Document:

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                                                                  Exhibit 10.47

                                  DSR AGREEMENT

                                      among

                                PRICESMART, INC.,

                              THE BANK OF NEW YORK,

                                       and

                   OVERSEAS PRIVATE INVESTMENT CORPORATION

                           Dated as of August xx, 2001

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<Table>
<S>                                                                                    <C>
ARTICLE I  DEFINITIONS AND INTERPRETATION...............................................1

   SECTION 1.01  DEFINITIONS AND INTERPRETATION.........................................1

ARTICLE II  THE COLLATERAL ACCOUNT......................................................2

   SECTION 2.01  STATUS OF ACCOUNT AND RELATIONSHIP OF PARTIES..........................2
   SECTION 2.02  TREATMENT OF PROPERTY AS FINANCIAL ASSETS..............................2
   SECTION 2.03  COMPLIANCE WITH ENTITLEMENT ORDERS OF OPIC.............................2
   SECTION 2.04  FORM OF PERMITTED INVESTMENTS..........................................3

ARTICLE III  ASSIGNMENT AND GRANT OF SECURITY INTEREST..................................4

   SECTION 3.01  ASSIGNMENT AND GRANT OF SECURITY INTEREST..............................4
   SECTION 3.02  SECURITY FOR OBLIGATIONS...............................................4
   SECTION 3.03  COMPANY REMAINS LIABLE.................................................4
   SECTION 3.04  DELIVERY OF COLLATERAL.................................................4
   SECTION 3.05  SECURITY INTEREST ABSOLUTE.............................................5

ARTICLE IV  INVESTMENT OF COLLATERAL ACCOUNT............................................6

   SECTION 4.01  INVESTMENTS............................................................6
   SECTION 4.02  LIQUIDATION OF INVESTMENTS.............................................6

ARTICLE V  PAYMENTS FROM THE COLLATERAL ACCOUNT.........................................7

   SECTION 5.01  DISBURSEMENTS AND LIMITATIONS ON DISBURSEMENTS TO THE COMPANY..........7
   SECTION 5.02  DISBURSEMENTS TO OPIC..................................................8

ARTICLE VI  CONCERNING THE INTERMEDIARY.................................................8

   SECTION 6.01  POWERS, RIGHTS AND RESPONSIBILITIES OF INTERMEDIARY....................8
   SECTION 6.02  COMPENSATION AND REIMBURSEMENT OF INTERMEDIARY........................10
   SECTION 6.03  INTERMEDIARY'S WAIVER OF LIEN ON COLLATERAL AND SETOFF RIGHTS.........11
   SECTION 6.04  ACCESS TO BOOKS; INSPECTION; STATEMENTS OF ACCOUNT....................11
   SECTION 6.05  CLOSING OF COLLATERAL ACCOUNT.........................................12

ARTICLE VII  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INTERMEDIARY.............13

   SECTION 7.01  REPRESENTATIONS AND WARRANTIES OF INTERMEDIARY........................13
   SECTION 7.02  COVENANTS OF INTERMEDIARY.............................................14

ARTICLE VIII  COMPANY REPRESENTATIONS, WARRANTIES AND COVENANTS........................16

   SECTION 8.01  REPRESENTATIONS AND WARRANTIES MADE UPON EXECUTION OF THIS AGREEMENT..16
   SECTION 8.02  REPRESENTATIONS AND WARRANTIES MADE UPON DELIVERY OF ANY COLLATERAL...17
   SECTION 8.03  COMPANY COVENANTS.....................................................18

ARTICLE IX  EVENT OF DEFAULT...........................................................19

   SECTION 9.01  NOTICE OF EVENT OF DEFAULT............................................19
   SECTION 9.02  REMEDIES UPON EVENT OF DEFAULT........................................19

ARTICLE X  CERTAIN RIGHTS, POWERS AND REMEDIES; NO WAIVER..............................21

   SECTION 10.01  OPIC APPOINTED ATTORNEY-IN-FACT......................................21
   SECTION 10.02  OPIC MAY PERFORM.....................................................21
   SECTION 10.03  CUMULATIVE RIGHTS....................................................21
   SECTION 10.04  NO DUTIES............................................................22
   SECTION 10.05  WAIVERS..............................................................22

ARTICLE XI  CONTINUING OBLIGATION; TERMINATION.........................................22

   SECTION 11.01  CONTINUING OBLIGATION................................................22

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   SECTION 11.02  TERMINATION..........................................................23

ARTICLE XII  MISCELLANEOUS.............................................................23

   SECTION 12.01  JURISDICTION AND CONSENT TO SUIT; WAIVER OF OBJECTION TO FORUM.......23
   SECTION 12.02  IMMUNITY.............................................................24
   SECTION 12.03  NOTICES..............................................................24
   SECTION 12.04  ENGLISH LANGUAGE.....................................................25
   SECTION 12.05  GOVERNING LAW........................................................26
   SECTION 12.06  SUCCESSION; ASSIGNMENT...............................................26
   SECTION 12.07  SURVIVAL OF AGREEMENTS...............................................26
   SECTION 12.08  INTEGRATION; AMENDMENTS..............................................26
   SECTION 12.09  SEVERABILITY.........................................................26
   SECTION 12.10  WAIVER OF JURY TRIAL.................................................27
   SECTION 12.11  RIGHT OF SET-OFF.....................................................27
   SECTION 12.12  INDEMNITY............................................................27
   SECTION 12.13  LIMITATION ON DAMAGES................................................28
   SECTION 12.14  FEES AND EXPENSES OF OPIC............................................28
   SECTION 12.15  WAIVER OF LITIGATION PAYMENTS........................................29
   SECTION 12.16  BENEFITS OF AGREEMENT................................................29
   SECTION 12.17  ARM'S-LENGTH NEGOTIATIONS............................................29
   SECTION 12.18  FURTHER ASSURANCES...................................................29
   SECTION 12.19  FINANCING STATEMENTS.................................................30
   SECTION 12.20  COUNTERPARTS.........................................................30

</Table>

                             SCHEDULES AND EXHIBITS

SCHEDULE X             DEFINITIONS AND RULES OF INTERPRETATION
SCHEDULE Y             FEES PAYABLE TO INTERMEDIARY
SCHEDULE Z-1           CERTIFICATE OF NAME, TITLE AND SPECIMEN SIGNATURES
                         PRICESMART, INC. (THE "COMPANY")
SCHEDULE Z-2           CERTIFICATE OF NAME, TITLE AND SPECIMEN SIGNATURES
                         OVERSEAS PRIVATE INVESTMENT CORPORATION ("OPIC")
SCHEDULE Z-3           CERTIFICATE OF NAME, TITLE AND SPECIMEN SIGNATURES
                         THE BANK OF NEW YORK  (THE "INTERMEDIARY")
EXHIBIT A              FORM OF EXCESS AMOUNT CERTIFICATE
EXHIBIT B              FORM OF NOTICE OF OBJECTION
EXHIBIT C              FORM OF NOTICE OF AUTHORIZATION
EXHIBIT D              FORM OF NOTICE OF EVENT OF DEFAULT
EXHIBIT E              FORM OF NOTICE OF CANCELLATION
EXHIBIT F              FORM OF OPIC DISBURSEMENT REQUEST
EXHIBIT G              FORM OF PERMITTED INVESTMENTS NOTICE

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                                  DSR AGREEMENT

      DSR AGREEMENT, dated as of August 17, 2001 (this "Agreement"), by and
among (i) PriceSmart, Inc, a corporation organized and existing under the laws
of the State of Delaware (the "COMPANY"), (ii) The Bank of New York, a banking
corporation organized and existing under the laws of the State of New York, (the
"INTERMEDIARY"), and (iii) OVERSEAS PRIVATE INVESTMENT CORPORATION, an agency of
the United States of America ("OPIC" and, together with the Company and the
Intermediary, the "PARTIES").

                                R E C I T A L S:

      WHEREAS, under two loan agreements (OPIC/517-2001-181-DI and
OPIC/515-2001181-DI) dated as of August17, 2001 (the "LOAN AGREEMENTS"), by and
between OPIC and the Company, OPIC has agreed to lend up to U.S. $10,000,000
(the "LOANS") to the Company;

      WHEREAS, it is a condition precedent to the first disbursement under the
Loan Agreements, that the Parties shall have entered into this Agreement and
that the Company shall have opened a Collateral Account (as hereinafter
defined), and that such Collateral Account shall be pledged to OPIC as security
for the Loan and associated obligations;

      WHEREAS, the Company is entering into this Agreement to satisfy such
condition to the first disbursement under the Loan Agreements; and

      WHEREAS, the Parties are entering into this Agreement to perfect OPIC's
security interest in the Collateral Account and to provide for the management of
the Account Assets (as hereinafter defined) held therein;

      NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, it is hereby agreed as follows:

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.01  DEFINITIONS AND INTERPRETATION

      In this Agreement, (a) unless otherwise provided herein, all capitalized
terms have the respective meanings specified in the Loan Agreements as of the
date hereof; (b) capitalized terms used but

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not otherwise defined in the Loan Agreements have the meanings set forth in the
attached Schedule X, and (c) the rules of interpretation set forth in Schedule X
apply.

                                   ARTICLE II
                             THE COLLATERAL ACCOUNT

SECTION 2.01  STATUS OF ACCOUNT AND RELATIONSHIP OF PARTIES

      The Intermediary acknowledges and agrees that:

      (a) it has established and is maintaining on its books and records a
segregated, non-interest bearing account with the account number A/C # 293644,
designated the "Collateral Account, subject to the security interest of the
Overseas Private Investment Corporation pursuant to the DSR Agreement among
Overseas Private Investment Corporation, PriceSmart, Inc. and Bank of New York,
dated as of August 17, 20001";

      (b) the Collateral Account is a "securities account" within the meaning
of Section 8-501(a) of the UCC, in respect of which the Intermediary is a
"securities intermediary" within the meaning of Section 8-102(a)(14) of the UCC;
and

      (c) the Company is the "entitlement holder" within the meaning of
Section 8-102(a)(7) of the UCC, and the Intermediary has identified OPIC on its
records as the party with "control" (within the meaning of Section 8-106(d) of
the UCC) of the Company's security entitlements, with respect to the Collateral,
in accordance with Sections 8-501(b) and 8-106(d)(2) of the UCC, and the
Intermediary shall make all notations in its records pertaining to the
Collateral that are necessary to reflect the security interest granted hereunder
to OPIC.

SECTION 2.02  TREATMENT OF PROPERTY AS FINANCIAL ASSETS

      The Intermediary agrees that each item of property (whether cash, a
security, an instrument or any other property whatsoever, including any
Permitted Investments) credited to the Collateral Account shall be treated as a
"financial asset" under Article 8 of the UCC.

SECTION 2.03  COMPLIANCE WITH ENTITLEMENT ORDERS OF OPIC

      The Intermediary agrees that it will comply with "entitlement orders"
(within the meaning of Section 8-102(a)(8) of the UCC) originated by OPIC, as
the secured party with respect to the Collateral, without further consent by the
Company.

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      Unless the Intermediary has received a Notice of Event of Default, OPIC
hereby directs the Intermediary to permit the Company to direct the investment
and reinvestment of any amounts in the Collateral Account in Permitted
Investments in accordance with Section 4.01(a) and to liquidate Permitted
Investments in accordance with Section 4.02(a). After receipt of a Notice of
Event of Default, the Intermediary shall no longer comply with orders originated
by, or other directions or instructions received from, or on behalf of, the
Company with respect to the Collateral.

SECTION 2.04  FORM OF PERMITTED INVESTMENTS

      To the extent applicable to the relevant Permitted Investments, the
Intermediary shall treat Account Assets in the following manner:

      (a) CERTIFICATED SECURITIES. All certificated securities and other
Account Assets in physical form shall be delivered to and thereafter held by the
Intermediary as follows:

          (i) (x) in its custody or subject to its control, which shall include
      the holding of such assets on behalf of the Intermediary by a clearing
      corporation, its custodian, or a nominee of either of them, (and, if held
      on behalf of the Intermediary by another intermediary, credited to a
      securities account maintained in the name of the Intermediary); (y) in
      bearer form or indorsed in blank by an appropriate Person or registered by
      the Company in the name of, or payable to the order of, the Intermediary,
      its clearing corporation, its custodian bank, or a nominee of either of
      them on the books of the issuer; and (z) credited to the Collateral
      Account, for the benefit of OPIC as secured party; or

      (b) UNCERTIFICATED SECURITIES. All uncertificated securities and other
Account Assets (other than cash balances) held in uncertificated form shall be
registered by the Company on the books of the issuer thereof in the name of the
Intermediary or, subject to the Intermediary's control, in the name of the
Intermediary's clearing corporation, its custodian bank, or a nominee of either
of them.

      In no case shall any Account Asset be registered in the name of, or
payable to or to the order of, the Company or indorsed to or to the order of the
Company, except to the extent the foregoing have been specially indorsed to or
to the order of the Intermediary (or its clearing corporation, its custodian
bank, or a nominee of either of them) or in blank.

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                                  ARTICLE III
                   ASSIGNMENT AND GRANT OF SECURITY INTEREST

SECTION 3.01  ASSIGNMENT AND GRANT OF SECURITY INTEREST

      The Company hereby pledges, assigns and grants to OPIC a first priority
security interest and Lien upon all of its rights, title and interest in and to,
the Collateral and all other rights of the Company in and arising out of the
Collateral.

SECTION 3.02  SECURITY FOR OBLIGATIONS

      The pledge, assignment, and grant in this Agreement is made by the Company
to OPIC to secure the full payment and performance of the Obligations. All
Collateral shall constitute security for the Obligations and shall not
constitute payment of any Obligation until applied as set forth in this
Agreement.

SECTION 3.03  COMPANY REMAINS LIABLE

      Anything herein to the contrary notwithstanding, (i) the Company shall
remain liable under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder, to the same extent as if this Agreement had not been executed,
(ii) the exercise by OPIC and/or the Intermediary of any of the rights hereunder
shall not release the Company from any of its duties or obligations under such
contracts and agreements, and (iii) OPIC and/or the Intermediary shall not have
any obligation or liability under such contracts and agreements or otherwise by
reason of this Agreement, nor shall OPIC be obligated to perform any of the
obligations or duties of the Company thereunder or to take any action to collect
or enforce any claim assigned hereunder.

SECTION 3.04  DELIVERY OF COLLATERAL

      (a) Unless otherwise specified herein, any and all funds, securities,
certificates, instruments, investment property, and other property and assets
from time to time that shall constitute or are intended to constitute or are
obligated to become Account Assets shall be delivered by the Company to the
Intermediary (i) by wire transfer as follows: The Bank of New York, ABA#: 021
000 018, A/C#: GLA 111-565, For further credit to A/C#: 293644 ______, Ref:
Price/Smart/OPIC Collateral Account,or (ii) by physical delivery to The Bank of
New York, 101 Barclay Street, 21W, New York, NY 10286, Attn: Vanessa Mack, Ref:
PriceSmart/OPIC, within one (1) Business Day of the date on which they are
required to be delivered, and shall be held in the Collateral Account in
accordance herewith.

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      (b) All certificates or instruments or other physical evidence, if any,
representing or evidencing the Collateral shall be held in the Collateral
Account by the Intermediary, and, when delivered, shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to OPIC.
OPIC shall have the right at any time to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of smaller
or larger denominations.

SECTION 3.05  SECURITY INTEREST ABSOLUTE

      The obligations of the Company under this Agreement are independent of the
other obligations included in the definition of "Obligations" and a separate
action or actions may be brought and prosecuted against the Company to enforce
this Agreement, irrespective of whether any action is brought against any
Sponsor or other collateral securing the obligations under the Loan Agreements,
and irrespective of whether any Sponsor is joined in any such action or actions.
Notwithstanding anything to the contrary contained herein and without limiting
the generality of any other provision hereof, OPIC may, at any time and from
time to time, either before or after the maturity of the Loan, make any
agreement with a Party, for the extension, renewal, payment, compromise,
discharge, release, or settlement of any of the terms hereof, without notice to
or further consent by any other Party, and without in any way impairing or
affecting the obligations and liabilities of any other Party. All rights of OPIC
and the pledge, assignment and security interest hereunder, and all obligations
of the Company hereunder, shall be absolute and unconditional (except as the
same may be extinguished by payment and/or performance in full of the
Obligations) irrespective of:

      (a) any lack of validity or enforceability of any Financing Document;

      (b) any change in the time, manner, or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from any Financing Document, including any
increase in the Obligations resulting from the extension of additional credit to
the Company or otherwise;

      (c) any taking, exchange, release, or non-perfection of any other
collateral or any taking, release, or amendment or waiver of, or consent to
departure from any guaranty, for all or any of the Obligations;

      (d) any manner of application of collateral, or proceeds thereof, to all
or any of the Obligations or any manner of sale or other disposition of any
collateral for all or any of the Obligations or any other assets of the Company
or any Sponsor;

      (e) whether or not there are, at any given time,  sufficient  funds in
the Collateral Account to meet the Company's Obligations;

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      (f) any change, restructuring, or termination of the corporate structure
or existence of the Company; or

      (g) any other circumstances that might otherwise constitute a defense
available to, or a discharge of, the Company or a third party grantor of a
security interest.

                                   ARTICLE IV
                        INVESTMENT OF COLLATERAL ACCOUNT

SECTION 4.01  INVESTMENTS

      (a) Subject to Section 4.02(a), if no Notice of Event of Default is in
effect, the Intermediary shall invest and reinvest all, or any portion of,
amounts at any time credited to the Collateral Account in such Permitted
Investments as shall be designated by the Company in a Permitted Investments
Notice. In the absence of such designation, by no later than 1:00 p.m. New York
City time on the Business Day following receipt of amounts in the form of same
day funds, the Intermediary shall, to the extent possible, invest such amounts
in (VALIANT TRSRY MMKT FD CL B (VN) (CUSIP NO.S99998860). OPIC may withdraw its
authorization allowing the Company to designate investments hereunder, at any
time, by notice to the Intermediary and the Company, in which case the
Intermediary shall invest at the direction of OPIC.

      (b) Subject to Section 4.02(b), if a Notice of Event of Default is in
effect, or if OPIC has provided notice to the Intermediary pursuant to the last
sentence of Section 4.01(a), the Intermediary shall invest and reinvest all, or
any portion of, amounts at any time credited to the Collateral Account in such
Permitted Investments as shall be designated by OPIC in a Permitted Investments
Notice. In the absence of such OPIC designation, by no later than 1:00 p.m. New
York City time on the Business Day following receipt of such amounts in the form
of same day funds, the Intermediary shall, to the extent possible, invest such
amounts in direct obligations of, or obligations guaranteed by, the United
States government or any agency or instrumentality thereof, maturing not later
than seven (7) days after the date of such investment, and the Intermediary
shall continue to re-invest any proceeds of such investments in like manner,
until further direction from OPIC.

SECTION 4.02  LIQUIDATION OF INVESTMENTS

      (a) If the Intermediary is required to disburse funds to the Company
pursuant to Section 5.01(b) hereof, then on the Requested Payment Date, the
Intermediary shall liquidate only those Account Assets specified in the related
Excess Amount Certificate (as may be superseded pursuant to Section 5.01(c))
hereof, which are necessary to enable the Intermediary to disburse the
Authorized Amount, in the order that has been specified by the Company;
PROVIDED, THAT, if the cash that will be realized upon the liquidation of

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the designated Account Assets is not sufficient to enable the Intermediary to
make such disbursement, subject to the conditions set forth in Section 5.01(b),
the Intermediary shall liquidate such Account Assets as instructed by OPIC in
writing, so long as the Intermediary has first provided to OPIC a complete list
of the Account Assets, as shall enable it to make such disbursement. Any amounts
not required for disbursement received from such liquidation shall be invested
in Permitted Investments indicated in the Excess Amount Certificate, or
otherwise in accordance with Section 4.01(a).

      (b) If a Notice of Event of Default is in effect, not less than two (2)
Business Days before a disbursement to OPIC from the Collateral Account is
required pursuant to Section 5.02, OPIC shall deliver to the Intermediary an
OPIC Disbursement Request designating the Account Assets to be liquidated. On
the OPIC Disbursement Date, the Intermediary shall liquidate only those
designated Account Accounts necessary to enable the Intermediary to disburse
the amount indicated in the OPIC Disbursement Request, in the order specified
therein; PROVIDED, THAT, if the cash that will be realized upon the liquidation
of the designated Account Assets is not sufficient to enable the Intermediary
to make such disbursement, the Intermediary shall liquidate such Account Assets
selected by OPIC in writing, so long as the Intermediary has first provided to
OPIC a complete list of the Account Assets, as shall enable it to make such
disbursement within the time required for payment under Section 5.02. Any
amounts not required for disbursement, received from such liquidation shall be
invested in Permitted Investments indicated in the OPIC Disbursement Request,
or otherwise in accordance with Section 4.01(b).

                                    ARTICLE V
                      PAYMENTS FROM THE COLLATERAL ACCOUNT

SECTION 5.01  DISBURSEMENTS AND LIMITATIONS ON DISBURSEMENTS TO THE COMPANY

      (a) Not less than fifteen (15) Business Days prior to a Requested
Payment Date, the Company shall send an Excess Amount Certificate to to OPIC,
setting forth the Requested Payment and designate the specific investments to be
sold as necessary. At least two (2) Business Days prior to the Requested Payment
Date, OPIC shall deliver either (i) to the Intermediary (with a copy to the
Company), a Notice of Authorization in respect of and with a copy of the Excess
Amount Certificate, or (ii) a Notice of Objection to the Company.

      (b) If OPIC has delivered a Notice of Authorization to the Intermediary,
then the Intermediary shall make disbursements from the Collateral Account to
the Company on the Requested Payment Date in the amount designated in the Notice
of Authorization as the Authorized Amount; PROVIDED, HOWEVER, that the
Intermediary shall make no such disbursement to the Company pursuant to this
Section 5.01 if:

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          (i)   the Intermediary receives a Notice of Event of Default from OPIC
      at any time prior to 11:00 a.m. New York City time on a Requested Payment
      Date, or

          (ii)  the Intermediary has received a Notice of Objection before
      11:00 a.m. New York City  time on the Requested Payment Date.

      (c) If the Company elects to designate Account Assets for liquidation on
the Requested Payment Date, other than those previously specified in an Excess
Amount Certificate, the Company shall notify the Intermediary of such
designation in writing, at least two (2) Business Days prior to a Requested
Payment Date.

      (d) Unless otherwise instructed by the Company in writing, the
Intermediary shall make all disbursements to the Company pursuant to this
Agreement in accordance with the following wire transfer instructions:

   [Mellon Bank, 3 Mellon Bank Center, Pittsburgh, PA 15259. USA. ] ABA # 043
   000 261. Account: Merrill Lynch, A/C No. 101-1730
   "For further credit to the account of PriceSmart, Inc.
   Account No. 72B-07435"

SECTION 5.02  DISBURSEMENTS TO OPIC

      If a Notice of Event of Default is in effect, the Intermediary shall make
disbursements from the Collateral Account on the date and in the amount
designated by OPIC in an OPIC Disbursement Request substantially in the form
annexed hereto as Exhibit F on at least two (2) Business Days' prior written
notice. The Intermediary shall conclusively rely upon and act in accordance with
such OPIC Disbursement Request without notice to or consent of the Company.

                                   ARTICLE VI
                           CONCERNING THE INTERMEDIARY

SECTION 6.01  POWERS, RIGHTS AND RESPONSIBILITIES OF INTERMEDIARY

      (a) The Intermediary shall exercise its duties upon the express terms and
conditions contained in this Agreement and in fulfillment of the duties and
obligations of a securities intermediary, as set forth in Article 8.

      (b) The Intermediary shall be obligated to perform only such duties as are
expressly set forth in this Agreement, including such duties as are incorporated
herein by reference to the UCC. No covenants or obligations shall be implied or
inferred from this

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Agreement against the Intermediary, nor shall the Intermediary be bound by the
provisions of any other agreement.

      (c) The Intermediary shall not be liable for any action taken or omitted
          or for any loss or injury resulting from its actions or its
          performance or lack of performance of its duties hereunder in the
          absence of gross negligence or willful misconduct on its part. In no
          event shall the intermediary be liable (i) for acting in accordance
          with or relying upon any instruction, notice, demand, certificate or
          document from any other Party hereto, but only to the extent that such
          Party may permissively give instructions, notices demands and the like
          pursuant to the provisions hereof, or any entity acting on behalf of
          any such Party, (ii) for any consequential, punitive or special
          damages, (iii) for the acts or omissions of its nominees,
          correspondents, designees, subagents or subcustodians chosen with due
          care, or (iv) for an amount in excess of the value of the securities
          or other property or assets deposited in or credited to the Collateral
          Account, valued as of the date of deposit.

      (d) The Intermediary shall be entitled to conclusively rely upon any
          order, judgment, certification, instruction, notice, direction,
          request, opinion, instrument or other ]writing  delivered to it in
          compliance with the provisions of this Agreement, reasonably believed
          by the Intermediary to be authentic, and to be signed or sent by the
          proper Person without being required to determine the authenticity or
          the correctness of any fact stated therein. The Intermediary shall not
          be required to ascertain the propriety or validity of service with
          respect to the foregoing.

      (e) The Intermediary shall not be called upon to advise any Party as to
          selling or retaining, or taking or refraining from taking any action
          with respect to, any securities or other property and assets deposited
          in or credited to the Collateral Account pursuant hereto.

      (f) No provision of this Agreement shall require the Intermediary to
          expend or risk its own funds or otherwise incur any financial
          liability in the performance of any of its duties or in the exercise
          of any of its rights or powers hereunder.

      (g) In the event of any ambiguity or uncertainty hereunder or in any
          notice, instruction or other communication received by the
          Intermediary hereunder, the Intermediary may, in its sole discretion,
          refrain from taking any action other than retain possession of the
          Account Assets, unless the Intermediary receives written instructions,
          signed by all other Parties, which eliminates such ambiguity or
          uncertainty.

      (h) The Intermediary may consult with legal counsel of its selection at
          the expense of the Company as to any matter relating to this
          Agreement, and

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          the Intermediary shall not incur any liability in acting in good faith
          in accordance with any advice from such counsel.

      (i) The Intermediary shall not incur any liability for not performing any
          act or fulfilling any duty, obligation or responsibility hereunder by
          reason of any occurrence beyond the control of the Intermediary
          (including butnot limited to any act or provision of any present or
          future law or regulation or governmental authority, any act of God or
          war, or the unavailability of the Federal Reserve Bank wire or telex
          or other wire or communication facility.

      (j) The Intermediary shall not be responsible in any respect for the form,
          execution, validity, value or genuineness of documents or securities
          deposited hereunder, or for any description therein, or for the
          identity, authority or rights of persons executing or delivering or
          purporting to execute or deliver any such document, security or
          endorsement. The Intermediary shall not be required, or have any duty,
          to notify anyone of any payment or maturity under the terms of any
          instrument deposited hereunder, nor to take any legal action to
          enforce payment of any check, note or security deposited hereunder or
          to exercise any right or privilege which may be afforded to the holder
          of such security.

      (k) If at any time the Intermediary is served with any judicial or
          administrative order, judgment, decree, writ or other form of judicial
          or administrative process which in any way affects the Collateral
          (including but not limited to orders of attachment or garnishment or
          other forms of levies or injunctions or stays relating to the transfer
          of Account Assets), the Intermediary shall immediately notify OPIC,
          provide copies of all documents served on it to enable OPIC to take
          appropriate action to protect its interests and confer with OPIC
          before complying. Thereafter, the Intermediary is authorized tom
          comply therewith in any manner as it or its legal counsel of its own
          choosing deems appropriate; and if the Intermediary complies with any
          such judicial or administrative order, judgment, decree writor other
          form of judicial or administrative  process, the Intermediary shall
          not be liable to any of the other parties hereto or to any other
          person or entity even though such order, judgment, decree, writ or
          process may be subsequently modified or vacated or otherwise
          determined to have been without legal force or effect.

      (m) The provisions of this Article shall survive termination of this
Agreement, the resignation or removal of the Intermediary and the closing of the
Collateral Account.

SECTION 6.02  COMPENSATION AND REIMBURSEMENT OF INTERMEDIARY

                                       10
<Page>

      (a) On or prior to the initial Closing Date, the Company shall pay the
Intermediary the fees payable for the first year, and, not later than the annual
anniversary thereof, the Company shall pay the Intermediary the fees then
payable, in advance, for the upcoming year, pursuant to Schedule Y, as such
schedule may be amended from time to time to reflect changes in the
Intermediary's standard rates for such services, by the Intermediary's delivery
of a new Schedule Y to the other Parties.

      (b) The Company shall reimburse the Intermediary, upon demand, for all
expenses, disbursements, and advances incurred or made by the Intermediary in
implementing any of the provisions of this Agreement, including any costs or
expenses incurred by the Intermediary as a result of conflicting claims or
notices involving the Parties, compensation and the expenses and disbursements
of its counsel and agents, and all other costs and expenses incurred in
connection with the execution, administration or enforcement of this Agreement,
except any such expense, disbursement, or advance as may arise from the
Intermediary's gross negligence or willful misconduct.

      (c) The Intermediary shall promptly notify OPIC of any failure by the
Company to pay the Intermediary any fees and expenses or other amounts due and
payable to the Intermediary pursuant to this Section 6.02 and Section 12.12. The
Intermediary shall take no action against the Company with respect to any
nonpayment, prior to thirty (30) Business Days from the date of notice to OPIC
thereof, during which time OPIC may elect to pay the Intermediary the amounts
due by the Company, as provided in Section 6.02(d).

      (d) OPIC shall have no liability to the Intermediary for any amounts
payable pursuant to this Section 6.02 and Section 12.12; however, OPIC may, in
its sole discretion, agree to pay amounts owed by the Company to the
Intermediary, in which case such amount shall be deemed to be an Obligation
secured by the Collateral. The foregoing is without prejudice to any right which
OPIC may have under applicable law, upon OPIC's payment to the Intermediary, to
be subrogated to the rights of the Intermediary against the Company.

SECTION 6.03  INTERMEDIARY'S WAIVER OF LIEN ON COLLATERAL AND SETOFF RIGHTS

      The Intermediary acknowledges that it shall hold the Collateral solely in
its capacity as securities intermediary hereunder, and the Intermediary
irrevocably waives and agrees not to exercise any banker's lien, right of
setoff, right of recoupment, right to combine accounts or any similar lien,
claim or right, it may have against or on the Collateral, express or implied,
statutory or otherwise, to satisfy any obligation which the Company may owe to
the Intermediary, in any capacity.

SECTION 6.04  ACCESS TO BOOKS; INSPECTION; STATEMENTS OF ACCOUNT

                                       11
<Page>

      (a) Until one (1) year after the Intermediary has received notice from
OPIC pursuant to Section 11.02 that all Obligations have been paid in full,
the Intermediary shall, upon request of OPIC, give or cause to be given to an
Authorized Officer of OPIC, access, during normal business hours, to examine,
copy and make extracts from, in a manner that does not disrupt the
Intermediary's normal business operations, any and all records and documents
which are then in the possession or subject to the control of the Intermediary,
relating to the Collateral. The Company shall pay the costs and expenses of OPIC
and the Intermediary in connection with the exercise of OPIC's rights under this
Section. If the Company fails to pay the Intermediary's costs and expenses, OPIC
may do so in accordance with Section 10.02, and OPIC may then seek reimbursement
from the Company under Section 12.14.

      (b) The Intermediary shall furnish to the Company and to an Authorized
Officer of OPIC monthly transaction statements showing all credits and deposits
to, and disbursements from, the Collateral Account during such month, and
showing the Account Assets held by the Intermediary (identified by title or
series, unpaid principal amount, maturity date and other relevant identifying
features) as of the last Business Day of such period and the value thereof
(valued in accordance with the Intermediary's customary methods for the
valuation of such assets). The Company and OPIC shall each be entitled to
communicate directly with the Intermediary and the Intermediary shall, upon the
reasonable request of the Company or OPIC, from time to time, confirm the value
of Account Assets.

SECTION 6.05  CLOSING OF COLLATERAL ACCOUNT

      (a) The Intermediary may close the Collateral Account by giving at least
ninety (90) days' prior written notice to the Company and OPIC. OPIC may enter
into an agreement with a successor securities intermediary during such notice
period. The Intermediary shall keep the Collateral Account open and hold all
Account Assets in accordance with the terms of this Agreement, pending
distribution to such successor securities intermediary, and shall promptly
deliver all Account Assets to such successor upon notice from OPIC of OPIC's
designation thereof.

      (b) OPIC may cause the Collateral Account to be closed upon written
notice to the Intermediary. The Intermediary shall promptly deliver the Account
Assets to OPIC or any successor securities intermediary designated by OPIC, in
accordance with OPIC's instructions. The account closing shall take effect upon
delivery of all Account Assets to OPIC as specified in clause (c) below or the
designated successor securities intermediary, and the Intermediary shall
thereupon be discharged from all further obligations under this Agreement and
shall have no further duties or responsibilities in connection herewith.

      (c) If during the ninety (90) day notice period specified in clause (a)
above or after forty-five (45) days following the date of delivery of OPIC's
notice of closing pursuant to clause (b) above, the Intermediary has not
received a written designation of a

                                       12
<Page>

successor securities intermediary then, after such period in each case, the
Intermediary's sole responsibility shall be to promptly deliver all Account
Assets to OPIC.

      (d) Pursuant to clauses (a) through (c) of this Section 6.05, and in
accordance with the time periods specified in each such clause, as applicable,
the Intermediary shall, upon instruction from OPIC and without notice to the
Company:

          (i)  transfer or cause its nominee to transfer to OPIC or its designee
      any and all Collateral in the Intermediary's possession or control, or
      maintained in the Intermediary's name, or on its behalf; and

          (ii) provide such documents to OPIC as may be reasonably required to
      register OPIC, a successor securities intermediary or another designee of
      OPIC, as the case may be, as the owner or registered pledgee (as directed
      by OPIC) of any uncertificated security or certificated security in
      registered form, then included in the Collateral.

      (e)     The Intermediary shall close the Collateral Account upon
              termination of this Agreement and delivery of Account Assets
              to the Company pursuant to Section 11.02.

                                   ARTICLE VII
                 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
                                  INTERMEDIARY

SECTION 7.01  REPRESENTATIONS AND WARRANTIES OF INTERMEDIARY

      The Intermediary represents and warrants as follows:

      (a) it is duly organized and validly existing the laws of the jurisdiction
of its organization and incorporation and, if relevant under such laws, is in
good standing;

      (b) it has the power to execute and deliver this Agreement and any other
documentation relating to this Agreement to which it is a party or that it is
required by this Agreement to deliver, and to perform its obligations under this
Agreement, and it has taken all necessary action to authorize such execution,
delivery and performance, and this Agreement has been, and each other such
document shall be, duly executed, delivered and performed by it;

      (c) such execution, delivery and performance do not violate or conflict
with any law applicable to it, any provision of its constituent documents, any
order or

                                       13
<Page>

judgment of any court or other agency of government applicable to it or any of
its assets or any contractual restriction binding on or affecting it or any of
its assets;

      (d) all governmental and other consents that are required to have been
obtained by it with respect to this Agreement have been obtained and are in full
force and effect and it has complied with all conditions of any such consents;

      (e) its obligations under this Agreement constitute its legal, valid and
binding obligations, enforceable in accordance with their respective terms;

      (f) there is not pending or, to its knowledge, threatened against it or
any of its affiliates any action, suit or proceeding at law or in equity before
any court, tribunal, governmental body, agency or official or any arbitrator
that is likely to affect the legality, validity or enforceability against it of
this Agreement or its ability to perform its obligations under this Agreement;

      (g) it is not a clearing corporation, as defined in Article 8;

      (h) its jurisdiction is New York for purposes of Section 8-110(e) of the
UCC;

      (i) it has established the Collateral Account in the manner described in
Section 2.01 and such Collateral Account is subject to this Agreement; and

      (j) it is not aware of any claim to or interest in the Collateral Account
or any of the Collateral, including any other Person having "control" (as
defined in Article 8) of such account or assets, other than those claims and
interests of the Company and OPIC hereunder, and it has not entered into any
other agreement with any Person relating to the Collateral pursuant to which it
has agreed to comply with entitlement orders or other instructions with respect
to the Collateral made by any Person or to limit or condition the obligation of
the Intermediary to comply with entitlement orders or other instructions by
OPIC.

      The Intermediary makes no representation as to the validity, value,
genuineness or collectability of any security or other document or instrument
held by or delivered to it.

SECTION 7.02  COVENANTS OF INTERMEDIARY

      The Intermediary covenants as follows:

      (a) it shall not change its jurisdiction, as specified in Section 7.01(h),
or the governing law provisions contained in the account agreement pursuant to
which the Company opened the Collateral Account;

      (b) if any account agreement establishing the Collateral Account exists
that does not specify New York as its governing law, this Agreement shall be
attached

                                       14
<Page>

thereto, and shall be provided to any third parties making inquiries about the
Collateral Account;

      (c) without the prior written consent of OPIC and notice to the Company,
it shall not change the name or account number of the Collateral Account, or
enter into any agreement under which the Intermediary agrees to comply with
entitlement orders originated by any Person other than OPIC with respect to the
Collateral;

      (d) subject to the terms of this Agreement, it shall comply with all
entitlement orders and other orders of OPIC directing transfer, investment,
redemption or withdrawal of any Collateral or other instructions originated by
OPIC with respect to the Collateral, without further consent by the Company or
any other Person, and notwithstanding any contrary instructions to the
Intermediary from the Company or any other Person, and the Company shall have
only such rights to transfer, invest, redeem or withdraw the Collateral as are
specifically provided herein or in a written instruction by OPIC to the
Intermediary;

      (e) it shall maintain all Account Assets in its exclusive control, subject
to the terms of this Agreement;

      (f) it shall report all items of income (including dividends, interest
and other distributions on Account Assets), gain, expense, and loss recognized
in the Collateral Account in the name and under the tax identification number of
the Company as shown on the Form W-9 to be delivered upon the execution hereof;

      (g) it shall accept and promptly credit all property delivered to it by
or on behalf of the Company for credit to the Collateral Account, and all
Permitted Investments, by an appropriate entry in its records;

      (h) it does not have any interest in the Collateral but is serving only as
securities intermediary, and this is, and shall remain until termination of this
Agreement pursuant to Section 11.02, the only agreement between the Intermediary
and the Company relating to the Collateral (other than an agreement establishing
the Collateral Account, a copy of which has been delivered to OPIC);

      (i) it shall not grant any Lien on the Collateral and it shall promptly
notify OPIC and the Company if any Person requests the Intermediary to enter
into an agreement with respect to the Collateral, or otherwise asserts or seeks
to assert a lien, encumbrance or adverse claim against all or any portion of the
Collateral;

      (j) it shall provide to OPIC and the Company, simultaneously, copies of
all account statements, confirmations, and other correspondence relating to the
Collateral Account, and a monthly transaction and valuation statement in
accordance with Section 6.04(b), and it shall provide OPIC with any other
reports, valuations or other correspondence that OPIC may reasonably request;

                                       15
<Page>

      (k) it shall only accept Account Assets in the form specified in
Section 2.04;

      (l) it shall maintain the Collateral Account and shall not terminate
or close the Collateral Account without the prior written consent of OPIC and
notice to the Company, except as provided in Section 6.05; and

      (m) it has not extended, and shall not extend, any credit to the Company.

                                  ARTICLE VIII
              COMPANY REPRESENTATIONS, WARRANTIES AND COVENANTS

SECTION 8.01  REPRESENTATIONS AND WARRANTIES MADE UPON EXECUTION OF THIS
AGREEMENT

      Upon execution of this Agreement, the Company represents and warrants as
follows:

      (a) it has established the Collateral Account with the Intermediary
subject to this Agreement and the Company is not a party to any agreement with
respect to the establishment, management, or operation of the Collateral Account
or investment of amounts credited thereto or held therein, except for this
Agreement (other than an agreement establishing the Collateral Account, a copy
of which has been delivered to OPIC);

      (b) this Agreement creates a legal, valid and enforceable Lien in favor
of OPIC in the Collateral, securing the payment of the Obligations, enforceable
against the Company and third parties;

      (c) the security interest created by this Agreement in the Collateral
Account is perfected under the UCC, and such security interest, as so perfected,
is first priority;

      (d) there are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived;

      (e) no consent of any other Person and no authorization, approval, or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required (x) for the execution, delivery, or performance of
this Agreement by the Company, (y) for the perfection or maintenance of the
security interest created hereby (including the first priority nature of such
security interest), or (z) for the exercise by OPIC of the rights provided for
in this Agreement;

      (f) the Company has no trade name;

                                       16
<Page>

      (g) the Company has not (x) borrowed any money from, (y) been extended any
credit by, or (z) become otherwise obligated to pay any money to, the
Intermediary, other than the fees and expenses payable to the Intermediary
pursuant to Section 6.02; and

      (h) the Company has, independently and without reliance upon the
representations of OPIC or any other Person and based on such documents and
information as it has deemed appropriate, made its own decision to enter into
this Agreement.

SECTION 8.02  REPRESENTATIONS AND WARRANTIES MADE UPON DELIVERY OF ANY
COLLATERAL

      The Company represents and warrants as follows, upon delivery of any
Collateral:

      (a) any Account Assets that are transferred to the Intermediary have been
fully paid and are nonassessable, and all documentary, stamp, or other taxes or
fees that may be owing in connection with the issuance, transfer, and pledge
thereof have been paid by it or on its behalf;

      (b) the Company is the legal and beneficial owner of and has good title to
the Collateral, free and clear of any Lien thereon, other than the Liens created
hereby, and the Collateral is not subject to any agreement purporting to grant
to any third party a Lien on the property or assets of the Company which would
include the Collateral. No effective financing statement or other instrument
similar in effect covering all or any part of such Collateral is on file in any
recording office, except such as may have been filed in favor of OPIC relating
to this Agreement; and

      (c) no consent of any other Person and no authorization, approval, or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the pledge and assignment of, and grant of a
security interest in, the Collateral or for the exercise by OPIC of the rights
provided for in this Agreement or the remedies in respect of such Collateral
pursuant to this Agreement (except as may be required in connection with any
disposition of any portion of the Collateral by laws affecting the offering and
sale of securities generally).

                                       17
<Page>

SECTION 8.03  COMPANY COVENANTS

      So long as any of the Obligations shall remain unpaid and until
termination of this Agreement, unless OPIC shall otherwise consent in writing,
the Company agrees as follows:

      (a) it shall not move its chief executive office without at least sixty
(60) days prior written notice to OPIC;

      (b) it shall not make any withdrawal from or direct that any payment be
debited from the Collateral Account other than as expressly permitted by this
Agreement;

      (c) it shall not permit any Person other than OPIC to have control of the
Collateral Account or any of the Account Assets, including as a result of the
grant of a security interest to any Person acting as securities intermediary
with respect to such Collateral;

      (d) it shall not (x) borrow any money from, (y) allow any credit to be
extended to it by, or (z) become otherwise obligated to pay any money to, the
Intermediary, other than the fees or expenses payable to the Intermediary
pursuant to Section 6.02;

      (e) it shall pay all documentary, stamp, registration, or other duties,
taxes or fees, if any, to which this Agreement may be subject or give rise, and
shall indemnify OPIC and the Intermediary against any and all liabilities with
respect to or resulting from any delay or omission on the part of the Company to
pay any such duties, taxes, or fees;

      (f) it shall not knowingly take any action in connection with the
Collateral that would materially impair the value of the Collateral or that
would impair the interest or rights of OPIC therein;

      (g) it shall not sell, assign, transfer, charge, pledge, or encumber in
any manner, or otherwise dispose of, or grant any option with respect to, any of
the Collateral or the Company's interest therein, or allow to exist any Lien
(other than a Lien created hereby) on such Collateral or any of the Company's
interest therein; nor file, nor permit to be at any time on file in any
recording office, any effective financing statement or other instrument similar
in effect covering all or any part of such Collateral (except for filings
permitted or required hereunder);

      (h) it shall at all times maintain or cause to be maintained in the
Collateral Account, Account Assets at least equal in aggregate fair market value
to the Collateral Maintenance Requirement, and it shall monitor the value of
Account Assets on a daily basis to assure that the Collateral Maintenance
Requirement is at all times maintained; and

                                       18
<Page>

      (i) it shall furnish to OPIC, within forty-five (45) days after the end o
each fiscal quarter (including the fourth fiscal quarter) of each Fiscal Year,
statements and schedules further identifying and describing the Collateral and
setting forth its fair market value, and, from time to time, it shall furnish
such other reports in connection with the Collateral as OPIC may reasonably
request, all in reasonable detail.

                                   ARTICLE IX
                                EVENT OF DEFAULT

SECTION 9.01  NOTICE OF EVENT OF DEFAULT

      Upon the occurrence of an Event of Default, under either of the Loan
Agreements, OPIC may, in its sole discretion, deliver a Notice of Event of
Default to the Intermediary, with a copy thereof delivered to the Company. A
Notice of Event of Default delivered by OPIC shall become effective upon receipt
thereof by the Intermediary. A Notice of Event of Default, once effective, shall
remain in effect unless and until it is canceled by OPIC by delivery of a Notice
of Cancellation to the Intermediary (with a copy thereof to the Company). The
Company shall not be entitled to cancel any Notice of Event of Default. For the
avoidance of doubt, the Intermediary is required to comply with OPIC's
entitlement orders whether or not a Notice of Event of Default shall have been
given; the mechanism of providing a Notice of Event of Default is used purely
for ease of administering this Agreement and to reflect understandings with
respect to directing investments, as set forth herein.

SECTION 9.02  REMEDIES UPON EVENT OF DEFAULT

      (a) Upon the occurrence of an Event of Default, under either of the Loan
Agreements, OPIC shall have the right, in its discretion and without notice to
or consent of the Company, and whether or not it has delivered a Notice of Event
of Default, to direct the Intermediary to transfer to OPIC or any of its
nominees, all or any part of the Collateral. OPIC shall be entitled to exercise
all of the rights, powers and remedies set forth in Article X and all rights and
remedies it may have as a secured creditor under the UCC and other applicable
law, in protecting and enforcing its rights hereunder, including, if an Event of
Default, under either of the Loan Agreements, shall have occurred and be
continuing, without notice, to sell, lease, assign, and deliver, or grant
options to purchase, or otherwise dispose of, all or any part of the Collateral,
at such place or places as OPIC may determine, at public or private sale, for
cash or on credit and for present or future delivery (without thereby assuming
any credit risk), and at such price or prices and upon such other terms as OPIC
may deem commercially reasonable, it being agreed that the purchaser, lessee,
assignee or recipient of any or all of the Collateral so disposed of at any
public or private sale shall thereafter hold the same absolutely free from any
claim or right of the Company of whatsoever kind, including any right of
redemption, and any

                                       19
<Page>

obligation to see to the application of any part of the purchase money paid
therefor or any liability for the misapplication or non-application thereof, and
OPIC may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for such sale or other disposition, and such sale or other
disposition may be made at any time or place to which the same may be so
adjourned. As provided in Sections 1-102 and 9-501(3)(c) of the UCC, the duties
of OPIC pursuant to Sections 9-504(3) and 9-505(1) of the UCC shall be deemed to
be satisfied so long as the requirements of this Section are satisfied in
connection with any disposition of Collateral pursuant to this Agreement. To the
extent notice of sale or other disposition shall be required by law, at least
ten (10) days notice to the Company of the time and place of any sale or other
disposition shall constitute reasonable notice.

      (b) All cash proceeds received by OPIC in respect of any sale of,
collection from, or other realization on or upon all or any part of the
Collateral pursuant to Section 10.01, or any other payments made in respect of
the Collateral and received by OPIC pursuant to Section 9.01(a), may, in the
discretion of OPIC, be redelivered to the Intermediary as Collateral for, and
then or as soon thereafter as is reasonably practicable applied in whole or in
part by OPIC in accordance with Section 5.02 hereof, against, all or any of the
Obligations in any manner elected by OPIC that is permitted by applicable law.
Any surplus of such cash proceeds or other payments and interest accrued
thereon, held by the Intermediary or OPIC and remaining after payment in full of
all of the Obligations shall be promptly paid over (upon joint written
instruction of the Company and OPIC) to the Company or to whomsoever else may be
lawfully entitled to receive such surplus as directed by a court of competent
jurisdiction; PROVIDED, HOWEVER, that neither the Intermediary nor OPIC shall
have any obligation to invest or otherwise pay interest on any amounts held by
it in connection with or pursuant to this Agreement.

      (c) If the proceeds of sale, collection or other realization of or upon
the Collateral pursuant to clause (a) are insufficient to cover the costs and
expenses of such sale, collection, or other realization and the payment in full
of the Obligations, the Company shall remain liable for any deficiency.

      (d) To the extent permitted by law, OPIC may be a purchaser of the
Collateral, or any part thereof, at any sale or other disposition carried out
pursuant to the provisions of this Agreement, and may bid for and acquire all or
any part of the Collateral and, in lieu of paying cash, may make settlement for
the purchase price by crediting against the Obligations the net sales or
realization price, after deducting the costs and expenses of such sale or other
disposition.

      (e) Subject to compliance with any applicable law, OPIC may, at its
option, enforce its rights hereunder without prior judicial or arbitral process
or hearing, and, to the extent permitted by applicable law, the Company
expressly waives any and all legal and equitable rights which might otherwise
require OPIC to enforce its rights by judicial or arbitral process.

                                       20
<Page>

                                    ARTICLE X
                CERTAIN RIGHTS, POWERS AND REMEDIES; NO WAIVER

SECTION 10.01  OPIC APPOINTED ATTORNEY-IN-FACT

      The Company irrevocably appoints OPIC its agent and attorney-in-fact,
coupled with an interest, with full authority in the Company's place and stead
and in its name or otherwise, from time to time upon the occurrence and during
the continuance of an Event of Default under either Loan Agreement or otherwise,
to the extent that OPIC shall reasonably deem any action to be necessary in
order to maintain the perfection and assure first priority of, and the ability
to enforce, its security interest in the Collateral, in OPIC's discretion, to
take any action and to execute any instrument which OPIC may deem necessary or
advisable to accomplish the purposes of this Agreement, including, to ask,
demand, collect, sue for, recover, compound, receive, and give acquittance and
receipts for moneys due and to become due under or in connection with the
Collateral, to receive, indorse, and collect any drafts or other instruments,
documents, and chattel paper in connection therewith, to sign the Company's name
on, and file financing statements as described in Section 12.19, and to file any
claims or take any action or institute any proceedings which OPIC may deem
necessary or desirable for the collection thereof.

SECTION 10.02  OPIC MAY PERFORM

      If the Company fails to perform any agreement contained herein, including
payment of fees and expenses of the Intermediary, OPIC may itself perform, or
cause performance of, such agreement, and the payments made by OPIC and expenses
incurred in connection therewith (including attorneys' fees and expenses) shall
be payable by the Company to OPIC on demand, and shall be secured by the
Collateral. In no event shall OPIC be responsible for any obligation of the
Company pursuant to Section 12.12.

SECTION 10.03  CUMULATIVE RIGHTS

      (a) OPIC shall be entitled to exercise all of the rights, powers, and
remedies (whether vested in it by this Agreement, by law, in equity, by statute,
or otherwise), to the maximum extent permitted by applicable law, for the
protection and enforcement of OPIC's rights hereunder, including any proceeding
in any court or other tribunal by an action at law, suit in equity, or other
appropriate proceeding, whether for damages, for the specific performance of any
term hereof, or otherwise in aid of the exercise of any power granted hereby or
by law.

      (b) The rights, powers and remedies provided herein and in the other
Financing Documents are cumulative and are in addition to any other rights,
powers or remedies provided in any Financing Document or now or hereafter
existing at law or in

                                       21
<Page>

equity or by statute. The assertion or employment of any right, power or remedy
hereunder or otherwise, including any rights of setoff or rights under other
Financing Documents or under applicable law shall not prevent the concurrent
assertion of any other appropriate right, power or remedy and shall not diminish
or otherwise affect the rights, powers and remedies conferred hereunder. No
single or partial exercise of any right, power or remedy shall preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy.

SECTION 10.04  NO DUTIES

      Rights, powers and remedies conferred upon OPIC by this Agreement are to
protect the interests of OPIC in the Collateral and shall not impose any duty
upon OPIC to exercise any such rights, powers or remedies. Except as
specifically provided herein, OPIC shall have no duty as to the collection or
protection of Collateral, nor as to the preservation of any rights pertaining
thereto, beyond the safe custody thereof (if Collateral is in OPIC's custody),
and OPIC shall not be responsible for any loss attributable to the manner of
realization of the value of any Collateral. Except for notices of sale or other
notices required to be given by OPIC hereunder, OPIC shall be under no duty
whatsoever to make or give any presentment, notice of dishonor, protest, demand
for performance, notice of non-performance, notice of intent to accelerate,
notice of acceleration, or take notice or demand in connection with any
Collateral or the Obligations, or take any steps necessary to preserve any
rights against the Company or any other Person.

SECTION 10.05  WAIVERS

      No waiver of any right, power or remedy of any Party hereunder shall be
effective unless given in writing. No delay of any Party hereunder in exercising
any right, power or remedy shall operate as a waiver thereof or otherwise impair
any of such Party's rights, powers or remedies.

                                   ARTICLE XI
                       CONTINUING OBLIGATION; TERMINATION

SECTION 11.01  CONTINUING OBLIGATION

      (a) This Agreement and the security interest created hereby is a
continuing obligation and whether or not there are, at any time, sufficient
assets in the Collateral Account to meet the Company's obligations to OPIC as
they fall due, nothing in this Agreement shall be deemed in any way to lessen or
absolve the Company from its obligations to OPIC to satisfy the Obligations in
full as they fall due. This Agreement shall create a continuing pledge and
assignment of, and security interest in, the Collateral

                                       22
<Page>

and shall be binding on the Company and shall remain in full force and effect
until this Agreement is terminated in accordance with Section 11.02. For the
avoidance of doubt, the security interest created hereby shall continue,
notwithstanding closure of the Collateral Account pursuant to Section 6.05(a),
(b) or (c) and transfer of Account Assets to a successor securities
intermediary.

      (b) To the extent that any payments on the Obligations or proceeds of
the Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, other law or
equitable cause, then to such extent the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received by
OPIC, and OPIC's security interests, rights, powers and remedies hereunder shall
continue in full force and effect. In such event, this Agreement shall be
automatically reinstated if it shall theretofore have been terminated. The
provisions of this Section shall survive termination of this Agreement.

SECTION 11.02  TERMINATION

      Except as otherwise stated herein, this Agreement shall remain in full
force and effect until the date that the Obligations shall have been
indefeasibly paid in full in Dollars and the Intermediary receives notice from
OPIC thereof. Upon the indefeasible payment in full in Dollars of the
Obligations, the security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the Company. Upon any such termination, OPIC
shall, at the Company's expense, execute and deliver to the Company such
documents as the Company shall reasonably request to evidence such termination
and promptly return any Collateral then in the possession or under the control
of OPIC, and the Intermediary shall deliver any remaining Account Assets to the
Company at the Company's direction, after deduction of any payments due from the
Company to the Intermediary.

                                   ARTICLE XII
                                  MISCELLANEOUS

SECTION 12.01  JURISDICTION AND CONSENT TO SUIT; WAIVER OF OBJECTION TO FORUM

      Each of the Company and the Intermediary hereby irrevocably and
unconditionally:

      (a) submits itself and its property in any legal action or proceeding
relating to this Agreement, or for recognition, protection, or enforcement of
any judgment in respect hereof (any of the foregoing, an "ACTION") to the
non-exclusive personal jurisdiction of the courts within the City and State of
New York,

                                       23
<Page>

      (b) consents that any such Action may be brought in such courts, and
waives its right to request transfer of such Action and any objection that it
may now or hereafter have to the venue of any such Action in any such court or
that such Action was brought in an inconvenient court or one that lacked or had
improper jurisdiction and agrees not to plead or claim the same;

      (c) agrees that service of process in any such Action may be effected by
mailing a copy thereof by registered or certified mail (or overnight courier or
any substantially similar form of mail), postage prepaid, to the Company at its
address set forth in Section 12.03 or at such other address of which OPIC shall
have been designated by notice pursuant thereto;

      (d) agrees that nothing herein shall affect OPIC's right to serve
process or notice in any other manner permitted by law or shall limit OPIC's
right to sue in any other jurisdiction; and

      (e) agrees that judgment against it in any such Action shall be final
and may be enforced in any other jurisdiction within or without the U.S. by
action to enforce the judgment or otherwise as provided by law, a certified or
exemplified copy of which judgment shall be conclusive evidence of the fact and
amount of the obligation of the Company or the Intermediary, as applicable.

SECTION 12.02  IMMUNITY

      The Company represents and warrants that it is subject to civil and
commercial law with respect to its obligations under this Agreement, that the
making and performance of this Agreement constitute private and commercial acts
rather than governmental or public acts and that neither the Company nor any of
its properties or revenues has any right of immunity from suit, court
jurisdiction, attachment prior to judgment, attachment in aid of execution of a
judgment, set-off, execution of a judgment, or from any other legal process with
respect to its obligations under this Agreement. To the extent that the
Agreement may hereafter be entitled, in any jurisdiction in which judicial or
arbitral proceedings may at any time be commenced with respect to any Financing
Document, to claim for itself or its revenues or assets any such immunity, and
to the extent that in any such jurisdiction there may be attributed to the
Company such an immunity (whether or not claimed), the Company hereby
irrevocably agrees not to claim and hereby irrevocably waives such immunity. The
foregoing waiver of immunity shall have effect under the United States Foreign
Sovereign Immunities Act of 1976.

SECTION 12.03  NOTICES

      Each notice, demand, or other communication relating to this Agreement
shall be in writing, shall be hand-delivered or sent prepaid by mail or
overnight delivery service or electronically confirmed facsimile transmission
(with a copy by mail to follow, receipt

                                       24
<Page>

of which copy shall not be required to effect notice), and shall be deemed
duly given when actually delivered to the following addresses:

   TO THE COMPANY:

      PriceSmart, Inc.
      4649 Morena Blvd.
      San Diego, CA 92117-3650

      Attn.: General Counsel

      Facsimile: (858) 581-4707
      Phone: (858) 581-7728

      TO OPIC:

      Overseas Private Investment Corporation
      1100 New York Avenue, N.W.
      Washington, D.C. 20527
      United States of America
      Attn.: Vice President, Finance
             Re: PriceSmart, Inc. corporate expansion

      Facsimile: 1-202-408-9866
      Phone: (202) 336-8480

      TO THE INTERMEDIARY:

      The Bank of New York
      101 Barclay Street 21W
      New York, NY 10286
      Attn.: Vanessa Mack
      Ref: PriceSmart/OPIC

      Facsimile: (212)  815-4803 Phone: (212) 815-5346

      Any Party may, by written notice to the other Parties, change the address
to which such notices, demands, or other communications should be sent to it.
Whenever hereunder the time for giving a notice or performing an act falls on a
Saturday, Sunday or banking holiday, such time shall be extended to the next day
on which the Intermediary is open for business.

SECTION 12.04  ENGLISH LANGUAGE

                                       25
<Page>

      All documents to be furnished or communications made under this Agreement
shall be in English or, if in another language, shall be accompanied by a
certified translation into English, which translation shall govern among the
Parties hereto.

SECTION 12.05  GOVERNING LAW

      THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. THE PARTIES AGREE THAT THE "SECURITIES
INTERMEDIARY'S JURISDICTION" (WITHIN THE MEANING OF SECTION 8-110(e)(1) OF THE
UCC) IS THE STATE OF NEW YORK.

SECTION 12.06  SUCCESSION; ASSIGNMENT

      This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Parties; provided, however, that neither the
Company nor the Intermediary shall, without the prior consent of OPIC, assign or
delegate all or any part of its interest herein or obligations hereunder.

SECTION 12.07  SURVIVAL OF AGREEMENTS

      Each agreement, representation, warranty, and covenant contained or
referred to in this Agreement shall survive any investigation at any time made
by OPIC and shall survive disbursement of the Loan, except for changes permitted
hereby, and, except as otherwise provided in this Section, shall terminate only
in accordance with Section 11.02. Without prejudice to the survival of any other
agreement of the Parties, the agreements and obligations contained in Sections
6.01(c) 6.02, 8.03(e), 12.12, 12.13, 12.14, 12.15 and 12.21 shall survive the
payment in full of all of the other Obligations.

SECTION 12.08  INTEGRATION; AMENDMENTS

      This Agreement embodies the entire understanding of the Parties and
supersedes all prior negotiations, understandings, and agreements between or
among them with respect to the subject matter hereof. The provisions of this
Agreement may be waived, supplemented, or amended only by an instrument in
writing signed by the Parties. The Parties agree to amend this Agreement to
reflect commercial code changes or otherwise, in a manner consistent with the
intent of this Agreement, if requested by OPIC.

SECTION 12.09  SEVERABILITY

                                       26
<Page>

      If any provision of this Agreement is prohibited or held to be invalid,
illegal, or unenforceable in any jurisdiction, the Parties agree to the fullest
extent permitted by law that such invalidity, illegality or enforceability shall
not affect the validity, legality, and enforceability of the other provisions of
this Agreement and shall not render such provision prohibited, invalid, illegal,
or unenforceable in any other jurisdiction. If, and to the extent that, any
obligation of the Company (including that under Article XI) is unenforceable for
any reason, the Company agrees, independently of any other obligation hereunder,
to make the maximum contribution to the payment and satisfaction thereof as is
permissible under applicable law.

SECTION 12.10  WAIVER OF JURY TRIAL

      THE COMPANY, OPIC AND THE INTERMEDIARY EACH IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP BETWEEN AND AMONG THEM ESTABLISHED BY THIS
AGREEMENT.

SECTION 12.11  RIGHT OF SET-OFF

      Upon the occurrence of any failure by the Company to perform any
obligation under this Agreement, OPIC is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by OPIC 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, whether or not OPIC
shall have made any demand under this Agreement and although such obligations
may be contingent and unmatured. OPIC agrees to promptly notify the Company
after any such set-off and application, PROVIDED, HOWEVER, that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of OPIC under this Section are in addition to other rights and
remedies (including other rights of setoff) which OPIC may have.

SECTION 12.12  INDEMNITY

      The Company shall, at all times, indemnify and hold harmless each of OPIC
and the Intermediary and its directors, officers, agents and employees (each, an
"INDEMNIFIED PERSON") in connection with any Loss (as defined below) and any
Costs of Defense (as defined below) (the "INDEMNITY"). The term "LOSS" shall
mean any losses, claims, damages, taxes, penalties, or other costs relating to
this Agreement to which an Indemnified Person may become subject. The term
"COSTS OF DEFENSE" shall mean costs, fees, and expenses incurred by or imposed
on any Indemnified Person in defending,

                                       27
<Page>

analyzing, settling, or resolving a Loss or Potential Loss (as defined below),
and the expenses associated with the making of any affirmative claim in
connection therewith (PROVIDED, THAT, costs, fees, and expenses in connection
with a proceeding by any Indemnified Person to enforce his, her, or its rights
under this Indemnity shall not be considered to be "COSTS OF DEFENSE"). The term
"POTENTIAL LOSS" shall mean any event, fact, condition, or circumstance that is
reasonably likely to give rise to a Loss. This Indemnity shall not apply to the
extent that a court or arbitral tribunal with jurisdiction over the Loss and
each Indemnified Person who has a Loss or Costs of Defense in connection
therewith renders a final determination that the Loss or Costs of Defense
resulted from (i) the gross negligence or willful misconduct of the Indemnified
Person, or (ii) OPIC's failure to perform any act required of it under this
Agreement. The Indemnity is independent of and in addition to (i) any rights of
any party hereto in connection with any Loss or Costs of Defense and (ii) any
other agreement, and shall survive the execution, modification, and amendment of
this Agreement and the other Financing Documents, the expiration, cancellation,
or termination of the Commitment, the disbursement and repayment of the Loan,
and the provisions of any other indemnity. Any exclusion of an obligation to pay
any amount under this Section shall not affect the requirement to pay such
amount under any other Section hereof or under any other agreement. OPIC and
each other Indemnified Person shall have the right to control its, his, or her
defense, PROVIDED, HOWEVER, that each Indemnified Person shall: (a) notify the
Company in writing as soon as practicable of any Loss, Potential Loss, or Cost
of Defense, and (b) keep the Company reasonably informed of material
developments with respect thereto. In exercising the right and power to control
his, her, or its actions in connection with a Loss or Potential Loss, including
a decision to settle any such Loss, each Indemnified Person shall, taking into
account the nature and policies of such Indemnified Person (i) consult with the
Company, and (ii) act as such Indemnified Person would act if the Costs of
Defense or settlement were to be paid by such Indemnified Person. The Company
acknowledges and agrees that each Indemnified Person is an express, third-party
beneficiary of the Company's obligations under this Section.

SECTION 12.13  LIMITATION ON DAMAGES

      No claim may be made by the Company against the Intermediary or OPIC or
any officer, agent, stockholder, partner, member, director or employee of either
of them for any special, indirect, consequential or punitive damages in respect
of any claim for breach of contract or any other theory of liability arising out
or relating to this Agreement or the transactions contemplated hereby or any
act, omission or event occurring in connection therewith, and the Company hereby
waives, releases, and agrees not to sue upon any claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.

SECTION 12.14  FEES AND EXPENSES OF OPIC

                                       28
<Page>

      The Company hereby agrees to pay OPIC on demand any and all costs and
expenses (including attorneys' fees and expenses) incurred by OPIC in connection
with this Agreement, including, without limitation, all costs and expenses
incurred by OPIC in connection with collecting any amount due by the Company
hereunder, defending against any claims or counterclaims by the Company, or
enforcing or preserving any of OPIC's rights, powers, or remedies contained
herein.

SECTION 12.15  WAIVER OF LITIGATION PAYMENTS

      In the event that any action or lawsuit is initiated by or on behalf of
OPIC against the Company or any other party to any Financing Document, the
Company, to the fullest extent permissible under applicable law, irrevocably
waives its right to, and agrees not to request, plead, or claim that OPIC and
its successors, transfers, and assigns (any such Person, an "OPIC PLAINTIFF")
post, pay, or offer, any CAUTIO JUDICATUM SOLVI bond, litigation bond, or any
other bond, fee, payment, or security measure provided for by any provision of
law applicable to such action or lawsuit (any such bond, fee, payment, or
measure, a "LITIGATION PAYMENT"), and the Company further waives any objection
that it may now or hereafter have to an OPIC Plaintiff's claim that such OPIC
Plaintiff should be exempt or immune from posting, paying, making, or offering
any such Litigation Payment.

SECTION 12.16  BENEFITS OF AGREEMENT

      Nothing in this Agreement, express or implied, shall give to any Person,
other than the Parties and the other Indemnified Persons and their respective
successors and assigns, any benefit or any legal or equitable right or remedy
under this Agreement.

SECTION 12.17  ARM'S-LENGTH NEGOTIATIONS

      This Agreement is the product of arm's-length negotiations between and
among the Parties. The Parties have entered into this Agreement freely,
voluntarily and with the advice of legal counsel. No Party shall be deemed to
have drafted this Agreement unilaterally. In the event a dispute arises
regarding the meaning or application of any provision of this Agreement, such
provision shall not be construed by reference to any doctrine calling for
ambiguities to be construed against the drafter of a document.

SECTION 12.18  FURTHER ASSURANCES

      The Company shall execute and deliver to OPIC such additional documents
and take such additional action as OPIC may require, at the Company's expense,
to carry out the purposes of this Agreement, to cause this Agreement to be duly
registered, notarized,

                                       29
<Page>

and stamped in any applicable jurisdiction, and to perfect, preserve and protect
OPIC's rights as contemplated herein.

SECTION 12.19  FINANCING STATEMENTS

      The Company hereby further authorizes OPIC to file one or more financing
or continuation statements, and amendments thereto (any such financing or
continuation statements or amendments to be delivered by the Company to OPIC in
form sufficient for filing), relating to all or any part of the Collateral
without the signature of the Company, where permitted by law. A photographic or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.

SECTION 12.20  COUNTERPARTS

      This Agreement may be executed in counterparts, each of which when so
executed and delivered shall be deemed an original and all of which together
shall constitute one and the same instrument.

SECTION 12.21 NO PROMOTIONAL MATERIALS

      No printed or other material in any language, including prospectuses,
notices, reports, and promotional material which mentions "the Bank of New York"
by name or the rights, powers, or duties of the Intermediaries under this
Agreement shall be issued by any other parties hereto, or on such party's
behalf, without the prior written consent of the Intermediary.

                                       30
<Page>

      IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed and delivered on its behalf by its duly authorized representative as of
the day and year first above written.

                                         PRICESMART, INC.

                                         By: ______________________________

                                         Name: ____________________________

                                         Title: ___________________________

                                         THE BANK OF NEW YORK

                                         By: ______________________________

                                         Name: ____________________________

                                         Title: ___________________________

                                         OVERSEAS PRIVATE INVESTMENT CORPORATION

                                         By: ______________________________

                                         Name: ____________________________

                                         Title: ___________________________

                                       31<PAGE>

                                                                   EXHIBIT 4.15

                         COMMON STOCK PURCHASE AGREEMENT

          This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
November 21, 2001 by and between On2 Technologies, Inc., a Delaware corporation
(the "Company"), and Crossover Ventures, Inc. (the "Purchaser").

          The parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1. CERTAIN DEFINITIONS.

                  (a) "AVERAGE DAILY PRICE" shall be the price based on the VWAP
         of the Company on the Principal Market.

                  (b) "DRAW DOWN" shall have the meaning assigned to such term
         in Section 6.1(a) hereof.

                  (c) "DRAW DOWN PRICING PERIOD" shall mean a period of twenty
         (20) consecutive Trading Days beginning on the date specified in the
         Draw Down Notice (as defined in Section 6.1(e) hereof); PROVIDED,
         HOWEVER, the Draw Down Pricing Period shall not begin before the day on
         which such notice is received in accordance with Section 9.4 hereof.

                  (d) "EFFECTIVE DATE" shall mean the date the Registration
         Statement of the Company covering the Shares being subscribed for
         hereby is declared effective by the Securities and Exchange Commission
         (the "SEC").

                  (e) "GAAP" shall mean the United States Generally Accepted
         Accounting Principles as those conventions, rules and procedures are
         determined by the Financial Accounting Standards Board.

                  (f) "INVESTMENT AMOUNT" shall have the meaning assigned to
         such term in Section 6.1(e) hereof.

                  (g) "MATERIAL ADVERSE EFFECT" shall mean any adverse effect on
         the business, operations, properties, or financial condition of the
         Company that is material and adverse to the Company and its
         subsidiaries, taken as a whole, and/or any condition, circumstance, or
         situation that would prohibit or otherwise materially interfere with
         the ability of the Company to perform any of its material obligations
         under this Agreement or the Registration Rights Agreement or to perform
         its obligations under any other Material Agreement.

                                       1
<PAGE>

                  (g) "PRINCIPAL MARKET" shall mean initially the American Stock
         Exchange and shall include the Nasdaq National Market, Nasdaq Small-Cap
         Market, and the New York Stock Exchange if the Company becomes listed
         and trades on such market or exchange after the date hereof. Principal
         Market shall not include the OTC Bulletin Board without the written
         consent of the Purchaser.

                  (h) "PURCHASE PRICE" shall mean with respect to Shares
         purchased during each applicable Settlement Period (not including the
         Stock):

                           (i) 90% of the Average Daily Price on the date in
                  question if the average VWAP during the 10 consecutive Trading
                  Days immediately prior to the applicable Settlement Period is
                  less than $2.43; and

                           (ii) 94% of the Average Daily Price on the date in
                  question if the average VWAP during the 10 consecutive Trading
                  Days immediately prior to the applicable Settlement Period is
                  equal to or greater than $2.43;

PROVIDED, HOWEVER, as to any Draw Downs in connection with a Special Activity
declared solely by the Company, the corresponding Purchase Price percentage
shall be reduced by an additional 3%.

                  (i) "REGISTRATION STATEMENT" shall mean the registration
         statement under the Securities Act of 1933, as amended (the "Securities
         Act"), to be filed with the Securities and Exchange Commission for the
         registration of the Shares pursuant to the Registration Rights
         Agreement attached hereto as EXHIBIT A (the "Registration Rights
         Agreement").

                  (j) "SEC DOCUMENTS" shall mean the Company's latest Form 10-K
         or 10-KSB as of the time in question, all Forms 10-Q or 10-QSB and 8-K
         filed thereafter, and the Proxy Statement for its most recent annual
         meeting of shareholders as of the time in question until such time as
         the Company no longer has an obligation to maintain the effectiveness
         of a Registration Statement as set forth in the Registration Rights
         Agreement.

                  (k) "SETTLEMENT PERIOD" shall have the meaning assigned to
         such term in Section 6.1(b).

                  (l) "SHARES" shall mean, collectively, the shares of Common
         Stock of the Company being subscribed for hereunder and the Stock.

                  (m) "SPECIAL ACTIVITY" shall mean any one time charge the
         Company expects to incur for any reason, including, without limitation,
         in connection with the acquisition of another business, as determined
         solely by the Company.

                  (n) "STOCK" shall have the meaning ascribed to such term in
         Section 5.2(f).

                                       2
<PAGE>

                  (o) "THRESHOLD PRICE" shall mean the price per share
         designated by the Company as the lowest Average Daily Price during any
         Draw Down Pricing Period at which the Company will sell its Common
         Stock in accordance with Article VI hereof.

                  (p) "TRADING DAY" shall mean any day on which the Principal
         Market is open for business.

                  (q) "VWAP" shall mean the daily volume weighted average price
         of the Company's Common Stock on the Principal Market as reported by
         Bloomberg Financial L.P. or any successor thereto, and if Bloomberg is
         no longer available, any comparable nationwide subscribed financial
         reporting service (based on a trading day from 9:30 am ET to 4:00 pm
         ET) using the VAP function on the date in question.

                                   ARTICLE II

                        PURCHASE AND SALE OF COMMON STOCK

         Section 2.1. PURCHASE AND SALE OF SHARES AND STOCK. Subject to the
terms and conditions of this Agreement, the Company may sell and issue to the
Purchaser and the Purchaser shall be obligated to purchase from the Company up
to an aggregate amount of twenty-three million dollars ($23,000,000) of the
Company's Common Stock (the "Commitment Amount"), $0.01 par value per share (the
"Common Stock"), and the Stock. Notwithstanding anything to the contrary herein,
the Commitment Amount shall be increased to $40,000,000 if after the first
anniversary of the Initial Closing Date (i) the average VWAP during any 10
consecutive Trading Days is equal to or greater than ten dollars ($10) (the "$10
Period"), and (ii) the average trading volume of the Common Stock during any
twenty (20) consecutive Trading Days (which period must include a $10 Period)
equals or exceeds 100,000 shares.

         Section 2.2. THE SHARES. The Company covenants to have authorized and
reserved, free of preemptive rights and other similar contractual rights of
stockholders (other than those set forth on Schedule 2.2), a sufficient number
of its shares, computed at the time of the applicable Draw Down, of its Common
Stock to cover the Shares to be issued in connection with all Draw Downs
requested under this Agreement and at the Initial Closing. Anything in this
Agreement to the contrary notwithstanding, (i) at no time will the Company
request a Draw Down which would result in the issuance to the Purchaser of an
aggregate number of shares of Common Stock which exceeds 19.9% of the number of
shares of Common Stock issued and outstanding on the Initial Closing Date
without obtaining stockholder approval of such excess issuance, unless otherwise
permitted by the Principal Market, and (ii) the Company may not make a Draw Down
to the extent that, after such purchase by the Purchaser, the sum of the number
of shares of Common Stock beneficially owned by the Purchaser and its affiliates
would result in beneficial ownership by the Purchaser and its affiliates of more
than 9.9% of the then outstanding shares of Common Stock. For purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act").

                                       3
<PAGE>

         Section 2.3. PURCHASE PRICE AND INITIAL CLOSING. The Company agrees to
issue and sell to the Purchaser and, in consideration of and in express reliance
upon the representations, warranties, covenants, terms and conditions of this
Agreement, the Purchaser agrees to purchase that number of the shares of Common
Stock to be issued in connection with each Draw Down at the applicable Purchase
Price. The delivery of executed documents under this Agreement and the other
agreements referred to herein and the payment of the fees set forth in Article
II of the Escrow Agreement, attached as EXHIBIT B hereto (the "Initial
Closing"), shall take place at the offices of Feldman & Associates, P.C., 36
West 44th Street, New York, New York 10036-8102 (i) within five (5) days from
the date hereof, or (ii) such other time and place or on such date as the
Purchaser and the Company may agree upon (the "Initial Closing Date"). Each
party shall deliver all documents, instruments and writings required to be
delivered by such party pursuant to this Agreement at or prior to the Initial
Closing.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         Section 3.1. REPRESENTATION AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to the Purchaser:

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

                  (b) AUTHORIZATION, ENFORCEMENT. (i) The Company has the
         requisite corporate power and corporate authority to enter into and
         perform its obligations under this Agreement, the Registration Rights
         Agreement, the Escrow Agreement and to issue the Draw Down Shares
         pursuant to their respective terms, (ii) the execution and delivery of
         this Agreement, the Registration Rights Agreement and the Escrow
         Agreement by the Company and the consummation by it of the transactions
         contemplated hereby and thereby have been duly authorized by all
         necessary corporate action and no further consent or authorization of
         the Company or its Board of Directors or stockholders is required, and
         (iii) this Agreement, the Registration Rights Agreement and the Escrow
         Agreement have been duly executed and delivered by the Company and at
         the Initial Closing shall constitute valid and binding obligations of
         the Company enforceable against the Company in accordance with their
         terms, except as such enforceability may be limited by applicable
         bankruptcy, insolvency, reorganization, moratorium, liquidation,

                                       4
<PAGE>

         conservatorship, receivership or similar laws relating to, or affecting
         generally the enforcement of, creditors' rights and remedies or by
         other equitable principles of general application. The Company has duly
         and validly authorized and reserved for issuance shares of Common Stock
         sufficient in number for the issuance of the Shares.

                  (c) CAPITALIZATION. The authorized capital stock of the
         Company consists of 100,000,000 shares of Common Stock of which
         ___________ shares are issued and outstanding and 20,000,000 shares of
         preferred stock, par value $0.01 per share, of which 400,000 shares of
         Series A Preferred Stock are issued and outstanding, 34,100 shares of
         Series B Preferred Stock are issued and outstanding, 1,644,304 shares
         of Series C Preferred Stock are issued and outstanding, 924,527 shares
         of Series C-II Preferred Stock are issued and outstanding, 2,049,839
         shares of Series C-III Preferred Stock, 3,571,429 shares of Series C-VI
         Preferred Stock.. On January 19, 2001, the Company entered into a
         Deferred Pricing Agreement with The Travelers Indemnity Company
         ("Travelers"), pursuant to which, upon the earlier of (i) a change of
         control or (ii) December 31, 2001, the Company will (A) cancel
         Travelers' existing 1,644,304 shares of Series C Preferred Stock and in
         its place issue 1,849,057 shares of Series C-IV Preferred Stock and
         4,099,678 shares of Series C-V Preferred Stock, and (B) cancel
         Travelers' existing warrants to purchase 205,538 shares of common stock
         at an exercise price of $8.69 per share and warrants to purchase
         205,538 shares of common stock at an exercise price of $10.86 per
         share, and in their place issue warrants to purchase 462,264 shares of
         common stock with an exercise price of $2.65 and warrants to purchase
         1,024,920 shares of common stock with an exercise price of $1.14. All
         of the outstanding shares of the Company's Common Stock have been duly
         and validly authorized and are fully paid and non-assessable, except as
         set forth in the SEC Documents. Except as set forth in this Agreement
         and the Registration Rights Agreement and as set forth in the SEC
         Documents, or on SCHEDULE 3.1(C) hereto, no shares of Common Stock are
         entitled to preemptive rights or registration rights and there are no
         outstanding options, warrant, scrip, rights to subscribe to, calls or
         commitments of any character whatsoever relating to, or securities or
         rights convertible into, any shares of capital stock of the Company.
         Furthermore, except as set forth in this Agreement and as set forth in
         the SEC Documents or on SCHEDULE 3.1(C), there are no contracts,
         commitments, understandings, or arrangements by which the Company is or
         may become bound to issue additional shares of the capital stock of the
         Company or options, securities or rights convertible into shares of
         capital stock of the Company. Except as set forth on SCHEDULE 3.1(C),
         the Company is not a party to any agreement granting registration
         rights to any person with respect to any of its equity or debt
         securities. Except as set forth on SCHEDULE 3.1(C), the Company is not
         a party to, and it has no knowledge of, any agreement restricting the
         voting or transfer of any shares of the capital stock of the Company.
         Except as set forth in the SEC Documents or on SCHEDULE 3.1(C) hereto,
         the offer and sale of all capital stock, convertible securities,
         rights, warrants, or options of the Company issued prior to the Initial
         Closing complied with all applicable federal and state securities laws,
         and no stockholder has a right of rescission or damages with respect
         thereto which would have a Material Adverse Effect on the Company's
         financial condition or operating results. The Company has made
         available to the Purchaser true and correct copies of the Company's

                                       5
<PAGE>

         articles or certificate of incorporation as in effect on the date
         hereof (the "Charter"), and the Company's bylaws as in effect on the
         date hereof (the "Bylaws"). The Company has not received any notice
         from the Principal Market questioning or threatening the continued
         inclusion of the Common Stock on such market.

                  (d) ISSUANCE OF SHARES. The Shares to be issued under this
         Agreement, when paid for and issued in accordance with the terms
         hereof, shall be duly authorized by all necessary corporate action and
         shall be validly issued and outstanding, fully paid and non-assessable,
         and the Purchaser shall be entitled to all rights accorded to a holder
         of Common Stock.

                  (e) NO CONFLICTS. The execution, delivery and performance of
         this Agreement by the Company and the consummation by the Company of
         the transactions contemplated herein do not and will not (i) violate
         any provision of the Company's Charter or Bylaws, (ii) conflict with,
         or constitute a default (or an event which with notice or lapse of time
         or both would become a default) under, or give to others any rights of
         termination, amendment, acceleration or cancellation of, any agreement,
         mortgage, deed of trust, indenture, note, bond, license, lease
         agreement, instrument or obligation to which the Company is a party,
         (iii) create or impose a lien, charge or encumbrance on any property of
         the Company under any agreement or any commitment to which the Company
         is a party or by which the Company is bound or by which any of its
         respective properties or assets are bound, or (iv) except with respect
         to the permissibility of private equity lines of credit under the
         Securities Act, result in a violation of any federal, state, or local
         statute, rule, regulation, order, judgment or decree (including any
         federal or state securities laws and regulations) applicable to the
         Company or any of its subsidiaries or by which any property or asset of
         the Company or any of its subsidiaries are bound or affected, except,
         in all cases, for such conflicts, defaults, termination, amendments,
         accelerations, cancellations and violations as would not, individually
         or in the aggregate, have a Material Adverse Effect. To the knowledge
         of the Company, the business of the Company and its subsidiaries is not
         being conducted in violation of any laws, ordinances or regulations of
         any governmental entity, except for possible violations which
         singularly or in the aggregate do not and will not have a Material
         Adverse Effect. The Company is not required under any federal, state or
         local law, rule or regulation to obtain any consent, authorization or
         order of, or make any filing or registration with, any court or
         governmental agency in order for it to execute, deliver or perform any
         of its obligations under this Agreement, or issue and sell the Shares
         in accordance with the terms hereof (other than any filings which may
         be required to be made by the Company with the SEC or state securities
         administrators and any registration statement which may be filed
         pursuant hereto); provided that, for purpose of the representation made
         in this sentence, the Company is assuming and relying upon the accuracy
         of the relevant representations and agreements of the Purchaser herein.

                  (f) SEC DOCUMENTS, FINANCIAL STATEMENTS. The Common Stock of
         the Company is registered pursuant to Section 12(g) of the Exchange
         Act, and, except as disclosed in the SEC Documents or on SCHEDULE
         3.1(F) hereto, the Company has timely

                                       6
<PAGE>

         filed all reports, schedules, forms, statements and other documents
         required to be filed by it with the SEC pursuant to the reporting
         requirements of the Exchange Act, including material filed pursuant to
         Section 13(a) or 15(d) of the Exchange Act (all of the foregoing
         including filings incorporated by reference therein being referred to
         herein as the "SEC Documents"). The Company has delivered or made
         available to the Purchaser true and complete copies of the SEC
         Documents filed with the SEC since June 16, 1999. The Company has not
         provided to the Purchaser any information which, according to
         applicable law, rule or regulation, should have been disclosed publicly
         by the Company but which has not been so disclosed, other than with
         respect to the transactions contemplated by this Agreement. As of their
         respective filing dates, the SEC Documents complied in all material
         respects with the requirements of the Exchange Act or the Securities
         Act, as applicable, and the rules and regulations of the SEC
         promulgated thereunder applicable to such documents, and, as of their
         respective filing dates, none of the SEC Documents contained any untrue
         statement of a material fact or omitted to state a material fact
         required to be stated therein or necessary in order to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading. The financial statements of the Company included
         in the SEC Documents comply as to form in all material respects with
         applicable accounting requirements under GAAP and the published rules
         and regulations of the SEC or other applicable rules and regulations
         with respect thereto. Such financial statements have been prepared in
         accordance with GAAP applied on a consistent basis during the periods
         involved (except (i) as may be otherwise indicated in such financial
         statements or the notes thereto or (ii) in the case of unaudited
         interim statements, to the extent they may not include footnotes or may
         be condensed or summary statements), and fairly present in all material
         respects the financial position of the Company and its subsidiaries as
         of the dates thereof and the results of operations and cash flows for
         the periods then ended (subject, in the case of unaudited statements,
         to normal year-end audit adjustments).

                  (g) SUBSIDIARIES. The SEC Documents or Schedule 3.1(g) hereto
         sets forth each subsidiary of the Company, showing the jurisdiction of
         its incorporation or organization and showing the percentage of the
         Company's ownership of the outstanding stock or other interests of such
         subsidiary. For the purposes of this Agreement, "subsidiary" shall mean
         any corporation or other entity of which at least a majority of the
         securities or other ownership interests having ordinary voting power
         (absolutely or contingently) for the election of directors or other
         persons performing similar functions are at the time owned directly or
         indirectly by the Company and/or any of its other subsidiaries. All of
         the issued and outstanding shares of capital stock of each subsidiary
         have been duly authorized and validly issued, and are fully paid and
         non-assessable. There are no outstanding preemptive, conversion or
         other rights, options, warrants or agreements granted or issued by or
         binding upon any subsidiary for the purchase or acquisition of any
         shares of capital stock of any subsidiary or any other securities
         convertible into, exchangeable for or evidencing the rights to
         subscribe for any shares of such capital stock. Neither the Company nor
         any subsidiary is subject to any obligation (contingent or otherwise)
         to repurchase or otherwise acquire or retire any shares of the capital
         stock of any subsidiary or any convertible securities, rights, warrants
         or options of

                                       7
<PAGE>

         the type described in the preceding sentence. Neither the Company nor
         any subsidiary is a party to, nor has any knowledge of, any agreement
         restricting the voting or transfer of any shares of the capital stock
         of any subsidiary.

                  (h) NO MATERIAL ADVERSE EFFECT. Since the date of the
         financial statement contained in the most recently filed Form 10-Q or
         Form 10-K, whichever is most current, no Material Adverse Effect has
         occurred or exists with respect to the Company, except as disclosed in
         the SEC Documents or on SCHEDULE 3.1(H) hereto.

                  (i) NO UNDISCLOSED LIABILITIES. Except as disclosed in the SEC
         Documents or on SCHEDULE 3.1(I) hereto, neither the Company nor any of
         its subsidiaries has any liabilities, obligations, claims or losses
         (whether liquidated or unliquidated, secured or unsecured, absolute,
         accrued, contingent or otherwise) that would be required to be
         disclosed on a balance sheet of the Company or any subsidiary
         (including the notes thereto) in conformity with GAAP which are not
         disclosed in the SEC Documents, other than those incurred in the
         ordinary course of the Company's or its subsidiaries' respective
         businesses since such date and which, individually or in the aggregate,
         do not or would not have a Material Adverse Effect on the Company or
         its subsidiaries.

                  (j) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since the date of
         the financial statement contained in the most recently filed Form 10-Q
         or Form 10-K, whichever is most current, no event or circumstance has
         occurred or exists with respect to the Company or its businesses,
         properties, operations or financial condition, that, under applicable
         law, rule or regulation, requires public disclosure or announcement
         prior to the date hereof by the Company but which has not been so
         publicly announced or disclosed in the SEC Documents.

                  (k) INDEBTEDNESS. The SEC Documents or SCHEDULE 3.1(K) hereto
         sets forth as of the date hereof all outstanding secured and unsecured
         Indebtedness of the Company or any subsidiary, or for which the Company
         or any subsidiary has commitments. For the purposes of this Agreement,
         "Indebtedness" shall mean (A) any liabilities for borrowed money or
         amounts owed in excess of $250,000 (other than trade accounts payable
         incurred in the ordinary course of business), (B) all guaranties,
         endorsements and contingent obligations in respect of Indebtedness of
         others, whether or not the same are or should be reflected in the
         Company's balance sheet (or the notes thereto), except guaranties by
         endorsement of negotiable instruments for deposit or collection or
         similar transactions in the ordinary course of business; and (C) the
         present value of any lease payments in excess of $250,000 due under
         leases required to be capitalized in accordance with GAAP. Neither the
         Company nor any subsidiary is in material default with respect to any
         Indebtedness.

                  (l) TITLE TO ASSETS. Each of the Company and the subsidiaries
         has good and marketable title to all of its real and personal property
         reflected in the SEC Documents, free of any mortgages, pledges,
         charges, liens, security interests or other encumbrances, except for
         those indicated in the SEC Documents or on SCHEDULE 3.1(1)

                                       8
<PAGE>

         hereto or such that do not cause a Material Adverse Effect. All said
         leases of the Company and each of its subsidiaries are valid and
         subsisting and in full force and effect.

                  (m) ACTIONS PENDING. There is no action, suit, claim,
         investigation or proceeding pending or, to the knowledge of the
         Company, threatened against the Company or any subsidiary which
         questions the validity of this Agreement or the transactions
         contemplated hereby or any action taken or to be taken pursuant hereto
         or thereto. Except as set forth in the SEC Documents or on SCHEDULE
         3.1(M) hereto, there is no material action, suit, claim, investigation
         or proceeding pending or, to the knowledge of the Company, threatened,
         against or involving the Company, any subsidiary or any of their
         respective properties or assets. There are no outstanding orders,
         judgments, injunctions, awards or decrees of any court, arbitrator or
         governmental or regulatory body against the Company or any subsidiary.

                  (n) COMPLIANCE WITH LAW. The Company and each of its
         subsidiaries have all franchises, permits, licenses, consents and other
         governmental or regulatory authorizations and approvals necessary for
         the conduct of their respective businesses as now being conducted by
         them unless the failure to possess such franchises, permits, licenses,
         consents and other governmental or regulatory authorizations and
         approvals, individually or in the aggregate, could not reasonably be
         expected to have a Material Adverse Effect.

                  (o) TAXES. The Company and each subsidiary has filed all
         material Tax Returns which it is required to file under applicable
         laws; all such Tax Returns are true and accurate in all material
         respects and have been prepared in compliance with all applicable laws;
         the Company has paid all material Taxes due and owing by it or any
         subsidiary (whether or not such Taxes are required to be shown on a Tax
         Return) and has withheld and paid over to the appropriate taxing
         authorities all material Taxes which it is required to withhold from
         amounts paid or owing to any employee, stockholder, creditor or other
         third parties; and since December 31, 2000, the charges, accruals and
         reserves for material Taxes with respect to the Company (including any
         provisions for deferred income taxes) reflected on the books of the
         Company are adequate to cover any Tax liabilities of the Company if its
         current tax year were treated as ending on the date hereof.

                  No claim has been made by a taxing authority in a jurisdiction
         where the Company does not file tax returns that the Company or any
         subsidiary is or may be subject to taxation by that jurisdiction. To
         the knowledge of the Company, there are no foreign, federal, state or
         local tax audits or administrative or judicial proceedings pending or
         being conducted with respect to the Company or any subsidiary; no
         information related to Tax matters has been requested by any foreign,
         federal, state or local taxing authority; and, except as disclosed
         above, no written notice indicating an intent to open an audit or other
         review has been received by the Company or any subsidiary from any
         foreign, federal, state or local taxing authority. The Company (A) has
         not executed or entered into a closing agreement pursuant to Section
         7121 of the Internal Revenue Code or any predecessor provision thereof
         or any similar provision of state, local or foreign law; and

                                       9
<PAGE>

         (B) has not agreed to or is required to make any adjustments pursuant
         to Section 481 (a) of the Internal Revenue Code or any similar
         provision of state, local or foreign law by reason of a change in
         accounting method initiated by the Company or any of its subsidiaries
         or has any knowledge that the IRS has proposed any such adjustment or
         change in accounting method, or has any application pending with any
         taxing authority requesting permission for any changes in accounting
         methods that relate to the business or operations of the Company. The
         Company has not been a United States real property holding corporation
         within the meaning of Section 897(c)(2) of the Internal Revenue Code
         during the applicable period specified in Section 897(c)(1)(A)(ii) of
         the Internal Revenue Code.

                  The Company has not made an election under Section 341(f) of
         the Internal Revenue Code. The Company is not liable for the Taxes of
         another person that is not a subsidiary of the Company under (A) Treas.
         Reg. Section 1.1502-6 (or comparable provisions of state, local or
         foreign law), (B) as a transferee or successor, (C) by contract or
         indemnity or (D) otherwise. The Company is not a party to any tax
         sharing agreement. The Company has not made any payments, is not
         obligated to make payments nor is it a party to an agreement that could
         obligate it to make any payments that would not be deductible under
         Section 280G of the Internal Revenue Code.

                  For purposes of this Section 3.1(o):

                  "IRS" means the United States Internal Revenue Service.

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

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

                  (p) CERTAIN FEES. No brokers, finders or financial advisory
         fees or commissions will be payable by the Company or any subsidiary
         with respect to the transactions contemplated by this Agreement.

                  (q) DISCLOSURE. To the best of the Company's knowledge,
         neither this Agreement or the Schedules hereto nor any other documents,
         certificates or instruments furnished to the Purchaser by or on behalf
         of the Company or any subsidiary by an authorized officer of the
         Company or such subsidiary in connection with the transactions
         contemplated by this Agreement contains any untrue statement of a
         material fact or omits to state a material fact necessary in order to
         make the statements made herein or therein, in the light of the
         circumstances under which they were made herein or therein, not
         misleading.

                                       10
<PAGE>

                  (r) OPERATION OF BUSINESS. The Company and each of the
         subsidiaries owns or possesses all patents, trademarks, service marks,
         trade names, copyrights, licenses and authorizations as set forth in
         the SEC Documents or on SCHEDULE 3.1(R) hereto, and all rights with
         respect to the foregoing, which are necessary for the conduct of its
         business as now conducted without any conflict to the knowledge of the
         Company with the rights of others.

                  (s) INSURANCE. Except as disclosed in the SEC Documents or on
         Schedule 3.1(s) hereto, the Company carries or will have the benefit of
         insurance in such amounts and covering such risks as is adequate for
         the conduct of its business and the value of its properties.

                  (t) BOOKS AND RECORDS. To the knowledge of the Company, the
         records and documents of the Company and its subsidiaries accurately
         reflect in all material respects the information relating to the
         business of the Company and the subsidiaries, the location and
         collection of their assets, and the nature of all transactions giving
         rise to the obligations or accounts receivable of the Company or any
         subsidiary.

                  (u) MATERIAL AGREEMENTS. Except as set forth in the SEC
         Documents, or on SCHEDULE 3.1(U) hereto, neither the Company nor any
         subsidiary is a party to any written or oral contract, instrument,
         agreement, commitment, obligation, plan or arrangement, a copy of which
         would be required to be filed with the SEC as an exhibit to a
         registration statement on Form S-1 or other applicable form
         (collectively, "Material Agreements") if the Company or any subsidiary
         were registering securities under the Securities Act. Except as set
         forth on Schedule 3.1(u), the Company and each of its subsidiaries has
         in all material respects performed all the obligations required to be
         performed by them to date under the foregoing agreements, have received
         no notice of default and, to the best of the Company's knowledge are
         not in default under any Material Agreement now in effect, the result
         of which could cause a Material Adverse Effect. Except as set forth in
         the SEC Documents or SCHEDULE 3.1(U), no written or oral contract,
         instrument, agreement, commitment, obligation, plan or arrangement of
         the Company or of any subsidiary limits or shall limit the payment of
         dividends on the Company's Common Stock.

                  (v) TRANSACTIONS WITH AFFILIATES. Except as set forth in the
         SEC Documents or on SCHEDULE 3.1(V) hereto, there are no loans, leases,
         agreements, contracts, royalty agreements, management contracts or
         arrangements or other continuing transactions exceeding $250,000
         between (A) the Company, any subsidiaries or, to the Company's
         knowledge, any of their respective material customers or suppliers on
         the one hand, and (B) on the other hand, any officer, employee,
         consultant or director of the Company, or any of its subsidiaries, or,
         to the Company's knowledge, any person owning 5% or more of the capital
         stock of the Company or any subsidiary or, to the Company's knowledge,
         any member of the immediate family of such officer, employee,
         consultant, director, stockholder or, to the Company's knowledge, any
         corporation or other entity controlled by any such officer, employee,
         consultant, director or stockholder, or a

                                       11
<PAGE>

         member of the immediate family of such officer, employee, consultant,
         director or stockholder.

                  (w) EMPLOYEES. Neither the Company nor any subsidiary has any
         collective bargaining arrangements or agreements covering any of its
         employees, except as set forth in the SEC Documents or on SCHEDULE
         3.1(W) hereto. Except as set forth in the SEC Documents or on SCHEDULE
         3.1(W) hereto, neither the Company nor any subsidiary is in breach of
         any employment contract, agreement regarding proprietary information,
         noncompetition agreement, nonsolicitation agreement, confidentiality
         agreement, or any other similar contract or restrictive covenant,
         relating to the right of any officer, employee or consultant to be
         employed or engaged by the Company or such subsidiary. Since the date
         of the December 31, 1999 Form 10-KSB, no officer, consultant or key
         employee of the Company or any subsidiary whose termination, either
         individually or in the aggregate, could have a Material Adverse Effect,
         has terminated or, to the knowledge of the Company, has any present
         intention of terminating his or her employment or engagement with the
         Company or any subsidiary.

                  (x) ABSENCE OF CERTAIN DEVELOPMENTS. Except as provided in SEC
         Documents or on SCHEDULE 3.1(X) hereto, since the date of the financial
         statement contained in the most recently filed Form 10-QSB or Form
         10-KSB, whichever is most current, neither the Company nor any
         subsidiary has:

                           (i) issued any stock, bonds or other corporate
                  securities or any rights, options or warrants with respect
                  thereto;

                           (ii) borrowed any amount or incurred or become
                  subject to any liabilities (absolute or contingent) except
                  current liabilities incurred in the ordinary course of
                  business which are comparable in nature and amount to the
                  current liabilities incurred in the ordinary course of
                  business during the comparable portion of its prior fiscal
                  year, as adjusted to reflect the current nature and volume of
                  the Company's or such subsidiary's business;

                           (iii) discharged or satisfied any lien or encumbrance
                  or paid any obligation or liability (absolute or contingent),
                  other than current liabilities paid in the ordinary course of
                  business;

                           (iv) declared or made any payment or distribution of
                  cash or other property to stockholders with respect to its
                  stock, or purchased or redeemed, or made any agreements so to
                  purchase or redeem, any shares of its capital stock;

                           (v) sold, assigned or transferred any other tangible
                  assets, or canceled any debts or claims, except in the
                  ordinary course of business;

                           (vi) sold, assigned or transferred any patent rights,
                  trademarks, trade names, copyrights, trade secrets or other
                  intangible assets or intellectual

                                       12
<PAGE>

                  property rights, or disclosed any proprietary confidential
                  information to any person except to customers in the ordinary
                  course of business or to the Purchaser or its representatives;

                           (vii) suffered any material losses or waived any
                  rights of material value, whether or not in the ordinary
                  course of business, or suffered the loss of any material
                  amount of prospective business;

                           (viii) made any changes in employee compensation
                  except in the ordinary course of business and consistent with
                  past practices;

                           (ix) made capital expenditures or commitments
                  therefor that aggregate in excess of $500,000;

                           (x) entered into any other material transaction,
                  whether or not in the ordinary course of business;

                           (xi) suffered any material damage, destruction or
                  casualty loss, whether or not covered by insurance;

                           (xii) experienced any material problems with labor or
                  management in connection with the terms and conditions of
                  their employment; or

                           (xiii) effected any two or more events of the
                  foregoing kind which in the aggregate would be material to the
                  Company or its subsidiaries.

                  (aa) USE OF PROCEEDS. The proceeds from the sale of the Shares
         will be used by the Company and its subsidiaries for general corporate
         purposes.

                  (bb) ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF SHARES.
         Company acknowledges and agrees that Purchaser is acting solely in the
         capacity of arm's length purchaser with respect to this Agreement and
         the transactions contemplated hereunder. The Company further
         acknowledges that the Purchaser is not acting as a financial advisor or
         fiduciary of the Company (or in any similar capacity) with respect to
         this Agreement and the transactions contemplated hereunder and any
         advice given by the Purchaser or any of its representatives or agents
         in connection with this Agreement and the transactions contemplated
         hereunder is merely incidental to the Purchaser's purchase of the
         Shares. The Company further represents to the Purchaser that the
         Company's decision to enter into this Agreement has been based solely
         on the independent evaluation by the Company and its own
         representatives and counsel.

         Section 3.2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser hereby makes the following representations and warranties to the
Company:

                                       13
<PAGE>

                  (a) ORGANIZATION AND STANDING OF THE PURCHASER. The Purchaser
         is a corporation duly incorporated, validly existing and in good
         standing under the laws of the Cayman Islands.

                  (b) AUTHORIZATION AND POWER. The Purchaser has the requisite
         power and authority to enter into and perform this Agreement and to
         purchase the Shares being sold to it hereunder. The execution, delivery
         and performance of this Agreement by Purchaser and the consummation by
         it of the transactions contemplated hereby have been duly authorized by
         all necessary corporate action. This Agreement, the Registration Rights
         Agreement and the Escrow Agreement have been duly executed and
         delivered by the Purchaser and, at the Initial Closing, shall
         constitute valid and binding obligations of the Purchaser enforceable
         against the Purchaser in accordance with their terms, except as such
         enforceability may be limited by applicable bankruptcy, insolvency,
         reorganization, moratorium, liquidation, conservatorship, receivership
         or similar laws relating to, or affecting generally the enforcement of,
         creditors' rights and remedies or by other equitable principles of
         general application.

                  (c) NO CONFLICTS. The execution, delivery and performance of
         this Agreement and the consummation by the Purchaser of the
         transactions contemplated hereby or relating hereto do not and will not
         (i) result in a violation of the Purchaser's charter documents or
         bylaws or (ii) conflict with, or constitute a default (or an event
         which with notice or lapse of time or both would become a default)
         under, or give to others any rights of termination, amendment,
         acceleration or cancellation of any agreement, indenture or instrument
         to which the Purchaser is a party, or result in a violation of any law,
         rule, or regulation, or any order, judgment or decree of any court or
         governmental agency applicable to the Purchaser or its properties
         (except for such conflicts, defaults and violations as would not,
         individually or in the aggregate, have a Material Adverse Effect on
         Purchaser). The Purchaser is not required to obtain any consent,
         authorization or order of, or make any filing or registration with, any
         court or governmental agency in order for it to execute, deliver or
         perform any of its obligations under this Agreement or to purchase the
         Shares in accordance with the terms hereof.

                  (d) FINANCIAL RISKS. The Purchaser acknowledges that it is
         able to bear the financial risks associated with an investment in the
         Shares and that it has been given full access to such records of the
         Company and the subsidiaries and to the officers of the Company and the
         subsidiaries as it has deemed necessary or appropriate to conduct its
         due diligence investigation. The Purchaser is capable of evaluating the
         risks and merits of an investment in the Shares by virtue of its
         experience as an investor and its knowledge, experience, and
         sophistication in financial and business matters and the Purchaser is
         capable of bearing the entire loss of its investment in the Shares.

                  (e) ACCREDITED INVESTOR. The Purchaser is an "accredited
         investor" as defined in Regulation D promulgated under the Securities
         Act.

                                       14
<PAGE>

                  (f) NOT AN AFFILIATE. Purchaser is not an officer, director or
         "affiliate" (as that term is defined in Rule 405 of the Securities Act)
         of the Company.

                  (g) DISCLOSURE; ACCESS TO INFORMATION. Purchaser has reviewed
         all documents, records, books and other publicly available information
         pertaining to Purchaser's investment in the Company that have been
         requested and received by the Purchaser.

                  (h) MANNER OF SALE. At no time was Purchaser presented with or
         solicited by or through any leaflet, public promotional meeting,
         television advertisement or any other form of general solicitation or
         advertising.

                  (i) UNDERWRITER LIABILITY. Purchaser understands that it is
         the position of the SEC that the Purchaser is an underwriter within the
         meaning of Section 2(11) of the Securities Act and that the Purchaser
         will be identified as an underwriter of the Draw Down shares of Common
         Stock in the Registration Statement subject to liability as an
         underwriter under the applicable provision of the Securities Act and is
         subject to prospectus delivery requirement of the Securities Act.

                  (j) GENERAL. The Purchaser understands that the Company is
         relying upon the truth and accuracy of the representations, warranties,
         agreements, acknowledgments and understandings of the Purchaser set
         forth herein in order to determine the suitability of the Purchaser to
         acquire the Shares.

                  (k) DISCLOSURE. To the best of the Purchaser's knowledge,
         neither this Agreement nor any other documents, certificates or
         instruments furnished to the Purchaser by or on behalf of the Purchaser
         by an authorized officer of the Purchaser in connection with the
         transactions contemplated by this Agreement contains any untrue
         statement of a material fact or omits to state a material fact
         necessary in order to make the statements made herein or therein, in
         the light of the circumstances under which they were made herein or
         therein, not misleading.

                                   ARTICLE IV

                                    COVENANTS

         The Company covenants with the Purchaser as follows:

         Section 4.1. SECURITIES COMPLIANCE. If applicable, the Company shall
notify the Principal Market, in accordance with their rules and regulations, of
the transactions contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Shares to the
Purchaser or subsequent holders.

                                       15
<PAGE>

         Section 4.2. REGISTRATION AND LISTING. The Company will cause its
Common Stock to continue to be registered under Sections 12(b) or 12(g) of the
Exchange Act, will comply in all material respects with its reporting and filing
obligations under the Exchange Act, will comply with all requirements related to
any registration statement filed pursuant to this Agreement, and will not take
any action or file any document (whether or not permitted by the Securities Act
or the Exchange Act or the rules promulgated thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act or Securities Act, except as permitted herein
and the Registration Rights Agreement. The Company will take all action
necessary to continue the listing or trading of its Common Stock on the
Principal Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Principal Market
and shall provide the Purchaser with copies of any correspondence to or from
such Principal Market which questions or threatens delisting of the Common
Stock, within three (3) Trading Days of the Company's receipt thereof, until the
Purchaser has disposed of all of their Shares.

         Section 4.3. ESCROW ARRANGEMENT. The Company shall enter into an escrow
arrangement with an escrow agent mutually agreed to by the Company and the
Purchaser (the "Escrow Agent") in the Form of EXHIBIT B hereto respecting
payment against delivery of the Shares.

         Section 4.4. REGISTRATION RIGHTS AGREEMENT. The Company shall enter
into the Registration Rights Agreement in the Form of EXHIBIT A hereto. Before
the Purchaser shall be obligated to accept a Draw Down request from the Company,
the Company shall have caused a sufficient number of shares of Common Stock to
be registered to cover the Shares to be issued in connection with such Draw Down
and at the Initial Closing.

         Section 4.5. ACCURACY OF REGISTRATION STATEMENT.On each Settlement
Date, the Registration Statement and the prospectus therein shall not contain
any untrue statement of a material fact or omit to state any material fact to be
required to be stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances under which they were made;
and on such Settlement Date or date of filing of the Registration Statement and
the prospectus therein will not include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, the Company makes no representations or
warranties as to the information contained in or omitted from the Registration
Statement and the prospectus therein in reliance upon and in conformity with the
information furnished in writing to the Company by the Purchaser specifically
for inclusion in the Registration Statement and the prospectus therein.

         Section 4.6. COMPLIANCE WITH LAWS. The Company shall comply, and cause
each subsidiary to comply, with all applicable laws, rules, regulations and
orders, noncompliance with which could have a Material Adverse Effect.

         Section 4.7. KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company shall
keep and cause each subsidiary to keep adequate records and books of account, in
which entries

                                       16
<PAGE>

will be made in accordance with GAAP consistently applied, reflecting all
financial transactions of the Company and its subsidiaries, and in which, for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.

         Section 4.8. OTHER AGREEMENTS/BEST EFFORTS. The Company shall not enter
into any agreement the terms of which such agreement would restrict or impair
the ability of the Company to perform its obligations under this Agreement. The
Company agrees (i) to use all reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement and the agreements related hereto; (ii) to execute any documents,
instruments or conveyances of any kind that may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder and
thereunder; and (iii) to cooperate with the Purchaser in connection with the
foregoing.

         Section 4.9. NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION;
SUSPENSION OF RIGHT TO REQUEST A DRAW DOWN. THE COMPANY WILL IMMEDIATELY NOTIFY
THE PURCHASER IN WRITING UPON THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS IN
RESPECT OF THE REGISTRATION STATEMENT OR RELATED PROSPECTUS IN RESPECT OF THE
SHARES: (i) receipt of any request for additional information from the SEC or
any other federal or state governmental authority during the period of
effectiveness of the Registration Statement the response to which would require
any amendments or supplements to the Registration Statement or related
prospectus; (ii) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the Registration Statement, 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 not misleading, and that in the case of the related prospectus, 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 the light of the circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate; and the Company
will promptly make available to the Purchaser any such supplement or amendment
to the related prospectus. THE COMPANY SHALL NOT DELIVER TO THE PURCHASER ANY
DRAW DOWN NOTICE IF ANY OF THE FOREGOING EVENTS SHALL HAVE OCCURRED UNLESS ANY
SUCH EXISTING EVENT(S) SHALL NOT CAUSE THE SUSPENSION OF SALES OF SHARES
PURSUANT TO THE REGISTRATION STATEMENT DURING THE CORRESPONDING DRAW DOWN
PRICING PERIOD AND DURING THE PERIOD OF TEN (10) CONSECUTIVE TRADING DAYS
IMMEDIATELY FOLLOWING THE END OF SUCH DRAW DOWN PRICING PERIOD.

                                       17
<PAGE>

         Section 4.10. CONSOLIDATION; MERGER. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity (a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument or by
operation of law the obligation to deliver to the Purchaser such shares of stock
and/or securities as the Purchaser is entitled to receive pursuant to this
Agreement.

         Section 4.11. LIMITATION ON FUTURE FINANCING. The Company agrees that
it will not enter into any new standby equity-based credit facility during the
term of this Agreement.

         The Purchaser covenants with the Company as follows:

         Section 4.12. COMPLIANCE WITH LAW. Section 4.13.The Purchaser's trading
activities with respect to shares of the Company's Common Stock will be in
compliance with all applicable state and federal securities laws, rules and
regulations and rules and regulations of the Principal Market on which the
Company's Common Stock is listed. Without limiting the generality of the
foregoing, the Purchaser agrees that it will, whenever required by federal
securities laws, deliver the prospectus included in the Registration Statement
to any purchaser of Shares from the Purchaser.

         Section 4.13 ESCROW ARRANGEMENT. The Purchaser shall enter into an
escrow arrangement with an escrow agent mutually agreed to by the Company and
the Purchaser in the Form of EXHIBIT B hereto respecting payment against
delivery of the Shares.

         Section 4.14. REGISTRATION RIGHTS AGREEMENT. The Purchaser shall enter
into the Registration Rights Agreement in the Form of EXHIBIT A hereto.

         Section 4.15. ACCURACY OF REGISTRATION STATEMENT.On each Settlement
Date, the information furnished in writing to the Company by the Purchaser
specifically for inclusion or omission in the Registration Statement and the
prospectus therein shall not contain any untrue statement of a material fact or
omit to state any material fact to be required to be stated therein or necessary
in order to make the statements therein not misleading in light of the
circumstances under which they were made.

         Section 4.16. OTHER AGREEMENTS/BEST EFFORTS. The Purchaser shall not
enter into any agreement the terms of which such agreement would restrict or
impair the ability of the Purchaser to perform its obligations under this
Agreement. The Purchaser agrees (i) to use all reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement and the agreements related hereto; (ii) to
execute any documents, instruments or conveyances of any kind that may be
reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder and thereunder; and (iii) to cooperate with the Company
in connection with the foregoing.

                                       18
<PAGE>

                  Section 4.17 NO SHORT SALES. The Purchaser and its affiliates
shall not engage in net short sales of the Company's Common Stock (as defined in
applicable SEC and the Principal Market rules) during the term of this
Agreement.

                                    ARTICLE V

                  CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS

         Section 5.1. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
SELL THE SHARES. The obligation hereunder of the Company to issue and sell the
Shares to the Purchaser is subject to the satisfaction or waiver, at or before
the Initial Closing, and as of each Settlement Date of each of the conditions
set forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.

                  (a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND
         WARRANTIES. Each of the representations and warranties of the Purchaser
         shall be true and correct in all material respects as of the date when
         made and as of the Initial Closing and as of each Settlement Date as
         though made at that time, except for representations and warranties
         that speak as of a particular date.

                  (b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have
         performed, satisfied and complied in all material respects with all
         covenants, agreements and conditions required by this Agreement to be
         performed, satisfied or complied with by the Purchaser at or prior to
         the Initial Closing and as of each Settlement Date.

                  (c) NO INJUNCTION. No statute, rule, regulation, executive
         order, decree, ruling or injunction shall have been enacted, entered,
         promulgated or endorsed by any court or governmental authority of
         competent jurisdiction which prohibits the consummation of any of the
         transactions contemplated by this Agreement.

                  (d) NO PROCEEDINGS OR LITIGATION. No action, suit or
         proceeding before any arbitrator or any governmental authority shall
         have been commenced by any third party, and no investigation by any
         governmental authority shall have been threatened, against the
         Purchaser or the Company or any subsidiary, or any of the officers,
         directors or affiliates of the Purchaser seeking to restrain, prevent
         or change the transactions contemplated by this Agreement, or seeking
         damages in connection with such transactions.

         Section 5.2. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
CLOSE. The obligation hereunder of the Purchaser to perform its obligations
under this Agreement and to purchase the Shares is subject to the satisfaction
or waiver, at or before the Initial Closing, of each of the conditions set forth
below. These conditions are for the Purchaser's sole benefit and may be waived
by the Purchaser at any time in its sole discretion.

                                       19
<PAGE>

                  (a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
         Each of the representations and warranties of the Company shall be true
         and correct in all material respects as of the date when made and as of
         the Initial Closing as though made at that time (except for
         representations and warranties that speak as of a particular date).

                  (b) PERFORMANCE BY THE COMPANY. The Company shall have
         performed, satisfied and complied in all material respects with all
         covenants, agreements and conditions required by this Agreement to be
         performed, satisfied or complied with by the Company at or prior to the
         Initial Closing.

                  (c) NO INJUNCTION. No statute, rule, regulation, executive
         order, decree, ruling or injunction shall have been enacted, entered,
         promulgated or endorsed by any court or governmental authority of
         competent jurisdiction which prohibits the consummation of any of the
         transactions contemplated by this Agreement.

                  (d) NO PROCEEDINGS OR LITIGATION. No action, suit or
         proceeding before any arbitrator or any governmental authority shall
         have been commenced by any third party, and no investigation by any
         governmental authority shall have been threatened, against the
         Purchaser or the Company or any subsidiary, or any of the officers,
         directors or affiliates of the Company or any subsidiary seeking to
         restrain, prevent or change the transactions contemplated by this
         Agreement, or seeking damages in connection with such transactions.

                  (e) OPINION OF COUNSEL, ETC. At the Initial Closing, the
         Purchaser shall have received an opinion of counsel to the Company,
         dated the date of the Initial Closing, in the form of EXHIBIT C hereto.

                  (f) STOCK. In lieu of an aggregate minimum Commitment Amount,
         the Company shall have issued to the Purchaser 100,000 shares of Common
         Stock (the "Stock").

         Section 5.3. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
ACCEPT A DRAW DOWN AND PURCHASE THE SHARES. The obligation hereunder of the
Purchaser to accept a Draw Down request and to acquire and pay for the Shares is
subject to the satisfaction at or before each Settlement Date, of each of the
conditions set forth below.

                  (a) SATISFACTION OF CONDITIONS TO INITIAL CLOSING. The Company
         shall have satisfied, or the Purchaser shall have waived at the Initial
         Closing, the conditions set forth in Section 5.2 hereof.

                  (b) EFFECTIVE REGISTRATION STATEMENT. The Registration
         Statement registering the Shares shall have been declared effective by
         the SEC and shall be effective on each Settlement Date.

                  (c) NO SUSPENSION. Trading in the Company's Common Stock or
         trading in securities generally whose trades are reported on the
         Principal Market shall not

                                       20
<PAGE>

         have been suspended or limited by the SEC or the Principal Market and
         minimum prices shall not have been established on securities generally
         whose trades are reported on the Principal Market (except for any
         suspension of trading of limited duration agreed to by the Company,
         which suspension shall be terminated prior to the delivery of each Draw
         Down Notice).

                  (d) MATERIAL ADVERSE EFFECT. No event which has a Material
         Adverse Effect and no Consolidation Event where the successor entity
         has not agreed to perform the Company's obligations shall have
         occurred.

                  (e) OPINION OF COUNSEL. The Purchaser shall have received a
         "down-to-date" letter from the Company's counsel, confirming that there
         is no change from the counsel's previously delivered opinion, or else
         specifying with particularity the reason for any change and an opinion
         as to the additional items specified in EXHIBIT C hereto.

                                   ARTICLE VI

                                 DRAW DOWN TERMS

         Section 6.1. DRAW DOWN TERMS. Subject to the satisfaction of the
conditions set forth in this Agreement, the parties agree as follows:

                  (a) For a period of 36 months commencing immediately after the
         Effective Date (the "Commitment Period"), the Company may, in its sole
         discretion, issue and exercise a draw down (a "Draw Down") during each
         Draw Down Pricing Period, which Draw Down the Purchaser will be
         obligated to accept.

                  (b) Only one Draw Down shall be allowed in each Draw Down
         Pricing Period. There shall be at least five (5) Trading Days between
         Draw Down Pricing Periods (such time between Draw Down Pricing Periods,
         the "Trading Cushion"); EXCEPT THAT, in the event the Company gives the
         Purchaser twenty-one (21) days notice of a Special Activity, the
         Trading Cushion shall be adjusted to two (2) Trading Days for a period
         of ten (10) consecutive weeks and the Purchase Price shall be adjusted
         as set forth in Section 1.1(h) herein as to any Draw Downs occurring
         during such ten (10) week period. The number of shares of Common Stock
         purchased by the Purchaser with respect to each Draw Down shall be
         determined as set forth in Section 6.1(d) herein and settled in
         accordance with Section 6.1(f) on, (i) as to the 1st through the 10th
         Trading Days after a Draw Down Pricing Period commences (the "First
         Settlement Period"), on the 12th Trading Day after a Draw Down Pricing
         Period commences, and (ii) as to the 11th through the 20th Trading Days
         after a Draw Down Pricing Period commences (the "Second Settlement
         Period"), the 22nd Trading Day after a Draw Down Pricing Period (each,
         a "Settlement Date" and the First and Second Settlement Periods
         collectively referred to as "Settlement Periods"). In connection with
         each Draw Down Pricing Period, the Company must set the Threshold Price
         in the Draw Down Notice.

                                       21
<PAGE>

                  (c) The minimum Investment Amount shall be, if the average of
         the VWAPs during the 10 Trading Day period immediately prior to the
         Draw Down Pricing Period ("Minimum Price") is greater than $0.30,
         $300,000, if the Minimum Price is equal to or less than $0.30 and
         greater than $0.20, $200,000 and if the Minimum Price is equal to or
         less than $0.20 and greater than $0.10, $100,000. In the event that the
         Minimum Price is greater than $0.30, the maximum Investment Amount
         shall be equal to the greater of (i) $500,000, and (ii) the amount
         determined by the following formula: 4.5% of the average of the VWAPs
         for the Common Stock for the thirty (30) day period immediately prior
         to the applicable Commencement Date (defined below) multiplied by the
         total trading volume in respect of the Common Stock for the three (3)
         month period immediately prior to the applicable Commencement Date. In
         the event the Minimum Price is equal to or less than $0.30, the maximum
         Investment Amount shall be equal to the greater of (i) the minimum
         Investment Amount set forth in the first sentence above, and (ii) the
         amount determined by the following formula: 4.5% of the average of the
         VWAPs for the Common Stock for the thirty (30) day period immediately
         prior to the applicable Commencement Date (defined below) multiplied by
         the total trading volume in respect of the Common Stock for the three
         (3) month period immediately prior to the applicable Commencement Date.
         Notwithstanding anything herein to the contrary, the Company shall be
         precluded from exercising a draw down during any periods where the
         Minimum Price is less than $0.10.

                  (d) The number of Shares of Common Stock to be issued on each
         Settlement Date shall be a number of shares equal to the sum of the
         quotients (for each trading day within the Settlement Period) of (x)
         1/20th of the Investment Amount and (y) the Purchase Price on each
         Trading Day within such Settlement Period, subject to the following
         adjustments:

                           (i) if the Average Daily Price on a given Trading Day
                  is less than the Threshold Price, then the Investment Amount
                  will be reduced by 1/20th and that day shall be withdrawn from
                  the Settlement Period; and

                           (ii) if trading of the Common Stock on the Principal
                  Market is suspended for more than three (3) hours, in the
                  aggregate, or the Registration Statement is not effective, on
                  any Trading Day during the Settlement Period, the Investment
                  Amount shall be reduced by 1/20th and that day shall be
                  withdrawn from the applicable Settlement Period.

                  (e) The Company must inform the Purchaser by delivering a draw
         down notice, in the form of EXHIBIT D hereto (the "Draw Down Notice"),
         via facsimile transmission in accordance with Section 9.4 as to the
         amount of the Draw Down (the "Investment Amount") the Company wishes to
         exercise before the first day of the Draw Down Pricing Period (the
         "Commencement Date"). If the Commencement Date is to be the date of the
         Draw Down Notice, the Draw Down Notice must be delivered to and receipt
         confirmed in accordance with Section 9.4 hereof at least one hour
         before trading commences on such date. At no time shall the Purchaser
         be required to purchase more

                                       22
<PAGE>

         than the maximum Investment Amount for a given Draw Down Pricing Period
         so that if the Company chooses not to exercise the maximum Investment
         Amount permitted in a given Draw Down Pricing Period the Purchaser is
         not obligated to and shall not purchase more than the scheduled maximum
         Investment Amount in a subsequent Draw Down Pricing Period.

                  (f) On or before each Settlement Date, the Shares purchased by
         the Purchaser shall be electronically delivered to the Purchaser or its
         designees via The Depository Trust Company's ("DTC") Fast Automated
         Securities Transfer program through its Deposit Withdrawal Agent
         Commission ("DWAC") system and the Purchaser shall wire transfer
         immediately available funds to the Company's designated account on such
         day. In the event the Purchaser elects to use the Escrow Agent, the
         Shares shall be credited by the Company to the DTC account designated
         by the Purchaser via DWAC upon receipt by the Escrow Agent of payment
         for the Draw Down into the Escrow Agent's master escrow account as
         provided in the Escrow Agreement. The Escrow Agent shall be directed to
         pay the purchase price to the Company, net of Seven Hundred Fifty
         Dollars ($750) per Settlement as escrow expenses to the Escrow Agent.
         The delivery of the Shares into the Purchaser's DTC account in exchange
         for payment therefor shall be referred to herein as "Settlement".

                  (g) Notwithstanding anything to the contrary herein, the
         Company shall be precluded from exercising a Draw Down under this
         Agreement during the pendency of a draw down under the other draw down
         facility with the Investor, dated December 1, 2000 ("Prior Draw Down
         Facility") and the Company shall not draw down under the Prior Draw
         Down Facility during the pendency of a Draw Down hereunder.

                                   ARTICLE VII

                                   TERMINATION

         Section 7.1. TERMINATION. Unless otherwise terminated in accordance
with Section 7.2 herein, the term of this Agreement shall be thirty-six (36)
months from the Effective Date; PROVIDED, HOWEVER, that the termination will not
affect any obligations arising prior to the date of such termination.

         Section 7.2. OTHER TERMINATION.

                  (a) This Agreement shall be terminated upon one (1) Trading
         Day's notice if (i) an event resulting in a Material Adverse Effect has
         occurred and has not been cured for a period of 60 days, (ii) the
         Common Stock is de-listed from the Principal Market unless such
         de-listing is in connection with the listing of the Common Stock on the
         Nasdaq National Market, Nasdaq SmallCap Market, or the New York Stock
         Exchange, or (iii) the Company files for protection from creditors
         under any applicable law.

                                       23
<PAGE>

                  (b) The Company may terminate this Agreement upon one (1)
         Trading Day's notice if the Purchaser shall fail to fund more than one
         properly noticed Draw Down within three (3) Trading Days of a
         Settlement Date.

         Section 7.3. EFFECT OF TERMINATION. In the event of termination by the
Company or the Purchaser, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If this Agreement is
terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become
void and of no further force and effect, except for Sections 9.1 and 9.2, and
Article VIII herein. Nothing in this Section 7.3 shall be deemed to release the
Company or the Purchaser from any liability for any breach under this Agreement,
or to impair the rights of the Company and the Purchaser to compel specific
performance by the other party of its obligations under this Agreement.

                                  ARTICLE VIII

                                 INDEMNIFICATION

         Section 8.1. GENERAL INDEMNITY. The Company agrees to indemnify and
hold harmless the Purchaser and its directors, officers, affiliates, agents,
successors and assigns ("Purchaser Indemnified Parties") from and against any
and all losses, liabilities, deficiencies, costs, damages and expenses
(including, without limitation, reasonable attorney's fees, charges and
disbursements) incurred by the Purchaser Indemnified Parties as a result of any
inaccuracy in or breach of the representations, warranties or covenants made by
the Company herein. The Purchaser agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors and assigns
("Company Indemnified Parties") from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys' fees, charges and disbursements) incurred by
the Company Indemnified Parties as result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Purchaser herein.
Notwithstanding anything to the contrary herein, except for gross negligence or
willful misconduct, the Purchaser shall be liable under this Section 8.1 for
only that amount as does not exceed the gross proceeds to such Purchaser as a
result of the sale of Shares pursuant to the Registration Statement.

         INDEMNIFICATION PROCEDURE. Promptly after receipt by an indemnified
party under this Article VIII of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Article VIII, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve the indemnifying party from any liability which it may have to any
indemnified party except to the extent of actual prejudice demonstrated by the
indemnifying party. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified,
assume the defense thereof, subject to the provisions herein stated and

                                       24
<PAGE>

after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Article VIII for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided that, the fees and expenses of
such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party, or (ii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying party
and the indemnified party shall have been advised by such counsel that there may
be one or more legal defenses available to the indemnifying party different from
or in conflict with any legal defenses which may be available to the indemnified
party (in which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of the indemnified party, it being
understood, however, that the indemnifying party shall, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable only for the reasonable fees and expenses of one separate firm of
attorneys for the indemnified party, which firm shall be designated in writing
by the indemnified party and be approved by the indemnifying party). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.

         All fees and expenses of the indemnified party (including reasonable
costs of defense and investigation in a manner not inconsistent with this
Section and all reasonable attorneys' fees and expenses) shall be paid to the
indemnified party, as incurred, within ten (10) Trading Days of written notice
thereof to the indemnifying party; 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.

                                   ARTICLE IX

                                  MISCELLANEOUS

         Section 9.1. FEES AND EXPENSES. Each party shall pay all of its own
fees and expenses related to the transactions contemplated by this Agreement;
PROVIDED, that the Company shall pay, prior to or at the Initial Closing, all
attorneys and escrow fees and expenses inclusive of disbursements and
out-of-pocket expenses) incurred by the Purchaser of $10,000 in connection with
the preparation, negotiation, execution and delivery of this Agreement and the
transactions contemplated hereunder. Notwithstanding anything to the contrary
herein, the

                                       25
<PAGE>

Company shall pay all reasonable fees and expenses incurred by the Purchaser in
connection with any subsequent amendments, modifications or waivers of this
Agreement, the Escrow Agreement or the Registration Rights Agreement or incurred
in connection with the enforcement of this Agreement, the Escrow Agreement and
the Registration Rights Agreement, including, without limitation, all reasonable
attorneys' fees and expenses if such subsequent amendment, modification or
waiver is at the request of the Company. The Company shall pay all stamp or
other similar taxes and duties levied in connection with issuance of the Shares
pursuant hereto.

         Section 9.2. SPECIFIC ENFORCEMENT. The Company and the Purchaser
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.

         Section 9.3. ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with
the Registration Rights Agreement and the Escrow Agreement contains the entire
understanding of the parties with respect to the matters covered hereby and,
except as specifically set forth herein, neither the Company nor the Purchaser
makes any representations, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or amended other than
by a written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought and no condition to closing any Draw Down in favor
of the Purchaser may be waived by the Purchaser.

         Section 9.4. NOTICES. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery or facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:

If to the Company:      On2 Technologies, Inc.
                        145 Hudson Street, 5th Floor
                        New York, NY 10013
                        Main:     917.237.0500
                        Fax:      917.237.1544
                        Attn: General Counsel
                        email:    ihecht@on2.com

                                       26
<PAGE>

With copies to:         McGuire-Woods LLP
notice):                9 West 57th Street
                        Suite 1620
                        New York, New York 10019
                        Attn:  William Newman, Esq.
                        Tel:  (212) 548-2160
                        Fax:  (212) 548-2150

If to Purchaser:        4th Floor
                        Harbour Centre
                        P.O. Box 61 GT
                        George Town
                        Cayman Islands
                        Attn: Ian Goodall
                        Fax: (345) 949-8635

         Any party hereto may from time to time change its address for notices
by giving written notice of such changed address to the other party hereto in
accordance herewith.

         Section 9.5. WAIVERS. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.

         Section 9.6. HEADINGS. The article, section and subsection headings in
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.

         Section 9.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns;
PROVIDED, HOWEVER, that the Purchaser may not assign this Agreement or any of
its rights or obligations hereunder. The parties hereto may not amend this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company and each Purchaser to be affected by the amendment. After
Initial Closing, the assignment by a party to this Agreement of any rights
hereunder shall not affect the obligations of such party under this Agreement.

         Section 9.8. NO THIRD PARTY BENEFICIARIES.This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.

         Section 9.9. GOVERNING LAW/ARBITRATION.This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York,
without giving effect to the choice of law provisions. The Company and the
Purchaser agree to submit itself to the IN PERSONAM jurisdiction of the state
and federal courts situated within the Southern District of the State of New
York with regard to any controversy arising out of or relating to this

                                       27
<PAGE>

Agreement. Any dispute under this Agreement or any Exhibit attached hereto shall
be submitted to arbitration under the American Arbitration Association (the
"AAA") in New York City, New York, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of three (3)
members (hereinafter referred to as the "Board of Arbitration") selected as
according to the rules governing the AAA. The Board of Arbitration shall meet on
consecutive business days in New York City, New York, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the losing party is
required to pay to the other party in respect of a claim filed. In connection
with rendering its decisions, the Board of Arbitration shall adopt and follow
the laws of the State of New York. To the extent practical, decisions of the
Board of Arbitration shall be rendered no more than thirty (30) calendar days
following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. The Board of Arbitration shall be authorized and is
directed to enter a default judgment against any party refusing to participate
in the arbitration proceeding within thirty days of any deadline for such
participation. Any decision made by the Board of Arbitration (either prior to or
after the expiration of such thirty (30) calendar day period) shall be final,
binding and conclusive on the parties to the dispute, and entitled to be
enforced to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The prevailing party shall be awarded its costs,
including attorneys' fees, from the non-prevailing party as part of the
arbitration award. Any party shall have the right to seek injunctive relief from
any court of competent jurisdiction in any case where such relief is available.
The prevailing party in such injunctive action shall be awarded its costs,
including attorney's fees, from the non-prevailing party.

         Section 9.10. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart. Execution may be made by
delivery by facsimile.

         Section 9.11. PUBLICITY. Prior to the execution of this Agreement,
neither the Company nor the Purchaser shall issue any press release or otherwise
make any public statement or announcement with respect to this Agreement or the
transactions contemplated hereby or the existence of this Agreement. After the
execution of this Agreement, the Company may issue a press release or otherwise
make a public statement or announcement with respect to this Agreement or the
transactions contemplated hereby or the existence of this Agreement; provided,
however, that prior to issuing any such press release, making any such public
statement or announcement, the Company obtains the prior consent of the
Purchaser, which consent shall not be unreasonably withheld or delayed.

         Section 9.12. SEVERABILITY. The provisions of this Agreement are
severable and, in the event that The Board of Arbitration or any court or
officials of any regulatory agency of competent jurisdiction shall determine
that any one or more of the provisions or part of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement
and this Agreement shall be reformed

                                       28
<PAGE>

and construed as if such invalid or illegal or unenforceable provision, or part
of such provision, had never been contained herein, so that such provisions
would be valid, legal and enforceable to the maximum extent possible, so long as
such construction does not materially adversely effect the economic rights of
either party hereto.

         Section 9.13. FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of the Purchaser or the Company, each of the Company
and the Purchaser shall execute and deliver such instruments, documents and
other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement.

         Section 9.14. EFFECTIVENESS OF AGREEMENT. This Agreement shall become
effective only upon satisfaction of the conditions precedent to the Initial
Closing set forth in Article I of the Escrow Agreement.

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

                                       29
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorize officer as of the date first set
forth above.

                                           ON2 TECHNOLOGIES, INC.

                                           By:
                                               ---------------------------------
                                               Douglas McIntyre, President & CEO

                                           CROSSOVER VENTURES, INC.

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

                                           By:
                                               ---------------------------------
                                               Douglas McIntyre, President & CEO

                                           CROSSOVER VENTURES, INC.

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

                                       30
<PAGE>

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