Exhibit 10.4
    
Form of Security Agreement
   
SECURITY AGREEMENT

1.  THE SECURITY.  The undersigned InferX Corporation, a Delaware  corporation
(the “Pledgor”) and all of the direct and indirect subsidiaries of the Pledgor
(the “Subsidiaries” and together with the Pledgor, the “Debtors”), hereby assign
and grant to the holders of the Pledgor’s 8% Secured Convertible Debentures due,
subject to the terms therein, June __, 2010, in the original aggregate principal
amount of up to $300,000 (collectively, the “Debentures”), signatory hereto,
their endorsees, transferees and assigns (collectively, the “Creditors”), a
security interest in all assets of the Debtors, now owned or hereafter acquired,
including the following described property now owned or hereafter acquired by
the Debtors (the “Collateral”):
 
 
(a)  All accounts, contract rights, chattel paper, instruments, deposit
accounts, letter of credit rights, payment intangibles and general intangibles,
including all amounts due to each Debtor from a factor; and all returned or
repossessed goods which, on sale or lease, resulted in an account or chattel
paper.

 
(b)  All inventory, including all materials, work in process and finished goods.

 
(c)  All machinery, furniture, fixtures and other equipment of every type now
owned or hereafter acquired by the Pledgor.

 
(d)  All instruments, notes, chattel paper, documents, certificates of deposit,
securities and investment property of every type, including, without limitation,
the capital stock of all of the Subsidiaries.  The Collateral shall include all
liens, security agreements, leases and other contracts securing or otherwise
relating to the foregoing.

 
(e)  All general intangibles, including, but not limited to: (i) all patents,
and all unpatented or unpatentable inventions, (ii) all trademarks, service
marks, and trade names, (iii) all copyrights and literary rights, (iv) all
computer software programs, (v) all mask works of semiconductor chip products,
and (vi) all trade secrets, proprietary information, customer lists,
manufacturing, engineering and production plans, drawings, specifications,
processes and systems.  The Collateral shall include all good will connected
with or symbolized by any of such general intangibles, all contract rights,
documents, applications, licenses, materials and other matters related to such
general intangibles; all tangible property embodying or incorporating any such
general intangibles; and all chattel paper and instruments relating to such
general intangibles.

 
1

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

 

 
(f)  All negotiable and nonnegotiable documents of title covering any
Collateral.

 
(g)  All accessions, attachments and other additions to the Collateral, and all
tools, parts and equipment used in connection with the Collateral.

 
(h)  All substitutes or replacements for any Collateral, all cash or non-cash
proceeds, product, rents and profits of any Collateral, all income, benefits and
property receivable on account of the Collateral, all rights under warranties,
indemnities and insurance contracts, letters of credit, guaranties or other
supporting obligations covering the Collateral, and any causes of action
relating to the Collateral.

 
(i)  All books and records pertaining to any Collateral, including but not
limited to any computer-readable memory and any computer hardware or software
necessary to process such memory (“Books and Records”).

2.  THE INDEBTEDNESS.  The Collateral secures and will secure all
Indebtedness.  “Indebtedness” means all debts, obligations or liabilities now or
hereafter existing, absolute or contingent of the Debtors to the Creditors,
whether voluntary or involuntary, whether due or not due, or whether incurred
directly or indirectly or acquired by the Creditors by assignment or otherwise.

3.        DEBTORS’ REPRESENTATIONS, WARRANTIES AND COVENANTS.  Each Debtor
represents, covenants and warrants that unless compliance is waived by each of
the Creditors in writing:

 
(a)  Each Debtor will properly preserve the Collateral (except for any thereof
that is sold in the ordinary course of business), defend the Collateral against
any adverse claims and demands, and keep accurate Books and Records.

 
(b)  Each Debtor’s chief executive office is located, in the state specified on
the signature page hereof.  In addition, each Debtor is incorporated in or
organized under the laws of the state specified on such signature page.  Each
Debtor shall give the Creditors at least thirty (30) days notice before changing
its chief executive office or state of incorporation or organization.  The
Debtors will notify the Creditors in writing prior to any change in the location
of any Collateral (except to the extent the change arises from the sale thereof
in the ordinary course of business), including the Books and Records.

 
(c)  Each Debtor will notify the Creditors, in writing, prior to any change in
the Debtor’s name, identity or material change in its business structure.

 
2

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

 

 
(d)  Except as otherwise specifically contemplated by this Agreement or unless
otherwise agreed, each Debtor has not granted and will not grant any security
interest in any of the Collateral except to the Creditors, and will keep the
Collateral free of all liens, claims, security interests and encumbrances of any
kind or nature.

 
(e)  Each Debtor will promptly notify the Creditors, in writing, of any event
which materially affects the value of the Collateral, the ability of the Debtors
or the Creditors to dispose of the Collateral, or the rights and remedies of the
Creditors in relation thereto, including, but not limited to, the levy of any
legal process against any Collateral and the adoption of any marketing order,
arrangement or procedure affecting the Collateral, whether governmental or
otherwise.

(f)  Each Debtor shall pay all costs necessary to preserve, defend, enforce and
collect the Collateral, including but not limited to taxes, assessments,
insurance premiums, repairs, rent, storage costs and expenses of sales, and any
costs to perfect the security interest of the Creditors (collectively, the
“Collateral Costs”).  Without waiving such Debtor’s default for failure to make
any such payment, the Creditors, following any such failure, at its option may
pay any such Collateral Costs, and discharge encumbrances on the Collateral, and
such Collateral Costs payments shall be a part of the Indebtedness and bear
interest at the rate set out in the Indebtedness.  Each Debtor agrees to
reimburse the Creditors on demand for any Collateral Costs reasonably
incurred. Each Debtor shall promptly execute and deliver to the Creditors such
further deeds, mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and take such
further action as the Agent may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce the Creditors’ security
interest in the Collateral including, without limitation, the delivery of any
stock certificates of the subsidiaries to the Creditors, together with any
necessary endorsements.

 
(g)  Until the Creditors exercise their rights to make collection, the Debtors
will diligently collect all Collateral.

 
(h)  If any Collateral is or becomes the subject of any registration
certificate, certificate of deposit or negotiable document of title, including
any warehouse receipt or bill of lading, each Debtor shall immediately deliver
such document to the Creditors, together with any necessary endorsements.

 
(i)  The Debtors will not sell, lease, agree to sell or lease, or otherwise
dispose of any Collateral except with the prior written consent of the
Creditors; provided, however, that the Debtors may sell inventory in the
ordinary course of business.

 
3

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

 

 
(j)  Each Debtor will maintain and keep in force insurance covering the
Collateral against fire and extended coverage, to the extent that any Collateral
is of a type which can be so insured.  Such insurance shall require losses to be
paid on a replacement cost basis, be issued by insurance companies acceptable to
the Creditors and include a loss payable endorsement in favor of the Creditors
in a form acceptable to the Creditors.  Upon the request of the Creditors, the
Debtors shall deliver to the Creditors a copy of each insurance policy, or, if
permitted by the Creditors, a certificate of insurance listing all insurance in
force.

 
(k)  The Debtors will not attach any Collateral to any real property or fixture
in a manner which might cause such Collateral to become a part thereof unless
the Debtor first obtains the written consent of any owner, holder of any lien on
the real property or fixture, or other person having an interest in such
property to the removal by the Creditors of the Collateral from such real
property or fixture.  Such written consent shall be in form and substance
acceptable to the Creditors and shall provide that the Creditors have no
liability to such owner, holder of any lien, or any other person.

 
(l)  Exhibit A to this Agreement is a complete list of all patents, trademark
and service mark registrations, copyright registrations, mask work
registrations, and all applications therefore, in which each Debtor has any
right, title, or interest, throughout the world.  Each Debtor will promptly
notify the Creditors of any acquisition (by adoption and use, purchase, license
or otherwise) of any patent, trademark or service mark registration, copyright
registration, mask work registration, and applications therefore, and
unregistered trademarks and service marks and copyrights, throughout the world,
which are granted or filed or acquired by any Debtor after the date hereof or
which are not listed on such Exhibit.  Each Debtor authorizes the Creditors,
without notice to any Debtor, to modify this Agreement by amending such Exhibit
to include any such Collateral.

 
(m)  Each Debtor will, at its expense, diligently prosecute all patent,
trademark or service mark or copyright applications pending on or after the date
hereof, will maintain in effect all issued patents and will renew all trademark
and service mark registrations, including payment of any and all maintenance and
renewal fees relating thereto, except for such patents, service marks and
trademarks that are being sold, donated or abandoned by the Debtors pursuant to
the terms of its intellectual property management program.  Each Debtor also
will promptly make application on any patentable but unpatented inventions,
registerable but unregistered trademarks and service marks, and copyrightable
but uncopyrighted works.  Each Debtor will at its expense protect and defend all
rights in the Collateral against any material claims and demands of all persons
other than the Creditors and will, at its expense, enforce all rights in the
Collateral against any and all infringers of the Collateral where such
infringement would materially impair the value or use of the Collateral to the
Debtors or the Creditors.  No Debtor will license or transfer any of the
Collateral, except for such licenses as are customary in the ordinary course of
the Debtors’ business, or except with the prior written consent of each of the
Creditors, which consent shall not be unreasonably withheld.

 
4

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

 

(n)           Based on the consolidated financial condition of the Debtors,
after giving effect to the receipt by the Debtors of the proceeds from the sale
of the Debentures: (i) the fair saleable value of the Debtors’ assets exceeds
the amount that will be required to be paid on or in respect of the Debtors’
existing debts and other liabilities (including known contingent liabilities) as
they mature, (ii) the Debtors’ assets do not constitute unreasonably small
capital to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Debtors, and projected capital
requirements and capital availability thereof, and (iii) the current cash flow
of the Debtors, together with the proceeds the Debtors would receive, were they
to liquidate all of their respective assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid.  The
Debtors do not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt).  The Debtors have no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the date hereof.  No Debtor is in default with respect to
any indebtedness.

(o)           At or prior to the date hereof, the Debtors hereby agree to
reimburse the Creditors for all of their legal fees and expenses.

4.  ADDITIONAL OPTIONAL REQUIREMENTS.  Each Debtor agrees that the Creditors
may, at their option at any time, whether or not any Debtor is in default:

 
(a)  Require the Debtors to deliver to the Creditors (i) copies of or extracts
from the Books and Records, and (ii) information on any contracts or other
matters affecting the Collateral.

 
(b)  Examine the Collateral, including the Books and Records, and make copies of
or extracts from the Books and Records, and for such purposes enter at any
reasonable time, with or without prior notice, upon the property where any
Collateral or any Books and Records are located.

 
(c)  Require each Debtor to deliver to the Creditors any instruments, chattel
paper or letters of credit which are part of the Collateral, and to assign to
the Creditors the proceeds of any such letters of credit.

 
(d)  Notify any account debtors, any buyers of the Collateral, or any other
persons of the Creditors’ interest in the Collateral.

 
5

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

 

5.  DEFAULTS.  Any one or more of the following shall be a default hereunder:

 
(a)  Any Indebtedness is not paid when due, or any default occurs under any
agreement relating to the Indebtedness, after giving effect to any applicable
grace or cure periods.

 
(b)  Any Debtor breaches any term, provision, warranty or representation under
this Agreement or under any other obligation of the Debtor to the Purchaser, and
such breach remains uncured after any applicable cure period.

 
(c)  Any Creditor fails to have an enforceable lien on or security interest in
the Collateral.

 
(d)  Any custodian, receiver or trustee is appointed to take possession, custody
or control of all or a material portion of the Collateral.

 
(e)  Any involuntary lien of any kind or character attaches to any Collateral,
except for liens for taxes not yet due.

6.  PURCHASER'S REMEDIES AFTER DEFAULT.  In the event of any default, the
Creditors may do any one or more of the following:

 
(a)  Declare any Indebtedness immediately due and payable, without notice or
demand.

 
(b)  Enforce the security interest given hereunder pursuant to the Uniform
Commercial Code and any other applicable law.

 
(c)  Require the Debtors to obtain the Creditors’ prior written consent to any
sale, lease, agreement to sell or lease, or other disposition of any Collateral
consisting of inventory.

 
(d)  Require the Debtors to segregate all collections and proceeds of the
Collateral so that they are capable of identification and deliver daily such
collections and proceeds to the Creditors in kind.

 
(e)  Require the Debtors, to the extent not previously required, to direct all
account debtors to forward all payments and proceeds of the Collateral to a post
office box or account under the Creditors’ exclusive control.

 
(f)  Require the Debtors to assemble the Collateral, including the Books and
Records, and make them available to the Purchaser at a place designated by the
Creditors.

 
6

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

 

 
(g)  Enter upon the property where any Collateral, including any Books and
Records, are located and take possession of such Collateral and such Books and
Records, and use such property (including any buildings and facilities) and any
of the Debtors’ equipment, if the Creditor deems such use necessary or advisable
in order to take possession of, hold, preserve, process, assemble, prepare for
sale or lease, market for sale or lease, sell or lease, or otherwise dispose of,
any Collateral.

 
(h)  Demand and collect any payments on and proceeds of the Collateral.  In
connection therewith, each Debtor irrevocably authorizes the Creditors to
endorse or sign the Debtor’s name on all checks, drafts, collections, receipts
and other documents, and to take possession of and open the mail addressed to
the Debtor and remove therefrom any payments and proceeds of the Collateral.

 
(i)  Grant extensions and compromise or settle claims with respect to the
Collateral for less than face value, all without prior notice to any Debtor.

 
(j)  Use or transfer any of the Debtors’ rights and interests in any
Intellectual Property now owned or hereafter acquired by any Debtor, if the
Creditors deem such use or transfer necessary or advisable in order to take
possession of, hold, preserve, process, assemble, prepare for sale or lease,
market for sale or lease, sell or lease, or otherwise dispose of, any
Collateral.  The Debtors agree that any such use or transfer shall be without
any additional consideration to any Debtor.  As used in this paragraph,
“Intellectual Property” includes, but is not limited to, all trade secrets,
computer software, service marks, trademarks, trade names, trade styles,
copyrights, patents, applications for any of the foregoing, customer lists,
working drawings, instructional manuals, and rights in processes for technical
manufacturing, packaging and labeling, in which any Debtor has any right or
interest, whether by ownership, license, contract or otherwise.

 
(k)  Have a receiver appointed by any court of competent jurisdiction to take
possession of the Collateral.  Each Debtor hereby consents to the appointment of
such a receiver and agrees not to oppose any such appointment.

 
(l)  Take such measures as the Creditors may deem necessary or advisable to take
possession of, hold, preserve, process, assemble, insure, prepare for sale or
lease, market for sale or lease, sell or lease, or otherwise dispose of, any
Collateral, and each Debtor hereby irrevocably constitutes and appoints the
Creditors as the Debtors’ attorneys-in-fact to perform all acts and execute all
documents in connection therewith.

 
(m)  Exercise any other remedies available to the Creditors at law or in equity.

 
7

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

 

7.  ENVIRONMENTAL MATTERS.

(a)  Each Debtor represents and warrants: (i) it is not in violation of any
health, safety, or environmental law or regulation regarding Hazardous
Substances and (ii) it is not the subject of any claim, proceeding, notice, or
other communication regarding Hazardous Substances.  “Hazardous Substances”
means any substance, material or waste that is or becomes designated or
regulated as “toxic,” “hazardous,” “pollutant,” or “contaminant” or a similar
designation or regulation under any current or future federal, state or local
law (whether under common law, statute, regulation or otherwise) or judicial or
administrative interpretation of such, including without limitation petroleum or
natural gas.

(b)  Each Debtor shall deliver to the Creditors, promptly upon receipt, copies
of all notices, orders, or other communications regarding (i) any enforcement
action by any governmental authority relating to health, safety, the
environment, or any Hazardous Substances with regard to the Debtors’ property,
activities, or operations, or (ii) any claim against the Debtors regarding
Hazardous Substances.

(c)  Each Creditor and its respective agents and representatives will have the
right at any reasonable time, after giving reasonable notice to the Debtors, to
enter and visit any locations where the Collateral is located for the purposes
of observing the Collateral, taking and removing environmental samples, and
conducting tests.  The Debtors shall reimburse the Creditors on demand for the
costs of any such environmental investigation and testing.  The Creditors will
make reasonable efforts during any site visit, observation or testing conducted
pursuant to this paragraph to avoid interfering with the Debtors’ use of the
Collateral.  The Creditors are under no duty to observe the Collateral or to
conduct tests, and any such acts by the Creditors will be solely for the
purposes of protecting the Creditor’s security and preserving the Creditor’s
rights under this Agreement.  No site visit, observation or testing or any
report or findings made as a result thereof (“Environmental Report”) will (i)
result in a waiver of any default of the Pledgor, (ii) impose any liability on
the Creditors, or (iii) be a representation or warranty of any kind regarding
the Collateral (including its condition or value or compliance with any laws) or
the Environmental Report (including its accuracy or completeness).  In the event
that any Creditor has a duty or obligation under applicable laws, regulations or
other requirements to disclose an Environmental Report to the Debtors or any
other party, the Debtors authorize the Creditors to make such a disclosure.  The
Creditors may also disclose an Environmental Report to any regulatory authority,
and to any other parties as necessary or appropriate in the Creditors’
judgment.  Each Debtor further understands and agrees that any Environmental
Report or other information regarding a site visit, observation or testing that
is disclosed to such Debtors by any Creditor or its agents and representatives
is to be evaluated (including any reporting or other disclosure obligations of
the Debtors) by the Debtors without advice or assistance from the Creditors.

 
8

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

 

(d)  The Debtors will indemnify and hold harmless the Creditors from any loss or
liability any Creditor incurs in connection with or as a result of this
Agreement, which directly or indirectly arises out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance.  These indemnities will apply
whether the hazardous substance is on, under or about the Debtors’ property or
operations or property leased to any Debtor.  The indemnities include but are
not limited to attorneys' fees (including the reasonable estimate of the
allocated cost of in-house counsel and staff).  The indemnities extend to the
Creditors, their parent, subsidiaries and all of their directors, officers,
employees, agents, successors, attorneys and assigns.

8.  MISCELLANEOUS.

 
(a)  Any waiver, express or implied, of any provision hereunder and any delay or
failure by any Creditor to enforce any provision shall not preclude any Creditor
from enforcing any such provision thereafter.

 
(b)  The Debtors shall, at the request of any of the Creditors, execute such
other agreements, documents, instruments, or financing statements in connection
with this Agreement as the Creditors may reasonably deem necessary.

 
(c)  This Agreement shall be governed by and construed according to the laws of
the State of New York, to the jurisdiction of which the parties hereto submit.

 
(d)  All rights and remedies herein provided are cumulative and not exclusive of
any rights or remedies otherwise provided by law.  Any single or partial
exercise of any right or remedy shall not preclude the further exercise thereof
or the exercise of any other right or remedy.

 
(e)  All terms not defined herein are used as set forth in the Uniform
Commercial Code.

 
(f)  In the event of any action by the Creditors to enforce this Agreement or to
protect the security interest of the Creditors in the Collateral, or to take
possession of, hold, preserve, process, assemble, insure, prepare for sale or
lease, market for sale or lease, sell or lease, or otherwise dispose of, any
Collateral, the Debtors agree to immediately pay the costs and expenses thereof,
together with reasonable attorney's fees and allocated costs for in-house legal
services to the extent permitted by law.

 
9

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

 

 
(g)  In the event any of the Creditors seek to take possession of any or all of
the Collateral by judicial process, the Debtors hereby irrevocably waive any
bonds and any surety or security relating thereto that may be required by
applicable law as an incident to such possession, and waives any demand for
possession prior to the commencement of any such suit or action.

(h)  This Agreement shall constitute a continuing agreement, applying to all
future as well as existing transactions, whether or not of the character
contemplated at the date of this Agreement, and if all transactions between the
Creditors and the Debtors shall be closed at any time, shall be equally
applicable to any new transactions thereafter.

(i)  The Creditors’ rights hereunder shall inure to the benefit of its
successors and assigns.  In the event of any assignment or transfer by any
Creditors of any of the Indebtedness or the Collateral, such Creditors
thereafter shall be fully discharged from any responsibility with respect to the
Collateral so assigned or transferred, but such Creditors shall retain all
rights and powers hereby given with respect to any of the Indebtedness or the
Collateral not so assigned or transferred.  All representations, warranties and
agreements of the Debtors shall be binding upon the successors and assigns of
the Debtors.

 
(j)  The Debtors agree that the Collateral may be sold as provided for in this
Agreement and expressly waives any rights of notice of sale, advertisement
procedures, or related provisions granted under applicable law.

 
10

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

 

The parties executed this Agreement as of  December __, 2009.

INFERX CORPORATION

     
Address: _____________
By:  
       
Name:
     
Title:
         
State of Inc.: _________

[INSERT NAMES OF ANY OTHER DIRECT AND INDIRECT SUBS]

     
Address: _____________
By:  
       
Name:
     
Title:
         
State of Inc.: _________

[SIGNATURE PAGE OF CREDITORS FOLLOWS]

 
11

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

 

[SIGNATURE PAGE OF CREDITORS TO NFRX SECURITY AGREEMENT]

Name of Investing Entity: __________________________
 
Signature of Authorized Signatory of Investing entity: _________________________
  
Name of Authorized Signatory: _________________________
  
Title of Authorized Signatory: __________________________

 
12

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

 

EXHIBIT A
Intellectual Property

 
13

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