Document:

Ex#10.4 - Form of Warrant Agreement

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UNPON EXERCISE HAS NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE BLUE SKY LAWS, AND IS SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS.  NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UNPON EXERCISE  MAY NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT AND APPLICABLE BLUE SKY LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Warrant No. _____

WARRANT TO PURCHASE COMMON STOCK
of
DIGITILITI, INC.
a Delaware corporation

Void after June __, 2016

This certifies that, for value received, [_____________], or his, her or its successors or assigns (“Holder”), is entitled during the Exercise Period (as defined below), subject to the terms set forth below, to purchase from Digitiliti, Inc., a Delaware corporation (the “Company”), up to [_______] shares of Common Stock, par value $.001 per share, of the Company (“Common Stock”) at the price of $0.06 per share, subject to adjustment as set forth below (the “Purchase Price”), upon surrender of this Warrant at the principal office of the Company referred to below, with the subscription form attached hereto (the “Subscription Form”) duly executed, and simultaneous payment therefor in the manner specified in Section 1.  The Purchase Price and the number of shares of Common Stock purchasable hereunder are subject to adjustment as provided in Section 3.  This Warrant is one of the warrants (collectively, the “Warrants”) referred to and issued pursuant to that certain Junior Secured Convertible Promissory Note and Warrant Purchase Agreement dated as of June ___, 2011 (the “Purchase Agreement”).
As used herein, “Exercise Date” means the particular date (or dates) on which this Warrant is exercised. “Exercise Period” means the period during which this Warrant is exercisable; such period shall begin on the date hereof and shall end at 6:00 p.m., Central Daylight Time, on June __, 2016.  “Issue Date” means the date hereof, June ___, 2011.  “Warrant” includes this Warrant and any warrant delivered in substitution or exchange therefor as provided herein.  “Warrant Shares” means any shares of Common Stock acquired by Holder upon exercise of this Warrant.
1.    Exercise.
(a)    This Warrant may be exercised, in whole or in part, at any time or from time to time, on any business day during the Exercise Period, by surrendering it at the principal office of the Company at 266 East 7th Street, Saint Paul, MN 55101, together with an executed Subscription Form and a check in an amount equal to (i) the number of Warrant Shares being purchased, multiplied by (ii) the Purchase Price.   
(b)    This Warrant may be exercised for less than the full number of Warrant Shares as of the Exercise Date. Upon such partial exercise, this Warrant shall be surrendered, and a new Warrant of the same tenor and for the purchase of the Warrant Shares not purchased upon such exercise shall be issued to Holder by the Company.
(c)    A Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the Warrant Shares issuable upon such exercise shall be treated for all purposes as the holder of such shares of record as of the close of business on such date. As soon as practicable on or after such date, and in any event within ten business days thereafter, the Company shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of shares of Common Stock issuable upon such exercise.
(d)    Notwithstanding the foregoing, the Company shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable 

securities registration requirements or registrations under applicable securities laws.  Nothing herein shall obligate the Company to effect registrations under federal or state securities laws.  If registrations are not in effect and if exemptions are not available when the Holder seeks to exercise the Warrant, the Warrant exercise period will be extended, if need be, to prevent the Warrant from expiring, until such time as either registrations become effective or exemptions are available, and the Warrant shall then remain exercisable for a period of at least 30 calendar days from the date the Company delivers to the Holder written notice of the availability of such registrations or exemptions.  The Holder agrees to execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company, or the registrations made, for the issuance of the Warrant Shares.
2.    Payment of Taxes. All shares of Common Stock issued upon the exercise of this Warrant shall be validly issued, fully paid and non-assessable and the Company shall pay all taxes and other governmental charges that may be imposed in respect of the issue or delivery thereof, other than any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for shares of Common Stock in any name other than that of the registered Holder of this Warrant, and in such case the Company shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the Company's satisfaction that no tax or other charge is due.
3.    Certain Adjustments.
(a)     Adjustment for Reorganization, Consolidation, Merger. In case of any reclassification or change of outstanding Company securities, or of any reorganization of the Company (or any other entity, the stock or securities of which are at the time receivable upon the exercise of this Warrant) or any similar corporate reorganization on or after the date hereof, then and in each such case Holder, upon the exercise hereof at any time after the consummation of such reclassification, change, reorganization, merger or conveyance, shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the exercise hereof prior to such consummation, the stock or other securities or property to which Holder would have been entitled upon such consummation if Holder had exercised this Warrant immediately prior thereto, the terms of this Section 3 shall be applicable to the Company securities properly receivable upon the exercise of this Warrant after such consummation.
(b)    Adjustments for Dividends in Common Stock. If the Company at any time or from time to time after the Issue Date declares any dividend on the Common Stock which is payable in shares of Common Stock, the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased and the Purchase Price shall be proportionately decreased.
(c)    Stock Split and Reverse Stock Split. If the Company at any time or from time to time after the Issue Date effects a subdivision of the Common Stock, the Purchase Price shall be proportionately decreased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time or from time to time after the Issue Date combines the outstanding shares of Common Stock into a smaller number of shares, the Purchase Price shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased. Each adjustment under this Section 3(c) shall become effective at the close of business on the date the subdivision or combination becomes effective.
(d)    Accountants' Certificate as to Adjustment. In each case of an adjustment in the shares of Common Stock receivable on the exercise of this Warrant, if Holder so requests in writing, the Company at its expense shall cause its independent public accountants to compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment and showing the facts upon which such adjustment is based. The Company will mail a copy of each such certificate to each holder of a Warrant at the time outstanding. 
(e)    Rights Under Warrant Agreement. The Company will not, by amendment of its Certificate of Incorporation, as amended, or through reorganization, consolidation, merger, dissolution, issue or sale of securities, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of the Warrants under this Warrant Agreement.

4.    Notices of Record Date. If either (a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or (b) the Company undertakes a voluntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company shall mail or cause to be mailed to each holder of a Warrant at the time outstanding a notice specifying, as the case may be, (1) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (2) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up.
5.    No Rights as Shareholder. Prior to the exercise of this Warrant, Holder shall not be entitled to any rights of a shareholder with respect to the Warrant Shares, including without limitation the right to vote such Warrant Shares, receive dividends or other distributions thereon or be notified of shareholder meetings, and Holder shall not be entitled to any notice or other communication concerning the business or affairs of the Company. However, nothing in this Section 5 shall limit the right of Holder to be provided the notices required under this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.
6.    Notice of Transfer of Warrant or Resale of the Warrant Shares.

(a)    The Holder, by acceptance hereof, agrees to give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such Holder's intention to do so, describing briefly the manner of any proposed transfer.  Promptly upon receiving such written notice, the Company shall present copies thereof to the Company's counsel.  If in the opinion of such counsel the proposed transfer may be effected without registration or qualification under any federal or state securities laws, the Company, as promptly as practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to transfer this Warrant or the Warrant Shares received upon the exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company..

(b)    If, in the opinion of the Company's counsel, the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section 6 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Company shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such transfer or disposition as, in the opinion of such counsel, are permitted by law.
7.    Investment Intent. Holder, by acceptance hereof, agrees that this Warrant and the Warrant Shares to be issued upon exercise hereof are being acquired for investment and not with a view towards resale and that it will not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances which will not result in a violation of the Securities Act. Upon exercise of this Warrant, Holder shall confirm in writing, in the form of Exhibit A, that the Warrant Shares so purchased are being acquired for investment and not with a view toward distribution or resale. This Warrant and all shares of Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a similar legend indicated on the first page of this Warrant.
8.    Loss or Mutilation. Upon receipt by the Company of evidence satisfactory to it (in the exercise of reasonable discretion) of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of loss, theft or destruction, of indemnity satisfactory to it (in the exercise of reasonable discretion), and in the case of mutilation, upon surrender and cancellation thereof, the Company will execute and deliver in lieu thereof a new Warrant of like tenor.
9.    Notices. All notices, requests, consents and other communications given hereunder to any party shall be deemed to be sufficient if contained in a written instrument: (a) delivered in per-son, (b) sent by confirmed facsimile transmission to the number provided by the receiving party, or (c) duly sent by first class registered or certified mail, 

return receipt requested, postage prepaid, or overnight delivery service (e.g., Federal Express), addressed to such party at the address designated in writing by receiving party, as may be revised by the receiving party.  All such notices and communications shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of facsimile transmission, on the date of transmission, and (iii) in the case of mailing or delivery by service, on the date of delivery as shown on the return receipt or delivery service statement.
10.    Change; Waiver. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Company and the Majority Noteholders (as defined in the Purchase Agreement).
11.    Headings. The headings in this Warrant are for purposes of convenience in reference only, and shall not be deemed to constitute a part hereof. 
12.    Governing Law. This Warrant is delivered in Minnesota and shall be construed and enforced in accordance with and governed by the internal laws, and not the law of conflicts thereof.

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Warrant as of the date first above written.

COMPANY:

DIGITILITI, INC.

By:                                
Name:________________________________________
Its: ___________________________________________

EXHIBIT A
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises this Warrant and purchases ____________ of the number of shares of Common Stock of DIGITILITI, INC., a Delaware corporation, purchasable with this Warrant, and makes payment therefore in the amount of $__________.
The undersigned hereby represents and warrants that the undersigned is acquiring such shares of Common Stock for the undersigned's own account for investment purposes only, and not for resale or with a view to distribution of such shares or any part thereof.

Dated:_________________
_________________________________________
(Signature of Registered Owner)

_________________________________________
(Street Address)

_________________________________________
(City), (State), (Zip)

FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under the within Warrant, with respect to the number of shares of Common Stock set forth below:
Name of Assignee                 Address                 No. of Shares

and does hereby irrevocably constitute and appoint ___________________________ Attorney to make such transfer on the books of DIGITILITI, INC., a Delaware corporation, maintained for the purpose, with full power of substitution in the premises. 
Dated: ___________________

_______________________________
(Signature)
                            
_______________________________
(Print Name)

_______________________________
(Witness)

_______________________________
(Print Name)

6081426v1Exhibit 10.5 (9/21/11)

SEPARATION AGREEMENT

This Agreement and General Release (the "Agreement") is made and entered into this 29 day of June, 2011, by and between Digitiliti. Inc., a Delaware corporation, with its principal office at 266 East Seventh Street, St. Paul, MN 55101 ("Company") and Ehssan Taghizadeh ("Employee") collectively referred to as the "Parties".

RECITALS

WHEREAS, Employee was employed by Company as President and Chief Executive Officer pursuant to that agreement dated September 30,2010 ("Employment Agreement"); and

WHEREAS, Employee's employment relationship with Company has terminated; and

WHEREAS, under the terms of the Employment Agreement and in recognition that Company and Employee desire to compromise and settle any and all claims Employee may have or claims to have against Company, Company will make a payment of money in consideration of the execution of a release on the terms and conditions provided herein; and,

WHEREAS, Employee desires receiving such payments and therefore agrees the receipt of such consideration
represents the full and complete satisfaction under the Employment Agreement including the satisfaction of any
and all claims or liabilities Employee may have or claim to have.

NOW, THEREFORE, in consideration of the foregoing, and for other consideration described below, the receipt and sufficiency of which is hereby acknowledged, it is agreed as follows:

1.Effective Termination Date. Employee's employment with Company has terminated June __, 2011 and, as of that date, Employee is no longer authorized to act on Company's behalf in the capacity of an officer or employee of Company, and, accordingly, Employee may act only in a manner consistent with the terms herein.

		
	2.
	Compensation for Past Services/Expenses. Company agrees to pay Employee compensation for the following:

(i)regular hours worked through the termination date;
(ii)accrued, unused Vacation in the amount of $7,115.38.

In addition, during the five (5) business days following the termination date, Employee may present receipts in accordance with Company's expense reimbursement policy for any expenses Employee has incurred prior to June 30, 2011.

3.Non-disparagement. Parties agree not to disparage or defame the other Party or any of Company's officers. agents, directors, representatives and employees in any respect or make any comments concerning the employment relationship, except as agreed herein. Moreover, unless agreed to by both Parties, Parties agree not to make any further statements concerning Employee's relationship with Company either in the employment or personal context with exception of necessary public filings with the SEC.

4.Reaffirmation of Covenant Not to Comoete. Employee hereby reaffirms his promises of confidentiality, non-competition and non-soliCitation contained in Sections 3.4. and 3.5 of the Employment Agreement.

5.Payments. Company hereby agrees to pay Employee cash and non-cash payments as follows and as set out on Exhibit B - Total Payments and Payment Terms:
		
	a)
	Total cash payments as set forth on Exhibit B as due under the Employment Agreement for severance payments, earned and unused vacation as well as reimbursable expenses;

		
	b)
	Common stock of Company in the amount of 597,129 shares as agreed to by both parties for five months of Employee's unpaid net salary, aU applicable federal and state taxes have already been paid in full by Company; and,

		
	c)
	Five-year stock warrants in the amount of 200,000 and valued at $.06 per share as consideration for entering into this Agreement, including but not limited to the release of all daims in Section 6 and covenant not to sue in Section 7. 

Any cash payments under this section shall be subject to all applicable deductions for federal and state income tax withholding and employment taxes.

Payments shall continue to be subject to the surviving sections of the Employment Agreement per section 9, below.

Except for sales of the Company's securities under that Junior Secured Convertible Promissory Note and Warrant Purchase Agreement made as of June _, 2011 ("Purchase Agreement"), in the event of a third party investment into Company of a minimum of ten percent (10%) of Company's value, or the equivalent shares of stock, which value will be as used in the transaction and agreed to by Company and the third party, the payments set out in this Agreement will be accelerated and paid out to Employee in a lump sum on the date of closing of the investment transaction and/or receipt of monies due and owing 

Digitiliti Confidential - Separation Agreement

Company into Company's designated account or control.

6.    Release and Discharge of All Claims. In consideration of the payment to be made under Section 5, Employee hereby agrees and does hereby permanently and irrevocably remise, release and forever discharge Company and its respective directors, officers, advisory board members, consultants, agents, representatives, employees, shareholders, attorneys and assigns (hereinafter collectively referred to as the "Released Parties"). all of whom are third party beneficiaries hereof, from all manner of actions and causes of action, suits, debts, claims and demands whatsoever, in law or in equity, known or unknown, which Employee may have or may claim to have from the beginning of time up to and including the effective date of termination
against any of the Released Parties, arising out of Employee's employment with Company or termination therefrom, or in any other manner concerning any relationship Employee may have had with all or any of the Released Parties. Without
limiting the foregoing, Employee expressly agrees to refrain forever from instituting any action or making any demand or claim of any kind for any compensation, bonus, wages, unpaid commiSSions, vacation, other payments or rights; discrimination,
harassment, or retaliation; or any alleged violation of the Minnesota Human Rights Act; Title VII of the Civil Rights Act of 1964, as amended, 42, U.S.C. § 2000e et seq., any other federal, state, or local civil rights laws; the AGE DISCRIMINATION IN EMPLOYMENT ACT, 29 U.S.C. § 621 et seq., the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., the Americans with Disabilities Act Amendments Act; the Family and Medical Leave Act. 29 U.S.C. § 2601 e/ seq.; Section 4980B of Internal
Revenue Code of 1986 (COBRA); the Fair Labor Standards Act; the Worker Adjustment and Retraining Notification Act; the Minnesota Whistleblower Act; claims for alleged breach of fiduciary duty under Section 409 of the Employee Retirement Income Security Act alleging the impairment in value of Employee's accounts, if any; claims for breach of contract, fraud, or misrepresentation; defamation; intentional or negligent infliction of emotional distress; breach of covenant of good faith and fair dealing; promissory estoppel; negligence; wrongful separation of employment; and any other claims for wrongful employment practices. 

Nothing contained herein shall be construed to prohibit Employee from filing a charge with the Equal Employment Opportunity Commission ("EEOC") or any state or local agency, but Employee's release contained in this Section 6 includes a release of Employee's right to file a court action or seek individual remedies of damage in any EEOC-filed court action or any other proceeding, including, but not limited to, any administrative proceeding. Employee's release of these rights shall apply with full force and effect to any proceedings arising from or relating to any administrative charge.

7.     Covenant Not To Sue. Employee agrees and covenants that neither Employee nor anyone claiming on behalf of or through Employee will claim, charge, sue or cause to permit any third party to claim, charge or sue any of the Released Parties for any claims released in this Agreement.

8.     Entire Agreement. This Agreement contains the entire agreement between the Employee and the Company and supersedes and cancels any and all other prior agreements, whether oral or in writing, between the Company and Employee with respect to the matters referred to herein. Notwithstanding any language in this Agreement to the contrary, Sections 3.4., 3.5., 3.6., and 3.7. of the Employment Agreement are not cancelled, terminated, or superseded in any respect.

9.     General Cooperation. For the duration of any payments hereunder or, in any event, for no more than three months from the Effective Date of this Agreement, Employee agrees to be available to answer questions and attend meetings by telephone or in person as reasonably requested by Company and as agreed to by Employee as it relates to Company's business as well as Employee's former duties and responsibilities. Company will not unreasonably request assistance and Employee will not unreasonably deny providing such assistance to Company. Company acknowledges Employee may initiate meeting requests as well. Both Company and Employee agree to use good faith and best efforts in requesting and responding to meeting requests as well as accommodating the other. If Employee engages in other business activities, including full time employment, both Parties will cooperate to schedule meetings in a manner that least interferes with the performance of either Party's business activities. Accordingly, the requesting Party shall provide the other Party no less than twenty-four (24) hours notice of a meeting. In the event the meeting requested is in person and the other Party is unavailable to meet in person, the non-requesting Party will either be available by telephone or offer at least two dates within the following five (5) business days when it will be available.

10.    Indemnification. Company acknowledges it has maintained Directors and Officers Insurance (D&O) Coverage throughout the period of employment of Employee. Furthermore, pursuant to its corporate bylaws, Article VIII - Indemnification of Directors and Officers, Company agrees to indemnify Employee, to the maximum extent permitted by law, against any and all liabilities, costs, expenses, amounts paid in settlement and damages incurred by Employee as a result of any lawsuit, judicial, administrative or investigative proceeding (Criminal or civil, including an action by or in the right of the Company) in which
Employee at any time is sued or made a party, or is threatened to be made a party, as a result of Employee's service as an officer or member of the Board of Directors of the Company (or Employee's providing services at the request of the Company as
a director, Officer, agent or employee of another corporation or other entity).

11.    Miscellaneous. Employee represents that in executing this Agreement Employee is not relying and has not relied on any representations or statements not set forth in this Agreement. Employee acknowledges that he/she has been advised and has been given the opportunity to seek legal advice concerning this Agreement prior to entering into this Agreement This Agreement, together with the attached Exhibits. incorporated herein by reference, constitutes the entire agreement and understanding of the Parties and supersedes all prior agreements and understandings and shall be construed as a waiver of all prior understandings, 

Digitiliti Confidential - Separation Agreement

claims and agreements relating to the subject matter of this Agreement.

12.    Liquidation of Claim Accounts. Company's maximum liability under this Agreement shall be the total amount payable to Employee under Section 5 and Employee releases, discharges and waives any and all claims, known and unknown, against the Released Parties. whether legal. equitable, or otherwise that Employee may now have or may have in the future.

13.    Severability. If, for any reason, a court of    competent jurisdiction finds any provision of this Agreement, or any portion thereof, to be unenforceable that provision will be severed or adjusted as held by the court and otherwise enforced to the maximum extent permissible so as to effect the intent of the Parties, and the remainder of this Agreement will continue in full force and effect.

14.    Rescission.
(i) To the extent that Employee waives and releases all claims Employee may have against the Released Parties under Minnesota Human Rights Act, Minn. Stat §363.01 ~. or other local law, Employee may rescind this waiver and release of such claims within fifteen (15) calendar days of signing this Agreement. Employee further acknowledges and agrees that Employee has been informed of the right to rescind this Agreemem to reinstate potential claims under the Age Discrimination in Employment Act, 29 U.S.C. §621, et. seq. within seven (7) calendar days of signing this Agreement

(ii) To be effective, Employee's rescission must be in writing and delivered to Digitiliti, Inc., 266 East Seventh Street, st. Paul, MN 55101, either by hand or by mail within the respective 15-day or 7-day period. If sent by mail, the rescission must be: a)
postmarked within the respective 15-day or 7 -day period; b) properly addressed to Company Human Resources department; and c) sent by certified mail, return receipt requested.

15.    Cancellation By Company. If Employee exercises Employee's right of rescission under Section 13 of this Agreement, the Company will have the right, exercisable by written notice delivered to Employee, to terminate this Agreement in its entirety, in which event Company will have no obligation whatsoever to Employee hereunder, except as otherwise provided in this Agreement, and all obligations to Employee will be as provided under the original terms of the Employment Agreement, which shall then be controlling and enforceable. If Employee exercises Employee's right of rescission and the Company does not exercise its right to terminate this Agreement hereunder, the remaining proVisions of this Agreement shall remain valid and
continue in full force and effect.

16.    Performance By Parties. Nothing contained herein shall operate as a waiver or an election of remedies by a Party should the other Party fail to perform any duty or obligation imposed upon it hereunder. Notwithstanding anything contained herein to the contrary, this Agreement and the duties and obligations of the Parties hereunder shall continue in full force and effect irrespective of any violation of any term or provision of this Agreement by the Parties. In the event that a Party violates any
term or provision of this Agreement, then the violating Party shall pay any of the non-viOlating Party's reasonable attorneys' fees related to such violation.

17.    Consideration Period. Employee has twentyone (21) calendar days from the date of this Agreement to consider whether or not to sign it; the Agreement may be Signed anytime during the 21 day period. If, within the 21-day period, Employee fails to
sign this Agreement, this entire Agreement is null and void. If Employee executes this Agreement prior to the expiration of the 21-day period, Employee acknowledges that Company notified him of his right to consider Company's offer of settlement for a period of 21 days and that he voluntarily waived his right to do so.

18.    Governing Law and Venue. The Parties agree that this Agreement will be exclusively governed, interpreted and construed in accordance with the laws of the State of Minnesota and applicable federal law. The location for the resolution of a/l disputes
shall be exclusively in Hennepin County, Minnesota and Parties waive any right to contest this venue location or the claim that this venue location is an inconvenient forum for the resolution of disputes.

UNDERSTOOD AND AGREED:

EHSSAN TAGHIZADEH •
	
	
	 

	Signature

	 

	 

	Date

Digitiliti Confidential - Separation Agreement

	
	
	DIGITILITI, INC.

	 

	Bill McDonald, CFO

	 

	 

	Date

EXHIBIT A - EM.J'LOYMENT AGREEMENT

EXHIBIT B - TOTAL PAYMENTS AND PAYMENT TERMS

	
				
	Based on the original annual compensation rate of $185,000
	 

	CASH PAYMENTS
	 

	Cash Severance, 50% of base salary
	$
	92,500.00
	

	First HaIf 2011 Bonus as of June 30
	$
	10,000.00
	

	Fourth Quarter 2010 Bonus
	$
	20,000.00
	

	Vacation
	$
	7,115.38
	

	Expenses
	$
	13,000.00
	

	Sub-Total
	$
	130,815.38
	

	 
	 

	 
	 

GOOD FAITH DISCOUNr $13.115.38
TOTAL CASH PAYMENTOUE $111,500.00
PAYMENT TERMS - CASH PAYMENT
cash due at Closing of First Tranche $70,500.00
Cash due at Closing of Second Tranche $47,000.00*"
NON-CASH PAYMENTS
Common Stock 597.129 shares"·
five-wa! Stock Warrnnts 200 000 shares at $.06lshare .... ••
TOTAl STOCK 797.129 shares
The Good Faith Discount is a reduction in cash that was offered by Employee to benefit the Company.
.... Empfoyee has the right to either (t) use this amount 10 purchase Notes and Warrants sold under the
Purchase Agreement on the same terms as under the Purchase Agreement or (2) receive this amount
in cash. However, if this amount is used 10 purchase Notes and Warrants, the amount shall not be
counted towards reaching either the Minimum or Maximum amounts under the Second Tranche.
.... During the period of February 1 to June 30, 20t 1, Employee suspended cash payment of his net base
salary to benefit Ute cash position of Company. The receipt of stock for salary due and owing was
agreed upon by both parties and represents a net cash equivalent equal to Employee's monthly salary
less applicable taxes that have already been paid in full by the Company.
_ ... This special grant of stock warrants was agreed to by both parties and SeJVeS as consideration in 6eu
of cash for the surrendering of rights as set out under this Separation Agreement..
M9SI61v5

Digitiliti Confidential - Separation Agreement

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