8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

^{______________}

FORM 8-K

^{______________}

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  May 26, 2006

^{______________}

ULTRASTRIP SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

^{______________}

Florida	000-25663	65-0841549
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation)	File Number)	Identification No.)

3515 S.E. Lionel Terrace, Stuart, FL 34997

(Address of Principal Executive Office) (Zip Code)

(772) 287-4846

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01

Entry into a Material Definitive Agreement.

In an effort to conserve cash outflow, the officers of UltraStrip Systems, Inc. (“UltraStrip”) and subsidiaries listed below on May 26, 2006 entered into a Management Compensation Adjustment Plan (the “Plan”) and thereby amended their respective Employment Agreements. The Plan is part of each exhibit attached to this Form 8-K. Under the Plan, they have agreed to reduce their aggregate annual salaries by approximately $400,000 and in return they received additional stock options and commissions based upon revenues of UltraStrip and/or its subsidiaries as listed below. The options are exercisable at $0.68 per share over a five-year period and vest in equal increments every six months over a 24 month period subject to periodic performance reviews by the chief executive officer or the Compensation Committee at six month intervals. Additionally, the executives may be terminated after any six month review by the Board of Directors. The Management Adjustme nt Compensation Plan modified the Employment Agreements of executive officers as follows:

Executives in the  Program and Principal Office	Current Agreement		Revised Pay Rate		Options	Commissions(1)
						UES(2)	ETI(3)	Consolidated(4)
Dennis McGuire, Chief Executive Officer	$	325,000	$	225,000	1,000,000			3.0%
James C. Rushing III, Chief Financial Officer		210,000		185,000	600,000			1.0%
Stephen Johnson, President of UES		250,000		125,000	500,000	2.0%		1.0%
Michael R. Donn, Sr., President of ETI		137,000		125,000	500,000		2.0%	1.0%
John  P. Odwazny, Chief Operating Officer of UES		165,000		100,000	250,000	1.0%		1.0%
Jacqueline McGuire, Vice President of Administration and Secretary		125,000		75,000	250,000	NA	NA	NA
Totals		1,212,000		835,000	3,100,000	3.0%	2.0%	7%

———————

(1)

Commissions apply to any revenues whatsoever, including product or services sales as well as transactions to “monetize” technology portfolio inventory.

(2)

UES refers to UltraStrip Envirobotic Solutions, Inc., a wholly-owned subsidiary of UltraStrip.

(3)

ETI refers to Ecosphere Technologies, Inc., a wholly-owned subsidiary of UltraStrip.

(4)

Consolidated means consolidated revenues of UltraStrip, including UES and ETI.

The executives had not received their full salaries to which they were entitled and waived salary accruals since January 1, 2006. All 3,400 unvested options held by Stephen Johnson, president of UES and a director of UltraStrip were forfeited.

2

Item 9.01

Financial Statements and Exhibits

(c)

Exhibits

Exhibit No.	Exhibit
10.1	Management Compensation Adjustment Plan Agreement for Dennis McGuire(1)
10.2	Management Compensation Adjustment Plan Agreement for James C. Rushing III(2)
10.3	Management Compensation Adjustment Plan Agreement for Stephen Johnson(3)
10.4	Management Compensation Adjustment Plan Agreement for Michael R. Donn, Sr.(1)
10.5	Management Compensation Adjustment Plan Agreement for John P. Odwazny(2)
10.6	Management Compensation Adjustment Plan Agreement for Jacqueline McGuire(2)

———————

(1)

The Employment Agreement, which is Exhibit A to the Management Compensation Adjustment Plan Agreement, is incorporated by reference from the Form 10-KSB filed on April 4, 2006.

(2)

The Employment Agreement, which is Exhibit A to the Management Compensation Adjustment Plan Agreement, is incorporated by reference from the Form 10-KSB filed on April 15, 2005.

(3)

The Employment Agreement, which is Exhibit A to the Management Compensation Adjustment Plan Agreement, is incorporated by reference from the Form 10-QSB filed on April 20, 2004.

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

ULTRASTRIP SYSTEMS, INC.
By:	/s/  J.C. “JIM” RUSHING III
	J.C. “Jim” Rushing III Chief Financial Officer

Date:  June 2, 2006

4

EX-10.1

EXHIBIT 10.1

UltraStrip Systems, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

May 26, 2006

Mr. Dennis McGuire

Chief Executive Officer

UltraStrip Systems, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

Re:

Management Compensation Adjustment Plan

Dear Mr. McGuire:

The Management Compensation Adjustment Plan (the “Plan”) is designed to address the Company’s need to conserve cash outflow as well as to enable the Management Team to be incentivized to produce revenue in the near-term and earn more than would be the case without this Program. This letter is an amendment to your existing Employment Agreement with UltraStrip Systems, Inc. (“UltraStrip” or the “Company”),  a copy of which is annexed as Exhibit A  and represents your agreement to be bound by the Plan, a copy of which is attached as Exhibit B.  If after any six-month review, the Compensation Committee determines, in its sole discretion, that your performance for the period has not been satisfactory, it may:

(i)

determine that  the options that are to vest for that period will not vest or will vest in whole or in part; and

(ii)

determine to  pay you all,  part or none of the commissions for that period.  

You acknowledge that the sums due which were owed to you under your Employment Agreement for the period January 1, 2006 through the date of this amendment, which sums you did not receive, have been waived and will not be paid to you in the future.  The new option grant is subject to your execution of UltraStrip’s standard Stock Option Agreement and the subordination provision which has been added to it.  Additionally, if you hold any unvested options, the options are forfeited and will not be returned to you.

Additionally, if any review is not satisfactory to the Compensation Committee, it may refer your review to the Board of Directors to consider your continued status of employment. A termination may be deemed to be for cause notwithstanding more limited cause in your Employment Agreement.  In all other respects, your Employment Agreement is ratified and confirmed.

Mr. Dennis McGuire

May 26, 2006

Page 2

Please sign a copy of this letter agreement evidencing your agreement to be bound.

Very truly yours,

J.C. “Jim” Rushing III

Chief Financial Officer

JCR/cdv

Enclosures

I hereby agree to the foregoing:

__________________________

Dennis McGuire

Exhibit A

Contained in the Form 10-KSB filed with the Securities and Exchange Commission on April 4, 2006.

Exhibit B

UltraStrip Systems, Inc.

May, 2006 Management Compensation Adjustment Plan

Revenue Producing Executive Management Staff

24 Month Incentive Compensation Program Proposal

(Including Performance-based Restricted Stock Option Program)

 

Executives in the Program	Current Contract		Current Actual Pay Rate		Proposed Payrate		Options Vesting After (subject to 6 month review)								Commissions awards(Notes 2-4)
							after 6 Mos		after 12 Mos		after 18 Mos		after 24 Mos		UES			ETI			Consoli- dated
Dennis McGuire	$	325,000	$	225,000	$	225,000		250,000		250,000		250,000		250,000								3.0	%
Jim Rushing	$	210,000	$	185,000	$	185,000		150,000		150,000		150,000		150,000								1.0	%
Steve Johnson		250,000		225,000		125,000		125,000		125,000		125,000		125,000		2.0	%					1.0	%
Mickey Donn		137,000		125,000		125,000		125,000		125,000		125,000		125,000					2.0	%		1.0	%
John Odwazny		165,000		150,000		100,000		62,500		62,500		62,500		62,500		1.0	%					1.0	%
Jackie McGuire		125,000		115,000		75,000		62,500		62,500		62,500		62,500		NA			NA			NA
Totals	$	1,212,000	$	1,025,000	$	835,000		775,000		775,000		775,000		775,000

Notes:

1

This "program" is not a guaranteed 24 month contract but a program to compensate results requiring a six month interval review by the CEO/Board to continue the next six months performance and program.  

2

Commission rates apply to any revenue whatsoever. That is product or service sales as well as transactions to "monetize" technology portfolio inventory during the period. Consolidated means USSI consolidated revenues including both Subsidiaries.

3

Commissions are payable quarterly within two weeks after "collection" of final quarterly revenues based on the Company's 10QSB Filing not on recording of the sale.  

4

Payment of Division Presidents & COO commissions include both a % for his division as well as a smaller % for consolidated to incentivize each Officer to execute cooperative effort to grow the entire company as well as his own division. Options grants incentivize Officers to help improve share price and encourage the adherance to the Proposed Rate reduced from current and contract levels by allowing the sale of Officer shares after we file the S-8 Registration for Officers and Directors.  

5

Grants will be for an exercise price of market closing price on the date of grant and will be exercisable for the vested portion any time within a five year period. Unvested grants will be forfeited if the six month review process determines the Executive's participation in this program is ceased  or additional options vesting bonus is cancelled.  

6

Six month reviews will be conducted by the CEO for Executives in the program and by the Compensation Committee for the CEO, Jackie McGuire and Mickey Donn.

7

All existing unvested Options as of the effective date of this program are forfeited as well as any "Current Contract" salaries accrued since January 1, 2006 in excess of the amount of Current Actual salaries paid to the effective date of this Program. Salaries deferred from prior to 2006 remain a deferred obligation of the Company to the Executive.

EX-10.2

EXHIBIT 10.2

UltraStrip Systems, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

May 26, 2006

Mr. J.C. “Jim” Rushing III

Chief Financial Officer

UltraStrip Systems, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

Re:

Management Compensation Adjustment Plan

Dear Mr. Rushing:

The Management Compensation Adjustment Plan (the “Plan”) is designed to address the Company’s need to conserve cash outflow as well as to enable the Management Team to be incentivized to produce revenue in the near-term and earn more than would be the case without this Program. This letter is an amendment to your existing Employment Agreement with UltraStrip Systems, Inc. (“UltraStrip” or the “Company”), a copy of which is annexed as Exhibit A and represents your agreement to be bound by the Plan, a copy of which is attached as Exhibit B.  If after any six-month review, the President and Chief Executive Officer (or, if applicable, the Compensation Committee) determines, in his (or its) sole discretion, that your performance for the period has not been satisfactory, he (or it) may:

(i)

determine that  the options that are to vest for that period will not vest or will vest in whole or in part; and

(ii)

determine to  pay you all,  part or none of the commissions for that period.  

You acknowledge that the sums due which were owed to you under your Employment Agreement for the period January 1, 2006 through the date of this amendment, which sums you did not receive, have been waived and will not be paid to you in the future.  The new option grant is subject to your execution of UltraStrip’s standard Stock Option Agreement and the subordination provision which has been added to it.  Additionally, if you hold any unvested options, the options are forfeited and will not be returned to you.

Additionally, if any review is not satisfactory to the President and Chief Executive Officer, he may refer your review to the Compensation Committee and Board of Directors (or the Compensation Committee may refer its review to the Board of Directors) to consider your continued status of employment. A termination may be deemed to be for cause notwithstanding more limited cause in your Employment Agreement.  In all other respects, your Employment Agreement is ratified and confirmed.

Mr. J.C. “Jim” Rushing III

May 26, 2006

Page 2

Please sign a copy of this letter agreement evidencing your agreement to be bound.

Very truly yours,

Dennis McGuire

Chief Executive Officer

DM/cdv

Enclosures

I hereby agree to the foregoing:

__________________________

J.C. “Jim” Rushing III

Exhibit A

Contained in the Form 10-KSB filed with the Securities and Exchange Commission on April 15, 2005.

Exhibit B

UltraStrip Systems, Inc.

May, 2006 Management Compensation Adjustment Plan

Revenue Producing Executive Management Staff

24 Month Incentive Compensation Program Proposal

(Including Performance-based Restricted Stock Option Program)

 

Executives in the Program	Current Contract		Current Actual Pay Rate		Proposed Payrate		Options Vesting After (subject to 6 month review)								Commissions awards(Notes 2-4)
							after 6 Mos		after 12 Mos		after 18 Mos		after 24 Mos		UES			ETI			Consoli- dated
Dennis McGuire	$	325,000	$	225,000	$	225,000		250,000		250,000		250,000		250,000								3.0	%
Jim Rushing	$	210,000	$	185,000	$	185,000		150,000		150,000		150,000		150,000								1.0	%
Steve Johnson		250,000		225,000		125,000		125,000		125,000		125,000		125,000		2.0	%					1.0	%
Mickey Donn		137,000		125,000		125,000		125,000		125,000		125,000		125,000					2.0	%		1.0	%
John Odwazny		165,000		150,000		100,000		62,500		62,500		62,500		62,500		1.0	%					1.0	%
Jackie McGuire		125,000		115,000		75,000		62,500		62,500		62,500		62,500		NA			NA			NA
Totals	$	1,212,000	$	1,025,000	$	835,000		775,000		775,000		775,000		775,000

Notes:

1

This "program" is not a guaranteed 24 month contract but a program to compensate results requiring a six month interval review by the CEO/Board to continue the next six months performance and program.  

2

Commission rates apply to any revenue whatsoever. That is product or service sales as well as transactions to "monetize" technology portfolio inventory during the period. Consolidated means USSI consolidated revenues including both Subsidiaries.

3

Commissions are payable quarterly within two weeks after "collection" of final quarterly revenues based on the Company's 10QSB Filing not on recording of the sale.  

4

Payment of Division Presidents & COO commissions include both a % for his division as well as a smaller % for consolidated to incentivize each Officer to execute cooperative effort to grow the entire company as well as his own division. Options grants incentivize Officers to help improve share price and encourage the adherance to the Proposed Rate reduced from current and contract levels by allowing the sale of Officer shares after we file the S-8 Registration for Officers and Directors.  

5

Grants will be for an exercise price of market closing price on the date of grant and will be exercisable for the vested portion any time within a five year period. Unvested grants will be forfeited if the six month review process determines the Executive's participation in this program is ceased  or additional options vesting bonus is cancelled.  

6

Six month reviews will be conducted by the CEO for Executives in the program and by the Compensation Committee for the CEO, Jackie McGuire and Mickey Donn.

7

All existing unvested Options as of the effective date of this program are forfeited as well as any "Current Contract" salaries accrued since January 1, 2006 in excess of the amount of Current Actual salaries paid to the effective date of this Program. Salaries deferred from prior to 2006 remain a deferred obligation of the Company to the Executive.

EX-10.3

EXHIBIT 10.3

UltraStrip Systems, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

May 26, 2006

Mr. Stephen R. Johnson

UltraStrip Systems, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

Re:

Management Compensation Adjustment Plan

Dear Mr. Johnson:

The Management Compensation Adjustment Plan (the “Plan”) is designed to address the Company’s need to conserve cash outflow as well as to enable the Management Team to be incentivized to produce revenue in the near-term and earn more than would be the case without this Program. This letter is an amendment to your existing Employment Agreement with UltraStrip Systems, Inc. (“UltraStrip” or the “Company”), a copy of which is annexed as Exhibit A and represents your agreement to be bound by the Plan, a copy of which is attached as Exhibit B.  If after any six-month review, the President and Chief Executive Officer determines, in his sole discretion, that your performance for the period has not been satisfactory, he may:

(i)

determine that  the options that are to vest for that period will not vest or will vest in whole or in part; and

(ii)

determine to  pay you all,  part or none of the commissions for that period.  

You acknowledge that the sums due which were owed to you under your Employment Agreement for the period January 1, 2006 through the date of this amendment, which sums you did not receive, have been waived and will not be paid to you in the future.  The new option grant is subject to your execution of UltraStrip’s standard Stock Option Agreement and the subordination provision which has been added to it.  Additionally, if you hold any unvested options, the options are forfeited and will not be returned to you.

Additionally, if any review is not satisfactory to the President and Chief Executive Officer, he may refer your review to the Compensation Committee and Board of Directors to consider your continued status of employment. A termination may be deemed to be for cause notwithstanding more limited cause in your Employment Agreement.  In all other respects, your Employment Agreement is ratified and confirmed.

Mr. Stephen R. Johnson

May 26, 2006

Page 2

Please sign a copy of this letter agreement evidencing your agreement to be bound.

Very truly yours,

J.C. “Jim” Rushing III

Chief Financial Officer

JCR/cdv

Enclosures

I hereby agree to the foregoing:

__________________________

Stephen R. Johnson

Exhibit A

Contained in the Form 10-QSB filed with the Securities and Exchange Commission on April 20, 2004.

Exhibit B

UltraStrip Systems, Inc.

May, 2006 Management Compensation Adjustment Plan

Revenue Producing Executive Management Staff

24 Month Incentive Compensation Program Proposal

(Including Performance-based Restricted Stock Option Program)

 

Executives in the Program	Current Contract		Current Actual Pay Rate		Proposed Payrate		Options Vesting After (subject to 6 month review)								Commissions awards(Notes 2-4)
							after 6 Mos		after 12 Mos		after 18 Mos		after 24 Mos		UES			ETI			Consoli- dated
Dennis McGuire	$	325,000	$	225,000	$	225,000		250,000		250,000		250,000		250,000								3.0	%
Jim Rushing	$	210,000	$	185,000	$	185,000		150,000		150,000		150,000		150,000								1.0	%
Steve Johnson		250,000		225,000		125,000		125,000		125,000		125,000		125,000		2.0	%					1.0	%
Mickey Donn		137,000		125,000		125,000		125,000		125,000		125,000		125,000					2.0	%		1.0	%
John Odwazny		165,000		150,000		100,000		62,500		62,500		62,500		62,500		1.0	%					1.0	%
Jackie McGuire		125,000		115,000		75,000		62,500		62,500		62,500		62,500		NA			NA			NA
Totals	$	1,212,000	$	1,025,000	$	835,000		775,000		775,000		775,000		775,000

Notes:

1

This "program" is not a guaranteed 24 month contract but a program to compensate results requiring a six month interval review by the CEO/Board to continue the next six months performance and program.  

2

Commission rates apply to any revenue whatsoever. That is product or service sales as well as transactions to "monetize" technology portfolio inventory during the period. Consolidated means USSI consolidated revenues including both Subsidiaries.

3

Commissions are payable quarterly within two weeks after "collection" of final quarterly revenues based on the Company's 10QSB Filing not on recording of the sale.  

4

Payment of Division Presidents & COO commissions include both a % for his division as well as a smaller % for consolidated to incentivize each Officer to execute cooperative effort to grow the entire company as well as his own division. Options grants incentivize Officers to help improve share price and encourage the adherance to the Proposed Rate reduced from current and contract levels by allowing the sale of Officer shares after we file the S-8 Registration for Officers and Directors.  

5

Grants will be for an exercise price of market closing price on the date of grant and will be exercisable for the vested portion any time within a five year period. Unvested grants will be forfeited if the six month review process determines the Executive's participation in this program is ceased  or additional options vesting bonus is cancelled.  

6

Six month reviews will be conducted by the CEO for Executives in the program and by the Compensation Committee for the CEO, Jackie McGuire and Mickey Donn.

7

All existing unvested Options as of the effective date of this program are forfeited as well as any "Current Contract" salaries accrued since January 1, 2006 in excess of the amount of Current Actual salaries paid to the effective date of this Program. Salaries deferred from prior to 2006 remain a deferred obligation of the Company to the Executive.

EX-10.4

EXHIBIT 10.4

Ecosphere Technologies, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

May 26, 2006

Mr. Michael R. Donn, Sr.

Ecosphere Technologies, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

Re:

Management Compensation Adjustment Plan

Dear Mr. Donn:

The Management Compensation Adjustment Plan (the “Plan”) is designed to address the Company’s need to conserve cash outflow as well as to enable the Management Team to be incentivized to produce revenue in the near-term and earn more than would be the case without this Program. This letter is an amendment to your existing Employment Agreement with Ecosphere Technologies, Inc. (“Ecosphere” or the “Company”), a copy of which is annexed as Exhibit A and represents your agreement to be bound by the Plan, a copy of which is attached as Exhibit B.  If after any six-month review, UltraStrip Systems, Inc.’s (“USTP”) Compensation Committee (or the President and Chief Executive Officer as applicable) determines, in its (or his) sole discretion, that your performance for the period has not been satisfactory, it (or he) may:

(i)

determine that  the options that are to vest for that period will not vest or will vest in whole or in part; and

(ii)

determine to  pay you all,  part or none of the commissions for that period.  

You acknowledge that the sums due which were owed to you under your Employment Agreement for the period January 1, 2006 through the date of this amendment, which sums you did not receive, have been waived and will not be paid to you in the future.  The new option grant is subject to your execution of USTP’s standard Stock Option Agreement and the subordination provision which has been added to it.  Additionally, if you hold any unvested options, the options are forfeited and will not be returned to you.

Additionally, if any review is not satisfactory to USTP’s President and Chief Executive Officer, he may refer your review to USTP’s Compensation Committee and Board of Directors (or the USTP Compensation Committee may refer its review to the USTP Board of Directors) to consider your continued status of employment. A termination may be deemed to be for cause notwithstanding more limited cause in your Employment Agreement.  In all other respects, your Employment Agreement is ratified and confirmed.

Mr. Michael R. Donn, Sr.

May 26, 2006

Page 2

Please sign a copy of this letter agreement evidencing your agreement to be bound.

Very truly yours,

J.C. “Jim” Rushing III

Authorized Signatory

JCR/cdv

Enclosures

I hereby agree to the foregoing:

__________________________

Michael R. Donn, Sr.

Exhibit A

Contained in the Form 10-KSB filed with the Securities and Exchange Commission on April 4, 2006.

Exhibit B

UltraStrip Systems, Inc.

May, 2006 Management Compensation Adjustment Plan

Revenue Producing Executive Management Staff

24 Month Incentive Compensation Program Proposal

(Including Performance-based Restricted Stock Option Program)

 

Executives in the Program	Current Contract		Current Actual Pay Rate		Proposed Payrate		Options Vesting After (subject to 6 month review)								Commissions awards(Notes 2-4)
							after 6 Mos		after 12 Mos		after 18 Mos		after 24 Mos		UES			ETI			Consoli- dated
Dennis McGuire	$	325,000	$	225,000	$	225,000		250,000		250,000		250,000		250,000								3.0	%
Jim Rushing	$	210,000	$	185,000	$	185,000		150,000		150,000		150,000		150,000								1.0	%
Steve Johnson		250,000		225,000		125,000		125,000		125,000		125,000		125,000		2.0	%					1.0	%
Mickey Donn		137,000		125,000		125,000		125,000		125,000		125,000		125,000					2.0	%		1.0	%
John Odwazny		165,000		150,000		100,000		62,500		62,500		62,500		62,500		1.0	%					1.0	%
Jackie McGuire		125,000		115,000		75,000		62,500		62,500		62,500		62,500		NA			NA			NA
Totals	$	1,212,000	$	1,025,000	$	835,000		775,000		775,000		775,000		775,000

Notes:

1

This "program" is not a guaranteed 24 month contract but a program to compensate results requiring a six month interval review by the CEO/Board to continue the next six months performance and program.  

2

Commission rates apply to any revenue whatsoever. That is product or service sales as well as transactions to "monetize" technology portfolio inventory during the period. Consolidated means USSI consolidated revenues including both Subsidiaries.

3

Commissions are payable quarterly within two weeks after "collection" of final quarterly revenues based on the Company's 10QSB Filing not on recording of the sale.  

4

Payment of Division Presidents & COO commissions include both a % for his division as well as a smaller % for consolidated to incentivize each Officer to execute cooperative effort to grow the entire company as well as his own division. Options grants incentivize Officers to help improve share price and encourage the adherance to the Proposed Rate reduced from current and contract levels by allowing the sale of Officer shares after we file the S-8 Registration for Officers and Directors.  

5

Grants will be for an exercise price of market closing price on the date of grant and will be exercisable for the vested portion any time within a five year period. Unvested grants will be forfeited if the six month review process determines the Executive's participation in this program is ceased  or additional options vesting bonus is cancelled.  

6

Six month reviews will be conducted by the CEO for Executives in the program and by the Compensation Committee for the CEO, Jackie McGuire and Mickey Donn.

7

All existing unvested Options as of the effective date of this program are forfeited as well as any "Current Contract" salaries accrued since January 1, 2006 in excess of the amount of Current Actual salaries paid to the effective date of this Program. Salaries deferred from prior to 2006 remain a deferred obligation of the Company to the Executive.

EX-10.5

EXHIBIT 10.5

UltraStrip Systems, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

May 26, 2006

Mr. John Odwazny

UltraStrip Systems, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

Re:

Management Compensation Adjustment Plan

Dear Mr. Odwazny:

The Management Compensation Adjustment Plan (the “Plan”) is designed to address the Company’s need to conserve cash outflow as well as to enable the Management Team to be incentivized to produce revenue in the near-term and earn more than would be the case without this Program. This letter is an amendment to your existing Employment Agreement with UltraStrip Systems, Inc. (“UltraStrip” or the “Company”), a copy of which is annexed as Exhibit A and represents your agreement to be bound by the Plan, a copy of which is attached as Exhibit B.  If after any six-month review, the President and Chief Executive Officer determines, in his sole discretion, that your performance for the period has not been satisfactory, he may:

(i)

determine that  the options that are to vest for that period will not vest or will vest in whole or in part; and

(ii)

determine to  pay you all,  part or none of the commissions for that period.  

You acknowledge that the sums due which were owed to you under your Employment Agreement for the period January 1, 2006 through the date of this amendment, which sums you did not receive, have been waived and will not be paid to you in the future.  The new option grant is subject to your execution of UltraStrip’s standard Stock Option Agreement and the subordination provision which has been added to it.  Additionally, if you hold any unvested options, the options are forfeited and will not be returned to you.

Additionally, if any review is not satisfactory to the President and Chief Executive Officer, he may refer your review to the Compensation Committee and Board of Directors to consider your continued status of employment. A termination may be deemed to be for cause notwithstanding more limited cause in your Employment Agreement.  In all other respects, your Employment Agreement is ratified and confirmed.

Mr. John Odwazny

May 26, 2006

Page 2

Please sign a copy of this letter agreement evidencing your agreement to be bound.

Very truly yours,

J.C. “Jim” Rushing III

Chief Financial Officer

JCR/cdv

Enclosures

I hereby agree to the foregoing:

__________________________

John Odwazny

Exhibit A

Contained in the Form 10-KSB filed with the Securities and Exchange Commission on April 15, 2005.

Exhibit B

UltraStrip Systems, Inc.

May, 2006 Management Compensation Adjustment Plan

Revenue Producing Executive Management Staff

24 Month Incentive Compensation Program Proposal

(Including Performance-based Restricted Stock Option Program)

 

Executives in the Program	Current Contract		Current Actual Pay Rate		Proposed Payrate		Options Vesting After (subject to 6 month review)								Commissions awards(Notes 2-4)
							after 6 Mos		after 12 Mos		after 18 Mos		after 24 Mos		UES			ETI			Consoli- dated
Dennis McGuire	$	325,000	$	225,000	$	225,000		250,000		250,000		250,000		250,000								3.0	%
Jim Rushing	$	210,000	$	185,000	$	185,000		150,000		150,000		150,000		150,000								1.0	%
Steve Johnson		250,000		225,000		125,000		125,000		125,000		125,000		125,000		2.0	%					1.0	%
Mickey Donn		137,000		125,000		125,000		125,000		125,000		125,000		125,000					2.0	%		1.0	%
John Odwazny		165,000		150,000		100,000		62,500		62,500		62,500		62,500		1.0	%					1.0	%
Jackie McGuire		125,000		115,000		75,000		62,500		62,500		62,500		62,500		NA			NA			NA
Totals	$	1,212,000	$	1,025,000	$	835,000		775,000		775,000		775,000		775,000

Notes:

1

This "program" is not a guaranteed 24 month contract but a program to compensate results requiring a six month interval review by the CEO/Board to continue the next six months performance and program.  

2

Commission rates apply to any revenue whatsoever. That is product or service sales as well as transactions to "monetize" technology portfolio inventory during the period. Consolidated means USSI consolidated revenues including both Subsidiaries.

3

Commissions are payable quarterly within two weeks after "collection" of final quarterly revenues based on the Company's 10QSB Filing not on recording of the sale.  

4

Payment of Division Presidents & COO commissions include both a % for his division as well as a smaller % for consolidated to incentivize each Officer to execute cooperative effort to grow the entire company as well as his own division. Options grants incentivize Officers to help improve share price and encourage the adherance to the Proposed Rate reduced from current and contract levels by allowing the sale of Officer shares after we file the S-8 Registration for Officers and Directors.  

5

Grants will be for an exercise price of market closing price on the date of grant and will be exercisable for the vested portion any time within a five year period. Unvested grants will be forfeited if the six month review process determines the Executive's participation in this program is ceased  or additional options vesting bonus is cancelled.  

6

Six month reviews will be conducted by the CEO for Executives in the program and by the Compensation Committee for the CEO, Jackie McGuire and Mickey Donn.

7

All existing unvested Options as of the effective date of this program are forfeited as well as any "Current Contract" salaries accrued since January 1, 2006 in excess of the amount of Current Actual salaries paid to the effective date of this Program. Salaries deferred from prior to 2006 remain a deferred obligation of the Company to the Executive.

EX-10.6

EXHIBIT 10.6

UltraStrip Systems, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

May 26, 2006

Mrs. Jacqueline McGuire

Senior Vice President of Administration

UltraStrip Systems, Inc.

3515 S.E. Lionel Terrace

Stuart, FL 34997

Re:

Management Compensation Adjustment Plan

Dear Mrs. McGuire:

The Management Compensation Adjustment Plan (the “Plan”) is designed to address the Company’s need to conserve cash outflow as well as to enable the Management Team to be incentivized to produce revenue in the near-term and earn more than would be the case without this Program. This letter is an amendment to your existing Employment Agreement with UltraStrip Systems, Inc. (“UltraStrip” or the “Company”), a copy of which is annexed as Exhibit A and represents your agreement to be bound by the Plan, a copy of which is attached as Exhibit B.  If after any six-month review, the Compensation Committee (or the President and Chief Executive Officer as applicable) determines, in its (or his) sole discretion, that your performance for the period has not been satisfactory, it (or he) may:

(i)

determine that  the options that are to vest for that period will not vest or will vest in whole or in part; and

(ii)

determine to  pay you all,  part or none of the commissions for that period.  

You acknowledge that the sums due which were owed to you under your Employment Agreement for the period January 1, 2006 through the date of this amendment, which sums you did not receive, have been waived and will not be paid to you in the future.  The new option grant is subject to your execution of UltraStrip’s standard Stock Option Agreement and the subordination provision which has been added to it.  Additionally, if you hold any unvested options, the options are forfeited and will not be returned to you.

Additionally, if any review is not satisfactory to the President and Chief Executive Officer, he may refer your review to the Compensation Committee and Board of Directors (or the Compensation Committee may refer its review to the Board of Directors) to consider your continued status of employment. A termination may be deemed to be for cause notwithstanding more limited cause in your Employment Agreement.  In all other respects, your Employment Agreement is ratified and confirmed.

Mrs. Jacqueline McGuire

May 26, 2006

Page 2

Please sign a copy of this letter agreement evidencing your agreement to be bound.

Very truly yours,

J.C. “Jim” Rushing III

Chief Financial Officer

JCR/cdv

Enclosures

I hereby agree to the foregoing:

__________________________

Jacqueline McGuire

Exhibit A

Contained in the Form 10-KSB filed with the Securities and Exchange Commission on April 15, 2005.

Exhibit B

UltraStrip Systems, Inc.

May, 2006 Management Compensation Adjustment Plan

Revenue Producing Executive Management Staff

24 Month Incentive Compensation Program Proposal

(Including Performance-based Restricted Stock Option Program)

 

Executives in the Program	Current Contract		Current Actual Pay Rate		Proposed Payrate		Options Vesting After (subject to 6 month review)								Commissions awards(Notes 2-4)
							after 6 Mos		after 12 Mos		after 18 Mos		after 24 Mos		UES			ETI			Consoli- dated
Dennis McGuire	$	325,000	$	225,000	$	225,000		250,000		250,000		250,000		250,000								3.0	%
Jim Rushing	$	210,000	$	185,000	$	185,000		150,000		150,000		150,000		150,000								1.0	%
Steve Johnson		250,000		225,000		125,000		125,000		125,000		125,000		125,000		2.0	%					1.0	%
Mickey Donn		137,000		125,000		125,000		125,000		125,000		125,000		125,000					2.0	%		1.0	%
John Odwazny		165,000		150,000		100,000		62,500		62,500		62,500		62,500		1.0	%					1.0	%
Jackie McGuire		125,000		115,000		75,000		62,500		62,500		62,500		62,500		NA			NA			NA
Totals	$	1,212,000	$	1,025,000	$	835,000		775,000		775,000		775,000		775,000

Notes:

1

This "program" is not a guaranteed 24 month contract but a program to compensate results requiring a six month interval review by the CEO/Board to continue the next six months performance and program.  

2

Commission rates apply to any revenue whatsoever. That is product or service sales as well as transactions to "monetize" technology portfolio inventory during the period. Consolidated means USSI consolidated revenues including both Subsidiaries.

3

Commissions are payable quarterly within two weeks after "collection" of final quarterly revenues based on the Company's 10QSB Filing not on recording of the sale.  

4

Payment of Division Presidents & COO commissions include both a % for his division as well as a smaller % for consolidated to incentivize each Officer to execute cooperative effort to grow the entire company as well as his own division. Options grants incentivize Officers to help improve share price and encourage the adherance to the Proposed Rate reduced from current and contract levels by allowing the sale of Officer shares after we file the S-8 Registration for Officers and Directors.  

5

Grants will be for an exercise price of market closing price on the date of grant and will be exercisable for the vested portion any time within a five year period. Unvested grants will be forfeited if the six month review process determines the Executive's participation in this program is ceased  or additional options vesting bonus is cancelled.  

6

Six month reviews will be conducted by the CEO for Executives in the program and by the Compensation Committee for the CEO, Jackie McGuire and Mickey Donn.

7

All existing unvested Options as of the effective date of this program are forfeited as well as any "Current Contract" salaries accrued since January 1, 2006 in excess of the amount of Current Actual salaries paid to the effective date of this Program. Salaries deferred from prior to 2006 remain a deferred obligation of the Company to the Executive.