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 6572663.2   SECURITY AGREEMENT       THIS SECURITY AGREEMENT dated as of the 2nd day of May, 2016 (“this   Agreement”), by and between [DLH Holdings Corp.]/[DLH Solutions, Inc.]/[Danya International   LLC]  (the “Pledgor”) and Fifth Third Bank (“Bank”) is being executed in connection with the   Loan Agreement, dated the same date, between Pledgor, Danya International, LLC, and DLH   Solutions, Inc. and the Bank (the “Loan Agreement”)      1. THE SECURITY.  As security for any and all of the Indebtedness (as   defined below) the Pledgor hereby assigns and grants to Bank a security interest in the following   described property now owned or hereafter acquired by the Pledgor (“Collateral”):   (a) All accounts, contract rights, chattel paper, instruments, deposit   accounts, letter of credit rights, payment intangibles and general intangibles, including all   amounts due to the Pledgor from a factor; rights to payment of money from the Bank under   any Swap (as defined in Paragraph 2 below); and all returned or repossessed goods which,   on sale or lease, resulted in an account or chattel paper.   (b) All inventory, including all materials, work in process and finished   goods.   (c) All of the Pledgor’s deposit accounts with the Bank.  The Collateral   shall include any renewals or rollovers of the deposit accounts, any successor accounts,   and any general intangibles arising therefrom or related thereto.   (d) All equipment, including vehicles, trailers and any equipment or   goods for which certificates of title are issued.   (e) All instruments, notes, chattel paper, documents, certificates of   deposit, of every type.  The Collateral shall include all liens, security agreements, leases   and other contracts securing or otherwise relating to the foregoing.   (f) All negotiable and nonnegotiable documents of title covering any   Collateral.   (g) All accessions, attachments and other additions to the Collateral.   (h) All substitutes or replacements for any Collateral, all cash or non-   cash proceeds, product, rents and profits of any Collateral, all income, benefits and property   receivable on account of the Collateral, all rights under warranties and insurance contracts,   letters of credit, guaranties or other supporting obligations covering the Collateral, and any   causes of action relating to the Collateral.   (i) All commercial tort claims.   (j) All of the Pledgor’s deposit accounts with the Bank. The Collateral   shall include any renewals or rollovers of the deposit accounts, any successor accounts,   and any general intangibles and choses in action arising therefrom or related thereto.     





 







DLH– Security Agreement     Page 2 of 9   6572663.2   (k) All general intangibles. The Collateral shall include all good will   connected with or symbolized by any of such general intangibles.   (l) All books and records pertaining to any Collateral, including but not   limited to any computer-readable memory and any computer hardware or software   necessary to process such memory (“Books and Records”).   Notwithstanding the forgoing, the Collateral shall expressly exclude any contract,   instrument or chattel paper (except for any account) in which Pledgor has any right, title or interest   if and to the extent such contract, instrument or chattel paper includes a provision containing a   restriction on assignment such that the creation of a security interest in the right, title or interest of   such Pledgor therein would be prohibited and would, in and of itself, cause or result in a default   thereunder enabling another person party to such contract, instrument or chattel paper to enforce   any remedy with respect thereto.   2. THE INDEBTEDNESS.  The Collateral secures and will secure all   Indebtedness of Pledgor, DLH Solutions, Inc.. and Danya International, LLC to the Bank.  Each   party obligated under any Indebtedness is referred to in this Agreement as a “Debtor.”    “Indebtedness” is used in its most comprehensive sense and includes any and all advances, debts,   obligations and liabilities of the Debtor, now or hereafter existing, absolute or contingent,   liquidated or unliquidated, determined or undetermined, voluntary or involuntary, including under   any swap, derivative, foreign exchange, hedge, or other arrangement (“Swap”), deposit, treasury   management or other similar transaction or arrangement, and whether the Debtor may be liable   individually or jointly with others, or whether recovery upon such Indebtedness may be or   hereafter becomes unenforceable. “Indebtedness” secured by the Collateral of such Pledgor shall   not include obligations arising under any Swap to which it is not party if, and to the extent that, all   or a portion of the guaranty by such Pledgor to the Bank of, or the grant by such Pledgor of a   security interest to the Bank to secure, such Swap, would violate the Commodity Exchange Act    (7 U.S.C., Sec. 1. et. seq.) by virtue of such Pledgor’s failure to constitute an “eligible contract   participant” as defined in the Commodity Exchange Act at the time such guaranty or grant of such   security interest becomes effective with respect to such Swap.   3. PLEDGOR’S COVENANTS.  The Pledgor represents, covenants and   warrants that unless compliance is waived by the Bank in writing:      (a)  The Pledgor agrees: (i)  to indemnify the Bank against all losses, claims,   demands, liabilities and expenses of every kind caused by any Collateral; (ii) to permit the Bank   to exercise its rights under this Agreement; (iii) to execute and deliver such documents as the Bank   deems necessary to create, perfect and continue the security interests contemplated by this   Agreement; (iv) not to change its name (including, for an individual, the Pledgor’s name on any   driver’s license or special identification card issued by any state), and as applicable, its chief   executive office, its principal residence or the jurisdiction in which it is organized and/or registered   or its business structure without giving the Bank at least 30 days prior written notice; (v) not to   change the places where the Pledgor keeps any Collateral or the Pledgor's Books and Records   concerning the Collateral without giving the Bank prior written notice of the address to which the   Pledgor is moving same; and (vi) to cooperate with the Bank in perfecting all security interests   granted by this Agreement and in obtaining such agreements from third parties as the Bank deems     





 







DLH– Security Agreement     Page 3 of 9   6572663.2   necessary, proper or convenient in connection with the preservation, perfection or enforcement of   any of its rights under this Agreement.         (b)  The Pledgor agrees with regard to the Collateral, unless the Bank agrees   otherwise in writing:  (i) that the Bank is authorized to file financing statements in the name of the   Pledgor to perfect the Bank's security interest in the Collateral; (ii) that the Bank is authorized to   notify any account debtors, any buyers of the Collateral, or any other persons of the Bank's interest   in the Collateral; (iii) where applicable, to operate the Collateral in accordance with all applicable   statutes, rules and regulations relating to the use and control of the Collateral, and not to use any   Collateral for any unlawful purpose or in any way that would void any insurance required to be   carried; (iv) not to remove the Collateral from the Pledgor's premises except in the ordinary course   of the Pledgor's business; (v) to pay when due all license fees, registration fees and other charges   in connection with any Collateral; (vi) not to permit any lien on the Collateral, including without   limitation, liens arising from repairs to or storage of the Collateral, except in favor of the Bank;   (vii) not to sell, hypothecate or dispose of, nor permit the transfer by operation of law of, any   Collateral or any interest in the Collateral, except sales of inventory to buyers in the ordinary   course of the Pledgor's business; (viii) to permit the Bank to inspect the Collateral at any time;   (ix) to keep, in accordance with generally accepted accounting principles, complete and accurate   Books and Records regarding all the Collateral, and to permit the Bank to inspect the same and   make copies at any reasonable time; (x) if requested by the Bank, to receive and use reasonable   diligence to collect the Collateral consisting of accounts and other rights to payment and proceeds,   in trust and as the property of the Bank, and to immediately endorse as appropriate and deliver   such Collateral to the Bank daily in the exact form in which they are received together with a   collection report in form satisfactory to the Bank; (xi) not to commingle the Collateral, or   collections with respect to the Collateral, with other property; (xii) to give only normal allowances   and credits and to advise the Bank thereof immediately in writing if they affect any rights to   payment or proceeds in any material respect; (xiii) from time to time, when requested by the Bank,   to prepare and deliver a schedule of all the Collateral subject to this Agreement and to assign in   writing and deliver to the Bank all accounts, contracts, leases and other chattel paper, instruments,   and documents; (xiv) in the event the Bank elects to receive payments or rights to payment or   proceeds hereunder, to pay all expenses incurred by the Bank, including expenses of accounting,   correspondence, collection efforts, reporting to account or contract debtors, filing, recording,   record keeping and other expenses; and (xv) to provide any service and do any other acts which   may be necessary to maintain, preserve and protect all the Collateral and, as appropriate and   applicable, to keep all the Collateral in good and saleable condition, to deal with the Collateral in   accordance with the standards and practices adhered to generally by users and manufacturers of   like property, and to keep all the Collateral free and clear of all defenses, rights of offset and   counterclaims.      4. BANK RIGHTS.  The Pledgor appoints the Bank its attorney in fact to   perform any of the following rights, which are coupled with an interest, are irrevocable until   termination of this Agreement and may be exercised from time to time by the Bank's officers and   employees, or any of them, whether or not the Pledgor is in default: (a) to perform any obligation   of the Pledgor hereunder in the Pledgor's name or otherwise; (b) to release persons liable on the   Collateral and to give receipts and acquittances and compromise disputes; (c) to release or   substitute security; (d) to prepare, execute, file, record or deliver notes, assignments, schedules,     





 







DLH– Security Agreement     Page 4 of 9   6572663.2   designation statements, financing statements, continuation statements, termination statements,   statements of assignment, applications for registration or like documents to perfect, preserve or   release the Bank's interest in the Collateral; (e) to take cash, instruments for the payment of money   and other property to which the Bank is entitled; (f) to verify facts concerning the Collateral by   inquiry of obligors thereon, or otherwise, in its own name or a fictitious name; (g) to endorse,   collect, deliver and receive payment under instruments for the payment of money constituting or   relating to the Collateral; (h) to prepare, adjust, execute, deliver and receive payment under   insurance claims, and to collect and receive payment of and endorse any instrument in payment of   loss or returned premiums or any other insurance refund or return, and to apply such amounts   received by the Bank, at the Bank's sole option, toward repayment of the Indebtedness or, where   appropriate, replacement of the Collateral; (i) to enter onto the Pledgor's premises in inspecting   the Collateral; (j) to make withdrawals from and to close deposit accounts or other accounts with   any financial institution, wherever located, into which proceeds may have been deposited, and to   apply funds so withdrawn to payment of the Indebtedness; (j) to preserve or release the interest   evidenced by chattel paper to which the Bank is entitled and to endorse and deliver any evidence   of title; and (k) to do all acts and things and execute all documents in the name of the Pledgor or   otherwise, deemed by the Bank as necessary, proper and convenient in connection with the   preservation, perfection or enforcement of its rights.      5. DEFAULTS.  Any one or more of the following shall be a default   hereunder:   (a) The occurrence of any defined or described event of default under,   or any default in the performance of or compliance with any obligation, agreement,   representation, warranty, or other provision contained in (i) this Agreement, or (ii) any   other contract or instrument evidencing the Indebtedness, and such breach remains uncured   for more than thirty (30) days.   (b) Any involuntary lien of any kind or character attaches to any   Collateral, except for liens for taxes not yet due.   (c) The Bank fails to have an enforceable first lien (except for any   Permitted Liens) on or security interest in the Collateral.   (d) Any custodian, receiver or trustee is appointed to take possession,   custody or control of all or a substantial portion of the property of the Pledgor or of any   guarantor or other party obligated under any Indebtedness.   6. BANK’S REMEDIES AFTER DEFAULT.  Following the occurrence of   an Event of Default which has not been cured within any applicable cure period, the Bank may do   any one or more of the following:   (a) Declare any Indebtedness immediately due and payable, without   notice or demand.     





 







DLH– Security Agreement     Page 5 of 9   6572663.2   (b) Enforce the security interest given hereunder pursuant to the   Uniform Commercial Code and any other applicable law.   (c) Enforce the security interest of the Bank in any deposit account of   the Pledgor maintained with the Bank by applying such account to the Indebtedness.   (d) Require the Pledgor to obtain the Bank’s prior written consent to   any sale, lease, agreement to sell or lease, or other disposition of any Collateral consisting   of inventory.   (e) Require the Pledgor to segregate all collections and proceeds of the   Collateral so that they are capable of identification and deliver daily such collections and   proceeds to the Bank in kind.   (f) Require the Pledgor to direct all account debtors to forward all   payments and proceeds of the Collateral to a post office box under the Bank’s exclusive   control.   (g) Require the Pledgor to assemble the Collateral, including the Books   and Records, and make them available to the Bank at a place designated by the Bank.   (h) Enter upon the property where any Collateral, including any Books   and Records, are located and take possession of such Collateral and such Books and   Records, and use such property (including any buildings and facilities) and any of the   Pledgor’s equipment, if the Bank deems such use necessary or advisable in order to take   possession of, hold, preserve, process, assemble, prepare for sale or lease, market for sale   or lease, sell or lease, or otherwise dispose of, any Collateral.   (i) Demand and collect any payments on and proceeds of the Collateral.    In connection therewith the Pledgor irrevocably authorizes the Bank to endorse or sign the   Pledgor’s name on all checks, drafts, collections, receipts and other documents, and to take   possession of and open the mail addressed to the Pledgor and remove therefrom any   payments and proceeds of the Collateral.   (j) Grant extensions and compromise or settle claims with respect to   the Collateral for less than face value, all without prior notice to the Pledgor.   (k) Use any of the Pledgor’s rights and interests in any Intellectual   Property now owned or hereafter acquired by the Pledgor, if the Bank deems such use   necessary or advisable in order to take possession of, hold, preserve, process, assemble,   prepare for sale or lease, market for sale or lease, sell or lease, or otherwise dispose of, any   Collateral.  The Pledgor agrees that any such use shall be without any additional   consideration to the Pledgor.  As used in this paragraph, “Intellectual Property” includes,   but is not limited to, all trade secrets, computer software, service marks, trademarks, trade   names, trade styles, copyrights, patents, applications for any of the foregoing, customer   lists, working drawings, instructional manuals, and rights in processes for technical   manufacturing, packaging and labeling, in which the Pledgor has any right or interest,   whether by ownership, license, contract or otherwise.     





 







DLH– Security Agreement     Page 6 of 9   6572663.2   (l) Have a receiver appointed by any court of competent jurisdiction to   take possession of the Collateral.  The Pledgor hereby consents to the appointment of such   a receiver and agrees not to oppose any such appointment.   (m) Take such measures as the Bank may deem necessary or advisable   to take possession of, hold, preserve, process, assemble, insure, prepare for sale or lease,   market for sale or lease, sell or lease, or otherwise dispose of, any Collateral, and the   Pledgor hereby irrevocably constitutes and appoints the Bank as the Pledgor’s attorney-in-   fact to perform all acts and execute all documents in connection therewith.   (n) Without notice or demand to the Pledgor, set off and apply against   any and all of the Indebtedness any and all deposits (general or special, time or demand,   provisional or final) and any other indebtedness, at any time held or owing by the Bank or   any of the Bank’s agents or affiliates to or for the credit of the account of the Pledgor or   any guarantor or endorser of the Pledgor’s Indebtedness.   (o) Exercise all rights, powers and remedies which the Pledgor would   have, but for this Agreement, with respect to all Collateral.   (p) Receive, open and read mail addressed to the Pledgor.   (q) Resort to the Collateral under this Agreement, and any other   collateral related to the Indebtedness, in any order.   (r) Exercise any other remedies available to the Bank at law or in   equity.      6. MISCELLANEOUS.   (a) Any waiver, express or implied, of any provision hereunder and any   delay or failure by the Bank to enforce any provision shall not preclude the Bank from   enforcing any such provision thereafter.   (b) The Pledgor shall, at the request of the Bank, execute such other   agreements, documents, or instruments, in connection with this Agreement as the Bank   may reasonably deem necessary.   (c) All notes, security agreements, subordination agreements and other   documents executed by the Pledgor or furnished to the Bank in connection with this   Agreement must be in form and substance satisfactory to the Bank.   (d) This Agreement shall be governed by and construed according to   the laws of the State of Georgia, to the jurisdiction of which the parties hereto submit.   (e) All rights and remedies herein provided are cumulative and not   exclusive of any rights or remedies otherwise provided by law.  Any single or partial     





 







DLH– Security Agreement     Page 7 of 9   6572663.2   exercise of any right or remedy shall not preclude the further exercise thereof or the   exercise of any other right or remedy.   (f) All terms not defined herein are used as set forth in the Uniform   Commercial Code.   (g) In the event of any action by the Bank to enforce this Agreement or   to protect the security interest of the Bank in the Collateral, or to take possession of, hold,   preserve, process, assemble, insure, prepare for sale or lease, market for sale or lease, sell   or lease, or otherwise dispose of, any Collateral, the Pledgor agrees to pay immediately the   costs and expenses thereof, together with reasonable attorney’s fees actually incurred to   the extent permitted by law.   (h) In the event the Bank seeks to take possession of any or all of the   Collateral by judicial process, the Pledgor hereby irrevocably waives any bonds and any   surety or security relating thereto that may be required by applicable law as an incident to   such possession, and waives any demand for possession prior to the commencement of any   such suit or action.   (i) This Agreement shall constitute a continuing agreement, applying   to all future as well as existing transactions, whether or not of the character contemplated   at the date of this Agreement, and if all transactions between the Bank and the Pledgor shall   be closed at any time, shall be equally applicable to any new transactions thereafter,   provided, however, that this Agreement shall terminate, and Pledgor shall be entitled to a   release of all liens and security interests created hereby at such time as (i) Pledgor pays the   Loan in full and the obligations of Bank to make any further Advances to Pledgor is   terminated and (ii) any Swap then in effect either (1) is terminated and all termination   payments have been paid in full, (2) has been assigned or cash collateralized, to the extent   permitted by the terms of the Swap or (3) is, by the mutual agreement of Pledgor and Bank,   left in effect notwithstanding the repayment of the Loan.   (j) The Bank’s rights hereunder shall inure to the benefit of its   successors and assigns.  In the event of any assignment or transfer by the Bank of any of   the Indebtedness or the Collateral, the Bank thereafter shall be fully discharged from any   responsibility with respect to the Collateral so assigned or transferred, but the Bank shall   retain all rights and powers hereby given with respect to any of the Indebtedness or the   Collateral not so assigned or transferred.  All representations, warranties and agreements   of the Pledgor if more than one are joint and several and all shall be binding upon the   personal representatives, heirs, successors and assigns of the Pledgor.   7. FINAL AGREEMENT.  BY SIGNING THIS DOCUMENT EACH   PARTY REPRESENTS AND AGREES THAT:  (A) THIS DOCUMENT REPRESENTS   THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE   SUBJECT MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY   COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE OF   TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF,   UNLESS SUCH COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN     





 







DLH– Security Agreement     Page 8 of 9   6572663.2   OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE   CONTRARY, (C) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN   THE PARTIES, AND (D) THIS DOCUMENT MAY NOT BE CONTRADICTED BY   EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL   AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.    8. Waiver of Notice for Immediate Writ of Possession.  Pledgor hereby   acknowledges that the Indebtedness arises out of a “commercial transaction” as that term is defined   in the O.C.G.A. Sec. 44-14-260 (1) concerning foreclosure of mortgages on personalty, and agrees   that if a default has occurred and is continuing, Bank shall have the right to an immediate writ of   possession without notice of hearing, and Pledgor hereby knowingly and intelligently waives any   and all rights it may have to any notice and posting of a bond prior to seizure by Bank, its   transferees, assigns or successors in interest of the Collateral or any portion thereof. The foregoing   is intended by Pledgor as a “waiver” as that term is defined in the O.C.G.A. Sec 44-14-260 (3)   relating to foreclosure of mortgages on personalty.    9. Inactive Subsidiaries. Notwithstanding anything to the contrary in this   Agreement,  the Bank acknowledges that the Board of Directors of the Pledgor has previously   authorized the dissolution of Pledgor’s inactive subsidiaries set forth on Schedule 7.14(3) of the   Loan Agreement and from time to time during the 180-day period from the date hereof, the Pledgor   may liquidate and dissolve one or more of such inactive subsidiaries and remove such subsidiaries   from the Collateral subject to this Agreement. Pledgor shall not be required to obtain the prior   written consent of the Bank with respect to any such dissolution but shall provide written notice   thereof within three (3) business days of the effective date of any such dissolution. In the event   that at the end of such 180-day period all such subsidiaries have not yet been dissolved, the Pledgor   shall report the status of such dissolutions to the Bank and may request an additional 60-day   extension from the Bank to complete the dissolutions of all remaining inactive subsidiaries.                        [Signatures begin on next page]        





 







DLH– Security Agreement     Page 9 of 9   6572663.2   IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be executed   by their authorized representatives as of the day and year first written above.               BANK:   FIFTH THIRD BANK        ADDRESS:   BY:/   Fifth Third Bank       3344Peachtree Road, NE Suite 800   Name:  __                  __________________  Atlanta, GA 30326           Title: __                                 ___________                         PLEDGOR:   [DLH HOLDINGS CORP.]/   [DLH SOLUTIONS, INC.]/   [DANYA INTERNATIONAL, LLC]:        ADDRESS:   BY:                         DLH Holdings Corp.       3565 Piedmont Road, NE   Name:  Kathryn JohnBull   Atlanta, GA 30305           Title: Chief Financial Officer