Document:

esph_ex412.htm

EXHIBIT 4.10

NON-QUALIFIED STOCK OPTION AGREEMENT

NON-PLAN

THIS STOCK OPTION AGREEMENT (the “Agreement”) entered into as of May 27, 2010 between Ecosphere Technologies, Inc. (the “Company”) and Jacqueline McGuire (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.  On June 30, 2008 (the “Grant Date”), 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 300,000 shares of authorized but unissued or treasury common stock of the Company (the “Options”) on the terms and conditions herein set forth.  The common stock shall be unregistered unless the Company voluntarily files a registration statement covering such shares with the Securities and Exchange Commission.  The Options are not intended to be Incentive Stock Options as defined by Section 422 of the Internal Revenue Code of 1986 (the “Code”) and are not issued under any of the Company’s equity incentive plans.  This Agreement replaces any stock option agreement or offer letter previously provided to the Optionee, if any, with respect to these Options.

 

2.   Price.  The exercise price of the Options is $0.47 per share.

3.  Vesting - When Exercisable.

(a)  The Options shall vest annually in equal increments over a three-year period with the first vesting date being June 30, 2009, subject to continuing to provide services for the Company on each applicable vesting date.  Any fractional vesting shall be rounded up to the extent necessary.

(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 five years from the Grant Date (the “Expiration Date”).

(c)   Notwithstanding any other provision of this Agreement at the option of the Board, all Options, whether vested or unvested, shall be immediately forfeited if any of the following events occur:

(1)  Termination of the Optionee by the Company for any reason including without cause and including, but not limited to, fraud, theft, 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) The Optionee acts in a disloyal manner to the Company.

4.  Termination of Relationship.

(a)  If for any reason, except death or disability as provided below, the Optionee ceases to perform services for the Company, all rights granted hereunder shall terminate effective three months from that date.

(b)  If the Optionee shall die while performing services for the Company, the Optionee’s estate or any Transferee, as defined herein, shall have the right within one year from the date of the Optionee’s death to exercise the Optionee’s vested Options subject to Section 3(c).  For the purpose of this Agreement, “Transferee” shall mean a person to whom the Options are transferred by will or by the laws of descent and distribution.

(c)  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.

(d)  If the Optionee becomes disabled while performing services for the Company within the meaning of Section 22(e)(3) of the Code, the three-month period referred to in Section 4(a) of this Agreement shall be extended to one year.

(e)  Notwithstanding anything in this Agreement to the contrary, 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 is performing services for the Company (the “Termination Date”), all profits earned from the sale of the Company’s securities, including the sale of shares of common stock underlying 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)  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; and

(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 Securities Exchange Act of 1934 (“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 date of grant of the Options 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.

(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 then subject to 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, nor the Optionee’s estate, nor any Transferee shall have any rights as a shareholder with respect to any of the shares underlying the Options until such person shall have become the holder of record of such shares.  No cash dividends or cash distributions, ordinary or extraordinary, shall be provided if the record date is prior to the date on which such person is 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 5 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 person’s 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 subject to 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 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.   Duties of 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 issuance 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.

13.  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.

14.  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.

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

16.  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, or by facsimile delivery as follows:

 

 

	 	 The Optionee:	
Jacqueline McGuire

3515 S.E. Lionel Terrace

Stuart, FL 34997 

	 	 	 
	 	 The Company:  	
Ecosphere Technologies, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

Facsimile: (772) 781-4778

Attention: Mr. Dennis McGuire

	 	 	 
	 	 with a copy to: 	
Michael D. Harris, Esq.

Harris Cramer LLP

1555 Palm Beach Lakes Blvd., Suite 310

West Palm Beach, FL 33401

Facsimile:  (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.

 

  

  

  

17.  Attorney’s 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 attorney’s fees, costs and expenses.

18.  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.

19.  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.

20.  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.

21.  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.

 

  

  

  

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

 

	WITNESSES:	 	 	ECOSPHERE TECHNOLOGIES, INC.	 
	
 

	 	By:	
 

	 
	
 

	 	 	
Dennis McGuire

	 
	
 

	 	 	
Chief Executive Officer

	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	OPTIONEE:	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	Jacqueline McGuireesph_ex1026.htm

    EXHIBIT
4.11

    

    THIS
WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS,
HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR TRANSFERRED OR OFFERED
FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN
EFFECT, OR IN THE OPINION OF COUNSEL TO THE ISSUER OF THESE SECURITIES, SUCH
REGISTRATION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS
NOT REQUIRED.

    

    
      	 
      	
              Date:
      December  22, 2009

            	 
      

    

    

    WARRANT
FOR THE PURCHASE OF SHARES OF

     

    COMMON
STOCK OF ECOSPHERE TECHNOLOGIES, INC.

     

    THIS IS TO CERTIFY that, for value
received, Michael R. Hull (the “Holder”), is entitled to purchase, subject to
the terms and conditions hereinafter set forth, Fifty
Thousand  (50,000.00) shares of Ecosphere Technologies, Inc., a
Delaware corporation (the “Company”) common stock, $0.01 par value per share
(“Common Stock”), and to receive certificates for the Common Stock so
purchased.  The exercise price of this Warrant is $0.43 per share, subject to
adjustment as provided below (the “Exercise Price”).

    

    1.   Exercise Period and
Vesting.  This Warrant may be exercised by the Holders at any
time through 5:00 p.m., New York time, December 21, 2014 (the “Exercise Period”)
..  This Warrant will terminate automatically and immediately upon the
expiration of the Exercise Period.

     

    2.   Exercise of
Warrant.  This Warrant may be exercised, in whole or in part,
at any time and from time to time during the Exercise Period.  Such
exercise shall be accomplished by tender to the Company of an amount equal to
the Exercise Price multiplied by number of underlying shares being purchased
(the “Purchase Price”), in cash, by wire transfer or by certified check or bank
cashier’s check, payable to the order of the Company, together with presentation
and surrender to the Company of this Warrant with an executed subscription
agreement in substantially the form attached hereto as Exhibit A (the
“Subscription”). Upon receipt of the foregoing, the Company will deliver to the
Holder, as promptly as possible, a certificate or certificates representing the
shares of Common Stock so purchased, registered in the name of the Holder or its
transferee (as permitted under Section 3 below).  With respect to any
exercise of this Warrant, the Holder will for all purposes be deemed to have
become the holder of record of the number of shares of Common Stock purchased
hereunder on the date a properly executed Subscription and payment of the
Purchase Price is received by the Company (the “Exercise Date”), irrespective of
the date of delivery of the certificate evidencing such shares, except that, if
the date of such receipt is a date on which the stock transfer books of the
Company are closed, such person will be deemed to have become the holder of such
shares at the close of business on the next succeeding date on which the stock
transfer books are open.  Fractional shares of Common Stock will not
be issued upon the exercise of this Warrant.  In lieu of any
fractional shares that would have been issued but for the immediately preceding
sentence, the Holder will be entitled to receive cash equal to the current
market price of such fraction of a share of Common Stock on the trading day
immediately preceding the Exercise Date.  In the event this Warrant is
exercised in part, the Company shall issue a new Warrant to the Holder covering
the aggregate number of shares of Common Stock as to which this Warrant remains
exercisable for.

     

    
      
         

      

      
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    3.   Transferability
and Exchange.

     

    (a)           This
Warrant, and the Common Stock issuable upon the exercise hereof, may not be
sold, transferred, pledged or hypothecated unless the Company shall have been
provided with an opinion of counsel reasonably satisfactory to the Company that
such transfer is not in violation of the Securities Act of 1933 (“Securities
Act”), and any applicable state securities laws.  Subject to the
satisfaction of the aforesaid condition, this Warrant and if the underlying
shares of Common Stock may not all be sold under Rule 144 of the Securities Act,
the shares of Common Stock shall be transferable from time to time by the
Holders upon written notice to the Company.  If this Warrant is
transferred, in whole or in part, the Company shall, upon surrender of this
Warrant to the Company, deliver to each transferee a Warrant evidencing the
rights of such transferee to purchase the number of shares of Common Stock that
such transferee is entitled to purchase pursuant to such
transfer.  The Company may place a legend similar to the legend at the
top of this Warrant on any replacement Warrant and on each certificate
representing shares issuable upon exercise of this Warrant or any replacement
Warrants. Only registered Holders may enforce the provisions of this Warrant
against the Company.  A transferee of the original registered Holder
becomes a registered Holder only upon delivery to the Company of the original
Warrant and an original Assignment, substantially in the form set forth in Exhibit B attached
hereto.

     

    (b)           This
Warrant is exchangeable upon its surrender by the Holders to the Company for new
Warrants of like tenor and date representing in the aggregate the right to
purchase the number of shares purchasable hereunder, each of such new Warrants
to represent the right to purchase such number of shares as may be designated by
the Holder at the time of such surrender (not to exceed the aggregate number of
shares underlying this Warrant).

     

    4.   Adjustments to Exercise Price and
Number of Shares Subject to Warrant.  The Exercise Price and
the number of shares of Common Stock purchasable upon the exercise of this
Warrant are subject to adjustment from time to time upon the occurrence of any
of the events specified in this Section 4.  For the purpose of this
Section 4, “Common Stock” means shares now or hereafter authorized of any class
of Common Stock of the Company, however designated, that has the right to
participate in any distribution of the assets or earnings of the Company without
limit as to per share amount (excluding, and subject to any prior rights of, any
class or series of preferred stock).

     

    (a)           
In case the Company shall (i) pay a dividend or make a distribution in shares of
Common Stock to holders of shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (iv) issue by reclassification of its shares of Common Stock other securities
of the Company, then the Exercise Price in effect at the time of the record date
for such dividend or on the effective date of such subdivision, combination or
reclassification, and/or the number and kind of securities issuable on such
date, shall be proportionately adjusted so that the Holders of the Warrant
thereafter exercised shall be entitled to receive the aggregate number and kind
of shares of Common Stock (or such other securities other than Common Stock) of
the Company, at the same aggregate Exercise Price, that, if such Warrant had
been exercised immediately prior to such date, the Holders would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
distribution, subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall
occur.

     

    
      
         

      

      
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    (b)          
 In case the Company shall fix a record date for the making of a
distribution of cash, evidences of indebtedness or assets, or subscription
rights or warrants to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation), the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Fair  Market Value  per share of Common Stock
on such record date, less the amount of cash to be distributed or the Fair
Market Value (as determined in good faith by, and reflected in a formal
resolution of, the Board of Directors of the Company) of the portion of the
assets or evidences of indebtedness so to be distributed, or of such
subscription rights or warrants, applicable to one share of Common Stock, and
the denominator of which shall be the  Fair Market Value per share of
Common Stock.  Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Exercise Price shall again be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.  When
determining Fair Market Value of the Company’s Common Stock, Fair Market
Value  shall mean:  (i) if the principal trading market for
such securities is a national securities exchange including The Nasdaq Stock
Market, or the Over-the-Counter Bulletin Board (“OTCBB”) (or a similar system
then in use), the last reported sales price on the principal market the trading
day immediately prior to such record date; or (ii) if subsection (i) is not
applicable, and if bid and ask prices for shares of Common Stock are reported by
the principal trading market or the Pink Sheets, the average of the high bid and
low ask prices so reported for the trading day immediately prior to such record
date.  Notwithstanding the foregoing, if there is no last reported
sales price or bid and ask prices, as the case may be, for the day in question,
then Fair Market Value shall be determined as of the latest day prior to such
day for which such last reported sales price or bid and ask prices, as the case
may be, are available, unless such securities have not been traded on an
exchange or in the over-the-counter market for 30 or more days immediately prior
to the day in question, in which case the Fair Market Value shall be determined
in good faith by, and reflected in a formal resolution of, the Board of
Directors of the Company.

     

    (c)           
Notwithstanding any provision herein to the contrary, no adjustment in the
Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Exercise Price; provided, however, that any
adjustments which by reason of this Section 4(c) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this Section 4 shall be made to
the nearest cent or the nearest one-hundredth of a share, as the case may
be.

     

    (d)           
In the event that at any time, as a result of an adjustment made pursuant to
Section 4(a) above, the Holders of any Warrant thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than shares
of Common Stock, thereafter the number of such other shares so receivable upon
exercise of any Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares of Common Stock contained in this Section 4, and the other
provisions of this Warrant shall apply on like terms to any such other
shares.

     

    
      
         

      

      
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    (e)         
  If the Company merges or consolidates into or with another
corporation or entity, or if another corporation or entity merges into or with
the Company (excluding such a merger in which the Company is the surviving or
continuing corporation and which does not result in any reclassification,
conversion, exchange, or cancellation of the outstanding shares of Common
Stock), or if all or substantially all of the assets or business of the Company
are sold or transferred to another corporation, entity, or person, then, as a
condition to such consolidation, merger, or sale (any a “Transaction”), lawful
and adequate provision shall be made whereby the Holders shall have the right
from and after the Transaction to receive, upon exercise of this Warrant and
upon the terms and conditions specified herein and in lieu of the shares of the
Common Stock that would have been issuable if this Warrant had been exercised
immediately before the Transaction, such shares of stock, securities, or assets
as the Holders would have owned immediately after the Transaction if the Holders
have exercised this Warrant immediately before the effective date of the
Transaction.

    

    (f)          
 In case any event shall occur as to which the other provisions of this
Section 4 are not strictly applicable but the failure to make any adjustment
would not fairly protect the purchase rights represented by this Warrant in
accordance with the essential intent and principles hereof, then, in each such
case, the Company shall effect such adjustment, on a basis consistent with the
essential intent and principles established in this Section 4, as may be
necessary to preserve, without dilution, the purchase rights represented by this
Warrant.

     

    5.   No Registration
Rights.  The Warrant has not been registered under the
Securities Act.  Unless (i) the appropriate period under Rule 144 of
the Securities Act has expired so that the shares may be sold without
restrictions of any kind, or (ii) an effective registration statement exists
with a current prospectus for the shares of Common Stock, upon exercise, the
stock certificates shall bear the following legend:

    

    “The
securities represented by this certifi­cate have not been registered under
the Securities Act of 1933 (the “Securities Act”), and may not be offered for
sale or sold except pursuant to (i) an effective registration statement under
the Securities Act, or (ii) an opinion of counsel to the issuer of these
securities that an exemption from registration under the Securities Act is
available”.

    

    6.   Reservation of
Shares.  The Company agrees at all times to reserve and hold
available out of its authorized but unissued shares of Common Stock the number
of shares of Common Stock issuable upon the full exercise of this
Warrant.  The Company further covenants and agrees that all shares of
Common Stock that may be delivered upon the exercise of this Warrant will, upon
delivery, be fully paid and nonassessable and free from all taxes, liens and
charges with respect to the purchase thereof hereunder.

     

    7.   Notices to
Holders.  Upon any adjustment of the Exercise Price (or number
of shares of Common Stock issuable upon the exercise of this Warrant) pursuant
to Section 4, the Company shall promptly thereafter cause to be given to the
Holders written notice of such adjustment.  Such notice shall include
the Exercise Price (and/or the number of shares of Common Stock issuable upon
the exercise of this Warrant) after such adjustment, and shall set forth in
reasonable detail the Company’s method of calculation and the facts upon which
such calculations were based.  Where appropriate, such notice shall be
given in advance and included as a part of any notice required to be given under
the other provisions of this Section 7.

     

    
      
         

      

      
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    In the event of (a) any fixing by the
Company of a record date with respect to the holders of any class of securities
of the Company for the purpose of determining which of such holders are entitled
to dividends or other distributions, or any rights to subscribe for, purchase or
otherwise acquire any shares of capital stock of any class or any other
securities or property, or to receive any other right, (b) any capital
reorganization of the Company, or reclassification or recapitalization of the
capital stock of the Company or any transfer of all or substantially all of the
assets or business of the Company to, or consolidation or merger of the Company
with or into, any other entity or person, or (c) any voluntary or involuntary
dissolution or winding up of the Company, then and in each such event the
Company will give the Holders a written notice specifying, as the case may be
(i) the record date for the purpose of such dividend, distribution, or right,
and stating the amount and character of such dividend, distribution, or right;
or (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, conveyance, dissolution,
liquidation, or winding up is to take place and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such capital stock or
securities receivable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock securities) for
securities or other property deliverable upon such event.  Any such
notice shall be given at least 10 days prior to the earliest date therein
specified.

    

    8.      No Rights as a
Stockholder.  This Warrant does not entitle the Holders to any
voting rights or other rights as a stockholder of the Company, nor to any other
rights whatsoever except the rights herein set forth. Provided, however, the Company
shall not enter into any merger agreement in which it is not the surviving
entity, or sell all or substantially all of its assets unless the Company shall
have first provided the Holders with 10 days’ prior written notice.

    

    9.   Additional Covenants of the
Company.  For so long as the Common Stock is listed for trading
or trades on any national securities exchange including The Nasdaq Stock Market
or the OTCBB, the Company shall, upon issuance of any shares for which this
Warrant is exercisable, at its expense, promptly obtain and maintain the listing
or qualifications for trading of such shares.

    

    The Company shall comply with the
reporting requirements of Sections 13 and 15(d) of the Securities Exchange Act
of 1934 for so long as and to the extent that such requirements apply to the
Company.

    

    The Company shall not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant.  Without limiting the generality
of the foregoing, the Company (a) shall comply with Section 6 of this Warrant
and have available sufficient shares of Common Stock to be issued from time to
time upon exercise of this Warrant, (b) will not increase the par value of any
shares of Common Stock issuable upon exercise of this Warrant above the amount
payable therefor upon such exercise, and (c) will take all such actions as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable stock.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    10.   Successors and
Assigns.  This Warrant shall be binding upon and inure to the
benefit of the Company, the Holders and their respective successors and
permitted assigns.

    

    11.   Notices.  The
Company agrees to maintain a ledger of the ownership of this Warrant (the
“Ledger”).  Any notice hereunder shall be given by Federal Express or
other overnight delivery service for delivery on the next business day if to the
Company, at its principal executive office and, if to the Holders, to their
address shown in the Ledger of the Company; provided, however, that either
the Company or the Holders may at any time on three days’ written notice to the
other designate or substitute another address where notice is to be
given.  Notice shall be deemed given and received after a Federal
Express or other overnight delivery service is delivered to the
carrier.

    

    12.   Severability.  Every
provision of this Warrant is intended to be severable. If any term or provision
hereof is illegal or invalid for any reason whatsoever, such illegality or
invalidity shall not affect the remainder of this Warrant.

    

    13.   Governing Law.  This
Warrant shall be governed by and construed in accordance with the laws of the
State of Delaware without giving effect to the principles of choice of laws
thereof.

    

    14.   Attorneys’ Fees.  In
any action or proceeding brought to enforce any provision of this Warrant, the
prevailing party shall be entitled to recover reasonable attorneys’ fees in
addition to its costs and expenses and any other available
remedies.

    

    15.   Entire Agreement. This Warrant
(including the Exhibits attached hereto) constitutes the entire understanding
between the Company and the Holders with respect to the subject matter hereof,
and supersedes all prior negotiations, discussions, agreements and
understandings relating to such subject matter.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly
authorized officer as of the date first set forth above.

     

    
      
        
          	 	Ecosphere
      Technologies, Inc	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	 	Dennis E. McGuire	 
	 	 	Chief Executive Officer	 

        

      

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

    

    Exhibit
A

    

    SUBSCRIPTION
FORM

    

    (To be
Executed by the Holders to Exercise the Rights To Purchase Common Stock
Evidenced by the Within Warrant)

    

    The
undersigned hereby irrevocably subscribes for _______ shares of the Common Stock
(the “Stock”) of Ecosphere Technologies, Inc.  (the “Company”)
pursuant to and in accordance with the terms and conditions of the attached
Warrant (the “Warrant”), and hereby makes payment of $_______ therefor by
[tendering cash, wire transferring or delivering a certified check or bank
cashier’s check, payable to the order of the Company] [surrendering _______
shares of Common Stock received upon exercise of the Warrant, which shares have
an aggregate fair market value equal to the Purchase Price as required in
Section 2 of the Warrant].  The undersigned requests that a
certificate for the Stock be issued in the name of the undersigned and be
delivered to the undersigned at the address stated below.  If the
Stock is not all of the shares purchasable pursuant to the Warrant, the
undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.

    

    In
connection with the issuance of the Stock, I hereby represent to the Company
that I am acquiring the Stock for my own account for investment and not with a
view to, or for resale in connection with, a distribution of the shares within
the meaning of the Securities Act of 1933, as amended (the “Securities
Act”).

    

    I
understand that if at this time the Stock has not been registered under the
Securities Act, I must hold such Stock indefinitely unless the Stock is
subsequently registered and qualified under the Securities Act or is exempt from
such registration and qualification. I shall make no transfer or disposition of
the Stock unless (a) such transfer or disposition can be made without
registration under the Securities Act by reason of a specific exemption from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Securities Act and has been declared effective with
respect to such disposition.  I agree that each certificate
representing the Stock delivered to me shall bear substantially the same legend
as set forth on the front page of the Warrant.

    

    I further
agree that the Company may place stop transfer orders with its transfer agent
having the same effect as the above legend.  The legend and stop
transfer notice referred to above shall be removed only upon my furnishing to
the Company an opinion of counsel (reasonably satisfactory to the Company) to
the effect that such legend may be removed.

    

    
      	
              Date:_______________________________

            	
              Signed:
      _______________________________

               

              Print
      Name:____________________________

               

              Address:______________________________

               

            
	
              Date:_______________________________

               

            	
              Signed:
      _______________________________

               

              Print
      Name:____________________________

               

              Address:______________________________

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
B

    

    ASSIGNMENT

    

    (To be
Executed by the Holders to Effect Transfer of the Attached Warrant)

     

    For Value
Received __________________________ hereby sells, assigns and transfers to
_________________________ the Warrant attached hereto and the rights represented
thereby to purchase _________ shares of Common Stock in accordance with the
terms and conditions hereof, and does hereby irrevocably constitute and appoint
___________________________ as attorney to transfer such Warrant on the books of
the Company with full power of substitution.

     

    Dated:________________________                                                                           Signed:
_____________________________

    
      	
              Please
      print or typewrite

              name
      and address of

              assignee:

               

               

            	 
      	
              Please
      insert Social Security

              or
      other Tax Identification

              Number
      of Assignee:

            

    

    

    Dated:________________________                                                                           Signed:
_____________________________

    
      	
              Please
      print or typewrite

              name
      and address of

              assignee:

               

            	 
      	
              Please
      insert Social Security

              or
      other Tax Identification

              Number
      of Assignee:

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