Document:

Exhibit 10.9.1(b)

                           NEGOTIABLE PROMISSORY NOTE
                                     SECURED

$500,000.00
Place of Execution: Kew Gardens, N.Y.                Date: August 28, 2001

                               FOR VALUE RECEIVED

SmartPros,  Ltd. a Delaware corporation,  authorized to do business in the State
of New York as SmartPros of New York,  with a principal  place of business at 12
Skyline Drive,  Hawthorne,  N.Y. 10532,  hereinafter referred to as the "maker",
promises to pay to the order of FRESHSTART VENTURE CAPITAL CORP., at 437 Madison
Avenue,  38th  Floor,  New York,  N.Y.  10022,  or at such other place as may be
designated  in  writing  by the  holder  of  this  note,  the  principal  sum of
$500,000.00  with interest  thereon computed from the date hereof at the rate of
Eleven and  Three-Quarters  (11-3/4%)  percent  per annum for the first  monthly
payment,  and adjusted monthly thereafter at a rate to be calculated based on an
interest  rate equal to 500 basis  points (5%) above the  highest  prime rate as
published in the Wall Street Journal on the business day  immediately  preceding
the due date of each  monthly  payment,  but in no case to fall below Eleven and
Three-Quarters  (11-3/4%) percent per annum nor shall same exceed Thirteen (13%)
percent  per  annum.  Principal  and  interest  shall be paid in 60  consecutive
monthly  installments  each in the  amount  of  $8,333.33  as a fixed  principal
payment,  plus interest as calculated  above,  commencing and due and payable on
the 28th day of  September,  2001,  and on the 28th day of each and every  month
thereafter  to and  including  the 28th day of  August,  2006,  when any  unpaid
balance of principal  and interest  shall be due and payable.  Each  installment
payment and any other payment shall be applied  first to any  outstanding  fees,
charges or expenses,  then to the payment of interest on said  principal sum, or
on so much  thereof as shall from time to time  remain  unpaid,  and then to the
balance to the payment of said principal. This Note shall mature on the 28th day
of August, 2006.

If any payment or installment to be made hereunder, whether interest, principal,
or both,  is not made  within ten (10) days from its due date,  a late charge of
Twenty Five  Dollars  ($25.00) or five  percent (5%) of each payment so overdue,
whichever is greater,  may be charged by the holder for the purpose of defraying
the expenses incident to handling such delinquent payment. Upon thirty (30) days
prior  written  notice,  the Maker may prepay any  outstanding  principal sum in
excess of that required to pay the next scheduled  installment (of principal and
interest) due under this Note,  prepayable  only as of the date of any regularly
scheduled  installment,  by paying to the Holder a  prepayment  fee equal to one
(1%) percent of the principal  amount being  prepaid  during the first (1st) and
(2nd) years of the term of the within loan and thereafter  without  penalty with
interest to the date of prepayment. Partial prepayment will be allowed but shall
be subject to the same prepayment  penalty on any amounts prepaid and the amount
prepaid  shall be applied in inverse order of maturity to the  installments  due
under the Note. Notwithstanding the foregoing at any time during the term of the
loan,  Borrower  may raise  equity and prepay the loan in full with the proceeds
thereof. In that event, there shall be no prepayment penalty.

The holder may require  payments  hereunder to be made by certified  check if on
any two  occasions  the  maker's  checks  to the  holder  are not  honored  when
presented in due course to the bank on which they are drawn. In the event that a
check tendered by the Borrower  herein is not duly honored by the institution on
which it is drawn for ANY reason,  Lender  reserves the right to charge a fee in
accordance with the law in an amount not to exceed $50.00 per check.

Any of the following occurrences shall constitute a default under this note: The
non-payment  of any  installment  required  to be made  hereunder  on the  dates
specified  herein,  and such default continues for a period of ten (10) days; if
Allen  Greene  ceases  to be  Chief  Executive  Office  of  the  Borrower  and a
replacement  acceptable to the Lender is not appointed  within ninety (90) days;
failure to perform any agreement  herein  contained or contained in any security
agreement,  mortgage,  or any  other  agreement  delivered  by the  maker to the
holder;  or if any of the following  events occur with respect to the maker,  or
any endorser or any  guarantor of the payment of the  obligations  of the maker;
default in respect of any  liability,  obligation  or agreement  with the holder
hereof (present or future, absolute or contingent,  secured or unsecured, mature
or  unmatured,  several or joint,  original  or  acquired);  death;  insolvency;
commission of an act of  bankruptcy;  assignment for the benefit of creditors or
liquidating agent;  offering to or receiving from any creditors a composition or
extension  of any of their  indebtedness;  making  or  sending  a  notice  of an
intended bulk sale; the hole or partial suspension or liquidation of their usual
business; failure to pay any tax when due; commencement of any proceeding,  suit
or  action  under  any of the  provisions  of the  Federal  Bankruptcy  Act  for
adjudication  as a  bankrupt  or for  the  relief  under  any  provision  of the
bankruptcy or similar laws;  making any  misrepresentation  to the holder hereof
for the  purpose of  obtaining  credit or an  extension  of credit to the maker;
default under any collateral,  mortgage or security  agreement given as security
for this note or as security for the guaranty of payment of the  obligations  of
the maker hereof,  or under any extension or  modification  thereof;  entry of a
money  judgment  against  any of  them or  commencement  of any  proceeding  for
enforcement of a money judgment against any of them; default with respect to any
indebtedness  for  borrowed  money (other than  obligations  owing to the holder
hereof) or with respect to the payment of money pursuant to any agreement, lease
or other instrument beyond any period of grace provided  therein,  or default in
the  performance  of any other  term,  condition  or covenant  contained  in any
document under which such obligation is created.  In the event of the occurrence
of any  default  hereunder,  then,  at the  option  of the  holder,  the  entire
principal  balance and  interest  due shall  forthwith  become due and  payable.
Neither delay in asserting this right nor the acceptance of past due payments or
the imposition of late

1
<PAGE>

charges shall be deemed a waiver thereof. Upon the happening of any default, the
holder  hereof  shall have,  in addition to all other rights and  remedies,  the
remedies of a secured  party  under the New York  Uniform  Commercial  Code with
respect to any collateral security.

All  parties  to  this  note,  whether  maker,  guarantor,  or  endorser,  waive
presentment for payment, notice of dishonor,  protest, notice of protest of this
note or  other  notice  of any  kind  and  all  demands  whatsoever;  and in any
litigation  with the  holder,  whether or not arising out of or relating to this
note or any collateral security therefor,  said parties expressly waive trial by
jury, and in addition,  expressly waive the right to interpose any defense based
on  any  statute  of  limitations  or any  claim  of  laches  and  any  set-off,
counterclaim, or cross-claim of any nature or description.

The holder hereof shall not by any act of delay,  commission,  failure to act or
otherwise  be  deemed to have  waived  any  right,  power,  privilege  or remedy
hereunder, and no waiver whatever shall be valid unless in writing signed by the
holder  hereof,  and then only to the extent  therein  set forth,  nor shall any
single or partial  exercise of any right,  power,  privilege or remedy hereunder
preclude  any further  exercise  thereof,  or the  exercise of any other  right,
power,  privilege  or remedy.  The  rights  and  remedies  herein  provided  are
cumulative  and not exclusive of any rights or remedies  provided by law and may
be exercised singly or concurrently.  A waiver by the holder hereof of any right
or remedy  under  the  terms of this  note,  on any one  occasion,  shall not be
construed as a bar to any right or remedy which the holder would  otherwise have
had on any future occasion. No executory agreement, unless in writing and signed
by the  holder,  and no course of  dealing  between  the maker,  endorser(s)  or
guarantor(s)  hereof and the holder  shall be  effective  to change or modify or
discharge  in whole or in part this note  unless in  writing  and  signed by the
holder.  Interest on the  indebtedness  evidenced by this note after  default or
maturity shall be due and payable at the rate of two percent (2%) per month,  or
the highest rate allowable by law,  computed from the date to which interest was
last credited, to the date actual payment of the entire indebtedness.

This promissory  note and the  obligations of the undersigned  shall be governed
and construed in accordance with the laws of the State of New York. For purposes
of any  action  or  proceeding  involving  this  promissory  note  or any of the
obligations of the undersigned,  the undersigned hereby  irrevocably  submits to
the jurisdiction of the courts of the State of New York and of the United States
having  jurisdiction  in the  County of New York and the State of New York,  and
agrees  not to raise and  waives  any  objection  to or  defense  based upon the
jurisdiction or venue of any such court or based upon forum non conveniens.  The
undersigned  agrees not to bring any action or other  proceeding with respect to
this promissory note or with respect to any of its obligations  hereunder in any
other court unless such courts of the State of New York and of the United States
determine that they do not have jurisdiction in the matter.

This note shall be governed  and  construed in  accordance  with the laws of the
State of New York. Any provision hereof which may prove  unenforceable under any
law shall not affect the validity of any other provision  hereof.  This note may
not be changed or terminated  orally, but only by a writing signed by the holder
hereof.

SmartPros, Ltd.                                      SmartPros, Ltd.,
Maker                                                Maker

    /s/ Dr. William K. Grollman                           /s/ Alan Ross
-------------------------------                      ------------------------
By: Dr. William K. Grollman,                         By:  Alan Ross,
President                                            Chief Financial Officer

2Exhibit 10.9.1(c)

                               SECURITY AGREEMENT

AGREEMENT made as of August 28, 2001, by and between  FRESHSTART VENTURE CAPITAL
CORP.  with an address at 437 Madison  Avenue,  38th Floor,  New York,  New York
10022  (hereinafter  referred to as the "Secured Party") and SMARTPROS,  LTD., a
corporation  duly organized under the laws of the State of Delaware,  authorized
to do  business  in the State of New York as  SmartPros  of New  York,  having a
principal  place  of  business  at  12  Skyline  Drive,  Hawthorne,  N.Y.  10532
(hereinafter referred to as the "Debtor").

                              W I T N E S S E T H:

     WHEREAS,  the  Secured  Party  has  agreed  to lend the  Debtor  the sum of
$500,000.00 (the "Debt") to be repaid, pursuant to a Loan Agreement,  (the "Loan
Agreement") and a certain promissory note (the "Note") of even date herewith and
the Debtor has agreed to execute this  Security  Agreement  granting the Secured
Party a first and second  security  interest,  respectively,  in the  collateral
hereinafter described as a condition to Lender funding the said loan.

     NOW,  THEREFORE,  in consideration of the mutual promises  contained herein
and for other good and valuable consideration, it is hereby agreed as follows:

1. CREATION OF SECURITY INTEREST
--------------------------------

The Debtor hereby grants to the Security Party and the Secured Party hereby
accepts, a first and second security interest, respectively, in the collateral
described in Paragraph 2 herein to secure the payment of the Debt by Debtor in
accordance with the terms set forth in the Loan Agreement and the Note. The
Debtor hereby authorizes the Secured Party to file such financing statements or
amendments thereof as may be necessary in the form provided in Article 9 of the
Uniform Commercial Code to perfect the security interests herein created in the
collateral hereinafter described.

2. COLLATERAL
-------------

To secure the payment of an indebtedness in the amount of $500,000.00 with
interest thereon payable in accordance with the Note and Loan Agreement executed
on even date herewith, and also to secure any other indebtedness or liability of
the Debtor to the Secured Party, direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, including all future
advances or loans which may be made at the option of the Secured Party (all
hereinafter called the "Obligations"), Debtor does hereby grant and convey to
the Secured Party, a security interest in (and mortgages to, if so necessary)
all of the following collateral ( as such term may be referred to in Article 9
of the New York Uniform Commercial Code), to wit: all of the Debtor's assets,
including, but not limited to patents, copyrights, trademarks, film library,
inventory, equipment and intangibles of any nature, now or hereafter owned or
acquired by Borrower and/or its subsidiaries whether now owned, or later
acquired, arising of every kind and nature including but in no way limited to,
all assets relating to the on-line/video professional education business
operated by the Borrower and all assets listed on Schedule "A" annexed hereto,
and all of the Debtor's assets, inventories (raw materials, work-in-progress,
finished goods and supplies), titled motor vehicles, leases, finished goods and
supplies, contract rights, accounts receivable, in excess of $750,000.00, and
all tangible and intangible assets now owned or later acquired and all proceeds
and products from all collateral covered by this security agreement whether or
not purchased with loan proceeds located at Debtor's address or elsewhere, and
any other real and/or personal property owned by the Debtor, together with all
substitutions, replacements, additions and accessions thereto (hereinafter
referred to as "Collateral"). Debtor hereby authorizes secured parties to
execute and record any UCC-1 financing statements in connection herewith against
Debtor and/or its subsidiaries.

In addition, Debtor has granted Lender a second position security interest in
all receivables of the Debtor and/or its subsidiaries, subordinate only to a
first position security interest not to exceed $750,000.00.

3. REPRESENTATIONS AND WARRANTIES OF DEBTOR
-------------------------------------------

Debtor  warrants and  represents  the  following:  (A) Debtor  agrees to pay and
perform all of the  obligations  secured by this  Agreement  according  to their
terms and defend the title to the collateral against all persons and against all
claims and all demands  whatsoever;  (B) On demand of the Secured Party,  Debtor
will execute any written  agreement or do any other acts necessary to effectuate
the  purposes  and  provisions  of this  Agreement,  execute any  instrument  or
statement  required  by law or  otherwise  in  order  to  perfect,  continue  or
terminate the security  interest of the Secured Party in the  collateral and pay
all costs or filing  fees in  connection  therewith;  (C)  Debtor  shall  retain
possession of the  collateral  during the existence of this agreement and Debtor
agrees not to sell,  exchange,  assign,  loan,  deliver,  mortgage or  otherwise
dispose of same without the prior written  consent of the Secured Party.  Debtor
further agrees to keep the collateral at the location specified in this Security
Agreement; (D) Debtor agrees to keep the collateral free and clear of all liens,
charges,

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<PAGE>

encumbrances,   taxes  and  assessments,  and  to  pay,  when  due,  all  taxes,
assessments and licenses fees relating to the collateral.; (E) Debtor shall keep
the collateral insured against loss by fire (including extended coverage), theft
and other hazards as the Secured Party may require.  Debtor shall give immediate
written  notice to the  Secured  Party and to  insurers of loss or damage to the
collateral  and shall  promptly file proofs of loss with  insurers.  The risk of
loss,  damage or  deterioration  of or to said goods shall rest upon the Debtor,
and no such loss, damage or deterioration shall in any way diminish or discharge
the liability of the Debtor to pay the full total loan and any accrued  interest
thereon and the debtor agrees to give  immediate  notice to the Secured party of
any loss or damage to any of the said goods or loss of possession  thereof.  The
Lender is expressly  authorized  by Debtor to insure said goods  against loss or
damage;  (F) Debtor  agrees to use the  proceeds of the loan to pay the purchase
price of the  equipment,  filing fees and  insurance  premiums and  specifically
authorizes  Secured Party to disburse same directly from the loan proceeds.  The
Secured Party is  specifically  authorized  to pay the proceeds  directly to the
seller/vendor of the collateral.

4. GENERAL PROVISIONS
---------------------

(A) The waiver of or  acquiescence  in any default by the Debtor,  or failure of
the  Secured  Party to  insist  upon  strict  performance  by the  Debtor of any
warranties  or agreements in this  security  agreement,  shall not  constitute a
waiver of any  subsequent  or other  default or  failure;  (B) Notices to either
party shall be in writing and shall be delivered personally or by mail addressed
to the party at the address herein set forth or otherwise designated in writing;
(C) The Uniform Commercial Code shall govern the rights,  duties and remedies of
the parties and any provisions  herein declared  invalid under any law shall not
invalidate any other provision of this agreement.

5. EVENTS OF DEFAULT
--------------------

The  occurrence of an "Event of Default" as defined in the Loan Agreement or the
Note  shall be deemed a default  hereunder.  Each such  Event of  Default as set
forth in the  Loan  Agreement  and the Note is  deemed  incorporated  herein  by
reference as if fully set forth at length herein.  For reference  purposes,  the
following  may  constitute  a default of the Debtor:  (a) The failure to pay the
principal or any installment of principal or of interest on the  indebtedness on
any note or notes  when due;  or (b) The  failure  by  Debtor to comply  with or
perform any  provision of this  Agreement,  the Loan  Agreement,  if any, or any
other  agreement  between Debtor and Secured Party  executed in connection  with
this loan, or otherwise;  or (c) If any false or misleading  representations  or
warranties are made or given by Debtor in connection with this agreement; or (d)
If the collateral is subject to levy or execution or other judicial process, and
the same is not removed or bonded  within ten (10) days after any lien is placed
thereon; or (e) The commencement of any insolvency  proceeding by or against the
Debtor or of any guarantor or surety for the Debtor's obligations; or (f) In the
event of any  reduction in the value of the  collateral or any act of the Debtor
which imperils the prospect of full  performance or satisfaction of the Debtor's
obligations herein, at the sole discretion of Secured Party.

6. SECURED PARTIES REMEDIES UPON DEFAULT
----------------------------------------

(A) On the occurrence of any Event of Default, or at any time thereafter, at the
option of the Secured  Party,  the  Secured  Party may declare all or any of the
obligations  secured by this Agreement and the Loan Agreement shall  immediately
become due and payable in full  without  notice or demand and the Secured  Party
shall  have  all  the  rights,   remedies,   and  privileges   with  respect  to
repossession,  retention  and  sale of the  collateral  and  disposition  of the
proceeds as are accorded to the Secured Party by the applicable  sections of the
New York Uniform  Commercial Code respecting  "Default" in effect as of the date
of this Security  Agreement,  or as may be granted to Secured Party  pursuant to
any Note or Loan  Agreement or other document  executed in connection  with this
Loan. (B) Upon any default,  the Secured Party's reasonable  attorney's fees and
the legal and other  expenses for pursuing,  searching for,  receiving,  taking,
keeping, storing, advertising, and selling the collateral shall be chargeable to
the Debtor,  and shall become party of the principal  indebtedness  and shall be
deemed secured  hereunder and by the collateral until fully paid. (C) The Debtor
shall remain liable for any  deficiency  resulting from a sale of the collateral
and shall pay any such deficiency  forthwith on demand.  (D) If the Debtor shall
default in the  performance  of any of the  provisions of this  agreement on the
Debtor's  part to be  performed,  Secured  Party may perform  same for  Debtor's
account and any monies expended in so doing shall be chargeable with interest to
the Debtor and added to the indebtedness secured hereby. (E) In conjunction with
or in addition to any other rights granted to secured Party,  Secured Party,  at
its  discretion,  may (i) enter  upon  Debtor's  premises  peaceably  by Secured
Party's own means or with legal process and take  possession of the  collateral,
or render it unusable, or dispose of the collateral on the Debtor's premises and
the Debtor  agrees not to resist or interfere;  (ii) require  Debtor to assemble
the  collateral  and make it  available  to the  Secured  Party at a place to be
designated by the Secured Party,  reasonably  convenient to both parties (Debtor
agrees that the Secured  Party's  address set forth above is a place  reasonably
convenient for such assembling);  (iv) Secured Party will give Debtor reasonable
notice of the time and place of any public  sale  thereof,  or of the time after
which any private sale or any other intended  disposition thereof is to be made.
The  requirements  of  reasonable  notice  will be met if such notice is mailed,
postage  prepaid,  to the address of the Debtor shown above,  at least seven (7)
days  before the time of the sale or  disposition.  The Secured  Party,  and its
representatives  shall have all the rights and remedies of a secured party under
the Uniform Commercial Code and any

                                  page 2 of 3
<PAGE>

other  applicable  law.  It is  agreed  that  a  sale  to a  dealer/vendor  is a
commercially  reasonable method of disposition (but shall not be deemed the only
commercially  reasonable  method of  disposition)  and that the  Secured  Party,
and/or its representative may purchase said goods, if repossessed at a public or
private sale. Expenses of retaking,  holding, preparing for sale, selling of the
like  shall  include  Secured  Party's  (or  its  representative's)   reasonable
attorney's  fees  and  legal  expenses.   Any  deficiency  remaining  after  the
repossession and sale of the goods by Secured Party shall be paid immediately by
the debtor to the Secured Party upon demand  together with interest  thereon and
reasonable  fees of an attorney  employed to collect  such  deficiency.  (F) The
Secured Party may assign this  agreement  and if assigned the assignee  shall be
entitled,  upon  notifying  the  Debtor,  to  performance  of  all  of  Debtor's
obligations and agreements hereunder. (G) No acts, delays,  omissions, or course
of delaying  between the Debtor and the Secured  Party shall be waiver of any of
the Secured Party' rights or remedies under terms of this Security Agreement. In
case of shares of stock given as  collateral  security,  the  Secured  Party may
transfer the shares of stock to its own name or the name of any designee, act in
the  capacity  of  and  with  full  authority  as  sole  officer,  director  and
shareholder,  and sell said  shares of stock at public or private  sale with the
Debtor's  understanding  that the  assets of the  corporation  shall be  applied
against the outstanding debt and expenses upon the said sale.

7. MISCELLANEOUS
----------------

All terms and provisions of this agreement shall be binding upon and shall inure
to the benefit of, and be enforceable by the parties  hereto,  their  respective
legal  representatives,  successors and assigns.  All communications and notices
hereunder  shall be in  writing  and shall be deemed to have been duly  given if
sent by United States mail, postage prepaid, to the parties at the address first
above written, or at such other places or places as the party addressed may have
designated by written notice to the other.  No waiver shall be deemed to be made
by any party of any of his rights  hereunder unless the same shall be in writing
and signed by each party hereto. This promissory note and the obligations of the
undersigned  shall be governed and construed in accordance  with the laws of the
State of New York.  For  purposes  of any action or  proceeding  involving  this
promissory  note or any of the obligations of the  undersigned,  the undersigned
hereby irrevocably submits to the jurisdiction of the courts of the State of New
York and of the United States having  jurisdiction in the County of New York and
the State of New York,  and agrees not to raise and waives any  objection  to or
defense  based  upon the  jurisdiction  or venue of any such court or based upon
forum non conveniens.  The  undersigned  agrees not to bring any action or other
proceeding  with respect to this  promissory  note or with respect to any of its
obligations  hereunder in any other court unless such courts of the State of New
York and of the United States  determine that they do not have  jurisdiction  in
the matter.  The Debtor  hereby waives trial by jury in any action or proceeding
in connection with this  agreement;  The headings of the paragraphs and sections
of this Agreement are inserted for  convenience  only and shall not be deemed to
constitute a part  hereof.  In the event that any word,  sentence,  paragraph or
article of this  Agreement is found to be void or voidable,  the balance of this
Agreement shall nevertheless be legal and binding with the same force and effect
as  though  the void or  voidable  parts  were  deleted.  This  writing  and the
documents  executed in connection with the loan contain the entire  agreement of
the parties with respect to its subject matter and no modifications, alterations
or waiver of all of any part shall be valid  unless made by a writing and signed
by all the parties hereto.

8. NO REPRESENTATION
--------------------

Each of the parties hereto and represents that the other parties, their agents,
servants or employee have made no representation or statement whether oral or in
writing, relating to or concerning this Agreement other than specifically set
forth herein. Each of the parties hereto warrants and represents to the other
that it is authorized or empowered to enter into this Agreement and perform the
terms hereof, and that in entering this Agreement and performing the terms
hereof, it will not be in violation of any other agreement, written or oral.
This Agreement may be executed in two or more counterparts, each of which is an
original, but all of which together shall constitute one and the same
instrument.

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

DEBTOR:
SmartPros, Ltd.

     /s/ Dr. William K. Grollman            /s/ Alan Ross
--------------------------------------  ----------------------------------------
By: Dr. William K. Grollman,            By: Alan Ross
    President                               Chief Financial Officer

Freshstart Venture Capital Corp.,
Secured Party

--------------------------------------
Authorized Agent

                                  page 3 of 3
<PAGE>

                                   SCHEDULE A
                         TO SECURITY AGREEMENT BETWEEN
              FRESHSTART VENTURE CAPITAL CORP. AND SMARTPROS, LTD.

1.   All assets now owned or hereafter acquired by the Borrower  including,  but
not  limited to,  patents,  copyrights,  trademarks,  film  library,  inventory,
equipment and  intangibles of any nature,  now or hereafter owned or acquired by
Borrower  and/or its  subsidiaries,  all accounts,  accounts  receivable,  other
receivables,  contract rights,  chattel paper, general intangibles,  instruments
and  documents,   deposit   accounts,   and  notes;  any  other  obligations  or
indebtedness  owed to Borrower from whatever  source  arising,  now or hereafter
existing,  all rights of Borrower to receive any  performance or any payments in
money or kind; all guaranties of the foregoing and security therefor; all of the
right,  title  and  interest  of  Borrower  in and with  respect  to the  goods,
services,  or other property that gave rise to or secure any of the foregoing or
which are described  thereto,  and all rights of Borrower as an unpaid seller of
goods and  services,  including,  but not  limited to, the rights to stoppage in
transit, replevin,  reclamation and resale; and all of the foregoing whether now
or hereafter acquired or arising in the future.

2.   All of the Borrower's now owned or hereafter  acquired or created  interest
in machinery, equipment in all its forms, furniture,  furnishings, and fixtures,
together with tools, boats and motor vehicles of every kind and description, all
parts therefor,  and all improvements,  accessions or appurtenances  thereto and
all proceeds thereof.

3.   Any and all now owned or hereafter acquired inventory,  goods, merchandise,
or other personal property, raw materials, parts, supplies, work-in-progress and
finished   products,   intended  for  sale,   or  intended   for   inclusion  in
work-in-progress,  of every kind and description,  in the custody or possession,
actual or constructive, of Borrower, including insurance proceeds from insurance
on any of the above,  all of  Borrower's  interest  in  inventory  described  in
invoices,  any returns upon any accounts and other proceeds,  resulting from the
sale or disposition of any of the foregoing,  including, without limitation, raw
materials, work-in-progress and finished goods.

4.   All general  intangibles,  choses in action,  and causes of action, and all
other  intangible  personal  property  of  Borrower of every kind and nature now
owned or hereafter acquired by Borrower, including, without limitation, business
records, inventions, designs, blueprints, plans, specifications, patents, patent
applications,  trademarks,  trade names,  trade secrets,  goodwill,  copyrights,
registrations,  licenses,  franchises,  tax refund  claims,  insurance  proceeds
thereof,  including,  without  limitation,  insurance  covering the lives of key
employees  on which the Borrower is the  beneficiary,  and any letter of credit,
guarantee,  claim,  security  interest or other  security  held by or granted to
Borrower to secure payment by an account Borrower of accounts owed to Borrower.

     All of the foregoing is collectively the "Collateral".

<PAGE>

5.   All  products  of  Collateral   and  all  additions  and   accessions   to,
replacements of, insurance or condemnation  proceeds of, and documents  covering
Collateral,  all  property  received  wholly or partly in trade or exchange  for
Collateral,  all leases of Collateral and all rents,  revenues,  issues, profits
and proceeds arising from the sale, lease, license, encumbrance,  collection, or
any other  temporary or permanent  disposition of the Collateral or any interest
therein.

                                        SMARTPROS, LTD.

                                        /s/ Dr. William K. Grollman
                                        ----------------------------------
                                        Dr. William K. Grollman, President

STATE OF NEW YORK   )
COUNTY OF NEW YORK  )s.s.:

     On the 28th day of August in the year 2001, before me, the undersigned, a
Notary Public in and for said State, personally appeared Dr. William K.
Grollman, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s) on the
instrument, the individual(s) or the person upon behalf of which the
individual(s) acted, executed the instrument.

                                        /s/ Kathleen F. Julian
                                        ----------------------------------
                                                  NOTARY PUBLIC

                               KATHLEEN F. JULIAN
                        Notary Public, State of New York
                                No. 02JU6001983
                           Qualified in Queens County
                        Commission Expires Feb. 2, 2002

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