Document:

esph_ex1020.htm

Exhibit 10.20

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE FEDERAL OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR HYPOTHECATED IN ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS AS MAY BE APPLICABLE OR, AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM SUCH APPLICABLE LAWS EXIST.

SECOND AMENDED AND RESTATED

REPLACEMENT SECURED NOTE

 

	$524,772.85	December 8, 2010

 

The Makers (as hereinafter defined) executed and delivered to the Holder (as hereinafter defined) a replacement secured note dated July 1, 2009, in the original principal amount of $1,111,095.89 (the “Original Note”), and an amended and restated replacement secured note dated November 1, 2009, in the original principal amount of $1,143,667.74 (the “Amended Note,” and together with the Original Note, the “Old Notes”), and the Makers and the Holder have agreed to amend and restate the Old Notes as follows:

 

THIS SECOND AMENDED AND RESTATED REPLACEMENT SECURED NOTE (this “Note”), is made as of December 8, 2010 by Ecosphere Energy Services, LLC, a Delaware limited liability company (“Holdings”), and EES Operating Company, LLC, a Delaware limited liability company (“EES”, and together with Holdings, the “Makers”), to and in favor of Clean Water Partners, LLC, a Delaware limited liability company (the “Holder”).

 

This Note shall amend, modify and restate in its entirety (but shall not constitute a novation of), the Old Notes, and the conditions contained in this Note shall supersede and control the terms, covenants, agreements, rights, obligations and conditions contained in the Old Notes.

FOR VALUE RECEIVED, the Makers hereby promise to pay to the order of the Holder, at c/o Chad Wold, Esq., 122 Central Avenue, Whitefish, MT 59937, or at such other office as Holder designates in writing to the Makers, the principal sum of  Five Hundred Twenty-Four Thousand Seven Hundred Seventy-Two and 85/100 Dollars  ($524,772.85) together with interest thereon computed at the annual rate of ten percent (10%) from the date hereof until this Note has been paid in full.

The Makers shall make the payments of principal and interest under this Note to the extent of 50% of receipts of Holdings from Southwestern Energy Production Company and Seeco, Inc. pursuant to that certain Commercial Oilfield Services Agreement dated June 29, 2009 and related work orders, until all outstanding principal and interest under the Note has been paid in full.  Such amounts shall be paid to the Holder by wire transfer (pursuant to instructions provided by Holder) within one business day of receipt thereof by Holdings.  Payments shall first be applied to accrued interest and other charges hereunder and then to principal.  Notwithstanding the foregoing, the remaining principal balance and interest under this Note shall be due and payable in full on or before March 31, 2011.

While in default, this Note shall bear interest at the lesser of (i) the rate of 18% per annum or (ii) such maximum rate of interest allowable under the laws of the State of Florida. Payments shall be made in lawful money of the United States.  This Note is secured by the Obligations and Collateral as set forth in that certain Amended and Restated Credit Agreement dated July 15, 2009 (as amended by that certain First Amendment to Amended and Restated Credit Agreement, dated December 8, 2010, and as may be amended, modified, revised or supplemented from time to time, the “Agreement”) among Holdings, EES, the Holder and Ecosphere Technologies, Inc., a Delaware corporation.  Capitalized terms used, but not otherwise defined herein, shall have the meaning ascribed to such terms in the Agreement.

 

  

  

  

1.  Event of Default.  In addition to the provisions of the Agreement, in the event either Holdings or EES shall fail to make any payment under the Agreement or the Notes when due; commence any case, proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to its debts, or seeking appointment of a receiver, custodian, trustee or other similar official for it or for all or any substantial part of its assets; or there shall be commenced against either Holdings or EES, any case, proceeding or other action which results in the entry of an order for relief or any such adjudication or appointment remains undismissed, undischarged or unbonded for a period of 30 days; or there shall be commenced against either Holdings or EES any case, proceeding or other action seeking issuance of a warrant of attachment, execution, restraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 10 days from the entry thereof; or either Holdings or EES shall make an assignment for the benefit of creditors; or Holdings or EES shall be unable to, or shall admit in writing the inability to, pay its debts as they become due; or Holdings or EES shall take any action indicating its consent to, approval of, or acquiescence in, or in furtherance of, any of the foregoing; then, or any time thereafter during the continuance of any of such events, the entire unpaid balance of this Note then outstanding, together with accrued interest thereon, if any, shall be and become immediately due and payable without notice of demand by Holder.  This note is secured by the Agreement and is subject to all of its provisions.

2.  Prepayment.

(a)  The Makers, upon three days prior written notice to the Holder, may prepay, without penalty or premium, the Note and any accrued interest to the date of prepayment.  All prepayments shall be applied, first, to the payment of accrued interest on this Note to the date of such payment and second, to the payment of the principal amount of this Note.

(b)  Upon the sale, lease, transfer or other disposition (or series of related sales, leases, transfers or other dispositions) of all or any Collateral, the Makers shall promptly apply the cash proceeds thereof (net of any reasonable attorney’s fees, reasonable accountant’s fees, reasonable brokerage fees and other reasonable customary fees and expenses incurred in connection therewith and net of taxes paid or reasonably expected to be payable as a result thereof) to the prepayment of the Loan.

3.  Miscellaneous.

(a)  This Note is subject to, and is entitled to the benefits of, the Agreement and amends and restates in its entirety (but does not constitute a novation of) the Old Notes.

(b)  All makers and endorsers now or hereafter becoming parties hereto jointly and severally waive demand, presentment, notice of non-payment and protest.

(c)  This Note may not be changed or terminated orally, but only with an agreement in writing, signed by the parties against whom enforcement of any waiver, change, modification, or discharge is sought with such agreement being effective and binding only upon attachment hereto.

(d)  This Note and the rights and obligations of the Holder and of the undersigned shall be governed and construed in accordance with the laws of the State of Florida.

 

  

  

  

 

IN WITNESS WHEREOF, the Makers have caused this Note to be executed as of the date aforesaid.

Ecosphere Energy Services, LLC

By:  ____________________________________________

 

______________  of Ecosphere Technologies, Inc.,

 

Managing Member

EES Operating Company, LLC

By: ____________________________________________

 

Manageresph_ex1030.htm

Exhibit 10.30

NON-QUALIFIED STOCK OPTION AGREEMENT

NON-PLAN

THIS STOCK OPTION AGREEMENT (the “Agreement”) entered into as of December 23, 2010 (the “Grant Date”) between Ecosphere Technologies, Inc. (the “Company”) and [see Schedule A] (the “Optionee”).

WHEREAS, pursuant to the authority of the Board of Directors (the “Board”), the Company has granted the Optionee the right to purchase common stock of the Company pursuant to stock options.

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:

1.           Grant of Non-Qualified Stock Options.  The Company irrevocably granted to the Optionee, as a matter of separate agreement and not in lieu of salary or other compensation for services, the right and option to purchase all or any part of [see Schedule A] shares of authorized but unissued or treasury common stock of the Company (the “Options”) on the terms and conditions herein set forth.  The Options are not intended to be Incentive Stock Options as defined by Section 422 of the Internal Revenue Code of 1986 (the “Code”).  This Agreement replaces any stock option agreement previously provided to the Optionee, if any, with respect to these Options.

	
2.    

	
Price.  The exercise price of the Options is $0.48 per share.

	
3.    

	
Vesting - When Exercisable.

(a)           The Options shall vest as follows: (i) one-half will vest on June 30, 2011, and (ii) one-half will vest on December 31, 2011, subject to the Optionee’s execution of a new employment agreement and continued service as an employee on each applicable vesting date.

(b)           Subject to Sections 3(c) and 4 of this Agreement, the 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”).

(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 as an employee 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)    

	
Any other reason required by future federal law or regulation of the Securities and Exchange Commission.

 

  

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4.           Termination of Relationship.

(a)           The termination of the Optionee as an employee of the Company shall not terminate the Options, except as provided in Section 3(c) above.

(b)           The Options may not be exercised after the Expiration Date.

5.           Profits on the Sale of Certain Shares; Redemption.  If any of the events specified in Section 3(c) of this Agreement occur within one year from the last date the Optionee performs services for the Company in the capacity for which the Options were granted (the “Termination Date”), all profits earned from the sale of the Company’s securities, including the sale of shares of common stock underlying the Options, during the two-year period commencing one year prior to the Termination Date shall be forfeited and forthwith paid by the Optionee to the Company.  Further, in such event, the Company may at its option redeem shares of common stock acquired upon exercise of the Options by payment of the exercise price to the Optionee.  The Company’s rights under this Section 5 do not lapse one year from the Termination Date but are a contract right subject to any appropriate statutory limitation period.

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.

(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.

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.

7.           Sale of Shares Acquired Upon Exercise of Options.  If the Optionee is an officer (as defined by Section 16(b) of the Exchange Act (“Section 16(b)”)) or a director of the Company, any shares of the Company’s common stock acquired pursuant to the Options cannot be sold by the Optionee until at least six months elapse from the Grant Date except in case of death or disability or if the grant was exempt from the short-swing profit provisions of Section 16(b).

8.           Adjustments.  Upon the occurrence of any of the following events, the Optionee’s rights with respect to the Options shall be adjusted as hereinafter provided unless otherwise specifically provided in a written agreement between the Optionee and the Company relating to the Options:

(a)           If the shares of common stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of its common stock as a stock dividend on its outstanding common stock, the number of shares of common stock deliverable upon the exercise of Options shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the exercise price per share to reflect such subdivision, combination or stock dividend.

 

  

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(b)           If the Company is to be consolidated with or acquired by another entity, the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Board”) shall either (i) make appropriate provision for the continuation of the Options by substituting on an equitable basis for the shares underlying the Options the consideration payable with respect to the outstanding shares of common stock in connection with the acquisition or consolidation; or (ii) terminate all the Options in exchange for a cash payment equal to the excess of the fair market value of the shares subject to the Options over the exercise price thereof.

(c)           In the event of a recapitalization or a reorganization of the Company (other than a transaction described in Section 8(b) above) pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of common stock, the Optionee upon exercising the Options shall be entitled to receive for the purchase price paid upon such exercise, the securities the Optionee would have received if the Optionee had exercised the Options prior to such recapitalization or reorganization.

(d)           Except as expressly provided herein, no issuance by the Company of shares of common stock of any class or securities convertible or exercisable into shares of common stock of any class shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to the Options.  No adjustments shall be made for dividends or other distributions paid in cash or in property other than securities of the Company.

(e)           With respect to shares issued in accordance with this Section 8, no fractional shares shall be issued and the Optionee shall receive from the Company cash in lieu of such fractional shares.

(f)           The Board or the Successor Board shall determine the specific adjustments to be made under this Section 8, and its determination shall be conclusive.  If the Optionee receives securities or cash in connection with a corporate transaction described in Section 8(a), (b) or (c) above as a result of holding the Options, such securities or cash shall be subject to all of the conditions and restrictions applicable to the Options stock with respect to which such securities or cash were issued, unless otherwise determined by the Board or the Successor Board.

9.           Necessity to Become Holder of Record.  Neither the Optionee, the Optionee’s estate, nor any Transferee shall have any rights as a shareholder with respect to any shares underlying the Options until such person shall have become the holder of record of such shares.  No dividends or cash distributions, ordinary or extraordinary, shall be provided to the holder if the record date is prior to the date on which such person became the holder of record thereof.

10.           Reservation of Right to Terminate Relationship.  Nothing contained in this Agreement shall restrict the right of the Company to terminate the relationship of the Optionee at any time, with or without cause.  The termination of the relationship of the Optionee by the Company, regardless of the reason therefor, shall have the results provided for in Sections 3 and 4 of this Agreement.

11.           Conditions to Exercise of Options.  In order to enable the Company to comply with the Securities Act of 1933 (the “Securities Act”) and relevant state law, the Company may require the Optionee, the Optionee’s estate, or any Transferee as a condition of the exercising of the Options, to give written assurance satisfactory to the Company that the shares underlying the Options are being acquired for such persons own account, for investment only, with no view to the distribution of same, and that any subsequent resale of any such shares either shall be made pursuant to a registration statement under the Securities Act and applicable state law which has become effective and is current with regard to the shares being sold, or shall be pursuant to an exemption from registration under the Securities Act and applicable state law.

The Options are subject to the requirement that, if at any time the Board shall determine, in its discretion, that the listing, registration, or qualification of the shares of common stock underlying the Options upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with the issue or purchase of the shares underlying the Options, the Options may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected.

12.           Transfer.  No transfer of the Options by the Optionee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the letters testamentary or such other evidence as 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 the Company.  The Company will at all times during the term of the 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; and

(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.

14.           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.

15.           Arbitration.  Any controversy, dispute or claim arising out of or relating to this Agreement, or its interpretation, application, implementation, breach or enforcement which the parties are unable to resolve by mutual agreement, shall be settled by submission by either party of the controversy, claim or dispute to binding arbitration in Martin County, Florida (unless the parties agree in writing to a different location), before a single arbitrator in accordance with the rules of the American Arbitration Association then in effect.  The decision and award made by the arbitrator shall be final, binding and conclusive on all parties hereto for all purposes, and judgment may be entered thereon in any court having jurisdiction thereof.

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

17.           Notices and Addresses.  All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted delivery, as follows:

 

	

    The Optionee:

	

 
[see Schedule A]

3515 S.E. Lionel Terrace 

Stuart, FL 34997 

 

 

	

    The Company:  

	

Ecosphere Technologies, Inc.

3515 S.E. Lionel Terrace

Stuart, FL  34996

Attention: Mr. Charles Vinick

 

	
    with a copy to: 

	
Michael D. Harris, Esq.

Harris Cramer LLP

3507 Kyoto Gardens Drive, Suite 320

Palm Beach Gardens, FL 33410

 

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.

 

  

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18.           Attorneys’ Fees.  In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses.

19.           Governing Law.  This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the laws of the State of Delaware without regard to choice of law considerations.

20.           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.

21.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  The execution of this Agreement may be by actual or facsimile signature.

22.           Section or Paragraph Headings.  Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement.

23.           Stop-Transfer Orders.

(a)           The Optionee agrees that, in order to ensure compliance with the restrictions set forth in this Agreement, the Company may issue appropriate “stop transfer” instructions to its duly authorized transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(b)           The Company shall not be required (i) to transfer on its books any shares of the Company’s common stock that have been sold or otherwise transferred in violation of this Agreement or (ii) to treat the owner of such shares of common stock or to accord the right to vote or pay dividends to any purchaser or other Transferee to whom such shares of common stock shall have been so transferred.

[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:

	 	 COMPANY:	 
	 	 	 	 
	
 

	 	
By: 

	/s/ 	 
	 	 	 	Dennis McGuire	 
	 	 	 	Chief Executive Officer	 
	 	 	 	 	 
	 	 	 	OPTIONEE:	 
	 	 	 	 	 
	 	 	 	 [see Schedule A]	 
	 	 	 	 	 

 

G:\Ecosphere\Agreements\Stock Options\Form of Non-Plan Executive Option Agreement 12-23-10(2).doc

 

  

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SCHEDULE A

	
Employee

	 	
Number of Options

	 
	
Michael Donn, Sr.

	 	 	500,000	 
	
Adrian Goldfarb

	 	 	250,000	 
	
Jacqueline McGuire

	 	 	150,000	 

 

 

 

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