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EXHIBIT 4.19




 




SECURITY AGREEMENT




 




THIS SECURITY

AGREEMENT (this “Agreement”) dated as of February         , 2002, is between EPICEDGE, INC., a

Texas corporation (the “Company” or the “Debtor”), and Edgewater

Private Equity Fund III, L.P., a Delaware limited partnership (the “Lender”).




 




W  I  T  N  E  S

S  E  T  H:




 




WHEREAS, the

Lender has agreed to loan the Company an aggregate principal amount of Six

Hundred Ten Thousand Dollars ($610,000) pursuant to that certain Secured

Promissory Note of even date herewith (the “Note”), made by the Company in

favor of the Lender; and




 




WHEREAS,

pursuant to the terms of the Note, the Company is required to execute this

Agreement in order to secure the obligations and liabilities of the Company

under the Note.




 




NOW,

THEREFORE, for and in consideration of the premises set forth herein, any loan,

advance or other financial accommodation heretofore or hereafter made to the

Company under or in connection with the Note, and for other good and valuable

consideration, the receipt and sufficiency of which are hereby acknowledged,

the parties hereto agree as follows:




 




1.             Definitions.  When used herein, (a) the terms

Account, Account Debtor, Certificated Security, Chattel Paper, Commercial Tort

Claim, Deposit Account, Document, Electronic Chattel Paper, Equipment,

Financial Asset, Fixtures, Goods, Health-Care-Insurance Receivable, Inventory,

Instrument, Investment Property, Letter-of-Credit Rights, Payment Intangibles,

Proceeds, Security, Security Entitlement, Supporting Obligations and Uncertificated

Security have the respective meanings assigned thereto in the UCC (as defined

below); (b) capitalized terms which are not otherwise defined have the

respective meanings assigned thereto in the Note; and (c) the following

terms have the following meanings (such definitions to be applicable to both

the singular and plural forms of such terms):




 




Assignee Deposit Account - see Section 4.




 




Collateral means all property and rights of

Debtor in which a security interest is granted hereunder.




 




Computer Hardware and Software means all of

Debtor’s rights (including rights as licensee and lessee) with respect to (i)

computer and other electronic data processing hardware, including all

integrated computer systems, central processing units, memory units, display terminals,

printers, computer elements, card readers, tape drives, hard and soft disk

drives, cables, electrical supply hardware, generators, power equalizers,

accessories, peripheral devices and other related computer hardware;

(ii) all Software and all software programs designed for use on the

computers and electronic data processing hardware described in clause (i)

above, including all operating system software, utilities and application

programs in whatsoever form (source code and object code in magnetic tape, disk

or hard copy format or any other listings whatsoever); (iii) any firmware

associated with any of the foregoing; and (iv) any documentation 




 





























 




for hardware, software and

firmware described in clauses (i), (ii) and (iii)

above, including flow charts, logic diagrams, manuals, specifications, training

materials, charts and pseudo codes.




 




Contract Right means any right of the Debtor

to payment under a contract for the sale or lease of goods or the rendering of

services, which right is at the time not yet earned by performance.




 




Default means the occurrence of any Default

under the Note which occurs prior to the full payment of all amounts due under

the Note.




 




General Intangibles means, with respect to

Debtor, all of Debtor’s “general intangibles” as defined in the UCC and, in any

event, includes (without limitation) all of Debtor’s trademarks, trade names,

patents, copyrights, trade secrets, customer lists, inventions, designs,

Software, software programs, mask works, goodwill, registrations, licenses,

franchises, tax refund claims, guarantee claims, Payment Intangibles, security

interests and rights to indemnification.




 




Intellectual Property means all past, present

and future: trade secrets, know-how and other proprietary information;

trademarks, Internet domain names, service marks, trade dress, trade names,

business names, designs, logos, slogans (and all translations, adaptations,

derivations and combinations of the foregoing) indicia and other source and/or

business identifiers, and the goodwill of the business relating thereto and all

registrations or applications for registrations which have heretofore been or

may hereafter be issued thereon throughout the world; copyrights (including

copyrights for computer programs and software) and copyright registrations or

applications for registrations which have heretofore been or may hereafter be

issued throughout the world and all tangible property embodying the copyrights;

unpatented inventions (whether or not patentable); patent applications and patents;

industrial designs, industrial design applications and registered industrial

designs; license agreements related to any of the foregoing and income

therefrom; books, records, writings, computer tapes or disks, flow diagrams,

specification sheets, computer software, source codes, object codes, executable

code, data, databases and other physical manifestations, embodiments or

incorporations of any of the foregoing; the right to sue for all past, present

and future infringements of any of the foregoing; all other intellectual

property; and all common law and other rights throughout the world in and to

all of the foregoing.




 




Material Adverse Effect means a material

adverse effect on the financial condition, business or operating results of the

Company or on the transactions contemplated in the Loan Documents.




 




Non-Tangible Collateral means, with respect to

Debtor, collectively, Debtor’s Accounts, Contract Rights and General

Intangibles.




 




Obligations mean all monetary obligations of

Debtor to the Lender under the Note.




 




Organization I.D. Number means, with respect

to Debtor, the number assigned to Debtor by the agency with which the articles

of incorporation, certificate of formation or other organizational document in

respect of Debtor was filed.




 




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Type of Organization means, with respect to

Debtor, the kind or type of entity of Debtor, such as a corporation or limited

liability company.




 




UCC means the Uniform Commercial Code as in

effect in the State of Illinois on the date of this Agreement, as may be

amended or modified from time to time after July 1, 2001; provided that,

as used in Section 8 hereof, “UCC” shall mean the Uniform

Commercial Code as in effect from time to time in any applicable jurisdiction.




 




Unless

otherwise expressly provided herein, references to agreements (including this

Agreement) and other contractual instruments shall be deemed to include all

subsequent amendments and other modifications thereto, but only to the extent

such amendments and other modifications are not prohibited by the terms of any

of the Loan Documents.  The term

“including” is not limiting and means “including, without limitation”.




 




2.             Grant of Security Interest.  As security for the payment of all

Obligations, Debtor hereby assigns to the Lender, and grants to the Lender a

continuing security interest in all of the property of Debtor, whether now or

hereafter existing or acquired, regardless of where located, including, without

limitation:




 




All of

Debtor’s:




 




a.                                       Accounts,

including Health-Care-Insurance Receivables;




 




b.                                      Certificated

Securities;




 




c.                                       Chattel

Paper, including Electronic Chattel Paper;




 




d.                                      Computer

Hardware and Software and all rights with respect thereto, including, any and

all licenses, options, warranties, service contracts, program services, test

rights, maintenance rights, support rights, improvement rights, renewal rights

and indemnifications, and any substitutions, replacements, additions or model

conversions of any of the foregoing;




 




e.                                       Commercial

Tort Claims;




 




f.                                         Deposit

Accounts;




 




g.                                      Documents;




 




h.                                      Financial

Assets;




 




i.                                          General

Intangibles, including Payment Intangibles and Software;




 




j.                                          Goods

(including all of its Equipment, Fixtures and Inventory), and all embedded

software, accessions, additions, attachments, improvements, substitutions and

replacements thereto and therefor;




 




3





























 




k.                                       Instruments;




 




l.                                          Intellectual

Property;




 




m.                                    Investment

Property;




 




n.                                      Letter

of Credit Rights;




 




o.                                      money

(of every jurisdiction whatsoever);




 




p.                                      Security

Entitlements;




 




q.                                      Supporting

Obligations;




 




r.                                         Contract

Rights;




 




s.                                       Uncertificated

Securities; and




 




t.                                         to

the extent not included in the foregoing, other personal property of any kind

or description;




 




together with all books,

records, writings, data bases, information and other property relating to, used

or useful in connection with, or evidencing, embodying, incorporating or

referring to any of the foregoing, and all Proceeds, products, offspring,

rents, issues, profits and returns of and from any of the foregoing; provided

that to the extent that the provisions of any lease or license of Computer

Hardware and Software or Intellectual Property expressly prohibit (which

prohibition is enforceable under applicable law) the assignment thereof, and

the grant of a security interest therein, Lender will not enforce its security

interest in Debtor’s rights under such lease or license (other than in respect

of the Proceeds thereof) for so long as such prohibition continues, it being

understood that upon request of the Lender, Debtor will in good faith use

reasonable efforts to obtain consent for the creation of a security interest in

favor of the Lender (and to Lender’s enforcement of such security interest) in

Debtor’s rights under such lease or license.




 




3.             Warranties.  Debtor warrants that:  (a) no financing statement (other than any

which may have been filed on behalf of the Lender or the parties listed on Schedule

3 attached hereto (“Permitted Liens”)) covering any of or has other rights

in the Collateral is on file in any public office; (b) Debtor is and will be

the lawful owner of all Collateral, free of all liens, claims, security

interests and encumbrances whatsoever, other than the security interest

hereunder and Permitted Liens, with full power and authority to execute this

Agreement and perform Debtor’s obligations hereunder, and to subject the

Collateral to the security interest hereunder (subject to licenses and leases

which expressly prohibit the granting of a security interest therein, which

prohibition is enforceable under applicable law); (c) all information with

respect to Collateral and Account Debtors set forth in any schedule,

certificate or other writing at any time heretofore or hereafter furnished by

Debtor to the Lender is and will be true and correct in all material respects

as of the date furnished; (d) Debtor’s state of incorporation or organization,

Type of Organization, Organization I.D. Number, chief executive office and

principal place of business are as set forth on Schedule I hereto (and

Debtor has not changed its state of incorporation or organization, nor

maintained its chief executive office and principal place of business at any




 




4





























 




other location at any time

after January 1, 1999 except as set forth on Schedule I; (e) each other

location where Debtor maintains a place of business is set forth on Schedule

II hereto; (f) except as set forth on Schedule III hereto, Debtor is

not now known and during the three years preceding the date hereof has not

previously been known by any trade name; (g) Debtor’s exact legal name is as

set forth on the signature pages of this Agreement, and except as set forth on Schedule

III hereto, during the three years preceding the date hereof Debtor has not

been known by any legal name different from the one set forth on the signature

pages of this Agreement nor has Debtor been the subject of any merger or other

corporate or organizational reorganization; (h) Schedule IV hereto contains

a complete listing of all of Debtor’s patented and registered Intellectual

Property (including all pending patent applications and applications for the

registration of other Intellectual Property owned or filed by the Debtor);

(i) Debtor is a corporation duly organized, validly existing and in good

standing under the laws of the state of its incorporation; (j) the

execution and delivery of this Agreement and the performance by Debtor of its

obligations hereunder are within Debtor’s corporate powers, have been duly

authorized by all necessary corporate action, have received all material

governmental approval (if any shall be required), and do not and will not

contravene or conflict with any provision of law or of the charter or by-laws

of Debtor or of any material agreement, indenture, instrument or other

document, or any material judgment, order or decree, which is binding upon

Debtor; (k) this Agreement is a legal, valid and binding obligation of

Debtor, enforceable in accordance with its terms, except that the

enforceability of this Agreement may be limited by bankruptcy, insolvency,

fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other

similar laws now or hereafter in effect relating to creditors’ rights generally

and by general principles of equity (regardless of whether enforcement is

sought in a proceeding in equity or at law); (l) Debtor is in compliance

with the requirements of all applicable laws (including the provisions of the

Fair Labor Standards Act), rules, regulations and orders of every governmental

authority, the noncompliance with which would reasonably be expected to result

in a Material Adverse Effect; (m) Schedule V hereto contains a

complete listing of all of Debtor’s Instruments, Deposit Accounts, Investment Property,

Letter-of-Credit Rights, Chattel Paper and Commercial Tort Claims;

(n) except as set forth on Schedule VI hereto, Debtor has no

tangible Collateral located outside of the United States; (o) Schedule VII

hereto contains a complete listing of Debtor’s tangible Collateral located with

any bailee, warehousemen or other third parties; and (p) Schedule VIII

hereto contains a complete listing of all of Debtor’s Collateral which is

subject to certificate of title statutes.




 




4.             Collections, etc.  Until such time during the existence of a

Default as the Lender shall notify Debtor of the revocation of such power and

authority, Debtor (a) may, in the ordinary course of its business, at its

own expense, sell, lease or furnish under contracts of service any of the

Inventory normally held by Debtor for such purpose, use and consume, in the

ordinary course of its business, any raw materials, work in process or

materials normally held by Debtor for such purpose, and use, in the ordinary

course of its business, the cash Proceeds of Collateral and other money which

constitutes Collateral, (b) will, at its own expense, endeavor to collect,

as and when due, all amounts due under any of the Non-Tangible Collateral,

including the taking of such action with respect to such collection as the

Lender may reasonably request or, in the absence of such request, as Debtor may

deem advisable, and (c) may grant, in the ordinary course of business, to

any party obligated on any of the Non-Tangible Collateral, any rebate, refund

or allowance to which such party may be lawfully entitled, and may accept, in

connection therewith, the return of Goods, the sale or lease of which shall

have given rise to such




 




5





























 




NonTangible Collateral.  The Lender, however, may, at any time that a

Default exists, whether before or after any revocation of such power and

authority or the maturity of any of the Obligations, notify an Account Debtor

or other Person obligated on Collateral to make payment or otherwise render

performance to or for the benefit of the Lender, and enforce, by suit or

otherwise, the obligations of an Account Debtor or other Person obligated on

Collateral and exercise the rights of Debtor with respect to the obligation of

the Account Debtor or other Person obligated on Collateral to make payment or

otherwise render performance to the Debtor, and with respect to any property

that secures the obligations of the Account Debtor or other Person obligated on

the Collateral.  In connection with the

exercise of such rights and remedies, Lender may surrender, release or exchange

all or any part of such Collateral, or compromise or extend or renew for any

period (whether or not longer than the original period) any indebtedness

thereunder or evidenced thereby.  Upon

the request of the Lender during the existence of a Default, Debtor will, at

its own expense, notify any or all parties obligated on any of the Non-Tangible

Collateral to make payment to the Lender of any amounts due or to become due

thereunder.




 




Upon request

by the Lender during the existence of a Default, Debtor will forthwith, upon

receipt, transmit and deliver to the Lender, in the form received, all cash,

checks, drafts and other instruments or writings for the payment of money

(properly endorsed, where required, so that such items may be collected by the

Lender) which may be received by Debtor at any time in full or partial payment

or otherwise as Proceeds of any of the Collateral.  Except as the Lender may otherwise consent in writing, any such

items which may be so received by Debtor will not be commingled with any other

of its funds or property, but will be held separate and apart from its own

funds or property and upon express trust for the Lender until delivery is made

to the Lender.  Debtor will comply with

the terms and conditions of any consent given by the Lender pursuant to the

foregoing sentence.




 




During the

existence of a Default, all items or amounts which are delivered by Debtor to

the Lender on account of partial or full payment or otherwise as Proceeds of

any of the Collateral shall be deposited to the credit of a deposit account at

a financial institution selected by Lender (each an “Assignee Deposit

Account”) of Debtor over which the Lender has sole dominion and control, as

security for payment of the Obligations. 

Debtor shall not have any right to withdraw any funds deposited in the

applicable Assignee Deposit Account. 

The Lender may, from time to time, in its discretion, and shall upon

request of the Debtor made not more than once in any week, apply all or any of

the then balance, representing collected funds, in the Assignee Deposit Account

toward payment of the Obligations, whether or not then due, in such order of

application as the Lender may determine, and the Lender may, from time to time,

in its discretion, release all or any of such balance to the Debtor.




 




The Lender (or

any designee of the Lender) is authorized to endorse, in the name of the

Debtor, any item, howsoever received by the Lender, representing any payment on

or other Proceeds of any of the Collateral.




 




5.             Certificates, Schedules and

Reports.  Debtor will from time to

time, as the Lender may request, deliver to the Lender such schedules,

certificates and reports respecting all or any of the Collateral at the time

subject to the security interest hereunder, and the items or amounts received

by Debtor in full or partial payment of any of the Collateral, as the Lender

may




 




6





























 




reasonably request. Any such

schedule, certificate or report shall be executed by a duly authorized officer

of Debtor and shall be in such form and detail as the Lender may specify.  Debtor shall immediately notify the Lender

of the occurrence of any event causing any loss or depreciation in the value of

its Inventory or other Goods which is material to the Company and its

Subsidiaries taken as a whole, and such notice shall specify the amount of such

loss or depreciation.




 




6.             Agreements of the Debtor.  Debtor (a) shall, at the Lender’s request,

at any time and from time to time, execute and deliver to the Lender such

financing statements, amendments  and

other documents and do such acts as the Lender deems necessary in order to

establish and maintain valid, attached and perfected security interests in the

Collateral in favor of the Lender, free and clear of all Liens and claims and

rights of third parties whatsoever except Permitted Liens.  Debtor hereby irrevocably authorizes the

Lender at any time, and from time to time, to file in any jurisdiction ay

initial financing statements and amendments thereto that (i) indicate the

Collateral (x) as all assets of Debtor or words of similar effect, regardless

of whether any particular asset comprised in the Collateral falls within the

scope of Article 9 of the UCC of the jurisdiction wherein such financing

statement or amendment is filed, or (y) as being of an equal or lesser scope or

within greater detail, and (ii) contain any other information required by

Section 5 of Article 9 of the UCC of the jurisdiction wherein such financing

statement or amendment is filed regarding the sufficiency or filing office

acceptance of any financing statement or amendment, including (x) whether

Debtor is an organization, the Type of Organization the Organization ID Number

issued to Debtor and (y) in the case of a financing statement filed as a

fixture filing or indicating Collateral to be extracted collateral or timber to

be cut, a sufficient description of real property to which the Collateral

relates, Debtor further ratifies and affirms its authorization for any

financing statements and/or amendments thereto, filed by the Lender in any

jurisdiction prior to the date of this Agreement, (b) will keep all its

Inventory and other tangible Collateral at, and will not maintain any place of

business at any location other than, its address(es) shown on Schedules I

and II hereto or at such other addresses of which Debtor shall have

given the Lender not less than 30 days’ prior written notice, (c) will

keep its records concerning the Non-Tangible Collateral in such a manner as

will enable the Lender or its designees to determine at any time the status of

the Non-Tangible Collateral; (d) will furnish the Lender such information

concerning Debtor, the Collateral and the Account Debtors as the Lender may

from time to time reasonably request; (e) will permit the Lender and its

designees, from time to time, on reasonable notice and at reasonable times and

intervals during normal business hours (or at any time without notice during the

existence of a Default) to inspect Debtor’s Inventory and other Goods, and to

inspect, audit and make copies of and extracts from all records and other

papers in the possession of Debtor pertaining to the Collateral and the Account

Debtors, and will, upon request of the Lender during the existence of a

Default, deliver to the Lender all of such records and papers; (f) will,

upon request of the Lender, stamp on its records concerning the Collateral, and

add on all Chattel Paper and Instruments constituting a portion of the

Collateral, a notation, in form satisfactory to the Lender, of the security

interest of the Lender hereunder; (g) except for the sale or lease of

Inventory in the ordinary course of its business and sales of Equipment which

is no longer useful in its business or which is being replaced by similar

Equipment, and except for the licensing of Debtor’s Intellectual Property in

the ordinary course of Debtor’s business upon fair and reasonable terms which

are fully disclosed to Lender, and the abandonment of Intellectual Property

which in Debtor’s reasonable discretion is no longer useful in the business or

not otherwise economically desirable, will not




 




7





























 




sell, lease, license or assign

any Collateral or create or permit to exist any lien on any Collateral other

than Permitted Liens; (h) will at all times keep all of its Inventory and

other Goods insured under policies maintained with reputable, financially sound

insurance companies against loss, damage, theft and other risks to such extent

as is customarily maintained by companies similarly situated, and cause all

such policies to provide that loss thereunder shall be payable to the Lender as

its interest may appear (it being understood that (A) so long as no

Default shall be existing, the Lender shall deliver any proceeds of such

insurance which may be received by it to Debtor and (B) whenever a Default

shall be existing, the Lender may apply any proceeds of such insurance which

may be received by it toward payment of the Obligations, whether or not due, in

such order of application as the Lender may determine), and such policies or

certificates thereof shall, if the Lender so requests, be deposited with or

furnished to the Lender; (i) will take such actions as are reasonably

necessary to keep its Inventory in good repair and condition; (j) will

take such actions as are reasonably necessary to keep its Equipment in good

repair and condition and in good working order, ordinary wear and tear excepted;

(k) will promptly pay when due all license fees, registration fees, taxes,

assessments and other charges which may be levied upon or assessed against the

ownership, operation, possession, maintenance or use of its Equipment and other

Goods; (1) will, upon request of the Lender, (i) cause to be noted on

the applicable certificate, in the event any of its Equipment is covered by a

certificate of title, the security interest of the Lender in the Equipment

covered thereby, and (ii) deliver all such certificates to the Lender or

its designees; (m) will take all steps reasonably necessary to protect,

preserve and maintain all of its rights in the Collateral; (n) except as

listed on Schedule VI, will keep all of the tangible Collateral in

the United States; (o) will promptly notify Lender in writing upon

acquiring or otherwise obtaining any Collateral after the date hereof

consisting of Deposit Accounts, Investment Property, Letter-of-Credit Rights or

Electronic Chattel Paper and, upon the request of Lender, will promptly execute

such other documents, and do such other acts or things deemed appropriate by

Lender to deliver to Lender control with respect to such Collateral;

(p) will promptly notify Lender in writing upon acquiring or otherwise

obtaining any Collateral after the date hereof consisting of Documents or

Instruments and, upon the request of Lender, will promptly execute such other

documents, and do such other acts or things deemed appropriate by Lender to

deliver to Lender possession of such Documents which are negotiable and

Instruments, and, with respect to nonnegotiable Documents, to have such

nonnegotiable Documents issued in the name of the Lender; (q) with respect

to Collateral in the possession of a third party, other than Certificated

Securities and Goods covered by a Document, will obtain an acknowledgment from

the third party that it is holding the Collateral for benefit of the Lender, if

requested by Lender; (r) will promptly notify Lender in writing upon

incurring or otherwise obtaining a Commercial Tort Claim in excess of $25,000

individually or Commercial Tort Claims in excess of $50,000 in the aggregate

after the date hereof against any third party, and, upon the request of Lender,

will promptly enter into an amendment to this Agreement, and do such other acts

or things deemed appropriate by the Lender to give Lender a security interest

in such Commercial Tort Claim or Commercial Tort Claims, as applicable;

(s) further agrees to take other action reasonably requested by the Lender

to insure the attachment, and the ability of the Lender to enforce, the

security interests in any and all of the Collateral including, without

limitation, (i) executing, delivering and, where appropriate, filing

financing statements and amendments relating thereto under the UCC, to the

extent, if any, that the Debtor’s signature thereon is required therefore,

(ii) complying with any provision of any statute, regulation or treaty of

the United States as to any Collateral if compliance with such provision is a

condition to




 




8





























 




attachment, perfection or

priority of, or ability of the Lender to enforce, the security interests in

such Collateral, (iii) obtaining governmental and other third party

consents and approvals, including without limitation any consent of any

licensor, lessor or other person or entity obligated on Collateral,

(iv) obtaining waivers from mortgages and landlords in form and substance

satisfactory to the Lender, and (v) taking all actions required by the UCC

in effect from time to time or by other law, as applicable in any relevant UCC

jurisdiction, or by other law as applicable in any foreign jurisdiction and as

requested by Lender, (t) will not change its state of incorporation or

organization or Type of Organization without providing Lender with at least

thirty (30) days’ prior written notice; (u) will not change its legal name

without providing Lender with at least 30 days’ prior written notice; and

(v) will reimburse the Lender for all expenses, including reasonable

attorney’s fees and charges (including time charges of attorneys who are

employees of the Lender), incurred by the Lender in seeking to collect or

enforce any rights in respect of Debtor’s Collateral.




 




Any expenses

incurred in protecting, preserving or maintaining any Collateral shall be borne

by the Debtor. Except as otherwise expressly set forth in Section 2,

whenever a Default shall be existing, the Lender shall have the right to bring

suit to enforce any or all of the Intellectual Property or licenses thereunder,

in which event the Debtor shall at the request of the Lender do any and all

lawful acts and execute any and all proper documents required by the Lender in

aid of such enforcement and Debtor shall promptly, upon demand, reimburse and indemnify

the Lender for all costs and expenses incurred by the Lender in the exercise of

its rights under this Section 6. 

Notwithstanding the foregoing, the Lender shall have no obligation or

liability regarding the Collateral or any Proceeds thereof by reason of, or

arising out of, this Agreement.




 




To the extent

Debtor uses any of the proceeds from the Loans to purchase Collateral, Debtor’s

repayment of the Loans shall apply on a “first- in-first-out” basis so that the

portion of the Loans used to purchase a particular item of Collateral shall be

paid in the chronological order the Debtor purchased the Collateral




 




7.             Default.  Whenever a Default shall be existing, the

Lender may exercise from time to time any right or remedy available to it under

applicable law, including without limitation, Lender may exercise all the

rights of a secured party under the UCC (whether or not in effect in the

jurisdiction where such rights are exercised) with respect to any

Collateral.  Debtor agrees, in case of

Default, (i) at the Lender’s request, to assemble, at its expense, all its

Inventory and other Goods (other than Fixtures) at a convenient place or places

acceptable to the Lender, and (ii) at the Lender’s request, to execute all

such documents and do all such other things which may be necessary or

desirable, subject to Section 2 above which prohibits Lender from

enforcing the liens granted hereunder in certain Intellectual Property, in

order to enable the Lender or its nominee to be registered as owner of the

Intellectual Property with any competent registration authority.  Any notification of intended disposition of

any of the Collateral required by law shall be deemed reasonably and properly

given if given at least ten days before such disposition.  Upon the occurrence of a Default, Lender may

sell the Collateral without giving any warranties as to the Collateral,

including any warranties of title, possession, quiet enjoyment and the

like.  Any cash Proceeds of any

enforcement, collection or disposition by the Lender of any of the Collateral

may be applied by the Lender to payment of expenses in connection with the

Collateral, including reasonable attorney's fees and charges, and any balance

of such cash




 




9





























 




Proceeds may be applied by the

Lender toward the payment of such of the Obligations, and in such order of

application, as the Lender may from time to time elect.  If Lender disposes of any of the Collateral

upon credit, the Debtor will be credited with only those payments actually made

by the purchaser and received by Lender. 

In the event the purchaser of such Collateral fails to pay for such

Collateral, Lender may resell such Collateral and the Debtor shall be credited

with any cash Proceeds of the sale.




 




8.             General.  The Lender shall be deemed to have exercised

reasonable care in the custody and preservation of any of the Collateral in its

possession if it takes such action for that purpose as any Debtor requests in

writing, but failure of the Lender to comply with any such request shall not of

itself be deemed a failure to exercise reasonable care, and no failure of the

Lender to preserve or protect any right with respect to such Collateral against

prior parties, or to do any act with respect to the preservation of such

Collateral not so requested by Debtor, shall be deemed of itself a failure to

exercise reasonable care in the custody or preservation of such Collateral.




 




All notices

required hereunder shall be given in accordance with the Note.




 




Debtor agrees

to pay all reasonable expenses, including reasonable attorney’s fees and

charges paid or incurred by the Lender or any Lender in endeavoring to collect

the Obligations of Debtor, or any part thereof, and in enforcing this

Agreement, and such obligations will themselves be Obligations.




 




No delay on

the part of the Lender in the exercise of any right or remedy shall operate as

a waiver thereof, and no single or partial exercise by the Lender of any right

or remedy shall preclude other or further exercise thereof or the exercise of

any other right or remedy.




 




This Agreement

shall remain in full force and effect until all Obligations have been fully

paid and satisfied and all commitments of any kind of Lender have

terminated.  If at any time all or any

part of any payment theretofore applied by the Lender to any of the Obligations

is or must be rescinded or returned by the Lender for any reason whatsoever

(including the insolvency, bankruptcy or reorganization of Debtor), such

Obligations shall, for the purposes of this Agreement, to the extent that such

payment is or must be rescinded or returned, be deemed to have continued in

existence, notwithstanding such application by the Lender, and this Agreement

shall continue to be effective or be reinstated, as the case may be, as to such

Obligations, all as though such application by the Lender had not been made.




 




This Agreement

shall be construed in accordance with and governed by the laws of the State of

Illinois applicable to contracts made and to be performed entirely within such

State.  Whenever possible, each

provision of this Agreement shall be interpreted in such manner as to be

effective and valid under applicable law, but if any provision of this

Agreement shall be prohibited by or invalid under applicable law, such provision

shall be ineffective to the extent of such prohibition or invalidity, without

invalidating the remainder of such provision or the remaining provisions of

this Agreement.




 




This Agreement

shall be binding upon Company and its successors and assigns, and shall inure

to the benefit of Lender and its nominees, successors and assigns. Company’s

successors




 




10





























 




and assigns shall include,

without limitation, a receiver, trustee or debtor-in-possession of or for

Company; provided , however, that Company shall not voluntarily

assign its obligations hereunder without the prior written consent of Lender.




 




This Agreement

may be executed in any number of counterparts and by the different parties

hereto on separate counterparts, and each such counterpart shall be deemed to

be an original, but all such counterparts shall together constitute one and the

same Agreement. Delivery of an executed counterpart of this Agreement by

telefacsimile shall be equally as effective as delivery of a manually executed

counterpart of this Agreement.  Any

party delivering an executed counterpart of this Agreement by telefacsimile

shall also deliver a manually executed counterpart of this Agreement, but the

failure to deliver a manually executed counterpart shall not affect the

validity, enforceability, and binding effect of this Agreement.




 




At any time

after the date of this Agreement, one or more additional Persons may become

parties hereto by executing and delivering to the Lender a counterpart of this

Agreement together with supplements to the Schedules hereto setting forth all

relevant information with respect to such party as of the date of such

delivery. Immediately upon such execution and delivery (and without any further

action), each such additional Person will become a party to, and will be bound

by all the terms of, this Agreement.




 




ANY LITIGATION BASED HEREON, OR ARISING OUT

OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS,

SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF

ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF

ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR

OTHER PROPERTY MAY BE BROUGHT, AT THE LENDER’S OPTION, IN THE COURTS OF

ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.

DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE

COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET

FORTH ABOVE. DEBTOR FURTHER IRREVOCABLY CONSENTS TO

THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS SET

FORTH ON SCHEDULE I HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE

SPECIFIED IN WRITING TO THE LENDER AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY

PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. DEBTOR HEREBY

EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY

OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY

SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT

ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.




 




EACH OF DEBTOR AND THE LENDER HEREBY WAIVES

ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND

ANY RIGHTS UNDER THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND




 




11





























 




ANY

AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE

FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY

FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND

AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT

BEFORE A JURY.




 




[SIGNATURE PAGE

FOLLOWS]




 




12





























 




Signature Page to Security Agreement




 




IN WITNESS

WHEREOF, this Agreement has been duly executed as of the day and year first

above written.




 




	

   


  	

  DEBTOR:


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  EPICEDGE,

  INC., a Texas corporation


  	

   


  
	

   


  	

   


  
	

   


  	

  By:


  	

   


  
	

   


  	

  Name:


  	

   


  
	

   


  	

  Title:


  	

   


  
	

   


  	

   


  
	

   


  	

  LENDER:


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  EDGEWATER

  PRIVATE EQUITY FUND 


  	

   


  
	

   


  	

  III, L.P.,

  as Lender


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  By:  Edgewater III Management, L.P.


  	

   


  
	

   


  	

  Its:  General Partner


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

  By:  Gordon Management, Inc.


  	

   


  
	

   


  	

  Its:  General Partner


  	

   


  
	

   


  	

   


  
	

   


  	

  By:


  	

   


  
	

   


  	

  Name:


  	

   


  
	

   


  	

  Its:


  	

   


  
						





 





























 




SCHEDULE I TO SECURITY AGREEMENT




 








	

  Information

  Required


  	

   


  	

  Company


  
	

  Exact Legal

  Name


  	

   


  	

   


  
	

  State of

  Organization


  	

   


  	

   


  
	

  Type of

  Organization


  	

   


  	

   


  
	

  Organization

  I.D. Number


  	

   


  	

   


  
	

  Chief

  Executive Officer and


  	

   


  	

   


  
	

  Principal

  Place of Business


  	

   


  	

   


  










 




[COMPANY TO COMPLETE]




 





























 




SCHEDULE II




TO SECURITY AGREEMENT




 




ADDRESSES




 




[COMPANY TO COMPLETE]




 





























 




SCHEDULE III




TO SECURITY AGREEMENT




 




TRADE NAMES, PRIOR LEGAL NAMES, ETC.




 




[COMPANY TO COMPLETE]




 





























 




SCHEDULE IV




TO SECURITY AGREEMENT




 




	

  PATENTS


  
	

   


  
	

  [COMPANY TO COMPLETE]


  
	

   


  
	

  PATENT/SERIAL NO.


  	

  COUNTRY


  	

  CO. NAME HELD IN


  	

  ISSUE DATE


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  TRADEMARKS


  
	

   


  
	

  TRADEMARK NAME


  	

  REGISTRATION/SERIAL NO.


  	

  COUNTRY


  	

  CO. NAME HELD IN


  	

  ISSUE DATE


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

  COPYRIGHTS


  
	

   


  
	

  COPYRIGHT NAME


  	

  COUNTRY


  	

  CO. NAME HELD IN


  	

  ISSUE DATE


  
								





 





























 




SCHEDULE V




TO SECURITY AGREEMENT




 




[COMPANY TO COMPLETE]




 




Instruments:




 




 




Deposit Accounts:




 




 




Investment Property:




 




 




Letter-of-Credit Rights:




 




 




Chattel Paper:




 




 




Commercial Tort Claims:




 




 





























 




SCHEDULE VI




TO SECURITY AGREEMENT




 




COLLATERAL NOT LOCATED IN THE UNITED STATES




 




[COMPANY TO COMPLETE]




 





























 




SCHEDULE VII




TO SECURITY AGREEMENT




 




COLLATERAL LOCATED WITH THIRD PARTIES




 




[COMPANY TO COMPLETE]




 





























 




SCHEDULE VIII




TO SECURITY AGREEMENT




 




COLLATERAL SUBJECT TO CERTIFICATE OF TITLE STATUTE




 




[COMPANY TO COMPLETE]