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Subscription Agreement and Investment Letter - Fanball.com Inc. and Lakes Gaming Inc.

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                                FANBALL.COM, INC.

                           SUBSCRIPTION AGREEMENT AND
                                INVESTMENT LETTER

                PURCHASE OF SERIES A CONVERTIBLE PREFERRED STOCK


Fanball.com, Inc.
5720 Green Circle Drive
Suite #202
Minnetonka, MN  55343

         The undersigned (the "Subscriber") hereby subscribes for and offers to
purchase from Fanball.com, Inc., a Minnesota corporation (the "Company"), six
hundred thousand (600,000) shares of Series A Convertible Preferred Stock (the
"Series A Preferred") at a purchase price of five dollars ($5.00) per share or
an aggregate purchase price of Three Million Dollars ($3,000,000) (the "Purchase
Price"), upon the terms and subject to the following conditions:

         1. Subscription and Authorization of Securities. The Series A Preferred
shall be issued pursuant to and shall be entitled to such preferences, rights
and benefits as are set forth in the capital stock provisions of the Company's
Amended and Restated Articles of Incorporation and its Certificate of
Designation, which shall be in the form of the attached Exhibit A (the "Series A
Certificate").

         2. Payment. The Subscriber herewith submits the Subscriber's check for
the Purchase Price, made payable to "Fanball.com, Inc.," representing the
aggregate purchase price for the Series A Preferred. In exchange therefor, the
Company herewith delivers to the Subscriber a stock certificate, dated as of the
date hereof, representing the Series A Preferred purchased by the Subscriber
registered in the name of Lakes Gaming, Inc.

         3. Representations of Subscriber. To induce the Company to accept this
offer, the Subscriber represents and warrants as follows:

                  a.   The Subscriber agrees that Subscriber may not sell or
         otherwise transfer all or any interest in the Series A Preferred except
         as expressly provided in this Subscription Agreement and Investment
         Letter.

                  b.   The Subscriber understands that the Company must comply
         with the securities laws of the jurisdiction in which the Subscriber is
         domiciled. The Subscriber therefore represents and warrants to the
         Company as follows:

                 (1)   The Subscriber is a business organization organized
                       and validly existing under the laws of, and with its
                       principal office located in, the State of Minnesota. The
                       Subscriber represents and warrants that it was not
                       organized, either directly or indirectly, for the
                       specific purpose of acquiring the Series A Preferred.

                  c.   The Subscriber realizes that purchase of the Series A
         Preferred is a speculative investment and that the economic benefits
         which may be derived therefrom are uncertain. In determining whether or
         not to make an investment in the Company, the Subscriber has relied
         solely upon the written materials provided to it by the Company,
         including the Certificate of



<PAGE>   2

         Designation which sets forth the rights, preferences and limitations of
         the Series A Preferred (the "Series A Certificate"), receipt of which
         is hereby acknowledged, and upon independent investigations made by
         Subscriber or its representatives. The shares of Series A Preferred
         will have the rights and preferences as set forth in the Series A
         Certificate, including without limitation the following: (i) each share
         of the Series A Preferred is convertible into one share of the
         Company's common stock (the "Common Stock") on a one-to-one basis
         subject to adjustment in certain events, (ii) the shares of Series A
         Preferred will have a liquidation preference over the Common Stock,
         (iii) the Subscriber will be entitled to appoint one director of the
         Company, which right will terminate upon the Company's Qualified Public
         Offering (as defined in the Series A Certificate), and (iv) shares of
         Series A Preferred will not be automatically entitled to receive or
         accrue dividends.

                  d.   The Subscriber has read and understands the Series A
         Certificate and understands the rights, preferences and limitations
         pertaining to the Series A Preferred.

                  e.   The Subscriber has had full opportunity to conduct, and
         has conducted, a complete and thorough due diligence investigation of
         the Company, and such opportunity has been made available to the
         Subscriber's professional representative(s), to ask questions of and
         receive answers from representatives of the Company concerning the
         Company and its financial condition and prospects and the terms and
         conditions of the Series A Certificate, as well as to obtain additional
         information necessary to verify the accuracy of the written materials
         provided to the Subscriber and its representatives by the Company.

                  f.   The information presented and statements made by the
         Subscriber in the attached questionnaire completed and delivered by the
         Subscriber and returned to the Company with this letter, and any
         additional information supplied by the Subscriber at the Company's
         request relating to the Subscriber's income, net worth, investment
         experience or other matters, are complete and accurate as of this date
         or any future date upon which such information will be supplied, and
         may be relied upon by the Company in determining whether to accept this
         offer.

                  g.   The Subscriber is acquiring the Series A Preferred for
         its own account for investment purposes and not with a view to or for
         resale in connection with any distribution thereof and not for the
         personal accounts of its shareholders. The Subscriber understands that
         the Series A Preferred have not been registered under the Securities
         Act of 1933, as amended (the "Act"), or any state securities laws, in
         reliance on exemptions from registration which depend, in part on the
         Subscriber's investment intention; and, accordingly, the truth and
         accuracy of the foregoing representation will be relied upon by the
         Company to establish such exemptions. The Subscriber acknowledges that
         the Company is not required to recognize any transfer of the Series A
         Preferred unless, in the opinion of counsel to the Company, such
         transfer would not result in a violation of any federal or state law
         regarding the offer and sale of securities and unless the other
         restrictions on transfer set forth in the Series A Preferred are
         complied with.

                  h.   The Subscriber agrees to the placing on the instruments
         or certificates representing the Series A Preferred of legends, in
         substantially the following form, referring to the restrictions set
         forth in the preceding paragraph:

         THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
         SECURITIES LAWS. NO SALE OR ASSIGNMENT OF THE SHARES REPRESENTED BY
         THIS CERTIFICATE SHALL BE MADE UNLESS THE HOLDER SHALL HAVE OBTAINED AN
         OPINION OF COUNSEL SATISFACTORY


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<PAGE>   3


         TO THE COMPANY THAT SUCH PROPOSED DISPOSITION OR TRANSFER LAWFULLY MAY
         BE MADE WITHOUT REGISTRATION OF SUCH SHARES PURSUANT TO APPLICABLE
         SECURITIES LAWS, OR SUCH REGISTRATION.

         THE SHARES OF THE COMPANY ARE SUBJECT TO CERTAIN DESIGNATIONS,
         PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS AS SET FORTH IN THE
         COMPANY'S ARTICLES OF INCORPORATION, AS FILED WITH THE MINNESOTA
         SECRETARY OF STATE, AS AMENDED FROM TIME TO TIME. THE COMPANY WILL
         FURNISH TO ANY SHAREHOLDER UPON REQUEST MADE TO THE SECRETARY OF THE
         COMPANY AND WITHOUT CHARGE A FULL STATEMENT (A) OF THE DESIGNATIONS,
         RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF THE SHARES OF EACH
         CLASS AND SERIES AUTHORIZED TO BE ISSUED, INSOFAR AS THE SAME HAVE BEEN
         DETERMINED AND (B) OF THE AUTHORITY OF THE BOARD OF DIRECTORS TO DIVIDE
         THE SHARES INTO CLASSES OR SERIES AND TO DETERMINE AND CHANGE THE
         RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF ANY CLASS OR SERIES.

                  i.   The Subscriber is aware that there are restrictions on
         the transferability of the Series A Preferred, that there is no market
         for the Series A Preferred, and that it is possible that such a market
         will never develop. Accordingly, it is unlikely that the Subscriber
         will be able to liquidate an investment in the Company in case of an
         emergency or for any other reason.

                  j.   The Subscriber's commitment to investments that are not
         readily marketable is not disproportionate to its net worth, and an
         investment in the Series A Preferred will not cause such commitment to
         become excessive. The Subscriber has adequate means of providing for
         its current needs and contingencies and has no need for liquidity with
         respect to its investment in the Series A Preferred, and can withstand
         a complete loss of such investment in the Series A Preferred. The
         Subscriber has, either alone or with a purchaser representative, such
         knowledge and experience in financial and business matters that the
         Subscriber is capable of evaluating the merits and risks of an
         investment in the Series A Preferred.

                  k.   The Subscriber acknowledges receipt of the documents and
         information which the Company has represented to Subscriber under
         Section 4.t. of this Agreement that it has delivered to the Subscriber.

         4.       Representations of the Company. The Company represents and
warrants to the Subscriber as follows:

                  a.   Organization. The Company is a corporation duly
         organized, validly existing and in good standing under the laws of the
         State of Minnesota, and has the requisite corporate power and authority
         to own its properties and carry on its business in all material
         respects as it is now being conducted. The Company has the requisite
         corporate power and authority to issue the Series A Preferred and the
         Common Stock into which it is convertible (the "Conversion Shares") and
         to otherwise perform its obligations under this Agreement.

                  b.   Status of the Preferred Shares and Conversion Shares. The
         Series A Preferred, when issued and paid for pursuant to the terms of
         this Subscription Letter, will be duly authorized, validly issuedand
         outstanding, fully paid and nonassessable, free and clear of all
         pledges, liens, encumbrances and restrictions, except as set forth
         herein, and the Conversion Shares have been reserved for issuance based
         upon a one-for-one Conversion Ratio (as defined in the Series A
         Certificate), and when issued upon conversion will be duly authorized,
         validly issued


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<PAGE>   4

         and outstanding, fully paid and nonassessable, and free and clear of
         all pledges, liens, encumbrances and restrictions, except as set forth
         herein. The certificates representing the Series A Preferred to be
         delivered by the Company hereunder, and the certificates representing
         the Conversion Shares will, when issued upon conversion, be genuine,
         and the Company has no knowledge of any fact which would impair the
         validity thereof.

                  c.   Corporate Acts and Proceedings. This Agreement has been
         duly authorized by all necessary corporate action on behalf of the
         Company, and has been duly executed and delivered by authorized
         officers of the Company, and is the valid and binding agreement upon
         the part of the Company that is enforceable against the Company in
         accordance with its terms, except as the enforceability thereof may be
         limited by bankruptcy, insolvency, moratorium, reorganization or other
         similar laws affecting the enforcement of creditors' rights generally
         and to judicial limitations on the enforcement of the remedy of
         specific performance and other equitable remedies. All corporate action
         necessary to the investment by the Subscriber in the Company and the
         authorization, creation, issuance and delivery of the Preferred Shares
         and the Conversion Shares has been taken by the Company.

                  d.   Brokers. Other than Mr. Larry Zipkin, who will be granted
         a warrant to purchase 37,500 shares of Common Stock at an exercise
         price of $1.00 per share, no other person, firm or corporation has or
         will have, as a result of any act or omission of the Company, any
         interest, right or valid claim against or upon the Company for any
         commission, fee or other compensation as a finder or broker in
         connection with the transactions contemplated by this Agreement. The
         Company will indemnify and hold the Subscriber harmless against any and
         all liability with respect to any such commission, fee or other
         compensation, except as set forth above, which may be payable or
         determined to be payable in connection with the transactions
         contemplated by this Agreement.

                  e.   Litigation; Governmental Proceedings. Except with respect
         to its defense of a lawsuit brought by Sims Security to collect $2,000
         alleging non-payment for services rendered, which the Company is
         disputing in good faith, there are no legal actions, suits,
         arbitrations or other legal, administrative or governmental proceedings
         or investigations pending or, to the knowledge of the Company,
         threatened against the Company, its properties, assets or business, and
         the Company is not aware of any facts which are likely to result in or
         form the basis for any such action, suit or other proceeding which
         would have a material adverse impact on the Company. The Company is not
         in default with respect to any judgment, order or decree of any court
         or any governmental agency or instrumentality.

                  f.   Governing Instruments. The copies of the Amended and
         Restated Articles of Incorporation and Bylaws of the Company which have
         been delivered to legal counsel for the Subscriber prior to the
         execution of this Agreement are true and complete copies of the duly
         and legally adopted Amended and Restated Articles of Incorporation and
         Bylaws of the Company in effect as of the date of this Agreement.

                  g.   Subsidiaries.  Etc. The Company does not have any direct
         or indirect ownership interest in any corporation, partnership, joint
         venture, limited liability company or partnership, association or other
         business enterprise.

                  h.   Qualification. The Company is duly qualified, licensed or
         domesticated as a foreign corporation in good standing in each
         jurisdiction wherein the nature of its activities or the properties
         owned or leased by it makes such qualification, licensing or
         domestication necessary


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<PAGE>   5


         and in which failure to so qualify or be licensed or domesticated would
         have a material adverse impact upon its business.

                  i.   Financial Statements. The Company has delivered to
         Subscriber true and correct copies of its unaudited balance sheets for
         the Company dated as at June 30, 1996, June 30, 1997, June 30, 1998 and
         June 8, 1999 (the "1999 Balance Sheet") together with the related
         statements of profit and loss for the periods then ended. Such
         financial statements (i) are in accordance with the books and records
         of the Company, (ii) present fairly the financial condition of the
         Company at the balance sheets dates and the results of its operations
         for the periods therein specified, and (iii) have, in all material
         respects, been prepared in accordance with generally accepted
         accounting principles applied on a basis consistent with prior
         accounting periods. Without limiting the generality of the foregoing,
         the balance sheets or notes thereto disclose all of the debts,
         liabilities and obligations of any nature (whether absolute, accrued or
         contingent and whether due or to become due) of the Company at their
         respective dates, which, individually or in the aggregate, are material
         and which in accordance with generally accepted accounting principles
         would be required to be disclosed in such balance sheets and include
         appropriate reserves for all taxes and other liabilities accrued as of
         such dates but not yet payable.

                  j.   Tax Returns and Audits. All required federal, state and
         local tax returns or appropriate extension requests of the Company have
         been filed, and all federal, state and local taxes required to be paid
         with respect to such returns have been paid or due provision for the
         payment thereof has been made. The Company is not delinquent in the
         payment of any such tax or in the payment of any assessment or
         governmental charge. The Company has not received notice of any tax
         deficiency proposed or assessed against it, and it has not executed any
         waiver of any statute of limitations on the assessment or collection of
         any tax. None of the Company's tax returns has been audited by
         governmental authorities in a manner to bring such audits to the
         Company's attention. The Company does not have any tax liabilities
         except those reflected on the financial statements referred to above or
         those which were incurred in the ordinary course of business since June
         8, 1999 and are not delinquent.

                  k.   Changes, Dividends, etc. Except for the transactions
         contemplated by this Agreement, since June 8, 1999 the Company has not:
         (i) incurred any debts, obligations or liabilities, absolute, accrued
         or contingent and whether due or to become due, except current
         liabilities incurred in the ordinary course of business which
         (individually or in the aggregate) will not materially and adversely
         affect the business, properties or prospects of the Company; (ii) paid
         any obligation or liability other than, or discharged or satisfied any
         liens or encumbrances other than those securing, current liabilities,
         in each case in the ordinary course of business; (iii) declared or made
         any payment to or distribution to its shareholders as such, or
         purchased or redeemed any of its shares of capital stock, or obligated
         itself to do so; (iv) mortgaged, pledged or subjected to lien, charge,
         security interest or other encumbrance any of its assets, tangible or
         intangible, except in the ordinary course of business; (v) sold,
         transferred or leased any of its assets except in the ordinary course
         of business; (vi) suffered any physical damage, destruction or loss
         (whether or not covered by insurance) materially and adversely
         affecting the properties, business or prospects of the Company; (vii)
         entered into any transaction other than in the ordinary course of
         business; (viii) encountered any labor difficulties or labor union
         organizing activities; (ix) issued or sold any shares of capital stock
         or other securities or granted any options, warrants, or other purchase
         rights with respect thereto; (x) made any acquisition or disposition of
         any material assets; other than for fair value in the ordinary course
         of business; (xi) increased the compensation payable, or to become
         payable, to any of its directors, officers or employees, or made any
         bonus payment or similar arrangement with any of its directors,
         officers or employees or increased the scope or nature of any fringe
         benefits provided for its directors, officers or


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<PAGE>   6


         employees; or (xii) agreed to do any of the foregoing other than
         pursuant hereto. There has been no material adverse change in the
         financial condition, operations, results or operations or business of
         the company since June 8, 1999.

                  l.   Title to Properties and Encumbrances. The Company does
         not have an ownership interest in any parcels of real property. The
         Company has good and marketable title to all of its properties and
         assets, including without limitation the properties and assets
         reflected on the 1999 Balance Sheet and the properties and assets used
         in the conduct of its business, which properties and assets are not
         subject to any mortgage, pledge, lease, lien, charge, security
         interest, encumbrance or restriction, except (a) those which are shown
         and described on the 1999 Balance Sheet, (b) liens for taxes and
         assessments or governmental charges or levies not at the time due or in
         respect of which the validity thereof shall currently be contested in
         good faith by appropriate proceedings, or (c) those which do not
         materially affect the value of or interfere with the use made of such
         properties and assets.

                  m.   Conditions of Properties. The offices and equipment of
         the Company have been kept in good condition and repair in the ordinary
         course of business.

                  n.   Compliance With Applicable Laws and Other Instruments.
         The business and operations of the Company have been and are being
         conducted in accordance with all applicable laws, rules and regulations
         of all governmental authorities, except where the failure to so conduct
         the business and operations of the Company would not have a material
         adverse effect on the business, properties or prospects of the Company.
         Neither the execution nor delivery of, nor the performance of or
         compliance with, this Agreement nor the consummation of the
         transactions contemplated hereby will, with or without the giving of
         notice or passage of time, result in any breach of, or constitute a
         default under, or result in the imposition of any lien or encumbrance
         upon any asset or property of the Company pursuant to any agreement or
         other instrument to which the Company is a party or by which it or any
         of its properties, assets or rights is bound or affected, and will not
         violate the Amended and Restated Articles of Incorporation or Bylaws of
         the Company. The Company is not in violation of its Amended and
         Restated Articles of Incorporation or Bylaws nor in violation of, or in
         default under, any lien, indenture, mortgage, lease, agreement,
         instrument, commitment or arrangement in any material respect. The
         Company is not subject to any restriction which would prohibit it from
         entering into or performing its obligations under this Agreement.

                  o.   Securities Laws. Based in part upon the representations
         of the Subscriber in Section 3 of this Agreement, no consent,
         authorization, approval, permit or order of or filing with any
         governmental or regulatory authority is required under current laws and
         regulations in connection with the execution and delivery of this
         Agreement or the offer, issuance, sale or delivery of the, Series A
         Preferred or the Conversion Shares, other than the qualification
         thereof, if required, under applicable state securities laws. The
         Company has not, directly or through an agent, offered the Series A
         Preferred or any similar securities for sale to, or solicited any
         offers to acquire such securities from, persons other than the
         Subscriber and other accredited investors. Under the circumstances
         contemplated by this Agreement and assuming the accuracy of the
         representations of the Subscriber in Section 4, the offer, issuance,
         sale and delivery of the Series A Shares and the Conversion Shares will
         not, under current laws and regulations, require compliance with the
         prospectus delivery or registration requirements of the federal
         Securities Act of 1933, as amended (the "Securities Act").

                  p.   Intellectual Property. The Company owns or possesses
         sufficient trademarks, tradenames, copyrights, licenses, approvals and
         other similar rights, which are to the Company's


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         knowledge free and clear of all liens, claims and restrictions
         (collectively, the "Intellectual Property Rights") reasonably necessary
         to conduct its business as now conducted; and the expected expiration
         of any of such Intellectual Property Rights would not result in a
         material adverse change in the business, properties, financial
         condition or results of operations of the Company. The Company has not
         received any notice of, nor to its knowledge is there any claim
         threatened regarding, infringement or conflict with asserted
         Intellectual Property Rights of others, which infringement or conflict,
         if the object of an unfavorable decision, would result in a material
         adverse change in the business, properties, financial condition or
         results of operation of the Company. The Company is not obligated or
         under any liability whatsoever to make any payments of a material
         nature by way of royalties, fees or otherwise to any owner of, licensor
         of or other claimant to, any patent, trademark, tradename, copyright or
         other intangible asset, with respect to the use thereof or in
         connection with the conduct of its business. To its knowledge, the
         Company owns or has the unrestricted right to use all trade secrets,
         including know-how, customer lists, inventions, designs, processes,
         computer programs and technical data necessary for the development,
         operation and sale of the products and services sold or proposed to be
         sold by it, free and clear of all rights, liens, or claims of others.

                  q.   Capital Stock. At the date hereof the authorized capital
         stock of the Company consists of 5,000,000 shares of common stock, $.01
         par value (the "Common Stock"), of which 1,919,716 shares are issued
         and outstanding, which such shares are owned by the persons and in the
         amounts indicated on Schedule 4.q. hereto, and 5,000,000 shares of
         Series A Preferred Stock, none of which are outstanding (without giving
         effect to the sale of Preferred Shares offered hereby). All of the
         outstanding shares of capital stock of the Company were duly authorized
         and validly issued and are fully paid and nonassessable, except that
         (i)stock certificates have not been issued and delivered by the Company
         to purchasers of Common Stock in the private placement of Company
         common stock sold in March and April 1999, and (ii) common shareholders
         approved the increase of authorized common stock to five million shares
         in June 1999, effective April 20, 1999, after an amendment to the
         Company's articles of incorporation were filed on April 20, 1999.
         Except with respect to outstanding options to purchase 251,250 shares
         of Company common stock held by Company employees and consultants,
         there are no outstanding subscriptions, options, warrants, calls,
         contracts, demands, commitments, convertible securities or other
         agreements or arrangements of any character or nature whatever, other
         than as contemplated by this Agreement under which the Company is
         obligated to issue any securities of any kind representing an ownership
         interest in the Company. Neither the offer nor the issuance or sale of
         the Preferred Shares or the Conversion Shares constitute, or will
         constitute, an event under any anti-dilution provisions of any
         securities issued or issuable by the Company or any agreements with
         respect to the issuance of securities by the Company, which will either
         increase the number of shares issuable pursuant to such provisions or
         decrease the consideration per share to be received by the Company
         pursuant to such provisions. Except as contemplated by this Agreement,
         no holder of any security of the Company is entitled to any preemptive
         or similar rights to purchase any securities of the Company from the
         Company; provided, however that nothing in this Section 4.q. shall
         affect, alter or diminish any right granted to the Subscriber in this
         Agreement. All outstanding securities of the Company have been issued
         in full compliance with an exemption or exemptions from the
         registration and prospectus delivery requirements of the Securities Act
         and from the registration and qualification requirements of all
         applicable state securities laws.

                  r.   Outstanding Debt. The Company has no indebtedness
         incurred as a result of direct borrowing of money (excluding any
         indebtedness incurred with respect to trade accounts), except as
         otherwise set forth in the financial statements or the notes thereto
         provided to the Subscriber. The Company is not in default in the
         payment of the principle of or interest or


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<PAGE>   8


         premium on any such indebtedness, and no event has occurred or is
         continuing under the provisions of any instrument, document or
         agreement evidencing or relating to any such indebtedness which, with
         the lapse of time or the giving of notice or both, would constitute an
         event of default thereunder.

                  s.   Insurance Coverage. There are in full force and effect
         policies of insurance issued by insurers of recognized responsibility
         which are insuring the Company and its properties against such losses
         and risks, and in such amounts, as in the Company's best judgment,
         after advice from its insurance broker, are acceptable for the nature
         and extent of its business and the Company's resources.

                  t.   Schedule of Assets and Contracts. The Company has
         previously delivered to Subscriber, to the extent they exist, copies of
         the documents described on the schedule of assets and contracts to be
         attached to this Agreement no later than one week after the date
         hereof:

                       (1)   each written or oral contract or agreement between
                  the Company and any shareholder of the Company;

                       (2)   each indenture, lease, sublease, license or other
                  instrument under which the Company claims or holds a leasehold
                  interest in real property;

                       (3)   each lease of personal property involving
                  payments remaining to or from the Company;

                       (4)   except with respect to Robert Phythian and Paul
                  Charchian, each of whom have verbal agreements with the
                  Company regarding salary, each written or oral contract,
                  agreement, subcontract, purchase order, commitment or
                  arrangement involving payments remaining to or from the
                  Company and each other agreement material to the Company's
                  business to which the Company is a party or by which it is
                  bound, under which full performance (including payment) has
                  not been rendered by any party thereto;

                       (5)   any collective bargaining agreements, employment
                  agreements, consulting agreement, noncompetition agreements,
                  nondisclosure agreements, executive compensation plans, profit
                  sharing plans, bonus plans, deferred compensation agreements,
                  employee pension retirement plans and employee benefit stock
                  option or stock purchase plans and other employee benefit
                  plans, entered into or adopted by the Company;

                       (6)   a current statement of balance of account in the
                  account at Richfield Bank and Trust maintained by the Company,
                  together with the persons authorized to make withdrawals from
                  such accounts; and

                       (7)   the name of each employee of the Company and the
                  remuneration currently payable to each such employee;

                       (8)   all accounts receivable of the Company that are
                  or were outstanding on the Balance Sheet Date, and the aging
                  of each such account receivable;

                       (9)   all accounts payable of the Company that are or
                  were outstanding on the June 1999 Balance Sheet, and the aging
                  of each such account payable;


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                       (10)  all insurance policies in force;

                       (11)  all patents, royalty and license agreements,
                  trademarks, trade names, service marks and copyrights relating
                  to products of the Company (including applications therefor);
                  and

                       (12)  all licenses, permits, authorizations,
                  approvals, franchises and rights granted to the Company by any
                  governmental or other regulatory authority.

                       The Company has performed in all material respects
                       all obligations required to be performed by it to
                       date and is not in default under any of the
                       contracts, agreements, leases, documents, commitments
                       or other arrangements to which it is a party or by
                       which it is otherwise bound. All instruments referred
                       to above are in effect and enforceable according to
                       their respective terms, and there is not under any of
                       such instruments any existing default or event of
                       default or event which, with notice or lapse of time
                       or both, would constitute an event of default
                       thereunder on the part of the Company, or, to the
                       best knowledge of the Company, on the part of any
                       other party thereto. All parties having contractual
                       arrangements with the Company are in compliance
                       therewith and none are in default thereunder. All
                       plans or arrangements described above are fully
                       funded to the extent that such funding is required by
                       generally accepted accounting principles.

                  u.   Conflicts of Interest. No officer, director or
         shareholder of the Company or any affiliate (as the term "affiliate" is
         defined in Rule 405 under the Securities Act) of any such person has
         any direct or indirect interest (a) in any entity which does business
         with the Company, (b) in any property, asset or right which is used by
         the Company in the conduct of its business, or (c) in any contractual
         relationship with the Company other than as an employee. For the
         purpose of this Section 4.u., there shall be disregarded any interest
         which arises solely from the ownership of less than a 1% equity
         interest in a corporation whose stock is regularly traded on any
         national securities exchange or in the over-the-counter market.

                  v.   Licenses. To the Company's knowledge, the Company
         possesses from the appropriate agency, commission, board and government
         body and authority, whether state, local or federal, all licenses,
         permits, authorizations, approvals, franchises and rights which are (a)
         necessary for it to engage in the business currently conducted by it,
         and (b) if not possessed by the Company would have a material adverse
         impact on the Company's business. The Company has no knowledge that
         would lead it to believe that it will not be able to obtain all
         licenses, permits, authorizations, approvals, franchises and rights
         that may be required for any business the Company proposes to conduct.

                  w.   Registration  Rights.  Except as set froth under this
         Agreement, the Company has not agreed to register any of its authorized
         or outstanding securities under the Securities Act.

                  x.   Retirement Plans. The Company does not have any
         retirement plan in which any employees of the Company participates that
         is subject to any provisions of the Employee Retirement Income Security
         Act of 1974 and of the regulations adopted pursuant thereto ("ERISA").

                  y.   Minute Books. A true and correct copy of all minute books
         and stock record books of the Company has been delivered to the
         Subscriber.


                                       9


<PAGE>   10


                  z.   Disclosure. The Company has not withheld from the
         Subscriber any material facts relating to the assets, business,
         operations, financial condition or prospects of the Company. No
         representation or warranty in this Agreement or in any certificate,
         schedule, statement or other document furnished or to be furnished to
         any Subscriber pursuant hereto or in connection with the transactions
         contemplated hereby contains or will contain any untrue statement of a
         material fact or omits or will omit to state any material fact required
         to be stated herein or therein or necessary to make the statements
         herein or therein, in light of all the circumstances in which they were
         made, not misleading.

         5.       Right to Purchase Additional Securities. If the Company should
decide to issue and sell for cash additional shares of any capital stock of the
Company, other than Additional Shares of Common Stock (as defined in the Series
A Certificate), and at such time, the Subscriber and its affiliates then own
19.9% or less of the outstanding Common Stock of the Company (including for
purposes of such calculation on an as converted basis all outstanding shares of
Series A Preferred and any other outstanding securities, options or warrants
convertible into Common Stock, but not including performance based options that
have not yet vested) then such issuances and sales shall be subject to the
following terms and conditions:

                  a.   the Company shall first offer to sell to the Subscriber,
         upon the same terms and conditions as the Company is proposing to issue
         and sell such additional shares of capital stock to others, such number
         of additional securities as would result in the Subscriber and its
         affiliates maintaining their then current aggregate ownership
         percentage, as such percentage may decrease from time to time but in no
         event in excess of nineteen and nine-tenths percent (19.9%) of the
         outstanding Common Stock of the Company;

                  b.   if Subscriber's and its affiliates' aggregate ownership
         percentage upon completion of such proposed issuance and sale of
         additional securities would be greater than their then current
         aggregate ownership percentage at the time of the proposed issuance and
         sale of additional securities (as such percentage may decrease from
         time to time but in no event in excess of 19.9%), then this right to
         purchase additional securities shall not apply to the extent the
         Subscriber's and its affiliates' ownership would be, upon completion of
         such proposed issuance and sale of additional securities, greater than
         their then current aggregate ownership percentage (as such percentage
         may decrease from time to time but in no event in excess of 19.9%); and

                  c.   this right to purchase additional securities hereunder
         shall automatically terminate upon the date that the Company completes
         a Qualified Public Offering, as defined in the Series A Certificate.

                  The Company and Subscriber understand that based on current
stock ownership levels as of the date of this Agreement, this right to purchase
additional securities shall not apply to the extent that the Company issues and
sells additional securities that would result in the Subscriber's and its
affiliates' aggregate ownership percentage exceeding 19.9%. By way of
illustration and not as a limitation, if, at a future date, the Subscriber's and
its affiliates' aggregate ownership percentage decreases from its level as of
the date of this Agreement to ten percent (10%), for example, then this right to
purchase additional securities would be a right to maintain a ten percent (10%)
aggregate ownership percentage in the Company.

         6.       Affirmative Covenants of the Company. Subject to Section 8 of
this Agreement, the Company covenants and agrees that:


                                       10


<PAGE>   11


                  a.   Corporate Existence. The Company will maintain its
         corporate existence in good standing and comply in all material
         respects with all applicable laws and regulations of the United States
         or of any state or states thereof or any political subdivision thereof
         where failure to so comply would have a material adverse impact on the
         company or its business or operations.

                  b.   Books of Account and Records. The Company will keep books
         of record and account in which full, true and correct entries are made
         of all of its and their respective dealings, business and affairs, in
         accordance with generally accepted accounting principles. The Company
         will deliver to the Subscriber as soon as practicable the following:
         (i) after the close of each fiscal quarter, unaudited consolidated
         balance sheets of the Company as of the end of such quarter, together
         with the related statements of operations for such quarter; and (ii)
         after the end of each fiscal year, a nonaudited balance sheet of the
         Company as of the end of such fiscal year, together with related
         statements of operations, stockholders equity and cash flow for such
         fiscal year. The Company will engage a certified public accountant from
         a "Big 5 Accounting Firm" selected by the Board of Directors of the
         Company who are "independent" within the meaning of the accounting
         regulations of the Securities and Exchange Commission (the
         "Commission"), and have annual audits made by such independent public
         accountants.

                  c.   Payment of Taxes. The Company will pay and discharge
         promptly, or cause to be paid and discharged promptly when due and
         payable, all taxes, assessments and governmental charges or levies
         imposed upon its income or upon any of its properties, as well as all
         material claims of any kind which, if unpaid, might by law become a
         lien or charge upon its property; provided, however, that the Company
         shall not be required to pay any such tax, assessment, charge, levy or
         claim if the amount, applicability or validity thereof shall currently
         be contested in good faith by appropriate proceedings and if the
         Company shall set aside on its books reserves deemed adequate by it
         with respect thereto; and (ii) maintain and keep or cause to be
         maintained and kept, its properties in good repair, working order and
         condition, and from time to time make, or cause to be made, all repairs
         and renewals and replacements which in the opinion of the Company are
         necessary and proper so that the business carried on in connection
         therewith will be properly and advantageously conducted at all times.

                  d.   Insurance. The Company will obtain and maintain in force
         such property damage, public liability, workers compensation, indemnity
         bonds and other types of insurance as the Company executive officers,
         after consultation with its insurance broker, shall determined to be
         necessary or appropriate to protect the Company from the insurable
         hazards or risks associated with the conduct of the Company's business.
         All insurance company maintained in at least such amounts and to such
         extent as shall be determined to be reasonable by the Board of
         Directors, and all such insurance shall be effected and maintained in
         force under a policy or policies issued by insurers of recognized
         responsibility, except that the Company may affect workers company or
         similar insurance in respect of operations in any state or other
         jurisdiction either through an insurance fund operated by such state or
         other jurisdiction or by causing to be maintained a system or systems
         of self insurance which is in accord with applicable laws.

                  e.   Inspection. The Company will permit the Subscriber and
         any of its representatives designated by it, to visit and inspect, at
         the Subscriber's expense, any of the properties of the Company,
         including its books and records (and to make photocopies thereof or
         make extracts therefrom), and to discuss its affairs, finances and
         accounts with its officers and accountants, all to such reasonable
         extent and at such reasonable times and intervals as the Subscriber may
         reasonably describe and request in advance. The Subscriber shall
         maintain, and shall require its representatives to maintain, all
         information obtained from the Company pursuant to this Agreement on a
         confidential basis.


                                       11


<PAGE>   12


                  f.   Preparation and Approval of Budgets. Commencing with its
         fiscal year ending June 30, 2000, at least one month prior to the
         beginning of each fiscal year of the Company, the Company shall prepare
         and submit to its board of directors, for its review and approval, an
         annual plan/budget for such year, which shall include monthly capital
         and operating expense budgets, cash flow statements and profit and loss
         projections itemized in such detail as the board of directors may
         reasonably request. The Company will, simultaneously with the
         submission thereof to the board of directors, deliver a copy of such
         annual plan/budget to the Subscriber.

                  g.   Payment of Indebtedness and Discharge of Obligations. The
         Company will make timely payment of all amounts due under, and will
         observe, perform and discharge all of the covenants, conditions and
         obligations which are imposed on it by, any and all indentures and
         other agreements securing or evidencing all indebtedness resulting from
         bank or other borrowings or pursuant to which such indebtedness is
         issued.

                  h.   Representation on Board of Directors; Directors' and
         Shareholders' Meetings. The Subscriber shall have the right to appoint
         one director to the Company's Board of Directors (the "Board"). In the
         event of the death, resignation or removal of any director designated
         by the Subscriber, the Subscriber shall be entitled to designate such
         director's successor. The Company agrees that in submitting to the
         Company's shareholders or board of directors the names and nominees for
         election as directors or in filling interim vacancies, it will use its
         good faith reasonable efforts to cause any person designated by the
         Subscriber to be elected as a director. The Company further agrees to
         call meetings of its board of directors at least quarterly and during
         each year to hold an annual meeting of shareholders within a reasonable
         time after the end of each of its fiscal years. The Company also agrees
         to reimburse the directors for the reasonable out-of-pocket travel
         expenses incurred by the directors in connection with attending
         meetings of the board of directors and meetings of shareholders, and
         shall maintain a provision in its by-laws providing for the
         indemnification of its directors to the full extent permitted by the
         law of the state of its incorporation.

                  i.   Application of Proceeds. Unless otherwise approved by the
         Subscriber, the net proceeds received by the Company from the sale of
         the Series A Preferred will be used by the Company for sales,
         marketing, advertising, acquisitions and general working capital
         purposes.
                  Pending use of the net proceeds in the business, they shall be
                  deposited in a bank or financial institution having assets of
                  $150,000,000 or more or a bank or financial institution
                  otherwise approved by the Investors, invested in certificate
                  of deposit or repurchase agreements of a bank or financial
                  institution having assets of $150,000,000 or more, invested in
                  money market mutual funds having assets of $500,000,000 or
                  more, or invested in securities issued or guaranteed by the
                  United States Government.

                  j.   Provision of Information and Filing of Reports. The
         Company shall, from and after the Closing Date, deliver to any holder
         of Series A Preferred upon request such information as may be required
         to be provided to enable the holder of Series A Preferred to comply
         with Rule 144A under the Securities Act in connection with the sale
         or transfer of any of the Preferred Shares. The Company shall, from and
         after such time as it has securities registered pursuant to Section 2
         of the Security Exchange Act of 1934 or has an offering of securities
         registered pursuant to the Securities Act, make timely filings of such
         reports as are required to be filed by it with the Commission so that
         Rule 144 under the Securities Act or any successor provision thereto
         will be available to the security holders of the Company who are
         otherwise able to take advantage of the provisions of such rule.


                                       12


<PAGE>   13


                  k.   Subsidiaries. If the Company establishes or maintains any
         subsidiary corporations, it shall cause each such subsidiary
         corporation to comply with the covenants set forth in this Section 6
         (other than Sections 6.h).

                  l.   Gaming. The Company understands that Subscriber is
         engaged in businesses that are regulated by various gaming authorities
         and regulation. Company covenants that it will provide prior written
         notice (which may be in the form of providing copies of minutes of
         meetings of the Company's Board of Directors) to the Subscriber
         concerning its planned activities and potential activities in the
         development stage that involve, directly or indirectly, contests or
         gaming which the Company may engage in prior to actually undertaking
         such activities. Subscriber agrees that, based on such prior notice and
         information, Subscriber will on a reasonably prompt basis notify the
         Company about any aspect of the proposed or developed plans regarding a
         new activity that could effect the subscribers compliance with the
         requirements of any gaming authority or regulation. The Company further
         covenants and agrees that it will not engage in any such activity that
         will in any way adversely effect Subscriber's compliance with the
         requirements of any such gaming authority or regulation, unless
         consented to in advance by subscriber, which consent may be withheld by
         Subscriber in its sole discretion.

                  m.   Issuance of Stock and Rights to Acquire Stock. The
         Company shall comply with Section 5 hereof.

                  n.   Intellectual Property Rights. The Company will apply for,
         or obtain assignments of, or license to use, all patents, trademarks,
         tradenames and copyrights which the Board of Directors so directs for
         the conduct and protection of the business of the Company.

                  o.   Consents to Subchapter S Status Termination. The Company
         agrees to undertake to obtain the consent from each shareholder of the
         Company to whom the Company was contractually obligated to obtain
         consent for termination of Subchapter S status under the Internal
         Revenue Code of 1986, as amended.

         7.       Negative Covenants of the Company. Subject to Section 8 of
this Agreement, the Company covenants and agrees that:

                  a.   Registration. Except any registration expressly permitted
         by Section 11 of this Agreement, and except for an underwriting
         agreement between the Company and one or more professional underwriters
         of securities, the Company shall not agree with the holders of any
         securities issued or to be issued by the Company to register such
         securities under the Securities Act nor will it grant any incidental
         registration rights to any such persons, unless such agreement
         specifically provides that (i) in the opinion of the managing
         underwriter or underwriters, if any, of any registration in which
         Conversion Shares are included pursuant to Section 1 of Exhibit B, the
         public offering or sale of such other securities would not interfere
         with the successful public offering and sale of such Conversion Shares,
         such other securities will not be included in a registration statement
         in which such Conversion Shares are so included, (ii) such subsequent
         purchasers shall not be granted registration rights more favorable than
         those granted to the Subscriber, and (iii) such securities may not be
         publicly offered or sold for a period of at least one hundred eighty
         (180) days after the closing of any public offering of Conversion
         Shares registered pursuant to Exhibit B.

                  b.   Other Restrictions. The Company will not, nor will it
         permit any subsidiary to, without the prior written consent of the
         Subscriber:


                                       13


<PAGE>   14


                       (1)   take any action that constitutes or results in
                  amendment or waiver of any provision of the Company's Articles
                  of Incorporation, as amended, the Series A Certificate or
                  Bylaws, if such amendment or waiver in any way adversely
                  affects the rights of the Series A Preferred or the holders
                  thereof; or

                       (2)   alter, amend or change any existing rights,
                  preferences privileges or provisions relating to the Series A
                  Preferred or the holders thereof; or

                       (3)   take any action that results in the redemption of
                  any share(s) of Common Stock (other than repurchases of shares
                  of Common Stock issued pursuant to the Employee Pool).

         8.       Termination of Covenants. The obligations of the Company under
Sections 5, 6 and 7, notwithstanding any provisions hereof to the contrary,
shall automatically terminate and shall be of no further force or effect on the
date on which the Company completes its Qualified Public Offering (as defined in
the Series A Certificate).

         9.       Co-Sale Agreements. Within thirty (30) days after the date
hereof, the Company undertakes and agrees to obtain written co-sale agreements
to be executed and delivered by Robert Phythian, Paul Charchian and Erwin Kelen
(and their related affiliates) who in the aggregate own at least 25,000 shares
of Company common stock, which co-sale agreements shall provide that to the
extent any such holder desires to sell at least 25,000 shares of Common Stock to
a third party, other than a transfer pursuant to a pledge, estate plan, gift or
registered public offering, then such holder will include, if Subscriber so
desires, as an additional seller of shares of Common Stock to such third party
the shares of Common Stock that Subscriber owns in such proposed sale
transaction on a pro rata basis. Such co-sale agreements shall include a
provision that expressly permits sale transactions of up to 25,000 shares during
any twelve (12) month period on a cumulative basis and shall be in a form
reasonably satisfactory to Subscriber and such shareholders.

         10.      Conversion of Preferred Shares.

                  a.   Conversion of Preferred Shares. Any holder of any Series
         A Preferred may, at its option, from and after the occurrence of such
         events as are set forth in the relevant provisions of the Series a
         Certificate, convert such Preferred Shares, or any portion thereof,
         into Conversion Shares at the rate and upon the terms and conditions
         and subject to the adjustments set forth it the Series A Certificate.
         Each Series A Preferred Share shall be automatically converted into
         Conversion Shares on the terms and conditions set forth in the Series A
         Certificate.

                  b.   Stock Fully Paid; Reservation of Preferred Shares. The
         Company covenants and agrees that all Conversion Shares that may be
         issued upon the exercise of the conversion privilege referred to in
         Section 9.a. will, upon issuance in accordance with the terms of the
         Series A Certificate, be fully paid and nonassessable and free from all
         taxes, liens and charges except for liens or changes created or
         incurred by the holder) with respect to the issue thereof, and that the
         issuance thereof shall not give rise to any preemptive rights on the
         part of any person. The Company further covenants and agrees that the
         Company will at all times have authorized and reserved a sufficient
         number of its shares of Common Stock for the purpose of issue upon the
         exercise of such conversion privilege.

                  c.   Adjustment of Number of Conversion Shares. The number of
         shares of Common Stock issuable upon conversion of the Series A
         Preferred and the conversion ratio with respect thereto shall be
         subject to adjustment from time to time as set forth in the Series A
         Certificate.


                                       14


<PAGE>   15


         11.      Registration Rights. The Subscriber shall have the right to
have any Conversion Shares acquired by the Subscriber upon conversion of any
Series A Preferred held by such Subscriber issued upon the exercise of the
conversion rights set forth in the Series A Certificate registered by the
Company in accordance with the terms and conditions set forth in Exhibit B of
this Agreement.

         12.      Default.

                  a.   Events of Default.  Each of the following events shall be
         an event of default (an "Event of Default") for purposes of this
         Agreement:

                       (1)   if the Company shall default in any material
                  respect in the due and punctual performance of any covenant or
                  agreement in any note, bond, indenture, loan agreement, note
                  agreement, mortgage, security agreement or other instrument
                  evidencing or related to indebtedness of the company, such
                  default shall continue for more than the period of notice
                  and/or grace, if any, therein specified and shall not have
                  been waived, and such creditor shall have accelerated the
                  maturity of such indebtedness or otherwise shall have
                  initiated action to collect such indebtedness;

                       (2)   (A) if any representation or warranty made by or
                  on behalf of the Company in this Agreement or in any
                  certificate, report or other instrument delivered under or
                  pursuant to any term hereof shall prove to have been untrue or
                  incorrect in any material respect as of the date of this
                  Agreement; or (B) if any report, certificate, financial
                  statement or financial schedule or other instrument prepared
                  or purported to be prepared by the Company or any officer of
                  the Company hereafter furnished or delivered under or pursuant
                  to this Agreement shall prove to be untrue or incorrect in any
                  material respect as of the date it was made, furnished or
                  delivered;

                       (3)   if the Company defaults in the due and punctual
                  performance or observance of any covenant contained in this
                  Agreement, and such default continues for a period of 30 days
                  after written notice thereof to the Company by any Subscriber;
                  provided, however, that an Event of Default shall not be
                  deemed to have occurred if, at the end of such 30-day period,
                  the Company is diligently attempting to cure such default and
                  the existence of such default is not adversely affecting the
                  business or financial condition of the Company; or

                       (4)   if the Subscriber's designees to the Company's
                  board of directors shall fail to be elected to the board of
                  directors in the manner and under the terms and conditions set
                  forth in Section 6.i of this Agreement.

                  b.   Remedy Upon Events of Default. Upon the occurrence of an
         Event of Default, then the holders of Series A Preferred and/or
         Conversion Shares shall have all remedies available under applicable
         law or in equity.

                  c.   Notice of Defaults. When, to its knowledge, any Event of
         Default has occurred or exists, the Company shall give written notice
         within three business days of such Event of Default to the holders of
         all outstanding Series A Preferred. If the holder of any of the Series
         A Preferred shall give any notice or take any other actions in respect
         of a claimed Event of Default, the Company will forthwith given written
         notice thereof to all other holders of Preferred Shares at the time
         outstanding, describing such notice or action and the nature of the
         claimed Event of Default.


                                       15


<PAGE>   16


                  d.   Remedies Not Waived. No course of dealing between the
         Company and the Subscriber or any holder of any Series A Preferred and
         no delay in exercising any right, power or remedy conferred hereby or
         by any such security or now or hereafter existing at law or in equity
         or by statute or otherwise, shall operate as a waiver of or otherwise
         prejudice any such right, power or remedy; provided, however, that this
         Section shall not be construed or applied so as to negate the
         provisions and intent of any statute which is otherwise applicable.

                  e.   Remedies Cumulative. No right, power or remedy conferred
         upon any holder of the Series A Preferred shall be exclusive, and each
         such right, power or remedy shall be cumulative and in addition to
         every other right, power or remedy, whether conferred hereby or by any
         such security or now or hereafter available at law or in equity or by
         statute or otherwise.

                  f.   Attorney Fees to the Prevailing Party. The parties hereto
         agree that in the event either party brings an action for breach of
         this Agreement or for indemnification, the prevailing party shall be
         entitled to receive all attorney fees, costs and expenses incurred,
         including without limitation such reasonable fees and expenses of
         attorneys (whether or not litigation is commenced) and reasonable fees,
         costs and expenses of appeals.

         13.      Lock-up Agreement. The Subscriber agrees, in connection with
the initial underwritten public offering of the Common Stock, (1) not to sell,
make short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Series A Preferred or the Common Stock into which it is
converted held by the Subscriber (other than those shares, if any, included in
the applicable registration statement) without the prior written consent of the
Company or the underwriters managing such initial underwritten public offering
for 180 days from the effective date of such registration statement and (2) to
execute any written instrument reflecting the agreement set forth in (1) above
as may be requested by the underwriters at the time of the initial public
offering.

         14.      Indemnification. The Subscriber agrees to indemnify and hold
the Company harmless from and against any liability, loss or expense (including
reasonable attorneys' fees) if the Subscriber, alone or with others, defaults in
any of the Subscriber's representations, warranties or covenants set forth
herein. The Company agrees to indemnify and hold the Subscriber harmless from
and against any liability, loss or expense (including reasonable attorneys'
fees) (a) if the Company defaults in any of the Company's representations,
warranties or covenants set forth herein and (b) incurred by Subscriber in
connection with, or arising from, any claims of third parties that the Company
improperly terminated its Subchapter S tax status.

         15.      No Filing. The Subscriber understands that no federal or state
agency has made any finding or determination as to the fairness for investment
nor any recommendation or endorsement of the Series A Preferred.

         16.      Successors. The Subscriber's rights and obligations hereunder
shall inure to the benefit of, and be binding upon and enforceable against his
or her heirs, representatives and successors. Notwithstanding the foregoing,
neither this offer nor any rights granted to the Subscriber herein may be
transferred or assigned by the Subscriber.

         17.      Notices. All notices to the Subscriber will be deemed given
when mailed by first class mail, postage prepaid, to the address designated by
the Subscriber below.

         18.      Questionnaires. The Subscriber understands that he or she must
complete Part I of the Subscriber Information questionnaire, and Part II of the
Accreditation Criteria questionnaire.


                                       16


<PAGE>   17


         19.      Governing Law. It is the intention of the Subscriber and the
Company that the laws of the State of Minnesota shall govern the validity of
this Subscription Agreement, the construction of its terms and the
interpretation of the rights and duties of the parties.

         20.      Changes Waivers, Etc. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver discharge or termination is sought.

         21.      Survival of Representations and Warranties, Etc. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement, any investigation at any time made by the
Subscribers or on their behalf, and the sale and purchase of the Series A
Preferred and the payment therefor. All statements contained in any certificate,
instrument or other writing delivered by or on behalf of the Company pursuant to
this Agreement (other than legal opinions) or in connection with or in
contemplation of the transactions herein contemplated shall constitute
representations and warranties by the Company hereunder.

         IN WITNESS WHEREOF, the Subscriber has caused this Agreement to be
executed by its duly authorized representative and the Company has caused this
Agreement to be executed by signing in counterpart the acceptance form attached
to this Agreement.


                                       17


<PAGE>   18


                                     PART I

                             SUBSCRIBER INFORMATION
                                       FOR
                                ENTITY SUBSCRIBER


-----------------------------------
Mailing Address


-----------------------------------
City           State       Zip


-----------------------------------
Telephone


         IN WITNESS WHEREOF, the Subscriber has caused this Agreement to be
executed by its duly authorized representative by signing in counterpart the
acceptance form attached to this Agreement.



LAKES GAMING, INC.

By:  /S/ Lyle Berman
    ------------------------------------------------
Its: Chairman of the Board & Chief Executive Officer
    ------------------------------------------------


                                       18



<PAGE>   19


                            CERTIFICATE OF SIGNATORY

         (to be completed if the Series A Preferred are being subscribed for by
         an entity)

         I, Lyle Berman, of the Lakes Gaming, Inc. (the "Entity"), hereby
certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement and to purchase and hold the
Series A Preferred, and certify further that the Subscription Agreement has been
duly and validly executed on behalf of the Entity and constitutes a legal and
binding obligation of the Entity.

         IN WITNESS WHEREOF, I have set my hand as of this 15th day of June,
1999.
                                 /s/ Lyle Berman
                                 ----------------------------------------------
                                 (Signature)

                                 Lyle Berman
                                 ----------------------------------------------
                                 (Please Print Name)

                                 Chairman of the Board & Chief Executive Officer
                                 ----------------------------------------------
                                 (Position)


                                       19



<PAGE>   20


                                     PART II

                             ACCREDITATION CRITERIA


TO BE COMPLETED BY ALL SUBSCRIBERS

The shares are being offered only to "accredited investors" as defined within
the meaning of rule 501 (a) of Regulation D promulgated by the Securities and
Exchange Commission. An accredited investor is one who fulfills any one of the
following criteria.

Please indicate (by check) which criteria apply:


A.       For an INDIVIDUAL INVESTOR (a natural person), please indicate (by a
         check) which criteria apply:

         [ ]      (1)  Individual income in excess of $200,000 in each
                       of the two most recent years or joint income (with
                       such investor's spouse) in excess of $300,000 in each
                       of those years and a reasonable expectation of
                       reaching the same income level in the current year.

         [ ]      (2)  Individual  net worth,  or Joint net worth (with such
                       investor's spouse), of $1,000,000 or more.

         [ ]      (3)  A director or executive officer of the Company.

B.       For a LEGAL ENTITY (other than a natural person), please indicate (by a
         check) which criteria apply:

         [ ]      (1)  A bank, savings and loan association or similar
                       institution, as defined in the Securities Act of
                       1933, whether acting in its individual or fiduciary
                       capacity.

         [ ]      (2)  A broker or dealer registered pursuant to Section 15 of
                       the Securities Exchange Act of 1934.

         [ ]      (3)  An insurance company as defined in the Securities Act of
                       1933.

         [ ]      (4)  An investment company registered under the Investment
                       Company Act of 1940.

         [ ]      (5)  A business development company as defined in the
                       Investment Company Act of 1940.

         [ ]      (6)  A private business development company as defined in the
                       Investment Advisors Act of 1940.

         [ ]      (7)  A Small Business Investment Company licensed by the U.S.
                       Small Business Administration under the Small Business
                       Investment Act of 1958.


                                       20


<PAGE>   21


         [ ]      (8)  An organization described in Section 501(c)(3) of
                       the Internal Revenue Code, corporation, Massachusetts
                       or similar business trust, or partnership, not formed
                       for the specific purpose of acquiring the securities
                       offered, with total assets in excess of $5,000,000.

         [ ]      (9)  A plan established and maintained by a state, its
                       political subdivisions, or any agency or
                       instrumentality of a state or its political
                       subdivisions, for the benefit of its employees, if
                       such plan has total assets in excess of $5,000,000.

         [ ]      (10) An employee benefit plan within the meaning of Title I of
                       the Employment Retirement Income Security Act of 1974, if
                       the investment decision is made by a plan fiduciary, as
                       defined in such Act, which is either a bank, savings and
                       loan association, insurance company, or registered
                       investment advisor, or if the employee benefit plan has
                       total assets in excess of  $5,000,000, or if a
                       self-directed  plan, the investment decisions are made
                       solely by persons that are accredited investors.

         [ ]      (11) A trust with total assets in excess of
                       $5,000,000, not formed for the specific purpose of
                       acquiring the Securities offered, whose purchase is
                       directed by a "sophisticated" person. the person or
                       persons making the investment decisions of the trust
                       should complete Part I (unless B(1) or B(2) also apply).

         [ ]      (12) An entity in which all of the equity owners are
                       "accredited investors."


         Date:   June 15, 1999
               ----------------         Lakes Gaming, Inc.
                                        ------------------------------
                                        Name of Subscriber

                                        /s/ Lyle Berman
                                        ------------------------------
                                        Signature of Subscriber


                                       21
<PAGE>   22


                                   ACCEPTANCE


         This Subscription Agreement of Lakes Gaming, Inc. is hereby accepted by
         Fanball.com, Inc. as of June 15, 1999.

                                 FANBALL.COM, INC.


                                 By:   Rob Phythian
                                 ------------------------------

                                 Its:  President
                                 ------------------------------



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