EXHIBIT 10.4
WAIVER AND CONSENT AGREEMENT
This
Waiver and Consent Agreement (this "Waiver") is dated as of
September
12, 2005 between Knockout Holdings, Inc., a
Delaware corporation (the "Company")
and CAMOFI Master LDC, formerly known as
DCOFI Master LDC (the "Purchaser").
WHEREAS,
the Company and the Purchaser have entered into the Securities
Purchase Agreement, dated as of May 2, 2005
(the "Purchase Agreement"), pursuant
to which the Company has issued to the
Purchaser the Company's 11% Senior
Secured Note due May 2, 2008 in the
original aggregate principal amount of
$3,000,000 (the "Note"). Capitalized terms
not otherwise defined herein shall
have the meaning set forth in the Purchase
Agreement.
WHEREAS,
the Company is contemplating a transaction (the "Contemplated
Transaction") whereby it proposes to issue
its convertible promissory notes in
the aggregate principal amount of
$2,800,000 (the "Additional Notes") pursuant
to a Purchase Agreement, among the Company
and the Purchasers of the Additional
Notes, in the form attached hereto as
Exhibit A;
WHEREAS,
the Note provides that so long as any portion of the Note is
outstanding, the Company will not enter
into, create, incur, assume or suffer to
exist any indebtedness of any kind other
than indebtedness in the ordinary
course of business in an amount less than
$25,000 or indebtedness which is used
to prepay the Note in full;
WHEREAS,
the Company has requested that Purchaser consent to the
issuance
of the Additional Notes, and the Purchaser
is willing to agree to provide such
consent, subject to the terms and
conditions contained in this Waiver.
In
consideration of the foregoing and the agreements and covenants
contained herein, and for other good and
valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged, the parties hereto agree as
follows:
1.
Consent. Subject to the terms and conditions contained herein
and
notwithstanding anything to the contrary
contained in the Purchase Agreement,
Note or Warrant, including Section 7(a) of
the Note, the Purchaser hereby: (i)
consents to the Contemplated Transaction,
including the incurrence of the
indebtedness pursuant to the Additional
Notes, and (ii) waives its rights
pursuant to Section 4.16 of the Purchase
Agreement to exchange all or a portion
of its Notes for the Additional Notes.
2.
Amendment to the Note. The Note is hereby amended and restated in
the
form attached hereto as Exhibit B.
3.
Amendment to Warrant. The Common Stock Purchase Warrants
("Warrants")
to purchase in the aggregate 364,720 shares
of the Company's Common Stock, which
Warrants were issued to the Purchaser
pursuant to the Securities Purchase
Agreement, dated as of January 17, 2005,
among the Company and the purchasers
identified therein, is hereby amended by
amending the term "Exercise Price" to
mean "$0.30" and by inserting anti-dilution
provisions substantially in the form
attached hereto as Exhibit C.
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4. Release
of Escrow Funds.
(a) Notwithstanding anything to the contrary in the Purchase
Agreement, the Note or the Escrow
Agreement, the remaining Escrowed Funds in the
amount of $364,453 shall be released and
paid to the Purchaser as prepayment of
$364,453 of the outstanding principal under
the Note.
(b) The prepayment of principal in the amount of $364,453
pursuant
to this Section 5 shall not be subject to
Section 2(e) of the Note.
(c) The Company and the Purchaser covenant and agree that they
