[FIRST UNION LOGO]


                                 LOAN AGREEMENT



First Union National Bank
765 Broad Street
Newark, New Jersey 07102
(Hereinafter referred to as the "Bank")

lBS Interactive, Inc.
2 Ridgedale Avenue
Cedar Knolls, New Jersey 07927
(Individually and collectively "Borrower")

This Loan  Agreement  ("Agreement")  is entered into  October 30,  1998,  by and
between Bank and Borrower,  a Corporation (For profit)  organized under the laws
of Delaware.

Borrower has applied to Bank for a loan or loans (individually and collectively,
the "Loan")  evidenced by one or more promissory notes (whether one or more, the
"Note") as follows:

Line of Credit - in the principal amount of $1,500,000.00  which is evidenced by
the Promissory Note dated October 30, 1998 ("Line of Credit Note"),  under which
Borrower may borrow,  repay,  and  reborrow,  from time to time,  so long as the
total  indebtedness  outstanding  at any one time does not exceed the  principal
amount. The Loan proceeds are to be used by Borrower solely to support operating
capital  needs.  Bank's  obligation  to advance or  readvance  under the Line of
Credit Note shall  terminate if Borrower is in Default  under the Line of Credit
Note.

This  Agreement  applies  to the Loan and all Loan  Documents.  The terms  "Loan
Documents"  and  "Obligations,"  as used in this  Agreement,  are defined in the
Note. The term "Borrower" shall include its Subsidiaries and Affiliates. As used
in this  Agreement as to Borrower,  "Subsidiary"  shall mean any  corporation of
which more than 50% of the issued and outstanding voting stock is owned directly
or indirectly by Borrower. As to Borrower, "Affiliate" shall have the meaning as
defined in 11 U.S.C.  ss. 101,  except that the term  "debtor"  therein shall be
substituted by the term "Borrower" herein.

Relying upon the covenants, agreements, representations and warranties contained
in this  Agreement,  Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions  set forth herein,  and Bank and Borrower agree as
follows:

REPRESENTATIONS.  Borrower  represents  that from the date of this Agreement and
until  final  payment  in full of the  Obligations:  Accurate  Information.  All
information now and hereafter furnished to Bank is and will be true, correct and
complete.  Any such information  relating to Borrower's financial condition will
accurately  reflect  Borrower's  financial  condition as of the date(s) thereof,
(including  all  contingent  liabilities  of every type),  and Borrower  further
represents that its financial  condition has not changed materially or adversely
since the  date(s)  of such  documents.  Authorization;  Non-Contravention.  The
execution,   delivery  and  performance  by  Borrower  and  any  guarantor,   as
applicable,  of this  Agreement and other Loan  Documents to which it is a party
are within its power, have been duly authorized by all necessary action taken by
the duly  authorized  officers of Borrower and any guarantors and, if necessary,
by making appropriate  filings with any governmental  agency or Unit and are the
legal,  binding,   valid  and  enforceable   obligations  of  Borrower  and  any
guarantors; and do not (i) contravene, or constitute (with or without the giving
of notice or lapse of time or both) a violation of any  provision of  applicable
law, a violation of the  organizational  documents of Borrower or any guarantor,
or a default under any agreement,  judgment,  injunction, order, decree or other
instrument binding upon or affecting  Borrower or any guarantor,  (ii) result in
the creation or  imposition  of any lien (other than the lien(s)  created by the
Loan Documents) on any of Borrower's or guarantor's  assets, or (iii) give cause
for the  acceleration  of any  obligations  of Borrower or any  guarantor to any
other creditor.  Asset Ownership.  Borrower has good and marketable title to all
of the  properties  and assets  reflected  on the balance  sheets and  financial
statements  supplied Bank by Borrower,  and all such  properties  and assets are
free and clear of mortgages,  security deeds,  pledges,  liens, charges, and all
other encumbrances, except as otherwise disclosed to Bank by Borrower in writing
("Permitted Liens"). To Borrower's knowledge,  no default has occurred under any

<PAGE>

Permitted Liens and no claims or interests adverse to Borrower's  present rights
in its properties and assets have arisen. Discharge of Liens and Taxes. Borrower
has duly  filed,  paid and/or  discharged  all taxes or other  claims  which may
become a lien on any of its  property or assets,  except to the extent that such
items are being  appropriately  contested in good faith and an adequate  reserve
for the payment thereof is being maintained. Sufficiency of Capital. Borrower is
not, and after  consummation  of this  Agreement  and after giving effect to all
indebtedness incurred and liens created by Borrower in connection with the Loan,
will not be, insolvent  within the meaning of 11 U.S.C. ss. 101(32).  Compliance
with Laws. Borrower is in compliance in all respects with all federal, state and
local laws,  rules and  regulations  applicable to its  properties,  operations,
business, and finances, including, without limitation, any federal or state laws
relating  to  liquor  (including  18  U.S.C.  ss.  3617,  ET SEQ.) or  narcotics
(including  21 U.S.C.  ss.  801,  ET SEQ.)  and/or any  commercial  crimes;  all
applicable federal, state and local laws and regulations intended to protect the
environment; and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), if applicable.  Organization and Authority. Each corporate or limited
liability  company Borrower and any guarantor,  as applicable,  is duly created,
validly  existing  and in good  standing  under  the  laws of the  state  of its
organization,  and  has  all  powers,  governmental  licenses,   authorizations,
consents and approvals  required to operate its business as now conducted.  Each
corporate or limited  liability  company Borrower and any guarantor,  if any, is
duly  qualified,  licensed  and in  good  standing  in each  jurisdiction  where
qualification  or  licensing  is required  by the nature of its  business or the
character and location of its property,  business or customers, and in which the
failure  to so  qualify or be  licensed,  as the case may be, in the  aggregate,
could  have a  material  adverse  effect on the  business,  financial  position,
results  of  operations,  properties  or  prospects  of  Borrower  or  any  such
guarantor.  No Litigation.  There are no pending or threatened suits,  claims or
demands  against  Borrower or any guarantor that have not been disclosed to Bank
by Borrower in writing  except as identified in the  Borrower's  10-Q  statement
dated  March  31,  1998.  Regulation  U. None of the  proceeds  of the Loan made
pursuant to this Agreement  shall be used directly or indirectly for the purpose
of purchasing or carrying any margin stock in violation of any of the provisions
of  Regulation  U of the  Board  of  Governors  of the  Federal  Reserve  System
("Regulation  U"), or for the purpose of reducing or retiring  any  indebtedness
which was originally incurred to purchase or carry margin stock or for any other
purchase  which might render the Loan a "Purpose  Credit"  within the meaning of
Regulation U. ERISA.  Each employee  pension  benefit plan, as defined in ERISA,
maintained  by  Borrower  meets,  as of the date  hereof,  the  minimum  funding
standards  of ERISA and all  applicable  regulations  thereto  and  requirements
thereof,  and of the Internal  Revenue Code of 1954, as amended.  No "Prohibited
Transaction"  or  "Reportable  Event" (as both  terms are  defined by ERISA) has
occurred with respect to any such plan.

AFFIRMATIVE COVENANTS.  Borrower agrees that from the date of this Agreement and
until final  payment in full of the  Obligations,  unless  Bank shall  otherwise
consent in writing, Borrower will: Business Continuity.  Conduct its business in
substantially  the same  manner and  locations  as such  business is now and has
previously been conducted. Maintain Properties.  Maintain, preserve and keep its
property  in good  repair,  working  order  and  condition,  making  all  needed
replacements,  additions and improvements thereto, to the extent allowed by this
Agreement.  Access to Books & Records.  Allow Bank, or its agents, during normal
business  hours,  access to the  books,  records  and such  other  documents  of
Borrower as Bank shall reasonably require, and allow Bank to make copies thereof
at Bank's expense. Insurance.  Maintain adequate insurance coverage with respect
to its  properties  and business  against loss or damage of the kinds and in the
amounts  customarily  insured  against by  companies of  established  reputation
engaged  in the  same  or  similar  businesses  including,  without  limitation,
commercial general liability  insurance,  workers  compensation  insurance,  and
business  interruption  insurance;  all  acquired in such  amounts and from such
companies as Bank may reasonably  require.  Notice of Default and Other Notices.
(a) Notice of Default.  Furnish to Bank  immediately  upon becoming aware of the
existence of any  condition or event which  constitutes a Default (as defined in
the Loan  Documents)  or any event which,  upon the giving of notice or lapse of
time or both,  may become a Default,  written  notice  specifying the nature and
period of existence  thereof and the action which Borrower is taking or proposes
to take with respect thereto. (b) Other Notices. Promptly notify Bank in writing
of (i) any material  adverse change in its financial  condition or its business;
(ii) any default under any material  agreement,  contract or other instrument to
which  it is a  party  or by  which  any of its  properties  are  bound,  or any
acceleration of the maturity of any  indebtedness  owing by Borrower;  (iii) any
material  adverse  claim  against  or  affecting  Borrower  or any  part  of its
properties;  (iv) the  commencement of, and any material  determination  in, any
litigation with any third party or any proceeding before any governmental agency
or unit affecting Borrower;  and (v) at least 30 days prior thereto,  any change

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First Union National Bank
IBS Interactive, Inc.
Page 3


in  Borrower's  name or address as shown above,  and/or any change in Borrower's
structure.   Compliance  with  Other  Agreements.  Comply  with  all  terms  and
conditions contained in this Agreement,  and any other Loan Documents,  and swap
agreements,  if applicable,  as defined in the Note.  Payment of Debts.  Pay and
discharge  when due,  and before  subject to  penalty  or  further  charge,  and
otherwise satisfy before maturity or delinquency, all obligations, debts, taxes,
and  liabilities  of whatever  nature or amount,  except those which Borrower in
good faith disputes.  Reports and Proxies.  Deliver to Bank, promptly, a copy of
all  financial  statements,  reports,  notices,  and proxy  statements,  sent by
Borrower to  stockholders,  and all regular or periodic  reports  required to be
filed by Borrower with any  governmental  agency or authority.  Other  Financial
Information.  Deliver promptly such other  information  regarding the operation,
business affairs,  and financial condition of Borrower which Bank may reasonably
request.  Non-Default  Certificate  From  Borrower.  Deliver  to Bank,  with the
Financial  Statements  required  herein,  a certificate  signed by Borrower,  if
Borrower  is an  individual,  or by a  principal  financial  officer of Borrower
warranting  that no "Default" as specified in the Loan  Documents  nor any event
which, upon the giving of notice or lapse of time or both, would constitute such
a Default, has occurred.  Estoppel  Certificate.  Furnish,  within 15 days after
request by Bank, a written  statement duly  acknowledged of the amount due under
the Loan and whether offsets or defenses exist against the Obligations.

NEGATIVE  COVENANTS.  Borrower  agrees that from the date of this  Agreement and
until final  payment in full of the  Obligations,  unless  Bank shall  otherwise
consent  in  writing,   Borrower  will  not:   Default  on  Other  Contracts  or
Obligations.  Default on any material  contract with or obligation when due to a
third party or default in the  performance  of any  obligation  to a third party
incurred  for money  borrowed  in an amount in excess of  $100,000.00.  Judgment
Entered.  Permit the entry of any monetary  judgment or the assessment  against,
the filing of any tax lien against,  or the issuance of any writ of  garnishment
or  attachment  against any  property  of or debts due  Borrower in an amount in
excess of  $100,000.00  and that is not  discharged  or  execution is not stayed
within Thirty (30) days of entry. GOVERNMENT INTERVENTION.  Permit the assertion
or making of any seizure,  vesting or  intervention by or under authority of any
government by which the  management of Borrower or any guarantor is displaced of
its  authority  in the conduct of its  respective  business or such  business is
curtailed or materially impaired. PREPAYMENT OF OTHER DEBT. Retire any long-term
debt  entered  into prior to the date of this  Agreement at a date in advance of
its legal obligation to do so except for debt to be retired from the proceeds of
the Initial Public  Offering,  as identified in the Borrower's  10-Q dated March
31, 1998. RETIRE OR REPURCHASE CAPITAL STOCK. Retire or otherwise acquire any of
its  capital  stock.  CHANGE  OF  MANAGEMENT.  Make or suffer a change in senior
management,   except  such  changes  as  are  reasonably   acceptable  to  Bank.
GUARANTEES.  Guarantee or otherwise  become  responsible  for obligations of any
other  person or persons in an  aggregate  amount in excess of  $250,000.00  per
fiscal year,  other than the  endorsement of checks and drafts for collection in
the ordinary  course of business.  ENCUMBRANCES.  Create,  assume,  or permit to
exist any mortgage,  security deed, deed of trust, pledge, lien, charge or other
encumbrance on any of its assets, whether now owned or hereafter acquired, other
than:  (i) security  interests  required by the Loan  Documents;  (ii) liens for
taxes  contested  in good  faith:  (iii)  liens  accruing  by law  for  employee
benefits; or (iv) Permitted Liens.

FINANCIAL  COVENANTS.  Borrower agrees to the following provisions from the date
hereof  until  final  payment  in full of the  Obligations,  unless  Bank  shall
otherwise  consent in writing:  CURRENT  RATIO.  Borrower  shall,  at all times,
maintain a Current  Ratio of not less than 1.50 to 1.00.  "Current  Ratio" shall
mean the ratio of current  assets divided by current  liabilities.  Tangible Net
Worth.  Borrower  shall, at all times,  maintain  Tangible Net Worth of at least
$5,500,000.00.  "Tangible  Net Worth"  shall mean the total  assets  minus total
liabilities.  For  purposes of this  computation,  the  aggregate  amount of any
intangible  assets  of  Borrower  including,   without   limitation,   goodwill,
franchises,  licenses,  patents,  trademarks,  trade names, copyrights,  service
marks,  and brand  names,  shall be  subtracted  from  total  assets,  and total
liabilities  shall  include  fully  subordinated  debt.  DEPOSIT   RELATIONSHIP.
Borrower shall  maintain its primary  depository  account with Bank.  Dividends.
Borrower  shall not,  during any fiscal  year,  declare or pay  dividends  in an
amount in excess of 40% of its net  income.  Said  amount may be paid only after
providing for the prior  satisfaction of all accrued taxes and debt service.  In
no event shall Borrower declare or pay a dividend if there shall exist a Default
or a condition which,  upon the giving of notice or lapse of time or both, would
become a Default  under the Loan  Documents.  DEBT TO CASH FLOW RATIO.  Borrower
shall, at all times maintain, a ratio of Debt to Cash Flow of not more than 2.00
to 1.00.  "Debt to Cash Flow" shall mean the sum of all Funded  Debt  divided by
the sum of earnings  before  interest,  taxes,  depreciation  and  amortization.
"Funded Debt" shall mean, as applied to any person,  the sum of all indebtedness
for borrowed  money  (including all  indebtedness  under the Loan and including,
without   limitation,   capital  lease   obligations,   subordinated  debt,  and
unreimbursed  drawings  under  letters of credit) or evidenced by a note,  bond,
debenture  or similar  instrument  of that  person.  Limitation  on Mergers  and

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First Union National Bank
IBS Interactive, Inc.
Page 4


Acquisitions.  Borrower shall not make any  acquisitions  except asset purchases
not to exceed a purchase price of $2,500,000.00 in the aggregate  without Bank's
prior written consent, which will not be unreasonably  withheld.  Borrower shall
not pay more than 30% of the  purchase  price for any such  acquisition  in cash
unless the  acquisition  purchase  price is less than  $500,000.00.  Without the
prior written  consent of Bank,  Borrower shall not permit any of the following:
(i) a material  alteration in the kind or type of Borrower's business or that of
Borrower's  Subsidiaries or Affiliates,  if any; (ii) the sale of  substantially
all of the business or assets of Borrower,  any of  Borrower's  Subsidiaries  or
Affiliates  or any  guarantor or a material  portion  (10%) of such  business or
assets,  if such a sale is outside the ordinary  course of business of Borrower,
or any of  Borrower's  Subsidiaries  of Affiliates or any guarantor or more than
50% of the  outstanding  stock or  voting  power of or in any such  entity  in a
single   transaction  or  a  series  of   transactions;   (iii)  any  merger  or
consolidation of any Borrower,  or any of Borrower's  Subsidiaries or Affiliates
or guarantor.  NO TWO QUARTERLY LOSSES.  Borrower shall not incur losses for two
(2)  consecutive  quarters  within a  rolling  four  quarter  period.  LOANS AND
Advances.  Borrower shall not,  during any fiscal year,  make loans or advances,
excepting ordinary course of business travel and expense advances, to any person
or entity, which total more than $500,000.00 in the aggregate.

ANNUAL  FINANCIAL  STATEMENTS.  Borrower  shall deliver to Bank,  within 90 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year,  including,  without  limitation,  a balance
sheet,  profit and loss statement and statement of cash flows,  with  supporting
schedules;  all on a  consolidated  and  consolidating  basis and in  reasonable
detail,  prepared in conformity with generally accepted  accounting  principles,
applied  on a  basis  consistent  with  that of the  preceding  year.  All  such
statements  shall be  examined by an  independent  certified  public  accountant
acceptable to Bank. The opinion of such independent  certified public accountant
shall not be  acceptable to Bank if qualified  due to any  limitations  in scope
imposed by Borrower or its Subsidiaries,  if any. Any other qualification of the
opinion by the  accountant  shall  render  the  acceptability  of the  financial
statements subject to Bank's approval.  Borrower's accountant shall provide Bank
with a  written  acknowledgment  of  Bank's  reliance  upon  the  statements  in
accordance with N.J.S. ss. 2A:53A-25.

PERIODIC  FINANCIAL  STATEMENTS.   Borrower  shall  deliver  to  Bank  unaudited
management-prepared   quarterly   financial   statements,   including,   without
limitation,  a balance  sheet,  profit and loss  statement and statement of cash
flows, with supporting  schedules,  as soon as available and in any event within
30 days  after the close of each  such  period;  all in  reasonable  detail  and
prepared in conformity with generally accepted accounting principles, applied on
a basis  consistent with that of the preceding  year.  Such statements  shall be
certified as to their correctness by a principal  financial officer of Borrower.
Borrower  shall  deliver to Bank  quarterly  an  accounts  receivable  aging and
borrowing base certificate within 30 days of quarter end. Borrower shall deliver
to Bank  semi-annually,  a covenant  compliance  certificate  with  delivery  of
financial statements.

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time,  including without limitation,
financial   statements  and  information   pertaining  to  Borrower's  financial
condition. Such information shall be true, complete, and accurate.

BORROWING  BASE.  As to the Line of  Credit  Note in the  principal  amount of
$1,500,000.00, the following provisions shall apply:

Borrowing  Limitation.  The maximum  principal  amount that  Borrower may borrow
shall be the lesser of the principal amount stated in the Line of Credit Note or
the maximum principal amount allowed under this addendum (the "Maximum Principal
Amount").

The Maximum  Principal  Amount shall be an amount equal to 70% of the net amount
of Eligible Accounts, less the amount of any Reserve required by Bank.

"Eligible  Account"  refers to an account  receivable not more than 90 days from
the  date  of the  original  invoice  that  arises  in the  ordinary  course  of
Borrower's business and meets the following  eligibility  requirements:  (a) the
sale of goods or services  reflected in such account is final and such goods and
services have been  delivered or provided and accepted by the account debtor and
payment  for such is owing;  (b) the  invoices  comprising  an  account  are not
subject to any claims,  returns or disputes of any kind;  (c) the account debtor
is not insolvent;  (d) the account debtor has its principal place of business in

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First Union National Bank
IBS Interactive, Inc.
Page 5


the United States; (e) the account debtor is not an affiliate of Borrower and is
not a supplier to Borrower and the account is not  otherwise  exposed to risk of
set-off;  (f) not more  than  thirty  percent  of the  original  invoices  owing
Borrower  by the  account  debtor are more than ninety days from the date of the
original invoice; (g) any account receivable less than $100.00.

"Reserves"  may be  required  at any time and from time to time by Bank  without
prior  notice to  Borrower  in amounts  deemed by Bank to be adequate to reserve
against  outstanding  letter  of  credit,   outstanding   bankers   acceptances,
Borrower's  obligations  to Bank or its  affiliates  or any  guaranties or other
contingent debt of Borrower.

Required Reports.  Borrower shall certify to Bank 30 days after quarter end, the
amount of Eligible Accounts as of the first day of each month, on forms required
by Bank together  with all detail and  supporting  documents  requested by Bank.
Bank may at any time and from time to time, during Bank's normal business hours,
enter upon any  business  premises of Borrower  and audit  Borrower's  accounts.
Bank's  determination  of the amount of Eligible  Accounts shall at all times be
indisputable  and deemed correct.  The Borrower,  at all times,  shall cooperate
with Bank  without  limitation  by  providing  Bank  information  and  access to
Borrower's  premises  and  business  records  and shall be  courteous  to Bank's
agents.

Continuing  Representations.  Borrower  warrants and  represents as a continuing
warranty,  that so long as  principal  is  outstanding  under the Line of Credit
Note,  the  outstanding  principal  balance  shall not  exceed the lesser of the
Maximum  Principal  Amount or the principal  amount stated in the Line of Credit
Note (the "Borrowing  Limit").  Borrower agrees to pay any advances in excess of
the Borrowing Limit  immediately upon receipt by Borrower of written notice that
the Borrowing Limit has been exceeded.

CONDITIONS  PRECEDENT.  The  obligations  of  Bank to make  the  Loan  and any
advances  pursuant to this  Agreement are subject to the following  conditions
precedent:   Additional   Documents.   Receipt  by  Bank  of  such  additional
supporting documents as Bank or its counsel may reasonably request.

IN WITNESS WHEREOF,  Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.

                                 IBS Interactive, Inc.


CORPORATE                        By: /s/ Nicholas R. Loglisci, Jr.
SEAL                                --------------------------------------------
                                    Nicholas R. Loglisci, Jr., President


                                 By: /s/ Jeff Brenner
                                    --------------------------------------------
                                    Jeff Brenner, Chief Financial Officer



                                 First Union National Bank


CORPORATE                        By:/s/ Eugene Smith
SEAL                                --------------------------------------------
                                    Eugene Smith, Vice President


<PAGE>
                                 PROMISSORY NOTE



$1,500,000.00                                                 October 30, 1998

IBS Interactive, Inc.
2 Ridgedale Avenue
Cedar Knolls, New Jersey 07927
(Individually and collectively "Borrower")

First Union National Bank
765 Broad Street
Newark, New Jersey 07102
(Hereinafter referred to as the "Bank")

Borrower  promises  to pay to the order of Bank,  in lawful  money of the United
States of  America,  at its office  indicated  above or  wherever  else Bank may
specify,  the sum of One  Million  Five  Hundred  Thousand  and  no/100  Dollars
($1,500,000.00) or such sum as may be advanced and outstanding from time to time
with  interest  on the  unpaid  principal  balance  at the rate and on the terms
provided  in  this  Promissory  Note  (including  all  renewals,  extensions  or
modifications hereof, this Note").

SECURITY.  Borrower  has  granted  Bank a security  interest  in the  collateral
described  in the  Loan  Documents,  including,  but not  limited  to,  personal
property  collateral  described in that certain Security  Agreement of even date
herewith.

INTEREST RATE DEFINITIONS.

LIBOR.  3-months  LIBOR  plus  2.0%  and  6-months  LIBOR  plus  2.0%  (each,  a
"LIBOR-Based  Rate").  "LIBOR" is the rate for U.S. dollar deposits of that many
months maturity as reported on Telerate page 3750 as of 11:00 a.m., London time,
on the second London business day before the relevant Interest Period begins (or
if not so reported, then as determined by Bank from another recognized source of
interbank quotation).

PRIME RATE. The rate of Bank's Prime Rate plus .25% as that rate may change from
time to time  with  changes  to occur  on the date  Bank's  Prime  Rate  changes
("Prime-Based  Rate").  "Bank's Prime Rate" shall be that rate announced by Bank
from time to time as its prime  rate and is one of several  interest  rate bases
used by Bank.  Bank lends at rates bath above and below Bank's  Prime Rate,  and
Borrower  acknowledges  that Bank's Prime Rate is not represented or intended to
be the lowest or most favorable rate of interest offered by Bank.

INTEREST RATE SELECTION AND ADJUSTMENT.

INTEREST RATE OPTIONS. At the election of Borrower, the unpaid principal balance
of each Advance  (defined herein) shall bear interest from the date such Advance


                                       1
<PAGE>

is made  available to the Borrower at a  LIBOR-Based  Rate or  Prime-Based  Rate
selected by Borrower in accordance herewith (each, an "Interest Rate"). Borrower
shall  select  the  Interest  Rate  and  for  each  Interest  Rate,  except  the
Prime-Based Rate, the period of time such Interest Rate will continuously  apply
(each, an "Interest  Period") pursuant to the subparagraph  entitled "Notice and
Manner of Borrowing and Rate  Conversion"  below;  provided,  the first Interest
Period  shall  commence  on the date of such  Advance  and end on the first date
thereafter  that  interest in respect of such Advance is due.  There shall be no
more than one Interest Rate for an Advance in effect at any time.

When the Prime-Based Rate is selected for an Advance, it shall be adjusted daily
as  applicable  to  reflect  Bank's  Prime Rate and the  Prime-Based  Rate shall
continue  to apply  until  another  Interest  Rate  option  for that  Advance is
selected  pursuant to the subparagraph  entitled "Notice and Manner of Borrowing
and Rate  Conversion."  When a LIBOR-Based Rate Rate is selected for an Advance,
such  rate  shall be fixed for the  Interest  Period  and  shall  apply for that
Advance for successive  Interest Periods at the then prevailing  successive rate
until another Interest Rate option for that Advance is selected  pursuant to the
subparagraph  entitled  "Notice and Manner of  Borrowing  and Rate  Conversion."
Until the Borrower  selects an initial  Interest  Rate as provided  herein,  the
Advance shall bear Interest at the Prime-Based Rate.

INTEREST PERIODS. In connection with each LIBOR-Based Rate Advance, Borrower, by
giving notice at the times described in the  subparagraph  entitled  "Notice end
Manner of Borrowing and Rate Conversion"  below, shall select an Interest Period
to be applicable thereto,  which Interest Period shall be a period corresponding
to one of the Interest Rate options.  No Interest  Period  selection is required
for a Prime-Based Rate Advance.

INDEMNIFICATION.  Borrower  indemnifies  Bank against  Bank's loss or expense in
employing  deposits  as a  consequence  of (a)  Borrower's  failure  to make any
payment when due on a loan or Advance  bearing  interest at a LIBOR-Based  Rate,
(b) any payment,  prepayment  or conversion of any loan on a date other than the
last day of the Interest Period, if applicable  ("Indemnified Loss or Expense").
The amount of such Indemnified Loss or Expense shall be determined by Bank based
upon the  assumption  that Bank funded  100% of that  portion of the loan in the
London interbank market.

DEFAULT  RATE.  In addition to all other  rights  contained  in this Note,  if a
Default (defined herein) occurs and as long as a Default continues, (a) Borrower
shall no longer  have the  option  to  request  a  LIBOR-Based  Rate and (b) all
outstanding  Obligations  shall bear  interest at the  Prime-Based  Rate plus 3%
("Default Rate").  The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.

NOTICE AND MANNER OF BORROWING  AND RATE  CONVERSION.  Borrower  shall give Bank
irrevocable telephonic notice (confirmed in writing) of each proposed Advance or
rate conversion not later than 11:00 a.m. local time at the office of Bank first
shown  above  (a) on the same  business  day as each  proposed  Advance  or rate
conversion  to a  Prime-Based  Rate and (b) at least 2 business days before each
proposed  Advance or rate  conversion  to a LIBOR-Based  Rate.  Each such notice


                                       2
<PAGE>

shall specify (i) the date of such Advance or rate conversion,  which shall be a
business day and, in the case of a conversion  from a LIBOR-Based  Rate Advance,
the last day of an  Interest  Period,  (ii) the  amount of each  Advance  or the
amount to be converted,  (iii) the Interest Rate selected by Borrower,  and (iv)
except for the Prime-Based  Rate, the duration of any Interest Period applicable
thereto,  which  period must  correspond  to one of the Interest  Rate  options.
Notices  received after 11 :00 a.m. local time at the office of Bank first shown
above shall be deemed received on the next business day.

INTEREST AND FEE(S) COMPUTATION.  (Actual/360). Interest and fees, if any, shall
be computed on the basis of a 350-day year for the actual  number of days in the
applicable  period  ("Actual/360   Computation").   The  Actual/360  Computation
determines the annual  effective yield by taking the stated (nominal) rate for a
year's period and then dividing said rate by 360 to determine the daily periodic
rate to be applied for each day in the  applicable  period.  Application  of the
Actual/360  Computation  produces an annualized effective rate exceeding that of
the nominal rate.

REPAYMENT  TERMS.  This Note  shall be due and  payable in  consecutive  monthly
payments of accrued  interest only  commencing on September 1, 1998,  and on the
same day of each month  thereafter until fully paid. In any event, all principal
and accrued interest shall be due and payable on June 30, 1999.

AUTOMATIC DEBIT OF CHECKING ACCOUNT FOR LOAN PAYMENT.  Borrower  authorizes Bank
to debit its demand deposit  account number  2020000309598  or any other account
with  Bank  (routing  number  021200025)  designated  in  writing  by  Borrower,
beginning August 1, 1998 for any payments due under this Note.  Borrower further
certifies  that  Borrower  holds  legitimate   ownership  of  this  account  and
preauthorizes this periodic debit as part of its right under said Ownership.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations  shall be applied to accrued interest and then
to principal.  If a Default occurs,  monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.

If any  payment  received  by Bank under this Note or other  Loan  Documents  is
rescinded,  avoided or for any reason  returned  by Bank  because of any adverse
claim or threatened  action,  the returned  payment  shall remain  payable as an
obligation  of all persons  liable  under this Note or other Loan  Documents  as
though such payment had not been made.

LOAN DOCUMENTS AND OBLIGATIONS.  The term "Loan Documents" used in this Note and
other Loan  Documents  refers to all documents  executed in connection  with the
loan  evidenced  by this  Note and any prior  notes  which  evidence  all or any
portion of the loan evidenced by this Note, and may include, without limitation,
a commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements,  security agreements,  security  instruments,  financing statements,
mortgage  instruments,  any  renewals  or  modifications,  whenever  any  of the
foregoing are executed,  but does not include swap  agreements (as defined in 11
U.S.C. ss. 101). OBLIGATIONs. The term "Obligations" used in this Note refers to


                                       3
<PAGE>

any and all  Indebtedness  and other  obligations  under  this  Note,  all other
obligations under any other Loan Document(s), and all obligations under any swap
agreements  as defined in 11 U.S.C.  ss. 101 between  Borrower and Bank whenever
executed. CERTAIN OTHer TERMS. All terms that are used but not otherwise defined
in any of the Loan Documents shall have the definitions  provided in the Uniform
Commercial Code.

LATE CHARGE.  If any payments  are not timely made,  Borrower  shall also pay to
Bank a late charge equal to 5% of each payment past due for 10 or more days.

Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.

If this Note is secured by  owner-occupied  residential  real  property  located
outside the state in which the office of Bank first shown above is located,  the
late charge laws of the state where the real  property is located shall apply to
this Note and the late charge shall be the highest amount  allowable  under such
laws.  If no amount is stated  thereunder,  the late charge  shall be 5% of each
payment past due for 10 or more days.

ATTORNEYS'  FEES AND OTHER  COLLECTION  COSTS.  Borrower shall pay all of Bank's
reasonable  expenses  incurred  to enforce or  collect  any of the  Obligations,
including, without limitation, reasonable arbitration,  paralegals',  attorneys'
and experts fees and expenses,  whether  incurred  without the commencement of a
Suit,  in  any  trial,  arbitration,  or  administrative  proceeding,  or in any
appellate or bankruptcy proceeding.

USURY. If at any time the effective interest rate under this Note would, but for
this  paragraph,  exceed the maximum  lawful rate,  the effective  interest rate
under this Note shall be the maximum  lawful  rate,  and any amount  received by
Bank in excess of such rate shall be applied to  principal  and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.

DEFAULT.  If any of the following occurs, a default  ("Default") under this Note
shall  exist:  NONPAYMENT;  NONPERFORMANCE.  The  failure  of timely  payment or
performance  of the  Obligations  or  Default  under this Note or any other Loan
Documents.  FALSE WARRANTY.  A warranty or representation made or deemed made in
the Loan  Documents or furnished  Bank in connection  with the loan evidenced by
this  Note  proves  materially  false,  or if of a  continuing  nature,  becomes
materially  false.  CROSS DEFAULT.  At Bank's option,  any default in payment or
performance of any obligation under any other loans,  contracts or agreements of
Borrower, any Subsidiary or Affiliate of Borrower, any general partner of or the
holder(s)  of the  majority  ownership  interests  of Borrower  with Bank or its
affiliates  ("Affiliate" shall have the meaning as defined in 11 U.S.C. ss. 101,
except  that  the  term  "debtor"'  therein  shall  be  substituted  by the term
"Borrower" herein; "Subsidiary" shall mean any business in which Borrower holds,
directly or indirectly,  a controlling  interest).  CESSATION;  BANKRUPTCY.  The
death of, appointment of guardian for,  dissolution of, termination of existence
of, loss of good standing status by,  appointment of a receiver for,  assignment
for the benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against the Borrower,  its Subsidiaries or Affiliates,  if any,
or any general partner of or the holder(s) of the majority  ownership  Interests
of Borrower, or any party to the Loan Documents.


                                       4
<PAGE>

REMEDIES UPON DEFAULT.  If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions:  BANK
LIEN.  Foreclose its security interest or lien against Borrower's accounts
without notice.  ACCELERATION UPON DEFAULT.  Accelerate the maturity of this
Note and all other Obligations, and all of the Obligations shall be
immediately due and payable.  CUMULATIVE.  Exercise any rights and remedies
as provided under the Note and other Loan Documents, or as provided by law or
equity.

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time,  including without limitation,
financial   statements  and  information   pertaining  to  Borrower's  financial
condition. Such information shall be true, complete, and accurate.

YEAR 2000 COMPATIBILITY. Borrower shall take all action necessary to ensure that
Borrower's  computer based systems are able to operate and  effectively  process
data  including  dates on and after  January  1, 2000.  At the  request of Bank,
Borrower shall provide Bank assurance acceptable to Bank of Borrower's Year 2000
compatibility.

LINE OF CREDIT ADVANCES.  Borrower may borrow, repay and reborrow,  and Bank may
advance and readvance under this Note  respectively  from time to time until the
maturity hereof (each an "Advance" and together the "`Advances"), so long as the
total  indebtedness  outstanding  at any one time does not exceed the  principal
amount stated on the face of this Note. Bank's obligation to make Advances under
this Note shall terminate if Borrower is in Default or a  representation  in any
of the  Loan  Documents  is false or has  become  false.  As of the date of each
proposed Advance, Borrower shall be deemed to represent that each representation
made in the Loan Documents is true as of such date.  30-DAY  PAYOUT.  During the
term of the Note,  Borrower  agrees  to pay down the  outstanding  balance  to a
maximum of $100.00 for 30 consecutive days annually.

If Borrower  subscribes to Bank's cash management services and such services are
applicable  to this line of credit.  the terms of such service shall control the
manner in which funds are  transferred  between the  applicable  demand  deposit
account and the line of credit for credit or debit to the line of credit.

LOAN  AGREEMENT.  This Note is subject to the  provisions  of that  certain Loan
Agreement  between Bank and Borrower  dated  October 30, 1998,  as modified from
time to time.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan  Documents  shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same  Default on a future  occasion.  Neither the failure nor any
delay on the part of Bank in exercising any right,  power,  or remedy under this
Note and other Loan  Documents  shall operate as a waiver  thereof,  nor shall a
single or  partial  exercise  thereof  preclude  any other or  further  exercise
thereof or the exercise of any other right, power or remedy.


                                       5
<PAGE>

Each Borrower or any person liable under this Note waives presentment.  protest,
notice of  dishonor,  demand for  payment,  notice of  intention  to  accelerate
maturity,  notice  of  acceleration  of  maturity,  notice of sale and all other
notices of any kind. Further,  each agrees that Bank may extend, modify or renew
this Note or make a novation of the loan  evidenced  by this Note for any period
and  grant  any  releases,  compromises  or  indulgences  with  respect  to  any
collateral  securing  this Note.  or with  respect to any other  Borrower or any
other person liable under this Note or other Loan Documents,  all without notice
to or consent of each  Borrower or each person who may be liable under this Note
or other Loan  Documents and without  affecting the liability of Borrower or any
person who may be liable under this Note or other Loan Documents.

MISCELLANEOUS PROVISIONS.  ASSIGNMENT.  This Note and other Loan Documents shall
inure to the benefit of and be binding  upon the  parties  and their  respective
heirs, legal  representatives,  successors and assigns.  Bank's interests in and
rights under this Note and other Loan Documents are freely assignable,  in whole
or in part,  by  Bank.  In  addition,  nothing  in this  Note or any of the Loan
Documents shall prohibit Bank from pledging or assigning this Note or any of the
Loan  Documents or any interest  therein to any Federal  Reserve Bank.  Borrower
shall not assign its rights and  interest  hereunder  without the prior  written
consent of Bank,  and any  attempt by Borrower to assign  without  Bank's  prior
written consent is null and void. Any assignment shall not release Borrower from
the Obligations. APPLICABLE LAW; CONFLICT BETWEEN DOCUMENTS. This Note and other
Loan  Documents  shall be governed by and construed  under the laws of the state
named in Bank's address shown above without  regard to that state's  conflict of
laws principles. If the terms of this Note should conflict with the terms of the
loan agreement or any commitment letter that survives closing, the terms of this
Note shall control.  BORROWER'S ACCOUNTS.  Except as prohibited by law, Borrower
grants Bank a security interest in all of Borrower's  accounts with Bank and any
of its affiliates.  JURISDICTION.  Borrower  irrevocably agrees to non-exclusive
personal  jurisdiction  in the  state  named  in  Bank's  address  shown  above.
SEVERABILITY. If any provision of this Note or of the other Loan Documents shall
be  prohibited  or  invalid  under  applicable  law,  such  provision  shall  be
ineffective  but only to the extent of such  prohibition or invalidity,  without
invalidating the remainder of such provision or the remaining provisions of this
Note or  other  such  document.  NOTICES.  Any  notices  to  Borrower  shall  be
sufficiently  given,  if in writing and mailed or  delivered  to the  Borrower's
address shown above or such other address as provided hereunder, and to Bank, if
in writing and mailed or delivered to Bank's office  address shown above or such
other  address as Bank may  specify in writing  from time to time.  In the event
that  Borrower  changes  Borrower's  address  at any time  prior to the date the
Obligations are paid in full, Borrower agrees to promptly give written notice of
said  change  of  address  by  registered  or  certified  mail,  return  receipt
requested,  all charges prepaid.  PLURAL;  CAPTIONS.  All references in the Loan
Documents to Borrower,  guarantor,  person, document or other nouns of reference
mean  both the  singular  and  plural  form,  as the  case may be,  and the term
"person" shall mean any individual,  person or entity. The captions contained in
the Loan  Documents are inserted for  convenience  only and shall not affect the
meaning or interpretation of the Loan Documents.  BINDING CONTRACT.  Borrower by
execution of and Bank by  acceptance of this Note agree that each party is bound
to all terms and provisions of this Note. Advances.  Bank in its sole discretion
may make other  Advances under this Note pursuant  hereto.  POSTING OF PAYMENTS.
All payments  received during normal banking hours after 2:00 p.m. local time at
the office of Bank first shown above shall be deemed  received at the opening of
the next banking day.  Joint and Several  Obligations.  Each Borrower is jointly


                                       6
<PAGE>

and severally obligated under this Note. FEES AND TAXES. Borrower shall promptly
pay  all  documentary,  intangible  recordation  and/or  similar  taxes  on this
transaction whether assessed at closing or arising from time to time.

ARBITRATION.  Upon  demand of any party  hereto,  whether  made  before or after
institution of any judicial proceeding,  any claim or controversy arising out of
or relating to the Loan Documents  between parties hereto (a "Dispute") shall be
resolved by binding  arbitration  conducted under and governed by the Commercial
Financial Disputes  Arbitration Rules (the "Arbitration  Rules") of the American
Arbitration  Association (the "AAA") and the Federal  Arbitration Act.  Disputes
may include,  without limitation,  tort claims,  counterclaims,  a dispute as to
whether a matter is subject to arbitration,  claims brought as class actions, or
claims arising from documents  executed in the future. A judgment upon the award
may be entered in any court having jurisdiction.  Notwithstanding the foregoing,
this  arbitration  provision does not apply to disputes under or related to swap
agreements.  SPECIAL RULES.  All arbitration  hearings shall be conducted in the
city named in the  address of Bank first  stated  above.  A hearing  shall begin
within 90 days of demand for  arbitration and all hearings shall conclude within
120 days of demand for  arbitration.  These time limitations may not be extended
unless a party shows cause for extension and then for no more than a total of 60
days. The expedited  procedures set forth in Rule 51 ET SEQ. of the  Arbitration
Rules  shall be  applicable  to claims of less than  $1,000,000.00.  Arbitrators
shall be licensed  attorneys  selected  from the  Commercial  Financial  Dispute
Arbitration  Panel of the AAA.  The parties do not waive  applicable  Federal or
state substantive law except as provided herein.  PRESERVATION AND LIMITATION OF
REMEDIES.  Notwithstanding  the preceding binding  arbitration  provisions,  the
parties agree to preserve,  without diminution,  certain remedies that any party
may exercise before or after an arbitration  proceeding is brought.  The parties
shall  have the  right to  proceed  in any court of  proper  jurisdiction  or by
self-help to exercise or prosecute the following  remedies,  as applicable:  (i)
all rights to foreclose  against any real or personal property or other security
by exercising a power of sale or under  applicable  law by judicial  foreclosure
including  a  proceeding  to  confirm  the sale;  (ii) all  rights of  self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful  possession of personal  property;  (iii) obtaining  provisional or
ancillary remedies  including  injunctive  relief,  sequestration,  garnishment,
attachment,  appointment  of  receiver  and  filing  an  involuntary  bankruptcy
proceeding;  and (iv) when applicable, a judgment by confession of judgment. Any
claim or controversy with regard to any party's  entitlement to such remedies is
a Dispute.  WAIVER OF EXEMPLARY  DAMAGES.  The parties agree that they shall not
have a remedy of punitive or  exemplary  damages  against  other  parties in any
Dispute and hereby  waive any right or claim to punitive  or  exemplary  damages
they have now or which may arise in the future in  connection  with any  Dispute
whether the Dispute is resolved by  arbitration  or  judicially.  WAIVER OF JURY
TRIAL. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE
IRREVOCABLY  WAIVED  ANY  RIGHT  THEY MAY HAVE TO JURY  TRIAL  WITH  REGARD TO A
DISPUTE.


                                       7
<PAGE>



IN WITNESS  WHEREOF,  Borrower,  on the day and year first  above  written,  has
caused this Note to be executed under seal.

                                    IBS Interactive, Inc.
                                    Taxpayer Identification Number: 13-3817344

CORPORATE                              By:/S/ NICHOLAS R. LOGLISCI, JR.         
SEAL                                      Nicholas R. Loglisci, Jr., President


                                       By:/S/ JEFF BRENNER                    
                                          Jeff Brenner, Chief Financial Officer


                                       8

<PAGE>
                               SECURITY AGREEMENT


                                                                October 30, 1998


IBS Interactive, Inc.
2 Ridgedale Avenue
Cedar Knolls, New Jersey 07927
(Individually and collectively "Debtor")

First Union National Bank
765 Broad Street
Newark, New Jersey 07102
(Hereinafter referred to as the "Bank")

For value  received and to secure the payment and  performance of the Promissory
Note executed by the Debtor dated  October 30, 1998,  in the original  principal
amount  of  $1,500,000.00,  payable  to  Bank,  and  any  extensions,  renewals,
modifications or novations thereof (the "Note"), this Security Agreement and the
other  Loan  Documents,  and any other  obligations  of  Debtor to Bank  however
created,  arising  or  evidenced,   whether  direct  or  indirect,  absolute  or
contingent,  now  existing or  hereafter  arising or  acquired,  including  swap
agreements (as defined in 11 U.S.C. ss. 101), future advances, and all costs and
expenses incurred by Bank to obtain, preserve,  perfect and enforce the security
interest  granted  herein and to  maintain,  preserve  and collect the  property
subject to the security interest  (collectively,  "Obligations"),  Debtor hereby
grants to Bank a  continuing  security  interest in and lien upon the  following
described property, now owned or hereafter acquired, any additions,  accessions,
or  substitutions  thereof and thereto  (including but not limited to investment
property and  security  entitlements),  and all cash and  non-cash  proceeds and
products thereof (collectively, "Collateral"):

All accounts,  together with all chattel paper and  instruments,  and all credit
insurance,  guaranties,  letters of credit,  and other  security  for any of the
foregoing.

All instruments,  documents,  chattel paper, goods, moneys, securities,  drafts,
and other  property of Debtor now in possession of and at any time and from time
to time  hereafter  delivered  to Bank,  its agents or  affiliates,  whether for
safekeeping, pledge, custody, transmission, collection, or otherwise, and all of
Debtor's deposits,  balances,  sums, proceeds,  and credits with, and any of its
claims against Bank and affiliates of Bank, at any time existing,  together with
the increases and profits received therefrom and the proceeds thereof, including
insurance payable because of loss or damage thereto.

All general intangibles (including, without limitation, all contract rights, tax
refunds and tax refund claims, choses in action, causes of action,  corporate or
other business  records,  inventions,  designs,  patents,  patent  applications,
trademarks,  trade names, trade secrets,  goodwill,  copyrights,  registrations,
licenses,  franchises,  claims  under  guaranties,  security  interests or other


                                       1
<PAGE>

security held or granted to secure payment of contracts by account debtors,  all
rights to  indemnification  and all other intangible  property of every kind and
nature).

Debtor hereby represents and agrees that:

OWNERSHIP. Debtor owns the Collateral or Debtor will purchase and acquire rights
in the  Collateral  within ten days of the date advances are made under the Loan
Documents. If Collateral is being acquired with the proceeds of an advance under
the Loan Documents,  Debtor authorizes Bank to disburse proceeds directly to the
seller  of the  Collateral.  The  Collateral  is free and  clear  of all  liens,
security  interests,  and claims except those previously  reported in writing to
Bank,  and  Debtor  will  keep the  Collateral  free and clear  from all  liens,
security interests and claims, other than those granted to Bank.

NAME AND  OFFICES.  There has been no change in the name of Debtor,  or the name
under which Debtor conducts  business,  within the 5 years preceding the date of
execution  of this  Security  Agreement  and Debtor has not moved its  executive
offices or residence  within the 5 years preceding the date of execution of this
Security  Agreement  except as  previously  reported  in  writing  to Bank.  The
taxpayer identification number of Debtor as provided herein is correct.

TITLE/TAXES. Debtor has good and marketable title to Collateral and will warrant
and defend same against all claims.  Debtor will not  transfer,  sell,  or lease
Collateral  (except in the ordinary  course of  business).  Debtor agrees to pay
promptly all taxes and assessments upon or for the use of Collateral and on this
Security Agreement.  At its option,  Bank may discharge taxes,  liens,  security
interests  or other  encumbrances  at any time  levied or placed on  Collateral.
Debtor agrees to reimburse  Bank, on demand,  for any such payment made by Bank.
Any amounts so paid shall be added to the Obligations.

WAIVERS. Debtor waives presentment,  demand, protest, notice of dishonor, notice
of default, demand for payment, notice of intention to accelerate, and notice of
acceleration of maturity.  Debtor further agrees not to assert against Bank as a
defense (legal or equitable), as a set-off, as a counterclaim, or otherwise, any
claims  Debtor may have  against  any seller or lessor  that  provided  personal
property or services  relating to any part of the Collateral.  Debtor waives all
exemptions and homestead rights with regard to the Collateral. Debtor waives any
and all  rights  to  notice  or to  hearing  prior to  Bank's  taking  immediate
possession or control of any Collateral, and to any bond or security which might
be required by  applicable  law prior to the exercise of any of Bank's  remedies
against any Collateral.

EXTENSIONS, RELEASES. Debtor agrees that Bank may extend, renew or modify any of
the Obligations and grant any releases,  compromises or indulgences with respect
to any security for the Obligations, or with respect to any party liable for the
Obligations,  all without  notice to or consent of Debtor and without  affecting
the liability of Debtor or the enforceability of this Security Agreement.

NOTIFICATIONS  OF CHANGE.  Debtor  will  notify Bank in writing at least 30 days
prior to any change in: (i) Debtor's chief place of business  and/or  residence;
(ii)  Debtor's  name or  identity;  or (iii)  Debtor's  corporate/organizational


                                       2
<PAGE>

structure. Debtor will keep Collateral at the location(s) previously provided to
Bank until such time as Bank  provides  written  advance  consent to a change of
location.  Debtor  will bear the cost of  preparing  and  filing  any  documents
necessary to protect Bank's liens.

COLLATERAL  CONDITION AND LAWFUL USE.  Debtor  represents  that Collateral is in
good repair and condition and that Debtor shall use  reasonable  care to prevent
Collateral from being damaged or depreciating.  Debtor shall immediately  notify
Bank of any material loss or damage to  Collateral.  Debtor shall not permit any
item of  equipment  to become a fixture to real estate or an  accession to other
personal  property.  Debtor  represents it is in compliance in all respects with
all  federal,  state and local laws,  rules and  regulations  applicable  to its
properties,  Collateral,  operations, business, and finances, including, without
limitation,  any federal or state laws  relating to liquor  (including 18 U.S.C.
ss. 3617, ET SEq.) or narcotics  (including 21 U.S.C.  ss. 801, et SEQ.) and all
applicable  federal,  state and local laws, and regulations  intended to protect
the environment.

RISK OF LOSS AND  INSURANCE.  Debtor shall bear all risk of loss with respect to
the  Collateral.  The injury to or loss of Collateral,  either partial or total,
shall not release Debtor from payment or other performance hereof. Debtor agrees
to obtain and keep in force casualty and hazard  insurance on Collateral  naming
Bank as loss payee. Such insurance is to be in form and amounts  satisfactory to
Bank.  All such  policies  shall  provide to Bank a minimum  of 30 days  written
notice of  cancellation.  Debtor shall furnish to Bank such  policies,  or other
evidence of such policies  satisfactory  to Bank.  Bank is  authorized,  but not
obligated,  to purchase  any or all  insurance  or "Single  Interest  Insurance"
protecting  such interest as Bank deems  appropriate  against such risks and for
such coverage and for such amounts, including either the loan amount or value of
the Collateral,  all at its discretion,  and at Debtor's expense. In such event,
Debtor agrees to reimburse  Bank for the cost of such insurance and Bank may add
such cost to the  Obligations.  Debtor shall bear the risk of loss to the extent
of any  deficiency in the effective  insurance  coverage with respect to loss or
damage to any of the  Collateral.  Debtor hereby assigns to Bank the proceeds of
all such  insurance and directs any insurer to make  payments  directly to Bank.
Debtor hereby appoints Bank its  attorney-in-fact,  which  appointment  shall be
irrevocable  and coupled  with an interest  for so long as the  Obligations  are
unpaid,  to file proof of loss and/or any other forms  required to collect  from
any  insurer any amount due from any damage or  destruction  of  Collateral,  to
agree to and  bind  Debtor  as to the  amount  of said  recovery,  to  designate
payee(s) of such recovery,  to grant releases to insurer,  to grant  subrogation
rights to any  insurer,  and to endorse any  settlement  check or draft.  Debtor
agrees not to exercise any of the foregoing  powers  granted to Bank without the
Bank's prior written consent.

ADDITIONAL COLLATERAL. If at any time Collateral is unsatisfactory to Bank, then
on demand of Bank, Debtor shall immediately  furnish such additional  Collateral
satisfactory to Bank to be held by Bank as if originally  pledged  hereunder and
shall execute such additional  security  agreements and financing  statements as
requested by Bank.

FINANCING  STATEMENTS.  No financing  statement (other than any filed by Bank or
disclosed  above)  covering any of Collateral or proceeds  thereof is on file in
any public filing office.  This Security  Agreement,  or a copy thereof,  or any
financing  statement  executed  hereunder  may be recorded.  On request of Bank,


                                       3
<PAGE>

Debtor will execute one or more  financing  statements in form  satisfactory  to
Bank and will pay all costs and  expenses  of filing the same or of filing  this
Security Agreement in all public filing offices,  where filing is deemed by Bank
to be desirable.  Bank is authorized to file  financing  statements  relating to
Collateral  without Debtor's  signature where authorized by law. Debtor appoints
Bank as its  attorney-in-fact  to execute such documents necessary to accomplish
perfection  of Bank's  security  interest.  The  appointment  is coupled with an
interest and shall be irrevocable as long as any Obligations remain outstanding.
Debtor  further  agrees to take such other actions as might be requested for the
perfection,  continuation  and assignment,  in whole or in part, of the security
interests granted herein. If certificates are issued or outstanding as to any of
the Collateral,  Debtor will cause the security interests of Bank to be properly
protected, including perfection of notation thereon.

LANDLORD/MORTGAGEE  WAIVERS.  Debtor shall cause each mortgagee of real property
owned by Debtor and each landlord of real  property  leased by Debtor to execute
and deliver instruments satisfactory in form and substance to Bank by which such
mortgagee or landlord waives its rights, if any, in the Collateral.

STOCK,  DIVIDENDS.  If, with respect to any security pledged hereunder,  a stock
dividend is declared,  any stock split made or right to subscribe is issued, all
the certificates for the shares representing such stock dividend, stock split or
right to subscribe will be immediately delivered,  duly endorsed, to the Bank as
additional  collateral,  and any cash or non-cash proceeds and products thereof,
including  investment  property and security  entitlements  will be  immediately
delivered  to Bank.  If  Debtor  has  granted  to Bank a  security  interest  in
securities, Debtor acknowledges that such grant includes all investment property
and security entitlements,  now existing or hereafter arising,  relating to such
securities.  In addition, Debtor agrees to execute such notices and instructions
to securities intermediaries as Bank may reasonably request.

CONTRACTS,  CHATTEL PAPER, ACCOUNTS,  GENERAL INTANGIBLES.  Debtor warrants that
Collateral  consisting of contract rights,  chattel paper,  accounts, or general
intangibles is (i) genuine and  enforceable in accordance  with its terms except
as  limited  by  law;  (ii)  not  subject  to any  defense,  set-off,  claim  or
counterclaim  of a material  nature against Debtor except as to which Debtor has
notified Bank in writing;  and (iii) not subject to any other circumstances that
would impair the validity,  enforceability,  value, or amount of such Collateral
except as to which Debtor has notified Bank in writing.  Debtor shall not amend,
modify or supplement any lease, contract or agreement contained in Collateral or
waive any provision therein, without prior written consent of Bank.

ACCOUNT  INFORMATION.  From time to time,  at the Bank's  request,  Debtor shall
provide Bank with schedules  describing  all accounts and  contracts,  including
customers'  addresses,  credited or acquired by Debtor and at the Bank's request
shall execute and deliver  written  assignments of contracts and other documents
evidencing  such  accounts and contracts to Bank.  Together with each  schedule,
Debtor shall,  if requested by Bank,  furnish Bank with copies of Debtor's sales
journals,  invoices,  customer  purchase orders or the equivalent,  and original
shipping  or  delivery  receipts  for all goods sold,  and Debtor  warrants  the
genuineness thereof.

ACCOUNT AND CONTRACT DEBTORS.  After a Default occurs, Bank shall have the right
to notify  the  account  and  contract  debtors  obligated  on any or all of the
Collateral to make payment hereof  directly to Bank and Bank may take control of


                                       4
<PAGE>

all proceeds of any such Collateral, which rights Bank may exercise at any time.
The cost of such  collection  and  enforcement,  including  attorneys'  fees and
expenses,  shall be borne solely by Debtor  whether the same is incurred by Bank
or Debtor.  After a Default  occurs,  upon  demand of Bank,  Debtor  will,  upon
receipt  of all  checks,  drafts,  cash and  other  remittances  in  payment  on
Collateral,  deposit the same in a special  bank account  maintained  with Bank,
over which Bank also has the power of withdrawal.

If a Default  occurs,  no discount,  credit,  or  allowance  shall be granted by
Debtor to any account or contract  debtor and no return of merchandise  shall be
accepted by Debtor without Bank's  consent.  Bank may, after Default,  settle or
adjust  disputes and claims directly with account  contract  debtors for amounts
and upon terms  that Bank  considers  advisable,  and in such  cases,  Bank will
credit the Obligations  with the net amounts  received by Bank,  after deducting
all of the expenses incurred by Bank. Debtor agrees to indemnify and defend Bank
and hold it harmless with respect to any claim or proceeding  arising out of any
matter related to collection of Collateral.

GOVERNMENT  CONTRACTS.  If any Collateral covered hereby arises from obligations
due  to  Debtor  from  any  governmental  unit  or  organization,  Debtor  shall
immediately  notify  Bank in writing  and  execute  all  documents  and take all
actions  demanded by Bank to ensure  recognition  by such  governmental  unit or
organization of the rights of Bank in the Collateral.

INVENTORY.  So long as no Default has  occurred,  Debtor shall have the right in
the regular course of business,  to process and sell Debtor's inventory,  unless
Bank shall hereafter  otherwise direct in writing.  Upon demand of Bank,  Debtor
will, upon receipt of all checks, drafts, cash and other remittances, in payment
of Collateral sold,  deposit the same in a special bank account  maintained with
Bank, over which Bank also has the power of withdrawal. Debtor shall comply with
all federal, state, and local laws, regulations,  rulings, and orders applicable
to Debtor or its assets or  business,  in all  respects.  Without  limiting  the
generality of the previous  sentence,  Debtor shall comply with all requirements
of the federal Fair Labor  Standards  Act in the conduct of its business and the
production of inventory.  Debtor shall notify Bank  immediately of any violation
by Debtor of the Fair Labor  Standards Act, and a failure of Debtor to so notify
Bank shall  constitute  a  continuing  representation  that all  inventory  then
existing has been produced in compliance with the Fair Labor Standards Act.

INSTRUMENTS,  CHATTEL PAPER.  Any Collateral that is instruments,  chattel paper
and negotiable  documents will be properly  assigned to, deposited with and held
by Bank,  unless Bank shall  hereafter  otherwise  direct or consent in writing.
Bank may, without notice, before or after maturity of the Obligations,  exercise
any or all rights of  collection,  conversion,  or  exchange  and other  similar
rights, privileges and options pertaining to Collateral,  but shall have no duty
to do so.

COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to perform
with respect to Collateral  pledged  except as set forth  herein;  and by way of
explanation and not by way of limitation,  Bank shall incur no liability for any
of the following:  (i) loss or depreciation of Collateral  (unless caused by its
willful  misconduct),  (ii) its  failure  to  present  any paper for  payment or

                                       5
<PAGE>

protest,  to protest or give  notice of  nonpayment,  or any other  notice  with
respect to any paper or Collateral, or (iii) its failure to present or surrender
for redemption,  conversion or exchange any bond, stock, paper or other security
whether in  connection  with any  merger,  consolidation,  recapitalization,  or
reorganization,  arising out of the refunding of the original  security,  or for
any other  reason,  or its failure to notify any party  hereto  that  Collateral
should be so presented or surrendered.

TRANSFER OF COLLATERAL.  The Bank may assign its rights in the Collateral or any
part  thereof to any  assignee who shall  thereupon  become  vested with all the
powers and rights  herein  given to the Bank with  respect  to the  property  so
transferred and delivered, and the Bank shall thereafter be forever relieved and
fully   discharged   from  any  liability  with  respect  to  such  property  so
transferred,  but with respect to any property not so transferred the Bank shall
retain all rights and powers hereby given.

SUBSTITUTE COLLATERAL.  With prior written consent of Bank, other Collateral may
be  substituted  for the original  Collateral  herein in which event all rights,
duties,  obligations,  remedies and security  interests provided for, created or
granted shall apply fully to such substitute Collateral.

INSPECTION,  BOOKS AND  RECORDS.  Debtor  will at all times  keep  accurate  and
complete  records  covering  each item of  Collateral,  including  the  proceeds
therefrom.  Bank, or any of its agents, shall have the right, at intervals to be
determined  by Bank and  without  hindrance  or delay,  to inspect,  audit,  and
examine the Collateral and to make extracts from the books,  records,  journals,
orders, receipts, correspondence and other data relating to Collateral, Debtor's
business or any other transaction between the parties hereto. Debtor will at its
expense furnish Bank copies thereof upon request.

CROSS COLLATERALLZATION  LIMITATION. As to any other existing or future consumer
purpose loan made by Bank to Debtor,  within the meaning of the Federal Consumer
Credit  Protection  Act, Bank  expressly  waives any security  interest  granted
herein in  Collateral  that Debtor uses as a principal  dwelling  and  household
goods.

ATTORNEYS'  FEES AND OTHER COSTS OF  COLLECTION.  Debtor shall pay all of Bank's
reasonable  expenses  incurred in enforcing this Agreement and in preserving and
liquidating  Collateral,  including but not limited to, reasonable  arbitration,
paralegals', attorneys' and experts' fees and expenses, whether incurred without
the  commencement  of a  suit,  in any  trial,  arbitration,  or  administrative
proceeding, or in any appellate or bankruptcy proceeding.

DEFAULT.  If any of the  following  occurs,  a default  ("Default")  under  this
Security Agreement shall exist: (i) The failure of timely payment or performance
of any of the Obligations or a default under any Loan Document;  (ii) Any breach
of any  representation  or agreement  contained or referred to in this  Security
Agreement or other Loan Document;  (iii) Any loss, theft, substantial damage, or
destruction  of  Collateral  not  fully  covered  by  insurance,  or as to which
insurance proceeds are not remitted to Bank within 30 days of the loss; any sale


                                       6
<PAGE>

(except the sale of inventory in the ordinary  course of  business),  lease,  or
encumbrance of any of Collateral  without prior written  consent of Bank; or the
making of any levy,  seizure,  or attachment  on or of  Collateral  which is not
removed  within 10 days;  or (iv) the death of,  appointment  of  guardian  for,
dissolution  of,  termination of existence of, loss of good standing  status by,
appointment  of a receiver for,  assignment  for the benefit of creditors of, or
commencement  of any bankruptcy or insolvency  proceeding by or against  Debtor,
its Subsidiaries or Affiliates ("Affiliate" shall have the meaning as defined in
11 U.S.C.  ss. 101; and  "Subsidiary"  shall mean any  corporation of which more
than 50% of the  issued  and  outstanding  voting  stock is  owned  directly  or
indirectly by Debtor), if any, or any general partner of or the holder(s) of the
majority ownership interests in Debtor or any party to the Loan Documents.

REMEDIES ON DEFAULT  (INCLUDING POWER OF SALE). If a Default occurs,  all of the
Obligations shall be immediately due and payable,  without notice and Bank shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code.  Without  limitation  thereto,  Bank shall have the  following  rights and
remedies:  (i) to take  immediate  possession of  Collateral,  without notice or
resort to legal  process,  and for such  purpose,  to enter upon any premises on
which  Collateral  or any part  thereof may be  situated  and to remove the same
therefrom,  or, at its option,  to render the Collateral  unusable or dispose of
said  Collateral on Debtor's  premises;  (ii) to require  Debtor to assemble the
Collateral  and make it available to Bank at a place to be  designated  by Bank;
(iii) to  exercise  its right of set-off or bank lien as to any monies of Debtor
deposited in demand,  checking,  time, savings,  certificate of deposit or other
accounts of any nature  maintained  by Debtor with Bank or  Affiliates  of Bank,
without  advance  notice,  regardless  of whether  such  accounts are general or
special; (iv) to dispose of Collateral,  as a unit or in parcels,  separately or
with any real property interests also securing the Obligations, in any county or
place to be selected by Bank, at either  private or public sale (at which public
sale bank may be the purchaser) with or without having the Collateral physically
present at said sale.  Any notice of sale,  disposition  or other action by Bank
required by law and sent to Debtor at Debtor's  address shown above,  or at such
other  address  of Debtor as may from  time to time be shown on the  records  of
Bank, at least 5 days prior to such action,  shall constitute  reasonable notice
to Debtor.  Notice shall be deemed given or sent when mailed postage  prepaid to
Debtor's  address  as  provided  herein.  Bank  shall be  entitled  to apply the
proceeds of any sale or other  disposition of the  Collateral,  and the payments
received by Bank with respect to any of the  Collateral,  to the  Obligations in
such order and manner as Bank may determine. Collateral that is subject to rapid
declines in value and is customarily sold in recognized  markets may be disposed
of by Bank in a recognized  market for such collateral  without providing notice
of sale.

REMEDIES  ARE  CUMULATIVE.  No failure on the part of Bank to  exercise,  and no
delay in exercising,  any right,  power or remedy  hereunder  shall operate as a
waiver thereof,  nor shall any single or partial  exercise by Bank or any right,
power or remedy hereunder  preclude any other or further exercise thereof or the
exercise  of any right,  power or  remedy.  The  remedies  herein  provided  are
cumulative and are not exclusive of any remedies  provided by law, in equity, or
in other Loan Documents.

MISCELLANEOUS.  (i) AMENDMENTS AND WAIVERS. No waiver, amendment or modification
of any provision of this Security Agreement shall be valid unless in writing and
signed by an officer of Bank.  No waiver by Bank of any Default shall operate as
a waiver of any  other  Default  or of the same  Default  on a future  occasion.
Neither the failure of, nor any delay by, Bank in exercising any right, power or


                                       7
<PAGE>

privilege granted pursuant to this Security  Agreement shall operate as a waiver
thereof,  nor shall a single or partial  exercise  thereof preclude any other or
further exercise of any other right,  power or privilege.  (ii) ASSIGNMENT.  All
rights of Bank hereunder are freely  assignable,  in whole or in part, and shall
inure to the benefit of and be enforceable by Bank, its successors,  assigns and
affiliates.  Debtor shall not assign its rights and interest  hereunder  without
the prior written  consent of Bank,  and any attempt by Debtor to assign without
Bank's prior written consent is null and void. Any assignment  shall not release
Debtor from the  Obligations.  This  Security  Agreement  shall be binding  upon
Debtor,  and the heirs,  personal  representatives,  successors,  and assigns of
Debtor.  (iii)  APPLICABLE  LAW;  CONFLICT  BETWEEN  DOCUMENTS.   This  Security
Agreement shall be governed by and construed under the law of the state named in
Bank's  address  shown above  without  regard to that  state's  conflict of laws
principles.  If any terms of this Security  Agreement conflict with the terms of
any  commitment  letter or loan proposal,  the terms of this Security  Agreement
shall control.  (iv)  JURISDICTION.  Debtor  irrevocably agrees to non-exclusive
personal  jurisdiction  in the state named in Bank's  address  shown above.  (v)
SEVERABILITY. If any provision of this Security Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining  provisions of this Security Agreement.  (vi)
NOTICES.  Any notices to Debtor shall be  sufficiently  given, if in writing and
mailed or delivered  to the address of Debtor shown above or such other  address
as provided  hereunder;  and to Bank,  if in writing and mailed or  delivered to
Bank's  office  address shown above or such other address as Bank may specify in
writing from time to time. In the event that the Debtor changes Debtor's mailing
address at any time prior to the date the Obligations  are paid in full,  Debtor
agrees to promptly  give written  notice of said change of address by registered
or  certified  mail,  return  receipt  requested,  all  charges  prepaid.  (vii)
CAPTIONS.  The captions  contained  herein are inserted for convenience only and
shall not affect the meaning or interpretation of this Security Agreement or any
provision hereof.  The use of the plural shall also mean the singular,  and vice
versa. (viii) LOAN DOCUMENTS. The term "Loan Documents" refers to all documents,
whether now or hereafter  existing,  executed in connection with the Obligations
and may include, without limitation and whether executed by Borrower,  Debtor or
others, commitment letters, loan agreements, guaranty agreements, other security
agreements,  letters of credit,  instruments,  financing statements,  mortgages,
deeds  of  trust,  deeds to  secure  debt,  and any  amendments  or  supplements
(excluding  swap  agreements  as defined in 11 U.S.C.  ss. 101).  (ix) JOINT AND
SEVERAL LIABILITY.  If more than one person has signed this Security  Agreement,
such  parties  are  jointly  and  severally  obligated  hereunder.  (x)  BINDING
CONTRACT. Debtor by execution and Bank by acceptance of this Security Agreement,
agree  that each  party is bound by all terms and  provisions  of this  Security
Agreement.


                                       8
<PAGE>



IN WITNESS WHEREOF,  Debtor, on the day and year first written above, has caused
this Security Agreement to be executed under seal.

                                      IBS Interactive, Inc.


CORPORATE                             By:/S/ NICHOLAS R. LOGLISCI, JR.,
SEAL                                     Nicholas R.Loglisci, Jr., President


                                      By: /S/ JEFF BRENNER                    
                                         Jeff Brenner, Chief Financial Officer


                                       9