Exhibit 10.1

                               PURCHASE AGREEMENT


                  THIS  PURCHASE  AGREEMENT  dated as of December 22, 2003 (this
"Agreement"),   by  and  between   KNIGHTSBRIDGE  FINE  WINES,  INC.,  a  Nevada
corporation  (the  "Company"),  and GRYPHON MASTER FUND, L.P., a Bermuda limited
partnership (the "Purchaser").

                              W I T N E S S E T H:

                  WHEREAS,  the  Purchaser  wishes to purchase from the Company,
and the Company  wishes to sell and issue to the  Purchaser,  upon the terms and
subject to the conditions of this Agreement,  (i) a Note (such  capitalized term
and all other  capitalized  terms used  herein  having the  respective  meanings
provided herein) in principal amount of $2,000,000, and (ii) a Warrant initially
entitling  the holder to purchase an  aggregate  of  1,111,111  shares of Common
Stock for the Purchase Price; and

                  WHEREAS,  at or before the  Closing,  the  parties  hereto are
executing and delivering,  one to the other, the Registration  Rights Agreement,
pursuant to which, among other things, the Company will agree to provide certain
registration   rights  under  the  1933  Act,  and  the  rules  and  regulations
promulgated  thereunder,  and applicable state securities laws for the resale of
the shares of Common Stock  issuable  upon  conversion  of the Note and issuable
upon exercise of the Warrant.

                  NOW THEREFORE, in consideration of the premises and the mutual
covenants made herein and for other good and valuable consideration, the receipt
and  sufficiency of which are hereby  acknowledged,  the parties hereto agree as
follows:

1.       DEFINITIONS.

                  1.1  As  used  in  this  Agreement,   the  terms  "Agreement",
"Company" and "Purchaser"  shall have the respective  meanings  assigned to such
terms in the introductory paragraph of this Agreement.

                  1.2 All the  agreements or  instruments  herein  defined shall
mean  such  agreements  or  instruments  as the same  may  from  time to time be
supplemented  or amended or the terms  thereof  waived or modified to the extent
permitted by, and in accordance with, the terms thereof and of this Agreement.

                  1.3 The  following  terms  shall have the  following  meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):

                  "Affiliate"  means,  with  respect  to any  Person,  any other


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Person  that  directly,  or  indirectly  through  one  or  more  intermediaries,
controls,  is controlled by or is under common control with the subject  Person.
For purposes of this definition, "control" (including, with correlative meaning,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean the possession,  directly or indirectly,  of the power
to direct or cause the direction of the  management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.

                  "Aggregation  Parties"  shall  have the  meaning  provided  in
Section 6.3(b).

                  "AMEX" means the American Stock Exchange, Inc.

                  "Approved  Markets" shall have the meaning provided in Section
6.9.

                  "Board  of  Directors"  means the  Board of  Directors  of the
Company.

                  "Business Day" means any day other than a Saturday,  Sunday or
a day on which commercial banks in the City of Dallas are authorized or required
by law or executive order to remain closed.

                  "Change in Control  Transaction"  shall have the meaning to be
provided or provided in the Note.

                  "Closing"  means the closing of the  purchase  and sale of the
Note and Warrant on the Closing Date.

                  "Closing Date" means 10 a.m., Dallas,  Texas time, on December
22, 2003, or such other time or date as mutually agreed by the parties hereto.

                  "Closing  Location"  means  100  Crescent  Court,  Suite  590,
Dallas, Texas 75201.

                  "Common Stock" means the Common Stock, $.001 per share, of the
Company.

                  "Common   Stock   Equivalent"   means  any  warrant,   option,
subscription  or  purchase  right with  respect to shares of Common  Stock,  any
security  convertible into,  exchangeable for, or otherwise entitling the holder
thereof to acquire, shares of Common Stock or any warrant, option,  subscription
or purchase right with respect to any such  convertible,  exchangeable  or other
security.

                  "Encumbrances"  means all mortgages,  deeds of trust,  claims,
security  interests,  liens,  pledges,  leases,  subleases,   charges,  escrows,
options,  proxies,  rights of  occupancy,  rights of first  refusal,  preemptive
rights, covenants, conditional limitations,  hypothecations,  prior assignments,
easements,  title retention agreements,  indentures,  security agreements or any
other encumbrances of any kind.


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                  "Environmental Law" shall have the meaning provided in Section
3.17.

                  "Event of  Default"  shall have the  meaning to be provided or
provided in the Note.

                  "Excluded  Shares" shall have the meaning  provided in Section
6.3(b).

                  "Generally  Accepted  Accounting  Principles"  means,  for any
Person, the United States generally accepted accounting principles and practices
applied  by such  Person  from time to time in the  preparation  of its  audited
financial statements.

                  "Intellectual   Property"  means  all   franchises,   patents,
trademarks,  service marks,  tradenames  (whether  registered or  unregistered),
copyrights,  corporate names, licenses,  trade secrets,  proprietary software or
hardware, proprietary technology,  technical information,  discoveries,  designs
and other  proprietary  rights,  whether  or not  patentable,  and  confidential
information (including, without limitation,  know-how, processes and technology)
used in the  conduct of the  business of the  Company or any  Subsidiary,  or in
which the Company or any Subsidiary has an interest.

                  "Material  Adverse Effect" means a material  adverse effect on
the (i)  business,  properties,  operations,  condition  (financial  or  other),
results of operations or prospects of the Company and the Subsidiaries, taken as
a whole; (ii) the validity or  enforceability  of, or the ability of the Company
to perform its obligations under, the Transaction Documents; or (iii) rights and
remedies of the Purchaser under the terms of the Transaction Documents.

                  "Nasdaq" means the Nasdaq National Market.

                  "Nasdaq Small Cap" means the Nasdaq Small Cap Market.

                  "1934  Act"  means the  Securities  Exchange  Act of 1934,  as
amended, and the rules and regulations of the SEC promulgated thereunder.

                  "1933 Act" means the Securities  Act of 1933, as amended,  and
the rules and regulations of the SEC promulgated thereunder.

                  "Note" means the Company's 7.5% Secured  Convertible  Note due
2006 in the principal  amount of  $2,000,000.00  in the form attached as EXHIBIT
10.2.

                  "NYSE" means the New York Stock Exchange, Inc.

                  "OTCBB" means the OTC Bulletin Board.

                  "Person"  means  an  individual,   corporation,   partnership,
limited  liability  company,  trust,  business trust,  association,  joint stock

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company,  joint venture,  pool, syndicate,  sole proprietorship,  unincorporated
organization,   governmental   authority   or  any  other  form  of  entity  not
specifically listed herein.

                  "Purchase Price" means the amount shown on the signature pages
to this Agreement as the Purchaser's Purchase Price.

                  "Purchaser  Share Notice"  shall have the meaning  provided in
Section 6.12.

                  "Registration  Rights Agreement" means the Registration Rights
Agreement by and between the Company and the  Purchaser in the form  attached as
EXHIBIT 10.4.

                  "Registration  Statement"  shall have the meaning  provided in
the Registration Rights Agreement.

                  "Regulation D" means Regulation D adopted by the SEC under the
1933 Act.

                  "Restricted  Ownership  Percentage"  shall  have  the  meaning
provided in Section 6.3(b).

                  "SEC" means the U.S. Securities and Exchange Commission.

                  "SEC Filings" means the Company's Annual Report on Form 10-KSB
for the fiscal year ended March 31,  2003,  and all other  reports  filed by the
Company pursuant to Section 13 or 15(d) of the 1934 Act since March 31, 2003.

                  "Securities"  means  the  Note, the  Underlying  Shares,   the
Warrant and the Warrant Shares.

                  "Subsidiary"  means any corporation or other entity of which a
majority of the  capital  stock or other  ownership  interests  having  ordinary
voting  power to elect a majority  of the board of  directors  or other  persons
performing similar functions are at the time directly or indirectly owned by the
Company.

                  "Transaction Documents" means this Agreement, the Registration
Rights Agreement, the Note and the Warrant.

                  "20% Cap" shall have the meaning provided in Section 6.1(a).

                  "2002 10-K" means the  Company's  Annual Report on Form 10-KSB
for the fiscal year ended March 31, 2003, as filed as the SEC.

                  "Underlying Shares" means the shares of Common Stock issued or
issuable upon conversion of the Note.

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                  "Variable Rate  Transaction"  means a transaction in which the
Company issues or sells any Common Stock or Common Stock  Equivalent (a) that is
convertible  into,  exchangeable  or  exercisable  for, or includes the right to
receive  additional shares of Common Stock either (x) at a conversion,  exercise
or  exchange  rate or other  price that is based  upon  and/or  varies  with the
trading  prices of or  quotations  for the  Common  Stock at any time  after the
initial  issuance  of  such  debt  or  equity  securities,  or (y)  with a fixed
conversion,  exercise, exchange or purchase price that is subject to being reset
at some future date after the initial  issuance of Common  Stock or Common Stock
Equivalent or upon the occurrence of specified or contingent  events directly or
indirectly  related to the  business of the Company or the market for the Common
Stock  (but  excluding  standard  stock  split,  reverse  stock  split and stock
dividend  anti-dilution  provisions),  or  (b)  pursuant  to  an  "equity  line"
structure  which provides for the sale,  from time to time, of securities of the
Company which are registered for sale or resale pursuant to the 1933 Act.

                  "Warrant" means the Company's Common Stock Purchase Warrant in
the form attached hereto as EXHIBIT 10.3.

                  "Warrant  Shares"  means the shares of Common  Stock  issuable
upon exercise of or otherwise pursuant to the Warrant.

2.       PURCHASES AND SALES OF THE NOTE AND WARRANT.

                  2.1  Purchase  and Sale.  Upon the terms  and  subject  to the
conditions of this Agreement,  the Purchaser  hereby agrees to purchase from the
Company, and the Company hereby agrees to sell to the Purchaser,  on the Closing
Date, the Note and the Warrant for the Purchase Price.

                  2.2  Payment.  Payment by the Purchaser of the  Purchase Price
to the Company at the Closing on the Closing Date shall be made as follows:

                  (a) the  Purchaser  shall  pay to Warren W.  Garden,  P.C.  an
amount equal to $35,000 payable by the Company  pursuant to Section 9.5, by wire
transfer of immediately available funds to an account designated by such firm;

                  (b) the  Purchaser  shall pay to CK Cooper & Company an amount
equal to  $140,000  payable  by the  Company  to such firm as a finder,  by wire
transfer of immediately  available funds to an account  designated by such firm;
and

                  (c)  Purchaser  shall pay to the  Company  the  balance of the
Purchase Price, after determination and deduction therefrom of the amounts to be
paid  pursuant to  Sections  2.2(a) and (b),  by wire  transfer  of  immediately
available funds to an account designated by the Company.

                  (d) For all purposes, upon payment of the amounts provided for
in this  Section 2.2,  the  Purchaser  shall be deemed to have paid the Purchase


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Price in full to the Company and to have  disbursed on behalf of the Company the
amounts  provided in Sections  2.2(a) and (b). By agreeing to disburse  funds on
behalf of the  Company as provided  in this  Section  2.2, in no event shall the
Purchaser have any liability to any Person, including,  without limitation,  the
Persons identified in Sections 2.2(a) and (b), for payment or performance of any
obligation or liability of the Company to such Person.

                  2.3  CLOSING.  The sale and  purchase  of the Note and Warrant
shall occur on the Closing Date at the Closing  Location.  At the Closing on the
Closing Date, upon the terms and subject to the conditions of this Agreement,

                  (A) the Company shall issue and sell to the Purchaser the Note
and the Warrant upon payment by the  Purchaser to the Company of an amount equal
to the Purchase Price as provided in Section 2.2, and

                  (B) the Purchaser  shall pay to the Company an amount equal to
the Purchase Price, as provided in Section 2.2, against issuance and sale by the
Company to the Purchaser of the Note and Warrant.

3.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents
and warrants to, and covenants and agrees with, the Purchaser that:

                  3.1 Organization, Good Standing and Qualification. The Company
and each Subsidiary is a corporation  duly  incorporated,  validly  existing and
subsisting under the laws of the jurisdiction of its  incorporation  and has all
requisite  corporate  power  and  authority  to  carry  on its  business  as now
conducted  and to own its  properties.  The Company and each  Subsidiary is duly
qualified  to do business as a foreign  corporation  and is in good  standing in
each  jurisdiction  in which the  conduct of its  business or its  ownership  or
leasing of property makes such  qualification or licensing  necessary unless the
failure to so  qualify  would not be  reasonably  likely to result in a Material
Adverse  Effect.  The Company  has no  Subsidiaries  other than those  listed in
SCHEDULE 3.1 and has no investment  in any other Person except such  investments
as would be  classified  as current  assets on a balance  sheet of the  Company,
prepared in accordance with Generally Accepted Accounting Principles.

                  3.2  Authorization.  The Company has full corporate  power and
authority  and has taken all  requisite  action on the part of the Company,  its
officers,  directors  and  stockholders  necessary  for (i)  the  authorization,
execution and delivery of the Transaction  Documents,  (ii) the authorization of
the  performance  of  all  obligations  of the  Company  under  the  Transaction
Documents,  and (iii) the authorization,  issuance (or reservation for issuance)
and delivery of the Securities.  The Transaction Documents constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency,  reorganization,
moratorium and similar laws of general  applicability,  relating to or affecting
creditors' rights generally.

                  3.3  Capitalization.  Set forth on SCHEDULE  3.3 hereto is (a)


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the authorized  capital stock of the Company on the date hereof;  (b) the number
of shares of capital stock issued and  outstanding  on the date hereof;  (c) the
number of shares of capital  stock  issuable  pursuant  to the  Company's  stock
option,  stock  purchase,  stock award and similar plans;  and (d) the number of
shares of capital  stock  issuable and  reserved  for  issuance  pursuant to all
Common Stock  Equivalents  outstanding  or which the Company has agreed to issue
(other than the Note and the Warrant).  All of the issued and outstanding shares
of the Company's  capital stock have been duly authorized and validly issued and
are  fully  paid,  nonassessable  and free of  preemptive  rights.  No Person is
entitled to preemptive or similar  statutory or contractual  rights with respect
to any securities of the Company.  Except as set forth on SCHEDULE 3.3 or in the
SEC Filings,  there are no outstanding Common Stock Equivalents or other rights,
agreements or arrangements of any character under which the Company is or may be
obligated to issue any equity securities of any kind, and except as contemplated
by this Agreement, the Company is not currently in negotiations for the issuance
of any Common Stock Equivalents or capital stock of any kind. The Company has no
knowledge  of any voting  agreements,  buy-sell  agreements,  option or right of
first  purchase  agreements  or other  agreements  of any kind  among any of the
security  holders of the Company  relating to the securities of the Company held
by them.  Except  as set  forth on  SCHEDULE  3.3 and  except  for  registration
statements  currently on file,  the Company has not granted any Person the right
(which is now  outstanding  or effective) to require the Company to register any
securities  of the Company  under the 1933 Act,  whether on a demand basis or in
connection  with the  registration  of  securities  of the  Company  for its own
account or for the account of any other Person.

                  3.4 Valid  Issuance.  The Company does not have any obligation
to issue shares of Common Stock for which it has not reserved an adequate number
of shares of Common Stock.  The Note and Warrant are duly  authorized,  and such
Securities,  and the Underlying  Shares issuable upon conversion of the Note and
Warrant Shares issuable upon exercise of the Warrant,  have been duly authorized
and when issued in  accordance  herewith  and with the terms of the Note and the
Warrant,  will be validly issued, fully paid,  non-assessable and free and clear
of all  Encumbrances  and  restrictions,  except for  restrictions  on  transfer
imposed by applicable securities laws.

                  3.5 Consents.  The execution,  delivery and performance by the
Company of the  Transaction  Documents  and the offer,  issuance and sale of the
Securities  require no consent of,  action by or in respect of, or filing  with,
any Person,  governmental body, agency, or official other than filings that have
been or will be made  pursuant  to  applicable  state  securities  laws  and the
requirements  of the OTCBB and other than the filing of a Form D by the  Company
with the SEC, each of which the Company undertakes to file within the applicable
time periods.

                  3.6 Delivery of SEC Filings; Business; Non-Public Information.
The Company has timely filed all material  reports and other documents  required
to be filed with the SEC pursuant to the 1934 Act since  December  31, 1999.  At
their  respective  times of filing with the SEC, the SEC Filings complied in all
material  respects with the requirements of the 1934 Act and did not contain any


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untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein,  in the light of the circumstances
under which they were made, not misleading. The Company and the Subsidiaries are
engaged only in the business  described in the SEC Filings,  and the SEC Filings
contain a complete and accurate  description  of the business of the Company and
the  Subsidiaries.  The  Company  has  not  provided  to the  Purchaser  (i) any
information  required  to be filed under the 1934 Act that has not been so filed
or (ii) any  material  non-public  information  concerning  the  Company and the
Subsidiaries.

                  3.7 Use of Proceeds.  The proceeds of the sale of the Note and
the  Warrant  hereunder  shall be used by the  Company to acquire a  controlling
interest in a number of wine  producing  and  distribution  businesses  in Spain
owned by Senor  Manuel  Fernandez-Aviles  Zamorano  of  Madrid,  Spain,  and for
general working capital purposes.

                  3.8 No Material  Adverse Change.  Since the filing of the 2002
10-K or as otherwise  identified  and described in the SEC Filings  subsequently
filed by the Company with the SEC pursuant to the 1934 Act there has not been:

                           any  material  change  in  the  consolidated  assets,
         liabilities,  financial  condition or operating  results of the Company
         and the  Subsidiaries  from that reflected in the financial  statements
         included in the 2002 10-K,  except  changes in the  ordinary  course of
         business  which have not had,  in the  aggregate,  a  Material  Adverse
         Effect;

                           any  declaration  or payment of any dividend,  or any
         authorization  or payment of any  distribution,  on any of the  capital
         stock of the Company, or any redemption or repurchase of any securities
         of the Company or any Subsidiary;

                           any material damage,  destruction or loss, whether or
         not covered by insurance, to any assets or properties of the Company or
         any Subsidiary;

                           any waiver by the  Company  or  any  Subsidiary  of a
         material right or of a material debt owed to it which waiver is adverse
         to the Company or any Subsidiary;

                           any  satisfaction  or discharge of any Encumbrance or
         payment of any obligation by the Company or any  Subsidiary,  except in
         the  ordinary  course  of  business  and which is not  material  to the
         assets, properties,  prospects,  financial condition, operating results
         or business of the  Company and the  Subsidiaries  taken as a whole (as
         such  business is  presently  conducted  and the  Company has  publicly
         disclosed it is proposed to be conducted);

                           any  material  change  or  amendment  to  a  material
         contract or  arrangement  by which the Company or any Subsidiary or any
         of their respective assets or properties is bound or subject;

                           any  material  labor   difficulties  or  labor  union
         organizing  activities  with respect to employees of or  contractors to
         the Company or any Subsidiary;


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                           any transaction entered  into by the  Company  or any
         Subsidiary other than in the ordinary course of business; or

                           any other event or condition  of any  character  that
may have a Material Adverse Effect.

                  3.9  Registration  Statements.  During the  preceding  two (2)
years,  each  registration  statement  and any  amendment  thereto  filed by the
Company pursuant to the 1933 Act, as of the date such registration  statement or
amendment became  effective,  complied as to form in all material  respects with
the 1933 Act,  and did not contain any untrue  statement  of a material  fact or
omit to state any material  fact  required to be stated  therein or necessary in
order to make the statements made therein,  in light of the circumstances  under
which they were made, not misleading;  and each  prospectus or supplement  filed
pursuant  to Rule 424  under the 1933  Act,  as of its issue  date and as of the
closing of any sale of  securities  pursuant  thereto did not contain any untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.

                  3.10  Form  S-3  Eligibility.  The  Company  is not  currently
eligible to register the resale of its Common Stock in a secondary offering on a
registration  statement  on Form S-3  under the 1933  Act,  but shall  hereafter
endeavor in good faith to use its commercially  reasonable  efforts to become so
eligible.

                  3.11  No  Conflict,  Breach,  Violation  or  Default.  (a) The
execution,  delivery and performance of the Transaction Documents by the Company
and the issuance and sale of the Securities  will not conflict with or result in
a breach or violation  of any of the terms and  provisions  of, or  constitute a
default  under  (i) the  Company's  Articles  of  Incorporation  (including  any
articles of amendment or articles designating series of shares) or the Company's
Bylaws,  both  currently  in effect  (copies of which have been  provided to the
Purchaser  before the date  hereof)  and as in effect on the date of issuance of
the Securities,  (ii) any statute, rule, regulation or order of any governmental
agency or body or any court,  domestic or foreign,  having jurisdiction over the
Company or any Subsidiary or any of their  respective  assets or properties,  or
(iii) any agreement or  instrument  to which the Company or any  Subsidiary is a
party or by which the Company or any  Subsidiary is bound or to which any of the
properties of the Company or any Subsidiary is subject.

                  (b) Except where it would not have a Material  Adverse Effect,
the Company and each Subsidiary (i) is not in violation of any statute,  rule or
regulation  applicable to the Company or any  Subsidiary or its assets,  (ii) is
not in violation of any judgment,  order or decree  applicable to the Company or
any Subsidiary or any of their respective  assets, and (iii) is not in breach or
violation of any  agreement,  note or instrument to which it or its assets are a
party or are bound or subject. To the best of the Company's  knowledge,  neither
the Company nor any Subsidiary has received  notice from any Person of any claim
or  investigation  that,  if adversely  determined,  would render the  preceding
sentence untrue or incomplete.


<PAGE>


                  3.12 Tax Matters. The Company and the Subsidiaries have timely
prepared  and filed all tax  returns  required to have been filed by the Company
with all  appropriate  governmental  agencies  and timely paid all taxes owed by
them,  except  where  failure  to make such  payment  would not have a  Material
Adverse Effect.  The charges,  accruals and reserves on the books of the Company
and the  Subsidiaries in respect of taxes for all fiscal periods are adequate in
all material respects,  and there are no material unpaid assessments against the
Company or any  Subsidiary  nor, to the knowledge of the Company,  any basis for
the  assessment of any  additional  taxes,  penalties or interest for any fiscal
period  or  audits by any  foreign,  U.S.  federal,  state,  representations  or
warranties in or local taxing  authority,  except such as are not material.  All
material  taxes  and  other  assessments  and  levies  that the  Company  or any
Subsidiary  is required  to  withhold  or to collect for payment  have been duly
withheld and collected and paid to the proper governmental entity or third party
when due.  There are no tax liens or claims  pending or  threatened  against the
Company or any Subsidiary or any of their respective assets or property which if
adversely  decided,   would  have  a  Material  Adverse  Effect.  There  are  no
outstanding  tax  sharing  agreements  or other such  arrangements  between  the
Company or any Subsidiary and any other Person.

                  3.13  Title to  Properties.  Except  as  disclosed  in the SEC
Filings or as set forth on SCHEDULE  3.13,  the Company and each  Subsidiary has
good and marketable  title to all real  properties and all other  properties and
assets owned by it, in each case free from  Encumbrances  and defects that would
materially affect the value thereof or materially interfere with the use made or
currently  planned to be made  thereof by the  Company or such  Subsidiary;  and
except as disclosed in the SEC Filings,  the Company and each  Subsidiary  holds
any leased real or personal property under valid and enforceable  leases with no
exceptions  that  would  materially  interfere  with the use  made or  currently
planned to be made thereof by the Company or such Subsidiary.

                  3.14 Certificates,  Licenses,  Authorizations and Permits. The
Company  and  each  Subsidiary   possesses  adequate   certificates,   licenses,
authorizations or permits issued by appropriate  governmental agencies or bodies
necessary  to conduct the  business  now operated by it and has not received any
notice of  proceedings  relating to the revocation or  modification  of any such
certificate,  license,  authorization or permit that, if determined adversely to
the Company or any  Subsidiary,  would  individually  or in the aggregate have a
Material Adverse Effect.

                  3.15 No Labor  Disputes.  No material  labor  dispute with the
employees of or contractors  to the Company or any Subsidiary  exists or, to the
knowledge of the Company, is imminent.

                  3.16   Intellectual   Property.   (1)  The  Company  and  each
Subsidiary holds all Intellectual  Property,  free and clear of all Encumbrances
and restrictions on use or transfer, whether or not recorded, and has sole title
to and  ownership  of or has the full,  exclusive  (subject to the rights of its
licensees or licensors)  right to use in its field of business,  for the life of
the proprietary right all Intellectual Property; (2) the use of the Intellectual


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Property by the Company or any  Subsidiary  does not,  to the  knowledge  of the
Company  after due  inquiry,  violate  or  infringe  on the  rights of any other
Person;  (3) neither the Company nor any  Subsidiary  has received any notice of
any  conflict  between  the  asserted  rights of others  and the  Company or any
Subsidiary with respect to any Intellectual  Property;  (4) the Company and each
Subsidiary  has  used its best  efforts  to  perfect  its  rights  in and to all
Intellectual Property used by it in its business or in which it has an interest;
(5) the Company and each  Subsidiary  are in compliance  with all material terms
and  conditions of its agreements  relating to the  Intellectual  Property;  (6)
neither the Company nor any Subsidiary is or has been a defendant in any action,
suit,  investigation or proceeding  relating to infringement or misappropriation
by the Company or any Subsidiary of any Intellectual  Property;  (7) neither the
Company  nor  any   Subsidiary  has  been  notified  of  any  alleged  claim  of
infringement  or  misappropriation  by  the  Company  or any  Subsidiary  of any
Intellectual  Property;  (8)  the  Company  has no  knowledge  of any  claim  of
infringement  or  misappropriation  by  the  Company  or any  Subsidiary  of any
Intellectual  Property; (9) to the knowledge (after due inquiry) of the Company,
none  of  the  products  the  Company  and  the  Subsidiaries  are  researching,
developing,  propose to research and  develop,  make,  have made,  use, or sell,
infringes or misappropriates any Intellectual Property right of any third party;
(10)  none of the  trademarks  and  service  marks  used by the  Company  or any
Subsidiary,  to the  knowledge of the Company  after due inquiry,  infringes the
trademark  or service  mark  rights of any third  party;  (11) to the  Company's
knowledge none of the material processes and formulae,  research and development
results  and other  know-how  relating  to the  Company's  or the  Subsidiaries'
respective  businesses,  the value of which to the Company or any  Subsidiary is
contingent upon maintenance of the confidentiality  thereof,  has been disclosed
to any Person other than Persons  bound by written  confidentiality  agreements;
and (12) the Company owns  directly,  or possesses  adequate  rights to use, all
Intellectual Property used in or relating to the development,  manufacture, use,
distribution  or  marketing  of  the  Company's  products,   and  none  of  such
Intellectual  Property  is  owned,  claimed  or  used  by,  or  subject  to  any
Encumbrance of or by, any Subsidiary.

                  3.17  Environmental  Matters.  Neither  the  Company  nor  any
Subsidiary is in violation of any statute, rule,  regulation,  decision or order
of any governmental agency or body or any court,  domestic or foreign,  relating
to the use,  disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the  environment or human exposure to hazardous
or  toxic  substances  (collectively,  "Environmental  Laws"),  does  not own or
operate any real property contaminated with any substance that is subject to any
Environmental  Laws,  is not liable for any off-site  disposal or  contamination
pursuant to any Environmental  Laws, and is not subject to any claim relating to
any Environmental Laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and neither the
Company nor any Subsidiary is aware of any pending investigation that might lead
to such a claim.

                  3.18 Litigation. Except as set forth in the SEC Filings, there
are no pending actions, suits or proceedings against or affecting the Company or
any  Subsidiary  or any of  their  respective  properties  that,  if  determined


<PAGE>

adversely  to the  Company  or such  Subsidiary,  would  individually  or in the
aggregate have a Material Adverse Effect, or which are otherwise material in the
context of the sale of the Securities;  and to the Company's knowledge,  no such
actions, suits or proceedings are threatened or contemplated.

                  3.19  Financial   Statements.   The   consolidated   financial
statements  included in each SEC Filing  present  fairly and  accurately  in all
material  respects the  consolidated  financial  position of the Company and the
Subsidiaries  as  of  the  dates  reported  and  the  consolidated   results  of
operations,  changes in  stockholders'  equity  and cash  flows for the  periods
reported,  all in  conformity  with  Generally  Accepted  Accounting  Principles
applied on a consistent  basis and in conformity  with the rules and regulations
of the SEC under the 1934 Act applicable to the Company.  Except as set forth in
the consolidated financial statements of the Company included in the SEC Filings
filed prior to the date hereof,  neither the Company nor any  Subsidiary has any
liabilities,  contingent or otherwise, except those which individually or in the
aggregate  are not material to the financial  condition or operating  results of
the Company and the Subsidiaries, taken as a whole.

                  3.20  Insurance  Coverage.  The  Company  and each  Subsidiary
maintains in full force and effect  insurance  coverage  that is  customary  for
comparably  situated  companies for the business being  conducted and properties
owned or  leased by it,  and the  Company  reasonably  believes  such  insurance
coverage to be adequate against all liabilities,  claims and risks against which
it is customary for comparably situated companies to insure.

                  3.21 SARBANES-OXLEY. The Company is in compliance with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
as of the  date  hereof,  and any  and  all  applicable  rules  and  regulations
promulgated  by the SEC  thereunder  that are  effective  as of the date hereof,
except  where  such  noncompliance  would  not  have,  individually  or  in  the
aggregate, a Material Adverse Effect.

                  3.22  Acknowledgement  of  Potential  Dilution.   The  Company
understands  that the number of shares of Common Stock issuable  pursuant to the
Note and  exercise  of the  Warrant  may  increase  substantially  and that such
increase may have a dilutive effect on the Company's equity capitalization.

                  3.23  Brokers  and  Finders.  Except as set forth on  Schedule
3.23, the Purchaser shall have no liability or responsibility for the payment of
any  commission  or  finder's  fee to any  third  party  in  connection  with or
resulting from this Agreement or the transactions contemplated by this Agreement
by reason of any agreement of or action taken by the Company.

                  3.24 No  Directed  Selling  Efforts or  General  Solicitation.
Notwithstanding  anything contained on any schedule hereto,  neither the Company
nor any Person acting on its behalf has conducted  any general  solicitation  or
general advertising (as those terms are used in Regulation D) in connection with


<PAGE>

the offer or sale of any of the Securities.

                  3.25 No  Integrated  Offering.  Neither the Company 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,  under  circumstances that would (1) adversely affect reliance
by the  Company  on  Section  4(2)  of the  1933  Act  for  the  exemption  from
registration  for  the  transactions   contemplated   hereby  or  would  require
registration  of the offer  and sale of the Note and  Warrant  to the  Purchaser
under the 1933 Act;  or (2)  require  the  integration  of the  offering  of the
Securities with any other offering of securities for purposes of determining the
need to obtain  stockholder  approval of the  transactions  contemplated  hereby
under the rules of the OTCBB.

                  3.26  Disclosures.  For  purposes  of this  Agreement  and the
transactions contemplated hereby, none of the representations or warranties made
by the Company under any of the Transaction Documents and no written information
furnished by the Company pursuant hereto, or in any other document,  certificate
or written statement furnished by the Company to the Purchaser or any authorized
representative  of the Purchaser,  pursuant to the  Transaction  Documents or in
connection therewith,  contains any untrue statement of a material fact or omits
to state a material  fact  necessary in order to make the  statements  contained
herein and therein,  in light of the  circumstances  under which they were made,
not misleading.

                  3.27 Absence of Rights Agreement.  The Company has not adopted
a shareholder  rights plan or similar  arrangement  relating to accumulations of
beneficial ownership of Common Stock or a change of control in the Company.

4.  REPRESENTATIONS  AND  WARRANTIES  OF THE  PURCHASER.  The  Purchaser  hereby
represents and warrants to the Company that:

                  4.1  Organization  and  Existence.  The Purchaser is a validly
existing  partnership and has all requisite  partnership  power and authority to
invest in the Securities pursuant to this Agreement.

                  4.2 Purchase  Entirely for Own Account.  The  Securities to be
acquired by the Purchaser  pursuant to this  Agreement  will be acquired for the
Purchaser's  own  account,  not as nominee or agent,  and not with a view to the
resale or distribution of any part thereof in violation of applicable securities
laws,  and the  Purchaser  has no present  intention  of selling,  granting  any
participation in, or otherwise  distributing the same in violation of applicable
securities laws.

                  4.3 Investment Experience.  The Purchaser acknowledges that it
can bear the economic risk and complete loss of its investment in the Securities
and has such  knowledge  of and  experience  with  securities  and  financial or
business  matters that it is capable of  evaluating  the merits and risks of the
purchase of the Note and Warrant.


<PAGE>


                  4.4  Disclosure  of  Information.  The  Purchaser  has  had an
opportunity to review  documents  related to the Company and to ask questions of
and receive  answers from the Company  regarding the terms and conditions of the
offering of the Securities;  provided  however,  that neither such inquiries nor
any other investigation conducted by the Purchaser shall modify, amend, limit or
otherwise affect the Purchaser's right to rely on the Company's  representations
and warranties  contained in the  Transaction  Documents or made pursuant to the
Transaction Documents.

                  4.5 Restricted Securities.  The Purchaser understands that the
Note and Warrant are  characterized  as "restricted  securities"  under the U.S.
federal  securities laws inasmuch as they are being acquired from the Company in
a  transaction  not  involving  a public  offering  and that under such laws and
applicable  regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.

                  4.6  Accredited Investor.  The  Purchaser  is  an  "accredited
investor" as defined in Rule 501(a) of Regulation D.

                  4.7  No General  Solicitation.  The Purchaser did not learn of
the offering of the Note and Warrant  through any public  advertising or general
solicitation (as these terms are used in Regulation D).

                  4.8  Residency of  Purchaser.  The  Purchaser is a resident of
the  state  or other  jurisdiction  indicated  in the  first  paragraph  of this
Agreement.

                  4.9 Brokers and Finders.  The Company  shall have no liability
or responsibility for the payment of any commission or finder's fee to any third
party in connection  with or resulting from this  Agreement or the  transactions
contemplated by this Agreement by reason of any agreement of the Purchaser.

                  4.10  Authorization.  The Purchaser has full partnership power
and authority  and has taken all  requisite  action on the part of the Purchaser
and its partners necessary for (i) the authorization,  execution and delivery of
the Transaction  Documents and (ii) the  authorization of the performance of all
obligations of the Purchaser  under the Transaction  Documents.  The Transaction
Documents  constitute the legal, valid and binding obligations of the Purchaser,
enforceable  against the  Purchaser in accordance  with their terms,  subject to
bankruptcy, insolvency,  reorganization,  moratorium and similar laws of general
applicability, relating to or affecting creditors' rights generally.




<PAGE>

                  4.11 Risk  Factors.  Without  limiting any of the  Purchaser's
other representations and warranties hereunder,  the Purchaser acknowledges that
the Purchaser has reviewed and is aware of the risk factors described in the SEC
Filings.

                  4.12 Reliance.  The Purchaser has consulted its own financial,
legal and tax advisors with respect to the economic,  legal and tax consequences
of an  investment  in the Note and Warrant and has not relied on the SEC Filings
or the Company,  its  officers,  directors or  professional  advisors as to such
consequences.

                  4.13 No  Representations.  No oral  representations  have been
made  by the  Company  to the  Purchaser  in  connection  with  the  Transaction
Documents;  and no written  representations have been made by the Company to the
Purchaser other than as stated in the Transaction Documents and the SEC Filings.

                  4.14   Survival.   The   Purchaser   acknowledges   that   the
representations,  warranties and agreements  made by the Purchaser  herein shall
survive the  execution  and delivery of this  Agreement  and the purchase of the
Note and Warrant.

5.       REGISTRATION RIGHTS AGREEMENT.

                  5.1 Registration  Rights Agreement.  The Company  acknowledges
and agrees that the Company's execution and delivery of, and full performance of
its  obligations  under,  the  Registration   Rights  Agreement  is  a  material
inducement to the  Purchaser to execute and deliver this  Agreement and purchase
and pay for the Note and Warrant.  The Company  agrees to execute and deliver to
the Purchaser the Registration Rights Agreement at or before the Closing.

6.       CERTAIN COVENANTS OF THE COMPANY AND THE PURCHASER.

                  6.1      19.99% Cap; Rule 144.

                  (A) 19.99% CAP.  Notwithstanding  anything contained herein or
in the other  Transaction  Documents,  if Rule  4350(i)(1)(D)  of the  Nasdaq is
applicable  the Company  shall not be entitled to issue upon  conversion  of the
Note and exercise of the Warrant an  aggregate  number of shares of Common Stock
in excess of 19.99% of the  Common  Stock  issued  and  outstanding  on the date
hereof,  subject to  appropriate  and equitable  adjustment for any stock split,
stock  dividend  or  reclassification  of the  Common  Stock  or  similar  event
occurring  after the date hereof (the "20%  Cap"),  unless the Company  receives
stockholder  approval for such issuance.  If Rule 4350(i)(1)(D) of the Nasdaq is
applicable to the shares of Common Stock  issuable  upon  conversion of the Note
and  exercise of the Warrant and the  limitations  thereof  restrict the Company
from issuing  additional  shares of Common Stock upon  conversion of the Note or
exercise of the Warrant, then the Company shall use its commercially  reasonable
best efforts to obtain,  as promptly as practicable,  but in no event later than
45 days thereafter,  the stockholder  approval that is necessary under the rules
of the Nasdaq so that the 20% Cap would no longer be  applicable  to issuance of


<PAGE>

shares of Common Stock upon conversion of the Note and exercise of the Warrant.

                  (B) RULE 144. The Company  acknowledges  that, for purposes of
determining the holding period under Rule 144 for Underlying  Shares issued upon
conversion  of, or in lieu of cash  payment of  principal of or interest on, the
Note,  the  holding  period  of such  Underlying  Shares  shall be tacked to the
holding  period of the Note and for purposes of  determining  the holding period
under Rule 144 for Warrant  Shares issued in a "net" or  "cashless"  exercise of
the  Warrant,  the holding  period of such  Warrant  Shares may be tacked to the
holding  period  of the  Warrant.  The  Company  agrees  not to take a  position
contrary thereto unless the SEC or its staff by rule or  interpretation  changes
its rules and interpretations thereof in effect on the date of this Agreement or
such  rules or  interpretations  are held  invalid  or  incorrect  by a court of
competent jurisdiction.

                  6.2      Limitation on Certain Transactions.

                  (a)  Beginning as of the date of this  Agreement and until the
effective date of the Registration Statement as contemplated by the Registration
Rights  Agreement,  without the prior written  consent of the  Purchaser  (which
consent shall not be unreasonably withheld), the Company shall not issue or sell
or agree to issue or sell any securities in a capital raising  transaction prior
to such date,  unless such securities  will not be, and are not,  registered for
sale or resale  under the 1933 Act until on or after the  effective  date of the
Registration  Statement,  provided that the  limitation  of this Section  6.2(a)
shall not apply to  securities  issued  pursuant to the  Company's  duly adopted
employee or director bona fide share and option plans.

                  (b) So long as the Note remains outstanding, without the prior
written consent of the registered holder of the Note (which consent shall not be
unreasonably  withheld),  the Company shall not issue or sell, or agree to issue
or sell, any securities in a Variable Rate Transaction.

                  6.3      Right of the Purchaser to Participate in Future
Transactions.

                  (A)  RIGHT  TO  PARTICIPATE.  So  long  as  the  Note  remains
outstanding,  the Purchaser will have a right to participate in any sales of any
of the Company's  securities in a capital  raising  transaction on the terms and
conditions set forth in this Section 6.3. During such period,  the Company shall
give ten (10) Business Days advance written notice to the Purchaser prior to any
non-public  offer or sale of any of the  Company's  capital  stock or any Common
Stock Equivalents in a capital raising transaction by providing to the Purchaser
a comprehensive  term sheet containing all significant  business terms of such a
proposed transaction.  The Purchaser shall have the right to participate in such
proposed transaction and to purchase 25 percent of such securities which are the
subject of such proposed  transaction for the same consideration and on the same
terms and conditions as contemplated  for such  third-party sale (or such lesser
portion  thereof as  specified by the  Purchaser).  If the  Purchaser  elects to
exercise  its rights  hereunder it must  deliver  written  notice to the Company
within five (5) Business Days following  receipt of the notice and comprehensive
term sheet from the Company, which notice from the Purchaser shall be contingent
upon receipt of satisfactory  definitive documents for such transaction from the
Company.  If, subsequent to the Company giving notice to the Purchaser hereunder
but  prior  to the  Purchaser  exercising  its  right  to  participate  (or  the
expiration  of the five-day  period  without  response from the Purchaser or the
rejection  of such offer for such  financing  by the  Purchaser),  the terms and
conditions of the proposed  third-party  sale are changed from that disclosed in
the  comprehensive  term sheet provided to the  Purchaser,  the Company shall be
required to provide a new notice and  comprehensive  term sheet  reflecting such
revised terms to the Purchaser hereunder and the Purchaser shall have the right,
which must be  exercised  within five (5)  Business  Days of such new notice and


<PAGE>

such revised  comprehensive  term sheet,  to exercise its rights to purchase the
securities on such changed terms and  conditions as provided  hereunder.  In the
event the  Purchaser  does not exercise its rights  hereunder  with respect to a
proposed  transaction  within the period or periods  provided,  or affirmatively
declines  to engage in such  proposed  transaction  with the  Company,  then the
Company  may  proceed  with  such  proposed  transaction  on the same  terms and
conditions as noticed to the Purchaser  (assuming the Purchaser has consented to
the  transaction,  if required,  pursuant to Section 6.2 of this Agreement) with
the Purchaser if it has elected to  participate  in such  proposed  transaction,
provided that if such proposed  transaction  is not  consummated  within 60 days
following  the  Company's  notice  hereunder,  then the  right of first  refusal
hereunder shall again apply to the Purchaser for such proposed transaction.  The
rights and obligations under this Section 6.3 shall in no way diminish the other
rights of the Purchaser pursuant to this Section 6.

                  (B)  LIMITATION  ON RIGHT OF  FIRST  REFUSAL.  Notwithstanding
anything to the contrary  contained herein, the number of shares of Common Stock
that may be acquired directly or through acquisition of Common Stock Equivalents
by the Purchaser  pursuant to any capital  raising  transaction  as described in
subsection  (a) above  shall not exceed a number  that,  when added to the total
number of shares of Common  Stock  deemed  beneficially  owned by the  Purchaser
(other  than by virtue  of the  ownership  of  securities  or rights to  acquire
securities  (including  the Note  and  Warrant)  that  have  limitations  on the
Purchaser's right to convert, exercise or purchase similar to the limitation set
forth herein (the "Excluded Shares")),  together with all shares of Common Stock
deemed beneficially owned (not counting such affiliate's Excluded Shares) by the
Purchaser (as defined in Rule 144 of the 1933 Act) (the  "Aggregation  Parties")
that would be aggregated for purposes of determining whether such securities are
beneficially  owned by the  Purchaser or for purposes of  determining  whether a
group  exists,  in each such case for purposes of Section  13(d) of the 1934 Act
and Regulation  13D-G  thereunder,  would result in beneficial  ownership by the
Purchaser or such group of more than 9.99% of the shares of the Company's Common
Stock (the  "Restricted  Ownership  Percentage"),  computed in  accordance  with
Regulation  13D-G.  The Purchaser 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 1934 Act
or the rules  promulgated  thereunder  (or any  successor  statute  or rules) is
changed to reduce the beneficial  ownership percentage threshold thereunder from
10%. If the Purchaser is unable by reason of the Restricted Ownership Percentage


<PAGE>

to acquire the full amount of securities  which the Purchaser would otherwise be
entitled to acquire  pursuant to this  Section 6.3 and  thereafter,  at any time
prior to the repayment or  conversion  in full of the Note the  Purchaser  could
acquire such securities without exceeding its Restricted  Ownership  Percentage,
then the Purchaser shall be entitled to acquire such securities at such time.

                  6.4  Reports  and  Information.  For so long as the  Purchaser
beneficially  owns  any of the  Securities,  the  Company  will  furnish  to the
Purchaser the following reports and information, each of which shall be provided
to the  Purchaser  by e-mail  (at such  address as  specified  in writing by the
Purchaser for such purpose) or reputable overnight courier:

                  (a)  Quarterly  Financial  Information.  In the  absence  of a
Quarterly Report on Form 10-Q timely filed with the SEC for any of the Company's
first three fiscal quarters in any fiscal year,  within 45 days after the end of
any such fiscal quarter consolidated balance sheets of the Company as at the end
of  each  of  the  Company's   first  three  fiscal  quarters  and  the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
such period and for the portion of the  Company's  fiscal year ended on the last
day of such  quarter,  all in  reasonable  detail and certified by the principal
financial  officer  of the  Company to have been  prepared  in  accordance  with
Generally  Accepted  Accounting  Principles,   subject  to  year-end  and  audit
adjustments.

                  (b) Annual  Financial  Information.  In the  absence of a Form
10-K timely filed with the SEC within 105 days after the end of any fiscal year,
then within such period consolidated balance sheets of the Company as at the end
of each  fiscal  year  and the  related  consolidated  statements  of  earnings,
stockholders'  equity and cash flows for such year, all in reasonable detail and
accompanied  by the  report  on such  consolidated  financial  statements  of an
independent  certified public accountant  selected by the Company and reasonably
satisfactory to the Purchaser.

                  (c) Stockholder and Analyst Reports and Information. Copies of
all notices,  financial  statements,  reports and documents as the Company shall
send or make available  generally to its stockholders or to financial  analysts,
promptly after providing same to the stockholders or financial analysts.

                  (d) Other Information.  Such other information relating to the
Company and the Subsidiaries as from time to time may reasonably be requested by
the  Purchaser,  provided  the Company or its  Subsidiary  has such  information
available to it in the ordinary  course of its  business,  and further  provided
that the Company, solely in its own discretion, determines that such information
is not  confidential  in nature and  disclosure  to the  Purchaser  would not be
harmful to the Company or its Subsidiary.

Notwithstanding  anything to the  contrary  contained  in this  Section 6.4, the
Company shall not disclose material nonpublic  information to the Purchaser,  or
to advisors to or representatives  of the Purchaser,  unless prior to disclosure
of such  information the Company  identifies such  information as being material


<PAGE>

nonpublic   information   and  provides  the   Purchaser,   such   advisors  and
representatives with the opportunity to accept or refuse to accept such material
nonpublic  information for review. The Company may, as a condition to disclosing
any material nonpublic information  hereunder,  require the Purchaser's advisors
and  representatives  to enter into a  confidentiality  agreement  (including an
agreement with such advisors and  representatives  prohibiting them from trading
in Common Stock during such period of time as they are in possession of material
nonpublic  information) in form  reasonably  satisfactory to the Company and the
Purchaser.

                  (e) Rule 144. The Company agrees to make publicly available on
a timely basis the information required by Rule 144(c) under the 1933 Act.

                  6.5 Press  Releases.  Any  press  release  or other  publicity
concerning  this Agreement or the  transactions  contemplated  by this Agreement
shall be submitted to the  Purchaser  for comment at least two (2) Business Days
prior to issuance,  unless the release is required to be issued within a shorter
period  of time by law or  pursuant  to the  rules of any  Approved  Market  (if
applicable).  The Company  shall,  on the Closing  Date,  issue a press  release
concerning  the  transactions  contemplated  hereby.  The Company's  other press
releases and other public information,  to the extent concerning the Transaction
Documents,  shall  contain  such  information  as  reasonably  requested  by the
Purchaser  and be  reasonably  approved  by the  Purchaser  in writing  prior to
issuance.

                  6.6 No Conflicting  Agreements.  The Company will not take any
action,  enter into any agreement or make any commitment  that would conflict or
interfere in any material  respect with the  obligations to the Purchaser  under
the Transaction Documents.

                  6.7 Insurance.  For so long as the Purchaser beneficially owns
any of the  Securities,  the Company shall,  and shall cause each Subsidiary to,
have in full force and effect (a) insurance  reasonably  believed to be adequate
on all assets and activities of a type customarily  insured,  covering  property
damage  and  loss of  income  by  fire  or  other  casualty,  and (b)  insurance
reasonably  believed to be adequate  protection against all liabilities,  claims
and risks against which it is customary for companies  similarly situated as the
Company and the Subsidiaries to insure.

                  6.8   Compliance   with  Laws.   So  long  as  the   Purchaser
beneficially  owns any  Securities,  the Company will use reasonable  efforts to
comply with all applicable laws, rules,  regulations,  orders and decrees of all
governmental  authorities,  except to the extent non-compliance (in one instance
or in the aggregate) would not have a Material Adverse Effect.

                  6.9  Listing  of  Underlying  Shares  and  Warrant  Shares and
Related  Matters.  The Company  agrees  that if the Company  applies to have its
Common Stock or other securities traded on any other principal stock exchange or
market,  it will include in such  application the Underlying  Shares and Warrant
Shares  and will take such other  action as is  necessary  to cause such  Common


<PAGE>

Stock  to be so  listed.  For  so  long  as the  Note  or  the  Warrant  remains
outstanding,  the Company will take all action necessary to continue the listing
and trading of its Common  Stock on at least one of the OTCBB,  the Nasdaq Small
Cap, the Nasdaq, the NYSE or the AMEX (collectively,  "Approved  Markets"),  and
will  comply in all  respects  with the  Company's  reporting,  filing and other
obligations under the bylaws or rules of such exchange or market, as applicable,
to ensure the  continued  eligibility  for trading of the Common Stock  thereon.
Neither the Company nor any of its  Affiliates,  nor any Person acting on its or
their  behalf,  shall  directly  or  indirectly  make any offers or sales of any
security  or  solicit  any  offers  to buy any  security  which  may  cause  the
integration of the offering  hereunder with any other offering of securities for
purposes  of  determining  the  need  to  obtain  stockholder  approval  of  the
transactions  contemplated  hereby  under any  applicable  rules of any Approved
Market.  Unless  in its  reasonable  judgment  such  would  constitute  material
non-public information,  the Company shall notify the Purchaser in advance if it
intends to make any private  placement of securities within the six-month period
after the Closing Date,  and unless the Company shall have received  stockholder
approval of the transactions contemplated hereby under the rules of any Approved
Market (if applicable), at the Purchaser's reasonable request, the Company shall
request  a ruling  from  such  Approved  Market in  advance  that  such  private
placement will not be integrated with the  transactions  contemplated  hereunder
pursuant to the rules of such Approved Market.

                  6.10 Corporate  Existence.  So long as the Note or the Warrant
remains outstanding,  the Company shall maintain its corporate existence, except
in  the  event  of a  merger,  consolidation,  amalgamation  or  sale  of all or
substantially all of the Company's assets, as long as the surviving or successor
entity in such  transaction (a) assumes  (jointly and severally with the Company
if the Company continues to exist) the Company's obligations hereunder and under
the agreements and instruments entered into in connection  herewith,  regardless
of whether or not the Company  would have had a  sufficient  number of shares of
Common  Stock  authorized  and  available  for  issuance in order to fulfill its
obligations hereunder and effect the conversion in full of the Note and exercise
in full of all Warrants outstanding as of the date of such transaction;  (b) has
no legal,  contractual  or other  restrictions  on its  ability to  perform  the
obligations of the Company  hereunder and under the  agreements and  instruments
entered into in connection herewith; and (c)(i) is a publicly traded corporation
whose common stock and the shares of capital stock  issuable upon  conversion of
the Note and  exercise of the Warrant  are (or would be upon  issuance  thereof)
listed for trading on an Approved  Market or (ii) if not such a publicly  traded
corporation,  then the Person who will be the  successor or surviving  entity in
such  transaction,  at the time it shall enter into a  definitive  agreement  to
complete such transaction,  shall have agreed in writing with the Purchaser that
it will, at the election of the Purchaser,  purchase the Purchaser's  Securities
at a price  equal  to the  greater  of (a)  120% of the  Purchase  Price of such
Securities or (b) the fair market value of such  Securities  on an  as-converted
and  as-exercised  basis based on the closing price  immediately  preceding such
transaction or the redemption date, whichever is greater.

                  6.11 Form 8-K. On or before 8:30 a.m.,  New York City time, on
the  Business  Day  immediately  following  the Closing  Date,  the Company will
publicly  report the issue and sale of the Note and  Warrant by filing  with the


<PAGE>

SEC a Current  Report on Form 8-K under the 1934 Act which report shall describe
the material terms and include copies of the  Transaction  Documents as exhibits
to such report.

                  6.12 Legends.  Until  registration  for resale pursuant to the
Registration  Rights  Agreement or until sales under Rule 144 under the 1933 Act
are permitted,  certificates  evidencing  the Underlying  Shares and the Warrant
Shares may bear one or both of the  following  legends or legends  substantially
similar thereto:

"The shares  represented by this certificate may not be transferred  without (i)
the opinion of counsel  reasonably  satisfactory  to the  corporation  that such
transfer may lawfully be made without  registration  under the Securities Act of
1933 or  qualification  under  applicable  state  securities  laws; or (ii) such
registration or qualification."

If required by the  authorities of any state in connection  with the issuance of
sale of the Securities, the legend required by such state.

Upon  registration for resale pursuant to the  Registration  Rights Agreement or
upon Rule  144(k)  under the 1933 Act  becoming  available,  the  Company  shall
promptly (but in no event later than five (5) Business  Days after  surrender of
the legended  certificates  to the Company)  cause  certificates  evidencing the
Underlying  Shares and Warrant  Shares  previously  issued to be  replaced  with
certificates  which  do not  bear  the  restrictive  legends  set  forth  in the
preceding  clause (a) of this  Section,  and all  Underlying  Shares and Warrant
Shares  subsequently  issued shall not bear the restrictive  legend set forth in
the preceding clause (a) of this Section.  If the Purchaser notifies the Company
that the Purchaser has not received such  certificates  without the  restrictive
legend set forth in the  preceding  clause (a) of this Section  within three (3)
Business Days after surrender of such legended  certificates (each, a "Purchaser
Share Notice"), and the Purchaser does not receive such certificates without the
restrictive  legend set forth in the preceding clause (a) of this Section within
two (2) Business Days after giving a particular Purchaser Share Notice, then the
Company shall pay cash liquidated damages to the Purchaser at the rate of 2% per
month of the original Purchase Price of the Note and Warrant in respect of which
such  Underlying  Shares and Warrant Shares are issuable or issued and for which
the  certificates  have not been provided in compliance  with the above,  for so
long as the Company fails to provide such certificates. A Purchaser Share Notice
may be given by telephone or e-mail to the Company's Chief Financial  Officer or
General  Counsel.  The  Purchaser  agrees  that  any  sale by the  Purchaser  of
Underlying  Shares and Warrant  Shares  pursuant to the  Registration  Statement
shall  be made by the  Purchaser  in  compliance  with the  prospectus  delivery
requirements of the 1933 Act and in accordance with the plan of distribution set
forth in the  Registration  Statement  and  related  prospectus,  as amended and
supplemented from time to time.


<PAGE>


7.      CONDITIONS TO THE COMPANY'S OBLIGATIONS TO ISSUE AND SELL. The Company's
obligation to issue and sell the Note and the Warrant to the Purchaser  pursuant
to this Agreement is conditioned upon  satisfaction of the following  conditions
precedent  on or before the  Closing  Date (any or all of which may be waived by
the Company in its sole discretion):

                  (a) On the Closing Date,  no legal action,  suit or proceeding
shall  be  pending  or  threatened  which  seeks to  restrain  or  prohibit  the
transactions contemplated by this Agreement; and

                  (b)  The  representations  and  warranties  of  the  Purchaser
contained in this Agreement shall have been true and correct on the date of this
Agreement and the  representations  and warranties of the Purchaser contained in
the  Transaction  Documents  shall be true and correct on the Closing Date as if
given on and as of the Closing  Date (except for  representations  given as of a
specific date, which representations shall be true and correct as of such date),
and on or before  the  Closing  Date the  Purchaser  shall  have  performed  all
covenants  and  agreements of the  Purchaser  contained  herein or in any of the
other  Transaction  Documents  required to be performed  by the  Purchaser on or
before the Closing Date.

8.       CONDITIONS TO THE PURCHASER'S OBLIGATIONS TO PURCHASE. The  Purchaser's
obligations to purchase the Note and Warrant are conditioned  upon  satisfaction
of the following  conditions precedent on or before the Closing Date (any or all
of which may be waived by the Purchaser in its sole discretion):

                  (a) On the Closing Date,  no legal action,  suit or proceeding
shall  be  pending  or  threatened  which  seeks to  restrain  or  prohibit  the
transactions contemplated by this Agreement;

                  (b)  The   representations   and  warranties  of  the  Company
contained in this Agreement shall have been true and correct on the date of this
Agreement and the representations and warranties of the Company contained in the
Transaction  Documents shall be true and correct on the Closing Date as if given
on and as of the Closing Date (except for representations given as of a specific
date, which  representations  shall be true and correct as of such date), and on
or before the Closing Date the Company  shall have  performed  all covenants and
agreements of the Company  contained  herein or in any of the other  Transaction
Documents required to be performed by the Company on or before the Closing Date;

                  (c) No  event  which,  if the  Note  were  outstanding,  would
constitute  an Event of  Default  or  which,  with the  giving  of notice or the
passage  of time,  or both,  would  constitute  an Event of  Default  shall have
occurred and be continuing;

                  (d) No Change in Control Transaction shall have occurred;

                  (e) The  Company  shall  have  delivered  to the  Purchaser  a


<PAGE>

certificate,  dated the  Closing  Date,  duly  executed  by its Chief  Executive
Officer or Chief Financial  Officer,  to the effects set forth in  subparagraphs
(a), (b) and (c) of this Section 8;

                  (f) The  Company  shall  have  delivered  to the  Purchaser  a
certificate,  dated the Closing Date, of the Secretary of the Company certifying
(A) the Certificate of Incorporation  and By-Laws of the Company as in effect on
the Closing Date, (B) all  resolutions of the Board of Directors (and committees
thereof) of the Company  relating to this  Agreement  and the other  Transaction
Documents and the  transactions  contemplated  hereby and thereby,  and (C) such
other matters as reasonably requested by the Purchaser;

                  (g) The  Company  shall have  delivered  to the  Purchaser  an
executed Security Agreement in the form attached as EXHIBIT 10.5; and

                  (h) On the  Closing  Date,  (i) trading in  securities  on the
OTCBB shall not have been  suspended  or  materially  limited and (ii) a general
moratorium on commercial banking activities in the State of Texas shall not have
been  declared  by either  federal or state  authorities,  nor shall  there have
occurred any material outbreak or escalation of hostilities or other national or
international  calamity  or crisis of such  magnitude  in its  effect on, or any
material adverse change in any financial market which, in each case, in the good
faith  judgment of the  Purchaser,  makes it  impracticable  or  inadvisable  to
purchase the Note and Warrant.

9.       MISCELLANEOUS.

                  9.1 Successors and Assigns. This Agreement may not be assigned
by the Company. This Agreement may not be assigned by the Purchaser prior to the
Closing without the prior written consent of the Company,  which consent may not
be unreasonably withheld, conditioned or delayed, except that after the Closing,
without the prior written consent of the Company,  but after notice given to the
Company,  the Purchaser may assign its rights and delegate its duties  hereunder
in whole or in part to an Affiliate or to any transferee of Securities  from the
Purchaser. The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective  successors  and permitted  assigns of the
parties.  Nothing in this Agreement,  express or implied,  is intended to confer
upon any party other than the parties hereto or their respective  successors and
permitted assigns any rights, remedies,  obligations, or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.

                  9.2  Counterparts.  This  Agreement  may be executed in two or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument.


<PAGE>


                  9.3 Titles and  Subtitles.  The titles and  subtitles  used in
this  Agreement  are used for  convenience  only and are not to be considered in
construing or interpreting this Agreement.

                  9.4 Notices. Unless otherwise provided, any notice required or
permitted  under this  Agreement  shall be given in writing  and shall be deemed
effectively  given  only  upon  delivery  to each  party to be  notified  by (i)
personal delivery, (ii) telephone line facsimile  transmission,  upon receipt of
confirmation  of  complete  transmittal,  or (iii) a  recognized  overnight  air
courier,  addressed to the party to be notified at the address as follows, or at
such other address as such party may designate by ten (10) days' advance written
notice to the other party:

                           If to the Company:

                           Knightsbridge Fine Wines, Inc.
                           65 Shrewsbury Road
                           Livingston, New Jersey  07039
                           Attention:  Chief Executive Officer
                           Telephone:  (973) 597-1971
                           Fax:        (973) 597-1972

                           with copies 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
                           Fax:        (212) 202-6380

                           If to the Purchaser,  to the address set forth on the
                           signature pages hereto.

                  9.5 Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith,  except that the Company shall pay or reimburse
the Purchaser,  at or before the Closing,  the flat sum of $35,000 for its legal
and  due  diligence  expenses  incurred  in  connection  with  the  transactions
contemplated by this  Agreement.  The Company shall pay all fees and expenses of
any placement  agents in connection with the  transactions  contemplated by this
Agreement pursuant to a separate agreement between such parties.

                  9.6 Amendments and Waivers.  Any term of this Agreement may be
amended and the  observance of any term of this  Agreement may be waived (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  only with the written consent of the Company and the Purchaser;
provided, however, that any such amendment or waiver effected in accordance with
this  paragraph  shall be binding upon each holder of any  Securities  purchased


<PAGE>

under this  Agreement at the time  outstanding,  each future  holder of all such
securities, and the Company.

                  9.7 Severability.  If one or more provisions of this Agreement
are held to be  unenforceable  under  applicable  law, such  provision  shall be
excluded  from  this  Agreement  and the  balance  of this  Agreement  shall  be
interpreted  as if such  provision  were so excluded and shall be enforceable in
accordance with its terms.

                  9.8 Entire Agreement.  This Agreement,  including the Exhibits
and  Schedules  hereto,  the other  Transaction  Documents  and other  documents
contemplated  hereby and thereby  constitute  the entire  agreement  between the
parties  hereto  with  respect to the  subject  matter  hereof and  thereof  and
supersede  all prior  agreements  and  understandings,  both  oral and  written,
between the parties with respect to the subject matter hereof and thereof.

                  9.9 Survival. All representations,  warranties,  covenants and
agreements  contained in this Agreement  shall be deemed to be  representations,
warranties,  covenants and agreements as of the date hereof, except as expressly
provided to be made or deemed made as of another date. The  representations  and
warranties  shall survive the execution and delivery of, and the Closing  under,
this Agreement.

                  9.10 Further Assurances. The parties shall execute and deliver
all such further  instruments  and  documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfillment of the agreements herein contained.

                  9.11  Applicable Law. This Agreement shall be governed by, and
construed in accordance  with, the laws of the State of Nevada without regard to
principles of conflicts of laws.

                  9.12     Remedies.

                  (a) The Purchaser shall be entitled to specific performance of
the Company's obligations under the Transaction Documents.

                  (b) The Company on the one hand and the Purchaser on the other
shall indemnify the other and hold it harmless from any loss,  cost,  expense or
fees  (including  reasonable  attorneys'  fees and expenses)  arising out of any
breach of any of its representations, warranties, covenants or agreements in any
of the Transaction Documents,  or arising out of the enforcement of this Section
9.12.

                  9.13  Jurisdiction.  The parties hereby agree that all actions
or proceedings  arising  directly or indirectly  from or in connection with this
Agreement  shall be litigated  only in the United States  District Court for the
Northern District of Texas located in Dallas County,  Dallas, Texas. The parties
consent  and submit to the  jurisdiction  and venue of the  foregoing  court and


<PAGE>

consent that any process or notice of motion or other  application to said court
or a judge  thereof  may be served  inside or outside  the State of Texas or the
Northern  District of Texas (but with respect to any party hereto,  such consent
shall not be deemed a general consent to jurisdiction  and service for any third
parties) by registered  mail,  return receipt  requested,  directed to the party
being  served at its address  provided in or  pursuant  to this  Agreement  (and
service so made shall be deemed  complete three (3) days after the same has been
posted as  aforesaid)  or by personal  service or in such other manner as may be
permissible  under the rules of said court.  The Company hereby waives any right
to a jury trial in connection with any litigation pursuant to this Agreement.

                            [SIGNATURE PAGES FOLLOW]


<PAGE>


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

                                              THE COMPANY:


                                              KNIGHTSBRIDGE FINE WINES, INC.



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











<PAGE>


                                      THE PURCHASER:

                                      GRYPHON MASTER FUND, L.P.

                                      By: Gryphon Partners, L.P.,
                                                 its General Partner

                                      By: Gryphon Management Partners, L.P.,
                                                 its General Partner

                                      By: Gryphon Advisors, LLC,
                                                 its General Partner


                                      By: /s/ Warren W. Garden
                                          -----------------------
                                              Warren W. Garden, Authorized Agent


Purchase Price:                            $2,000,000
Number of Warrant Shares:                  1,111,111
Initial Conversion Price of Note:          $1.80
Initial Exercise Price of Warrant:         $0.70

                                           Address for Notices:

                                           Gryphon Master Fund, L.P.
                                           500 Crescent Court, Suite 270
                                           Dallas, Texas  75201
                                           Attn:  Ryan R. Wolters
                                           Telephone:  (214) 871-6783
                                           Fax:  (214) 871-6909
                                           E-mail:  wolly@gryphonlp.com

                                           with copies to:

                                           Warren W. Garden, P.C.
                                           100 Crescent Court
                                           Suite 590
                                           Dallas, Texas  75201
                                           Attn:  Warren W. Garden, Esq.
                                           Telephone:  (214) 871-6710
                                           Fax:  (214) 871-6711




<PAGE>


                                  Schedule 3.1

                  Subsidiaries of Knightsbridge Fine Wine, Inc

1.  KFWBA Acquisition Corp. ("KFWBA"), a Nevada Corporation
2.  Torriques S.L., a Spanish Holding Company













<PAGE>


                                  Schedule 3.13

                               Title to Properties

         The Company and each  subsidiary  (listed in Schedule 3.1) has good and
marketable  title to all real  properties  and all other  properties  and assets
owned by it,  in each  case  free  from  Encumbrances  and  defects  that  would
materially affect the value thereof or materially interfere with the use made or
currently  planned to be made  thereof by the  Company or such  Subsidiary;  and
except as disclosed in the SEC Filings,  the Company and each  Subsidiary  holds
any leased real or personal property under valid and enforceable  leases with no
exceptions  that  would  materially  interfere  with the use  made or  currently
planned to be made thereof by the Company or such Subsidiary.










<PAGE>


                                  Schedule 3.23

The Company shall pay a finder's fee to TriPoint Capital  Advisors,  LLC by wire
transfer of immediately available funds to an account designated by such firm.




<PAGE>


                                  Schedule 3.3

                Capitalization of Knightsbridge Fine Wines, Inc.

A. Authorized Capital Stock of Company:  100,000,000 Common shares, par value
$0.001
B. Number of Shares issued and Outstanding: 31,568,250
C. Number of Shares issued pursuant to Stock Option plan: none
D. Number of Warrants: 1,051,667
E. Individuals with Registration Rights, set forth in following table:

         Gryphon Master Fund, LP   1,458,334
         500 Crescent Court
         Suite 270
         Dallas, Texas 75201
         James McCubbin              300,000
         38 Maybaugh Lane
         Annapolis, MD 21403

         Michael McIntyre             60,000
         1496 Bramwell Rd
         West Vancouver, BC
         Canada. V7S 2N9

         Richard Baright (5)          50,000
         50 Hudson Bluff
         Tivoli, NY 12583

         Robert Massucci, Sr.(6)      50,000
         1881 Hood Lane
         Maple Glenn, PA 19002

         Jack Masre (7) 30,000
         1931 east 87th street,
         Brooklyn NY 11223

         Robert Ryan (8)             100,000
         108 Cathcart Rd, Gwynedd
         Valley, PA 19437

         Robert Massucci, Jr. (9)     25,000
         1881 Hood Lane
         Maple Glenn, PA 19002

         Michael Garncik (10)        250,000
         1590 Stockdale Road
         Meadowbrook, PA
         19046



<PAGE>

         Vincent Russo (11)           50,000
         413 Riverview Circle,
         New Hope, PA 18938

         Frank Gasztonyi (12)        200,000
         2355 Miramar Ave, Long
         Beach, CA 90815

         Victor Sedaka (13)           30,000
         3359 Bedford Avenue
         Brooklyn, NY 11210

         CK Cooper and Company        25,000
         (14)
         18300 Von Karman Avenue,
         Suite 440
         Irvine, CA  92612