Document:

Execution
Copy

     

    NOTE
PURCHASE AND SECURITY AGREEMENT

     

    by
and among

     

    SOUTHPEAK
INTERACTIVE CORPORATION

     

    and

     

    THE
PURCHASERS IDENTIFIED HEREIN

     

    April
29,  2010

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Execution
Copy

     

    TABLE OF
CONTENTS

     

    
      
        
          
            
              
                
                  
                    
                      
                        	Article
      I DEFINITIONS AND INTERPRETATION	
                                1

                              
	 	
                                1.1

                              	
                                Definitions

                              	
                                1

                              
	 	
                                1.2

                              	
                                Other
      Defined Terms

                              	
                                4

                              
	Article
      II PURCHASE AND SALE OF THE NOTES	
                                4

                              
	 	
                                2.1

                              	
                                Authorization
      of Issuance of the Notes

                              	
                                4

                              
	 	
                                2.2

                              	
                                Purchase
      and Sale of Initial Closing Notes

                              	
                                5

                              
	 	
                                2.3

                              	
                                Purchase
      and Sale of Additional Notes

                              	
                                5

                              
	 	
                                2.4

                              	
                                Use
      of Proceeds

                              	
                                5

                              
	 	
                                2.5

                              	
                                Initial
      Closing

                              	
                                5

                              
	 	
                                2.6

                              	
                                Subsequent
      Closings

                              	
                                6

                              
	Article
      III TERM OF THE NOTES, SECURITY FOR THE NOTES, SUBORDINATION,
      PRIORITY	
                                6

                              
	 	
                                3.1

                              	
                                General

                              	
                                6

                              
	 	
                                3.2

                              	
                                Security

                              	
                                6

                              
	 	
                                3.3

                              	
                                Subordination

                              	
                                6

                              
	Article
      IV REPRESENTATIONS AND WARRANTIES OF THE BORROWER and the
      Subsidiaries	
                                6

                              
	 	
                                4.1

                              	
                                Organization
      and Qualification

                              	
                                7

                              
	 	
                                4.2

                              	
                                Capitalization

                              	
                                7

                              
	 	
                                4.3

                              	
                                Authority
      Relative to this Agreement

                              	
                                7

                              
	 	
                                4.4

                              	
                                No
      Conflict; Required Filings and Consents

                              	
                                7

                              
	 	
                                4.5

                              	
                                Reporting
      Company Status

                              	
                                8

                              
	 	
                                4.6

                              	
                                Exchange
      Act Filings; Financial Statements

                              	
                                8

                              
	 	
                                4.7

                              	
                                Offering
      Exemption

                              	
                                9

                              
	 	
                                4.8

                              	
                                Brokers
      or Finders

                              	
                                9

                              
	Article
      V REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS	
                                9

                              
	 	
                                5.1

                              	
                                Organization
      and Qualification

                              	
                                9

                              
	 	
                                5.2

                              	
                                Authorization

                              	
                                9

                              
	 	
                                5.3

                              	
                                Purchase
      Entirely for Own Account

                              	
                                9

                              
	 	
                                5.4

                              	
                                Disclosure
      of Information

                              	
                                9

                              
	 	
                                5.5

                              	
                                Investment
      Experience

                              	
                                9

                              
	 	
                                5.6

                              	
                                Accredited
      Investor

                              	
                                10

                              
	 	
                                5.7

                              	
                                Restricted
      Securities; Legends

                              	
                                10

                              
	 	
                                5.8

                              	
                                No
      General Solicitation

                              	
                                10

                              
	 	
                                5.9

                              	
                                Prohibited
      Transactions

                              	
                                10

                              
	 	
                                5.10

                              	
                                Brokers
      or Finders

                              	
                                10

                              
	Article
      VI CONDITIONS OF THE PARTIES	
                                11

                              
	 	
                                6.1

                              	
                                Conditions
      of Purchasers’ Obligations at any Closing

                              	
                                11

                              
	 	
                                6.2

                              	
                                Conditions
      of Initial Purchasers’ Obligations at the Initial Closing

                              	
                                11

                              
	 	
                                6.3

                              	
                                Conditions
      of Additional Purchasers’ Obligations at any Subsequent
      Closing

                              	
                                12

                              
	 	
                                6.4

                              	
                                Conditions
      of Borrower’s and the Subsidiaries’ Obligations at any
    Closing

                              	
                                12

                              
	Article
      VII EVENTS OF DEFAULT AND REMEDIES	
                                12

                              
	 	
                                7.1

                              	
                                Events
      of Default

                              	
                                12

                              
	 	
                                7.2

                              	
                                Exercise
      of Remedies

                              	
                                14

                              

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              	 	
                      7.3

                    	
                      Waiver
      of Defaults

                    	
                      14

                    
	Article
      VIII SURVIVAL AND INDEMNIFICATION	
                      14

                    
	 	
                      8.1

                    	
                      Survival

                    	
                      14

                    
	 	
                      8.2

                    	
                      Indemnification

                    	
                      14

                    
	 	
                      8.3

                    	
                      Conduct
      of Indemnification Proceedings

                    	
                      15

                    
	Article
      IX GENERAL PROVISIONS	
                      15

                    
	 	
                      9.1

                    	
                      Guaranty

                    	
                      15

                    
	 	
                      9.2

                    	
                      Security

                    	
                      15

                    
	 	
                      9.3

                    	
                      Notices

                    	
                      17

                    
	 	
                      9.4

                    	
                      Counterparts

                    	
                      17

                    
	 	
                      9.5

                    	
                      Entire
      Agreement; Nonassignability; Parties in Interest

                    	
                      17

                    
	 	
                      9.6

                    	
                      Successors
      and Assigns

                    	
                      17

                    
	 	
                      9.7

                    	
                      Severability

                    	
                      17

                    
	 	
                      9.8

                    	
                      Other
      Remedies

                    	
                      18

                    
	 	
                      9.9

                    	
                      Amendments
      and Waivers

                    	
                      18

                    
	 	
                      9.10

                    	
                      Delays
      or Omissions

                    	
                      18

                    
	 	
                      9.11

                    	
                      Exchanges;
      Lost, Stolen or Mutilated Notes

                    	
                      18

                    
	 	
                      9.12

                    	
                      Governing
      Law

                    	
                      18

                    
	 	
                      9.13

                    	
                      Rules
      of Construction

                    	
                      19

                    
	 	
                      9.14

                    	
                      Pro
      Rata

                    	
                      19

                    
	 	
                      9.15

                    	
                      More
      Favorable Terms

                    	
                      19

                    
	 	
                      9.16

                    	
                      Appointment
      of Attorney-in-Fact..

                    	
                      19

                    

            

          

        

      

    

     

    EXHIBITS

     

    
      
        	
                Exhibit
      A

              	
                -

              	
                Form
      of Note

              
	 
      	 
      	 
      
	
                Schedule
      I

              	
                -

              	
                Initial
      Purchasers

              
	 
      	 
      	 
      
	
                Schedule
      II

              	
                -

              	
                Additional
      Purchasers

              
	 
      	 
      	 
      
	
                Schedule
      III

              	 
      	
                Collateral

              

      

    

    

    
      
         

      

      
        - ii
-

        
          

        

      

      
         

      

    

     

    Execution Copy

     

    NOTE
PURCHASE AND SECURITY AGREEMENT

     

    This Note
Purchase and Security Agreement (this “Agreement”) is made
on the 29th day of April, 2010, by and among SouthPeak Interactive Corporation,
a Delaware corporation (the “Borrower”), the
Subsidiaries of the Borrower as guarantors, and the purchasers listed on Schedule I hereto,
each of which is herein referred to as an “Initial Purchaser”
and the purchasers listed from time to time on Schedule II hereto,
each of which is herein referred to as an “Additional
Purchaser”, and collectively, as the “Purchasers”.

     

    Whereas,
subject to the terms and conditions set forth herein, the Borrower desires to
issue and sell to the Initial Purchasers on the Initial Closing Date junior
secured subordinated convertible promissory notes in the aggregate principal
amount of not greater than $5,000,000 maturing on the Maturity Date (each, an
“Initial Closing
Note” and, collectively, the “Initial Closing
Notes”), and the Initial Purchasers shall purchase the Initial Closing
Notes from the Borrower on the terms and conditions set forth
herein;

     

    Whereas,
subject to the terms and conditions set forth herein, the Borrower desires to
issue and sell to the Additional Purchasers on any Subsequent Closing Date
junior secured subordinated convertible promissory notes (each, an “Additional Note” and,
collectively, the “Additional Notes”
and, together with the Initial Closing Notes, the “Notes”), in an
aggregate principal amount which together with the aggregate principal amount of
the Initial Closing Notes does not exceed $5,000,000 maturing on the Maturity
Date, and such Additional Purchasers shall purchase such Additional Notes from
the Borrower on the terms and conditions set forth herein; and

     

    Whereas,
the boards of directors or other applicable governing bodies of the Borrower and
the Subsidiaries have approved the execution and delivery of this Agreement, all
ancillary agreements related hereto, and the transactions contemplated
hereby.

     

    Now,
Therefore, in consideration of the premises and agreements contained in this
Agreement, and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as
follows:

     

    ARTICLE
I

    DEFINITIONS
AND INTERPRETATION

     

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

     

    “Affiliate(s)” means,
with respect to any Person, any other Person directly or indirectly controlling
(including but not limited to all directors and executive officers of such
Person), controlled by, or under direct or indirect common control with such
Person.  A Person shall be deemed to control a corporation for the purposes
of this definition if such Person possesses, directly or indirectly, the power
(i) to vote 10% or more of the securities having ordinary voting power for the
election of directors of such corporation or (ii) to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Closing” means each
of the Initial Closing and any Subsequent Closing.

     

    “Closing Date” means
each of the Initial Closing Date and any Subsequent Closing Date.

     

    “Common Stock” means
the common stock, par value $.0001 per share, of the Borrower.

     

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    “Governmental
Authority” means any government or political subdivision or any agency,
authority, bureau, central bank, commission, department or instrumentality of
either, or any court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic.

     

    “Indemnified Party”
means a Purchaser Indemnified Party or a Borrower Indemnified
Party.

     

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

     

    “Law” means any
foreign, federal, state or local law, statute, rule, regulation, ordinance,
code, directive, writ, injunction, decree, judgment or order applicable to the
Borrower.

     

    “Lien(s)” means any
mortgage, deed of trust, pledge, lien, security interest, charge or other
encumbrance or security arrangement of any nature whatsoever, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of,
security.

     

    “Loan Documents” means
the Notes and all agreements related hereto and thereto.

     

    “Losses” means claims,
losses (excluding losses of earnings), liabilities, obligations, payments,
damages (actual and direct), charges, judgments, fines, penalties, amounts paid
in settlement, costs and expenses (including, without limitation, interest which
may be imposed in connection therewith, costs and expenses of investigation,
actions, suits, proceedings, demands, assessments and reasonable fees, expenses
and disbursements of counsel, consultants and other experts); provided that
Losses shall not include punitive or consequential damages.

     

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

     

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

       

    

    “Maturity Date” means,
with respect to any Note, December 27, 2010.

     

    “Note Indebtedness”
means without duplication principal, interest, fees, expenses and other charges
or other indebtedness related to the Notes and indemnification obligations with
respect to the Notes, whether direct or indirect, absolute or contingent, of the
Borrower to any of the Purchasers in any manner and at any time, whether
evidenced by the Notes or arising under this Agreement, due or hereafter to
become due, now owing or that may be hereafter incurred by the Borrower to, any
of the Purchasers and any judgments that may hereafter be rendered on such
indebtedness or any part thereof, with interest according to the rates and terms
specified, or as provided by Law, and any and all consolidation, amendments,
renewals, replacements, substitutions or extensions of any of the
foregoing.

     

    “Permitted Liens”
means the following: (i) mechanics’, materialmen’s or similar inchoate Liens
arising or incurred in the ordinary course of business relating to liabilities
not yet due and payable; (ii) Liens for current taxes not yet delinquent, or the
validity of which is being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing foreclosure or enforcement of
such Liens and where adequate reserves are established and maintained in
accordance with generally accepted accounting principles; (iii) Liens or pledges
in connection with workmen’s compensation, unemployment insurance or other
social security obligations; (iv) deposits to secure the performance of
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of alike nature incurred in the ordinary course of
business, (v) Liens in favor of the Senior Lender or otherwise permitted by the
Senior Credit Facility, and (vi) the Liens evidenced by UCC-1 filings in favor
of  any seller or lessor of equipment, provided such Lien is limited to the
equipment obtained from such seller or lessor.

     

    “Person” means an
individual, corporation, limited liability company, partnership, trust,
incorporated or unincorporated organization, joint venture, joint stock company,
or a government or any agency or political subdivision thereof or other entity
of any kind.

     

    “SEC” means the
Securities and Exchange Commission.

     

    “Securities Act” means
the Securities Act of 1933, as amended.

     

    “Senior Credit
Facility” means, at any time, the credit facility evidencing Senior
Indebtedness.

     

    “Senior Indebtedness”
means indebtedness under the Senior Credit Agreement and/or indebtedness under
any future credit facility that is senior to, pari passu with, or a refinancing
of, the indebtedness outstanding under the Senior Credit Agreement.

     

    “Senior Lender” means
each holder of Senior Indebtedness.

     

    “Subsidiaries” means
the Subsidiaries of SouthPeak including SouthPeak Interactive, L.L.C., a
Virginia limited liability company and wholly-owned subsidiary of the Borrower
(“SouthPeak
LLC”), SouthPeak Interactive, Limited, a United Kingdom corporation and
wholly-owned subsidiary of SouthPeak LLC, Vid Sub, LLC, a Delaware limited
liability company and wholly-owned subsidiary of the Borrower (“Vid Sub”), Gone Off
Deep, LLC, a Delaware limited liability company and wholly-owned subsidiary of
Vid Sub (“Gamecock
LLC”), Gamecock Media Europe Limited, a United Kingdom corporation and
wholly-owned subsidiary of Gamecock LLC, and IRP GmbH, a Swiss corporation and
wholly-owned subsidiary of the Borrower.

     

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

       

    

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

     

    
      
        
          	
                  TERM

                	 
      	
                  SECTION

                
	 
      	 
      	 
      
	
                  Additional
      Note(s)

                	 
      	
                  Recitals

                
	
                  Additional
      Purchaser(s)

                	 
      	
                  Preamble

                
	
                  Agreement

                	 
      	
                  Preamble

                
	
                  Borrower

                	 
      	
                  Preamble

                
	
                  Borrower
      Entity

                	 
      	
                  8.1

                
	
                  Collateral

                	 
      	
                  3.2

                
	
                  Event
      of Default

                	 
      	
                  7.1

                
	
                  Gamecock
      LLC

                	 
      	
                  1.1

                
	
                  Indemnifying
      Party

                	 
      	
                  8.3

                
	
                  Initial
      Closing

                	 
      	
                  2.5

                
	
                  Initial
      Closing Date

                	 
      	
                  2.5

                
	
                  Initial
      Closing Note(s)

                	 
      	
                  Recitals

                
	
                  Initial
      Purchaser(s)

                	 
      	
                  Preamble

                
	
                  Notes

                	 
      	
                  Recitals

                
	
                  Prohibited
      Transaction

                	 
      	
                  5.9

                
	
                  Purchaser
      Entity

                	 
      	
                  8.1

                
	
                  Purchasers

                	 
      	
                  Preamble

                
	
                  SEC
      Reports

                	 
      	
                  4.6

                
	
                  Senior
      Credit Agreement

                	 
      	
                  3.3

                
	
                  SouthPeak
      LLC

                	 
      	
                  1.1

                
	
                  SouthPeak
      UK

                	 
      	
                  3.3

                
	
                  Subsequent
      Closing(s)

                	 
      	
                  2.6

                
	
                  Subsequent
      Closing Date

                	 
      	
                  2.6

                
	
                  SunTrust

                	 
      	
                  3.3

                
	
                  Trading
      Affiliates

                	 
      	
                  5.9

                
	
                  Vid
      Sub

                	 
      	
                  1.1

                

        

      

    

     

    ARTICLE
II

    PURCHASE
AND SALE OF THE NOTES

     

    2.1 
         Authorization of Issuance of
the Notes.

     

    (a) 
         Subject to the terms and conditions of this
Agreement, on or prior to the Initial Closing Date, the Borrower shall have
authorized the issuance and sale to the Initial Purchasers of the Initial
Closing Notes, in the form attached hereto as Exhibit
A.

     

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

       

    

    (b) 
         Subject to the terms and conditions of this
Agreement, on or prior to any Subsequent Closing Date, the Borrower shall have
authorized the issuance and sale to the Additional Purchasers of all Additional
Notes to be issued at any Subsequent Closing in the form attached hereto as
Exhibit
A.

     

    2.2 
         Purchase and Sale of Initial
Closing Notes. 
Subject to the terms and conditions of this Agreement, each Initial Purchaser,
severally and not jointly, agrees to purchase at the Initial Closing, and the
Borrower agrees to issue and sell to each such Initial Purchaser at the Initial
Closing an Initial Closing Note, dated as of the Initial Closing Date in the
original principal amount equal to the dollar amount set forth opposite such
Initial Purchaser’s name under the heading “Initial Closing Note
Purchase Price” on Schedule I hereto in
exchange for the amount set forth opposite such Initial Purchaser’s name under
the heading “Initial
Closing Note Purchase Price” on Schedule I
hereto.

     

    2.3 
         Purchase and Sale of
Additional Notes. 
At any time and from time to time, one or more Additional Purchasers may
purchase at one or more Subsequent Closings, Additional Notes, the aggregate
purchase price of which, together with the aggregate purchase price of the
Initial Closing Notes, shall not exceed $5,000,000.  Schedule II attached
hereto shall be amended from time to time concurrent with each Subsequent
Closing to include the names of the Additional Purchasers purchasing Additional
Notes at such Subsequent Closing, as well as the purchase price of the
Additional Notes. The aggregate purchase price for the Notes shall not exceed
$5,000,000.

     

    2.4 
         Use of
Proceeds. 
The Borrower agrees to use the net proceeds from the sale and issuance of the
Notes pursuant to this Agreement for working capital, videogame development,
product manufacturing and other general corporate purposes.

     

    2.5 
         Initial
Closing. 
The purchase and sale of the Initial Closing Notes shall take place at the
offices of Greenberg Traurig, LLP, 1750 Tysons Boulevard, Suite 1200, McLean,
Virginia 22102, promptly upon the satisfaction or waiver of the closing
conditions set forth in Sections 6.1, 6.2 and 6.4 hereto, but not
later than April 30, 2010, or on such other date and at such other time as the
Borrower and the Initial Purchasers, mutually agree upon (which time and place
is designated as the “Initial
Closing”).  The date of the Initial Closing is referred to herein as
the “Initial Closing
Date.”  At the Initial Closing, the Borrower shall deliver to each
Initial Purchaser Initial Closing Notes, in an original principal amount equal
to the dollar amount set forth opposite such Initial Purchaser’s name under the
heading “Initial
Closing Note Purchase Price” on Schedule I hereto,
against payment in the amounts set forth opposite such Initial Purchaser’s name
under the heading “Initial Closing Note
Purchase Price” on Schedule I hereto, by
any combination of check or wire transfer of immediately available funds to such
account as the Borrower designates.

     

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

       

    

    2.6 
         Subsequent
Closings. 
Upon the purchase of any Additional Notes subject to the satisfaction or waiver
of the closing conditions set forth in Sections 6.1, 6.3 and 6.4, Subsequent
Closings shall take place at the offices of Greenberg Traurig, LLP, 1750 Tysons
Boulevard, Suite 1200, McLean, Virginia 22102, on such date and at such time as
the Borrower and the applicable Additional Purchasers mutually agree upon (each,
a “Subsequent
Closing” and collectively, the “Subsequent
Closings”).  The date of each applicable Subsequent Closing is
referred to herein as a “Subsequent Closing
Date.”  At each Subsequent Closing, the Borrower shall deliver to
each Additional Purchaser an Additional Note, dated as of such Subsequent
Closing Date, in an original principal amount equal to the dollar amount set
forth opposite such Additional Purchaser’s name under the heading “Additional Note Purchase
Price” on Schedule II hereto,
which shall be updated by the Borrower from time to time as necessary upon each
Subsequent Closing, with respect to such Additional Purchaser, against payment
in the amounts set forth opposite such Additional Purchaser’s name under the
heading “Additional
Note Purchase Price” on Schedule II hereto,
by any combination of (i) check or (ii) wire transfer of immediately available
funds to such account as the Borrower designates.

     

    ARTICLE
III

    TERM OF
THE NOTES, SECURITY FOR THE NOTES, SUBORDINATION, PRIORITY

     

    3.1 
         General. 
The Notes shall be issued in the aggregate principal amount of up to $5,000,000
and shall bear interest, and otherwise be in the form attached hereto as Exhibit A. Payment of
all principal and accrued and unpaid interest on any Note shall be made in full
no later than the Maturity Date.

     

    3.2 
         Security. 
The Notes shall be equally and ratably secured by all of the assets of the
Borrower and the Subsidiaries pursuant to a security interest in and to all of
the Borrower’s and the Subsidiaries’ assets, including but not limited to all of
the assets set forth on Schedule III, whether
now owned or hereafter acquired or existing (the “Collateral”). 
Each Purchaser agrees that such security interest and any rights or remedies
available to it under this Agreement and the other Loan Documents may be
enforced only by the action of the holders of a majority of the Note
Indebtedness and that no holder of any Note shall have any right individually to
seek to enforce any such security interest or right or remedy under any Note or
to realize upon the security granted in any Note, it being understood and agreed
that such rights and remedies may be exercised by the holders of a majority of
the Note Indebtedness for the benefit of all such holders upon the terms of this
Agreement and the other Loan Documents.

     

    3.3 
         Subordination. The
indebtedness under the Notes (including the right of repayment of principal of
and interest on the Notes) and the security interest of the Purchasers in the
assets of the Borrower and the Subsidiaries shall be subordinated to (a) the
indebtedness and security interest of SunTrust Banks, Inc. (“SunTrust”) under the
Loan Agreement by and among SunTrust, the Borrower, SouthPeak LLC, and SouthPeak
Interactive Limited, a United Kingdom limited company (“SouthPeak UK”), dated
December 16, 2005, as amended (as may from time to time be further amended,
modified, supplemented or restated or refinanced with SunTrust, the “Senior Credit
Agreement”), and (b) the indebtedness of any other Senior Lender in
connection with any future Senior Credit Facility.

     

    ARTICLE
IV

    REPRESENTATIONS
AND WARRANTIES OF

    THE
BORROWER AND THE SUBSIDIARIES

     

    The
Borrower and the Subsidiaries, jointly and severally, represent and warrant to
each Purchaser as of the Initial Closing Date and in the case of any Additional
Purchasers as of such Subsequent Closing Date, the following:

     

    
      
         

      

      
        - 6
-

        
          

        

      

      
         

      

       

    

    4.1 
         Organization and
Qualification. 
Each of the Borrower and the Subsidiaries is duly organized, validly existing
and in good standing under the Laws of the jurisdiction or its incorporation or
organization and has the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as it is now
being or currently planned to be conducted.  Neither the Borrower nor any
Subsidiary is in violation of any of the provisions of its certificate of
incorporation, bylaws or other organizational documents.

     

    4.2 
         Capitalization. 
The Borrower’s periodic reports on Form 10-Q and Form 10-K and current reports
on Form 8-K filed with the SEC accurately reflect its capitalization as of the
dates indicated in such reports.  The issued and outstanding capital stock
of the Borrower (a) has been duly and validly issued; (b) is fully
paid and nonassessable; and (c) was not issued in violation of any
preemptive rights or rights of first refusal or first offer.

     

    4.3 
         Authority Relative to this
Agreement. 
The Borrower and each of the Subsidiaries has full corporate or other power and
authority to: (a) execute, deliver and perform this Agreement and each of
the Loan Documents it is a party thereto, (b) with respect to the Borrower only,
issue and sell the Notes to the Purchasers hereunder, and (c) carry out the
Borrower’s or the Subsidiary’s, as applicable, obligations hereunder and
thereunder and, to consummate the transactions contemplated hereby.  The
execution and delivery of this Agreement and the consummation by the Borrower
and each of the Subsidiaries of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate or other action on the
part of the Borrower and each of the Subsidiaries, and no other corporate or
other proceedings on the part of the Borrower or any of the Subsidiaries are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby.  This Agreement has been duly and validly executed and
delivered by the Borrower and each of the Subsidiaries and, assuming the due
authorization, execution and delivery thereof by the other parties hereto,
constitutes the legal and binding obligation of the Borrower and each of the
Subsidiaries, enforceable against them in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization or other similar Laws
affecting the enforcement of creditors’ rights generally and by general
principles of equity.

     

    4.4 
         No Conflict; Required
Filings and Consents.

     

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

     

    
      
         

      

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

     

    4.5 
         Reporting Company
Status. 
The Borrower is subject to the reporting requirements of the Exchange Act and
the Borrower has taken no action designed to, or which to its knowledge is
likely to, have the effect of, terminating the registration of the Common Stock
under the Exchange Act nor has the Borrower received any notification that the
SEC is contemplating terminating such registration.  The Common Stock is
traded on the Over-the-Counter bulletin board and the Borrower has not received
any notice regarding, and to the Borrower’s knowledge there is no threat of, the
termination or discontinuance of the eligibility of the Common Stock for such
trading.

     

    4.6 
         Exchange Act Filings;
Financial Statements. 
The Borrower has filed all reports, forms or other information required to be
filed by it under the Securities Act and the Exchange Act (the foregoing
materials being collectively referred to herein as the “SEC Reports”), except
as otherwise disclosed in any SEC Reports.  Except as otherwise disclosed
in any SEC Reports, as of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the SEC promulgated thereunder,
and none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.  The financial
statements of the Borrower included in the SEC Reports were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Borrower and the Subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

     

    
      
         

      

      
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    4.7 
         Offering
Exemption. 
Assuming the truth and accuracy of the representations and warranties contained
in Article V,
the offer and sale of the Notes as contemplated hereby and the issuance and
delivery to the Purchasers of the Notes are exempt from registration under the
Securities Act, and will be registered or qualified (or exempt from registration
or qualification) under applicable state securities and blue sky Laws, as
currently in effect.

     

    4.8 
         Brokers or
Finders. 
Except for Pelion Securities, no Person will have, as a result of the
transactions contemplated by this Agreement or the Loan Documents, any valid
right, interest or claim against or upon the Borrower or any of the Subsidiaries
for any commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of the Borrower or any
of the Subsidiaries.

     

    ARTICLE
V

    REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS

     

    As of the
Initial Closing Date or any Subsequent Closing Date, as the case may be, each
Purchaser severally and not jointly hereby represents and warrants to the
Borrower and each Subsidiary that:

     

    5.1 
         Organization and
Qualification. 
Such Purchaser, if such person is not an individual, is a validly existing
corporation, limited partnership or limited liability company and has all
requisite corporate, partnership or limited liability company power and
authority to invest in the purchase the Notes pursuant to this
Agreement.

     

    5.2 
         Authorization. 
The execution, delivery and performance by such Purchaser of this Agreement and
each Loan Document such Purchaser is a party have been duly authorized and each
will constitute the legal, valid and binding obligations of such Purchaser,
enforceable against such Purchaser in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors’
rights generally.

     

    5.3 
         Purchase Entirely for Own
Account. The
Notes will be acquired for investment for such Purchaser’s own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof.  Such Purchaser’s address is listed on Schedule I and II, as applicable,
attached hereto. Such Purchaser is aware that the Borrower is issuing the Notes
pursuant to an exemption from registration under the Securities Act, and will be
qualified (or exempt from registration or qualification) under applicable state
securities and blue sky Laws, as currently in effect.  Such Purchaser is
also aware that the Borrower is relying upon, among other things, the
representations and warranties of such Purchaser contained in this Agreement for
purposes of qualifying for such exemption from registration under the Securities
Act.

     

    5.4 
         Disclosure of
Information. 
Such Purchaser has had an opportunity to receive all information related to the
Borrower requested by it and to ask questions of and receive answers from the
Borrower regarding its business and the terms and conditions of the offering of
the Notes.  Neither such inquiries nor any other due diligence
investigation conducted by such Purchaser shall modify, limit or otherwise
affect such Purchaser’s right to rely on the representations and warranties of
the Borrower and the Subsidiaries contained in this Agreement.

     

    5.5 
         Investment
Experience. 
Such Purchaser acknowledges that it can bear the economic risk and complete loss
of its investment in the Notes and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment contemplated hereby.

     

    
      
         

      

      
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    5.6 
         Accredited
Investor. 
Such Purchaser is an accredited investor as defined in Rule 501(a) of Regulation
D, as amended, under the Securities Act.

     

    5.7 
         Restricted Securities;
Legends. 
Such Purchaser understands that the Notes are characterized as “restricted
securities” under the federal securities laws inasmuch as they are being
acquired from the Borrower in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances. Such Purchaser acknowledges that the Notes will bear the
following legend or similar legend as applicable:

     

    “THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), AND SUCH NOTE MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION AND REGISTRATION UNDER
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM UNDER THE ACT AND THE
RULES AND REGULATIONS THEREUNDER AND SUCH APPLICABLE STATE SECURITIES
LAWS.”

     

    5.8 
         No General
Solicitation. 
Such Purchaser did not learn of the investment in the Notes as a result of any
general solicitation or general advertising.

     

    5.9 
         Prohibited
Transactions. 
During the last 30 days prior to the date hereof, neither such Purchaser nor any
Affiliate of such Purchaser which (a) had knowledge of the transactions
contemplated hereby, (b) has or shares discretion relating to such Purchaser’s
investments or trading or information concerning such Purchaser’s investments,
including in respect of the Notes, or (z) is subject to such Purchaser’s review
or input concerning such Affiliate’s investments or trading (collectively,
“Trading
Affiliates”) has, directly or indirectly, effected or agreed to effect
any short sale, whether or not against the box, established any “put equivalent
position” (as defined in Rule 16a-1(h) under the Exchange Act) with respect to
the Common Stock, granted any other right (including, without limitation, any
put or call option) with respect to the Common Stock or with respect to any
security that includes, relates to or derived any significant part of its value
from the Common Stock or otherwise sought to hedge its position in the Common
Stock (each, a “Prohibited
Transaction”).  Such Purchaser acknowledges that the
representations, warranties and covenants contained in this Section 5.9 are being
made for the benefit of the Purchasers as well as the Borrower and that each of
the other Purchasers shall have an independent right to assert any claims
against such Purchaser arising out of any breach or violation of the provisions
of this Section
5.9.

     

    5.10 
         Brokers or
Finders. No
Person will have, as a result of the transactions contemplated by this Agreement
or the Loan Documents, any valid right, interest or claim against or upon the
Borrower, any Subsidiary or any Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of such Purchaser.

     

    
      
         

      

      
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    ARTICLE
VI

    CONDITIONS
OF THE PARTIES

     

    6.1 
         Conditions of Purchasers’
Obligations at any Closing. 
The obligations of each Purchaser under Article II of this
Agreement are subject to the satisfaction by the Borrower and each Subsidiary on
or before such Closing of each of the following conditions:

     

    (a) 
         Representations and
Warranties. 
The representations and warranties of the Borrower and the Subsidiaries
contained in Article
IV shall be true and correct on and as of the Initial Closing Date and
shall be true and correct in all material respects on and as of any Subsequent
Closing Date with the same force and effect as though such representations and
warranties had been made on such date.

     

    (b) 
         Performance. 
The Borrower and the Subsidiaries shall have performed and complied with all
conditions contained in this Agreement that are required to be performed or
complied with by them on or before such Closing.

     

    (c) 
         No Material Adverse Effect;
Officer’s Certificate. 
No Material Adverse Effect un the Borrower and the Subsidiaries, on a
consolidated basis, shall have occurred between the date hereof and such Closing
Date and the Chief Executive Officer of the Borrower shall deliver, at each such
Closing, a certificate stating that the conditions specified in Sections 6.1(a),
(b) and (c) have been
fulfilled.

     

    (d) 
         Consents and
Approvals. 
All authorizations, approvals, permits, or consents, if any, of any Governmental
Authority or any creditor of the Borrower or any Subsidiary or any other Person
that are required in connection with the lawful issuance and sale of the Notes
at such Closing pursuant to this Agreement shall be duly obtained and effective
as of each such Closing and the purchase and payment of the Notes to be
purchased by the Purchasers at each such Closing on the terms and conditions as
provided herein shall not violate any applicable Law.

     

    (e) 
         Good
Standing. 
The Borrower and each Subsidiary shall have delivered a certificate of good
standing dated as of a date no earlier than 15 days prior to the Initial Closing
Date from its jurisdiction of incorporation or organization.

     

    (f) 
         Secretary’s
Certificate. The
Secretary of the Borrower shall have delivered a certificate dated as of such
Closing Date certifying the authorizing resolutions of the Borrower and each
Subsidiary authorizing the transactions contemplated by this Agreement and the
Loan Documents.

     

    (g) 
         Compliance with
Covenants. 
On any such Closing Date the Borrower and the Subsidiaries shall be in
compliance with the covenant set forth in Article
VIII.

     

    6.2 
         Conditions of Initial
Purchasers’ Obligations at the Initial Closing.  In
addition to the conditions set forth in Section 6.1, the
obligations of each Initial Purchaser under Section 2.2 of this
Agreement are subject to the Borrower’s execution and delivery of each Initial
Closing Note on the Initial Closing Date.

     

    
      
         

      

      
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    6.3           Conditions of Additional
Purchasers’ Obligations at any Subsequent Closing.  In
addition to the conditions set forth in Section 6.1, the
obligations of each Additional Purchaser under Section 2.3 of this
Agreement are subject to the satisfaction by the Borrower on each Subsequent
Closing Date of the following conditions:

     

    (a)           Supplemental Schedule
II.  On
or before any Subsequent Closing Date, the Borrower shall deliver a supplement
to Schedule II
reflecting the amount of the Additional Notes that the Borrower will issue to
each Additional Purchaser on such Subsequent Closing Date and the aggregate
purchase price therefor.

     

    (b)           Additional
Notes.  The
Borrower shall execute and deliver each Additional Note.

     

    6.4           Conditions of Borrower’s and
the Subsidiaries’ Obligations at any Closing.  The
obligations of the Borrower and the Subsidiaries to consummate the transactions
contemplated by this Agreement are subject to the satisfaction by the Purchasers
on or before any such Closing of each of the following conditions:

     

    (a)           Representations and
Warranties.  The
representations and warranties of each of the Purchasers contained in Article V shall be
true and correct in all material respects on and as of such Closing with the
same force and effect as though such representations and warranties had been
made on and as of the date of such Closing.

     

    (b)           Performance.  Each
Purchaser shall have performed and complied with all conditions contained in
this Agreement that are required to be performed or complied with by it on or
before such Closing.

     

    (c)           Consents and
Approvals.  All
authorizations, approvals, or permits, if any, of any Governmental Authority or
any other Person that are required in connection with the lawful issuance and
sale of the Notes to such Purchaser pursuant to this Agreement shall be duly
obtained and effective as of such Closing and the purchase and payment of the
Notes to be purchased by the Purchasers at such Closing on the terms and
conditions as provided herein shall not violate any applicable Law.

     

    (d)           Purchase
Price.  The
Purchasers shall have delivered to the Borrower the purchase price for the Notes
being purchased pursuant hereto on such Closing Date.

     

    ARTICLE
VII

    EVENTS OF
DEFAULT AND REMEDIES

     

    7.1           Events of
Default.  So
long as the Notes are outstanding an “Event of Default”
with respect to the Notes shall mean the occurrence and existence of one or more
of the following events or conditions (for any reason, whether voluntary,
involuntary or effected or required by any Law applicable to the Borrower or any
Subsidiary):

     

    
      
         

      

      
        - 12
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    (a)           The
Borrower, or any Subsidiary as guarantors, fails to pay when due and payable any
portion of the Note Indebtedness at stated maturity, upon acceleration or
otherwise.

     

    (b)           The
Borrower or any Subsidiary fails or neglects to perform, keep, or observe in any
material respect any term, provision, condition, covenant or agreement contained
in this Agreement or any Loan Document and such failure or neglect to perform
remains in effect for a period of 30 days.

     

    (c)           Any
material portion, determined on a consolidated basis, of the Borrower’s or any
Subsidiary’s assets is seized, attached, subjected to a writ or distress
warrant, is levied upon or comes into the possession of any judicial officer
unless such action is stayed and such attachment is dismissed within 30
days.

     

    (d)           The
Borrower institutes proceedings to be adjudicated as bankrupt or insolvent, or
the consent by the Borrower to the institution of bankruptcy or insolvency
proceedings against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal, provincial or
state Law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or the consent by it to the filing of any such petition or to the
appointment under any such Law of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Borrower or of substantially all
of its property, or the making by it of a general assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due.

     

    (e)           If
there is the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Borrower as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement or adjustment of
or in respect of the Borrower under any applicable Law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or appointing under any such
Law a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Borrower or of substantially all of its property, or ordering
pursuant to any such Law the winding-up or liquidation of its affairs, and the
continuance of any such decree, petition, appointment or order unstayed and in
effect for a period of 45 consecutive days.

     

    (f)           If
any act, matter or thing is done to, or any action or proceeding is launched or
taken to, terminate the corporate existence of the Borrower, whether by
winding-up, surrender of charter or otherwise.

     

    (g)           If
the Borrower ceases to carry on its business or makes or proposes to make any
sale of its assets in bulk or any sale of its assets out of the usual course of
its business.

     

    (h)           If
there shall occur or arise any change (or any condition, event or development
involving a prospective change) in the business, operations, affairs, assets,
liabilities (including any contingent liabilities that may arise through
outstanding pending or threatened litigation or otherwise), capitalization,
financial condition, licenses, permits, rights or privileges, whether
contractual or otherwise, or prospects of the Borrower which has or is
reasonably expected to have a Material Adverse Effect on the Borrower,
determined on a consolidated basis, or on its ability to perform its obligations
hereunder or under the Loan Documents.

     

    
      
         

      

      
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    7.2           Exercise of
Remedies.  If
an Event of Default has occurred and is continuing hereunder:

     

    (a)           Any
Purchaser may declare the entire unpaid Note Indebtedness, immediately due and
payable, without presentment, notice or demand, all of which are hereby
expressly waived by the Borrower and each Subsidiary; and

     

    (b)           Any
Purchaser may exercise any remedy permitted by this Agreement, or the Loan
Documents or at Law or in equity.

     

    7.3           Waiver of
Defaults.  No
Event of Default shall be waived by the Purchasers except in a writing signed by
the holders of a majority of the outstanding Note Indebtedness.  No
waiver of any Event of Default shall extend to any other or further Event of
Default.

     

    ARTICLE
VIII

    SURVIVAL
AND INDEMNIFICATION

     

    8.1           Survival.  The
representations and warranties of the Borrower, the Subsidiaries and the
Purchasers contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Loan Documents.

     

    8.2           Indemnification.  The
Borrower and each Subsidiary, jointly and severally, shall indemnify, defend and
hold each Purchaser, its affiliates and their respective officers, directors,
partners, employees, agents, attorneys, successors and assigns (each a “Purchaser Indemnified
Party”) harmless from and against all Losses incurred, suffered or
arising out of, or by reason of, any matter relating, directly or indirectly, to
this Agreement or any other Loan Document, unless such Losses are the result of
the gross negligence, willful misconduct or fraud of such Purchaser Indemnified
Party.  Each Purchaser, severally and not jointly, shall indemnify,
defend and hold the Borrower and each Subsidiary, their respective officers,
directors, employees, agents, attorneys, successors and assigns (each a “Borrower Indemnified
Party”) harmless against all Losses as a result of the breach of any of
the representations, warranties, covenants or agreements made by such Purchaser
in this Agreement or any of the Loan Documents, unless such Losses are a result
of the gross negligence, willful misconduct or fraud of such Borrower
Indemnified Party.

     

    
      
         

      

      
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    8.3           Conduct of Indemnification
Proceedings. Promptly
after receipt by any Indemnified Party of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 8.2, such
Indemnified Party shall promptly notify the Borrower or the applicable
Purchaser, as applicable (each an “Indemnifying Party”)
in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all fees and expenses; provided, however,
that the failure of any Indemnified Party so to notify the Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder except to
the extent that the Indemnifying Party is materially prejudiced by such failure
to notify.  In any such proceeding, any Indemnified Party shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless: (a) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the retention of
such counsel; or (b) in the reasonable judgment of counsel to such Indemnified
Party representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them.  The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, but if settled with such consent, or if there be a final judgment for
the plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Party from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.  Without the prior
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld, the Indemnifying Party shall not effect any settlement of
any pending or threatened proceeding in respect of which any Indemnified Party
is or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Party from all liability arising out of such
proceeding.

     

    ARTICLE
IX

    GENERAL
PROVISIONS

     

    9.1           Guaranty.  In
order to induce the Purchaser to purchase the Notes, each Subsidiary hereby
unconditionally and irrevocably guarantees as primary obligor and not merely as
surety the full and prompt payment when due, whether upon maturity, by
acceleration or otherwise, of any and all Note Indebtedness to the holder of any
Note.  If any or all of the Note Indebtedness becomes due and payable
hereunder, each Subsidiary unconditionally promises to pay such indebtedness to
the holder of any Note, or their order, or demand, together with any and all
reasonable expenses which may be incurred by such holder or holders in
collecting any Note Indebtedness.

     

    9.2           Security.

     

    (a)           Grant of
Security.  The
Borrower and each Subsidiary hereby grants to the Purchasers, for the ratable
benefit of each Purchaser, a security interest in and lien on all of Borrower’s
and each Subsidiary’s right, title and interest in and to the Collateral,
subject to Permitted Liens.  The Collateral secures the prompt and
complete payment and performance when due of all Note
Indebtedness.  The security interest granted hereunder will terminate
upon repayment in full of all Note Indebtedness.

     

    (b)           Security Interest
Absolute.  This Section 9.2 shall be
construed as a continuing, absolute and unconditional irrevocable grant of
security interest and shall remain in full force and effect until payment in
full of all of the Note Indebtedness.  The liability of the Borrower
and the Subsidiaries under this Section 9.2 shall be
absolute and unconditional irrespective of:

     

    (i)           any
lack of validity or enforceability of this Agreement, or any Loan Document or
any other agreement or instrument relating to any thereof;

     

    
      
         

      

      
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    (ii)           to
the extent permitted by applicable law, any occurrence or condition whatsoever,
including without limitation, (A) any compromise, settlement, release, waiver,
renewal, extension, indulgence or modification of, or any change in, any of the
obligations of the Borrower or any Subsidiary contained in this Agreement or any
Loan Document, (B) the assertion or exercise by the Borrower, any Subsidiary t
or the Purchasers of any rights or remedies, (C) the extension of the time for
payment by the Borrower or any Subsidiary of any payments or other sums or any
part thereof owing or payable under any of the terms and provisions of any Loan
Document or of the time for performance by the Borrower or any Subsidiary of any
other obligations under or arising out of any terms or provisions or the
extension of the renewal of any thereof, (D) the modification or amendment
(whether material or otherwise) of any duty, agreement or obligation of the
Borrower or any Subsidiary set forth in any Loan Document, or (E) the release or
discharge of the Borrower or any Subsidiary from the performance or observance
of any agreement, covenant, term or condition contained in any of such
instruments by operation of law; or

     

    (iii)           to
the extent permitted by applicable law, any exchange, release or non-perfection
of any Collateral, or any release or amendment or waiver of or consent to
departure from any other security agreement, for all or any of the Secured
Obligations.

     

    (c)           Borrower and Subsidiaries
Remain Liable.  Anything herein to the contrary
notwithstanding, (i) the Borrower and each Subsidiary shall remain liable under
the contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (ii) the exercise by any
holder of a Note of any of the rights hereunder shall not release the Borrower
or any Subsidiary from any of their duties or obligations under the contracts
and agreements included in the Collateral, and (iii) no holder of a Note shall
have any obligation or liability under the contracts and agreements included in
the Collateral by reason of this Agreement, nor shall any holder of a Note be
obligated to perform any of the obligations or duties of the Borrower or any
Subsidiary thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

     

    (d)           Notes Equally and Ratably
Secured; Enforcement; Subordination.

     

    (i)           The
Notes shall be equally and ratably secured pursuant to the terms of this Section
9.2.  The Borrower shall not make any offer to purchase or
otherwise pay any Purchaser without making the same offer to each
Purchaser.

     

    (ii)           Each
Purchaser acknowledges and agrees that such security interest granted hereunder
may be enforced only by the action of the holders of a majority of the Note
Indebtedness and that no such holder shall have any right individually to seek
to enforce any such security interest or to realize upon the security granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the holders of a majority of the Note Indebtedness for the benefit
of all such holders upon the terms of this Agreement and the other Loan
Documents.

     

    (iii)           Each
Purchaser acknowledges and agrees that all of the Note Indebtedness is
subordinated to the rights of any Senior Lender in connection with the Senior
Credit Facility including as set forth in the Senior Credit
Agreement.

     

    
      
         

      

      
        - 16
-

        
          

        

      

      
         

      

       

    

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

     

    (a)           if
to an Initial Purchaser, to such Initial Purchaser’s address set forth on Schedule I hereto; or
at such other address or facsimile number as such Initial Purchaser shall have
furnished to the Borrower in writing; or

     

    (b)           if
to an Additional Purchaser, to such Additional Purchaser’s address set forth on
Schedule II
hereto, or at such other address or facsimile number as such Additional
Purchaser shall have furnished to the Borrower in writing; or

     

    (c)           if
to the Borrower or to any Subsidiary to SouthPeak Interactive Corporation, 2900
Polo Parkway, Midlothian, Virginia 23113, Attn:  Terry Phillips, with
a copy (which shall not constitute notice) to Greenberg Traurig, LLP, 1750
Tysons Boulevard, Suite 1200, McLean, Virginia 22102, Attn:  Mark
Wishner, Esq., or at such other address as the Borrower shall have furnished in
writing to the Purchasers.

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        - 17
-

        
          

        

      

      
         

      

       

    

    9.8           Other
Remedies.  In
addition to those remedies specifically set forth herein and in the Loan
Documents, if any, the Purchasers, may proceed to protect and enforce the rights
of any party under this Agreement and the Loan Documents either by suit in
equity and/or by action at Law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Agreement or in the Loan
Documents.  No right or remedy conferred upon or reserved under this
Agreement or the Loan Documents is intended to be exclusive of any other right
or remedy, and every right and remedy shall be cumulative and in addition to
every other right and remedy given under this Agreement and the Loan Documents
or now and hereafter existing under applicable Law.

     

    9.9           Amendments and
Waivers.  Any
term of this Agreement may be amended, and the observance of any term hereof may
be waived (either generally or in a particular instance), only with the written
consent of the holders of a majority of the outstanding Note
Indebtedness.

     

    9.10         Delays or
Omissions.  No
delay or omission to exercise any right, power or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under this
Agreement, shall impair any such right, power or remedy of such nonbreaching or
nondefaulting party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring.

     

    9.11         Exchanges; Lost, Stolen or
Mutilated Notes. Upon
surrender by any Purchaser to the Borrower of any Note, the Borrower at its
expense shall issue in exchange therefor, and deliver to such Purchaser, a
replacement Note. Upon receipt of evidence satisfactory to the Borrower of the
loss, theft, destruction or mutilation of any Note and in case of any such loss,
theft or destruction, upon delivery of an indemnity agreement, satisfactory to
the Borrower, or in case of any such mutilation, upon surrender and cancellation
of such Note, the Borrower shall issue and deliver to such Purchaser a new Note
of like tenor, in lieu of such lost, stolen or mutilated Note.

     

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

     

    
      
         

      

      
        - 18
-

        
          

        

      

      
         

      

    

     

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

     

    9.14           Pro Rata.  Each
Purchaser agrees that, for the benefit of the other Purchasers, any proceeds
received by such Purchaser as a result of the exercise of rights and remedies
under this Agreement will be divided, pro rata, among all
Purchasers.

     

    9.15           More Favorable
Terms.  In the event the Company issues any Notes at any
Subsequent Closing upon any more favorable terms, including the inclusion of any
further equity incentives, than the terms of any Notes issued at any prior
Closing, any such more favorable terms shall apply to all Notes issued at any
prior Closing and the Company shall take such further actions that are required
to effect the provisions of this section.

     

    9.16           Appointment of
Attorney-in-Fact.  Upon execution of this Agreement, each of
the Purchasers shall have been deemed to appoint Terry Phillips, as their agent
and attorney-in-fact (the “Representative”), with full power and authority
(including power of substitution), except as otherwise expressly provided in
this Agreement, in the name of and for and on behalf the Purchasers, or in such
person’s own name as the  Representative of each of the Purchasers, to
execute any subordination and intercreditor agreements with SunTrust or any
other Senior Lender; provided any such agreement applies to all Purchasers to
the same effect without any distinction.  The authority conferred
under this Section 9.16  shall be an agency coupled with an interest,
and all authority conferred hereby is irrevocable and not subject to termination
by the Purchasers or any of them, or by operation of law, whether by the death
or incapacity of any Purchasers, the termination of any trust or estate or the
occurrence of any other event.  If Terry Phillips resigns, dies or is
otherwise unable to serve as the Representative, the successor Representative
shall be designated in writing by the Purchasers holding a majority of the Note
Indebtedness.  If any individual Purchaser should die or become
incapacitated, if any trust or estate should terminate or if any other such
event should occur, any action taken by the  Representative pursuant
to this Section 9.16 shall be as valid as if such death or incapacity,
termination or other event had not occurred, regardless of whether or not
the  Representative shall have received notice of such death,
incapacity, termination or other event.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
         

      

      
        - 19
-

        
          

        

      

      
         

      

    

     

    
      
        
          	
                  SOUTHPEAK
      INTERACTIVE CORPORATION

                

        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  By:

                                	 
      
	 
      
	 
      
	
                                  SOUTHPEAK
      INTERACTIVE L.L.C

                                
	 
      
	
                                  By:

                                	  
      
	 
      
	 
      
	
                                  SOUTHPEAK
      INTERACTIVE, LIMITED

                                
	 
      
	
                                  By:

                                	  
      
	 
      
	
                                  VID
      SUB, LLC

                                
	 
      
	
                                  By:

                                	 
      
	 
      
	
                                  GONE
      OFF DEEP, LLC

                                
	 
      
	
                                  By:

                                	 
      
	 
      
	
                                  GAMECOCK
      MEDIA EUROPE LIMITED

                                
	 
      
	
                                  By:

                                	 
      
	 
      
	
                                  IRP
      GmbH

                                
	 
      
	
                                  By:

                                	 
      

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    [EXECUTION
BY PURCHASERS APPEARS ON ANNEXED PAGES]

    
      
         

      

      
        - 20
-

        
          

        

      

      
         

      

    

    SIGNATURE
PAGE FOR PURCHASER UNDER NOTE PURCHASE AGREEMENT DATED APRIL 29,
2010

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    $

                                  	
                                     

                                  
	 
      	
                                    Insert
      Principal Amount of Note

                                  
	 
      	
                                    Being
      Purchased

                                  
	 
      	 
      
	 
      	
                                     

                                  
	 
      	
                                    Name(s)
      of Purchaser

                                  
	 
      	 
      
	 
      	
                                     

                                  
	 
      	 
      
	 
      	
                                     

                                  
	 
      	
                                    Signature(s)

                                  
	 
      	 
      
	 
      	
                                     

                                  
	 
      	
                                    Print
      Title (If Applicable)

                                  
	 
      	 
      
	 
      	
                                     

                                  
	 
      	
                                    Street
      Address

                                  
	 
      	 
      
	 
      	
                                     

                                  
	 
      	
                                    City        State        Zip
      Code

                                  
	 
      	 
      
	 
      	
                                     

                                  
	 
      	
                                    Tax
      Identification Number

                                  
	 
      	 
      
	 
      	
                                     

                                  
	 
      	
                                    Telephone
      Number

                                  

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        - 21
-

        
          

        

      

      
         

      

    

    SCHEDULE
I

    

    (LIST OF
INITIAL PURCHASERS)

    
      
         

      

      
        - 22
-

        
          

        

      

      
         

      

    

    SCHEDULE
II

    

    (LIST OF
ADDITIONAL PURCHASERS)

    
      
         

      

      
        - 23
-

        
          

        

      

      
         

      

    

    SCHEDULE
III

     

    Collateral

     

    The term
“Collateral” means all property and assets of the Borrower and the Subsidiaries
(collectively, the “Companies”) (including proceeds and products thereof),
wherever situated, whether now owned or later acquired, including but not
limited to the following:

     

    a.           all
accounts of the Companies;

     

    b.           all
chattel paper of the Companies, now existing or later arising;

     

    c.           all
goods of the Companies, including consumer goods and equipment of  the
Companies, located at the Companies’ addresses, or wherever situated, and any
proceeds and products thereof;

     

    d.           all
inventory of the Companies, now owned or later acquired, and any proceeds
thereof, including all inventory repossessed or returned. Also, as used in this
Agreement, inventory includes goods held for sale or lease or furnished or to be
furnished under contracts of service, or goods being processed for sale in the s
business, as now or later conducted, including raw materials, work in process,
finished goods, and materials and supplies used or consumed in the Companies’
businesses;

     

    e.           all
rights and property of any kind and description at any time in the possession or
control of any Purchaser belonging to or for the account of or subject to the
order of the Companies;

     

    f.           all
general intangibles of the Companies now owned or later acquired and any
proceeds thereof;

     

    g.           all
intellectual property of the Companies now owned or later acquired and any
proceeds of the foregoing;

     

    h.           all
of the Companies’ interest in all intellectual property to which the Companies
have a license to or later acquires a license to and any proceeds of the
foregoing; and

     

    i.           all
rights in and to customer contracts of the Companies now existing or later
arising and any proceeds thereof

     

    
      
         

      

      
        - 24
-THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), AND SUCH NOTE MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION AND REGISTRATION UNDER
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM UNDER THE ACT AND THE
RULES AND REGULATIONS THEREUNDER AND SUCH APPLICABLE STATE SECURITIES
LAWS.

     

    THIS NOTE
AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE TO THE
INDEBTEDNESS (INCLUDING INTEREST) OF THE BORROWER REPRESENTED BY THAT CERTAIN
LOAN AGREEMENT DATED AS DECEMBER 16, 2005, AS AMENDED, BY AND AMONG THE SENIOR
LENDER, THE BORROWER, SOUTHPEAK LLC AND SOUTHPEAK UK, AS SUCH LOAN AGREEMENT MAY
BE AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME OR
ANY REFINANCINGS THEREOF.

     

    JUNIOR
SECURED SUBORDINATED CONVERTIBLE  PROMISSORY NOTE

     

    
      	
              $__________

            	
              April
      30, 2010

            

    

     

    For Value
Received, the undersigned, SouthPeak Interactive Corporation, a Delaware
corporation, (the “Borrower”), promises
to pay to _______________  (the “Holder”), the maximum
aggregate principal amount of _________ dollars ($_________.00), or such lesser
sum which represents the principal balance outstanding under this Note, together
with interest on the principal amount outstanding from time to time, as
specified below.  The actual amount due and owing from time to time
hereunder shall be evidenced by the Holder’s records of receipts and
disbursements with respect to this Note, which shall, in the absence of manifest
error, be conclusive evidence of the amount.  This Note is one of the
junior secured subordinated convertible promissory notes (collectively, the
“Notes”)
referred to in, and purchased pursuant to, the Note Purchase and Security
Agreement dated April 29, 2010, as amended from time to time, among the Borrower
and the Purchasers therein (the “Note Purchase
Agreement”) and evidences a borrowing from the Holder by the Borrower
under the Note Purchase Agreement.  The obligations of the Borrower under
this Note are secured as provided in the Note Purchase Agreement.

     

    1. 
         Interest.  This
Note shall bear interest at an annual rate of 10%.  All computations of
interest payable hereunder shall be made on the basis of the actual number of
days in the period for which such interest is payable and a year of 365
days.

     

    2. 
         Payment.  The
Borrower reserves the right to make payments in whole or in part, without notice
or penalty at any time.  Notwithstanding any such payment, the Holder shall
have the right, at its option, prior to the Maturity Date to re-advance to
Borrower any principal previously repaid under such Holder’s Note.  All
payments shall first be applied to accrued and unpaid interest and the remainder
to principal.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    3. 
         Maturity Date. 
The principal of this Note, together with all accrued and unpaid interest and
any other fees or expenses otherwise due and owed to the Holder under the Note
Purchase Agreement (the sum of such principal and accrued and unpaid interest,
fees and expenses being hereinafter referred to as the “Amount Due”), shall
be due and payable on December 27, 2010 (the “Maturity
Date”).  Upon five day’s prior written notice, the Borrower may
prepay the Amount Due, in whole or in part, prior to the Maturity Date, without
penalty or additional fees.

     

    4. 
         Pro-Rata
Payment.  Any payments made under the Notes, other than any payments
in full, either on the Maturity Date or upon the occurrence of an Event of
Default, or upon any prepayment at the option of the Borrower, the holders of
the Notes shall share ratably in any distribution of the Borrower pro rata in
proportion to the respective principal amounts of all such Holders’
Notes.

     

    5. 
         Conversion.

     

    (a) 
          At any time on or after the date of issuance
of this Note and upon ten day’s prior written notice, this Note shall be
convertible (in whole or in part), at the option of the Holder, into such number
of fully paid and non-assessable shares of Common Stock, as is determined by
dividing (i) that portion of the outstanding principal balance under this Note
and accrued but unpaid interest thereon as of such date that the Holder elects
to convert by (ii) $0.35 (the “Conversion Price”);
provided, however, that the Conversion Price shall be subject to adjustment as
described in Section
5(b) below.  The Holder shall deliver this Note to the principal
address of the Borrower at such time that this Note is fully converted. 
With respect to partial conversions of this Note, the Borrower shall keep
written records of the amount of this Note converted.

     

    (b) 
          The Conversion Price shall be subject to
adjustment from time to time as follows:

     

     (i) 
         If the Borrower shall at any time or from time
to time after the date of issuance of this Note, effect a stock split of the
outstanding Common Stock, the Conversion Price in effect immediately prior to
the stock split shall be proportionately decreased.  If the Borrower shall
at any time or from time to time after the date of issuance of this Note,
combine the outstanding shares of Common Stock, the Conversion Price in effect
immediately prior to the combination shall be proportionately increased. 
Any adjustments under this Section 5(b)(i) shall
be effective at the close of business on the date the stock split or combination
occurs.

     

     (ii) 
         If the Borrower shall at any time or from time
to time after the date of issuance of this Note, make or issue or set a record
date for the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in shares of Common Stock, then, and in
each event, the Conversion Price in effect immediately prior to such event shall
be decreased as of the time of such issuance or, in the event such record date
shall have been fixed, as of the close of business on such record date, by
multiplying, the Conversion Price then in effect by a fraction:

     

    
      
        
        

      

      
        - 2
-

        
          

        

      

      
        
        

      

       

    

    (1) 
         the numerator of which shall be the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date;
and

     

    (2) 
         the denominator of which shall be the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend or
distribution.

     

    (iii) 
         If the Common Stock issuable upon voluntary
conversion of this Note at any time or from time to time after the date of
issuance of this Note shall be changed to the same or different number of shares
of any class or classes of stock, whether by reclassification, exchange,
substitution or otherwise (other than by way of a stock split or combination of
shares or stock dividends provided for in Sections 6(b)(i) and
(ii), then, and
in each event, an appropriate revision to the Conversion Price shall be made and
provisions shall be made (by adjustments of the Conversion Price or otherwise)
so that the Holder shall have the right thereafter to voluntarily convert this
Note into the kind and amount of shares of stock and other securities receivable
upon reclassification, exchange, substitution or other change, by holders of the
number of shares of Common Stock into which this Note might have been
voluntarily converted immediately prior to such reclassification, exchange,
substitution or other change, all subject to further adjustment as provided
herein.

     

    6. 
         Event of Default;
Remedies.  Upon the occurrence and during the continuance of an
Event of Default, this Note may be accelerated in the manner described in the
Note Purchase Agreement and the Holder shall have all of the rights and remedies
provided in the Note Purchase Agreement and the Loan Documents.

     

    7. 
         Waiver of Certain
Rights.  Subject to any applicable notice periods, all parties to
this Note, including Borrower and any sureties, endorsers, or guarantors, hereby
waive protest, presentment, notice of dishonor, and notice of acceleration of
maturity and agree to continue to remain bound for the payment of principal,
interest and all other sums due under this Note notwithstanding any change or
changes by way of release, surrender, exchange, modification or substitution of
any security for this Note or by way of any extension or extensions of time for
the payment of principal and interest; and all such parties waive all and every
kind of notice of such change or changes and agree that the same may be without
notice or consent of any of them.

     

    8. 
         Enforcement. 
The Holder may enforce this Note as described in the Note Purchase
Agreement.

     

    9. 
         Subordination. 
Notwithstanding anything to the contrary contained in this Note, the Holder
agrees, by acceptance of this Note, that the obligations under this Note,
including principal, interest and all other amounts payable hereunder
(collectively, the “Subordinated
Indebtedness”), shall be and remain junior and subordinate to any and all
indebtedness, obligations and liabilities, including principal and interest, of
the Borrower and the Subsidiaries to the Senior Lenders under a Senior Credit
Facility now existing or hereafter arising, whether direct or indirect, secured
or unsecured, absolute or contingent, joint or several or joint and several, and
howsoever owned, held or acquired, whether through discount, purchase, direct
loan or as collateral or otherwise and all post-petition interest in a
bankruptcy or similar proceeding whether or not allowed, all on the following
terms and conditions:

     

    
      
        
        

      

      
        - 3
-

        
          

        

      

      
        
        

      

       

    

    (a) 
         The Holder will take no steps, whether by suit
or otherwise, to compel or enforce the collection of Subordinated Indebtedness,
nor will the Holder use Subordinated Indebtedness by way of counterclaim,
set-off, recoupment or otherwise so as to diminish, discharge or otherwise
satisfy in whole or in part any indebtedness or liability of the Holder to the
Borrower, whether now existing or hereafter arising and howsoever
evidenced.

     

    (b) 
         In the event of any distribution, dividend, or
application, partial or complete, voluntary or involuntary, by operation of law
or otherwise, of all or any part of the assets of the Borrower or of the
proceeds thereof to the creditors of the Borrower or upon any indebtedness of
the Borrower, occurring by reason of the liquidation, dissolution, or other
winding up of the Borrower, or by reason of any execution sale, or bankruptcy,
receivership, reorganization, arrangement, insolvency, liquidation or
foreclosure proceeding of or for the Borrower or involving its property, no
dividend, distribution or application shall be made, and the Holder shall not be
entitled to receive or retain any dividend, distribution, or application on or
in respect of principal of or interest on Subordinated Indebtedness, unless and
until all principal of and interest on Senior Indebtedness then outstanding
shall have been paid and satisfied in full, and in any such event any dividend,
distribution or application otherwise payable in respect of Subordinated
Indebtedness shall be paid and applied on Senior Indebtedness until such Senior
Indebtedness has been fully paid and satisfied.

     

    (c) 
         No Senior Lender need at any time give the
Holder notice of any kind of the creation or existence of any Senior
Indebtedness, nor of the amount or terms thereof, all such notice being hereby
expressly waived.  Also, the Senior Lenders may at any time from time to
time, without the consent of or notice to the Holder, without incurring
responsibility to the Holder, and without impairing or releasing the obligation
of the Holder under this Note (i) renew, refund or extend the maturity of, or
increase or decrease the amount of, any Senior Indebtedness, or any part
thereof, or otherwise revise, amend or alter the terms and conditions thereof,
(ii) sell, exchange, release or otherwise deal with any property by whomsoever
at any time pledged, mortgaged or otherwise hypothecated or subjected to a lien
to secure any Senior Indebtedness, and (iii) exercise or refrain from exercising
any rights against the Borrower, any Subsidiary and others, including the
Holder.

     

    (d) 
         The Holder will not sell, assign or otherwise
transfer any Subordinated Indebtedness, or any part thereof, except subject to
and in accordance with the terms of this Note and upon the agreement of the
transferee or assignee to abide by and be bound by the terms of this
Note.

     

    
      
        
        

      

      
        - 4
-

        
          

        

      

      
        
        

      

       

    

    (e) 
         The Holder expressly subordinates all of the
Holder’s rights in the Collateral now or later securing the Subordinated
Indebtedness to all rights of the Senior Lenders, and any and all of their
successors and assigns, now or later existing in any of the same Collateral to
secure the Senior Indebtedness, and any and every lien or security interest with
respect to the Collateral in favor of or held for the benefit of the Senior
Lenders, and any and all of their successors and assigns, now have and shall
have priority over every lien and security interest that the Holder now has or
may hereafter acquire with respect to the Collateral, all notwithstanding any
statement or provision contained in the instruments evidencing the Subordinated
Indebtedness, or agreements with respect thereto or otherwise to the contrary
and irrespective of the time or order of filing or recording of financing
statements, deeds of trust, mortgages or other notices of Liens granted pursuant
thereto, and irrespective of anything contained in any filing or agreement to
which any part hereto or its respective successors and assigns may now or
hereafter be a party, and irrespective of the ordinary rules for determining
priorities under the Uniform Commercial Code of the State of Delaware or under
any other law governing the relative priorities of secured creditors.  The
Holder consents to the creation and continuance of all present and future Liens
of the Senior Lenders, and any and all of their successors and assigns, in the
Collateral to secure the Senior Indebtedness and to the enforcement of those
Liens, including the removal of the Collateral from the real property of the
Borrower.  This subordination as to the Collateral is intended to define
the rights and duties of the Senior Lenders, and any and all of their successors
and assigns, and the Holder; it is not intended that any third party shall
benefit from it.  If the effect of any provision of this Note would be to
give any third party a priority status to which that party would not otherwise
be entitled, that provision shall, to the extent necessary to avoid that
priority, be given no effect and the rights and priorities of the Senior
Lenders, and any and all of their successors and assigns, and the Holder shall
be determined in accordance with applicable law.

     

    (f) 
         If notwithstanding the provisions of this
Section 9, the
Holder shall receive any payment of principal or interest on Subordinated
Indebtedness which the Borrower or any Subsidiary is not entitled to make
pursuant to the terms hereof, whether or not the Holder has knowledge that the
Borrower or any Subsidiary is not entitled to make such payment, the Holder
shall promptly account for such payment and upon any Senior Lender’s demand pay
over such payment to the Senior Lender for application to the Senior
Indebtedness owing to the Senior Lenders.  No payment or any distribution
received by Senior Lenders in respect of Subordinated Indebtedness pursuant to
any of the terms hereof shall entitle the Holder to any right, whether by virtue
of subrogation or otherwise, in and to any Senior Indebtedness unless and until
all Senior Indebtedness owing to the Senior Lenders has been fully paid and
satisfied and the Senior Lenders obligations, if any, to extend credit to the
Borrower or any Subsidiary have expired or otherwise been
terminated.

     

    (g) 
         Holder further acknowledges and agrees, by
acceptance of this Note, that SunTrust Bank (“SunTrust Bank”) is an
intended third-party beneficiary of the provisions of this Section 9, and as
such SunTrust Bank shall be fully entitled to enforce the same.  In
addition, Holder, by acceptance of this Note, hereby appoints _____________ (the
“Holder’s
Representative”) as the representative of Holder to execute a separate
subordination agreement with SunTrust Bank on behalf of Holder in form and
substance acceptable to SunTrust Bank (the “Subordination
Agreement”), and agrees that Holder is appointed as agent and
attorney-in-fact for and on behalf of Holder, with full power of substitution
and with full power and authority to execute such Subordination Agreement on
behalf of Holder, and that such Subordination Agreement shall be binding upon
Holder and its successors as if expressly ratified and confirmed by
them.

     

    
      
        
        

      

      
        - 5
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    10. 
         Definitions.  Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
such terms in the Note Purchase Agreement.

     

    11.           Miscellaneous.  The
following general provisions apply:

     

    (a)           This
Note, and the obligations and rights of the Borrower and the Holder hereunder,
shall be binding upon and inure to the benefit of the Borrower, the Holder, and
their respective heirs, personal representatives, successors and
assigns.

     

    (b)           All
notices, requests, consents and demands hereunder shall be made in writing in
the manner described in the Note Purchase Agreement.

     

    (c)           Whenever
possible, each provision of this Note will be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Note
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Note will be reformed, construed and enforced in such jurisdiction to
the greatest extent possible to carry out the intentions of the parties
hereto.

     

    (d)           This
Note shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of Delaware.  Each
of the parties hereto hereby irrevocably consents to the (non-exclusive)
jurisdiction of the courts of the Commonwealth of Virginia and of any federal
court located therein in connection with any suit, action or other proceeding
arising out of or relating to this Note and waives any objection to venue in the
Commonwealth of Virginia.

     

    (e)           Recourse
under this Note shall be solely as provided in the Note Purchase Agreement and
the Loan Documents and in no event to the officers, directors or stockholders of
the Borrower.

     

    (g)           Reference
is hereby made to the Note Purchase Agreement that authorizes the holders of a
majority of the outstanding Note Indebtedness to take action on behalf of all
the holders of the Notes.

     

    Signature
on the following page

     

    
      
        
        

      

      
        - 6
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    IN
WITNESS WHEREOF, this Note has been duly executed on behalf of the undersigned
on the day and in the year first written above.

     

    
      
        	
                SOUTHPEAK
      INTERACTIVE CORPORATION

              

      

    

    

    
      
        	
                 

              
	
                Name:

              
	
                Title:

              

      

    

     

    
      
        
        

      

      
        - 7
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