Document:

Exhibit 103 - PSU 2015 Equity Comp Plan

		

			Exhibit 10.3

		

		
			Bankrate, Inc.
		

		
			2015 EQUITY COMPENSATION PLAN
		

		
			PERFORMANCE UNIT AGREEMENT
		

		
			THIS PERFORMANCE UNIT AGREEMENT (this “Agreement”), dated as of March [ ], 2016 (the “Grant Date”), is entered into by and between Bankrate, Inc., a Delaware corporation (the “Company”), and [NAME], an employee of the Company (the “Participant”).
		

		
			WHEREAS, the Bankrate, Inc. 2015 Equity Compensation Plan (the “Plan”) provides for grants of Restricted Stock Units; and
		

		
			WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Board”) has decided to make a grant of performance-based Restricted Stock Units to the Participant in order to promote the best interests of the Company and its stockholders on the terms and conditions set forth in this Agreement, conditioned on the Participant’s execution of this Agreement.
		

		
			NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:
		

			
	
			
				 1.
			

			
	
			
			Restricted Stock Unit Grant.  The Company hereby grants to the Participant [NUMBER] Restricted Stock Units (the “Performance Units”), subject to increase or decrease in accordance with the terms and conditions of this Agreement and the Plan (which is incorporated herein by reference with the same effect as if set forth herein in full) in addition to such other restrictions, if any, as may be imposed by law.    

			
	
			
				 2.
			

			
	
			
			Definitions.  All capitalized terms used herein shall have the same meaning as in the Plan, except as otherwise expressly provided.

			
	
			
				 3.
			

			
	
			
			Vesting and Forfeiture.

			
	
			
				 (a)
			

			
	
			
			Performance Factor.  The actual number of Performance Units earned by the Participant, subject to the continued service vesting requirement set forth in Section 3(b) of this Agreement, shall be determined by multiplying the Performance Factor (as defined in Exhibit A hereto) for the period commencing on January 1, 2016 and ending on December 31, 2017 (the “Measurement Period”) by the number of Performance Units granted pursuant to Section 1 of this Agreement, rounded to the nearest whole Performance Unit, with the Performance Factor to be determined upon the later of (i) the date on which the audit of the Company’s financial statements for 2017 is completed and (ii) the date on which the final calculation of the Relative TSR Factor (as defined in Exhibit A hereto) is made by the Committee (such later date, the “Determination Date”), it being expected that the Determination Date shall occur in April 2018 (and in no event shall the determinations contemplated by this sentence be made later than December 31, 2018).  Subject to Section 3(d)(i) of this Agreement, the 
		

		 

		

			

		

		

			 

		

 

			number of Performance Units determined pursuant to this Section 3(a) shall be the “Earned Performance Units.” 

			
	
			
				 (b)
			

			
	
			
			Service Vesting.  Except as otherwise set forth in this Agreement, (i) 50% of the Earned Performance Units shall vest on the Determination Date and (ii) 50% of the Earned Performance Units shall vest on the third anniversary of the Grant Date (each, a “Vesting Date”), in each case, subject to the Participant not incurring a Termination of Service prior to the applicable Vesting Date (if the number of Earned Performance Units is an odd number, an extra Earned Performance Unit shall vest on the Determination Date).

			
	
			
				 (c)
			

			
	
			
			Termination of Service.

			
	
			
				 (i)
			

			
	
			
			General.  Except as otherwise provided in Sections 3(c)(ii) and 3(c)(iii) of this Agreement, if the Participant incurs a Termination of Service, any then outstanding and unvested Performance Units shall be automatically and immediately forfeited for no consideration.

			
	
			
				 (ii)
			

			
	
			
			Death or Disability; Termination without Cause Prior to a Change in Control.  Notwithstanding Section 3(c)(i) of this Agreement, if the Participant incurs a Termination of Service prior to the third anniversary of the Grant Date that is due to the Participant’s death or Disability, or due to a termination by the Company other than for Cause that occurs prior to a Change in Control, the applicable number of Prorated Earned Performance Units (as defined in Section 3(c)(v) of this Agreement) shall vest on the later of the date of such Termination of Service or the Determination Date (and all other Performance Units shall be forfeited);  provided,  however, that if the Termination of Service occurs subsequent to the Determination Date, the number of Prorated Earned Performance Units that shall so vest shall be reduced by the number of Performance Units, if any, that vested and settled prior to such Termination of Service.

			
	
			
				 (iii)
			

			
	
			
			Termination without Cause or Resignation with Good Reason Following a Change in Control.  Notwithstanding Section 3(c)(i) of this Agreement, if the Participant incurs a Termination of Service following a Change in Control due to (A) a termination by the Company without Cause or (B) a termination by the Participant with Good Reason (as defined in Section 3(c)(iv) of this Agreement), all unvested outstanding Earned Performance Units (determined in accordance with Section 3(d) of this Agreement) shall immediately vest as of the date of such Termination of Service.

			
	
			
				 (iv)
			

			
	
			
			Definition of Good Reason.  For purposes of this Agreement, “Good Reason” shall mean: (A) if the Participant is party to an employment, consulting or services agreement with the Company that defines “good reason,” the definition of “good reason” set forth therein, and (B) if the Participant is not party to any such agreement, the occurrence of any of the 
		

		 

		

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			following events:  (1) a reduction in the Participant’s base salary or  incentive compensation opportunity, (2) a material diminution in the Participant’s title, position, or duties, or (3) a relocation of the Participant’s principal place of employment that increases the Participant’s one-way commute by at least 30 miles; provided,  however, that the Participant’s termination shall not be considered to be with Good Reason unless (x) the Participant provides the Company with written notice of the event giving rise to the claim of Good Reason within 30 days following the occurrence of such event, (y) such event is not corrected, in all material respects, by the Company within 30 days following receipt of such notice, and (z) the Participant incurs a Termination of Service not more than 30 days following the expiration of such correction period.

			
	
			
				 (v)
			

			
	
			
			Definition of Prorated Earned Performance Units.  For purposes of this Agreement, the “Prorated Earned Performance Units” shall mean a number of Performance Units, rounded to the nearest whole Performance Unit, equal to the product of (A) the number of Earned Performance Units that the Participant would have earned had the Participant not incurred a Termination of Service prior to the third anniversary of the Grant Date (determined in accordance with Section 3(a) of this Agreement) multiplied by (B) a fraction, the numerator of which is the number of days elapsed from the Grant Date through the Date of Termination and the denominator of which is 1,096.

			
	
			
				 (d)
			

			
	
			
			Change in Control.  Notwithstanding Section 3(a) or 3(b) of this Agreement:

			
	
			
				 (i)
			

			
	
			
			Prior to the Determination Date.  If a Change in Control occurs prior to the Determination Date, (A) the Earned Performance Units shall be determined by the Committee based upon the Company’s actual performance through the Change in Control (with both actual performance and the applicable performance metrics prorated for the portion of the Measurement Period occurring prior to such closing for purposes of determining the Performance Factor, in accordance with the final paragraph of Exhibit A hereto); and (B) the number of Earned Performance Units determined in accordance with clause (A) shall vest in equal installments on (1) the final day of the Measurement Period (or, if later, upon the Change in Control) and (2) the third anniversary of the Grant Date, subject to the Participant not incurring a Termination of Service through such dates. 

			
	
			
				 (ii)
			

			
	
			
			Following the Determination Date.  If a Change in Control occurs following the Determination Date but prior to the third anniversary of the Grant Date, all unvested Earned Performance Units (as determined in accordance with Section 3(a) of this Agreement) shall continue to vest in accordance with Section 3(b) of this Agreement.

		 

		

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				 (e)
			

			
	
			
			Restatement.  If, during the period following the end of the Measurement Period and prior to the third anniversary of the Grant Date, the Company restates its earnings for any portion of the Measurement Period and it is determined that the Participant would have been eligible to receive a different number of Earned Performance Units based on such restated earnings, the Committee shall adjust the number of Earned Performance Units to reflect the number of Performance Units earned based on the restated earnings, rounded to the nearest whole Performance Unit (in the case of a restatement subsequent to the Determination Date that results in a reduction in the number of Performance Units eligible for vesting, such reduction shall be taken from the Performance Units that would have been eligible to vest on the third anniversary of the Grant Date pursuant to Section 3(b) of this Agreement, but shall not be taken from any previously vested Shares, it being understood that this parenthetical imposes no limitation on application of Section 3(f) of this Agreement).

			
	
			
				 (f)
			

			
	
			
			Clawback Policy.  The Participant hereby agrees to be subject to the Company’s Senior Management Team Clawback Policy (the “Clawback Policy”) in all respects, and acknowledges that the Clawback Policy shall apply to (but that its application is not limited to) the Performance Units granted hereunder.

			
	
			
				 4.
			

			
	
			
			Nontransferability.  The Performance Units acquired by the Participant pursuant to this Agreement shall not be sold, transferred, pledged, assigned, or otherwise encumbered or disposed of, except as provided herein and in the Plan.

			
	
			
				 5.
			

			
	
			
			Settlement.  Subject to Section 7 of this Agreement,  the Company shall issue one Share to the Participant for each Performance Unit that becomes vested hereunder within 30 days following the applicable Vesting Date.

			
	
			
				 6.
			

			
	
			
			No Voting Rights; Dividend Equivalents.  Until such time as Performance Units have been settled pursuant to Section 5 of this Agreement and the underlying Shares have been delivered to the Participant, and the Participant has become the holder of such Shares, the Participant shall have no rights as a stockholder, including, without limitation, any right to dividends or other distributions or any right to vote.  Notwithstanding the foregoing,  if the Company declares an ordinary cash dividend the record date of which occurs while the Performance Units are outstanding, the Participant shall receive additional Performance Units in an amount determined by dividing the dollar value of the dividend the Participant would have received on the Performance Units outstanding on the record date of such dividend by the Fair Market Value of a Share on the last trading day before the date of the dividend payment (rounded to the nearest whole Performance Unit).  The additional Performance Units so granted shall be subject to the same restrictions applicable to the underlying Performance Units in respect of which they were granted.

			
	
			
				 7.
			

			
	
			
			Certain Tax Matters.  The Participant expressly acknowledges that the settlement of the Performance Units acquired hereunder may give rise to “wages” subject to withholding and agrees that the minimum withholding required by law shall be satisfied by the Participant surrendering to the Company a portion of the Shares that are issued or transferred to the Participant upon the settlement of the Performance Units (and, at the 
		

		 

		

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			Company’s election, the Company may withhold and remit to the tax authorities additional Shares so long as the aggregate withholdings do not exceed the amount of tax that would be due based upon the highest statutory tax rate in the applicable jurisdiction).  Any Shares so surrendered by the Participant shall be credited against any such withholding obligation at the Fair Market Value of such Shares on the date of such surrender (and the amount equal to the Fair Market Value of such Shares shall be remitted to the appropriate tax authorities).

			
	
			
				 8.
			

			
	
			
			Governing Law; Captions.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

			
	
			
				 9.
			

			
	
			
			Plan.  The Performance Units are granted pursuant to the Plan, which is incorporated herein by reference, and the Performance Units shall, except as otherwise expressly provided herein, be governed by the terms of the Plan.  In the event of a conflict between the provisions of this Agreement and the terms of the Plan, the terms of the Plan shall control.  The Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.  The Participant and the Company each acknowledge that this Agreement (together with the Plan) constitutes the entire agreement and supersedes all other agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

			
	
			
				 10.
			

			
	
			
			No Employment Rights.  This Agreement shall not create any right of the Participant to continued employment or limit the right of the Company to terminate the Participant’s employment at any time and shall not create any right of the Participant to employment with the Company.

			
	
			
				 11.
			

			
	
			
			Amendment.  This Agreement may be amended only by mutual written agreement of the parties.

			
	
			
				 12.
			

			
	
			
			Assignment.  This Agreement is personal to the Participant and, without the prior written consent of the Company, shall not be assignable by the Participant other than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Participant’s legal representatives.  This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

			
	
			
				 13.
			

			
	
			
			Severability.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

			
	
			
				 14.
			

			
	
			
			No Waiver.  The Participant’s or the Company’s failure to insist upon strict compliance with any provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of such provision or right or of any other provision of or right under this Agreement.

			
	
			
				 15.
			

			
	
			
			Section 409A of the Code.  It is intended that the Performance Units granted pursuant to this Agreement and the provisions of this Agreement be exempt from or comply with Section 409A of the Code, and all provisions of this Agreement shall be construed and 
		

		 

		

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			interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A of the Code.

			
	
			
				 16.
			

			
	
			
			Unfunded Plan.  This Award is unfunded and the Participant shall be considered an unsecured creditor of the Company with respect to the Company’s obligations, if any, to issue Shares pursuant to this Agreement (including, without limitation, as to any Performance Units that vest).  Nothing contained in this Agreement, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Participant and the Company or any other person.

			
	
			
				 17.
			

			
	
			
			Counterparts.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  The parties hereto confirm that any facsimile copy of another party’s executed counterpart of this Agreement (or its signature page thereof) shall be deemed to be an executed original thereof.

		
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		IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first written above.
		

		
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			BANKRATE, INC.
		

		
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			By: _____________________________________
       Name:
		

		
			       Title:
		

		
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			PARTICIPANT
		

		
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			________________________________________
		

		
			[PARTICIPANT NAME]
		

		
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			[Signature Page to Performance Unit Agreement]Amended and Restated Convertible Promissory Note

 

EXHIBIT 10.1

THE SHARES ISSUABLE UPON CONVERSION OF THIS CONVERTIBLE NOTE AND THE CONVERTIBLE NOTE HAVE 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 TO THE COMPANY, THAT AN EXEMPTION FROM SUCH APPLICABLE LAWS EXIST.

THIS AMENDED, RESTATED AND CONSOLIDATED CONVERTIBLE NOTE REPLACES AND SUPERSEDES THAT CERTAIN AMENDED, RESTATED AND CONSOLIDATED CONVERTIBLE NOTE ISSUED ON FEBRUARY 29, 2015.

AMENDED, RESTATED AND CONSOLIDATED

CONVERTIBLE NOTE

		
	$2,904,000.00

	Issuance Date: May 4, 2016

	 
	Maturity Date: December 15, 2016

FOR VALUE RECEIVED, Ecosphere Technologies, Inc. (the “Company”), a Delaware corporation, hereby promises to pay to the order of Brisben Water Solutions LLC or its assigns (the “Holder”), the principal sum of $2,904,000.00 together with interest at 10% per annum  on the basis of a 360-day year except as otherwise stated: (i) on the principal amount of $1,000,000 from September 12, 2014 to February 9, 2015; (ii) on the principal amount of $1,250,000 from February 9, 2015 to March 19, 2015; (iii) on the principal amount of $1,500,000 from March 19, 2015 to May 8, 2015; (iv) on the principal amount of $1,750,000 from May 8, 2015 to June 18, 2015; (v) on the principal amount of $2,000,000 from June 18, 2015 to July 10, 2015; (vi) on the principal amount of $2,125,000 from July 10, 2015 to March 30, 2016; (vii) on the principal amount of $150,000, the fixed amount of $30,000; (viii) on the principal amount of $200,000, the fixed amount of $40,000; (ix) on the principal amount of $2,154,000 from March 30, 2016 to April 8, 2016, (x) on the principal amount of $2,254,000 from April 8, 2016 to May 4, 2016 and; (xi) on the principal amount of $2,554,000 from May 4, 2016. This Amended, Restated and Consolidated Convertible Note (the “Note”) replaces and supersedes that Amended, Restated and Consolidated Convertible Note issued February 29, 2016.

Interest shall be due and payable on the earlier of: (i) the Conversion Date (defined below), or each Conversion Date if more than one; and (ii) the Maturity Date (defined above), and the principal of this Note is due and payable on the Maturity Date.

While in default, this Note (or the amount thereof in default) shall bear interest at the rate of 18% per annum or 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. On 10 business days prior written notice to the Holder, the Company may prepay the principal and accrued and unpaid interest, in whole or in part, without penalty or provision.  This Note shall be prepaid upon the sale by the Company of any part of the Collateral (as defined below) and shall be repaid upon occurrence of any events requiring repayment under the Security Agreement (defined below).  The Company shall give the Holder written notice of any sale of any part of the Collateral at least 30 days prior to such sale.

This Note shall be secured by the Collateral, as defined in the Security Agreement between the Company and the Holder, dated as of the date hereof, which replaces and supersedes all prior security agreements entered into between the Company and the Holder prior to the date hereof (the “Security Agreement”). The Parties acknowledge and agree that the Security Agreement contains a covenant that, in enforcing the Holder’s rights under 

the Security Agreement and this Note, the Lender shall never seek to take possession of, nor cause the sale, transfer or other disposition of, nor in any way limit or interfere with the rights of Ecosphere or other parties to certain equity interests in Sea of Green Systems, Inc. (“SOGS”) and Ecosphere Development Corporation LLC (“EDC”), or any other agriculture-related asset held directly, or indirectly, by Ecosphere or any entity it controls, or by SOGS or any entity SOGS acquires or is acquired by, or by EDC or any entity EDC acquires or is acquired by. The preceding sentence shall not be construed to limit the Holder’s rights to any asset that is explicitly included in the definition of Collateral under the Security Agreement.  

1.

Conversion to Common Stock or Series C Convertible Stock.

(a)

The number of shares of common stock issuable upon a conversion of this Note shall be determined by dividing: (i) the principal amount of this Note being converted by (ii) $0.115 per share. No fractional shares shall be issued upon a conversion. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall pay the Holder cash equal to the product of such fraction multiplied by the common stock’s fair market value at the time of conversion based on the closing price of a share of common stock on the Conversion Date.

(b)

To convert this Note into common stock on any date (a “Conversion Date”), the Holder shall: (i) transmit by email (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit 1 (the “Conversion Notice”) to the Company, and (ii) surrender this Note to a common carrier for delivery to the Company as soon as practicable on or following such date (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction).  On or before the second business day following the date of receipt of a Conversion Notice, the Company shall confirm that it has issued to the Holder the number of shares of common stock to which the Holder shall be entitled, and shall return to the Holder a new Note with respect to the portion of the original Note which was not converted.  The person or persons entitled to receive the common stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such common stock on the Conversion Date.

(c)

The Holder and the Company agree that in lieu of any shares of common stock deliverable upon conversion of this Note, the Company may, to the extent that it lacks sufficient authorized common stock, issue the Holder an equivalent number, on an as-converted basis, of shares of the Company’s Series C Convertible Preferred Stock (the “Series C”), which converts on the basis of 1,000,000 shares of common stock to one share of Series C, in accordance with the Certificate of Designation setting forth the terms of the Series C, which is attached as Exhibit A to this Note.

(d)

For the avoidance of doubt, and notwithstanding anything in this Note or any other agreement between the Company and the Holder, Section 1 of the January 18, 2016 Note is no longer of any force or effect, and, no amounts of principal or interest under this Note shall be convertible into shares of common stock for SOGS.

(e)

The Company acknowledges and agrees that as further consideration for the advance of $429,000 made in connection with the issuance of this Note and the advances of $200,000 made in February 2016 and $150,000 in January 2016, the Holder shall be issued 13,547,826 warrants to purchase shares of common stock of the Company (or, if the Company lacks the authorized common stock, an equivalent number of shares of Series C on terms reasonably acceptable to the Holder), exercisable for five years at $0.115 per share (subject to adjustment as defined therein) and which permit the Holder to exercise on a cashless basis.

2.

Anti-Dilution Protection.

(a)

In the event, prior to the payment of this Note, that the Company shall issue any of its shares of common stock as a stock dividend or shall subdivide the number of outstanding shares of common stock into a 

greater number of shares, then, in either of such events, the Conversion Price  shall be decreased proportionately; and, conversely, in the event that the Company shall reduce the number of outstanding shares of common stock by combining such shares into a smaller number of shares, then, in such event, the Conversion Price shall be increased proportionately.  Any dividend paid or distributed upon the common stock in shares of any other class of capital stock of the Company or securities convertible into shares of common stock shall be treated as a dividend paid in common stock.  In the event that the Company shall pay a dividend consisting of the securities of any other entity or in cash or other property, upon the next conversion of this Note, the Holder shall receive the securities, cash, or property which the Holder would have been entitled to if the conversion occurred immediately prior to the record date of such dividend.

(b)

In the event, prior to the payment of this Note, that the Company shall be recapitalized by reclassifying its outstanding common stock (other than into shares of common stock with a different par value, or by changing its outstanding shares of common stock to shares without par value), or in the event the Company or a successor corporation, partnership, limited liability company or other entity (any of which is defined as a “Corporation”) shall consolidate or merge with or convey all or substantially all of its, or of any successor Corporation's property and assets to any other Corporation or Corporations (any such other Corporation being included within the meaning of the term “successor Corporation” used in the context of any consolidation or merger of any other Corporation with, or the sale of all or substantially all of the property of any such other Corporation to, another Corporation or Corporations), or in the event of any other material change in the capital structure of the Company or of any successor Corporation by reason of any reclassification, reorganization, recapitalization, consolidation, merger, conveyance or otherwise, then, as a condition of any such reclassification, reorganization, recapitalization, consolidation, merger or conveyance, a prompt, proportionate, equitable, lawful and adequate provision shall be made whereby  in lieu of the securities of the Company theretofore issuable upon the conversion of this Note, the Holder upon conversion shall receive the securities or assets as may be issued or paid as a result of the foregoing; and in any such event, the rights of the Holder of this Note to any adjustment in the number of shares of common stock obtainable upon conversion of this Note, as provided, shall continue and be preserved in respect of any shares, securities or assets which the Holder becomes entitled to obtain.  Notwithstanding anything herein to the contrary, this Section 2 shall not apply to a merger with a subsidiary provided the Company is the continuing Corporation or involving a subsidiary merger and provided further such merger does not result in any reclassification, capital reorganization or other change of the securities issuable under this Note.  The foregoing provisions of this Section 2(b) shall apply to successive reclassifications, capital reorganizations and changes of securities and to successive consolidations, mergers, sales or conveyances.

(c)

In the event the Company, at any time while this Note shall remain outstanding, shall sell all or substantially all of its assets, or dissolve, liquidate, or wind up its affairs, prompt, proportionate, equitable, lawful and adequate provision shall be made as part of the terms of any such sale, dissolution, liquidation, or winding up such that the Holder of this Note may thereafter receive, upon exercise hereof, in lieu of the securities of the Company which it would have been entitled to receive, the same kind and amount of any shares, securities or assets as may be issuable, distributable or payable  upon any such sale, dissolution, liquidation or winding up with respect to each common share of the Company; provided, however, that in the event of any such sale, dissolution, liquidation or winding up, the conversion provisions of this Note shall terminate on a date fixed by the Company, such date so fixed to be not earlier than 6:00 p.m., New York time, on the 30th day after the date on which notice of such termination of conversion provisions of this Note has been given by mail to the Holder of this Note at such Holder's address as it appears on the books of the Company.

3.

Event of Default.  In the event of any failure to pay this Note when due; or the Company shall be in breach of or default under any agreement with the Holder; or the Company shall 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 the Company, 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 unbounded for a period of 30 days after service upon the Company; or there shall be commenced against the Company, 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 after service upon the Company; or the Company shall make an assignment for the benefit of creditors; or the Company shall take any action indicating its consent to, approval of, or acquiescence in, or in furtherance of, any of the foregoing; or the Company or any of its subsidiaries shall fail to pay any indebtedness for borrowed money to any third party when due; 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.

4.

Investment Intent.  The Holder, by acceptance of this Note, warrants and represents that it is acquiring this Note and the underlying common stock for its own account, for investment and not with a view to, or for resale in connection with, the distribution thereof.  The Holder has no present intention of reselling or distributing them after any period of time.  The acquisition of the securities for investment is consistent with Holder’s financial needs.

5.

Miscellaneous.

(a)

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

(b)

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.

(c)

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 Delaware.

(d)

Any action brought by either party against the other concerning this Note shall be brought only in the state or federal courts of Florida and venue shall be in the County of Martin or the Southern District of Florida.  The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. 

(e)

In the event that there is any controversy or claim arising out of or relating to this Note, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Note, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and expenses (including such fees and costs on appeal).

(f)

Upon any endorsement, assignment, or other transfer of this Note by the Holder or by operation of law, the term “Holder,” as used herein, shall mean such endorsee, assignee, or other transferee or successor to the Holder, then becoming the holder of this Note.  This Note shall inure to the benefit of the Holder and its successors and assigns and shall be binding upon the undersigned and their successors and assigns.  

(g) 

In the event that any interest paid on this Note is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note, and any surplus thereafter shall immediately be refunded to the Company.

(h)

To the extent permitted by law, any reproduction of this Note shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by Holder or the Company in the regular course of business) and that, to the extent permitted by law, any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

[Signature Page Follows]

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

			
	 
	COMPANY:

	 
	Ecosphere Technologies, Inc.,

	 
	a Delaware corporation

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	By:

	/s/ Dennis McGuire

	 
	 
	Dennis McGuire,

	 
	 
	Chief Executive Officer

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