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                                  EXHIBIT 10.4

                               SECURITY AGREEMENT

                                                              September 21, 2001

<TABLE>
============================== ================================== ===================== =========================
<S>                            <C>                                <C>                   <C>
           DEBTOR              Aero Systems Engineering, Inc.            SECURED        National City Bank of
                                                                          PARTY         Minneapolis
------------------------------ ---------------------------------- --------------------- -------------------------
          BUSINESS             358 East Fillmore Avenue                  ADDRESS        651 Nicollet Mall
             OR
          RESIDENCE
           ADDRESS
------------------------------ ---------------------------------- --------------------- -------------------------
            CITY               St. Paul, MN  55107                        CITY          Minneapolis, MN  55402
           STATE &                                                       STATE &
          ZIP CODE                                                      ZIP CODE
============================== ================================== ===================== =========================
</TABLE>

1. SECURITY INTEREST AND COLLATERAL. To secure the payment and performance of
each and every debt, liability and obligation of every type and description
which Debtor may now or at anytime hereafter owe to Secured Party (whether such
debt, liability or obligation now exists or is hereafter created or incurred,
and whether it is or may be direct or indirect, due or to become due, absolute
or contingent, primary or secondary; liquidated or unliquidated, or joint,
several or joint and several; all such debts, liabilities and obligations being
herein collectively referred to as the "Obligations"). Debtor hereby grants
Secured Party a security interest (herein called the "Security Interest") in the
following property (herein called the "Collateral") :

All of the following properties, assets and rights of the Debtor, wherever
located, whether now owned or hereafter acquired or arising, and all proceeds
and products thereof:

         All personal and fixture property of every kind and nature including,
         without limitation, all furniture, fixtures, equipment, raw materials,
         inventory, other goods, accounts, contract rights, rights to the
         payment of money, insurance refund claims and all other insurance
         claims and proceeds, tort claims, chattel paper, electronic chattel
         paper, documents, instruments, securities and other investment
         property, deposit accounts, rights to payment under letters of credit,
         letter-of-credit rights, supporting obligations of every nature, and
         general intangibles including, without limitation, all tax refund
         claims, license fees, patents, patent applications, trademarks,
         trademark application, trade names, copyrights, copyright applications,
         rights to sue and recover for past infringement of patents, trademarks
         and copyrights, computer programs, computer software, engineering
         drawings, service marks, customer lists, goodwill, and all licenses,
         permits, agreements of any kind or nature pursuant to which (i) the
         Debtor operates or has authority to operate; (ii) the Debtor possesses,
         uses or has authority to possess or use property (whether tangible or
         intangible) of others, or (iii) others possess, use, or have authority
         to possess or use property (whether tangible or intangible) of the
         Debtor, and all recorded data of any kind or nature, regardless of the
         medium of recording, including, without limitation, all software,
         writings, plans, specifications, and schematics,


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         together with, to the extent not listed above as original Collateral,
         all substitutions and replacements for and products of any of the
         foregoing property not constituting consumer goods and together with
         proceeds of any and all of the foregoing property and, in the case of
         all tangible Collateral, together with all accessions and, except in
         the case of consumer goods, together with (i) all accessories,
         attachments, parts, equipment and repairs now or hereafter attached or
         affixed to or used in connection with any such goods, and (ii) all
         warehouse receipts, bills of lading and other documents of title now or
         hereafter covering such goods.

The Debtor acknowledges and agrees that, with respect to any term used herein
that is defined in either (i) Article 9 of the Uniform Commercial Code as in
force in the jurisdiction in which this financing statement was signed by the
Debtor at the time that it was signed, or (ii) Article 9 as in force at any
relevant time in the jurisdiction in which a financing statement for the
Collateral is filed, the meaning to be ascribed thereto with respect to any
particular item of the property shall be that under the more encompassing of the
two definitions.

2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Debtor represents, warrants and
agrees that:

(a)      Debtor is a corporation, organized under the laws of Minnesota, with
         the exact legal name shown above.

(b)      The Collateral will be used primarily for business purposes.

(c)      Debtor's chief executive office is located at the address of Debtor
         shown at the beginning of this Agreement.

(d)      Debtor has no commercial tort claims except:

    ------------------------------------------------

    ------------------------------------------------

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(e)      Debtor shall preserve its corporate existence and not merge into or
         consolidate with any other entity or sell all or substantially all of
         its assets.

3. ADDITIONAL REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Debtor represents,
warrants and agrees that:

    (a) Debtor has (or will have at the time Debtor acquires rights in
Collateral hereafter arising) absolute title to each item of Collateral free and
clear of all claims, security interests, liens and encumbrances and restrictions
on transfer and pledge, except the Security Interest, and security interest of
Celsius Inc. and will defend the Collateral against all claims or demands of all
persons other than Secured Party and Celsius Inc.. Debtor will not sell or
otherwise dispose of the Collateral or any interest therein without the prior
written consent of Secured Party, except that, until the occurrence of an Event
of Default and the revocation by Secured Party of Debtor's right to do so,
Debtor may sell any inventory constituting Collateral to buyers in the ordinary
course of business and equipment which is obsolete or which is being replaced.
If Debtor is a corporation, this Agreement has been duly and validly authorized
by all necessary corporate action, and, if Debtor is a partnership, the
partner(s) executing this Agreement has (have) authority to act for the
partnership.



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    (b) Debtor will not permit any tangible Collateral to be located in any
state (and, if county filing is required, in any county) in which a financing
statement covering such Collateral is required to be, but has not in fact been,
filed in order to perfect the Security Interest.

    (c) Each right to payment and each instrument, document, chattel paper and
other agreement constituting or evidencing Collateral is (or will be when
arising or issued) the valid genuine and legally enforceable obligation, subject
to no defense, set-off or counterclaim (other than those arising in the ordinary
course of business) of the account debtor or other obligor named therein or in
Debtor's records pertaining thereto as being obligated to pay such obligation.
Debtor will neither agree to any material modification or amendment nor agree to
any cancellation of any such obligation without Secured Party's prior written
consent, and will not subordinate any such right to payment to claims of other
creditors of such account debtor or other obligor.

    (d) Debtor will

        (i) keep all tangible Collateral in good repair, working order and
condition, normal depreciation excepted, and will, from time to time, replace
any worn, broken or defective parts thereof;

        (ii) promptly pay all taxes and other governmental charges levied or
assessed upon or against any Collateral or upon or against the creation,
perfection or continuance of the Security Interest;

        (iii) keep all Collateral free and clear of all security interests,
liens and encumbrances except the Security Interest and the security interest of
Celsius Inc.;

        (iv) at all reasonable times, permit Secured Party or its
representatives to examine or inspect any Collateral, wherever located, and to
examine, inspect and copy Debtor's books and records pertaining to the
Collateral and its business and financial condition and to send and discuss with
account debtors and other obligors requests for verifications of amounts owed to
Debtor;

        (v) keep accurate and complete records pertaining to the Collateral and
pertaining to Debtor's business and financial condition and submit to Secured
Party such periodic reports concerning the Collateral and Debtor's business and
financial condition as Secured Party may from time to time reasonably request;

        (vi) promptly notify Secured Party of any loss of or material damage to
any Collateral or of any adverse change, known to Debtor, in the prospect of
payment of any sums due on or under any instrument, chattel paper, or account
constituting Collateral;

        (vii) if Secured Party at any time so requests (whether the request is
made before or after the occurrence of an Event of Default), promptly deliver to
Secured Party any instrument, document or chattel paper constituting Collateral,
duly endorsed or assigned by Debtor;



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        (viii) bear the risk of loss of the Collateral and at all times keep all
tangible Collateral insured against risks of fire (including so-called extended
coverage), theft, collision (in case of Collateral consisting of motor vehicles)
and such other risks and in such amounts as Secured Party may reasonably
request, with any loss payable to Secured Party to the extent of its interest;

        (ix) from time to time execute such financing statements as Secured
Party may reasonably require in order to perfect the Security Interest, and, if
any Collateral consists of a motor vehicle, execute such documents as may be
required to have the Security Interest properly noted on a certificate of title;

        (x) pay when due or reimburse Secured Party on demand for all costs of
collection of any of the Obligations and all other out-of-pocket expenses
(including in each case all reasonable attorneys' fees) incurred by Secured
Party in connection with the creation, perfection, satisfaction, protection,
defense or enforcement of the Security Interest or the creation, continuance,
protection, defense or enforcement of this Agreement or any or all of the
Obligations, including expenses incurred in any litigation or bankruptcy or
insolvency proceedings;

        (xi) execute, deliver or endorse any and all instruments, documents,
assignments, security agreements and other agreements and writings which Secured
Party may at any time reasonably request in order to secure, protect, perfect or
enforce the Security Interest and Secured Party's rights under this Agreement;

        (xii) not use or keep any Collateral, or permit it to be used or kept,
for any unlawful purpose or in violation of any federal, state or local law,
statute or ordinance; and

        (xiii) not permit any tangible Collateral to become part of or to be
affixed to any real property without first assuring to the reasonable
satisfaction of Secured Party that the Security Interest will be prior and
senior to any interest, or lien then held or thereafter acquired by any
mortgagee of such real property or the owner or purchaser of any interest
therein.

If Debtor at any time fails to perform or observe any agreement contained in
this Section 3(d), and if such failure shall continue for a period of ten
calendar days after Secured Party gives Debtor written notice thereof (or, in
the case of the agreements contained in clauses (viii) and (ix) of this Section
3(d), immediately upon the occurrence of such failure, without notice or lapse
of time), Secured Party may (but need not) perform or observe such agreement on
behalf and in the name, place and stead of Debtor (or, at Secured Party's
option, in Secured Party's own name) and may (but need not) take any and all
other actions which Secured Party may reasonably deem necessary to cure or
correct such failure (including, without limitation, the payment of taxes, the
satisfaction of security interests, liens, or encumbrances, the performance of
obligations under contracts or agreements with account debtors or other
obligors, the procurement and maintenance of insurance, the execution of
financing statements, the endorsement of instruments, and the procurement of
repairs, transportation or insurance); and, except to the extent that the effect
of such payment would be to render any loan or forbearance of money usurious or
otherwise illegal under any applicable law, Debtor shall thereupon pay Secured
Party on demand the amount of all moneys expended and all costs and expenses
(including reasonable attorneys' fees) incurred by Secured Party in connection
with or as a result of Secured Party's performing or observing such agreements
or taking


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such actions, together with interest thereon from the date expended or incurred
by Secured Party at the highest rate then applicable to any of the Obligations.
To facilitate the performance or observance by Secured Party of such agreements
of Debtor, Debtor hereby irrevocably appoints (which appointment is coupled with
an interest) Secured Party, or its delegate, as the attorney-in-fact of Debtor
with the right (but not the duty) from time to time to create, prepare,
complete, execute, deliver, endorse or file, in the name and on behalf of
Debtor, any and all instruments, documents, financing statements, applications
for insurance and other agreements and writings required to be obtained,
executed, delivered or endorsed by Debtor under this Section 3 and Section 4.

4.  PERFECTION OF SECURITY INTERESTS.

    (a) Debtor shall, from time to time, execute such financing statements as
Secured Party may reasonably require in order to perfect the Security Interest.
If any Collateral consists of a motor vehicle or other personal property with a
certificate of title, Debtor shall execute such documents as may be required to
have the Security Interest properly noted on a certificate of title. Debtor
shall execute, deliver or endorse any and all instruments, documents,
assignments, security agreements and other agreements and writings which Secured
Party may at any time reasonably request in order to secure, protect, perfect or
enforce the Security Interest and Secured party's rights under this Agreement.

    (b) To the extent permitted by law, Debtor hereby authorizes Secured Party
to file one or more financing statements (each a "Financing Statement")
describing the Collateral or any agricultural liens or other statutory liens
held by Secured Party.

    (c) Debtor shall have possession of the Collateral, except where expressly
otherwise provided in this Security Agreement. Where collateral is in the
possession of a third party, Debtor will join with Secured Party in notifying
the third party of Secured Party's security interest and obtaining an
acknowledgement from the third party that it is holding the Collateral for the
benefit of the Secured party.

    (d) Debtor will cooperate with Secured Party in obtaining control with
respect to Collateral consisting of deposit accounts, investment property,
letter-of-credit rights and electronic chattel paper.

    (e) Debtor will not create any chattel paper without placing a legend on the
chattel paper acceptable to Secured Party that indicates that Secured Party has
a security interest in the chattel paper.

    (f) To the extent Debtor uses the Loan to purchase Collateral, Debtor's
repayment of the Loan shall apply on a "first-in, first-out" basis so that the
portion of the Loan used to purchase a particular item of Collateral shall be
paid in the chronological order the Debtor purchased the Collateral.

5. LOCK BOX, COLLATERAL ACCOUNT. If Secured Party so requests at any time after
the occurrence of an Event of Default, Debtor will direct each of its account
debtors to make payments due under the relevant account or chattel paper
directly to a special lock box to be under the control of Secured



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Party. Debtor hereby authorizes and directs Secured Party to deposit into a
special collateral account to be established and maintained with or by Secured
Party all checks, drafts and cash payments, received in said lock box. All
deposits in said collateral account shall constitute proceeds of Collateral and
shall not constitute payment of any Obligation. At its option, Secured Party may
at any time after an Event of Default, apply finally collected funds on deposit
in said collateral account to the payment of the Obligations in such order of
application as Secured Party may determine, or permit Debtor to withdraw all or
any part of the balance on deposit in said collateral account. If a collateral
account is so established, Debtor agrees that it will promptly deliver to
Secured Party, for deposit into said collateral account, all payments on
accounts and chattel paper received by it. All such payments shall be delivered
to Secured Party in the form received (except for Debtor's endorsement where
necessary). Until so deposited, all payments on accounts and chattel paper
received by Debtor shall be held in trust by Debtor for and as the property of
Secured Party and shall not be commingled with any funds or property of Debtor.

6. ACCOUNT VERIFICATION AND COLLECTION RIGHTS OF SECURED PARTY. Secured Party
shall have the right to verify any accounts in the name of Debtor or in its own
name; and Debtor, whenever requested, shall furnish Secured Party with duplicate
statements of the accounts, which statements may be mailed or delivered by
Secured Party for that purpose. Notwithstanding Secured Party's rights under
Section 5 with respect to any and all debt instruments, chattel papers,
accounts, and other rights to payment constituting Collateral (including
proceeds), Secured Party may at any time (after the occurrence of an Event of
Default) notify any account debtor, or any other person obligated to pay any
amount due, that such chattel paper, account, or other right to payment has been
assigned or transferred to Secured Party for security and shall be paid directly
to Secured Party. If Secured Party so requests at any time after an Event of
Default, Debtor will so notify such account debtors and other obligors in
writing and will indicate on all invoices to such account debtors or other
obligors that the amount due is payable directly to Secured Party. At any time
after Debtor gives such notice to an account debtor or other obligor, Secured
Party may (but need not), in its own name or in Debtor's name, demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of, or securing, any such chattel paper, account, or other right to
payment, or grant any extension to, make any compromise or settlement with or
otherwise agree to waive, modify, amend or change the obligations (including
collateral obligations) of any such account debtor or other obligor.

7. ASSIGNMENT OF INSURANCE. Debtor hereby assigns to Secured Party, as
additional security for the payment of the Obligations, any and all moneys
(including but not limited to proceeds of insurance and refunds of unearned
premiums) due or to become due under and all other rights of Debtor under or
with respect to, any and all policies of insurance covering the Collateral, and
Debtor hereby directs the issuer of any such policy to pay any such moneys
directly to Secured Party. After the occurrence of an Event of Default, Secured
Party may (but need not), in its own name or in Debtor's name, execute and
deliver proofs of claim, receive all such moneys, indorse checks and other
instruments representing payment of such moneys, and adjust, litigate,
compromise or release any claim against the issuer of such policy.

8. EVENTS OF DEFAULT. An event of default under that certain Credit Agreement
between Debtor and Secured Party dated the date hereof shall constitute an event
of default under this Agreement (herein called "Event of Default").


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9. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of Default
under Section 8 and at any time thereafter, Secured Party may exercise any one
or more of the following rights and remedies:

    (i) declare all unmatured Obligations to be immediately due and payable, and
the same shall thereupon be immediately due and payable, without presentment or
other notice or demand;

    (ii) exercise and enforce any or all rights and remedies available upon
default to a secured party under the Uniform Commercial Code, including but not
limited to the right to take possession of any Collateral, proceeding without
judicial process (without a prior hearing or notice thereof, which Debtor hereby
expressly waives), and the right to sell, lease or otherwise dispose of any or
all of the Collateral, and in connection therewith, Secured Party may require
Debtor to make the Collateral available to Secured Party at a place to be
designated by Secured Party which is reasonably convenient to both parties, and
if notice to Debtor of any intended disposition of Collateral or any other
intended action is required by law in a particular instance, such notice shall
be deemed commercially reasonable if given (in the manner specified in Section
11) at least 10 calendar days prior to the date of intended disposition or other
action;

    (iii) exercise or enforce any or all other rights or remedies available to
Secured Party by law or agreement against the Collateral, against Debtor or
against any other person or property. Upon the occurrence of the Event of
Default described in Section 8(v)(B), all Obligations shall be immediately due
and payable without demand or notice thereof. Secured Party is hereby granted a
nonexclusive, worldwide and royalty-free license to use or otherwise exploit all
trademarks, trade secrets, franchises, copyrights and patents of Debtor that
Secured Party deems necessary or appropriate to the disposition of any
Collateral.

10. OTHER PERSONAL PROPERTY. Unless at the time Secured Party takes possession
of any tangible Collateral, or within seven days thereafter, Debtor gives
written notice to Secured Party of the existence of any goods, papers or other
property of Debtor, not affixed to or constituting a part of such Collateral,
but which are located or found upon or within such Collateral, describing such
property, Secured Party shall not be responsible or liable to Debtor for any
action taken or omitted by or on behalf of Secured Party with respect to such
property without actual knowledge of the existence of any such property or
without actual knowledge that it was located or to be found upon or within such
Collateral.

11. MISCELLANEOUS. This Agreement does not contemplate a sale of accounts, or
chattel paper. Debtor agrees that each provision whose box is checked is a part
of this Agreement. This Agreement can be waived, modified, amended, terminated
or discharged and the Security Interest can be released, only explicitly in a
writing signed by Secured Party. A waiver signed by Secured Party shall be
effective only in the specific instance and for the specific purpose given. Mere
delay or failure to act shall not preclude the exercise or enforcement of any of
Secured Party's rights or remedies. All rights and remedies of Secured Party
shall be cumulative and may be exercised singularly or concurrently, at Secured
Party's option, and the exercise or enforcement of any one such right or remedy
shall neither be a condition to nor bar the exercise or enforcement of any
other. All notices to be given to Debtor shall be deemed sufficiently given if
delivered or mailed by


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registered or certified mail, postage prepaid, to Debtor at its address set
forth above or at the most recent address shown on Secured Party's records.
Secured Party's duty of care with respect to Collateral in its possession (as
imposed by law) shall be deemed fulfilled if Secured Party exercises reasonable
care in physically safekeeping such Collateral or, in the case of Collateral in
the custody or possession of a bailee or other third person, exercises
reasonable care in the selection of the bailee or other third person, and
Secured Party need not otherwise preserve, protect, insure or care for any
Collateral. Secured Party shall not be obligated to preserve any rights Debtor
may have against prior parties, to realize on the Collateral at all or in any
particular manner or order, or to apply any cash proceeds of Collateral in any
particular order of application. Secured Party has no obligations to attempt to
satisfy the Obligations by collecting them from any other person liable for them
and Secured Party may release, modify or waive any collateral provided by any
other person to secure any of the Obligations, all without affecting Secured
Party's rights against Debtor. Debtor hereby waives any right it may have to
require Secured Party to pursue any third person for any of the Obligations.
This Agreement shall be binding upon and inure to the benefit of Debtor and
Secured Party and their respective heirs, representatives, successors and
assigns and shall take effect when signed by Debtor and delivered to Secured
Party, and Debtor waives notice of Secured Party's acceptance hereof. Secured
Party may execute this Agreement if appropriate for the purpose of filing, but
the failure of Secured Party to execute this Agreement shall not affect or
impair the validity or effectiveness of this Agreement. A carbon, photographic
or other reproduction of this Agreement or of any financing statement signed by
the Debtor shall have the same force and effect as the original for all purposes
of a financing statement. This Agreement shall be governed by the internal laws
of the where the main office of the Secured Party is located. If any provision
or application of this Agreement is held unlawful or unenforceable in any
respect, such illegality or unenforceability shall not affect other provisions
or applications which can be given effect and this Agreement shall be construed
as if the unlawful or unenforceable provision or application had never been
contained herein or prescribed hereby. All representations and warranties
contained in this Agreement shall survive the execution, delivery and
performance of this Agreement and the creation and payment of the Obligations.
If this Agreement is signed by more than one person as Debtor, the term "Debtor"
shall refer to each of them separately and to both or all of them jointly; all
such persons shall be bound both severally and jointly with the other(s); and
the Obligations shall include all debts, liabilities and obligations owed to
Secured Party by any Debtor solely or by both or several or all Debtors jointly
or jointly and severally, and all property described in Section 1 shall be
included as part of the Collateral, whether it is owned jointly by both or all
Debtors or is owned in whole or in part by one (or more) of them.


NATIONAL CITY BANK OF MINNEAPOLIS      AERO SYSTEMS ENGINEERING, INC.



By                                     By /s/ CHARLES LOUX
  ------------------------------          --------------------------------------
                                              Charles Loux
Title                                         Title President and Chief
     ---------------------------                Executive Officer




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