THIS AGREEMENT,  AND THE SECURITIES ISSUABLE HEREUNDER (THE "SECURITIES"),  HAVE
NOT BEEN  REGISTERED  UNDER THE U.S.  SECURITIES  ACT OF 1933,  AS AMENDED  (THE
"ACT"),  NOR HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY U.S. STATE OR TERRITORY.  THE SECURITIES ARE BEING OFFERED AND SOLD PURSUANT
TO REGULATION S OF THE U.S.  SECURITIES AND EXCHANGE  COMMISSION  UNDER THE ACT.
THE SECURITIES ARE  "RESTRICTED  SECURITIES,"  AND MAY NOT BE OFFERED OR SOLD IN
THE UNITED  STATES OR TO A U.S.  PERSON (AS DEFINED IN  REGULATION S) UNLESS THE
SECURITIES  ARE  REGISTERED  UNDER THE ACT,  OR  PURSUANT  TO  REGULATION  S, OR
PURSUANT TO OTHER AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
ACT. A HOLDER OF ANY OF THE  SECURITIES  MAY NOT  ENGAGE IN HEDGING  TRANSACTION
WITH REGARD TO SUCH SECURITIES UNLESS IN COMPLIANCE WITH THE ACT.

                          SECURITIES PURCHASE AGREEMENT


ss.1.  Parties

     1.1.  This  Agreement  is made and  entered  into as of June 27,  2000 (the
"Effective Date"), at Toronto,  Ontario, Canada, by and between eAutoclaims.com,
Inc. and Thomson  Kernaghan & Co. Ltd. as Agent,  and the  Purchasers  executing
this Agreement.


ss.2.  Definition and Accounting Terms

     2.1. Definitions. As used in this Agreement:

              (a)  "Affiliate"  means any Person (i) that directly or indirectly
     controls,  or is  controlled  by, or is under  common  control with another
     Person or a  subsidiary  of such other  Person;  or (ii) that  directly  or
     indirectly  beneficially  owns or holds  ten  percent  (10%) or more of any
     class of voting  stock of  another  Person or a  subsidiary  of such  other
     Person;  or (iii) ten percent (10%) or more of the voting stock of which is
     directly or indirectly  beneficially  owned or held by another  Person or a
     subsidiary of such other Person.

              (b) "Agent"  means  Thomson  Kernaghan & Col.  Ltd., a corporation
     incorporated  under the laws of  Ontario,  for  itself and as agent for the
     Purchasers.

              (c)  "Agent's  Fee" shall have the meaning  ascribed in  paragraph
10.12 of this Agreement.

              (d) "Agent's  Principal Office" means the Agent's principal office
     at 365 Bay Street, Toronto, Ontario M5H 2V2.

              (e)  "Agent's   Warrants"  shall  have  the  meaning  ascribed  in
paragraph 6.2(a) of this Agreement.

              (f)  "Agreement"  means this  Securities  Purchase  Agreement,  as
     amended, supplemented or modified from time to time.

              (g)  "Capital  Lease" means all leases that have been or should be
     capitalized on the books of the lessee in accordance with GAAP.

              (h)  "Certificate  of  Designations"   shall  mean  the  Company's
     certificate of  designations  of the rights and preferences of the Series A
     Convertible  Preferred  Stock, in the form set forth in Exhibit A-1 to this
     Agreement.

              (i)  "Closing  Bid Price"  shall mean the closing bid price of the
     Common Stock on a Trading Day reported by Bloomburg L.P.

              (j)  "Closing  Date" means,  August __, 2000,  with respect to the
     initial sale of Preferred Shares pursuant to this Agreement.

              (k)  "Code"  means  the U.S.  Internal  Revenue  Code of 1986,  as
     amended   from   time  to  time,   and  the   regulations   and   published
     interpretations thereof.

              (l)  "Collateral"  means all property  that is subject to the Lien
     granted by the Security Agreement;


<PAGE>

              (m)  "Collateral  Shares"  shall  have  the  meaning  ascribed  in
paragraph 3.6 of this Agreement.

              (n) "Common Stock" means the Company's common stock, U.S.$.001 par
value.

              (o) "Commonly  Controlled Entity" means an entity,  whether or not
     incorporated,  that is under common  control  with the Company,  within the
     meaning of Section 414(b) or 414(c) of the Code.

              (p)   "Company"   means   eAutoclaims.com,   Inc.,  a  corporation
     incorporated under the laws of the U.S. state of Nevada.

              (q) "Control"  (whether or not capitalized)  means the possession,
     directly or  indirectly,  of the power to direct or cause the  direction of
     the management and policies of a Person,  whether  through the ownership of
     voting securities, by contract, or otherwise.

              (r)  "Conversion  Shares"  means the  shares of Common  Stock into
     which the Preferred Shares are convertible.

              (s) "Debt" means (i) indebtedness or liability for borrowed money;
     (ii) obligations  evidenced by bonds,  Preferred  Shares,  or other similar
     instruments;  (iii) obligations for the deferred purchase price of property
     or services (including trade  obligations);  (iv) obligations under Capital
     Leases;  (v) obligations  under letters of credit;  (vi) obligations  under
     acceptance facilities;  (vii) all guaranties,  endorsements (other than for
     collection  or  deposit  in the  ordinary  course of  business),  and other
     contingent obligations to purchase, to provide funds for payment, to supply
     funds to invest in any Person or entity,  or otherwise to assure a creditor
     against loss; and (viii) all obligations  secured by any Liens,  whether or
     not the obligations have been assumed.

              (t) "Default" means any of the events  specified in paragraph 9.1,
     whether or not any requirement for the giving of notice, the lapse of time,
     or both, or any other condition has been satisfied.

              (u) "EDGAR"  means the computer  system  maintained by the SEC for
     the receipt, acceptance, review and dissemination of documents submitted to
     it in electronic format.

              (v) "Effective  Date" means the date set forth in paragraph 1.1 of
this Agreement.

              (x)  "Escrow   Agreement"  shall  have  the  meaning  ascribed  in
paragraph 6.2(d) of this Agreement.

              (y) "ERISA" means the Employee  Retirement  Income Security Act of
     1974,  as amended  from time to time,  and the  regulations  and  published
     interpretations thereof.

              (z)  "Event of  Default"  means  any of the  events  specified  in
     Section 9.01,  provided that any requirement for the giving of notice,  the
     lapse of time, or both, or any other condition, has been satisfied.

              (aa)  "Exchange  Act" means the United  States of America.
     Securities  Exchange Act of 1934, as amended.

              (bb)  "GAAP" means generally accepted accounting principles in
     the U.S.

              (cc)  "Holder" mean the holder of a Preferred Share.

              (dd)  "Purchasers'  Warrants"  shall have the meaning  ascribed in
     paragraph 6.2(a) of this Agreement.

              (ee) "Lien" means any mortgage,  deed of trust,  pledge,  security
     interest, hypothecation, assignment, deposit arrangement, encumbrance, lien
     (statutory or other), or preference,  priority, or other security agreement
     or  preferential  arrangement,  charge or encumbrance of any kind or nature
     whatsoever  (including  without  limitation any  conditional  sale or other
     title retention  agreement,  any financing lease having  substantially  the
     same  economic  effect  as any of the  foregoing,  and  the  filing  of any
     financing  statement,  charge  or  similar  notice  under  the  law  of any
     jurisdiction to evidence any of the foregoing.


<PAGE>

              (ff)  Multiemployer Plan" means a Plan described in
     Section 4001(a)(3) of ERISA.

              (ee) "PBGC" means the Pension Benefit Guaranty  Corporation or any
     entity succeeding to any or all of its functions under ERISA.

              (ff)  "Person"  means  an  individual,  partnership,  corporation,
     business trust,  joint stock company,  trust,  unincorporated  association,
     joint venture, governmental authority, or other entity of whatever nature.

              (gg) "Plan" means any pension plan which is covered by Title IV of
     ERISA and in respect of which the Company or a Commonly  Controlled  Entity
     is an "employer" as defined in Section 3(5) of ERISA.

              (hh) "Preferred  Shares" means the Company's  Series A Convertible
     Preferred Stock described in the Certificate of Designations.

              (ii) "Prohibited  Transaction"  means any transaction set forth in
     Section 406 of ERISA or Section 4975 of the Code.

              (jj) "Purchase Price" means, with respect to the Preferred Shares,
     an amount equal to the "Liquidation  Preference" ($5,000) of each share set
     forth in the Certificate of Designations.

              (kk) "Purchaser"  means each Person that executes a signature page
     of this Agreement as a Purchaser.

              (ll)  "Registration  Rights  Agreement"  shall  have  the  meaning
     ascribed in paragraph 6.2(c) of this Agreement.

              (mm)  "Reportable Event" means any of the events set forth in
     Section 4043 of ERISA.

              (nn)  "SEC" means the U.S. Securities and Exchange Commission.

              (oo) "SEC  Documents"  means all forms,  statements,  reports  and
     other  documents  and  information  that the  Company  has filed and in the
     future may file with the SEC.

              (pp)  "Securities Act" means the U.S. Securities Act of 1933, as
     amended.

              (qq)   "Security   Agreement"   means  a  Security   Agreement  in
     substantially  the form of Exhibit B to be delivered  by the Company  under
     the terms of this Agreement.

              (rr)  "Subsidiary"  means a  corporation  of which shares of stock
     having  ordinary  voting  power (other than stock having such power only by
     reason of the happening of a contingency)  to elect a majority of the board
     of directors or other managers of that  corporation  are at the time owned,
     or the management of which is otherwise controlled,  directly or indirectly
     through one or more intermediaries, or both, by the Company.

              (ss) "Termination  Date" means the date on which the Company files
     a registration statement as described in the Registration Rights Agreement.

              (tt) "Trading Day" means any day, other than a Saturday or Sunday,
     on which the New York Stock Exchange is open for business.

              (uu) "Transaction  Documents" means this Agreement,  the Preferred
     Shares, the Purchasers' Warrants, the Agent's Warrant, and the Registration
     Rights Agreement.

              (vv)  "U.S." means the United States of America.

              (ww) "Warrant  Shares"  means the shares of Common Stock  issuable
upon exercise of the Warrants.

<PAGE>

              (xx)  "Warrants"  means the  Purchasers'  Warrants and the Agent's
Warrants.

         2.2.  Singular  and  Plural  Terms.  As used in this  Agreement,  terms
defined in the singular have the same meaning when used in the plural, and terms
defined in the plural have the same meaning when used in the singular.

         2.3. Accounting Terms. All accounting terms not specifically defined in
this  Agreement  shall be construed in accordance  with GAAP. All financial data
submitted  pursuant to this Agreement  shall be prepared in accordance with GAAP
except that,  unless audited financial  statements are specifically  required by
this Agreement, such financial date need not be audited.

         2.4.  Currency.  All  currency  described  or otherwise  referred to
 in the  Transaction  Documents is the currency of the United States of America.


ss.3.  Purchase and Sale of Securities

         3.1.  Preferred  Shares  Purchase.  The Company  agrees to sell to each
Purchaser,  and each Purchaser  severally (and not jointly)  agrees on the terms
and  conditions  set forth in this  Agreement  to purchase  from the Company the
number  of  Preferred  Shares  set  forth  after  such  Purchaser's  name on the
signature pages to this Agreement. The Company agrees to sell up to five hundred
(500)  Preferred  Shares during the period from the date of this Agreement up to
but not including the Termination Date. The Company is not obligated to sell any
Preferred  Shares  unless not less than two hundred (200)  Preferred  Shares are
sold. The Purchase  Price for each  Preferred  Share shall be an amount equal to
its  Liquidation  Preference  ($5,000)  as  set  forth  in  the  Certificate  of
Designations.

         (a)  Initial  Purchase.  On the date  that the  Company  executes  this
Agreement (the "Initial Closing Date"), each Purchaser shall purchase the number
of Preferred  Shares set forth after its signature on the signature page of this
Agreement.  The Company hereby acknowledges that on the Effective Date the Agent
advanced and delivered to the Company the sum of  U.S.$500,000  as an advance on
the purchase price of 200 Preferred Shares.

         (b)  Subsequent  Purchases.  The  Purchasers  may,  in  their  sole and
absolute  discretion,  up to but not including the  Termination  Date,  purchase
additional  Preferred Shares, but the Purchasers shall be under no obligation to
do so. The Company  shall give the Agent at least ten (10) Trading  Days' notice
of any request for the sale of additional Preferred Shares,  specifying the date
and amount  thereof.  If the Company  does not receive  written  notice from the
Agent within five (5) Trading Days that the  Purchasers  have agreed to purchase
additional  Preferred Shares, then the Purchasers shall be deemed to have denied
that request.

         3.2.  Notice and Manner of Purchase.  The Company  shall give the Agent
written wiring  instructions  for the  disbursement of proceeds from the sale of
the Preferred  Shares,  specifying the name,  address and ABA routing number for
the Bank,  and the Company's  account number to be credited with the Purchase of
Preferred Shares proceeds.

         3.3.  Dividends.  The Company  shall pay  dividends on the  outstanding
Preferred  Shares at the rate and times,  and in the  manner,  specified  in the
Certificate of Designations.

         3.4. The Preferred  Shares.  The  certificates for the Preferred Shares
shall be in  substantially  the form of Exhibit A-2  attached to this  Agreement
with blanks  appropriately  filled in, registered in either the Agent's name, as
nominee,  or in the name of the  Purchaser,  as the  Agent  shall  specify.  The
Preferred  Shares  evidencing  the  Initial  Purchase  of  Preferred  Shares are
referred to as the "Initial  Preferred  Shares." The  Preferred  Shares shall be
convertible  into  Common  Stock on the terms set  forth in the  Certificate  of
Designations.

         3.5.  Redemption.  The Company  shallnot have the rightor power to
redeem the Preferred Shares,either in whole or in part.

         3.6.  Collateral.  As  security  for  the  Company's  prompt  and  full
performance of its  obligations  under this Agreement and the other  Transaction
Documents, the Company shall issue, assign, pledge and deliver to the Agent, for
the benefit of the Agent and the  Purchasers,  Two Hundred  Twenty Five Thousand
shares of Common Stock  ("Collateral  Shares") for each 200 Preferred  Shares or
portion thereof issued and outstanding pursuant to this Agreement.


<PAGE>

         3.7. Method of Payment. The Company shall make each payment required by
the terms of this Agreement or the  Certificate of  Designations  at the Agent's
Principal Office not later than 2:00 P.M.,  Toronto time on the date when due in
lawful U.S. currency and in immediately available funds. Whenever any payment is
required to be made under this Agreement or under the Preferred  Shares shall be
stated to be due on a day other than a Trading Day,  such payment  shall be made
on the next  succeeding  Trading Day,  and such  extension of time shall in such
case be included in the computation of dividends due on the Preferred Shares.

         3.8. Use of Proceeds. The Company shall use the proceeds of the sale of
the Preferred Shares solely for the following  purposes:  (a) to pay the Agent's
Fee; (b) to pay the fees and expenses of the Agent's counsel and Company counsel
in the negotiation and preparation of this Agreement;  and (c) for the Company's
working capital  purposes.  The Company hereby  authorizes the Agent to withhold
the amounts  necessary  to pay the Agent's Fee and such fees and expenses of its
counsel from the proceeds of the sale of the Preferred Shares.


ss.4.  Conditions Precedent.

         4.1.  Condition  Precedent to Initial  Purchase.  The obligation of the
Purchasers  to make the initial  purchase of Preferred  Shares is subject to the
condition  precedent that the Agent shall have received on or before the Closing
Day of the purchase each of the following, in form and substance satisfactory to
the Agent and its counsel:

               (a)  Preferred  Shares.  Certificates  for the  Preferred  Shares
                    being purchased, duly executed by the Company;

               (b)  Security  Agreement.  The Security  Agreement and Collateral
                    Shares.

              (b) Evidence of all corporate action by the Company. Certified (as
     of the Closing Date) copies of all  corporate  action taken by the Company,
     including resolutions of its Board of Directors, authorizing the execution,
     delivery,  and  performance  of the  Transaction  Documents  and each other
     document to be delivered pursuant to this Agreement;

              (d)  Incumbency  and  signature  certificate  of  the  Company.  A
     certificate  (dated as of the Closing Date) of the Secretary of the Company
     certifying  the names and true  signatures  of the  officers of the Company
     authorized to sign the Transaction  Documents and any other documents to be
     delivered by the Company under this Agreement;

              (e)  Purchasers'   Warrants.   A  Purchasers'   Warrant  for  each
Purchaser;

              (f) Agent's Warrant.  The Agent's Warrant;

              (g) Registration Rights Agreement.  The Registration Rights
Agreement; and

              (i) Opinion of counsel  for the  Company.  A favorable  opinion of
     counsel for the Company, in substantially the form of Exhibit C hereto, and
     as to such other matters as the Agent may reasonably request.

         4.2. Conditions  Precedent to the Purchase of all Preferred Shares. Any
obligation of the Purchasers to purchase Preferred Shares (including the initial
purchase) shall be subject to the further conditions  precedent that on the date
of each such Purchase of Preferred Shares:

              (a) The  following  statements  shall be true and the Agent  shall
     have  received a  certificate  signed by a duly  authorized  officer of the
     Company,  dated the Closing  Date of such  purchase,  stating  that (i) the
     representations and warranties  contained in Section 5.1 of this Agreement,
     and in Section 4.01 of the Security  Agreement are correct on and as of the
     Closing  Date of such  purchase as though made on and as of such date;  and
     (ii) no Default or Event of Default  has  occurred  and is  continuing,  or
     would result from such purchase;

              (b) The Agent shall have received a detailed statement  specifying
     how the  Company  will  use the  proceeds  from  the  purchase,  reasonably
     satisfactory  to the Agent,  certified  by the  Company's  chief  financial
     officer and chief executive officer;


<PAGE>

              (c) The Agent shall have received Preferred Shares and Purchasers'
     Warrants with respect to the Purchase of Preferred Shares and

              (d) The Agent shall have received such other approvals,  opinions,
     or documents as the Agent may reasonably request.


ss.5.  Representations and Warranties.

         5.1. Company's  Representations and Warranties.  The Company represents
and warrants to the Purchasers that:

              (a) Incorporation, Good Standing, and Due Qualification. Except as
     set  forth  in  Schedule   5.1(a),   the  Company  is  a  corporation  duly
     incorporated,  validly  existing and in good standing under the laws of the
     jurisdiction of its incorporation; has the corporate power and authority to
     own its assets and to transact  the business in which it is now engaged and
     proposes to be engaged in; and is duly  qualified as a foreign  corporation
     and in good  standing  under the laws of each other  jurisdiction  in which
     such qualification is required. The Company has no Subsidiaries.

              (b)  Capitalization.  The capital stock of the Company consists of
     50,000,000  shares of common stock and 5,000,000 shares of preferred stock.
     No shares of  prefered  stock have been  issued  prior to the  transactions
     contemplated  by this  Agreement.  Schedule  5.1(b)  sets forth the current
     capitalization of the Company.

              (c) Corporate  Power and Authority.  The  execution,  delivery and
     performance  by the  Company of the  Transaction  Documents  have been duly
     authorized  by all necessary  corporate  action and do not and will not (i)
     require any consent or approval of its  shareholders;  (ii)  contravene its
     charter  or  bylaws;   (iii)  violate  any  provision  of  any  law,  rule,
     regulation,  order, writ, judgment,  injunction,  decree,  determination or
     award  presently  in effect  having  applicability  to the  Company  or any
     Subsidiary;  (iv) result in a breach of or  constitute a default  under any
     indenture or purchase of Preferred  Shares or credit agreement or any other
     agreement,  lease or instrument to which the Company or any Subsidiary is a
     party or by which it or its properties may be bound or affected; (v) except
     as  provided  in this  Agreement,  result in or  require  the  creation  or
     imposition  of any Lien upon or with respect to any to the  properties  now
     owned or  hereafter  acquired  by the Company or any  Subsidiary;  and (vi)
     cause the Company to be in default  under any such law,  rule,  regulation,
     order, writ, judgment,  injunction,  decree, determination or award, or any
     such indenture, agreement, lease or instrument to which it is subject.

              (d) Legally Enforceable Agreement.  This Agreement is, and each of
     the other  Transaction  Documents when delivered  under this Agreement will
     be,  legal,  valid and  binding  obligations  of the  Company,  enforceable
     against the Company in accordance with their  respective  terms,  except to
     the extent that such  enforcement may be limited by applicable  bankruptcy,
     insolvency and other similar laws affecting creditors' rights generally and
     other equitable remedies.

              (e) Financial Statements.  Each financial statement of the Company
     contained in the SEC Documents  filed as of the Effective  Date is complete
     and correct, and fairly presents the financial condition of the Company and
     its  Subsidiaries  as at the dates set forth therein and the results of the
     operations of the Company and its  Subsidiaries  for the periods covered by
     such statements,  all in accordance with GAAP consistently applied (subject
     to year-end  adjustments in the case of the interim financial  statements).
     Since  July 31,  2000,  there has been no  material  adverse  change in the
     condition (financial or otherwise),  business, or operations of the Company
     or  any  Subsidiary.  There  are  no  liabilities  of  the  Company  or any
     Subsidiary,  fixed or contingent,  which are material but are not reflected
     in the SEC Documents  publicly  available on EDGAR,  other than liabilities
     arising in the ordinary course of business since July 31, 2000.

              (f) Full  Disclosure.  No SEC Document  filed as of the  Effective
     Date, and no information, exhibit or report furnished by the Company to the
     Agent or any Purchaser in connection with the negotiation of this Agreement
     (including any schedule or exhibit  attached  hereto) contains any material
     misstatement  of fact or  omitted  to  state a  material  fact or any  fact
     necessary  to  make  the  statement   contained   therein  not   materially
     misleading.

<PAGE>

              (g) Labor  Disputes and Acts of God.  Neither the business nor the
     properties  of the  Company or any  Subsidiary  are  affected  by any fire,
     explosion,  accident,  strike,  lockout or other  labor  dispute,  drought,
     storm,  hail,  earthquake,  embargo,  act of God or of the public enemy, or
     other  casualty  (whether  or not  covered  by  insurance)  materially  and
     adversely  affecting  such  business  properties  or the  operation  of the
     Company or such Subsidiary.

              (h) Other  Agreements.  Except  as set forth in the SEC  Documents
     publicly available on EDGAR or on Schedule 5.1 (h), neither the Company nor
     any Subsidiary is a party to any indenture,  purchase of Preferred  Shares,
     or credit agreement,  or to any lease or other agreement or instrument,  or
     subject to any charter or corporate restriction which could have a material
     adverse  effect  on  the  business,   properties,  assets,  operations,  or
     conditions,  financial or otherwise, of the Company or such Subsidiary,  or
     on the Company's  ability to perform its obligations  under the Transaction
     Documents. Neither the Company nor any Subsidiary is in material default in
     any respect in the  performance,  observance,  or fulfillment of any of the
     obligations,  covenants,  or  conditions  contained  in  any  agreement  or
     instrument material to its business to which it is a party.

              (i) Litigation.  Except as set forth in the SEC Documents publicly
     available on EDGAR or on Schedule 5.1(i), there is no pending or threatened
     action or  proceeding  against or affecting  the Company or any  Subsidiary
     before any court,  governmental agency, or arbitrator which may, in any one
     case  or in  the  aggregate,  materially  adversely  affect  the  financial
     condition,  operations,  properties,  or  business  of the  Company or such
     Subsidiary,  or the ability of the Company to perform its obligations under
     the Transaction Documents.

              (j) No Defaults on  Outstanding  Judgments or Orders.  Each of the
     Company and its  Subsidiaries  has satisfied all judgments (if any), and is
     not in default  with respect to any  judgment,  writ,  injunction,  decree,
     rule, or regulation of any court, arbitrator, or federal, state, municipal,
     or other  governmental  authority,  commission,  board,  bureau,  agency or
     instrumentality, domestic or foreign.

              (k) Ownership and Liens.  Except as set forth in the SEC Documents
     or Schedule 5.1(k),  each of the Company and its Subsidiaries has title to,
     or valid leasehold interests in, all of its properties and assets, real and
     personal,  including without limitation, all patents,  trademarks and other
     intellectual   property,  and  including  the  properties  and  assets  and
     leasehold  interest  reflected in the financial  statements  referred to in
     paragraph  5.1(e) of this  Agreement  (other than any  properties or assets
     disposed of in the ordinary course of business), and none of the properties
     and  assets  owned  by the  Company  or any  Subsidiary,  and  none  of its
     leasehold  interests,  is  subject  to  any  Lien,  except  such  as may be
     permitted pursuant to paragraph 7.1(a) of this Agreement.

              (l)  ERISA.  Each  of  the  Company  and  its  Subsidiaries  is in
     compliance  in all material  respects  with all  applicable  provisions  of
     ERISA. Neither a Reportable Event nor a Prohibited Transaction has occurred
     and is  continuing  with  respect  to any  Plan;  no  notice  of  intent to
     terminate  a Plan has been  filed,  nor has any Plan  been  terminated;  no
     circumstances   exist  which  constitute  grounds  entitling  the  PBGC  to
     institute proceedings to terminate,  or appoint a trustee to administer,  a
     Plan, nor has the PBGC instituted any such proceedings; neither the Company
     nor any Commonly  Controlled  Entity has completely or partially  withdrawn
     from a Multiemployer  Plan; the Company and each Commonly Controlled Entity
     have met their minimum funding requirements under ERISA with respect to all
     of their Plans,  and the present  value of all vested  benefits  under each
     Plan does not exceed the fair market value of all Plan assets  allocable to
     such benefits,  as determined on the most recent valuation date of the Plan
     and in accordance with the provisions of ERISA; and neither the Company nor
     the Parent nor any Commonly Controlled Entity has incurred any liability to
     the PBGC under ERISA.

              (m)  Operation  of  Business.  The  Company  and its  Subsidiaries
     possess all material licenses, permits,  franchises,  patents,  copyrights,
     trademarks, and trade names, or rights thereto, to conduct their respective
     businesses  substantially as now conducted and as presently  proposed to be
     conducted,  and neither the Company nor any  Subsidiary  is in violation of
     any valid rights of others with respect to any of the foregoing.


<PAGE>

              (n) Taxes.  The  Company  and each  Subsidiary  have filed all tax
     returns (federal,  state, and local) required to be filed and have paid all
     taxes,  assessments,  and  governmental  charges and levies thereon due and
     payable as of the date hereof, including any interest and penalties.

              (o) Debt.  Schedule  5.1(o) is a complete  and correct list of all
     credit agreements,  indentures,  purchase agreements,  guaranties,  Capital
     Leases, and other investments,  agreements,  and arrangements  presently in
     effect  providing  for or  relating  to  extensions  of  credit  (including
     agreements  and  arrangements  for the issuance of letters of credit or for
     acceptance  financing)  in  respect  of which the  Company is in any manner
     directly  or  contingently  obligated;  and the maximum  principal  or face
     amounts of the credit in question,  which are  outstanding and which can be
     outstanding,  are  correctly  stated,  and all Liens of any nature given or
     agreed  to be  given  as  security  therefor  are  correctly  described  or
     indicated in the SEC Documents or Schedule 5.1(o).

              (p)  Environment.  The  Company  and  it  Subsidiaries  have  duly
     complied with, and its businesses, operations, assets, equipment, property,
     leaseholds,  or other  facilities are in compliance with, the provisions of
     all federal, state, and local environmental, health, and safety laws, codes
     and  ordinances,  and all rules  and  regulations  promulgated  thereunder.
     Neither the Company nor any  Subsidiary  has received  notice of, nor knows
     of, or suspects facts which might constitute any violations of any federal,
     state, or local environmental, health, or safety laws, codes or ordinances,
     and any rules or  regulations  promulgated  thereunder  with respect to its
     businesses,  operations,  assets, equipment, property, leaseholds, or other
     facilities. Except in accordance with a valid governmental permit, license,
     certificate,  or  approval  listed in  Schedule  5.1(p),  there has been no
     emission, spill, release, or discharge into or upon (1) the air; (2) soils;
     or any improvements located thereon;  (3) surface water or groundwater;  or
     (4) the sewer, septic system or waste treatment, storage or disposal system
     servicing the premises of any toxic or hazardous substances or wastes at or
     from the  premises;  and  accordingly  the  premises of the Company and its
     Subsidiaries are free of all such toxic or hazardous  substances or wastes.
     There has been no complaint,  order, directive,  claim, citation, or notice
     by any  governmental  authority or any person or entity with respect to (1)
     air emissions;  (2) spills, releases or discharges to soils or improvements
     located thereon,  surface water, groundwater or the sewer, septic system or
     waste treatment,  storage or disposal systems  servicing the premises;  (3)
     noise  emissions;  (4)  solid  or  liquid  waste  disposal;  (5)  the  use,
     generation,  storage,  transportation,  or disposal  of toxic or  hazardous
     substances or waste; or (6) other environmental,  health, or safety matters
     affecting  the  Company or its  business,  operations,  assets,  equipment,
     property,  leaseholds,  or other  facilities.  Neither  the Company nor its
     Subsidiaries have any indebtedness,  obligation, or liability,  absolute or
     contingent, matured or not matured, with respect to the storage, treatment,
     cleanup,  or disposal of any solid wastes,  hazardous wastes or other toxic
     or   hazardous   substances   (including   without   limitation   any  such
     indebtedness,   obligation,  or  liability  with  respect  to  any  current
     regulation, law, or statute regarding such storage, treatment,  cleanup, or
     disposal) which is not shown on Schedule 5.1(p).

              (q)  Registration  and Listing of Common  Stock.  The Company is a
     reporting  company  and has  continuously  been a reporting  company  since
     August, 1986.  The Common  Stock is  registered  under the Exchange Act and
     listed on the OTC Bulletin  Board.  Since June , 2000,  the Company has
     filed  in an  timely  manner  all  SEC  Documents  required  of  it by  the
     ExchangeAct,  the  rules  and  regulations  of the SEC,  and the  rules and
     regulations of the OTC Bulletin Board.

              (r) No U.S.  Offering.  The  Company  has not  offered  any of the
     Preferred Shares, the Conversion Shares, the Warrants or the Warrant Shares
     to a U.S.  Person  (as  defined  in SEC Rule  902(k)) or to a person in the
     United States.

              (s) Offshore Transaction. The negotiations for and the issuance of
     the  Preferred  Shares  and the  Warrants  to the Agent has been made in an
     offshore transaction as defined in SEC Rule 902(h).

              (t) No Directed  Selling  Efforts.  The Company has not engaged in
     any directed selling efforts,  as defined in SEC Rule 902(c),  with respect
     to the Preferred Shares and the Warrants.

              (u) Category 3  Securities.  The Company has complied  with all of
     the  conditions  required  of it under SEC Rules  903(a)  and  (b)(3)  with
     respect to the issuance of the Preferred Shares and Warrants.


<PAGE>

              (v) Exemption of Preferred Shares and Warrants from  Registration.
     The Company's  issuance of the Preferred  Shares and the Warrants is exempt
     from the  registration  requirements  of  Section  5 of  theSecurities  Act
     pursuant to the provisions of Section 4(2)of the Act and SEC Regulation S.

         5.2.  Purchasers'   Representations  and  Warranties.   Each  Purchaser
severally  represents  and warrants to the Company,  only with respect to itself
that:

              (a) Accredited Investor. It is an accredited investor as that term
     is defined in Rule 501(a)(3) of Regulation D of the SEC.

              (b) Non-U.  S. Persons.  It is not a U.S. Person as defined in SEC
Rule 902(k).

              (c) It has complied with all of the  conditions  required of it by
     SEC  Regulation  S and SEC  Rule  903(b)(3)  to be  complied  with by it in
     connection with the transactions contemplated by this Agreement.

         5.3. Agent's  Representations and Warranties.  The Agent represents and
     warrants to the Company that:

              (a) It has not offered any Preferred Shares to any U.S. Person, or
     to any Person that is not an accredited investor.

              (b) It has complied with all of the  conditions  required of it by
     SEC  Regulation S and SEC Rules 903(a) and (b)(3) to be complied with by it
     in connection with the transactions contemplated by this Agreement


ss.6.  Affirmative Covenants.

         6.1.  Financial  and  Operational  Covenants.  So  long  as  any of the
Preferred  Shares  shall  remain  unpaid  or  unconverted,and  until  all of the
Warrants have been fully exe the Company will:

              (a)  Maintenance  of Existence.  Preserve and maintain,  and cause
     each Subsidiary to preserve and maintain,  its corporate existence and good
     standing in the jurisdiction of its  incorporation,  and qualify and remain
     qualified  as a foreign  corporation  in each  jurisdiction  in which  such
     qualification is required.

              (b)  Maintenance of Records.  Keep,  and cause each  Subsidiary to
     keep, adequate records and books of account, in which complete entries will
     be made in  accordance  with  GAAP  consistently  applied,  reflecting  all
     material financial transactions of the Company and each Subsidiary.

              (c) Maintenance of Properties.  Maintain,  keep and preserve,  and
     cause each Subsidiary to maintain, keep and preserve, all of its properties
     (tangible and intangible)  necessary or useful in the proper conduct of its
     business  in good  working  order  and  condition,  ordinary  wear and tear
     excepted.

              (d) Conduct of Business.  Continue,  and cause each  Subsidiary to
     continue,  to engage in an efficient and economical manner in a business of
     the same general type as conducted by it on the date of this Agreement.

              (e) Maintenance of Insurance.  Maintain, and cause each Subsidiary
     to maintain,  insurance  with  financially  sound and  reputable  insurance
     companies or  associations  in such amounts and covering  such risks as are
     usually carried by companies  engaged in the same or a similar business and
     similarly   situated,   which   insurance   may  provide   for   reasonable
     deductibility from its coverage.

              (f) Compliance  With Laws.  Comply,  and cause each  Subsidiary to
     comply, with all applicable laws, codes, regulations, rules, ordinances and
     orders,   including  without  limitation  paying  before  the  same  become
     delinquent all taxes,  assessments and governmental charges imposed upon it
     or upon its property.

              (g) Right of Inspection.  At any reasonable  time and from time to
     time,  permit  the  Agent  or any  Purchaser,  or any of  their  agents  or
     representatives,  to  examine  and make  copies of and  abstracts  from the
     records and books of account of, and visit the  properties of, the Company,
     and to discuss its affairs, finances and accounts with any of its officers,
     directors and independent accountants.


<PAGE>

              (h)  Reporting  Requirements.  Furnish  to the  Agent at the times
     specified  below, so long as the  dissemination  of such information to the
     Agent at such times complies with the rules and regulations of the SEC then
     in force,  otherwise delivery will be made as soon as practicable after SEC
     rules and regulations authorize such delivery:

                  (i) Quarterly Financial  Statements.  The Company's reports on
         Form 10-Q or 10-QSB contemporaneously with their filing with the SEC.

                  (ii) Annual Financial Statements. The Company's annual reports
         on Form 10-K or 10-KSB  contemporaneously  with their  filing  with the
         SEC.

                  (iii)  Management  Letters.  Promptly  upon  receipt  thereof,
         copies of any reports  submitted  to the Company or any  Subsidiary  by
         independent  accountants  in connection  with their  examination of the
         financial statements of the Company.

                  (iv) Certificate of No Default.  Within  twenty-five (25) days
         after  the  end of each  month a  certificate  of the  Company's  chief
         financial  officer  certifying that to the best of his or her knowledge
         no Default or Event of Default has occurred and is continuing  or, if a
         Default or Event of Default has occurred and is continuing, a statement
         as to the nature  thereof  and the action  that is proposed to be taken
         with respect thereto.

                  (v)  Notice of  Litigation.  Promptly  after the  commencement
         thereof,  notice of all actions, suits and proceedings before any court
         or governmental  department,  commission,  board,  bureau,  agency,  or
         instrumentality  (domestic  or foreign) or  arbitrator,  affecting  the
         Company,  which, if determined  adversely to the Company,  could have a
         material  adverse  effect on the  financial  condition,  properties  or
         operations of the Company.

                  (vi)  Notice of  Defaults  and Events of  Default.  As soon as
         possible and in any event within ten (10) days after the  occurrence of
         each material  Default or material  Event of Default,  a written notice
         setting  forth the details of such  Default or Event of Default and the
         action  that is  proposed  to be  taken  by the  Company  with  respect
         thereto.

                  (vii) ERISA  reports.  As soon as  possible,  and in any event
         within  thirty (30) days after the Company  knows or has reason to know
         that any circumstances exist that constitute grounds entitling the PBGC
         to  institute  proceedings  to  terminate a Plan  subject to ERISA with
         respect to the Company or any Commonly  Controlled Entity, and promptly
         but in any event  within two (2) Trading Days of receipt by the Company
         or any  Commonly  Controlled  Entity of notice that the PBGC intends to
         terminate  a Plan or  appoint a trustee  to  administer  the same,  and
         promptly  but in any event  within five (5) Trading Days of the receipt
         of notice  concerning  the  imposition  of  withdrawal  liability  with
         respect to the Company or any Commonly  Controlled  Entity, the Company
         will deliver to the Agent a certificate of the chief financial  officer
         of the Company setting forth all relevant  details and the action which
         the Company proposes to take with respect thereto.

                  (vii)  Reports  to  Other   Creditors.   Promptly   after  the
         furnishing thereof,  copies of any statement or report furnished by the
         Company or any  Subsidiary to any other party  pursuant to the terms of
         any  indenture,   purchase  of  Preferred  Shares,  credit  or  similar
         agreement  and not  otherwise  required  to be  furnished  to the Agent
         pursuant to any other clause of this Agreement.

                  (viii) Other  Regulatory  Reports and Filings.  Promptly after
         the  sending  or  filing  thereof,  copies  of  all  proxy  statements,
         financial  statements  and reports  that the Company or any  Subsidiary
         sends to its  shareholders,  and copies of all  regular,  periodic  and
         special reports, and all registration statements that the Company files
         with the securities regulatory authorities of any country,  province or
         state, or with any securities exchange.


<PAGE>

                  (ix) General  Information.  Such other information  respecting
         the condition or operations,  financial or otherwise, of the Company as
         the Agent or any Purchaser may from time to time reasonably request.

              (i) Environment,  Health and Safety. Be and remain, and cause each
     Subsidiary  to be and remain,  in  compliance  with the  provisions  of all
     federal, state, and local environmental, health, and safety laws, codes and
     ordinances,  and all rules and regulations  issued  thereunder;  notify the
     Agent  immediately of any notice of a hazardous  discharge or environmental
     complaint received from any governmental  agency or any other party; notify
     the Agent  immediately  of any  hazardous  discharge  from or affecting its
     premises;  immediately  contain and remove the same, in compliance with all
     applicable  laws;  promptly pay any fine or penalty  assessed in connection
     therewith;  permit  the Agent to inspect  the  premises,  to conduct  tests
     thereon, and to inspect all books,  correspondence,  and records pertaining
     thereto; and at the Agent's request, and at the Company's expense,  provide
     a report of a  qualified  environmental  engineer,  satisfactory  in scope,
     form,  and  content to the Agent,  and such  other and  further  assurances
     reasonably satisfactory to the Agent that the condition has been corrected.

              (j) The Company's  Reporting and Listing Status. The Company shall
     be and remain a reporting company under the Exchange Act, and shall file in
     a timely  manner all SEC  Documents  required  by the  Exchange  Act or SEC
     regulations to be filed by a reporting company; and the Company shall cause
     its  Common  Stock to  continuously  be quoted on the OTC  Bulletin  Board,
     listed on a Nasdaq market,  or national  securities  exchange.  The Company
     shall apply for listing on the Nasdaq  Small Cap Market as soon as it meets
     the published requirements for listing thereon.

     6.2. Additional Covenants.  The Company hereby further covenants and agrees
with the Agent that:

              (a)  Warrants.   Contemporaneously  with  the  execution  of  this
     Agreement,  the Company  (i) shall  issue and  deliver to each  Purchaser a
     warrant in the form of Exhibit D hereto (each a  "Purchasers'  Warrant") to
     purchase the number of shares of Common Stock determined by dividing thirty
     percent  (30%) of the  principal  amount of the  Initial  Preferred  Shares
     issued to that  Purchaser  by 130% of the  Closing Bid Price on the Trading
     Day immediately  preceding the Closing Date (the "Warrant Exercise Price");
     and (ii)  shall  issue and  deliver  to the Agent a warrant  in the form of
     Exhibit E hereto (the  "Agent's  Warrant") to purchase 10% of the number of
     shares of Common  Stock into which the Initial  Preferred  Shares  would be
     convertible  if the  Conversion  Date were the Closing Date, at an exercise
     price of $4.50  per  share.  Contemporaneously  with  the  delivery  of any
     additional  Preferred  Shares under this  Agreement,  the Company shall (i)
     issue and deliver to each Purchaser making a purchase of Preferred  Shares,
     an  additional  Purchasers'  Warrant  to  purchase  the number of shares of
     Common Stock  determined by dividing  thirty percent (30%) of the principal
     amount of the  Preferred  Share  issued to that  Purchaser  by the  Warrant
     Exercise Price, and (ii) shall issue and deliver to the Agent an additional
     Agent's  Warrant to  purchase  10% of the number of shares of Common  Stock
     into which those  Preferred  Shares would be  convertible if the Conversion
     Date were the date on which those Preferred Shares were being issued.

              (b) Adequate  Available  Shares of Common Stock. The Company shall
     at all times keep an adequate  number of duly  authorized  shares of Common
     Stock  reserved and available for issuance upon the conversion of Preferred
     Shares and the  exercise of  Warrants.  If at any time the Company does not
     have  such an  adequate  number of shares  of  Common  Stock  reserved  and
     available for issuance,  then the Company shall immediately call and within
     30 days hold a special meeting of its  shareholders for the sole purpose of
     increasing the number of the Company's  authorized  shares of Common Stock.
     The Company  shall cause its  directors,  officers,  and  employees who are
     holders of Common Stock to vote their  shares in favor of such  increase in
     the Company's number of authorized shares of Common Stock.

              (c) Registration of Common Stock  Underlying  Preferred Shares and
     Warrants.  Contemporaneously  with the  execution  of this  Agreement,  the
     Company  shall  execute  and  deliver  to the Agent a  registration  rights
     agreement  in the form of  Exhibit  F  hereto.  (the  "Registration  Rights
     Agreement"). The Company shall register the shares of Common Stock issuance
     upon  conversion  of  Preferred  Stock  and  pursuant  to the  warrants  in
     accordance with the provisions of the Registration Rights Agreement.


<PAGE>

         6.3. The  Purchasers'  and Agent's  Covenants.  The Purchasers' and the
Agent  severally  agree  (i) not to  offer,  sell or  otherwise  dispose  of any
securities issued to them respectively, except in compliance with the provisions
of  Regulation  S, or  pursuant to  registration  under the  Securities  Act, or
pursuant  to an  available  exemption  from such  registration;  and (ii) not to
engage  in  hedging  transactions  with  regard  to such  securities  unless  in
compliance with the Securities Act.


ss.7.  Negative Covenants.

         7.1. So long as any of the  Preferred  Shares  remains  unpaid,  or the
Agent  shall be  obligated  to make  Purchase  of  Preferred  Shares  under this
Agreement, the Company will not:

              (a) Liens.  Create,  incur,  assume, or suffer to exist, or permit
     any Subsidiary to create,  incur, assume, or suffer to exist, any Lien upon
     or with respect to any of its properties,  now owned or hereafter acquired,
     except:

                  (1)  Liens in favor of the Purchasers;

                  (2) Liens for taxes or assessments or other government charges
         or levies if not yet due and  payable or, if due and  payable,  if they
         are being  contested in good faith by appropriate  proceedings  and for
         which appropriate reserves are maintained;

                  (3) Liens imposed by law, such as  mechanics',  materialmen's,
         landlords',  warehousemen's,  and  carriers'  Liens,  and other similar
         Liens, securing obligations incurred in the ordinary course of business
         which  are not past due for more  than  thirty  (30)  days or which are
         being contested in good faith by appropriate  proceedings and for which
         appropriate reserves have been established;

                  (4) Liens under workers' compensation, unemployment insurance,
         Social Security, or similar legislation;

                  (5) Liens,  deposits,  or pledges to secure the performance of
         bids,  tenders,  contracts  (other  than  contracts  for the payment of
         money), leases (permitted under the terms of this Agreement), public or
         statutory obligations, surety, stay, appeal, indemnity, performance, or
         other  similar  bonds,  or other  similar  obligations  arising  in the
         ordinary course of business;

                  (6)  Liens  disclosed  in the  SEC  Documents  or on  Schedule
5.1(o);

                  (7) Judgment and other  similar  Liens  arising in  connection
         with court proceedings,  provided the execution or other enforcement of
         such Liens is  effectively  stayed and the claims  secured  thereby are
         being actively contested in good faith and by appropriate proceedings;

                  (8) Easements, rights-of-way,  restrictions, and other similar
         encumbrances which, in the aggregate,  do not materially interfere with
         the occupation,  use, and enjoyment by the Company or any Subsidiary of
         the property or assets  encumbered  thereby in the normal course of its
         business  or  materially  impair  the  value  of the  property  subject
         thereto; and

                  (9) Liens securing  obligations of a Subsidiary to the Company
or another Subsidiary

              (b) Debt. Create, incur, assume, or suffer to exist, or permit any
     Subsidiary to create, incur, assume, or suffer to exist, any Debt, except:

                  (1) Debt of the Company  under this  Agreement or with respect
to the Preferred Shares;

                  (2) Debt  described in the SEC  Documents or Schedule  5.1(o),
         but no voluntary prepayments,  renewals,  extensions,  refinancings, or
         increases in the amounts thereof;

                  (3) Debt of the Company  subordinated on terms satisfactory to
         the Agent and consistent with to the Company's  obligations  under this
         Agreement and the Preferred Shares;

<PAGE>

                  (4) Debt of the Company to any Subsidiary or of any Subsidiary
         to the Company or another Subsidiary; and

                  (5) Accounts  payable to trade creditors for goods or services
         which are not aged more than sixty (60) days from the billing  date and
         current operating liabilities (other than for borrowed money) which are
         not more  than ten (10) days past  due,  in each case  incurred  in the
         ordinary course of business,  as presently  conducted,  and paid within
         the specified time,  unless  contested in good faith and by appropriate
         proceedings.

              (c)  Mergers,   Etc.  Wind  up,   liquidate  or  dissolve  itself,
     reorganize,  merge or consolidate  with or into, or convey,  sell,  assign,
     transfer,  lease, or otherwise dispose of (whether in one transaction or in
     a series of transactions)  all or substantially  all of its assets (whether
     now  owned  or  hereafter  acquired)  to  any  Person,  or  acquire  all or
     substantially  all of the assets or the  business  of any  Person,  and the
     Company  shall not  permit any  Subsidiary  to do so,  except  that (1) any
     Subsidiary  may merge into or transfer  assets to the Company,  and (2) any
     Subsidiary  may merge into or  consolidate  with or transfer  assets to any
     other Subsidiary.

              (d) Leases.  Create,  incur, assume, or suffer to exist, or permit
     any Subsidiary to create,  incur,  assume, or suffer to exist, any material
     obligation  as  lessee  for the  rental  or hire  of any  real or  personal
     property,  except:  (i) Capital Leases  created  pursuant to existing lease
     financing  agreements disclosed in the SEC Documents or on Schedule 5.1(o);
     (ii) leases  existing on the date of this  Agreement and any  extensions or
     renewals  thereof;  (iii) leases  between the Company and any Subsidiary or
     between any Subsidiaries;  and (iv) leases necessary to carry on the normal
     business operations of the Company.

              (e) Sale and Leaseback.  Sell, transfer,  or otherwise dispose of,
     or permit any Subsidiary to sell,  transfer,  or otherwise  dispose of, any
     real  or  personal  property  to any  Person  and  thereafter  directly  or
     indirectly lease back the same or similar property.

              (f) Dividends.  Except with respect to the Preferred Stock declare
     or pay any dividends; or purchase, redeem, retire, or otherwise acquire for
     value any of its capital  stock now or hereafter  outstanding;  or make any
     distribution of assets to its stockholders as such whether in cash, assets,
     or obligations  of the Company;  or allocate or otherwise set apart any sum
     for the payment of any dividend or  distribution  on, or for the  purchase,
     redemption,  or retirement of any shares of its capital stock;  or make any
     other  distribution  by reduction of capital or otherwise in respect of any
     shares of its capital stock; or permit any of its Subsidiaries to do any of
     the  foregoing or to purchase or  otherwise  acquire for value any stock of
     the Company or another Subsidiary.

              (g) Sale of Assets.  Sell, lease, assign,  transfer,  or otherwise
     dispose of, or permit any Subsidiary to sell, lease, assign,  transfer,  or
     otherwise  dispose of, any of its now owned or  hereafter  acquired  assets
     (including,  without  limitation,  shares  of  stock  and  indebtedness  of
     Subsidiaries,  receivables, and leasehold interests), except: (1) inventory
     disposed  of in the  ordinary  course  of  business;  (2) the sale or other
     disposition  of  assets no longer  used or  useful  in the  conduct  of its
     business; and (3) that any Subsidiary may sell, lease, assign, or otherwise
     transfer its assets to the Company.

              (h)  Investments.  (i) Make, or permit any Subsidiary to make, any
     purchase of Preferred Shares or advance to any Person,  or (ii) purchase or
     otherwise  acquire,  or permit any  Subsidiary  to  purchase  or  otherwise
     acquire,  any capital stock, assets,  obligations,  or other securities of,
     make any capital  contribution  to, or  otherwise  invest in or acquire any
     interest in any Person,  or participate as a partner or joint venturer with
     any other Person,  except: (1) direct obligations of the U.S. or any agency
     thereof with  maturities of one year or less from the date of  acquisition;
     (2) commercial  paper of a domestic issuer rated at least "A_1" by Standard
     & Poor's  Corporation  or "P_1" by Moody's  Investors  Service,  Inc.;  (3)
     certificates  of deposit with  maturities of one year or less from the date
     of acquisition  issued by any commercial bank having capital and surplus in
     excess of One Hundred Million U.S. Dollars (US$100,000,000); and (4) stock,
     obligations,  or securities received in settlement of debts (created in the
     ordinary course of business) owing to the Company or any Subsidiary.


<PAGE>

              (i) Guaranties, Etc. Assume, guaranty, endorse, or otherwise be or
     become  directly  or  contingently  responsible  or  liable,  or permit any
     Subsidiary to assume, guaranty, endorse, or otherwise be or become directly
     or contingently  responsible or liable  (including,  but not limited to, an
     agreement to purchase any obligation, stock, assets, goods, or services, or
     to supply or advance any funds, assets, goods, or services, or an agreement
     to maintain or cause such Person to maintain a minimum  working  capital or
     net worth,  or  otherwise  to assure the  creditors  of any Person  against
     loss), for obligations of any Person,  except  guaranties by endorsement of
     negotiable instruments for deposit or collection or similar transactions in
     the ordinary course of business.

              (j)  Transactions  With  Affiliates.  Enter into any  transaction,
     including,  without limitation, the purchase, sale, or exchange of property
     or the  rendering  of any  service,  with  any  Affiliate,  or  permit  any
     Subsidiary to enter into any transaction,  including,  without  limitation,
     the  purchase,  sale,  or  exchange of  property  or the  rendering  of any
     service, with any Affiliate,  except in the ordinary course of and pursuant
     to the  reasonable  requirements  of the  Company's  or  such  Subsidiary's
     business  and upon  fair and  reasonable  terms  no less  favorable  to the
     Company or such  Subsidiary  than would be obtained in a  comparable  arm's
     length transaction with a Person who is not an Affiliate.

              (k) Capital Expenditures. Purchase or otherwise acquire, or permit
     any  Subsidiary  to purchase or otherwise  acquire,  any  material  capital
     assets, without the Agent's prior written consent.

              (l) Issue  Securities.  Issue,  or permit any Subsidiary to issue,
     any common stock or other equity  securities,  or any other stock,  option,
     warrant,  right or other instrument that is convertible into or exercisable
     or exchangeable for common stock or other equity securities, except for (i)
     securities issued pursuant to, or as contemplated by, this Agreement,  (ii)
     securities  of a  Subsidiary  that are  issued  to the  Company;  and (iii)
     securities sold and options granted to directors, officers and employees of
     the  Company  pursuant  to bona  fide  employee  benefit  plans;  provided,
     however,  that the Company may issue such securities with the prior written
     consent  of the  Purchasers,  which  consent  the  Purchasers  agree not to
     unreasonably withhold.


ss.9.  Events of Default

         9.1.  Events of Default. If any of the following events shall occur:

              (a) The  Company  should fail to pay any sums due the Agent or any
     Purchaser  under this  Agreement  or any other  Transaction  Document by or
     within 10 days after the date that it is due and payable;

              (b) Any  representation  or  warranty  made or deemed  made by the
     Company in this Agreement or any other  Transaction  Document,  or which is
     contained  in any  certificate,  document,  opinion,  or financial or other
     statement furnished at any time under or in connection with any Transaction
     Document, shall prove to have been incorrect,  incomplete, or misleading in
     any material respect on or as of the date made or deemed made;

              (c) The  Company  shall  fail to  perform  or  observe  any  term,
     covenant, or agreement contained in this Agreement or any other Transaction
     Document to be performed or observed by it ;

              (d)  The  Company  or any  Subsidiary  shall  (i)  fail to pay any
     indebtedness for borrowed money) of the Company or such Subsidiary,  as the
     case may be, or any  interest  or premium  thereon,  when due  (whether  by
     scheduled  maturity,   required   prepayment,   acceleration,   demand,  or
     otherwise), or (ii) fail to perform or observe any material term, covenant,
     or condition on its part to be performed or observed under any agreement or
     instrument relating to any such indebtedness, when required to be performed
     or  observed,  if the  effect of such  failure  to perform or observe is to
     accelerate, or to permit the acceleration of, after the giving of notice or
     passage of time, or both, the maturity of such indebtedness, whether or not
     such  failure to  perform or observe  shall be waived by the holder of such
     indebtedness;  or any such  indebtedness  shall be  declared  to be due and
     payable,  or  required to be prepaid  (other than by a regularly  scheduled
     required prepayment), prior to the stated maturity thereof;


<PAGE>

              (e) The Company or any Subsidiary (i) shall  generally not pay, or
     shall be unable to pay, or shall admit in writing its  inability 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  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  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  commenced  against it in which an order for relief is
     entered  or an  adjudication  or  appointment  is made,  and which  remains
     undismissed for a period of thirty (30) days or more; or (v) shall take any
     corporate action indicating its consent to, approval of, or acquiescence in
     any such  petition,  application,  proceeding,  or order for  relief or the
     appointment of a custodian, receiver, or trustee for all or any substantial
     part of its  properties;  or (vi)  shall  suffer  any  such  custodianship,
     receivership,  or  trusteeship  to  continue  undischarged  for a period of
     thirty (30) days or more;

              (f) One or more judgments,  decrees,  or orders for the payment of
     money shall be rendered  against  the  Company or any  Subsidiary  and such
     judgments,  decrees, or orders shall continue unsatisfied and in effect for
     a period of thirty (30) consecutive days without being vacated, discharged,
     satisfied, appealed or stayed;

              (g) The Security  Agreement  shall at any time after its execution
     and delivery  and for any reason cease (i) to create a valid and  perfected
     security  interest in and to the  property  purported to be subject to such
     Security  Agreement,  and in the priority  disclosed on Schedule 5.1(o); or
     (ii) to be in full force and effect or shall be declared  null and void, or
     the validity or  enforceability  thereof shall be contested by the Company,
     or the Company shall deny it has any further  liability or obligation under
     the  Security  Agreement,  or the Company  shall fail to perform any of its
     material obligations under the Security Agreement;

              (h) Any of the following  events shall occur or exist with respect
     to  the  Company  or  any  Commonly  Controlled  Entity  under  ERISA:  any
     Reportable  Event  shall  occur;  complete or partial  withdrawal  from any
     Multiemployer  Plan shall take  place;  any  Prohibited  Transaction  shall
     occur;  a notice of intent to  terminate  a Plan shall be filed,  or a Plan
     shall be terminated;  or circumstances shall exist which constitute grounds
     entitling  the PBGC to institute  proceedings  to terminate a Plan,  or the
     PBGC shall institute such  proceedings;  and in each case above, such event
     or condition,  together with all other events or conditions,  if any, could
     subject the Company to any tax,  penalty,  or other  liability which in the
     aggregate may exceed Ten Thousand Dollars ($10,000); or

              (i)  If  the  Agent  receives  its  first  notice  of a  hazardous
     discharge  or  an  environmental  complaint  regarding  the  Company  or  a
     Subsidiary  from a source  other than the  Company,  and the Agent does not
     receive notice (which may be given in oral form,  provided same is followed
     with all due dispatch by written  notice given by  Certified  Mail,  Return
     Receipt Requested) of such hazardous  discharge or environmental  complaint
     from the Company within  twenty-four (24) hours of the time the Agent first
     receives  said  notice  from a source  other  than the  Company;  or if any
     federal,  state,  or local agency asserts or creates a Lien upon any or all
     of the assets, equipment,  property, leaseholds, or other facilities of the
     Company  or a  Subsidiary  by  reason  of  the  occurrence  of a  hazardous
     discharge or an environmental complaint; or if any federal, state, or local
     agency asserts a claim against the Company, a Subsidiary, or its respective
     assets, equipment, property, leaseholds, or other facilities for damages or
     cleanup  costs  relating  to a  hazardous  discharge  or  an  environmental
     complaint;  provided,  however,  that such  claim  shall not  constitute  a
     default if, within five (5) Trading Days of the  occurrence  giving rise to
     the claim, (i) the Company can prove to the Agent's  satisfaction  that the
     Company has  commenced  and is diligently  pursuing  either:  (a) a cure or
     correction  of the event  which  constitutes  the basis for the claim,  and
     continues diligently to pursue such cure or correction to completion or (b)
     proceedings for an injunction,  a restraining  order, or other  appropriate
     emergent  relief  preventing  such agency or agencies from  asserting  such
     claim,  which  relief  is  granted  within  ten  (10)  Trading  Days of the
     occurrence giving rise to the claim and the injunction,  order, or emergent
     relief is not thereafter resolved or reversed on appeal; and (ii) in either
     of the foregoing  events,  the Company has posted a bond, letter of credit,
     or other security satisfactory in form,  substance,  and amount to both the
     Agent and the agency or entity asserting the claim to secure the proper and
     complete cure or correction  of the event which  constitutes  the basis for
     the claim;

              (j) A change of Control of the Company or any  Subsidiary  occurs,
     including   without   limitation   any  Person  shall  acquire   securities
     representing 25% or more of the voting securities of the Company;


<PAGE>


then,  and in any such  event,  the Agent  may,  by notice to the  Company,  (i)
declare it obligations  and those of the  Purchasers  under this Agreement to be
terminated,  whereupon the same shall forthwith terminate,  and (ii) declare any
and all amounts payable under this Agreement and any Transaction  Document to be
forthwith  due and  payable,  whereupon  all such  amounts  shall  become and be
forthwith due and payable,  without  presentment,  demand,  protest,  or further
notice of any kind, all of which are hereby expressly waived by the Company.

         9.2.  Agent's  Right to  Setoff.  Upon the  occurrence  and  during the
continuance of any Event of Default,  the Agent is hereby authorized at any time
and from time to time,  without  notice to the Company  (any such  notice  being
expressly  waived  by the  Company),  to set off and  apply  any and all  funds,
deposits and accounts at any time held and other  indebtedness at any time owing
by the Agent to or for the credit or the account of the Company  against any and
all of the  obligations  of the Company  now or  hereafter  existing  under this
Agreement or any other Transaction Document,  irrespective of whether or not the
Agent shall have made any demand under this Agreement or such other  Transaction
Document  and  although  such  obligations  may be  unmatured.  The Agent agrees
promptly to notify the Company 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 the Agent under this  Section 9.2 are in
addition to other  rights and remedies  (including,  without  limitation,  other
rights of setoff) that the Agent may have.

ss.10.  Miscellaneous.

         10.1.  Amendments,  Etc. No amendment,  modification,  termination,  or
waiver of any  provision of any  Transaction  Document to which the Company is a
party, nor consent to any departure by the Company from any Transaction Document
to which it is a party, shall in any event be effective unless the same shall be
in writing  and signed by the Agent,  and then such  waiver or consent  shall be
effective only in the specific  instance and for the specific  purpose for which
given.

         10.2.  Notices,  Etc. All notices given under this  Agreement and under
the other Transaction Documents shall be in writing, addressed to the parties as
set forth below, or to such other address as a party may specify by notice given
in accordance with this paragraph, and shall be effective on the earliest of (i)
the date received,  or (ii) if given by facsimile  transmittal on the date given
if transmitted before 5:00 p.m. the recipient's time,  otherwise it is effective
the next day,  or (iii) on the  second  Trading  Day after  delivery  to a major
international  air delivery or air courier  service (such as Federal  Express or
Network Couriers):

       If to the Agent:

     Thomson Kernaghan & Co. Ltd.
     365 Bay Street
     Toronto, Ontario M5H 2V2
     Attention: Mr. Gregg Badger, Sr. V.P.
     Facsimile No. (416) 860-6352

      If to the Company:

     eAutoclaims.com, Inc.
     2708 Alternate 19 North
     Suite 507
     Palm Harbor, Florida 34683
     Attention: Eric W. J. Seidel, President
     Facsimile No. (727) 781-8425

      If to the Purchasers

     c/o Thomson Kernaghan & Co. Ltd.
         as Agent
     365 Bay Street
     Toronto, Ontario M5H 2V2
     Attention: Mr. Gregg Badger, Sr. V.P.
         Facsimile No. (416) 860-6352

     With a copy (that does not constitute
               notice) to:
     Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A.
     911 Chestnut Street, P.O. Box 1368
     Clearwater, Florida 33757-1368
     Attention: Michael T. Cronin

     In either case, with a copy (that does not
         constitute notice) to:
     John M. Mann
     Attorney at Law
     1330 Post Oak Boulevard, Suite 2800
     Houston, Texas 77056-3060
     Facsimile No. (713) 622-7185


         10.3.  No  Waiver.  No failure or delay on the part of the Agent or any
Purchaser in exercising any right, power, or remedy hereunder shall operate as a
waiver  thereof;  nor shall any single or partial  exercise  of any such  right,
power, or remedy preclude any other or further  exercise thereof or the exercise
of any other right, power, or remedy hereunder. The rights and remedies provided
herein  are  cumulative,  and are not  exclusive  of any other  rights,  powers,
privileges,  or  remedies,  now or  hereafter  existing,  at law or in equity or
otherwise.

<PAGE>

         10.4.  Successors and Assigns. This Agreement shall be binding upon and
inure to the  benefit  of the  Company,  the  Agent,  the  Purchasers  and their
respective  successors  and  assigns,  except that the Company may not assign or
transfer any of its rights under any  Transaction  Document to which the Company
is a party without the prior written consent of the Agent and the Purchasers.

         10.5 Costs,  Expenses,  and Taxes.  The Company agrees to pay on demand
all costs and expenses  incurred by the Agent and the  Purchasers  in connection
with the preparation,  execution,  delivery,  filing,  and administration of the
Transaction Documents, and of any amendment,  modification, or supplement to the
Transaction Documents, including, without limitation, the fees and out-of-pocket
expenses of counsel for the Agent and the Purchasers incurred in connection with
advising the Agent or the  Purchasers as to theirs  rights and  responsibilities
hereunder. The Company also agrees to pay all such costs and expenses, including
court costs,  incurred in connection  with  construction  or  enforcement of the
Transaction Documents,  or any amendment,  modification,  or supplement thereto,
whether by  negotiation,  legal  proceedings,  or  otherwise.  In addition,  the
Company  shall  pay any and all  stamp  and  other  taxes  and fees  payable  or
determined to be payable in connection with the execution, delivery, filing, and
recording  of any of the  Transaction  Documents  and the other  documents to be
delivered  under  any such  Transaction  Documents,  and agree to hold the Agent
harmless from and against any and all  liabilities  with respect to or resulting
from any delay in paying or omission to pay such taxes and fees.
This provision shall survive termination of this Agreement.

         10.6. Integration. This Agreement and the Transaction 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.

         10.7. Indemnity. The Company shall defend, protect, indemnify, and hold
harmless the Agent and each  Purchaser,  and all of their  respective  officers,
directors,  employees, and agents (including, without limitation, those retained
in  connection   with  the   transactions   contemplated   by  this   Agreement)
(collectively,  the "Indemnitees") from and against any and all actions,  causes
of action,  suits, claims,  losses, costs,  penalties,  fees,  liabilities,  and
damages, and expenses in connection therewith  (irrespective of whether any such
Indemnitee  is a party to the  action  for which  indemnification  hereunder  is
sought),  and  including  reasonable  attorneys'  fees  and  disbursements  (the
"Indemnified  Liabilities"),  incurred  by the  Indemnitees  or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any  representation  or warranty made by the Company in this Agreement or any
other Transaction  Document, or any other certificate,  instrument,  or document
contemplated hereby or thereby; or (b) any breach of any covenant, agreement, or
obligation of the Company  contained in this Agreement or any other  Transaction
Document; or (c) the activities of the Company or any Subsidiary,  each of their
respective  predecessors  in interest or third  parties with whom they or any of
them have or had a contractual  relationship,  or arising directly or indirectly
from the  violation  of any  environmental  protection,  health,  or safety law,
whether such claims are asserted by any governmental agency or any other person;
or (d) any  cause  of  action,  suit,  or claim  brought  or made  against  such
Indemnitee  and  arising  out of or  resulting  from  the  execution,  delivery,
performance,  or enforcement of this Agreement or any Transaction  Document,  or
any other instrument, document, or agreement executed pursuant hereto or thereto
by any of the Indemnities,  any transaction  financed or to be financed in whole
or in part,  directly  or  indirectly,  with the  proceeds  of the  Purchase  of
Preferred  Shares or from the  exercise  of the  Warrants,  or the status of the
Agent or any  Purchaser  or holder  of any of the  Preferred  Shares,  Warrants,
Conversion Shares or Warrant Shares, or as a stockholder in the Company.  To the
extent that the foregoing  undertaking by the Company may be  unenforceable  for
any reason,  the Company shall make the maximum  contribution to the payment and
satisfaction of each of the Indemnified  Liabilities  that is permissible  under
applicable law. This indemnity shall survive termination of this Agreement.

         10.8.  Governing Law. This  Agreement and the Preferred  Share shall be
governed  by, and  construed  in  accordance  with,  the laws of the Province of
Ontario,  Canada;  provided,  however,  if any  provision  of this  Agreement is
unenforceable  under Ontario law, but is enforceable  under the laws of the U.S.
State of Florida, then Florida law shall govern the construction and enforcement
of that provision.

         10.9.  Severability  of  Provisions.  Any provision of any  Transaction
Document  which  is  prohibited  or  unenforceable  in any  jurisdiction  (after
applying the provisions of paragraph  10.8 of this Agreement to that  provision)
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or  unenforceability  without  invalidating  the  remaining  provisions  of such
Transaction  Document  or  affecting  the  validity  or  enforceability  of such
provision in any other jurisdiction.

<PAGE>

         10.10  Headings.  Section and  paragraph  headings  in the  Transaction
Documents  are included  for the  convenience  of  reference  only and shall not
constitute a part of the applicable Transaction Documents for any other purpose.

                10.11. Dispute Resolution.  The parties agree that the courts of
the  Province  of Ontario,  Canada,  shall have  jurisdiction  and venue for the
adjudication  of any civil  action  between or among any of them  arising out of
relating to this Agreement or any other Transaction Document. The parties hereby
irrevocably consent to such jurisdiction and venue, and hereby irrevocably waive
any claim of forum non conveniens or right to change venue.

         10.12.  Agent's  Fee. In addition to the Agent's  Warrant,  the Company
shall pay Thomson  Kernaghan & Co.  Limited a fee for its services as Agent (the
"Agent's  Fee")  in an  amount  equal  to ten  percent  (10%)  of the  aggregate
principal amount of all Purchase of Preferred Shares,  payable pro rata upon the
disbursement of each Purchase of Preferred Shares.



                            [Signature pages follow]


<PAGE>


      IN WITNESS WHEREOF,  the parties have caused this Agreement to be executed
by their  respective  officers  thereunto duly  authorized,  as of the Effective
Date.


The Agent:

Thomson Kernaghan & Co. Ltd.


By ________________________________
Name ______________________________
Title _______________________________
Date signed _________________________

The Company:

eAutoclaims.com, INC.


By ________________________________
Name ______________________________
Title _______________________________
Date signed _________________________


The Purchasers:

By ________________________________
Name ______________________________
Title _______________________________
Date signed _________________________

By ________________________________
Name ______________________________
Title _______________________________
Date signed _________________________

<PAGE>



                                   EXHIBIT A-1
                           CERTIFICATE OF DESIGNATIONS


<PAGE>



                                   EXHIBIT A-2
                  FORM OF SERIES A PREFERRED SHARE CERTIFICATE


<PAGE>



                                    EXHIBIT B
                               SECURITY AGREEMENT


<PAGE>



                                    EXHIBIT C
                          OPINION OF COMPANY'S COUNSEL
        [JOHNSON, BLAKELY, POPE, BOKOR, RUPPELL & BURNS, P.A. TO PROVIDE]


<PAGE>



                                    EXHIBIT D
                               PURCHASERS' WARRANT


<PAGE>



                                    EXHIBIT E
                                 AGENT'S WARRANT


<PAGE>



                                    EXHIBIT F
                          REGISTRATION RIGHTS AGREEMENT

                                 SCHEDULE 5.1(a)

     The  Company  is  currently  in the  process  of  registering  as a foreign
corporation authorized to transact business in the State of Florida.


<PAGE>



                                 SCHEDULE 5.1(d)

     The Company makes no representations or warranties regarding enforceability
of any of the  Transaction  Documents under the laws of any  jurisdiction  other
than the U.S.





<PAGE>



                                 SCHEDULE 5.1(e)

1.       The Company makes no representation or warranty regarding the financial
         statements  or SEC  Documents  prior to and through the Form 10-QSB for
         the period ended April 31, 2000.

2. The  Company is in the  process of  updating  the SEC filings and to date has
filed the following Form 8-K's:

              Filed:   July 5, 2000
                       July 25, 2000
                       August 8, 2000

3.       All SEC Documents and financial  statements are subject to updating and
         adjustment for the Form 10-KSB  relating to the fiscal year ending July
         31, 2000.


<PAGE>



                                 SCHEDULE 5.1(f)

1.   See Schedule 5.1(e)

     2.  The SEC  Documents  filed to date do not  contain  a full and  complete
         description of the operations of the Company to reflect the business of
         the  Company  after its merger  with  Transformation  Processing,  Inc.
         ("TI") or and  acquisition of Premier in conformity  with the rules and
         regulations  of the SEC. The Company  intends to file a Form 10-KSB for
         the fiscal  year ended July 31, 2000 in  accordance  with the rules and
         regulations of the SEC.


<PAGE>



                                 SCHEDULE 5.1(i)

                                      None


<PAGE>



                                 SCHEDULE 5.1(k)

1. Liabilities and debts as described in the SEC Documents.

2. See the attached loan and debt schedule.

3.            Loans and other credit  arrangements that may be entered into with
              commercial lending  institutions on an arms length basis and which
              may grant a security interest in the Company's assets.


<PAGE>



                                 SCHEDULE 5.1(m)

                  See the attached  correspondence from counsel regarding domain
name infringement allegations.

     The  Company has not  obtained a  registered  trademark  or  tradename  for
"eautoclaims.com".


<PAGE>



                                                           SCHEDULE 5.1(o)

     See SEC Documents

     See attached schedule