SECURITY AND PURCHASE AGREEMENT

This Security and Purchase Agreement is made as of July 7, 2005 by and among
LAURUS MASTER FUND, LTD., a Cayman Islands corporation (“Laurus”), 360 GLOBAL
WINE COMPANY, a Nevada corporation (“the Parent”), and each party listed on
Exhibit A attached hereto (each an “Eligible Subsidiary” and collectively, the
“Eligible Subsidiaries”) the Parent and each Eligible Subsidiary, each a
“Company” and collectively, the “Companies”).

BACKGROUND

The Companies have requested that Laurus make advances available to the
Companies; and

Laurus has agreed to make such advances on the terms and conditions set forth in
this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and undertakings and
the terms and conditions contained herein, the parties hereto agree as follows:

1.

General Definitions and Terms; Rules of Construction.

(a)

General Definitions.  Capitalized terms used in this Agreement shall have the
meanings assigned to them in Annex A.

(b)

Accounting Terms.  Any accounting terms used in this Agreement which are not
specifically defined shall have the meanings customarily given them in
accordance with GAAP and all financial computations shall be computed, unless
specifically provided herein, in accordance with GAAP consistently applied.

(c)

Other Terms.  All other terms used in this Agreement and defined in the UCC,
shall have the meaning given therein unless otherwise defined herein.

(d)

Rules of Construction.  All Schedules, Addenda, Annexes and Exhibits hereto or
expressly identified to this Agreement are incorporated herein by reference and
taken together with this Agreement constitute but a single agreement.  The words
“herein”, “hereof” and “hereunder” or other words of similar import refer to
this Agreement as a whole, including the Exhibits, Addenda, Annexes and
Schedules thereto, as the same may be from time to time amended, modified,
restated or supplemented, and not to any particular section, subsection or
clause contained in this Agreement.  Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the
singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, the feminine and the neuter.  The
term “or” is not exclusive.  The term “including” (or any form thereof) shall
not be limiting or exclusive.  All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations.  All references in this Agreement or in the Schedules, Addenda,
Annexes and Exhibits to this Agreement to sections,

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schedules, disclosure schedules, exhibits, and attachments shall refer to the
corresponding sections, schedules, disclosure schedules, exhibits, and
attachments of or to this Agreement.  All references to any instruments or
agreements, including references to any of this Agreement or the Ancillary
Agreements shall include any and all modifications or amendments thereto and any
and all extensions or renewals thereof.

2.

Loan Facility.

(a)

Revolving Loans.

Subject to the terms and conditions set forth herein and in the Ancillary
Agreements, Laurus may make revolving loans (the “ Revolving Loans”) to
Companies from time to time during the Term which, in the aggregate at any time
outstanding, will not exceed the lesser of (x) (I) the Capital Availability
Amount minus (II) such reserves as Laurus may reasonably in its good faith
judgment deem proper and necessary from time to time (the “Reserves”) and (y) an
amount equal to (I) the Accounts Availability minus (II) the Reserves.  The
amount derived at any time from Section 2(a)(i)(y)(I) minus 2(a)(i)(y)(II) shall
be referred to as the “Formula Amount.”  The Companies shall, jointly and
severally, execute and deliver to Laurus on the Closing Date the Revolving Note
and a Minimum Borrowing Note evidencing the Revolving Loans funded on the
Closing Date.  From time to time thereafter, the Companies shall jointly and
severally execute and deliver to Laurus immediately prior to the final funding
of each additional $500,000 tranche of Revolving Loans allocated to any Minimum
Borrowing Note issued after the date hereof (calculated on a cumulative basis
for each such tranche) an additional Minimum Borrowing Note evidencing such
tranche, substantially in the form of the Minimum Borrowing Note delivered by
the Companies to Laurus on the Closing Date.  Notwithstanding anything herein to
the contrary, whenever during the Term the outstanding balance on the Minimum
Borrowing Note shall be less than the Minimum Borrowing Amount (such amount
being referred to herein as the “Transferable Amount”) to the extent that the
outstanding balance on the Revolving Note should equal or exceed $500,000, that
portion of the balance of the Revolving Note that exceeds $500,000, but does not
exceed the Transferable Amount, shall be segregated from the outstanding balance
under the Revolving Note and allocated to and aggregated with the then existing
balance of the next unissued serialized Minimum Borrowing Note (the “Next
Unissued Serialized Note”); provided that such segregated amount shall remain
subject to the terms and conditions of such Revolving Note until a new
serialized Minimum Borrowing Note is issued as set forth below.  The Next
Unissued Serialized Note shall remain in book entry form until the balance
thereunder shall equal the Minimum Borrowing Amount, at which time a new
serialized Minimum Borrowing Note in the face amount equal to the Minimum
Borrowing Amount will be issued and registered as set forth in the Registration
Rights Agreement (and the outstanding balance under the Revolving Note shall at
such time be correspondingly reduced in the amount equal to the Minimum
Borrowing Amount as a result of the issuance of such new serialized Minimum
Borrowing Note).

(i)

Notwithstanding the limitations set forth above, if requested by any Company,
Laurus retains the right to lend to such Company from time to time such amounts
in excess of such limitations as Laurus may determine in its sole discretion.

(ii)

The Companies acknowledge that the exercise of Laurus’ discretionary rights
hereunder may result during the Term in one or more increases or decreases

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in the advance percentages used in determining Accounts Availability and each of
the Companies hereby consent to any such increases or decreases which may limit
or restrict advances requested by the Companies.

(iii)

If any interest, fees, costs or charges payable to Laurus hereunder are not paid
when due, each of the Companies shall thereby be deemed to have requested, and
Laurus is hereby authorized at its discretion to make and charge to the
Companies’ account, a Loan as of such date in an amount equal to such unpaid
interest, fees, costs or charges.

(iv)

If any Company at any time fails to perform or observe any of the covenants
contained in this Agreement or any Ancillary Agreement, Laurus may, but need
not, perform or observe such covenant on behalf and in the name, place and stead
of such Company (or, at Laurus’ option, in Laurus’ name) and may, but need not,
take any and all other actions which Laurus may deem necessary to cure or
correct such failure (including the payment of taxes, the satisfaction of Liens,
the performance of obligations owed to Account Debtors, lessors or other
obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments).  The amount of all monies expended and all costs and expenses
(including attorneys’ fees and legal expenses) incurred by Laurus in connection
with or as a result of the performance or observance of such agreements or the
taking of such action by Laurus shall be charged to the Companies’ account as a
Revolving Loan and added to the Obligations.  To facilitate Laurus’ performance
or observance of such covenants by each Company, each Company hereby irrevocably
appoints Laurus, or Laurus’ delegate, acting alone, as such Company’s attorney
in fact (which appointment is coupled with an interest) with the right (but not
the duty) from time to time to create, prepare, complete, execute, deliver,
endorse or file in the name and on behalf of such Company any and all
instruments, documents, assignments, security agreements, financing statements,
applications for insurance and other agreements and writings required to be
obtained, executed, delivered or endorsed by such Company.

(v)

Laurus will account to Company Agent monthly with a statement of all Loans and
other advances, charges and payments made pursuant to this Agreement, and such
account rendered by Laurus shall be deemed final, binding and conclusive unless
Laurus is notified by Company Agent in writing to the contrary within thirty
(30) days of the date each account was rendered specifying the item or items to
which objection is made.

(vi)

During the Term, the Companies may borrow and prepay Loans in accordance with
the terms and conditions hereof.  

(vii)

If any Eligible Account is not paid by the Account Debtor within ninety (90)
days after the date that such Eligible Account was invoiced or if any Account
Debtor asserts a deduction, dispute, contingency, set-off, or counterclaim with
respect to any Eligible Account, (a “Delinquent Account”), the Companies shall
jointly and severally (i) reimburse Laurus for the amount of the Loans made with
respect to such Delinquent Account plus an adjustment fee in an amount equal to
one-half of one percent (0.50%) of the gross face amount of such Eligible
Account or (ii) immediately replace such Delinquent Account with an otherwise
Eligible Account.

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(b)

Receivables Purchase.  Following the occurrence and during the continuance of an
Event of Default, Laurus may, at its option, elect to convert the credit
facility contemplated hereby to an accounts receivable purchase facility.  Upon
such election by Laurus (subsequent notice of which Laurus shall provide to
Company Agent), the Companies shall be deemed to hereby have sold, assigned,
transferred, conveyed and delivered to Laurus, and Laurus shall be deemed to
have purchased and received from the Companies, all right, title and interest of
the Companies in and to all Accounts which shall at any time constitute Eligible
Accounts (the “Receivables Purchase”).  All outstanding Loans hereunder shall be
deemed obligations under such accounts receivable purchase facility.  The
conversion to an accounts receivable purchase facility in accordance with the
terms hereof shall not be deemed an exercise by Laurus of its secured creditor
rights under Article 9 of the UCC.  Immediately following Laurus’ request, the
Companies shall execute all such further documentation as may be required by
Laurus to more fully set forth the accounts receivable purchase facility herein
contemplated, including, without limitation, Laurus’ standard form of accounts
receivable purchase agreement and account debtor notification letters, but any
Company’s failure to enter into any such documentation shall not impair or
affect the Receivables Purchase in any manner whatsoever.

(c)

Minimum Borrowing Amount.  After a registration statement registering the
Registrable Securities has been declared effective by the SEC, conversions of
the Minimum Borrowing Amount into the Common Stock may be initiated as set forth
in the respective Minimum Borrowing Note.  From and after the date upon which
any outstanding principal of the Minimum Borrowing Amount (as evidenced by the
first Minimum Borrowing Note) is converted into Common Stock (the “First
Conversion Date”), (i) corresponding amounts of all outstanding Loans (not
attributable to the then outstanding Minimum Borrowing Amount) existing on or
made after the First Conversion Date will be aggregated in accordance with
Section 2(a)(i) and (ii) the Companies will issue a new (serialized) Minimum
Borrowing Note to Laurus in accordance with Section 2(a)(i), and (iii) the
Parent shall prepare and file a subsequent registration statement with the SEC
to register such subsequent Minimum Borrowing Note as set forth in the
Registration Rights Agreement.

(d)

Term Loan.  Subject to the terms and conditions set forth herein and in the
Ancillary Agreements, Laurus shall make a term loan (the “Term Loan”) to Company
Agent (for the benefit of Companies) in an aggregate amount equal to $
34,500,000 .  The Term Loan shall be advanced on the Closing Date and shall be,
with respect to principal, payable in consecutive monthly installments of
principal commencing on November 1, 2005 and on the first day of each month
thereafter, subject to acceleration upon the occurrence of an Event of Default
or termination of this Agreement. The Term Loan shall be evidenced by the
Secured Convertible Term Note

3.

Repayment of the Loans.  The Companies (a) may prepay the Obligations from time
to time in accordance with the terms and provisions of the Notes (and Section 17
hereof if such prepayment is due to a termination of this Agreement); (b) shall
repay on the expiration of the Term (i) the then aggregate outstanding principal
balance of the Loans together with accrued and unpaid interest, fees and charges
and; (ii) all other amounts owed Laurus under this Agreement and the Ancillary
Agreements; (c) subject to Section 2(a)(ii), shall repay on any day on which the
then aggregate outstanding principal balance of the Loans are in excess of the
Formula Amount at such time, Loans in an amount equal to such excess and (d)
shall apply no

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less than 50% of the gross sale proceeds of sales of granite received by the
Companies (which sales shall have been reported in accordance with Section
11(d)) to repay Obligations outstanding in respect of the Term Note immediately
upon receipt of such gross proceeds; it being agreed and understood that such
repayments under this clause (d) shall be made without penalty otherwise payable
pursuant to  Section 17. Any payments of principal, interest, fees or any other
amounts payable hereunder or under any Ancillary Agreement shall be made prior
to 12:00 noon (New York time) on the due date thereof in immediately available
funds.

4.

Procedure for Revolving Loans.  Company Agent may by written notice request a
borrowing of Revolving Loans prior to 12:00 noon (New York time) on the Business
Day of its request to incur, on the next Business Day, a Loan.  Together with
each request for a Revolving Loan (or at such other intervals as Laurus may
request), Company Agent shall deliver to Laurus a Borrowing Base Certificate in
the form of Exhibit B attached hereto, which shall be certified as true and
correct by the Chief Executive Officer or Chief Financial Officer of Company
Agent together with all supporting documentation relating thereto.  All
Revolving Loans shall be disbursed from whichever office or other place Laurus
may designate from time to time and shall be charged to the Companies’ account
on Laurus’ books.  The proceeds of each Revolving Loan made by Laurus shall be
made available to Company Agent on the Business Day following the Business Day
so requested in accordance with the terms of this Section 4 by way of credit to
the applicable Company’s operating account maintained with such bank as Company
Agent designated to Laurus.  Any and all Obligations due and owing hereunder may
be charged to the Companies’ account and shall constitute Revolving Loans.

5.

Interest and Payments.  

(a)

Interest.

(i)

Except as modified by Section 5(a)(iii) below, the Companies shall jointly and
severally pay interest at the Contract Rate on the unpaid principal balance of
each Loan until such time as such Loan is collected in full in good funds in
dollars of the United States of America.

(ii)

Interest and payments shall be computed on the basis of actual days elapsed in a
year of 360 days.  At Laurus’ option, Laurus may charge the Companies’ account
for said interest.

(iii)

Effective upon the occurrence of any Event of Default and for so long as any
Event of Default shall be continuing, the Contract Rate shall automatically be
increased as set forth in the Notes (such increased rate, the “Default Rate”),
and all outstanding Obligations, including unpaid interest, shall continue to
accrue interest from the date of such Event of Default at the Default Rate
applicable to such Obligations.

(iv)

In no event shall the aggregate interest payable hereunder exceed the maximum
rate permitted under any applicable law or regulation, as in effect from time to
time (the “Maximum Legal Rate”), and if any provision of this Agreement or any
Ancillary Agreement is in contravention of any such law or regulation, interest
payable under this

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Agreement and each Ancillary Agreement shall be computed on the basis of the
Maximum Legal Rate (so that such interest will not exceed the Maximum Legal
Rate).

(v)

The Companies shall jointly and severally pay principal, interest and all other
amounts payable hereunder, or under any Ancillary Agreement, without any
deduction whatsoever, including any deduction for any set-off or counterclaim.

(b)

Payments; Certain Closing Conditions; Certain Funding Conditions.

(i)

Closing/Annual Payments.  Upon execution of this Agreement by each Company and
Laurus, the Companies shall jointly and severally pay to Laurus Capital
Management, LLC a closing payment in an amount equal to three and six tenths
percent (3.6%) of the Total Investment Amount.  Such payment shall be deemed
fully earned on the Closing Date and shall not be subject to rebate or proration
for any reason.

(ii)

Unused Line Payment.  None.

(iii)

Overadvance Payment.  Without affecting Laurus’ rights hereunder in the event
the Loans exceed the Formula Amount (each such event, an “Overadvance”), all
such Overadvances shall bear additional interest at a rate equal to two percent
(2%) per month of the amount of such Overadvances for all times such amounts
shall be in excess of the Formula Amount.  All amounts that are incurred
pursuant to this Section 5(b)(iii) shall be due and payable by the Companies
monthly, in arrears, on the first business day of each calendar month and upon
expiration of the Term.

(iv)

Financial Information Default.  Without affecting Laurus’ other rights and
remedies, in the event any Company fails to deliver the financial information
required by Section 11 on or before the date required by this Agreement, the
Companies shall jointly and severally pay Laurus an aggregate fee in the amount
of $500.00 per week (or portion thereof) for each such failure until such
failure is cured to Laurus’ satisfaction or waived in writing by Laurus.  All
amounts that are incurred pursuant to this Section 5(b)(iv) shall be due and
payable by the Companies monthly, in arrears, on the first business of each
calendar month and upon expiration of the Term.

(v)

Expenses.  The Companies shall jointly and severally reimburse Laurus for its
expenses (including reasonable legal fees and expenses) incurred in connection
with the preparation and negotiation of this Agreement and the Ancillary
Agreements, and expenses incurred in connection with Laurus’ due diligence
review of each Company and its Subsidiaries and all related matters.  Amounts
required to be paid under this Section 5(b)(v) will be paid on the Closing Date
and shall be $58,000 for such expenses referred to in this Section 5(b)(v) plus
the cost of any required third-party appraisals and/or extraordinary diligence,
subject to the Parent’s prior approval, as well as fees and expenses of outside
real estate counsel in those jurisdictions in which any Company owns real
property to the extent such real property shall be encumbered pursuant to a
Security Document.

(vi)

Gryphon Lien Subordination.  On the Closing Date, the Parent shall cause Gryphon
Master Fund, L.P. (“Gryphon”) as holder of indebtedness, liabilities and other
obligations arising under the Securities Exchange Agreement (the “Existing
Security

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Exchange Agreement”), dated as of April 21, 2004 between the Parent and Gryphon
and the Transaction Documents referred to in the Existing Security Exchange
Agreement (the Existing Security Exchange Agreement, together with the
Transaction Documents, collectively are referred to as the “Subordinated Debt
Documentation”), to enter into, execute and deliver to Purchaser an lien
subordination agreement in form and substance reasonably satisfactory to the
Purchaser (the “Subordination Agreement”).

(vii)

Refinancing.

On or prior to the Closing Date, all indebtedness under the (i) Amended and
Restated Loan and Security Agreement, dated as of April 23, 2004 between Silicon
Valley Bank (“SVB”), as servicing agent and lender and Harris Trust and Savings
Bank and Viansa Winery, a California limited party (as amended, modified and/or
supplemented, the “Existing SVB Loan Agreement”) and all related documents and
(ii) the security agreement and promissory note dated as of April 30, 2005
between Marks Paneth & Shron, LLP (“MPS”) and the Parent and its Subsidiaries
(as amended, modified and/or supplemented, the “Existing MPS Promissory Note”),
in each case, shall have been repaid in full and all commitments in respect
thereof shall have been terminated and all Liens and guaranties in connection
therewith shall have been terminated (and all appropriate releases, termination
statements or other instruments of assignment with respect thereto shall have
been obtained) to the reasonable satisfaction of Laurus.  Laurus shall have
received satisfactory evidence (including satisfactory pay-off letters, mortgage
releases, intellectual property releases and UCC-3 termination statements) that
the matters set forth in the immediately preceding sentence have been satisfied
as of the Closing Date.

(viii)

Mortgages. On or prior to the Closing Date, Laurus shall be granted a first
priority security interest pursuant to the California Deed of Trust and the
Texas Deed of Trust, in the real property described therein, each in form and
substance satisfactory to the Laurus.

(ix)

Lockbox Accounts.  On the date of initial funding of amounts under the Minimum
Borrowing and Revolving Note, each Company shall have entered into lockbox
control agreements.

(x)

Waiver of Existing Events of Default.  On or prior to the Closing Date, the
Parent shall deliver to the Purchaser evidence reasonably satisfactory to the
Purchaser that all “defaults” and “events of defaults” that may have occurred
and are continuing under the Subordinated Debt Documentation and the Longview
Debt Documentation shall have been irrevocably cured and/or waived.

6.

Security Interest.

(a)

To secure the prompt payment to Laurus of the Obligations, each Company hereby
assigns, pledges and grants to Laurus a continuing security interest in and Lien
upon all of the Collateral.  All of each Company’s Books and Records relating to
the Collateral shall, until delivered to or removed by Laurus, be kept by such
Company in trust for Laurus until all Obligations have been paid in full.  Each
confirmatory assignment schedule or other form of assignment hereafter executed
by each Company shall be deemed to include the foregoing grant, whether or not
the same appears therein.

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(b)

Each Company hereby (i) authorizes Laurus to file any financing statements,
continuation statements or amendments thereto that (x) indicate the Collateral
(1) as all assets and personal property of such Company or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the UCC of such jurisdiction, or (2) as
being of an equal or lesser scope or with greater detail, and (y) contain any
other information required by Part 5 of Article 9 of the UCC for the sufficiency
or filing office acceptance of any financing statement, continuation statement
or amendment and (ii) ratifies its authorization for Laurus to have filed any
initial financial statements, or amendments thereto if filed prior to the date
hereof.  Each Company acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement without the prior written consent of Laurus and agrees that
it will not do so without the prior written consent of Laurus, subject to such
Company’s rights under Section 9-509(d)(2) of the UCC.

(c)

Each Company hereby grants to Laurus an irrevocable, non-exclusive license
(exercisable upon the termination of this Agreement due to an occurrence and
during the continuance of an Event of Default without payment of royalty or
other compensation to such Company) to use, transfer, license or sublicense any
Intellectual Property now owned, licensed to, or hereafter acquired by such
Company, 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 and automatic machinery software and programs used for the
compilation or printout thereof, and represents, promises and agrees that any
such license or sublicense is not and will not be in conflict with the
contractual or commercial rights of any third Person; provided, that such
license will terminate on the termination of this Agreement and the payment in
full of all Obligations.

7.

Representations, Warranties and Covenants Concerning the Collateral.  Each
Company represents, warrants (each of which such representations and warranties
shall be deemed repeated upon the making of each request for a Revolving Loan
and made as of the time of each and every Revolving Loan hereunder) and
covenants as follows:

(a)

all of the Collateral (i) is owned by it free and clear of all Liens (including
any claims of infringement) except those in Laurus’ favor and Permitted Liens
and (ii) is not subject to any agreement prohibiting the granting of a Lien or
requiring notice of or consent to the granting of a Lien.

(b)

it shall not encumber, mortgage, pledge, assign or grant any Lien in any
Collateral or any other assets to anyone other than Laurus and except for
Permitted Liens.

(c)

the Liens granted pursuant to this Agreement, upon completion of the filings and
other actions listed on Schedule 7(c) (which, in the case of all filings and
other documents referred to in said Schedule, have been delivered to Laurus in
duly executed form) constitute valid perfected security interests in all of the
Collateral in favor of Laurus as security for the prompt and complete payment
and performance of the Obligations, enforceable in accordance with the terms
hereof against any and all of its creditors and purchasers and such security
interest is prior to all other Liens in existence on the date hereof.

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(d)

no effective security agreement, mortgage, deed of trust, financing statement,
equivalent security or Lien instrument or continuation statement covering all or
any part of the Collateral is or will be on file or of record in any public
office, except those relating to Permitted Liens.

(e)

it shall not dispose of any of the Collateral whether by sale, lease or
otherwise except for the sale of Inventory in the ordinary course of business
and for the disposition or transfer in the ordinary course of business during
any fiscal year of obsolete and worn-out Equipment having an aggregate fair
market value of not more than $25,000 and only to the extent that (i) the
proceeds of any such disposition are used to acquire replacement Equipment which
is subject to Laurus’ first priority security interest or are used to repay
Loans or to pay general corporate expenses, or (ii) following the occurrence of
an Event of Default which continues to exist the proceeds of which are remitted
to Laurus to be held as cash collateral for the Obligations.

(f)

it shall defend the right, title and interest of Laurus in and to the Collateral
against the claims and demands of all Persons whomsoever, and take such actions,
including (i) all actions necessary to grant Laurus “control” of any Investment
Property, Deposit Accounts, Letter-of-Credit Rights or electronic Chattel Paper
owned by it, with any agreements establishing control to be in form and
substance satisfactory to Laurus, (ii) the prompt (but in no event later than
five (5) Business Days following Laurus’ request therefor) delivery to Laurus of
all original Instruments, Chattel Paper, negotiable Documents and certificated
Stock owned by it (in each case, accompanied by stock powers, allonges or other
instruments of transfer executed in blank), (iii) notification of Laurus’
interest in Collateral at Laurus’ request, and (iv) the institution of
litigation against third parties as shall be prudent in order to protect and
preserve its and/or Laurus’ respective and several interests in the Collateral.

(g)

it shall promptly, and in any event within five (5) Business Days after the same
is acquired by it, notify Laurus of any commercial tort claim (as defined in the
UCC) acquired by it and unless otherwise consented by Laurus, it shall enter
into a supplement to this Agreement granting to Laurus a Lien in such commercial
tort claim.

(h)

it shall place notations upon its Books and Records and any of its financial
statements to disclose Laurus’ Lien in the Collateral.

(i)

if it retains possession of any Chattel Paper or Instrument with Laurus’
consent, upon Laurus’ request such Chattel Paper and Instruments shall be marked
with the following legend:  “This writing and obligations evidenced or secured
hereby are subject to the security interest of Laurus Master Fund, Ltd.”
Notwithstanding the foregoing, upon the reasonable request of Laurus, such
Chattel Paper and Instruments shall be delivered to Laurus.

(j)

it shall perform in a reasonable time all other steps requested by Laurus to
create and maintain in Laurus’ favor a valid perfected first Lien in all
Collateral subject only to Permitted Liens.

(k)

it shall notify Laurus promptly and in any event within three (3) Business Days
after obtaining knowledge thereof (i) of any event or circumstance that, to its
knowledge,

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would cause Laurus to consider any then existing Account and/or Inventory as no
longer constituting an Eligible Account; (ii) of any material delay in its
performance of any of its obligations to any Account Debtor; (iii) of any
assertion by any Account Debtor of any material claims, offsets or
counterclaims; (iv) of any allowances, credits and/or monies granted by it to
any Account Debtor; (v) of all material adverse information relating to the
financial condition of an Account Debtor; (vi) of any material return of goods;
and (vii) of any loss, damage or destruction of any of the Collateral.

(l)

all Eligible Accounts (i) represent complete bona fide transactions which
require no further act under any circumstances on its part to make such Accounts
payable by the Account Debtors, (ii) are not subject to any present, future
contingent offsets or counterclaims, and (iii) do not represent bill and hold
sales, consignment sales, guaranteed sales, sale or return or other similar
understandings or obligations of any Affiliate or Subsidiary of such Company.
 It has not made, nor will it make, any agreement with any Account Debtor for
any extension of time for the payment of any Account, any compromise or
settlement for less than the full amount thereof, any release of any Account
Debtor from liability therefor, or any deduction therefrom except a discount or
allowance for prompt or early payment allowed by it in the ordinary course of
its business consistent with historical practice and as previously disclosed to
Laurus in writing.

(m)

it shall keep and maintain its Equipment in good operating condition, except for
ordinary wear and tear, and shall make all necessary repairs and replacements
thereof so that the value and operating efficiency shall at all times be
maintained and preserved.  It shall not permit any such items to become a
Fixture to real estate or accessions to other personal property.

(n)

it shall maintain and keep all of its Books and Records concerning the
Collateral at its executive offices listed in Schedule 12(aa).

(o)

it shall maintain and keep the tangible Collateral at the addresses listed in
Schedule 12(aa), provided, that it may change such locations or open a new
location, provided that it provides Laurus at least thirty (30) days prior
written notice of such changes or new location and (ii) prior to such change or
opening of a new location where Collateral having a value of more than $50,000
will be located, it executes and delivers to Laurus such agreements deemed
reasonably necessary or prudent by Laurus, including landlord agreements,
mortgagee agreements and warehouse agreements, each in form and substance
satisfactory to Laurus, to adequately protect and maintain Laurus’ security
interest in such Collateral.

(p)

Schedule 7(p) lists all banks and other financial institutions at which it
maintains deposits and/or other accounts, and such Schedule correctly identifies
the name, address and telephone number of each such depository, the name in
which the account is held, a description of the purpose of the account, and the
complete account number.  It shall not establish any depository or other bank
account with any financial institution (other than the accounts set forth on
Schedule 7(p)) without Laurus’ prior written consent.

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(q)

All Inventory manufactured by it in the United States of America shall be
produced in accordance with the requirements of the Federal Fair Labor Standards
Act of 1938, as amended and all rules, regulations and orders related thereto or
promulgated thereunder.

8.

Payment of Accounts.

(a)

Each Company will irrevocably direct all of its present and future Account
Debtors and other Persons obligated to make payments constituting Collateral to
make such payments directly to the lockboxes maintained by such Company (the
“Lockboxes”) with North Fork Bank or such other financial institution accepted
by Laurus in writing as may be selected by such Company (the “Lockbox Bank”)
pursuant to the terms of the certain agreements among one or more Companies,
Laurus and/or the Lockbox Bank dated as of July __, 2005.  On or prior to the
Closing Date, each Company shall and shall cause the Lockbox Bank to enter into
all such documentation acceptable to Laurus pursuant to which, among other
things, the Lockbox Bank agrees to:  (a) sweep the Lockbox on a daily basis and
deposit all checks received therein to an account designated by Laurus in
writing and (b) comply only with the instructions or other directions of Laurus
concerning the Lockbox.  All of each Company’s invoices, account statements and
other written or oral communications directing, instructing, demanding or
requesting payment of any Account of any Company or any other amount
constituting Collateral shall conspicuously direct that all payments be made to
the Lockbox or such other address as Laurus may direct in writing.  If,
notwithstanding the instructions to Account Debtors, any Company receives any
payments, such Company shall immediately remit such payments to Laurus in their
original form with all necessary endorsements.  Until so remitted, such Company
shall hold all such payments in trust for and as the property of Laurus and
shall not commingle such payments with any of its other funds or property.

(b)

At Laurus’ election, following the occurrence of an Event of Default which is
continuing, Laurus may notify each Company’s Account Debtors of Laurus’ security
interest in the Accounts, collect them directly and charge the collection costs
and expenses thereof to Company’s and the Eligible Subsidiaries joint and
several account.

9.

Collection and Maintenance of Collateral.

(a)

Laurus may verify each Company’s Accounts from time to time, but not more often
than once every three (3) months, unless an Event of Default has occurred and is
continuing, utilizing an audit control company or any other agent of Laurus.

(b)

Proceeds of Accounts received by Laurus will be deemed received on the Business
Day after Laurus’ receipt of such proceeds in good funds in dollars of the
United States of America to an account designated by Laurus.  Any amount
received by Laurus after 12:00 noon (New York time) on any Business Day shall be
deemed received on the next Business Day.

(c)

As Laurus receives the proceeds of Accounts of any Company, it shall (i) apply
such proceeds, as required, to amounts outstanding under the Notes, and (ii)
remit all such remaining proceeds (net of interest, fees and other amounts then
due and owing to Laurus hereunder) to Company Agent (for the benefit of the
applicable Companies) upon request (but no

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more often than twice a week).  Notwithstanding the foregoing, following the
occurrence and during the continuance of an Event of Default, Laurus, at its
option, may (a) apply such proceeds to the Obligations in such order as Laurus
shall elect, (b) hold all such proceeds as cash collateral for the Obligations
and each Company hereby grants to Laurus a security interest in such cash
collateral amounts as security for the Obligations and/or (c) do any combination
of the foregoing.

10.

Inspections and Appraisals.  At all times during normal business hours, Laurus,
and/or any agent of Laurus shall have the right to (a) have access to, visit,
inspect, review, evaluate and make physical verification and appraisals of each
Company’s properties and the Collateral, (b) inspect, audit and copy (or take
originals if necessary) and make extracts from each Company’s Books and Records,
including management letters prepared by the Accountants, and (c) discuss with
each Company’s directors, principal officers, and independent accountants, each
Company’s business, assets, liabilities, financial condition, results of
operations and business prospects.  Each Company will deliver to Laurus any
instrument necessary for Laurus to obtain records from any service bureau
maintaining records for such Company.  If any internally prepared financial
information, including that required under this Section is unsatisfactory in any
manner to Laurus, Laurus may request that the Accountants review the same.

11.

Financial Reporting.  Company Agent will deliver, or cause to be delivered, to
Laurus each of the following, which shall be in form and detail acceptable to
Laurus:

(a)

As soon as available, and in any event within ninety (90) days after the end of
each fiscal year of the Parent, each Company’s audited financial statements with
a report of independent certified public accountants of recognized standing
selected by the Parent and acceptable to Laurus (the “Accountants”), which
annual financial statements shall be without qualification (except for any
qualification as to “going concern” for any Company) and shall include each
Company’s balance sheet as at the end of such fiscal year and the related
statements of each Company’s income, retained earnings and cash flows for the
fiscal year then ended, prepared, if Laurus so requests, on a consolidating and
consolidated basis to include all Subsidiaries and Affiliates of each Company,
all in reasonable detail and prepared in accordance with GAAP, together with (i)
if and when available, copies of any management letters prepared by the
Accountants; and (ii) a certificate of the Parent’s President, Chief Executive
Officer or Chief Financial Officer stating that such financial statements have
been prepared in accordance with GAAP and whether or not such officer has
knowledge of the occurrence of any Default or Event of Default hereunder and, if
so, stating in reasonable detail the facts with respect thereto;

(b)

As soon as available and in any event within forty five (45) days after the end
of each quarter, an unaudited/internal balance sheet and statements of income,
retained earnings and cash flows of each Company as at the end of and for such
quarter and for the year to date period then ended, prepared, if Laurus so
requests, on a consolidating and consolidated basis to include all Subsidiaries
and Affiliates of each Company, in reasonable detail and stating in comparative
form the figures for the corresponding date and periods in the previous year,
all prepared in accordance with GAAP, subject to year-end adjustments and
accompanied by a certificate of the Parent’s President, Chief Executive Officer
or Chief Financial Officer, stating (i) that such financial statements have been
prepared in accordance with GAAP, subject to year-

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end audit adjustments, and (ii) whether or not such officer has knowledge of the
occurrence of any Default or Event of Default hereunder not theretofore reported
and remedied and, if so, stating in reasonable detail the facts with respect
thereto;

(c)

Within fifteen (15) days after the end of each month (or more frequently if
Laurus so requests), agings of each Company’s Accounts, unaudited trial balances
and their accounts payable and a calculation of each Company’s Accounts,
Eligible Accounts and/or Inventory, provided, however, that if Laurus shall
request the foregoing information more often than as set forth in the
immediately preceding clause, each Company shall have fifteen (15) days from
each such request to comply with Laurus’ demand;

(d)

By no later than Tuesday of each week (each, a “Granite Sale Report Date”), the
Parent shall provide to Laurus a report setting out the aggregate sales of
granite booked by the Parent and its Subsidiaries during the period commencing
on the second Monday preceding such Granite Sale Report Date through and
including the Sunday immediately preceding such Granite Sale Report Date,
together with the applicable payment terms of such sales, and such other
information as may be reasonably requested by Laurus.

(e)

Promptly after (i) the filing thereof, copies of the Parent’s most recent
registration statements and annual, quarterly, monthly or other regular reports
which the Parent files with the Securities and Exchange Commission (the “SEC”),
and (ii) the issuance thereof, copies of such financial statements, reports and
proxy statements as the Parent shall send to its stockholders.

(f)

The Company shall not be required to provide the foregoing financial information
for any subsidiary that is substantially inactive during the period for which
such financial statements are required.  

12.

Additional Representations and Warranties.  Each Company hereby represents and
warrants to Laurus as follows:

(a)

Organization, Good Standing and Qualification.  It and each of its Subsidiaries
is a corporation, partnership or limited liability company, as the case may be,
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization.  It and each of its Subsidiaries has the
corporate, limited liability company or partnership, as the   case may be, power
and authority to own and operate its properties and assets and, insofar as it is
or shall be a party thereto, to (i) execute and deliver this Agreement and the
Ancillary Agreements, (ii) to issue the Notes and the shares of Common Stock
issuable upon conversion of the Notes (the “Note Shares”), (iii) to issue the
Warrants and the shares of Common Stock issuable upon conversion of the Warrants
(the “Warrant Shares”), (iv) to issue the Options and the shares of Common Stock
issuable upon conversion of the Options (the “Option Shares”)and to (v) carry
out the provisions of this Agreement and the Ancillary Agreements and to carry
on its business as presently conducted.  It and each of its Subsidiaries is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation, partnership or limited liability company, as the case may be, in
all jurisdictions in which the nature or location of its activities and of its
properties (both owned and leased) makes such qualification necessary,

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except for those jurisdictions in which failure to do so has not had, or could
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

(b)

Subsidiaries.  Each of its direct and indirect Subsidiaries, the direct owner of
each such Subsidiary and its percentage ownership thereof, is set forth on
Schedule 12(b).

(c)

Capitalization; Voting Rights.

(i)

The authorized capital stock of the Parent, as of the date hereof consists of
100,000,000 shares, of which 100,000,000 are shares of Common Stock, par value
$0.001 per share, 46,592,546 shares of which are issued and outstanding.  The
authorized, issued and outstanding capital stock of each Subsidiary of each
Company is set forth on Schedule 12(c).

(ii)

Except as disclosed on Schedule 12(c), other than:  (i) the shares reserved for
issuance under the Parent’s stock option plans; and (ii) shares which may be
issued pursuant to this Agreement and the Ancillary Agreements, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or stockholder agreements, or arrangements
or agreements of any kind for the purchase or acquisition from the Parent of any
of its securities.  Except as disclosed on Schedule 12(c), neither the offer or
issuance of any of the Notes, the Warrants or the Options, or the issuance of
any of the Note Shares, the Warrant Shares or the Option Shares, nor the
consummation of any transaction contemplated hereby will result in a change in
the price or number of any securities of the Parent outstanding, under
anti-dilution or other similar provisions contained in or affecting any such
securities.

(iii)

All issued and outstanding shares of the Parent’s Common Stock:  (i) have been
duly authorized and validly issued and are fully paid and nonassessable; and
(ii) were issued in compliance with all applicable state and federal laws
concerning the issuance of securities.

(iv)

The rights, preferences, privileges and restrictions of the shares of the Common
Stock are as stated in the Parent’s Certificate of Incorporation (the
“Charter”).  The Note Shares, the Warrant Shares and the Option Shares have been
duly and validly reserved for issuance.  When issued in compliance with the
provisions of this Agreement and the Parent’s Charter, the Securities will be
validly issued, fully paid and nonassessable, and will be free of any liens or
encumbrances; provided, however, that the Securities may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein or as otherwise required by such laws at the time a transfer is proposed.

(d)

Authorization; Binding Obligations.  All corporate, partnership or limited
liability company, as the case may be, action on its and its Subsidiaries’ part
(including their respective officers and directors) necessary for the
authorization of this Agreement and the Ancillary Agreements, the performance of
all of its and its Subsidiaries’ obligations hereunder and under the Ancillary
Agreements on the Closing Date and, the authorization, issuance and delivery of
the Notes, the Warrant and the Options has been taken or will be taken prior to
the Closing Date.  This Agreement and the Ancillary Agreements, when executed
and delivered and

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to the extent it is a party thereto, will be its and its Subsidiaries’ valid and
binding obligations enforceable against each such Person in accordance with
their terms, except:

(i)

as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors’ rights;
and

(ii)

general principles of equity that restrict the availability of equitable or
legal remedies.

The issuance of the Notes and the subsequent conversion of the Notes into Note
Shares are not and will not be subject to any preemptive rights or rights of
first refusal that have not been properly waived or complied with.  The issuance
of the Warrants and the subsequent exercise of the Warrants for Warrant Shares
are not and will not be subject to any preemptive rights or rights of first
refusal that have not been properly waived or complied with. The issuance of the
Options and the subsequent exercise of the Options for Option Shares are not and
will not be subject to any preemptive rights or rights of first refusal that
have not been properly waived or complied with.

(e)

Liabilities.  Neither it nor any of its Subsidiaries has any material
liabilities, except current liabilities incurred in the ordinary course of
business and liabilities disclosed in any Exchange Act Filings or listed on
Schedule 12(e) hereto.

(f)

Agreements; Action.  Except as set forth on Schedule 12(f) or as disclosed in
any Exchange Act Filings:

(i)

There are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which it or any of its
Subsidiaries is a party or to its knowledge by which it is bound which may
involve:  (i) obligations (contingent or otherwise) of, or payments to, it or
any of its Subsidiaries in excess of $500,000 (other than obligations of, or
payments to, it or any of its Subsidiaries arising from purchase or sale
agreements entered into in the ordinary course of business); or (ii) the
transfer or license of any patent, copyright, trade secret or other proprietary
right to or from it (other than licenses arising from the purchase of “off the
shelf” or other standard products); or (iii) provisions restricting the
development, manufacture or distribution of its or any of its Subsidiaries’
products or services; or (iv) indemnification by it or any of its Subsidiaries
with respect to infringements of proprietary rights.

(ii)

Since December 31, 2004 (the “Balance Sheet Date”) neither it nor any of its
Subsidiaries has:  (i) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its capital stock;
(ii) incurred any indebtedness for money borrowed or any other liabilities
(other than ordinary course obligations) individually in excess of $50,000 or,
in the case of indebtedness and/or liabilities individually less than $50,000,
in excess of $100,000 in the aggregate; (iii) made any loans or advances to any
Person not in excess, individually or in the aggregate, of $100,000, other than
ordinary advances for travel expenses; or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its Inventory in
the ordinary course of business.

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(iii)

For the purposes of subsections (i) and (ii) of this Section 12(f), all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same Person (including Persons it or any
of its applicable Subsidiaries has reason to believe are affiliated therewith or
with any Subsidiary thereof) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of such subsections.

(iv)

the Parent maintains disclosure controls and procedures (“Disclosure Controls”)
designed to ensure that information required to be disclosed by the Parent in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized, and reported, within the time periods specified in the
rules and forms of the SEC.

(v)

The Parent makes and keeps books, records, and accounts, that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of its
assets.  It maintains internal control over financial reporting (“Financial
Reporting Controls”) designed by, or under the supervision of, its principal
executive and principal financial officers, and effected by its board of
directors, management, and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP, including
that:

(1)

transactions are executed in accordance with management’s general or specific
authorization;

(2)

unauthorized acquisition, use, or disposition of the Parent’s assets that could
have a material effect on the financial statements are prevented or timely
detected;

(3)

transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that its receipts and expenditures are
being made only in accordance with authorizations of the Parent’s management and
board of directors;

(4)

transactions are recorded as necessary to maintain accountability for assets;
and

(5)

the recorded accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to any
differences.

(vi)

There is no weakness in any of its Disclosure Controls or Financial Reporting
Controls that is required to be disclosed in any of the Exchange Act Filings,
except as so disclosed.

(g)

Obligations to Related Parties.  Except as set forth on Schedule 12(g), neither
it nor any of its Subsidiaries has any obligations to their respective officers,
directors, stockholders or employees other than:

(i)

for payment of salary for services rendered and for bonus payments;

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(ii)

reimbursement for reasonable expenses incurred on its or its Subsidiaries’
behalf;

(iii)

for other standard employee benefits made generally available to all employees
(including stock option agreements outstanding under any stock option plan
approved by its and its Subsidiaries’ Board of Directors, as applicable); and

(iv)

obligations listed in its and each of its Subsidiary’s financial statements or
disclosed in any of the Parent’s Exchange Act Filings.

Except as described above or set forth on Schedule 12(g), none of its officers,
directors or, to the best of its knowledge, key employees or stockholders, any
of its Subsidiaries or any members of their immediate families, are indebted to
it or any of its Subsidiaries, individually or in the aggregate, in excess of
$50,000 or have any direct or indirect ownership interest in any Person with
which it or any of its Subsidiaries is affiliated or with which it or any of its
Subsidiaries has a business relationship, or any Person which competes with it
or any of its Subsidiaries, other than passive investments in publicly traded
companies (representing less than one percent (1%) of such company) which may
compete with it or any of its Subsidiaries. Except as described above, none of
its officers, directors or stockholders, or any member of their immediate
families, is, directly or indirectly, interested in any material contract with
it or any of its Subsidiaries and no agreements, understandings or proposed
transactions are contemplated between it or any of its Subsidiaries and any such
Person.  Except as set forth on Schedule 12(g), neither it nor any of its
Subsidiaries is a guarantor or indemnitor of any indebtedness of any other
Person.

(h)

Changes.  Since the Balance Sheet Date, except as disclosed in any Exchange Act
Filing or in any Schedule to this Agreement or to any of the Ancillary
Agreements, there has not been:

(i)

any change in its or any of its Subsidiaries’ business, assets, liabilities,
condition (financial or otherwise), properties, operations or prospects, which,
individually or in the aggregate, has had, or could reasonably be expected to
have, a Material Adverse Effect;

(ii)

any resignation or termination of any of its or its Subsidiaries’ officers, key
employees or groups of employees;

(iii)

any material change, except in the ordinary course of business, in its or any of
its Subsidiaries’ contingent obligations by way of guaranty, endorsement,
indemnity, warranty or otherwise;

(iv)

any damage, destruction or loss, whether or not covered by insurance, which has
had, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect;

(v)

any waiver by it or any of its Subsidiaries of a valuable right or of a material
debt owed to it;

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(vi)

any direct or indirect material loans made by it or any of its Subsidiaries to
any of its or any of its Subsidiaries’ stockholders, employees, officers or
directors, other than advances made in the ordinary course of business;

(vii)

any material change in any compensation arrangement or agreement with any
employee, officer, director or stockholder;

(viii)

any declaration or payment of any dividend or other distribution of its or any
of its Subsidiaries’ assets;

(ix)

any labor organization activity related to it or any of its Subsidiaries;

(x)

any debt, obligation or liability incurred, assumed or guaranteed by it or any
of its Subsidiaries, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;

(xi)

any sale, assignment or transfer of any Intellectual Property or other
intangible assets;

(xii)

any change in any material agreement to which it or any of its Subsidiaries is a
party or by which either it or any of its Subsidiaries is bound which, either
individually or in the aggregate, has had, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect;

(xiii)

any other event or condition of any character that, either individually or in
the aggregate, has had, or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect; or

(xiv)

any arrangement or commitment by it or any of its Subsidiaries to do any of the
acts described in subsection (i) through (xiii) of this Section 12(h).

(i)

Title to Properties and Assets; Liens, Etc.  Except as set forth on
Schedule 12(i), it and each of its Subsidiaries has good and marketable title to
their respective properties and assets, and good title to its leasehold
interests, in each case subject to no Lien, other than Permitted Liens.

All facilities, Equipment, Fixtures, vehicles and other properties owned, leased
or used by it or any of its Subsidiaries are in good operating condition and
repair and are reasonably fit and usable for the purposes for which they are
being used.  Except as set forth on Schedule 12(i), it and each of its
Subsidiaries is in compliance with all material terms of each lease to which it
is a party or is otherwise bound.

(j)

Intellectual Property.

(i)

It and each of its Subsidiaries owns or possesses sufficient legal rights to all
Intellectual Property necessary for their respective businesses as now conducted
and, to its knowledge as presently proposed to be conducted, without any known
infringement of the

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rights of others.  There are no outstanding options, licenses or agreements of
any kind relating to its or any of its Subsidiary’s Intellectual Property, nor
is it or any of its Subsidiaries bound by or a party to any options, licenses or
agreements of any kind with respect to the Intellectual Property of any other
Person other than such licenses or agreements arising from the purchase of “off
the shelf” or standard products.

(ii)

Except as disclosed in its Exchange Act Filings, neither it nor any of its
Subsidiaries has received any communications alleging that it or any of its
Subsidiaries has violated any of the Intellectual Property or other proprietary
rights of any other Person, nor is it or any of its Subsidiaries aware of any
basis therefor.

(iii)

Neither it nor any of its Subsidiaries believes it is or will be necessary to
utilize any inventions, trade secrets or proprietary information of any of its
employees made prior to their employment by it or any of its Subsidiaries,
except for inventions, trade secrets or proprietary information that have been
rightfully assigned to it or any of its Subsidiaries.

(k)

Compliance with Other Instruments.  Neither it nor any of its Subsidiaries is in
violation or default of (x) any term of its Charter or Bylaws, or (y) any
provision of any indebtedness, mortgage, indenture, contract, agreement or
instrument to which it is party or by which it is bound or of any judgment,
decree, order or writ, which violation or default, in the case of this clause
(y), has had, or could reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect.  The execution, delivery and
performance of and compliance with this Agreement and the Ancillary Agreements
to which it is a party, and the issuance of the Notes and the other Securities
each pursuant hereto and thereto, will not, with or without the passage of time
or giving of notice, result in any such material violation, or be in conflict
with or constitute a default under any such term or provision, or result in the
creation of any Lien upon any of its or any of its Subsidiary’s properties or
assets or the suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to it or any of its
Subsidiaries, their businesses or operations or any of their assets or
properties.  

(l)

Litigation.  Except as set forth on Schedule 12(l), there is no action, suit,
proceeding or investigation pending or, to its knowledge, currently threatened
against it or any of its Subsidiaries that prevents it or any of its
Subsidiaries from entering into this Agreement or the Ancillary Agreements, or
from consummating the transactions contemplated hereby or thereby, or which has
had, or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, or could result in any change in its or
any of its Subsidiaries’ current equity ownership, nor is it aware that there is
any basis to assert any of the foregoing.  Neither it nor any of its
Subsidiaries is a party to or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality.  There is no action, suit, proceeding or investigation by it or
any of its Subsidiaries currently pending or which it or any of its Subsidiaries
intends to initiate.

(m)

Tax Returns and Payments.  It and each of its Subsidiaries has timely filed all
tax returns (federal, state and local) required to be filed by it.  All taxes
shown to be due and payable on such returns, any assessments imposed, and all
other taxes due and payable by it and

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each of its Subsidiaries on or before the Closing Date, have been paid or will
be paid prior to the time they become delinquent.  Except as set forth on
Schedule 12(m), neither it nor any of its Subsidiaries has been advised:

(i)

that any of its returns, federal, state or other, have been or are being audited
as of the date hereof; or

(ii)

of any adjustment, deficiency, assessment or court decision in respect of its
federal, state or other taxes.

Neither it nor any of its Subsidiaries has any knowledge of any liability of any
tax to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.

(n)

Employees.  Except as set forth on Schedule 12(n), neither it nor any of its
Subsidiaries has any collective bargaining agreements with any of its employees.
 There is no labor union organizing activity pending or, to its knowledge,
threatened with respect to it or any of its Subsidiaries.  Except as disclosed
in the Exchange Act Filings or on Schedule 12(n), neither it nor any of its
Subsidiaries is a party to or bound by any currently effective employment
contract, deferred compensation arrangement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation plan or
agreement.  To its knowledge, none of its or any of its Subsidiaries’ employees,
nor any consultant with whom it or any of its Subsidiaries has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, it or any of its Subsidiaries because of
the nature of the business to be conducted by it or any of its Subsidiaries; and
to its knowledge the continued employment by it and its Subsidiaries of their
present employees, and the performance of its and its Subsidiaries contracts
with its independent contractors, will not result in any such violation.
 Neither it nor any of its Subsidiaries is aware that any of its or any of its
Subsidiaries’ employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency that would
interfere with their duties to it or any of its Subsidiaries.  Neither it nor
any of its Subsidiaries has received any notice alleging that any such violation
has occurred.  Except for employees who have a current effective employment
agreement with it or any of its Subsidiaries, none of its or any of its
Subsidiaries’ employees has been granted the right to continued employment by it
or any of its Subsidiaries or to any material compensation following termination
of employment with it or any of its Subsidiaries.  Except as set forth on
Schedule 12(n), neither it nor any of its Subsidiaries is aware that any
officer, key employee or group of employees intends to terminate his, her or
their employment with it or any of its Subsidiaries, as applicable, nor does it
or any of its Subsidiaries have a present intention to terminate the employment
of any officer, key employee or group of employees.

(o)

Registration Rights and Voting Rights.  Except as set forth on Schedule 12(o)
and except as disclosed in Exchange Act Filings, neither it nor any of its
Subsidiaries is presently under any obligation, and neither it nor any of its
Subsidiaries has granted any rights, to register any of its or any of its
Subsidiaries’ presently outstanding securities or any of its securities that may
hereafter be issued.  Except as set forth on Schedule 12(o) and except as
disclosed in Exchange Act Filings, to its knowledge, none of its or

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any of its Subsidiaries’ stockholders has entered into any agreement with
respect to its or any of its Subsidiaries’ voting of equity securities.

(p)

Compliance with Laws; Permits.  Neither it nor any of its Subsidiaries is in
violation of the Sarbanes-Oxley Act of 2002 or any SEC related regulation or
rule or any rule of the Principal Market promulgated thereunder or any other
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which has had, or
could reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.  No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement or any Ancillary Agreement and the issuance of any of
the Securities, except such as have been duly and validly obtained or filed, or
with respect to any filings that must be made after the Closing Date, as will be
filed in a timely manner.  It and each of its Subsidiaries has all material
franchises, permits, licenses and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which could,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

(q)

Environmental and Safety Laws.  Neither it nor any of its Subsidiaries is in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.  Except as set forth on Schedule 12(q), no Hazardous
Materials (as defined below) are used or have been used, stored, or disposed of
by it or any of its Subsidiaries or, to its knowledge, by any other Person on
any property owned, leased or used by it or any of its Subsidiaries.  For the
purposes of the preceding sentence, “Hazardous Materials” shall mean:

(i)

materials which are listed or otherwise defined as “hazardous” or “toxic” under
any applicable local, state, federal and/or foreign laws and regulations that
govern the existence and/or remedy of contamination on property, the protection
of the environment from contamination, the control of hazardous wastes, or other
activities involving hazardous substances, including building materials; and

(ii)

any petroleum products or nuclear materials.

(r)

Valid Offering.  Assuming the accuracy of the representations and warranties of
Laurus contained in this Agreement, the offer and issuance of the Securities
will be exempt from the registration requirements of the Securities Act of 1933,
as amended (the “Securities Act”), and will have been registered or qualified
(or are exempt from registration and qualification) under the registration,
permit or qualification requirements of all applicable state securities laws.  

(s)

Full Disclosure.  It and each of its Subsidiaries has provided Laurus with all
information requested by Laurus in connection with Laurus’ decision to enter
into this Agreement, including all information each Company and its Subsidiaries
believe is reasonably necessary to make such investment decision.  Neither this
Agreement, the Ancillary Agreements

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nor the exhibits and schedules hereto and thereto nor any other document
delivered by it or any of its Subsidiaries to Laurus or its attorneys or agents
in connection herewith or therewith or with the transactions contemplated hereby
or thereby, contain any untrue statement of a material fact nor omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances in which they are made, not misleading.
 Any financial projections and other estimates provided to Laurus by it or any
of its Subsidiaries were based on its and its Subsidiaries’ experience in the
industry and on assumptions of fact and opinion as to future events which it or
any of its Subsidiaries, at the date of the issuance of such projections or
estimates, believed to be reasonable.  

(t)

Insurance.  It and each of its Subsidiaries has general commercial, product
liability, fire and casualty insurance policies with coverages which it believes
are customary for companies similarly situated to it and its Subsidiaries in the
same or similar business.

(u)

SEC Reports and Financial Statements.  Except as set forth on Schedule 12(u), it
and each of its Subsidiaries has filed all proxy statements, reports and other
documents required to be filed by it under the Exchange Act.  The Parent has
furnished Laurus with copies of:  (i) its Annual Report on Form 10-KSB for its
fiscal years ended December 31, 2004; and (ii) its Quarterly Reports on Form
10-QSB for its fiscal quarters ended March 31, 2005, and the Form 8-K filings
which it has made during its fiscal year 2005 to date (collectively, the “SEC
Reports”).  Except as set forth on Schedule 12(u), each SEC Report was, at the
time of its filing, in substantial compliance with the requirements of its
respective form and none of the SEC Reports, nor the financial statements (and
the notes thereto) included in the SEC Reports, as of their respective filing
dates, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  Such financial statements have been prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed) and fairly present in all material
respects the financial condition, the results of operations and cash flows of
the Parent and its Subsidiaries, on a consolidated basis, as of, and for, the
periods presented in each such SEC Report.

(v)

Listing.  The Parent’s Common Stock is listed or quoted, as applicable, on the
Principal Market and satisfies all requirements for the continuation of such
listing or quotation, as applicable, and the Parent shall do all things
necessary for the continuation of such listing or quotation, as applicable.  The
Parent has not received any notice that its Common Stock will be delisted from,
or no longer quoted on, as applicable, the Principal Market or that its Common
Stock does not meet all requirements for such listing or quotation, as
applicable.

(w)

No Integrated Offering.  Neither it, nor any of its Subsidiaries nor any of its
Affiliates, nor any Person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security (other than a concurrent offering to Laurus under a Securities
Purchase Agreement between the Parent and Laurus dated as of the date hereof)
under circumstances that would cause the offering of the Securities pursuant to
this Agreement or any Ancillary Agreement to be integrated with prior offerings
by it for purposes of the Securities Act which would prevent it from issuing the
Securities pursuant to

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Rule 506 under the Securities Act, or any applicable exchange-related
stockholder approval provisions, nor will it or any of its Affiliates or
Subsidiaries take any action or steps that would cause the offering of the
Securities to be integrated with other offerings.

(x)

Stop Transfer.  The Securities are restricted securities as of the date of this
Agreement.  Neither it nor any of its Subsidiaries will issue any stop transfer
order or other order impeding the sale and delivery of any of the Securities at
such time as the Securities are registered for public sale or an exemption from
registration is available, except as required by state and federal securities
laws.

(y)

Dilution.  It specifically acknowledges that the Parent’s obligation to issue
the shares of Common Stock upon conversion of the Notes, exercise of the
Warrants and exercise of the Options is binding upon the Parent and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Parent.

(z)

Patriot Act.  It certifies that, to the best of its knowledge, neither it nor
any of its Subsidiaries has been designated, nor is or shall be owned or
controlled, by a “suspected terrorist” as defined in Executive Order 13224.  It
hereby acknowledges that Laurus seeks to comply with all applicable laws
concerning money laundering and related activities.  In furtherance of those
efforts, it hereby represents, warrants and covenants that:  (i) none of the
cash or property that it or any of its Subsidiaries will pay or will contribute
to Laurus has been or shall be derived from, or related to, any activity that is
deemed criminal under United States law; and (ii) no contribution or payment by
it or any of its Subsidiaries to Laurus, to the extent that they are within its
or any such Subsidiary’s control shall cause Laurus to be in violation of the
United States Bank Secrecy Act, the United States International Money Laundering
Control Act of 1986 or the United States International Money Laundering
Abatement and Anti-Terrorist Financing Act of 2001.  It shall promptly notify
Laurus if any of these representations, warranties and covenants ceases to be
true and accurate regarding it or any of its Subsidiaries.  It shall provide
Laurus with any additional information regarding it and each Subsidiary thereof
that Laurus deems necessary or convenient to ensure compliance with all
applicable laws concerning money laundering and similar activities.  It
understands and agrees that if at any time it is discovered that any of the
foregoing representations, warranties and covenants are incorrect, or if
otherwise required by applicable law or regulation related to money laundering
or similar activities, Laurus may undertake appropriate actions to ensure
compliance with applicable law or regulation, including but not limited to
segregation and/or redemption of Laurus’ investment in it.  It further
understands that Laurus may release confidential information about it and its
Subsidiaries and, if applicable, any underlying beneficial owners, to proper
authorities if Laurus, in its sole discretion, determines that it is in the best
interests of Laurus in light of relevant rules and regulations under the laws
set forth in subsection (ii) above.

(aa)

Company Name; Locations of Offices, Records and Collateral.  Schedule 12(aa)
sets forth each Company’s name as it appears in official filings in the state of
its organization, the type of entity of each Company, the organizational
identification number issued by each Company’s state of organization or a
statement that no such number has been issued, each Company’s state of
organization, and the location of each Company’s chief executive office,
corporate offices, warehouses, other locations of Collateral and locations where
records with respect to Collateral are kept (including in each case the county
of such locations) and,

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except as set forth in such Schedule 12(aa), such locations have not changed
during the preceding twelve months.  As of the Closing Date, during the prior
five years, except as set forth in Schedule 12(aa), no Company has been known as
or conducted business in any other name (including trade names).  Each Company
has only one state of organization.

(bb)

ERISA.  Based upon the Employee Retirement Income Security Act of 1974
(“ERISA”), and the regulations and published interpretations thereunder:  (i)
neither it nor any of its Subsidiaries has engaged in any Prohibited
Transactions (as defined in Section 406 of ERISA and Section 4975 of the Code);
(ii) it and each of its Subsidiaries has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans; (iii) neither
it nor any of its Subsidiaries has any knowledge of any event or occurrence
which would cause the Pension Benefit Guaranty Corporation to institute
proceedings under Title IV of ERISA to terminate any employee benefit plan(s);
(iv) neither it nor any of its Subsidiaries has any fiduciary responsibility for
investments with respect to any plan existing for the benefit of persons other
than its or such Subsidiary’s employees; and (v) neither it nor any of its
Subsidiaries has withdrawn, completely or partially, from any multi-employer
pension plan so as to incur liability under the Multiemployer Pension Plan
Amendments Act of 1980.

13.

Covenants.  Each Company, as applicable, covenants and agrees with Laurus as
follows:

(a)

Stop-Orders.  It shall advise Laurus, promptly after it receives notice of
issuance by the SEC, any state securities commission or any other regulatory
authority of any stop order or of any order preventing or suspending any
offering of any securities of the Parent, or of the suspension of the
qualification of the Common Stock of the Parent for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purpose.

(b)

Listing.  It shall promptly secure the listing or quotation, as applicable, of
the shares of Common Stock issuable upon conversion of the Notes, exercise of
the Warrants and exercise of the Options on the Principal Market upon which
shares of Common Stock are listed or quoted, as applicable, (subject to official
notice of issuance) and shall maintain such listing or quotation, as applicable,
so long as any other shares of Common Stock shall be so listed or quoted, as
applicable.  The Parent shall maintain the listing or quotation, as applicable,
of its Common Stock on the Principal Market, and will comply in all material
respects with the Parent’s reporting, filing and other obligations under the
bylaws or rules of the National Association of Securities Dealers (“NASD”) and
such exchanges, as applicable.  

(c)

Market Regulations.  It shall notify the SEC, NASD and applicable state
authorities, in accordance with their requirements, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Securities to Laurus and
promptly provide copies thereof to Laurus.

(d)

Reporting Requirements.  It shall timely file with the SEC all reports required
to be filed pursuant to the Exchange Act and refrain from terminating its status
as an issuer required by the Exchange Act to file reports thereunder even if the
Exchange Act or the rules or regulations thereunder would permit such
termination.  

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(e)

Use of Funds.  It shall use the proceeds of the Loans as follows: (i repayment
in full  of the Company’s senior credit facility with Silicon Valley Bank, (ii
repyament in full of the promissory note with Marks Paneth and Shron, LLP, (iii)
acquisition of the properties subject of the California Deed of Trust and Texas
Deed of Trust, in such amounts as set forth on Schedule 13(e) and (iv) general
working capital purposes only.

(f)

Access to Facilities.  It shall, and shall cause each of its Subsidiaries to,
permit any representatives designated by Laurus (or any successor of Laurus),
upon reasonable notice and during normal business hours, at Company’s expense
and accompanied by a representative of Company Agent (provided that no such
prior notice shall be required to be given and no such representative shall be
required to accompany Laurus in the event Laurus believes such access is
necessary to preserve or protect the Collateral or following the occurrence and
during the continuance of an Event of Default), to:

(i)

visit and inspect any of its or any such Subsidiary’s properties;

(ii)

examine its or any such Subsidiary’s corporate and financial records (unless
such examination is not permitted by federal, state or local law or by contract)
and make copies thereof or extracts therefrom; and

(iii)

discuss its or any such Subsidiary’s affairs, finances and accounts with its or
any such Subsidiary’s directors, officers and Accountants.

Notwithstanding the foregoing, neither it nor any of its Subsidiaries shall
provide any material, non-public information to Laurus unless Laurus signs a
confidentiality agreement and otherwise complies with Regulation FD, under the
federal securities laws.

(g)

Taxes.  It shall, and shall cause each of its Subsidiaries to, promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon it and its
Subsidiaries’ income, profits, property or business, as the case may be;
provided, however, that any such tax, assessment, charge or levy need not be
paid currently if (i) the validity thereof shall currently and diligently be
contested in good faith by appropriate proceedings, (ii) such tax, assessment,
charge or levy shall have no effect on the Lien priority of Laurus in the
Collateral, and (iii) if it and/or such Subsidiary, as applicable, shall have
set aside on its and/or such Subsidiary’s books adequate reserves with respect
thereto in accordance with GAAP; and provided, further, that it shall, and shall
cause each of its Subsidiaries to, pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefor.

(h)

Insurance.  It shall bear the full risk of loss from any loss of any nature
whatsoever with respect to the Collateral.  It and each of its Subsidiaries
shall keep its assets which are of an insurable character insured by financially
sound and reputable insurers against loss or damage by fire, explosion and other
risks customarily insured against by companies in similar business similarly
situated as it and its Subsidiaries; and it and its Subsidiaries shall maintain,
with financially sound and reputable insurers, insurance against other hazards
and risks and liability to persons and property to the extent and in the manner
which it and/or such

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Subsidiary thereof reasonably believes is customary for companies in similar
business similarly situated as it and its Subsidiaries and to the extent
available on commercially reasonable terms.  It and each of its Subsidiaries
will jointly and severally bear the full risk of loss from any loss of any
nature whatsoever with respect to the assets pledged to Laurus as security for
its obligations hereunder and under the Ancillary Agreements.  At its own cost
and expense in amounts and with carriers reasonably acceptable to Laurus, it and
each of its Subsidiaries shall (i) keep all their insurable properties and
properties in which they have an interest insured against the hazards of fire,
flood, sprinkler leakage, those hazards covered by extended coverage insurance
and such other hazards, and for such amounts, as is customary in the case of
companies engaged in businesses similar to it or the respective Subsidiary’s
including business interruption insurance; (ii) maintain a bond in such amounts
as is customary in the case of companies engaged in businesses similar to it and
its Subsidiaries’ insuring against larceny, embezzlement or other criminal
misappropriation of insured’s officers and employees who may either singly or
jointly with others at any time have access to its or any of its Subsidiaries
assets or funds either directly or through governmental authority to draw upon
such funds or to direct generally the disposition of such assets; (iii) maintain
public and product liability insurance against claims for personal injury, death
or property damage suffered by others; (iv) maintain all such worker’s
compensation or similar insurance as may be required under the laws of any state
or jurisdiction in which it or any of its Subsidiaries is engaged in business;
and (v) furnish Laurus with (x) copies of all policies and evidence of the
maintenance of such policies at least thirty (30) days before any expiration
date, (y) excepting its and its Subsidiaries’ workers’ compensation policy,
endorsements to such policies naming Laurus as “co-insured” or “additional
insured” and appropriate loss payable endorsements in form and substance
satisfactory to Laurus, naming Laurus as lenders loss payee, and (z) evidence
that as to Laurus the insurance coverage shall not be impaired or invalidated by
any act or neglect of any Company or any of its Subsidiaries and the insurer
will provide Laurus with at least thirty (30) days notice prior to cancellation.
 It shall instruct the insurance carriers that in the event of any loss
thereunder, the carriers shall make payment for such loss to Laurus and not to
any Company or any of its Subsidiaries and Laurus jointly.  If any insurance
losses are paid by check, draft or other instrument payable to any Company
and/or any of its Subsidiaries and Laurus jointly, Laurus may endorse, as
applicable, such Company’s and/or any of its Subsidiaries’ name thereon and do
such other things as Laurus may deem advisable to reduce the same to cash.
 Laurus is hereby authorized to adjust and compromise claims.  All loss
recoveries received by Laurus upon any such insurance may be applied to the
Obligations, in such order as Laurus in its sole discretion shall determine or
shall otherwise be delivered to Company Agent for the benefit of the applicable
Company and/or its Subsidiaries.  Any surplus shall be paid by Laurus to Company
Agent for the benefit of the applicable Company and/or its Subsidiaries, or
applied as may be otherwise required by law.  Any deficiency thereon shall be
paid, as applicable, by Companies and their Subsidiaries to Laurus, on demand.

(i)

Intellectual Property.  It shall, and shall cause each of its Subsidiaries to,
maintain in full force and effect its corporate existence, rights and franchises
and all licenses and other rights to use Intellectual Property owned or
possessed by it and reasonably deemed to be necessary to the conduct of its
business.

(j)

Properties.  It shall, and shall cause each of its Subsidiaries to, keep its
properties in good repair, working order and condition, reasonable wear and tear
excepted, and

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from time to time make all needful and proper repairs, renewals, replacements,
additions and improvements thereto; and it shall, and shall cause each of its
Subsidiaries to, at all times comply with each provision of all leases to which
it is a party or under which it occupies property if the breach of such
provision could reasonably be expected to have a Material Adverse Effect.

(k)

Confidentiality.  It shall not, and shall not permit any of its Subsidiaries to,
disclose, and will not include in any public announcement, the name of Laurus,
unless expressly agreed to by Laurus or unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement.  Notwithstanding the foregoing, each Company and its Subsidiaries
may disclose Laurus’ identity and the terms of this Agreement to its current and
prospective debt and equity financing sources.

(l)

Required Approvals.  It shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of Laurus, (i) create, incur, assume or
suffer to exist any indebtedness (exclusive of trade debt) whether secured or
unsecured other than each Company’s indebtedness to Laurus and as set forth on
Schedule 13(l)(i) attached hereto and made a part hereof; (ii) cancel any debt
owing to it in excess of $50,000 in the aggregate during any 12 month period;
(iii) assume, guarantee, endorse or otherwise become directly or contingently
liable in connection with any obligations of any other Person, except the
endorsement of negotiable instruments by it or its Subsidiaries for deposit or
collection or similar transactions in the ordinary course of business; (iv)
directly or indirectly declare, pay or make any dividend or distribution on any
class of its Stock or apply any of its funds, property or assets to the
purchase, redemption or other retirement of any of its or its Subsidiaries’
Stock outstanding on the date hereof, or issue any preferred stock; (v) purchase
or hold beneficially any Stock or other securities or evidences of indebtedness
of, make or permit to exist any loans or advances to, or make any investment or
acquire any interest whatsoever in, any other Person, including any partnership
or joint venture, except (x) travel advances, (y) loans to its and its
Subsidiaries’ officers and employees not exceeding at any one time an aggregate
of $10,000, and (z) loans to its existing Subsidiaries so long as such
Subsidiaries are designated as either a co-borrower hereunder or has entered
into such guaranty and security documentation required by Laurus, including,
without limitation, to grant to Laurus a first priority perfected security
interest in substantially all of such Subsidiary’s assets to secure the
Obligations; (vi) create or permit to exist any Subsidiary, other than any
Subsidiary in existence on the date hereof and listed in Schedule 12(b) unless
such new Subsidiary is a wholly-owned Subsidiary and is designated by Laurus as
either a co-borrower or guarantor hereunder and such Subsidiary shall have
entered into all such documentation required by Laurus, including, without
limitation, to grant to Laurus a first priority perfected security interest in
substantially all of such Subsidiary’s assets to secure the Obligations; (vii)
directly or indirectly, prepay any indebtedness (other than to Laurus and in the
ordinary course of business), or repurchase, redeem, retire or otherwise acquire
any indebtedness (other than to Laurus and in the ordinary course of business)
except to make scheduled payments of principal and interest thereof; (viii)
enter into any merger, consolidation or other reorganization with or into any
other Person or acquire all or a portion of the assets or Stock of any Person or
permit any other Person to consolidate with or merge with it, unless (1) such
Company is the surviving entity of such merger or consolidation, (2) no Event of
Default shall exist immediately prior to and after giving effect to such merger
or consolidation, (3) such Company shall have provided Laurus copies of all
documentation relating to such merger or consolidation and (4) such Company
shall have provided Laurus with at least thirty

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(30) days’ prior written notice of such merger or consolidation; (ix) materially
change the nature of the business in which it is presently engaged; (x) become
subject to (including, without limitation, by way of amendment to or
modification of) any agreement or instrument which by its terms would (under any
circumstances) restrict its or any of its Subsidiaries’ right to perform the
provisions of this Agreement or any of the Ancillary Agreements; (xi) change its
fiscal year or make any changes in accounting treatment and reporting practices
without prior written notice to Laurus except as required by GAAP or in the tax
reporting treatment or except as required by law; (xii) enter into any
transaction with any employee, director or Affiliate, except in the ordinary
course on arms-length terms; (xiii) bill Accounts under any name except the
present name of such Company; or (xiv) sell, lease, transfer or otherwise
dispose of any of its properties or assets, or any of the properties or assets
of its Subsidiaries, except for (1) the sale of Inventory in the ordinary course
of business and (2) the disposition or transfer in the ordinary course of
business during any fiscal year of obsolete and worn-out Equipment and only to
the extent that (x) the proceeds of any such disposition are used to acquire
replacement Equipment which is subject to Laurus’ first priority security
interest or are used to repay Loans or to pay general corporate expenses, or (y)
following the occurrence of an Event of Default which continues to exist, the
proceeds of which are remitted to Laurus to be held as cash collateral for the
Obligations.

(m)

Reissuance of Securities.  The Parent shall reissue certificates representing
the Securities without the legends set forth in Section 39 below at such time
as:

(i)

the holder thereof is permitted to dispose of such Securities pursuant to Rule
144(k) under the Securities Act; or

(ii)

upon resale subject to an effective registration statement after such Securities
are registered under the Securities Act.

The Parent agrees to cooperate with Laurus in connection with all resales
pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions necessary to
allow such resales provided the Parent and its counsel receive reasonably
requested representations from Laurus and broker, if any.

(n)

Opinion.  On the Closing Date, it shall deliver to Laurus an opinion acceptable
to Laurus from each Company’s legal counsel.  Each Company will provide, at the
Companies’ joint and several expense, such other legal opinions in the future as
are reasonably necessary for the conversion of the Notes, the exercise of the
Warrants and the exercise of the Options.

(o)

Legal Name, etc.  It shall not, without providing Laurus with 30 days prior
written notice, change (i) its name as it appears in the official filings in the
state of its organization, (ii) the type of legal entity it is, (iii) its
organization identification number, if any, issued by its state of organization,
(iv) its state of organization or (v) amend its certificate of incorporation,
by-laws or other organizational document.

(p)

Compliance with Laws.  The operation of each of its and each of its
Subsidiaries’ business is and shall continue to be in compliance in all material
respects with all

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applicable federal, state and local laws, rules and ordinances, including to all
laws, rules, regulations and orders relating to taxes, payment and withholding
of payroll taxes, employer and employee contributions and similar items,
securities, employee retirement and welfare benefits, employee health and safety
and environmental matters.

(q)

Notices.  It and each of its Subsidiaries shall promptly inform Laurus in
writing of:  (i) the commencement of all proceedings and investigations by or
before and/or the receipt of any notices from, any governmental or
nongovernmental body and all actions and proceedings in any court or before any
arbitrator against or in any way concerning any event which could reasonably be
expected to have singly or in the aggregate, a Material Adverse Effect; (ii) any
change which has had, or could reasonably be expected to have, a Material
Adverse Effect; (iii) any Event of Default or Default; and (iv) any default or
any event which with the passage of time or giving of notice or both would
constitute a default under any agreement for the payment of money to which it or
any of its Subsidiaries is a party or by which it or any of its Subsidiaries or
any of its or any such Subsidiary’s properties may be bound the breach of which
would have a Material Adverse Effect.

(r)

Margin Stock.  It shall not permit any of the proceeds of the Loans made
hereunder to be used directly or indirectly to “purchase” or “carry” “margin
stock” or to repay indebtedness incurred to “purchase” or “carry” “margin stock”
within the respective meanings of each of the quoted terms under Regulation U of
the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect.

(s)

Offering Restrictions.  Except as previously disclosed in the SEC Reports or in
the Exchange Act Filings, or stock or stock options granted to its employees or
directors, neither it nor any of its Subsidiaries shall, prior to the full
repayment or conversion of the Notes (together with all accrued and unpaid
interest and fees related thereto), (x) enter into any equity line of credit
agreement or similar agreement or (y) issue, or enter into any agreement to
issue, any securities with a variable/floating conversion and/or pricing feature
which are or could be (by conversion or registration) free-trading securities
(i.e. common stock subject to a registration statement).

(t)

Authorization and Reservation of Shares.  The Parent shall at all times have
authorized and reserved a sufficient number of shares of Common Stock to provide
for the conversion of the Notes, exercise of the Warrants and exercise of the
Options.

(u)

Financing Right of First Refusal.

(i)

During the term of this Agreement and so long as any of the Debt Obligations
created by the Ancillary Agreements are in effect, it hereby grants to Laurus a
right of first refusal to provide any Additional Financing (as defined below) to
be issued by any Company and/or any of its Subsidiaries (the “Additional
Financing Parties”), subject to the following terms and conditions.  From and
after the date hereof, prior to the incurrence of any additional indebtedness
and/or the sale or issuance of any equity interests of the Additional Financing
Parties (an “Additional Financing”), Company Agent shall notify Laurus of such
Additional Financing.  In connection therewith, Company Agent shall submit a
fully executed term sheet (a “Proposed Term Sheet”) to Laurus setting forth the
terms, conditions and pricing of

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any such Additional Financing (such financing to be negotiated on “arm’s length”
terms and the terms thereof to be negotiated in good faith) proposed to be
entered into by the Additional Financing Parties.  Laurus shall have the right,
but not the obligation, to deliver to Company Agent its own proposed term sheet
(the “Laurus Term Sheet”) setting forth the terms and conditions upon which
Laurus would be willing to provide such Additional Financing to the Additional
Financing Parties.  The Laurus Term Sheet shall contain terms no less favorable
to the Additional Financing Parties than those outlined in Proposed Term Sheet.
 Laurus shall deliver to Company Agent the Laurus Term Sheet within ten Business
Days of receipt of each such Proposed Term Sheet.  If the provisions of the
Laurus Term Sheet are at least as favorable to the Additional Financing Parties
as the provisions of the Proposed Term Sheet, the Additional Financing Parties
shall enter into and consummate the Additional Financing transaction outlined in
the Laurus Term Sheet.  

(ii)

It shall not, and shall not permit its Subsidiaries to, agree, directly or
indirectly, to any restriction with any Person which limits the ability of
Laurus to consummate an Additional Financing with it or any of its Subsidiaries.

(v)

Prohibition of Amendments to Subordinated Debt Documentation.  It shall not,
without the prior written consent of Laurus, amend, modify or in any way alter
the terms of any of the Subordinated Debt Documentation.

(w)

Prohibition of Grant of Collateral for Subordinated Debt Documentation.  It
shall not, without the prior written consent of Laurus, grant or permit any of
its Subsidiaries to grant to any Person any Collateral of such Company or any
collateral of any of its Subsidiaries as security for any obligation arising
under the Subordinated Debt Documentation other than as permitted under the
Subordination Agreement and/or required pursuant to the terms of the Letter
Agreement, dated as of the date hereof between the Companies, Gryphon Master
Fund, L.P. and Laurus (the “Side Letter”).

(x)

Prohibitions of Payment Under Subordinated Debt Documentation.  Neither it nor
any of its Subsidiaries shall, without the prior written consent of Laurus, make
any prepayments in respect of the indebtedness evidenced by the Subordinated
Debt Documentation, other than as expressly permitted by the terms thereof or as
otherwise required pursuant to the Side Letter.

(y)

Inactive Subsidiaries.

Each Company shall ensure that none of (i) KFWBA Acquisition Corporation, a
Delaware corporation, (ii) Knightsbridge Torrique, a company organized under the
laws of Spain and (iii) Dominion Wines, Ltd., a company organized under the laws
of Australia, shall hold significant assets or liabilities or engage in any
business activities.

14.

Further Assurances.  At any time and from time to time, upon the written request
of Laurus and at the sole expense of Companies, each Company shall promptly and
duly execute and deliver any and all such further instruments and documents and
take such further action as Laurus may request (a) to obtain the full benefits
of this Agreement and the Ancillary Agreements, (b) to protect, preserve and
maintain Laurus’ rights in the Collateral and under this

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Agreement or any Ancillary Agreement, and/or (c) to enable Laurus to exercise
all or any of the rights and powers herein granted or any Ancillary Agreement.

15.

Representations, Warranties and Covenants of Laurus.  Laurus hereby represents,
warrants and covenants to each Company as follows:

(a)

Requisite Power and Authority.  Laurus has all necessary power and authority
under all applicable provisions of law to execute and deliver this Agreement and
the Ancillary Agreements and to carry out their provisions.  All corporate
action on Laurus’ part required for the lawful execution and delivery of this
Agreement and the Ancillary Agreements have been or will be effectively taken
prior to the Closing Date.  Upon their execution and delivery, this Agreement
and the Ancillary Agreements shall be valid and binding obligations of Laurus,
enforceable in accordance with their terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights, and (b) as limited by
general principles of equity that restrict the availability of equitable and
legal remedies.

(b)

Investment Representations.  Laurus understands that the Securities are being
offered pursuant to an exemption from registration contained in the Securities
Act based in part upon Laurus’ representations contained in this Agreement,
including, without limitation, that Laurus is an “accredited investor” within
the meaning of Regulation D under the Securities Act.  Laurus has received or
has had full access to all the information it considers necessary or appropriate
to make an informed investment decision with respect to the Notes to be issued
to it under this Agreement and the Securities acquired by it upon the conversion
of the Notes.

(c)

Laurus Bears Economic Risk.  Laurus has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Parent so that it is capable of evaluating the merits and risks of its
investment in the Parent and has the capacity to protect its own interests.
 Laurus must bear the economic risk of this investment until the Securities are
sold pursuant to (i) an effective registration statement under the Securities
Act, or (ii) an exemption from registration is available.

(d)

Investment for Own Account.  The Securities are being issued to Laurus for its
own account for investment only, and not as a nominee or agent and not with a
view towards or for resale in connection with their distribution.

(e)

Laurus Can Protect Its Interest.  Laurus represents that by reason of its, or of
its management’s, business and financial experience, Laurus has the capacity to
evaluate the merits and risks of its investment in the Notes, and the Securities
and to protect its own interests in connection with the transactions
contemplated in this Agreement, and the Ancillary Agreements.  Further, Laurus
is aware of no publication of any advertisement in connection with the
transactions contemplated in the Agreement or the Ancillary Agreements.

(f)

Accredited Investor.  Laurus represents that it is an accredited investor within
the meaning of Regulation D under the Securities Act.

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(g)

Shorting.  Neither Laurus nor any of its Affiliates or investment partners has,
will, or will cause any Person, to directly engage in “short sales” of the
Parent’s Common Stock as long as any Minimum Borrowing Note shall be
outstanding.

(h)

Patriot Act.  Laurus certifies that, to the best of Laurus’ knowledge, Laurus
has not been designated, and is not owned or controlled, by a “suspected
terrorist” as defined in Executive Order 13224.  Laurus seeks to comply with all
applicable laws concerning money laundering and related activities.  In
furtherance of those efforts, Laurus hereby represents, warrants and covenants
that:  (i) none of the cash or property that Laurus will use to make the Loans
has been or shall be derived from, or related to, any activity that is deemed
criminal under United States law; and (ii) no disbursement by Laurus to any
Company to the extent within Laurus’ control, shall cause Laurus to be in
violation of the United States Bank Secrecy Act, the United States International
Money Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001.  Laurus shall
promptly notify the Company Agent if any of these representations ceases to be
true and accurate regarding Laurus.  Laurus agrees to provide the Company any
additional information regarding Laurus that the Company deems necessary or
convenient to ensure compliance with all applicable laws concerning money
laundering and similar activities.  Laurus understands and agrees that if at any
time it is discovered that any of the foregoing representations are incorrect,
or if otherwise required by applicable law or regulation related to money
laundering similar activities, Laurus may undertake appropriate actions to
ensure compliance with applicable law or regulation, including but not limited
to segregation and/or redemption of Laurus’ investment in the Parent.  Laurus
further understands that the Parent may release information about Laurus and, if
applicable, any underlying beneficial owners, to proper authorities if the
Parent, in its sole discretion, determines that it is in the best interests of
the Parent in light of relevant rules and regulations under the laws set forth
in subsection (ii) above.

(i)

Limitation on Acquisition of Common Stock.  Notwithstanding anything to the
contrary contained in this Agreement, any Ancillary Agreement, or any document,
instrument or agreement entered into in connection with any other transaction
entered into by and between Laurus and any Company (and/or Subsidiaries or
Affiliates of any Company), Laurus shall not acquire stock in the Parent
(including, without limitation, pursuant to a contract to purchase, by
exercising an option or warrant, by converting any other security or instrument,
by acquiring or exercising any other right to acquire, shares of stock or other
security convertible into shares of stock in the Parent, or otherwise, and such
options, warrants, conversion or other rights shall not be exercisable) to the
extent such stock acquisition would cause any interest (including any original
issue discount) payable by any Company to Laurus not to qualify as portfolio
interest, within the meaning of Section 881(c)(2) of the Internal Revenue Code
of 1986, as amended (the “Code”) by reason of Section 881(c)(3) of the Code,
taking into account the constructive ownership rules under Section 871(h)(3)(C)
of the Code (the “Stock Acquisition Limitation”).  The Stock Acquisition
Limitation shall automatically become null and void without any notice to any
Company upon the earlier to occur of either (a) the Parent’s delivery to Laurus
of a Notice of Redemption (as defined in the Notes) or (b) the existence of an
Event of Default at a time when the average closing price of the Common Stock as
reported by Bloomberg, L.P. on the Principal Market for the immediately
preceding five trading days is greater than or equal to 150% of the Fixed
Conversion Price (as defined in the Notes).

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16.

Power of Attorney.  In the event of a default under this Agreement or any
Ancillary Agreement, each Company hereby appoints Laurus, or any other Person
whom Laurus may designate as such Company’s attorney, with power to:  (i)
endorse such Company’s name on any checks, notes, acceptances, money orders,
drafts or other forms of payment or security that may come into Laurus’
possession; (ii) sign such Company’s name on any invoice or bill of lading
relating to any Accounts, drafts against Account Debtors, schedules and
assignments of Accounts, notices of assignment, financing statements and other
public records, verifications of Account and notices to or from Account Debtors;
(iii) verify the validity, amount or any other matter relating to any Account by
mail, telephone, telegraph or otherwise with Account Debtors; (iv) do all things
necessary to carry out this Agreement, any Ancillary Agreement and all related
documents; and (v) on or after the occurrence and during the continuation of an
Event of Default, notify the post office authorities to change the address for
delivery of such Company’s mail to an address designated by Laurus, and to
receive, open and dispose of all mail addressed to such Company.  Each Company
hereby ratifies and approves all acts of the attorney.  Neither Laurus, nor the
attorney will be liable for any acts or omissions or for any error of judgment
or mistake of fact or law, except for gross negligence or willful misconduct.
 This power, being coupled with an interest, is irrevocable so long as Laurus
has a security interest and until the Obligations have been fully satisfied.

17.

Term of Agreement.  Laurus’ agreement to make Loans and extend financial
accommodations under and in accordance with the terms of this Agreement or any
Ancillary Agreement shall continue in full force and effect until the expiration
of the Term.  At Laurus’ election following the occurrence of an Event of
Default, Laurus may terminate this Agreement.  The termination of the Agreement
shall not affect any of Laurus’ rights hereunder or any Ancillary Agreement and
the provisions hereof and thereof shall continue to be fully operative until all
transactions entered into, rights or interests created and the Obligations have
been irrevocably disposed of, concluded or liquidated.  Notwithstanding the
foregoing, Laurus shall release its security interests at any time after thirty
(30) days notice upon irrevocable payment to it of all Obligations if each
Company shall have (i) provided Laurus with an executed release of any and all
claims which such Company may have or thereafter have under this Agreement and
all Ancillary Agreements and (ii) paid to Laurus an early payment fee in an
amount equal to (1) five percent (5%) of the Total Investment Amount if such
payment occurs prior to the first anniversary of the Closing Date, (2) four
percent (4%) of the Total Investment Amount if such payment occurs on or after
the first anniversary of the Closing Date and prior to the second anniversary of
the Closing Date and (3) three percent (3%) of the Total Investment Amount if
such termination occurs thereafter during the Term; such fee being intended to
compensate Laurus for its costs and expenses incurred in initially approving
this Agreement or extending same. Such early payment fee shall be due and
payable jointly and severally by the Companies to Laurus upon termination by
acceleration of this Agreement by Laurus due to the occurrence and continuance
of an Event of Default.  Notwithstanding the foregoing, the Laurus agrees to
waive the Early Payment fees listed above during the last six (6) months of the
term of this Agreement.

18.

Termination of Lien.  The Liens and rights granted to Laurus hereunder and any
Ancillary Agreements and the financing statements filed in connection herewith
or therewith shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that any Company’s account may from
time to time be temporarily in a

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zero or credit position, until all of the Obligations have been indefeasibly
paid or performed in full after the termination of this Agreement.  Laurus shall
not be required to send termination statements to any Company, or to file them
with any filing office, unless and until this Agreement and the Ancillary
Agreements shall have been terminated in accordance with their terms and all
Obligations indefeasibly paid in full in immediately available funds.

19.

Events of Default.  The occurrence of any of the following shall constitute an
“Event of Default”:

(a)

failure to make payment of any of the Obligations when required hereunder, and,
in any such case, such failure shall continue for a period of three (3) days
following the date upon which any such payment was due;

(b)

failure by any Company or any of its Subsidiaries to pay any taxes when due
unless such taxes are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been provided on such Company’s
and/or such Subsidiary’s books;

(c)

failure to perform under, and/or committing any breach of, in any material
respect, this Agreement or any covenant contained herein, which failure or
breach shall continue without remedy for a period of fifteen (15) days after the
occurrence thereof;

(d)

any representation, warranty or statement made by any Company or any of its
Subsidiaries hereunder, in any Ancillary Agreement, any certificate, statement
or document delivered pursuant to the terms hereof, or in connection with the
transactions contemplated by this Agreement should prove to be false or
misleading in any material respect on the date as of which made or deemed made;

(e)

the occurrence of any default (or similar term) in the observance or performance
of any other agreement or condition relating to any indebtedness or contingent
obligation of any Company or any of its Subsidiaries (including, without
limitation, the indebtedness evidenced by the Purchase Agreement and the Related
Agreement beyond the period of grace (if any), the effect of which default is to
cause, or permit the holder or holders of such indebtedness or beneficiary or
beneficiaries of such contingent obligation to cause, such indebtedness to
become due prior to its stated maturity or such contingent obligation to become
payable;

(f)

attachments or levies in excess of $500,000 in the aggregate are made upon any
Company’s assets or a judgment is rendered against any Company’s property
involving a liability of more than $500,000 which shall not have been vacated,
discharged, stayed or bonded within thirty (30) days from the entry thereof;

(g)

[Intentionally left blank];

(h)

any Lien created hereunder or under any Ancillary Agreement for any reason
ceases to be or is not a valid and perfected Lien having a first priority
interest;

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(i)

any Company or any of its Subsidiaries shall (i) apply for, consent to or suffer
to exist the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under the federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to without challenge within ten (10) days of the filing thereof,
or failure to have dismissed within thirty (30) days, any petition filed against
it in any involuntary case under such bankruptcy laws, or (vii) take any action
for the purpose of effecting any of the foregoing;

(j)

any Company or any of its Subsidiaries shall admit in writing its inability, or
be generally unable, to pay its debts as they become due or cease operations of
its present business;

(k)

any Company or any of its Subsidiaries directly or indirectly sells, assigns,
transfers, conveys, or suffers or permits to occur any sale, assignment,
transfer or conveyance of any assets of such Company or any interest therein,
except as permitted herein;

(l)

any “Person” or “group” (as such terms are defined in Sections 13(d) and 14(d)
of the Exchange Act, as in effect on the date hereof), other than the Holder, is
or becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under
the Exchange Act), directly or indirectly, of 35% or more on a fully diluted
basis of the then outstanding voting equity interest of any Company (other than
a “Person” or “group” that beneficially owns 35% or more of such outstanding
voting equity interests of the respective Company on the date hereof),  (ii) the
Board of Directors of the Parent shall cease to consist of a majority of the
Board of Directors of the Parent on the date hereof (or directors appointed by a
majority of the board of directors in effect immediately prior to such
appointment) or (iii) the Parent or any of its Subsidiaries merges or
consolidates with, or sells all or substantially all of its assets to, any other
person or entity;

(m)

the indictment or threatened indictment of any Company or any of its
Subsidiaries or any executive officer of any Company or any of its Subsidiaries
under any criminal statute, or commencement or threatened commencement of
criminal or civil proceeding against any Company or any of its Subsidiaries or
any executive officer of any Company or any of its Subsidiaries pursuant to
which statute or proceeding penalties or remedies sought or available include
forfeiture of any of the property of any Company or any of its Subsidiaries;

(n)

an Event of Default shall occur under and as defined in any Note or in any other
Ancillary Agreement;

(o)

any Company or any of its Subsidiaries shall breach any term or provision of any
Ancillary Agreement to which it is a party, in any material respect which breach
is not cured within any applicable cure or grace period provided in respect
thereof (if any);

(p)

any Company or any of its Subsidiaries attempts to terminate, challenges the
validity of, or its liability under this Agreement or any Ancillary Agreement,
or any proceeding shall be brought to challenge the validity, binding effect of
any Ancillary Agreement

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or any Ancillary Agreement ceases to be a valid, binding and enforceable
obligation of such Company or any of its Subsidiaries (to the extent such
Persons are a party thereto);

(q)

an SEC stop trade order or Principal Market trading suspension of the Common
Stock shall be in effect for five (5) consecutive days or five (5) days during a
period of ten (10) consecutive days, excluding in all cases a suspension of all
trading on a Principal Market, provided that the Parent shall not have been able
to cure such trading suspension within thirty (30) days of the notice thereof or
list the Common Stock on another Principal Market within sixty (60) days of such
notice; or

(r)

The Parent’s failure to deliver Common Stock to Laurus pursuant to and in the
form required by the Notes and this Agreement, if such failure to deliver Common
Stock shall not be cured within two (2) Business Days or any Company is required
to issue a replacement Note to Laurus and such Company shall fail to deliver
such replacement Note within seven (7) Business Days.

20.

Remedies.  Following the occurrence of an Event of Default, Laurus shall have
the right to demand repayment in full of all Obligations, whether or not
otherwise due.  Until all Obligations have been fully and indefeasibly
satisfied, Laurus shall retain its Lien in all Collateral.  Laurus shall have,
in addition to all other rights provided herein and in each Ancillary Agreement,
the rights and remedies of a secured party under the UCC, and under other
applicable law, all other legal and equitable rights to which Laurus may be
entitled, including the right to take immediate possession of the Collateral, to
require each Company to assemble the Collateral, at Companies’ joint and several
expense, and to make it available to Laurus at a place designated by Laurus
which is reasonably convenient to both parties and to enter any of the premises
of any Company or wherever the Collateral shall be located, with or without
force or process of law, and to keep and store the same on said premises until
sold (and if said premises be the property of any Company, such Company agrees
not to charge Laurus for storage thereof), and the right to apply for the
appointment of a receiver for such Company’s property.  Further, Laurus may, at
any time or times after the occurrence of an Event of Default, sell and deliver
all Collateral held by or for Laurus at public or private sale for cash, upon
credit or otherwise, at such prices and upon such terms as Laurus, in Laurus’
sole discretion, deems advisable or Laurus may otherwise recover upon the
Collateral in any commercially reasonable manner as Laurus, in its sole
discretion, deems advisable.  The requirement of reasonable notice shall be met
if such notice is mailed postage prepaid to Company Agent at Company Agent’s
address as shown in Laurus’ records, at least ten (10) days before the time of
the event of which notice is being given.  Laurus may be the purchaser at any
sale, if it is public.  In connection with the exercise of the foregoing
remedies, Laurus is granted permission to use all of each Company’s Intellectual
Property.  The proceeds of sale shall be applied first to all costs and expenses
of sale, including attorneys’ fees, and second to the payment (in whatever order
Laurus elects) of all Obligations.  After the indefeasible payment and
satisfaction in full of all of the Obligations, and after the payment by Laurus
of any other amount required by any provision of law, including
Section 9-608(a)(1) of the UCC (but only after Laurus has received what Laurus
considers reasonable proof of a subordinate party’s security interest), the
surplus, if any, shall be paid to Company Agent (for the benefit of the
applicable Companies) or its representatives or to

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whosoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct.  The Companies shall remain jointly and
severally liable to Laurus for any deficiency.  In addition, the Companies shall
jointly and severally pay Laurus a liquidation fee (“Liquidation Fee”) in the
amount of five percent (5%) of the actual amount collected in respect of each
Account outstanding at any time during a Liquidation Period”.  For purposes
hereof, “Liquidation Period” means a period:  (i) beginning on the earliest date
of (x) an event referred to in Section 19(i) or 19(j), or (y) the cessation of
any Company’s business; and (ii) ending on the date on which Laurus has actually
received all Obligations due and owing it under this Agreement and the Ancillary
Agreements.  The Liquidation Fee shall be paid on the date on which Laurus
collects the applicable Account by deduction from the proceeds thereof.  Each
Company and Laurus acknowledge that the actual damages that would be incurred by
Laurus after the occurrence of an Event of Default would be difficult to
quantify and that such Company and Laurus have agreed that the fees and
obligations set forth in this Section and in this Agreement would constitute
fair and appropriate liquidated damages in the event of any such termination.

21.

Waivers.  (a) To the full extent permitted by applicable law, each Company
hereby waives (x) presentment, demand and protest, and notice of presentment,
dishonor, intent to accelerate, acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all of
this Agreement and the Ancillary Agreements or any other notes, commercial
paper, Accounts, contracts, Documents, Instruments, Chattel Paper and guaranties
at any time held by Laurus on which such Company may in any way be liable, and
hereby ratifies and confirms whatever Laurus may do in this regard; (y) all
rights to notice and a hearing prior to Laurus’ taking possession or control of,
or to Laurus’ replevy, attachment or levy upon, any Collateral or any bond or
security that might be required by any court prior to allowing Laurus to
exercise any of its remedies; and (z) the benefit of all valuation, appraisal
and exemption laws.  Each Company acknowledges that it has been advised by
counsel of its choices and decisions with respect to this Agreement, the
Ancillary Agreements and the transactions evidenced hereby and thereby.

(b)

Each of the undersigned consents and agrees that, without notice to or by the
undersigned and without affecting or impairing in any way the obligations or
liability of the undersigned hereunder, Laurus may, from time to time, exercise
any right or remedy it may have with respect to any or all of the Obligations or
any property securing any or all of the Obligations or any guaranty thereof,
including without limitation, judicial foreclosure, nonjudicial foreclosure,
exercise of a power of sale, and taking a deed, assignment or transfer in lieu
of foreclosure as to any such property, and the undersigned each expressly
waives any defense based upon the exercise of any such right or remedy,
notwithstanding the effect thereof upon any of the undersigneds’ rights,
including without limitation, any destruction of the undersigned’s right of
subrogation against any Company and any destruction of Guarantor's right of
contribution or other right against any other guarantor of any or all of the
Obligations or against any other person, whether by operation of Sections 580a,
580d or 726 of the California Code of Civil Procedure, or any comparable
provisions of the laws of any other jurisdiction, or any other statutes or rules
of law now or hereafter in effect, or otherwise.  Pursuant to Section 2856 of
the California Civil Code, each of the undersigned waives all rights and
defenses that it may have because the Obligations are secured by real property.
 This

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means, among other things:  (a) Laurus may collect from any of the undersigned
without first foreclosing on any real or personal property collateral pledged by
any Company or any other guarantor; and (b) if Laurus forecloses on any real
property collateral pledged by any Company or any other guarantor:  (i) the
amount of the Obligations may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price; and (ii) Laurus may collect from any of the undersigned
even if Laurus, by foreclosing on such real property collateral, has destroyed
any right any of the undersigned may have to collect from any Company or such
other guarantor.  This is an unconditional and irrevocable waiver of any rights
and defenses the undersigned may have because the Obligations are secured by
real property.  These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California
Code of Civil Procedure.

22.

Expenses.  The Companies shall jointly and severally pay all of Laurus’
out-of-pocket costs and expenses, including reasonable fees and disbursements of
in-house or outside counsel and appraisers, in connection with the preparation,
execution and delivery of this Agreement and the Ancillary Agreements, and in
connection with the prosecution or defense of any action, contest, dispute, suit
or proceeding concerning any matter in any way arising out of, related to or
connected with this Agreement or any Ancillary Agreement.  The Companies shall
also jointly and severally pay all of Laurus’ reasonable fees, charges,
out-of-pocket costs and expenses, including fees and disbursements of counsel
and appraisers, in connection with (a) the preparation, execution and delivery
of any waiver, any amendment thereto or consent proposed or executed in
connection with the transactions contemplated by this Agreement or the Ancillary
Agreements, (b) Laurus’ obtaining performance of the Obligations under this
Agreement and any Ancillary Agreements, including, but not limited to, the
enforcement or defense of Laurus’ security interests, assignments of rights and
Liens hereunder as valid perfected security interests, (c) any attempt to
inspect, verify, protect, collect, sell, liquidate or otherwise dispose of any
Collateral, (d) any appraisals or re-appraisals of any property (real or
personal) pledged to Laurus by any Company or any of its Subsidiaries as
Collateral for, or any other Person as security for, the Obligations hereunder
and (e) any consultations in connection with any of the foregoing.  The
Companies shall also jointly and severally pay Laurus’ customary bank charges
for all bank services (including wire transfers) performed or caused to be
performed by Laurus for any Company or any of its Subsidiaries at any Company’s
or such Subsidiary’s request or in connection with any Company’s loan account
with Laurus.  All such costs and expenses together with all filing, recording
and search fees, taxes and interest payable by the Companies to Laurus shall be
payable on demand and shall be secured by the Collateral.  If any tax by any
Governmental Authority is or may be imposed on or as a result of any transaction
between any Company and/or any Subsidiary thereof, on the one hand, and Laurus
on the other hand, which Laurus is or may be required to withhold or pay, the
Companies hereby jointly and severally indemnifies and holds Laurus harmless in
respect of such taxes, and the Companies will repay to Laurus the amount of any
such taxes which shall be charged to the Companies’ account; and until the
Companies shall furnish Laurus with indemnity therefor (or supply Laurus with
evidence satisfactory to it that due provision for the payment thereof has been
made), Laurus may hold without interest any balance standing to each Company’s
credit and Laurus shall retain its Liens in any and all Collateral.

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23.

Assignment By Laurus.  Laurus may assign any or all of the Obligations together
with any or all of the security therefor to any Person which is not a competitor
of any Company and any such transferee shall succeed to all of Laurus’ rights
with respect thereto.  Upon such transfer, Laurus shall be released from all
responsibility for the Collateral to the extent same is assigned to any
transferee.  Laurus may from time to time sell or otherwise grant participations
in any of the Obligations and the holder of any such participation shall,
subject to the terms of any agreement between Laurus and such holder, be
entitled to the same benefits as Laurus with respect to any security for the
Obligations in which such holder is a participant.  Each Company agrees that
each such holder may exercise any and all rights of banker’s lien, set-off and
counterclaim with respect to its participation in the Obligations as fully as
though such Company were directly indebted to such holder in the amount of such
participation.

24.

No Waiver; Cumulative Remedies.  Failure by Laurus to exercise any right, remedy
or option under this Agreement, any Ancillary Agreement or any supplement hereto
or thereto or any other agreement between or among any Company and Laurus or
delay by Laurus in exercising the same, will not operate as a waiver; no waiver
by Laurus will be effective unless it is in writing and then only to the extent
specifically stated.  Laurus’ rights and remedies under this Agreement and the
Ancillary Agreements will be cumulative and not exclusive of any other right or
remedy which Laurus may have.

25.

Application of Payments.  Each Company irrevocably waive the right to direct the
application of any and all payments at any time or times hereafter received by
Laurus from or on such Company’s behalf and each Company hereby irrevocably
agrees that Laurus shall have the continuing exclusive right to apply and
reapply any and all payments received at any time or times hereafter against the
Obligations hereunder in such manner as Laurus may deem advisable
notwithstanding any entry by Laurus upon any of Laurus’ books and records.

26.

Indemnity.  Each Company hereby jointly and severally indemnify and hold Laurus,
and its respective affiliates, employees, attorneys and agents (each, an
“Indemnified Person”), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses of any kind or
nature whatsoever (including attorneys’ fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement or any of the Ancillary Agreements or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement, the Ancillary Agreements or any
other documents or transactions contemplated by or referred to herein or therein
and any actions or failures to act with respect to any of the foregoing, except
to the extent that any such indemnified liability is finally determined by a
court of competent jurisdiction to have resulted solely from such Indemnified
Person’s gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO ANY COMPANY OR TO ANY OTHER PARTY OR TO ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT OR AS

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A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

27.

Revival.  The Companies further agree that to the extent any Company makes a
payment or payments to Laurus, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then, to
the extent of such payment or repayment, the obligation or part thereof intended
to be satisfied shall be revived and continued in full force and effect as if
said payment had not been made.

28.

Borrowing Agency Provisions.  

(a)

Each Company hereby irrevocably designates Company Agent to be its attorney and
agent and in such capacity to borrow, sign and endorse notes, and execute and
deliver all instruments, documents, writings and further assurances now or
hereafter required hereunder, on behalf of such Company, and hereby authorizes
Laurus to pay over or credit all loan proceeds hereunder in accordance with the
request of Company Agent.

(b)

The handling of this credit facility as a co-borrowing facility with a borrowing
agent in the manner set forth in this Agreement is solely as an accommodation to
the Companies and at their request.  Laurus shall not incur any liability to any
Company as a result thereof.  To induce Laurus to do so and in consideration
thereof, each Company hereby indemnifies Laurus and holds Laurus harmless from
and against any and all liabilities, expenses, losses, damages and claims of
damage or injury asserted against Laurus by any Person arising from or incurred
by reason of the handling of the financing arrangements of the Companies as
provided herein, reliance by Laurus on any request or instruction from Company
Agent or any other action taken by Laurus with respect to this Paragraph 28.

(c)

All Obligations shall be joint and several, and the Companies shall make payment
upon the maturity of the Obligations by acceleration or otherwise, and such
obligation and liability on the part of the Companies shall in no way be
affected by any extensions, renewals and forbearance granted by Laurus to any
Company, failure of Laurus to give any Company notice of borrowing or any other
notice, any failure of Laurus to pursue to preserve its rights against any
Company, the release by Laurus of any Collateral now or thereafter acquired from
any Company, and such agreement by any Company to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Laurus to
any Company or any Collateral for such Company’s Obligations or the lack
thereof.

(d)

Each Company expressly waives any and all rights of subrogation, reimbursement,
indemnity, exoneration, contribution or any other claim which such Company may
now or hereafter have against the other or other Person directly or contingently
liable for the Obligations, or against or with respect to any other’s property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until
all Obligations have been indefeasibly paid in full and this Agreement has been
irrevocably terminated.

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(e)

Each Company represents and warrants to Laurus that (i) Companies have one or
more common shareholders, directors and officers, (ii) the businesses and
corporate activities of Companies are closely related to, and substantially
benefit, the business and corporate activities of Companies, (iii) the financial
and other operations of Companies are performed on a combined basis as if
Companies constituted a consolidated corporate group, (iv) Companies will
receive a substantial economic benefit from entering into this Agreement and
will receive a substantial economic benefit from the application of each Loan
hereunder, in each case, whether or not such amount is used directly by any
Company and (v) all requests for Loans hereunder by the Company Agent are for
the exclusive and indivisible benefit of the Companies as though, for purposes
of this Agreement, the Companies constituted a single entity.

29.

Notices.  Any notice or request hereunder may be given to any Company, Company
Agent or Laurus at the respective addresses set forth below or as may hereafter
be specified in a notice designated as a change of address under this Section.
 Any notice or request hereunder shall be given by registered or certified mail,
return receipt requested, hand delivery, overnight mail or telecopy (confirmed
by mail).  Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when delivered to any officer of the party to whom it
is addressed, in the case of those by mail or overnight mail, deemed to have
been given three (3) Business Days after the date when deposited in the mail or
with the overnight mail carrier, and, in the case of a telecopy, when confirmed.

Notices shall be provided as follows:

If to Laurus:

Laurus Master Fund, Ltd.
c/o Laurus Capital Management, LLC
825 Third Avenue, 14th Fl.
New York, New York 10022
Attention:John E. Tucker, Esq.
Telephone:(212) 541-4434
Telecopier:(212) 541-5800

If to any Company,

or Company Agent:

360 Global Wine Company
1 Kirkland Ranch Road
Napa, CA 94558
Attention:Jake Shapiro
Telephone: 212-254-9100
Facsimile: ____________

 

With  a copy to:

 

Law Offices of Louis E. Taubman, P.C.

225 Broadway,Suite 1200

New York, New York 10007

Attention:  Louis E. Taubman, Esq.

Telephone:  212-732-7184

Facsimile:  212-202-6380

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or such other address as may be designated in writing hereafter in accordance
with this Section 29 by such Person.

30.

Governing Law, Jurisdiction and Waiver of Jury Trial.  

(a)

THIS AGREEMENT AND THE ANCILLARY AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.

(b)

EACH COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE
HAND, AND LAURUS, ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR ANY OF THE
ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS; PROVIDED, THAT LAURUS AND EACH
COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER
PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
LAURUS FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY
FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
LAURUS.  EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.  EACH COMPANY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO COMPANY
AGENT AT THE ADDRESS SET FORTH IN SECTION 29 AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF COMPANY AGENT’S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

(c)

THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,

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WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN LAURUS, AND/OR ANY
COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, ANY
ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

31.

Limitation of Liability.  Each Company acknowledges and understands that in
order to assure repayment of the Obligations hereunder Laurus may be required to
exercise any and all of Laurus’ rights and remedies hereunder and agrees that,
except as limited by applicable law, neither Laurus nor any of Laurus’ agents
shall be liable for acts taken or omissions made in connection herewith or
therewith except for actual bad faith.

32.

Entire Understanding; Maximum Interest.  This Agreement and the Ancillary
Agreements contain the entire understanding among each Company and Laurus as to
the subject matter hereof and thereof and any promises, representations,
warranties or guarantees not herein contained shall have no force and effect
unless in writing, signed by each Company’s and Laurus’ respective officers.
 Neither this Agreement, the Ancillary Agreements, nor any portion or provisions
thereof may be changed, modified, amended, waived, supplemented, discharged,
cancelled or terminated orally or by any course of dealing, or in any manner
other than by an agreement in writing, signed by the party to be charged.
 Nothing contained in this Agreement, any Ancillary Agreement or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum rate permitted by applicable law.  In the event that the
rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum rate permitted by such law, any payments in excess of such
maximum shall be credited against amounts owed by the Companies to Laurus and
thus refunded to the Companies.

33.

Severability.  Wherever possible each provision of this Agreement or the
Ancillary Agreements shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement or the
Ancillary Agreements 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 provision or the remaining provisions
thereof.

34.

Survival.  The representations, warranties, covenants and agreements made herein
shall survive any investigation made by Laurus and the closing of the
transactions contemplated hereby to the extent provided therein.  All statements
as to factual matters contained in any certificate or other instrument delivered
by or on behalf of the Companies pursuant hereto in connection with the
transactions contemplated herebly shall be deemed to be representations and
warranties by the Companies hereunder solely as of the date of such certificate
or instrument.  All indemnities set forth herein shall survive the execution,
delivery and termination of this Agreement and the Ancillary Agreements and the
making and repaying of the Obligations.

35.

Captions.  All captions are and shall be without substantive meaning or content
of any kind whatsoever.

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36.

Counterparts; Telecopier Signatures.  This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of which
taken together shall constitute one and the same agreement.  Any signature
delivered by a party via telecopier transmission shall be deemed to be any
original signature hereto.

37.

Construction.  The parties acknowledge that each party and its counsel have
reviewed this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments, schedules or
exhibits thereto.

38.

Publicity.  Each Company hereby authorizes Laurus to make appropriate
announcements of the financial arrangement entered into by and among each
Company and Laurus, including, without limitation, announcements which are
commonly known as tombstones, in such publications and to such selected parties
as Laurus shall in its sole and absolute discretion deem appropriate, or as
required by applicable law.

39.

Joinder.  It is understood and agreed that any Person that desires to become a
Company hereunder, or is required to execute a counterpart of this Agreement
after the date hereof pursuant to the requirements of this Agreement or any
Ancillary Agreement, shall become a Company hereunder by (a) executing a Joinder
Agreement in form and substance satisfactory to Laurus, (b) delivering
supplements to such exhibits and annexes to this Agreement and the Ancillary
Agreements as Laurus shall reasonably request and (c) taking all actions as
specified in this Agreement as would have been taken by such Company had it been
an original party to this Agreement, in each case with all documents required
above to be delivered to Laurus and with all documents and actions required
above to be taken to the reasonable satisfaction of Laurus.

40.

Legends.  The Securities shall bear legends as follows;

(a)

The Notes shall bear substantially the following legend:

“THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE,
STATE SECURITIES LAWS.  THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO PARENT THAT SUCH REGISTRATION IS NOT REQUIRED.”

(b)

Any shares of Common Stock issued pursuant to conversion of the Notes, exercise
of the Warrants or exercise of the Options, shall bear a legend which shall be
in

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substantially the following form until such shares are covered by an effective
registration statement filed with the SEC:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS.
 THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO PARENT THAT SUCH REGISTRATION IS NOT REQUIRED.”

(c)

The Warrants shall bear substantially the following legend:

“THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS.  THIS WARRANT AND THE COMMON SHARES ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT OR THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO PARENT
THAT SUCH REGISTRATION IS NOT REQUIRED.”

(d)

The Options shall bear substantially the following legend:

“THIS OPTION AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS OPTION HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS.  THIS OPTION AND THE COMMON SHARES ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
OPTION OR THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO PARENT
THAT SUCH REGISTRATION IS NOT REQUIRED.”

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[Balance of page intentionally left blank; signature page follows.]

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IN WITNESS WHEREOF, the parties have executed this Security and Purchase
Agreement as of the date first written above.

360 GLOBAL WINE COMPANY

By:

 
Name:   Joel Shapiro
Title:    CEO

360 VIANSA LLC,
By 360 Global Wine Company, its managing member

By:

 
Name:   Joel Shapiro
Title:    CEO

LAURUS MASTER FUND, LTD.

By:

 
Name:    Eugene Grin
Title:      Director

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Annex A - Definitions

“Account Debtor” means any Person who is or may be obligated with respect to, or
on account of, an Account.

“Accountants” has the meaning given to such term in Section 11(a).

“Accounts” means all “accounts”, as such term is defined in the UCC, now owned
or hereafter acquired by any Person, including:  (a) all accounts receivable,
other receivables, book debts and other forms of obligations (other than forms
of obligations evidenced by Chattel Paper or Instruments) (including any such
obligations that may be characterized as an account or contract right under the
UCC); (b) all of such Person’s rights in, to and under all purchase orders or
receipts for goods or services; (c) all of such Person’s rights to any goods
represented by any of the foregoing (including unpaid sellers’ rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods); (d) all rights to payment due to such
Person for Goods or other property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a secondary
obligation incurred or to be incurred, for energy provided or to be provided,
for the use or hire of a vessel under a charter or other contract, arising out
of the use of a credit card or charge card, or for services rendered or to be
rendered by such Person or in connection with any other transaction (whether or
not yet earned by performance on the part of such Person); and (e) all
collateral security of any kind given by any Account Debtor or any other Person
with respect to any of the foregoing.

“Accounts Availability” means sum of (i) the amount of Revolving Loans against
Eligible Accounts Laurus may make from time to time up to ninety percent (90%)
of the net face amount of Eligible Accounts.

“Affiliate” means, with respect to any Person, (a) any other Person (other than
a Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person or (b) any other Person who is a
director or officer (i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (a) above.  For the purposes of this
definition, control of a Person shall mean the power (direct or indirect) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.

“Ancillary Agreements” means the Notes, the Warrants, the Options, the
Registration Rights Agreements, the Subordination Agreement, each Security
Document and all other agreements, instruments, documents, mortgages, pledges,
powers of attorney, consents, assignments, contracts, notices, security
agreements, trust agreements and guarantees whether heretofore, concurrently, or
hereafter executed by or on behalf of any Company, any of its Subsidiaries or
any other Person or delivered to Laurus, relating to this Agreement or to the
transactions contemplated by this Agreement or otherwise relating to the
relationship between or among any Company and Laurus, as each of the same may be
amended, supplemented, restated or otherwise modified from time to time.

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“Available Minimum Borrowing” has the meaning given such term in Section
2(a)(i).

“Balance Sheet Date” has the meaning given such term in Section 12(f)(ii).

“Books and Records” means all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral or otherwise necessary or helpful in the
collection thereof or the realization thereupon.

“Business Day” means a day on which Laurus is open for business and that is not
a Saturday, a Sunday or other day on which banks are required or permitted to be
closed in the State of New York.

“California Deed of Trust” shall mean the Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing made by 360 Viansa LLC to First American
Title Company, as Trustee for the benefit of Laurus Master Fund, Ltd, dated as
of the date hereof.

“Capital Availability Amount” means $3,000,000.

“Charter” has the meaning given such term in Section 12(c)(iv).

“Chattel Paper” means all “chattel paper,” as such term is defined in the UCC,
including electronic chattel paper, now owned or hereafter acquired by any
Person.

“Closing Date” means the date on which any Company shall first receive proceeds
of the initial Loans or the date hereof, if no Loan is made under the facility
on the date hereof.

“Code” has the meaning given such term in Section 15(i).

“Collateral” means all of each Company’s property and assets, whether real or
personal, tangible or intangible, and whether now owned or hereafter acquired,
or in which it now has or at any time in the future may acquire any right, title
or interests including all of the following property in which it now has or at
any time in the future may acquire any right, title or interest:

(a)

all Inventory;

(b)

all Equipment;

(c)

all Fixtures;

(d)

all General Intangibles;

(e)

all Accounts;

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(f)

all Goods;

(g)

all Deposit Accounts, other bank accounts and all funds on deposit therein;

(h)

all Investment Property;

(i)

all Stock;

(j)

all Chattel Paper;

(k)

all Letter-of-Credit Rights;

(l)

all Instruments;

(m)

all commercial tort claims set forth on Schedule 1(A);

(n)

all Books and Records;

(o)

all Intellectual Property;

(p)

all Supporting Obligations including letters of credit and guarantees issued in
support of Accounts, Chattel Paper, General Intangibles and Investment Property;

(q)

(i) all money, cash and cash equivalents and (ii) all cash held as cash
collateral to the extent not otherwise constituting Collateral, all other cash
or property at any time on deposit with or held by Laurus for the account of any
Company (whether for safekeeping, custody, pledge, transmission or otherwise);
and

(r)

all products and Proceeds of all or any of the foregoing, tort claims and all
claims and other rights to payment including (i) insurance claims against third
parties for loss of, damage to, or destruction of, the foregoing Collateral and
(ii) payments due or to become due under leases, rentals and hires of any or all
of the foregoing and Proceeds payable under, or unearned premiums with respect
to policies of insurance in whatever form.

“Common Stock” means the shares of stock representing the Parent’s common equity
interests.

“Company Agent” means 360 Global Wine Company.

“Contract Rate” has the meaning given such term in the respective Note.

“Default” means any act or event that, with the giving of notice or passage of
time or both, would constitute an Event of Default.

“Deposit Accounts” means all “deposit accounts” as such term is defined in the
UCC, now or hereafter held in the name of any Person, including, without
limitation, the Lockboxes.

“Disclosure Controls” has the meaning given such term in Section 12(f)(iv).

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“Documents” means all “documents”, as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located, including all bills of
lading, dock warrants, dock receipts, warehouse receipts, and other documents of
title, whether negotiable or non-negotiable.

“Eligible Accounts” means each Account of each Company which conforms to the
following criteria:  (a) shipment of the merchandise or the rendition of
services has been completed; (b) no return, rejection or repossession of the
merchandise has occurred; (c) merchandise or services shall not have been
rejected or disputed by the Account Debtor and there shall not have been
asserted any offset, defense or counterclaim; (d) continues to be in full
conformity with the representations and warranties made by such Company to
Laurus with respect thereto; (e) Laurus is, and continues to be, satisfied with
the credit standing of the Account Debtor in relation to the amount of credit
extended; (f) there are no facts existing or threatened which are likely to
result in any adverse change in an Account Debtor’s financial condition; (g) is
documented by an invoice in a form approved by Laurus and shall not be unpaid
more than ninety (90) days from invoice date; (h) not more than twenty-five
percent (25%) of the unpaid amount of invoices due from such Account Debtor
remains unpaid more than ninety (90) days from invoice date; (i) is not
evidenced by chattel paper or an instrument of any kind with respect to or in
payment of the Account unless such instrument is duly endorsed to and in
possession of Laurus or represents a check in payment of an Account; (j) the
Account Debtor is located in the United States; provided, however, Laurus may,
from time to time, in the exercise of its sole discretion and based upon
satisfaction of certain conditions to be determined at such time by Laurus, deem
certain Accounts as Eligible Accounts notwithstanding that such Account is due
from an Account Debtor located outside of the United States; (k) Laurus has a
first priority perfected Lien in such Account and such Account is not subject to
any Lien other than Permitted Liens; (l) does not arise out of transactions with
any employee, officer, director, stockholder or Affiliate of any Company; (m) is
payable to such Company; (n) does not arise out of a bill and hold sale prior to
shipment and does not arise out of a sale to any Person to which such Company is
indebted; (o) is net of any returns, discounts, claims, credits and allowances;
(p) if the Account arises out of contracts between such Company, on the one
hand, and the United States, on the other hand, any state, or any department,
agency or instrumentality of any of them, such Company has so notified Laurus,
in writing, prior to the creation of such Account, and there has been compliance
with any governmental notice or approval requirements, including compliance with
the Federal Assignment of Claims Act; (q) is a good and valid account
representing an undisputed bona fide indebtedness incurred by the Account Debtor
therein named, for a fixed sum as set forth in the invoice relating thereto with
respect to an unconditional sale and delivery upon the stated terms of goods
sold by such Company or work, labor and/or services rendered by such Company;
(r) does not arise out of progress billings prior to completion of the order;
(s) the total unpaid Accounts from such Account Debtor does not exceed
twenty-five percent (25%) of all Eligible Accounts; (t) such Company’s right to
payment is absolute and not contingent upon the fulfillment of any condition
whatsoever; (u) such Company is able to bring suit and enforce its remedies
against the Account Debtor through judicial process; (v) does not represent
interest payments, late or finance charges owing to such Company, and (w) is
otherwise satisfactory to Laurus as determined by Laurus in the exercise of its
sole discretion.  In the event any Company requests that Laurus include within
Eligible Accounts certain Accounts of one or more of such Company’s acquisition
targets, Laurus shall at the time of such request consider such inclusion, but
any such inclusion shall be at the sole option of Laurus and shall at all times
be subject to the

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execution and delivery to Laurus of all such documentation (including, without
limitation, guaranty and security documentation) as Laurus may require in its
sole discretion.

“Eligible Subsidiary” means each Subsidiary of the Parent set forth on Exhibit A
hereto, as the same may be updated from time to time with Laurus’ written
consent.

“Equipment” means all “equipment” as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located, including any and all
machinery, apparatus, equipment, fittings, furniture, Fixtures, motor vehicles
and other tangible personal property (other than Inventory) of every kind and
description that may be now or hereafter used in such Person’s operations or
that are owned by such Person or in which such Person may have an interest, and
all parts, accessories and accessions thereto and substitute ons and
replacements therefor.

“ERISA” has the meaning given such term in Section 12(bb).

“Event of Default” means the occurrence of any of the events set forth in
Section 19.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Act Filings” means the Parent’s filings under the Exchange Act made
prior to the date of this Agreement.

“Financial Reporting Controls” has the meaning given such term in
Section 12(f)(v).

“Fixtures” means all “fixtures” as such term is defined in the UCC, now owned or
hereafter acquired by any Person.

“Formula Amount” has the meaning given such term in Section 2(a)(i).

“GAAP” means generally accepted accounting principles, practices and procedures
in effect from time to time in the United States of America.

“General Intangibles” means all “general intangibles” as such term is defined in
the UCC, now owned or hereafter acquired by any Person including all right,
title and interest that such Person may now or hereafter have in or under any
contract, all Payment Intangibles, customer lists, Licenses, Intellectual
Property, interests in partnerships, joint ventures and other business
associations, permits, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, Software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials, Books and Records, Goodwill
(including the Goodwill associated with any Intellectual Property), all rights
and claims in or under insurance policies (including insurance for fire, damage,
loss, and casualty, whether covering personal property, real property, tangible
rights or intangible rights, all liability, life, key-person, and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit accounts, rights to receive tax refunds and other
payments, rights to received dividends, distributions, cash,

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Instruments and other property in respect of or in exchange for pledged Stock
and Investment Property, and rights of indemnification.

“Goods” means all “goods”, as such term is defined in the UCC, now owned or
hereafter acquired by any Person, wherever located, including embedded software
to the extent included in “goods” as defined in the UCC, manufactured homes,
standing timber that is cut and removed for sale and unborn young of animals.

“Goodwill” means all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

“Instruments” means all “instruments”, as such term is defined in the UCC, now
owned or hereafter acquired by any Person, wherever located, including all
certificated securities and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.

“Intellectual Property” means any and all patents, trademarks, service marks,
trade names, copyrights, trade secrets, Licenses, information and other
proprietary rights and processes.

“Inventory” means all “inventory”, as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located, including all inventory,
merchandise, goods and other personal property that are held by or on behalf of
such Person for sale or lease or are furnished or are to be furnished under a
contract of service or that constitute raw materials, work in process, finished
goods, returned goods, or materials or supplies of any kind, nature or
description used or consumed or to be used or consumed in such Person’s business
or in the processing, production, packaging, promotion, delivery or shipping of
the same, including all supplies and embedded software.

“Investment Property” means all “investment property”, as such term is defined
in the UCC, now owned or hereafter acquired by any Person, wherever located.

“Letter-of-Credit Rights” means “letter-of-credit rights” as such term is
defined in the UCC, now owned or hereafter acquired by any Person, including
rights to payment or performance under a letter of credit, whether or not such
Person, as beneficiary, has demanded or is entitled to demand payment or
performance.

“License” means any rights under any written agreement now or hereafter acquired
by any Person to use any trademark, trademark registration, copyright, copyright
registration or invention for which a patent is in existence or other license of
rights or interests now held or hereafter acquired by any Person.

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“Lien” means any mortgage, security deed, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including any conditional sale or other title retention
agreement, any lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
under the UCC or comparable law of any jurisdiction.

“Loans” has the Revolving Loans and the Term Loan and shall include all other
extensions of credit hereunder and under any Ancillary Agreement.

“Lockboxes” has the meaning given such term in Section 8(a).

“Longview Debt Documentation” means [Company to provide full legal description].

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, liabilities, condition (financial or otherwise), properties, operations
or prospects of any Company or any of its Subsidiaries (taken individually and
as a whole), (b) any Company’s or any of its Subsidiary’s ability to pay or
perform the Obligations in accordance with the terms hereof or any Ancillary
Agreement, (c) the value of the Collateral, the Liens on the Collateral or the
priority of any such Lien or (d) the practical realization of the benefits of
Laurus’ rights and remedies under this Agreement and the Ancillary Agreements.

“Minimum Borrowing Amount” means $500,000.

“Minimum Borrowing Notes” means that certain Secured Convertible Minimum
Borrowing Note dated as of the Closing Date made by the Companies in favor of
Laurus evidencing the Minimum Borrowing Amount and each other Secured
Convertible Minimum Borrowing Note made by the Companies in favor of Laurus
which evidences the Minimum Borrowing Amount, as each of the same may be
amended, supplemented, restated and/or otherwise modified from time to time.

“NASD” has the meaning given such term in Section 13(b).

“Next Unissued Serialized Note” has the meaning given such term in Section
2(a)(i).

“Note Shares” has the meaning given such term in Section 12(a).

“Notes” means the Minimum Borrowing Notes, the Term Note and the Revolving Note
made by Companies in favor of Laurus in connection with the transactions
contemplated hereby, as each of the same may be amended, supplemented, restated
and/or otherwise modified from time to time.

“Obligations” means all Loans, all advances, debts, liabilities, obligations,
covenants and duties owing by each Company and each of its Subsidiaries to
Laurus (or any corporation that directly or indirectly controls or is controlled
by or is under common control

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with Laurus) of every kind and description (whether or not evidenced by any note
or other instrument and whether or not for the payment of money or the
performance or non-performance of any act), direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, whether existing by operation of law or otherwise now existing or
hereafter arising including any debt, liability or obligation owing from any
Company and/or each of its Subsidiaries to others which Laurus may have obtained
by assignment or otherwise and further including all interest (including
interest accruing at the then applicable rate provided in this Agreement after
the maturity of the Loans and interest accruing at the then applicable rate
provided in this Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, whether
or not a claim for post-filing or post-petition interest is allowed or allowable
in such proceeding), charges or any other payments each Company and each of its
Subsidiaries is required to make by law or otherwise arising under or as a
result of this Agreement, the Ancillary Agreements or otherwise, together with
all reasonable expenses and reasonable attorneys’ fees chargeable to the
Companies’ or any of their Subsidiaries’ accounts or incurred by Laurus in
connection therewith.

“Option Shares” has the meaning given such term in Section 12(a).

“Options” means that certain Option dated as of the Closing Date made by the
Parent in favor of Laurus and each other option made by the Parent in favor
Laurus, as each of the same may be amended, restated, modified and/or
supplemented from time to time.

“Payment Intangibles” means all “payment intangibles” as such term is defined in
the UCC, now owned or hereafter acquired by any Person, including, a General
Intangible under which the Account Debtor’s principal obligation is a monetary
obligation.

“Permitted Liens” means (a) Liens of carriers, warehousemen, artisans, bailees,
mechanics and materialmen incurred in the ordinary course of business securing
sums not overdue; (b) Liens incurred in the ordinary course of business in
connection with worker’s compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (i) not
overdue or (ii) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on the books of the Companies and
their Subsidiaries, as applicable, in conformity with GAAP; (c) Liens in favor
of Laurus; (d) Liens for taxes (i) not yet due or (ii) being diligently
contested in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the Companies and
their Subsidiaries, as applicable, in conformity with GAAP; and which have no
effect on the priority of Liens in favor of Laurus or the value of the assets in
which Laurus has a Lien; (e) Purchase Money Liens securing Purchase Money
Indebtedness to the extent permitted in this Agreement and (f) Liens specified
on Schedule 2 hereto.

“Person” means any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person’s successors and assigns.

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“Principal Market” means the NASD Over The Counter Bulletin Board, NASDAQ
SmallCap Market, NASDAQ National Market System, American Stock Exchange or New
York Stock Exchange (whichever of the foregoing is at the time the principal
trading exchange or market for the Common Stock).

“Proceeds” means “proceeds”, as such term is defined in the UCC and, in any
event, shall include:  (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Company or any other Person from time to
time with respect to any Collateral; (b) any and all payments (in any form
whatsoever) made or due and payable to any Company from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any Collateral by any governmental body, governmental authority,
bureau or agency (or any person acting under color of governmental authority);
(c) any claim of any Company against third parties (i) for past, present or
future infringement of any Intellectual Property or (ii) for past, present or
future infringement or dilution of any trademark or trademark license or for
injury to the goodwill associated with any trademark, trademark registration or
trademark licensed under any trademark License; (d) any recoveries by any
Company against third parties with respect to any litigation or dispute
concerning any Collateral, including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral; (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock; and (f) any and all other amounts, rights to payment or other property
acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.

“Purchase Money Indebtedness” means (a) any indebtedness incurred for the
payment of all or any part of the purchase price of any fixed asset, including
indebtedness under capitalized leases, (b) any indebtedness incurred for the
sole purpose of financing or refinancing all or any part of the purchase price
of any fixed asset, and (c) any renewals, extensions or refinancings thereof
(but not any increases in the principal amounts thereof outstanding at that
time).

“Purchase Money Lien” means any Lien upon any fixed assets that secures the
Purchase Money Indebtedness related thereto but only if such Lien shall at all
times be confined solely to the asset the purchase price of which was financed
or refinanced through the incurrence of the Purchase Money Indebtedness secured
by such Lien and only if such Lien secures only such Purchase Money
Indebtedness.

“Registration Rights Agreements” means that certain Registration Rights
Agreement dated as of the Closing Date by and between the Parent and Laurus and
each other registration rights agreement by and between the Parent and Laurus,
as each of the same may be amended, modified and supplemented from time to time.

“Revolving Loan” shall have the meaning given such term in Section 2(a)(i).

“Revolving Note” means that certain Secured Revolving Note dated as of the
Closing Date made by the Companies in favor of Laurus in the original principal
amount of

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$2,500,000, as the same may be amended, supplemented, restated and/or otherwise
modified from time to time.

“SEC” means the Securities and Exchange Commission.

“SEC Reports” has the meaning given such term in Section 12(u).

“Securities” means the Notes, the Warrants and the Options and the shares of
Common Stock which may be issued pursuant to conversion of such Notes in whole
or in part or exercise of such Warrants and/or Options.

“Securities Act” has the meaning given such term in Section 12(r).

“Security Documents” means all security agreements, mortgages, cash collateral
deposit letters, pledges, mortgages (including, without limitation, the
California Deed of Trust and the Texas Deed of Trust) and other agreements which
are executed by any Company or any of its Subsidiaries in favor of Laurus.

“Software” means all “software” as such term is defined in the UCC, now owned or
hereafter acquired by any Person, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.

“Stock” means all certificated and uncertificated shares, options, warrants,
membership interests, general or limited partnership interests, participation or
other equivalents (regardless of how designated) of or in a corporation,
partnership, limited liability company or equivalent entity whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Securities Exchange Act of 1934).

“Subordinated Debt Documentation” has the meaning given such term in Section
5(b)(vi).

“Subordination Agreement” has the meaning given such term in Section 5(b)(vi).

“Subsidiary” means, with respect to any Person, (i) any other Person whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors or other
governing body of such other Person, are owned, directly or indirectly, by such
Person or (ii) any other Person in which such Person owns, directly or
indirectly, more than 50% of the equity interests at such time.

“Supporting Obligations” means all “supporting obligations” as such term is
defined in the UCC.

“Term” means the Closing Date through the close of business on the day
immediately preceding the third anniversary of the Closing Date, subject to
acceleration at the option of Laurus upon the occurrence of an Event of Default
hereunder or other termination hereunder.

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“Term Note” means that certain Secured Convertible Term Note dated as of the
Closing Date made by the Companies in favor of Laurus in the original principal
amount of $ 34,500,000 as the same may amended, supplemented, restated and/or
otherwise modified from time to time.

“Texas Deed of Trust” shall mean the Deed of Trust, Security Agreement and
Fixture Filing, dated as of the date hereof, made by 360 Global Wine Company to
Phillip Weller, Trustee for the benefit of Laurus Master Fund, Ltd.

“Total Investment Amount” means $ 37,500,000

“Transferable Amount” has the meaning given such term in Section 2(a)(i).

“UCC” means the Uniform Commercial Code as the same may, from time to time be in
effect in the State of New York; provided, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Laurus’ Lien on any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term “UCC” shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions of
this Agreement relating to such attachment, perfection, priority or remedies and
for purposes of definitions related to such provisions; provided further, that
to the extent that UCC is used to define any term herein or in any Ancillary
Agreement and such term is defined differently in different Articles or
Divisions of the UCC, the definition of such term contained in Article or
Division 9 shall govern.

“Warrant Shares” has the meaning given such term in Section 12(a).

“Warrants” means that certain Common Stock Purchase Warrant dated as of the
Closing Date made by the Parent in favor of Laurus and each other warrant made
by the Parent in favor Laurus, as each of the same may be amended, restated,
modified and/or supplemented from time to time.

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Exhibit A

Eligible Subsidiaries

1.

360 Viansa LLC, a Nevada LLC

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07/08/2005

 

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Exhibit B

Borrowing Base Certificate

[To be inserted]

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07/08/2005

 

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SECURITY AGREEMENT

LAURUS MASTER FUND, LTD.

360 GLOBAL WINE COMPANY

and

360 VIANSA LLC

Dated: July __, 2005

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07/08/2005

 

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TABLE OF CONTENTS

Page

1.

General Definitions and Terms; Rules of Construction.

1

2.

Loan Facility

2

3.

Repayment of the Loans

4

4.

Procedure for Loans

5

5.

Interest and Payments.

5

6.

Security Interest.

7

7.

Representations, Warranties and Covenants Concerning the Collateral

8

8.

Payment of Accounts.

11

9.

Collection and Maintenance of Collateral.

11

10.

Inspections and Appraisals

12

11.

Financial Reporting

12

12.

Additional Representations and Warranties

13

13.

Covenants

24

14.

Further Assurances

30

15.

Representations, Warranties and Covenants of Laurus.

30

16.

Power of Attorney

32

17.

Term of Agreement

33

18.

Termination of Lien

33

19.

Events of Default

33

20.

Remedies

36

21.

Waivers

36

22.

Expenses

37

23.

Assignment By Laurus

38

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Page(s)

24.

No Waiver; Cumulative Remedies

38

25.

Application of Payments

39

26.

Indemnity

39

27.

Revival

39

28.

Borrowing Agency Provisions

39

29.

Notices

40

30.

Governing Law, Jurisdiction and Waiver of Jury Trial

41

31.

Limitation of Liability

42

32.

Entire Understanding

42

33.

Severability

43

34.

Captions

43

35.

Counterparts; Telecopier Signatures

43

36.

Construction

43

37.

Publicity

43

38.

Joinder

44

39.

Legends

44

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