MUTUAL SETTLEMENT AND RELEASE AGREEMENT AMONG ROSE WASTE SYSTEMS, INC., GEORGE GITSCHEL, ITEC ENVIRONMENTAL GROUP, INC., AND ITEC ACQUISITIONS, INC

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

7.   Mutual Release. The parties hereto agree to release and discharge each other, and each of their respective partners, agents, employees, attorneys, representatives, and the successors, heirs and assigns of any of the preceding, from all sums of money, claims, demands, contracts, actions, debts, controversies, agreements, damages and causes of action whatsoever, whether known or unknown, suspected or unsuspected by them, which they now own, hold, have or claim to have or at any time heretofore owned, held or claimed to have held against each other, by reason of any matter or thing alleged or referred to, or in any way connected with, arising out of or related to any of the matters, acts, events or occurrences alleged or referred to in any of the pleadings on file in the Action or otherwise, except for the right to enforce Defendant's obligations to Plaintiff as set forth hereinabove. Notwithstanding the foregoing, this Release does not rel