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EXHIBIT 4.4

                                                                       EXHIBIT C

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THIS  SECURITY  AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

                  To Purchase 700,000 Shares of Common Stock of

                             KNOCKOUT HOLDINGS, INC.

      THIS COMMON STOCK PURCHASE  WARRANT (the  "Warrant")  certifies  that, for
value received, DCOFI MASTER LDC (the "Holder"), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the "Initial  Exercise Date") and on or
prior to the close of  business  on the five  year  anniversary  of the  Initial
Exercise Date (the "Termination Date") but not thereafter,  to subscribe for and
purchase from KNOCKOUT HOLDINGS,  INC., a Delaware  corporation (the "Company"),
up to 700,000 shares (the "Warrant  Shares") of Common Stock,  $0.001 par value,
of the Company (the "Common  Stock").  The purchase price of one share of Common
Stock under this  Warrant  shall be equal to the Exercise  Price,  as defined in
Section 2(b).

      Section 1.  Definitions.  Capitalized terms used and not otherwise defined
herein shall have the meanings  set forth in that  certain  Securities  Purchase
Agreement (the "Purchase  Agreement"),  dated May 2, 2005, among the Company and
the purchasers signatory thereto.

      Section 2. Exercise.

            a)    Exercise  of  Warrant.   Exercise  of  the   purchase   rights
      represented  by this  Warrant may be made at any time or times on or after
      the  Initial  Exercise  Date  and on or  before  the  Termination  Date by
      delivery to the Company of a duly executed facsimile copy of the Notice of
      Exercise  Form  annexed  hereto  (or such  other  office  or agency of the
      Company as it may designate by notice in writing to the registered  Holder
      at the  address of such  Holder  appearing  on the books of the  Company);
      provided,  however,  within 5  Trading  Days of the date  said  Notice  of
      Exercise is delivered to the  Company,  the Holder shall have  surrendered
      this Warrant to the Company and the Company shall have received payment of
      the  aggregate  Exercise  Price of the shares  thereby  purchased  by wire
      transfer or cashier's check drawn on a United States bank.

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            b)    Exercise  Price.  The exercise price of the Common Stock under
      this  Warrant  shall  be  $0.01,  subject  to  adjustment  hereunder  (the
      "Exercise Price").

            c)    Cashless Exercise. If at any time after one year from the date
      of issuance of this Warrant there is no effective  Registration  Statement
      registering  the resale of the  Warrant  Shares by the  Holder,  then this
      Warrant  may  also be  exercised  at such  time by  means  of a  "cashless
      exercise" in which the Holder  shall be entitled to receive a  certificate
      for the  number  of  Warrant  Shares  equal to the  quotient  obtained  by
      dividing [(A-B) (X)] by (A), where:

            (A)   = the VWAP on the Trading Day  immediately  preceding the date
                  of such election;

            (B)   = the Exercise Price of this Warrant, as adjusted; and

            (X)   = the number of Warrant Shares  issuable upon exercise of this
                  Warrant in accordance  with the terms of this Warrant by means
                  of a cash exercise rather than a cashless exercise.

            d)    Exercise Limitations;  Holder's Restrictions. The Holder shall
      not have the right to exercise  any portion of this  Warrant,  pursuant to
      Section 2(c) or otherwise,  to the extent that after giving effect to such
      issuance  after   exercise,   the  Holder   (together  with  the  Holder's
      affiliates),  as set forth on the  applicable  Notice of  Exercise,  would
      beneficially  own in excess of 9.9% of the  number of shares of the Common
      Stock outstanding  immediately  after giving effect to such issuance.  For
      purposes of the foregoing  sentence,  the number of shares of Common Stock
      beneficially  owned by the Holder and its  affiliates  shall  include  the
      number of shares of Common Stock  issuable  upon  exercise of this Warrant
      with respect to which the  determination  of such  sentence is being made,
      but shall  exclude  the number of shares of Common  Stock  which  would be
      issuable upon (A) exercise of the remaining,  nonexercised portion of this
      Warrant  beneficially owned by the Holder or any of its affiliates and (B)
      exercise or conversion of the unexercised or  nonconverted  portion of any
      other securities of the Company (including,  without limitation, any other
      Notes or  Warrants)  subject to a  limitation  on  conversion  or exercise
      analogous to the limitation  contained  herein  beneficially  owned by the
      Holder or any of its  affiliates.  Except  as set  forth in the  preceding
      sentence, for purposes of this Section 2(d), beneficial ownership shall be
      calculated in accordance  with Section 13(d) of the Exchange Act, it being
      acknowledged by Holder that the Company is not representing to Holder that
      such  calculation is in compliance  with Section 13(d) of the Exchange Act
      and Holder is solely responsible for any schedules required to be filed in
      accordance therewith.  To the extent that the limitation contained in this
      Section  2(d)  applies,  the  determination  of  whether  this  Warrant is
      exercisable (in relation to other  securities  owned by the Holder) and of
      which a  portion  of this  Warrant  is  exercisable  shall  be in the sole
      discretion  of such  Holder,  and the  submission  of a Notice of Exercise
      shall be deemed to be such Holder's  determination of whether this Warrant
      is exercisable (in relation to other  securities owned by such Holder) and
      of which portion of this Warrant is  exercisable,  in each case subject to
      such  aggregate  percentage  limitation,  and the  Company  shall  have no
      obligation to verify or confirm the accuracy of such determination. For

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      purposes of this Section 2(d), in  determining  the number of  outstanding
      shares of Common Stock,  the Holder may rely on the number of  outstanding
      shares of Common Stock as reflected in (x) the Company's  most recent Form
      10-QSB  or Form  10-KSB,  as the case  may be,  (y) a more  recent  public
      announcement  by the Company or (z) any other notice by the Company or the
      Company's  Transfer  Agent  setting  forth the  number of shares of Common
      Stock  outstanding.  Upon the written or oral  request of the Holder,  the
      Company shall within two Trading Days confirm orally and in writing to the
      Holder the number of shares of Common Stock then outstanding. In any case,
      the number of outstanding shares of Common Stock shall be determined after
      giving effect to the  conversion or exercise of securities of the Company,
      including this Warrant,  by the Holder or its affiliates since the date as
      of which such number of  outstanding  shares of Common Stock was reported.
      The  provisions  of this Section 2(d) may be waived by the Holder upon, at
      the  election  of the Holder,  not less than 61 days' prior  notice to the
      Company,  and the  provisions of this Section 2(d) shall continue to apply
      until such 61st day (or such later date, as  determined by the Holder,  as
      may be specified in such notice of waiver).

            e)    Mechanics of Exercise.

                        i.    Authorization  of  Warrant  Shares.   The  Company
                  covenants that all Warrant Shares which may be issued upon the
                  exercise of the purchase  rights  represented  by this Warrant
                  will, upon exercise of the purchase rights represented by this
                  Warrant,  be duly authorized,  validly issued,  fully paid and
                  nonassessable  and free from all taxes,  liens and  charges in
                  respect of the issue  thereof  (other than taxes in respect of
                  any transfer occurring contemporaneously with such issue). The
                  Company  covenants  that  during  the  period  the  Warrant is
                  outstanding,  it will reserve from its authorized and unissued
                  Common Stock a sufficient  number of shares to provide for the
                  issuance  of the  Warrant  Shares  upon  the  exercise  of any
                  purchase  rights  under  this  Warrant.  The  Company  further
                  covenants  that its issuance of this Warrant shall  constitute
                  full  authority  to its officers who are charged with the duty
                  of  executing  stock  certificates  to  execute  and issue the
                  necessary   certificates  for  the  Warrant  Shares  upon  the
                  exercise  of the  purchase  rights  under  this  Warrant.  The
                  Company  will  take  all  such  reasonable  action  as  may be
                  necessary to assure that such Warrant  Shares may be issued as
                  provided  herein  without  violation of any  applicable law or
                  regulation,  or of any requirements of the Trading Market upon
                  which the Common Stock may be listed.

                        ii.   Delivery   of    Certificates    Upon    Exercise.
                  Certificates   for  shares   purchased   hereunder   shall  be
                  transmitted by the transfer agent of the Company to the Holder
                  by crediting the account of the Holder's prime broker with the
                  Depository Trust Company through its Deposit  Withdrawal Agent
                  Commission  ("DWAC") system if the Company is a participant in
                  such system, and otherwise by physical delivery to the address
                  specified  by the  Holder in the Notice of  Exercise  within 3
                  Trading Days from the delivery to the Company of the Notice of
                  Exercise  Form,  surrender  of this Warrant and payment of the
                  aggregate  Exercise Price as set forth above  ("Warrant  Share
                  Delivery  Date").  This  Warrant  shall be deemed to have been
                  exercised  on the date the  Exercise  Price is received by the
                  Company.  The  Warrant  Shares  shall be  deemed  to have been

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                  issued,  and Holder or any other  person so  designated  to be
                  named  therein  shall be  deemed  to have  become a holder  of
                  record of such  shares  for all  purposes,  as of the date the
                  Warrant  has been  exercised  by payment to the Company of the
                  Exercise  Price  and  all  taxes  required  to be  paid by the
                  Holder,  if any,  pursuant to Section  2(e)(vii)  prior to the
                  issuance of such shares, have been paid.

                        iii.  Delivery of New Warrants  Upon  Exercise.  If this
                  Warrant shall have been  exercised in part, the Company shall,
                  at the time of delivery  of the  certificate  or  certificates
                  representing  Warrant Shares,  deliver to Holder a new Warrant
                  evidencing  the rights of Holder to purchase  the  unpurchased
                  Warrant  Shares called for by this Warrant,  which new Warrant
                  shall in all other respects be identical with this Warrant.

                        iv.   Rescission  Rights.  If the Company fails to cause
                  its transfer  agent to transmit to the Holder a certificate or
                  certificates  representing the Warrant Shares pursuant to this
                  Section  2(e)(iv) by the Warrant Share Delivery Date, then the
                  Holder will have the right to rescind such exercise.

                        v.    Compensation  for  Buy-In  on  Failure  to  Timely
                  Deliver  Certificates Upon Exercise.  In addition to any other
                  rights available to the Holder,  if the Company fails to cause
                  its transfer  agent to transmit to the Holder a certificate or
                  certificates  representing  the Warrant Shares  pursuant to an
                  exercise on or before the Warrant Share  Delivery Date, and if
                  after  such  date the  Holder  is  required  by its  broker to
                  purchase (in an open market  transaction or otherwise)  shares
                  of Common  Stock to deliver in  satisfaction  of a sale by the
                  Holder of the  Warrant  Shares  which the  Holder  anticipated
                  receiving  upon such exercise (a  "Buy-In"),  then the Company
                  shall (1) pay in cash to the  Holder  the  amount by which (x)
                  the  Holder's  total  purchase  price   (including   brokerage
                  commissions,  if any)  for  the  shares  of  Common  Stock  so
                  purchased  exceeds (y) the amount  obtained by multiplying (A)
                  the number of Warrant  Shares that the Company was required to
                  deliver to the Holder in connection with the exercise at issue
                  times  (B) the price at which the sell  order  giving  rise to
                  such purchase  obligation was executed,  and (2) at the option
                  of the Holder, either reinstate the portion of the Warrant and
                  equivalent  number of Warrant  Shares for which such  exercise
                  was not  honored or deliver to the Holder the number of shares
                  of Common  Stock that would have been  issued had the  Company
                  timely  complied  with its exercise  and delivery  obligations
                  hereunder.  For example,  if the Holder purchases Common Stock
                  having a total  purchase  price of  $11,000  to cover a Buy-In
                  with  respect  to an  attempted  exercise  of shares of Common
                  Stock  with  an  aggregate  sale  price  giving  rise  to such
                  purchase  obligation  of  $10,000,  under  clause  (1)  of the
                  immediately  preceding  sentence the Company shall be required
                  to pay the Holder $1,000. The Holder shall provide the Company
                  written notice indicating the amounts payable to the Holder in
                  respect of the Buy-In, together with applicable  confirmations
                  and  other  evidence  reasonably  requested  by  the  Company.
                  Nothing  herein  shall  limit a  Holder's  right to pursue any
                  other remedies available to it hereunder,  at law or in equity

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                  including,   without   limitation,   a  decree   of   specific
                  performance  and/or  injunctive  relief  with  respect  to the
                  Company's failure to timely deliver certificates  representing
                  shares  of  Common  Stock  upon  exercise  of the  Warrant  as
                  required pursuant to the terms hereof.

                        vi.   No  Fractional  Shares  or  Scrip.  No  fractional
                  shares or scrip representing fractional shares shall be issued
                  upon the  exercise of this  Warrant.  As to any  fraction of a
                  share which  Holder  would  otherwise  be entitled to purchase
                  upon such exercise, the Company shall pay a cash adjustment in
                  respect  of such  final  fraction  in an amount  equal to such
                  fraction multiplied by the Exercise Price.

                        vii.  Charges,   Taxes   and   Expenses.   Issuance   of
                  certificates  for Warrant  Shares shall be made without charge
                  to  the  Holder  for  any  issue  or  transfer  tax  or  other
                  incidental   expense  in  respect  of  the  issuance  of  such
                  certificate,  all of which taxes and expenses shall be paid by
                  the Company, and such certificates shall be issued in the name
                  of the Holder or in such name or names as may be  directed  by
                  the Holder; provided,  however, that in the event certificates
                  for  Warrant  Shares are to be issued in a name other than the
                  name of the Holder, this Warrant when surrendered for exercise
                  shall be accompanied by the  Assignment  Form attached  hereto
                  duly executed by the Holder; and the Company may require, as a
                  condition  thereto,   the  payment  of  a  sum  sufficient  to
                  reimburse it for any transfer tax incidental thereto.

                        viii. Closing of Books.  The Company  will not close its
                  stockholder  books or records in any manner which prevents the
                  timely exercise of this Warrant, pursuant to the terms hereof.

      Section 3. Certain Adjustments.

            a)    Stock Dividends and Splits. If the Company,  at any time while
this  Warrant is  outstanding:  (A) pays a stock  dividend or  otherwise  make a
distribution or  distributions on shares of its Common Stock or any other equity
or equity equivalent  securities  payable in shares of Common Stock (which,  for
avoidance  of doubt,  shall not include any shares of Common Stock issued by the
Company pursuant to this Warrant),  (B) subdivides  outstanding shares of Common
Stock into a larger number of shares, (C) combines  (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (D) issues by  reclassification  of shares of the Common  Stock any shares of
capital  stock of the  Company,  then in each case the  Exercise  Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding  treasury shares, if any) outstanding  before such event
and of which the  denominator  shall be the  number  of  shares of Common  Stock
outstanding  after such event and the number of shares issuable upon exercise of
this Warrant shall be proportionately  adjusted. Any adjustment made pursuant to
this Section 3(a) shall become effective  immediately  after the record date for
the  determination  of  stockholders   entitled  to  receive  such  dividend  or
distribution and shall become effective  immediately after the effective date in
the case of a subdivision, combination or re-classification.

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            b)    Subsequent  Equity  Sales.  If the  Company or any  Subsidiary
thereof,  as applicable,  at any time while this Warrant is  outstanding,  shall
offer,  sell, grant any option to purchase or offer,  sell or grant any right to
reprice its securities, or otherwise dispose of or issue (or announce any offer,
sale, grant or any option to purchase or other  disposition) any Common Stock or
Common Stock Equivalents entitling any Person to acquire shares of Common Stock,
at an effective  price per share less than the then  Exercise  Price (such lower
price,  the "Base  Share  Price" and such  issuances  collectively,  a "Dilutive
Issuance"),  as adjusted  hereunder (if the holder of the Common Stock or Common
Stock Equivalents so issued shall at any time,  whether by operation of purchase
price adjustments, reset provisions,  floating conversion,  exercise or exchange
prices or  otherwise,  or due to warrants,  options or rights per share which is
issued in connection with such issuance, be entitled to receive shares of Common
Stock at an  effective  price per share which is less than the  Exercise  Price,
such  issuance  shall be deemed  to have  occurred  for less  than the  Exercise
Price),  then, the Exercise Price shall be reduced to equal the Base Share Price
and the number of Warrant Shares issuable hereunder shall be increased such that
the aggregate  Exercise Price payable  hereunder,  after taking into account the
decrease in the Exercise Price,  shall be equal to the aggregate  Exercise Price
prior to such  adjustment.  Such  adjustment  shall be made whenever such Common
Stock or Common Stock  Equivalents  are issued.  Such  adjustment  shall be made
whenever such Common Stock or Common Stock  Equivalents are issued.  The Company
shall notify the Holder in writing,  no later than the Trading Day following the
issuance  of any  Common  Stock or  Common  Stock  Equivalents  subject  to this
section,  indicating  therein the applicable  issuance  price,  or of applicable
reset price,  exchange  price,  conversion  price and other  pricing terms (such
notice the "Dilutive Issuance Notice").  For purposes of clarification,  whether
or not the Company provides a Dilutive  Issuance Notice pursuant to this Section
3(b),  upon the  occurrence  of any  Dilutive  Issuance,  after the date of such
Dilutive  Issuance the Holder is entitled to receive a number of Warrant  Shares
based upon the Base Share  Price  regardless  of whether  the Holder  accurately
refers to the Base Share Price in the Notice of Exercise.

            c)    Pro Rata  Distributions.  If the Company, at any time prior to
the Termination  Date,  shall distribute to all holders of Common Stock (and not
to Holders of the Warrants) evidences of its indebtedness or assets or rights or
warrants to subscribe  for or purchase any security  other than the Common Stock
(which  shall be subject to Section  3(b)),  then in each such case the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect  immediately
prior to the record date fixed for  determination  of  stockholders  entitled to
receive such  distribution by a fraction of which the  denominator  shall be the
VWAP  determined  as of the  record  date  mentioned  above,  and of  which  the
numerator  shall be such VWAP on such  record  date less the then per share fair
market  value at such  record  date of the portion of such assets or evidence of
indebtedness so distributed  applicable to one  outstanding  share of the Common
Stock as determined by the Board of Directors in good faith.  In either case the
adjustments  shall be  described  in a statement  provided to the Holders of the
portion  of  assets  or  evidences  of   indebtedness  so  distributed  or  such
subscription  rights  applicable to one share of Common Stock.  Such  adjustment
shall be made whenever any such  distribution is made and shall become effective
immediately after the record date mentioned above.

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            d)    Calculations.  All calculations  under this Section 3 shall be
made to the nearest cent or the nearest  1/100th of a share, as the case may be.
The  number of shares of Common  Stock  outstanding  at any given time shall not
includes  shares  of Common  Stock  owned or held by or for the  account  of the
Company,  and the  description  of any such  shares  of  Common  Stock  shall be
considered on issue or sale of Common Stock. For purposes of this Section 3, the
number of shares of Common  Stock  deemed to be issued and  outstanding  as of a
given date shall be the sum of the number of shares of Common  Stock  (excluding
treasury shares, if any) issued and outstanding.

            e)    Notice to Holders.

                        i.    Adjustment   to  Exercise   Price.   Whenever  the
                  Exercise  Price is adjusted  pursuant  to this  Section 3, the
                  Company shall  promptly  mail to each Holder a notice  setting
                  forth the  Exercise  Price after such  adjustment  and setting
                  forth  a  brief   statement  of  the  facts   requiring   such
                  adjustment.  If the Company  issues a variable rate  security,
                  despite the prohibition thereon in the Purchase Agreement, the
                  Company  shall be deemed to have issued Common Stock or Common
                  Stock  Equivalents  at  the  lowest  possible   conversion  or
                  exercise  price at which such  securities  may be converted or
                  exercised  in the  case of a  Variable  Rate  Transaction  (as
                  defined in the  Purchase  Agreement),  or the lowest  possible
                  adjustment price in the case of an MFN Transaction (as defined
                  in the Purchase Agreement.

                        ii.   Notice to Allow  Exercise  by  Holder.  If (A) the
                  Company shall  declare a dividend (or any other  distribution)
                  on the Common  Stock;  (B) the Company shall declare a special
                  nonrecurring  cash  dividend on or a redemption  of the Common
                  Stock;  (C) the Company  shall  authorize  the granting to all
                  holders of the Common  Stock  rights or warrants to  subscribe
                  for or purchase any shares of capital stock of any class or of
                  any  rights;  (D)  the  approval  of any  stockholders  of the
                  Company   shall   be   required   in   connection   with   any
                  reclassification  of the Common Stock,  any  consolidation  or
                  merger to which the  Company is a party,  any sale or transfer
                  of all or substantially  all of the assets of the Company,  of
                  any  compulsory  share  exchange  whereby the Common  Stock is
                  converted  into other  securities,  cash or property;  (E) the
                  Company  shall   authorize   the   voluntary  or   involuntary
                  dissolution,  liquidation  or winding up of the affairs of the
                  Company;  then,  in each case,  the Company  shall cause to be
                  mailed to the Holder at its last  addresses as it shall appear
                  upon the Warrant Register of the Company, at least 20 calendar
                  days  prior  to  the  applicable   record  or  effective  date
                  hereinafter  specified, a notice stating (x) the date on which
                  a record  is to be taken  for the  purpose  of such  dividend,
                  distribution,  redemption,  rights or warrants, or if a record
                  is not to be taken,  the date as of which the  holders  of the
                  Common  Stock  of  record  to be  entitled  to such  dividend,
                  distributions,  redemption,  rights  or  warrants  are  to  be
                  determined  or (y) the  date on which  such  reclassification,
                  consolidation,  merger,  sale,  transfer or share  exchange is
                  expected  to become  effective  or  close,  and the date as of
                  which it is  expected  that  holders  of the  Common  Stock of
                  record  shall be  entitled  to  exchange  their  shares of the
                  Common   Stock  for   securities,   cash  or  other   property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange;  provided,  that the failure
                  to mail such  notice or any defect  therein or in the  mailing
                  thereof shall not affect the validity of the corporate  action
                  required  to be  specified  in  such  notice.  The  Holder  is
                  entitled to exercise  this  Warrant  during the 20-day  period
                  commencing  the date of such notice to the  effective  date of
                  the event triggering such notice.

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            f)    Fundamental Transaction. If, at any time while this Warrant is
outstanding,  (A) the Company effects any merger or consolidation of the Company
with  or into  another  Person,  (B)  the  Company  effects  any  sale of all or
substantially all of its assets in one or a series of related transactions,  (C)
any tender offer or exchange offer (whether by the Company or another Person) is
completed  pursuant to which  holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects  any  reclassification  of the  Common  Stock  or any  compulsory  share
exchange  pursuant to which the Common Stock is  effectively  converted  into or
exchanged  for  other  securities,  cash  or  property  (in  any  such  case,  a
"Fundamental  Transaction"),  then,  upon  any  subsequent  conversion  of  this
Warrant, the Holder shall have the right to receive, for each Warrant Share that
would have been issuable upon such exercise absent such Fundamental Transaction,
at the option of the Holder,  (a) upon exercise of this  Warrant,  the number of
shares of Common  Stock of the  successor  or  acquiring  corporation  or of the
Company,  if  it is  the  surviving  corporation,  and  Alternate  Consideration
receivable upon or as a result of such reorganization, reclassification, merger,
consolidation  or  disposition  of assets by a Holder of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
event or (b) cash equal to the value of this Warrant as determined in accordance
with the Black-Scholes  option pricing formula (the "Alternate  Consideration").
For purposes of any such exercise, the determination of the Exercise Price shall
be appropriately adjusted to apply to such Alternate  Consideration based on the
amount of  Alternate  Consideration  issuable  in respect of one share of Common
Stock in such  Fundamental  Transaction,  and the Company  shall  apportion  the
Exercise  Price  among  the  Alternate  Consideration  in  a  reasonable  manner
reflecting  the relative  value of any  different  components  of the  Alternate
Consideration.  If  holders  of Common  Stock  are  given  any  choice as to the
securities,  cash or property to be received in a Fundamental Transaction,  then
the Holder shall be given the same choice as to the Alternate  Consideration  it
receives  upon  any  exercise  of  this  Warrant   following  such   Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or  surviving  entity in such  Fundamental  Transaction
shall issue to the Holder a new warrant consistent with the foregoing provisions
and  evidencing  the Holder's  right to exercise  such  warrant  into  Alternate
Consideration.  The  terms of any  agreement  pursuant  to  which a  Fundamental
Transaction  is effected  shall  include terms  requiring any such  successor or
surviving  entity  to  comply  with the  provisions  of this  paragraph  (f) and
insuring that this Warrant (or any such replacement  security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

            g)    Voluntary  Adjustment By Company.  The Company may at any time
during the term of this Warrant  reduce the then current  Exercise  Price to any
amount and for any period of time deemed  appropriate  by the Board of Directors
of the Company.

      Section 4. Transfer of Warrant.

            a)    Transferability.  Subject to  compliance  with any  applicable
securities  laws and the  conditions  set forth in Sections 5(a) and 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and
all rights  hereunder are  transferable,  in whole or in part, upon surrender of

                                       8
<PAGE>

this Warrant at the  principal  office of the Company,  together  with a written
assignment  of this  Warrant  substantially  in the form  attached  hereto  duly
executed by the Holder or its agent or attorney and funds  sufficient to pay any
transfer  taxes payable upon the making of such  transfer.  Upon such  surrender
and, if required,  such  payment,  the Company  shall  execute and deliver a new
Warrant  or  Warrants  in the  name  of the  assignee  or  assignees  and in the
denomination or  denominations  specified in such instrument of assignment,  and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned,  and this Warrant shall  promptly be cancelled.  A Warrant,  if
properly assigned,  may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.

            b)    New  Warrants.  This  Warrant may be divided or combined  with
other Warrants upon presentation  hereof at the aforesaid office of the Company,
together with a written notice  specifying the names and  denominations in which
new  Warrants  are to be issued,  signed by the Holder or its agent or attorney.
Subject  to  compliance  with  Section  4(a),  as to any  transfer  which may be
involved in such division or combination,  the Company shall execute and deliver
a new Warrant or Warrants in exchange  for the Warrant or Warrants to be divided
or combined in accordance with such notice.

            c)    Warrant  Register.  The Company  shall  register this Warrant,
upon records to be  maintained  by the Company for that  purpose  (the  "Warrant
Register"),  in the name of the  record  Holder  hereof  from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise  hereof or any  distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.

            d)    Transfer  Restrictions.  If, at the time of the  surrender  of
this Warrant in connection  with any transfer of this  Warrant,  the transfer of
this  Warrant  shall not be  registered  pursuant to an  effective  registration
statement under the Securities Act and under applicable state securities or blue
sky laws, the Company may require,  as a condition of allowing such transfer (i)
that the Holder or transferee of this  Warrant,  as the case may be,  furnish to
the  Company a written  opinion  of  counsel  (which  opinion  shall be in form,
substance   and  scope   customary   for  opinions  of  counsel  in   comparable
transactions) to the effect that such transfer may be made without  registration
under the Securities Act and under applicable state securities or blue sky laws,
(ii) that the  holder or  transferee  execute  and  deliver  to the  Company  an
investment letter in form and substance acceptable to the Company and (iii) that
the transferee be an "accredited investor" as defined in Rule 501(a)(1), (a)(2),
(a)(3),  (a)(7),  or (a)(8)  promulgated under the Securities Act or a qualified
institutional buyer as defined in Rule 144A(a) under the Securities Act.

      Section 5. Miscellaneous.

            a)    Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 4 of this Warrant,  this Warrant and
all rights  hereunder  are  transferable,  in whole or in part, at the office or
agency of the  Company by the Holder in person or by duly  authorized  attorney,
upon surrender of this Warrant  together with the Assignment Form annexed hereto
properly  endorsed.  The transferee shall sign an investment  letter in form and
substance reasonably satisfactory to the Company.

                                       9
<PAGE>

            b)    No Rights as Shareholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder  of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate  Exercise  Price (or by means of a cashless  exercise),
the  Warrant  Shares  so  purchased  shall be and be deemed to be issued to such
Holder as the record  owner of such  shares as of the close of  business  on the
later of the date of such surrender or payment.

            c)    Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence  reasonably  satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate  relating  to the  Warrant  Shares,  and in case of  loss,  theft or
destruction,  of indemnity or security reasonably  satisfactory to it (which, in
the case of the  Warrant,  shall not include the posting of any bond),  and upon
surrender and cancellation of such Warrant or stock  certificate,  if mutilated,
the Company  will make and deliver a new  Warrant or stock  certificate  of like
tenor  and  dated  as of such  cancellation,  in lieu of such  Warrant  or stock
certificate.

            d)    Saturdays,  Sundays,  Holidays,  etc. If the last or appointed
day for the  taking of any action or the  expiration  of any right  required  or
granted herein shall be a Saturday,  Sunday or a legal holiday, then such action
may be taken or such right may be  exercised  on the next  succeeding  day not a
Saturday, Sunday or legal holiday.

            e)    Authorized Shares.

                  The  Company  covenants  that during the period the Warrant is
            outstanding, it will reserve from its authorized and unissued Common
            Stock a  sufficient  number of shares to provide for the issuance of
            the Warrant  Shares upon the exercise of any  purchase  rights under
            this Warrant.  The Company  further  covenants  that its issuance of
            this Warrant shall constitute full authority to its officers who are
            charged with the duty of executing stock certificates to execute and
            issue the  necessary  certificates  for the Warrant  Shares upon the
            exercise of the purchase rights under this Warrant. The Company will
            take all such  reasonable  action as may be necessary to assure that
            such  Warrant  Shares  may be  issued  as  provided  herein  without
            violation  of  any  applicable   law  or   regulation,   or  of  any
            requirements  of the Trading  Market upon which the Common Stock may
            be listed.

                  Except  and to the  extent as waived  or  consented  to by the
            Holder,  the  Company  shall not by any action,  including,  without
            limitation, amending its certificate of incorporation or through any
            reorganization,   transfer   of   assets,   consolidation,   merger,
            dissolution,  issue or sale of  securities  or any  other  voluntary
            action,  avoid or seek to avoid the observance or performance of any
            of the terms of this  Warrant,  but will at all times in good  faith
            assist in the  carrying  out of all such  terms and in the taking of
            all such actions as may be necessary or  appropriate  to protect the
            rights of Holder as set forth in this  Warrant  against  impairment.
            Without  limiting the generality of the foregoing,  the Company will
            (a) not  increase  the par  value of any  Warrant  Shares  above the
            amount payable therefor upon such exercise immediately prior to such
            increase in par value,  (b) take all such action as may be necessary
            or  appropriate  in order that the  Company  may validly and legally
            issue fully paid and nonassessable  Warrant Shares upon the exercise
            of this  Warrant,  and (c) use  commercially  reasonable  efforts to
            obtain all such  authorizations,  exemptions  or  consents  from any
            public  regulatory  body  having  jurisdiction  thereof  as  may  be
            necessary  to enable the  Company to perform its  obligations  under
            this Warrant.

                                       10
<PAGE>

                  Before  taking any action which would result in an  adjustment
            in  the  number  of  Warrant   Shares  for  which  this  Warrant  is
            exercisable or in the Exercise  Price,  the Company shall obtain all
            such  authorizations or exemptions  thereof, or consents thereto, as
            may be necessary  from any public  regulatory  body or bodies having
            jurisdiction thereof.

            f)    Jurisdiction.   All  questions  concerning  the  construction,
validity,  enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.

            g)    Restrictions.  The Holder acknowledges that the Warrant Shares
acquired  upon the  exercise  of this  Warrant,  if not  registered,  will  have
restrictions upon resale imposed by state and federal securities laws.

            h)    Nonwaiver and  Expenses.  No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding  the fact that all rights hereunder terminate on the Termination
Date. If the Company  willfully and knowingly fails to comply with any provision
of this  Warrant,  which  results in any  material  damages to the  Holder,  the
Company  shall pay to Holder such  amounts as shall be  sufficient  to cover any
costs and expenses  including,  but not limited to, reasonable  attorneys' fees,
including those of appellate  proceedings,  incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights,  powers
or remedies hereunder.

            i)    Notices.  Any notice,  request or other  document  required or
permitted  to be  given or  delivered  to the  Holder  by the  Company  shall be
delivered in accordance with the notice provisions of the Purchase Agreement.

            j)    Limitation of Liability.  No provision  hereof, in the absence
of any affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration  herein of the rights or privileges of Holder,  shall
give rise to any liability of Holder for the purchase  price of any Common Stock
or as a stockholder  of the Company,  whether such  liability is asserted by the
Company or by creditors of the Company.

            k)    Remedies.  Holder,  in addition to being  entitled to exercise
all rights granted by law,  including  recovery of damages,  will be entitled to
specific  performance of its rights under this Warrant.  The Company agrees that
monetary  damages  would not be adequate  compensation  for any loss incurred by
reason of a breach by it of the  provisions of this Warrant and hereby agrees to
waive the defense in any action for  specific  performance  that a remedy at law
would be adequate.

            l)    Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations  evidenced hereby shall inure to the
benefit of and be binding upon the  successors of the Company and the successors
and permitted assigns of Holder.  The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.

                                       11
<PAGE>

            m)    Amendment.  This  Warrant  may be  modified  or amended or the
provisions hereof waived with the written consent of the Company and the Holder.

            n)    Severability.   Wherever  possible,  each  provision  of  this
Warrant shall be  interpreted  in such manner as to be effective and valid under
applicable  law, but if any  provision of this Warrant shall be prohibited by or
invalid under  applicable law, such provision shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

            o)    Headings.  The  headings  used  in  this  Warrant  are for the
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                              ********************

                                       12
<PAGE>

      IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.

Dated:  May 2, 2005

                                              KNOCKOUT HOLDINGS, INC.

                                              /s/ Oscar Turner
                                              ----------------------------------
                                              Oscar Turner,
                                              Chief Financial Officer

                                       13
<PAGE>

                               NOTICE OF EXERCISE

TO:   KNOCKOUT HOLDINGS, INC.

      (1)   The undersigned hereby elects to purchase ________ Warrant Shares of
the Company  pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

      (2)   Payment shall take the form of (check applicable box):

            |_|   in lawful money of the United States; or

            |_|   the  cancellation  of such  number  of  Warrant  Shares  as is
                  necessary,  in  accordance  with  the  formula  set  forth  in
                  subsection  2(c), to exercise this Warrant with respect to the
                  maximum number of Warrant Shares  purchasable  pursuant to the
                  cashless exercise procedure set forth in subsection 2(c).

      (3)   Please issue a certificate or certificates representing said Warrant
Shares in the name of the  undersigned  or in such  other  name as is  specified
below:

            -------------------------------

The Warrant Shares shall be delivered to the following:

            -------------------------------

            -------------------------------

            -------------------------------

      (4)   Accredited Investor.  The undersigned is an "accredited investor" as
defined  in  Regulation  D  promulgated  under the  Securities  Act of 1933,  as
amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:_______________________________________________________
Signature of Authorized Signatory of Investing Entity:__________________________
Name of Authorized Signatory:___________________________________________________
Title of Authorized Signatory:__________________________________________________
Date:___________________________________________________________________________

                                       14
<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

      FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to

_______________________________________________ whose address is
______________________________________________________________________.

______________________________________________________________________

                                              Dated:______________, _______

                         Holder's Signature:  _____________________________

                         Holder's Address:    _____________________________

Signature Guaranteed:___________________________________________

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

                                       15EXHIBIT 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;

<PAGE>

                  (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.

                                       2
<PAGE>

                  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

                                       3
<PAGE>

      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

                                       4
<PAGE>

      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.

                                       5
<PAGE>

            (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.

                                       6
<PAGE>

            (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

                                       7
<PAGE>

      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

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