Document:

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                                                                    Exhibit 10.4

                              SECURITY AGREEMENT

     THIS SECURITY AGREEMENT is entered into as of the 17th day of September,
2001, by and between GRAD PARTNERS, INC., an Ohio corporation (the "Borrower"),
                                                                    --------
FIFTH THIRD BANK, not in its individual capacity but solely as eligible lender
trustee on behalf of Grad Partners, Inc. (the "Borrower ELT") and FIFTH THIRD
                                               ------------
BANK, an Ohio banking corporation (the "Lender").
                                        ------

Section 1.  Definitions:
            -----------

     1.1    Specific Definitions.  The following definitions shall apply:
            --------------------

     (a)    "Collateral" has the meaning set forth in Section 2.1 hereof.
             ----------

     (b)    "Guarantee Payment" means any payment by a Guarantor with respect to
             -----------------
a Student Loan .

     (c)    "Guarantor" means any guarantee agency that guarantees the payment
             ---------
of any Student Loan included in the Collateral.

     (d)    "Higher Education Act" has the meaning set forth in Section 2.4
             --------------------
hereof.

     (e)    "Lien" means any security interest, mortgage, pledge, assignment,
             ----
lien or other encumbrance of any kind, including interests of vendors or lessors
under conditional sale contracts or capital leases.

     (f)    "Loan and Security Agreement" means a Loan and Security Agreement
             ---------------------------
among Borrower, Borrower ELT and a LSA Debtor pursuant to which the LSA Debtor
has granted a security interest to Borrower in certain Student Loans originated
by or on behalf of such LSA Debtor with funds provided by Borrower.

     (g)    "LSA Debtor" means any graduate school or other student loan
             ----------
originator who is a party to a Loan and Security Agreement.

     (h)    "Student Loan Debtor" means the obligor of a Student Loan.
             -------------------

     1.2    Other Definitions.  Capitalized terms not defined herein have the
            -----------------
meanings set forth in the Credit Agreement of even date herewith between
Borrower and Lender (the "Credit Agreement").  All other undefined terms shall
                          ----------------
have the meaning given to them in the Ohio Uniform Commercial Code.

Section 2.  Security.
            --------

     2.1    Security Interest of Lender. To induce Lender to make the Loans,
            ---------------------------
and as security for all Obligations, Borrower (and Borrower ELT in its capacity
as title holder to

                                       1
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the Student Loans that are part of the Collateral) hereby assigns to Lender as
collateral and grants to Lender a continuing first priority pledge and security
interest in the following property of Borrower (the "Collateral"), whether now
                                                     ----------
owned or existing or hereafter acquired or arising and regardless of where it is
located:

     (a)    all of Borrower's and the Borrower ELT's right, title and interest
in each Student Loan owned by Borrower, including all instruments, chattel
paper, documents, securities, money, cash, promissory notes, loan applications
and cash proceeds and payments related thereto but excluding any such Student
Loan and the instruments, chattel paper, documents, securities, money, cash,
promissory note, loan application and proceeds relating thereto, that is sold
and transferred to Grad Partners Premier, LLC (and Fifth Third Bank as eligible
lender trustee on its behalf).

     (b)    all of Borrower's right, title and interest in each Loan and
Security Agreement listed on Exhibit A attached hereto as such exhibit may be
                             ---------
amended from time to time.

     (c)    all proceeds and products of Collateral and all additions and
accessions to, replacements of, insurance or condemnation proceeds of, and
documents covering Collateral.

     2.2    Items Not Included in Collateral.  The Lender hereby expressly
            --------------------------------
acknowledges that the Borrower shall sell Student Loans to Grad Partners Premier
LLC, a Delaware limited liability company and that the proceeds of such sales
shall be used to repay amounts owed by Borrower to Lender under the Credit
Agreement.  Lender further expressly acknowledges that it does not have, and if
necessary will immediately release, any Lien on or security interest in, any
Student Loans, and the instruments, chattel paper, documents, securities,
money, cash, promissory notes, loan applications and proceeds relating thereto,
that are sold and transferred to Grad Partners Premier, LLC (and Fifth Third
Bank, as eligible lender trustee on its behalf) and for which the proceeds of
such sales have been delivered to Lender.

     2.3    Representations in Schedule I. The representations and warranties
            -----------------------------
in Schedule I attached hereto entitled the Specific Representation Schedule are
true and correct in all material respects. Except as otherwise permitted
hereunder, Borrower shall not change its name, transfer executive offices or
maintain records with respect to Collateral at any location other than the
present locations specified in that schedule.

     2.4    Provisions Concerning the Collateral.  (a)  Borrower represents and
            ------------------------------------
warrants that each Student Loan and Loan and Security Agreement contained in the
Collateral reflected on each Collateral report submitted to Lender is, or at the
time it arises shall be owned by Borrower free and clear of all Liens in favor
of any third party, shall be a bona fide existing obligation and shall not be
subject to any known deduction, offset, counterclaim, return privilege or other
condition, except as applicable under the Federal Family Education Loan Program
as authorized by the Higher Education Act of

                                       2
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1965 and all regulations promulgated thereunder, each as amended from time to
time (the "Higher Education Act") or on Collateral reports delivered to Lender.
           --------------------

     (b)    Any officer, employee or agent of Lender shall have the right, at
any time or times hereafter, in the name of Lender or its nominee (including
Borrower), to verify the validity, amount or any other matter relating to any
Student Loan or any Loan and Security Agreement by mail, telephone, or
otherwise. Lender or its designee may at any time notify LSA Debtors or any
Student Loan Debtor that a security interest has been granted in the Loan and
Security Agreements and the Student Loans to Lender and after default by
Borrower hereunder collect the same directly and charge all collection costs and
expenses to Borrower's account.

     (c)    If Borrower becomes aware that a LSA Debtor or a Student Loan
Debtor disputes liability or makes any claim with respect to a Loan and Security
Agreement in excess of $10,000 or that a receivership petition or petition under
any chapter of the federal bankruptcy act is filed by or against a LSA Debtor or
a Student Loan Debtor, or that a LSA Debtor or a Student Loan Debtor dissolves,
makes an assignment for the benefit of creditors, becomes insolvent, fails or
goes out of business, or that any other event occurs which adversely affects the
value of any Loan and Security Agreement owed by a LSA Debtor or any Student
Loan owed by a Student Loan Debtor, Borrower shall immediately notify Lender of
each such event where such event is material in nature. After default by
Borrower hereunder, Borrower shall not grant any discounts, credit or allowances
to any LSA Debtor, or to any Student Loan Debtor except as required by the
Higher Education Act. After default by Borrower, Lender may settle disputes and
claims directly with LSA Debtors and Student Loan Debtors, and in such cases,
Lender shall credit Borrower's account with the net amounts collected from such
disputed Loan and Security Agreements or Student Loans, after expenses of
collection.

     (d)    Effective upon any Event of Default, Borrower (and Borrower ELT on
behalf of Borrower) hereby grant a power of attorney and all necessary
authorization to Lender to maintain any and all collection procedures with
respect to the Collateral, including with respect to Student Loans contained in
the Collateral, filing, pursuing and recovering claims against Guarantors for
Guarantee Payments and taking steps to enforce such Student Loans such as
commencing a legal proceeding to enforce a Student Loan in the name of the
Borrower or the Borrower ELT.

     2.5    Liens.  Borrower as to the Loan and Security Agreement, and the
            -----
Borrower ELT as to the Student Loans, has good and marketable title to its
respective Collateral, and the Liens granted to Lender in this Agreement are
enforceable, and upon (a) receipt by Lender of an Acknowledgment and Acceptance
of Bailment Notice from Great Lakes Higher Education Servicing Corporation as
bailee on Lender's behalf, and (b) the filing of financing statements naming the
LSA Debtor, the Borrower and the Borrower ELT have been duly filed in the
appropriate offices, are fully perfected first priority Liens in the Collateral
with priority over the rights of every person other than Borrower in the
Collateral.

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     2.6    Further Assurances. (a) Borrower shall execute and deliver to
            ------------------
Lender at Lender's request all financing statements, continuation statements and
other documents that Lender may reasonably request, in form satisfactory to
Lender, to perfect and maintain perfected Lender's security interest in the
Collateral and to fully consummate all transactions contemplated under this
Agreement. Borrower hereby irrevocably makes, constitutes and appoints Lender
(and any of Lender's officers, employees or agents designated by Lender) as
Borrower's true and lawful attorney with power to sign the name of Borrower on
any such documents.

     (b)    If any Collateral, including proceeds, consists of a letter of
credit, advice of credit, instrument, money, negotiable documents, chattel paper
or similar property (collectively, "Negotiable Collateral") Borrower shall,
immediately upon receipt thereof, deliver actual physical possession of the
Negotiable Collateral to Lender with such endorsements as may be necessary.

     (c)    Lender may inspect and verify Borrower's books and records at any
time or times hereafter, during usual business hours, in order to verify the
amount or condition of the Collateral, or any other matter relating to the
Collateral or Borrower's financial condition. Borrower shall promptly deliver to
Lender copies of all books and records requested by Lender.

     2.7    Other Amounts Deemed Loans.  If Borrower fails to pay any tax,
            --------------------------
assessment, government charge or levy or to maintain insurance within the time
permitted by this Agreement or the Credit Agreement, or to discharge any Lien
prohibited hereby, or to comply with any other obligation, Lender may, but shall
not be required to, pay, satisfy, discharge or bond the same of the account of
Borrower, and to the extent permitted by law and all monies so paid out shall be
secured by the Collateral.

     2.8    Borrower Remains Liable.  Borrower shall remain liable under any
            -----------------------
contracts and agreements included in the Collateral to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, and Lender shall not have any obligation or liability under such
contracts and agreements by reason of this Agreement or otherwise.

     Section 3     Events of Default and Remedies.
                   ------------------------------

     3.1    Events of Default. Any of the following events shall be an Event of
            -----------------
Default:

     (a)    any representation or warranty made herein by Borrower is incorrect
in any material respect when made; or

     (b)    Borrower fails to observe or perform any covenant, condition or
agreement herein and the failure or inability of Borrower to cure such default
for a period of 30 days after the occurrence thereof, provided that such 30 day
grace period shall not apply to (i) a breach of any covenant which in Lender's
good faith judgement is incapable

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of cure, (ii) any failure to maintain insurance or permit inspection of the
Collateral or of the books and records of Borrower, or (iii) any breach of any
covenant which has already occurred; or

     (c)    an Event of Default occurs under the Credit Agreement, the Loan
Documents or any document or agreement evidencing or securing the Obligations.

     3.2    Remedies. If any Event of Default shall occur and be continuing, in
            --------
addition to the remedies provided in the Credit Agreement:

     (a)    Lender may resort to the rights and remedies of a Lender under the
Ohio Uniform Commercial Code including the right to enter any premises of
Borrower, with or without legal process and take possession of the Collateral
and remove it and any records pertaining thereto and/or remain on such premises
and use it for the purpose of collecting, preparing and disposing of the
Collateral;

     (b)    Borrower shall upon request of Lender assemble the Collateral and
any records pertaining thereto and make them available at a place designated by
Lender; or

     3.3    No Remedy Exclusive. No remedy set forth herein is exclusive of any
            -------------------
other available remedy or remedies, but each is cumulative and in addition to
every other remedy given under this Agreement or the Credit Agreement or now or
hereafter existing at law or in equity or by statute.

Section 4   Miscellaneous Provisions.
            ------------------------

     4.1    Miscellaneous.  No delay or omission to exercise any right shall
            -------------
impair any such right or be a waiver thereof, and a waiver on one occasion shall
be limited to that particular occasion.  This Agreement may be amended only in
writing signed by the party against whom enforcement of the amendment is sought.
This Agreement may be executed in counterparts.  If any part of this Agreement
is held invalid, the remainder of this Agreement shall not be affected thereby.

     4.2    Binding Effect. This Agreement shall be binding upon and inure to
            --------------
the benefit of the respective legal representatives, successors and assigns of
the parties hereto; however, Borrower may not assign any of its rights or
delegate any of its obligations hereunder. Lender (and any subsequent assignee)
may transfer and assign this Agreement or may assign partial interests or
participation in the Loans to other persons.

     4.3    Financing Statement. Borrower hereby authorizes Lender to file a
            -------------------
copy of this Agreement as a Financing Statement under the Ohio Uniform
Commercial Code with appropriate county and state government authorities
necessary to perfect the Lender's security interest in the Collateral as set
forth herein.

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     4.4    Notices.  Any notices under or pursuant to this agreement shall be
            -------
deemed duly sent when delivered in hand or when mailed by registered or
certified mail, return receipt requested, to the addresses then provided for in
the Notices section of the Credit Agreement.

     4.6    Governing Law; Jurisdiction. This Agreement shall be governed by
            ---------------------------
the domestic laws of the State of Ohio. Borrower agrees that the state and
federal courts in Hamilton County, Ohio or any other court in which Lender
initiates proceedings have exclusive jurisdiction over all matters arising out
of this Agreement, and that service of process in any such proceeding shall be
effective if mailed to Borrower at its address described in the Notices section
of the Credit Agreement. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO TRIAL BY
JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

                           [Signature page follows]

                                       6
<PAGE>

       IN WITNESS WHEREOF, Borrower, Borrower ELT and Lender have executed this
Security Agreement by their respective duly authorized officers as of the date
first above written.

                                    BORROWER:

                                    GRAD PARTNERS, INC.

                                    By:     ______________________________

                                    Title:  ______________________________

                                    BORROWER ELT:

                                    FIFTH THIRD BANK, as eligible lender
                                    trustee on behalf of Grad Partners, Inc.

                                    By:     ______________________________

                                    Title:  ______________________________

                                    LENDER:

                                    FIFTH THIRD BANK

                                    By:     ______________________________

                                    Title:  ______________________________

                    [Signature page to Security Agreement]

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<PAGE>

                                  SCHEDULE I

                           SPECIFIC REPRESENTATIONS
                            ------------------------

     1.  The exact legal name of Borrower is: Grad Partners, Inc.

     2.  Borrower has not changed its name since it was incorporated.

     3.  Borrower uses in its business and owns the following trade names:
Student Assistance Group and Consolidation Assistance Group.

     4.  Borrower was incorporated on October 3, 2000, under the laws of the
State of Delaware, and is in good standing under those laws.

     5.  Borrower is qualified to transact business in Delaware, California and
Ohio.

     6.  Borrower has its chief executive office and principal place of business
at 12760 High Bluff Drive, Suite 210, San Diego, California 92130.  Borrower
maintains all its records with respect to the Collateral at that address.

     7.  Borrower also has a place of business at Six East Fourth Street, Suite
300, Cincinnati, Ohio 45202.

     8.  In the past five (5) years, Borrower has never maintained its chief
executive office or principal place of business or records with respect to the
Collateral at any location except that set forth in paragraph 6 above.

     9.  No entity (a) has been merged into Borrower, (b) has sold substantially
all of its assets to Borrower outside the ordinary course of its business since
Borrower was incorporated.

     10.  Borrower does not have any subsidiaries, or own stock in any other
corporations, or own an interest in any partnerships or joint ventures, except
Grad Partner Premier, LLC, a Delaware limited liability company.

     11.  Borrower is not a plaintiff or defendant in any litigation.

                                       8
<PAGE>

                                   EXHIBIT A
                                      TO
                           UCC-1 FINANCING STATEMENT
                           -------------------------

DEBTOR:                                 SECURED PARTY:
Grad Partners, Inc.                     Fifth Third Bank
12760 High Bluff Drive, Suite 210       38 Fountain Square Plaza
San Diego, California 92130             Cincinnati, Ohio 45263

This UCC-1 Financing Statement covers the following property of Grad Partners,
Inc. whether now owned or existing or hereafter acquired or arising regardless
of where it is located (collectively referred to herein as the "Collateral"):
                                                                ----------

     (a)   all of Borrower's and the Borrower ELT's right, title and interest in
each Student Loan owned by Borrower, including all instruments, chattel paper,
documents, securities, money, cash, promissory notes, loan applications and cash
proceeds and payments related thereto but excluding any such Student Loan and
the instruments, chattel paper, documents, securities, money, cash, promissory
note, loan application and proceeds relating thereto, that is sold and
transferred to Grad Partners Premier, LLC (and Fifth Third Bank as eligible
lender trustee on its behalf).

     (b)   all of Borrower's right, title and interest in each Loan and Security
Agreement that may be entered into from time to time.

     (c)   all proceeds and products of the Collateral and all additions and
accessions to, replacements of, insurance or condemnation proceeds of, and
documents covering Collateral.

     As used herein, the following terms shall have the meanings set forth
below:

     "Borrower" means Grad Partners, Inc.
      --------

     "Borrower ELT" means Fifth Third Bank not in its individual capacity but
      ------------
solely as eligible lender trustee on behalf of Borrower.

     "Loan and Security Agreement" means a Loan and Security Agreement among
      ---------------------------
Borrower, Borrower ELT and a LSA Debtor pursuant to which the LSA Debtor has
granted a security interest to Borrower in certain Student Loans originated by
or on behalf of such LSA Debtor with funds provided by Borrower.

     "LSA Debtor" means any graduate school or other student loan originator who
      ----------
is a party to a Loan and Security Agreement.

     "Student Loan" - shall mean loans made to or for the benefit of eligible
      ------------
students to cover the cost of attending eligible post secondary education
institutions that are originated pursuant to the Federal Family Education Loan
Program authorized under the Higher Education Act of 1965, as amended from time
to time, or, subject to the prior written consent of Fifth Third Bank,
authorized under a private consumer education loan program.

                                       9<PAGE>

                                                                    Exhibit 10.5

                          CONTINUING GUARANTY AGREEMENT

         THIS CONTINUING GUARANTY AGREEMENT (the "Guaranty") made as of the 17th
                                                  --------
day of September, 2001, by and between DIRECT III MARKETING, INC., a Delaware
corporation ("Guarantor") and FIFTH THIRD BANK, an Ohio banking corporation, for
              ---------
itself and as agent for any affiliate of Fifth Third Bancorp ("Beneficiary").
                                                               -----------
                             W I T N E S S E T H:

         WHEREAS, Beneficiary has agreed to extend credit and financial
accommodations to GRAD PARTNERS, INC., a Delaware corporation ("Borrower"),
                                                                --------
pursuant to the Credit Agreement, dated of even date herewith, by and between
Borrower and Beneficiary, together with the $5,000,000 Revolving Note, dated of
even date herewith, executed by Borrower and made payable to the order of
Beneficiary (the "Note"), and all agreements, instruments and documents executed
                  ----
or delivered in connection with any of the foregoing or otherwise related
thereto (together with any amendments, modifications, or restatements thereof,
the "Loan Documents"); and
     ---- ---------

         WHEREAS, Guarantor is affiliated with Borrower and, as such, shall be
benefited directly by the transaction contemplated by the Loan Documents, and
shall execute this Guaranty in order to induce Beneficiary to enter into such
transaction.

NOW, THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, Guarantor hereby guarantees, promises and undertakes as
follows:

         1.    GUARANTY.
               --------

               (a)  Guarantor hereby unconditionally, absolutely and irrevocably
guarantees to Beneficiary the full and prompt payment and performance when due
(whether at maturity by acceleration or otherwise) of any and all loans,
advances, indebtedness and each and every other obligation or liability of
Borrower owed to Beneficiary and any affiliate of Fifth Third Bancorp, however
created, of every kind and description, whether now existing or hereafter
arising and whether direct or indirect, primary or as guarantor or surety,
absolute or contingent, due or to become due, liquidated or unliquidated,
matured or unmatured, participated in whole or in part, created by trust
agreement, lease, overdraft, agreement, or otherwise, whether or not secured by
additional collateral, whether originated with Beneficiary or owed to others and
acquired by Beneficiary by purchase, assignment or otherwise, and including,
without limitation, all loans, advances, indebtedness and each and every other
obligation or liability arising under the Loan Documents, letters of credit now
or hereafter issued by Beneficiary or any affiliate of Fifth Third Bancorp for
the benefit of or at the request of Borrower, all obligations to perform or
forbear from performing acts, and all agreements, instruments and documents
evidencing, guarantying, securing or otherwise executed in connection with any
of the foregoing, together with any amendments, modifications, and restatements
thereof, and all expenses and attorneys' fees incurred or other sums disbursed
by Beneficiary or any affiliate of Fifth Third Bancorp under
<PAGE>

this Guaranty or any other document, instrument or agreement related to any of
the foregoing (collectively, the "Obligations").
                                  -----------

          (b)  This Guaranty is a continuing guaranty of payment, and not merely
of collection, that shall remain in full force and effect until expressly
terminated in writing by Beneficiary, notwithstanding the fact that no
Obligations may be outstanding from time to time. Such termination by
Beneficiary shall be applicable only to transactions having their inception
after the effective date thereof, and shall not affect the enforceability of
this Guaranty with regard to any Obligations arising out of transactions having
their inception prior to such effective date, even if such Obligations shall
have been modified, renewed, compromised, extended, otherwise amended or
performed by Beneficiary subsequent to such termination. In the absence of any
termination of this Guaranty as provided above, Guarantor agrees that
Guarantor's obligations hereunder shall not be deemed discharged or satisfied
until the Obligations are fully paid and performed, and no such payments or
performance with regard to the Obligations is subject to any right on the part
of any person whomsoever, including but not limited to any trustee in
bankruptcy, to recover any of such payments. If any such payments are so set
aside or settled without litigation, all of which is within Beneficiary's
discretion, Guarantor shall be liable for the full amount Beneficiary is
required to repay, plus costs, interest, reasonable attorneys' fees and any and
all expenses that Beneficiary paid or incurred in connection therewith. A
successor of Borrower, including Borrower in its capacity as debtor in a
bankruptcy reorganization case, shall not be considered to be a different person
than Borrower; and this Guaranty shall apply to all Obligations incurred by such
successor.

          (c)  Guarantor agrees that Guarantor is directly and primarily liable
to Beneficiary and that the Obligations hereunder are independent of the
Obligations of Borrower, or of any other guarantor. The liability of Guarantor
hereunder shall survive discharge or compromise of any Obligation of Borrower in
bankruptcy or otherwise. Beneficiary shall not be required to prosecute or seek
to enforce any remedies against Borrower or any other party liable to
Beneficiary on account of the Obligations, or to seek to enforce or resort to
any remedies with respect to any collateral granted to Beneficiary by Borrower
or any other party on account of the Obligations, as a condition to payment or
performance by Guarantor under this Guaranty.

          (d)  Beneficiary may, without notice or demand and without affecting
its rights hereunder, from time to time: (i) renew, extend, accelerate or
otherwise change the amount of, the time for payment of, or other terms relating
to, any or all of the Obligations, or otherwise modify, amend or change the
terms of the Loan Documents or any other document or instrument evidencing,
securing or otherwise relating to the Obligations,(ii) take and hold collateral
for the payment of the Obligations guaranteed hereby, and exchange, enforce,
waive, and release any such collateral, and apply such collateral and direct the
order or manner of sale thereof as Beneficiary in its discretion may determine.
Accordingly, Guarantor hereby waives notice of any and all of the foregoing.

          (e)  Guarantor hereby waives all defenses, counterclaims and off-sets
of any kind or nature, whether legal or equitable, that may arise: (i) directly
or indirectly from the present or future lack of validity, binding effect or
enforceability of the Loan Documents or any other document or instrument
evidencing, securing or otherwise relating to the Obligations, (ii)

                                       2
<PAGE>

from Beneficiary's impairment of any collateral, including the failure to record
or perfect the Beneficiary's interest in the collateral, or (iii) by reason of
any claim or defense based upon an election of remedies by Beneficiary in the
event such election may, in any manner, impair, affect, reduce, release, destroy
or extinguish any right of contribution or reimbursement of Guarantor, or any
other rights of the Guarantor to proceed against any other guarantor, or against
any other person or any collateral.

          (f)  Guarantor hereby waives all presentments, demands for performance
or payment, notices of nonperformance, protests, notices of protest, notices of
dishonor, notices of default or nonpayment, notice of acceptance of this
Guaranty, and notices of the existence, creation, or incurring of new or
additional Obligations, and all other notices or formalities to which Guarantor
may be entitled, and Guarantor hereby waives all suretyship defenses, including
but not limited to all defenses set forth in the Uniform Commercial Code as in
effect as of the date hereof in the State of Ohio, (the "Ohio Uniform Commercial
                                                         -----------------------
Code") to the full extent such a waiver is permitted thereby.
----
          (g)  Guarantor hereby irrevocably waives all legal and equitable
rights to recover from Borrower any sums paid by the Guarantor under the terms
of this Guaranty, including without limitation all rights of subrogation and all
other rights that would result in Guarantor being deemed a creditor of Borrower
under the federal Bankruptcy Code or any other law, and Guarantor hereby waives
any right to assert in any manner against Beneficiary any claim, defense,
counterclaim and off-set of any kind or nature, whether legal or equitable, that
Guarantor may now or at any time hereafter have against Borrower or any other
party liable to Beneficiary.

     2.   REPRESENTATIONS, WARRANTIES AND COVENANTS.  Guarantor hereby
          -----------------------------------------
represents, warrants and covenants as follows:

          (a)  Guarantor is duly organized, validly existing and in good
standing under the laws of the state of its organization, has the power and
authority to carry on its business and to enter into and perform this Guaranty,
and is qualified and licensed to do business in each jurisdiction in which such
qualification or licensing is required.

          (b)  The execution, delivery and performance by Guarantor of this
Guaranty have been duly authorized by all necessary company action, and shall
not violate any provision of law or regulation applicable to Guarantor, or the
articles of organization or operating agreement of Guarantor, or any writ or
decree of any court or governmental instrumentality, or any instrument or
agreement to which Guarantor is a party or by which Guarantor may be bound; this
Guaranty is a legal, valid and binding obligation of said Guarantor, enforceable
in accordance with its terms; and there is no action or proceeding before any
court or governmental body or agency now pending that may materially adversely
affect the condition (financial or otherwise) of Guarantor.

     3.   EVENTS OF DEFAULT. Any of the following occurrences shall constitute
          -----------------
an "Event of Default" under this Guaranty:
    ----------------
                                       3
<PAGE>

     (a)  An Event of Default occurs under the terms of the Loan Documents or
          any other document or instrument evidencing, securing or otherwise
          relating to the Obligations, as "Event of Default" shall be defined
          therein.

     (b)  Guarantor shall fail to observe or perform any covenant, condition, or
          agreement under this Guaranty for a period of thirty (30) days after
          date of such breach, or any representation or warranty of Guarantor
          set forth in this Guaranty shall be materially inaccurate or
          misleading when made or delivered.

     (c)  The death, legal incompetence or dissolution of Guarantor, of the
          general partner thereof, or of any endorser or other guarantor of the
          Obligations, or the merger or consolidation of any of the foregoing
          with a third party, or the lease, sale or other conveyance of a
          material part of the assets or business of any of the foregoing to a
          third party outside the ordinary course of its business, or the lease,
          purchase or other acquisition of a material part of the assets or
          business of a third party by any of the foregoing.

     (d)  The default by Guarantor under the terms of any indebtedness of
          Guarantor now or hereafter existing, which default has not been cured
          within any time period permitted pursuant to the terms and conditions
          of such indebtedness or the occurrence of an event which gives any
          creditor the right to accelerate the maturity of any such
          indebtedness.

     (e)  The commencement by Guarantor of a voluntary case under any applicable
          bankruptcy, insolvency or other similar law now or hereafter in
          effect; or the entry of a decree or order for relief in respect of
          Guarantor in a case under any such law or appointing a receiver,
          liquidator, assignee, custodian, trustee, sequestrator (or other
          similar official) of Guarantor or for any substantial part of
          Guarantor's property, or ordering the wind-up or liquidation of
          Guarantor's affairs; or the filing and pendency for 30 days without
          dismissal of a petition initiating an involuntary case under any such
          bankruptcy, insolvency or similar law; or the making by Guarantor of
          any general assignment for the benefit of creditors; or the failure of
          Guarantor generally to pay Guarantor's debts as such debts become due;
          or the taking of action by Guarantor in furtherance of any of the
          foregoing.

     (f)  The revocation or attempted revocation of this Guaranty by Guarantor
          before the termination of this Guaranty in accordance with its terms,
          or the assignment or attempted assignment of this Guaranty by
          Guarantor.

4.   REMEDIES.
     --------

     (a)  Whenever any Event of Default as defined herein shall have happened,
Beneficiary, in its sole discretion, may take any remedial action permitted by
law or in

                                       4
<PAGE>

     equity or by the Loan Documents or any other document or instrument
     evidencing, securing or otherwise relating to the Obligations, including
     demanding payment in full of all sums guaranteed hereby, plus any accrued
     interest or other expenses.

          (b)  If Beneficiary should employ attorneys or incur other expenses
     for the enforcement of this Guaranty, Guarantor, on demand therefor, shall
     reimburse the reasonable fees of such attorneys and such other expenses to
     the extent permitted by law.

          (c)  No remedy set forth herein is exclusive of any other
     available remedy or remedies, but each is cumulative and in addition to
     every other remedy given under this Guaranty or now or hereafter existing
     at law or in equity or by statute. No delay or omission on the part of
     Beneficiary to exercise any right or remedy shall be construed to be a
     waiver thereof, but any such right or remedy may be exercised from time to
     time and as often as may be deemed expedient thereby, and a waiver on any
     one occasion shall be limited to that particular occasion.

     5.   FINANCIAL CONDITION OF BORROWER. Guarantor is presently informed of
          -------------------------------
the financial condition of Borrower and of all other circumstances that a
diligent inquiry would reveal and which would bear upon the risk of nonpayment
of any of the Obligations. Guarantor hereby covenants that Guarantor shall
continue to keep informed of such matters, and hereby waives Guarantor's right,
if any, to require Beneficiary to disclose any present or future information
concerning such matters including, but not limited to, the release of or
revocation by any other guarantor.

     6.   SUBORDINATION. All indebtedness and liability now or hereafter owing
          -------------
by Borrower to Guarantor is hereby postponed and subordinated to the Obligations
owing to Beneficiary; and such indebtedness and liability to Guarantor, if
Beneficiary so requests, shall be collected, enforced and received by Guarantor
as trustee for Beneficiary and be paid over to Beneficiary on account of the
Obligations.

     7.   NOTICES. Any notices under or pursuant to this Guaranty shall be
          -------
deemed duly sent when delivered in hand or when mailed by registered or
certified mail, return receipt requested, addressed as follows:

          To Guarantor:   DIRECT III MARKETING, INC.
                          12760 High Bluff Drive
                          Suite 210
                          San Diego, California 92130
                          Attention:  Robert deRose

          To Beneficiary: FIFTH THIRD BANK
                          38 Fountain Square Plaza
                          Cincinnati, Ohio 45263
                          Attention:  Andrew Hauck

          Either party may change such address by sending notice of the change
to the other party.

                                       5
<PAGE>

8.        MISCELLANEOUS.
          -------------

(a)  This Guaranty may be executed by the parties hereto in separate
     counterparts, each of which when so executed and delivered shall be an
     original, but all such counterparts shall together constitute but one and
     the same instrument.
(b)  This Guaranty is the complete agreement of the parties hereto and
     supersedes all previous understandings and agreements relating to the
     subject matter hereof. Neither this Guaranty nor any of the terms hereof
     may be terminated, amended, supplemented, waived or modified orally, but
     only by an instrument in writing signed by the party against whom
     enforcement of the termination, amendment, supplement, waiver or
     modification is sought.
(c)  As the context herein requires, the singular shall include the plural and
     one gender shall include one or both other genders.
(d)  This Guaranty shall inure to the benefit of Beneficiary's successors and
     assigns and shall be binding upon the heirs, executors, administrators and
     successors of Guarantor. This Guaranty is not assignable by Guarantor.
(e)  If any provision of this Guaranty or the application thereof to any person
     or circumstance is held invalid, the remainder of this Guaranty and the
     application thereof to other persons or circumstances shall not be affected
     thereby.
(f)  This Guaranty shall be governed by and construed in accordance with the law
     of the State of Ohio. Guarantor agrees that the state and federal courts
     for the County in which the Beneficiary is located or any other court in
     which Beneficiary initiates proceedings have exclusive jurisdiction over
     all matters arising out of this Guaranty.
(g)  GUARANTOR AND BENEFICIARY HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY
     MATTERS ARISING IN CONNECTION WITH THIS GUARANTY OR THE TRANSACTIONS
     RELATED THERETO.
(h)  This Guaranty may be executed by the parties hereto in separate
     counterparts, each of which when so executed and delivered shall be an
     original, but all such counterparts shall together constitute but one and
     the same instrument. This Guaranty is the complete agreement of the parties
     hereto and supersedes all previous understandings and agreements relating
     to the subject matter hereof; neither this Guaranty nor any of the terms
     hereof may be terminated, amended, supplemented, waived or modified orally,
     but only by an instrument in writing signed by the party against whom
     enforcement of the termination, amendment, supplement, waiver or
     modification is sought. As the context requires, the singular shall include
     the plural and one gender shall include one or both other genders. This
     Guaranty shall inure to the benefit of the Beneficiary's successors and
     assigns and shall be binding upon the heirs, executors, administrators and
     successors of the Guarantor. This Guaranty is nonassignable by the
     Guarantor. If any provision of this Guaranty or the application thereof to
     any person or circumstance is held invalid, the remainder of this Guaranty
     and the application thereof to other persons or circumstances shall not be
     affected thereby. This Guaranty shall be governed by and construed in
     accordance with the law of the State of Ohio. Guarantor agrees that the
     state and federal courts in Hamilton County, Ohio or any other court in
     which Beneficiary initiates proceedings have exclusive jurisdiction over
     all matters arising out of this Guaranty.

                                       6
<PAGE>

     GUARANTOR AND BENEFICIARY HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY
     MATTERS ARISING IN CONNECTION WITH THIS GUARANTY OR THE TRANSACTIONS
     RELATED THERETO.
(i)  Guarantor authorizes any attorney of record to appear for it in any court
     of record in the State of Ohio, after an Obligation becomes due and payable
     whether by its terms or upon default, waive the issuance and service of
     process, and release all errors, and confess a judgment against it in favor
     of the holder of such Obligation, for the principal amount of such
     Obligation plus interest thereon, together with court costs and attorneys'
     fees. Stay of execution and all exemptions are hereby waived. If an
     Obligation is referred to an attorney for collection, and the payment is
     obtained without the entry of a judgment, the obligors shall pay to the
     holder of such obligation its attorneys' fees. GUARANTOR AGREES THAT AN
     ATTORNEY WHO IS COUNSEL TO BENEFICIARY OR ANY OTHER HOLDER OF SUCH
     OBLIGATION MAY ALSO ACT AS ATTORNEY OF RECORD FOR GUARANTOR WHEN TAKING THE
     ACTIONS DESCRIBED ABOVE IN THIS PARAGRAPH. GUARANTOR AGREES THAT ANY
     ATTORNEY TAKING SUCH ACTIONS MAY BE PAID FOR THOSE SERVICES BY BENEFICIARY
     OR THE HOLDER OF SUCH OBLIGATION. GUARANTOR WAIVES ANY CONFLICT OF INTEREST
     THAT MAY BE CREATED BECAUSE THE ATTORNEY WHO ACTS FOR GUARANTOR PURSUANT TO
     THIS PARAGRAPH IS ALSO REPRESENTING BENEFICIARY OR THE HOLDER OF SUCH
     OBLIGATION, OR BECAUSE SUCH ATTORNEY IS BEING PAID BY BENEFICIARY OR THE
     HOLDER OF SUCH OBLIGATION.

                                       7
<PAGE>

         WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.

         IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
as of the date first above written.

                                        GUARANTOR:

                                             DIRECT III MARKETING, INC.

                                        By:    ________________________________

                                        Title: ________________________________

         Accepted this _____ day of September, 2001.

                                        BENEFICIARY:

                                             FIFTH THIRD BANK

                                        By:    ________________________________

                                        Title: ________________________________

                          [Signature page to Guaranty]

                                       8

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