EXHIBIT 10.19


                                 LOAN AGREEMENT

                                     Between

                              Pawnbroker.com, Inc.

                                       and

                          the Lenders Signatory Hereto

     LOAN  AGREEMENT  dated as of June 5, 2000 (the  "Agreement"),  between  the
Lenders  signatory  hereto (each an "Lender" and  together the  "Lenders"),  and
Pawnbroker.com, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Company").

     WHEREAS,  the  parties  desire  that,  upon the  terms and  subject  to the
conditions  contained herein, the Company shall borrow from the Lenders, and the
Lenders shall lend to the Company in the aggregate, (i) $500,000 in exchange for
the Company's 9% Convertible Debentures (as defined below) and (ii) Warrants (as
defined  below) to purchase  shares of the Common  Stock (as  defined  below) as
described herein.

     WHEREAS,  such  investments will be made in reliance upon the provisions of
Section 4(2) ("Section 4(2)") and/or 4(6) of the United States Securities Act of
1933, as amended,  (the "Securities  Act") and/or  Regulation D ("Regulation D")
promulgated  under  the  Securities  Act and the  other  rules  and  regulations
promulgated  under the Securities Act and other applicable state securities laws
and  regulations,  and/or  upon  such  other  exemption  from  the  registration
requirements  of the  Securities  Act as may be available with respect to any or
all of the investments in securities to be made hereunder.

     NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                               Certain Definitions

Section 1.1.  "Capital Shares" shall mean the Common Stock and any shares of any
other class of common  stock  whether now or  hereafter  authorized,  having the
right to participate in the distribution of earnings and assets of the Company.

Section 1.2. "Capital Shares Equivalents" shall mean any securities,  rights, or
obligations  that are convertible  into or exchangeable for or give any right to
subscribe  for any  Capital  Shares of the Company or any  warrants,  options or
other rights to subscribe for or purchase Capital Shares or any such convertible
or exchangeable securities.




<PAGE>

Section  1.3.  "Closing"  shall mean the closing of the purchase and sale of the
Convertible Debentures and Warrants pursuant to Section 2.1.

Section 1.4.  "Closing  Date" shall mean the date on which all conditions to the
Closing  have been  satisfied  (as  defined in Section  2.1 (b)  hereto) and the
Closing shall have occurred.

Section 1.5. "Common Stock" shall mean the Company's  common stock,  $0.0001 par
value per share.

Section 1.6.  "Conversion Shares" shall mean the shares of Common Stock issuable
upon conversion of the Convertible Debentures.

Section 1.7.  "Convertible  Debentures"  shall mean the Company's 9% Convertible
Debentures in the form of Exhibit A hereto.

Section 1.8. "Damages" shall mean any loss, claim,  damage,  judgment,  penalty,
deficiency,  liability,  costs  and  expenses  (including,  without  limitation,
reasonable  attorney's fees and  disbursements and reasonable costs and expenses
of expert witnesses and investigation).

Section 1.9.  "Disclosure  Schedule" shall mean that certain Disclosure Schedule
provided  by the  Company to the  Lenders as  provided  for in  connection  with
Article IV of this Loan Agreement.

Section  1.10.  "Effective  Date"  shall  mean the date on which  the SEC  first
declares  effective  a  Registration  Statement  registering  the  resale of the
Registrable Securities as set forth in the Registration Rights Agreement.

Section  1.11.  "Escrow  Agent"  shall have the  meaning set forth in the Escrow
Agreement.

Section  1.12.   "Escrow   Agreement"   shall  mean  the  Escrow   Agreement  in
substantially   the  form  of   Exhibit   D  hereto   executed   and   delivered
contemporaneously with this Agreement.

Section 1.13.  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

Section 1.14.     "Legend" shall mean the legend set forth in Section 9.1.

Section  1.15.  "Market  Price" on any given date shall mean the  average of the
five (5) lowest  closing  bid prices  during the  twenty-two  Trading Day period
ending on the  Trading  Day  immediately  prior to the date for which the Market
Price is to be determined.

Section 1.16.  "Material  Adverse Effect" shall mean any effect on the business,
operations,  properties,  prospects,  stock price or financial  condition of the
Company that is material and



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<PAGE>

adverse to the Company and its  subsidiaries  and affiliates,  taken as a whole,
and/or  any  condition,  circumstance,  or  situation  that  would  prohibit  or
otherwise  interfere  with the  ability of the Company to enter into and perform
any of its obligations under this Agreement,  the Registration Rights Agreement,
the Escrow Agreement, the Convertible Debentures or the Warrants in any material
respect.

Section 1.17.  "Outstanding"  when used with reference to shares of Common Stock
or Capital Shares  (collectively  the  "Shares"),  shall mean, at any date as of
which the number of such Shares is to be determined,  all issued and outstanding
Shares,  and shall  include all such Shares  issuable in respect of  outstanding
scrip or any  certificates  representing  fractional  interests  in such Shares;
provided,  however,  that  "Outstanding"  shall  not mean any such  Shares  then
directly or indirectly owned or held by or for the account of the Company.

Section 1.18. "Person" shall mean an individual, a corporation, a partnership, a
limited  liability  company,  an  association,   a  trust  or  other  entity  or
organization,  including a government or political  subdivision  or an agency or
instrumentality thereof.

Section 1.19. "Principal Market" shall mean the American Stock Exchange, the New
York Stock Exchange,  the NASDAQ National Market, or the NASDAQ Small-Cap Market
or the OTC  Bulletin  Board,  whichever  is at the  time the  principal  trading
exchange or market for the Common Stock, based upon share volume.

Section 1.20.  "Purchase Price" shall mean the $500,000  principal amount of the
Convertible Debentures less a 10% origination fee to the Lenders.

Section 1.21. "Registrable  Securities" shall mean the Conversion Shares and the
Warrant Shares until (i) the Registration  Statement has been declared effective
by the SEC, and all  Conversion  Shares and Warrant Shares have been disposed of
pursuant to the Registration  Statement,  (ii) all Conversion Shares and Warrant
Shares  have been sold under  circumstances  under  which all of the  applicable
conditions  of Rule 144 (or any  similar  provision  then in  force)  under  the
Securities  Act ("Rule 144") are met,  (iii) all  Conversion  Shares and Warrant
Shares  have been  otherwise  transferred  to holders  who may trade such shares
without  restriction  under the Securities  Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive  legend  or (iv)  such time as, in the  opinion  of  counsel  to the
Company,  all Conversion Shares and Warrant Shares may be sold without any time,
volume or manner  limitations  pursuant to Rule 144(k) (or any similar provision
then in effect) under the Securities Act.

Section 1.22. "Registration Rights Agreement" shall mean the agreement regarding
the  filing of the  Registration  Statement  for the  resale of the  Registrable
Securities,  entered  into between the Company and the Lenders as of the Closing
Date in the form annexed hereto as Exhibit C.

Section 1.23.  "Registration  Statement" shall mean a registration  statement on
Form S-3 (if use of such form is then  available to the Company  pursuant to the
rules of the SEC and, if not, on



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<PAGE>

such other form  promulgated by the SEC for which the Company then qualifies and
which  counsel for the Company shall deem  appropriate,  and which form shall be
available  for the resale by the  Lenders of the  Registrable  Securities  to be
registered  thereunder in accordance with the provisions of this Agreement,  the
Registration  Rights  Agreement  and in accordance  with the intended  method of
distribution  of such  securities),  for the  registration  of the resale by the
Lender of the Registrable Securities under the Securities Act.

Section 1.24. "Regulation D" shall have the meaning set forth in the recitals of
this Agreement.

Section  1.25.  "SEC"  shall  mean the United  States  Securities  and  Exchange
Commission.

Section  1.26.  "Section  4(2)" and  "Section  4(6)" shall have the meanings set
forth in the recitals of this Agreement.

Section 1.27.  "Securities Act" shall have the meaning set forth in the recitals
of this Agreement.

Section 1.28. "SEC Documents" shall mean the Company's Registration Statement on
Form 10, as amended, filed November 3, 1999, and each report, proxy statement or
registration  statement  filed  by the  Company  with  the SEC  pursuant  to the
Exchange  Act or the  Securities  Act  since  the  filing  of such  Registration
Statement through the date hereof.

Section 1.29.     "Shares" shall have the meaning set forth in Section 1.17.

Section 1.30. "Trading Day" shall mean any day during which the Principal Market
shall be open for business.

Section 1.31.  "Warrants"  shall mean the Warrants  substantially in the form of
Exhibit B to be issued to the Lenders hereunder.

Section  1.32.  "Warrant  Shares" shall mean all shares of Common Stock or other
securities issued or issuable pursuant to exercise of the Warrants.

                                   ARTICLE II

            Purchase and Sale of Convertible Debentures and Warrants

Section 2.1. Investment.

     (a) Upon the terms and  subject to the  conditions  set forth  herein,  the
Company  agrees to sell,  and the  Lenders  agree to  purchase  the  Convertible
Debentures  together with the Warrants at the Purchase Price on the Closing Date
as follows:



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<PAGE>

     (i)       Upon execution and delivery of this Agreement,  each Lender shall
               deliver  to the  Company  immediately  available  funds  in their
               proportionate  amount of the  Purchase  Price as set forth on the
               signature  pages  hereto,  and  the  Company  shall  deliver  the
               Convertible  Debentures and the Warrants to the Escrow Agent,  in
               each case to be held by the Escrow  Agent  pursuant to the Escrow
               Agreement.

     (ii)      Upon  satisfaction of the conditions set forth in Section 2.1(b),
               the Closing  ("Closing") shall occur at the offices of the Escrow
               Agent at which the Escrow  Agent shall  release  the  Convertible
               Debentures and the Warrants to the Lenders, pursuant to the terms
               of the Escrow Agreement.

     (b) The  Closing  is  subject  to the  satisfaction  or waiver by the party
sought to be benefited thereby of the following conditions:

     (i)       acceptance  and  execution by the Company and by the Lenders,  of
               this Agreement and all Exhibits hereto;

     (ii)      delivery to the Company by each Lender of  immediately  available
               funds in the  amount  of the  Purchase  Price of the  Convertible
               Debentures and the Warrants to the Company;

     (iii)     all  representations  and  warranties  of the  Lenders  contained
               herein shall remain true and correct as of the Closing Date (as a
               condition to the Company's obligations);

     (iv)      all  representations  and  warranties  of the  Company  contained
               herein shall remain true and correct as of the Closing Date (as a
               condition to the Lenders' obligations);

     (v)       the Company  shall have  obtained all permits and  qualifications
               required  by any state for the offer and sale of the  Convertible
               Debentures  and  Warrants,  or  shall  have the  availability  of
               exemptions therefrom;

     (vi)      the sale  and  issuance  of the  Convertible  Debentures  and the
               Warrants  hereunder,  and the proposed issuance by the Company to
               the  Lenders  of the  Common  Stock  underlying  the  Convertible
               Debentures  and the  Warrants  upon the  conversion  or  exercise
               thereof shall be legally permitted by all laws and regulations to
               which the  Lenders and the Company are subject and there shall be
               no  ruling,  judgment  or  writ  of  any  court  prohibiting  the
               transactions contemplated by this Agreement;

     (vii)     delivery  to the Lender of an  opinion  of Dorsey & Whitney  LLP,
               counsel to the Company,  in  substantially  the form of Exhibit E
               hereto, within five (5) Trading Days from the date hereof;



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<PAGE>

     (viii)    delivery  to  the  Lender  of  the  Irrevocable  Instructions  to
               Transfer Agent in the form attached hereto as Exhibit F; and

     (ix)      delivery to the Lender of the Registration Rights Agreement.

Section  2.2.  The  Warrants.  The number of Warrants  to be issued  shall equal
one-half of (i) the principal  amount of the  Convertible  Debentures  issued at
Closing  divided by (ii) the closing  bid price on the  Trading Day  immediately
prior to the Closing Date.  The exercise price of such Warrants shall be 115% of
the  closing  bid  price for the  Common  Stock on the  Principal  Market on the
Trading Day immediately  prior to the Closing Date.  Two-thirds of each Lender's
Warrants shall be immediately exercisable upon issuance. The remaining one-third
of  each  Lender's  Warrants  shall  be  exercisable  only  if  the  Convertible
Debentures  have not been redeemed in  accordance  with their terms on or before
the 120th day after the Closing Date.

Section 2.3. Liquidated  Damages.  The parties hereto acknowledge and agree that
the sums payable pursuant to the Registration  Rights Agreement shall constitute
liquidated damages and not penalties.  The parties further  acknowledge that (a)
the amount of loss or damages likely to be incurred is incapable or is difficult
to  precisely  estimate,  (b) the  amounts  specified  in such  Sections  bear a
reasonable  proportion  and are not plainly or grossly  disproportionate  to the
probable  loss  likely to be  incurred  by the  Lenders in  connection  with the
failure  by the  Company to timely  cause the  registration  of the  Registrable
Securities and (c) the parties are sophisticated  business parties and have been
represented by sophisticated and able legal and financial counsel and negotiated
this Agreement at arm's length.

                                  ARTICLE III

                    Representations and Warranties of Lenders

Each Lender,  severally and not jointly,  represents and warrants to the Company
that:

Section 3.1.  Intent.  The Lender is entering  into this  Agreement  for its own
account and not with a view to or for sale in connection  with any  distribution
of the Convertible Debentures, the Warrants or the Conversion Shares. The Lender
has no present arrangement  (whether or not legally binding) at any time to sell
the  Convertible  Debentures,  the Warrants,  any  Conversion  Shares or Warrant
Shares to or through any person or entity; provided, however, that by making the
representations  herein,  the Lender does not agree to hold such  securities for
any  minimum or other  specific  term and  reserves  the right to dispose of the
Conversion  Shares and Warrant Shares at any time in accordance with federal and
state securities laws applicable to such disposition.

Section 3.2. Sophisticated Lender. The Lender is a "sophisticated  investor" (as
described in Rule  506(b)(2)(ii)  of Regulation D) and an "accredited  investor"
(as  defined in Rule 501 of  Regulation  D), and Lender has such  experience  in
business  and  financial  matters  that it has the  capacity  to protect its own
interests in connection  with this  transaction and is capable of evaluating the
merits and risks of an investment in the  Convertible  Debentures,  the Warrants
and the underlying  Common Stock. The Lender  acknowledges that an investment in
the Convertible



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<PAGE>

Debentures,  the Warrants and the  underlying  Common Stock is  speculative  and
involves a high degree of risk.

Section 3.3. Authority. This Agreement and each agreement attached as an Exhibit
hereto which is required to be executed by Lender,  has been duly authorized and
validly  executed  and  delivered  by the  Lender  and is a  valid  and  binding
agreement of the Lender  enforceable  against it in  accordance  with its terms,
subject to applicable  bankruptcy,  insolvency,  or similar laws relating to, or
affecting  generally the  enforcement of,  creditors'  rights and remedies or by
other equitable principles of general application.

Section  3.4.  Not an  Affiliate.  The  Lender is not an  officer,  director  or
"affiliate"  (as that term is defined in Rule 405 of the Securities  Act) of the
Company.

Section 3.5. Absence of Conflicts.  The execution and delivery of this Agreement
(and each agreement  which is attached as an Exhibit hereto and executed by each
Lender  in  connection  herewith)  and  the  consummation  of  the  transactions
contemplated hereby and thereby, and compliance with the requirements hereof and
thereof by each Lender (a) will not violate any law,  rule,  regulation,  order,
writ, judgment,  injunction, decree or award binding on Lender, and (b) will not
violate any provision of any indenture,  instrument or agreement to which Lender
is a party or is subject,  or by which Lender or any of its assets is bound; and
(c) will not conflict with or constitute a material default thereunder;  and (d)
will not result in the creation or  imposition of any lien pursuant to the terms
of any such  indenture,  instrument or agreement,  or constitute a breach of any
fiduciary  duty owed by Lender to any third party;  and (e) will not require the
approval  of any  third-party  (which  has not been  obtained)  pursuant  to any
material contract,  agreement,  instrument,  relationship or legal obligation to
which Lender is subject or to which any of its assets,  operations or management
may be subject.

Section  3.6.  Disclosure;  Access to  Information.  The Lender has received all
documents, records, books and other publicly available information pertaining to
Lender's  investment  in the  Company  that have been  requested  by the Lender.
Lender  acknowledges  that the  Company  is subject  to the  periodic  reporting
requirements  of the Exchange Act, and the Lender has reviewed copies of all SEC
Documents deemed relevant by Lender.

Section 3.7.  Manner of Sale. At no time was Lender  presented with or solicited
by or through any leaflet, public promotional meeting,  television advertisement
or any other form of general solicitation or advertising.

Section 3.8. Rule 144. Each Lender  understands  that the Warrant Shares and the
Conversion  Shares  must be held  indefinitely  unless such  Warrant  Shares and
Conversion  Shares are registered  under the Securities Act or an exemption from
registration  is available.  Each such Lender  acknowledges  that such Lender is
familiar  with Rule 144 of the  rules  and  regulations  of the  Commission,  as
amended,  promulgated pursuant to the Securities Act ("Rule 144"), and that such
Lender  has been  advised  that Rule 144  permits  resales  only  under  certain
circumstances.  Each Lender  understands that to the extent that Rule 144 is not
available,  such  Lender  will be  unable  to sell  any  Warrant  Shares  or any
Conversion  Shares without either  registration  under the Securities Act or the
existence of another exemption from such registration requirement.



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<PAGE>

Section 3.9. Conversion  Restrictions.  Notwithstanding anything to the contrary
set forth herein or in the Convertible  Debentures and the Warrants, in no event
shall any Lender be entitled to convert the  Convertible  Debentures or exercise
Warrants  to  purchase,  in excess of that  aggregate  number of the  Conversion
Shares or that aggregate number of Warrant Shares,  which, upon giving effect to
such conversion or exercise, as applicable,  would cause the aggregate number of
shares of Common Stock  beneficially  owned by such Lender and its affiliates to
exceed  9.9% of the  outstanding  shares  of the  Common  Stock  of the  Company
following such conversion.  For purposes of the foregoing proviso, the aggregate
number of  shares  of Common  Stock  beneficially  owned by the  Lender  and its
affiliates  shall  include the number of shares of Common  Stock  issuable  upon
conversion of the Convertible  Debentures and upon the exercise of the Warrants.
Except as set forth in the preceding sentence, for purposes of this Section 3.9,
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act.

Section 3.10. General.  Each Lender understands that the Convertible  Debentures
and the  Warrants  are being  offered  and sold and the  Conversion  Shares  and
Warrant  Shares are being issued in reliance on a  transactional  exemption from
the  registration  requirements  of federal  and state  securities  laws and the
Company  is  relying  upon  the  truth  and  accuracy  of  the  representations,
warranties, agreements, acknowledgments and understandings of such Lender as set
forth herein in order to determine the  applicability of such exemptions and the
suitability  of such Lender to acquire  the  Convertible  Debentures,  Warrants,
Conversion Shares, and Warrant Shares.

                                   ARTICLE IV

                  Representations and Warranties of the Company

The Company  represents and warrants to the Lenders that, except as set forth on
the Disclosure Schedule prepared by the Company and attached hereto:

Section 4.1.  Organization  of the Company.  The Company is a  corporation  duly
incorporated  and  existing  in good  standing  under  the laws of the  State of
Delaware and has all requisite  corporate authority to own its properties and to
carry on its  business as now being  conducted.  The  Company  does not have any
subsidiaries  and does not own more that fifty  percent  (50%) of or control any
other business  entity except as set forth in the SEC Documents.  The Company is
duly  qualified and is in good standing as a foreign  corporation to do business
in every  jurisdiction in which the nature of the business conducted or property
owned by it makes such  qualification  necessary,  other than those in which the
failure so to qualify would not have a Material Adverse Effect.

Section  4.2.  Authority.  The Company  has the  requisite  corporate  power and
corporate  authority  to (i) enter into and perform its  obligations  under this
Agreement,  the Registration  Rights Agreement,  the Escrow  Agreement,  and the
Warrants and to issue the Convertible  Debentures,  the Conversion  Shares,  the
Warrants and the Warrant Shares pursuant to their



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<PAGE>

respective terms,  (ii) the execution,  issuance and delivery of this Agreement,
the  Registration  Rights  Agreement,  the  Escrow  Agreement,  the  Convertible
Debentures  and the  Warrants by the Company and the  consummation  by it of the
transactions  contemplated  hereby have been duly  authorized  by all  necessary
corporate  action and no further consent or  authorization of the Company or its
Board of Directors or  stockholders is required,  and (iii) this Agreement,  the
Registration Rights Agreement,  the Escrow Agreement, the Convertible Debentures
and the Warrants have been duly executed and delivered by the Company and at the
Closing  shall  constitute   valid  and  binding   obligations  of  the  Company
enforceable  against the Company in accordance with their terms,  except as such
enforceability may be limited by applicable bankruptcy,  insolvency,  or similar
laws relating to, or affecting  generally the enforcement of,  creditors' rights
and  remedies  or by other  equitable  principles  of general  application.  The
Company has duly and validly  authorized  and reserved  for  issuance  shares of
Common  Stock  sufficient  in  number  for  the  conversion  of the  Convertible
Debentures  and for the exercise of the Warrants.  The Company  understands  and
acknowledges the potentially dilutive effect to the Common Stock of the issuance
of the Conversion Shares.  The Company further  acknowledges that its obligation
to issue  Conversion  Shares upon conversion of the  Convertible  Debentures and
Warrant  Shares upon exercise of the Warrants in accordance  with this Agreement
and the Convertible Debentures,  pursuant to their respective terms, is absolute
and unconditional  regardless of the dilutive effect that such issuance may have
on  the  ownership   interests  of  other   stockholders   of  the  Company  and
notwithstanding  the  commencement  of any case under 11 U.S.C.  ss. 101 et seq.
(the "Bankruptcy Code").

Section 4.3.  Capitalization.  The Company is  authorized  to issue  one-hundred
fifty million  (150,000,000) shares of capital stock,  consisting of one hundred
million  (100,000,000)  shares of common stock, par value $0.0001 per share (the
"Common Stock") and fifty million  (50,000,000)  shares of preferred  stock, par
value  $0.0001  per  share  (the  "Preferred   Stock").  As  of  June  5,  2000,
approximately  17,814,750 shares of Common Stock were issued and outstanding and
no shares of Preferred Stock were issued or outstanding.  Except as set forth in
the SEC Documents and/or as set forth in Section 4.3 of the Disclosure Schedule,
there are no  outstanding  Capital  Shares  Equivalents  nor any  agreements  or
understandings  pursuant  to which any  Capital  Shares  Equivalents  may become
outstanding.  Except as set forth in Section 4.3 of the Disclosure Schedule, the
Company is not a party to any agreement  granting  registration or anti-dilution
rights to any person with respect to any of its equity or debt  securities.  All
of the  outstanding  shares of Common  Stock of the  Company  have been duly and
validly authorized and issued and are fully paid and non-assessable.

Section  4.4.  Common  Stock.  Except as set forth in the SEC  Documents  and/or
Section 4.4 of the  Disclosure  Schedule,  the Company has registered its Common
Stock  pursuant to Section 12 (g) of the Exchange Act and is in full  compliance
with all  reporting  requirements  of the  Exchange  Act,  and the Company is in
compliance with all requirements  for the continued  listing or quotation of its
Common  Stock,  and such  Common  Stock is  currently  listed  or  quoted on the
Principal  Market.  As of the  date  hereof,  the  Principal  Market  is the OTC
Bulletin Board and the Company has not received any notice regarding, and to its
knowledge  there is no  threat,  of the  termination  or  discontinuance  of the
eligibility of the Common Stock for such listing.



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<PAGE>

Section 4.5. SEC  Documents.  The Company has made available to the Lenders true
and  complete  copies  of the SEC  Documents.  Except  as  contemplated  by this
Agreement,  the Company has not  provided to the Lenders any  information  that,
according to applicable  law,  rule or  regulation,  should have been  disclosed
publicly  prior to the date  hereof  by the  Company,  but which has not been so
disclosed.  As of their  respective  dates,  the SEC  Documents  complied in all
material  respects  with the  requirements  of the  Exchange  Act, and rules and
regulations  of the SEC  promulgated  thereunder  and the SEC  Documents did not
contain any untrue statement of a material fact or omit to state a material fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  The  financial  statements  of the  Company  included  in  the  SEC
Documents   complied  in  all  material  respects  with  applicable   accounting
requirements  and the  published  rules  and  regulations  of the  SEC or  other
applicable  rules  and  regulations  with  respect  thereto  at the time of such
inclusion.  Such  financial  statements  have been prepared in  accordance  with
generally  accepted  accounting  principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements  or the  notes  thereto  or (ii) in the  case  of  unaudited  interim
statements,  to the extent they exclude footnotes or may be condensed or summary
statements) and fairly present in all material  respects the financial  position
of the Company as of the dates  thereof and the results of  operations  and cash
flows for the periods  then ended  (subject,  in the case of  unaudited  interim
statements,  to  normal  year-end  audit  adjustments).  Except  as set forth in
Section  4.5 of the  Disclosure  Schedule,  neither  the  Company nor any of its
subsidiaries  has any material  indebtedness,  obligations or liabilities of any
kind (whether accrued, absolute,  contingent or otherwise, and whether due or to
become due) that would have been required to be reflected in,  reserved  against
or otherwise  described in the  financial  statements or in the notes thereto in
accordance  with GAAP,  which was not fully  reflected in,  reserved  against or
otherwise described in the financial statements or the notes thereto included in
the SEC  Documents  or was not  incurred  in the  ordinary  course  of  business
consistent  with the  Company's  past  practices  since  the  last  date of such
financial statements.

Section  4.6.  Exemption  from  Registration;  Valid  Issuances.  Subject to the
accuracy  of the  Lenders'  representations  in  Article  III,  the  sale of the
Convertible  Debentures,  the  Conversion  Shares,  the Warrants and the Warrant
Shares  will not  require  registration  under the  Securities  Act  and/or  any
applicable state securities law. When issued and paid for in accordance with the
Warrants and validly  converted in accordance  with the terms of the Convertible
Debentures,  the  Conversion  Shares  and the  Warrant  Shares  will be duly and
validly  issued,  fully  paid,  and  non-assessable.  Neither  the  sales of the
Convertible  Debentures,  the  Conversion  Shares,  the  Warrants or the Warrant
Shares pursuant to, nor the Company's performance of its obligations under, this
Agreement,   the  Registration  Rights  Agreement,  the  Escrow  Agreement,  the
Convertible  Debentures  or the  Warrants  will (i)  result in the  creation  or
imposition by the Company of any liens,  charges,  claims or other  encumbrances
upon the  Convertible  Debentures,  the Conversion  Shares,  the Warrants or the
Warrant  Shares  or,  except as  contemplated  herein,  any of the assets of the
Company, or (ii) entitle the holders of Outstanding Capital Shares to preemptive
or other  rights  to  subscribe  for or  acquire  the  Capital  Shares  or other
securities of the Company.  The Convertible  Debentures,  the Conversion Shares,
the  Warrants  and the Warrant  Shares shall not subject the Lenders to personal
liability to the Company or its creditors by reason of the possession thereof.



                                       10
<PAGE>

Section  4.7.  No  General   Solicitation  or  Advertising  in  Regard  to  this
Transaction. Neither the Company nor any of its affiliates nor, to the knowledge
of the Company,  any person  acting on its or their behalf (i) has  conducted or
will  conduct any general  solicitation  (as that term is used in Rule 502(c) of
Regulation D) or general advertising with respect to the sale of the Convertible
Debentures or the Warrants,  or (ii) made any offers or sales of any security or
solicited  any offers to buy any  security  under any  circumstances  that would
require registration of the Convertible  Debentures,  the Conversion Shares, the
Warrants or the Warrant Shares under the Securities Act.

Section 4.8. No  Conflicts.  The  execution,  delivery and  performance  of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of and payment of
interest upon the Convertible  Debentures,  the Conversion  Shares, the Warrants
and the Warrant  Shares,  do not and will not (i) result in a  violation  of the
Company's  Certificate  of  Incorporation  or By-Laws or (ii) conflict  with, or
constitute a material  default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument, or any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company is a party, or (iii) result in a violation of any
federal,  state or local  law,  rule,  regulation,  order,  judgment  or  decree
(including federal and state securities laws and regulations)  applicable to the
Company or by which any  material  property  or asset of the Company is bound or
affected, nor is the Company otherwise in violation of, conflict with or default
under any of the foregoing  (except in each case for such  conflicts,  defaults,
terminations,  amendments, accelerations,  cancellations and violations as would
not have,  individually or in the aggregate,  a Material  Adverse  Effect).  The
business  of the  Company  is not  being  conducted  in  violation  of any  law,
ordinance  or  regulation  of  any  governmental  entity,  except  for  possible
violations  that  either  singly or in the  aggregate  would not have a Material
Adverse  Effect.  The Company is not required under any Federal,  state or local
law,  rule or regulation  to obtain any consent,  authorization  or order of, or
make any filing or registration with, any court or governmental  agency in order
for  it to  execute,  deliver  or  perform  any of its  obligations  under  this
Agreement  or issue  and sell the  Convertible  Debentures  or the  Warrants  in
accordance with the terms hereof (other than any SEC,  Principal Market or state
securities  filings that may be required to be made by the Company subsequent to
Closing,  any registration  statement that may be filed pursuant hereto, and any
shareholder  approval required by the rules applicable to companies whose common
stock  trades on the  Principal  Market);  provided  that,  for  purposes of the
representation  made in this sentence,  the Company is assuming and relying upon
the  accuracy of the  relevant  representations  and  agreements  of the Lenders
herein.

Section 4.9. No Material  Adverse  Change.  Since December 31, 1999, no Material
Adverse  Effect has occurred or exists with  respect to the  Company,  except as
disclosed in the SEC Documents and in Section 4.9 of the Disclosure Schedule.

Section 4.10. No Undisclosed  Events or Circumstances.  Since December 31, 1999,
no event or  circumstance  has occurred or exists with respect to the Company or
its businesses,  properties, prospects, operations or financial condition, that,
under  applicable  law,  rule  or  regulation,  requires  public  disclosure  or
announcement prior to the date hereof by the Company but which



                                       11
<PAGE>

has not been so publicly  announced  or disclosed  in the SEC  Documents  and in
Section 4.10 of the Disclosure Schedule.

Section  4.11.  No  Integrated  Offering.  Other than  pursuant to an  effective
registration  statement under the Securities Act, or pursuant to the issuance or
exercise of employee  stock  options,  or  pursuant to its  discussion  with the
Lenders in connection with the transactions contemplated hereby, the Company has
not issued,  offered or sold the  Convertible  Debentures,  the  Warrants or any
shares of Common Stock (including for this purpose any securities of the same or
a similar class as the Convertible Debentures,  the Warrants or Common Stock, or
any  securities   convertible   into  a  exchangeable  or  exercisable  for  the
Convertible  Debentures or Common Stock or any such other securities) within the
six-month  period next  preceding  the date  hereof,  and the Company  shall not
permit any of its  directors,  officers or affiliates  directly or indirectly to
take, any action  (including,  without  limitation,  any offering or sale to any
Person of the Convertible Debentures, Warrants or shares of Common Stock), so as
to make unavailable the exemption from Securities Act registration  being relied
upon by the  Company  for the  offer  and  sale to  Lenders  of the  Convertible
Debentures (and the Conversion  Shares) or the Warrants (and the Warrant Shares)
as contemplated by this Agreement.

Section 4.12.  Litigation and Other Proceedings.  Except as disclosed in the SEC
Documents,  there are no lawsuits or proceedings pending or, to the knowledge of
the  Company,  threatened,  against the Company or any  subsidiary,  nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation,  which could reasonably be expected to have a Material Adverse
Effect.  Except as set forth in the SEC  Documents,  no judgment,  order,  writ,
injunction  or decree or award has been  issued by or, to the  knowledge  of the
Company,  requested of any court,  arbitrator or governmental agency which could
result in a Material Adverse Effect.

Section 4.13. No  Misleading  or Untrue  Communication.  The Company and, to the
knowledge  of the Company,  any person  representing  the Company,  or any other
person selling or offering to sell the Convertible Debentures or the Warrants in
connection with the transaction  contemplated by this Agreement,  have not made,
at any time, any oral  communication in connection with the offer or sale of the
same which contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

Section 4.14. Material Non-Public Information.  The Company has not disclosed to
the Lenders any material  non-public  information  that (i) if disclosed,  would
reasonably  be  expected  to have a  material  effect on the price of the Common
Stock or (ii) according to applicable law, rule or regulation,  should have been
disclosed  publicly  by the  Company  prior to the date hereof but which has not
been so disclosed.

Section 4.15. Insurance.  The Company and each subsidiary maintains property and
casualty,  general  liability,  workers'  compensation,   environmental  hazard,
personal injury and other similar types of insurance with financially  sound and
reputable insurers that is adequate,  consistent with industry standards and the
Company's  historical  claims  experience.  The Company has not received  notice
from, and has no knowledge of any threat by, any insurer (that has issued any



                                       12
<PAGE>

insurance  policy to the  Company)  that such insurer  intends to deny  coverage
under or cancel,  discontinue  or not renew any  insurance  policy  presently in
force.

Section 4.16. Tax Matters.

     (a) The Company and each  subsidiary  has filed all Tax Returns which it is
required  to file  under  applicable  laws;  all such Tax  Returns  are true and
accurate and has been  prepared in  compliance  with all  applicable  laws;  the
Company has paid all Taxes due and owing by it or any subsidiary (whether or not
such Taxes are required to be shown on a Tax Return) and have  withheld and paid
over to the  appropriate  taxing  authorities  all Taxes which it is required to
withhold  from amounts paid or owing to any employee,  stockholder,  creditor or
other third  parties;  and since  December 31, 1999,  the charges,  accruals and
reserves for Taxes with respect to the Company  (including  any  provisions  for
deferred  income  taxes)  reflected  on the books of the Company are adequate to
cover any Tax liabilities of the Company if its current tax year were treated as
ending on the date hereof.

     (b) No claim  has been  made to the  Company  by a  taxing  authority  in a
jurisdiction where the Company does not file tax returns that the Company or any
subsidiary is or may be subject to taxation by that  jurisdiction.  There are no
foreign,  federal,  state or local tax  audits  or  administrative  or  judicial
proceedings  pending  or being  conducted  with  respect  to the  Company or any
subsidiary;  no  information  related to Tax matters has been  requested  by any
foreign,  federal,  state or local taxing  authority;  and,  except as disclosed
above,  no written notice  indicating an intent to open an audit or other review
has been received by the Company or any  subsidiary  from any foreign,  federal,
state or local taxing authority.  There are no material unresolved  questions or
claims concerning the Company's Tax liability.  The Company (A) has not executed
or entered into a closing agreement pursuant to ss. 7121 of the Internal Revenue
Code or any  predecessor  provision  thereof or any similar  provision of state,
local or  foreign  law;  and (B) has not  agreed to or is  required  to make any
adjustments  pursuant to ss. 481 (a) of the Internal Revenue Code or any similar
provision  of state,  local or foreign  law by reason of a change in  accounting
method  initiated by the Company or any of its subsidiaries or has any knowledge
that the IRS has proposed any such adjustment or change in accounting method, or
has any application pending with any taxing authority requesting  permission for
any changes in  accounting  methods that relate to the business or operations of
the  Company.  The Company has not been a United  States real  property  holding
corporation  within the meaning of ss.  897(c)(2) of the  Internal  Revenue Code
during the applicable period specified in ss.  897(c)(1)(A)(ii)  of the Internal
Revenue Code.

     (c) The Company has not made an election  under ss.  341(f) of the Internal
Revenue Code.  The Company is not liable for the Taxes of another person that is
not a  subsidiary  of the  Company  under  (A)  Treas.  Reg.  ss.  1.1502-6  (or
comparable  provisions of state,  local or foreign law),  (B) as a transferee or
successor,  (C) by contract or indemnity or (D) otherwise.  The Company is not a
party to any tax sharing  agreement.  The Company has not made any payments,  is
obligated to make payments or is a party to an agreement  that could obligate it
to make any payments that would not be deductible under ss. 280G of the Internal
Revenue Code.



                                       13
<PAGE>

     (d) For purposes of this Section 4.16:

          "IRS" means the United States Internal Revenue Service.

          "Tax" or "Taxes" means federal,  state,  county,  local,  foreign,  or
          other income, gross receipts, ad valorem, franchise, profits, sales or
          use,   transfer,   registration,   excise,   utility,   environmental,
          communications,  real or personal  property,  capital stock,  license,
          payroll,  wage or  other  withholding,  employment,  social  security,
          severance, stamp, occupation, alternative or add-on minimum, estimated
          and other taxes of any kind whatsoever (including, without limitation,
          deficiencies,  penalties,  additions to tax, and interest attributable
          thereto) whether disputed or not.

          "Tax  Return"  means any  return,  information  report or filing  with
          respect  to  Taxes,  including  any  schedules  attached  thereto  and
          including any amendment thereof.

Section 4.17. Property. Neither the Company nor any of its subsidiaries owns any
real property.  Except as disclosed in Section 4.17 of the Disclosure  Schedule,
each of the Company and its  subsidiaries  has good and marketable  title to all
personal  property  owned by it, free and clear of all liens,  encumbrances  and
defects except such as do not  materially  affect the value of such property and
do not  materially  interfere  with the use made and proposed to be made of such
property by the  Company;  and to the  Company's  knowledge  any real  property,
mineral or water rights, and buildings held under lease by the Company as tenant
are  held by it  under  valid,  subsisting  and  enforceable  leases  with  such
exceptions  as are not  material  and do not  interfere  with  the use  made and
intended to be made of such property,  mineral or water rights, and buildings by
the Company.

Section 4.18. Intellectual Property.  Except as disclosed in Section 4.18 of the
Disclosure Schedule,  each of the Company and its subsidiaries owns or possesses
adequate  and  enforceable  rights  to use  all  patents,  patent  applications,
trademarks,  trademark  applications,  trade names,  service marks,  copyrights,
copyright  applications,  licenses,  know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,  systems
or procedures) and other similar rights and proprietary knowledge (collectively,
"Intangibles") necessary for the conduct of its business as now being conducted.
To the  Company's  knowledge,  except as disclosed in the SEC  Documents  and in
Section  4.18 of the  Disclosure  Schedule  neither  the  Company nor any of its
subsidiaries  is  infringing  upon or in  conflict  with any  right of any other
person with respect to any Intangibles. Except as disclosed in the SEC Documents
or Section 4.18 of the Disclosure Schedule, no adverse claims have been asserted
by any person to the ownership or use of any  Intangibles and the Company has no
knowledge of any basis for such claim.

Section 4.19. Internal Controls and Procedures.  The Company maintains books and
records and internal accounting controls which provide reasonable assurance that
(i) all  transactions  to which the Company or any  subsidiary  is a party or by
which its  properties  are bound are executed with  management's  authorization;
(ii) the recorded  accounting of the Company's  consolidated  assets is compared
with  existing  assets at  regular  intervals;  (iii)  access  to the  Company's
consolidated   assets  is  permitted  only  in  accordance   with   management's
authorization; and (iv) all transactions



                                       14
<PAGE>

to which the Company or any subsidiary is a party or by which its properties are
bound  are  recorded  as  necessary  to  permit  preparation  of  the  financial
statements of the Company in accordance with U.S. generally accepted  accounting
principles.

Section 4.20. Payments and Contributions.  Neither the Company,  any subsidiary,
nor any of its directors, officers or, to its knowledge, other employees has (i)
used  any  Company  funds  for any  unlawful  contribution,  endorsement,  gift,
entertainment  or other unlawful expense  relating to political  activity;  (ii)
made any direct or indirect  unlawful payment of Company funds to any foreign or
domestic government  official or employee;  (iii) violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977, as amended;  or (iv)
made any bribe,  rebate,  payoff,  influence payment,  kickback or other similar
payment to any person with respect to Company matters.

Section 4.21. No  Misrepresentation.  The  representations and warranties of the
Company contained in this Agreement,  any schedule,  annex or exhibit hereto and
any agreement, instrument or certificate furnished by the Company to the Lenders
pursuant to this  Agreement,  do not contain any untrue  statement of a material
fact or omit 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.

                                   ARTICLE V

                            Covenants of the Lenders

     Each Lender, severally and not jointly, covenants with the Company that:

Section 5.1. Compliance with Law The Lender's trading activities with respect to
shares of the Company's  Common Stock will be in compliance  with all applicable
state  and  federal  securities  laws,  rules  and  regulations  and  rules  and
regulations  of the  Principal  Market on which the  Company's  Common  Stock is
listed.

Section 5.2. No Short Sale Covenant.  Each Lender shall not,  either directly or
indirectly,  or through  an  affiliate  (as that term is defined  under Rule 405
promulgated  under the Securities Act) or by, with or through an unrelated third
party or entity  (whether or not  pursuant  to a written or oral  understanding,
agreement,  arrangement, scheme or artifice of any nature whatsoever) take or be
in a net short position with respect to the common stock of the Company.




                                       15
<PAGE>

                                   ARTICLE VI

                            Covenants of the Company

Section  6.1.  Registration  Rights.  The Company  shall cause the  Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all material respects with the terms thereof.

Section 6.2. Reservation of Common Stock. As of the date hereof, the Company has
reserved  and the Company  shall  continue to reserve and keep  available at all
times,  free of  preemptive  rights,  shares of Common  Stock for the purpose of
enabling  the  Company to issue the  Conversion  Shares and the  Warrant  Shares
pursuant to any  conversion  of the  Convertible  Debentures  or exercise of the
Warrants.  The number of shares so reserved  from time to time,  as  theretofore
increased or reduced as  hereinafter  provided,  may be reduced by the number of
shares  actually  delivered  pursuant  to  any  conversion  of  the  Convertible
Debentures  or  exercise  of the  Warrants  and the number of shares so reserved
shall be increased or decreased to reflect  potential  increases or decreases in
the Common Stock that the Company may thereafter be obligated to issue by reason
of adjustments to the Warrants.

Section 6.3.  Listing of Common Stock. The Company hereby agrees to maintain the
listing of the Common  Stock on a Principal  Market,  and as soon as  reasonably
practicable  following the Closing to list the Conversion Shares and the Warrant
Shares on the Principal Market, if required.  The Company further agrees, if the
Company applies to have the Common Stock traded on any other  Principal  Market,
it will  include in such  application  the  Conversion  Shares  and the  Warrant
Shares,  and will take such other action as is necessary to cause the Conversion
Shares  and  Warrant  Shares  to be  listed on such  other  Principal  Market as
promptly as possible.  The Company will take all actions to continue the listing
and  trading of its Common  Stock on 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 Principal Market and shall provide Lenders with copies of
any correspondence to or from such Principal Market which questions or threatens
delisting of the Common  Stock,  within three (3) Trading Days of the  Company's
receipt  thereof,  until the Lenders have  disposed of all of their  Registrable
Securities.

Section 6.4. Exchange Act Registration.  The Company will cause its Common Stock
to continue to be  registered  under  Section  12(b) or (g) of the Exchange Act,
will use its best  efforts  to comply in all  respects  with its  reporting  and
filing  obligations under the Exchange Act, and will not take any action or file
any  document  (whether  or not  permitted  by  the  Exchange  Act or the  rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its  reporting  and filing  obligations  under said Act until the  Lenders  have
disposed of all of their Registrable Securities.

Section 6.5.  Legends.  The certificates  evidencing the Registrable  Securities
shall be free of  legends,  except as set forth in Article  IX. If the  Transfer
Agent requires an opinion of counsel



                                       16
<PAGE>

from the  Company's  counsel  pursuant to the  Instructions  to  Transfer  Agent
attached  hereto  as  Exhibit  F to  issue  certificates  free of a  legend  and
Company's counsel fails to deliver such opinion within five (5) days from such a
request,  then the Company will pay the applicable Lenders (pro rated on a daily
basis), as liquidated damages for such failure and not as a penalty, ten percent
(10%) of the market value of the applicable Conversion Shares purchased from the
Company to be issued by the transfer  agent free of a legend for each week until
such  opinion  is  provided,  notwithstanding  the  fact  that the  Company  has
instructed the Transfer Agent to accept such an opinion from Lender's counsel.

Section 6.6. Corporate Existence;  Conflicting Agreements. The Company will take
all steps  necessary to preserve and  continue  the  corporate  existence of the
Company.  The  Company  shall not enter into any  agreement,  the terms of which
agreement  would  restrict  or impair  the right or  ability  of the  Company to
perform  any  of its  obligations  under  this  Agreement  or  any of the  other
agreements attached as exhibits hereto or under the Convertible Debentures.

Section 6.7. Consolidation; Merger. The Company shall not, at any time after the
date hereof,  effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially  all of the assets of the Company to, another
entity (a  "Consolidation  Event")  unless the resulting  successor or acquiring
entity (if not the Company) assumes by written instrument or by operation of law
the obligations of the Company to the Lenders  pursuant to this  Agreement,  the
Convertible Debentures, and the Warrants.

Section 6.8. Issuance of Convertible  Debentures and Warrant Shares. The sale of
the  Convertible  Debentures  and the  Warrants  and the issuance of the Warrant
Shares  pursuant to  exercise of the  Warrants  and the  Conversion  Shares upon
conversion of the  Convertible  Debentures  shall be made in accordance with the
provisions  and  requirements  of Section  4(2),  4(6) or  Regulation  D and any
applicable  state  securities  law. The Company shall make any necessary SEC and
"blue sky"  filings  required to be made by the Company in  connection  with the
sale of the  Securities to the Lenders as required by all  applicable  laws, and
shall provide a copy thereof to the Lenders promptly after such filing.

Section 6.9. Limitation on Future Financing. The Company agrees that it will not
enter into any sale of its securities for cash at a discount to the then-current
bid price  until the  earlier  of  repayment  in full of all of the  Convertible
Debentures,  or 120 days after the effective date of the Registration  Statement
except for any sales (i) pursuant to any  presently  existing  employee  benefit
plan which plan has been approved by the Company's  stockholders,  (ii) pursuant
to any compensatory  plan for a full-time  employee or key consultant,  or (iii)
with the prior approval of a majority in interest of the Lenders, which will not
be unreasonably  withheld,  in connection with a strategic  partnership or other
business  transaction,  the  principal  purpose  of which is not simply to raise
money.

Section 6.10.  Pro-Rata  Redemption.  The Company agrees that if it shall redeem
any of the Convertible  Debentures,  that it shall make such redemption pro-rata
among all Lenders in  proportion  their  respective  initial  purchases  of such
securities pursuant to this Agreement.



                                       17
<PAGE>

Section 6.11. No Bankruptcy. The Company shall not seek judicial relief from its
obligations  hereunder  except pursuant to the Bankruptcy Code. In the event the
Company is a debtor under the Bankruptcy  Code, the Company hereby waives to the
fullest  extent  permitted any rights to relief it may have under 11 U.S.C.  ss.
362 in respect of the conversion of the Convertible  Debentures and the exercise
of the Warrants.  The Company agrees, without cost or expense to the Lenders, to
take or consent to any and all action  necessary to  effectuate  relief under 11
U.S.C. ss. 362.

                                  ARTICLE VII

                            Survival; Indemnification

Section 7.1.  Survival.  The  representations,  warranties and covenants made by
each of the Company and each Lender in this  Agreement,  the annexes,  schedules
and exhibits hereto and in each  instrument,  agreement and certificate  entered
into and delivered by them pursuant to this Agreement, shall survive the Closing
and the consummation of the transactions  contemplated hereby. In the event of a
breach or violation of any of such representations, warranties or covenants, the
party to whom such representations, warranties or covenants have been made shall
have all rights and remedies for such breach or violation  available to it under
the provisions of this Agreement,  irrespective of any investigation  made by or
on behalf of such party on or prior to the Closing Date.

Section 7.2.  Indemnity.  (a) The Company  hereby  agrees to indemnify  and hold
harmless the Lenders, their respective Affiliates and their respective officers,
directors, partners and members (collectively,  the "Lender Indemnitees"),  from
and against any and all Damages,  and agrees to reimburse the Lender Indemnitees
for all reasonable  out-of-pocket  expenses  (including the reasonable  fees and
expenses  of legal  counsel),  in each case  promptly  as incurred by the Lender
Indemnitees and to the extent arising out of or in connection with:

          (i) any  misrepresentation,  omission  of fact or breach of any of the
     Company's  representations or warranties  contained in this Agreement,  the
     annexes,  schedules  or exhibits  hereto or any  instrument,  agreement  or
     certificate  entered  into or  delivered  by the  Company  pursuant to this
     Agreement; or

          (ii) any failure by the Company to perform in any material respect any
     of its covenants, agreements, undertakings or obligations set forth in this
     Agreement,  the annexes,  schedules or exhibits  hereto or any  instrument,
     agreement or certificate  entered into or delivered by the Company pursuant
     to this Agreement; or

          (iii) any action  instituted  against the Lenders,  or any of them, by
     any  stockholder of the Company who is not an Affiliate of an Lender,  with
     respect to any of the transactions contemplated by this Agreement.



                                       18
<PAGE>

     (b) Each Lender,  severally and not jointly, hereby agrees to indemnify and
hold  harmless  the  Company,  its  Affiliates  and their  respective  officers,
directors, partners and members (collectively, the "Company Indemnitees"),  from
and against any and all Damages, and agrees to reimburse the Company Indemnitees
for reasonable all  out-of-pocket  expenses  (including the reasonable  fees and
expenses  of legal  counsel),  in each case  promptly as incurred by the Company
Indemnitees  and  to  the  extent  arising  out  of or in  connection  with  any
misrepresentation,   omission  of  fact,  or  breach  of  any  of  the  Lender's
representations  or  warranties  contained  in  this  Agreement,   the  annexes,
schedules or exhibits hereto or any instrument, agreement or certificate entered
into or  delivered  by the Lender  pursuant to this  Agreement.  Notwithstanding
anything to the contrary  herein,  the Lender shall be liable under this Section
7.2(b) for only that  amount as does not exceed the net  proceeds to such Lender
as a result of the sale of Registrable  Securities  pursuant to the Registration
Statement.

Section 7.3.  Notice.  Promptly  after  receipt by either  party hereto  seeking
indemnification  pursuant  to Section  7.2 (an  "Indemnified  Party") of written
notice of any  investigation,  claim,  proceeding  or other action in respect of
which  indemnification is being sought (each, a "Claim"),  the Indemnified Party
promptly  shall notify the party from whom  indemnification  pursuant to Section
7.2 is being sought (the "Indemnifying  Party") of the commencement thereof; but
the omission to so notify the  Indemnifying  Party shall not relieve it from any
liability  that it otherwise may have to the  Indemnified  Party,  except to the
extent that the  Indemnifying  Party is actually  prejudiced by such omission or
delay. In connection with any Claim as to which both the Indemnifying  Party and
the Indemnified Party are parties,  the Indemnifying  Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying  Party, the Indemnified  Party shall have the right to
employ  separate  legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees,  out-of-pocket  costs
and expenses of such  separate  legal counsel to the  Indemnified  Party if (and
only if):  (x) the  Indemnifying  Party  shall  have  agreed  to pay such  fees,
out-of-pocket  costs and expenses,  (y) the Indemnified  Party  reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal  counsel would not be  appropriate  due to actual or, as
reasonably  determined by legal counsel to the  Indemnified  Party,  potentially
differing  interests  between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying  Party,
or (z) the  Indemnifying  Party  shall  have  failed  to  employ  legal  counsel
reasonably  satisfactory to the Indemnified  Party within a reasonable period of
time after notice of the  commencement of such Claim.  If the Indemnified  Party
employs  separate  legal  counsel in  circumstances  other than as  described in
clauses  (x),  (y) or (z)  above,  the fees,  costs and  expenses  of such legal
counsel shall be borne exclusively by the Indemnified Party.  Except as provided
above,  the  Indemnifying  Party shall not, in connection  with any Claim in the
same jurisdiction,  be liable for the fees and expenses of more than one firm of
legal  counsel  for the  Indemnified  Party  (together  with  appropriate  local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or  compromise  any Claim or consent to the entry of any judgment  that does not
include an unconditional  release of the Indemnified  Party from all liabilities
with respect to such Claim or judgment.



                                       19
<PAGE>

     All fees and expenses of the Indemnified Party (including  reasonable costs
of defense and  investigation in a manner not inconsistent with this Section and
all reasonable  attorneys'  fees and expenses)  shall be paid to the Indemnified
Party,  as incurred,  within ten (10) Trading Days of written  notice thereof to
the Indemnifying  Party (regardless of whether it is ultimately  determined that
an indemnified  party is not entitled to  indemnification  hereunder;  provided,
that the Indemnifying  Party may require such Indemnified  Party to undertake to
reimburse  all such fees and  expenses  to the extent it is  finally  judicially
determined  that  such  Indemnified  Party is not  entitled  to  indemnification
hereunder).

Section 7.4. Direct Claims. In the event one party hereunder should have a claim
for indemnification  that does not involve a claim or demand being asserted by a
third party,  the Indemnified  Party promptly shall deliver notice of such claim
to the  Indemnifying  Party. If the Indemnified  Party disputes the claim,  such
dispute shall be resolved by mutual  agreement of the Indemnified  Party and the
Indemnifying  Party or by binding  arbitration  conducted in accordance with the
procedures  and rules of the American  Arbitration  Association  as set forth in
Article X. Judgment upon any award rendered by any arbitrators may be entered in
any court having competent jurisdiction thereof.

                                  ARTICLE VIII

         Due Diligence Review; Non-Disclosure of Non-Public Information.

Section 8.1. Due  Diligence  Review.  Subject to Section 8.2, the Company  shall
make  available  for  inspection  and  review by the  Lenders,  advisors  to and
representatives  of the  Lenders  (who  may or may not be  affiliated  with  the
Lenders and who are  reasonably  acceptable  to the  Company),  any  underwriter
participating in any disposition of the Registrable  Securities on behalf of the
Lenders pursuant to the Registration Statement,  any such registration statement
or amendment or supplement  thereto or any blue sky, Nasdaq or other filing, all
SEC Documents and other filings with the SEC, and all other  publicly  available
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company's officers,  directors and
employees to supply all such publicly available information reasonably requested
by the Lenders or any such representative,  advisor or underwriter in connection
with such Registration Statement (including,  without limitation, in response to
all questions and other inquiries  reasonably made or submitted by any of them),
prior to and  from  time to time  after  the  filing  and  effectiveness  of the
Registration  Statement  for the sole  purpose of enabling  the Lenders and such
representatives,  advisors and underwriters and their respective accountants and
attorneys  to conduct  initial  and ongoing due  diligence  with  respect to the
Company and the accuracy of the Registration Statement.

Section 8.2. Non-Disclosure of Non-Public Information.

     (a) The Company shall not disclose material  non-public  information to the
Lenders,  advisors  to  or  representatives  of  the  Lenders  unless  prior  to
disclosure of such information the Company  identifies such information as being
non-public information and provides the Lenders,



                                       20
<PAGE>

such advisors and  representatives  with the  opportunity to accept or refuse to
accept such  non-public  information  for review.  Other than  disclosure of any
comment  letters  received  from the SEC staff with respect to the  Registration
Statement,  the  Company  may,  as a  condition  to  disclosing  any  non-public
information  hereunder,  require the Lenders'  advisors and  representatives  to
enter  into  a  confidentiality   agreement  in  form  and  content   reasonably
satisfactory to the Company and the Lenders.

     (b)  Nothing  herein  shall  require  the  Company  to  disclose   material
non-public information to the Lenders or their advisors or representatives,  and
the  Company  represents  that  it  does  not  disseminate  material  non-public
information  to any  Lenders  who  purchase  stock  in the  Company  in a public
offering, to money managers or to securities analysts,  provided,  however, that
notwithstanding   anything  herein  to  the  contrary,   the  Company  will,  as
hereinabove  provided,  promptly notify the advisors and  representatives of the
Lenders  and,  if  any,  underwriters,  of any  event  or the  existence  of any
circumstance   (without  any  obligation  to  disclose  the  specific  event  or
circumstance)  of which  it  becomes  aware,  constituting  material  non-public
information  (whether or not requested of the Company  specifically or generally
during the course of due diligence by such persons or entities),  which,  if not
disclosed in the prospectus  included in the Registration  Statement would cause
such  prospectus to include a material  misstatement  or to omit a material fact
required to be stated therein in order to make the statements,  therein in light
of the circumstances in which they were made, not misleading.  Nothing contained
in this  Section 8.2 shall be  construed  to mean that such  persons or entities
other than the  Lenders  (without  the written  consent of the Lenders  prior to
disclosure of such  information  as set forth in Section  8.2(a)) may not obtain
non-public  information  in the course of conducting due diligence in accordance
with the terms of this  Agreement  and  nothing  herein  shall  prevent any such
persons or entities  from  notifying  the Company of their opinion that based on
such due diligence by such persons or entities,  that the Registration Statement
contains  an  untrue  statement  of a  material  fact or omits a  material  fact
required to be stated in the  Registration  Statement  or  necessary to make the
statements  contained therein,  in light of the circumstances in which they were
made, not misleading.

                                   ARTICLE IX

                      Legends; Transfer Agent Instructions

Section  9.1.  Legends.   Unless  otherwise  provided  below,  each  certificate
representing Registrable Securities will bear the following legend or equivalent
(the "Legend"):

THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S.  SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY OTHER
APPLICABLE  SECURITIES  LAWS AND HAVE BEEN ISSUED IN RELIANCE  UPON AN EXEMPTION
FROM  THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT  AND  SUCH  OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION  HEREIN
MAY BE SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED
OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT



                                       21
<PAGE>

UNDER THE SECURITIES  ACT OR PURSUANT TO A TRANSACTION  THAT IS EXEMPT FROM SUCH
REGISTRATION.

Section  9.2.  Transfer  Agent  Instructions.  Upon the  execution  and delivery
hereof,  the Company is issuing to the transfer  agent for its Common Stock (and
to any  substitute or  replacement  transfer agent for its Common Stock upon the
Company's  appointment  of any such  substitute or replacement  transfer  agent)
instructions  substantially in the form of Exhibit F hereto.  Such  instructions
shall be  irrevocable  by the Company from and after the date hereof or from and
after the issuance thereof to any such substitute or replacement transfer agent,
as the case may be.

Section 9.3. No Other  Legend or Stock  Transfer  Restrictions.  No legend other
than the one  specified  in Section 9.1 has been or shall be placed on the share
certificates  representing  the  Registrable  Securities and no  instructions or
"stop transfer  orders," "stock transfer  restrictions,"  or other  restrictions
have been or shall be given to the Company's transfer agent with respect thereto
other than as expressly set forth in this Article IX or as otherwise required by
law or regulation adopted after the date of this Agreement.

Section 9.4.  Lenders'  Compliance.  Nothing in this Article shall affect in any
way each Lender's obligations to comply with all applicable securities laws upon
resale of the Common Stock.


                                   ARTICLE X

                           Choice of Law; Arbitration

Section 10.1. Governing Law/Arbitration. This Agreement shall be governed by and
construed in  accordance  with the laws of the State of New York  applicable  to
contracts  made in New York by persons  domiciled  in New York City and  without
regard to its  principles of conflicts of laws. Any dispute under this Agreement
shall be submitted to  arbitration  under the American  Arbitration  Association
(the "AAA") in New York City,  New York,  and shall be finally and  conclusively
determined  by the decision of a board of  arbitration  consisting  of three (3)
members  (hereinafter  referred  to as  the  "Board  of  Arbitration")  selected
according to the rules governing the AAA. The Board of Arbitration shall meet on
consecutive business days in New York City, New York, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration)  with  respect to the  amount,  if any,  which the losing  party is
required to pay to the other party in respect of a claim  filed.  In  connection
with  rendering its decisions,  the Board of Arbitration  shall adopt and follow
the laws of the State of New York unless the matter at issue is the  corporation
law of the company's state of incorporation,  in which event the corporation law
of such jurisdiction shall govern such issue. To the extent practical, decisions
of the Board of Arbitration  shall be rendered no more than thirty (30) calendar
days following  commencement of proceedings with respect  thereto.  The Board of
Arbitration  shall cause its written  decision  to be  delivered  to all parties
involved in the dispute.  Any decision made by the Board of Arbitration  (either
prior to or



                                       22
<PAGE>

after the  expiration  of such thirty (30)  calendar day period) shall be final,
binding  and  conclusive  on the  parties to the  dispute,  and  entitled  to be
enforced  to the  fullest  extent  permitted  by law and entered in any court of
competent  jurisdiction.  The Board of  Arbitration  shall be authorized  and is
hereby  directed  to enter a  default  judgment  against  any party  failing  to
participate in any proceeding hereunder within the time periods set forth in the
AAA rules.  The  non-prevailing  party to any  arbitration (as determined by the
Board of Arbitration) shall pay the expenses of the prevailing party,  including
reasonable attorney's fees, in connection with such arbitration. Any party shall
be  entitled  to obtain  injunctive  relief  from a court in any case where such
relief  is  available,  and the  non-prevailing  party  to any  such  injunctive
proceeding shall pay the expenses of the prevailing party,  including reasonable
attorney's fees, in connection with such proceeding.

                                   ARTICLE XI

                                   Assignment

Section 11.1.  Assignment.  Neither this Agreement nor any rights of the Lenders
or the Company  hereunder  may be assigned by either party to any other  person.
Notwithstanding the foregoing,  (a) the provisions of this Agreement shall inure
to the benefit of, and be enforceable by, any permitted transferee of any of the
Convertible Debentures or Warrants purchased or acquired by any Lender hereunder
with respect to the Convertible  Debentures or Warrants held by such person, and
(b) upon the prior  written  consent of the  Company,  which  consent  shall not
unreasonably  be withheld or delayed,  each Lender's  interest in this Agreement
may be assigned at any time,  in whole or in part, to any other person or entity
(including  any Affiliate of the Lender) who agrees to make the  representations
and warranties  contained in Article III and who agrees to be bound by the terms
of this Agreement.

                                  ARTICLE XII

                                     Notices

Section 12.1. Notices. All notices, demands, requests, consents,  approvals, and
other  communications  required or permitted  hereunder shall be in writing and,
unless otherwise specified herein,  shall be (i) hand delivered,  (ii) deposited
in the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges  prepaid,  or (iv)
transmitted by facsimile, addressed as set forth in the Escrow Agreement to such
other  address  as such party  shall have  specified  most  recently  by written
notice.  Any notice or other  communication  required or  permitted  to be given
hereunder  shall be deemed  effective  (a) upon hand  delivery  or  delivery  by
facsimile,  with accurate confirmation  generated by the transmitting  facsimile
machine,  at the address or number  designated below (if delivered on a business
day during normal  business  hours where such notice is to be received),  or the
first  business  day  following  such  delivery  (if  delivered  other than on a
business day during normal  business  hours where such notice is to be received)
or (b) on the first  business  day  following  the date of sending by  reputable
courier service, fully prepaid, addressed to such address, or (c) upon



                                       23
<PAGE>

actual receipt of such mailing, if mailed. The addresses for such communications
shall be as set forth  below.  Either  party hereto may from time to time change
its address or  facsimile  number for notices  under this Section 12.1 by giving
written  notice of such changed  address or facsimile  number to the other party
hereto as provided in this Section 12.1.























                                       24
<PAGE>

If to the Company:                                 2900 Gordon Avenue, Suite 201
                                                   Santa Clara, CA 95051
                                                   Attn:  Neil McElwee
                                                   Fax: 408-522-9895

With a copy to (shall not constitute notice):      Dorsey & Whitney
                                                   1420 Fifth Avenue, Suite 400
                                                   Seattle, WA 98101
                                                   Attn: Kenneth Sam
                                                   Fax: 206-903-8820

If to the Lenders:  As set forth on the signature pages hereto


With a copy to:                                    Robert F. Charron, Esq.
                                                   Epstein Becker & Green, P.C.
                                                   250 Park Avenue
                                                   New York, New York
                                                   Tel: (212) 351 3771
                                                   Fax:  (212) 661-0989

                                  ARTICLE XIII

                                  Miscellaneous

Section  13.1.  Counterparts/  Facsimile/  Amendments.  This  Agreement  may  be
executed  in multiple  counterparts,  each of which may be executed by less than
all of the parties and shall be deemed to be an original  instrument which shall
be enforceable  against the parties actually executing such counterparts and all
of which  together  shall  constitute  one and the same  instrument.  Except  as
otherwise  stated  herein,  in  lieu  of the  original  documents,  a  facsimile
transmission  or  copy of the  original  documents  shall  be as  effective  and
enforceable  as the  original.  This  Agreement may be amended only by a writing
executed by all parties.

Section 13.2.  Entire  Agreement.  This  Agreement,  the agreements  attached as
Exhibits  hereto,  which  include,  but  are  not  limited  to  the  Convertible
Debentures,  the Warrants,  the Escrow  Agreement,  and the Registration  Rights
Agreement,  set forth the entire  agreement  and  understanding  of the  parties
relating  to  the  subject   matter   hereof  and   supersedes   all  prior  and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and  written  relating  to the subject  matter  hereof.  The terms and
conditions  of all Exhibits to this  Agreement are  incorporated  herein by this
reference  and shall  constitute  part of this  Agreement  as is fully set forth
herein.

Section 13.3.  Severability.  In the event that any provision of this  Agreement
becomes or is  declared  by a court of  competent  jurisdiction  to be  illegal,
unenforceable or void, this Agreement



                                       25
<PAGE>

shall  continue in full force and effect without said  provision;  provided that
such  severability  shall be ineffective  if it materially  changes the economic
benefit of this Agreement to any party.

Section  13.4.  Headings.  The  headings  used in this  Agreement  are  used for
convenience only and are not to be considered in construing or interpreting this
Agreement.

Section  13.5.  Number and Gender.  There may be one or more Lenders  parties to
this Agreement, which Lenders may be natural persons or entities. All references
to plural  Lenders  shall apply  equally to a single Lender if there is only one
Lender, and all references to an Lender as "it" shall apply equally to a natural
person.

Section 13.6. Reporting Entity for the Common Stock. The reporting entity relied
upon for the  determination of the trading price or trading volume of the Common
Stock on any given  Trading  Day for the  purposes  of this  Agreement  shall be
Bloomberg,  L.P. or any successor  thereto.  The written  mutual  consent of the
Lenders and the Company shall be required to employ any other reporting entity.

Section  13.7.  Replacement  of  Certificates.  Upon  (i)  receipt  of  evidence
reasonably  satisfactory  to the  Company  of the loss,  theft,  destruction  or
mutilation  of a  certificate  representing  the  Convertible  Debentures or any
Conversion  Shares or Warrants or any Warrant Shares and (ii) in the case of any
such  loss,  theft or  destruction  of such  certificate,  upon  delivery  of an
indemnity agreement or security  reasonably  satisfactory in form to the Company
(which  shall not  include  the posting of any bond) or (iii) in the case of any
such mutilation, on surrender and cancellation of such certificate,  the Company
at its expense will execute and deliver,  in lieu thereof,  a new certificate of
like tenor.

Section 13.8.  Fees and Expenses.  Each of the Company and the Lenders agrees to
pay its own expenses  incident to the performance of its obligations  hereunder,
except  that the  Company  shall pay the fees,  expenses  and  disbursements  of
counsel to the Lenders,  in an amount equal to $15,000,  all as set forth in the
Escrow Agreement.

Section 13.9.  Finder's and Broker's Fees. Each of the parties hereto represents
that it has had no dealings in connection with this  transaction with any finder
or broker who will demand payment of any fee or commission from the other party,
except Thomas Systems, Inc. The Company on the one hand, and the Lenders, on the
other hand,  agree to indemnify  the other  against and hold the other  harmless
from any and all  liabilities to any person  claiming  brokerage  commissions or
finder's  fees on account of services  purported to have been rendered on behalf
of the indemnifying  party in connection with this Agreement or the transactions
contemplated hereby.



                                       26
<PAGE>

Section  13.10.  Publicity.  The Company agrees that it will not issue any press
release or other public  announcement of the  transactions  contemplated by this
Agreement  without  the  prior  consent  of  the  Lenders,  which  shall  not be
unreasonably  withheld  nor delayed by more than two (2) Trading Days from their
receipt of such  proposed  release.  No release  shall name the Lenders  without
their express consent.

     IN WITNESS  WHEREOF,  the parties hereto have caused this Loan Agreement to
be executed by the undersigned, thereunto duly authorized, as of this 7th day of
June, 2000.

                                      PAWNBROKER.COM, INC.

                                      By: /s/ Neil McElwee
                                          ------------------------------------
                                          Name:  Neil McElwee
                                          Title:  Chief Executive Officer

LENDER:

  Address:  c/o B.A.S.E. S.A.M.       Lamothe Investing Corp.
  31 Avenue Princesse Grace
  MC 98000 Monaco
  Fax: 011-377-9330-5159              By: /s/ Gregory C. Mussa
                                          ------------------------------------
                                          Gregory C. Mussa, Authorized Signatory





                                       27