EXHIBIT 10.4

SECURITY AGREEMENT

This Security Agreement (the “Agreement”) is entered into as of this 12thday of
September, 2014 by and between Ecosphere Technologies, Inc., a Delaware
corporation (“Ecosphere”), and Brisben Water Solutions LLC (the “Lender” and
together with Ecosphere, the “Parties”). The Parties hereby agree as follows:

1.

Creation of Security Interest.  Ecosphere hereby grants to the Lender a security
interest in the Collateral described in Section 2 to secure the performance or
payment of the Obligations of Ecosphere under Section 3.

2.

Collateral.  The collateral of this Agreement (the “Collateral”) consists of the
items described on attached Exhibit A, including the Physical Collateral, as
defined in Exhibit A.

3.

Ecosphere's Obligations.

(a)

Obligation to Pay.  Ecosphere shall pay to the Lender $1,000,000 and accrued
interest thereon in accordance with the terms of the promissory note (the
“Note”) attached hereto as Exhibit B.

(b)

Additional Obligations.

(i)

Protection of Collateral.  The Physical Collateral:

(A)

will not be misused or abused, but will be maintained in good and operable
condition, reasonable wear and tear excepted (except for any loss, damage or
destruction which is fully covered by insurance proceeds) and will be repaired,
renewed and replaced by Ecosphere, in the exercise of reasonable discretion,
shall deem necessary;

(B)

will be insured by Ecosphere until this Agreement is terminated against all
expected risks to which it is exposed, including fire, theft, wind and flood,
and those which the Lender may designate, with the policies acceptable to the
Lender, payable to both Ecosphere and the Lender, as their interests appear, and
providing for 30 days' minimum cancellation notice to the Lender, and with
certificates evidencing such insurance deposited with the Lender; and

(ii)

Protection of Security Interest.

(A)

The Collateral will not be sold, transferred, encumbered, pledged, or disposed
of or be subjected to any unpaid charge, including taxes, or to any subsequent
interest of a third person created or suffered by Ecosphere voluntarily or
involuntarily, unless the Lender consents in advance in writing to such charge,
transfer, disposition or subsequent interest, and

(B)

The Lender has filed Financing Statements and may file additional Financing
Statements it deems necessary in places it deems appropriate to protect the
security interest under this Agreement against the rights or interests of third
persons.

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(iii)

Sale of FNES Interest.  In addition to the Lender’s rights and remedies with
respect to the Collateral, to secure the performance or payment of the
Obligations, Ecosphere agrees as follows:

(A)

Ecosphere shall not sell, assign, transfer or encumber in any manner Ecosphere’s
30.6% limited liability company ownership interest in Fidelity National
Environmental Solutions, LLC (“FNES”, and such 30.6% interest, the “FNES
Interest”); and

(B)

In the event Ecosphere is in default of the Note and Lender declares the Note to
be immediately due and payable, Ecosphere shall sell the FNES Interest or any
part thereof for cash at public or private sale, subject to full compliance with
the provisions, including tag-along rights and rights of first refusal, of the
Amended and Restated Limited Liability Company Agreement of FNES, as in effect
on the date hereof, a copy of which is appended to this Agreement as Exhibit C.
 To facilitate the sale process, Lender may solicit offers to purchase the FNES
Interest.  Such public or private sale shall take place no later than 90 days
after the date of default by non-payment.  Ecosphere shall give Lender at least
30 days notice of the time and place of any public sale or the time at which any
private sale is to be made.  At any sale of the FNES Interest the Lender may be
the purchaser of the FNES Interest or any part thereof and shall be entitled to
use and apply any sums due it under the Note as a credit on account of the
purchase price of the FNES Interest or any part thereof payable at such sale.
 Any proceeds received by Ecosphere upon sale of the FNES Interest or any part
thereof shall be applied and paid to Lender to fully discharge principal,
accrued interest and attorneys’ fees due under the Note.  All additional
proceeds, if any, from the sale shall be retained by Ecosphere.

4.

Representations, Warranties and Covenants.  Ecosphere represents, warrants and
covenants to Lender that:

(a)

Ecosphere has good and sufficient title to the Collateral and the FNES Interest,
free and clear of all security interests, liens, encumbrances and claims
whatsoever, other than those created under the Securities Purchase Agreement and
this Agreement.

(b)

No financing statement, notice of lien, security agreement or any other
agreement or instrument creating or giving notice of an encumbrance or charge
against any of the Collateral or the FNES Interest is in existence or on file in
any public office, except those in favor of Lender.

(c)

Ecosphere will at all times hereafter keep the Collateral and the FNES Interest
free of all security interests, liens and claims whatsoever, except the security
interests, liens and claims in favor of Lender.

(d)

Ecosphere will, from time to time, on request of Lender, execute such financing
statements, statements of assignment, notices and other documents and pay the
costs of filing or recording the same in all public offices deemed necessary by
Lender and do such other acts as Lender may request to establish and maintain a
valid security interest in the Collateral and the FNES Interest.

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(e)

Ecosphere will account fully and faithfully for and promptly pay or turn over to
Lender proceeds in whatever form received in disposition in any manner of any of
the Collateral or the FNES Interest as provided herein.

(f)

All information now or hereafter furnished by Ecosphere to Lender relating in
any way to the Collateral or the FNES Interest is and will be true and correct
in all material respects as of the date furnished.

5.

Default.  Any misrepresentation or misstatement in connection with, or
non-compliance with or non-performance of the Note or this Agreement shall
constitute default under this Agreement.  In addition, Ecosphere shall be in
default if (i) bankruptcy or insolvency proceedings are instituted by or against
Ecosphere, which proceedings are not dismissed within 30 days; (ii) if Ecosphere
makes any assignment for the benefit of creditors, or (iii) if Ecosphere shall
default in performance of any agreement with the Lender.

6.

The Lender's Rights and Remedies.

(a)

The Lender may assign this Agreement, with notice to Ecosphere, and, if the
Lender does assign this Agreement, the assignee shall be entitled, upon
notifying Ecosphere, to performance of all of Ecosphere's obligations under this
Agreement.

(b)

Upon Ecosphere's default, the Lender may exercise its rights of enforcement
under the Uniform Commercial Code in force in Delaware and any notice of lien
filed with the United States Patent Office and, in conjunction with, addition to
or substitution for those rights, at the Lender's discretion, it may:

(i)

To the extent permitted by law, enter upon Ecosphere's premises to take
possession of, assemble and collect the Physical Collateral or to render it
unuseable.

(ii)

Require Ecosphere to assemble the Physical Collateral and make it available at a
place the Lender designates which is mutually convenient, to allow the Lender to
take possession or dispose of the Collateral.

(iii)

Waive any default or remedy any default in any reasonable manner without waiving
the default remedied and without waiving any other prior or subsequent default.

(iv)

Ecosphere understands that to the extent permitted by law, if Ecosphere fails to
meet any of Ecosphere's obligations under this Agreement, the Lender has a right
to take possession of the Collateral by all lawful means.

(c)

Upon default of the Note, the Lender shall have rights to a sale of the FNES
Interest by Ecosphere, including a right to solicit purchasers, in accordance
with Section 3(b)(iii).

(d)

With regards to only non-monetary defaults, the Lender will give notice to
Ecosphere that Ecosphere is in default hereunder, and Ecosphere shall have 30
days from the date of such notice to cure the non-monetary defaults.  

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(e)

The Lender’s remedies are subject to a Securities Purchase Agreement dated
September ______ 2014, which limits the Lender to recovering its outstanding
principal, accrued interest, attorneys’ fees and costs incurred in the sale of
the Collateral.

7.

Other Lienholders.  Any person or entity taking a junior encumbrance, or other
lien upon the Collateral or any part thereof or any interest therein, shall take
said lien subject to the rights of the Lender to amend, modify, extend, renew,
enlarge or release the Note, this  Agreement or any other document or instrument
evidencing, securing or guaranteeing the Note, including, but not limited to,
any amendments, modifications, extensions or renewals that increase the amount
outstanding under the Note, in each and every case without obtaining the consent
of the holder of such junior lien and without the lien of this Agreement losing
its priority over the rights of any such junior lien.  Accordingly, any person
or entity taking a junior encumbrance, or other lien upon the Collateral or any
part therein or any interest therein, shall take said lien subject to the
provisions of the Note and this Agreement, including, but not limited to, the
above provision.  Nothing in this Section shall be deemed to authorize any such
junior encumbrance or other liens on the Collateral or the FNES Interest.

 

8.

Severability.  In the event any parts of this Agreement are found to be void,
the remaining provisions of this Agreement shall nevertheless be binding with
the same effect as though the void parts were deleted.

9.

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

10.

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

11.

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

Lender:

Brisben Water Solutions LLC

23 N. Beach Road

Jupiter Island, FL 33455

Attn:  William Brisben

Email:  wbrisben@hotmail.com

with a copy to:

Dinsmore & Shohl LLP

10 N. Ludlow Street, Suite 1100

Dayton, OH 45402

Attn:  Frederick J. Caspar,  Esq.

Email:  fred.caspar@dinsmore.com

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Ecosphere:

3515 SE Lionel Terrace

Stuart, Florida 34097

Attention: Dennis McGuire

Email: dennismcguire1@mac.com

with a copy to:

Nason, Yeager, Gerson, White

& Lioce, P.A.

1645 Palm Beach Lakes Blvd.

Suite 1200

West Palm Beach, Florida  33401

Attention:  Michael D. Harris

Email:  mharris@nasonyeager.com

or to such other address as any of them, by notice to the other may designate
from time to time.  Time shall be counted to, or from, as the case may be, the
date of delivery.

12.

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

13.

Oral Evidence.  This Agreement constitutes the entire Agreement between the
parties and supersedes all prior oral and written agreements between the parties
hereto with respect to the subject matter hereof.  Neither this Agreement nor
any provision hereof may be changed, waived, discharged or terminated orally,
except by a statement in writing signed by the party or parties against which
enforcement or the change, waiver discharge or termination is sought.

14.

Additional Documents.  The parties hereto shall execute such additional
instruments as may be reasonably required by their counsel in order to carry out
the purpose and intent of this Agreement and to fulfill the obligations of the
parties hereunder.

15.

Governing Law.  All claims relating to or arising out of this Agreement, or the
breach thereof, whether sounding in contract, tort, or otherwise, shall also be
governed by the laws of the State of Delaware without regard to choice of law
considerations.

16.

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

(Signature Page Follows)

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IN WITNESS WHEREOF the parties hereto have set their hand and seals as of the
date first above written.

 

 

ECOSPHERE:  

 

 

 

ECOSPHERE TECHNOLOGIES, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:  

/s/ Dennis McGuire

 

 

 

Dennis McGuire, Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

BRISBEN WATER SOLUTIONS LLC

 

 

 

 

 

 

By:

/s/ William Brisben

 

 

 

William Brisben, Manager

 

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EXHIBIT A

This Security Agreement covers all of the following property of Ecosphere
Technologies, Inc., whether now or hereafter owned, existing, acquired or
arising and wherever now or hereafter located (capitalized terms used herein
shall have the meaning ascribed to such term under the Uniform Commercial Code
as in effect in the State of Delaware and/or as otherwise set forth herein):

(a)

The Ecos PowerCube® unit (the “Physical Collateral”) located in Stuart, Florida

(b)

United States Patent #8,593,102, filed November 26, 2013

(c)

All warranties, increases, parts, renewals, additions and accessions to,
substitutions for, and replacements, products and Proceeds of the foregoing
property, and all of Ecosphere's books and records relating to any of the
foregoing. Provided, however, that if Ecosphere manufactures any additional Ecos
PowerCube® units, they shall not be deemed to be Physical Collateral or subject
to this Agreement.

Proceeds shall mean and include all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or other
realization upon collateral, including, without limitation, all licenses,
permits, authorizations and applications, all claims of Ecosphere against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of, any
collateral, and any condemnation or requisition payments with respect to any
collateral, in each case whether now existing or hereafter arising.

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EXHIBIT B

PROMISSORY NOTE

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EXHIBIT C

FNES AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

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