<PAGE>
                                                                     EXHIBIT 4.5
                               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 convertible promissory note to the
Secured Party (the "Note") in the principal amount of $3,500,000 pursuant to a
Note and Warrant Purchase Agreement by and between the Grantor and the Secured
Party dated as of August 31, 2001 (the "Purchase Agreement");

     WHEREAS, in consideration of the Secured Party entering into the
transactions contemplated by the Note and Warrant Purchase Agreement dated as of
July 2, 2002 between the Grantor and the Secured Party, the Grantor has agreed
to secure the obligations under the Purchase Agreement by 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); and

     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, 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,

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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, 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

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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.

     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

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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 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

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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.

     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

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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 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.

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     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 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

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          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
     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

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     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 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

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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 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.

<PAGE>
                                                                              11

          (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 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

<PAGE>
                                                                              12

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 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

<PAGE>
                                                                              13

     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 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),

<PAGE>
                                                                              14

     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.

<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>
                                                                              17

                     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
     July 2, 2002.

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.