SECURITY AGREEMENT

Exhibit 10.5

SECURITY AGREEMENT

This SECURITY AGREEMENT ("Agreement"), dated as of July 12, 2000, is

made between Creative Products International, Inc., a Delaware corporation,

having an address at 3317 3rd Ave, S Seattle, WA 98134 ("Pledgor"), and Susan

Schreter, having an address at 5843 Woodlawn Ave., N, Seattle, WA 98103

("Secured Party").

Reference is made to the accompanying Secured Promissory Note (the

"Promissory Note") issued by Pledgor for the benefit of Secured Party evidencing

Advances (as defined in the Promissory Note) made or to be made to Pledgor by

Secured Party.

Secured Party has agreed to make the Advances on condition that Pledgor

execute and deliver this Security Agreement.

Accordingly, Pledgor hereby agrees as follows:

Section 1. Definitions

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As used herein, the following terms shall have the following

meanings:

"Assets" means the assets listed on Schedule I attached

hereto.

"Collateral" means (i) all of the Assets and (ii) Proceeds of

any of the Assets.

"Event of Default" has the meaning assigned to such term in

the Promissory Note.

"Obligations" means the due and punctual payment of all

principal and accrued interest (including interest accruing during the pendency

of any bankruptcy, insolvency, receivership or other similar proceeding,

regardless of whether allowed or allowable in such proceeding) when and as due,

whether at maturity, by acceleration, upon one or more dates set for prepayment

or otherwise and (b) all other monetary obligations, including fees,

commissions, costs, expenses, and indemnities, whether primary, secondary,

direct, contingent, fixed or otherwise (including monetary obligations incurred

during the pendency of any bankruptcy, insolvency, receivership or other similar

proceeding, regardless of whether allowed or allowable in such proceeding),

payable hereunder.

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"Proceeds" means, when used with respect to any Collateral,

any consideration received from the sale, exchange, license, lease or other

disposition of any asset or property that constitutes such Collateral, any value

received as a consequence of the possession of such Collateral and any payment

received from any insurer or other person or entity as a result of the

destruction, loss, theft, damage or other involuntary conversion of whatever

nature of any asset or property that constitutes such Collateral, and shall

include (i) any claim of Pledgor against any third party for (and the right to

sue and recover for and the rights to damages or profits due or accrued arising

out of or in connection with) (a) past, present or future infringement or

dilution of any Trademark included in the Assets, or licensed under a Trademark

License, or injury to the goodwill associated with or symbolized by any

Trademark included in the Assets and (b) past, present or future breach of any

License, and (ii) any and all other amounts from time to time paid or payable

under or in connection with such Collateral.

"Security Interest" has the meaning assigned to such term in

Section 2(a).

"Trademark License" means any written agreement, now or

hereafter in effect, granting to any third party any right to use any Trademark

included in the Assets.

"Trademarks" means all of the following: (i) all trademarks

included in the Assets whether or not registered with the United States Patent

and Trademark Office, any State of the United States, (ii) all goodwill

associated therewith or symbolized thereby, and (iii) all other assets, rights,

and interests that uniquely reflect or embody such goodwill.

Section 2. Grant of Security Interest; No Assumption of Liability

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(a) Grant of Security Interest. As security for the

payment of any sums due under the terms of the Promissory Note, Pledgor hereby

bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates,

and transfers to Secured Party and hereby grants to Secured Party (and its

successors and assigns), a security interest in, to and under the Collateral

(the "Security Interest"). Without limiting the foregoing, Secured Party is

hereby authorized to file one or more financing statements, continuation

statements, filings with the United States Patent and Trademark Office or the

United States Copyright Office (or any successor office) or other documents for

the purpose of perfecting, confirming, continuing, enforcing or protecting the

Security Interest granted by Pledgor, without the signature of Pledgor, and

naming Secured Party as secured party.

TO HAVE AND TO HOLD the Collateral, together with all right, title, interest,

powers, privileges, and preferences pertaining or incidental thereto, unto

Secured Party (and its successors and assigns), forever, subject, however, to

the terms, covenants, and conditions hereinafter set forth.

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(b) No Assumption of Liability. The Security Interest is

granted as security only and shall not subject Secured Party to, or in any way

alter or modify, any obligation or liability with respect to or arising out of

the Collateral.

Section 3. Delivery of the Collateral

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Subject to Section 6, Pledgor agrees to deliver or cause to be delivered

to Secured Party as soon as is reasonably practicable any and all notes, chattel

paper, instruments, certificates, and documents evidencing or representing any

of the Assets, or any other amount that becomes payable under or in connection

with any Collateral, owned or held by or on behalf of Pledgor, in each case

accompanied by proper instruments of assignment duly executed by Pledgor and

such other instruments or documents as Secured Party or its legal counsel may

reasonably request.

Section 4. Representations and Warranties

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Pledgor represents and warrants to Secured Party that:

(a) Pledgor has good and valid rights in and title to the

Collateral with respect to which it has purported to grant a Security Interest

hereunder, and has full power and authority to grant to Secured Party the

Security Interest in such Collateral pursuant hereto and to execute, deliver,

and perform its obligations in accordance with the terms of this Security

Agreement, without the consent or approval of any other person other than any

consent or approval which has been obtained.

(b) Fully executed Uniform Commercial Code financing

statements, as applicable, or other appropriate filings, recordings or

registrations containing a description of the Collateral have been delivered to

Secured Party for filing in each applicable governmental, municipal or other

office and each other applicable governmental, municipal or other office, which

are all the filings, recordings and registrations (other than filings required

to be made in the United States Patent and Trademark Office in order to perfect

the Security Interest in Collateral consisting of Trademarks) that are necessary

to publish notice of and protect the validity of and to establish a legal,

valid, and perfected security interest in favor of Secured Party in respect of

all Collateral in which the Security Interest may be perfected by filing,

recording or registration in the United States (or any political subdivision

thereof) and its territories and possessions, except for any such Collateral as

to which the representations and warranties in this sentence would not be true

solely by virtue of such Collateral having been used or disposed of in a manner

expressly permitted hereunder, and no further or subsequent filing, refiling,

recording, rerecording, registration or reregistration is necessary in any such

jurisdiction, except as provided under applicable law with respect to the filing

of continuation statements.

(c) The Security Interest constitutes (i) a legal and

valid security interest in all the Collateral securing the payment and

performance of the Obligations, (ii) subject to (A) the filings described in

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paragraph (b) of this Section and (B) the delivery to Secured Party of any

instruments included in such Collateral, a perfected security interest in such

Collateral to the extent that a security interest may be perfected by filing,

recording or registering a financing statement or analogous document, or by the

secured party's taking possession, in the United States (or any political

subdivision thereof) and its territories and possessions pursuant to the Uniform

Commercial Code or other applicable law in such jurisdictions, except for any

such Collateral as to which the representations and warranties in this sentence

would not be true solely by virtue of such Collateral having been used or

disposed of in a manner expressly permitted hereunder, and (iii) a security

interest that shall be perfected in all Collateral in which a security interest

may be perfected upon the receipt and recording of this Agreement, together with

any other necessary documents, as may be required pursuant to the laws of the

United States. The Security Interest is and shall be prior to any other lien on

any of the Collateral.

(d) The Collateral is owned or held by Pledgor free and

clear of any lien. It has not filed or consented to the filing of (i) any

financing statement or analogous document under the Uniform Commercial Code or

any other applicable laws covering any such Collateral, (ii) any assignment in

which it assigns any such Collateral or any security agreement or similar

instrument covering any such Collateral with the United States Patent and

Trademark Office, or (iii) any assignment in which it assigns any such

Collateral or any security agreement or similar instrument covering any such

Collateral with any foreign governmental, municipal or other office, which

financing statement or analogous document is still in effect.

(e) The Security Interest in the Collateral is effective

to vest in Secured Party the rights in such Collateral as set forth herein.

Section 5. Covenants

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(a) Pledgor agrees promptly to notify Secured Party in

writing of any change (i) in its legal name or in any trade name used to

identify it in the conduct of its business or in the ownership of its

properties, (ii) in the location of its chief executive office, principal place

of business, any office in which it maintains books or records relating to

Collateral owned or held by it or on its behalf or any office or facility at

which any such Collateral is located (including the establishment of any such

new office or facility), (iii) in its identity or legal or organizational

structure or (iv) in its Federal Taxpayer Identification Number. Pledgor agrees

not to effect or permit any change referred to in the preceding sentence unless

all filings have been made under the Uniform Commercial Code or otherwise that

are required in order for Secured Party to continue at all times following such

change to have a valid, legal and perfected first priority security interest in

all the Collateral as described in Section 4(c). Pledgor agrees promptly to

notify Secured Party if any material portion of the Collateral is damaged or

destroyed.

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(b) Pledgor agrees to maintain, at its own cost and

expense, such complete and accurate records with respect to the Collateral owned

or held by it or on its behalf as is consistent with its current practices and

in accordance with such prudent and standard practices used in industries that

are the same as or similar to those in which it is engaged, but in any event to

include complete accounting records indicating all payments and proceeds

received with respect to any part of such Collateral, and, at such time or times

as Secured Party may reasonably request, promptly to prepare and deliver to

Secured Party a duly certified schedule or schedules in form and detail

satisfactory to Secured Party showing the identity and amount of any and all

such Collateral.

(c) Pledgor shall, at its own cost and expense, take any

and all actions necessary to defend title to the Collateral owned or held by it

or on its behalf against all persons and to defend the Security Interest of

Secured Party in such Collateral and the priority thereof against any lien or

other interest not expressly permitted.

(d) Pledgor agrees, at its own expense, to execute,

acknowledge, deliver, and cause to be duly filed all such further instruments

and documents and take all such actions as Secured Party may from time to time

reasonably request to preserve, protect, and perfect (including as a result of

any change in applicable law) the Security Interest granted by it and the rights

and remedies created hereby, including the payment of any fees and taxes

required in connection with its execution and delivery of this Security

Agreement, the granting by it of the Security Interest and the filing of any

financing statements or other documents in connection herewith or therewith.

(e) Secured Party and such persons as Secured Party may

reasonably designate shall have the right, at the cost and expense of Pledgor,

to inspect all of its records (and to make extracts and copies from such

records), to discuss its affairs with its officers and independent accountants

and to verify under reasonable procedures the validity, amount, quality,

quantity, value, condition, and status of, or any other matter relating to, the

Collateral owned or held by it or on its behalf.

(f) At its option, Secured Party may discharge past due

taxes, assessments, charges, fees, liens, security interests or other

encumbrances at any time levied or placed on the Collateral and not permitted,

and may pay for the maintenance and preservation of the Collateral, and Pledgor

agrees to reimburse Secured Party on demand for any payment made or any expense

incurred by Secured Party pursuant to the foregoing authorization; provided,

however, that nothing in this paragraph shall be interpreted as excusing Pledgor

from the performance of, or imposing any obligation on Secured Party to cure or

perform, any covenants or other promises of Pledgor with respect to taxes,

assessments, charges, fees, liens, security interests or other encumbrances and

maintenance as set forth herein.

(g) Pledgor shall remain liable to observe and perform

all the conditions and obligations to be observed and performed by it under each

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contract, agreement or instrument relating to the Collateral, all in accordance

with the terms and conditions thereof, and Pledgor agrees to indemnify and hold

harmless Secured Party from and against any and all liability for such

performance.

(h) Pledgor shall not make or permit to be made an

assignment, pledge or hypothecation of the Collateral, and shall not grant any

other lien in respect of such Collateral. Except for liens expressly permitted

herein, it shall not make or permit to be made any transfer of such Collateral,

and it shall remain at all times in possession of such Collateral.

(i) Pledgor, at its own expense, shall maintain or cause

to be maintained insurance covering (i) physical loss or damage to the

Collateral against all risks, and (ii) liability arising from the use or

intended use, or otherwise attributable or relating to, the Collateral. The

policies covering such insurance (A) shall, in the case of each policy under

clause (i) of this paragraph, contain a standard loss payable clause and shall

name Secured Party as loss payee in respect of each claim relating to the

Collateral and resulting in a payment thereunder, (B) shall, in the case of each

policy under clause (ii) of this paragraph, be indorsed to provide that Secured

Party shall be an additional insured, and (C) shall, in the case of each policy

under clauses (i) and (ii) of this paragraph, provide that 30 days' prior

written notice of any cancellation or modification thereof or any reduction of

amounts payable thereunder shall be given to Secured Party and in the event that

Pledgor at any time or times shall fail to pay any premium in whole or part

relating thereto, Secured Party may, in its sole discretion, pay such premium.

Pledgor irrevocably makes, constitutes and appoints Secured Party (and all

officers, employees or agents designated by Secured Party) as Pledgor's true and

lawful agent (and attorney-in-fact) for the purpose, during the continuance of

an Event of Default, of making, settling, and adjusting claims in respect of

Collateral under policies of insurance, endorsing the name of Pledgor on any

check, draft, instrument, or other item of payment for the proceeds of such

policies of insurance and for making all determinations and decisions with

respect thereto. In the event that Pledgor at any time or times shall fail to

obtain or maintain any of the policies of insurance required hereby or to pay

any premium in whole or part relating thereto, Secured Party may, without

waiving or releasing any obligation or liability of Pledgor hereunder or any

Event of Default, in its sole discretion, obtain and maintain such policies of

insurance and pay such premium and take any other actions with respect thereto

as Secured Party deems advisable. All sums disbursed by Secured Party in

connection with this paragraph, including reasonable attorneys' fees, court

costs, expenses, and other charges relating thereto, shall be payable, upon

demand, by Pledgor to Secured Party and shall be additional Obligations secured

hereby.

(j) Pledgor (either itself or through its licensees or

its sublicensees) will, for each Trademark include in the Assets, (i) maintain

such Trademark in full force free from any claim of abandonment or invalidity

for non-use, (ii) maintain the quality of pro