Exhibit 10.2

EXECUTION VERSION

SECURITY AGREEMENT

This SECURITY AGREEMENT (this “Agreement”) is made this 22 day of December,
2006, among the Grantors listed on the signature pages hereof and those
additional entities that hereafter become parties hereto by executing the form
of Supplement attached hereto as Annex 1 (collectively, jointly and severally,
“Grantors” and each individually “Grantor”), and WELLS FARGO FOOTHILL, INC., a
California corporation, in its capacity as administrative agent (together with
its successors and assigns in such capacity, “Agent”) for the Lender Group (as
defined in the Credit Agreement referred to below) and the Bank Product Provider
(as defined in the Credit Agreement referred to below).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as
amended, restated, supplemented or otherwise modified from time to time,
including all schedules thereto, the “Credit Agreement”), by and among the
lenders identified on the signature pages thereof (such lenders, together with
their respective successors and permitted assigns, are referred to hereinafter
each individually as a “Lender” and collectively as the “Lenders”), the Agent,
Velocity Express Corporation, a Delaware corporation (“Parent”), each of
Parent’s Subsidiaries identified on the signature pages thereof as a Borrower
(such Subsidiaries are referred to hereinafter each individually as a
“Borrower”, and individually and collectively, jointly and severally, as the
“Borrowers”), and each of Parent’s Subsidiaries identified on the signature
pages thereof as a Guarantor (such Subsidiaries, together with Parent, are
referred to hereinafter each individually as a “Guarantor”, and individually and
collectively, jointly and severally, as the “Guarantors”), the Lender Group is
willing to make certain financial accommodations available to Borrowers from
time to time pursuant to the terms and conditions thereof,

WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group
and the Bank Product Provider in connection with the transactions contemplated
by the Credit Agreement, this Agreement and the other Loan Documents (as defined
in the Credit Agreement), and

WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement
and the other Loan Documents and to induce the Lender Group to make financial
accommodations to Borrowers as provided for in the Credit Agreement, Grantors
have agreed to grant a continuing security interest in and to the Collateral (as
defined below) in order to secure the prompt and complete payment, observance
and performance of, among other things, (a) all of the present and future
obligations of Grantors arising from this Agreement, the Credit Agreement, and
the other Loan Documents, including under any Guaranty (as defined in the Credit
Agreement), (b) all Bank Product Obligations (as defined in the Credit
Agreement), and (c) all Obligations (as defined in the Credit Agreement) of
Borrowers, including, in the case of each of clauses (a), (b) and (c),
reasonable attorneys fees and expenses and any interest, fees or expenses that
accrue after the filing of an Insolvency Proceeding (as defined in the Credit
Agreement), regardless of whether allowed or allowable in whole or in part as a
claim in any Insolvency Proceeding (clauses (a), (b), and (c) being hereinafter
referred to as the “Secured Obligations”).

NOW, THEREFORE, for and in consideration of the recitals made above and other
good and valuable consideration, the receipt, sufficiency and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:

1. Defined Terms. All capitalized terms used herein (including in the preamble
and recitals hereof) without definition shall have the meanings ascribed thereto
in the Credit Agreement. Any terms used

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in this Agreement that are defined in the Code shall be construed and defined as
set forth in the Code unless otherwise defined herein or in the Credit
Agreement; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 of the Code shall
govern. In addition to those terms defined elsewhere in this Agreement, as used
in this Agreement, the following terms shall have the following meanings:

(a) “Account” means an account (as that term is defined in the Code).

(b) “Account Debtor” means any Person who is obligated on an Account, chattel
paper, or a general intangible.

(c) “Agent’s Lien” has the meaning specified therefor in the Credit Agreement.

(d) “Bank Product Obligations” has the meaning specified therefor in the Credit
Agreement.

(e) “Bank Product Provider” has the meaning specified therefor in the Credit
Agreement.

(f) “Books” means books and records (including each Grantor’s Records
indicating, summarizing, or evidencing such Grantor’s assets (including the
Collateral) or liabilities, each Grantor’s Records relating to such Grantor’s
business operations or financial condition, and each Grantor’s goods or General
Intangibles related to such information).

(g) “Borrower” has the meaning specified therfor in the recitals to this
Agreement.

(h) “Cash Equivalents” has the meaning specified therefor in the Credit
Agreement.

(i) “Chattel Paper” means chattel paper (as that term is defined in the Code)
and includes tangible chattel paper and electronic chattel paper.

(j) “Code” means the New York Uniform Commercial Code, as in effect from time to
time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Agent’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies.

(k) “Collateral” has the meaning specified therefor in Section 2.

(l) “Commercial Tort Claims” means commercial tort claims (as that term is
defined in the Code), and includes those commercial tort claims listed on
Schedule 1 attached hereto (“Commercial Tort Claims”).

(m) “Copyrights” means works of authorship (whether or not published, and
whether or not copyrightable), copyrights and copyright registrations, including
the copyright registrations and recordings thereof and all applications in
connection therewith listed on Schedule 2 attached hereto and made a part
hereof, and (i) all reissues, restorations, reversions, continuations,
extensions or renewals thereof, (ii) all income, royalties, damages and payments
now and hereafter due and/or payable under and with respect thereto, including
payments under all licenses entered into in connection therewith and damages and
payments for past or future infringements or dilutions thereof, (iii) the right
to sue for past, present and future infringements and dilutions thereof,
(iv) the goodwill of each Grantor’s business symbolized by the foregoing and
connected therewith, and (v) all of each Grantor’s rights corresponding thereto
throughout the world.

 

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(n) “Copyright Security Agreement” means each Copyright Security Agreement among
Grantors, or any of them, and Agent, for the benefit of the Lender Group and the
Bank Product Provider, in substantially the form of Exhibit A attached hereto,
pursuant to which Grantors have granted to Agent, for the benefit of the Lender
Group and the Bank Product Provider, a security interest in all their respective
Copyrights.

(o) “Credit Agreement” has the meaning specified therefor in the recitals to
this Agreement.

(p) “Deposit Account” means any deposit account (as that term is defined in the
Code).

(q) “Equipment” means equipment (as that term is defined in the Code).

(r) “Event of Default” has the meaning specified therefor in Section 7 of the
Credit Agreement.

(s) “General Intangibles” means general intangibles (as that term is defined in
the Code) and, in any event, including payment intangibles, contract rights,
rights to payment, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill (including the goodwill associated with any
Trademark, Patent, or Copyright), Patents, Trademarks, Copyrights, URLs and
domain names, industrial designs, other industrial or Intellectual Property or
rights therein or applications therefor, whether under license or otherwise,
rights in programs, programming materials, blueprints, drawings, purchase
orders, customer lists, monies due or recoverable from pension funds, route
lists, rights to payment and other rights under any royalty or licensing
agreements, including Intellectual Property Licenses, infringement claims,
rights in computer programs, information contained on computer disks or tapes,
software, literature, reports, catalogs, pension plan refunds, pension plan
refund claims, insurance premium rebates, tax refunds, and tax refund claims,
uncertificated securities, and any other personal property other than Commercial
Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment
Related Property, Negotiable Collateral, and oil, gas, or other minerals before
extraction.

(t) “Grantor” and “Grantors” has the meaning specified therefor in the recitals
to this Agreement.

(u) “Guaranty” has the meaning specified therefor in the Credit Agreement.

(v) “Insolvency Proceeding” has the meaning specified therefor in the Credit
Agreement.

(w) “Intellectual Property” means any and all Intellectual Property Licenses,
Patents, Copyrights, Trademarks, the goodwill associated with such Trademarks,
confidential and proprietary information, trade secrets and know-how (including
processes, schematics, databases, formulae, drawings, prototypes, models,
designs, technical data, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals), all
computer software, Internet web sites, and all other intellectual property or
proprietary rights and claims or causes of action arising out of or related to
an infringement, misappropriation or other violation of any of the foregoing,
including rights to recover for past, present and future violations thereof.

(x) “Intellectual Property Licenses” means all rights under or interest in any
patent, trademark, copyright or other intellectual property, including software
license agreements with any other party, whether the applicable Grantor is a
licensee or licensor under any such license agreement, including the license
agreements listed on Schedule 3 attached hereto and made a part hereof, and the
right to use the foregoing in connection with the enforcement of the Lender
Group’s rights under the Loan Documents, including the right to prepare for sale
and sell any and all Inventory and Equipment now or hereafter owned by any
Grantor and now or hereafter covered by such licenses.

 

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(y) “Inventory” means inventory (as that term is defined in the Code).

(z) “Investment Related Property” means (i) investment property (as that term is
defined in the Code), and (ii) all of the following regardless of whether
classified as investment property under the Code: all Pledged Interests, Pledged
Operating Agreements, and Pledged Partnership Agreements.

(aa) “Lender Group” has the meaning specified therefor in the Credit Agreement.

(bb) “Loan Document” has the meaning specified therefor in the Credit Agreement.

(cc) “Negotiable Collateral” means letters of credit, letter of credit rights,
instruments, promissory notes, drafts and documents (as that term is defined in
the Code) and, in any event, including payment intangibles, contract rights,
rights to payment, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill (including the goodwill associated with any
Trademark, Patent, or Copyright), Patents, Trademarks, Copyrights, URLs and
domain names, industrial designs, other industrial or Intellectual Property or
rights therein or applications therefor, whether under license or otherwise,
programs, programming materials, blueprints, drawings, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists, rights to
payment and other rights under any royalty or licensing agreements, including
Intellectual Property Licenses, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, pension plan refunds, pension plan refund claims, insurance premium
rebates, tax refunds, and tax refund claims, uncertificated securities, and any
other personal property other than Commercial Tort Claims, money, Accounts,
Chattel Paper, Deposit Accounts, goods, Investment Related Property, Negotiable
Collateral, and oil, gas, or other minerals before extraction.

(dd) “Obligations” has the meaning specified therefor in the Credit Agreement.

(ee) “Patents” means inventions, discoveries and ideas, whether patentable or
not, and all patents, registrations and applications therefor, including the
patents and patent applications listed on Schedule 4 attached hereto and made a
part hereof, and (i) all reissues, continuations, continuations-in-part,
substitutes, extensions or renewals thereof and improvements thereon, (ii) all
income, royalties, damages and payments now and hereafter due or payable under
and with respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements
or dilutions thereof, (iii) the right to sue for past, present and future
infringements and dilutions thereof, and (iv) all of each Grantor’s rights
corresponding thereto throughout the world.

(ff) “Patent Security Agreement” means each Patent Security Agreement among
Grantors, or any of them, and Agent, for the benefit of the Lender Group and the
Bank Product Provider, in substantially the form of Exhibit B attached hereto,
pursuant to which Grantors have granted to Agent, for the benefit of the Lender
Group and the Bank Product Provider, a security interest in all their respective
Patents.

(gg) “Permitted Liens” has the meaning specified therefor in the Credit
Agreement.

(hh) “Person” has the meaning specified therefor in the Credit Agreement.

(ii) “Pledged Companies” means, each Person listed on Schedule 5 hereto as a
“Pledged Company”, together with each other Person, all or a portion of whose
Stock, is acquired or otherwise owned by a Grantor after the Closing Date;
provided, that, no Person formed under the laws of a jurisdiction other than the
United States which is not directly owned by a Loan Party (each such person, an
“Indirect Foreign Subsidiary”) shall be a Pledged Company.

(jj) “Pledged Interests” means all of each Grantor’s right, title and interest
in and to all of the Stock of any Person other than an Indirect Foreign
Subsidiary, now or hereafter owned by such Grantor,

 

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regardless of class or designation, including, in each of the Pledged Companies,
and all substitutions therefor and replacements thereof, all proceeds thereof
and all rights relating thereto, including any certificates representing the
Stock, the right to request after the occurrence and during the continuation of
an Event of Default that such Stock be registered in the name of Agent or any of
its nominees, the right to receive any certificates representing any of the
Stock and the right to require that such certificates be delivered to Agent
together with undated powers or assignments of investment securities with
respect thereto, duly endorsed in blank by such Grantor, all warrants, options,
share appreciation rights and other rights, contractual or otherwise, in respect
thereof and of all dividends, distributions of income, profits, surplus, or
other compensation by way of income or liquidating distributions, in cash or in
kind, and cash, instruments, and other property from time to time received,
receivable, or otherwise distributed in respect of or in addition to, in
substitution of, on account of, or in exchange for any or all of the foregoing.

(kk) “Pledged Interests Addendum” means a Pledged Interests Addendum
substantially in the form of Exhibit C to this Agreement.

(ll) “Pledged Operating Agreements” means all of each Grantor’s rights, powers,
and remedies under the limited liability company operating agreements of each of
the Pledged Companies that are limited liability companies.

(mm) “Pledged Note Addendum” means a Pledged Note Addendum substantially in the
form of Exhibit E to this Agreement.

(nn) “Pledged Notes” has the meaning specified therefor in Section 5(h).

(oo) “Pledged Partnership Agreements” means all of each Grantor’s rights,
powers, and remedies under the partnership agreements of each of the Pledged
Companies that are partnerships.

(pp) “Proceeds” has the meaning specified therefor in Section 2.

(qq) “Real Property” means any estates or interests in real property now owned
or hereafter acquired by any Grantor and the improvements thereto.

(rr) “Records” means information that is inscribed on a tangible medium or which
is stored in an electronic or other medium and is retrievable in perceivable
form.

(ss) “Security Interest” has the meaning specified therefor in Section 2.

(tt) “Secured Obligations” has the meaning specified in the recitals to this
Agreement.

(uu) “Securities Account” means a securities account (as that term is defined in
the Code).

(vv) “Stock” has the meaning specified therefor in the Credit Agreement

(ww) “Supporting Obligations” means Supporting Obligations (as such term is
defined in the Code), and includes letters of credit and guaranties issued in
support of Accounts, Chattel Paper, documents, General Intangibles, instruments,
or Investment Related Property.

(xx) “Trademarks” means trademarks, trade names, registered trademarks,
trademark applications, service marks, registered service marks and service mark
applications, brand names, certification marks, collective marks, d/b/a’s,
Internet domain names, logos, symbols, trade dress, assumed names, fictitious
names, and other indicia of origin, including the trade names, registered
trademarks, trademark applications, registered service marks and service mark
applications listed on Schedule 6 attached hereto and made a part hereof, and
(i) all extensions, modifications and renewals thereof, (ii) all income,
royalties, damages and

 

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payments now and hereafter due or payable under and with respect thereto,
including payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements or dilutions thereof,
(iii) the right to sue for past, present and future infringements and dilutions
thereof, (iv) the goodwill of each Grantor’s business symbolized by the
foregoing and connected therewith, and (v) all of each Grantor’s rights
corresponding thereto throughout the world.

(yy) “Trademark Security Agreement” means each Trademark Security Agreement
among Grantors, or any of them, and Agent, for the benefit of the Lender Group
and the Bank Product Provider, in substantially the form of Exhibit D attached
hereto, pursuant to which Grantors have granted to Agent, for the benefit of the
Lender Group and the Bank Product Provider, a security interest in all their
respective Trademarks.

(zz) “URL” means “uniform resource locator,” an internet web address.

2. Grant of Security. Each Grantor hereby unconditionally grants, assigns, and
pledges to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing security interest (hereinafter referred to as the
“Security Interest”) in all personal property of such Grantor whether now owned
or hereafter acquired or arising and wherever located, including such Grantor’s
right, title, and interest in and to the following, whether now owned or
hereafter acquired or arising and wherever located (the “Collateral”):

(a) all of such Grantor’s Accounts;

(b) all of such Grantor’s Books;

(c) all of such Grantor’s Chattel Paper;

(d) all of such Grantor’s interest with respect to any Deposit Account;

(e) all of such Grantor’s Equipment and fixtures;

(f) All of such Grantor’s General Intangibles;

(g) all of such Grantor’s Inventory;

(h) all of such Grantor’s Investment Related Property;

(i) all of such Grantor’s Negotiable Collateral;

(j) all of such Grantor’s rights in respect of Supporting Obligations;

(k) all of such Grantor’s interest with respect to any Commercial Tort Claims;

(l) all of such Grantor’s money, Cash Equivalents, or other assets of each such
Grantor that now or hereafter come into the possession, custody, or control of
Agent or any other member of the Lender Group; and

(m) all of the proceeds and products, whether tangible or intangible, of any of
the foregoing, including proceeds of insurance or Commercial Tort Claims
covering or relating to any or all of the foregoing, and any and all Accounts,
Books, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Equipment,
General Intangibles, Inventory, Investment Related Property, Negotiable
Collateral, Supporting Obligations, money, or other tangible or intangible
property resulting from the sale, lease, license, exchange, collection, or other
disposition of any of the foregoing, the proceeds of any award in condemnation
with respect to any of the property of Grantors, any rebates or refunds, whether
for taxes or otherwise, and all

 

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proceeds of any such proceeds, or any portion thereof or interest therein, and
the proceeds thereof, and all proceeds of any loss of, damage to, or destruction
of the above, whether insured or not insured, and, to the extent not otherwise
included, any indemnity, warranty, or guaranty payable by reason of loss or
damage to, or otherwise with respect to any of the foregoing Collateral (the
“Proceeds”). Without limiting the generality of the foregoing, the term
“Proceeds” includes whatever is receivable or received when Investment Related
Property or proceeds are sold, exchanged, collected, or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes proceeds of
any indemnity or guaranty payable to any Grantor or Agent from time to time with
respect to any of the Investment Related Property.

Notwithstanding anything herein to the contrary, the term “Collateral” shall not
include, and no Grantor is pledging, nor granting a security interest hereunder
in, any of such Grantor’s right, title or interest in any license, contract or
agreement to which such Grantor is a party as of the date hereof or any of its
right, title or interest thereunder to the extent, but only to the extent, that
such a grant would, under the express terms of such license, contract or
agreement on the date hereof result in a breach of the terms of, or constitute a
default under, such license, contract or agreement (other than to the extent
that any such term (i) has been waived or (ii) would be rendered ineffective
pursuant to Sections 9-406, 9-408, 9-409 of the Code or other applicable
provisions of the Uniform Commercial Code of any relevant jurisdiction or any
other applicable law (including the Bankruptcy Code) or principles of equity);
provided, that (x) immediately upon the ineffectiveness, lapse or termination of
any such provision, the Collateral shall include, and such Grantor shall be
deemed to have granted a security interest in, all such right, title and
interest as if such provision had never been in effect and (y) the foregoing
exclusion shall in no way be construed so as to limit, impair or otherwise
affect the Agent’s unconditional continuing security interest in and liens upon
any rights or interests of a Grantor in or to the proceeds of, or any monies due
or to become due under, any such license, contract or agreement.

Notwithstanding anything herein to the contrary, the term “Collateral” shall not
include in the case of a Foreign Subsidiary, more than 65% (or such greater
percentage that, due to a change in applicable law after the date hereof,
(i) would not reasonably be expected to cause the undistributed earnings of such
Foreign Subsidiary as determined for United States federal income tax purposes
to be treated as a deemed dividend to such Foreign Subsidiary’s United States
parent and (ii) would not reasonably be expected to cause any material adverse
tax consequences) of the issued and outstanding shares of Stock entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (it being understood
and agreed that the Collateral shall include 100% of the issued and outstanding
shares of Stock not entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) or other equity interest of such Foreign Subsidiary).

The Grantors agree that the pledge of the shares of Stock of any Pledged Company
who is a Foreign Subsidiary may be supplemented by one or more separate pledge
agreements, deeds of pledge, share charges, or other similar agreements or
instruments, executed and delivered by the relevant Grantors in favor of the
Agent, which pledge agreements will provide for the pledge of such shares of
Stock in accordance with the laws of the applicable foreign jurisdiction. With
respect to such shares of Stock, the Agent may, at any time and from time to
time, in its sole discretion, take actions in such foreign jurisdictions that
will result in the perfection of the Lien created in such shares of Stock.

3. Security for Obligations. This Agreement and the Security Interest created
hereby secures the payment and performance of all of the Secured Obligations,
whether now existing or arising hereafter. Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts which
constitute part of the Secured Obligations and would be owed by Grantors, or any
of them, to Agent, the Lender Group, the Bank Product Provider or any of them,
but for the fact that they are unenforceable or not allowable due to the
existence of an Insolvency Proceeding involving any Grantor.

4. Grantors Remain Liable. Anything herein to the contrary notwithstanding,
(a) each of the Grantors shall remain liable under the contracts and agreements
included in the Collateral, including the Pledged Operating Agreements and the
Pledged Partnership Agreements, to perform all of the duties and obligations
thereunder to the same extent as if this Agreement had not been executed,
(b) the exercise by Agent

 

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or any other member of the Lender Group of any of the rights hereunder shall not
release any Grantor from any of its duties or obligations under such contracts
and agreements included in the Collateral, and (c) none of the members of the
Lender Group shall have any obligation or liability under such contracts and
agreements included in the Collateral by reason of this Agreement, nor shall any
of the members of the Lender Group be obligated to perform any of the
obligations or duties of any Grantors thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder. Until an Event of
Default shall occur and be continuing, except as otherwise provided in this
Agreement, the Credit Agreement, or any other Loan Document, Grantors shall have
the right to possession and enjoyment of the Collateral for the purpose of
conducting their respective businesses in the ordinary course, subject to and
upon the terms hereof and of the Credit Agreement and the other Loan Documents.
Without limiting the generality of the foregoing, it is the intention of the
parties hereto that record and beneficial ownership of the Pledged Interests,
including all voting, consensual, and dividend rights, shall remain in the
applicable Grantor until the occurrence of an Event of Default and until Agent
shall notify the applicable Grantor of Agent’s exercise of voting, consensual,
or dividend rights with respect to the Pledged Interests pursuant to Section 15
hereof.

5. Representations and Warranties. Each Grantor hereby represents and warrants
as follows:

(a) The exact legal name of each of the Grantors is set forth on the signature
pages of this Agreement or a written notice provided to Agent pursuant to
Section 6.5 of the Credit Agreement.

(b) Schedule 7 attached hereto sets forth all Real Property owned by Grantors as
of the Closing Date.

(c) Such Grantor is the sole legal and beneficial owner, or exclusive or
non-exclusive licensee, of all Intellectual Property rights that are necessary
to the conduct of its business as currently conducted. As of the Closing Date,
(i) such Grantor has no ownership interest in, or title to, any Copyrights,
Patents or Trademarks that are registered or the subject of pending applications
for registrations, except as set forth on Schedules 2(a), 4(a) and 6(a),
respectively, attached hereto; (ii) such Grantor has no ownership interest in,
or title to, any Copyrights, Patents or Trademarks that are material to such
Grantor’s businesses as currently conducted and that are not registered or the
subject of pending applications for registrations, except as set forth in
Schedules 2(b), 4(b) and 6(b), respectively, attached hereto; and (iii) such
Grantor is not a party to any Intellectual Property Licenses, except as set
forth on Schedule 3 attached hereto. This Agreement is effective to create a
valid and continuing Lien on such Grantor’s Copyrights, Patents and Trademarks
and all of its rights and interests in and to any Intellectual Property
Licenses. Upon the filing of the Copyright Security Agreement with the United
States Copyright Office and the filing of the Patent Security Agreement and the
Trademark Security Agreement with the United States Patent and Trademark Office,
and the filing of appropriate financing statements in the jurisdictions listed
on Schedule 8 hereto, all action necessary or desirable to protect and perfect
the Security Interest in each Grantor’s Patents, Trademarks, or Copyrights has
been taken and such perfected Security Interests are enforceable as such as
against any and all creditors of and purchasers from any Grantor. No Grantor has
any interest in any Copyright that is necessary in connection with the operation
of such Grantor’s business, except for those Copyrights identified on Schedule
2(a) attached hereto which have been registered with the United States Copyright
Office.

(d) This Agreement creates a valid security interest in the Collateral of each
Grantor, to the extent a security interest therein can be created under the
Code, securing the payment of the Secured Obligations. Except to the extent a
security interest in the Collateral cannot be perfected by the filing of a
financing statement under the Code, all filings and other actions necessary or
desirable to perfect and protect such security interest have been duly taken or
will have been taken upon the filing of financing statements listing each
applicable Grantor, as a debtor, and Agent, as secured party, in the
jurisdictions listed next to such Grantor’s name on Schedule 8 attached hereto.
Upon the making of such filings, Agent shall have a first priority (subject only
to Permitted Liens) perfected security interest in the Collateral of each
Grantor to the extent such security interest can be perfected by the filing of a
financing statement. All action by any Grantor necessary to protect and perfect
such security interest on each item of Collateral has been duly taken.

 

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(e)(i) Except for the Security Interest created hereby, each Grantor is, and
unless otherwise permitted by the Loan Documents, will at all times be, the sole
holder of record and the legal and beneficial owner, free and clear of all Liens
other than Permitted Liens, of the Pledged Interests indicated on Schedule 5 as
being owned by such Grantor and, when acquired by such Grantor, any Pledged
Interests acquired after the Closing Date; (ii) all of the Pledged Interests are
duly authorized, validly issued, fully paid and nonassessable and the Pledged
Interests constitute or will constitute the percentage of the issued and
outstanding Stock of the Pledged Companies of such Grantor identified on
Schedule 5 hereto as supplemented or modified by any Pledged Interests Addendum
or any Supplement to this Agreement; (iii) such Grantor has the right and
requisite authority to pledge, the Investment Related Property pledged by such
Grantor to Agent as provided herein; (iv) all actions necessary to perfect,
establish the first priority (subject only to Permitted Liens) of, or otherwise
protect, Agent’s Liens in the Investment Related Property, and the proceeds
thereof, have been duly taken, (A) upon the execution and delivery of this
Agreement; (B) upon the taking of possession by Agent of any certificates
constituting the Pledged Interests, to the extent such Pledged Interests are
represented by certificates, together with undated powers endorsed in blank by
the applicable Grantor; (C) upon the filing of financing statements in the
applicable jurisdiction set forth on Schedule 8 attached hereto for such Grantor
with respect to the Pledged Interests of such Grantor that are not represented
by certificates, and (D) with respect to any Securities Accounts, upon the
delivery of Control Agreements with respect thereto; and (v) each Grantor has
delivered to and deposited with Agent (or, with respect to any Pledged Interests
created or obtained after the Closing Date, will deliver and deposit in
accordance with Sections 6(a) and 8 hereof) all certificates representing the
Pledged Interests owned by such Grantor to the extent such Pledged Interests are
represented by certificates, and undated powers endorsed in blank with respect
to such certificates. None of the Pledged Interests owned or held by such
Grantor has been issued or transferred in violation of any securities
registration, securities disclosure or similar laws of any jurisdiction to which
such issuance or transfer may be subject. As to all limited liability company or
partnership interests, issued under any Pledged Operating Agreement or Pledged
Partnership Agreement, each Grantor represents and warrants that the Pledged
Interests issued pursuant to any such agreement are (x) securities for purposes
of Article 8 of the Code, (y) investment company securities within the meaning
of Section 8-103 of the Code and (z) evidenced by a certificate.

(f) No consent, approval, authorization, or other order or other action by, and
no notice to or filing with, any Governmental Authority or any other Person is
required (i) for the grant of a Security Interest by such Grantor in and to the
Collateral pursuant to this Agreement or for the execution, delivery, or
performance of this Agreement by such Grantor, or (ii) for the exercise by Agent
of the voting or other rights provided for in this Agreement with respect to the
Investment Related Property or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required in connection with such
disposition of Investment Related Property by laws affecting the offering and
sale of securities generally.

(g) [Intentionally Omitted].

(h) There is no default, breach, violation or event of acceleration existing
under any promissory note (as defined in the Code) constituting Collateral and
pledged hereunder (the “Pledged Notes”) and no event has occurred or
circumstance exists which, with the passage of time or the giving of notice, or
both, would constitute a default, breach, violation or event of acceleration
under the Pledged Notes. Such Grantor, if it is an obligee under a Pledged Note,
has not expressly or intentionally waived any default, breach, violation or
event of acceleration under such Pledged Notes. The proceeds of the loans
evidenced by the Pledged Notes have been fully disbursed and such Grantor has no
obligation to make any future advances or other disbursements under or in
respect of the Pledged Notes. A true, correct and complete list of the Pledged
Notes is set forth on Schedule 9.

(i) Each Grantor has made in good faith and in accordance with the procedures
and regulations of the United States Copyright Office and the United States
Patent and Trademark Office, as applicable, all payments, filings and
recordations necessary to protect and maintain its interest in the Intellectual
Property rights identified on Schedules 2(a), 4(a) and 6(a) in the United States
in a manner sufficient to claim in the public record such Grantor’s ownership
thereof, including (i) making all necessary registration, maintenance, and
renewal fee payments; and (ii) filing all necessary documents, including all
applications for registration of such Intellectual Property rights.

 

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(j) Except as set forth on Schedules 2, 4 or 6, no claim has been made in
writing and is continuing or, to the best of each Grantor’s knowledge,
threatened that the use by any Grantor of any Intellectual Property rights that
are material to the conduct of its business does or may violate the Intellectual
Property rights of any Person. To the best of each Grantor’s knowledge, there is
currently no infringement or unauthorized use of any item of Intellectual
Property rights contained on Schedules 2, 4 or 6.

6. Covenants. Each Grantor, jointly and severally, covenants and agrees with
Agent and the Lender Group that from and after the date of this Agreement and
until the date of termination of this Agreement in accordance with Section 22
hereof:

(a) Possession of Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Investment
Related Property, or Chattel Paper, and if and to the extent that perfection or
priority of Agent’s Security Interest is dependent on or enhanced by possession,
the applicable Grantor, immediately upon the request of Agent and in accordance
with Section 8 hereof, shall execute such other documents and instruments as
shall be requested by Agent or, if applicable, endorse and deliver physical
possession of such Negotiable Collateral, Investment Related Property, or
Chattel Paper to Agent, together with such undated powers endorsed in blank as
shall be requested by Agent; provided, however, that the Grantors shall not have
to deliver physical possession to Agent of any such Negotiable Collateral,
Investment Related Property, or Chattel Paper (the “Non-delivered Possessory
Collateral”) with a fair market value of less than $25,000, so long as the fair
market value of all such Non-delivered Possessory Collateral does not exceed
$100,000 in the aggregate.

(b) Chattel Paper.

(i) Except as otherwise provided in Section 5.15 of the Credit Agreement, each
Grantor shall take all steps reasonably necessary to grant Agent control of all
electronic Chattel Paper in accordance with the Code and all “transferable
records” as that term is defined in Section 16 of the Uniform Electronic
Transaction Act and Section 201 of the federal Electronic Signatures in Global
and National Commerce Act as in effect in any relevant jurisdiction; and

(ii) If any Grantor retains possession of any Chattel Paper or instruments
(which retention of possession shall be subject to the extent permitted hereby
and by the Credit Agreement), promptly upon the request of Agent, such Chattel
Paper and instruments shall be marked with the following legend: “This writing
and the obligations evidenced or secured hereby are subject to the Security
Interest of Wells Fargo Foothill, Inc., as Agent for the benefit of the Lender
Group and the Bank Product Provider”.

(c) Control Agreements.

(i) Except to the extent otherwise permitted by the Credit Agreement, each
Grantor shall obtain an authenticated Control Agreement, from each bank holding
a Deposit Account for such Grantor; and

(ii) Except to the extent otherwise permitted by the Credit Agreement, each
Grantor shall obtain authenticated Control Agreements, from each issuer of
uncertificated securities, securities intermediary, or commodities intermediary
issuing or holding any financial assets or commodities to or for any Grantor.

(d) Letter of Credit Rights. Each Grantor that is or becomes the beneficiary of
a letter of credit in an amount greater than $25,000 shall promptly (and in any
event within 2 Business Days after becoming a beneficiary), notify Agent thereof
and, upon the request by Agent, enter into a tri-party agreement

 

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with Agent and the issuer or confirmation bank with respect to letter-of-credit
rights (as that term is defined in the Code) assigning such letter-of-credit
rights to Agent and directing all payments thereunder to Agent’s Account, all in
form and substance reasonably satisfactory to Agent.

(e) Commercial Tort Claims. Each Grantor shall promptly (and in any event within
2 Business Days of receipt thereof), notify Agent in writing upon incurring or
otherwise obtaining a Commercial Tort Claim after the date hereof against any
third party and, upon request of Agent, promptly amend Schedule 1 to this
Agreement, authorize the filing of additional financing statements or amendments
to existing financing statements and do such other acts or things reasonably
deemed necessary by Agent to give Agent a first priority, perfected security
interest in any such Commercial Tort Claim.

(f) Government Contracts. If any Account or Chattel Paper, in an aggregate
amount in excess of $500,000, arises out of a contract or contracts with the
United States of America or any department, agency, or instrumentality thereof,
Grantors shall promptly (and in any event within 2 Business Days of the creation
thereof) notify Agent thereof in writing and execute any instruments or take any
steps reasonably required by Agent in order that all moneys due or to become due
under such contract or contracts shall be assigned to Agent, for the benefit of
the Lender Group and the Bank Product Provider, and notice thereof given under
the Assignment of Claims Act or other applicable law.

(g) Intellectual Property.

(i) Upon request of Agent, in order to facilitate filings with the United States
Patent and Trademark Office and the United States Copyright Office, each Grantor
shall execute and deliver to Agent one or more Copyright Security Agreements,
Trademark Security Agreements, or Patent Security Agreements to evidence Agent’s
Lien on such Grantor’s Patents, Trademarks, or Copyrights, and the General
Intangibles of such Grantor relating thereto or represented thereby;

(ii) Each Grantor shall have the duty, to the extent material to or economically
desirable in the operation of such Grantor’s business, (A) to promptly sue for
infringement, misappropriation, or dilution and to recover any and all damages
for such infringement, misappropriation, or dilution, (B) to prosecute
diligently any trademark application or service mark application that is part of
the Trademarks pending as of the date hereof or hereafter until the termination
of this Agreement, (C) to prosecute diligently any patent application that is
part of the Patents pending as of the date hereof or hereafter until the
termination of this Agreement, and (D) to take all reasonable and necessary
action to preserve and maintain all of such Grantor’s Trademarks, Patents,
Copyrights, Intellectual Property Licenses, and its rights therein, including
the filing of applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and cancellation proceedings.
Each Grantor shall promptly file an application with the United States Copyright
Office for any Copyright that has not been registered with the United States
Copyright Office if such Copyright is material to the operation of such
Grantor’s business. Any expenses incurred in connection with the foregoing shall
be borne by the appropriate Grantor. Each Grantor further agrees not to abandon
any Trademark, Patent, Copyright, or Intellectual Property License that is
material to or economically desirable in the operation of such Grantor’s
business without the prior written consent of Agent;

(iii) Grantors acknowledge and agree that the Lender Group shall have no duties
with respect to the Trademarks, Patents, Copyrights, or Intellectual Property
Licenses. Without limiting the generality of this Section 6(g), Grantors
acknowledge and agree that no member of the Lender Group shall be under any
obligation to take any steps necessary to preserve rights in the Trademarks,
Patents, Copyrights, or Intellectual Property Licenses against any other Person,
but any member of the Lender Group may do so at its option from and after the
occurrence and during the continuance of an Event of Default, and all expenses
incurred in connection therewith (including reasonable fees and expenses of
attorneys and other professionals) shall be for the sole account of Borrowers
and shall be chargeable to the Loan Account;

 

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(iv) In no event shall any Grantor, either itself or through any agent,
employee, licensee, or designee, file an application for the registration of any
Patent, Trademark, or Copyright with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency
without giving Agent prior written notice thereof. Promptly upon any such
filing, each Grantor shall comply with Section 6(g)(i) hereof; and

(v) With respect to the Intellectual Property rights that are material to the
conduct of Grantors’ businesses, each Grantor agrees to take all necessary steps
to protect each such Intellectual Property right. Each Grantor hereby agrees to
take corresponding steps with respect to each new or acquired Intellectual
Property right to which it or any of its Subsidiaries is now or later becomes
entitled that are material to the conduct of their businesses. Any expenses
incurred in connection with such activities shall be borne solely by such
Grantor.

(h) Investment Related Property.

(i) If any Grantor shall receive or become entitled to receive any Pledged
Interests after the Closing Date, it shall promptly (and in any event within 2
Business Days of receipt thereof) deliver to Agent a duly executed Pledged
Interests Addendum identifying such Pledged Interests;

(ii) Any time after an Event of Default has occurred and is continuing, all sums
of money and property paid or distributed in respect of the Investment Related
Property which are received by any Grantor shall be held by such Grantor in
trust for the benefit of Agent segregated from such Grantor’s other property,
and such Grantor shall promptly deliver it forthwith to Agent’s in the exact
form received;

(iii) Each Grantor shall promptly deliver to Agent a copy of each material
notice or other communication received by it in respect of any Pledged
Interests;

(iv) No Grantor shall make or consent to any amendment or other modification or
waiver with respect to any Pledged Interests, Pledged Operating Agreement, or
Pledged Partnership Agreement, or enter into any agreement or permit to exist
any restriction (other than any restrictions imposed by law) with respect to any
Pledged Interests other than pursuant to the Loan Documents;

(v) Each Grantor agrees that it will cooperate with Agent in obtaining all
necessary approvals and making all necessary filings under federal, state,
local, or foreign law in connection with the Security Interest on the Investment
Related Property or any sale or transfer thereof; and

(vi) As to all limited liability company or partnership interests, issued under
any Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor
covenants that the Pledged Interests issued pursuant to any such agreement shall
be (i) represented by a certificate, (ii) deemed a “security” within the meaning
of Article 8 of the Code and (iii) shall be governed by Article 8 of the Code.

(i) Real Property; Fixtures. Each Grantor covenants and agrees that upon the
acquisition of any fee interest in Real Property it will promptly (and in any
event within 2 Business Days of acquisition) notify Agent of the acquisition of
such Real Property and will grant to Agent, for the benefit of the Lender Group
and the Bank Product Provider, a first priority (subject only to Permitted
Liens) Mortgage on each fee interest in Real Property now or hereafter owned by
such Grantor and shall deliver such other documentation and opinions, in form
and substance reasonably satisfactory to Agent, in connection with the grant of
such Mortgage as Agent shall request in its Permitted Discretion, including
title insurance policies, financing statements, fixture filings and
environmental audits and such Grantor shall pay all recording costs, intangible
taxes and other fees and costs (including reasonable attorneys fees and
expenses) incurred in connection therewith. Each Grantor acknowledges and agrees
that, to the extent permitted by applicable law, all of the Collateral shall
remain personal property regardless of the manner of its attachment or
affixation to real property.

 

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(j) Transfers and Other Liens. Grantors shall not (i) sell, assign (by operation
of law or otherwise) or otherwise dispose of, or grant any option with respect
to, any of the Collateral, except as expressly permitted by the Credit
Agreement, or (ii) create or permit to exist any Lien upon or with respect to
any of the Collateral of any Grantor, except for Permitted Liens. The inclusion
of Proceeds in the Collateral shall not be deemed to constitute Agent’s consent
to any sale or other disposition of any of the Collateral except as expressly
permitted in this Agreement or the other Loan Documents.

(k) Other Actions as to Any and All Collateral. Each Grantor shall promptly (and
in any event within 2 Business Days of acquiring or obtaining such Collateral)
notify Agent in writing upon (i) acquiring or otherwise obtaining any Collateral
after the date hereof consisting of Trademarks, Patents, Copyrights,
Intellectual Property Licenses, Investment Related Property, Chattel Paper
(electronic, tangible or otherwise), documents (as defined in Article 9 of the
Code), promissory notes (as defined in the Code), or instruments (as defined in
the Code) or (ii) any amount payable under or in connection with any of the
Collateral being or becoming evidenced after the date hereof by any Chattel
Paper, documents, promissory notes, or instruments and, in each such case upon
the request of Agent and in accordance with Section 8 hereof, promptly execute
such other documents and instruments, or if applicable, deliver such Chattel
Paper, other documents, instruments or certificates evidencing any Investment
Related Property in accordance with Section 6 hereof and do such other acts or
things reasonably deemed necessary by Agent to protect Agent’s Security Interest
therein.

(l) Pledged Notes.

(i) If any Grantor shall receive or become entitled to receive any Pledged Note
after the Closing Date, it shall promptly (and in any event within 5 Business
Days of receipt thereof) deliver to Agent a duly executed Pledged Note Addendum
(substantially in the form of Exhibit E hereto) identifying such Pledged Note;

(ii) No Grantor will waive or release any obligation of any party to the Pledged
Notes without the prior consent of Agent;

(iii) No Grantor will take or omit to take any action or suffer or permit any
action to be omitted or taken, the taking or omission of which would result in
any right of offset against sums payable under the Pledged Notes;

(iv) Each Grantor shall give Agent copies of all notices (including notices of
default) given or received with respect to any Pledged Note promptly after
giving or receiving such notice; and

(v) Without Agent’s prior written consent, each Grantor shall not, and shall not
agree to, assign or surrender its rights and interests under any Pledged Note
with a principal amount greater than $100,000, nor terminate, cancel, modify,
change, supplement or amend any such Pledged Note.

(m) Motor Vehicles. Upon request of Agent, with respect to all motor vehicles
owned by any Grantor, Grantor shall deliver to Agent, a certificate of title for
all such motor vehicles and shall cause those title certificates to be filed
(with the Agent’s Lien noted thereon) in the appropriate state motor vehicle
filing office.

7. Relation to Other Security Documents. The provisions of this Agreement shall
be read and construed with the other Loan Documents referred to below in the
manner so indicated.

(a) Credit Agreement. In the event of any conflict between any provision in this
Agreement and a provision in the Credit Agreement, such provision of the Credit
Agreement shall control.

 

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(b) Patent, Trademark, Copyright Security Agreements. The provisions of the
Copyright Security Agreements, Trademark Security Agreements, and Patent
Security Agreements are supplemental to the provisions of this Agreement, and
nothing contained in the Copyright Security Agreements, Trademark Security
Agreements, or the Patent Security Agreements shall limit any of the rights or
remedies of Agent hereunder.

8. Further Assurances.

(a) Each Grantor agrees that from time to time, at its own expense, such Grantor
will promptly execute and deliver all further instruments and documents, and
take all further action that Agent may reasonably request, in order to perfect
and protect any Security Interest granted or purported to be granted hereby or
to enable Agent to exercise and enforce its rights and remedies hereunder with
respect to any of the Collateral.

(b) Each Grantor hereby authorizes the filing by Agent of financing or
continuation statements, or amendments thereto, and such Grantor will execute
and deliver to Agent such other instruments or notices, as Agent may reasonably
request, in order to perfect and preserve the Security Interest granted or
purported to be granted hereby.

(c) Each Grantor hereby authorizes Agent at any time and from time to time to
file, transmit, or communicate, as applicable, financing statements and
amendments (i) describing the Collateral as “all personal property of debtor” or
“all assets of debtor” or words of similar effect, (ii) describing the
Collateral as being of equal or lesser scope or with greater detail, or
(iii) that contain any information required by part 5 of Article 9 of the Code
for the sufficiency or filing office acceptance. Each Grantor also hereby
ratifies any and all financing statements or amendments previously filed by
Agent in any jurisdiction with respect to the Collateral.

(d) Each Grantor acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any financing
statement filed in connection with this Agreement without the prior written
consent of Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of
the Code.

9. Agent’s Right to Perform Contracts. Upon the occurrence and during the
continuance of an Event of Default, Agent (or its designee) may proceed to
perform any and all of the obligations of any Grantor contained in any contract,
lease, or other agreement and exercise any and all rights of any Grantor therein
contained as fully as such Grantor itself could.

10. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints
Agent as its attorney-in-fact, with full authority in the place and stead of
such Grantor and in the name of such Grantor or otherwise, at such time as an
Event of Default has occurred and is continuing under the Credit Agreement, to
take any action and to execute any instrument which Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement or any other
Loan Document, including:

(a) to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in connection
with the Accounts or any other Collateral of such Grantor;

(b) to receive and open all mail addressed to such Grantor and to notify postal
authorities to change the address for the delivery of mail to such Grantor to
that of Agent;

(c) to receive, endorse, and collect any drafts or other instruments, documents,
Negotiable Collateral or Chattel Paper;

 

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(d) to file any claims or take any action or institute any proceedings which
Agent may deem necessary or desirable for the collection of any of the
Collateral of such Grantor or otherwise to enforce the rights of Agent with
respect to any of the Collateral;

(e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or
in part the purchase order of any Person obligated to such Grantor in respect of
any Account of such Grantor;

(f) to use any labels, Patents, Trademarks, trade names, URLs, domain names,
industrial designs, Copyrights, advertising matter or other industrial or
intellectual property rights, in advertising for sale and selling Inventory and
other Collateral and to collect any amounts due under Accounts, contracts or
Negotiable Collateral of such Grantor; and

(g) Agent on behalf of the Lender Group and the Bank Product Provider shall have
the right, but shall not be obligated, to bring suit in its own name to enforce
the Trademarks, Patents, Copyrights and Intellectual Property Licenses and, if
Agent shall commence any such suit, the appropriate Grantor shall, at the
request of Agent, do any and all lawful acts and execute any and all proper
documents reasonably required by Agent in aid of such enforcement.

To the extent permitted by law, each Grantor hereby ratifies all that such
attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable until
this Agreement is terminated.

11. Agent May Perform. If any Grantor fails to perform any agreement contained
herein, Agent may itself perform, or cause performance of, such agreement, and
the reasonable expenses of Agent incurred in connection therewith shall be
payable, jointly and severally, by Grantors.

12. Agent’s Duties. The powers conferred on Agent hereunder are solely to
protect Agent’s interest in the Collateral, for the benefit of the Lender Group
and the Bank Product Provider, and shall not impose any duty upon Agent to
exercise any such powers. Except for the safe custody of any Collateral in its
actual possession and the accounting for moneys actually received by it
hereunder, Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. Agent shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in its actual possession
if such Collateral is accorded treatment substantially equal to that which Agent
accords its own property.

13. Collection of Accounts, General Intangibles and Negotiable Collateral. At
any time upon the occurrence and during the continuation of an Event of Default,
Agent or Agent’s designee may (a) notify Account Debtors of any Grantor that
such Grantor’s Accounts, General Intangibles, Chattel Paper or Negotiable
Collateral have been assigned to Agent, for the benefit of the Lender Group and
the Bank Product Provider, or that Agent has a security interest therein, and
(b) collect such Grantor’s Accounts, General Intangibles and Negotiable
Collateral directly, and any collection costs and expenses shall constitute part
of such Grantor’s Secured Obligations under the Loan Documents.

14. Disposition of Pledged Interests by Agent. None of the Pledged Interests
existing as of the date of this Agreement are, and none of the Pledged Interests
hereafter acquired on the date of acquisition thereof will be, registered or
qualified under the various federal or state securities laws of the United
States and disposition thereof after an Event of Default may be restricted to
one or more private (instead of public) sales in view of the lack of such
registration. Each Grantor understands that in connection with such disposition,
Agent may approach only a restricted number of potential purchasers and further
understands that a sale under such circumstances may yield a lower price for the
Pledged Interests than if the Pledged Interests were registered and qualified
pursuant to federal and state securities laws and sold on the open market. Each
Grantor, therefore, agrees that: (a) if Agent shall, pursuant to the terms of
this Agreement, sell or cause the Pledged Interests or any portion thereof to be
sold at a private sale, Agent shall have the right to rely upon the

 

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advice and opinion of any nationally recognized brokerage or investment firm
(but shall not be obligated to seek such advice and the failure to do so shall
not be considered in determining the commercial reasonableness of such action)
as to the best manner in which to offer the Pledged Interest or any portion
thereof for sale and as to the best price reasonably obtainable at the private
sale thereof; and (b) such reliance shall be conclusive evidence that Agent has
handled the disposition in a commercially reasonable manner.

15. Voting Rights.

(a) Upon the occurrence and during the continuation of an Event of Default,
(i) Agent may, at its option, and with prior notice (unless such Event of
Default is an Event of Default set forth in Section 7.4 or Section 7.5 of the
Credit Agreement, in which case no such notice need be provided) to any Grantor,
and in addition to all rights and remedies available to Agent under any other
agreement, at law, in equity, or otherwise, exercise all voting rights, and all
other ownership or consensual rights in respect of the Pledged Interests owned
by such Grantor, but under no circumstances is Agent obligated by the terms of
this Agreement to exercise such rights, and (ii) if Agent duly exercises its
right to vote any of such Pledged Interests, each Grantor hereby appoints Agent
as such Grantor’s true and lawful attorney-in-fact and grants to Agent an
IRREVOCABLE PROXY to vote such Pledged Interests in any manner Agent deems
advisable for or against all matters submitted or which may be submitted to a
vote of shareholders, partners or members, as the case may be. The
power-of-attorney granted hereby is coupled with an interest and shall be
irrevocable.

(b) For so long as any Grantor shall have the right to vote the Pledged
Interests owned by it, such Grantor covenants and agrees that it will not,
without the prior written consent of Agent, vote or take any consensual action
with respect to such Pledged Interests which would materially adversely affect
the rights of Agent and the other members of the Lender Group or the value of
the Pledged Interests.

16. Remedies. Upon the occurrence and during the continuance of an Event of
Default:

(a) Agent may exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein, in the other Loan Documents, or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code or any other applicable law. Without limiting the generality of the
foregoing, each Grantor expressly agrees that, in any such event, Agent without
demand of performance or other demand, advertisement or notice of any kind
(except a notice specified below of time and place of public or private sale) to
or upon any of Grantors or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code or any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors to,
and each Grantor hereby agrees that it will at its own expense and upon request
of Agent forthwith, assemble all or part of the Collateral as directed by Agent
and make it available to Agent at one or more locations where such Grantor
regularly maintains equipment, and (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Agent’s offices or elsewhere, for cash, on credit,
and upon such other terms as Agent may deem commercially reasonable. Each
Grantor agrees that, to the extent notice of sale shall be required by law, at
least 10 days notice to the Administrative Borrower of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification and specifically such notice shall constitute
a reasonable “authenticated notification of disposition” within the meaning of
Section 9-611 of the Code. Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.

(b) Agent is hereby granted a license or other right to use, without liability
for royalties or any other charge, each Grantor’s labels, Patents, Copyrights,
rights of use of any name, trade secrets, trade names, Trademarks, service marks
and advertising matter, URLs, domain names, industrial designs, other industrial
or intellectual property or any property of a similar nature, whether owned or
licensable by any of Grantors or with respect to which any of Grantors have
rights under license, sublicense, or other agreements, as it pertains to the
Collateral, in preparing for sale, advertising for sale and selling any
Collateral, and each Grantor’s rights under all licenses and all franchise
agreements shall inure to the benefit of Agent.

 

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(c) Any cash held by Agent as Collateral and all cash proceeds received by Agent
in respect of any sale of, collection from, or other realization upon all or any
part of the Collateral shall be applied against the Secured Obligations in the
order set forth in the Credit Agreement. In the event the proceeds of Collateral
are insufficient to satisfy all of the Secured Obligations in full, each Grantor
shall remain jointly and severally liable for any such deficiency.

(d) Each Grantor hereby acknowledges that the Secured Obligations arose out of a
commercial transaction, and agrees that if an Event of Default shall occur and
be continuing, to the extent permitted by applicable law, Agent shall have the
right to an immediate writ of possession without notice of a hearing. To the
extent permitted by applicable law, Agent shall have the right to the
appointment of a receiver for the properties and assets of each Grantor, and
each Grantor hereby consents to such rights and such appointment and hereby
waives any objection such Grantor may have thereto or the right to have a bond
or other security posted by Agent.

17. Remedies Cumulative. Each right, power, and remedy of Agent as provided for
in this Agreement or in the other Loan Documents or now or hereafter existing at
law or in equity or by statute or otherwise shall be cumulative and concurrent
and shall be in addition to every other right, power, or remedy provided for in
this Agreement or in the other Loan Documents or now or hereafter existing at
law or in equity or by statute or otherwise, and the exercise or beginning of
the exercise by Agent, of any one or more of such rights, powers, or remedies
shall not preclude the simultaneous or later exercise by Agent of any or all
such other rights, powers, or remedies.

18. Marshaling. Agent shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other
assurances of payment of, the Secured Obligations or any of them or to resort to
such collateral security or other assurances of payment in any particular order,
and all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights and remedies, however existing or arising. To the extent that
it lawfully may, each Grantor hereby agrees that it will not invoke any law
relating to the marshaling of collateral which might cause delay in or impede
the enforcement of Agent’s rights and remedies under this Agreement or under any
other instrument creating or evidencing any of the Secured Obligations or under
which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, each Grantor hereby irrevocably waives the
benefits of all such laws.

19. Indemnity and Expenses.

(a) Each Grantor agrees to indemnify Agent and the other members of the Lender
Group from and against all claims, lawsuits and liabilities (including
reasonable attorneys fees) growing out of or resulting from this Agreement
(including enforcement of this Agreement) or any other Loan Document to which
such Grantor is a party, except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of the party seeking indemnification as
determined by a final non-appealable order of a court of competent jurisdiction.
This provision shall survive the termination of this Agreement and the Credit
Agreement and the repayment of the Secured Obligations.

(b) Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent,
may charge to the Loan Account) all the Lender Group Expenses which Agent may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or, upon an Event of Default, the
sale of, collection from, or other realization upon, any of the Collateral in
accordance with this Agreement and the other Loan Documents, (iii) the exercise
or enforcement of any of the rights of Agent hereunder or (iv) the failure by
any of Grantors to perform or observe any of the provisions hereof.

 

17

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20. Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER
LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES. No waiver of any provision of this Agreement, and no consent to any
departure by any of Grantors herefrom, shall in any event be effective unless
the same shall be in writing and signed by Agent, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No amendment of any provision of this Agreement shall
be effective unless the same shall be in writing and signed by Agent and each of
Grantors to which such amendment applies.

21. Addresses for Notices. All notices and other communications provided for
hereunder shall be given in the form and manner and delivered to Agent at its
address specified in the Credit Agreement, and to any of the Grantors at their
respective addresses specified in the Credit Agreement or Guaranty, as
applicable, or, as to any party, at such other address as shall be designated by
such party in a written notice to the other party.

22. Continuing Security Interest: Assignments under Credit Agreement. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the Obligations have been paid
in full in cash in accordance with the provisions of the Credit Agreement and
the Commitments have expired or have been terminated, (b) be binding upon each
Grantor, and their respective successors and assigns, and (c) inure to the
benefit of, and be enforceable by, Agent, and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Lender
may, in accordance with the provisions of the Credit Agreement, assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
herein or otherwise. Upon payment in full in cash of the Obligations in
accordance with the provisions of the Credit Agreement and the expiration or
termination of the Commitments, the Security Interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantors or any other
Person entitled thereto. At such time, Agent will file or authorize the filing
of appropriate termination statements to terminate such Security Interests. No
transfer or renewal, extension, assignment, or termination of this Agreement or
of the Credit Agreement, any other Loan Document, or any other instrument or
document executed and delivered by any Grantor to Agent nor any additional
Advances or other loans made by any Lender to Borrowers, nor the taking of
further security, nor the retaking or re-delivery of the Collateral to Grantors,
or any of them, by Agent, nor any other act of the Lender Group or the Bank
Product Provider, or any of them, shall release any of Grantors from any
obligation, except a release or discharge executed in writing by Agent in
accordance with the provisions of the Credit Agreement. Agent shall not by any
act, delay, omission or otherwise, be deemed to have waived any of its rights or
remedies hereunder, unless such waiver is in writing and signed by Agent and
then only to the extent therein set forth. A waiver by Agent of any right or
remedy on any occasion shall not be construed as a bar to the exercise of any
such right or remedy which Agent would otherwise have had on any other occasion.

23. Governing Law.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.

 

18

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(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED
IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. AGENT AND
EACH GRANTOR WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 23(b).

(c) AGENT AND EACH GRANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
AGENT AND EACH GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

24. New Subsidiaries. Pursuant to Section 5.16 of the Credit Agreement, any new
direct or indirect Domestic Subsidiary (whether by acquisition or creation) of
any Loan Party is required to enter into this Agreement by executing and
delivering in favor of Agent a supplement to this Agreement in the form of Annex
1 attached hereto. Upon the execution and delivery of Annex 1 by such new
Domestic Subsidiary, such Domestic Subsidiary shall become a Grantor hereunder
with the same force and effect as if originally named as a Grantor herein. The
execution and delivery of any instrument adding an additional Grantor as a party
to this Agreement shall not require the consent of any Grantor hereunder. The
rights and obligations of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor hereunder.

25. Agent. Each reference herein to any right granted to, benefit conferred upon
or power exercisable by the “Agent” shall be a reference to Agent, for the
benefit of the Lender Group and the Bank Product Provider.

26. Miscellaneous.

(a) This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile or other electronic
method of transmission shall be equally as effective as delivery of an original
executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile or other electronic method of
transmission also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement. The
foregoing shall apply to each other Loan Document mutatis mutandis.

(b) Any provision of this Agreement which is prohibited or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other jurisdiction.

(c) Headings used in this Agreement are for convenience only and shall not be
used in connection with the interpretation of any provision hereof.

 

19

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(d) The pronouns used herein shall include, when appropriate, either gender and
both singular and plural, and the grammatical construction of sentences shall
conform thereto.

(e) Unless the context of this Agreement or any other Loan Document clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the terms “includes” and “including” are not
limiting, and the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the phrase “and/or.” The words “hereof,” “herein,”
“hereby,” “hereunder,” and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document, as the case may
be, as a whole and not to any particular provision of this Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Agreement or in any other Loan Document to any agreement,
instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein or in any other Loan Document to the satisfaction or payment in
full of the Obligations shall mean the payment in full in cash (or cash
collateralization in accordance with the terms hereof) of all Obligations other
than unasserted contingent indemnification Obligations and other than any Bank
Product Obligations that, at such time, are allowed by the applicable Bank
Product Provider to remain outstanding and that are not required by the
provisions of the Credit Agreement to be paid or cash collateralized at such
time or as a condition to the termination of the Credit Agreement and the
termination of the Agent’s Liens on the Collateral and the full and final
termination of any commitment to extend any financial accommodations under the
Credit Agreement and any other Loan Document. Any reference herein to any Person
shall be construed to include such Person’s successors and assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record and any Record so transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.

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20

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IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement
by and through their duly authorized officers, as of the day and year first
above written.

 

GRANTORS:

VELOCITY EXPRESS, INC.,

a Delaware corporation

By:  

 

Name:   Edward W. Stone Title:   Chief Financial Officer

VELOCITY EXPRESS LEASING, INC.,

a Delaware corporation

By:  

 

Name:   Title:  

VXP MID-WEST, INC.,

a Delaware corporation

By:  

 

Name:   Title:  

VXP LEASING MID-WEST, INC.,

a Delaware corporation

By:  

 

Name:   Title:  

CLICK MESSENGER SERVICE, INC.,

a New Jersey corporation

By:  

 

Name:   Title:  

 

Signature Page to Security Agreement

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SECURITIES COURIER CORPORATION,

a New York corporation By:  

 

Name:   Title:  

OLYMPIC COURIER SYSTEMS, INC.,

a New York corporation

By:  

 

Name:   Title:  

SILVER STAR EXPRESS, INC.,

a Florida corporation

By:  

 

Name:   Title:  

CLAYTON / NATIONAL COURIER SYSTEMS, INC.,

a Missouri corporation

By:  

 

Name:   Title:  

VELOCITY EXPRESS CORPORATION,

a Delaware corporation

By:  

/s/ Edward W. Stone

Name:   Edward W. Stone Title:   Chief Financial Officer

CD&L, INC.,

a Delaware corporation

By:  

 

Name:   Title:   AGENT:

WELLS FARGO FOOTHILL, INC.,

a California corporation

By:  

 

Name:   Title:  

 

Signature Page to Security Agreement

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SCHEDULE 1

COMMERCIAL TORT CLAIMS

[include specific case caption or descriptions per Official Code Comment 5 to
Section 9-108 of the Code]

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SCHEDULE 2

COPYRIGHTS

Schedule 2(a)

Schedule 2(b)

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SCHEDULE 3

INTELLECTUAL PROPERTY LICENSES

 

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SCHEDULE 4

PATENTS

Schedule 4(a)

Schedule 4(b)

 

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SCHEDULE 5

PLEDGED COMPANIES

 

Name of Pledgor

   Name of Pledged
Company    Number of
Shares/Units    Class of
Interests    Percentage of
Class Owned    Certificate
Nos.               

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SCHEDULE 6

TRADEMARKS

Schedule 6(a)

Schedule 6(b)

 

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SCHEDULE 7

OWNED REAL PROPERTY

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SCHEDULE 8

LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS

Grantor                                Jurisdictions

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

SCHEDULE 9

PLEDGED NOTES

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ANNEX 1 TO SECURITY AGREEMENT

FORM OF SUPPLEMENT

Supplement No.              (this “Supplement”) dated as of             ,
20    , to the Security Agreement dated as of December __, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, the “Security
Agreement”) by each of the parties listed on the signature pages thereto and
those additional entities that thereafter become parties thereto (collectively,
jointly and severally, “Grantors” and each individually “Grantor”) and Wells
Fargo Foothill, Inc., a California corporation. in its capacity as Agent for the
Lender Group and the Bank Product Provider (together with its successors and
assigns in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated as of December     ,
2006 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), by and among the lenders identified on the
signature pages thereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
“Lender” and collectively as the “Lenders”), the Agent, Velocity Express
Corporation, a Delaware corporation (“Parent”), each of Parent’s Subsidiaries
identified on the signature pages thereof as a Borrower (such Subsidiaries are
referred to hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as the “Borrowers”), and each of Parent’s
Subsidiaries identified on the signature pages thereof as a Guarantor (such
Subsidiaries, together with Parent, are referred to hereinafter each
individually as a “Guarantor”, and individually and collectively, jointly and
severally, as the “Guarantors”), the Lender Group is willing to make certain
financial accommodations available to Borrowers from time to time pursuant to
the terms and conditions thereof;

WHEREAS, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement or the Credit
Agreement;

WHEREAS, Grantors have entered into the Security Agreement in order to induce
the Lender Group to make and/or maintain certain financial accommodations to
Borrower; and

WHEREAS, pursuant to Section 5.16 of the Credit Agreement, new direct or
indirect Domestic Subsidiaries of any Loan Party, must execute and deliver to
Agent certain Loan Documents, including the Security Agreement, and the
execution of the Security Agreement by the undersigned new Grantor or Grantors
(collectively, the “New Grantors”) may be accomplished by the execution of this
Supplement in favor of Agent, for the benefit of the Lender Group and the Bank
Product Provider.

NOW, THEREFORE, for and in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each New Grantor hereby agrees as follows:

1. In accordance with Section 24 of the Security Agreement, each New Grantor, by
its signature below, becomes a “Grantor” under the Security Agreement with the
same force and effect as if originally named therein as a “Grantor” and each New
Grantor hereby (a) agrees to all of the terms and provisions of the Security
Agreement applicable to it as a “Grantor” thereunder and (b) represents and
warrants that after giving effect to this supplement, the representations and
warranties made by it as a “Grantor” thereunder are true and correct on and as
of the date hereof. In furtherance of the foregoing, each New Grantor, as
security for the payment and performance in full of the Secured Obligations,
does hereby grant, assign, and pledge to Agent, for the benefit of the Lender
Group and the Bank Product Provider, a security interest in and security title
to all assets of such New Grantor of the type described in Section 2 of the
Security Agreement to secure the full and prompt payment of the Secured
Obligations, including, any interest thereon, plus reasonable attorneys’ fees
and expenses if the Secured Obligations represented by the Security Agreement
are collected by law, through an

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attorney-at-law, or under advice therefrom. Schedule 1, “Commercial Tort
Claims”, Schedule 2, “Copyrights”, Schedule 3, “Intellectual Property Licenses”,
Schedule 4, “Patents”, Schedule 5, “Pledged Companies”, Schedule 6,
“Trademarks”, Schedule 7, “Owned Real Property,” Schedule 8, “List of Uniform
Commercial Code Filing Jurisdictions”, Schedule 9, “Pledged Notes” attached
hereto supplement Schedule 1, Schedule 2, Schedule 3, Schedule 4, Schedule 5,
Schedule 6, Schedule 7, Schedule 8, and Schedule 9 respectively, to the Security
Agreement and shall be deemed a part thereof for all purposes of the Security
Agreement. Each reference to a “Grantor” in the Security Agreement shall be
deemed to include each New Grantor. The Security Agreement is incorporated
herein by reference.

2. Each New Grantor represents and warrants to Agent, the Lender Group and the
Bank Product Provider that this Supplement has been duly executed and delivered
by such New Grantor and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws affecting creditors’ rights generally
and general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).

3. This Supplement may be executed in multiple counterparts, each of which shall
be deemed to be an original, but all such separate counterparts shall together
constitute but one and the same instrument. Delivery of a counterpart hereof by
facsimile transmission or by e-mail transmission shall be as effective as
delivery of a manually executed counterpart hereof.

4. Except as expressly supplemented hereby, the Security Agreement shall remain
in full force and effect.

5. This Supplement shall be construed in accordance with and governed by the
laws of the State of New York, without regard to the conflict of laws principles
thereof.

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4

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IN WITNESS WHEREOF, each New Grantor and Agent have duly executed this
Supplement to the Security Agreement as of the day and year first above written.

 

NEW GRANTORS:

[                                ],

a [                                ]

By:  

 

Name:   Title:  

[                                ],

a [                                ]

By:  

 

Name:   Title:   AGENT:

WELLS FARGO FOOTHILL, INC.,

a California corporation

By:  

 

Name:   Title:  

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EXHIBIT A

COPYRIGHT SECURITY AGREEMENT

This COPYRIGHT SECURITY AGREEMENT (this “Copyright Security Agreement”) is made
this      day of December, 2006, among Grantors listed on the signature pages
hereof (collectively, jointly and severally, “Grantors” and each individually
“Grantor”), and Wells Fargo Foothill, Inc., in its capacity as Agent for the
Lender Group and the Bank Product Provider (together with its successors and
assigns in such capacity, the “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated as of December 22, 2006
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), by and among the lenders identified on the signature pages
thereof (such lenders, together with their respective successors and permitted
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), the Agent, Velocity Express Corporation, a
Delaware corporation (“Parent”), each of Parent’s Subsidiaries identified on the
signature pages thereof as a Borrower (such Subsidiaries are referred to
hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as the “Borrowers”), and each of Parent’s
Subsidiaries identified on the signature pages thereof as a Guarantor (such
Subsidiaries, together with Parent, are referred to hereinafter each
individually as a “Guarantor”, and individually and collectively, jointly and
severally, as the “Guarantors”), the Lender Group is willing to make certain
financial accommodations available to Borrowers from time to time pursuant to
the terms and conditions thereof;

WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrowers as provided for in the Credit Agreement, but only
upon the condition, among others, that Grantors shall have executed and
delivered to Agent, for the benefit of the Lender Group and the Bank Product
Provider, that certain Security Agreement dated as of even date herewith
(including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the “Security
Agreement”); and

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Agent, for the benefit of the Lender Group and the Bank Product
Provider, this Copyright Security Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as follows:

1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein
have the meanings given to them in the Security Agreement or the Credit
Agreement.

2. GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL. Each Grantor hereby
grants to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing first priority (subject only to Permitted Liens) security
interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired
(collectively, the “Copyright Collateral”):

(a) all of such Grantor’s Copyrights and rights in and to Copyright Intellectual
Property Licenses to which it is a party including those referred to on Schedule
I hereto;

(b) all reissues, restorations, reversions, continuations or extensions of the
foregoing; and

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(c) all products and proceeds of the foregoing, including any claim by such
Grantor against third parties for past, present or future infringement or
dilution of any Copyright or any Copyright licensed under any Intellectual
Property License.

3. SECURITY FOR OBLIGATIONS. This Copyright Security Agreement and the Security
Interest created hereby secures the payment and performance of all the Secured
Obligations, whether now existing or arising hereafter. Without limiting the
generality of the foregoing, this Copyright Security Agreement secures the
payment of all amounts which constitute part of the Obligations and would be
owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product
Provider or any of them, whether or not they are unenforceable or not allowable
due to the existence of an Insolvency Proceeding involving any Grantor.

4. SECURITY AGREEMENT. The security interests granted pursuant to this Copyright
Security Agreement are granted in conjunction with the security interests
granted to Agent, for the benefit of the Lender Group and the Bank Product
Provider, pursuant to the Security Agreement. Each Grantor hereby acknowledges
and affirms that the rights and remedies of Agent with respect to the security
interest in the Copyright Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

5. AUTHORIZATION TO SUPPLEMENT. In accordance with the provisions of the
Security Agreement, Grantors shall give Agent prompt notice in writing of any
additional United States copyright registrations or applications therefor after
the date hereof. Grantors hereby authorize Agent unilaterally to modify this
Agreement by amending Schedule I to include any future United States registered
copyrights or applications therefor of Grantors. Notwithstanding the foregoing,
no failure to so modify this Copyright Security Agreement or amend Schedule I
shall in any way affect, invalidate or detract from Agent’s continuing security
interest in all Collateral, whether or not listed on Schedule I.

6. COUNTERPARTS. This Copyright Security Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
In proving this Copyright Security Agreement or any other Loan Document in any
judicial proceedings, it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom such enforcement is
sought. Any signatures delivered by a party by facsimile transmission or by
e-mail transmission shall be deemed an original signature hereto.

7. CONSTRUCTION. Unless the context of this Copyright Security Agreement or any
other Loan Document clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural, the terms
“includes” and “including” are not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this
Copyright Security Agreement or any other Loan Document refer to this Copyright
Security Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular provision of this Copyright Security Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Copyright Security Agreement unless
otherwise specified. Any reference in this Copyright Security Agreement or in
any other Loan Document to any agreement, instrument, or document shall include
all alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or payment in full of the Obligations
shall mean the payment in full in cash (or cash collateralization in accordance
with the terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations that, at
such time, are allowed by the applicable Bank Product Provider to remain
outstanding and that are not required by the provisions of the Credit Agreement
to be paid or cash collateralized at such time or as a condition to the
termination of the Credit Agreement and the termination of the Agent’s Liens on
the

 

7

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Collateral and the full and final termination of any commitment to extend any
financial accommodations under the Credit Agreement and any other Loan Document.
Any reference herein to any Person shall be construed to include such Person’s
successors and assigns. Any requirement of a writing contained herein or in any
other Loan Document shall be satisfied by the transmission of a Record and any
Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.

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8

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IN WITNESS WHEREOF, each Grantor has caused this Copyright Security Agreement to
be executed and delivered by its duly authorized officer as of the date first
set forth above.

 

GRANTORS:

[                                ],

a [                                ]

By:  

 

Name:   Title:  

[                                ],

a [                                ]

By:  

 

Name:   Title:   ACCEPTED AND ACKNOWLEDGED BY: WELLS FARGO FOOTHILL, INC., as
Agent By:  

 

Name:   Title:  

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SCHEDULE I

TO

COPYRIGHT SECURITY AGREEMENT

COPYRIGHT REGISTRATIONS

 

Grantor

   Country    Copyright    Registration No.    Registration Date            

Copyright Licenses

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EXHIBIT B

PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this
     day of December, 2006, among the Grantors listed on the signature pages
hereof (collectively, jointly and severally, “Grantors” and each individually
“Grantor”), and Wells Fargo Foothill, Inc., in its capacity as administrative
agent for the Lender Group and the Bank Product Provider (together with its
successors and assigns in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated as of December 22, 2006
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), by and among the lenders identified on the signature pages
thereof (such lenders, together with their respective successors and permitted
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), the Agent, Velocity Express Corporation, a
Delaware corporation (“Parent”), each of Parent’s Subsidiaries identified on the
signature pages thereof as a Borrower (such Subsidiaries are referred to
hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as the “Borrowers”), and each of Parent’s
Subsidiaries identified on the signature pages thereof as a Guarantor (such
Subsidiaries, together with Parent, are referred to hereinafter each
individually as a “Guarantor”, and individually and collectively, jointly and
severally, as the “Guarantors”), the Lender Group is willing to make certain
financial accommodations available to Borrowers from time to time pursuant to
the terms and conditions thereof;

WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrowers as provided for in the Credit Agreement, but only
upon the condition, among others, that Grantors shall have executed and
delivered to Agent, for the benefit of the Lender Group and the Bank Product
Provider, that certain Security Agreement dated as of even date herewith
(including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the “Security
Agreement”); and

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Agent, for the benefit of the Lender Group and the Bank Product
Provider, this Patent Security Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:

1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein
have the meanings given to them in the Security Agreement or the Credit
Agreement.

2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby grants
to Agent, for the benefit of the Lender Group and the Bank Product Provider, a
continuing first priority (subject only to Permitted Liens) security interest in
all of such Grantor’s right, title and interest in, to and under the following,
whether presently existing or hereafter created or acquired (collectively, the
“Patent Collateral”):

(a) all of its Patents and rights in and to Patent Intellectual Property
Licenses to which it is a party including those referred to on Schedule I
hereto;

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(b) all reissues, continuations, continuations-in-part, substitutions,
extensions or renewals of, and improvements on, all of the foregoing; and

(c) all products and proceeds of the foregoing, including any claim by such
Grantor against third parties for past, present or future infringement or
dilution of any Patent or any Patent licensed under any Intellectual Property
License.

3. SECURITY FOR OBLIGATIONS. This Patent Security Agreement and the Security
Interest created hereby secures the payment and performance of all the Secured
Obligations, whether now existing or arising hereafter. Without limiting the
generality of the foregoing, this Patent Security Agreement secures the payment
of all amounts which constitute part of the Obligations and would be owed by
Grantors, or any of them, to Agent, the Lender Group, the Bank Product Provider
or any of them, whether or not they are unenforceable or not allowable due to
the existence of an Insolvency Proceeding involving any Grantor.

4. SECURITY AGREEMENT. The security interests granted pursuant to this Patent
Security Agreement are granted in conjunction with the security interests
granted to Agent, for the benefit of the Lender Group and the Bank Product
Provider, pursuant to the Security Agreement. Each Grantor hereby acknowledges
and affirms that the rights and remedies of Agent with respect to the security
interest in the Patent Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

5. AUTHORIZATION TO SUPPLEMENT. In accordance with the provisions of the
Security Agreement, if any Grantor shall obtain rights to any new patentable
inventions or become entitled to the benefit of any patent application or patent
for any reissue, division, or continuation, of any patent, the provisions of
this Patent Security Agreement shall automatically apply thereto. Grantors shall
give prompt notice in writing to Agent with respect to any such new patent
rights. Without limiting Grantors’ obligations under this Section 5, Grantors
hereby authorize Agent unilaterally to modify this Agreement by amending
Schedule I to include any such new patent rights of Grantors. Notwithstanding
the foregoing, no failure to so modify this Patent Security Agreement or amend
Schedule I shall in any way affect, invalidate or detract from Agent’s
continuing security interest in all Collateral, whether or not listed on
Schedule I.

6. COUNTERPARTS. This Patent Security Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
In proving this Patent Security Agreement or any other Loan Document in any
judicial proceedings, it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom such enforcement is
sought. Any signatures delivered by a party by facsimile transmission or by
e-mail transmission shall be deemed an original signature hereto.

7. CONSTRUCTION. Unless the context of this Patent Security Agreement or any
other Loan Document clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural, the terms
“includes” and “including” are not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this
Patent Security Agreement or any other Loan Document refer to this Patent
Security Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular provision of this Patent Security Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Patent Security Agreement unless
otherwise specified. Any reference in this Patent Security Agreement or in any
other Loan Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or payment in full of the Obligations
shall mean the payment in

 

3

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full in cash (or cash collateralization in accordance with the terms hereof) of
all Obligations other than unasserted contingent indemnification Obligations and
other than any Bank Product Obligations that, at such time, are allowed by the
applicable Bank Product Provider to remain outstanding and that are not required
by the provisions of the Credit Agreement to be paid or cash collateralized at
such time or as a condition to the termination of the Credit Agreement and the
termination of the Agent’s Liens on the Collateral and the full and final
termination of any commitment to extend any financial accommodations under the
Credit Agreement and any other Loan Document. Any reference herein to any Person
shall be construed to include such Person’s successors and assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record and any Record so transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

4

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IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

 

GRANTORS:

[                                ],

a [                                ]

By:  

 

Name:   Title:  

[                                ],

a [                                ]

By:  

 

Name:   Title:   ACCEPTED AND ACKNOWLEDGED BY: WELLS FARGO FOOTHILL, INC., as
Agent By:  

 

Name:   Title:  

 

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SCHEDULE I

TO

PATENT SECURITY AGREEMENT

Patent Registrations/Applications

 

Grantor

   Country    Patent No.    Title    Filing Date    Filing Status               

Patents Not Currently In Use

Patent Licenses

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EXHIBIT C

PLEDGED INTERESTS ADDENDUM

This Pledged Interests Addendum, dated as of                               ,
20    , is delivered pursuant to Section 6 of the Security Agreement referred to
below. The undersigned hereby agrees that this Pledged Interests Addendum may be
attached to that certain Security Agreement, dated as of December 22, 2006 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Security Agreement”), made by the undersigned, together with the other Grantors
named therein, to Wells Fargo Foothill, Inc., as Agent. Initially capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in the Security Agreement or the Credit Agreement. The undersigned hereby agrees
that the additional interests listed on this Pledged Interests Addendum as set
forth below shall be and become part of the Pledged Interests pledged by the
undersigned to the Agent in the Security Agreement and any pledged company set
forth on this Pledged Interests Addendum as set forth below shall be and become
a “Pledged Company” under the Security Agreement, each with the same force and
effect as if originally named therein.

The undersigned hereby certifies that the representations and warranties set
forth in Section 5 of the Security Agreement of the undersigned are true and
correct as to the Pledged Interests listed herein on and as of the date hereof.

 

[                                ],

a [                                ]

By:

 

 

Name:

 

Title:

 

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Name of Pledgor

   Name of Pledged
Company    Number of
Shares/Units    Class of
Interests    Percentage of
Class Owned    Certificate
Nos.               

 

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EXHIBIT D

TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is made
this      day of December, 2006, among Grantors listed on the signature pages
hereof (collectively, jointly and severally, “Grantors” and each individually
“Grantor”), and Wells Fargo Foothill, Inc., in its capacity as Agent for the
Lender Group and the Bank Product Provider (together with its successors and
assigns in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement dated as of December 22, 2006
(as amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), by and among the lenders identified on the signature pages
thereof (such lenders, together with their respective successors and permitted
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), the Agent, Velocity Express Corporation, a
Delaware corporation (“Parent”), each of Parent’s Subsidiaries identified on the
signature pages thereof as a Borrower (such Subsidiaries are referred to
hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as the “Borrowers”), and each of Parent’s
Subsidiaries identified on the signature pages thereof as a Guarantor (such
Subsidiaries, together with Parent, are referred to hereinafter each
individually as a “Guarantor”, and individually and collectively, jointly and
severally, as the “Guarantors”), the Lender Group is willing to make certain
financial accommodations available to Borrowers from time to time pursuant to
the terms and conditions thereof;

WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrowers as provided for in the Credit Agreement, but only
upon the condition, among others, that Grantors shall have executed and
delivered to Agent, for the benefit of the Lender Group and the Bank Product
Provider, that certain Security Agreement dated as of even date herewith
(including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the “Security
Agreement”); and

WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Agent, for the benefit of the Lender Group and the Bank Product
Provider, this Trademark Security Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:

1. DEFINED TERMS. All capitalized terms used but not otherwise defined herein
have the meanings given to them in the Security Agreement or the Credit
Agreement.

2. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Each Grantor hereby
grants to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing first priority (subject only to Permitted Liens) security
interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired
(collectively, the “Trademark Collateral”):

(a) all of its Trademarks and rights in and to Trademark Intellectual Property
Licenses to which it is a party including those referred to on Schedule I
hereto;

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(b) all goodwill, trade secrets, proprietary or confidential information,
technical information, procedures, formulae, quality control standards, designs,
operating and training manuals, customer lists, and other General Intangibles
with respect to the foregoing;

(c) all reissues, continuations, extensions, modifications or renewals of the
foregoing;

(d) all goodwill of the business connected with the use of, and symbolized by,
each Trademark and each Trademark Intellectual Property License; and

(e) all products and proceeds of the foregoing, including any claim by such
Grantor against third parties for past, present or future (i) infringement or
dilution of any Trademark or any Trademark licensed under any Intellectual
Property License or (ii) injury to the goodwill associated with any Trademark or
any Trademark licensed under any Intellectual Property License.

3. SECURITY FOR OBLIGATIONS. This Trademark Security Agreement and the Security
Interest created hereby secures the payment and performance of all the Secured
Obligations, whether now existing or arising hereafter. Without limiting the
generality of the foregoing, this Trademark Security Agreement secures the
payment of all amounts which constitute part of the Obligations and would be
owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product
Provider or any of them, whether or not they are unenforceable or not allowable
due to the existence of an Insolvency Proceeding involving any Grantor.

4. SECURITY AGREEMENT. The security interests granted pursuant to this Trademark
Security Agreement are granted in conjunction with the security interests
granted to Agent, for the benefit of the Lender Group and the Bank Product
Provider, pursuant to the Security Agreement. Each Grantor hereby acknowledges
and affirms that the rights and remedies of Agent with respect to the security
interest in the Trademark Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

5. AUTHORIZATION TO SUPPLEMENT. In accordance with the provisions of the
Security Agreement, if any Grantor shall obtain rights to any new trademarks,
the provisions of this Trademark Security Agreement shall automatically apply
thereto. Grantors shall give prompt notice in writing to Agent with respect to
any such new trademarks or renewal or extension of any trademark registration.
Without limiting Grantors’ obligations under this Section 5, Grantors hereby
authorize Agent unilaterally to modify this Agreement by amending Schedule I to
include any such new trademark rights of Grantors. Notwithstanding the
foregoing, no failure to so modify this Trademark Security Agreement or amend
Schedule I shall in any way affect, invalidate or detract from Agent’s
continuing security interest in all Collateral, whether or not listed on
Schedule I.

6. COUNTERPARTS. This Trademark Security Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
In proving this Trademark Security Agreement or any other Loan Document in any
judicial proceedings, it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom such enforcement is
sought. Any signatures delivered by a party by facsimile transmission or by
e-mail transmission shall be deemed an original signature hereto.

7. CONSTRUCTION. Unless the context of this Trademark Security Agreement or any
other Loan Document clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural, the terms
“includes” and “including” are not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this
Trademark Security Agreement or any other Loan Document refer to this Trademark
Security Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular provision of this Trademark Security Agreement or such
other Loan

 

2

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Document, as the case may be. Section, subsection, clause, schedule, and exhibit
references herein are to this Trademark Security Agreement unless otherwise
specified. Any reference in this Trademark Security Agreement or in any other
Loan Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or payment in full of the Obligations
shall mean the payment in full in cash (or cash collateralization in accordance
with the terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations that, at
such time, are allowed by the applicable Bank Product Provider to remain
outstanding and that are not required by the provisions of the Credit Agreement
to be paid or cash collateralized at such time or as a condition to the
termination of the Credit Agreement and the termination of the Agent’s Liens on
the Collateral and the full and final termination of any commitment to extend
any financial accommodations under the Credit Agreement and any other Loan
Document. Any reference herein to any Person shall be construed to include such
Person’s successors and assigns. Any requirement of a writing contained herein
or in any other Loan Document shall be satisfied by the transmission of a Record
and any Record so transmitted shall constitute a representation and warranty as
to the accuracy and completeness of the information contained therein.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

3

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IN WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement to
be executed and delivered by its duly authorized officer as of the date first
set forth above.

 

GRANTORS:

[                                ],

a [                                ]

By:  

 

Name:   Title:  

[                                ],

a [                                ]

By:  

 

Name:   Title:   ACCEPTED AND ACKNOWLEDGED BY: WELLS FARGO FOOTHILL, INC., as
Agent By:  

 

Name:   Title:  

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SCHEDULE I

to

TRADEMARK SECURITY AGREEMENT

Trademark Registrations/Applications

 

Grantor

   Country    Mark    Application/
Registration No.    App/Reg Date            

Trade Names

Common Law Trademarks

Trademarks Not Currently In Use

Trademark Licenses

 

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EXHIBIT E

PLEDGED NOTE ADDENDUM

This Pledged Note Addendum, dated as of             ,         , is delivered
pursuant to Section 6(l) of the Security Agreement referred to below. The
undersigned hereby agrees that this Pledged Note Addendum may be attached to
that certain Security Agreement, dated as of December 22, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, the “Security
Agreement”), made by the undersigned, together with the other Grantors named
therein, to Wells Fargo Foothill, Inc., as Agent. Initially capitalized terms
used but not defined herein shall have the meanings ascribed to such terms in
the Security Agreement and/or the Credit Agreement. The undersigned hereby
agrees that the additional promissory notes listed on this Pledged Note Addendum
as set forth below shall be and become part of the Pledged Notes pledged by the
undersigned to the Agent in the Security Agreement, with the same force and
effect as if originally named therein.

The undersigned hereby certifies that the representations and warranties set
forth in Section 5 of the Security Agreement of the undersigned are true and
correct as to the Pledged Notes listed herein on and as of the date hereof.

 

[                                             ] By:  

 

Name:   Title  

 

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Name of Pledgor

  

Name of Maker

  

Description

  

Original Principal Amount