Securities Purchase Agreement



 






Exhibit 10.1




SECURITIES PURCHASE AGREEMENT




     THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”)
is made and entered into as of October 31, 2005, among SmartVideo Technologies, Inc., a Delaware corporation, with headquarters located
at 3505 Koger Boulevard, Suite 400, Duluth, Georgia 30096 (the “Company”), and the investors listed
on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”).



RECITALS




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



     B. Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, (i) shares of the Series A-1 Convertible Preferred Stock, par
value $0.001 per share (the “Preferred Stock”), of the Company, in the amount set forth opposite
such Buyer’s name on the Schedule of Buyers (which aggregate amount for all Buyers shall
collectively be referred to herein as the “Preferred Shares”), (ii) a warrant to acquire shares of
Common Stock, par value $.001 per share (the “Common Stock”) of the Company at a price of $1.75 per
share (the “$1.75 Warrants”), in substantially the form attached hereto as Exhibit A-1 (as
exercised, collectively, the “$1.75 Warrant Shares”), and (iii) a warrant to acquire shares of
Common Stock at a price of $2.00 per share (the “$2.00 Warrants” and, collectively with the $1.75
Warrants, the “Warrants”), in substantially the form attached hereto as Exhibit A-2 (as
exercised, collectively, the “$2.00 Warrant Shares” and, collectively with the $1.75 Warrant
Shares, the “Warrant Shares”).



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



     D. The Preferred Shares, the Warrants, the Warrant Shares, the Strategic Investment Securities
(as defined herein) and the shares of the Common Stock into which the Preferred Shares and the
Strategic Investment Securities are convertible collectively are referred to hereinafter as the
"Securities”.



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



     1. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS.



          (a) Purchase of Preferred Shares and Warrants. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 herein:




 









 









          (i) The Company shall issue and sell to each Buyer, and each Buyer severally, but not
jointly, agrees to purchase from the Company on the date hereof (the “First Closing Date”),
the number of Preferred Shares as is set forth opposite such Buyer’s name in column (3) on
the Schedule of Buyers, along with the Warrants to acquire up to that number of $1.75
Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of
Buyers and that number of $2.00 Warrant Shares as is set forth opposite such Buyer’s name in
column (5) on the Schedule of Buyers (the “First Closing”). The purchase price for the
Preferred Shares and related Warrants to be purchased by each Buyer at the First Closing
shall be the amount set forth opposite such Buyer’s name in column (6) of the Schedule of
Buyers (the “First Closing Purchase Price”). The First Closing shall occur on the First
Closing Date at the offices of the Company.




          (ii) In the event that a Strategic Investor shall have entered into a binding agreement
with the Company to make a Strategic Investment, or otherwise made a Strategic Investment,
within 90 days after the First Closing Date, each Buyer shall have the right, but not the
obligation, to purchase securities identical to those being purchased through such Strategic
Investment (“Strategic Investment Securities”) on the same terms and conditions as such
Strategic Investor. The Buyers shall be entitled to purchase, in the aggregate, a dollar
amount of Strategic Investment Securities equal to the aggregate First Closing Purchase
Price paid by all Buyers. Each Buyer shall be entitled to purchase a portion of Strategic
Investment Securities in the same proportion that the First Closing Purchase Price paid by
such Buyer at the First Closing bears to the aggregate First Closing Purchase Price paid by
all Buyers. In the event that any Buyer elects to purchase none or less than its pro rata
share of Strategic Investment Securities, then the other Buyers may elect to purchase more
than their pro rata shares, with any such Strategic Investment Securities being divided
among each Buyer electing to purchase more than its pro rata share in the same proportion
that the First Closing Purchase Price paid by each such Buyer bears to the First Closing
Purchase Price paid by each other such Buyer. The Company shall promptly notify the Buyers
of the execution of a term sheet or any agreement or Strategic Investment (as applicable),
and each Buyer shall have five Business Days from the date of delivery of such notice to
notify the Company of its election to purchase Strategic Investment Securities. On the
fifth Business Day following a Strategic Investment (the “Strategic Closing Date”), the
Company shall issue and sell to each Buyer electing to purchase Strategic Investment
Securities, and each Buyer electing to purchase Strategic Investment Securities severally,
but not jointly, agrees to purchase from the Company, such Strategic Investment Securities
(the “Strategic Closing”) at an aggregate purchase price equal to the First Closing Purchase
Price (the “Strategic Closing Purchase Price”).




          (iii) In the event that a Strategic Investor shall not have entered into a binding
agreement with the Company to make a Strategic Investment, or otherwise made a Strategic
Investment, within 90 days after the First Closing Date, but the Secondary Closing
Conditions shall have been fulfilled within 75 days after the First Closing Date (or those
of the Buyers who elect to waive shall have waived in writing within 90 days after the First
Closing Date, the fulfillment of the Secondary Closing Conditions), the Company shall issue
and sell to each Buyer, and each Buyer severally, but not jointly, shall purchase from the
Company, the number of Preferred Shares as is set forth opposite such Buyer’s name in column
(9) on the Schedule of Buyers, along with the Warrants to acquire up to that number of $1.75
Warrant Shares as is set forth opposite such Buyer’s name in column (10) on the



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Schedule of Buyers and that number of $2.00 Warrant Shares as is set forth opposite
such Buyer’s name in column (11) on the Schedule of Buyers (the “Secondary Closing” and,
with the First Closing and the Strategic Closing, each a “Closing”). The purchase price for
the Preferred Shares and related Warrants to be purchased by each Buyer at the Secondary
Closing shall be the amount set forth opposite such Buyer’s name in column (12) of the
Schedule of Buyers (the “Secondary Closing Purchase Price” and, with the First Closing Date
Purchase Price and the Strategic Closing Date Purchase Price, each a “Purchase Price”). The
Company shall promptly notify the Buyers of the satisfaction of the Secondary Closing
Conditions (or if the Secondary Closing Conditions are not satisfied within 75 days after
the First Closing Date, those of the Buyers who elect to waive shall have waived in writing
by no later than 82 days after the First Closing Date the fulfillment of the Secondary
Closing Conditions), and on the tenth day following the delivery of such notice (the
“Secondary Closing Date” and, with the First Closing Date and the Strategic Closing Date,
each a “Closing Date”), the Company shall issue and sell to each Buyer, and each Buyer
severally, but not jointly, agrees (to the extent the Secondary Closing Conditions are
fulfilled or are waived by such Buyer) to purchase from the Company, such Preferred Shares
and Warrants.



          (b) Form of Payment; Delivery of Certificates. On each Closing Date, (i) each Buyer
shall pay the Purchase Price to the Company for the Securities to be issued and sold to such Buyer
at such Closing, by wire transfer of immediately available funds in accordance with the Company’s
written wire instructions, and (ii) the Company shall deliver within three Business Days to each
Buyer (A) one or more stock certificates evidencing the number of Preferred Shares and/or Strategic
Investment Securities such Buyer is purchasing, and/or (B) one or more Warrants pursuant to which
such Buyer shall have the right to acquire $1.75 Warrant Shares and/or $2.00 Warrant Shares, in all
cases duly executed on behalf of the Company and registered in the name of such Buyer.




     2. BUYER’S REPRESENTATIONS AND WARRANTIES.



          As of the date hereof, each Buyer represents and warrants to the Company with respect to only
itself that:




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




          (b) Investor Status. At the time such Buyer was offered the Securities, such Buyer
was, and at each Closing, and on each date on which such Buyer exercises the Warrants such




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Buyer will be a sophisticated investor as described in Rule 506(b)(2)(ii) of Regulation D and
an “accredited investor” as defined in Rule 501(a) of Regulation D.




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




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




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




          (f) Transfer or Resale. Such Buyer understands that except as provided in the
Registration Rights Agreement: (i) the Securities have not been and are not being registered under
the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to
the Company an opinion of counsel, in a form reasonably acceptable to the Company, to the effect
that such Securities to be sold, assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration, or (C) such Buyer provides the Company with
reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144
or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto)
(collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any
resale of the Securities under circumstances in which the seller (or the Person (as defined in
Section 3(r)) through whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other Person is
under any obligation to register the Securities under the 1933 Act or any state securities laws or
to comply with the terms and conditions of any exemption thereunder. Notwithstanding the
foregoing, the Securities may be pledged in connection with a bona fide margin account or other
loan secured by the Securities and such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall
be required to provide the Company with any notice thereof or otherwise make any delivery to the
Company




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pursuant to this Agreement or any other Transaction Document, including, without limitation,
this Section 2(f); provided, that in order to make any sale, transfer or assignment of
Securities, such Buyer and its pledgee makes such disposition in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.




          (g) Legends. Such Buyer understands that the certificates or other instruments
representing the Preferred Shares, the Warrants and the stock certificates representing the Warrant
Shares and the Common Stock, except as set forth below, shall bear any legend as required by the
“blue sky” laws of any state and a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock certificates):





[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN][THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO
THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
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.



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




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




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




          (k) Broker-Dealer Status. Such Buyer is a not a registered broker-dealer or, if such
Buyer is an affiliate of a broker-dealer, such Buyer is acquiring the Securities hereunder in the
ordinary course of its business and such Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the Securities.




     3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.



          As of the date hereof, the Company represents and warrants to each of the Buyers that:




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




          (b) Authorization; Enforcement; Validity. Except as set forth in Section 3(c) hereof,
the Company has the requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Certificate of Designation in the form attached hereto as
Exhibit D, the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions
(as defined in Section 5), the Warrants and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by this Agreement (collectively,
the “Transaction Documents”) and to issue the Securities in accordance with the terms hereof and
thereof. The execution and delivery of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Preferred Shares and the Warrants and the reservation for issuance
and the issuance of the Warrant Shares issuable upon exercise of the Warrants and the shares of
Common Stock issuable upon conversion of the Preferred Shares have been duly authorized by the
Company’s Board of Directors and no further consent or authorization is required by the Company,
its Board of Directors or, except as set forth in Section 3(c) hereof, its stockholders. This
Agreement and the other Transaction Documents have been duly executed and delivered by the Company,
and constitute the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,




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reorganization, moratorium, liquidation or similar laws relating to, or affecting generally,
the enforcement of applicable creditors’ rights and remedies.




          (c) Issuance of Securities. The Preferred Shares and the Warrants are duly authorized
and, upon issuance in accordance with the terms hereof, shall be validly issued and free from all
taxes, liens and charges with respect to the issue thereof and the Preferred Shares shall be fully
paid and nonassessable with the holders being entitled to all rights accorded to a holder of
Preferred Stock. As of the Closing Date, the Company does not have a sufficient number of
authorized shares of Common Stock reserved to equal the number of shares of Common Stock underlying
the Warrants and the Preferred Shares. As soon as reasonably practicable, but in any case within
120 days, after the Closing Date, the Company shall use its best efforts to obtain stockholder
approval of an amendment to the Company’s Certificate of Incorporation in order to increase the
number of authorized shares of Common Stock to at least 100,000,000 shares. Subsequent to the
stockholders’ approval of such amendment to the Certificate of Incorporation, the Company shall, so
long as any of the Preferred Shares and the Warrants are outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued capital stock, solely for the purpose
of effecting the conversion of the Preferred Stock and the exercise of the Warrants, 100% of the
number of shares of Common Stock issuable upon conversion of the Preferred Shares and the exercise
of the Warrants. Upon exercise in accordance with the Warrants, the Warrant Shares will be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a holder of Preferred
Stock. The issuance by the Company of the Securities is exempt from registration under the 1933
Act.




          (d) No Conflicts. Except as set forth in Section 3(c) hereof, the execution, delivery
and performance of the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without limitation, the issuance of
the Preferred Shares and Warrants and reservation for issuance and issuance of the Warrant Shares)
will not (i) result in a violation of the Certificate of Incorporation (as defined below) or Bylaws
(as defined below) of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations of the
over-the-counter market (the “Principal Market”)) or other principal market applicable to the
Company or any of its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected.




          (e) Consents. The Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court, governmental agency or any regulatory
or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of
its obligations under or contemplated by the Transaction Documents, in each case in accordance with
the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence have been obtained or effected
on or prior to the Closing Date. The Company and its Subsidiaries are unaware of any facts or
circumstances that might prevent the Company from obtaining or effecting any of the registration,
application or filings pursuant to the preceding sentence. The Company is not in




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violation of the listing requirements of the Principal Market and has no knowledge of any
facts that would reasonably lead to delisting or suspension of the Common Stock in the foreseeable
future.




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




          (g) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of
its affiliates, nor any Person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in connection with the
offer or sale of the Securities. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’ commissions (other than for persons engaged by
any Buyer or its investment advisor) relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in
connection with any such claim. Except as set forth in Schedule 3(g), the Company has not
engaged any placement agent or other agent in connection with the sale of the Company’s debt or
equity securities for financing purposes.




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




          (i) Application of Takeover Protections; Rights Agreement. The Company and its board
of directors have taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Certificate of Incorporation or the
laws of the State of Delaware, including Section 203 of the Delaware General Corporation Law, which
is or could become applicable to any Buyer as a result of the transactions contemplated by




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this Agreement, including, without limitation, the Company’s issuance of the Securities and
any Buyer’s ownership of the Securities.




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




          (k) Absence of Certain Changes. Since December 31, 2004, there has been no material
adverse change and no material adverse development in the business, properties, operations,
condition (financial or otherwise), results of operations or prospects of the Company or its
Subsidiaries. Since December 31, 2004, the Company has not (i) declared or paid any dividends,
(ii) sold any assets, individually or in the aggregate, in excess of $500,000 outside of the
ordinary course of business or (iii) had capital expenditures, individually or in the aggregate, in
excess of $1,000,000. The Company has not taken any steps to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which
would reasonably lead a creditor to do so. The Company is not as of the date hereof, and after
giving effect to the transactions contemplated hereby to occur at the Closing, will not be
Insolvent (as defined below). For purposes of this Section 3(k), “Insolvent” means (i) the present
fair saleable value of the Company’s assets is less than the amount required to pay the Company’s
total Indebtedness (as defined in Section 3(r)), (ii) the Company is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute
and matured,




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(iii) the Company intends to incur or believes that it will incur debts that would be beyond
its ability to pay as such debts mature or (iv) the Company has unreasonably small capital with
which to conduct the business in which it is engaged as such business is now conducted and is
proposed to be conducted.




          (l) No Undisclosed Events, Liabilities, Developments or Circumstances. No event,
liability, development or circumstance has occurred or exists, or is contemplated to occur, with
respect to the Company or its Subsidiaries or their respective business, properties, prospects,
operations or financial condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 or SB-2 filed with the SEC
relating to an issuance and sale by the Company of its Preferred Stock and which has not been
publicly announced.




          (m) Conduct of Business; Regulatory Permits. Neither the Company nor its Subsidiaries
is in violation of any term of or in default under the Certificate of Incorporation or Bylaws or
their organizational charter or bylaws, respectively. Neither the Company nor any Subsidiary is in
violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable
to the Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries will
conduct its business in violation of any of the foregoing, except for possible violations which
would not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Company is not in violation of any of the rules, regulations or
requirements of the Principal Market and has no knowledge of any facts or circumstances that would
reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the
foreseeable future. Since December 31, 2004, (i) the Common Stock has been designated for
quotation or listed on the Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market, and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the
Common Stock from the Principal Market, or any requests for information in connection with any
informal inquiry or formal investigation or proceedings regarding the Company or its officers and
directors and (iv) except as set forth in Schedule 3(j), the Company has not received any comment
letters from the staff of the SEC concerning any filings made by the Company which have not been
resolved to the satisfaction of the SEC staff. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, except where the failure
to possess such certificates, authorizations or permits would not have, individually or in the
aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such certificate,
authorization or permit.




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




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




          (p) Transactions With Affiliates. Except as set forth in the Company’s Annual Report
on Form 10-KSB for the year ended December 31, 2004, the Company’s Registration Statement on Form
SB-2 filed with the SEC on June 30, 2005, the Company’s Form 8-K filed with the SEC on August 19,
2005 and the Company’s Quarterly Report on Form 10-QSB filed with the SEC on September 14, 2005,
none of the officers, directors or employees of the Company is presently a party to any transaction
with the Company or any of its Subsidiaries (other than for ordinary course services as employees,
officers or directors), including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any such officer, director or employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director, trustee or partner.




          (q) Equity Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of (x) 50,000,000 shares of Common Stock, of which as of the date hereof,
26,812,179 shares are issued and outstanding and 10,299,544 shares are reserved for issuance
pursuant to the Company’s employee incentive plan and other warrants, exercisable or exchangeable
for, or convertible into, shares of Common Stock, and (y) 50,000,000 shares of convertible
preferred stock, of which as of the date hereof, none are issued and outstanding. All of such
outstanding shares have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as set forth on Schedule 3(q): (i) no shares of the Company’s
capital stock are subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company; (ii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness (as defined in Section 3(r)) of the Company or any of its Subsidiaries or
by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing
statements securing obligations in any material amounts, either singly or in the aggregate, filed
in connection with the Company; (v) there are no agreements or arrangements under which the Company
or any of its Subsidiaries is obligated to register the sale of any of their securities under the
1933 Act (except the Registration Rights Agreement); (vi) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or
any of its Subsidiaries; (vii) there are




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no securities or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; (viii) the Company does not have any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and
(ix) the Company and its Subsidiaries have no liabilities or obligations required to be disclosed
in the SEC Documents (as defined herein) but not so disclosed in the SEC Documents, other than
those incurred in the ordinary course of the Company’s or any Subsidiary’s respective businesses
and which, individually or in the aggregate, do not or would not have a Material Adverse Effect.
The Company has furnished or made available to the Buyer true, correct and complete copies of the
Company’s certificate of incorporation, as amended and as in effect on the date hereof (the
“Certificate of Incorporation”), and the Company’s bylaws, as amended and as in effect on the date
hereof (the “Bylaws”), and the terms of all securities convertible into, or exercisable or
exchangeable for, Common Stock and the material rights of the holders thereof in respect thereto.




          (r) Indebtedness and Other Contracts. Neither the Company nor any of its Subsidiaries
(i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement
or instrument, the violation of which, or default under which, by the other party(ies) to such
contract, agreement or instrument would result in a Material Adverse Effect, (iii) is in violation
of any term of or in default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result, individually or in the
aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s
officers, has or is expected to have a Material Adverse Effect. No outstanding Indebtedness is
secured. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade payables and
broadcast rights payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other similar
instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition of property, assets
or businesses, (E) all indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to any property or
assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to repossession or sale of
such property), (F) all monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied for the periods
covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or
other encumbrance upon or in any property or assets (including accounts and contract rights) owned
by any Person, even though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above;
(y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent
or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation
of another Person if the primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) “Person” means an individual, a limited liability

- 12 -









 








company, a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.




          (s) Absence of Litigation. Except as set forth in the SEC Documents, there is no
action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court,
public board, government agency, self-regulatory organization or body pending or, to the knowledge
of the Company, threatened against or affecting the Company, the Securities or any of its
Subsidiaries or any of the Company’s or the Company’s Subsidiary’s officers or directors, whether
of a civil or criminal nature or otherwise.




          (t) Insurance. The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged, including directors’ and officers’ liability insurance with a policy
limit of at least $5,000,000. Neither the Company nor any Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any Subsidiary has any reason
to believe that it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.




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




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



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




- 13 -









 








          (w) Intellectual Property Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property rights (“Intellectual
Property Rights”) necessary to conduct their respective businesses as now conducted. None of the
Company’s Intellectual Property Rights have expired or terminated, or are expected to expire or
terminate within three years from the date of this Agreement. The Company does not have any
knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of
others. There is no claim, action or proceeding being made or brought, or to the knowledge of the
Company, being threatened, against the Company or any of its Subsidiaries regarding its
Intellectual Property Rights. The Company is unaware of any facts or circumstances which might
give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and
its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their Intellectual Property Rights.




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




          (y) Tax Status. Except as indicated in the Side Letter, the Company and each of its
Subsidiaries (i) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and (ii) has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due
by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for
any such claim.




          (z) Internal Accounting and Disclosure Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to maintain asset and
liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in
accordance with management’s general or specific authorization and (iv) the recorded accountability




- 14 -









 







for assets and liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference, except where the failure
to satisfy any of clauses (i) through (iv) above, would not, individually or in the aggregate, be
reasonably expected to result in a Material Adverse Effect. The Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14 under the 1934 Act) that are
effective in ensuring that information required to be disclosed by the Company in the reports that
it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the SEC, including, without limitation, controls
and procedures designed in to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions regarding required
disclosure. The Company’s independent public accountant has not informed the Company, including
the Company’s board of directors, pursuant to Section 10A of the 1934 Act or otherwise, of any
illegal act or fraud involving the Company, of any material weakness or significant deficiency in
the Company’s internal control over financial reporting, or of any disagreements it has had with
management of the Company.




          (aa) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise would be reasonably likely to have a Material Adverse Effect.




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




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




          (dd) Disclosure. The Company confirms that neither it nor any other Person acting on
its behalf has provided any of the Buyers or their respective agents or counsel with any
information that constitutes or might constitute material, nonpublic information. The Company
understands and confirms that each of the Buyers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to the Buyers
regarding the Company, its business and the transactions contemplated hereby, including the
Schedules to this Agreement, furnished by or on behalf of the Company are true and correct and do
not contain any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or information exists with respect to
the Company or any Subsidiary or either of its or their respective business, properties, prospects,




- 15 -









 







operations or financial conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company’s reports filed under the 1934 Act are being
incorporated into an effective registration statement filed by the Company under the 1933 Act).
The Company acknowledges and agrees that no Buyer makes or has made any representations or
warranties with respect to the transactions contemplated hereby other than those specifically set
forth in Section 2.




     4. COVENANTS.



          (a) Best Efforts. Each party shall use its best efforts timely to satisfy each of the
covenants and the conditions to be satisfied by it as provided in Sections 4, 5, 6 and 7 of this
Agreement.




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




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




          (d) Use of Proceeds. The Company will use the proceeds from the sale of the
Securities for general corporate purposes, prospectively and retrospectively, including general and
administrative expenses, and current accounts payable (a list of which has been provided to the
Buyers), but not for (i) the repayment of other outstanding Indebtedness of the Company or any of
its Subsidiaries in excess of $250,000 or (ii) the payment of bonuses or other compensation except
for salaries to officers, directors or other affiliates of the Company. The Company may repay in
full the loan in the principal amount of $225,000 (plus accrued interest thereon) made to the
Company by Justin A. Stanley as described in the Company’s Form 8-K filed with the SEC on August
19, 2005.




          (e) Financial Information. The Company agrees to send to each Buyer during the
Reporting Period, unless the following are filed with the SEC through EDGAR and are available to
the public through the EDGAR system, within five (5) Business Days after the filing thereof with
the SEC, a copy of its Annual Reports on Form 10-KSB, its Quarterly Reports on Form 10-QSB, any
Current Reports on Form 8-K and any registration statements (other than on Form S-8) or




- 16 -









 







amendments filed pursuant to the 1933 Act, and (ii) copies of any notices and other
information made available or given to the stockholders of the Company generally, contemporaneously
with the making available or giving thereof to the stockholders.




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




          (g) Fees. Within three Business Days of each Closing, the Company shall pay all
reasonable attorney’s fees incurred by the Buyers relating to or arising out of the transactions
contemplated hereby. The Company shall also be responsible for the payment of any placement
agent’s fees, financial advisory fees, or broker’s commissions (other than for Persons engaged by
any Buyer) relating to or arising out of the transactions contemplated hereby. The Company shall
pay, and hold each Buyer harmless against, any liability, loss or expense (including, without
limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any
claim relating to any such payment. Except as otherwise set forth in this Agreement or in the
Transaction Documents, each party to this Agreement shall bear its own expenses in connection with
the sale of the Securities to the Buyers.




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




          (i) Additional Registration Statements. Except as set forth on Schedule 4(i), so long
as any Warrant Shares or shares of Common Stock into which any Preferred Shares have been converted
are issued and outstanding but no Registration Statement (as defined in the Registration Rights
Agreement) has been filed with respect to such Warrant Shares or shares of Common Stock, the
Company will not file a registration statement under the 1933 Act relating to securities that are
not the Securities until the date that a Registration Statement with respect to such Warrant Shares
or





- 17 -









 







shares of Common Stock is first declared effective by the SEC (the “Effective Date”), provided
that the Company may include in a Registration Statement the securities listed on Schedule
4(i).




          (j) Corporate Existence. So long as any Buyer beneficially owns any Warrants, the
Company shall maintain its corporate existence and shall not sell all or substantially all of the
Company’s assets, except in the event of a merger or consolidation or, except in compliance with
the Warrant, sale of all or substantially all of the Company’s assets, where the surviving or
successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the
agreements and instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose common stock is quoted on or listed for trading on the Principal Market, the New
York Stock Exchange or the American Stock Exchange.




          (k) Reservation of Shares. As soon as reasonably practicable after the Closing Date,
the Company shall use its best efforts to obtain stockholder approval of an amendment (the
“Amendment”) to the Company’s Certification of Incorporation in order to increase the number of
authorized shares of Common Stock to at least 100,000,000 shares. Subsequent to the stockholders’
approval of such amendment to the Certificate of Incorporation, the Company shall, so long as any
of the Preferred Stock and Warrants are outstanding, take all action necessary to at all times have
authorized, and reserved for the purpose of issuance, the number of shares of Common Stock issuable
upon conversion of the Preferred Stock and exercise of the Warrants being issued at the Closing in
conformity with Section 3(c).




          (l) Buyers’ Agreement to Vote for Amendment. Each of the Buyers shall vote, by proxy,
consent solicitation or otherwise, to approve the Amendment within the time period required for the
Amendment to be approved in accordance with the Delaware General Corporation Law.




     5. TRANSFER RESTRICTIONS; TRANSFER AGENT INSTRUCTIONS.



          (a) Transfer Restrictions. The legend set forth in Section 2(g) shall be removed and
the Company shall issue a certificate without such legend or any other legend to the holder of the
applicable Securities upon which it is stamped, if (i) in connection with any sale of such
Securities made pursuant to a Registration Statement and in accordance with the prospectus delivery
requirements under the 1933 Act, (ii) in connection with a sale, assignment or other transfer, such
holder provides the Company with an opinion of counsel, in a generally acceptable form, to the
effect that such sale, assignment or transfer of such Securities may be made without registration
under the applicable requirements of the 1933 Act and the legend may be removed from such
certificate in connection with such sale, assignment or other transfer, or (iii) such holder
provides the Company with reasonable assurance that such Securities can be sold, assigned or
transferred pursuant to Rule 144. The Company shall cause its legal counsel to issue the legal
opinion included in the Irrevocable Transfer Agent Instructions to the Company’s transfer agent on
the Effective Date. Following the Effective Date or at such earlier time as a legend is no longer
required for any or all of the Securities, the Company will no later than three Business Days
following the delivery by a Buyer to the Company or the Company’s transfer agent of a legended
certificate representing such Securities, deliver or cause to be delivered to such Buyer a
certificate representing such Securities that is free from all restrictive and other legends.
Following the Effective Date and upon the delivery to any Buyer of any certificate representing
Securities that is free from all restrictive and other legends, such Buyer agrees that any sale of
such Securities shall be made pursuant to a




- 18 -









 







Registration Statement and in accordance with the plan of distribution described therein or
pursuant to an available exemption from the registration requirements of the 1933 Act. The Company
may not make any notation on its records or give instructions to any transfer agent of the Company
that enlarge the restrictions on transfer set forth in Section 2(g). The Company will not effect
or publicly announce its intention to effect any exchange, recapitalization or other transaction
that effectively requires or rewards physical delivery of certificates evidencing the Common Stock
or the Preferred Stock. In order for the Buyers to effect sales under a Registration Statement in
accordance with the legal opinion included in the Irrevocable Transfer Agent Instructions, the
Company agrees to give notice, at any time and from time to time upon written request of any Buyer,
to the Company’s transfer agent that (a) the Company has filed all required reports under the 1934
Act, (b) there is no stop order suspending the effectiveness of the Registration Statement, and (c)
there has been no event that would cause the Registration Statement to include any untrue statement
of material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The notice in the foregoing sentence shall be given by
the Company on the same business day as the request is made if the request is made at or prior to
11:00 A.M., EST, on any business day, and within one business day if the request is made after
11:00 A.M., EST.




          (b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to
its transfer agent, and any subsequent transfer agent, to issue certificates, registered in the
name of each Buyer or its respective nominee(s), for the Warrant Shares in such amounts as
specified from time to time by each Buyer to the Company upon exercise of the Warrants in the form
of Exhibit C attached hereto (the “Irrevocable Transfer Agent Instructions”). The Company
represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f)
hereof, will be given by the Company to its transfer agent with respect to the Securities, and that
the Securities shall otherwise be freely transferable on the books and records of the Company as
and to the extent provided in this Agreement and the other Transaction Documents.




          (c) Breach. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Section 5 will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this Section 5, that a
Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.




          (d) Additional Relief. If the Company shall fail for any reason or for no reason to
issue to such holder unlegended certificates within three (3) Business Days of receipt of documents
necessary for the removal of legend set forth above (the “Deadline Date”), then, in addition to all
other remedies available to the holder, if on or after the Business Day immediately following such
three (3) Business Day period, the holder purchases (in an open market transaction or otherwise)
Securities to deliver in satisfaction of a sale by the holder of Securities that the holder
anticipated receiving from the Company (a “Buy-In"), then the Company shall, within five (5)
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 Securities so purchased (the “Buy-In Price"), at which point the Company’s obligation
to deliver such certificate (and to issue such Securities) shall terminate, or (ii) if applicable,




- 19 -









 




promptly honor its obligation to deliver to the holder a certificate or certificates
representing such Securities 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 Securities, times (B) the Closing Bid
Price (as defined in the Warrants) on the Deadline Date.




     6. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.



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




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




          (b) Such Buyer shall have delivered to the Company the Purchase Price for the Securities being
purchased by such Buyer and each other Buyer at such Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.




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




          (d) At any time that the Buyer or any other Person shall have a beneficial ownership interest
(within the meaning of Rule 13d-3 under the 1934 Act), or a direct or indirect pecuniary interest
(within the meaning of Rule 16a-1(a)(2) under the 1934 Act) in the Securities, the Buyer and each
such Person 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 16a- 1(h) under the
1934 Act), 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.




     7. CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.



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




- 20 -









 








               (a) The Company shall have executed and delivered to such Buyer (i) each of the Transaction
Documents and (ii) the Securities being purchased by such Buyer at such Closing pursuant to this
Agreement.



               (b) The Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent
Instructions, in the form of Exhibit C attached hereto, which instructions shall have been
delivered to and acknowledged in writing by the Company’s transfer agent.



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



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



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



               (f) The Company shall have delivered to such Buyer such other documents relating to the
transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request.



               (g) The Board of Directors of the Company shall have taken all necessary and proper corporate
action to appoint Michael Criden and Glen Singer as members of the Board of Directors of the
Company.



               (h) The Company shall have filed the Certificate of Designation substantially in the form
attached hereto as Exhibit D with the Secretary of State of Delaware.



     8. TERMINATION. In the event that the First Closing shall not have occurred with
respect to a Buyer on or before ten (10) days from the date hereof due to the Company’s or such
Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching
party’s failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching party at the close of business on
such date without liability of any party to any other party.



     9. MISCELLANEOUS.



          (a) Definitions. The following definitions shall for all purposes, unless otherwise
clearly indicated to the contrary, apply to terms used in this Agreement.




- 21 -









 







“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.



“Secondary Closing Conditions” means the following conditions precedent: (1) a Strategic Investor
shall have entered into a binding agreement with the Company to make a Small Strategic Investment,
or otherwise have made a Small Strategic Investment; and (2) four or more of the Secondary Funding
Conditions shall have been fulfilled; and (3) the Amendment shall have been adopted by the
Company’s stockholders and shall be in full force and effect; and (4) the Registration Statement
required to be filed within 30 days after the First Closing Date pursuant to the Registration
Rights Agreement shall have been declared effective by the SEC and shall be in full force and
effect.



“Secondary Funding Conditions” means the following conditions precedent: (1) an entertainment
provider identified in the Side Letter shall be capable of offering its content to mobile viewers
utilizing the Company’s services within 75 days after the First Closing Date; and (2) either an
entity identified in the Side Letter or one of such entity’s customers shall have entered into an
agreement with the Company to distribute video content to its customers within 75 days after the
First Closing Date; and (3) a prominent entertainment provider identified in the Side Letter shall
be capable of offering its content to mobile viewers utilizing the Company’s services by no later
than within 75 days after the First Closing Date; and (4) a prominent computer company identified
in the Side Letter shall be actively promoting Company’s service as part of its promotion for
applicable products within 75 days after the First Closing Date; and (5) a prominent media company
identified in the Side Letter and the Company shall have entered into, at a minimum, a memorandum
of understanding relating to such company becoming a purchaser of the Company’s products or
services, or a reseller of the Company’s products or services, no later than within 75 days after
the First Closing Date.



“Side Letter” means that certain letter, dated October 29, 2005, from the Company to the Buyers
identifying a Strategic Investor and certain other parties with which the Company is contemplating
business arrangements.



“Small Strategic Investment” means (1) with respect to the Strategic Investor identified in the
Side Letter, a purchase by such Strategic Investor from the Company of Common Stock and/or shares
of preferred stock of the Company with an aggregate purchase price of less than $5,000,000, or (2)
with respect to any other Strategic Investor, a purchase by such Strategic Investor from the
Company of Common Stock and/or shares of preferred stock of the Company with an aggregate purchase
price of less than $10,000,000.



“Strategic Investment” means (1) with respect to the Strategic Investor identified in the Side
Letter, a purchase by such Strategic Investor from the Company of Common Stock and/or shares of
preferred stock of the Company with an aggregate purchase price of at least $5,000,000, or (2) with
respect to any other Strategic Investor, a purchase by such Strategic Investor from the Company of
Common Stock and/or shares of preferred stock of the Company with an aggregate purchase price of at
least $10,000,000.



“Strategic Investor” means (1) the potential strategic investor in the Company identified in the
Side Letter, or (2) any other party that makes an investment in the Company and also becomes a
significant business partner of the Company in connection with its investment, that is, a major


- 22 -









 






purchaser of the Company’s products and services, or a major reseller of the Company’s products and
services.




          (b) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of 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. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in Miami-Dade County, Florida and Broward County, Florida, or any federal court sitting in
the Southern District of Florida for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
Each party hereby irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.




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




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




          (e) Pronouns. As used herein, all pronouns shall include the masculine, feminine,
neuter, singular and plural whenever the context and facts require such construction.




          (f) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.




          (g) Entire Agreement; Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyers, the Company, their affiliates and Persons acting on their
behalf with respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or therein, neither the
Company nor




- 23 -









 




any Buyer makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be amended other than by an instrument in writing
signed by the Company and the holders of at least seventy-five percent of the aggregate amount of
the Preferred Shares and the shares of Common Stock into which the Preferred Shares are converted.
No provision hereof may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Preferred Shares then outstanding. No consideration
shall be offered or paid to any Person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration also is offered to all
of the parties to the Transaction Documents, holders of Preferred Shares or holders of the
Warrants, as the case may be. The Company has not, directly or indirectly, made any agreements
with any Buyers relating to the terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction Documents.




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




	 	 	 
	If to the Company:
	SmartVideo Technologies, Inc.
	3505 Koger Boulevard, Suite 400
	Duluth, Georgia 30096
	Telephone:

	 	(770) 279-3100
	Facsimile:

	 	(770) 279-3144
	Attention:

	 	Richard E. Bennett, Jr.
	 
	 	 
	with a copy to:
	 
	 	 
	Edwards Angell Palmer & Dodge LLP
	350 East Las Olas Boulevard
	Suite 1150
	Fort Lauderdale, Florida 33301
	Telephone:

	 	(954) 727-2600
	Facsimile:

	 	(954) 727-2601
	Attention:

	 	Leslie J. Croland, P.A.
	 
	 	 
	If to the Transfer Agent:
	Continental Stock Transfer and Trust Company
	17 Battery Place South
	8th Floor
	New York, New York 10004
	Telephone:

	 	(212) 845-3217
	Facsimile:

	 	(212) 616-7616






- 24 -









 





If to a Buyer, to his address and facsimile number set forth on the Schedule of Buyers, with copies
to Akerman Senterfitt, One S.E. Third Avenue, Suite 2800, Miami, Florida 33131, telephone: (305)
374-5600, facsimile: (305) 374-5095, Attention: Jonathan L. Awner, Esq., or to such other address
and/or facsimile number and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by the sender’s
facsimile machine containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight courier service in
accordance with clause (i), (ii) or (iii) above, respectively.




          (i) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including any purchasers of the
Preferred Shares or the Warrants. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the holders of at least seventy-five
percent of the aggregate amount of the Preferred Shares and shares of Common Stock into which the
Preferred Shares are converted, including by merger or consolidation. A Buyer may assign some or
all of its rights hereunder without the consent of the Company, in which event such assignee shall
be deemed to be a Buyer hereunder with respect to such assigned rights.




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




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




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




          (m) Indemnification. In consideration of each Buyer’s execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each other holder of the Securities and all of their
stockholders, partners, members, officers, directors, employees and direct or indirect investors
and any of the foregoing Persons’ agents or other representatives (including, without limitation,
those retained in connection with the transactions contemplated by this Agreement) (collectively,
the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective
of whether any such Indemnitee is a party to the action for which indemnification hereunder is




- 25 -









 




sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the Company in the
Transaction Documents or any other certificate, instrument or document contemplated hereby or
thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the
Transaction Documents or any other certificate, instrument or document contemplated hereby or
thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf of the Company) and
arising out of or resulting from (i) the execution, delivery, performance or enforcement of the
Transaction Documents or any other certificate, instrument or document contemplated hereby or
thereby, (ii) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of such Buyer
or holder of the Securities as an investor in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 9(m) shall be the same as
those set forth in Section 6 of the Registration Rights Agreement.




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




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




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




          (q) Payment Set Aside. To the extent that the Company makes a payment or payments to
the Buyers hereunder or pursuant to any of the other Transaction Documents or the Buyers enforce or
exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,




- 26 -









 




declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any
other Person under any law (including, without limitation, any bankruptcy law, state or federal
law, common law or equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement or setoff had not
occurred.




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




[Signature Page Follows]




- 27 -









 







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




	 	 	 	 	 
	 	COMPANY: 





SMARTVIDEO TECHNOLOGIES, INC.

 	 
	 	By:  	/s/ Richard E. Bennett, Jr. 	 
	 	 	         Name:  	Richard E. Bennett, Jr. 	 
	 	 	         Title:  	Chief Executive Officer 	 



- 28 -









 






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







/s/ Michael E. Criden 

Michael E. Criden





Ghs Holdings

By: /s/ Glenn Singer

 

Name: Glenn Singer





SME Children LLP

By: /s/ Stephen Esrick

 

Name: Stephen Esrick





/s/ Scott Hunter

 

Scott Hunter





/s/ Michael Puder

 

Michael Puder





/s/ Michael Cohen

 

Michael Cohen





/s/ Michael Brunnberg

 

Michael Brunnberg





/s/ Audrey Bennati

 

Audrey Bennati





Dean and Jessica Goldfine

/s/ Dean Goldfine

 

Dean Goldfine



/s/ Jessica Goldfine

 

Jessica Golfine





Doug M. Rudolph Partners Ltd.

By: /s/ Doug Rudolph

 

Name: Doug Rudolph





Craig Morris/Ernie Frywald

/s/ Craig Morris

 

Craig Morris





/s/ Ernie Fyrwald

 

Ernie Fyrwald





/s/ William Matz

 

William Matz





/s/ Peter Greenberg

 

Peter Greenberg





Bradcliff Investments, Inc.

By: /s/ Brad Naimer

 

Name: Brad Naimer





/s/ Todd Katz

 

Todd Katz





Apex Capital

By: /s/ Robert Rubin,

 

Name: Robert Rubin,





/s/ Jeff Hanft

 

Jeff Hanft







/s/ Art Criden

 

Art Criden





MSG Properties LLC

By: /s/ Mark S. Gold

 

Name: Mark S. Gold





Tony Blank Family Trust

By: /s/ Tony Blank

 

Name: Tony Blank





/s/ Kevin Love

 

Kevin Love





/s/ Dwight Richert

 

Dwight Richert





/s/ Manuel Kadre

 

Manuel Kadre





/s/ Jonathan Colby

 

Jonathan Colby





/s/ Michael Hanzman

 

Michael Hanzman





/s/ Jonathan Wish

 

Jonathan Wish





/s/ John Accetta

 

John Accetta





/s/ Bryce Epstein

 

Bryce Epstein





/s/ Cory Waldman

 

Cory Waldman





/s/ Steven Meister

 

Steven Meister





/s/ Kenneth Goodman

 

Kenneth Goodman





SCB LLC

By: /s/ Paul G. Schwichte (Carbone)

 

Name: Paul G. Schwichte (Carbone)





Andy R, Inc.

By: /s/ Andy Roddeck

 

Name: Andy Roddeck





/s/ Barry Frank

 

Barry Frank







/s/ Bob Burstein

 

Bob Burstein





/s/ Brett Overman

 

Brett Overman





/s/ Mitchell Kline

 

Mitchell Kline





Michael and Rachel Goldman

/s/ Michael Goldman

 

Michael Goldman





/s/ Rachel Goldman

 

Rachel Goldman





/s/ Michael Meister

 

Michael Meister





/s/ Malcom Meister

 

Malcom Meister





/s/ Jay Shapiro

 

Jay Shapiro





/s/ Paul; B. Chaplin

 

Paul; B. Chaplin





Ronni Jill Trust

/s/ Judy Silverman, Trustee

 

Judy Silverman, Trustee





/s/ Gary N. Itzenson

 

Gary N. Itzenson





Stephen And Deborah Clifford, Joint Tenants

/s/ Stephen Clifford

 

Stephen Clifford





/s/ Deborah Clifford

 

Deborah Clifford





/s/ Thomas Brunnberg

 

Thomas Brunnberg





Stuart Lasher LP I

/s/ Stuart Lasher

 

Name: Stuart Lasher





/s/ Michael Levy

 

Michael Levy





/s/ John Fels

 

John Fels





/s/ Chris Damian

 

Chris Damian




/s/ Dan Kleiman

 

Dan Kleiman








/s/ Robert Rovinsky

 

Robert Rovinsky





/s/ Jimmy Tate

 

Jimmy Tate





/s/ Lester Epstein

 

Lester Epstein





/s/ Andrew Henschel

 

Andrew Henschel





Balogh Family Partnership

By: /s/ Illegible

 

Name: Illegible





/s/ Mark Levinson

 

Mark Levinson





/s/ Kenneth Bernstein

 

Kenneth Bernstein





/s/ Barry Ross

 

Barry Ross





Chris & Renne Eilers

/s/ Chris Eilers

 

Chris Eilers

/s/ Renne Eilers

 

Renne Eilers










[Signature Page to Securities Purchase Agreement]




- 29 -









 






SCHEDULE OF BUYERS




First Closing




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Purchase
	 	 	Address and	 	Number of	 	Number of $1.75	 	Number of $2.00	 	Price
	Buyer	 	Facsimile Number	 	Preferred Shares	 	Warrant Shares	 	Warrant Shares	 	$
	Michael E. Criden
	 	11035 Marin Street,

Coral Gables, FL

33156

	 	 	483,333	 	 	 	483,333	 	 	 	120,833	 	 	 	362,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Glenn Singer/GHS

Holdings
	 	552 N. Island
Drive, Golden
Beach, FL 33160

	 	 	600,000	 	 	 	600,000	 	 	 	150,000	 	 	 	450,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stephen Esrick/SME

Children LLP
	 	12990 Owl Creek

Ranch Road, Aspen,

CO 81611

	 	 	133,333	 	 	 	133,333	 	 	 	33,333	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Scott Hunter
	 	2686 Riviera Court,

Weston, FL 33332

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Puder
	 	5324 Princeton Way,

Boca Raton, FL

33496

	 	 	133,333	 	 	 	133,333	 	 	 	33,333	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Cohen
	 	481 Sweet Bay

Avenue, Plantation,

FL 33324

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Brunnberg
	 	445 N.E.
16th
Avenue, Fort
Lauderdale, FL
33301

	 	 	100,000	 	 	 	100,000	 	 	 	25,000	 	 	 	75,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Audrey Bennati
	 	6330 Allison Road,

Miami Beach, FL

33141

	 	 	100,000	 	 	 	100,000	 	 	 	25,000	 	 	 	75,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dean and Jessica
Goldfine
	 	20755 N.E.
31st
Place, Aventura, FL
33180

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Doug Rudolph Doug
M. Rudolph Partners
Ltd.
	 	212 Bal Bay Drive,

Bal Harbour, FL

33154

	 	 	166,666	 	 	 	166,666	 	 	 	41,666	 	 	 	125,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Craig Morris/Ernie

Fyrwald
	 	415 E. Hyman
Avenue, Aspen, CO
81611

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	William Matz
	 	3482
Derby Lane,

Weston, FL 33331

	 	 	133,333	 	 	 	133,333	 	 	 	33,333	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Peter Greenberg
	 	
22 Pyramid Road,

Aspen, CO 81611

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Brad Naimer,
BradCliff
Investments, Inc.
	 	
10 Holly Road,

Hampstead, Quebec,

Canada H3X 3K7

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Todd Katz
	 	213 Oakmont Drive,

Philadelphia PA

19422

	 	 	200,000	 	 	 	200,000	 	 	 	50,000	 	 	 	150,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Robert Rubin, Apex

Capital
	 	13040 Old Cutler

Road, Miami, FL

33156

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jeff Hanft
	 	13040 Old Cutler

Road, Miami,

Florida 33156

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Art Criden
	 	1300 Tahoe Pines

Circle, Alpharetta,

GA 30005

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MSG Properties
LLC/Mark S. Gold
	 	1801 N. Meridian
Street,
Tallahassee, FL
32301

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tony Blank Family

Trust
	 	1172 South Dixie

Highway, #497,

Coral Gables, FL

33146

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Kevin Love
	 	8150 S.W. 143
Street, Miami,
Florida 33158

	 	 	16,666	 	 	 	16,666	 	 	 	4,166	 	 	 	12,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dwight Richert
	 	P.O. Box 2295,
Winter Haven, FL
33883

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Manuel Kadre
	 	1503 Alberca

Street, Coral

Gables, FL 33134

	 	 	200,000	 	 	 	200,000	 	 	 	50,000	 	 	 	150,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jonathan Colby
	 	1548 Quayside

Terrace, Miami, FL

33138

	 	 	133,333	 	 	 	133,333	 	 	 	33,333	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Hanzman
	 	9050 Schoolhouse

Road, Coral Gables,

FL 33143

	 	 	200,000	 	 	 	200,000	 	 	 	50,000	 	 	 	150,000	 






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Purchase
	 	 	Address and	 	Number of	 	Number of $1.75	 	Number of $2.00	 	Price
	Buyer	 	Facsimile Number	 	Preferred Shares	 	Warrant Shares	 	Warrant Shares	 	$
	Jonathan Wish
	 	 

	 	 	16,666	 	 	 	16,666	 	 	 	4,166	 	 	 	12,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	John Accetta
	 	700 Balboa Avenue,

Coronado, CA 92118

	 	 	50,000	 	 	 	50,000	 	 	 	12,500	 	 	 	37,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bryce Epstein
	 	1020 S. Southlake
Drive, Hollywood,
FL 33019

	 	 	100,000	 	 	 	100,000	 	 	 	25,000	 	 	 	75,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cory Waldman
	 	1125 Lemonwood

Street, Miami, FL

	 	 	16,666	 	 	 	16,666	 	 	 	4,166	 	 	 	12,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Steven Meister
	 	1901 N.E.
188th
Street, Miami, FL
33179

	 	 	50,000	 	 	 	50,000	 	 	 	12,500	 	 	 	37,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Kenneth Goodman
	 	2600 N. Military
Trail, #290, Boca
Raton, FL 33431

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SCB LLC/Paul G.
Schwichte (Carbone)
	 	2134 Hollywood

Boulevard,

Hollywood, Florida

33020

	 	 	86,666	 	 	 	86,666	 	 	 	21,666	 	 	 	65,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Andy Roddeck/Andy
R, Inc.
	 	140 Sherman Mills

Drive, Ingrahm, TX

78025

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Barry Frank
	 	1395 Brickell
Avenue, Suite 1200,
Miami, FL 33131

	 	 	50,000	 	 	 	50,000	 	 	 	12,500	 	 	 	37,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bob Burstein
	 	129 Rosales Court,

Coral Gables, FL

33143

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Brett Overman
	 	19501 West Country

Club Drive, TS-5,

Aventura, FL 33180

	 	 	133,333	 	 	 	133,333	 	 	 	33,333	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mitchell Kline
	 	4204 Emerson Place,

Vestal, NY 13850

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael and Rachel
Goldman
	 	16300 Hillsboro
Avenue, South, St.
Louis Park, MN
55401

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Meister
	 	5880 S.W.
116th
Street, Miami, FL
33156

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Malcom Meister
	 	3000 Island

Boulevard, #2704,

Aventura, FL 33160

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jay Shapiro
	 	10102 S.W.
57th
Court, Pinecrest,
Florida 33156

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	Paul; B. Chaplin
	 	108 Bal Bay Drive,

Bal Harbor, FL

33154

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ronni Jill

Trust/Judy

Silverman, Trustee
	 	19553 N.E.
37th
Avenue, Aventura,
FL 33180

	 	 	100,000	 	 	 	100,000	 	 	 	25,000	 	 	 	75,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gary N. Itzenson
	 	535 Leslie Lane,

Blue Bell, PA 19422

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stephen and Deborah
Clifford, Joint
Tenants
	 	1490 N.E. 103
Street, Miami
Shores, FL 33138

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Thomas Brunnberg
	 	2730 N.E.
40th
Street, Lighthouse
Point, FL 36064

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stuart Lasher LP I
	 	140 Fountain
Parkway, Suite 420,
St. Petersburg, FL
33716

	 	 	133,333	 	 	 	133,333	 	 	 	33,333	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Levy
	 	802 Spinnaker Drive

East, Hollywood, FL

33109

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	John Fels
	 	4026 Island Estates

Drive, Aventura, FL

33160

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chris Damian
	 	250 Gerona Avenue,

Coral Gables, FL

33146

	 	 	83,333	 	 	 	83,333	 	 	 	20,833	 	 	 	62,500	 






-2-









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Purchase
	 	 	Address and	 	Number of	 	Number of $1.75	 	Number of $2.00	 	Price
	Buyer	 	Facsimile Number	 	Preferred Shares	 	Warrant Shares	 	Warrant Shares	 	$
	Dan Kleiman
	 	3920 Island Estates

Drive, Aventura, FL

33160

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Robert Rovinsky
	 	8 Thoreau Court,

Cherry Hill, NJ

08003

	 	 	43,333	 	 	 	43,333	 	 	 	10,833	 	 	 	32,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jimmy Tate
	 	12855 Biscayne Bay

Drive, North Miami,

FL 33181

	 	 	60,000	 	 	 	60,000	 	 	 	15,000	 	 	 	45,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lester Epstein
	 	19001 N.E.
28th
Avenue, North Miami
Beach, FL 33179

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Andrew Henschel
	 	20001 N.E.
21st
Court, North Miami
Beach, FL 33179

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balogh Family

Partnership
	 	 

	 	 	83,333	 	 	 	83,333	 	 	 	20,833	 	 	 	62,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mark Levinson
	 	 

	 	 	66,666	 	 	 	66,666	 	 	 	16,666	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Kenneth Bernstein
	 	550 Golden Beach

Drive, Golden

Beach, FL 33160

	 	 	26,666	 	 	 	26,666	 	 	 	6,666	 	 	 	20,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Barry Ross
	 	C/o Ross Realty
Investments, Inc.,
3325 S. University
Drive, Suite 210,
Davie, FL 33328

	 	 	133,333	 	 	 	133,333	 	 	 	33,333	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chris & Renne Eilers
	 	 

	 	 	33,333	 	 	 	33,333	 	 	 	8,333	 	 	 	25,000	 






Second Closing




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(7)	 	(8)	 	(9)	 	(10)	 	(11)	 	(12)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Purchase
	 	 	Address and	 	Number of	 	Number of $1.75	 	Number of $2.00	 	Price
	Buyer	 	Facsimile Number	 	Preferred Shares	 	Warrant Shares	 	Warrant Shares	 	$
	Michael E. Criden
	 	11035 Marin Street,

Coral Gables, FL

33156

	 	 	483,334	 	 	 	483,334	 	 	 	120,834	 	 	 	362,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Glenn Singer/GHS

Holdings
	 	552 N. Island
Drive, Golden
Beach, FL 33160

	 	 	600,000	 	 	 	600,000	 	 	 	150,000	 	 	 	450,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stephen Esrick/SME

Children LLP
	 	12990 Owl Creek

Ranch Road, Aspen,

CO 81611

	 	 	133,334	 	 	 	133,334	 	 	 	33,334	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Scott Hunter
	 	2686 Riviera Court,

Weston, FL 33332

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Puder
	 	5324 Princeton Way,

Boca Raton, FL

33496

	 	 	133,334	 	 	 	133,334	 	 	 	33,334	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Cohen
	 	481 Sweet Bay

Avenue, Plantation,

FL 33324

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Brunnberg
	 	445 N.E.
16th
Avenue, Fort
Lauderdale, FL
33301

	 	 	100,000	 	 	 	100,000	 	 	 	25,000	 	 	 	75,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Audrey Bennati
	 	6330 Allison Road,

Miami Beach, FL

33141

	 	 	100,000	 	 	 	100,000	 	 	 	25,000	 	 	 	75,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dean and Jessica
Goldfine
	 	20755 N.E.
31st
Place, Aventura, FL
33180

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Doug Rudolph Doug
M. Rudolph Partners
Ltd.
	 	212 Bal Bay Drive,

Bal Harbour, FL

33154

	 	 	166,667	 	 	 	166,667	 	 	 	41,667	 	 	 	125,000	 






-3-









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(7)	 	(8)	 	(9)	 	(10)	 	(11)	 	(12)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Purchase
	 	 	Address and	 	Number of	 	Number of $1.75	 	Number of $2.00	 	Price
	Buyer	 	Facsimile Number	 	Preferred Shares	 	Warrant Shares	 	Warrant Shares	 	$
	Craig Morris/Ernie

Fyrwald
	 	415 E. Hyman
Avenue, Aspen, CO
81611

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	William Matz
	 	3482 Derby Lane,

Weston, FL 33331

	 	 	133,334	 	 	 	133,334	 	 	 	33,334	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Peter Greenberg
	 	22 Pyramid Road,

Aspen, CO 81611

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Brad Naimer,
BradCliff
Investments, Inc.
	 	10 Holly Road,

Hampstead, Quebec,

Canada H3X 3K7

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Todd Katz
	 	213 Oakmont Drive,

Philadelphia PA

19422

	 	 	200,000	 	 	 	200,000	 	 	 	50,000	 	 	 	150,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Robert Rubin, Apex

Capital
	 	13040 Old Cutler

Road, Miami, FL

33156

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jeff Hanft
	 	13040 Old Cutler

Road, Miami,

Florida 33156

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Art Criden
	 	1300 Tahoe Pines

Circle, Alpharetta,

GA 30005

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MSG Properties
LLC/Mark S. Gold
	 	1801 N. Meridian
Street,
Tallahassee, FL
32301

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tony Blank Family

Trust
	 	1172 South Dixie

Highway, #497,

Coral Gables, FL

33146

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Kevin Love
	 	8150 S.W. 143
Street, Miami,
Florida 33158

	 	 	16,667	 	 	 	16,667	 	 	 	4,167	 	 	 	12,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dwight Richert
	 	P.O. Box 2295,
Winter Haven, FL
33883

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Manuel Kadre
	 	1503 Alberca

Street, Coral

Gables, FL 33134

	 	 	200,000	 	 	 	200,000	 	 	 	50,000	 	 	 	150,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jonathan Colby
	 	1548 Quayside

Terrace, Miami, FL

33138

	 	 	133,334	 	 	 	133,334	 	 	 	33,334	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Hanzman
	 	9050 Schoolhouse

Road, Coral Gables,

FL 33143

	 	 	200,000	 	 	 	200,000	 	 	 	50,000	 	 	 	150,000	 
	Jonathan Wish
	 	 

	 	 	16,667	 	 	 	16,667	 	 	 	4,167	 	 	 	12,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	John Accetta
	 	700 Balboa Avenue,

Coronado, CA 92118

	 	 	50,000	 	 	 	50,000	 	 	 	12,500	 	 	 	37,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bryce Epstein
	 	1020 S. Southlake
Drive, Hollywood,
FL 33019

	 	 	100,000	 	 	 	100,000	 	 	 	25,000	 	 	 	75,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cory Waldman
	 	1125 Lemonwood

Street, Miami, FL

	 	 	16,667	 	 	 	16,667	 	 	 	4,167	 	 	 	12,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Steven Meister
	 	1901 N.E.
188th
Street, Miami, FL
33179

	 	 	50,000	 	 	 	50,000	 	 	 	12,500	 	 	 	37,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Kenneth Goodman
	 	2600 N. Military
Trail, #290, Boca
Raton, FL 33431

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SCB LLC/Paul G.
Schwichte (Carbone)
	 	2134 Hollywood

Boulevard,

Hollywood, Florida

33020

	 	 	86,667	 	 	 	86,667	 	 	 	21,667	 	 	 	65,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Andy Roddeck/Andy
R, Inc.
	 	140 Sherman Mills

Drive, Ingrahm, TX

78025

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Barry Frank
	 	1395 Brickell
Avenue, Suite 1200,
Miami, FL 33131

	 	 	50,000	 	 	 	50,000	 	 	 	12,500	 	 	 	37,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bob Burstein
	 	129 Rosales Court,

Coral Gables, FL

33143

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Brett Overman
	 	19501 West Country

Club Drive, TS-5,

Aventura, FL 33180

	 	 	133,334	 	 	 	133,334	 	 	 	33,334	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mitchell Kline
	 	4204 Emerson Place,

Vestal, NY 13850

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael and Rachel
Goldman
	 	16300
Hillsboro

Avenue, South, 
St.
Louis Park, MN
55401

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 






-4-









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(7)	 	(8)	 	(9)	 	(10)	 	(11)	 	(12)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Purchase
	 	 	Address and	 	Number of	 	Number of $1.75	 	Number of $2.00	 	Price
	Buyer	 	Facsimile Number	 	Preferred Shares	 	Warrant Shares	 	Warrant Shares	 	$
	Michael Meister
	 	5880 S.W.
116th
Street, Miami, FL
33156

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Malcom Meister
	 	3000 Island

Boulevard, #2704,

Aventura, FL 33160

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jay Shapiro
	 	10102 S.W.
57th
Court, Pinecrest,
Florida 33156

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Paul B. Chaplin
	 	108 Bal Bay Drive,

Bal Harbor, FL

33154

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ronni Jill

Trust/Judy

Silverman, Trustee
	 	19553 N.E.
37th
Avenue, Aventura,
FL 33180

	 	 	100,000	 	 	 	100,000	 	 	 	25,000	 	 	 	75,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gary N. Itzenson
	 	535 Leslie Lane,

Blue Bell, PA 19422

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stephen and Deborah
Clifford, Joint
Tenants
	 	1490 N.E. 103
Street, Miami
Shores, FL 33138

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Thomas Brunnberg
	 	2730 N.E.
40th
Street, Lighthouse
Point, FL 36064

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stuart Lasher LP I
	 	140 Fountain
Parkway, Suite 420,
St. Petersburg, FL
33716

	 	 	133,334	 	 	 	133,334	 	 	 	33,334	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Michael Levy
	 	802 Spinnaker Drive

East, Hollywood, FL

33109

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	John Fels
	 	4026 Island Estates

Drive, Aventura, FL

33160

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chris Damian
	 	250 Gerona Avenue,

Coral Gables, FL

33146

	 	 	83,334	 	 	 	83,334	 	 	 	20,834	 	 	 	62,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dan Kleiman
	 	3920 Island Estates

Drive, Aventura, FL

33160

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Robert Rovinsky
	 	8 Thoreau Court,

Cherry Hill, NJ

08003

	 	 	43,334	 	 	 	43,334	 	 	 	10,834	 	 	 	32,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jimmy Tate
	 	12855 Biscayne Bay

Drive, North Miami,

FL 33181

	 	 	60,000	 	 	 	60,000	 	 	 	15,000	 	 	 	45,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lester Epstein
	 	19001 N.E.
28th
Avenue, North Miami
Beach, FL 33179

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Andrew Henschel
	 	20001 N.E.
21st
Court, North Miami
Beach, FL 33179

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balogh Family

Partnership
	 	 

	 	 	83,334	 	 	 	83,334	 	 	 	20,834	 	 	 	62,500	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mark Levinson
	 	 

	 	 	66,667	 	 	 	66,667	 	 	 	16,667	 	 	 	50,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Kenneth Bernstein
	 	550 Golden Beach

Drive, Golden

Beach, FL 33160

	 	 	26,667	 	 	 	26,667	 	 	 	6,667	 	 	 	20,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Barry Ross
	 	C/o Ross Realty
Investments, Inc.,
3325 S. University
Drive, Suite 210,
Davie, FL 33328

	 	 	133,334	 	 	 	133,334	 	 	 	33,334	 	 	 	100,000	 
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chris & Renne Eilers
	 	 

	 	 	33,334	 	 	 	33,334	 	 	 	8,334	 	 	 	25,000	 







-5-









 






EXHIBITS




	 	 	 
	Exhibit A

	 	Form of Warrants. See Exhibits
4.1 and 4.2 of this Form 8-K.
	 
	 	 
	Exhibit B

	 	Form of Registration Rights
Agreement. See Exhibit 10.2 of this Form 8-K.
	 
	 	 
	Exhibit C

	 	Form of Irrevocable Transfer Agent Instructions
	 
	 	 
	Exhibit D

	 	Certificate of Designation. See
Exhibit 3.1 of this Form 8-K.






-31-









 






Schedule 3(a)




Subsidiaries




OVT, Inc., a Georgia corporation

Ownership: 100%




-32-









 








Schedule 3(g)




No General Solicitation; Placement Agent’s Fees



On June 29, 2005, the Company entered into an agreement (the “June 2005 Agreement”) with Ascendiant
Securities, LLC (“Ascendiant”), pursuant to which Ascendiant agreed to use its best efforts as a
financial advisor and exclusive placement agent to assist the Company in the sale of its debt
and/or equity securities for financing purposes. The Company does not believe that Ascendiant is
entitled to compensation under the June 2005 Agreement as a result of the closing of the
transaction contemplated by this Agreement.




-33-









 








Schedule 3(j)




SEC Documents; Financial Statements



As of the date hereof, the Company has timely filed all SEC Reports, schedules, forms, statements
and other documents required to be filed by it under the Securities Act and the Exchange Act in the
last two years other than: (i) Annual Report on Form 10-KSB for the Year Ended December 31, 2004,
which was filed on April 29, 2005; (ii) Current Report on From 8-K, which was filed on July 27,
2005; and (iii) Quarterly Report on Form 10-QSB for the Quarterly Period Ended June 30, 2005 which
was filed on September 14, 2005.



On August 24, 2005, the staff of the SEC’s Division of Corporation Finance provided the Company
with a comment letter on the Company’s Form 10-KSB for the fiscal year ended December 31, 2004 and
the Company’s Form 10-QSB for the quarterly period ended March 31, 2005. The Company has provided
this letter to the Buyers.




Schedule 3(q)




Equity Capitalization



In connection with the Company’s March 2005 equity financing, warrants to purchase 880,620 shares
of Common Stock at a purchase price of $3.50 per share were issued. As a result of the
anti-dilution provisions contained in such warrants, new warrants to purchase 4,109,560 shares of
Common Stock at a purchase price of $0.75 per share will be issued to the investors in the March
2005 equity financing in exchange for their existing warrants.




-34-









 








Schedule 4(i)




Additional Registration Statements



As a result of the Closing, the Company will be required to file a post-effective amendment to its
Registration Statement on Form SB-2 filed with the SEC on June 30, 2005 (SEC File No. 333-124918).



As of the date hereof, Ascendiant Capital Group LLC has piggy-back registration rights for 750,000
shares of Common Stock, Interim CFO Solutions LLC has piggy-back registration rights for 2,608,696
shares of Common Stock underlying common stock purchase warrants, ACI Solutions has piggy-back
registration rights for 127,981 shares of Common Stock, WH Platts has piggy-back registration
rights for 52,000 shares of Common Stock and The Lippin Group has piggy-back registration rights
for 11,000 shares of Common Stock.





-35-









 









Exhibit C




TRANSFER AGENT INSTRUCTIONS

SMARTVIDEO TECHNOLOGIES, INC.




October __, 2005




Continental Stock Transfer and Trust Company

17 Battery Place South

8th Floor

New York, NY 10004

Attention:



Ladies and Gentlemen:




     Reference is made to that certain Securities Purchase Agreement, dated as of October ___, 2005
(the “Agreement”), by and among SmartVideo Technologies, Inc., a Delaware corporation (the
“Company”), and the investors named on the Schedule of Buyers attached thereto (collectively, the
"“Holders”), pursuant to which the Company is issuing to the Holders shares (the “Preferred Shares”)
of the Series A-1 Convertible Preferred Stock, par value $0.001 per share, of the Company (the
“Preferred Stock”), and Warrants (the “Warrants”), which are exercisable into shares of Common
Stock, par value $.001 per share, of the Company (the “Common Stock”).



     This letter shall serve as our irrevocable authorization and direction to you (provided that
you are the transfer agent of the Company at such time):



     (i) to issue shares of Preferred Stock upon transfer or resale of the Preferred Shares;



     (ii) to issue shares of Common Stock upon conversion of Preferred Stock (the “Converted
Shares”) to or upon the order of a Holder upon delivery to you of a written notice that such Holder
elects or is required to convert all or any number of such shares of the Preferred Stock; and



     (iii) to issue shares of Common Stock upon the exercise of the Warrants (the “Warrant Shares”)
to or upon the order of a Holder from time to time upon delivery to you of a properly completed and
duly executed Exercise Notice, in the form attached hereto as Exhibit I, which has been
acknowledged by the Company as indicated by the signature of a duly authorized officer of the
Company thereon.



     You acknowledge and agree that so long as you have previously received (a) written
confirmation from the Company’s legal counsel that either (i) a registration statement covering
resales of the Converted Shares and the Warrant Shares has been declared effective by the
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the
"1933 Act”), or (ii) sales of the Converted Shares and the Warrant Shares may be made in conformity
with Rule 144 under the 1933 Act (“Rule 144”), (b) if applicable, a copy of such registration
statement, and (c) notice from legal counsel to the Company or any Holder that a transfer of
Converted Shares and/or Warrant Shares has been effected either pursuant to the registration
statement (and a prospectus delivered to the transferee) or pursuant to Rule 144, then as promptly
as practicable, you shall issue the certificates representing the Converted Shares and the Warrant
Shares registered in the names of such transferees, and such certificates shall not bear any legend
restricting transfer of the Converted Shares and the Warrant Shares thereby and should not be
subject to any stop-transfer restriction.



 









 





     A form of written confirmation from the Company’s outside legal counsel that a registration
statement covering resales of the Converted Shares and the Warrant Shares has been declared
effective by the SEC under the 1933 Act is attached hereto as Exhibit II.



     Please execute this letter in the space indicated to acknowledge your agreement to act in
accordance with these instructions. Should you have any questions concerning this matter, please
contact me at (770) 729-8777.



	 	 	 
	 

	 	Very truly yours,






	 	 	 	 	 
	 	SMARTVIDEO TECHNOLOGIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Richard E. Bennett, Jr. 	 
	 	 	Title:  	President & CEO 	 
	 



THE FOREGOING INSTRUCTIONS ARE

ACKNOWLEDGED AND AGREED TO

this ___day of October 2005

Continental Stock Transfer and Trust Company



 

	By:  	
  
Name:

Title:
	 


Enclosures

 - 2 -









 









EXHIBIT I




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:	 	 






 - 3 -









 






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 October ___, 2005 from the Company and
acknowledged and agreed to by Continental Stock Transfer and Trust Company.



	 	 	 	 	 
	 	SMARTVIDEO TECHNOLOGIES, INC. 

 	 
	 	By:  	 	 
	 	 	Name:  	Richard E. Bennett, Jr. 	 
	 	 	Title:  	President & CEO 	 



 - 4 -









 






	 	 	 	 	 



EXHIBIT II




FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT




Continental Stock Transfer and Trust Company

17 Battery Place South

8th Floor

New York, NY 10004

Attn:





     Re: SmartVideo Technologies, Inc.


Ladies and Gentlemen:




     We are counsel to SmartVideo Technologies, Inc., a Delaware corporation (the “Company”), and
have represented the Company in connection with that certain Securities Purchase Agreement, dated
as of October ___, 2005 (the “Securities Purchase Agreement”), entered into by and among the



          Company and the buyers named therein (collectively, the “Holders”) pursuant to which the Company
issued to the Holders shares (the “Preferred Shares”) of the Series A-1 Convertible Preferred
Stock, par value $0.001 per share, of the Company (the “Preferred Stock”) and warrants (the
"Warrants”) exercisable for shares of the Company’s Common Stock, par value $0.001 per share (the
"Common Stock”). Pursuant to the Securities Purchase Agreement, the Company also has entered into
a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant to
which the Company agreed, among other things, to register the resale of the Registrable Securities
(as defined in the Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Preferred Shares and/or exercise of the Warrants under the Securities Act of
1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the
Registration Rights Agreement, on                      2005, the Company filed a Registration Statement on
Form S-                     (File No. 333-                    ) (the “Registration Statement”) with the Securities and
Exchange Commission (the “SEC”) relating to the Registrable Securities which names each of the
Holders as a selling stockholder thereunder.




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




          This letter shall serve as our standing opinion to you that the shares of Common Stock are
freely transferable by the Holders pursuant to the Registration Statement. Assuming that at the
time of each sale you have received notice that (1) the Holders sell the Common Stock for their own
account pursuant to the prospectus and in compliance with the prospectus delivery requirements of
the 1933 Act and (2) you shall have received notice from the Company that (a) the Company has
timely filed all required reports under the 1934 Act, (b) there is no stop order suspending the
effectiveness of the Registration Statement, and (c) there has been no event that would cause the
Registration Statement to include an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading, you
need not require further letters from us to effect any future legend-free issuance or reissuance of
shares of Common Stock to the Holders as contemplated by the Company’s Irrevocable Transfer Agent
Instructions dated October ___, 2005. This letter shall serve as our standing opinion with regard to
this matter.




	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 

	 	[ISSUER’S COUNSEL]
	 
	 	 
	 

	 	By:                                                            





CC: [LIST NAMES OF HOLDERS]





 - 5 -