SECURITY AGREEMENT
 
SECURITY AGREEMENT, dated as of August 13, 2008 (this “Agreement”) made by US
DATAWORKS, INC., a Nevada corporation (the “Company” or the “Grantor”), in favor
of CHARLES E. RAMEY, in his capacity as collateral agent (in such capacity, the
“Collateral Agent”) (as defined below) for the “Buyers” party to the Note
Purchase Agreement, dated as of August 13, 2008 (as amended, restated or
otherwise modified from time to time, the “Note Purchase Agreement”).
 
WITNESSETH:
 
WHEREAS, the Company and each party listed as a “Buyer” on the signature page to
the Note Purchase Agreement (collectively, the “Buyers”) are parties to the Note
Purchase Agreement, pursuant to which the Company has agreed to sell, and the
Buyers agreed to purchase, the “Notes” (as defined in the Note Purchase
Agreement) to be issued pursuant thereto (as such Notes may be amended,
restated, replaced or otherwise modified from time to time in accordance with
the terms thereof, collectively, the “Notes”);
 
WHEREAS, it is a condition precedent to the Buyers purchasing the Notes pursuant
to the Note Purchase Agreement that the Grantor executes and deliver to the
Collateral Agent this Agreement providing for the grant to the Collateral Agent
for the benefit of the Buyers of a first priority perfected security interest in
the personal property of the Grantor to secure all of the Company’s obligations
under the Note Purchase Agreement, the Notes, the “Transaction Documents” (as
defined in the Note Purchase Agreement) (the “Transaction Documents”); and
 
WHEREAS, the Grantor has determined that the execution, delivery and performance
of this Agreement directly benefits, and is in the best interest of, the
Grantor.
 
NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce the Buyers to perform under the Note Purchase Agreement, the
Grantor agrees with the Collateral Agent, for the benefit of the Buyers, as
follows:
 
SECTION 1. Definitions.
 
(a) Reference is hereby made to the Note Purchase Agreement and the Notes for a
statement of the terms thereof. All terms used in this Agreement and the
recitals hereto which are defined in the Note Purchase Agreement, the Notes or
in Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time
in the State of New York (the “Code”), and which are not otherwise defined
herein shall have the same meanings herein as set forth therein; provided that
terms used herein which are defined in the Code as in effect in the State of New
York on the date hereof shall continue to have the same meaning notwithstanding
any replacement or amendment of such statute except as the Holders may otherwise
determine.
 
(b) The following terms shall have the respective meanings provided for in the
Code: “Accounts”, “Cash Proceeds”, “Chattel Paper”, “Commercial Tort Claim”,
“Commodity Account”, “Commodity Contracts”, “Deposit Account”, “Documents”,
“Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”,
“Inventory”, “Investment Property”, “Letter-of-Credit Rights”, “Noncash
Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory Notes”, “Security”,
“Record”, “Security Account”, “Software”, and “Supporting Obligations”.

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(c) As used in this Agreement, the following terms shall have the respective
meanings indicated below, such meanings to be applicable equally to both the
singular and plural forms of such terms:
 
“Capital Stock” means (i) with respect to any Person that is a corporation, any
and ,all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, and (ii) with respect
to any Person that is not a corporation, any and all partnership, membership or
other equity interests of such Person.
 
“Copyright Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming the Grantor as licensee or licensor and providing for
the grant of any right to use or sell any works covered by any copyright
(including, without limitation, all Copyright Licenses set forth in Schedule II
hereto).
 
“Copyrights” means all domestic and foreign copyrights, whether registered or
not, including, without limitation, all copyright rights throughout the universe
(whether now or hereafter arising) in any and all media (whether now or
hereafter developed), in and to all original works of authorship fixed in any
tangible medium of expression, acquired or used by the Grantor (including,
without limitation, all copyrights described in Schedule II hereto), all
applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in par and extensions or renewals
thereof.
 
“Event of Default” shall have the meaning set forth in the Notes.
 
“Governmental Authority” means any nation or government, any Federal, state,
city, town, municipality, county, local or other political subdivision thereof
or thereto and any department, commission, board, bureau, instrumentality,
agency or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.
 
“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United
States Code) or under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or , proceedings seeking reorganization,
arrangement, or other similar relief.
 
“Intellectual Property” means the Copyrights, Trademarks and Patents.
 
“Licenses” means the Copyright Licenses, the Trademark Licenses and the Patent
Licenses.
 
“Lien” means any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in any Collateral (including accounts and contract rights).
 
“Patent Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming the Grantor as licensee or licensor and providing for
the grant of any right to manufacture, use or sell any invention covered by any
Patent (including, without limitation, all Patent Licenses set forth in Schedule
II hereto).

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“Patents” means all domestic and foreign letters patent, design patents, utility
patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how,
formulae, rights of publicity and other general intangibles of like nature, now
existing or hereafter acquired (including, without limitation, all domestic and
foreign letters patent, design patents, utility patents, industrial designs,
inventions, trade secrets, ideas, concepts, methods, techniques, processes,
proprietary information, technology, know-how and formulae described in Schedule
II hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office, or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations, continuations in par and extensions or
renewals thereof.
 
“Person” means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental
Authority.
 
“PWSP” means Pillsbury Winthrop Shaw Pittman LLP.
 
“Trademark Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming the Grantor as licensor or licensee and providing for
the grant of any right concerning any Trademark, together with any goodwill
connected with and symbolized by any such trademark licenses, contracts or
agreements and the right to prepare for sale or lease and sell or lease any and
all Inventory now or hereafter owned by the Grantor and now or hereafter covered
by such licenses (including, without limitation, all Trademark Licenses
described in Schedule II hereto).
 
“Trademarks” means all domestic and foreign trademarks, service marks,
collective marks, certification marks, trade names, business names, d/b/a’s,
Internet domain names, trade styles, designs, logos and other source or business
identifiers and all general intangibles of like nature, now or hereafter owned,
adopted, acquired or used by the Grantor (including, without limitation, all
domestic and foreign trademarks, service marks, collective marks, certification
marks, trade names, business names, d/b/a’s, Internet domain names, trade
styles, designs, logos and other source or business identifiers described in
Schedule II hereto), all applications, registrations and recordings thereof
(including, without limitation, applications, ‘registrations and recordings in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any state thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof, together
with all goodwill of the business symbolized by such marks and all customer
lists, formulae and other Records of the Grantor relating to the distribution of
products and services in connection with which any of such marks are used.
 
SECTION 2. Grant of Security Interest. As collateral security for all of the
“Obligations” (as defined in Section 3 hereof), the Grantor hereby pledges and
assigns to the Collateral Agent for the benefit of the Buyers and PWSP, and
grants to the Collateral Agent for the benefit of the Buyers and PWSP a
continuing security interest in, all personal property of the Grantor, wherever
located and whether now or hereafter existing and whether now owned or hereafter
acquired, of every kind and description, tangible or intangible (collectively,
the “Collateral”), including, without limitation, the following:
 
(a) all Accounts;

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(b) all Chattel Paper (whether tangible or electronic);
 
(c) the Commercial Tort Claims specified on Schedule VI hereto;
 
(d) all Deposit Accounts, (including, without limitation, all cash, and all
other property from time to time deposited therein and the monies and property
in the possession or under the control of the Collateral Agent or Buyer or any
affiliate, representative, agent or correspondent of the Collateral Agent or
Buyer);
 
(e) all Documents;
 
(f) all Equipment;
 
(g) all Fixtures;
 
(h) all General Intangibles (including, without limitation, all Payment
Intangibles );
 
(i) all Goods
 
(j) all Instruments (including, without limitation, Promissory Notes and each
certificated Security);
 
(k) all Inventory;
 
(l) all Investment Property;
 
(m) all Copyrights, Patents and Trademarks, and all Licenses;
 
(n) all Letter-of-Credit Rights;
 
(o) all Supporting Obligations;
 
(p) all other tangible and intangible personal property of the Grantor (whether
or not subject to the Code), including, without limitation, all bank and other
accounts and all cash and all investments therein, all proceeds, products,
offspring, accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of any Grantor described in the
preceding clauses of this Section 2 (including, without limitation, any proceeds
of insurance thereon and all causes of action, claims and warranties now or
hereafter held by each Grantor in respect of any of the items listed above), and
all books, correspondence, files and other Records, including, without
limitation, all tapes, desks, cards, Software, data and computer programs in the
possession or under the control of any Grantor or any other Person from time to
time acting for any Grantor, in each case, to the extent of the Grantor’s rights
therein, that at any time evidence or contain information relating to any of the
property described in the preceding clauses of this Section 2 or are otherwise
necessary or helpful in the collection or realization thereof; and
 
(q) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products
of any and all of the foregoing Collateral;
 
in each case howsoever the Grantor’s interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).

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Notwithstanding anything herein to the contrary, the term “Collateral” shall not
include, in the case of a Subsidiary organized under the laws of a jurisdiction
other than the United States, any of the states thereof or the District of
Columbia (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 Capital 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 Capital 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 Grantor agrees that the pledge of the shares of Capital Stock acquired by
the Grantor of any and all Persons now or hereafter existing 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 Grantor in favor of the Collateral Agent, which pledge
agreements will provide for the pledge of such shares of Capital Stock in
accordance with the laws of the applicable foreign jurisdiction. With respect to
such shares of Capital Stock, the Collateral Agent may, at any time and from
time to time, at the written direction of the Required Holders, in their sole
discretion, take actions in such foreign jurisdictions that will result in the
perfection of the Lien created in such shares of Capital Stock.
 
SECTION 3. Security for Obligations. The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, whether now existing or hereafter incurred (collectively, the
“Obligations”):
 
(a) for so long as the Notes are outstanding, the payment by the Company, as and
when due and payable (by scheduled maturity, required prepayment, acceleration,
demand or otherwise), of all amounts from time to time owing by it in respect of
the Note Purchase Agreement, the Notes and the other Transaction Documents,
including, without limitation, in both cases, (i) all principal of and interest
on the Notes (including, without limitation, all interest that accrues after the
commencement of any Insolvency Proceeding of the Grantor, whether or not the
payment of such interest is unenforceable or is not allowable due to the
existence of such Insolvency Proceeding), and (ii) all fees, commissions,
expense reimbursements, indemnifications and all other amounts due or to become
due under any of the Transaction Documents;
 
(b) for so long as the Notes are outstanding, the due performance and observance
by the Grantor of all of its other obligations from time to time existing in
respect of any of the Transaction Documents, including without limitation, with
respect to any conversion or redemption rights of the Buyers under the Notes;
and
 
(c) for so long as the Notes are outstanding, the payment by the Company of all
amounts from time to time owing by it to PWSP, including, without limitation,
all fees and other amounts due or to become due to PWSP in connection with
professional services rendered.
 
SECTION 4. Representations and Warranties. The Grantor represents and warrants
as of the date of this Agreement as follows:

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(a) Schedule I hereto sets forth (i) the exact legal name of the Grantor, and
(ii) the state of incorporation, organization or formation and the
organizational identification number of the Grantor in such state, or states
that no such organizational identification number exists.
 
(b) All Federal, state and local tax returns and other reports required by
applicable law to be filed by the Grantor have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon the Grantor or any property of the Grantor (including, without limitation,
all federal income and social security taxes on employees’ wages) and which have
become due and payable on or prior to the date hereof have been paid, except to
the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment thereof
and with respect to which adequate reserves have been set aside for the payment
thereof in accordance with generally accepted accounting principles consistently
applied (“GAAP”).
 
(c) All Equipment, Fixtures, Goods and Inventory of the Grantor now existing
are, and all Equipment, Fixtures, Goods and Inventory of the Grantor hereafter
existing will be, located and/or based at the addresses specified therefor in
Schedule III hereto, except that the Grantor will give the Collateral Agent
written notice of any change in the location of any such Collateral within 20
days of such change, other than to locations set forth on Schedule III hereto
(or a new Schedule III delivered by the Grantor to the Collateral Agent from
time to time) and with respect to which the Holders have filed financing
statements and otherwise fully perfected its Liens thereon or will take such
actions pursuant to Section 5(n). The Grantor’s chief place of business and
chief executive office, the place where the Grantor keeps its Records concerning
Accounts and all originals of all Chattel Paper are located at the addresses
specified therefor in Schedule III hereto. None of the Accounts is evidenced by
Promissory Notes or other Instruments. Set forth in Schedule IV hereto is a
complete and accurate list, as of the date of this Agreement, of (i) each
Promissory Note, Security and other Instrument owned by the Grantor and (ii)
each Deposit Account, Securities Account and Commodities Account of the Grantor,
,together with the name and address of each institution at which each such
account is maintained, the account number for each such account and a
description of the purpose of each such account. Set forth in Schedule II hereto
is a complete and correct list of each trade name used by the Grantor, and the
name of, and each trade name used by, each person from which the Grantor has
acquired any substantial par of the Collateral.
 
(d) The Grantor has delivered to the Collateral Agent complete and correct
copies of each License described in Schedule II hereto, including all schedules
and exhibits thereto, which represents all of the Licenses existing on the date
of this Agreement. Each such License sets forth the entire agreement and
understanding of the parties thereto relating to the subject matter thereof, and
there are no other agreements, arrangements or understandings, written or oral,
relating to the matters covered thereby or the rights of the Grantor or any of
its affiliates in respect thereof. Each material License now existing is, and
any material License entered into in the future will be, the legal, valid and
binding obligation of the parties thereto, enforceable against such parties in
accordance with its terms. No default under any material License by any such
party has occurred, nor does any defense, offset, deduction or counterclaim
exist thereunder in favor of any such party.

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(e) The Grantor owns and controls, or otherwise possesses adequate rights to
use, all Trademarks, Patents and Copyrights, which are the only trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity necessary to conduct its
business in substantially the same manner as conducted as of the date hereof.
Schedule II hereto sets forth a true and complete list of all registered
copyrights, issued Patents, Trademarks, and Licenses annually owned or used by
the Grantor as of the date hereof. To the best knowledge of the Grantor, all
such Intellectual Property of the Grantor is subsisting and in full force and
effect, has not been adjudged invalid or unenforceable, is valid and enforceable
and has not been abandoned in whole or in par. Except as set forth in Schedule
II, no such Intellectual Property is the subject of any licensing or franchising
agreement. The Grantor has no knowledge of any conflict with the rights of
others to any such Intellectual Property and, to the best knowledge of the
Grantor, the Grantor is not now infringing or in conflict with any such rights
of others in any material respect, and to the best knowledge of the Grantor, no
other Person is now infringing or in conflict in any material respect with any
such properties, assets and rights owned or used by the Grantor. The Grantor has
not received any notice that it is violating or has violated the trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity or other intellectual
property rights of any third party.
 
(f) The Grantor is and will be at all times the sole and exclusive owner of, or
otherwise has and will have adequate rights in, the Collateral free and clear of
any Liens, except for Permitted Liens. No effective financing statement or other
instrument similar in effect covering all or any par of the Collateral is on
file in any recording or filing office except such as (i) may have been filed in
favor of the Collateral Agent and/or the Buyers relating to this Agreement or
the other Security Documents and (ii) are described on Schedule 4(f) hereto.
 
(g) The exercise by the Collateral Agent of any of its rights and remedies
hereunder will not contravene any law or any contractual restriction binding on
or otherwise affecting the Grantor or any of its properties and will not result
in or require the creation of any Lien, upon or with respect to any of its
properties.
 
(h) No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or other regulatory body or any other Person,
is required for (i) the grant by the Grantor, or the perfection, of the security
interest purported to be created hereby in the Collateral, or (ii) the exercise
by the Collateral Agent of any of its rights and remedies hereunder, except
(except (A) for the filing under the Uniform Commercial Code as in effect in the
applicable jurisdiction of the financing statements described in Schedule V
hereto (or a new Schedule V delivered by the Grantor to the Collateral Agent
from time to time), all of which financing statements have been duly filed and
are in full force and effect or will be duly filed and in full force and effect,
(B) with respect to Deposit Accounts, and all cash and other property from time
to time deposited therein, for the execution of a control agreement with the
depository institution with which such account is maintained, as provided in
Section 5(i), (C) with respect to Commodity Contracts, for the execution of a
control agreement with the commodity intermediary with which such commodity
contract is carried, as provided in Section 5(i), (D) with respect to the
Perfection of the security interest created hereby in the United States
Intellectual Property and Licenses, for the recording of the appropriate
Assignment for Security, substantially in the form of Exhibit A hereto in the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable, (E) with respect to the Perfection of the security interest
created hereby in foreign Intellectual Property and Licenses, for registrations
and filings in jurisdictions located outside of the United States and covering
rights in such jurisdictions relating to such foreign Intellectual Property and
Licenses, (F) with respect to the Perfection of the security interest created
hereby in Titled Collateral, for the submission of an appropriate application
requesting that the Lien of the Collateral Agent be noted on the Certificate of
Title or certificate of ownership, completed and authenticated by the Grantor,
together with the Certificate of Title or certificate of ownership, with respect
to such Titled Collateral, to the appropriate governmental authority, (G) with
respect to the Perfection of the security interest created hereby in any
Letter-of-Credit Rights, for the consent of the issuer of the applicable letter
of credit to the assignment of proceeds as provided in the Uniform Commercial
Code as in effect in the applicable jurisdiction, (H) with respect to any action
that may be necessary to obtain control of Collateral constituting Deposit
Accounts, Commodity Contracts, Electronic Chattel Paper, Investment Property or
Letter-of-Credit Rights, the taking of such actions, and (1) the Collateral
Agent having possession of all Documents, Chattel Paper, Instruments and cash
constituting Collateral (subclauses (A), (B), (C), (D), (E), (F), G), (H) and
(I), each a “Perfection Requirement” and collectively, the “Perfection
Requirements”).

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(i) This Agreement creates in favor of the Collateral Agent a legal, valid and
enforceable security interest in the Collateral, as security for the
Obligations. The Perfection Requirements result in the Perfection of such
security interests. Such security interests are, or in the case of Collateral in
which the Grantor obtains rights after the date hereof, will be, perfected,
first priority security interests, subject only to Permitted Liens and the
Perfection Requirements and the financing statements described in Schedule 4(f).
Such recordings and filings and all other action necessary to perfected and
protect such security interest have been duly taken or will be taken pursuant to
Section 5(n), and, in the case of Collateral in which the Grantor obtains rights
after the date hereof, will be duly taken, except for the Collateral Agent’s
having possession of all Documents, Chattel Paper, Instruments and cash
constituting Collateral after the date hereof and the other actions, filings and
recordations described above, including the Perfection Requirements.
 
(j) As of the date hereof, the Grantor does not hold any Commercial Tort Claims
or has knowledge of any pending Commercial Tort Claims, except for such
Commercial Tort Claims described in Schedule VI.
 
SECTION 5. Covenants as to the Collateral. So long as any of the Obligations
shall remain outstanding, unless the Required Holders shall otherwise consent in
writing:
 
(a) Further Assurances. The Grantor will at its expense, at any time and from
time to time, promptly execute and deliver all further instruments and documents
and take all further action that the Required Holders may reasonably request in
order to: (i) perfect and protect the security interest purported to be created
hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder in respect of the Collateral; or (ii) otherwise effect the
purposes of this Agreement, including, without limitation: (A) marking
conspicuously all Chattel Paper and each License and, at the request of the
Required Holders, each’ of its Records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Required Holders, indicating
that such Chattel Paper, License or Collateral is subject to the security
interest created hereby, (B) delivering and pledging to the Collateral Agent
pursuant to the Pledge each Promissory Note, Security, Chattel Paper or other
Instrument, now or hereafter owned by the Grantor, duly endorsed and accompanied
by executed instruments of transfer or assignment, all in form and substance
satisfactory to the Required Holders, (C) executing and filing (to the extent,
if any, that the Grantor’s signature is required thereon) or authenticating the
filing of, such financing or continuation statements, or amendments thereto, as
may be required by applicable law or necessary or that the Required Holders may
reasonably request in order to perfect and preserve the security interest
purported to be created hereby, (D) furnishing to the Collateral Agent from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral in each case
as the Required Holders may reasonably request, all in reasonable detail, (E) if
any Collateral shall be in the possession of a third party, notifying such
Person of the Collateral Agent’s security interest created hereby and obtaining
a written acknowledgment from such Person that such Person holds possession of
the Collateral for the benefit of the Collateral Agent, which such written
acknowledgement shall be in form and substance reasonably satisfactory to the
Required Holders, (F) if at any time after the date hereof, the Grantor acquires
or holds any Commercial Tort Claim, promptly notifying the Collateral Agent in a
writing signed by the Grantor setting forth a brief description of such
Commercial Tort Claim and granting to the Collateral Agent a security interest
therein and in the proceeds thereof, which writing shall incorporate the
provisions hereof and shall be in form and substance satisfactory to the
Required Holders, (G) upon the acquisition after the date hereof by the Grantor
of any motor vehicle or other Equipment subject to a certificate of title or
ownership (other than a Motor Vehicle or Equipment that is subject to a purchase
money security interest), causing the Collateral Agent to be listed as the
lienholder on such certificate of title or ownership and delivering evidence of
the same to the Collateral Agent in accordance with Section 50) hereof; and (H)
taking all actions required by any earlier versions of the Uniform Commercial
Code or by other law, as applicable, in any relevant Uniform Commercial Code
jurisdiction, or by other law as applicable in any foreign jurisdiction.

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(b) Location of Equipment and Inventory. The Grantor will keep the Equipment and
Inventory (i) at the locations specified therefor on Schedule II hereto, or (ii)
at such other locations set forth on Schedule II (or a new Schedule III
delivered by the Grantor to Collateral Agent from time to time) and with respect
to which the Holders have filed financing statements and otherwise fully
perfected its Liens thereon, or (iii) at such other locations in the United
States, provided that within 20 days following the relocation of Equipment or
Inventory to such other location or the acquisition of Equipment or Inventory,
the Grantor shall deliver to the Collateral Agent a new Schedule II indicating
such new locations.
 
(c) Condition of Equipment. The Grantor will maintain or cause the Equipment
(necessary or useful to its business) to be maintained and preserved in good
condition, repair and working order, ordinary wear and tear excepted, and will
forthwith, or in the case of any loss or damage to any Equipment of the Grantor
within a commercially reasonable time after the occurrence thereof, make or
cause to be made all repairs, replacements and other improvements in connection
therewith which are necessary or desirable, consistent with past practice, or
which the Required Holders may request to such end. The Grantor will promptly
furnish to the Collateral Agent a statement describing in reasonable detail any
such loss or damage in excess of $250,000 per occurrence to any Equipment.
 
(d) Taxes, Etc. The Grantor agrees to pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof.
 
(e) Insurance.
 
(i) The Grantor will, at its own expense, maintain insurance liability and
property insurance) with respect (including, without limitation, commercial
general to the Equipment and Inventory in such amounts, against such risks, in
such form and with responsible and reputable insurance companies or associations
as is required by any governmental authority having jurisdiction with respect
thereto or as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated and in any event, in amount,
adequacy and scope reasonably satisfactory to the Required Holders. To the
extent requested by the Required Holders, at any time and from time to time,
each such policy for liability insurance shall provide for all losses to be paid
on behalf of the Collateral Agent and the Grantor as their respective interests
may appear, and each policy for property damage insurance shall provide for all
losses to be adjusted with, and paid directly to, the Collateral Agent. To the
extent requested by the Required Holders, at any time and from time to time,
each such policy shall in addition (A) name the Collateral Agent as an
additional insured party thereunder (without any representation or warranty by
or obligation upon the Collateral Agent) as their interests may appear, (B)
contain an agreement by the insurer that any loss thereunder shall be payable to
the Collateral Agent on its own account notwithstanding any action, inaction or
breach of representation or warranty by the Grantor, (C) provide that there
shall be no recourse against the Collateral Agent for payment of premiums or
other amounts with respect thereto, and (D) provide that at least 30 days’ prior
written notice of cancellation, lapse, expiration or other adverse change shall
be given to the Collateral Agent by the insurer. The Grantor will, if so
requested by the Required Holders, deliver to the Collateral Agent original or
duplicate policies of such insurance and, as often as the Required Holders may
reasonably request, a report of a reputable insurance broker with respect to
such insurance. The Grantor will, if so requested by the Required Holders, also
execute and deliver instruments of assignment of such insurance policies and
cause the respective insurers to acknowledge notice of such assignment.

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(ii) Reimbursement under any liability insurance maintained by the Grantor
pursuant to this Section 5(e) may be paid directly to the Person who shall have
incurred liability covered by such insurance. Following an Event of Default, in
the case of any loss involving damage to Equipment or Inventory, any proceeds of
insurance maintained by the Grantor pursuant to this Section 5(e) shall be paid
to the Collateral Agent (except as to which paragraph (iii) of this Section 5(e)
is not applicable), the Grantor will make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of
insurance maintained by the Grantor pursuant to this Section 5(e) shall be paid
by the Collateral Agent to the Grantor as reimbursement for the costs of such
repairs or replacements.
 
(iii) Following and during the continuance of an Event of Default, all insurance
payments in respect of such Equipment or Inventory shall be paid to the
Collateral Agent and applied as specified in Section 7(b) hereof.
 
(f) Provisions Concerning the Accounts and the Licenses.
 
(i) The Grantor will (A) give the Collateral Agent at least 30 days’ prior
written notice of any change in the Grantor’s name, identity or organizational
structure, (B) maintain its jurisdiction of incorporation, organization or
formation as set forth in Schedule I hereto, (C) immediately notify the
Collateral Agent upon obtaining an organizational identification number, if on
the date hereof the Grantor did not have such identification number, and (D)
keep adequate records concerning the Accounts, in accordance with Section 4 (i)
of the Note Purchase Agreement and Chattel Paper.

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(ii) Each Grantor will, except as otherwise provided in this subsection (f),
continue to collect, at its own expense, all amounts due or to become due under
the Accounts. In connection with such collections, the Grantor may (and, at the
Required Holders’ direction, will take such action as the Grantor or the
Required Holders may deem necessary or advisable to enforce collection or
performance of the Accounts; provided, however, that the Collateral Agent shall
have the right at any time, upon the occurrence and during the continuance of an
Event of Default, to notify the account debtors or obligors under any Accounts
of the assignment of such Accounts to the Collateral Agent and to direct such
account debtors or obligors to make payment of all amounts due or to become due
to the Grantor thereunder directly to the Collateral Agent or its designated
agent and, upon such notification and at the expense of the Grantor and to the
extent permitted by law, to enforce collection of any such Accounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as the Grantor might have done. After receipt by the
Grantor of a notice from the Collateral Agent that the Collateral Agent has
notified, intends to notify, or has enforced or intends to enforce the Grantor’s
rights against the account debtors or obligors under any Accounts as referred to
in the proviso to the immediately preceding sentence, (A) all amounts and
proceeds (including Instruments) received by the Grantor in respect of the
Accounts shall be received in trust for the benefit of the Collateral Agent
hereunder, shall be segregated from other funds of the Grantor and shall be
forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement) to be held as cash collateral and applied as
specified in Section 7(b) hereof, and (B) the Grantor will not adjust, settle or
compromise the amount or payment of any Account or release wholly or partly any
account debtor or obligor thereof or allow any credit or discount thereon. In
addition, upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall (at the written direction of the Required Holders)
direct any or all of the banks and financial institutions with which the Grantor
either maintains a Deposit Account or a lockbox or deposits the proceeds of any
Accounts to send immediately to the Collateral Agent by wire transfer (to such
account as the Collateral Agent shall specify, or in such other manner as the
Collateral Agent shall direct) all or a portion of such securities, cash,
investments and other items held by such institution. Any such securities, cash,
investments and other items so received by the Collateral Agent shall (at the
written direction of the Required Holders) be held as additional Collateral for
the Obligations or distributed in accordance with Section 7(b) hereof.

(iii) Upon the occurrence and during the continuance of any breach or default
under any material License referred to in Schedule II hereto by any party
thereto other than the Grantor, the Grantor party thereto will, promptly after
obtaining knowledge thereof, give the Collateral Agent written notice of the
nature and duration thereof, specifying what action, if any, it has taken and
proposes to take with respect thereto and thereafter will take reasonable steps
to protect and preserve its rights and remedies in respect of such breach or
default, or will obtain or acquire an appropriate substitute License.
 
(iv) The Grantor will, at its expense, promptly deliver to the Collateral Agent
a copy of each notice or other communication received by it by which any other
party to any material License referred to in Schedule II hereto purports to
exercise any of its rights or affect any of its obligations thereunder, together
with a copy of any reply by the Grantor thereto.
 
(v) The Grantor will exercise promptly and diligently each and every right which
it may have under each material License (other than any right of termination)
and will duly perform and observe in all respects all of its obligations under
each material License and will take all action reasonably necessary to maintain
such Licenses in full force and effect. The Grantor will not, without the prior
written consent of the Required Holders, cancel, terminate, amend or otherwise
modify in any respect, or waive any provision of, any material License referred
to in Schedule II hereto.

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(g) Transfers and Other Liens.
 
(i) The Grantor will not sell, assign (by operation of law or otherwise), lease,
license, exchange or otherwise transfer or dispose of any of the Collateral,
except (A) Inventory in the ordinary course of business, and (B) worn out or
obsolete assets, not necessary to the business.
 
(ii) The Grantor will not create, suffer to exist or grant any Lien upon or with
respect to any Collateral other than a Permitted Lien.
 
(h) Intellectual Property.
 
(i) If applicable, the Grantor shall, upon the Required Holders’ written
request, duly execute and deliver the applicable Assignment for Security in the
form attached hereto as Exhibit A. The Grantor (either itself or through
licensees) will, and will cause each licensee thereof to, take all action
necessary to maintain all of the Intellectual Property in full force and effect,
including, without limitation, using the proper statutory notices and markings
and using the Trademarks on each applicable trademark class of goods in order to
so maintain the Trademarks in full force and free from any claim of abandonment
for non-use, and the Grantor will not (nor permit any licensee thereof to) do
any act or knowingly omit to do any act whereby any Intellectual Property may
become invalidated; provided, however, that so long as no Event of Default has
occurred and is continuing, the Grantor shall not have an obligation to use or
to maintain any Intellectual Property (A) that relates solely to any product or
work, that has been, or is in the process of being, discontinued, abandoned or
terminated, (B) that is being replaced with Intellectual Property substantially
similar to the Intellectual Property that may be abandoned or otherwise become
invalid, so long as the failure to use or maintain such Intellectual Property
does not materially adversely affect the validity of such replacement
Intellectual Property and so long as such replacement Intellectual Property is
subject to the Lien created by this Agreement or (C) that is substantially the
same as another Intellectual Property that is in full force, so long the failure
to use or maintain such Intellectual Property does not materially adversely
affect the validity of such replacement Intellectual Property and so long as
such other Intellectual Property is subject to the Lien and security interest
created by this Agreement. The Grantor will cause to be taken all necessary
steps in any proceeding before the United States Patent and Trademark Office and
the United States Copyright Office or any similar office or agency in any other
country or political subdivision thereof to maintain each registration of the
Intellectual Property (other than the Intellectual Property described in the
proviso to the immediately preceding sentence), including, without limitation,
filing of renewals, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and payment of maintenance
fees, filing fees, taxes or other governmental fees. If any Intellectual
Property (other than Intellectual Property described in the proviso to the first
sentence of subsection (i) of this clause (h)) is infringed, misappropriated,
diluted or otherwise violated in any material respect by a third party, the
Grantor shall (x) upon learning of such infringement, misappropriation, dilution
or other violation, promptly notify the Collateral Agent and (y) to the extent
the Grantor shall deem appropriate under the circumstances, promptly sue for
infringement, misappropriation, dilution or other violation, seek injunctive
relief where appropriate and recover any and all damages for such infringement,
misappropriation, dilution or other violation, or take such other actions as the
Grantor shall deem appropriate under the circumstances to protect such
Intellectual Property. The Grantor shall furnish to the Collateral Agent from
time to time statements and schedules further identifying and describing the
Intellectual Property and Licenses and such other reports in connection with the
Intellectual Property and Licenses as the Required Holders may reasonably
request, all in reasonable detail and promptly upon request of the Required
Holders, following receipt by the Collateral Agent of any such statements,
schedules or reports, the Grantor shall modify this Agreement by amending
Schedule II hereto, as the case may be, to include any Intellectual Property and
License, as the case may be, which becomes par of the Collateral under this
Agreement and shall execute and authenticate such documents and do such acts as
shall be necessary or, in the reasonable judgment of the Required Holders,
desirable to subject such Intellectual Property and Licenses to the Lien and
security interest created by this Agreement. Notwithstanding anything herein to
the contrary, upon the occurrence and during the continuance of an Event of
Default, the Grantor may not abandon or otherwise permit any Intellectual
Property to become invalid without the prior written consent of the Required
Holders, and if any Intellectual Property is infringed, misappropriated, diluted
or otherwise violated in any material respect by a third party, the Grantor will
take such action as the Required Holders shall deem appropriate under the
circumstances to protect such Intellectual Property.

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(ii) In no event shall the Grantor, either itself or through any agent,
employee, licensee or designee, fie an application for the registration of any
Trademark or Copyright or the issuance of any Patent with the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable, or in any similar office or agency of the United States or any
country or any political subdivision thereof unless it gives the Collateral
Agent prior written notice thereof. Upon request of the Required Holders, the
Grantor shall execute, authenticate and deliver any and all assignments,
agreements, instruments, documents and papers as the Required Holders may
reasonably request to evidence the Collateral Agent’s security interest
hereunder in such Intellectual Property and the General Intangibles of the
Grantor relating thereto or represented thereby, and the Grantor hereby appoints
the Collateral Agent its attorney-in-fact to execute and/or authenticate and fie
all such writings for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed, and such power (being coupled with an interest)
shall be irrevocable until the indefeasible payment in full in cash of all of
the Obligations in full.
 
(i) Deposit, Commodities and Securities Accounts.
 
(i) As soon as commercially reasonable, and in no event greater than 5 Business
Days after the Closing Date, the Company shall and shall cause each of its
Subsidiaries to (a) establish and maintain cash management services of a type
and on terms satisfactory to Required Holders with the Collateral Agent (in such
capacity, the “Cash Management Bank”), and shall request in writing and
otherwise take such reasonable steps to ensure that all of its and its
Subsidiaries’ account debtors forward payment of the amounts owed by them
directly to the Cash Management Bank, and (b) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, al of their cash, checks, notes instruments and all other
items of payment (including those sent directly by their account debtors to
Company or one of its Subsidiaries) into a bank account (a “Cash Management
Account”) at the Cash Management Bank.

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(ii) Upon the Required Holders’ written request, the Grantor shall cause each
other bank and other financial institution with an account referred to in
Schedule IV hereto to execute and deliver to the Collateral Agent a control
agreement, in form and substance reasonably satisfactory to the Required
Holders, duly executed by the Grantor and such bank or financial institution, or
enter into other arrangements in form and substance satisfactory to the Required
Holders, pursuant to which such institution shall irrevocably agree, inter alia,
that (i) it will comply at any time with the instructions originated by the
Collateral Agent to such bank or ‘financial institution directing the
disposition of cash, Commodity Contracts, securities, Investment Property and
other items from time to time credited to such account, without further consent
of the Grantor, which instructions the Collateral Agent will not give to such
bank or other financial institution in the absence of a continuing Event of
Default, (ii) all Commodity Contracts, securities, Investment Property and other
items of the Grantor deposited with such institution shall be subject to a
perfected, first priority security interest in favor of the Collateral Agent,
(iii) any right of set off (other than recoupment of standard fees), banker’s
Lien or other similar Lien, security interest or encumbrance shall be fully
waived as against the Collateral Agent, and (iv) upon receipt of written notice
from the Collateral Agent during the continuance of an Event of Default, such
bank or financial institution shall immediately send to the Collateral Agent by
wire transfer (to such account as the Collateral Agent shall specify, or in such
other manner as the Collateral Agent shall direct) all such cash, the value of
any Commodity Contracts, securities, Investment Property and other items held by
it. Without the prior written consent of the Required Holders, the Grantor shall
not make or maintain any Deposit Account, Commodity Account or Securities
Account except for the Cash Management Accounts and the accounts set forth in
Schedule IV hereto. The provisions of this paragraph 5(ii) shall not apply to
accounts specially and exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of the Grantor’s
salaried or hourly employees.
 
(j) Motor Vehicles.
 
(i) The Grantor shall deliver to the Collateral Agent originals of the
certificates of title or ownership for all motor vehicles with a value in excess
of $50,00, owned by it with the Collateral Agent listed as lienholder, for the
benefit of the Buyers.
 
(ii) Upon the written request of the Required Holders, the Grantor hereby
appoints the Collateral Agent as its attorney-in-fact, effective the date hereof
and terminating upon the termination of this Agreement, for the purpose of (A)
executing on behalf of the Grantor title or ownership applications for filing
with appropriate state agencies to enable motor vehicles now owned or hereafter
acquired by the Grantor to be retitled and the Collateral Agent listed as
lienholder thereof, (B) filing such applications with such state agencies, and
(C) executing such other documents and instruments on behalf of, and taking such
other action in the name of, the Grantor as the Collateral Agent may deem
necessary or advisable to accomplish the purposes hereof (including, without
limitation, for the purpose of creating in favor of the Collateral Agent a
perfected Lien on the motor vehicles and exercising the rights and remedies of
the Collateral Agent hereunder). This appointment as attorney-in-fact is coupled
with an interest and is irrevocable until all of the Obligations are
indefeasibly paid in full in cash. Notwithstanding the foregoing, the Collateral
Agent shall not have any responsibility for any filings under this Section, it
being understood that all such filings will be maintained by counsel to the
Holders.
 
(iii) Any certificates of title or ownership delivered pursuant to the terms
hereof shall be accompanied by odometer statements for each motor vehicle
covered thereby.
 
(iv) So long as no Event of Default shall have occurred and be continuing, upon
the request of the Grantor, the Collateral Agent shall, at the written direction
of ‘the Required Holders, execute and deliver to the Grantor such instruments as
the Grantor shall reasonably request to remove the notation of the Collateral
Agent as lienholder on any certificate of title for any motor vehicle; provided,
however, that any such instruments shall be delivered, and the release
effective, only upon receipt by the Collateral Agent of a certificate from the
Grantor stating that such motor vehicle is to be sold or has suffered a casualty
loss (with title thereto in such case passing to the casualty insurance company
therefor in settlement of the claim for such loss) and the amount that the
Grantor will receive as sale proceeds or insurance proceeds.

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(k) Control. The Grantor hereby agrees to take any or all action that may be
necessary or that the Required Holders may reasonably request in order for the
Collateral Agent to obtain control in accordance with Sections 9-105 - 9-107 of
the Code with respect to the following Collateral: (i) Electronic Chattel Paper,
(ii) Investment Property, and (iii) Letter-of-Credit Rights.
 
(l) Inspection and Reporting. The Grantor shall permit, in accordance with the
Note Purchase Agreement, the Collateral Agent, or any designee, agent or
representatives thereof or such professionals or other Persons as the Collateral
Agent or Required Holders may designate, during normal business hours, after
reasonable prior notice, in the absence of an Event of Default and not more than
once a year in the absence of an Event of Default, (i) to examine and make
copies of and abstracts from the Grantor’s records and books of account, (ii) to
visit and inspect its properties, (iii) to verify materials, leases,
Instruments, Accounts, Inventory and other assets of the Grantor from time to
time, (iii) to conduct audits, physical counts, appraisals and/or valuations,
examinations at the locations of any Grantor. Each Grantor shall also permit, in
accordance with the Note Purchase Agreement, the Collateral Agent, or any
designee, agent or representatives thereof or such professionals or other
Persons as the Collateral Agent or Required Holders may designate to discuss the
Grantor’s affairs, finances and accounts with any of its directors, officers,
managerial employees, independent accountants or any of its other
representatives.
 
(m) Future Subsidiaries. If the Grantor shall hereafter create or acquire any
Subsidiary, simultaneously with the creation or acquisition of such Subsidiary,
the Grantor shall (i) cause such Subsidiary to become a party to this Agreement
as an additional “Grantor” hereunder, (ii) the Grantor shall deliver to
Collateral Agent revised Schedules to this Agreement, as appropriate, (iii)
shall duly execute and deliver a guaranty of the Obligations in favor of the
Collateral Agent in form and substance reasonably acceptable to the Required
Holders, and (iv) shall duly execute and/or deliver such opinions of counsel and
other documents, in form and substance reasonably acceptable to the Required
Holders, as the Required Holders shall reasonably request with respect thereto,
provided that that if the Grantor acquires a subsidiary on or within two days
after the Closing Date, it shall have 10 Business Days in which to satisfy the
requirements of this Section 5(m).
 
SECTION 6. Additional Provisions Concerning the Collateral.
 
(a) To the maximum extent permitted by applicable law, and for the purpose of
taking any action that the Collateral Agent or Required Holders may deem
necessary or advisable to accomplish the purposes of this Agreement, the Grantor
hereby (i) authorizes the Collateral Agent or the Required Holders to execute
any such agreements, instruments or other documents in the Grantor’s name and to
fie such agreements, instruments or other documents in the Grantor’s name and in
any appropriate filing office, (ii) authorizes the Collateral Agent or the
Required Holders at any time and from time to time to fie, one or more financing
or continuation statements, and amendments thereto, relating to the Collateral
(including, without limitation, any such financing statements that (A) describe
the Collateral as “all assets” or “all personal property” (or words of similar
effect) or that describe or identify the Collateral by type or in any other
manner as the Required Holders may determine regardless of whether any
particular asset of the Grantor falls within the scope of Article 9 of the
Uniform Commercial Code or whether any particular asset of the Grantor
constitutes par of the Collateral, and (B) contain any other information
required by Part 5 of Article 9 of the Code for the sufficiency or filing office
acceptance of any financing statement, continuation statement or amendment,
including, without limitation, whether the Grantor is an organization, the type
of organization and any organizational identification number issued to the
Grantor) and (iii) ratifies such authorization to the extent that the Required
Holders have filed any such financing or continuation statements, or amendments
thereto, prior to the date hereof. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any par thereof
shall be sufficient as a financing statement where permitted by law.

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(b) The Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of the
Grantor and in the name of the Grantor or otherwise, from time to time in the
Required Holders’ discretion, so long as an Event of Default shall have occurred
and is continuing, to take any action and to execute any instrument which the
Required Holders may reasonably deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of the Grantor under Section 5
hereof), including, without limitation, (i) to obtain and adjust insurance
required to be paid to the Collateral Agent pursuant to Section 5(e) hereof,
(ii) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any Collateral, (ii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper in connection with clause (i) or (ii)
above, (iv) to fie any claims or take any action or institute any proceedings
which the Required Holders may deem necessary or desirable for the collection of
any Collateral or otherwise to enforce the rights of the Collateral Agent and
the Buyers with respect to any Collateral, and (v) to execute assignments,
licenses and other documents to enforce the rights of the Collateral Agent and
the Buyers with respect to any Collateral. This power is coupled with an
interest and is irrevocable until all of the Obligations are indefeasibly paid
in full in cash.
 
(c) For the purpose of enabling the Collateral Agent to exercise rights and
remedies hereunder, at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose, the
Grantor hereby grants to the Collateral Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Grantor) to use, assign, license or sublicense any
Intellectual Property now owned or hereafter acquired by the Grantor, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof. Notwithstanding
anything contained herein to the contrary, but subject to the provisions of the
Note Purchase Agreement that limit the right of the Grantor to dispose of its
property, and Section 5(g) and Section 5(h) hereof, so long as no Event of
Default shall have occurred and be continuing, the Grantor may exploit, use,
enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of its
business. In furtherance of the foregoing, unless an Event of Default shall have
occurred and be continuing, the Collateral Agent shall from time to time, upon
the request of the Grantor, execute and deliver any instruments, certificates or
other documents, in the form so requested, which the Grantor shall have
certified are appropriate (in the Grantor’s judgment) to allow it to take any
action permitted above (including relinquishment of the license provided
pursuant to this clause (c) as to any Intellectual Property. Further, upon the
indefeasible payment in full in cash of all of the Obligations, the Collateral
Agent (subject to Section Wee) hereof) shall release and reassign to the Grantor
all of the Collateral Agent’s right, title and interest in and to the
Intellectual Property, and the Licenses, all without recourse, representation or
warranty whatsoever. The exercise of rights and remedies hereunder by the
Collateral Agent shall not terminate the rights of the holders of any licenses
or sublicenses theretofore granted by the Grantor in accordance with the second
sentence of this clause (c). The Grantor hereby releases the Collateral Agent
from any claims, causes of action and demands at any time arising out .of or
with respect to any actions taken or omitted to be taken by the Collateral Agent
under the powers of attorney granted herein other than actions taken or omitted
to be taken through the Collateral Agent’s gross negligence or willful
misconduct, as determined by a final determination of a court of competent
jurisdiction.

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(d) If the Grantor fails to perform any agreement or obligation contained
herein, the Collateral Agent may itself perform, or cause performance of, such
agreement or obligation, in the name of the Grantor or the Collateral Agent, and
the expenses of the Collateral Agent incurred in connection therewith shall be
payable by the Grantor pursuant to Section 8 hereof and shall be secured by the
Collateral.
 
(e) The powers conferred on the Collateral Agent hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Collateral
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.
 
(f) Anything herein to the contrary notwithstanding (i) the Grantor shall remain
liable under the Licenses and otherwise with respect to any of the Collateral to
the extent set forth therein to perform all of its obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by the
Collateral Agent of any of its rights hereunder shall not release the Grantor
from any of its obligations under the Licenses or otherwise in respect of the
Collateral, and (iii) the Collateral Agent shall not have any obligation or
liability by reason of this Agreement under the Licenses or with respect to any
of the other Collateral, nor shall the Collateral Agent be obligated to perform
any of the obligations or duties of the Grantor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder.
 
SECTION 7. Remedies Upon Event of Default. If any Event of Default shall have
occurred and be continuing, acting at the written direction of the Required
Holders:

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(a) The Collateral Agent may exercise in respect of the Collateral, in addition
to any other rights and remedies provided for herein or otherwise available to
it, all of the rights and remedies of a secured party upon default under the
Code (whether or not the Code applies to the affected Collateral), and also may
(i) take absolute control of the Collateral, including, without limitation,
transfer into the Collateral Agent’s name or into the name of its nominee or
nominees (to the extent the Collateral Agent has not theretofore done so) and
thereafter receive, for the benefit of the Collateral Agent, all payments made
thereon, give all consents, waivers and ratifications in respect thereof and
otherwise act with respect thereto as though it were the outright owner thereof,
(ii) require the Grantor to, and the Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or par
of its respective Collateral as directed by the Collateral Agent and make it
available to the Collateral Agent at a place or places to be designated by the
Collateral Agent that is reasonably convenient to both parties, and the
Collateral Agent may enter into and occupy any premises owned or leased by the
Grantor where the Collateral or any par thereof is located or assembled for a
reasonable period in order to effectuate the Collateral Agent’s rights and
remedies hereunder or under law, without obligation to the Grantor in respect of
such occupation, and (iii) without notice except as specified below and without
any obligation to prepare or process the Collateral for sale, (A) sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or
for future delivery, and at such price or prices and upon such other terms as
the Collateral Agent may deem commercially reasonable and/or (B) lease, license
or dispose of the Collateral or any par thereof upon such terms as the
Collateral Agent may deem commercially reasonable. The Grantor agrees that, to
the extent notice of sale or any other disposition of its respective Collateral
shall be required by law, at least ten (10) days’ notice to the Grantor of the
time and place of any public sale or the time after which any private sale or
other disposition of its respective Collateral is to be made shall constitute
reasonable notification. The Collateral Agent shall not be obligated to make any
sale or other disposition of any Collateral regardless of notice of sale having
been given. The Collateral 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. The Grantor hereby waives any claims against the Collateral Agent and
the Buyers arising by reason of the fact that the price at which its respective
Collateral may have been sold at a private sale was less than the price which
might have been obtained at a public sale or was less than the aggregate amount
of the Obligations, even if the Collateral Agent accepts the first offer
received and does not offer such Collateral to more than one offeree, and waives
all rights that the Grantor may have to require that all or any par of such
Collateral be marshaled upon any sale (public or private) thereof. The Grantor
hereby acknowledges that (i) any such sale of its respective Collateral by the
Collateral Agent shall be made without warranty, (ii) the Collateral Agent may
specifically disclaim any warranties of title, possession, quiet enjoyment or
the like, and (iii) such actions set forth in clauses (i) and (ii) above shall
not adversely affect the commercial reasonableness of any such sale of
Collateral. In addition to the foregoing, (1) upon written notice to the Grantor
from the Collateral Agent after and during the continuance of an Event of
Default, the Grantor shall cease any use of the Intellectual Property or any
trademark, patent or copyright similar thereto for any purpose described in such
notice; (2) the Collateral Agent may, at any time and from time to time after
and during the continuance of an Event of Default, upon 10 days’ prior notice to
the Grantor, License, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any of the Intellectual Property, throughout
the universe for such term or terms, on such conditions, and in such manner, as
the Collateral Agent shall in its sole discretion determine; and (3) the
Collateral Agent may, at any time, pursuant to the authority granted in Section
6 hereof (such authority being effective upon the occurrence and during the
continuance of an Event of Default), execute and deliver on behalf of the
Grantor, one or more instruments of assignment of the Intellectual Property (or
any application or registration thereof), in form suitable for filing, recording
or registration in any country.
 
(b) Any cash held by the Collateral Agent as Collateral and all Cash Proceeds
received by the Collateral Agent in respect of any sale of or collection from,
or other realization upon, all or any part of the Collateral shall be applied
(after payment of any amounts payable to the Collateral Agent pursuant to
Section 8 hereof) by the Collateral Agent first to PWSP against Obligations
under Section 3(c), until the indefeasible payment to PWSP in full in cash of
all such Obligations, and then pro rata among the Buyers against, all or any
part of the Obligations under Sections 3(a) and (b) in such order as the
Collateral Agent shall elect, consistent with the provisions of the Note
Purchase Agreement. Any surplus of such cash or Cash Proceeds held by the
Collateral Agent and remaining after the indefeasible payment in full in cash of
all of the Obligations shall be paid over to whomsoever shall be lawfully
entitled to receive the same or as a court of competent jurisdiction shall
direct.
 
(c) In the event that the proceeds of any such sale, collection or realization
are insufficient to pay all amounts to which the Collateral Agent, the Buyers
and PWSP are legally entitled, the Grantor shall be liable for the deficiency,
together with interest thereon at the highest rate specified in the Notes for
interest on overdue principal thereof or such other rate as shall be fixed by
applicable law, together with the costs of collection and the reasonable fees,
costs, expenses and other client charges of any attorneys employed by the
Collateral Agent to collect such deficiency.

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(d) The Grantor hereby acknowledges that if the Collateral Agent complies with
any applicable state, provincial, or federal law requirements in connection with
a disposition of the Collateral, such compliance will not adversely affect the
commercial reasonableness of any sale or other disposition of the Collateral.
 
(e) The Collateral Agent shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of the Collateral Agent’s rights hereunder and in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising. To
the extent that the Grantor lawfully may, the 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 the Collateral Agent’s rights under this
Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, the Grantor hereby irrevocably waives the
benefits of all such laws.
 
SECTION 8. Indemnity and Expenses.
 
(a) The Grantor agrees to defend, protect, indemnify and hold the Collateral
Agent and each of the Buyers, jointly and severally, harmless from and against
any and all claims, damages, losses, liabilities, obligations, penalties, fees,
costs and expenses (including, without limitation, reasonable legal fees, costs,
expenses, and disbursements of such Person’s counsel) to the extent that they
arise out of or otherwise result from this Agreement (including, without
limitation, enforcement of this Agreement), except to the extent resulting from
such Person’s gross negligence or willful misconduct, as determined by a final
judgment of a court of competent jurisdiction.
 
(b) The Grantor agrees to pay to the Collateral Agent upon demand the amount of
any and all costs and expenses, including the reasonable fees, costs, expenses
and disbursements of counsel for the Collateral Agent and of any experts and
agents (including, without limitation, any collateral trustee which may act as
agent of the Collateral Agent), which the Collateral Agent may incur in
connection with (i) the preparation, negotiation, execution, delivery,
recordation, administration, amendment, waiver or other modification or
termination of this Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization upon, any Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder, or (iv) the failure by the Grantor to perform or observe any of the
provisions hereof.
 
SECTION 9. Notices. Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied, e-mailed or delivered at its
address below and if to the Collateral Agent to it, at its address specified on
the signature pages below; or as to any such Person, at such other address as
shall be designated by such Person in a written notice to all other parties
hereto complying as to delivery with the terms of this Section 9. All such
notices and other communications shall be effective (a) if sent by certified
mail, return receipt requested, when received or three days after deposited in
the mails, whichever occurs first, (b) if telecopied or e-mailed, when
transmitted (during normal business hours) and confirmation is received, and
otherwise, the day after the notice or communication was transmitted and
confirmation is received, or (c) if delivered in person, upon delivery.
 

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SECTION 10. Miscellaneous.
 
(a) No amendment of any provision of this Agreement shall be effective unless it
is in writing and signed by the Grantor and the Collateral Agent (acting at the
written direction of the Required Holders), and no waiver of any provision of
this Agreement, and no consent to any departure by the Grantor therefrom, shall
be effective unless it is in writing and signed by the Grantor and the
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
 
(b) No failure on the par of the Collateral Agent to exercise, and no delay in
exercising, any right hereunder or under any of the other Transaction Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The rights and remedies of the Collateral Agent or any Buyer
provided herein and in the other Transaction Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law. ‘The
rights of the Collateral Agent or any Buyer under any of the other Transaction
Documents against any party thereto are not conditional or contingent on any
attempt by such Person to exercise any of its rights under any of the other
Transaction Documents against such party or against any other Person, including
but not limited to, the Grantor.
 
(c) Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceabilty without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
 
(d) This Agreement shall create a continuing security interest in the Collateral
and shall (i) remain in full force and effect until the indefeasible payment in
full in cash of the Obligations, and (ii) be binding on the Grantor and all
other Persons who become bound as debtor to this Agreement in accordance with
Section 9-203(d) of the Code and shall inure, together with all rights and
remedies of the Collateral Agent and the Buyers hereunder, to the benefit of the
Collateral Agent and the Buyers and their respective permitted successors,
transferees and assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, without notice to the Grantor, the Collateral
Agent and the Buyers may assign or otherwise transfer their rights and
obligations under this Agreement and any of the other Transaction Documents in
accordance with the respective Transaction Documents, to any other Person and
such other Person shall thereupon become vested with all of the benefits in
respect thereof granted to the Collateral Agent and the Buyers herein or
otherwise. Upon any such assignment or transfer, all references in this
Agreement to the Collateral Agent or any such Buyer shall mean the assignee of
the Collateral Agent or such Buyer. None of the rights or obligations of the
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Required Holders, and any such assignment or transfer
without the consent of the Required Holders shall be null and void.
 
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(e) Upon written notice to the Collateral Agent from the Required Holders that
the indefeasible payment in full in cash of the Obligations has occurred, (i)
this Agreement and the security interests created hereby shall terminate and all
rights to the Collateral shall revert to the Grantor that granted such security
interests hereunder, and (ii) the Collateral Agent will, upon the Grantor’s
request and at the Grantor’s expense, (A) return to the Grantor such of the
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (B) execute and deliver to the Grantor such
documents as the Grantor shall reasonably request to evidence such termination,
all without any representation, warranty or recourse whatsoever.
 
(f) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR
THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
 
(g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO MAYBE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN
THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AN APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE
GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WANES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENES, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
 
(h) THE GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) TH
COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, ORAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.
 
(i) The Grantor irrevocably consents to the service of process of any of the
aforesaid courts in any such action, suit or proceeding by the mailing of copies
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to the Grantor at its address provided herein, such
service to become effective 10 days after such mailing.
 
(j) Nothing contained herein shall affect the right of the Collateral Agent to
serve process in any other manner permitted by law or commence legal proceedings
or otherwise proceed against the Grantor or any property of the Grantor in any
other jurisdiction.

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(k) The Grantor irrevocably and unconditionally waives any right it may have to
claim or recover in any legal action, suit or proceeding referred to in this
Section any special, exemplar, punitive or consequential damages.
 
(l) Section headings herein are included for convenience of reference only and
shall not constitute a par of this Agreement for any other purpose. (m) This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together constitute one in the same Agreement.
 
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IN WITNESS WHEREOF. the Grantor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
 
US DATA WORKS, INC.
   
By:
 /s/ Charles E. Ramey
 
Name: Charles E. Ramey
 
Title: CEO

 
ACCEPTED BY:
 
CHARLES E. RAMEY, as Collateral
Agent
       
By:
/s/ Charles E. Ramey
 
Charles E. Ramey

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Schedules
 
Schedule I.
Information on Grantor
   
Schedule II
Licenses
   
Schedule III
Equipment, Fixtures, Goods and Inventory
   
Schedule IV
Promissory Notes; Deposit Accounts
   
Schedule 4(f)
UCC Filings
   
Schedule V
Financing Statements
   
Schedule VI
Commercial Tort Claims