EXHIBIT 10.4

SECURITY AGREEMENT

This Security Agreement (the “Agreement”) is entered into as of this 18th day of
June, 2015 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 all of the Obligations of Ecosphere under Section 3. The Parties
agree that notwithstanding any provision to the contrary contained in the
Security Agreement between the Parties, dated as of May 8, 2015, the Security
Agreement between the Parties, dated as of March 19, 2015, or the Amended and
Restated Security Agreement between the Parties, dated as of February 9, 2015
(the “Prior Security Agreements”), the entry into each of this Agreement and the
promissory note in the amount of $250,000 (the “Note”) attached hereto as
Exhibit B do not constitute a default or violation of any covenant under the
Prior Security Agreement or related transaction documents.

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 $250,000 and accrued
interest thereon in accordance with the terms of that certain convertible note,
dated as of the date hereof, in the original principal amount of $250,000 (“the
Note”). This obligation to pay $250,000 is in addition to, and not in
modification of, Ecosphere’s obligation to pay $1,750,000 which exists as of the
date hereof in accordance with (i) that certain Convertible Note dated as of May
8, 2015, (ii) that certain Convertible Note dated as of March 19, 2015, and
(iii) that certain Amended and Restated Convertible Note dated as of February 9,
2015 (the “Prior Notes”), which obligations are secured by the Prior Security
Agreements.

(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

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(ii)

Protection of Security Interest.

(A)

The Collateral will not be sold, licensed, 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.

(C)

Any proceeds received by Ecosphere upon the sale, lease, license, assignment,
transfer, encumbrance, pledge or other disposition of any of the Collateral or
any part thereof shall be paid to Lender when received to fully discharge
principal, accrued interest and attorneys’ fees due under the Note and the Prior
Notes, if any.  All additional proceeds, if any, from such sale or other
disposition shall be retained by Ecosphere.

(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 and the Prior Notes, if
any.  All additional proceeds, if any, from the sale shall be retained by
Ecosphere.

(iv)

Sale of EM 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:

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(A)

Ecosphere shall not sell, assign, transfer or encumber in any manner the 25%
limited liability company ownership interest in Ecosphere Mining, LLC (“EM”)
which Ecosphere owns and has pledged to the Lender under this Agreement (the “EM
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 EM Interest or any part
thereof for cash at public or private sale.  To facilitate the sale process,
Lender may solicit offers to purchase the EM 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 EM Interest, the Lender may be the purchaser of the EM
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 EM
Interest or any part thereof payable at such sale.  Any proceeds received by
Ecosphere upon sale of the EM 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 and the Prior Notes, if any.  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, the FNES Interest and
the EM Interest, free and clear of all security interests, liens, encumbrances
and claims whatsoever, other than those created under (i) the Securities
Purchase Agreement dated as of the date hereof, (ii) this Agreement, (iii) the
Securities Purchase Agreement dated May 8, 2015, (iv) the Securities Purchase
Agreement dated March 19, 2015 and (v) the Securities Purchase Agreement dated
September 12, 2014, as amended February 9, 2015 ((iii)-(v), the “Prior SPAs”)
and (vi) the Prior Security Agreements.

(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, the FNES Interest and the EM 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, the FNES Interest and
the EM Interest free of all security interests, liens and claims whatsoever,
except the security interests, liens and claims in favor of Lender.

(d)

Ecosphere (i) 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, the FNES Interest and
the EM Interest and (ii) authorizes  Lender at Ecosphere’s expense to file any
financing statements, or any notices or assignments with the Patent and
Trademark Office, relating to the Collateral (without Ecosphere’s signature
thereon) which Lender deems appropriate and Ecosphere irrevocably appoints
Lender as Ecosphere’s attorney-in-fact to execute any such financing statements
and notices or assignments in Ecosphere’s name and to perform all other acts
which Lender deems appropriate to perfect and to continue perfection of the
security interest created herein.

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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, the FNES Interest and the EM Interest as provided herein.

(f)

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

(g)

The FNES Interest and the EM Interest are not represented by a certificate and
are “uncertificated securities” under the Uniform Commercial Code as in effect
in Delaware.  Ecosphere will, if the FNES Interest or the EM Interest are
represented by a certificate, promptly deliver possession of such certificate to
Lender.

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.

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(c)

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

(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.  

(e)

The Lender’s remedies are subject to a Securities Purchase Agreement dated as of
the date hereof and the Prior SPAs, which limit the Lender to recovering its
outstanding principal and accrued interest under each of the Note and the Prior
Notes, 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, the FNES Interest and the
EM 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

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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

Ecosphere:

3515 SE Lionel Terrace

Stuart, Florida 34997

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. (“Ecosphere”), 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 (with the Ecos GrowCube® unit, the “Physical
Collateral”) located in Stuart, Florida.

(b)

One completed Ecos GrowCube® unit (with the Ecos PowerCube® unit, the “Physical
Collateral”) located in Stuart, Florida.

(c)

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

(d)

United States Patent #8,999,154, issued April 7, 2015.

(e)

United States Patent, when issued, pertaining to patent application #62/083,747,
filed November 24, 2014.

(f)

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 or Ecos GrowCube® units, they shall not be deemed to be
Physical Collateral or subject to this Agreement.

(g)

25% of the limited liability company interests in Ecosphere Mining, LLC, a
Delaware limited liability company and Ecosphere’s subsidiary (the “EM
Interest”).

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.