EXHIBIT
4.1




**FORM
OF WARRANT**




**NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (II) AN OPINION OF COUNSEL, IN A FORM
REASONABLY ACCEPTABLE TO THE COMPANY, THAT SUCH TRANSFER MAY BE MADE WITHOUT
REGISTRATION OR QUALIFICATION UNDER SAID ACT OR (III) SUCH TRANSFER BEING MADE
PURSUANT TO RULE 144 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.**




**SMARTVIDEO
TECHNOLOGIES, INC.**




**WARRANT**




Warrant
No.: ________




Number of
Shares: _________




Date of
Issuance: March ___, 2005 (" **Issuance
Date** ")




SmartVideo
Technologies, Inc., a Delaware corporation (the " **Company** "),
hereby certifies that, for value received, the receipt and sufficiency of which
are hereby acknowledged, [ NAME OF
HOLDER] , the
registered holder hereof or its permitted assigns (the " **Holder** "), is
entitled, subject to the terms set forth below, to purchase from the Company, at
the Exercise Price (as defined below) then in effect, at any time or times on or
after the date hereof, but not after 11:59 p.m., New York Time, on the
Expiration Date (as defined below), [ NUMBER OF
SHARES (____) ] fully
paid nonassessable shares of Common Stock (as defined below) **** (the
" **Warrant
Shares** ").
Except as otherwise defined herein, capitalized terms in this Warrant shall have
the meanings set forth in Section 17. This Warrant (including all Warrants
issued in exchange, transfer or replacement hereof, the " **Warrants** ") is one
of the Warrants (the " **SPA
Warrants** ") issued
pursuant to Section 1 of that certain Securities Purchase Agreement, dated as of
March __, 2005 (the **"Subscription
Date"** ), among
the Company and the investors (the " **Buyers** ")
referred to therein (the " **Securities
Purchase Agreement** ").




1.  EXERCISE
OF WARRANT.




(i)  Mechanics
of Exercise . Subject
to the terms and conditions hereof (including, without limitation, the
limitations set forth in Section 1(f)), this Warrant may be exercised by the
Holder on any day on or after the date hereof, in whole or in part, by
(i) delivery of a written notice, in the form attached hereto as Exhibit
A (the
" **Exercise
Notice** "), of
the Holder's election to exercise this Warrant and (ii) (A) payment to the
Company of an amount equal to the applicable Exercise Price multiplied by the
number of Warrant Shares as to which this Warrant is being exercised (the
" **Aggregate
Exercise Price** ") in
cash or wire transfer of immediately available funds or (B) by notifying the
Company that this Warrant is being exercised pursuant to a Cashless Exercise (as
defined in Section 1(d)). Upon exercise in full of this Warrant, the Holder
shall deliver the original Warrant in order to effect an exercise hereunder, or,
in the alternative, an affidavit of lost instrument in form reasonably
satisfactory to the Company. Execution and delivery of the Exercise Notice with
respect to less than all of the Warrant Shares shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares. On or before the
first Business Day following the date on which the Company has received each of
the Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless
Exercise) (the " **Exercise
Delivery Documents** "), the
Company shall transmit by facsimile an acknowledgment of confirmation of receipt
of the Exercise Delivery Documents to the Holder and the Company's transfer
agent (the " **Transfer
Agent** "). On or
before the third Business Day following the date on which the Company has
received all of the Exercise Delivery Documents (the " **Share
Delivery Date** "), the
Company shall (X) provided that the Transfer Agent is participating in The
Depository Trust Company (" **DTC** ") Fast
Automated Securities Transfer Program and if the Holder is entitled to receive
shares not bearing a legend pursuant to Section 2(g) of the Securities Purchase
Agreement, upon the request of the Holder, credit such aggregate number of
shares of Common Stock to which the Holder is entitled pursuant to such exercise
to the Holder's or its designee's balance account with DTC through its Deposit
Withdrawal Agent Commission system, or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and
dispatch by overnight courier to the address as specified in the Exercise
Notice, a certificate, registered in the Company's share register in the name of
the Holder or its designee, for the number of shares of Common Stock to which
the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise
Notice and Aggregate Exercise Price referred to in clause (ii)(A) above or
notification to the Company of a Cashless Exercise referred to in Section 1(d),
the Holder shall be deemed for all corporate purposes to have become the holder
of record of the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date of delivery of the certificates evidencing
such Warrant Shares. If this Warrant is submitted in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise, then the Company shall as soon
as practicable and in no event later than three Business Days after any exercise
and at its own expense, issue a new Warrant (in accordance with Section 7(d))
representing the right to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised. No fractional
shares of Common Stock are to be issued upon the exercise of this Warrant, but
rather the number of shares of Common Stock to be issued shall be rounded up to
the nearest whole number. The Company shall pay any and all taxes which may be
payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.







(ii)  Exercise
Price . For
purposes of this Warrant, " **Exercise
Price** " means
$3.50, subject to adjustment as provided herein.




(iii)  Company's
Failure to Timely Deliver Securities . If the
Company shall fail for any reason or for no reason to issue to the Holder within
three (3) Business Days of receipt of the Exercise Delivery Documents, a
certificate for the number of shares of Common Stock to which the Holder is
entitled and register such shares of Common Stock on the Company's share
register or to credit the Holder's balance account with DTC for such number of
shares of Common Stock to which the Holder is entitled upon the Holder's
exercise of this Warrant, then, in addition to all other remedies available to
the Holder, the Company shall pay in cash to the Holder on each day after such
third **** Business
Day that the issuance of such shares of Common Stock is not timely effected an
amount equal to 1.5% of the product of (A) the sum of the number of shares of
Common Stock not issued to the Holder on a timely basis and to which the Holder
is entitled and (B) the Closing Sale Price of the shares of Common Stock on the
trading day immediately preceding the last possible date which the Company could
have issued such shares of Common Stock to the Holder without violating Section
1(a). In addition to the foregoing, if within three (3) trading days after the
Company's receipt of the facsimile copy of a Exercise Notice the Company shall
fail to issue and transmit for delivery a certificate to the Holder and register
such shares of Common Stock on the Company's share register or credit the
Holder's balance account with DTC for the number of shares of Common Stock to
which the Holder is entitled upon such holder's exercise hereunder, and if on or
after such Trading Day the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of shares of Common Stock issuable upon such exercise that the Holder
anticipated receiving from the Company (a **"Buy-In"** ), then
the Company shall, within three Business Days after the Holder's request and in
the Holder's discretion, either (i) pay cash to the Holder in an amount equal to
the Holder's total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased (the **"Buy-In
Price"** ), at
which point the Company's obligation to deliver such certificate (and to issue
such shares of Common Stock) shall terminate, or (ii) promptly honor its
obligation to deliver to the Holder a certificate or certificates representing
such shares of Common Stock and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Bid Price on the date of
exercise.




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(iv)  Cashless
Exercise . **** Notwithstanding
anything contained herein to the contrary, if a Registration Statement (as
defined in the Registration Rights Agreement) covering the Warrant Shares that
are the subject of the Exercise Notice (the " **Unavailable
Warrant Shares** ") is not
available for the resale of such Unavailable Warrant Shares, the Holder may, in
its sole discretion, exercise this Warrant in whole or in part and, in lieu of
making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the "Net Number" of shares of Common Stock determined
according to the following formula (a " **Cashless
Exercise** "):




Net
Number = (A x
B) - (A x C)


B




For
purposes of the foregoing formula:




A= the
total number of shares with respect to which this Warrant is then being
exercised.




B= the
Closing Sale Price of the shares of Common Stock (as reported by Bloomberg) on
the date immediately preceding the date of the Exercise Notice.




C= the
Exercise Price then in effect for the applicable Warrant Shares at the time of
such exercise.




(v)  Disputes . In the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall promptly issue
to the Holder the number of Warrant Shares that are not disputed and resolve
such dispute in accordance with Section 14.




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(vi)  Limitations
on Exercises . The
Company shall not effect the exercise of this Warrant, and the Holder shall not
have the right to exercise this Warrant, to the extent that after giving effect
to such exercise, such Person (together with such Person's affiliates) would
beneficially own in excess of 4.99% of the shares of Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of shares of Common Stock beneficially owned by
such Person and its affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude shares of Common
Stock which would be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by such Person and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company beneficially owned by such Person and its
affiliates (including, without limitation, any convertible notes or convertible
preferred stock or warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the
Securities and Exchange Commission, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or the
Transfer Agent setting forth the number of shares of Common Stock outstanding.
For any reason at any time, upon the written or oral request of the Holder, the
Company shall within one Business Day confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including the
SPA Warrants, by the Holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported.




2. ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES . The
Exercise Price and the number of Warrant Shares shall be adjusted from time to
time as follows:




(a)  Adjustment
upon Issuance of Common Stock . If and
whenever on or after the Subscription Date the Company issues or sells, or in
accordance with this Section 2 is deemed to have issued or sold, any shares of
Common Stock (including the issuance or sale of shares of Common Stock owned or
held by or for the account of the Company, but excluding Excluded Securities)
for a consideration per share (the " **New
Issuance Price** ") less
than a price (the " **Applicable
Price** ") equal
to the Exercise Price in effect immediately prior to such issue or sale or
deemed issuance or sale (the foregoing, a " **Dilutive
Issuance** "), then
immediately after such Dilutive Issuance the Exercise Price then in effect shall
be reduced to an amount equal to the New Issuance Price. Upon each such
adjustment of the Exercise Price hereunder, the number of Warrant Shares shall
be adjusted to the number of shares of Common Stock determined by multiplying
the Exercise Price in effect immediately prior to such adjustment by the number
of Warrant Shares acquirable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment. For purposes of determining the adjusted Exercise Price
under this Section 2(a), the following shall be applicable:




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(i)  Issuance
of Options . If the
Company in any manner grants any Options and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such Option
or upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting or sale of such Option for
such price per share. For purposes of this Section 2(a)(i), the "lowest price
per share for which one share of Common Stock is issuable upon exercise of such
Options or upon conversion, exercise or exchange of such Convertible Securities"
shall be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to any one share of Common
Stock upon the granting or sale of the Option, upon exercise of the Option and
upon conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option. No further adjustment of the Exercise Price or number
of Warrant Shares shall be made upon the actual issuance of such Common Stock or
of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Common Stock upon conversion, exercise or exchange of
such Convertible Securities.




(ii)  Issuance
of Convertible Securities . If the
Company in any manner issues or sells any Convertible Securities and the lowest
price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof is less than the Applicable Price, then
such share of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such
Convertible Securities for such price per share. For the purposes of this
Section 2(a)(ii), the "lowest price per share for which one share of Common
Stock is issuable upon the conversion, exercise or exchange" shall be equal to
the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to one share of Common Stock upon the issuance or
sale of the Convertible Security and upon conversion, exercise or exchange of
such Convertible Security. No further adjustment of the Exercise Price or number
of Warrant Shares shall be made upon the actual issuance of such Common Stock
upon conversion, exercise or exchange of such Convertible Securities, and if any
such issue or sale of such Convertible Securities is made upon exercise of any
Options for which adjustment of this Warrant has been or is to be made pursuant
to other provisions of this Section 2(a), no further adjustment of the Exercise
Price or number of Warrant Shares shall be made by reason of such issue or sale.




(iii)  Change
in Option Price or Rate of Conversion. If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exercisable or exchangeable for Common Stock increases or decreases at any
time, the Exercise Price and the number of Warrant Shares in effect at the time
of such increase or decrease shall be adjusted to the Exercise Price and the
number of Warrant Shares which would have been in effect at such time had such
Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion
rate, as the case may be, at the time initially granted, issued or sold. For
purposes of this Section 2(a)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the date of issuance of this Warrant are
increased or decreased in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such increase or decrease. No adjustment pursuant
to this Section 2(a) shall be made if such adjustment would result in an
increase of the Exercise Price then in effect or a decrease in the number of
Warrant Shares.




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(iv)  Calculation
of Consideration Received . In case
any Option is issued in connection with the issue or sale of other securities of
the Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for a consideration of $0.0001. If any Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed
to be the net amount received by the Company therefor. If any Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of such consideration received by the Company will be the
fair value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the Company
will be the Closing Sale Price of such security on the date of receipt. If any
Common Stock, Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash or securities will be determined jointly by the Board of Directors of the
Company and the holders of SPA Warrants representing at least a majority of the
shares of Common Stock obtainable upon exercise of the SPA Warrants then
outstanding. If such parties are unable to reach agreement within 10 days after
the occurrence of an event requiring valuation (the " **Valuation
Event** "), the
fair value of such consideration will be determined within fifteen Business
Days after the tenth day following the Valuation Event by an independent,
reputable appraiser jointly selected by the Company and the holders of SPA
Warrants representing at least a majority of the shares of Common Stock
obtainable upon exercise of the SPA Warrants then outstanding. The determination
of such appraiser shall be final and binding upon all parties absent manifest
error and the fees and expenses of such appraiser shall be borne by the
Company.




(v)  Record
Date . If the
Company takes a record of the holders of Common Stock for the purpose of
entitling them (A) to receive a dividend or other distribution payable in
Common Stock, Options or in Convertible Securities or (B) to subscribe for
or purchase Common Stock, Options or Convertible Securities, then such record
date will be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.




(b)  Adjustment
upon Subdivision or Combination of Common Stock . If the
Company at any time after the date of issuance of this Warrant subdivides (by
any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced and the number of Warrant Shares will be
proportionately increased. If the Company at any time after the date of issuance
of this Warrant combines (by combination, reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Exercise Price in effect immediately prior to such combination
will be proportionately increased and the number of Warrant Shares will be
proportionately decreased. Any adjustment under this Section 2(b) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.




(c)  Other
Events . If any
event occurs of the type contemplated by the provisions of this Section 2 but
not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights
with equity features), then the Company's Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of Warrant Shares so
as to protect the rights of the holder of this Warrant; provided that no such
adjustment pursuant to this Section 2(c) will increase the Exercise Price or
decrease the number of Warrant Shares as otherwise determined pursuant to this
Section 2.




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3. RIGHTS
UPON DISTRIBUTION OF ASSETS . If the
Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of Common Stock, by way of return
of capital or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a dividend, spin
off, reclassification, corporate rearrangement or other similar transaction) (a
" **Distribution** "), at
any time after the issuance of this Warrant, then, in each such
case:




(a)  any
Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of Common Stock entitled to
receive the Distribution shall be reduced, effective as of the close of business
on such record date, to a price determined by multiplying such Exercise Price by
a fraction of which (i) the numerator shall be the Closing Bid Price of the
Common Stock on the trading day immediately preceding such record date minus the
value of the Distribution (as determined in good faith by the Company's Board of
Directors) applicable to one share of Common Stock, and (ii) the denominator
shall be the Closing Bid Price of the Common Stock on the trading day
immediately preceding such record date; and




(b)  the
number of Warrant Shares shall be increased to a number of shares equal to the
number of shares of Common Stock obtainable immediately prior to the close of
business on the record date fixed for the determination of holders of Common
Stock entitled to receive the Distribution multiplied by the reciprocal of the
fraction set forth in the immediately preceding paragraph (a); provided that in
the event that the Distribution is of common stock (" **Other
Common Stock** ") of a
company whose common stock is traded on a national securities exchange or a
national automated quotation system, then the holder of this Warrant may elect
to receive a warrant to purchase Other Common Stock in lieu of an increase in
the number of Warrant Shares, the terms of which shall be identical to those of
this Warrant, except that such warrant shall be exercisable into the number of
shares of Other Common Stock that would have been payable to the holder of this
Warrant pursuant to the Distribution had the holder exercised this Warrant
immediately prior to such record date and with an aggregate exercise price equal
to the product of the amount by which the exercise price of this Warrant was
decreased with respect to the Distribution pursuant to the terms of the
immediately preceding paragraph (a) and the number of Warrant Shares calculated
in accordance with the first part of this paragraph (b).




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4. FUNDAMENTAL
TRANSACTIONS . The
Company shall not enter into or be party to a Fundamental Transaction unless the
Successor Entity assumes in writing all of the obligations of the Company under
this Warrant and the other Transaction Documents in accordance with the
provisions of this Section (4) pursuant
to written agreements in form and substance satisfactory to the Required Holders
and approved by the Required Holders prior to such Fundamental Transaction,
including agreements to deliver to each holder of Warrants in exchange for such
Warrants a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant, including, without
limitation, an adjusted exercise price equal to the value for the shares of
Common Stock reflected by the terms of such Fundamental Transaction, and
exercisable for a corresponding number of shares of capital stock equivalent to
the shares of Common Stock acquirable and receivable upon exercise of this
Warrant (without regard to any limitations on the exercise of this Warrant)
prior to such Fundamental Transaction, and satisfactory to the Required Holders
and ( **b) (i)** the
Successor Entity (including its Parent Entity) is a publicly traded corporation
whose common stock is quoted on or listed for trading on an Eligible
Market **.** Upon the
occurrence of any Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the "Company" shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of the Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon
exercise of this Warrant at any
time after the consummation of the Fundamental Transaction, in lieu of the
shares of the Common Stock (or other
securities, cash, assets or other property) purchasable
upon the exercise of the Warrant prior to
such Fundamental Transaction , such
shares of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights) which the Holder
would have been entitled to receive upon the happening of such Fundamental
Transaction had this Warrant been
exercised immediately prior to such Fundamental Transaction, as adjusted in
accordance with the provisions of this Warrant . In
addition to and not in substitution for any other rights hereunder, prior to the
consummation of any Fundamental Transaction pursuant to which holders of shares
of Common Stock are entitled to receive securities or other assets with respect
to or in exchange for shares of Common Stock (a " **Corporate
Event** "), the
Company shall make appropriate provision to insure that the Holder will
thereafter have the right to receive upon an exercise of this Warrant at any
time after the consummation of the
Fundamental Transaction but prior
to the Expiration Date , in lieu
of the shares of the Common Stock (or other
securities, cash, assets or other property) purchasable
upon the exercise of the Warrant prior to such Fundamental
Transaction , such
shares of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights) which the Holder
would have been
entitled to receive upon the happening of such Fundamental Transaction had the
Warrant been exercised immediately prior to such Fundamental Transaction. Provision
made pursuant to the preceding sentence shall be in a form and substance
reasonably satisfactory to the Required Holders. The provisions of this Section
shall apply similarly and equally to successive Fundamental Transactions and
Corporate Events. Provision made pursuant to the preceding sentence shall be in
a form and substance satisfactory to the Required Holders. The provisions of
this Section shall apply similarly and equally to successive Fundamental
Transactions and Corporate Events and shall be applied without regard to any
limitations on the exercise of this Warrant. Notwithstanding the foregoing, if the
Successor Entity is not a publicly traded corporation whose common stock is
quoted on or listed for trading on an Eligible Market, such Successor Entity
agrees to pay the Holder, at the closing of the transactions contemplated by
such Fundamental Transaction, for the outstanding Warrants immediately prior to
the effective time of such Fundamental Transaction and in consideration of the
cancellation of each such outstanding Warrant, an amount in cash determined
according to the Black-Scholes Option Pricing Method.




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5. NONCIRCUMVENTION . The
Company hereby covenants and agrees that the Company will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, and will at all times in good faith carry out
all the provisions of this Warrant and take all action as may be required to
protect the rights of the holder of this Warrant. Without limiting the
generality of the foregoing, the Company (i) will not increase the par
value of any shares of Common Stock receivable upon the exercise of this Warrant
above the Exercise Price then in effect, (ii) will take all such actions as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant, and (iii) will, so long as any of the SPA
Warrants are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the exercise of the SPA Warrants, 100% of the number of
shares of Common Stock as shall from time to time be necessary to effect the
exercise of the SPA Warrants then outstanding (without regard to any limitations
on exercise).




6. HOLDER
NOT DEEMED A STOCKHOLDER . Except
as otherwise specifically provided herein, no holder, solely in such Person's
capacity as a holder, of this Warrant shall be entitled to vote or receive
dividends or be deemed the holder of shares of the Company for any purpose, nor
shall anything contained in this Warrant be construed to confer upon the holder
hereof, solely in such Person's capacity as a holder of this Warrant, any of the
rights of a shareholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which such Person is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on such holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 6, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.




7. REISSUANCE
OF WARRANTS .




(a) Transfer
of Warrant . If this
Warrant is to be transferred, the holder shall surrender this Warrant to the
Company, whereupon the Company will forthwith issue and deliver upon the order
of the holder of this Warrant a new Warrant (in accordance with Section 7(d)),
registered as the holder of this Warrant may request, representing the right to
purchase the number of Warrant Shares being transferred by the Holder and, if
less then the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance with Section 7(d)) to the holder
of this Warrant representing the right to purchase the number of Warrant Shares
not being transferred.




(b) Lost,
Stolen or Mutilated Warrant . Upon
receipt by the Company of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant, and, in the case of
loss, theft or destruction, of any indemnification undertaking by the holder of
this Warrant to the Company in customary form and, in the case of mutilation,
upon surrender and cancellation of this Warrant, the Company shall execute and
deliver to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then underlying this
Warrant.




(c) Warrant
Exchangeable for Multiple Warrants . This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance
with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant
will represent the right to purchase such portion of such Warrant Shares as is
designated by the holder of this Warrant at the time of such surrender;
provided, however, that no Warrants for fractional shares of Common Stock shall
be given.




-9-


(d) Issuance
of New Warrants .
Whenever the Company is required to issue a new Warrant pursuant to the terms of
this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
(ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a
new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant
Shares designated by the holder of this Warrant which, when added to the number
of shares of Common Stock underlying the other new Warrants issued in connection
with such issuance, does not exceed the number of Warrant Shares then underlying
this Warrant), (iii) shall have an issuance date, as indicated on the face of
such new Warrant which is the same as the Issuance Date, and (iv) shall have the
same rights and conditions as this Warrant.




8. NO
SHORT TRANSACTIONS . During
the term of the Warrant, the Holder, and any Person who shall have a beneficial
ownership interest (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended), or a direct or indirect pecuniary interest
(within the meaning of Rule 16-a-1(a)(2) under the Securities Exchange Act of
1934, as amended) in the Warrant Shares, shall not, directly or indirectly, make
any short sale or maintain any short position, establish or maintain a “put
equivalent position” (within the meaning of Rule 16-a-1(h) under the Securities
Exchange Act of 1934, as amended), enter into any swap, derivative transaction
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock (whether any such
transaction is to be settled by delivery of Common Stock, other securities, cash
or other consideration) or any securities convertible into, exercisable for or
exchangeable for Common Stock of the Company.




9. CALL
OPTION . At any
time that the Closing Sale Price of the Common Stock shall equal or exceed 200%
of the then existing Exercise Price of the Warrants for a period of twenty
consecutive trading days, and provided that a Registration Statement (as defined
in the Registration Rights Agreement) covering the Warrant is available for the
resale of the related Warrant Shares during such twenty trading day period, the
Company shall have the right, upon twenty days written notice to the Holders, to
call the Warrant for cancellation in whole. Unless on or prior to the expiration
of such twenty day period, a Holder exercises its right to purchase any of the
Warrant Shares covered by the Warrant pursuant to the terms of this Warrant,
such Holder shall forfeit its right to do so, and the Warrants not so exercised
shall automatically expire without any consideration to the Holder or any
further action by the Holder or the Company and the Warrants shall be canceled
on the books and records of the Company.




10. NOTICES .
Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given in accordance with Section 9(f) of
the Securities Purchase Agreement. The Company shall provide the holder of this
Warrant with prompt written notice of all actions taken pursuant to this
Warrant, including in reasonable detail a description of such action and the
reason therefore. Without limiting the generality of the foregoing, the Company
will give written notice to the holder of this Warrant (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least fifteen days
prior to the date on which the Company closes its books or takes a record (A)
with respect to any dividend or distribution upon the Common Stock, (B) with
respect to any grants, issues or sales of any Options, Convertible Securities or
rights to purchase stock, warrants, securities or other property to holders of
Common Stock or (C) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation, provided in each case that such information
shall be made known to the public prior to or in conjunction with such notice
being provided to such holder.




-10-


11. AMENDMENT
AND WAIVER . Except
as otherwise provided herein, the provisions of this Warrant may be amended and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
written consent of the holders of SPA Warrants representing at least a majority
of the shares of Common Stock obtainable upon exercise of the SPA Warrants then
outstanding; provided that no such action may increase the exercise price of any
SPA Warrant or decrease the number of shares or class of stock obtainable upon
exercise of any SPA Warrant without the written consent of the holder of this
Warrant. No such amendment shall be effective to the extent that it applies to
less than all of the holders of the SPA Warrants then outstanding.




12. GOVERNING
LAW . This
Warrant shall be construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this
Warrant shall be governed by, the internal laws of the State of Delaware,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
Delaware.




13. CONSTRUCTION;
HEADINGS . This
Warrant shall be deemed to be jointly drafted by the Company and all the Buyers
and shall not be construed against any person as the drafter hereof. The
headings of this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this Warrant.




14. DISPUTE
RESOLUTION . In the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within two
Business Days of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to the holder of this Warrant. If the holder of this Warrant
and the Company are unable to agree upon such determination or calculation of
the Exercise Price or the Warrant Shares within three Business Days of such
disputed determination or arithmetic calculation being submitted to the Holder,
then the Company shall, within two Business Days submit via facsimile (a) the
disputed determination of the Exercise Price to an independent, reputable
investment bank selected by the Company and approved by the holder of this
Warrant or (b) the disputed arithmetic calculation of the Warrant Shares to the
Company's independent, outside accountant. The Company shall cause at its
expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the
results no later than ten Business Days from the time it receives the disputed
determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.




15. REMEDIES,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF . The
remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant, the Securities Purchase Agreement
and the Registration Rights Agreement, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein
shall limit the right of the holder of this Warrant to pursue actual damages for
any failure by the Company to comply with the terms of this Warrant. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the holder of this Warrant and that the remedy at law for
any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.




-11-


16. TRANSFER .  This
Warrant may be offered for sale, sold, transferred or assigned without the
consent of the Company, except as may otherwise be required by Section 2(f) of
the Securities Purchase Agreement.




17. CERTAIN
DEFINITIONS . For
purposes of this Warrant, the following terms shall have the following
meanings:




(a) " **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.




(b) " **Bloomberg** " means
Bloomberg Financial Markets.




(c) " **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.




(d) " **Closing
Bid Price** " and
" **Closing
Sale Price** " means,
for any security as of any date, the last closing bid price and last closing
trade price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the closing
trade price, as the case may be, then the last bid price or last trade price,
respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the "pink
sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant to
Section 14. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the
applicable calculation period.




(e) " **Common
Stock** " means
(i) the Company's common stock, par value $0.001 per share, and
(ii) any capital stock into which such Common Stock shall have been changed
or any capital stock resulting from a reclassification of such Common
Stock.




(g) " **Convertible
Securities** " means
any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for Common Stock.




-12-


(h) " **Eligible
Market** " means
the Principal Market, The New York Stock Exchange, Inc., the American Stock
Exchange, the Nasdaq National Market or The Nasdaq SmallCap Market.




(i) " **Excluded
Securities** " means
any Common Stock issued or issuable: (i) in connection with any Approved Stock
Plan; (ii) upon exercise of the Warrants; (iii) pursuant to a bona fide firm
commitment underwritten public offering with a nationally recognized underwriter
which generates gross proceeds to the Company in excess of $25,000,000 (other
than an "at-the-market offering" as defined in Rule 415(a)(4) under the 1933 Act
and "equity lines"); (iv) upon conversion of any Options or Convertible
Securities which are outstanding on the day immediately preceding the
Subscription Date, provided that the terms of such Options or Convertible
Securities are not amended, modified or changed on or after the Subscription
Date; (v) in connection with acquisitions or strategic investments (including,
without limitation, any licensing or distribution arrangements); or (vi)
securities issued to commercial banks or financial institutions, the primary
business of which is not making equity-related loans) or lessors in connection
with commercial credit arrangements, equipment financings or similar
transactions, where the principal consideration for such transaction is not the
issuance of such securities.




(j) " **Expiration
Date** " means
the sixty month anniversary of the Issuance Date.




(k) " **Fundamental
Transaction** " means
that the Company shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Person, or (ii) sell, assign, transfer,
convey or otherwise dispose of all or substantially all of the properties or
assets of the Company to another Person, or (iii) allow another Person to make a
purchase, tender or exchange offer that is accepted by the holders of more than
the 50% of either the outstanding shares of Common Stock (not including any
shares of Common Stock held by the Person or Persons making or party to, or
associated or affiliated with the Persons making or party to, such purchase,
tender or exchange offer), or (iv) consummate a stock purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby
such other Person acquires more than the 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock purchase agreement or other business
combination), or (v) reorganize, recapitalize or reclassify its Common
Stock.




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




(m) " **Parent
Entity** " of a
Person means an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is quoted or listed
on an Eligible Market, or, if there is more than one such Person or Parent
Entity, the Person or Parent Entity with the largest public market
capitalization as of the date of consummation of the Fundamental
Transaction.




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




-13-


(o) " **Principal
Market** " means
the OTC Bulletin Board.




(p) " **Registration
Rights Agreement** " means
that certain registration rights agreement dated the Subscription Date by and
among the Company and the Buyers.




(q) " **Required
Holders** " means
the holders of the SPA Warrants representing at least a majority of shares of
Common Stock underlying the SPA Warrants then outstanding.




(r) " **Successor
Entity** " means
the Person (or, if so elected by the Required Holders, the Parent Entity) formed
by, resulting from or surviving any Fundamental Transaction or the Person (or,
if so elected by the Required Holders, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.









**[Signature
Page Follows]**






-14-






**IN
WITNESS WHEREOF,** the
Company has caused this Warrant to be duly executed as of the Issuance Date set
out above.







****SMARTVIDEO
      TECHNOLOGIES, INC.****By:
    /s/Name: Richard E. Bennett, Jr.Title: President
      & CEO







EXHIBIT
A




**EXERCISE
NOTICE**




**TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS** **WARRANT**


****


**SMARTVIDEO
TECHNOLOGIES, INC.**




To: SmartVideo
Technologies, Inc.




The
undersigned is the holder of Warrant No. ______ (the " **Warrant** ") issued
by SmartVideo Technologies, Inc., a Delaware corporation (the " **Company** ").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.




1. The
Warrant is currently exercisable to purchase a total of _________ Warrant
Shares.




2. The
undersigned holder hereby exercises its right to purchase ____________ Warrant
Shares pursuant to the Warrant.




3. The
Holder intends that payment of the Exercise Price shall be made as:





____________  a
" Cash
Exercise" with
respect to _________________ Warrant Shares; and/or




____________  a "Cashless
Exercise" with
respect to _______________ Warrant Shares.




4. Pursuant
to this exercise, the Company shall deliver to the holder __________ Warrant
Shares in accordance with the terms of the Warrant.




5. Following
this exercise, the Warrant shall be exercisable to purchase a total of
________________ Warrant Shares.




Please
issue the Warrant Shares in the following name and to the following
address:




Issue
      to:
    ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________




Account
      Number:
    _______________________________________________________________________________(if electronic book entry transfer)





DTC
      Participant Number:
    ____________________________________________________________________(if electronic book entry
transfer)




Date:
_______________ , ______





__________________________________


Name of Registered Holder


By:      _______________________________


Name:


Title:










**ACKNOWLEDGMENT**






The
Company hereby acknowledges this Exercise Notice and hereby directs Continental
Stock Transfer and Trust Company to issue the above indicated number of shares
of Common Stock in accordance with the Transfer Agent Instructions dated March
__, 2005 from the Company and acknowledged and agreed to by Continental Stock
Transfer and Trust Company.




**SMARTVIDEO
      TECHNOLOGIES**,
      INC.****By:
    /s/Name:
      Richard E. Bennett, Jr.Title: President
      & CEO











**FORM
OF ASSIGNMENT**




[To be
completed and signed only upon transfer of Warrant]




FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the within Warrant to
purchase ____________ shares of Common Stock of SmartVideo Technologies, Inc. to
which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of SmartVideo Technologies, Inc. with full
power of substitution in the premises.





Dated:
      _________________,
      _____
    Registered
      Holder:(Signature
      must conform in all respects to name of holder as specified on the face of
      the Warrant)Address
      of TransfereeIn
      the presence of: