Exhibit 10.4

LINE OF CREDIT AGREEMENT

This Line of Credit Agreement (“Agreement”), dated as of November 10, 2008, is
entered into by and between Key Ovation, LLC (“Lender”), and IdentiPHI, Inc., a
Delaware corporation (“Borrower”).

RECITALS

WHEREAS, Lender has agreed to lend to Borrower up to One Million Dollars
($1,000,000) and Borrower has agreed to borrow up to the amount of such funds on
the terms set forth below.

NOW, THEREFORE, the parties hereto agree as follows:

1. LINE OF CREDIT.

1.1 Credit Line. Upon execution of this Agreement and subject to the terms
hereof, Lender agrees to make available to Borrower a committed line of credit
equal to One Million Dollars ($1,000,000) (the “Credit Line”).

1.2 Advances. “Advances” shall mean funds advanced to Borrower by Lender under
the Credit Line. The aggregate amount of the Advances shall not exceed the
Credit Line, and each Advance shall be at Borrower’s sole discretion; provided,
however, that aggregate Advances may not exceed $100,000 during any one calendar
month period. Each Advance shall be made by Lender within ten (10) Business Days
(as defined in the Notes) of receipt of an executed draw down request from
Borrower in the form of Exhibit A attached hereto (a “Draw Down Request”).

1.3 Issuance of Notes. All Advances made from time to time shall be evidenced by
promissory notes in the form of Exhibit B attached hereto (each, a “Note” and,
together, the “Notes”) and shall be repaid in accordance with the terms thereof.

1.4 Interest. Interest shall accrue with respect to the principal amount of each
Advance from the date of such Advance until such principal is fully paid or
converted, at eight percent (8.0%) simple interest per annum (computed on the
basis of a 365- day year, based upon the actual days elapsed).

1.5 Payment. All unpaid principal of each Note, together with the balance of
accrued but unpaid interest and other amounts payable under each Note, shall be
due and payable on demand at any time upon and after the earlier of (a) the one
year anniversary of the issuance of such Note, or (b) the occurrence of an Event
of Default (as defined in the Notes). All payments shall be made in lawful money
of the United States of America at the principal office of Borrower, or at such
other place as Lender may from time to time designate in writing to Borrower.
Borrower may prepay all or any portion of the Notes at any time in accordance
with the provisions of the Notes.

 

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1.6 Optional Conversion. Lender shall have the right, at Lender’s option, at any
time prior to payment in full of the principal balance of each Note, to convert
the unpaid principal and accrued but unpaid interest under such Note, in whole
or in part, into shares of Borrower’s common stock (the “Conversion Shares”).
The number of Conversion Shares to be issued upon such conversion shall be equal
to the number obtained by dividing (i) the total amount of unpaid principal and
accrued but unpaid interest being converted under the subject Note on the date
of conversion by (ii) $0.18.

1.7 Failure to Make an Advance. Lender’s failure to make an Advance within ten
(10) Business Days of receipt of an Executed Draw Request shall constitute a
breach of this Agreement.

1.8 Warrants. Upon Borrower’s receipt of each Advance, Borrower shall issue to
Lender a common stock purchase warrant, in substantially the form of Exhibit C
attached hereto (each, a “Warrant” and, together, the “Warrants”), which Warrant
shall entitle Lender to purchase a number of shares of Borrower’s common stock
equal to 50% of the principal amount of such Advance divided by 0.18, at an
exercise price of $0.18 per share.

1.9 Cancellation of Credit Line. Borrower may cancel all or any portion of the
unborrowed amounts of the Credit Line by delivery to Lender of a Notice of
Cancellation in the form of Exhibit D attached hereto. In addition, any
prepayment by Borrower, or any conversion by Lender, of any amount due under a
Note shall automatically constitute a cancellation of the amount prepaid or
converted and of such prepaid or converted Note.

1.10 Qualifying Financing. Lender, at its option, may suspend its obligations to
make any further Advances after January 31, 2009, if Borrower has not, after the
date hereof, completed an equity and/or debt financing (or series of financings)
for aggregate gross proceeds to Borrower of at least $1.7 million (a “Qualifying
Financing”) by delivery of written notice of such suspension to Borrower at
least ten (10) Business Days prior to the effective date of such suspension. In
the event Lender suspends its obligations to make further Advances pursuant to
this Section 1.10, Lender’s obligations to make further Advances shall be
automatically resumed upon the completion of a Qualifying Financing by Borrower
after January 31, 2009.

2. ACCELERATION. If any Event of Default shall occur and be continuing:
(a) Lender’s obligations to make any Advances shall be suspended; and
(b) Lender, at its option, may, by notice to Borrower, declare the entire unpaid
principal amount of the Notes, all interest accrued and unpaid thereon and all
other amounts payable pursuant thereto to be forthwith due and payable,
whereupon all unpaid principal of the Notes, all such accrued interest and all
such other amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower.

 

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3. TERMINATION.

3.1 Termination. This Agreement shall terminate on October 31, 2009 (the
“Termination Date”), unless earlier terminated pursuant to Section 3.2. In the
event of termination of this Agreement, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of Lender or
Borrower or their respective officers, directors, stockholders, members,
managers or affiliates; provided, however, that the provisions of this
Section 3.1 and Section 4 of this Agreement shall remain in full force and
effect and survive any termination of this Agreement.

3.2 Termination by Mutual Consent. This Agreement may be terminated at any time
prior to the Termination Date by the mutual written consent of Lender and
Borrower.

4. MISCELLANEOUS.

4.1 Notices. All notices which any party to this Agreement may be required or
may wish to give may be given by addressing them to the other party at the
addresses set forth below by: (a) personal delivery, (b) by commercial overnight
courier with written verification of actual receipt, (c) by registered or
certified mail, or (d) by facsimile with receipt confirmed:

 

If to Lender:

  Key Ovation, LLC   2111 West Braker Lane   Austin, Texas 78758   Attention:
President   Fax: (512) 795-9997   With a copy to:   Akin & Almanza, Attorneys
and Counselors   2301 Capital of Texas Highway South, Building H,   Austin,
Texas 78746   Attention: Rick Akin, Esq.   Fax: (512) 478-7151

If to Borrower:

  IdentiPHI, Inc.   13809 Research Blvd., Ste 275   Austin, Texas 78750  
Attention: Chief Executive Officer   Fax: (512) 492-6225   With a copy to:   DLA
Piper LLP   701 Fifth Avenue, Suite 7000   Seattle, WA 98104-7044   Attention:
Michael Hutchings, Esq.   Fax: (206) 839-4801

 

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If so mailed or otherwise delivered, such notices shall be deemed and presumed
to have been given on the earlier of the date of actual receipt or three
(3) days after mailing or authorized form of delivery.

4.2 Governing Law. This Agreement shall be construed in accordance with, and the
rights of the parties shall by governed by, the law of the State of Texas. Venue
for any action arising out of this Agreement shall be Travis County, Texas.

4.3 Waiver. Lender’s acceptance of partial or delinquent payments or failure to
enforce or delay in enforcing any right shall not waive or release any
obligation of Borrower or right of Lender, or modify this Agreement or the
Notes, or waive any default.

4.4 Amendment. This Agreement may not be amended or modified except by a written
instrument signed by both Borrower and Lender.

4.5 Entire Agreement. This Agreement and the Notes constitute the entire
agreement between Lender and Borrower with respect to this Agreement and
supersede all prior agreements, understandings, offers and negotiations, oral or
written.

4.6 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 instrument. Any party may execute this Agreement by facsimile
signature, which shall be deemed to constitute an original for all purposes.

4.7 Assignment. No party shall assign this Agreement or any part hereof,
interest herein, right or obligation hereunder without obtaining in each
instance the prior written consent of the other party.

4.8 Expenses. Each party shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement.

4.9 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their permitted successors and assigns.

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IN WITNESS WHEREOF, the undersigned have executed this Line of Credit Agreement
as of the date first above written.

 

BORROWER: IdentiPHI, Inc. By:         

 

LENDER: Key Ovation, LLC By:         

 

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EXHIBIT A

DRAW DOWN REQUEST FORM

 

TO:    KEY OVATION, LLC    DATE:                                      FROM:   
IDENTIPHI, INC.   

The undersigned represents and warrants on behalf of IdentiPHI, Inc. that as of
the date hereof there has been no Event of Default under the Line of Credit
Agreement between IdentiPHI, Inc. and Key Ovation, LLC, dated as of November
      , 2008 (the “Line of Credit Agreement”).

 

REQUESTED BY:                                          
                                         
                                         
                                                                 
AUTHORIZED SIGNER’S NAME   

 

AUTHORIZED SIGNATURE:                                          
                                         
                                         
                                         

IdentiPHI, Inc. hereby requests an advance of the below referenced amount under
Section 1.2 of the Line of Credit Agreement.

 

REQUESTED TRANSACTION TYPE

   REQUEST DOLLAR AMOUNT

PRINCIPAL INCREASE (ADVANCE)

   $                                          

 

OTHER INSTRUCTIONS:     

                                 

Exhibit A

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EXHIBIT B

FORM OF CONVERTIBLE PROMISSORY NOTE

Exhibit B

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EXHIBIT C

FORM OF WARRANT

Exhibit C

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EXHIBIT D

NOTICE OF CANCELLATION

 

TO:    KEY OVATION, LLC    DATE:                                      FROM:   
IDENTIPHI, INC.   

 

AUTHORIZED SIGNATURE:                                          
                                         
                                                                               

IdentiPHI, Inc. hereby makes payment of the amount specified below and/or
requests the cancellation of Key Ovation, LLC’s commitment to advance additional
funds under the Line of Credit Agreement between IdentiPHI, Inc. and Key
Ovation, LLC, dated as of November       , 2008.

 

REQUESTED TRANSACTION TYPE

   REQUEST DOLLAR AMOUNT

CANCELLATION OF COMMITMENT

   $                                          

 

OTHER INSTRUCTIONS:     

                                 

Exhibit D