Document:

Exhibit 10.7

    

    

    

    

    

    

    

    LOAN
      AGREEMENT

    

    BY
      AND
      BETWEEN

    

    SOUTHPEAK
      INTERACTIVE, L.L.C.,

    

    SOUTHPEAK
      INTERACTIVE LIMITED

    

    AND

    

    SUNTRUST
      BANK

    

    

    

    

    

    

    

    

    

    

    

    December
      16, 2005

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    LOAN
      AGREEMENT

    

    

    THIS
      AGREEMENT,
      made, entered into and effective as of December 16, 2005, by and between
      SOUTHPEAK INTERACTIVE, L.L.C., a Virginia limited liability company
      (“SouthPeak”), SOUTHPEAK INTERACTIVE LIMITED, a United Kingdom limited company
      (“SouthPeak-UK”), jointly and severally (SouthPeak and SouthPeak-UK shall be
      referred to herein collectively or individually, whether one or more in number,
      as the “Borrower”), and SUNTRUST BANK (the “Lender”), recites and provides as
      follows:

    

    WITNESSETH:

    

    WHEREAS,
      Borrower
      has applied to Lender for financing more particularly described hereinbelow;
      and

    

    WHEREAS,
      Lender is
      willing to extend financing to Borrower in accordance with the terms hereof
      upon
      the execution of this Agreement by Borrower, compliance by Borrower with all
      of
      the terms and provisions of this Agreement and fulfillment of all conditions
      precedent to Lender’s obligations herein contained;

    

    NOW,
      THEREFORE, to
      induce Lender to extend the financing provided for herein, and for other good
      and valuable consideration, the sufficiency and receipt of all of which are
      acknowledged by Borrower, Lender and Borrower agree as follows:

    

    
      	 	
              1.

            	
              DEFINITIONS,
                TERMS AND REFERENCES

            

    

    

    1.1 Certain
      Definitions.
      In addition to
      such other terms as elsewhere defined herein, as used in this Agreement, in
      any
      Exhibits and in any Supplements, the following terms shall have the following
      meanings:

    

    “Account
      Debtor”
means
      any Person
      who is or may become obligated to the Borrower under or on an account as defined
      in the UCC.

    

    “Advance”
shall
      mean an
      advance of borrowed funds made by Lender to or on behalf of Borrower under
      the
      Revolving Note.

    

    “Affiliate”
shall
      mean, with
      respect to any Person, any Person Controlling, Controlled by or under common
      Control with such Person or any director, officer, member, manager or employee
      of such Person. For purposes hereof, each Guarantor, Manager and Subsidiary
      shall at all times be considered an “Affiliate” of Borrower.

    

    “Agreement”
shall
      mean this
      Loan Agreement, as it may be amended or supplemented from time to
      time.

    

    “Applicable
      Rate”
shall
      mean the
      Prime Rate plus one-half percent (1⁄2%) per annum.

    

    “Bankruptcy
      Code”
shall
      mean Title
      11 of the United States Code, as it may be amended from time to
      time.

    

    “Borrower”
shall
      have the
      meaning given to such term in the preamble to this Agreement. 

    

    “Borrowings”
shall
      mean
      advances of borrowed funds made hereunder to or on behalf of
      Borrower.

     

    
      
        
        

      

      
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    “Business
      Day”
shall
      mean a day
      on which Lender is open for the conduct of banking business at its office in
      the
      City of Richmond, Virginia.

     

    “Capital
      Expenditures”
shall
      mean all
      expenditures made in respect of the cost of any fixed asset or improvement,
      or
      replacement, substitution, or addition thereto, having a useful life of more
      than one (1) year, including, without limitation, those arising in connection
      with the direct or indirect acquisition of such assets by way of increased
      product or service charges or offset items or in connection with Capital
      Leases.

    

    “Capital
      Lease”
shall
      mean any
      lease of property that, in accordance with GAAP, should be reflected as a
      liability on the balance sheet of a Person.

    

    “Cash
      Collateral
      Account”
means
      that
      certain deposit account number ____________________ held by Lender in the name
      of SouthPeak into which all proceeds of SouthPeak’s Accounts
      (as
      defined in the Security Agreements) are
      deposited in
      accordance with Section 4.8.1. hereof.

    

    “Closing
      Date”
shall
      mean the
      date indicated on the first page.

    

    “Collateral”
shall
      mean the
      property described in the Security Agreements.

    

    “Consolidated
      Subsidiaries”
shall
      mean: (i)
      those Subsidiaries of Borrower (if any) existing from time to time which, for
      purposes of GAAP, are required to be consolidated with the Borrower for
      financial reporting purposes; and (ii) those Subsidiaries of Borrower (if any)
      organized under the laws of any foreign jurisdiction and existing from time
      to
      time which, if such Subsidiary were a U.S. entity, would be required to be
      consolidated with the Borrower for financial reporting purposes under
      GAAP.

    

    “Control”,
“Controlled”
or
“Controlling”
shall
      mean, with
      respect to any Person, the power to direct the management and policies of such
      Person, directly, indirectly, whether through the ownership of voting rights
      or
      otherwise; provided, however, that, with respect to a business entity, any
      Person which owns directly or indirectly ten percent (10%) or more of the voting
      rights of such entity or of the rights to elect the management of such entity
      shall be deemed to “Control” such business entity for purposes of this
      Agreement.

    

    “Debt”
shall
      mean all
      liabilities, obligations and indebtedness of a Person, of any kind or nature,
      whether now or hereafter owing, arising, due or payable, howsoever evidenced,
      created, incurred, acquired or owing, and whether primary, secondary, direct,
      contingent, fixed or otherwise, including, without in any way limiting the
      generality of the foregoing: (i) all obligations, liabilities and indebtedness
      secured by any Lien on a Person’s property, even though such Person shall not
      have assumed or become liable for the payment thereof; (ii) all obligations
      or
      liabilities created or arising under any Capital Lease, conditional sale or
      other title retention agreement; (iii) all accrued pension fund and other
      employee benefit plan obligations and liabilities; (iv) all guaranteed
      obligations; (v) any liabilities under, or associated with, interest rate
      protection agreements; and (vi) all deferred taxes.

    

    “Default
      Condition”
shall
      mean the
      occurrence of any event which, after satisfaction of any requirement for the
      giving of notice or the lapse of time, or both, would become an Event of
      Default.

    

    “Default
      Rate”
shall
      mean that
      interest rate that is the lesser of (i) the Applicable Rate plus 4.00% per
      annum
      or (ii) the maximum rate allowed by law.

     

    
      
        
        

      

      
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    “Eligible Receivables”
shall
      mean such
      Accounts (as defined in the Security Agreements) of SouthPeak to the extent
      that
      they conform and continue to conform to the following criteria to the
      satisfaction of Lender: 

    

    (i) the
      Account arose
      from a bona fide outright sale of goods or provision of services by SouthPeak,
      and such goods or services have been delivered to the appropriate account debtor
      or its respective designees, SouthPeak has in its possession shipping and
      delivery receipts evidencing such shipment and delivery, no return, rejection
      or
      repossession has occurred and such goods or services have been finally accepted
      by the account debtor; 

    

    (ii) the
      Account is
      based upon an enforceable written order or contract for goods delivered or
      services rendered and the same were shipped, held, or performed in accordance
      with such order or contract; 

    

    (iii) the
      title of
      SouthPeak to the Account and, except as to the account debtor and any creditor
      which finances the account debtor’s purchase of such goods, to any goods is
      absolute and is not subject to any prior assignment, claim or Lien, and
      SouthPeak otherwise has the full and unqualified right and power to assign
      and
      grant a security interest in it to Lender; 

    

    (iv) the
      amount shown on
      the books of SouthPeak and on any invoice, certificate, schedule or statement
      delivered to Lender is owing to SouthPeak and no partial payment has been
      received unless reflected on such invoice, certificate, schedule or statement;
      

    

    (v) the
      Account is not
      subject to any claim of reduction, counterclaim, set-off, recoupment, or other
      defense in law or equity, or any claim for credits, allowances, or adjustments
      by the account debtor because of returned, inferior, or damaged goods,
      unsatisfactory services or for any other reason; 

    

    (vi) the
      account debtor
      has not returned or refused to retain, or otherwise notified SouthPeak of any
      dispute concerning, or claimed nonconformity of, any of the goods or services
      from the sale of which the Account arose; 

    

    (vii) the
      Account is not
      outstanding more than ninety (90) days from the date of the invoice therefor;
      

    

    (viii) the
      Account does
      not arise out of a contract with, or order from, an account debtor that, by
      its
      terms, forbids or makes void or unenforceable the assignment by SouthPeak to
      Lender of the Account arising with respect thereto; 

    

    (ix) SouthPeak
      has not
      received any note, trade acceptance draft or other instrument with respect
      to,
      or in payment of, the Account, unless, if any such instrument has been received,
      SouthPeak immediately notified Lender and, at the latter’s request, endorsed or
      assigned and delivered the same to Lender; 

    

    (x) SouthPeak
      has not
      received any written notice of dissolution, termination of existence,
      insolvency, business failure, appointment of a receiver for any part of the
      property of, assignment for the benefit of creditors by, or the filing of a
      petition in bankruptcy or the commencement of any proceeding under any
      bankruptcy or insolvency laws by or against, the account debtor; 

     

    
      
        
        

      

      
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    (xi) the
      account debtor
      is not an Affiliate, Subsidiary, employee, officer director or shareholder
      of
      SouthPeak;

    

    (xii) the
      account debtor
      is not incorporated in or primarily conducting business in any jurisdiction
      located outside of the United States of America, unless consented to in advance
      by Lender, and has its principal place of business located in either the United
      States of America or Canada;

    

    (xiii) SouthPeak
      is not
      indebted in any manner to the account debtor, with the exception of customary
      credits, adjustments and/or discounts given to an account debtor by SouthPeak
      in
      the ordinary course of its business, and the account is not otherwise subject
      to
      risk of set-off;

    

    (xiv) the
      Accounts of any
      single account debtor of SouthPeak (together with the Accounts of all Affiliates
      of such account debtor) shall be eligible only to the extent that they do not
      exceed thirty-five percent (35%) of the total Accounts of SouthPeak;

    

    (xv) no
      Accounts of an
      account debtor shall be eligible if more than thirty-five percent (35%) of
      such
      account debtor’s Accounts are outstanding
      more
      than ninety (90) days from the date of the invoice therefor; 

    

    (xvi) the
      account debtor
      is not a supplier of SouthPeak; and

    

    (xvii) the
      Account is not
      a contra account.

    

    In
      the event of any
      dispute under the foregoing criteria, as to whether an Account is, or has ceased
      to be, an Eligible Receivable, the decision of Lender in the exercise of its
      reasonable discretion shall control. Lender may determine, on a daily basis,
      whether any Account constitutes an Eligible Receivable, and if an Eligible
      Receivable subsequently becomes ineligible its ineligibility shall be
      immediate.

    

    “Employee
      Benefit
      Plan”
shall
      mean any
      employee welfare benefit plan as that term is defined in Section 3(1) of ERISA,
      any employee pension benefit plan, as that term is defined in Section 3(2)
      of
      ERISA or any other plan which is subject to the provisions of Title IV of ERISA
      or which is for the benefit of any employees of Borrower and any employees
      of
      any Subsidiary or any other entity which is a member of a controlled group
      or
      under common control with Borrower, as such terms are defined in Section
      4001(a)(14) of ERISA.

    

    “Environmental
      Laws”
shall
      mean all
      federal, state, local and foreign laws, rules, regulations, ordinances,
      programs, permits, guidances, orders and consent decrees relating to health,
      safety and environmental matters, whether now or hereafter existing, including,
      but not limited to state and federal superlien and environmental cleanup laws
      and U.S. Department of Transportation regulations and any other state or local
      law or regulation relating to pollution, reclamation, or protection of the
      environment, including laws relating to emissions, discharges, releases or
      threatened releases of pollutants, contaminants, or hazardous or toxic materials
      or wastes into air, water, or land, or otherwise relating to the manufacture,
      processing, distribution, use, treatment, storage, disposal, transport, or
      handling of pollutants, contaminants or hazardous or toxic materials or
      wastes.

    

    “ERISA”
shall
      mean the
      Employee Retirement Income Security Act of 1974, as may be amended from time
      to
      time.

    

    “Event
      of
      Default”
shall
      mean any of
      the events or conditions described in Section 7, provided that any requirement
      for the giving of notice or the lapse of time, or both, has been
      satisfied.

     

    
      
        
        

      

      
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    “Executive
      Office”
shall
      mean the
      address of SouthPeak designated as such on Exhibit
      “A”.

    

    “Financial
      Contract”
shall
      mean (a) an
      agreement (including terms and conditions incorporated by reference therein)
      which is a rate swap agreement, basis swap, forward rate agreement, commodity
      swap, commodity option, equity or equity index swap, bond option, interest
      rate
      option, foreign exchange agreement, rate cap agreement, rate floor agreement,
      rate collar agreement, currency swap agreement, cross-currency rate swap
      agreement, currency option, any other similar agreement (including any option
      to
      enter into any of the foregoing; (b) any combination of the foregoing; or (c)
      a
      master agreement for any of the foregoing together with all
      supplements.

    

    “Fiscal
      Year”,
      in respect of a
      Person, shall mean the fiscal year of such Person employed by such Person as
      of
      the Closing Date, and designated as such on Exhibit
      “A”
      as to Borrower.
      The term “Fiscal
      Quarter”
shall
      correspond
      accordingly thereto.

    

    “GAAP”
shall
      mean
      generally accepted accounting principles consistently applied for the period
      or
      periods in question.

    

    “Guarantees”
shall
      mean the
      Guaranty Agreements dated of even date herewith executed in connection with
      the
      Loan by the Guarantors, together with any amendments, modifications, extensions,
      renewals or substitutions thereof.

    

    “Guarantors”
shall
      mean,
      collectively: (i) Terry M. Phillips and Cathy S. Phillips; (ii) Gregory R.
      Phillips and Susan M. Phillips; (iii) Terry Phillips Sales, Inc., a
      Virginia corporation; (iv) Phillips Land, L.C., a Virginia limited liability
      company; and (v) Capitol Distributing, LLC, a Virginia limited liability
      company.

    

    “Lender”
shall
      mean
      SunTrust Bank, its subsidiaries, affiliates, successors and assigns.

    

    “Lien”
shall
      mean any
      deed to secure debt, deed of trust, mortgage or similar instrument, and any
      lien, security interest, preferential arrangement which has the practical effect
      of constituting a security interest, security title, pledge, charge, encumbrance
      or servitude of any kind, whether by consensual agreement or by operation of
      statute or other law, and whether voluntary or involuntary, including, without
      limitation, any conditional sale or other title retention agreement or lease
      in
      the nature thereof.

    

    “Loan”
shall
      mean the
      Revolving Loan.

    

    “Loan
      Administration Fee”
shall
      have the
      meaning set forth in Section 2.2.2.

    

    “Loan
      Documents”
shall
      mean this
      Agreement, the Revolving Note, the Security Agreements, the Guarantees and
      the
      Security Agreements of even date herewith executed by each of the Guarantors,
      any Financial Contract, and any and all other documents, instruments,
      certificates, commitment letters, deeds of trust, security agreements, guaranty
      agreements, landlords’ lien waivers, and any and all other agreements executed
      and/or delivered by Borrower or any Guarantor in connection herewith, or any
      one, more, or all of the foregoing, as the context shall require, together
      with
      all amendments, modifications, replacements, substitutions and extensions
      thereof. 

    

    “Manager(s)”
shall
      mean the
      Person(s) designated as such on Exhibit
      “A”
      attached
      hereto.

     

    
      
        
        

      

      
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    “Material
      Adverse
      Effect”
shall
      mean with
      respect to any event, act, condition or occurrence of whatever nature (including
      any adverse determination in any litigation, arbitration or governmental
      investigation or proceeding), whether singly or in conjunction with any other
      event or events, act or acts, condition or conditions, occurrence or
      occurrences, whether or not related, a material adverse change in, or a material
      adverse effect upon any of (a) the financial condition, operations, business,
      properties or prospects of the Borrower and its Consolidated Subsidiaries taken
      as a whole, (b) the rights and remedies of the Lender under any of the Loan
      Documents or any documents, instruments or agreements executed and/or delivered
      by any Person other than Borrower in conjunction with the Loan Documents, or
      the
      ability of the Borrower to perform its obligations under any of the Loan
      Documents or (c) the legality, validity or enforceability of any of the Loan
      Documents or any documents, instruments or agreements executed and/or delivered
      by any Person other than Borrower in conjunction with the Loan
      Documents.

    

    “Member(s)”
shall
      mean the
      Person(s) designated as such on Exhibit
      “A”
      attached
      hereto.

    

    “Note”
shall
      mean the
      Revolving Note.

    

    “Obligations”
shall
      mean any
      and all Debt of Borrower to Lender, including without limiting the generality
      of
      the foregoing, any indebtedness, liability or obligation, now existing or
      hereafter arising, due or to become due, absolute or contingent, of Borrower
      to
      Lender under any Loan Document or under any Financial Contract, and any and
      all
      extensions or renewals thereof in whole or in part; any Debt of Borrower to
      Lender arising hereunder or as a result hereof, whether evidenced by the
      Revolving Note, or otherwise, and any and all extensions or renewals thereof
      in
      whole or in part; any Debt of Borrower to Lender under any later or future
      advances or loans made by Lender to Borrower, and any and all extensions or
      renewals thereof in whole or in part; and any and all future or additional
      Debt
      of Borrower to Lender whatsoever and in any event, whether existing as of the
      date hereof or hereafter arising, whether arising under a loan, lease, credit
      card arrangement, line of credit, letter of credit or other type of financing,
      and whether direct, indirect, absolute or contingent, as maker, endorser,
      guarantor, surety or otherwise, and whether evidenced by, arising out of, or
      relating to, a promissory note, bill of exchange, check, draft, bond, letter
      of
      credit, guaranty agreement, bankers’ acceptance, foreign exchange contract,
      interest rate protection agreement, commitment fee, service charge or
      otherwise.

    

    “Payment(s)”
shall
      mean any
      check, note, draft, bill of exchange, acceptance, money order, legal tender
      or
      other form of payment or evidence of indebtedness in total or partial payment
      of
      the amount due on any Account or other Collateral.

    

    “Permitted
      Encumbrances”
shall
      mean: (i)
      Liens for taxes not yet due and payable or being actively contested as permitted
      by this Agreement, only if such Liens do not adversely affect Lender’s rights or
      the priority of Lender’s security interest in the Collateral; (ii) carriers’,
      warehousemen’s mechanics, materialmen’s, repairmen’s or other like Liens arising
      in the ordinary course of business, payment for which is not yet due or which
      are being actively contested in good faith and by appropriate, lawful
      proceedings, but only if such Liens are and remain junior to Liens granted
      in
      favor of Lender; (iii) pledges or deposits in connection with worker’s
      compensation, unemployment insurance and other social security legislation;
      (iv)
      deposits to secure the performance of utilities, leases, statutory obligations
      and surety and appeal bonds and other obligations of a like nature arising
      by
      statute or under customary terms regarding depository relationships on deposits
      held by financial institutions with whom Borrower has a banker-customer
      relationship; (v) typical restrictions imposed by licenses and leases of
      software (including location and transfer restrictions); (vi) Liens set forth
      on
Exhibit
      “A”
      and approved by
      the Lender in its sole discretion; (vii) statutory Liens against the Collateral
      in favor of any landlords of Borrower, which liens have been satisfactorily
      subordinated to the Lender; and (viii) Liens in favor of the Lender.

     

    
      
        
        

      

      
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    “Person”
shall
      mean any
      individual, partnership, corporation, limited liability company, joint venture,
      joint stock company, trust, governmental unit or other entity.

    

    “Prime
      Rate”
shall
      mean that
      interest rate so denominated and set by Lender from time to time as an interest
      rate basis for borrowings. The Prime Rate is but one of several interest rate
      bases used by Lender. Lender extends credit at interest rates above and below
      the Prime Rate.

    

    “Related
      Loan
      Agreements”
shall
      mean: (i)
      that certain
      Loan
      Agreement dated September 13, 2004, by and among Lender and Terry M.
      Phillips and Cathy S. Phillips; (ii) that certain Loan Agreement dated
      September 13, 2004, by and among Lender and Gregory R. Phillips and
      Susan M. Phillips; and (iii) that
certain
      Loan
      Agreement dated September 13, 2004, by and between Lender and Terry Phillips
      Sales, Inc.

    

    “Revolving
      Loan”
shall
      mean that
      certain extension of credit from Lender to Borrower for general corporate and
      working capital purposes, in the maximum principal amount of Five Million and
      No/100 Dollars ($5,000,000.00), evidenced by the Revolving Note, all as more
      particularly described in the Loan Documents.

    

    “Revolving
      Note”
shall
      mean the
      promissory note, dated of even date herewith, as amended or supplemented from
      time to time, in the original principal amount of Five Million and No/100
      Dollars ($5,000,000.00), evidencing the Borrower’s obligation to repay to the
      Lender the Revolving Loan, together with interest together with any renewals,
      modifications or extensions thereof, in whole or in part.

    

    “Security
      Agreements”
means
      (i) the one
      or more Security Agreements by the Borrower encumbering the assets of the
      Borrower as therein provided and the proceeds thereof as security for the
      Obligations; and (ii) any subsequent Security Agreement executed in favor of
      Lender pursuant to Section 4.17.

    

    “Subordinated
      Debt”
shall
      mean any
      Debt of the Borrower, any Guarantor or any Subsidiary to any Person which,
      by
      written agreement in form and substance satisfactory to Lender, has been
      subordinated in right of payment and claim, to the rights and claims of Lender
      in respect of the Obligations, on terms and conditions satisfactory to
      Lender.

    

    “Subsidiary”
shall
      mean any
      corporation, partnership, business association or other entity (including any
      Subsidiary of any of the foregoing) of which Borrower owns, directly or
      indirectly, fifty percent (50%) or more of the capital stock or equity interest
      having ordinary power for the election of directors, managers or others
      performing similar functions.

    

    “Termination
      Date”
shall
      mean, with
      respect to the Revolving Loan, the earliest to occur of the following dates:
      (i)
      that date on which, pursuant to Section 7, Lender terminates the Revolving
      Loan
      (or the Revolving Loan is deemed automatically terminated) subsequent to the
      occurrence of an Event of Default; or (ii) November 30, 2006, or such later
      date
      as to which Lender may agree in writing from time to time
      hereafter.

    

    “UCC”
shall
      mean the
      Uniform Commercial Code of Virginia, as amended or modified from time to
      time.

    

    1.2 Use
      of Defined
      Terms.
      All terms defined
      in this Agreement and the Exhibits shall have the same defined meanings when
      used in any other Loan Documents, unless the context shall require
      otherwise.

    

    1.3 Accounting
      Terms.
      All accounting
      terms not specifically defined herein shall have the meanings generally
      attributed to such terms under GAAP.

     

    
      
        
        

      

      
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    1.4 UCC
      Terms.
      The terms
“accounts”, “chattel paper”, “deposit account”, “instruments”, “general
      intangibles”, “inventory”, “equipment” and “fixtures”, as and when used in the
      Loan Documents, shall have the same meanings given such terms under the UCC
      unless the context shall require otherwise.

    

    1.5 Terminology.
      All personal
      pronouns used in this Agreement, whether used in the masculine, feminine or
      neuter gender, shall include all other genders; the singular shall include
      the
      plural, and the plural shall include the singular. Titles of Articles and
      Sections in this Agreement are for convenience only, and neither limit nor
      amplify the provisions of this Agreement, and all references in this Agreement
      to Articles, Sections, Subsections, paragraphs, clauses, subclauses, Exhibits
      or
      Supplements shall refer to the corresponding Article, Section, Subsection,
      paragraph, clause, subclause of, or Exhibit or Supplement attached to, this
      Agreement, unless specific reference is made to the articles, sections or other
      subdivisions of, or Exhibit or Supplement to, another document or instrument.
      Wherever in this Agreement reference is made to any instrument, agreement or
      other document, including, without limitation, any of the Loan Documents, such
      reference shall be understood to mean and include any and all amendments thereto
      or modifications, restatements, renewals or extensions thereof. Wherever in
      this
      Agreement reference is made to any statute, such reference shall be understood
      to mean and include any and all amendments thereof and all regulations
      promulgated pursuant thereto. Whenever any matter set forth herein or in any
      Loan Document is to be consented to or satisfactory to Lender, or is to be
      determined, calculated or approved by Lender, then, unless otherwise expressly
      set forth herein or in any such Loan Document, such consent, satisfaction,
      determination, calculation or approval shall be in Lender’s sole discretion, and
      shall be conclusive absent manifest error.

    

    1.6 Exhibits.
      All Exhibits
      attached hereto are by reference made a part hereof.

    

    2. THE
      FINANCING.

    

    2.1 Revolving
      Loan.
      On the Closing
      Date, subject to fulfillment of all conditions precedent set forth in Section
      10
      and any other conditions contained in the Loan Documents, Lender agrees to
      extend the Revolving Loan to Borrower so that, during the period from the
      Closing Date to, but not including, the Termination Date, so long as there
      is
      not in existence any Default Condition or Event of Default and the borrowing
      will not cause a Default Condition or Event of Default to exist, Borrower may
      borrow and repay and reborrow Advances up to a maximum aggregate principal
      amount outstanding at any one time equal to the original principal amount of
      the
      Revolving Note. All proceeds so obtained under the Revolving Loan may be used
      by
      Borrower for general corporate and working capital purposes, in such manner
      as
      Borrower may elect in the ordinary course of its business operations. The Debts
      arising from Advances made to or on behalf of Borrower under the Revolving
      Loan
      shall be evidenced by the Revolving Note, which shall be executed by Borrower
      and delivered to Lender on the Closing Date. The outstanding principal amount
      of
      the Revolving Note may fluctuate from time to time, but shall be due and payable
      in full on the Termination Date, and each Advance thereunder shall bear interest
      from the date of such Advance until paid in full at the Applicable Rate.

    

    2.1.1 Advances.
      After the Closing
      Date, Advances under the Revolving Loan shall be made on the following terms
      and
      conditions:

    

    (a) SouthPeak
      shall
      make each request for a Revolving Loan (“Advance Request”) to Lender (or to
      Lender’s agent) before 11:00 a.m. on the Business Day prior
      to the date of the
      requested Advance; provided,
      however, that
      SouthPeak shall not be permitted to make more than one (1) Advance Request
      per
      week. Advance Requests must be made in writing, specifying the date of the
      requested Advance and the amount thereof. Each request shall be signed by (i)
      the manager of SouthPeak or (ii) any person designated as SouthPeak’s agent by
      the manager of SouthPeak in a writing delivered to Lender or (iii) any person
      whom Lender reasonably believes to be the manager of SouthPeak or such a
      designated agent, and shall be accompanied by a current Borrowing Base
      Certificate (hereinafter defined).

     

    
      
        
        

      

      
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    (b) On
      a daily basis,
      Lender shall debit the Cash Collateral Account and apply the amount of collected
      funds in the Cash Collateral Account to the reduction of the aggregate principal
      amount outstanding under the Revolving Loan. All principal and accrued interest
      and fees shall be due and payable on the Termination Date and to the extent
      that
      the collected funds in the Cash Collateral Account (or the Lockbox in accordance
      with Section 4.8.1) are insufficient to make such payments, SouthPeak shall
      be
      obligated to make such payments. 

    

    (c) The
      Borrower’s
      obligation to pay the principal of, and interest on, the Revolving Loan shall
      be
      evidenced by the records of Lender and by the Revolving Note. The entries made
      in such records and/or on the schedule annexed to the Revolving Note shall
      be
prima
      facie
evidence
      of the
      existence and amounts of the obligations of the Borrower therein
      recorded; provided,
      that the failure
      or delay of Lender in maintaining or making entries into any such record or
      on
      such schedule or any error therein shall not in any manner affect the obligation
      of the Borrower to repay the Revolving Loan in accordance with the terms of
      this
      Agreement. 

    

    (d) Lender
      shall send
      Borrower a monthly statement of Borrower’s loan account showing all debits and
      credits and which shall also reflect the interest accrued on the Revolving
      Loan,
      the Loan Administration Fee for the immediately preceding month and any other
      fees due hereunder. The interest and fees shall be added by Lender to Borrower’s
      loan account on the last Business Day of each calendar month and shall be deemed
      to be first paid from Payments subsequently credited to the Cash Collateral
      Account. The statement of the loan account shall be deemed correct and accepted
      by and conclusively binding upon Borrower unless Borrower notifies Lender in
      writing specifically as to a particular discrepancy within forty-five (45)
      days
      from the mailing of such statement. 

    

    2.1.2 Limitations
      on
      Revolving Loan.
      Notwithstanding
      anything contained in this Agreement to the contrary, including, without
      limitation, the provisions of the foregoing Section 2.1.1, the
      aggregate
      outstanding principal balance of Advances under the Revolving Loan (the “Total
      Outstandings”) at any one time shall not exceed the lesser of (a) the original
      principal amount of the Revolving Note, or (b) the Borrowing Base (hereinafter
      defined). In the event that the Total Outstandings at any time exceeds the
      Borrowing Base, Borrower shall pay to Lender the amount of such excess within
      three (3) business days of receipt by Borrower of written notice of such excess
      from Lender. For purposes of this Agreement, the term “Borrowing Base” shall
      mean (i) from the date hereof until and including December 31, 2005,
      seventy-five percent (75%) of the net amount of Eligible Receivables, plus
      $2,000,000.00; (ii) from and including January 1, 2006 until and including
      March
      31, 2006, seventy-five percent (75%) of the net amount of Eligible Receivables,
      plus $1,500,000.00; (iii) from and including April 1, 2006 until and including
      April 30, 2006, seventy-five percent (75%) of the net amount of Eligible
      Receivables, plus $750,000.00; and (iv) from and including May 1, 2006 until
      and
      including the Termination Date, seventy-five percent (75%) of the net amount
      of
      Eligible Receivables.

    

    2.2 Interest
      and
      Other Charges.

    

    2.2.1 Interest
      at
      Applicable Rate.
      The Revolving
      Loan shall bear interest on the outstanding principal amount thereof at a rate
      per annum equal to the Applicable Rate. 

    

    (a) Payment
      of
      Interest.
      Accrued interest
      on each Borrowing at the Applicable Rate shall be due and payable monthly in
      arrears, on the first day of each calendar month, for the preceding calendar
      month (or portion thereof), commencing on the first day of the first calendar
      month following the Closing Date. 

     

    
      
        
        

      

      
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    (b) Calculation
      of
      Interest and Fees.
      Interest on each
      Borrowing at the Applicable Rate shall be calculated on the basis of a 360-day
      year and actual days elapsed. 

    

    (c) Charging
      Interest and Fees.
      Accrued and
      unpaid interest on any Borrowings (and any outstanding fees described in Section
      2.2.2) may, when due and payable, be paid, at Lender’s option (without any
      obligation to do so), either (i) by Lender’s charging the Revolving Note for an
      Advance in the amount thereof; or (ii) by Lender’s debiting any deposit account
      of Borrower for the amount thereof.

    

    (d) Rate
      on Other
      Obligations.
      To the extent
      that, at any time, there are other Obligations besides Advances which are
      outstanding and unpaid, such Obligations shall, unless any Note evidencing
      such
      Obligations provides otherwise, bear interest at the Applicable Rate.

    

    2.2.2 Loan
      Fees.
      In addition to
      the payment of interest at the Applicable Rate, Borrower shall also be obligated
      to pay Lender: (i) a fee equal to the monthly average principal balance
      outstanding under all of the Note for such month, multiplied by 0.125%, due
      on a
      monthly basis in arrears and payable with each regularly scheduled monthly
      interest payment under the Note (the “Loan Administration Fee”), but in no event
      shall the Loan Administration Fee be less than $1,500.00 per month; and (ii)
      a
      one-time loan fee equal to $40,000.00, which sum shall be due, payable and
      deemed earned on the Closing Date.

    

    2.2.3 Capital
      Adequacy.
      If, after the
      Closing Date, the adoption of any applicable law, rule or regulation regarding
      capital adequacy, or any change therein, or any change in the interpretation
      or
      administration thereof by any governmental authority, central bank or comparable
      agency charged with the administration thereof, or compliance by Lender with
      any
      request or directive regarding capital adequacy (whether or not having the
      force
      of law) of any such authority, central bank or comparable agency, affects or
      might affect the amount of capital required or expected to be maintained by
      Lender or any corporation in control of Lender and Lender determines that the
      amount of such capital is increased by or based upon Lender’s obligations
      hereunder, then from time to time, within thirty (30) days after demand by
      Lender, Borrower shall pay to Lender such additional amount or amounts as will
      compensate Lender in light of such circumstances, to the extent that Lender
      reasonably determines such increase in capital is allocable to Lender’s
      obligations hereunder, and such payment, as and when received, shall be applied
      by Lender in reimbursement of Lender’s increased costs in regard to such
      obligations.

    

    2.2.4 Usury
      Savings
      Provisions.
      Lender and
      Borrower hereby further agree that the only charge imposed by Lender upon
      Borrower for the use of money in connection herewith is and shall be the
      interest expressed in the Revolving Note at the rate set forth in the Revolving
      Note, and that all other charges imposed by Lender upon Borrower in connection
      herewith, are and shall be deemed to be charges made to compensate Lender for
      underwriting and administrative services and costs, and other services and
      costs
      performed and incurred, and to be performed and incurred, by Lender in
      connection with the Borrowings, and shall under no circumstances be deemed
      to be
      charges for the use of money. In no contingency or event whatsoever shall the
      aggregate of all amounts deemed interest hereunder or under the Revolving Note
      and charged or collected pursuant to the terms of this Agreement or pursuant
      to
      the Revolving Note exceed the highest rate permissible under any law which
      a
      court of competent jurisdiction shall, in a final determination, deem applicable
      hereto. In the event that such a court determines that Lender has charged or
      received interest hereunder in excess of the highest applicable rate, the rate
      in effect hereunder shall automatically be reduced to the maximum rate permitted
      by applicable law and Lender shall promptly refund to Borrower any interest
      received by Lender in excess of the maximum lawful rate or, if so requested
      by
      Borrower, shall apply such excess to the principal balance of the Obligations.
      It is the intent hereof that Borrower not pay or contract to pay, and that
      Lender not receive or contract to receive, directly or indirectly in any manner
      whatsoever, interest in excess of that which may be paid by Borrower under
      applicable law.

     

    
      
        
        

      

      
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    2.3 General
      Provisions as to Payments.

    

    2.3.1 Method
      of
      Payment.
      Unless paid in
      accordance with Section 2.2.1(c), all payments of interest, fees and principal
      pursuant to this Agreement must be received by Lender no later than 2:00 p.m.
      (Richmond, Virginia time) on the date when due, in Federal or other funds
      immediately available to Lender in Richmond, Virginia. 

    

    2.3.2 Application
      of
      Payment.
      All payments
      received by Lender hereunder shall be applied, in accordance with the then
      current billing statement applicable to the Borrowing, first to accrued
      interest, then to fees, then to principal
      due
      and then to late
      charges.
      Any remaining
      funds shall be applied to the further reduction of principal. In the event
      more
      than one Borrowing shall be outstanding hereunder, Lender in its sole discretion
      may determine which Borrowing(s) each payment shall be applied to.
      Notwithstanding the foregoing, upon the occurrence of a Default Condition or
      Event of Default, payments shall be applied as determined by Lender in its
      sole
      discretion or as expressly provided herein.

    

    2.3.3 Late
      Charges.
      If any portion of a payment is at least ten (10) days past due, the Borrower
      agrees to pay a late charge of 5% of the amount which is past due. 

    

    3. GENERAL
      REPRESENTATIONS AND WARRANTIES.
      In order to
      induce Lender to enter into this Agreement, Borrower hereby represents and
      warrants to Lender (which representations and warranties, together with any
      other representations and warranties of Borrower contained elsewhere in this
      Agreement, shall be deemed to be renewed as of the date of each Advance under
      the Revolving Note) as set forth below:

    

    3.1 Existence
      and
      Qualification.
      SouthPeak is a
      limited liability company duly organized, validly existing and in good standing
      under the laws of the Commonwealth of Virginia, with its principal place of
      business, chief executive office and office where it keeps all of its books
      and
      records being located at its Executive Office. SouthPeak-UK is a limited company
      duly organized, validly existing and in good standing under the laws of the
      United Kingdom. Within thirty (30) calendar days from the date hereof, Borrower
      shall be duly qualified as a foreign limited liability company in good standing
      in each other state in which a Collateral location is situated or wherein the
      conduct of its business or the ownership of its property requires such
      qualification. Each Borrower has as its company name, as registered with the
      secretary of state of the state of its organization or similar authority, the
      words first inscribed hereinabove as its name, and, except as may be described
      on Exhibit
      “A”,
      has not done
      business under any other name for at least the past seven (7)
      years.

    

    3.2 Authority;
      Validity and Binding Effect.
      Borrower has the
      power to make, deliver and perform under the Loan Documents, and to borrow
      hereunder, and has taken all necessary and appropriate action to authorize
      the
      execution, delivery and performance of the Loan Documents. This Agreement and
      the remainder of the Loan Documents constitute, the valid obligations of
      Borrower, legally binding upon it and enforceable against it in accordance
      with
      their respective terms. The Borrower acknowledges that the Lender’s liens and
      security interests in the Collateral have been duly perfected as required by
      applicable law. No novation is intended or to be implied. The Collateral shall
      secure the Revolving Note and the other Obligations.

    

    3.3 Incumbency
      and
      Authority of Signing Parties.
      The undersigned
      Manager(s) of Borrower hold the office(s) specified hereinbelow and, in such
      capacity, are duly authorized and empowered to execute, attest and deliver
      this
      Agreement and the remainder of the Loan Documents for and on behalf of Borrower,
      and to bind Borrower accordingly thereby.

     

    
      
        
        

      

      
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    3.4 No
      Material
      Litigation.
      Except as may be
      set forth on Exhibit
      “A”,
      there are no
      legal proceedings pending (or, so far as Borrower or its Manager(s) know,
      threatened), before any court or administrative agency which, if adversely
      determined, could reasonably be expected to materially and adversely affect
      the
      financial condition or operations of Borrower.

    

    3.5 Taxes.
      Borrower has
      filed or caused to be filed all tax returns required to be filed by it and
      has
      paid all taxes shown to be due and payable by it on said returns or on any
      assessments made against it.

    

    3.6 Collateral
      Locations.
      Prior to July 1,
      2001, no portion of SouthPeak’s Collateral has been located at any location
      other than 2900
      Polo Parkway,
      Suite 200, Midlothian, Virginia 23113. Thereafter, no portion of SouthPeak’s
      Collateral has been located at any location other than those identified as
      “Business Locations” on Exhibit
      “A”
      attached hereto.

    

    3.7 Organization.
      The articles of
      organization of and operating agreement, or similar charter or organizational
      documents, of Borrower are in full force and effect under the law of the state
      or other jurisdiction of its organization and all amendments to said articles
      of
      organization, operating agreement and other documents have been duly and
      properly made under and in accordance with all applicable laws.

    

    3.8 Insolvency.
      After giving
      effect to the execution and delivery of the Loan Documents and the making of
      any
      disbursements under the Revolving Note, Borrower will not be “insolvent”, within
      the meaning of such term as used in Virginia Code Section 8.1A-201(23) or as
      defined in Sec. 101(32) of the Bankruptcy Code; or be unable to pay its debts
      generally as such debts become due; or have an unreasonably small
      capital.

    

    3.9 Title.
      Borrower has good
      and marketable title to all of its properties subject to no material Lien of
      any
      kind except as otherwise disclosed in writing to Lender and as to the
      Collateral, except for the Permitted Encumbrances.

    

    3.10 Margin
      Stock.
      Borrower is not
      engaged principally, or as one of its important activities, in the business
      of
      purchasing or carrying any “margin stock”, as that term is defined in Section
      221.2(h) of Regulation U of the Board of Governors of the Federal Reserve
      System, and no part of the proceeds of any borrowing made pursuant hereto will
      be used to purchase or carry any such margin stock or to extend credit to others
      for the purpose of purchasing or carrying any such margin stock, or be used
      for
      any purpose which violates, or which is inconsistent with, the provisions of
      Regulation X of said Board of Governors. In connection herewith, if requested
      by
      Lender, Borrower will furnish to Lender a statement in conformity with the
      requirements of Federal Reserve Form U-1 referred to in said Regulation U to
      the
      foregoing effect.

     

    3.11 No
      Violations.
      The execution,
      delivery and performance by Borrower of this Agreement and the Revolving Note
      have been duly authorized by all necessary action and do not and will not
      require any consent or approval of the members of Borrower, violate any
      provision of any law, rule, regulation (including, without limitation,
      Regulation X of the Board of Governors of the Federal Reserve System), order,
      writ, judgment, injunction, decree, determination or award presently in effect
      having applicability to Borrower or of the charter, operating agreement or
      similar organizational documents of Borrower, or result in a breach of or
      constitute a default under any indenture or loan or credit agreement or any
      other agreement, lease or instrument to which Borrower is a party or by which
      it
      or its properties may be bound or affected; and Borrower is not in default
      under
      any such law, rule, regulation, order, writ, judgment, injunction, decree,
      determination or award or any such indenture, agreement, lease or
      instrument.

     

    
      
        
        

      

      
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    3.12 Financial
      Statements.
      The financial
      statements of Borrower, the Guarantors and Borrower’s Consolidated Subsidiaries
      (if any) for its most recent Fiscal Year together with the financial statements
      of Borrower, the Guarantors and Borrower’s Consolidated Subsidiaries (if any)
      for that portion ended with its most recent Fiscal Quarter of its current Fiscal
      Year, for which statements have been prepared, copies of which heretofore have
      been furnished to Lender, are complete and accurately and fairly represent
      the
      financial condition of Borrower, the Guarantors and Borrower’s Consolidated
      Subsidiaries (if any), the results of its operations and the transactions in
      its
      equity accounts as of the dates and for the periods referred to therein, and
      have been prepared in accordance with GAAP. There are no material liabilities,
      direct or indirect, fixed or contingent, of Borrower, any Guarantor or any
      such
      Consolidated Subsidiaries as of the date of such financial statements which
      are
      not reflected therein or in the notes thereto. No Material Adverse Effect has
      occurred since the date of the balance sheet contained in financial statements
      described hereinabove.

    

    3.13 Purchase
      of
      Collateral.
      Except as
      disclosed on Exhibit
      “A”,
      within the twelve
      (12) months period preceding the Closing Date, neither Borrower nor any
      Subsidiary has purchased any of the Collateral in a bulk transfer or in a
      transaction which was outside the ordinary course of the business of Borrower’s
      seller.

    

    3.14 Pollution
      and
      Environmental Control.
      Borrower and each
      Subsidiary have obtained all permits, licenses and other authorizations which
      are required under, and is in material compliance with, all Environmental
      Laws.

    

    3.15 Possession
      of
      Permits.
      Borrower and each
      Subsidiary possess all franchises, certificates, licenses, permits and other
      authorizations from governmental political subdivisions or regulatory
      authorities, and all patents, trademarks, service marks, trade names,
      copyrights, licenses and other rights, free from burdensome restrictions, that
      are necessary for the ownership, maintenance and operation of any of its
      properties, assets and Collateral, and Borrower is not in violation of any
      thereof.

    

    3.16 Subsidiaries.
      As of the Closing
      Date, Borrower has no Subsidiaries except as described on Exhibit
      “A”.

    

    3.17 Federal
      Taxpayer
      Identification Number.
      SouthPeak’s
      federal taxpayer identification number is as indicated on Exhibit
      “A”.

    

    3.18 Employee
      Benefit
      Plans.
      As of the Closing
      Date, Borrower has no Employee Benefit Plans except as described on Exhibit
      “A”.

    

    4. AFFIRMATIVE
      COVENANTS.
      Borrower covenants
      to Lender that from and after the date hereof, and so long as any amount remains
      unpaid on account of any of the Obligations or this Agreement remains effective
      (whichever is the last to occur), Borrower will comply (and cause each
      Subsidiary to comply) with the affirmative covenants set forth
      below:

    

    4.1 Records
      Respecting Collateral.
      All records of
      SouthPeak with respect to the Collateral will be kept at its Executive Office
      and will not be removed from such address without the prior written consent
      of
      Lender.

     

    
      
        
        

      

      
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    4.2 Further
      Assurances.
      Borrower shall
      duly execute and/or deliver (or cause to be duly executed and/or delivered)
      to
      Lender any instrument, invoice, document, document of title, dock warrant,
      dock
      receipt, warehouse receipt, bill of lading, order, financing statement,
      assignment, waiver, consent, financial report or other writing which may be
      reasonably necessary to Lender to carry out the terms of this Agreement and
      any
      of the other Loan Documents and to perfect its security interest in and
      facilitate the collection of the Collateral, the proceeds thereof, and any
      other
      property at any time constituting security to Lender. Borrower shall perform
      or
      cause to be performed such acts as Lender may reasonably request to establish
      and maintain for Lender a valid and perfected security interest in and security
      title to the Collateral, free and clear of any Liens other than Permitted
      Encumbrances.

    

    4.3 Right
      to
      Inspect.
      Lender (or any
      person or persons designated by it) may, in its sole discretion and at
      Borrower’s expense, call at any place of business of Borrower at any reasonable
      time and upon one (1) business day’s notice, and, without hindrance or delay,
      examine, inspect, audit, check and make extracts from Borrower’s books, records,
      journals, orders, receipts and any correspondence and other data relating to
      the
      Collateral, to Borrower’s business or to any other transactions between the
      parties hereto.

    

    4.4 Financial
      Statements.

    

    4.4.1 Monthly
      Financial Statements.
      SouthPeak shall,
      as soon as practicable, and in any event within twenty (20) days after the
      end
      of each month, furnish to Lender unaudited, management-prepared financial
      statements of SouthPeak, including balance sheets, income statements and
      statements of cash flow, organized on a divisional basis and prepared in
      accordance with GAAP, together with reconciliations of the preceding month’s
      Borrowing Base Certificates (hereinafter defined), for the month ended,
      certified as to truth and accuracy by a duly authorized manager of
      SouthPeak.

    

    4.4.2 Annual
      Financial
      Statements.
      SouthPeak shall,
      as soon as practicable, and in any event within one hundred twenty (120) days
      after the end of each Fiscal Year, furnish to Lender the annual audited
      financial statements of SouthPeak, prepared by independent certified public
      accountants selected by SouthPeak and acceptable to Lender, and prepared in
      accordance with GAAP, together with balance sheets, income statements,
      statements of cash flows and other relevant financial statements of SouthPeak
      for the Fiscal Year then ended, with supporting schedules, on a consolidating
      and a consolidated basis, if applicable. 

    

    4.4.3 Annual
      Financial
      Statements and Tax Returns of Guarantors.
      Guarantors shall,
      as soon as practicable after the Fiscal Year end of the Borrower, furnish to
      Lender the annual financial statements of the Guarantors, so that the Lender
      has, at all times, financial statements of the Guarantors which are no more
      than
      thirteen (13) months old, certified as to truth and accuracy by Guarantors.
      In
      addition, Guarantors shall deliver to Lender, within thirty (30) days of filing,
      complete copies of federal and state tax returns, as applicable, together with
      all schedules thereto, certified as to truth and accuracy by Guarantors. In
      the
      event an extension is filed, Guarantors shall deliver a copy of the extension
      within thirty (30) days of filing. 

    

    4.5 Weekly
      Borrowing
      Certificates.
      No later than
      12:00 p.m. (Richmond, Virginia time) on the second Business Day of each week,
      (a) a detailed borrowing base report for SouthPeak (each, a “Borrowing Base
      Certificate”), including totals, customer names and addresses, a reconciliation
      statement, and the original date of each invoice and demonstrating compliance
      with the borrowing base restrictions of Eligible Receivables set forth in this
      Agreement, in substantially the same form as attached hereto as Exhibit
      “D-1”,
      (b) an aged
      analysis by week of all outstanding receivables and payables in substantially
      the same form as attached hereto as Exhibit
      “D-2”
      (the form of which
      shall satisfy this subsection 4.5(b)), and (c) all other details or supporting
      documents relating to SouthPeak’s accounts receivable or inventory requested by
      Lender. In all cases, Borrower shall at a minimum provide to Lender,
      within
      twenty (20) days after the end of each calendar month (or at any other time
      reasonably requested by the Lender), a detailed accounts receivable aging
      report, setting forth totals, customer names, a reconciliation statement, the
      original date of each invoice, and such other information as the Lender shall
      reasonably require, including but not limited to customer addresses, all in
      form
      and substance satisfactory to the Lender.

     

    
      
        
        

      

      
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    4.6 Payment
      of
      Taxes.
      Borrower shall
      pay and discharge all taxes, assessments and governmental charges upon it,
      its
      income and its properties prior to the date on which penalties attach thereto,
      unless and to the extent only that (i) such taxes, assessments and governmental
      charges are being contested in good faith and by appropriate proceedings by
      Borrower, (ii) Borrower maintains reasonable reserves on its books therefor,
      and
      (iii) the non-payment of such taxes does not result in a Lien upon any of the
      Collateral other than a Permitted Encumbrance.

    

    4.7 Maintenance
      of
      Insurance.
      In addition to
      and cumulative with any other requirements imposed on Borrower under the Loan
      Documents with respect to insurance, SouthPeak shall maintain insurance with
      responsible insurance companies on such of its properties, in such amounts
      reasonably and against such risks as is customarily maintained by similar
      businesses operating in the same vicinity, but in any event to include business
      interruption, freight, loss, damage, flood, windstorm, fire, theft, extended
      coverage and product liability insurance in amounts reasonably satisfactory
      to
      Lender, which such insurance shall not be cancelable by SouthPeak, unless with
      the prior written consent of Lender, or by SouthPeak’s insurer, unless with at
      least thirty (30) days (or such lesser or greater number of days as Lender
      may
      agree or accept) advance written notice to Lender thereof. SouthPeak shall
      file
      with Lender upon its request a detailed list of such insurance then in effect
      stating the names of the insurance companies, the amounts and rate of insurance,
      the date of expiration thereof, the properties and risks covered thereby and
      the
      insured with respect thereto, a copy of each such insurance policy, and within
      thirty (30) days after notice in writing from Lender, obtain such additional
      insurance as Lender may reasonably request.

    

    4.8 Payments
      on
      Accounts.

    

    4.8.1 Cash
      Collateral
      Account; Lockbox.
SouthPeak
      shall
      open and maintain at its expense a cash collateral account with Lender (the
      “Cash Collateral Account”), over which Lender alone shall have the power of
      withdrawal, and shall deposit all Payments to such account promptly upon receipt
      thereof. SouthPeak shall also execute and deliver to the Lender a Lockbox
      Agreement in form satisfactory to Lender and direct all Payments to the lockbox
      (“Lockbox”) established under the Lockbox Agreement and which shall be under the
      sole dominion and control of Lender. Thereafter, SouthPeak shall direct all
      account debtors to make all Payments on Accounts and other Collateral directly
      to the Lockbox. SouthPeak shall pay all fees and charges in connection with
      such
      lockbox arrangement (if any) as such fees and charges may change from time
      to
      time. All Payment items received by SouthPeak on Accounts and sale of inventory
      and other Collateral shall be held by SouthPeak in trust for Lender and not
      commingled with SouthPeak’s funds and shall be delivered promptly by SouthPeak
      to Lender. All such items shall be the exclusive property of Lender upon the
      earlier of the receipt thereof by Lender or by SouthPeak. SouthPeak hereby
      grants to Lender a security interest in and lien upon all items and balances
      held in the Lockbox and any deposit account (including the Cash Collateral
      Account) as collateral for the Obligations.

    

    4.8.2 Attorney
      in
      Fact.
SouthPeak
      hereby
      irrevocably appoints Lender (and any duly authorized Person designated by
      Lender) as SouthPeak’s attorney-in-fact to endorse SouthPeak’s name on any
      checks, drafts, money orders or other media of payment which come into Lender’s
      possession or control; this power being coupled with an interest is irrevocable
      so long as any of the Indebtedness remain outstanding. Such endorsement by
      Lender under power of attorney shall, for all purposes, be deemed to have been
      made by SouthPeak (prior to any subsequent endorsement by Lender) in negotiation
      of the item.

     

    
      
        
        

      

      
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    4.8.3 Interest
      Calculation.
For
      the purpose of
      calculating interest due under this Agreement, only Payments that have become,
      and are indicated as, collected funds in the Cash Collateral Account shall
      be
      applied to the Loan by Lender. Payments which are credited to SouthPeak’s loan
      account from the Cash Collateral Account or the Lockbox after 2:00 P. M. on
      any
      Business Day shall be credited to SouthPeak’s loan account on the next Business
      Day. No Payments received by Lender shall constitute payment to Lender until
      such Payment is actually collected by Lender and credited to SouthPeak’s loan
      account; provided, however, Lender shall have the right to charge back of
      SouthPeak any Payment which is returned for inability to collect, plus accrued
      interest during the period of Lender’s provisional credit for such item prior to
      receiving notice of dishonor. 

    

    4.8.4 Notification
      to
      Account Debtors.
      Upon an Event of
      Default, Lender shall have the right at any time to notify Account Debtors
      of
      its security interest in the Accounts and to require Payments to be made
      directly to Lender or to the Lockbox. To facilitate direct collection and upon
      an Event of Default, SouthPeak hereby appoints Lender and any officer or
      employee of Lender, as Lender may from time to time designate, as
      attorney-in-fact for SouthPeak to (a) receive, open and dispose of all mail
      addressed to SouthPeak and take therefrom any Payments or proceeds of Accounts;
      (b) take over SouthPeak’s post office boxes or make other arrangements, in which
      SouthPeak shall cooperate, to receive SouthPeak’s mail, including notifying the
      post office authorities to change the address for delivery of mail addressed
      to
      SouthPeak to such address as Lender shall designate; (c) endorse the name of
      SouthPeak in favor of Lender upon any and all Payments that may come into
      Lender’s possession; (d) sign and endorse the name of SouthPeak on any invoice
      or bill of lading relating to any Account, on verifications of Accounts sent
      to
      any Debtor, to drafts against Account Debtors, to assignments of Accounts and
      to
      notices to Account Debtors; and (e) do all acts and things necessary to carry
      out this Agreement, including signing the name of SouthPeak on any instruments
      required by law in connection with the transactions contemplated hereby and
      on
      financing statements as permitted by the UCC. SouthPeak hereby ratifies and
      approves all acts of such attorney-in-fact and neither Lender nor any other
      such
      attorney-in-fact shall be liable for any acts of commission or omission, or
      for
      any error of judgment or mistake of fact or law unless occasioned by Lender’s or
      such attorney-in-fact’s gross negligence. This power, being coupled with an
      interest, is irrevocable so long as any of the Obligations remain
      unsatisfied.

    

    4.8.5 Collections
      Liability.
Lender
      shall not,
      under any circumstances, be liable for any error or omission or delay of any
      kind occurring in the settlement, collection or payment of any Account or any
      instrument received in payment thereof or for any damage resulting therefrom
      unless occasioned by Lender’s fraud, gross negligence or willful misconduct.
      Lender may, after the occurrence of an Event of Default, without notice to
      or
      consent from SouthPeak, sue upon or otherwise collect, extend the time of
      payment of, or compromise or settle for cash, credit or otherwise upon any
      terms, any of the Accounts or any securities, instruments or insurance
      applicable thereto and/or release the obligor thereon. Lender is authorized
      to
      accept the return of the goods represented by any of the Accounts, without
      notice to or consent of SouthPeak, or without discharging or any way affecting
      the Obligations. Lender shall not be liable for or prejudiced by any loss,
      depreciation or other damage to the Accounts and other Collateral unless caused
      by Lender’s fraud, gross negligence or willful misconduct.

    

    4.9 Certificate
      of
      Compliance and No Default.
      SouthPeak shall,
      on a quarterly basis not later than thirty (30) days after the close of each
      Fiscal Quarter, certify to Lender, in a statement executed by the Manager(s)
      of
      SouthPeak, in the form of Exhibit
      “B”
      attached hereto,
      that no Event of Default and no Default Condition exists or has occurred, or,
      if
      an Event of Default or Default Condition exists or has occurred, specifying
      the
      nature and period of existence thereof. 

    

    4.10 Change
      of
      Principal Place of Business.
      Borrower hereby
      understands and agrees that if, at any time hereafter, Borrower elects to move
      its Executive Office, or if Borrower elects to change its name, identity,
      structure, type or status, Borrower will notify Lender in writing at least
      thirty (30) days prior thereto.

     

    
      
        
        

      

      
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    4.11 Waivers.
      With respect to
      each of the Collateral locations, SouthPeak will obtain such waivers of lien,
      estoppel certificates or subordination agreements as Lender may reasonably
      require to insure the priority of its security interest in that portion of
      the
      Collateral situated at such locations.

    

    4.12 Preservation
      of
      Existence.
      Borrower shall
      preserve and maintain its existence, rights, franchises and privileges in the
      jurisdiction of its organization, and qualify and remain qualified as a foreign
      limited liability company in each jurisdiction in which such qualification
      is
      necessary or desirable in view of its business and operations or the ownership
      of its properties.

    

    4.13 Compliance
      With
      Laws.
      Borrower and each
      of its Subsidiaries shall comply with the requirements of all applicable laws,
      rules, regulations and orders of any governmental authority, noncompliance
      with
      which would or could materially adversely affect their respective financial
      condition or the ownership, maintenance or operation of any material portion
      of
      any of their respective properties. Without limiting the foregoing, Borrower
      and
      its Subsidiaries shall obtain and maintain all permits, licenses and other
      authorizations which are required under, and otherwise comply with, all federal,
      state, local and foreign laws and regulations.

    

    4.14 Subordinations.
      Borrower shall
      provide Lender with a subordination agreement, in form satisfactory to Lender,
      executed by any Person who is an owner or agent of Borrower to whom Borrower
      is
      or hereafter becomes indebted for money borrowed, subordinating in right of
      payment and claim all of such indebtedness and any future advances thereon
      to
      the claims of Lender on the Revolving Note and the other Obligations so long
      as
      any amount remains unpaid on the Revolving Note or any of the Obligations.
      Such
      subordination agreement shall provide, among other things, that no principal
      or
      interest on any such indebtedness shall be repaid unless and until there is
      no
      outstanding balance due and payable on the Revolving Note or on any other
      Obligations of Borrower to Lender.

    

    4.15 Certain
      Required
      Notices.
      Promptly, upon
      its receipt of notice or knowledge thereof, Borrower will report to Lender:
      (i)
      any lawsuit or administrative proceeding in which Borrower is a defendant in
      which the amount or amounts in controversy exceed $100,000; or (ii) the
      existence and nature of any Default Condition or Event of Default.

    

    4.16 Primary
      Deposit
      Relationship.
      SouthPeak shall
      at all times maintain its primary deposit relationship and treasury management
      services with the Lender.

    

    4.17 Subsequently
      Created Subsidiaries.
      In the event
      Borrower creates a new Subsidiary (with Lender’s consent as required by Section
      5.10), Borrower shall execute a pledge agreement pledging the equity interests
      of the Subsidiary to Lender and shall cause the Subsidiary to execute a Guaranty
      Agreement and Security Agreement.

    

    4.18 Management.
      Borrower’s
      executive management shall be reasonably satisfactory to Lender. Lender shall
      be
      consulted in advance of any changes in the executive management of
      Borrower.

     

    
      
        
        

      

      
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    5. NEGATIVE
      COVENANTS.
      Borrower
      covenants to Lender that from and after the date hereof and so long as any
      amount remains unpaid on account of any of the Obligations or this Agreement
      remains effective (whichever is the last to occur), Borrower will not do (and
      will not permit any Subsidiary to do), without the prior written consent of
      Lender, which
      consent may
      be withheld by Lender in its sole discretion, any
      of the things
      or acts set forth below:

    

    5.1 Encumbrances.
      Create, assume,
      or suffer to exist any Lien on its property, except
      for
      Permitted
      Encumbrances. Without limiting the generality of the foregoing, Borrower agrees
      that the assets of SouthPeak-UK shall not be pledged to any party other than
      Lender.

    

    5.2 Debt.
      Incur, assume, or
      suffer to exist any Debt, except
      for:
      (i) Debt to
      Lender or any Affiliate of Lender; (ii) Subordinated Debt; (iii) trade payables
      and contractual obligations to suppliers and customers incurred in the ordinary
      course of business; (iv) accrued pension fund and other employee benefit plan
      obligations and liabilities (provided, however, that such Debt does not result
      in the existence of any Event of Default or Default Condition under any other
      provision of this Agreement); (v) deferred taxes; and (vi) debt which serves
      as
      the underlying basis for the Permitted Encumbrances.

    

    5.3 Contingent
      Liabilities.
      Guarantee,
      endorse, become surety with respect to or otherwise become directly or
      contingently liable for or in connection with the obligations of any other
      Person.

    

    5.4 Dividends;
      Distributions.
      Declare or pay
      any dividends on, or make any distribution with respect to, its equity interests
      except to the extent necessary to pay income tax on the income of the members
      of
      the Borrower directly attributable to the Borrower’s or such member’s income
      received from Borrower.

    

    5.5 Redemption.
      Purchase, redeem,
      or otherwise acquire for value any of its equity interests. 

    

    5.6 Mergers.
      Dissolve,
      liquidate, merge, lease, transfer or otherwise terminate its limited liability
      company or limited company status or enter into any merger, reorganization
      or
      consolidation or dispose of any material portion of its assets or make any
      substantial change in the basic type of business conducted by Borrower and
      its
      Subsidiaries, as of the Closing Date.

    

    5.7 Business
      Locations.
      Transfer its
      principal place of business or chief executive office, or open new locations
      or
      warehouses, or transfer existing locations or warehouses or maintain records
      with respect to Collateral, to or at any locations other than those at which
      the
      same are presently kept or maintained as set forth on Exhibit
      “A”,
      except upon at
      least thirty (30) days prior written notice to Lender and after the delivery
      to
      Lender of financing statements, if required by Lender, in form satisfactory
      to
      Lender, to perfect or continue the perfection of Lender’s Lien.

    

    5.8 Affiliate
      Transactions.
      Enter into, or be
      a party to, or permit any Subsidiary to enter into or be a party to, any
      transaction with any Affiliate, except in the ordinary course of and pursuant
      to
      the reasonable requirements of Borrower’s or such Subsidiary’s business and upon
      fair and reasonable terms which are fully disclosed to Lender and are no less
      favorable to Borrower than would obtain in a comparable arm’s length transaction
      with a Person not an Affiliate.

    

    5.9 Capital
      Expenditures. Make
      Capital
      Expenditures, including payments due under Capital Leases, in any Fiscal Year
      in
      excess of $100,000.00 without prior written consent of Lender.

     

    
      
        
        

      

      
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    5.10 Subsidiaries.
      Create any
      Subsidiary or divest itself of any material assets by transferring them to
      any
      Subsidiary without the prior written consent of the Lender and the pledge of
      equity interests of the new Subsidiary and execution of a Guaranty Agreement
      and
      Security Agreement by the new Subsidiary.

    

    5.11 Fiscal
      Year.
      Change its Fiscal
      Year, or permit any Subsidiary to have a fiscal year different from the Fiscal
      Year of Borrower.

    

    5.12 Disposition
      of
      Assets.
      Sell, lease or
      otherwise dispose of any of its properties, including any disposition of
      property as part of a sale and leaseback transaction, to or in favor of any
      Person, except: (i) sales of inventory Collateral in the ordinary course of
      Borrower’s business; or (ii) dispositions otherwise expressly authorized by this
      Agreement.

    

    5.13 Federal
      Taxpayer
      Identification Number.
      Change its
      federal taxpayer identification number without prior written notice to
      Lender.

    

    5.14 Employee
      Benefit
      Plans.
      Permit an
      Employee Benefit Plan to become underfunded or create any Employee Benefit
      Plan
      without prior written notice to Lender and upon such notification, this
      Agreement shall be amended as determined necessary by Lender in its discretion
      as a result of the creation of such Plan.

    

    5.15 Acquisitions.
      Borrower shall
      not make acquisitions other than in the ordinary course of business except
      with
      the prior written consent of Lender and so long as Borrower is in compliance
      with the terms of this Agreement.

    

    6. INTENTIONALLY
      OMITTED.

    

    7. EVENTS
      OF
      DEFAULT.
      The occurrence of
      any events or conditions set forth below shall constitute an Event of Default
      hereunder, provided that any requirement for the giving of notice or the lapse
      of time, or both, has been satisfied:

    

    7.1 Obligations.
      Borrower shall
      fail to make any payments on any of its Obligations when due.

    

    7.2 Misrepresentations.
      Borrower or any
      Subsidiary shall make any representations or warranties in any of the Loan
      Documents or in any certificate or statement furnished at any time hereunder
      or
      in connection with any of the Loan Documents which proves to have been untrue
      or
      misleading in any material respect when made or furnished.

    

    7.3 Reporting
      Covenants; Cure Period.
      Borrower shall:
      (a) default in the observance or performance of any covenant or agreement
      contained in Section 4.5, unless such default is cured to Lender’s satisfaction
      within two (2) days after receipt of notice of such default from Lender; or
      (b)
      default in the observance or performance of any covenant or agreement contained
      in Sections 4.4.1, 4.4.2, 4.4.3 or 4.9 unless such default is cured to Lender’s
      satisfaction within fifteen (15) days after receipt of notice of such default
      from Lender.

    

    7.4 Other
      Covenants;
      Cure Period.
      Borrower or any
      Subsidiary or Guarantor shall default in the observance or performance of any
      covenant or agreement contained herein, in any of the other Loan Documents
      (other than a default the performance or observance of which is dealt with
      specifically elsewhere in this Section 7) unless:
      (i) with respect
      to this Agreement, such default is cured to Lender’s satisfaction within thirty
      (30) days after the sooner to occur of receipt of notice of such default from
      Lender or the date on which such default first becomes known to
      Borrower;
      and (ii)
with
      respect to any other Loan Document, such default is cured within any applicable
      grace, cure or notice and cure period contained therein, if any.

     

    
      
        
        

      

      
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    7.5 Other
      Debts.
      Borrower shall
      default in connection with any agreement for Debt with any creditor other than
      Lender which entitles said creditor to accelerate the maturity
      thereof.

    

    7.6 Voluntary
      Bankruptcy.
      Borrower or any
      Subsidiary shall file a voluntary petition in bankruptcy or a voluntary petition
      or answer seeking liquidation, reorganization, arrangement, readjustment of
      its
      debts, or for any other relief under the Bankruptcy Code, or under any other
      act
      or law pertaining to insolvency or debtor relief, whether state, Federal, or
      foreign, now or hereafter existing; Borrower or any Subsidiary shall enter
      into
      any agreement indicating its consent to, approval of, or acquiescence in, any
      such petition or proceeding; Borrower or any Subsidiary shall apply for or
      permit the appointment by consent or acquiescence of a receiver, custodian
      or
      trustee of Borrower or any Subsidiary for all or a substantial part of its
      property; Borrower or any Subsidiary shall make an assignment for the benefit
      of
      creditors; or Borrower or any Subsidiary shall be unable or shall fail to pay
      its debts generally as such debts become due, or Borrower or any Subsidiary
      shall admit, in writing, its inability or failure to pay its debts generally
      as
      such debts become due.

    

    7.7 Involuntary
      Bankruptcy.
      There shall have
      been filed against Borrower or any Subsidiary an involuntary petition in
      bankruptcy or seeking liquidation, reorganization, arrangement, readjustment
      of
      its debts or for any other relief under the Bankruptcy Code, or under any other
      act or law pertaining to insolvency or debtor relief, whether state, federal
      or
      foreign, now or hereafter existing, and such petition is not dismissed within
      sixty (60) days; Borrower or any Subsidiary shall suffer or permit the
      involuntary appointment of a receiver, custodian or trustee of Borrower or
      any
      Subsidiary or for all or a substantial part of its property; or Borrower or
      any
      Subsidiary shall suffer or permit the issuance of a warrant of attachment,
      execution or similar process against all or any substantial part of the property
      of Borrower or any Subsidiary and is not vacated or stayed within sixty (60)
      days of such attachment, execution, or similar process.

    

    7.8 Damage,
      Loss,
      Theft or Destruction of Collateral.
      There shall have
      occurred material uninsured damage to, or loss, theft or destruction of, any
      material part of the Collateral. 

    

    7.9 Default
      in
      Agreement with Third Party.
      If there is a
      default, after the expiration of any applicable grace or cure period, in any
      loan agreement, mortgage, indenture or other material agreement to which
      Borrower is a party with third parties, and Lender determines that such default
      shall have a Material Adverse Effect on Borrower’s business or the prospects for
      repayment of the Obligations.

    

    7.10 Judgments.
      A final judgment
      or order for the payment of money is rendered against Borrower or any Subsidiary
      in the amount of $25,000 or more (exclusive of amounts covered by insurance)
      and
      either (i) enforcement proceedings shall have been commenced by any creditor
      upon such judgment or order, or (ii) a stay of enforcement of such judgment
      or
      order, by reason of pending appeal or otherwise, shall not be in effect for
      any
      period of thirty (30) consecutive days.

    

    7.11 Bankruptcy
      of
      Affiliate.
      Any motion,
      complaint or other pleading is filed in any bankruptcy case of any Affiliate
      of
      the Borrower and such motion, complaint or pleading seeks the consolidation
      of
      Borrower’s assets and liabilities with the assets and liabilities of such
      Person.

    

    7.12 Material
      Adverse
      Effect.
      There shall be
      any event, act, condition or occurrence having a Material Adverse Effect.

    

    7.13 Change
      of
      Control, Etc.
      Any of the
      following shall occur: (i) any Person or group of Persons shall have become,
      after the date hereof, the beneficial owner of equity interests of the Borrower
      representing ten percent (10%) or more of the combined voting power of the
      then-outstanding equity interests of Borrower; or (ii) the Manager(s) of the
      Borrower shall cease to consist of a majority of the individuals who constituted
      the Manager(s) immediately following the consummation of the Closing.

     

    
      
        
        

      

      
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    7.14 Deemed
      Insecure.
      Lender, at any
      time and in good faith, shall deem itself insecure (and for the purposes of
      this
      Agreement, Lender shall be entitled to deem itself insecure when any Guarantor
      terminates a Guarantee, or when some event occurs, fails to occur or is
      threatened or some objective condition exists or is threatened which
      significantly impairs the prospects that any of the Obligations will be paid
      when due, which significantly impairs the value of the Collateral to Lender
      or
      which significantly affects the financial or business condition of
      Borrower).

    

    7.15 Change
      in
      Management, Etc.
      Either of Terry
      M. Phillips or Gregory R. Phillips shall
      become
      incapacitated, cease to be managers or officers of Borrower or otherwise cease
      to be actively involved in the day to day executive management of Borrower,
      or
      Borrower shall fail to maintain executive management having sufficient skill
      and
      experience in Borrower’s industry to manage Borrower competently and
      efficiently.

    

    7.16 Related
      Loans.
      There shall be
      any Event of Default under any of the Related Loan Agreements.

    

    8. REMEDIES.
      Upon the
      occurrence of any Default Condition or Event of Default, Lender’s obligation to
      extend financing under the Loans shall immediately cease; provided, however,
      that if such obligation has ceased due to the occurrence of a Default Condition,
      and such Default Condition does not become an Event of Default due to its having
      been cured or waived before it has matured into an Event of Default, then such
      obligation shall be reinstated as of the date such Default Condition is cured
      or
      waived. Upon the occurrence or existence of any Event of Default, or any time
      thereafter, without prejudice to the rights of Lender to enforce its claims
      against Borrower for damages for failure by Borrower to fulfill any of its
      obligations hereunder, subject only to prior receipt by Lender of payment in
      full of all Obligations then outstanding in a form acceptable to Lender, Lender
      shall have all of the rights and remedies set forth below, and it may exercise
      any one, more, or all of such remedies, in its sole discretion, without thereby
      waiving any of the others.

    

    8.1 Acceleration
      of
      the Obligations.
      Lender, at its
      option, may declare all of the Obligations (including but not limited to that
      portion thereof evidenced by the Revolving Note) to be immediately due and
      payable, whereupon the same shall become immediately due and payable without
      presentment, demand, protest, notice of nonpayment or any other notice required
      by law relative thereto, all of which are hereby expressly waived by Borrower,
      anything contained herein to the contrary notwithstanding. If any note of
      Borrower to Lender constituting Obligations, including, without limitation,
      the
      Revolving Note, shall be a demand instrument, however, the recitation of the
      right of Lender to declare any and all Obligations to be immediately due and
      payable, whether such recitation is contained in such note or in this Agreement,
      as well as the recitation of the above events permitting Lender to declare
      all
      Obligations due and payable, shall not constitute an election by Lender to
      waive
      its right to demand payment under a demand at any time and in any event, as
      Lender in its discretion may deem appropriate. Thereafter, Lender, at its
      option, may, but shall not be obligated to, accept less than the entire amount
      of Obligations due, if tendered, provided, however, that unless then agreed
      to
      in writing by Lender, no such acceptance shall or shall be deemed to constitute
      a waiver of any Event of Default or a reinstatement of any commitments of Lender
      hereunder.

    

    8.2 Interest
      Rate.
      If Lender so
      elects, by further written notice to Borrower, Lender may increase the rate
      of
      interest charged on the Revolving Note then outstanding for so long thereafter
      as Lender further shall elect to an amount not to exceed the Default
      Rate.

     

    
      
        
        

      

      
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    8.3 Remedies
      of a
      Secured Party.
      Lender shall
      thereupon have the rights and remedies of a secured party under the UCC in
      effect on date thereof (regardless of whether the same has been enacted in
      the
      jurisdiction where the rights or remedies are asserted), including, without
      limitation, the right to take possession of any of the Collateral or the
      proceeds thereof, to sell or otherwise dispose of the same, to apply the
      proceeds therefrom to any of the Obligations in such order as Lender, in its
      sole discretion, may elect. Lender shall give Borrower written notice of the
      time and place of any public sale of the Collateral or the time after which
      any
      other intended disposition thereof is to be made. The requirement of sending
      reasonable notice shall be met if such notice is given to Borrower at least
      ten
      (10) days before such disposition. Expenses of retaking, holding, insuring,
      preserving, protecting, preparing for sale or selling or the like with respect
      to the Collateral shall include, in any event, reasonable attorneys’ fees and
      other legally recoverable collection expenses, all of which shall constitute
      Obligations.

    

    8.4 Repossession
      of
      the Collateral.
      Lender may take
      the Collateral or any portion thereof into its possession, by such means
      (without breach of the peace) and through agents or otherwise as it may elect
      (and, in connection therewith, demand that Borrower assemble the Collateral
      at a
      place or places and in such manner as Lender shall prescribe), and sell, lease
      or otherwise dispose of the Collateral or any portion thereof in its then
      condition or following any commercially reasonable preparation or processing,
      which disposition may be by public or private proceedings, by one or more
      contracts, as a unit or in parcels, at any time and place and on any terms,
      so
      long as the same are commercially reasonable and Borrower hereby waives all
      rights which Borrower has or may have to notice and to a judicial hearing prior
      to seizure of any Collateral by Lender.

    

    8.5 Other
      Remedies.
      Unless and except
      to the extent expressly provided for to the contrary herein, the rights of
      Lender specified herein shall be in addition to, and not in limitation of,
      Lender’s rights under the UCC, as amended from time to time, or any other
      statute or rule of law or equity, or under any applicable foreclosure laws,
      or
      under any other provision of any of the Loan Documents, or under the provisions
      of any other document, instrument or other writing executed by Borrower or
      any
      third party in favor of Lender, all of which may be exercised successively
      or
      concurrently.

    

    8.6 Set
      Off;
      Debiting Accounts.
      Upon the
      occurrence of an Event of Default, Lender may set off against the Obligations
      any funds owed by Lender to Borrower. In addition, upon the occurrence of an
      Event of Default, Lender may satisfy all or any part of the Obligations, at
      Lender’s option (without any obligation to do so), by Lender’s debiting any
      deposit account or investment account of Borrower for the amount
      thereof.

    

    9. MISCELLANEOUS.

    

    9.1 Waiver.
      Each and every
      right granted to Lender under this Agreement, or any of the other Loan
      Documents, or any other document delivered hereunder or in connection herewith
      or allowed it by law or in equity, shall be cumulative and may be exercised
      from
      time to time. No failure on the part of Lender to exercise, and no delay in
      exercising, any right shall operate as a waiver thereof, nor shall any single
      or
      partial exercise by Lender of any right preclude any other or future exercise
      thereof or the exercise of any other right. No waiver by Lender of any Default
      Condition or Event of Default shall constitute a waiver of any subsequent
      Default Condition or Event of Default.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    

    9.2 Governing
      Law.
      THIS AGREEMENT,
      THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE
      PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED AND
      INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA,
      WITHOUT REGARD TO ANY STATE’S CONFLICTS OF LAWS RULES.

    

    9.3 Survival.
      All
      representations, warranties and covenants made herein and in the Loan Documents
      shall survive the execution and delivery hereof and thereof. The terms and
      provisions of this Agreement shall continue in full force and effect,
      notwithstanding the payment of the Revolving Note, until all of the Obligations
      have been paid in full and Lender has terminated this Agreement in
      writing.

    

    9.4 No
      Assignment by
      Borrower.
      No assignment
      hereof or of any Loan Document shall be made by Borrower without the prior
      written consent of Lender. Lender may assign, or sell participations in, its
      rights, title and interest herein and in the Loan Documents at any time
      hereafter without notice to or consent of Borrower.

    

    9.5 Counterparts.
      This Agreement
      may be executed in two or more counterparts, each of which when fully executed
      shall be an original, and all of said counterparts taken together shall be
      deemed to constitute one and the same agreement.

    

    9.6 Reimbursement.
      Borrower shall
      pay to Lender on demand all out-of-pocket costs and expenses that Lender pays
      or
      actually incurs in connection with the negotiation, preparation, consummation,
      enforcement and termination of this Agreement and the other Loan Documents,
      including, without limitation: (a) reasonable attorneys’ fees and paralegals’
fees and disbursements of outside counsel; (b) costs and expenses (including
      reasonable outside attorneys’ and paralegals’ fees and disbursements) for any
      amendment, supplement, waiver, consent or subsequent closing in connection
      with
      the Loan Documents and the transactions contemplated thereby; (c) costs and
      expenses of lien and title searches and title insurance; (d) actual taxes,
      fees
      and other charges for recording any deeds to secure debt, deeds of trust,
      mortgages, filing financing statements and continuations, and other actions
      to
      perfect, protect and continue the Lien of Lender in the Collateral; (e) sums
      paid or incurred to pay for any amount or to take any action required of
      Borrower under the Loan Documents that Borrower fails to pay or take; (f) costs
      of appraisals, inspections, field audits and verifications of the Collateral,
      including, without limitation, costs of travel, for inspections of the
      Collateral and Borrower’s operations by Lender or its designees; (g) costs and
      expenses of preserving and protecting the Collateral; and (h) after an Event
      of
      Default, costs and expenses (including reasonable attorneys’ and paralegals’
fees and disbursements) paid or incurred to obtain payment of the Obligations,
      enforce the Lien in the Collateral, sell or otherwise realize upon the
      Collateral, and otherwise enforce the provisions of the Loan Documents or to
      defend any claim made or threatened against Lender arising out of the
      transactions contemplated hereby (including, without limitation, preparations
      for and consultations concerning any such matters). The foregoing shall not
      be
      construed to limit any other provisions of the Loan Documents regarding costs
      and expenses to be paid to Borrower. All of the foregoing costs and expenses
      may, in the discretion of Lender, be paid as provided in Section 2.2.1(c).
      Borrower will pay all expenses incurred by it in the transaction. In the event
      Borrower becomes a debtor under the Bankruptcy Code, Lender’s secured claim in
      such case shall include interest on the Obligations and all fees, costs and
      charges provided for herein (including, without limitation, reasonable
      attorneys’ fees actually incurred), all to the extent allowed by the Bankruptcy
      Code.

    

    9.7 Successors
      and
      Assigns.
      This Agreement
      and Loan Documents shall be binding upon and inure to the benefit of the
      successors and permitted assigns of the parties hereto and thereto.

    

    9.8 Severability.
      If any provision
      this Agreement or of any of the Loan Documents or the application thereof to
      any
      party thereto or circumstances shall be invalid or unenforceable to any extent,
      the remainder of such Loan Documents and the application of such provisions
      to
      any other party thereto or circumstance shall not be affected thereby and shall
      be enforced to the greatest extent permitted by law.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

    9.9 Notices.
      All notices,
      requests and demands to or upon the respective parties hereto shall be deemed
      to
      have been given or made when personally delivered or deposited in the mail,
      registered or certified mail, postage prepaid, addressed to the Borrower at
      its
      Executive Office and to the Lender
      at SunTrust
      Bank, Mail Code HDQ 2102, 919 East Main Street, Richmond, Virginia 23219, Attn:
      Mr. Max C. Morehead, Jr., Senior Vice President
      (or to such other
      address as may be designated hereafter in writing by the respective parties
      hereto) except in cases where it is expressly provided herein or by applicable
      law that such notice, demand or request is not effective until received by
      the
      party to whom it is addressed.

    

    9.10 Entire
      Agreement; Amendments.
      This Agreement,
      together with the remaining Loan Documents, constitute the entire agreement
      between the parties hereto with respect to the subject matter hereof. Neither
      this Agreement nor any Loan Document may be changed, waived, discharged,
      modified or terminated orally, but only by an instrument in writing signed
      by
      the party against whom enforcement is sought.

    

    9.11 Time
      of
      Essence.
      Time is of the
      essence in this Agreement and the other Loan Documents.

    

    9.12 Interpretation.
      No provision of
      this Agreement or any Loan Document shall be construed against or interpreted
      to
      the disadvantage of any party hereto by any court or other governmental or
      judicial authority by reason of such party having or being deemed to have
      structured or dictated such provision.

    

    9.13 Lender
      Not a
      Joint Venturer.
      Neither this
      Agreement nor any Loan Document shall in any respect be interpreted, deemed
      or
      construed as making Lender a partner or joint venturer with Borrower or as
      creating any similar relationship or entity, and Borrower agrees that it will
      not make any contrary assertion, contention, claim or counterclaim in any
      action, suit or other legal proceeding involving Lender and
      Borrower.

    

    9.14 Jurisdiction.
      BORROWER AGREES
      THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY LOAN
      DOCUMENT MAY BE BROUGHT IN THE CIRCUIT COURT OF THE CITY OF RICHMOND, VIRGINIA
      OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA,
      RICHMOND DIVISION, ALL AS LENDER MAY ELECT. BY EXECUTION OF THIS AGREEMENT,
      BORROWER HEREBY SUBMITS TO EACH SUCH JURISDICTION, HEREBY EXPRESSLY WAIVING
      WHATEVER RIGHTS MAY CORRESPOND TO IT BY REASON OF ITS PRESENT OR FUTURE
      DOMICILE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO COMMENCE LEGAL
      PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION
      OR
      TO SERVE PROCESS IN ANY MANNER PERMITTED OR REQUIRED BY LAW.

    

    9.15 Acceptance.
      This Agreement,
      together with the other Loan Documents, shall not become effective unless and
      until delivered to Lender at its principal office in the Commonwealth of
      Virginia and accepted in writing by Lender at such office as evidenced by its
      execution hereof (notice of which delivery and acceptance are hereby waived
      by
      Borrower).

    

    9.16 Payment
      on
      Non-Business Days.
      Whenever any
      payment to be made hereunder or under the Revolving Note shall be stated to
      be
      due on a Saturday, Sunday or a public holiday under the laws of the Commonwealth
      of Virginia, such payment may be made on the next succeeding Business Day,
      and
      such extension of time shall in such case be included in the computation of
      payment of interest hereunder or under the Revolving Note.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    

    9.17 Cure
      of Defaults
      by Lender.
      If, hereafter,
      Borrower defaults in the performance of any duty or obligation to Lender
      hereunder or under any Loan Document, Lender may, at its option, but without
      obligation, cure such default and any costs, fees and expenses incurred by
      Lender in connection therewith including, without limitation, for the purchase
      of insurance, the payment of taxes and the removal or settlement of liens and
      claims, shall be deemed to be advances against the Revolving Note, whether
      or
      not this creates an overadvance thereunder, and shall be payable in accordance
      with its terms.

    

    9.18 Recitals.
      All recitals
      contained herein are hereby incorporated by reference into this Agreement and
      made part thereof.

    

    9.19 Attorney-in-Fact.
      Borrower hereby
      designates, appoints and empowers Lender irrevocably as its attorney-in-fact,
      at
      Borrower’s cost and expense, to do in the name of Borrower any and all actions
      which Lender may deem necessary or advisable to carry out the terms of this
      Agreement or any other Loan Document upon the failure, refusal or inability
      of
      Borrower to do so and Borrower hereby agrees to indemnify and hold Lender
      harmless from any costs, damages, expenses or liabilities arising against or
      incurred by Lender in connection therewith.

    

    9.20 Sole
      Benefit.
      The rights and
      benefits set forth in this Agreement and the other Loan Documents are for the
      sole and exclusive benefit of the parties hereto and thereto and may be relied
      upon only by them.

    

    9.21 Indemnification.
      Borrower will
      hold Lender, its respective directors, officers, employees, agents, Affiliates,
      successors and assigns harmless from and indemnify Lender, its respective
      directors, officers, employees, agents, Affiliates, successors and assigns
      against, all loss, damages, costs and expenses (including, without limitation,
      reasonable attorney’s fees, costs and expenses) actually incurred by any of the
      foregoing, whether direct, indirect or consequential, as a result of or arising
      from or relating to any “Proceedings” (as defined below) by any Person, whether
      threatened or initiated, asserting a claim for any legal or equitable remedy
      against any Person under any statute, case or regulation, including, without
      limitation, any federal or state securities laws or under any common law or
      equitable case or otherwise, arising from or in connection with this Agreement,
      and any other of the transactions contemplated by this Agreement, except to
      the
      extent such losses, damages, costs or expenses are due to the willful misconduct
      or gross negligence of Lender. As used herein, “Proceedings” shall mean actions,
      suits or proceedings before any court, governmental or regulatory authority
      and
      shall include, particularly, but without limitation, any actions concerning
      Environmental Laws. At the request of Lender, Borrower will indemnify any Person
      to whom Lender transfers or sells all or any portion of its interest in the
      Obligations or participations therein on terms substantially similar to the
      terms set forth above. Lender shall not be responsible or liable to any Person
      for consequential damages which may be alleged as a result of this Agreement
      or
      any of the transactions contemplated hereby. The obligations of Borrower under
      this Section shall survive the termination of this Agreement and payment of
      the
      Obligations.

    

    9.22 JURY
      TRIAL
      WAIVER.
      EACH OF BORROWER
      AND LENDER HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT
      TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
      ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, OBLIGATIONS OR THE
      COLLATERAL.

    

    10. CONDITIONS
      PRECEDENT.
      Unless waived in
      writing by Lender at or prior to the execution and delivery of this Agreement,
      the conditions set forth below shall constitute express conditions precedent
      to
      any obligation of Lender hereunder. These conditions shall be in addition to,
      and not in replacement of, any of the conditions precedent contained in any
      of
      the other Loan Documents.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    

    10.1 Manager’s
      Certificate.
      Receipt by Lender
      of a certificate from the Manager(s) of Borrower, certifying to Lender that
      appropriate resolutions have been entered into by the Member(s) or Manager(s)
      of
      Borrower incident hereto and that the Manager(s) of Borrower whose signatures
      appear hereinbelow, on the other Loan Documents, and on any and all other
      documents, instruments and agreements executed in connection herewith, are
      duly
      authorized by the Member(s) or Manager(s) of Borrower for and on behalf of
      Borrower to execute and deliver this Agreement, the other Loan Documents and
      such other documents, instruments and agreements, and to bind Borrower
      accordingly thereby, all in form and substance acceptable to
      Lender.

    

    10.2 Good
      Standing
      Certificates.
      Receipt by Lender
      of a certificate of good standing with respect to Borrower and each Subsidiary
      from the secretaries of state of the state of organization of Borrower and
      of
      any state in which a Collateral location is situated, dated within thirty (30)
      days of the date hereof.

    

    10.3 Guarantees.
      The Guarantees
duly
      executed by the Guarantors, in a form satisfactory to the Lender in its sole
      discretion.

    

    10.4 Loan
      Documents.
      Receipt by Lender
      of all the other Loan Documents, duly executed, in form and substance acceptable
      to Lender.

    

    10.5 Financing
      Statements.
      Receipt by Lender
      of any Uniform Commercial Code financing statements respecting the Collateral
      as
      deemed necessary by Lender, duly executed by Borrower and each Subsidiary (if
      requested) in form and substance acceptable to Lender accompanied by Uniform
      Commercial Code searches acceptable to the Lender in all respects and
      accompanied by certificates of filing in all jurisdiction deemed necessary
      by
      the Lender.

    

    10.6 Opinion
      of
      Counsel.
      Receipt by Lender
      of an acceptable opinion of counsel from independent legal counsel to
      SouthPeak.

    

    10.7 No
      Default. 
      No Default
      Condition or Event of Default shall exist and Borrower shall in all respects
      be
      in compliance with all of the terms of the Loan Documents, as evidenced by
      its
      delivery of a certificate of no default to such effect, to be substantially
      in
      the form of Exhibit
      “B”
      attached
      hereto.

    

    10.8 Telephone
      Instruction Letter.
      Receipt by Lender
      of a telephone instruction letter, concerning requests for advances under the
      Revolving Note, to be substantially in the form of Exhibit
      “C”
      attached
      hereto.

    

    10.9 Other.
      Receipt by Lender
      of such other documents, certificates, instruments and agreements as shall
      be
      required hereunder or provided for herein or as Lender or Lender’s counsel may
      require in connection herewith. 

    

    

    

    [SIGNATURE
      PAGES
      FOLLOW]

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the parties have caused this Agreement to be duly executed as of the date first
      written above.

    

     

    
 

    
      	 LENDER:
	 
	 SUNTRUST
              BANK
	 

    

    
      	 	 
	 By:	
               (SEAL)

            
	 Name:	  

	 Title:	  

	 	 

    

     

    
      
        	 BORROWER:
	 
	 SOUTHPEAK
                INTERACTIVE, L.L.C.,
                 a
                  Virginia limited liability company 

              
	 

      

      
        	 	 
	 By:	
                 (SEAL)

              
	 Name:	   
                
	 	 

      

    

    
       

      
        	 
	 SOUTHPEAK
                INTERACTIVE LIMITED,
                 a United
                  Kingdom limited company 

              
	 

      

      
        	 	 
	 By:	
                 (SEAL)

              
	 Name:	  

	 Title:	  

	 	 

      

       

       

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    FIRST
      ADDENDUM TO LOAN AGREEMENT

    

    THIS
      FIRST ADDENDUM TO LOAN AGREEMENT
      (this
“Addendum”), dated as of June 1, 2006, is made by SOUTHPEAK INTERACTIVE, L.L.C.,
      a Virginia limited liability company (“SouthPeak”), SOUTHPEAK INTERACTIVE
      LIMITED, a United Kingdom limited company (“SouthPeak-UK”), jointly and
      severally (SouthPeak and SouthPeak-UK shall be referred to herein collectively
      or individually, whether one or more in number, as the “Borrower”), and provides
      as follows:

    

    RECITALS:

    

    A. The
      Borrower and SunTrust Bank (the “Bank”) are parties to that certain Loan
      Agreement dated December 16, 2005 pursuant to which the Bank agreed to provide
      a
      Revolving Line of Credit to the Borrower in the original principal amount of
      $5,000,000 (the “Loan Agreement”).

    

    B. The
      Bank
      has agreed to modify the Limitations on the Revolving Loan pursuant to the
      Loan
      Agreement.

    

    C. As
      a
      condition to modifying the limitations of the Revolving Loan, the Bank has
      required the Borrower to modify the Loan Agreement as set forth herein, and
      the
      Borrower executes this Addendum to amend the Loan Agreement as set forth
      below.

    

    AMENDMENT:

    

    The
      Loan
      Agreement is hereby amended as follows:

    

    1. Section
      2.1.2 of the Loan Agreement is hereby deleted in its entirety and this now
      Section 2.1.2 is substituted in its place:

     

    2.1.2 Limitations
      on Revolving Loan.
      Notwithstanding anything contained in this Agreement to the contrary, including,
      without limitation, the provisions of the foregoing Section 2.1.1. the aggregate
      outstanding principal balance of Advances under the Revolving Loan (the “Total
      Outstandings”) at any one time shall not exceed the lesser of (a) the original
      principal amount of the Revolving Note, or (b) the Borrowing Base (hereinafter
      defined). In the event that the Total Outstandings at any time exceeds the
      Borrowing Base, Borrower shall pay to Lender the amount of such excess within
      three (3) business days of receipt by Borrower of written notice of such excess
      from Lender. For purposes of this Agreement, the term “Borrowing Base” shall
      mean (i) from the date hereof until and including February 28, 2006,
      seventy-five percent (75%) of the net amount of Eligible Receivables, plus
      $2,000,000.00; (ii) from and including March 1, 2006 until and including March
      31, 2006, seventy-five percent (75%) of the net amount of Eligible Receivables,
      plus $1,500,000.00; (iii) from and including April 1, 2006 until and including
      July 31, 2006, seventy-five percent (75%) of the net amount of Eligible
      Receivables, plus $750,000.00; and (iv) from and including August 1, 2006 until
      and including the Termination Date, seventy-five percent (75%) of the net amount
      of Eligible Receivables.

    

    2. In
      all
      other respects, the Loan Agreement is hereby ratified and
      confirmed.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      Borrower has caused this Addendum to be duly executed and delivered by its
      proper and duly authorized representative as of the day and year first above
      written.

    

    
      	
              SOUTHPEAK
                INTERACTIVE, L.L.C.,

            
	
              a
                Virginia limited liability company

            
	 
	
              By:

            	
              /s/
                Terry M. Phillips 

            	
              (SEAL)

            
	 	
              Terry
                M. Phillips, Manager

            

    

     

    
      	
              SOUTHPEAK
                INTERACTIVE, LIMITED,

            
	
              a
                United Kingdom limited company

            
	 
	
              By:

            	
              /s/
                Greg Phillips 

            	
              (SEAL)

            
	
              Name:

            	
              Greg
                Phillips

            
	
              Title:

            	
              Secretary

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    SECOND
      ADDENDUM TO LOAN AGREEMENT

    

    THIS
      SECOND ADDENDUM TO LOAN AGREEMENT
      (this
“Addendum”), dated as of October 5, 2006, is made by SOUTHPEAK INTERACTIVE,
      L.L.C., a Virginia limited liability company (“SouthPeak”), SOUTHPEAK
      INTERACTIVE LIMITED, a United Kingdom limited company (“SouthPeak-UK”), jointly
      and severally (SouthPeak and SouthPeak-UK shall be referred to herein
      collectively or individually, whether one or more in number, as the “Borrower”),
      and provides as follows:

    

    RECITALS:

    

    A. The
      Borrower and SunTrust Bank (the “Bank”) are parties to that certain Loan
      Agreement dated December 16, 2005 pursuant to which the Bank agreed to provide
      a
      Revolving Line of Credit to the Borrower in the original principal amount of
      $5,000,000 (the “Loan Agreement”).

    

    B. The
      Bank
      has agreed to modify the Limitations on the Revolving Loan pursuant to the
      Loan
      Agreement.

    

    C. As
      a
      condition to modifying the limitations of the Revolving Loan, the Bank has
      required the Borrower to modify the Loan Agreement as set forth herein, and
      the
      Borrower executes this Addendum to amend the Loan Agreement as set forth
      below.

    

    AMENDMENT:

    

    The
      Loan
      Agreement is hereby amended as follows:

    

    1. Within
      Section 1.1.1 of the Loan Agreement, under the definition of eligible
      receivables, number “xiv” is hereby deleted in its entirety and this new “xiv”
is substituted in its place:

    

    (xiv)
      With the exception of Wal-Mart, the Accounts of any single debtor of Southpeak
      (together with the Accounts of all Affiliates of such account debtor) shall
      be
      eligible only to the extent that they do not exceed thirty-five percent (35%)
      of
      the total Accounts to Southpeak. Wal-Mart Accounts shall not exceed fifty
      percent (50%) of the total Accounts to Southpeak. The Lender reserves the right
      to amend these limits as they feel appropriate.

    

    2. In
      all
      other respects, the Loan Agreement is hereby ratified and
      confirmed.

    

    The
      Borrower has caused this Addendum to be duly executed and delivered by its
      proper and duly authorized representative as of the day and year first above
      written.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                SOUTHPEAK
                  INTERACTIVE. L.L.C.,

              
	 	
                a
                  Virginia limited liability company

              
	 	 
	 	
                By:

              	
                /s/
                  Terry M. Phillips

              	
                (SEAL)

              
	 	 	
                Terry
                  M. Phillips, Manager

              
	 	 
	 	
                SOUTHPEAK
                  INTERACTIVE. LIMITED,

              
	 	
                a
                  United Kingdom limited company

              
	 	 
	 	
                By:

              	
                /s/
                  Gregory R. Phillips

              	
                (SEAL)

              
	 	 	
                Gregory
                  R. Phillips, Director

              

      

    

    
      

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

      

    

     

    THIRD
      ADDENDUM TO LOAN AGREEMENT

    

    THIS
      THIRD ADDENDUM TO LOAN AGREEMENT (this
      “Addendum”), dated as of January 31, 2007, is made by SOUTHPEAK INTERACTIVE,
      L.L.C., a Virginia limited liability company (“SouthPeak”), SOUTHPEAK
      INTERACTIVE LIMITED, a United Kingdom limited company (“SouthPeak-UK”), jointly
      and severally (SouthPeak and SouthPeak-UK shall be referred to herein
      collectively or individually, whether one or more in number, as “Borrower”), and
      SUNTRUST BANK (“Lender”), and provides as follows:

    

    RECITALS:

    

    A. Borrower
      and Lender are parties to that certain Loan Agreement dated December 16, 2005
      pursuant to which Lender agreed to provide a Revolving Loan to Borrower in
      the
      original principal amount of $5,000,000 (as the same may have been amended
      from
      time to time, the “Loan Agreement”).

    

    B. Lender
      has agreed to renew and extend the Revolving Loan on the terms and conditions
      set forth herein.

    

    C. As
      a
      condition to renewing and extending the Revolving Loan, Lender has required
      Borrower to modify the Loan Agreement as set forth herein, and Borrower executes
      this Addendum to amend the Loan Agreement as set forth below.

    

    NOW,
      THEREFORE, in consideration of the foregoing recitals, which are incorporated
      herein by reference, of the mutual convenants and agreements contained herein
      and other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged, the parties hereto covenant and agree as
      follows:

    

    AGREEMENT:

    

    1. Defined
      Terms.
      This
      Addendum amends and supplements the Loan Agreement in certain respects. All
      capitalized words and terms used in this Addendum which are defined in the
      Loan
      Agreement shall have their defined meanings unless otherwise defined herein,
      which meanings shall be equally applicable to the singular and the plural forms
      of the words and terms defined.

    

    2. Amendments.
      The
      Loan Agreement is hereby amended as follows:

    

    a. The
      definition of “Termination Date” set forth in Section 1.1 of the Loan Agreement
      is hereby deleted in its entirety and replaced with the following:

    

    ““Termination
      Date” shall mean, with respect to the Revolving Loan, the earliest to occur
      of the following dates: (i) that date on which, pursuant to Section 7. Lender
      terminates the Revolving Loan (or the Revolving Loan is deemed automatically
      terminated) subsequent to the occurrence of an Event of Default; or (ii) April
      30, 2008, or such later date as to which Lender may agree in writing from time
      to time hereafter.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    b.
      The
      definition of “Eligible Receivables” set forth in Section 1.1 of the Loan
      Agreement is hereby amended by deleting clause (xiv) thereof and inserting
      in
      its place the following new clause (xiv):

    

    “(xiv)
      With the exception of Wal-Mart, the Accounts of any single debtor of Southpeak
      (together with the Accounts of all Affiliates of such account debtor) shall
      be
      eligible only to the extent that they do not exceed thirty-five percent (35%)
      of
      the total Accounts of Southpeak. Wal-Mart Accounts shall be eligible only to
      the
      extent that they do not exceed fifty percent (50%) of the total Accounts of
      Southpeak. Lender reserves the right to amend these limits from time to time
      and
      as Lender may determine in Lender’s sole discretion.”

    

    c.
      Section 2.1.2 of the Loan Agreement is hereby deleted in its entirety and
      replaced with the following:

    

    “2.1.2 Limitations
      on Revolving Loan.
      Notwithstanding anything contained in this Agreement to the contrary, including,
      without limitation, the provisions of the foregoing Section 2.1.1, the aggregate
      outstanding principal balance of Advances under the Revolving Loan (the “Total
      Outstandings”) at any one time shall not exceed the lesser of (a) the original
      principal amount of the Revolving Note, or (b) the Borrowing Base (hereinafter
      defined). In the event that the Total Outstandings at any time exceeds the
      Borrowing Base, Borrower shall pay to Lender the amount of such excess within
      three (3) business days of receipt by Borrower of written notice of such excess
      from Lender. For purpose of this Agreement, the term “Borrowing Base” shall mean
      (i) from the date hereof until and including June 30, 2007, seventy-five percent
      (75%) of the net amount of Eligible Receivables. Plus $3,000,000.00; and (ii)
      from and including July1, 2007 until and including the Termination Date,
      seventy-five percent (75%) of the net amount of Eligible
      Receivables.”

    

    d.
      The
      Loan Agreement is hereby amended by adding the following new Section
      4.19:

    

    “4.19 Minimum
      Personal Liquidity Covenant.
      Terry M.
      Phillips, Cathy S. Phillips, Gregory R. Phillips and Susan M. Phillips shall
      at
      all times own (free from Liens) a combined amount of cash and marketable
      securities valued at not less than Two Million and No Dollars ($2,000,000.00)
      Borrower shall provide to Lender, within twenty (20) days after the end of
      each
      calendar month (or at any other time reasonable requested by the Lender), copies
      of such accounts statements as Lender may request to evidence compliance with
      the foregoing financial covenant.”

    

    3.
      Loan
      Renewal Fee.
      In
      addition to the payment of any amounts owed to Lender under Section 2.2.2 of
      the
      Loan Agreement, Borrower shall also be obligated to pay Lender a one-time loan
      fee equal to $25,000.00, which shall be due, payable and deemed earned as of
      the
      date of this Addendum.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    4.
      Ratification.
      Except
      as modified by this Addendum, the Loan Agreement is hereby ratified and
      reaffirmed in its entirety.

    

    [Remainder
      of page intentionally left blank. Signature pages follow.]

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      parties have caused this Addendum to be duly executed as of the date first
      written above.

     

    
      
        	 	
                LENDER:

              
	 	 
	 	
                SUNTRUST
                  BANK

              
	 	 
	 	
                By:
                  

              	 	
                (SEAL)

              
	 	
                Name:

              	 
	 	
                Title:

              	 
	 	 
	 	
                BORROWER:

              
	 	 
	 	
                SOUTHPEAK
                  INTERACTIVE, L.L.C.,

              
	 	
                a
                  Virginia limited liability company

              
	 	 
	 	
                By:
                  

              	
                /s/
                  Terry M. Phillips

              	
                (SEAL)

              
	 	
                                  
                  Terry M. Phillips, Manager

              
	 	 
	 	
                SOUTHPEAK
                  INTERACTIVE LIMITED,

              
	 	
                a
                  United Kingdom limited company

              
	 	 
	 	
                By:
                  

              	
                /s/
                  Terry M. Phillips

              	
                (SEAL)

              
	 	
                                 
                  Terry M. Phillips, Director

              
	 	 
	 	
                By:
                  

              	
                /s/
                  Gregory R. Phillips 

              	
                (SEAL)

              
	 	
                                   Gregory
                  R. Phillips, Director

              

      

    

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    FOURTH
      ADDENDUM TO LOAN AGREEMENT

     

    THIS
      FOURTH ADDENDUM TO LOAN AGREEMENT
      (this
“Addendum”), dated as of August 6, 2007, is made by SOUTHPEAK INTERACTIVE,
      L.L.C., a Virginia limited liability company (“SouthPeak”), SOUTHPEAK
      INTERACTIVE LIMITED, a United Kingdom limited company (“SouthPeak-UK”), jointly
      and severally (SouthPeak and SouthPeak-UK shall be referred to herein collective
      or individually, whether one or more in number, as “Borrower”), and SUNTRUST
      BANK (“Lender”), and provides as follows:

     

    RECITALS:

     

    A. Borrower
      and Lender are parties to that certain Loan Agreement dated December 16, 2005
      pursuant to which Lender agreed to provide a Revolving Loan to Borrower in
      the
      original principal amount of $5,000,000 (as the same may have been amended
      from
      time to time, the “Loan Agreement”).

     

    B. Lender
      has agreed to modify the Revolving Loan on the terms and conditions set forth
      herein.

     

    C. As
      a
      condition to modifying the Revolving Loan, Lender as required Borrower to modify
      the Loan Agreement as set forth herein, and Borrower executes this Addendum
      to
      amend the Loan Agreement as set forth below.

     

    NOW,
      THEREFORE, in consideration of the foregoing recitals, which are incorporated
      herein by reference, of the mutual covenants and agreements contained herein
      and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto covenant and agree as
      follows:

     

    AGREEMENT:

     

    1. Defined
      Terms.
      This
      Addendum amends and supplements the Loan Agreement in certain respects. All
      capitalized words and terms used in this Addendum which are defined in the
      Loan
      Agreement shall have their defined meanings unless otherwise defined herein,
      which meanings shall be equally applicable to the singular and the plural forms
      of the words and terms defined.

     

    2. Amendments.
      The
      Loan Agreement is hereby amended as follows:

     

    a. The
      definition of “Guarantors” set forth in Section 1.1 of the Loan Agreement is
      hereby deleted in its entirety and replaced with the following:

     

    “Guarantors”
shall
      mean, collectively: (i) Terry M. Phillips and Cathy S. Phillips; (ii) Gregory
      R.
      Phillips and Susan M. Phillips; (iii) Terry Phillips Sales, Inc., a Virginia
      corporation; (iv) Phillips Land, L.C., a Virginia limited liability company;
      and
      (v) C&K Development, LLC, a Virginia limited liability company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    b. The
      definition of “Revolving Loan” set forth in Section 1.1 of the Loan Agreement is
      hereby deleted in its entirety and replaced with the following:

     

    “Revolving
      Loan”
shall
      mean that certain extension of credit from Lender to Borrower for general
      corporate and working capital purposes, in the maximum principal amount of
      Nine
      Million and No/100 Dollars ($9,000,000.00), evidenced by the Revolving Note,
      all
      as more particularly described in the Loan Documents.

     

    c. The
      definition of “Revolving Note” set forth in Section 1.1 of the Loan Agreement is
      hereby deleted in its entirety and replaced with the following:

     

    “Revolving
      Note”
shall
      mean the promissory note, dated even date herewith, as amended or supplemented
      from time to time, in the original principal amount of Nine Million and No/100
      Dollars ($9,000,000.00), evidencing Borrower’s obligation to repay to Lender the
      Revolving Loan, together with interest together with any renewals, modifications
      or extensions thereof, in whole or in part.

     

    d. Section
      2.1.2 of the Loan Agreement is hereby deleted in its entirety and replaced
      with
      the following:

     

    “2.1.2 Limitations
      on Revolving Loan.
      

     

    (a) Notwithstanding
      anything contained in this Agreement to the contrary, including, without
      limitation, the provisions of the foregoing Section 2.1.1, the aggregate
      outstanding principal balance of the Advances under the Revolving Loan (the
      “Total Outstandings”) at any one time shall not exceed the lesser of (a) the
      Maximum Loan Amount (hereinafter defined), or (b) the Borrowing Base
      (hereinafter defined). In the event that the Total Outstandings at any time
      exceeds the Borrowing Base, Borrower shall pay to Lender the amount of such
      excess within three (3) business days of receipt by Borrower of written notice
      of such excess from Lender.

     

    (b) For
      purposes of this Agreement, the term “Maximum Loan Amount” shall mean: (i) from
      the date hereof until and including October 31, 2007, $9,000,000.00; (ii) from
      and including November 1, 2007 until and including November 30, 2007,
      $6,500,000.00; and (iii) from and including December 1, 2007 until and including
      the Termination Date, $5,000,000.00.

     

    (c) For
      purposes of this Agreement, the term “Borrowing Base” shall mean (i) from the
      date hereof until and including August 31, 2007, seventy-five percent (75%)
      of
      the net amount of Eligible Receivables, plus
      seventy-five percent (75%) of the amount of the Unencumbered Investment
      Portfolio (hereinafter defined), plus
      $2,179,000.00; and (ii) from and including September 1, 2007 until and including
      the Termination Date, sixty-five percent (65%) of the amount of Eligible
      Receivables.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (d) For
      purposes of this Agreement, the term “Unencumbered Investment Portfolio” shall
      mean: (i) the fair market value of SunTrust Investment Services, Inc. Account
      No. DFL-088676; plus
      (ii) the
      fair market value of SunTrust Investment Services, Inc. Account No. WAP-007390;
      minus
      (iii)
      the outstanding loan balance on SunTrust Commercial Loan obligation No.
      34432-67.

     

    (e) Lender
      shall have the right to modify the dates set forth above in Lender’s sole
      discretion in the event of any delays in Borrower’s release of the “Two Worlds”
video game.”

     

    3. Real
      Property Collateral.

     

    a. Borrower
      agrees that as additional security for the Obligations, Terry M. Phillips and
      Cathy S. Phillips (“Phillips”) shall execute and deliver to Lender one or more
      credit line deeds of trust of even date herewith, in form and substance
      satisfactory to Lender, from Phillips to the trustee or trustees named therein
      (the “Deeds of Trust”), which are to be recorded in the appropriate Circuit
      Court Clerk’s Office as a first priority lien against all of the rights, title
      and interests of Phillips in and to: (i) that certain real property located
      at
      14101 Thorney Court, Midlothian, Virginia; (ii) that certain real property
      located at 1105 Beechnut Lane, Moneta, Virginia; (iii) that certain real
      property known as Thaxton Lots 8&9 at Smith Mountain Lake, Moneta, Virgina
      (collectively, the “Real Property”). Borrower covenants to Lender that from and
      after the date hereof, and so long as any amount remains unpaid on account
      of
      any of the Obligations or the Loan Agreement remains effective (whichever is
      the
      last to occur), Lender shall at all times have a first priority lien against
      all
      of the rights, title and interests of Phillips in and to the Real
      Property.

     

    b. Lender
      shall be entitled to obtain, at Borrower’s sole expense an ALTA mortgagee title
      insurance policy in the form acceptable to Lender issued with respect to the
      Real Property and insuring the lien of the Deeds of Trust encumbering the Real
      Property. Such title insurance policy shall (i) provide coverage in an amount
      equal to the collective fair market value of the Real Property, (ii) insure
      Lender that the Deeds of Trust create a valid first priority lien on the Real
      Property encumbered thereby, free and clear of the exceptions from coverage
      other than standard exceptions and exclusions from coverage (as modified by
      the
      terms of any endorsements) and exceptions that do not affect the insurability
      or
      marketability of title or the value or use of the Real Property, (iii) contain
      such endorsements and affirmative coverages as Lender may reasonably request,
      and (iv) name Lender, its successors and assigns, as the insured. Should any
      title insurance commitment obtained by Lender reveal the existence of prior
      deeds of trust, judgment liens or other encumbrances that would cause the Deeds
      of Trust not to be a valid first priority lien on the Real Property encumbered
      thereby, Lender shall be entitled to (i) require Borrower to take such actions,
      at its sole expense, as are deemed necessary by Lender to remove such existing
      deeds of trust, judgment liens or other encumbrances, or (ii) require Borrower
      or one or more Guarantors to provide substitute collateral for the Real
      Property.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    4. Guaranty
      and Security Agreement of C&K.
      Borrower agrees that as additional security for the Obligations, C&K
      Development, LLC, a Virginia limited liability company (“C&K”) shall execute
      and deliver to Lender a Guaranty Agreement, Security Agreement and Assignment
      of
      Deed of Trust Note and Deed of Trust, and Notice Assignment of Deed of Trust
      Note, each of even date herewith and in form and substance satisfactory to
      Lender, to guarantee

    the
      Obligations and to assign to Lender all of C&K’s rights, title and interests
      in and to: (i) that certain Deed of Trust Note (the “C&K Note”) dated
      January 19, 2006 in the amount of $1,326,023.37 and made by Sabot Creek
      Development Group, LLC, a Virginia limited liability company (“SCDG”); and (ii)
      that certain Deed of Trust ( the “C&K Deed of Trust”) made by SCDG dated
      January 19, 2006 and recorded on January 20, 2006, as Instrument Number
      060000313 in the Clerk’s Office, Circuit Court, Goochland County, Virginia.
      Borrower covenants to Lender that from and after the date hereof, and so long
      as
      any amount remains unpaid on account of any of the Obligations or the Loan
      Agreement
      remains effective (whichever is the last to occur),  Lender shall at all
      times have a first priority lien against all of the rights, title
      and interests of C&K in and to the C&K Note and the C&K Deed of
      Trust.

    

    5.
      Examination.
      Without
      limiting the generality of Lender’s inspection rights under Section 4.4 of the
      Loan Agreement, Borrower agrees that Lender (or any person or persons designated
      by it) shall, at Borrower’s expense, conduct a field exam/audit of Borrower’s
      books, records and assets on or before September 21, 2007.

    

    6.
      Commitment
      Fee.
      In
      addition to the payment of any amounts owed to Lender under Section 2.2.2 of
      the
      Loan Agreement, Borrower shall also be obligated to pay Lender a one-time
      commitment fee equal to $40,000.00, which sum shall be due and payable as
      follows: (a) $10,000.00 shall be paid as of the date of this Addendum; and
      (b)
      $30,000.00 shall be paid on or before October 31, 2007.

    

    7.
      Reimbursement.
      Pursuant to Section 9.6 of the Loan Agreement, Borrower shall pay to Lender
      on
      demand all out-of-pocket costs and expenses that Lender pays or actually incurs
      in connection with this Addendum and the other Loan Documents executed in
      connection herewith, including, without limitation all title insurance premiums,
      recording and filing fees or taxes, the fees and costs of Lender’s counsel and
      all other third party out-of-pocket expenses incurred in connection with the
      Real Property, the Deeds of Trust, the C&K Note and the C&K Deed of
      Trust.

    

    8.
      Ratification.
      Except
      as modified by this Addendum, the Loan Agreement is hereby ratified and
      reaffirmed in its entirety.

    

    [Remainder
      of page intentionally left blank. Signature pages follow.]

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      parties have caused this Addendum to be duly executed as of the date first
      written above.

    

      
        	
                 

              	
                LENDER:

              
	 	 
	
                 

              	
                SUNTRUST
                  BANK

              
	 	 
	
                 

              	
                By:
                  __________________________________(SEAL)

              
	
                 

              	
                Name:
                  ______________________________________

              
	
                 

              	
                Title:
                  _______________________________________

              
	 	 
	
                 

              	
                BORROWER:

              
	 	 
	
                 

              	
                SOUTHPEAK
                  INTERACTIVE, L.L.C.,

              
	
                 

              	
                a
                  Virginia limited liability company

              
	 	 
	
                 

              	
                By:
                  __________________________________(SEAL)

              
	
                 

              	
                Terry
                  M. Phillips, Manager

              
	 	 
	
                 

              	
                SOUTHPEAK
                  INTERACTIVE LIMITED

              
	
                 

              	
                a
                  United Kingdom limited company

              
	 	 
	
                 

              	
                By:
                  __________________________________(SEAL)

              
	
                 

              	
                Terry
                  M. Phillips, Director

              
	 	 
	
                 

              	
                By:
                  __________________________________(SEAL)

              
	
                 

              	
                Gregory
                  R. Phillips, Director

              

      

    

     

    
      
        
        

      

      
        5Exhibit 10.8

    

    SouthPeak
      Interactive, Sales Representative Agreement

     

    This
      Agreement ("Agreement") is made and entered into as of July 21, 2006, by and
      between SouthPeak Interactive LLC., ("Publisher"), a Virginia
      Corporation,
      with an
      address of 2900 Polo Parkway, Suite 104, Midlothian, VA 23113 U.S.A., and
Phillips
      Sales, Inc.("Representative"), a
      corporation, with an address of 2900
      Polo Parkway, Suite 200, Midlothian,VA 23113

     

    WHEREAS,
      Representative is engaged in the business of the sales and marketing of
      videogames, software and related products ("Products"), and maintains a sales
      force experienced in such sales;

     

    WHEREAS,
      Publisher is in the business of publishing and distributing the Products;
      and

     

    WHEREAS,
      Representative possesses the expertise and sales marketing knowledge consistent
      with the sales objectives of Publisher.

     

    NOW
      THEREFORE, the parties hereto agree as follows:

     

    1. Appointment

     

    Publisher
      hereby appoints Representative as an exclusive representative to sell the
      Products published by Publisher set forth in Schedule A, which is attached
      hereto and incorporated herein (the "Authorized Products"), solely in the
      territory set forth on Schedule B, attached hereto and incorporated herein
      (the
      "Authorized Territory"). Publisher may modify, discontinue or change the
      Authorized Products, and add or delete Authorized Products from Schedule A,
      in
      its sole discretion, upon written notice to Representative. During the Term
      (as
      defined below) of this Agreement, Representative shall have the right to sell
      the Authorized Products in the Authorized Territory to the account(s)
      specifically identified in Schedule C (the "Authorized Account(s)"). Nothing
      contained in this Agreement shall prohibit Publisher from marketing and selling,
      nor from appointing others to market and sell the Authorized Products to
      accounts other than the Authorized Account(s) or products not identified as
      Authorized Products to any account, including Authorized
      Account(s).

     

    2. Representative
      Obligations

     

    Representative
      hereby agrees to use its best efforts to promote the sale of the Authorized
      Products to Authorized Accounts in the Authorized Territory and to cooperate
      with Publisher in carrying out the Publisher's sales programs. To this end,
      Representative shall, without limitation:

     

    (a) Maintain
      an office and staff in the Authorized Territory sufficient to meet obligations
      under this Agreement;

     

    (b) Contact
      all Authorized Accounts and potential accounts on a regular basis as agreed
      upon
      with the Publisher's sales management;

     

    (c) Cooperate
      at the request of Publisher and furnish such information concerning the credit
      standing and accounts payables of Authorized Accounts in the Authorized
      Territory;

     

    (d) Be
      responsible for assisting Publisher in assuring the prompt payment from
      Authorized Accounts within their terms of credit extended by
      Publisher;

     

    (f)
      Provide such sales and lead reports and forecasts and such other information
      reasonably
      requested by Publisher, including, but not limited to, reports and forecasts
      regarding market conditions, pending business and contacts, problem areas,
      and
      sales plans and programs; and

    
       

      
        
          
          

        

        
          Page
            1 of
            10

          
            

          

        

        
          
          

        

      

    

     

    (g)
      Provide necessary and reasonable customer support and consultation, including
      accommodating customer relations and inquiries.

     

    3. Purchase
      Orders

     

    All
      purchase orders for the Authorized Products received by Representative shall
      be
      promptly forwarded to Publisher and each Authorized Account order submitted
      by
      Representative for the Authorized Products shall be subject to Publisher's
      prior
      approval and acceptance. Representative shall have no authority to accept or
      reject any orders for or in the name of Publisher or in any other way to bind
      or
      to enter into contractual commitments for or on behalf of Publisher and
      Representative will so inform all Authorized Accounts in the Authorized
      Territory. In all cases the documents forwarded to Publisher shall be the
      original order documents received from the Authorized Account. Publisher may
      accept orders by telephone or other electronic means, but in all such cases
      the
      Representative shall promptly forward to Publisher the supporting original
      purchase order document. Unless otherwise agreed upon by Publisher and
      Representative, Publisher shall ship all of the Authorized Products directly
      to
      the Authorized Accounts from such location(s) as Publisher shall
      determine.

     

    4. Terms
      of Sale

     

    Publisher
      shall at prices and upon terms and conditions establish Sale of the Authorized
      Products. At its sole discretion, Publisher shall have the right at any time
      to
      establish or change its prices, account price list, discount rates, terms and
      conditions of sale, warranty, delivery and packaging charges, methods of payment
      and any other matters relating to the sale of the Authorized Products and to
      discontinue offering any Authorized Product without thereby incurring any
      obligation or liability to Representative.

     

    5. OEM
      Accounts and License Transaction

     

    This
      Agreement does not apply to sales to "original equipment manufacturers" now
      or
      hereafter designated by Publisher in its sole discretion, nor does it apply
      to
      transactions with Authorized Accounts or other accounts who obtain rights in
      the
      Authorized Products by license rather than purchase. Representative shall not
      have the right to negotiate or enter into any such agreements with any third
      parties and no commissions and/or compensation shall be payable to
      Representative from sales to, by or through original equipment manufacturers'
      or
      licensees or sublicenses of the Publisher.

     

    6. Records
      and Reports

     

    During
      the Term and for a period of one (1) year thereafter, Representative shall
      maintain complete and accurate books and records and retain originals or copies
      of all correspondence with Authorized Accounts and all other correspondence
      of
      any kind relating to all obligations of Representative under this Agreement.
      Publisher, or its designee, upon reasonable notice shall have the right at
      any
      time during the Term of this Agreement, and for a period of one (1) year
      thereafter, to make an examination of such books, records and correspondence
      maintained by the Representative hereunder.

     

    
      
        
        

      

      
        Page
          2 of
          10

        
          

        

      

      
        
        

      

       

    

    7.
      Compensation

     

    Publisher
      agrees to compensate Representative at the rate of three percent (3%) of the
      Net
      Receipts (as defined herein) for sales of the Authorized Products made by
      Representative to Authorized Accounts (the "Commission Rate"). In addition,
      Publisher may change the Commission Rate for Authorized Accounts and add
      Authorized Accounts with different Commission Rates to this Agreement from
      time
      to time. Net Receipts are defined as all money actually received by Publisher
      from the Authorized Account(s) for the purchase of Authorized Products, reduced
      by any marketing discount funds, discounts, returns or allowances, price
      protections, credits or other adjustments, applicable taxes, shipping and
      handling. All sales commissions due hereunder shall be payable to Representative
      on the last day of the month following the month in which Publisher receives
      Net
      Receipts from the Authorized Accounts. Commissions shall be considered as earned
      as of the date of payment of Net Receipts to Publisher by Representative's
      Authorized Account.

     

    8.
      Term

     

    The
      initial term (the "Initial Term") of this Agreement shall commence as of the
      date of this Agreement and continue for a term of one (1) year, unless sooner
      terminated in accordance with Section 9 below. Publisher may extend the term
      for
      an additional one (1) year period (the "Renewal Term") by giving Representative
      written notice thereof within thirty (30) days of the end of the Initial Term.
      The Initial Term and Renewal Term, if any, are hereinafter collectively referred
      to as the Term.

     

    9. Termination

     

    (a) During
      the Term, Publisher may terminate this Agreement or the exclusive nature of
      the
      appointment of Representative as set forth in Section 1, upon either (1)
      immediate written notice if Representative is in material breach of any
      representation, warranty, indemnification or any other provision of this
      Agreement; or, (2) ten (10) days written notice by Publisher, for any other
      reason at Publisher's sole discretion. During the Term, Representative may
      terminate this Agreement upon thirty (30) days prior written notice, if
      Publisher is in material breach of this Agreement, and fails to cure that breach
      within thirty (30) days after receipt of written notice thereof.

     

    (b) Upon
      expiration or termination of this Agreement, representative shall return to
      Publisher all technical, sales, advertising and promotional materials and
      packages, cartons, labels, containers and similar items pertaining to the
      Authorized Products and samples of the Authorized Products or, at Publisher's
      option, shall take such other action with respect to such items as requested
      by
      Publisher. Publisher shall also have the right to inspect and make copies of
      all
      or any portion of any documents regarding fulfillment of Representative's
      obligations assumed under this Agreement as per Section 6 of this Agreement.
      Adjustment and/or payment of all claims between Representative and Publisher
      shall occur no later than one (1) year after the effective date of expiration
      or
      termination of this Agreement, except that no commission shall be paid to
      Representative on account of orders shipped to any Authorized Account if (1)
      any
      proceedings have been threatened or commenced against such account under any
      bankruptcy, insolvency, or debtor's relief law (until such proceeding has been
      vacated or set aside) and (2) any payments received by Publisher from such
      Authorized Account might be required, in Publisher's sole judgment, to be paid
      over to a trustee or other person in connection with such proceeding.
      Representative shall repay any commissions received which are attributed to
      goods paid for if such payments are required to be refunded pursuant to a
      judgment or order issued from such proceeding.

    
      
        
        

      

      
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    (c)
      This
      Agreement and all privileges, rights and obligations herein shall terminate
      except that Representative's obligations under Section 6 and under Sections
      10,
      12, 13, 14, 16, 18, 19, 24 and 25 shall survive the termination or expiration
      of
      this Agreement.

     

    10. Proprietary
      Rights

     

    Ownership
      of all applicable copyrights, trade secrets, patents and other intellectual
      property rights in the Authorized Products shall remain vested in Publisher,
      or
      in Publisher's licensors. Representative shall not remove Publisher's copyright
      and/or trademark notices, restricted rights legends or any other notices from
      the Authorized Products. Representative shall fully cooperate with Publisher
      in
      any action relating to enforcement of Publisher's proprietary
      rights.

     

    11. No
      Representations

     

    Representative
      may not make any contracts or commitments on behalf of Publisher nor make any
      warranties or other representations regarding the Authorized Products other
      than
      those previously authorized by Publisher in writing.

     

    12. Representations
      & Warranties

     

    Representative
      represents, warrants and covenants that: (i) it has full power and authority
      to
      enter into this Agreement and to carry out its obligations hereunder; (ii)
      this
      Agreement has been duly authorized, executed and delivered by Representative
      and
      constitutes a legally enforceable agreement of Representative; (iii) this
      Agreement is not limited or restricted by, and is not in conflict with, any
      commercial arrangements, obligations, contract, agreement or other instrument
      to
      which Representative is either bound or subject; (iv) the performance of this
      Agreement by Representative shall not infringe any intellectual property rights
      of any person; and (v) Representative shall not violate any rules, regulations
      or laws in securing orders of the Authorized Products.

     

    Publisher
      represents and warrants that (i) it is a duly existing corporation under the
      laws of The State of Virginia; (ii) it has full power and authority to enter
      into this Agreement and to carry out its obligations hereunder; and (iii) to
      the
      best of Publisher's knowledge, the Authorized Products will not include any
      content matter or service that will infringe or misappropriate any rights of
      any
      third party.

     

    13. Indemnification

     

    Each
      party hereby agrees to defend, indemnify and hold, the other party, its
      shareholders, directors, officers, employees, parent companies, subsidiaries,
      and affiliates, harmless from and against any and all claims, liabilities,
      judgments, penalties, and taxes, civil and criminal, and all costs, expenses
      (including, without limitation, reasonable attorneys' fees) incurred in
      connection therewith, which any of them may incur or to which any of them may
      be
      subjected, arising out of or relating to a material breach of this Agreement
      or
      a breach of any representation and/or warranty of the other party.

     

    
      
        
        

      

      
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    14. Limitation

     

    ALL
      IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
      MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED.
      THE
      LIABILITY OF PUBLISHER, IF ANY, FOR DAMAGES RELATING TO ANY OF THE AUTHORIZED
      PRODUCTS WILL BE LIMITED TO AMOUNTS OWED PURSUANT TO PARAGRAPH 3 HEREOF AND
      WILL
      IN NO EVENT INCLUDE LOST PROFITS OR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
      ANY
      KIND EVEN IF PUBLISHER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
      DAMAGES.

     

    15. Independent
      Contractors

     

    It
      is
      expressly agreed that Publisher and Representative are acting hereunder as
      independent contractors and under no circumstances shall any of the employees
      of
      one party be deemed the employees of the other for any purpose. This Agreement
      shall not be construed as authority for either party to act for the other party
      in any agency or other capacity, or to make commitments of any kind for the
      account of or on behalf of the other except to the extent and for the purposes
      provided for herein.

     

    16. Confidentiality

     

    During
      the Term of this Agreement and for a period of three (3) years from the
      expiration or earlier termination of this Agreement, Representative will regard
      and preserve as strictly confidential all information and material, including
      the terms and conditions of this Agreement, marketing information, manufacturing
      information, and customer or client information, provided by Publisher
      (hereinafter "Confidential Information"). Representative further acknowledges
      and agrees that, in the event of a breach or threatened breach of this Section
      16, Publisher shall have no adequate remedy in money or damages and,
      accordingly, shall be entitled to preliminary, permanent and other injunctive
      relief without having to post bond. Representative represents and warrants
      that
      all of its employees and/or contractors who will have access to any Confidential
      Information of Publisher have entered, or will enter, into a confidentiality
      agreement no less restrictive than the terms of this Section 16.

     

    17. Severability

     

    In
      the
      event any portion of this Agreement is declared void by any court or tribunal
      of
      competent jurisdiction then, in that event, that portion shall be deemed severed
      from this Agreement, and the remaining portions hereof shall remain in full
      force and effect.

     

    18. Assignment

     

    Representative
      may not assign this Agreement (including by operation of law) or any obligations
      herein (including, but not limited to, hiring of non-employees and/or
      sub-representatives) without the prior written consent of Publisher. Any
      purported assignment without such written consent shall be unenforceable and
      shall have no force or effect. The provisions of the Agreement shall be binding
      upon and shall inure to the benefit of the parties hereto, their heirs,
      administrators, successors and assigns.

     

    
      
        
        

      

      
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    19. Notices

     

    Ail
      notices and statements shall be in writing and shall, together with any
      payments, be delivered personally by hand delivery or by United States Postal
      Service, certified, return receipt requested, Federal Express or other
      internationally recognized receipted overnight or courier service, postage
      prepaid, or sent by a confirmed (confirmation report printed) facsimile
      transmission with follow up copy sent by the aforesaid means (failure to send
      follow up copy by other means shall be deemed failed delivery of notice), to
      the
      intended party at the address set forth at the beginning of this Agreement
      (unless notification of a change of address is given in writing). Notice shall
      be deemed delivered upon the date of personal delivery or facsimile transmission
      or the date of delivery as indicated by Federal Express or other internationally
      recognized receipted overnight or courier service, or the date indicated on
      the
      return receipt from the United States Postal Service.

     

    20. Complete
      Agreement

     

    This
      Agreement, together with the annexed Schedules constitutes the entire agreement
      between the parties with respect to the subject matter hereof and supersedes
      all
      previous proposals, both oral and written, negotiations, representations,
      commitments, writings and all other communications between the parties. This
      Agreement may not be modified except by a writing signed by a duly authorized
      representative of each of the parties.

     

    21. Force
      Majeure

     

    Publisher
      shall not be liable or deemed to be in default for any delay or failure in
      performance under this Agreement resulting directly or indirectly from acts
      of
      God, or any causes beyond the reasonable control of Publisher.

     

    22. No
      Waiver

     

    Failure
      by Publisher or Representative, in any one or more instances, to enforce any
      of
      its rights in connection with this Agreement, or to insist upon the strict
      performance of the terms of this Agreement or its Schedules, shall not be
      construed as a waiver or a relinquishment of any such rights for any other
      breach or enforcement thereof.

     

    23. Counterparts

     

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

     

    24. Governing
      Law

     

    This
      Agreement and the Appendices shall be construed in accordance with the laws
      of
      the United States and the State of Virginia applicable to agreements executed
      and wholly performed therein. The parties hereto agree that any dispute arising
      out of or relating to this Agreement shall be instituted and prosecuted in
      the
      courts of competent jurisdiction of the State of Virginia located in Richmond,
      VA and the parties hereto irrevocably submit to the jurisdiction of said courts
      and waive any rights to object to or challenge the appropriateness of said
      forums. Representative hereby agrees to accept service of process pursuant
      to
      the notice provisions hereunder and waives any and all objections to venue,
      jurisdiction or service of process.

     

    25. Remedies

     

    Except
      as
      otherwise provided in this Agreement, all of Publisher's rights and remedies
      herein or otherwise shall be cumulative and none of them shall be in limitation
      of any other right or remedy in law and/or equity

     

    
      
        
        

      

      
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    26.
      No Offer

     

    This
      document shall not be deemed an offer and shall not be binding unless signed
      by
      a duty authorized representative or officer of Publisher and
      Representative.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      set forth above.

     

    
      
        	PUBLISHER	 	REPRESENTATIVE
	 	 	 	 	 
	
                By: 

              	/s/
                Gregory Phillips	 	
                By: 

              	/s/
                Gregory Phillips
	
                Duly
                  authorized for SouthPeak Interactive 

              	 	Duly
                authorized for Phillips Sales, Inc. 
	
                Print
                  Name:   Gregory
                  Phillips

              	 	Print Name: 
Greg
                Phillips
	
                Print
                  Title:     Secretary /
                  Treasurer

              	 	
                Print
                  Title:    Sec /
                  Tres

              

      

       

    

    
      
        
        

      

      
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    SCHEDULE
      A

    
AUTHORIZED
      PRODUCTS

     

    New
      video
      software products for:

     

    
      	
            	
              ·

            	
              Microsoft
                Windows PC

            

    

    
      	
            	
              ·

            	
              Microsoft
                Xbox

            

    

    
      	
            	
              ·

            	
              Nintendo
                Game Boy Advance

            

    

    
      	
            	
              ·

            	
              Nintendo
                GameCube

            

    

    
      	
            	
              ·

            	
              Sony
                PlayStation (PSOne)

            

    

    
      	
            	
              ·

            	
              Sony
                PlayStation 2

            

    

     

    Excludes
      sales of "used", "customer returns" or "defectives" to any
      accounts.

     

    
      
        
        

      

      
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    SCHEDULE
      B

    

      “AUTHORIZED
        TERRITORY”

       

    

    NA

     

    
      
        
        

      

      
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          9 of
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    SCHEDULE
      C

    

      “AUTHORIZED
        ACCOUNT(S)”

Blockbuster

    

     

    Circuit
      City

     

    CompUSA

     

    Gamestop
      Texas LP

     

    Ingram
      Entertainment

     

    US1

     

    VPD

     

    Wal-Mart

     

    
      
        
        

      

      
        Page
          10
          of 10

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