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2.4 All tax refunds and tax refund claims;2.5 All guaranties, security and liens for which the Debtor may hold for the payment orperformance of any item of Collateral;2.6 Letters of credit payable to the Debtor and all proceeds therefrom;2.7 All rights to goods represented by any item of Collateral, or the sale of which goods gaverise to any item of Collateral;2.8 the Debtor’s good will;2.9 All of the Debtor’s inventory (as defined in the UCC), including all goods, merchandise,materials, raw materials, work in progress, finished goods, now owned or hereinafter acquired andheld for sale or lease or furnished or to be furnished under contracts or service agreements or tobe used or consumed in the Debtor’s business and all other tangible personal property of theDebtor, wherever located, whether in the Debtor’s or some other person’s possession, and anymaterials and supplies of any kind used in connection with the Debtor’s business or for packagingor shipping such inventory upon its return to replevy or repossession by the Debtor after sale;2.10 All instruments of title or documents relating to any item of Collateral;2.11 All the Debtor’s books, records and lists in whatever form maintained related to any itemof Collateral;2.12 All patents and applications for a patent, including, without limitation, each patent andpatent application referred to in Exhibit B attached hereto, together with all reissues,continuations, divisions, modifications, substitutions and extensions thereof;2.13 All know-how, proprietary information, all software source and object code whethercreated or licensed by the Debtor, maskworks, all data that comprises the Debtor’s databases;2.14 All trademarks and copyrights;2.15 All commercial tort claims;2.16 Any other property which now or hereafter serves as security for the Obligations;2.17 All property of the types described in Sections 2.1 through 2.15 or similar thereto, thatat any time hereafter may be acquired by the Debtor, including but not limited to all accessions,parts, additions, and replacements; and2.18 All proceeds of any item of Collateral and all proceeds of such proceeds, including(without limitation) all accounts, instruments, chattel paper or other rights to payment, money,insurance proceeds and all refunds of insurance premiums due or to become due under all insurancepolicies covering the foregoing property and proceeds derived from any condemnation of theCollateral.
 
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3. Perfection of Security Interest. Concurrently with the execution of thisAgreement, the Debtor shall deliver to Secured Parties, or their agents, a form or forms ofNational Financing Statement (Form UCC-1) and such other documentation as may be required orhelpful as evidence of the granting and perfection of the security interest in the Collateralgranted to the Secured Parties hereunder. The Secured Parties shall, immediately upon execution ofthis Agreement, cause the financing statement(s) to be filed with the Secretary of State ofDelaware.4. Subordination. Each Secured Party hereby agrees and acknowledges that the securityinterest granted to the Secured Parties pursuant to this Agreement is expressly subordinate to theVault Loan (as such term is defined in the Purchase Agreement) and Permitted Indebtedness (seeSection 2.1(a) of the Purchase Agreement. Additionally, the Secured Parties shall, from time totime, at the request of the Company, subordinate the portion security interest securing repaymentof the Notes covering accounts receivable only to any accounts receivable or equipment basedfinancing obtained by the Company from any bank or other lender.5. Removal of Collateral Prohibited. The Debtor shall not permanently remove anyCollateral from its premises without the written consent of the Collateral Agent, except that theDebtor may dispose of Collateral in the ordinary course of business.6. Debtor’s Representations, Warranties and Covenants. As long as the Debtor hasoutstanding Obligations to a Secured Party, the Debtor hereby represents, warrants and covenantswith such Secured Party that:6.1 The Debtor is a corporation duly organized and validly existing under the laws of theState of Delaware, and it will at all times take or cause to be taken all actions as may from timeto time be necessary to maintain in good standing, preserve and renew its company existence andrights.6.2 The Debtor and its officers signing this Agreement have the corporate power and authorityto enter into and perform this Agreement and have taken all corporate action necessary to authorizethe execution, delivery and performance of this Agreement and any related agreements or documents.This Agreement is a legal, valid and binding obligation of the Debtor, enforceable in accordancewith its terms; and the Debtor’s execution, delivery and performance of this Agreement does notconflict with or violate the Debtor’s certificate of incorporation, bylaws, or any law, regulation,order, judgment, rule or agreement to which the Debtor is a party or by which it is bound.6.3 Except for the Permitted Liens listed on Exhibit 6.3, all of the Collateral is andshall at all times remain free and clear of any and all liens, claims or encumbrances that aresenior to the lien granted by this Agreement.6.4 Except for inventory sold in the ordinary course of business, the Debtor has and will havegood and indefeasible title to, and is and will be the true owner of the Collateral.6.5 The execution of and performance by the Debtor of all of the terms and provisionscontained in this Agreement do not and will not constitute, or would not constitute following anynotice or lapse of time, an event of default under any agreement (including any existing loan agreement, promissory note or other loan document) to which the Debtor is now orhereafter becomes a party.
 
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6.6 The Debtor will punctually pay or cause to be paid all payments of principal and interestto become due in respect of the Note according to the terms thereof.6.7 The Debtor will keep, at all times, true and complete books of account and financialrecords in accordance with generally accepted accounting principles.6.8 Within ten days after written notice from the Collateral Agent, the Debtor shall reimbursethe Collateral Agent, for all sums expended by the Collateral Agent, in connection with the filingof any third-party claim as to the Collateral or any part thereof which the Collateral Agent maydeem reasonably necessary or desirable, or in connection with any action brought by the CollateralAgent, to correct any default or enforce any provision of this Agreement, including reasonableattorneys’ fees and expenses and court costs.6.9 The Debtor will not sell, transfer or encumber the Collateral except in the ordinarycourse of business.6.10 Except in the ordinary course of business, the Debtor shall not lease or otherwisedispose of, remove, move, relocate or transfer, or permit the removal, movement, relocation ortransfer, whether by sale or otherwise, any of the Collateral, and shall keep the Collateral onlyat its principal place of business, or at any other secured warehouse or location owned or leasedby the Debtor, or such other location as shall be used from time to time by the Debtor totemporarily store the Collateral so long as the Collateral remains fully insured, unless and untilthe Debtor provides Secured Party, with written notice that the Collateral is being moved to suchlocation, specifying the exact address of such location and the exact Collateral to be moved, atleast 30 days prior to moving the Collateral to such location.7. Protection of Secured Party’s Security. If an Event of Default, as defined in theNotes, has occurred, or if any action or proceeding is commenced which materially adversely affectsthe Collateral or title thereto or the interest of the Secured Parties therein, then the SecuredParties, upon the prior written consent of the Collateral Agent, may make such appearance, disbursesuch sums, and take such action as the Secured Parties deem necessary, in their sole discretion, toprotect the Secured Parties’ interest, including but not limited to (a) disbursement of reasonablehourly attorneys’ fees, (b) entry upon the Debtor’s property to make repairs to the Collateral, and(c) procurement of satisfactory insurance that is reasonable under the circumstances. Any amountsdisbursed by the Secured Parties pursuant to this Section 7, with interest thereon, shall becomeadditional indebtedness of the Debtor secured by this Agreement. Unless the Debtor and theCollateral Agent agree to other terms of payment, such amounts shall be immediately due andpayable, and if the Secured Parties notify the Debtor within five days of such disbursement, allsuch amounts shall bear interest from the date which is ten days following the date of disbursementat the rate stated in the Notes. Nothing contained in this Section 7 shall require the SecuredParties to incur any expense or take any action.
 
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8. Collateral Agent.(a) Appointment. The Majority Noteholders may from time to time appoint a collateralagent for the Secured Parties (in such capacity, the ***“*****Collateral Agent*****”***) to serve from the date ofsuch appointment until the earliest of resignation, removal of the Collateral Agent by the Majority Noteholders, or termination of this Agreement. Upon ten days written notice to theDebtor, the Majority Noteholders (as such term is defined in the Purchase Agreement) may appointanother Collateral Agent.(b) Powers and Duties of Collateral Agent. Each Secured Party hereby irrevocablyauthorizes the Collateral Agent, if any, to take such action and to exercise such powers hereunderas provided herein or as requested in writing by the Majority Noteholders. The Collateral Agentmay execute any of its duties hereunder by or through agents or employees and shall be entitled torequest and act in reliance upon the advice of counsel concerning all matters pertaining to itsduties hereunder and shall not be liable for any action taken or omitted to be taken by it in goodfaith in accordance therewith. The Collateral Agent may not, without consent of the MajorityNoteholders, demand payment of the Notes or foreclose on the Collateral. For the avoidance ofdoubt and without in any way limiting the rights of the Collateral Agent set forth herein, theCollateral Agent may with consent of the Majority Noteholders subordinate repayment of the Notesand their security interest hereby granted to other obligations of the Debtor.(c) Indemnity by Secured Parties. Neither the Collateral Agent nor any of itspartners, directors, officers, employees, or agents shall be liable or responsible to any SecuredParty or to the Debtor for any action taken or omitted to be taken by the Collateral Agent or anyother such person hereunder or under any related agreement, instrument or document, nor shall theCollateral Agent or any of its partners, directors, officers, employees, or agents be liable orresponsible for: (i) the validity, effectiveness, sufficiency, enforceability or enforcement ofthe Notes, this Agreement or any instrument or document delivered hereunder or relating hereto;(ii) the title of the Debtor to any of the Collateral or the freedom of any of the Collateral fromany prior or other liens or security interests; (iii) the determination, verification orenforcement of the Debtor’s compliance with any of the terms and conditions of this Agreement; (iv)the failure by the Debtor to deliver any instrument or document required to be delivered pursuantto the terms hereof; or (v) the receipt, disbursement, waiver, extension or other handling ofpayments or proceeds made or received with respect to the Collateral, the servicing of theCollateral or the enforcement or the collection of any amounts owing with respect to theCollateral. In the case of this Agreement, the transactions contemplated hereby and any documentrelating to the Collateral, each of the Secured Parties agrees to pay to the Collateral Agent, ondemand, its pro rata share of all fees and all expenses incurred by the Collateral Agent inconnection with the operation and enforcement of this Agreement, the Notes or any related agreementto the extent that such fees or expenses have not been paid by the Debtor. In the case of thisAgreement and each instrument and document relating to any of the Collateral, each of the SecuredParties and the Debtor hereby agrees to hold the Collateral Agent harmless, and to indemnify theCollateral Agent from and against any and all loss, damage, expense or liability which may beincurred by the Collateral Agent under this Agreement and the transactions contemplated hereby andany related agreement or other instrument or document, as the case may be.9. Forbearance by Collateral Agent Not a Waiver. Any forbearance by the CollateralAgent in exercising any right or remedy hereunder, or otherwise afforded by applicable law, shallnot be a waiver of, or preclude the exercise of, any right or remedy. The acceptance by theCollateral Agent of payment of any sum secured by this Agreement or the Purchase Agreement afterthe due date of such payment shall not be a waiver of the Secured Parties’ right to either requireprompt payment when due of all other sums so secured or to declare a default for failure to makeprompt payment. No action taken by the Collateral Agent shall waive the Secured Parties’ right toaccelerate the indebtedness secured by this Agreement and seek such other remedies as are provided by this Agreement, the Purchase Agreement orapplicable law.
 
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10. Uniform Commercial Code Security Agreement. This Agreement is intended to be asecurity agreement pursuant to the UCC for all of the items specified above as part of theCollateral which, under applicable law, may be subject to a security interest pursuant to the UCC,and the Debtor hereby grants the Collateral Agent a security interest in such items. The Debtoragrees that the Secured Parties may file any appropriate document in the appropriate jurisdictionas a financing statement for any of the Collateral. In addition, the Debtor agrees to execute, ifnecessary, and deliver to the Secured Parties, upon a Secured Party’s request, any financingstatements, as well as extensions, renewals and amendments thereof, and reproductions of thisAgreement or the Purchase Agreement in such form as the Secured Parties may require to perfect asecurity interest with respect to said Collateral. The Debtor shall pay all costs of filing suchfinancing statements and any extensions, renewals, amendments, and releases thereof, and shall payall reasonable costs and expenses of any record searches for financing statements the SecuredParties may reasonably require. Without the prior written consent of the Collateral Agent, theDebtor shall not create or suffer to be created pursuant to the UCC any other security interest inthe Collateral, including replacements and additions thereto, except under Section 4. Upon theoccurrence of an Event of Default (as such term is defined in the Notes), the Secured Parties shallhave the remedies of a “secured party” under the UCC and, at the Collateral Agent’s option, mayalso invoke the other remedies provided in this Agreement, the Notes, or the Purchase Agreement asto such items. In exercising any of such remedies, the Secured Parties may proceed against any orall of the Collateral separately or together and in any order whatsoever, without in any wayaffecting the availability of the Secured Parties remedies under the UCC or of the other remediesprovided in this Agreement and/or the Subscription Agreement.11. Events of Default. The Debtor shall be in default under this Agreement upon theoccurrence of an Event of Default (as such term is defined in the Notes) or a breach of thePurchase Agreement.12. Rights of Secured Parties.(a) Upon the occurrence of an Event of Default (as such term is defined in the Notes) or abreach of the Purchase Agreement, the Collateral Agent may, at the request of the MajorityNoteholders, require the Debtor to assemble the Collateral and make it available to the CollateralAgent at the place to be designated by the Collateral Agent which is reasonably convenient to bothparties. The Collateral Agent may sell all or any part of the Collateral as a whole or in parcelseither by public auction, private sale, or other method of disposition pursuant to the UCC. TheCollateral Agent or any Secured Party may bid at any public sale on all or any portion of theCollateral. The Collateral Agent shall give the Debtor reasonable notice of the time and place ofany public sale or of the time after which any private sale or other disposition of the Collateralis to be made, and notice given at least ten days before the time of the sale or other dispositionshall be conclusively presumed to be reasonable.(b) Notwithstanding any provision of this Agreement, the Collateral Agent shall be under noobligation to offer to sell the Collateral. In the event the Collateral Agent offers to sell theCollateral, the Collateral Agent will be under no obligation to consummate a sale of the Collateralif, in its reasonable business judgment, none of the offers received by it reasonably approximatesthe fair value of the Collateral.(c) In the event the Collateral Agent elects not to sell the Collateral, the Collateral Agentmay elect to follow the procedures set forth in the UCC for retaining the Collateral insatisfaction of the Debtor’s obligation, subject to the Debtor’s rights under such procedures.
 
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13. Remedies Cumulative. Each remedy provided in this Agreement or the PurchaseAgreement is distinct and cumulative to all other rights or remedies under this Agreement or thePurchase Agreement or afforded by law or equity, and may be exercised concurrently, independently,or successively, in any order whatsoever.14. Costs and Expenses. The Debtor agrees to pay on demand all costs and expenses,including reasonable hourly attorneys fees and court costs, of the Secured Parties in connectionwith the enforcement of this Agreement (whether suit is commenced or not).15. Notices, etc. All notices, requests, demands, approvals, consents, and othercommunications which are required or may be given hereunder shall be (a) in writing; (b) addressedto the address furnished addressed to the parties as set forth on the signature page hereto, unlessa party notifies the others of a change of address (in which case the latest noticed address shallbe used); and (c) deemed to have been duly given (i) on the date given by hand delivery orfacsimile, or (ii) the day after deposit with a recognized overnight courier; provided thatif the actual or deemed notice date is not a business day, the date of actual or deemed noticeshall be the next business day thereafter.16. Entire Agreement, Savings Clause, Assigns and Governing Law. This Agreement, thePurchase Agreement, the Notes and all documents referenced therein contain the entire understandingbetween and among the parties and supersede any prior understandings and agreements among themrespecting the subject matter of such agreements and instruments. If any provision of thisAgreement, or the application of such provision to any person or circumstance, shall be heldinvalid, the remainder of this Agreement, or the application of such provision to persons orcircumstances other than those as to which it is held invalid, shall not be affected thereby. ThisAgreement shall be binding upon the heirs, executors, administrators, successors and assigns of theparties hereto. This Agreement shall be governed by and construed in accordance with the laws ofthe State of Minnesota.17. Amendment and Additional Parties. The Agreement may be amended only in writingsigned by the Debtor and the Collateral Agent.18. Attorneys’ Fees**.**Any actions or proceedings, including arbitration, brought byeither party with respect to this Agreement, the court or arbitrator in such action or proceedingshall award to the prevailing party, in addition to any other relief granted, (i) the actualattorneys’ fees based on a reasonable hourly basis which the prevailing party has paid or isobligated to pay; and (ii) all costs and expenses, not merely recoverable costs, which theprevailing party has paid or is obligated to pay. The court may reduce such actual attorneys’fees, costs and expenses only to the extent that the court determines that such amounts wereunnecessarily incurred or unreasonable. In addition, the parties agree that if any dispute betweenthe parties results in a judgment in favor of either party, such party shall be entitled to recoverfrom the other all reasonable hourly attorneys’ fees and costs incurred by it in enforcing suchjudgment. This provision is intended to be severable from any other provision of this Agreementand is not to be deemed merged in the judgment.
 
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19. Time is of the Essence. TIME IS EXPRESSLY DECLARED TO BE OF THE ESSENCE of eachObligation of the Debtor hereunder and in all matters concerning this Agreement, including all actsor things to be done or performed in connection herewith, and specifically of every provision ofthis Agreement and the Notes in which time is an element.20. Counterparts; Execution. This Agreement may be executed in multiple counterparts,each of which shall be deemed an original Agreement, and all of which shall constitute oneAgreement to be effective as of the date of execution of this Agreement.[Multiple signature pages follow.]
 
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**IN WITNESS WHEREOF**, the parties have caused this Agreement to be executed as of the date firstabove written.         **THE DEBTOR:** **COLLATERAL AGENT:**           **DIGITILITI, Inc.**a Delaware corporation **INSERT NAME OF COLLATERAL AGENT, IF ANY**           By:   By:    Name:  Name:   Its:  Its:                   Address: 266 East 7th Street, St. Paul, MN 55101      Phone:   Address:  Fax:   Phone:        Fax:    [Multiple secured party signature pages follow.]
 
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**IN WITNESS WHEREOF**, the parties have caused this Security Agreement to be executed as of thedate first above written.         **SECURED PARTY:**           Name:             Sign:                                                                     (*Address*)                                  (*Phone and Fax Numbers*)  
 
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**SCHEDULE A****SECURED PARTIES**
 
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**EXHIBIT B****LIST OF PATENTS AND PATENT APPLICATIONS**
 
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**EXHIBIT 6.3****PERMITTED LIENS**“**Permitted Liens**” are:(a) Liens approved in writing by the Collateral Agent or the Majority Noteholders;(b) Liens for taxes, fees, assessments or other government charges or levies, either notdelinquent or being contested in good faith and for which the Debtor maintains adequate reserves onits books;(c) Purchase money liens (i) on equipment acquired or held by the Debtor incurred forfinancing the acquisition of the equipment, or (ii) existing on equipment when acquired, if thelien is confined to the property and improvements and the proceeds of the equipment;(d) Leases or subleases and licenses or sublicenses granted in the ordinary course of theDebtor’s business including those listed on Attachment A incorporated herein by reference; and(e) Liens of carriers, warehousemen, suppliers, or other persons that are possessory in naturearising in the ordinary course of business so long as such liens attach only to inventory and whichare not delinquent or remain payable without penalty or which are being contested in good faith andby appropriate proceedings which proceedings have the effect of preventing the forfeiture or saleof the property subject thereto.
 
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