Exhibit 10.4


    Exhibit
      10.4

    
 

    MASTER
      SECURITY AGREEMENT

     

    To:
      Biometrics Investors, L.L.C., a Delaware limited liability company

    5111
      Maryland Way, Suite 201

    Brentowood,
      Tennessee 37027

    


    Date:
      March 30, 2007

     

    To
      Whom
      It May Concern:

     

    Biometrics
      Investors, L.L.C. (the "Lender") is
      the
      holder of a note which was made by Sequiam Corporation, a California Corporation
      (the "Borrower") and which has an outstanding balance as of the date of this
      Security Agreement, including principal and accrued interest, of $3,965,119.00
      (the "Prior Note"). Subject to the terms and conditions of that certain
      Agreement dated as of the date hereof (the "Agreement") among Lender, as lender,
      and Borrower, as borrower, Lender has agreed to extend a term loan to Borrower
      in the amount of $2,500,000 ("Term Loan A") which loan would be consolidated
      with the indebtedness evidenced by the Prior Note and evidenced by a new note
      in
      the face amount of $6,500,000 ("Term Note A"). Subject to the terms and
      conditions of the Agreement, Lender is scheduled to extend a separate term
      loan
      to Borrower in the amount of $5,000,000 ("Term Loan B" and collectively with
      Term Loan A, the "Loans") evidenced by a note in such amount ("Term Note B").
      As
      security for the Loans, each of the undersigned (jointly and severally referred
      to as "Guarantors" or "the undersigned"), pursuant to that certain Subsidiary
      Guaranty dated as of the date hereof (the "Subsidiary Guaranty"), have
      unconditionally guarantied to the Lender, its successors, endorsees and assigns
      the prompt payment when due (whether by acceleration or otherwise) of all
      present and future obligations and liabilities of any and all kinds of Borrower
      to the Lender and of all instruments of any nature evidencing or relating to
      any
      such obligations and liabilities upon which Borrower or one or more parties
      and
      Borrower is or may become liable to the Lender, whether incurred by Borrower
      as
      maker, endorser, drawer, acceptor, guarantors, accommodation party or otherwise,
      and whether due or to become due, secured or unsecured, absolute or contingent,
      joint or several, and however or whenever acquired by the Lender. To secure
      the
      Guarantors obligations under the Subsidiary Gauranty, the Guarantors now wish
      to
      enter into this Master Security Agreement (the "Security Agreement").
      Previously, the Guarantors and the Borrower had executed that certain Amended
      and Restated Master Security Agreement in favor of Lee Harrison Corbin, Attorney
      in-Fact for the Trust Under the Will of John Svenningsen (“the Trust”) dated as
      of May 18, 2005 (the “Prior Agreement”). The Trust has assigned all of its
      rights under the Original Agreement to the Lender such that the Lender now
      stands in place of the Trust thereunder. In connection with the Subsidiary
      Guaranty and the Agreement, the Lender and the Guarantors now wish to enter
      into
      this new Security Agreement (in addition to, and not in replacement of, the
      Prior Agreement) as provided herein.

     

    1. To
      secure
      the payment of all Obligations (as hereafter defined), each of the undersigned
      parties (other than Lender) and each other entity that is required to enter
      into
      this Master Security Agreement (each an "Assignor" and, collectively, the
      "Assignors") hereby assigns and grants to Lender a continuing security interest
      in all of the following property now owned or at any time hereafter acquired
      by
      any Assignor, or in which any Assignor now have or at any time in the future
      may
      acquire any right, title or interest (the "Collateral"): all cash, cash
      equivalents, accounts, inventory, equipment, goods, documents, instruments
      (including, without limitation, promissory notes), contract rights, general
      intangibles (including, without limitation, payment intangibles and an absolute
      right to license on terms no less favorable than those currently in effect
      among
      our affiliates), chattel paper, supporting obligations, investment property
      (including, without limitation, all equity interests owned by any Assignor),
      letter-of-credit rights, trademarks and tradestyles, patents, copyrights and
      other intellectual property in which any Assignor now have or hereafter may
      acquire any right, title or interest, all proceeds and products thereof
      (including, without limitation, proceeds of insurance) and all additions,
      accessions and substitutions thereto or therefore. In the event any Assignor
      wishes to finance the acquisition in the ordinary course of business of any
      hereafter acquired equipment and have obtained a commitment from a financing
      source to finance such equipment from an unrelated third party, Lender agrees
      to
      release its security interest on such hereafter acquired equipment so financed
      by such third party financing source. Except as otherwise defined herein, all
      capitalized terms used herein shall have the meaning provided such terms in
      the
      Agreement.

     

    2. The
      term
      "Obligations" as used herein shall mean and include all debts, liabilities
      and
      obligations owing by each Assignor to Lender arising under, out of, or in
      connection with the Subsidiary Guaranty and in connection with any documents,
      instruments or agreements relating to or executed in connection with therewith
      or any documents, instruments or agreements referred to therein or otherwise,
      and in connection with any other indebtedness, obligations or liabilities of
      any
      Assignor to Lender, whether now existing or hereafter arising, direct or
      indirect, liquidated or unliquidated, absolute or contingent, due or not due
      and
      whether under, pursuant to or evidenced by a note, agreement, guaranty,
      instrument or otherwise, in each case, irrespective of the genuineness,
      validity, regularity or enforceability of such Obligations, or of any instrument
      evidencing any of the Obligations or of any collateral therefor or of the
      existence or extent of such collateral, and irrespective of the allowability,
      allowance or disallowance of any or all of the Obligations in any case commenced
      by or against any Assignor under Title 11, United States Code, including,
      without limitation, obligations or indebtedness of each Assignor for
      post-petition interest, fees, costs and charges that would have accrued or
      been
      added to the Obligations but for the commencement of such case

     

    3. Each
      Assignor hereby jointly and severally represents, warrants and covenants to
      Lender that:

     

    (a) 
      it is a
      corporation, partnership or limited liability company, as the case may be,
      validly existing, in good standing and organized under the respective laws
      of
      its jurisdiction of organization set forth on Schedule A, and each Assignor
      will
      provide the Trust thirty (30) days' prior written notice of any change in any
      of
      its respective jurisdiction of organization;

     

    (b) its
      legal
      name is as set forth in its respective Articles of Incorporation or other
      organizational document (as applicable) as amended through the date hereof
      and
      as set forth on Schedule A, and it will provide the Trust thirty (30) days'
      prior written notice of any change in its legal name;

     

    (c) its
      organizational identification number (if applicable) is as set forth on Schedule
      A hereto, and it will provide the Trust thirty (30) days' prior written notice
      of any change in any of its organizational identification number;

     

    (d) the
      Prior
      Agreement is in full force and effect and, as of the date hereof, the
      enforcement of the Prior Agreement against the Assignors is subject to no
      defenses of any kind;

     

    (e) it
      is the
      lawful owner of the respective Collateral and it has the sole right to grant
      a
      security interest therein and will defend the Collateral against all claims
      and
      demands of all persons and entities;

     

    (f) it
      will
      keep its respective Collateral free and clear of all attachments, levies, taxes,
      liens, security interests and encumbrances of every kind and nature
      ("Encumbrances"), except (i) Encumbrances securing the Obligations, (ii) to
      the
      extent said Encumbrance does not secure indebtedness in excess of $100,000
      and
      such Encumbrance is removed or otherwise released within ten (10) days of the
      creation thereof, (iii) liens of warehousemen, mechanics, materialmen, workers,
      repairmen, common carriers, or landlords, liens for taxes, assessments or other
      governmental charges, and other similar liens arising by operation of law,
      in
      each case arising in the ordinary course of business and for amounts that are
      not yet due and payable or which are being contested in good faith by
      appropriate proceedings promptly instituted and diligently conducted and for
      which an adequate reserve or other appropriate provision shall have been made
      to
      the extent required by generally accepted accounting principals, and (iv)
      pledges or deposits in connection with workers' compensation, unemployment
      insurance and other social security legislation (collectively, the "Permitted
      Encumbrances");

     

    (g) it
      will,
      at its and the other Assignors joint and several cost and expense use
      commercially reasonable efforts to keep the Collateral in good state of repair
      (ordinary wear and tear excepted) and will not waste or destroy the same or
      any
      part thereof other than ordinary course discarding of items no longer used
      or
      useful in its or such other Assignors’ business;

     

    (h) it
      will
      not without Lender's prior written consent, sell, exchange, lease or otherwise
      dispose of the Collateral, whether by sale, lease or otherwise, except for
      the
      sale of inventory in the ordinary course of business and for the disposition
      or
      transfer in the ordinary course of business during any fiscal year of obsolete
      and worn-out equipment or equipment no longer necessary for its ongoing needs,
      having an aggregate fair market value of not more than $25,000 and only to
      the
      extent that:

     

    (i) the
      proceeds of any such disposition are used to acquire replacement Collateral
      which is subject to Lender's first priority perfected security interest, or
      are
      used to repay Obligations or to pay general corporate expenses; and

     

    (ii) following
      the occurrence of an Event of Default which continues to exist the proceeds
      of
      which are remitted to Lender to be held as cash collateral for the
      Obligations;

     

    (i) it
      will
      insure or cause the Collateral to be insured in Lender's name against loss
      or
      damage by fire, theft, burglary, pilferage, loss in transit and such other
      hazards as Lender shall specify, in amounts and under policies which are
      customary for similarly situated businesses, and by insurers acceptable to
      Lender, and all premiums thereon shall be paid by such Assignor and the policies
      delivered to Lender. If any such Assignor fails to do so, Lender may procure
      such insurance and the cost thereof shall be promptly reimbursed by the
      Assignors, jointly and severally, and shall constitute Obligations;

     

    (j) it
      will
      at all reasonable times and upon reasonable advance notice to such Assignor
      allow Lender or Lender's representatives free access to and the right of
      inspection of the Collateral;

     

    (k) such
      Assignor (jointly and severally with each other Assignor) hereby indemnifies
      and
      holds Lender harmless from all loss, costs, damage, liability and/or expense,
      including reasonable attorneys' fees, that Lender may sustain or incur to
      enforce payment, performance or fulfillment of any of the Obligations and/or
      in
      the enforcement of this Master Security Agreement or in the prosecution or
      defense of any action or proceeding either against Lender or any Assignor
      concerning any matter growing out of or in connection with this Master Security
      Agreement, and/or any of the Obligations and/or any of the Collateral except
      to
      the extent caused by Lender's own gross negligence or willful misconduct (as
      determined by a court of competent jurisdiction in a final and nonappealable
      decision).

     

    4. The
      occurrence of any of the following events or conditions shall constitute an
      "Event of Default” under this Master Security Agreement:

     

    (a) Breach
      of
      any covenant, warranty, representation or statement made or furnished to Lender
      by any Assignor or on any Assignor’s benefit was false or misleading in any
      material respect when made or furnished, and if subject to cure, shall not
      be
      cured for a period of thirty (30) days;

     

    (b)
      the
      loss, theft, substantial damage, destruction, sale or encumbrance to or of
      any
      of the Collateral or the making of any levy, seizure or attachment thereof
      or
      thereon except to the extent:

     

    (i) such
      loss
      is covered by insurance proceeds which are used to replace the item or repay
      Lender; or

     

    (ii) said
      levy, seizure or attachment does not secure indebtedness in excess of $100,000
      and such levy, seizure or attachment has not been removed or otherwise released
      within ten (10) days of the creation or the assertion thereof;

     

    (b) any
      Assignor shall become insolvent, cease operations, dissolve, terminate our
      business existence, make an assignment for the benefit of creditors, suffer
      the
      appointment of a receiver, trustee, liquidator or custodian of all or any part
      of Assignors’ property;

     

    (c) any
      proceedings under any bankruptcy or insolvency law shall be commenced by or
      against any Assignor and if commenced against any Assignor shall not be
      dismissed within forty-five (45) days;

     

    (d) the
      Borrower shall repudiate, purport to revoke or fail to perform any or all of
      its
      obligations under Term Note A, Term Note B, or the Agreement (after passage
      of
      applicable cure period, if any); or

     

    (e) an
      Event
      of Default shall have occurred under and as defined in any Document, after
      giving effect to any applicable cure or grace period.

     

    5. Upon
      the
      occurrence of any Event of Default and at any time thereafter, Lender may
      declare all Obligations immediately due and payable and Lender shall have the
      remedies of a secured party provided in the Uniform Commercial Code as in effect
      in the State of Illinois, Security Agreement and other applicable law. Upon
      the
      occurrence of any Event of Default and at any time thereafter Lender will have
      the right to take possession of the Collateral and to maintain such possession
      on our premises or to remove the Collateral or any part thereof to such other
      premises as Lender may desire. Upon Lender's request, each of the Assignors
      shall assemble or cause the Collateral to be assembled and make it available
      to
      Lender at a place designated by Lender. If any notification of intended
      disposition of any Collateral is required by law, such notification, if mailed,
      shall be deemed properly and reasonably given if mailed at least ten (10) days
      before such disposition, postage prepaid, addressed to any Assignor either
      at
      such Assignor’s address shown herein or at any address appearing on Lender's
      records for such Assignor. Any proceeds of any disposition of any of the
      Collateral shall be applied by Lender to the payment of all expenses in
      connection with the sale of the Collateral, including reasonable attorneys'
      fees
      and other legal expenses and disbursements and the reasonable expense of
      retaking, holding, preparing for sale, selling, and the like, and any balance
      of
      such proceeds may be applied by Lender toward the payment of the Obligations
      in
      such order of application as Lender may elect, and each Assignor shall be liable
      for any deficiency.

     

    6. If
      any
      Assignor defaults in the performance or fulfillment of any of the terms,
      conditions, promises, covenants, provisions or warranties on such Assignor’s
      part to be performed or fulfilled under or pursuant to this Master Security
      Agreement, Lender may, at its option without waiving its right to enforce this
      Master Security Agreement according to its terms, immediately or at any time
      thereafter and without notice to any Assignor, perform or fulfill the same
      or
      cause the performance or fulfillment of the same for each Assignor’s joint and
      several account and at each Assignor’s joint and several cost and expense, and
      the cost and expense thereof (including reasonable attorneys' fees) shall be
      added to the Obligations and shall be payable on demand with interest thereon
      at
      the highest rate permitted by law.

     

    7. Each
      Assignor appoints Lender, any of Lender's officers, employees or any other
      person or entity whom Lender may designate as our attorney, with power to
      execute such documents in each of our behalf and to supply any omitted
      information and correct patent errors in any documents executed by any Assignor
      or on any Assignor’s behalf; to file financing statements against us covering
      the Collateral; to sign our name on public records; and to do all other things
      Lender deems necessary to carry out this Master Security Agreement. Each
      Assignor hereby ratifies and approves all acts of the attorney and neither
      lender nor the attorney will be liable for any acts of commission or omission,
      nor for any error of judgment or mistake of fact or law other than gross
      negligence or willful misconduct (as determined by a court of competent
      jurisdiction in a final and non-appealable decision). This power being coupled
      with an interest, is irrevocable so long as any Obligations remains unpaid.
      Furthermore, in connection with the filing of any financing statements, the
      Collateral may be described in any such financing statements as "all assets"
      and/or "all personal property", whether now owned and/or hereafter acquired.
      

     

    8. No
      delay
      or failure on Lender's part in exercising any right, privilege or option
      hereunder shall operate as a waiver of such or of any other right, privilege,
      remedy or option, and no waiver whatever shall be valid unless in writing,
      signed by Lender and then only to the extent therein set forth, and no waiver
      by
      Lender of any default shall operate as a waiver of any other default or of
      the
      same default on a future occasion. Lender's books and records containing entries
      with respect to the Obligations shall be admissible in evidence in any action
      or
      proceeding, shall be binding upon each Assignor for the purpose of establishing
      the items therein set forth and shall constitute prima
      facie
      proof
      thereof. Lender shall have the right to enforce any one or more of the remedies
      available to Lender, successively, alternately or concurrently. Each Assignor
      agrees to join with Lender in executing financing statements or other
      instruments to the extent required by the Uniform Commercial Code in form
      satisfactory to Lender and in executing such other documents or instruments
      as
      may be required or deemed necessary by Lender for purposes of affecting or
      continuing Lender's security interest in the Collateral.

     

    9. This
      Master Security Agreement shall be governed by and construed in accordance
      with
      the laws of the State of Illinois and cannot be terminated orally. All of the
      rights, remedies, options, privileges and elections given to Lender hereunder
      shall inure to the benefit of Lender's successors and assigns. The term "Lender"
      as herein used shall include Lender, any parent of Lender, any of the Lender's
      subsidiaries and any co-subsidiaries of the Lender's parent, whether now
      existing or hereafter created or acquired, and all of the terms, conditions,
      promises, covenants, provisions and warranties of this Security Agreement shall
      inure to the benefit of and shall bind the representatives, successors and
      assigns of each Assignor and each of the foregoing. Lender and each Assignor
      hereby (a) waive any and all right to trial by jury in litigation relating
      to
      this Security Agreement and the transactions contemplated hereby and each
      Assignor agrees not to assert any counterclaim in such litigation, (b) submit
      to
      the nonexclusive jurisdiction of any Illinois State court sitting in the County
      of Cook, the city of Chicago and (c) waive any objection Lender or each Assignor
      may have as to the bringing or maintaining of such action with any such
      court.

     

    10. All
      notices from Lender to any Assignor shall be sufficiently given if mailed or
      delivered to such Assignor’s address set forth below.

     

    11. This
      Master Security Agreement and the security interests granted by the Assignors
      hereunder shall terminate upon the provision by Lender of written confirmation
      to the Borrower that (x) all indebtedness obligations owed by any Assignor
      to
      Lender have been repaid in full (including, without limitation, all principal,
      interest and fees related to the Term Note, any indebtedness referred to in
      the
      Agreement and any other indebtedness outstanding at such time and owed toLender)
      and (y) all commitments by Lender to fund any indebtedness have been terminated
      in their entirety.

     

    12. This
      Security Agreement may be executed in any number of counterparts, each of which
      when so executed shall be deemed to be an original and, all of which taken
      together shall constitute one and the same Agreement. In the event that any
      signature is delivered by facsimile transmission, such signature shall create
      a
      valid binding obligation of the party executing (or on whose behalf such
      signature is executed) the same with the same force and effect as if such
      facsimile signature were the original thereof.

     

    Very
      truly yours,

     

    


     

    SEQUIAM
      SOFTWARE, INC.

     

    By:
           

     

    Name: Nicholas
      VandenBrekel 

     

    Title: CEO    

     

    Address:
      300 Sunport Lane

    Orlando,
      FL 32809

     

    SEQUIAM
      BIOMETRICS, INC.

     

    By:
           

     

    Name: Nicholas
      VandenBrekel 

     

    Title: CEO    

     

    Address:
      300 Sunport Lane

    Orlando,
      FL 32809

     

    SEQUIAM
      EDUCATION, INC.

     

    By:
           

     

    Name: Nicholas
      VandenBrekel 

     

    Title: CEO    

     

    Address:
      300 Sunport Lane

    Orlando,
      FL 32809

     

    SEQUIAM
      SPORTS, INC.

     

    By:
           

     

    Name: Nicholas
      VandenBrekel 

     

    Title: CEO    

     

    Address:
      300 Sunport Lane

    Orlando,
      FL 32809

     

    FINGERPRINT
      DETECTION TECHNOLOGIES, INC.

     

    By:
           

     

    Name: Nicholas
      VandenBrekel 

     

    Title: CEO    

     

    Address:
      300 Sunport Lane

    Orlando,
      FL 32809

    


     

    CONSTELLATION
      BIOMETRICS CORPORATION

     

    By:
           

     

    Name: Nicholas
      VandenBrekel 

     

    Title: CEO    

     

    Address:
      300 Sunport Lane

    Orlando,
      FL 32809

    


    


    BIOMETRIC
      SECURITY (PTY) LTD.

     

    


     

    By:
           

     

    Name: Nicholas
      VandenBrekel 

     

    Title: Director   

     

    Address:
      300 Sunport Lane

    Orlando,
      FL 32809

    


    


    SEQUIAM
      EAST, INC. (F/K/A MAGSTONE INNOVATION, INC.)

     

    By:
           

     

    Name: Nicholas
      VandenBrekel 

     

    Title: Deputy
      General Manager 

     

    Address:
      300 Sunport Lane

    Orlando,
      FL 32809

    


     

    ACKNOWLEDGED:

     

    BIOMETRICS
      INVESTORS, L.L.C.

     

    By:   

     

    Name: Roger
      Brown   

     

    Title: Manager   

     


    
      
         

        


         

      

      
         

        
          

        

      

      
         

      

    


    SCHEDULE
      A

    


    
      	
              Entity

            	
              Employer
                Identification #

            	
              Place
                of Incorporation

            
	
              Sequiam
                Software, Inc.

            	
              33-0998899

            	
              CA

            
	
              Sequiam
                Biometrics, Inc.

            	
              06-1691143

            	
              FL

            
	
              Sequiam
                Education, Inc.

            	
              41-2097750

            	
              FL

            
	
              Sequiam
                Sports, Inc.

            	
              59-3650544

            	
              DE

            
	
              Fingerprint
                Detection Technologies, Inc.

            	
              20-1115746

            	
              FL

            
	
              Constellation
                Biometrics

              Corporation

            	
              20-1998878

            	
              FL

            
	
              Biometric
                Security (Pty) Ltd.

            	
              2005/005066/07

            	
              South
                Africa

            
	
              Sequiam
                East, Inc. (f/k/a Magstone Innovation, Inc.)

            	
              1164611

            	
              China