Document:

Unassociated Document

    
      SECURITIES
PURCHASE AGREEMENT

       

      SECURITIES PURCHASE AGREEMENT
(the "Agreement"), dated
as of July 16, 2010, by and among SouthPeak Interactive Corporation, a Delaware
corporation, with headquarters located at 2900 Polo Parkway, Midlothian,
Virginia 23113 (the "Company"), and the investors
listed on the Schedule of Buyers attached hereto (individually, a "Buyer" and collectively, the
"Buyers").

       

      WHEREAS:

       

      A.     The
Company and each Buyer is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act"), and Rule 506 of
Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange
Commission (the "SEC")
under the 1933 Act.

       

      B.     The
Company has authorized a new series of senior secured convertible notes of the
Company, in the form attached hereto as Exhibit A (the "Notes"), which Notes shall be
convertible into the Company's common stock, par value $0.0001 per share
(the "Common
Stock"), in accordance with the terms of the Notes.

       

      C.     Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, (i) that aggregate principal amount of the
Notes set forth opposite such Buyer's name in column (3) on the Schedule of
Buyers attached hereto (which aggregate amount for all Buyers together shall be
$5,500,000 (as converted, collectively, the "Conversion Shares"), (ii)
warrants, in substantially the form attached hereto as Exhibit B-1 (the
"Series A Warrants"), to acquire that
number of shares of Common Stock set forth opposite such Buyer's name in column
(4) on the Schedule of Buyers, and (iii) warrants in substantially the form
attached hereto as Exhibit B-2 (the
"Series B Warrants") to
acquire that number of shares of Common Stock set forth opposite such Buyer's
name in column (5) on the Schedule of Buyers (collectively with the Series A
Warrants, the "Warrants") (as exercised,
collectively, the "Warrant
Shares").

       

      D.    Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, substantially in the
form attached hereto as Exhibit C (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights with respect to Registrable Securities (as defined in the
Registration Rights Agreement) under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.

       

      E.      The
Notes, the Conversion Shares, the Warrants and the Warrant Shares collectively
are referred to herein as the "Securities".

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      F.           The Notes will rank senior to all
outstanding and future indebtedness of the Company, other than Permitted
Indebtedness (as defined in the Notes), and will be secured by a first priority
perfected security interest in all of the assets of the Company other than
collateral secured pursuant to that certain Factoring Agreement, dated July 7,
2010, by and between Rosenthal & Rosenthal, Inc. and the Company, and the
stock, equity interests and assets of each of the Company's subsidiaries, as
evidenced by certain security documents, including without limitation (i) a
pledge and security agreement, in the form attached hereto as Exhibit
D-1 (as amended or
modified from time to time in accordance with its terms, the "Security
Agreement") and (ii)
guarantees of certain Subsidiaries of the Company in the form attached hereto as
Exhibit
D-2 (as amended or
modified in accordance with its terms, the "Guarantees" and, together with the Security
Agreement and ancillary documents related to the Security Agreement and the
Guarantees, collectively the "Security
Documents").

       

      NOW, THEREFORE, the Company
and each Buyer hereby agree as follows:

       

      
        	
                 
      

              	
                1.

              	
                PURCHASE AND SALE
      OF NOTES AND WARRANTS.

              

      

       

      (a) Purchase of Notes and
Warrants.  Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 below, the Company shall issue and sell
to each Buyer, and each Buyer severally, but not jointly, agrees to purchase
from the Company on the Closing Date (as defined below), a principal amount of
Notes as is set forth opposite such Buyer's name in column (3) on the Schedule
of Buyers, along
with Series A Warrants to acquire up to that number of Warrant Shares as is set
forth opposite such Buyer's name in column (4) on the Schedule of Buyers and
Series B Warrants to acquire up to that number of Warrant Shares as is set forth
opposite such Buyer's name in column (5) on the Schedule of Buyers (the "Closing").  The
Closing shall occur on the Closing Date at the offices of Schulte Roth &
Zabel LLP, 919 Third Avenue, New York, New York 10022.

       

      (b) Purchase
Price.  (i)  The aggregate purchase price for the
Notes and related Warrants to be purchased by each Buyer at the Closing shall be
the amount set forth opposite such Buyer’s name in column (6) of the Schedule of
Buyers (the "Purchase
Price").  Each Buyer shall pay $1,000 for each $1,000 of
principal amount of Notes and related Warrants to be purchased by such Buyer at
the Closing.

       

      (ii) The Buyers and the Company agree
that the Notes and the Warrants constitute an "investment unit" for purposes of
Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended (the
"Code").  The
Buyers and the Company mutually agree that the allocation of the issue price of
such investment unit between the Notes and the Warrants in accordance with
Section 1273(c)(2) of the Code and Treasury Regulation Section 1.1273-2(h) shall
be an aggregate amount of $1,627,031 allocated to the Warrants and the balance
of the Purchase Price allocated to the Notes, and neither the Buyers nor the
Company shall take any position inconsistent with such allocation in any tax
return or in any judicial or administrative proceeding in respect of
taxes.

         

      (c)           Closing
Date.  The date and time of the Closing (the "Closing Date") shall be 10:00
a.m., New York City time, on the date hereof (or such other date and time as is
mutually agreed to by the Company and each Buyer) after notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7 below.

      
        
           

        

        
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      (d)           Form of
Payment.  On the Closing Date, (i) each Buyer shall pay its
respective Purchase Price (less in the case of CNH Diversified Opportunities
Master Account, L.P. (“CNH”), the amounts withheld
pursuant to Section 4(g)) to the Company for the Notes and Warrants to be issued
and sold to such Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Company's written wire instructions, and
(ii) the Company shall deliver to each Buyer the Notes (allocated in the
principal amounts as such Buyer shall request) which such Buyer is then
purchasing hereunder along with the Warrants (allocated in the amounts as such
Buyer shall request) which such Buyer is purchasing, in each case duly executed
on behalf of the Company and registered in the name of such Buyer or its
designee.

       

      
        	
                 
      

              	
                2.

              	
                BUYER'S
      REPRESENTATIONS AND
WARRANTIES.

              

      

       

      Each
Buyer, severally and not jointly, represents and warrants with respect to only
itself that, as of the date hereof and as of the Closing Date:

       

      (a)           No Public Sale or
Distribution.  Such Buyer is (i) acquiring the Notes and the
Warrants and (ii) upon conversion of the Notes and exercise of the Warrants will
acquire the Conversion Shares issuable upon conversion of the Notes and the
Warrant Shares issuable upon exercise of the Warrants (other than Warrant Shares
surrendered in a Cashless Exercise (as defined in the Warrants) in the ordinary
course of business for its own account and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act and such Buyer does
not have a present arrangement to effect any distribution of the Securities to
or through any person or entity; provided, however, that by
making the representations herein, such Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.  Such Buyer
is acquiring the Securities hereunder in the ordinary course of its
business.  Such Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person (as defined in Section
3(s)) to distribute any of the Securities.

       

      (b)           Accredited Investor
Status.  Such Buyer is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D.

       

      (c)           Reliance on
Exemptions.  Such Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.

       

      (d)           Information.  Such
Buyer and its advisors, if any, have been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities which have been requested by such
Buyer.  Such Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company.  Neither such inquiries
nor any other due diligence investigations conducted by such Buyer or its
advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
herein.  Such Buyer understands that its investment in the Securities
involves a high degree of risk and is able to afford a complete loss of such
investment.  Such Buyer has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Securities.

      
        
           

        

        
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      (e)           No Governmental
Review.  Such Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.

       

      (f)           Transfer or
Resale.  Such Buyer understands that except as provided in the
Registration Rights Agreement: (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the
1933 Act, as amended, (or a successor rule thereto) (collectively, "Rule 144"); (ii) any sale of
the Securities made in reliance on Rule 144 may be made only in accordance with
the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
the Securities under circumstances in which the seller (or the Person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other Person is under any obligation to register the
Securities under the 1933 Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder.  Notwithstanding the
foregoing, the Securities may be pledged in connection with a bona fide margin
account or other loan or financing arrangement secured by the Securities and
such pledge of Securities shall not be deemed to be a transfer, sale or
assignment of the Securities hereunder, and no Buyer effecting a pledge of
Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document (as defined in Section 3(b)), including, without
limitation, this Section 2(f); provided, that in order to make any sale,
transfer or assignment of Securities, such Buyer and its pledgee makes such
disposition in accordance with or pursuant to a registration statement or an
exemption under the 1933 Act.

       

      (g)           Legends.  Such
Buyer understands that the certificates or other instruments representing the
Notes and the Warrants and, until such time as the resale of the Conversion
Shares and the Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Conversion Shares and the Warrant Shares, except as set forth
below, shall bear any legend as required by the "blue sky" laws of any state and
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock
certificates):

      
        
           

        

        
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      [NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH
THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

      

      The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped or issue to such holder by electronic delivery at the applicable balance
account at DTC, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a sale, assignment or other transfer, such holder provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the Securities may be made without registration
under the applicable requirements of the 1933 Act and that such legend is no
longer required, or (iii) such holder provides the Company with reasonable
assurances that the Securities can be sold, assigned or transferred pursuant to
Rule 144 or Rule 144A.  The Company shall be responsible for the fees
of its transfer agent and all DTC fees associated with such
issuance.

      

      (h)           Validity;
Enforcement.  This Agreement, the Registration Rights Agreement
and the Security Documents to which such Buyer is a party have been duly and
validly authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer enforceable
against such Buyer in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.

       

      (i)           No
Conflicts.  The execution, delivery and performance by such
Buyer of this Agreement, the Registration Rights Agreement and the Security
Documents to which such Buyer is a party and the consummation by such Buyer of
the transactions contemplated hereby and thereby will not (i) result in a
violation of the organizational documents of such Buyer or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Buyer is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment  or decree (including federal
and state securities laws) applicable to such Buyer, except in the case of
clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of such Buyer to perform its
obligations hereunder.

      
        
           

        

        
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      (j)           Residency.  Such
Buyer is a resident of that jurisdiction specified below its address on the
Schedule of Buyers.

       

      (k)           Organization.  Such
Buyer is an entity duly organized and validly existing in good standing under
the laws of the jurisdiction in which it is formed, and has the requisite power
and authority to enter into and perform its obligations under this Agreement and
the other Transaction Documents to which it is a party and otherwise to carry
out its obligations hereunder and thereunder.

       

      
        	
                 
      

              	
                3.

              	
                REPRESENTATIONS AND
      WARRANTIES OF THE COMPANY.

              

      

       

      The
Company represents and warrants to each of the Buyers that:

       

      (a)           Organization and
Qualification.  Except as set forth on Schedule
3(a)(i),  each of the Company and its "Subsidiaries" (which for
purposes of this Agreement means any entity in which the Company, directly or
indirectly, owns any of the capital stock or holds an equity or similar
interest) are entities duly organized and validly existing in good standing
under the laws of the jurisdiction in which they are formed, and have the
requisite power and authorization to own their properties and to carry on their
business as now being conducted.  Each of the Company and its
Subsidiaries is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect.  As used in this Agreement, "Material Adverse Effect" means
any material adverse effect on the business, properties, assets, operations,
results of operations, condition (financial or otherwise) or prospects of the
Company and its Subsidiaries, individually or taken as a whole, or on the
transactions contemplated hereby and the other Transaction Documents or by the
agreements and instruments to be entered into in connection herewith or
therewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below).  The
Company has no Subsidiaries except as set forth on Schedule 3(a)(ii).

       

      (b)           Authorization; Enforcement;
Validity.  The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, the
Notes, the Registration Rights Agreement, the Security Documents, the
Irrevocable Transfer Agent Instructions (as defined in Section 5), the Warrants,
the Lock-Up Agreements (as defined below) and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "Transaction Documents") and to
issue the Securities in accordance with the terms hereof and
thereof.  The execution and delivery of the Transaction Documents by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby, including, without limitation, the issuance of the Notes and
the Warrants, the reservation for issuance and the issuance of the Conversion
Shares issuable upon conversion of the Notes, the reservation for the issuance
of Warrant Shares issuable upon exercise of the Warrants and the granting of a
security interest in the Collateral (as defined in the Security Documents) have
been duly authorized by the Company's Board of Directors and other than (i) the
filing of appropriate UCC financing statements with the appropriate states and
other authorities pursuant to the Security Agreement, (ii) appropriate filings
with the United States Patent and Trademark Office, (iii) the filing of a Form D
pursuant to Regulation D under the 1933 Act and any required notices or filings
under applicable state securities or Blue Sky laws of the United States ("Blue Sky Laws") with respect
to the transactions contemplated hereby, (iv) the filing with the SEC of one or
more Registration Statements in accordance with the requirements of the
Registration Rights Agreement and (v) as contemplated pursuant to Section 4(m)
hereof, no further filing, consent or authorization is required by the Company,
its Board of Directors or its stockholders.  This Agreement and the
other Transaction Documents have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.

      
        
           

        

        
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      (c)           Issuance of
Securities.  The issuance of the Notes and the Warrants are
duly authorized and, upon issuance in accordance with the terms hereof, shall be
validly issued and free from all taxes, liens and charges with respect to the
issue thereof.  As of the Closing, subject to the provisions of
Section 4(m) hereof, a number of shares of Common Stock shall have been duly
authorized and reserved for issuance which equals or exceeds 130% of the sum of
the maximum number of shares of Common Stock (i) issuable upon conversion of the
Notes and (ii) upon exercise of the Warrants (without taking into account any
limitations on the conversion of the Notes or exercise of the Warrants set forth
in the Notes and Warrants, respectively).  Upon conversion or payment
in accordance with the Notes or exercise in accordance with the Warrants, as the
case may be, the Conversion Shares and the Warrant Shares, respectively, will be
validly issued, fully paid and nonassessable and free from all preemptive or
similar rights, taxes, liens and charges with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common
Stock.  Assuming the accuracy of the representations and warranties
set forth in Section 2 of this Agreement, the offer and issuance by the Company
of the Securities is exempt from registration under the 1933 Act.

       

      (d)           No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Notes and the Warrants, the granting of a security interest in
the Collateral and, subject to the provisions of Section 4(m) hereof,
reservation for issuance and issuance of the Conversion Shares and the Warrant
Shares) will not (i) result in a violation of any certificate of incorporation,
certificate of formation, any certificate of designations or other constituent
documents of the Company or any of its Subsidiaries, any capital stock of the
Company or any of its Subsidiaries or the bylaws of the Company or any of its
Subsidiaries or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) in any respect
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including foreign, federal and
state securities laws and regulations and the rules and regulations The OTC
Bulletin Board (the "Principal
Market") applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is bound or
affected, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.

      
        
           

        

        
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      (e)           Consents.  Except
for the filing of a Form D pursuant to Regulation D under the 1933 Act and any
required notices or filings under applicable Blue Sky Laws, neither the Company
nor any of its Subsidiaries is required to obtain any consent, authorization or
order of, or make any filing or registration with, any court, governmental
agency or any regulatory or self-regulatory agency or any other Person in order
for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents, in each case in accordance with the
terms hereof or thereof.  All consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the Closing
Date, except for the filing of Form D and any required notices or filings under
applicable Blue Sky Laws.  The Company and its Subsidiaries are
unaware of any facts or circumstances that could reasonably be expected to
prevent the Company from obtaining or effecting any of the registration,
application or filings pursuant to the preceding sentence.  The
Company is not in violation of the listing requirements of the Principal Market
and has no knowledge of any facts that could reasonably be expected to lead to
delisting or suspension of the Common Stock in the foreseeable
future.

       

      (f)           Acknowledgment Regarding
Buyer's Purchase of Securities.  The Company acknowledges and
agrees that each Buyer is acting solely in the capacity of arm's length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and that no Buyer is (i) an officer or director
of the Company or any of its Subsidiaries, (ii) an "affiliate" of the Company or
any of its Subsidiaries (as defined in Rule 144) or (iii) to the knowledge of
the Company, a "beneficial owner" of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the "1934
Act")).  The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company or any of its
Subsidiaries (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer's purchase of the Securities.  The
Company further represents to each Buyer that the Company's decision to enter
into the Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.

       

      (g)           No General Solicitation;
Placement Agent's Fees.  Neither the Company, nor any of its
Subsidiaries or affiliates, nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the
Securities.  The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or brokers' commissions (other
than for persons engaged by any Buyer or its investment advisor) relating to or
arising out of the transactions contemplated hereby.  The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, attorney's fees and out-of-pocket expenses)
arising in connection with any such claim.  The Company acknowledges
that it has engaged Roth Capital Partners LLC, as placement agent (the "Placement Agent") in
connection with the sale of the Securities.  Other than the Placement
Agent, neither the Company nor any of its Subsidiaries has engaged any placement
agent or other agent in connection with the sale of the
Securities.

      
        
           

        

        
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      (h)           No Integrated
Offering.  None of the Company, its Subsidiaries, any of their
affiliates, and any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of any of the
Securities under the 1933 Act, whether through integration with prior offerings
or otherwise, or cause this offering of the Securities to require the approval
of stockholders of the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated.  None of the
Company, its Subsidiaries, their affiliates and any Person acting on their
behalf will take any action or steps referred to in the preceding sentence that
would require registration of any of the Securities under the 1933 Act or cause
the offering of the Securities to be integrated with other offerings for
purposes of any such applicable stockholder approval provisions.

       

      (i)           Dilutive
Effect.  The Company understands and acknowledges that the
number of Conversion Shares issuable upon conversion of the Notes and the
Warrant Shares issuable upon exercise of the Warrants will increase in certain
circumstances.  The Company further acknowledges that its obligation
to issue Conversion Shares upon conversion of the Notes in accordance with this
Agreement and the Notes and its obligation to issue the Warrant Shares upon
exercise of the Warrants in accordance with this Agreement and the Warrants is,
in each case, is absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other stockholders of
the Company.

       

      (j)           Application of Takeover
Protections; Rights Agreement.  The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation or the laws of
the State of Delaware which is or could become applicable to any Buyer as a
result of the transactions contemplated by this Agreement, including, without
limitation, the Company's issuance of the Securities and any Buyer's ownership
of the Securities.  Neither the Company nor its Board of Directors has
adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company.

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      (k)           SEC Documents; Financial
Statements.  During the two years prior to the date hereof, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof or prior to the date of the Closing, and all exhibits included therein
and financial statements, notes and schedules thereto and documents incorporated
by reference therein being hereinafter referred to as the "SEC
Documents").  The Company has delivered to the Buyers or their
respective representatives true, correct and complete copies of the SEC
Documents not available on the EDGAR system.  Except as set forth in
Schedule 3(k),
as of their respective filing dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, 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 the
light of the circumstances under which they were made, not
misleading.  As of their respective filing dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).  No other information provided by or on behalf of the
Company to the Buyers which is not included in the SEC Documents, including,
without limitation, information referred to in Section 2(d) of this Agreement or
in the disclosure schedules to this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstance under which they are or
were made, not misleading.

       

      (l)           Absence of Certain
Changes.  Except as disclosed in Schedule 3(l), since
June 30, 2009, there has been no material adverse change and no material adverse
development in the business, assets, properties, operations, condition
(financial or otherwise), results of operations or prospects of the Company or
its Subsidiaries.  Except as disclosed in Schedule 3(l), since
June 30, 2009, neither the Company nor any of its Subsidiaries has (i) declared
or paid any dividends, (ii) sold any assets, individually or in the aggregate,
in excess of $100,000 outside of the ordinary course of business or (iii) had
capital expenditures, individually or in the aggregate, in excess of
$100,000.  Neither the Company nor any of its Subsidiaries has taken
any steps to seek protection pursuant to any bankruptcy law nor does the Company
have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which
would reasonably lead a creditor to do so.  The Company and its
Subsidiaries, individually and on a consolidated basis, are not as of the date
hereof, and after giving effect to the transactions contemplated hereby to occur
at the Closing, will not be Insolvent (as defined below).  For
purposes of this Section 3(l), "Insolvent" means, with respect
to any Person (i) the present fair saleable value of such Person's assets is
less than the amount required to pay such Person's total Indebtedness (as
defined in Section 3(s)), (ii) such Person is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) such Person intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) such Person has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.

       

      (m)           No Undisclosed Events,
Liabilities, Developments or Circumstances.  Since June 30,
2009, no event, liability, development or circumstance has occurred or exists,
or is contemplated to occur, with respect to the Company or its Subsidiaries or
their respective business, properties, prospects, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      (n)           Conduct of Business;
Regulatory Permits.  Neither the Company nor its Subsidiaries
is in violation of any term of or in default under any certificate of
designations of any outstanding series of preferred stock of the Company, the
Certificate of Incorporation or Bylaws or their organizational charter or
articles of incorporation or bylaws, respectively.  Neither the
Company nor any of its Subsidiaries is in violation of any judgment, decree or
order or any statute, ordinance, rule or regulation applicable to the Company or
any of its Subsidiaries, and neither the Company nor any of its Subsidiaries
will conduct its business in violation of any of the foregoing, except for
possible violations which would not, individually or in the aggregate, have a
Material Adverse Effect.  Without limiting the generality of the
foregoing, the Company is not in violation of any of the rules, regulations or
requirements of the Principal Market and has no knowledge of any facts or
circumstances that would reasonably lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable future.  Since
the date two years prior to the date hereof, (i) the Common Stock has been
designated for quotation or listed on the Principal Market, (ii) trading in the
Common Stock has not been suspended by the SEC or the Principal Market and (iii)
the Company has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common Stock from
the Principal Market.  The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

       

      (o)           Foreign Corrupt
Practices.  Neither the Company, nor any of its Subsidiaries,
nor any director, officer, agent, employee or other Person acting on behalf of
the Company or any of its Subsidiaries has, in the course of its actions for, or
on behalf of, the Company or any of its Subsidiaries (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.

       

      (p)           Sarbanes-Oxley
Act.  The Company is in compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date
hereof, and any and all applicable rules and regulations promulgated by the SEC
thereunder that are effective as of the date hereof, except where such
noncompliance would not have, individually or in the aggregate, a Material
Adverse Effect.

       

      (q)           Transactions With
Affiliates.  Except as set forth on Schedule 3(q), none
of the officers, directors or employees of the Company or any of its
Subsidiaries is presently a party to any transaction with the Company or any of
its Subsidiaries (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company or any of
its Subsidiaries, any corporation, partnership, trust or other entity in which
any such officer, director, or employee has a substantial interest or is an
officer, director, trustee or partner.

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      (r)           Equity
Capitalization.  As of the date hereof, the authorized capital
stock of the Company consists of (y) 90,000,000 shares of Common Stock, of which
as of the date hereof, 60,795,538 shares are issued and outstanding and (z)
20,000,000 shares of preferred stock, of which as of the date hereof, 5,503,833
shares of Series A Convertible Preferred Stock are issued and
outstanding.  All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and
nonassessable.  Except as set forth on Schedule 3(r): (i) no
shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries; (iii) there
are no outstanding debt securities, notes, credit agreements, credit facilities
or other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company or any of its Subsidiaries; (v) there are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement); (vi) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Company does not have any stock appreciation rights
or "phantom stock" plans or agreements or any similar plan or agreement; and
(ix) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company's or
any Subsidiary's respective businesses and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect.  The
Company has furnished or made available to the Buyer upon such Buyer's request,
true, correct and complete copies of the Company's Certificate of Incorporation,
as amended and as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's Bylaws, as amended and as in effect on
the date hereof (the "Bylaws"), and the terms of all
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock and the material rights of the holders thereof in respect
thereto.

      
        
           

        

        
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      (s)           Indebtedness and Other
Contracts.  Except as disclosed in Schedule 3(s),
neither the Company nor any of its Subsidiaries (i) has any outstanding
Indebtedness (as defined below), (ii) is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument would result in a Material
Adverse Effect, (iii) is in violation of any term of or in default under any
contract, agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, or (iv) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company's officers, has or is expected to have a Material
Adverse Effect.  Schedule 3(s) provides a detailed description of the
material terms of any such outstanding Indebtedness.  For purposes of
this Agreement: (x) "Indebtedness" of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services, including, without limitation, "capital leases" in
accordance with United States generally accepted accounting principles (other
than trade payables entered into in the ordinary course of business), (C) all
reimbursement or payment obligations with respect to letters of credit, surety
bonds and other similar instruments, (D) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) "Contingent
Obligation" means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; and (z) "Person" means an individual,
a limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.

       

      (t)           Absence of
Litigation.  Except as set forth on Schedule 3(t), there
is no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company, the Common Stock or any of its Subsidiaries or
any of the Company's or the Company's Subsidiaries' officers or directors,
whether of a civil or criminal nature or otherwise.  The matters set
forth on Schedule
3(t) would not have a Material Adverse Effect.

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

      (u)           Insurance.  The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged.  Except as set
forth on Schedule
3(u), neither the Company nor any
Subsidiary has been refused any insurance coverage sought or applied for.
Neither the Company nor any Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.

       

      (v)           Employee
Relations.  (i) Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining agreement or employs any member of a
union.  The Company and its Subsidiaries believe that their relations
with their employees are good.  No executive officer of the Company or
any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified
the Company or any such Subsidiary that such officer intends to leave the
Company or any such Subsidiary or otherwise terminate such officer's employment
with the Company or any such Subsidiary.  No executive officer of the
Company or any of its Subsidiaries, to the knowledge of the Company or any of
its Subsidiaries, is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and, to the knowledge of the Company or any of its
Subsidiaries, the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.

       

      (ii)           The
Company and its Subsidiaries are in compliance with all federal, state, local
and foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not, either individually or in
the aggregate, reasonably be expected to result in a Material Adverse
Effect.

       

      (w)           Title.  The
Company and its Subsidiaries have good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned by
them which is material to the business of the Company and its Subsidiaries, in
each case free and clear of all liens, encumbrances and defects except such as
do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and any of
its Subsidiaries.  Any real property and facilities held under lease
by the Company and any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.

       

      
        
          
             

          

          
            14

            
              

            

          

          
             

          

        

      

         

      (x)            Intellectual Property
Rights.  (i) The Company and its Subsidiaries own, or are
licensed, or otherwise possess legally enforceable rights, to use, sell or
license, as applicable, all Intellectual Property that is reasonably necessary
for the operation of their respective businesses as currently
conducted.  The Company and its Subsidiaries possess or have access to
the original (or, if owned by a third party, copies) of all documentation and
all source code, as applicable, for all of the Business Intellectual Property
consisting of software.  Schedule 3(x)(i)(a) sets forth a true and
complete list of all (i) Registered or otherwise material Owned Intellectual
Property; and (ii) Intellectual Property Contracts.  Except as set
forth on Schedule 3(x)(i)(b), all such rights are free of all Liens and are
fully assignable by the Company and its Subsidiaries to any Person, without
payment, consent of any Person or other condition or
restriction.  Except as set forth on Schedule 3(x)(i)(c), there exists
no event, condition or occurrence which, with the giving of notice or lapse of
time, or both, would constitute a breach or default by the Company, its
Subsidiaries or another Person under any Intellectual Property
Contract.

       

      (ii)           Except
as set forth on Schedule 3(x)(ii), no
Owned Intellectual Property has expired or terminated or has been abandoned, or
is expected to expire or terminate or be abandoned, within three years from the
date of this Agreement.  All Owned Intellectual Property (and to the
knowledge of the Company all Licensed Intellectual Property) is subsisting , has
been used by the Company and its Subsidiaries and made available to their
distributors and customers with all patent, trademark, copyright, confidential,
proprietary, and other Intellectual Property notices and legends prescribed by
law or otherwise permitted, and, to the knowledge of the Company, is valid and
enforceable.  No Owned Intellectual Property (and to the knowledge of
the Company, no Licensed Intellectual Property) ,is subject to any outstanding
order, judgment or decree restricting its use by the Company or its Subsidiaries
or their distributors and customers or adversely affecting the Company's or any
Subsidiary's rights thereto.

       

      (iii)          The
Company does not have any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property of others.  There is no claim,
action or proceeding being made or brought, or to the knowledge of the Company,
being threatened in writing, against the Company or any of its Subsidiaries
regarding any Business Intellectual Property, except for claims, actions or
proceedings set forth on Schedule
3(x)(iii).  The Company is unaware of any facts or
circumstances which could reasonably be expected to give rise to any of the
foregoing infringements or claims, actions or proceedings.

       

      (iv)          Each
employee who in the regular course of his employment may create programs,
modifications, enhancements or other inventions, improvements, discoveries,
methods or works of authorship and all consultants have signed an assignment or
similar agreement with the Company and/or its Subsidiaries confirming the
Company's or a Subsidiary's ownership or, in the alternate, transferring and
assigning to the Company or a Subsidiary all right, title and interest in and to
such programs, modifications, enhancements or other inventions including
copyright and other intellectual property rights therein.  No Person
(other than the Company and/or its Subsidiaries) has any reasonable basis for
claiming any right, title or interest in and to any such Intellectual
Property.

       

      (v)           Except
as set forth on Schedule 3(x)(v), (1)
no Product contains, and no Product is derived from Public Software, (2) neither
the Company nor any Subsidiary has distributed Public Software in conjunction
with any Products, or (3) used Public Software in the development of a
derivative work of any Intellectual Property.  The Company and the
Subsidiaries are in compliance with all agreements and other terms and
conditions governing the use of Public Software and there exists no event,
condition or occurrence which, with the giving of notice or lapse of time, or
both, would constitute a breach or default by the Company or a Subsidiary of
such agreements, terms and conditions.  Neither the Company nor any
Subsidiary has received any notice of any alleged breach or other violation of
any such agreement, term or condition.  No Product or any other
Intellectual Property is required to be (a) disclosed or distributed in source
code form; (b) licensed for the purpose of making derivative works; or (c)
redistributable at no charge, in each case, as a result of the Company's or a
Subsidiary's use, modification or distribution of Public
Software.

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      

       

      (vi)          Each
of the Company and its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of all material Trade Secrets
used in or on behalf of its business.  To the Company's knowledge, no
unauthorized disclosure of any of the Business Intellectual Property consisting
of Trade Secrets has occurred within the last three (3) years.

       

      (vii)         The
use by or on behalf of the Company and its Subsidiaries of the Data in
connection with their business does not infringe or violate the rights of any
Person or otherwise violate any applicable law.  The Company has a
published privacy policy (the "Privacy Policy") regarding the
collection and use of "nonpublic personal information" (as defined in the
Privacy Policy in effect on the date hereof) ("Customer Information"), that
discloses the manner by which it collects, uses and transfers Customer
Information.  The Company and its Subsidiaries are and have been in
compliance with the Privacy Policy since its adoption by the
Company.

       

      (viii)       The
IT Systems of the Company and its Subsidiaries are adequate in all material
respects for their intended use and for the operation of such businesses as are
currently operated by the Company and its Subsidiaries, and are in good working
condition (normal wear and tear excepted).

       

      (ix)          For
purposes of this Section 3(x), the following definitions shall
apply.

       

      (1)           "Ancillary Product Materials"
shall mean all documentation currently used or distributed by the Company or a
Subsidiary concerning the Products, including customer support materials such as
support and training materials, support bulletins, and any and all data
contained in the customer support organization computer system of the Company or
a Subsidiary; and marketing materials relating to the Products, including sales
and marketing material, white papers, performance benchmark reports, customer
training materials, sales training materials and sales presentation
materials.

      

      (2)           "Business Intellectual
Property" means the Owned Intellectual Property and the Licensed
Intellectual Property.

      

      (3)           "Data" means all information
and data, whether in printed or electronic form and whether contained in a
database or otherwise.

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      (4)           "Intellectual Property"
means  (i) foreign and domestic trademarks, trade names, service
marks, service names, brand names, certification marks, collective marks,
d/b/a's, Internet domain names, logos, symbols, trade dress, assumed names,
fictitious names, and other indicia of origin, all applications and
registrations for all of the foregoing, and all goodwill associated therewith
and symbolized thereby, including without limitation all extensions,
modifications and renewals of same; (ii) foreign and domestic inventions,
discoveries and ideas, whether patentable or not, and all patents,
registrations, and applications therefor, including without limitation
divisions, continuations, continuations-in-part and renewal applications, and
including without limitation renewals, extensions and reissues; (iii) foreign
and domestic published and unpublished works of authorship, whether
copyrightable or not (including, but not limited to, computer software),
copyrights therein and thereto, and registrations and applications therefor, and
all renewals, extensions, restorations and reversions thereof; (iv) confidential
and proprietary information, trade secrets and know-how, including without
limitation processes, schematics, databases, formulae, drawings, specifications,
prototypes, models, designs, research and development, manufacturing and
production processes and techniques, technical data, and customer and supplier
lists, pricing and cost information and business and marketing plans and
proposals (collectively, "Trade
Secrets"); (v) rights of publicity, name and likeness rights; (vi)
electronic data processing, information, recordkeeping, communications,
telecommunications, networking, account management, inventory management and
other such applications, software, and hardware, equipment and services
(including, but not limited to, all applications and software installed on all
hardware and equipment, and all databases, firmware, and related documentation),
and Internet websites and related content (collectively, "IT Systems"); and (vii) all
other intellectual property or proprietary rights and claims or causes of action
arising out of or related to any infringement, misappropriation or other
violation of any of the foregoing, including without limitation rights to
recover for past, present and future violations thereof.

      

      (5)           "Intellectual Property
Contracts" means all agreements concerning the Business Intellectual
Property, including without limitation agreements granting the Company rights to
use the Licensed Intellectual Property, agreements granting rights to use Owned
Intellectual Property, confidentiality agreements, reseller agreements,
consulting agreements, trademark coexistence agreements, Trademark consent
agreements and nonassertion agreements.

      

      (6)           "Licensed Intellectual
Property" means Intellectual Property that the Company and its
Subsidiaries is licensed or otherwise permitted by other Persons to
use.

      

      (7)           "Owned Intellectual Property"
means Intellectual Property owned by the Company or its Subsidiaries, directly
or indirectly, jointly or individually.

       

      
        
          
             

          

          
            17

            
              

            

          

          
             

          

        

      

        

      (8)           "Products" shall mean the
software products marketed, sold, licensed, supported, serviced or maintained by
the Company or a Subsidiary, together with the inventory of the Products, the
Ancillary Product Materials, any and all such software related to, comprising or
constituting such products, any and all supplements, modifications, updates,
corrections and enhancements to past and current versions of such products,
shipping versions of such products, versions of such products currently under
development, and any and all English and foreign language versions of current
and past versions of such products, shipping versions of such products and
versions of such products currently under development; and any and all
documentation, back-up tapes and archival tapes relating to the
foregoing.

      

      (9)           "Public Software" means
software which creates, or purports to create, obligations for the user or
grants, or purports to grant, to any third party any rights or immunities under
the user's intellectual property or proprietary rights in its software
(including, without limitation, open source software and any other software that
requires as a condition of use, modification and/or distribution of the software
that other software incorporated into, derived from or distributed with that
software be (1) disclosed or distributed in source code form, (2) licensed for
the purpose of making derivative works, or (3) redistributable at no charge),
shareware, "copyleft" software, or similar software.

      

      (10)           "Registered" means issued,
registered, renewed or the subject of a pending application.

         

      (y)           Environmental
Laws.  The Company and its Subsidiaries (i) are in compliance
with any and all applicable Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect.  The term "Environmental Laws" means all
federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous Materials") into the environment, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

       

      (z)           Subsidiary
Rights.  The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary.

       

      
        
          
             

          

          
            18

            
              

            

          

          
             

          

        

      

      (aa)           Tax
Status.  The Company and each of its Subsidiaries (i) has made
or filed all federal, foreign and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply.  There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim.

       

      (bb)           Internal Accounting and
Disclosure Controls.  Except as set forth on Schedule 3(bb), the
Company and each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference.  Except as set forth on Schedule 3(bb),
Company maintains disclosure controls and procedures (as such term is defined in
Rule 13a-14 under the 1934 Act) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed in to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the Company’s management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure.  Except as set forth on Schedule 3(bb),
during the twelve months prior to the date hereof, neither the Company nor any
of its Subsidiaries has received any notice or correspondence from any
accountant relating to any potential material weakness in any part of the system
of internal accounting controls of the Company or any of its
Subsidiaries.

       

      (cc)           Form S-1
Eligibility.  The Company is eligible to register the
Conversion Shares and the Warrant Shares for resale by the Buyers using Form S-1
promulgated under the 1933 Act.

       

      (dd)           Stock Option
Plans.  Each stock option granted by the Company under the
Company's stock option plan was granted (i) in accordance with the terms of the
Company's stock option plan and (ii) with an exercise price at least equal to
the fair market value of the Common Stock on the date such stock option would be
considered granted under United States generally accepted accounting principles
consistently applied and applicable law.  No stock option granted
under the Company's stock option plan has been backdated.  The Company
has not knowingly granted, and there is no and has been no Company policy or
practice to knowingly grant, stock options prior to, or otherwise knowingly
coordinate the grant of stock options with, the release or other public
announcement of material information regarding the Company or its Subsidiaries
or their financial results or prospects.

       

      (ee)           Off Balance Sheet
Arrangements.  There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance
sheet entity that is required to be disclosed by the Company in its Exchange Act
filings and is not so disclosed or that otherwise would be reasonably likely to
have a Material Adverse Effect.

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

       

      (ff)           Ranking of
Notes.  Except as set forth on Schedule 3(ff), no
Indebtedness of the Company is senior to or ranks pari passu with the Notes in
right of payment, whether with respect of payment of redemptions, interest,
damages or upon liquidation or dissolution or otherwise.

       

      (gg)          Manipulation of
Price.  The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) other than the Agent sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any of the Securities, or (iii) other
than the Agent paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.

       

      (hh)          Transfer
Taxes.  On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection
with the sale and transfer of the Securities to be sold to each Buyer hereunder
will be, or will have been, fully paid or provided for by the Company, and all
laws imposing such taxes will be or will have been complied with.

       

      (ii)            Investment Company
Status.  The Company is not, and upon consummation of the sale
of the Securities, and for so long any Buyer holds any Securities, will not be,
an "investment company," a company controlled by an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company" as such terms are defined in the Investment Company Act
of  1940, as amended.

       

      (jj)            No Disagreements with
Accountants and Lawyers.  There are no material disagreements
of any kind presently existing, or reasonably anticipated by the Company to
arise, between the Company and the accountants and lawyers formerly or presently
employed by the Company and the Company is current with respect to any fees owed
to its accountants and lawyers which could affect the Company's ability to
perform any of its obligations under any of the Transaction
Documents.

       

      (kk)          Acknowledgement Regarding
Buyers' Trading Activity.  The Company understands and
acknowledges (i) that none of the Buyers have been asked by the Company or its
Subsidiaries to agree, nor has any Buyer agreed with the Company or its
Subsidiaries, to desist from purchasing or selling, long and/or short,
securities of the Company, or "derivative" securities based on securities issued
by the Company or to hold the Securities for any specified term; (ii) that any
Buyer, and counterparties in "derivative" transactions to which any such Buyer
is a party, directly or indirectly, presently may have a "short" position in the
Common Stock, and (iii) that each Buyer shall not be deemed to have any
affiliation with or control over any arm's length counterparty in any
"derivative" transaction.  The Company further understands and
acknowledges that (a) one or more Buyers may engage in hedging and/or trading
activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value of
the Conversion Shares and/or the Warrant Shares are being determined, and (b)
such hedging and/or trading activities, if any, can reduce the value of the
existing stockholders' equity interest in the Company both at and after the time
the hedging and/or trading activities are being conducted.  The
Company acknowledges that such aforementioned hedging and/or trading activities
do not constitute a breach of this Agreement, the Notes, the Warrants or any of
the documents executed in connection herewith.

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

    

    

      (ll)           U.S. Real Property Holding
Corporation.  The Company is not, has never been, and so long
as any Securities remain outstanding, shall not become, a U.S. real property
holding corporation within the meaning of Section 897 of the Internal Revenue
Code of 1986, as amended, and the Company shall so certify upon any Buyer's
request.

       

      (mm)       Bank Holding Company
Act.  Neither the Company nor any of its Subsidiaries or
affiliates is subject to the Bank Holding Company Act of 1956, as amended (the
"BHCA") and to
regulation by the Board of Governors of the Federal Reserve System (the "Federal
Reserve").  Neither the Company nor any of its Subsidiaries or
affiliates owns or controls, directly or indirectly, five percent (5%) or more
of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.  Neither
the Company nor any of its Subsidiaries or affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

       

      (nn)        Shell Company Status.
The Company is not, and has not been at any time during the 12 months preceding
the date hereof, an issuer identified in Rule 144(i)(1).

       

      (oo)        No Additional
Agreements.  The Company does not have any agreement or
understanding with any Buyer with respect to the transactions contemplated by
the Transaction Documents other than as specified in the Transaction
Documents.

       

      (pp)        Judgments.  Schedule 3(pp)
contains a list of certain judgments outstanding against the Company that have
been properly accrued on the Company's balance sheet in accordance with
GAAP.

       

      (qq)        Disclosure.  The
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Buyers or their respective agents or counsel with any
information that constitutes or could reasonably be expected to constitute
material, nonpublic information.  The Company understands and confirms
that each of the Buyers will rely on the foregoing representations in effecting
transactions in securities of the Company.  All disclosure provided to
the Buyers regarding the Company, its business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on behalf of
the Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.  Each press release issued by the Company or any
of its Subsidiaries during the twelve (12) months preceding the date of this
Agreement did not at the time of release contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.  No event or
circumstance has occurred or information exists with respect to the Company or
any Subsidiary or either of its or their respective business, properties,
prospects, operations or financial conditions, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming for this purpose
that the Company's reports filed under the 1934 Act, as amended, are being
incorporated into an effective registration statement filed by the Company under
the 1933 Act).  The Company acknowledges and agrees that no Buyer
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 2.

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                4.

              	
                COVENANTS.

              

      

       

      (a)           Best
Efforts.  Each party shall use its best efforts timely to
satisfy each of the covenants and the conditions to be satisfied by it as
provided in Sections 5, 6 and 7 of this Agreement.

       

      (b)           Form D and Blue
Sky.  The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each
Buyer promptly after such filing.  The Company, on or before the
Closing Date, shall take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for or to qualify the Securities
for sale to the Buyers at the Closing pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to the Buyers on or prior to the Closing
Date.  The Company shall make all filings and reports relating to the
offer and sale of the Securities required under applicable securities or "Blue
Sky" laws of the states of the United States following the Closing
Date.

       

      (c)           Reporting
Status.  Until the date on which the Investors (as defined in
the Registration Rights Agreement) shall have sold all the Conversion Shares and
Warrant Shares and
none of the Notes or Warrants is outstanding (the "Reporting Period"), the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would otherwise permit such termination.

       

      (d)           Use of
Proceeds.  The Company will use the proceeds from the sale of
the Securities for general corporate purposes, including general and
administrative expenses and not for (i) the repayment of any outstanding
Indebtedness of the Company or any of its Subsidiaries other than as set forth
on Schedule
4(d)(i) or (ii) the redemption or repurchase of any of its or its
Subsidiaries' equity securities.

       

      (e)           Financial
Information.  The Company agrees to send the following to each
Investor during the Reporting Period (i) unless the following are filed with the
SEC through EDGAR and are available to the public through the EDGAR system,
within one (1) Business Day after the filing thereof with the SEC, a copy of its
Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current
Reports on Form 8-K and any registration statements (other than on Form S-8) or
amendments filed pursuant to the 1933 Act, (ii) on the same day as the release
thereof, facsimile copies of all press releases issued by the Company or any of
its Subsidiaries, and (iii) copies of any notices and other information made
available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.  As used herein, "Business Day" means any day
other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

      (f)           Listing.  The
Company shall promptly secure the listing of all of the Registrable Securities
(as defined in the Registration Rights Agreement) upon each national securities
exchange and automated quotation system, if any, upon which the Common Stock is
then listed (subject to official notice of issuance) and shall maintain such
listing of all Registrable Securities from time to time issuable under the terms
of the Transaction Documents.  The Company shall maintain the Common
Stock's authorization for listing on the Principal Market.  Neither
the Company nor any of its Subsidiaries shall take any action which would be
reasonably expected to result in the delisting or suspension of the Common Stock
on the Principal Market. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 4(f).

       

      (g)           Fees.  The
Company shall reimburse CNH or its designee(s) (in addition to any other expense
amounts paid to any Buyer prior to the date of this Agreement) for all
reasonable costs and expenses incurred in connection with the transactions
contemplated by the Transaction Documents (including all reasonable legal fees
and disbursements in connection therewith, documentation and implementation of
the transactions contemplated by the Transaction Documents and due diligence in
connection therewith), which amount may be withheld by such Buyer from its
Purchase Price at the Closing.  The Company shall be responsible for
the payment of any placement agent's fees, financial advisory fees, or broker's
commissions (other than for Persons engaged by or on behalf of any Buyer)
relating to or arising out of the transactions contemplated hereby, including,
without limitation, any fees or commissions payable to the Placement
Agent.  The Company shall pay, and hold each Buyer harmless against,
any liability, loss or expense (including, without limitation, reasonable
attorney's fees and out-of-pocket expenses) arising in connection with any claim
relating to any such payment.

       

      (h)           Pledge of
Securities.  The Company acknowledges and agrees that the
Securities may be pledged by an Investor in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities.  The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Investor
effecting a pledge of Securities shall be required to provide the Company with
any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement or any other Transaction Document, including, without limitation,
Section 2(f) of this Agreement; provided that an Investor and its pledgee shall
be required to comply with the provisions of Section 2(f) of this Agreement in
order to effect a sale, transfer or assignment of Securities to such
pledgee.  The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an
Investor.

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

      (i)           Disclosure of Transactions
and Other Material Information.  The Company shall, on or
before 8:30 a.m., New York City time, on the fourth Business Day after this
Agreement is executed, issue a press release reasonably acceptable to the Buyers
disclosing all material terms of the transactions contemplated hereby and file a
Current Report on Form 8-K describing the terms of the transactions contemplated
by the Transaction Documents in the form required by the 1934 Act, and attaching
the material Transaction Documents (including, without limitation, this
Agreement (and all schedules to this Agreement), the form of the Notes, the form
of Warrant, the form of Registration Rights Agreement, the form of Lock-Up
Agreements, the form of Security Documents) as exhibits to such filing
(including all attachments, the "8-K Filing").  From
and after the 8-K Filing, no Buyer shall be in possession of any material,
nonpublic information received from the Company, any of its Subsidiaries or any
of its respective officers, directors, employees or agents, that is not
disclosed in the 8-K Filing.  The Company shall not, and shall cause
each of its Subsidiaries and each of their respective officers, directors,
employees and agents, not to, provide any Buyer with any material, nonpublic
information regarding the Company or any of its Subsidiaries from and after the
8-K Filing without the express written consent of such Buyer.  In the
event of a breach of the foregoing covenant by the Company, any Subsidiary, or
its each of respective officers, directors, employees and agents, in addition to
any other remedy provided herein or in the Transaction Documents, a Buyer shall
have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such material, nonpublic information
without the prior approval by the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees or agents.  No Buyer
shall have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, stockholders or agents for any
such disclosure.  Subject to the foregoing, neither the Company, its
Subsidiaries nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions (i)
in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations, including the
applicable rules and regulations of the Principal Market (provided that in the
case of clause (i) each Buyer shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its
release).  Without the prior written consent of any applicable Buyer,
neither the Company nor any of its Subsidiaries or affiliates shall disclose the
name of such Buyer in any filing, announcement, release or otherwise except
where such disclosure is required by applicable law and regulations (including
the rules and regulations of  any applicable Eligible Market),
provided the Company agrees that unless otherwise required by such law or
regulations, it shall disclose any such names only through a Transaction
Document that is filed as an exhibit to a report or other filing made with the
SEC; provided
further, that
such Buyer shall be consulted by the Company in connection with any such filing,
announcement, release or other public disclosure prior to its
release.

       

      (j)           Additional Registration
Statements.  Until the date that is ninety (90) calendar days
from the earlier of (i) the Initial Effective Date (as defined in the
Registration Rights Agreement) and (ii) the date all of the Registrable
Securities may be sold without the requirement for the Company to be in
compliance with Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144, the Company shall not file a registration statement under
the 1933 Act relating to securities that are not the
Securities.

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

      (k)           Additional Notes; Variable
Securities; Dilutive Issuances.  So long as any Buyer
beneficially owns any Securities, the Company will not issue any Notes other
than to the Buyers as contemplated hereby and the Company shall not issue any
other securities that would cause a breach or default under the
Notes.  For so long as any Notes or Warrants remain outstanding, the
Company shall not, in any manner, issue or sell any rights, warrants or options
to subscribe for or purchase Common Stock or directly or indirectly convertible
into or exchangeable or exercisable for Common Stock at a price which varies or
may vary with the market price of the Common Stock, including by way of one or
more reset(s) to any fixed price unless the conversion, exchange or exercise
price of any such security cannot be less than the then applicable Conversion
Price (as defined in the Notes) with respect to the Common Stock into which any
Note is convertible or the then applicable Exercise Price (as defined in the
Warrants) with respect to the Common Stock into which any Warrant is
exercisable.

       

      (l)           Corporate
Existence.  So long as any Buyer beneficially owns any Notes or
Warrants, the Company shall maintain its corporate existence and shall not be
party to any Fundamental Transaction (as defined in the Warrants) unless the
Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Notes and Warrants.

       

      (m)          Reservation of
Shares.

       

      (i)           So
long as any Buyer owns any Notes or Warrants, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance no less than 130% of the sum of the maximum number of shares of Common
Stock issuable (the "Required
Reserved Amount") (i) upon conversion of the Notes and (ii) upon exercise
of the Warrants then outstanding (without taking into account any limitations on
the conversion of the Notes or exercise of the Warrants set forth in the Notes
and Warrants, respectively).  If at any time the number of shares of
Common Stock authorized and reserved for issuance is not sufficient to meet the
Required Reserved Amount, the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of stockholders to authorize
additional shares to meet the Company's obligations under Section 3(c), in the
case of an insufficient number of authorized shares, obtain stockholder approval
of an increase in such authorized number of shares, and voting the management
shares of the Company in favor of an increase in the authorized shares of the
Company to ensure that the number of authorized shares is sufficient to meet the
Required Reserved Amount.

       

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      (ii)         The
parties hereto acknowledge that, as of the date hereof, the Company does not
have the number of authorized shares of Common Stock sufficient to satisfy the
Required Reserved Amount.  The Company represents and warrants that
its Board of Directors and stockholders have duly authorized an amendment to the
Company’s Certificate of Incorporation (the “Charter Amendment”) to increase its
authorized shares of Common Stock to 190,000,000 shares, which amount will be
sufficient to permit the Company to satisfy the then Required Reserved Amount
when accepted for filing by the Secretary of State of the State of Delaware
(“Delaware Secretary of State”).  The Company covenants and agrees to:
(1) prepare a preliminary Information Statement regarding the Charter Amendment
and file the same with the SEC no later than fourteen (14) calendar days
following the date hereof, (2) promptly respond to any comments by the SEC
thereon and use its best efforts to cause such Information Statement to be
approved for distribution to stockholders by the SEC, (3) promptly following
either the approval of the Information Statement for distribution to all
stockholders by the SEC, after addressing all SEC comments, or the elapse of 10
calendar days from the filing of the Information Statement without notification
from the SEC that the Information Statement will be reviewed, prepare, file with
the SEC and mail to all Company stockholders a definitive copy of the
Information Statement, and (4) promptly following the elapse of 20 calendar days
from such mailing, file the Charter Amendment with the Delaware Secretary of
State and deliver to the Company's then transfer agent (with a copy to the
Buyers) the Irrevocable Transfer Agent Instructions, in the form of Exhibit E
attached hereto.  The Company further covenants and agrees that until
such time as the Charter Amendment is accepted for filing by the Delaware
Secretary of State, it shall not take any action that would decrease the number
of shares of authorized, unissued and unreserved Common Stock available to meet
its obligations in Section 4(m)(i) above or issue any shares of Common Stock or
issue any securities convertible, exchangeable or exercisable into shares of
Common Stock, other than pursuant to (A) the exercise of options under the
Company's Approved Stock Plan, provided that no option term, exercise price or
similar provisions of any issuances pursuant to such Approved Stock Plan are
amended, modified or changed on or after the date hereof, (B) the conversion or
exercise of any preferred stock or warrants of the Company, respectively,
outstanding as of the date hereof, provided that the terms of such preferred
Stock or warrants are not amended, modified or changed on or after the date
hereof, or (B) the vesting of shares of Common Stock outstanding as of the date
hereof, provided that the terms of such unvested shares are not amended,
modified or changed on or after the date hereof.

       

      (n)          Additional Issuances of
Securities.

       

      (i)           For
purposes of this Section 4(n), the following definitions shall
apply.

       

      (1)           "Approved Stock Plan" means any
employee benefit plan which has been approved by the Board of Directors of the
Company, pursuant to which the Company's securities may be issued to any
employee, officer or director for services provided to the Company.

      

      (2)           "Common Stock Equivalents"
means, collectively, Options and Convertible Securities.

       

      (3)           "Convertible Securities" means
any stock or securities (other than Options) convertible into or exercisable or
exchangeable for Common Shares.

       

      (4)           "Options" means any rights,
warrants or options to subscribe for or purchase Common Stock or Convertible
Securities.

       

      (5)           "Trading Day" means any day on
which the Common Stock is traded on the Principal Market, or, if the Principal
Market is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is
then traded; provided that "Trading Day" shall not include any day on which the
Common Stock is scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00 p.m., New York City
time).

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

      (ii)         From
the date hereof until the date that no Notes are outstanding, the Company will
not, directly or indirectly, (A) offer, sell, grant any option to purchase, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its or its Subsidiaries' equity or
equity equivalent securities, including without limitation any debt, preferred
stock or other instrument or security that is, at any time during its life and
under any circumstances, convertible into or exchangeable or exercisable for
shares of Common Stock or Common Stock Equivalents or (B) be a party to any
solicitations, negotiations or discussions with regard to the
foregoing.

       

      (iii)        The
restrictions contained in subsection (ii) of this Section 4(n) shall not apply
in connection with the issuance of any Excluded Securities.  As used
herein, "Excluded
Securities" means shares of Common Stock: (i) issued or issuable in
connection with any Approved Stock Plan; provided that the option term, exercise
price or similar provisions of any issuances pursuant to such Approved Stock
Plan are not amended, modified or changed on or after the date hereof, (ii)
issued or issuable upon conversion of the Notes, (iii) issued or issuable upon
exercise of the Warrants, (iv) issued or issuable upon conversion of any Options
or Convertible Securities which are outstanding on the day immediately preceding
the date hereof, provided that the terms of such Options or Convertible
Securities are not amended, modified or changed on or after the date hereof, (v)
issued in a public or private offering which generates gross proceeds to the
Company of at least $100,000 with a price per share of Common Stock no less than
95% of the arithmetic average of the Weighted Average Price (as defined in the
Notes) of the Common Stock on the thirty (30) Trading Days immediately preceding
the date of execution of a definitive agreement with respect to the issuance of
such Common Stock, or (vi) as the consideration issued to the stockholders of
the target entity in a merger transaction or stock acquisition or to the
partners in strategic business partnerships or joint ventures, in each case with
non-affiliated third parties in a bona fide transaction and otherwise on an
arm's length basis, the purpose of which is not to raise additional capital,
which for purposes of clarity shall not include securities issued to any other
party in connection with any such transaction.

       

      (o)           Collateral
Agent.

       

      (i)          Each
Buyer hereby (a) appoints CNH as the collateral agent hereunder and under the
Security Documents (in such capacity, the "Collateral Agent"), and (b)
authorizes the Collateral Agent (and its officers, directors, employees and
agents) to take such action on such Buyer's behalf in accordance with the terms
hereof and thereof.  The Collateral Agent shall not have, by reason
hereof or the Security Documents, a fiduciary relationship in respect of any
Buyer.  Neither the Collateral Agent nor any of its officers,
directors, employees and agents shall have any liability to any Buyer for any
action taken or omitted to be taken in connection hereof or the Security
Documents except to the extent caused by its own gross negligence or willful
misconduct, and each Buyer agrees to defend, protect, indemnify and hold
harmless the Collateral Agent and all of its officers, directors, employees and
agents (collectively, the "Collateral Agent Indemnitees") from and against
any losses, damages, liabilities, obligations, penalties, actions, judgments,
suits, fees, costs and expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses) incurred by such Collateral Agent
Indemnitee, whether direct, indirect or consequential, arising from or in
connection with the performance by such Collateral Agent Indemnitee of the
duties and obligations of Collateral Agent pursuant hereto or the Security
Documents.  The Collateral Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the holders of at least a majority in principal amount
of the Notes then outstanding, and such instructions shall be binding upon all
holders of Notes; provided, however, that the
Collateral Agent shall not be required to take any action which, in the
reasonable opinion of the Collateral Agent, exposes the Collateral Agent to
liability or which is contrary to this Agreement or any other Transaction
Document or applicable law.

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

      (ii)         The
Collateral Agent shall be entitled to rely upon any written notices, statements,
certificates, orders or other documents or any telephone message believed by it
in good faith to be genuine and correct and to have been signed, sent or made by
the proper Person, and with respect to all matters pertaining to this Agreement,
the Security Agreement or any of the Transaction Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it.

       

      (iii)        The
Collateral Agent may resign from the performance of all its functions and duties
hereunder and under the Notes and the Security Documents at any time by giving
at least ten (10) Business Days prior written notice to the Company and each
holder of the Notes.  Such resignation shall take effect upon the
acceptance by a successor Collateral Agent of appointment as provided
below.  Upon any such notice of resignation, the holders of a majority
of the outstanding principal under the Notes shall appoint a successor
Collateral Agent.  Upon the acceptance of the appointment as
Collateral Agent, such successor Collateral Agent shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent, and the retiring Collateral Agent shall be discharged from its
duties and obligations under this Agreement, the Notes and the Security
Documents.  After any Collateral Agent's resignation hereunder, the
provisions of this Section 4(o) shall inure to its benefit.  If a
successor Collateral Agent shall not have been so appointed within said ten (10)
Business Day period, the retiring Collateral Agent shall then appoint a
successor Collateral Agent who shall serve until such time, if any, as the
holders of a majority of the outstanding principal under the Notes appoint a
successor Collateral Agent as provided above.

       

      (p)           Restriction on Redemption
and Cash Dividends.  So long as any Notes are outstanding, the
Company shall not, directly or indirectly, redeem, or declare or pay any cash
dividend or distribution on, the Common Stock without the prior express written
consent of the holders of Notes representing not less than a majority of the
aggregate principal amount of the then outstanding Notes.

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

      (q)           Public
Information.  At any time during the period commencing from the
six (6) month anniversary of the Closing Date and ending at such time that all
of the Securities can be sold either pursuant to a registration statement, or if
a registration statement is not available for the resale of all of the
Securities, may be sold without the requirement for the Company to be in
compliance with Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144, if the Company shall fail for any reason to satisfy the
current public information requirement under Rule 144(c) (a "Public Information Failure")
then, as partial relief for the damages to any holder of Securities by reason of
any such delay in or reduction of its ability to sell the Securities (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each such holder an amount in cash equal to
one percent (1.0%) of the aggregate Purchase Price of such holder's Securities
on the day of a Public Information Failure and on every thirtieth day (pro rated
for periods totaling less than thirty days) thereafter until the earlier of (i)
the date such Public Information Failure is cured and (ii) such time that such
public information is no longer required pursuant to Rule 144.  The
payments to which a holder shall be entitled pursuant to this Section 4(q) are
referred to herein as "Public
Information Failure Payments."  Public Information Failure Payments shall be paid
on the earlier of (I) the last day of the calendar month during which such
Public Information Failure Payments are incurred
and (II) the third Business Day after the event or failure giving rise to the
Public Information Failure Payments is
cured.  In the event the Company fails to make Public Information
Failure Payments in
a timely manner, such Public Information Failure Payments shall bear
interest at the rate of 1.5% per month (prorated for partial months) until paid
in full.

       

      (r)           Conduct of
Business.  For so long as any Buyers owns Notes or Warrants,
the business of the Company and its Subsidiaries shall not be conducted in
violation of any law, ordinance or regulation of any governmental entity, except
where such violations would not result, either individually or in the aggregate,
in a Material Adverse Effect.

       

      (s)           Lock-Up.  The
Company shall not amend or waive any provision of any of the Lock-Up Agreements
except to extend the term of the lock-up period and shall enforce such Lock-Up
Agreements in accordance with their terms.

       

      (t)           Security Surrender
Agreements.  The Company shall not amend or waive any provision
of the Securities Surrender Agreement (as defined below) and shall enforce such
Securities Surrender Agreement in accordance with their terms.  The
Company shall use the shares of Common Stock surrendered by the Covering
Stockholders pursuant to the Securities Surrender Agreement solely to satisfy
its conversion obligations under the Notes and its exercise obligations under
the Warrants, as applicable.

       

      (u)          Good
Standing.  On or prior to the twenty (20) Business Day after
the Closing Date, the Company shall cause Gamecock Media Europe Limited (UK) to
be in good standing with the Companies House.

       

      (v)          Closing
Documents.  On or prior to fourteen (14) calendar days after
the Closing Date, the Company agrees to deliver, or cause to be delivered, to
each Buyer and Schulte Roth & Zabel LLP a complete closing set of the
Transaction Documents, Securities and any other document required to be
delivered to any party pursuant to Section 7 hereof or
otherwise.

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                5.

              	
                REGISTER; TRANSFER
      AGENT INSTRUCTIONS.

              

      

       

      (a)           Register.  The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each holder of
Securities), a register for the Notes and the Warrants, in which the Company
shall record the name and address of the Person in whose name the Notes and the Warrants have
been issued (including the name and address of each transferee), the principal
amount of Notes held by such  Person, the number of Conversion Shares
issuable upon conversion of the Notes, the number of Warrant Shares issuable
upon exercise of the Warrants held by such Person.  The Company shall
keep the register open and available at all times during business hours for
inspection of any Buyer or its legal representatives.

       

      (b)           Transfer Agent
Instructions.  The Company shall issue irrevocable instructions
to its transfer agent, and any subsequent transfer agent, to issue certificates
or credit shares to the applicable balance accounts at DTC, registered in the
name of each Buyer or its respective nominee(s), for the Conversion Shares and
the Warrant Shares issuable upon conversion of the Notes or exercise of the
Warrants in such amounts as specified from time to time by each Buyer to the
Company upon conversion of the Notes or exercise of the Warrants in the form of
Exhibit E
attached hereto (the "Irrevocable Transfer Agent
Instructions").  The Company warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section
5(b), and stop transfer instructions to give effect to Section 2(f) hereof, will
be given by the Company to its transfer agent, and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the other Transaction
Documents.  If a Buyer effects a sale, assignment or transfer of the
Securities in accordance with Section 2(f), the Company shall permit the
transfer and shall promptly instruct its transfer agent to issue one or more
certificates or credit shares to the applicable balance accounts at DTC in such
name and in such denominations as specified by such Buyer to effect such sale,
transfer or assignment.  In the event that such sale, assignment or
transfer involves Conversion Shares or Warrant Shares sold, assigned or
transferred pursuant to an effective registration statement or pursuant to Rule
144, the transfer agent shall issue such Securities to the Buyer, assignee or
transferee, as the case may be, without any restrictive legend.  The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Buyer.  Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Section 5(b)
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Section 5(b), that a Buyer shall be
entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.

       

      
        	
                 
      

              	
                6.

              	
                CONDITIONS TO THE
      COMPANY'S OBLIGATION TO
SELL.

              

      

       

      The
obligation of the Company hereunder to issue and sell the Notes and the related
Warrants to each Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Buyer with prior
written notice thereof:

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

      (i)           Such
Buyer shall have executed each of the Transaction Documents to which it is a
party and delivered the same to the Company.

       

      (ii)          Such
Buyer shall have delivered to the Company the Purchase Price (less, in the case
of CNH, the amounts withheld pursuant to Section 4(g)) for the Notes and the
related Warrants being purchased by such Buyer and each other Buyer at the
Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.

       

      (iii)        The
representations and warranties of such Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date which shall be true and correct as of such specified date), and
such Buyer shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Buyer at or prior to the Closing
Date.

       

      
        	
                 
      

              	
                7.

              	
                CONDITIONS TO EACH
      BUYER'S OBLIGATION TO
PURCHASE.

              

      

       

      The
obligation of each Buyer hereunder to purchase the Notes and the Warrants at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion
by providing the Company with prior written notice thereof:

       

      (i)          The
Company shall have duly executed and delivered to such Buyer (i) each of the
Transaction Documents and (ii) the Notes (in such principal amounts as such
Buyer shall request), being purchased by such Buyer at the Closing pursuant to
this Agreement and (iii) the Warrants (in such amounts as such Buyer shall
request) being purchased by such Buyer at the Closing pursuant to this
Agreement.

       

      (ii)         Such
Buyer shall have received the opinion of Greenberg Traurig, LLP, the Company's
outside counsel ("Company
Counsel"), dated as of the Closing Date, in substantially the form of
Exhibit F
attached hereto.

       

      (iii)        [Intentionally
omitted]

       

      (iv)        The
Company shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company and each of its operating
Subsidiaries in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation as of a date within 10 days of
the Closing Date.

       

      (v)         The
Company shall have delivered to such Buyer a certificate evidencing the
Company's qualification as a foreign corporation and good standing issued by the
Secretary of State (or comparable office) of each jurisdiction in which the
Company conducts business and is required to so qualify, as of a date within ten
(10) days of the Closing Date.

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

      (vi)        The
Common Stock (I) shall be listed on the Principal Market and (II) shall not have
been suspended, as of the Closing Date, by the SEC or the Principal Market from
trading on the Principal Market nor shall suspension by the SEC or the Principal
Market have been threatened, as of the Closing Date, either (A) in writing by
the SEC or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.

       

      (vii)       The
Company shall have delivered to such Buyer a certified copy of the Certificate
of Incorporation as certified by the Secretary of State of the State of Delaware
within 10 days of the Closing Date.

       

      (viii)      The
Company shall have delivered to such Buyer a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(b) as adopted by the Company's Board of
Directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of
Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the
form attached hereto as Exhibit
G.

       

      (ix)         The
representations and warranties of the Company shall be true and correct as of
the date when made and shall be true and correct in all material respects as of
the Closing Date (except, that any representation or warranty that is qualified
by materiality or Material Adverse Effect shall be true and correct in all
respects as of the Closing Date) as though made at that time (except for
representations and warranties that speak as of a specific date which shall be
true and correct as of such specified date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Closing
Date.  Such Buyer shall have received a certificate, executed by the
Chief Executive Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
such Buyer in the form attached hereto as Exhibit
H.

       

      (x)          The
Company shall have delivered to such Buyer a letter from the Company's transfer
agent certifying the number of shares of Common Stock outstanding as of a date
within five days of the Closing Date.

       

      (xi)         The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.

       

      (xii)        All
officers, directors, employees and affiliates of the Company set forth on Schedule 7(xii) shall
have entered into a lock-up agreement with the Company in the form attached
hereto as Exhibit
I (the "Lock-Up
Agreements").

       

      (xiii)       Each
of Terry Phillips, Gregory Phillips and Melanie Mroz (the "Covering Shareholders") shall
have entered into a securities surrender agreement with the Company in the form
attached hereto as Exhibit J (the "Securities Surrender
Agreements").

      
        
           

        

        
          32

          
            

          

        

        
           

        

      

      (xiv)      In
accordance with the terms of the Security Documents, the Company shall have
delivered to the Collateral Agent (i) certificates representing the
Subsidiaries' shares of capital stock, along with duly executed blank stock
powers and (ii) appropriate financing statements on Form UCC-1 to be duly filed
in such office or offices as may be necessary or, in the opinion of the
Collateral Agent, desirable to perfect the security interests purported to be
created by each Security Document.

       

      (xv)       Within
six (6) Business Days prior to the Closing, the Company shall have delivered or
caused to be delivered to each Buyer (A) certified copies of UCC search results,
listing all effective financing statements which name as debtor the Company or
any of its Subsidiaries filed in the prior five years to perfect an interest in
any assets thereof, together with copies of such financing statements, none of
which, except as otherwise agreed in writing by the Buyers, shall cover any of
the Collateral (as defined in the Security Documents) and the results of
searches for any tax lien and judgment lien filed against such Person or its
property, which results, except as otherwise agreed to in writing by the Buyers
shall not show any such Liens (as defined in the Security Documents); and (B) a
perfection certificate, duly completed and executed by the Company and each of
its Subsidiaries, in form and substance satisfactory to the Buyers.

       

      8.    
       TERMINATION.  In
the event that the Closing shall not have occurred with respect to a Buyer on or
before five (5) Business Days from the date hereof due to the Company's or such
Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above
(and the nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party; provided, however, that if this
Agreement is terminated pursuant to this Section 8, the Company shall remain
obligated to reimburse the non-breaching Buyers for the expenses described in
Section 4(g) above.

       

      
        	
                 
      

              	
                9.

              	
                MISCELLANEOUS.

              

      

       

      (a) Governing Law; Jurisdiction;
Jury Trial.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper.  Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

      
        
           

        

        
          33

          
            

          

        

        
           

        

      

      (b) Counterparts.  This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.

       

      (c) Headings.  The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.

       

      (d) Severability.  If
any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties.  The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s).

       

      (e) Entire Agreement;
Amendments.  This Agreement and the other Transaction Documents
supersede all other prior oral or written agreements between the Buyers, the
Company, their affiliates and Persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, the other Transaction Documents
and the instruments referenced herein and therein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters.  No provision of this
Agreement may be amended or waived other than by an instrument in writing signed
by the Company and the holders of at least fifty percent (50%) of the aggregate
amount of Registrable Securities issued and issuable hereunder and under the
Notes and Warrants, and any amendment or waiver to this Agreement made in
conformity with the provisions of this Section 9(e) shall be binding on all
Buyers and holders of Securities.  No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
applicable Securities then outstanding.  No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same consideration
(other than the reimbursement of legal fees) also is offered to all of the
parties to the Transaction Documents, holders of Notes or holders of the
Warrants, as the case may be.  The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.  Without limiting the
foregoing, the Company confirms that, except as set forth in this Agreement, no
Buyer has made any commitment or promise or has any other obligation to provide
any financing to the Company or otherwise.

      
        
           

        

        
          34

          
            

          

        

        
           

        

      

      (f) Notices.  Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered:  (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one Business Day after deposit with an overnight courier
service, in each case properly addressed to the party to receive the
same.  The addresses and facsimile numbers for such communications
shall be:

       

      If to the
Company:

       

      SouthPeak
Interactive Corporation

      2900 Polo
Parkway

      Midlothian,
VA  23113

      Telephone:          (804)
378-5100

      Facsimile:            (804)
378-6085

      Attention:            Reba
McDermott, Chief Financial Officer

       

      With a copy (for informational purposes
only) to:

       

      Greenberg
Traurig, LLP

      1750
Tysons Boulevard

      Suite
1200

      McLean,
VA  22102

      Telephone:          (703)
749-1352

      Facsimile:            (703)
714-8359

      Attention:  Mark
Wishner, Esq.

       

      If to the
Transfer Agent:

       

      American
Stock Transfer & Trust Company, LLC

      6201 15th
Avenue

      Brooklyn,
NY 11219

      

      Telephone:          (718)
921-8261

      Facsimile:            (718)
765-8712

      Attention:            Donna
Ansbro

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

      If to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
with copies to such Buyer's representatives as set forth on the Schedule of
Buyers,

       

      with a
copy (for informational purposes only) to:

       

      Schulte
Roth & Zabel LLP

      919 Third
Avenue

      New York,
New York  10022

      Telephone:          (212)
756-2000

      Facsimile:            (212)
593-5955

      Attention:            Eleazer
N. Klein, Esq.

      

      or to
such other address and/or facsimile number and/or to the attention of such other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such
change.  Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

       

      (g) Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including
any purchasers of the Notes or the Warrants.  The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of at least a majority of the aggregate number of
Registrable Securities issued and issuable hereunder, including by way of
Fundamental Transaction (unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes and the
Warrants).  A Buyer may assign some or all of its rights hereunder
without the consent of the Company, in which event such assignee shall be deemed
to be a Buyer hereunder with respect to such assigned rights.

       

      (h) No Third Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

       

      (i) Survival.  Unless
this Agreement is terminated under Section 8, the representations and warranties
of the Company and the Buyers contained in Sections 2 and 3, the agreements and
covenants set forth in Sections 4, 5 and 9 shall survive the Closing and the
delivery and exercise of Securities, as applicable.  Each Buyer shall
be responsible only for its own representations, warranties, agreements and
covenants hereunder.

       

      (j) Further
Assurances.  Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

      
        
           

        

        
          36

          
            

          

        

        
           

        

      

      (k) Indemnification.  In
consideration of each Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each other holder of
the Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against
any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status of
such Buyer or holder of the Securities as an investor in the Company pursuant to
the transactions contemplated by the Transaction Documents.  To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.  Except as otherwise set forth herein, the mechanics
and procedures with respect to the rights and obligations under this Section
9(k) shall be the same as those set forth in Section 6 of the Registration
Rights Agreement.  Notwithstanding anything in this Agreement or in
clause (iv) of Section 6(a) of the Registration Rights Agreement to the
contrary, if the Company shall have any indemnification obligations with respect
to any Indemnified Liabilities that resulted primarily from the willful
misconduct or gross negligence of one or more Indemnitees, then the Company
shall not be obligated to indemnify such Indemnitee for such Indemnified
Liabilities. .

       

      (l)           No Strict
Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.

       

      (m)          Remedies.  Each
Buyer and each holder of the Securities shall have all rights and remedies set
forth in the Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract and
all of the rights which such holders have under any law.  Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law.  Furthermore, the Company
recognizes that in the event that it fails to perform, observe, or discharge any
or all of its obligations under the Transaction Documents, any remedy at law may
prove to be inadequate relief to the Buyers.  The Company therefore
agrees that the Buyers shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages and without posting a bond or other security.

      
        
           

        

        
          37

          
            

          

        

        
           

        

      

      (n)          Rescission and Withdrawal
Right.  Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction Documents,
whenever any Buyer exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights

       

      (o)          Payment Set
Aside.  To the extent that the Company makes a payment or
payments to the Buyers hereunder or pursuant to any of the other Transaction
Documents or the Buyers enforce or exercise their rights hereunder or
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.

       

      (p)           Independent Nature of
Buyers' Obligations and Rights.  The obligations of each Buyer
under any Transaction Document are several and not joint with the obligations of
any other Buyer, and no Buyer shall be responsible in any way for the
performance of the obligations of any other Buyer under any Transaction
Document.  Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as, and the Company acknowledges that the Buyers
do not so constitute, a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Buyers are in any way
acting in concert or as a group, and the Company shall not assert any such claim
with respect to such obligations or the transactions contemplated by the
Transaction Documents and the Company acknowledges that the Buyers are not
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents.  The Company
acknowledges and each Buyer confirms that it has independently participated in
the negotiation of the transaction contemplated hereby with the advice of its
own counsel and advisors.  Each Buyer shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose.

       

      [Signature
Page Follows]

      
        
           

        

        
          38

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, each Buyer
and the Company have caused its respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.

       

      
        
          
            
              	 	
                      COMPANY:

                    
	 	 
      
	 	
                      SouthPeak
      Interactive Corporation

                    
	 	 
      
	 	
                      By:  

                    	
                      /s/ Reba McDermott

                    
	 	 
      	
                      Name:
      Reba McDermott

                    
	 	 
      	
                      Title:
      Chief Financial
Officer

                    

            

          

        

      

      

      [Signature
Page to Securities Purchase Agreement]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.

      

      
        
          	 	
                  BUYERS:

                
	 	 
      
	 	
                  CNH
      Diversified Opportunities

                  Master
      Account, L.P.

                
	 	 
      
	 	By:	      
                  CNH
      Partners, LLC

                  its Investment Manager

                
	 	 	 
	 	
                  By:  

                	
                  /s/ Brendan R. Kalb

                
	 	 
      	
                  Name:
      Brendan R. Kalb

                
	 	 
      	
                  Title:
      Associate General Counsel

                  
                    CNH Partners,
LLC

                  

                

        

      

      

      [Signature
Page to Securities Purchase Agreement]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.

      

      
        
          	 	
                  BUYERS:

                
	 	 
      
	 	
                  CNH
      CA Master Account, L.P.

                
	 	 
      
	 	By:	      
                  CNH
      Partners, LLC

                  its Investment Manager

                
	 	 	 
	 	
                  By:  

                	
                  /s/ Brendan R. Kalb

                
	 	 
      	
                  Name:
      Brendan R. Kalb

                
	 	 
      	
                  Title:
      Associate General Counsel

                  
                    CNH
      Partners, LLC

                  

                

        

      

      

      [Signature
Page to Securities Purchase Agreement]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.

      

      
        
          	 	
                  BUYERS:

                
	 	 
      
	 	
                  AQR
      Diversified Arbitrage Fund

                
	 	 
      
	 	
                  By:  

                	
                  /s/ Brendan R. Kalb

                
	 	 
      	
                  Name:
      Brendan R. Kalb

                
	 	 
      	
                  Title:
      Executive Vice President and Secretary

                  AQR
Funds

                

        

      

      

      [Signature
Page to Securities Purchase Agreement]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written
above.

      

      
        
          	 	
                  BUYERS:

                
	 	 
      
	 	
                  By:  

                	
                  /s/ Terry
      Phillips

                
	 	 
      	
                  Terry
      Phillips

                

        

      

      

      [Signature
Page to Securities Purchase Agreement]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
OF BUYERS

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            	
                                                    (1)

                                                  	 	
                                                    (2)

                                                  	 	
                                                    (3)

                                                  	 	 	
                                                    (4)

                                                  	 	 	
                                                    (5)

                                                  	 	 	
                                                    (6)

                                                  	 	
                                                    (7)

                                                  
	
                                                    Buyer

                                                  	 	
                                                    Address and Facsimile Number

                                                  	 	
                                                    Aggregate

                                                    Principal

                                                    Amount of

                                                     Notes

                                                  	 	 	
                                                    Number of Series A

                                                    Warrant Shares

                                                  	 	 	
                                                    Number of Series B

                                                    Warrant Shares

                                                  	 	 	
                                                    Purchase Price

                                                  	 	
                                                    Legal Representative's

                                                    Address and Facsimile Number

                                                  
	  	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                                    CNH
      Diversified Opportunities Master Account, L.P.

                                                  	 	
                                                    c/o
      CNH Partners, LLC

                                                    2
      Greenwich Plaza, 1st Floor

                                                    Greenwich,
      CT  06830

                                                    Attention:  Rocky
      Bryant

                                                    Brendan
      Kalb

                                                    Facsimile:

                                                    Telephone:
      203-742-3600

                                                  	 	$	500,000	 	 	 	1,160,093	 	 	 	870,070	 	 	$	500,000	 	
                                                    Schulte
      Roth & Zabel LLP

                                                    919
      Third Avenue

                                                    New
      York, New York  10022

                                                    Attention:  Eleazer
      Klein, Esq.

                                                    Facsimile:
      (212) 593-5955

                                                    Telephone:  (212)
      756-2376

                                                  
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    CNH
      CA Master Account L.P.

                                                  	 	
                                                    c/o
      CNH Partners, LLC

                                                    2
      Greenwich Plaza, 1st Floor

                                                    Greenwich,
      CT  06830

                                                    Attention:  Rocky
      Bryant

                                                    Brendan
      Kalb

                                                    Facsimile:

                                                    Telephone:
      203-742-3600

                                                  	 	$	2,000,000	 	 	 	4,640,371	 	 	 	3,480,278	 	 	$	2,000,000	 	
                                                    Schulte
      Roth & Zabel LLP

                                                    919
      Third Avenue

                                                    New
      York, New York  10022

                                                    Attention:  Eleazer
      Klein, Esq.

                                                    Facsimile:
      (212) 593-5955

                                                    Telephone:  (212)
      756-2376

                                                  
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    AQR
      Diversified Arbitrage Fund

                                                  	 	
                                                    c/o
      AQR Capital Management

                                                    2
      Greenwich Plaza, 3rd Floor

                                                    Greenwich,
      CT  06830

                                                    Attention:  Rocky
      Bryant

                                                    Brendan
      Kalb

                                                    Facsimile:

                                                    Telephone:
      203-742-3600

                                                  	 	$	2,500,000	 	 	 	5,800,464	 	 	 	4,350,348	 	 	$	2,500,000	 	
                                                    Schulte
      Roth & Zabel LLP

                                                    919
      Third Avenue

                                                    New
      York, New York  10022

                                                    Attention:  Eleazer
      Klein, Esq.

                                                    Facsimile:
      (212) 593-5955

                                                    Telephone:  (212)
      756-2376

                                                  
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                    Terry
      Phillips

                                                  	 	
                                                    c/o
      SouthPeak Interactive Corporation

                                                    2900
      Polo Parkway

                                                    Midlothian,
      VA  23113

                                                    Attention:  Terry
      Phillips

                                                    Facsimile:
      804- 378-5100

                                                    Telephone:
      804-378-6085

                                                  	 	$	500,000	 	 	 	1,160,093	 	 	 	870,070	 	 	$	500,000	 	 
      

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      [Signature
Page to Securities Purchase Agreement]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBITS

      

      
        
          	
                  Exhibit
      A

                	
                  Form
      of Notes

                
	
                  Exhibit
      B-1

                	
                  Form
      of Series A Warrants

                
	
                  Exhibit
      B-2

                	
                  Form
      of Series B Warrants

                
	
                  Exhibit
      C

                	
                  Form
      of Registration Rights Agreement

                
	
                  Exhibit
      D-1

                	
                  Security
      Agreement

                
	
                  Exhibit
      D-2

                	
                  Form
      of Guarantee

                
	
                  Exhibit
      E

                	
                  Form
      of Irrevocable Transfer Agent Instructions

                
	
                  Exhibit
      F

                	
                  Form
      of Company Counsel Opinion

                
	
                  Exhibit
      G

                	
                  Form
      of Secretary's Certificate

                
	
                  Exhibit
      H

                	
                  Form
      of Officer's Certificate

                
	
                  Exhibit
      I

                	
                  Form
      of Lock-Up Agreement

                
	
                  Exhibit
      J

                	
                  Form
      of Securities Surrender
Agreement

                

        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULES

      

      Schedule
3(a)(i) - Good Standing

      Schedule
3(a)(ii) - List of Subsidiaries

      Schedule
3(k) - SEC Documents

      Schedule
3(l) - Absence of Certain Changes

      Schedule
3(q) - Transactions with Affiliates

      Schedule
3(r) - Equity Capitalization

      Schedule
3(s) - Indebtedness and Other Contracts

      Schedule
3(t) - Absence of Litigation

      Schedule
3(u) - Insurance

      Schedule
3(x)(i)(a) - Registered and Material Owned Intellectual Property and
Contracts

      Schedule
3(x)(i)(b) - Exceptions to Intellectual Property Assignability

      Schedule
3(x)(i)(c) - Intellectual Property Breaches or Defaults

      Schedule
3(x)(ii) - Abandoned, Expired and Terminated Owned Intellectual
Property

      Schedule
3(x)(iii) - Intellectual Property Infringement Claims, Actions and
Proceedings

      Schedule
3(x)(v) - Public Software

      Schedule
3(bb) - Internal Accounting and Disclosure Controls

      Schedule
3(ff) - Ranking of Notes

      Schedule
3(pp) - Judgments

      Schedule
4(d)(i) - Use of Proceeds

      Schedule
7(xii) - Parties to Lock-Up AgreementsUnassociated Document

     

    REGISTRATION
RIGHTS AGREEMENT

     

    REGISTRATION RIGHTS AGREEMENT
(this "Agreement"),
dated as of July 19, 2010, by and among SouthPeak Interactive Corporation, a
Delaware corporation, with headquarters located at 2900 Polo Parkway,
Midlothian, Virginia 23113 (the "Company"), and the investors
listed on the Schedule of Buyers attached hereto (each, a "Buyer" and collectively, the
"Buyers").

     

    WHEREAS:

     

    A.           In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to each Buyer
(i) senior secured convertible notes of the Company (the "Notes"), which will, among
other things, be convertible into the Company's common stock, par value $0.0001
per share (the "Common
Stock") (as converted, collectively, the "Conversion Shares"). and (ii)
two series of warrants (the "Warrants") which will be
exercisable to purchase shares of Common Stock (as exercised, collectively, the
"Warrant Shares") in
accordance with the terms of the Warrants.

     

    B.           In
accordance with the terms of the Securities Purchase Agreement, the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the "1933 Act"), and applicable
state securities laws.

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:

     

    1.           Definitions.

     

    Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

     

    (a)          "Additional Effective Date"
means the date the Additional Registration Statement is declared effective by
the SEC.

     

    (b)          "Additional Effectiveness
Deadline" means (i) in the event that the Additional Registration
Statement is not subject to a full review by the SEC, the date which is one
hundred thirty five (135) calendar days after the earlier of the Additional
Filing Date and the Additional Filing Deadline or (ii) in the event that the
Additional Registration Statement is subject to a full review by the SEC, one
hundred sixty five (165) calendar days after the after the earlier of the
Additional Filing Date and the Additional Filing Deadline.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (c)          "Additional Filing Date" means
the date on which the Additional Registration Statement is filed with the
SEC.

     

    (d)          "Additional Filing Deadline"
means if Cutback Shares are required to be included in any Additional
Registration Statement, the later of (i) the date sixty (60) days after the date
substantially all of the Registrable Securities registered under the immediately
preceding Registration Statement are sold and (ii) the date six (6) months from
the Initial Effective Date or the most recent Additional Effective Date, as
applicable.

     

    (e)          "Additional Registrable
Securities" means, (i) any Cutback Shares not previously included on a
Registration Statement and (ii) any capital stock of the Company issued or
issuable with respect to the Notes, the Conversion Shares, the Warrants, the
Warrant Shares, or the Cutback Shares, as applicable, as a result of any stock
split, stock dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on conversion and/or redemption of the Notes
or exercise of the Warrants.

     

    (f)           "Additional Registration
Statement" means a registration statement or registration statements of
the Company filed under the 1933 Act covering any Additional Registrable
Securities.

     

    (g)          "Additional Required Registration
Amount" means (I) any Cutback Shares not previously included on a
Registration Statement, all subject to adjustment as provided in Section 2(f) or
(II) such other amount as may be required by the staff of the SEC pursuant to
Rule 415, without regard to any limitations on conversion and/or redemption of
the Notes or exercise of the Warrants.

     

    (h)          "Business Day" means any day
other than Saturday, Sunday or any other day on which commercial banks in the
City of New York are authorized or required by law to remain
closed.

     

    (i)           "Closing Date" shall have the
meaning set forth in the Securities Purchase Agreement.

     

    (j)           "Cutback Shares" means any of
the Initial Required Registration Amount or the Additional Required Registration
Amount (without regard to clause (II) in the definition thereof) of Registrable
Securities not included in all Registration Statements previously declared
effective hereunder as a result of a limitation on the maximum number of shares
of Common Stock of the Company permitted to be registered by the staff of the
SEC pursuant to Rule 415.  For the purpose of determining the Cutback
Shares, in order to determine any applicable Required Registration Amount,
unless an Investor gives written notice to the Company to the contrary with
respect to the allocation of its Cutback Shares, first the Series B Warrant
Shares (as defined in the Securities Purchase Agreement) shall be excluded on a
pro rata basis until all of the Series B Warrant Shares have been excluded,
second the Series A Warrant Shares (as defined in the Securities Purchase
Agreement) shall be excluded on a pro rata basis until all of the Series A
Warrant Shares have been excluded, and third the Conversion Shares shall be
excluded on a pro rata basis until all of the Conversion Shares have been
excluded.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (k)          "Effective Date" means the
Initial Effective Date and the Additional Effective Date, as
applicable.

     

    (l)           "Effectiveness Deadline" means
the Initial Effectiveness Deadline and the Additional Effectiveness Deadline, as
applicable.

     

     

    (m)         "Filing Deadline" means the
Initial Filing Deadline and the Additional Filing Deadline, as
applicable.

     

    (n)          "Initial Effective Date" means
the date that the Initial Registration Statement has been declared effective by
the SEC.

     

    (o)          "Initial Effectiveness
Deadline" means the date which is (i) in the event that the Initial
Registration Statement is not subject to a full review by the SEC, one hundred
thirty five (135) calendar days after the Closing Date or (ii) in the event that
the Initial Registration Statement is subject to a full review by the SEC, one
hundred sixty five (165) calendar days after the Closing Date.

     

    (p)          "Initial Filing Date" means the
date on which the Initial Registration Statement is filed with the
SEC.

     

    (q)          "Initial Filing Deadline" means
the date which is thirty (30) calendar days after the Closing Date.

     

    (r)           "Initial Registrable
Securities" means (i) the Conversion Shares issued or issuable upon
conversion and/or redemption of the Notes, (ii) the Warrant Shares issued or
issuable upon exercise of the Warrants and (iii) any capital stock of the
Company issued or issuable with respect to the Notes, the Conversion Shares, the
Warrant Shares or the Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to any
limitations on conversion and/or redemption of the Notes or exercise of the
Warrants.

     

    (s)          "Initial Registration
Statement" means a registration statement or registration statements of
the Company filed under the 1933 Act covering the Initial Registrable
Securities.

     

    (t)           "Initial Required Registration
Amount" means 130% of the sum of (i) the number of Conversion Shares
issued and issuable pursuant to the Notes and (ii) the number of Warrant Shares
issued and issuable pursuant to the Warrants, each as of the Trading Day
immediately preceding the applicable date of determination and all subject to
adjustment as provided in Section 2(f), without regard to any limitations on
conversion and/or redemption of the Notes or exercise of the
Warrants.

     

    (u)          "Investor" means a Buyer or any
transferee or assignee thereof to whom a Buyer assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 and any transferee or assignee thereof to whom a
transferee or assignee assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section
9.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (dd)       "Person" means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.

     

    (ee)      
"register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415, and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.

     

    (ff)        "Registrable Securities" means
the Initial Registrable Securities and the Additional Registrable
Securities.

     

    (gg)      "Registration Statement" means
the Initial Registration Statement and the Additional Registration Statement, as
applicable.

     

    (hh)      "Required Holders" means the
holders of at least a majority of the Registrable Securities.

     

    (ii)         "Required Registration Amount"
means either the Initial Required Registration Amount or the Additional Required
Registration Amount, as applicable.

     

    (jj)         "Rule 415" means Rule 415
promulgated under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis.

     

    (kk)       "SEC" means the United States
Securities and Exchange Commission.

     

    (ll)         "Trading Day" means any day on
which the Common Stock is traded on the Principal Market, or, if the Principal
Market (as defined in the Securities Purchase Agreement) is not the principal
trading market for the Common Stock, then on the principal securities exchange
or securities market on which the Common Stock is then traded; provided that
"Trading Day" shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time).

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    2.           Registration.

     

    (a)           Initial Mandatory
Registration.  The Company shall prepare, and, as soon as
practicable but in no event later than the Initial Filing Deadline, file with
the SEC the Initial Registration Statement on Form S-3 covering the resale of
all of the Initial Registrable Securities.  In the event that Form S-3
is unavailable for such a registration, the Company shall use such other form as
is available for such a registration on another appropriate form reasonably
acceptable to the Required Holders, subject to the provisions of Section
2(e).  The Initial Registration Statement prepared pursuant hereto
shall register for resale at least the number of shares of Common Stock equal to
the Initial Required Registration Amount determined as of the date the Initial
Registration Statement is initially filed with the SEC, subject to adjustment as
provided in Section 2(f).  The Initial Registration Statement shall
contain (except if otherwise directed by the Required Holders) the "Plan of Distribution"
and "Selling
Shareholders" sections in substantially the form attached hereto as Exhibit B. The
Company shall use its best efforts to have the Initial Registration Statement
declared effective by the SEC as soon as practicable, but in no event later than
the Initial Effectiveness Deadline.  By 9:30 a.m. New York time on the
Business Day following the Initial Effective Date, the Company shall file with
the SEC in accordance with Rule 424 under the 1933 Act the final prospectus to
be used in connection with sales pursuant to such Initial Registration
Statement.

     

    (b)           Additional Mandatory
Registrations.  The Company shall prepare, and, as soon as
practicable but in no event later than the Additional Filing Deadline, file with
the SEC an Additional Registration Statement on Form S-3 covering the resale of
all of the Additional Registrable Securities not previously registered on an
Additional Registration Statement hereunder.  To the extent the staff
of the SEC does not permit the Additional Required Registration Amount to be
registered on an Additional Registration Statement, the Company shall file
Additional Registration Statements successively trying to register on each such
Additional Registration Statement the maximum number of remaining Additional
Registrable Securities until the Additional Required Registration Amount has
been registered with the SEC.  In the event that Form S-3 is
unavailable for such a registration, the Company shall use such other form as is
available for such a registration on another appropriate form reasonably
acceptable to the Required Holders, subject to the provisions of Section
2(e).  Each Additional Registration Statement prepared pursuant hereto
shall register for resale at least that number of shares of Common Stock equal
to the Additional Required Registration Amount determined as of the date such
Additional Registration Statement is initially filed with the SEC, subject
to adjustment as provided in Section 2(f).  Each Additional
Registration Statement shall contain (except if otherwise directed by the
Required Holders) the "Plan of Distribution"
and "Selling
Shareholders" sections in substantially the form attached hereto as Exhibit
B.  The Company shall use its best efforts to have each
Additional Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the Additional Effectiveness
Deadline.  By 9:30 a.m. New York time on the Business Day following
the Additional Effective Date, the Company shall file with the SEC in accordance
with Rule 424 under the 1933 Act the final prospectus to be used in connection
with sales pursuant to such Additional Registration Statement.

    
      
         

      

      
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    (c)            Allocation of Registrable
Securities.  The initial number of Registrable Securities
included in any Registration Statement and any increase or decrease in the
number of Registrable Securities included therein shall be allocated pro rata
among the Investors based on the number of Registrable Securities held by each
Investor at the time the Registration Statement covering such initial number of
Registrable Securities or increase or decrease thereof is declared effective by
the SEC.  In the event that an Investor sells or otherwise transfers
any of such Investor's Registrable Securities, each transferee shall be
allocated a pro rata portion of the then remaining number of Registrable
Securities included in such Registration Statement for such
transferor.  Any shares of Common Stock included in a Registration
Statement and which remain allocated to any Person which ceases to hold any
Registrable Securities covered by such Registration Statement shall be allocated
to the remaining Investors, pro rata based on the number of Registrable
Securities then held by such Investors which are covered by such Registration
Statement.  In no event shall the Company include any securities other
than Registrable Securities on any Registration Statement without the prior
written consent of the Required Holders other than shares of Common Stock
received by Deep Silver, Inc. ("Deep Silver") pursuant to
that certain Distribution Agreement, dated as of March 2, 2010, between the
Company and Deep Silver, such amount not to exceed 3 million shares of Common
Stock; provided
however, that
if the number of securities to be registered in any Registration Statement is
required to be reduced for any reason, including, without limitation, as
requested or required by the SEC, no Registable Securities shall be so reduced
until all securities held by Deep Silver are excluded from such Registration
Statement.

     

    (d)          Legal
Counsel.  Subject to Section 5 hereof, the Required Holders
shall have the right to select one legal counsel to review and oversee any
registration pursuant to this Section 2 ("Legal Counsel"), which shall
be Schulte Roth & Zabel LLP or such other counsel as thereafter designated
by the Required Holders.  The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company's obligations
under this Agreement.

     

    (e)          Ineligibility for Form
S-3.  In the event that Form S-3 is not available for the
registration of the resale of Registrable Securities hereunder, the Company
shall (i) register the resale of the Registrable Securities on another
appropriate form reasonably acceptable to the Required Holders and (ii)
undertake to register the Registrable Securities on Form S-3 as soon as such
form is available, provided that the Company shall maintain the effectiveness of
the Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.

     

    (f)           Sufficient Number of Shares
Registered.  In the event the number of shares available under
a Registration Statement filed pursuant to Section 2(a) or Section 2(b) is
insufficient to cover all of the Registrable Securities required to be covered
by such Registration Statement or an Investor's allocated portion of the
Registrable Securities pursuant to Section 2(c), the Company shall amend the
applicable Registration Statement, or file a new Registration Statement (on the
short form available therefor, if applicable), or both, so as to cover at least
the Required Registration Amount as of the Trading Day immediately preceding the
date of the filing of such amendment or new Registration Statement, in each
case, as soon as practicable, but in any event not later than fifteen (15) days
after the necessity therefor arises.  The Company shall use its best
efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof.  For
purposes of the foregoing provision, the number of shares available under a
Registration Statement shall be deemed "insufficient to cover all of the
Registrable Securities" if at any time the number of shares of Common Stock
available for resale under the Registration Statement is less than the product
determined by multiplying (i) the Required Registration Amount as of such time
by (ii) 0.90.  The calculation set forth in the foregoing sentence
shall be made without regard to any limitations on the conversion and/or
redemption of the Notes or exercise of the Warrants and such calculation shall
assume that the Notes are then convertible in full into shares of Common Stock
at the then prevailing Conversion Rate (as defined in the Notes) and the
Warrants are then exercisable in full into shares of Common
Stock.

    
      
         

      

      
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    (g)          Effect of Failure to File
and Obtain and Maintain Effectiveness of Registration
Statement.  If (i) a Registration Statement covering all of the
Registrable Securities required to be covered thereby and required to be filed
by the Company pursuant to this Agreement is (A) not filed with the SEC on or
before the applicable Filing Deadline (a "Filing Failure") or (B) not
declared effective by the SEC on or before the applicable Effectiveness
Deadline, (an "Effectiveness
Failure") or
(ii) on any day after the applicable Effective Date sales of all of the
Registrable Securities required to be included on such Registration Statement
cannot be made (other than during an Allowable Grace Period (as defined in
Section 3(r)) pursuant to such Registration Statement or otherwise (including,
without limitation, because of the suspension of trading or any other limitation
imposed by an Eligible Market, a failure to keep such Registration Statement
effective, a failure to disclose such information as is necessary for sales to
be made pursuant to such Registration Statement, a failure to register a
sufficient number of shares of Common Stock or a failure to maintain the listing
of the Common Stock) (a "Maintenance Failure") then, as
partial relief for the damages to any holder by reason of any such delay in or
reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity, including, without limitation, specific performance), (A) the Company
shall pay to each holder of Registrable Securities relating to such Registration
Statement an amount in cash equal to one percent (1.0%) of the aggregate
Purchase Price (as such term is defined in the Securities Purchase Agreement) of
such Investor's Registrable Securities included in such Registration Statement
on each of the following dates: (i) the day of a Filing Failure; (ii) the day of
an Effectiveness Failure; (iii) the initial day of a Maintenance Failure; (iv)
on the thirtieth day after the date of a Filing Failure and every thirtieth day
thereafter (pro rated for periods totaling less than thirty days) until such
Filing Failure is cured; (v) on the thirtieth day after the date of an
Effectiveness Failure and every thirtieth day thereafter (pro rated for periods
totaling less than thirty days) until such Effectiveness Failure is cured; and
(vi) on the thirtieth day after the date of a Maintenance Failure and every
thirtieth day thereafter (pro rated for periods totaling less than thirty days)
until such Maintenance Failure is cured.  The payments to which a
holder shall be entitled pursuant to this Section 2(g) are referred to herein as
"Registration Delay
Payments."  Registration Delay Payments shall be paid on the
earlier of (I) the dates set forth above and (II) the third Business Day after
the event or failure giving rise to the Registration Delay Payments is
cured.  In the event the Company fails to make Registration Delay
Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of one and one-half percent (1.5%) per month (prorated for
partial months) until paid in full.

     

    3.           Related
Obligations.

     

    At such
time as the Company is obligated to file a Registration Statement with the SEC
pursuant to Section 2(a), 2(b), 2(e) or 2(f), the Company will use its best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, pursuant thereto, the
Company shall have the following obligations:

    
      
         

      

      
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    (a)           The
Company shall promptly prepare and file with the SEC a Registration Statement
with respect to the Registrable Securities and use its reasonable best efforts
to cause such Registration Statement relating to the Registrable Securities to
become effective as soon as practicable after such filing (but in no event later
than the Effectiveness Deadline).  The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction or limitation pursuant to Rule 144 and without the requirement to be
in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under
the 1933 Act or (ii) the date on which the Investors shall have sold all of the
Registrable Securities covered by such Registration Statement (the "Registration
Period").  The Company shall ensure that each Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading.  The term "best
efforts" shall mean, among other things, that the Company shall submit to the
SEC, within two (2) Business Days after the later of the date that (i) the
Company learns that no review of a particular Registration Statement will be
made by the staff of the SEC or that the staff has no further comments on a
particular Registration Statement, as the case may be, and (ii) the approval of
Legal Counsel pursuant to Section 3(c) (which approval is immediately sought), a
request for acceleration of effectiveness of such Registration Statement to a
time and date not later than two (2) Business Days after the submission of such
request.  The Company shall respond in writing to comments made by the
SEC in respect of a Registration Statement as soon as practicable, but in no
event later than fifteen (15) days after the receipt of comments by or notice
from the SEC that an amendment is required in order for a Registration Statement
to be declared effective.

     

    (b)           The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement.  In the case of amendments and
supplements to a Registration Statement which are required to be filed pursuant
to this Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-Q, Form 10-K or any analogous report under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), the Company shall
have incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on the
same day on which the 1934 Act report is filed which created the requirement for
the Company to amend or supplement such Registration Statement.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (c)           The
Company shall (A) permit Legal Counsel to review and comment upon (i) a
Registration Statement at least five (5) Business Days prior to its filing with
the SEC and (ii) all amendments and supplements to all Registration Statements
(except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and any similar or successor reports) within a reasonable
number of days prior to their filing with the SEC, and (B) not file any
Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects.  The Company shall not submit a
request for acceleration of the effectiveness of a Registration Statement or any
amendment or supplement thereto without the prior approval of Legal Counsel,
which consent shall not be unreasonably withheld.  The Company shall
furnish to Legal Counsel, without charge, (i) copies of any correspondence from
the SEC or the staff of the SEC to the Company or its representatives relating
to any Registration Statement, (ii) promptly after the same is prepared and
filed with the SEC, one copy of any Registration Statement and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, if requested by an Investor, and all exhibits
and (iii) upon the effectiveness of any Registration Statement, one copy of the
prospectus included in such Registration Statement and all amendments and
supplements thereto.  The Company shall reasonably cooperate with
Legal Counsel in performing the Company's obligations pursuant to this Section
3.

     

    (d)           The
Company shall furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge,  (i) promptly after the
same is prepared and filed with the SEC, at least one copy of such Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by an
Investor, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities owned by such
Investor.

     

    (e)           The
Company shall use its best efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by Investors
of the Registrable Securities covered by a Registration Statement under such
other securities or "blue sky" laws of all applicable jurisdictions in the
United States, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such
jurisdiction.  The Company shall promptly notify Legal Counsel and
each Investor who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or "blue sky" laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (f)           The
Company shall notify Legal Counsel and each Investor in writing of the happening
of any event, as promptly as practicable after becoming aware of such event, as
a result of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and, subject to Section 3(r), promptly prepare
a supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request).  The Company
shall also promptly notify Legal Counsel and each Investor in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile on the same day of such effectiveness and
by overnight mail), (ii) of any request by the SEC for amendments or supplements
to a Registration Statement or related prospectus or related information, and
(iii) of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.  By 9:30 a.m. New
York City time on the date following the date any post-effective amendment has
become effective, the Company shall file with the SEC in accordance with Rule
424 under the 1933 Act the final prospectus to be used in connection with sales
pursuant to such Registration Statement.

     

    (g)          The
Company shall use its best efforts to prevent the issuance of any stop order or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and to
notify Legal Counsel and each Investor who holds Registrable Securities being
sold of the issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such
purpose.

     

    (h)           If
any Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter or an Investor believes that it could
reasonably be deemed to be an underwriter of Registrable Securities, at the
reasonable request of such Investor, the Company shall furnish to such Investor,
on the date of the effectiveness of the Registration Statement and thereafter
from time to time on such dates as an Investor may reasonably request (i) a
letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the Investors, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Investors.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (i)           If
any Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter or an Investor believes that it could
reasonably be deemed to be an underwriter of Registrable Securities, the Company
shall make available for inspection by (i) such Investor, (ii) Legal Counsel and
(iii) one firm of accountants or other agents retained by the Investors
(collectively, the "Inspectors"), all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be
reasonably deemed necessary by each Inspector, and cause the Company's officers,
directors and employees to supply all information which any Inspector may
reasonably request; provided, however, that each Inspector shall agree to hold
in strict confidence and shall not make any disclosure (except to an Investor)
or use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
Agreement.  Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential.  Nothing herein (or in any other confidentiality
agreement between the Company and any Investor) shall be deemed to limit the
Investors' ability to sell Registrable Securities in a manner which is otherwise
consistent with applicable laws and regulations.

     

    (j)           The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement.  The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at the
Investor's expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

     

    (k)          The
Company shall use its best efforts either to (i) cause all of the Registrable
Securities covered by a Registration Statement to be listed on (A) each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (B) the OTC
Bulletin Board, or (ii) secure the inclusion for quotation of all of the
Registrable Securities on The NASDAQ Global Market or (iii) if, despite the
Company's best efforts, the Company is unsuccessful in satisfying the preceding
clauses (i) or (ii), to secure the inclusion for quotation on, The New York
Stock Exchange, The NASDAQ Global Select Market, The NASDAQ Capital Market or
the NYSE Amex for such Registrable Securities and, without limiting the
generality of the foregoing, to use its best efforts to arrange for at least two
market makers to register with the Financial Industry Regulatory Authority, Inc.
("FINRA") as such with
respect to such Registrable Securities.  The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(k).

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (l)           The
Company shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such names as the
Investors may request.

     

    (m)          If
requested by an Investor, the Company shall as soon as practicable (i)
incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or make
amendments to any Registration Statement if reasonably requested by an Investor
holding any Registrable Securities.

     

    (n)          The
Company shall use its best efforts to cause the Registrable Securities covered
by a Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.

     

    (o)          The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 1933 Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the applicable Effective Date of a Registration
Statement.

     

    (p)          The
Company shall otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC in connection with any registration
hereunder.

     

    (q)          Within
two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.

    
      
         

      

      
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    (r)           Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its counsel, in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a "Grace
Period"); provided, that the Company shall promptly (i) notify the
Investors in writing of the existence of material, non-public information giving
rise to a Grace Period (provided that in each notice the Company will not
disclose the content of such material, non-public information to the Investors)
and the date on which the Grace Period will begin, and (ii) notify the Investors
in writing of the date on which the Grace Period ends; and, provided further,
that no Grace Period shall exceed twenty (20) consecutive days and during any
three hundred sixty five (365) day period such Grace Periods shall not exceed an
aggregate of forty-five (45) days and the first day of any Grace Period must be
at least five (5) Trading Days after the last day of any prior Grace Period
(each, an "Allowable Grace
Period").  For purposes of determining the length of a Grace
Period above, the Grace Period shall begin on and include the date the Investors
receive the notice referred to in clause (i) and shall end on and include the
later of the date the Investors receive the notice referred to in clause (ii)
and the date referred to in such notice.  The provisions of Section
3(g) hereof shall not be applicable during the period of any Allowable Grace
Period.  Upon expiration of the Grace Period, the Company shall again
be bound by the first sentence of Section 3(f) with respect to the information
giving rise thereto unless such material, non-public information is no longer
applicable.  Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale, prior to the
Investor's receipt of the notice of a Grace Period and for which the Investor
has not yet settled.

     

    (s)          Neither
the Company nor any Subsidiary or affiliate thereof shall identify any Buyer as
an underwriter in any public disclosure or filing with the SEC, the Principal
Market (as defined in the Securities Purchase Agreement) or any Eligible Market
and any Buyer being deemed an underwriter by the SEC shall not relieve the
Company of any obligations it has under this Agreement or any other Transaction
Document (as defined in the Securities Purchase Agreement); provided, however, that the
foregoing shall not prohibit the Company from including the disclosure found in
the "Plan of Distribution" section attached hereto as Exhibit B in the
Registration Statement.

     

    (t)           The
Company shall not file any other registration statements until, or grant
registration rights to any Person that can be exercised prior to the time that,
all Registrable Securities are registered pursuant to a Registration Statement
that is declared effective by the SEC, provided that this Section 3(t) shall not
prohibit the Company from filing amendments (pre-effective and post-effective)
to registration statements filed prior to the date of this Agreement; provided
that no such amendment shall increase the number of securities registered on a
registration statement. Neither the Company nor
any of its Subsidiaries has entered, as of the date hereof, nor shall the
Company or any of its Subsidiaries, on or after the date of this Agreement,
enter into any agreement with respect to its securities, that would have the
effect of impairing the rights granted to the Buyers in this Agreement or
otherwise conflicts with the provisions hereof.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    4.           Obligations of the
Investors.

     

    (a)           At
least five (5) Business Days prior to the first anticipated Filing Date of a
Registration Statement, the Company shall notify each Investor in writing of the
information the Company requires from each such Investor if such Investor elects
to have any of such Investor's Registrable Securities included in such
Registration Statement.  It shall be a condition precedent to the
obligations of the Company to complete any registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect and maintain the effectiveness of the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.

     

    (b)           Each
Investor, by such Investor's acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from such Registration
Statement.

     

    (c)           Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor's receipt of copies of the
supplemented or amended prospectus as contemplated by Section 3(g) or the first
sentence of 3(f) or receipt of notice that no supplement or amendment is
required.  Notwithstanding anything to the contrary, the Company shall
cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to the
Investor's receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(g) or the first sentence of 3(f) and for which
the Investor has not yet settled.

     

    (d)           Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom in
connection with sales of Registrable Securities pursuant to the Registration
Statement.

     

    5.           Expenses of
Registration.

     

    All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company.  The Company
shall also reimburse the Investors for the fees and disbursements of Legal
Counsel in connection with registration, filing or qualification pursuant to
Sections 2 and 3 of this Agreement which amount shall be limited to $20,000 for
each such registration, filing or qualification.

     

    6.           Indemnification.

     

    In the
event any Registrable Securities are included in a Registration Statement under
this Agreement:

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    (a)           To
the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Investor, the directors, officers,
partners, members, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act or the 1934
Act (each, an "Indemnified
Person"), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, reasonable attorneys' fees, amounts paid in
settlement or expenses, joint or several (collectively, "Claims"), incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("Indemnified Damages"), to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon:  (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other "blue sky" laws of any jurisdiction
in which Registrable Securities are offered ("Blue Sky Filing"), or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "Violations").  Subject
to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly
as such expenses are incurred and are due and payable, for any legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim.  Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section
6(a):  (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant to
Section 3(d); and (ii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld or
delayed.  Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (b)           In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Party"), against
any Claim or Indemnified Damages to which any of them may become subject, under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case to the
extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and, subject
to Section 6(c), such Investor shall reimburse the Indemnified Party for any
legal or other expenses reasonably incurred by an Indemnified Party in
connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld or delayed; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the
sale of Registrable Securities pursuant to such Registration
Statement.  Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.

     

    (c)           Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of not
more than one counsel for all such Indemnified Person or Indemnified Party to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the Indemnified Person or Indemnified Party, as applicable, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding.  In the
case of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least a
majority in interest of the Registrable Securities included in the Registration
Statement to which the Claim relates.  The Indemnified Party or
Indemnified Person shall cooperate reasonably with the indemnifying party in
connection with any negotiation or defense of any such action or Claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or Claim.  The indemnifying party shall keep
the Indemnified Party or Indemnified Person fully apprised at all times as to
the status of the defense or any settlement negotiations with respect
thereto.  No indemnifying party shall be liable for any settlement of
any action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent.  No indemnifying party shall, without
the prior written consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim or litigation and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party.  Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been
made.  The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such
action.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    (d)          The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.

     

    (e)           The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.

     

    7.           Contribution.

     

    To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that:  (i) no
Person involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to contribution from any
Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the amount of net proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.

     

    8.           Reports Under the 1934
Act.

     

    With a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that may
at any time permit the Investors to sell securities of the Company to the public
without registration ("Rule
144"), the Company agrees to:

     

    (a)           make
and keep public information available, as those terms are understood and defined
in Rule 144;

     

    (b)          file
with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    (c)           furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144, the 1933 Act and the 1934
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the Investors to sell
such securities pursuant to Rule 144 without registration.

     

    9.           Assignment of Registration
Rights.

     

    The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of such Investor's Registrable
Securities if:  (i) the Investor agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act or applicable state securities laws; (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement.

     

    10.         Amendment of Registration
Rights.

     

    Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders.  Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company.  No
such amendment shall be effective to the extent that it applies to less than all
of the holders of the Registrable Securities.  No consideration shall
be offered or paid to any Person to amend or consent to a waiver or modification
of any provision of this Agreement unless the same consideration also is offered
to all of the parties to this Agreement.

     

    11.         Miscellaneous.

     

    (a)           A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities.  If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from such record
owner of such Registrable Securities.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    (b)           Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered:  (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same.  The addresses and facsimile numbers for such
communications shall be:

     

    If to the
Company:

    

    SouthPeak
Interactive Corporation

    2900 Polo
Parkway

    Midlothian,
Virginia 23113

    Telephone:
(804) 378-5100

    Facsimile:  (804)
378-6085

    Attention:
Reba McDermott, Chief Financial Officer

     

    With a
copy (for informational purposes only) to:

    

    Greenberg
Traurig, LLP

    1750
Tysons Boulevard

    Suite
1200

    McLean,
VA  22102

    Telephone:     (703)
749-1352

    Facsimile:      (703)
714-8359

    Attention:  Mark
Wishner, Esq.

     

    If to the
Transfer Agent:

     

    American
Stock Transfer & Trust Company, LLC

    6201 15th
Avenue

    Brooklyn,
NY 11219

    Telephone:
(718) 921-8261

    Facsimile:  (718)
765-8712

    Attention:  Donna
Ansbro

     

    If to
Legal Counsel:

     

    Schulte
Roth & Zabel LLP

    919 Third
Avenue

    New York,
New York  10022

    Telephone:        (212)
756-2000

    Facsimile:         (212)
593-5955

    Attention:          Eleazer
Klein, Esq.

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    If to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers
attached hereto, with copies to such Buyer's representatives as set forth on the
Schedule of Buyers, or to such other address and/or facsimile number and/or to
the attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written confirmation of receipt (A)
given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

     

    (c)           Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

     

    (d)           All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

     

    (e)           If
any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties.  The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s).

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    (f)           This
Agreement, the other Transaction Documents (as defined in the Securities
Purchase Agreement) and the instruments referenced herein and therein constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof.  There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein and
therein.  This Agreement, the other Transaction Documents and the
instruments referenced herein and therein supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.

     

    (g)          Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of
and be binding upon the permitted successors and assigns of each of the parties
hereto.

     

    (h)          The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

     

    (i)           This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

     

    (j)           Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.

     

    (k)          All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders, determined as if all of the outstanding Notes then held
by the Investors have been converted for Registrable Securities without regard
to any limitations on conversion of the Notes and the outstanding Warrants then
held by Investors have been exercised for Registrable Securities without regard
to any limitations on exercise of the Warrants.

     

    (l)           The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party.

     

    (m)         This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

     

    (n)          The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other
Investor.  Nothing contained herein, and no action taken by any
Investor pursuant hereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated
herein.

     

    * * * * *
*

     

    [Signature
Page Follows]

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written
above.

    

    
      
        	 
      	
                COMPANY:

              
	 
      	 
      
	 
      	
                SouthPeak
      Interactive Corporation

              
	 
      	 
      
	 
      	
                By:  

              	/s/
      Reba L. McDermott  
	 
      	 
      	
                Name:
      Reba L. McDermott

              
	 
      	 
      	
                Title:
      Chief Financial Officer

              

      

    

    

    [Signature
Page to Registration Rights Agreement]

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written
above.

    

    
      
        	 
      	
                BUYERS:

              
	 
      	 
      
	 
      	
                CNH
      Diversified Opportunities Master

                Account,
      L.P.

              
	 
      	 
      
	 	By:	
                CHN
      Partners, LLC

                its Investment Manager

              
	 	 	 
	 
      	
                By:  

              	/s/
      Brendan R. Kalb 
	 
      	 
      	
                Name:
      Brendan R. Kalb

              
	 
      	 
      	
                Title:
      Associate General Counsel

                CHN Partners,
LLC

              

      

    

    

    [Signature
Page to Registration Rights Agreement]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written
above.

    

    
      
        	 
      	
                BUYERS:

              
	 
      	 
      
	 
      	
                CNH
      CA Master Account, L.P.

              
	 
      	 
      
	 	By:	      
                CHN
      Partners, LLC

                its Investment Manager

              
	 	 	 
	 
      	
                By:  

              	/s/
      Brendan R. Kalb 
	 
      	 
      	
                Name:
      Brendan R. Kalb

              
	 
      	 
      	
                Title:
      Associate General Counsel

                
                  CHN
      Partners, LLC

                

              

      

    

    

    [Signature
Page to Registration Rights Agreement]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written
above.

    

    
      
        	 
      	
                BUYERS:

              
	 
      	 
      
	 
      	
                AQR
      Diversified Arbitrage Fund

              
	 
      	 
      
	 
      	
                By:  

              	/s/
      Brendan R. Kalb
	 
      	 
      	
                Name:
      Brendan R. Kalb

              
	 
      	 
      	
                Title:
      Executive Vice President and Secretary

                AQR
Funds

              

      

    

    

    [Signature
Page to Registration Rights Agreement]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, each Buyer
and the Company have caused their respective signature page to this Registration
Rights Agreement to be duly executed as of the date first written
above.

    

    
      
        	 
      	
                BUYERS:

              
	 
      	 
      
	 
      	
                By:  

              	/s/
      Terry Phillips  
	 
      	 
      	
                Terry
      Phillips 

              

      

    

    

    [Signature
Page to Registration Rights Agreement]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    SCHEDULE
OF BUYERS

    

    
      
        
          
            
              	
                      Buyer

                    	 	
                      Buyer Address

                      and Facsimile Number

                    	 	
                      Buyer's Representative's Address

                      and Facsimile Number

                    
	 
      	 	 
      	 	 
      
	
                      CNH
      DIVERSIFIED OPPORTUNITIES MASTER ACCOUNT, L.P.

                    	 	
                      c/o
      CNH Partners, LLC

                      2
      Greenwich Plaza, 1st Floor

                      Greenwich,
      CT  06830

                      Attention:  Rocky
      Bryant

                                         Brendan
      Kalb

                      Facsimile:

                      Telephone:
      203-742-3600

                    	 	
                      Schulte
      Roth & Zabel LLP

                      919
      Third Avenue

                      New
      York, NY 10022

                      Attn:  Eleazer
      Klein, Esq.

                      Facsimile:  (212)
      593-5955

                      Telephone:  (212)
      756-2000

                    
	 
      	 	 
      	 	 
      
	
                      CNH
      CA MASTER ACCOUNT, L.P.

                    	 	
                      c/o
      CNH Partners, LLC

                      2
      Greenwich Plaza, 1st Floor

                      Greenwich,
      CT  06830

                      Attention:  Rocky
      Bryant

                                         Brendan
      Kalb

                      Facsimile:

                      Telephone:
      203-742-3600

                    	 	
                      Schulte
      Roth & Zabel LLP

                      919
      Third Avenue

                      New
      York, NY 10022

                      Attn:  Eleazer
      Klein, Esq.

                      Facsimile:  (212)
      593-5955

                      Telephone:  (212)
      756-2000

                    
	 
      	 	 
      	 	 
      
	
                      AQR
      DIVERSIFIED ARBITRAGE FUND

                    	 	
                      c/o
      CNH Partners, LLC

                      2
      Greenwich Plaza, 1st Floor

                      Greenwich,
      CT  06830

                      Attention:  Rocky
      Bryant

                                         Brendan
      Kalb

                      Facsimile:

                      Telephone:
      203-742-3600

                    	 	
                      Schulte
      Roth & Zabel LLP

                      919
      Third Avenue

                      New
      York, NY 10022

                      Attn:  Eleazer
      Klein, Esq.

                      Facsimile:  (212)
      593-5955

                      Telephone:  (212)
      756-2000

                    
	 
      	 	 
      	 	 
      
	
                      TERRY
      PHILLIPS

                    	 	
                      c/o
      SouthPeak Interactive Corporation

                      2900
      Polo Parkway

                      Midlothian,
      VA  23113

                      Attention:  Terry
      Phillips

                      Facsimile:  804-378-5100

                      Telephone:
      804-378-6085

                    	 	 
      

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    FORM
OF NOTICE OF EFFECTIVENESS

    OF
REGISTRATION STATEMENT

     

    [                                           ]

    [                                           ]

    [                                           ]

    

    Attention:  [                  ]

     

    
      	
               
      

            	
              Re:

            	
              SouthPeak
      Interactive Corporation

            

    

     

    Ladies
and Gentlemen:

     

    [We
are][I am] counsel to SouthPeak Interactive Corporation, a Delaware corporation
(the "Company"), and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of July [●], 2010 (the "Securities Purchase Agreement"), entered
into by and among the Company and the buyers named therein (collectively, the
"Holders") pursuant to
which the Company issued to the Holders senior secured convertible notes (the
“Notes”) convertible into shares of the Company's common stock, par value
$0.0001 per share (the "Common
Stock") and two series of warrants exercisable for shares of Common Stock
(the "Warrants").  Pursuant
to the Securities Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Holders (the "Registration Rights
Agreement") pursuant to which the Company agreed, among other things, to
register the resale of the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Notes and exercise of the Warrants under the Securities
Act of 1933, as amended (the "1933 Act").  In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 2010, the Company filed a Registration Statement
on Form S-1 (File No. 333-_____________) (the "Registration Statement") with
the Securities and Exchange Commission (the "SEC") relating to the
Registrable Securities which names each of the Holders as a selling shareholder
thereunder.

     

    In
connection with the foregoing, [we][I] advise you that a member of the SEC's
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF
EFFECTIVENESS] and
[we][I] have no knowledge, after telephonic inquiry of a member of the SEC's
staff, that any stop order suspending its effectiveness has been issued or that
any proceedings for that purpose are pending before, or threatened by, the SEC
and the Registrable Securities are available for resale under the 1933 Act
pursuant to the Registration Statement.

     

    This
letter shall serve as our standing instruction to you that the shares of Common
Stock are freely transferable by the Holders pursuant to the Registration
Statement.  You need not require further letters from us to effect any
future legend-free issuance or reissuance of shares of Common Stock to the
Holders as contemplated by the Company's Irrevocable Transfer Agent Instructions
dated July [●],
2010.

    

    
      
        	 
      	
                Very
      truly yours,

              
	 
      	 
      
	 
      	
                [ISSUER'S COUNSEL]

              
	 
      	 
      
	 
      	
                By:

              	 
      	 
      

      

    

     

    
      	
              CC:

            	
              [LIST NAMES OF
      HOLDERS]

            

    

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    EXHIBIT
B

    SELLING
SHAREHOLDERS

     

    The
shares of common stock being offered by the selling shareholders are those
issuable to the selling shareholders upon conversion of the convertible notes
and upon exercise of the warrants.  For additional information
regarding the issuance of those convertible notes and warrants, see "Private
Placement of Convertible Notes and Warrants" above.  We are
registering the shares of common stock in order to permit the selling
shareholders to offer the shares for resale from time to time.  Except
for the ownership of the convertible notes and the warrants issued pursuant to
the Securities Purchase Agreement, the selling shareholders have not had any
material relationship with us within the past three years.

     

    The table
below lists the selling shareholders and other information regarding the
beneficial ownership of the shares of common stock by each of the selling
shareholders.  The second column lists the number of shares of common
stock beneficially owned by each selling shareholder, based on its ownership of
the convertible notes and warrants, as of ________, 2010, assuming conversion of
all convertible notes and exercise of the warrants held by the selling
shareholders on that date, without regard to any limitations on conversions or
exercises.

     

    The third
column lists the shares of common stock being offered by this prospectus by the
selling shareholders.

     

    In
accordance with the terms of a registration rights agreement with the selling
shareholders, this prospectus generally covers the resale of at least 130% of
the sum of (i) number of shares of common stock issuable upon conversion and/or
of the convertible notes as of the Trading Day immediately preceding the date
the registration statement is initially filed with the SEC and (ii) the number
of shares of common stock issuable upon exercise of the related warrants as of
the Trading Day immediately preceding the date the registration statement is
initially filed with the SEC. Because the conversion
price of the convertible notes and the exercise price of the warrants may be
adjusted, the number of shares that will actually be issued may be more or less
than the number of shares being offered by this prospectus.  The
fourth column assumes the sale of all of the shares offered by the selling
shareholders pursuant to this prospectus.

     

    Under the
terms of the convertible notes and the warrants, a selling shareholder may not
convert the convertible notes or exercise the warrants to the extent such
conversion or exercise would cause such selling shareholder, together with its
affiliates, to beneficially own a number of shares of common stock which would
exceed 4.99% of our then outstanding shares of common stock following such
conversion or exercise, excluding for purposes of such determination shares of
common stock issuable upon conversion of the convertible notes which have not
been converted and upon exercise of the warrants which have not been
exercised.  The number of shares in the second column does not reflect
this limitation.  The selling shareholders may sell all, some or none
of their shares in this offering.  See "Plan of
Distribution."

    
      
         

      

      
        Annex
I-1

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              
                
                  	
                          Name of Selling Shareholder

                        	 	
                          Number of Shares of

                          Common Stock Owned

                          Prior to Offering

                        	 	
                          Maximum Number of Shares

                          of Common Stock to be Sold

                          Pursuant to this Prospectus

                        	 	
                          Number of Shares of

                          Common Stock Owned

                          After Offering

                        
	 
      	 	 
      	 	 
      	 	 
      
	
                          CNH
      DIVERSIFIED OPPORTUNITIES MASTER ACCOUNT, L.P. (1)

                        	 	 
      	 	 
      	 	
                          0

                        
	 
      	 	 
      	 	 
      	 	 
      
	
                          CNH
      CA MASTER ACCOUNT, L.P. (1)

                        	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	
                          AQR
      DIVERSIFIED ARBITRAGE FUND (1)

                        	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	
                          TERRY
      PHILLIPS

                        	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	
                          [Other
      Buyers]

                        	 	 
      	 	 
      	 	 
      

                

              

            

          

        

      

    

     

    (1)

    
      
         

      

      
        Annex
I-2

        
          

        

      

      
         

      

    

    PLAN
OF DISTRIBUTION

     

    We are
registering the shares of common stock issuable upon conversion of the
convertible notes and upon exercise of the warrants to permit the resale of
these shares of common stock by the holders of the convertible notes and
warrants from time to time after the date of this prospectus.  We will
not receive any of the proceeds from the sale by the selling shareholders of the
shares of common stock.  We will bear all fees and expenses incident
to our obligation to register the shares of common stock.

     

    The
selling shareholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents.  If the
shares of common stock are sold through underwriters or broker-dealers, the
selling shareholders will be responsible for underwriting discounts or
commissions or agent's commissions.  The shares of common stock may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of the sale, at varying prices determined at the time of sale, or at
negotiated prices.  These sales may be effected in transactions, which
may involve crosses or block transactions,

     

    
      	
               
      

            	
              ·

            	
              on
      any national securities exchange or quotation service on which the
      securities may be listed or quoted at the time of
  sale;

            

    

     

    
      	
               
      

            	
              ·

            	
              in
      the over-the-counter market;

            

    

     

    
      	
               
      

            	
              ·

            	
              in
      transactions otherwise than on these exchanges or systems or in the
      over-the-counter market;

            

    

     

    
      	
               
      

            	
              ·

            	
              through
      the writing of options, whether such options are listed on an options
      exchange or otherwise;

            

    

     

    
      	
               
      

            	
              ·

            	
              ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

            

    

     

    
      	
               
      

            	
              ·

            	
              block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

            

    

     

    
      	
               
      

            	
              ·

            	
              purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

            

    

     

    
      	
               
      

            	
              ·

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            

    

     

    
      	
               
      

            	
              ·

            	
              privately
      negotiated transactions;

            

    

     

    
      	
               
      

            	
              ·

            	
              short
      sales;

            

    

     

    
      	
               
      

            	
              ·

            	
              sales
      pursuant to Rule 144;

            

    

     

    
      	
               
      

            	
              ·

            	
              broker-dealers
      may agree with the selling securityholders to sell a specified number of
      such shares at a stipulated price per
share;

            

    

     

    
      
         

      

      
        Annex
I-3

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              ·

            	
              a
      combination of any such methods of sale;
and

            

    

     

    
      	
               
      

            	
              ·

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

     

    If the
selling shareholders effect such transactions by selling shares of common stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling shareholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved).  In connection with
sales of the shares of common stock or otherwise, the selling shareholders may
enter into hedging transactions with broker-dealers, which may in turn engage in
short sales of the shares of common stock in the course of hedging in positions
they assume.  The selling shareholders may also sell shares of common
stock short and deliver shares of common stock covered by this prospectus to
close out short positions and to return borrowed shares in connection with such
short sales.  The selling shareholders may also loan or pledge shares
of common stock to broker-dealers that in turn may sell such
shares.

     

    The
selling shareholders may pledge or grant a security interest in some or all of
the convertible notes, warrants or shares of common stock owned by them and, if
they default in the performance of their secured obligations, the pledgees or
secured parties may offer and sell the shares of common stock from time to time
pursuant to this prospectus or any amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933, as
amended, amending, if necessary, the list of selling shareholders to include the
pledgee, transferee or other successors in interest as selling shareholders
under this prospectus.  The selling shareholders also may transfer and
donate the shares of common stock in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.

     

    The
selling shareholders and any broker-dealer participating in the distribution of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act.  At the time a particular
offering of the shares of common stock is made, a prospectus supplement, if
required, will be distributed which will set forth the aggregate amount of
shares of common stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling shareholders and any
discounts, commissions or concessions allowed or reallowed or paid to
broker-dealers.

     

    Under the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers.  In
addition, in some states the shares of common stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied
with.

    
      
         

      

      
        Annex
I-4

        
          

        

      

      
         

      

    

    There can
be no assurance that any selling shareholder will sell any or all of the shares
of common stock registered pursuant to the registration statement, of which this
prospectus forms a part.

     

    The
selling shareholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of common stock by the selling
shareholders and any other participating person.  Regulation M may
also restrict the ability of any person engaged in the distribution of the
shares of common stock to engage in market-making activities with respect to the
shares of common stock.  All of the foregoing may affect the
marketability of the shares of common stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
common stock.

     

    We will
pay all expenses of the registration of the shares of common stock pursuant to
the registration rights agreement, estimated to be
$[     ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or "blue sky" laws; provided, however, that a selling
shareholder will pay all underwriting discounts and selling commissions, if
any.  We will indemnify the selling shareholders against liabilities,
including some liabilities under the Securities Act, in accordance with the
registration rights agreements, or the selling shareholders will be entitled to
contribution.  We may be indemnified by the selling shareholders
against civil liabilities, including liabilities under the Securities Act, that
may arise from any written information furnished to us by the selling
shareholder specifically for use in this prospectus, in accordance with the
related registration rights agreement, or we may be entitled to
contribution.

     

    Once sold
under the registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other
than our affiliates.

    
      
         

      

      
        Annex
I-5

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