exv10w4






Exhibit 10.4




SECURITY AGREEMENT




     This Security Agreement (this “Agreement”) is made as of August 14, 2008, by and among Lime
Energy Co., a Delaware corporation (the “Debtor”), and Richard P. Kiphart (“Kiphart”) and Advanced
Biotherapy, Inc. (“ADVB” and together with Kiphart, the “Secured Parties,” and each, a “Secured
Party”).



Explanatory Statement




     Debtor has agreed to grant to Secured Parties a security interest in the Debtor’s assets to
secure the payment and performance of the obligations in connection with (i) that certain Second
Amended and Restated Revolving Line of Credit Promissory Note made by the Debtor in favor of
Kiphart (“Kiphart Note”) and (ii) that certain Second Amended and Restated Revolving Line of Credit
Note made by Debtor to ADVB (the “ADVB Note” and together with the Kiphart Note, the “Notes”), each
dated as of the date hereof.



     NOW, THEREFORE, based on the premises and agreements set forth herein, intending to be legally
bound, and to secure the payment of an indebtedness equal to the aggregate principal amount of the
Notes, plus accrued interest, as detailed in the Notes, the parties hereto agree as follows:



     1. (a) Definitions. As used herein, the capitalized terms set forth in bold below
shall have the following meanings:




          “Collateral” shall mean all right, title and interest of the Debtor in and to (a) all
Accounts, (b) all Instruments, (c) all Inventory, (d) all General Intangibles, (e) all
Equipment, (f) any and all Proceeds, (g) all contract rights, (h) all computer software, and
(i) all right, title and interest in and to any and all other assets and property of the
Debtor to secure the Obligations, but shall not include any Equipment or other Collateral
obtained or acquired or to be obtained or acquired by the Debtor on a lease financing basis.




          “Obligations” shall mean the payment obligations of the Debtor under the Notes.




          “Permitted Liens” shall mean: (a) the liens and security interests of the Senior
Lenders; (b) the liens and security interests of the Secured Parties hereunder; (c) liens
for taxes, assessments, or similar charges either not yet due or being contested in good
faith; (d) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens
arising in the ordinary course of business and securing obligations which are not yet
delinquent; (e) purchase money liens or purchase money security interests upon or in any
property acquired or held by Debtor in the ordinary course of business to secure
indebtedness outstanding on the date of this Agreement; (f) liens and security interests
which, as of the date of this Agreement, have been disclosed to and approved by Secured
Parties in writing; and (g) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to the net value of
Debtor’s assets.




          “Senior Lenders” shall mean each of American Chartered Bank and any commercial lender
which provides financing to Debtor.




          “Senior Lien” shall mean liens made in favor of the Senior Lenders by Debtor.













 






          “UCC” shall mean the Uniform Commercial Code as in effect in the State of Illinois from
time to time.




     (b) Incorporation of UCC Terms. Except as specifically defined in this
Agreement, all words, terms and/or phrases used in this Agreement shall be defined by the
applicable definition ascribed thereto in Article 9 of the UCC, which definitions are
incorporated herein by reference as if fully set forth herein, including: , “Accounts”,
“Documents”, “Equipment”, “General Intangibles”, “Goods”, “Instruments”, “Inventory” and
“Proceeds”. If a term is defined in Article 9 of the UCC differently than in another
Article of the UCC, the term shall have the meaning ascribed to such term in Article 9.



     2. Grant of Security Interest. The Debtor hereby grants and conveys to the Secured
Parties a continuing perfected security interest in and a lien upon all of the Debtor’s right,
title and interest in, to and under the Collateral, whether presently existing or hereafter created
or acquired, and all products and proceeds for the foregoing to secure the payment and performance
of Debtor’s obligations under the Notes. Nothing in this Agreement shall be deemed to constitute
an assumption or acceptance by either Secured Party of any of the obligations or the Debtor under
any of the Collateral or any contract or agreement for purchase, sale, lease or disposition of the
Collateral, and Debtor hereby specifically confirms and acknowledges that it shall remain liable
for any obligations it may have under or in respect of any of the Collateral and agree to indemnify
the Secured Parties and hold the Secured Parties harmless against any such liability or obligation.



     3. Continuing Security Interest. This Agreement creates a continuing perfected
security interest in and lien upon the Collateral and shall: (a) remain in full force and effect
until all Obligations have been paid in full or otherwise discharged; (b) be binding upon the
Debtor and its successors, permitted transferees and permitted assigns; and (c) inure, together
with the rights and remedies of the Secured Parties hereunder, to the benefit of each Secured Party
and their respective successors, transferees and assigns. Upon the payment in full of all
Obligations, the security interest and lien granted hereunder shall terminate and all rights to the
Collateral shall revert to the Debtor. Upon such termination, the Secured Parties will execute and
deliver to the Debtor such documents as the Debtor shall reasonably request to evidence such
termination.



     4. Representations, Warranties and Covenants. The Debtor represents, warrants,
covenants and agrees as follows:




     (a) Debtor is the sole legal and beneficial owner of each item of the Collateral,
having good and marketable title thereto, free and clear of any and all liens, charges,
encumbrances, taxes and assessments other than the Permitted Liens.




     (b) The execution, delivery and performance of this Agreement and the endorsement and
delivery of the Collateral does not and will not contravene or violate any provision of any
law, rule, regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect and applicable to the Debtor, or result in a breach of or constitute a
default (with or without the giving of notice or the lapse of time, or both) under any
indenture or any other agreement to which the Debtor is a party, or by which the Debtor or
any of the Debtor’s property may be bound or affected.




     (c) Debtor shall pay and perform all of the obligations secured by this Agreement
according to their terms.



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     (d) Debtor shall defend the title to the Collateral against all persons and against all
claims and demands whatsoever, which Collateral is free and clear of any and all liens,
security interests, claims, charges, encumbrances, taxes and assessments, except for the
Permitted Liens.




     (e) Debtor shall do the following: (i) furnish any further assurances of title
reasonably requested by a Secured Party; (ii) execute any written agreement or do any other
acts reasonably necessary to effectuate the purposes and provisions of the Agreement; (iii)
execute any instrument or statement required by law in order to perfect or continue the
security interest of the Secured Parties in the Collateral; and (iv) pay all costs of filing
in connection therewith.




     (f) Debtor shall keep the Collateral free and clear of all liens, charges,
encumbrances, taxes and assessments other than the Permitted Liens.




     (g) Debtor shall pay, when due, all taxes, assessments and license fees relating to the
Collateral unless such taxes and/or assessments are being contested by Debtor in good faith.




     (h) The Debtor has the full corporate right and authority to enter into this Agreement
and to pledge the Collateral in accordance with the terms hereof.




     (i) Except for the filing of financing statements with the Secretary of State for the
State of Illinois under the UCC, no authorization, approval or other action by, and no
notice to or filing with, any governmental or regulatory authority, agency or office is
required either (1) for the grant by the Debtor or the effectiveness of the security
interest and lien granted hereby or for the execution, delivery and performance of this
Agreement by the Debtor, or (2) for the perfection of or the exercise by the Secured Parties
of any of their rights and remedies hereunder.



     5. Waiver. Waiver of, or acquiescence in, any default by the Debtor, or failure of a
Secured Party to insist upon strict performance by the Debtor of any warranties or agreements in
this Agreement, shall not constitute a waiver of any subsequent or other default or failure.



     6. Debtor Remains Liable. Anything herein to the contrary notwithstanding (a) the
Debtor shall remain liable under any agreements which have been (in whole or in part) pledged or
assigned herein to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Secured Parties of any of the rights
hereunder shall not release the Debtor from any of its respective duties or obligations under any
such agreements, and (c) no Secured Party shall have any obligation or liability under any such
agreements by reason of this Agreement, nor shall either Secured Party be obligated to perform any
of the obligations or duties of the Debtor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.



     7. Governing Statute. The UCC shall govern the rights, duties and remedies of the
parties and any provisions herein declared invalid under any law shall not invalidate any other
provision or this Agreement.



     8. Remedies Upon Default.




     (a) Upon any Event of Default (as defined in the Notes), the Obligations secured by
this Agreement shall immediately become due and payable in full without notice or demand and
the Secured Parties shall have all the rights, remedies and privileges with respect to the
retention and sale of the Collateral and disposition of the proceeds thereof as are accorded
by the applicable sections of the Uniform Commercial Code respecting “Default.”



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     (b) Upon any Event of Default, the Debtor shall assemble all materials relevant to the
Collateral and make it available to the Secured Parties at the place and at the time
designated in the demand. The proceeds of all sales and collections of the Collateral shall
be applied as follows:




     (i) to the payment of costs and expenses of such sales and collections incurred
by Secured Parties;




     (ii) any surplus then remaining to the payment of unpaid interest under the
Notes;




     (iii) any surplus remaining to the payment of the unpaid principal of the
Notes;




     (iv) to the payment of any other amounts required by applicable law, including
without limitation, the UCC; and




     (v) any surplus then remaining shall be paid over (subject to the rights of
third parties) to the Debtor or for its account. The Debtor shall remain liable for
any deficiency resulting from the sale of the Collateral and shall pay any such
deficiency forthwith on demand.



     9. Subordination. The security interest in the Collateral described in Section
2 is hereby expressly subordinated to the any lien now or hereafter granted to the Senior
Lenders by Debtor or by law, notwithstanding the date, order or method of attachment or perfection
of any such Senior Liens or the provisions of any applicable law.



     10. Termination. This Agreement shall terminate upon payment of all indebtedness and
performance of all obligations under the Notes, and each Secured Party shall execute and deliver to
the Debtor a UCC-3 financing statement terminating the lien of such Secured Party on the
Collateral.



     11. Miscellaneous.




     (a) This Agreement shall bind and inure to the benefit of the respective parties
hereto, and their legal representatives, successors and assigns.




     (b) This Agreement may be modified or amended only by a writing signed by the Debtor
and each Secured Party.




     (c) All notices, requests, demands, claims and other communications hereunder
(“Notices”) shall be in writing. Any Notice hereunder shall be deemed duly given (i) upon
receipt if delivered in person; (ii) upon the third business day after being sent if sent by
registered or certified mail, return receipt requested with postage thereon prepaid; or
(iii) on the next business day if sent by Federal Express or similar overnight courier
service; in each case addressed to the intended recipient as set forth below (or to such
other address as the intended receipt may request by way of Notice delivered in accordance
with this Section):


If to the Debtor, to:



Lime Energy Co.

1280 Landmeier Road




4









 







Elk Grove Village, IL 60007

Attention: Chief Financial Officer



With a copy to:



Reed Smith LLP

10 S. Wacker Drive

Chicago, IL 60606

Attention: Evelyn Arkebauer



If to the Kiphart:



Richard P. Kiphart

William Blair &Co.

222 W. Adams Street

Chicago, IL 60606



If to ADVB:



Advanced Biotherapy, Inc.

227 W. Monroe Steet

Suite 2900

Chicago, IL 60606

Attention: Chief Executive Officer





     (d) This Agreement shall be governed by, and interpreted and enforced in accordance
with, the laws of the State of Illinois, as applied to contracts made and to be performed in
that state, without regard to conflicts of law principles.



          (e) This Agreement may be signed in one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same agreement.




[Signatures on following page]





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     IN WITNESS WHEREOF, the undersigned have executed this Security Agreement effective as of the
date first set forth above.



	 	 	 	 	 
	 	 	DEBTOR:
	 
	 	 	 	 
	 	 	LimeEnergy Co.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jeffrey Mistarz
	 

	 	 	 	 
	 

	 	Name:
	 	Jeffrey Mistarz
	 

	 	Title:
	 	Chief Financial Officer
	 
	 	 	 	 
	 	 	SECURED PARTIES
	 
	 	 	 	 
	 	 	Richard P. Kiphart
	 
	 	 	 	 
	 	 	/s/ Richard Kiphart
	 	 	 
	 
	 	 	 	 
	 	 	Advanced Biotherapy, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Christopher W. Capps
	 

	 	 	 	 
	 

	 	Name:
	 	Christopher W. Capps
	 

	 	 	 	 
	 

	 	Title:
	 	President
	 

	 	 	 	 






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