SPORTSPRIZE ENTERTAINMENT INC/
FORM OF LOAN AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>FORM OF LOAN AGREEMENT
<TEXT>



                                                                    EXHIBIT 10.1


                         SPORTSPRIZE ENTERTAINMENT INC.

                    Debenture and Warrant Purchase Agreement

     This Debenture and Warrant Purchase Agreement (this "Agreement") is entered
into as of May 30, 2000, by and between SPORTSPRIZE ENTERTAINMENT INC., a Nevada
corporation (the "Company"),  Cutter Services Corp., ("Cutter"),  and Strathburn
Investments Inc. ("Strathburn") (together with Cutter, the "Purchasers").

     In consideration of the mutual promises  hereinafter set forth, the parties
hereto agree as follows:

     1.   Agreement to Sell and Purchase

     1.1  Sale and Purchase.  Subject to the terms and conditions hereof, at the
          Closing (as defined in Section 2 below),  the Company hereby agrees to
          issue and sell to the Purchasers, and the Purchasers agree to purchase
          from  the  Company,   the  following   convertible   debentures   (the
          "Debentures")  due May 30, 2005, in the respective  principal  amounts
          set out  opposite  the  name of each  of the  Purchasers  below,  each
          Debenture  to be in the  form  of the  Debenture  attached  hereto  as
          Exhibit A and to be  convertible  (subject to  adjustment  and therein
          provided)  into the  number of shares of the  Company's  common  stock
          ("Common Stock") at the conversion price  ("Conversion  Price") and in
          accordance with the terms of the Debenture:

                    Purchaser                          Principal Amount
                    ---------                          ----------------
                    Cutter                             US$850,000

                    Strathburn                         US$200,000

     1.2  Sale of  Warrant.  In  connection  with and in  consideration  for the
          offering of the Debentures (the "Offering"), the Company will issue to
          the Purchasers warrants (the "Warrants") exercisable for two (2) years
          from the date of issue to  purchase  from the  Company  the  number of
          shares of the Company's Common Stock set out opposite the name of each
          of the Purchasers  below,  at the respective  exercise  prices set out
          below opposite the name of such Purchaser,  each such Warrant to be in
          the form of the Warrant attached hereto as Exhibit B:

          Purchaser           Shares Purchasable        Exercise Price per Share
          ---------           ------------------        ------------------------
          Cutter                   48,000                   $1.275
          Strathburn               12,000                   $1.275



                                      -1-
<PAGE>

     1.3  Purchase  Price.  The  purchase  price shall be  US$1,050,000  paid as
          follows:

                      Purchaser                    Purchase Price
                      ---------                    --------------
                      Cutter                       US$850,000

                      Strathburn                   US$200,000

     1.4  Grant of Security  Interest.  To secure the prompt and full payment of
          all principal  and interest  owing to the  Purchasers  pursuant to the
          Debentures,  the Company  agrees to grant to each Purchaser a security
          interest  in all of the  Company's  assets,  accounts  receivable  and
          inventory,  now  existing  or  hereafter  arising,  and  all  proceeds
          therefrom.  Such security  interest shall  terminate on the earlier of
          (i) the date the Company  completes any unsecured  financing in excess
          of $2.5 million  after May 30, 2000 or (ii) the date such  Purchaser's
          Debenture  is redeemed or converted  in full.  The Company  shall file
          UCC-1 Financing Statements in the States of California and Nevada and,
          at the written  request of each  Purchaser,  execute  for filing,  any
          additional financing  statements or continuation  statements as may be
          required  from time to time to perfect or  continue  such  Purchaser's
          security interest in such assets.

     2.   Closing, Delivery and Payment

     2.1  The  closing  of the  sale  and  purchase  of the  Debentures  and the
          Warrants under this Agreement (the "Closing")  shall take place on May
          30,  2000,  at the  offices of Clark  Wilson,  800 - 885 West  Georgia
          Street, Vancouver, British Columbia, or at such other time or place as
          the Company and the  Purchasers  may  mutually  agree (such date being
          hereinafter  referred to as the "Closing Date").  At the Closing,  the
          Purchasers  shall  pay to the  Company,  by  certified  check  or wire
          transfer of immediately  available  funds,  the Purchase Price (less a
          non-refundable  fee payable to Sonora  Capital as set forth in Section
          2.1), and the Company shall, at the Closing, deliver to the Purchasers
          the Debentures and the Warrants, each dated the Closing Date.

     2.2  At  the  Closing,  the  Purchasers  shall  pay  to  Sonora  Capital  a
          non-refundable fee of US$100,000 on behalf of the Company.

     3.   Representations and Warranties of the Company

          The Company  hereby  represents and warrants to each of the Purchasers
          as follows:

     3.1  Organization, Subsidiaries, Good Standing, Qualification and Power and
          Authority.  The  Company  is a  corporation  duly  organized,  validly
          existing and in good  standing  under the laws of the State of Nevada.
          The Company has all requisite corporate power and authority to own and
          operate  its  properties  and assets and to carry on its  business  as
          presently conducted and as presently proposed to be conducted,  and is
          duly qualified to do business and is in good standing as a foreign



                                      -2-
<PAGE>

          corporation  in each  jurisdiction  in which the failure to so qualify
          would  have a material  adverse  effect on its  business,  properties,
          prospects  or  financial  condition.  The  Company  has all  requisite
          corporate  power  and  authority  (a)  to  execute  and  deliver  this
          Agreement,  the  Debentures,  the Warrants  and the other  agreements,
          instruments and documents contemplated to be executed and delivered by
          it pursuant to this Agreement (this Agreement, the Debentures, and the
          Warrants,  and such other  agreements  instruments and documents being
          herein  sometime   collectively   referred  to  as,  the  "Transaction
          Documents"),  (b) to issue  and sell the  Debentures  and to issue the
          shares of the Company's  Common Stock issuable upon  conversion of the
          Debentures  (the  "Conversion  Shares"),  (c) to  issue  and  sell the
          Warrants  and to  issue  the  shares  of the  Company's  Common  Stock
          issuable upon exercise of the Warrants (the "Warrant Shares"), and (d)
          to carry out the other  provisions of the Transaction  Documents.  The
          Company has no  subsidiaries  or  affiliates  other than  SportsPrize,
          Inc., a Nevada corporation  ("Subsidiary"),  and does not, directly or
          indirectly,   own  any   interest  in  or  control  any   corporation,
          partnership, joint venture, or other business entity.

     3.2  Capitalization.  All issued and outstanding shares of the Common Stock
          of the Company have been duly  authorized  and validly  issued and are
          fully paid and nonassessable. The issued and outstanding capital stock
          of the Company  immediately  prior to the Closing will be as set forth
          on Schedule 3.2 attached hereto and incorporated by reference herein.

     3.3  Authorization;  Binding Obligations.  All corporate action on the part
          of the Company, its officers, directors and shareholders necessary for
          the authorization of the Transaction  Documents and the performance of
          all of its  obligations  thereunder and for the  authorization,  sale,
          issuance and delivery of the Debentures,  the Warrants, the Conversion
          Shares and the Warrant Shares has been taken or will be taken prior to
          the Closing. The Conversion Shares and the Warrant Shares have been or
          will prior to the Closing be duly and validly  reserved  for  issuance
          and,  when  issued  upon  conversion  of the  Debentures  or upon  the
          exercise of the Warrants,  as the case may be, will be validly issued,
          fully paid and  nonassessable.  The Company shall take all such action
          as may be  necessary  to assure that an  adequate  number of shares of
          Common Stock is authorized and reserved for issuance of the Conversion
          Shares and the Warrant Shares. This Agreement has been duly authorized
          and  executed by the  Company.  This  Agreement  constitutes,  and the
          Debentures, the Warrants and the other Transaction Documents will once
          executed  constitute,  valid,  legal and  binding  obligations  of the
          Company  enforceable  in accordance  with their terms,  except to such
          limitations as may result from any applicable bankruptcy,  insolvency,
          reorganization,  moratorium  or  other  similar  laws  relating  to or
          affecting the enforcement of creditors' rights generally.

     3.4  No Real Property. The Company does not own or have any interest in any
          real estate.

     3.5  Consents and  Approvals.  Except as required by the  Securities Act of
          1933, as amended (the "Securities  Act"), the Securities  Exchange Act
          of 1934, as amended



                                      -3-
<PAGE>

          (the "Exchange  Act") and any  applicable  state  securities  laws, no
          filings  with,  notices  to,  or  approvals  of  any  governmental  or
          regulatory  body are required to be obtained or made by the Company in
          connection  with the  consummation  of the  transactions  contemplated
          hereby.

     3.6  No  Violations.  The  execution  and delivery of this  Agreement,  the
          Debentures,  the Warrants or the other  Transaction  Documents and the
          performance by the Company of its obligations hereunder and thereunder
          (a) do not and will not conflict  with or violate any provision of the
          Company's Articles of Incorporation or bylaws, and (b) do not and will
          not (i) conflict  with or result in a breach of the terms,  conditions
          or provisions of, (ii) constitute a default under, (iii) result in the
          creation of any  encumbrance  upon the capital  stock or assets of the
          Company  pursuant  to,  (iv) give any third party the right to modify,
          terminate  or  accelerate  any  obligation  under,  (v)  result  in  a
          violation of, or (vi) require any  authorization,  consent,  approval,
          exemption or other action by or notice to any court or  administrative
          or  governmental  body or other  third  party  pursuant  to,  any law,
          statute,  rule or  regulation  or any  agreement or  instrument or any
          order,  judgment or decree to which the Company is subject or by which
          any of its assets are bound except for such  consents  which have been
          obtained by the Company.

     3.7  Compliance with Laws. The business of the Company to its knowledge has
          been conducted in compliance  with all applicable laws and regulations
          of governmental authorities, except for such violations that have been
          cured or that, individually or in the aggregate, may not reasonably be
          expected  to  have  a  material   adverse   effect  on  the  business,
          operations,  financial  condition or prospects of the Company.  To the
          Company's  knowledge,  neither the real or personal properties leased,
          operated  or  occupied  by the  Company,  nor the  use,  operation  or
          maintenance  thereof (i) violates any applicable  laws, or regulations
          of any government or  governmental  authorities,  or (ii) violates any
          restrictive or similar covenant, agreement, commitment,  understanding
          or arrangement.

     3.8  Licenses;  Permits;  Related  Approvals.  The Company to its knowledge
          possesses all licenses, permits, consents, approvals,  authorizations,
          qualifications,   and  orders  of  all  governments  and  governmental
          authorities  legally  required  to enable the  Company to conduct  its
          business in all jurisdictions in which such business is conducted.

     3.9  Title to Assets.  Except as set forth on Schedule 3.9 attached  hereto
          and incorporated by reference herein, the Company to its knowledge has
          good and marketable title to its property and assets free and clear of
          all  mortgages,   security   interests,   liens,   claims,  and  other
          encumbrances.  With respect to the property and assets it leases,  the
          Company  is in  material  compliance  with  such  leases  and,  to its
          knowledge,  holds  a valid  leasehold  interest  free of any  security
          interests, liens, claims, or other encumbrances.

     3.10 Defaults.  The  Company  and its  Subsidiary  is not in default in the
          performance,  observance or fulfillment of any obligation,  agreement,
          covenant, or condition



                                      -4-
<PAGE>

          contained in any contract, indenture,  mortgage, loan agreement, note,
          lease or other instrument to which it is a party or by which it or any
          of its properties may be bound, other than such violations or defaults
          that  would  not  individually  or in the  aggregate  have a  material
          adverse  effect  on  the  Company's  or  such  Subsidiary's  business,
          prospects,  properties,  condition  (financial  or other),  results of
          operations or net worth.

     3.11 Intellectual  Property.  Except as set forth on Schedule 3.11 attached
          hereto and incorporated by reference herein, the following  statements
          are correct, other than such exceptions that would not have a material
          adverse  effect on the  Company.  The Company owns or has a license to
          use all intellectual property used in its business. The Company to its
          knowledge  has  not  infringed,  and is  not  now  infringing,  on any
          proprietary right belonging to any other person,  firm, or entity. The
          Company  has  the  exclusive  right  and  authority  to use all of its
          creations and inventions,  trade secrets, processes,  models, designs,
          software  and  formulas  as are  necessary  to enable  the  Company to
          conduct and to  continue to conduct all phases of its  business in the
          manner  presently  conducted  by it and in  accordance  with  the  its
          business  plan.  The  Company is the sole owner of its trade  secrets,
          free and clear of any liens, encumbrances,  restrictions,  or legal or
          equitable  claims of others and the Company  has taken all  reasonable
          security measures to protect the secrecy,  confidentiality,  and value
          of these trade secrets.  Any of the Company's  employees and any other
          persons  who,  either  alone or in  concert  with  others,  developed,
          invented, discovered,  derived, programmed, or designed these secrets,
          or who have  knowledge of or access to  information  relating to them,
          have  assigned and  transferred  their rights to such trade secrets to
          the  Company  and each  such  person  has been put on notice  and,  if
          necessary,   has  entered  into  agreements  that  these  secrets  are
          proprietary to the Company and are not to be divulged or misused.

     3.12 Proprietary  Rights.  The Company has not received any  communications
          alleging  that it has  violated  or, by  conducting  its  business  as
          proposed would violate,  any  proprietary  rights of any other person,
          and the Company is not aware of any basis for the foregoing.

     3.13 No Litigation.  There is no action,  suit or proceeding pending or, to
          the  knowledge of the  Company,  threatened  against or affecting  the
          Company,  its  Subsidiary or any of their  properties or rights before
          any court or by or before any governmental  body or arbitration  board
          or  tribunal,  and the Company and its  Subsidiary  are not in default
          with respect to any final judgment, writ, injunction,  decree, rule or
          regulation of any court or federal, state, local or other governmental
          department,  commission,  board,  bureau,  agency or  instrumentality,
          domestic or foreign.

     3.14 Financial  Statements;  Undisclosed  Liabilities.  Attached  hereto as
          Schedule 3.14 and  incorporated by reference  herein are copies of the
          Company's  consolidated balance sheet as of February 29, 2000, and the
          Company's  consolidated  statement of operations and retained earnings
          for the period ended February 29, 2000, and the Company's consolidated
          statement  of cash  flows  for the  period  ended  February  29,  2000
          (hereinafter  collectively referred to as the "Financial Statements").
          The



                                      -5-
<PAGE>

          Financial  Statements are in accordance  with the books and records of
          the Company, are true, correct and complete and accurately present the
          Company's financial position as of the dates set forth therein and the
          results of the  Company's  operations  and  changes  in the  Company's
          financial  position for the periods then ended, all in conformity with
          generally accepted accounting principles applied on a consistent basis
          during  each  period  and on a basis  consistent  with  that of  prior
          periods. Except (i) as disclosed in the Financial Statements,  (ii) as
          disclosed in this Agreement, and (iii) as are incurred in the ordinary
          course  of  the  routine  daily  affairs  of  the  Company's  and  its
          Subsidiary's business,  neither the Company nor its Subsidiary has any
          liabilities or  obligations  of any nature or kind,  known or unknown,
          whether accrued, absolute, contingent, or otherwise. There is no basis
          for  assertion  against the Company or its  Subsidiary of any material
          claim,  liability or obligation  not fully  disclosed in the Financial
          Statements or in this Agreement.

     3.15 Tax Matters. The Company and its Subsidiary has duly and timely filed,
          or obtained  extensions  of time for filing,  all material tax returns
          required by federal, state and local authorities (the "Returns").  All
          information reported on the Returns is true,  accurate,  and complete.
          The  Company is not a party to,  and is not aware of,  any  pending or
          threatened action, suit, proceeding,  or assessment against it for the
          collection of taxes by any government.  The Company and its Subsidiary
          has paid in full  all  taxes,  interest,  penalties,  assessments  and
          deficiencies owed by it to all taxing authorities.

     4.   Representations And Warranties of the Purchasers

          The Purchasers  each  severally and not jointly  hereby  represent and
          warrant to the Company as follows:

     4.1  Requisite Power and Authority.  Such Purchaser has all necessary power
          and  authority to execute and deliver this  Agreement and to carry out
          its provisions.  All actions on such Purchaser's part required for the
          lawful  execution and delivery of this  Agreement have been or will be
          effectively taken prior to the Closing.

     4.2  Investment  Representations.  Such Purchaser  understands that none of
          the  "Securities"  (collectively  the  Debentures,  the Warrants,  the
          Conversion  Shares  and the  Warrant  Shares) to be  acquired  by such
          Purchaser has been registered under the Securities Act. Such Purchaser
          also  understands  that such  Debenture  and such  Warrants  are being
          offered and sold pursuant to an exemption from registration  contained
          in  regulations  under  the  Securities  Act  based in part  upon such
          Purchaser's representations contained in this Agreement.

     4.3  Acquisition   for  Own  Account.   Such  Purchaser  is  acquiring  the
          Debentures  and/or the Conversion  Shares and the Warrants  and/or the
          Warrant Shares to be acquired by it for its own account for investment
          only, and not with a view towards their  distribution  in violation of
          applicable securities laws.



                                      -6-
<PAGE>

     4.4  Accredited   Investor.   Each  Purchaser  represents  that  it  is  an
          "accredited  investor" within the meaning of Rule 501(a) of Regulation
          D under the Securities Act.

     4.5  Non-U.S. Person. Such Purchaser represents, warrants and agrees:

     (a)  Purchaser is not a "U.S.  Person," as such term is defined by Rule 902
          of  Regulation S under the  Securities  Act (the  definition  of which
          includes,  but is not limited to, an individual resident in the United
          States and an estate or trust of which any  executor or  administrator
          or trustee,  respectively,  is a U.S.  Person and any  partnership  or
          corporation  organized  or  incorporated  under the laws of the United
          States);

     (b)  Purchaser  was outside the United  States at the time of execution and
          delivery of the Agreement;

     (c)  no  offers  to sell the  Securities  were  made by any  person  to the
          Purchaser while the Purchaser was in the United States;

     (d)  the Securities are not being acquired, directly or indirectly, for the
          account or benefit of a U.S. Person or a person in the United States;

     (e)  that the Securities have not been registered under the Securities Act,
          and the Purchaser undertakes and agrees that it will not offer or sell
          the  Securities  unless such  Securities  are sold in accordance  with
          Regulation S under the  Securities  Act, the Securities are registered
          under the  Securities  Act and the  securities  laws of all applicable
          states of the United States,  or such  Securities are sold pursuant to
          an available  exemption from such registration  requirements that does
          not require  registration  under the  Securities Act or any applicable
          state laws and regulations governing the offer and sale of securities.
          The Purchaser understands that the Company presently has no obligation
          or present  intention  of filing a  registration  statement  under the
          Securities Act for the Securities; and

     (f)  hedging  transactions  involving the  Securities  may not be conducted
          unless in compliance with the Securities Act.

     4.6  Such  Purchaser  has such  knowledge  and  experience in financial and
          business  matters as to be capable of evaluating  the merits and risks
          of an investment in the Debenture,  the Warrants, the Debenture Shares
          and the  Warrant  Shares and it is able to bear the  economic  risk of
          loss of its entire investment.

     4.7  The Company has  provided to such  Purchaser  the  opportunity  to ask
          questions and receive  answers  concerning the terms and conditions of
          the Offering and it has had access to such information  concerning the
          Company as it has  considered  necessary or  appropriate in connection
          with its investment decision to acquire the Securities.

     4.8  Such   Purchaser   understands   and  agrees  that  the   certificates
          representing  the  Securities  will  bear a legend  stating  that such
          shares  have not  been  registered  under  the  Securities  Act or the
          securities laws of any state of the United States and may



                                      -7-
<PAGE>

          not be offered for sale or sold unless registered under the Securities
          Act and the  securities  laws of all  applicable  states of the United
          States  or  an  exemption  from  such  registration   requirements  is
          available.

     4.9  Such  Purchaser  consents  to the  Company  making a  notation  on its
          records or giving instructions to any transfer agent of the Company in
          order  to  implement  the  restrictions  on  transfer  set  forth  and
          described herein.

     4.10 Such   Purchaser   acknowledges   the   Company   is  relying  on  the
          representations,  warranties  and agreements of the Purchaser and that
          this  offering  is  being  made  in  reliance  on the  exemption  from
          registration  provided  by  Regulation  S of the  Securities  Act  and
          Section  4(2) of the  Securities  Act, as  interpreted  by Rule 506 of
          Regulation D under the Securities Act.


     5.   Registration Rights Relating To Conversion Shares and Warrant Shares

     5.1  Definitions. As used in this Article 5, the following terms shall have
          the following respective meanings:

     (a)  "Equity  Securities"  means (i) any securities of the Company entitled
          to  participate  with  the  Common  Stock  in a  distribution  of  the
          Company's  remaining  assets  (after  distribution  to all  holders of
          securities entitled to such distribution in priority to the holders of
          Common Stock) and (ii) any securities  convertible into or exercisable
          or  exchangeable  for  securities  of the type  referred to in Section
          5.1(a)(i).

     (b)  "Public  Offering" shall mean an underwritten  public offering (with a
          nationally  recognized  underwriter)  of Common  Stock  pursuant to an
          effective registration statement under the Securities Act.

     (c)  "Public Sale" means any sale of  Registrable  Securities to the public
          pursuant to an offering  registered under the Securities Act or to the
          public  through a  broker,  dealer or  market  maker  pursuant  to the
          provisions of Rule 144.

     (d)  "registers,"   "registered,"  and  "registration"  shall  refer  to  a
          registration effected by preparing and filing a registration statement
          in compliance  with the Securities Act and the declaration or ordering
          of the effectiveness of such registration statement by the SEC.

     (e)  "Registrable  Securities" shall mean (i) the Conversion  Shares,  (ii)
          the Warrant Shares, if the Warrants are exercised and (iii) any shares
          of Common  Stock or Equity  Securities  issued as a dividend  or other
          distribution  with respect to or in exchange for or in  replacement of
          the Conversion Shares or the Warrant Shares,  provided,  however, that
          Registrable  Securities  shall not  include  any such shares or Equity
          Securities that have  previously been registered  under the Securities
          Act or that have  otherwise  been sold to the public in an open-market
          transaction under Rule 144.



                                      -8-
<PAGE>

     (f)  "Registration Expenses" shall mean all expenses incurred in connection
          with effecting any registration pursuant to this Agreement,  including
          without  limitation all  registration,  qualification and filing fees,
          printing expenses,  escrow fees, fees and disbursements of counsel for
          the Company,  blue sky fees and  expenses,  expenses of any regular or
          special audits incident to or required by any such  registration,  and
          the fees and  expenses  of one  counsel  for the  selling  holders  of
          Registrable Securities, but excluding Selling Expenses.

     (g)  "Rule  144" shall  mean Rule 144 as  promulgated  by the SEC under the
          Securities  Act, as such Rule may be amended from time to time, or any
          similar successor rule that may be promulgated by the SEC.

     (h)  "SEC" shall mean the Securities  and Exchange  Commission or any other
          federal agency at the time administering the Securities Act.

     (i)  "Selling  Expenses" shall mean all stock transfer taxes,  underwriting
          discounts,  expenses for special counsel of a selling  stockholder and
          selling commissions applicable to the sale of Registrable Securities.

     5.2  Piggyback Registrations.

     (a)  Request for Inclusion.  If the Company shall determine to register any
          of its  securities  for its own  account  or for the  account of other
          security holders of the Company on any  registration  form in a Public
          Offering  or other  registration  of Equity  Securities  (other than a
          registration  relating to either Form S-4 or S-8),  which  permits the
          inclusion of Registrable Securities (a "Piggyback Registration"),  the
          Company will promptly give Agent,  as set forth in Section 8.2 written
          notice  thereof (the  "Registration  Notice") and,  subject to Section
          5.2(c),  shall  include in such  registration  all of the  Registrable
          Securities  requested to be included  therein  pursuant to the written
          request of Agent  received  within thirty (30) days after  delivery of
          the Company's notice.

     (b)  Underwriting. If the Piggyback Registration relates to an underwritten
          Public  Offering,  the Company  shall so advise Agent as a part of the
          written notice given pursuant to Section  5.2(a).  In such event,  the
          right of any holder of  Registrable  Securities to participate in such
          registration shall be conditioned upon such holder's  participation in
          such underwriting in accordance with the terms and conditions thereof.
          Agent  shall  be  responsible   for  answering  that  all  holders  of
          Registrable   Securities  proposing  to  distribute  their  securities
          through  such  underwriting  enter into an  underwriting  agreement in
          customary form with the  underwriter or  underwriters  selected by the
          Company.

     (c)  Priorities. If such proposed Piggyback Registration is an underwritten
          offering and the managing  underwriter  for such offering  advises the
          Company that the amount of securities requested to be included therein
          exceeds the amount of securities that can be sold in such offering, or
          if the  Company  and the  managing  underwriter  shall  in good  faith
          determine to reduce the number of shares to be



                                      -9-
<PAGE>

          offered by the Company  pursuant to a reasonable  assessment of market
          conditions (an "Underwriter's Cutback"), (i) the number of Registrable
          Securities  requested to be included in such  Piggyback  Registration,
          (ii) the  number of  securities  determined  by the  directors  of the
          Company in good faith to be sold by the Company,  and (iii) the number
          of securities, if any, to be sold by any other security holders of the
          Company  exercising  demand  registration  rights,  if  any,  in  such
          offering,  shall  each be reduced  pro rata  among the  holders on the
          basis of the percentage of the  outstanding  Common Stock held by such
          holders  (assuming  the complete  conversion  of the Debenture and the
          exercise in full of the Warrant and any other  options,  warrants  and
          similar rights held by such holders).  Notwithstanding  the foregoing,
          in no event  shall the  Underwriter's  Cutback  reduce  the  number of
          Registrable  Securities  included  in such  Public  Offering  or other
          registration of Equity  Securities to less than fifty percent (50%) of
          the  Registrable  Securities held by the Purchasers on the date of the
          Registration Notice.

     5.3  Expenses of Registration.  Except as provided in this Section 5.4, the
          Company shall bear all  Registration  Expenses  incurred in connection
          with any Piggyback Registrations. All Selling Expenses incurred by the
          Company relating to Registrable  Securities  included in any Piggyback
          Registration, shall be reimbursed by each Purchaser, pro rata based on
          the number of Registrable Securities being registered on their behalf.

     5.4  Registration Procedures.  In the case of each registration effected by
          the Company  pursuant to this  Article 5, the Company  will keep Agent
          advised in writing as to the initiation of such registration and as to
          the completion  thereof.  The Company will use its reasonable  efforts
          to:

     (a)  cause such registration to be declared effective by the SEC;

     (b)  prepare and file with the SEC such  amendments and supplements to such
          registration statement and the prospectus used in connection with such
          registration statement (including post-effective amendments) as may be
          necessary to comply with the  provisions of the Securities Act and the
          Exchange Act with respect to the disposition of all securities covered
          by such registration statement;

     (c)  obtain  appropriate  qualifications of the securities  covered by such
          registration  under  state  securities  or  "blue  sky"  laws  in such
          jurisdictions as may be requested by Agent;

     (d)  furnish  such  number of  prospectuses  and other  documents  incident
          thereto,  including any amendment of or supplement to the  prospectus,
          as Agent from time to time may reasonably request;

     (e)  notify  Agent  at any  time  when a  prospectus  relating  thereto  is
          required to be delivered under the Securities Act, of the happening of
          any  event  as a result  of  which  the  prospectus  included  in such
          registration   statement,  as  then  in  effect,  includes  an  untrue
          statement of a material fact or omits to state a material fact



                                      -10-
<PAGE>

          required  to be stated  therein or  necessary  to make the  statements
          therein not misleading or incomplete in the light of the circumstances
          then  existing,  and at the  request of Agent,  prepare and furnish to
          Agent a reasonable number of copies of a supplement to or an amendment
          of  such  prospectus  as may  be  necessary  so  that,  as  thereafter
          delivered to the purchasers of such shares,  such prospectus shall not
          include  an untrue  statement  of a  material  fact or omit to state a
          material fact  required to be stated  therein or necessary to make the
          statements  therein not  misleading  or incomplete in the light of the
          circumstances then existing;  cause all Registrable Securities covered
          by such  registration  to be listed  on each  securities  exchange  or
          inter-dealer  quotation system on which similar  securities  issued by
          the Company are then listed;

     (f)  provide a transfer agent and registrar for all Registrable  Securities
          covered by such registration and, if necessary, a CUSIP number for all
          such Registrable Securities, in each case not later than the effective
          date of such registration;

     (g)  otherwise comply with all applicable rules and regulations of the SEC,
          and make  available to its  security  holders,  as soon as  reasonably
          practicable,  an earnings statement covering the period of at least 12
          months,  but not more than 18 months,  beginning  with the first month
          after the effective date of the registration statement, which earnings
          statement  shall  satisfy  the  provisions  of  Section  11(a)  of the
          Securities Act; and

     5.5  Indemnification.

     (a)  The Company will indemnify each  Purchaser,  each of such  Purchaser's
          officers and  directors,  and each person  controlling  such Purchaser
          within the meaning of Section 15 of the  Securities  Act, with respect
          to each registration, qualification or compliance effected pursuant to
          this Article 5 or  otherwise,  against all expenses,  claims,  losses,
          damages and  liabilities  (or actions,  proceedings  or settlements in
          respect  thereof)  arising out of or based on any untrue statement (or
          alleged  untrue  statement)  of  a  material  fact  contained  in  any
          prospectus, offering circular or other document (including any related
          registration statement, notification or the like) incident to any such
          registration,  qualification  or compliance,  or based on any omission
          (or alleged  omission) to state therein a material fact required to be
          stated  therein  or  necessary  to make  the  statements  therein  not
          misleading,  or any  violation  by the Company of the  Securities  Act
          applicable to the Company and relating to action or inaction  required
          of the Company in connection with any such registration, qualification
          or compliance, and will reimburse each such indemnified person for any
          legal and any other expenses  reasonably  incurred in connection  with
          investigating and defending or settling any such claim,  loss, damage,
          liability or action;  provided,  however, that the Company will not be
          liable  in any such case to the  extent  that any such  claims,  loss,
          damage,  liability or expense  arises out of or is based on any untrue
          statement or omission based upon written information  furnished to the
          Company  by such  Purchaser  and  stated  to be  specifically  for use
          therein.  It is agreed that the indemnity  agreement contained in this
          Section  5.5(a) shall not apply to amounts paid in  settlement  of any
          such loss,



                                      -11-
<PAGE>

          claim,  damage,  liability  or action if such  settlement  is effected
          without  the  consent  of the  Company  (which  consent  has not  been
          unreasonably withheld).

     (b)  Each of the  Purchasers,  to the extent it is a holder of  Registrable
          Securities  included  in any  registration  effected  pursuant to this
          Article  5,  shall  indemnify  the  Company,  each  of its  directors,
          officers,  agents, employees and representatives,  and each person who
          controls  the  Company  within  the  meaning  of  Section  15  of  the
          Securities Act,  against all claims,  losses,  damages and liabilities
          (or actions in respect  thereof) arising out of or based on any untrue
          statement (or alleged  untrue  statement) of a material fact contained
          in any such registration statement,  prospectus,  offering circular or
          other document, or any omission (or alleged omission) to state therein
          a material fact required to be stated therein or necessary to make the
          statements therein not misleading, and will reimburse such indemnified
          persons  for any legal or any other  expenses  reasonably  incurred in
          connection  with  investigating  or  defending  any such claim,  loss,
          damage,  liability or action, in each case to the extent,  but only to
          the extent,  that such untrue statement (or alleged untrue  statement)
          or  omission  (or  alleged  omission)  is made  in  such  registration
          statement, prospectus, offering circular or other document in reliance
          upon and in strict  conformity with written  information  furnished to
          the Company by Agent on behalf of such Purchaser;  provided,  however,
          that (x) such Purchaser shall not be liable  hereunder for any amounts
          in excess of the net proceeds  received by such Purchaser  pursuant to
          such registration, and (y) the obligations of such Purchaser hereunder
          shall not apply to  amounts  paid in  settlement  of any such  claims,
          losses, damages or liabilities (or actions in respect thereof) if such
          settlement is effected  without the consent of such  Purchaser  (which
          consent has not been unreasonably withheld).

     (c)  Each party  entitled to  indemnification  under this  Section 5.5 (the
          "Indemnified  Party")  shall  give  notice  to the party  required  to
          provide indemnification (the "Indemnifying Party") promptly after such
          Indemnified  Party  has  actual  knowledge  of any  claim  as to which
          indemnity may be sought,  and shall permit the  Indemnifying  Party to
          assume  the  defense  of any such  claim or any  litigation  resulting
          therefrom,  provided that counsel selected by the Indemnifying  Party,
          who  shall  conduct  the  defense  of  such  claim  or any  litigation
          resulting therefrom, shall be approved by the Indemnified Party (whose
          approval  shall not  unreasonably  be withheld),  and the  Indemnified
          Party may  participate  in such defense at such party's  expense,  and
          provided  further  that the failure of any  Indemnified  Party to give
          notice as provided herein shall not relieve the Indemnifying  Party of
          its  obligations  under this Section 5.5 to the extent such failure is
          not  prejudicial.  No  Indemnifying  Party in the  defense of any such
          claim or litigation shall, except with the consent of each Indemnified
          Party,  consent to entry of any judgment or enter into any  settlement
          which does not include an  unconditional  release of such  Indemnified
          Party from all liability in respect to such claim or litigation.  Each
          Indemnified  Party shall furnish such information  regarding itself or
          the claim in question as an Indemnifying  Party may reasonably request
          in writing  and as shall be  reasonably  required in  connection  with
          defense of such claim and litigation resulting therefrom.



                                      -12-
<PAGE>

     (d)  If the  indemnification  provided for in this Section 5.5 is held by a
          court of competent  jurisdiction  to be  unavailable to an Indemnified
          Party with respect to any loss,  liability,  claim,  damage or expense
          referred  to  therein,   then  the  Indemnifying  Party,  in  lieu  of
          indemnifying such Indemnified Party hereunder, shall contribute to the
          amount paid or payable by such  Indemnified  Party as a result of such
          loss,  liability,  claim,  damage or expense in such  proportion as is
          appropriate to reflect the relative fault of the Indemnifying Party on
          the one hand and of the  Indemnified  Party on the other in connection
          with  the  statements  or  omissions  which  resulted  in  such  loss,
          liability,  claim,  damage or  expense  as well as any other  relevant
          equitable considerations. The relative fault of the Indemnifying Party
          and of the  Indemnified  Party shall be  determined  by reference  to,
          among other things,  whether the untrue or alleged untrue statement of
          a material  fact or the  omission to state a material  fact relates to
          information  supplied by the Indemnifying  Party or by the Indemnified
          Party  and  the  parties'  relative  intent,   knowledge,   access  to
          information  and  opportunity  to correct or prevent such statement or
          omission.

     (e)  Notwithstanding  the  foregoing,  to the extent that the provisions on
          indemnification   and   contribution   contained  in  an  underwriting
          agreement  entered  into in  connection  with an  underwritten  public
          offering are in conflict with the foregoing provisions, the provisions
          in the underwriting agreement shall control.

     5.6  Other  Obligations.  With a view to making  available  the benefits of
          certain  rules and  regulations  of the SEC which may  effectuate  the
          registration   of  Registrable   Securities  or  permit  the  sale  of
          Registrable Securities to the public without registration, the Company
          agrees to:

     (a)  after its initial registration under the Securities Act, exercise best
          efforts to cause the Company to be  eligible  to utilize  Form S-3 (or
          any similar form) for the registration of Registrable Securities;

     (b)  at such time as any  Registrable  Securities are eligible for transfer
          under Rule  144(k),  upon the request of Agent on behalf of the holder
          of such Registrable Securities, promptly remove any restrictive legend
          from the certificates evidencing such securities,  at no cost to Agent
          or such holder where such holder is a Purchaser hereunder,  and at the
          cost of Agent in any other case;

     (c)  make and keep  available  public  information  as  defined in Rule 144
          under  the  Securities  Act at all times  from and  after its  initial
          registration under the Securities Act;

     (d)  file with the SEC in a timely  manner all reports and other  documents
          required of the Company under the  Securities Act and the Exchange Act
          at  any  time   after  it  has  become   subject  to  such   reporting
          requirements; and

     (e)  furnish  Agent upon  request a written  statement by the Company as to
          its  compliance  with the reporting  requirements  of Rule 144 (at any
          time following



                                      -13-
<PAGE>

          the effective date of the first  registration  statement  filed by the
          Company under the  Securities Act for an offering of its securities to
          the general  public),  and of the  Securities Act and the Exchange Act
          (at  any  time  after  it  has  become   subject  to  such   reporting
          requirements), a copy of the most recent annual or quarterly report of
          the  Company,  and such other  reports  and  documents  as a holder of
          Registrable  Securities may reasonably  request in availing  itself of
          any  rule  or  regulation  of the  Commission  (including  Rule  144A)
          allowing  a  holder  of  Registrable   Securities  to  sell  any  such
          securities without registration.

     5.7  Termination  of  Registration  Rights.  The right of Agent to  request
          inclusion of Registrable  Securities in any  registration  pursuant to
          this Article 5 shall terminate at the date that is the earlier of: (a)
          that date that all Registrable  Securities have been registered  under
          the  Securities  Act has or  otherwise  been sold to the  public in an
          open-market transaction under Rule 144; and (b) the earlier of (i) the
          fifth  anniversary of the Closing Date, and (ii) the first anniversary
          of the date on which the last  Registrable  Securities  obtainable  by
          each  Purchaser  have been  obtained by conversion or exercise of such
          Purchaser's Debenture or Warrant, as applicable.

     6.   Conditions Precedent To Purchasers' Obligations

     The obligation of the Purchasers to purchase and pay for the Debentures and
the  Warrants  to be  delivered  to it at the  Closing  shall be  subject to the
satisfaction of the following conditions as of the Closing Date:

     6.1  the  representations  and warranties of the Company  contained in this
          Agreement,  the Debenture and the Warrant shall be true and correct on
          and as of the Closing Date.

     7.   Company Covenants and Purchaser Covenants.

     7.1  Company   Covenants.   The  Company  covenants  and  agrees  with  the
          Purchasers that:

     (a)  Reservation  of  Common  Stock.  The  Company  will  reserve  and keep
          available that maximum  number of its  authorized but unissued  Common
          Stock as may be required for the issuance of Conversion Shares and the
          Warrant Shares.

     (b)  Board  Appointment.  On the Closing  Date,  the Company  shall use its
          reasonable  effort to have one (1)  representative  of the  Purchasers
          appointed  to  serve  as  a  director  on  the  Board  of   Directors.
          Thereafter,  until such time as either (a) 50% of the principal amount
          of the Debenture has been converted  into the Company's  Common Stock,
          or (b) the Debenture shall have been repaid in full, the Company shall
          use its reasonable  effort to nominate one (1)  representative  of the
          Purchasers for election at each meeting of the Company's  shareholders
          for which all members of the Board of  Directors  stand for  election.
          The  Agent  shall  designate  such  representative  on  behalf  of the
          Purchasers.

     (c)  Security Interests in Software.  The Company will not grant a security
          interest  or  encumber  any of its  properties  or  assets  which  are
          material individually or in the



                                      -14-
<PAGE>

          aggregate,  to its and its business,  taken as a whole,  to secure the
          repayment of debt in excess of $50,000,  except in the ordinary course
          of business  consistent  with past  practice,  without  the  expressed
          written  consent of the  Purchasers,  which shall not be  unreasonably
          withheld.

     7.2  Purchaser Covenants.  Each of the Purchasers covenants and agrees with
          the Purchasers that it will not either directly or indirectly take any
          short position or hedge  position in the Company's  Common Stock until
          all of the  Purchasers  have  converted  all  of the  Debentures  into
          Debenture Shares and exercised all of the Warrants for Warrant Shares,
          nor will any Purchaser  make any  promissory  notes and/or  pledges to
          that effect on the Company's Common Stock.

     8.   Cutter As Agent for the Purchaser

     8.1  Provisions for the Benefit of Purchasers  Only. The provisions of this
          Section 8 relate to the rights and  obligations  of the Purchasers and
          Agent,  inter se, and shall be operative as between the Purchasers and
          Agent only,  and the Company  shall not have any rights or be entitled
          to rely for any  purposes  upon such  provisions,  save as provided in
          section 8.2(b).

     8.2  Authorization and Action.

     (a)  Each  Purchaser  appoints  Cutter,  as its  agent  (in such  capacity,
          "Agent"),  for  the  purposes  of  collecting  payments,  electing  to
          exercise the rights of the  Purchasers  under this  Agreement  and the
          other Transaction  Documents as herein and therein provided.  For such
          purposes,  each Purchaser authorizes Agent on behalf of such Purchaser
          to  take  such  action  and  to  exercise  such  rights,   powers  and
          discretions as are expressly  delegated to it under this Agreement and
          the other  Transaction  Documents  and on the terms  hereof or thereof
          together  with  such  other  rights,  powers  and  discretions  as are
          reasonably incidental thereto; provided always, however, that, without
          the consent of the Purchasers,  Agent shall not effect or agree to any
          change  in  the  interest  rate,  payment  dates,   maturity  date  or
          conversion  rights under the Debentures.  Agent may perform any of its
          duties  hereunder or thereunder by or through its agents,  officers or
          employees. Agent shall not be required to exercise any right, power or
          discretion or take any action as to any matters not expressly provided
          for by this Agreement or the other Transaction  Documents  (including,
          without limitation, enforcement of the collection of any amounts owing
          to the Purchasers hereunder).  Agent shall not be required to exercise
          any right,  power or  discretion  or to take any action which  exposes
          Agent to personal  liability  or risk  thereof or which is contrary to
          this Agreement, the other Transaction Documents or applicable law. The
          duties of Agent, as agent,  shall be mechanical and  administrative in
          nature. Agent shall not have, by reason of this Agreement or the other
          Transaction  Documents,  a fiduciary relationship in respect of either
          Purchaser.

     (b)  Agent  shall  only act on behalf of the  Purchasers  in  dealings  and
          communications  with the  Company  as set out in this  Agreement,  and
          shall be the only person to so



                                      -15-
<PAGE>

          act, except as may be otherwise  agreed in writing between the parties
          hereto.  The Company and the  Subsidiaries may rely upon the grant and
          delegation  of  authority  provided in this Section 8 from each of the
          Purchasers to Agent without further inquiry.

     8.3  Exoneration.

     (a)  Agent and its  limited  and  general  partners,  and their  respective
          directors,  officers,  managers,  members,  shareholders,   agents  or
          employees  shall  not  be  liable  to  any  person,  company  or  firm
          (including  the  Purchasers  and the  Company) for any action taken or
          omitted  to be  taken  by any of them  (other  than  actions  taken or
          omitted  to  be  taken  by  Agent  in  its  capacity  as a  Purchaser,
          including, without limitation,  actions giving rise to indemnification
          obligations  pursuant to Section  5.5(b)) under or in connection  with
          this Agreement or the other Transaction  Documents unless directly due
          to their own gross negligence or willful misconduct.

     (b)  Without limiting the generality of the foregoing Section 8.3(a):

     (i)  subject to sections 8.8 and 9, Agent may retain,  consult with and pay
          legal counsel,  independent  accountants and other experts selected by
          it (provided  that all  reasonable  costs and fees in respect  thereof
          shall be paid by the Company as  provided  for in Section 9) and Agent
          shall not be liable  for any  action  taken or  omitted to be taken in
          good  faith by it in  accordance  with  the  advice  of such  counsel,
          accountants or experts;

     (ii) Agent  shall not  incur  any  liability  by  acting  upon any  notice,
          consent,  certificate or other  instrument or writing (which may be by
          telegram,  telecopy,  cable or telex) believed by it at the time to be
          genuine  or by  acting  upon any  representation  or  warranty  of the
          Company made hereunder;

     (iii)Agent may assume  without  inquiry or  investigation  that no event of
          default,  default,  or other event which is, or which with the passing
          of time or giving of notice or both  would  become an event of default
          under the Debentures or any other Transaction  Document,  has occurred
          unless it has received from the Company or any Cutter  notice  thereof
          specifying the nature of the relevant event whereupon Agent may assume
          that such event has occurred as therein  described and that an default
          hereunder or default or event of default  thereunder,  as the case may
          be, has occurred; and

     (iv) Agent  shall not have any duty to  ascertain  or to  inquire as to the
          performance or observance of any of the terms, covenants or conditions
          of this Agreement or any other  Transaction  Document,  to inspect the
          property  (including  the  books  and  records)  of the  Company,  the
          Subsidiaries  or any of the other  parties,  or to  conduct  any other
          inquiry  usual for a lender;  Agent  shall not be  responsible  to any
          Purchaser for the due execution, legality, validity, enforceability,



                                      -16-
<PAGE>

          genuineness,  sufficiency  or  value  of  this  Agreement,  any  other
          Transaction  Document or any security  provided by the Company and the
          Subsidiaries.

     8.4  Agent  as  Purchaser.  Agent,  which  also  is  a  Purchaser  of  this
          Debenture,  shall have the same rights and powers under this Agreement
          and the other  Transaction  Documents as any other  Purchaser  and may
          exercise  the  same  as  though  it were  not  Agent;  and  the  terms
          "Purchaser"  or  "Purchasers"   shall,   unless  otherwise   expressly
          indicated,  include Agent in its capacity as Purchaser. Subject to any
          restrictions  on the Company  herein,  Agent may accept deposits from,
          lend money to, and  generally  engage in any kind of business with the
          Company and any other party,  all as if Agent were not agent hereunder
          and without any duty to account therefore to either Purchaser.

     8.5  Credit Decision.  Each Purchaser has entered into this Agreement after
          its own  negotiations  with the Company and is and will continue to be
          solely   responsible  for  its  own   independent   appraisal  of  and
          investigations into the financial condition, creditworthiness, affairs
          and nature of the  Company and all other  credit and  banking  matters
          relative to this Agreement and the other Transaction  Documents.  Each
          Purchaser  confirms  to  Agent  that it has not  relied,  and will not
          hereafter rely, on Agent:

     (a)  to check or inquire  on its  behalf  into the  adequacy,  accuracy  or
          completeness  of any  information  provided by the Company under or in
          connection with this Agreement or the transactions herein contemplated
          and that each Purchaser  shall be responsible  for obtaining  directly
          from the Company, through requests made by Agent to the Company on its
          behalf,  such  information,  documents  or other  information  as each
          Purchaser deems necessary from time to time; or

     (b)  to assess or keep under review on its behalf the financial  condition,
          creditworthiness,  affairs or nature of the Company, the Subsidiary or
          their  respective  properties  or any other credit or banking  matters
          relative to this Agreement.

     (c)  A copy of this Agreement  including all Schedules  hereto has been, or
          prior to such  Purchaser  entering into this  Agreement  will be, made
          available to each Purchaser for review by it and each Purchaser is, or
          will be,  satisfied  with the form  and  substance  of this  Agreement
          including all Schedules hereto;  and Agent is not liable in any way to
          such  Purchaser  in respect  thereof or in respect of the  accuracy or
          completeness of any information or data, financial or otherwise,  made
          available to such Purchaser in connection with the negotiation of this
          Agreement or for any statements, warranties or representations whether
          made in writing or orally made in connection  with the  negotiation of
          this Agreement.

     8.6  Sharing of Payments.  All Purchasers shall share in payments  received
          from or other  recoveries  from the Company or any its  Subsidiary  in
          respect of their  indebtedness  (including amounts paid by the Company
          in accordance with the



                                      -17-
<PAGE>

          Debentures and this Agreement, amounts received on any exercise of any
          right of  counterclaim,  set-off,  banker's  lien or similar right and
          amounts  recovered on the  realization  of the  Security)  pari passu,
          equally and ratably on a pro rata basis between the Purchasers,  based
          upon  the  respective   amounts  of  indebtedness  owing  under  their
          Debentures.

     8.7  Indemnification.  The  Purchasers  agree to  indemnify  Agent  (to the
          extent  not  reimbursed  by  the  Company)  ratably  according  to the
          respective  amounts of indebtedness  owing under their Debentures from
          and against any and all  liabilities,  obligations,  losses,  damages,
          penalties, actions, judgments, suits, costs, expenses or disbursements
          of any nature or kind whatsoever which may be imposed on, incurred by,
          or asserted  against  Agent in its capacity as Agent  hereunder in any
          way  relating  to  or  arising  out  of  this  Agreement,   any  other
          Transaction  Document  or any action  taken or omitted by Agent  under
          this  Agreement or any other  Transaction  Document;  provided that no
          Purchaser  shall  be  liable  for any  portion  of  such  liabilities,
          obligations,  losses, damages,  penalties,  actions, judgments, suits,
          costs,   expenses  or  disbursements   resulting  from  Agent's  gross
          negligence or willful  misconduct.  Without  limitation each Purchaser
          Agrees to reimburse  Agent  promptly upon demand for its ratable share
          as above described of out-of-pocket  expenses  (including the fees and
          disbursements  of counsel)  incurred by Agent in  connection  with the
          determination or preservation of any rights of Agent or the Purchasers
          under,  or the enforcement of, or legal advice in respect of rights or
          responsibilities under, this Agreement or other Transaction Documents,
          to the extent that Agent is not  reimbursed  for such  expenses by the
          Company on demand.

     8.8  Selling  Expenses.  Agent shall be entitled to be  reimbursed  for all
          Selling Expenses incurred by it pursuant to Section 5.3 by the holders
          of Registrable  Securities  included in the Registration to which such
          Selling  Expenses  relate,  and may  require  payment of any  holder's
          estimated  share  thereof to it as a  precondition  to including  such
          Registrable Securities in such Registration.

     8.9  Exchange of  Information.  The Company  agrees that each Purchaser and
          Agent may provide to the other  Purchasers  or Agent such  information
          concerning  the financial  position and property and operations of the
          Company and the  Subsidiaries  as, in the opinion of such Purchaser or
          Agent, is relevant to the ability of the Company and the Subsidiary to
          fulfill their  obligations  under or in connection with this Agreement
          and the other Transaction Documents.

     8.10 Replacement of Agent.  Upon any  dissolution of Agent,  Agent shall be
          entitled  to  transfer  to  its   shareholders   or  to  one  or  more
          corporations or limited partnerships, the majority of the shareholders
          or partners of which are  shareholders of Agent,  all of its rights as
          Agent  under  the  Transaction  Documents.  In  connection  with  such
          distribution,  Agent  shall  be  entitled  to  assign  to its  limited
          partners  or  such   corporations  or   partnerships   Agent's  rights
          hereunder. In addition, the Purchasers may agree to immediately remove
          Agent from its position and appoint a successor  Agent in the stead of
          Cutter. Upon the acceptance of any appointment as Agent



                                      -18-
<PAGE>

          hereunderby a successor  Agent,  such successor  Agent shall thereupon
          succeed to and become vested with all the rights,  powers,  privileges
          and duties of the retiring Agent, and the retiring Agent shall be then
          discharged from its further duties and obligations as Agent under this
          Agreement  provided that the Agent shall execute such documents as may
          be necessary or desirable to assign and transfer the retiring  Agent's
          interest in this Agreement and the other Transaction  Documents to the
          successor  Agent.  After any retiring  Agent's  resignation or removal
          hereunder as Agent,  the  provisions  of this Section 8 shall inure to
          its benefit as to any actions taken or omitted to be taken by it while
          it was an Agent under this Agreement.

     9.   Miscellaneous

     9.1  Currency.  Except as may be otherwise expressly  provided,  all dollar
          amounts herein are references to United States dollars.

     9.2  Governing Law. This  Agreement  shall be governed by the internal law,
          and not the law of conflicts, of the State of California.

     9.3  Survival.  The representations,  warranties,  covenants and agreements
          made herein shall  survive any  investigation  made by or on behalf of
          the  Purchasers  and  the  closing  of the  transactions  contemplated
          hereby.  All  statements  as  to  factual  matters  contained  in  any
          certificate  or other  instrument  delivered  by or on  behalf  of the
          Company   pursuant   hereto  in  connection   with  the   transactions
          contemplated   hereby  shall  be  deemed  to  be  representations  and
          warranties  by the  Company  hereunder  solely  as of the date of such
          certificate or instrument.

     9.4  Successors and Assigns.  Neither Purchaser shall be entitled to assign
          its  rights  under  this  Agreement  or any of the  other  Transaction
          Documents, without the consent of the Company, which consent shall not
          be unreasonably withheld or delayed; provided always, however, that no
          such  consent  shall be required  for either  Purchaser to assign such
          rights to any  person or group of  persons  controlling  or owning the
          majority of all  beneficial  interests  in such  Purchaser,  any other
          entity  controlled by such person or persons,  or an entity controlled
          by such  Purchaser,  provided that such entity shall continue to be so
          controlled by such persons or such Cutters applicable.  The provisions
          hereof  shall  inure to the  benefit  of,  and be  binding  upon,  the
          successors,  permitted assigns, heirs, executors and administrators of
          the parties hereto.

     9.5  Entire Agreement;  Amendment and Waiver. This Agreement, the Schedules
          and  Exhibits  hereto  and the  other  documents  expressly  delivered
          pursuant  hereto or thereto  supersede  any other  agreement,  whether
          written  or oral,  that  may have  been  made or  entered  into by the
          parties  hereto  relating  to the  matters  contemplated  hereby,  and
          constitute the full and entire understanding and agreement between the
          parties with regard to the subjects  hereof and thereof,  and no party
          shall  be  liable  or  bound  to  any  other  in  any  manner  by  any
          representations,   warranties,  covenants  and  agreements  except  as
          specifically set forth or incorporated by reference herein



                                      -19-
<PAGE>

          and  therein.  Neither  this  Agreement  nor any  term  hereof  may be
          amended,  waived,   discharged  or  terminated  except  by  a  written
          instrument signed by the Company and the Purchasers.

     9.6  Severability.  In case  any  provision  of  this  Agreement  shall  be
          invalid,  illegal  or  unenforceable,   the  validity,   legality  and
          enforceability  of the  remaining  provisions  shall not in any way be
          affected or impaired thereby.

     9.7  Notices.  All notices  required  or  permitted  hereunder  shall be in
          writing  and  shall be deemed  effectively  given:  (i) upon  personal
          delivery  to the party to be  notified;  (ii)  when sent by  confirmed
          telex  or  facsimile  if sent  during  normal  business  hours  of the
          recipient,  if not, then on the next business day; (iii) five (5) days
          after having been sent by registered or certified mail, return receipt
          requested,  postage prepaid;  or (iv) one (1) day after deposit with a
          nationally  recognized  overnight courier,  special next day delivery,
          with verification of receipt. All communications shall be sent:

               to the Company at:

                             SportsPrize Entertainment Inc.
                             13101 Washington Blvd., Suite 131
                             Los Angeles, California  90066
                             Attn:  Chief Executive Officer
                             Fax: (310) 566-7150

               with a copy to:

                             Dorsey & Whitney LLP
                             U.S. Bank Centre
                             1420 Fifth Avenue, Suite 3400
                             Seattle, Washington 98101
                             Attn:  Kenneth Sam
                             Fax:  (206) 908-8820

               to the Purchasers:

                             Cutter Services Corp.
                             P.O. Box N-1836 (A-93)
                             East Bay Shopping Center
                             Nassau, Bahamas

                             Strathburn Investments Inc.
                             Suite 95, East Bay Shopping Center
                             P.O. Box N-1836
                             Nassau, Bahamas




                                      -20-
<PAGE>

               with a copy to:

                             Clark Wilson
                             800 - 885 West Georgia Street
                             Vancouver, British Columbia
                             Canada  V6C 3H1
                             Attn:  Bernard Pinsky
                             Fax:  (604) 687-6314

or at such other  address as the  Company or Agent on behalf of  Purchasers  may
designate by ten (10) days advance written notice to the other parties hereto.

     9.8  Counterparts;  Facsimile. This Agreement may be executed in any number
          of counterparts,  each of which shall be an original, but all of which
          together  shall  constitute  one  instrument.  This  Agreement  may be
          executed and delivered by facsimile.

     9.9  Broker's  Fees.  Except as provided in Section 2.2,  each party hereto
          represents  and warrants  that no agent,  broker,  investment  banker,
          person or firm  acting on  behalf  of or under the  authority  of such
          party hereto is or will be entitled to any broker's or finder's fee or
          any other  commission  directly or indirectly  in connection  with the
          transactions contemplated herein.





















                                      -21-
<PAGE>

IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement as of the
date set forth in the first paragraph hereof.

     COMPANY:

     SportsPrize Entertainment Inc.

     By:
         ----------------------------

     Name:
         ----------------------------

     Title:
         ----------------------------



     PURCHASERS:

     Cutter Services Corp.

     By:
         ----------------------------

     Name:
         ----------------------------

     Title:
         ----------------------------



     Strathburn Investments Inc.

     By:
         ----------------------------

     Name:
         ----------------------------

     Title:
         ----------------------------



                                      -22-
<PAGE>


                                  Schedule 3.2

                  Issued and outstanding shares of Common Stock

                                   17,585,374





                                  Schedule 3.9

 Mortgages, security interests, liens, claims, and other encumbrances on assets

                                      NONE






                                  Schedule 3.11

                        Intellectual Property Exceptions


                                      NONE












                                      -23-
<PAGE>


                                  Schedule 3.14

                              Financial Statements











                                      -24-
<PAGE>



                                    Exhibit A

                              FORM OF THE DEBENTURE









                                      -25-
<PAGE>



                                    Exhibit B

                               FORM OF THE WARRANT













                                      -26-

</TEXT>
</DOCUMENT>
