Document:

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                                                                    EXHIBIT 10.2
                                                                    ------------

                               SECURITY AGREEMENT
                               ------------------

         THIS SECURITY AGREEMENT (the "Agreement") dated as of October 16, 2001
                                       ---------
between ProsoftTraining.com, a Nevada corporation (the "Debtor"), and Hunt
                                                        ------
Capital Growth Fund II, L.P. (the "Secured Party").
                                   -------------

                                R E C I T A L S:
                                - - - - - - - -

         WHEREAS, the Debtor and the Secured Party are entering into that
certain Securities Purchase Agreement dated of even date herewith (such
agreement as it may be amended, renewed, extended, restated, replaced,
substituted, supplemented, or otherwise modified from time to time is referred
to herein as the "Purchase Agreement"); and
                  ------------------

         WHEREAS, execution and delivery of this Agreement is a condition to the
Secured Party entering into the Purchase Agreement and the purchase of the
Convertible Note pursuant thereto;

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy, receipt, and sufficiency of which are
hereby acknowledged, and in order to induce the Secured Party to make the loan
under the Purchase Agreement, the parties hereto hereby agree as follows:

                                    ARTICLE I

                                   Definitions
                                   -----------

         Section 1.01.  Definitions.  As used in this Agreement, the following
                        -----------
 terms have the following meanings:

         "Account" means any "account," as such term is defined in Article or
          -------
Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor and, in any
event, shall include, without limitation, each of the following, whether now
owned or hereafter acquired by the Debtor: (a) all rights of the Debtor to
payment for goods sold or leased or services rendered, whether or not earned by
performance, (b) all accounts receivable of the Debtor, (c) all rights of the
Debtor to receive any payment of money or other form of consideration, (d) all
security pledged, assigned, or granted to or held by the Debtor to secure any of
the foregoing, (e) all guaranties of, or indemnifications with respect to, any
of the foregoing, and (f) all rights of the Debtor as an unpaid seller of goods
or services, including, but not limited to, all rights of stoppage in transit,
replevin, reclamation and resale.

         "Borrower" means the Debtor.
          --------

         "Broker" means any "broker," as such term is defined in Article or
          ------
Chapter 8 of the UCC, and in any event shall include, but not be limited to, any
Person defined as a broker or dealer under the federal securities laws, but
without excluding a bank acting in that capacity.

         "Chattel Paper" means any "chattel paper," as such term is defined in
          -------------
Article or Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor.

         "Clearing Corporation" means any "clearing corporation," as such term
          --------------------
is defined in Article or Chapter 8 of the UCC, and in any event shall include,
but not be limited to, any (a) Person that is registered as a "clearing agency"
under the federal securities laws, (b) federal reserve bank, or (c) other Person
that provides clearance or settlement services with respect to Financial Assets
that would require it to register as a clearing agency under the federal

                                     Page 1

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securities laws but for an exclusion or exemption from the registration
requirement, if its activities as a clearing corporation, including promulgation
of rules, are subject to regulation by a federal or state governmental
authority.

         "Collateral" has the meaning specified in Section 2.01 of this
          ----------                               ------------
Agreement.

         "Commodity Account" means any commodity account, now owned or hereafter
          -----------------
acquired by the Debtor, including, without limitation, all accounts maintained
by a Commodity Intermediary in which a Commodity Contract is carried for the
Debtor.

         "Commodity Contract" means any commodity contract, and includes,
          ------------------
without limitation, a commodity futures contract, a commodity option, or other
contract that, in each case, is (a) traded on or subject to the rules of a board
of trade that has been designated as a contract market for such a contract
pursuant to the federal commodities laws, or (b) traded on a foreign commodity
board of trade, exchange, or market, and is carried on the books of a Commodity
Intermediary for a Commodity Customer.

         "Commodity Customer" means any Person for whom a Commodity Intermediary
          ------------------
carries a Commodity Contract on its books.

         "Commodity Intermediary" means (a) a Person who is registered as a
          ----------------------
futures commission merchant under the federal commodities laws, or (b) a Person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to the federal commodities laws.

         "Deposit Accounts" means any and all deposit accounts, bank accounts or
          ----------------
investment accounts now owned or hereafter acquired or opened by the Debtor, and
any account which is a replacement or substitute for any of such accounts,
together with all monies, Instruments and other property deposited therein and
all balances therein and all investments made with funds deposited therein or
otherwise held in connection therewith including, without limitation,
indebtedness (howsoever evidenced) and/or securities issued or guaranteed by the
government of the United States of America, certificates of deposit and all
contract rights, General Intangibles, contracts, Instruments, Investment
Property, Security Entitlements, Financial Assets, Commodity Contracts and other
Documents now or hereafter existing with respect thereto, including, but not
limited to, any and all renewals, extensions, reissuances and replacements and
substitutions therefor with all earnings, profits or other Proceeds therefrom in
the form of interest or otherwise.

         "Document" means any "document," as such term is defined in Article or
          --------
Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor, including,
without limitation, all documents of title and all receipts covering, evidencing
or representing goods now owned or hereafter acquired by the Debtor.

         "Entitlement Holder" means any Person identified in the records of a
          ------------------
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary.

         "Equipment" means any "equipment," as such term is defined in Article
          ---------
or Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor and, in
any event, shall include, without limitation, all machinery, equipment,
furniture, fixtures, trade fixtures, trailers, rolling stock, vessels, aircraft
and vehicles now owned or hereafter acquired by the Debtor and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.

         "Financial Asset" means any financial asset, and in any event shall
          ---------------
include, but not be limited to, any (a) Security, (b) obligation of a Person or
a share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment, and (c) any property that is held by a
Securities

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Intermediary for another Person in a Securities Account if the Securities
Intermediary has expressly agreed with the other Person that the property is to
be treated as a Financial Asset under Article or Chapter 8 of the UCC.

         "General Intangibles" means any "general intangibles," as such term is
          -------------------
defined in Article or Chapter 9 of the UCC, now owned or hereafter acquired by
the Debtor and, in any event, shall include, without limitation, each of the
following, whether now owned or hereafter acquired by the Debtor: (a) all of the
Debtor's service marks, trade names, trade secrets, registrations, goodwill,
franchises, licenses, permits, proprietary information, customer lists, designs
and inventions; (b) all of the Debtor's books, records, data, plans, manuals,
computer software, computer tapes, computer disks, computer programs, source
codes, object codes and all rights of the Debtor to retrieve data and other
information from third parties; (c) all of the Debtor's contract rights,
partnership interests, joint venture interests, securities, deposit accounts,
investment accounts and certificates of deposit; (d) all rights of the Debtor to
payment under letters of credit and similar agreements; (e) all tax refunds and
tax refund claims of the Debtor; (f) all choses in action and causes of action
of the Debtor (whether arising in contract, tort or otherwise and whether or not
currently in litigation) and all judgments in favor of the Debtor; (g) all
rights and claims of the Debtor under warranties and indemnities; and (h) all
rights of the Debtor under any insurance, surety or similar contract or
arrangement.

         "Instrument" means any "instrument," as such term is defined in Article
          ----------
or Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor, and, in
any event, shall include all promissory notes, drafts, bills of exchange and
trade acceptances of the Debtor, whether now owned or hereafter acquired.

         "Intellectual Property" means (a) all copyrights, copyright licenses,
          ---------------------
patents, patent licenses, trademarks and trademark licenses of Debtor; (b) all
renewals, extensions and modifications thereof; (c) all income, royalties,
damages, profits and payments relating to or payable under any of the foregoing;
(d) the right to sue for past, present or future infringements of any of the
foregoing; (e) all other rights and benefits relating to any of the foregoing
throughout the world; and (f) all goodwill associated with and symbolized by any
of the foregoing; in each case, whether now owned or hereafter acquired by the
Debtor.

         "Inventory" means any "inventory," as such term is defined in Article
          ---------
or Chapter 9 of the UCC, now owned or hereafter acquired by the Debtor, and, in
any event, shall include, without limitation, each of the following, whether now
owned or hereafter acquired by the Debtor: (a) all goods and other personal
property of the Debtor that are held for sale or lease or to be furnished under
any contract of service; (b) all raw materials, work-in-process, finished goods,
inventory, supplies and materials of the Debtor; (c) all wrapping, packaging,
advertising and shipping materials of the Debtor; (d) all goods that have been
returned to, repossessed by or stopped in transit by the Debtor; and (e) all
Documents evidencing any of the foregoing.

         "Investment Property" means any investment property, now owned or
          -------------------
hereafter acquired by the Debtor, and, in any event, shall include, without
limitation, each of the following, whether now owned or hereafter acquired by
the Debtor: (a) any Security, whether certificated or uncertificated; (b) any
Security Entitlement; (c) any Securities Account; (d) any Commodity Contract;
and (e) any Commodity Account.

         "Issuer" means any "issuer," as such term is defined in Article or
          ------
Chapter 8 of the UCC, and in any event shall include, but not be limited to, any
Person that, with respect to an obligation on or a defense to a Security, (a)
places or authorizes the placing of its name on a Security Certificate, other
than as authenticating trustee, registrar, transfer agent, or the like, to
evidence a share, participation, or other interest in its property or in an
enterprise, or to evidence its duty to perform an obligation represented by the
certificate; (b) creates a share, participation, or other interest in its
property or in an enterprise, or undertakes an obligation, that is an
Uncertificated Security; (c) directly or indirectly creates a fractional
interest in its rights or property, if the fractional interest is represented by
a Security Certificate; or (d) becomes responsible for, or in the place of,
another Issuer.

         "Obligations" means all indebtedness, liabilities and obligations of
          -----------
Debtor under the Convertible Note, under the Purchase Agreement and under this
Agreement.

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         "Permitted Liens" means Liens and security interests (a) permitted
          ---------------
under Section 7.4 of the Purchase Agreement or (b) in favor of Secured Party.
      -----------

         "Pledged Collateral" has the meaning specified in Section 4.13(b)(i) of
          ------------------                               ------------------
this Agreement.

         "Pledged Shares" means the shares of capital stock or other equity,
          --------------
partnership or membership interests described on Schedule 3 attached hereto and
                                                 ----------
incorporated herein by reference.

         "Proceeds" means any "proceeds," as such term is defined in Article or
          --------
Chapter 9 of the UCC and, in any event, shall include, but not be limited to,
(a) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Debtor from time to time with respect to any of the Collateral,
(b) any and all payments (in any form whatsoever) made or due and payable to the
Debtor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any Person acting, or purporting to act, for or on
behalf of any governmental authority), and (c) any and all other amounts from
time to time paid or payable under or in connection with any of the Collateral.

         "Securities Account" means any account to which a Financial Asset is or
          ------------------
may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise the rights that comprise the Financial Asset.

         "Securities Intermediary" means any (a) Clearing Corporation, or (b)
          -----------------------
Person, including a bank or Broker, that in the ordinary course of its business
maintains Securities Accounts for others and is acting in that capacity.

         "Security" means any "security," as such term is defined in Article or
          --------
Chapter 8 of the UCC and, in an event, shall include, but not be limited to, any
obligation of an Issuer or a share, participation, or other interest in an
issuer or in property or an enterprise or an Issuer: (a) which is represented by
a Security Certificate in bearer or registered form, or the transfer of which
may be registered upon books maintained for that purpose by or on behalf of the
Issuer; (b) which is one of a class or series or by its terms is divisible into
a class or series of shares, participations, interests, or obligations; and (c)
which (i) is, or is of a type, dealt in or traded on securities exchanges or
securities markets; or (ii) is a medium for investment and by its terms
expressly provides that it is a security governed by Article or Chapter 8 of the
UCC.

         "Security Certificate" means any certificate representing a Security.
          --------------------

         "Security Entitlement" means any the rights and property interest of an
          --------------------
Entitlement Holder with respect to a Financial Asset.

         "UCC" means the Uniform Commercial Code as in effect in the State of
          ---
Texas; provided, that if, by applicable law, the perfection or effect of
perfection or non-perfection of the security interest created hereunder in any
Collateral is governed by the Uniform Commercial Code as in effect on or after
the date hereof in any other jurisdiction, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or the effect of perfection or
non-perfection.

         "Uncertificated Security" means any "uncertificated security," as such
          -----------------------
term is defined in Article or Chapter 8 of the UCC, and in any event shall
include, but not be limited to, any Security that is not represented by a
certificate.

         Section  1.02.  Other  Definitional  Provisions.  Terms used  herein
                         -------------------------------
that are defined in the Purchase Agreement and are not otherwise defined herein
shall have the meanings therefor specified in the Purchase Agreement. References
to "Sections," "subsections," "Exhibits" and "Schedules" shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided. All definitions contained in this Agreement are
equally applicable to the singular and plural forms of the terms defined. All
references to statutes and regulations shall include any amendments of the same
and any successor statutes and regulations. References to

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particular sections of the UCC should be read to refer also to parallel sections
of the Uniform Commercial Code as enacted in each state or other jurisdiction
where any portion of the Collateral is or may be located.

                                   ARTICLE II

                                Security Interest
                                -----------------

         Section 2.01. Security Interest. As collateral security for the prompt
                       -----------------
payment and performance in full when due of the Obligations (whether at stated
maturity, by acceleration or otherwise), the Debtor hereby pledges and assigns
(as collateral) to the Secured Party, and grants to the Secured Party a
continuing lien on and security interest in, all of the Debtor's right, title
and interest in and to the following, whether now owned or hereafter arising or
acquired and wherever located (collectively, the "Collateral"):

         (a)      all Accounts;

         (b)      all Chattel Paper;

         (c)      all Instruments;

         (d)      all General Intangibles;

         (e)      all Documents;

         (f)      all Equipment;

         (g)      all Inventory;

         (h)      all Intellectual Property;

         (i)      all Investment Property;

         (j)      all Deposit Accounts of the Debtor and all funds,
                  certificates, Documents, Instruments, checks, drafts, wire
                  transfer receipts and other earnings, profits or other
                  Proceeds from time to time representing, evidencing, deposited
                  into or held in the Deposit Accounts (including, without
                  limitation, in the form of interest);

         (k)      the Pledged Shares and the certificates representing the
                  Pledged Shares, and all dividends, cash, instruments and other
                  property from time to time received, receivable or otherwise
                  distributed or distributable in respect of or in exchange for
                  any or all of the Pledged Shares;

         (l)      all additional shares of stock of the Subsidiaries of the
                  Debtor from time to time owned or acquired by the Debtor in
                  any manner, and the certificates and all dividends, cash,
                  instruments and other property from time to time received,
                  receivable or otherwise distributed or distributable in
                  respect of or in exchange for any or all of such shares;

         (m)      all indebtedness from time to time owed to the Debtor by the
                  Subsidiaries of the Debtor and the instruments evidencing such
                  indebtedness, and all interest, cash, instruments and other
                  property from time to time received, receivable or otherwise
                  distributed or distributable in respect of or in exchange
                  for any or all of such indebtedness;

         (n)      the proceeds, in cash or otherwise, of any of the property
                  described in the foregoing clauses (a) through (m) and all
                                             -----------         ---
                  liens, security, rights, remedies and claims of the Debtor
                  with respect thereto;

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         (o)      all other goods and personal property of the Debtor of any
                  kind or character, whether tangible or intangible, including,
                  without limitation, any and all rights in and claims under
                  insurance policies, judgments and rights thereunder, and tort
                  claims; and

         (p)      all Proceeds and products of any or all of the foregoing.

         Section 2.02. Debtor Remains Liable. Notwithstanding anything to the
                       ---------------------
contrary contained herein, (a) the Debtor shall remain liable under the
contracts, agreements, documents and instruments included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by the Secured Party of any of its rights or remedies hereunder
shall not release the Debtor from any of its duties or obligations under the
contracts, agreements, documents and instruments included in the Collateral, and
(c) the Secured Party shall not have any indebtedness, liability or obligation
under any of the contracts, agreements, documents and instruments included in
the Collateral by reason of this Agreement, and the Secured Party shall not be
obligated to perform any of the obligations or duties of the Debtor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.

         Section 2.03. Delivery of Collateral. All certificates or instruments
                       ----------------------
representing or evidencing the Pledged Shares, any Instruments or Chattel Paper
or any other Collateral including, without limitation, any Investment Property,
promptly upon the Debtor gaining any rights therein, shall be delivered to and
held by or on behalf of the Secured Party pursuant hereto in suitable form for
transfer by delivery, or accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Secured Party. After the occurrence and during the continuation of an Event of
Default, the Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing any Pledged Collateral in
its possession for certificates or instruments of smaller or larger
denominations.

                                   ARTICLE III

                         Representations and Warranties
                         ------------------------------

         To induce the Secured Party to enter into this Agreement and the
Purchase Agreement, the Debtor represents and warrants to the Secured Party
that:

         Section 3.01. Title. The Debtor is, and with respect to Collateral
                       -----
acquired after the date hereof the Debtor will be, the legal and beneficial
owner of the Collateral free and clear of any Lien or other encumbrance, except
for Permitted Liens.

         Section 3.02. Accounts. Unless the Debtor has given the Secured Party
                       --------
written notice to the contrary, whenever the security interest granted hereunder
attaches to an Account, the Debtor shall be deemed to have represented and
warranted to the Secured Party as to each of its Accounts that (a) each Account
is genuine and in all respects what it purports to be, (b) each Account
represents the legal, valid and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor, (c) except for
defenses and business disputes arising in the ordinary course of business which
in the aggregate are not material, the amount of each Account represented as
owing is the correct amount actually and unconditionally owing except for normal
trade discounts granted in the ordinary course of business, and (d) except for
defenses and business disputes arising in the ordinary course of business which
in the aggregate are not material, no Account is subject to any offset,
counterclaim, or other defense.

         Section 3.03. Financing Statements. No financing statement, security
                       --------------------
agreement or other Lien instrument covering all or any part of the Collateral is
on file in any public office, except as may have been filed in favor of the
Secured Party pursuant to this Agreement and except for financing statements
evidencing Permitted Liens in favor of the Secured Party. Except as otherwise
disclosed on Schedule 4 hereto, the Debtor does not do business and has not done
             ----------
business within the past five (5) years under a trade name or any name other
than its legal name set forth at the beginning of this Agreement.

                                     Page 6

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         Section 3.04. Principal Place of Business. The principal place of
                       ---------------------------
business and chief executive office of the Debtor, and the office where the
Debtor keeps its books and records, is located at the address of the Debtor
shown on the signature pages of this Agreement.

         Section 3.05. Location of Collateral. All Inventory (except Inventory
                       ----------------------
in transit) and Equipment (other than vehicles) of the Debtor are located at the
places specified on Schedule 1 hereto. If any such location is leased by the
                    ----------
Debtor, the name and address of the landlord leasing such location is identified
on Schedule 1 hereto. The Debtor has exclusive possession and control of its
   ----------
Inventory and Equipment. None of the Inventory or Equipment of the Debtor is
evidenced by a Document (including, without limitation, a negotiable document of
title). All Instruments, Chattel Paper and Security Certificates of the Debtor
have been delivered to the Secured Party.

         Section 3.06. Perfection. Upon the filing of Uniform Commercial Code
                       ----------
financing statements in the jurisdictions listed on Schedule 2 attached hereto,
                                                    ----------
and upon the Secured Party's obtaining possession of the Pledged Shares and all
other Instruments, Chattel Paper and Security Certificates of the Debtor, the
security interest in favor of the Secured Party created herein will constitute a
valid and perfected Lien upon and security interest in the Collateral, subject
to no equal or prior Liens except for those (if any) which constitute Permitted
Liens in favor of the Secured Party.

         Section 3.07.  Inventory.  All Inventory has been produced in
                        ---------
compliance  with all  requirements  of the Fair Labor Standards Act.

         Section 3.08.  Pledged Shares.
                        --------------

         (a) The Pledged Shares that are shares of a corporation have been duly
authorized and validly issued and are fully paid and nonassessable, and the
Pledged Shares that are membership or partnership interests (if any) have been
validly granted, under the laws of the jurisdiction of organization of the
issuers thereof.

         (b) The Debtor is the legal and beneficial owner of the Pledged Shares,
free and clear of any Lien (other than the Lien created by this Agreement), and
the Debtor has not sold, granted any option with respect to, assigned,
transferred or otherwise disposed of any of its rights or interest in or to the
Pledged Shares.

         (c) On the date hereof, the Pledged Shares constitute the percentage of
the issued and outstanding shares of stock, partnership interests or membership
interests of the issuers thereof indicated on Schedule 3, as such Schedule 3 may
                                              ----------          ----------
from time to time be supplemented, amended or modified.

                                   ARTICLE IV

                                    Covenants
                                    ---------

         The Debtor covenants and agrees with the Secured Party that until the
Obligations are paid and performed in full:

         Section 4.01. Encumbrances. The Debtor shall not create, permit or
                       ------------
suffer to exist, and shall defend the Collateral against, any Lien or other
encumbrance on the Collateral except for Permitted Liens, and shall defend the
Debtor's rights in the Collateral and the Secured Party's pledge and collateral
assignment of and security interest in the Collateral against the claims and
demands of all Persons. The Debtor shall do nothing to impair the rights of the
Secured Party in the Collateral.

         Section 4.02. Modification of Accounts. The Debtor shall, in accordance
                       ------------------------
with prudent business practices, endeavor to collect or cause to be collected
from each account debtor under its Accounts, as and when due, any and all
amounts owing under such Accounts. Without the prior written consent of the
Secured Party the Debtor shall not (a) grant any extension of time for any
payment with respect to any of the Accounts, (b) compromise, compound or

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settle any of the Accounts for less than the full amount thereof, (c) release,
in whole or in part, any Person liable for payment of any of the Accounts, (d)
allow any credit or discount for payment with respect to any Account other than
trade discounts granted in the ordinary course of business, or (e) release any
Lien or guaranty securing any Account.

         Section 4.03. Disposition of Collateral. Except as expressly permitted
                       -------------------------
by the terms of the Purchase Agreement and sales of Inventory in the ordinary
course of the Debtor's business, the Debtor shall not sell, lease, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, the Collateral or any part thereof without the prior written consent
of the Secured Party.

         Section 4.04. Further Assurances. At any time and from time to time,
                       ------------------
upon the request of the Secured Party, and at the sole expense of the Debtor,
the Debtor shall promptly execute and deliver all such further agreements,
documents and instruments and take such further action as the Secured Party may
reasonably deem necessary or appropriate to preserve and perfect its security
interest in and pledge and collateral assignment of the Collateral and carry out
the provisions and purposes of this Agreement or to enable the Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any of
the Collateral, and, to the extent any of the Collateral is at any time in the
custody of a Clearing Corporation or of a "custodian bank" or a nominee of
either, as defined in the UCC, or any other Securities Intermediary, then the
Debtor shall cause the Secured Party to obtain "control," as defined in Article
or Chapter 8 of the UCC, of such Collateral in one of the manners prescribed in
Article or Chapter 8.106 of the UCC. Except as otherwise expressly permitted by
the terms of the Purchase Agreement relating to disposition of assets and except
for Permitted Liens, the Debtor agrees to defend the title to the Collateral and
the Lien thereon of the Secured Party against the claim of any other Person and
to maintain and preserve such Lien. Without limiting the generality of the
foregoing, the Debtor shall (a) execute and deliver to the Secured Party such
financing statements as the Secured Party may from time to time require; (b)
deliver and pledge to the Secured Party all Documents (including, without
limitation, documents of title) evidencing Inventory or Equipment and cause the
Secured Party to be named as lienholder on all Documents of title; (c) deliver
and pledge to the Secured Party all Instruments and Chattel Paper of the Debtor
with any necessary endorsements; and (d) execute and deliver to the Secured
Party such other agreements, documents and instruments as the Secured Party may
require to perfect and maintain the validity, effectiveness and priority of the
Liens intended to be created by the Transaction Agreements. The Debtor
authorizes the Secured Party to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of the Debtor where permitted by law. A carbon,
photographic or other reproduction of this Agreement or of any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement and may be filed as a financing statement.

         Section 4.05. Insurance. The Debtor will, at its own expense, maintain
                       ---------
insurance with respect to all Collateral which constitutes goods in such amounts
and against such risks as is provided in the Purchase Agreement.

         Section 4.06.  Bailees.  If any of the Collateral is at any time in
                        -------
the possession or control of any warehouseman, bailee or any of the Debtor's
agents or processors, the Debtor shall, at the request of the Secured Party,
notify such warehouseman, bailee, agent or processor of the security interest
created hereunder and shall instruct such Person to hold such Collateral for the
Secured Party's account subject to the Secured Party's instructions.

         Section 4.07. Inspection Rights. The Debtor shall permit the Secured
                       -----------------
Party and its representatives to examine, inspect and audit the Collateral and
to examine, inspect and audit the Debtor's books and records at any reasonable
time and after notice, and as the Secured Party may desire. The Secured Party
may at any time and from time to time contact account debtors to verify the
existence, amounts and terms of the Accounts.

         Section 4.08. Mortgagee and Landlord Waivers. The Debtor shall cause
                       ------------------------------
each mortgagee of real property owned by the Debtor and each landlord of real
property leased by the Debtor to execute and deliver instruments satisfactory in
form and substance to the Secured Party by which such mortgagee or landlord
waives its rights, if any, in the Collateral.

                                     Page 8

<PAGE>

         Section 4.09. Legal Changes. The Debtor shall not change its name,
                       -------------
identity or legal structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
the Debtor shall have given the Secured Party thirty (30) days prior written
notice thereof and shall have taken all action deemed necessary or desirable by
the Secured Party to protect its Liens and the perfection and priority thereof.
The Debtor shall not change its principal place of business, chief executive
office or the place where it keeps its books and records unless it shall have
given the Secured Party thirty (30) days prior written notice thereof and shall
have taken all action deemed necessary or desirable by the Secured Party to
cause its security interest in the Collateral to be perfected with the priority
required by this Agreement.

         Section 4.10. Books and Records; Information. The Debtor shall keep
                       ------------------------------
accurate and complete books and records of the Collateral and the Debtor's
business and financial condition in accordance with generally accepted
accounting principles consistently applied. The Debtor shall from time to time
at the request of the Secured Party deliver to the Secured Party such
information regarding the Collateral and the Debtor as the Secured Party may
request, including, without limitation, lists and descriptions of the Collateral
and evidence of the identity and existence of the Collateral. To the extent
required by Section 4.04 of this Agreement, the Debtor shall mark its books and
            ------------
records to reflect the security interest of the Secured Party under this
Agreement.

         Section 4.11.  Equipment and Inventory.
                        -----------------------

         (a) The Debtor shall keep the Equipment (other than vehicles) and
Inventory (other than Inventory in transit) at the locations specified on
Schedule 1 hereto or, upon thirty (30) days prior written notice to the Secured
----------
Party, at such other places within the United States of America where all action
required to perfect the Secured Party's security interest in the Equipment and
Inventory with the priority required by this Agreement shall have been taken.

         (b) The Debtor shall maintain the Equipment and Inventory in good
condition and repair (ordinary wear and tear excepted) and in accordance with
any manufacturer's manual. The Debtor shall not permit any waste or destruction
of the Equipment or Inventory or any part thereof. The Debtor shall not permit
the Equipment or Inventory to be used in violation of any law, rule or
regulation or the terms of any policy of insurance. The Debtor shall not use or
permit any of the Equipment or Inventory to be used in any manner or for any
purpose that would impair its value or expose it to unusual risk.

         (c) In producing Inventory, the Debtor shall comply with all
requirements of the Fair Labor Standards Act.

         Section 4.12. Warehouse Receipts Non-Negotiable. The Debtor agrees that
                       ---------------------------------
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued in respect of any of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be "negotiable" (as such term is used in Section
7.104 of the UCC) unless such warehouse receipt or receipt in the nature thereof
is delivered to the Secured Party.

         Section 4.13. Notification. The Debtor shall promptly notify the
                       ------------
Secured Party of (a) any Lien, encumbrance or claim that has attached to or been
made or asserted against any of the Collateral, (b) any material change in any
of the Collateral, including, without limitation any material damage to or loss
of Collateral, and (c) the occurrence of any other event or condition
(including, without limitation, matters as to Lien priority) that could have a
material adverse effect on the Collateral or the security interest created
hereunder.

         Section 4.14. Collection of Accounts. So long as no Event of Default
                       ----------------------
has occurred and is continuing and except as otherwise provided in this
Section 4.12 and in Section 5.01, the Debtor shall have the right to collect and
------------        ------------
receive payments on the Accounts. In connection with such collections, the
Debtor may take (and, at the Secured Party's direction, shall take) such actions
as the Debtor or the Secured Party may deem necessary or advisable to enforce
collection of the Accounts. Upon the request of the Secured Party, the Debtor
shall cause all account debtors and other Persons obligated in respect of the
Accounts to make all payments on the Accounts directly to any collection or
collateral account established by the Secured Party and the Debtor shall cause
all other Proceeds of

                                     Page 9

<PAGE>

Collateral to be deposited directly to such account. Until such Proceeds are
delivered to such account, such Proceeds shall be held in trust by the Debtor
for the benefit of the Secured Party and shall not be commingled with any other
funds or property of the Debtor. All Proceeds of Collateral received by the
Secured Party pursuant to this Section 4.12 will be applied by the Secured Party
                               ------------
to the Obligations at such time and in such order as the Secured Party shall
determine from time to time in its sole judgment.

         Section 4.15.  Intellectual Property.
                        ---------------------

         (a) The Debtor shall prosecute diligently all applications in respect
of Intellectual Property, now or hereafter pending.

         (b) The Debtor shall make federal applications on all of its unpatented
but patentable inventions and all of its registrable but unregistered Copyrights
and Trademarks.

         (c) The Debtor shall preserve and maintain all of its rights in the
Intellectual Property and shall protect the Intellectual Property from
infringement, unfair competition, cancellation or dilution by all appropriate
action, including the commencement and prosecution of legal proceedings to
recover damages for infringement and to defend and preserve its rights in the
Intellectual Property.

         (d) The Debtor shall not abandon any of the Intellectual Property.

         (e) The Debtor shall not sell or assign any of its interest in, or
grant any license under (except as permitted by Section 5.05 hereof), any of the
                                                ------------
Intellectual Property without the prior written consent of the Secured Party and
shall maintain the quality of any and all products and services with respect to
which the Intellectual Property is used. The Debtor shall not enter into any
agreement regarding Intellectual Property, including, but not limited to any
licensing agreement not permitted by Section 5.05 hereof, that is or may be
                                     ------------
inconsistent with the Debtor's obligations under this Agreement or any of the
other Transaction Agreements.

         (f) If the Debtor shall obtain rights to or become entitled to the
benefit of any Intellectual Property, the Debtor shall give the Secured Party
prompt written notice thereof and the provisions of this Agreement shall
automatically apply thereto.

         (g) If an Event of Default shall have occurred and be continuing, the
Debtor shall use its best efforts to obtain any consents, waivers or agreements
necessary to enable the Secured Party to exercise its rights and remedies with
respect to the Intellectual Property.

         (h) The Debtor shall, at the request of the Secured Party, execute and
deliver to the Secured Party a copyright security agreement, a patent security
agreement, and a trademark security agreement and all other documents,
instruments, and other items as may be necessary for the Secured Party to file
such agreements with the United States Copyright Office, the United States
Patent and Trademark Office, and any similar domestic or foreign office,
department, or agency. The Debtor will, at any time and from time to time upon
the request of the Secured Party, execute and deliver to the Secured Party all
such other agreements, documents, instruments and other items as may be
necessary or appropriate for the Secured Party to create and perfect its
security interest in the Intellectual Property and to make all appropriate
filings with respect thereto.

         Section 4.16.  Voting Rights; Distributions, etc.
                        ----------------------------------

         (a) So long as no Event of Default shall have occurred and be
continuing:

             (i)  The Debtor shall be entitled to exercise any and all
voting and other consensual rights (including, without limitation, the right to
give consents, waivers and notifications in respect of any of the Pledged
Collateral) pertaining to any of the Pledged Collateral or any part thereof;
provided; however, that without the prior written consent of the Secured Party,
no vote shall be cast or consent, waiver or ratification given or action taken

                                    Page 10

<PAGE>

which would (x) be inconsistent with or violate any provision of this Agreement
or any other Loan Paper or (y) amend, modify or waive any term, provision or
condition of the certificate of incorporation, by-laws, certificate of formation
or other charter document or other agreement relating to, evidencing, providing
for the issuance of or securing any Collateral; and provided further that the
Debtor shall give the Secured Party at least five (5) Business Days' prior
written notice in the form of an officer's certificate of the manner in which it
intends to exercise, or the reasons for refraining from exercising, any voting
or other consensual rights pertaining to the Collateral or any part thereof
which might have a material adverse effect on the value of the Collateral or any
part thereof; and

             (ii) Unless a Event of Default shall have occurred and be
continuing, the Debtor shall be entitled to receive and retain any and all
dividends and interest paid in respect to any of the Collateral to the extent,
if any, permitted by the Purchase Agreement; provided, however, that any and all
                                             -----------------

                  (A) dividends, interest or other distributions paid or payable
in violation of the Purchase Agreement,

                  (B) dividends,  interest or other  distributions  paid or
payable other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in exchange for,
any Collateral,

                  (C) dividends,  interest  or other  distributions  hereafter
paid or payable in cash in respect of any Collateral in connection with a
partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and

                  (D) cash paid, payable or otherwise distributed in redemption
of, or in exchange for, any Collateral,

shall be, and shall be forthwith delivered to the Secured Party to hold as,
Collateral and shall, if received by the Debtor, be received in trust for the
benefit of the Secured Party, be segregated from the other property or funds of
the Debtor and be forthwith delivered to the Secured Party as Collateral in the
same form as so received (with any necessary endorsement). All amounts (other
than amounts described in clauses (ii) (A)-(D) above) received by the Secured
                          --------------------
Party in respect of any Pledged Collateral shall be either (1) promptly released
to the Debtor, so long as no Event of Default shall have occurred and be
continuing or (2) if any Event of Default shall have occurred and be continuing,
held by the Secured Party and applied to the Obligations. During the continuance
of any Event of Default, any dividends, interest or other distributions (whether
in cash, securities, property or otherwise) received by the Debtor with respect
to any Pledged Collateral shall be held by the Debtor in trust for the benefit
of the Secured Party and, upon the request of the Secured Party, shall be
delivered promptly to the Secured Party to hold as Collateral. If such Event of
Default is waived or cured to the satisfaction of the Secured Party, any such
distributions (except those of the types described in clauses (ii)(A)-(D) above)
                                                      -------------------
shall be returned promptly to the Debtor (provided that no other Event of
Default exists).

         (b) Upon the occurrence and during the continuance of a Event of
Default:

             (i)   The Secured Party may, without notice to the Debtor,
transfer or register in the name of the Secured Party or any of its nominees any
or all of the Collateral described in Section 2.01(i) through (m) of this
                                      ---------------         ---
Agreement, the proceeds thereof (in cash or otherwise) and all liens, security,
rights, remedies and claims of the Debtor with respect thereto (collectively,
the "Pledged Collateral") held by the Secured Party hereunder, and the Secured
     ------------------
Party or its nominee may thereafter, after delivery of notice to the Debtor,
exercise all voting and corporate rights at any meeting of any corporation,
partnership or other business entity issuing any of the Pledged Collateral and
any and all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any of the Pledged Collateral as if it were
the absolute owner thereof, including, without limitation, the right to exchange
at its discretion any and all of the Pledged Collateral upon the merger,
consolidation, reorganization, recapitalization or other readjustment of any
corporation, partnership or other business entity issuing any of such Pledged
Collateral or upon the exercise by any such issuer or the Secured Party of any
right, privilege or option

                                    Page 11

<PAGE>

pertaining to any of the Pledged Collateral, and in connection therewith, to
deposit and deliver any and all of the Pledged Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it but the Secured Party shall have no duty to
exercise any of the aforesaid rights, privileges or options, and the Secured
Party shall not be responsible for any failure to do so or delay in so doing.

             (ii)  All rights of the Debtor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Subsection 4.13(a)(i) and to receive the dividends, interest and other
---------------------
distributions which it would otherwise be authorized to receive and retain
pursuant to Subsection 4.13(a)(ii) shall be suspended until such Event of
            ----------------------
Default shall no longer exist, and all such rights shall, until such Event of
Default shall no longer exist, thereupon become vested in the Secured Party
which shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such dividends,
interest and other distributions.

             (iii) All dividends, interest and other distributions which
are received by the Debtor contrary to the provisions of this Subsection 4.13(b)
                                                              ------------------
shall be received in trust for the benefit of the Secured Party, shall be
segregated from other funds of the Debtor and shall be forthwith paid over to
the Secured Party as Collateral in the same form as so received (with any
necessary endorsement).

             (iv)  The Debtor shall execute and deliver (or cause to be
executed and delivered) to the Secured Party all such proxies and other
instruments as the Secured Party may reasonably request for the purpose of
enabling the Secured Party to exercise the voting and other rights which it is
entitled to exercise pursuant to this Subsection 4.13(b) and to receive the
                                      ------------------
dividends, interest and other distributions which it is entitled to receive and
retain pursuant to this Subsection 4.13(b). The foregoing shall not in any way
                        ------------------
limit the Secured Party's power and authority granted pursuant to Section 5.01.
                                                                  ------------

         Section 4.17.  Transfers and Other Liens; Additional Investments.
                        -------------------------------------------------

         (a) Except as may be expressly permitted by the terms of the Purchase
Agreement, the Debtor shall not grant any option with respect to, exchange, sell
or otherwise dispose of any of the Collateral, except for the sales of inventory
in the ordinary course of its business, or create or permit to exist any Lien
upon or with respect to any of the Collateral except for the Liens created
hereby.

         (b) The Debtor agrees that it will (i) cause each issuer of any of the
Collateral not to issue any shares of stock, notes or other securities or
instruments in addition to or in substitution for any of the Collateral, except,
with the written consent of the Secured Party, to the Debtor, (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all such shares of stock, membership interests, partnership interests,
notes or instruments, and (iii) promptly (and in any event within three Business
Days) deliver to the Secured Party an Amendment, duly executed by the Debtor, in
substantially the form of Exhibit A hereto (an "Amendment"), in respect of such
                          ---------
shares of stock, membership interests, partnership interests, notes or
instruments, together with all certificates, notes or other instruments
representing or evidencing the same. The Debtor hereby (i) authorizes the
Secured Party to attach each Amendment to this Agreement, (ii) agrees that all
such shares of stock, membership interests, partnership interests, notes or
instruments listed on any Amendment delivered to the Secured Party shall for all
purposes hereunder constitute Collateral, and (iii) is deemed to have made, upon
such delivery, the representations and warranties contained in Article III with
                                                               -----------
respect to such Collateral.

         Section 4.18. Possession; Reasonable Care. Regardless of whether a
                       ---------------------------
Event of Default has occurred or is continuing, the Secured Party shall have the
right to hold in its possession all Pledged Collateral pledged, assigned or
transferred hereunder and from time to time constituting a portion of the
Collateral. The Secured Party may, from time to time, in its sole discretion,
appoint one or more agents (which in no case shall be the Debtor or an affiliate
of the Debtor) to hold physical custody, for the account of the Secured Party,
of any or all of the Collateral. The Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Secured Party accords its

                                    Page 12

<PAGE>

own property, it being understood that the Secured Party shall not have any
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters, or (b) taking any necessary steps to preserve rights against
any parties with respect to any Collateral. Following the occurrence of a Event
of Default, the Secured Party shall be entitled to take possession of the
Collateral.

         Section 4.19. Acknowledgment of Pledge. The Debtor shall deliver to the
                       ------------------------
Secured Party, concurrently with the execution hereof, acknowledgment by each
financial institution in which any Deposit Account is held or maintained that
the pledge of such Deposit Account has been recorded in the books and records of
the financial institution, and that the Secured Party shall have dominion and
control over such Deposit Account, such acknowledgment to be in form and
substance satisfactory to the Secured Party.

                                    ARTICLE V

                           Rights of the Secured Party
                           ---------------------------

         Section 5.01. Power of Attorney. The Debtor hereby irrevocably
                       -----------------
constitutes and appoints the Secured Party and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the name of the Debtor or in its own
name, to take after the occurrence and during the continuance of a Event of
Default and from time to time thereafter, any and all action and to execute any
and all documents and instruments which the Secured Party at any time and from
time to time deems necessary or desirable to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, the Debtor
hereby gives the Secured Party the power and right on behalf of the Debtor and
in its own name to do any of the following after the occurrence and during the
continuance of a Event of Default and from time to time thereafter, without
notice to or the consent of the Debtor:

                  (a) to demand, sue for, collect or receive, in the name of the
         Debtor or in its own name, any money or property at any time payable
         or receivable on account of or in exchange for any of the Collateral
         and, in connection therewith, endorse checks, notes, drafts,
         acceptances, money orders, documents of title or any other instruments
         for the payment of money under the Collateral or any policy of
         insurance;

                  (b) to pay or discharge taxes, Liens or other encumbrances
         levied or placed on or threatened against the Collateral;

                  (c) to notify post office authorities to change the address
         for delivery of mail of the Debtor to an address designated by the
         Secured Party and to receive, open and dispose of mail addressed to the
         Debtor;

                  (d) (i) to direct account debtors and any other parties liable
         for any payment under any of the Collateral to make payment of any and
         all monies due and to become due thereunder directly to the Secured
         Party or as the Secured Party shall direct; (ii) to receive payment of
         and receipt for any and all monies, claims and other amounts due and to
         become due at any time in respect of or arising out of any Collateral;
         (iii) to sign and endorse any invoices, freight or express bills, bills
         of lading, storage or warehouse receipts, drafts against debtors,
         assignments, proxies, stock powers, verifications and notices in
         connection with accounts and other documents relating to the
         Collateral; (iv) to commence and prosecute any suit, action or
         proceeding at law or in equity in any court of competent jurisdiction
         to collect the Collateral or any part thereof and to enforce any other
         right in respect of any Collateral; (v) to defend any suit, action or
         proceeding brought against the Debtor with respect to any Collateral;
         (vi) to settle, compromise or adjust any suit, action or proceeding
         described above and, in connection therewith, to give such discharges
         or releases as the Secured Party may deem appropriate; (vii) to
         exchange any of the Collateral for other property upon any merger,
         consolidation, reorganization, recapitalization or other readjustment
         of the issuer thereof and, in connection therewith, deposit any of the
         Collateral with any committee, depositary, transfer agent, registrar or
         other designated agency upon such terms as the Secured Party may
         determine; (viii) to

                                    Page 13

<PAGE>

         add or release any guarantor, indorser, surety or other party to any
         of the Collateral; (ix) to renew, extend or otherwise change the terms
         and conditions of any of the Collateral; (x) to grant or issue any
         exclusive or nonexclusive license under or with respect to any of the
         Intellectual Property; (xi) to endorse the Debtor's name on all
         applications, documents, papers and instruments necessary or desirable
         in order for the Secured Party to use any of the Intellectual
         Property; (xii) to make, settle, compromise or adjust any claims under
         or pertaining to any of the Collateral (including claims under any
         policy of insurance); and (xiii) to sell, transfer, pledge, convey,
         make any agreement with respect to or otherwise deal with any of the
         Collateral as fully and completely as though the Secured Party were
         the absolute owner thereof for all purposes, and to do, at the Secured
         Party's option and the Debtor's expense, at any time, or from time to
         time, all acts and things which the Secured Party deems necessary to
         protect, preserve, maintain, or realize upon the Collateral and the
         Secured Party's security interest therein.

         This power of attorney is a power coupled with an interest and shall be
irrevocable. The Secured Party shall be under no duty to exercise or withhold
the exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to the Secured Party in this Agreement, and shall not be
liable for any failure to do so or any delay in doing so. Neither the Secured
Party nor any Person designated by the Secured Party shall be liable for any act
or omission or for any error of judgment or any mistake of fact or law. This
power of attorney is conferred on the Secured Party solely to protect, preserve,
maintain and realize upon its security interest in the Collateral. The Secured
Party shall not be responsible for any decline in the value of the Collateral
and shall not be required to take any steps to preserve rights against prior
parties or to protect, preserve or maintain any Lien given to secure the
Collateral.

         Section 5.02. Setoff. The Secured Party shall have the right to set off
                       ------
and apply against the Obligations, at any time and without notice to the Debtor,
any and all deposits (general, time or demand, provisional or final) or other
sums at any time credited by or owing from the Secured Party to the Debtor
whether or not the Obligations are then due. The rights and remedies of the
Secured Party hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) that the Secured Party may have.

         Section 5.03. Assignment by the Secured Party. The Secured Party may at
                       -------------------------------
any time assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement and the other Transaction Agreements, in
connection with an assignment of the Obligations, to any other Person, and such
Person shall thereupon become vested with all the benefits thereof granted to
the Secured Party herein or otherwise.

         Section 5.04. Performance by the Secured Party. If the Debtor shall
                       --------------------------------
fail to perform any covenant or agreement contained in this Agreement, the
Secured Party may perform or attempt to perform such covenant or agreement on
behalf of the Debtor. In such event, the Debtor shall, at the request of the
Secured Party, promptly pay any amount expended by the Secured Party in
connection with such performance or attempted performance to the Secured Party,
together with interest thereon at the applicable rate of interest set forth in
the Note from and including the date of such expenditure to but excluding the
date such expenditure is paid in full. Notwithstanding the foregoing, it is
expressly agreed that the Secured Party shall not have any liability or
responsibility for the performance of any obligation of the Debtor under this
Agreement.

         Section 5.05. License. If no Event of Default shall have occurred and
                       -------
be continuing, the Debtor shall have the exclusive, non-transferable right and
license to use the Intellectual Property in the ordinary course of business and
the exclusive right to grant to other Persons licenses and sublicenses with
respect to the Intellectual Property for full and fair consideration. The Debtor
agrees not to sell or assign its interest in, or grant any sublicense under, the
license granted under this Section 5.05 without the prior written consent of the
                           ------------
Secured Party.

         Section 5.06. Change of Depository. In the event of the termination by
                       --------------------
any financial institution in which any Deposit Account is maintained of any
agreement with or for the benefit of the Secured Party, or if any such financial
institution shall fail to comply with any provisions of any such agreement or
any instructions of the Secured Party in accordance with any such agreement or
this Agreement, or if the Secured Party determines in its sole discretion that
the financial condition of any such financial institution has materially
deteriorated, the Debtor agrees

                                    Page 14

<PAGE>

to transfer the affected Deposit Account(s) to another financial institution
acceptable to the Secured Party and cause such substitute financial institution
to execute such agreements as the Secured Party may require, in form and
substance reasonably acceptable to the Secured Party, to ensure that the Secured
Party has a perfected, first priority security interest in the Deposit
Account(s) held with such substitute financial institution. If any affected
Deposit Account is a lockbox account, the Debtor agrees to notify its account
debtors promptly to remit all payments which were being sent to the terminated
Deposit Account directly to the substitute Deposit Account.

         Section 5.07. Collection of Deposit Accounts. Upon written demand from
                       ------------------------------
the Secured Party to any financial institution in which any of the Deposit
Accounts are maintained, each such financial institution is hereby authorized
and directed by the Debtor to make payment directly to the Secured Party of the
funds in or credited to the Deposit Accounts, or such part thereof as the
Secured Party may request, and each such financial institution shall be fully
protected in relying upon the written statement of the Secured Party that the
Deposit Accounts are at the time of such demand assigned hereunder and that the
Secured Party is entitled to payment of the Obligations therefrom. The Secured
Party's receipt for sums paid it pursuant to such demand shall be a full and
complete release, discharge and acquittance to the Depository or other financial
institution making such payment to the extent of the amount so paid. The Debtor
hereby authorizes the Secured Party upon the occurrence and during the
continuation of a Event of Default and so long as any part of the Obligations
remain unpaid, (i) to withdraw, collect and receipt for any and all funds,
securities or other investments on deposit in or payable on the Deposit
Accounts; (ii) on behalf of the Debtor to endorse the name of the Debtor upon
any checks, drafts or other instruments payable to the Debtor evidencing payment
on the Deposit Accounts; and (iii) to surrender or present for notation of
withdrawal the passbook, certificate or other documents issued to the Debtor in
connection with the Deposit Accounts. No power granted herein to the Secured
Party by the Debtor shall terminate upon any disability of the Debtor.

                                   ARTICLE VI

                                Event of Default
                                ----------------

         Section 6.01. Rights and Remedies. If a Event of Default shall have
                       --------------------
occurred and be continuing, the Secured Party shall have the following rights
and remedies:

             (i)   In addition to all other rights and remedies granted to
the Secured Party in this Agreement or in any other Loan Paper or by applicable
law, the Secured Party shall have all of the rights and remedies of a secured
party under the UCC (whether or not the UCC applies to the affected Collateral)
and the Secured Party may also, without notice except as specified below, sell
or otherwise dispose of the Collateral or any part thereof in one or more
parcels by means of a public or private disposition, at any exchange, broker's
board or at any of the Secured Party's offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as the Secured Party may deem
commercially reasonable or otherwise as may be permitted by law. Without
limiting the generality of the foregoing, the Secured Party may (A) without
demand or notice to the Debtor, collect, receive or take possession of the
Collateral or any part thereof and for that purpose the Secured Party may enter
upon any premises on which the Collateral is located and remove the Collateral
therefrom or render it inoperable, and/or (B) sell, lease or otherwise dispose
of the Collateral, or any part thereof, in one or more parcels by means of a
public or private disposition or dispositions, at the Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as the Secured Party may deem commercially reasonable or otherwise as may be
permitted by law. The Secured Party shall have the right at any public
disposition or dispositions, and, to the extent permitted by applicable law, at
any private disposition or dispositions, to bid (which bid may be, in whole or
in part, in the form of cancellation of indebtedness) and become a purchaser of
the Collateral or any part thereof free of any right or equity of redemption on
the part of the Debtor, which right or equity of redemption is hereby expressly
waived and released by the Debtor. Upon the request of the Secured Party, the
Debtor shall assemble the Collateral and make it available to the Secured Party
at any place designated by the Secured Party that is reasonably convenient to
the Debtor and the Secured Party. The Debtor agrees that the Secured Party shall
not be obligated to give more than ten (10) days prior written notice of the
time and place of any public sale or disposition or of the time after which any
private sale or disposition may take place and that such notice shall constitute
reasonable notice of such matters. The Secured Party shall not be obligated to
make any sale or other disposition of Collateral if it shall determine not to do
so, regardless

                                    Page 15

<PAGE>

of the fact that notice of sale or disposition of Collateral may have been
given. The Secured Party may, without notice or publication, adjourn any public
or private sale or disposition or cause the same to be adjourned from time to
time by announcement at the time and place fixed for sale or disposition, and
such disposition may, without further notice, be made at the time and place to
which the same was so adjourned. The Debtor shall be liable for all expenses of
retaking, holding, preparing for sale or other disposition or the like, and all
attorneys' fees, legal expenses and other costs and expenses incurred by the
Secured Party in connection with the collection of the Obligations and the
enforcement of the Secured Party's rights under this Agreement. The Debtor shall
remain liable for any deficiency if the Proceeds of any sale or other
disposition of the Collateral applied to the Obligations are insufficient to pay
the Obligations in full. The Secured Party may apply the Collateral against the
Obligations in such order and manner as the Secured Party may elect in its sole
discretion. The Debtor waives all rights of marshaling, valuation and appraisal
in respect of the Collateral. Any cash held by the Secured Party as Collateral
and all cash proceeds received by the Secured Party in respect of any
disposition of, collection from or other realization upon all or any part of the
Collateral may, in the discretion of the Secured Party, be held by the Secured
Party as collateral for, and then or at any time thereafter applied in whole or
in part by the Secured Party against, the Obligations in such order as the
Secured Party shall select. Any surplus of such cash or cash proceeds and
interest accrued thereon, if any, held by the Secured Party and remaining after
payment in full of all the Obligations shall be paid over to the Debtor or to
whomsoever may be lawfully entitled to receive such surplus; provided that the
Secured Party shall have no obligation to invest or otherwise pay interest on
any amounts held by it in connection with or pursuant to this Agreement.

             (ii)  The Secured Party may cause any or all of the Collateral
held by it to be transferred into the name of the Secured Party or the name or
names of the Secured Party's nominee or nominees.

             (iii) The Secured Party may exercise any and all rights and
remedies of the Debtor under or in respect of the Collateral, including, without
limitation, any and all rights of the Debtor to demand or otherwise require
payment of any amount under, or performance of any provision of, any of the
Collateral and any and all voting rights and legal powers in respect of the
Collateral.

             (iv)  The Secured Party may collect or receive all money or
property at any time payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do so.

             (v)   On any sale or other disposition of the Collateral, the
Secured Party is hereby authorized to comply with any limitation or restriction
with which compliance is necessary, in the view of the Secured Party's counsel,
in order to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser or purchasers by any applicable governmental
authority.

             (vi)  For purposes of enabling the Secured Party to exercise
its rights and remedies under this Section 6.01 and enabling the Secured Party
                                   ------------
and its successors and assigns to enjoy the full benefits of the Collateral, the
Debtor hereby grants to the Secured Party an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to the Debtor) to
use, assign, license or sublicense any of the Intellectual Property, including
in such license reasonable access to all media in which any of the licensed
items may be recorded or stored and all computer programs used for the
completion or printout thereof. This license shall also inure to the benefit of
all successors, assigns and transferees of the Secured Party.

             (vii) The Secured Party may require that the Debtor assign all
of its right, title and interest in and to the Intellectual Property or any part
thereof to the Secured Party or such other Person as the Secured Party may
designate pursuant to documents satisfactory to the Secured Party.

         6.02.  Registration Rights, Private Dispositions, etc.
                -----------------------------------------------

         (a) If the Secured Party shall determine to exercise its right to sell
or otherwise dispose of all or any of the Collateral pursuant to Section 6.01,
                                                                 -------------
the Debtor agrees that, upon the reasonable request of the Secured Party (which
request may be made by the Secured Party in its sole discretion), the Debtor
will, at its own expense:

                                    Page 16

<PAGE>

             (i)   execute and deliver, and cause each issuer of any of the
Collateral contemplated to be sold or otherwise disposed of and the directors
and officers thereof to execute and deliver, all such agreements, documents and
instruments, and do or cause to be done all such other acts and things, as may
be necessary or, in the opinion of the Secured Party, advisable to register such
Collateral under the provisions of the Securities Act (as hereinafter defined)
and to cause the registration statement relating thereto to become effective and
to remain effective for such period as prospectuses are required by law to be
furnished and to make all amendments and supplements thereto and to the related
prospectus which, in the opinion of the Secured Party, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto;

             (ii)  use its best efforts to qualify such Collateral under all
applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale or other disposition of such Collateral, as
requested by the Secured Party;

             (iii) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement which will satisfy the
provisions of Section 11(a) of the Securities Act;

             (iv)  do or cause to be done all such other acts and things as
may be reasonably necessary to make such sale or other disposition of the
Collateral or any part thereof valid and binding and in compliance with
applicable law; and

             (v)   bear all reasonable costs and expenses, including
reasonable attorneys' fees, of carrying out its obligations under this
Section 6.02.
------------

         (b) The Debtor recognizes that the Secured Party may be unable to
effect a public sale or other disposition of any or all of the Collateral by
reason of certain prohibitions contained in the laws of any jurisdiction
outside the United States or in the Securities Act of 1933, as amended from time
to time (the "Securities Act"), and applicable state securities laws but may be
              --------------
compelled to resort to one or more private dispositions thereof to a restricted
group of purchasers who will be obliged to agree, among other things, to acquire
such Collateral for their own account for investment and not with a view to the
distribution or resale thereof. The Debtor acknowledges and agrees that any such
private sale or other disposition may result in prices and other terms less
favorable to the seller than if such disposition were a public sale or other
disposition and, notwithstanding such circumstances, agrees that any such
private sale or other disposition shall, to the extent permitted by law, be
deemed to have been made in a commercially reasonable manner. The Secured Party
shall not be under any obligation to delay a disposition of any of the
Collateral for the period of time necessary to permit the issuer of such
securities to register such securities under the laws of any jurisdiction
outside the United States, under the Securities Act or under any applicable
state securities laws, even if such issuer would agree to do so.

         (c) The Debtor further agrees to do or cause to be done, to the extent
that the Debtor may do so under applicable law, all such other acts and things
as may be necessary to make such sales or resales of any portion or all of the
Collateral valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at the Debtor's expense.
The Debtor further agrees that a breach of any of the covenants contained in
this Section 6.02 will cause irreparable injury to the Secured Party and that
     ------------
the Secured Party has no adequate remedy at law in respect of such breach and,
as a consequence, agrees that each and every covenant contained in this
Section 6.02 shall be specifically enforceable against the Debtor, and the
------------
Debtor hereby waives and agrees, to the fullest extent permitted by law, not to
assert as a defense against an action for specific performance of such covenants
that (i) the Debtor's failure to perform such covenants will not cause
irreparable injury to the Secured Party or (ii) the Secured Party has an
adequate remedy at law in respect of such breach. The Debtor further
acknowledges the impossibility of ascertaining the amount of damages which would
be suffered by the Secured Party by reason of a breach of any of the covenants
contained in this Section 6.02 and, consequently, agrees that, if the Debtor
                  ------------
shall breach any of such covenants and the Secured Party shall sue for

                                    Page 17

<PAGE>

damages for such breach, the Debtor shall pay to the Secured Party, as
liquidated damages and not as a penalty, an aggregate amount equal to the value
of the Collateral on the date the Secured Party shall demand compliance with
this Section 6.02.
     ------------

         (d) THE DEBTOR HEREBY AGREES TO INDEMNIFY, PROTECT AND SAVE HARMLESS
THE SECURED PARTY AND ANY CONTROLLING PERSONS THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT FROM AND AGAINST ANY AND ALL LIABILITIES, SUITS, CLAIMS, COSTS
AND EXPENSES (INCLUDING COUNSEL FEES AND DISBURSEMENTS) ARISING UNDER THE
SECURITIES ACT, THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, ANY
APPLICABLE STATE SECURITIES STATUTE, OR AT COMMON LAW, OR PURSUANT TO ANY OTHER
APPLICABLE LAW IN CONNECTION WITH THE AFORESAID REGISTRATION, INSOFAR AS SUCH
LIABILITIES, SUITS, CLAIMS, COSTS AND EXPENSES ARISE OUT OF, OR ARE BASED UPON,
ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT CONTAINED IN
ANY REGISTRATION STATEMENT RELATING TO ANY PART OF THE COLLATERAL, OR SUCH
REGISTRATION STATEMENT AS AMENDED OR SUPPLEMENTED, OR ARISES OUT OF, OR IS BASED
UPON, THE OMISSION OR ALLEGED OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED
TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING;
PROVIDED, HOWEVER, THAT THE DEBTOR SHALL NOT BE LIABLE IN ANY SUCH CASE TO THE
EXTENT THAT ANY SUCH LIABILITIES, SUITS, CLAIMS, COSTS AND EXPENSES ARISE OUT
OF, OR ARE BASED UPON, ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OR
OMISSION OR ALLEGED OMISSION MADE IN THE AFORESAID REGISTRATION STATEMENT OR THE
AFORESAID REGISTRATION STATEMENT AS AMENDED OR SUPPLEMENTED, IN RELIANCE UPON
AND IN CONFORMITY WITH WRITTEN INFORMATION FURNISHED TO THE DEBTOR BY THE
SECURED PARTY SPECIFICALLY FOR INCLUSION THEREIN. THE FOREGOING INDEMNITY
AGREEMENT IS IN ADDITION TO ANY INDEBTEDNESS, LIABILITY OR OBLIGATION THAT THE
DEBTOR MAY OTHERWISE HAVE TO THE SECURED PARTY OR ANY SUCH CONTROLLING PERSON.

                                   ARTICLE VII

                                  Miscellaneous
                                  -------------

         Section 7.01. No Waiver; Cumulative Remedies. No failure on the part of
                       ------------------------------
the Secured Party to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.

         Section 7.02. Successors and Assigns. This Agreement shall be binding
                       ----------------------
upon and inure to the benefit of the Debtor and the Secured Party and their
respective heirs, successors and assigns, except that the Debtor may not assign
any of its rights or obligations under this Agreement without the prior written
consent of the Secured Party.

         Section 7.03. Amendment; Entire Agreement. This Agreement embodies the
                       ---------------------------
final, entire agreement among the parties hereto and supersedes any and all
prior commitments, agreements, representations and understandings, whether
written or oral, relating to the subject matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no unwritten oral
agreements among the parties hereto. The provisions of this Agreement may be
amended or waived only by an instrument in writing signed by the parties hereto,
except as provided in Section 4.15(g).
                      ---------------

         Section 7.04. Notices. All notices and other communications provided
                       -------
for in this Agreement shall be given or made by telecopy or in writing and
telecopied, mailed by certified mail return receipt requested, or delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof, or, as to any party, at such other address as shall
be designated by such party in a notice to the other party given in accordance

                                    Page 18

<PAGE>

with this Section 7.04. Except as otherwise provided in this Agreement, all such
          ------------
communications shall be deemed to have been duly given when transmitted by
telecopy or when personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid; provided, however, that
                                                       -----------------
notices to the Secured Party shall be deemed given when received by the Secured
Party.

         Section 7.05. Governing Law; Submission to Jurisdiction; Service of
                       -----------------------------------------------------
Process. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
-------
THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES)
AND APPLICABLE LAWS OF THE UNITED STATES.

         Section 7.06.  Headings. The headings, captions, and arrangements used
                        --------
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.

         Section 7.07. Survival of Representations and Warranties. All
                       ------------------------------------------
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by the Secured Party shall affect the
representations and warranties or the right of the Secured Party to rely upon
them.

         Section 7.08.  Counterparts.  This Agreement may be executed in any
                        ------------
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

         Section 7.09. Waiver of Bond. In the event the Secured Party seeks to
                       --------------
take possession of any or all of the Collateral by judicial process, the Debtor
hereby irrevocably waives any bonds and any surety or security relating thereto
that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or
action

         Section 7.10. Severability. Any provision of this Agreement which is
                       ------------
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         Section 7.11. Construction. The Debtor and the Secured Party
                       ------------
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement with its
legal counsel and that this Agreement shall be construed as if jointly drafted
by the Debtor and the Secured Party.

         Section 7.12. Termination. If all of the Obligations shall have been
                       -----------
paid and performed in full, the Secured Party shall, upon the written request of
the Debtor, execute and deliver to the Debtor a proper instrument or instruments
acknowledging the release and termination of the security interests created by
this Agreement, and shall duly assign and deliver to the Debtor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Secured Party and has not previously been sold
or otherwise applied pursuant to this Agreement.

                            (Signature page follows)

                                    Page 19

<PAGE>

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

                           DEBTOR:

                           PROSOFTTRAINING.COM

                           By:
                              -------------------------------------------
                           Name:    Jerrell M. Baird
                           Title:   Chief Executive Officer

                           Address for Notices:
                           3001 Bee Caves Road, Suite 300
                           Austin, Texas  78746
                           Fax No.:  512.328.5239
                           Telephone No.:  512.328.6140
                           Attention: Chief Executive Officer

                           SECURED PARTY:

                           HUNT CAPITAL GROWTH FUND II, L.P.

                           By: HUNT CAPITAL GROWTH, L.P.
                               its general partner

                               By: HUNT CAPITAL
                                   MANAGEMENT, L.L.C., its
                                   general partner

                                   By:
                                       ----------------------------------
                                   Name:    J.R. Holland, Jr.
                                   Title:   President

                                   Address:   1601 Elm Street
                                              4000 Thanksgiving Tower
                                              Dallas, Texas 75201
                                              Telephone: (214) 720-1600
                                              Fax:       (214) 720-1662
                                              Attn.:     Thomas J. Fowler, Esq.

                                    Page 20

<PAGE>

                                   Schedule 1
                                   ----------

                      Locations of Equipment and Inventory
                      ------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================
                                             EQUIPMENT AND INVENTORY

====================================================================================================================
----------------------------------------------------------- --------------------------------------------------------

                        Location                                         Name and Address of Landlord
                                                                             of Premises (if any)
----------------------------------------------------------- --------------------------------------------------------
<S>                                                           <C>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

=========================================================== ========================================================
</TABLE>

<PAGE>

                                   Schedule 2
                                   ----------

                            Jurisdictions for Filing
                           UCC-1 Financing Statements
                           --------------------------

                          [Secretary of State of Texas]

<PAGE>

                                   Schedule 3
                                   ----------

<TABLE>
<CAPTION>
================= ================ ========================== =========== ================== =====================
   Stock Issuer    Class of Stock   Stock Certificate No(s).   Par Value   Number of Shares      Percentage of
                                                                                              Outstanding Shares

================= ================ ========================== =========== ================== =====================
<S>               <C>              <C>                        <C>         <C>                <C>
----------------- ---------------- -------------------------- ----------- ------------------ ---------------------

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

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

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

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

================= ================ ========================== =========== ================== =====================

</TABLE>

<PAGE>

                                   Schedule 4
                                   -----------

                             Trade and other Names

<PAGE>

                                    EXHIBIT A

                                FORM OF AMENDMENT

         This Amendment, dated __________________, 20__, is delivered pursuant
to Section 4.14 of the Security Agreement (as herein defined) referred to below.
   ------------
The undersigned hereby agrees that this Amendment may be attached to the
Security Agreement dated as of October 16, 2001, between the undersigned (the
"Security Agreement") and that the shares of stock, membership interests,
 ------------------
partnership interests, notes or other instruments listed on Schedule 1 annexed
                                                            ----------
hereto shall be and become part of the Collateral referred to in the Security
Agreement and shall secure payment and performance of all Obligations as
provided in the Security Agreement.

         Capitalized terms used herein but not defined herein shall have the
meanings therefor provided in the Security Agreement.

                                 PROSOFTTRAINING.COM

                                 By:
                                    -------------------------------------------
                                 Name:
                                      -----------------------------------------
                                 Title:
                                       ----------------------------------------

                                 Address:
                                 -------

                                 Tax I.D. No. _______________

                                 HUNT CAPITAL GROWTH FUND II, L.P.

                                 By:
                                    -------------------------------------------
                                 Name:
                                      -----------------------------------------
                                 Title:
                                       ----------------------------------------

                                 Address:
                                 -------

<PAGE>

                                   Schedule 1
                                   ----------
<TABLE>
<CAPTION>

                                         Stock
                                      Certificate                        Number         Percentage of
   Stock Issuer    Class of Stock        No(s).          Par Value     of Shares     Outstanding Shares
-----------------  ---------------  ----------------  --------------   ---------     ------------------
<S>                <C>              <C>               <C>              <C>           <C>

</TABLE><PAGE>

                                                                    EXHIBIT 10.3
                                                                    ------------

                          SECURITIES PURCHASE AGREEMENT

                                   dated as of

                                October 16, 2001

                                  by and among

                               ProsoftTraining.com
                                 as the Issuer,

                                       and

                       Hunt Capital Growth Fund II, L.P.,
                                as the Purchaser

<PAGE>

                          SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES PURCHASE AGREEMENT, (this "Agreement") is dated as of
this 16th day of October, 2001, between ProsoftTraining.com (the "Company") and
the Hunt Capital Growth Fund II, L.P. (the "Purchaser").

                                R E C I T A L S:

         WHEREAS, the Company desires to sell and issue to the Purchaser, and
the Purchaser desires to purchase from the Company, a Subordinated Secured
Convertible Note (in the Form attached hereto as Exhibit A, the "Convertible
                                                 ---------
Note") in the principal amount of $2,500,000 (the "Principal Amount"); and

         WHEREAS, the terms of the Convertible Note will permit the Purchaser to
convert the Convertible Note, in whole or in part, into shares of the Company's
Common Stock (the "Conversion Shares") subject to the terms and conditions of
the Convertible Note; and

         WHEREAS, the Purchaser will have certain registration rights with
respect to the Conversion Shares as set forth in that certain Registration
Rights Agreement by and between the Company and the Purchaser, executed as of
November 22, 1999 (as amended by the First Amendment to Registration Rights
Agreement attached hereto as Exhibit B, the "Amended Registration Rights
                             ---------
Agreement"); and

         WHEREAS, in connection with the Purchaser's execution of this Agreement
and its purchase of the Convertible Note, the Company is entering into the
Rights Agreement attached hereto as Exhibit C (the "Rights Agreement");
                                    ---------

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

                                I.  DEFINITIONS

         SECTION 1.1.   Definitions. The following terms, as used herein, have
the following meanings:

         "Acceleration Event" shall have the meaning set forth in the
Convertible Note.

         "Advisory Fee" means a fee of $20,000 payable by the Company to Hunt
Capital Growth, L.P. or its designee on the Closing Date.

         "Affiliate" means, at any time, a Person (other than the Purchaser) (a)
that directly or indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, the Company; (b) that
beneficially owns or holds five percent (5%) or more of any class of the Common
Stock (c) five percent (5%) or more of the voting stock (or in the case of a
Person that is not a corporation, five percent (5%) or more of the equity
interest) of which is

                                       Page 1

<PAGE>

beneficially owned or held by the Company or a subsidiary; or (d) that is an
officer or director (or a member of the immediate family of an officer or
director) of the Company or any subsidiary, at such time.

         "Agreement" means this Securities Purchase Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.

         "Amended Registration Rights Agreement" has the meaning set forth in
the recital to this Agreement.

         "Balance Sheet Date" has the meaning set forth in Section 3.7.

         "Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by the Company.

         "Benefit Plans" has the meaning set forth in Section 3.9(b).

         "Board" shall mean the Company's Board of Directors.

         "Broker's Fees" has the meaning set forth in Section 8.6.

         "Business Day" means a day other than a Saturday, a Sunday or a day on
which banks in Dallas, Texas are required or permitted by law (other than a
general banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed.

          "Closing Date" means the date on which all of the conditions set forth
in Sections 5.1 and 5.2 shall have been satisfied and the Convertible Note is
issued to the Purchaser.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Commission" means the Securities and Exchange Commission or any entity
succeeding to all of its material functions.

         "Common Stock" means the voting common stock, $0.001 par value per
share, of the Company.

         "Company" means ProsoftTraining.com, a Nevada corporation, and its
successors.

         "Company Corporate Documents" means the certificate of incorporation
and by-laws of the Company.

         "Contingent Liability" means, as to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Debt or obligation of any other Person in any manner,
whether directly or indirectly, including without limitation any obligation of
such Person, direct or indirect, (a) to purchase or pay (or advance or

                                       Page 2

<PAGE>

supply funds for the purchase or payment of) such Debt or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Debt, (b) to purchase Property or services for the purpose of assuring the
owner of such Debt of its payment, or (c) to maintain the solvency, working
capital, equity, cash flow, fixed charge or other coverage ratio, or any other
financial condition of the primary obligor so as to enable the primary obligor
to pay any Debt or to comply with any agreement relating to any Debt or
obligation.

         "Control" (including, with correlative meanings, the terms
"Controlling," "Controlled by" and under "common Control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities, by contract or
otherwise.

         "Conversion Shares" has the meaning set forth in the Recitals to this
Agreement.

         "Convertible Note" has the meaning set forth in the Recitals to this
Agreement.

         "Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments
issued by such Person, (iii) all obligations of such Person as lessee which (y)
are capitalized in accordance with GAAP or (z) arise pursuant to sale-leaseback
transactions, (iv) all reimbursement obligations of such Person in respect of
letters of credit or other similar instruments, (v) all Debt of others secured
by a Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person and (vi) all Debt of others guaranteed by such Person.

         "Directors" means the individuals then serving on the Board of
Directors or similar such management council of the Company.

         "Distribution" means, as to any Person, (i) any declaration or payment
of any distribution or dividend (other than a stock dividend) on, or the making
of any pro rata distribution, loan, advance, or investment to or in any holder
(in its capacity as a partner, member, shareholder or other equity holder) of,
any partnership interest, membership interest or shares of capital stock or
other equity interest of such Person or (b) any purchase, redemption, or other
acquisition or retirement for value of membership interest, partnership interest
or any shares of capital stock or other equity interest of such Person.

         "Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the cleanup or other
remediation thereof.

                                       Page 3

<PAGE>

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.

         "ERISA Group" means the Company and each Subsidiary and all members of
a controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under the Code.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Expense Reimbursement Fee" has the meaning set forth in Section 8.4.

         "GAAP" has the meaning set forth in Section 1.2.

         "Intellectual Property" has the meaning set forth in Section 3.20.

         "Investment" means any investment in any Person, whether by means of
share purchase, partnership interest, capital contribution, loan, time deposit
or otherwise.

         "Lien" means, any lien, mechanic's lien, materialmen's lien, lease,
easement, charge, encumbrance, mortgage, conditional sale agreement, title
retention agreement, agreement to sell or convey, option, claim, title
imperfection, encroachment or other survey defect, pledge, restriction, security
interest or other adverse claim, whether arising by contract or under law or
otherwise (including, without limitation, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in respect of any of the foregoing).

         "Listing Applications" has the meaning set forth in Section 3.4.

         "Major Investor" means the Purchaser as long as the Purchaser and/or
any Affiliate of the Purchaser continues to own at least 1,000,000 Purchaser
Shares.

         "Material Adverse Effect" means any material adverse effect on the
operations, results of operations, properties, assets or condition (financial or
otherwise) of the Company or the Company and its Subsidiaries, taken as a whole,
or on the transactions contemplated hereby or by the agreements or instruments
to be entered into in connection herewith.

         "Nasdaq Market" means the Nasdaq Stock Market's National Market System,
including the Nasdaq National Market on which the Company's stock currently
trades.

         "Net Cash Proceeds" means, with respect to a Qualified Public Offering,
the total amount of cash proceeds received by the Company or any Subsidiary less
reasonable underwriters' fees, brokerage commissions, reasonable professional
fees and other customary out-of-pocket expenses payable in connection with such
transaction.

         "New Securities" has the meaning set forth in Section 6.14.

                                       Page 4

<PAGE>

         "Notice of Conversion" means the notice to be delivered by the holder
of the Convertible Note to the Company informing the Company of the election to
convert all or a portion of the Convertible Note.

         "Officer's Certificate" shall mean a certificate executed by the chief
executive officer of the Company in the form of Exhibit E attached hereto.
                                                ---------

         "Operating Leases" means operating leases, as defined in accordance
with GAAP.

         "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

         "Permits" means all domestic and foreign licenses, franchises, grants,
authorizations, permits, easements, variances, exemptions, consents,
certificates, orders and approvals necessary to own, lease and operate the
properties of, and to carry on the business of the Company and the Subsidiaries.

         "Permitted Indebtedness" shall have the meaning set forth in Section
7.3.

         "Permitted Senior Indebtedness" means Debt incurred by the Company in
amount up to one million dollars ($1,000,000) which may rank senior in right of
payment to the obligations of the Company under the Convertible Note.

         "Person" means an individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.

         "Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
the Code and either (i) is maintained, or contributed to, by any member of the
ERISA group for employees of any member of the ERISA group or (ii) has at any
time within the preceding five years been maintained, or contributed to, by any
Person which was at such time a member of the ERISA Group for employees of any
Person which was at such time a member of the ERISA group.

         "Prepayment Notice" shall have the meaning set forth in the Convertible
Note.

         "Principal Amount" shall have the meaning set forth in the Recitals to
this Agreement.

         "Prior Securities Purchase Agreement" means that certain Securities
Purchase Agreement entered into by the Purchaser and the Company as of November
22, 1999, as amended as of the date hereof.

         "Rights Agreement" means that certain agreement by and between the
Company and the Purchaser attached hereto as Exhibit C.
                                             ---------

                                       Page 5

<PAGE>

         "Property" means any amount of cash or any interest in any land or
property or asset, whether real, personal or mixed, and whether tangible or
intangible.

         "Purchaser" means Hunt Capital Growth Fund II, L.P., a Delaware limited
partnership.

         "Purchaser's Designee" shall have the meaning set forth in
Section 6.15.

         "Purchaser Shares" means collectively the sum of the shares of Common
Stock owned by the Purchaser (or its Affiliates) together with the shares of
Common Stock issuable to the Purchaser or its Affiliates as Warrant Shares
and/or Conversion Shares.

         "Qualified Public Offering" means a firm commitment underwritten public
offering of the Company's Common Stock which (i) results in Net Cash Proceeds to
the Company of not less than $20,000,000, and (ii) is offered at a per share
price equal to or greater than $0.795 per share.

         "Reimbursement Expense Fee" has the meaning set forth in Section 8.4.

         "Restricted Payments" means, with respect to any Person, (a) any direct
or indirect Distribution, dividend or other payment on account of any equity
interest in, or shares of capital stock or other securities of, such Person and
(b) any management, consulting or other similar fees, or any interest thereon,
payable by such Person to any Affiliate of such Person (other than the Company),
or to any other Person other than an unrelated third party; provided, however,
                                                            --------  -------
that Restricted Payments shall not include any arms length consulting agreements
with consultants of the Company which are approved by the Board.

         "SEC Reports" shall have the meaning set forth in Section 3.7.

         "Securities" means the Convertible Note and any Conversion Shares.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Security Agreement" shall have the meaning set forth in Section 2.4.

         "Subsidiary" means, with respect to any Person, any corporation or
other entity of which (x) a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the Board of
Directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person or (y) the results of operations, the assets
and the liabilities of which are consolidated with such Person under GAAP.

         "Subsidiary Corporate Documents" means the certificates of
incorporation and by-laws of each Subsidiary.

         "Trading Day" shall mean any Business Day in which the Nasdaq Market or
other automated quotation system or exchange on which the Common Stock is then
traded is open for trading for at least four (4) hours.

                                       Page 6

<PAGE>

         "Transaction Agreements" means this Agreement, the Convertible Note,
the Rights Agreement, the Security Agreement and the Amended Registration Rights
Agreement.

         "Warrant Shares" means the 350,000 shares of Common Stock (subject to
adjustment) issuable to the Purchaser upon exercise of the Purchaser's Common
Stock Purchase Warrants issued by the Company on November 22, 1999 in connection
with the Prior Securities Purchase Agreement and the Warrant Agreement executed
in connection therewith, all of which on the Closing Date shall be fully vested
(respectively the "Warrants" and the "Warrant Agreement").

         SECTION 1.2.   Accounting Terms and Determinations.  Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a consistent basis (except for changes made in concurrence with the Company's
independent public accountants) ("GAAP"). All references to "dollars," "Dollars"
or "$" are to United States dollars unless otherwise indicated.

                                   ARTICLE II

           PURCHASE AND SALE OF SECURITIES; VESTING OF WARRANT SHARES

         SECTION 2.1.   Issuance of the Convertible Note.  Subject to the terms
and conditions set forth herein, the Company agrees to issue to the Purchaser
the Convertible Note and to enter into the other Transaction Documents in
exchange for the Purchaser advancing to the Company the Principal Amount.

         SECTION 2.2    Payment.  On the Closing Date, subject to the
satisfaction of all terms and conditions set forth herein, the Purchaser shall
deliver by wire transfer to the Company immediately available funds in an amount
equal to the Principal Amount.

         SECTION 2.3    Closing.  Subject to satisfaction of the conditions set
forth in Sections 5.1 and 5.2 hereof, the Closing Date shall occur on October
16, 2001, or such other date as the parties shall mutually agree upon.

         SECTION 2.4    Collateral.  To secure the payment and performance of
the Company's obligation under the Convertible Note and the other Transaction
Documents, the Company shall grant to the Purchaser a security interest in all
or substantially all of the Company's assets as described in a Security
Agreement in the form attached hereto as Exhibit D (the "Security Agreement").
                                         ---------

         SECTION 2.5    Warrant Acceleration.  On the Closing Date, the Company
hereby agrees that all of the remaining unvested portion of the Warrant Shares
shall be fully vested, notwithstanding the existing terms of the Warrants and
the Warrant Agreement, such that all 350,000 Warrant Shares (subject to
adjustment as provided therein) are fully vested and currently fully
exercisable. The Company and the Purchaser hereby agree and acknowledge that the
terms of the Warrants and the Warrant Agreement are hereby amended to the extent
necessary to effect the acceleration of the Warrants provided for in this
Section 2.5.

                                       Page 7

<PAGE>

                                   ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company represents and warrants to the Purchaser, as of the Closing
Date, the following:

         SECTION 3.1.   Organization and Qualification.  The Company and each
Subsidiary is a corporation (or other legal entity) duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, with full power and authority to own, lease, use and operate its
properties and to carry on its business as and where now owned, leased, used,
operated and conducted. Schedule 3.1 sets forth a list of all Subsidiaries and
the country or jurisdiction in which each is incorporated. The Company and each
of its Subsidiaries is duly qualified to conduct business as a foreign
corporation and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary, except where
such failure would not have a Material Adverse Effect.

         SECTION 3.2.   Authorization and Execution.

                  (a)   The Company has all requisite corporate power and
         authority to enter into and perform each Transaction Agreement and to
         consummate the transactions contemplated hereby and thereby and to
         issue the Securities in accordance with the terms hereof and thereof.

                  (b)   The execution, delivery and performance by the Company
         of each Transaction Agreement and the issuance by the Company of the
         Securities have been duly and validly authorized and no further consent
         or authorization of the Company, its Board of Directors or its
         shareholders is required.

                  (c)   This Agreement has been duly executed and delivered by
         the Company.

                  (d)   This Agreement constitutes, and upon execution and
         delivery thereof by the Company, each of the other Transaction
         Agreements will constitute, a valid and binding agreement of the
         Company, in each case enforceable against the Company in accordance
         with its respective terms.

         SECTION 3.3.   Capitalization.  As of the date hereof, the authorized,
issued and outstanding capital stock of the Company is as set forth on Schedule
3.3 hereto and no other shares of capital stock of the Company will be
outstanding as of the Closing Date. All of such outstanding shares of capital
stock are, or upon issuance will be, duly authorized, validly issued, fully paid
and non-assessable. No shares of capital stock of the Company are subject to
preemptive rights or similar rights of the stockholders of the Company or any
liens or encumbrances imposed through the actions or failure to act of the
Company. Other than as set forth on Schedule 3.3 hereto, as of the date hereof,
(i) there are no outstanding options, warrants, scrip, rights to subscribe for,
puts, calls, rights of first refusal, agreements, understandings, claims or
other commitments or rights of any character whatsoever relating to, or
securities or

                                       Page 8

<PAGE>

rights convertible into or exchangeable for any shares of capital stock of the
Company or any of its Subsidiaries, or arrangements by which the Company or any
of its Subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its Subsidiaries, (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries are obligated to
register the sale of any of its or their securities under the Securities Act
(except pursuant to the Amended Registration Rights Agreement) and (iii) there
are no anti-dilution or price adjustment provisions contained in any security
issued by the Company (or in any agreement providing rights to security holders)
that will be triggered by the issuance of the Conversion Shares. The Company has
furnished to the Purchaser true and correct copies of the Company's Corporate
Documents, and of all securities convertible into or exercisable for Common
Stock (a list of such securities, and a summary of the material terms thereof,
being attached hereto as Schedule 3.3).

         SECTION 3.4.   Governmental Authorization.  The execution and delivery
by the Company of the Transaction Agreements does not and will not, the issuance
and sale by the Company of the Securities does not and will not, and the
consummation of the transactions contemplated hereby and by the other
Transaction Agreements will not, require any action by or in respect of, or
filing with, any governmental body, agency or governmental official except (a)
such actions or filings that have been undertaken or made prior to the date
hereof and that will be in full force and effect (or as to which all applicable
waiting periods have expired) on and as of the date hereof or which are not
required to be filed on or prior to the Closing Date, (b) such actions or
filings that, if not obtained, would not result in a Material Adverse Effect,
(c) listing applications ("Listing Applications") to be filed with the Nasdaq
Market relating to the Conversion Shares and the Warrant Shares, and (d) the
filing of a "Form D" as described in Section 7.13 below.

         SECTION 3.5.   Issuance of Securities.

                  (a)   Convertible Note.  Upon payment by the Purchaser of the
         Principal Amount, the issuance of the Convertible Note shall be duly
         and validly issued and outstanding, fully paid and nonassessable, free
         and clear of any taxes, Liens and charges with respect to issuance and
         shall not be subject to preemptive rights or similar rights of any
         other stockholders of the Company.

                  (b)   Conversion Shares.  Upon exercise in accordance with the
         terms of the Convertible Note, the issuance of the Conversion Shares
         shall be duly and validly issued and outstanding, fully paid and
         nonassessable, free and clear of any taxes, Liens and charges with
         respect to issuance and shall not be subject to preemptive rights or
         similar rights of any other stockholders of the Company.

                  (c)   Compliance with Laws.  Assuming the representations and
         warranties of the Purchaser herein are true and correct in all material
         respects, each of the Securities will have been issued in material
         compliance with all applicable U.S. federal and state securities laws.

                  (d)   Potential Dilution.  The Company understands and
         acknowledges that, in certain circumstances, the issuance of the
         Conversion Shares could dilute the ownership

                                       Page 9

<PAGE>

         interests of other stockholders of the Company. The Company further
         acknowledges that its obligation to issue the Conversion Shares is
         absolute and unconditional regardless of the dilutive effect that such
         issuance may have on the ownership interests of other stockholders of
         the Company.

         SECTION 3.6.   No Conflicts.  The execution and delivery by the Company
of the Transaction Agreements to which it is a party did not and will not, the
issuance and sale by the Company of the Securities did not and will not and the
consummation of the transactions contemplated hereby and by the other
Transaction Agreements will not, contravene or constitute a default under or
violation of (i) any provision of applicable law or regulation, (ii) the Company
Corporate Documents, (iii) any agreement, judgment, injunction, order, decree or
other instrument binding upon the Company or any Subsidiary or any of their
respective assets, or result in the creation or imposition of any Lien on any
asset of the Company or any Subsidiary. The Company and each Subsidiary is in
compliance with and conforms to all statutes, laws, ordinances, rules,
regulations, orders, restrictions and all other legal requirements of any
domestic or foreign government or any instrumentality thereof having
jurisdiction over the conduct of its businesses or the ownership of its
properties, except where such failure would not have a Material Adverse Effect.

         SECTION 3.7.   Financial Information and SEC Reports.  Since July 31,
2000, the Company has timely filed all forms, reports and documents with the
Commission required to be filed by it under the Exchange Act through the date
hereof (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
(other than exhibits) incorporated by reference therein, being referred to
herein collectively as the "SEC Reports"). The Company has delivered to the
Purchaser true and complete copies of the SEC Reports, except for such exhibits
and incorporated documents. Such SEC Reports, at the time filed, complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder applicable to such SEC Reports. None of
the SEC Reports, including without limitation, any financial statements or
schedules included therein, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading. There
have been no material adverse changes in the Company's business, properties,
results of operations or condition (financial or otherwise) since the date of
the Company's most recent Report on Form 10-Q for the quarter ended April 30,
2001 which have not been disclosed in the Company's SEC Reports, its September
25, 2001 report on the financial results for the fiscal year ending July 31,
2001, or to the Purchaser in writing. The audited and unaudited consolidated
balance sheets of the Company and its Subsidiaries contained in the SEC Reports,
its September 25, 2001 report on the financial results for the fiscal year
ending July 31, 2001, or to the Purchaser in writing, and the related
consolidated statements of income, changes in stockholders' equity and changes
in cash flows for the periods then ended, including the footnotes thereto,
except as indicated therein, (i) complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto and (ii) have been prepared in accordance
with GAAP consistently applied throughout the periods indicated, except that the
unaudited financial statements do not contain notes and may be subject to normal
audit adjustments and normal annual adjustments. Such financial statements
fairly present the financial condition of the Company and its Subsidiaries at
the dates indicated and the consolidated results of their operations and cash
flows for the periods then ended and, except as

                                       Page 10

<PAGE>

indicated therein, reflect all claims against and all Debts and liabilities of
the Company and its Subsidiaries, fixed or contingent. Since April 30, 2001 (the
"Balance Sheet Date"), except as disclosed in the SEC Reports, its September 25,
2001 report on the financial results for the fiscal year ending July 31, 2001,
or to the Purchaser in writing, there has been (x) no material adverse change in
the assets or liabilities, or in the business or condition, financial or
otherwise, or in the results of operations, of the Company and its Subsidiaries,
whether as a result of any legislative or regulatory change, revocation of any
license or rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation, act of God, public force or
otherwise and (y) no material adverse change in the assets or liabilities, or in
the business or condition, financial or otherwise, or in the results of
operations, of the Company and its Subsidiaries except in the ordinary course of
business; and no fact or condition exists or is contemplated or threatened which
might cause such a change in the future.

         SECTION 3.8.   Litigation.  Except as set forth in the SEC Reports,
there is no action, suit or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary, before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could materially adversely
affect the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Company or which challenges the
validity of any Transaction Agreements.

         SECTION 3.9.   Compliance with ERISA and other Benefit Plans.

         (a)  Each member of the ERISA Group has fulfilled its obligations under
the minimum funding standards of ERISA and the Code with respect to each Plan
and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code with respect to each Plan. No member of the
ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Code in respect of any Plan, (ii) failed to make any required
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA.

         (b)  The benefit plans not covered under clause (a) above (including
profit sharing, deferred compensation, stock option, employee stock purchase,
bonus, retirement, health or insurance plans, collectively the "Benefit Plans")
relating to the employees of the Company are duly registered where required by,
and are in good standing in all material respects under, all applicable laws.
All required employer and employee contributions and premiums under the Benefit
Plans to the date hereof have been made, the respective fund or funds
established under the Benefit Plans are funded in accordance with applicable
laws, and no past service funding liabilities exist thereunder.

         (c)  No Benefit Plans have any unfunded liabilities, either on a "going
concern" or "winding up" basis and determined in accordance with all applicable
laws and actuarial practices and using actuarial assumptions and methods that
are reasonable in the circumstances. No event has occurred and no condition
exists with respect to any Benefit Plans that has resulted or could

                                       Page 11

<PAGE>

reasonably be expected to result in any pension plan having its registration
revoked or wound up (in whole or in part) or refused for the purposes of any
applicable laws or being placed under the administration of any relevant pension
benefits regulatory authority or being required to pay any taxes or penalties
(in any material amounts) under any applicable laws.

         SECTION 3.10.  Environmental Matters.  The costs and liabilities
associated with Environmental Laws (including the cost of compliance therewith)
are unlikely to have a Material Adverse Effect on the business, condition
(financial or otherwise), operations, performance, properties or prospects of
the Company or any Subsidiary. Each of the Company and the Subsidiaries conducts
its businesses in compliance in all material respects with all applicable
Environmental Laws.

         SECTION 3.11.  Taxes.  All United States federal, state, county,
municipality local or foreign income tax returns and all other material tax
returns (including foreign tax returns) which are required to be filed by or on
behalf of the Company and each Subsidiary have been filed and all material taxes
due pursuant to such returns or pursuant to any assessment received by the
Company and each Subsidiary have been paid except those being disputed in good
faith and for which adequate reserves have been established. The charges,
accruals and reserves on the books of the Company and each Subsidiary in respect
of taxes or other governmental charges have been established in accordance with
GAAP.

         SECTION 3.12.  Investments, Joint Ventures.  Other than as set forth on
Schedule 3.1, , the Company has no Subsidiaries or other direct or indirect
Investment in any Person, and the Company is not a party to any partnership,
management, shareholders' or joint venture or similar agreement.

         SECTION 3.13.  Not an Investment Company.  Neither the Company nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

         SECTION 3.14.  Full Disclosure.  The information heretofore furnished
by the Company to the Purchaser for purposes of or in connection with this
Agreement or any transaction contemplated hereby does not, and all such
information hereafter furnished by the Company or any Subsidiary to the
Purchaser will not (in each case taken together and on the date as of which such
information is furnished), contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they are made,
not misleading.

         SECTION 3.15.  No Solicitation; No Integration with Other Offerings.
No form of general solicitation or general advertising was used by the Company
or, to the best of its actual knowledge, any other Person acting on behalf of
the Company, in connection with the offer and sale of the Securities. The
issuance of the Securities to the Purchaser will not be integrated with any
other issuance of the Company's securities (past, current or future) which
requires stockholder approval under the rules of the Nasdaq Market.

         SECTION 3.16.  Permits.  (a) Each of the Company and its  Subsidiaries
has all material Permits; (b) all such Permits are in full force and effect, and
each of the Company and

                                       Page 12

<PAGE>

its Subsidiaries has fulfilled and performed all material obligations with
respect to such Permits; (c) no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination by the issuer thereof or
which results in any other material impairment of the rights of the holder of
any such Permit; and (d) the Company has no reason to believe that any
governmental body or agency is considering limiting, suspending or revoking any
such Permit.

         SECTION 3.17.  Leases.  Except as disclosed on Schedule 3.17 hereto,
neither the Company nor any Subsidiary is a party to any capital lease
obligation with a value greater than $100,000 or to any operating lease with an
aggregate annual rental greater than $100,000 during the life of such lease.

         SECTION 3.18.  Absence of Any Undisclosed Liabilities or Capital Calls.
Except for litigation described in the SEC Reports, there are no liabilities of
the Company or any Subsidiary of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than (i) those liabilities
provided for in the financial statements delivered pursuant to Section 3.7
hereof and (ii) other undisclosed liabilities which, individually or in the
aggregate, would not have a Material Adverse Effect.

         SECTION 3.19.  Public Utility Holding Company.  Neither the Company nor
any Subsidiary is, or will be upon the issuance and sale of the Securities and
the use of the proceeds described herein, subject to regulation under the Public
Utility Holding Company Act of 1935, as amended, the Federal Power Act, the
Interstate Commerce Act or to any federal or state statute or regulation
limiting its ability to issue and perform its obligations under any Transaction
Agreement.

         SECTION 3.20.  Intellectual Property Rights.  Each of the Company and
its Subsidiaries owns, or is licensed under, and has the rights to use, all
material patents, trademarks, trade names, copyrights, technology, know-how and
processes (collectively, "Intellectual Property") used in, or necessary for the
conduct of its business; no claims have been asserted by any Person to the use
of any such Intellectual Property or challenging or questioning the validity or
effectiveness of any license or agreement related thereto. To the best of the
Company's and its Subsidiaries' knowledge, there is no valid basis for any such
claim and the use of such Intellectual Property by the Company and its
Subsidiaries will not infringe upon the rights of any Person.

         SECTION 3.21.  Insurance.  The Company and its Subsidiaries maintain,
with financially sound and reputable insurance companies, insurance in at least
such amounts and against such risks such that any uninsured loss would not have
a Material Adverse Effect. All insurance coverages of the Company and its
Subsidiaries are in full force and effect and there are no past due premiums in
respect of any such insurance.

         SECTION 3.22.  Title to Properties.  The Company and its Subsidiaries
have good and marketable title to all their respective properties reflected on
the financial statements referred to in Section 3.7, free and clear of all
Liens, other than Liens set forth on Schedule 3.22 or in the SEC Reports.

                                       Page 13

<PAGE>

         SECTION 3.23.  Eligibility to Use Form S-3.  As of the date hereof, the
Company meets the "registrant eligibility" requirements set forth in the general
instructions applicable to registration statements on Form S-3 covering the
resale of the Registrable Securities.

         SECTION 3.24.  Internal Accounting Controls.  The Company and each of
its Subsidiaries maintain a system of internal accounting controls sufficient,
in the judgment of the Company's Board of Directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

                                   ARTICLE IV

           REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER

         SECTION 4.1.   Representations and Warranties.  The Purchaser hereby
represents and warrants to the Company solely that:

                  (a)   the Purchaser is an "accredited investor" within the
         meaning of Rule 501(a)(3) under the Securities Act and the Securities
         to be acquired by it pursuant to this Agreement are being acquired for
         its own account and, as of the date hereof, not with a view toward, or
         for sale in connection with, any distribution thereof except in
         compliance with applicable United States federal and state securities
         law; provided that the disposition of the Purchaser's property shall at
         all times be and remain within its control;

                  (b)   the execution, delivery and performance of this
         Agreement and the purchase of the Securities pursuant hereto are within
         the Purchaser's partnership powers, and have been duly and validly
         authorized by all requisite corporate or partnership action;

                  (c)   this Agreement has been duly executed and delivered by
         the Purchaser.

                  (d)   the execution and delivery by the Purchaser of the
         Transaction Agreements to which it is a party does not, and the
         consummation of the transactions contemplated hereby and thereby will
         not, contravene or constitute a default under or violation of (i) any
         provision of applicable law or regulation, or (ii) any agreement,
         judgment, injunction, order, decree or other instrument binding upon
         the Purchaser;

                  (e)   the Purchaser understands that the Securities have not
         been registered under the Securities Act and may not be transferred or
         sold except as permitted under the Securities Act and applicable state
         securities laws, pursuant to either an effective registration statement
         or an exemption therefrom, and that the Securities will contain a
         legend to that effect.

                                       Page 14

<PAGE>

                  (f)   this Agreement constitutes a valid and binding agreement
         of the Purchaser enforceable in accordance with its terms, subject to
         (i) applicable bankruptcy, insolvency or similar laws affecting the
         enforceability of creditors rights generally and (ii) equitable
         principles of general applicability;

                  (g)   the Purchaser has such knowledge and experience in
         financial and business matters so as to be capable of evaluating the
         merits and risks of its investment in the Securities and the Purchaser
         is capable of bearing the economic risks of such investment;

                  (h)   the Purchaser is knowledgeable, sophisticated and
         experienced in business and financial matters; the Purchaser has
         previously invested in securities similar to the Securities and fully
         understands the limitations on transfer described herein; the Purchaser
         has been afforded access to information about the Company and the
         financial condition, results of operations, property, management and
         prospects of the Company sufficient to enable it to evaluate its
         investment in the Securities; the Purchaser has been afforded the
         opportunity to ask such questions as it has deemed necessary of, and to
         receive answers from, representatives of the Company concerning the
         terms and conditions of the offering of the Securities and the merits
         and the risks of investing in the Securities; and the Purchaser has
         been afforded the opportunity to obtain such additional information
         which the Company possesses or can acquire that is necessary to verify
         the accuracy and completeness of the information given to the Purchaser
         concerning the Company. The foregoing does not in any way relieve the
         Company of its representations and other undertakings hereunder, and
         shall not limit the Purchaser's ability to rely thereon;

                  (i)   no part of the source of funds used by the Purchaser to
         acquire the Securities constitutes assets allocated to any separate
         account maintained by the Purchaser in which any employee benefit plan
         (or its related trust) has any interest; and

                  (j)   the Purchaser is a limited partnership formed under the
         laws of the State of Delaware, is authorized and duly empowered to
         purchase and hold the Securities, has its principal place of business
         at the address set forth on the signature page and has not been formed
         for the specific purpose of acquiring the Securities.

         SECTION 4.2    Purchaser Covenants.

                  (a)   The Purchaser agrees that, notwithstanding the
         Purchaser's rights under an effective registration statement as
         contemplated by the Amended Registration Rights Agreement, it shall not
         be permitted to publicly sell pursuant to such registration statement
         any or all of the Purchaser Shares, in each case, for the period from
         the Closing Date until the earlier of (i) the occurrence of an
         Acceleration Event, (ii) the delivery of a Prepayment Notice or
         (iii) the date twelve (12) months from the Closing Date.

                  (b)   Notwithstanding anything to the contrary set forth in
         clause (a) above, the Purchaser will be permitted to (i) transfer the
         Convertible Note, Warrants and/or the Purchaser Shares to Affiliates,
         subject to compliance with all applicable securities laws,

                                       Page 15

<PAGE>

         (ii) pledge the Convertible Note, Warrants and/or the Purchaser Shares
         as collateral against the obligations of the Purchaser, and (iii)
         transfer the Convertible Note, Warrants and/or the Purchaser Shares
         pursuant to any private transaction which is in compliance with the
         Securities Act or exemptions thereunder.

                  (c)   The Purchaser acknowledges and agrees that the Company
         is publicly traded and that the Purchaser may have been provided
         material non-public information concerning the Company. The Purchaser
         acknowledges that federal and state securities laws prohibit it from
         trading securities of a Company about which it has material non-public
         information and the Purchaser agrees to comply with all such applicable
         laws.

                                    ARTICLE V

                 CONDITIONS PRECEDENT TO PURCHASE OF SECURITIES

         SECTION 5.1.   Conditions Precedent to the Purchaser's Obligation to
Purchase.  The obligation of the Purchaser hereunder to purchase the Convertible
Note at the Closing is subject to the satisfaction, on or before the Closing
Date of each of the following conditions, provided that these conditions are for
the Purchaser's sole benefit and may be waived by such Purchaser at any time in
its sole discretion:

                  (a)   The Company shall have executed this Agreement, the
         Convertible Note, the Security Agreement, the Rights Agreement and the
         Amended Registration Rights Agreement and delivered the same to the
         Purchaser;

                  (b)   The Company shall have delivered to the Purchaser the
         duly executed Convertible Note;

                  (c)   The representations and warranties of the Company
         contained in each Transaction Agreement shall be true and correct in
         all material respects as of the date when made and as of the Closing
         Date as though made at such time (except for representations and
         warranties that speak as of a specified date) and the Company shall
         have performed, satisfied and complied with all covenants, agreements
         and conditions required by such Transaction Agreements to be performed,
         satisfied or complied with by it at or prior to the Closing Date;

                  (d)   The Purchaser shall have received an Officer's
         Certificate executed by the chief executive officer of the Company,
         dated as of the Closing Date, to the foregoing effect and as to such
         other matters as may be reasonably requested by the Purchaser,
         including but not limited to certificates with respect to the Company
         Corporate Documents, resolutions relating to the transactions
         contemplated hereby and the incumbencies of certain officers and
         Directors of the Company (the form of such certificate is attached
         hereto as Exhibit E);
                   ---------

                  (e)   The Company shall have received all governmental, Board
         of Directors, shareholders and third party consents and approvals
         necessary or desirable in connection with the issuance and sale of the
         Securities;

                                       Page 16

<PAGE>

                  (f)   All applicable waiting periods in respect to the
         issuance and sale of the Securities shall have expired without any
         action having been taken by any competent authority that could
         restrain, prevent or impose any materially adverse conditions thereon
         or that could seek or threaten any of the foregoing;

                  (g)   No law or regulation shall have been imposed or enacted
         that, in the judgment of the Purchaser, could adversely affect the
         transactions set forth herein or in the other Transaction Agreements,
         and no law or regulation shall have been proposed that in the
         reasonable judgment of Purchaser could reasonably have any such effect;

                  (h)   The Purchaser shall have received an opinion, dated the
         Closing Date, of counsel to the Company, substantially in the form
         attached as Exhibit F hereto;

                  (i)   All fees and expenses due and payable by the Company on
         or prior to the Closing Date shall have been paid, including but not
         limited to the payment to the Purchaser of the Reimbursement Expense
         Fee and the Advisory Fee to Hunt Capital Growth, L.P. or its designee;

                  (j)   The Company Corporate Documents shall be in full force
         and effect and no term or condition thereof shall have been amended,
         waived or otherwise modified without the prior written consent of the
         Purchaser;

                  (k)   Other than as disclosed in the SEC Reports, the
         Company's September 25, 2001 report on the financial results for the
         fiscal year ending July 31, 2001, or otherwise provided to the
         Purchaser in writing by the Company, there shall have occurred no
         change in the business, condition (financial or otherwise), operations,
         performance or properties of the Company or any Subsidiary which would
         have, in the aggregate, a Material Adverse Effect since April 30, 2001;

                  (l)   There shall exist no action, suit, investigation,
         litigation or proceeding pending or threatened in any court or before
         any arbitrator or governmental instrumentality that challenges the
         validity of or purports to affect this Agreement or any other
         Transaction Agreement, or other transaction contemplated hereby or
         thereby or that could reasonably be expected to have a Material Adverse
         Effect, or any material adverse effect on the enforceability of the
         Transaction Agreements or the Securities or the rights of the holders
         of the Securities or the Purchaser;

                  (m)   The Purchaser shall have confirmed receipt of the
         Convertible Note, duly executed by the Company;

                  (n)   There shall not have occurred any disruption or adverse
         change in the financial or capital markets generally, or in the market
         for the Common Stock (including but not limited to any suspension or
         delisting), which the Purchaser reasonably deems material in connection
         with the purchase of the Securities; and

                                       Page 17

<PAGE>

                  (o)   The Purchaser shall have received all other opinions,
         resolutions, certificates, instruments, agreements or other documents
         as it shall reasonably request.

         SECTION 5.2.   Conditions to the Company's Obligations. The obligations
of the Company to issue and sell the Securities to the Purchaser pursuant to
this Agreement are subject to the satisfaction, at or prior to any Closing Date,
of the following conditions:

                  (a)   The representations and warranties of the Purchaser
         contained herein shall be true and correct in all material respects on
         the Closing Date and the Purchaser shall have performed and complied in
         all material respects with all agreements required by this Agreement to
         be performed or complied with by the Purchaser at or prior to the
         Closing Date;

                  (b)   The issue and sale of the Securities by the Company
         shall not be prohibited by any applicable law, court order or
         governmental regulation;

                  (c)   Receipt by the Company of duly executed counterparts of
         this Agreement, the Rights Agreement, the Security Agreement and the
         Amended Registration Rights Agreement signed by the Purchaser; and

                  (d)   The Company shall have received payment of the Principal
         Amount.

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

         The Company hereby agrees that, from and after the date hereof until
the latter of (i) the date that the Convertible Note has either been repaid in
its entirety and/or converted entirely into Common Stock and (ii) the date that
the Purchaser and/or its Affiliates no longer qualifies as a Major Investor:

         SECTION 6.1.   Information.  The Company will deliver to the Purchaser
promptly upon the filing thereof, copies of (i) all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent), and (ii) all reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which the Company or any Subsidiary has filed with the Commission;

         SECTION 6.2.   Payment of Obligations.  The Company will, and will
cause each Subsidiary to, pay and discharge, at or before maturity, all their
respective material obligations, including, without limitation, tax liabilities,
except where the same may be contested in good faith by appropriate proceedings
and will maintain, in accordance with GAAP, appropriate reserves for the accrual
of any of the same.

                                       Page 18

<PAGE>

         SECTION 6.3.   Maintenance of Property; Insurance.

                  (a)   The Company will, and will cause each Subsidiary to,
         keep all property useful and necessary in its business in good working
         order and condition, ordinary wear and tear excepted.

                  (b)   The Company and each Subsidiary will maintain insurance
         in at least such amounts and against such risks as it has insured
         against as of the Closing Date.

                  (c)   The Company will obtain and maintain insurance to cover
         any liabilities incurred by the actions of its directors and officers
         in an amount not less than $5,000,000.

                  (d)   The Company will use its best efforts to maintain life
         insurance, payable to the Company, in an amount of at least $2,000,000
         on the life of each of the Company's top two (2) executives (as
         designated from time to time by the Board of Directors).

         SECTION 6.4.   Maintenance of Existence.  The Company will, and will
cause each Subsidiary to, continue to engage in business of the same general
type as now conducted by the Company and such Subsidiaries, and will preserve,
renew and keep in full force and effect its respective corporate existence and
their respective material rights, privileges and franchises necessary or
desirable in the normal conduct of business.

         SECTION 6.5.   Compliance with Laws.  The Company will, and will cause
each Subsidiary to, comply, in all material respects, with all federal, state,
municipal, local or foreign applicable laws, ordinances, rules, regulations,
municipal by-laws, codes and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except (i) where compliance therewith is contested in
good faith by appropriate proceedings or (ii) where non-compliance therewith
could not reasonably be expected, in the aggregate, to have a Material Adverse
Effect on the business, condition (financial or otherwise), operations,
performance, properties of the Company or such Subsidiary.

         SECTION 6.6.   Maintenance of Records; Inspection

                  (a)   The Company will, and will cause each Subsidiary to,
         keep proper books of record and account in which full, true and correct
         entries shall be made of all dealings and transactions in relation to
         their respective businesses and activities.

                  (b)   The Company will permit, and will cause each Subsidiary
         to permit, the Purchaser's Designee or an affiliate thereof, as
         representatives of the Purchaser, to visit and inspect any of their
         respective properties, upon reasonable prior notice and during normal
         business hours, to examine and make abstracts from any of their
         respective books and records and to discuss their respective affairs,
         finances and accounts with their respective executive officers and
         independent public accountants (and by this provision the Company
         authorizes its independent public accountants to disclose and discuss
         with the Purchaser the affairs, finances and accounts of the Company
         and its Subsidiaries), all at such reasonable times.

                                       Page 19

<PAGE>

         SECTION 6.7.   Investment Company Act.  The Company will not be or
become an open-end investment trust, unit investment trust or face-amount
certificate company that is or is required to be registered under Section 8 of
the Investment Company Act of 1940, as amended.

         SECTION 6.8.   Use of Proceeds.

                  (a)   The Principal Amount shall be used by the Company as set
         forth on Schedule 6.8 attached hereto and for other working capital
         purposes.

                  (b)   No portion of the Principal Amount shall be used by the
         Company, directly or indirectly, for the purpose, whether immediate,
         incidental or ultimate, of purchasing or carrying any "margin stock"
         within the meaning of Regulation G of the Board of Governors of the
         Federal Reserve System.

                  (c)   No portion of the Principal Amount shall be used by the
         Company, directly or indirectly, to make any principal payment on or
         prepay any Debt of the Company or to settle any pending litigation in
         which the Company is involved.

         SECTION 6.9.   Compliance with Terms and Conditions of Material
Contracts.  The Company will, and will cause each Subsidiary to, comply, in all
respects, with all terms and conditions of all material contracts to which it is
subject.

         SECTION 6.10.  Reserved Shares and Listings

                  (a)   The Company shall at all times have authorized, and
reserved for the purpose of issuance, a sufficient number of shares of Common
Stock to provide for the conversion in full of the Convertible Note and the
issuance of the Conversion Shares and the exercise in full of the Warrants and
the issuance of the Warrant Shares.

                  (b)   The Company shall promptly file the Listing Applications
and secure the listing of the Conversion Shares (and any Warrant Shares not
previously the subject of a Listing Application) upon each national securities
exchange or automated quotation system, if any, upon which shares of Common
Stock are listed at the time of conversion (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Conversion Shares and Warrant Shares from time
to time issuable upon conversion, in whole or in part, of the value of the
Convertible Note and the exercise of the Warrants.

                  (c)   The Company will obtain and maintain the listing and
trading of its Common Stock on the Nasdaq Market, the Nasdaq SmallCap Market,
the New York Stock Exchange, Inc., or the American Stock Exchange Inc., and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the National Association of Securities
Dealers, Inc. (the "NASD") and such exchanges, as applicable. The Company shall
promptly provide to the Purchaser copies of any notices it receives from Nasdaq
regarding the continued eligibility of the Common Stock for listing on the
Nasdaq Market.

                                       Page 20

<PAGE>

         SECTION 6.11.  Irrevocable Instructions.  Upon receipt of a Notice of
Conversion in respect of the Convertible Note, the Company shall immediately
issue irrevocable instructions to its transfer agent to issue certificates,
registered in the name of the Purchaser or its nominee, for the Conversion
Shares, in such amounts as specified from time to time by the Purchaser to the
Company upon proper conversion, in whole or in part, of the value of the
Convertible Note. Upon conversion, in whole or in part, of the value of the
Convertible Note, the Company will, and will use its best lawful efforts to
cause its transfer agent to, issue one or more certificates representing shares
of Common Stock in such name or names and in such denominations specified by a
Purchaser in a Notice of Conversion. The Company further warrants and agrees
that no instructions other than these instructions have been or will be given to
its transfer agent. Nothing in this Section 6.11 shall affect in any way the
Purchaser's obligation to comply with all securities laws applicable to the
Purchaser upon resale of such shares of Common Stock, including any prospectus
delivery requirements.

         SECTION 6.12.  Maintenance of Reporting Status; Supplemental
Information.  So long as any of the Securities are outstanding, the Company
shall timely file all reports required to be filed with the Commission pursuant
to the Exchange Act. The Company shall not terminate its status as an issuer
required to file reports under the Exchange Act, even if the Exchange Act or the
rules and regulations thereunder would permit such termination. If at any time
the Company is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act, the Company will promptly furnish at its expense, upon request,
for the benefit of the holders from time to time of Securities, and prospective
purchaser of Securities, information satisfying the information requirements of
Rule 144 under the Securities Act.

         SECTION 6.13.  Form D; Blue Sky Laws.  The Company agrees to file a
"Form D" with respect to the Securities as required under Regulation D of the
Securities Act and to provide a copy thereof to the Purchaser promptly after
such filing. The Company shall, on or before the Closing Date, take such action
as the Company shall reasonably determine is necessary to qualify the Securities
for sale to the Purchaser at the Closing pursuant to this Agreement under
applicable securities or "blue sky" laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to each Purchaser on or prior to the Closing Date.

         SECTION 6.14.  Right of First Refusal Upon Issuance of New Securities.

                  (a)   In the event that the Company offers to issue any of its
         equity stock, or any securities exercisable or exchangeable for or
         convertible into any equity security or otherwise having an equity
         feature, other than (i) the issuance of any security in connection with
         employee/director stock grants, employee stock options or purchase
         plans, (ii) the issuance of any security upon the exercise or
         conversion of any outstanding convertible securities, rights, options
         or warrants to acquire Common Stock of the Company in existence as of
         the date hereof, or (iii) the issuance of any security in the first
         Qualified Public Offering of the Company following the Closing Date
         ("New Securities"), the Company hereby grants to the Purchaser the
         right of first refusal to purchase a pro rata share of any such New
         Securities.

                                       Page 21

<PAGE>

                  (b)   "Pro rata" shall mean, for purposes of this section, the
         ratio of the number of the Conversion Shares held by the Purchaser
         immediately prior to the issuance of New Securities, assuming full
         conversion of the then current value of the Convertible Note calculated
         in accordance with the conversion procedures set forth in the
         Convertible Note, to the total number of shares of Common Stock
         outstanding immediately prior to the issuance of New Securities,
         assuming full conversion and/or exercise of all outstanding convertible
         securities, rights options, and warrants to acquire Common Stock of the
         Company. The rights granted under this Section 6.14 shall be in
         addition to and not in lieu of any other such rights of first refusal
         relating to any debt or equity securities of the Company other than the
         Convertible Note or the Conversion Shares which may be or may have been
         granted to Purchaser by the Company in any other documents or
         instruments.

                  (c)   In the event the Company proposes to undertake an
         issuance of New Securities, it shall give the Purchaser written notice
         of its intention, describing the type of New Securities, and their
         price and the general terms upon which the Company proposes to issue
         the same.

                  (d)   The Purchaser shall have ten (10) days after any such
         notice is mailed or delivered to agree to purchase the Purchaser's pro
         rata share of such New Securities for the price and upon the terms
         specified in the notice by giving written notice to the Company and
         stating therein the quantity of New Securities to be purchased.

                  (e)   The Company's obligations under this Section 6.14 shall
         terminate upon the earlier of (i) the completion of the first Qualified
         Public Offering following the Closing Date (ii) the date the
         Convertible Note has been repaid in its entirety or (iii) the date the
         Convertible Note has been converted entirely into Common Stock.

                  (f)   The Company's obligations to the Purchaser under this
         Section 6.14 are expressly transferable by the Purchaser to one, and
         only one, Person to whom the Purchaser transfers no less than fifty
         percent (50%) of the Principal Amount of the Convertible Note, and if
         the Purchaser elects to transfer the Convertible Note together with the
         rights under this Section 6.14, then the Purchaser will have no
         residual rights whatsoever under this Section 6.14 after the date of
         such transfer.

                  (g)   The provisions of this Section 6.14 expressly supercede
         and replace in their entirety the provisions of Section 6.14 in the
         Prior Securities Purchase Agreement as of the date hereof.

         SECTION 6.15.  Purchaser's Designee on the Company's Board of
Directors.

                  (a)   Pursuant to the terms of the Prior Securities Purchase
         Agreement, the Company agreed to use its best efforts to cause one
         person designated by the Purchaser (the "Purchaser's Designee") to be
         elected as a member of the Board. For the period beginning from the
         date of this Agreement and ending on the earlier to occur of (i) the
         fifth anniversary of the Closing, or (ii) the date that the Purchaser
         no longer qualifies as a Major Investor, the Company agrees to continue
         to use its best efforts to cause the Purchaser's Designee to be elected
         as a member of the Board, including, but not limited to, taking any of
         the following actions: creating a vacancy on the Board, nominating the

                                       Page 22

<PAGE>

         Purchaser's Designee to the Board from time to time and at all meetings
         or actions of the stockholders of the Company, and using its best
         efforts to provide information to, and promote the election of the
         Purchaser's Designee by, the Company's stockholders. As of the date
         hereof, the Company represents and warrants that (x) its existing Board
         has lawfully nominated J.R. Holland, Jr., the initial Purchaser's
         Designee, as a class III director for a term expiring in 2002, such
         nomination was approved by the Company's shareholders at the annual
         meeting of the Company which was held on Monday, December 13, 1999, and
         (y) the actions taken by the Board in clause (x) and which it will
         continue to take under the provisions of this Section 6.15 are valid
         and binding and do not and will not create or result in a breach of the
         Company's Certificate of Incorporation, Bylaws or any other material
         agreement of the Company.

                  (b)   The Company shall provide notice to the Purchaser at
         least thirty (30) days prior to any upcoming nomination by the Board or
         vote of the Company's stockholders regarding the election of or
         continued service of the members of the Board. The Purchaser may, at
         any time, with or without cause, remove and replace the Purchaser's
         Designee with another individual selected by the Purchaser. If the
         Purchaser desires to select another Purchaser's Designee, then the
         Purchaser shall provide written notice to the Company of its
         replacement designee, and the Company will take all necessary action
         and use its best efforts to promptly cause such replacement of the
         Purchaser's Designee to occur.

                  (c)   The Company's obligations to the Purchaser under this
         Section 6.15 are expressly transferable by the Purchaser to one, and
         only one, Person to whom the Purchaser transfers no less than fifty
         percent (50%) of the Principal Amount of the Convertible Note, and if
         the Purchaser elects to transfer the Convertible Note together with the
         rights under this Section 6.15, then the Purchaser will have no
         residual rights whatsoever under this Section 6.15 after the date of
         such transfer.

                  (d)   The provisions of this Section 6.15 expressly supercede
         and replace in their entirety the provisions of Section 6.15 in the
         Prior Securities Purchase Agreement as of the date hereof.

                                   ARTICLE VII

                               NEGATIVE COVENANTS

         The Company hereby agrees that, from and after the date hereof until
the date that the Convertible Note has either been repaid in its entirety and/or
converted entirely into Common Stock, the Company shall be bound according to
the restrictions set forth in each of following negative covenants unless any
such restriction shall have been expressly waived in writing by the Purchaser:

         SECTION 7.1.   Restrictions on Certain Amendments.  The Company will
not, without the prior written consent of the Purchaser, amend the rights and
privileges granted under the Convertible Note, to adversely affect the rights or
privileges granted under the Convertible Note.

                                       Page 23

<PAGE>

         SECTION 7.2.   Restricted Payment.  The Company shall not make any
Restricted Payment.

         SECTION 7.3.   Debt.  The Company shall not create, incur, assume,
become or be liable in any manner in respect of, or suffer to exist, any Debt,
except (a) Debt in existence on the date hereof, as shown on Schedule 7.3(a),
(b) trade payables incurred and paid in the ordinary course of business, (c)
Contingent Liabilities in existence on the date hereof, as shown on Schedule
7.3(c), (d) Contingent Liabilities resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business, (e) Debt incurred
to finance the acquisition of fixed or capital assets (whether pursuant to a
loan, capital lease obligation or otherwise) in an aggregate principal amount
not to exceed five-hundred thousand dollars ($500,000) at any time outstanding,
provided that such Debt is incurred simultaneously with such acquisition (the
"Purchase Money Financing") and (f) the Permitted Senior Indebtedness
(collectively (a) through (f) shall be referred to as the "Permitted
Indebtedness").

         SECTION 7.4.   Liens.  The Company shall not create or suffer to exist
any Lien upon any of its Properties, except (a) Liens created by the Security
Agreement, (b) Liens in existence on the date hereof, as disclosed on Schedule
3.22, (c) tax, mechanics', materialmen's, warehousemen's, laborer's and landlord
and other similar Liens relating to amounts that are not yet due and payable, or
that are being contested in good faith by appropriate proceedings, for which
adequate reserves have been established, (d) Liens incurred in the ordinary
course of business in connection with worker's compensation, unemployment
insurance or similar legislation and (e) Liens to secure the Permitted
Indebtedness, provided that (x) any Lien securing any Purchase Money Financing
              --------
shall be created substantially simultaneously with the acquisition of such fixed
or capital asset, (y) such Liens do not at any time encumber any property other
than the property that is the subject of the Purchase Money Financing, and (z)
the principal amount of Debt secured by any such Purchase Money Financing shall
at no time exceed one hundred percent (100%) of the original purchase price of
such property at the time it was acquired. Except as provided in this Section
7.4, the Company shall not hereafter agree with any Person (other than the
Purchaser) to grant a Lien on any of its assets or to permit the pledge of any
of its equity interests.

         SECTION 7.5.   Amendment of Organizational Documents.  The Company
shall not permit any amendment to its articles of incorporation so as to
adversely affect the rights or privileges granted under the Convertible Note.

         SECTION 7.6.   Sale and Leaseback.  The Company shall not enter into
any arrangement whereby it sells or transfers any of its assets, and thereafter
rents or leases such assets.

         SECTION 7.7.   Business.  The Company shall not change the nature of
its business as now conducted.

         SECTION 7.8.   Transactions with Affiliates.  The Company shall not,
directly or indirectly, pay any funds to or for the account of, make any
investment (whether by acquisition of stock or indebtedness, by loan, advance,
transfer of property, guarantee or other agreement to pay, purchase or service,
directly or indirectly, any Debt, or otherwise) in, lease, sell, transfer or

                                       Page 24

<PAGE>

otherwise dispose of any assets, tangible or intangible, to, or participate in,
or effect any transaction in connection with any joint enterprise or other joint
arrangement with, any Affiliate, except, on terms no less favorable than terms
that could be obtained by the Company from a Person that is not an Affiliate of
the Company upon negotiation at arms' length, as determined in good faith by the
Board; provided that no determination of the Board of Directors shall be
required with respect to any such transactions entered into in the ordinary
course of business.

         SECTION 7.9.   Limitation on Restrictions.  The Company shall not enter
into, or suffer to exist, any agreement with any Person which prohibits or
limits the ability of the Company to (a) pay Debt owed to the Purchaser, except
as expressly permitted by the Security Agreement, (b) make loans or advances to
the Company or (c) transfer any of its properties or assets to the Company.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         SECTION 8.1.   Notices.  All notices, demands and other communications
to any party hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party at its address set forth on the
signature pages hereof, or such other address as such party may hereafter
specify for the purpose to the other parties. Each such notice, demand or other
communication shall be effective (i) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified on the signature page hereof, (ii)
if given by mail, four days after such communication is deposited in the mail
with first class postage prepaid, addressed as aforesaid or (iii) if given by
any other means, when delivered at the address specified in or pursuant to this
Section.

         SECTION 8.2.   No Waivers; Amendments.

                  (a)   No failure or delay on the part of any party in
         exercising any right, power or remedy hereunder shall operate as a
         waiver thereof, nor shall any single or partial exercise of any such
         right, power or remedy preclude any other or further exercise thereof
         or the exercise of any other right, power or remedy.

                  (b)   Any provision of this Agreement may be amended,
         supplemented or waived if, but only if, such amendment, supplement or
         waiver is in writing and is signed by the Company and the Purchaser, or
         the Purchaser's permitted successors or assigns.

         SECTION 8.3.   Indemnification.

                  (a)   The Company agrees to indemnify and hold harmless the
         Purchaser, its Affiliates, and each Person, if any, who controls the
         Purchaser, or any of its Affiliates, within the meaning of the
         Securities Act or the Exchange Act (each, a "Controlling Person"), and
         the respective partners, agents, employees, officers and Directors of
         the Purchaser, their Affiliates and any such Controlling Person (each
         an "Indemnified Party" and collectively, the "Indemnified Parties"),
         from and against any and all losses, claims, damages, liabilities and
         expenses (including, without limitation and as incurred,

                                       Page 25

<PAGE>

         reasonable costs of investigating, preparing or defending any such
         claim or action, whether or not such Indemnified Party is a party
         thereto, provided that the Company shall not be obligated to advance
         such costs to any Indemnified Party other than the Purchaser unless it
         has received from such Indemnified Party an undertaking to repay to the
         Company the costs so advanced if it should be determined by final
         judgment of a court of competent jurisdiction that such Indemnified
         Party was not entitled to indemnification hereunder with respect to
         such costs) which may be incurred by such Indemnified Party in
         connection with any investigative, administrative or judicial
         proceeding brought or threatened that relates to or arises out of, or
         is in connection with (i) any failure of any representation, breach of
         any warranty of the Company in any of the Transaction Agreements to be
         true and correct when made and as of the Closing Date; (ii) any failure
         by the Company to perform or observe, or to have performed or observed,
         in full any covenant or agreement to be observed or performed by the
         Company in any Transaction Agreement; or (iii) any activities
         contemplated by any Transaction Agreement; provided that the Company
                                                    --------
         will not be responsible for any claims, liabilities losses, damages or
         expenses that are determined by final judgment of a court of competent
         jurisdiction to result from such Indemnified Party's gross negligence,
         willful misconduct or bad faith.

                  (b)   If any action shall be brought against an Indemnified
         Party with respect to which indemnity may be sought against the Company
         under this Agreement, such Indemnified Party shall promptly notify the
         Company in writing and the Company, at its option, may assume the
         defense thereof, including the employment of counsel reasonably
         satisfactory to such Indemnified Party and payment of all reasonable
         fees and expenses. The failure to so notify the Company shall not
         affect any obligations the Company may have to such Indemnified Party
         under this Agreement or otherwise unless the Company would suffer a
         Material Adverse Effect as a result of such failure. Such Indemnified
         Party shall have the right to employ separate counsel in such action
         and participate in the defense thereof, but the fees and expenses of
         such counsel shall be at the expense of such Indemnified Party, unless:
         (i) the Company has failed to assume the defense and employ counsel or
         (ii) the named parties to any such action (including any impleaded
         parties) include such Indemnified Party and the Company, and such
         Indemnified Party shall have been advised by counsel that there may be
         one or more legal defenses available to it which are different from or
         additional to those available to the Company, in which case, if such
         Indemnified Party notifies the Company in writing that it elects to
         employ separate counsel at the expense of the Company, the Company
         shall not have the right to assume the defense of such action or
         proceeding on behalf of such Indemnified Party, provided, however, that
                                                         --------  -------
         the Company shall not, in connection with any one such action or
         proceeding or separate but substantially similar or related actions or
         proceedings in the same jurisdiction arising out of the same general
         allegations or circumstances, be responsible hereunder for the
         reasonable fees and expenses of more than one such firm of separate
         counsel, in addition to any local counsel, which counsel shall be
         designated by the Purchaser. The Company shall not be liable for any
         settlement of any such action effected without the written consent of
         the Company (which shall not be unreasonably withheld) and the Company
         agrees to indemnify and hold harmless each Indemnified Party from and
         against any loss or liability by reason of settlement of any action
         effected with the consent of the Company. In addition, the Company will
         not, without the prior written consent of the Purchaser, settle or
         compromise or consent to the entry of any

                                       Page 26

<PAGE>

         judgment in or otherwise seek to terminate any pending or threatened
         action, claim, suit or proceeding in respect to which indemnification
         or contribution may be sought hereunder (whether or not any Indemnified
         Party is a party thereto) unless such settlement, compromise, consent
         or termination includes an express unconditional release of the
         Purchaser and the other Indemnified Parties, satisfactory in form and
         substance to the Purchaser, from all liability arising out of such
         action, claim, suit or proceeding.

                  (c)   If for any reason the foregoing indemnity is unavailable
         (otherwise than pursuant to the express terms of such indemnity) to an
         Indemnified Party or insufficient to hold an Indemnified Party
         harmless, then in lieu of indemnifying such Indemnified Party, the
         Company shall contribute to the amount paid or payable by such
         Indemnified Party as a result of such claims, liabilities, losses,
         damages, or expenses (i) in such proportion as is appropriate to
         reflect the relative benefits received by the Company on the one hand
         and by the Purchaser on the other from the transactions contemplated by
         this Agreement or (ii) if the allocation provided by clause (i) is not
         permitted under applicable law, in such proportion as is appropriate to
         reflect not only the relative benefits received by the Company on the
         one hand and the Purchaser on the other, but also the relative fault of
         the Company and the Purchaser as well as any other relevant equitable
         considerations. It is hereby further agreed that the relative benefits
         to the Company on the one hand and the Purchaser on the other with
         respect to the transactions contemplated hereby shall be determined by
         reference to, among other things, whether any untrue or alleged untrue
         statement of material fact or the omission or alleged omission to state
         a material fact related to information supplied by the Company or by
         the Purchaser and the parties' relative intent, knowledge, access to
         information and opportunity to correct or prevent such statement or
         omission. No Person guilty of fraudulent misrepresentation (within the
         meaning of Section 11(f) of the Securities Act) shall be entitled to
         contribution from any Person who was not guilty of such fraudulent
         misrepresentation.

                  (d)   The indemnification, contribution and expense
         reimbursement obligations set forth in this Section 8.3 (i) shall be in
         addition to any liability the Company may have to any Indemnified Party
         at common law or otherwise, (ii) shall survive the termination of this
         Agreement and the other Transaction Agreements and (iii) shall remain
         operative and in full force and effect regardless of any investigation
         made by or on behalf of the Purchaser or any other Indemnified Party.

         SECTION 8.4.   Expenses: Documentary Taxes.  At or promptly following
the Closing Date, the Company agrees to pay (a) to the Purchaser the reasonable
out-of-pocket expenses of the Purchaser, including attorneys' fees incurred in
connection with the preparation and consummation of the contemplated Transaction
Agreements and related disclosure reports required to be filed by the Purchaser
or J.R. Holland, Jr. with the Securities and Exchange Commission as a result of
the acquisition by Purchaser of the Securities (the "Expense Reimbursement Fee")
and (b) to Hunt Capital Growth, L.P. or its designee, the Advisory Fee. If the
Transaction Agreements are not consummated because the Purchaser has determined
during its due-diligence review that the historical performance, future
projects, or any information of the Company is significantly different from that
presented to the Purchaser by the Company, the Company agrees to pay to the
Purchaser the Expense Reimbursement Fee, calculated through the date the
Purchaser made the determination not to consummate the Transaction Agreements.

                                       Page 27

<PAGE>

         SECTION 8.5.   Successors and Assigns.  This Agreement shall be binding
upon the Company and upon the Purchaser and their respective successors and
assigns; provided that the Company shall not assign or otherwise transfer its
rights or obligations under this Agreement to any other Person without the prior
written consent of the Purchaser. All provisions hereunder purporting to give
rights to Purchaser and their affiliates or to holders of Securities are for the
express benefit of such Persons and their successors and assigns, except where
transfer of the Purchaser's rights hereunder are expressly limited.

         SECTION 8.6.   Brokers.  The Company represents and warrants that other
than the individuals or entities and their corresponding fees as set forth on
Schedule 8.6 hereof, it has not employed any broker, finder, financial advisor
or investment banker who would be entitled to any brokerage, finder's or other
fee or commission payable by the Company or the Purchaser in connection with the
sale of the Securities ("Broker's Fees"). The Company acknowledges that payment
of any Broker's Fees is the Company's sole obligation and hereby indemnifies and
holds the Purchaser harmless for any claim that the Purchaser is in any way
obligated to pay any amount of such Broker's Fees.

         SECTION 8.7.   Texas Law; Submission to Jurisdiction; Waiver of Jury
Trial; Appointment of Agent.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS. EACH PARTY HERETO HEREBY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN DALLAS
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

         SECTION 8.8.   Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated unless a failure
of consideration would result thereby.

         SECTION 8.9.   Survival.  All provisions contained in this Agreement
(unless specifically noted to the contrary) shall survive the issuance of the
Convertible Note and shall remain operative and in full force and effect until
the Convertible Note has been repaid in full and/or converted entirely into
Common Stock.

                                       Page 28

<PAGE>

         SECTION 8.10.  Counterparts.  This Agreement may be executed by
telecopy signature and in any number of counterparts each of which shall be an
original with the same effect as if the signatures there to and hereto were upon
the same instrument.

         SECTION 8.11.  Powers and Remedies Cumulative.  No right or remedy
herein conferred upon or reserved to the Purchaser is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to ever other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy. Every power and remedy given by any of the
Transaction Documents or by law may be exercised from time to time, and as often
as shall be deemed expedient, by the Purchaser.

                            [Signature page follows]

                                       Page 29

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.

                             PROSOFTTRAINING.COM

                             By:
                                    --------------------------------------------
                             Name:  Jerrell M. Baird
                             Title: Chief Executive Officer

                             Address:    3001 Bee Caves Road, Suite 300
                                         Austin, Texas  78746
                             Telephone:  (512) 328-6140
                             Fax:        (512) 328-5239
                             Attn:       Chief Executive Officer

                             HUNT CAPITAL GROWTH FUND II, L.P.

                             By:  HUNT CAPITAL GROWTH, L.P.
                                  its general partner

                                  By:  HUNT CAPITAL
                                       MANAGEMENT, L.L.C., its
                                       general partner

                                       By:
                                            ------------------------------------
                                            Name:  J.R. Holland, Jr.
                                            Title: President

                                       Address:    1601 Elm Street
                                                   4000 Thanksgiving Tower
                                                   Dallas, Texas 75201
                                       Telephone:  (214) 720-1600
                                       Fax:        (214) 720-1662
                                       Attn.:      Thomas J. Fowler, Esq.

<PAGE>

                                    EXHIBITS

      Exhibit A      Convertible Note
      Exhibit B      First Amendment to the Registration Rights Agreement
      Exhibit C      Rights Agreement
      Exhibit D      Security Agreement
      Exhibit E      Officer's Certificate
      Exhibit F      Opinion of Counsel

<PAGE>

                                    SCHEDULES

                  Schedule 3.1         Subsidiaries
                  Schedule 3.3         Capitalization
                  Schedule 3.17        Leases
                  Schedule 3.22        Liens
                  Schedule 6.8         Use of Proceeds
                  Schedule 7.3(a)      Debt
                  Schedule 7.3(c)      Contingent Liabilities
                  Schedule 8.6         Broker's Fees

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