Document:

Unassociated Document

     

    ZEVOTEK,
INC.

     

    2011
EQUITY INCENTIVE PLAN

     

    1.           Purpose of the
Plan.

     

    This 2011
Equity Incentive Plan (the “Plan”) is intended as
an incentive, to retain in the employ of and as directors, officers,
consultants, advisors and employees to Zevotek, Inc., a Delaware corporation
(the “Company”), and any
Subsidiary of the Company, within the meaning of Section 424(f) of the United
States Internal Revenue Code of 1986, as amended (the “Code”), persons of
training, experience and ability, to attract new directors, officers,
consultants, advisors and employees whose services are considered valuable, to
encourage the sense of proprietorship and to stimulate the active interest of
such persons in the development and financial success of the Company and its
Subsidiaries.

     

    It is
further intended that certain options granted pursuant to the Plan shall
constitute incentive stock options within the meaning of Section 422 of the Code
(the “Incentive
Options”) while certain other options granted pursuant to the Plan shall
be nonqualified stock options (the “Nonqualified
Options”).  Incentive Options and Nonqualified Options are
hereinafter referred to collectively as “Options.”

     

    The
Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”)
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
that transactions of the type specified in subparagraphs (c) to (f) inclusive of
Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be
exempt from the operation of Section 16(b) of the Exchange
Act.  Further, the Plan is intended to satisfy the performance-based
compensation exception to the limitation on the Company’s tax deductions imposed
by Section 162(m) of the Code with respect to those Options for which
qualification for such exception is intended.  In all cases, the
terms, provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company’s intent as stated in this Section
1.

     

    2.           Administration of the
Plan.

     

    The Board
of Directors of the Company (the “Board”) shall appoint
and maintain as administrator of the Plan a Committee (the “Committee”)
consisting of two or more directors who are (i) “Independent Directors” (as such
term is defined under the rules of the NASDAQ Stock Market), (ii) “Non-Employee
Directors” (as such term is defined in Rule 16b-3) and (iii) “Outside Directors”
(as such term is defined in Section 162(m) of the Code), which shall serve at
the pleasure of the Board. ` The Committee, subject to Sections 3, 5 and 6
hereof, shall have full power and authority to designate recipients of Options
and restricted stock (“Restricted Stock”)
and to determine the terms and conditions of the respective Option and
Restricted Stock agreements (which need not be identical) and to interpret the
provisions and supervise the administration of the Plan.  The
Committee shall have the authority, without limitation, to designate which
Options granted under the Plan shall be Incentive Options and which shall be
Nonqualified Options.  To the extent any Option does not qualify as an
Incentive Option, it shall constitute a separate Nonqualified
Option.

     

    Subject
to the provisions of the Plan, the Committee shall interpret the Plan and all
Options and Restricted Stock granted under the Plan, shall make such rules as it
deems necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defects or supply any omission or reconcile any inconsistency
in the Plan or in any Options or Restricted Stock granted under the Plan in the
manner and to the extent that the Committee deems desirable to carry into effect
the Plan or any Options or Restricted Stock.  The act or determination
of a majority of the Committee shall be the act or determination of the
Committee and any decision reduced to writing and signed by all of the members
of the Committee shall be fully effective as if it had been made by a majority
of the Committee at a meeting duly held for such purpose.  Subject to
the provisions of the Plan, any action taken or determination made by the
Committee pursuant to this and the other Sections of the Plan shall be
conclusive on all parties.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    In the
event that for any reason the Committee is unable to act or if the Committee at
the time of any grant, award or other acquisition under the Plan does not
consist of two or more Non-Employee Directors, or if there shall be no such
Committee, or if the Board otherwise determines to administer the Plan, then the
Plan shall be administered by the Board, and references herein to the Committee
(except in the proviso to this sentence) shall be deemed to be references to the
Board, and any such grant, award or other acquisition may be approved or
ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3;
provided, however, that grants
to the Company’s Chief Executive Officer or to any of the Company’s other four
most highly compensated officers that are intended to qualify as
performance-based compensation under Section 162(m) of the Code may only be
granted by the Committee.

     

    3.           Designation of Optionees and
Grantees.

     

    The
persons eligible for participation in the Plan as recipients of Options (the
“Optionees”) or
Restricted Stock (the “Grantees” and
together with Optionees, the “Participants”) shall
include directors, officers and employees of, and consultants and advisors to,
the Company or any Subsidiary; provided that Incentive Options may only be
granted to employees of the Company and any Subsidiary. In selecting
Participants, and in determining the number of shares to be covered by each
Option or award of Restricted Stock granted to Participants, the Committee may
consider any factors it deems relevant, including, without limitation, the
office or position held by the Participant or the Participant’s relationship to
the Company, the Participant’s degree of responsibility for and contribution to
the growth and success of the Company or any Subsidiary, the Participant’s
length of service, promotions and potential. A Participant who has been granted
an Option or Restricted Stock hereunder may be granted an additional Option or
Options, or Restricted Stock if the Committee shall so determine.

     

    4.           Stock Reserved for the
Plan.

     

    Subject
to adjustment as provided in Section 8 hereof, a total of 60,000,000 shares of
the Company’s common stock, par value $0.00001 per share (the “Stock”), shall be
subject to the Plan.  The shares of Stock subject to the Plan shall
consist of unissued shares, treasury shares or previously issued shares held by
any Subsidiary of the Company, and such number of shares of Stock shall be and
is hereby reserved for such purpose.  Any of such shares of Stock that
may remain unissued and that are not subject to outstanding Options at the
termination of the Plan shall cease to be reserved for the purposes of the Plan,
but until termination of the Plan the Company shall at all times reserve a
sufficient number of shares of Stock to meet the requirements of the
Plan.  Should any Option or award of Restricted Stock expire or be
canceled prior to its exercise or vesting in full or should the number of shares
of Stock to be delivered upon the exercise or vesting in full of an Option or
award of Restricted Stock be reduced for any reason, the shares of Stock
theretofore subject to such Option or Restricted Stock may be subject to future
Options or Restricted Stock under the Plan, except where such reissuance is
inconsistent with the provisions of Section 162(m) of the Code where
qualification as performance-based compensation under Section 162(m) of the Code
is intended.

     

    5.           Terms and Conditions of
Options.

     

    Options
granted under the Plan shall be subject to the following conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:

     

    (a)           Option
Price.  The purchase price of each share of Stock purchasable
under an Incentive Option shall be determined by the Committee at the time of
grant, but shall not be less than 100% of the Fair Market Value (as defined
below) of such share of Stock on the date the Option is granted; provided, however, that with
respect to an Optionee who, at the time such Incentive Option is granted, owns
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or of any
Subsidiary, the purchase price per share of Stock shall be at least 110% of the
Fair Market Value per share of Stock on the date of grant.  The
purchase price of each share of Stock purchasable under a Nonqualified Option
shall not be less than 100% of the Fair Market Value of such share of Stock on
the date the Option is granted.  The exercise price for each Option
shall be subject to adjustment as provided in Section 8 below.  “Fair Market Value”
means the closing price on the final trading day immediately prior to the grant
date of the Stock on the principal securities exchange on which shares of Stock
are listed (if the shares of Stock are so listed), or on the NASDAQ Stock Market
or OTC Bulletin Board (if the shares of Stock are regularly quoted on the NASDAQ
Stock Market or OTC Bulletin Board, as the case may be), or, if not so listed,
the mean between the closing bid and asked prices of publicly traded shares of
Stock in the over the counter market, or, if such bid and asked prices shall not
be available, as reported by any nationally recognized quotation service
selected by the Company, or as determined by the Committee in a manner
consistent with the provisions of the Code.  Anything in this Section
5(a) to the contrary notwithstanding, in no event shall the purchase price of a
share of Stock be less than the minimum price permitted under the rules and
policies of any national securities exchange on which the shares of Stock are
listed.

    
      
         

      

      
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    (b)           Option
Term.  The term of each Option shall be fixed by the Committee,
but no Option shall be exercisable more than ten years after the date such
Option is granted and in the case of an Incentive Option granted to an Optionee
who, at the time such Incentive Option is granted, owns (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined voting power of
all classes of stock of the Company or of any Subsidiary, no such Incentive
Option shall be exercisable more than five years after the date such Incentive
Option is granted.

     

    (c)           Exercisability.  Subject
to Section 5(j) hereof, Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee at
the time of grant; provided, however, that in the
absence of any Option vesting periods designated by the Committee at the time of
grant, Options shall vest and become exercisable as to one-tenth of the total
number of shares subject to the Option on each of the three month anniversary of
the date of grant; and provided further that no Options shall be exercisable
until such time as any vesting limitation required by Section 16 of the Exchange
Act, and related rules, shall be satisfied if such limitation shall be required
for continued validity of the exemption provided under Rule
16b-3(d)(3).

     

    Upon the
occurrence of a “Change in Control” (as hereinafter defined), the Committee may
accelerate the vesting and exercisability of outstanding Options, in whole or in
part, as determined by the Committee in its sole discretion.  In its
sole discretion, the Committee may also determine that, upon the occurrence of a
Change in Control, each outstanding Option shall terminate within a specified
number of days after notice to the Optionee thereunder, and each such Optionee
shall receive, with respect to each share of Company Stock subject to such
Option, an amount equal to the excess of the Fair Market Value of such shares
immediately prior to such Change in Control over the exercise price per share of
such Option; such amount shall be payable in cash, in one or more kinds of
property (including the property, if any, payable in the transaction) or a
combination thereof, as the Committee shall determine in its sole
discretion.

     

    For
purposes of the Plan, unless otherwise defined in an employment agreement
between the Company and the relevant Optionee, a Change in Control shall be
deemed to have occurred if:

     

    (i)           a
tender offer (or series of related offers) shall be made and consummated for the
ownership of 50% or more of the outstanding voting securities of the Company,
unless as a result of such tender offer more than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Company (as of the time immediately prior
to the commencement of such offer), any employee benefit plan of the Company or
its Subsidiaries, and their affiliates;

     

    (ii)           the
Company shall be merged or consolidated with another corporation, unless as a
result of such merger or consolidation more than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Company (as of the time immediately prior
to such transaction), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates;

     

    (iii)           the
Company shall sell substantially all of its assets to another corporation that
is not wholly owned by the Company, unless as a result of such sale more than
50% of such assets shall be owned in the aggregate by the stockholders of the
Company (as of the time immediately prior to such transaction), any employee
benefit plan of the Company or its Subsidiaries and their affiliates;
or

     

    (iv)           a
Person (as defined below) shall acquire 50% or more of the outstanding voting
securities of the Company (whether directly, indirectly, beneficially or of
record), unless as a result of such acquisition more than 50% of the outstanding
voting securities of the surviving or resulting corporation shall be owned in
the aggregate by the stockholders of the Company (as of the time immediately
prior to the first acquisition of such securities by such Person), any employee
benefit plan of the Company or its Subsidiaries, and their
affiliates.

    
      
         

      

      
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    Notwithstanding
the foregoing, if Change of Control is defined in an employment agreement
between the Company and the relevant Optionee, then, with respect to such
Optionee, Change of Control shall have the meaning ascribed to it in such
employment agreement.

     

    For
purposes of this Section 5(c), ownership of voting securities shall take into
account and shall include ownership as determined by applying the provisions of
Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange
Act.  In addition, for such purposes, “Person” shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; provided, however, that a
Person shall not include (A) the Company or any of its Subsidiaries; (B) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Subsidiaries; (C) an underwriter temporarily holding
securities pursuant to an offering of such securities; or (D) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportion as their ownership of stock of the
Company.

     

    (d)           Method of
Exercise.  Options to the extent then exercisable may be
exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares of Stock to be
purchased, accompanied by payment in full of the purchase price, in cash, or by
check or such other instrument as may be acceptable to the
Committee.  As determined by the Committee, in its sole discretion, at
or after grant, payment in full or in part may be made at the election of the
Optionee (i) in the form of Stock owned by the Optionee (based on the Fair
Market Value of the Stock which is not the subject of any pledge or security
interest, (ii) in the form of shares of Stock withheld by the Company from the
shares of Stock otherwise to be received with such withheld shares of Stock
having a Fair Market Value equal to the exercise price of the Option, or (iii)
by a combination of the foregoing, such Fair Market Value determined by applying
the principles set forth in Section 5(a), provided that the combined value of
all cash and cash equivalents and the Fair Market Value of any shares
surrendered to the Company is at least equal to such exercise price and except
with respect to (ii) above, such method of payment will not cause a
disqualifying disposition of all or a portion of the Stock received upon
exercise of an Incentive Option.  An Optionee shall have the right to
dividends and other rights of a stockholder with respect to shares of Stock
purchased upon exercise of an Option at such time as the Optionee (i) has given
written notice of exercise and has paid in full for such shares, and (ii) has
satisfied such conditions that may be imposed by the Company with respect to the
withholding of taxes.

     

    (e)           Non-transferability of
Options.  Options are not transferable and may be exercised
solely by the Optionee during his lifetime or after his death by the person or
persons entitled thereto under his will or the laws of descent and
distribution.  The Committee, in its sole discretion, may permit a
transfer of a Nonqualified Option to (i) a trust for the benefit of the
Optionee, (ii) a member of the Optionee’s immediate family (or a trust for his
or her benefit) or (iii) pursuant to a domestic relations order.  Any
attempt to transfer, assign, pledge or otherwise dispose of, or to subject to
execution, attachment or similar process, any Option contrary to the provisions
hereof shall be void and ineffective and shall give no right to the purported
transferee.

     

    (f)           Termination by
Death.  Unless otherwise determined by the Committee, if any
Optionee’s employment with or service to the Company or any Subsidiary
terminates by reason of death, the Option may thereafter be exercised, to the
extent then exercisable (or on such accelerated basis as the Committee shall
determine at or after grant), by the legal representative of the estate or by
the legatee of the Optionee under the will of the Optionee, for a period of one
(1) year after the date of such death (or, if later, such time as the Option may
be exercised pursuant to Section 14(d) hereof) or until the expiration of the
stated term of such Option as provided under the Plan, whichever period is
shorter.

     

    (g)           Termination by Reason of
Disability.  Unless otherwise determined by the Committee, if
any Optionee’s employment with or service to the Company or any Subsidiary
terminates by reason of Disability (as defined below), then any Option held by
such Optionee may thereafter be exercised, to the extent it was exercisable at
the time of termination due to Disability (or on such accelerated basis as the
Committee shall determine at or after grant), but may not be exercised after one
(1) year after the date of such termination of employment or service (or, if
later, such time as the Option may be exercised pursuant to Section 14(d)
hereof) or the expiration of the stated term of such Option, whichever period is
shorter; provided, however, that, if the
Optionee dies within such ninety (90) day period, any unexercised Option held by
such Optionee shall thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of one (1) year after the date of
such death (or, if later, such time as the Option may be exercised pursuant to
Section 14(d) hereof) or for the stated term of such Option, whichever period is
shorter.  “Disability” shall mean an Optionee’s total and permanent
disability; provided,
that if Disability is defined in an employment agreement between the Company and
the relevant Optionee, then, with respect to such Optionee, Disability shall
have the meaning ascribed to it in such employment agreement

    
      
         

      

      
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    (h)           Termination by Reason of
Retirement.  Unless otherwise determined by the Committee, if
any Optionee’s employment with or service to the Company or any Subsidiary
terminates by reason of Normal or Early Retirement (as such terms are defined
below), any Option held by such Optionee may thereafter be exercised to the
extent it was exercisable at the time of such Retirement (or on such accelerated
basis as the Committee shall determine at or after grant), but may not be
exercised after ninety (90) days after the date of such termination of
employment or service (or, if later, such time as the Option may be exercised
pursuant to Section 14(d) hereof) or the expiration of the stated term of such
Option, whichever date is earlier; provided, however, that, if the
Optionee dies within such ninety (90) day period, any unexercised Option held by
such Optionee shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of one (1) year after the date of
such death (or, if later, such time as the Option may be exercised pursuant to
Section 14(d) hereof) or for the stated term of such Option, whichever period is
shorter.

     

    For
purposes of this paragraph (h), “Normal Retirement”
shall mean retirement from active employment with the Company or any Subsidiary
on or after the normal retirement date specified in the applicable Company or
Subsidiary pension plan or if no such pension plan, age 65, and “Early Retirement”
shall mean retirement from active employment with the Company or any Subsidiary
pursuant to the early retirement provisions of the applicable Company or
Subsidiary pension plan or if no such pension plan, age 55.

     

    (i)           Other
Terminations.  Unless otherwise determined by the Committee
upon grant, if any Optionee’s employment with or service to the Company or any
Subsidiary is terminated by such Optionee for any reason other than death,
Disability, Normal or Early Retirement or Good Reason (as defined below), the
Option shall thereupon terminate, except that the portion of any Option that was
exercisable on the date of such termination of employment or service may be
exercised for the lesser of ninety (90) days after the date of termination (or,
if later, such time as the Option may be exercised pursuant to Section 14(d)
hereof) or the balance of such Option’s term, whichever period is
shorter.  The transfer of an Optionee from the employ of or service to
the Company to the employ of or service to a Subsidiary, or vice versa, or from
one Subsidiary to another, shall not be deemed to constitute a termination of
employment or service for purposes of the Plan.

     

    (i)           In
the event that the Optionee’s employment or service with the Company or any
Subsidiary is terminated by the Company or such Subsidiary for “cause” any
unexercised portion of any Option shall immediately terminate in its
entirety.  For purposes hereof, unless otherwise defined in an
employment agreement between the Company and the relevant Optionee, “Cause”
shall exist upon a good-faith determination by the Board, following a hearing
before the Board at which an Optionee was represented by counsel and given an
opportunity to be heard, that such Optionee has been accused of fraud,
dishonesty or act detrimental to the interests of the Company or any Subsidiary
of Company or that such Optionee has been accused of or convicted of an act of
willful and material embezzlement or fraud against the Company or of a felony
under any state or federal statute; provided, however, that it is
specifically understood that “Cause” shall not include any act of commission or
omission in the good-faith exercise of such Optionee’s business judgment as a
director, officer or employee of the Company, as the case may be, or upon the
advice of counsel to the Company.  Notwithstanding the foregoing, if
Cause is defined in an employment agreement between the Company and the relevant
Optionee, then, with respect to such Optionee, Cause shall have the meaning
ascribed to it in such employment agreement.

    
      
         

      

      
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    (ii)           In
the event that an Optionee is removed as a director, officer or employee by the
Company at any time other than for “Cause” or resigns as a director, officer or
employee for “Good Reason” the Option granted to such Optionee may be exercised
by the Optionee, to the extent the Option was exercisable on the date such
Optionee ceases to be a director, officer or employee.  Such Option
may be exercised at any time within one (1) year after the date the Optionee
ceases to be a director, officer or employee (or, if later, such time as the
Option may be exercised pursuant to Section 14(d) hereof), or the date on which
the Option otherwise expires by its terms; which ever period is shorter, at
which time the Option shall terminate; provided, however, if the
Optionee dies before the Options terminate and are no longer exercisable, the
terms and provisions of Section 5(f) shall control.  For purposes of
this Section 5(i), and unless otherwise defined in an employment agreement
between the Company and the relevant Optionee, Good Reason shall exist upon the
occurrence of the following:

     

    
      	
               
      

            	
              (A)

            	
              the
      assignment to Optionee of any duties inconsistent with the position in the
      Company that Optionee held immediately prior to the
      assignment;

            

    

     

    
      	
               
      

            	
              (B)

            	
              a
      Change of Control resulting in a significant adverse alteration in the
      status or conditions of Optionee’s participation with the Company or other
      nature of Optionee’s responsibilities from those in effect prior to such
      Change of Control, including any significant alteration in Optionee’s
      responsibilities immediately prior to such Change in Control;
      and

            

    

     

    
      	
               
      

            	
              (C)

            	
              the
      failure by the Company to continue to provide Optionee with benefits
      substantially similar to those enjoyed by Optionee prior to such
      failure.

            

    

     

    Notwithstanding
the foregoing, if Good Reason is defined in an employment agreement between the
Company and the relevant Optionee, then, with respect to such Optionee, Good
Reason shall have the meaning ascribed to it in such employment
agreement.

     

    (j)           Limit on Value of Incentive
Option.  The aggregate Fair Market Value, determined as of the
date the Incentive Option is granted, of Stock for which Incentive Options are
exercisable for the first time by any Optionee during any calendar year under
the Plan (and/or any other stock option plans of the Company or any Subsidiary)
shall not exceed $100,000.

     

    6.           Terms and Conditions of Restricted
Stock.

     

    Restricted
Stock may be granted under this Plan aside from, or in association with, any
other award and shall be subject to the following conditions and shall contain
such additional terms and conditions (including provisions relating to the
acceleration of vesting of Restricted Stock upon a Change of Control), not
inconsistent with the terms of the Plan, as the Committee shall deem
desirable:

     

    (a)           Grantee
rights.  A Grantee shall have no rights to an award of
Restricted Stock unless and until Grantee accepts the award within the period
prescribed by the Committee and, if the Committee shall deem desirable, makes
payment to the Company in cash, or by check or such other instrument as may be
acceptable to the Committee.  After acceptance and issuance of a
certificate or certificates, as provided for below, the Grantee shall have the
rights of a stockholder with respect to Restricted Stock subject to the
non-transferability and forfeiture restrictions described in Section 6(d)
below.

     

    (b)           Issuance of
Certificates.  The Company shall issue in the Grantee’s name a
certificate or certificates for the shares of Common Stock associated with the
award promptly after the Grantee accepts such award.

     

    (c)           Delivery of
Certificates.  Unless otherwise provided, any certificate or
certificates issued evidencing shares of Restricted Stock shall not be delivered
to the Grantee until such shares are free of any restrictions specified by the
Committee at the time of grant.

     

    (d)           Forfeitability,
Non-transferability of Restricted Stock.  Shares of Restricted
Stock are forfeitable until the terms of the Restricted Stock grant have been
satisfied.  Shares of Restricted Stock are not transferable until the
date on which the Committee has specified such restrictions have
lapsed.  Unless otherwise provided by the Committee at or after grant,
distributions in the form of dividends or otherwise of additional shares or
property in respect of shares of Restricted Stock shall be subject to the same
restrictions as such shares of Restricted Stock.

    
      
         

      

      
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    (e)           Change of
Control.  Upon the occurrence of a Change in Control as defined
in Section 5(c), the Committee may accelerate the vesting of outstanding
Restricted Stock, in whole or in part, as determined by the Committee, in its
sole discretion.

     

    (f)           Termination of
Employment.  Unless otherwise determined by the Committee at or
after grant, in the event the Grantee ceases to be an employee or otherwise
associated with the Company for any other reason, all shares of Restricted Stock
theretofore awarded to him which are still subject to restrictions shall be
forfeited and the Company shall have the right to complete the blank stock
power.  The Committee may provide (on or after grant) that
restrictions or forfeiture conditions relating to shares of Restricted Stock
will be waived in whole or in part in the event of termination resulting from
specified causes, and the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted Stock.

     

    7.           Term of Plan.

     

    No Option
or award of Restricted Stock shall be granted pursuant to the Plan on or after
the date which is ten years from the effective date of the Plan, but Options and
awards of Restricted Stock theretofore granted may extend beyond that
date.

     

    8.           Capital Change of the
Company.

     

    In the
event of any merger, reorganization, consolidation, recapitalization, stock
dividend, or other change in corporate structure affecting the Stock, the
Committee shall make an appropriate and equitable adjustment in the number and
kind of shares reserved for issuance under the Plan and in the number and option
price of shares subject to outstanding Options granted under the Plan, to the
end that after such event each Optionee’s proportionate interest shall be
maintained (to the extent possible) as immediately before the occurrence of such
event.  The Committee shall, to the extent feasible, make such other
adjustments as may be required under the tax laws so that any Incentive Options
previously granted shall not be deemed modified within the meaning of Section
424(h) of the Code.  Appropriate adjustments shall also be made in the
case of outstanding Restricted Stock granted under the Plan.

     

    The
adjustments described above will be made only to the extent consistent with
continued qualification of the Option under Section 422 of the Code (in the case
of an Incentive Option) and Section 409A of the Code.

     

    9.           Purchase for
Investment/Conditions.

     

    Unless
the Options and shares covered by the Plan have been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or
the Company has determined that such registration is unnecessary, each person
exercising or receiving Options or Restricted Stock under the Plan may be
required by the Company to give a representation in writing that he is acquiring
the securities for his own account for investment and not with a view to, or for
sale in connection with, the distribution of any part thereof.  The
Committee may impose any additional or further restrictions on awards of Options
or Restricted Stock as shall be determined by the Committee at the time of
award.

     

    10.         Taxes.

     

    (a)           The
Company may make such provisions as it may deem appropriate, consistent with
applicable law, in connection with any Options or Restricted Stock granted under
the Plan with respect to the withholding of any taxes (including income or
employment taxes) or any other tax matters.

     

    (b)           If
any Grantee, in connection with the acquisition of Restricted Stock, makes the
election permitted under Section 83(b) of the Code (that is, an election to
include in gross income in the year of transfer the amounts specified in Section
83(b)), such Grantee shall notify the Company of the election with the Internal
Revenue Service pursuant to regulations issued under the authority of Code
Section 83(b).

    
      
         

      

      
        - 7 -

        
          

        

      

      
         

      

    

    (c)           If
any Grantee shall make any disposition of shares of Stock issued pursuant to the
exercise of an Incentive Option under the circumstances described in Section
421(b) of the Code (relating to certain disqualifying dispositions), such
Grantee shall notify the Company of such disposition within ten (10) days
hereof.

     

    11.         Effective Date of
Plan.

     

    The Plan
shall be effective on November 17, 2010; provided, however, that if, and only
if, certain options are intended to qualify as Incentive Stock Options, the Plan
must subsequently be approved by majority vote of the Company’s stockholders no
later than November 17, 2011, and further, that in the event certain Option
grants hereunder are intended to qualify as performance-based compensation
within the meaning of Section 162(m) of the Code, the requirements as to
stockholder approval set forth in Section 162(m) of the Code are
satisfied.

     

    12.         Amendment and
Termination.

     

    The Board
may amend, suspend, or terminate the Plan, except that no amendment shall be
made that would impair the rights of any Participant under any Option or
Restricted Stock theretofore granted without the Participant’s consent, and
except that no amendment shall be made which, without the approval of the
stockholders of the Company would:

     

    (a)           materially
increase the number of shares that may be issued under the Plan, except as is
provided in Section 8;

     

    (b)           materially
increase the benefits accruing to the Participants under the Plan;

     

    (c)           materially
modify the requirements as to eligibility for participation in the
Plan;

     

    (d)           decrease
the exercise price of an Incentive Option to less than 100% of the Fair Market
Value per share of Stock on the date of grant thereof or the exercise price of a
Nonqualified Option to less than 100% of the Fair Market Value per share of
Stock on the date of grant thereof; or

     

    (e)           extend
the term of any Option beyond that provided for in Section 5(b).

     

    (f)           except
as otherwise provided in Sections 5(d) and 8 hereof, reduce the exercise price
of outstanding Options or effect repricing through cancellations and re-grants
of new Options.

     

    Subject
to the forgoing, the Committee may amend the terms of any Option theretofore
granted, prospectively or retrospectively, but no such amendment shall impair
the rights of any Optionee without the Optionee’s consent.

     

    It is the
intention of the Board that the Plan comply strictly with the provisions of
Section 409A of the Code and Treasury Regulations and other Internal Revenue
Service guidance promulgated thereunder (the “Section 409A Rules”)
and the Committee shall exercise its discretion in granting awards hereunder
(and the terms of such awards), accordingly.  The Plan and any grant
of an award hereunder may be amended from time to time (without, in the case of
an award, the consent of the Participant) as may be necessary or appropriate to
comply with the Section 409A Rules.

     

    13.         Government
Regulations.

     

    The Plan,
and the grant and exercise of Options or Restricted Stock hereunder, and the
obligation of the Company to sell and deliver shares under such Options and
Restricted Stock shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies, national securities
exchanges and interdealer quotation systems as may be required.

    
      
         

      

      
        - 8 -

        
          

        

      

      
         

      

    

    14.         General
Provisions.

     

    (a)           Certificates.  All
certificates for shares of Stock delivered under the Plan shall be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, or other securities commission having jurisdiction, any
applicable Federal or state securities law, any stock exchange or interdealer
quotation system upon which the Stock is then listed or traded and the Committee
may cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions.

     

    (b)           Employment
Matters.  Neither the adoption of the Plan nor any grant or
award under the Plan shall confer upon any Participant who is an employee of the
Company or any Subsidiary any right to continued employment or, in the case of a
Participant who is a director, continued service as a director, with the Company
or a Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate the employment of any of its
employees, the service of any of its directors or the retention of any of its
consultants or advisors at any time.

     

    (c)           Limitation of
Liability.  No member of the Committee, or any officer or
employee of the Company acting on behalf of the Committee, shall be personally
liable for any action, determination or interpretation taken or made in good
faith with respect to the Plan, and all members of the Committee and each and
any officer or employee of the Company acting on their behalf shall, to the
extent permitted by law, be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.

     

    (d)           Registration of
Stock.  Notwithstanding any other provision in the Plan, no
Option may be exercised unless and until the Stock to be issued upon the
exercise thereof has been registered under the Securities Act and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration in the United States.  The Company shall not be
under any obligation to register under applicable federal or state securities
laws any Stock to be issued upon the exercise of an Option granted hereunder in
order to permit the exercise of an Option and the issuance and sale of the Stock
subject to such Option, although the Company may in its sole discretion register
such Stock at such time as the Company shall determine.  If the
Company chooses to comply with such an exemption from registration, the Stock
issued under the Plan may, at the direction of the Committee, bear an
appropriate restrictive legend restricting the transfer or pledge of the Stock
represented thereby, and the Committee may also give appropriate stop transfer
instructions with respect to such Stock to the Company’s transfer
agent.

     

    15.         Non-Uniform
Determinations.

     

    The
Committee’s determinations under the Plan, including, without limitation, (i)
the determination of the Participants to receive awards, (ii) the form, amount
and timing of such awards, (iii) the terms and provisions of such awards and
(ii) the agreements evidencing the same, need not be uniform and may be made by
it selectively among Participants who receive, or who are eligible to receive,
awards under the Plan, whether or not such Participants are similarly
situated.

     

    16.         Governing Law.

     

    The
validity, construction, and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with the internal laws of
the State of Delaware, without giving effect to principles of conflicts of laws,
and applicable federal law.

     

    
      
        
        

      

      
        - 9 -PURCHASE
AGREEMENT

     

    by
and among

     

    SOUTHPEAK
INTERACTIVE CORPORATION,

     

    INTERMEZZO
ESTABLISHMENT,

     

    AND

     

    PARAGON
INVESTMENT FUND

     

    March
31, 2010

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    PURCHASE
AGREEMENT

     

    This
Purchase Agreement (the “Agreement”) is made
and entered into this 31st day of March, 2010, by and among SouthPeak
Interactive Corporation, a Delaware corporation (“Buyer”), Intermezzo
Establishment, a Liechtenstein corporation (“Intermezzo”),  and
Paragon Investment Fund, an investment fund organized under the laws of the
Cayman Islands (“Paragon”).

     

    WHEREAS,
Intermezzo has assigned all of its right, title and interest in and to the
Publishing Agreement dated August 20, 2009 between Intermezzo and FireFly
Holdings Limited (“FireFly Agreement”)
for the development of the electronic game “Stronghold 3” (the “Game”) to IRP GmbH, a
corporation organized under the laws of Switzerland (the “Company”);

     

    WHEREAS,
Intermezzo and Paragon (collectively, the “Shareholders”) are
the sole shareholders of the Company;

     

    WHEREAS,
the Buyer desires to acquire all the outstanding shares of stock that the
Shareholders hold of the Company (the “Stock”),
and  the Shareholders desire to sell the shares of Stock to Buyer for
the consideration set forth below, subject to the terms and conditions of this
Agreement;

     

    WHEREAS,
Intermezzo holds a note (the “Note”) in the
principal amount of EUR 4,385,371.43 of CDV Finance Schweiz, AG for which CDV
Software Entertainment AG, a corporation organized under the laws of Germany,
has assumed the obligation to pay; and

     

    WHEREAS,
Buyer desires to obtain by sale and assignment the right to repayment of EUR
3,700,000 of the principal and interest due thereon under the Note.

     

    NOW,
THEREFORE, in consideration of the mutual promises hereinafter set forth and
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereby agree as follows:

     

    ARTICLE
I

    DEFINITIONS
AND INTERPRETATION

     

    1.1 Definitions.  For
purposes of this Agreement, the following terms have the respective meanings set
forth below:

     

    “Governmental Entity”
means any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign.

     

    “knowledge” means
actual knowledge or awareness as to a specified fact or event of a Person that
is an individual or of an officer, director or managerial personnel of a Person
that is a corporation or of a Person in a similar capacity of an entity other
than a corporation.

     

    “Legal Requirements”
means any federal, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Entity.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Lien” means any
mortgage, pledge, security interest, encumbrance, lien, restriction or charge of
any kind (including, without limitation, any conditional sale or other title
retention agreement or lease in the nature thereof, any sale with recourse
against the seller or any affiliate of the seller, or any agreement to give any
security interest).

     

    “Losses” shall include
any loss, damage, injury, liability, claim, demand, settlement, judgment, award,
fine, penalty, tax, fee (including any reasonable legal fee, expert fee,
accounting fee or advisory fee), charge, cost (including any cost of
investigation) or expense of any nature.

     

    “Material Adverse
Effect” means any change, event, violation, inaccuracy, circumstance or
effect, individually or when aggregated with other changes, events, violations,
inaccuracies, circumstances or effects, that is materially adverse to the
business, assets, revenues, financial condition, results of operations or
business prospects of an entity and its subsidiaries, taken as a whole, except
to the extent resulting from: (a) changes in general industry or economic
conditions, (b) adverse effects arising from the announcement or consummation of
the transactions contemplated hereby, or (c) changes to generally accepted
accounting principles that apply generally to the industry in which the entity
operates.

     

    “Net Receipts” means
all monies (expressed in U.S. Dollars) Buyer and its subsidiaries actually
receive from the sale, license or lease of the Game under the FireFly Agreement
net of a reasonable reserve for returns, less all Advance Royalty and Royalty
payments paid and payable under Sections 6.1 and 6.2 of the FireFly Agreement
and less, to the extent deducted under the FireFly Agreement to determine net
receipts thereunder, (i) all applicable duties, value-added taxes and other
similar taxes, (ii) direct manufacturing costs and other costs of fulfillment,
(iii) discounts, markdowns and allowances, (iv) marketing and PR expenses and
(v) localization expenses.

     

    “Person” means any
individual, corporation, partnership, firm, joint venture, limited liability
company, association, joint-stock company, trust, unincorporated organization,
Governmental Entity or other entity.

     

    “SEC” means the
Securities and Exchange Commission.

     

    “Tax” or “Taxes” refers to any
and all federal, foreign, state, provincial, local and foreign taxes, including,
without limitation, gross receipts, income, profits, sales, use, occupation,
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, assessments, governmental charges and
duties together with all interest, penalties and additions imposed with respect
to any such amounts and any obligations under any agreements or arrangements
with any other Person with respect to any such amounts and including any
liability of a predecessor entity for any such amounts.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.2 Other Defined
Terms.  For
purposes of this Agreement, the following terms have the respective meanings set
forth in the section opposite each such term:

     

    
      	
              TERM

            	 	
              SECTION

            
	
              Agreement

            	 	
              Preamble

            
	
              Buyer

            	 	
              Preamble

            
	
              Buyer
      Indemnified Party

            	 	
              Section
      7.1

            
	
              Buyer
      Shares

            	 	
              Section
      2.2

            
	
              Closing

            	 	
              Section
      2.1

            
	
              Closing
      Date

            	 	
              Section
      3.1

            
	
              Common
      Stock

            	 	
              Section
      2.2

            
	
              Company

            	 	
              Preamble

            
	
              Deductible
      Amount

            	 	
              Section
      7.4

            
	
              Exchange
      Act

            	 	
              Section
      4.5

            
	
              FireFly

            	 	
              Section
      4.6

            
	
              FireFly
      License

            	 	
              Section
      4.6

            
	

              Fixed
      Payments

            	 	

              Section
      2.2

            
	

              Game

            	 	

              Section
      2.2

            
	
              Indemnified
      Party

            	 	
              Section
      7.3

            
	

              Net
      Receipts Payments

            	 	

              Section
      2.2

            
	
              PDF

            	 	
              Section
      3.1

            
	
              SEC
      Reports

            	 	
              Section
      5.7

            
	
              Shareholder
      Indemnified Party

            	 	
              Section
      7.2

            
	
              Stock

            	 	
              Recitals

            
	
              Stronghold
      3

            	 	
              Recitals

            
	
              Survival
      Period

            	 	
              Section
      7.5

            
	
              Third
      Party Claim

            	 	
              Section
      7.3

            

    

     

    ARTICLE
II

    PURCHASE
AND SALE OF THE STOCK

     

    2.1 Purchase of the Stock from
the
Shareholders and Right to Repayment of Part of  Note from
Intermezzo.  Subject
to and upon the terms and conditions of this Agreement, at the closing of the
transactions contemplated by this Agreement (the “Closing”), the
Shareholders shall sell, transfer, convey, assign and deliver to the Buyer, and
the Buyer, in part, upon reliance of the covenants set forth in Section 6.5 of
this Agreement,  shall purchase, acquire and accept from the Company,
all of the Stock. Pursuant to the Sale and Assignment Agreement attached hereto
as Exhibit A
(“Assignment
Agreement”) which shall be executed at the Closing, Buyer shall purchase
from Intermezzo the principal and interest amount of EUR 3,700,000 due under the
Note plus the interest accrued and unpaid thereon after March 31, 2010 for the
consideration set forth in the Assignment Agreement.

     

    2.2 Purchase
Price.  The
purchase price (the “Purchase Price”) to
be paid to the Shareholders by the Buyer for the Stock shall be (a) Ten Million
(10,000,000) shares (“Buyer Shares”) of the
Buyer’s common stock, par value $.0001 per share (the “Common Stock”), (b)
10% of  Net Receipts not to exceed $1,000,000 (“Net Receipts
Payments”) and (c)  fixed payments totaling
$1,200,000  at such times and in such amounts as set forth on Exhibit B, by wire
transfer of immediately available funds to the accounts of the Shareholders
designated in writing prior to the Closing  (the “Fixed Payments”). The
Buyer will account for and make the Net Receipts Payments at the same time and
in the same manner that accountings for and payments of the Royalty payments are
required and due under the FireFly Agreement; provided, however, no obligation
will exist on the part of the Shareholders to render an invoice for such Net
Receipts Payments. All amounts and shares payable and issuable to the
Shareholders shall be equally divided between the Shareholders unless they
indicate otherwise to Buyer.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    ARTICLE
III

    THE
CLOSING

     

    3.1 Closing.  The
Closing shall take place at the offices of Greenberg Traurig, LLP, 1750 Tysons
Boulevard, Suite 1200, McLean, Virginia 22102 contemporaneously with the
execution and delivery of this Agreement (the “Closing
Date”).  The documents to be delivered at the Closing (other
than stock certificates evidencing the Buyer Shares) may, at the election of the
parties, be exchanged by telecopier or electronic transmission in portable
document format (“PDF”) upon a written
undertaking to provide original executed copies within one business day
following the Closing.

     

    3.2  Sale. Shareholders,
upon the terms and conditions of this Agreement, hereby sell (verkaufen) and hereby
transfer (treten ab)
the Stock to the Buyer under the condition precedent (unter der aufschiebenden
Bedingung) of the receipt of the Buyer Shares and the initial payment set
forth in Section. 3.7(ii).

     

    3.3 Acceptance. Buyer
hereby accepts such sale and transfer of the Stock.

     

    3.4 Ancillary
Rights.  The sale and transfer of the Stock hereunder shall
include without limitation any and all ancillary rights (Nebenrechte) pertaining to
the Stock, including the rights to any undistributed profits (Gewinnbezugsrechte).

     

    3.5 Cooperation.  The
Parties shall reasonably cooperate with each other with respect to all filings
that the Parties are required to make or elect to make in connection with the
consummation of this Agreement.

     

    3.6 Closing Deliveries by
Paragon and
Intermezzo.   Paragon
and Intermezzo shall deliver to the Buyer at the Closing the
following:

     

    (i) stock
certificates representing the Stock duly endorsed in blank or accompanied by
stock powers duly executed by Paragon;

     

    (ii) certificates
of the Secretary of the Company attesting to the incumbency of the Company’s
officers, the authenticity of the resolutions authorizing the transactions
contemplated by this Agreement, and the authenticity and continuing validity of
the organizational documents delivered pursuant to Section
4.1;

     

    (iii) the
original minute book of the Company to the extent one exists;

     

    (iv) the
consent of FireFly Holdings Limited to the assignment of the FireFly Agreement
to the Company;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (v) a
resignation, effective as of the Closing, of each officer and director of the
Company from each such position, executed by such person;

     

    (vi) the
executed Assignment Agreement; and

     

    (vii) a cross
receipt executed by the Shareholders for the portion of Purchase Price being
paid at the Closing and a cross receipt of Intermezzo for the consideration it
is receiving under the Assignment Agreement.

     

    3.7 Closing Deliveries of the
Buyer.  The
Buyer shall deliver to Paragon and Intermezzo at the Closing the
following:

     

    (i) the Buyer
Shares (issued in accordance with Section
2.2);

     

    (ii) the
initial $50,000 of the Fixed Payments;

     

    (iii) the
initial $50,000 payment due Intermezzo under the Assignment
Agreement;

     

    (iv) certificates
of the Secretary of the Buyer attesting to the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement; and

     

    (v) a cross
receipt executed by the Buyer for the Stock.

     

    ARTICLE
IV

    REPRESENTATIONS
AND WARRANTIES OF INTERMEZZO AND PARAGON

     

    Intermezzo
and Paragon jointly and severally represent and warrant to the Buyer, as set
forth below in this Article
IV.

     

    4.1 Organization and
Qualification.  The
Company is an unused shell corporation, duly organized, validly existing and in
good standing under the laws of Switzerland and has the requisite corporate
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted.  Complete and
correct copies of the charter of the Company, as amended and currently in
effect, have been heretofore delivered to Buyer or Buyer’s
counsel.  The Company is not in violation of any of the provisions of
its charter or any other governing document.

     

    4.2 Subsidiaries.  The
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any other company, corporation, limited liability company
or other business entity.

     

    4.3 Capitalization.

     

    (a) The Stock
represents all of the outstanding capital stock or other equity securities of
the Company.  The shares of Stock are validly issued, fully paid and
nonassessable.  The shares of Stock are owned by Paragon free and
clear of any Liens and Paragon has all right to sell and transfer the shares of
Stock as contemplated by this Agreement and upon such sale and transfer, such
Stock shall be acquired by the Buyer as contemplated by Section 2.1 of this
Agreement free and clear of any Liens.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    (b) There are
no subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which the Company is a party or by
which it is bound obligating the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition of, any Stock or similar equity
security of the Company or obligating the Company to grant, extend, accelerate
the vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement.

     

    (c) All
shares of Stock have been issued in compliance with all applicable securities
laws and other applicable laws and regulations.

     

    (d) There are
no registration rights, and there is no voting trust, proxy, rights plan,
anti-takeover plan or other agreement or understanding to which the Company is a
party or by which the Company is bound with respect to any equity security of
any class of the Company.

     

    (e) No shares
of Stock are subject to a repurchase option, risk of forfeiture or other
condition under any applicable agreement with the Company.

     

    4.4 Authority Relative to this
Agreement.

     

    (a) Each of
Intermezzo and Paragon has all necessary power and authority to execute and
deliver this Agreement and to perform its respective obligations hereunder and
to consummate the transactions contemplated hereby.

     

    (b) The
execution and delivery of this Agreement and the consummation by Intermezzo and
Paragon of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on their part and no corporate or
organizational proceedings on the part of Intermezzo or Paragon are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
pursuant to the applicable law and the terms and conditions of this
Agreement.

     

    (c) This
Agreement has been duly and validly executed and delivered by Intermezzo and
Paragon, and assuming the due authorization, execution and delivery thereof by
Buyer, constitutes the legal and binding obligations of Intermezzo and Paragon,
enforceable against each of them in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors’ rights generally and by general
principles of equity.

     

    4.5 No Conflict; Required
Filings and Consents.

     

    (a) The
execution and delivery of this Agreement by each of Intermezzo and Paragon does
not, and the performance of this Agreement by such Persons shall not,
(i) conflict with or violate any of their respective charters or other
organizational documents, (ii) conflict with or violate any Legal
Requirements, (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
materially impair the Company’s rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company, or
(iv) result in the triggering, acceleration or increase of any payment to
any Person, including any “change in control” or similar provision, except, with
respect to clauses (ii), (iii) or (iv), for any such conflicts, violations,
breaches, defaults, triggers, accelerations, increases or other occurrences that
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company or its rights under the FireFly Agreement.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (b) The
execution, delivery and performance of this Agreement by each of Intermezzo and
Paragon does not require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity or other third party
(including, without limitation, lenders and lessors, except (i) for
applicable requirements, if any, of the Securities Act of 1933, amended (the
“Securities
Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or
applicable securities laws of any foreign country, and the rules and regulations
thereunder, and appropriate documents received from or filed with the relevant
authorities of other jurisdictions in which the Company is licensed or qualified
to do business, (ii) [SHARE REGISTRY IN [SWITZERLAND]?], and (iii) where
the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company or
prevent consummation of the transactions contemplated hereby or otherwise
prevent the parties hereto from performing their obligations under this
Agreement.

     

    4.6 Assets and
Liabilities.  The
Company has no assets other than the FireFly Agreement. The Company has no
liabilities other than its obligations arising after the Closing under the
FireFly Agreement.

     

    Intermezzo
has made available to the Buyer a correct and complete copy of the FireFly
Agreement (as amended to date).  The FireFly Agreement:  (a)
is in full force and effect; (ii)  is legal, valid, binding and
enforceable against FireFly Holdings Limited (“FireFly”); and
(iii)  will continue to be in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect prior to
the Closing. No party is in breach or default, and no event has occurred which
with notice or lapse of time or both would constitute a breach or default or
permit termination, modification or acceleration, under the FireFly
Agreement.  Intermezzo and the Company have duly exercised all of
their rights under the FireFly Agreement to assure that FireFly is performing
its obligations under the FireFly Agreement and Intermezzo and the Company have
no knowledge that FireFly has failed to perform in any material respect its
obligations under the FireFly Agreement.

     

    4.7 Litigation.  There
are no claims, suits, actions or proceedings pending or, to the knowledge of
Intermezzo and Paragon, threatened against, Intermezzo, the Company or Paragon
before any Governmental Entity, governmental department or instrumentality, or
any arbitrator.  There are no claims, suits, actions or proceedings
pending or, to the knowledge of Intermezzo,  the Company
or  Paragon, threatened against Intermezzo, the Company or Paragon
before any Governmental Entity, governmental department or instrumentality, or
any arbitrator that seeks to restrain or enjoin the consummation of the
transactions contemplated by this Agreement.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    4.8 Intellectual
Property.  The
Company’s rights under the FireFly Agreement are not subject to any material
proceeding or outstanding decree, order, judgment, contract, license or
stipulation restricting in any manner the use, transfer or licensing thereof by
the Company, or which may affect the validity, use or enforceability of such
rights.

     

    4.9 Investment
Intent.

     

    (a) The
Shareholders are acquiring the Buyer Shares hereunder for their own
accounts for investment and not for distribution, assignment or resale to
others.

     

    (b) The
Shareholders acknowledge that the issuance of the Buyer Shares has not been
registered under the Securities Act in reliance upon an exemption therefrom for
nonpublic offerings.

     

    (c) The
Shareholders acknowledge that the Buyer Shares may not be sold or otherwise
transferred unless such sale or other transfer is registered under the
Securities Act or an exemption from registration is available.

     

    (d) Each of
the Shareholders is an “accredited investor” as that term is defined in Rule 501
of Regulation D promulgated under the Securities Act, and has had access to such
financial and other information and has been afforded the opportunity to ask
questions of the Buyer’s representatives and has received answers thereto, as
deemed necessary in connection with its decision to accept the Buyer
Shares hereunder.

     

    ARTICLE
V

    REPRESENTATIONS
AND WARRANTIES OF THE BUYER

     

    The Buyer
represent and warrant to Intermezzo and Paragon as set forth below in this Article
V.

     

    5.1 Organization and
Qualification. The
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being or currently planned by the Buyer to be
conducted.  The Buyer is not in violation of any of the provisions of
its certificate of incorporation and bylaws.

     

    5.2 Capitalization.  The
Buyer’s periodic reports on Form 10-Q and Form 10-K and current reports on Form
8-K filed with the SEC accurately reflect its capitalization as of the dates
indicated in such reports.  The issued and outstanding capital stock
of the Buyer (a) has been duly and validly issued; (b) is fully paid
and nonassessable; and (c) was not issued in violation of any preemptive
rights or rights of first refusal or first offer.

     

    5.3 Valid Issuance of the Buyer
Shares. The
Buyer Shares issued to Paragon hereunder have been duly authorized, validly
issued, fully paid and are non-assessable, free of restrictions on transfer
other than restrictions on transfer under applicable state and federal
securities laws, are not subject to any preemptive rights, rights of first
refusal, tag-along rights, drag-along rights or other similar rights, and have
been issued in compliance with applicable state and federal securities
laws.  Upon consummation of the transactions contemplated by this
Agreement, Paragon and Intermezzo will acquire marketable title to the Buyer
Shares free and clear of all Liens.

     

    
      
        
        

      

      
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    5.4 Authority Relative to this
Agreement.  The
Buyer has full corporate power and authority to: (a) execute, deliver and
perform this Agreement, and each ancillary document that the Buyer has executed
or delivered or is to execute or deliver pursuant to this Agreement, and
(b) carry out the Buyer’s obligations hereunder and thereunder and, to
consummate the transactions contemplated hereby.  The execution and
delivery of this Agreement and the consummation by the Buyer of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Buyer, and no other corporate proceedings on
the part of the Buyer are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby.  This Agreement has been duly
and validly executed and delivered by the Buyer and, assuming the due
authorization, execution and delivery thereof by the other parties hereto,
constitutes the legal and binding obligation of the Buyer, enforceable against
it in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity.

     

    5.5 No Conflict; Required
Filings and Consents.

     

    (a) The
execution and delivery of this Agreement by the Buyer do not, and the
performance of this Agreement by the Buyer shall not (i) conflict with or
violate the Buyer’s certificate or incorporation or bylaws, (ii) conflict with
or violate any Legal Requirements or any rule or regulation of the
Over-the-Counter bulletin board, (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or materially impair the Buyer’s rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of the Buyer pursuant to,
any contracts to which the Buyer is a party or by or to which any of the
properties or assets of the Buyer may be bound, subject or affected, or (iv)
result in the triggering, acceleration or increase of any payment to any Person
pursuant to any contracts to which the Buyer is a party or by or to which any of
the properties or assets of the Buyer may be bound, subject or affected,
including any “change in control” or similar provision thereof, except, with
respect to clauses (ii), (iii) or (iv), for any such conflicts, violations,
breaches, defaults, triggers, accelerations, increases or other occurrences that
would not, individually or in the aggregate, have a Material Adverse Effect on
the Buyer.

     

    (b) The
execution and delivery of this Agreement by the Buyer do not, and the
performance of its respective obligations hereunder will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for applicable requirements, if
any, of the Securities Act, the Exchange Act, Blue Sky Laws, and the rules and
regulations thereunder, and appropriate documents with the relevant authorities
of other jurisdictions in which the Buyer is qualified to do business, and
(ii) where the failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Buyer, or prevent consummation of the transaction contemplated hereby or
otherwise prevent the parties hereto from performing their obligations under
this Agreement.

     

    
      
        
        

      

      
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    5.6 Reporting Company
Status.  The
Buyer is subject to the reporting requirements of the Exchange Act and the Buyer
has taken no action designed to, or which to its knowledge is likely to, have
the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Buyer received any notification that the SEC is
contemplating terminating such registration. The Common Stock is traded on the
Over-the-Counter bulletin board and the Buyer has not received any notice
regarding, and to the Buyer’s knowledge there is no threat of, the termination
or discontinuance of the eligibility of the Common Stock for such
trading.

     

    5.7 Exchange Act Filings;
Financial Statements.  Buyer
has filed all reports, forms or other information required to be filed by it
under the Securities Act and the Exchange Act (the foregoing materials being
collectively referred to herein as the “SEC Reports”), except
as otherwise disclosed in any EC Reports.  Except as otherwise
disclosed in any SEC Reports, as of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  The
financial statements of Buyer included in the SEC Reports were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of Buyer and its consolidated subsidiaries as of
and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

     

    5.8 Private
Placement. No
registration under the Securities Act is required for the offer and sale of the
Buyer Shares by the Buyer to Paragon as contemplated hereby.

     

    ARTICLE
VI

    ADDITIONAL
AGREEMENTS

     

    6.1 Confidential
Information.  Except
in connection with any dispute between the parties and subject to any obligation
to comply with (i) any applicable law, (ii) any rule or regulation of any
Governmental Entity or securities exchange, or (iii) any subpoena or other legal
process to make information available to the persons entitled thereto, whether
or not the transactions contemplated herein shall be concluded, all information
obtained by any party about any other, and all of the terms and conditions of
this Agreement, shall be kept in confidence by each party, and each party shall
cause its stockholders, directors, officers, managers, employees, agents and
attorneys to hold such information confidential.  Such confidentiality
shall be maintained to the same degree as such party maintains its own
confidential information and shall be maintained until such time, if any, as any
such data or information either is, or becomes, published or a matter of public
knowledge; provided, however, that the foregoing shall not apply to any
information obtained by a party through its own independent investigations of
the other party or received by a party from a source not known by such party to
be bound by a confidentiality agreement with, or other contractual, legal or
fiduciary obligation of confidentiality to, the other party, nor to any
information obtained by a party which is generally known to others engaged in
the trade or business of such party. In the event a party to this Agreement
becomes legally compelled to disclose any such information, it shall promptly
provide the others with written notice of such requirement so that the other
parties to this Agreement may seek a protective order or other remedy. If this
Agreement shall be terminated for any reason, the parties shall return or cause
to be returned to the others all written data, information, files, records and
copies of documents, worksheets and other materials obtained by such parties in
connection with this Agreement.

     

    
      
        
        

      

      
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    6.2 Public
Disclosure.  Unless
otherwise permitted by this Agreement, the Buyer, Paragon and Intermezzo shall
consult with each other before issuing any press release or otherwise making any
public statement or making any other public (or non-confidential) disclosure
(whether or not in response to an inquiry) regarding the terms of this Agreement
and the transactions contemplated hereby, and neither shall issue any such press
release or make any such statement or disclosure without the prior written
approval of the other (which approval shall not be unreasonably withheld),
except as may be required by law, in which case the party proposing to issue
such press release or make such public statement or disclosure shall use its
commercially reasonable efforts to consult with the other party before issuing
such press release or making such public statement or disclosure.

     

    6.3 Piggyback
Registration.  The
Buyer shall use its reasonable best efforts to provide to Paragon and Intermezzo
piggyback registration rights as to Buyer Shares in any registration statement
the Buyer files in which it is registering any shares of Common Stock other than
on a Form S-4 or Form S-8 or any successor forms thereto. As a condition to such
registration right, each Stockholder, or any affiliate thereof, shall agree to
be bound by the provisions of any registration rights agreement pursuant to
which other shares are being registered and, absent any such agreement, to such
standard limitations and obligations to which registration rights are generally
subject, including, but not limited to, the obligation to participate in any
underwriting and the right to have any underwriter limit the number of shares
being registered by a stockholder, or any affiliate thereof.  In no
event, however, shall the Buyer have the obligation to register any Buyer Shares
if such shares can be sold in accordance with Rule 144 promulgated under the
Securities Act.

     

    6.4 Timely Filing of SEC
Reports.  The
Buyer will use its best efforts to file its SEC Reports with the SEC until the
one year anniversary of the Closing.

     

    6.5 Best Efforts
of  Intermezzo and Paragon.  Intermezzo
and Paragon agree, for each of themselves and their affiliates, to use its best
efforts to:

     

    (a) identify
potential equity or debt financing opportunities for the Buyer over the eighteen
months following the Closing;

     

    
      
        
        

      

      
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    (b) cause any
fund which Intermezzo, Paragon or any affiliate thereof forms to finance the
development of electronic games to consider financing games for the benefit of
Buyer and its affiliates; and

     

    (c) assign to
Buyer at Buyer’s request any videogame distribution or videogame development
contracts, and intellectual property rights related to videogames obtained from
CDV Software Entertainment, AG and its affiliates that revert to Intermezzo,
Paragon or any of their affiliates in satisfaction of the exercise of their
rights; provided that any such assignment shall be subject to (i) Buyer’s
repayment of any production or royalty advances directly funded by Intermezzo or
an affiliate thereof, and (ii) assumption by Buyer or any of its affiliates of
any future financial obligations arising under any such videogame distribution
or videogame development contract.

     

    6.6 Tax
Obligations.

     

    (a) Intermezzo
and Paragon, on or after the Closing Date, shall pay any and all Taxes due or
imposed in connection with the transfer of the FireFly Agreement to the Company
or the transactions contemplated in this Agreement, at such time as such Taxes
become due and payable, and shall remain exclusively liable for (i) any Taxes
with respect to the FireFly Agreement or the Company to the extent such Taxes
accrued prior to the Closing Date or arose out of acts occurring or conditions
existing prior to the Closing Date; (ii) any Taxes of the Company arising before
the Closing Date.

     

    (b) The Buyer
shall remain exclusively liable for (i) any Taxes with respect to the FireFly
License or the Company to the extent such Taxes accrue after the Closing Date or
arise out of acts occurring or conditions existing after the Closing Date; (ii)
any Taxes of Buyer arising before or after the Closing Date; or (iii) any Taxes
of the Buyer arising out of or with respect to the operation of the Company
after the Closing Date.

     

    6.7 Notice and Rights Upon
Default.  If Buyer shall fail to pay or cause IRP to pay any
Milestone  payments due FireFly (as defined in the FireFly Agreement)
within 75 days of its due date, or any Royalty (as defined in the FireFly
Agreement) payment within 20 days of its due date, Buyer shall provide notice
thereof to Intermezzo.  Intermezzo shall then have the right to make
such payments on behalf of Buyer and IRP.  If Intermezzo makes any
such payment and is not reimbursed by the time such payment was otherwise due
(after regard for cure periods under the FireFly Agreement), upon notice by
Intermezzo, Buyer shall either assign the FireFly Agreement to Intermezzo or its
designee, after consent to such assignment is obtained from FireFly, or transfer
the stock of IRP to Intermezzo or its designee.  In addition, if Buyer
shall fail to make any Net Receipts Payment, Fixed Payment or any payment due
under the Assignment Agreement within 60 days when due, then upon notice from
Intermezzo, the same rights shall exist in favor of Intermezzo as existed for
failures to pay under the FireFly Agreement.  In no event shall
Intermezzo have any rights resulting from the failure to make any payment under
the FireFly Agreement if a bona fide dispute exists as to the obligation to make
any such payment.

    

    6.8 Further
Assurances.  Each of the parties to this Agreement shall use
its commercially reasonable efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement. Each party hereto, at the reasonable request of another party
hereto, shall execute and deliver such other instruments and do and perform such
other acts and things as may be necessary or desirable for effecting completely
the consummation of this Agreement and the transactions contemplated hereby,
including under the Assignment Agreement.

     

    
      
        
        

      

      
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    ARTICLE
VII

    INDEMNIFICATION

     

    7.1 Indemnification of
Buyer.  The
Buyer and each of its officers, directors, employees, stockholders and agents
(each, a “Buyer
Indemnified Party”) shall be entitled to be indemnified by Intermezzo and
Paragon against any and all Losses suffered or incurred by such Buyer
Indemnified Party, arising from, relating to or otherwise in connection
with:

     

    (a) any
breach of any representation or warranty of Intermezzo or Paragon contained in
this Agreement or the Assignment Agreement as modified by the exceptions thereto
and other disclosures included in any other agreement or instrument furnished to
the Buyer pursuant to this Agreement;

     

    (b) any
breach or failure to perform any covenant or agreement of Intermezzo or Paragon
contained in this Agreement or any other agreement or instrument furnished to
the Buyer pursuant to this Agreement; or

     

    (c) any
legal, accounting, or advisory expenses of Intermezzo and Paragon incurred in
connection with the transaction contemplated by this Agreement.

     

    7.2 Indemnification of
Paragon and
Intermezzo.  The
Buyer shall indemnify, defend and hold harmless Intermezzo and Paragon and their
respective officers, directors, employees, stockholders and agents (each, a
“Shareholder
Indemnified Party”) from and against any and all Losses suffered or
incurred by such Shareholder Indemnified Party, arising from, relating to or
otherwise in connection with:

     

    (a) any
breach of any representation or warranty of the Buyer contained in this
Agreement as modified by the exceptions thereto and other disclosures included
in any other agreement or instrument furnished to Intermezzo or Paragon pursuant
to this Agreement;

     

    (b) any
breach or failure to perform any covenant or agreement of the Buyer contained in
this Agreement or any other agreement or instrument furnished to Intermezzo or
Paragon pursuant to this Agreement; or

     

    (c) any
legal, accounting, or advisory expenses of the Buyer incurred in connection with
the transaction contemplated by this Agreement.

     

    7.3 Indemnification
Claims.

     

    (a) In order
for a Buyer Indemnified Party or a Shareholder Indemnified Party, as applicable
(an “Indemnified
Party”), to be entitled to any indemnification provided for under Section 7.1 or Section 7.2 in
respect of, arising out of or involving a claim by a third party (“Third Party Claim”),
such Indemnified Party, must notify the indemnifying party (the “Indemnifying Party”)
in writing of the Third Party Claim within 30 days after receipt by such
Indemnified Party of notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
under Section
7.1 or Section
7.2 except to the extent the Indemnifying Party has been actually
prejudiced as a result of such failure. Thereafter, the Indemnified Party shall
deliver to the Indemnifying Party, within 10 days after the Indemnified Party’s
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the Third Party Claim. The
Indemnifying Party shall have the right to assume and conduct and control the
defense of such Third Party Claim and the Indemnified Party shall have the right
to observe and receive information regarding the defense of such claim. The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party (such consent not to be unreasonably delayed, withheld or
conditioned), settle, compromise or offer to settle or compromise any such claim
or demand on a basis which would result in the imposition of a consent order,
injunction or decree that does not include an unconditional release of the
Indemnified Party for any liability arising out of such claim or demand or any
related claim or demand.

     

    
      
        
        

      

      
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    (b) In order
for an Indemnified Party to be entitled to any indemnification provided for
under this Agreement other than in respect of, arising out of or involving a
Third Party Claim, such Indemnified Party shall deliver notice of such claim
with reasonable promptness after discovery of any such claim to the Indemnifying
Party; provided, however, that failure to give such notification shall not
affect the indemnification provided under Section 7.1 or Section 7.2 except to
the extent the Indemnifying Party has been actually prejudiced as a result of
such failure.  If the Indemnifying Party does not notify the
Indemnified Party within 30 days following its receipt of such notice that the
Indemnifying Party disputes its liability to the Indemnified Party, such claim
specified by the Indemnified Party in such notice shall be conclusively deemed a
liability of the Indemnifying Party under Section 7.1 or Section 7.2 and the
Indemnifying Party shall pay the amount of the Losses stated in such notice to
the Indemnified Party in the manner set forth in Section 7.4 or, in
the case of any notice in which the Losses (or any portion thereof) are
estimated, on such later date when the amount of such Losses (or such portion
thereof) becomes finally determined.

     

    7.4 Limitations.

     

    (a) Except as
otherwise provided in Section 7.8, Buyer
shall be required to make any indemnification payment pursuant to Section 7.2(a) for
any breach of the representations and warranties made by Buyer until such time
as the total amount of all indemnifiable Losses (including Losses arising from
such breach and all other indemnifiable Losses arising from any other breaches
of any representations or warranties) that have been suffered or incurred by all
of the Paragon Indemnified Parties collectively exceeds $50,000 (the “Deductible
Amount”).  In such event, if the total amount of such
indemnifiable Losses exceeds the Deductible Amount, the Paragon Indemnified
Parties shall be entitled, in accordance with the provisions in this Article VII, to be
indemnified against and compensated and reimbursed for all indemnifiable Losses
in excess of the Deductible Amount.  Except as otherwise provided in
Section 7.7, in
no event shall the aggregate liability of the Buyer pursuant to Sections 7.2(a),
(b) or (c) exceed an amount
equal to $5,000,000 (the “Cap
Amount”).  Buyer shall have the right to reacquire Buyer Shares
from the Shareholders, if any of such shares are then held, in satisfaction of
an indemnification claim with each share being deemed to have the same value per
share as of the end of the Closing Date.

     

    
      
        
        

      

      
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    (b) Except as
otherwise provided in Section 7.8, Paragon
and Intermezzo shall not be required to make any indemnification payment
pursuant to Section
7.1(a) for any breach of the representations and warranties made by
either of them  until such time as the total amount of all
indemnifiable Losses (including Losses arising from such breach and all other
indemnifiable Losses arising from any other breaches of any representations or
warranties) that have been suffered or incurred by all of the Buyer Indemnified
Parties collectively exceeds the Deductible Amount.  In such event, if
the total amount of such indemnifiable Losses exceeds the Deductible Amount, the
Buyer Indemnified Parties shall be entitled, in accordance with the provisions
in this Article
VII, to be indemnified against and compensated and reimbursed for all
indemnifiable Losses in excess of the Deductible Amount.  Except as
otherwise provided in Section 7.7, in no
event shall the aggregate liability of each of Paragon and Intermezzo pursuant
to Section
7.1(a), (b) or (c) exceed the
Cap.  Paragon and Intermezzo shall have the right to satisfy any
indemnification claim by tendering to the Buyer Indemnified Parties Buyer Shares
which shall be deemed to have a value of the closing price of such shares on the
Closing Date.  In no event will Paragon and Intermezzo have any
liability to pay an indemnification claim that exceeds the value of the Buyer
Shares and all payments they have received under this Agreement and the
Assignment Agreement, it being understood that Buyer shall have the right to
exercise its set-off right for any further amounts under Section 7.6
hereof.

     

    7.5 Termination of
Indemnification.  The
representations and warranties in this Agreement shall survive the Closing until
the second anniversary of the Closing Date; provided, however, that the
representations and warranties contained in Sections 4.1, 4.3, 4.4, 5.3, and 5.4, shall survive
until the expiration of the applicable statutes of limitations (collectively,
the “Survival
Period”). Any claim made by a party hereunder shall be preserved despite
the subsequent expiration of the Survival Period and any claim made prior to the
expiration of the Survival Period shall survive until final resolution thereof.
Except as set forth in the immediately preceding sentence, no claim for
indemnification under this Article VII shall be
brought after the end of the Survival Period.

     

    7.6 Right to
Set-Off.  The
Buyer or any of its affiliates may, at their discretion, satisfy the unpaid
portion of any of indemnification obligations due them by, to the extent
permitted by law, setting-off against any amounts due and owing from the Buyer
or any of its affiliates to Paragon and Intermezzo including, without
limitation, any Net Receipts Payments or Fixed Payments due under this Agreement
or payments due under the Assignment Agreement.  Notwithstanding the
foregoing, in the event that there exists a reasonable and good faith dispute as
to whether (i) either of the Shareholders has an indemnification obligation
hereunder or (ii) the Buyer or any Buyer Indemnified Party may enforce its right
to set-off under this Section 7.6, then, in
each case, the Buyer shall be entitled to place any amounts due and owing to the
Shareholders hereunder into a third-party escrow account until such dispute has
been fully and finally resolved.

     

    7.7 Adjustment to Purchase
Price. All indemnification payments
paid pursuant to this Article VII shall, to
the maximum extent permitted by law, be treated as an adjustment to the Purchase
Price or the purchase of the interest in the Note.

     

    
      
        
        

      

      
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    7.8 Exclusivity. The right of Paragon,
Intermezzo and the Buyer to assert indemnification claims and receive
indemnification payments pursuant to this Article VII shall be
the sole and exclusive right and remedy exercisable by such party with respect
to any breach by the other party hereto of any covenant, representation or
warranty or otherwise under this Agreement or relating to the transactions
contemplated hereby; provided, however, that the remedies of each such party for
fraud in the inducement or criminal acts (as determined by a final judgment of a
court of competent jurisdiction) by another party shall not be subject to any
limitation pursuant to this Agreement.

     

    7.9 Determination of
Losses.

     

    (a) Losses
payable to an Indemnified Party shall be reduced by any insurance proceeds
received by such Indemnified Party on account of such matter.  The
parties hereto shall seek full recovery under all insurance policies covering
any indemnifiable matter in the ordinary course of business and to the same
extent as they would if such claim were not subject to right of indemnification
hereunder.  No indemnifying party shall be required to make any
payment under this Article VII unless
and until all claims for insurance have been exhausted and all payments under
applicable insurance policies have been paid.  Notwithstanding the
foregoing, if an insurance recovery is made by an Indemnified Party with respect
to any indemnification payment for which an indemnification payment has been
made, such Indemnified Party shall promptly pay to the indemnifying party the
amount of the insurance recovery, but not more than the amount of such
indemnification payment.

     

    (b) All
indemnification payments payable hereunder shall be reduced by the net amount of
any tax benefits inuring to the benefit of the Indemnified Party as a result of
the Losses for which the Indemnified Party is seeking indemnification, offset by
tax benefits lost due to such payment.

     

    ARTICLE
VIII

    GENERAL
PROVISIONS

     

    8.1 Notices.  All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or by commercial delivery service, or
mailed by registered or certified mail (return receipt requested) or sent via
facsimile (with confirmation of receipt) to the parties at the following address
(or at such other address for a party as shall be specified by like
notice):

     

    (a) if to the
Buyer to:

     

    SouthPeak
Interactive Corporation

    2900 Polo
Parkway

    Midlothian,
Virginia  23113

    Attn:  Terry
Phillips

     

    
      
        
        

      

      
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    with a
copy (which shall not constitute notice) to:

     

    Greenberg
Traurig, LLP

    1750
Tysons Boulevard

    Suite
1200

    McLean,
Virginia 22102

    Attn:  Mark
Wishner, Esq.

     

    (b) if to
Paragon and Intermezzo:

     

    Intermezzo
Establishment

    Landstrasse
114

    9495
Triefen, Liechtenstein

    Attn:
Paul Bauer

     

    with a
copy (which shall not constitute notice) to:

     

    Holme,
Roberts & Owen, LLP

    Rosental
4

    D-80331
Munich

    Germany

    Attn:  Jens
Roehrborn

    

     

    8.2 Counterparts.  This
Agreement may be executed in one or more counterparts, including by facsimile
and/or PDF, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

     

    8.3 Entire Agreement;
Nonassignability; Parties in Interest.  This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter
hereof,  (b) are not intended to confer upon any other person any
rights or remedies hereunder, and (c) shall not be assigned.  No
representations, warranties, inducements, promises or agreements, oral or
written, by or among the parties not contained herein shall be of any force of
effect.

     

    8.4 Severability.  If
any provision of this Agreement, or the application thereof, becomes or is
declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force and
effect and the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties hereto.
The parties further agree to replace such void or unenforceable provision of
this Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.

     

    8.5 Remedies Cumulative;
Specific Performance.

     

    (a) Except as
otherwise provided herein, any and all remedies herein expressly conferred upon
a party will be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other remedy. The
parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (b) It is
accordingly agreed that the parties hereto shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.

     

    8.6 Governing
Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to the laws that might otherwise govern under
applicable principles of conflicts of law.  Each of the parties hereto
irrevocably consents to the exclusive jurisdiction of any state or Federal court
located Chesterfield, County, Virginia  in connection with any matter
based upon or arising out of this Agreement or the matters contemplated herein,
agrees that process may be served upon them in any manner authorized by the laws
of the Commonwealth of Virginia for such persons and waives and covenants not to
assert or plead any objection which they might otherwise have to such
jurisdiction and such process.

     

    8.7 Rules of
Construction.  The
parties hereto agree that they have been represented by counsel during the
negotiation, preparation and execution of this Agreement and, therefore, waive
the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.  References
herein to “Dollars” or “$” shall refer to U.S. dollars and all payments and all
calculations of amount hereunder shall be made in U.S. dollars.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, this Stock Purchase Agreement has been duly executed by the
parties as of and on the date first above written.

     

    
      
        	 	
                BUYER:

              	 
	 	

                 

              	 
	 	

                SOUTHPEAK
      INTERACTIVE CORPORATION

              	 
	 	 	 	 
	
                 

              	
                By:

              	/s/
      Terry Phillips	 
	 	 	Name: Terry
      Phillips	 
	 	 	Title: Chairman	 
	 	 	 	 
	 	

                PARAGON
      INVESTMENT FUND

              	 
	 	 	 	 
	 	By:	/s/
      T. Florio	 
	 	 	Name: T.
      Florio	 
	 	 	

                Title: Director

              	 
	 	 	 	 
	 	

                INTERMEZZO
      ESTABLISHMENT

              	 
	 	 	 	 
	 	

                By:

              	/s/
      T. Florio	 
	 	 	Name: T.
      Florio	 
	 	 	Title:  Director	 

      

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

    

    Sale and Assignment
Agreement

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

     

    FireFly Consent
Letter

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

     

    Fixed Payments
Schedule

     

    
      	
              Fixed
      Payments Date

            	 	
              Amount

            	 
	
              Closing
      Date

            	 	$	50,000	 
	
              May
      15, 2010

            	 	$	100,000	 
	
              June
      15, 2010

            	 	$	100,000	 
	
              July
      15, 2010

            	 	$	150,000	 
	
              August
      15, 2010

            	 	$	150,000	 
	
              September
      15, 2010

            	 	$	250,000	 
	
              October
      15, 2010

            	 	$	200,000	 
	
              November
      15, 2010

            	 	$	200,000	 
	 
      	 	 	 	 
	
              Total

            	 	$	1,200,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}]]