Document:

THIS NOTE
AND THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES STATUTES OR
REGULATIONS, AND MAY NOT BE TRANSFERRED OR SOLD UNLESS (i) A REGISTRATION
STATEMENT UNDER SUCH ACT IS THEN IN EFFECT WITH RESPECT THERETO, (ii) A WRITTEN
OPINION FROM COUNSEL FOR THE ISSUER OR OTHER COUNSEL FOR THE HOLDER REASONABLY
ACCEPTABLE TO THE ISSUER HAS BEEN OBTAINED TO THE EFFECT THAT NO SUCH
REGISTRATION IS REQUIRED OR (iii) A “NO ACTION” LETTER OR ITS THEN EQUIVALENT
HAS BEEN ISSUED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION WITH
RESPECT TO SUCH TRANSFER OR SALE.

     

    STEELCLOUD,
INC.

    

    SECOND

    CONSOLIDATED,
AMENDED AND RESTATED

    PROMISSORY
NOTE

    

    THIS
SECOND CONSOLIDATED, AMENDED AND RESTATED PROMISSORY NOTE (this “Second Amended
and Restated Note”) is made and entered into as of September 10, 2010, intending
to be effective for all purposes as of the 2nd day of July, 2010, by and between
STEELCLOUD, INC., a Virginia corporation (hereinafter referred to as the
“Company” or “Borrower”); and CALEDONIA CAPITAL CORPORATION, a Delaware
corporation (hereinafter called the "Lender").

    

    WITNESSETH:

    

    WHEREAS,
Borrower heretofore executed and delivered to the Lender its one certain Secured
Promissory Note dated July 1, 2009 in the original principal amount of Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), which amount was
subsequently increased to Three Hundred Thousand and 00/100 Dollars
($300,000.00) (together with all amendments, modifications, substitutions,
extensions or renewals thereof hereinafter referred to as "Note 1");
and

    

    WHEREAS,
Borrower heretofore executed and delivered to the Lender its one certain
Revolving Line of Credit Promissory Note dated November 3, 2009 in the original
principal amount of One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00)
(together with all amendments, modifications, substitutions, extensions or
renewals thereof hereinafter referred to as "Note 2"); and

    

    WHEREAS,  Borrower
has requested that Lender extend the maturity  date and modify certain
of the terms of Note 1 and Note 2; and

    

    WHEREAS,
Lender is willing to extend the maturity date and modify certain of the terms of
Note 1 and Note 2 on the condition that Borrower agree to pay Lender a
modification fee in the amount of $50,000.00 (the “Modification Fee”) which
shall be added to the principal balance evidenced by Note 1 and Note 2 and
repaid in accordance with the terms of this Second Amended and Restated Note;
and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    WHEREAS,
pursuant to the terms of that certain First Amended and Restated Exchange
Agreement dated as of September 10, 2010, by and between the Company and the
Lender, the Lender exchanged 2,500,000 shares of the Company’s Common Stock for
90,000 shares of the Company’s Series A Preferred Stock and a Note in the
original principal amount of $70,000 (the “Exchange Note”); and

    

    WHEREAS,
Borrower and Lender wish to consolidate the aggregate outstanding principal
balance evidenced by Note 1, Note 2, the Exchange Note, and the Modification Fee
to form a single consolidated debt obligation evidencing a principal
indebtedness in the amount of Five Hundred Seventy Thousand and 00/100 Dollars
($570,000.00) and Borrower and Lender also wish to modify, extend and restate in
their entirety Note 1, Note 2, the Exchange Note, and the terms for repayment of
the Modification Fee, as herein consolidated, upon the terms and conditions set
forth herein.

    

    NOW,
THEREFORE, in consideration of the sum of Ten Dollars ($10.00) in hand paid by
each of the parties to the other, and in consideration of the mutual covenants
and agreements herein contained, the parties hereto, for themselves and their
respective successors and assigns, hereby agree that the terms
of  Note 1, Note 2 and the Modification Fee are hereby consolidated,
amended and restated in their entirety as follows:

    

    PROMISSORY
NOTE

    

    
      
        	
                $570,000

              	
                July
      2, 2010

              

      

    

     

    STEELCLOUD,
INC., a Virginia corporation (the “Company”), for value
received, hereby promises to pay to the order of CALEDONIA CAPITAL
CORPORATION,  a Delaware corporation (the “Holder”), or its
registered assigns, at 19441 Golf Vista Plaza, Suite 360, Leesburg,
VA  20176, the principal amount of FIVE HUNDRED SEVENTY THOUSAND AND
NO/100 DOLLARS ($570,000) on July 2, 2013 (the “Maturity Date”),
with interest thereon at a rate of 12% per annum, until
paid.   Payments of principal, premium, if any, and interest
hereon shall be made in lawful money of the United States of America, and such
payments shall be overdue for purposes hereof if not made on the scheduled date
of payment therefor, without giving effect to any applicable grace
period.  Accrued interest in arrears shall be payable on July 31, 2010
and on the last day of each month thereafter, and on the first to occur of the
conversion of the outstanding balance of this Second Amended and Restated Note
as contemplated by Section 2 hereof, the Maturity Date, and the acceleration of
this Second Amended and Restated Note.  Interest payable on this
Second Amended and Restated Note shall be calculated on the basis of a year of
360 days consisting of twelve 30-day months.  If the date for any
payment of principal is extended (whether by operation of this Second Amended
and Restated Note, any provision of law or otherwise), interest shall be payable
for such extended time at the rates provided herein.  Whenever any
payment hereunder shall be stated to be due on a day other than a business day,
such payment shall be due on the next succeeding business
day.    If the Company shall fail to pay on the due date
therefor, whether on the Maturity Date, by acceleration or otherwise, any
principal owing under this Second Amended and Restated Note, then interest shall
accrue on such unpaid principal from the due date to the date on which such
principal is paid in full at a rate per annum equal to eighteen percent (18%)
(the “Default Rate”).  Interest calculated at the Default Rate shall
be due and payable upon demand by the Lender.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    1.           General.

     

    1.1.           Assignment.  This
Second Amended and Restated Note and all rights hereunder are transferable, in
whole or in part, at the office or agency of the Company by the Holder or its
agent or attorney upon surrender of this Second Amended and Restated Note
together with the Assignment Form attached hereto as Exhibit A, properly
endorsed.

     

    1.2.           Certain
Waivers.  The parties hereto hereby waive presentment, demand,
notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance or enforcement of this Second Amended and
Restated Note.

     

    1.3.           Governing
Law.  This Second Amended and Restated Note shall be construed
in accordance with and governed by the domestic substantive laws of the
Commonwealth of Virginia without giving effect to any choice of law or conflicts
of law provision or rule that would cause the application of domestic
substantive laws of any other jurisdiction.

     

    1.4.           Notices.  Unless
otherwise specifically provided herein, all notices and service of any process
shall be in writing, addressed to the respective party at the address set forth
below and may be personally served, faxed or sent by overnight courier service
or United States mail and shall be deemed to have been given: (a) if delivered
in person, when delivered; (b) if delivered by telecopy, on the date of
transmission if confirmed and if transmitted on a business day before 4:00 p.m.
(Eastern time) or, if not, on the next succeeding business day; (c) if delivered
by overnight courier, two days after delivery to such courier properly
addressed; or (d) if by U.S. mail, four business days after depositing in the
United States mail, with postage prepaid and properly addressed.  The
parties hereto may change the address at which they are to receive notices and
the fax number at which they are to receive fax copies hereunder, by notice, in
writing, in the foregoing manner given to the other:

     

    
      	
            	
              If
      to Borrower: 

            	
              SteelCloud,
      Inc.

            

    

    20110 Ashbrook Place, Suite
130

    Ashburn,
VA  20171

    Attn: Brian Hajost

    Fax No. 703-435-8494

    

    
      	
            	
              If
      to Lender: 

            	
              Caledonia
      Capital Corporation

            

    

    19441 Golf Vista Plaza

     Suite 360, Leesburg,
VA  20176,

    Attn: Edward Murchie

    Fax No.
_______________________

    

     

    1.5.           Replacement.  Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Second Amended and Restated Note and, in the case of any
such loss, theft or destruction of this Second Amended and Restated Note, upon
receipt of an indemnity reasonably satisfactory to the Company or, in the case
of any such mutilation, upon the surrender and cancellation of this Second
Amended and Restated Note, the Company, at its expense, shall execute and
deliver, in lieu thereof, a new Note of like tenor and dated the date of such
lost, stolen, destroyed or mutilated Note, and following such execution and
delivery this Second Amended and Restated Note shall not be deemed to be an
outstanding note.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    1.6.           Amendment.  Any term of this
Second Amended and Restated Note may be amended only with the written consent of
the Company and the holder.

     

    
      	
              2.

            	
              Lender’s Conversion
      Option.

            

    

     

    2.1           Conversion
of Note.   The Lender shall have the right at any time and
from time to time to convert all, or any part, of the outstanding balance due
under this Second Amended and Restated Note into shares of Common Stock of the
Company at the conversion rate of $0.10 per share of Common Stock (subject to
adjustment in the event of stock splits or combinations).  To exercise
such conversion right, Lender must give written notice to the Company (“Conversion Notice”)
of such intent at least five (5) days prior to such conversion and specify the
portion of the outstanding principal balance of this Second Amended and Restated
Note to be so converted. No fractional shares of the Company's Common Stock
shall be issued upon conversion of this Second Amended and Restated Note. In
lieu of the Company issuing any fractional shares to Lender upon the conversion
of this Second Amended and Restated Note, the Company shall pay to the Lender
the amount of outstanding principal that is not so converted in cash. Within
five (5) days after receipt of the Conversion Notice, (a) the Company at its
expense will issue and deliver to the Investor a certificate or certificates for
the number of full shares of Common Stock issuable upon such conversion and pay
any outstanding interest accrued under this Second Amended and Restated Note,
(b) the principal balance of this Second Amended and Restated Note shall be
reduced by the amount so converted, and (c) upon conversion of all of the
outstanding principal balance due under this Second Amended and Restated Note,
the Lender shall concurrently surrender this Second Amended and Restated Note,
marked paid, at the principal office of the Company.  Upon conversion
of all of the outstanding principal balance due under this Second Amended and
Restated Note, and payment of any accrued and outstanding interest thereon, the
Company shall be forever released from all its obligations and liabilities under
this Second Amended and Restated Note. Anything contained in this Second Amended
and Restated Note to the contrary notwithstanding, this Note may not be prepaid
without the Company providing the Investor not less than thirty (30) days prior
written notice of such prepayment and the Investor shall not be
required to accept any prepayment of this Second Amended and Restated Note if
following receipt of such written notice the Investor has delivered a Conversion
Notice to the Company.

     

    2.2           Reservation
of Shares.  From and after the date hereof, the Company shall
reserve and keep available for issuance (i) such number of its authorized but
unissued shares of its Common Stock as will be sufficient to permit the
conversion in full of this Second Amended and Restated Note into Common Stock,
and in each case in accordance with this Agreement and the terms of this
Note.  All shares of Common Stock that are so issuable shall, when
issued upon conversion or exercise, be duly and validly issued and fully paid
and non-assessable.  If at any time the number of authorized but
unissued shares of Common Stock shall be insufficient to effect the conversion
or exercise of all the outstanding balance of this Second Amended and Restated
Note, the Company shall take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such
purpose.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    2.3           Registration
Rights.  The Lender shall be
entitled to the rights and benefits as a holder of Investor Registrable
Securities under that certain Registration Rights Agreement of even date herewith between and among Borrower,
Lender and Clipper Investors LLC. 

     

    3.           Events of
Default And Remedies.  Any one of the following occurrences
shall constitute an “Event of Default” under this Note:

     

    3.1           The
failure by Borrower to make payment of principal and/or interest due under this
Note as and when the same becomes due and payable in accordance with the terms
hereof;

     

    3.2           Borrower
fails to pay or perform any obligation or covenant under the Security
Agreement.

     

    3.3           If
any proceeding is commenced by or against (unless dismissed within forty-five
(45) calendar days) Borrower under any provision of the United States Bankruptcy
Code or under any other state or federal bankruptcy or insolvency law,
assignments for the benefit of creditors, formal or informal or moratoria,
compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement or other similar relief is commenced by
Borrower;

     

    3.4           If
all or a substantial portion of Borrower’s assets become subject to writ of
attachment, writ of execution or any other lien, and such writ or lien is not
released within twenty (20) calendar days;

     

    Upon the occurrence of any Event of
Default, (i) the entire unpaid principal amount of this Note, and any unpaid
interest then accrued thereon, and any other amounts owing under or evidenced by
this Note, shall, without notice or demand of any kind by Lender to Borrower or
any other person, immediately become due and payable in full; and (ii) Lender
shall have and may exercise any and all rights and remedies available at law or
in equity and also any and all rights and remedies as may otherwise be available
to Lender.  Notwithstanding anything to the contrary herein, Lender’s
exercise of its remedies hereunder is subject to the provisions of that certain
Intercreditor Agreement by and among Clipper Investors LLC, Lender and the
Company.

     

    No act of omission or commission by
Lender, including specifically any failure to exercise any right, remedy or
recourse, shall be deemed to be a waiver or release of the same, such waiver or
release to be effected only through a written document executed by Lender and
then only to the extent specifically recited therein.  A waiver or
release with reference to any one event shall not be construed as continuing, as
a bar to, or as a waiver or release of, any subsequent right, remedy or recourse
as to a subsequent event.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the Company has executed this Second Amended and Restated Note
as of the date first above written.

     

    
      	 	BORROWER:	 
	 	 	 
	 	STEELCLOUD,
      INC.	 
	 	 	 	 
	
               

            	
              By:
      

            	/s/
      Brian H. Hajost	 
	 	 	Name:
      Brian H. Hajost 	 
	 	 	Title:
      President & CEO	 

    

     

     

    
      
        	 	LENDER:	 
	 	 	 
	 	CALEDONIA
      CAPITAL CORPORATION	 
	 	 	 	 
	
                 

              	
                By:
      

              	      
                /s/ Edward M.
      Murchie

              	 
	 	 	      
                Edward
      M. Murchie, President

              	 

      

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

    

    ASSIGNMENT
FORM

     

    (To
assign the foregoing Note, execute

    this form
and supply the required information.)

     

    FOR VALUE
RECEIVED, the foregoing Note and all rights evidenced thereby are hereby
assigned to

     

    

    _______________________________________________
whose address is

     

    _______________________________________________________________

    

    _______________________________________________________________

     

    Dated:  ______________,
_______

     

    Holder’s
Name:                         
_______________________

     

    Signature of Holder

    or Authorized
Signatory:          _______________________

     

    Title (if
applicable):                   
_______________________

     

    Holder’s
Address:                     _______________________

     

     

    Signature
Guaranteed:  ___________________________________________

     

    NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Note, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Note.

     

    
      
         

      

      
        7MASTER PURCHASE ORDER
ASSIGNMENT AGREEMENT

    

    THIS
AGREEMENT is made on the 21st day of September, 2010, by and between WELLS FARGO BANK, NATIONAL
ASSOCIATION, acting through its Wells Fargo Business Credit, operating
division (the “CONTRACTOR”) and SOUTHPEAK INTERACTIVE, L.L.C.,
a Virginia limited liability company (the “DISTRIBUTOR”), as
follows:

    

    BACKGROUND OF
AGREEMENT:

    

    
      	
              A.

            	
              The
      parties have signed an agreement in principle to enter into a purchase
      order assignment program under which the Distributor will assign customer
      purchase orders to the Contractor and request the Contractor to purchase
      the required materials to fulfill such purchase orders; the Contractor
      will retain the Distributor to manufacture, process and ship ordered
      goods; and fees will be paid to the Distributor for its services upon
      payment to the Contractor for the
goods.

            

    

    

    
      	
              B.

            	
              The
      parties desire to enter into a formal agreement to set forth the terms and
      provisions of the purchase order assignment
  program.

            

    

    

    THEREFORE,
in consideration of the services to be performed, the payments to be made, and
the obligations to be assumed as set forth in this Agreement, the parties agree
as follows:

    

    1.          Definitions.  In this
Agreement, the following frequently used terms are defined as set forth in this
¶1:

    

    (a)         The
“CERTIFICATE” means the
Purchase Order Package Certificate required to be delivered with each request
for assignment of a purchase order.  The form of Certificate is
attached to this Agreement as Exhibit “A” and made a part hereof.

    

    (b)         With
respect to each purchase order submitted for assignment hereunder, the
Certificate will define the “PRODUCT” (the end product to
be delivered to the customer), the “CUSTOMER” (the business
entity which issues the purchase order), the “WAREHOUSE”(an independent
warehouse acceptable to the Contractor where the Products will be stored and
shipped), the “P.O.
PRICE” (the purchase price to be paid by the Customer for the Products),
the “P.O. DELIVERY DATE”
(the date on which Products are to be delivered to the Customer as set forth in
the Certificate), and the “MATERIALS DELIVERY DATE” (the
date on which the Products are to be delivered to the Distributor or the
Warehouse as set forth in the Certificate).

    

    (c)         A
purchase order delivered to the Distributor in the ordinary course of its
business is referred to as a “P.O.”  A P.O. which
meets all of the requirements of ¶3 below is deemed to be unconditionally
accepted by Contractor and is referred to as an “ACCEPTED P.O.”  The
date on which the Contractor delivers notice of acceptance of the assignment of
the P.O. is referred to as the “ACCEPTANCE
DATE”.  When an Accepted P.O. is made null and void pursuant to
this Agreement, it is referred to as a “CANCELED P.O.” Under certain
circumstances, when a P.O. is not assignable to the Contractor, the Contractor
will accept an assignment of the proceeds of the P.O.  In such cases,
the terms P.O. and Accepted P.O. will mean the proceeds of such P.O. or Accepted
P.O. as the case may be.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d)         A
financial institution engaged in the practice of lending sums to the Distributor
secured at least in part by Distributor's accounts receivable is referred to as
the “ACCOUNTS RECEIVABLE
LENDER”.  The Accounts Receivable Lender involved in this
transaction (if any) is identified on Addendum I attached hereto.  A
“SENIOR LENDER” is any
financial institution (including the Accounts Receivable Lender) which is
engaged in lending sums to the Distributor secured by liens on some or all of
the Distributor's assets.  Each Senior Lender involved in this
transaction (if any) is also identified on Addendum I.

    

    (e)         The
invoice rendered upon delivery of Products pursuant to a P.O. is referred to as
the “P.O. INVOICE”; and
payments received on account of P.O. Invoices (whether paid by the Customer, the
Accounts Receivable Lender, the Distributor, or any other party) are referred to
as the “P.O.
PROCEEDS”.

    

    (f)          The
Distributor may repurchase an Accepted P.O. pursuant to ¶8(b)
below.  In the absence of such repurchase, an Accepted P.O. becomes a
“DELINQUENT P.O.” if the
P.O. Price is not paid to the Contractor by the earliest of (i) the due date for
payment of the P.O. Invoice, (ii) seventy-five (75) days following the Funding
Date if Contractor issues its letter of credit or purchase order, (iii)
seventy-five (75) days following the Funding Date if Contractor advances funds
by other than issuing its letter of credit or purchase order, (iv) the date on
which the Accepted P.O. is canceled, or (v) the date of occurrence of an event
of default pursuant to ¶18 below.

    

    (g)         If
a lock box collection procedure is established pursuant to this Agreement, the
term “LOCK BOX” refers
to the Contractor's lock box account; and the term “LOCK BOX BANK” means the bank
at which the Contractor establishes the Lock Box and so notifies Distributor in
writing.  The Lock Box and Lock Box Bank involved in this transaction
(if any) are identified on Addendum II attached hereto.

    

    (h)         The “FUNDING DATE” is the date on
which the Contractor makes its first Product purchase in connection with an
Accepted P.O. or issues its letter of credit or purchase order or otherwise
advances funds to or for the benefit of or on account of an Accepted P.O.,
whichever is earlier.  The “CLEARANCE DATE” is the date
on which the Contractor (or the Lock Box Bank) has received full payment of the
P.O. Price or such other amount as is designated by Contractor on Exhibit “C”
hereto in connection with an Accepted P.O. in fully collected
funds.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    (i)           The
Distributor will perform its obligations in accordance with the “DISTRIBUTOR'S SPECIFICATIONS”
which are set forth on Exhibit “B” attached hereto and will be paid a “DISTRIBUTOR'S FEE” computed
in accordance with the provisions of ¶7(c) below.  The Distributor's
obligations are secured by a “SECURITY AGREEMENT” described
in ¶10 below.

    

    (j)           The
Contractor will be paid a “COMMITMENT FEE” (computed and
paid pursuant to ¶6 below), the
“CONTRACTOR'S DEAL FEES” (computed and paid pursuant to ¶7 below), and
“CONTRACTOR'S EXPENSES”
(computed and paid pursuant to ¶9 below).  For purposes of computing
the waiver of portions of the Commitment Fee, the term “PRODUCT VOLUME” means the
aggregate of (a) the face amounts of all letters of credit issued by Contractor
plus (b) the aggregate amount of funds advanced by Contractor by other than
issuing its letters of credit, in connection with an Accepted P.O. for which a
P.O. Invoice is issued on or before the date on which payment of the Commitment
Fee is due; and “MINIMUM
VOLUME” means Product Volume which equals or exceeds
$6,000,000.

    

    (k)          If
the Distributor is required to make a “SECURITY DEPOSIT” (as defined
in ¶3(b)(i)), the Security Deposit will be maintained in accordance with
¶10.1.

    

    2.           Submission
of P.O.'s for Assignment.  Subject to the
terms of this Agreement, the Distributor may request that the Contractor accept
an assignment of each P.O. submitted to and accepted by Distributor and make
Product purchases to fulfill the P.O.  Each such request shall be made
pursuant to a completed and signed Certificate delivered to the
Contractor.

    

    3.           Acceptance
of P.O. Assignments.

    

    (a)          Subject
to the conditions and requirements set forth in this ¶3, Contractor agrees to
accept or decline acceptance of the assignment of a P.O. submitted to Contractor
pursuant to the provisions of ¶2 above (in Contractor's absolute discretion) by
delivery of written notice to Distributor.  Contractor may, in its
absolute discretion, elect to treat all P.O.’s that became Accepted P.O’s
concurrently as a single P.O.   Contractor will use its best
efforts to deliver such acceptance by 5:00 p.m. on or before the fourth full
business day after Contractor receives the Certificate.

    

    (b)         Notwithstanding
the provisions of ¶3(a) above, Contractor shall not accept the assignment of any
P.O. which does not meet the following requirements:

    

    (i)           Contractor's
funding commitment with respect to the P.O. shall not exceed 55% of the P.O.
Price, provided, however, that Contractor may exceed such limitation upon the
deposit by the Distributor with the Contractor of a Security Deposit (the
“Security Deposit”) in an amount equal to the aggregate amount of capital
required to purchase and deliver Products to a Customer in connection with the
P.O. minus the lesser of 55% of the P.O. Price or 90% of the advance to be made
by the Accounts Receivable Lender for such P.O. Price;

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (ii)         If
the Distributor has an Accounts Receivable Lender acceptable to Contractor, the
P.O. shall have been approved for an advance rate of not less than 65% of the
P.O. Price by such Accounts Receivable Lender;

    

    (iii)        Distributor
shall have on deposit with Contractor a Security Deposit as set forth in ¶10.1
hereof;

    

    (iv)        Upon
the purchase of Product required for the P.O., or upon any other advance of
funds in connection with the P.O., the Contractor's aggregate outstanding
funding pursuant to this Agreement shall not exceed the sum of
$2,000,000;

    

    (v)         An
original, signed copy of the Certificate shall have been delivered to the
Contractor;

    

    (vi)        All
information contained on the Certificate shall be verified by Contractor to
ensure (to Contractor's satisfaction) that the Materials Delivery Date and P.O.
Delivery Date are reasonable and that the P.O. is bona fide (which verification
may include, without limitation, direct confirmation from the Customer and any
vendors); and

    

    (vii)       The
Distributor shall have delivered to the Contractor such additional information
and documentation as the Contractor may have from time to time
requested.

    

    (c)         Notwithstanding
the other provisions of this ¶3, the Contractor's acceptance of the assignment
of a P.O. shall be made null and void and the P.O. shall be deemed a Canceled
P.O. upon the occurrence of any one of the following:

    

    (i)         
The failure of the Contractor to obtain accepted orders for Products at prices
and on other terms and conditions acceptable to the Contractor within five (5)
business days following the Acceptance Date, and Contractor's notice to the
Distributor thereof.  Upon delivery of such notice to Distributor,
Contractor's rights and interests in and to the P.O. will be terminated
absolutely and Contractor shall have no obligation whatsoever to Distributor
with respect to such P.O.;

    

    (ii)         The
failure of a vendor of Products to deliver Products which conform to
Contractor's specifications to the Warehouse on or before the Materials Delivery
Date.  Upon such failure of delivery, Contractor shall have the right
to require Distributor to purchase the Products from Contractor and shall assign
to Distributor the right to receive those Products which have not then arrived
at the Warehouse;

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    (iii)        The
cancellation of the P.O. prior to delivery of Products to the
Customer.  Upon such cancellation, Distributor shall pay Contractor
such sums as are required pursuant to ¶8 below; and

    

    (iv)        The
failure of the Distributor to obtain (if so requested by Contractor) a waiver
and release of Contractor by the Customer of any and all liability for breach of
any and all express or implied warranties or product liability claims with
respect to the Products or the use and distribution thereof.

    

    (d)         A
P.O. shall be deemed an Accepted P.O. only when (i) the P.O. is submitted for
assignment by the Distributor pursuant to a Certificate or such other form of
submission to which the Contractor may from time to time consent, (ii) the
Contractor shall deliver notice of acceptance of assignment to the Distributor
pursuant to subparagraph (a) or, in the absence of such notice of acceptance,
the Contractor shall purchase Products with respect to the P.O. or otherwise
advance of funds in connection with the P.O., (iii) the P.O. shall meet each of
the requirements of subparagraph (b) above unless otherwise waived by the
Contractor, and (iv) none of the events described in subparagraph (c) above
shall have occurred prior to delivery of the Products to the Customer pursuant
to the P.O.  Until such time as each of the aforedescribed
requirements and conditions is satisfied in full, Contractor's acceptance of an
assigned P.O. shall be deemed conditional and subject to revocation at any
time.

    

    4.          Appointment of
Distributor.

    

    (a)         Subject
to the other provisions of this Agreement, with respect to all Accepted P.O.'s
(and only so long as such P.O. remains an Accepted P.O.) Contractor hereby
appoints the Distributor as Contractor's exclusive source for performing or
causing to be performed in accordance with the Distributor’s Specifications all
processing, warehousing, and shipping requirements with respect to the Products,
and the Distributor hereby accepts such appointment.  Distributor
agrees to perform all of its obligations pursuant to this ¶4 in a good and
workmanlike manner, to utilize quality control procedures consistent with the
standards of Distributor and the industry, and to otherwise comply with each of
the Distributor's Specifications.

    

    (b)         So
long as any Products are located at the Warehouse or are scheduled for delivery
to the Warehouse, Distributor agrees to perform in accordance with all of the
Distributor's Specifications.  If any Products are located at any
facility of the Distributor or at an independent warehouse which is not
acceptable to the Contractor, the Distributor shall furnish the Contractor with
a surety bond issued by a company and having terms acceptable to the
Contractor.

    

    (c)         Distributor
further agrees that with respect to Products purchased by Contractor pursuant to
(and in accordance with) a Certificate which are not (or cannot be) used in
connection with the applicable Accepted P.O., upon Contractor's written
notice:

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    (i)           Distributor
shall purchase such Products from Contractor within three (3) days following
Contractor's notice for a purchase price equal to Contractor's costs for the
Products; or

    

    (ii)          If
Distributor fails to make such purchase of Products, such Products shall be sold
by Contractor and the proceeds thereof applied first to Contractor's costs for
the Products, and the balance, if any, to Distributor.

    

    5.           Payment and
Re-Assignment.

    

    (a)         Upon
delivery of Products to the Customer pursuant to an Accepted P.O., Distributor
shall issue a P.O. Invoice (and deliver any other related documents required by
the applicable P.O. for issuance of an invoice on account of such P.O.) to the
Customer for the full P.O. Price.  Upon Contractor's direction, the
P.O. Invoice so issued shall be in the name of the Contractor and shall direct
the Customer to make payment to the Contractor (or the Lock Box, if
applicable).  Distributor shall immediately pay to the Contractor any
sums from time to time received by the Distributor from the Customer or any
other party other than the Contractor on account of a P.O.
Invoice.  Upon Contractor's demand, each P.O. Invoice shall be
prepared on such invoice form as Contractor may designate.

    

    (b)         At
such time as Contractor has received payment in full on account of a P.O.
Invoice or such other amount as is designated by Contractor on Exhibit “C”
hereto, the Contractor shall re-assign the applicable Accepted P.O. and all
rights with respect thereto to the Distributor and the Distributor shall accept
such re-assignment.  The re-assignment shall be evidenced by a
Re-Assignment and Release of Purchase Order in the form of Exhibit “C” attached
hereto.

    

    (c)         Sums
received by the Contractor on account of a P.O. Invoice shall be applied by the
Contractor for the satisfaction of the expenses, fees and charges described in
this Agreement pursuant to the priorities of payment set forth in ¶7
below.  Provided, however, that Distributor shall pay all sums due
Contractor upon a Delinquent P.O. in the manner and pursuant to the terms of ¶8
below.

    

    6.           Commitment
Fee.

    

    (a)          Subject
to the provisions of this ¶6, Distributor shall pay Contractor a Commitment Fee
in consideration of Contractor's commitment to reserve and have available
sufficient funds to purchase Products or to otherwise advance funds in
connection with a P.O. for Product Volume in amounts equal to or exceeding the
Minimum Volume as contemplated by this Agreement.  The Commitment Fee
shall be in the sum of $120,000 and shall be paid by Distributor on the earlier
of twelve months following the date of this Agreement or the date of termination
of this Agreement.  In the event the term of this Agreement is renewed
for one or more twelve month renewal terms, for each such renewal, Distributor
shall pay Contractor a Commitment Fee in the sum of $120,000, which fee shall be
paid by Distributor on the earlier of twelve months following the date of the
renewal of this Agreement or the date of termination of this
Agreement.  The Commitment Fee for the initial term of this Agreement
is deemed by the parties to have been earned by the Contractor upon the signing
of this Agreement, as of which date the Contractor has reserved the requisite
funds.  The Commitment Fee for each renewal term of this Agreement is
deemed by the parties to have been earned by the Contractor upon each renewal
date of this Agreement, as of which date the Contractor has reserved the
requisite funds.

    
      
         

      

      
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    (b)         Notwithstanding
the provisions of subparagraph (a) above, all or a portion of the Commitment Fee
shall be waived in accordance with the provisions of this subparagraph
(b).  If Product Volume for the initial term or any renewal thereof as
of the due date for payment of the Commitment Fee equals or exceeds the Minimum
Volume, the entire Commitment Fee shall be waived by the
Contractor.  If Product Volume for the initial term or any renewal
thereof as of the due date for payment of the Commitment Fee does not equal or
exceed the Minimum Volume, Contractor shall waive that portion of the Commitment
Fee equal to the Commitment Fee multiplied by a fraction, the numerator of which
is the Product Volume as of the due date for payment of the Commitment Fee, and
the denominator of which is the Minimum Volume.

    

    7.           Compensation of Contractor
and Distributor.

    

    (a)          Payments
received by the Contractor on account of Accepted P.O.'s will be applied in the
following order of priority:

    

    (i)           First,
to pay Contractor's Expenses to the extent that such expenses are then due
pursuant to the terms of ¶9;

    

    (ii)         Second,
to the payment of the Contractor's Deal Fees in connection with the Accepted
P.O. and all other Accepted P.O.'s that became Accepted P.O.'s concurrently with
such Accepted P.O.;

    

    (iii)        Third,
to pay any shortage then existing in the Security Deposit as set forth in
¶10.1;

    

    (iv)        Fourth,
to reimburse the Contractor for the cost of Products and for other advances made
in connection with a P.O. (without regard to term or prompt payment discounts)
purchased in connection with the Accepted P.O. and all other Accepted P.O.'s
that became Accepted P.O.'s concurrently with such Accepted P.O.;
and

    

    (v)         Fifth,
to the payment of the Distributor's Fee in connection with the Accepted
P.O.

    

    (b)         The
Contractor's Deal Fees with respect to each Accepted P.O. shall be as
follows:

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (i)           A
transaction initiation and set-up fee in a sum equal to 1.5% of the aggregate of
(a) the face amounts of all letters of credit issued by Contractor (or other
financial accommodations) plus (b) all funds advanced by Contractor by other
than issuing its letters of credit; plus

    

    (ii)          A
daily maintenance fee in a sum equal to 0.05% of the aggregate of the face
amounts of all letters of credit issued by Contractor (or other financial
accommodations) and all funds advanced by Contractor by other than issuing its
letters of credit which remain outstanding for more than thirty (30) days;
plus

    

    (iii)         A
Product advance fee in a sum equal to the Applicable Daily Rate (as hereinafter
defined) multiplied by the aggregate amount outstanding on all letters of credit
(or other financial accommodations) and all funds advanced by Contractor by
other than issuing its letters of credit on account of purchases of Products or
other advances made in connection with a P.O. multiplied by the number of days
from the earliest of (A) the date on which any such letter of credit or purchase
order or financial accommodation is negotiated into cash by any person, or (B)
the date funds are advanced by other than issuing a letter of credit or purchase
order, to and including the Clearance Date.  The “Applicable Daily
Rate” shall mean the prime rate as in effect from time to time at Wells Fargo
Bank, National Association, plus 2%, divided by 360.

    

    (iv)         In
the event of a Delinquent P.O., a late payment fee in a sum equal to 0.067% of
the outstanding portion of the P.O. Price multiplied by the number of days from
the date an Accepted P.O. becomes a Delinquent P.O. to and including the
Clearance Date.

    

    Notwithstanding
the foregoing, if the sum of the transaction initiation and set-up fee and the
daily maintenance fee is not equal to or greater than $2,500 with respect to an
Accepted P.O., the minimum aggregate amount payable by Distributor to Contractor
for the transaction initiation and set-up fee and the daily maintenance fee with
respect to such accepted P.O. shall be equal to $2,500.

    

    (c)         The
Distributor's Fee with respect to each Accepted P.O. shall be equal to the
collected P.O. Proceeds with respect to such Accepted P.O. less all sums payable
pursuant to subparagraphs (a)(i), (ii), (iii) and (iv) above and less 100% of
all term discounts or discounts for prompt payment.

    

    (d)         Sums
due on account of the expenses and fees described in subparagraphs (a)(i), (ii),
(iii) and (iv) above shall be paid as and when proceeds are received with
respect to the applicable Accepted P.O.  The Distributor's Fee will be
paid not later than the second business day after the Clearance Date and after
satisfaction of all costs, fees and expenses having a higher priority then due
and owing.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    8.           Repurchase;
Reassignment.

    

    (a)          Contractor
shall have the right to require the Distributor to immediately purchase any
Delinquent P.O. (and inventory of Products in the case of a Canceled P.O.) for
an amount equal to the full amount outstanding under the P.O. Invoice (or the
P.O. Price in the case of a Canceled P.O.).  Any such payment by the
Distributor shall be deemed to be P.O. Proceeds and shall be applied in
accordance with the priorities and terms set forth in ¶7 above.

    

    (b)         In
the event that Distributor makes all payments due on a Delinquent P.O. or
Canceled P.O. pursuant to the provisions of subparagraph (a) above, Contractor
shall thereupon immediately assign to Distributor all of Contractor's rights and
interests in and to the P.O. Invoice and the P.O. Proceeds and any Products in
the possession of Contractor or Distributor with respect to such Delinquent
P.O.

    

    9.           Contractor's
Expenses.  Immediately upon
Contractor's demand, Distributor shall pay or reimburse Contractor for all
Contractor's Expenses.  Contractor's Expenses include all reasonable
expenses, fees, and costs incurred by Contractor in connection with the creation
of and performance of this Agreement and the transactions contemplated hereby,
including without limitation, the expenses of Contractor's representative at the
Warehouse, insurance and credit insurance premiums, audit costs, attorney's
fees, Contractor's travel expenses, Lock Box Bank charges, bank letter of credit
charges, and filing fees.  Contractor's demand for payment of
Contractor's Expenses will be made in writing and will include reasonable
documentation of the expenses for which reimbursement is
demanded.  Contractor acknowledges receipt of the sum of $7,500
deposited by Distributor to be applied towards the payment of Contractor's
Expenses.

    

    10.        Security
Interests.  As security for
the performance by Distributor of each of its obligations under this Agreement,
Distributor hereby grants the following security interests to the
Contractor:

    

    (a)         A
security interest in all of Distributor's assets in accordance with the
provisions of the Security Agreement in form satisfactory to
Contractor.  Provided, however, that such grant of security interest
shall be subordinate to the lien of the Senior Lender (if any) in any common
collateral.

    

    (b)         The
right to set-off against any and all amounts due to the Distributor hereunder
any sums which are due to the Contractor hereunder which have become past due
and delinquent under this Agreement.

    

    (c)         All
of the Distributor's rights and interests in, and right of payment from, the
Accounts Receivable Lender of all sums paid or payable by the Accounts
Receivable Lender from time to time to the Distributor.  Distributor
agrees to direct the Accounts Receivable Lender to make such payments to
Contractor pursuant to such written direction as Contractor may request from
time to time.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (d)         All
checks, notes, deposits, drafts, and other instruments of payment on account of
or related to an Accepted P.O., and all bills of lading and other documents of
title related to an Accepted P.O.  Distributor hereby irrevocably
designates and appoints the Contractor (and all persons designated by the
Contractor) as the Distributor's true and lawful attorney-in-fact and
agent-in-fact and Contractor (or Contractor's agent) may, without notice to
Distributor:

    

    (i)           At
any time endorse by writing or stamping Distributor's name on any checks, notes,
deposits, drafts or other instruments of payment on account of, relating to, or
representing the proceeds of an Accepted P.O. or any other collateral described
herein or in the Security Agreement (collectively the “Collateral”) which come
into the possession of the Contractor or are under Contractor's control and
deposit the same to the account of the Contractor for application to all sums
due from the Distributor to the Contractor hereunder;

    

    (ii)          At
any time endorse by writing or stamping Distributor's name on any bill of lading
or other document of title relating to an Accepted P.O.; and

    

    (iii)         At
any time after the occurrence of a default by the Distributor hereunder or
pursuant to the Security Agreement, in Distributor's or Contractor's name,
demand payment of, enforce payment of, exercise all of Distributor's rights and
remedies with respect to, settle, adjust, compromise, initiate and prosecute
legal proceeding with respect to, and otherwise take all actions with respect to
the Collateral which are, in the Contractor's sole discretion, necessary or
desirable in order to fulfill Distributor's obligations under this Agreement and
otherwise realize the full economic value of the Collateral.

    

    10.1       Security
Deposit.  (a)  The
Security Deposit shall be held and applied by the Contractor as
follows:

    

    (i)          Contractor
shall hold the Security Deposit in such depositories as it determines and may
commingle the same with other funds from time to time in Contractor's
possession.  No interest or other earnings shall be payable on account
of sums held as a Security Deposit.

    

    (ii)         Upon
the occurrence of a default as set forth in ¶18(c) below, Contractor may, in its
discretion and without prior notice, apply all or any portion of the Security
Deposit to pay or otherwise satisfy Distributor's obligations hereunder.
Contractor shall, as soon as practicable following any such application, notify
Distributor thereof and provide a full accounting of such
application.

    

    (b)           When
funds are applied in the manner set forth in ¶10.1(a)(ii) above, a “shortage” is
created in an amount equal to all sums so applied.  Distributor shall,
within five (5) business days following notification of any shortage, pay to the
Contractor, as and for a portion of the Security Deposit, the sum of such
shortage.

    
      
         

      

      
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    (c)          Contractor
shall pay the Security Deposit to Distributor promptly following such time as
all sums then due and owing to the Contractor by the Distributor hereunder have
been paid in full, provided that Distributor is not then in default of any of
its other obligations under this Agreement.

    

    11.         Guaranty.  It is a condition
to the signing of this Agreement and the performance by the Contractor of any of
its obligations hereunder that the persons and entities listed on Addendum III
attached hereto execute and deliver to the Contractor a Guaranty in form and
substance satisfactory to Contractor under which said guarantor(s) guaranty the
Distributor's obligations to Contractor hereunder.

    

    12.         Covenants
of Contractor.  Provided that
Distributor performs each of its obligations in the manner set forth in this
Agreement, the Contractor covenants and agrees as follows:

    

    (a)          To
use reasonable efforts to place orders for Products identified on Certificates
for Accepted P.O.'s for purchase by Contractor and delivery to the Warehouse on
terms consistent with the terms set forth in the Certificate.

    

    (b)          Following
timely delivery and acceptance of Products at the Warehouse, to promptly pay for
all such Products in accordance with the terms of purchase.

    

    (c)          To
release Products located at the Warehouse in such quantity and at such times as
are necessary to permit Distributor to meet the terms of Accepted
P.O.'s.

    

    (d)          Upon
termination of this Agreement and performance by Distributor of all of its
obligations hereunder, to promptly execute and deliver (if Distributor so
requests) any instruments and documents reasonably necessary to terminate and
release any and all security interests granted to Contractor by Distributor
pursuant to this Agreement.

    

    13.         Warranties
and Representations of Distributor.  Distributor
hereby makes the following warranties and representations to Contractor, each of
which is deemed a material inducement to the Contractor to enter into and
perform in accordance with the provisions of this Agreement and each of which
shall be deemed renewed and restated as of the Acceptance Date of each Accepted
P.O.:

    

    (a)          Distributor
is a limited liability company duly organized, validly existing, and in good
standing under the laws of the state of its formation, and is qualified or
licensed as a foreign limited liability company to do business in every location
in which the laws require Distributor to be so qualified or
licensed;

    (b)          Distributor
has the right and power and is duly authorized and empowered to enter into,
execute, deliver, and perform this Agreement and all agreements and documents
described herein;

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    (c)          The
execution, delivery, and performance by Distributor of this Agreement and all
agreements and documents described herein does not constitute a violation of any
law, regulation, judgment, order, contract, charter, by-laws, or other
instrument to which Distributor is a party or is otherwise bound or
subject;

    

    (d)         Distributor
is not in default under any loan agreement, mortgage, lease, trust deed or
similar agreement relating to the borrowing of money to which Distributor is a
party or is otherwise bound;

    

    (e)          Each
P.O. submitted for assignment by the Distributor is a bona fide purchase order
and conforms in all respects to the representations contained in the
Certificate, which Certificate is true and correct in all respects;

    

    (f)          The
Distributor shall at all times maintain such types and amounts of insurance
coverage (including without limitation credit insurance) with respect to
Distributor's business operations, the Products located in the Warehouse and any
Accepted P.O. as Contractor may from time to time reasonably require, such
insurance to name the Contractor as an insured in the manner and to the extent
required by Contractor from time to time and, upon the failure to maintain such
coverage, Contractor may purchase the same and the cost thereof shall be deemed
a Contractor's Expense;

    

    (g)          Except
with respect to the lien of the Accounts Receivable Lender or as otherwise set
forth on Exhibit “D” attached hereto, there are no liens, judgments or claims
affecting or relating to the Distributor or any of its assets;

    

    (h)          Except
as set forth on Exhibit “E”, there are no suits, administrative proceedings,
arbitration proceedings or other adversarial proceedings or investigations
pending or (to the best of Distributor's knowledge) threatened against
Distributor or any of the guarantors;

    

    (i)           All
of the financial information (including projections) provided by the Distributor
to the Contractor in connection with the Contractor's consideration of the
transaction contemplated by this Agreement are true and accurate, contain no
material misstatement of any facts, contain all material information concerning
the Distributor's financial condition, and do not omit to state any facts which,
if disclosed, would reflect adversely on the financial condition of the
Distributor or any of its Customers; and

    

    (j)           Distributor
has duly filed all federal, state, county, local, and foreign income, excise,
sales, customs, property, withholding, social security and other tax and
information returns and reports required to be filed by it to the date hereof,
or in the alternative, has obtained extensions for filing pursuant to
established procedures, and has paid or made provision for payment of all taxes
(including interest and penalties) due and payable.  Distributor has
no material liability for any taxes of any nature whatsoever.

    
      
         

      

      
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    14.         Product
Warranties.  Distributor
expressly assumes and agrees to make all product and service warranties
(expressed or implied) to Customers with respect to Products and further agrees
to defend, indemnify and hold the Contractor harmless from and against any
claims, suits, obligations, costs, or expenses (including reasonable attorney's
fees and legal expenses) with respect to all express or implied warranties in
connection with the Products.

    

    15.         Audit
Rights.  Distributor shall
deliver to Contractor copies of all information and documents submitted from
time to time by the Distributor to any Senior Lender simultaneously with the
submission of such documents to such Senior Lender; and shall deliver to
Contractor monthly financial statements, aged accounts receivable, aged accounts
payable, and Distributor's and Contractor's inventory schedules within fifteen
(15) days following the end of each month during the term hereof.  In
addition, Contractor shall have the right to inspect, audit and copy any
financial books, computer programs, and other data  containing
financial information in connection with the Distributor at any time during
regular business hours upon not less than 24 hours' prior written
notice.  Distributor agrees to prepare and maintain complete and
accurate business records with respect to the transactions contemplated by this
Agreement.

    

    16.         Relationship
of the Parties.  The parties are
independent contractors and are not (and shall not be deemed to be) the
partners, joint venturers, agents or representatives of the
other.  Each party is exclusively responsible for the conduct of its
own business and is not authorized to bind the other party in any manner
whatsoever.  Further in this regard:

    

    (a)          Distributor
acknowledges that it has no ownership interest in any P.O. or Products in
connection with an Accepted P.O. except as otherwise provided in this Agreement;
and

    

    (b)          Contractor
acknowledges that it has no ownership interest (other than the security
interests granted hereunder) in Distributor or in any of Distributor's
assets.

    

    17.         Indemnification.  Distributor
agrees to indemnify, hold harmless and defend Contractor from and against any
loss, costs, (including reasonable attorney's fees and costs), claims, suits or
causes of action brought, threatened or incurred by or against Contractor by
reason of any of the following:

    

    (a)          As
a consequence of any breach of this Agreement by Distributor, any breach of a
warranty made by Distributor hereunder, or the failure of any representation
made by Distributor hereunder to be true;

    

    (b)          Any
suit or threat of suit by any Customer, including, without limitation, all
claims under or with respect to Product warranties, except with respect to any
suit or claim arising or threatened solely by reason of Contractor's acts or
omissions to act which constitute a breach of Contractor's obligations
hereunder;

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (c)          Any
suit or threat of suit by any of Distributor's employees, former employees,
securities holders or lenders, except with respect to any suit or claim arising
or threatened solely by reason of Contractor's acts or omissions to act which
constitute a breach of Contractor's obligations hereunder;

    

    (d)          Any
product liability claims of any kind, including, without limitation, all claims
under or with respect to Product warranties; and

    

    (e)          Environmental
liability, if any, as a result of this Agreement or any transaction contemplated
by or engaged in pursuant to or on account of this Agreement.

    

    18.         Term and Termination;
Default.

    

    (a)          Term of
Agreement.  This Agreement is for an initial term of twelve
months following the date hereof and shall continue thereafter for successive
twelve month renewal terms unless either party terminates the Agreement by
written notice to the other not later than thirty days prior to the end of the
initial term or any renewal term.  Provided, however, that Contractor
may also terminate this Agreement immediately upon Distributor's default or at
any time following the initial term upon fifteen days' prior written notice to
Distributor.

    

    (b)          Obligations Upon
Termination.  Except for termination in the event of
Distributor's default, upon termination of this Agreement, each party shall
remain liable to perform all obligations under this Agreement which remain
unperformed as of the termination date as if this Agreement remained in full
force and effect.  Upon termination for any reason and upon completion
of the foregoing obligations, all obligations hereunder shall terminate except
the continuing obligations of the parties under ¶¶12(d), 13, 14, 15 and 17
hereof.

    

    (c)          Default.

    

    (i)           Distributor
shall be considered to be in default hereunder if it either (A) fails to make
any payment due Contractor hereunder within three (3) business days of the due
date thereof, or (B) fails in any respect to perform any of its other
obligations hereunder and such failure continues unremedied for a period of
three (3) business days following Contractor's notice thereof, or (C) has made a
representation which proves to be false or breaches a warranty made hereunder,
or (D) files (or has filed against it) a petition (or otherwise initiates
proceedings) for bankruptcy, reorganization, receivership or other proceedings
for the protection of debtors, or (E) fails to make any payment due to any third
party on or before the due date therefor if the failure to make such payment
gives rise to or creates (or if unremedied would give rise to or create) an
encumbrance upon the Products or any of them or otherwise restricts Contractor's
sale or disposition of the Products or any of them.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (ii)          Without
waiving or limiting any of Contractor's other rights and remedies in the event
of a default by Distributor, and in addition to Contractor's right of set-off
set forth in ¶10 above, upon the occurrence of any event of default, Distributor
shall be liable for immediate payment to Contractor of all amounts due or to
become due to Contractor hereunder, including, without limitation, Contractor's
Expenses, Contractor's Deal Fees and the Commitment Fee.  Contractor
shall further be entitled to reimbursement for all of its costs of collection,
whether or not suit has been filed or judgment entered, including, without
limitation, reasonable attorneys' fees and legal expenses.  All
amounts owed to Contractor pursuant to this ¶18(c) shall carry interest at the
rate of 2% per month from the effective date of default or, in the case of
Contractor's costs of collection, from the date such costs are
incurred.

    

    (iii)      
  In the event of default by Distributor, and subject to any
agreements between Contractor and any Senior Lender, Contractor shall further be
entitled to exercise all the rights and remedies of a secured party under the
Uniform Commercial Code or as otherwise provided under the Security
Agreement.  The proceeds of any amount recovered by Contractor shall
be applied, first, to the payment of Contractor's reasonable costs and expenses
in connection with the enforcement of Contractor's rights and remedies
hereunder; second, toward the payment or satisfaction of all amounts owing
Contractor hereunder, including interest thereon; and third, any surplus to be
paid to Distributor or as a court of competent jurisdiction may
direct.  In the case of a deficiency, Distributor shall remain liable
for such deficiency after such sale, with interest at the rate herein
provided.

    

    19.          Miscellaneous
Provisions.

    

    (a)          CHOICE OF LAW, VENUE,
JURISDICTION AND SERVICE.  THIS AGREEMENT AND ALL AGREEMENTS
REFERRED TO HEREIN BETWEEN THE CONTRACTOR AND THE DISTRIBUTOR (COLLECTIVELY THE
“TRANSACTION DOCUMENTS”) HAVE BEEN SUBMITTED TO THE CONTRACTOR AT THE
CONTRACTOR’S PRINCIPAL PLACE OF BUSINESS IN THE STATE OF ILLINOIS, WILL BE
PERFORMED BY THE PARTIES IN THE STATE OF ILLINOIS, AND SHALL BE DEEMED TO HAVE
BEEN MADE IN THE STATE OF ILLINOIS.  THE VALIDITY OF EACH OF THE
TRANSACTION DOCUMENTS AND THE CONSTRUCTION, INTERPRETATION AND ENFORCEMENT
THEREOF, AND THE RIGHTS OF THE PARTIES THERETO SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO THE CONFLICTS OF LAW RULES OF THE STATE IN WHICH
SUIT IS INITIATED PERTAINING TO THIS AGREEMENT.  FURTHER, THE
CONTRACTOR AND THE DISTRIBUTOR AGREE THAT ANY SUIT, ACTION, OR PROCEEDING
ARISING OUT OF OR RELATING TO THE TRANSACTION DOCUMENTS OR ANY TRANSACTION
CONTEMPLATED THEREBY, SHALL BE INSTITUTED IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, OR ANY COURT OF THE
STATE OF ILLINOIS LOCATED IN COOK COUNTY, AND EACH PARTY IRREVOCABLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THOSE COURTS AND WAIVES ANY AND ALL OBJECTIONS
TO JURISDICTION OR VENUE THAT ANY SUCH PARTY MAY HAVE UNDER THE LAWS OF THE
STATE OF ILLINOIS OR OTHERWISE IN THOSE COURTS IN ANY SUCH SUIT, ACTION, OR
PROCEEDING.  FURTHER, TO THE EXTENT PERMITTED BY LAW, SERVICE OF
PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST THE
DISTRIBUTOR MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO ITS ADDRESS FOR NOTICE AS PROVIDED IN THIS
AGREEMENT.  DISTRIBUTOR AGREES THAT ANY FINAL JUDGMENT RENDERED
AGAINST IT IN ANY ACTION OR PROCEEDING SHALL BE CONCLUSIVE AS TO THE SUBJECT OF
SUCH FINAL JUDGMENT AND MAY BE ENFORCED IN OTHER JURISDICTIONS IN ANY MANNER
PROVIDED BY LAW.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

    (b)          WAIVER OF RIGHT TO JURY
TRIAL. DISTRIBUTOR AND CONTRACTOR ACKNOWLEDGE AND AGREE THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT, ANY OTHER AGREEMENT RELATED
HERETO OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WOULD
BE BASED UPON DIFFICULT AND COMPLEX ISSUES, AND THEREFORE, THE PARTIES AGREE
THAT ANY COURT PROCEEDING ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A
COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

    

    (c)          Notices.  All
notices required or permitted pursuant to this Agreement shall be in writing and
either personally delivered, sent by facsimile transmission (provided evidence
of transmission is maintained and the original of the transmittal notice is sent
by U.S. mail), or Federal Express or similar overnight delivery service,
addressed to the respective addresses or facsimile number of the parties set
forth on the last page of this Agreement, or at such telephone numbers or other
addresses as have from time to time been designated by like
notice.  Notices given in the manner prescribed herein shall be deemed
given on the date sent or transmitted (as the case may be).

    

    (d)          Severability.  The
paragraphs of this Agreement are severable, and in the event that any paragraph
or portion of this Agreement is declared illegal or unenforceable, the remainder
of this Agreement will be effective and binding upon the parties.

    

    (e)          Opinion of
Counsel.  It is an express condition to the closing of the
transactions contemplated by this Agreement that the Distributor cause to be
delivered to the Contractor an opinion of Distributor's counsel which is
satisfactory to Contractor.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (f)           Waiver; Entire
Agreement.  This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof, and supersedes all prior
oral or written agreements, understandings, or arrangements.  No
waiver of or modifications to the provisions of this Agreement will be valid
unless in writing and signed by all parties.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto, their successors,
assigns and legal representatives.

    

    (g)          Assignment.  Distributor
may not transfer or assign its rights or obligations hereunder without the prior
written consent of the Contractor, and any attempted transfer or assignment
shall be null and void.

    

    (h)          Performance.  Time
is of the essence under this Agreement.

    

    (i)           Further
Assurances.  From and after the date hereof, each party will
execute all documents and take such further actions as the other may from time
to time reasonably request in order to carry out the transactions provided for
herein and accomplish the purposes contemplated hereby.

    

    (j)           Publication.  Contractor
shall have the right to publicize (by “tombstone” or comparable publication) the
Purchase Order Assignment Program evidenced hereby (including the date and size
of the facility but not the specific terms hereof).

    

    (k)          Counterparts: Facsimile
Delivery.  This Agreement may be executed in two or more
counterparts, each of which taken together shall constitute one and the same
instrument, admissible into evidence.  Delivery of an executed
counterpart of this Agreement by facsimile shall be equally as effective as
delivery of a manually executed counterpart of this Agreement.  Any
party delivering an executed counterpart of this Agreement by facsimile shall
also deliver a manually executed counterpart of this Agreement, but the failure
to deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.

    

    * * * * *
* * * * *

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

    This
Agreement has been signed at Deerfield, Illinois on the day and year first above
written.

    

    
      
        
          
            
              	
                      CONTRACTOR:

                    	 
      	
                      DISTRIBUTOR:

                    
	 
      	 
      	 
      
	
                      WELLS
      FARGO BANK,

                    	 
      	
                      SOUTHPEAK
      INTERACTIVE, L.L.C.

                    
	
                      NATIONAL
      ASSOCIATION

                    	 
      	 
      
	 
      	 
      	 
      
	
                      By:

                    	 
      	 
      	
                      By:

                    	
                      /s/ Reba McDermott

                    
	
                      Title:

                    	 
      	 
      	
                      Title:

                    	
                      Chief Financial
  Officer

                    

            

          

        

      

    

    

    
      
        
          
            
              
                	
                        Address:

                      	
                        520 Lake Cook Road #315

                      	 
      	
                        Address:

                      	
                        2900 Polo Parkway

                      
	
                      	
                        Deerfield, IL 60015

                      	 
      	 
      	

                        Midlothian, VA 23113

                      
	
                        Facsimile:

                      	
                         847-282-6630

                      	 
      	
                        Facsimile:

                      	 
      

              

            

          

        

      

    

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    PURCHASE ORDER PACKAGE
CERTIFICATE

    

    This
Certificate is executed by ____________________________, who is the
____________________ of SOUTHPEAK INTERACTIVE, L.L.C., a Virginia limited
liability company (“Distributor”), in connection with the Master Purchase Order
Assignment Agreement dated ______________, 2010, (the “Agreement”) with WELLS
FARGO BANK, NATIONAL ASSOCIATION (“Contractor”).

    

    The
undersigned certifies to Contractor that all of the information contained in
this Certificate is true, complete and accurate and is furnished to Contractor
to induce Contractor to purchase Product in accordance with the
Agreement:

    

    1.           Customer
Information

    

    
      	
               
      

            	
              (a)

            	
              Attached
      is a purchase order number ______ dated _______________, 20____ in the
      total amount of $_________ (the “Purchase Order”) from the following
      customer (“Customer”), or Distributor has received a bona fide indication
      of interest from the following
Customer.

            

    

    

    Name:

    Address:

    

    

    Person in
charge:

    Phone
Number:

    

    
      	
               
      

            	
              (b)

            	
              Attached
      is a true and complete credit history, payment history and credit report
      on the Customer; or, in lieu thereof, ______________ approval or accepted
      letter of credit.

            

    

    

    
      	
               
      

            	
              (c)

            	
              The
      Purchase Order is (check one):

            

    

    

    
      	
               
      

            	
              _____

            	
              Assignable
      to Contractor by Distributor without Customer's consent;
  or

            

    

    

    
      	
               
      

            	
              _____

            	
              Not
      assignable without Customer's consent, but attached is the consent of the
      Customer to assignment to
Contractor;

            

    

    

    
      	
               
      

            	
              _____

            	
              Not
      assignable, but the proceeds of the Purchase Order are assignable;
      or

            

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              _____

            	
              Distributor
      has received indication of interest
only.

            

    

    

    
      	
              2.

            	
              Customer Product
      Information

            

    

    

    An
original (or a true, accurate and complete copy) of Customer’s Purchase Order
identifying the Product, the quantity ordered, and the quality specifications
therefor is attached.

    

    
      	
              3.

            	
              Product Price and
      Delivery Information

            

    

    

    Attached
is an exhibit detailing: (a) the cost, quantity and quality specifications for
all Products needed to complete the Purchase Order (“Products”); (b) the name,
address, contact person and phone number of each person from whom the Products
may be purchased; and (c) confirmed current pricing and delivery date(s)
(“Material Delivery Date(s)”) for all of the Products and a copy of the
Distributor’s applicable Purchase Orders.

    

    
      	
              4.

            	
              Warehouse
      Information

            

    

    

    The
warehouse facility at which the Product(s) will be warehoused/distributed (the
“Warehouse”):

    

    _______________________________________

    _______________________________________

    _______________________________________

    

    
      	
              5.

            	
              Customs Broker
      Information

            

    

    

    The
customs broker for the Product(s) will be:

    

    _______________________________________

    _______________________________________

    _______________________________________

    

    
      	
              6.

            	
              Gross
      Margin

            

    

    

    Attached
is the computation of Projected Net Gross Margin before depreciation, including,
without limitation, projections of the cost of Products and Distributor's Direct
Costs:

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      	
              7.

            	
              Assignment of Purchase
      Order

            

    

    

    Attached
is an Assignment of the Purchase Order, duly executed by authorized officers of
Distributor.

    

    
      	
              8.

            	
              Power of
      Attorney

            

    

    

    Distributor
hereby irrevocably designates and appoints Contractor (and all persons
designated by Contractor) as Distributor’s true and lawful attorney-in-fact and
agent-in-fact, and Contractor (or Contractor’s agent) may, at any time and
without notice to Distributor, endorse any bill of lading or other document of
title related to a Purchase Order accepted by Contractor by writing or stamping
Distributor’s name thereon.

    

    
      	
              9.

            	
              Lender Consent
      (check one):

            

    

    

    
      	 	
              _____

            	
              None
      of the Products is subject to a security interest;
  or

            

    

    

    
      	 	
              _____

            	
              If
      any of the Products are subject to a security interest, attached is the
      written consent and release of each holder of a security interest, in form
      previously approved by Contractor.

            

    

    

    Dated:
______________, 20____

    

    
      
        
          
            
              
                	
                        SOUTHPEAK
      INTERACTIVE, L.L.C.

                      	 
	 
      	 
      	 
	
                        By:

                      	
                          

                      	 
	
                        Title:

                      	
                          

                      	 

              

            

          

        

      

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    EXHIBIT
A
(continued)

    

    ACCEPTANCE
OF PURCHASE ORDER CERTIFICATE

    

    The
foregoing Purchase Order Certificate, as prepared and delivered by Distributor,
is hereby accepted and approved.

    

    
      
        	 
      	
                WELLS
      FARGO BANK, NATIONAL ASSOCIATION

              
	 
      	 
      
	 
      	
                By: 

              	
                  

              

      

    

    

    Dated:                                            

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    EXHIBIT
A
(continued)

    

    ASSIGNMENT OF PURCHASE
ORDER

    

    FOR VALUE
RECEIVED, SOUTHPEAK INTERACTIVE, L.L.C., a Virginia limited liability company
(“Assignor”) hereby assigns, transfers and delivers to WELLS FARGO BANK,
NATIONAL ASSOCIATION (“Assignee”) all of Assignor's right, title and interest
in, to and under that certain Purchase Order, identified as follows, for the
purposes, and pursuant to the terms and conditions of that certain Master
Purchase Order Assignment Agreement, dated ________, 2010, between Assignor and
Assignee:

    

    Assignor's
P.O. No.:  ___________________________

    

    Customer
Name:  __________________________________

    

    P.O.
Date:  ___________________________________________

    

    
      
        
          
            
              	
                      SOUTHPEAK
      INTERACTIVE, L.L.C.

                    	 
	 
      	 
      	 
	
                      By:

                    	
                         

                    	 
	
                      Title:

                    	
                        

                    	 

            

          

        

      

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    DISTRIBUTOR'S
SPECIFICATIONS

    

    The
following are performance specifications, obligations, and covenants
(collectively the “Distributor's Specifications”) required of Distributor in
connection with its obligations under the Master Purchase Order Assignment
Agreement to which this Exhibit is attached:

    

    1.           To
deliver to each Customer a Purchase Order Acknowledgment on such form as
Contractor may accept directing that payment of each P.O. Invoice be made to
Contractor or the Lock Box Bank (if any).

    

    2.           To
cooperate with Contractor concerning Contractor's placement of orders for
Products.

    

    3.           To
notify Contractor immediately upon the receipt of Products at the
Warehouse.  Upon such delivery, to inspect the quality and quantity of
Products and to notify Contractor of any deficiencies.

    

    4.           To
take or cause to be taken all actions necessary for the shipment of Products to
Customers in accordance with Accepted P.O.'s, including without limitation,
packaging, shipping, and insuring Products in accordance with the specifications
set forth in the applicable Accepted P.O., and to deliver the same to the
Customer on or before the P.O. Delivery Date.

    

    5.           To
maintain all inventories of Products in such segregated locations at the
Warehouse as the Contractor may approve; to properly identify such Products as
being the property of the Contractor and further identify the same by the P.O.
and the Customer for which such Products relate; and to implement such
commercially reasonable security procedures and devices as Contractor may
require for the preservation and segregation of Products, including without
limitation, the construction and maintenance of secured cages and storage rooms
for such Products.  To not ship or otherwise release any Products
except with the prior written consent of the Contractor.

    

    6.           To
ship all Products by such date, by such means, and under such terms as required
pursuant to the applicable P.O. and to deliver the Products to the Customer on
or before the P.O. Delivery Date.  Distributor shall further provide
Contractor with written notice of each shipment of Products to a Customer
immediately following shipment thereof.

    

    7.           To
prepare and deliver to the Contractor each P.O. Invoice immediately following
shipment of the Products to the Customer.

    

    8.           To
fully insure in the name of the Distributor and the Contractor all Products
during shipment to Customers in amounts, with carriers and on terms and
conditions acceptable to Contractor.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    9.           To
direct all Customers to make payment with respect to a P.O. Invoice to the
Contractor or the Lock Box (if any) and to take no actions and make no
statements which direct (or have the effect of causing) any Customer to make any
payment with respect to any P.O. Invoice to anyone other than the Contractor or
the Lock Box.

    

    10.         To
not accept any payment (including rebates, set-offs, and other Customer
adjustments) with respect to any P.O. Invoice other than through the Contractor
or the Lock Box.

    

    11.         To
receive and hold in trust for the sole and exclusive benefit of Contractor all
sums and instruments representing payment of any P.O. Invoice and all proceeds
which for any reason come into the possession of Distributor, its agents,
representatives or any other party acting on behalf of Distributor, and promptly
to deliver or cause delivery of such sums to the Contractor.

    

    12.         To
maintain in the name of Distributor and Contractor general comprehensive
liability insurance, with extended coverage and coverage against theft and
product liability and such other insurance and coverages as may be commercially
reasonable with exclusions, with carriers, and on terms and conditions that may
be acceptable to Contractor in its sole discretion.

    

    13.         To
deliver to Contractor a list of unpaid accounts receivable relating to P.O.
Invoices as of last day of the preceding calendar month, such list to be
delivered by the 10th day of the next succeeding month and certified as complete
and accurate by a duly authorized officer of Distributor.

    

    14.         To
not pledge any of its assets or cause or permit any lien or security interest to
be taken in any of its assets, except such liens as are described on Exhibit “D”
of this Agreement or are otherwise approved by Contractor.

    

    15.         To
provide Contractor with written notice immediately upon (i) the filing or threat
of filing of a bankruptcy petition by or against Distributor, (ii) the
initiation of foreclosure proceedings or other similar action against
Distributor or any of its assets, (iii) a request or demand made upon
Distributor to make, or for any reason Distributor makes, an assignment for the
benefit of its creditors, or (iv) Distributor becomes unable to pay its bills in
the ordinary course of business as they become due.

    

    16.         To
immediately notify Contractor of any pending or threatened litigation,
administrative proceeding, arbitration, or governmental investigation concerning
or relating to Distributor or any goods, services or assets that are the subject
of an Accepted P.O. or are pledged as collateral pursuant to the Security
Agreement.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    EXHIBIT
C

    

    RE-ASSIGNMENT AND RELEASE OF
PURCHASE ORDER

    

    UPON AND
SUBJECT TO PAYMENT OF the sum of $__________ on or before ___________, ________
(“Payment Date”), WELLS FARGO BANK, NATIONAL ASSOCIATION  (“Assignor”)
hereby assigns, transfers and delivers to SOUTHPEAK INTERACTIVE, L.L.C.
(“Assignee”) all of Assignor's right, title and interest in, to and under that
certain Purchase Order identified below, and hereby releases any claims in or
with respect to such Purchase Order.  If payment is made after the
Payment Date, such assignment and release shall require payment of $__________
for each day after the Payment Date during which payment is not
received.  The applicable Purchase Order is:

    

    P.O.
Invoice No.:                                             

    Customer
Name:                                              

    P.O.
Invoice Date:                                           

    

    This
Assignment shall become effective immediately upon receipt of good funds in the
amount described above.

    

    
      
        	 	
                WELLS FARGO BANK, NATIONAL
      ASSOCIATION

              
	 	 
      	 
      
	 	
                By: 

              	
                  

              

      

    

    

    
      
        Dated:                                            

      

    

      

    ACCEPTANCE

    

    SOUTHPEAK
INTERACTIVE, L.L.C., a Virginia limited liability company (“Assignee”), hereby
accepts the foregoing assignment of Purchase Order, and covenants and agrees to
fully perform all obligations with respect thereto and hereby releases Assignor
from responsibility for the performance of any such obligations whether required
before, on or after the date of this Acceptance.  [Assignee hereby
authorizes Accounts Receivable Lender to transfer the amount set forth above to
Assignor per Assignor's instructions.]

     

    
      Dated:                                            

    

     

    
      
        
          
            	
                    SOUTHPEAK
      INTERACTIVE, L.L.C.

                  	 
	 
      	 
      	 
	
                    By:

                  	
                      

                  	 
	
                    Title:

                  	
                      

                  	 

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
D

    

    EXCEPTIONS TO CONTRACTOR'S
SENIOR LIEN

    

    SunTrust
Bank

    Rosenthal
& Rosenthal

    CNH
Diversified Opportunities Master Account, L.P.

    Paradox
Interactive, AB

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
E

    

    PENDING
LITIGATION, ETC.

    

    None

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ADDENDUM
I

    

    The
Accounts Receivable Lender is:

    

    None

    

    The
Senior Lenders other than the Accounts Receivable Lender are:

    

    SunTrust
Bank

    Rosenthal
& Rosenthal

    CNH
Diversified Opportunities Master Account, L.P.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ADDENDUM
II

    

    In this
Agreement:

    

    
      	 	
              (a) 

            	
              The
      “Lock Box Bank” is:

            

    

    

    Wells
Fargo Bank, National Association

    NW 5985PO
Box 1450

    Minneapolis,
MN 55485-5985

    

    
      	
               
      

            	
              (b)

            	
              The
      “Lock Box” is maintained in Lock Box
      Account

            

    

    No. 77-6132 at the Lock Box
Bank.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ADDENDUM
III

    

    The
Guarantors pursuant to this Agreement are:

    

    Terry
Phillips

    Gone
Off  Deep, LLC

    Southpeak
Interactive Ltd.

    Vid Sub,
LLC

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