SECURITY AGREEMENT

        This SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Agreement"), is entered into as
of March 28, 2002, by and among CONCEPTS DIRECT, INC., a Delaware
corporation (the "Company" or the "Grantor"), PHILLIP A. WILAND
and LINDA S. WILAND ("Wiland"), individuals, as secured parties
hereunder (Phillip A. Wiland and Linda S. Wiland are each referred
to herein as a "Secured Party" and are collectively referred to
herein as the "Secured Parties").

                          RECITALS:

        WHEREAS, the Secured Parties are purchasing from the Company
(a) the Company's 10.0% Senior Secured Notes in the aggregate
principal amount of Two Million Dollars ($2,000,000.00) (each, a
"Note") and (b) a Common Stock Purchase Warrant to purchase an
aggregate of  275,000 shares of the common stock, par value $0.10
per share, of Grantor; and

        WHEREAS, in order to induce the Secured Parties to purchase
the Note, Grantor has agreed to grant the Secured Parties a
continuing security interest in the Collateral (as hereinafter
defined) to secure all obligations of Grantor.

        WHEREAS, each of the parties hereto believes that the value
of the Collateral, including the Colorful Images Business as a
going concern presently greatly exceeds the principal and interest
due under each of the Note and recognizes the desirability of
providing security to the Secured Parties while still preserving
the excess value realized as an ongoing business of the Colorful
Images Business for the benefit of other creditors and
stockholders.

                        AGREEMENT:

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

     1. DEFINED TERMS. The following terms shall have the following
respective meanings:

        "Accounts Receivable" means all of Grantor's now owned or
hereafter acquired or arising accounts, as defined in the UCC,
including any rights to payment for the sale or lease of goods or
rendition of services, whether or not they have been earned by
performance, in each case to the extent (and only to such extent)
used or useful in, arising from or otherwise related to the
Colorful Images Business.

        "Affiliate" shall mean, when used with reference to any
specified Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with, such specified Person.  For the purposes of this
definition, "control," when used with respect to any specified
Person, means the power to direct or cause the direction of
management or policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have
meanings correlative of the foregoing.

        "Assigned Contracts" means, collectively, all of Grantor's
rights and remedies under, and all moneys and claims for money due
or to become due to Grantor under those contracts set forth on
Schedule 1.1 hereto, and all other material contracts and
agreements to which Grantor is a party, and any and all
amendments, supplements, extensions, and renewals thereof
including all rights and claims of Grantor now or hereafter
existing:  (a) under any insurance, indemnities, warranties, and
guarantees provided for or arising out of or in connection with
any of the foregoing agreements; (b) for any damages arising out
of or for breach or default under or in connection with any of the
foregoing contracts; (c) to all other amounts from time to time
paid or payable under or in connection with any of the foregoing
agreements; or (d) to exercise or enforce any and all covenants,
remedies, powers and privileges thereunder, in each case to the
extent (and only to such extent) used or useful in, arising from
or otherwise related to the Colorful Images Business.

        "Chattel Paper" means all of Grantor's now owned or hereafter
acquired chattel paper, as defined in the UCC, including
electronic chattel paper, in each case to the extent (and only to
such extent) used or useful in, arising from or otherwise related
to the Colorful Images Business.

        "Colorful Images Business" means the business, revenues and
all assets and obligation of the Grantor relating to the Colorful
Images catalog and all related business.

        "Documents" means all documents as such term is defined in
the UCC, including bills of lading, warehouse receipts or other
documents of title, now owned or hereafter acquired by Grantor, in
each case to the extent (and only to such extent) used or useful
in, arising from or otherwise related to the Colorful Images
Business.

        "Equipment" means all of Grantor's now owned, leased and
hereafter acquired machinery, equipment, furniture, furnishings,
fixtures, and other tangible personal property (except Inventory),
including embedded software, motor vehicles with respect to which
a certificate of title has been issued, aircraft, dies, tools,
jigs, molds and office equipment, as well as all of such types of
property leased by Grantor and all of Grantor's rights and
interests with respect thereto under such leases (including,
without limitation, options to purchase); together with all
present and future additions and accessions thereto, replacements
therefor, component and auxiliary parts and supplies used or to be
used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and
rights with respect thereto; wherever any of the foregoing is
located, in each case to the extent (and only to such extent) used
or useful in, arising from or otherwise related to the Colorful
Images Business.

        "General Intangibles" means all of Grantor's now owned or
hereafter acquired general intangibles, choses in action and
causes of action and all other intangible personal property of
Grantor of every kind and nature (other than Accounts), including,
without limitation, all contract rights, payment intangibles,
Proprietary Rights, corporate or other business records,
inventions, designs, blueprints, plans, specifications, patents,
patent applications, trademarks, service marks, trade names, trade
secrets, goodwill, copyrights, domain names, computer software,
customer lists, registrations, use of licenses, franchises, tax
refund claims, any funds which may become due to Grantor in
connection with the termination of any employee benefit plan or
any rights thereto and any other amounts payable to Grantor from
any employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar
type of insurance and any proceeds thereof, proceeds of insurance
covering the lives of key employees on which Grantor is
beneficiary, rights to receive dividends, distributions, cash,
Instruments and other property in respect of or in exchange for
pledged equity interests or Investment Property and any letter of
credit, guarantee, claim, security interest or other security held
by or granted to Grantor, in each case to the extent (and only to
such extent) used or useful in, arising from or otherwise related
to the Colorful Images Business.

        "Instruments" means all instruments as such term is defined
in the UCC, now owned or hereafter acquired by Grantor.

        "Inventory" means all of Grantor's now owned and hereafter
acquired Soft Inventory, wherever located, to be furnished under
any contract of service or held for sale or lease to the extent
(and only to such extent) used or useful in, arising from or
otherwise related to the Colorful Images Business.

        "Investment Property" means all of Grantor's right title and
interest in and to any and all: (a) securities whether certificated
or uncertificated, (b) securities entitlements, (c) securities accounts,
(d) commodity contracts, or (e) commodity accounts, in each case to the
extent (and only to such extent) used or useful in, arising from or
otherwise related to the Colorful Images Business.

        "Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, operations, prospects or financial
condition of the company, (b) the ability of the Company to pay
the Obligations in accordance with their terms, or (c) the liens
of the Secured Parties on the Collateral or the priority of such
liens.

        "Obligations" shall mean all loans, advances, debts,
liabilities, obligations, covenants and duties owing to any
Investor by the Company of any kind or nature, present of future,
whether or not evidenced by any note, guaranty or other
instrument, arising under the Note or the Security Agreement,
whether or not for the payment of money, arising by reason of an
extension of credit, absolute or contingent, due or to become due,
now existing or hereafter arising, including all principal,
interest, charges, expenses, fees, attorneys' fees and
disbursements and any other sum chargeable to the Company under
the Note.

        "Permitted Liens" shall mean: (a) the liens created under
the Security Agreement, (b) landlords', suppliers', tax,
assessment, governmental and other like liens and charges arising
in the ordinary course of business securing obligations that are
not incurred in connection with the obtaining of any advance or
credit and which are not overdue, or are being contested in good
faith by appropriate proceedings, provided that, in accordance
with GAAP, adequate reserves have been set aside on the books of
the company for the eventual payment thereof in the event it is
determined that such obligations are payable by the Company, (c)
liens arising in connection with worker's compensation,
unemployment insurance, appeal and release bonds and progress
payments under government contracts, (d) any "banker's lien" or
similar right of offset, (e) any lien arising in connection with a
capitalized lease obligation permitted hereunder on the asset
which is the subject of the related lease, (f) liens of mechanics,
materialmen, warehousemen or carriers, and other like liens,
securing obligations incurred in the ordinary course of business
that are not yet due and payable, and (g) liens for any taxes, or
other governmental charges, either not delinquent or secured by a
bond reasonably acceptable to the Secured Parties or not yet due
and being contested in good faith and by appropriate proceedings,
so long as (i) such proceedings could not reasonably be expected
to result in the sale, forfeiture or loss of the Collateral or
have a Material Adverse Effect on the Company, or (ii) a bond or
other security acceptable to the Secured Parties.

        "Proprietary Rights" means all of Grantor's now owned and
hereafter arising or acquired: material licenses, franchises,
permits, patents, patent rights, copyrights, works which are the
subject matter of copyrights, trademarks (including, without
limitation all Colorful Images trademarks), service marks, trade
names, trade styles, patent, trademark and service mark
applications, and all material licenses and rights related to any
of the foregoing, and all other rights under any of the foregoing,
all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to
sue for past, present and future infringement of any of the
foregoing, in each case to the extent (and only to such extent)
used or useful in, arising from or otherwise related to the
Colorful Images Business.

        "Soft Inventory" means paper products used or useful in,
arising from or otherwise related to the Colorful Images Business.

        "Supporting Obligations" means all supporting obligations
as such term is defined in the UCC, in each case to the extent
(and only to such extent) used or useful in, arising from or
otherwise related to the Colorful Images Business.

        "UCC" means the Uniform Commercial Code, as in effect from
time to time, of the State of Colorado or of any other state the
laws of which are required as a result thereof to be applied in
connection with the issue of perfection of security interests. All
other capitalized terms used but not otherwise defined herein have
the meanings given to them in the Purchase Agreement.

        All other undefined terms contained in this Agreement,
unless the context indicates otherwise, have the meanings provided
for by the UCC to the extent the same are used or defined therein.


    2. GRANT OF LIEN.

            (a) Grantor, as security for all Obligations of Grantor
under the Transaction Documents, hereby grants to each Secured Party,
for the ratable benefit of the Secured Parties, a continuing security
interest in, lien on, assignment of and right of set-off against, all
of the following property and assets of Grantor, whether now owned or
existing or hereafter acquired or arising, regardless of where
located:

        (i)    all Accounts;

        (ii)   all Inventory;

        (iii)  all shared contract rights, in each case to the extent
(and only to such extent) used or useful in, arising from or otherwise
related to the Colorful Images Business, including Assigned Contracts;

        (iv)   all Chattel Paper

        (v)    all Documents;

        (vi)   all Instruments;

        (vii)  all Supporting Obligations;

        (viii) all General Intangibles;

        (ix)   all Equipment and obligations thereof;

        (x)    all Investment Property;

        (xi)   all cash receipts received after an Event of Default,
arising from or otherwise related to the Colorful Images Business;

        (xii)  all of Grantor's deposit accounts, credits, and
balances with and other claims against any of the Secured Parties or
any of their Affiliates or any financial institution with which
Grantor maintains deposits, in each case to the extent (and only to
such extent) used or useful in, arising from or otherwise related to
the Colorful Images Business;

        (xiii) all books, records and other property related to or
referring to any of the foregoing, including books, records, account
ledgers, data processing records, computer software and other property
and General Intangibles at any time evidencing or relating to any of the
foregoing, in each case to the extent (and only to such extent)
used or useful in, arising from or otherwise related to the
Colorful Images Business; and

        (xv)   all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not
limited to, proceeds of any insurance policies, claims against
third parties, and condemnation or requisition payments with
respect to all or any of the foregoing.

        All of the foregoing is herein collectively referred to as
the "Collateral."

     3. PERFECTION AND PROTECTION OF SECURITY INTEREST.

               (a) Grantor shall, at its expense, perform all steps
reasonably requested by any Secured Party at any time to perfect,
maintain, protect, and enforce such Secured Party's Liens,
including:  (i) executing and filing financing or continuation
statements, and amendments thereof, in form and substance
reasonably satisfactory to such Secured Party; (ii) at the Secured
Parties request, when an Event of Default has occurred and is
continuing delivering to the Secured Parties the originals of all
Instruments, Documents, and Chattel Paper, and all other
Collateral of which the Secured Parties determine it should have
physical possession in order to perfect and protect the Secured
Parties' security interest therein, duly pledged, endorsed or
assigned to the Secured Parties without restriction; (iii)
delivering to the Secured Parties warehouse receipts covering any
portion of the Collateral located in warehouses and for which
warehouse receipts are issued and certificates of title covering
any portion of the collateral for which certificates of title have
been issued; (iv) at the request of the Secured Parties when an
Event of Default has occurred and is continuing, transferring
Inventory to warehouses or other locations designated by the
Secured Parties (or such Secured Party); (v) placing notations on
Grantor's books of account to disclose the Secured Parties'
security interest; (vi) obtaining control agreements in favor of
the Secured Parties from securities intermediaries with respect to
financial assets in the possession of securities intermediaries;
(vii) at the request of the Secured Parties, assigning and
delivering to the Secured Parties all Supporting Obligations,
including letters of credit on which Grantor is named beneficiary
with the written consent of the issuer thereof; and (viii) taking
such other steps as are reasonably deemed necessary or desirable
by any Secured Party to maintain and protect such Secured Party's
Liens and shall provide Grantor a copy of such filing within seven
(7) days. To the extent permitted by applicable law, any Secured
Party may file, without Grantor's signature, one  or more
financing statements disclosing such Secured Party's Liens.
Grantor agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is
sufficient as a financing statement.

               (b) If any Collateral is at any time in the possession
or control at any third party warehouse or agent, then Grantor
shall notify each Secured Party thereof and shall obtain a letter
from such third party acknowledging the Secured Parties security
interest in such Collateral.

               (c) The provisions of this Section are subject to the
provisions of Section 26.

    4. LOCATION OF COLLATERAL.  Grantor represents and warrants to
the Secured Parties that:  (a) Schedule I is a correct and
complete list of Grantor's chief executive office, the location of
its books and records, the locations of the Collateral, and the
locations of all of its other places of business; and (b) Schedule
I correctly identifies any of such facilities and locations that
are not owned by Grantor and sets forth the names of the owners
and lessors or sublessors of such facilities and locations.
Grantor covenants and agrees that it will not (i) maintain any
Collateral at any location other than those locations listed for
Grantor on Schedule I attached hereto, (ii) otherwise change or
add to any of such locations, or (iii) change the location of its
chief executive office from the location identified in Schedule I,
unless it gives each Secured Party at least thirty (30) days'
prior written notice thereof and executes any and all financing
statements and other documents that any Secured Party reasonably
requests in connection therewith. Without limiting the foregoing,
Grantor represents that all of its Inventory (other than Inventory
not yet received and paid for) is, and covenants that all of its
Inventory will be, located either (a) on premises owned by
Grantor, (b) on premises leased by Grantor, provided that the
Secured Parties have received an executed landlord waiver from the
landlord of such premises in form and substance satisfactory to
the Secured Parties, or (c) in a warehouse or with a bailee,
provided that the Secured Parties have received an executed bailee
letter from the applicable Person in form and substance
satisfactory to the Secured Parties.

    5. JURISDICTION OF ORGANIZATION.  Schedule II attached hereto
identifies the jurisdiction in which Grantor is incorporated or
organized.

    6. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL . Subject in
each case to Section 26, Grantor represents and warrants to the
Secured Parties and agrees with the Secured Parties that: (a) all
of the Collateral is and will continue to be owned by Grantor free
and clear of all Liens whatsoever, except for Permitted Liens and
sales in the ordinary course of business; (b) the Secured Parties
Liens in the Collateral will not be subject to any prior Lien; and
(c) Grantor will use, store, and maintain the Collateral with all
reasonable care and will use such Collateral for lawful purposes
only.

    7. APPRAISALS.  Upon the request of the Secured Parties whenever
an Event of Default has occurred and is continuing, Grantor shall, at
its expense, provide each Secured Party with appraisals of any or
all of the Collateral from an appraiser, and prepared on a basis,
satisfactory to the Secured Parties.

    8. ACCESS AND EXAMINATION.  Any Secured Party may at all reasonable
times during regular business hours (and at any time when an Event
of Default exists and is continuing) have access to, examine,
audit, make extracts from or copies of and inspect any or all of
Grantor's records, files, and books of account and the Collateral,
and discuss Grantor's affairs with Grantor's officers and
management.  Grantor will deliver to the Secured Parties any
instrument necessary for the Secured Parties to obtain records
from any service bureau maintaining records for Grantor.  Upon the
request of the Secured Parties when an Event of Default has
occurred and is continuing, the Secured Parties (or such Secured
Party) may, at the Grantor's expense, make copies of all of
Grantor's books and records, or require Grantor to deliver such
copies to the Secured Parties (or such Secured Party).  The
Secured Parties may, without expense to any Secured Party, use
such of Grantor's respective personnel and supplies as may be
reasonably necessary for maintaining or enforcing each Secured
Party's Liens.  The Secured Parties shall have the right, at any
time, in such Secured Party's name or in the name of a nominee of
such Secured Party, to verify the validity, amount or any other
matter relating to the Accounts Receivable, Inventory, or other
Collateral, by mail, telephone, or otherwise.

    9. [INTENTIONALLY OMITTED.]

   10. [INTENTIONALLY OMITTED.]

   11. [INTENTIONALLY OMITTED.]

   12. INVENTORY.

               (a) Grantor represents and warrants to the Secured
Parties and agrees with the Secured Parties that all of the
Inventory owned by Grantor is and will be held for sale or lease,
or to be furnished in connection with the rendition of services,
in the ordinary course of Grantor's business, and is and will be
fit for such purposes.  Grantor will keep its Inventory in good
and marketable condition, except for damaged or defective goods
arising in the ordinary course of Grantor's business. Grantor
agrees that all Inventory produced by Grantor in the United States
of America will be produced in accordance with the Federal Fair
Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder.  Grantor will conduct a
physical count of the Inventory at the Secured Parties request
after an Event of Default.  Grantor will not, without the Secured
Parties' written consent, sell any Inventory on a bill-and-hold,
guaranteed sale, sale and return or sale on approval.

               (b) In connection with all Inventory financed by
Letters of Credit, Grantor will, at the Secured Parties' request,
instruct all suppliers, carriers, forwarders, customs brokers,
warehouses or others receiving or holding cash, checks, Inventory,
Documents or Instruments in which the Secured Parties hold a
security interest to deliver them to the Secured Parties and/or
subject to the Secured Parties' order, and if they shall come into
Grantor's possession, to deliver them, upon request, to the
Secured Parties in their original form.  Grantor shall also, at
the Secured Parties' request, designate the Secured Parties as the
consignee on all bills of lading and other negotiable and
non-negotiable documents.

    13. EQUIPMENT.

               (a) Grantor represents and warrants to the Secured
Parties and agrees with the Secured Parties that all of the Equipment
owned by Grantor is and will be used or held for use in Grantor's
business, and is and will be fit for such purposes.  Grantor shall
keep and maintain its Equipment in good operating condition and repair
(ordinary wear and tear excepted) and shall make all necessary
replacements thereof.

               (b) Grantor shall promptly inform the Secured Parties
of any material additions to or deletions from the Equipment.
Grantor shall not permit any Equipment to become a fixture with
respect to real property or to become an accession with respect to
other personal property with respect to which real or personal
property the Secured Parties do not have a Lien.  Grantor will
not, without the Secured Parties' prior written consent, alter or
remove any identifying symbol or number on Grantor's Equipment
constituting Collateral.

               (c) Except as otherwise permitted under this Agreement,
Grantor will not, without the Secured Parties' prior written
consent, sell, lease as a lessor, or otherwise dispose of any of
Grantor's Equipment.

    14. ASSIGNED CONTRACTS. Grantor shall fully perform all of its
obligations under each of the Assigned Contracts, and shall
enforce all of its rights and remedies thereunder, in each case,
as it deems appropriate in its business judgment; provided,
however, that except after and during the continuance of an Event
of Default Grantor shall have full power to amend, modify or
terminate any such contract it deems appropriate in its business
judgment, and that after and during the continuance of an Event of
Default but subject to the provisions of Section 26 that Grantor
shall not take any action or fail to take any action with respect
to its Assigned Contracts which would cause the termination of a
material Assigned Contract. Without limiting the generality of the
foregoing, after and during the continuance of an Event of
Default, but subject to the provisions of Section 26, Grantor
shall take all action necessary or appropriate to permit, and
shall not take any action which would have any materially adverse
effect upon, the full enforcement of all indemnification rights
under its Assigned Contracts.  Except as otherwise provided in the
first sentence, and subject to Section 16, Grantor shall notify
the Secured Parties in writing, promptly after Grantor becomes
aware thereof, of any event or fact which could give rise to a
material claim by it for indemnification under any of its Assigned
Contracts, and shall diligently pursue such right and report to
the Secured Parties on all further developments with respect
thereto.  Except as otherwise provided in the first sentence, and
subject to Section 16, Grantor shall fail after the Secured
Parties' demand to pursue diligently any right under its Assigned
Contracts, or if an Event of Default then exists, the Secured
Parties may, directly enforce such right in their own or the
Grantor's name and may enter into such settlements or other
agreements with respect thereto as the Secured Parties shall
determine.  In any suit, proceeding or action brought by the
Secured Parties under any Assigned Contract for any sum owing
thereunder or to enforce any provision thereof, the Grantor shall,
jointly and severally, indemnify and hold the Secured Parties
harmless from and against all expense, loss or damage suffered by
reason of any defense, setoff, counterclaims, recoupment, or
reduction of liability whatsoever of the obligor thereunder
arising out of a breach by Grantor of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at
any time owing from Grantor to or in favor of such obligor or its
successors except for such expenses, losses or damages that are
the result of the gross negligence or willful misconduct of the
Secured Party. All such obligations of Grantor shall be and remain
enforceable only against the Grantor and shall not be enforceable
against any of the Secured Parties.  Notwithstanding any provision
hereof to the contrary, Grantor shall at all times remain liable
to observe and perform all of its duties and obligations under its
Assigned Contracts, and the Secured Parties' exercise of any of
their respective rights with respect to the Collateral shall not
release Grantor from any of such duties and obligations.  No
Secured Party shall be obligated to perform or fulfill any of
Grantor's duties or obligations under its Assigned Contracts or to
make any payment thereunder, or to make any inquiry as to the
nature or sufficiency of any payment or property received by it
thereunder or the sufficiency of performance by any party
thereunder, or to present or file any claim, or to take any action
to collect or enforce any performance, any payment of any amounts,
or any delivery of any property.

    15. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER.  Grantor represents
and warrants to the Secured Parties that (a) all Documents,
Instruments, and Chattel Paper describing, evidencing, or
constituting Collateral, and all signatures and endorsements
thereon, are and will be complete, valid, and genuine, and (b) all
goods evidenced by such Documents, Instruments, and Chattel Paper
are and will be owned by Grantor, free and clear of all Liens
other than Permitted Liens.

    16. RIGHT TO CURE.  The Secured Parties may, in their discretion
(but shall have not obligation to), pay any amount or do any act
required of Grantor hereunder or under any other Transaction
Document in order to preserve, protect, maintain or enforce the
Obligations, the Collateral or the Secured Parties' Liens therein,
and which Grantor fails to pay or do, including payment of any
judgment against Grantor, any insurance premium, any warehouse
charge, any finishing or processing charge, any landlord's or
bailee's claim, and any other Lien upon or with respect to the
Collateral.  All reasonable payments that any Secured Party makes
under this Section 16 and all reasonable out-of-pocket costs and
expenses that any Secured Party pays or incurs in connection with
any action taken by it hereunder shall be subject to reimbursement
by the Company.  Any payment made or other action taken by any
Secured Party under this Section 16 shall be without prejudice to
any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.

    17. POWER OF ATTORNEY.  Grantor hereby appoints each Secured
Party (subject to Section 26) or its designee as Grantor's
attorney, with power:  (a) to endorse Grantor's name on any
checks, notes, acceptances, money orders, or other forms of
payment or security that come into any of the Secured Parties'
possession; (b) to sign Grantor's name on any invoice, bill of
lading, warehouse receipt or other negotiable or non-negotiable
Document constituting Collateral, on drafts against customers, on
assignments of Accounts, on notices of assignment, financing
statements and other public records and to file any such financing
statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure; (c)
so long as any Event of Default has occurred and is continuing, to
notify the post office authorities to change the address for
delivery of Grantor's mail to an address designated by the Secured
Parties and to receive, open and dispose of all mail addressed to
Grantor; (d) to send requests for verification of Accounts to
customers; (e) to complete in Grantor's name or such Secured
Party's (or designee's) name, any order, sale or transaction,
obtain the necessary Documents in connection therewith, and
collect the proceeds thereof; and (f) to clear Inventory through
customs in Grantor's name, or such Secured Party's (or designee's)
name and to sign and deliver to customs officials powers of
attorney in Grantor's name for such purpose. Grantor ratifies and
approves all acts of such attorney.  None of the Secured Parties
nor their attorneys will be liable for any acts or omissions or
for any error of judgment or mistake of fact or law except for
their willful misconduct.  This power, being coupled with an
interest, is irrevocable until the Purchase Agreement has been
terminated and the Obligations have been fully satisfied.

     18. CERTAIN RIGHTS, DUTIES AND LIABILITIES OF THE SECURED PARTIES.

               (a) Grantor assumes all responsibility and liability
arising from or relating to the use, sale or other disposition of
the Collateral. The Obligations shall not be affected by any
failure of any of the Secured Parties to take any steps to perfect
any Secured Party's Liens or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release
Grantor from any of the Obligations.  Following the occurrence and
during the continuation of an Event of Default, the Secured
Parties may (but shall not be required to), without notice to or
consent from Grantor, sue upon or otherwise collect, extend the
time for payment of, modify or amend the terms of, compromise or
settle for cash, credit, or otherwise upon any terms, grant other
indulgences, extensions, renewals, compositions, or releases, and
take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto,
any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of Grantor for
the Obligations or under the Purchase Agreement or any other
Transaction Document or any other agreement now or hereafter
existing between the Secured Parties and/or any of the Secured
Parties and Grantor.

    19. PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.

               (a) As of the date hereof, Grantor has no other
interest in, or title to, any patent, trademark or copyright
included in the Collateral except as set forth in Schedule III
hereto.  This Agreement is effective to create a valid and
continuing Lien on and, perfected Liens in favor of the Secured
Parties on Grantor's patents, trademarks and copyrights included
in the Collateral and such perfected Liens are enforceable as such
as against any and all creditors of and purchasers from Grantor.
All action necessary or desirable to protect and perfect the
Secured Parties' Liens on Grantor's patents, trademarks or
copyrights included in the Collateral shall have been duly taken.

               (b) Grantor shall notify the Secured Parties immediately
if it knows or has reason to know that any application or
registration relating to any patent, trademark or copyright (now
or hereafter existing) included in the Collateral may become
abandoned or dedicated, 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, the United States Copyright
Office or any court) regarding Grantor's ownership of any patent,
trademark or copyright included in the Collateral, its right to
register the same, or to keep and maintain the same.

               (c) In no event shall Grantor, either directly or
through any agent, employee, licensee or designee, file an
application for the registration of any patent, trademark or
copyright included in the Collateral with the United States Patent
and Trademark Office, the United States Copyright Office or any
similar office or agency without giving the Secured Parties prior
written notice thereof,

               (d) Grantor shall take all actions necessary or
requested by the Secured Parties to maintain and pursue each
application, to obtain the relevant registration and to maintain
the registration of each of the patents, trademarks and copyrights
(now or hereafter existing) included in the Collateral, including
the filing of applications for renewal, affidavits of use,
affidavits of noncontestability and opposition and interference
and cancellation proceedings.

               (e) In the event that any of patent, trademark or
copyright included in the Collateral is infringed upon, or
misappropriated or diluted by a third party, the Company shall
notify the Secured Parties promptly after the Company learns
thereof.  Grantor shall, unless it shall reasonably determine that
such patent, trademark or copyright is in no way material to the
conduct of its business or operations, promptly sue for
infringement, misappropriation or dilution and to recover any and
all damages for such infringement, misappropriation or dilution,
and shall take such other actions as the Secured Parties shall
deem appropriate under the circumstances to protect such patent,
trademark or copyright.

    20. INDEMNIFICATION.  In any suit, proceeding or action brought
by any Secured Party relating to any Account, Chattel Paper,
Contract, Document, General Intangible or Instrument for any sum
owing thereunder or to enforce any provision of any Account,
Chattel Paper, Contract, Document, General Intangible or
Instrument, Grantor will save, indemnify and keep the Secured
Parties and the Secured Parties harmless from and against all
expense (including reasonable attorneys' fees and expenses), loss
or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by Grantor of any obligation
thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or
its successors from Grantor, except in the case of any of the
Secured Parties, to the extent such expense, loss, or damage is
attributable solely to the gross negligence or willful misconduct
of such Secured Party as finally determined by a court of
competent jurisdiction.

    21. LIMITATION ON LIENS ON COLLATERAL. Grantor will not create,
permit or suffer to exist, and will defend the Collateral against,
and take such other action as is necessary to remove, any Lien on
the Collateral except Permitted Liens, and will defend the right,
title and interests of each of the Secured Parties in and to any
of Grantor's rights under the Collateral against the claims and
demands of all Persons whomsoever.

    22. NOTICE REGARDING COLLATERAL.  Grantor will advise the Secured
Parties promptly, in reasonable detail, (i) of any Lien (other
than Permitted Liens) or claim made or asserted against any of the
Collateral, and (ii) of the occurrence of any other event which
could have a Material Adverse Effect.

    23. REMEDIES; RIGHTS UPON DEFAULT.

               (a) In addition to all other rights and remedies
granted to it under this Agreement and under any other instrument
or agreement securing, evidencing or relating to any of the
Obligations, if any Event of Default shall have occurred and be
continuing, the Secured Parties may exercise all rights and
remedies of a secured party under the UCC.  Without limiting the
generality of the foregoing, Grantor expressly agrees that in any
such event the Secured Parties, without demand of performance or
other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private
sale) to or upon Grantor or any other Person (all and each of
which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the UCC and other
applicable law), may forthwith enter upon the premises of Grantor
where any Collateral is located through selfhelp, without judicial
process, without first obtaining a final judgment or giving
Grantor or any other Person notice and opportunity for a hearing
on the Secured Parties' claim or action and may collect, receive,
assemble, process, appropriate and realize upon the Collateral, or
any part thereof, and may forthwith sell, lease, assign, give an
option or options to purchase, or sell or otherwise dispose of and
deliver said Collateral (or contract to do so), or any part
thereof, in one or more parcels at a public or private sale or
sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of
any credit risk.  The Secured Parties shall have the right upon
any such public sale or sales and, to the extent permitted by law,
upon any such private sale or sales, to purchase for the benefit
of the Secured Parties, the whole or any part of said Collateral
so sold, free of any right or equity of redemption, which equity
of redemption Grantor hereby releases.  Such sales may be
adjourned and continued from time to time with or without notice.
The Secured Parties shall have the right to conduct such sales on
Grantor's premises or elsewhere and shall have the right to use
Grantor's premises without charge for such time or times as the
Secured Parties deems necessary or advisable.

               (b) Grantor further agrees, at the Secured Parties'
request, to assemble the Collateral and make it available to the
Secured Parties at places which the Secured Parties shall select,
whether at Grantor's premises or elsewhere.  Until the Secured
Parties are able to effect a sale, lease, or other disposition of
Collateral, the Secured Parties shall have the right to hold or
use Collateral, or any part thereof, to the extent that deemed
appropriate by the Secured Parties for the purpose of preserving
Collateral or its value or for any other purpose deemed
appropriate by the Secured Parties.  The Secured Parties may, if
they so elect, seek the appointment of a receiver or keeper to
take possession of Collateral and to enforce any of the Secured
Parties' remedies (for the benefit of the Secured Parties), with
respect to such appointment without prior notice or hearing as to
such appointment.  The Secured Parties shall apply the net
proceeds of any such collection, recovery, receipt, appropriation,
realization or sale ratably to the Obligations, and only after so
paying over such net proceeds, and after the payment by the
Secured Parties of any other amount required by any provision of
law, need the Secured Parties account for the surplus, if any, to
Grantor.  To the maximum extent permitted by applicable law,
Grantor waives all claims, damages, and demands against any of the
Secured Parties arising out of the repossession, retention or sale
of the Collateral except such as arise solely out of the gross
negligence or willful misconduct of the Secured Parties or any of
the Secured Parties as finally determined by a court of competent
jurisdiction.  Grantor agrees that ten (10) days prior notice by
the Secured Parties of the time and place of any public sale or of
the time after which a private sale may take place is reasonable
notification of such matters.  Grantor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all Obligations, including any
attorneys' fees or other expenses incurred by any of the Secured
Parties to collect such deficiency.

               (c) Except as otherwise specifically provided herein,
Grantor hereby waives presentment, demand, protest or any notice
(to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.

               (d) The provisions of this Section are subject to the
provisions of Section 26.

    24. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the purpose
of enabling the Secured Parties to exercise rights and remedies
under Section 23 hereof (including, without limiting the terms of
Section 23 hereof, in order to take possession of, hold, preserve,
process, assemble, prepare for sale, market for sale, sell or
otherwise dispose of Collateral) at such time as the Secured
Parties shall be lawfully entitled to exercise such rights and
remedies, Grantor hereby grants to the Secured Parties, for the
benefit of the Secured Parties, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other
compensation to Grantor) to use, license or sublicense any
Intellectual Property now owned or hereafter acquired by Grantor
and to the extent permitted by the terms of the Intellectual
Property, and wherever the same may be located, and including in
such license 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.

    25. LIMITATION ON SECURED PARTY'S DUTY IN RESPECT OF COLLATERAL.
The Secured Parties shall use reasonable care with respect to the
Collateral in its possession or under its control. No Secured
Parties shall have any other duty as to any Collateral in its
possession or control or in the possession or control of any agent
or nominee of any Secured Party, or any income thereon or as to
the preservation of rights against prior parties or any other
rights pertaining thereto.

    26. LIMITATION OF REMEDIES AS TO CERTAIN COLLATERAL; ADDITIONAL
SECURED PARTIES.

               (a) Notwithstanding any contrary provision of this
Agreement or any other Transaction Document, and as long as a
petition of voluntary or involuntary bankruptcy (that has not been
withdrawn or removed within ten (10) days upon demand) has not
been filed against the Company, the Secured Parties agree that
their rights under this Agreement with respect to all of the
Collateral shall be subject to the following:

    (1) Upon receipt by the Company of a notice of an Event of
        Default (a "Default Notice") by a Secured Party, which
        default is not cured within the time allowed, the Company
        shall provide the Secured Creditors a list of three (3)
        investment banks with recognized expertise in the direct
        marketing and/or catalog retailing business that the
        Company wishes to hire to sell the Colorful Images
        Business as a going concern in a transaction intended to
        maximize the return to all creditors and equityholders of
        the Company (the "CIB Sale").  The Secured Parties shall
        have five (5) days in which to agree to one of the three
        investment banks.  In the event that the Secured Parties
        are unable to agree on any one of the three, the Company
        shall be free to hire any of the three.

    (2) For a period of six (6) months from receipt of the Default
        Notice, the Secured Parties agree not to exercise any of
        their rights with respect to any Collateral pursuant to
        this Agreement so as to allow the investment bank retained
        (the "Investment Bank") to find a party to enter into an
        agreement with the Company to purchase the Colorful Images
        Business. The Company shall provide each of the Secured
        Parties regular reports on the Investment Bank's progress.

    (3) In the event that (i) the Company has not entered into a
        definitive agreement within six (6) months after receipt
        of an uncured Default Notice for the CIB Sale at or above
        the price that will result, after payment of all expenses,
        in the Secured Parties receiving all amounts due to them
        under the Note (the "Minimum Price"); (ii) the Investment
        Bank informs the Company that it believes it will be
        unable to identify for the Company a purchaser willing to
        pay the Minimum Price in a CIB Sale or (iii) the Company
        and the Secured Creditors agree that the Investment Bank
        is not making a commercially reasonable effort to
        effectuate the CIB Sale at or above the Minimum Price,
        each of the Secured Parties that have not been paid in
        full may exercise any and all of their rights under this
        Agreement.

    (4) In the event that Company has entered into a definitive
        agreement for the CIB Sale at or above the Minimum Price
        within six (6) months of receipt of a Default Notice, the
        Company shall have sixty (60 days in which to close the
        transaction contemplated therein and shall disburse the
        proceeds received pursuant to Section 26(c) within five
        (5) business days thereafter so as to pay in full the
        Secured Parties.  In the event the Company fails to close
        the transaction within sixty (60) days, each of the
        Secured Parties may exercise any and all of their rights
        under this Agreement.

    (5) The Secured Parties agree to consent to any CIB Sale that
        results in the Minimum Price or higher and to release all
        security interests granted under this Agreement so as to
        effectuate such sale.

    (6) Until a Secured Party has the right under paragraph (4) or
        (5) of this Section 26(a) to exercise its right under this
        Agreement, Grantor shall have the right to deal with the
        Assigned Contracts, and all other Collateral as though no
        Event of Default has occurred or is continuing.

               (b) In the event that the Company issues a promissory
note to a third party equal to or greater than Two Million Dollars
($2,000,000) on or before April 30, 2002, the Lender agrees to
provide such third party a pro rata share in the security provided
to Lender herein, and shall receive, in addition to the rights
granted to Lender under this Agreement, the Note and a Warrant to
Purchase Common Stock of the Company dated as of the date hereof,
any and all other rights and obligations granted to such third
party, including without limitation, registration rights and
preemptive rights.

               (c) Except as set forth in Section 26(a),
notwithstanding anything to the contrary contained in this
Agreement and irrespective of:

        (1) the time, order or method of attachment or perfection
            of the security interests created by any security
            document,

        (2) the time or order of filing or recording of financing
            statements or other documents filed or recorded to
            perfect security interests in any Collateral,

        (3) anything contained in any filing or agreement to which
            any Secured Party now or hereafter may be a party and

        (4) the rules for determining priority under the Uniform
            Commercial Code or any other law governing the
            relative priorities of secured creditors, the security
            interests of the Secured Parties in the Collateral as
            provided in Section 26(a) shall be of equal priority.


            (d) Any money, property or securities realized upon
the sale, disposition or other realization upon all or any part
of the Collateral, shall be applied in the following order:

        (1) First, to the payment in full of all costs and expenses
            (including, without limitation, reasonable attorneys'
            fees and disbursements) paid or incurred by the
            Secured Parties in connection with such realization on
            the Collateral or the protection of their rights and
            interests therein;

        (2) Second, to the Secured Parties, ratably, in payment of
            all Obligations until such Obligations are paid in full;

        (3) Third, to the Company, or its representative or as a
            court of competent jurisdiction may direct, any
            surplus then remaining.

        In furtherance of the foregoing, each Secured Party agrees
that if it receives any payment in respect of the Obligations in
excess of its ratable share of all such payments received by all
Secured Parties, such Secured Party shall immediately pay to the
other Secured Parties such amount as is necessary so that all
Secured Parties have received their ratable share of all such
payments and, in the event of any such payment by a Secured Party,
Grantor agrees that the Obligations owing to such Secured Party shall
be reinstated to the extent of such payment.

    27. MISCELLANEOUS.

               (a) Reinstatement.  This Agreement shall remain in
full force and effect and continue to be effective should any
petition be filed by or against Grantor for liquidation or
reorganization, should Grantor become insolvent or make an
assignment for the benefit of any creditor or creditors or should
a receiver or trustee be appointed for all or any significant part
of Grantor's assets, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant
to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent
conveyance," or otherwise, all as though such payment or
performance had not been made.  In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.


               (b) Notices.  Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may
be given to or served upon any of the parties by any other party,
or whenever any of the parties desires to give and serve upon any
other party any communication with respect to this Agreement, each
such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be given in the
manner, and deemed received, as provided for in the Purchase
Agreement.

               (c) Severability.  Whenever possible, each provision
of this Agreement shall be interpreted in a manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement. This
Agreement and the Note and the Warrant Agreement for Common Stock
of the Company set forth the complete understanding and agreement
of the Secured Parties and the Grantor with respect to the matters
referred to herein and therein.

               (d) No Waiver; Cumulative Remedies.  No Secured
Party shall by any act, delay, omission or otherwise be deemed to
have waived any of its rights or remedies hereunder, and no waiver
shall be valid unless in writing, signed by the Secured Parties
and then only to the extent therein set forth.  A waiver by the
Secured Parties of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy
which the Secured Parties would otherwise have had on any future
occasion.  No failure to exercise nor any delay in exercising on
the part of any of the Secured Parties, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege
hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and
remedies hereunder provided are cumulative and may be exercised
singularly or concurrently, and are not exclusive of any rights
and remedies provided by law. None of the terms or provisions of
this Agreement may be waived, altered, modified or amended except
by an instrument in writing, duly executed by the Secured Parties
and the Company.

               (e) Limitation by Law.  All rights, remedies and
powers provided in this Agreement may be exercised only to the
extent that the exercise thereof does not violate any applicable
provision of law, and all the provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of
law that may be controlling and to be limited to the extent
necessary so that they shall not render this Agreement invalid,
unenforceable, in whole or in part, or not entitled to be
recorded, registered or filed under the provisions of any
applicable law.

               (f) Termination of this Agreement.  Subject to
Section 27(a) hereof, this Agreement shall terminate upon the
payment in full of all Obligations (other than indemnification
Obligations as to which no claim has been asserted).

               (g) Successors and Assigns.  This Agreement and all
obligations of Grantor hereunder shall be binding upon the
successors and assigns of Grantor (including any
debtor-in-possession on behalf of Grantor) and shall, together
with the rights and remedies of the Secured Parties hereunder,
inure to the benefit of the Secured Parties, all future holders of
any instrument evidencing any of the Obligations and their
respective successors and assigns.  No sales of participations,
other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Obligations or
any portion thereof or interest therein shall in any manner affect
the Lien granted to the Secured Parties hereunder.   Grantor may
not assign, sell, hypothecate or otherwise transfer any interest
in or obligation under this Agreement.

               (h) Counterparts.  This Agreement may be executed in
any number of separate counterparts, each of which shall
collectively and separately constitute one and the same agreement.

               (i) Governing Law.  EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE TRANSACTION DOCUMENTS, IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF COLORADO APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.  GRANTOR HEREBY CONSENTS AND AGREES THAT
THE STATE OR FEDERAL COURTS LOCATED IN DENVER, COLORADO, SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN GRANTOR AND THE SECURED PARTIES PERTAINING TO
THIS SECURITY AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS
OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY
AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, PROVIDED,
THAT THE SECURED PARTIES AND GRANTOR ACKNOWLEDGE THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
OF DENVER, COLORADO, AND, PROVIDED, FURTHER, NOTHING IN THIS
SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY
SECURED PARTY FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN
ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE SECURED PARTIES.  GRANTOR EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION
OR SUIT COMMENCED IN ANY SUCH COURT, AND GRANTOR HEREBY WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. GRANTOR HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY
SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL ADDRESSED TO GRANTOR AT THE ADDRESS SET FORTH IN
THE NO TE AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE ACTUAL RECEIPT THEREOF.

               (j) Waiver of Jury Trial.  BECAUSE DISPUTES ARISING
IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY
AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND
THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
[(RATHER THAN ARBITRATION RULES EXCEPT AS EXPRESSLY SET FORTH IN
SECTION [26]), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER
OR RELATING HERETO [(EXCEPT AS EXPRESSLY SET FORTH IN SECTION
[26]) BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE
JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, AMONG THE SECURED PARTIES (OR ANY SECURED PARTY) AND
GRANTOR ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY
AGREEMENT OR THE TRANSACTIONS RELATED HERETO.

               (k) Section Titles. The Section titles contained in
this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement
between the parties hereto.

               (l) No Strict Construction.  The parties hereto have
participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties hereto and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue
of the authorship of any provisions of this Agreement.

               (m) Advice of Counsel.  Each of the parties represents
to each other party hereto that it has discussed this Agreement
and, specifically, the provisions of Section 27(i) and Section
27(j), with its counsel.

               (n) Benefit of the Secured Parties.  All Liens
granted or contemplated hereby shall be for the benefit of
the Secured Parties, and all proceeds or payments realized from
Collateral in accordance herewith shall be applied to the
Obligations.

        IN WITNESS WHEREOF, each of the parties hereto has
caused this Security Agreement to be executed and delivered by its
duly authorized officer as of the date first set forth above.


                               CONCEPTS DIRECT, INC.,
                               as a Grantor

                               By:/s/Cody S. McGarraugh___________
                               Cody S. McGarraugh
                               Chief Financial Officer


                               PHILLIP A. WILAND,
                               as a Secured Party

                               By:/s/Phillip A. Wiland____________
                               Phillip A. Wiland

                               LINDA S. WILAND,
                               as a Secured Party

                               By:/s/Linda S. Wiland______________
                               Linda S. Wiland