SECURITY AGREEMENT
 
This SECURITY AGREEMENT, dated as of August 1, 2008 (as the same may from time
to time be amended, supplemented or otherwise modified, this “Security
Agreement”), by and between The Intagio Group, Inc., a Delaware corporation (the
“Secured Party”), and ITEX Corporation, a Nevada corporation (the “Debtor”).
 
W I T N E S S E T H:
 
WHEREAS, the Debtor and the Secured Party are parties to the certain Asset
Purchase Agreement, dated as of August 1, 2008 (the “Purchase Agreement”), which
provides for, among other things, the issuance to the Secured Party of
non-negotiable senior subordinated secured promissory note (the “Note”) in the
aggregate principal amount of $687,500 (subject to adjustment as provided by the
Purchase Agreement); and
 
WHEREAS, it is a condition precedent to the consummation of the transactions
contemplated by the Purchase Agreement that the Debtor execute and deliver this
Security Agreement to the Secured Party.
 
NOW, THEREFORE, the parties hereto hereby agree as follows:
 
ARTICLE I
 
DEFINITIONS
 
1.1 Defined Terms. As used herein, capitalized terms defined in this Agreement
and not otherwise defined herein are used herein as so defined.
 
“Account Debtor” shall mean the Person who is obligated on a Receivable.
 
“Accounts” shall mean “accounts” as such term is defined in Section 9-102(2) of
the UCC.
 
“Chattel Paper” shall mean “chattel paper” as such term is defined in
Section 9-102(11) of the UCC.
 
“Collateral” shall have the meaning assigned to it in Article II hereof.
 
“Collateral Records” shall mean books, records, computer software, computer
printouts, customer lists, blueprints, technical specifications, manuals, and
similar items which relate to any Collateral other than such items obtained
under license or franchise security agreements which prohibit assignment or
disclosure of such items.
 
“Contracts” means all contracts, undertakings, franchise agreements or other
agreements in or under which the Debtor now holds or hereafter acquires any
right, title or interest, including, without limitation, with respect to an
Account, any agreement relating to the terms of payment or the terms of
performance thereof.
 

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

 
“Documents” shall mean “documents” as such term is defined in Section 9-102(30)
of the UCC.
 
“Equipment” shall mean “equipment” as such term is defined in Section 9-102(33)
of the UCC, including, without limitation, machinery, manufacturing equipment,
data processing equipment, computers, office equipment, furniture, appliances,
and tools.
 
“Event of Default” shall have the meaning assigned to it in the Note.
 
“Fixtures” shall mean “fixtures” as such term is defined in Section 9-102(41) of
the UCC.
 
“General Intangibles” shall mean “general intangibles” as such term is defined
in Section 9-102(42) of the UCC, including, without limitation, rights to the
payment of money (other than Receivables), trademarks, copyrights, patents, and
contracts, licenses and franchises (except in the case of licenses and
franchises in respect of which the Debtor is the licensee or franchisee if the
agreement in respect of such license or franchise prohibits by its terms any
assignment or grant of a security interest), limited and general partnership
interests and joint venture interests, federal income tax refunds, trade names,
distributions on certificated securities (as defined in § 8-102(a)(4) of the
UCC) and uncertificated securities (as defined in § 8-102(a)(18) of the UCC),
computer programs and other computer software, inventions, designs, trade
secrets, goodwill, proprietary rights, customer lists, supplier contracts, sale
orders, correspondence, advertising materials, payments due in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of any
property, reversionary interests in pension and profit-sharing plans and
reversionary, beneficial and residual interests in trusts, credits with and
other claims against any Person, together with any collateral for any of the
foregoing and the rights under any security agreement granting a security
interest in such collateral.
 
“Instruments” shall mean “instruments” as such term is defined in
Section 9-102(47) of the UCC.
 
“Inventory” shall mean “inventory” as such term is defined in § 9-102(48) of the
UCC, including without limitation, all goods (whether such goods are in the
possession of the Debtor or of a bailee or other Person for sale, lease,
storage, transit, processing, use or otherwise and whether consisting of whole
goods, spare parts, components, supplies, materials or consigned or returned or
repossessed goods), including without limitation, all such goods which are held
for sale or lease or are to be furnished (or which have been furnished) under
any contract of service or which are raw materials or work in progress or
materials used or consumed in the Debtor’s business.
 
“Investment Property” shall mean “investment property” as such term is defined
in Section 9-102(49) of the UCC.
 
“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement of any kind or nature whatsoever, including, without
limitation, the filing of any financing statement or similar instrument under
the UCC or comparable law of any jurisdiction, domestic or foreign.
 
- 2 -

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

 
“Permitted Liens” shall mean any of the following (1) Liens for taxes, fees,
assessments or other governmental charges which are not yet due and payable or
which are being contested in good faith with a reserve or other appropriate
provision having been made therefor; (2) statutory liens of landlords, carriers,
warehousemen, mechanics, materialmen and other similar liens imposed by law
which are incurred in the ordinary course of business; (3) Liens incurred or
deposits made in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security;
(4) easements, reservations, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary conduct of the business of the Debtor; (5) Liens in
favor of the Secured Party and the Senior Secured Party (as hereinafter
defined); (6) Liens existing on the date hereof and set forth on Schedule A
hereto; (7) Liens (i) upon or in any Equipment acquired or held by the Debtor to
secure the purchase price of such Equipment or indebtedness incurred solely for
the purpose of financing the acquisition of such Equipment or (ii) existing on
such Equipment at the time of its acquisition, provided that the Lien is
confined solely to the Equipment so acquired, improvements thereon and the
Proceeds of such Equipment; (8) Liens arising from judgments, decrees or
attachments; and (9) other Liens not described above securing outstanding
aggregate indebtedness of less than $50,000.
 
“Person” shall mean and include any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or agency, department or instrumentality thereof.
 
“Proceeds” shall mean “proceeds” as such term is defined in Section 9-102(64) of
the UCC.
 
“Receivables” shall mean all rights to payment for goods sold or leased or
services rendered, whether or not earned by performance and all rights in
respect of the Account Debtor, including, without limitation, all such rights in
which the Debtor has any right, title or interest by reason of the purchase
thereof by the Debtor, and including, without limitation, all such rights
constituting or evidenced by any Account, Chattel Paper, Instrument, General
Intangible, note, contract, invoice, purchase order, draft, acceptance, book
debt, intercompany account, security agreement, or other evidence of
indebtedness or security, together with (1) any collateral assigned,
hypothecated or held to secure any of the foregoing and the rights under any
security agreement granting a security interest in such collateral; (2) all
goods, the sale of which gave rise to any of the foregoing, including, without
limitation, all rights in any returned or repossessed goods and unpaid seller’s
rights; (3) all guarantees, endorsements and indemnifications on, or of, any of
the foregoing; and (4) all powers of attorney for the execution of any evidence
of indebtedness or security or other writing in connection therewith.
 
“Receivables Records” shall mean (1) all original copies of all documents,
instruments or other writings evidencing the Receivables; (2) all books,
correspondence, credit or other files, records, ledger sheets or cards,
invoices, and other papers relating to Receivables, including, without
limitation, all tapes, cards, computer tapes, computer discs, computer runs,
record keeping systems and other papers and documents relating to the
Receivables, whether in the possession or under the control of the Debtor or any
computer bureau or agent from time to time acting for the Debtor or otherwise;
(3) all evidences of the filing of financing statements and the registration of
other instruments in connection therewith and amendments, supplements or other
modifications thereto, notices to other creditors or secured parties, and
certificates, acknowledgments, or other writings, including without limitation
lien search reports, from filing or other registration officers; (4) all credit
information, reports and memoranda relating thereto, and (5) all other written
or non-written forms of information related in any way to the foregoing or any
Receivable.
 
- 3 -

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

 
“Secured Obligations” means the indebtedness and obligations of the Debtor
evidenced by the Note, including all principal and interest, together with all
other indebtedness and costs and expenses for which the Debtor is responsible
under this Agreement or the Note.
 
“UCC” shall mean the Uniform Commercial Code as the same may, from time to time,
be in effect in the State of Nevada; provided, however, in the event that any or
all of the attachment, perfection or priority of the Secured Party’s security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the state of incorporation of the Debtor,
the term “UCC” shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
 
ARTICLE II
 
GRANT OF SECURITY INTERESTS
 
As security for the prompt and complete payment and performance in full of all
the Secured Obligations, the Debtor hereby assigns, conveys, mortgages, and
pledges, hypothecates and transfers to the Secured Party and hereby grants to
the Secured Party a security interest in and continuing lien on all of the
Debtor’s right, title and interest in, to and under the following, whether now
owned or existing or hereafter acquired or arising, and wherever located (all of
which being hereinafter collectively called the “Collateral”):
 
(i) all Accounts;
 
(ii) all Chattel Paper;
 
(iii) all Collateral Records;
 
(iv) Contracts
 
(v) all Documents;
 
(vi) all Equipment;
 
(vii) all Fixtures;
 
(viii) all General Intangibles;
 
- 4 -

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

 
(ix) all Instruments;
 
(x) all Inventory;
 
(xi) all Investment Property;
 
(xii) all Receivables;
 
(xiii) all Receivables Records;
 
(xiv) all other tangible and intangible personal property; and
 
(xv) all accessions, attachments and additions to any or all of the foregoing,
all substitutions and replacements for any or all of the foregoing and all
Proceeds or products of any or all of the foregoing.
 
The Secured Party acknowledges the security interest of U.S. Bank, N.A. (the
"Senior Secured Party") in the Collateral and agrees and confirms that the
security interest granted hereunder shall be subordinate in priority to the
security interest of the Senior Secured Party in the Collateral.
 
ARTICLE III
 
RIGHTS OF THE SECURED PARTY; COLLECTION OF ACCOUNTS.
 
(a) Notwithstanding anything contained in this Security Agreement to the
contrary, the Debtor expressly agrees that it shall remain liable under each of
its Contracts and each of its licenses to observe and perform all the conditions
and obligations to be observed and performed by it thereunder and that it shall
perform all of its duties and obligations thereunder, all in accordance with and
pursuant to the terms and provisions of each such Contract or license. The
Secured Party shall not have any obligation or liability under any Contract or
license by reason of or arising out of this Security Agreement or the granting
to the Secured Party of a lien therein or the receipt by the Secured Party of
any payment relating to any contract or license pursuant hereto, nor shall the
Secured Party be required or obligated in any manner to perform or fulfill any
of the obligations of the Debtor under or pursuant to any Contract or license,
or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any Contract or license, or to present or file any claim, or
to take any action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be entitled at any
time or times.
 
(b) The Secured Party authorizes the Debtor, upon the occurrence and continuance
of an Event of Default, to collect its Accounts, provided that such collection
is performed in a prudent and businesslike manner, and the Secured Party may,
upon the occurrence and during the continuation of any Event of Default and
without notice, limit or terminate said authority at any time. Upon the
occurrence and during the continuance of any Event of Default, at the request of
the Secured Party, the Debtor shall deliver to the Secured Party all original
and other documents evidencing and relating to the performance of labor or
service which created such Accounts, including, without limitation, all original
orders, invoices and shipping receipts.
 
- 5 -

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

 
(c) The Secured Party may at any time, upon the occurrence and during the
continuance of any Event of Default, after notifying the Debtor of its intention
to do so, notify Account Debtors of the Debtor, parties to the Contracts of the
Debtor, obligors in respect of Instruments of the Debtor and obligors in respect
of Chattel Paper of the Debtor that the Accounts and the right, title and
interest of the Debtor in and under such Contracts, Instruments and Chattel
Paper have been assigned to the Secured Party and that payments shall be made
directly to the Secured Party. Upon the request of the Secured Party, the Debtor
shall so notify such Account Debtors, parties to such Contracts, obligors in
respect of such Instruments and obligors in respect of such Chattel Paper. Upon
the occurrence and during the continuance of any Event of Default, the Secured
Party may, in its name or in the name of others, communicate with such Account
Debtors, parties to such Contracts, obligors in respect of such Instruments and
obligors in respect of such Chattel Paper to verify with such parties, to the
Secured Party’s satisfaction, the existence, amount and terms of any such
Accounts, Contracts, Instruments or Chattel Paper.
 
ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES
 
The Debtor has delivered to the Secured Party a certificate signed by the Debtor
and entitled “Perfection Certificate” (the “Perfection Certificate”) attached as
Annex A. The Debtor represents and warrants to the Secured Party as follows: (a)
the Debtor’s exact legal name is that indicated on the Perfection Certificate
and on the signature page hereof, (b) the Debtor is an organization of the type,
and is organized in the jurisdiction set forth in the Perfection Certificate,
(c) the Perfection Certificate accurately sets forth the Debtor’s organizational
identification number or accurately states that the Debtor has none, (d) the
Perfection Certificate accurately sets forth the Debtor’s place of business or,
if more than one, its chief executive office, as well as the Debtor’s mailing
address, if different, (e) all other information set forth on the Perfection
Certificate pertaining to the Debtor is accurate and complete, and (f) that
there has been no change in any information provided in the Perfection
Certificate since the date on which it was executed by the Debtor.
 
ARTICLE V
 
COVENANTS
 
The Debtor covenants and agrees with the Secured Party that from and after the
date of this Security Agreement:
 
5.1 Further Assurances. The Debtor will from time to time at the expense of the
Debtor, promptly execute, deliver, file and record all further instruments,
endorsements and other documents, and take such further action as the Secured
Party may deem reasonably desirable in obtaining the full benefits of this
Security Agreement and of the rights, remedies and powers herein granted,
including, without limitation, the following:
 
- 6 -

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

 
(i) The filing of any financing statements, in a form reasonably acceptable to
the Secured Party under the UCC or applicable law, rule or regulation in effect
in any jurisdiction with respect to the Liens and security interests granted
hereby. The Debtor also hereby authorizes the Secured Party to file any such
financing statements, including without limitation continuation statements, and
amendments thereto, in all jurisdictions and with all filing offices as the
Secured Party may determine, in its reasonable discretion are necessary or
advisable to perfect the security interests granted to the Secured Party in
connection herewith without the signature of the Debtor to the extent permitted
by applicable law. Such financing statements may describe the Collateral in the
same manner as described in this Security Agreement or may contain an indication
or description of Collateral that describes such property in any other manner as
the Secured Party may determine, in its reasonable discretion, is necessary,
advisable or prudent to ensure the perfection of the security interests in the
Collateral granted to the Secured Party in connection herewith, including,
without limitation, describing such property as “all assets” or “all personal
property.” A photocopy or other reproduction of this Security Agreement shall be
sufficient as a financing statement and may filed in lieu of the original to the
extent permitted by applicable law. The Debtor will pay or reimburse the Secured
Party for all filing fees and related expenses reasonably incurred in connection
therewith; and
 
(ii) Furnish to the Secured Party from time to time statements and schedules
further identifying and describing the Collateral and its location and such
other reports in connection with the Collateral as the Secured Party may
reasonable request, all in reasonable detail and in form reasonably satisfactory
to the Secured Party.
 
5.2 Covenants Concerning Debtor’s Legal Status. Without providing at least 30
days’ prior written notice to the Secured Party, the Debtor will not change its
name, its place of business or, if more than one, chief executive office, or its
mailing address or organizational identification number if it has one. If the
Debtor does not have an organizational identification number and later obtains
one, the Debtor shall forthwith notify the Secured Party of such organizational
identification number. The Debtor will not change its type of organization,
jurisdiction of organization or other legal structure.
 
5.3 Covenants Concerning Collateral. The Collateral, to the extent not delivered
to the Secured Party, will be kept at those locations listed on the Perfection
Certificate and the Debtor will not remove the Collateral from such locations,
without providing at least thirty days prior written notice to the Secured
Party. Except as previously pledged and assigned to the Senior Secured Party,
and except for the security interest herein granted, the Debtor shall be the
owner of or have other rights in the Collateral free from any right or claim of
any other Person, lien, security interest or other encumbrance, and the Debtor
shall defend the same against all claims and demands of all Persons at any time
claiming the same or any interests therein adverse to the Secured Party. The
Debtor (i) shall not pledge, mortgage or create, or suffer to exist any right of
any Person in or claim by any Person to the Collateral, or any security
interest, lien or encumbrance in the Collateral in favor of any Person, other
than the Senior Secured Party and the Secured Party; (ii) will keep the
Collateral in good order and repair and will not use the same in violation of
law or any policy of insurance thereon; (iii) will permit the Secured Party, or
its designee, to inspect the Collateral at any reasonable time, wherever
located; (iv) will pay promptly when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in connection with the use or
operation of such Collateral or incurred in connection with this Agreement; (v)
will continue to operate its business in compliance with all applicable
provisions of the federal Fair Labor Standards Act, as amended, and with all
applicable provisions of federal, state and local statutes and ordinances
dealing with the control, shipment, storage or disposal of hazardous materials
or substances; and (vi) will not sell or otherwise dispose, or offer to sell or
otherwise dispose, of the Collateral or any interest therein except for sales
and leases of inventory in the ordinary course of business.
 
- 7 -

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

 
5.4 Maintain Records. The Debtor will keep and maintain at its own cost and
expense reasonably satisfactory and complete records of the Collateral.
 
5.5 Other Actions as to Any and All Collateral. The Debtor will, at the request
and option of the Secured Party, take any and all other actions the Secured
Party may determine to be necessary or useful for the attachment and perfection
of, and the ability of the Secured Party to enforce, the Secured Party’s
security interest in any and all of the Collateral, including, without
limitation, (i) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the Uniform Commercial Code, to
the extent, if any, that the Debtor’s signature thereon is required therefor,
(ii) causing the Secured Party’s name to be noted as secured party on any
certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of the Secured Party to
enforce, the Secured Party’s security interest in such Collateral, (iii)
complying with any provision of any statute, regulation or treaty of the United
States as to any Collateral if compliance with such provision is a condition to
attachment, perfection or priority of, or ability of the Secured Party to
enforce, the Secured Party’s security interest in such Collateral, (iv)
obtaining governmental and other third party waivers, consents and approvals in
form and substance satisfactory to Secured Party, including, without limitation,
any consent of any licensor, lessor or other Person obligated on Collateral, (v)
obtaining waivers from mortgagees and landlords in form and substance
satisfactory to the Secured Party and (vi) taking all actions under any earlier
versions of the Uniform Commercial Code or under any other law, as reasonably
determined by the Secured Party to be applicable in any relevant Uniform
Commercial Code or other jurisdiction, including any foreign jurisdiction.
 
5.6 Right of Inspection. The Secured Party shall at all times on a confidential
basis have full and free access during normal business hours to the Collateral
and to all the books, correspondence and records of the Debtor, and the Secured
Party and its representatives may examine the same, take extracts therefrom and
make photocopies thereof, and the Debtor agrees to render the Secured Party, at
the Debtor’s cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Secured Party and its
representatives shall (i) at all times also have the right to enter into and
upon any premises where any of the Inventory or Equipment is located for the
purpose of inspecting the same or observing its use, and (ii) after an Event of
Default has occurred, to repossess any or all of the Collateral.
 
5.7 Payment of Obligations. The Debtor will pay promptly when due all taxes,
assessments and governmental charges or levies imposed upon the Collateral, as
well as all claims of any kind (including, without limitation, claims for labor,
materials, supplies and services) against or with respect to the Collateral,
except that no such charge need be paid if (i) the validity thereof is being
contested in good faith by appropriate proceedings, (ii) the Debtor has promptly
notified the Secured Party of the existence of such proceedings and such
proceedings do not involve, in the good faith and reasonable opinion of the
Secured Party, any material danger for the sale, forfeiture or loss of any
material portion of the Collateral or any material interest therein and (iii)
such charge is adequately reserved against on the Debtor’s books in accordance
with generally accepted accounting principles.
 
- 8 -

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

 
5.8 Negative Pledge. Without the consent of the Secured Party, the Debtor will
not create, incur or permit to exist, will defend the Collateral against, and
will take such other action as is necessary to remove, any Lien or claim on or
to the Collateral, other than the Liens created hereby and other than Permitted
Liens.
 
5.9 Limitations on Dispositions of Collateral. Without the express prior written
consent of the Secured Party (which consent the Secured Party may withhold or
delay in its complete and sole discretion), the Debtor will not sell, transfer,
lease or otherwise dispose of any of the Collateral, or attempt, offer or
contract to do so, except for sales Inventory in the ordinary course of its
business and except for, so long as no Event of Default shall have occurred and
be continuing, the disposition in the ordinary course of business of items of
Equipment which have become worn out or obsolete.
 
5.10 Expenses Incurred by Secured Party. In the Secured Party’s discretion, if
the Debtor fails to do so, the Secured Party may discharge taxes and other
encumbrances at any time levied or placed on any of the Collateral, maintain any
of the Collateral, make repairs thereto and pay any necessary filing fees or
insurance premiums. The Debtor agrees to reimburse the Secured Party on demand
for all expenditures so made. The Secured Party shall have no obligation to the
Debtor to make any such expenditures, nor shall the making thereof be construed
as the waiver or cure of any Default or Event of Default.
 
5.11 Secured Party’s Obligations and Duties. Anything herein to the contrary
notwithstanding, the Debtor shall remain obligated and liable under each
contract or agreement comprised in the Collateral to be observed or performed by
the Debtor thereunder. The Secured Party shall not have any obligation or
liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by the Secured Party of any payment relating to
any of the Collateral, nor shall the Secured Party be obligated in any manner to
perform any of the obligations of the Debtor under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Secured Party in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled at
any time or times. The Secured Party’s sole duty with respect to the custody,
safe keeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Uniform Commercial Code of the State or otherwise,
shall be to deal with such Collateral in the same manner as the Secured Party
deals with similar property for its own account.
 
- 9 -

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

 
ARTICLE VI
 
POWER OF ATTORNEY
 
6.1 Following the occurrence and continuance of an Event of Default, Debtor
hereby irrevocably constitutes and appoints the Secured Party and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Debtor and in the name of the Debtor or in its own name, from time
to time in the Secured Party’s reasonable discretion, for the purpose of
enforcing the Secured Party’s rights under Article VII below, to take any and
all appropriate action by any technologically available means, which may
include, without limitation, any form of electronic data transmission, and to
execute in any appropriate manner, which may include, without limitation, using
any symbol that the Secured Party may adopt to signify the Debtor’s intent to
authenticate, any and all documents and instruments which may be reasonably
necessary or desirable to enforce Secured Party’s rights under Article VII
below.
 
The Debtor hereby ratifies all that said attorneys shall lawfully do or cause to
be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
 
ARTICLE VII
 
REMEDIES; RIGHTS UPON DEFAULT
 
7.1 Rights and Remedies Generally. If an Event of Default shall occur and be
continuing, then and in every such case, the Secured Party shall have all the
rights and remedies of a secured party under the UCC, shall have all rights now
or hereafter existing under all other applicable laws, and, subject to any
mandatory requirements of applicable law then in effect, shall have all the
rights set forth in this Security Agreement or the Note and all the rights set
forth with respect to the Collateral or this Security Agreement in any other
security agreement between the parties.
 
7.2 Assembly of Collateral. If an Event of Default shall occur and be
continuing, upon five (5) days’ notice to the Debtor, the Debtor shall, at its
own expense, assemble the Collateral (or from time to time any portion thereof)
and make it available to the Secured Party at any place or places designated by
the Secured Party which is reasonably convenient to both parties.
 
7.3 Disposition of Collateral. The Secured Party will give the Debtor reasonable
notice of the time and place of any public sale of the Collateral or any part
thereof or the time after which any private sale or any other intended
disposition thereof is to be made. The Debtor agrees that the requirements of
reasonable notice to it shall be met if such notice is mailed, postage prepaid
to its address specified in Section 7.3 of the Purchase Agreement (or such other
address that the Debtor may provide to the Secured Party in writing) at least
ten (10) days before the time of any public sale or after which any private sale
may be made. The Proceeds of any sale, disposition or other realization upon all
or any part of the Collateral shall be distributed by the Secured Party in the
following order of priorities: First, to the Secured Party in an amount
sufficient to pay in full the reasonable costs of the Secured Party in
connection with such sale, disposition or other realization, including all fees,
costs, expenses, liabilities and advances reasonably incurred or made by the
Secured Party in connection therewith, including, without limitation, reasonable
attorneys’ fees; Second, to the Secured Party in an amount equal to the then
unpaid Secured Obligations; and Finally, upon payment in full of the Secured
Obligations, to the Debtor or its representatives, in accordance with the UCC or
as a court of competent jurisdiction may direct.
 
- 10 -

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

 
7.4 Recourse. The Debtor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to satisfy
the Secured Obligations. The Debtor shall also be liable for all expenses of the
Secured Party reasonably incurred in connection with collecting such deficiency,
including, without limitation, the reasonable fees and disbursements of
attorneys employed by the Secured Party to collect such deficiency.
 
7.5 Expenses; Attorneys’ Fees. The Debtor shall reimburse the Secured Party for
all its reasonable expenses in connection with the exercise of its rights under
this Article VII, including, without limitation, all reasonable attorneys’ fees
and legal expenses incurred by the Secured Party. Expenses of retaking, holding,
preparing for sale, selling or the like shall include the reasonable attorneys’
fees and legal expenses of the Secured Party. All such expenses shall be secured
hereby.
 
7.6 Limitation on Duties Regarding Preservation of Collateral. The Secured
Party’s sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the UCC
or otherwise, shall be to deal with it in the same manner as the Secured Party
deals with similar property for its own account.
 
(a) The Secured Party shall have no obligation to take any steps to preserve
rights against prior parties to any Collateral.
 
(b) Neither the Secured Party nor any of its directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or any
part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Debtor or otherwise.
 
ARTICLE VIII
 
MISCELLANEOUS
 
8.1 Limitation on the Secured Party’s Duty in Respect of Collateral. The Secured
Party shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it takes such action as the Debtor
requests in writing, but failure of the Secured Party to comply with any such
request shall not in itself be deemed a failure to act reasonably, and no
failure of the Secured Party to do any act not so requested shall be deemed a
failure to act reasonably.
 
8.2 Reinstatement. This Security Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against the
Debtor for liquidation or reorganization, should the Debtor become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of the Debtor’s property and
assets, and shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
 
- 11 -

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

 
8.3 Governing Law; Waiver of Jury Trial.
 
(i) This Agreement shall be governed by and construed in accordance with the
laws of the State of Washington without regard to the principles of conflicts of
law thereof.
 
(ii) Each of the parties hereto consents to the jurisdiction of any state or
federal court located within the county of San Francisco in the State of
California, and irrevocably agrees that all actions or proceedings relating to
this Agreement or the transactions contemplated hereby shall be litigated in one
of such courts, and each of the parties waives any objection that it may have
based on improper venue or forum non conveniens to the conduct of any such
action or proceeding in any such court and waives personal service of any and
all process upon it, and consents to all such service of process made in the
manner set forth in Section 8.4. Nothing contained in this Section 8.3(ii) shall
affect the right of any party to serve legal process on any other party in any
other manner permitted by law.
 
8.4 Notices. Except as otherwise expressly provided herein, all notices,
requests and demands to or upon the respective parties hereto to be effective
shall be in made in accordance with all of the provisions of Section 7.3 of the
Purchase Agreement.
 
8.5 Successors and Assigns. This Security Agreement shall be binding upon and
inure to the benefit of the Debtor, the Secured Party, all future holders of the
Secured Obligations and their respective successors and assigns, except that the
Debtor may not assign or transfer any of its rights or obligations under this
Security Agreement without the prior written consent of the Secured Party, which
consent the Secured Party may withhold or delay in its sole and complete
discretion.
 
8.6 Waivers and Amendments. None of the terms or provisions of this Security
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the party against whom enforcement is sought. In
the case of any waiver, the Debtor and the Secured Party shall be restored to
their former position and rights hereunder and under the outstanding Secured
Obligations, and any Event of Default waived shall be deemed to be cured and not
continuing, but no such waiver shall extend to any subsequent or other Event of
Default, or impair any right consequent thereon.
 
8.7 No Waiver; Remedies Cumulative. No failure or delay on the part of the
Secured Party in exercising any right, power or privilege hereunder and no
course of dealing between the Debtor and the Secured Party shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Secured Party
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Secured Party would otherwise have on any
future occasion. The rights and remedies herein expressly provided are
cumulative and may be exercised singly or concurrently and as often and in such
order as the Secured Party deems expedient and are not exclusive of any rights
or remedies which the Secured Party would otherwise have whether by security
agreement or now or hereafter existing under applicable law. No notice to or
demand on the Debtor in any case shall entitle the Debtor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Secured Party to any other or future action in any
circumstances without notice or demand.
 
- 12 -

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

 
8.8 Termination; Release. When the Secured Obligations have been indefeasibly
paid and performed in full this Security Agreement shall terminate, and the
Secured Party, at the request and sole expense of the Debtor, will execute and
deliver to the Debtor the proper instruments (including UCC termination
statements) acknowledging the termination of this Security Agreement, and will
duly assign, transfer and deliver to the Debtor, without recourse,
representation or warranty of any kind whatsoever, such of the Collateral as may
be in the possession of the Secured Party and has not theretofore been disposed
of, applied or released.
 
8.9 Headings Descriptive. The headings of the several Sections and subsections
of this Security Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Security
Agreement.
 
8.10 Severability. In case any provision in or obligation under this Security
Agreement or the Secured Obligations shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
 
8.11 
 
[THIS SPACE INTENTIONALLY LEFT BLANK]
 
- 13 -

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

IN WITNESS WHEREOF, the Debtor and the Secured Party have caused this Security
Agreement to be duly executed and delivered as of the date first above written.

THE DEBTOR
ITEX CORPORATION
 
By:
/s/ Steven White
Name: Steven White
Title:   Chief Executive Officer
Address:
3326 – 160th Ave SE, Suite 100
Bellevue, WA 98008-6418

SECURED PARTY
 
THE INTAGIO GROUP, INC.
 
By:
/s/ Eric Jeck
Eric Jeck
Title: President

 
- 14 -

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

 
ANNEX A
 
PERFECTION CERTIFICATE(UCC Financing Statements)
 
The undersigned, the President of ITEX Corporation, a Nevada corporation (the
“Debtor”), hereby certifies, with reference to a certain Security Agreement
dated August 1, 2008 (the “Security Agreement”) (terms defined in such Security
Agreement having the same meanings herein as specified therein), between the
Debtor and The Intagio Group, Inc., a Delaware corporation (the “Secured
Party”), to the Secured Party as follows:
 
1. Name. The exact legal name of the Debtor as that name appears on its Restated
Articles of Incorporation filed with the Nevada Secretary of State is as
follows: ITEX Corporation.
 
2. Other Identifying Factors.
 

(a)
The following is a mailing address for the Debtor: 3326 – 160th Ave SE, Suite
100, Bellevue, WA 98008-6418.

 

 
(b)
If different from its indicated mailing address, the Debtor’s place of business
or, if more than one, its chief executive office is located at the following
address:

 
Address
County
State
     
Not applicable
   

 
(c)
The following is the type of organization of the Debtor: Corporation

 

 
(d)
The following is the jurisdiction of the Debtor’s organization: Nevada

 

 
(e)
The following is the Debtor’s state issued organizational identification number:
C6527-1985

 
3. Other Names.
 
(a) The following is a list of all other names (including trade names or similar
appellations) used by the Debtor, or any other business or organization to which
the Debtor became the successor by merger, consolidation, acquisition, change in
form, nature or jurisdiction of organization or otherwise, now or at any time
during the past five years:
 
ITEX Payment Systems
 
(b) Attached hereto as Schedule 3 is the information required in Section 2 for
any other business or organization to which the Debtor became the successor by
merger, consolidation, acquisition of assets, change in form, nature or
jurisdiction of organization or otherwise, now or at any time during the past
five years: None
 

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

 
4. Other Current Locations.
 
(a) The following are all other locations in the United States of America in
which the Debtor maintains any books or records relating to any of the
Collateral consisting of accounts, instruments, chattel paper, general
intangibles or mobile goods:
 
Address
County
State
 
None
   

 
(b) The following are all other places of business of the Debtor in the United
States of America:
 
Address
County
State
 
None
   

(c) The following are all other locations in the United States of America where
any of the Collateral consisting of inventory or equipment is located:
 
Address
County
State
 
None
   

 
(d) The following are the names and addresses of all Persons or entities other
than the Debtor, such as lessees, consignees, warehousemen or purchasers of
chattel paper, which have possession or are intended to have possession of any
of the Collateral consisting of instruments, chattel paper, inventory or
equipment:
 
Name
Mailing Address
County
State
 
None
     

 
5. Prior Locations.
 
(a) Set forth below is the information required by Section 4 (a) or (b) with
respect to each location or place of business previously maintained by the
Debtor at any time during the past five years in a state in which the Debtor has
previously maintained a location or place of business at any time during the
past four months:
 
Address
County
State
 
Not applicable
   

 
(b) Set forth below is the information required by Section 4(c) or (d) with
respect to each other location at which, or other Person or entity with which,
any of the Collateral consisting of inventory or equipment has been previously
held at any time during the past twelve months:
 

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

 
Name
Mailing Address
County
State
 
Not applicable
     

 
6. Fixtures. Attached hereto as Schedule 6 is the information required by UCC
Section 9-502(b) or Section 9-402(5) of each state in which any of the
Collateral consisting of fixtures are or are to be located and the name and
address of each real estate recording office where a mortgage on the real estate
on which such fixtures are or are to be located would be recorded.
 
7. Unusual Transactions. Except for those purchases, acquisitions and other
transactions described on Schedule 3 or on Schedule 7 attached hereto, all of
the Collateral has been originated by the Debtor in the ordinary course of the
Debtor’s business or consists of goods which have been acquired by the Debtor in
the ordinary course from a Person in the business of selling goods of that kind.
 
8. UCC Filings. A duly authorized financing statement, in a form acceptable to
the Secured Party and containing the indication of the Collateral set forth on
Schedule 8(A) has been, or will be as of the Closing Date, duly filed in the
central Uniform Commercial Code filing office in the jurisdiction identified in
Section 2(d) and in each real estate recording office referred to on Schedule 6
hereto.
 
IN WITNESS WHEREOF, I have hereunto signed this Certificate on August 1, 2008.

ITEX Corporation
   
/s/ Steven White
By:
Steven White
 
Chief Executive Officer

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

Schedule 3 – Other Names

None

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

Schedule 6 – Fixtures

None

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

Schedule 7 – Unusual Transactions

None

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

Schedule 8(A) – Collateral Description
 
Debtor:   ITEX Corporation
 
Secured Party:  The Intagio Group, Inc.
 
The collateral covered by this Financing Statement is all of the Debtor’s right,
title and interest in, to and under the following, whether now owned or existing
or hereafter acquired or arising, and wherever located (all of which being
hereinafter collectively called the “Collateral”):
 
(i) all Accounts;
 
(ii) all Chattel Paper;
 
(iii) all Collateral Records;
 
(iv) Contracts
 
(v) all Documents;
 
(vi) all Equipment;
 
(vii) all Fixtures;
 
(viii) all General Intangibles;
 
(ix) all Instruments;
 
(x) all Inventory;
 
(xi) all Investment Property;
 
(xii) all Receivables;
 
(xiii) all Receivables Records;
 
(xiv) all other tangible and intangible personal property; and
 
(xv) all accessions, attachments and additions to any or all of the foregoing,
all substitutions and replacements for any or all of the foregoing and all
Proceeds or products of any or all of the foregoing.

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