SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES  ACT OF 1933,  AND HAVE BEEN ACQUIRED FOR  INVESTMENT  AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION  THEREOF.  NO SUCH SALE
OR  DISPOSITION  MAY BE EFFECTED  WITHOUT AN  EFFECTIVE  REGISTRATION  STATEMENT
RELATED  THERETO OR AN OPINION OF COUNSEL  ACCEPTABLE  TO THE COMPANY  THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

                           CONVERTIBLE PROMISSORY NOTE

$2,000,000.00                                                  December 22, 1999
                                                             Seattle, Washington

         For  value  received,  Ubarter.com,  Inc.,  a Nevada  corporation  (the
"Company"),  promises to pay to ShopNow.com Inc., a Washington  corporation (the
"Holder"),  the principal sum of Two Million Dollars  ($2,000,000.00).  Interest
shall accrue from the date of this Note on the unpaid principal amount at a rate
equal to eight and one-half percent (8.5%) per annum, simple interest.  Interest
will be computed on the basis of a 360-day year of twelve  30-day  months.  This
Note is subject to the following terms and conditions.

1. Maturity. Subject to Section 2, principal and all accrued and unpaid interest
under this Note shall be due and  payable  upon demand by the Holder at any time
after June 22, 2000 (the "Maturity Date").  Notwithstanding  the foregoing,  the
entire unpaid  principal sum of this Note,  together with all accrued and unpaid
interest thereon,  shall become  immediately due and payable in the event of any
Event of Default (as defined below).

2.       Conversion.

(a)  Termination of LOI. The entire  principal  amount of and accrued and unpaid
interest  on this Note  shall  automatically  be  converted  into fully paid and
nonassessable  shares of the Company's  common stock  ("Common  Stock") upon the
earlier to occur of (1) the termination of the binding  provisions (the "Binding
Provisions")  of that certain Letter of Intent,  dated December 20, 1999,  among
Holder, the Company,  Steven M. White and New Horizons LP (the "LOI"), by Holder
pursuant  to  Paragraph  J(ii) of the LOI,  (2) the  termination  of the Binding
Provisions  by the Company  pursuant to  Paragraphs  J(iii) of the LOI,  (3) the
acceptance by the Company of a proposal to effect an Alternative Transaction (as
defined in the LOI), (4) the failure of the transaction  contemplated in the LOI
to be consummated  on or before the date  designated for the Closing (as defined
in the LOI) for any reason other than the Company's closing conditions not being
satisfied  on or prior to such date due to any  omission or  affirmative  act of
Holder,  (5) the termination of the Binding Provisions by the Company and Holder
pursuant  to  Paragraph  J(i) of the LOI,  (6) the  termination  of the  Binding
Provisions  by  the  Company  pursuant  to  Paragraph  J(ii)  of  the  LOI,  (7)
termination of the Binding  Provisions by Holder pursuant to Paragraphs  J(iii),
J(iv) or J(v) of the LOI, or (8) the failure of the Company's closing conditions
to the  transaction  proposed in the LOI to be satisfied on or prior to the date
designated for the Closing due to any omission or affirmative act of Holder. (b)

<PAGE>


(b)           Number of Shares Issued upon Termination by the Company. Upon the
conversion of this Note due to the occurrence of an event represented by clauses
(1), (2),(3) or (4) of Section 2(a) above, the number of shares of Common  Stock
to be issued upon such conversion shall be equal to the quotient  obtained by
dividing (x) the entire principal amount of this Note plus accrued and unpaid
interest by (y) $2.15 (the "Company Termination  Conversion Price"),  rounded to
the nearest whole share.

(c)          Number of Shares Issued upon  Termination by Holder.  Upon the
conversion of this Note due to the occurrence of an event represented by clauses
(5), (6), (7) or (8) of Section 2(a) above, the number of shares of Common Stock
to be issued upon such conversion shall be equal to the quotient obtained by
dividing (x) the entire  principal  amount of this Note plus  accrued and unpaid
interest by (y) $3.58 (the "Holder Termination Conversion Price"),  rounded to
the nearest whole share.

(d)      Warrant Coverage.

     (i) In the event of a conversion of this Note pursuant to clauses (1), (2),
(3) or (4) of Section 2(a) above, the Company shall issue to Holder a warrant to
purchase a number of shares of Common  Stock  equal to the  quotient of (A) 125%
times the entire  principal amount of this Note plus accrued and unpaid interest
divided by (B) the Company Termination Conversion Price. Such warrant shall have
a term of 7  years  and an  exercise  price  equal  to the  Company  Termination
Conversion  Price,  rounded to the nearest  whole share.  The form of warrant is
attached as Appendix A hereto.

     (ii) In the event of a  conversion  of this Note  pursuant to clauses  (5),
(6),  (7) or (8) of Section  2(a)  above,  the  Company  shall issue to Holder a
warrant to purchase a number of shares of Common  Stock equal to the quotient of
(i) 50% times the entire  principal  amount of this Note plus accrued and unpaid
interest divided by (ii) the Holder Termination  Conversion Price. Such warrants
shall  have a term  of 7  years  and  an  exercise  price  equal  to the  Holder
Termination  Conversion  Price,  rounded to the nearest whole share. The form of
warrant is attached as Appendix A hereto.

(e)          Mechanics and Effect of  Conversion.  No fractional  shares of the
Company's capital  stock  will be issued  upon  conversion  of this  Note.  In
lieu of any fractional  share to which the Holder would  otherwise be entitled,
the Company will pay to the  Holder in cash the  amount  of the  unconverted
principal  and interest  balance  of this Note that  would  otherwise  be
converted  into such fractional  share.  Upon conversion of this Note pursuant
to this Section 2, the Holder shall surrender this Note, duly endorsed, at the
principal offices of the Company or any transfer agent of the Company. At its
expense,  the Company will, as soon as  practicable  thereafter,  issue and
deliver to such Holder,  at such principal office, a certificate or certificates
for the number of fully paid and nonassessable  shares of Common Stock to which
such Holder is entitled upon such conversion, together with any other securities
and property to which the Holder is entitled upon such conversion under the
terms of this Note, including a check payable to the Holder for any cash amounts
payable as described  herein.  Upon conversion  of this Note,  the Company will
be forever  released from all of its obligations and  liabilities  under this
Note with regard to that portion of the principal amount and accrued interest
being converted

<PAGE>


including without limitation the obligation to pay such portion of the principal
amount and accrued interest.

3. Payment.  All payments  shall be made in lawful money of the United States of
America at such place as the Holder  hereof may from time to time  designate  in
writing to the Company.  Payment shall be credited first to the accrued interest
then due and payable and the remainder applied to principal.  Prepayment of this
Note may not be made prior to the Maturity Date,  unless agreed to in writing by
the Holder.

4. Transfer; Successors and Assigns. The terms and conditions of this Note shall
inure to the  benefit  of and be  binding  upon the  respective  successors  and
assigns of the parties.  Notwithstanding  the foregoing,  (i) the Holder may not
assign,  pledge,  or  otherwise  transfer  this Note  without the prior  written
consent of the Company,  except for transfers to affiliates and (ii) the Company
may not  assign,  pledge,  or  otherwise  transfer  this Note  without the prior
written consent of the Holder. Subject to the preceding sentence,  this Note may
be  transferred  only upon  surrender of the original Note for  registration  of
transfer, duly endorsed, or accompanied by a duly executed written instrument of
transfer in form satisfactory to the Holder.  Thereupon, a new note for the same
principal  amount and interest will be issued to, and registered in the name of,
the transferee. Interest and principal are payable only to the registered holder
of this Note.

5. Governing Law. This Note and all acts and  transactions  pursuant  hereto and
the rights and  obligations of the parties  hereto shall be governed,  construed
and interpreted in accordance with the laws of the State of Washington,  without
giving effect to principles of conflicts of law.

6.  Notices.  Any notice  required or permitted by this Note shall be in writing
and shall be deemed sufficient upon delivery,  when delivered personally or by a
nationally-recognized  delivery  service  (such as Federal  Express or UPS),  or
forty-eight  (48) hours after being  deposited in the U.S. mail, as certified or
registered mail, with postage prepaid,  addressed to the party to be notified at
such party's address as set forth below or as  subsequently  modified by written
notice.

7.  Amendments and Waivers.  Any term of this Note may be amended or waived only
with the written consent of the Company and the Holder.  Any amendment or waiver
effected in  accordance  with this  Section 7 shall be binding upon the Company,
the Holder and each transferee of the Note.

8.  Shareholders,  Officers  and  Directors  Not  Liable.  In no event shall any
shareholder, officer or director of the Company be liable for any amounts due or
payable pursuant to this Note.

9.  Notice  and   Presentment.   The  Company  hereby  waives  demand,   notice,
presentment, protest and notice of dishonor.

10.  Severability.  If one or  more  provisions  of  this  Note  are  held to be
unenforceable  under  applicable law, such provision shall be excluded from this
Note, and the balance of this 11.

<PAGE>


Note shall be  interpreted  as if such  provision  were so excluded and shall be
enforceable in accordance with its terms.

12. Attorneys' Fees. The Company and all endorsers of this Note agree to pay the
Holder's  reasonable  expenses and costs in collecting  and enforcing this Note,
including reasonable attorneys' fees.

13. Holder as Owner. The Company may deem and treat the holder of record of this
Note as the  absolute  owner for all  purposes  regardless  of any notice to the
contrary.

14. Events of Default.  If any of the events  specified in this Section 13 shall
occur (an "Event of Default"), the Holder may, so long as such condition exists,
declare the outstanding  principal and accrued but unpaid  interest  immediately
due and payable by notice in writing to the Company:

     (a) The  institution  of  proceedings  by the Company to be  adjudicated as
bankrupt or  insolvent,  the filing of a petition  or answer or consent  seeking
reorganization  or  release  under  the  federal  Bankruptcy  Act,  or any other
applicable  federal or state law, the  appointment of a receiver,  liquidator or
trustee, an assignment for the benefit of creditors,  or the taking of corporate
action by the Company in furtherance of any such action;

     (b) If,  within 60 days after the  commencement  of an action  against  the
Company  (and  service  of  process  on the  Company)  seeking  any  bankruptcy,
insolvency, reorganization, liquidation, dissolution or similar relief under any
present or future  statute,  law or regulation,  such action shall not have been
resolved  in  favor of the  Company  or all  orders  or  proceedings  thereunder
affecting the operations or the business of the Company  stayed,  or if the stay
of any such order or proceeding  shall thereafter be set aside, or if, within 60
days after the appointment without the consent or acquiescence of the Company of
any trustee,  receiver or liquidator of the Company,  such appointment shall not
have been vacated;

     (c) Failure to pay the principal of and interest on this Note when due;

     (d) The adoption of any plan of  liquidation,  dissolution or winding up of
the Company, or the involuntary occurrence thereof; or

     (e)  Material  breach by the Company of any  provision  of this Note (other
than the payment obligations  described in clause (c) above),  where such breach
is not cured within ten (10) days after the Company  receives  written notice of
the same from the Holder.

14. Covenants of the Company.  For so long as any principal remains  outstanding
under the Note,  the Company shall not,  without first  obtaining the consent of
Holder:

     (a) issue equity  securities or options,  warrants,  rights or  convertible
securities;  other  than for  customary  grants of  options  to new hires not to
exceed in the aggregate 50,000



<PAGE>


     (b) amend the Company's  Articles of  Incorporation or Bylaws in any manner
adverse to Holder;

     (c) lease,  sell, license or otherwise transfer all or substantially all of
its assets;

     (d) create or assume any indebtedness for borrowed money that is pari passu
or senior in right of payment to the obligations under the Note;

     (e) pay any  dividends or other  distributions  on the capital stock of the
Company,  or  repurchase  or redeem any Common  Stock,  other than  pursuant  to
vesting or repurchase  provisions under equity incentive programs  maintained by
the Company;

     (f) grant any unusual or extraordinary bonuses,  benefits or other forms of
direct or indirect compensation to any employee, officer, director or consultant
if the direct or indirect result of such action would be likely to result in (i)
the insolvency or bankruptcy of the Company or (ii) an Event of Default;

     (g) directly or indirectly make any payments on existing indebtedness other
than  regularly  scheduled  installments  of principal and interest nor make any
payment on any  existing  indebtedness  which  would  violate  the terms of such
indebtedness or any agreement related thereto; or

     (h) cause the net loss on the  Company's  income  statement  to increase by
more than $500,000 in any individual month.

15. Company Representations and Warranties.  The Company represents and warrants
that:

     (a) It is a corporation  duly  incorporated,  validly  existing and in good
standing  under the laws of the state of Nevada.  The Company has all  requisite
corporate  power and authority to carry on its business as presently  conducted,
and to carry out the transactions contemplated in this Note. The Company is duly
qualified to transact business and is in good standing as a foreign  corporation
in each  jurisdiction  in which the  failure  to be so  qualified  would  have a
material  adverse  effect  on  the  Company's  financial  condition,   business,
operations  or property.

     (b) The execution, delivery and performance by the Company of this Note has
been duly  authorized by all  requisite  action of the Company and its directors
and shareholders. This Note has been duly executed and delivered by the Company,
and this  Note  constitutes  a valid  and  binding  obligation  of the  Company,
enforceable against the Company in accordance with its terms.

     (c) No  consent,  approval,  order or  authorization  of, or  registration,
qualification,  designation,  declaration  or filing with,  any federal,  state,
local  or  provincial  governmental  authority  on the  part of the  Company  is
required in connection with the consummation of the transactions contemplated by
this Note,  except for filings  pursuant to the federal  securities  laws and to
applicable state Blue Sky laws.


<PAGE>



     (d) The Company is not in default (i) under its  Articles of  Incorporation
or its Bylaws;  (ii) under any material  contract,  agreement or  instrument  to
which the  Company is a party or by which it or any of its  property is bound or
affected, including without limitation any material indenture,  mortgage, lease,
license or purchase or sales  order,  other than any  default  arising  from the
failure to the Company to register the shares of the  Company's  common stock in
accordance  with  section 1.9 of that certain  Share  Purchase  Agreement  dated
February 28, 1999, among the registrant,  Barter Business  Exchange Inc. and Bob
Bagga;  or (iii) with respect to any order,  writ,  injunction  or decree of any
court  or of  any  federal,  state,  municipal  or  other  domestic  or  foreign
governmental department,  commission,  board, bureau, agency or instrumentality.
To the knowledge of the Company,  there presently  exists no material default by
any party  other than the  Company to any of the  foregoing,  and no  condition,
event or act which  constitutes,  or which after  notice,  lapse of time or both
would constitute, a material default by the Company or any other party under any
of the foregoing.



                            [Signature page follows]

<PAGE>



                                     COMPANY:

                                     Ubarter.com, Inc.

                                     By:    /s/ Steven White

                                     Name:     Steven White
                                                 (print)
                                     Title:  CEO

                                     Address:  21400 International Blvd, #207
                                               Seattle, WA  98198
                                               (206) 872-9290


AGREED AND ACCEPTED:

ShopNow.com Inc.




By: ______________________________________

Name:_____________________________________
                  (print)
Title:____________________________________

Address:  411 First Avenue S., Suite 200N
          Seattle, WA  98104











          [Signature Page to Convertible Subordinated Promissory Note]