Document:

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                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
as of this 1st day of February, 2000, by and between Uproar Inc., a Delaware
corporation (the "Company"), and Trans Cosmos USA Inc., a Washington corporation
(the "Purchaser").

                                 R E C I T A L S

                  WHEREAS, the Company and the Purchaser are parties to the
Common Stock Purchase Agreement of even date herewith (the "Purchase
Agreement"); and

                  WHEREAS, in order to induce the Purchaser to enter into the
Purchase Agreement, the Purchaser and the Company hereby agree that this
Agreement shall govern the rights of the Purchaser to cause the Company to
register shares of Common Stock issuable to the Purchaser and certain other
matters as set forth herein.

                  NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

         1. Registration Rights. The Company covenants and agrees as follows:

         1.1. Definitions. For purposes of this Agreement:

         (a) The term "Affiliate" of the Purchaser shall mean an entity that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with the Purchaser. For purposes of
this definition, an entity shall be deemed to control another entity if such
first entity possesses directly or indirectly the power to direct, or cause the
direction of, the management and policies of the second entity, whether through
the ownership of voting securities, by contract or otherwise.

         (b) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.11 hereof.

         (c) The term "Initial Public Offering" means the closing of the first
sale of securities pursuant to an effective registration statement filed by the
Company under the Securities Act in connection with a firm commitment
underwritten offering of its securities to the general public.
<PAGE>

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

         (d) The term "Permitted Transferee" means an Affiliate of the
Purchaser.

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

         (f) The term "Registrable Securities" means the Common Stock sold and
issued to the Purchaser pursuant to the Purchase Agreement.

         (g) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding which
are Registrable Securities.

         (h) The term "SEC" means the Securities and Exchange Commission.

         (i) The term "Securities Act" means the Securities Act of 1933, as
amended.

         1.2. Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holders) any of its stock or
other securities under the Securities Act in connection with the public offering
of such securities solely for cash (other than an Initial Public Offering or a
registration statement relating either to the sale of securities to employees of
the Company pursuant to a stock option, stock purchase or similar plan or a Rule
145 transaction), the Company shall, at such time, promptly give each Holder at
least ten (10) days written notice of such registration. Upon the written
request of each Holder given within ten (10) days after mailing of such notice
by the Company in accordance with Section 2.5, the Company shall, subject to the
provisions of Section 1.8, cause to be registered under the Securities Act all
of the Registrable Securities that each such Holder has requested to be
registered.

         1.3. Form S-3 Registration. In case the Company shall receive from the
Purchaser a written request that the Company effect a registration on Form S-3
or a comparable form ("Form S-3") with respect to the Registrable Securities
owned by the Purchaser, the Company will:

         (a) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of the Purchaser's
Registrable Securities as are specified in such request; provided, however, that
the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1.3: (1) if Form S-3 is
not available for such offering by the Purchaser; (2) if the Purchaser proposes
to sell the Registrable Securities at an aggregate price to the public (net of
any underwriters' discounts or commissions) of less than $2,000,000; (3) if the
Company shall furnish the Purchaser a certificate signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its stockholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than ninety (90) days after
receipt of the request of the Purchaser under this Section 1.3, provided,
however, that the Company shall not utilize this right more than once in any
twelve (12) month period; (4) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance; or (5) after the Company has effected two (2) registrations pursuant
to this Section 1.3 and such registrations have been declared effective.
<PAGE>

         (b) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities as soon as practicable after
receipt of the request of the Purchaser.

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

         (a) Use its reasonable best efforts to prepare and file with the SEC a
registration statement with respect to such Registrable Securities and use
reasonable efforts to cause such registration statement to become effective,
and, upon the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for a period
of up to the earlier of one hundred twenty (120) days or until the distribution
contemplated in the Registration Statement has been completed.

         (b) Use its reasonable best efforts to prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement.

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

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

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

         (f) Use its reasonable best efforts to cause all such Registrable
Securities registered pursuant hereunder to be listed on each securities
exchange on which similar securities issued by the Company are then listed.
<PAGE>

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

         1.6. Expenses of Registration. All reasonable expenses (other than
underwriting discounts and commissions and fees and disbursements of counsel for
the selling Holders) incurred in connection with registrations, filings or
qualifications pursuant to Section 1.2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, and
fees and disbursements of counsel for the Company, shall be borne by the
Company.

         1.7. Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.2 to include any of the Holders'
securities in such underwriting unless such Holders accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
the Company (or by other persons entitled to select the underwriters), and then
only in such quantity as the underwriters determine in their sole discretion
will not jeopardize the success of the offering by the Company. If the total
amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling Holders
according to the total amount of securities entitled to be included therein
owned by each selling Holder or in such other proportions as shall mutually be
agreed to by such selling Holders). For purposes of the preceding parenthetical
concerning apportionment, for any selling Holder that is a holder of Registrable
Securities and that is a partnership or corporation, the partners, retired
partners and stockholders of such holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons, shall be deemed to be a single "selling Holder," and any
pro rata reduction with respect to such "selling Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "selling Holder," as defined in this sentence.

         1.8. Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
<PAGE>

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

         (a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the 1934 Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively, a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any state securities law, and the Company will pay to each such
Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 1.9(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.

         (b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the 1934 Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will pay, as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this Section 1.9(b), in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 1.9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this Section 1.9(b) exceed
the gross proceeds from the offering received by such Holder.
<PAGE>

         (c) Promptly after receipt by an indemnified party under this Section
1.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.9.

         (d) If the indemnification provided for in this Section 1.9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.

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

<PAGE>

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

         1.10. Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a Permitted
Transferee of such securities, provided: (a) the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and address
of such Permitted Transferee and the securities with respect to which such
registration rights are being assigned; (b) upon such transfer, such Permitted
Transferee holds at least thirty percent (30%) of the Registrable Securities (on
a fully-diluted basis and as adjusted for stock splits or combinations); (c)
such Permitted Transferee agrees in writing to be bound by and subject to the
terms and conditions of this Agreement; and (d) such assignment shall be
effective only if immediately following such transfer the further disposition of
such securities by the Permitted Transferee is restricted under the Securities
Act. For the purposes of determining the number of shares of Registrable
Securities held by a Permitted Transferee, the holdings of Permitted Transferees
of a partnership who are partners or retired partners of such partnership
(including spouses and ancestors, lineal descendants and siblings of such
partners or spouses who acquire Registrable Securities by gift, will or
intestate succession) shall be aggregated together and with the partnership;
provided that all Permitted Transferees who would not qualify individually for
assignment of registration rights shall have a single attorney-in-fact for the
purpose of exercising any rights, receiving notices or taking any action under
this Section 1.

         1.11. "Market Stand-Off" Agreement. The Purchaser hereby agrees that,
during the period of duration specified by the Company and an underwriter of
Common Stock or other securities of the Company, following the date of the
Initial Public Offering or any subsequent public offering, the Purchaser shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to Permitted Transferees in accordance with Section 1.10) any
securities of the Company held by it at any time during such period except
Common Stock included in the Initial Public Offering or such subsequent public
offering; provided, however, that this agreement shall be applicable for a
maximum period of one hundred eighty (180) days following the Initial Public
Offering and for a maximum period of ninety (90) days following any subsequent
public offering of the Company.
<PAGE>

         In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Purchaser (and the shares or securities of every other person subject to the
foregoing restriction) until the end of the applicable period.

         Notwithstanding the foregoing, the obligations described in this
Section 1.11 shall not apply to a registration relating solely to employee
benefit plans on Form S-8 or similar forms which may be promulgated in the
future, or a registration relating solely to a SEC Rule 145 transaction on Form
S-4 or similar forms which may be promulgated in the future.

         1.12. Termination of Registration Rights. Notwithstanding anything to
the contrary set forth herein, the covenants set forth in Section 1 and the
Company's obligations thereunder shall terminate and be of no further force and
effect upon the closing of the first Company-initiated registered public
offering of common stock of the Company if all shares of Registrable Securities
held by such Holder may immediately be sold under Rule 144 during any 90-day
period, or on such date after the closing of the first Company-initiated
registered public offering of common stock of the Company as all shares of
Registrable Securities held by such Holder may immediately be sold under Rule
144 during any 90-day period.

         2. Miscellaneous.

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

         2.2. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware.

         2.3. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         2.4. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
<PAGE>

         2.5. Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.

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

         2.7. Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and the Purchaser; provided that any party
hereto may waive any of its rights hereunder without obtaining the consent of
any other party hereto. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities, and the
Company.

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

         2.9. Aggregation of Stock. All shares of Registrable Securities held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.

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

<PAGE>

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

                                 UPROAR INC.

                                 By: /s/ Kenneth D. Cron
                                     ---------------------------------------
                                        Name:     Kenneth D. Cron
                                        Title:    Chairman and CEO
                                        Address:  240 West 35th Street
                                                  9th Floor
                                                  New York, New York  10001

                                 TRANS COSMOS USA INC.

                                 By: /s/ Shozo Okuda
                                     ---------------------------------------
                                       Name:     Shozo Okuda
                                       Title:    Chairman
                                       Address:  777 108th Avenue N.E.
                                                 Suite 2300
                                                 Bellevue, Washington 98004<PAGE>   1
                                                                    EXHIBIT 10.3

INDEMNIFICATION AGREEMENT dated as of _______________ ____, 2000, between
INTERWORLD CORPORATION, a Delaware corporation (the "Company"), and the director
or the executive officer named on the signature page hereto (the
"Director/Executive Officer").

                  Section 145 of the Delaware General Corporation Law (the
"DGCL") empowers corporations to indemnify persons serving as a director,
officer, employee or agent of such corporation or persons who serve at the
request of such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, and Section
145(f) of the DGCL further specifies that the indemnification set forth in said
Section shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise.

                  The Company desires to have the Director/Executive Officer
serve or continue to serve as an executive officer and/or director of the
Company free from undue concern for unpredictable, inappropriate or unreasonable
claims for damages by reason of his or her decisions or actions on its behalf;
and the Director/Executive Officer desires to serve, or to continue to serve, in
such capacity. Accordingly, in consideration of the Director/Executive Officer's
serving or continuing to serve as an executive officer and/or director of the
Company, the parties agree as follows:

                  1.Indemnification. The Company shall indemnify, defend and
hold harmless the Director/Executive Officer against all expenses, losses,
claims, damages and liabilities, including, without limitation, attorneys' fees,
judgments, fines and amounts paid in settlement (all such expenses,
collectively, "Costs"), actually and reasonably incurred by him or her in
connection with the investigation, defense or appeal of any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, to which the Director/Executive Officer is a party or
threatened to be made a party (all such actions, collectively, "Proceedings")
(i) by reason of the fact that the Director/Executive Officer is or was a
director, officer, employee or agent of the Company or of any other corporation,
partnership, joint venture, trust or other enterprise (collectively,
<PAGE>   2
"Affiliates") of which he or she has been or is serving at the request of, for
the convenience of or to represent the interest of the Company or (ii) by reason
of anything done or not done by the Director/Executive Officer in any such
capacity referred to in the foregoing clause (i).

                  2.Culpable Action. (a) Notwithstanding the provisions of
Section 1, the Director/Executive Officer shall not be entitled to
indemnification if (i) the Company is prohibited from paying such
indemnification under applicable law, (ii) the Director/Executive Officer
breached his or her duty of loyalty to the Company or its stockholders or any
Affiliate or its stockholders, (iii) the Director/Executive Officer's actions or
omissions were not in good faith or involved intentional misconduct or a knowing
violation of law or (iv) the Director/Executive Officer derived an improper
personal benefit from any transaction which is a subject of the applicable
Proceeding (any existence or occurrence described in the foregoing clauses (i) -
(iv), individually, a "Culpable Action").

                  (b) The existence or occurrence of a Culpable Action shall be
conclusively determined by (i) a non-appealable, final decision of the court
having jurisdiction over the applicable Proceeding or (ii) a non-appealable,
final decision of the Court of Chancery of the State of Delaware (or if such a
decision is appealable, by the court in such State which has jurisdiction to
render a non-appealable, final decision). Such determination shall be final and
binding upon the parties hereto.

                  (c) The existence or occurrence of a Culpable Action may also
be determined by (i) the Board of Directors of the Company, by a majority vote
of a quorum consisting of directors who were not parties to the applicable
Proceeding (the "Disinterested Directors"), (ii) the stockholders of the
Company, by a majority vote of a quorum consisting of stockholders who were not
parties to the applicable Proceeding (the "Disinterested Stockholders"), or
(iii) any other entity to which the Disinterested Directors or the Disinterested
Stockholders shall have delegated the authority to make such a determination;
provided, however, that such determination shall be binding upon the parties
hereto only if a determination shall not have been made or shall not be
subsequently made pursuant to Subsection (b) above.
<PAGE>   3
                  (d) If a Proceeding involves more than one claim, issue or
matter, the determination as to whether there exists or has occurred a Culpable
Action shall be severable as to each and every claim, issue and matter.

                  (e) The termination of any Proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
does not change the presumption of Section 1 that the Director/Executive Officer
is entitled to indemnification hereunder and does not create a presumption that
there exists a Culpable Action.

                  3.Payment of Costs. The Costs incurred by the
Director/Executive Officer in connection with any Proceeding, including any
Proceeding brought pursuant to Section (2)(b), shall be paid by the Company on
an "as incurred" basis; provided, however, that if it shall ultimately be
determined that there exists or has occurred a Culpable Action with respect to
such Proceeding, the Director/Executive Officer shall repay to the Company the
amount (or the appropriate portion thereof as contemplated by Section 2(d)) so
advanced, including the costs of obtaining a determination pursuant to Section
2(b).

                  4.Severability. If any provision of this Agreement shall be
determined to be illegal and unenforceable by any court of law, the remaining
provisions shall be severable and enforceable in accordance with their terms.

                  5.No Right to Employment or Directorship. This Agreement shall
not entitle the Director/Executive Officer to any right or claim to be retained
as an employee and/or director of the Company or limit the right of the Company
to terminate the employment and/or directorship of the Director/Executive
Officer or to change the terms of such employment and/or directorship.

                  6.Other Rights and Remedies. This Agreement shall not be
deemed exclusive as to any other non-contractual rights to indemnification to
which the Director/Executive Officer may be entitled under any provision of law,
the Restated Certificate of Incorporation of the Company, any By-law of the
Company or otherwise.

                  7.Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart shall
<PAGE>   4
be deemed to be an original instrument, but all such counterparts together shall
constitute but one agreement.

                  8.Descriptive Headings. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.

                  9.Modification. This Agreement shall not be altered or
otherwise amended except pursuant to an instrument in writing signed by each of
the parties.

                  10.Notice to the Company by the Director/Executive Officer.
The Director/Executive Officer, as a condition precedent to his or her right to
be indemnified under this Agreement, shall give to the Company notice in writing
as soon as practicable of any Proceeding for which indemnity will or could be
sought under this Agreement.

                  11.Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or by facsimile
transmission with electronic confirmation of receipt or if sent by nationally
recognized overnight courier or first class certified mail, postage prepaid,
return receipt requested, addressed to such party at the address set forth below
or such other address as may hereafter be designated in writing by notice given
pursuant to this Section 11:

                              (i) if to the Company, to:

                             InterWorld Corporation
                             395 Hudson Street, 6th Floor
                             New York, New York 10014
                             Attention:  President and Chief Executive Officer
                             Telephone:(212) 301-2000; and

                              (ii) if to the Director/Executive Officer, to:

                             the Director/Executive Officer's name and address
                             as it appears in the records of the Company.
<PAGE>   5
                  12.Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and performed wholly therein.

                  13.Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of the Director/Executive Officer and his or her spouse, heirs, executors and
administrators.
<PAGE>   6
                  IN WITNESS WHEREOF, each of the undersigned have duly executed
this Indemnification Agreement as of the date first above written.

                                        INTERWORLD CORPORATION

                                        By:__________________________
                                           Name:
                                           Title:

                                           __________________________
                                           Director/Executive Officer
                                           Name:

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