BRIAZZ INC
EXHIBIT 10.34
<DOCUMENT>
<TYPE>EX-10.34
<SEQUENCE>17
<FILENAME>v88005exv10w34.txt
<DESCRIPTION>EXHIBIT 10.34
<TEXT>
<PAGE>
                                                                   Exhibit 10.34

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE LAW, AND NO
INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION
INVOLVING SAID SECURITIES OR (ii) THE COMPANY RECEIVES AN OPINION OF LEGAL
COUNSEL FOR THE HOLDER OF THESE SECURITIES STATING THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION OR THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION.

No. W-__                                    Warrant to Purchase 1,193,546 Shares
of
                                                                    Common Stock

                        WARRANT TO PURCHASE COMMON STOCK
                                       OF
                                  BRIAZZ, INC.

         THIS CERTIFIES that, for value received, Briazz Venture, L.L.C., an
Illinois limited liability company ("Briazz Venture"), is entitled, upon the
terms and subject to the conditions hereinafter set forth, to subscribe for and
purchase from BRIAZZ, INC., a Washington corporation (the "Company"), the number
of shares (the "Shares") of Common Stock of the Company (the "Common Stock")
equal to 1,193,546, which is 19.99% of the outstanding Common Stock as of
February 18, 2003, at a purchase price per Share of $0.50. The purchase price
per Share upon exercise of this Warrant is sometimes referred to herein as the
"Exercise Price." The number and exercise price, if any, of the Shares are
subject to adjustment as provided in Section 8 hereof.

         1.       Term of Warrant. Subject to the terms and conditions set forth
herein, this Warrant will be exercisable during the term commencing on the date
hereof and ending at the earliest to occur of:

                  (a)      11:59 p.m. Pacific Time on the date immediately prior
                           to the date on which the Company receives shareholder
                           approval of the Common Stock issuable upon conversion
                           of the Series D preferred stock issued pursuant to
                           the Amended and Restated Purchase Agreement between
                           the Company and Briazz Venture dated as of March 5,
                           2003;

                  (b)      11:59 p.m. Pacific Time on the date immediately prior
                           to the date on which Nasdaq provides the Company with
                           a formal exception to Nasdaq's shareholder approval
                           requirements in connection with the Common Stock
                           described in (a) above; and

                  (c)      5:00 p.m. Pacific Time on the fifth anniversary
                           hereof.

<PAGE>

         2.       Exercise of Warrant.

                  (a)      The purchase rights represented by this Warrant are
exercisable by the registered holder hereof, in whole or in part, at any time,
or from time to time, during the term hereof as described in Section 1 above, by
the surrender of this Warrant and the Notice of Exercise annexed hereto duly
completed and executed on behalf of the holder hereof, at the office of the
Company in Seattle, Washington (or such other office or agency of the Company as
it may designate by notice in writing to the registered holder hereof at the
address of such holder appearing on the books of the Company), and upon payment
in cash or check acceptable to the Company of the purchase price of the Shares
thereby purchased, whereupon the holder of this Warrant will be entitled to
receive a certificate for the Shares so purchased and, if this Warrant is
exercised in part, a new Warrant for the unexercised portion of this Warrant.
The Company agrees that if at the time of surrender of this Warrant and purchase
the holder hereof will be entitled to exercise this Warrant, the Shares so
purchased will be deemed to be issued to such holder as the record owner of such
securities as of the close of business on the date on which this Warrant shall
have been exercised as aforesaid.

                  (b)      Certificates for Shares purchased hereunder and, on
partial exercise of this Warrant, a new Warrant for the unexercised portion of
this Warrant will be delivered to the holder hereof promptly as practicable
after the date on which this Warrant shall have been exercised as aforesaid.

         3.       No Fractional Securities or Scrip. No fractional shares or
scrip representing fractional shares will be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.

         4.       No Rights as Shareholders. This Warrant does not entitle the
holder hereof to any voting rights, dividends, participation rights or other
rights as a shareholder of the Company prior to the exercise hereof.

         5.       Exchange and Registry of Warrant. The Company will maintain a
registry showing the name and address of the registered holder of this Warrant.
This Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms, at the office of the Company, and the Company will be
entitled to rely in all respects, prior to written notice to the contrary, upon
such registry.

         6.       Loss, Theft, Destruction or Mutilation of Warrant. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of this Warrant.

                                       -2-

<PAGE>

         7.       Saturdays, Sundays and Holidays. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein is a Saturday or a Sunday or will be a legal holiday or the equivalent
for banks generally in the State of Washington, then such action may be taken or
such right may be exercised on the next succeeding day not a legal holiday or
the equivalent for banks generally in the State of Washington.

         8.       Adjustment Rights. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time, as follows:

                  (a)      Recapitalization, Merger, Sale of Assets. If at any
time, there is a capital reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving corporation, or the sale
of the Company's properties and assets as, or substantially as, an entirety to
any other person, then, as a part of such reorganization, merger, consolidation
or sale, lawful provision will be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during a period
beginning on the effective date of such reorganization, merger consolidation or
sale and ending at 5 p.m. Seattle, Washington time on the tenth (10th) day after
the effective date (whereupon this Warrant shall terminate to the extent not
previously exercised) and upon payment of the exercise price then in effect, the
number of shares of stock or other securities or property of the successor
corporation resulting from such merger or consolidation, to which a holder of
the Common Stock deliverable upon exercise of this Warrant would have been
entitled in such capital reorganization, merger, consolidation or sale if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation or sale. The Company shall notify the holder hereof of any such
reorganization, merger, consolidation or sale not later than the effective date
thereof.

                  (b)      Reclassification. If the Company at any time
reclassifies the Common Stock or otherwise changes any of the securities as to
which purchase rights under this Warrant exist into the same or a different
number of securities of any different class or classes, this Warrant will
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change.

                  (c)      Split, Subdivision or Combination. If the Company at
any time while this Warrant remains outstanding and unexpired splits, subdivides
or combines the securities as to which purchase rights under this Warrant exist,
the Exercise Price will be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination. Upon each
adjustment in the Exercise Price, the number of such securities purchasable
hereunder will be adjusted, to the nearest whole share, to the product obtained
by multiplying the number of Shares purchasable immediately prior to such
adjustment in the Exercise Price by a fraction (i) the numerator of which will
be the Exercise Price immediately prior to such adjustment, and (ii) the
denominator of which will be the Exercise Price immediately after such
adjustment.

                                       -3-

<PAGE>

                  (d)      Sale of Securities Below Exercise Price.

                           (A)      If, at any time or from time to time after
the date hereof, the Company issues or sells, or is deemed by the express
provisions of this Section 8(d) to have issued or sold, Additional Stock (as
defined in Section 8(d)(F) hereof), other than as a reclassification as provided
in Section 8(b) above, and other than a split, subdivision or combination as
provided in Section 8(c) above, without consideration or for a consideration per
share less than the Exercise Price in effect immediately before the issuance of
such Additional Stock, the Exercise Price in effect upon such issuance (except
as otherwise provided in this Section 8(d)) shall be adjusted to equal the
consideration per share at which such Additional Stock was issued.

                           (B)      No adjustment of the Exercise Price shall be
made in an amount less than $.01 per share, provided that any adjustments that
are not required to be made by reason of this sentence shall be carried forward
and shall be taken into account in any subsequent adjustment made to the
Exercise Price. Except as provided in Sections 8(d)(E)(III) and (IV), no
adjustment of the Exercise Price shall have the effect of increasing the
Exercise Price above the Exercise Price in effect immediately before such
adjustment.

                           (C)      In the case of the issuance of Common Stock
for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any discounts, commissions or other expenses allowed,
paid or incurred by the Company for any underwriting or otherwise in connection
with the issuance and sale thereof.

                           (D)      In the case of the issuance of Common Stock
for consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined in good
faith by the Company's Board of Directors irrespective of any accounting
treatment.

                           (E)      In the case of the issuance of options to
purchase or rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock, or options to purchase or
rights to subscribe for such convertible or exchangeable securities (which
options, rights or convertible or exchangeable securities are not excluded from
the definition of Additional Stock), in applying the provisions of Section 8(A),
the following provisions shall apply:

                                             (I)      the aggregate maximum
number of shares of Common Stock deliverable upon exercise of such options to
purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued for a consideration equal
to the consideration (determined in the manner provided in Sections 8(d)(C) and
(D)) received by the Company upon the issuance of such options or rights, plus
the minimum purchase price provided in such options or rights for the Common
Stock covered thereby, but no further adjustment to the Exercise Price shall be
made for the actual issuance of Common Stock upon the exercise of such options
or rights in accordance with their terms (other than adjustments pursuant to
Section 8(d)(E)(III));

                                       -4-

<PAGE>

                                             (II)     the aggregate maximum
number of shares of Common Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities were issued or such options or rights
were issued for a consideration equal to the consideration received by the
Company for any such securities and related options or rights, plus the
additional consideration, if any, to be received by the Company upon the
conversion or exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the manner
provided in Sections 8(d)(C) and (D)), but no further adjustments to the
Exercise Price shall be made for the actual issuance of Common Stock upon the
conversion or exchange of such securities in accordance with their terms (other
than adjustments pursuant to Section 8(d)(E)(III));

                                             (III)    if such options, rights or
convertible or exchangeable securities by their terms provide, with the passage
of time or otherwise, for any increase in the consideration payable to the
Company, or decrease in the number of shares of Common Stock issuable, upon the
exercise, conversion or exchange thereof, the Exercise Price computed upon the
original issue thereof, and any subsequent adjustments based thereon, shall,
upon such increase or decrease becoming effective, be recomputed to reflect such
increase or decrease with respect to such options, rights and securities not
already exercised, converted or exchanged before such increase or decrease
became effective, but no further adjustment to the Exercise Price shall be made
for the actual issuance of Common Stock upon the exercise of any such options or
rights or the conversion or exchange of such securities in accordance with their
terms;

                                             (IV)     upon the expiration of any
such options or rights, the termination of any such rights to convert or
exchange, or the expiration of any options or rights related to such convertible
or exchangeable securities, the Exercise Price shall forthwith be readjusted to
such Exercise Price as would have been obtained had the adjustment that was made
upon the issuance of such options, rights or securities, or options or rights
related to such securities, been made upon the basis of the issuance of only the
number of shares of Common Stock actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such securities or upon
the exercise of the options or rights related to such securities, and

                                             (V)      if any such options or
rights shall be issued in connection with the issuance and sale of other
securities of the Company, together comprising one integral transaction in which
no specific consideration is allocated to such options or rights by the parties
thereto, such options or rights shall be deemed to have been issued for such
consideration as determined in good faith by the Company's Board of Directors.

                           (F)      Additional Stock. "Additional Stock" shall
mean any shares of Common Stock or securities convertible into or exchangeable
or exercisable for shares of Common Stock issued (or deemed to have been issued
pursuant to Section 8(d)(E)) by the Company other than:

                                       -5-

<PAGE>

                                    (I)      Common Stock issued or issuable
upon conversion, exercise or exchange of securities outstanding as of the date
of issuance of this Warrant;

                                    (II)     shares of Common Stock issued after
the date of issuance of this Warrant pursuant to or issuable under stock option
agreements and stock option, incentive and purchase plans of the Company (the
"Compensation Shares"), up to a maximum number of Compensation Shares equal to
15% of the Company's outstanding common stock measured as of the date that the
Company's shares of Series D Preferred Stock becomes convertible into shares of
the Company's Common Stock pursuant to Section 2.6.3(a)(i) of the Company's
Articles of Amendment dated March 3, 2003, assuming conversion of the Series D
stock on such date (the "Option Limit"); provided, that the exercise price of
any Compensation Shares issued pursuant to stock options shall be no less than
fair market value at the time the option for these shares is granted;

                                    (III)    Common Stock issued or issuable
upon conversion of Series D Preferred Stock; and

                                    (IV)     Common Stock issued or issuable
upon conversion or exercise of any securities convertible into or exchangeable
or exercisable for shares of Common Stock provided that such securities are
designated as excluded from the definition of Additional Stock by the prior vote
or written consent of the holder of this Warrant.

                   (e)     Authorized Shares. The Company covenants that during
the period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares of Common Stock to provide
for the issuance of the Shares upon the exercise of any purchase rights under
this Warrant. The Company further covenants that its issuance of this Warrant
will constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Shares upon the exercise of the purchase rights under this Warrant.

         9.       Notice of Adjustments. Whenever the Exercise Price or number
of Shares purchasable hereunder will be adjusted pursuant to Section 8 hereof,
the Company shall issue a certificate signed by its Chief Financial Officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated and
the Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such Certificate to be
transmitted to the holder of this Warrant within 10 days of such event.

         10.      Warranties and Covenants. The Company warrants and covenants
that this Warrant and all shares to be issued hereunder, when issued in
accordance with the terms hereof will be, duly and validly issued, fully paid
and non-assessable, and free of all liens, claims and encumbrances. The Company
further warrants and covenants that this Warrant constitutes a valid and legally
binding obligation of the Company, enforceable in accordance with its terms. The
Company further covenants that it will promptly submit an application to Nasdaq
for listing of the shares issuable upon exercise of this Warrant on the Nasdaq
National Market.

         11.      Transferability; Compliance with Securities Laws.

                                       -6-

<PAGE>

                  (a)      The holder acknowledges that this Warrant is
non-transferable.

                  (b)      The holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Shares issuable upon exercise hereof are
being acquired solely for the holder's own account and not as a nominee for any
other party, and for investment, and covenants that the holder will not offer,
sell or otherwise dispose of this Warrant or any Shares issuable upon exercise
hereof, except under circumstances that will not result in a violation of the
Securities Act, or any state securities laws. Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Shares so purchased are being acquired
solely for holder's own account and not as a nominee for any other party, for
investment, and not with a present view toward distribution or resale.

                  (c)      The offer and sale of the Warrant and the Shares have
not been and will not (except as provided in the Registration Rights Agreement
dated as of the date hereof) be registered under the Securities Act or
applicable state securities laws and this Warrant may not be exercised except
(i) by an "accredited investor" as defined in Rule 501(a) under the Securities
Act that acquired this Warrant directly from the Company; or (ii) by a holder
that is an "accredited investor" and provides the Company with evidence
satisfactory to the Company (which may at the Company's option be required to
include an opinion of counsel) to the effect that no violation of the
registration provisions of the Securities Act or applicable state securities
laws will result from such exercise. Each certificate representing the Shares,
or other securities issued in respect of the Shares upon any conversion, stock
split, stock dividend, recapitalization, merger, consolidation or similar event,
will be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable securities
laws):

"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE LAW, AND NO
INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION
INVOLVING SAID SECURITIES OR (ii) THE COMPANY RECEIVES AN OPINION OF LEGAL
COUNSEL FOR THE HOLDER OF THESE SECURITIES STATING THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION OR THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION."

         12.      Miscellaneous.

                  (a)      Issue Date. The provisions of this Warrant will be
construed and will be given effect in all respects as if it had been issued and
delivered by the Company on the date hereof. This Warrant will be binding upon
any successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of the State of Washington and for all purposes will be
construed in accordance with and governed by the laws of said state.

                                       -7-

<PAGE>

                  (b)      Notices. All notices and other communications called
for or required by this Warrant shall be in writing to the parties at their
respective addresses stated in the Purchase Agreement, or to such other address
as a party may subsequently specify and shall be deemed to have been received
(i) upon delivery in person, (ii) upon the passage of seventy-two (72) hours
following post by first class registered or certified mail, return receipt
requested, with postage prepaid, (iii) upon the passage of twenty-four (24)
hours following post by overnight receipted courier service, or (iv) upon
transmittal by confirmed telex or facsimile provided that if sent by facsimile a
copy of such receipt requested and postage prepaid, with an indication that the
original was set by facsimile and the date of its transmittal.

                  (c)      Attorneys' Fees. In any litigation, arbitration or
court proceeding between the Company and the holder relating hereto, the
prevailing party will be entitled to reasonable attorneys' fees and expenses and
court costs incurred in enforcing this Warrant.

                  (d)      Charges, Taxes and Expenses. Issuance of certificates
for any of the Shares upon the exercise of this Warrant will be made without
charge to the holder hereof for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes and
expenses will be paid by the Company, and such certificates will be issued in
the name of the holder of this Warrant or in such name or names as may be
directed by the holder of this Warrant; provided, however, that in the event
certificates for the Shares are to be issued in a name other than the name of
the holder of this Warrant, this Warrant when surrendered for exercise will be
accompanied by the Assignment Form attached hereto duly executed by the holder
hereof.

         IN WITNESS WHEREOF, BRIAZZ, INC., has caused this Warrant to be
executed by the undersigned officer thereunto duly authorized.

Dated: March 6, 2003

                                    BRIAZZ, INC.

                                    By:  /s/ Victor D. Alhadeff
                                         ----------------------
                                         Victor D. Alhadeff,
                                         Chief Executive Officer

                                       -8-

<PAGE>

                               NOTICE OF EXERCISE

To:      BRIAZZ, INC.

         (1)      The undersigned hereby elects to purchase __________ shares of
Common Stock ("Shares") of BRIAZZ, INC. (the "Company") pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.

         (2)      In exercising the attached Warrant, the undersigned hereby
represents, warrants, confirms and acknowledges as follows:

         (a)      the undersigned has such knowledge and experience in financial
                  and business matters as to be capable of evaluating the merits
                  and risks of the investment and it is able to bear the
                  economic risk of loss of an investment in any Shares
                  subscribed for pursuant to the attached Warrant;

         (b)      the undersigned has had access to such information concerning
                  the Company as he or she has considered necessary in
                  connection with an investment in the Company and has been
                  advised to seek business, tax and legal counsel with respect
                  to such matters;

         (c)      the undersigned is acquiring the Shares for its own account
                  for investment purposes only and not with a view to resale or
                  distribution; provided, however, that the undersigned may sell
                  or otherwise dispose of Shares pursuant to registration
                  thereof pursuant to the Securities Act of 1933, as amended
                  (the "Securities Act"), and any applicable state securities
                  laws or under an exemption from such registration
                  requirements;

         (d)      the undersigned understands that the Shares have not been and
                  will not be registered under the Securities Act and that the
                  issuance of the Shares is being made in reliance on an
                  exemption from such registration requirement;

         (e)      the undersigned is, and was at all times that it purchased
                  Shares or received an offer to purchase Shares an "accredited
                  investor" within the meaning of Rule 501 of Regulation D under
                  the Securities Act.

         (f)      the undersigned agrees that if it decides to offer, sell or
                  otherwise transfer any Shares, it will not offer, sell or
                  otherwise transfer any of such securities directly or
                  indirectly, unless:

                  (i)      the sale is to the Company;

                  (ii)     the sale is made in compliance with the exemption
                           from the registration requirements under the
                           Securities Act provided by Rule 144 or Rule 144A
                           thereunder, if available, and in accordance with any
                           applicable state securities or "Blue Sky" laws;

<PAGE>

                  (iii)    the securities are sold in a transaction that does
                           not require registration under the Securities Act or
                           any applicable state laws and regulations governing
                           the offer and sale of securities; or

                  (iv)     the sale is made pursuant to an effective
                           registration statement filed under the Securities
                           Act;

                  and, with respect to subparagraphs (ii) and (iii) hereof, it
                  has prior to such sale furnished to the Company an opinion of
                  counsel reasonably satisfactory to the Company;

         (g)      the undersigned acknowledges that upon the issuance thereof,
                  and until such time as the same is no longer required under
                  the applicable requirements of the Securities Act or
                  applicable state laws and regulations, the certificates
                  representing the Shares will bear a legend in substantially
                  the following form:

                           "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
                           NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
                           AS AMENDED (THE "ACT"), OR APPLICABLE STATE LAW, AND
                           NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED,
                           ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED
                           UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
                           STATEMENT UNDER THE ACT AND APPLICABLE STATE
                           SECURITIES LAWS COVERING ANY SUCH TRANSACTION
                           INVOLVING SAID SECURITIES OR (ii) THE COMPANY
                           RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER
                           OF THESE SECURITIES STATING THAT SUCH TRANSACTION IS
                           EXEMPT FROM REGISTRATION OR THE COMPANY OTHERWISE
                           SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM
                           REGISTRATION."

         (h)      the undersigned understands that the Company may instruct the
                  transfer agent for the Shares not to record any transfer of
                  the Shares without first being notified by the Company that it
                  is satisfied that such transfer is exempt from or not subject
                  to the registration requirements of the Securities Act;

         (i)      the undersigned consents to the Company making a notation on
                  its records or giving instruction to the registrar and
                  transfer agent of the Company in order to implement the
                  restrictions on transfer set forth and described herein;

         (j)      the undersigned received the attached Warrant, any term sheet,
                  agreement or other offering materials in connection with his,
                  her or its acquisition of the Shares, and the form of this
                  Notice of Exercise, at the address set forth below, and is a
                  resident of the state set forth in such address.

<PAGE>

         (3)      Please issue a certificate or certificates representing said
Shares in the name of the undersigned.

Date                                         Signature  /s/ Victor D. Alhadeff

                                             Address:

                                             ___________________________________

                                             ___________________________________

                                             ___________________________________

</TEXT>
</DOCUMENT>
