NONE OF THE SECURITIES TO WHICH THIS AGREEMENT (THE "AGREEMENT") RELATES HAVE
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE
MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED
HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

ADVISORY FEE PAYMENT AND SUBSCRIPTION AGREEMENT

This ADVISORY FEE PAYMENT AND SUBSCRIPTION AGREEMENT (the "Agreement") is made
as of February 24, 2004, by and between Internetstudios.com, Inc. (the
"Company"), whose business address is 1601 Cloverfield Boulevard, Santa Monica,
California 90403, and InCap Group, Inc. ("InCap"), whose business address is 320
North Charles Street, Baltimore, Maryland 21201.

RECITALS

WHEREAS:

A. The parties have entered into an Advisory Agreement dated as of January 9,
2004 (the "Advisory Agreement"), pursuant to which InCap has agreed to act as a
non-exclusive advisor to the Company in raising new equity and/or debt
financing, and, in partial consideration for such services (the "Services"), the
Company has agreed to pay to InCap a non-refundable retainer in the amount of
$10,000 per month for the first two months in shares of the Company's common
stock (the "Retainer Fee"); and

B. The Company has agreed to issue 20,000 shares of its common stock (the
"Shares") representing the Retainer Fee for the second month of the Advisory
Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

1. Issuance of the Shares

1.1 In consideration for the Services provided to the Company under the Advisory
Agreement, the Company hereby grants to InCap 20,000 Shares.

1.2 The Company agrees to issue to InCap a certificate representing the Shares
as soon as practicable following delivery by InCap to the Company of two
fully-executed copies of this Agreement and a Prospective Investor Suitability
Questionnaire in the form attached as Appendix 1 (the "Questionnaire").

2. Acknowledgements of InCap

2.1 InCap acknowledges and agrees that:

(a) none of the Shares have been registered under the 1933 Act, or under any
state securities or "blue sky" laws of any state of the United States, and,
unless so registered, may not be offered or sold in the United States or,
directly or indirectly, to U.S. Persons, as that term is defined in Regulation S
under the 1933 Act ("Regulation S"), except in accordance with the provisions of
Regulation S, pursuant to an effective registration statement under the 1933
Act, or pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the 1933 Act;

(b) the Company has not undertaken, and will have no obligation, to register any
of the Shares under the 1933 Act;

(c) the decision to execute this Agreement and acquire the Shares hereunder has
not been based upon any oral or written representation as to fact or otherwise
made by or on behalf of the Company, and such decision is based entirely upon a
review of information (the receipt of which is hereby acknowledged) which has
been filed by the Company with the United States Shares and Exchange Commission
and in compliance, or intended compliance, with applicable securities
legislation (collectively, the "Public Record");

(d) if the Company has presented a business plan to InCap, InCap acknowledges
that the business plan may not be achieved or be achievable;

(e) no securities commission or similar regulatory authority has reviewed or
passed on the merits of the Shares;

(f) there is no government or other insurance covering the Shares;

(g) InCap and its advisor(s) have had a reasonable opportunity to ask questions
of and receive answers from the Company in connection with the distribution of
the Shares hereunder, and to obtain additional information, to the extent
possessed or obtainable without unreasonable effort or expense, necessary to
verify the accuracy of the information about the Company;

(h) the books and records of the Company were available upon reasonable notice
for inspection, subject to certain confidentiality restrictions, by InCap during
reasonable business hours at its principal place of business, and all documents,
records and books in connection with the distribution of the Shares hereunder
have been made available for inspection by InCap, its attorney and/or
advisor(s);

(j) the Company is entitled to rely on the representations and warranties and
the statements and answers of InCap contained in this Agreement and in the
Questionnaire;

(j) InCap will indemnify and hold harmless the Company and, where applicable,
its directors, officers, employees, agents, advisors and shareholders, from and
against any and all loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all fees, costs and expenses whatsoever
reasonably incurred in investigating, preparing or defending against any claim,
lawsuit, administrative proceeding or investigation whether commenced or
threatened) arising out of or based upon any representation or warranty of InCap
contained herein or in any document furnished by InCap to the Company in
connection herewith (including, without limitation, the Questionnaire) being
untrue in any material respect or any breach or failure by InCap to comply with
any covenant or agreement made by InCap to the Company in connection therewith;

(k) none of the Shares are listed on any stock exchange or automated dealer
quotation system and no representation has been made to InCap that any of the
Shares will become listed on any stock exchange or automated dealer quotation
system; except that currently the common shares of the Company are quoted for
trading on the OTC Bulletin Board;

(l) offers and sales of any of the Shares prior to the expiration of a period of
one year after the date of issuance of such Shares (the "Restricted Period")
shall only be made in compliance with the safe harbor provisions set forth in
Regulation S, pursuant to the registration provisions of the 1933 Act or an
exemption therefrom, and that all offers and sales after the Restricted Period
shall be made only in compliance with the registration provisions of the 1933
Act or an exemption therefrom;

(m) the Company will refuse to register any transfer of the Shares not made in
accordance with the provisions of Regulation S, pursuant to an effective
registration statement under the 1933 Act or pursuant to an available exemption
from the registration requirements of the 1933 Act; and

(n) InCap has been advised to consult InCap's own legal, tax and other advisors
with respect to the merits and risks of an investment in the Shares and with
respect to applicable resale restrictions, and it is solely responsible (and the
Company is not in any way responsible) for compliance with applicable resale
restrictions.

3.1 Representations, Warranties and Covenants of InCap

3.1 InCap hereby represents and warrants to and covenants with the Company
(which representations, warranties and covenants shall survive the closing)
that:

(a) InCap is resident in the United States;

(b) InCap has received and carefully read this Agreement;

(c) InCap is duly incorporated and validly subsisting under the laws of its
jurisdiction of incorporation and all necessary approvals by its directors,
shareholders and others have been obtained to authorize execution and
performance of this Agreement on behalf of InCap;

(d) InCap has the legal capacity and competence to enter into and execute this
Agreement and to take all actions required pursuant hereto;

(e) InCap has duly executed and delivered this Agreement and it constitutes a
valid and binding agreement of InCap enforceable against InCap;

(f) the entering into of this Agreement and the transactions contemplated hereby
do not result in the violation of any of the terms and provisions of any law
applicable to, or, if applicable, the constating documents of, InCap, or of any
agreement, written or oral, to which InCap may be a party or by which InCap is
or may be bound;

(g) InCap (i) has adequate net worth and means of providing for its current
financial needs and possible personal contingencies, (ii) has no need for
liquidity in this investment, and (iii) is able to bear the economic risks of an
investment in the Shares for an indefinite period of time, and can afford the
complete loss of such investment;

(h) InCap is aware that an investment in the Company is speculative and involves
certain risks, including the possible loss of the investment, and InCap has
carefully read and considered the matters set forth under the caption "Risk
Factors" appearing in the Company's most recent annual report on Form 10-K filed
with the SEC;

(i) InCap has the requisite knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the investment in
the Shares and the Company, and InCap is providing evidence of such knowledge
and experience in these matters through the information requested in the
Questionnaire;

(j) InCap understands and agrees that the Company and others will rely upon the
truth and accuracy of the acknowledgements, representations and agreements
contained in this Agreement and the Questionnaire, and agrees that if any of
such acknowledgements, representations and agreements are no longer accurate or
have been breached, InCap shall promptly notify the Company;

(k) all information contained in the Questionnaire is complete and accurate and
may be relied upon by the Company, and InCap will notify the Company immediately
of any material change in any such information occurring prior to the closing of
the purchase of the Shares;

(l) InCap is purchasing the Shares for its own account for investment purposes
only and not for the account of any other person and not for distribution,
assignment or resale to others, and no other person has a direct or indirect
beneficial interest in such Shares, and InCap has not subdivided its interest in
the Shares with any other person;

(m) InCap is not an underwriter of, or dealer in, the common shares of the
Company, nor is InCap participating, pursuant to a contractual agreement or
otherwise, in the distribution of the Shares;

(n) InCap has made an independent examination and investigation of an investment
in the Shares and the Company and has depended on the advice of its legal and
financial advisors and agrees that the Company will not be responsible in anyway
whatsoever for InCap's decision to invest in the Shares and the Company;

(o) if InCap is acquiring the Shares as a fiduciary or agent for one or more
investor accounts, the investor accounts for which InCap acts as a fiduciary or
agent satisfy the definition of an "Accredited Investor", as the term is defined
under Regulation D of the 1933 Act;

(p) if InCap is acquiring the Shares as a fiduciary or agent for one or more
investor accounts, InCap has sole investment discretion with respect to each
such account, and InCap has full power to make the foregoing acknowledgements,
representations and agreements on behalf of such account;

(q) InCap is not aware of any advertisement of any of the Shares and is not
acquiring the Shares as a result of any form of general solicitation or general
advertising including advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast over radio or
television, or any seminar or meeting whose attendees have been invited by
general solicitation or general advertising; and

(r) no person has made to InCap any written or oral representations:

(i) that any person will resell or repurchase any of the Shares;

(ii) that any person will refund the purchase price of any of the Shares; or

(iii) as to the future price or value of any of the Shares.

3.2 In this Agreement, the term "U.S. Person" shall have the meaning ascribed
thereto in Regulation S and for the purpose of the Agreement includes any person
in the United States.

4. Acknowledgement and Waiver

4.1 InCap has acknowledged that the decision to purchase the Shares was solely
made on the basis of publicly available information contained in the Public
Record. InCap hereby waives, to the fullest extent permitted by law, any rights
of withdrawal, rescission or compensation for damages to which InCap might be
entitled in connection with the distribution of any of the Shares.

5. Legending of Subject Shares

5.1 InCap hereby acknowledges that that upon the issuance thereof, and until
such time as the same is no longer required under the applicable securities laws
and regulations, the certificates representing any of the Shares will bear
legends in substantially the following forms:

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE
SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS.

5.2 InCap hereby acknowledges and agrees to the Company making a notation on its
records or giving instructions to the registrar and transfer agent of the
Company in order to implement the restrictions on transfer set forth and
described in this Agreement.

6. Costs

6.1 InCap acknowledges and agrees that all costs and expenses incurred by InCap
(including any fees and disbursements of any special counsel retained by InCap)
relating to the acquisition of the Shares shall be borne by InCap.

7. Governing Law

7.1 This Agreement is governed by the laws of the State of Nevada and the
federal laws of the United States applicable therein.

8. Survival

8.1 This Agreement, including without limitation the representations, warranties
and covenants contained herein, shall survive and continue in full force and
effect and be binding upon the parties hereto notwithstanding the completion of
the purchase of the Shares by InCap pursuant hereto.

9. Assignment

9.1 This Agreement is not transferable or assignable.

10. Counterparts and Electronic Means

10.1 This Agreement may be executed in several counterparts, each of which will
be deemed to be an original and all of which will together constitute one and
the same instrument. Delivery of an executed copy of this Agreement by
electronic facsimile transmission or other means of electronic communication
capable of producing a printed copy will be deemed to be execution and delivery
of this Agreement as of the date first above written.

11. Severability

11.1 The invalidity or unenforceability of any particular provision of this
Agreement shall not affect or limit the validity or enforceability of the
remaining provisions of this Agreement.

12. Entire Agreement

12.1 Except as expressly provided in this Agreement and in the agreements,
instruments and other documents contemplated or provided for herein, this
Agreement contains the entire agreement between the parties with respect to the
subject matter hereof and there are no other terms, conditions, representations
or warranties, whether expressed, implied, oral or written, by statute or common
law, by the Company or by anyone else.

IN WITNESS WHEREOF

the parties hereto have duly executed this Agreement as of the date first above
written.

INTERNETSTUDIOS.COM, INC.

INCAP GROUP, INC.

By:
/s/ Robert MacLean

By:
/s/ signed

APPENDIX 1

 

ACCREDITED INVESTOR QUESTIONNAIRE

All capitalized terms herein, unless otherwise defined, have the meanings
ascribed thereto in the Agreement.

This Questionnaire is for use by the undersigned US person (as that term is
defined Regulation S of the United States Securities Act of 1933 (the "1933
Act")) who has indicated an interest in acquiring Shares of InternetStudios.com,
Inc. ("ISTO"). The purpose of this Questionnaire is to assure ISTO that the
undersigned will meet the standards imposed by the 1933 Act and the appropriate
exemptions of applicable state securities laws. ISTO will rely on the
information contained in this Questionnaire for the purposes of such
determination. The Shares will not be registered under the 1933 Act in reliance
upon the exemption from registration afforded by Section 3(b) and/or Section
4(2) and Regulation D of the 1933 Act. This Questionnaire is not an offer of the
Shares or any other securities of ISTO in any state other than those
specifically authorized by ISTO.

All information contained in this Questionnaire will be treated as confidential.
However, by signing and returning this Questionnaire, the undersigned agrees
that, if necessary, this Questionnaire may be presented to such parties as ISTO
deems appropriate to establish the availability, under the 1933 Act or
applicable state securities law, of exemption from registration in connection
with the sale of the Shares under the Agreement.

The undersigned covenants, represents and warrants to ISTO that it satisfies one
or more of the categories of "Accredited Investors", as defined by Regulation D
promulgated under the 1933 Act, as indicated below: (Please initial in the space
provide those categories, if any, of an "Accredited Investor" which the
Subscriber satisfies)

Category 1

An organization described in Section 501(c)(3) of the United States Internal
Revenue Code, a corporation, a Massachusetts or similar business trust or
partnership, not formed for the specific purpose of acquiring the Shares, with
total assets in excess of US $5,000,000;

Category 2

A natural person whose individual net worth, or joint net worth with that
person's spouse, on the date of purchase exceeds US $1,000,000;

Category 3

A natural person who had an individual income in excess of US $200,000 in each
of the two most recent years or joint income with that person's spouse in excess
of US $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;

__________

Category 4

A "bank" as defined under Section (3)(a)(2) of the 1933 Act or savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the 1933
Act acting in its individual or fiduciary capacity; a broker dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934 (United States);
an insurance company as defined in Section 2(13) of the 1933 Act; an investment
company registered under the Investment Company Act of 1940 (United States) or a
business development company as defined in Section 2(a)(48) of such Act; a Small
Business Investment Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United
States); a plan with total assets in excess of $5,000,000 established and
maintained by a state, a political subdivision thereof, or an agency or
instrumentality of a state or a political subdivision thereof, for the benefit
of its employees; an employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974 (United States) whose investment
decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association, insurance company or
registered investment adviser, or if the employee benefit plan has total assets
in excess of $5,000,000, or, if a self-directed plan, whose investment decisions
are made solely by persons that are accredited investors;

Category 5

A private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940 (United States);

 

Category 6

A director or executive officer of ISTO;

Category 7

A trust with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Shares, whose purchase is directed by a sophisticated
person as described in Rule 506(b)(2)(ii) under the 1933 Act;

Category 8

An entity in which all of the equity owners satisfy the requirements of one or
more of the foregoing categories;

Note that the undersigned, in claiming to satisfy one of the above categories of
Accredited Investor, may be required to supply ISTO with a balance sheet, prior
years' federal income tax returns or other appropriate documentation to verify
and substantiate the undersigned's status as an Accredited Investor.

If the Subscriber is an entity which initialled Category 8 in reliance upon the
Accredited Investor categories above, state the name, address, total personal
income from all sources for the previous calendar year, and the net worth:

______________________________________________________________________________________

______________________________________________________________________________________

The undersigned hereby certifies that the information contained in this
Questionnaire is complete and accurate and the Subscriber will notify the
Company promptly of any change in any such information. If this Questionnaire is
being completed on behalf of a corporation, partnership, trust or estate, the
person executing on behalf of the undersigned represents that it has the
authority to execute and deliver this Questionnaire on behalf of such entity.

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the
_____ day of February, 2004.

If a Corporation, Partnership or Other Entity:

If an Individual:

INCAP GROUP, INC.

Print of Type Name of Entity

_________________________________
Signature of Authorized Signatory

_________________________________
Type of Entity

____________________________
Signature

____________________________
Print or Type Name

____________________________
Social Security/Tax I.D. No.