EXHIBIT 10.39

                            ASSET PURCHASE AGREEMENT


                                  BY AND AMONG


                            INTERACTIVE MAGIC, INC.,


                         VIRTUAL BUSINESS DESIGNS, INC.
                               DBA THE GAMERS NET

                                       AND

                                   DAVID HEATH


                                 August 27, 1999



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                                TABLE OF CONTENTS
1.       Definitions

2.       Basic Transaction

         (a)      Purchase and Sale of Assets
         (b)      Assumption of Liabilities
         (c)      Purchase Price
         (d)      The Closing
         (e)      Deliveries at the Closing
         (f)      Allocation

3.       Representations and Warranties of the Seller

         (a)      Organization of the Seller
         (b)      Authorization of Transaction
         (c)      Noncontravention
         (d)      Brokers' Fees
         (e)      Title to Assets
         (f)      Absence of Material Events
         (g)      Undisclosed Liabilities
         (h)      Legal Compliance
         (i)      Tax Matters
         (j)      Intellectual Property
         (k)      Contracts
         (l)      Powers of Attorney
         (m)      Insurance
         (n)      Litigation
         (o)      Product Warranty
         (p)      Product Liability
         (q)      Disclosure
         (r)      Investment
         (s)      Year 2000 Compliance

4.       Representations and Warranties of the Buyer

         (a)      Organization of the Buyer
         (b)      Authorization of Transaction
         (c)      Noncontravention
         (d)      Brokers' Fees

5.       Post-Closing Covenants

         (a)      General
         (b)      Litigation Support
         (c)      Transition

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         (d)      Confidentiality
         (e)      Buyer's Acquisition Shares

6.       Remedies for Breaches of This Agreement

         (a)      Survival of Representations and Warranties
         (b)      Indemnification Provisions for Benefit of the Buyer
         (c)      Indemnification Provisions for Benefit of the Seller
         (d)      Matters Involving Third Parties
         (e)      Determination of Adverse Consequences
         (f)      Other Indemnification Provisions

7.       Holdback Shares

         (a)      Purpose
         (b)      Adjustments
         (c)      Indemnification
         (d)      Termination of Holdback

8.       Miscellaneous

         (a)      Press Releases and Public Announcements
         (b)      No Third-Party Beneficiaries
         (c)      Entire Agreement
         (d)      Succession and Assignment
         (e)      Counterparts
         (f)      Headings
         (g)      Notices
         (h)      Governing Law
         (i)      Amendments and Waivers
         (j)      Severability
         (k)      Expenses
         (l)      Construction
         (m)      Incorporation of Exhibits and Schedules
         (n)      Specific Performance
         (o)      Submission to Jurisdiction
         (p)      Bulk Transfer Laws
         (q)      Sales, Transfer and Documentary Taxes, etc.

Disclosure Schedule
Schedule of Assigned Contracts
Exhibit A--Form of Bill of Sale and Assignment
Exhibit B--Form of Assumption
Exhibit C--Consulting Agreement
Exhibit D - Registration Rights Agreement
Exhibit E--Allocation Schedule


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                            ASSET PURCHASE AGREEMENT


         This Asset Purchase Agreement (the "Agreement") is entered into as of
August 27, 1999, by and among Interactive Magic, Inc., a North Carolina
corporation (the "Buyer"), Virtual Business Designs, Inc. (d/b/a The Gamers
Net), a Delaware corporation (the "Seller"), the sole owner of the Gamers Net
web site, located at www.thegamers.net on the World-Wide Web, including its
related business (the "Web Site"), and David Heath, the sole shareholder of
Seller ("Shareholder"). The Buyer, the Seller and the Shareholder are referred
to collectively herein as the "Parties".

         This Agreement contemplates a transaction in which the Buyer will
purchase certain of the assets of the Seller in return for Common Stock of the
Buyer.

         Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.

1.       DEFINITIONS.

         "Acquired Assets" means all right, title and interest in and to all of
the tangible and intangible assets of the Seller relating to the Web Site,
including the following items to the extent related to the Web Site:

                  (a) all current, unreleased or Beta versions of the software
         relating to the Web Site, in both object and source code format,
         including (but not limited to) games, game scenarios, game patches,
         opponent locating and matching software and databases, bulletin boards,
         chat programs, or other message posting systems;

                  (b) all customer names, lists, addresses, contact names and
         registered user or player lists;

                  (c) Intellectual Property, goodwill associated therewith,
         licenses and sublicenses granted and obtained with respect thereto, and
         rights thereunder, remedies against infringements thereof, and rights
         to protection of interests therein under the laws of all jurisdictions;

                  (d) the agreements, contracts, instruments, Security
         Interests, other similar arrangements, and rights thereunder as listed
         on the Schedule of Assigned Contracts (if any) attached hereto;

                  (e) claims, deposits, prepayments, refunds, causes of action,
         choses in action, rights of recovery, rights of set off, and rights of
         recoupment;

                  (f) franchises, approvals, permits, licenses, orders,
         registrations, certificates and similar rights obtained from
         governments and governmental agencies; and

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                  (g) books, records, ledgers, files, documents, correspondence,
         lists, creative materials, advertising and promotional materials,
         studies, reports, scenario archives, articles, reviews, electronic
         message board content, and other printed or written materials;

         "Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.

         "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

         "Assigned Contracts" means the agreements, contracts, leases, licenses
and other arrangements being assigned to the Buyer hereunder, if any, as set
forth on the Schedule of Assigned Contracts attached hereto.

         "Assumed Liabilities" means all obligations of the Seller under the
Assigned Contracts, including up to $6,000 of liabilities as set forth on the
Schedule of Assigned Contracts. The Assumed Liabilities specifically shall
exclude the Retained Liabilities.

         "Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.

         "Buyer" has the meaning set forth in the preface above.

         "Buyer's Acquisition Shares" means collectively the shares of the
Buyer's Common Stock issuable to the Seller in connection with the Buyer's
acquisition of the Acquired Assets pursuant to this Agreement.

         "Cash" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements.

         "Closing" has the meaning set forth in Section 2(d) below.

         "Closing Date" has the meaning set forth in Section 2(d) below.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Confidential Information" means any information concerning the
businesses and affairs of the Seller relating to the Web Site that is not
already generally available to the public.

         "Disclosure Schedule" has the meaning set forth in Section 3 below.

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         "Financial Statements" has the meaning set forth in Section 3(f) below.

         "GAAP" means United States generally accepted accounting principles as
in effect from time to time.

         "Indemnified Party" has the meaning set forth in Section 6(d) below.

         "Indemnifying Party" has the meaning set forth in Section 6(d) below.

         "Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, subscriber or user lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including web pages, game scenarios and patches, data and related
documentation) used independently or in conjunction with other programs, (g) all
registered or licensed domain names (including "www.thegamers.net"), IP
addresses, and email addresses (including all those using the "@thegamers.net"
suffix), (h) other proprietary rights, and (i) all copies and tangible
embodiments thereof (in whatever form or medium).

         "Knowledge" means actual knowledge after reasonable investigation.

         "Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.

         "Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).

         "Party" has the meaning set forth in the preface above.

         "Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).

         "Process Agent" has the meaning set forth in Section 8(o) below.

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         "Purchase Price" has the meaning set forth in Section 2(c) below.

         "Retained Liabilities" means, without limitation, all of the following
liabilities being retained by the Seller:

                  (i)      any Liability of the Seller for unpaid Taxes;

                  (ii) any Liability of the Seller for income, transfer, sales,
         use, and other Taxes arising in connection with the consummation of the
         transactions contemplated hereby (including any income Taxes arising
         because the Seller is transferring the Acquired Assets);

                  (iii) any obligation of the Seller to indemnify any Person by
         reason of the fact that such Person was an employee, independent
         contractor, or agent of the Seller or was serving at the request of the
         Seller as a partner, trustee, director, officer, employee, or agent of
         another entity (whether such indemnification is for judgments, damages,
         penalties, fines, costs, amounts paid in settlement, losses, expenses,
         or otherwise and whether such indemnification is pursuant to any
         statute, charter document, bylaw, agreement, or otherwise);

                  (iv) any Liability of the Seller for costs and expenses
         incurred in connection with this Agreement and the transactions
         contemplated hereby;

                  (v) any Liability relating to the ownership or operation of
         the Web Site prior to Closing (except any Liability specifically
         identified as an Assumed Liability as defined herein); and

                  (vi) any Liability or obligation of the Seller under this
         Agreement.

         "Securities Act" means the Securities Act of 1933, as amended.

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

         "Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest.

         "Seller" has the meaning set forth in the preface above.

         "Shareholder" has the meaning set forth in the preface above.

         "Tax(es)" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use,


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transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.

         "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

         "Third Party Claim" has the meaning set forth in Section 6(d) below.

         "Web Site" has the meaning set forth in the preface above.

2.        BASIC TRANSACTION.

                  (a) Purchase and Sale of Assets. On and subject to the terms
         and conditions of this Agreement, the Buyer agrees to purchase from the
         Seller, and the Seller agrees to sell, transfer, convey and deliver to
         the Buyer, all of the Acquired Assets at the Closing for the
         consideration specified below in this Section 2.

                  (b) Assumption of Liabilities. On and subject to the terms and
         conditions of this Agreement, the Buyer agrees to assume and become
         responsible only for the Assumed Liabilities (if any) at the Closing.
         The Buyer will not assume or have any responsibility, however, with
         respect to any other obligation or Liability of the Seller or the Web
         Site not specifically included within the definition of Assumed
         Liabilities.

                  (c) Purchase Price. The Buyer agrees to issue to the Seller
         one hundred seven thousand one hundred forty-three (107,143) shares of
         the Buyer's Common Stock (the "Purchase Price"). Ten percent (10%) of
         the Buyer's Common Stock included in the Purchase Price will be held
         back pursuant to Section 7 (the "Holdback Shares").

                           (i) No fraction of a share of the Buyer's Common
                  Stock will be issued as part of the Purchase Price, but in
                  lieu thereof the Seller will receive from the Buyer an amount
                  of cash (rounded to the nearest whole cent) equal to the
                  product of (i) such fraction multiplied by (ii) the average of
                  the closing price per share of the Buyer's Common Stock on the
                  National Association of Securities Dealers Automated Quotation
                  System ("Nasdaq") as reported in THE WALL STREET JOURNAL for
                  the twenty (20) trading days prior to the date hereof.

                           (ii) The parties acknowledge and agree that the
                  Buyer's Acquisition Shares and the transactions contemplated
                  under this Agreement are and will be subject to the applicable
                  federal and state securities laws and regulations.

                           (iii) Promptly after the Closing Date, the Holdback
                  Shares will be delivered to the Buyer to be held pursuant to
                  Section 7.



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                  (d) The Closing. The closing of the transactions contemplated
         by this Agreement (the "Closing") shall take place simultaneous with
         the execution of this Agreement at the offices of Wyrick Robbins Yates
         & Ponton, LLP in Raleigh, North Carolina, commencing at 9:00 a.m. local
         time or such other date as the Parties may mutually determine (the
         "Closing Date").

                  (e)      Deliveries at the Closing. At the Closing,

                           (i) the Seller will execute and deliver to the Buyer
                  (A) the Bill of Sale and Assignment in the form attached
                  hereto as Exhibit A and (B) such other instruments of sale,
                  transfer, conveyance and assignment as the Buyer and its
                  counsel reasonably may request;

                           (ii) the Buyer will execute and deliver to the Seller
                  (A) an assumption in the form attached hereto as Exhibit B and
                  (B) such other instruments of assumption as the Seller and its
                  counsel reasonably may request;

                           (iii) the Seller shall deliver to the Buyer UCC-3
                  termination statements signed by any party with a Security
                  Interest in any of the Acquired Assets in such form that will
                  permit the Buyer to terminate such interests of record;

                           (iv) the Seller shall deliver to the Buyer signed
                  consents and releases from any third parties whose consent or
                  release is required in connection with consummation of the
                  transactions contemplated by this Agreement;

                           (v) the Buyer will deliver to the Seller a copy of
                  its letter to the Buyer's stock transfer agent, authorizing
                  and directing the issuance of the Buyer's Acquisition Shares
                  issuable pursuant to Section 2(c) above (less the Holdback
                  Shares to be held by the Buyer) and otherwise in accordance
                  with the provisions of this Agreement;

                           (vi) the Buyer and the Shareholder shall have entered
                  into a Consulting Agreement with respect to the ongoing work
                  to be performed on the Web Site by the Seller in the form
                  attached hereto as Exhibit C (the "Consulting Agreement"); and

                           (vii) the Buyer and the Seller shall have entered
                  into a Registration Rights Agreement with respect to Seller's
                  registration rights in the Buyer's Acquisition Shares in
                  substantially the form of Exhibit D (the "Registration Rights
                  Agreement").

                  (f) Allocation. The Parties agree to allocate the Purchase
         Price (and all other capitalizable costs) among the Acquired Assets for
         all purposes (including financial accounting and tax purposes) in
         accordance with the allocation schedule attached hereto as Exhibit E.


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                  (g)      Forfeiture.

                           (i) In the event that the Buyer is forced or elects
                  to declare bankruptcy, thus terminating the business, within
                  the initial twenty-four (24) months of the Consulting
                  Agreement period associated with this agreement, all rights
                  and property purchased within and by the terms of this
                  agreement will be forfeited and returned to the Seller, to
                  include intellectual property. Additional property both
                  physical and intellectual, acquired, purchased or developed
                  after the signing of this contract, for the purpose of
                  maintaining and developing the website/property, will remain
                  the property of the Buyer.

3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER.

         The Seller and the Shareholder jointly and severally represent and
warrant to the Buyer that the statements contained in this Section 3 are correct
as of the date of this Agreement and as of the Closing Date, except as set forth
in the disclosure schedule accompanying this Agreement and initialed by the
Parties (the Disclosure Schedule). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3.

                  (a) Good Standing of the Seller. The Seller is a corporation
         duly incorporated, validly existing and in good standing under the laws
         of the State of Delaware and is duly authorized to conduct business and
         is in good standing under the laws of each jurisdiction where such
         qualification is required, except where such failure to be qualified
         would not have a material adverse effect on the Web Site.

                  (b) Authorization of Transaction. The Seller has full
         corporate power and authority to execute and deliver this Agreement and
         to perform its obligations hereunder. The execution, delivery and
         performance of this agreement by the Seller have been duly and validly
         authorized by all necessary corporate and shareholder action. This
         Agreement constitutes the valid and legally binding obligation of the
         Seller, enforceable in accordance with its terms and conditions.

                  (c) Noncontravention. Neither the execution and the delivery
         of this Agreement, nor the consummation of the transactions
         contemplated hereby (including the assignments and assumptions referred
         to in Section 2 above), will (i) conflict with or result in a breach of
         the charter or bylaws of the Seller, (ii) violate any constitution,
         statute, regulation, rule, injunction, judgment, order, decree, ruling,
         charge, or other restriction of any government, governmental agency, or
         court to which the Seller or Web Site is subject or (iii) conflict
         with, result in a breach of, constitute a default under, result in the
         acceleration of, create in any party the right to accelerate,
         terminate, modify, or cancel, or require any notice under any
         agreement, contract, lease, license, instrument or other arrangement to
         which the Seller or the Web Site is a party or by which either of them
         is bound or to which any of their assets is subject (or result in the
         imposition of any Security Interest upon any of their assets). Neither
         the Seller nor the Web Site needs to give any notice to, make any
         filing with, or obtain any authorization, consent, or approval of any
         government or


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         governmental agency in order for the Parties to consummate the
         transactions contemplated by this Agreement.

                  (d) Brokers' Fees. The Seller has no Liability or obligation
         to pay any fees or commissions to any broker, finder, or agent with
         respect to the transactions contemplated by this Agreement for which
         the Buyer could become liable or obligated.

                  (e) Title to Assets. The Seller has good and marketable title
         to the Acquired Assets, free and clear of all Security Interests or
         restrictions on transfer.

                  (f) Absence of Material Events. Since the date of the Web
         Site's formation, there has not been any material adverse change in the
         business, financial condition, operations, results of operations or
         future prospects of the Seller or Web Site relating to the Acquired
         Assets. Without limiting the generality of the foregoing, since that
         date through the Closing Date:

                           (i) the Seller has not sold, leased, licensed,
                  transferred or assigned any of the Acquired Assets;

                           (ii) the Seller has not entered into any agreement,
                  contract, lease or license (or series of related agreements,
                  contracts, leases and licenses) relating to the Acquired
                  Assets either involving more than $5,000 or outside the
                  Ordinary Course of Business;

                           (iii) no party has accelerated, terminated, modified
                  or cancelled any agreement, contract, lease or license (or
                  series of related agreements, contracts, leases and licenses)
                  relating to the Acquired Assets involving more than $5,000 to
                  which the Seller is a party or by which it is bound;

                           (iv) the Seller has not imposed any Security Interest
                  upon any of the Acquired Assets;

                           (v) the Seller has not cancelled, compromised, waived
                  or released any right or claim (or series of related rights
                  and claims) relating to the Acquired Assets either involving
                  more than $5,000 or outside the Ordinary Course of Business;

                           (vi) the Seller has not granted any license or
                  sublicense of any rights under or with respect to any
                  Intellectual Property relating to the Acquired Assets;

                           (vii) there has been no change made or authorized in
                  the Seller's ownership and complete control of the Web Site;

                           (viii) the Seller has not experienced any damage,
                  destruction or loss (whether or not covered by insurance) to
                  the Acquired Assets;

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                           (ix) there has not been any other material
                  occurrence, event, incident, action, failure to act or
                  transaction outside the Ordinary Course of Business involving
                  the Acquired Assets; and

                           (x) the Seller has not committed to any of the
                  foregoing.

                  (g) Undisclosed Liabilities. The Seller does not have any
         Liability (and there is no Basis for any present or future action,
         suit, proceeding, hearing, investigation, charge, complaint, claim or
         demand against it giving rise to any Liability) relating to or
         affecting, directly or indirectly, any of the Acquired Assets.

                  (h) Legal Compliance. No violation by the Seller or its
         predecessors of any applicable laws (including rules, regulations,
         codes, plans, injunctions, judgments, orders, decrees, rulings, and
         charges thereunder) of federal, state, local and foreign governments
         (and all agencies thereof), nor any action, suit, proceeding, hearing,
         investigation, charge, complaint, claim, demand or notice has been
         filed or commenced that will prohibit or adversely affect its ability
         to enter into and to perform its obligations under this Agreement.

                  (i)      Tax Matters.

                           (i) The Seller has filed all Tax Returns that he was
                  required to file. All such Tax Returns were correct and
                  complete in all respects. All Taxes owed by the Seller
                  (whether or not shown on any Tax Return) have been paid. No
                  claim has ever been made by an authority in a jurisdiction
                  where the Seller does not file Tax Returns that he is or may
                  be subject to taxation by that jurisdiction. There are no
                  Security Interests on any of the assets of the Seller that
                  arose in connection with any failure (or alleged failure) to
                  pay any Tax.

                           (ii) The Seller does not expect any authority to
                  assess any additional Taxes with respect to the Seller or any
                  of the Acquired Assets for any period for which Tax Returns
                  have been filed. There is no dispute or claim concerning any
                  Tax Liability of the Seller or pertaining to the Acquired
                  Assets.

                  (j)      Intellectual Property.

                           (i) The Seller owns or has the right to use pursuant
                  to license, sublicense, agreement or permission all
                  Intellectual Property necessary or desirable for the operation
                  of the Web Site. Each item of Intellectual Property relating
                  to the Acquired Assets owned, licensed or used by the Seller
                  immediately prior to the Closing hereunder will be owned,
                  licensed or available for use by the Buyer on identical terms
                  and conditions immediately subsequent to the Closing
                  hereunder. The Seller has taken all necessary and desirable
                  action to maintain and protect each item of Intellectual
                  Property being transferred to the Buyer under this Agreement.

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                           (ii) The Seller has not interfered with, infringed
                  upon, misappropriated or otherwise come into conflict with any
                  Intellectual Property rights of third parties relating to the
                  Acquired Assets, and the Seller (and employees or agents with
                  responsibility for Intellectual Property matters of the Web
                  Site) has never received any charge, complaint, claim, demand
                  or notice alleging any such interference, infringement,
                  misappropriation or violation (including any claim that the
                  Seller or Web Site must license or refrain from using any
                  Intellectual Property rights of any third party relating to
                  the Acquired Assets). To the Knowledge of the Seller (and
                  employees or agents with responsibility for Intellectual
                  Property matters of the Web Site), no third party has
                  interfered with, infringed upon, misappropriated or otherwise
                  come into conflict with any Intellectual Property rights
                  relating to the Acquired Assets.

                           (iii) Section 3(j)(iii) of the Disclosure Schedule
                  identifies, to the extent applicable, each: (i) patent or
                  registration which has been issued to the Seller, its
                  employees, partners, agents, or the Web Site with respect to
                  any of its Intellectual Property relating to the Acquired
                  Assets; (ii) pending patent application or application for
                  registration which the Seller, its employees, partners,
                  agents, or the Web Site has made with respect to any of its
                  Intellectual Property relating to the Acquired Assets; and
                  (iii) license, agreement or other permission which the Seller,
                  its employees, partners, agents, or the Web Site has granted
                  to any third party with respect to any of its Intellectual
                  Property relating to the Acquired Assets. The Seller has
                  delivered to the Buyer correct and complete copies of all such
                  patents, registrations, applications, licenses, agreements and
                  permissions (as amended to date). Section 3(j)(iii) of the
                  Disclosure Schedule also identifies each trade name or
                  unregistered trademark used by the Seller in connection with
                  the Web Site. With respect to each item of Intellectual
                  Property required to be identified in Section 3(j)(iii) of the
                  Disclosure Schedule:

                                    (A) the Seller possesses all right, title
                           and interest in and to the item, free and clear of
                           any Security Interest, license or other restriction;

                                    (B) the item is not subject to any
                           outstanding injunction, judgment, order, decree,
                           ruling or charge;

                                    (C) no action, suit, proceeding, hearing,
                           investigation, charge, complaint, claim, or demand is
                           pending or, to the Knowledge of the Seller, is
                           threatened which challenges the legality, validity,
                           enforceability, use or ownership of the item; and

                                    (D) the Seller has never agreed to indemnify
                           any Person for or against any interference,
                           infringement, misappropriation or other conflict with
                           respect to the item.

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                           (iv) Section 3(j)(iv) of the Disclosure Schedule
                  identifies each item of Intellectual Property that any third
                  party owns and that the Seller uses in the Web Site pursuant
                  to license, sublicense, agreement or permission. The Seller
                  has delivered to the Buyer correct and complete copies of all
                  such licenses, sublicenses, agreements and permissions (as
                  amended to date). With respect to each item of Intellectual
                  Property required to be identified in Section 3(j)(iv) of the
                  Disclosure Schedule:

                                    (A) the license, sublicense, agreement or
                           permission covering the item is legal, valid,
                           binding, enforceable and in full force and effect;

                                    (B) the license, sublicense, agreement or
                           permission will continue to be legal, valid, binding,
                           enforceable and in full force and effect on identical
                           terms following the consummation of the transactions
                           contemplated hereby;

                                    (C) no party to the license, sublicense,
                           agreement or permission is in breach or default, and
                           no event has occurred which with notice or lapse of
                           time would constitute a breach or default or permit
                           termination, modification or acceleration thereunder;
                           and

                                    (D) no party to the license, sublicense,
                           agreement or permission has repudiated any provision
                           thereof.

                  (k) Contracts. Section 3(k) of the Disclosure Schedule lists
         all contracts and other agreements, if any, being assigned to the Buyer
         hereunder and to which the Seller or Web Site is a party. The Seller
         has delivered to the Buyer a correct and complete copy of each written
         agreement listed in Section 3(k) of the Disclosure Schedule (as amended
         to date) and a written summary setting forth the terms and conditions
         of each oral agreement referred to in Section 3(k) of the Disclosure
         Schedule, if any. With respect to each such agreement: (A) the
         agreement is legal, valid, binding, enforceable and in full force and
         effect; (B) the agreement will continue to be legal, valid, binding,
         enforceable and in full force and effect on identical terms following
         the consummation of the transactions contemplated hereby; (C) no party
         is in breach or default, and no event has occurred which with notice or
         lapse of time would constitute a breach or default, or permit
         termination, modification or acceleration under the agreement; and (D)
         no party has repudiated any provision of the agreement.

                  (l) Powers of Attorney. There are no outstanding powers of
         attorney executed on behalf of the Seller or Web Site.

                  (m) Litigation. Section 3(n) of the Disclosure Schedule sets
         forth each instance relating to the Acquired Assets in which the Seller
         (i) is subject to any outstanding injunction, judgment, order, decree,
         ruling or charge or (ii) is a party or, to the Knowledge of the Seller,
         is threatened to be made a party to any action, suit, proceeding,
         hearing or


                                       11
<PAGE>

         investigation of, in, or before any court or quasi-judicial
         or administrative agency of any federal, state, local or foreign
         jurisdiction or before any arbitrator. None of the actions, suits,
         proceedings, hearings, and investigations set forth in Section 3(n) of
         the Disclosure Schedule could result in any material adverse change in
         the business, financial condition, operations, results of operations or
         future prospects of the Web Site. The Seller has no reason to believe
         that any such action, suit, proceeding, hearing or investigation may be
         brought or threatened against the Seller or Web Site relating to or
         adversely affecting the Acquired Assets.

                  (n) Product Warranty. Each product manufactured, displayed,
         transmitted, sold, licensed, leased or delivered by the Seller related
         to the Acquired Assets has been in conformity with all applicable
         contractual commitments and all express and implied warranties, and the
         Seller has no Liability (and there is no Basis for any present or
         future action, suit, proceeding, hearing, investigation, charge,
         complaint, claim or demand against it giving rise to any Liability) for
         replacement or repair thereof or other damages in connection therewith.
         No product manufactured, displayed, transmitted, sold, licensed, leased
         or delivered by the Seller is subject to any guaranty, warranty or
         other indemnity.

                  (o) Product Liability. The Seller has no Liability arising out
         of any injury to individuals or property as a result of the ownership,
         possession or use of any product manufactured, displayed, transmitted,
         sold, leased, licensed or delivered by the Seller related to the
         Acquired Assets.

                  (p) Disclosure. The representations and warranties contained
         in this Section 3 do not contain any untrue statement of a material
         fact or omit to state any material fact necessary in order to make the
         statements and information contained in this Section 3 not misleading.

                  (q) Investment. The Seller (i) understands that the Buyer's
         Acquisition Shares will not be registered under the Securities Act and
         are being offered and sold in reliance upon federal and state
         exemptions for transactions not involving any public offering, (ii) is
         acquiring the Buyer's Acquisition Shares solely for its own account for
         investment purposes, and not with a view to the distribution thereof,
         (iii) is a sophisticated investor with knowledge and experience in
         business and financial matters, (iv) has received certain information
         concerning the Buyer and has had the opportunity to obtain additional
         information as desired in order to evaluate the merits and the risks
         inherent in holding the Buyer's Acquisition Shares, and (v) is able to
         bear the economic risk and lack of liquidity inherent in holding the
         Buyer's Acquisition Shares.

                  (r) Year 2000 Compliance. The software of the Web Site and all
         software which is part of the Acquired Assets are Year 2000 Compliant.
         The term "Year 2000 Compliant" as used herein means that the software
         (1) is capable of recognizing, processing, managing, representing,
         interpreting, and manipulating correctly date related data for dates
         earlier, during and later than January 1, 2000, including, but not
         limited to, calculating, comparing, sorting, storing, tagging and
         sequencing, without resulting in or causing logical


                                       12
<PAGE>

         or mathematical errors or inconsistencies in any user-interface
         functionalities or otherwise, including data input and retrieval, data
         storage, data fields, calculations, reports, processing, or any other
         input or output, (2) has the ability to provide date recognition for
         any data element without limitation (including, but not limited to,
         date-related data presented without a century designation, date-related
         data whose year is represented by only two digits and date fields
         assigned special values), (3) has the ability to automatically function
         into and beyond the year 2000 without human intervention and without
         any change in operations associated with the advent of the year 2000,
         (4) has the ability to correctly interpret data, dates and time into
         and beyond the year 2000, (5) has the ability not to produce
         noncompliance in existing information, nor otherwise corrupt such data
         into and beyond the year 2000, (6) has the ability to correctly process
         after January 1, 2000 data containing dates before that date, and (7)
         has the ability to recognize all "leap years," including February 29,
         2000.

                           (i) The software which is part of the Acquired Assets
                  has the ability to properly interface and will continue to
                  properly interface with internal and external applications and
                  systems of third parties whether or not they have achieved
                  Year 2000 Compliance.

                           (ii) The Seller has inquired of all such third
                  parties whose lack of Year 2000 Compliance would be materially
                  or significantly adverse to the Seller or the Acquired Assets,
                  and all such third parties have represented that they are Year
                  2000 Compliant.

4. REPRESENTATIONS AND WARRANTIES OF THE BUYER.

         The Buyer represents and warrants to the Seller and the Shareholder
that the statements contained in this Section 4 are correct as of the date of
this Agreement and as of the Closing Date, except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Section 4.

                  (a) Organization of the Buyer. The Buyer is a corporation duly
         organized, validly existing, and in good standing under the laws of the
         jurisdiction of its incorporation. The Buyer is duly authorized to
         conduct business and is in good standing under the laws of each
         jurisdiction where such qualification is required, except where such
         failure to be qualified would not have a material adverse effect on the
         Buyer. The Buyer has made available to the Seller or its counsel
         correct and complete copies of the Articles of Incorporation and Bylaws
         of the Buyer (as amended to date).

                  (b) Authorization of Transaction. The Buyer has full power and
         authority (including full corporate power and authority) to execute and
         deliver this Agreement and to perform its obligations hereunder. This
         Agreement constitutes the valid and legally binding obligation of the
         Buyer, enforceable in accordance with its terms and conditions.


                                       13
<PAGE>

                  (c) Noncontravention. Neither the execution and the delivery
         of this Agreement, nor the consummation of the transactions
         contemplated hereby (including the assignments and assumptions referred
         to in Section 2 above), will (i) violate any constitution, statute,
         regulation, rule, injunction, judgment, order, decree, ruling, charge,
         or other restriction of any government, governmental agency, or court
         to which the Buyer is subject or any provision of its Articles of
         Incorporation or Bylaws or (ii) conflict with, result in a breach of,
         constitute a default under, result in the acceleration of, create in
         any party the right to accelerate, terminate, modify, or cancel, or
         require any notice under any agreement, contract, lease, license,
         instrument, or other arrangement to which the Buyer is a party or by
         which it is bound or to which any of its assets is subject. The Buyer
         does not need to give any notice to, make any filing with, or obtain
         any authorization, consent, or approval of any government or
         governmental agency in order for the Parties to consummate the
         transactions contemplated by this Agreement (including the assignments
         and assumptions referred to in Section 2 above).

                  (d) Brokers' Fees. The Buyer has no Liability or obligation to
         pay any fees or commissions to any broker, finder, or agent with
         respect to the transactions contemplated by this Agreement for which
         the Seller could become liable or obligated.

5.       POST-CLOSING COVENANTS.

         The Parties agree as follows with respect to the period following the
Closing.

                  (a) General. In case at any time after the Closing any further
         action is necessary or desirable to carry out the purposes of this
         Agreement, each of the Parties will take such further action (including
         the execution and delivery of such further instruments and documents)
         as the other Party reasonably may request, all at the sole cost and
         expense of the requesting Party (unless the requesting Party is
         entitled to indemnification therefor under Section 6 below). The Seller
         and the Shareholder acknowledge and agree that from and after the
         Closing the Buyer will be entitled to possession of all documents,
         books, records, agreements and financial data of any sort relating to
         the Acquired Assets.

                  (b) Litigation Support. In the event and for so long as any
         Party actively is contesting or defending against any action, suit,
         proceeding, hearing, investigation, charge, complaint, claim, or demand
         in connection with (i) any transaction contemplated under this
         Agreement or (ii) any fact, situation, circumstance, status, condition,
         activity, practice, plan, occurrence, event, incident, action, failure
         to act or transaction on or prior to the Closing Date involving the
         Acquired Assets, the other Party will cooperate with the contesting or
         defending Party and its counsel in the contest or defense, make
         available its personnel, and provide such testimony and access to its
         books and records as shall be necessary in connection with the contest
         or defense, all at the sole cost and expense of the contesting or
         defending Party (unless the contesting or defending Party is entitled
         to indemnification therefor under Section 6 below).

                                       14
<PAGE>

                  (c) Transition. Neither the Seller nor the Shareholder will
         take any action that is designed or intended to have the effect of
         discouraging any lessor, licensor, customer, supplier or other business
         associate of the Seller's Web Site from maintaining the same business
         relationships with the Buyer after the Closing as it maintained with
         the Seller prior to the Closing. The Seller and the Shareholder will
         refer all customer inquiries relating to the Web Site to the Buyer from
         and after the Closing. If requested by the Buyers, the Seller agrees to
         prepare and deliver, with the Buyer's guidance and approval, a letter
         to the Seller's customers and business associates relating to the Web
         Site announcing the sale and endorsing the Buyer as the successor to
         its business relationship with such parties.

                  (d) Confidentiality. The Seller, the Shareholder, the Web
         Site, and their agents will treat and hold confidential all of the
         Confidential Information, refrain from using any of the Confidential
         Information except in connection with this Agreement, and deliver
         promptly to the Buyer or destroy, at the request and option of the
         Buyer, all tangible embodiments (and all copies) of the Confidential
         Information which are in their possession.

                  (e) Buyer's Acquisition Shares. The Buyer's Acquisition Shares
         will be imprinted with a legend substantially in the following form:

                  THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
                  SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF A
                  REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
                  SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
                  SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
                  REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.

         Each holder desiring to transfer the Buyer's Acquisition Shares first
must furnish the Buyer with a written opinion reasonably satisfactory to the
Buyer in form and substance from counsel reasonably satisfactory to the Buyer by
reason of experience to the effect that the holder may transfer the Buyer's
Acquisition Shares as desired under the Securities Act.

6.       REMEDIES FOR BREACHES OF THIS AGREEMENT.

                  (a) Survival of Representations and Warranties. All of the
         representations and warranties of the Buyer, the Seller and the
         Shareholder contained in this Agreement shall survive the Closing (even
         if the damaged Party knew or had reason to know of any
         misrepresentation or breach of warranty at the time of Closing) and
         continue in full force and effect forever thereafter (subject to any
         applicable statutes of limitations).

                  (b)      Indemnification Provisions for Benefit of the Buyer.

                                       15
<PAGE>

                           (i) In the event the Seller or the Shareholder
                  breaches (or in the event any third party alleges facts that,
                  if true, would mean the Seller or the Shareholder has
                  breached) any of its or his representations, warranties and
                  covenants contained in this Agreement, and, if there is an
                  applicable survival period pursuant to Section 6(a) above,
                  provided that the Buyer makes a written claim for
                  indemnification against the Seller or the Shareholder pursuant
                  to Section 8(g) below within such survival period, then the
                  Seller and the Shareholder agree, jointly and severally, to
                  indemnify the Buyer from and against the entirety of any
                  Adverse Consequences the Buyer may suffer through and after
                  the date of the claim for indemnification (including any
                  Adverse Consequences the Buyer may suffer after the end of any
                  applicable survival period) resulting from, arising out of,
                  relating to, in the nature of or caused by the breach (or the
                  alleged breach).

                           (ii) The Seller and the Shareholder agree, jointly
                  and severally, to indemnify the Buyer from and against the
                  entirety of any Adverse Consequences the Buyer may suffer
                  resulting from, arising out of, relating to, in the nature of
                  or caused by:

                                    (A) any Liability of the Seller or the
                           Shareholder which is not an Assumed Liability
                           (including any Liability of the Seller or the
                           Shareholder that becomes a Liability of the Buyer
                           under any bulk transfer law of any jurisdiction,
                           under any common law doctrine of de facto merger or
                           successor liability or otherwise by operation of
                           law); or

                                    (B) any Liability of any of the Seller or
                           the Shareholder for any unpaid Taxes.

                  (c) Indemnification Provisions for Benefit of the Seller and
the Shareholder.

                           (i) In the event the Buyer breaches (or in the event
                  any third party alleges facts that, if true, would mean the
                  Buyer has breached) any of its representations, warranties,
                  and covenants contained in this Agreement, and, if there is an
                  applicable survival period pursuant to Section 6(a) above,
                  provided that the Seller or the Shareholder makes a written
                  claim for indemnification against the Buyer pursuant to
                  Section 8(g) below within such survival period, then the Buyer
                  agrees to indemnify the Seller or the Shareholder from and
                  against the entirety of any Adverse Consequences the Seller or
                  the Shareholder may suffer through and after the date of the
                  claim for indemnification (including any Adverse Consequences
                  the Seller or the Shareholder may suffer after the end of any
                  applicable survival period) resulting from, arising out of,
                  relating to, in the nature of or caused by the breach (or the
                  alleged breach).

                           (ii) The Buyer agrees to indemnify the Seller and the
                  Shareholder from and against the entirety of any Adverse
                  Consequences the Seller or the Shareholder


                                       16
<PAGE>

                  may suffer resulting from, arising out of, relating to, in the
                  nature of or caused by any Assumed Liability.

                  (d)      Matters Involving Third Parties.

                           (i) If any third party shall notify any Party (the
                  "Indemnified Party") with respect to any matter (a "Third
                  Party Claim") which may give rise to a claim for
                  indemnification against the other Party (the "Indemnifying
                  Party") under this Section 6, then the Indemnified Party shall
                  promptly notify the Indemnifying Party thereof in writing;
                  provided, however, that no delay on the part of the
                  Indemnified Party in notifying the Indemnifying Party shall
                  relieve the Indemnifying Party from any obligation hereunder
                  unless (and then solely to the extent) the Indemnifying Party
                  thereby is prejudiced.

                           (ii) The Indemnifying Party will have the right to
                  defend the Indemnified Party against the Third Party Claim
                  with counsel of its choice reasonably satisfactory to the
                  Indemnified Party so long as (A) the Indemnifying Party
                  notifies the Indemnified Party in writing within 15 days after
                  the Indemnified Party has given notice of the Third Party
                  Claim that the Indemnifying Party will indemnify the
                  Indemnified Party from and against the entirety of any Adverse
                  Consequences the Indemnified Party may suffer resulting from,
                  arising out of, relating to, in the nature of, or caused by
                  the Third Party Claim, (B) the Indemnifying Party provides the
                  Indemnified Party with evidence reasonably acceptable to the
                  Indemnified Party that the Indemnifying Party will have the
                  financial resources to defend against the Third Party Claim
                  and fulfill its indemnification obligations hereunder, (C) the
                  Third Party Claim involves only money damages and does not
                  seek an injunction or other equitable relief, (D) settlement
                  of, or an adverse judgment with respect to, the Third Party
                  Claim is not, in the good faith judgment of the Indemnified
                  Party, likely to establish a precedential custom or practice
                  materially adverse to the continuing business interests of the
                  Indemnified Party, and (E) the Indemnifying Party conducts the
                  defense of the Third Party Claim actively and diligently.

                           (iii) So long as the Indemnifying Party is conducting
                  the defense of the Third Party Claim in accordance with
                  Section 6(d)(ii) above, (A) the Indemnified Party may retain
                  separate co-counsel at its sole cost and expense and
                  participate in the defense of the Third Party Claim, (B) the
                  Indemnified Party will not consent to the entry of any
                  judgment or enter into any settlement with respect to the
                  Third Party Claim without the prior written consent of the
                  Indemnifying Party (not to be withheld unreasonably), and (C)
                  the Indemnifying Party will not consent to the entry of any
                  judgment or enter into any settlement with respect to the
                  Third Party Claim without the prior written consent of the
                  Indemnified Party (not to be withheld unreasonably).

                           (iv) In the event any of the conditions in Section
                  6(d)(ii) above is or becomes unsatisfied, however, (A) the
                  Indemnified Party may defend against, and


                                       17
<PAGE>

                  consent to the entry of any judgment or enter into any
                  settlement with respect to, the Third Party Claim in any
                  manner it reasonably may deem appropriate (and the Indemnified
                  Party need not consult with, or obtain any consent from, the
                  Indemnifying Party in connection therewith), (B) the
                  Indemnifying Party will reimburse the Indemnified Party
                  promptly and periodically for the costs of defending against
                  the Third Party Claim (including reasonable attorneys' fees
                  and expenses), and (C) the Indemnifying Party will remain
                  responsible for any Adverse Consequences the Indemnified Party
                  may suffer resulting from, arising out of, relating to, in the
                  nature of, or caused by the Third Party Claim to the fullest
                  extent provided in this Section 6.

                  (e) Determination of Adverse Consequences. The Parties shall
         take into account the time cost of money (using the Applicable Rate as
         the discount rate) in determining Adverse Consequences for purposes of
         this Section 6. All indemnification payments under this Section 6 shall
         be deemed adjustments to the Purchase Price.

                  (f) Other Indemnification Provisions. The foregoing
         indemnification provisions are in addition to, and not in derogation
         of, any statutory, equitable, or common law remedy any Party may have
         for breach of representation, warranty, or covenant any Party may have
         with respect to the Seller or Web Site, or the transactions
         contemplated by this Agreement.

7.       HOLDBACK SHARES.

                  (a) Purpose. The Holdback Shares will be available to
         compensate the Buyer for any Adverse Consequences, to the extent of the
         amount of such Adverse Consequences that the Buyer has incurred by
         reason of any of the items set forth in Section 6(b) and any reduction
         in the Purchase Price pursuant to Section 7(b) below; provided,
         however, if the Holdback Shares are exhausted or insufficient to cover
         such resulting amount, Seller will immediately reimburse Buyer in cash
         for any resulting amount over and above the available amount of
         Holdback Shares.

                  (b) Adjustments. Adjustments to the Purchase Price will be
         made from the Holdback Shares and will be valued at the Average Closing
         Price. Seller will have provided the Buyer with no less than five (5)
         executed stock powers (with the date and number of shares left blank)
         to facilitate the cancellation of the Holdback Shares in compensation
         for Adverse Consequences, if any, suffered by the Buyer hereunder.

                  (c) Indemnification. This Section 7 and the provision and
         utilization of the Holdback Shares will not limit the Seller's and the
         Shareholder's indemnification obligations under Section 6 provided that
         any amounts owed to the Buyer pursuant to Section 7(b) will first be
         satisfied from the Holdback Shares to the extent available.

                  (d) Termination of Holdback. The Holdback Shares, minus
         adjustments made, if any, under Section 7(b), will be paid to the
         Seller one (1) year following the Closing Date.

                                       18
<PAGE>

8.       MISCELLANEOUS.

                  (a) Press Releases and Public Announcements. No Party shall
         issue any press release or make any public announcement relating to the
         subject matter of this Agreement without the prior written approval of
         the other Party; provided, however, that any Party may make any public
         disclosure it believes in good faith is required by applicable law or
         any listing or trading agreement concerning its publicly-traded
         securities (in which case the disclosing Party will use its reasonable
         best efforts to advise the other Party prior to making the disclosure).

                  (b) No Third-Party Beneficiaries. This Agreement shall not
         confer any rights or remedies upon any Person other than the Parties
         and their respective successors and permitted assigns.

                  (c) Entire Agreement. This Agreement (including the documents
         referred to herein) constitutes the entire agreement between the
         Parties and supersedes any prior understandings, agreements, or
         representations by or between the Parties, written or oral, to the
         extent they have related in any way to the subject matter hereof.

                  (d) Succession and Assignment. This Agreement shall be binding
         upon and inure to the benefit of the Parties named herein and their
         respective successors and permitted assigns. No Party may assign either
         this Agreement or any of its rights, interests, or obligations
         hereunder without the prior written approval of the other Party;
         provided however, that the Buyer may (i) assign any or all of its
         rights and interests hereunder to one or more of its Affiliates and
         (ii) designate one or more of its Affiliates to perform its obligations
         hereunder (in any or all of which cases the Buyer nonetheless shall
         remain responsible for the performance of all of its obligations
         hereunder).

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

                  (f) Headings. The section headings contained in this Agreement
         are inserted for convenience only and shall not affect in any way the
         meaning or interpretation of this Agreement.

                  (g) Notices. All notices, requests, demands, claims, and other
         communications hereunder will be in writing. Any notice, request,
         demand, claim, or other communication hereunder shall be deemed duly
         given if (and then two business days after) it is sent by registered or
         certified mail, return receipt requested, postage prepaid, and
         addressed to the intended recipient as set forth below:



                                       19
<PAGE>

                  If to the Seller:

                         Virtual Business Designs, Inc.
                         DBA The Gamers Net
                         3835 Richmond Avenue, Suite. 192
                         Staten Island, New York 10312
                         Attn: Mr. David Heath

                  If to the Buyer:

                         Interactive Magic, Inc.
                         215 Southport Drive, Suite 1000
                         Morrisville, North Carolina 27560
                         Attn: Chief Executive Officer


                  Copy to:

                          Wyrick Robbins Yates & Ponton LLP
                          4101 Lake Boone Trail, Suite 300
                          Raleigh, North Carolina 27607
                          Attn: Kevin A. Prakke

         Any Party may send any notice, request, demand, claim, or other
         communication hereunder to the intended recipient at the address set
         forth above using any other means (including personal delivery,
         expedited courier, messenger service, telecopy, telex, ordinary mail,
         or electronic mail), but no such notice, request, demand, claim, or
         other communication shall be deemed to have been duly given unless and
         until it actually is received by the intended recipient. Any Party may
         change the address to which notices, requests, demands, claims, and
         other communications hereunder are to be delivered by giving the other
         Party notice in the manner herein set forth.

                  (h) Governing Law. This Agreement shall be governed by and
         construed in accordance with the domestic laws of the State of North
         Carolina without giving effect to any choice or conflict of law
         provision or rule that would cause the application of the laws of any
         jurisdiction other than the State of North Carolina.

                  (i) Amendments and Waivers. No amendment of any provision of
         this Agreement shall be valid unless the same shall be in writing and
         signed by the Buyer and the Seller. No waiver by any Party of any
         default, misrepresentation, or breach of warranty or covenant
         hereunder, whether intentional or not, shall be deemed to extend to any
         prior or subsequent default, misrepresentation, or breach of warranty
         or covenant hereunder or affect in any way any rights arising by virtue
         of any prior or subsequent such occurrence.



                                       20
<PAGE>

                  (j) Severability. Any term or provision of this Agreement that
         is invalid or unenforceable in any situation in any jurisdiction shall
         not affect the validity or enforceability of the remaining terms and
         provisions hereof or the validity or enforceability of the offending
         term or provision in any other situation or in any other jurisdiction.

                  (k) Expenses. Each of the Buyer, the Seller and the
         Shareholder will bear his or its own costs and expenses (including
         legal fees and expenses) incurred in connection with this Agreement and
         the transactions contemplated hereby.

                  (l) Construction. The Parties have participated jointly in the
         negotiation and drafting of this Agreement. In the event an ambiguity
         or question of intent or interpretation arises, this Agreement shall be
         construed as if drafted jointly by the Parties and no presumption or
         burden of proof shall arise favoring or disfavoring any Party by virtue
         of the authorship of any of the provisions of this Agreement. Any
         reference to any federal, state, local, or foreign statute or law shall
         be deemed also to refer to all rules and regulations promulgated
         thereunder, unless the context requires otherwise. The word "including"
         shall mean including without limitation. Nothing in the Disclosure
         Schedule shall be deemed adequate to disclose an exception to a
         representation or warranty made herein unless the Disclosure Schedule
         identifies the exception with reasonable particularity and describes
         the relevant facts in reasonable detail. Without limiting the
         generality of the foregoing, the mere listing (or inclusion of a copy)
         of a document or other item shall not be deemed adequate to disclose an
         exception to a representation or warranty made herein (unless the
         representation or warranty has to do with the existence of the document
         or other item itself). The Parties intend that each representation,
         warranty, and covenant contained herein shall have independent
         significance. If any Party has breached any representation, warranty,
         or covenant contained herein in any respect, the fact that there exists
         another representation, warranty, or covenant relating to the same
         subject matter (regardless of the relative levels of specificity) which
         the Party has not breached shall not detract from or mitigate the fact
         that the Party is in breach of the first representation, warranty, or
         covenant.

                  (m) Incorporation of Exhibits and Schedules. The Exhibits and
         Schedules identified in this Agreement are incorporated herein by
         reference and made a part hereof.

                  (n) Specific Performance. Each of the Parties acknowledges and
         agrees that the other Party would be damaged irreparably in the event
         any of the provisions of this Agreement are not performed in accordance
         with their specific terms or otherwise are breached. Accordingly, each
         of the Parties agrees that the other Party shall be entitled to an
         injunction or injunctions to prevent breaches of the provisions of this
         Agreement and to enforce specifically this Agreement and the terms and
         provisions hereof in any action instituted in any court of the United
         States or any state thereof having jurisdiction over the Parties and
         the matter (subject to the provisions set forth in Section 8(o) below),
         in addition to any other remedy to which it may be entitled, at law or
         in equity.

                  (o) Submission to Jurisdiction. Each of the Parties submits to
         the jurisdiction of any state or federal court sitting in North
         Carolina, in any action or proceeding arising out of


                                       21
<PAGE>

         or relating to this Agreement and agrees that all claims in respect of
         the action or proceeding may be heard and determined in any such court.
         Each of the Parties waives any defense of inconvenient forum to the
         maintenance of any action or proceeding so brought and waives any bond,
         surety, or other security that might be required of any other Party
         with respect thereto. Each Party appoints the Buyer's corporate
         registered agent in North Carolina (the "Process Agent") as its agent
         to receive on its behalf service of copies of the summons and complaint
         and any other process that might be served in the action or proceeding.
         Any Party may make service on the other Party by sending or delivering
         a copy of the process (i) to the Party to be served at the address and
         in the manner provided for the giving of notices in Section 8(g) above
         or (ii) to the Party to be served in care of the Process Agent at the
         address and in the manner provided for the giving of notices in Section
         8(g) above. Nothing in this Section 8(o), however, shall affect the
         right of any Party to bring any action or proceeding arising out of or
         relating to this Agreement in any other court or to serve legal process
         in any other manner permitted by law or in equity. Each Party agrees
         that a final judgment in any action or proceeding so brought shall be
         conclusive and may be enforced by suit on the judgment or in any other
         manner provided by law or in equity.

                  (p) Bulk Transfer Laws. The Buyer acknowledges that the Seller
         will not comply with the provisions of any bulk transfer laws of any
         jurisdiction in connection with the transactions contemplated by this
         Agreement. The Seller agrees to indemnify the Buyer from and against
         any Adverse Consequences arising from or related to the Buyer's
         noncompliance with such laws.

                  (q) Sales, Transfer and Documentary Taxes, etc. The Seller
         will pay all federal, state and local sales, documentary and other
         transfer taxes, if any, due as a result of the purchase, sale or
         transfer of the Acquired Assets in accordance herewith imposed by law
         on the Seller or Buyer, and the Seller will indemnify, reimburse and
         hold harmless Buyer in respect of the liability for payment of or
         failure to pay any such taxes or the filing of or failure to file any
         reports required in connection therewith.


                     [THE NEXT PAGE IS THE SIGNATURE PAGE.]


                                       22
<PAGE>

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


Interactive Magic, Inc.

By: ___________________________________

Name: _________________________________

Title: __________________________________


Virtual Business Designs, Inc. (d/b/a The Gamers Net)

By: ___________________________________

Name: _________________________________

Title: __________________________________





<PAGE>


                               Disclosure Schedule


                                      None

<PAGE>


                         Schedule of Assigned Contracts


1)       Worlds Apart Contract

2)       Online Golf Challenge Contract