Document:

EXHIBIT 10.2

                          REGISTRATION RIGHTS AGREEMENT

     This Registration  Rights Agreement (this  "AGREEMENT") is made and entered
into as of May 31, 2002,  among Pacific  Magtron  International  Corp., a Nevada
corporation  (the  "COMPANY"),  and the purchasers  signatory  hereto (each such
purchaser  is a  "PURCHASER"  and all such  purchasers  are,  collectively,  the
"PURCHASERS").

     This Agreement is made pursuant to the Securities Purchase Agreement, dated
as of the date  hereof  among the  Company  and the  Purchasers  (the  "PURCHASE
AGREEMENT").

     The Company and the Purchasers hereby agree as follows:

     1. DEFINITIONS

     CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN THAT ARE DEFINED IN
THE PURCHASE  AGREEMENT SHALL HAVE THE MEANINGS GIVEN SUCH TERMS IN THE PURCHASE
AGREEMENT.  As used in this  Agreement,  the  following  terms  shall  have  the
following meanings:

          "BUSINESS DAY" means any day except Saturday, Sunday and any day which
     shall be a legal  holiday  or a day on which  banking  institutions  in the
     State of New York or the State of California  are authorized or required by
     law or other government actions to close.

          "EFFECTIVENESS  DATE" means, with respect to the initial  Registration
     Statement  required  to be filed  hereunder  as to shares  of Common  Stock
     underlying  the Shares of Preferred  Stock and Warrants,  the 90th calendar
     day  following  the Closing Date (120 calendar days in the event of a "full
     review"  by  the   Commission),   and,  with  respect  to  any   additional
     Registration Statements which may be required pursuant to Section 3(c), the
     60th calendar day  following the date on which the Company first knows,  or
     reasonably should have known, that such additional  Registration  Statement
     is required hereunder;  PROVIDED, HOWEVER, in the event that the Company is
     notified by the Commission  that one of the above  Registration  Statements
     will  not be  reviewed  or is no  longer  subject  to  further  review  and
     comments, the Effectiveness Date as to such Registration Statement shall be
     the  fifth  Trading  Day  following  the date on which  the  Company  is so
     notified if such date precedes the dates required above.

          "EFFECTIVENESS  PERIOD"  shall have the  meaning  set forth in Section
     2(a).

          "FILING  DATE"  means,  with  respect  to  the  initial   Registration
     Statement  required  to be filed  hereunder  as to shares  of Common  Stock
     underlying  the  Preferred  Stock  and  Warrants,  the  30th  calendar  day

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     following   the  Closing  Date,   and,  with  respect  to  any   additional
     Registration Statements which may be required pursuant to Section 3(c), the
     30th day following the date on which the Company first knows, or reasonably
     should have known that such additional  Registration  Statement is required
     hereunder.

          "HOLDER" or "HOLDERS" means the holder or holders, as the case may be,
     from time to time of Registrable Securities.

          "INDEMNIFIED PARTY" shall have the meaning set forth in Section 5(c).

          "INDEMNIFYING PARTY" shall have the meaning set forth in Section 5(c).

          "PROSPECTUS" means the prospectus included in a Registration Statement
     (including,  without limitation, a prospectus that includes any information
     previously  omitted  from  a  prospectus  filed  as  part  of an  effective
     registration  statement in reliance  upon Rule 430A  promulgated  under the
     Securities  Act), as amended or supplemented by any prospectus  supplement,
     with respect to the terms of the offering of any portion of the Registrable
     Securities  covered by a Registration  Statement,  and all other amendments
     and supplements to the Prospectus, including post-effective amendments, and
     all material  incorporated  by reference  or deemed to be  incorporated  by
     reference in such Prospectus.

          "REGISTRABLE  SECURITIES"  means all of the  shares  of  Common  Stock
     issuable upon conversion in full of the Preferred  Stock,  exercise in full
     of the  Warrants,  shares  issuable  in lieu of the  payment of  liquidated
     damages,  together  with any  securities  issued or issuable upon any stock
     split,  dividend or other  distribution  recapitalization  or similar event
     with respect to the foregoing.

          "REGISTRATION STATEMENT" means the registration statements required to
     be filed hereunder and any additional  registration statements contemplated
     by Section 3(c),  including (in each case) the  Prospectus,  amendments and
     supplements to such  registration  statement or Prospectus,  including pre-
     and  post-effective  amendments,  all  exhibits  thereto,  and all material
     incorporated by reference or deemed to be incorporated by reference in such
     registration statement.

          "RULE 415" means Rule 415  promulgated by the  Commission  pursuant to
     the  Securities  Act, as such Rule may be amended from time to time, or any
     similar  rule or  regulation  hereafter  adopted by the  Commission  having
     substantially the same effect as such Rule.

          "RULE 424" means Rule 424  promulgated by the  Commission  pursuant to
     the  Securities  Act, as such Rule may be amended from time to time, or any
     similar  rule or  regulation  hereafter  adopted by the  Commission  having
     substantially the same effect as such Rule.

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          "SPECIAL COUNSEL" means one special counsel to the Holders,  for which
     the Holders will be reimbursed by the Company pursuant to Section 4.

          "WARRANTS" shall mean the Common Stock purchase warrants issued to the
     Purchasers pursuant to the Purchase Agreement.

     2. SHELF REGISTRATION

          (a) On or prior to each Filing  Date,  the Company  shall  prepare and
     file with the  Commission  a "Shelf"  Registration  Statement  covering the
     resale of all Registrable  Securities applicable to such Filing Date for an
     offering  to be made on a  continuous  basis  pursuant  to  Rule  415.  The
     Registration  Statement  shall be on Form S-3 (except if the Company is not
     then  eligible to register for resale the  Registrable  Securities  on Form
     S-3, in which case such registration  shall be on another  appropriate form
     in accordance  herewith) and shall contain (except if otherwise directed by
     the Holders)  the "Plan of  Distribution"  attached  hereto as ANNEX A. The
     Company shall use its best efforts to cause the  Registration  Statement to
     be  declared  effective  under the  Securities  Act as promptly as possible
     after  the  filing  thereof,  but  in any  event  prior  to the  applicable
     Effectiveness   Date,   and  shall  use  its  best  efforts  to  keep  such
     Registration  Statement  continuously  effective  under the  Securities Act
     until  the date  which is two years  after the date that such  Registration
     Statement is declared effective by the Commission or such earlier date when
     all Registrable Securities covered by such Registration Statement have been
     sold or may be sold without volume restrictions pursuant to Rule 144(k), as
     determined  by the  counsel to the Company  pursuant  to a written  opinion
     letter to such effect,  addressed and acceptable to the Company's  transfer
     agent and the affected Holders (the "EFFECTIVENESS PERIOD").

          (b) The Registration  Statements to be filed hereunder shall include a
     number of shares of Common  Stock equal to no less than the sum of (i) 200%
     of the number of shares of Common Stock issuable upon conversion in full of
     the Preferred Stock subject to such  Registration  Statement,  assuming for
     such purposes that such Preferred Stock are outstanding for three years and
     the lowest  possible  Conversion  Price (as defined in the  Certificate  of
     Designations) in effect during the period between the First Closing and the
     filing date of the Registration  Statement,  and that all accrued dividends
     are added to the Stated Value of such Preferred  Stock, and (ii) the number
     of shares of Common Stock  issuable  upon  exercise in full of the Warrants
     subject to such Registration Statement.

          (c) If (a) a  Registration  Statement  is not filed on or prior to its
     respective  Filing Date (if the Company files such  Registration  Statement
     without  affording the Holder the  opportunity to review and comment on the
     same as required by Section 3(a) hereof, the Company shall not be deemed to
     have  satisfied this clause (a)), or (b) the Company fails to file with the
     Commission  a  request  for   acceleration  in  accordance  with  Rule  461
     promulgated under the Securities Act, within five Business Days of the date

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     that the Company is notified  (orally or in writing,  whichever is earlier)
     by the Commission that a Registration  Statement will not be "reviewed," or
     not  subject to  further  review,  or (c) a  Registration  Statement  filed
     hereunder is not declared  effective by the  Commission  on or prior to its
     Effectiveness Date, or (d) after a Registration Statement is filed with and
     declared effective by the Commission, such Registration Statement ceases to
     be effective as to all  Registrable  Securities  to which it is required to
     relate at any time  prior to the  expiration  of the  Effectiveness  Period
     without  being  succeeded  within ten Business Days by an amendment to such
     Registration Statement or by a subsequent Registration Statement filed with
     and declared effective by the Commission,  or (e) the Common Stock shall be
     delisted or suspended from trading on the Nasdaq  Smallcap Market or on the
     Nasdaq National  Market,  the New York Stock Exchange or the American Stock
     Exchange  (each,  a  "SUBSEQUENT  MARKET") for more than five Business Days
     (which need not be  consecutive  Business  Days),  or (f) an amendment to a
     Registration  Statement  is not filed by the  Company  with the  Commission
     within ten Business  Days of the  Commission's  notifying  the Company that
     such amendment is required in order for such  Registration  Statement to be
     declared  effective  (any such  failure or breach  being  referred to as an
     "EVENT,"  and for  purposes of clauses (a) and (c),  the date on which such
     Event  occurs,  or for  purposes  of clause (b) the date on which such five
     Business Day period is exceeded, or for purposes of clauses (d) and (f) the
     date which such ten Business  Day-period  is  exceeded,  or for purposes of
     clause (e) the date on which such five  Business  Day-period  is  exceeded,
     being referred to as "EVENT DATE"), then, on each such Event Date and every
     monthly  anniversary  thereof  until the  applicable  Event is  cured,  the
     Company shall pay to each Holder an amount in cash,  as liquidated  damages
     and not as a penalty,  equal to 1.0% of (i) the purchase price paid by such
     Holder pursuant to the Purchase Agreement, and (ii) if the Warrants are "in
     the money", the value of any outstanding Warrants (valued at the difference
     between the  average  Closing  Price  during the  applicable  month and the
     Exercise  Price  multiplied  by the  number of  shares of Common  Stock the
     Warrants are  exercisable  into) for the first month  following  such Event
     Date and 2.0%,  as to clause (i) above,  and 1.0%,  as to  subsection  (ii)
     above,  per month  thereafter.  If the Company fails to pay any  liquidated
     damages  pursuant to this  Section in full within seven days after the date
     payable,  the Company will pay interest  thereon at a rate of 12% per annum
     (or such lesser  maximum  amount that is permitted to be paid by applicable
     law) to the Holder,  accruing daily from the date such  liquidated  damages
     are due until such  amounts,  plus all such interest  thereon,  are paid in
     full. At the option of the Company, shares of Common Stock may be issued to
     the Holder in lieu of a cash payment for such liquidated damages based upon
     the then  prevailing  Conversion  Price in effect provided that such shares
     have been registered for resale by such Holder and the Company provides the
     Holder with at least five days'  irrevocable  notice prior to the date such
     payment is due. The liquidated  damages  pursuant to the terms hereof shall
     apply on a pro-rata  basis for any  portion of a month prior to the cure of
     an Event.

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     3. REGISTRATION PROCEDURES

     In connection with the Company's registration  obligations  hereunder,  the
Company shall:

          (a) Not less  than  five  Business  Days  prior to the  filing of each
     Registration  Statement  or any  related  Prospectus  or any  amendment  or
     supplement  thereto  (including any document that would be  incorporated or
     deemed to be  incorporated  therein by reference),  the Company shall,  (i)
     furnish  to the  Holders  and  their  Special  Counsel  copies  of all such
     documents   proposed  to  be  filed,  which  documents  (other  than  those
     incorporated  or deemed to be incorporated by reference) will be subject to
     the review of such Holders and their  Special  Counsel,  and (ii) cause its
     officers  and  directors,   counsel  and   independent   certified   public
     accountants  to respond to such  inquiries  as shall be  necessary,  in the
     reasonable   opinion  of   respective   counsel  to  conduct  a  reasonable
     investigation  within the meaning of the Securities  Act. The Company shall
     not  file  the  Registration  Statement  or  any  such  Prospectus  or  any
     amendments or supplements thereto to which the Holders of a majority of the
     Registrable  Securities and their Special Counsel shall reasonably  object,
     provided,  the  Company  is  notified  of such  objection  no later  than 5
     Business  Days  after the  Holders  have been so  furnished  copies of such
     documents and provided, further, that such objections relate to the selling
     shareholder information, the plan of distribution, any information relating
     to the Purchasers,  either directly or indirectly,  or the compliance under
     the securities Act of such Registration Statement or prospectus as to form.

          (b)  (i)  Prepare  and  file  with  the  Commission  such  amendments,
     including  post-effective  amendments,  to a Registration Statement and the
     Prospectus  used in  connection  therewith  as may be  necessary  to keep a
     Registration   Statement   continuously  effective  as  to  the  applicable
     Registrable  Securities for the  Effectiveness  Period and prepare and file
     with the Commission  such  additional  Registration  Statements in order to
     register  for  resale  under  the  Securities  Act  all of the  Registrable
     Securities; (ii) cause the related Prospectus to be amended or supplemented
     by any required Prospectus supplement, and as so supplemented or amended to
     be filed  pursuant to Rule 424;  (iii)  respond as  promptly as  reasonably
     possible,  and in any event within ten days, to any comments  received from
     the Commission  with respect to a  Registration  Statement or any amendment
     thereto and as promptly as reasonably possible provide the Holders true and
     complete copies of all correspondence  from and to the Commission  relating
     to a Registration Statement;  and (iv) comply in all material respects with
     the  provisions of the  Securities Act and the Exchange Act with respect to
     the  disposition of all  Registrable  Securities  covered by a Registration
     Statement  during the  applicable  period in  accordance  with the intended
     methods  of  disposition   by  the  Holders   thereof  set  forth  in  such
     Registration   Statement  as  so  amended  or  in  such  Prospectus  as  so
     supplemented.

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          (c)  File  additional   Registration   Statements  if  the  number  of
     Registrable  Securities  at any time exceeds 75% of the number of shares of
     Common Stock then registered for the account of the Holders in all existing
     Registration Statements hereunder.

          (d) Notify the Holders of Registrable  Securities to be sold and their
     Special  Counsel as promptly as  reasonably  possible  (and, in the case of
     (i)(A)  below,  not less than five  Business Days prior to such filing) and
     (if  requested by any such Person)  confirm such notice in writing no later
     than one Business  Day  following  the day (i)(A) when a Prospectus  or any
     Prospectus  supplement  or  post-effective   amendment  to  a  Registration
     Statement  is proposed to be filed;  (B) when the  Commission  notifies the
     Company whether there will be a "review" of such Registration Statement and
     whenever the Commission comments in writing on such Registration  Statement
     (the Company shall provide true and complete copies thereof and all written
     responses  thereto  to each of the  Holders);  and (C)  with  respect  to a
     Registration Statement or any post-effective  amendment,  when the same has
     become  effective;  (ii) of any  request  by the  Commission  or any  other
     Federal or state governmental  authority for amendments or supplements to a
     Registration Statement or Prospectus or for additional  information;  (iii)
     of the  issuance  by  the  Commission  of any  stop  order  suspending  the
     effectiveness  of a  Registration  Statement  covering  any  or  all of the
     Registrable  Securities  or the  initiation  of any  Proceedings  for  that
     purpose;  (iv) if at any time any of the  representations and warranties of
     the Company  contained in any  agreement  contemplated  hereby ceases to be
     true and  correct  in all  material  respects;  (v) of the  receipt  by the
     Company  of  any  notification  with  respect  to  the  suspension  of  the
     qualification  or exemption from  qualification  of any of the  Registrable
     Securities for sale in any  jurisdiction,  or the initiation or threatening
     of any Proceeding for such purpose; and (vi) of the occurrence of any event
     or  passage  of time that  makes the  financial  statements  included  in a
     Registration  Statement  ineligible for inclusion  therein or any statement
     made in a Registration Statement or Prospectus or any document incorporated
     or deemed to be  incorporated  therein by reference  untrue in any material
     respect  or  that  requires  any  revisions  to a  Registration  Statement,
     Prospectus  or  other  documents  so that,  in the  case of a  Registration
     Statement  or the  Prospectus,  as the case may be, it will not contain any
     untrue  statement  of a material  fact or omit to state any  material  fact
     required to be stated therein or necessary to make the statements  therein,
     in light of the circumstances under which they were made, not misleading.

          (e) Promptly deliver to each Holder and their Special Counsel, without
     charge,  as many copies of the Prospectus or  Prospectuses  (including each
     form of  prospectus)  and each  amendment  or  supplement  thereto  as such
     Persons may reasonably  request.  The Company hereby consents to the use of
     such  Prospectus  and each  amendment or supplement  thereto by each of the
     selling Holders in connection with the offering and sale of the Registrable
     Securities  covered by such  Prospectus  and any  amendment  or  supplement
     thereto.

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          (f) Prior to any public  offering of Registrable  Securities,  use its
     best efforts to register or qualify or cooperate  with the selling  Holders
     and  their  Special  Counsel  in  connection   with  the   registration  or
     qualification  (or exemption from such  registration or  qualification)  of
     such Registrable Securities for offer and sale under the securities or Blue
     Sky laws of such  jurisdictions  within  the  United  States as any  Holder
     requests in writing,  to keep each such  registration or qualification  (or
     exemption  therefrom)  effective during the Effectiveness  Period and to do
     any and all other  acts or things  necessary  or  advisable  to enable  the
     disposition in such jurisdictions of the Registrable  Securities covered by
     a Registration Statement;  provided, that the Company shall not be required
     to qualify  generally  to do business in any  jurisdiction  where it is not
     then so  qualified  or subject the Company to any  material tax in any such
     jurisdiction where it is not then so subject.

          (g) Cooperate  with the Holders to facilitate  the timely  preparation
     and delivery of  certificates  representing  Registrable  Securities  to be
     delivered  to a  transferee  pursuant to a  Registration  Statement,  which
     certificates  shall  be  free,  to the  extent  permitted  by the  Purchase
     Agreement,  of all  restrictive  legends,  and to enable  such  Registrable
     Securities to be in such  denominations and registered in such names as any
     such Holders may request.

          (h) Upon the occurrence of any event  contemplated  this Section 3, as
     promptly  as  reasonably  possible,  prepare  a  supplement  or  amendment,
     including a  post-effective  amendment,  to a  Registration  Statement or a
     supplement to the related Prospectus or any document incorporated or deemed
     to be  incorporated  therein  by  reference,  and file any  other  required
     document so that, as thereafter delivered, neither a Registration Statement
     nor such Prospectus will contain an untrue  statement of a material fact or
     omit to state a material fact required to be stated therein or necessary to
     make the statements therein, in light of the circumstances under which they
     were made, not misleading.

          (i)  Comply  with  all  applicable   rules  and   regulations  of  the
     Commission.

          (j) Use its best  efforts  to avoid the  issuance  of,  or, if issued,
     obtain the withdrawal of (i) any order  suspending the  effectiveness  of a
     Registration  Statement,  or (ii) any suspension of the  qualification  (or
     exemption from qualification) of any of the Registrable Securities for sale
     in any jurisdiction, at the earliest practicable moment.

          (k) Furnish to each Holder and their Special Counsel,  without charge,
     at  least  one  conformed  copy of each  Registration  Statement  and  each
     amendment  thereto,  including  financial  statements  and  schedules,  all
     documents  incorporated or deemed to be incorporated  therein by reference,
     and all exhibits to the extent  requested by such Person  (including  those
     previously  furnished or  incorporated  by  reference)  promptly  after the
     filing of such documents with the Commission.

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          (l) Notwithstanding anything herein to the contrary, if at any time or
     from time to time during the Effectiveness Period, the Company notifies the
     Holders in writing  of the  existence  of a  Potential  Material  Event (as
     defined below), the Holders shall not offer or sell any Securities from the
     time of the giving of notice  with  respect to a Potential  Material  Event
     until  the  Holders  receive  written  notice  from the  Company  that such
     Potential  Material  Event  either has been  disclosed  to the public or no
     longer constitutes a Potential Material Event; PROVIDED,  HOWEVER, that the
     Company may not so suspend the right to such holders of Securities for more
     than twenty (20)  calendar  days in the  aggregate  during any twelve month
     period,  and if such period is  exceeded,  such  period  shall be deemed an
     "Event"  and the  Company  shall be liable  to the  Holder  for  liquidated
     damages  pursuant  to  Section  2(c);  PROVIDED,  FURTHER,  the  failure to
     maintain a  Registration  Statement  for not more than sixty (60)  calendar
     days in the  aggregate  during  any  twelve  month  period as a result of a
     Potential  Material  Event shall not be deemed a breach of this  Agreement,
     provided the Company timely pays the Holder such  liquidated  damages.  THE
     COMPANY MUST GIVE THE HOLDERS AT LEAST 30 DAYS' PRIOR  WRITTEN  NOTICE THAT
     SUCH A BLACKOUT  PERIOD  (WITHOUT  INDICATING  THE NATURE OF SUCH  BLACKOUT
     PERIOD) WILL OCCUR AND SUCH NOTICE MUST BE  ACKNOWLEDGED  IN WRITING BY THE
     HOLDERS.  FAILURE TO PROVIDE THE HOLDERS WITH SUCH NOTICE SHALL  CONSTITUTE
     AN  EVENT  DURING  THE  ENTIRE  APPLICABLE  PERIOD  THAT  THE  REGISTRATION
     STATEMENT  IS  SUSPENDED.  "Potential  Material  Event"  means  any  of the
     following:

               (i) The Board of Directors of the Company determines, in its good
          faith  judgment,  that the use of any  prospectus  would  require  the
          disclosure of important  information which the Company has a bona fide
          business  purpose for preserving as  confidential or the disclosure of
          which would impede the  Company's  ability to consummate a significant
          transaction,  in which  event such  period may be  extended  for up to
          sixty (60) additional days in any twelve (12) month period;

               (ii)  The  Company  consummates  any  business   combination  for
          purposes  of Rule  3-05 or  Article  11 of  Regulation  S-X  under the
          Securities Act, in which event such restricted  period may be extended
          until the date on which the Company has filed such reports or obtained
          the  financial  information  required  by Rule 3-05 or  Article  11 of
          Regulation S-X to be included in the Registration Statement, but in no
          event more sixty (60) additional days in any twelve (12) month period;

               (iii) After one year from the Closing Date,  the Company files or
          proposes to file a registration  statement in an underwritten  primary
          equity offering  initiated by the Company (other than any registration
          by the  Company  on  Form  S-8),  which  underwriters  are  reasonably
          acceptable to a majority in interest of the Holders, or a successor or
          substantially  similar  form, of (1) an employee  stock option,  stock
          purchase  or  compensation  plan or of  securities  issued or issuable
          pursuant to any such plan, or (2) a dividend  reinvestment  plan),  in

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          which event such  restricted  period may be extended for 30 days prior
          to the  effective  date of the  registration  statement  covering such
          underwritten  primary equity offering and ending on the date specified
          by such managing  underwriter in such written  request to each Holder,
          which date shall be no more than 30 days  after such  effective  date,
          during  which the  Holder  agrees,  if  requested  in  writing  by the
          managing underwriter or underwriters  administering such offering, not
          to effect any offer,  sale or distribution  of Company  securities (or
          any option or right to acquire Company securities;

     4. REGISTRATION EXPENSES. All fees and expenses incident to the performance
of or  compliance  with  this  Agreement  by the  Company  shall be borne by the
Company  whether or not any  Registrable  Securities  are sold  pursuant  to the
Registration  Statement.  The fees and  expenses  referred  to in the  foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including,  without  limitation,  fees and expenses (A) with respect to filings
required to be made with the Nasdaq Smallcap Market and any Subsequent Market on
which the Common Stock is then listed for trading,  and (B) in  compliance  with
applicable  state securities or Blue Sky laws  (including,  without  limitation,
fees and  disbursements  of counsel for the Company in connection  with Blue Sky
qualifications or exemptions of the Registrable  Securities and determination of
the eligibility of the Registrable  Securities for investment  under the laws of
such  jurisdictions  as  requested  by the Holders )),  (ii)  printing  expenses
(including,   without   limitation,   expenses  of  printing   certificates  for
Registrable  Securities and of printing prospectuses  requested by the Holders),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and (v) fees and expenses of all other Persons  retained
by  the  Company  in  connection  with  the  consummation  of  the  transactions
contemplated  by this Agreement.  In addition,  the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including,  without limitation,
all salaries and expenses of its  officers  and  employees  performing  legal or
accounting  duties),  the expense of any annual  audit and the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities exchange as required hereunder.

     5. INDEMNIFICATION

          (a) INDEMNIFICATION BY THE COMPANY. The Company shall, notwithstanding
     any termination of this Agreement, indemnify and hold harmless each Holder,
     the officers,  directors,  agents, brokers (including brokers who offer and
     sell  Registrable  Securities  as  principal as a result of a pledge or any
     failure  to  perform  under a  margin  call of  Common  Stock),  investment
     advisors and  employees of each of them,  each Person who controls any such
     Holder  (within the meaning of Section 15 of the  Securities Act or Section
     20 of the Exchange Act) and the officers,  directors,  agents and employees
     of each  such  controlling  Person,  to the  fullest  extent  permitted  by
     applicable  law,  from and  against any and all  losses,  claims,  damages,
     liabilities, costs (including, without limitation, costs of preparation and

                                       9
<PAGE>
     attorneys'  fees)  and  expenses  (collectively,  "Losses"),  as  incurred,
     arising out of or relating to any untrue or alleged  untrue  statement of a
     material fact contained in a Registration Statement,  any Prospectus or any
     form of  prospectus  or in any  amendment or  supplement  thereto or in any
     preliminary  prospectus,  or arising out of or relating to any  omission or
     alleged  omission  of a  material  fact  required  to be stated  therein or
     necessary to make the statements  therein (in the case of any Prospectus or
     form of  prospectus or supplement  thereto,  in light of the  circumstances
     under which they were made) not misleading,  except to the extent, but only
     to the  extent,  that (1) such untrue  statements  or  omissions  are based
     solely upon  information  regarding such Holder furnished in writing to the
     Company by such Holder  expressly  for use  therein,  or to the extent that
     such information relates to such Holder or such Holder's proposed method of
     distribution  of  Registrable  Securities  and was reviewed  and  expressly
     approved  in writing by such  Holder  expressly  for use in a  Registration
     Statement,  such  Prospectus or such form of Prospectus or in any amendment
     or  supplement  thereto or (2) in the case of an  occurrence of an event of
     the type specified in Section  3(d)(ii)-(vi),  the use by such Holder of an
     outdated or defective Prospectus after the Company has notified such Holder
     in writing that the  Prospectus  is outdated or defective  and prior to the
     receipt by such  Holder of the Advice  contemplated  in Section  6(e).  The
     Company  shall notify the Holders  promptly of the  institution,  threat or
     assertion  of any  Proceeding  of which the Company is aware in  connection
     with the transactions contemplated by this Agreement.

          (b) INDEMNIFICATION BY HOLDERS.  Each Holder shall,  severally and not
     jointly, indemnify and hold harmless the Company, its directors,  officers,
     agents and  employees,  each Person who  controls  the Company  (within the
     meaning of Section 15 of the  Securities Act and Section 20 of the Exchange
     Act), and the directors,  officers, agents or employees of such controlling
     Persons,  to the fullest  extent  permitted  by  applicable  law,  from and
     against all Losses (as determined by a court of competent jurisdiction in a
     final  judgment  not  subject to appeal or review)  arising out of or based
     upon any untrue  statement of a material fact contained in any Registration
     Statement, any Prospectus,  or any form of prospectus,  or in any amendment
     or supplement  thereto,  or arising  solely out of or based solely upon any
     omission of a material fact  required to be stated  therein or necessary to
     make the statements  therein not misleading to the extent,  but only to the
     extent,  that  such  untrue  statement  or  omission  is  contained  in any
     information  so  furnished  in  writing  by  such  Holder  to  the  Company
     specifically  for  inclusion  in  such   Registration   Statement  or  such
     Prospectus  or to the extent that (1) such untrue  statements  or omissions
     are based  solely  upon  information  regarding  such Holder  furnished  in
     writing to the Company by such Holder expressly for use therein,  or to the
     extent  that such  information  relates  to such  Holder  or such  Holder's
     proposed method of distribution of Registrable  Securities and was reviewed
     and expressly  approved in writing by such Holder  expressly for use in the
     Registration  Statement,  such  Prospectus or such form of Prospectus or in
     any amendment or supplement  thereto or (2) in the case of an occurrence of

                                       10
<PAGE>
     an event of the type  specified in Section  3(d)(ii)-(vi),  the use by such
     Holder  of an  outdated  or  defective  Prospectus  after the  Company  has
     notified  such  Holder  in  writing  that the  Prospectus  is  outdated  or
     defective   and  prior  to  the  receipt  by  such  Holder  of  the  Advice
     contemplated  in  Section  6(e).  In no event  shall the  liability  of any
     selling Holder hereunder be greater in amount than the dollar amount of the
     net  proceeds  received  by such  Holder  upon the sale of the  Registrable
     Securities giving rise to such indemnification obligation.

          (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall be
     brought or asserted against any Person entitled to indemnity  hereunder (an
     "INDEMNIFIED  PArty"),  such  Indemnified  Party shall promptly  notify the
     Person from whom indemnity is sought (the "Indemnifying Party") in writing,
     and the Indemnifying Party shall assume the defense thereof,  including the
     employment of counsel reasonably  satisfactory to the Indemnified Party and
     the payment of all fees and expenses  incurred in  connection  with defense
     thereof;  provided,  that the failure of any Indemnified Party to give such
     notice  shall not  relieve the  Indemnifying  Party of its  obligations  or
     liabilities  pursuant  to this  Agreement,  except (and only) to the extent
     that it shall be finally  determined  by a court of competent  jurisdiction
     (which  determination is not subject to appeal or further review) that such
     failure shall have  proximately  and  materially  adversely  prejudiced the
     Indemnifying Party.

          An Indemnified  Party shall have the right to employ separate  counsel
     in any such Proceeding and to participate in the defense  thereof,  but the
     fees  and  expenses  of  such  counsel  shall  be at the  expense  of  such
     Indemnified Party or Parties unless:  (1) the Indemnifying Party has agreed
     in writing to pay such fees and  expenses;  or (2) the  Indemnifying  Party
     shall have failed  promptly to assume the defense of such Proceeding and to
     employ counsel  reasonably  satisfactory to such  Indemnified  Party in any
     such Proceeding; or (3) the named parties to any such Proceeding (including
     any  impleaded  parties)  include  both  such  Indemnified  Party  and  the
     Indemnifying  Party, and such Indemnified  Party shall have been advised by
     counsel  that a conflict of interest is likely to exist if the same counsel
     were to represent such  Indemnified  Party and the  Indemnifying  Party (in
     which case, if such Indemnified  Party notifies the  Indemnifying  Party in
     writing  that it elects to employ  separate  counsel at the  expense of the
     Indemnifying  Party,  the  Indemnifying  Party  shall not have the right to
     assume the defense  thereof and such counsel shall be at the expense of the
     Indemnifying  Party).  The  Indemnifying  Party shall not be liable for any
     settlement of any such  Proceeding  effected  without its written  consent,
     which consent shall not be unreasonably  withheld.  No  Indemnifying  Party
     shall,  without the prior written consent of the Indemnified Party,  effect
     any  settlement  of  any  pending   Proceeding  in  respect  of  which  any
     Indemnified  Party  is  a  party,   unless  such  settlement   includes  an
     unconditional  release  of such  Indemnified  Party from all  liability  on
     claims that are the subject matter of such Proceeding.

                                       11
<PAGE>
          All fees and expenses of the Indemnified  Party (including  reasonable
     fees and expenses to the extent incurred in connection  with  investigating
     or preparing to defend such  Proceeding in a manner not  inconsistent  with
     this Section) shall be paid to the Indemnified  Party, as incurred,  within
     ten  Business  Days of written  notice  thereof to the  Indemnifying  Party
     (regardless  of whether it is  ultimately  determined  that an  Indemnified
     Party is not  entitled to  indemnification  hereunder;  provided,  that the
     Indemnifying  Party may require  such  Indemnified  Party to  undertake  to
     reimburse all such fees and expenses to the extent it is finally judicially
     determined that such Indemnified  Party is not entitled to  indemnification
     hereunder).

          (d) CONTRIBUTION. If a claim for indemnification under Section 5(a) or
     5(b) is unavailable to an Indemnified  Party (by reason of public policy or
     otherwise),  then each  Indemnifying  Party, in lieu of  indemnifying  such
     Indemnified  Party,  shall contribute to the amount paid or payable by such
     Indemnified  Party as a result of such  Losses,  in such  proportion  as is
     appropriate  to reflect the relative  fault of the  Indemnifying  Party and
     Indemnified  Party in connection with the actions,  statements or omissions
     that  resulted  in such  Losses  as well as any  other  relevant  equitable
     considerations.   The  relative  fault  of  such  Indemnifying   Party  and
     Indemnified  Party shall be determined by reference to, among other things,
     whether  any action in  question,  including  any untrue or alleged  untrue
     statement of a material fact or omission or alleged  omission of a material
     fact,  has been taken or made by, or relates to  information  supplied  by,
     such  Indemnifying  Party or Indemnified  Party, and the parties'  relative
     intent,  knowledge,  access to  information  and  opportunity to correct or
     prevent such action, statement or omission. The amount paid or payable by a
     party as a result of any Losses shall be deemed to include,  subject to the
     limitations  set forth in Section 5(c), any reasonable  attorneys' or other
     reasonable  fees or expenses  incurred by such party in connection with any
     Proceeding  to the extent such party would have been  indemnified  for such
     fees or expenses if the  indemnification  provided  for in this Section was
     available to such party in accordance with its terms.

          The parties  hereto  agree that it would not be just and  equitable if
     contribution  pursuant to this  Section  5(d) were  determined  by pro rata
     allocation  or by any other  method of  allocation  that does not take into
     account  the  equitable  considerations  referred  to  in  the  immediately
     preceding  paragraph.  Notwithstanding the provisions of this Section 5(d),
     no Holder shall be required to contribute,  in the aggregate, any amount in
     excess of the amount by which the proceeds actually received by such Holder
     from the  sale of the  Registrable  Securities  subject  to the  Proceeding
     exceeds  the amount of any  damages  that such  Holder has  otherwise  been
     required to pay by reason of such  untrue or alleged  untrue  statement  or
     omission or alleged omission.

          The indemnity and  contribution  agreements  contained in this Section
     are in addition to any liability that the Indemnifying  Parties may have to
     the Indemnified Parties.

                                       12
<PAGE>
     6. MISCELLANEOUS

          (a)  AMENDMENTS  AND  WAIVERS.   The  provisions  of  this  Agreement,
     including the provisions of this sentence, may not be amended,  modified or
     supplemented,  and waivers or consents to  departures  from the  provisions
     hereof may not be given,  unless the same shall be in writing and signed by
     the Company and the Holders of at least  two-thirds of the then outstanding
     Registrable Securities.  Notwithstanding the foregoing, a waiver or consent
     to depart from the provisions  hereof with respect to a matter that relates
     exclusively  to the  rights  of  Holders  and  that  does not  directly  or
     indirectly affect the rights of other Holders may be given by Holders of at
     least a majority  of the  Registrable  Securities  to which such  waiver or
     consent relates;  PROVIDED,  HOWEVER,  that the provisions of this sentence
     may not be amended, modified, or supplemented except in accordance with the
     provisions of the immediately preceding sentence.

          (b) NO  INCONSISTENT  AGREEMENTS.  Neither  the Company nor any of its
     subsidiaries has entered,  as of the date hereof,  nor shall the Company or
     any of its subsidiaries, on or after the date of this Agreement, enter into
     any agreement with respect to its securities, that would have the effect of
     impairing the rights  granted to the Holders in this Agreement or otherwise
     conflicts with the provisions hereof. Except as and to the extent specified
     in Schedule  6(b) hereto,  neither the Company nor any of its  subsidiaries
     has previously entered into any agreement granting any registration  rights
     with  respect to any of its  securities  to any  Person  that have not been
     satisfied in full.

          (c) NO  PIGGYBACK  ON  REGISTRATIONS.  Except  as  and  to the  extent
     specified  in  Schedule  6(c)  hereto,  neither  the Company nor any of its
     security holders (other than the Holders in such capacity  pursuant hereto)
     may include  securities of the Company in the Registration  Statement other
     than the Registrable  Securities,  and the Company shall not after the date
     hereof  enter  into any  agreement  providing  any such right to any of its
     security holders.

          (d) COMPLIANCE.  Each Holder  covenants and agrees that it will comply
     with  the  prospectus  delivery  requirements  of  the  Securities  Act  as
     applicable  to  it in  connection  with  sales  of  Registrable  Securities
     pursuant to the Registration Statement.

          (e) DISCONTINUED DISPOSITION. Each Holder agrees by its acquisition of
     such Registrable Securities that, upon receipt of a notice from the Company
     of the occurrence of any event of the kind described in Sections 3(d), such
     Holder  will  forthwith   discontinue   disposition  of  such   Registrable
     Securities  under a Registration  Statement until such Holder's  receipt of
     the  copies of the  supplemented  Prospectus  and/or  amended  Registration
     Statement  contemplated  by Section 3(h), or until it is advised in writing
     (the "Advice") by the Company that the use of the applicable Prospectus may
     be resumed,  and, in either case, has received  copies of any additional or

                                       13
<PAGE>
     supplemental  filings that are incorporated or deemed to be incorporated by
     reference in such  Prospectus or  Registration  Statement.  The Company may
     provide   appropriate  stop  orders  to  enforce  the  provisions  of  this
     paragraph.

          (f) PIGGY-BACK REGISTRATIONS.  If at any time during the Effectiveness
     Period there is not an effective Registration Statement covering all of the
     Registrable  Securities and the Company shall determine to prepare and file
     with the  Commission a registration  statement  relating to an offering for
     its own account or the account of others under the Securities Act of any of
     its  equity  securities,  other  than on  Form  S-4 or Form  S-8  (each  as
     promulgated under the Securities Act) or their then equivalents relating to
     equity securities to be issued solely in connection with any acquisition of
     any entity or business or equity  securities  issuable in  connection  with
     stock option or other employee  benefit plans,  then the Company shall send
     to each Holder written notice of such  determination and, if within fifteen
     days after  receipt of such  notice,  any such  Holder  shall so request in
     writing,  the Company shall include in such  registration  statement all or
     any  part  of  such  Registrable  Securities  such  holder  requests  to be
     registered,  subject to customary  underwriter  cutbacks  applicable to all
     Holders of registration  rights;  provided,  that, the Company shall not be
     required to register any  Registrable  Securities  pursuant to this Section
     6(f) that are eligible for resale pursuant to Rule 144(k) promulgated under
     the Securities Act.

          (g) NOTICES. Any and all notices or other communications or deliveries
     required or  permitted to be provided  hereunder  shall be delivered as set
     forth in the Purchase Agreement.

          (h) SUCCESSORS AND ASSIGNS.  This Agreement shall inure to the benefit
     of and be binding upon the successors and permitted  assigns of each of the
     parties and shall inure to the benefit of each Holder.  The Company may not
     assign  its  rights or  obligations  hereunder  without  the prior  written
     consent of each  Holder.  Each Holder may assign  their  respective  rights
     hereunder in the manner and to the Persons as permitted  under the Purchase
     Agreement.

          (i)  COUNTERPARTS.  This  Agreement  may be  executed in any number of
     counterparts,  each of which  when so  executed  shall be  deemed  to be an
     original and, all of which taken together shall constitute one and the same
     Agreement.  In the event  that any  signature  is  delivered  by  facsimile
     transmission, such signature shall create a valid binding obligation of the
     party  executing  (or on whose behalf such  signature is executed) the same
     with the same  force and  effect as if such  facsimile  signature  were the
     original thereof.

          (j)  GOVERNING  LAW.  All  questions   concerning  the   construction,
     validity,  enforcement  and  interpretation  of  this  Agreement  shall  be
     governed by and construed and enforced in accordance with the internal laws
     of the State of New York,  without regard to the principles of conflicts of
     law  thereof.  Each  party  hereby  irrevocably  submits  to the  exclusive

                                       14
<PAGE>
     jurisdiction  of the state and  federal  courts  sitting in the City of New
     York,  borough of Manhattan,  for the adjudication of any dispute hereunder
     or in connection  herewith or with any transaction  contemplated  hereby or
     discussed herein, and hereby  irrevocably  waives, and agrees not to assert
     in any suit,  action or  proceeding,  any claim  that it is not  personally
     subject to the  jurisdiction of any such court,  that such suit,  action or
     proceeding  is improper.  Each party  hereby  irrevocably  waives  personal
     service of process and  consents to process  being served in any such suit,
     action or proceeding by mailing a copy thereof to such party at the address
     in effect  for  notices  to it under this  Agreement  and agrees  that such
     service shall constitute good and sufficient  service of process and notice
     thereof.  Nothing  contained herein shall be deemed to limit in any way any
     right to serve  process in any manner  permitted by law.  Each party hereto
     hereby  irrevocably  waives,  to the fullest extent permitted by applicable
     law, any and all right to trial by jury in any legal proceeding arising out
     of or relating to this Agreement or the transactions  contemplated  hereby.
     If either party shall  commence a Proceeding  to enforce any  provisions of
     this  Agreement,  then the  prevailing  party in such  Proceeding  shall be
     reimbursed  by the other party for its  attorneys  fees and other costs and
     expenses  incurred with the  investigation,  preparation and prosecution of
     such Proceeding.

          (k) CUMULATIVE  REMEDIES.  The remedies provided herein are cumulative
     and not exclusive of any remedies provided by law.

          (l) SEVERABILITY.  If any term, provision,  covenant or restriction of
     this Agreement is held by a court of competent  jurisdiction to be invalid,
     illegal,  void or  unenforceable,  the remainder of the terms,  provisions,
     covenants and  restrictions set forth herein shall remain in full force and
     effect and shall in no way be affected,  impaired or  invalidated,  and the
     parties  hereto  shall use their  reasonable  efforts to find and employ an
     alternative  means to achieve the same or substantially  the same result as
     that contemplated by such term, provision,  covenant or restriction.  It is
     hereby stipulated and declared to be the intention of the parties that they
     would  have  executed  the  remaining  terms,  provisions,   covenants  and
     restrictions  without including any of such that may be hereafter  declared
     invalid, illegal, void or unenforceable.

          (m) HEADINGS.  The headings in this  Agreement are for  convenience of
     reference only and shall not limit or otherwise affect the meaning hereof.

          (n)  INDEPENDENT  NATURE OF PURCHASERS'  OBLIGATIONS  AND RIGHTS.  The
     obligations of each  Purchaser  hereunder is several and not joint with the
     obligations of any other  Purchaser  hereunder,  and no Purchaser  shall be
     responsible in any way for the  performance of the obligations of any other
     Purchaser hereunder.  Nothing contained herein or in any other agreement or
     document  delivered  at any closing,  and no action taken by any  Purchaser
     pursuant hereto or thereto, shall be deemed to constitute the Purchasers as
     a partnership, an association, a joint venture or any other kind of entity,

                                       15
<PAGE>
     or  create a  presumption  that the  Purchasers  are in any way  acting  in
     concert with respect to such obligations or the  transactions  contemplated
     by this Agreement.  Each Purchaser shall be entitled to protect and enforce
     its rights,  including  without  limitation  the rights arising out of this
     Agreement,  and it shall not be  necessary  for any other  Purchaser  to be
     joined as an additional party in any proceeding for such purpose.

                              ********************

                                       16
<PAGE>
     IN WITNESS  WHEREOF,  the parties have  executed this  Registration  Rights
Agreement as of the date first written above.

                                      PACIFIC MAGTRON INTERNATIONAL CORP.

                                      By: /s/ Theodore S. Li
                                          --------------------------------------
                                      Name: Theodore S. Li
                                      Title: Chairman of the Board and President

                                      STONESTREET L.P.

                                      By:
                                         ---------------------------------------
                                         Name:
                                         Title:

                                       17
<PAGE>
                              PLAN OF DISTRIBUTION

     The  Selling  Stockholders  and  any  of  their  pledgees,   assignees  and
successors-in-interest  may, from time to time,  sell any or all of their shares
of Common Stock on any stock exchange,  market or trading  facility on which the
shares  are traded or in private  transactions.  These  sales may be at fixed or
negotiated  prices.  The  Selling  Stockholders  may  use any one or more of the
following methods when selling shares:

     *    ordinary   brokerage   transactions  and  transactions  in  which  the
          broker-dealer solicits purchasers;

     *    block  trades  in which the  broker-dealer  will  attempt  to sell the
          shares as agent but may  position and resell a portion of the block as
          principal to facilitate the transaction;

     *    purchases  by  a   broker-dealer   as  principal  and  resale  by  the
          broker-dealer for its account;

     *    an  exchange   distribution  in  accordance  with  the  rules  of  the
          applicable exchange;

     *    privately negotiated transactions;

     *    short sales

     *    broker-dealers  may  agree  with the  Selling  Stockholders  to sell a
          specified number of such shares at a stipulated price per share;

     *    a combination of any such methods of sale; and

     *    any other method permitted pursuant to applicable law.

     The  Selling  Stockholders  may also sell  shares  under Rule 144 under the
Securities Act, if available, rather than under this prospectus.  Broker-dealers
engaged by the Selling  Stockholders  may arrange for other  brokers-dealers  to
participate in sales.  Broker-dealers may receive  commissions or discounts from
the  Selling  Stockholders  (or,  if any  broker-dealer  acts as  agent  for the
purchaser  of shares,  from the  purchaser)  in amounts  to be  negotiated.  The
Selling  Stockholders  do not expect these  commissions  and discounts to exceed
what is customary in the types of transactions involved.

     The  selling  stockholder  may from time to time pledge or grant a security
interest in some or all of the Shares or common  stock or Warrant  owned by them
and,  if they  default in the  performance  of their  secured  obligations,  the
pledgees or secured  parties may offer and sell the shares of common  stock from
time to time under this  prospectus,  or under an amendment  to this  prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933
amending the list of selling stockholders to include the pledgee,  transferee or
other successors in interest as selling stockholders under this prospectus.

                                       18
<PAGE>
     The selling  stockholders  also may  transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in  interest  will  be the  selling  beneficial  owners  for  purposes  of  this
prospectus.

     The Selling Stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be  "underwriters"  within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received  by such  broker-dealers  or agents and any profit on the resale of the
shares  purchased  by them  may be  deemed  to be  underwriting  commissions  or
discounts under the Securities Act. The Selling  Stockholders  have informed the
Company  that it does not have  any  agreement  or  understanding,  directly  or
indirectly, with any person to distribute the Common Stock.

     The  Company  is  required  to pay all fees and  expenses  incident  to the
registration  of the shares.  The Company  has agreed to  indemnify  the Selling
Stockholders against certain losses, claims, damages and liabilities,  including
liabilities under the Securities Act.

                                       19EXHIBIT 10.3

                                ESCROW AGREEMENT

     THIS ESCROW AGREEMENT (this "AGREEMENT") is made as of May 31, 2002, by and
among Pacific Magtron International Corp., a corporation  incorporated under the
laws of  Nevada  (the  "COMPANY"),  the  Purchasers  signatory  hereto  (each an
"Purchaser" and together the  "PURCHASERS"),  and Feldman Weinstein LLP, with an
address  at 36 West  44th  Street,  New York,  NY 10036  (the  "ESCROW  Agent").
CAPITALIZED  TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS SET FORTH
IN THE SECURITIES PURCHASE AGREEMENT REFERRED TO IN THE FIRST RECITAL.

                              W I T N E S S E T H:

     WHEREAS,  the  Purchasers  will be  purchasing  from  the  Company,  in the
aggregate,  up to US$1,000,000 of the Company's  Preferred Stock (the "PREFERRED
STOCK") and  Warrants as set forth in the  Securities  Purchase  Agreement  (the
"PURCHASE  AGREEMENT")  dated the date  hereof  between the  Purchasers  and the
Company,  which  will be  issued as per the terms  contained  herein  and in the
Purchase Agreement; and

     WHEREAS,  it is intended that the purchase of the securities be consummated
in  accordance  with the  requirements  set forth by  Sections  4(2) and/or 4(6)
and/or  Regulation D promulgated  under the  Securities Act of 1933, as amended;
and

     WHEREAS,  the Company and the  Purchasers  have  requested  that the Escrow
Agent hold the  purchase  price with  respect to the Closing in escrow until the
Escrow Agent has received the Release  Notice in the form  attached  hereto from
the Company and each Purchaser;

     NOW,  THEREFORE,  in  consideration  of the covenants  and mutual  promises
contained  herein and other good and  valuable  consideration,  the  receipt and
legal  sufficiency of which are hereby  acknowledged and intending to be legally
bound hereby, the parties agree as follows:

                                    ARTICLE 1
                               TERMS OF THE ESCROW

     The parties  hereby agree to  establish  an escrow  account with the Escrow
Agent  whereby the Escrow  Agent shall hold the funds for the  purchase of up to
US$1,000,000,  in the aggregate,  of the Preferred Stock and the Warrants at the
Closing as contemplated by the Purchase Agreement.

     1.1. FIRST CLOSING.

          (a)  Upon the Escrow  Agent's  receipt of the  purchase  price for the
     First  Closing  into its master  escrow  account,  together  with  executed
     counterparts of this Agreement, the Purchase Agreement and the Registration
     Rights  Agreement,  it shall  telephonically  advise  the  Company,  or the

                                       1
<PAGE>
     Company's  designated  attorney  or  agent,  of the  amount of funds it has
     received into its master escrow account.

          (b)  Wire transfers to the Escrow Agent shall be made as follows:

               Chase Manhattan Bank, NA
               510 Fifth Avenue
               New York, NY 10036 USA
               ABA Routing Number: 021000021
               Account Number: 987074342668
               Name of Account: Feldman Weinstein LLP Master Escrow Account
               Remark: PMIC

          (c)  The Company,  upon receipt of said notice,  shall  deliver to the
     Escrow Agent the certificates  representing the applicable  Preferred Stock
     and the  Warrants  to be issued  to each  Purchaser  at the  First  Closing
     together with:

               (i)   a copy of the filed Certificate of Designations;

               (ii)  the  original   executed   Registration   Rights  Agreement
                     substantially  in the  form of  EXHIBIT  B to the  Purchase
                     Agreement;

               (iii) the  original  executed   Instructions  to  Transfer  Agent
                     substantially  in the  form of  EXHIBIT  E to the  Purchase
                     Agreement;

               (iv)  the  original  executed  opinions of Quarles & Brady LLP in
                     the form of EXHIBIT D to the Purchase Agreement;

               (v)   a warrant issued to M.H. Meyerson  ("MEYERSON") to purchase
                     up to a number of shares of Common  Stock equal to $100,000
                     divided by the Closing Price on the Trading Day immediately
                     prior to the First Closing Date otherwise identical to that
                     of the Warrant (the "MH WARRANT"); and

               (vi)  an original counterpart of this Escrow Agreement.

          (d)  In the  event  that the  foregoing  items  are not in the  Escrow
     Agent's  possession  within  three (3)  Trading  Days of the  Escrow  Agent
     notifying  the Company  that the Escrow  Agent has custody of the  purchase
     price applicable to such Preferred Stock and Warrants,  then each Purchaser
     shall have the right to demand the return of their purchase price.

          (e)  Once the  Escrow  Agent  receives  a  Release  Notice in the form
     attached hereto as EXHIBIT X executed by the Company and each Purchaser, it
     shall wire 90% of that amount of funds necessary to purchase the applicable
     Preferred   Stock  and  the  Warrants,   net  of  $15,000  for  the  legal,
     administrative  and due diligence  costs and expenses of the  Purchasers to
     Feldman Weinstein LLP, per the written  instructions of the Company, 7% per

                                       2
<PAGE>
     the instructions of Purchasers as an original purchase price refund and the
     remaining 3% per the instructions of Meyerson.

          (f)  Once the  funds  (as set  forth  above)  have  been  sent per the
     Company's  instructions,  the Escrow  Agent shall then  arrange to have the
     Purchase Agreement,  the Warrants, the MH Warrant, the Preferred Stock, the
     copy of the Certificate of Designations, the Registration Rights Agreement,
     the  Escrow  Agreement,  the  opinion of counsel  and the  Instructions  to
     Transfer Agent delivered to the appropriate parties.

     1.2. SECOND CLOSING.

          (a)  Upon the Escrow  Agent's  receipt of the  purchase  price for the
     Second  Closing  into its master  escrow  account  it shall  telephonically
     advise the Company,  or the Company's  designated attorney or agent, of the
     amount of funds it has received into its master escrow account.

          (b)  The Company,  upon receipt of said notice,  shall  deliver to the
     Escrow Agent the certificates  representing the applicable  Preferred Stock
     to be issued to each Purchaser at the Second Closing

          (c)  In the event that the  certificate of Preferred  Stock are not in
     the Escrow Agent's  possession  within three (3) Trading Days of the Escrow
     Agent  notifying  the  Company  that the  Escrow  Agent has  custody of the
     purchase price  applicable to such Preferred Stock and Warrants,  then each
     Purchaser  shall  have the right to  demand  the  return of their  purchase
     price.

          (d)  Once the  Escrow  Agent  receives  a  Release  Notice in the form
     attached hereto as EXHIBIT X executed by the Company and each Purchaser, it
     shall wire 90% of that amount of funds necessary to purchase the applicable
     Preferred  Stock  and the  Warrants  per the  written  instructions  of the
     Company,  7% per the  instructions  of Purchasers  as an original  purchase
     price refund and the remaining 3% per the instructions of Meyerson.

          (e)  Once the  funds  (as set  forth  above)  have  been  sent per the
     Company's  instructions,  the Escrow  Agent shall then  arrange to have the
     Preferred Stock delivered to the appropriate parties.

                                    ARTICLE 2
                                  MISCELLANEOUS

     2.1. No waiver or any breach of any covenant or provision  herein contained
shall be deemed a waiver of any preceding or succeeding  breach  thereof,  or of
any other  covenant or  provision  herein  contained.  No  extension of time for
performance  of any  obligation  or act shall be deemed an extension of the time
for performance of any other obligation or act.

                                       3
<PAGE>
     2.2. All notices or other  communications  required or permitted  hereunder
shall be in writing, and shall be sent as set forth in the Purchase Agreement.

     2.3.  This Escrow  Agreement  shall be binding  upon and shall inure to the
benefit of the permitted successors and permitted assigns of the parties hereto.

     2.4.  This Escrow  Agreement is the final  expression  of, and contains the
entire agreement between,  the parties with respect to the subject matter hereof
and  supersedes  all prior  understandings  with  respect  thereto.  This Escrow
Agreement may not be modified, changed,  supplemented or terminated, nor may any
obligations  hereunder  be waived,  except by written  instrument  signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.

     2.5.  Whenever  required  by the  context  of this  Escrow  Agreement,  the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties,  but rather as if both parties had prepared the same.  Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.

     2.6. The parties hereto expressly agree that this Escrow Agreement shall be
governed by, interpreted under and construed and enforced in accordance with the
laws of the  State of New  York.  Any  action  to  enforce,  arising  out of, or
relating in any way to, any  provisions of this Escrow  Agreement  shall only be
brought in a state or Federal court sitting in New York City.

     2.7. The Escrow Agent's duties hereunder may be altered,  amended, modified
or revoked  only by a writing  signed by the  Company,  each  Purchaser  and the
Escrow Agent.

     2.8. The Escrow Agent shall be obligated  only for the  performance of such
duties as are  specifically set forth herein and may rely and shall be protected
in relying or refraining  from acting on any instrument  reasonably  believed by
the  Escrow  Agent to be genuine  and to have been  signed or  presented  by the
proper party or parties. The Escrow Agent shall not be personally liable for any
act the Escrow  Agent may do or omit to do  hereunder  as the Escrow Agent while
acting in good faith,  and any act done or omitted by the Escrow Agent  pursuant
to the  advice  of the  Escrow  Agent's  attorneys-at-law  shall  be  conclusive
evidence of such good faith.

     2.9. The Escrow Agent is hereby  expressly  authorized to disregard any and
all  warnings  given by any of the  parties  hereto  or by any  other  person or
corporation,  excepting  only  orders or  process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order,  judgment
or decree,  the Escrow Agent shall not be liable to any of the parties hereto or
to any  other  person,  firm or  corporation  by  reason  of such  decree  being
subsequently reversed,  modified,  annulled, set aside, vacated or found to have
been entered without jurisdiction.

     2.10. The Escrow Agent shall not be liable in any respect on account of the
identity,  authorization  or rights of the parties  executing or  delivering  or
purporting  to execute or deliver the  Purchase  Agreement  or any  documents or
papers deposited or called for thereunder.

                                       4
<PAGE>
     2.11.  The Escrow Agent shall be entitled to employ such legal  counsel and
other  experts as the Escrow  Agent may deem  necessary  properly  to advise the
Escrow Agent in connection  with the Escrow Agent's duties  hereunder,  may rely
upon  the  advice  of  such  counsel,   and  may  pay  such  counsel  reasonable
compensation  therefor  which  shall  be paid  by the  Escrow  Agreement  unless
otherwise  provided  for in Section  3.14.  THE ESCROW  AGENT HAS ACTED AS LEGAL
COUNSEL FOR THE  PURCHASERS,  AND MAY  CONTINUE TO ACT AS LEGAL  COUNSEL FOR THE
PURCHASERS,  FROM TIME TO TIME,  NOTWITHSTANDING  ITS DUTIES AS THE ESCROW AGENT
HEREUNDER.  THE COMPANY  CONSENTS TO THE ESCROW AGENT IN SUCH  CAPACITY AS LEGAL
COUNSEL  FOR THE  PURCHASERS  AND  WAIVES  ANY CLAIM  THAT  SUCH  REPRESENTATION
REPRESENTS A CONFLICT OF INTEREST ON THE PART OF THE ESCROW  AGENT.  THE COMPANY
UNDERSTANDS  THAT THE PURCHASERS AND THE ESCROW AGENT ARE RELYING  EXPLICITLY ON
THE FOREGOING PROVISION IN ENTERING INTO THIS ESCROW AGREEMENT.

     2.12. The Escrow Agent's  responsibilities  as escrow agent hereunder shall
terminate if the Escrow Agent shall resign by written  notice to the Company and
the  Purchasers.  In the event of any such  resignation,  the Purchasers and the
Company shall appoint a successor Escrow Agent.

     2.13. If the Escrow Agent reasonably  requires other or further instruments
in connection with this Escrow  Agreement or obligations in respect hereto,  the
necessary parties hereto shall join in furnishing such instruments.

     2.14.  It is  understood  and agreed  that  should any  dispute  arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow  funds held by the Escrow  Agent  hereunder,  the Escrow  Agent is
authorized and directed in the Escrow  Agent's sole  discretion (1) to retain in
the Escrow  Agent's  possession  without  liability to anyone all or any part of
said  documents or the escrow funds until such disputes  shall have been settled
either by mutual  written  agreement of the parties  concerned by a final order,
decree  or  judgment  or a court of  competent  jurisdiction  after the time for
appeal has expired and no appeal has been perfected,  but the Escrow Agent shall
be under no duty  whatsoever to institute or defend any such  proceedings or (2)
to deliver the escrow  funds and any other  property and  documents  held by the
Escrow Agent  hereunder to a state or Federal  court  having  competent  subject
matter  jurisdiction  and located in the City of New York in accordance with the
applicable procedure therefor.

     2.15.  The Company  and each  Purchaser  agree  jointly  and  severally  to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims,  liabilities,  costs or expenses in
any way  arising  from or relating  to the duties or  performance  of the Escrow
Agent  hereunder  or the  transactions  contemplated  hereby or by the  Purchase
Agreement  other than any such claim,  liability,  cost or expense to the extent
the same shall have been determined by final,  unappealable  judgment of a court
of competent  jurisdiction to have resulted from the gross negligence or willful
misconduct of the Escrow Agent.

                            [SIGNATURE PAGE FOLLOWS]

                                       5
<PAGE>
                      [SIGNATURE PAGE TO ESCROW AGREEMENT]

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
this __ day of May, 2002.

                                        PACIFIC MAGTRON INTERNATIONAL CORP.

                                        By: /s/ Theodore S. Li
                                            ------------------------------------
                                            Name: Theodore S. Li
                                            Title: Chairman of the Board and
                                                   President

                                        PURCHASERS:

                                        STONESTREET L.P.

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        ESCROW AGENT:

                                        FELDMAN WEINSTEIN LLP

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                       6
<PAGE>
                                                                    EXHIBIT X TO
                                                                ESCROW AGREEMENT

                                 RELEASE NOTICE

     The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of May 31, 2002
among Pacific Magtron  International Corp., the Purchasers signatory thereto and
Feldman  Weinstein  LLP, as Escrow  Agent (the "Escrow  Agreement";  capitalized
terms used herein and not defined shall have the meaning  ascribed to such terms
in the  Escrow  Agreement),  hereby  notify  the  Escrow  Agent that each of the
conditions  precedent to the purchase and sale of the Preferred  Stock set forth
in the Securities  Purchase  Agreement have been satisfied.  The Company and the
undersigned   Purchaser   hereby   confirm   that   all  of   their   respective
representations  and warranties  contained in the Purchase Agreement remain true
and  correct  and  authorize  the  release by the Escrow  Agent of the funds and
documents to be released at the Closing as  described  in the Escrow  Agreement.
This Release Notice shall not be effective until executed by the Company and the
Purchaser.

     This  Release  Notice  may be signed in one or more  counterparts,  each of
which shall be deemed an original.

     IN WITNESS  WHEREOF,  the undersigned have caused this Release Notice to be
duly executed and delivered as of this __ day of May, 2002.

                                        PACIFIC MAGTRON INTERNATIONAL CORP.

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        PURCHASERS:

                                        STONESTREET L.P.

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                       7

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