EARTHCARE CO
14.00% CONVERTIBLE DEBENTURE DATED 4/05/2001
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>14
<FILENAME>d86156ex10-27.txt
<DESCRIPTION>14.00% CONVERTIBLE DEBENTURE DATED 4/05/2001
<TEXT>

<PAGE>   1

                                                                   EXHIBIT 10.27

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The Securities represented by this Debenture have not been registered under the
Securities Act of 1933, as amended ("Act"), or applicable state securities laws
("State Acts") and shall not be sold, hypothecated, donated or otherwise
transferred unless the Borrower shall have received an opinion of Legal Counsel
for the holder hereof, or such other evidence as may be satisfactory to Legal
Counsel for the Borrower, to the effect that any such transfer shall not require
registration under the Act and the State Acts.
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                 EARTHCARE RESOURCE MANAGEMENT OF FLORIDA, INC.
              EARTHCARE RESOURCE MANAGEMENT OF SOUTH FLORIDA, INC.
                         EARTHCARE ACQUISITION SUB, INC.


                          14.00% CONVERTIBLE DEBENTURE

$1,500,000                                                                No: 1

                          Date of Issue: April 3, 2001

         EARTHCARE RESOURCE MANAGEMENT OF FLORIDA, INC., a Florida corporation,
EARTHCARE RESOURCE MANAGEMENT OF SOUTH FLORIDA, INC. (a Florida corporation) and
EARTHCARE ACQUISITION SUB, INC., (an Illinois corporation) as co-borrowers
(hereinafter collectively referred to as "BORROWER") (is indebted and, for value
received, herewith promises to pay to:

                              Sagmark Capital, L.P.

or to its order or assigns, (together with any assignee, jointly or severally,
the "Holder" or "Lender") on or before April 1, 2002 (the "Due Date") (unless
this Debenture shall have been sooner called for redemption or presented for
conversion as herein provided), the sum of One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Principal Amount") and to pay interest on the
Principal Amount at the rate of fourteen percent (14.00%) per annum as provided
herein. This Debenture is a Debenture referred to in the Convertible Loan
Agreement dated April 3, 2001 among Borrower, Parent and Lender. Capitalized
Terms used herein and not otherwise defined shall have the meaning set forth for
such terms in the Loan Agreement. In furtherance thereof, and in consideration
of the premises, the Borrower covenants, promises and agrees as follows:

   1. INTEREST: Interest on the Principal Amount outstanding from time to time
shall accrue at the rate of 14.00% per annum and be payable in monthly
installments commencing May 1, 2001, and subsequent payments shall be made on
the first day of each month thereafter until the Principal Amount and all
accrued and unpaid interest shall have been paid in full. Overdue principal and
interest on the Debenture shall, to the extent permitted by applicable law, bear
interest at the rate of 18.00% per annum. All payments of both principal and
interest shall be made at the address of the Holder hereof as it appears in the
books and records of the Borrower, or at such other place as may be designated
by the Holder hereof in writing to Borrower.

   2. MATURITY: If not sooner redeemed or converted, this Debenture shall mature
on April 1, 2002 at which time all then remaining unpaid principal, interest and
any other charges then due under the Loan Agreement shall be due and payable in
full.




<PAGE>   2
   3. MANDATORY PRINCIPAL INSTALLMENT: If this Debenture is not sooner redeemed
or converted, Borrower shall pay to Holder on April 1, 2002, a final installment
of all of the remaining unpaid Principal plus the amount of any unpaid interest
and other charges then due.

   4. OPTIONAL REDEMPTION: On any interest payment date, and after prior
irrevocable notice as provided for below, the outstanding principal amount of
this Debenture is redeemable at the option of the Borrower, in whole but not in
part, at 105% of par. The Borrower may exercise its right to redeem prior to Due
Date by giving notice (the "Redemption Notice") thereof to the Holder as such
name appears on the books of the Borrower, which notice shall specify the terms
of redemption (including the place at which the Holder may obtain payment), the
total principal amount to be redeemed (such principal amount plus the premium
thereon herein called the "Redemption Amount") and the date for redemption (the
"Redemption Date"), which date shall not be less than 30 days nor more than 60
days after the date of the Redemption Notice. On the Redemption Date, the
Borrower shall pay all accrued unpaid interest on the Debenture up to and
including the Redemption Date, and shall pay to the Holder a dollar amount equal
to the Redemption Amount. In the case of Debentures called for redemption, the
conversion rights will expire at the close of business on the Redemption Date.

   5. CONVERSION RIGHT: The Holder shall have the right, at Holder's option, at
any time, to convert all, or, in multiples of $25,000, any part of this
Debenture into such number of fully paid and nonassessable shares of common
stock, .0001 par value, of Earthcare Company (the "Common Stock") as shall be
provided herein. Earthcare Company ("Parent") is the parent of the Borrower. The
Holder may exercise the conversion right by giving written notice (the
"Conversion Notice") to the Parent of the exercise of such right and stating the
name or names in which the stock certificate or stock certificates for the
shares of Common Stock are to be issued and the address to which such
certificates shall be delivered. The Conversion Notice shall be accompanied by
the Debenture. The number of shares of Common Stock that shall be issuable upon
conversion of the Debenture shall equal the face amount of the Debenture divided
by the Conversion Price as defined below and in effect on the date the
Conversion Notice is given; provided, however, that in the event that this
Debenture shall have been partially redeemed, shares of Common Stock shall be
issued pro rata, rounded to the nearest whole share. Conversion shall be deemed
to have been effected on the date the Conversion Notice is received (the
"Conversion Date"). Within 10 business days after receipt of the Conversion
Notice, Parent shall issue and deliver by hand against a signed receipt therefor
or by United States registered mail, return receipt requested, to the address
designated in the Conversion Notice, a stock certificate or stock certificates
of Parent representing the number of shares of Common Stock to which Holder is
entitled and a check or cash in payment of all interest accrued and unpaid on
the Debenture being converted up to and including the Conversion Date. The
conversion rights will be governed by the following provisions:

   (a) Conversion Price: On the issue date hereof and until such time as an
adjustment shall occur, the Conversion price shall be $3.60 PER SHARE; provided,
however, that the Conversion Price shall be subject to adjustment at the times,
and in accordance with the provisions, as follows:

   (i) Adjustment for Issuance of Shares at less than the Conversion Price: If
and whenever any Additional Common Stock (as herein defined) shares shall be
issued by the Parent (the "Stock Issue Date") for a consideration per share less
than the Conversion Price, then in each such case the Conversion Price shall be
reduced to a new Conversion Price equal to the consideration per share received
by the Parent for the additional shares of Common Stock then issued and the
number of shares issuable to Holder upon conversion shall be proportionately
increased; and, in the case of shares issued without consideration, the initial
Conversion Price shall be reduced in amount and the number of shares issued upon
conversion shall be increased in an amount so as to maintain for the Holder the
right to convert the Debenture into shares equal in amount to the same
percentage interest in the Common Stock of the Parent as existed for the Holder
immediately preceding the Stock Issue Date.

    (ii) Sale of Shares: In case of the issuance of Additional Common Stock for
a consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of the cash received by
Parent for such shares, after any compensation or discount in the sale,
underwriting or purchase thereof by underwriters or dealers or others performing
similar services or for any expenses incurred in connection therewith. In case
of the issuance of any shares of Additional Common Stock for a consideration
part or all of which shall be other than cash, the amount of the consideration
therefor, other than cash, shall be deemed to be the then fair market value (as
hereinafter defined) of the property received.


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                                     Page 2

                                                       Issuer's Initial
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<PAGE>   3
   (iii) Options and Convertible Securities, etc. In the case of (i) options,
warrants or other rights to purchase or acquire Common Stock (whether or not at
the time exercisable) (ii) securities by their terms convertible into or
exchangeable for Common Stock (whether or not at the time so convertible into or
exchangeable) or (iii) options, warrants or rights to purchase such convertible
or exchangeable securities (whether or not at the time exercisable), the Common
Stock deliverable upon exercise of such options, warrants or other rights to
purchase or acquire Common Stock shall be deemed to have been issued at the time
such options, warrants or rights were issued and for a consideration equal to
the consideration, if any, received by the Company upon the issuance of such
options, warrants or rights plus the minimum purchase price provided in such
options, warrants or rights for the Common Stock covered thereby. On any change
in the number of shares of Common Stock deliverable upon exercise of any such
options, warrants or rights or conversion of or exchange for such convertible or
exchangeable securities or any change in the consideration to be received by the
Company upon such exercise, conversion or exchange, including, but not limited
to, a change resulting from the antidilution provisions thereof, the Conversion
Price as then in effect shall forthwith be readjusted to such Conversion Price
as would have been obtained had an adjustment been made upon the issuance of
such options, warrants or rights. If the Conversion Price shall have been
adjusted upon the issuance of any such options, warrants, rights or convertible
or exchangeable securities, no further adjustment of the Conversion Price shall
be made for the actual issuance of Common Stock upon the exercise, conversion of
exchange thereof.

   (iv) Reclassification of Shares: In case of the reclassification of
securities into shares of Common Stock, the shares of Common Stock issued in
such reclassification shall be deemed to have been issued for a consideration
other than cash. Shares of Additional Common Stock issued by way of dividend or
other distribution on any class of stock of the Parent shall be deemed to have
been issued without consideration.

   (v) Split up or Combination of Shares: In case issued and outstanding shares
of Common Stock shall be subdivided or split up into a greater number of shares
of the Common Stock, the Conversion Price shall be proportionately decreased,
and in case issued and outstanding shares of Common Stock shall be combined into
a smaller number of shares of Common Stock, the Conversion Price shall be
proportionately increased, such increase or decrease, as the case may be,
becoming effective at the time of record of the split-up or combination, as the
case may be.

   (vi) Exceptions: The term "Additional Common Stock" herein shall mean all
shares of Common Stock hereafter issued by the Parent (including Common Stock
held in the treasury of the Parent), except (1) Common Stock issued upon the
conversion of this Debentures; (2) Common Stock issued pursuant to exercise of
authorized or outstanding options under any incentive stock option plan for the
officers, directors, and certain other key personnel as defined in said stock
option plans of the Parent as currently established; and (3) Common Stock issued
upon exercise of the Warrant issued in conjunction with this financing.

   (b) Adjustment for Mergers, Consolidations, Etc.:

   (i) In the event of distribution to all Common Stock holders of any stock,
indebtedness of the Parent or assets (excluding cash dividends or distributions
from retained earnings) or other rights to purchase securities or assets, then,
after such event, this Debenture will be convertible into the kind and amount of
securities, cash and other property which the Holder would have been entitled to
receive if the Holder owned the Common Stock issuable upon conversion of this
Debenture immediately prior to the occurrence of such event.

   (ii) In case of any capital reorganization, reclassification of the stock of
the Parent (other than a change in par value or as a result of a stock dividend,
subdivision, split up or combination of shares), this Debenture shall be
convertible into the kind and number of shares of stock or other securities or
property of the Parent to which the Holder would have been entitled to receive
if the Holder owned the Common Stock issuable upon conversion of the Debenture
immediately prior to the occurrence of such event. The provisions of these
foregoing sentence shall similarly apply to successive reorganizations,
reclassifications, consolidations, exchanges, leases, transfers or other
dispositions or other share exchanges.

   (iii) The term "Fair Market Value", as used herein, is the value ascribed to
consideration other than cash as determined by the Board of Directors of the
Parent in good faith, which determination shall be final, conclusive and
binding. If the Board of Directors shall be unable to agree as to such fair
market value, then the issue of fair market value shall be submitted to
arbitration under and pursuant to the rules and regulations of the American
Arbitration Association, and the decision of the arbitrators shall be final,
conclusive and binding, and a final judgment may be entered thereon, provided
however that such arbitration shall be limited to determination of the fair
market value of assets tendered in consideration for the issue of Common Stock.


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                                     Page 3

                                                       Issuer's Initial
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<PAGE>   4
   (iv) Notice of Adjustment. (A) In the event the Parent shall propose to take
any action which shall result in an adjustment in the Conversion Price, the
Parent shall give notice to the Holder, which notice shall specify the record
date, if any, with respect to such action and the date on which such action is
to take place. Such notice shall be given on or before the earlier of 10 days
before the record date or the date which such action shall be taken. Such notice
shall also set forth all facts (to the extent known) material to the effect of
such action on the Conversion Price and the number, kind or class of shares or
other securities or property which shall be deliverable or purchasable upon the
occurrence of such action or deliverable upon conversion of this Debenture. (B)
Following completion of an event wherein the Conversion Price shall be adjusted,
the Parent shall furnish to the Holder a statement, signed by the Chief
Executive Officer of the Parent of the facts creating such adjustment and
specifying the resultant adjusted Conversion Price then in effect.

   6. RESERVATION OF SHARES: Parent warrants and agrees that it shall at all
times reserve and keep available, free from preemptive rights, sufficient
authorized and unissued shares of Common Stock to effect conversion of this
Debenture.

   7. REGISTRATION RIGHTS: Shares issued upon conversion of this Debenture shall
be restricted from transfer by the Holder except if and unless the shares are
duly registered for sale pursuant to the Securities Act of 1933, as amended, or
the transfer is duly exempt from registration.
   The Holder has certain rights with respect to the registration of shares of
Common Stock issued upon the conversion of this Debenture pursuant to the terms
of the Loan Agreement. Parent agrees that a copy of the Loan Agreement with all
amendments, additions or substitutions therefor shall be available to the Holder
at the offices of the Parent.

   8. HOLDERS RIGHT TO REQUEST MULTIPLE DEBENTURES: The Holder shall, upon
written request and presentation of the Debenture, have the right, at any
interest payment date, to request division of this Debenture into two or more
units, each of such to be in such amounts as shall be requested; provided
however that no Debentures shall be issued in denominations of face amount less
than $25,000.00.

   9. TRANSFER: This Debenture may be transferred on the books of the Borrower
by the registered Holder hereof, or by Holder's attorney duly authorized in
writing, only upon (i) delivery to the Borrower of a duly executed assignment of
the Debenture, or part thereof, to the proposed new Holder, along with a current
notation of the amount of payments received and net Principal Amount yet
unfunded, and presentment of such Debenture to the Borrower for issue of a
replacement Debenture, or Debentures, in the name of the new Holder, (ii) the
designation by the new Holder of the Lender's agent for notice, such agent to be
the sole party to whom Borrower shall be required to provide notice when notice
to Lender is required hereunder and who shall be the sole party authorized to
represent Lender in regard to modification or waivers under the Debenture, the
Loan Agreement, or other Loan Documents; and any action, consent or waiver,
(other than a compromise of principal and interest), when given or taken by
Lender's agent for notice, shall be deemed to be the action of the holders of a
majority in amount of the Principal Amount of the Debentures, as such holders
are recorded on the books of the Borrower, and (iii) in compliance with the
legend to read "The Securities represented by this Debenture have not been
registered under the Securities Act of 1933, as amended ("Act"), or applicable
state securities laws ("State Acts") and shall not be sold, hypothecated,
donated or otherwise transferred unless the Borrower shall have received an
opinion of Legal Counsel for the Borrower, or such other evidence as may be
satisfactory to Legal Counsel for the Borrower, to the effect that any such
transfer shall not require registration under the Act and the State Acts."

   The Borrower shall be entitled to treat any holder of record of the Debenture
as the Holder in fact thereof and of the Debenture and shall not be bound to
recognize any equitable or other claim to or interest in this Debenture in the
name of any other person, whether or not it shall have express or other notice
thereof, save as expressly provided by the laws of Texas.

   10. MAXIMUM INTEREST RATE: Regardless of any provision contained in this
Debenture, Lender shall never be entitled to receive, collect or apply as
interest on the Debenture any amount in excess of interest calculated at the
Maximum Rate, and, in the event that Lender ever receives, collects or applies
as interest any such excess, the amount which would be excessive interest shall
be deemed to be a partial prepayment of principal and treated hereunder as such;
and, if the principal amount of the Debenture is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether or not the
interest paid or payable under any specific contingency exceeds interest
calculated at the Maximum Rate, Borrower and Lender shall, to the maximum extent
permitted under applicable law, (i) characterize any non principal payment as an
expense, fee or premium rather


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                                     Page 4

                                                       Issuer's Initial
                                                                        --------
<PAGE>   5



than as interest; (ii) exclude voluntary prepayments and the effects thereof,
and (iii) amortize, pro rate, allocate and spread, in equal parts, the total
amount of interest throughout the entire contemplated term of the Debenture;
provided that, if the Debenture is paid and performed in full prior to the end
of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds interest calculated at the Maximum
Rate, Lender shall refund to Borrower the amount of such excess or credit the
amount of such excess against the principal amount of the Debenture and, in such
event, Lender shall not be subject to any penalties provided by any laws for
contracting for, charging, taking, reserving or receiving interest in excess of
interest calculated at the Maximum Rate.

   (b) "Maximum Rate" shall mean, on any day, the highest nonusurious rate of
interest (if any) permitted by applicable law on such day that at any time, or
from time to time, may be contracted for, taken, reserved, charged or received
on the Indebtedness evidenced by the Debenture under the laws which are
presently in effect of the United States of America and the State of Texas or by
the laws of any other jurisdiction which are or may be applicable to the holders
of the Debenture and such Indebtedness or, to the extent permitted by law, under
such applicable laws of the United States of America and the State of Texas or
by the laws of any other jurisdiction which are or may be applicable to the
Holder and which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow.

   11. RIGHTS UNDER LOAN AGREEMENT: This Debenture is issued pursuant to that
certain Convertible Loan Agreement dated April 3, 2001 by and between the
Borrower, Parent and Sagemark Capital L.P. and the Holder hereof is entitled to
all the rights and benefits, and is subject to all the obligations of Lender,
Parent and Borrower under said agreement. Borrower, Parent and Lender have
participated in the negotiation and preparation of the Loan Agreement and of
this Debenture. Borrower and Parent agree that a copy of the Loan Agreement with
all amendments, additions and substitutions therefor shall be available to the
Holder at the offices of the Borrower and Parent.

   12. GOVERNING LAW: THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, OR, WHERE
APPLICABLE, THE LAWS OF THE UNITED STATES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

                            (signature pages follow)















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                                     Page 5

                                                       Issuer's Initial
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<PAGE>   6



            IN WITNESS WHEREOF, the undersigned Borrower and Parent have caused
this Debenture to be duly issued and executed on the Date of Issue as stated
above.



Address for Notice:             Parent
-------------------
14901 Quorum Drive, Suite 100
Dallas, TX 75240                Earthcare Company

                                By:
                                   ---------------------------------------------
                                   William W. Solomon, Jr
                                   Vice President and Chief Financial Officer

                                Attest  by:
                                            -------------------------------
                                   Name:
                                   Title:


Address for Notice:             Borrower
-------------------
4800 N. Federal Highway         Earthcare Resource Management of Florida, Inc.,
Boca Raton, FL 33431

                                By:
                                   ---------------------------------------------
                                   William W. Solomon, Jr
                                   Vice President and Chief Financial Officer

                                Attest  by:
                                            -------------------------------
                                   Name:
                                   Title:


Address for Notice:             Borrower
-------------------
4800 N. Federal Highway         Earthcare Resource Management of South Florida,
Boca Raton, FL 33431            Inc.,

                                By:
                                   ---------------------------------------------
                                   William W. Solomon, Jr
                                   Vice President and Chief Financial Officer

                                Attest  by:
                                            -------------------------------
                                   Name:
                                   Title:


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                                     Page 6

                                                       Issuer's Initial
                                                                        --------
<PAGE>   7


Address for Notice:             Borrower
-------------------
4800 N. Federal Highway         Earthcare Acquisition Sub, Inc.
Boca Raton, FL 33431

                                By:
                                   ---------------------------------------------
                                   William W. Solomon, Jr
                                   Vice President and Chief Financial Officer

                                Attest  by:
                                            -------------------------------
                                   Name:
                                   Title:




         This instrument was acknowledged before me on ___________, 200____, by
_________________________, ________________of__________________, a
_______________________ corporation.


                                         Notary Public, State of
                                                                --------------
                                         My Commission Expires:
                                                               ---------------

                                         Printed Name of Notary
                                                               ---------------









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                                     Page 7

                                                       Issuer's Initial
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