EXHIBIT
4.18

 

NEITHER
THESE WARRANTS NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THESE WARRANTS
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.

 

 


	
      450,000
      Warrants
	
      March
      1, 2005




 

SMARTVIDEO
TECHNOLOGIES, INC.

 

WARRANTS

 

SmartVideo
Technologies, Inc., a Delaware corporation (“SMVD”),
certifies that, for value received, Trilogy Capital Partners, Inc.
(“Trilogy”), or
registered assigns (the “Holder”), is
the owner of Four Hundred Fifty Thousand (450,000) Warrants of SMVD (the
“Warrants”). Each
Warrant entitles the Holder to purchase from SMVD at any time prior to the
Expiration Date (as defined below) one share of the common stock of SMVD (the
“Common
Stock”) for
$6.50 (the “Exercise
Price”), on
the terms and conditions hereinafter provided. The Exercise Price and the number
of shares of Common Stock purchasable upon exercise of each Warrant are subject
to adjustment as provided in this Agreement. 

 

1.    Vesting.
Expiration Date; Exercise

 

1.1    Vesting. The
Warrants are fully vested and exercisable. 

 

1.2    Expiration
Date. The
Warrants shall expire on the earlier to occur of (the “Expiration
Date”): (a)
February 28, 2008; and (b) the 21st trading day following written notice of
early expiration from SMVD to Holder if: (i) prior to such notice, the Market
Price of the Common Stock (as defined below) shall exceed two times the Exercise
Price for 20 consecutive trading days, and (ii) at all times after receipt of
such notice and prior to the early expiration the shares of Common Stock
underlying the Warrants may be sold by Holder pursuant to a valid and effective
Registration Statement under Section 9 of this Agreement. 

 

1.3    Manner
of Exercise. The
Warrants are exercisable by delivery to SMVD of the following (the “Exercise
Documents”): (a)
this Agreement (b) a written notice of election to exercise the Warrants; and
(c) payment of the Exercise Price in cash, by check or by “net” exercise as
contemplated by Section 1.4 of this Agreement; provided that the Holder may not
pay by “net” exercise if the Holder may immediately following such exercise sell
the shares acquired upon such exercise pursuant a Registration Statement (as
defined in Section 9 of this Agreement). Within three business days following
receipt of the foregoing, SMVD shall execute and deliver to the Holder: (a) a
certificate or certificates representing the aggregate number of shares of
Common Stock purchased by the Holder, and (b) if less than all of the Warrants
evidenced by this Agreement are exercised, a new certificate evidencing the
Warrants not so exercised.

 




















1.4    Net
Exercise. In lieu
of the payment methods set forth in Section 1.3 above, the Holder may elect
to exchange all or some of the Warrants for the number of shares of Common Stock
computed using the following formula:

 

X = Y
(A-B)

 

A

 

Where X =
the number of shares of Common Stock to be issued to Holder.

 

Y = the
number of shares of Common Stock purchasable under the Warrants being exchanged
(as adjusted to the date of such calculation).

 

A = the
Market Price on the date of receipt by SMVD of the exercise
documents.

 

B = the
Exercise Price of the Warrants being exchanged (as adjusted in accordance with
the terms of Section 2 hereof).

 

The
“Market
Price” on any
trading day shall be deemed to be the last reported sale price of the Common
Stock on such day, or, in the case no such reported sales take place on such
day, the last reported sale price on the preceding trading day on which there
was a last reported sales price, as officially reported by the principal
securities exchange in which the shares of Common Stock are listed or admitted
to trading or by the Nasdaq Stock Market, or if the Common Stock is not listed
or admitted to trading on any national securities exchange or the Nasdaq Stock
Market, the last sale price, or if there is no last sale price, the closing bid
price, as furnished by the National Association of Securities Dealers, Inc.
(such as through the OTC Bulletin Board) or a similar organization or if Nasdaq
is no longer reporting such information. 

 

1.5    Warrant
Exercise Limitation. Notwithstanding any other provision of this Agreement, if
as of the date of exercise SMVD has a class of securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended, Holder may not
exercise Warrants under this Section 1 to the extent that immediately following
such exercise Holder would beneficially own 5% or more of the outstanding Common
Stock of SMVD. For this purpose, a representation of the Holder that following
such exercise it would not beneficially own 5% or more of the outstanding Common
Stock of SMVD shall be conclusive and binding upon SMVD.

 

1.6    No
Hedging. Holder
has not, and will not, prior to the prior to the exercise of the Warrants,
establish any hedge or other position in the Common Stock that is outstanding on
the date of the exercise of the Warrant and that is designed to or could
reasonably be expected to lead to or result in a disposition by the Holders or
any other person or entity. For purposes hereof, a “hedge or other position”
would include, without limitation, effecting any short sale or having in effect
any short position (whether or not such sale or position is against the box and
regardless of when such position was entered into) or any purchase, sale or
grant of any right (including, without limitation, any put or call option) with
respect to the Common Stock or with respect to any security (other than a
broad-based market basket or index) that includes, relates to or derives any
significant part of its value from the Common Stock.

 

2.    Adjustments
of Exercise Price and Number and Kind of Conversion Shares

 

2.1    In the
event that SMVD shall at any time hereafter (a) pay a dividend in Common Stock
or securities convertible into Common Stock; (b) subdivide or split its
outstanding Common Stock; (c) combine its outstanding Common Stock into a
smaller number of shares; then the number of shares to be issued immediately
after the occurrence of any such event shall be adjusted so that the Holder
thereafter may receive the number of shares of Common Stock it would have owned
immediately following such action if it had exercised the Warrants immediately
prior to such action and the Exercise Price shall be adjusted to reflect such
proportionate increases or decreases in the number of shares.

 







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2.2    In case
of any reclassification of the outstanding shares of Common Stock (other than a
change covered by Section 2.1 hereof or a change which solely affects the par
value of such shares) or in the case of any merger or consolidation or merger in
which SMVD is not the continuing corporation and which results in any
reclassification or capital reorganization of the outstanding shares), the
Holder shall have the right thereafter (until the Expiration Date) to receive
upon the exercise hereof, for the same aggregate Exercise Price payable
hereunder immediately prior to such event, the kind and amount of shares of
stock or other securities or property receivable upon such reclassification,
capital reorganization, merger or consolidation, by a Holder of the number of
shares of Common Stock obtainable upon the exercise of the Warrants immediately
prior to such event; and if any reclassification also results in a change in
shares covered by Section 2.1, then such adjustment shall be made pursuant
to both this Section 2.2 and Section 2.1 (without duplication). The
provisions of this Section 2.2 shall similarly apply to successive
reclassifications, capital reorganizations and mergers or consolidations, sales
or other transfers.

 

3.    Reservation
of Shares. SMVD
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, such number of shares of Common Stock as shall from time
to time be issuable upon exercise of the Warrants. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to permit
the exercise of the Warrants, SMVD shall promptly seek such corporate action as
may be necessary to increase its authorized but unissued shares of Common Stock
to such number of shares as shall be sufficient for such purpose.

 

4.    Certificate
as to Adjustments. In each
case of any adjustment in the Exercise Price, or number or type of shares
issuable upon exercise of these Warrants, the Chief Financial Officer of SMVD
shall compute such adjustment in accordance with the terms of this Warrants and
prepare a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based, including a statement of the adjusted
Exercise Price. SMVD shall promptly send (by facsimile and by either first class
mail, postage prepaid or overnight delivery) a copy of each such certificate to
the Holder. 

 

5.    Loss
or Mutilation. Upon
receipt of evidence reasonably satisfactory to SMVD of the ownership of and the
loss, theft, destruction or mutilation of this certificate, and of indemnity
reasonably satisfactory to it, and (in the case of mutilation) upon surrender
and cancellation of these Warrants, SMVD will execute and deliver in lieu
thereof a new certificate of like tenor as the lost, stolen, destroyed or
mutilated certificate.

 

6.    Representations
and Warranties of SMVD. SMVD
hereby represents and warrants to Holder that:

 

6.1    Due
Authorization. All
corporate action on the part of SMVD, its officers, directors and shareholders
necessary for (a) the authorization, execution and delivery of, and the
performance of all obligations of SMVD under these Warrants, and (b) the
authorization, issuance, reservation for issuance and delivery of all of the
Common Stock issuable upon exercise of these Warrants, has been duly taken.
These Warrants constitute a valid and binding obligation of SMVD enforceable in
accordance with their terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, moratorium, reorganization and similar laws
affecting creditors’ rights generally and to general equitable
principles.

 

6.2    Organization. SMVD is
a corporation duly organized, validly existing and in good standing under the
laws of the State referenced in the first paragraph of this Agreement and has
all requisite corporate power to own, lease and operate its property and to
carry on its business as now being conducted and as currently proposed to be
conducted.

 







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6.3    Valid
Issuance of Stock. Any
shares of Common Stock issued upon exercise of these Warrants will be duly and
validly issued, fully paid and non-assessable.

 

6.4    Governmental
Consents. All
consents, approvals, orders, authorizations or registrations, qualifications,
declarations or filings with any federal or state governmental authority on the
part of SMVD required in connection with the consummation of the transactions
contemplated herein have been obtained.

 

7.    Representations
and Warranties of Trilogy. Trilogy
hereby represents and warrants to SMVD that:

 

7.1    Trilogy
is acquiring the Warrants for its own account, for investment purposes
only.

 

7.2    Trilogy
understands that an investment in the Warrants involves a high degree of risk,
and Trilogy has the financial ability to bear the economic risk of this
investment in the Warrants, including a complete loss of such investment.
Trilogy has adequate means for providing for its current financial needs and has
no need for liquidity with respect to this investment.

 

7.3    Trilogy
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Warrants and
in protecting its own interest in connection with this transaction.

 

7.4    Trilogy
understands that the Warrants have not been registered under the Securities Act
of 1933, as amended (the “Securities
Act”), or
under any state securities laws. Trilogy is familiar with the provisions of the
Securities Act and Rule 144 thereunder and understands that the restrictions on
transfer on the Warrants may result in Trilogy being required to hold the
Warrants for an indefinite period of time.

 

7.5    Trilogy
agrees not to sell, transfer, assign, gift, create a security interest in, or
otherwise dispose of, with or without consideration (collectively, “Transfer”) any of
the Warrants except pursuant to an effective registration statement under the
Securities Act or an exemption from registration. As a further condition to any
such Transfer, except in the event that such Transfer is made pursuant to an
effective registration statement under the Securities Act, if in the reasonable
opinion of counsel to SMVD any Transfer of the Warrants by the contemplated
transferee thereof would not be exempt from the registration and prospectus
delivery requirements of the Securities Act, SMVD may require the contemplated
transferee to furnish SMVD with an investment letter setting forth such
information and agreements as may be reasonably requested by SMVD to ensure
compliance by such transferee with the Securities Act. Further, any transferee
of the Warrants, as a condition of the Transfer, must agree to be legally bound
by all of the provisions of is Warrant, including Section 1.6
hereof.

 

8.    Notices
of Record Date

 

In the
event:

 

8.1    SMVD
shall take a record of the holders of its Common Stock (or other stock or
securities at the time receivable upon the exercise of these Warrants), for the
purpose of entitling them to receive any dividend or other distribution, or any
right to subscribe for or purchase any shares of stock of any class or any other
securities or to receive any other right; or

 

8.2    of any
consolidation or merger of SMVD with or into another corporation, any capital
reorganization of SMVD, any reclassification of the capital stock of SMVD, or
any conveyance of all or substantially all of the assets of SMVD to another
corporation in which holders of SMVD’s stock are to receive stock, securities or
property of another corporation; or

 

8.3    of any
voluntary dissolution, liquidation or winding-up of SMVD; or

 







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8.4    of any
redemption or conversion of all outstanding Common Stock;

 

then, and
in each such case, SMVD will mail or cause to be mailed to the Holder a notice
specifying, as the case may be, (a) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, or (b) the date on
which such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation, winding-up, redemption or conversion is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such stock or securities as at the time are receivable upon the
exercise of these Warrants), shall be entitled to exchange their shares of
Common Stock (or such other stock or securities), for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. SMVD shall use all
reasonable efforts to ensure such notice shall be delivered at least 15 days
prior to the date therein specified.

 

9.    Registration
Rights

 

9.1    Definitions. For
purposes of this Section 9, the following terms shall have the meanings set
forth below:

 

9.1.1    A
“Blackout
Event” means
any of the following: (a) the possession by SMVD of material information that is
not ripe for disclosure in a registration statement or prospectus, as determined
reasonably and in good faith by the Chief Executive Officer or the Board of
Directors of SMVD or that disclosure of such information in the Registration
Statement or the prospectus constituting a part thereof would be materially
detrimental to the business and affairs of SMVD; or (b) any material engagement
or activity by SMVD which would, in the reasonable and good faith determination
of the Chief Executive Officer or the Board of Directors of SMVD, be materially
adversely affected by disclosure in a registration statement or prospectus at
such time. 

 

9.1.2    “Exchange
Act” shall
mean the Securities Exchange Act of 1934, as amended.

 

9.1.3    “Included
Shares” shall
mean any Registrable Shares included in a Registration.

 

9.1.4    “Registrable
Shares” shall
mean the shares of Common Stock (or such stock or securities as at the time are
receivable upon the exercise of these Warrants) issuable upon exercise of the
Warrants and any other warrants and or other securities issued to Trilogy in
connection with performing investor relations services for SMVD, and shares or
securities issued as a result of stock split, stock dividend or reclassification
of such shares.

 

9.1.5    “Registration” shall
mean a registration of securities under the Securities Act pursuant to Section
9.2 or 9.3 of this Agreement. 

 

9.1.6    “Registration
Period” with
respect to any Registration Statement the period commencing the effective date
of the Registration Statement and ending upon withdrawal or termination of the
Registration Statement.

 

9.1.7    “Registration
Statement” shall
mean the registration statement, as amended from time to time, filed with the
SEC in connection with a Registration. 

 

9.1.8    “SEC” shall
mean the Securities and Exchange Commission.

 

9.2    Demand
Registration. Within
45 days following written demand of Holder on or after June 30, 2005, SMVD shall
prepare and file with the SEC a Registration Statement for the purpose of
registering the sale of the Registrable Shares under the Securities Act, and
shall use its commercially reasonable efforts to cause the Registration
Statement to become effective within 90 days of the date of filing. Once
effective, SMVD shall prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus forming a part
thereof as may be necessary to keep the Registration Statement effective until
the earliest date on which (a) all the Included Shares (as defined below) have
been disposed of pursuant to the Registration Statement, or (b) all of the
Included Shares then held by Holder may be sold within a 90 day period under the
provisions of Rule 144 without limitation as to volume, whether pursuant to Rule
144(k) or otherwise. 

 







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9.3    Piggyback
Registration. Unless
the Registrable Shares are then included in a Registration Statement or can be
sold under the provisions of Rule 144 without limitation as to volume, whether
pursuant to Rule 144(k) or otherwise, if SMVD shall determine to register any
Common Stock under the Securities Act for sale in connection with a public
offering of Common Stock (other than pursuant to an employee benefit plan or a
merger, acquisition or similar transaction), SMVD will give written notice
thereof to Holder and will include in such Registration Statement any of the
Registrable Shares which Holder may request be included (“Included
Shares”) by a
writing delivered to SMVD within 15 days after the notice given by SMVD to
Holder; provided,
however, that if
the offering is to be underwritten, and the representative advises the Holders
in writing that marketing factors require a limitation on the number of shares
to be included in the offering, the shares to be included shall be allocated
first to SMVD and any shareholder who initiated such Registration and then among
the others based on the respective number of shares of Common Stock held by such
persons. If a Holder who has requested inclusion in such registration as
provided above does not agree to all of the terms of any such underwriting, such
Holder shall be excluded therefrom by written notice from SMVD or the
representative of the underwriters. If SMVD decides not to, and does not, file a
Registration Statement with respect to such Registration, or after filing
determines to withdraw the same before the effective date thereof, SMVD will
promptly so inform Holder, and SMVD will not be obligated to complete the
registration of the Included Shares included therein. 

 

9.4    Certain
Covenants. In
connection with any Registration: 

 

9.4.1    SMVD
shall take all lawful action such that the Registration Statement, any amendment
thereto and the prospectus forming a part thereof does not contain an 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 light of the
circumstances under which they are made, not misleading. Upon becoming aware of
the occurrence of any event or the discovery of any facts during the
Registration Period that make any statement of a material fact made in the
Registration Statement or the related prospectus untrue in any material respect
or which material fact is omitted from the Registration Statement or related
prospectus that requires the making of any changes in the Registration Statement
or related prospectus so that it will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they are made, not misleading
(taking into account any prior amendments or supplements), SMVD shall promptly
notify Holder, and, subject to the provisions of Section 9.5, as soon as
reasonably practicable prepare (but, subject to Section 9.5, in no event more
than 15 business days in the case of a supplement or 15 business days in the
case of a post-effective amendment) and file with the SEC a supplement or
post-effective amendment to the Registration Statement or the related prospectus
or file any other required document so that, as thereafter delivered to a
purchaser of Shares from Holder, such prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.

 

9.4.2    At least
three business days prior to the filing with the SEC of the Registration
Statement (or any amendment thereto) or the prospectus forming a part thereof
(or any supplement thereto), SMVD shall provide draft copies thereof to Holder
and shall consider incorporating into such documents such comments as Holder
(and its counsel) may propose to be incorporated therein. Notwithstanding the
foregoing, no prospectus supplement, the form of which has previously been
provided to Holder, need be delivered in draft form to Holder.

 







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9.4.3    SMVD
shall promptly notify Holder upon the occurrence of any of the following events
in respect of the Registration Statement or the prospectus forming a part
thereof: (a) the receipt of any request for additional information from the SEC
or any other federal or state governmental authority, the response to which
would require any amendments or supplements to the Registration Statement or
related prospectus; (b) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose; or
(c) the receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose.

 

9.4.4    SMVD
shall furnish to Holder with respect to the Included Shares registered under the
Registration Statement (and to each underwriter, if any, of such Shares) such
number of copies of prospectuses and such other documents as Holder may
reasonably request, in order to facilitate the public sale or other disposition
of all or any of the Included Shares by Holder pursuant to the Registration
Statement.

 

9.4.5    In
connection with any registration pursuant to Section 9.2, SMVD shall file or
cause to be filed such documents as are required to be filed by SMVD for normal
Blue Sky clearance in states specified in writing by Holder; provided, however,
that SMVD shall not be required to qualify to do business or consent to service
of process in any jurisdiction in which it is not now so qualified or has not so
consented.

 

9.4.6    SMVD
shall bear and pay all expenses incurred by it and Holder (other than
underwriting discounts, brokerage fees and commissions and fees and expenses of
more than one law firm) in connection with the registration of the Shares
pursuant to the Registration Statement. 

 

9.4.7    As a
condition to including Registrable Shares in a Registration Statement, Holder
must provide to SMVD such information regarding itself, the Registrable Shares
held by it and the intended method of distribution of such Shares as shall be
required to effect the registration of the Registrable Shares and, if the
offering is being underwritten, Holder must provide such powers of attorney,
indemnities and other documents as may be reasonably requested by the managing
underwriter.

 

9.4.8    Following
the effectiveness of the Registration Statement, upon receipt from SMVD of a
notice that the Registration Statement contains an untrue statement of material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, Holder will immediately discontinue
disposition of Included Shares pursuant to the Registration Statement until SMVD
notifies Holder that it may resume sales of Included Shares and, if necessary,
provides to Holder copies of the supplemental or amended prospectus.


 

9.5    Blackout
Event. SMVD
shall not be obligated to file a post-effective amendment or supplement to the
Registration Statement or the prospectus constituting a part thereof during the
continuance of a Blackout Event; provided, however, that no Blackout Event may
be deemed to exist for more than 60 days. Without the express written consent of
Holder, if required to permit the continued sale of Shares by Holder, a
post-effective amendment or supplement to Registration Statement or the
prospectus constituting a part thereof must be filed no later than the 61st day
following commencement of a Blackout Event.

 

9.6    Rule
144. With a
view to making available to Holder the benefits of Rule 144, SMVD agrees, until
Holder can sell all remaining Registrable Shares under the provisions Rule
144(k), to:

 

(i)    comply
with the provisions of paragraph (c)(1) of Rule 144; and

 







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(ii)    file with
the SEC in a timely manner all reports and other documents required to be filed
by SMVD pursuant to Section 13 or 15(d) under the Exchange Act; and, if at any
time it is not required to file such reports but in the past had been required
to or did file such reports, it will, upon the request of a Purchaser, make
available other information as required by, and so long as necessary to permit
sales of its Shares pursuant to, Rule 144.

 

9.7    SMVD
Indemnification. SMVD
agrees to indemnify and hold harmless Holder, and its officers, directors and
agents, and each person, if any, who controls Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities caused by (a) any
violation or alleged violation by SMVD of the Securities Act, Exchange Act, any
state securities laws or any rule or regulation promulgated under the Securities
Act, Exchange Act or any state securities laws, (b) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Included Shares (as amended or
supplemented if SMVD shall have furnished any amendments or supplements thereto)
or any preliminary prospectus, or (c) caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished in writing to SMVD
by Holder or on Holder’s behalf expressly for use therein.

 

9.8    Holder
Indemnification. Holder
agrees to indemnify and hold harmless SMVD, its officers, directors and agents
and each person, if any, who controls SMVD within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from SMVD to Holder, but only with respect to
information furnished in writing by Holder or on Holder’s behalf expressly for
use in any registration statement or prospectus relating to the Registrable
Shares, or any amendment or supplement thereto, or any preliminary prospectus.


 

9.9    Indemnification
Procedures. In case
any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
this Section 9, such person (an “Indemnified
Party”) shall
promptly notify the person against whom such indemnity may be sought (the
“Indemnifying
Party”) in
writing and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent (and only
to the extent that) that the Indemnifying Party is prejudiced by such failure to
notify. In any such proceeding, any Indemnified Party shall have the right to
retain its own counsel, but the reasonable fees and actual expenses of such
counsel shall be at the expense of such Indemnified Party unless (a) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
retention of such counsel or (b) in the reasonable judgment of such Indemnified
Party representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the Indemnifying Party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and actual expenses of more than one separate firm of attorneys (in addition to
any local counsel) at any time for all such Indemnified Parties (including in
the case of Holder, all of its officers, directors and controlling persons) and
that all such fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Indemnified Parties, the Indemnified
Parties shall designate such firm in writing to the Indemnifying Party. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its prior written consent (which consent shall not be
unreasonably withheld or delayed), but if settled with such consent, or if there
be a final judgment for the plaintiff, the Indemnifying Party shall indemnify
and hold harmless such Indemnified Parties from and against any loss or
liability (to the extent stated above) by reason of such settlement or judgment.
No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such proceeding.

 







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9.10    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, he, she or it would otherwise be liable under this
Section 9.6 to the fullest extent permitted by law; provided, however, that (a)
no contribution shall be made under circumstances where a party would not have
been liable for indemnification under this Section 9.6 and (b) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning used in the Securities Act) shall be entitled to contribution from any
party who was not guilty of such fraudulent misrepresentation. 

 

10.    Nontransferability. Trilogy
may not sell or transfer any Warrants to any person without the consent of SMVD
except to (a) a director, officer, employee, manager or affiliate of Trilogy or
a person controlled by one or more directors, officers, employees, managers or
affiliates of Trilogy); and (b) a person who acted as finder in putting together
Trilogy and SMVD. These restrictions on transfer shall not apply to any
successor Holder. Any such transferee of this Warrant, as a condition of the
Transfer, shall agree to be legally bound by all of the provisions of is
Warrant, including Section 1.6 hereof.

 

11.    Severability. If any
term, provision, covenant or restriction of these Warrants is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of these Warrants shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.

 

12.    Notices. All
notices, requests, consents and other communications required hereunder shall be
in writing and shall be effective when delivered or, if delivered by registered
or certified mail, postage prepaid, return receipt requested, shall be effective
on the third day following deposit in United States mail: to the Holder, at
Trilogy Capital Partners, Inc., 14061⁄2 Kenter Avenue, Los Angeles, CA 90049; and
if addressed to SMVD, at SmartVideo Technologies, Inc., Attn: Robert E. Bennett,
Jr., Chief Executive Officer and President, 1650 Oakbrook Drive, Suite 405,
Norcross, Georgia 30093 or such other address as Holder or SMVD may designate in
writing.

 

13.    No
Rights as Shareholder. The
Holder shall have no rights as a shareholder of SMVD with respect to the shares
issuable upon exercise of the Warrants until the receipt by SMVD of all of the
Exercise Documents. 

 



	 	 	 
	 	SMARTVIDEO TECHNOLOGIES, INC.
	 
 	 
 	 
 
		By:  	/s/ 
	 	
      

      Richard E. Bennett, Jr.
	 	Chief Executive Officer and
      President











-9-













EXHIBIT
“A”

NOTICE
OF EXERCISE

(To
be signed only upon exercise of the Warrants)

 

To:    SmartVideo
Technologies, Inc.

 

The
undersigned hereby elects to purchase shares of Common Stock (the “Warrant
Shares”) of
SmartVideo Technologies, Inc. (“SMVD”),
pursuant to the terms of the enclosed warrant certificate (the “Certificate”). The
undersigned tenders herewith payment of the exercise price pursuant to the terms
of the Certificate. 

 

The
undersigned hereby represents and warrants to, and agrees with, SMVD as follows:


 

1.  Holder is
acquiring the Warrant Shares for its own account, for investment purposes only
and not for distribution in violation of the Securities Act of 1933, as amended
(the “Securities
Act”).


 

2.  Holder
understands that an investment in the Warrant Shares involves a high degree of
risk, and Holder has the financial ability to bear the economic risk of this
investment in the Warrant Shares, including a complete loss of such investment.
Holder has adequate means for providing for its current financial needs and has
no need for liquidity with respect to this investment.

 

3.  Holder
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Warrant
Shares and in protecting its own interest in connection with this
transaction.

 

4.  Holder
understands that the Warrant Shares have not been registered under the
Securities Act, or under any state securities laws. Holder is familiar with the
provisions of the Securities Act and Rule 144 thereunder and understands that
the restrictions on transfer on the Warrant Shares may result in Holder being
required to hold the Warrant Shares for an indefinite period of
time.

 

5.  Holder
agrees not to sell, transfer, assign, gift, create a security interest in, or
otherwise dispose of, with or without consideration (collectively, “Transfer”) any of
the Warrant Shares except pursuant to an effective registration statement under
the Securities Act or an exemption from registration. As a further condition to
any such Transfer, except in the event that such Transfer is made pursuant to an
effective registration statement under the Securities Act, if in the reasonable
opinion of counsel to SMVD any Transfer of the Warrant Shares by the
contemplated transferee thereof would not be exempt from the registration and
prospectus delivery requirements of the Securities Act, SMVD may require the
contemplated transferee to furnish SMVD with an investment letter setting forth
such information and agreements as may be reasonably requested by SMVD to ensure
compliance by such transferee with the Securities Act.

 




















Each
certificate evidencing the Warrant Shares will bear the following
legend:

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE EXERCISED, SOLD, PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.”

 

6.  The
Holder is either an “accredited investor” as defined under Regulation D of the
Securities and Exchange Commission under the Securities Act or has reviewed the
most recent Form 10-K filed by SMVD under the Securities Exchange Act of 1934,
as amended, and each other filing by SMVD under such Act filed
thereafter.

 

7.  Immediately
following this exercise of Warrants, if as of the date of exercise SMVD has a
class of securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended, the undersigned will not beneficially own five percent (5%)
or more of the then outstanding Common Stock of SMVD (based on the number of
shares outstanding set forth in the most recent periodic report filed by SMVD
with the Securities and Exchange Commission and any additional shares which have
been issued since that date of which Holder is aware have been
issued).

 

Number of
Warrants Exercised: ______________

 

Net
Exercise ____ Yes ___ No 

 

Dated:
____________________

 

__________________________________