Document:

UNDERWRITING AGREEMENT

June 19, 2002

Spectrum Signal Processing Inc.
One Spectrum Court
200-2700 Production Way
Burnaby, British Columbia
V5A 4X1

ATTENTION:  MR. MARTIN MCCONNELL,
            VICE-PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER

Dear Sirs:

Pursuant  to a letter  agreement  dated  June 6, 2002 (the  "Letter  Agreement")
between  Spectrum  Signal  Processing  Inc.  (the   "Corporation")   and  Sprott
Securities Inc. ("Sprott"),  the Corporation agreed to issue and sell and Sprott
agreed to purchase (or find substituted  purchasers for) 2,310,000 common shares
in the capital of the Corporation (the "Offered Shares").  In furtherance of the
Letter Agreement,  Sprott,  Raymond James Ltd. and Griffiths McBurney & Partners
(collectively,  the "Underwriters") hereby severally (but not jointly or jointly
and severally) agree to purchase, or find substituted purchasers for the Offered
Shares  upon and  subject  to the terms  and  conditions  contained  herein at a
purchase  price of $3.00 per  Offered  Share for  aggregate  gross  proceeds  of
$6,930,000.  The offer of the Offered  Shares by the  Corporation is hereinafter
referred to as the "Offering". If the Corporation is not able or willing to sell
all of the  Offered  Shares  hereunder  (whether or not such action is a default
hereunder  by the  Corporation),  the  Underwriters  shall not be  obligated  to
purchase  any of the  Offered  Shares,  but may do so if it elects to waive this
condition  in  accordance  with the  terms  hereof.  It is  understood  that the
Underwriters may arrange for substituted purchasers of the Offered Shares (i) in
Canada, it being  acknowledged that sales of Offered Shares will take place only
in the Provinces of Ontario and British Columbia (the "Offering Jurisdictions");
and (ii) in other  jurisdictions,  other than Canada and the United States, on a
private placement basis, provided that the Corporation is not required to file a
prospectus  or  other  disclosure  document  or  become  subject  to  continuing
obligations  in such other  jurisdictions,  in each case in accordance  with the
provisions of this  Agreement.  It is understood and agreed that the Corporation
may sell a portion of the Offered Shares  directly to  Institutional  Accredited
Investors (as defined below) in the manner and subject to the  restrictions  set
forth in Section 7 of this Agreement.

1.       INTERPRETATION

Unless  expressly  provided  otherwise,  where  used  in this  Agreement  or any
schedule  hereto,  the  following  terms  shall  have  the  following  meanings,
respectively:

Aird & Berlis LLP                                Execution Copy: June 19, 2002
Underwriting Agreement

<PAGE>

"1933 ACT" means the United States Securities Act of 1933, as amended;

"APPLICABLE SECURITIES LAWS" means, collectively, the applicable securities laws
of the Offering Jurisdictions,  the regulations,  rules, rulings and orders made
thereunder,  the applicable published policy statements issued by the Securities
Commissions  thereunder and the securities legislation and published policies of
each other  jurisdiction the securities laws of which are applicable to the sale
of the Offered Shares on the terms and conditions set out in this Agreement;

"AUDITED  FINANCIAL   STATEMENTS"  means  the  audited  consolidated   financial
statements  of the  Corporation  as at and for the  twelve  month  period  ended
December 31, 2001;

"BROKER WARRANTS" shall have the meaning ascribed thereto in section 3 hereof;

"BUSINESS DAY" shall mean any day except Saturday, Sunday or a statutory holiday
in Toronto, Ontario or Vancouver, British Columbia;

"CLOSING"  means the completion of the issue and sale by the  Corporation of the
Offered Shares pursuant to this Agreement;

"CLOSING  DATE" means the date of the  Closing,  namely June 19,  2002,  or such
other date as the Underwriters and the Corporation may agree;

"COMMON SHARES" means the common shares in the capital of the Corporation;

"CORPORATION" means Spectrum Signal Processing Inc.;

"DISCLOSURE DOCUMENTS" means all of the documentation which has been filed by or
on  behalf  of the  Corporation  since  December  31,  2001  with  the  relevant
securities  regulatory  authorities  pursuant to the  requirements of Applicable
Securities Laws, including all press releases filed on SEDAR;

"EXCHANGE" means the Toronto Stock Exchange;

"GROSS  PROCEEDS"  means the gross proceeds  raised from the sale of the Offered
Shares;

"HAZARDOUS  SUBSTANCES"  shall have the meaning  ascribed  thereto in subsection
5(jj) of this Agreement;

"LETTER  AGREEMENT"  shall  have  the  meaning  ascribed  thereto  in the  first
paragraph of this Agreement;

"MATERIAL  AGREEMENTS"  has the meaning  ascribed  thereto in subsection 5(n) of
this Agreement;

"MATERIAL  CHANGE"  means a material  change for the purposes of the  Applicable
Securities  Laws  or any  of  them  or  where  undefined  under  the  Applicable
Securities Laws of a jurisdiction means a change in the business,  operations or
capital  of  the  Corporation  that  would  reasonably  be  expected  to  have a
significant  effect  on the  market  price or value of any of the  Corporation's
securities  and  includes  a decision  to  implement  such a change  made by the
Corporation's  board of directors or by senior management of the Corporation who
believe that confirmation of the decision by the board of directors is probable;

                                     - 2 -
<PAGE>

"MATERIAL  FACT"  means a  material  fact  for the  purposes  of the  Applicable
Securities  Laws  or any  of  them  or  where  undefined  under  the  Applicable
Securities Laws of a jurisdiction  means a fact that significantly  affects,  or
would  reasonably be expected to have a significant  effect on, the market price
or value of the Corporation's securities;

"MISREPRESENTATION" means a misrepresentation for the purposes of the Applicable
Securities  Laws  or any  of  them  or  where  undefined  under  the  Applicable
Securities  Laws of a jurisdiction  means (i) an untrue  statement of a material
fact, or (ii) an omission to state a material fact that is required to be stated
or that is  necessary  to make a statement  not  misleading  in the light of the
circumstances in which it was made;

"NASDAQ" means The NASDAQ National Market;

"OFFERED  SHARES" shall have the meaning ascribed thereto in the first paragraph
of this Agreement;

"OFFERING"  shall have the meaning  ascribed  thereto in the first  paragraph of
this Agreement;

"OFFERING JURISDICTIONS" has the meaning ascribed thereto in the first paragraph
of this Agreement;

"PERSON"  includes any individual,  corporation,  limited  partnership,  general
partnership,  joint stock company or  association,  joint  venture  association,
company,  trust, bank, trust company,  land trust,  investment trust, society or
other entity,  organization,  syndicate,  whether  incorporated or not, trustee,
executor or other legal personal  representative,  and  governments and agencies
and political subdivisions thereof;

"PRIVATE PLACEMENT  EXEMPTIONS" means (i) in respect of Ontario, the "accredited
investor"  exemption  under section 2.3 of Ontario  Securities  Commission  Rule
45-501  -  Exempt  Distributions;  (ii) in  respect  of  British  Columbia,  the
"accredited  investor"  exemption or the "friends  and family"  exemption  under
Multilateral  Instrument  45-103 - Capital  Raising  Exemptions or the "$97,000"
exemption under subsections 45(2)(5) and 74(2)(4) of the Securities Act (British
Columbia);

"PURCHASERS" means, collectively,  those persons or companies who are purchasing
the Offered Shares as contemplated herein;

"SECURITIES  COMMISSIONS" means the applicable securities regulatory authorities
in the Offering Jurisdictions;

"SPECTRUM  USA" means  Spectrum  Signal  Processing  (USA) Inc.,  a  corporation
existing under the laws of Delaware;

                                     - 3 -
<PAGE>

"SUBSCRIPTION AGREEMENTS" means, collectively, the subscription agreements to be
entered into between the  Purchasers,  the  Corporation and Sprott (on behalf of
the Underwriters) in respect of the Offering;

"SUBSIDIARIES"  means collectively,  Spectrum USA and Spectrum Signal Processing
(UK) Inc. and "SUBSIDIARY" means any one of them;

"TIME OF CLOSING"  means 10:00 a.m.  (Toronto  time) on the Closing Date or such
other time on the  Closing  Date as the  Corporation  and the  Underwriters  may
agree;

"UNDERWRITERS" shall have the meaning ascribed thereto in the first paragraph of
this Agreement;

"UNDERWRITERS' PERSONNEL" has the meaning ascribed thereto in section 12 of this
Agreement;

"UNDERWRITING FEE" shall have the meaning ascribed thereto in subsection 3(a) of
this Agreement;

"UNITED  STATES"  means  the  United  States of  America,  its  territories  and
possessions, any state of the United States, and the District of Columbia;

"US SECURITIES  LAWS" means the 1933 Act, all rules and regulations  promulgated
thereunder and the applicable  securities ("blue sky") laws of the states of the
United States; and

"WARRANT  SHARES" shall have the meaning  ascribed thereto in subsection 8(b) of
this Agreement.

The division of this Agreement into sections, subsections,  paragraphs and other
subdivisions and the insertion of headings are for convenience of reference only
and shall not affect  the  construction  or  interpretation  of this  Agreement.
Unless  something in the subject  matter or context is  inconsistent  therewith,
references herein to sections,  subsections,  paragraphs and other  subdivisions
are  to  sections,  subsections,  paragraphs  and  other  subdivisions  of  this
Agreement.  Unless otherwise expressly provided, all amounts expressed herein in
terms of money refer to lawful  currency  of Canada and all  payments to be made
hereunder shall be made in such currency.

If any provision of this Agreement shall be adjudged by a competent authority to
be invalid or for any reason unenforceable,  such invalidity or unenforceability
shall  not  affect  the  validity,  enforceability  or  operation  of any  other
provision herein.

The following are the schedules attached to this Agreement,  which schedules are
deemed to be a part hereof and are hereby incorporated by reference herein:

Schedule "A" - United States Placement Agent Certificate

Schedule "B" - List of Options, Warrants and Convertible Securities

Schedule "C" - Form of Broker Warrant Certificate

                                     - 4 -
<PAGE>

2.       NATURE OF TRANSACTION

(a)               Each Purchaser  shall purchase  Offered Shares under a Private
                  Placement   Exemption.   The  Underwriters   will  notify  the
                  Corporation with respect to the identity of any such Purchaser
                  as soon as practicable  and with a view to leaving  sufficient
                  time to allow the  Corporation to secure  compliance  with all
                  relevant  regulatory  requirements of the applicable  Offering
                  Jurisdictions  relating to the sale of the Offered Shares and,
                  in any event not later  than 2:00 p.m.  (Toronto  time) on the
                  day before the Closing  Date.  The  Corporation  undertakes to
                  file or cause to be filed all forms or  undertakings  required
                  to be filed by the  Corporation  and to pay all filing fees in
                  connection with the purchase and sale of the Offered Shares so
                  that the  distribution  of such  securities may lawfully occur
                  without  the  necessity  of filing a  prospectus  in Canada or
                  comparable document elsewhere.

(b)               Any offer and sale of Offered  Shares in the United  States or
                  to, or for the  account or benefit of, any U.S.  person  (such
                  term being used in this  Agreement as defined in  Regulation S
                  under the 1933 Act) shall be made in accordance with the terms
                  and  conditions  set out in Section 7 to this  Agreement.  The
                  Corporation and each  Underwriter  shall, and each Underwriter
                  shall  cause each U.S.  broker-dealer  through  which sales of
                  Offered  Shares in the United  States are to be  effected  to,
                  comply with the terms and conditions set out herein.

(c)               It is  understood  and agreed that the  Underwriters  may also
                  arrange for  substituted  purchasers of the Offered  Shares in
                  other jurisdictions,  other than Canada and the United States,
                  on a private placement basis, provided that the Corporation is
                  not required to file a prospectus or other disclosure document
                  or made  subject  to  continuing  obligations  in  such  other
                  jurisdictions.

(d)               The certificates representing the Offered Shares delivered at
                  Closing shall contain the following legends:

          "UNLESS  PERMITTED  UNDER  SECURITIES  LEGISLATION,  THE HOLDER OF THE
          SECURITIES  REPRESENTED  HEREBY SHALL NOT TRADE THE SECURITIES  BEFORE
          OCTOBER 20, 2002.

          THE  SECURITIES  REPRESENTED  HEREBY  HAVE  NOT  BEEN  AND WILL NOT BE
          REGISTERED UNDER THE UNITED STATES  SECURITIES ACT OF 1933, AS AMENDED
          (THE "U.S.  SECURITIES ACT").  THESE SECURITIES MAY BE OFFERED,  SOLD,
          PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) IN A
          TRANSACTION  OUTSIDE THE UNITED STATES IN COMPLIANCE  WITH RULE 904 OF
          REGULATION S UNDER THE U.S.  SECURITIES  ACT, OR (C) IN A  TRANSACTION
          EXEMPT FROM THE REGISTRATION  REQUIREMENTS  UNDER THE U.S.  SECURITIES
          ACT AND ANY APPLICABLE  STATE  SECURITIES LAWS. IN CONNECTION WITH ANY
          TRANSFER PURSUANT TO THE FOREGOING CLAUSE (C), THERE MUST BE FURNISHED
          TO THE CORPORATION A WRITTEN OPINION OF COUNSEL REASONABLY  ACCEPTABLE
          TO THE CORPORATION TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM THE
          REGULATION  REQUIREMENTS  OF ALL APPLICABLE  UNITED STATES FEDERAL AND
          STATE SECURITIES LAWS. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE
          "GOOD  DELIVERY" IN SETTLEMENT OF  TRANSACTIONS  ON STOCK EXCHANGES IN
          CANADA AND, IN CONNECTION WITH ANY SALE OF SUCH SECURITIES PURSUANT TO

                                     - 5 -
<PAGE>

          THE FOREGOING  CLAUSE (B) AT A TIME WHEN THE CORPORATION IS A "FOREIGN
          ISSUER"  AS  DEFINED IN RULE 902 UNDER THE U.S.  SECURITIES  ACT,  THE
          LEGEND MAY BE REMOVED BY PROVIDING A DECLARATION TO THE  CORPORATION'S
          TRANSFER  AGENT  IN  SUCH  FORM  AS  THE  CORPORATION  MAY  REASONABLY
          PRESCRIBE, TO THE EFFECT THAT THE SALE OF THE SECURITIES IS BEING MADE
          IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S.
          SECURITIES ACT."

3.       UNDERWRITERS' COMPENSATION

(a)               In  consideration  for the  performance  of their  obligations
                  hereunder, the Corporation shall, subject to the provisions of
                  this  Agreement,  pay to the  Underwriters an aggregate fee of
                  $485,100 (the "Underwriting Fee"), being $0.21 for each Common
                  Share purchased hereunder by the Underwriters or any Purchaser
                  that may be substituted therefor. The Corporation acknowledges
                  that each of Sprott and Raymond  James Ltd.  shall be entitled
                  to a praecipuum equal to $0.007875 per share and $0.002625 per
                  share,  respectively.  For greater  certainty,  such praecipua
                  shall be deducted from the aggregate Underwriting Fee.

(b)               The Underwriters may retain one or more registered  securities
                  brokers  or  investment  dealers  to act as  selling  agent in
                  connection  with  the  sale  of the  Offered  Shares  but  the
                  compensation  payable to such selling agents shall be the sole
                  responsibility of the Underwriters.

(c)               In  addition   to  the   Underwriting   Fee,   as   additional
                  consideration   for  the  performance  of  their   obligations
                  hereunder, the Corporation shall issue to the Underwriters (in
                  such name or names as the  Underwriters  direct in writing) at
                  the Time of Closing on the Closing Date,  broker warrants (the
                  "Broker  Warrants"),  substantially  in the  form  set  out in
                  Schedule "C" hereto, entitling the Underwriters to acquire, in
                  the  aggregate  a number of Common  Shares  equal to 7% of the
                  aggregate  number of Offered  Shares sold hereunder at a price
                  of $3.14 per share  for a period  of 14 months  following  the
                  Closing Date.

4.       COVENANTS OF THE UNDERWRITERS

Each of the  Underwriters  covenants with the Corporation  that it will and will
cause each U.S.  Affiliate  acting on its behalf to: (i) conduct  activities  in
connection  with  arranging for  purchasers of the Offered  Shares in compliance
with the Applicable  Securities Laws and will indemnify the Corporation from all
losses incurred by it as a result of a violation by such  Underwriter or selling
agent retained by it of such Applicable Securities Laws; (ii) not deliver to any
prospective  Purchaser any document or material  which  constitutes  an offering
memorandum  under  Applicable  Securities  Laws;  (iii)  not  solicit  offers to
purchase or sell the  Offered  Shares so as to require  registration  thereof or
filing of a prospectus  with respect  thereto or continuing  obligations  on the
part of the Corporation  under the laws of any jurisdiction  including,  without
limitation,  the United States of America or any state thereof,  and not solicit
offers to  purchase or sell the Offered  Shares in any  jurisdiction  outside of
Canada where the  solicitation or sale of the Offered Shares would result in any
statutory   ongoing   disclosure   requirements  in  such  jurisdiction  or  any
registration  requirements  in such  jurisdiction on the part of the Corporation
except for the filing of a notice or report of the  solicitation  or sale;  (iv)

                                     - 6 -
<PAGE>

obtain  from  each  Purchaser  an  executed  Subscription  Agreement  in a  form
reasonably acceptable to the Corporation and to the Underwriters relating to the
transactions  herein  contemplated,  together with all  documentation  as may be
necessary in connection with  subscriptions for Offered Shares; (v) refrain from
advertising the Offering in (A) printed media of general circulation, (B) radio,
(C) television,  or (D) electronic media, and not make use of any green sheet or
other internal marketing  document without the consent of the Corporation,  such
consent to be promptly considered and not to be unreasonably  withheld; and (vi)
comply  with,  and  ensure  that its and its  selling  agents  and their and its
respective  directors,  officers,  employees  and  affiliates  comply  with  all
Applicable Securities Laws.

All steps which must or may be taken by the Underwriters in connection with this
Agreement,  including any agreement,  waiver, order, notice (other than a notice
pursuant to section 9 or section 12),  direction,  receipt or other action to be
made, given or taken by the Underwriters hereunder shall be made, given or taken
by Sprott  on  behalf  of the  Underwriters  and the  Corporation  shall  accept
notification  of any  such  steps  from,  and  shall  deliver  the  certificates
representing the Offered Shares to, or to the order of, Sprott.

5.       REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

The Corporation  hereby represents and warrants to and with the Underwriters (on
their own  behalf and on behalf of each of the  Purchasers)  that as at the date
hereof:

(a)               the  Corporation  and each of the  Subsidiaries  has been duly
                  incorporated   and  is   existing   under   the  laws  of  its
                  jurisdiction of incorporation  and has all requisite power and
                  authority  necessary  to, and is  qualified  to,  carry on its
                  business as now conducted  and to own or lease its  properties
                  and assets in all  jurisdictions in which it currently carries
                  on business  and/or owns or leases its  properties and assets;
                  and the  Corporation  has all  required  corporate  power  and
                  authority  to allot,  issue and sell the  Offered  Shares,  to
                  enter into this Agreement and the Subscription Agreements, and
                  to carry out the provisions of each of such agreements;

(b)               the  authorized   capital  of  the  Corporation   consists  of
                  50,000,000  Common  Shares,  of which,  as of the date hereof,
                  12,420,108  Common Shares are issued and  outstanding as fully
                  paid  and   non-assessable   shares  in  the  capital  of  the
                  Corporation;

(c)               the  Corporation  has  no   subsidiaries   other   than   the
                  Subsidiaries  and the Corporation does not beneficially own or
                  exercise  control  or  direction  over,  10%  or  more  of the
                  outstanding  voting  shares  of any  company  other  than such
                  subsidiaries;  the Corporation  beneficially owns, directly or
                  indirectly,  100% of the issued and outstanding  shares in the
                  capital  of each of the  Subsidiaries  free  and  clear of all
                  mortgages,   liens,  charges,   pledges,  security  interests,
                  encumbrances, claims or demands of any kind whatsoever; to the
                  best of the  Corporation's  knowledge  all of such shares have
                  been duly authorized and validly issued and are outstanding as
                  fully-paid shares and, in respect of the Subsidiaries only, no

                                     - 7 -
<PAGE>

                  person has any right,  agreement or option, present or future,
                  contingent  or  absolute,  or any right  capable of becoming a
                  right,   agreement  or  option,  for  the  purchase  from  the
                  Corporation  of any  interest in any of such shares or for the
                  issue or allotment  of any  unissued  shares in the capital of
                  any  Subsidiary  or any  other  security  convertible  into or
                  exchangeable for any such shares;

(d)               Spectrum Signal Processing (UK) Limited has no material assets
                  or liabilities, is not party to any Material Agreements and no
                  revenues are booked through such Subsidiary;

(e)               no order  ceasing or suspending  trading in any  securities of
                  the  Corporation or prohibiting the sale of the Offered Shares
                  or the trading of any of the  Corporation's  issued securities
                  has  been  issued  and no  proceedings  for such  purpose  are
                  pending or, to the knowledge of the Corporation, threatened;

(f)               to the knowledge of the Corporation,  no agreement is in force
                  or effect which in any manner affects the voting or control of
                  any  of  the  securities  of  the  Corporation  or  any of its
                  Subsidiaries;

(g)               except as  described  in the  Disclosure  Documents  or as set
                  forth in  Schedule  "B"  hereto  and  except  as  contemplated
                  hereby, no person, firm or corporation, as of the date hereof,
                  has  any  agreement  or  option,  or any  right  or  privilege
                  (whether  pre-emptive or  contractual)  capable of becoming an
                  agreement  or  option,  for  the  purchase,   subscription  or
                  issuance of any securities of the Corporation;

(h)               the  Corporation  is a reporting  issuer under the  Applicable
                  Securities  Laws in  each of  British  Columbia,  Alberta  and
                  Ontario,  and is a "qualifying  issuer"  within the meaning of
                  Multilateral  Instrument  45-102 - Resale of  Securities  ("MI
                  45-102");  the  Corporation  is not in default in any material
                  respect of any  requirement of the Applicable  Securities Laws
                  of the  Offering  Jurisdictions  and  the  Corporation  is not
                  included in a list of defaulting  reporting issuers maintained
                  by the securities  commissions of the Offering  Jurisdictions.
                  In particular, without limiting the foregoing, the Corporation
                  is in  compliance at the date hereof with its  obligations  to
                  make timely  disclosure of all material changes relating to it
                  and,  since  December  31,  2001  (other  than in  respect  of
                  material  change  reports  previously  filed on a confidential
                  basis and  thereafter  made public or material  change reports
                  previously  filed on a  confidential  basis and in  respect of
                  which no material  change ever  resulted),  no such disclosure
                  has been made on a confidential basis and there is no material
                  change relating to the Corporation which has occurred and with
                  respect to which the requisite  material change  statement has
                  not  been  filed,  except  to the  extent  that  the  Offering
                  constitutes a material change;

(i)               the  currently  issued and  outstanding  Common  Shares of the
                  Corporation  are listed and posted for trading on the Exchange
                  and NASDAQ and no order ceasing or  suspending  trading in any
                  securities of the  Corporation or prohibiting  the sale of the
                  Offered  Shares has been  issued and no  proceedings  for such
                  purpose are pending or, to the  knowledge of the  Corporation,
                  threatened;

                                     - 8 -
<PAGE>

(j)               the  definitive  form of certificate  representing  the Common
                  Shares is in proper  form  under the laws of the  Province  of
                  British Columbia and complies with the requirements of each of
                  the  Exchange  and  NASDAQ  and  does  not  conflict  with the
                  constating documents of the Corporation;

(k)               each of the Corporation and its Subsidiaries has conducted and
                  is  conducting  its business in material  compliance  with all
                  applicable laws, rules and regulations of each jurisdiction in
                  which its business is carried on and is  licensed,  registered
                  or qualified in all  jurisdictions in which it owns, leases or
                  operates  its  property  or carries on  business to enable its
                  business to be carried on as now or  proposed to be  conducted
                  and its property  and assets to be owned,  leased and operated
                  and all such licences,  registrations and  qualifications  are
                  and will at the Time of  Closing be valid,  subsisting  and in
                  good standing, except in each case in respect of matters which
                  do not and will not result in any material  adverse  change to
                  the business,  business  prospects or condition  (financial or
                  otherwise)  of the  Corporation  and  its  Subsidiaries  (on a
                  consolidated  basis),  and  except  for the  failure  to be so
                  qualified or the absence of any such license,  registration or
                  qualification  which  does not and  will  not have a  material
                  adverse effect on the assets or properties,  business, results
                  of operations, prospects or condition (financial or otherwise)
                  of the  Corporation  and its  Subsidiaries  (on a consolidated
                  basis)  or on the power or  authority  of the  Corporation  to
                  perform its obligations under this Agreement;

(l)               except  as  qualified  by the  disclosure  in  the  Disclosure
                  Documents, each of the Corporation and its Subsidiaries is the
                  beneficial owner of the properties, business and assets or the
                  interests in the properties, business or assets referred to as
                  owned by it in the Disclosure Documents,  all agreements under
                  which the Corporation or its Subsidiaries holds an interest in
                  a property,  business or asset are in good standing  according
                  to their  terms  except  where the  failure to be in such good
                  standing does not and will not have a material  adverse effect
                  on the  Corporation  and its  Subsidiaries  (on a consolidated
                  basis)  or  its  properties,   business  or  assets,  and  the
                  Disclosure  Documents  were as at the  date  thereof  true and
                  correct in all material  respects  concerning the  Corporation
                  and its Subsidiaries, and contained no misrepresentations;

(m)               none of the Corporation nor its  Subsidiaries has received any
                  notice  of   proceedings   relating  to  the   revocation   or
                  modification of any material certificate, authority, permit or
                  license  necessary  to  conduct  the  business  now  owned  or
                  operated  by it  which,  if  the  subject  of an  unfavourable
                  decision,  ruling or finding  would  materially  and adversely
                  affect the  conduct  of the  business,  operations,  financial
                  condition or income of the  Corporation  and its  Subsidiaries
                  (on a consolidated basis);

(n)               the  Corporation  is  not in  default  nor  in  breach  in any
                  material  respect of, and the  execution  and delivery of this
                  Agreement,  the  performance  and  compliance  with the  terms
                  hereof and the completion of the transactions described herein
                  by the Corporation  will not result in any material breach of,
                  or be in conflict with or constitute a material default under,
                  or  create a state of facts  which,  after  notice or lapse of

                                     - 9 -
<PAGE>

                  time, or both,  would  constitute a material default under any
                  term  or  provision  of  the   constating   documents  or  any
                  resolutions of the Corporation or any material mortgage, note,
                  indenture,  contract, agreement (written or oral), instrument,
                  lease or other document to which the Corporation is a party or
                  by which it or a  material  portion of its assets are bound (a
                  "Material  Agreement"),   or  any  judgment,   decree,  order,
                  statute, rule or regulation applicable to any of them;

(o)               the  auditors  of the  Corporation  who  audited  the  Audited
                  Financial  Statements are  independent  public  accountants as
                  required by the Applicable Securities Laws and there has never
                  been  any  reportable  disagreement  (within  the  meaning  of
                  National  Policy  Statement No. 31 of the Canadian  Securities
                  Administrators)  with the present or any former auditor of the
                  Corporation;

(p)               the  Corporation  and each of its  Subsidiaries  has filed all
                  federal, provincial, state, local and foreign tax returns that
                  are required to be filed or have requested  extensions thereof
                  (except in any case in which the  failure so to file would not
                  have a material  adverse effect on the assets and  properties,
                  business,  results  of  operations,   prospects  or  condition
                  (financial   or  otherwise)   of  the   Corporation   and  its
                  Subsidiaries (on a consolidated basis)) and has paid all taxes
                  required  to be paid by it and any other  assessment,  fine or
                  penalty  levied  against  it,  to the  extent  that any of the
                  foregoing is due and payable,  except for any such assessment,
                  fine or penalty  that is  currently  being  contested  in good
                  faith;

(q)               the Corporation and each of its  Subsidiaries  has established
                  on its books and records  reserves  that are  adequate for the
                  payment of all taxes not yet due and  payable and there are no
                  liens for taxes on the assets of the Corporation or any of its
                  Subsidiaries,   and  there   are  no   audits   known  by  the
                  Corporation's  management  to be pending of the tax returns of
                  the Corporation or any of its Subsidiaries  (whether  federal,
                  state,  provincial,  local or foreign) and there are no claims
                  which have been or may be  asserted  relating  to any such tax
                  returns,  which audits and claims,  if  determined  adversely,
                  would result in the  assertion by any  governmental  agency of
                  any  deficiency  that would have a material  adverse effect on
                  the assets or  properties,  business,  results of  operations,
                  prospects  or  condition   (financial  or  otherwise)  of  the
                  Corporation and its Subsidiaries (on a consolidated basis);

(r)               no domestic or foreign taxation  authority has asserted or, to
                  the best of the Corporation's knowledge,  threatened to assert
                  any assessment,  claim or liability for taxes due or to become
                  due in connection  with any review or  examination  of the tax
                  returns  of  the  Corporation  or  any  of  its   Subsidiaries
                  (including,  without  limitation,  any predecessor  companies)
                  filed for any year which would have a material  adverse effect
                  on the assets or properties,  business, results of operations,
                  prospects  or  condition   (financial  or  otherwise)  of  the
                  Corporation or any of its Subsidiaries;

(s)               neither the Corporation nor, to the best of the  Corporation's
                  knowledge,  any  other  party is in  material  default  in the

                                     - 10 -
<PAGE>

                  observance  or  performance  of any term or  obligation  to be
                  performed by it under any Material  Agreement and no event has
                  occurred  which  with  notice  or lapse of time or both  would
                  constitute  such a default,  in any such case which default or
                  event  would have a material  adverse  effect on the assets or
                  properties,  business,  results of  operations,  prospects  or
                  condition  (financial or otherwise) of the Corporation and its
                  Subsidiaries (on a consolidated basis);

(t)               at the Time of Closing,  the  Corporation  will have filed all
                  documents,  taken all  proceedings and obtained all regulatory
                  consents  necessary in connection with the sale of the Offered
                  Shares;

(u)               upon  completion of all of the  transactions  contemplated  in
                  this  Agreement the Offered  Shares will be validly issued and
                  outstanding as fully paid and non-assessable and will not have
                  been  issued in  violation  of or subject  to any  pre-emptive
                  rights  or other  contractual  rights to  purchase  securities
                  issued by the Corporation;

(v)               the execution  and delivery of each of this  Agreement and the
                  Subscription   Agreements   and   the   performance   of   the
                  transactions contemplated thereunder, the offering and sale of
                  the Offered  Shares at the Time of Closing and any  compliance
                  by the Corporation  with the other  provisions of each of such
                  Agreements to be complied with by it does not and will not:

                  (i)   require   the    consent,    approval,    authorization,
                        registration   or   qualification   of   or   with   any
                        governmental  authority,   stock  exchange,   securities
                        regulatory  authority or other third party,  except: (i)
                        such  as have  been  obtained;  or  (ii)  such as may be
                        required   under  the  applicable   by-laws,   policies,
                        regulations  and  prescribed  forms of the  Exchange  or
                        NASDAQ;

                  (ii)  result in a breach of or  default  under,  nor  create a
                        state of facts  which,  after notice or lapse of time or
                        both,  would result in a breach of or default under, nor
                        conflict with:

                        (1)   any of the terms,  conditions or provisions of the
                              constating   documents  or   resolutions   of  the
                              shareholders,   directors  or  any   committee  of
                              directors  of  the   Corporation  or  any  of  its
                              Subsidiaries or any material indenture,  agreement
                              or instrument to which the  Corporation  or any of
                              its Subsidiaries is a party or by which it or they
                              are contractually bound; or

                        (2)   any statute, rule, regulation or law applicable to
                              the  Corporation,   or  any  of  its  Subsidiaries
                              including,   without  limitation,  the  Applicable
                              Securities Laws of the Offering Jurisdictions,  or
                              any judgment,  order or decree of any governmental
                              body, agency or court having jurisdiction over the
                              Corporation or any of its Subsidiaries; and

                  (iii) give  rise  to any  lien,  charge  or  claim  in or with
                        respect  to  the  properties  or  assets  now  owned  or
                        hereafter   acquired   by   the   Corporation   or   its

                                     - 11 -
<PAGE>

                        Subsidiaries  or the  acceleration of or the maturity of
                        any debt under any indenture, mortgage, lease, agreement
                        or instrument binding or affecting any of them or any of
                        their properties;

(w)               the Corporation is not aware of any  legislation,  or proposed
                  legislation  (published  by  a  legislative  body),  which  it
                  anticipates will materially and adversely affect the business,
                  affairs,   operations,   assets,  liabilities  (contingent  or
                  otherwise)   or   prospects   of  the   Corporation   and  its
                  Subsidiaries, considered as a whole;

(x)               the financial  statements,  press  releases,  material  change
                  reports,    management   information   circulars   or   annual
                  information  forms  filed by or on behalf  of the  Corporation
                  since  December 31, 2001 with any Securities  Commission,  the
                  Exchange or NASDAQ  taken  together  as a whole,  are true and
                  correct and do not contain a misrepresentation,  determined as
                  at the date of filing, which has not been corrected;

(y)               other  than the  Underwriters,  there is no  person  acting or
                  purporting  to act at the request of the  Corporation,  who is
                  entitled to any brokerage or agency fee in connection with the
                  transactions contemplated herein;

(z)               the minute books and records of the Corporation made available
                  to counsel for the  Underwriters  in  connection  with its due
                  diligence  investigation  of the  Corporation  for the periods
                  from its  date of  incorporation  to the  date of  examination
                  thereof  are  all of  the  minute  books  and  records  of the
                  Corporation   and  contain  copies  of  all   proceedings  (or
                  certified copies thereof) of the  shareholders,  the boards of
                  directors and all committees of the boards of directors of the
                  Corporation  to the date of review of such  corporate  records
                  and  minute  books  and  there  have  been no other  meetings,
                  resolutions  or  proceedings  of the  shareholders,  boards of
                  directors or any  committees of the boards of directors of the
                  Corporation  to the date of review of such  corporate  records
                  and minute books not  reflected in such minute books and other
                  records,  other than those  which have been  disclosed  to the
                  Underwriters  or which are not  material in the context of the
                  Corporation;

(aa)              there is not, in the constating  documents of the  Corporation
                  or in  any  material  agreement,  mortgage,  note,  debenture,
                  indenture  or  other  instrument  or  document  to  which  the
                  Corporation is a party,  any restriction upon or impediment to
                  the  declaration  or payment of dividends by the  directors of
                  the Corporation or the payment of dividends by the Corporation
                  to the holders of its Common Shares;

(bb)              Computershare Trust Company of Canada, at its principal office
                  in the City of  Vancouver,  has been duly  appointed  transfer
                  agent and  registrar for the Common  Shares;

(cc)              the Audited  Financial  Statements  and the unaudited  interim
                  consolidated  financial  statements for the three month period
                  ended March 31, 2002:

                                     - 12 -
<PAGE>

                  (i)   have been  prepared in  accordance  with  United  States
                        generally  accepted  accounting  principles applied on a
                        basis consistent with those of preceding fiscal periods;

                  (ii)  present  fully,  fairly and  correctly,  in all material
                        respects,   the  assets,   liabilities   and   financial
                        condition of the Corporation as at December 31, 2001 and
                        March 31,  2002,  respectively,  and the  results of its
                        operations and the changes in its financial position for
                        the periods then ended; and

                  (iii) contain and reflect adequate  provision or allowance for
                        all  reasonably  anticipated  liabilities,  expenses and
                        losses of the Corporation;

(dd)              since  December  31, 2001 there has been no  material  adverse
                  change in the financial  position or condition of the business
                  of  the  Corporation   from  that  indicated  by  the  Audited
                  Financial Statements,  nor has there been any material adverse
                  change  in  the  affairs,  business,  prospects,  liabilities,
                  assets, operations or condition of the business,  financial or
                  otherwise that has not been publicly disclosed;

(ee)              with  respect  to  each  premises  which  is  material  to the
                  Corporation on a consolidated  basis and which the Corporation
                  or any of its  Subsidiaries  occupies as tenant  (the  "Leased
                  Premises"),  the Corporation or such  Subsidiary  occupies the
                  Leased  Premises and has the exclusive right to occupy and use
                  the Leased  Premises and each of the leases  pursuant to which
                  the Corporation  and/or its  Subsidiaries  occupies the Leased
                  Premises is in good standing and in full force and effect;

(ff)              there  has not been  and  there is not  currently  any  labour
                  disruption or conflict  which is adversely  affecting or could
                  adversely affect, in a material manner, the carrying on of the
                  Corporation's or any Subsidiaries'  business,  considered as a
                  whole;

(gg)              the Corporation and each of its  Subsidiaries has procured and
                  maintains adequate insurance against all insurable risks which
                  are material to the Corporation and its Subsidiaries (taken as
                  a whole);

(hh)              other than as set out in the Disclosure  Documents,  there are
                  no  actions,  suits,   proceedings  or  inquiries  pending  or
                  threatened  against or affecting the Corporation or any of its
                  Subsidiaries  at law or in equity or before or by any federal,
                  provincial,   municipal  or  other  governmental   department,
                  commission,  board, bureau, agency or instrumentality which in
                  any way materially adversely affects the business,  operations
                  or condition  (financial or otherwise) of the  Corporation and
                  its  Subsidiaries  or  their  properties  or  assets  or which
                  affects or may affect the  distribution  of the Offered Shares
                  and none of the actions,  suits,  proceedings or inquiries, if
                  any,  referred to in the  Disclosure  Documents is expected to

                                     - 13 -
<PAGE>

                  materially  adversely  affect,  the  business,  operations  or
                  condition  (financial or otherwise) of the Corporation and its
                  Subsidiaries or their properties or assets;

(ii)              except as disclosed in the Disclosure  Documents,  none of the
                  directors,  officers or  employees of the  Corporation  or its
                  Subsidiaries,  any  known  holder of more than ten per cent of
                  any class of shares of the Corporation, or any known associate
                  or affiliate of any of the foregoing  persons or companies (as
                  such terms are defined in the Securities Act  (Ontario)),  has
                  had any material interest, direct or indirect, in any material
                  transaction  within  the  previous  two years or any  proposed
                  material  transaction  which,  as the case may be,  materially
                  affected,  is  material  to  or  will  materially  affect  the
                  Corporation and its Subsidiaries;

(jj)              except  in  compliance   with  applicable   legislation,   the
                  Corporation  has not used any of its  properties or facilities
                  to generate,  manufacture,  process,  distribute,  use, treat,
                  store,   dispose  of,  transport  or  handle  any  pollutants,
                  contaminants, chemicals or industrial toxic or hazardous waste
                  or substances ("Hazardous Substances");

(kk)              except  in  compliance   with  applicable   legislation,   the
                  Corporation  has not caused or permitted  the release,  in any
                  manner whatsoever,  of any Hazardous Substances on or from any
                  of its  properties  or assets or any such release on or from a
                  facility  owned or operated by third  parties but with respect
                  to which the  Corporation  is or may  reasonably be alleged to
                  have material  liability or has received any notice that it is
                  potentially responsible for a federal,  provincial,  municipal
                  or  local  clean-up  site  or  corrective   action  under  any
                  applicable laws, statutes, ordinances, by-laws, regulations or
                  any orders,  directions or decisions rendered by any ministry,
                  department or administrative regulatory agency relating to the
                  protection of the environment,  occupational health and safety
                  or otherwise relating to dealing with Hazardous Substances;

(ll)              each of the  Corporation  and its  Subsidiaries  has  good and
                  valid title to all material  intellectual property rights used
                  by  the  Corporation  or  relating  to  the  operation  of its
                  business,  including  copyrights,  industrial  designs,  trade
                  marks,   trade  secrets,   know  how  and  proprietary  rights
                  necessary  to  carry  on  its  business   (the   "Intellectual
                  Property") free and clear of any and all encumbrances,  except
                  for royalty  obligations and general bank security incurred or
                  granted,  as the  case  may  be,  in the  ordinary  course  of
                  business.  No royalty or other fee is  required  to be paid by
                  the  Corporation  or its  Subsidiaries  to any other person in
                  respect of the use of any of the Intellectual Property. To the
                  best of the knowledge of the  Corporation,  no employee of the
                  Corporation or its Subsidiaries is in violation of any term of
                  any  non-disclosure,  proprietary  rights or similar agreement
                  between such employee and the Corporation or its  Subsidiaries
                  or between such employee and any former employer.  To the best
                  of the knowledge of the Corporation, all technical information
                  developed  by and  belonging  to the  Corporation  and/or  its
                  Subsidiaries  which has not been  copyrighted  or patented has
                  been kept confidential; and

                                     - 14 -
<PAGE>

(mm)              there  are no  material  restrictions  on the  ability  of the
                  Corporation or its  Subsidiaries to use and exploit all rights
                  in the Intellectual  Property  required in the ordinary course
                  of the  Corporation's or its Subsidiaries'  business.  None of
                  the  rights  of the  Corporation  or its  Subsidiaries  in the
                  Intellectual  Property will be impaired or affected in any way
                  by the  transactions  contemplated by this  agreement.  To the
                  best of the knowledge of the  Corporation,  the conduct of the
                  business of the Corporation and its  Subsidiaries  and the use
                  of the  Intellectual  Property does not infringe,  and each of
                  the  Corporation  and its  Subsidiaries  has not  received any
                  notice,  complaint,  threat or claim alleging infringement of,
                  any patent,  trade mark,  trade  name,  copyright,  industrial
                  design,  trade  secret  or  other  Intellectual   Property  or
                  proprietary right of any other person,  and the conduct of the
                  business  of each of the  Corporation  does  not  include  any
                  activity  which  may  constitute  passing  off.  Each  of  the
                  Corporation  and  its   Subsidiaries  has  no  notice  of  any
                  infringements of the Intellectual  Property or material claims
                  against the Intellectual Property by any third party.

The Corporation  acknowledges  that the  Underwriters and each of the Purchasers
are relying upon such representations and warranties.

6.       COVENANTS OF THE CORPORATION

The Corporation  hereby covenants to and with each of the Underwriters (on their
own behalf and on behalf of the Purchasers) that:

(a)               the Corporation will enter into  Subscription  Agreements with
                  each of the Purchasers;

(b)               the  Corporation  will  use its  reasonable  best  efforts  to
                  maintain  its status as a  reporting  issuer not in default in
                  each of the Offering  Jurisdictions  for a period of 14 months
                  from the Closing Date;

(c)               the  Corporation  will  use its  reasonable  best  efforts  to
                  maintain  the listing of the Common  Shares on the Exchange to
                  the date which is one year  following  the Closing Date and to
                  ensure that the  Offered  Shares will be listed and posted for
                  trading on the Exchange upon their issue;

(d)               other than as contemplated  herein,  the Corporation will not,
                  directly or indirectly,  without the prior written  consent of
                  Sprott (on behalf of the  Underwriters),  which  consent shall
                  not be unreasonably withheld or delayed,  issue, sell or grant
                  any securities of the Corporation  for a period  commencing on
                  the date  hereof and ending 90 days  thereafter  nor shall the
                  Corporation publicly announce during such period the intention
                  to do so,  except  for (i) the  issuance  of Common  Shares in
                  connection  with the  exercise  of any  currently  outstanding
                  stock options, warrants or other convertible securities,  (ii)
                  the issuance of Common Shares  pursuant to the exercise of any
                  Broker  Warrants;  (iii) the issuance of stock  options in the
                  normal course pursuant to the Corporation's  stock option plan

                                     - 15 -
<PAGE>

                  and/or the Corporation's employee share purchase plan, or (iv)
                  the issuance of securities of the  Corporation  pursuant to an
                  arm's length acquisition;

(e)               in the event any person  acting or  purporting  to act for the
                  Corporation  establishes a claim from the Underwriters for any
                  brokerage or agency fee in  connection  with the  transactions
                  contemplated  herein, the Corporation shall indemnify and hold
                  harmless  each of the  Underwriters  with respect  thereto and
                  with respect to all costs  reasonably  incurred in the defence
                  thereof

(f)               until the Time of Closing, at the request of the Underwriters,
                  which  request   shall  not  be   unreasonably   denied,   the
                  Corporation will give to the  Underwriters,  the Underwriters'
                  counsel   and   other   authorized   representatives   of  the
                  Underwriters,  full access during normal business hours to all
                  locations  where the business of the Corporation is carried on
                  and to  the  properties,  books,  contracts,  commitments  and
                  records of the  Corporation  pertaining to its business (taken
                  as a whole);

(g)               until the Time of  Closing,  subject to any  applicable  legal
                  restrictions,  the Corporation  shall furnish the Underwriters
                  in confidence with all  information  concerning the affairs of
                  the  business  of  the  Corporation  as the  Underwriters  may
                  reasonably request;

(h)               the  Corporation  shall,  as  soon  as  practicable,  use  its
                  commercially  reasonable best efforts to receive all necessary
                  consents to the transactions contemplated herein; and

(i)               the  Corporation  shall use its  reasonable  best  efforts  to
                  maintain  and  defend  all  of  the   Corporation's   and  its
                  Subsidiaries' rights to use the Intellectual Property.

7.       UNITED STATES SALES

(a)               As used in this Section 7, the following  terms shall have the
                  meanings indicated:

                  (i)   "DIRECTED   SELLING   EFFORTS"  means  directed  selling
                        efforts as that term is defined in Regulation S. Without
                        limiting  the  foregoing,  but for greater  clarity,  it
                        means,  subject to the exclusions from the definition of
                        directed selling efforts  contained in Regulation S, any
                        activity  undertaken  for the  purpose of, or that could
                        reasonably   be   expected   to  have  the   effect  of,
                        conditioning  the  market in the  United  States for the
                        Offered   Shares  and  includes  the  placement  of  any
                        advertisement   in  a   publication   with   a   general
                        circulation  in the  United  States  that  refers to the
                        offering of the Offered Shares;

                  (ii)  "INSTITUTIONAL ACCREDITED INVESTOR" means an institution
                        that is an  accredited  investor as that term is defined
                        in Rule 501(a) (1), (2), (3) or (7) of Regulation D;

                  (iii) "REGULATION D" means Regulation D promulgated  under the
                        1933 Act;

                                     - 16 -
<PAGE>

                  (iv)  "REGULATION S" means Regulation S promulgated  under the
                        1933 Act;

                  (v)   "SEC" means the United  States  Securities  and Exchange
                        Commission;

                  (vi)  "SUBSTANTIAL  U.S. MARKET  INTEREST"  means  substantial
                        U.S.   market  interest  as  that  term  is  defined  in
                        Regulation S;

                  (vii) "U.S.  AFFILIATE"  means an affiliate of an  Underwriter
                        which is a duly registered broker or dealer with the SEC
                        and  is  a  member  of  the  National   Association   of
                        Securities Dealers, Inc.;

                 (viii) "U.S.  EXCHANGE ACT" means the United States  Securities
                        Exchange Act of 1934, as amended; and

                  (ix)  "U.S.  PERSON"  means  a U.S.  person  as  that  term is
                        defined in Regulation S.

(b)               The Corporation and each Underwriter:

                  (i)   acknowledge  that the  Offered  Shares have not been and
                        will not be  registered  with the SEC under the 1933 Act
                        and that the Offered  Shares are being offered and sold:
                        (x) outside the United States  pursuant to the exclusion
                        from  registration  provided by Regulation S; and (y) in
                        the United States to Institutional  Accredited Investors
                        pursuant to the exemption from registration  provided by
                        Rule 506 of Regulation D; and

                  (ii)  agree that  neither  they,  nor any of their  respective
                        affiliates,  nor any  person  acting  on  behalf  of the
                        foregoing  have made or will make,  except to the extent
                        permitted by  Subparagraph  7(d)(vii):  (x) any offer to
                        sell  or  solicitation  of an  offer  to buy  any of the
                        Offered Shares to any person in the United States or (y)
                        any sale of the Offered  Shares to any person unless the
                        seller of such Offered  Shares and any person  acting on
                        its  behalf  reasonably  believes  that at the time such
                        person placed the order to purchase  Offered Shares such
                        person was outside the United States.

(c)                     The Corporation hereby represents,  warrants,  covenants
                        and agrees with each Underwriter that:

                        (i)   the  Corporation is, and until the Time of Closing
                              will be, a  "foreign  private  issuer"  within the
                              meaning of  Regulation S; and the  Corporation  is
                              not and does not own or control (and for two years
                              from the Time of Closing  will not be and will not
                              own or control) an  open-end  investment  company,
                              closed-end  investment  company,  unit  investment
                              trust or face-amount  certificate  company that is
                              or is required to be registered under Section 8 of
                              the United States Investment  Company Act of 1940,
                              as amended;

                                     - 17 -
<PAGE>

                        (ii)  none of the Corporation,  its Subsidiaries,  their
                              affiliates or anyone acting on its or their behalf
                              (other than the  Underwriters,  their  affiliates,
                              any subagent, or any person acting on its or their
                              behalf,  as to  which no  representation  is made)
                              directly or indirectly, has taken or will take any
                              action in violation of Regulation M under the U.S.
                              Exchange Act in connection with the offer and sale
                              of the Offered Shares;

                        (iii) none of the Corporation,  its Subsidiaries,  their
                              affiliates  or any person  acting on their  behalf
                              (other than the  Underwriters,  their  affiliates,
                              any subagent, or any person acting on its or their
                              behalf,  in respect of which no  representation is
                              made)  (x)  has  engaged  or  will  engage  in any
                              Directed  Selling  Efforts  with  respect  to  the
                              Offered  Shares,  and has not  taken  and will not
                              take  any  action  that  would  cause  Rule 903 of
                              Regulation  S to be  unavailable  for  offers  and
                              sales of the Offered Shares, or (y) has offered or
                              will  offer  to  sell,  or has  solicited  or will
                              solicit  offers to buy, the Offered  Shares in the
                              United  States  by means  of any  form of  general
                              solicitation  or  general  advertising  (as  those
                              terms are used in  Regulation  D) or in any manner
                              involving a public  offering within the meaning of
                              Section   4(2)   of  the   1933   Act,   including
                              advertisements,   articles,   notices,   or  other
                              communications   published   in   any   newspaper,
                              magazine or similar media  broadcast over radio or
                              television  or in any  seminar  or  meeting  whose
                              attendees    have   been    invited   by   general
                              solicitation or advertising in connection with the
                              offer  or  sale  of the  Offered  Shares  to  U.S.
                              Persons; and

                        (iv)  the Corporation will execute and file with the SEC
                              on a timely  basis a Form D relating  to the offer
                              and sale of the  Offered  Shares and  execute  and
                              file such other documents as may be required under
                              applicable  United States state securities  ("blue
                              sky") laws.

(d)                     Each of the Underwriters,  on a joint and several basis,
                        represents,  warrants,  covenants and agrees to and with
                        the Corporation that:

                        (i)   it is aware that the Offered  Shares have not been
                              and will not be registered  under the 1933 Act and
                              have not and may not be  offered  or sold  outside
                              the United States  except  pursuant to Rule 903 of
                              Regulation S or within the United States except to
                              Institutional  Accredited Investors pursuant to an
                              exemption from the  registration  requirements  of
                              the 1933 Act provided by Rule 506 of Regulation D,
                              in the manner contemplated in this Section 7;

                        (ii)  such  Underwriter,  its  affiliates or any persons
                              acting on its behalf (other than the  Corporation,
                              its  affiliates  or any  person  acting  on  their
                              behalf,  as to  which no  representation  is made)
                              have  not  engaged  and  will  not  engage  in any
                              Directed  Selling  Efforts  with  respect  to  the
                              Offered  Shares,  and has not  taken nor will take
                              any action that would cause Rule 903 of Regulation
                              S  or  the  exemption  afforded  by  Rule  506  of

                                     - 18 -
<PAGE>

                              Regulation  D to be  unavailable  for  offers  and
                              sales  of the  Offered  Shares  pursuant  to  this
                              Agreement;

                        (iii) offers  to sell  the  Offered  Shares  within  the
                              United States have been and will be made on behalf
                              of the Corporation only through its U.S. Affiliate
                              and all sales of the Offered  Shares in the United
                              States shall be made by the  Corporation  pursuant
                              to Rule 506 of Regulation D;

                        (iv)  it has not  entered  and will not  enter  into any
                              contractual   arrangement   with  respect  to  the
                              distribution  of the Offered  Shares,  except with
                              its  affiliates  or any selling  group  members in
                              accordance  with this  Subsection 7(d) or with the
                              prior written consent of the Corporation;

                        (v)   it will  require  its U.S.  Affiliate  to agree in
                              writing,  for the benefit of the  Corporation,  to
                              comply  with,  and shall use its best  efforts  to
                              ensure that its U.S.  Affiliate complies with, the
                              provisions  of  this  Subsection  7(d)  as if such
                              provisions applied to such affiliate;

                        (vi)  all offers and sales of the Offered  Shares in the
                              United  States will be  effected  in  transactions
                              exempt  from  the  registration  or  qualification
                              provisions of applicable state  securities  ("blue
                              sky") laws and in accordance  with all  applicable
                              U.S. federal and state broker-dealer requirements;

                        (vii) it has not, either directly, or through any person
                              acting on its or their behalf,  solicited and will
                              not solicit  offers  for,  and has not offered and
                              will not offer to sell,  the Offered Shares in the
                              United  States  by means  of any  form of  general
                              solicitation  or  general  advertising  (as  those
                              terms are used in  Regulation  D) or in any manner
                              involving a public  offering within the meaning of
                              Section   4(2)   of  the   1933   Act,   including
                              advertisements,   articles,   notices   or   other
                              communications   published   in   any   newspaper,
                              magazine, or similar media broadcast over radio or
                              television  or in any  seminar  or  meeting  whose
                              attendees    have   been    invited   by   general
                              solicitation or advertising in connection with the
                              offer  or  sale  of the  Offered  Shares  to  U.S.
                              Persons;

                       (viii) offers to sell and  solicitation  of offers to buy
                              the Offered  Shares in the United  States shall be
                              made only to persons with whom an  Underwriter  or
                              its U.S. Affiliate has a pre-existing relationship
                              and  to  whom  such   Underwriter  has  reasonable
                              grounds   to   believe   and    believes   to   be
                              Institutional  Accredited  Investors  and  only in
                              states of the United States where such Underwriter
                              or its U.S.  Affiliate is  registered or otherwise
                              exempt from  registration  and where the offer and
                              sale  of  such   securities  is  permitted   under
                              applicable state securities ("blue sky"), laws and
                              sales of Offered  Shares in the United States will
                              be made only to persons reasonably  believed to be
                              Institutional Accredited Investors and who execute
                              and deliver a Representation Letter in the form of

                                     - 19 -
<PAGE>

                              Schedule   "A"  to  the   Subscription   Agreement
                              completed, executed and delivered by such persons;

                        (ix)  at Closing,  it will deliver to the  Corporation a
                              certificate, substantially in the form of Schedule
                              "A"  to  this  Agreement   executed  by  its  U.S.
                              Affiliate  relating to the manner of the offer and
                              sale of Offered Shares in the United States; and

                        (x)   neither such  Underwriter,  its  affiliates or any
                              person  acting on its or their behalf  (other than
                              the  Corporation,  its third party  affiliates and
                              any  third  party  acting on their  behalf,  as to
                              which no representation is made) has taken or will
                              take,  directly  or  indirectly,   any  action  in
                              violation of Regulation M under the U.S.  Exchange
                              Act in  connection  with  offer  and  sale  of the
                              Offered Shares.

8.       CONDITIONS TO CLOSING

The following are  conditions to the closing of the  transactions  involving the
issuance and sale of the Offered Shares  contemplated  hereby,  which conditions
the  Corporation  covenants  to exercise  its  reasonable  best  efforts to have
fulfilled on or prior to the Time of Closing and which  conditions may be waived
in writing in whole or in part by the Underwriters:

      (a)   the  Corporation  will  have  made  and/or  obtained  the  necessary
            filings,  approvals,  consents and  acceptances  of the  appropriate
            regulatory  authorities  required  to be  made  or  obtained  by the
            Corporation in connection with the sale of the Offered Shares to the
            Purchasers  prior  to the Time of  Closing  on the  Closing  Date as
            herein contemplated, it being understood that the Underwriters shall
            do all that is  reasonably  required  to assist the  Corporation  to
            fulfil this condition;

      (b)   the  Corporation's  board of  directors  shall have  authorized  and
            approved  the  execution  and  delivery  of  this   Agreement,   the
            acceptance of the Subscription Agreements,  the allotment,  issuance
            and  delivery of the  Offered  Shares  issuable,  the  creation  and
            issuance of the Broker  Warrants  and the  allotment,  issuance  and
            delivery of the Common Shares  issuable upon the due exercise of the
            Broker  Warrants  (the  "Warrant  Shares") and all matters  relating
            thereto;

      (c)   the  Corporation  shall  have  accepted  one  or  more  Subscription
            Agreements with the Purchasers;

      (d)   the Underwriters  shall have received an opinion,  dated the Closing
            Date, of the  Corporation's  counsel (it being  understood that such
            counsel may rely to the extent appropriate in the circumstances, (i)
            as to matters of fact, on certificates  of the Corporation  executed
            on  its  behalf  by a  senior  officer  of  the  Corporation  and on
            certificates of Computershare Trust Company of Canada, the registrar
            and transfer agent for the Common  Shares,  as to the issued capital
            of the Corporation; and (ii) as to matters of fact not independently
            established,  on certificates of the  Corporation's  auditors) which
            shall, as appropriate, include the following opinions:

                                     - 20 -
<PAGE>

            (i)   the  Corporation  is duly  incorporated  under the Company Act
                  (British  Columbia)  and is,  with  respect to the  filings of
                  annual  reports with the  Registrar  of Companies  for British
                  Columbia,  in good standing,  and has all requisite  corporate
                  power and  capacity  to carry on its  business to own or lease
                  its assets and  properties  and to carry out the provisions of
                  this Agreement and the Subscription Agreements;

            (ii)  an opinion  as to the  authorized  and  issued  capital of the
                  Corporation;

            (iii) all  requisite  corporate  actions  have  been  taken by or on
                  behalf of the  Corporation  to authorize the issuance and sale
                  of the Offered Shares;

            (iv)  the  execution   and  delivery  of  this   Agreement  and  the
                  Subscription  Agreements has been duly  authorized by, and has
                  been executed and  delivered on behalf and is legally  binding
                  upon, the  Corporation  and is enforceable in accordance  with
                  its terms, subject to the usual qualifications;

            (v)   the Offered  Shares will have been and the Warrant Shares will
                  be  issued  as fully  paid and  non-assessable  shares  in the
                  capital of the Corporation;

            (vi)  no documents  need be filed,  proceedings  taken or approvals,
                  permits,   consents  or  authorizations   obtained  under  the
                  Applicable  Securities Laws of the Offering  Jurisdictions and
                  the rules,  regulations and policies  thereunder to permit the
                  offer  and  sale  of  the  Offered   Shares  in  the  Offering
                  Jurisdictions and the issuance of the Broker Warrants;

            (vii) the first trade of the Offered Shares and the Warrant  Shares,
                  as the case may be, will not (except as  specified) be subject
                  to any statutory hold period under the  Applicable  Securities
                  Laws of the Offering Jurisdictions and no other documents will
                  be required to be filed, no proceedings will be required to be
                  taken  and  no  approvals,   permits,   consents,   orders  or
                  authorizations   will  be  required  to  be  obtained  by  the
                  Corporation or the holder of the Offered Shares or the Warrant
                  Shares, as the case may be, making such first trade under such
                  Applicable  Securities Laws in connection with the first trade
                  of such  shares  through  registrants  registered  under  such
                  Applicable  Securities Laws in compliance with such Applicable
                  Securities Laws, provided that at the time of such trade:

                  (1)   the  Corporation  has been a reporting  issuer in one of
                        the   Offering   Jurisdictions   for  the  four   months
                        immediately preceding the trade;

                  (2)   a period of at least four  months has  elapsed  from the
                        date of the issuance of the Offered Shares or the Broker
                        Warrants, as the case may be; and

                                     - 21 -
<PAGE>

                  (3)   no unusual  effort is made to  prepare  the market or to
                        create a demand for such securities and no extraordinary
                        commission or other  consideration is paid in respect of
                        such trade;

           (viii) the  execution   and  delivery  of  this   Agreement  and  the
                  fulfilment of the terms hereof,  do not and will not result in
                  a breach of, do not create a state of facts which after notice
                  or lapse of time or both will  result in a breach  of,  and do
                  not and will not conflict with,  any of the terms,  conditions
                  or provisions of the constating documents of the Corporation;

            (ix)  the  Exchange has approved the listing and posting for trading
                  of all of the Offered Shares and the Warrant Shares subject to
                  the  satisfaction of the conditions set out in its conditional
                  listing letter; and

            (x)   such other  opinions  as may be  reasonably  requested  by the
                  Underwriters.

      (e)   the   Underwriters   shall  have   received  an  opinion   from  the
            Corporation's  United  States  counsel that  Spectrum USA is validly
            existing  under  the  laws  of the  State  of  Delaware  and has all
            requisite  power and capacity to carry on its business and to own or
            lease its assets and properties;

      (f)   the Underwriters shall have received an Incumbency Certificate dated
            the  Closing  Date  including  specimen   signatures  of  the  Chief
            Executive Officer, the Chief Financial Officer and any other officer
            of the Corporation  signing this Agreement or any document delivered
            hereunder;

      (g)   the  Underwriters  shall  have  received  a  certificate,  dated the
            Closing Date, of the Chief Executive Officer and the Chief Financial
            Officer of the Corporation (or such other officer or officers of the
            Corporation  acceptable  to the  Underwriters,  acting  reasonably),
            addressed to the  Underwriters and their counsel to the effect that,
            to the best of their  knowledge,  information and belief,  after due
            enquiry and without personal liability:

            (i)   the  representations and warranties of the Corporation in this
                  Agreement are true and correct in all material  respects as if
                  made at and as of the Time of Closing and the  Corporation has
                  performed  all  covenants  and  agreements  and  satisfied all
                  conditions  on its part to be  performed  or  satisfied in all
                  material respects at or prior to the Time of Closing;

            (ii)  no  order,  ruling  or  determination  having  the  effect  of
                  suspending the sale or ceasing,  suspending or restricting the
                  trading of Common Shares in any of the Offering  Jurisdictions
                  has been  issued  or made by any  stock  exchange,  securities
                  commission or regulatory authority and is continuing in effect
                  and no  proceedings,  investigations  or  enquiries  for  that
                  purpose have been instituted or are pending;

                                     - 22 -
<PAGE>

            (iii) the memorandum and articles of the Corporation attached to the
                  certificate are full, true and correct copies,  unamended, and
                  in effect on the date thereof;

            (iv)  the  minutes  or other  records  of  various  proceedings  and
                  actions of the  Corporation's  Board of Directors  attached to
                  the  certificate  relating to the Offering are full,  true and
                  correct copies thereof and have not been modified or rescinded
                  as of the date thereof;

            (v)   since  the date of the  Letter  Agreement,  there  has been no
                  material adverse change in the business, affairs,  operations,
                  assets,  liabilities  or  capital of the  Corporation  and its
                  Subsidiaries taken as a whole;

            (vi)  none of the materials filed by or on behalf of the Corporation
                  within the last twelve months under Applicable Securities Laws
                  contained  a  misrepresentation  as at the time  the  relevant
                  material was filed; and

            (vii) except  as  disclosed  in  the   Disclosure   Documents,   the
                  Corporation  has not  incurred  any  material  liabilities  or
                  obligations (absolute,  accrued,  contingent or otherwise), or
                  entered  into any  material  transaction,  not in the ordinary
                  course of  business  and there  has been no  material  change,
                  financial or otherwise, in the assets, liabilities (contingent
                  or otherwise),  capital,  business or results of operations of
                  the Corporation of any of its Subsidiaries.

      (h)   the Offered  Shares and the Warrant  Shares shall have been approved
            for listing on the Exchange, subject only to the official notices of
            issuance and fulfilment of such other  conditions of the Exchange as
            set out in the conditional listing letter;

      (i)   the  Underwriters  shall have  received  certificates,  issued under
            applicable  provisions  of  the  securities  laws  of  the  Offering
            Jurisdictions  stating that the  Corporation is not in default under
            the  Applicable  Securities  Laws  of  the  Offering  Jurisdictions,
            respectively; and

      (j)   the  Underwriters  will have  received,  at the Time of  Closing,  a
            favourable  legal opinion from the  Corporation's  U.S. counsel that
            the offer and sale of the  Offered  Shares in the  United  States is
            exempt from registration under the 1933 Act.

It is understood that the  Underwriters  may waive in whole or in part or extend
the time for compliance with any of such terms and conditions  without prejudice
to their rights in respect of any other of the foregoing terms and conditions or
any other or subsequent breach or non-compliance, provided that to be binding on
the  Underwriters  any such waiver or extension must be in writing and signed by
it.

The  Corporation  agrees that the aforesaid legal opinions and certificate to be
delivered at the Time of Closing will also be  addressed to the  Purchasers  and
that the  Underwriters  may deliver  copies  thereof to such  persons and to any
persons who purchase Offered Shares.

                                     - 23 -
<PAGE>

9.       TERMINATION OF OBLIGATIONS

If at any time before the Time of Closing on the Closing Date:

      (a)   there shall have occurred any adverse material change or there shall
            be discovered any previously  undisclosed  adverse  material fact in
            relation to the Corporation (on a consolidated basis); or

      (b)   there shall have  occurred any change in the  applicable  securities
            laws of any  province  of Canada or any  inquiry,  investigation  or
            other proceeding is made or any order is issued under or pursuant to
            any statute of Canada or any province  thereof or any statute of the
            United States or any state thereof or any stock exchange in relation
            to the Corporation or any of its securities (except for any inquiry,
            investigation  or other  proceeding  based  upon  activities  of the
            Underwriters and not upon activities of the Corporation);

which, in the opinion of the  Underwriters,  prevents or restricts trading in or
the  distribution of the Common Shares or adversely  affects or would reasonably
be expected to adversely  affect the market price or value of the Common Shares;
or

      (c)   if there should develop,  occur or come into effect or existence any
            event,  action,  state,  condition or major financial  occurrence or
            catastrophe of national or  international  consequence or any law or
            regulation  which,  in the reasonable  opinion of the  Underwriters,
            seriously adversely affects or involves, or will seriously adversely
            affect or involve, the financial markets or the business, operations
            or  affairs  of the  Corporation  and its  Subsidiaries,  taken as a
            whole;

      (d)   a cease trading order is made by any Securities  Commission or other
            competent authority by reason of the fault of the Corporation or its
            respective  directors,  officers  and agents and such cease  trading
            order is not rescinded within 48 hours; or

      (e)   the Corporation is in material breach of a material term, conditions
            or covenant of this Agreement which has not been cured,

the  obligations  of  the  Underwriters  contained  in  this  Agreement  may  be
terminated by one or more of the Underwriters in their sole discretion.

Any termination pursuant to the foregoing provisions shall be effected by notice
in writing  delivered by the terminating  Underwriters to the Corporation at its
address  as  herein  set  out.  Notwithstanding  the  giving  of any  notice  of
termination  hereunder,  the expenses agreed to be paid by the Corporation shall
be paid by the  Corporation  as  herein  provided  and  the  obligations  of the
Corporation  under sections 11, 12 and 13 hereof shall survive.  The right of an
Underwriter  to terminate  this  Agreement  shall be exercised by it in its sole
discretion.

In the event of a termination  pursuant to and in accordance with the provisions
hereof and notice  having been  given,  as  aforesaid,  there will be no further
liability on the part of the terminating  Underwriter under this Agreement.  The

                                     - 24 -
<PAGE>

rights of the  Underwriters  to terminate  their  obligations  hereunder  are in
addition to, and without prejudice to, any other remedies they may have.

10.      CLOSING

The sale of Offered Shares (the "Closing") will be completed concurrently at the
offices of McCarthy  Tetrault LLP, Suite 1300, 777 Dunsmuir  Street,  Vancouver,
B.C.,  V7Y 1K2 and Aird & Berlis  LLP,  Suite  1800,  181 Bay  Street,  Toronto,
Ontario  M5J 2T9,  or such  other  place or places as may be agreed  upon by the
Corporation  and the  Underwriters,  at the Time of Closing on the Closing Date,
provided  that if the  Corporation  has not been able to comply  with any of the
conditions to closing set forth under  "Conditions to Closing" prior to the Time
of Closing on the  Closing  Date,  the  Closing  Date may be  extended by mutual
agreement of the Corporation and the Underwriters, failing which, the respective
obligations  of  the  parties  will  terminate   without  further  liability  or
obligation except as set out under sections 11, 12 and 13 hereof.

At the Time of Closing, the Corporation shall deliver to the Underwriters:

      (a)   a certificate or  certificates,  duly registered as the Underwriters
            may  direct,   representing  the  Offered  Shares  purchased,   such
            certificates  to  be  delivered  to  the  Underwriters'  counsel  in
            Toronto, Ontario;

      (b)   certificates,  duly  registered  as  the  Underwriters  may  direct,
            representing the Broker Warrants;

      (c)   the requisite  legal opinions and  certificates  as  contemplated in
            Section 8 hereof;

      (d)   a  direction  addressed  to Sprott (on  behalf of the  Underwriters)
            directing  Sprott  to pay the  Gross  Proceeds  in  accordance  with
            section 2 hereof; and

      (e)   such further documentation as may be contemplated herein,

against payment of the purchase price for the Offered Shares by certified cheque
or bank  draft to the  Corporation  or as  otherwise  contemplated  by section 2
hereof as contemplated herein.

All representations and warranties contained herein and all of the covenants and
agreements of the Corporation herein, to the extent that they are required to be
performed on or before Closing,  shall be construed as conditions and any breach
or failure to comply with any thereof shall entitle each of the Underwriters, at
its  option,  in  addition  to  and  not in  lieu  of any  other  remedies  such
Underwriter  has in respect  thereof,  to terminate  and cancel its  obligations
hereunder by written notice to that effect given to the Corporation prior to the
Time of Closing on the Closing Date. It is understood that the  Underwriters may
waive in whole or in part or  extend  the time for  compliance  with any of such
terms and conditions  without prejudice to its rights in respect of any other of
such terms and conditions or any other or subsequent  breach or  non-compliance,
provided  that to be binding on the  Underwriters  any such waiver or  extension
must be in writing and signed by each Underwriter.

                                     - 25 -
<PAGE>

11.      EXPENSES

Whether or not Closing occurs,  the Corporation shall pay all costs and expenses
of or incidental to the Offering,  including,  without limitation, the costs and
filing fees with  respect to the private  placement of the Offered  Shares,  the
listing  of the  Offered  Shares  on the  Exchange,  the  cost of  printing  the
certificates  representing  the Offered  Shares,  the cost of  registration  and
delivery  of  such  certificates,  and  the  fees  and  expenses  of each of the
Corporation's  auditors,  counsel  and local  counsel.  Whether  or not  Closing
occurs,  the  Corporation  shall  be  responsible  for the  reasonable  fees and
disbursements  (including GST) of the Underwriters'  counsel (up to a maximum in
respect  of  the  fees  of  the  Underwriters'  counsel  of  $25,000,  excluding
disbursements and GST) and the Underwriters'  reasonable out-of-pocket expenses,
which shall be paid  forthwith  by the  Corporation  to Sprott (on behalf of the
Underwriters) upon advice from Sprott as to such costs and expenses.

12.      INDEMNITY

The Corporation  covenants and agrees to indemnify and save harmless each of the
Underwriters and their respective directors,  officers, employees,  shareholders
and agents  (collectively,  the "Underwriters'  Personnel"),  against all losses
(other than loss of profits), claims, damages,  liabilities,  costs or expenses,
whether joint or several,  caused or incurred by reason of or in connection with
the  transactions  contemplated  hereby  including,   without  limitation,   the
following:

      (a)   any  information or statement  (except any  information or statement
            relating  solely  to the  Underwriters)  contained  in any  offering
            document,  amendments thereto or documents  incorporated  therein by
            reference, which at the time and in light of the circumstances under
            which  it  was  made   contains   or  is   alleged   to   contain  a
            misrepresentation  or any omission or any alleged  omission to state
            therein any act or information (except facts or information relating
            solely  to  the  Underwriter)  required  to  be  stated  therein  or
            necessary to make any of the  statements  therein not  misleading in
            light of the circumstances in which they are made;

      (b)   any  order  made  or in any  inquiry,  investigation  or  proceeding
            commenced or  threatened  by any  securities  regulatory  authority,
            stock exchange or by any other competent  authority,  based upon any
            misrepresentation  (as defined in the  Securities  Act (Ontario)) or
            alleged  misrepresentation  (except  a  misrepresentation   relating
            solely to the  Underwriters)  in any offering  document,  amendments
            thereto or documents incorporated therein by reference,  (except any
            document or material  delivered  solely by the  Underwriters)  based
            upon any  failure or  alleged  failure to comply  with  Canadian  or
            United  States  securities  laws  (other than any failure or alleged
            failure to comply by the  Underwriters)  preventing and  restricting
            the trading in or the sale of the Common  Shares in the provinces of
            Canada;

      (c)   the non-compliance or alleged non-compliance by the Corporation with
            any  requirement  of  applicable   securities  laws,  including  the
            Corporation's  non-compliance with any statutory requirement to make
            any document available for inspection; or

                                     - 26 -
<PAGE>

      (d)   any  breach  of any  representation,  warranty  or  covenant  of the
            Corporation  contained  herein or the failure of the  Corporation to
            comply with any of its obligations hereunder,

and will reimburse each such  Underwriter  promptly upon demand for any legal or
other expenses  reasonably  incurred by it in connection with  investigating  or
defending any such losses,  claims,  damages,  liabilities or actions in respect
thereof, as incurred.

The   Corporation   shall  not,   without  the  prior  written  consent  of  the
Underwriters,  which shall not be unreasonably withheld, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which  indemnification  may be sought hereunder
(whether or not the Underwriters or any  Underwriters'  Personnel are a party to
such claim, action, suit or proceeding),  unless such settlement,  compromise or
consent  includes  an  unconditional   release  of  the  Underwriters  and  each
Underwriters'  Personnel from all liability  arising out of such claim,  action,
suit or proceeding.

Notwithstanding the foregoing, an indemnifying party shall not be liable for the
settlement  of any claim or action in respect of which  indemnity  may be sought
hereunder  effected  without its written  consent,  which  consent  shall not be
unreasonably withheld.

If any matter or thing  contemplated by this paragraph shall be asserted against
any  person  in  respect  of which  indemnification  is or might  reasonably  be
considered to be provided, such person (the "Indemnified Party") will notify the
Corporation  as soon as  possible  and in any  event on a timely  basis,  of the
nature of such claim and the Corporation shall be entitled (but not required) to
assume the defence of any suit brought to enforce such claim; provided, however,
that the defence shall be through legal  counsel  acceptable to the  Indemnified
Party, acting reasonably,  and that no settlement may be made by the Corporation
or the Indemnified Party without the prior written consent of the other.

In any such claim,  the  Indemnified  Party shall have the right to retain other
counsel to act on the  Indemnified  Party s behalf,  provided  that the fees and
disbursements  of such other  counsel  shall be paid by the  Indemnified  Party,
unless (i) the Corporation  and the  Indemnified  Party mutually agree to retain
such other  counsel or (ii) the named parties to any such claim  (including  any
third or implicated  party) include both the  Indemnified  Party on the one hand
and  the  Corporation,  on  the  other  hand,  and  the  representation  of  the
Corporation and the Indemnified Party by the same counsel would be inappropriate
due to actual or potential conflicting  interests,  in which event such fees and
disbursements shall be paid by the Corporation to the extent that they have been
reasonably incurred.

To the extent that any Indemnified  Party is not a party to this Agreement,  the
Underwriter to which such Indemnified Party is related shall obtain and hold the
right and  benefit of the  indemnity  provisions  hereunder  in trust for and on
behalf of such Indemnified Party.

The Corporation  hereby waives all rights which it may have by statute or common
law to recover  contribution from any Underwriter in respect of losses,  claims,
costs,  damages,  expenses or liabilities  which any of them may suffer or incur

                                     - 27 -
<PAGE>

directly  or  indirectly  (in  this  paragraph,  "losses")  by  reason  of or in
consequence of a document  containing a  misrepresentation;  provided,  however,
that  such  waiver  shall  not  apply in  respect  of  losses by reason of or in
consequence  of any  misrepresentation  which  is  based  upon or  results  from
information or statements  furnished by or relating solely to one or more of the
Underwriters.

13.      CONTRIBUTION

In the event that the indemnity  provided for above is, for any reason,  illegal
or  unenforceable  as being  contrary to public  policy or for any other reason,
each of the Underwriters  and the Corporation  shall contribute to the aggregate
of all losses,  claims, costs, damages,  expenses or liabilities  (including any
legal  or  other  expenses  reasonably  incurred  by the  Indemnified  Party  in
connection  with  investigating  or  defending  any action or claim which is the
subject of this section but excluding loss of profits or consequential  damages)
of the nature provided for above such that each Underwriter shall be responsible
for that portion represented by the percentage that the Underwriting Fee paid by
the Corporation to such  Underwriter  bears to the Gross Proceeds  realized from
the sale of the Offered Shares and the Corporation  shall be responsible for the
balance,  whether or not it has been sued,  provided that, in no event, shall an
Underwriter  be  responsible  for any  amount  in  excess  of the  amount of the
Underwriting Fee actually  received by it. In the event that the Corporation may
be held to be entitled to contribution  from an Underwriter under the provisions
of any statute or law, the  Corporation  shall be limited to  contribution in an
amount  not  exceeding  the lesser  of:  (i) the  portion of the full  amount of
losses,  claims, costs, damages,  expenses and liabilities,  giving rise to such
contribution for which such Underwriter is responsible, as determined above, and
(ii) the amount of the Underwriting Fee actually  received by such  Underwriter.
Notwithstanding  the foregoing,  a party guilty of fraudulent  misrepresentation
shall not be entitled to contribution  from the other party.  Any party entitled
to contribution  will,  promptly after  receiving  notice of commencement of any
claim, action, suit or proceeding against such party in respect of which a claim
for contribution may be made against the other party under this section,  notify
such party  from whom  contribution  may be sought.  In no case shall such party
from whom  contribution may be sought be liable under this Agreement unless such
notice has been  provided,  but the  omission  to so notify such party shall not
relieve the party from whom contribution may be sought from any other obligation
it may have otherwise than under this section.

The rights to indemnity and contribution  provided in this Agreement shall be in
addition and not in derogation  of any other right to indemnity or  contribution
which the  Underwriters  or the  Corporation may have by statute or otherwise by
law.

14.      NOTICE

Any notice or other  communication  to be given hereunder  shall, in the case of
notice to the  Corporation,  be  addressed  to the  Corporation  at the  address
appearing  on  page  1  of  this   Agreement,   Attention:   Martin   McConnell,
Vice-President,  Finance  and Chief  Financial  Officer,  Telecopier  No.  (604)
421-1764, and in the case of notice to the Underwriters:

                                     - 28 -
<PAGE>

if to Sprott:                       Sprott Securities Inc.
                                    Royal Bank Plaza, South Tower
                                    Suite 3450
                                    Toronto, Ontario M5J 2J2
                                    Attention:  Jeff Kennedy
                                    Telecopier No.:  (416) 943-6496

if to Raymond James Ltd.:  925 West Georgia Street
                                    Suite 2300
                                    Vancouver, British Columbia  V6C 3L2

                                    Attention: Brian K. Begert
                                    Telecopier No.: (604) 659-8399

if to Griffiths McBurney:  145 King Street West
& Partners                          Suite 1100
                                    Toronto, Ontario  M5H 1J8

                                    Attention: Lorne Sugarman
                                    Telecopier No.: (416) 943-6160

and if so given, shall be deemed to have been given and received upon receipt by
the  addressee or a responsible  officer of the  addressee if delivered,  or one
hour after being telecopied and receipt  confirmed during normal business hours,
as the case may be. Any party may,  at any time,  give  notice in writing to the
others in the manner  provided for above of any change of address or  telecopier
number.

15.      LIABILITY OF THE UNDERWRITERS

The  obligation of the  Underwriters  to purchase the Offered  Shares  hereunder
shall be several (and not joint or joint and several) and:

      (a)   each Underwriter shall be obligated to purchase and pay for only the
            percentage of the Offered Shares set out opposite its name below;

      (b)   if one of the  Underwriters  shall fail to purchase  the  applicable
            percentage  of the  Offered  Shares  which it has agreed to purchase
            under this  Agreement  and such failure  constitutes a default under
            any of its obligations under this Agreement,  the other Underwriters
            (the "Continuing  Underwriters") may, but shall not be obligated to,
            purchase  the total  number of  Offered  Shares  and the  Continuing
            Underwriters  shall  have the  right,  by notice in  writing  to the
            Corporation  to  postpone  the Time of  Closing  by not more than 48
            hours to effect such purchase;

      (c)   the   applicable   percentage  of  the  Offered  Shares  which  each
            Underwriter  shall severally be obligated to purchase and pay for is
            as follows:

                                     - 29 -
<PAGE>

                           Sprott                             -        55%
                           Raymond James Ltd.                 -        30%
                           Griffiths McBurney & Partners      -        15%

      (d)   if the  Continuing  Underwriters  shall  not elect to  purchase  the
            balance of the Offered  Shares  pursuant to subsection  15(b) hereof
            then:

            (i)   the Corporation  shall not be obliged to sell less than all of
                  the Offered Shares; and

            (ii)  the Corporation shall be entitled to terminate its obligations
                  under this Agreement, in which event there shall be no further
                  liability on the part of the  Corporation or the  Underwriters
                  under this Agreement except in respect of any liability of the
                  Corporation  which  may have  arisen or may  thereafter  arise
                  under sections 11, 12 or 13 hereof.

Nothing in this  section  and no action  taken  pursuant to this  section  shall
relieve any defaulting  Underwriter from liability to the Corporation in respect
of such default hereunder.

16.      TIME OF THE ESSENCE

Time shall be of the essence of this Agreement and every part hereof.

17.      ASSIGNMENT

Except as contemplated  herein, no party hereto may assign this Agreement or any
part  hereof  without the prior  written  consent of the other  parties  hereto.
Subject to the  foregoing,  this  agreement  shall  enure to the benefit of, and
shall be binding upon, the Corporation and the Underwriters and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement  is intended or shall be  construed to give any other person any legal
or equitable  right,  remedy or claim under or in respect of this Agreement,  or
any provisions  contained in this  Agreement,  this Agreement and all conditions
and provisions of this Agreement being intended to be and being for the sole and
exclusive  benefit of such persons and for the benefit of no other person except
that the covenants and indemnities of the Corporation set out under the headings
"Indemnity"   and   "Contribution"   shall  also  be  for  the  benefit  of  the
Underwriters' Personnel.

18.      COUNTERPART PROVISION

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

19.      ENTIRE AGREEMENT

The provisions  herein  contained  constitute the entire  agreement  between the
parties  relating to the Offering  and  supersede  all previous  communications,
representations,  understandings and agreements between the parties with respect
to the subject matter hereof whether verbal or written.

                                     - 30 -
<PAGE>

20.      GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of
the  Province  of British  Columbia  and the federal  laws of Canada  applicable
therein.

21.      SURVIVAL OF WARRANTIES, REPRESENTATIONS, COVENANTS AND AGREEMENTS

All warranties,  representations,  covenants,  indemnities and agreements of the
Corporation herein contained or contained in documents  submitted or required to
be  submitted  pursuant to this  Agreement  shall  survive  the  purchase by the
Purchasers of the Offered Shares and shall continue in full force and effect for
the benefit of the Underwriters.

22.      LANGUAGE
The parties  hereto  confirm  their  express  wish that this  agreement  and all
documents and agreements  directly or indirectly relating thereto be drawn up in
the English language.

Les parties  reconnaissent  leur volonte  express que la presente ainsi que tous
les documents et contrats s'y  rattachant  directement  ou  indirectment  soient
rediges en anglais.

23.      FACSIMILE

The  Corporation and the  Underwriters  shall be entitled to rely on delivery by
facsimile  of  an  executed  copy  of  this  Agreement  and  acceptance  by  the
Corporation and the Underwriters of that delivery shall be legally  effective to
create  a  valid  and  binding   agreement   between  the  Corporation  and  the
Underwriters in accordance with the terms of this Agreement.

                                     - 31 -
<PAGE>

24.      ACCEPTANCE

If this letter accurately  reflects the terms of the transaction which we are to
enter  into  and  if  such  terms  are  agreed  to by  the  Corporation,  please
communicate acceptance by executing where indicated below and returning a signed
copy of this Agreement to Sprott.

Yours very truly,

SPROTT SECURITIES INC.

Per:
         /s/ W. Jeffrey Kennedy
         -----------------------------------
         W. Jeffrey Kennedy

RAYMOND JAMES LTD.

Per:     /s/ Brian K. Begert
         -----------------------------------
         Brian K. Begert

GRIFFITHS MCBURNEY & PARTNERS

Per:     /s/ Lorne Sugarman
         -----------------------------------
         Lorne Sugarman

                                     - 32 -

<PAGE>

The foregoing  accurately  reflects the terms of the transaction which we are to
enter into and such terms are agreed to with  effect as of the date  provided at
the top of the first page of this Agreement.

SPECTRUM SIGNAL PROCESSINGINC.

Per:
        /s/ Martin C. McConnell
         -----------------------------------

                                     - 33 -UNLESS  PERMITTED  UNDER  SECURITIES  LEGISLATION,  THE HOLDER OF THE SECURITIES
REPRESENTED HEREBY SHALL NOT TRADE THE SECURITIES BEFORE OCTOBER 20, 2002.

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED  STATES  SECURITIES  ACT OF 1933,  AS AMENDED  (THE "U.S.  SECURITIES
ACT"). THESE SECURITIES MAY BE OFFERED,  SOLD, PLEDGED OR OTHERWISE  TRANSFERRED
ONLY (A) TO THE CORPORATION,  (B) IN A TRANSACTION  OUTSIDE THE UNITED STATES IN
COMPLIANCE  WITH RULE 904 OF REGULATION S UNDER THE U.S.  SECURITIES ACT, OR (C)
IN A  TRANSACTION  EXEMPT  FROM THE  REGISTRATION  REQUIREMENTS  UNDER  THE U.S.
SECURITIES ACT AND ANY APPLICABLE  STATE SECURITIES LAWS. IN CONNECTION WITH ANY
TRANSFER  PURSUANT TO THE FOREGOING  CLAUSE (C),  THERE MUST BE FURNISHED TO THE
CORPORATION  A  WRITTEN  OPINION  OF  COUNSEL   REASONABLY   ACCEPTABLE  TO  THE
CORPORATION  TO THE EFFECT  THAT SUCH  TRANSFER  IS EXEMPT  FROM THE  REGULATION
REQUIREMENTS OF ALL APPLICABLE  UNITED STATES FEDERAL AND STATE SECURITIES LAWS.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS  ON STOCK  EXCHANGES IN CANADA AND, IN CONNECTION  WITH ANY SALE OF
SUCH  SECURITIES  PURSUANT  TO THE  FOREGOING  CLAUSE  (B) AT A  TIME  WHEN  THE
CORPORATION  IS A  "FOREIGN  ISSUER"  AS  DEFINED  IN RULE  902  UNDER  THE U.S.
SECURITIES  ACT,  THE LEGEND MAY BE REMOVED BY  PROVIDING A  DECLARATION  TO THE
CORPORATION'S  TRANSFER  AGENT IN SUCH FORM AS THE  CORPORATION  MAY  REASONABLY
PRESCRIBE,  TO THE  EFFECT  THAT THE  SALE OF THE  SECURITIES  IS BEING  MADE IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT.

                  BROKER WARRANTS TO PURCHASE COMMON SHARES OF

                         SPECTRUM SIGNAL PROCESSING INC.
                  (EXISTING UNDER THE LAWS OF BRITISH COLUMBIA)

                                   VOID AFTER
                                 AUGUST 19, 2003

         THIS CERTIFIES that, for value received, ___________ (the "Holder"), is
the registered holder of ______ broker warrants (the "Broker  Warrants") each of
which entitle the holder,  subject to the terms and conditions set forth in this
Broker Warrant  Certificate,  to purchase from Spectrum  Signal  Processing Inc.
(the  "Corporation"),  one common share of the  Corporation (a "Share"),  at any
time until 5:00 p.m.  (Vancouver time) on August 19, 2003 (the "Time of Expiry")
on payment of $3.14 per Share (the "Exercise Price"). The number of Shares which
the Holder is entitled to acquire upon  exercise of the Broker  Warrants and the
Exercise Price are subject to adjustment as hereinafter provided.

1.     Exercise of Broker Warrants

      (a)   Election to Purchase.  The rights  evidenced by this certificate may
            be  exercised  by the  Holder in whole or in part and in  accordance
            with the provisions hereof by delivery of an Election to Purchase in
            substantially  the form  attached  hereto as  Schedule  1,  properly
            completed and executed, together with payment by certified cheque or
            bank draft of the Exercise Price for the number of Shares  specified
            in the Election to Purchase at the office of the  Corporation at One
            Spectrum Court,  200-2700 Production Way, Burnaby,  British Columbia
            V5A 4X1,  or such  other  address  in Canada as may be  notified  in

<PAGE>

            writing by the Corporation (the "Corporation  Office"). The election
            to purchase must be executed outside the United States. In the event
            that the rights evidenced by this certificate are exercised in part,
            the Corporation  shall,  contemporaneously  with the issuance of the
            Shares issuable on the exercise of the Broker Warrants so exercised,
            issue to the Holder a Broker Warrant  Certificate on identical terms
            in respect  of that  number of Shares in respect of which the Holder
            has not exercised the rights evidenced by this certificate.

      (b)   Exercise.  The Corporation  shall,  within three business days after
            receiving a duly  executed  Election to  Purchase  and the  Exercise
            Price for the number of Shares specified in the Election to Purchase
            (the "Exercise Date"),  issue that number of Shares specified in the
            Election to Purchase.

      (c)   Share  Certificates.  As promptly as practicable  after the Exercise
            Date,  the  Corporation  shall  issue  and  deliver  to the  Holder,
            registered  in such name or names as the  Holder may direct or if no
            such  direction  has  been  given,  in the  name  of the  Holder,  a
            certificate or  certificates  for the number of Shares  specified in
            the  Election to  Purchase.  To the extent  permitted  by law,  such
            exercise  shall be deemed to have been  effected  as of the close of
            business on the  Exercise  Date,  and at such time the rights of the
            Holder with respect to the number of Broker Warrants which have been
            exercised  as such shall  cease,  and the person or persons in whose
            name or names any certificate or certificates  for Shares shall then
            be issuable  upon such  exercise  shall be deemed to have become the
            holder or holders of record of the Shares represented thereby.

      (d)   Fractional  Shares.  No  fractional  Shares  shall  be  issued  upon
            exercise of any Broker  Warrant and no payments or adjustment  shall
            be made upon any  exercise on account of any cash  dividends  on the
            Shares issued upon such exercise.

      (e)   Corporate Changes.

            (i)   Subject to paragraph  1(e)(ii) hereof, if, after June 19, 2002
                  and prior to the Time of Expiry,  the  Corporation  shall be a
                  party to any  reorganization,  merger,  dissolution or sale of
                  all or  substantially  all of its  assets,  whether or not the
                  Corporation  is the  surviving  entity,  the  number of Broker
                  Warrants  evidenced by this  certificate  shall be adjusted so
                  that the holder  hereof  shall be entitled to acquire the same
                  number  and type of  securities  to which  the  holder of that
                  number of Shares of the Corporation subject to the unexercised
                  Broker  Warrants  would have been  entitled  by reason of such
                  reorganization,   merger,   dissolution  or  sale  of  all  or
                  substantially  all  of  its  assets  (the  "Event"),  and  the
                  Exercise  Price shall be adjusted to be the amount  determined
                  by multiplying the Exercise Price in effect  immediately prior
                  to  the  Event  by  the  number  of  Shares   subject  to  the
                  unexercised  Broker Warrants  immediately  prior to the Event,
                  and dividing the product  thereof by the number of  securities

                                      - 2 -
<PAGE>

                  to which the  holder of that  number of Shares  subject to the
                  unexercised  Broker  Warrants  would have been  entitled to by
                  reason of such Event.

            (ii)  If the  Corporation  is unable to  deliver  securities  to the
                  Holder  pursuant to the proper  exercise of a Broker  Warrant,
                  the  Corporation  may satisfy such  obligations  to the Holder
                  hereunder  by  paying  to the  Holder  in cash the  difference
                  between the Exercise Price of all unexercised  Broker Warrants
                  granted  hereunder and the Fair Market Value of the securities
                  to which the Holder would be entitled to upon  exercise of all
                  unexercised   Broker   Warrants.    Adjustments   under   this
                  subparagraph   (e)  or  (subject  to  subparagraph   (o))  any
                  determinations  as to the Fair Market Value of any  securities
                  shall be made by the board of directors of the Corporation, or
                  any committee thereof specifically  designated by the board of
                  directors  to be  responsible  therefor,  and  any  reasonable
                  determination made by such board or committee thereof shall be
                  binding and  conclusive,  subject only to any  disputes  being
                  resolved by the Corporation's  auditors,  whose  determination
                  shall be binding and conclusive.

      (f)   Subdivision or Consolidation of Shares.

            (i)   In the event  that,  after June 19, 2002 and prior to the Time
                  of Expiry,  the  Corporation  shall  subdivide its outstanding
                  common  shares  ("Common  Shares")  into a  greater  number of
                  shares, the Exercise Price in effect immediately prior to such
                  subdivision shall be proportionately  reduced, and conversely,
                  in case the outstanding Common Shares of the Corporation shall
                  be consolidated into a smaller number of shares,  the Exercise
                  Price in effect immediately prior to such consolidation  shall
                  be proportionately increased.

            (ii)  Upon each  adjustment  of the  Exercise  Price as  provided in
                  paragraph  1(f)(i)  above,  the  Holder  shall  thereafter  be
                  entitled to acquire, at the Exercise Price resulting from such
                  adjustment,  the number of Shares  (calculated  to the nearest
                  tenth of a Share)  obtained by multiplying  the Exercise Price
                  in effect  immediately  prior to such adjustment by the number
                  of Shares which may be acquired hereunder immediately prior to
                  such  adjustment  and  dividing  the  product  thereof  by the
                  Exercise Price resulting from such adjustment.

      (g)   Change or  Reclassification of Shares. In the event that, after June
            19,  2002 and prior to the Time of  Expiry,  the  Corporation  shall
            change or reclassify its outstanding  Common Shares into a different
            class of  securities,  the rights  evidenced by the Broker  Warrants
            shall be adjusted as follows so as to apply to the  successor  class
            of securities:

            (i)   the  number of the  successor  class of  securities  which the
                  Holder  shall be  entitled  to  acquire  as part of the Shares
                  shall be that  number  of the  successor  class of  securities

<PAGE>

                  which a  holder  of  that  number  of  Shares  subject  to the
                  unexercised Broker Warrants immediately prior to the change or
                  reclassification would have been entitled to by reason of such
                  change or reclassification; and

            (ii)  the Exercise  Price shall be  determined  by  multiplying  the
                  Exercise  Price in effect  immediately  prior to the change or
                  reclassification  by  the  number  of  Shares  subject  to the
                  unexercised Broker Warrants immediately prior to the change or
                  reclassification,  and  dividing  the  product  thereof by the
                  number of shares determined in paragraph 1(g)(i) hereof.

      (h)   Offering to Shareholders. If and whenever at any time after June 19,
            2002 and prior to the Time of Expiry,  the  Corporation  shall fix a
            record  date or if a date of  entitlement  to receive  is  otherwise
            established  (any such date being  hereinafter  referred  to in this
            subsection  1(h) as the "record  date") for the  issuance of rights,
            options or warrants to all or  substantially  all the holders or the
            outstanding  Common Shares entitling them, for a period expiring not
            more than 45 days  after  such  record  date,  to  subscribe  for or
            purchase   Common   Shares  or   securities   convertible   into  or
            exchangeable  for Common Shares at a price per share or, as the case
            may be,  having a conversion  or exchange  price per share less than
            95% of the Fair Market Value (as hereinafter defined) on such record
            date,  the Exercise Price shall be adjusted  immediately  after such
            record  date  so  that  it  shall  equal  the  price  determined  by
            multiplying  the  Exercise  Price in effect on such record date by a
            fraction, of which the numerator shall be the total number of Common
            Shares  outstanding  on such record date plus a number  equal to the
            number arrived at by dividing the aggregate subscription or purchase
            price of the total number of additional  Common  Shares  offered for
            subscription  or  purchase  or,  as the case may be,  the  aggregate
            conversion  or exchange  price of the  convertible  or  exchangeable
            securities  so offered by such Fair Market  Value,  and of which the
            denominator  shall be the total number of Common Shares  outstanding
            on such  record  date plus the total  number  of  additional  Common
            Shares so offered  (or into which the  convertible  or  exchangeable
            securities  so offered  are  convertible  or  exchangeable);  Common
            Shares  owned by or held for the account of the  Corporation  or any
            subsidiary of the Corporation  shall be deemed not to be outstanding
            for the purpose of any such  computation;  such adjustment  shall be
            made  successively  whenever  such a record  date is  fixed;  to the
            extent  that any  rights or  warrants  are not so issued or any such
            rights  or  warrants  are  not  exercised  prior  to the  expiration
            thereof, the Exercise Price shall then be readjusted to the Exercise
            Price which would then be in effect if such record date had not been
            fixed or to the  Exercise  Price which would then be in effect based
            upon the number of Common Shares or  conversion  or exchange  rights
            contained in convertible or exchangeable  securities actually issued
            upon the exercise of such rights or warrants, as the case may be.

            (i)   Carry Over of Adjustments. No adjustment of the Exercise Price
                  shall be made if the amount of such  adjustment  shall be less
                  than 1% of the Exercise Price in effect  immediately  prior to
                  the event giving rise to the  adjustment,  provided,  however,
                  that in such  case any  adjustment  that  would  otherwise  be

<PAGE>

                  required then to be made shall be carried forward and shall be
                  made at the time of and  together  with  the  next  subsequent
                  adjustment  which,  together  with any  adjustment  so carried
                  forward, shall amount to at least 1% of the Exercise Price.

            (j)   Notice of  Adjustment.  Upon any  adjustment  of the number of
                  Shares and upon any adjustment of the Exercise Price, then and
                  in each such case the  Corporation  shall give written  notice
                  thereof to the Holder,  which  notice shall state the Exercise
                  Price and the number of Shares or other securities  subject to
                  the   unexercised   Broker   Warrants   resulting   from  such
                  adjustment,  and  shall  set forth in  reasonable  detail  the
                  method  of   calculation   and  the  facts   upon  which  such
                  calculation  is based.  Upon the  request of the Holder  there
                  shall be transmitted promptly to the Holder a statement of the
                  firm of independent  chartered  accountants  retained to audit
                  the financial statements of the Corporation to the effect that
                  such firm  concurs  in the  Corporation's  calculation  of the
                  change.

            (k)   Other  Notices.  In case at any time after  June 19,  2002 and
                  prior to the Time of Expiry:

                  (i)   the  Corporation  shall  declare any  dividend  upon its
                        Common Shares payable in Shares;

                  (ii)  the Corporation shall offer for subscription pro rata to
                        the holders of its Common Shares any  additional  shares
                        of any class or other rights;

                  (iii) there   shall   be   any   capital   reorganization   or
                        reclassification   of   the   capital   stock   of   the
                        Corporation, or consolidation, amalgamation or merger of
                        the  Corporation  with, or sale of all or  substantially
                        all of its assets to, another corporation; or

                  (iv)  there shall be a voluntary or  involuntary  dissolution,
                        liquidation or winding-up of the Corporation,

                  then, in any one or more of such cases, the Corporation  shall
                  give to the Holder (A) at least 10 days' prior written  notice
                  of the  date on which a record  date  shall be taken  for such
                  dividend,   distribution   or   subscription   rights  or  for
                  determining   rights   to  vote  in   respect   of  any   such
                  reorganization,   reclassification,   consolidation,   merger,
                  amalgamation, sale, dissolution, liquidation or winding-up and
                  (B) in the case of any such reorganization,  reclassification,
                  consolidation,   merger,  sale,  dissolution,  liquidation  or
                  winding-up, at least 10 days' prior written notice of the date
                  when the same shall take place. Such notice in accordance with
                  the foregoing  clause (A) shall also  specify,  in the case of
                  any such dividend,  distribution or subscription  rights,  the
                  date on which the holders of Common  Shares  shall be entitled
                  thereto,  and such  notice in  accordance  with the  foregoing
                  clause (B) shall also specify the date on which the holders of
                  Common  Shares  shall be  entitled to  exchange  their  Common
                  Shares for securities or other property  deliverable upon such
                  reorganization,   reclassification,   consolidation,   merger,
                  amalgamation, sale, dissolution, liquidation or winding-up, as
                  the case may be.

<PAGE>

            (l)   Shares to be Reserved.  The Corporation will at all times keep
                  available, and reserve if necessary under Canadian law, out of
                  its authorized Common Shares,  solely for the purpose of issue
                  upon the  exercise  of the  Broker  Warrants,  such  number of
                  Shares as shall  then be  issuable  upon the  exercise  of the
                  Broker Warrants. The Corporation covenants and agrees that all
                  Shares which shall be so issuable will, upon issuance, be duly
                  authorized  and issued as fully paid and  non-assessable.  The
                  Corporation  will take all such actions as may be necessary to
                  ensure that all such Shares may be so issued without violation
                  of any applicable  requirements of any exchange upon which the
                  Common  Shares may be listed or in respect of which the Common
                  Shares are  qualified  for unlisted  trading  privileges.  The
                  Corporation will take all such actions are within its power to
                  ensure that all such Shares may be so issued without violation
                  of any applicable law.

            (m)   Issue Tax.  The issuance of  certificates  for Shares upon the
                  exercise of Broker  Warrants  shall be made without  charge to
                  the Holder for any issuance tax in respect  thereto,  provided
                  that the  Corporation  shall  not be  required  to pay any tax
                  which may be payable in respect of any  transfer  involved  in
                  the issuance and delivery of any  certificate  in a name other
                  than that of the Holder.

            (n)   Listing.   The  Corporation   will,  at  its  expense  and  as
                  expeditiously  as  possible,  use  its  reasonable  commercial
                  efforts to cause all Shares  issuable upon the exercise of the
                  Broker  Warrants  to be  duly  listed  on  the  Toronto  Stock
                  Exchange  upon which Common  Shares are on the  Exercise  Date
                  then listed prior to the issuance of such Shares.

            (o)   Fair  Market  Value.  For  the  purposes  of  any  computation
                  hereunder,  the "Fair  Market  Value" at any date shall be the
                  weighted average sale price per share for the Common Shares of
                  the   Corporation   for  the  20   consecutive   trading  days
                  immediately  before  such date on the stock  exchange on which
                  the Common Shares may then be listed and on which there is the
                  greatest  volume of trading  of the Common  Shares for such 20
                  day period, or, if the shares or any other security in respect
                  of which a  determination  of Fair Market  Value is being made
                  are not listed on any stock  exchange,  the Fair Market  Value
                  shall be  determined  by the  directors,  which  determination
                  shall be  conclusive.  The  weighted  average  price  shall be
                  determined  by dividing the  aggregate  sale price of all such
                  shares  sold  on  the  said   exchange   during  the  said  20
                  consecutive trading days by the total number of such shares so
                  sold.

2.       Replacement.

         Upon receipt of evidence  satisfactory  to the Corporation of the loss,
theft,  destruction  or mutilation of this Broker  Warrant  Certificate  and, if
requested by the Corporation,  upon delivery of a bond of indemnity satisfactory
to the Corporation (or, in the case of mutilation, upon surrender of this Broker
Warrant  Certificate),  the  Corporation  will issue to the Holder a replacement
certificate  (containing  the same terms and  conditions as this Broker  Warrant
Certificate).

<PAGE>

3.       Expiry Date.

         The Broker  Warrants  shall  expire and all rights to  purchase  Shares
hereunder shall cease and become null and void at 5:00 p.m.  (Vancouver time) on
August 19 , 2003.

4.       Covenant.

         So long as any  Broker  Warrants  remain  outstanding  the  Corporation
covenants that it shall do or cause to be done all things  necessary to maintain
its status as a reporting issuer not in default in the Offering Jurisdictions.

5.       U.S. Securities Laws

         The holder:

            (a)   acknowledges  that the Shares  issuable  upon the  exercise of
                  this Broker  Warrant have not been and will not be  registered
                  under the United  States  Securities  Act of 1933,  as amended
                  (the "1933 Act"),  or the securities  laws of any state of the
                  United  States and may be offered  and sold only  outside  the
                  United  States  pursuant  to  Regulation  S under the 1933 Act
                  ("Regulation  S")  or in the  United  States  in  transactions
                  exempt from such registration;

            (b)   agrees  that to the extent  required  by the 1933 Act or state
                  securities   laws:  (i)  such  Shares  may  be  subject  to  a
                  "distribution  compliance period" imposed by Regulation S or a
                  holding period imposed upon "restricted  securities" under the
                  1933 Act or by  applicable  state law; and (ii) stop  transfer
                  orders  may be  placed  on such  Shares  and the  certificates
                  therefor may bear legends restricting their transfer.

6.       Inability to Deliver Shares.

         If for any reason, other than the failure or default of the Holder, the
Corporation  is unable to issue and  deliver the Shares or other  securities  as
contemplated  herein to the Holder upon the proper exercise by the Holder of the
right to purchase any of the Shares covered by this Broker Warrant  Certificate,
the  Corporation  may pay,  at its option and in  complete  satisfaction  of its
obligations hereunder, to the Holder, in cash, an amount equal to the difference
between the  Exercise  Price and the Fair  Market  Value of such Shares or other
securities on the Exercise Date.

7.       Defined Terms.

         All capitalized  terms used herein and not otherwise defined shall have
the meaning ascribed thereto in the underwriting  agreement dated as of June 19,
2002 between the Corporation and Sprott Securities Inc.,  Raymond James Ltd. and
Griffiths McBurney & Partners.

<PAGE>

8.       Governing Law

         The laws of the  Province  of British  Columbia  and the laws of Canada
applicable therein shall govern the Broker Warrants.

9.       Successors

This Broker Warrant Certificate shall enure to the benefit of the Holder and its
successors or assigns and shall be binding on the Corporation and its respective
successors.

         IN WITNESS  WHEREOF the  Corporation  has caused  this  Broker  Warrant
Certificate to be signed by a duly authorized officers.

         DATED as of ________________, 2002.

                                        SPECTRUM SIGNAL PROCESSING INC.

                                        Per:________________________________
                                              Authorized Signing Officer

<PAGE>

                                  SCHEDULE "1"

                              ELECTION TO EXERCISE

       The undersigned hereby irrevocably elects to exercise the number of
Broker Warrants of Spectrum Signal  Processing Inc. set out below for the number
of Shares (or other property or securities subject thereto) as set forth below:

    (a)  Number of Broker Warrants to be Exercised:                ____________

    (b)  Number of Shares to be Acquired:                          ____________

    (c)  Exercise Price per Share:                                $____________

    (d)  Aggregate Purchase Price [(b) multiplied by (c)]         $____________

and hereby  tenders a certified  cheque,  bank draft or cash for such  aggregate
purchase  price,  and directs  such Shares to be  registered  and a  certificate
therefor to be issued as directed below.

The undersigned represents that:

                             [PLEASE CHECK ONE BOX]

|_|      It is not a U.S.  person (as defined in  Regulation  S under the United
         States Securities Act of 1933, as amended),  is acquiring the Units for
         its own account and not for the account or benefit of a U.S. person and
         has executed and delivered this Election outside the United States.

|_|      Accompanying this Election is a Representation Letter in the form
         attached as Exhibit 1 to the Broker Warrant Certificate.

This Election has been executed and delivered in Canada.

         DATED this ______ day of ____________, 200__ .

                                  [NAME OF HOLDER]

                                  Per:________________________________

                                  ------------------------------------

                                  Name of Registered Holder:

                                  ------------------------------------

                                  Address of Registered Holder:
                                  ------------------------------------

                                  ____________________________________

<PAGE>

                                    EXHIBIT 1
                              REPRESENTATION LETTER

Spectrum Signal Processing Inc.
One Spectrum Court
200 - 2700 Production Way
Burnaby, British Columbia
V5A 4X1

Ladies and Gentlemen:

         In  connection  with the  purchase by the  undersigned  on this date of
common  shares  (the  "Securities")  of Spectrum  Signal  Processing  Inc.  (the
"Company"), the undersigned hereby confirms to you that:

1.       The undersigned:

            (a)   is an  "accredited  investor" as defined in Rule  501(a)(1) of
                  Regulation D under the United States  Securities  Act of 1933,
                  as   amended   (the   "Securities   Act")   because  it  is  a
                  broker-dealer  registered pursuant to Section 15 of the United
                  States Securities Exchange Act of 1934, as amended; and

            (b)   is purchasing  the Securities for its own account and not with
                  a view to  resale,  distribution  or  other  disposition  in a
                  manner that would violate the registration requirements of the
                  Securities Act.

2.       It  acknowledges  that neither the Securities nor any interest  therein
         has  been  or  will  be  registered  under  the  Securities  Act or the
         securities  laws of any  State or other  political  subdivision  of the
         United States.

3.       It further  acknowledges  and agrees that,  because the Securities have
         not been registered  under the Securities Act and are being offered and
         sold in a private offering under the exemption afforded by Section 4(2)
         of the Securities  Act, the Shares are "restricted  securities"  within
         the meaning of Rule  144(a)(3)  under the  Securities Act and cannot be
         reoffered or resold unless they are  subsequently  registered under the
         Securities  Act  or  an  exemption  from  registration   thereunder  is
         available,  and that it will  continue to bear the economic risk of its
         investment in the Shares for an indefinite period of time.

4.       It agrees that it will not re-offer,  resell,  pledge,  hypothecate  or
         otherwise transfer or dispose of the Securities (or securities that may
         be received in replacement thereof or in exchange therefore) except:

            (a)   pursuant  to an  effective  registration  statement  under the
                  Securities Act;

<PAGE>

            (b)   in  a  transaction  outside  the  United  States  meeting  the
                  requirements  of Rule 904 of Regulation S under the Securities
                  Act; or

            (c)   in a transaction exempt from registration under the Securities
                  Act and, in each case in compliance with any applicable  state
                  securities ("blue sky") laws.

         It agrees  that in  connection  with any  transaction  pursuant  to the
         foregoing  clause (c), it will furnish to the Company a written opinion
         of counsel  acceptable  to the  Company to the effect  that such offer,
         sale, pledge,  hypothecation,  transfer or disposition is in compliance
         with the  registration  requirements  of all  applicable  United States
         federal and state securities laws. It acknowledges and agrees that each
         certificate  for  the  Securities   (and  any  certificate   issued  in
         replacement therefore) shall bear a restrictive legend in substantially
         the  following  form  and  that  an  appropriate  stop  transfer  order
         implementing the same shall be lodged with the transfer agent:

          "The  securities  represented  hereby  have  not  been and will not be
          registered under the united states  securities act of 1933, as amended
          (the "u.s.  securities act").  These securities may be offered,  sold,
          pledged or otherwise transferred only (a) to the corporation, (b) in a
          transaction  outside the united states in compliance  with rule 904 of
          regulation s under the u.s.  securities  act, or (c) in a  transaction
          exempt from the registration  requirements  under the u.s.  securities
          act and any applicable  state  securities laws. in connection with any
          transfer pursuant to the foregoing clause (c), there must be furnished
          to the corporation a written opinion of counsel reasonably  acceptable
          to the corporation to the effect that such transfer is exempt from the
          regulation  requirements  of all applicable  united states federal and
          state securities laws. delivery of this certificate may not constitute
          "good  delivery" in settlement of  transactions  on stock exchanges in
          canada and, in connection with any sale of such securities pursuant to
          the foregoing  clause (b) at a time when the corporation is a "foreign
          issuer"  as  defined in rule 902 under the u.s.  securities  act,  the
          legend may be removed by providing a declaration to the  corporation's
          transfer  agent  in  such  form  as  the  corporation  may  reasonably
          prescribe, to the effect that the sale of the securities is being made
          in compliance with rule 904 of regulation s under the u.s.
          securities act."

5.       The  undersigned  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 Securities. It acknowledges that it has had access
         to such  information  concerning the Company as it has deemed necessary
         to make an  informed  decision  to  purchase  Securities,  and has been
         afforded the  opportunity  to ask  questions  and receive  satisfactory
         answers from  representatives  of the Company regarding the Company and
         the terms and conditions relating to investment in the Company, and all
         such questions have been answered to its full satisfaction.

                                                              Very truly yours,

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