IENTERTAINMENT NETWORK INC
INVESTOR'S RIGHTS AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>INVESTOR'S RIGHTS AGREEMENT
<TEXT>



                           INVESTOR'S RIGHTS AGREEMENT

         THIS INVESTOR'S  RIGHTS AGREEMENT (the  "Agreement") is made as of June
30, 2000, by and between  iEntertainment  Network, Inc., a corporation organized
under the laws of the State of North Carolina (the  "Company"),  and the persons
listed on Exhibit A hereto (the "Investors").

                                    RECITALS

         WHEREAS,  the Company  and the  Investors  are parties to that  certain
Stock Purchase Agreement of even date herewith (the "Stock Purchase Agreement");

         WHEREAS,  to  induce  the  Investors  to  invest  funds in the  Company
pursuant to the Stock Purchase  Agreement,  the Investors and the Company hereby
agree that this Agreement  shall govern the rights of the Investors to cause the
Company to register shares of Common Stock  purchased by the Investors  pursuant
to the Stock Purchase Agreement, and certain other matters as set forth herein;

         NOW,  THEREFORE,  in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:

1.       REGISTRATION RIGHTS. THE COMPANY COVENANTS AND AGREES AS FOLLOWS:

         1.1   Definitions.

               (a)  "Act" means the Securities Act of 1933, as amended.

               (b)  "Common  Stock"  means  shares  of the  Common  Stock of the
          Company, par value $.10 per share (the "Common Stock").

               (c)  "Holder"  means any  person  owning  or having  the right to
          acquire  Registrable  Securities or any assignee thereof in accordance
          with Section 1.12 hereof.

               (d) "1934  Act" means the  Securities  Exchange  Act of 1934,  as
          amended.

               (e)  "Register,"  "registered,"  and  "registration"  refer  to a
          registration effected by preparing and filing a registration statement
          in  compliance  with the  Act,  and the  declaration  or  ordering  of
          effectiveness of such registration statement.

               (f) "Registrable Securities" means (i) the Common Stock, (ii) any
          shares of Common Stock issued upon conversion of the Company's  Series
          B Preferred Stock, and (iii) any Common Stock of the Company issued as
          (or issuable upon the conversion or exercise of any warrant,  right or
          other security which is issued as) a dividend or other

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          distribution  with respect to, or in exchange for or in replacement of
          the shares  referenced in (i) and (ii) above,  excluding in all cases,
          however, any Registrable  Securities sold by a person in a transaction
          in which his rights  under  this  Section 1 are not  assigned,  or any
          shares of Common Stock which have  previously been registered or which
          have  been  sold  to the  public  either  pursuant  to a  registration
          statement or Rule 144 promulgated under the Act.

               (g)  "SEC" shall mean the Securities and Exchange Commission.

          1.2  Request for Registration.

               (a)  If the Company shall receive, at any time commencing  ninety
          (90) days after the date of this Agreement, a written request from the
          Investors holding at least fifty percent (50%) of the then outstanding
          Registrable  Securities  held by the Investors that the Company file a
          registration  statement  under the Act  covering the  registration  of
          Registrable Securities, the Company shall:

                         (i)   within ten (10) days of the receipt thereof, give
                    written notice,  in accordance  with Section 3.5 hereof,  of
                    such request to all Holders; and

                         (ii)  file  as soon as  practicable,  and in any  event
                    within sixty (60) days of the receipt of such  request,  and
                    use its best efforts to cause to become effective as soon as
                    practicable,   the   registration   under  the  Act  of  all
                    Registrable  Securities  which  the  Holders  request  to be
                    registered as specified in a written request received by the
                    Company  within  twenty (20) days after such written  notice
                    from the  Company  is mailed or  delivered,  subject  to the
                    limitations of Subsection 1.2(b).

               (b) If the Holders initiating the registration  request hereunder
          ("Initiating Holders") intend to distribute the Registrable Securities
          covered by their  request by means of an  underwriting,  they shall so
          advise  the  Company  as a part of  their  request  made  pursuant  to
          Subsection  1.2(a) and the Company shall include such  information  in
          the written notice referred to in Subsection  1.2(a).  The underwriter
          will be selected by the Company and shall be  acceptable to a majority
          in interest of the Initiating Holders. In such event, the right of any
          Holder to include  his  Registrable  Securities  in such  registration
          shall  be  conditioned  upon  such  Holder's   participation  in  such
          underwriting and the inclusion of such Holder's Registrable Securities
          in the underwriting (unless otherwise mutually agreed by a majority in
          interest  of the  Initiating  Holders  and such  Holder) to the extent
          provided herein.  All Holders proposing to distribute their securities
          through such underwriting shall (together with the Company as provided
          in  Subsection  1.4(e))  enter  into  an  underwriting   agreement  in
          customary form with the underwriter or underwriters  selected for such
          underwriting.  Whenever a  registration  is demanded  pursuant to this
          Section  1.2,  the  Company  may  not  include  in  such  registration
          securities for offering by the Company and any

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          other holder of securities  without the prior  written  consent of the
          Holders  holding  at least  fifty  percent  (50%)  of the  Registrable
          Securities  covered  by  their  request.   Notwithstanding  any  other
          provision  of  this  Section  1.2,  if  the  underwriter  advises  the
          Initiating  Holders  in  writing  that  marketing  factors  require  a
          limitation  of the  number  of  shares  to be  underwritten,  then the
          Company shall exclude from such  underwriting  (x) first,  the maximum
          number of securities, if any, other than Registrable Securities, as is
          necessary  to reduce the size of the offering and (y) then the minimum
          number of Registrable Securities,  pro rata to the extent practicable,
          on the basis of the number of Registrable  Securities  requested to be
          registered among the participating holders of Registrable  Securities,
          as is  necessary  in the  opinion of the  managing  underwriter(s)  to
          reduce the size of the offering.

               (c) In addition, the Company shall not be obligated to effect, or
          to take any  action  to  effect,  any  registration  pursuant  to this
          Section 1.2:

                    (i) In any  particular  jurisdiction  in which  the  Company
               would be  required  to  execute a general  consent  to service of
               process  in  effecting  such  registration,   qualification,   or
               compliance,  unless the Company is already  subject to service in
               such jurisdiction and except as may be required by the Act;

                    (ii) After the Company  has  effected  one (1)  registration
               pursuant  to  this  Section  1.2,   excluding  any  registrations
               effected on Form S-3, and such  registration has been declared or
               ordered effective;

                    (iii) If the Initiating Holders propose to dispose of shares
               of Registrable  Securities that may be immediately  registered on
               Form S-3  pursuant to a request  made  pursuant  to Section  1.11
               below;

                    (iv) If the Company  delivers to the  Initiating  Holders an
               opinion,  in form and  substance  acceptable  to such  Initiating
               Holders,  of counsel  satisfactory to the Initiating Holders that
               the  Registrable  Securities  requested to be  registered  by the
               Initiating Holders may be sold or transferred without restriction
               pursuant to Rule 144(k) of the Act;

                    (v) During the period starting with the date sixty (60) days
               prior to the Company's  good faith estimate of the date of filing
               of, and ending on (A) a date ninety (90) days after the effective
               date  or (B) the  date of  abandonment  of,  a  Company-initiated
               registration  statement  relating  to the  offering of any of the
               Company's  securities;  provided,  that the  Company is  actively
               employing  in good  faith all  reasonable  efforts  to cause such
               registration statement to become effective; or

                    (vi)  If the  Company  reasonably  anticipates  that it will
               consummate,  within  sixty (60) days after the date of receipt of
               any request pursuant to this Section 1.2, a significant  business

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               transaction that would be materially  adversely affected,  to the
               material detriment of the Company, by a registration  pursuant to
               this  Section  1.2 (all in the good  faith  determination  of the
               Company's Board of Directors);  provided,  that the  registration
               statement  relating to the request  pursuant to this  Section 1.2
               shall be filed no later than  sixty  (60) days after the  closing
               (or  any  such  similar   event)  of   agreements   or  documents
               consummating   such   transaction  or  the  abandonment  of  such
               transaction,  but in any event not later  than 120 days after the
               receipt  of  the  request  pursuant  to  this  Section  1.2;  and
               provided,  further,  that the Company  shall not be  permitted to
               delay,  pursuant to this Section 1.2(c)(vi) or Section 1.2(c)(v),
               its  obligations  pursuant to this  Section 1.2 more than once in
               any twelve month period.

          1.3 Company Registration. If (but without any obligation to do so) the
     Company  proposes to register  (including  for this purpose a  registration
     effected by the Company for stockholders other than the Holders) any of its
     stock or other  securities  under  the Act in  connection  with the  public
     offering of such securities  (other than a registration  relating solely to
     the  sale  of  securities  to  participants  in a  Company  stock  plan,  a
     registration  relating solely to a Rule 145 transaction,  a registration on
     any form which does not include substantially the same information as would
     be required to be included in a registration statement covering the sale of
     the Registrable  Securities,  a registration in which the only Common Stock
     being   registered  is  Common  Stock  issuable  upon  conversion  of  debt
     securities  which  are also  being  registered,  or a  registration  on any
     registration form that does not permit secondary sales), the Company shall,
     at  such  time,   promptly  give  each  Holder   written   notice  of  such
     registration.  Upon the written  request of each Holder given within twenty
     (20) days after  giving of such  notice by the Company in  accordance  with
     Section 3.5, the Company  shall,  subject to the provisions of Section 1.8,
     use its best  efforts  to cause to be  registered  under the Act all of the
     Registrable   Securities   that  each  such  Holder  has  requested  to  be
     registered.

          1.4 Obligations of the Company. Whenever required under this Section 1
     to effect the  registration  of any  Registrable  Securities,  the  Company
     shall, as expeditiously as reasonably possible:

               (a) Prepare and file with the SEC a  registration  statement with
          respect to such  Registrable  Securities  and use its best  efforts to
          cause such registration  statement to become effective,  and keep such
          registration  statement  effective  for a period of up to one  hundred
          twenty  (120)  days or  until  the  distribution  contemplated  in the
          Registration  Statement has been  completed,  whichever  first occurs;
          provided, however, that such one hundred twenty (120) day period shall
          be  extended  for a period  of time  equal to the  period  the  Holder
          refrains from selling any securities  included in such registration at
          the request of an underwriter of Common Stock (or other securities) of
          the Company, and provided further that in the case of any registration
          of Registrable  Securities on Form S-3 that are intended to be offered
          on a continuous or delayed  basis,  such one hundred  twenty (120) day
          period shall be extended  until all such  Registrable  Securities  are
          sold,  if applicable  rules under the Act governing the  obligation to
          file  a  post-effective   amendment   permit,  in  lieu  of  filing  a
          post-effective amendment which (i) includes any prospectus required by

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          Section  10(a)(3)  of  the  Act  or  (ii)  reflects  facts  or  events
          representing a material or fundamental  change in the  information set
          forth in the registration statement, the incorporation by reference of
          information  required  to be  included  in (i) and  (ii)  above  to be
          contained in periodic reports filed pursuant to Section 13 or 15(d) of
          the 1934 Act in the registration statement.

               (b) Prepare and file with the SEC such amendments and supplements
          to such  registration  statement and the prospectus used in connection
          with such registration  statement as, in the opinion of counsel to the
          Company,  may be  necessary to comply with the  provisions  of the Act
          with  respect to the  disposition  of all  securities  covered by such
          registration statement.

               (c)  Furnish  to  the  Holders   such  numbers  of  copies  of  a
          prospectus, including a preliminary prospectus, in conformity with the
          requirements  of the  Act,  and  such  other  documents  as  they  may
          reasonably   request  in  order  to  facilitate  the   disposition  of
          Registrable Securities owned by them.

               (d) Use its best efforts to register  and qualify the  securities
          covered by such registration  statement under such other securities or
          Blue Sky laws of such  jurisdictions as shall be reasonably  requested
          by the  Holders;  provided  that the Company  shall not be required in
          connection  therewith  or as a  condition  thereto  to  qualify  to do
          business  or to file a general  consent  to  service of process in any
          such states or jurisdictions, unless the Company is already subject to
          service in such jurisdiction and except as may be required by the Act.

               (e) In the event of any underwritten public offering,  enter into
          and perform its obligations under an underwriting  agreement, in usual
          and customary  form,  with the managing  underwriter of such offering.
          Each Holder  participating in such underwriting  shall also enter into
          and perform its obligations under such an agreement.

               (f) Notify each Holder of Registrable  Securities covered by such
          registration  statement at any time when a prospectus relating thereto
          is  required to be  delivered  under the Act of the  happening  of any
          event  as  a  result  of  which  the   prospectus   included  in  such
          registration   statement,  as  then  in  effect,  includes  an  untrue
          statement  of a  material  fact or  omits  to  state a  material  fact
          required  to be stated  therein or  necessary  to make the  statements
          therein  not  misleading  in  the  light  of  the  circumstances  then
          existing.

               (g) Cause all such  Registrable  Securities  registered  pursuant
          hereunder to be listed on each  securities  exchange on which  similar
          securities issued by the Company are then listed.

               (h) Provide a transfer  agent and registrar  for all  Registrable
          Securities  registered  pursuant  hereunder and a CUSIP number for all
          such Registrable Securities, in each case not later than the effective
          date of such registration.

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               (i) Use its  best  efforts  to  furnish,  on the date  that  such
          Registrable  Securities are delivered to the  underwriters for sale in
          connection with the  registration  pursuant to this Section 1, if such
          Registrable  Securities  are being sold through  underwriters,  (i) an
          opinion,  dated such date, of counsel representing the Company for the
          purposes of such registration, in form and substance as is customarily
          given to underwriters in an underwritten public offering, addressed to
          the  underwriters,  and  (ii) a  letter,  dated  such  date,  from the
          independent  certified public accountants of the Company,  in form and
          substance as is  customarily  given by  independent  certified  public
          accountants  to  underwriters  in  an  underwritten  public  offering,
          addressed to the underwriters.

          1.5  Furnish  Information.  It shall be a condition  precedent  to the
               --------------------
     obligations  of the Company to take any action  pursuant to this  Section 1
     with respect to the Registrable  Securities of any selling Holder that such
     Holder shall furnish to the Company such information  regarding itself, the
     Registrable  Securities  held by it, and the intended method of disposition
     of such securities as shall be required to effect the  registration of such
     Holder's Registrable Securities.

          1.6  Expenses  of  Demand   Registration.   All  expenses  other  than
               -----------------------------------
     underwriting   discounts  and  commissions   incurred  in  connection  with
     registrations, filings or qualifications pursuant to Section 1.2, including
     (without  limitation)  all  registration,  filing and  qualification  fees,
     printers' and accounting  fees, fees and  disbursements  of counsel for the
     Company and the reasonable  fees and  disbursements  of one counsel for the
     selling Holders shall be borne by the Company;  provided,  that the Company
     shall not be  responsible  for fees and  disbursements  of counsel  for the
     selling Holders to the extent that they exceed $5,000.

          1.7  Expenses of Company Registration.  The Company shall bear and pay
               --------------------------------
     all  expenses  incurred  in  connection  with any  registration,  filing or
     qualification of Registrable  Securities with respect to the  registrations
     pursuant to Section 1.3 for each Holder, including (without limitation) all
     registration, filing, and qualification fees, printers' and accounting fees
     relating or apportionable  thereto and, for one such registration only, the
     reasonable fees and  disbursements  of one counsel for the selling Holders,
     but  excluding   underwriting   discounts  and   commissions   relating  to
     Registrable Securities.

          1.8  Underwriting  Requirements.   In  connection  with  any  offering
               --------------------------
     involving an underwriting of shares of the Company's capital stock pursuant
     to Section  1.3,  the Company  shall not be required  under  Section 1.3 to
     include  any of a Holder's  securities  in such  underwriting  unless  such
     Holder  accepts the terms of the  underwriting  as agreed upon  between the
     Company and the  underwriters  (or by other persons  entitled to select the
     underwriters), and then only in such quantity as the underwriters determine
     in their sole discretion will not jeopardize the success of the offering by
     the  Company.  If the total  amount of  securities,  including  Registrable
     Securities,  requested  by  stockholders  and the Company to be included in
     such  offering  exceeds  the  amount of  securities  that the  underwriters
     determine in their sole  discretion is  compatible  with the success of the
     offering, then the following priorities shall govern:


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               (a)  If the  underwritten  offering  has  been  initiated  by the
          Company, the Company shall include in such underwriting (x) first, the
          securities the Company  proposes to sell, (y) second,  the Registrable
          Securities,   any  other   securities   entitled  to  the  benefit  of
          registration  rights  existing on the date of this  Agreement  ("Third
          Party  Registrable  Securities")  requested  to be  included  in  such
          registration  and up to 15% of the then  outstanding  shares of Common
          Stock to the  extent  that  such  shares  are  owned by  directors  or
          employees of the Company ("Management Registrable Securities") and are
          requested to be included in such registration,  pro rata to the extent
          practicable,  on the basis of the  number of  Registrable  Securities,
          Third  Party   Registrable   Securities  and  Management   Registrable
          Securities requested to be registered among the participating  holders
          of such  securities,  and (z) third, any other  securities,  including
          Management Registrable Securities that exceed the 15% threshold above,
          requested to be included in such registration,  all as is necessary in
          the opinion of the managing  underwriter(s)  to reduce the size of the
          offering; and

               (b) If the underwritten offering has been initiated by any holder
          of Third Party Registrable  Securities  entitled to the benefit of any
          duly exercised demand registration right, the Company shall include in
          such  underwriting (x) first, the securities  requested to be included
          therein by the holder of Third Party Registrable Securities requesting
          such  registration,  (y) second,  the  Registrable  Securities and any
          other Third Party  Registrable  Securities or  Management  Registrable
          Securities  (provided,  that such  Management  Registrable  Securities
          shall not exceed 15% of the then  outstanding  shares of Common Stock)
          requested to be included in such registration,  pro rata to the extent
          practicable,  on the basis of the number of Registrable Securities and
          such  other  Third  Party   Registrable   Securities   and  Management
          Registrable   Securities   requested  to  be   registered   among  the
          participating  holders of such  securities,  and (z) third,  any other
          securities,  including Management  Registrable  Securities that exceed
          the  15%   threshold   above,   requested   to  be  included  in  such
          registration,  all as is  necessary  in the  opinion  of the  managing
          underwriter(s) to reduce the size of the offering.

          1.9  Indemnification.  In the event  any  Registrable  Securities  are
               ---------------
     included in a registration statement under this Section 1:

               (a) To the extent  permitted by law,  the Company will  indemnify
          and hold  harmless  each Holder,  the  officers and  directors of each
          Holder participating in such registration, any underwriter (as defined
          in the Act) for such Holder and each person, if any, who controls such
          Holder or  underwriter  within the meaning of the Act or the 1934 Act,
          against any losses, claims, damages, or liabilities (joint or several)
          to which they may become subject under the Act or state securities and
          blue sky laws, or otherwise insofar as such losses,  claims,  damages,
          or  liabilities  (or actions in respect  thereof)  arise out of or are
          based upon any of the  following  statements,  omissions or violations
          (collectively  a  "Violation"):  (i) any untrue  statement  or alleged
          untrue  statement of a material  fact  contained in such  registration
          statement,  including any preliminary  prospectus or final  prospectus
          contained  therein or any  amendments or  supplements  thereto and any

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          document  filed in  connection  therewith  or in  connection  with any
          registration or qualification  under the state securities and blue sky
          laws,  (ii) the  omission  or  alleged  omission  to state  therein  a
          material fact required to be stated therein,  or necessary to make the
          statements  therein not misleading,  or (iii) any violation or alleged
          violation by the Company of the Act or state  securities  and blue sky
          laws or any  rule or  regulation  promulgated  under  the Act or state
          securities  and blue sky laws and the  Company  will pay to each  such
          Holder,  underwriter or controlling person, as incurred,  any legal or
          other  expenses   reasonably  incurred  by  them  in  connection  with
          investigating or defending any such loss,  claim,  damage,  liability,
          expense or action;  provided,  however,  that the Company shall not be
          liable in any such case for any such loss, claim,  damage,  liability,
          or  action to the  extent  that it  arises  out of or is based  upon a
          Violation which occurs in reliance upon and in strict  conformity with
          written  information  furnished  expressly for use in connection  with
          such  registration  by any such  Holder,  underwriter  or  controlling
          person.

               (b)  To the  extent  permitted  by  law,  each  Holder  will,  if
          Registrable  Securities  held  by  such  Holder  are  included  in the
          securities as to which  registration is being effected,  indemnify and
          hold harmless the Company, each of its directors, each of its officers
          who has signed the registration  statement,  each person,  if any, who
          controls the Company  within the meaning of the Act, any  underwriter,
          any other Holder selling securities in such registration statement and
          any  controlling  person  of any such  underwriter  or  other  Holder,
          against any losses, claims, damages, or liabilities (joint or several)
          to which any of the foregoing  persons may become  subject,  under the
          Act,  insofar as such losses,  claims,  damages,  or  liabilities  (or
          actions  in  respect  thereto)  arise  out of or are  based  upon  any
          Violation,  in each case to the extent (and only to the  extent)  that
          such Violation  occurs in reliance upon and in strict  conformity with
          written  information  furnished  by such Holder  expressly  for use in
          connection  with  such  registration;   provided,  however,  that  the
          indemnity  agreement  contained  in this  Subsection  1.9(b) shall not
          apply to amounts paid in settlement of any such loss,  claim,  damage,
          liability or action if such settlement is effected without the consent
          of the Holder, which consent shall not be unreasonably  withheld;  and
          provided,  further,  that  in no  event  shall  any  selling  Holder's
          liability under this Subsection 1.9(b) exceed the proceeds received by
          such Holder from the offering (net of any  underwriting  discounts and
          commissions).

               (c) Promptly  after  receipt by an  indemnified  party under this
          Section 1.9 of notice of the commencement of any action (including any
          governmental  action),  such  indemnified  party  will,  if a claim in
          respect  thereof is to be made  against any  indemnifying  party under
          this Section 1.9, deliver to the  indemnifying  party a written notice
          of the commencement  thereof and the indemnifying party shall have the
          right to participate in, and, to the extent the indemnifying  party so
          desires,  jointly with any other indemnifying party similarly noticed,
          to assume the defense  thereof with counsel  mutually  satisfactory to
          the parties;  provided,  however,  that an indemnified party (together
          with all other  indemnified  parties which may be represented  without
          conflict by one  counsel)  shall have the right to retain one separate


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<PAGE>
          counsel,  with the fees and  expenses  to be paid by the  indemnifying
          party,  if  representation  of such  indemnified  party by the counsel
          retained  by the  indemnifying  party  would be  inappropriate  due to
          differing interests between such indemnified party and any other party
          represented by such counsel in such proceeding. The failure to deliver
          written notice to the  indemnifying  party within a reasonable time of
          the commencement of any such action,  if prejudicial to its ability to
          defend such  action,  shall  relieve  such  indemnifying  party of its
          liability  under this  Section  1.9, but (i) only to the extent of the
          liability  actually  resulting  from the  failure to  deliver  written
          notice  and (ii) the  omission  so to  deliver  written  notice to the
          indemnifying  party will not relieve it of any  liability  that it may
          have to any  indemnified  party otherwise than under this Section 1.9.
          The indemnifying party will not be subject to any liability under this
          Section 1.9 for any settlement made by the  indemnified  party without
          its consent (which consent shall not be unreasonably withheld).

               (d) If the  indemnification  provided  for in this Section 1.9 is
          held by a court of  competent  jurisdiction  to be  unavailable  to an
          indemnified party with respect to any loss, liability,  claim, damage,
          or expense referred to therein,  then the indemnifying  party, in lieu
          of indemnifying such indemnified party hereunder,  shall contribute to
          the amount  paid or payable by such  indemnified  party as a result of
          such loss, liability,  claim, damage, or expense in such proportion as
          is appropriate to reflect the relative fault of the indemnifying party
          on the  one  hand  and of  the  indemnified  party  on  the  other  in
          connection  with the  statements  or omissions  that  resulted in such
          loss,  liability,  claim,  damage,  or  expense  as well as any  other
          relevant   equitable   considerations.   The  relative  fault  of  the
          indemnifying party and of the indemnified party shall be determined by
          reference to, among other things, whether the untrue or alleged untrue
          statement of a material  fact or the omission to state a material fact
          relates to information  supplied by the  indemnifying  party or by the
          indemnified party and the parties' relative intent, knowledge,  access
          to  information,  and opportunity to correct or prevent such statement
          or  omission;  provided,  that in no event shall any selling  Holder's
          liability  under this Section  1.9(d) exceed the proceeds  received by
          such Holder from the offering (net of any  underwriting  discounts and
          commissions).

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

               (f) The obligations of the Company and Holders under this Section
          1.9 shall  survive  the  completion  of any  offering  of  Registrable
          Securities  in a  registration  statement  under  this  Section 1, and
          otherwise.

          1.10  Reports Under  Securities  Exchange Act of 1934.  With a view to
                -----------------------------------------------
     making available to the Holders the benefits of Rule 144 promulgated  under
     the Act and any other  rule or  regulation  of the SEC that may at any time


                                       11
<PAGE>

     permit a Holder to sell  securities  of the  Company to the public  without
     registration  or pursuant to a registration on Form S-3, the Company agrees
     to use its best efforts to:

               (a)  make and keep public  information  available, as those terms
          are understood and defined in SEC Rule 144;

               (b)  file  with  the SEC in a  timely  manner  and  make and keep
          available  all  reports  and other  documents  required of the Company
          under the Act and the 1934 Act so long as the Company  remains subject
          to  such  requirements  and  the  filing  of such  reports  and  other
          documents is required for the applicable provisions of Rule 144; and

               (c)  furnish  to any  Holder,  so long  as the  Holder  owns  any
          Registrable  Securities,  forthwith upon written request (i) a written
          statement  by the  Company  as to its  compliance  with the  reporting
          requirements of SEC Rule 144, the Act and the 1934 Act, (ii) a copy of
          the most  recent  annual or  quarterly  report of the Company and such
          other  reports and  documents so filed by the Company,  and (iii) such
          other  information  as may be  reasonably  requested  in availing  any
          Holder of any rule or  regulation of the SEC which permits the selling
          of any such securities without registration or pursuant to such form.

          1.11  Form S-3 Registration.  In case the Company shall receive at any
                ----------------------
     time after the completion of the first registration  statement for a public
     offering of securities of the Company (other than a registration  statement
     relating  either to the sale of  securities  to  employees  of the  Company
     pursuant to a stock option,  stock  purchase or similar plan or an SEC Rule
     145  transaction),  a written  request  from the Holders of at least twenty
     five percent (25%) of the Registrable  Securities then outstanding that the
     Company effect a registration on Form S-3 and any related  qualification or
     compliance  with  respect  to all or a part of the  Registrable  Securities
     owned by such Holder or Holders, the Company will:

               (a)  promptly give written  notice of the proposed  registration,
          and any related qualification or compliance, to all other Holders; and

               (b)  as soon as practicable,  use its best efforts to effect such
          registration and all such  qualifications and compliances as may be so
          requested and as would permit or facilitate the sale and  distribution
          of all or  such  portion  of such  Holder's  or  Holders'  Registrable
          Securities as are specified in such request, together with all or such
          portion of the  Registrable  Securities of any other Holder or Holders
          joining in such request as are  specified in a written  request  given
          within twenty (20) days after receipt of such written  notice from the
          Company; provided, however, that the Company shall not be obligated to
          effect any such registration, qualification or compliance, pursuant to
          this Section 1.11:  (1) if Form S-3 is not available for such offering
          by the Holders;  or (2) in any  particular  jurisdiction  in which the
          Company  would be  required  to qualify to do business or to execute a
          general consent to service of process in effecting such  registration,
          qualification  or compliance;  (3) if, during any twelve month period,
          the Company has already  effected two  registrations  pursuant to this
          Section  1.11;  or (4)  during  the  periods  set  forth  in  Sections


                                       12
<PAGE>

          1.2(c)(v) and (vi), if the  provisions of such sections are applicable
          to such proposed registration.

               (c)  Subject  to  the   foregoing,   the  Company  shall  file  a
          registration  statement covering the Registrable  Securities and other
          securities so requested to be registered as soon as practicable  after
          receipt of the  request  or  requests  of the  Holders.  All  expenses
          incurred in connection with a registration  requested pursuant to this
          Section 1.11, including, without limitation, all registration, filing,
          qualification,  printers' and accounting fees, the reasonable fees and
          disbursements of one (1) counsel for the selling Holder or Holders and
          the fees and  disbursements of counsel for the Company,  but excluding
          any underwriting  discounts or commissions associated with Registrable
          Securities,  shall be borne by the Company; provided, that the Company
          shall not be responsible for fees and disbursements of counsel for the
          selling Holders to the extent that they exceed $15,000.  Registrations
          effected  pursuant  to this  Section  1.11  shall  not be  counted  as
          registrations effected pursuant to Sections 1.2 or 1.3.

          1.12  Assignment  of  Registration  Rights.  The  rights  to cause the
                ------------------------------------
     Company to register  Registrable  Securities pursuant to this Section 1 may
     be  assigned  (but only with all  related  obligations)  by a Holder to any
     transferee  or  assignee  who  acquires  at  least  25% of the  Registrable
     Securities  held by such  Holder  immediately  prior  to such  transfer  or
     assignment,  provided:  (a) the Company is, within a reasonable  time after
     such  transfer,  furnished  with written  notice of the name and address of
     such  transferee or assignee and the securities  with respect to which such
     registration rights are being assigned; and (b) such transferee or assignee
     agrees in writing to be bound by and subject to the terms and conditions of
     this  Agreement.  In no event shall the Company be obligated to effect more
     than one (1)  registration  pursuant to Section 1.2 hereof in the aggregate
     except as otherwise provided in Section 1.2(c)(ii) hereof.  Notwithstanding
     anything herein to the contrary,  the Investor shall be permitted to assign
     the rights to cause the Company to register Registrable Securities pursuant
     to this Section 1 to certain  assignees of the Investor who may participate
     in the initial purchase of the Common Stock.

          1.13  "Market Stand-Off"  Agreement.  The Investors hereby agree that,
                -----------------------------
     during the period of duration  specified by the Company and an  underwriter
     of Common Stock or other securities of the Company, following the effective
     date of a  registration  statement  of the Company  filed under the Act, it
     shall not, to the extent  requested  by the  Company and such  underwriter,
     directly or indirectly  sell,  offer to sell,  contract to sell (including,
     without  limitation,  any short  sale),  grant any  option to  purchase  or
     otherwise  transfer  or  dispose  of (other  than to donees who agree to be
     similarly  bound)  any  securities  of the  Company  held by it at any time
     during such  period  except  Common  Stock  included in such  registration;
     provided, however:

               (a) that such market  stand-off  time period shall not exceed one
          hundred  eighty  (180)  days  following  the  effective  date  of  the
          Company's  registration of Common Stock or other  securities under the
          Act; and


                                       13
<PAGE>

               (b) all  officers  and  directors  of the  Company  and all  five
          percent (5%) or greater stockholders of the Company enter into similar
          agreements.  In order to enforce the foregoing  covenant,  the Company
          may impose stop-transfer  instructions with respect to the Registrable
          Securities  of the  Investors  (and the shares or  securities of every
          other person  subject to the foregoing  restriction)  until the end of
          such period.

     2.   COVENANTS OF THE COMPANY.

          2.1 Positive Covenants.  So long as any shares of the Common Stock are
              ------------------
     outstanding, the Company agrees as follows:

               (a) The Company  will  retain  Ernst & Young LLP or, in the event
          Ernst & Young LLP is terminated by the Company, such other independent
          public  accountants  reasonably  acceptable  to the  Investors  in its
          discretion who shall certify the Company's financial statements at the
          end of each fiscal year. In the event the services of the  independent
          public  accountants  so selected,  or any firm of  independent  public
          accountants  hereafter  employed by the Company  are  terminated,  the
          Company will promptly thereafter notify the Investors and will request
          the  firm  of  independent   public  accountants  whose  services  are
          terminated to deliver to the Investors a letter from such firm setting
          forth the reasons for the termination of their services.  In the event
          of such  termination,  the Company  will  promptly  thereafter  engage
          another firm of independent public accountants of recognized  national
          standing.  In its notice to the  Investors  the  Company  shall  state
          whether the change of accountants  was  recommended or approved by the
          Board of Directors of the Company or any committee thereof.

               (b) The Company  shall  maintain in full force and effect,  fire,
          casualty,  workmen's  compensation and liability  insurance  policies,
          with extended coverage,  in such amounts and with such coverage as are
          carried by companies in a position similar to that of the Company.

          2.2  Negative Covenants. The Company shall not without first obtaining
               ------------------
     the written consent of the Investors:

               (a) engage in any spin-out,  distribution or sale of any business
          unit of the Company;

               (b) enter into any  transactions  with  affiliates of the Company
          except on arms-length terms; or

               (c) redeem or repurchase any outstanding equity securities of the
          Company except for:  repurchases  of unvested or restricted  shares of
          Common Stock at cost from  employees,  consultants,  or members of the
          Board of Directors  pursuant to repurchase  options of the Company (i)
          currently  outstanding  or (ii)  hereafter  entered into pursuant to a
          stock option plan or  restricted  stock plan approved by the Company's
          Board of Directors.

                                       14
<PAGE>

          3.  MISCELLANEOUS.

          3.1  Successors and Assigns.  Except as otherwise provided herein, the
               ----------------------
     terms and conditions of this Agreement shall inure to the benefit of and be
     binding  upon  the  respective   successors  and  assigns  of  the  parties
     (including transferees of any shares of Registrable Securities). Nothing in
     this  Agreement,  express or implied,  is intended to confer upon any party
     other than the parties  hereto or their  respective  successors and assigns
     any rights,  remedies,  obligations,  or liabilities  under or by reason of
     this Agreement, except as expressly provided in this Agreement.

          3.2  Governing Law.  This Agreement shall be governed by and construed
               -------------
     under the laws of the State of North Carolina,  disregarding North Carolina
     principles  of  conflicts  of laws which  would  otherwise  provide for the
     application of the substantive laws of another jurisdiction.

          3.3  Counterparts.  This  Agreement  may be  executed  in two or  more
               ------------
     counterparts,  each of which shall be deemed an original,  but all of which
     together shall constitute one and the same instrument.


          3.4  Titles and  Subtitles.  The  titles  and  subtitles  used in this
               ---------------------
     Agreement  are used for  convenience  only and are not to be  considered in
     construing or interpreting this Agreement.

          3.5  Notices.  Unless  otherwise  provided,  any  notice  required  or
               -------
     permitted  under  this  Agreement  shall be given in  writing  and shall be
     deemed effectively given upon personal delivery to the party to be notified
     upon delivery by  registered or certified  mail,  postage  prepaid,  return
     receipt  requested and addressed to the party to be notified at the address
     indicated  for such party on the  signature  page hereof,  or at such other
     address  as such party may  designate  by ten (10)  days'  advance  written
     notice to the other parties with a copy for the Company to:

                  Kilpatrick Stockton LLP
                  3737 Glenwood Avenue
                  Raleigh, NC  27612
                  Attention:  Jim Verdonik, Esq.,

          3.6  Expenses.  If any  action  at law or in equity  is  necessary  to
               --------
     enforce or interpret  the terms of this  Agreement,  the  prevailing  party
     shall be entitled to reasonable  attorneys' fees actually  incurred,  costs
     and necessary  disbursements  in addition to any other relief to which such
     party may be entitled.

          3.7 Amendments and Waivers.  Any term of this Agreement may be amended
              ----------------------
     and the  observance  of any term of this  Agreement  may be waived  (either
     generally  or  in  a  particular  instance  and  either   retroactively  or
     prospectively),  only  with the  written  consent  of the  Company  and the
     holders of a majority of the Registrable  Securities then outstanding.  Any
     amendment or waiver  effected in accordance  with this Section 3.7 shall be


                                       15

<PAGE>

     binding upon each holder of any Registrable  Securities  then  outstanding,
     each future holder of all such Registrable Securities, and the Company.

          3.8 Severability. If one or more provisions of this Agreement are held
              ------------
     to be unenforceable  under applicable law, such provision shall be excluded
     from this  Agreement and the balance of the Agreement  shall be interpreted
     as if  such  provision  were  so  excluded  and  shall  be  enforceable  in
     accordance with its terms.

          3.9  Entire Agreement.  This Agreement constitutes the full and entire
               ----------------
     understanding and agreement between the parties with regard to the subjects
     hereof.


                                       16
<PAGE>


         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first above written.

                                           IENTERTAINMENT NETWORK, INC.

                                           By: /s/ Michael C. Pearce
                                               ---------------------
                                           Name:    Michael C. Pearce
                                           Title:   Chief Executive Officer
                                           Address:  215 Southport Drive
                                           Suite 1000
                                           Morrisville, NC  27560


                                           VERTICAL FINANCIAL HOLDINGS

                                           By:  /s/ Jacob Agam
                                               ---------------
                                           Name:    Jacob Agam
                                           Title:   Chairman
                                           Address:  Vertical Financial Holdings
                                           C/o Orida Capital USA, Inc.
                                           70 East 55th Street, 24th Floor
                                           New York, NY  10022
                                           Attn.:  Marc S. Goldfarb

</TEXT>
</DOCUMENT>
