Exhibit 10.2

NEITHER  THIS  SECURITY NOR THE  ISSUANCE TO THE HOLDER OF THE  SECURITIES  INTO
WHICH THIS SECURITY IS CONVERTIBLE  HAS BEEN  REGISTERED WITH THE SECURITIES AND
EXCHANGE  COMMISSION IN RELIANCE UPON AN EXEMPTION FROM  REGISTRATION  UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
UNDER THE  SECURITIES  ACT OR PURSUANT TO AN AVAILABLE  EXEMPTION  FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

THIS NOTE DOES NOT  REQUIRE  PHYSICAL  SURRENDER  OF THIS NOTE IN THE EVENT OF A
PARTIAL  REDEMPTION,  REPAYMENT  OR  CONVERSION.  AS  A  RESULT,  FOLLOWING  ANY
REDEMPTION, REPAYMENT OR CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING
PRINCIPAL AMOUNT  REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL AMOUNT
SET FORTH BELOW.


                     7.5% SECURED CONVERTIBLE NOTE DUE 2006

                                       OF

                         KNIGHTSBRIDGE FINE WINES, INC.


NOTE NO.:  G-2                            ORIGINAL PRINCIPAL AMOUNT:  $2,000,000
ISSUANCE DATE:  DECEMBER 22, 2003                                  DALLAS, TEXAS


                  FOR VALUE  RECEIVED,  the Company hereby promises to pay to or
upon the order of  GRYPHON  MASTER  FUND,  L.P.  or its  registered  assigns  or
successors-in-interest  (the "Holder") the principal sum of Two Million  Dollars
($2,000,000.00),  together with all accrued but unpaid interest thereon, if any,
on the third  anniversary  of the Issuance  Date,  to the extent such  principal
amount  and  interest  have not been  repaid  or  converted  into  shares of the
Company's Common Stock, $.001 par value (the "Common Stock"), in accordance with
the terms hereof.  Interest on the unpaid principal  balance hereof shall accrue
at the rate of 7.5% per annum from the date of  original  issuance  hereof  (the
"Issuance  Date") until the same  becomes due and payable on the Final  Maturity
Date,  or such earlier date upon  acceleration  or by  conversion,  repayment or
redemption  in  accordance  with the terms  hereof.  Interest on this Note shall
accrue daily  commencing on the Issuance Date,  shall be compounded  monthly and
shall be computed on the basis of a 360-day year,  30-day months and actual days
elapsed   and  shall  be  payable   in   accordance   with   Section  2  hereof.


<PAGE>

Notwithstanding  anything contained herein, this Note shall bear interest on the
outstanding  Principal  Amount  from and after the  occurrence  and  during  the
continuance  of an Event of Default,  at the rate (the "Default  Rate") equal to
the lower of eighteen  percent (18%) per annum or the highest rate  permitted by
applicable law. Unless otherwise agreed or required by applicable law,  payments
will be applied first to any unpaid  collection  costs,  then to unpaid interest
and fees and any remaining amount to unpaid principal.

                  All  payments of  principal of and interest on this Note shall
be made in lawful  money of the United  States of America  by wire  transfer  of
immediately  available funds to such account as the Holder may from time to time
designate by written notice in accordance with the provisions of this Note. This
Note may not be  prepaid  in whole or in part  except as  specifically  provided
herein. Whenever any amount expressed to be due by the terms of this Note is due
on any day  which is not a  Business  Day (as  defined  below),  the same  shall
instead  be due on the next  succeeding  day  which is a  Business  Day and such
extension  shall be taken into  account in  determining  the amount of  interest
accrued on this Note.

                  This Note is  secured  by a  security  interest  in all of the
assets and  properties  of the Company  pursuant to a Security  Agreement  dated
December 22, 2003, by and between the Company and the Holder.

                  The following terms and conditions shall apply to this Note:

                  1. DEFINITIONS.

                  (a)  Capitalized  terms used herein and not otherwise  defined
herein shall have the meanings set forth in the Purchase Agreement.

                  (b) For  purposes  hereof the  following  terms shall have the
meanings ascribed to them below:

                  "Aggregation  Parties"  shall  have the  meaning  provided  in
Section 4(i).

                  "Bankruptcy  Event" means any of the following events: (a) the
Company or any material  subsidiary  commences a case or other  proceeding under
any  bankruptcy,  reorganization,  arrangement,  adjustment  of debt,  relief of
debtors,   dissolution,   insolvency  or  liquidation  or  similar  law  of  any
jurisdiction  relating to the Company or any material  subsidiary  thereof;  (b)
there is commenced against the Company or any material  subsidiary any such case
or proceeding that is not dismissed within 60 days after  commencement;  (c) the
Company or any material subsidiary thereof is adjudicated  insolvent or bankrupt
or any order of relief or other order  approving  any such case or proceeding is
entered;  (d) the Company or any material  subsidiary suffers any appointment of
any  trustee,  custodian  or the  like  for it or any  substantial  part  of its
property that is not discharged or stayed within 60 days; (e) the Company or any
material subsidiary makes a general assignment for the benefit of creditors; (f)
the Company or any material subsidiary fails to pay, states that it is unable to


<PAGE>

pay, or is unable to pay, its debts (excluding those reasonably disputed in good
faith by the Company in the case of failure to pay and for which it has reserves
on its books and  financial  statements)  generally  as they become due; (g) the
Company or any material  subsidiary calls a meeting of its creditors with a view
to arranging a composition, adjustment or restructuring of its debts; or (h) the
Company or any  material  subsidiary,  by any act or  failure to act,  expressly
indicates its consent to, approval of or acquiescence in any of the foregoing or
takes any  corporate  or other  action for the purpose of  effecting  any of the
foregoing.

                  "Call  Amount"  means  for  any  exercise  of the  Call  Right
pursuant to Section 3, the sum of (1) the product of (x) the principal amount of
this Note to be prepaid by reason of such  exercise  of the Call Right times (y)
the  applicable  Call  Percentage  plus (2) accrued  and unpaid  interest on the
principal  amount of this Note to be prepaid by reason of such  exercise  of the
Call Right to the applicable Call Date.

                  "Call Date" shall have the meaning provided in Section 3(b).

                  "Call Notice" shall have the meaning provided in Section 3(b).

                  "Call Percentage" means 125%.

                  "Call Right" shall have the meaning provided in Section 3(a).

                  "Cash" or "cash"  means at any time such coin or  currency  of
the  United  States of  America  as shall at such time be legal  tender  for the
payment of public and private debts.

                  "Change in Control Transaction" will be deemed to exist if (i)
there  occurs  any  consolidation,   merger,   amalgamation  or  other  business
combination of the Company with or into any other corporation or other entity or
person (whether or not the Company is the surviving  corporation),  or any other
corporate  reorganization  or transaction or series of related  transactions  in
which in any of such events the  persons who are holders of the voting  stock of
the  Company  immediately  prior to such  event  cease to own 50% or more of the
voting  stock,  or  corresponding  voting  equity  interests,  of the  surviving
corporation  or other entity  immediately  after such event  (including  without
limitation any "going private" transaction under Rule 13e-3 promulgated pursuant
to the Exchange Act or tender offer by the Company under Rule 13e-4  promulgated
pursuant to the Exchange  Act for 20% or more of the  Company's  Common  Stock),
(ii) any person (as defined in Section 13(d) of the Exchange Act), together with
its  affiliates  and associates (as such terms are defined in Rule 405 under the
Securities  Act),  beneficially  owns  or is  deemed  to  beneficially  own  (as
described  in Rule 13d-3 under the  Exchange  Act  without  regard to the 60-day
exercise  period)  in  excess  of 50%  of  the  voting  power  of the  Company's
outstanding  securities,  (iii) there is a replacement  of more than one-half of
the members of the Company's  Board of Directors  which is not approved by those
individuals  who are members of the  Company's  Board of  Directors  on the date
thereof or (iv) in one or a series of related  transactions,  there is a sale or
transfer of all or substantially all of the assets of the Company, determined on


<PAGE>

a consolidated basis.

                  "Conversion  Date" shall have the meaning  provided in Section
4(b).

                  "Conversion Delay Payments" shall have the meaning provided in
Section 4(b)(ii).

                  "Conversion Notice" shall have the meaning provided in Section
4(a).

                  "Conversion  Price"  means  $1.80,  subject  to  anti-dilution
adjustment as set forth herein.

                  "Conversion  Ratio" means,  at any time, a fraction,  of which
the numerator is the entire  outstanding  Principal Amount of this Note (or such
portion  thereof  that is being  redeemed  or  repurchased),  and of  which  the
denominator is the then applicable Conversion Price.

                  "DTC" shall have the meaning provided in Section 4(b)(ii).

                  "Effective  Date"  means  the  date on  which  a  Registration
Statement  covering all the Underlying Shares and other  Registrable  Securities
(as defined in the Registration  Rights Agreement) is declared  effective by the
SEC.

                  "Effective Registration" means (i) the Company has complied in
all material respects with its obligations  under all the Transaction  Documents
where the failure to comply by the Company would have a material  adverse effect
on the ability of the Holder to publicly  resell the  Underlying  Shares and the
Warrant  Shares and no Event of Default shall have  occurred and be  continuing;
(ii) the resale of all  Registrable  Securities (as defined in the  Registration
Rights  Agreement)  is  covered  by  an  effective   Registration  Statement  in
accordance  with  the  terms  of the  Registration  Rights  Agreement  and  such
Registration  Statement  is not subject to any  suspension  or stop order and is
expected to remain  effective and available for use by the selling  stockholders
named therein or in any related  prospectus  supplement  for at least 20 Trading
Days thereafter; (iii) the resale of such Registrable Securities may be effected
pursuant  to a current  and  deliverable  prospectus  that is not subject to any
blackout or similar circumstance;  (iv) such Registrable  Securities are listed,
or approved  for listing  prior to issuance,  on an Approved  Market and are not
subject  to any  trading  suspension  (nor  shall  trading  generally  have been
suspended on such  exchanges or  markets),  and the Company  shall not have been
notified of any pending or  threatened  proceeding  or other action to delist or
suspend the Common  Stock on the  Approved  Market on which the Common  Stock is
then traded or listed;  (v) the requisite number of shares of Common Stock shall
have been duly authorized and shall be available for issuance as required by the
terms of the  Transaction  Documents;  (vi) the Holder is not  identified  as an
underwriter in the Registration Statement;  and (vii) the Company is not subject
to any Bankruptcy Event.

                  "Event of Default" shall have the meaning  provided in Section
5(a).


<PAGE>

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
amended.

                  "Final Maturity Date" means December 22, 2006.

                  "Holder  Share  Notice"  shall have the  meaning  provided  in
Section 4(b)(ii).

                  "Newly  Issued  Shares"  shall have the  meaning  provided  in
Section 4(c)(iii).

                  "Principal  Amount"  means  at any  time  the  sum of (i)  the
outstanding  principal  amount of this Note at such time,  (ii) all  accrued but
unpaid interest  hereunder to such time, and (iii) any default payments owing at
such time to the Holder under the Transaction Documents but not theretofore paid
or added to the Principal Amount.

                  "Principal  Market" means the OTC Bulletin Board or such other
U.S. market or exchange which is the principal  market on which the Common Stock
is then listed for trading.

                  "Purchase Agreement" means the Purchase Agreement, dated as of
December 22, 2003, by and between the Company and Gryphon  Master Fund,  L.P., a
Bermuda limited partnership, pursuant to which this Note was originally issued.

                  "Quarterly  Interest  Payment  Date"  means  each  October  1,
January 1, April 1 and July 1, commencing  April 1, 2004, and the Final Maturity
Date.

                  "QIB" means a qualified institutional buyer as defined in Rule
144A.

                  "Post-Notice  Period"  shall  have  the  meaning  provided  in
Section 3(b).

                  "Restricted  Ownership  Percentage"  shall  have  the  meaning
provided in Section 4(i).

                  "Rule  144A" means Rule 144A as  promulgated  by the SEC under
the Securities Act or any successor thereto.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Trading  Day"  means a day on which the  Principal  Market is
open for the general trading of securities.

                  "Underlying Shares" means the shares of Common Stock issued or
issuable  upon  conversion  of,  in lieu of cash  payment  of  principal  of, or
interest on, as repayment of  principal  under,  or otherwise  pursuant to, this
Note in accordance with the terms hereof and the Purchase Agreement.


<PAGE>


SECTION 2.        PAYMENTS OF PRINCIPAL AND INTEREST.

                  (A) INTEREST.  The Company shall pay interest accruing on this
Note  (from the date  hereof) on all  principal  outstanding,  quarterly  on the
Quarterly Interest Payment Dates, commencing on April 1, 2004, in cash.

                  (B) PRINCIPAL.  The entire Principal Amount of this Note, plus
any and all default  payments  owing  under the  Transaction  Documents  but not
previously  paid,  shall become due and payable on the Final  Maturity Date. Any
principal  of this Note that is prepaid by the Company  pursuant to Section 3 or
converted  by the  Holder  pursuant  to Section 4 shall be applied to reduce the
principal payable under this Section 2(b).

SECTION 3.        PREPAYMENT AT THE COMPANY'S OPTION.

The Company shall have the right, subject to the conditions set forth below (the
"Call Right"),  to prepay all or any portion (in increments of $100,000) of this
Note, in cash, at the applicable Call Amount.

The Call Right may be  exercised by the Company by  delivering  to the Holder an
irrevocable,  written notice (the "Call Notice"), which notice shall specify the
date for the  Company's  prepayment of this Note (as the same may be extended as
herein provided, the "Call Date"), which date shall be not less than 30 nor more
than 40 days after the date the Call  Notice is  delivered  to the  Holder  (the
"Post-Notice Period").

Notwithstanding the foregoing,  the Company may not give a Call Notice or effect
a prepayment  pursuant to Section 3(a) above unless,  at all times from the date
that is 20 Trading Days prior to the date the Company  gives such Call Notice to
and including the applicable Call Date:

                           (i)  there  is  Effective   Registration  and  it  is
         expected  that  Effective  Registration  will  continue for at least 20
         Trading Days after the Call Date; and

                           (ii)  conversion by the Holder  pursuant to Section 4
         of the  portions  of this Note that is being  called  contemporaneously
         therewith would not cause the Holder's  beneficial  ownership of shares
         of Common Stock to exceed the limits set forth in Section 4(i)(A).

If such conversion  would cause the Holder to exceed such  beneficial  ownership
limitation,  the prepayment of that portion of this Note the conversion of which
would  cause  such  beneficial  ownership  limitation  to be  exceeded  shall be
deferred  until the date that is 20 Trading  Days after the date the  conversion
thereof  would not exceed  such  limitations,  and this Note shall  continue  to
accrue  interest on the amount  being called until the same is paid or converted
pursuant to Section 4.
                  (D) If the  Company  gives a Call  Notice,  the  Holder  shall


<PAGE>

continue to have the right to convert the portion of this Note to which the Call
Notice  relates  pursuant to Section 4 until the  prepayment  of such portion of
this Note  pursuant to this  Section 3. A  prepayment  pursuant to this  Section
shall occur on the  applicable  Call Date.  If the Company fails to pay the Call
Amount in full on the applicable Call Date in immediately  available  funds, (i)
the  Company  shall  lose its right to  prepay  this Note by reason of such Call
Notice or thereafter in accordance  with this Section 3, and (ii) in addition to
any other  rights or  remedies it may have,  the Holder  shall have the right to
require the Company to repurchase  this Note (or any portion  hereof as selected
by the Holder) at a price equal to the sum of 125% of the Principal Amount, plus
accrued interest thereon to the date of such repurchase.

                  (E) Except as specifically  provided herein, this Note may not
be prepaid,  redeemed or  repurchased  at the option of the Company prior to the
Final Maturity Date.

SECTION 4.        CONVERSION.

                  (a)  Conversion  Right.  Upon the  terms  and  subject  to the
conditions  hereof,  the Holder shall have the right, at the Holder's option, to
convert  the  outstanding  Principal  Amount and  accrued  and  unpaid  interest
thereon, in whole at any time or in part from time to time, by delivering to the
Company a duly executed  notice of  conversion  in the form  attached  hereto as
Exhibit A (the "Conversion Notice"),  which may be transmitted by telephone line
facsimile  transmission.  Notwithstanding  anything to the contrary herein, this
Note and the  outstanding  Principal  Amount  hereunder shall not be convertible
into Common Stock at any time to the extent,  and only to the extent,  that such
conversion  at such time would  result in the Holder  exceeding  the  limitation
contained in, or otherwise violating the provisions of, Section 4(i)(A) below.
                  (b)      Common Stock Issuance Upon Conversion.
                              (I) CONVERSION PROCEDURES.  Upon any conversion of
          this Note pursuant to Section 4(a) above,  the  outstanding  Principal
          Amount being converted and accrued and unpaid interest  thereon to the
          applicable  Conversion  Date shall be  converted  into such  number of
          fully paid, validly issued and non-assessable  shares of Common Stock,
          free of any  liens,  claims  and  encumbrances,  as is  determined  by
          dividing the outstanding  Principal Amount being converted and accrued
          and unpaid interest  thereon to the applicable  Conversion Date by the
          then applicable  Conversion  Price. The date of any Conversion  Notice
          hereunder shall be referred to herein as the  "Conversion  Date". If a
          conversion  under this Note cannot be effected in full for any reason,
          or if the  Holder  is  converting  less  than  all of the  outstanding
          Principal  Amount  hereunder  pursuant  to a  Conversion  Notice,  the
          Company  shall,  upon request of the Holder,  promptly  deliver to the
          Holder (but no later than five  Trading  Days after the  surrender  of
          this Note to the  Company) a new Note having a Principal  Amount equal
          to the  amount of such  outstanding  Principal  Amount as has not been
          converted.  The Holder shall not be required  physically  to surrender
          this  Note  to  the  Company  upon  any  conversion  unless  the  full
          outstanding  Principal  Amount  of this  Note is  being  converted  or
          repaid.  The Holder and the Company shall maintain records showing the


<PAGE>

          outstanding  Principal Amount so converted and repaid and the dates of
          such  conversions  or  repayments  or  shall  use such  other  method,
          reasonably  satisfactory  to the Holder and the Company,  so as not to
          require  physical  surrender of this Note upon each such conversion or
          repayment. The Holder agrees that, if the outstanding Principal Amount
          of this Note is less than the  Principal  Amount stated on the face of
          this Note, the Holder will not  voluntarily  transfer this Note at any
          time when no Event of Default has occurred and is  continuing  without
          first  surrendering  this Note to the  Company for  issuance,  without
          charge to the Holder,  of a replacement  instrument  that reflects the
          outstanding  Principal  Amount of this Note.  The Company will deliver
          such  replacement  instrument  to the Holder as promptly as practical,
          but in no event later than three Trading Days,  after surrender by the
          Holder.

                              (II) STOCK  CERTIFICATES OR DWAC. The Company will
          deliver to the Holder  not later  than five (5)  Trading  Days after a
          particular Conversion Date, a certificate or certificates, which shall
          be free of restrictive legends and trading restrictions (except to the
          extent  permitted under Section 6.12 of the Purchase  Agreement),  for
          the number of shares of Common Stock issuable upon such  conversion of
          this Note. In lieu of delivering physical  certificates for the shares
          of Common Stock  issuable upon any  conversion of this Note,  provided
          the Company's  transfer agent is participating in the Depository Trust
          Company ("DTC") Fast Automated  Securities  Transfer ("FAST") program,
          upon  request  of the  Holder,  the  Company  shall  use  commercially
          reasonable  efforts  to cause its  transfer  agent  electronically  to
          transmit such shares  issuable  upon  conversion to the Holder (or its
          designee),   by  crediting  the  account  of  the  Holder's  (or  such
          designee's)  broker  with DTC through  its  Deposit  Withdrawal  Agent
          Commission  system  (provided that the same time periods herein as for
          stock  certificates  shall  apply).  If in the case of any  conversion
          hereunder,  such  shares are not  delivered  to or as  directed by the
          Holder by the third Trading Day after the applicable  Conversion Date,
          the Holder  shall be entitled by written  notice to the Company at any
          time  on or  before  its  receipt  of such  shares,  to  rescind  such
          conversion,  in which event the Company shall immediately  return this
          Note to the  Holder if the Holder has  tendered  it to the  Company in
          connection  with such  conversion.  If the Holder notifies the Company
          that the Holder has not received such shares (free of any restrictions
          on  transfer or legends  except as  permitted  by Section  6.12 of the
          Purchase  Agreement)  within  three  Trading  Days after a  particular
          Conversion  Date (each,  a "Holder Share  Notice") and the Holder does
          not  receive  such  shares  (free of any  restrictions  on transfer or
          legends except as permitted by Section 6.12 of the Purchase Agreement)
          within two Trading Days after giving such Holder Share  Notice,  then,
          in addition to any other  liability the Company may have,  the Company
          shall pay to the Holder,  in cash, an amount,  computed at the rate of
          2% of the outstanding  Principal Amount per month, for the period such
          failure   continues  (the  "Conversion   Delay   Payments"),   without
          duplication of any amount payable to the Holder pursuant to clause (F)
          of Section  2(c)(i) of the  Registration  Rights  Agreement.  A Holder
          Share  Notice  may be given by  telephone  or e-mail to the  Company's
          Chief Financial Officer or General Counsel.  The Company's  obligation
          to issue and deliver  such shares of Common Stock upon  conversion  of


<PAGE>

          this Note shall be absolute  and  unconditional,  irrespective  of the
          absence of any action by the Holder to enforce the same, of any waiver
          or consent with respect to any provision  hereof,  the recovery of any
          judgment  against  any Person or any action to enforce  the same,  any
          failure or delay in the  enforcement  of any other  obligation  of the
          Company  to the  Holder,  or  any  setoff,  counterclaim,  recoupment,
          limitation  or  termination,  or any breach or  alleged  breach by the
          Holder or any other  Person of any  obligation  to the  Company or any
          violation  or  alleged  violation  of law by the  Holder  or any other
          Person,  and  irrespective  of  any  other  circumstance  which  might
          otherwise  limit  such  obligation  of the  Company  to the  Holder in
          connection  with such  exercise.

                              (III) LIABILITY FOR LATE  DELIVERY; FORCE MAJEURE.
          If in any case the Company  shall fail to issue and deliver the shares
          of Common  Stock to the Holder  pursuant  to this Note on the due date
          therefor,  in addition to any other  liabilities  the Company may have
          hereunder  and  under  applicable  law (A) the  Company  shall  pay or
          reimburse  the  Holder  on  demand  for  all  out-of-pocket  expenses,
          including,  without limitation,  reasonable fees and expenses of legal
          counsel,  incurred by the Holder as a result of such failure,  so long
          as the Holder  shall have given the Company a Holder Share Notice with
          respect  to such  shares of Common  Stock,  (B) if as a result of such
          failure the Holder shall suffer any direct damages or liabilities from
          such failure (including,  without limitation,  margin interest and the
          cost of  purchasing  securities to cover a sale (whether by the Holder
          or the  Holder's  securities  broker) or borrowing of shares of Common
          Stock by the Holder for  purposes  of settling  any trade  involving a
          sale of shares of Common  Stock made by the  Holder  during the period
          beginning  on the  Issuance  Date and  ending on the date the  Company
          delivers or causes to be delivered to the Holder such shares of Common
          Stock),  then the  Company  shall upon demand of the Holder pay to the
          Holder an amount equal to the actual, direct out-of-pocket damages and
          liabilities  suffered by the Holder by reason thereof which the Holder
          documents to the reasonable  satisfaction  of the Company,  so long as
          the Holder  shall have given the  Company a Holder  Share  Notice with
          respect  to such  shares of Common  Stock,  and (C) the  Holder may by
          written notice (which may be given by mail, courier,  personal service
          or telephone line  facsimile  transmission)  or oral notice  (promptly
          confirmed  in  writing),  given at any time prior to  delivery  to the
          Holder of the shares of Common Stock  issuable in connection  with any
          exercise  of the  Holder's  rights by reason of which such  shares are
          deliverable,  rescind such exercise in whole or in part, in which case
          the Holder  shall  thereafter  be entitled to exercise its rights with
          respect to that  portion of this Note as to which such  exercise is so
          rescinded  and to exercise its other rights and remedies  with respect
          to such  failure by the Company.  Notwithstanding  the  foregoing  and
          Section  4(b)(ii),  (x) the Company  shall not be liable to the Holder
          under clauses (A) and (B) of the immediately preceding sentence or (y)
          for Conversion  Delay  Payments,  in either such case of the preceding
          clause (x) or (y) to the extent the  failure of the Company to deliver
          or to cause to be delivered  such shares of Common Stock  results from
          fire,  flood,  storm,  earthquake,  shipwreck,  strike,  war,  acts of
          terrorism,  crash involving  facilities of a common  carrier,  acts of
          God, or any similar event outside the control of the Company (it being


<PAGE>

          understood that the action or failure to act of the Company's Transfer
          Agent shall not be deemed an event  outside the control of the Company
          except to the extent resulting from fire,  flood,  storm,  earthquake,
          shipwreck,  strike, war, acts of terrorism, crash involving facilities
          of a common  carrier,  acts of God, or any similar  event  outside the
          control  of such  Transfer  Agent or the  bankruptcy,  liquidation  or
          reorganization of such Transfer Agent under any bankruptcy, insolvency
          or other similar law).  The Holder shall notify the Company in writing
          (or by  telephone  conversation,  confirmed in writing) as promptly as
          practicable  following  the third  Trading  Day after the due date for
          delivery to it of shares of Common Stock under this Note if the Holder
          becomes  aware that such shares of Common  Stock so issuable  have not
          been  received  as  provided  herein,  but any failure so to give such
          notice  shall  not  affect  the  Holder's  rights  under  this Note or
          otherwise.  If  pursuant  to this  Section  4(b)(iii)  the  Company is
          relieved of its obligation to make Conversion Delay Payments, then the
          Principal  Amount of this Note for which a Conversion  Notice has been
          given and for which the  Company  has not  issued the shares of Common
          Stock within the period provided in Section 4(b)(ii) shall continue to
          bear  interest at the  applicable  rate provided in this Note from the
          applicable  Conversion  Date to the date the  Company  so issues  such
          shares of Common Stock.









<PAGE>

                  (c)      Conversion Price Adjustments.
                              (I)  STOCK DIVIDENDS, SPLITS AND COMBINATIONS. If
          the Company or any of its subsidiaries, at any time while this Note is
          outstanding,  shall  (A)  pay a stock  dividend  or  otherwise  make a
          distribution  or  distributions  on any equity  securities  (including
          Common Stock  Equivalents)  in shares of Common  Stock,  (B) subdivide
          outstanding  Common  Stock  into a larger  number  of  shares,  or (C)
          combine outstanding Common Stock into a smaller number of shares, then
          the Conversion Price shall be multiplied by a fraction,  the numerator
          of which  shall be the  number of shares of Common  Stock  outstanding
          before such event and the  denominator of which shall be the number of
          shares of Common Stock  outstanding  after such event.  Any adjustment
          made  pursuant  to  this  Section   4(c)(i)  shall  become   effective
          immediately   after  the  record   date  for  the   determination   of
          stockholders  entitled to receive such  dividend or  distribution  and
          shall become  effective  immediately  after the effective  date in the
          case of a subdivision or combination.

                              (II) DISTRIBUTIONS. Neither the Company nor any of
          its  subsidiaries,  at  any  time  this  Note  is  outstanding,  shall
          distribute  to all or  substantially  all holders of Common  Stock (a)
          evidences of its  indebtedness or (b) assets or (c) cash or (d) rights
          (other  than  rights  issued  pursuant  to a  shareholder  rights plan
          adopted for the benefit of  stockholders  generally,  the rights under
          which are  attached to shares of Common  Stock  until a trigger  event
          such as a tender offer, change of control, accumulation of a specified
          percentage  of the  outstanding  shares  of  Common  Stock or  similar
          events) or (e) warrants to  subscribe  for or purchase any security of
          the Company or any of its subsidiaries (excluding those referred to in
          Section 4(c)(i) above) without  obtaining the prior written consent of
          the Holder.

                           (III)    ADJUSTMENT FOR CERTAIN ISSUANCES.

                  (A) If, at any time (or from time to time)  during  the period
         beginning on the Issuance Date and ending on the second  anniversary of
         the Issuance  Date, the Company issues shares of Common Stock or Common
         Stock Equivalents (collectively,  the "Newly Issued Shares") at a price
         per share at which the Company  sells such shares of Common  Stock,  or
         the  price  per  share  at  which  the  holders  of such  Common  Stock
         Equivalents  are  entitled  to  acquire  shares  of Common  Stock  upon
         conversion or exercise thereof, which is less than the Conversion Price
         in effect at the time of such  issuance,  then  following such issuance
         the  Conversion  Price  shall be  reduced  to the price per share  that
         equals the price per share (or  weighted  average  price per share,  if
         such  shares  are  issued,  or such  Common  Stock  Equivalents  may be
         converted or  exercised,  at different  prices) at which such shares of
         Common Stock are issued or at which such Common Stock  Equivalents  may
         be converted or exercised.  The  provisions  of this Section  4(c)(iii)
         shall be applicable to successive  issuances of Common Stock and Common
         Stock Equivalents.

                  (B) Notwithstanding the foregoing, no adjustment shall be made

<PAGE>

 under Section 4(c)(iii)(A) by reason of:

                           (1) the  issuance  by the Company of shares of Common
         Stock pro rata to all  holders of the  Common  Stock so long as (i) any
         adjustment  required  by Section  4(c)(i) is made and (ii) the  Company
         shall have given  notice  thereof  to the  Holder  pursuant  to Section
         4(c)(vii);

                           (2) the  issuance by the Company of this Note and the
         Warrant  pursuant  to the  Purchase  Agreement  or the  issuance by the
         Company  of shares  of Common  Stock  upon  conversion  of this Note in
         accordance with its terms or upon exercise of the Warrant in accordance
         with its terms; or

                           (3) the  issuance by the  Company of Common  Stock or
         options  to  purchase   Common  Stock  to   employees,   directors  and
         consultants  (or the exercise of such options by  employees,  directors
         and consultants) under the Company's  non-qualified and incentive stock
         option plans  existing as of the date  hereof,  as amended from time to
         time hereafter or any other stock compensation plan duly adopted by the
         Board of Directors.

For the purposes of the  adjustments in this Section  4(c)(iii),  in the case of
the issuance of any Common Stock  Equivalents,  the maximum  number of shares of
Common Stock issuable upon exercise, exchange or conversion of such Common Stock
Equivalents  shall  be  deemed  to be  outstanding,  provided  that  no  further
adjustment shall be made upon the actual issuance of Common Stock upon exercise,
exchange or conversion of such Common Stock Equivalents.
                  (IV)  ROUNDING OF  ADJUSTMENTS.  All  calculations  under this
Section 4 or Section 2 shall be made to the nearest cent or the nearest  1/100th
of a share, as the case may be.
                  (V) NOTICE OF  ADJUSTMENTS.  Whenever the Conversion  Price is
adjusted  pursuant to Section  4(c)(i),  (ii) or (iii) above,  the Company shall
promptly deliver to the Holder a notice setting forth the Conversion Price after
such  adjustment and setting forth a brief statement of the facts requiring such
adjustment, provided that any failure to so provide such notice shall not affect
the automatic adjustment hereunder.
                  (VI) CHANGE IN CONTROL TRANSACTIONS.  In case of any Change in
Control Transaction,  the Holder shall have the right thereafter, at its option,
(A) to convert this Note, in whole or in part, at the then applicable Conversion
Price  into the  shares of stock  and other  securities,  cash  and/or  property
receivable  upon or deemed to be held by holders of Common Stock  following such
Change in Control Transaction,  and the Holder shall be entitled upon such event
to receive  such  amount of  securities,  cash or  property as the shares of the
Common  Stock of the  Company  into which  this Note  could have been  converted
immediately prior to such Change in Control Transaction would have been entitled
if such conversion were permitted  (determined without regard to any limitations
contained  in  Section  4(i)  hereof  or  equivalent  provisions  in  the  other
Transaction Documents), subject to such further applicable adjustments set forth
in this Section 4, or (B) to require the Company or its successor to redeem this
Note,  in  whole  or in  part,  at a  redemption  price  equal  to  125%  of the


<PAGE>

outstanding Principal Amount being redeemed,  plus accrued interest thereon. The
terms of any such Change in Control  Transaction  shall include such terms so as
to continue to give to the Holder the right to receive the amount of securities,
cash and/or property upon any conversion or redemption  following such Change in
Control  Transaction  to which a holder of the number of shares of Common  Stock
deliverable  upon  conversion of this Note  immediately  prior to such Change in
Control  Transaction  would have been  entitled  to  receive  in such  Change in
Control  Transaction  and if such Holder had continued to hold such  securities,
cash  and/or  property  until the date of such  conversion  or  redemption,  and
interest  payable  hereunder after such Change in Control  Transaction  shall be
paid in cash or such new securities  and/or  property,  at the Holder's  option.
This  provision   shall   similarly   apply  to  successive   reclassifications,
consolidations, mergers, amalgamations, sales, transfers or share exchanges.
                  (VII) NOTICE OF CERTAIN EVENTS. If:
                           A.       the Company shall declare a dividend (or any
                                    other distribution) on its Common Stock; or

                           B.       the   Company   shall   declare   a  special
                                    nonrecurring  cash  dividend  on or a tender
                                    offer for,  offer to purchase or  redemption
                                    of its Common Stock; or

                           C.       the Company shall  authorize the granting to
                                    all  holders of the Common  Stock  rights or
                                    warrants to  subscribe  for or purchase  any
                                    shares of  capital  stock of any class or of
                                    any rights; or

                           D.       the  approval  of  any  stockholders  of the
                                    Company shall be required in connection with
                                    any  reclassification of the Common Stock of
                                    the Company, any consolidation, amalgamation
                                    or merger to which the  Company  is a party,
                                    any sale or transfer of all or substantially
                                    all of the  assets  of the  Company,  of any
                                    compulsory  share of  exchange  whereby  the
                                    Common   Stock  is   converted   into  other
                                    securities, cash or property; or

                           E.       the Company shall authorize the voluntary or
                                    involuntary   dissolution,   liquidation  or
                                    winding up of the affairs of the Company; or

                           F.       there  exists  an  agreement  to  which  the
                                    Company  is a party  or by which it is bound
                                    providing    for   a   Change   in   Control
                                    Transaction,   or  a   Change   in   Control
                                    Transaction has occurred;


<PAGE>


                                    then the Company  shall cause to be filed at
                                    each  office  or agency  maintained  for the
                                    purpose  of  conversion  of this  Note,  and
                                    shall  cause to be mailed  to the  Holder at
                                    its last address as it shall appear upon the
                                    books  of the  Company,  on or  prior to the
                                    date notice of such matter to the  Company's
                                    stockholders  generally  is given,  a notice
                                    stating (x) the date on which a record is to
                                    be taken for the  purpose of such  dividend,
                                    distribution,   tender   offer,   offer   to
                                    purchase, redemption, rights or warrants, or
                                    if a record is not to be taken,  the date as
                                    of which  the  holders  of  Common  Stock of
                                    record  to be  entitled  to  such  dividend,
                                    distributions,   tender   offer,   offer  to
                                    purchase, redemption, rights or warrants are
                                    to be  determined  or (y) the  date on which
                                    such    reclassification,     consolidation,
                                    amalgamation,  merger, sale, transfer, share
                                    exchange or Change in Control Transaction is
                                    expected to become  effective or close,  and
                                    the  date as of which  it is  expected  that
                                    holders of Common  Stock of record  shall be
                                    entitled to exchange  their shares of Common
                                    Stock for securities, cash or other property
                                    deliverable   upon  such   reclassification,
                                    consolidation,  amalgamation,  merger, sale,
                                    transfer,   share   exchange  or  Change  in
                                    Control Transaction.


<PAGE>


                  (d)  Reservation  and Issuance of Underlying  Securities.  The
Company  covenants  that it will at all times  reserve from its  authorized  and
unissued  Common Stock a sufficient  number of shares  solely for the purpose of
issuance  upon  conversion  in full of this  Note  and  exercise  in full of the
Warrant,  free from preemptive  rights or any other actual  contingent  purchase
rights of persons other than the Holder (subject to any additional  requirements
of the  Company  as to  reservation  of such  shares  set forth in the  Purchase
Agreement  and taking into  account the  adjustments  under this  Section 4, but
determined without regard to any ownership  limitations  contained in this Note,
the Warrant or the Purchase  Agreement).  The Company  represents,  warrants and
covenants that all shares of Common Stock that shall be so issuable shall,  upon
issue, be duly authorized, validly issued, fully paid, and nonassessable.
                  (e) No  Fractions.  Upon a  conversion  hereunder  the Company
shall not be required to issue stock  certificates  for a fraction of a share of
Common Stock, but may, if otherwise permitted, make a cash payment in respect of
any fraction of a share based on the closing price of a share of Common Stock at
such time. If the Company elects not, or is unable, to make such a cash payment,
the Holder shall be entitled to receive, in lieu of the fraction of a share, one
whole share of Common Stock.
                  (f) Charges, Taxes and Expenses.  Issuance of shares of Common
Stock  upon the  conversion  of this Note  shall be made  without  charge to the
Holder for any issue or transfer tax or other  incidental  expense in respect of
the  issuance of such shares,  all of which taxes and expenses  shall be paid by
the  Company,  and such  shares  shall be issued in the name of the Holder or in
such name or names as may be directed by the Holder; provided,  however, that in
the event  certificates  for  shares of Common  Stock are to be issued in a name
other than the name of the Holder, the applicable  Conversion Notice, when given
for such  conversion  shall be accompanied or followed by an assignment form for
the  applicable  portion  of this Note or such  shares,  as the case may be; and
provided further, that the Company shall not be required to pay any tax or taxes
which may be payable in respect of any such transfer.
                  (g) Cancellation. After the entire Principal Amount (including
accrued but unpaid interest and default  payments at any time owed on this Note)
has  been  paid in  full  or  converted  into  Common  Stock,  this  Note  shall
automatically  be deemed  canceled and the Holder shall promptly  surrender this
Note to the Company at the  Company's  principal  executive  offices;  provided,
however,  that the failure to surrender  this Note shall not delay or limit such
cancellation.
                  (h)  Notice   Procedures.   Any  and  all   notices  or  other
communications  or  deliveries  to be  provided  by the Holder  under this Note,
including,  without limitation,  any Conversion Notice,  shall be in writing and
delivered  personally,  by confirmed  facsimile,  or by a nationally  recognized
overnight  courier service to the Company at the facsimile  telephone  number or
address of the  principal  place of  business of the Company as set forth in, or
provided  pursuant  to, the  Purchase  Agreement.  Any and all  notices or other
communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered  personally,  by facsimile,  or by a nationally recognized
overnight  courier  service  addressed to the Holder at the facsimile  telephone
number or address of the Holder appearing on the books of the Company,  or if no
such facsimile  telephone number or address  appears,  at the principal place of
business  of the  Holder.  Any  notice  or  other  communication  or  deliveries
hereunder shall be deemed delivered (i) upon receipt, when delivered personally,


<PAGE>

(ii) when sent by facsimile, upon receipt if received on a Business Day prior to
5:00 p.m. (Central Time), or on the first Business Day following such receipt if
received on a Business  Day after 5:00 p.m.  (Central  Time) or on a day that is
not a Business  Day or (iii) upon  receipt,  when  deposited  with a  nationally
recognized overnight courier service.
                  (i) 9.99% Limitations.
                           (A)   Notwithstanding   anything   to  the   contrary
         contained herein,  the number of shares of Common Stock that the Holder
         shall have the right to acquire upon  conversion of this Note shall not
         exceed a number  that,  when  added to the  total  number  of shares of
         Common Stock  deemed  beneficially  owned by the Holder  (other than by
         virtue of the ownership of  securities or rights to acquire  securities
         (including  this Note and the  Warrant)  that have  limitations  on the
         Holder's  right  to  convert,  exercise  or  purchase  similar  to  the
         limitation set forth herein),  together with all shares of Common Stock
         deemed  beneficially  owned at such time  (other  than by virtue of the
         ownership  of  securities  or rights to  acquire  securities  that have
         limitations  on the right to convert,  exercise or purchase  similar to
         the limitation set forth herein) by the Holder's  "affiliates"  at such
         time (as defined in Rule 144 of the Securities  Act) (the  "Aggregation
         Parties") that would be aggregated for purposes of determining  whether
         a group exists or for purposes of determining  the Holder's  beneficial
         ownership,  in either such case for  purposes  of Section  13(d) of the
         Exchange  Act  and  Regulation  13D-G   thereunder,   would  result  in
         beneficial  ownership by the Holder or such group of more than 9.99% of
         the  outstanding  shares of Common  Stock  (the  "Restricted  Ownership
         Percentage"). The Holder shall have the right at any time and from time
         to time to reduce its Restricted Ownership Percentage  immediately upon
         notice to the Company in the event and only to the extent that  Section
         16 of the  Exchange  Act or the rules  promulgated  thereunder  (or any
         successor  statute  or  rules) is  changed  to  reduce  the  beneficial
         ownership percentage limitation thereunder from 10%. If at any time the
         limits in this Section 4(i) make this Note inconvertible in whole or in
         part,  the  Company  shall not by reason  thereof  be  relieved  of its
         obligation  to issue shares of Common Stock at any time or from time to
         time  thereafter  as shares of Common Stock may be issued in compliance
         with such restrictions.
                           (B) For purposes of this Section 4(i), in determining
         the  number of  outstanding  shares of  Common  Stock at any time,  the
         Holder may rely on the number of outstanding  shares of Common Stock as
         reflected in (1) the Company's then most recent Form 10-Q, Form 10-K or
         other  public  filing  with the SEC,  as the case may be,  (2) a public
         announcement by the Company that is later than any such filing referred
         to in the preceding  clause (1), or (3) any other notice by the Company
         or its  transfer  agent  setting  forth the  number of shares of Common
         Stock outstanding.  Upon the written or oral request of the Holder, the
         Company shall within one Business Day confirm  orally and in writing to
         the Holder the number of shares of Common  Stock then  outstanding.  In
         any case,  the number of  outstanding  shares of Common  Stock shall be
         determined  after giving effect to the conversion or exercise of Common
         Stock Equivalents,  including this Note and the Warrant,  by the Holder
         or its Aggregation  Parties,  in each such case subsequent to, the date
         as of which  such  number of  outstanding  shares  of Common  Stock was


<PAGE>

         reported.

SECTION 5.        DEFAULTS AND REMEDIES.

                  (A) EVENTS OF DEFAULT. An "Event of Default" is: (i) a failure
to pay any Principal  Amount or accrued but unpaid interest thereon of this Note
on the date such payment is due (to the extent such principal  and/or amount has
not been converted into Common Stock in accordance with the terms hereof), which
failure continues for two Business Days after written notice of such non-payment
has been received by the Company from the Holder; (ii) a failure timely to issue
Underlying  Shares  upon and in  accordance  with terms  hereof,  which  failure
continues  for ten Business Days after the Company has received  written  notice
from the Holder  informing  the  Company  that it has failed to issue  shares or
deliver  stock  certificates  prior to the  fifth  Business  Day  following  the
applicable  Conversion  Date;  (iii) failure by the Company for twenty (20) days
after written  notice has been received by the Company from the Holder to comply
with any material provision (other than as provided in the immediately preceding
clauses  (i)  and  (ii))  of any of  this  Note,  the  Purchase  Agreement,  the
Registration Rights Agreement,  the Warrant or any other agreement or instrument
of  the  Company  or  between  the  Company  and  the  Holder  relating  thereto
(including, without limitation the failure to redeem this Note upon the Holder's
request following a Change in Control Transaction pursuant to Section 4(c)(vi));
(iv) a material  breach by the Company of its  representations  or warranties in
this Note, the Purchase  Agreement,  the  Registration  Rights  Agreement or the
Warrant;  (v) any default after any cure period under, or acceleration  prior to
maturity of, any note,  mortgage,  indenture or instrument under which there may
be issued or by which there may be secured or  evidenced  any  indebtedness  for
money borrowed by the Company for in excess of $1 million, or for money borrowed
the repayment of which is guaranteed by the Company for in excess of $1 million,
whether such indebtedness or guarantee now exists or shall be created hereafter;
(vi) if the Company is subject to any Bankruptcy Event; (vii) if (x) the Company
fails to obtain the stockholder  approval  contemplated by Section 6.1(a) of the
Purchase  Agreement as and when required thereby,  (y) under the rules of Nasdaq
the 20% Cap is applicable  to the  Company's  issuance of shares of Common Stock
upon  conversion  of and issuance of shares of Common Stock upon exercise of the
Warrant  without  such  stockholder  approval,  and (z) the Company is unable to
issue additional  shares of Common Stock upon conversion of this Note within the
20% Cap; or (viii) if the Registration  Statement required by Section 2(a)(i) of
the Registration  Rights  Agreement is not declared  effective by the SEC within
one  hundred  and  twenty  (120)  days   following  the  Closing  Date,  or  the
Registration  Statement required by Section 2(a)(ii) of the Registration  Rights
Agreement  is not  declared  effective  by the SEC within one hundred and twenty
(120) days following  demand of the Holder pursuant to the  Registration  Rights
Agreement.

                  (b) Remedies. If an Event of Default occurs and is continuing,
the Holder may  declare  all of the then  outstanding  Principal  Amount of this
Note,  and any  accrued  and  unpaid  interest  thereon,  to be due and  payable
immediately in cash, except that in the case of an Event of Default arising from
events described in clauses (v) and (vi) of Section 5(a), this Note shall become


<PAGE>

automatically  due and payable without further action or notice,  and the Holder
may exercise all other rights and remedies available at law or in equity. In the
event of such acceleration, the amount due and owing to the Holder shall be 125%
of the  outstanding  Principal  Amount of this Note (plus all accrued and unpaid
interest, if any). In any event the Company shall pay interest on such amount in
cash at the  Default  Rate to the Holder if such  amount is not paid  within one
Business  Day after such  acceleration.  The  remedies  under this Note shall be
cumulative.

SECTION 6.        CERTAIN COVENANTS; GENERAL.
                  (a) Rule 144A Information Requirement. Within the period prior
to the  expiration of the holding  period  applicable to sales hereof under Rule
144(k)  under the  Securities  Act (or any  successor  provision),  the  Company
covenants and agrees that it shall, during any period in which it is not subject
to Section 13 or 15(d) under the Exchange Act, make  available to the Holder and
any prospective purchaser of this Note from the Holder, the information required
pursuant to Rule  144A(d)(4)  under the  Securities  Act upon the request of the
Holder  and it will  take  such  further  action as the  Holder  may  reasonably
request,  all to the extent  required  from time to time to enable the Holder to
sell  this Note  without  registration  under  the  Securities  Act  within  the
limitations of the exemption  provided by Rule 144A, as Rule 144A may be amended
from time to time.  Upon the request of the Holder,  the Company will deliver to
the  Holder  a  written  statement  as to  whether  it has  complied  with  such
requirements.
                  (b)  Payment  of  Expenses.  The  Company  agrees  to pay  all
reasonable charges and expenses,  including attorneys' fees and expenses,  which
may be incurred by the Holder in seeking to enforce this Note.
                  (c) Savings Clause. In case any provision of this Note is held
by a court of  competent  jurisdiction  to be  excessive  in scope or  otherwise
invalid or  unenforceable,  such provision shall be adjusted rather than voided,
if possible,  so that it is enforceable to the maximum extent possible,  and the
validity and enforceability of the remaining provisions of this Note will not in
any way be  affected  or  impaired  thereby.  In no event  shall  the  amount of
interest  paid  hereunder  exceed the  maximum  rate of  interest  on the unpaid
principal balance hereof allowable by applicable law. If any sum is collected in
excess of the applicable  maximum rate, the excess collected shall be applied to
reduce the principal debt. If the interest actually collected hereunder is still
in excess of the applicable  maximum rate, the interest rate shall be reduced so
as not to exceed the maximum allowable under law.
                  (d)  Amendment.  Neither  this Note nor any term hereof may be
amended,  waived,  discharged or terminated  other than by a written  instrument
signed by the Company and Holder.
                  (e)  Assignment,  Etc. The Holder may assign or transfer  this
Note, subject to compliance with applicable securities laws, without the consent
of the Company, except that the Holder may not assign or transfer this Note to a
Person who is a business  competitor of the Company in any  significant  respect
without the Company's prior written  consent,  which the Company may withhold in
its sole discretion.  The Holder shall notify the Company of any such assignment
or transfer promptly. The Company may not assign its rights or obligations under
this Note.  This Note shall be binding upon the Company and its  successors  and
shall  inure to the  benefit  of the  Holder and its  successors  and  permitted
assigns.


<PAGE>

                  (f) No  Waiver.  No  failure  on the  part  of the  Holder  to
exercise,  and no delay in exercising any right, remedy or power hereunder shall
operate as a waiver  thereof,  nor shall any single or partial  exercise  by the
Holder of any  right,  remedy or power  hereunder  preclude  any other or future
exercise of any other right,  remedy or power.  Each and every right,  remedy or
power hereby granted to the Holder or allowed it by law or other agreement shall
be cumulative and not exclusive of any other, and may be exercised by the Holder
from time to time.
                  (g) Governing Law; Jurisdiction.
                              (I) GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY
          AND  CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF THE  STATE OF  NEVADA
          WITHOUT REGARD TO ANY CONFLICTS OF LAWS PROVISIONS  THEREOF THAT WOULD
          OTHERWISE   REQUIRE   THE   APPLICATION   OF  THE  LAW  OF  ANY  OTHER
          JURISDICTION.

                              (II) JURISDICTION. The Company irrevocably submits
          to the exclusive  jurisdiction of the United States District Court for
          the Northern District of Texas located in Dallas County, Dallas, Texas
          (such  consent shall not be deemed a general  consent to  jurisdiction
          and service for any third party) over any suit,  action, or proceeding
          arising  out of or  relating  to this Note.  The  Company  irrevocably
          waives, to the fullest extent permitted by law, any objection which it
          may now or hereafter have to the laying of the venue of any such suit,
          action, or proceeding  brought in such a court and any claim that such
          suit, action, or proceeding has been brought in an inconvenient forum.
                           The Company  agrees that the service of process  upon
         it mailed by certified or registered mail (and service so made shall be
         deemed  complete  five  Business Days after the same has been posted as
         aforesaid)  by  personal  service  shall be  deemed  in  every  respect
         effective  service of process  upon it in any such suit or  proceeding.
         Nothing  herein shall  affect  Holder's  right to serve  process in any
         other  manner  permitted  by  law.  The  Company  agrees  that a  final
         non-appealable  judgment  in any  such  suit  or  proceeding  shall  be
         conclusive and may be enforced in other  jurisdictions  by suit on such
         judgment or in any other lawful manner.
                           (III)  NO  JURY  TRIAL.  The  Company  knowingly  and
         voluntarily  waives  any and all  rights it may have to a trial by jury
         with respect to any litigation  based on, or arising out of, under,  or
         in connection with, this Note.
                  (i) Replacement Notes. This Note may be exchanged by Holder at
any time and from time to time for a Note or Notes with different  denominations
representing  an equal aggregate  outstanding  Principal  Amount,  as reasonably
requested by Holder,  upon surrendering the same. No service charge will be made
for such registration or exchange. In the event that Holder notifies the Company
that this Note has been lost, stolen or destroyed,  a replacement Note identical
in all  respects  to the  original  Note  (except  for  registration  number and
Principal Amount,  if different than that shown on the original Note),  shall be
issued to the Holder, without requirement for any surety bond, provided that the
Holder executes and delivers to the Company an agreement reasonably satisfactory
to the  Company  to  indemnify  the  Company  from  any loss  incurred  by it in
connection with this Note.


[Signature Page Follows]



<PAGE>


                  IN WITNESS  WHEREOF,  the  Company  has caused  this Note to
be duly executed on the day and in the year first above written.


                                               KNIGHTSBRIDGE FINE WINES, INC.



                                               By: /s/ Joel Shapiro
                                                   --------------------------
                                               Name:   Joel Shapiro
                                               Title:  President & CEO