<PAGE>

                                                                     EXHIBIT 4.4
                               SECURITY AGREEMENT

         SECURITY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time and including all attachments, exhibits and schedules
hereto, the "Agreement"), dated as of July 2, 2002, made by VERTEL CORPORATION,
a California corporation (the "Grantor"), in favor of SDS Merchant Fund, L.P.
(the "Secured Party").

         WHEREAS, the Grantor has issued a senior secured convertible promissory
note to the Secured Party (the "Note") in the principal amount of $3,100,000
pursuant to a Note and Warrant Purchase Agreement by and between the Grantor and
the Secured Party dated the date hereof (the "Purchase Agreement");

         WHEREAS, it is a condition precedent to the Grantor's making the loan
evidenced by the Purchase Agreement to the Secured Party that the Grantor
execute and deliver to the Secured Party a security agreement providing for the
grant to the Secured Party of a continuing security interest in the accounts
receivable and all personal property of the Grantor, all in substantially the
form hereof to secure all Obligations (hereinafter defined).

         NOW, THEREFORE, the parties agree as follows:

                             ARTICLE I. Definitions

         Section 1.1.   Definition of Terms Used Herein. All capitalized terms
used herein and not defined herein have the respective meanings provided
therefor in the Purchase Agreement. All terms defined in the Uniform Commercial
Code (hereinafter defined) as in effect from time to time and used herein and
not otherwise defined herein (whether or not such terms are capitalized) have
the same definitions herein as specified therein.

         Section 1.2.   Definition of Certain Terms Used Herein. As used herein,
the following terms have the following meanings:

         "Collateral" means all accounts receivable of the Grantor and all
personal and fixture property of every kind and nature, including without
limitation all furniture, fixtures, equipment, raw materials, inventory, or
other goods, accounts, contract rights, rights to the payment of money,
insurance refund claims and all other insurance claims and proceeds, tort
claims, chattel paper, documents, instruments, securities and other investment
property, deposit accounts, rights to proceeds of letters of credit and all
general intangibles including, without limitation, all tax refund claims,
license fees, patents, patent licenses, patent applications, trademarks,
trademark licenses, trademark applications, trade names, copyrights, copyright
licenses, copyright applications, rights to sue and recover for past
infringement of patents, trademarks and copyrights, computer programs, computer
software, engineering drawings, service marks,

<PAGE>

customer lists, goodwill, and all licenses, permits, agreements of any kind or
nature pursuant to which the Grantor possesses, uses or has authority to possess
or use property (whether tangible or intangible) of others or others possess,
use or have authority to possess or use property (whether tangible or
intangible) of the Grantor, and all recorded data of any kind or nature,
regardless of the medium of recording including, without limitation, all books
and records, software, writings, plans, specifications and schematics; and all
proceeds and products of each of the foregoing.

         "Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.

         "Event of Default" has the meaning specified in the Note.

         "Indemnitees" has the meaning specified in Section 7.5(b).

         "Lien" means: (i) any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes; (ii) to the extent not included
under clause (i), any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
or encumbrance affecting property; and (iii) any contingent or other agreement
to provide any of the foregoing.

         "Note" has the meaning assigned to such term in the first recital of
this Agreement.

         "Obligations" means all indebtedness, liabilities, obligations,
covenants and duties of the Grantor to the Secured Party of every kind, nature
and description, direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of law
or otherwise, now existing of hereafter arising under or in connection with the
Note, the Purchase Agreement or this Agreement.

         "Registered Organization" means an entity formed by filing a
registration document with a United States Governmental Authority, such as a
corporation, limited partnership or limited liability company.

         "Revised Article 9" has the meaning specified in Section 7.14.

         "Security Interest" has the meaning specified in Section 2.1 of this
Agreement.

         "Uniform Commercial Code" means the Uniform Commercial Code from time
to time in effect in the State of New York.

                          ARTICLE II. Security Interest

         Section 2.1. Security Interest. As security for the payment and
performance, in full of the Obligations, and any extensions, renewals,
modifications or refinancings of the Obligations,

                                       2

<PAGE>

the Grantor hereby bargains, sells, conveys, assigns, sets over, mortgages,
pledges, hypothecates and transfers to the Secured Party, and hereby grants to
the Secured Party, its successors and assigns, a security interest in, all of
such Grantor's right, title and interest in, to and under the Collateral (the
"Security Interest"). The continuing security in and lien on the Collateral
granted by the Grantor to the Secured Party pursuant to this Agreement shall
expire and this Agreement shall be of no further force or effect at such time
that (i) the Grantor's annual revenues for the prior twelve month period exceed
$15,000,000 or (ii) the closing bid price of the Grantor's Common Stock is equal
to or greater than $.80 for a period of ten (10) consecutive trading days.

         Section 2.2.   No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Secured Party to, or in any
way alter or modify, any obligation or liability of the Grantor with respect to
or arising out of the Collateral.

                   ARTICLE III. Representations and Warranties

         The Grantor represents and warrants to the Secured Party that:

         Section 3.1    Title and Authority. The Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant a security interest hereunder and has full power and authority to grant to
the Secured Party the Security Interest and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other Person other than any consent or approval which has
been obtained.

         Section 3.2.   Filings; Actions to Achieve Perfection. Fully executed
Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations containing
a description of the Collateral have been delivered to the Secured Party for
filing in each United States governmental, municipal or other office specified
in Schedule A, which are all the filings, recordings and registrations that are
necessary to publish notice of and protect the validity of and to establish a
legal, valid and perfected security interest in favor of the Secured Party in
respect of all Collateral in which the Security Interest may be perfected by
filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements or with
respect to the filing of amendments or new filings to reflect the change of the
Grantor's name, location, identity or corporate structure. The Grantor's name is
listed in the preamble of this Agreement identically to how it appears on its
certificate of incorporation or other organizational documents.

         Section 3.3.   Validity and Priority of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations, (b) subject
only to the filings described in Section 3.2 above, a perfected security
interest in all Collateral in which a security interest may be perfected by
filing, recording or registration in the United States pursuant to the Uniform
Commercial Code or other applicable law in the United States (or any political
subdivision thereof) and its territories and possessions or any other country,
state or nation (or any political subdivision thereof). The Security Interest is
and shall be prior to any other Lien on any of the Collateral.

                                       3

<PAGE>

         Section 3.4. Absence of Other Liens. The Grantor's Collateral is owned
by the Grantor free and clear of any Lien. Without limiting the foregoing and
except as set forth on Schedule 3.4 to this Agreement, the Grantor has not filed
or consented to any filing described in Schedule A in favor of any Person other
than the Secured Party, nor permitted the granting or assignment of a security
interest or permitted perfection of any security interest in the Collateral in
favor of any Person other than the Secured Party. The Grantor's having
possession of all instruments and cash constituting Collateral from time to time
and the filing of financing statements in the offices referred to in Schedule A
hereto results in the perfection of such security interest. Such security
interest is, or in the case of Collateral in which the Grantor obtain rights
after the date hereof, will be, a perfected, first priority security interest.
Such notices, filings and all other action necessary or desirable to perfect and
protect such security interest have been duly taken.

         Section 3.5. Valid and Binding Obligation. This Agreement constitutes
the legal, valid and binding obligation of the Grantor, enforceable against the
Grantor in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the indemnification
provisions contained in this Agreement may be limited by applicable federal or
state securities laws.

                              ARTICLE IV. Covenants

         Section 4.1. Change of Name; Location of Collateral; Place of Business,
State of Formation or Organization.

               (a)  The Grantor shall notify the Secured Party in writing
         promptly of any change (i) in its corporate name or in any trade name
         used to identify it in the conduct of its business or in the ownership
         of its properties, (ii) in the location of its chief executive office,
         its principal place of business, any office in which it maintains books
         or records relating to Collateral owned by it (including the
         establishment of any such new office or facility), (iii) in its
         identity or corporate structure such that a filed filing made under the
         Uniform Commercial Code becomes misleading or (iv) in its Federal
         Taxpayer Identification Number. In extension of the foregoing, the
         Grantor shall not effect or permit any change referred to in the
         preceding sentence unless all filings have been made under the Uniform
         Commercial Code or otherwise that are required in order for the Secured
         Party to continue at all times following such change to have a valid,
         legal and perfected first priority security interest in all the
         Collateral.

               (b)  Without limiting Section 4.1(a), without the prior written
         consent of the Secured Party in each instance, the Grantor shall not
         change its (i) principal residence, if it is an individual, (ii) place
         of business, if it has only one place of business and is not a
         Registered Organization, (iii) principal place of business, if it has
         more than one place of business and is not a Registered Organization,
         or (iv) state of incorporation, formation or organization, if it is a
         Registered Organization.

         Section 4.2. Records. The Grantor shall maintain, at its own cost and
expense, such complete and accurate records with respect to the Collateral owned
by it as is consistent with its current practices and in accordance with such
prudent and standard practices used in industries

                                       4

<PAGE>

that are the same as or similar to those in which the Grantor is engaged, but in
any event to include complete accounting records indicating all payments and
proceeds received with respect to any part of the Collateral, and, at such time
or times as the Secured Party may reasonably request, promptly to prepare and
deliver to the Secured Party a duly certified schedule or schedules in form and
detail satisfactory to the Secured Party showing the identity, amount and
location of any and all Collateral.

         Section 4.3. Periodic Certification; Notice of Changes. In the event
there should at any time be any change in the information represented and
warranted herein or in the documents and instruments executed and delivered in
connection herewith, the Grantor shall immediately notify the Secured Party in
writing of such change (this notice requirement shall be in extension of and
shall not limit or relieve the Grantor of any other covenants hereunder).

         Section 4.4. Protection of Security. The Grantor shall, at its own cost
and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Secured Party in the Collateral and the priority thereof against any Lien.

         Section 4.5. Inspection and Verification. The Secured Party and such
persons as the Secured Party may reasonably designate shall have the right to
inspect the Collateral, all records related thereto (and to make extracts and
copies from such records) and the premises upon which any of the Collateral is
located, to discuss the Grantor's affairs with the officers of the Grantor and
its independent accountants and to verify under reasonable procedures the
validity, amount, quality, quantity, value, condition and status of, or any
other matter relating to, the Collateral, including, in the case of collateral
in the possession of any third Person, by contacting any account debtor or third
Person possessing such Collateral for the purpose of making such a verification.
Out-of-pocket expenses in connection with any inspections by representatives of
the Secured Party shall be (a) the obligations of the Grantor with respect to
any inspection during the continuance of a Default or an Event of Default or in
which a Default or an Event of Default is discovered or (b) the obligation of
the Secured Party in any other case.

         Section 4.6. Taxes; Encumbrances. At its option, the Secured Party may
discharge, Liens at any time levied or placed on the Collateral and may pay for
the maintenance and preservation of the Collateral to the extent the Grantor
fails to do so and the Grantor shall reimburse the Secured Party on demand for
any payment made or any expense incurred by the Secured Party pursuant to the
foregoing authorization; provided, however, that nothing in this Section shall
be interpreted as excusing the Grantor from the performance of, or imposing any
obligation on the Secured Party to cure or perform, any covenants or other
obligation of the Grantor with respect to any Lien or maintenance or
preservation of Collateral as set forth herein.

         Section 4.7. Use and Disposition of Collateral. The Grantor shall not
make or permit to be made an assignment, pledge or hypothecation of any
Collateral or shall grant any other Lien in respect of the Collateral except for
the sale of its products and license of its software in the ordinary course of
business. The Grantor shall not make or permit to be made any transfer of any
Collateral and the Grantor shall remain at all times in possession of the
Collateral owned by it except for the sale of its products and license of its
software in the ordinary course of business.

                                       5

<PAGE>

         Section 4.8.  Insurance/Notice of Loss. Within a reasonable period of
time following the date of this Agreement, Grantor, at its own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Collateral. In extension of the foregoing and without limitation, such
insurance shall be payable to the Secured Party as loss payee under a "standard"
loss payee clause, and the Secured Party shall be listed as an "additional
insured" on Grantor's general liability insurance. Such insurance shall not be
terminated, cancelled or not renewed for any reason, including non-payment of
insurance premiums, unless the insurer shall have provided the Secured Party at
least 30 days prior written notice. Grantor irrevocably makes, constitutes and
appoints the Secured Party (and all officers, employees or agents designated by
the Secured Party) as its true and lawful agent and attorney-in-fact for the
purpose, during the continuance of an Event of Default, of making, settling and
adjusting claims in respect of Collateral under policies of insurance, endorsing
the name of Grantor on any check, draft, instrument or other item of payment for
the proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that Grantor at any time or times
shall fail to obtain or maintain any of the policies of insurance required
hereby or to pay any premium in whole or part relating thereto, the Secured
Party may, without waiving or releasing any obligation or liability of Grantor
hereunder or any Event of Default, in their sole discretion, obtain and maintain
such policies of insurance and pay such premium and take any other actions with
respect thereto as the Secured Party deems advisable. All sums disbursed by the
Secured Party in connection and in accordance with this Section, including
reasonable attorneys' fees, court costs, expenses and other charges relating
thereto, shall be payable upon demand, by Grantor to the Secured Party and shall
be additional Obligations secured hereby. Grantor shall promptly notify the
Secured Party if any material portion of the Collateral owned or held by Grantor
is damaged or destroyed. The proceeds of any casualty insurance in respect of
any casualty loss of any of the Collateral shall (i) so long as no Default or
Event of Default has occurred and is continuing, be disbursed to Grantor for
direct application by Grantor solely to the repair or replacement of Grantor's
property so damaged or destroyed, and (ii) in all other circumstances, be held
by the Secured Party as cash collateral for the Obligations. The Secured Party
may, at its sole option, disburse from time to time all or any part of such
proceeds so held as cash collateral, upon such terms and conditions as the
Secured Party may reasonably prescribe, for direct application by the Secured
Party solely to the repair or replacement of Grantor's property so damaged or
destroyed, or Grantor may apply all or any part of such proceeds to the
Obligations.

         Section 4.9.  Legend. Grantor shall legend, in form and manner
satisfactory to the Secured Party, its accounts and its books, records and
documents evidencing or pertaining thereto with an appropriate reference to the
fact that such accounts have been assigned to the Secured Party and that the
Secured Party has a security interest therein.

                ARTICLE V. Further Assurances; Power of Attorney

         Section 5.1.  Further Assurances. Grantor shall, at its own expense,
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Secured Party may
from time to time reasonably request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements (including fixture filings) or other
documents in connection herewith or

                                       6

<PAGE>

therewith. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged and delivered
to the Secured Party, duly endorsed in a manner satisfactory to the Secured
Party.

         Section 5.2. Power of Attorney.

               (a)  Grantor hereby irrevocably (as a power coupled with an
interest) constitutes and appoints the Secured Party (and all officers,
employees or agents designated by the Secured party), its attorney-in-fact with
full power of substitution, for the benefit of the Secured Party,

                    (i)  to take all appropriate action and to execute all
         documents and instruments that may be necessary or desirable to
         accomplish the purposes of this Agreement, and without limiting the
         generality of the foregoing, Grantor hereby grants the power to file
         one or more financing statements (including fixture filings),
         continuation statements, filings with the United States Patent and
         Trademark Office or United States Copyright Office (or any successor
         office or any similar office in any other country) or other documents
         for the purpose of perfecting, confirming, continuing, enforcing or
         protecting the Security Interest granted by Grantor, without the
         signature of Grantor, and naming Grantor as debtor and the Secured
         Party as secured party; and

                    (ii) upon the occurrence and during the continuance of an
         Event of Default (i) to receive, endorse, assign and/or deliver any and
         all notes, acceptances, checks, drafts, money orders or other evidences
         of payment relating to the Collateral or any part thereof; (ii) to
         demand, collect, receive payment of, give receipt for and give
         discharges and releases of all or any of the Collateral; (iii) to sign
         the name of Grantor on any invoice or bill of lading relating to any of
         the Collateral; (iv) to send verifications of accounts to any account
         debtor or any other Person liable for an account; (v) to commence and
         prosecute any and all suits, actions or proceedings at law or in equity
         in any court of competent jurisdiction to collect or otherwise realize
         on all or any of the Collateral or to enforce any rights in respect of
         any Collateral; (vi) to settle, compromise, compound, adjust or defend
         any actions, suits or proceeding relating to all or any of the
         Collateral; and (vii) to use, sell, assign, transfer, pledge, make any
         agreement with respect to or otherwise deal with all or any of the
         Collateral, and to do all other acts and things necessary to carry out
         the purposes of this Agreement, as fully and completely as though the
         Secured Party was the absolute owner of the Collateral for all
         purposes; provided, however, that nothing herein contained shall be
         construed as requiring or obligating the Secured Party to make any
         commitment or to make any inquiry as to the nature or sufficiency of
         any payment received by the Secured Party, or to present or file any
         claim or notice, or to take any action with respect to the Collateral
         or any part thereof or the moneys due or to become due in respect
         thereof or any property covered thereby, and no action taken or omitted
         to be taken by the Secured Party with respect to the Collateral or any
         part thereof shall give rise to any defense, counterclaim or offset in
         favor of Grantor or to any claim or action against the Secured Party.

               (b)  The provisions of this Article shall in no event relieve
Grantor of any of its obligations hereunder with respect to the Collateral or
any part thereof or impose any obligation on the Secured Party to proceed in any
particular manner with respect to the Collateral or any

                                       7

<PAGE>

part thereof, or in any way limit the exercise by the Secured Party of any other
or further right which it may have on the date of this Agreement or hereafter,
whether hereunder, by law or otherwise.

                              ARTICLE VI. Remedies

         Section 6.1. Remedies upon Default.

               (a)  Upon the occurrence and during the continuance of an Event
         of Default, Grantor agrees to deliver each item of its Collateral to
         the Secured Party on demand, and it is agreed that the Secured Party
         shall have the right to take any of or all the following actions at the
         same or different times: with or without legal process and with or
         without prior notice or demand for performance, to take possession of
         the Collateral and without liability for trespass to enter any premises
         where the Collateral may be located for the purpose of taking
         possession of or removing the Collateral, exercise Grantor's right to
         bill and receive payment for completed work and, generally, to exercise
         any and all rights afforded to a secured party under the Uniform
         Commercial Code or other applicable law. Without limiting the
         generality of the foregoing, Grantor agrees that the Secured Party
         shall have the right, subject to the mandatory requirements of
         applicable law, to sell or otherwise dispose of all or any part of the
         Collateral, at public or private sale or at any broker's board or on
         any securities exchange, for cash, upon credit or for future delivery
         as the Secured Party shall deem appropriate. The Secured Party shall be
         authorized at any such sale (if it deems it advisable to do so) to
         restrict the prospective bidders or purchasers to persons who will
         represent and agree that they are purchasing the Collateral for their
         own account for investment and not with a view to the distribution or
         sale thereof, and upon consummation of any such sale the Secured Party
         shall have the right to assign, transfer and deliver to the purchaser
         or purchasers thereof the Collateral so sold. Each such purchaser at
         any such sale shall hold the property sold absolutely, free from any
         claim or right on the part of Grantor, and Grantor hereby waives (to
         the extent permitted by law) all rights of redemption, stay and
         appraisal which Grantor now has or may at any time in the future have
         under any rule of law or statute now existing or hereafter enacted.

               (b)  The Secured Party shall give Grantor ten (10) days' written
         notice (which Grantor agrees is reasonable notice within the meaning of
         Section 9-504(3) of the Uniform Commercial Code) of the Secured Party's
         intention to make any sale of Collateral. Such notice, in the case of a
         public sale, shall state the time and place for such sale and, in the
         case of a sale at a broker's board or on a securities exchange, shall
         state the board or exchange at which such sale is to be made and the
         day on which the Collateral, or portion thereof, will first be offered
         for sale at such board or exchange. Any such public sale shall be held
         at such time or times within ordinary business hours and at such place
         or places as the Secured Party may fix and state in the notice (if any)
         of such sale. At any such sale, the Collateral, or portion thereof, to
         be sold may be sold in one lot as an entirety or in separate parcels,
         as the Secured Party may (in its sole and absolute discretion)
         determine. The Secured Party shall not be obligated to make any sale of
         any Collateral if it shall determine not to do so, regardless of the
         fact that notice of sale of such Collateral shall have been given. The
         Secured Party may, without notice or publication, adjourn any public or
         private sale or cause the same to be adjourned from

                                       8

<PAGE>

         time to time by announcement at the time and place fixed for sale, and
         such sale may, without further notice, be made at the time and place to
         which the same was so adjourned. In case any sale of all or any part of
         the Collateral is made on credit or for future delivery, the Collateral
         so sold may be retained by the Secured Party until the sale price is
         paid by the purchaser or purchasers thereof, but the Secured Party
         shall not incur any liability in case any such purchaser or purchasers
         shall fail to take up and pay for the Collateral so sold and, in case
         of any such failure, such Collateral may be sold again upon like
         notice. At any public (or, to the extent permitted by law, private)
         sale made pursuant to this Section, the Secured Party may bid for or
         purchase, free (to the extent permitted by law) from any right of
         redemption, stay, valuation or appraisal on the part of Grantor (all
         said rights being also hereby waived and released to the extent
         permitted by law), the Collateral or any part thereof offered for sale
         and may make payment on account thereof by using any claim then due and
         payable to the Secured Party from Grantor as a credit against the
         purchase price, and the Secured Party may, upon compliance with the
         terms of sale, hold, retain and dispose of such property without
         further accountability to Grantor therefor. For purposes hereof, a
         written agreement to purchase the Collateral or any portion thereof
         shall be treated as a sale thereof; the Secured Party shall be free to
         carry out such sale pursuant to such agreement and Grantor shall not be
         entitled to the return of the Collateral or any portion thereof subject
         thereto, notwithstanding the fact that after the Secured Party shall
         have entered into such an agreement all Events of Default shall have
         been remedied and the Obligations paid in full. As an alternative to
         exercising the power of sale herein conferred upon it, the Secured
         Party may proceed by a suit or suits at law or in equity to foreclose
         this Agreement and to sell the Collateral or any portion thereof
         pursuant to a judgment or decree of a court or courts having competent
         jurisdiction or pursuant to a proceeding by a court-appointed receiver.

         Section 6.2. Application of Proceeds. The Secured Party shall apply the
proceeds of any collection or sale of the Collateral, as well as any Collateral
consisting of cash, as follows:

               (a)  FIRST, to the payment of all costs and expenses incurred by
the Secured Party in connection with such collection or sale or otherwise in
connection with this Agreement or any of the Obligations, including all court
costs and the fees and expenses of its agents and legal counsel, and any other
costs or expenses incurred in connection with the exercise of any right or
remedy hereunder, under the Purchase Agreement or under the Note;

               (b)  SECOND, to the payment in full of the Obligations; and

               (c)  THIRD, to Grantor, its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may otherwise direct.

         Subject to the foregoing, the Secured Party shall have absolute
discretion as to the time of application of such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of the Collateral by the Secured
Party (including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of any such proceeds, moneys or balances by
the Secured Party or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to

                                       9

<PAGE>

see to the application of any part of the purchase money paid over to the
Secured Party or such officer or be answerable in any way for the misapplication
thereof.

         Section 6.3.  Grant of License to Use Intellectual Property. For the
purpose of enabling the Secured Party to exercise rights and remedies under this
Article at such time as the Secured Party shall be lawfully entitled to exercise
such rights and remedies, Grantor hereby grants to the Secured Party an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to Grantor) to use, license or sub-license any of the
Collateral consisting of intellectual property now owned or hereafter acquired
by Grantor, and wherever the same may be located, and 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 software and programs used for the
compilation or printout thereof. The use of such license by the Secured Party
may be exercised, at the option of the Secured Party, only upon the occurrence
and during the continuation of an Event of Default (after giving effect to any
applicable cure periods).

                           ARTICLE VII. Miscellaneous

         Section 7.1.  Notices. All communications and notices hereunder to the
Grantor and to the Secured Party shall (except as otherwise expressly permitted
herein) be in writing and delivered to the Grantor or the Secured Party, as the
case may be, as provided in the Purchase Agreement.

         Section 7.2.  Security Interest Absolute. All rights of the Secured
Party hereunder, the Security Interest and all obligations of Grantor hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Purchase Agreement, the Note, any agreement with respect
to any of the Obligations or any other agreement or instrument relating to any
of the foregoing, (b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Purchase Agreement, the Note
or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, Grantor in
respect of the Obligations or this Agreement.

         Section 7.3.  Survival of Agreement. All covenants, agreements,
representations and warranties made by Grantor herein and in the certificates or
other instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the Secured Party and
shall survive the making of the loan and the execution and delivery to the
Secured Party of the Note, regardless of any investigation made by the Secured
Party or on its behalf; and shall continue in full force and effect until this
Agreement shall terminate.

         Section 7.4.  Binding Effect; Several Agreement; Successors and
Assigns. This Agreement shall become effective as to Grantor when a counterpart
hereof executed on behalf of Grantor shall have been delivered to the Secured
Party and a counterpart hereof shall have been executed on behalf of the Secured
Party, and thereafter shall be binding upon Grantor and the Secured Party and
its respective successors and assigns, and shall inure to the benefit of
Grantor, the Secured Party and its respective successors and assigns, except
that Grantor shall not have

                                       10

<PAGE>

the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer shall
be void) except as expressly contemplated by this Agreement, the Purchase
Agreement or the Note.

     Section 7.5. Secured Party's Fees and Expense; Indemnification.

          (a) Grantor agrees to pay upon demand to the Secured Party the amount
     of any and all reasonable expenses, including all reasonable fees,
     disbursements and other charges of its counsel and of any experts or
     agents, which the Secured Party may incur in connection with (i) the
     administration of this Agreement (including the customary fees and charges
     of the Secured Party for any audits conducted by it or on its behalf with
     respect to the accounts inventory), (ii) the custody or preservation of, or
     the sale of, collection from or other realization upon any of the
     Collateral, (iii) the exercise, enforcement or protection of any of the
     rights of the Secured Party hereunder or (iv) the failure of Grantor to
     perform or observe any of the provisions hereof.

          (b) Without limitation of its indemnification obligations under the
     Purchase Agreement, Grantor agrees to indemnify the Secured Party and the
     agent, contractors and employees of the Secured Party (collectively, the
     "Indemnitees") against, and hold each of them harmless from, any and all
     losses, claims, damages, liabilities and related expenses, including
     reasonable fees, disbursements and other charges of counsel, incurred by or
     asserted against any of them arising out of, in any way connected with, or
     as a result of, the execution, delivery, or performance of this Agreement
     or any agreement or instrument contemplated hereby or any claim,
     litigation, investigation or proceeding relating hereto or to the
     Collateral, whether or not any Indemnitee is a party thereto; provided that
     such indemnity shall not, as to any Indemnitee, be available to the extent
     that such losses, claims, damages, liabilities or related expenses are
     determined by a court of competent jurisdiction by final and nonappealable
     judgment to have resulted from the gross negligence or willful misconduct
     of such Indemnitee.

          (c) Any such amounts payable as provided hereunder shall be additional
     Obligations secured hereby. The provisions of this Section shall remain
     operative and in full force and effect regardless of the termination of
     this Agreement, the Purchase Agreement or the Note, the consummation of the
     transactions contemplated hereby, the repayment of any of the Obligations,
     the invalidity or unenforceability of any term or provision of this
     Agreement, the Purchase Agreement or the Note, or any investigation made by
     or on behalf of the Secured Party. All amounts due under this Section shall
     be payable on written demand therefor.

     Section 7.6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

     Section 7.7. Waivers; Amendment.

          (a) No failure or delay of the Secured Party in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such

                                       11

<PAGE>

right or power, or any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise thereof or the exercise
of any other right or power. The rights and remedies of the Secured Party
hereunder and under the Purchase Agreement are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement, the Purchase Agreement or the Note or consent to
any departure by Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on Grantor in any case shall entitle Grantor to
any other or further notice or demand in similar or other circumstances.

          (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements, in writing
entered into by the Secured Party and Grantor.

     Section 7.8.  WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, THE PURCHASE AGREEMENT OR THE NOTE. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT, THE PURCHASE AGREEMENT AND THE NOTE, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     Section 7.9.  Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

     Section 7.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract. Each party shall be entitled
to rely on a facsimile signature of any other party hereunder as if it were an
original.

     Section 7.11. Jurisdiction; Consent to Service of Process.

          (a) Grantor hereby irrevocably and unconditionally submits, for itself
     and its property, to the nonexclusive jurisdiction of any New York State
     court or Federal court of the United States of America sitting in New York
     City, and any appellate court from any thereof, in any action or proceeding
     arising out of or relating to this Agreement, the

                                       12

<PAGE>

     Purchase Agreement or the Note, or for recognition or enforcement of any
     judgment, and each of the parties hereto hereby irrevocably and
     unconditionally agrees that all claims in respect of any such action or
     proceeding may be heard and determined in such New York State or, to the
     extent permitted by law, in such Federal court. Each of the parties hereto
     agrees that a final judgment in any such action or proceeding shall be
     conclusive and may be enforced in other jurisdictions by suit on the
     judgment or in any other manner provided by law. Nothing in this Agreement
     shall affect any right that the Secured Party may otherwise have to bring
     any action or proceeding relating to this Agreement, the Purchase Agreement
     or the Note against Grantor or its properties in the courts of any
     jurisdiction.

          (b) Grantor hereby irrevocably and unconditionally waives, to the
     fullest extent it may legally and effectively do so, any objection which it
     may now or hereafter have to the laying of venue of any suit, action or
     proceeding arising out of or relating to this Agreement, the Purchase
     Agreement or the Note in any New York State or Federal court. Each of the
     parties hereto hereby irrevocably waives, to the fullest extent permitted
     by law, the defense of an inconvenient forum to the maintenance of such
     action or proceeding in any such court.

          (c) Each party to this Agreement irrevocably consents to service of
     process in the manner provided for notices in Section 7.1. Nothing in this
     Agreement will affect the right of any party to this Agreement to process
     in any other manner permitted by law.

     Section 7.12. Termination. Subject to earlier termination of this Agreement
and the Security Interest pursuant to Section 2.1 hereof, this Agreement and the
Security Interest shall terminate when all the Obligations have been paid in
full, at which time the Secured Party shall execute and deliver to Grantor, at
Grantor's expense, all Uniform Commercial Code termination statements and
similar documents which Grantor shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section shall be without recourse to or warranty by the Secured
Party.

     Section 7.13. Prejudgment Remedy Waiver. Grantor acknowledges that this
Agreement, the Purchase Agreement and the Note evidence a commercial transaction
and that it could, under certain circumstances have the right, to notice of and
hearing on the right of the Secured Party to obtain a prejudgment remedy, such
as attachment, garnishment and/or replevin, upon commencing any litigation
against Grantor. Notwithstanding, Grantor hereby waives all rights to notice,
judicial hearing or prior court order to which it might otherwise have the right
under any state or federal statute or constitution in connection with the
obtaining by the Secured Party of any prejudgment remedy by reason of this
Agreement, the Purchase Agreement, the Note or by reason of the Obligations or
any renewals or extensions of the same. Grantor also waives any and all
objection which it might otherwise assert, now or in the future, to the exercise
or use by the Secured Party of any right of setoff, repossession or self help as
may presently exist under statute or common law.

     Section 7.14. Concerning Revised Article 9 of the Uniform Commercial Code.
The parties acknowledge and agree to the following provisions of this Agreement
in anticipation of the possible application, in one or more jurisdictions to the
transactions contemplated hereby, of the revised Article 9 of the Uniform
Commercial Code in the form or substantially in the form

                                       13

<PAGE>

approved in 1998 by the American Law Institute and the National Conference of
Commissioners on Uniform State Law ("Revised Article 9").


          (a) In applying the law of any jurisdiction in which Revised Article 9
is in effect, the Collateral is all assets of Grantor, whether or not within the
scope of Revised Article 9. The Collateral shall also include, without
limitation, the following categories of assets as defined in Revised Article 9:
goods (including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts (including
health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other investment property, general intangibles (including payment
intangibles and software), supporting obligations and any and all proceeds of
any thereof, wherever located, whether now owned and hereafter acquired. If
Grantor shall at any time, whether or not Revised Article 9 is in effect in any
particular jurisdiction, acquire a commercial tort claim, as defined in Revised
Article 9, Grantor shall immediately notify the Secured Party in a writing
signed by Grantor of the brief details thereof and grant to the Secured Party in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
satisfactory to the Secured Party. The Secured Party may at any time and from
time to time, pursuant to the provisions of Article V, file financing
statements, continuation statements and amendments thereto that describe the
Collateral as all assets of Grantor or words of similar effect and which contain
any other information required by Part 5 of Revised Article 9 for the
sufficiency or filing office acceptance of any financing statement, continuation
statement or amendment, including whether Grantor is an organization, the type
of organization and any organization identification number issued to Grantor.
Grantor shall furnish any such information to the Secured Party promptly upon
request. Any such financing statements, continuation statements or amendments
may be signed by the Secured Party on behalf of Grantor, as provided in Article
V, and may be filed at any time in any jurisdiction whether or not Revised
Article 9 is then in effect in that jurisdiction.

          (b) Grantor shall at any time and from time to time, whether or not
Revised Article 9 is in effect in any particular jurisdiction, take such steps
as the Secured Party may reasonably request for the Secured Party (i) to obtain
an acknowledgement, in form and substance satisfactory to the Secured Party, of
any bailee having possession of any of the Collateral that the bailee holds such
Collateral for the Secured Party, (ii) to obtain "control" of any investment
property, deposit accounts, letter-of-credit rights or electronic chattel paper
(as such terms are defined in Revised Article 9 with corresponding provisions in
ss.ss. 9-104, 9-105, 9-106 and 9-107 relating to what constitutes "control" for
such items of Collateral), with any agreements establishing control to be in
form and substance satisfactory to the Secured Party, and (iii) otherwise to
insure the continued perfection and priority of the Secured Party's security
interest in any of the Collateral and of the preservation of its rights therein,
whether in anticipation and following the effectiveness of Revised Article 9 in
any jurisdiction.

          (c) Nothing contained in this Section shall be construed to narrow the
scope of the security interest granted hereby in any of the Collateral or the
perfection or priority thereof or to impair or otherwise limit any of the
rights, powers, privileges or remedies of the Secured Party hereunder except as
(and then only to the extent) specifically mandated by Revised Article 9 to the
extent then applicable.

                                       14

<PAGE>

     IN WITNESS WHEREOF, the parties have duly executed this Security Agreement
as of the day and year first written above.


                                          VERTEL CORPORATION



                                          By:_______________________________
                                             Name:
                                             Title:


                                          SDS MERCHANT FUND, L.P.



                                          By:_______________________________
                                             Name: Steve Derby
                                             Title: Managing Member

<PAGE>

                                   SCHEDULE A

          Places of Business; Chief Executive Office; Filing Locations

State of Incorporation:
California

Chief Executive Office:
21300 Victory Boulevard
Suite 700
Woodland Hills, California 91367

Filing Locations:
Secretary of State of the State of California

<PAGE>


                     Schedule 3.4 to the Security Agreement

Grantor has the following outstanding liens and security interests:

1.  Secured Party -- Canon Financial Services, Inc. filed on 10/03/96.

2.  Secured Party -- Canon Financial Services, Inc. filed on 02/18/97.

3.  Secured Party -- Canon Financial Services, Inc. filed on 01/31/00.

4.  Secured Party -- SDS Merchant Fund, L.P. security agreement entered into on
    07/02/02.

5.  Lien -- State of California -- $741 -- State Tax Lien -- entered 12/07/01.

The security interests held by Canon Financial Services, cover Canon office
equipment sold to Grantor.