EXHIBIT 10.5





NON-QUALIFIED STOCK OPTION AGREEMENT





THIS STOCK OPTION AGREEMENT (the “Agreement”) entered into as of July 1, 2009 (the “Grant Date”) between Ecosphere Technologies, Inc. (the “Company”) and [SEE SCHEDULE A] (the “Optionee”).





WHEREAS, by action taken by the Board of Directors (the “Board”) it has adopted the 2006 Equity Incentive Plan (the “Plan”); and










NOW THEREFORE, in consideration of the mutual covenants and promises hereafter set forth and for other good and valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:





Grant of Non-Qualified Options [SEE SCHEDULE A]





2.           Price.  The exercise price of the Options is $0.49 per share.





3.           Vesting - When Exercisable.










(b)           Subject to Sections 3(c) and 4 of this Agreement, Options may be exercised prior to vesting and remain exercisable until 6:00 p.m. New York time for five years from the Grant Date (the “Expiration Date”).


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(c)           However, notwithstanding any other provision of this Agreement at the option of the Board, all Options whether vested or unvested shall be immediately forfeited in the event of:





(1)           Termination of the Optionee by the Company for cause, including, but not limited to, fraud, theft, employee dishonesty and violation of Company policy;





(2)           The Optionee purchases or sells securities of the Company not in accordance with the Company’s inside information guidelines then in effect;





(3)           The Optionee breaches any duty of confidentiality including that required by the Company’s inside information guidelines then in effect;
                                                (4)             The Optionee competes with the Company;





(5)           The Optionee is unavailable for consultation after termination of the Optionee if such availability is a condition of any Agreement between the Company and the Optionee;





(6)           The Optionee recruits Company personnel for another entity;





(7)           The Optionee fails to assign any invention or technology to the Company if such assignment is a condition of any agreement between the Company and the Optionee; or





(8)           A finding by the Company that the Optionee has acted against the interests of the Company.





4.           Termination of Relationship.













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(c)           If the Optionee becomes disabled while performing services for the Company in the capacity for which the Options were granted within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, the three-month period referred to in Section 4(a) of this Agreement shall be extended to one year.





(d)           Notwithstanding anything contained in this Section 4, the Options may not be exercised after the Expiration Date.


Profits on the Sale of Certain Shares; Redemption





6.           Method of Exercise.  The Options shall be exercisable by a written notice which shall:





(a)           state the election to exercise the Options, the number of shares to be exercised, the person in whose name the stock certificate or certificates for such shares of common stock is to be registered, address and social security number of such person (or if more than one, the names, addresses and social security numbers of such persons);





(b)           if applicable, contain such representations and agreements as to the holder’s investment intent with respect to such shares of common stock as set forth in Section 11 hereof;





(c)           be signed by the person or persons entitled to exercise the Options and, if the Options are being exercised by any person or persons other than the Optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such person or persons to exercise the Options;





(d)           be accompanied by full payment of the exercise price in United States dollars in cash or by check.





(e)           be accompanied by payment of any amount that the Company, in its sole discretion, deems necessary to comply with any federal, state or local withholding requirements for income and employment tax purposes.  If the Optionee fails to make such payment in a timely manner, the Company may: (i) decline to permit exercise of the Options or (ii) withhold and set-off against compensation and any other amounts payable to the Optionee the amount of such required payment. Such withholding may be in the shares underlying the Options at the sole discretion of the Company.


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The certificate or certificates for shares of common stock as to which the Options shall be exercised shall be registered in the name of the person or persons exercising the Options.





Sale of Shares Acquired Upon Exercise of Options





8.           Anti-Dilution Provisions.  The Options granted hereunder shall have the anti-dilution rights set forth in the Plan.





Necessity to Become Holder of Record





Reservation of Right to Terminate Relationship





Conditions to Exercise of Options










Transfer the Board may deem necessary to establish the authority of the estate and the acceptance by the Transferee or Transferees of the terms and conditions of the Options.


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13.           Duties of Company.  The Company will at all times during the term of Options:





(a)           Reserve and keep available for issue such number of shares of its authorized and unissued common stock as will be sufficient to satisfy the requirements of this Agreement;





(b)           Pay all original issue taxes with respect to the issue of shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith;





(c)           Use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.





Parties Bound by Plan





15.           Severability.  In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.





Arbitration





17.           Benefit.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their legal representatives, successors and assigns.


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Notices and Addresses   The Optionee:The Company:

Ecosphere Technologies, Inc.3515 S.E. Lionel TerraceStuart, Florida 34997Attention: Chief Financial OfficerFacsimile: (772) 781-4778with a copy to:

Michael D. Harris, Esq.Harris Cramer LLP1555 Palm Beach Lakes Blvd., Suite 310West Palm Beach, FL 33401Facsimile:  (561) 659-0701


or to such other address as either of them, by notice to the other may designate from time to time.  The transmission confirmation receipt from the sender’s facsimile machine shall be evidence of successful facsimile delivery.  Time shall be counted to, or from, as the case may be, the delivery in person or by mailing.










Governing Law


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21.           Oral Evidence.  This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof.  Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing signed by the party or parties against which enforcement or the change, waiver discharge or termination is sought.















24.           Stop-Transfer Orders.








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[Signature Page To Follow]


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IN WITNESS WHEREOF the parties hereto have set their hand and seals the day and year first above written. WITNESSES:


ECOSPHERE TECHNOLOGIES, INC.By:OPTIONEE:







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Schedule A


Dennis McGuire

2,500,000 optionsAdrian Goldfarb

1,100,000 options






















A-1