Preview | Agreement and Plan of Merger |

THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is entered into as of May 26, 2005 (the Execution Date), by and among Itec Environmental Group, Inc., a Delaware corporation ("ITEC"), Itec Acquisitions, Inc., a Delaware corporation wholly owned by Itec ("MERGER SUB") and Rose Waste Systems, Inc., a California corporation ("ROSE WASTE").

WHEREAS, the Boards of Directors of Itec, Merger Sub and Rose Waste each have determined that the acquisition of Rose Waste by Itec is in the best interests of their respective companies and stockholders, have approved the Merger and accordingly have agreed to effect the merger provided for herein upon the terms and subject to the conditions set forth herein;

WHEREAS, (a) Itec has organized Merger Sub as a new Delaware corporation and a wholly owned subsidiary of Itec; (b) Merger Sub will merge with and into Rose Waste in a reverse triangular merger (the "MERGER"); and (c) Rose Waste will be the surviving corporation (the "SURVIVING CORPORATION") of the Merger. Upon the effectiveness of the Merger, all the outstanding capital stock of Rose Waste will be converted into capital stock of Itec. Each of these events will be subject to and carried out pursuant to the terms and conditions of this Agreement and a Certificate of Merger (the "CERTIFICATE OF MERGER") and the applicable provisions of the laws of the States of Delaware and California; and

WHEREAS, the Merger is intended to be treated as: (a) a purchase for accounting purposes and (b) a tax-free reorganization pursuant to the provisions of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "CODE"), by virtue of the provisions of Section 368(a)(1)(A) and Section 368(a)(2)(E) of the Code.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, intending to be legally bound hereby the parties to this Agreement agree as follows:

1.1 "ACQUISITION PROPOSAL" with respect to an Entity means any proposal or offer concerning the possible disposition of all or any substantial portion of Rose Waste's business, assets or capital stock by merger, consolidation, sale of assets or any other means or any other transaction that would involve a change in control of Rose Waste.

1.2 "BEST EFFORTS" shall mean the commercially reasonable efforts that a prudent business Person desiring to achieve a particular result with respect to its business would use in order to ensure that such result is achieved as expeditiously as possible. An obligation to use "Best Efforts" under this Agreement does not require the Person subject to that obligation to take actions that would result in a Material Adverse Change in the benefits to such Person under this Agreement or the other Merger Agreements.

1.5 "CONTRACT" shall mean, with respect to any Person, any written or oral agreement, contract, understanding, arrangement, instrument, note, guaranty, indemnity, representation, warranty, deed, assignment, power of attorney, purchase order, work order, insurance policy, benefit plan, commitment, covenant, obligation, promise or undertaking of any nature to which such Person is a party or by which its properties or assets may be bound or affected or under which it or its business, properties or assets receive benefits. See also "ROSE WASTE CONTRACTS".

1.6 "ENCUMBRANCE" shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, equity, equitable interest, claim, preference, right of possession, lease, tenancy, license, encroachment, covenant, infringement, interference, Order, proxy, option, right of first refusal, preemptive right, community property interest, defect, impediment, exception, reservation, limitation, impairment, imperfection of title, condition or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset) other than liens for Taxes not yet due and payable.

1.7 "ENTITY" shall mean any corporation (including any non profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, cooperative, foundation, society, political party, union, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization or entity.

1.11 "LIABILITY" shall mean any debt, obligation, duty or liability of any nature including any unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious, derivative, joint, several or secondary liability, regardless of whether such debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with GAAP and regardless of whether such debt, obligation, duty or liability is immediately due and payable.

1.12 "MATERIAL ADVERSE CHANGE" and "MATERIAL ADVERSE EFFECT" shall mean one or more changes in, or effects on, the business, financial condition, operations, results of operations, assets or liabilities of Itec or Rose Waste (as the case may be) that, individually or in the aggregate, results in or would reasonably be expected to result in a material adverse effect on, or a material adverse change in, the business, financial condition, operations, results of operations, assets or liabilities of the affected party taken as a whole. A statement in this Agreement that an event or state of affairs "has," "does not have," "would have," or "would not have" (or similar statements) a Material Adverse Change or Material Adverse Effect, shall be deemed to mean that such event or state of affairs both: (a) has (or does not have), does (or does not), will (or will not), or would (or would not), result in, and/or (b) would (or would not) reasonably be expected to result in, the consequences described in the preceding sentence.

1.13 "MERGER AGREEMENTS" shall include: (a) this Agreement; (b) the Certificate of Merger, (c) the Employment Agreement, (d) the Pledge Agreement, (e) the Letter Agreement and (f) all other agreements to which at least one party to this Agreement will be a party and that must be executed pursuant to this Agreement.

(a) order, judgment, injunction, edict, decree, ruling, pronouncement, determination, decision, opinion, verdict, sentence, subpoena, writ or award that is issued, made, entered, rendered or otherwise put into effect by or under the authority of any court, administrative agency or other governmental body or any arbitrator or arbitration panel; or

(b) such action is not required to be authorized by such party's stockholders, board of directors or any committee of its board of directors and does not require any other separate or special authorization of any nature; and

(c) such action is similar in nature and magnitude to actions customarily taken, without any special or separate authorization, in the ordinary course of the normal day to day operations of other entities that are employed in businesses similar to such party's business.

1.16 "PERMITTED ENCUMBRANCE" shall mean any (i) statutory lien for taxes, (ii) encumbrance in the nature of zoning restrictions, easements, rights or restrictions of record on the use of real property if the same do not materially detract from the value of the property encumbered thereby or materially impair the use of such property in the Business as currently conducted or proposed to be conducted, (iii) statutory or common law lien to secure landlords, lessors or renters under leases or rental agreements confined to the premises rented, (iv) deposit or pledge made in connection with, or to secure payment of, worker's compensation, unemployment insurance, old age pension programs mandated under applicable law or other social security, (v) statutory or common law liens in favor of carriers, warehousemen, mechanics and materialmen, statutory or common law liens to secure claims for labor, materials or supplies and other like liens, and (vi) restrictions on transfer of securities imposed by applicable state and federal laws.