
      Shares acquirable by exercise hereof or as a stockholder of the Company.

     

    SECTION
      6. Warrant
      Transferable.
      Subject
      to compliance with applicable securities laws and the terms of this Section
      6,
      this Warrant and all rights hereunder are transferable, in whole or in part,
      without charge to the Registered Holder upon surrender of this Warrant with
      a
      properly executed Assignment (in the form of Exhibit II
      hereto)
      at the principal office of the Company.

     

    SECTION
      7. Warrant
      Exchangeable for Different Denominations.
      This
      Warrant is exchangeable, upon the surrender hereof by the Registered Holder
      at
      the principal office of the Company, for new Warrants of like tenor representing
      in the aggregate the purchase rights hereunder, and each of such new Warrants
      shall represent such portion of such rights as is designated by the Registered
      Holder at the time of such surrender. The date the Company initially issues
      this
      Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
      number of times new certificates representing the unexpired and unexercised
      rights formerly represented by this Warrant shall be issued. All Warrants
      representing portions of the rights hereunder are referred to herein as the
      "Warrants." 

     

    SECTION
      8. Replacement.
      Upon
      receipt of evidence reasonably satisfactory to the Company of the ownership
      and
      the loss, theft, destruction or mutilation of any certificate evidencing this
      Warrant, and in the case of any such loss, theft or destruction, upon receipt
      of
      indemnity reasonably satisfactory to the Company, or, in the case of any such
      mutilation upon surrender of such certificate, the Company shall (at the expense
      of the Registered Holder) execute and deliver in lieu of such certificate a
      new
      certificate of like kind representing the same rights represented by such lost,
      stolen, destroyed or mutilated certificate and dated the date of such lost,
      stolen, destroyed or mutilated certificate. 

     

    SECTION
      9. Notices.
      All
      notices, requests, deliveries, consents and other communications provided for
      herein shall be in writing and shall be effective upon delivery in person,
      faxed, or mailed by certified or registered mail, return receipt requested,
      postage pre-paid, addressed as follows:

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    If
      to
      the Company, to:

    

    ITec
      Environmental Group, Inc.

    5300
      Claus Road, Box 760

    Riverbank,
      CA 95367

    Attn: Gary
      M.
      De Laurentiis

    Fax: (209)
      881-3529

     

    with
      a
      copy to:

    

    The
      Otto
      Law Group, PLLC

    601
      Union
      Street, Suite 4500

    Seattle,
      WA 98101

    Attn: David
      M.
      Otto

    Fax: (206)
      262-9513

     

    If
      to
      Buyer, to:

     

    

     

    As
      set
      forth on the Schedule of Lenders in the Loan Agreement

     

    or,
      in
      any case, at such other address or addresses as shall have been furnished in
      writing to the Company (in the case of a Registered Holder of Warrants) or
      to
      the Registered Holders of Warrants (in the case of the Company) in accordance
      with the provisions of this paragraph.

     

    SECTION
      10. Amendment
      and Waiver.
      Except
      as otherwise provided herein, the provisions of the Warrants may be amended
      and
      the Company may take any action herein prohibited, or omit to perform any act
      herein required to be performed by it, only if the Company has obtained the
      written consent of the Registered Holders of Warrants representing a majority
      of
      the Warrant Shares obtainable upon exercise of the then-outstanding Warrants;
      provided, however, that no such action may change the Exercise Price of the
      Warrants or the number of shares or class of capital stock obtainable upon
      exercise of each Warrant without the written consent of all Registered
      Holders.

     

    SECTION
      11. Descriptive
      Headings; Governing Law. 

     

    (a)  The
      descriptive headings of the several Sections of this Warrant are inserted for
      convenience only and do not constitute a part of this Warrant. 

     

    (b)  All
      issues and questions concerning the construction, validity, enforcement and
      interpretation of this Agreement shall be governed by, and construed in
      accordance with, the laws of the State of California, without giving effect
      to
      any choice of law or conflict of law rules or provisions (whether of the State
      of California or any other jurisdiction) that would cause the application of
      the
      laws of any jurisdiction other than the State of California.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    SECTION
      12. Warrant
      Register.
      The
      Company shall maintain at its principal executive office books for the
      registration and the registration of transfer of this Warrant. The Company
      may
      deem and treat the Registered Holder as the absolute owner hereof
      (notwithstanding any notation of ownership or other writing thereon made by
      anyone) for all purposes and shall not be affected by any notice to the
      contrary.

     

    SECTION
      13. Fractions
      of Shares.
      The
      Company may, but shall not be required, to issue a fraction of a Warrant Share
      upon the exercise of this Warrant in whole or in part. As to any fraction of
      a
      share which the Company elects not to issue, the Company shall make a cash
      payment in respect of such fraction in an amount equal to the same fraction
      of
      the market price of a Warrant Share on the date of such exercise (as determined
      by the board of directors in its reasonable discretion).

     

    *
      * * * *

     

    

     

    
      
        
          

           

        

        
        

      

      
        10

        
          

        

      

      
        
        

        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested
      by its duly authorized officers and to be dated as of the Date of Issuance
      hereof. 

     

    

     

    ITEC
      ENVIRONMENTAL GROUP, INC.

     

    

     

    

     

    By: __________________________________

    Name:
      Gary M. De Laurentiis 

    Title: Chief
      Executive Officer

     

    

     

    

     

    
      
        
           

        

        
        

      

      
        11

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      I

     

    EXERCISE
      AGREEMENT

     

    

     

    To: Dated:
      

     

    

     

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant
      (Certificate No. W-15), hereby agrees to subscribe for the purchase of ______
      Warrant Shares covered by such Warrant and makes payment herewith in full
      therefor at the price per share provided by such Warrant. Please issue the
      Warrant Shares in the following names and amounts:

     

    

     

    Name Number
      of
      Warrant Shares

     

    

     

    

     

    

     

    

     

    Signature
      ____________________

     

    

     

    Address
      ______________________

     

    

     

    

     

    
      
        
           

        

        
        

      

      
        12

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      II

     

    ASSIGNMENT

     

    

     

    FOR
      VALUE
      RECEIVED, _____________________________ hereby sells, assigns and transfers
      all
      of the rights of the undersigned under the attached Warrant (Certificate No.
      W-15) with respect to the number of the Warrant Shares covered thereby set
      forth
      below, unto: 

     

    
       

      
        
          	 Names of Assignee	 Address	 No. of Shares
	 	 	 
	 Dated:	 Signature
                  ___________________________	 
	 	 	 
	 	 Witness
                  ____________________________	 
	 	 	 
	 	 	 
	 The Assignee agrees to be bound
                  by
                  the terms of the Warrant.	 	 
	 	 	 
	 	 Signature
                  ____________________________	 
	 	 	 
	 	 Witness
                  _____________________________	 

        

      

    

     

     

    
      
         

      

      
        13

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