EXHIBIT 10.23
                                  -------------

                                 LOAN AGREEMENT
                                 --------------


      THIS LOAN  AGREEMENT  ("Agreement"),  dated as of the 29th day of October,
1999,  is made and  entered  into on the terms and  conditions  hereinafter  set
forth, by and among EUROPEAN MICRO  HOLDINGS,  INC., a Nevada  corporation  with
principal  offices at 6073 N.W. 167th Street,  Unit C-25,  Miami,  Florida 33015
("Borrower"),  AMERICAN  MICRO  COMPUTER  CENTER,  INC.,  a Florida  corporation
("American Micro"),  NOR'EASTER MICRO, INC., a Nevada corporation ("Nor'easter";
American Micro and Nor'easter are sometimes hereinafter collectively referred to
as " Corporate  Guarantors"),  and  SOUTHTRUST  BANK,  NATIONAL  ASSOCIATION,  a
national banking association with offices in Nashville, Tennessee ("Lender").

      WHEREAS,  Borrower has requested  that Lender make available to Borrower a
term loan in the original  principal  amount of  $1,500,000  (the "Loan") on the
terms and conditions  hereinafter set forth, and for the purpose(s)  hereinafter
set forth; and

      WHEREAS, in order to induce Lender to make the Loan to Borrower,  Borrower
and Corporate Guarantors have made certain representations to Lender; and

      WHEREAS,  Lender, in reliance upon the  representations and inducements of
Borrower and  Corporate  Guarantors,  has agreed to make the Loan upon the terms
and conditions hereinafter set forth;

      NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and  agreements   hereinafter  set  forth,  and  for  other  good  and  valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Borrower, Corporate Guarantors and Lender hereby agree as follows:


                                    ARTICLE I

                                   DEFINITIONS
                                   -----------


      As used in this  Agreement,  the following  terms shall have the indicated
meanings:

      "Compliance  Certificate"  shall have the meaning assigned to such term in
SUBSECTION 5.3(A) of this Agreement.

      "Event of Default" shall have the meaning assigned to such term in SECTION
7.1 of this Agreement.

      "Guaranties" shall mean,  collectively,  one or more Continuing Guaranties
of even date herewith, executed in favor of Lender by Guarantors.

      "Guarantors" shall mean, collectively, Corporate Guarantors and
Individual Guarantors.

      "Individual Guarantors" shall mean, collectively, John B. Gallagher and
Harry D. Shields.



<PAGE>


      "Loan  Documents"  shall mean,  collectively,  the  Security  Instruments,
together with the Note and any other  instruments and documents now or hereafter
evidencing,  securing or in any way related to the  indebtednesses  evidenced by
the Note.

      "Note"  shall  mean  that  certain  Secured  Promissory  Note of even date
herewith, in the principal amount of $1,500,000,  made and executed by Borrower,
payable to the order of Lender,  evidencing  the  indebtedness  of  Borrower  to
Lender  in  connection  with the  Loan,  together  with any and all  extensions,
modifications, renewals, restatements and/or replacements thereof.

      "Pledge  Agreements"  shall mean those two (2) certain Pledge and Security
Agreements of even date herewith, executed by Individual Guarantors, in favor of
Lender.

      "Pledge  Securities" shall mean the securities  pledged to Lender pursuant
to the Pledge Agreements.

      "Secured Obligations" shall have the meaning assigned such term in SECTION
3.3 of this Agreement.

      "Security  Instruments"  shall mean,  collectively,  this  Agreement,  the
Guaranties, and any other instruments,  documents or agreements now or hereafter
securing the Secured Obligations, whether by specific or general reference.


                                   ARTICLE II

                                    THE LOAN
                                    --------

      II.1  REPAYMENT. The indebtedness of Borrower to Lender in connection with
the Loan shall be evidenced by, and payable in accordance with the terms of, the
Note.

      II.2  COMMITMENT FEE.  Upon execution of this Agreement, Borrower shall
pay to Lender a non-refundable commitment fee in the amount of $7,500.00.

      II.3  PURPOSE.  The  purpose of the Loan  shall be to  finance  Borrower's
additional  working  capital  needs  resulting  from its purchase of one hundred
percent (100%) of the issued and outstanding stock of American Micro.


                                   ARTICLE III

                                    SECURITY
                                    --------

      III.1 SECURITY.   The  Secured  Obligations  are and shall  continue to be
secured  by the  Guaranties,  the  Pledge  Agreements  and  the  other  Security
Instruments.

      III.2 VALUE OF PLEDGED  SECURITIES.  As  of the date  hereof,  the Pledged
Securities shall have an aggregate market value of not less than $3,000,000,  as
determined  by  Lender.  If,  at any  time,  the  market  value  of the  Pledged
Securities (as determined by Lender from time to time) is less than  $3,000,000,


                                       2
<PAGE>


Borrower  shall cause  Individual  Guarantors  to promptly (and in any event not
later  than  three (3) days  after  written  notice  from  Lender to  Individual
Guarantors)  pledge to Lender  additional stock in Borrower (or other marketable
securities  acceptable  to  Lender) in an amount  necessary  to cause the market
value of the Pledged  Securities and such additional  stock pledged to Lender to
be not less than $3,000,000.

      III.3 SECURED OBLIGATIONs.  Without   limiting   any   of   the provisions
thereof, the Security Instruments shall secure:

            (a) The full and timely payment of the  indebtednesses  evidenced by
      the  Note,   together  with   interest   thereon,   and  any   extensions,
      modifications  and/or  renewals  thereof  and any notes  given in  payment
      thereof,

            (b) The full and prompt  performance  of all of the  obligations  of
      Borrower to Lender under the Loan Documents,

            (c) The  full  and  prompt  payment  of all  expenses  and  costs of
      whatever kind incident to the collection of the  indebtednesses  evidenced
      by the Note,  the  perfection,  enforcement  or protection of the security
      interests  of the  Security  Instruments  or the exercise by Lender of any
      rights or remedies of Lender with respect to the indebtednesses  evidenced
      by the Note,  including but not limited to reasonable  attorney's fees and
      expenses incurred by Lender, all of which Borrower agrees to pay to Lender
      upon demand,

            (d)  The  full  and  prompt  payment  of  the   indebtednesses   and
      obligations of Corporate  Guarantors to Lender evidenced and/or secured by
      (i) that certain Loan and Security Agreement of even date herewith, by and
      among  Lender,   Borrower  and  Corporate  Guarantors,   entered  into  in
      connection  with that certain line of credit from Lender to American Micro
      in the original principal amount of $1,500,000, and (ii) that certain Loan
      and  Security  Agreement  of even  date  herewith,  by and  among  Lender,
      Borrower and Corporate  Guarantors,  entered into in connection  with that
      certain line of credit from Lender to Nor'easter, in the maximum principal
      amount of $1,500,000,  together with any and all renewals,  amendments and
      modifications thereof, and

            (e) The full and prompt payment and performance of any and all other
      indebtednesses  and other  obligations  of  Borrower  or either  Corporate
      Guarantor to Lender,  direct or contingent  (including  but not limited to
      obligations incurred as indorser,  guarantor or surety), however evidenced
      or  denominated,  and however and  whenever  incurred,  including  but not
      limited  to  indebtednesses  incurred  pursuant  to any  present or future
      commitment of Lender to Borrower or either Corporate  Guarantor,  together
      with interest thereon,  and any extensions,  modifications and/or renewals
      thereof and any notes given in payment thereof.

All of the foregoing  indebtedness and other obligations are herein collectively
referred to as the "Secured Obligations".


                                       3
<PAGE>


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

      Borrower and Corporate  Guarantors  hereby represent and warrant to Lender
as follows:

      IV.1  CORPORATE  STATUS.  Borrower and Nor'easter  are  corporations  duly
organized,  validly existing and in good standing under the laws of the State of
Nevada. American Micro is a corporation duly organized,  validly existing and in
good  standing  under  the  laws of the  State  of  Florida.  Borrower  and each
Corporate  Guarantor has the corporate  power to own and operate its properties,
to carry on its business as now  conducted  and to enter into and to perform its
obligations  under this  Agreement and the other Loan Documents to which it is a
party.  Borrower and each  Corporate  Guarantor is duly qualified to do business
and in good  standing in each state in which a failure to be so qualified  would
have a material  adverse  effect on its  financial  position  or its  ability to
conduct its business in the manner now conducted.

      IV.2  AUTHORIZATION.  Borrower and each Corporate Guarantor has full legal
right,  power and  authority  to conduct its  business and affairs in the manner
contemplated  by  the  Loan  Documents,  and  to  enter  into  and  perform  its
obligations  thereunder,  without the  consent or approval of any other  person,
firm,  governmental  agency or other legal entity. The execution and delivery of
this Agreement, the borrowing hereunder, the execution and delivery of each Loan
Document to which  Borrower or either  Corporate  Guarantor is a party,  and the
performance  by  Borrower  and  each  Corporate  Guarantor  of  its  obligations
thereunder are within the corporate  powers of Borrower or Corporate  Guarantors
and have been duly and properly  authorized by all necessary  corporate  action,
have received all necessary governmental approvals, if any were required, and do
not and  will  not  contravene  or  conflict  with  any  provision  of law,  any
applicable judgment, ordinance, regulation or order of any court or governmental
agency,  the  charters or by-laws of Borrower or  Corporate  Guarantors,  or any
agreement binding upon Borrower,  Corporate Guarantors or their properties.  The
officer(s) executing this Agreement and all of the other Loan Documents to which
Borrower and  Corporate  Guarantors  are a party are duly  authorized  to act on
behalf of Borrower and Corporate Guarantors.

      IV.3  VALIDITY  AND  BINDING  EFFECT.  This  Agreement  and the other Loan
Documents are the legal,  valid and binding  obligations of the parties thereto,
enforceable in accordance with their respective terms.

      IV.4  OTHER   TRANSACTIONS.   Consummation  of  the  transactions   hereby
contemplated  and the  performance of the  obligations of Borrower and Corporate
Guarantors  under  and by virtue of the Loan  Documents  will not  result in any
breach  of, or  constitute  a default  under,  any  mortgage,  security  deed or
agreement,  deed of  trust,  lease,  bank loan or  credit  agreement,  corporate
charter or by-laws, agreement or certificate of limited partnership, partnership
agreement,  license,  franchise  or any other  instrument  or agreement to which
Borrower  or  either  Corporate  Guarantor  is a  party  or by  which  Borrower,
Corporate Guarantors or their properties may be bound or affected.

      IV.5 PLACES OF  BUSINESS.  Borrower's  chief  place of business  and chief
executive  office has the  address of 6073 N.W.  167th  Street,  Miami,  Florida
33015.  Borrower's  additional  business  locations  are set  forth in  attached
SCHEDULE 4.5.


                                       4
<PAGE>


      IV.6  LITIGATION.  There are no actions, suits or proceedings pending, or,
to the knowledge of Borrower or either Corporate Guarantor,  threatened, against
or  affecting   Borrower  or  any   Guarantor  or  involving   the  validity  or
enforceability  of any of the  Loan  Documents  or  the  priority  of the  liens
thereof,  at law or in equity,  or before  any  governmental  or  administrative
agency,  except  actions,  suits  and  proceedings  that are  fully  covered  by
insurance  and that,  if adversely  determined,  would not impair the ability of
Borrower  or  Guarantors  to  perform  each and  every  one of their  respective
obligations  under and by virtue of the Loan Documents;  and to the knowledge of
Borrower and  Corporate  Guarantors,  neither  Borrower nor any  Guarantor is in
default with  respect to any order,  writ,  injunction,  decree or demand of any
court or any governmental authority.

      IV.7  FINANCIAL  STATEMENTS.  The financial  statement(s) of  Borrower and
Guarantors  heretofore delivered to Lender are true and correct in all respects,
have been prepared in accordance with generally accepted  accounting  principles
consistently applied, and fairly present the financial condition of the subjects
thereof as of the date(s)  thereof.  No material  adverse change has occurred in
the financial  condition of Borrower or any Guarantor since the date(s) thereof,
and no additional  borrowings  have been made by Borrower or any Guarantor since
the date(s) thereof.

      IV.8  NO DEFAULTS. No   default   or   event   of  default  by Borrower or
Guarantors  exists under this Agreement or any of the other Loan  Documents,  or
under any other  instrument or agreement to which Borrower or any Guarantor is a
party or by which  Borrower,  Guarantors  or  their  properties  may be bound or
affected,  and no event has  occurred  and is  existing  that with notice or the
passage  of time or  both  would  constitute  a  default  or  event  of  default
thereunder.

      IV.9  COMPLIANCE WITH LAW. Borrower and Corporate Guarantors have obtained
all necessary  licenses,  permits and governmental  approvals and authorizations
necessary or proper in order to conduct their business and affairs as heretofore
conducted  and as  intended  to be  conducted  hereafter.  To the  knowledge  of
Borrower and  Corporate  Guarantors,  Borrower and Corporate  Guarantors  are in
compliance  with all laws,  regulations,  decrees and orders  applicable to them
(including but not limited to laws, regulations,  decrees and orders relating to
occupational and health standards and controls,  antitrust,  monopoly, restraint
of trade or unfair competition). Neither Borrower nor either Corporate Guarantor
has  received,  nor expects to receive,  any order or notice of any violation or
claim of violation of any law,  regulation,  decree,  rule, judgment or order of
any governmental  authority or agency relating to the ownership and/or operation
of its  properties,  as to which the cost of  compliance is or might be material
and the  consequences of noncompliance  would or might be materially  adverse to
its business,  operations,  property or financial  condition,  or which would or
might impair its ability to perform its obligations  under the Loan Documents to
which it is a party.

      IV.10 ENVIRONMENTAL MATTERS.

            (a) As used in this SECTION  4.10 and in SECTION  5.11  hereof,  the
      following terms shall have the indicated meanings:

            "BUSINESS" means all of Borrower's and Corporate Guarantors' assets,
      both real and personal, tangible and intangible, now existing or hereafter
      acquired  and  wherever  located,  and  all of  Borrower's  and  Corporate
      Guarantors' current and future business operations at all locations and in
      all jurisdictions.


                                       5
<PAGE>


            "ENVIRONMENTAL  AUTHORITIES"  means  all  federal,  state  and local
      governmental  bodies,  authorities or agencies and all public corporations
      created   and/or   empowered  to  administer,   regulate   and/or  enforce
      Environmental Laws, including without limitation the U.S.
      Environmental Protection Agency.

            "ENVIRONMENTAL  LAWS" means any and all  federal,  state,  regional,
      county or local laws, statutes,  rules, regulations or ordinances relating
      to  the  generation,  recycling,  use,  reuse,  sale,  storage,  handling,
      transport, treatment or disposal of Hazardous Materials, including without
      limitation the Comprehensive Environmental Response Compensation Liability
      Act of 1980, as amended by the Superfund  Amendments  and  Reauthorization
      Act of  1986,  42  U.S.C.  ss.ss.9601  ET seq.  ("CERCLA"),  the  Resource
      Conservation  and  Recovery  Act of 1976,  as  amended  by the  Solid  and
      Hazardous Waste Amendments of 1984, 42 U.S.C. ss.ss.6901 ET seq. ("RCRA"),
      the Tennessee  Hazardous Waste Management Act, T.C.A.  ss.ss.68-46-101  ET
      seq., and any rules,  regulations  and guidance  documents  promulgated or
      published thereunder,  and any state,  regional,  county or local statute,
      law, rule,  regulation or ordinance  relating to public health,  safety or
      the  discharge,  emission or disposal of Hazardous  Materials or Hazardous
      Wastes in or to air, water, land or groundwater,  to the withdrawal or use
      of   groundwater,   to  the  use,   handling  or  disposal  of   asbestos,
      polychlorinated   biphenyls,    petroleum,    petroleum   derivatives   or
      by-products,  other hydrocarbons or urea  formaldehyde,  to the treatment,
      storage,  disposal or  management of Hazardous  Materials,  to exposure to
      Hazardous Materials, to the transportation,  storage, disposal, management
      or release of gaseous or liquid  substances,  and any  regulation,  order,
      injunction, judgment, declaration, notice or demand issued thereunder.

            "HAZARDOUS  MATERIALS"  means  any  hazardous,  toxic  or  dangerous
      materials,  substances,  chemicals,  waste or pollutants that from time to
      time  are  defined  by  or  pursuant  to  or  are   regulated   under  any
      Environmental Laws, including without limitation asbestos, polychlorinated
      biphenyls,   petroleum,   petroleum  derivatives  or  by-products,   other
      hydrocarbons,  urea formaldehyde and any material, substance, pollutant or
      waste  that is  defined as a  hazardous  waste  under RCRA or defined as a
      hazardous substance under CERCLA.

            "HAZARDOUS  WASTES"  means  Hazardous  Materials  that are or become
      "wastes" or "solid wastes" as such terms are used in RCRA.

            "PROPERTY"  means all real property now or hereafter  constituting a
      part of, or otherwise used or operated by Borrower or Corporate Guarantors
      in connection with, the Business.

            (b)  Borrower  and  Corporate  Guarantors  represent  and warrant to
      Lender as follows:

                 (i)     The   Property   is   being   operated  by Borrower and
            Corporate Guarantors in full compliance with Environmental Laws, and
            Borrower and Corporate  Guarantors have obtained,  maintained and is
            in  good  standing  under  all  approvals,  consents,  certificates,
            licenses and permits required by Environmental  Laws with respect to
            the Property.


                                       6
<PAGE>


                 (ii)    To the knowledge of Borrower and Corporate  Guarantors,
            the  Property  is free of all  Hazardous  Wastes  and is free of all
            Hazardous  Materials other than those maintained  therein or thereon
            in full compliance with Environmental  Laws.  Borrower and Corporate
            Guarantors  have not caused or permitted  the Property to be used to
            generate,  manufacture,  refine,  transport,  treat, store,  handle,
            dispose,  transfer, produce or process Hazardous Materials except in
            full compliance with Environmental Laws.

                  (iii)  Neither  Borrower nor either  Corporate  Guarantor  has
            received notice,  nor has knowledge,  of any  noncompliance  with or
            violation of any Environmental  Laws with respect to the Property or
            the Business.

      IV.11 NO BURDENSOME RESTRICTIONS. No instrument,  document or agreement to
which  Borrower or any Guarantor is a party or by which it or its properties may
be bound or affected materially adversely affects, or may reasonably be expected
so to affect, its business, operations, property or financial condition.

      IV.12 TAXES.  Borrower and each  Guarantor has filed or caused to be filed
all tax returns  that to its  knowledge  are  required  to be filed  (except for
returns  that  are not yet  due),  and has paid  all  taxes  shown to be due and
payable on said returns and all other taxes, impositions,  assessments,  fees or
other  charges  imposed  on  it  by  any  governmental   authority,   agency  or
instrumentality,  prior to any  delinquency  with  respect  thereto  (other than
taxes, impositions,  assessments,  fees and charges currently being contested in
good faith by appropriate  proceedings,  for which appropriate amounts have been
reserved).  No tax liens have been filed against Borrower,  Guarantors or any of
their property.


                                    ARTICLE V

                            COVENANTS AND AGREEMENTS
                            ------------------------

      Borrower and Corporate  Guarantors covenant and agree that during the term
of this Agreement:

      V.1 PAYMENT OF SECURED OBLIGATIONS.  Borrower shall pay the indebtednesses
evidenced by the Note  according to the terms  thereof,  and shall timely pay or
perform, as the case may be, all of the other Secured Obligations.

      V.2  FURTHER  ASSURANCES.  Borrower  will take all  actions  (or cause all
actions to be taken)  requested  by Lender to create and  maintain  in  Lender's
favor valid liens upon,  security titles to and/or perfected  security interests
in any collateral described in the Security Instruments and all other collateral
for the Secured Obligations now or hereafter held by or for Lender.

      V.3 FINANCIAL  STATEMENTS AND REPORTS.  Borrower and Corporate  Guarantors
shall furnish to Lender such financial  data as Lender may  reasonably  request.
Without limiting the foregoing,  Borrower and Corporate Guarantors shall furnish
to Lender (or cause to be furnished to Lender) the following:

            (a) as soon as practicable  and in any event within ninety (90) days
      after the end of each fiscal year of Borrower  and  Corporate  Guarantors,


                                       7
<PAGE>


      consolidated  and  consolidating  balance sheets of Borrower and Corporate
      Guarantors  as  of  the  close  of  such  fiscal  year,  consolidated  and
      consolidating statements of earnings and retained earnings of Borrower and
      Corporate Guarantors as of the close of such fiscal year, and consolidated
      and  consolidating  statements  of cash flows for Borrower  and  Corporate
      Guarantors  for such fiscal year,  all in reasonable  detail,  prepared in
      accordance  with generally  accepted  accounting  principles  consistently
      applied,  audited in accordance with generally accepted auditing standards
      by independent certified public accountants  satisfactory to Lender in its
      reasonable judgment,  and accompanied by the unqualified favorable opinion
      of such  accountants  and a  certificate  of the chief  executive or chief
      financial officers of Borrower and Corporate Guarantors,  stating that, to
      the  best  of the  knowledge  of such  officers,  Borrower  and  Corporate
      Guarantors  have kept,  observed,  performed and fulfilled  each covenant,
      term and condition of this Agreement and the other Loan  Documents  during
      such fiscal year and that no Event of Default  hereunder  has occurred and
      is continuing  (or if an Event of Default has occurred and is  continuing,
      specifying  the nature of same,  the period of  existence  of same and the
      action  Borrower and  Corporate  Guarantors  propose to take in connection
      therewith),  and setting forth calculations of the financial covenants set
      forth in ARTICLE VI of this Agreement (a "Compliance Certificate");

            (b) within  forty-five  (45) days of the end of the first  three (3)
      fiscal quarters of each fiscal year of Borrower and Corporate  Guarantors,
      consolidated  and  consolidating  balance sheets of Borrower and Corporate
      Guarantors  as  of  the  close  of  such  quarter  and   consolidated  and
      consolidating statements of earnings and retained earnings of Borrower and
      Corporate  Guarantors as of the close of such  quarter,  all in reasonable
      detail,  and prepared  substantially in accordance with generally accepted
      accounting  principles  consistently  applied,   certified  by  the  chief
      executive or chief financial officers of Borrower and Corporate Guarantors
      as being true and correct, and accompanied by a Compliance Certificate;

            (c)  within  thirty  (30)  days of the end of each  calendar  month,
      non-consolidated  balance sheets of Borrower and each Corporate  Guarantor
      as of the close of such month, and non-consolidated statements of earnings
      and retained  earnings of Borrower and each Corporate  Guarantor as of the
      close of such month, all in reasonable detail, and prepared  substantially
      in accordance with generally accepted accounting  principles  consistently
      applied,  certified by the chief executive or chief financial  officers of
      Borrower  and  Corporate   Guarantors  as  being  true  and  correct,  and
      accompanied by a Compliance Certificate;

            (d)  promptly  upon  receipt  thereof,  copies  of all  accountants'
      reports and accompanying financial reports submitted to Borrower or either
      Corporate  Guarantor by independent  accountants  in connection  with each
      annual examination of Borrower and Corporate Guarantors; and

            (e)  from  time  to  time,  personal  financial  statements  of each
      Individual  Guarantor,  in form  satisfactory to Lender,  such that at all
      times Lender shall have personal  financial  statements of each Individual
      Guarantor on file that are not more than one (1) year old.

      V.4 MAINTENANCE OF BOOKS AND RECORDS;  INSPECTION.  Borrower and Corporate
Guarantors  shall maintain their books,  accounts and records in accordance with
generally  accepted  accounting  principles  consistently  applied,  and  permit


                                       8
<PAGE>


Lender, its officers and employees and any professionals designated by Lender in
writing, at any time to visit and inspect any of their properties (including but
not limited to the collateral  security described in the Security  Instruments),
corporate books and financial  records,  and to discuss their accounts,  affairs
and finances with any employee, officer or director thereof.

      V.5  INSURANCE.  Without  limiting any of the  requirements  of any of the
other Loan Documents, Borrower shall maintain, in amounts satisfactory to Lender
(a) public liability insurance, (b) worker's compensation insurance (or maintain
a legally  sufficient  amount of self insurance  against  worker's  compensation
liabilities,  with adequate reserves, under a plan approved by Lender), (c) fire
and "all risk" casualty  insurance on its properties  (including but not limited
to the collateral  security now or hereafter securing payment and performance of
the Secured  Obligations),  against such hazards and in at least such amounts as
are customary in the type of business in which Borrower is engaged, and (d) rent
or business interruption  insurance against loss of income arising out of damage
or  destruction by such hazards as presently are included in so called "all risk
coverage".  At  the  request  of  Lender,  Borrower  will  deliver  forthwith  a
certificate,  executed by a duly  authorized  representative  of the insurer(s),
specifying the details of such insurance in effect.

      All  policies of insurance  shall  provide that at least thirty (30) days'
prior written  notice of  cancellation  or  modification  of the policy shall be
given to Lender by the insurer,  and all policies of casualty insurance covering
any tangible  security for the Secured  Obligations shall be payable to Borrower
and Lender as their respective interests may appear.  Borrower agrees that there
shall be no recourse  against  Lender for the payment of premiums,  commissions,
assessments or advances in respect of any such policy,  and at Lender's  request
shall provide Lender with the agreement of the insurer(s) to this effect.

      At the request of Lender,  all policies of casualty insurance covering any
tangible security for the Secured  Obligations shall be delivered to and held by
Lender.  Borrower  shall act  expeditiously  in the adjustment and settlement of
claims  under such  policies in order to preserve the  greatest  possible  value
reasonably obtainable in respect of such claims.  Following the occurrence of an
Event of  Default,  Lender  may,  at its  option,  act as  attorney  in fact for
Borrower in adjusting and settling claims under such insurance and endorsing any
drafts with respect  thereto,  and this power,  being  coupled with an interest,
shall be irrevocable prior to payment in full of the indebtednesses evidenced by
the Note and  performance  of all of the  obligations  of  Borrower to Lender in
connection therewith, and any insurer is hereby instructed to rely upon Lender's
representation  that an Event of Default has occurred  hereunder without further
inquiry or investigation.

      V.6 TAXES AND  ASSESSMENTS;  TAX  INDEMNITY.  Borrower and each  Corporate
Guarantor shall (a) file all tax returns and appropriate  schedules thereto that
are required to be filed under applicable law, prior to the date of delinquency,
(b) pay and discharge all taxes,  assessments and governmental charges or levies
imposed upon Borrower or either Corporate Guarantor, upon its income and profits
or upon any  properties  belonging to it,  prior to the date on which  penalties
attach thereto,  and (c) pay all taxes,  assessments and governmental charges or
levies  that,  if  unpaid,  might  become  a  lien  or  charge  upon  any of its
properties;  provided,  however,  that Borrower and Corporate Guarantors in good
faith  may  contest  any  such  tax,  assessment,  governmental  charge  or levy
described in the foregoing  clauses (b) and (c) so long as appropriate  reserves
are maintained with respect thereto.


                                       9
<PAGE>


      V.7  CORPORATE  EXISTENCE.  Borrower and each  Corporate  Guarantor  shall
maintain  its  corporate  existence  and  good  standing  in  the  state  of its
incorporation,  and its qualification and good standing as a foreign corporation
in each  jurisdiction  in which such  qualification  is  necessary  pursuant  to
applicable law.

      V.8 COMPLIANCE WITH LAW AND OTHER AGREEMENTS.  Borrower and each Corporate
Guarantor  shall maintain its business  operations and property owned or used in
connection  therewith in compliance with (a) all applicable  federal,  state and
local laws,  regulations and ordinances  governing such business  operations and
the use  and  ownership  of such  property,  and (b) all  agreements,  licenses,
franchises,  indentures  and  mortgages  to which  Borrower or either  Corporate
Guarantor is a party or by which Borrower,  either Corporate Guarantor or any of
their  properties is bound.  Without  limiting the foregoing,  Borrower and each
Corporate  Guarantor  shall pay all of its  indebtedness  promptly in accordance
with the terms thereof.

      V.9  NOTICE OF  DEFAULT.  Borrower  and  Corporate  Guarantors  shall give
written notice to Lender of the  occurrence of any default,  event of default or
Event of Default under this  Agreement or any other Loan Document  promptly upon
the occurrence thereof.

      V.10 NOTICE OF LITIGATION.  Borrower and Corporate  Guarantors  shall give
notice, in writing,  to Lender of (a) any actions,  suits or proceedings wherein
the amount at issue is in excess of $250,000,  instituted by any persons against
Borrower or any  Guarantor,  or  affecting  any of the assets of Borrower or any
Guarantor,  and (b) any  dispute,  not  resolved  within  sixty (60) days of the
commencement thereof,  between Borrower or any Guarantor on the one hand and any
governmental  or regulatory  body on the other hand,  which might  reasonably be
expected  to have a  material  adverse  effect  on the  business  operations  or
financial condition of Borrower or either Corporate Guarantor.

      V.11  ENVIRONMENTAL MATTERS.

            (a) Borrower  and  Corporate  Guarantors  will cause the Property to
      remain free of all Hazardous  Wastes,  and to remain free of all Hazardous
      Materials  other  than  those  maintained   therein  or  thereon  in  full
      compliance with Environmental  Laws. Neither Borrower nor either Corporate
      Guarantor  will  cause or  permit  the  Property  to be used to  generate,
      manufacture,  refine, transport,  treat, store, handle, dispose, transfer,
      produce or process  Hazardous  Materials  except in full  compliance  with
      Environmental Laws.

            (b) Borrower and Corporate Guarantors will notify Lender immediately
      if they receive any notice or obtain knowledge of any  noncompliance  with
      or violation of any Environmental Laws with respect to the Property or the
      Business.

            (c) In the event that Hazardous Materials unrelated to the Business,
      or Hazardous  Wastes,  are discovered on or are brought onto the Property,
      Borrower and Corporate  Guarantors will cause such Hazardous  Materials or
      Hazardous  Wastes to be  removed  and  disposed  of  promptly  and in full
      compliance with Environmental Laws. Borrower and Corporate Guarantors will
      provide Lender prior written notice of such removal and disposal actions.

            (d)  Borrower  and  Corporate   Guarantors   will  comply  with  all
      Environmental  Laws in all  jurisdictions  in  which  Borrower  or  either


                                       10
<PAGE>


      Corporate Guarantor  operates,  now or in the future, and will comply with
      all  Environmental  Laws  that  in the  future  become  applicable  to the
      Property or the Business.

      V.12 MERGERS,  CONSOLIDATIONS,  ACQUISITIONS AND SALES.  Without the prior
express  written  consent  of Lender,  neither  Borrower  nor  either  Corporate
Guarantor  shall  (a) be a  party  to any  merger,  consolidation  or  corporate
reorganization,  (b) purchase or otherwise  acquire all or substantially  all of
the assets or stock of, or any  partnership  or joint  venture  interest in, any
other  person,  firm or entity,  (c) sell,  transfer,  convey,  grant a security
interest in or lease all or any substantial  part of its assets,  nor (d) create
any  subsidiaries  nor  convey any of its  assets to any  subsidiary;  provided,
however,  Borrower or either Corporate Guarantor may make acquisitions of all or
substantially  all of the stock or assets of other  entities,  so long as (i) no
Event of Default exists hereunder, (ii) the purchase price payable in connection
with each such  acquisition,  including  the fair market  value of any  non-cash
consideration,  does not exceed $5,000,000, and (iii) any subsidiary of Borrower
or either  Corporate  Guarantor  created or acquired in connection with any such
acquisition  shall  guarantee the  indebtedness  of Borrower to Lender and grant
Lender a security  interest in all of its assets to secure its  obligations  and
the obligations of Borrower to Lender, all pursuant to documentation in form and
substance satisfactory to Lender in all respects.

      V.13  MANAGEMENT,   OWNERSHIP.   Neither  Borrower  nor  either  Corporate
Guarantor shall permit any significant change in its ownership,  executive staff
or  management  without  the prior  written  consent of Lender.  The  ownership,
executive staff and management of Borrower and Corporate Guarantors are material
factors in Lender's willingness to institute and maintain a lending relationship
with Borrower.

      V.14 DIVIDENDS, ETC. Neither Borrower nor either Corporate Guarantor shall
declare or pay any dividend of any kind, in cash or in property, on any class of
its capital stock, nor purchase,  redeem,  retire or otherwise acquire for value
any  shares of such  stock,  nor make any  distribution  of any kind in  respect
thereof,  nor make any return of capital to shareholders,  nor make any payments
in respect of any pension,  profit  sharing,  retirement,  stock  option,  stock
bonus,  incentive  compensation or similar plan (except as required or permitted
hereunder),  without the prior written consent of Lender.  Without  limiting the
foregoing,  not less than seventy-five  percent (75%) of the net proceeds of any
equity offering by Borrower or either Corporate  Guarantor shall be retained and
shall not be paid out as dividends or otherwise distributed to shareholders.

      V.15 GUARANTIES;  LOANS.  Neither Borrower nor either Corporate  Guarantor
shall guarantee nor be liable in any manner, whether directly or indirectly,  or
become  contingently  liable after the date of this Agreement in connection with
the  obligations  or  indebtedness  of any  person or  persons,  except  for the
indorsement  of  negotiable   instruments   payable  to  Borrower  or  Corporate
Guarantors for deposit or collection in the ordinary course of business. Neither
Borrower  nor  either  Corporate  Guarantor  shall  make any  loan,  advance  or
extension  of  credit  to any  person  other  than in the  normal  course of its
business.

      V.16 DEBT.  Neither Borrower nor either Corporate  Guarantor shall create,
incur,  assume or suffer to exist indebtedness of any description  whatsoever in
an  aggregate  amount in excess  of  $250,000  (excluding  any  indebtedness  of
Borrower or either  Corporate  Guarantor to Lender,  trade accounts  payable and
accrued expenses incurred in the ordinary course of business and the indorsement
of  negotiable  instruments  payable to Borrower  or  Corporate  Guarantors  for
deposit or collection in the ordinary course of business).

      V.17 CONDUCT OF BUSINESS.  Borrower and Corporate Guarantors will continue
to engage,  in an efficient  and  economical  manner,  in a business of the same
general type as conducted by them on the date of this Agreement.


                                       11
<PAGE>


      V.18  PLACES OF  BUSINESS.  Borrower  will not change the  location of its
chief  place of  business,  chief  executive  office  or any  place of  business
disclosed to Lender  pursuant to SECTION 4.5 hereof,  without  thirty (30) days'
prior written notice to Lender in each instance.

      V.19 ERISA PLAN. If Borrower has in effect, or hereafter  institutes (with
Lender's consent,  as hereinafter  provided),  a pension plan that is subject to
the requirements of Title IV of the Employee  Retirement  Income Security Act of
1974, Pub. L. No. 93 406, September 2, 1974, 88 Stat. 829, 29 U.S.C.A.  ss. 1001
ET Seq.  (1975),  as amended  from time to time  ("ERISA"),  then the  following
warranty and covenants  shall be applicable  during such period as any such plan
(the "Plan") shall be in effect:  (a) Borrower hereby warrants that no fact that
might constitute grounds for the involuntary termination of the Plan, or for the
appointment  by the  appropriate  United States  District  Court of a trustee to
administer  the Plan,  exists at the time of  execution of this  Agreement,  (b)
Borrower hereby covenants that throughout the existence of the Plan,  Borrower's
contributions under the Plan will meet the minimum funding standards required by
ERISA and Borrower will not institute a distress  termination  of the Plan,  (c)
Borrower  hereby  covenants  that the  Plan's  annual  financial  and  actuarial
statements and the Plan's annual Form 5500 information return will be filed with
Lender  within  thirty (30) days of the  preparation  thereof,  and (d) Borrower
covenants that it will send to Lender a copy of any notice of a reportable event
(as defined in ERISA) required by ERISA to be filed with the Labor Department or
the Pension  Benefit  Guaranty  Corporation,  at the time that such notice is so
filed.

      No Plan shall be instituted by Borrower unless Lender shall have given its
written consent thereto.

                                   ARTICLE VI

                               FINANCIAL COVENANTS
                               -------------------

      VI.1 NET WORTH  REQUIREMENTS.  Borrower and Corporate  Guarantors shall at
all times maintain a minimum tangible net worth of $12,000,000,  calculated on a
consolidated  basis.  For purposes of this covenant,  "tangible net worth" shall
refer to the excess of Borrower's and Corporate  Guarantors'  total assets above
the sum of their intangible assets plus total liabilities (exclusive of any debt
subordinated to indebtedness of Borrower or Corporate Guarantors to Lender), all
determined  in  accordance  with  generally   accepted   accounting   principles
consistently applied.

      VI.2 DEBT TO WORTH RATIO.  Borrower and Corporate  Guarantors shall at all
times maintain a ratio of total liabilities  (exclusive of any debt subordinated
to  indebtedness  of Borrower or Corporate  Guarantor to Lender) to tangible net
worth of not more  than 2.0 to 1.0,  calculated  on a  consolidated  basis.  For
purposes of this covenant, "tangible net worth" shall have the meaning set forth
in SECTION 6.1 hereof.


      VI.3 INTEREST  COVERAGE  RATIO.  Borrower and Corporate  Guarantors  shall
maintain a ratio of earnings before interest and taxes to interest expense,  all
determined  in  accordance  with  generally   accepted   accounting   principles


                                       12
<PAGE>


consistently  applied,  calculated on a consolidated basis as of the last day of
each September,  December,  March and June, for the  then-previous  twelve-month
period (beginning September 30, 1999), of not less than 4.0 to 1.0.


                                   ARTICLE VII

                              DEFAULT AND REMEDIES
                              --------------------

      VII.1 EVENTS OF DEFAULT.  The  occurrence  of any of the  following  shall
constitute an Event of Default hereunder:

            (a) Failure to make  payment of the  principal of or interest on the
      indebtedness evidenced by the Note within five (5) days of when due;

            (b) Any  misrepresentation  by Borrower or any  Guarantor  as to any
      material  matter  hereunder or under any of the other Loan  Documents,  or
      delivery  by  Borrower  or  any  Guarantor  of  any  schedule,  statement,
      resolution,  report,  certificate,  notice or  writing  to Lender  that is
      untrue in any material respect on the date as of which the facts set forth
      therein are stated or certified;

            (c)  Failure of  Borrower  or any  Guarantor  to perform  any of its
      obligations  under  SECTIONS  5.6,  5.8 or 5.11 of this  Agreement  within
      fifteen  (15) days after the earlier of (i) written  notice from Lender to
      Borrower of such  failure to perform,  or (ii) the date  Borrower  becomes
      aware of such failure to perform;

            (d) Failure of Borrower or any Guarantor to perform any other of its
      obligations   under  this  Agreement,   the  Note,  any  of  the  Security
      Instruments or any of the other Loan Documents;

            (e) Borrower or any Guarantor  (i) shall  generally not pay or shall
      be unable to pay its debts as such debts become due; or (ii) shall make an
      assignment  for the benefit of creditors or petition or apply to any court
      or tribunal for the appointment of a custodian, receiver or trustee for it
      or a  substantial  part  of  its  assets;  or  (iii)  shall  commence  any
      proceeding  or case  under any  bankruptcy,  reorganization,  arrangement,
      readjustment  of debt,  dissolution or  liquidation  law or statute of any
      jurisdiction,  whether now or hereafter in effect;  or (iv) shall have had
      any such  petition or  application  filed or any such  proceeding  or case
      commenced  against  it in which an  order  for  relief  is  entered  or an
      adjudication or appointment is made; or (v) shall indicate,  by any act or
      omission,  its  consent  to,  approval  of or  acquiescence  in  any  such
      petition,  application,  case,  proceeding  or  order  for  relief  or the
      appointment  of a custodian,  receiver or trustee for it or a  substantial
      part  of  its  assets;  or  (vi)  shall  suffer  any  such  custodianship,
      receivership  or  trusteeship  to  continue  undischarged  for a period of
      thirty (30) days or more;

            (f) Borrower or any Guarantor  shall die, be liquidated,  dissolved,
      partitioned  or  terminated,  or the charter or  certificate  of authority
      thereof shall expire or be revoked;

            (g) A default or event of default shall occur under any of the other
      Loan Documents;


                                       13
<PAGE>


            (h) Borrower or any Guarantor shall default in the timely payment or
      performance  of  any  obligation  now  or  hereafter  owed  to  Lender  in
      connection with any other indebtedness of Borrower or any Guarantor now or
      hereafter owed to Lender;

            (i) Lender shall reasonably suspect the occurrence of one or more of
      the aforesaid events of default and Borrower,  upon the written request of
      Lender,  shall fail to provide evidence reasonably  satisfactory to Lender
      that such event or events of default have not in fact occurred; or

            (j) Lender in good faith shall deem itself insecure.

      VII.2 ACCELERATION OF MATURITY; REMEDIES. Upon the occurrence of any Event
of Default described in SUBSECTION 7.1(D) hereof as it relates to Borrower,  the
indebtednesses  evidenced by the Note as well as any and all other  indebtedness
of Borrower to Lender shall be immediately due and payable in full; and upon the
occurrence  of any other Event of Default  described  above  (including  but not
limited to SUBSECTION  7.1(D) hereof as it relates to any Guarantor),  Lender at
any  time  thereafter  may  at  its  option   accelerate  the  maturity  of  the
indebtednesses  evidenced by the Note as well as any and all other  indebtedness
of Borrower to Lender;  all without  notice of any kind.  Upon the occurrence of
any  such  Event  of  Default  and  the  acceleration  of  the  maturity  of the
indebtednesses evidenced by the Note:

            (a) Lender  shall be  immediately  entitled to exercise  any and all
      rights  and  remedies  possessed  by Lender  pursuant  to the terms of the
      Security Instruments and all of the other Loan Documents;

            (b) Lender  shall have all of the rights and  remedies  of a secured
      party under the Uniform Commercial Code; and

            (c) Lender  shall have any and all other  rights and  remedies  that
      Lender may now or hereafter possess at law, in equity or by statute.

      VII.3  RIGHT OF SETOFF.  Without  limitation  of the  foregoing,  upon the
occurrence and during the continuance of any Event of Default,  Lender is hereby
authorized  at any time and from time to time,  without  notice to  Borrower  or
Guarantors (any such notice being expressly  waived by Borrower and Guarantors),
to set off and apply any and all deposits  (general or special,  time or demand,
provisional or final) at any time held by Lender or any of its  affiliates,  and
any other  indebtedness  at any time owing by Lender or its affiliates to or for
the credit or the account of Borrower or Guarantors,  against any and all of the
Secured  Obligations,  irrespective of whether Lender shall have made any demand
under this  Agreement or the Note or any other Loan  Document and although  such
obligations may be unmatured. Lender agrees to notify Borrower or Guarantors (as
applicable)  within a  reasonable  time after any such  setoff and  application;
provided  that the failure to give such notice  shall not affect the validity of
such setoff and application.  The rights of Lender under this SECTION 7.3 are in
addition to any other rights and remedies (including,  without limitation, other
rights of setoff) that Lender may have.

      VII.4 REMEDIES CUMULATIVE;  NO WAIVER. No right, power or remedy conferred
upon or reserved to Lender by this  Agreement or any of the other Loan Documents
is intended to be exclusive of any other  right,  power or remedy,  but each and
every such right,  power and remedy shall be cumulative and concurrent and shall
be in addition to any other right,  power and remedy given hereunder,  under any


                                       14
<PAGE>


of the other Loan Documents or now or hereafter existing at law, in equity or by
statute.  No delay or omission by Lender to exercise any right,  power or remedy
accruing upon the occurrence of any Event of Default shall exhaust or impair any
such  right,  power or remedy or shall be  construed  to be a waiver of any such
Event of Default or an acquiescence  therein,  and every right, power and remedy
given by this  Agreement and the other Loan Documents to Lender may be exercised
from time to time and as often as may be deemed necessary by Lender.

      VII.5  PROCEEDS  OF  REMEDIES.  Any or all  proceeds  resulting  from  the
exercise of any or all of the foregoing  remedies  shall be applied as set forth
in the Loan Document(s)  providing the remedy or remedies exercised;  if none is
specified, or if the remedy is provided by this Agreement, then as follows:

            First, to the costs and expenses,  including  reasonable  attorney's
      fees and expenses,  incurred by Lender in connection  with the exercise of
      its remedies;

            Second, to the expenses of curing the default that has occurred,  in
      the event that Lender elects, in its sole discretion,  to cure the default
      that has occurred;

            Third, to the payment of the Secured Obligations,  including but not
      limited  to  the  payment  of  the   principal  of  and  interest  on  the
      indebtednesses  evidenced by the Note, in such order of priority as Lender
      shall determine in its sole discretion; and

            Fourth,  the  remainder,  if any, to Borrower or to any other person
      lawfully thereunto entitled.


                                  ARTICLE VIII

                                  MISCELLANEOUS
                                  -------------

      VIII.1  INDEPENDENCE OF COVENANTS.  All covenants hereunder shall be given
independent  effect so that if a particular action or condition is not permitted
by any of such  covenants,  the fact that it would be  permitted by an exception
to, or otherwise would be within the limitations of, another  covenant shall not
avoid the occurrence of an Event of Default if such action is taken or condition
exists.

      VIII.2  PERFORMANCE BY LENDER.  If Borrower or Corporate  Guarantors shall
default in the payment,  performance  or  observance  of any  covenant,  term or
condition of this Agreement,  Lender may, at its option, pay, perform or observe
the same,  and all  payments  made or costs or  expenses  incurred  by Lender in
connection  therewith  (including but not limited to reasonable  attorney's fees
and  expenses),  with interest  thereon at the default rate provided in the Note
(if none, then at the maximum rate from time to time allowed by applicable law),
shall be immediately  repaid to Lender by Borrower and Corporate  Guarantors and
shall  constitute a part of the Secured  Obligations and be secured hereby until
fully repaid.  Lender shall  determine at its sole  discretion the necessity for
any such actions and of the amounts to be paid.

      VIII.3 COSTS AND EXPENSES.  Borrower  agrees to pay all costs and expenses
incurred by Lender in connection with the making of the Loan,  including but not
limited to filing  fees,  recording  taxes and  reasonable  attorney's  fees and
expenses,  promptly upon demand of Lender.  Borrower  further  agrees to pay all


                                       15
<PAGE>


premiums for insurance  required to be  maintained  pursuant to the terms of the
Loan  Documents  and all of the  out-of-pocket  costs and  expenses  incurred by
Lender in connection with the administration, servicing and/or collection of the
Loan,  including  but not limited to  reasonable  attorney's  fees and expenses,
promptly upon demand of Lender.

      VIII.4  ASSIGNMENT.  The Note, this Agreement and the other Loan Documents
may be endorsed,  assigned and/or transferred in whole or in part by Lender, and
any such holder and/or assignee of the same shall succeed to and be possessed of
the rights and powers of Lender under all of the same to the extent  transferred
and  assigned.  Lender  may grant  participations  in all or any  portion of its
interest in the indebtednesses  evidenced by the Note. Borrower shall not assign
any of its rights nor delegate  any of its duties  hereunder or under any of the
other Loan Documents without the prior express written consent of Lender.

      VIII.5  SUCCESSORS  AND  ASSIGNS  INCLUDED  IN  PARTIES.  Subject  to  the
provisions of SECTION 8.4 hereof,  whenever in this Agreement one of the parties
hereto is named or referred to, the heirs,  legal  representatives,  successors,
successors-in-title  and  assigns of such  parties  shall be  included,  and all
covenants and agreements contained in this Agreement by or on behalf of Borrower
or by or on behalf  of  Lender  shall  bind and  inure to the  benefit  of their
respective  heirs,  legal  representatives,   successors-in-title  and  assigns,
whether so expressed or not.

      VIII.6  THIRD  PARTY  BENEFICIARIES.  This  Agreement  and the other  Loan
Documents are intended for the sole and exclusive  benefit of the parties hereto
and their respective  successors and permitted  assigns,  and shall not serve to
confer any rights or  benefits  in favor of any  person not a party  hereto.  No
other  person  shall have any right to rely on this  Agreement or the other Loan
Documents, or to derive any benefit herefrom.

      VIII.7 TIME OF THE  ESSENCE.  Time is of the essence  with respect to each
and  every  covenant,  agreement  and  obligation  of  Borrower  and  Guarantors
hereunder and under all of the other Loan Documents.

      VIII.8  SEVERABILITY.  If  any  provision(s)  of  this  Agreement  or  the
application   thereof  to  any  person  or  circumstance  shall  be  invalid  or
unenforceable to any extent, the remainder of this Agreement and the application
of such  provisions  to other  persons or  circumstances  shall not be  affected
thereby and shall be enforced to the greatest extent permitted by law.

      VIII.9  INTEREST  AND LOAN CHARGES NOT TO EXCEED  MAXIMUM  ALLOWED BY LAW.
Anything in this  Agreement,  the Note,  the Security  Instruments or any of the
other Loan Documents to the contrary  notwithstanding,  in no event  whatsoever,
whether by reason of  advancement of proceeds of the Loan,  acceleration  of the
maturity of the unpaid balance of the Loan or otherwise,  shall the interest and
loan charges agreed to be paid to Lender for the use of the money advanced or to
be advanced  hereunder exceed the maximum amounts  collectible  under applicable
laws in effect  from time to time.  It is  understood  and agreed by the parties
that,  if for  any  reason  whatsoever  the  interest  or loan  charges  paid or
contracted to be paid by Borrower in respect of the indebtednesses  evidenced by
the Note shall exceed the maximum amounts  collectible  under applicable laws in
effect from time to time,  then IPSO facto,  the obligation to pay such interest
and/or loan charges shall be reduced to the maximum  amounts  collectible  under
applicable laws in effect from time to time, and any amounts collected by Lender
that  exceed  such  maximum  amounts  shall be applied to the  reduction  of the
principal balance(s) of the indebtednesses evidenced by the Note and/or refunded
to  Borrower  so that at no time  shall the  interest  or loan  charges  paid or
payable  in  respect  of the  indebtednesses  evidenced  by the Note  exceed the
maximum amounts permitted from time to time by applicable law.


                                       16
<PAGE>


      VIII.10 ARTICLE AND SECTION HEADINGS;  DEFINED TERMS.  Numbered and titled
article and section  headings  and defined  terms are for  convenience  only and
shall not be construed as amplifying  or limiting any of the  provisions of this
Agreement.

      VIII.11 NOTICES.  Any and all notices,  elections or demands  permitted or
required  to be made  under  this  Agreement  shall be in  writing  and shall be
delivered  personally,  telecopied  or sent  by  certified  mail  or  nationally
recognized courier service (such as Federal Express),  to the other party at the
address set forth below,  or at such other address as may be supplied in writing
by the party  whose  address  is being  changed  and of which  receipt  has been
acknowledged in writing.  The date of personal  delivery or telecopy or the date
of mailing (or delivery to such courier  service),  as the case may be, shall be
the date of such notice, election or demand. For the purposes of this Agreement:

            The address of Lender is:

                  SouthTrust Bank, National Association
                  230 Fourth Avenue North
                  8th Floor
                  Nashville, Tennessee  37219
                  Attention: Marci Osesek
                  Telecopy Number: 615/880-4004

            with copy to:

                  Bass, Berry & Sims PLC
                  2700 First American Center
                  Nashville, Tennessee  37238
                  Attention: Felix R. Dowsley, III
                  Telecopy Number:  615/742-2728

            The address of Borrower is:

                  European Micro Holdings, Inc.
                  6073 N.W. 167th Street, Unit C-25
                  Miami, Florida 33015
                  Attention: Frank Cruz
                  Telecopy Number: 305/825-7774

            with copy to:

                  Kirkpatrick & Lockhart LLP
                  Miami Center, 20th Floor
                  201 South Biscayne Boulevard
                  Miami, Florida 33131-2399
                  Attention: Clayton E. Parker, Esq.
                  Telecopy Number: 305/358-7095


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<PAGE>


            The addresses of Corporate Guarantors are:

                  American Micro Computer Center, Inc.
                  6073 N.W. 167th Street, Unit C-25
                  Miami, Florida 33015
                  Attention: Frank Cruz
                  Telecopy Number: 305/825-7774

                  Nor'easter Micro, Inc.
                  808 Third Avenue South
                  Nashville, TN 37210
                  Attention: Jay Nash
                  Telecopy Number: 615/254-9318

      VIII.12  INTEGRATION.  This Agreement and the Loan  Documents  contain the
entire  agreement  between the parties relating to the subject matter hereof and
supersede all oral statements and prior writings with respect thereto.

      VIII.13  INDEMNITY.  Borrower  and  Corporate  Guarantors  hereby agree to
defend, indemnify, and hold Lender harmless from and against any and all claims,
damages,   judgments,   penalties,  costs  and  expenses  (including  reasonable
attorney's  fees and expenses and court costs now or hereafter  arising from the
aforesaid  enforcement of this clause)  arising  directly or indirectly from the
activities of Borrower or Corporate Guarantors, their predecessors in interests,
or third  parties  with whom they have a  contractual  relationship,  or arising
directly or indirectly  from the  violation of any law,  whether such claims are
asserted by any  governmental  agency or any other person.  This indemnity shall
survive the termination of this Agreement.

      VIII.14  JURY TRIAL  WAIVER.  BORROWER,  CORPORATE  GUARANTORS  AND LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,  PROCEEDING,  CLAIM OR  COUNTER-CLAIM,
WHETHER IN CONTRACT IN TORT,  AT LAW OR IN EQUITY,  ARISING OUT OF OR IN ANY WAY
RELATED TO THIS AGREEMENT OR THE LOAN DOCUMENTS.

      VIII.15 VENUE.  All actions or  proceedings in any way,  manner or respect
arising out of or from or related to this Agreement shall be litigated in courts
having  situs within the City of  Nashville,  State of  Tennessee.  Borrower and
Corporate Guarantors hereby consent and submit to the jurisdiction of any local,
state or federal courts located within said city and state.

      VIII.16  MISCELLANEOUS.  This  Agreement  shall be construed  and enforced
under  the  laws  of  the  State  of  Tennessee.  No  amendment,   modification,
termination or waiver of any provision of any Loan Document to which Borrower or
either Corporate  Guarantor is a party, nor consent to any departure by Borrower
or  either  Corporate  Guarantor  from  compliance  with  the  terms of any Loan
Document to which it is a party,  shall be effective unless the same shall be in
writing and signed on behalf of Lender by a duly  authorized  officer of Lender,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.


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<PAGE>


      IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement,  or
have caused this Agreement to be executed by their duly authorized officers,  as
of the day and year first above written.

                                     LENDER:

                                    SOUTHTRUST BANK, NATIONAL ASSOCIATION

                                    By:_____________________________
                                       Title:_______________________


                                    BORROWER:

                                    EUROPEAN MICRO HOLDINGS, INC.

                                    By:_____________________________
                                       Title:_______________________


                                    CORPORATE GUARANTORS:

                                    AMERICAN MICRO COMPUTER CENTER, INC.

                                    By:_____________________________
                                       Title:_______________________


                                    NOR'EASTER MICRO, INC.

                                    By:_____________________________
                                       Title:_______________________



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