Exhibit 10.5

SECURITY AGREEMENT   

THIS SECURITY AGREEMENT (this “Agreement”) is made as of this 26th day of
November 2007, by and among, the Purchaser, as secured party, each other
purchaser listed on the signature page attached hereto (the “Secured Party”),
and Corcell, Ltd., a Nevada corporation, as grantor (“Grantor”).  All
capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Securities Agreement (as defined below).

RECITALS:

WHEREAS, pursuant to the terms of a certain Securities Purchase Agreement, dated
as of the date hereof (the “Securities Agreement”), by and among Cord Blood
America, Inc., a Florida corporation (the “Parent”), and the Secured Party
whereby Parent issued to the Secured Party a promissory note (the “Note”) in the
principle amount of principle amount of One Million Nine Hundred Thirty One
Thousand One Hundred Six Dollars and Twenty Cents ($1,931,106.20) as
consideration of the Purchase Price, which Noteholder accepted, upon the
condition, among others, that Grantor shall guaranty on a non-recourse basis the
obligations of Parent under the Note (the “Guaranty”) pursuant to this Agreement
and the other documents contemplated herewith (collectively, the “Transaction
Documents”)

WHEREAS, the Grantor is the wholly owned subsidiary of the Parent; and

WHEREAS, Grantor is hereby granting a security interest in its assets in favor
of Secured Party upon the terms and conditions set forth herein and subject to
the terms and conditions of the Subordination Agreement by and between Grantor,
Shelter Island Opportunity Fund, Cord Blood America, Inc., Career Channel, Inc.,
and the Secured Party, dated the date hereof, to secure its obligations under
the Note.

NOW, THEREFORE, in consideration of the foregoing and the respective covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Grantor and
Secured Party hereby agree as follows:

ARTICLE 1.  Definitions.

1.1.

General Definitions. As used herein, the following terms shall have the
following meanings (such meanings to be equally applicable to both singular and
plural forms of the terms defined):

“Chattel Paper” means all chattel paper as such term is defined in the UCC, now
owned or hereafter acquired, including, without limitation, electronic chattel
paper, as such term is defined in the UCC.

“Collateral” means and includes all now and hereafter acquired assets of the
Grantor including, without limitation:

(A)

all Inventory;

(B)

all Equipment;

(C)

all General Intangibles;

(D)

all Receivables;

(E)

all Chattel Paper;

(F)

all Letter-of-Credit Rights;

(G)

all Instruments;

(H)

the commercial tort claims set forth on Schedule V;

 

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(I)

all books, records, ledgercards, files, correspondence, computer programs,
tapes, disks and related data processing software (owned by any Grantor or in
which a Grantor has an interest) which at any time evidence or contain
information relating to any or all of (A), (B), (C), (D), (E), (F), (G) and (H)
above or are otherwise necessary or helpful in the collection thereof or
realization thereupon;

(J)

documents of title, policies and certificates of insurance, securities, Chattel
Paper, other documents or instruments evidencing or pertaining to any or all of
(A), (B), (C), (D) (E), (F), (G), (H) and (I) above;

(K)

all Supporting Obligations and guaranties now owned or hereafter acquired,
including letters of credit and guarantees issued in support of Receivables,
Chattel Paper, General Intangibles and Investment Property, Liens on real or
personal property, leases, and other agreements and property which in any way
secure or relate to any or all of (A), (B), (C), (D), (E), (F), (G), (H), (I)
and (J) above, or are acquired for the purpose of securing and enforcing any
item thereof;

(L)

()  all cash held as cash collateral to the extent not otherwise constituting
Collateral, all other cash or property at any time on deposit with or held by
Secured Party for the account of the Grantor (whether for safekeeping, custody,
pledge, transmission or otherwise), (ii) all present or future deposit accounts
(whether time or demand or interest or non-interest bearing) of the Grantor with
Secured Party or any other Person including those to which any such cash may at
any time and from time to time be credited, (iii) all Payment Intangibles, (iv)
all letter of credit obligations, (v) all investments and reinvestments (however
evidenced) of amounts from time to time credited to such accounts, (vi) all
interest, dividends, distributions and other proceeds payable on or with respect
to (1) such investments and reinvestments and (2) such accounts, and (vii)(1)
capital stock, equity securities or interests or other Investment Property
(including the Shares and the other capital stock described on Exhibit A
hereto), (2) all cash dividends and cash distributions with respect to the
foregoing (“Dividends”), (3) all non-cash dividends paid on capital securities,
liquidating dividends paid on capital securities, shares of capital securities
resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any capital securities constituting
Collateral (excluding Dividends), and (4) all certificates, agreements
(including stockholders agreements, partnership agreements, operating agreements
and limited liability company agreements), books, records, writings, data bases,
information and other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the foregoing; and

(M)

all products and proceeds of (A), (B), (C), (D), (E), (F), (G), (H), (I), (J),
(K) and (L) above (including, but not limited to, all claims to items referred
to in (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K) and (L) above) and
all claims of the Grantor against third parties (x) for (i) loss of, damage to,
or destruction of, and (ii) payments due or to become due under leases, rentals
and hires of any or all of (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K)
and (L) above and (y) proceeds payable under, or unearned premiums with respect
to policies of insurance in whatever form.

Secured Party acknowledges that the attachment of the security interest in any
commercial tort claim as original Collateral is subject to the Grantor’s
compliance with Section 4.10(d).

Notwithstanding the foregoing, Collateral shall not include any of the Excluded
Collateral.

“Copyright License” means any written agreement, now or hereafter in effect,
granting any right to any third parties under any Copyright now or hereafter
owned by the Grantor or which any of the Grantor otherwise has the right to
license, or granting any right to the Grantor under any Copyright now or
hereafter owned by any third Parties, and all rights of the Grantor under any
such agreement.

“Copyrights” means all of the following, now owned or hereafter acquired by the
Grantor: (a) all copyright rights in any work subject to the copyright laws of
the United States or any other country, whether as author, assignee, transferee
or otherwise, and (b) all registrations and applications for registration of any
such copyright in the United States or any other country, including
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office, including those listed
on Schedule II attached hereto.

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“Customer” means and includes the account debtor with respect to any Receivable
and/or the prospective purchaser of goods, services or both with respect to any
contract or contract right, and/or any Parties who enters into or proposes to
enter into any contract or other arrangement with the Grantor, pursuant to which
the Grantor are to deliver any personal property or perform any services.

“Default” means any act or event which, with the giving of notice or passage of
time or both, would constitute an Event of Default.

“Equipment” means all equipment as such term is defined in the UCC, now owned or
hereafter acquired, including, without limitation, equipment, machinery and
goods (excluding Inventory), whether or not constituting fixtures, including,
without limitation:  plant and office equipment, tools, dies, parts, data
processing equipment, computer equipment with embedded software and peripheral
equipment, furniture and trade fixtures, trucks, trailers, loaders and other
vehicles and all replacements and substitutions therefore and all accessions
thereto.

“Event of Default” means the occurrence of any of the events set forth in
Section 6.1.

“Excluded Collateral” means, collectively, each of the following:

(A)

vehicles subject to a certificate of title statute; and

(B)

rights under licenses, permits and contracts and other general intangibles to
the extent that the granting of a security interest therein or assignment
thereof would violate any applicable law or any enforceable provision of any
such license, permit, contract or other general intangible, provided that the
Grantor shall not permit any such prohibitions in any contracts, licenses,
general intangibles and permits entered into after the date hereof except in the
ordinary course on usual and customary terms, consistent with past practice.

“General Intangibles” means all general intangibles as such term is defined in
the UCC, now owned or hereafter acquired, including, without limitation, Payment
Intangibles, Intellectual Property, equipment formulation, manufacturing
procedures, quality control procedures, product specifications, registrations,
contract rights, choses in action, causes of action, corporate or other business
records, goodwill, claims under guarantees, franchises, tax refunds, tax refund
claims, computer programs, computer data bases, computer program flow diagrams,
source codes, object codes and all other intangible property of every kind and
nature.

“Grantor” shall have the meaning set forth in the Preamble above.

 “Instruments” means all instruments as such term is defined in the UCC, now
owned or hereafter acquired, including, without limitation, a negotiable
instrument or a certificated security or any other writing which evidences a
right to the payment of money.

“Intellectual Property” means all intellectual and similar property of the
Grantor of every kind and nature, now owned or hereafter acquired, by the
Grantor, including inventions, designs, Trademarks, Patents, Copyrights,
Licenses, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in the connection with, any of the
foregoing.

“Inventory” means all inventory as such term is defined in the UCC, now owned or
hereafter acquired, including, without limitation, goods, merchandise and other
personal property, wherever located, to be furnished under any contract of
service or held for sale or lease, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description which are or
might be used or consumed in business or used in selling or furnishing such
goods, merchandise and other personal property, and all documents of title or
other documents representing them.

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 “Investment Property” means all investment property as such term is defined in
the UCC.

 “Letter-of-Credit Rights” means all letter-of-credit rights as such term is
defined in the UCC, now owned or hereafter acquired, including, without
limitation, rights to payment or performance under a letter of credit, whether
or not the beneficiary has demanded or is entitled to demand payment or
performance.

“License” means any Patent License, Trademark License, Copyright License or
other license or sublicense to which the Grantor is a Parties.

“Lien” means any mortgage, security deed, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, any lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction.

“Mortgage” shall have the meaning set forth in Section 7.3.

“Note” shall have the meaning set forth in the Recitals above.

“Obligations” means and includes all obligations of the Grantor to Secured Party
under the Guaranty and this Agreement, including, without limitation, all
expenses (including attorneys’ fees and expenses) chargeable to the Grantor
account or incurred by Secured Party in connection with the Grantor account
whether provided for herein or in any other agreement, instrument or document
executed by or on behalf of the Grantor in connection with this Agreement or the
Collateral.

 “Patent License” means any written agreement, now or hereafter in effect,
granting to any third parties any right to make, use or sell any invention on
which a Patent, now or hereafter owned by the Grantor or which the Grantor
otherwise have the right to license, is in existence, or granting to the Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third Parties, is in existence, and all rights of the Grantor under
any such agreement.

“Patents” means all of the following, now owned or hereafter acquired by the
Grantor (a) all letters patent of the United States or any other country, all
registrations and recordings thereof, and all applications for letters patent of
the United States or any other country, including registrations, recordings and
pending applications in the United States Patent and Trademark Office or any
similar offices in any other country, including those listed on Schedule III
attached hereto, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.

“Payment Intangibles” means all payment intangibles as such term is defined in
the UCC, now owned or hereafter acquired, including, without limitation a
General Intangible under which the account debtor’s principle obligation is a
monetary obligation.

“Permitted Liens” means with respect to any Grantor:

(a)

Liens created under the Transaction Documents;

(b)

encumbrances consisting of easements, rights-of-way, zoning restrictions or
other restrictions on the use of real property or imperfections to title that do
not (individually or in the aggregate) materially impair the ability of such
Grantor to use such property in its businesses, and none of which is violated in
any material respect by existing or proposed structures or land use;

(c)

Liens for taxes, assessments or other governmental charges (including without

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limitation in connection with workers’ compensation and unemployment insurance)
that are not delinquent or which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the assets or property subject to such Liens, and for
which adequate reserves (as determined in accordance with GAAP) have been
established;

(d)

Liens of mechanics, materialmen, warehousemen, carriers, landlords or other
similar statutory Liens securing obligations that are not yet due and are
incurred in the ordinary course of business or which are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the assets or property subject to such
Liens, for which adequate reserves (as determined in accordance with GAAP) have
been established and which have been bonded over and omitted from the title
policy;

(e)

purchase money Liens to finance property or assets of any Grantor acquired in
the ordinary course of business; provided, however, that (i) the related
purchase money Indebtedness shall not exceed the cost of such property or assets
(including the cost of design, development, improvement, production,
acquisition, construction, installation and integration) and shall not be
secured by any property or assets of any Grantor other than the property and
assets so acquired or constructed (and any improvements thereto) and (ii) the
Lien securing such Indebtedness shall be created within ten (10) days of such
acquisition, construction or improvement;

(f)

Liens upon specific items of inventory or other goods and proceeds of any Person
securing such Person’s obligations in respect of bankers’ acceptances issued or
created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods;

(g)

Liens encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual, or warranty requirements of Parent or any of its
Subsidiaries, including rights of offset and set-off;

(h)

Liens on Excluded Collateral; and

(i)

Liens existing on the date of this agreement which are listed on Schedule 3.1 to
this Agreement.

“Premises” means all premises where the Grantor conducts its business and has
any rights of possession, including, without limitation, the premises described
in Schedule V attached hereto.

“Receivables” means all accounts as such term is defined in the UCC, including,
without limitation each and every right to the payment of money, whether such
right to payment now exists or hereafter arises, whether such right to payment
arises out of a sale, lease or other disposition of goods or other property, out
of a rendering of services, out of a loan, out of the overpayment of Taxes or
other liabilities, or otherwise arises under any contract or agreement, whether
such right to payment is created, generated or earned by the Grantor or by some
other Person who subsequently transfers such Person’s interest to the Grantor,
whether such right to payment is or is not already earned by performance, and
howsoever such right to payment may be evidenced, together with all other rights
and interests (including all Liens) which the Grantor may at any time have by
law or agreement against any account debtor or other obligor obligated to make
any such payment or against any property of such account debtor or other
obligor,  including, but not limited to, all present and future accounts,
contract rights, loans and obligations receivable, Chattel Paper, bonds, notes
and other debt instruments, tax refunds and rights to payment in the nature of
General Intangibles.

“Secured Party” shall have the meaning set forth in the Preamble above.

“Security Interest” shall have the meaning assigned to such term in Section 2.1
hereof.

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“Subsidiary” of any entity means, at any date, any Person: (a) the accounts of
which would be consolidated with those of the applicable entity in such entity’s
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date; or (b) of which securities or other
ownership interests representing more than 50% of the equity or more than 50% of
the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests or more than 50% of the profits or losses of which
are, as of such date, owned, controlled or held by the applicable entity or one
or more subsidiaries of such entity; or (c) that is under the Control of such
entity.  

“Subsidiary Guarantor” means each Subsidiary of Parent which guarantees the
Obligations of Parent.

“Supporting Obligations” means all supporting obligations as such term is
defined in the UCC, as may now exist or that hereafter arise.

“Trademark License” means any written agreement, now or hereafter in effect,
granting to any third parties any right to use any Trademark, now or hereafter
owned by the Grantor or which the Grantor otherwise has the right to license, or
granting to the Grantor any right to use any Trademark now or hereafter owned by
any third Parties and all rights of the Grantor under any such agreement.

“Trademarks” means all of the following, now owned or hereafter acquired by the
Grantor: (a) all trademarks, service marks, trade names, corporate names,
business names, fictitious business names, trade styles, trade dress, logos,
uniform resource locations (URLs), Internet domain names, other source or
business identifiers, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all registrations and recording applications filed in connection
therewith, including registrations and registration applications in the United
States Patent and Trademark Office, any State of the United States or any
similar offices in any other country or any political subdivision thereof, and
all extensions or renewals thereof, including those listed on Schedule IV
attached hereto, (b) all goodwill associated therewith or symbolized thereby and
(c) all other assets, rights and interests that uniquely reflect or embody such
goodwill.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
state designated in Section 8.12 as the state whose laws govern this Agreement
or in any other state whose laws are held to govern this Agreement or any
portion hereof.

1.2.

Other Terms.

(a)

All capitalized terms not otherwise defined herein shall have the meanings
assigned to them in the Purchase Agreement.

(b)

All terms defined in the UCC and not defined in this Agreement or the Purchase
Agreement shall have the meanings specified in the UCC.

(c)

All accounting terms not otherwise defined in this Agreement or the Purchase
Agreement shall have the meanings assigned to them in accordance with GAAP.

1.3.

Cross References.

(a)

All references in this Agreement to Articles, Sections, subsections, Exhibits
and Schedules, shall be to Articles, Sections, subsections, Exhibits and
Schedules of this Agreement unless otherwise explicitly specified.

(b)

All references to statutes and related regulations shall include any amendments
of same and any successor statutes and regulations.

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ARTICLE 2.  Security Interest.

2.1.

Security Interest.

(a)

The Grantor hereby guarantees payment of all of the Obligations of Parent under
the Note.  Notwithstanding anything to the contrary contained in this Agreement
or any other Transaction Document, Secured Party’s recovery against Grantor in
respect of the Guaranteed Obligations shall be limited solely to the Collateral
of such Grantor.  Parent shall not have any personal liability in respect of the
obligations under this Agreement or any other Transaction Document for any of
the obligations, and no monetary or deficiency judgment shall be sought or
enforced against Parent with respect thereto under this Agreement or any other
Transaction Document.

(b)

To secure the prompt and complete payment and performance to Secured Party of
the Obligations, the Grantor hereby assign, pledge and grant to Secured Party a
continuing security interest in and to the Collateral, whether now owned or
existing or hereafter acquired or arising and wheresoever located, whether or
not the same is subject to Article 9 of the UCC (the “Security Interest”).  All
of the Grantor ledger sheets, files, records, books of account, business papers
and documents relating to the Collateral shall, until delivered to or removed by
Secured Party, be kept by the Grantor in trust for Secured Party until all
Obligations have been paid in full.

(c)

The Grantor hereby authorize Secured Party to file one or more financing
statements (including fixture filings), amendments, filings with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) or other documents
for the purpose of perfecting, confirming, continuing, enforcing or protecting
the Security Interest granted by the Grantor, without the Grantor signature
appearing thereon.  The Grantor agree to furnish to Secured Party promptly upon
request any information necessary for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by the
Grantor.  The Grantor also ratifies its authorization for Secured Party to file
any initial financing statements or amendments thereto filed prior to the date
hereof.  If any Receivable becomes evidenced by a promissory note or any other
instrument for the payment of money, the Grantor will immediately deliver such
instrument to Secured Party appropriately endorsed.

ARTICLE 3.  Representations and Warranties.

The Grantor hereby represents and warrants to Secured Party as of the date
hereof, knowing and intending that Secured Party is relying hereon in entering
into this Agreement, the other Transaction Documents, and the transactions
contemplated hereby and thereby, as follows:

3.1.

Title and Liens.  The Collateral: (a) is owned solely by the Grantor free and
clear of all Liens, except (i) those in Secured Party’s favor and (ii) Permitted
Liens, including the Liens existing on the date hereof as set forth on
Schedule 3.1; and (b) is not subject to any agreement prohibiting the granting
of a security interest or requiring notice of or consent to the granting of a
security interest.  The Grantor holds the commercial tort claims set forth on
Schedule V.

3.2.

Validity of Security Interest.  The Security Interest constitutes: (a) a legal
and valid Lien in all of the Collateral; (b) subject to the filing of the
financing statements described in Section 2.1(c) hereof, a perfected Lien in all
Collateral in which a Lien may be perfected by the filing of a financing
statement; and (c) a perfected Lien in all Collateral in which a Lien may be
perfected upon the receipt and recording of this Agreement with the United
States Patent and Trademark Office and the United States Copyright Office, as
applicable.

3.3.

The Internet domain names and uniform resource locations (URLs) listed on
Schedule 3.3 (i)  constitute all of the Internet domain names and URLs owned,
licensed by, registered to or otherwise used by the Grantor and (ii) sets forth,
as applicable, with respect to each Internet domain name or uniform resource
location listed thereon, the name of each Grantor with said rights, the name and
address of the registrar therefor, the address of the host server, the identity
of the administrative contact with the registry therefor

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and an indication as to whether such Internet domain name or uniform resource
location is actively used by the applicable Grantor or any other Grantor.

ARTICLE 4.  Covenants.

4.1.

Change of Name; Location of Collateral; Records; Place of Business.  Grantor
shall not make any change: (a) in its name; (b) in the location of its chief
executive office, its principal place of business, any office in which it
maintains books or records relating to Collateral owned by it or any office
facility at which Collateral owned by it is located (including the establishment
of any such new office or facility) from the locations set forth on Schedule I
attached hereto; (c) in its identity or type of organization or corporate
structure; (d) in its Federal Taxpayer Identification Number or, if any, its
organizational identification number; or (e) in its jurisdiction of
organization; unless in each instance, (i) the Grantor provides Secured Party at
least thirty (30) days prior written notice of such change, and (ii) all filings
have been made under the UCC or otherwise that are required in order for Secured
Party to continue at all times following such change to have a valid, legal and
perfected security interest having the same priority in effect immediately prior
to such change, in all the Collateral subject to the exceptions set forth in
Section 3.1.

4.2.

Records.  The Grantor shall keep and maintain at its own cost and expense,
satisfactory and complete records of the Collateral including, without
limitation, a record of any and all payments received and any and all credits
granted with respect to the Collateral and all other dealings with the
Collateral.  Following the occurrence of an Event of Default, Secured Party may
at any time verify the Grantor Receivables utilizing an audit control party.
 Secured Party or Secured Party’s designee may, following the occurrence of an
Event of Default, notify Customers at any time, at Secured Party’s sole
discretion, of Secured Party’s Security Interest in Receivables and collect them
directly from the Customers or parties to contracts, instruments and chattel
paper and charge the collection costs and expenses to the Grantor account, but,
unless and until Secured Party does so or gives the Grantor other instructions,
the Grantor shall collect all Receivables for Secured Party, receive all
payments thereon for Secured Party’s benefit in trust as Secured Party’s trustee
and immediately deliver them to Secured Party in their original form with all
necessary endorsements or deposit such payments as directed by Secured Party.
 The Grantor shall place notations upon the Grantor books of account and any
financial statement prepared by the Grantor to disclose Secured Party’s Security
Interest in the Collateral and shall provide Secured Party, as requested by
Secured Party, such schedules, documents and/or information regarding the
Collateral as Secured Party may require.

4.3.

Protection of Collateral and Security Interest.  The Grantor shall, at its own
cost and expense, take any and all actions necessary to defend the Collateral
against the claims and demands of all parties and to defend the Security
Interest of Secured Party in the Collateral and the priority thereof against any
Lien other than  Permitted Liens.

4.4.

Further Assurances.

(a)

Any time and from time to time, upon the written request of Secured Party and at
the sole expense of the Grantor, the Grantor shall promptly and duly execute and
deliver any and all such further instruments and documents and take such further
actions as Secured Party may reasonably request to preserve, protect and perfect
the Security Interest and the rights and remedies created hereby.

(b)

Without limiting the generality of the foregoing, the Grantor hereby authorizes
Secured Party to supplement this Agreement by supplementing Schedule II, III or
IV hereto or adding additional schedules hereto to specifically identify any
asset or item that may constitute Copyrights, Patents or Trademarks.

(c)

Each Grantor shall take all steps reasonably necessary to perfect Secured
Party’s security interest in all of the Internet domain names and uniform
resource locations (URLs) registered under such Grantor’s name that form part of
the Collateral, including using its reasonable best efforts to obtain a
tri-party agreement among such Grantor, Secured Party and the registrar of each
Internet domain name and uniform resource locations (URLs) registered in
Grantor’s name acknowledging Secured Party’s security interest in such Internet
domain name or uniform resource location (URL).

4.5.

Inspection  and Examination.  At all times during normal business hours, Secured
Party

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shall have the right to: (a) visit and inspect the Grantor properties and the
Collateral; and (b) inspect, audit and make extracts from the Grantor relevant
books and records relating to the Collateral.  The Grantor will deliver to
Secured Party any instrument necessary for Secured Party to obtain records from
any service bureau maintaining records for the Grantor.

4.6.

Liens.  The Grantor shall not grant, permit, or suffer to exist, any Lien in any
Collateral or any of the Grantor other assets to anyone other than Secured
Party, except for the Permitted Liens.

4.7.

Use and Disposition of Collateral.  The Grantor shall: (a) not dispose of any of
the Collateral whether by sale, lease or otherwise except for (i) the sales of
Inventory in the ordinary course of business, and (ii) the disposition or
transfer of obsolete and worn-out Equipment in the ordinary course of business;
(iii) payment of expenses incurred in the ordinary course of Grantor’s business;
(iv) repayment of any loans listed on Schedule 4.7 and (b) keep and maintain the
Equipment in good operating condition, except for ordinary wear and tear, and
shall make all necessary repairs and replacements thereof so that the value and
operating efficiency shall at all times be maintained and preserved in a
commercially reasonable manner.

4.8.

Risk of Loss; Insurance.  The Grantor shall bear the full risk of loss from any
loss of any nature whatsoever with respect to the Collateral.  The Grantor shall
keep the Collateral insured as follows:

(a)

Casualty Insurance.  Maintain extended coverage casualty insurance written in
the name of the Grantor in the broadest “all risks” form available on a full
replacement cost basis covering all Collateral.  Such insurance shall be in
amounts and with deductible amounts that are acceptable to Secured Party.

(b)

Liability Insurance.  Maintain commercial general liability insurance in the
name of Secured Party, including a contractual liability endorsement and a
completed operations and personal injury coverage, with a combined single limit
for any one occurrence of at least $3,000,000.

(c)

Policy Terms.  All insurance policies shall meet the following requirements:

(i)

overall blanket or excess coverage policies may be supplied; provided, however,
that all insurance shall be in amounts sufficient to prevent any insured from
being a co-insurer and that the amount of the casualty insurance coverage
attributable to the Collateral is clearly set forth; and

(ii)

all policies shall: (A) name Secured Party “and its successors and assigns as
their interests may appear” as “additional insured” and “loss payee” on all
casualty insurance and as “additional insured” as to all other insurance; (B)
contain an endorsement stating that, as to the interest of Secured Party, such
policy “shall not be impaired, invalidated or affected by any statement, act or
neglect of any insured, loss payee or other Person, or by any failure to make
any report to the insurer, or by the institution of any proceeding to execute
upon any lien”; and (C) contain a provision stating that such policy “shall not
be canceled or modified except after thirty (30) days prior written notice
delivered to Secured Party at its address for notices herein or as subsequently
directed in writing by Secured Party”; and

(iii)

all policies shall be in a form acceptable to Secured Party and shall be issued
by financially sound insurers duly licensed and authorized to conduct that type
of insurance business in each state where the Collateral is located; and

(iv)

evidence on ACORD Form 27 (with respect to casualty coverage) and ACORD Form 25
(with respect to other coverages) of the existence of all policies of insurance
and endorsements thereof shall be delivered to Secured Party prior to the date
hereof.  At least thirty (30) days prior to the expiration of any such policies,
the Grantor shall furnish paid receipts and other evidence satisfactory to
Secured Party that all such policies have been renewed or replaced; and

(v)

all policies shall provide that the insurance proceeds and awards may

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be adjusted only after obtaining the prior written consent of Secured Party and
shall be paid directly to Secured Party to the extent required in Section
4.8(d).

(d)

Insurance Proceeds.  Secured Party’s loss payable endorsements shall specify
that the proceeds of such insurance (other than key-man life insurance) shall be
payable to Secured Party as its interests may appear, and Secured Party shall
have the exclusive authority to determine whether to apply any awards and
proceeds to reduce the Note or any other Obligations.

(e)

Further Actions.  Secured Party shall have the authority on behalf of the
Grantor to execute and deliver any such instruments, agreements and documents as
may be necessary to effect the provisions of this Section 4.8.  Any deficiency
remaining in the amounts owing by the Grantor to Secured Party after application
of any awards and proceeds shall be paid by the Grantor to Secured Party, on
demand, and shall be deemed Obligations and additional principal under the Note
bearing interest at the rate specified therein until indefeasibly paid in full.

4.9.

Covenants Regarding Patent, Trademark and Copyright Collateral.

(a)

The Grantor agree that it will not, nor will they permit any of its licensees
to, do any act, or omit to do any act, whereby any Patent may become invalidated
or dedicated to the public, and agrees that it shall continue to mark any
products covered by a Patent with the relevant patent number as necessary and
sufficient to establish and preserve its maximum rights under applicable patent
laws.

(b)

The Grantor (either alone or through its licensees or its sub licensees) will,
for each Trademark, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such Trademark
with notice of federal or foreign registration to the extent necessary and
sufficient to establish and preserve its maximum rights under applicable law and
(iv) not knowingly use or knowingly permit the use of such Trademark in
violation of any third parties’ rights.

(c)

The Grantor (either themselves or through licensees) will, for each work covered
by a Copyright, continue to publish, reproduce, display, adopt and distribute
the work with appropriate copyright notice as necessary and sufficient to
establish and preserve its maximum rights under applicable copyright laws.

(d)

The Grantor shall notify Secured Party immediately if they knows or have reason
to know that any Patent, Trademark or Copyright may become abandoned, lost or
dedicated to the public, or of any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, United States
Copyright Office or any court or similar office of any country) regarding the
Grantor ownership of any Patent, Trademark or Copyright, its right to register
the same, or to keep and maintain the same.

(e)

In no event shall the Grantor, either themselves or through any agent, employee,
licensee or designee, file an application for any Patent, Trademark or Copyright
(or for the registration of any Trademark or Copyright) with the United States
Patent and Trademark Office, United States Copyright Office (or any successor
thereof), unless it promptly informs Secured Party, and, upon request of Secured
Party, execute and deliver the appropriate security agreement as described in
(e), (f), and (g) above and any additional agreements, instruments, documents
and papers as Secured Party may request to evidence Secured Party’s security
interest in such Patent, Trademark or Copyright, and the Grantor hereby appoint
Secured Party as its attorney-in-fact to execute and file such writings for the
foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power, being coupled with an interest, is irrevocable.

(f)

The Grantor will take all necessary steps that are consistent with the practice
in any proceeding before the United States Patent and Trademark Office, United
States Copyright Office (or any successor thereof) to maintain and pursue each
material application relating to the United States Patents, Trademarks and/or
Copyrights (and to obtain the relevant grant or registration) and to maintain
each issued United States Patent and each United States registration of the
Trademarks and Copyrights, including timely filings of applications for

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renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancellation proceedings against third parties.

(g)

Upon and during the continuance of an Event of Default, upon the request of
Secured Party, the Grantor shall obtain all requisite consents or approvals by
the licensor of each Copyright License, Patent License or Trademark License to
effect the assignment of all the Grantor right, title and interest thereunder to
Secured Party or its designee.

4.10.

Other Actions.  In order to further insure the attachment, perfection and
priority of, and the ability of Secured Party to enforce, Secured Party’s
Security Interest in the Collateral, the Grantor agree, in each case at the
Grantor own expense, to take the following actions with respect to the following
Collateral:

(a)

Deposit Accounts.  For each deposit account that the Grantor at any time opens
or maintains and that is included in the Collateral, the Grantor shall, at
Secured Party’s request and option, pursuant to an agreement in form and
substance satisfactory to Secured Party, either: (i) cause the depositary bank
to agree to comply at any time with instructions from Secured Party to such
depositary bank directing the disposition of funds from time to time credited to
such deposit account, without further consent of the Grantor; or (ii) arrange
for Secured Party to become the customer of the depositary bank with respect to
the deposit account, with the Grantor being permitted, only with the consent of
Secured Party, to exercise rights to withdraw funds from such deposit account.
 Secured Party agrees with the Grantor that Secured Party shall not give any
such instructions or withhold any withdrawal rights from the Grantor, unless an
Event of Default has occurred and is continuing, or, after giving effect to any
withdrawal would occur.  The provisions of this Section 4.10(a) shall not apply
to any deposit account for which the Grantor, the depositary bank and Secured
Party have entered into a cash collateral agreement specially negotiated among
the Grantor, the depositary bank and Secured Party for the specific purpose set
forth therein.

(b)

Investment Property.  If the Grantor shall at any time hold or acquire any
certificated securities, the Grantor shall forthwith endorse, assign and deliver
the same to Secured Party, accompanied by such instruments of transfer or
assignment duly executed in blank as Secured Party may from time to time
specify.  If any securities now or hereafter acquired by the Grantor are
uncertificated and are issued to the Grantor or its nominee directly by the
issuer thereof, the Grantor shall immediately notify Secured Party thereof and,
at Secured Party’s request and option, pursuant to an agreement in form and
substance satisfactory to Secured Party, either: (i) cause the issuer to agree
to comply with instructions from Secured Party as to such securities, without
further consent of the Grantor or such nominee; or (ii) arrange for Secured
Party to become the registered owner of the securities.  If any securities,
whether certificated or uncertificated, or other Investment Property now or
hereafter acquired by the Grantor are held by the Grantor or its nominees
through a securities intermediary or commodity intermediary, the Grantor shall
immediately notify Secured Party thereof and, at Secured Party’s request and
option, pursuant to an agreement in form and substance satisfactory to Secured
Party, either: (i) cause such securities intermediary or (as the case may be)
commodity intermediary to agree to comply with entitlement orders or other
instructions from Secured Party to such securities intermediary as to such
securities or other investment property, or (as the case may be) to apply any
value distributed on account of any commodity contract as directed by Secured
Party to such commodity intermediary, in each case without further consent of
the Grantor or such nominee; or (ii) in the case of financial assets or other
Investment Property held through a securities intermediary, arrange for Secured
Party to become the entitlement holder with respect to such Investment Property,
with the Grantor being permitted, only with the consent of Secured Party, to
exercise rights to withdraw or otherwise deal with such Investment Property.
 Secured Party agrees with the Grantor that Secured Party shall not give any
such entitlement orders, instructions or directions to any such issuer,
securities intermediary or commodity intermediary, and shall not withhold its
consent to the exercise of any withdrawal or dealing rights by the Grantor,
unless an Event of Default has occurred, or, after giving effect to any such
investment and withdrawal rights would occur.  The provisions of this Section
4.10(b) shall not apply to any financial assets credited to a securities account
for which Secured Party is the securities intermediary.

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(c)

Letter of Credit Rights.  If the Grantor are at any time a beneficiary under a
letter of credit (other than any letter credit constituting a Supporting
Obligation) now or hereafter issued in favor of the Grantor, the Grantor shall
promptly notify Secured Party thereof and, at the request and option of Secured
Party, the Grantor shall, pursuant to an agreement in form and substance
satisfactory to Secured Party, either: (i) arrange for the issuer and any
confirmer to such letter of credit to consent to an assignment to Secured Party
of the proceeds of any drawing under the letter of credit; or (ii) arrange for
Secured Party to become the transferee beneficiary of the letter of credit, with
Secured Party agreeing, in each case, that the proceeds of any drawing under the
letter of credit are to be applied to satisfy the Obligations.

(d)

Commercial Tort Claims.  If the Grantor shall at any time hold or acquire a
commercial tort claim, the Grantor shall immediately notify Secured Party in a
writing signed by the Grantor of the brief details thereof and grant to Secured
Party in such writing a Security Interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance satisfactory to Secured Party.

4.11.

Information.  The Grantor shall promptly inform Secured Party in writing of: (a)
the commencement of all proceedings and investigations by or before and/or the
receipt of any notices from, any Governmental Authority or other Person and all
actions and proceedings in any court or before any arbitrator against or in any
way concerning any of the Collateral; (b) any Event of Default or Default; (c)
any change in the location of any of the Grantor Inventory or Equipment from the
locations listed on Schedule I attached hereto; (d) any additional Patents,
Copyrights, Trademarks, commercial tort claims or URLs or Internet domain names
not listed on Schedule II, III, IV, V; or 3.3; and (e) any additional Licenses,
tradenames, corporate names or Grantor’s names.

ARTICLE 5.  Power of Attorney.

Each Grantor hereby irrevocably appoints Secured Party or any other Person whom
Secured Party may designate as the Grantor attorney-in-fact, with full power and
authority in place and stead of such Grantor and in the name of such Grantor or
in its own name to:  (a) endorse such Grantor’s name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into Secured Party’s possession; (b) sign such Grantor’s name on any
invoice or bill of lading relating to any Receivables, drafts against customers,
schedules and assignments of Receivables, notices of assignment, financing
statements and other public records, verifications of account and notices to or
from Customers; (c) verify the validity, amount or any other matter relating to
any Receivable by mail, telephone, telegraph or otherwise with Customers; (d)
execute customs declarations and such other documents as may be required to
clear Inventory through United States Customs; (e) do all things necessary to
carry out this Agreement and all other Transaction Documents; (f) continue any
insurance existing pursuant to the terms of this Agreement and pay all or any
part of the premium therefor and the cost thereof; and (g) notify the post
office authorities to change the address for delivery of such Grantor’s mail to
an address designated by Secured Party, and to receive, open and dispose of all
mail addressed to such Grantor.  Each Grantor hereby ratifies and approves all
acts of the attorney.  The powers conferred on Secured Party hereunder are
solely to protect its interests in the Collateral and shall not impose any duty
upon it to exercise any such powers.  Neither Secured Party nor the attorney
will be liable for any acts or omissions or for any error of judgment or mistake
of fact or law.  This power, being coupled with an interest, is irrevocable so
long as any Receivable which is assigned to Secured Party or in which Secured
Party has a Security Interest remains unpaid and until the Obligations have been
fully satisfied.  Secured Party hereby agrees that it shall not exercise any of
the rights conferred on it under this Article 5 until the occurrence and
continuation of an Event of Default.

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ARTICLE 6.  Events of Default, Rights and Remedies.

6.1.

Events of Default.  The occurrence of any one or more of the following events
shall constitute an “Event of Default”:

(a)

the occurrence of an “Event of Default” under the Guaranty or the Note; or

(b)

the Security Interest for any reason ceases to be or is not a valid and
perfected Lien, subject to the exceptions set forth in Section 3.1.

6.2.

Rights and Remedies.  Upon the occurrence of any Event of Default, Secured Party
shall have the right to demand repayment in full of all Obligations, whether or
not otherwise due (in such case Secured Party may deposit any and all such
amounts realized in a cash collateral deposit account to be maintained as
security for the Obligations).  Until all Obligations have been fully satisfied,
Secured Party shall retain its Security Interest in all Collateral.  Secured
Party shall have, in addition to all other rights provided herein, the rights
and remedies of a Secured Party under the UCC, and under other applicable law,
all other legal and equitable rights to which Secured Party may be entitled,
including without limitation, the right to take immediate possession of the
Collateral, to require the Grantor to assemble the Collateral, at the Grantor
expense, and to make it available to Secured Party at a place designated by
Secured Party which is reasonably convenient to both parties and to enter any of
the Premises of the Grantor or wherever the Collateral shall be located, with or
without force or process of law, and to keep and store the same at any such
Premises until sold (and in the case of any of the Premises or any other
property of the Grantor, the Grantor agrees not to charge Secured Party for
storage thereof).  Further, Secured Party may, at any time or times after the
occurrence of an Event of Default, sell and deliver all Collateral held by or
for Secured Party in one or more parcels at public or private sale for cash,
upon credit or otherwise, at such prices and upon such terms as Secured Party,
in Secured Party’s sole discretion, deems advisable or Secured Party may
otherwise recover upon the Collateral in any commercially reasonable manner as
Secured Party, in its sole discretion, deems advisable.  Except as to that part
of the Collateral which is perishable or threatens to decline speedily in nature
or is of a type customarily sold on a recognized market, the requirement of
reasonable notice shall be met if such notice is mailed postage prepaid to the
Grantor at the Grantor address as shown in Secured Party’s records, at least ten
(10) days before the time of the event of which notice is being given.  Secured
Party may be the purchaser at any sale, if it is public.  Until Secured Party is
able to effect a sale, lease, or other disposition of Collateral, Secured Party
shall have the right to use or operate Collateral, or any part thereof, to the
extent that it deems appropriate for the purpose of preserving Collateral or its
value or for any other purpose deemed appropriate by Secured Party.  Secured
Party shall have no obligation to the Grantor to maintain or preserve the rights
of the Grantor as against third parties with respect to Collateral while
Collateral is in the possession of Secured Party.  Secured Party may, if it so
elects, seek the appointment of a receiver or keeper to take possession of
Collateral and to enforce any of Secured Party’s remedies with respect to such
appointment without prior notice or hearing.  In connection with the exercise of
the foregoing remedies, Secured Party is granted permission to use: (a) all of
the Grantor Intellectual Property which are used in connection with Inventory
for the purpose of disposing of such Inventory; and (b) any Equipment for the
purpose of completing the manufacture of unfinished goods.  The proceeds of sale
shall be applied first to all costs and expenses of sale, including attorneys’
fees, and second to the payment (in whatever order Secured Party elects) of all
Obligations.  Secured Party will return any excess to the Grantor and the
Grantor shall remain liable to Secured Party for any deficiency.

6.3.

Grant of License to Use Intellectual Property.  For the purpose of enabling
Secured Party to exercise the rights and remedies under this ARTICLE 6.   at
such time as Secured Party shall be lawfully entitled to exercise such rights
and remedies, the Grantor hereby grants to Secured Party an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to the Grantor) to use, license or sublicense any of the Collateral
consisting of Intellectual Property now owned or hereafter acquired by the
Grantor, and wherever the same may be located, and including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof.  The use of such license by Secured Party shall
be exercised, at the option of Secured Party, from and after the occurrence of
an Event of Default; provided that any license, sublicense or other transaction
entered into by Secured Party in accordance herewith shall be binding upon the
Grantor notwithstanding any subsequent cure of an Event of Default

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ARTICLE 7.  Additional Collateral; Additional Grantor.

7.1.

Subject to the terms of this Article 7, with respect to any property acquired
after the Closing Date by any of the Grantor that is intended to be subject to
the Lien created by this Agreement but is not so subject, promptly (and in any
event within 30 days after the acquisition thereof), at the written request of
Secured Party, (i) execute and deliver to Secured Party such amendments or
supplements to the relevant security documents or such other documents as
Secured Party shall deem necessary or advisable to grant to Secured Party a Lien
on such property subject to no Liens other than Permitted Liens, and (ii)
promptly after the written request of the Secured Party take all actions
necessary to cause such Lien to be duly perfected to the extent required by such
security document in accordance with all applicable requirements of law,
including the filing of financing statements in such jurisdictions as may be
reasonably requested by Secured Party.  The Grantor shall otherwise take such
actions and execute and/or deliver to Secured Party such documents as Secured
Party shall require to confirm the validity, perfection and priority of the Lien
 on such after-acquired properties.  

7.2.

With respect to any Person that is or becomes a Subsidiary after the Closing
Date, promptly (and in any event within 30 days after such Person becomes a
Subsidiary) (i) deliver to Secured Party the certificates, if any, representing
all of the equity interests of such Subsidiary, together with undated stock
powers or other appropriate instruments of transfer executed and delivered in
blank by a duly authorized officer of the holder(s) of such equity interests,
and all intercompany notes owing from such Subsidiary to the Grantor together
with instruments of transfer executed and delivered in blank by a duly
authorized officer of such Grantor and (ii) cause such new Subsidiary (A) to
execute a guaranty in form and substance reasonably acceptable to Secured Party
to become a Subsidiary Guarantor and an Assumption Agreement to this Agreement,
substantially in the form annexed thereto or, in the case of a foreign
subsidiary, execute a security agreement compatible with the laws of such
foreign subsidiary’s jurisdiction in form and substance reasonably satisfactory
to Secured Party, and (B) to take all actions necessary or advisable or as
otherwise reasonably requested by Secured Party to cause the Liens to be duly
perfected to the extent required by such agreement in accordance with all
applicable requirements of law, including the filing of financing statements in
such jurisdictions as may be reasonably requested by Secured Party.
 Notwithstanding the foregoing, (1) the obligations under this Section 7.2 shall
not apply to Excluded Collateral and (2) no foreign Subsidiary shall be required
to take the actions specified in clause (ii) of this Section 7.2, if, in the
case of clause (2), doing so would constitute an investment of earnings in
United States property under Section 956 (or a successor provision) of the Code,
which investment would or could reasonably be expected to trigger an increase in
the net income of a United States shareholder of such Subsidiary pursuant to
Section 951 (or a successor provision) of the Code, as reasonably determined by
the Borrower; provided that this exception shall not apply to (A) voting stock
of any Subsidiary which is a first-tier controlled foreign corporation (as
defined in Section 957(a) of the Code) representing 66% of the total voting
power of all outstanding voting stock of such Subsidiary and (B) 100% of the
equity interests not constituting voting stock of any such Subsidiary, except
that any such equity interests constituting “stock entitled to vote” within the
meaning of Treasury Regulation Section 1.956-2(c)(2) shall be treated as voting
stock for purposes of this Section 7.2.  

7.3.

Promptly grant to Secured Party, within 30 days of the acquisition thereof, a
security interest in and mortgage on each real property (the “Mortgage”), other
than Excluded Collateral, owned in fee by the Grantor as is acquired by such
Grantor after the Closing Date and that, together with any improvements thereon,
as additional security for the Obligations (unless the subject property is
already mortgaged to a third party to the extent permitted by Section 3.1).
 Such Mortgages shall be granted pursuant to documentation reasonably
satisfactory in form and substance to Secured Party and shall constitute valid
and enforceable perfected Liens subject only to Permitted  Liens or other Liens
acceptable to Secured Party.  The Mortgages or instruments related thereto shall
be duly recorded or filed in such manner and in such places as are required by
law to establish, perfect, preserve and protect the Liens in favor of Secured
Party and all taxes, fees and other charges payable in connection therewith
shall be paid in full by the Grantor.  The Grantor shall otherwise take such
actions and execute and/or deliver to Secured Party such documents as Secured
Party shall require to confirm, if any, the validity, perfection and priority of
the Lien of any existing mortgage or new mortgage against such after-acquired
real property (including a Title Policy, a survey and local counsel opinion (in
form and substance reasonably satisfactory to Secured Party in respect of such
Mortgage).

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ARTICLE 8.  Miscellaneous.

8.1.

No Waiver; Cumulative Remedies.  No failure or delay by Secured Party in
exercising any right, power or remedy under this Agreement 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 under this Agreement.  The remedies provided
in this Agreement are cumulative and not exclusive of any remedies provided by
law.

8.2.

Waivers.  The Grantor waive presentment and protest of any instrument and notice
thereof, notice of default and all other notices to which the Grantor might
otherwise be entitled.

8.3.

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

8.4.

Amendments, Etc.  No amendment, modification, termination or waiver of any
provision of this Agreement or consent to any departure by the Grantor therefrom
or any release of a Lien shall be effective unless the same shall be in writing
and signed by Secured Party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.  No
notice to or demand on the Grantor in any case shall entitle the Grantor to any
other or further notice or demand in similar or other circumstances.
 Notwithstanding anything to the contrary herein this Agreement is subject to
the Subordination Agreement by and between Grantor, Shelter Island Opportunity
Fund, LLC., Cord Blood America, Inc., Career Channel, Inc. and the Secured
Party, dated the date hereof.

8.5.

Notices.  Except as otherwise expressly provided herein, any notice or request
hereunder shall be given in accordance with the terms of the Purchase Agreement.

8.6.

Collateral.  This Agreement does not contemplate a sale of accounts, contract
rights or chattel paper, and, as provided by law, the Grantor is entitled to any
surplus and shall remain liable for any deficiency.  Secured Party’s duty of
care with respect to Collateral in its possession (as imposed by law) shall be
deemed fulfilled if it exercises reasonable care in physically keeping such
Collateral, or in the case of Collateral in the custody or possession of a
bailee or other third Person, exercises reasonable care in the selection of the
bailee or other third Person, and Secured Party need not otherwise preserve,
protect, insure or care for any Collateral.  Secured Party shall not be
obligated to preserve any rights the Grantor may have against prior parties, to
realize on the Collateral at all or in any particular manner or order or to
apply any cash proceeds of the Collateral in any particular order of
application.

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8.7.

Costs and Expenses; Indemnification.

(a)

The Grantor shall pay all of Secured Party’s out-of-pocket costs and expenses
including, without limitation, fees and disbursements of counsel and appraisers,
connection with the prosecution or defense of any action, contest, dispute, suit
or proceeding concerning any matter in any way arising out of, related to or
connected with this Agreement, the Purchase Agreement or any other Transaction
Document.  The Grantor shall also pay all of Secured Party’s out-of-pocket costs
and expenses, including, without limitation, fees and disbursements of counsel,
in connection with: (i) the preparation, execution and delivery of any waiver,
amendment or consent proposed or executed in connection with the transactions
contemplated by this Agreement; (ii) Secured Party’s obtaining performance of
the Grantor obligations under this Agreement, including, but not limited to, the
enforcement or defense of the Security Interest, assignments of rights and Liens
hereunder as valid perfected security interests; (iii) any attempt to inspect,
verify, protect, collect, sell, liquidate or otherwise dispose of any
Collateral; and (iv) any consultations in connection with any of the foregoing.

(b)

Any such amounts payable as provided hereunder shall be additional Obligations
secured hereby and by the other Transaction Documents.  The provisions of this
Section 8.7 shall remain operative and in full force and effect regardless of
the termination of this Agreement or any other Transaction Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Transaction Document, or any investigation made by
or on behalf of Secured Party.  All amounts due under this Section 8.7 shall be
payable on written demand therefor, and shall bear interest at the rate then in
effect under the Note until such amounts are paid in full.

8.8.

Counterparts; Faxes.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  This Agreement may also
be executed via facsimile, which shall be deemed an original.

8.9.

Binding Effect; Assignment; Complete Agreement.  This Agreement shall be binding
upon and inure to the benefit of the Grantor and Secured Party and their
respective successors and assigns, except that the Grantor shall not have the
right to assign or transfer its respective rights or obligations hereunder or
any interest herein or in the Collateral (and any such assignment or transfer
shall be void).  Upon a transfer by Secured Party, Secured Party shall be
released from all responsibility for the Collateral to the extent same is
assigned to any transferee.

8.10.

Severability of Provisions.  Any provision of this Agreement which is prohibited
or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.

8.11.

Titles and Subtitles.  The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.

8.12.

Governing Law; Consent to Jurisdiction.  This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York,
without reference to the choice of law principles thereof.  Any legal action,
suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby or shall only be instituted, heard and
adjudicated (excluding appeals) in a state or federal court located in the
Southern District of New York, and each party hereto knowingly, voluntarily and
intentionally waives any objection which such parties may now or hereafter have
to the laying of the venue of any such action, suit or proceeding, and
irrevocably submits to the exclusive personal jurisdiction of any such court in
any such action, suit or proceeding.  Service of process in connection with any
such action, suit or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Agreement.  Notwithstanding the foregoing to the contrary, Secured Party
may institute and prosecute any action, suit or proceeding in any court of
competent jurisdiction it shall deem advisable in connection the enforcement of
its rights against the Collateral.

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8.13.

No Jury Trial.  Each party acknowledges and agrees that any controversy which
may arise under this Agreement is likely to involve complicated and difficult
issues.  ACCORDINGLY, EACH SUCH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.  Each party certifies and acknowledges that: (a) no other party
has represented, expressly or otherwise, that such other Parties would not, in
the event of litigation, seek to enforce the foregoing waiver; (b) each such
Parties understands and has considered the implications of this waiver; and
(iii) each such Parties has been induced to enter into this Agreement by, among
other things, the waivers and certifications in this Section 8.13.

8.14.

Recapture.  Anything in this Agreement to the contrary notwithstanding, if
Secured Party receives any payment or payments on account of the Obligations,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver, or any other party under the United States
Bankruptcy Code, as amended, or any other federal or state bankruptcy,
reorganization, moratorium or insolvency law relating to or affecting the
enforcement of creditors’ rights generally, common law or equitable doctrine,
then to the extent of any sum not finally retained by Secured Party, the Grantor
obligations to Secured Party shall be reinstated and this Agreement shall remain
in full force and effect (or be reinstated) until payment shall have been made
to Secured Party, which payment shall be due on demand.

8.15.

Construction.  The parties acknowledge that each party and its counsel have
reviewed this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting Parties shall not
be employed in the interpretation of this Agreement or any amendments, schedules
or exhibits hereto.

8.16

Termination of this Agreement.  This Agreement and the Security Interest shall
terminate immediately on the satisfaction of the Obligations and the Secured
Party shall immediately thereafter return to the Grantor any Collateral directly
or indirectly in its possession or control.

[Signature Pages Follow.]

 

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

SECURED PARTY:

By:

_______________________
Name:
Title

GRANTOR:

CORCELL, LTD.

By:

______________________
Name:
Title:

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