BRIAZZ INC
SECURITIES PURCHASE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.21
<SEQUENCE>3
<FILENAME>ex10_21.txt
<DESCRIPTION>SECURITIES PURCHASE AGREEMENT
<TEXT>
                                                                   EXHIBIT 10.21












                                  BRIAZZ, INC.

                          SECURITIES PURCHASE AGREEMENT


                                  June 18, 2002





<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

1.  AGREEMENT TO SELL AND PURCHASE.............................................1

2.  FEES AND WARRANT...........................................................1

3.  CLOSING, DELIVERY AND PAYMENT..............................................2

    3.1      Closing...........................................................2

    3.2      Delivery..........................................................2

4.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................2

    4.1      Organization, Good Standing and Qualification.....................2

    4.2      Subsidiaries......................................................3

    4.3      Capitalization; Voting Rights.....................................3

    4.4      Authorization; Binding Obligations................................3

    4.5      Liabilities.......................................................4

    4.6      Agreements; Action................................................4

    4.7      Obligations to Related Parties....................................4

    4.8      Changes...........................................................5

    4.9      Title to Properties and Assets; Liens, Etc........................6

    4.10     Intellectual Property.............................................6

    4.11     Compliance with Other Instruments.................................7

    4.12     Litigation........................................................7

    4.13     Tax Returns and Payments..........................................7

    4.14     Employees.........................................................7

    4.15     Registration Rights and Voting Rights.............................8

    4.16     Compliance with Laws; Permits.....................................8

    4.17     Environmental and Safety Laws.....................................8

    4.18     Valid Offering....................................................9

    4.19     Full Disclosure...................................................9

    4.20     Insurance.........................................................9

    4.21     SEC Reports.......................................................9

    4.22     No Market Manipulation............................................9

    4.23     Listing...........................................................9

    4.24     No Integrated Offering...........................................10




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<PAGE>


    4.25     Stop Transfer....................................................10

    4.26     Dilution.........................................................10

5.  REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..........................10

    5.1      Requisite Power and Authority....................................10

    5.2      Investment Representations.......................................11

    5.3      Purchaser Bears Economic Risk....................................11

    5.4      Acquisition for Own Account......................................11

    5.5      Purchaser Can Protect Its Interest...............................11

    5.6      Accredited Investor..............................................11

    5.7      Legends..........................................................11

    5.8      No Shorting......................................................11

6.  COVENANTS OF THE COMPANY..................................................12

    6.1      Stop-Orders......................................................12

    6.2      Listing..........................................................12

    6.3      Market Regulations...............................................13

    6.4       Reporting Requirements..........................................13

    6.5      Use of Funds.....................................................13

    6.6      Access to Facilities.............................................13

    6.7      Taxes............................................................13

    6.8      Insurance........................................................14

    6.9      Intellectual Property............................................14

    6.10     Properties.......................................................14

    6.11     Confidentiality..................................................14

    6.12     Required Approvals...............................................14

    6.13     Reissuance of Securities.........................................15

    6.14     Opinion..........................................................15

7.  COVENANTS OF THE COMPANY AND PURCHASERS REGARDING INDEMNIFICATION.........15

    7.1      Company Indemnification..........................................15

    7.2      Purchaser's Indemnification......................................15

    7.3      Procedures.......................................................15

8.  CONVERSION OF CONVERTIBLE NOTE............................................16

    8.1      Mechanics of Conversion..........................................16



                                      -ii-
<PAGE>

    8.2      Mandatory Redemption.............................................17

    8.3      Maximum Conversion...............................................17

    8.4      Injunction - Posting of Bond.....................................17

    8.5      Buy-In...........................................................

    8.6      Optional Redemption..............................................18

    8.7      Nasdaq Approval..................................................19

9.  REGISTRATION RIGHTS.......................................................18

    9.1      Registration Rights Granted......................................18

    9.2      Registration Procedures..........................................20

    9.3      Provision of Documents...........................................21

    9.4      Non-Registration Events..........................................21

    9.5      Expenses.........................................................22

    9.6      Indemnification and Contribution.................................22

    9.7      Termination......................................................22

10. OFFERING RESTRICTIONS.................................................... 24

11. SECURITY INTEREST.........................................................25

12. MISCELLANEOUS.............................................................25

    12.1     Governing Law....................................................25

    12.2     Survival.........................................................25

    12.3     Successors and Assigns...........................................25

    12.4     Entire Agreement.................................................26

    12.5     Severability.....................................................26

    12.6     Amendment and Waiver.............................................26

    12.7     Delays or Omissions..............................................26

    12.8     Notices..........................................................26

    12.9     Attorneys' Fees..................................................26

    12.10    Titles and Subtitles.............................................27

    12.11    Counterparts.....................................................27

    12.12    Broker's Fees....................................................27

    12.13    Construction.....................................................27


                                     -iii-

<PAGE>

                                  BRIAZZ, INC.
                          SECURITIES PURCHASE AGREEMENT


     THIS SECURITIES  PURCHASE  AGREEMENT (the  "Agreement") is made and entered
into as of June 18, 2002,  by and among Briazz,  Inc., a Washington  corporation
(the  "Company"),  and Laurus Master Fund,  Ltd. a Cayman  Islands  company (the
"Purchaser").

                                    RECITALS

     WHEREAS,  the Company has authorized the sale of a 14% Convertible  Note in
an aggregate  principal  amount of  $1,250,000  (the "Note"),  convertible  into
shares of the Company's common stock, no par value (the "Common Stock");

     WHEREAS,  the  Company  wishes to issue a warrant  (the  "Warrant")  to the
Purchaser to purchase  shares of the Company's  Common Stock in connection  with
Purchaser's purchase of the Note;

     WHEREAS,  Purchaser  desires to purchase  the Note and Warrant on the terms
and conditions set forth herein; and

     WHEREAS,  the  Company  desires  to issue and sell the Note and  Warrant to
Purchaser on the terms and conditions set forth herein.

                                    AGREEMENT

     NOW,  THEREFORE,  in consideration of the foregoing recitals and the mutual
promises,  representations,  warranties and covenants  hereinafter set forth and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

     1.   AGREEMENT TO SELL AND PURCHASE.  Pursuant to the terms and  conditions
set forth in this Agreement,  on the Closing Date (as defined in Section 3), the
Company  agrees to sell to the  Purchaser,  and the  Purchaser  hereby agrees to
purchase  from the  Company a Note in the amount of  $1,250,000  convertible  in
accordance with the terms thereof into shares of the Company's Common Stock. The
Note purchased on the Closing Date shall be known as the "Offering." The form of
Note is annexed  hereto as  Exhibit  A. The Note will have a  Maturity  Date (as
defined in the Note)  eighteen  months from the date of issuance.  Collectively,
the Note and  Warrant  (as  defined in Section 2) and Common  Stock  issuable in
payment of the Note upon conversion of the Note and upon exercise of the Warrant
are referred to as the "Securities."

     2.   FEES AND WARRANT.

               (a)  The  Company  will  issue and  deliver  to the  Purchaser  a
Warrant  to  purchase  250,000  shares of Common  Stock in  connection  with the
Offering  (the  "Warrant")  pursuant to Section 1 hereof.  The  Warrant  must be
delivered on the Closing Date. A form of Warrant is annexed hereto as Exhibit B.
The per share "Purchase  Price" of Common Stock as defined in the Warrants shall
be as set forth in the Warrant. All the representations, covenants,



<PAGE>

warranties,  undertakings, and indemnification, and other rights made or granted
to or for the benefit of the  Purchaser  by the Company are hereby also made and
granted in respect of the  Warrant  and  shares of the  Company's  Common  Stock
issuable upon exercise of the Warrant (the "Warrant Shares").

               (b)  The Company shall reimburse the Purchaser for its reasonable
legal  fees for  services  rendered  to the  Purchaser  in  preparation  of this
Agreement  and the  Related  Agreements,  and  expenses in  connection  with the
Purchaser's due diligence  review of the Company and relevant  matters.  Amounts
required to be paid  hereunder  will be paid at the Closing and shall not exceed
$20,000.

               (c)  The  Company  will  pay a cash  fee in the  amount  of seven
percent (7%) of the  aggregate  gross  purchase  price to be paid to the Company
from the sale of Note in the  Offering  (the  "Fund  Management  Fee") to Laurus
Capital  Management,  L.L.C., a Delaware  limited  liability  company.  The Fund
Management  Fee  must be paid  on the  Closing  Date.  The  aforementioned  Fund
Management  Fee and legal fees will be payable at the  Closing out of funds held
pursuant  to a  Funds  Escrow  Agreement  to be  entered  into  by the  Company,
Purchaser and an Escrow Agent (the "Funds Escrow Agreement").

     3.   CLOSING, DELIVERY AND PAYMENT.

          3.1  Closing.  Subject to the terms and conditions herein, the closing
of the transactions contemplated hereby (the "Closing"), shall take place on the
date  hereof,  at such time or place as the Company and  Purchaser  may mutually
agree (such date is hereinafter referred to as the "Closing Date").

          3.2  Delivery. Pursuant to the Funds Escrow Agreement, at the Closing,
subject to the terms and  conditions  hereof,  the Company  will  deliver to the
Escrow  Agent,  among  other  things,  a Note in the form  attached as Exhibit A
representing  the  principal  amount of $1,250,000  and a Common Stock  Purchase
Warrant in the form attached as Exhibit B in the Purchaser's  name  representing
250,000 Warrant Shares and the Purchaser will deliver to the Escrow Agent, among
other things,  $1,250,000,  by certified  funds or wire transfer made payable to
the order of the Escrow Agent.

     4.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

          The  Company hereby represents and warrants to the Purchaser as of the
date of this Agreement as set forth below.

          4.1  Organization,  Good Standing and Qualification.  The Company is a
corporation  duly organized and validly  existing under the laws of the State of
Washington. The Company has the corporate power and authority to own and operate
its properties and assets, to execute and deliver this Agreement, the Warrant to
be issued in connection with this  Agreement,  the Funds Escrow  Agreement,  the
Security  Agreement and all other agreements  referred to herein  (collectively,
the "Related  Agreements"),  to issue and sell the Note and the shares of Common
Stock  issuable upon  conversion of the Note (the "Note  Shares"),  to issue and
sell the Warrant and the Warrant Shares, and to carry out the provisions of this
Agreement and the Related  Agreements  and to carry on its business as presently
conducted. The Company is duly



                                      -2-
<PAGE>

qualified  and is authorized to do business and is in good standing as a foreign
corporation  in all  jurisdictions  in which the nature of its activities and of
its  properties  (both owned and  leased)  makes such  qualification  necessary,
except  for  those  jurisdictions  in which  failure  to do so would  not have a
material adverse effect on the Company or its business.

          4.2  No  Subsidiaries.  The Company does not own or control any equity
security or other  interest of any other  corporation,  limited  partnership  or
other business entity.

          4.3  Capitalization; Voting Rights.

               (a)  The authorized capital stock of the Company, as of March 31,
2002,  consists  of (i)  100,000,000  shares  of  Common  Stock,  no par  value,
5,847,310  shares of which are issued and  outstanding  and 50,00,000  shares of
Preferred Stock, no par value, none of which are issued and outstanding.

               (b)  Other than (i) the shares  reserved for  issuance  under the
Company's  stock option  plans,  director  option  agreement  and the  Company's
employee stock  purchase plan; and (ii) shares which may be granted  pursuant to
this Agreement and the Related  Agreements,  there are no  outstanding  options,
warrants,  rights (including conversion or preemptive rights and rights of first
refusal), proxy or stockholder agreements,  or arrangements or agreements of any
kind for the purchase or acquisition from the Company of any of its securities.

               (c)  All issued and  outstanding  shares of the Company's  Common
Stock  have been duly  authorized  and  validly  issued  and are fully  paid and
nonassessable.

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

          4.4  Authorization;  Binding Obligations.  All corporate action on the
part of the Company,  its officers and directors necessary for the authorization
of this Agreement and the Related Agreements, the performance of all obligations
of the Company hereunder at the Closing and the  authorization,  sale,  issuance
and  delivery  of the Note and  Warrant has been taken or will be taken prior to
the  Closing.  The  Agreement  and the Related  Agreements,  when  executed  and
delivered,  will be valid and binding  obligations of the Company enforceable in
accordance  with their terms,  except (a) as limited by  applicable  bankruptcy,
insolvency,  reorganization,  moratorium  or other laws of  general  application
affecting enforcement of creditors' rights, and (b) general principles of equity
that restrict the availability of equitable  remedies.  The sale of the Note and
the  subsequent  conversion of the Note into Note Shares are not and will not be
subject to any  preemptive  rights or rights of first refusal that have not been
properly  waived or complied  with.  The sale of the Warrant and the  subsequent
exercise of the Warrant for Warrant Shares are



                                      -3-
<PAGE>

not and will not be subject to any preemptive  rights or rights of first refusal
that have not been properly  waived or complied  with. The Note and the Warrant,
when executed and delivered in accordance with the terms of this Agreement, will
be valid and binding obligations of the Company,  enforceable in accordance with
their respective terms.

          4.5  Liabilities.  Except as set forth in the SEC  Reports (as defined
herein),  the  Company  has no  material  liabilities  and,  to the  best of its
knowledge,   knows  of  no  material  contingent  liabilities,   except  current
liabilities  incurred in the  ordinary  course of business  which have not been,
either in any individual case or in the aggregate, material.

          4.6  Agreements; Action.

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

               (b)  Except as set forth in the SEC Reports,  the Company has not
(i) declared or paid any dividends,  or authorized or made any distribution upon
or with respect to any class or series of its capital  stock,  (ii) incurred any
indebtedness for money borrowed or any other liabilities  individually in excess
of $50,000 or, in the case of indebtedness and/or liabilities  individually less
than $50,000,  in excess of $100,000 in the  aggregate,  (iii) made any loans or
advances to any person,  other than ordinary  advances for travel  expenses,  or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights, other
than the sale of its inventory in the ordinary course of business.

               (c)  Except as set forth in the SEC Reports,  for the purposes of
subsections  (a) and  (b)  above,  all  indebtedness,  liabilities,  agreements,
understandings,  instruments,  contracts and proposed transactions involving the
same person or entity  (including  persons or entities the Company has reason to
believe are affiliated therewith) shall be aggregated for the purpose of meeting
the individual minimum dollar amounts of such subsections.

          4.7  Obligations  to Related  Parties.  Except as set forth in the SEC
Reports,  there  are no  obligations  of the  Company  to  officers,  directors,
stockholders  or employees  of the Company  other than (a) for payment of salary
for services  rendered,  (b) reimbursement  for reasonable  expenses incurred on
behalf of the Company,  (c) for other standard  employee benefits made generally
available to all employees (including stock option agreements  outstanding under
any stock option plan approved by the Board of Directors of the Company) and (d)
obligations listed in the Company's financial statements.  None of the officers,
directors or stockholders of



                                      -4-
<PAGE>

the Company,  or any members of their  immediate  families,  are indebted to the
Company.  Except as described above, none of the officers,  directors or, to the
best of the Company's knowledge, key employees or stockholders of the Company or
any members of their immediate families, are indebted to the Company or have any
direct or indirect  ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business relationship,  or
any firm or  corporation  which  competes  with the Company,  other than passive
investments  in publicly  traded  companies  (representing  less than 1% of such
company)  which may compete with the  Company.  Except as  described  above,  no
officer, director or stockholder, or any member of their immediate families, is,
directly or indirectly, interested in any material contract with the Company and
no agreements,  understandings or proposed transactions are contemplated between
the Company and any such person. The Company is not a guarantor or indemnitor of
any indebtedness of any other person, firm or corporation.

          4.8  Changes. Since December 31, 2001, there has not been:

               (a)  Any change in the assets, liabilities,  financial condition,
prospects  or  operations  of the  Company,  other than  changes in the ordinary
course of business, none of which individually or in the aggregate has had or is
reasonably   expected  to  have  a  material  adverse  effect  on  such  assets,
liabilities, financial condition, prospects or operations of the Company;

               (b)  Any resignation or termination of any officer,  key employee
or group of employees of the Company;

               (c)  Any  material  change,  except  in the  ordinary  course  of
business,  in the  contingent  obligations  of the  Company by way of  guaranty,
endorsement, indemnity, warranty or otherwise;

               (d)  Any damage,  destruction or loss,  whether or not covered by
insurance,  materially  and  adversely  affecting  the  properties,  business or
prospects or financial condition of the Company;

               (e)  Any  waiver  by the  Company  of a  valuable  right  or of a
material debt owed to it;

               (f)  Any  direct or  indirect  loans  made by the  Company to any
stockholder,  employee,  officer or director of the Company, other than advances
made in the ordinary course of business;

               (g)  Any  material  change  in any  compensation  arrangement  or
agreement with any employee, officer, director or stockholder;

               (h)  Any   declaration  or  payment  of  any  dividend  or  other
distribution of the assets of the Company;

               (i)  Any labor organization activity related to the Company;



                                      -5-
<PAGE>

               (j)  Any debt,  obligation  or  liability  incurred,  assumed  or
guaranteed by the Company,  except those for immaterial  amounts and for current
liabilities incurred in the ordinary course of business;

               (k)  Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;

               (l)  Any change in any material agreement to which the Company is
a party or by which it is bound which may  materially  and adversely  affect the
business, assets, liabilities,  financial condition,  operations or prospects of
the Company;

               (m)  Any other event or condition of any character  that,  either
individually  or  cumulatively,  has or may materially and adversely  affect the
business, assets, liabilities,  financial condition,  prospects or operations of
the Company; or

               (n)  Any  arrangement  or  commitment by the Company to do any of
the acts described in subsection (a) through (m) above.

          4.9  Title to Properties and Assets;  Liens, Etc. The Company has good
and  marketable  title to its  properties  and  assets,  and  good  title to its
leasehold  estates,  in each case subject to no mortgage,  pledge,  lien, lease,
encumbrance or charge,  other than (a) those resulting from taxes which have not
yet become delinquent,  (b) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or materially  impair the
operations  of the  Company,  and (c) those  that have  otherwise  arisen in the
ordinary course of business.  All facilities,  machinery,  equipment,  fixtures,
vehicles and other properties  owned,  leased or used by the Company are in good
operating  condition  and  repair  and are  reasonably  fit and  usable  for the
purposes for which they are being used.  The Company is in  compliance  with all
material terms of each lease to which it is a party or is otherwise bound.

          4.10 Intellectual Property.

               (a)  The Company owns or possesses sufficient legal rights to all
patents,  trademarks,  service marks,  trade names,  copyrights,  trade secrets,
licenses,  information and other proprietary rights and processes  necessary for
its  business as now  conducted  and to the  Company's  knowledge  as  presently
proposed  to be  conducted  (the  "Intellectual  Property"),  without  any known
infringement of the rights of others. There are no outstanding options, licenses
or agreements of any kind relating to the foregoing  proprietary  rights, nor is
the Company  bound by or a party to any options,  licenses or  agreements of any
kind with  respect to the  patents,  trademarks,  service  marks,  trade  names,
copyrights,  trade secrets,  licenses,  information and other proprietary rights
and  processes  of any other  person  or entity  other  than  such  licenses  or
agreements arising from the purchase of "off the shelf" or standard products.

               (b)  The Company has not  received  any  communications  alleging
that the Company has  violated any of the patents,  trademarks,  service  marks,
trade names,  copyrights  or trade  secrets or other  proprietary  rights of any
other person or entity, nor is the Company aware of any basis therefor.



                                      -6-
<PAGE>

               (c)  The Company  does not believe it is or will be  necessary to
utilize any inventions,  trade secrets or proprietary  information of any of its
employees made prior to their employment by the Company,  except for inventions,
trade secrets or proprietary  information that have been rightfully  assigned to
the Company.

          4.11 Compliance  with  Other  Instruments.   The  Company  is  not  in
violation or default of any term of the Charter or Bylaws,  or of any  provision
of any mortgage, indenture, contract, agreement, instrument or contract to which
it is party or by which it is bound or of any judgment,  decree,  order or writ.
The execution,  delivery and  performance of and compliance  with this Agreement
and the Related  Agreements,  and the issuance and sale of  Securities  pursuant
hereto,  will not,  with or  without  the  passage  of time or giving of notice,
result in any such  material  violation,  or be in conflict with or constitute a
default  under any such term or  provision,  or  result in the  creation  of any
mortgage,  pledge,  lien,  encumbrance  or charge upon any of the  properties or
assets of the Company or the suspension,  revocation,  impairment, forfeiture or
nonrenewal of any permit,  license,  authorization or approval applicable to the
Company, its business or operations or any of its assets or properties.

          4.12 Litigation.  Except as set forth in the SEC Reports,  there is no
action,  suit,   proceeding  or  investigation  pending  or,  to  the  Company's
knowledge,  currently threatened against the Company that questions the validity
of this Agreement or the Related Agreements or the right of the Company to enter
into any of such  agreements,  or to consummate  the  transactions  contemplated
hereby  or  thereby,  or  which  might  result,  either  individually  or in the
aggregate, in any material adverse change in the assets,  condition,  affairs or
prospects of the Company, financially or otherwise, or any change in the current
equity  ownership  of the  Company,  nor is the Company  aware that there is any
basis for any of the  foregoing.  The  Company  is not a party or subject to the
provisions of any order,  writ,  injunction,  judgment or decree of any court or
government agency or instrumentality.  There is no action,  suit,  proceeding or
investigation by the Company  currently  pending or which the Company intends to
initiate.

          4.13 Tax Returns and Payments. Except as set forth in the SEC Reports,
the Company has timely filed all tax returns (federal, state and local) required
to be filed by it. All taxes  shown to be due and payable on such  returns,  any
assessments  imposed,  and to the  Company's  knowledge  all other taxes due and
payable by the Company on or before the Closing,  have been paid or will be paid
prior to the time they become  delinquent.  The Company has not been advised (a)
that any of its returns, federal, state or other, have been or are being audited
as of the date  hereof,  or (b) of any  deficiency  in  assessment  or  proposed
judgment to its federal,  state or other taxes.  The Company has no knowledge of
any  liability of any tax to be imposed upon its  properties or assets as of the
date of this Agreement that is not adequately provided for.

          4.14 Employees.  Except as set forth in the SEC  Reports,  the Company
has no collective bargaining  agreements with any of its employees.  There is no
labor  union  organizing  activity  pending  or,  to  the  Company's  knowledge,
threatened  with respect to the Company.  The Company is not a party to or bound
by  any  currently  effective   employment   contract,   deferred   compensation
arrangement,  bonus  plan,  incentive  plan,  profit  sharing  plan,  retirement
agreement or other  employee  compensation  plan or agreement.  To the Company's
knowledge,  no employee of the Company, nor any consultant with whom the Company
has  contracted,  is in  violation  of  any  term  of any  employment  contract,
proprietary information agreement or any other agreement



                                      -7-
<PAGE>

relating to the right of any such  individual  to be employed by, or to contract
with,  the Company  because of the nature of the business to be conducted by the
Company;  and to the Company's knowledge the continued employment by the Company
of its present  employees,  and the performance of the Company's  contracts with
its independent contractors,  will not result in any such violation. The Company
is  not  aware  that  any of its  employees  is  obligated  under  any  contract
(including licenses, covenants or commitments of any nature) or other agreement,
or  subject  to any  judgment,  decree or order of any  court or  administrative
agency,  that would interfere with their duties to the Company.  The Company has
not  received any notice  alleging  that any such  violation  has  occurred.  No
employee of the Company has been  granted the right to continued  employment  by
the Company or to any material compensation  following termination of employment
with the  Company.  The Company is not aware that any  officer,  key employee or
group of employees  intends to terminate his, her or their  employment  with the
Company,  nor does  the  Company  have a  present  intention  to  terminate  the
employment of any officer, key employee or group of employees.

          4.15 Registration  Rights  and Voting  Rights.  Except as set forth on
Schedule  4.15, the Company is presently not under any  obligation,  and has not
granted  any rights,  to register  any of the  Company's  presently  outstanding
securities or any of its securities that may hereafter be issued.

          4.16 Compliance with Laws; Permits.  To its knowledge,  the Company is
not  in  violation  of  any  applicable  statute,  rule,  regulation,  order  or
restriction  of any domestic or foreign  government  or any  instrumentality  or
agency thereof in respect of the conduct of its business or the ownership of its
properties  which violation would  materially and adversely affect the business,
assets,  liabilities,  financial  condition,  operations  or  prospects  of  the
Company.   No  governmental   orders,   permissions,   consents,   approvals  or
authorizations  are required to be obtained and no registrations or declarations
are required to be filed in  connection  with the execution and delivery of this
Agreement  and the  issuance of any of the  Securities,  except such as has been
duly and validly  obtained or filed, or with respect to any filings that must be
made after the Closing, as will be filed in a timely manner. The Company has all
franchises,  permits,  licenses  and any  similar  authority  necessary  for the
conduct of its  business as now being  conducted  by it, the lack of which could
materially and adversely affect the business, properties, prospects or financial
condition of the Company.

          4.17 Environmental and Safety Laws. The Company is not in violation of
any  applicable  statute,  law or  regulation  relating  to the  environment  or
occupational health and safety, and to its knowledge,  no material  expenditures
are or will be required in order to comply with any such existing  statute,  law
or regulation.  No Hazardous  Materials (as defined below) are used or have been
used, stored, or disposed of by the Company or, to the Company's  knowledge,  by
any other person or entity on any property owned, leased or used by the Company.
For the purposes of the preceding sentence, "Hazardous Materials" shall mean (a)
materials which are listed or otherwise  defined as "hazardous" or "toxic" under
any applicable  local,  state,  federal and/or foreign laws and regulations that
govern the existence and/or remedy of contamination on property,  the protection
of the environment from contamination, the control of hazardous wastes, or other
activities involving hazardous substances,  including building materials, or (b)
any petroleum products or nuclear materials.



                                      -8-
<PAGE>

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

          4.19 Full Disclosure.  The Company has provided the Purchaser with all
information  requested  by the  Purchaser  in  connection  with its  decision to
purchase the Note and Warrant, including all information the Company believes is
reasonably necessary to make such investment  decision.  Neither this Agreement,
the exhibits and schedules hereto, the Related Agreements nor any other document
delivered by the Company to Purchaser or its  attorneys or agents in  connection
herewith or therewith or with the transactions  contemplated  hereby or thereby,
contain  any untrue  statement  of a material  fact nor omit to state a material
fact necessary in order to make the statements  contained herein or therein,  in
light of the circumstances in which they are made, not misleading. Any financial
projections  and other  estimates  provided to the Purchaser by the Company were
based on the Company's experience in the industry and on assumptions of fact and
opinion as to future  events which the  Company,  at the date of the issuance of
such projections or estimates,  believed to be reasonable. As of the date hereof
no facts have come to the  attention of the Company that would,  in its opinion,
require the Company to revise or amplify in any material respect the assumptions
underlying  such  projections  and other  estimates or the  conclusions  derived
therefrom.

          4.20 Insurance. The Company has general commercial, product liability,
fire and casualty  insurance  policies  with  coverage  customary  for companies
similarly situated to the Company.

          4.21 SEC Reports. The Company has filed all proxy statements,  reports
and other  documents  required  to be filed by it under the  Exchange  Act.  The
Company has furnished the Purchaser with copies of (i) its Annual Report on Form
10-K for the fiscal year ended  December  30, 2001 and (ii) its Proxy  Statement
dated April 29, 2002 (collectively,  the "SEC Reports").  Each SEC Report was in
substantial  compliance with the requirements of its respective form and none of
the SEC Reports,  nor the financial  statements (and the notes thereto) included
in the SEC Reports, as of their respective dates, contained any untrue statement
of a material  fact or omitted to state a material  fact  required  to be stated
therein  or  necessary  to  make  the  statements   therein,  in  light  of  the
circumstances under which they were made, not misleading.

          4.22 No Market  Manipulation.  The Company has not taken, and will not
take,  directly or indirectly,  any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the price of
the Common Stock of the Company to  facilitate  the sale or resale of any of the
Securities  being  offered  hereby  or  affect  the  price at  which  any of the
Securities being offered hereby may be issued.

          4.23 Listing.  The Company's Common Stock is listed for trading on the
Nasdaq National Market and satisfies all  requirements  for the  continuation of
such listing. The Company has not received any notice that its Common Stock will
be delisted from the Nasdaq



                                      -9-
<PAGE>

National Market or that the Common Stock does not meet all  requirements for the
continuation of such listing.

          4.24 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  cause the  offering  of the
Securities  pursuant to this Agreement to be integrated  with prior offerings by
the Company for purposes of the  Securities  Act which would prevent the Company
from selling the Securities  pursuant to Rule 506 under the  Securities  Act, or
any applicable  exchange-related  stockholder approval provisions.  Nor will the
Company or any of its affiliates or  subsidiaries  take any action or steps that
would  cause  the  offering  of  the  Securities  to be  integrated  with  other
offerings.

          4.25 Stop Transfer. The Securities are restricted securities as of the
date of this  Agreement.  The Company will not issue any stop transfer  order or
other order impeding the sale and delivery of any of the Securities at such time
as  the  Securities  are  registered  for  public  sale  or  an  exemption  from
registration is available, except as required by federal securities laws.

          4.26 Dilution.  The  number of shares of Common  Stock  issuable  upon
conversion of the Note and exercise of the Warrant may increase substantially in
certain   circumstances,   including,   but  not  necessarily  limited  to,  the
circumstance  wherein the trading  price of the Common Stock  declines  prior to
conversion or exercise of such securities. The Company understands the nature of
the  Securities  being sold hereby and recognize  that they may have a potential
dilutive  effect.  The Board of Directors of the Company has  concluded,  in its
good faith business judgment, that such issuance is in the best interests of the
Company. The Company specifically  acknowledges that its obligation to issue the
shares of Common Stock upon  conversion  of the Note and exercise of the Warrant
is binding upon the Company and  enforceable  regardless  of the  dilution  such
issuance  may  have on the  ownership  interests  of other  shareholders  of the
Company.

     5.   REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

          The Purchaser hereby represents and warrants to the Company as follows
(such   representations   and   warranties   do  not  lessen  or   obviate   the
representations and warranties of the Company set forth in this Agreement):

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



                                      -10-
<PAGE>

          5.2  Investment   Representations.   Purchaser  understands  that  the
Securities are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon  Purchaser's  representations
contained in the Agreement, including, without limitation, that the Purchaser is
an "accredited investor" within the meaning of Regulation D under the Securities
Act.

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

          5.4  Acquisition for Own Account.  Purchaser is acquiring the Note and
Warrant and the Note Shares and the Warrant Shares for  Purchaser's  own account
for investment only, and not with a view towards their distribution.

          5.5  Purchaser Can Protect Its Interest.  Purchaser represents that by
reason  of its,  or of its  management's,  business  and  financial  experience,
Purchaser has the capacity to protect its own  interests in connection  with the
transactions  contemplated  in  this  Agreement,  and  the  Related  Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement or the Related Agreements.

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

          5.7  Legends.

               (a)  The  Note and  Note  Shares  shall  bear  substantially  the
following  legend  until the Note and Note  Shares  are  resold  pursuant  to an
effective registration statement filed with the SEC or are sold pursuant to Rule
144 under the Securities Act or may otherwise be removed pursuant to Rule 144(k)
under the Securities Act:

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



                                      -11-
<PAGE>

               (b)  The Note Shares and the Warrant  Shares  shall bear a legend
which shall be in substantially the following form:

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

               (c)  The Warrant shall bear substantially the following legend:

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

          5.8  No Shorting. The Purchaser will not and will not cause any person
or entity to engage in "short sales" of the Company's Common Stock.

     6.   COVENANTS OF THE COMPANY.  The Company  covenants  and agrees with the
Purchaser as follows:

          6.1  Stop-Orders.  The  Company  will advise the  Purchaser,  promptly
after it receives  notice of issuance by the Securities and Exchange  Commission
(the "SEC"), any state securities  commission or any other regulatory  authority
of any stop order or of any order  preventing or suspending  any offering of any
securities  of the Company,  or of the  suspension of the  qualification  of the
Common  Stock of the Company for  offering or sale in any  jurisdiction,  or the
initiation of any proceeding for any such purpose.

          6.2  Listing.  The Company  will use its best  efforts to maintain the
listing of its Common  Stock on the Pink Sheets,  the NASD OTC  Bulletin  Board,
NASDAQ SmallCap



                                      -12-
<PAGE>

Market,  NASDAQ  National  Market,  American  Stock  Exchange  or New York Stock
Exchange  (a  "Principal  Market"),  and will  comply in all  respects  with the
Company's  reporting,  filing and other obligations under the bylaws or rules of
the National  Association of Securities Dealers ("NASD") and such exchanges,  as
applicable.  The Company  will  provide the  Purchaser  copies of all notices it
receives  notifying the Company of the  threatened  and actual  delisting of the
Common Stock from any  Principal  Market.  The Company  shall  promptly file any
necessary  notices  with  respect to the  Offering  and issuance of the Note and
Warrant with the Principal Market.

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

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

          6.5  Use of Funds. The Company agrees that it will use the proceeds of
the sale of the Note and Warrant for general  corporate  purposes  only,  in the
ordinary course of its business and consistent  with past practice and,  without
limiting the generality of the foregoing,  shall not use such proceeds to make a
loan to any employee,  officer, director or stockholder of the Company, to repay
any loan or other  obligation  of the Company or to repurchase or pay a dividend
on shares of Common Stock or other  securities of the Company (in any such case,
regardless of whether such loan or payment was authorized by the Company's Board
of  Directors  prior to the date  hereof),  other  than any such  repurchase  or
payment  explicitly  required,  permitted or  contemplated  by the terms of this
Agreement or the other Related Agreements.

          6.6  Access to Facilities. The Company will permit any representatives
designated  by the Purchaser (or any  transferee of the  Purchaser),  so long as
such  person  holds any  Securities  upon  reasonable  notice and during  normal
business hours, at such person's expense and accompanied by a representative  of
the Company, to (a) visit and inspect any of the properties of the Company,  (b)
examine  the  corporate  and  financial  records  of the  Company  (unless  such
examination is not permitted by federal,  state or local law or by contract) and
(c) discuss the affairs, finances and accounts of any such corporations with the
directors, officers and independent accountants of the Company.

          6.7  Taxes.  The Company will promptly pay and discharge,  or cause to
be paid and discharged,  when due and payable, all lawful taxes, assessments and
governmental  charges or levies  imposed upon the income,  profits,  property or
business  of the  Company;  provided,  however,  that any such tax,  assessment,
charge or levy  need not be paid if the  validity  thereof  shall  currently  be
contested in good faith by appropriate proceedings and if the Company shall have
set aside on its books  adequate  reserves with respect  thereto,  and provided,
further,  that the  Company  will pay all such  taxes,  assessments,  charges or
levies forthwith upon the



                                      -13-
<PAGE>

commencement  of  proceedings  to foreclose  any lien which may have attached as
security therefor.

          6.8  Insurance.  The  Company  will  keep its  assets  which are of an
insurable  character insured by financially sound and reputable insurers against
loss or damage by fire, explosion and other risks customarily insured against by
companies in the Company's  line of business,  in amounts  sufficient to prevent
the Company from  becoming a  co-insurer;  and the Company will  maintain,  with
financially  sound and reputable  insurers,  insurance against other hazards and
risks and  liability  to persons  and  property  to the extent and in the manner
customary  for  companies in similar  businesses  similarly  situated and to the
extent available on commercially reasonable terms.

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

          6.10 Properties.  The Company will keep its properties in good repair,
working order and condition, reasonable wear and tear excepted, and from time to
time make all needful and proper repairs, renewals, replacements,  additions and
improvements  thereto;  and the  Company  will at all  times  comply  with  each
provision  of all  leases  to which it is a party  or  under  which it  occupies
property if the breach of such provision could  reasonably be expected to have a
material adverse effect.

          6.11 Confidentiality.  The Company  agrees that it will not  disclose,
and will not  include in any  public  announcement,  the name of the  Purchaser,
unless  expressly agreed to by the Purchaser or unless and until such disclosure
is required by law or applicable regulation, and then only to the extent of such
requirement.

          6.12 Required Approvals.  For so long as at least 40% of the principal
amount of the Note is  outstanding,  the  Company,  without  the  prior  written
consent of the Purchaser, which shall not be unreasonably withheld, shall not:

               (a)  directly or indirectly  declare or pay any dividends or make
any  distributions  upon any of its capital stock or other equity securities (or
any  securities  directly  or  indirectly  convertible  into or  exercisable  or
exchangeable for equity securities);

               (b)  consent  to  or  implement   any   termination,   amendment,
modification,  supplement  or  waiver  of (a) the  certificate  or  articles  of
incorporation,  bylaws,  regulations  or other  constitutional  documents of the
Company or any  subsidiary  or (b) any material  contract to which it is a party
not in the ordinary  course of business  with Company  obligations  in excess of
$250,000 per year;  provided,  however,  that such  documents  may be amended or
modified if and to the extent that such amendment or modification is not adverse
to the Purchaser and further,  except as set forth in Section 10 hereof, that no
consent is required with respect to any future  equity or debt  financing of the
Company; or

               (c)  materially  alter or change the scope of the business of the
Company.



                                      -14-
<PAGE>

          6.13 Reissuance  of   Securities.   The  Company   agrees  to  reissue
certificates  representing  the  Securities  without  the  legends  set forth in
Section 5.7 above at such time as (a) the holder thereof is permitted to dispose
of such Securities pursuant to Rule 144(k) under the Securities Act, or (b) upon
resale subject to an effective  registration statement after such Securities are
registered  under the  Securities  Act. The Company agrees to cooperate with the
Purchaser in connection with all resales pursuant to Rule 144(d) and Rule 144(k)
and provide legal opinions  necessary to allow such resales provided the Company
and its counsel receive reasonably  requested  representations  from the selling
Purchaser and broker, if any.

          6.14 Opinion.  On the Closing  Date,  the Company  will deliver to the
Purchaser  an opinion  acceptable  to the  Purchaser  from the  Company's  legal
counsel in the form annexed  hereto as Exhibit D. The Company will  provide,  at
the Company's expense, such other legal opinions in the future as are reasonably
necessary for the conversion of the Note and exercise of the Warrant.

     7.   COVENANTS OF THE COMPANY AND PURCHASER REGARDING INDEMNIFICATION.

          7.1  Company  Indemnification.  The Company agrees to indemnify,  hold
harmless,   reimburse  and  defend  Purchaser,  each  of  Purchaser's  officers,
directors,  agents,  affiliates,  control persons,  and principal  shareholders,
against  any  claim,  cost,  expense,  liability,  obligation,  loss  or  damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Purchaser   which   results,   arises   out  of  or  is   based   upon  (i)  any
misrepresentation  by  Company  or breach of any  warranty  by  Company  in this
Agreement  or in any  exhibits  or  schedules  attached  hereto  or any  Related
Agreement,  or (ii) any  breach or  default  in  performance  by  Company of any
covenant or  undertaking  to be  performed  by Company  hereunder,  or any other
agreement entered into by the Company and Purchaser relating hereto.

          7.2  Purchaser's Indemnification.  Purchaser agrees to indemnify, hold
harmless,  reimburse and defend the Company and each of the Company's  officers,
directors,  agents, affiliates,  control persons and principal shareholders,  at
all times  against any claim,  cost,  expense,  liability,  obligation,  loss or
damage (including  reasonable legal fees) of any nature,  incurred by or imposed
upon  the  Company  which  results,  arises  out of or is  based  upon  (i)  any
misrepresentation  by  Purchaser  or breach of any warranty by Purchaser in this
Agreement  or in any  exhibits  or  schedules  attached  hereto  or any  Related
Agreement;  or (ii) any breach or default in  performance  by  Purchaser  of any
covenant or  undertaking  to be performed by Purchaser  hereunder,  or any other
agreement entered into by the Company and Purchaser relating hereto.

          7.3  Procedures.  The procedures and  limitations set forth in Section
9.6 shall apply to the indemnifications set forth in Sections 7.1 and 7.2 above.



                                      -15-
<PAGE>

     8.   CONVERSION OF CONVERTIBLE NOTE.

          8.1  Mechanics of Conversion.

               (a)  Provided  the  Purchaser  has  notified  the  Company of the
Purchaser's  intention  to sell the Note Shares and the Note Shares are included
in an effective registration statement or are otherwise exempt from registration
when sold:  (i) Upon the  conversion  of the Note or part  thereof,  the Company
shall,  at its own cost and expense,  take all necessary  action  (including the
issuance of an opinion of counsel) to assure that the Company's  transfer  agent
shall issue stock  certificates in the name of the Purchaser (or its nominee) or
such other persons as designated by the Purchaser and in such  denominations  to
be  specified  representing  the  number  of  Note  Shares  issuable  upon  such
conversion;  and (ii) Provided that the Note Shares are included in an effective
registration  statement or are otherwise exempt from  registration,  the Company
warrants that no instructions other than these instructions have been or will be
given to the transfer agent of the Company's Common Stock.

               (b)  Purchaser  will give notice of its  decision to exercise its
right to convert the Note or part thereof by telecopying or otherwise delivering
an executed and completed  notice of the number of shares to be converted to the
Company  (the "Notice of  Conversion").  The  Purchaser  will not be required to
surrender the Note until the Purchaser  receives a certificate or  certificates,
as the case may be,  representing  the Note  Shares  or until  the Note has been
fully  satisfied.  Each date on which a Notice of  Conversion  is  telecopied or
delivered  to the Company in  accordance  with the  provisions  hereof  shall be
deemed a "Conversion Date." The Company will or will cause the transfer agent to
transmit  the  Company's  Common  Stock  certificates  representing  the  shares
issuable upon conversion of the Note (and a certificate representing the balance
of the Note not so  converted,  if requested by  Purchaser) to the Purchaser via
express  courier for receipt by such  Purchaser  within five business days after
receipt by the Company of the Notice of Conversion  (the  "Delivery  Date").  In
lieu of delivering physical certificates,  provided the Company's transfer agent
is  participating  in  the  Depository  Trust  Company  ("DTC")  Fast  Automated
Securities  Transfer program,  upon request of the Holder, the Company shall use
commercially  reasonably  efforts to cause its transfer agent to  electronically
transmit  such shares to the Holder by  crediting  the  account of the  Holder's
prime broker with DTC through its Deposit Withdrawal Agent Commission system.

               (c)  The Company  understands that a delay in the delivery of the
Note Shares in the form required  pursuant to Section 8 hereof, or the Mandatory
Redemption Payment described in Section 8.2 hereof,  beyond the Delivery Date or
Mandatory  Redemption  Payment  Date (as defined in Section 8.2) could result in
economic loss to the Purchaser.  As compensation to the Purchaser for such loss,
the Company  agrees to pay late  payments to the  Purchaser for late issuance of
the  Note  Shares  in the form  required  pursuant  to  Section  8  hereof  upon
conversion  of the  Note in the  amount  equal  to the  greater  of (i) $100 per
business day after the  Delivery  Date for each  $20,000  Note  principal  being
converted or redeemed or (ii) the  Purchaser's  actual damages from such delayed
delivery.  The Company  shall pay any  payments  incurred  under this Section in
immediately  available  funds upon demand  and,  in the case of actual  damages,
accompanied  by  reasonable   documentation  of  the  amount  of  such  damages.
Furthermore,  in addition to any other  remedies  which may be  available to the
Purchaser, in the event that the Company fails for any reason to effect delivery
of the Note Shares by the Delivery Date or make



                                      -16-
<PAGE>

payment by the Mandatory Redemption Payment Date, the Purchaser will be entitled
to revoke all or part of the  relevant  Notice of  Conversion  or rescind all or
part of the  notice of  Mandatory  Redemption  by  delivery  of a notice to such
effect to the Company  whereupon  the Company  and the  Purchaser  shall each be
restored to their respective positions immediately prior to the delivery of such
notice.

               (d)  Nothing  contained  herein or in any  document  referred  to
herein or  delivered  in  connection  herewith  shall be deemed to  establish or
require  the  payment of a rate of  interest  or other  charges in excess of the
maximum  permitted by applicable  law. In the event that the rate of interest or
dividends  required  to be paid or other  charges  hereunder  exceed the maximum
amount  permitted by such law,  any payments in excess of such maximum  shall be
credited against amounts owed by the Company to a Purchaser and thus refunded to
the Company.

          8.2  Mandatory  Redemption.  If  after  receiving  a valid  Notice  of
Conversion,  the Company is unable to issue Note Shares within five (5) business
days of a Delivery Date, for any reason, then at the Purchaser's  election,  the
Company must pay to the Purchaser ten (10) days after receipt of written request
by the Purchaser ("Mandatory Redemption Payment Date") a sum of money determined
by  multiplying  the  principal of the Note  required to be converted and not so
converted by 130%, together with accrued but unpaid interest thereon ("Mandatory
Redemption  Payment").  Upon receipt of the Mandatory  Redemption  Payment,  the
corresponding  Note  principal  and  interest  will be deemed paid and no longer
outstanding.

          8.3  Maximum  Conversion.  The  Purchaser  shall  not be  entitled  to
convert  on a  Conversion  Date that  amount of a Note in  connection  with that
number of shares of Common  Stock which would be in excess of the sum of (i) the
number of  shares  of Common  Stock  beneficially  owned by the  Purchaser  on a
Conversion Date, and (ii) the number of shares of Common Stock issuable upon the
conversion of the Note with respect to which the  determination  of this proviso
is being made on a Conversion Date,  which would result in beneficial  ownership
by the Purchaser of more than 4.99% of the outstanding shares of Common Stock of
the  Company  on such  Conversion  Date.  For the  purposes  of the  immediately
preceding sentence,  beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and Regulation  13d-3  thereunder.  Subject to
the foregoing, a Purchaser shall not be limited to aggregate conversions of only
4.99%. A Purchaser may void the conversion  limitation described in this Section
8.3 upon 75 days prior notice to the Company. Upon an Event of Default under the
Note, the conversion  limitation in this Section 8.3 shall automatically  become
null and void.

          8.4  Injunction  - Posting  of Bond.  In the event a  Purchaser  shall
elect to convert a Note or part thereof,  the Company may not refuse  conversion
for any reason, unless an injunction from a court, on notice, restraining and or
enjoining  conversion  of all or part of said Note  shall  have been  sought and
obtained and the Company posts a surety bond for the benefit of the Purchaser in
the  amount  of  130%  of the  amount  of the  Note,  which  is  subject  to the
injunction,   which  bond  shall  remain  in  effect  until  the  completion  of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Purchaser to the extent it obtains judgment.



                                      -17-
<PAGE>

          8.5  Optional  Redemption.   The  Company  will  have  the  option  of
redeeming the Note  ("Optional  Redemption") by paying to the Purchaser a sum of
money as follows:


               from the Closing  Date  through 30 days after the Closing  Date -
               102%
               from 31 days through 60 days after the Closing Date - 104%
               from 61 days through 90 days after the Closing Date - 106%
               from 91 days through 120 days after the Closing date -108%
               from 121 days through 150 days after the Closing date -110%
               from 151 days through 180 days after the Closing date -112%
               after 180 days following the Closing Date - 125%


of the principal  amount of the Note  together with accrued but unpaid  interest
thereon  and any and all other sums due,  accrued  or  payable to the  Purchaser
arising under this  Agreement,  Note or any other  document  delivered  herewith
("Redemption  Amount")  outstanding on the day notice of redemption  ("Notice of
Redemption) is given to a Purchaser  ("Redemption  Date").  Notwithstanding  the
foregoing,  if the implied return to the Purchaser  based on the market price of
the  Common  Stock on any of the three days  preceding  the  Redemption  Date is
greater than the percentages set forth above,  then the Redemption  Amount shall
be increased to equal the implied return to the Purchaser had the Purchaser been
permitted  to convert  the  principal  amount of the Note into  shares of Common
Stock at the  relevant  Conversion  Price on the  Redemption  Date.  A Notice of
Redemption  may not be given in  connection  with any  portion of Note for which
notice of conversion  has been given by the Purchaser at any time before receipt
of a Notice of Redemption.  The Redemption  Amount must be paid in good funds to
the Purchaser no later than the seventh (7th)  business day after the Redemption
Date ("Optional Redemption Payment Date"). In the event the Company fails to pay
the  Redemption  Amount  by the  Optional  Redemption  Payment  Date,  then  the
Redemption  Notice will be null and void and the Company will thereafter have no
further right to effect an Optional  Redemption.  A Notice of Redemption  may be
given by the  Company,  provided no Event of Default,  as  described in the Note
shall have occurred or be continuing.

     9.   REGISTRATION RIGHTS.

          9.1  Registration  Rights  Granted.  The  Company  hereby  grants  the
following registration rights to the Purchaser.

               (a)  For a period  commencing 90 days after the Closing Date, but
not later than four (4) years after the Closing Date (the "Request  Date"),  the
Company, upon a written request ("Request for Registration")  therefore from the
Purchaser (the Note Shares and Warrant Shares issued or issuable upon conversion
of the Note or exercise of the Warrant issued hereunder, being, the "Registrable
Securities"), shall prepare and file with the SEC a registration statement under
the Securities Act covering the Registrable  Securities which are the subject of
such  request,   unless  the  Company  has  given  the  Purchaser  a  Notice  of
Registration and/or such Registrable  Securities are the subject of an effective
registration  statement.  As a condition precedent to the Company's  preparation
and filing of a registration statement, the Purchaser shall promptly provide the
Company with all such information as the Company



                                      -18-
<PAGE>

reasonably requests.  The obligation of the Company under this Section 9.1 shall
be limited to two registration statements.

               (b)  If the Company at any time  proposes to register  any of its
securities under the Act for sale to the public,  whether for its own account or
for the  account of other  security  holders  or both,  except  with  respect to
registration  statements  on Forms S-4,  S-8 or another form not  available  for
registering  the  Registrable  Securities  for sale to the public,  provided the
Registrable  Securities are not otherwise  subject to an effective  registration
statement,  the  Company  will give the  Purchaser  written  notice  ("Notice of
Registration")  to cause such  Registrable  Securities  to be included  with the
securities to be covered by the registration  statement  proposed to be filed by
the Company. In the event that any registration  pursuant to this Section 9.1(b)
shall be, in whole or in part, an  underwritten  public offering of Common Stock
of the Company, the number of shares of Registrable Securities to be included in
such an  underwriting  may be reduced by the managing  underwriter if and to the
extent that the Company and the underwriter  shall  reasonably be of the opinion
that such inclusion would adversely affect the marketing of the securities to be
sold by the Company therein;  provided,  however,  that the Company shall notify
the  Purchaser in writing of any such  reduction.  Notwithstanding  the forgoing
provisions,  or Section  9.1(a)  hereof,  the Company  may  withdraw or delay or
suffer a delay of any  registration  statement  referred to in Section 9.1(a) or
(b) without  thereby  incurring any liability to the  Purchaser,  so long as the
registration provisions are otherwise complied with by the Company.

               (c)  If, a Request  for  Registration  is received by the Company
pursuant  to  Section  9.1(a) and the  Company  determines  to proceed  with the
preparation  and filing of a registration  statement  under the Securities  Act,
such  Request for  Registration  shall be deemed to have been given  pursuant to
Section  9.1(b)  rather than  Section  9.1(a),  and the rights of the  Purchaser
pursuant to such Request for Registration shall be governed by Section 9.1(b).

               (d)  The Company shall use its reasonable  commercial  efforts to
file a Form S-3  registration  statement (or such other form that it is eligible
to use)  in  order  to  register  the  Registrable  Securities  for  resale  and
distribution under the Securities Act with the SEC within 45 days of the Closing
Date (the "Filing  Date"),  and use its reasonable  commercial  efforts to cause
such  registration  statement  to be declared  effective  within 120 days of the
Filing Date (the  "Effective  Date").  The Company will register not less than a
number of shares of Common Stock in the  aforedescribed  registration  statement
that is equal to the Warrant Shares and 200% of the Note Shares  issuable at the
Conversion and Purchase Prices set forth in the Note and Warrant,  respectively,
that  would be in  effect  on the  Closing  Date or the date of  filing  of such
registration  statement  (employing  the price which would result in the greater
number of Shares),  assuming the  conversion of 100% of the principal  amount of
the Note which is then  outstanding,  and at least one share of Common Stock for
each common  share  issuable  upon  exercise of the Warrant.  Such  registration
statement will be promptly amended or additional registration statements will be
promptly filed by the Company as necessary to register additional Company Shares
to allow the public  resale of all Common  Stock  included  in and  issuable  by
virtue of the  Registrable  Securities.  Unless  required by agreements with the
Company's  shareholders  entered into prior to the date hereof, and set forth on
Schedule 9.1 hereto,  no securities  of the Company  other than the  Registrable
Securities  will be included in the  registration  statement  described  in this
Section 9.1(d).



                                      -19-
<PAGE>

          9.2  Registration Procedures.  If and whenever the Company is required
by  the  provisions  hereof  to  effect  the  registration  of  the  Registrable
Securities under the Act, the Company will, as expeditiously as possible:

               (a)  prepare and file with the SEC a registration  statement with
respect to such  securities and use its best efforts to cause such  registration
statement  to become and  remain  effective  for the period of the  distribution
contemplated  thereby  (determined as herein provided),  and promptly provide to
the Purchaser copies of all filings and SEC letters of comment;

               (b)  prepare   and  file  with  the  SEC  such   amendments   and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration  statement effective for
a period of one year,  and comply with the provisions of the Securities Act with
respect to the disposition of all of the Registrable  Securities covered by such
registration  statement in accordance  with the  Purchaser's  intended method of
disposition set forth in such registration statement for such period;

               (c)  furnish to the  Purchaser,  and to each  underwriter if any,
such number of copies of the registration  statement and the prospectus included
therein (including each preliminary  prospectus) as the Purchaser reasonably may
request to facilitate the public sale or  disposition of the securities  covered
by such registration statement;

               (d)  use its best efforts to register or qualify the  Purchaser's
Registrable   Securities  covered  by  such  registration  statement  under  the
securities or "blue sky" laws of such  jurisdictions as the Purchaser and in the
case  of  an  underwritten  public  offering,  the  managing  underwriter  shall
reasonably request,  provided,  however, that the Company shall not for any such
purpose be  required  to qualify  generally  to  transact  business as a foreign
corporation  in any  jurisdiction  where it is not so qualified or to consent to
general service of process in any such jurisdiction;

               (e)  list the Registrable Securities covered by such registration
statement with any securities  exchange on which the Common Stock of the Company
is then listed;

               (f)  immediately  notify the Purchaser and each underwriter under
such  registration  statement at any time when a prospectus  relating thereto is
required to be delivered under the Securities Act, of the happening of any event
of which the Company has knowledge as a result of which the prospectus contained
in such registration  statement, as then in effect, includes an untrue statement
of a  material  fact or omits to state a  material  fact  required  to be stated
therein or necessary to make the  statements  therein not misleading in light of
the circumstances then existing;

               (g)  make  available  for   inspection  by  the  Purchaser,   any
underwriter  participating  in any  distribution  pursuant to such  registration
statement, and any attorney, accountant or other agent retained by the Purchaser
or underwriter,  all publicly  available,  non-confidential  financial and other
records,  pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all publicly



                                      -20-
<PAGE>

available,  non-confidential  information  reasonably  requested  by the seller,
underwriter,  attorney, accountant or agent in connection with such registration
statement; and

               (h)  Black-out Period. Without limiting the provisions of Section
9.4, each holder of Registrable  Securities  agrees that, if so requested by the
Company,  not to effect any offer or sale of shares pursuant to the Registration
Statement,  or otherwise, or engage in any hedging or other transaction intended
to reduce or transfer the risk of ownership for any period deemed  necessary (x)
by the Company or any  underwriter  in  connection  with the  offering of Common
Stock pursuant to any demand  registration rights granted to any other person or
to the offering of Common Stock by the Company for its own account or (y) by the
Company in connection  with any proposal or plan by the Company to engage in any
material financing or material  acquisition or disposition by the Company or any
subsidiary  thereof of the capital stock or substantially  all the assets of any
other person (other than in the ordinary  course of business),  any tender offer
or any merger,  consolidation,  corporate reorganization,  strategic partnership
arrangement or  restructuring  or other similar  transaction  (each, a "Business
Combination") material to the Company and its subsidiaries taken as a whole. Any
period  within the  Effective  Period during which the Company fails to keep the
Registration  Statement  effective  and usable for  resales  of the  Shares,  or
requires pursuant to this subsection that the Holders not effect sales of shares
pursuant  to  the  Registration   Statement,  is  hereafter  referred  to  as  a
"Suspension Period." A Suspension Period shall commence on the date set forth in
a written notice by the Company to the Holders that the  Registration  Statement
is no  longer  usable  for  resales  of shares  or, in the case of a  suspension
pursuant to this  subsection the date  specified in the notice  delivered by the
Company pursuant to this subsection,  and shall end on the date when each holder
of shares covered by the  Registration  Statement  either receives the copies of
the supplemented or amended  prospectus  contemplated by herein or is advised in
writing by the Company that use of the prospectus or sales may be resumed.

          9.3  Provision of Documents.

               (a)  In  connection  with  each   registration   hereunder,   the
Purchaser  will  furnish  to  the  Company  in  writing  such   information  and
representation  letters with respect to itself and the proposed  distribution by
it as reasonably  shall be necessary in order to assure  compliance with federal
and  applicable  state  securities  laws. In connection  with each  registration
pursuant to Section 9 covering an underwritten public offering,  the Company and
the  Purchaser  agree to  enter  into a  written  agreement  with  the  managing
underwriter in such form and containing  such provisions as are customary in the
securities  business  for  such an  arrangement  between  such  underwriter  and
companies of the Company's size and investment stature.

          9.4  Non-Registration Events. The Company and the Purchaser agree that
the Purchaser will suffer damages if (i) the registration  statement on Form S-3
or such other form as described in Section  9.1(d) is not filed on or before the
Filing Date or not declared  effective on or before the sooner of the  Effective
Date, or within five days of receipt by the Company of a communication  from the
SEC that the  registration  statement  described  in Section  9.1(d) will not be
reviewed,  or (ii) any  registration  statement  described in Section  9.1(d) is
filed and declared effective but shall thereafter cease to be effective (without
being succeeded  immediately by an additional  registration  statement filed and
declared effective) for a period of time which shall



                                      -21-
<PAGE>

exceed  30 days in the  aggregate  per  year but not  more  than 20  consecutive
calendar  days  (defined  as a  period  of 365 days  commencing  on the date the
Registration  Statement is declared  effective)  (each such event referred to in
this Section 9.4 is referred to herein as a "Non-Registration Event"), then, for
so long as such Non-Registration  Event shall continue, the Company shall pay in
cash as  Liquidated  Damages to each  holder of any  Registrable  Securities  an
amount equal to one percent  (1%) per month or part thereof  during the pendency
of such Non-Registration Event of the principal of the Note issued in connection
with the Offering, whether or not converted, then owned of record by such holder
or issuable  as of or  subsequent  to the  occurrence  of such  Non-Registration
Event.  Payments to be made  pursuant to this  Section  shall be due and payable
immediately upon demand in immediately available funds. In the event a Mandatory
Redemption  Payment is  demanded  from the  Company by the  holder  pursuant  to
Section 8.2 of this  Agreement,  then the Liquidated  Damages  described in this
Section  9.4  shall no  longer  accrue  on the  portion  of the  purchase  price
underlying the Mandatory Redemption Payment,  from and after the date the holder
receives the Mandatory Redemption Payment. It shall be deemed a Non-Registration
Event to the  extent  that all the  Common  Stock  included  in the  Registrable
Securities  and  underlying  the  Securities  is not  included  in an  effective
registration  statement  as of and after the  Effective  Date at the  conversion
prices in effect from and after the Effective Date.

          9.5  Expenses.  All expenses incurred by the Company in complying with
Section 9, including,  without  limitation,  all  registration  and filing fees,
printing  expenses,  fees and  disbursements  of counsel and independent  public
accountants for the Company,  fees and expenses  (including  reasonable  counsel
fees) incurred in connection with complying with state  securities or "blue sky"
laws, fees of the NASD,  transfer taxes, fees of transfer agents and registrars,
fees of, and disbursements incurred by, one counsel for the Purchaser, and costs
of insurance are called "Registration  Expenses". All underwriting discounts and
selling commissions applicable to the sale of Registrable Securities,  including
any fees and  disbursements of any special counsel to the Purchaser beyond those
included in Registration Expenses, are called "Selling Expenses."

               The  Company  will pay all  Registration  Expenses.  All  Selling
Expenses in connection with each registration statement under Section 9 shall be
borne by the Purchaser.

          9.6  Indemnification.

               (a)  In the event of a registration of any Registrable Securities
under the  Securities  Act pursuant to Section 9, the Company will indemnify and
hold harmless the Purchaser, and its officers,  directors and each other person,
if any, who controls the  Purchaser  within the meaning of the  Securities  Act,
against any losses, claims,  damages or liabilities,  joint or several, to which
the  Purchaser,  or such persons may become  subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect  thereof) arise out of or are based upon any untrue statement or alleged
untrue  statement of any material fact contained in any  registration  statement
under which such Registrable Securities were registered under the Securities Act
pursuant to Section 9, any preliminary  prospectus or final prospectus contained
therein,  or any amendment or supplement  thereof,  or arise out of or are based
upon the omission or alleged  omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the



                                      -22-
<PAGE>

Purchaser,  and each such  person  for any  reasonable  legal or other  expenses
incurred by them in connection  with  investigating  or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable  in any such  case if and to the  extent  that any such  loss,  claim,
damage  or  liability  arises  out of or is based  upon an untrue  statement  or
alleged untrue  statement or omission or alleged  omission so made in conformity
with  information  furnished by any the  Purchaser or any such person in writing
specifically for use in any such document and provided further, that the Company
shall not be liable in any such case to the extent  that any such  losses  arise
out of or are based upon an untrue  statement  or alleged  untrue  statement  or
omission or alleged omission in the final  prospectus,  if such untrue statement
or alleged untrue  statement or omission or alleged  omission is corrected in an
amendment or supplement to the final prospectus and such Holder thereafter fails
to deliver  such final  prospectus  as so  amended or  supplemented  prior to or
concurrently  with  the  sale  of  the  Registrable  Securities  covered  by the
registration statement to the person asserting such losses after the Company had
furnished such Holder with a sufficient number of copies thereof in a manner and
at a time sufficient to permit delivery of the same by such Holder.

               (b)  In the event of a registration of the Registrable Securities
under the Securities Act pursuant to Section 9, the Purchaser will indemnify and
hold harmless the Company, and its officers, directors and each other person, if
any, who controls the Company within the meaning of the Securities Act,  against
all losses,  claims,  damages or  liabilities,  joint or  several,  to which the
Company  or  such  persons  may  become  subject  under  the  Securities  Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect  thereof) arise out of or are based upon any untrue statement or alleged
untrue  statement of any material fact contained in the  registration  statement
under which such Registrable Securities were registered under the Securities Act
pursuant to Section 9, any preliminary  prospectus or final prospectus contained
therein,  or any amendment or supplement  thereof,  or arise out of or are based
upon the omission or alleged  omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such person for any reasonable  legal or
other expenses  incurred by them in connection with  investigating  or defending
any such loss, claim, damage, liability or action,  provided,  however, that the
Purchaser  will be liable in any such  case if and only to the  extent  that any
such loss,  claim,  damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished in writing to the Company by the Purchaser
specifically for use in any such document.

               (c)  Promptly after receipt by an indemnified  party hereunder of
notice of the  commencement of any action,  such  indemnified  party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof,  but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such  indemnified  party other than under this Section  9.6(c) and shall only
relieve it from any liability which it may have to such indemnified  party under
this Section 9.6(c) if and to the extent the indemnifying party is prejudiced by
such omission.  In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying  party of the  commencement  thereof,
the indemnifying party shall be entitled to participate in and, to the extent it
shall  wish,  to  assume  and   undertake  the  defense   thereof  with  counsel
satisfactory to such indemnified  party, and, after notice from the indemnifying
party to such indemnified party



                                      -23-
<PAGE>

of its election so to assume and undertake the defense thereof, the indemnifying
party shall not be liable to such  indemnified  party under this Section  9.6(c)
for any  legal  expenses  subsequently  incurred  by such  indemnified  party in
connection with the defense thereof other than reasonable costs of investigation
and of liaison  with  counsel  so  selected,  provided,  however,  that,  if the
defendants  in any such  action  include  both  the  indemnified  party  and the
indemnifying  party and the indemnified  party shall have  reasonably  concluded
that there may be reasonable  defenses  available to it which are different from
or additional to those available to the  indemnifying  party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the  indemnifying  party,  the  indemnified  parties  shall have the right to
select one separate  counsel and to assume such legal  defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and fees
of such separate counsel and other expenses related to such  participation to be
reimbursed by the indemnifying party as incurred.

               In order to provide for just and  equitable  contribution  in the
event of joint  liability  under the  Securities Act in any case in which either
(i) the Purchaser, or any controlling person of the Purchaser, makes a claim for
indemnification pursuant to this Section 9.6 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such  indemnification may not be enforced in such case  notwithstanding the fact
that this  Section  9.6  provides  for  indemnification  in such  case,  or (ii)
contribution  under  the  Securities  Act  may be  required  on the  part of the
Purchaser or  controlling  person of the  Purchaser in  circumstances  for which
indemnification is provided under this Section 9.6; then, and in each such case,
the Company and the Purchaser will contribute to the aggregate  losses,  claims,
damages or  liabilities to which they may be subject  (after  contribution  from
others) in such  proportion  so that the Purchaser is  responsible  only for the
portion  represented  by the  percentage  that the public  offering price of its
securities  offered by the  registration  statement bears to the public offering
price  of all  securities  offered  by such  registration  statement,  provided,
however,  that,  in any such case,  (A) the  Purchaser  will not be  required to
contribute  any  amount  in  excess  of the  public  offering  price of all such
securities  offered by it pursuant to such  registration  statement;  and (B) no
person or entity guilty of fraudulent  misrepresentation  (within the meaning of
Section  10(f) of the Act) will be entitled to  contribution  from any person or
entity who was not guilty of such fraudulent misrepresentation.

          9.7  Termination.  The rights  and  obligations  under this  Section 9
(other than under Sections 9.6 and 9.7) shall  automatically  terminate upon the
earlier to occur of (a) the sale of all Registrable  Securities by the Purchaser
and (b) the date on which the Registrable Securities shall have been outstanding
for five years. No holder shall have the right to request to include Registrable
Securities in any registration  statement if (a) the Registrable  Securities are
eligible for sale pursuant to Rule 144(k), or (b) the Registrable Securities are
eligible  for sale  pursuant  to Rule  144 and the  Purchaser  owns  Registrable
Securities  in the amount of less than 1% of the  Company's  outstanding  Common
Stock.

     10.  OFFERING  RESTRICTIONS.  Except  as  previously  disclosed  in the SEC
Reports or stock or stock  options  granted to  employees  or  directors  of the
Company;  or  equity or debt  issued  in  connection  with an  acquisition  of a
business or assets by the  Company;  or the  issuance by the Company of stock in
connection with the establishment of a joint venture partnership or



                                      -24-
<PAGE>

licensing arrangement (these exceptions hereinafter referred to as the "Excepted
Issuances"),  the Company will not issue any securities with a variable/floating
conversion  feature  which  are or  could  be (by  conversion  or  registration)
free-trading  securities  prior to the full  repayment or conversion of the Note
(the  "Exclusion  Period"),  except  in the case  where the  proceeds  from such
financing are used to pay in full the Company's obligations under the Note. This
restriction shall not prohibit the Company from issuing any equity,  convertible
debt or  other  securities  prior to the  expiration  of the  Exclusion  Period,
provided that such equity,  convertible  debt or other securities are restricted
securities  when  issued  and  remain  restricted  until the  expiration  of the
Exclusion  Period.  The  provisions  of  this  Section  10  shall  automatically
terminate upon the full repayment or conversion of the Note.

     11.  SECURITY INTEREST.  As a condition of Closing,  the Company will grant
to the Purchaser a security  interest in certain assets of the Company  pursuant
to a Security  Agreement.  The  Company  will also  execute  all such  documents
reasonably  necessary to memorialize and further  protect the security  interest
described  above. To the extent required by any bank or lender  providing a loan
to the Company (each a "Bank" and together the "Banks"), the Purchaser agrees to
enter into a  subordination  agreement  with  respect to the  security  interest
herein as may reasonably be requested by any such Bank or Banks

     12.  MISCELLANEOUS.

          12.1 Governing Law. This Agreement  shall be governed by and construed
in  accordance  with  the laws of the  State  of New  York,  without  regard  to
principles of conflicts of laws.  Any action brought by either party against the
other  concerning  the  transactions  contemplated  by this  Agreement  shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York. Both parties and the individuals executing this Agreement
and  other  agreements  on  behalf  of  the  Company  agree  to  submit  to  the
jurisdiction of such courts and waive trial by jury. The prevailing  party shall
be entitled to recover from the other party its reasonable  attorney's  fees and
costs.  In the event that any provision of this Agreement or any other agreement
delivered  in  connection   herewith  is  invalid  or  unenforceable  under  any
applicable  statute  or  rule  of law,  then  such  provision  shall  be  deemed
inoperative  to the extent that it may  conflict  therewith  and shall be deemed
modified to conform with such statute or rule of law. Any such  provision  which
may prove invalid or  unenforceable  under any law shall not affect the validity
or enforceability of any other provision of any agreement.

          12.2 Survival.   The   representations,   warranties,   covenants  and
agreements made herein shall survive any investigation made by the Purchaser and
the  closing of the  transactions  contemplated  hereby.  All  statements  as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company  pursuant  hereto in connection  with the  transactions
contemplated  hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.

          12.3 Successors and Assigns.  Except as otherwise  expressly  provided
herein,  the  provisions  hereof  shall  inure to the benefit of, and be binding
upon,  the  successors,  assigns,  heirs,  executors and  administrators  of the
parties  hereto and shall  inure to the  benefit of and be  enforceable  by each
person  who shall be a holder  of at least  100,000  shares  of Common  Stock or
$100,000 principal amount of the Securities from time to time.



                                      -25-
<PAGE>

          12.4 Entire  Agreement.  This  Agreement,  the exhibits and  schedules
hereto, the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire  understanding  and agreement between the parties
with regard to the subjects  hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.

          12.5 Severability.  In case any  provision of the  Agreement  shall be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

          12.6 Amendment and Waiver.

               (a)  This  Agreement  may be  amended or  modified  only upon the
written consent of the Company and the Purchaser.

               (b)  The obligations of the Company and the rights of the holders
of the  Securities  under  the  Agreement  may be waived  only with the  written
consent of such holders of Securities. The rights of the holder of a Note may be
waived only with the written consent of the holder of such Note.

          12.7 Delays or  Omissions.  It is agreed  that no delay or omission to
exercise  any right,  power or remedy  accruing  to any party,  upon any breach,
default or  noncompliance  by another party under this  Agreement or the Related
Agreements,  shall  impair  any such  right,  power or  remedy,  nor shall it be
construed to be a waiver of any such breach,  default or  noncompliance,  or any
acquiescence  therein, or of or in any similar breach,  default or noncompliance
thereafter occurring. All remedies, either under this Agreement, the Note or the
Related  Agreements,  by law  or  otherwise  afforded  to any  party,  shall  be
cumulative and not alternative.

          12.8 Notices.  All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be  notified,  (b) when sent by  confirmed  telex or  facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day,  (c) five days after  having been sent by  registered  or  certified  mail,
return receipt requested,  postage prepaid,  or (d) one day after deposit with a
nationally  recognized  overnight  courier,  specifying next day delivery,  with
written verification of receipt. All communications shall be sent to the Company
at the address as set forth on the signature page hereof and to the Purchaser at
the address set forth on the signature  page hereto for such  Purchaser,  with a
copy in the case of the  Purchaser  to Daniel  M.  Laifer,  Esq.,  152 West 57th
Street,  4th Floor, New York, NY 10019,  facsimile number (212) 541-4434,  or at
such other  address as the Company or the  Purchaser  may  designate by ten days
advance written notice to the other parties hereto.

          12.9 Attorneys'  Fees.  In the  event  that  any  suit  or  action  is
instituted to enforce any provision in this Agreement,  the prevailing  party in
such dispute shall be entitled to recover from the losing party all fees,  costs
and  expenses  of  enforcing  any right of such  prevailing  party under or with
respect to this Agreement, including, without limitation, such



                                      -26-
<PAGE>

reasonable fees and expenses of attorneys and accountants,  which shall include,
without limitation, all fees, costs and expenses of appeals.

          12.10 Titles and Subtitles. The titles of the sections and subsections
of the  Agreement  are  for  convenience  of  reference  only  and are not to be
considered in construing this Agreement.

          12.11 Facsimile Signatures;   Counterparts.   This  Agreement  may  be
executed by  facsimile  signatures  and in any number of  counterparts,  each of
which shall be an  original,  but all of which  together  shall  constitute  one
instrument.

          12.12 Broker's Fees. Each party hereto represents and warrants that no
agent,  broker,  investment banker,  person or firm acting on behalf of or under
the  authority  of such party  hereto is or will be entitled to any  broker's or
finder's fee or any other  commission  directly or indirectly in connection with
the transactions contemplated herein, except as specified herein with respect to
the  Purchaser.  Each party hereto  further agrees to indemnify each other party
for any claims,  losses or expenses  incurred by such other party as a result of
the representation in this Section 12.12 being untrue.

          12.13 Construction.  Each party  acknowledges  that its legal  counsel
participated  in the  preparation of this Agreement and,  therefore,  stipulates
that the rule of construction  that  ambiguities are to be resolved  against the
drafting party shall not be applied in the  interpretation  of this Agreement to
favor any party against the other.



                                      -27-
<PAGE>



         IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.


COMPANY:                              PURCHASER:

BRIAZZ, INC.                          LAURUS MASTER FUND, LTD.


By: /s/ Victor D. Alhadeff            By:   /s/ David Grin
    -----------------------               -----------------------------------
Name:                                 Name:
Title:                                Address:  c/o Ironshore Corporate
Address:                                        Services Ltd.
3901 - 7th Avenue South, Suite 200              P.O. Box 1234 G.T.,
Seattle, Washington 98108                       Queensgate House, South
                                                  Church Street
                                                Grand Cayman, Cayman Islands









                 [Securities Purchase Agreement Signature Page]

<PAGE>

                                LIST OF EXHIBITS


Form of Offering Convertible Note                          Exhibit A

Form of Warrant                                            Exhibit B

Form of Opinion                                            Exhibit C




<PAGE>


                                    EXHIBIT A

                            FORM OF CONVERTIBLE NOTE








                                      A-1
<PAGE>



                                    EXHIBIT B

                                 FORM OF WARRANT








                                       B-1
<PAGE>


                                   EXHIBIT C

                                 FORM OF OPINION


     1.   The Company is a  corporation  validly  existing and in good  standing
under the laws of the State of Washington and has all requisite  corporate power
and  authority  to own,  operate  and lease its  properties  and to carry on its
business as it is now being conducted.

     2.   The  Company  has the  requisite  corporate  power  and  authority  to
execute,  deliver and perform its  obligations  under the  Agreement and Related
Agreements.  All  corporate  action on the part of the  Company,  its  officers,
directors and stockholders  necessary for (i) the authorization of the Agreement
and Related  Agreements,  and the  performance of all obligations of the Company
thereunder  at the  Closing,  and (ii) the  authorization,  sale,  issuance  and
delivery of the Securities  pursuant to the Agreement and the Related Agreements
has been taken. The Note Shares and the Warrant Shares,  when issued pursuant to
and in accordance  with the terms of the Agreement and upon  delivery,  shall be
validly issued and outstanding, fully paid and non assessable.

     3.   The execution,  delivery and performance of the Agreement, the Note or
the Related  Agreements by the Company and the  consummation of the transactions
contemplated  by any thereof,  will not, with or without the giving of notice or
the passage of time or both:

          (a)  Violate the  provisions  of the Charter or bylaws of the Company;
     or

          (b) To the best of such  counsel's  knowledge,  violate any  judgment,
     decree, order or award of any court binding upon the Company.

     4.   The Agreement and Related  Agreements  constitute  and the Note,  upon
their issuance will  constitute,  valid and legally  binding  obligations of the
Company,  and are  enforceable  against  the  Company in  accordance  with their
respective terms.

     5.   The sale of the Note and the  subsequent  conversion  of the Note into
Note Shares are not and will not be subject to any preemptive rights or, to such
counsel's knowledge,  rights of first refusal that have not been properly waived
or complied  with.  The sale of the Warrant and the  subsequent  exercise of the
Warrant  for  Warrant  Shares are not and will not be subject to any  preemptive
rights or, to such  counsel's  knowledge,  rights of first refusal that have not
been properly waived or complied with.

     6.   Assuming the accuracy of the  representations  and  warranties  of the
Purchasers  contained  in the  Agreement,  the offer,  sale and  issuance of the
Securities will be exempt from the  registration  requirements of the Securities
Act, and will have been registered or qualified (or are exempt from registration
and qualification) under the registration,  permit or qualification requirements
of  all  applicable  state  securities  laws.  To the  best  of  such  counsel's
knowledge, 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



                                      C-1
<PAGE>


buy and  security  under  circumstances  that would  cause the  offering  of the
Securities  pursuant to this Agreement to be integrated  with prior offerings by
the Company for purposes of the  Securities  Act which would prevent the Company
from selling the Securities  pursuant to Rule 506 under the  Securities  Act, or
any applicable exchange-related stockholder approval provisions.

     7.   There is no action, suit,  proceeding or investigation  pending or, to
the best of such counsel's  knowledge,  currently threatened against the Company
that  questions the validity of the  Agreement or the Related  Agreements or the
right of the Company to enter into any of such agreements,  or to consummate the
transactions contemplated thereby, or which might result, either individually or
in the  aggregate,  in any  material  adverse  change in the assets,  condition,
affairs or prospects of the Company,  financially or otherwise, or any change in
the current  equity  ownership  of the  Company.  To the best of such  counsel's
knowledge, the Company is not a party or subject to the provisions of any order,
writ,  injunction,  judgment  or  decree of any  court or  government  agency or
instrumentality;  nor is there any action, suit,  proceeding or investigation by
the Company currently pending or which the Company intends to initiate.














                                      C-2

<PAGE>


                              DISCLOSURE SCHEDULE


                                 Schedule 4.3(b)
                          Capitalization; Voting Rights

The Company has outstanding warrants to purchase the Company's common stock. The
warrants are described in Note 3to the Company's  financial  statements  for the
quarter ended March 31, 2002.

                                  Schedule 4.8
                                     Changes

There have been no changes as  described in Section  4.8,  except those  changes
that have been  reported  in the  Company's  public  filings  with the SEC since
December 31, 2001.

                                  Schedule 4.15
                      Registration Rights and Voting Rights

The Company has granted  registration rights pursuant to the Registration Rights
Agreement  among the Company and certain of its  shareholders  dated  August 15,
1997.  This  agreement was filed as exhibit 10.8 to the  Company's  Registration
Statement on Form S-1.


                                  Schedule 4.23
                                     Listing

The  Company is not in  compliance  with the public  float  requirement  for the
Nasdaq National Market.





</TEXT>
</DOCUMENT>
