EXHIBIT 4.5

                                                                       EXHIBIT D

                               SECURITY AGREEMENT

      SECURITY  AGREEMENT,  dated as of May 2, 2005  (this  "Agreement"),  among
Knockout Holdings,  Inc., a Delaware corporation (the "Company" or the "Debtor")
and the holder or holders of the Company's  11% Senior  Secured Notes due May 2,
2008 in the  aggregate  principal  amount  of up to  $3,000,000  (the  "Notes"),
signatory  hereto,  their  endorsees,   transferees  and  assigns  (collectively
referred to as, the "Secured Parties").

                              W I T N E S S E T H:

      WHEREAS,  pursuant to the Notes, the Secured Parties have severally agreed
to extend the loans to the Company evidenced by the Notes; and

      WHEREAS,  in order to induce  the  Secured  Parties  to  extend  the loans
evidenced  by the Notes,  the Debtor  has agreed to execute  and  deliver to the
Secured Parties this Agreement and to grant the Secured Parties, pari passu with
each other Secured Party, a first priority  perfected  security  interest in all
property of such Debtor to secure the prompt payment,  performance and discharge
in full of all of the Company's obligations under the Notes.

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

      1.    CERTAIN DEFINITIONS.  As used in this Agreement, the following terms
shall  have  the  meanings  set  forth in this  Section  1.  Terms  used but not
otherwise  defined in this  Agreement  that are  defined in Article 9 of the UCC
(such as "account", "chattel paper", "commercial tort claim", "deposit account",
"document",    "equipment",    "fixtures",   "general   intangibles",   "goods",
"instruments",  "inventory",  "investment property",  "letter-of-credit rights",
"proceeds" and  "supporting  obligations")  shall have the  respective  meanings
given such terms in Article 9 of the UCC.

            (a)   "Collateral" means the collateral in which the Secured Parties
      are granted a security  interest by this Agreement and which shall include
      the following personal property of the Debtors, whether presently owned or
      existing  or  hereafter  acquired  or  coming  into  existence,   wherever
      situated,  and all additions and accessions  thereto and all substitutions
      and replacements thereof, and all proceeds, products and accounts thereof,
      including,  without limitation,  all proceeds from the sale or transfer of
      the Collateral  and of insurance  covering the same and of any tort claims
      in  connection  therewith,  and  all  dividends,  interest,  cash,  notes,
      securities, equity interest or other property at any time and from time to
      time  acquired,  receivable or otherwise  distributed in respect of, or in
      exchange for, any or all of the Pledged Securities (as defined below):

                  (i)   All  goods,  including,  without  limitations,  (A)  all
            machinery,  equipment,  computers,  motor vehicles,  trucks,  tanks,
            boats,  ships,  appliances,  furniture,  special and general  tools,
            fixtures,  test and quality  control  devices and other equipment of
            every kind and  nature  and  wherever  situated,  together  with all
            documents  of  title  and  documents   representing  the  same,  all
            additions and accessions thereto,  replacements  therefor, all parts
            therefor, and all substitutes for any of the foregoing and all other
            items used and useful in connection with any Debtor's businesses and
            all improvements thereto; and (B) all inventory;


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                  (ii)  All  contract  rights  and  other  general  intangibles,
            including, without limitation, all partnership interests, membership
            interests,  stock  or  other  securities,  rights  under  any of the
            Organizational   Documents,   agreements   related  to  the  Pledged
            Securities,  licenses,  distribution and other agreements,  computer
            software (whether "off-the-shelf",  licensed from any third party or
            developed  by any Debtor),  computer  software  development  rights,
            leases,  franchises,  customer lists,  quality  control  procedures,
            grants  and  rights,  goodwill,  trademarks,  service  marks,  trade
            styles,  trade  names,  patents,  patent  applications,  copyrights,
            Intellectual Property, and income tax refunds;

                  (iii) All  accounts,   together  with  all  instruments,   all
            documents of title representing any of the foregoing,  all rights in
            any merchandising, goods, equipment, motor vehicles and trucks which
            any of the same may represent,  and all right,  title,  security and
            guaranties  with  respect to each  account,  including  any right of
            stoppage in transit;

                  (iv)  All documents,  letter-of-credit rights, instruments and
            chattel paper;

                  (v)   All commercial tort claims;

                  (vi)  All  deposit  accounts  and  all  cash  (whether  or not
            deposited in such deposit accounts);

                  (vii) All investment property;

                  (viii) All supporting obligations; and

                  (ix)  All files, records,  books of account,  business papers,
            and computer programs; and

                  (x)   the  products  and  proceeds  of all  of  the  foregoing
            Collateral set forth in clauses (i)-(ix) above.

                  Without   limiting  the  generality  of  the  foregoing,   the
            "Collateral"  shall  include  all  investment  property  and general
            intangibles  respecting  ownership  and/or other equity interests in
            each  Subsidiary,  including,  without  limitation,  the  shares  of
            capital  stock and the other equity  interests  listed on Schedule H
            hereto (as the same may be  modified  from time to time  pursuant to
            the terms  hereof),  and any other  shares of capital  stock  and/or
            other equity interests of any other direct or indirect subsidiary of
            any  Debtor  obtained  in  the  future,   and,  in  each  case,  all
            certificates  representing  such shares and/or equity interests and,
            in each case, all rights, options, warrants, stock, other securities
            and/or equity  interests that may hereafter be received,  receivable
            or distributed in respect of, or exchanged for, any of the foregoing
            (all of the  foregoing  being  referred  to herein  as the  "Pledged
            Securities")  and all rights arising under or in connection with the
            Pledged  Securities,  including,  but not limited to, all dividends,
            interest and cash.


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                  Notwithstanding the foregoing,  nothing herein shall be deemed
            to constitute  an assignment of any asset which,  in the event of an
            assignment,  becomes  void by  operation  of  applicable  law or the
            assignment of which is otherwise  prohibited  by applicable  law (in
            each case to the extent that such  applicable  law is not overridden
            by Sections  9-406,  9-407 and/or 9-408 of the UCC or other  similar
            applicable law); provided,  however, that to the extent permitted by
            applicable  law,  this  Agreement  shall  create  a  valid  security
            interest in such asset and, to the extent  permitted  by  applicable
            law, this Agreement  shall create a valid  security  interest in the
            proceeds of such asset.

            (b)   "Intellectual  Property" means the collective reference to all
      rights,  priorities  and  privileges  relating to  intellectual  property,
      whether  arising  under United  States,  multinational  or foreign laws or
      otherwise, including, without limitation, (i) all copyrights arising under
      the  laws  of the  United  States,  any  other  country  or any  political
      subdivision  thereof,  whether  registered  or  unregistered  and  whether
      published or unpublished,  all registrations and recordings  thereof,  and
      all applications in connection therewith,  including,  without limitation,
      all  registrations,  recordings  and  applications  in the  United  States
      Copyright Office,  (ii) all letters patent of the United States, any other
      country or any political  subdivision thereof, all reissues and extensions
      thereof,  and all  applications for letters patent of the United States or
      any    other    country    and   all    divisions,    continuations    and
      continuations-in-part   thereof,   (iii)  all  trademarks,   trade  names,
      corporate names, company names, business names, fictitious business names,
      trade  dress,  service  marks,  logos,  domain  names and other  source or
      business identifiers,  and all goodwill associated therewith, now existing
      or  hereafter  adopted  or  acquired,  all  registrations  and  recordings
      thereof,  and all  applications  in connection  therewith,  whether in the
      United  States  Patent and  Trademark  Office or in any similar  office or
      agency of the United States, any State thereof or any other country or any
      political  subdivision  thereof,  or otherwise,  and all common law rights
      related  thereto,  (iv) all trade  secrets  arising  under the laws of the
      United States, any other country or any political subdivision thereof, (v)
      all  rights  to  obtain  any  reissues,  renewals  or  extensions  of  the
      foregoing,  (vi) all  licenses  for any of the  foregoing,  and  (vii) all
      causes of action for infringement of the foregoing.

            (c)   "Majority   in   Interest"   shall   mean,   at  any  time  of
      determination,   the  majority  in  interest  (based  on  then-outstanding
      principal  amounts  of  Notes at the  time of such  determination)  of the
      Secured Parties.

            (d)   "Necessary   Endorsement"  shall  mean  undated  stock  powers
      endorsed in blank or other proper  instruments of assignment duly executed
      and such  other  instruments  or  documents  as the  Secured  Parties  may
      reasonably request.

            (e)   "Obligations" means all of the Debtors' obligations under this
      Agreement,  the  Notes  and any  other  instruments,  agreements  or other
      documents  executed and/or delivered in connection  herewith or therewith,
      in each case, whether now or hereafter existing, voluntary or involuntary,
      direct or indirect,  absolute or contingent,  liquidated or  unliquidated,
      whether or not jointly owed with  others,  and whether or not from time to
      time decreased or extinguished and later  increased,  created or incurred,
      and all or any portion of such  obligations or liabilities  that are paid,
      to the  extent all or any part of such  payment  is  avoided or  recovered
      directly or  indirectly  from any of the Secured  Parties as a preference,
      fraudulent  transfer  or  otherwise  as such  obligations  may be amended,
      supplemented,  converted,  extended or modified from time to time. Without


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      limiting the generality of the  foregoing,  the term  "Obligations"  shall
      include,  without limitation:  (i) principal of, and interest on the Notes
      and the loans  extended  pursuant  thereto;  (ii) any and all other  fees,
      indemnities,  costs,  obligations and liabilities of the Debtors from time
      to time  under or in  connection  with this  Agreement,  the Notes and any
      other instruments, agreements or other documents executed and/or delivered
      in connection herewith or therewith;  and (iii) all amounts (including but
      not limited to  post-petition  interest) in respect of the foregoing  that
      would be payable but for the fact that the obligations to pay such amounts
      are  unenforceable  or not allowable due to the existence of a bankruptcy,
      reorganization or similar proceeding involving any Debtor.

            (f)   "Organizational  Documents"  means with respect to any Debtor,
      the documents by which such Debtor was organized (such as a certificate of
      incorporation,   certificate   of  limited   partnership  or  articles  of
      organization,  and including,  without  limitation,  any  certificates  of
      designation  for preferred  stock or other forms of preferred  equity) and
      which relate to the internal  governance of such Debtor (such as bylaws, a
      partnership  agreement  or an  operating,  limited  liability  or  members
      agreement).

            (g)   "UCC"  means the Uniform  Commercial  Code of the State of New
      York and or any other  applicable  law of any  state or  states  which has
      jurisdiction  with  respect to all, or any portion of, the  Collateral  or
      this  Agreement,  from time to time.  It is the intent of the parties that
      defined  terms in the UCC should be construed in their  broadest  sense so
      that  the term  "Collateral"  will be  construed  in its  broadest  sense.
      Accordingly  if there are, from time to time,  changes to defined terms in
      the UCC that broaden the definitions,  they are incorporated herein and if
      existing  definitions in the UCC are broader than the amended definitions,
      the existing ones shall be controlling.

      2.    GRANT OF  PERFECTED  SECURITY  INTEREST.  As an  inducement  for the
Secured  Parties to extend the loans as evidenced by the Notes and to secure the
complete and timely payment,  performance and discharge in full, as the case may
be, of all of the Obligations, the Debtor hereby unconditionally and irrevocably
pledges,  grants  and  hypothecates  to the  Secured  Parties a  continuing  and
perfected  security  interest  in and to, a lien  upon  and a right  of  set-off
against all of their respective right, title and interest of whatsoever kind and
nature in and to, the Collateral (the "Security Interest").

      3.    DELIVERY OF CERTAIN  COLLATERAL.  Contemporaneously  or prior to the
execution of this  Agreement,  the Debtor shall deliver or cause to be delivered
to the  Secured  Parties  (a) any and all  certificates  and  other  instruments
representing  or  evidencing  the  Pledged  Securities,  and  (b)  any  and  all
certificates  and other  instruments or documents  representing any of the other
Collateral, in each case, together with all Necessary Endorsements.  The Debtors
are,  contemporaneously  with the  execution  hereof,  delivering to the Secured
Parties, or have previously delivered to the Secured Parties, a true and correct
copy of each Organizational Document governing any of the Pledged Securities.

      4.    REPRESENTATIONS,   WARRANTIES,   COVENANTS  AND  AGREEMENTS  OF  THE
DEBTORS.  The Debtor  represents and warrants to, and covenants and agrees with,
the Secured Parties as follows:

            (a)   The Debtor has the requisite corporate,  partnership,  limited
      liability  company  or  other  power  and  authority  to enter  into  this
      Agreement  and  otherwise  to carry  out its  obligations  hereunder.  The
      execution,  delivery and  performance  by the Debtor of this Agreement and
      the  filings  contemplated  therein  have  been  duly  authorized  by  all


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      necessary  action  on the part of such  Debtor  and no  further  action is
      required by such  Debtor.  This  Agreement  has been duly  executed by the
      Debtor. This Agreement constitutes the legal, valid and binding obligation
      of the Debtor, enforceable against the Debtor in accordance with its terms
      except as such  enforceability  may be limited by  applicable  bankruptcy,
      insolvency,   reorganization  and  similar  laws  of  general  application
      relating  to or  affecting  the rights and  remedies of  creditors  and by
      general principles of equity.

            (b)   The Debtors  have no place of business or offices  where their
      respective  books of account and records are kept (other than  temporarily
      at the offices of its attorneys or accountants) or places where Collateral
      is stored or located,  except as set forth on Schedule A attached  hereto.
      Except as  specifically  set forth on Schedule A, the Debtor is the record
      owner of the real property  where such  Collateral  is located,  and there
      exist no  mortgages  or other liens on any such real  property.  Except as
      disclosed on Schedule A, none of such  Collateral is in the  possession of
      any consignee, bailee, warehouseman, agent or processor.

            (c)   Except as set forth on Schedule B attached hereto, the Debtors
      are the sole owner of the Collateral  (except for  non-exclusive  licenses
      granted by any Debtor in the ordinary course of business),  free and clear
      of any liens, security interests,  encumbrances, rights or claims, and are
      fully authorized to grant the Security Interest.  Other than those filings
      made  in  connection  with  the  Notes,  there  is  not  on  file  in  any
      governmental  or  regulatory  authority,  agency  or  recording  office an
      effective financing statement,  security agreement, license or transfer or
      any notice of any of the foregoing (other than those that will be filed in
      favor of the  Secured  Parties  pursuant  to this  Agreement)  covering or
      affecting any of the  Collateral.  So long as this  Agreement  shall be in
      effect, the Debtors shall not execute and shall not knowingly permit to be
      on file  (other  than  those on file to  evidence  the  liens  granted  in
      connection  the  Notes) in any such  office or agency  any such  financing
      statement or other  document or instrument  (except to the extent filed or
      recorded  in favor of the  Secured  Parties  pursuant to the terms of this
      Agreement).

            (d)   No written  claim has been  received  that any  Collateral  or
      Debtor's  use of any  Collateral  violates  the rights of any third party.
      There has been no adverse  decision  to any  Debtor's  claim of  ownership
      rights in or exclusive rights to use the Collateral in any jurisdiction or
      to any Debtor's  right to keep and maintain such  Collateral in full force
      and effect,  and there is no proceeding  involving said rights pending or,
      to the best knowledge of any Debtor, threatened before any court, judicial
      body,   administrative   or   regulatory   agency,   arbitrator  or  other
      governmental authority.

            (e)   The Debtor  shall at all times  maintain  its books of account
      and records  relating to the Collateral at its principal place of business
      and its  Collateral  at the  locations  set forth on  Schedule  A attached
      hereto and may not relocate  such books of account and records or tangible
      Collateral  unless it  delivers  to the  Secured  Parties at least 30 days
      prior to such relocation (i) written notice of such relocation and the new
      location  thereof  (which  must be  within  the  United  States)  and (ii)
      evidence that  appropriate  financing  statements  under the UCC and other
      necessary documents have been filed and recorded and other steps have been
      taken to perfect the  Security  Interest to create in favor of the Secured
      Parties a valid,  perfected and continuing  perfected second priority lien
      in the Collateral.


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            (f)   This  Agreement  creates  in favor of the  Secured  Parties  a
      valid,  security  interest  in the  Collateral,  securing  the payment and
      performance of the Obligations.  Upon making the filings  described in the
      immediately following paragraph,  all security interests created hereunder
      in any Collateral which may be perfected by filing Uniform Commercial Code
      financing statements shall have been duly perfected. Except for the filing
      of the Uniform  Commercial  Code financing  statements  referred to in the
      immediately  following  paragraph,  the  recordation  of the  Intellectual
      Property Security  Agreement (as defined below) with respect to copyrights
      and copyright  applications in the United States Copyright Office referred
      to in paragraph (p), the execution and delivery of deposit account control
      agreements  satisfying the requirements of Section  9-104(a)(2) of the UCC
      with respect to each deposit  account of the Debtors,  and the delivery of
      the certificates and other instruments provided in Section 3, no action is
      necessary  to create,  perfect or protect the security  interests  created
      hereunder.  Without  limiting the generality of the foregoing,  except for
      the  filing  of  said  financing  statements,   the  recordation  of  said
      Intellectual  Property Security Agreement,  and the execution and delivery
      of said  deposit  account  control  agreements,  no  consent  of any third
      parties and no  authorization,  approval or other action by, and no notice
      to or filing  with,  any  governmental  authority  or  regulatory  body is
      required  for  (i)  the  execution,   delivery  and  performance  of  this
      Agreement,  (ii) the  creation or  perfection  of the  Security  Interests
      created hereunder in the Collateral or (iii) the enforcement of the rights
      of the Secured Parties hereunder.

            (g)   The Debtor hereby  authorizes the Secured  Parties,  or any of
      them, to file one or more financing statements under the UCC, with respect
      to the Security Interest with the proper filing and recording  agencies in
      any jurisdiction deemed proper by them.

            (h)   The execution,  delivery and  performance of this Agreement by
      the  Debtors  does  not  (i)  violate  any  of  the   provisions   of  any
      Organizational  Documents of any Debtor or any judgment,  decree, order or
      award of any court, governmental body or arbitrator or any applicable law,
      rule or  regulation  applicable  to any Debtor or (ii)  conflict  with, or
      constitute  a default  (or an event  that with  notice or lapse of time or
      both  would  become a  default)  under,  or give to others  any  rights of
      termination,  amendment,  acceleration  or  cancellation  (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other  instrument  (evidencing  any Debtor's  debt or  otherwise) or other
      understanding  to which any Debtor is a party or by which any  property or
      asset of any Debtor is bound or affected.  No consent (including,  without
      limitation,  from stockholders or creditors of any Debtor) is required for
      any Debtor to enter into and perform its obligations hereunder, other than
      consents that have already been received.

            (i)   The  capital  stock  and  other  equity  interests  listed  on
      Schedule H hereto  represent all capital stock and other equity  interests
      owned,  directly  or  indirectly,  by the  Company.  All  of  the  Pledged
      Securities  are  validly  issued,  fully paid and  nonassessable,  and the
      Company is the legal and beneficial owner of the Pledged Securities,  free
      and clear of any lien, security interest or other encumbrance.

            (j)   The ownership and other equity  interests in partnerships  and
      limited  liability  companies  (if any)  included in the  Collateral  (the
      "Pledged  Interests")  by their express terms do not provide that they are
      securities  governed  by  Article  8 of the  UCC  and  are  not  held in a
      securities account or by any financial intermediary.


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            (k)   The Debtor shall at all times  maintain the liens and Security
      Interest  provided for  hereunder as valid and perfected  second  priority
      liens and  security  interests in the  Collateral  in favor of the Secured
      Parties until this Agreement and the Security Interest  hereunder shall be
      terminated  pursuant  to Section 11 hereof.  The Debtor  hereby  agrees to
      defend the same  against the claims of any and all  persons and  entities.
      The Debtor shall  safeguard and protect all  Collateral for the account of
      the Secured  Parties.  At the request of the Secured  Parties,  the Debtor
      will sign and deliver to the  Secured  Parties at any time or from time to
      time  one  or  more  financing  statements  pursuant  to the  UCC in  form
      reasonably  satisfactory  to the Secured  Parties and will pay the cost of
      filing the same in all public offices  wherever filing is, or is deemed by
      the Secured Parties to be, necessary or desirable to effect the rights and
      obligations  provided for herein.  Without  limiting the generality of the
      foregoing,  the  Debtor  shall  pay all  fees,  taxes  and  other  amounts
      necessary to maintain the Collateral and the Security Interest  hereunder,
      and the Debtor shall  obtain and furnish to the Secured  Parties from time
      to time, upon demand,  such releases and/or  subordinations  of claims and
      liens  which may be  required to  maintain  the  priority of the  Security
      Interest hereunder.

            (l)   No  Debtor  will  transfer,  pledge,  hypothecate,   encumber,
      license,  sell or otherwise  dispose of any of the Collateral  (except for
      non-exclusive  licenses  granted  by a Debtor  in its  ordinary  course of
      business  and sales of  inventory  by a Debtor in its  ordinary  course of
      business) without the prior written consent of a Majority in Interest.

            (m)   The Debtor shall keep and preserve  its  equipment,  inventory
      and other  tangible  Collateral  in good  condition,  repair and order and
      shall not operate or locate any such  Collateral  (or cause to be operated
      or located) in any area excluded from insurance coverage.

            (n)   The Debtor shall maintain with financially sound and reputable
      insurers,  insurance with respect to the Collateral against loss or damage
      of the kinds and in the amounts customarily insured against by entities of
      established reputation having similar properties similarly situated and in
      such amounts as are  customarily  carried under similar  circumstances  by
      other such  entities and  otherwise as is prudent for entities  engaged in
      similar  businesses  but  in  any  event  sufficient  to  cover  the  full
      replacement  cost thereof.  The Debtor shall cause each  insurance  policy
      issued in  connection  herewith to provide,  and the insurer  issuing such
      policy to certify to the Secured Parties that (a) the Secured Parties will
      be named as lender  loss  payees and  additional  insured  under each such
      insurance  policy;  (b) if such  insurance  be proposed to be cancelled or
      materially changed for any reason  whatsoever,  such insurer will promptly
      notify the Secured  Parties and such  cancellation  or change shall not be
      effective  as to the Secured  Parties for at least  thirty (30) days after
      receipt by the Secured  Parties of such notice,  unless the effect of such
      change is to extend or increase  coverage  under the  policy;  and (c) the
      Secured Parties will have the right (but no obligation) at its election to
      remedy any default in the payment of premiums  within  thirty (30) days of
      notice  from the  insurer  of such  default.  If no Event of  Default  (as
      defined in the  Debenture)  exists and if the proceeds  arising out of any
      claim or series of related claims do not exceed $50,000,  loss payments in
      each  instance  will be  applied  by the  applicable  Debtor to the repair
      and/or replacement of property with respect to which the loss was incurred
      to the extent  reasonably  feasible,  and any loss payments or the balance
      thereof remaining,  to the extent not so applied,  shall be payable to the
      applicable Debtor, provided, however, that payments received by any Debtor
      after an Event of Default occurs and is continuing or in excess of $50,000
      for any occurrence or series of related  occurrences  shall be paid to the
      Secured  Parties and, if received by such  Debtor,  shall be held in trust


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      for and  immediately  paid over to the Secured  Parties  unless  otherwise
      directed in writing by the Secured Parties. Copies of such policies or the
      related  certificates,  in each case, naming the Secured Parties as lender
      loss  payee and  additional  insured  shall be  delivered  to the  Secured
      Parties at least  annually  and at the time any new policy of insurance is
      issued.

            (o)   The Debtor shall,  within ten (10) days of obtaining knowledge
      thereof, advise the Secured Parties promptly, in sufficient detail, of any
      substantial  change in the Collateral,  and of the occurrence of any event
      which would have a material  adverse effect on the value of the Collateral
      or on the Secured Parties' security interest therein.

            (p)   The Debtor shall  promptly  execute and deliver to the Secured
      Parties such further deeds, mortgages,  assignments,  security agreements,
      financing  statements or other  instruments,  documents,  certificates and
      assurances  and take such further  action as the Secured  Parties may from
      time to time  request and may in its sole  discretion  deem  necessary  to
      perfect,  protect or  enforce  its  security  interest  in the  Collateral
      including,  without limitation, if applicable,  the execution and delivery
      of a separate security agreement with respect to the Debtor's Intellectual
      Property ("Intellectual Property Security Agreement") in which the Secured
      Parties have been granted a security interest hereunder,  substantially in
      a form  acceptable to the Secured  Parties,  which  Intellectual  Property
      Security Agreement,  other than as stated therein, shall be subject to all
      of the terms and conditions hereof.

            (q)   The  Debtor  shall  permit  the  Secured   Parties  and  their
      representatives  and agents to inspect the  Collateral at any time, and to
      make copies of records pertaining to the Collateral as may be requested by
      a Secured Party from time to time.

            (r)   The  Debtor  shall  take all  steps  reasonably  necessary  to
      diligently  pursue and seek to  preserve,  enforce and collect any rights,
      claims,  causes  of action  and  accounts  receivable  in  respect  of the
      Collateral.

            (s)   The  Debtor  shall  promptly  notify  the  Secured  Parties in
      sufficient  detail upon  becoming  aware of any  attachment,  garnishment,
      execution or other legal process  levied against any Collateral and of any
      other  information  received by such Debtor that may materially affect the
      value of the Collateral,  the Security Interest or the rights and remedies
      of the Secured Parties hereunder.

            (t)   All information  heretofore,  herein or hereafter  supplied to
      the  Secured  Parties  by or on behalf of any Debtor  with  respect to the
      Collateral  is accurate and  complete in all  material  respects as of the
      date furnished.

            (u)   The Debtor shall at all times  preserve and keep in full force
      and effect their  respective  valid  existence  and good  standing and any
      rights and franchises material to its business.

            (v)   No  Debtor  will  change  its  name,  type  of   organization,
      jurisdiction of organization,  organizational identification number (if it
      has  one),  legal or  corporate  structure,  or  identity,  or add any new
      fictitious  name unless it provides at least 30 days prior written  notice
      to the Secured  Parties of such  change  and, at the time of such  written
      notification,  such Debtor  provides any  financing  statements or fixture
      filings necessary to perfect and continue perfected the perfected Security
      Interest granted and evidenced by this Agreement.


                                       8
<PAGE>

            (w)   No Debtor may consign any of its  Inventory or sell any of its
      Inventory on bill and hold,  sale or return,  sale on  approval,  or other
      conditional  terms of sale  without  the consent of a Majority in Interest
      which  shall  not be  unreasonably  withheld,  except to the  extent  such
      consignment  or sale does not exceed 15% of the total  value of all of the
      Company's finished goods in Inventory.

            (x)   No Debtor may  relocate  its chief  executive  office to a new
      location without providing 30 days prior written  notification  thereof to
      the  Secured  Parties  and  so  long  as,  at the  time  of  such  written
      notification,  such Debtor  provides any  financing  statements or fixture
      filings necessary to perfect and continue perfected the perfected security
      Interest granted and evidenced by this Agreement.

            (y)   The Debtor was  organized and remains  organized  solely under
      the laws of the state set forth  next to such  Debtor's  name in the first
      paragraph  of this  Agreement.  Schedule D attached  hereto sets forth the
      Debtor's  organizational  identification number or, if any Debtor does not
      have one, states that one does not exist.

            (z)   (i) The actual name of the Debtor is the name set forth in the
      preamble above;  (ii) no Debtor has any trade names except as set forth on
      Schedule E attached  hereto;  (iii) no Debtor has used any name other than
      that stated in the  preamble  hereto or as set forth on Schedule E for the
      preceding  five  years;  and (iv) no entity has merged  into any Debtor or
      been acquired by any Debtor within the past five years except as set forth
      on Schedule E.

            (aa)  At any time and from time to time that any Collateral consists
      of  instruments,  certificated  securities  or other items that require or
      permit  possession by the secured  party to perfect the security  interest
      created hereby, the applicable Debtor shall deliver such Collateral to the
      Secured Parties.

            (bb)  The Debtor, in its capacity as issuer, hereby agrees to comply
      with any and all orders and instructions of the Secured Parties  regarding
      the Pledged Interests  consistent with the terms of this Agreement without
      the further consent of any Debtor as contemplated by Section 8-106 (or any
      successor  section) of the UCC.  Further,  the Debtor agrees that it shall
      not enter into a similar  agreement  (or one that would  confer  "control"
      within  the  meaning  of  Article 8 of the UCC)  with any other  person or
      entity.

            (cc)  The Debtor shall cause all tangible chattel paper constituting
      Collateral to be delivered to the Secured Parties, or, if such delivery is
      not  possible,  then to cause  such  tangible  chattel  paper to contain a
      legend noting that it is subject to the security  interest created by this
      Agreement.  To the  extent  that any  Collateral  consists  of  electronic
      chattel paper,  the applicable  Debtor shall cause the underlying  chattel
      paper to be "marked"  within the  meaning of Section  9-105 of the UCC (or
      successor section thereto).

            (dd)  If  there  is  any  investment  property  or  deposit  account
      included as  Collateral  that can be  perfected  by  "control"  through an
      account  control  agreement,  the  applicable  Debtor  shall cause such an
      account control agreement, in form and substance in each case satisfactory
      to the Secured  Parties,  to be entered into and  delivered to the Secured
      Parties.


                                       9
<PAGE>

            (ee)  To the extent that any Collateral consists of letter-of-credit
      rights,  the applicable  Debtor shall cause the issuer of each  underlying
      letter of credit to consent to an  assignment  of the proceeds  thereof to
      the Secured Parties.

            (ff)  To the extent that any  Collateral is in the possession of any
      third party, the applicable  Debtor shall join with the Secured Parties in
      notifying such third party of the Secured  Parties'  security  interest in
      such   Collateral   and   shall  use  its  best   efforts   to  obtain  an
      acknowledgement  and  agreement  from such third party with respect to the
      Collateral, in form and substance satisfactory to the Secured Parties.

            (gg)  If any Debtor  shall at any time hold or acquire a  commercial
      tort claim,  such Debtor shall  promptly  notify the Secured  Parties in a
      writing signed by such Debtor of the particulars  thereof and grant to the
      Secured  Parties in such  writing a security  interest  therein and in the
      proceeds thereof, all upon the terms of this Agreement,  with such writing
      to be in form and substance satisfactory to the Secured Parties.

            (hh)  The Debtor shall  immediately  provide  written  notice to the
      Secured  Parties of any and all accounts which arise out of contracts with
      any  governmental  authority  and, to the extent  necessary  to perfect or
      continue the  perfected  status of the Security  Interest in such accounts
      and proceeds thereof,  shall execute and deliver to the Secured Parties an
      assignment  of claims for such  accounts  and  cooperate  with the Secured
      Parties in taking any other steps required,  in their judgment,  under the
      Federal  Assignment of Claims Act or any similar  federal,  state or local
      statute  or rule to  perfect  or  continue  the  perfected  status  of the
      Security Interest in such accounts and proceeds thereof.

            (ii)  Intentionally Omitted.

            (jj)  The Debtor  shall vote the Pledged  Securities  to comply with
      the covenants and agreements set forth herein and in the Notes.

            (kk)  The Debtor shall register the pledge of the applicable Pledged
      Securities  on the books of such  Debtor.  The Debtor  shall  notify  each
      issuer of Pledged  Securities  to  register  the pledge of the  applicable
      Pledged Securities in the name of the Secured Parties on the books of such
      issuer.  Further, except with respect to certificated securities delivered
      to the Secured  Parties,  if any, the  applicable  Debtor shall deliver to
      Secured Parties an  acknowledgement  of pledge (which,  where appropriate,
      shall  comply with the  requirements  of the  relevant UCC with respect to
      perfection by registration) signed by the issuer of the applicable Pledged
      Securities,   which   acknowledgement  shall  confirm  that:  (a)  it  has
      registered  the  pledge  on its  books  and  records;  and (b) at any time
      directed  by  Secured  Parties  during  the  continuation  of an  Event of
      Default,  such issuer will  transfer the record  ownership of such Pledged
      Securities  into the name of any  designee of Secured  Parties,  will take
      such steps as may be  necessary  to effect the  transfer,  and will comply
      with all other  instructions  of Secured  Parties  regarding  such Pledged
      Securities without the further consent of the applicable Debtor.


                                       10
<PAGE>

            (ll)  In the event that,  upon an occurrence of an Event of Default,
      the Secured  Parties  shall sell all or any of the Pledged  Securities  to
      another  party  or  parties  (herein  called  the  "Transferee")  or shall
      purchase or retain all or any of the Pledged Securities, the Debtor shall,
      to the  extent  applicable:  (i)  deliver  to the  Secured  Parties or the
      Transferee,  as the case may be, the  articles of  incorporation,  bylaws,
      minute books, stock certificate  books,  corporate seals,  deeds,  leases,
      indentures,  agreements,  evidences  of  indebtedness,  books of  account,
      financial  records and all other  Organizational  Documents and records of
      the Debtor and their direct and indirect  subsidiaries;  (ii) use its best
      efforts to obtain resignations of the persons then serving as officers and
      directors of the Debtor and their direct and indirect subsidiaries,  if so
      requested; and (iii) use its best efforts to obtain any approvals that are
      required by any  governmental  or  regulatory  body in order to permit the
      sale of the  Pledged  Securities  to the  Transferee  or the  purchase  or
      retention of the Pledged  Securities by the Secured  Parties and allow the
      Transferee  or the Secured  Parties to continue the business of the Debtor
      and their direct and indirect subsidiaries.

            (mm)  Without  limiting the  generality of the other  obligations of
      the Debtor hereunder, the Debtor shall promptly (i) cause to be registered
      at the United States Copyright Office all of its material copyrights, (ii)
      cause the  security  interest  contemplated  hereby  with  respect  to all
      Intellectual  Property registered at the United States Copyright Office or
      United  States  Patent and  Trademark  Office to be duly  recorded  at the
      applicable  office,  and (iii) give the Secured Parties notice whenever it
      acquires  (whether  absolutely  or by license)  or creates any  additional
      material Intellectual Property.

            (nn)  The Debtor  will from time to time,  at the joint and  several
      expense of the Debtor,  promptly  execute  and  deliver  all such  further
      instruments  and  documents,  and take all such  further  action as may be
      necessary or desirable,  or as the Secured Parties may reasonably request,
      in order to perfect and protect any security interest granted or purported
      to be granted  hereby or to enable the  Secured  Parties to  exercise  and
      enforce  their  rights  and  remedies  hereunder  and with  respect to any
      Collateral or to otherwise carry out the purposes of this Agreement.

            (oo)  Schedule F attached  hereto lists all of the  patents,  patent
      applications,  trademarks, trademark applications,  registered copyrights,
      and domain  names  owned by the Debtor as of the date  hereof.  Schedule F
      lists all  material  licenses  in favor of any  Debtor  for the use of any
      patents,  trademarks,  copyrights  and domain names as of the date hereof.
      All material  patents and trademarks of the Debtor have been duly recorded
      at the  United  States  Patent  and  Trademark  Office  and  all  material
      copyrights  of the Debtor  have been duly  recorded  at the United  States
      Copyright Office.

            (pp)  Except as set forth on Schedule G attached hereto, none of the
      account  debtors or other  persons  or  entities  obligated  on any of the
      Collateral is a governmental  authority covered by the Federal  Assignment
      of Claims Act or any similar  federal,  state or local  statute or rule in
      respect of such Collateral.

      5.    EFFECT OF PLEDGE ON CERTAIN RIGHTS. If any of the Collateral subject
to  this  Agreement   consists  of  nonvoting  equity  or  ownership   interests
(regardless of class,  designation,  preference or rights) that may be converted
into voting equity or ownership  interests upon the occurrence of certain events
(including,  without  limitation,  upon the  transfer of all or any of the other
stock or assets of the  issuer),  it is agreed that the pledge of such equity or
ownership  interests pursuant to this Agreement or the enforcement of any of the
Secured  Parties'  rights  hereunder shall not be deemed to be the type of event
which would trigger such conversion rights notwithstanding any provisions in the
Organizational  Documents  or  agreements  to which any  Debtor is subject or to
which any Debtor is party.


                                       11
<PAGE>

      6.    DEFAULTS. The following events shall be "Events of Default":

            (a)   The  occurrence  of an Event of  Default  (as  defined  in the
      Notes) under the Notes;

            (b)   Any representation or warranty of any Debtor in this Agreement
      shall prove to have been incorrect in any material respect when made;

            (c)   The  failure by any  Debtor to  observe or perform  any of its
      obligations  hereunder for five (5) days after  delivery to such Debtor of
      notice of such  failure  by or on behalf of a Secured  Party  unless  such
      default is capable of cure but cannot be cured  within such time frame and
      such Debtor is using best efforts to cure same in a timely fashion; or

            (d)   If any provision of this  Agreement  shall at any time for any
      reason be declared to be null and void, or the validity or  enforceability
      thereof  shall  be  contested  by any  Debtor,  or a  proceeding  shall be
      commenced  by  any  Debtor,  or  by  any  governmental   authority  having
      jurisdiction  over any Debtor,  seeking to  establish  the  invalidity  or
      unenforceability thereof, or any Debtor shall deny that any Debtor has any
      liability or obligation purported to be created under this Agreement.

      7.    DUTY TO HOLD IN TRUST.

            (a)   Upon the  occurrence  of any Event of Default  and at any time
      thereafter,  the  Debtor  shall,  upon  receipt  of any  revenue,  income,
      dividend, interest or other sums subject to the Security Interest, whether
      payable pursuant to the Notes or otherwise,  or of any check, draft, note,
      trade acceptance or other  instrument  evidencing an obligation to pay any
      such  sum,  hold the same in  trust  for the  Secured  Parties  and  shall
      forthwith  endorse and transfer any such sums or instruments,  or both, to
      the Secured Parties,  pro-rata in proportion to their initial purchases of
      Notes for application to the  satisfaction of the Obligations  (and if any
      Debenture  is not  outstanding,  pro-rata  in  proportion  to the  initial
      purchases of the remaining Notes).

            (b)   If any  Debtor  shall  become  entitled  to  receive  or shall
      receive any securities or other property  (including,  without limitation,
      shares  of  Pledged   Securities  or  instruments   representing   Pledged
      Securities  acquired  after the date  hereof,  or any  options,  warrants,
      rights or other similar property or certificates  representing a dividend,
      or   any   distribution   in   connection   with   any   recapitalization,
      reclassification  or  increase  or  reduction  of  capital,  or  issued in
      connection with any  reorganization of such Debtor or any of its direct or
      indirect subsidiaries) in respect of the Pledged Securities (whether as an
      addition  to,  in  substitution  of,  or in  exchange  for,  such  Pledged
      Securities or otherwise), such Debtor agrees to (i) accept the same as the
      agent of the Secured Parties; (ii) hold the same in trust on behalf of and
      for the benefit of the Secured  Parties;  and (iii) to deliver any and all
      certificates or instruments  evidencing the same to the Secured Parties on
      or before the close of business on the fifth  business day  following  the
      receipt thereof by such Debtor,  in the exact form received  together with
      the Necessary  Endorsements,  to be held by the Secured Parties subject to
      the terms of this Agreement as Collateral.


                                       12
<PAGE>

      8.    RIGHTS AND REMEDIES UPON DEFAULT.

            (a)   Upon the  occurrence  of any Event of Default  and at any time
      thereafter,  the Secured  Parties,  acting through any agent  appointed by
      them for  such  purpose,  shall  have the  right  to  exercise  all of the
      remedies conferred  hereunder and under the Notes, and the Secured Parties
      shall have all the rights and  remedies of a secured  party under the UCC.
      Without  limitation,  the Secured Parties shall have the following  rights
      and powers:

                  (i)   The  Secured  Parties  shall  have  the  right  to  take
            possession of the Collateral and, for that purpose,  enter, with the
            aid and assistance of any person, any premises where the Collateral,
            or any part  thereof,  is or may be placed and remove the same,  and
            the Debtor shall  assemble the  Collateral  and make it available to
            the  Secured  Parties  at places  which the  Secured  Parties  shall
            reasonably  select,  whether at such Debtor's premises or elsewhere,
            and make available to the Secured Parties, without rent, all of such
            Debtor's  respective  premises and facilities for the purpose of the
            Secured  Parties  taking  possession  of,  removing  or putting  the
            Collateral in saleable or disposable form.

                  (ii)  Upon  notice to the Debtor by the Secured  Parties,  all
            rights of the Debtor to  exercise  the  voting and other  consensual
            rights  which it would  otherwise  be entitled  to exercise  and all
            rights of the Debtor to receive the dividends and interest  which it
            would  otherwise be authorized  to receive and retain,  shall cease.
            Upon  such  notice,  the  Secured  Parties  shall  have the right to
            receive  any  interest,  cash  dividends  or other  payments  on the
            Collateral and, at the option of the Secured Parties, to exercise in
            the  Secured  Parties'   discretion  all  voting  rights  pertaining
            thereto.  Without  limiting the  generality  of the  foregoing,  the
            Secured  Parties  shall have the right (but not the  obligation)  to
            exercise  all rights with respect to the  Collateral  as it were the
            sole and absolute owners thereof, including,  without limitation, to
            vote and/or to exchange,  at its sole discretion,  any or all of the
            Collateral   in   connection   with   a   merger,    reorganization,
            consolidation,  recapitalization or other readjustment concerning or
            involving  the  Collateral  or any  Debtor  or any of its  direct or
            indirect subsidiaries.

                  (iii) The Secured  Parties shall have the right to operate the
            business of the Debtor using the Collateral and shall have the right
            to assign,  sell,  lease or otherwise  dispose of and deliver all or
            any part of the Collateral,  at public or private sale or otherwise,
            either with or without special conditions or stipulations,  for cash
            or on credit or for future  delivery,  in such parcel or parcels and
            at such time or times  and at such  place or  places,  and upon such
            terms and  conditions as the Secured  Parties may deem  commercially
            reasonable,  all without  (except as shall be required by applicable
            statute and cannot be waived) advertisement or demand upon or notice
            to any Debtor or right of redemption  of a Debtor,  which are hereby
            expressly waived.  Upon each such sale,  lease,  assignment or other
            transfer of Collateral,  the Secured Parties may, unless  prohibited
            by applicable  law which cannot be waived,  purchase all or any part
            of the  Collateral  being  sold,  free  from and  discharged  of all
            trusts,  claims,  right of  redemption  and  equities of any Debtor,
            which are hereby waived and released.


                                       13
<PAGE>

                  (iv)  The  Secured  Parties  shall have the right (but not the
            obligation)  to notify any account  debtors and any  obligors  under
            instruments  or  accounts to make  payments  directly to the Secured
            Parties and to enforce the  Debtor's  rights  against  such  account
            debtors and obligors.

                  (v)   The  Secured  Parties  may  (but are not  obligated  to)
            direct  any  financial  intermediary  or any other  person or entity
            holding any investment  property to transfer the same to the Secured
            Parties or their designee.

                  (vi)  The  Secured  Parties  may  (but are not  obligated  to)
            transfer any or all Intellectual  Property registered in the name of
            any Debtor at the United States  Patent and Trademark  Office and/or
            Copyright  Office  into  the  name  of the  Secured  Parties  or any
            designee or any purchaser of any Collateral.

            (b)   The  Secured  Parties may comply  with any  applicable  law in
      connection  with a disposition of Collateral and such  compliance will not
      be considered  adversely to affect the  commercial  reasonableness  of any
      sale of the  Collateral.  The  Secured  Parties  may sell  the  Collateral
      without  giving  any  warranties  and  may   specifically   disclaim  such
      warranties.  If the Secured  Parties sell any of the Collateral on credit,
      the  Debtor  will only be  credited  with  payments  actually  made by the
      purchaser.  In addition,  the Debtor waives any and all rights that it may
      have to a judicial  hearing in  advance of the  enforcement  of any of the
      Secured  Parties'  rights  and  remedies  hereunder,   including,  without
      limitation,  its right  following  an Event of Default  to take  immediate
      possession of the  Collateral and to exercise its rights and remedies with
      respect thereto.

            (c)   For the  purpose of enabling  the  Secured  Parties to further
      exercise rights and remedies under this Section 8 or elsewhere provided by
      agreement  or  applicable  law,  the Debtor  hereby  grants to the Secured
      Parties an irrevocable,  nonexclusive license (exercisable without payment
      of  royalty  or other  compensation  to such  Debtor)  to use,  license or
      sublicense  following an Event of Default,  any Intellectual  Property now
      owned or hereafter  acquired by such Debtor,  and wherever the same may be
      located, and including in such license access to all media in which any of
      the licensed items may be recorded or stored and to all computer  software
      and programs used for the compilation or printout thereof.

      9.    APPLICATIONS  OF PROCEEDS.  The proceeds of any such sale,  lease or
other  disposition of the Collateral  hereunder  shall be applied first,  to the
expenses of retaking,  holding,  storing,  processing  and  preparing  for sale,
selling, and the like (including,  without limitation, any taxes, fees and other
costs  incurred in connection  therewith) of the  Collateral,  to the reasonable
attorneys' fees and expenses  incurred by the Secured Parties in enforcing their
rights hereunder and in connection with collecting, storing and disposing of the
Collateral,  and then to  satisfaction  of the  Obligations  pro rata  among the
Secured  Parties (based on  then-outstanding  principal  amounts of Notes at the
time  of any  such  determination),  and to the  payment  of any  other  amounts
required by  applicable  law,  after which the Secured  Parties shall pay to the
applicable  Debtor any surplus  proceeds.  If,  upon the sale,  license or other
disposition of the Collateral,  the proceeds thereof are insufficient to pay all
amounts to which the Secured  Parties are legally  entitled,  the Debtor will be
liable for the deficiency,  together with interest  thereon,  at the rate of 20%
per annum or the lesser amount permitted by applicable law (the "Default Rate"),
and the  reasonable  fees of any  attorneys  employed by the Secured  Parties to
collect such  deficiency.  To the extent permitted by applicable law, the Debtor
waives all claims,  damages and demands  against the Secured Parties arising out
of the repossession,  removal,  retention or sale of the Collateral,  unless due
solely to the gross  negligence or willful  misconduct of the Secured Parties as
determined  by a final  judgment  (not subject to further  appeal) of a court of
competent jurisdiction.


                                       14
<PAGE>

      10.   SECURITIES LAW PROVISION. The Debtor recognizes that Secured Parties
may be limited in their ability to effect a sale to the public of all or part of
the Pledged  Securities by reason of certain  prohibitions in the Securities Act
of 1933, as amended,  or other federal or state  securities laws  (collectively,
the "Securities Laws"), and may be compelled to resort to one or more sales to a
restricted  group of  purchasers  who may be  required  to agree to acquire  the
Pledged Securities for their own account,  for investment and not with a view to
the distribution or resale thereof.  The Debtor agrees that sales so made may be
at prices and on terms less favorable than if the Pledged  Securities  were sold
to the public, and that the Secured Parties have no obligation to delay the sale
of any Pledged  Securities  for the period of time  necessary  to  register  the
Pledged  Securities for sale to the public under the Securities Laws. The Debtor
shall  cooperate  with the  Secured  Parties in their  attempt  to  satisfy  any
requirements   under  the  Securities  Laws  (including,   without   limitation,
registration  thereunder if requested by the Secured Parties)  applicable to the
sale of the Pledged Securities by the Secured Parties.

      11.   COSTS  AND  EXPENSES.  The  Debtor  agrees  to  pay  all  reasonable
out-of-pocket  fees,  costs and expenses  incurred in connection with any filing
required  hereunder,  including  without  limitation,  any financing  statements
pursuant  to  the  UCC,   continuation   statements,   partial  releases  and/or
termination   statements  related  thereto  or  any  expenses  of  any  searches
reasonably required by the Secured Parties.  The Debtor shall also pay all other
claims and charges which in the reasonable  opinion of the Secured Parties might
prejudice,  imperil or otherwise affect the Collateral or the Security  Interest
therein.  The Debtor will also,  upon  demand,  pay to the  Secured  Parties the
amount of any and all reasonable  expenses,  including the  reasonable  fees and
expenses of its counsel and of any experts and agents, which the Secured Parties
may incur in connection  with (i) the  enforcement of this  Agreement,  (ii) the
custody  or  preservation  of,  or  the  sale  of,  collection  from,  or  other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured  Parties  under the Notes.  Until so paid,  any
fees payable  hereunder shall be added to the principal  amount of the Notes and
shall bear interest at the Default Rate.

      12.   RESPONSIBILITY  FOR  COLLATERAL.  The Debtor assumes all liabilities
and responsibility in connection with all Collateral,  and the Obligations shall
in no way be affected or diminished by reason of the loss,  destruction,  damage
or theft of any of the Collateral or its unavailability for any reason.  Without
limiting the generality of the foregoing,  (a) no Secured Party (i) has any duty
(either  before or after an Event of  Default) to collect any amounts in respect
of the Collateral or to preserve any rights relating to the Collateral,  or (ii)
has any obligation to clean-up or otherwise prepare the Collateral for sale, and
(b) the Debtor  shall  remain  obligated  and  liable  under  each  contract  or
agreement  included in the Collateral to be observed or performed by such Debtor
thereunder.  No Secured Party shall have any  obligation or liability  under any
such contract or agreement by reason of or arising out of this  Agreement or the
receipt by any Secured Party of any payment  relating to any of the  Collateral,
nor  any  Secured  Party  be  obligated  in any  manner  to  perform  any of the
obligations  of any Debtor under or pursuant to any such  contract or agreement,
to make inquiry as to the nature or sufficiency  of any payment  received by any
Secured  Party in  respect of the  Collateral  or as to the  sufficiency  of any
performance  by any party under any such  contract or  agreement,  to present or
file any claim,  to take any action to enforce any performance or to collect the
payment of any amounts  which may have been  assigned to any Secured Party or to
which any Secured Party may be entitled at any time or times.


                                       15
<PAGE>

      13.   SECURITY  INTEREST  ABSOLUTE.  All rights of the Secured Parties and
all obligations of the Debtor  hereunder,  shall be absolute and  unconditional,
irrespective of: (a) any lack of validity or  enforceability  of this Agreement,
the Notes or any agreement entered into in connection with the foregoing, or any
portion  hereof or  thereof;  (b) any  change  in the  time,  manner or place of
payment  or  performance  of,  or in  any  other  term  of,  all  or  any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the  Notes or any  other  agreement  entered  into in  connection  with the
foregoing; (c) any exchange,  release or nonperfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure  from any other
collateral for, or any guaranty,  or any other  security,  for all or any of the
Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and
cancel in its sole discretion any insurance claims or matters made or arising in
connection  with the  Collateral;  or (e) any  other  circumstance  which  might
otherwise  constitute any legal or equitable defense available to a Debtor, or a
discharge of all or any part of the Security Interest granted hereby.  Until the
Obligations  shall  have  been paid and  performed  in full,  the  rights of the
Secured  Parties  shall  continue  even if the  Obligations  are  barred for any
reason, including, without limitation, the running of the statute of limitations
or bankruptcy.  The Debtor  expressly  waives  presentment,  protest,  notice of
protest,  demand, notice of nonpayment and demand for performance.  In the event
that at any time any transfer of any  Collateral or any payment  received by the
Secured Parties hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable  preference or fraudulent  conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise  due to any party other than the Secured  Parties,  then,  in any such
event,  the Debtor's  obligations  hereunder shall survive  cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or  cancellation  of this  Agreement,  but shall  remain a valid and binding
obligation  enforceable in accordance with the terms and provisions  hereof. The
Debtor  waives all right to require the Secured  Parties to proceed  against any
other person or entity or to apply any Collateral  which the Secured Parties may
hold at any time,  or to  marshal  assets,  or to pursue any other  remedy.  The
Debtor waives any defense arising by reason of the application of the statute of
limitations to any obligation secured hereby.

      14.   TERM OF AGREEMENT.  This  Agreement and the Security  Interest shall
terminate  on the  date  on  which  all  payments  under  the  Notes  have  been
indefeasibly  paid  in  full  and  all  other  Obligations  have  been  paid  or
discharged;  provided,  however, that all indemnities of the Debtor contained in
this Agreement  shall survive and remain  operative and in full force and effect
regardless of the termination of this Agreement.

      15.   POWER OF ATTORNEY; FURTHER ASSURANCES.

            (a)   The Debtor  authorizes  the Secured  Parties,  and does hereby
      make,  constitute  and appoint the  Secured  Parties and their  respective
      officers,  agents,  successors or assigns with full power of substitution,
      as such Debtor's true and lawful attorney-in-fact, with power, in the name
      of the various  Secured  Parties or such Debtor,  to, after the occurrence
      and during the  continuance of an Event of Default,  (i) endorse any note,
      checks,  drafts,  money orders or other instruments of payment  (including
      payments  payable  under or in  respect  of any  policy of  insurance)  in
      respect of the  Collateral  that may come into  possession  of the Secured
      Parties;  (ii) to sign and endorse any financing statement pursuant to the
      UCC or any invoice,  freight or express bill,  bill of lading,  storage or
      warehouse receipts, drafts against debtors, assignments, verifications and
      notices in connection with accounts,  and other documents  relating to the
      Collateral;  (iii) to pay or discharge taxes, liens, security interests or
      other  encumbrances at any time levied or placed on or threatened  against


                                       16
<PAGE>

      the Collateral;  (iv) to demand, collect, receipt for, compromise,  settle
      and sue for monies due in respect of the  Collateral;  (v) to transfer any
      Intellectual  Property or provide  licenses  respecting  any  Intellectual
      Property; and (vi) generally, at the option of the Secured Parties, and at
      the expense of the Debtor,  at any time,  or from time to time, to execute
      and deliver any and all documents and  instruments  and to do all acts and
      things which the Secured  Parties deem necessary to protect,  preserve and
      realize upon the Collateral and the Security  Interest  granted therein in
      order to effect  the intent of this  Agreement  and the Notes all as fully
      and  effectually  as the Debtor  might or could do; and the Debtor  hereby
      ratifies all that said attorney  shall  lawfully do or cause to be done by
      virtue  hereof.  This power of  attorney is coupled  with an interest  and
      shall be irrevocable for the term of this Agreement and thereafter as long
      as any of the Obligations shall be outstanding.  The designation set forth
      herein shall be deemed to amend and supersede any  inconsistent  provision
      in the Organizational  Documents or other documents or agreements to which
      any Debtor is subject or to which any Debtor is a party.  Without limiting
      the  generality  of the  foregoing,  after the  occurrence  and during the
      continuance  of an Event of Default,  each Secured  Party is  specifically
      authorized  to execute and file any  applications  for or  instruments  of
      transfer and  assignment of any patents,  trademarks,  copyrights or other
      Intellectual  Property with the United States Patent and Trademark  Office
      and the United States Copyright Office.

            (b)   On  a  continuing  basis,  the  Debtor  will  make,   execute,
      acknowledge, deliver, file and record, as the case may be, with the proper
      filing and  recording  agencies in any  jurisdiction,  including,  without
      limitation, the jurisdictions indicated on Schedule C attached hereto, all
      such  instruments,  and take all such action as may  reasonably  be deemed
      necessary or advisable, or as reasonably requested by the Secured Parties,
      to perfect the Security  Interest granted hereunder and otherwise to carry
      out the  intent  and  purposes  of this  Agreement,  or for  assuring  and
      confirming  to the Secured  Parties the grant or perfection of a perfected
      security interest in all the Collateral under the UCC.

            (c)   The Debtor hereby irrevocably  appoints the Secured Parties as
      such  Debtor's  attorney-in-fact,  with  full  authority  in the place and
      instead of such Debtor and in the name of such  Debtor,  from time to time
      in the Secured Parties' discretion,  to take any action and to execute any
      instrument  which the Secured  Parties may deem  necessary or advisable to
      accomplish the purposes of this  Agreement,  including the filing,  in its
      sole discretion,  of one or more financing or continuation  statements and
      amendments  thereto,  relative  to  any  of  the  Collateral  without  the
      signature  of  such  Debtor  where   permitted  by  law,  which  financing
      statements  may (but need not) describe the  Collateral as "all assets" or
      "all  personal  property" or words of like  import,  and ratifies all such
      actions  taken by the Secured  Parties.  This power of attorney is coupled
      with an interest and shall be  irrevocable  for the term of this Agreement
      and thereafter as long as any of the Obligations shall be outstanding.

      16.   NOTICES.  All notices,  requests,  demands and other  communications
hereunder shall be subject to the notice provision of the Purchase Agreement (as
such term is defined in the Notes).

      17.   OTHER  SECURITY.  To the  extent  that  the  Obligations  are now or
hereafter  secured by property  other than the  Collateral or by the  guarantee,
endorsement or property of any other person, firm,  corporation or other entity,
then the  Secured  Parties  shall have the  right,  in its sole  discretion,  to
pursue,  relinquish,  subordinate,  modify or take any other action with respect
thereto,  without in any way modifying or affecting any of the Secured  Parties'
rights and remedies hereunder.


                                       17
<PAGE>

      18.   INTENTIONALLY OMITTED

      19.   MISCELLANEOUS.

            (a)   No  course of  dealing  between  the  Debtor  and the  Secured
      Parties, nor any failure to exercise, nor any delay in exercising,  on the
      part of the Secured Parties,  any right,  power or privilege  hereunder or
      under the Notes shall operate as a waiver thereof; nor shall any single or
      partial exercise of any right, power or privilege  hereunder or thereunder
      preclude  any other or further  exercise  thereof or the  exercise  of any
      other right, power or privilege.

            (b)   All of the rights and  remedies  of the Secured  Parties  with
      respect to the Collateral,  whether  established hereby or by the Notes or
      by any  other  agreements,  instruments  or  documents  or by law shall be
      cumulative and may be exercised singly or concurrently.

            (c)   This Agreement constitutes the entire agreement of the parties
      with respect to the subject matter hereof and is intended to supersede all
      prior  negotiations,  understandings  and agreements with respect thereto.
      Except as specifically  set forth in this Agreement,  no provision of this
      Agreement  may be  modified  or  amended  except  by a  written  agreement
      specifically referring to this Agreement and signed by the parties hereto.

            (d)   In the event any  provision  of this  Agreement  is held to be
      invalid,  prohibited or  unenforceable in any jurisdiction for any reason,
      unless such provision is narrowed by judicial construction, this Agreement
      shall,  as  to  such  jurisdiction,  be  construed  as  if  such  invalid,
      prohibited or  unenforceable  provision had been more narrowly drawn so as
      not to be invalid,  prohibited or unenforceable.  If,  notwithstanding the
      foregoing,  any  provision  of  this  Agreement  is  held  to be  invalid,
      prohibited or unenforceable  in any  jurisdiction,  such provision,  as to
      such jurisdiction,  shall be ineffective to the extent of such invalidity,
      prohibition or unenforceability without invalidating the remaining portion
      of such  provision or the other  provisions of this  Agreement and without
      affecting the validity or  enforceability  of such  provision or the other
      provisions of this Agreement in any other jurisdiction.

            (e)   No waiver of any  breach or  default  or any right  under this
      Agreement  shall be  considered  valid unless in writing and signed by the
      party giving such  waiver,  and no such waiver shall be deemed a waiver of
      any subsequent breach or default or right,  whether of the same or similar
      nature or otherwise.

            (f)   This Agreement  shall be binding upon and inure to the benefit
      of each party hereto and its successors and assigns.

            (g)   Each party  shall take such  further  action and  execute  and
      deliver such further documents as may be necessary or appropriate in order
      to carry out the provisions and purposes of this Agreement.


                                       18
<PAGE>

            (h)   All   questions   concerning   the   construction,   validity,
      enforcement and  interpretation of this Agreement shall be governed by and
      construed and enforced in  accordance  with the internal laws of the State
      of New York, without regard to the principles of conflicts of law thereof.
      The Debtor agrees that all  proceedings  concerning  the  interpretations,
      enforcement and defense of the transactions contemplated by this Agreement
      and the Notes  (whether  brought  against a party hereto or its respective
      affiliates,   directors,   officers,   shareholders,   partners,  members,
      employees  or  agents)  shall be  commenced  exclusively  in the state and
      federal courts sitting in the City of New York, Borough of Manhattan.  The
      Debtor hereby  irrevocably  submits to the exclusive  jurisdiction  of the
      state and  federal  courts  sitting  in the City of New York,  Borough  of
      Manhattan for the  adjudication of any dispute  hereunder or in connection
      herewith or with any transaction  contemplated hereby or discussed herein,
      and hereby irrevocably waives, and agrees not to assert in any proceeding,
      any claim that it is not  personally  subject to the  jurisdiction  of any
      such court,  that such  proceeding  is improper.  Each party hereto hereby
      irrevocably  waives  personal  service of process and  consents to process
      being  served  in any  such  proceeding  by  mailing  a copy  thereof  via
      registered  or certified  mail or  overnight  delivery  (with  evidence of
      delivery)  to such party at the  address in effect for notices to it under
      this  Agreement  and agrees that such service  shall  constitute  good and
      sufficient service of process and notice thereof. Nothing contained herein
      shall be  deemed  to limit in any way any  right to serve  process  in any
      manner permitted by law. Each party hereto hereby  irrevocably  waives, to
      the fullest extent permitted by applicable law, any and all right to trial
      by  jury  in any  legal  proceeding  arising  out of or  relating  to this
      Agreement  or the  transactions  contemplated  hereby.  If any party shall
      commence a proceeding to enforce any  provisions of this  Agreement,  then
      the prevailing  party in such proceeding  shall be reimbursed by the other
      party for its  reasonable  attorney's  fees and other  costs and  expenses
      incurred  with the  investigation,  preparation  and  prosecution  of such
      proceeding.

            (i)   This Agreement may be executed in any number of  counterparts,
      each of which when so executed  shall be deemed to be an original and, all
      of which taken together shall  constitute one and the same  Agreement.  In
      the event that any signature is delivered by facsimile transmission,  such
      signature  shall create a valid binding  obligation of the party executing
      (or on whose behalf such  signature  is  executed)  the same with the same
      force and effect as if such facsimile signature were the original thereof.

            (j)   Intentionally Omitted.

            (k)   The Debtor shall  indemnify,  reimburse  and hold harmless the
      Secured  Parties and their  respective  partners,  members,  shareholders,
      officers,  directors,  employees and agents (collectively,  "Indemnitees")
      from  and  against  any  and all  losses,  claims,  liabilities,  damages,
      penalties,  suits, costs and expenses,  of any kind or nature,  (including
      fees  relating  to the  cost of  investigating  and  defending  any of the
      foregoing)  imposed on, incurred by or asserted against such Indemnitee in
      any way related to or arising from or alleged to arise from this Agreement
      or the Collateral,  except any such losses, claims, liabilities,  damages,
      penalties,   suits,  costs  and  expenses  which  result  from  the  gross
      negligence  or willful  misconduct  of the  Indemnitee  as determined by a
      final,  nonappealable decision of a court of competent jurisdiction.  This
      indemnification provision is in addition to, and not in limitation of, any
      other  indemnification  provision in the Notes, the Purchase Agreement (as
      such term is defined in the Notes) or any other  agreement,  instrument or
      other document executed or delivered in connection herewith or therewith.


                                       19
<PAGE>

            (l)   Nothing in this  Agreement  shall be  construed to subject any
      Secured Party to liability as a partner in any Debtor or any if its direct
      or  indirect  subsidiaries  that is a  partnership  or as a member  in any
      Debtor or any of its  direct or  indirect  subsidiaries  that is a limited
      liability  company,  nor shall any Secured Party be deemed to have assumed
      any  obligations  under any  partnership  agreement  or limited  liability
      company agreement, as applicable,  of any such Debtor or any if its direct
      or indirect  subsidiaries or otherwise,  unless and until any such Secured
      Party  exercises its right to be substituted  for such Debtor as a partner
      or member, as applicable, pursuant hereto.

            (m)   To the extent that the grant of the  security  interest in the
      Collateral  and the  enforcement  of the terms hereof require the consent,
      approval or action of any partner or member, as applicable,  of any Debtor
      or any direct or indirect  subsidiary of any Debtor or compliance with any
      provisions  of any of the  Organizational  Documents,  the  Debtor  hereby
      grants such consent and approval  and waives any such  noncompliance  with
      the terms of said documents.

                            [SIGNATURE PAGES FOLLOW]


                                       20
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed on the day and year first above written.


                                              KNOCKOUT HOLDINGS, INC.


                                              /s/ Oscar Turner
                                              ----------------------------------
                                              Name: Oscar Turner
                                              Title: Chief Financial Officer


                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                       21
<PAGE>

               [SIGNATURE PAGE OF HOLDERS TO KNOCKOUT HOLDINGS SA]

Name of Investing Entity: DCOFI Master LDC
                          ----------------
Signature of Authorized Signatory of Investing entity: /s/ Richard Smithline
                                                       ---------------------
Name of Authorized Signatory: Richard Smithline
                              -----------------
Title of Authorized Signatory: Director
                               --------

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                       22
<PAGE>

                                   SCHEDULE A

                             LOCATION OF COLLATERAL


Principal Place of Business of Debtor:

      Knockout Holdings, Inc.

Locations Where Collateral is Located or Stored:



                                       23
<PAGE>

                                   SCHEDULE B

                          EXISTING LIENS ON COLLATERAL



NONE





                                       24
<PAGE>

                                   SCHEDULE C

                    JURISDICTIONS IN WHICH COLLATERAL LOCATED








                                       25
<PAGE>

                                   SCHEDULE D

                      ORGANIZATIONAL IDENTIFICATION NUMBERS








                                       26
<PAGE>

                                   SCHEDULE E

                         NAMES; MERGERS AND ACQUISITIONS







                                       27
<PAGE>

                                   SCHEDULE F

                              INTELLECTUAL PROPERTY






                                       28
<PAGE>

                                   SCHEDULE G

                                 ACCOUNT DEBTORS







                                       29
<PAGE>

                                   SCHEDULE H

                               PLEDGED SECURITIES







                                       30