EMPLOYMENT AGREEMENT

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

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

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

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

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respect to the employment of Executive are deemed by the parties to be either canceled and void and/or are deemed to be superseded by this final written Agreement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4.   California Integrated Waste Management Board Obligations .   The Company shall satisfy or take action to assign or novate Executive’s personal guarantee with the California Integrated Waste Management Board (“ CIWMB ”), provided that Executive supplies the Company with the intellectual property, trade secrets, information and know-how associated with the operation of the Eco ₂ Environmental System and the Company’s plant located in Riverbank, California (the “ CIWMB Obligations ”). The CIWMB Obligations shall be deemed fulfilled upon the reasonable satisfaction of the Parties.

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

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

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

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

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

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

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

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

6.7.   Salary Continuation During Disability . Notwithstanding Section 6.1 above, if Executive suffers any physical or mental