GLOBALSCAPE INC
EX-10.25
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<TYPE>EX-10.25
<SEQUENCE>15
<FILENAME>j3101_ex10d25.htm
<DESCRIPTION>EX-10.25
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<title>COMMERCIAL SECURITY AGREEMENT</title>



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<p style="margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EXHIBIT 10.25</font></b></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">SECURITY

AGREEMENT</font></b></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt 1.0in;text-indent:-1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Borrower:</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>TeleSpan, Inc.</p>



<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6000 Northwest Pkwy.,

Suite 110</font></p>



<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">San Antonio, TX 78249</font></p>



<p style="margin:0in 0in .0001pt 1.0in;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

 <tr>

  <td width="13%" valign="top" style="padding:0in .7pt 0in .7pt;width:13.06%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Lender:</font></p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:86.94%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GlobalSCAPE, Inc.</font></p>

  </td>

 </tr>

 <tr>

  <td width="13%" valign="top" style="padding:0in .7pt 0in .7pt;width:13.06%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="86%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:86.94%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6000 Northwest Pkwy., Suite 100</font></p>

  </td>

 </tr>

 <tr>

  <td width="13%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:13.06%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="24%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:24.02%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">San Antonio, Texas&#160; 78249</font></p>

  </td>

  <td width="62%" valign="top" style="padding:0in .7pt 0in .7pt;width:62.92%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

</table>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Principal Amount:&#160; $100,000.00</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Date of Note:&#160; November 15, 2001</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Maturity:&#160; January 31, 2002</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;text-indent:26.0pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">THIS SECURITY AGREEMENT is

entered into between ATSI Communications, Inc. (referred to below as

&#147;Grantor&#148;); and GlobalSCAPE, Inc. (referred to below as &#147;Lender&#148;).&#160; For valuable consideration, Grantor grants

to Lender a security interest in the Collateral to secure the Indebtedness and

agrees that Lender shall have the rights stated in this Agreement with respect

to the Collateral, in addition to all other rights which Lender may have by

law.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">DEFINITIONS</font></b>.&#160;

The following words shall have the following meanings when used in this

Agreement.&#160; Terms not otherwise defined

in this Agreement shall have the meanings attributed to such terms in the

Uniform Commercial Code.&#160; All references

to dollar amounts shall mean amounts in lawful money of the United States of

America.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Agreement</font></b>.&#160;

The word &#147;Agreement&#148; means this Security Agreement, as this Security

Agreement may be amended or modified from time to time, together with all

exhibits and schedules attached to this Security Agreement from time to time.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Collateral</font></b>.&#160;

The word &#147;Collateral&#148; means the following described property of Grantor,

whether now owned or hereafter acquired, whether now existing or hereafter

arising, and wherever located:</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Grantor&#146;s Accounts, as that definition may be

amended from time to time, under that Carrier Service Agreement for

International Terminating Traffic dated November 25, 1998 between Grantor and

Qwest Communications Corporation.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;In addition, the word

&#147;Collateral&#148; includes all the following, whether now owned or hereafter

acquired, whether now existing or hereafter arising, and wherever located:</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;

All attachments, accessions, accessories, tools, parts, supplies,

increases, and additions to and all replacements of and substitutions for any property

described above.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;

All products and produce of any of the property described in this

Collateral section.</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1</font></p>





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<hr size="2" width="100%" noshade color="gray" align="left">



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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;

All accounts, general intangibles, instruments, rents, monies, payments,

and all other rights, arising out of a sale, lease, or other disposition of any

of the property described in this Collateral section.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;

All proceeds (including insurance proceeds) from the sale, destruction,

loss, or other disposition of any of the property described in this Collateral

section.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt .5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(e)&#160;

All records and data relating to any of the property described in this

Collateral section, whether in the form of a writing, photograph, microfilm,

microfiche, or electronic media, together with all of Grantor&#146;s right, title,

and interest in and to all computer software required to utilize, create,

maintain, and process any such records or data on electronic media.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Event of Default</font></b>.&#160;

The words &#147;Event of Default&#148; mean and include without limitation any of

the Events of Default set forth below in the section titled &#147;Events of

Default.&#148;</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Grantor</font></b>.&#160;

The word &#147;Grantor&#148; means American TeleSource International, Inc., its

successors and assigns.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Guarantor</font></b>.&#160;

The word &#147;Guarantor&#148; means and includes without limitation each and all

of the guarantors, sureties, and accommodation parties in connection with the

Indebtedness.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Indebtedness</font></b>.&#160;

The word &#147;Indebtedness&#148; means the Indebtedness evidenced by the Note,

including all principal and earned interest, together with all other

Indebtedness and costs and expenses for which Grantor is responsible under this

Agreement or under any of the Related Documents.&#160; In addition, the word &#147;Indebtedness&#148; includes all other

obligations, debts and liabilities, plus interest thereon, of Grantor, or any one

or more of them, to Lender, as well as all claims by Lender against Grantor, or

any one or more of them, whether existing now or later; whether they are

voluntary or involuntary, due or not due, direct or indirect, absolute or

contingent, liquidated or unliquidated; whether Grantor may be liable

individually or jointly with others; whether Grantor may be obligated as

guarantor, surety, accommodation party or otherwise.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Lender</font></b>.&#160;

The word &#147;Lender&#148; means GlobalSCAPE, Inc., its successors and assigns.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note</font></b>.&#160;

The word &#147;Note&#148; means the note dated November 15, 2001, in the principal

amount of $100,000.00 from Grantor to Lender, together with all renewals of,

extensions of, modifications of, refinancings of, consolidations of and

substitutions for the note or credit agreement.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Related Documents</font></b>.&#160;

The words &#147;Related Documents&#148; mean and include without limitation all

promissory notes, credit agreements, loan agreements, environmental agreements,

guaranties, security agreements, mortgages, deeds of trust, and all other

instruments, agreements and documents, whether now or hereafter existing,

executed in connection with the Indebtedness.</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>





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<p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">OBLIGATIONS OF GRANTOR</font></b>.&#160;

Grantor warrants and covenants to Lender as follows:</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Perfection of Security Interest</font></u>.&#160;

Grantor agrees to execute such financing statement and to take whatever

other actions are requested by Lender to perfect and continue Lender&#146;s security

interest in the Collateral.&#160; Upon

request of Lender, Grantor will deliver to Lender any and all of the documents

evidencing or constituting the Collateral, and Grantor will note Lender&#146;s

interest upon any and all chattel paper if not delivered to Lender for

possession by Lender.&#160; Grantor hereby

appoints Lender as its irrevocable attorney-in-fact for the purpose of

executing any documents necessary to perfect or to continue the security

interest granted in this Agreement.&#160;

Lender may at any time, and without further authorization from Grantor,

file a carbon, photographic or other reproduction of any financing statement or

of this Agreement for use as a financing statement. Grantor will reimburse

Lender for all expenses for the perfection and the continuation of the

perfection of Lender&#146;s security interest in the Collateral.&#160; Grantor promptly will notify Lender before

any change in Grantor&#146;s name including any change to the assumed business names

of Grantor.&#160; This is a continuing

Security Agreement and will continue in effect even though all or any part of

the Indebtedness is paid in full and even though for a period of time Grantor

may not be indebted to Lender.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">No Violations</font></u>.&#160;

The execution and delivery of this Agreement will not violate any law or

agreement governing Grantor or to which Grantor is a party, and its certificate

or articles of incorporation and bylaws do not prohibit any term or condition

of this Agreement.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Enforceability of Collateral</font></u>.&#160;

To the extent the Collateral consists of accounts, chattel paper, or

general intangibles, the Collateral is enforceable in accordance with its

terms, is genuine, and complies with applicable laws concerning form, content

and manner of preparation and execution, and all persons appearing to be

obligated on the Collateral have authority and capacity to contract and are in

fact obligated as they appear to be on the Collateral.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Location of the Collateral</font></u>.&#160;

Grantor, upon request of Lender, will deliver to Lender in form

satisfactory to Lender a schedule of real properties and Collateral locations

relating to Grantor&#146;s operations, including without limitation the following:

(a) all real property owned or being purchased by Grantor; (b) all real

property being rented or leased by Grantor; (c) all storage facilities owned,

rented, leased, or being used by Grantor; and (d) all other properties where

Collateral is or may be located.&#160; Except

in the ordinary course of its business, Grantor shall not remove the Collateral

from its existing locations without the prior written consent of Lender.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Removal of Collateral</font></u>.&#160;

Grantor shall keep the Collateral (or to the extent the Collateral

consists of intangible property such as accounts, the records concerning the

Collateral) at Grantor&#146;s address shown above, or at such other locations as are

acceptable to Lender.&#160; Except in the

ordinary course of its business, including the sales of inventory, Grantor

shall not remove the Collateral from its existing locations without the prior

written consent of Lender.&#160; To the

extent that the Collateral consists of vehicles, or other titled property,

Grantor shall not take or permit any action which would require application for

certificates of title for the vehicles outside the State of Texas, without the

prior written consent of Lender.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Transactions Involving Collateral</font></u>.&#160;

Except for inventory sold or accounts collected in the ordinary course

of Grantor&#146;s business, Grantor shall not sell, offer to sell, or otherwise

transfer or </p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>





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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">dispose of the Collateral.&#160;

While Grantor is not in default under this Agreement, Grantor may sell

inventory, but only in the ordinary course of its business and only to buyers

who qualify as a buyer in the ordinary course of business.&#160; A sale in the ordinary course of Grantor&#146;s

business does not include a transfer in partial or total satisfaction of a debt

or any bulk sale.&#160; Grantor shall not

pledge, mortgage, encumber or otherwise permit the Collateral to be subject to

any lien, security interest, encumbrance, or charge, other than the security

interest provided for in this Agreement, without the prior written consent of Lender.&#160; This includes security interests even if

junior in right to the security interests granted under this Agreement.&#160; Unless waived by Lender, all proceeds from

any disposition of the Collateral (for whatever reason) shall be held in trust

for Lender and shall not be commingled with any other funds; provided however,

this requirement shall not constitute consent by Lender to any sale or other

disposition.&#160; Upon receipt, Grantor

shall immediately deliver any such proceeds to Lender.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Title</font></u>.&#160;

Grantor represents and warrants to Lender that it holds good and

marketable title to the Collateral, free and clear of all liens and

encumbrances except for the lien of this Agreement.&#160; No financing statement covering any of the Collateral is on file

in any public office other than those which reflect the security interest

created by this Agreement or to which Lender has specifically consented.&#160; Grantor shall defend Lender&#146;s rights to the

Collateral against the claims and demands of all other persons.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;<u>Collateral Schedules and

Locations</u>.&#160; Insofar as the

Collateral consists of inventory, Grantor shall deliver to Lender, as often as

Lender shall require, such lists, descriptions, and designations of such

Collateral as Lender may require to identify the nature, extent, and location

of such Collateral.&#160; Such information

shall be submitted for Grantor and each of its subsidiaries or related

companies.</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Maintenance and Inspection of Collateral</font></u>.&#160;

Grantor shall maintain all tangible Collateral in good condition and

repair.&#160; Grantor will not commit or

permit damage to or destruction of the Collateral or any part of the

Collateral.&#160; Lender and its designated

representatives and agents shall have the right at all reasonable times to

examine, inspect, and audit the Collateral wherever located.&#160; Grantor shall immediately notify Lender of

all cases involving the return, rejection, repossession, loss or damage of or

to any Collateral; of any request for credit or adjustment or of any other

dispute arising with respect to the Collateral; and generally of all happenings

and events affecting the Collateral or the value or the amount of the

Collateral.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Taxes, Assessments and Liens</font></u>.&#160;

Grantor will pay when due all taxes, assessments and liens upon the

Collateral, its use or operation, upon this Agreement, upon any promissory note

or notes evidencing the Indebtedness, or upon any of the other Related

Documents.&#160; Grantor may withhold any

such payment or may elect to contest any lien if Grantor is in good faith

conducting an appropriate proceeding to contest the obligation to pay and so

long as Lender&#146;s interest in the Collateral is not jeopardized in Lender&#146;s sole

opinion.&#160; If the Collateral is subjected

to a lien which is not discharged within fifteen (15) days, Grantor shall

deposit with Lender cash, a sufficient corporate surety bond or other security

satisfactory to Lender in an amount adequate to provide for the discharge of

the lien plus any interest, costs, attorneys&#146; fees or other charges that could

accrue as a result of foreclosure or sale of the Collateral.&#160; In any contest Grantor shall defend itself

and Lender and shall satisfy any final adverse judgment before enforcement

against the Collateral.&#160; Grantor shall

name Lender as an additional obligee under any surety bond furnished in the contest

proceedings.</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



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<p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Compliance with Governmental Requirements</font></u>.&#160;

Grantor shall comply promptly with all laws, ordinances, rules and

regulations of all governmental authorities, nor or hereafter in effect,

applicable to the ownership, production, disposition, or use of the

Collateral.&#160; Grantor may contest in good

faith any such law, ordinance or regulation and withhold compliance during any

proceeding, including appropriate appeals, so long as Lender&#146;s interest in the

Collateral, in Lender&#146;s opinion, is not jeopardized.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EXPENDITURES BY LENDER</font></b>.&#160;

If not discharged or paid when due, Lender may (but shall not be

obligated to) discharge or pay any amounts required to be discharged or paid by

Grantor under this Agreement, including without limitation all taxes, liens,

security interests, encumbrances, and other claims, at any time levied or

placed on the Collateral.&#160; Lender also

may (but shall not be obligated to) pay all costs for insuring, maintaining and

preserving the Collateral.&#160; All such

expenditures incurred or paid by Lender for such purposes will then bear

interest at the Note rate from the date incurred or paid by Lender to the date

of repayment by Grantor.&#160; All such

expenses shall become a part of the Indebtedness and, at Lender&#146;s option, will

(a) be payable on demand, (b) be added to the balance of the Note and be

apportioned among and be payable with any installment payments to become due

during either (i) the term of any applicable insurance policy or (ii) the

remaining term of the Note, or (c) be treated as a balloon payment which will

be due and payable at the Note&#146;s maturity.&#160;

This Agreement also will secure payment of these amounts.&#160; Such right shall be in addition to all other

rights and remedies to which Lender may be entitled upon the occurrence of an

Event of Default.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EVENTS OF DEFAULT</font></b>.&#160;

Each of the following shall constitute an Event of Default under this

Agreement:</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Default on Indebtedness</font></u>.&#160;

Failure of Grantor to make any payment when due on the Indebtedness.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other Defaults</font></u>.&#160;

Failure of Grantor to comply with or to perform any other term,

obligation, covenant or condition contained in this Agreement of in any of the

Related Documents or in any other agreement between Lender and Grantor.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Default in Favor of Third Parties</font></u>.&#160;

Should Borrower or any Grantor default under any loan, extension of

credit, security agreement, purchase or sales agreement, or any other

agreement, in favor of any other creditor or person that may materially affect

any of Borrower&#146;s property or Borrower&#146;s or Grantor&#146;s ability to repay the

Loans or perform their respective obligations under this Agreement or any of

the Related Documents.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">False Statements</font></u>.&#160;

Any warranty, representation or statement made or furnished to Lender by

or on behalf of Grantor under this Agreement, the Note or the Related Documents

is false or misleading in any material respect, either now or at the time made

or furnished.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Defective Collateralization</font></u>.&#160;

This Agreement or any of the Related Documents ceases to be in full

force and effect (including failure of any collateral documents to create a

valid and perfected security interest or lien) at any time and for any reason.</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



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</font>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Insolvency</font></u>.&#160;

The dissolution or termination of Grantor&#146;s existence as a going

business, the insolvency of Grantor, the appointment of a receiver for any part

of Grantor&#146;s property, any assignment for the benefit of creditors, and type of

creditor workout, or the commencement of any proceeding under any bankruptcy or

insolvency laws by or against Grantor.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Creditor or Forfeiture Proceedings</font></u>.&#160;

Commencement of foreclosure or forfeiture proceedings, whether by

judicial proceeding, self-help, repossession or any other method, by any

Creditor of Grantor or by any governmental agency against the Collateral or any

other collateral securing the Indebtedness.&#160;

This includes a garnishment of any of Grantor&#146;s deposit accounts with

Lender.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Events Affecting Guarantor</font></u>.&#160;

Any of the preceding events occurs with respect to any Guarantor of any

of the Indebtedness or such Guarantor dies or becomes incompetent.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Adverse Change</font></u>.&#160;

A material adverse change occurs in Grantor&#146;s financial condition, or

Lender believes the prospect of payment or performance of the Indebtedness is

impaired.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Insecurity</font></u>.&#160;

Lender, in good faith, deems itself insecure.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">RIGHTS AND REMEDIES ON DEFAULT</font></b>.&#160;

If an Event of Default occurs under this Agreement, at any time

thereafter, Lender shall have all the rights of a secured party under the Texas

Uniform Commercial Code.&#160; In addition

and without limitation, Lender may exercise any one or more of the following

rights and remedies:</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accelerate Indebtedness</font></u>.&#160;

Lender may declare the entire Indebtedness immediately due and payable,

without notice.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Assemble Collateral</font></u>.&#160;

Lender may require Grantor to deliver to Lender all or any portion of

the Collateral and any and all certificates of title and other documents

relating to the Collateral.&#160; Lender may

require Grantor to assemble the Collateral and make it available to Lender at a

place to be designated by Lender.&#160;

Lender also shall have full power to enter, provided Lender does so

without a breach of the peace or a trespass, upon the property of Grantor to

take possession of and remove the Collateral.&#160;

If the Collateral contains other goods not covered by this Agreement at

the time of the repossession, Grantor agrees Lender may take such other goods,

provided that Lender makes reasonable efforts to return them to Grantor after

repossession.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Sell the Collateral</font></u>.&#160;

Lender shall have full power to sell, lease, transfer, or otherwise deal

with the Collateral or proceeds thereof in its own name or that of

Grantor.&#160; Lender may sell the Collateral

at public auction or private sale.&#160;

Unless the Collateral threatens to decline speedily in value or is of a

type customarily sold on a recognized market, Lender will give Grantor

reasonable notice of the time after which any private sale or any other

intended disposition of the Collateral is to be made.&#160; The requirements of reasonable notice shall be met if such notice

is given at least ten (10) days before the time of the sale or

disposition.&#160; All expenses relating to

the disposition of the Collateral, including without limitation the expenses of

retaking, holding, insuring, preparing for sale and selling the Collateral,

shall become a part of the Indebtedness secured by this Agreement and shall be

payable on demand, with interest at the Note rate from date of expenditure

until repaid.</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



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</font>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Appoint Receiver</font></u>. To the extent permitted by

applicable law, Lender shall have the following rights and remedies regarding

the appointment of a receiver:&#160; (a)

Lender may have a receiver appointed as a matter of right, (b) the receiver may

be an employee of Lender and may serve without bond, and (c) all fees of the

receiver and his or her attorney shall become part of the Indebtedness secured

by this Agreement and shall be payable on demand, with interest at the Note rate

from date of expenditure until repaid.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Collect Revenues, Apply Accounts</font></u>.&#160;

Lender, either itself or through a receiver, may collect the payments,

rents, income, and revenues from the Collateral.&#160; Lender may at any time in its discretion transfer any Collateral

into its own name or that of its nominee and receive the payments, rents,

income, and revenues therefrom and hold the same as security for the

Indebtedness or apply it to payment of the Indebtedness in such order of

preference as Lender may determine.&#160;

Insofar as the Collateral consists of accounts, general intangibles,

insurance policies, instruments, chattel paper, choses in action, or similar

property, Lender may demand, collect, receipt for, settle, compromise, adjust,

sue for, foreclose, or realize on the Collateral as Lender may determine,

whether or not Indebtedness or Collateral is then due.&#160; For these purposes, Lender may, on behalf of

and in the name of Grantor, receive, open and dispose of mail addressed to

Grantor; change any address to which mail and payments are to be sent; and

endorse notes, checks, drafts, money orders, documents of title, instruments

and items pertaining to payment, shipment, or storage of any Collateral.&#160; To facilitate collection, Lender may notify

account debtors and obligors on any Collateral to make payments directly to

Lender.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Obtain Deficiency</font></u>.&#160;

If Lender chooses to sell any or all of the Collateral, Lender may

obtain a judgment against Grantor for any deficiency remaining on the

Indebtedness due to Lender after application of all amounts received from the

exercise of the rights provided in this Agreement.&#160; Grantor shall be liable for a deficiency even if the transaction

described in this subsection is a sale of accounts or chattel paper.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other Rights and Remedies</font></u>.&#160;

Lender shall have all the rights and remedies of a secured creditor

under the provisions of the Uniform Commercial Code, as may be amended from

time to time.&#160; In addition, Lender shall

have and may exercise any or all other rights and remedies it may have

available at law, in equity, or otherwise.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cumulative Remedies</font></u>.&#160;

All of Lender&#146;s rights and remedies, whether evidenced by this Agreement

or the Related Documents or by any other writing, shall be cumulative and may

be exercised singularly or concurrently.&#160;

Election by Lender to pursue any remedy shall not exclude pursuit of any

other remedy, and an election to make expenditures or to take action to perform

an obligation of Grantor under this Agreement, after Grantor&#146;s failure to

perform, shall not affect Lender&#146;s right to declare a default and to exercise

its remedies.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">MISCELLANEOUS PROVISIONS</font></b>.&#160;

The following miscellaneous provisions are a part of this Agreement:</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Amendments</font></u>.&#160;

This Agreement, together with any Related Documents, constitutes the

entire understanding and agreement of the parties as to the matters set forth

in this Agreement.&#160; No alteration of or

amendment to this Agreement shall be effective unless given in writing and

signed by the party or parties sought to be charged or bound by the alteration

or amendment.</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7</font></p>





<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">



<hr size="2" width="100%" noshade color="gray" align="left">



</font></div>



<font size="2" face="Times New Roman" style="font-size:10.0pt;"><u>
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</u></font>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Applicable Law</font></u>.&#160;

This Agreement has been delivered to Lender and accepted by Lender in

the State of Texas.&#160; If there is a

lawsuit, and if the transaction evidenced by this Agreement occurred in Bexar

County, Grantor agrees upon Lender&#146;s request to submit to the jurisdiction of

the courts of Bexar County, the State of Texas.&#160; This Agreement shall be governed by and construed in accordance

with the laws of the State of Texas and applicable Federal laws.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Attorneys&#146; Fees and Other Costs</font></u>.&#160;

Lender may hire an attorney to help collect the Note if Grantor does not

pay, and Grantor will pay Lender&#146;s reasonable attorneys&#146; fees.&#160; Grantor also will pay Lender all other

amounts actually incurred by Lender as court costs, lawful fees for filing,

recording, or releasing to any public office any instrument securing the Note;

the reasonable cost actually for repossessing, storing, preparing for sale, and

selling any security; and fees for noting a lien on or transferring a

certificate of title to any motor vehicle offered as security for the Note, or

premiums or identifiable charges received in connection with the sale of

authorized insurance.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 15.0pt .0001pt 0in;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Caption Headings</font></u>.&#160;

Caption headings in this Agreement are for convenience purposes only and

are not to be used to interpret or define the provisions of this Agreement.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Notices</font></u>.&#160;

All notices required to be given under this Agreement shall be given in

writing, may be sent by telefacsimile (unless otherwise required by law) and

shall be effective when actually delivered or when deposited with a nationally

recognized overnight courier or deposited in the United States mail, first

class, postage prepaid, addressed to the party to whom the notice is to be

given at the address shown above.&#160; Any

party may change its address for notices under this Agreement by giving formal

written notice to the other parties, specifying that the purpose of the notice

is to change the party&#146;s address.&#160; To

the extent permitted by applicable law, if there is more than one Grantor,

notice to any Grantor will constitute notice to all Grantors.&#160; For notice purposes, Grantor will keep

Lender informed at all times of Grantor&#146;s current address(es).</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Power of Attorney</font></u>.&#160;

Grantor hereby appoints Lender as its true and lawful attorney-in-fact,

irrevocably, with full power of substitution to do the following:&#160; a) to demand, collect, receive, receipt for,

sue and recover all sums of money or other property which may now or hereafter

become due, owing or payable from the Collateral; (b) to execute, sign and

endorse any and all claims, instruments, receipts, checks, drafts or warrants

issued in payment for the Collateral; (c) to settle or compromise any and all

claims arising under the Collateral, and, in the place and stead of Grantor, to

execute and deliver its release and settlement for the claim; and (d) to file

any claim or claims or to take any action or institute or take part in any

proceedings, either in its own name or in the name of Grantor, or otherwise,

which in the discretion of Lender may seem to be necessary or advisable.&#160; This power is given as security for the

Indebtedness, and the authority hereby conferred is and shall be irrevocable

and shall remain in full force and effect until renounced by Lender.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Severability</font></u>.&#160;

If a court of competent jurisdiction finds any provision of this

Agreement to be invalid or unenforceable as to any person or circumstance, such

finding shall not render that provision invalid or unenforceable as to any

other persons or circumstances.&#160; If

feasible, any such offending provision shall be deemed to be modified to be

within the limits of enforceability or validity;&#160; however, if the offending provision cannot be so modified, it

shall be stricken and all other provisions of this Agreement in all other

respects shall remain valid and enforceable.</p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8</font></p>





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<p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Successor Interests</font></u>.&#160;

Subject to the limitations set forth above on transfer of the

Collateral, this Agreement shall be binding upon and inure to the benefit of

the parties, their successors and assigns.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Waiver</font></u>.&#160;

Lender shall not be deemed to have waived any rights under this

Agreement unless such waiver is given in writing and signed by Lender.&#160; No delay or omission on the part of Lender

in exercising any right shall operate as a waiver of such right or any other

right.&#160; A waiver by Lender of a

provision of this Agreement shall not prejudice or constitute a waiver of

Lender&#146;s right otherwise to demand strict compliance with that provision or any

other provision of this Agreement.&#160; No

prior waiver by lender, nor any course of dealing between Lender and Grantor,

shall constitute a waiver of any of Lender&#146;s rights or of any of Grantor&#146;s

obligations as to any future transactions.&#160;

Whenever the consent of Lender is required under this Agreement, the

granting of such consent by Lender in any instance shall not constitute

continuing consent to subsequent instances where such consent is required and

in all cases such consent may be granted or withheld in the sole discretion of

Lender.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="font-size:10.0pt;margin:0in 0in .0001pt;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">FACSIMILE DOCUMENTS AND SIGNATURES</font></b>.&#160;

For purposes of negotiating and finalizing this document, if this

document is transmitted by facsimile machine (&#147;fax&#148;), it shall be treated for

all purposes as an original document.&#160;

Additionally, the signature of any party on this document transmitted by

way of a fax machine shall be considered for all purposes as an original

signature.&#160; Any such faxed document

shall be considered to have the same binding legal effect as an original

document.&#160; At the request of any party,

any faxed document shall be re-executed by each signatory party in an original

form.</p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>



<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS SECURITY

AGREEMENT, AND GRANTOR AGREES TO ITS TERMS.&#160;

THIS AGREEMENT IS DATED NOVEMBER 15, 2001.</font></p>



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<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">

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  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:46.88%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GRANTOR:</font></p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:53.12%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">LENDER</font></p>

  </td>

 </tr>

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  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:46.88%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:53.12%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:46.88%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">TeleSpan, Inc.</font></p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:53.12%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">GlobalSCAPE, Inc.</font></p>

  </td>

 </tr>

 <tr>

  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:46.88%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:53.12%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="23%" valign="top" style="padding:0in .7pt .7pt .7pt;width:23.44%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ H. Doulgas Saathoff</font></p>

  </td>

  <td width="23%" valign="top" style="padding:0in .7pt .7pt .7pt;width:23.44%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="26%" valign="top" style="padding:0in .7pt .7pt .7pt;width:26.56%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Tim Nicolaou</font></p>

  </td>

  <td width="26%" valign="top" style="padding:0in .7pt .7pt .7pt;width:26.56%;">

  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:46.88%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:53.12%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:46.88%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">H. Douglas Saathoff</font></p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:53.12%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Tim Nicolaou</font></p>

  </td>

 </tr>

 <tr>

  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:46.88%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:53.12%;">

  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Executive Officer</font></p>

  </td>

 </tr>

 <tr>

  <td width="46%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:46.88%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

  <td width="53%" colspan="2" valign="top" style="padding:0in .7pt .7pt .7pt;width:53.12%;">

  <p style="font-size:10.0pt;margin:0in 0in .0001pt;">&nbsp;</p>

  </td>

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<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9</font></p>





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