Document:

Escrow Agreement

 

Exhibit
10.3

ESCROW AGREEMENT

     THIS
ESCROW AGREEMENT (this “Agreement”) is made and
entered into as of November 2,
2005 by and among SMARTVIDEO TECHNOLOGIES, INC., a Delaware corporation (the “Company”),
the investors signatory hereto (the “Investors”); EDWARDS ANGELL PALMER & DODGE LLP, a
Delaware limited liability partnership (the “Securities Escrow Agent”); and HANZMAN &
CRIDEN, P.A., a Florida professional association (the “Cash Escrow Agent” and, with the
Securities Escrow Agent, the “Escrow Agents”).

Recitals

     A. Pursuant to the terms of that certain Securities Purchase Agreement, dated as of October
31, 2005, by and among the Company and the Investors (the “Securities Purchase Agreement”),
the Investors will be purchasing from the Company certain securities issued by the Company (the
“Securities”). Capitalized terms used but not defined herein shall have the meaning
assigned to them in the Securities Purchase Agreement.

     B. As a result of the current proxy contest and related litigation involving the Company in
the case styled Forte Capital Partners, LLC v. Richard E. Bennett, Jr. and SmartVideo
Technologies, Inc., C.A. No. 1495-N (the “Proxy Litigation”), the Investors are requiring
this escrow arrangement. The Investors and the Company acknowledge that the transactions
contemplated by the Securities Purchase Agreement would have closed without any escrow had the
Proxy Litigation not been filed. However, in order to assure the Investors that the transactions
can proceed with the current management remaining in office, the Investors demanded this escrow
arrangement. The Company and the Investors have agreed to (i) deposit with the Cash Escrow Agent
the cash payment to be delivered by the Investors to the Company pursuant to the Securities
Purchase Agreement at the First Closing (the “First Closing Payment”) and (ii) deposit with
the Securities Escrow Agent the Securities to be delivered by the Company to the Investors pursuant
to the Securities Purchase Agreement at the First Closing (the “First Closing Securities”
and, with the First Closing Payment, the “Escrowed Property”).

     C. The Escrow Agents have agreed to serve as escrow agents and to hold, disburse and deliver
the Escrowed Property in accordance with the terms, and subject to the conditions, of this
Agreement.

     NOW, THEREFORE, in consideration of the foregoing Recitals and the covenants and conditions
set forth below, the parties hereto agree as follows:

1. Recitals. The Recitals are incorporated herein by reference and made a part of this
Agreement as if fully set forth herein.

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2. Escrow Agents. Each of the Company and the Investors hereby designates and appoints the
Escrow Agents to act as escrow agents in accordance with the terms and conditions of this
Agreement, and each Escrow Agent hereby accepts such designation and appointment.

3. Escrowed Property.

          (a) The Cash Escrow Agent shall hold the First Closing Payment in its non-interest bearing
trust account (the “Cash Escrow Account”). The Cash Escrow Account is maintained in the
name of “Hanzman Criden Customers Account,” with Gibraltar Bank, FSB, Miami, Florida, ABA Number
267090455, with an Account Number of 20046308.

          (b) The Securities Escrow Agent shall hold the First Closing Securities, evidenced by stock
and warrant certificates registered in the name of the Investors.

          (c) Except as required under applicable law, the Escrowed Property shall not be subject to
lien or attachment of any creditor of any party hereto.

4. Release of Escrowed Property. Notwithstanding anything to the contrary contained in
this Agreement, each Escrow Agent shall hold all Escrowed Property delivered to it in escrow and
shall not release any such Escrowed Property except upon the terms and conditions set forth in this
Section 4.

          (a) Joint Instruction. Escrow Agents shall release and deliver the Escrowed Property
upon receipt of, and pursuant to any instructions set forth in, a joint letter executed by the
Companies and all the Investors.

          (b) Dismissal of Proxy Litigation. Whether or not joint instructions are executed and
delivered pursuant to Section 4(a) above, the Cash Escrow Agent shall release the First Closing
Payment to the Company, and the Securities Escrow Agent shall release the First Closing Securities
to the Investors, upon receipt of (i) a final dispositive order, judgment or decree of the Delaware
Chancery Court dismissing the Proxy Litigation with prejudice or (ii) a notice of voluntary
dismissal with prejudice that has been duly filed by the plaintiffs of all of their claims with the
Delaware Chancery Court with respect to the Proxy Litigation.

          (c) Return of the Escrowed Property. Whether or not joint instructions are executed
and delivered pursuant to Section 4(a) above, (i) the Cash Escrow Agent shall return the First
Closing Payment to the Investors, and the Securities Escrow Agent shall return the First Closing
Securities to the Company, in the event of a termination of the Securities Purchase Agreement by
the Company, the Investors or otherwise in accordance with its terms, and (ii) the Escrow Agents
either shall return the First Closing Payment to the Investors and the First Closing Securities to
the Company, or shall deliver the First Closing Payment to the Company and the First Closing
Securities to the Investors, in either case as specified (A) at any time on or after December 9,
2005 in the written request of Michael Criden and Glen Singer (or such successors as may be
appointed by written consent of the majority of the Investors) in the event that neither of the
events specified in Section 4(b) has occurred by no later than December 9,

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2005, or (B) on or after December 10, 2005 in the written request of the Company provided that
none of the events specified in Section 4(b), Section 4(c)(i) or Section 4(c)(ii)(A) has occurred.

5. Escrow Agent’s Duties. Each of the Company and the Investors understands and agrees
that:

          (a) This Agreement expressly sets forth all the duties, responsibilities and obligations of
the Escrow Agents with respect to any and all matters pertinent hereto. No implied duties,
responsibilities or obligations shall be read into this Agreement against any Escrow Agent.
Without limiting the generality of the foregoing, no Escrow Agent shall have any duty to take any
action to preserve or exercise rights in any property held by it hereunder.

          (b) No Escrow Agent nor any of its directors, officers, employees or partners shall be liable
to anyone for any error of judgment, or for any act done or step taken or omitted to be taken by it
or any of its directors, officers, employees or partners, or for any mistake or fact or law, or for
anything which it, or any of its directors, officers, employees or partners may do or refrain from
doing in connection or in the administration of this Agreement, unless and except to the extent the
same constitutes gross negligence or willful misconduct on the part of the Escrow Agent. In no
event shall an Escrow Agent be liable for any indirect, punitive, special or consequential damages.
The Company hereby indemnifies and holds the Securities Escrow Agent (and any successor escrow
agent) harmless from and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys’ fees and other costs and expenses of defending or prepare
to defend against any claim or liability, arising out of and in connection with this Agreement,
except to the extent such losses , liabilities, claims, actions, damages or expenses are the result
of Securities Escrow Agent’s willful misconduct, or gross negligence. The Investors hereby
indemnify and hold the Cash Escrow Agent (and any successor escrow agent) harmless from and against
any and all losses, liabilities, claims, actions, damages and expenses, including reasonable
attorneys’ fees and disbursements, arising out of and in connection with this Agreement, except to
the extent such losses , liabilities, claims, actions, damages or expenses are the result of Cash
Escrow Agent’s willful misconduct or gross negligence.

          (c) Each Escrow Agent shall be entitled to rely upon any order, judgment, certification,
demand, notice, instrument or other writing delivered to it in accordance with the terms of this
Agreement without being required to determine the authenticity or the correctness of any fact
stated therein or the propriety or validity of the service thereof. Each Escrow Agent may act in
reliance upon any instrument or signature believed by it to be genuine and may assume that any
person purporting to give or make any statement or execute any document in connection with the
provisions hereof has been duly authorized to do so.

          (d) Each Escrow Agent may act pursuant to the advice of counsel with respect to any matter
relating to this Agreement and shall not be liable for any action taken or omitted in accordance
with such advice. No Escrow Agent shall be under any duty to monitor performance by any party of
its obligations under any agreement.

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          (e) No Escrow Agent shall have any interest in the Escrowed Property deposited hereunder; each
Escrow Agent is serving as escrow holder only and having only possession thereof. No Escrow Agent
shall have any tax reporting duties with respect to the Escrowed Property.

          (f) No Escrow Agent makes any representation as to the validity, value or genuineness of any
security or other document or instrument held by or delivered to it. No Escrow Agent shall have
any liability for the loss of value of any Escrowed Property.

          (g) No Escrow Agent shall be called upon to advise any party as to the wisdom in selling or
retaining or taking or refraining from any action with respect to any securities or other property
deposited hereunder.

          (h) Any Escrow Agent (and any successor escrow agent) may at any time resign by delivering all
Escrowed Property that has been delivered to such Escrow Agent to any successor escrow agent
designated by the Company and the Investors pursuant to a joint written instruction, or to any
court of competent jurisdiction, whereupon such Escrow Agent shall be discharged of and from any
and all further obligations arising in connection with this Agreement. The resignation of an
Escrow Agent will take effect on the earlier of (1) the appointment of a successor escrow agent or
delivery of the Escrowed Property to a court of competent jurisdiction or (2) the day which is 10
days after the date of delivery of its written notice of resignation to the Company and the
Investors. If at that time the Escrow Agent has not received a designation of a successor escrow
agent, the Escrow Agent’s sole responsibility after that time shall be to safe keep the Escrowed
Property in such Escrow Agent’s possession until (i) receipt of a designation of successor escrow
agent or a joint written instruction by the Company and the Investors as to the disposition of the
Escrowed Property or (ii) delivery by such Escrow Agent of such Escrowed Property to the registry
of a court of competent jurisdiction.

          (i) No Escrow Agent is a party to the Securities Purchase Agreement, and no Escrow Agent is
bound by such agreement or by any other agreement among the other parties hereto.

          (j) No Escrow Agent shall be under any duty to give any property held by it hereunder any
greater degree of care than it gives its own similar property. In no event shall an Escrow Agent
have any obligation to advance its own funds.

          (k) The Escrow Agent shall not be deemed to have notice of any fact, claim or demand with
respect hereto unless actually known by an officer charged with the responsibility of administering
this Agreement or unless in writing received by the Escrow Agent.

          (l) Each Escrow Agent shall not be deemed to have notice of any fact, claim or demand with
respect hereto unless actually known by an officer charged with responsibility for administering
this Agreement or unless in writing received by such Escrow Agent.

          (m) No provision of this Agreement shall require an Escrow Agent to expend or risk its own
funds, or to take any legal or other action hereunder which might in its judgment

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involve it in, or require it to incur in connection with the performance of its duties
hereunder, any expense or any financial liability unless it shall be furnished with indemnification
acceptable to it.

          (n) Any permissive right of an Escrow Agent to take any action hereunder shall not be
construed as a duty.

          (o) All indemnifications contained in this Agreement shall survive the resignation or removal
of an Escrow Agent, and shall survive the termination of this Agreement.

          (p) No Escrow Agent has responsibility for the sufficiency of this Agreement for any purpose.

          (q) Nothing in this Agreement shall obligate the Escrow Agent to qualify to do business or act
in any jurisdiction in which it is not presently qualified to do business, or be deemed to impose
upon either of the Escrow Agents the duty of a trustee. The duties of the Escrow Agents under are
strictly ministerial in nature.

          (r) In no event shall an Escrow Agent have any liability for any failure or inability of a
party to perform or observe his duties under the Securities Purchase Agreement, or by reason of a
breach of this Agreement by an Investor or the Company. In no event shall either Escrow Agent be
obligated to take any action against the other parties hereto to compel performance hereunder.

          (s) In the event of any ambiguity or uncertainty under this Agreement, or in any notice,
instruction, or other communication received by an Escrow Agent hereunder, such Escrow Agent may,
in its discretion, refrain from taking action, and may retain the First Closing Securities or the
First Closing Payment, as the case may be, until and unless it receives written instructions signed
by each of the parties hereto which eliminates such uncertainty or ambiguity.

6. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted transferees and assigns and shall not
be enforceable by or inure to the benefit of any third party. No party may assign any of its
rights or obligations under this Agreement without the written consent of the other parties.

7. 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: (a) upon receipt, when delivered personally; (b) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file
by the sending party); or (c) 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, (x) for the Company and the Investors the addresses and facsimile
numbers set forth in the Securities Purchase Agreements, and (y) for the Escrow Agents as is set
forth below:

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	If to the Cash Escrow Agent:

	 	Hanzman & Criden, P.A.
	 

	 	220 Alhambra Circle, Suite 400
	 

	 	Coral Gables, FL 33134
	 

	 	Telephone: (305) 357-9000
	 

	 	Facsimile: (305) 357-9050
	 

	 	Attention: Michael E. Criden, Esq.
	 
	 	 
	with a copy 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.
	 
	 	 
	If to the Securities Escrow Agent:

	 	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.

8. 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.

9. Force Majeure. No Escrow Agent shall be responsibility or liable for delays or
failures in performance resulting from acts beyond its control. Such acts shall include but not be

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limited to act of God, strikes, lock-outs, riots, acts of war, epidemics, laws or governmental
regulations changed or superimposed after the fact, fire, communication line failures, power
failures, computer viruses, earth quakes or other disasters, or to unavailability of Federal
Reserve Bank wire or telex facilities.

10. Amendments and Waivers. No supplement, modification or amendment of this
Agreement, or of any covenant, condition or limitation herein contained, shall be valid unless made
in writing and executed by the parties hereto. No waiver of any covenant, condition, or limitation
herein contained shall be valid unless made in writing and executed by the party making the waiver.

11. Multiple Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

12. Severability. If any one or more of the provisions contained in this Agreement or
in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal
or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this Agreement or any other
such instrument.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the
date first above written.

	 	 	 	 	 
	 	SMARTVIDEO TECHNOLOGIES, INC.

 	 
	 	By:  	/s/ Richard E. Bennett, Jr.
 	 
	 	 	Name:  	Richard E. Bennett, Jr. 	 
	 	 	Title:  	President 	 
	 
	 	EDWARDS ANGELL PALMER & DODGE LLP

 	 
	 	By:  	/s/ Leslie J. Croland
 	 
	 	 	Name:  	Leslie J. Croland 	 
	 	 	Title:  	Partner 	 
	 
	 	HANZMAN & CRIDEN, P.A.

 	 
	 	By:  	/s/ Michael Criden
 	 
	 	 	Name:  	Michael Criden 	 
	 	 	Title:  	Partner 	 

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/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

9Conv. Promissory Note/ Glenn Singer

 

Exhibit 10.4

CONVERTIBLE PROMISSORY NOTE

			
	$100,000.00 Dated:
	 	September 26, 2005

     FOR VALUE RECEIVED, SmartVideo Technologies, Inc., a Delaware corporation (the “Company”),
hereby promises to pay to Glenn Singer, an individual and resident of the State of Florida, with a
mailing address of 552 North Island Drive, Golden Beach, Florida 33160 or his assigns (the
“Lender”) the principal amount of One Hundred Thousand Dollars ($100,000.00), together with
interest accrued thereon calculated from the date hereof in accordance with the provisions of this
Note.

     Interest from the date hereof on the principal amount outstanding hereunder from time to time
until maturity, and after the maturity hereof until paid, shall be payable at a rate of eight
percent (8%) per annum. Interest shall be calculated on a year of 360 days based upon the actual
number of days elapsed. After the occurrence of an Event of Default, as defined below, until this
Note is paid in full or the Event of Default is satisfied or cured, as applicable, interest on the
principal amount outstanding from time to time shall be payable at twelve percent (12%) per annum.

     In addition, the Company shall issue to the Lender, a Warrant to purchase 33,333 shares of
Common Stock, par value $.001 per share at an exercise price of $2.00 per share.

     Except as otherwise described herein, principal together with all accrued and unpaid interest
thereon shall be payable in a single installment one year from the date of this Note. Principal and
interest shall be paid in lawful money of the United States of America in immediately available
funds at the address of Lender as first set forth above or at such other place as Lender may from
time to time designate.

     The unpaid principal balance of this Note may be prepaid in whole or in part at any time and
from time to time without premium or penalty. Each prepayment amount with respect to this Note
shall be applied first to the principal balance of this Note and then to the accrued and unpaid
interest of this Note.

     Upon the closing of the first capital raising transaction in which the Company receives gross
proceeds of at least Two Million Five Hundred Thousand Dollars ($2,500,000.00) from the sale of its
equity securities as contemplated between the Company and Lender (a “Qualified Financing”), the
principal amount outstanding under this Note shall convert into shares or units of the equity
securities sold in the Qualified Financing at a per share sale price or unit sale price equal to
the per share sale price or unit sale price of the Qualified Financing (the “Purchase Price”). Each
dollar of principal amount then outstanding under this Note shall constitute a dollar of Purchase
Price for the Qualified Financing equity securities. At the time of conversion, Lender shall have
the option of converting all accrued and unpaid interest on the same terms as the conversion of
principal herein, alternatively the Company may pay accrued and unpaid interest in cash at the time
of conversion.

     In the event the Qualified Financing as contemplated by the Company and the Lender does not
occur, the Lender shall have the right to convert the into shares of the Company’s

 

 

common stock at a per share price equal to closing price on the date the conversion notice is
received by the Company. At the time of conversion, Lender shall also have the option of
converting all accrued and unpaid interest on the same terms as the conversion of principal herein.
For purposes of this provision, the shares issuable on conversion will be issued as restricted
shares with the appropriate restrictive legend(s) and shall have piggy-back registration rights to
be included in the Company’s next registration statement.

     The Lender understands and agrees that the conversion of the Notes into equity securities of
the Company may require the execution of certain agreements (in form reasonably agreeable to the
Lender) relating to the purchase and sale of such securities as well as registration, co-sale, and
voting rights, if any, relating to such equity securities.

     If any payment on this Note shall be due on a Saturday, a Sunday, or a day which is a legal
holiday, the payment shall be made without default on the next succeeding day which is a business
day, but any interest-bearing portions of the payment shall continue to accrue interest until
payment during the extension.

     Failure to pay, when due, the principal, any interest or any other sum payable with respect to
the Note, and continuance of the failure for five (5) business days after the date on which the
principal, installment of interest or other sum is due (whether upon maturity hereof, upon any
prepayment date, upon acceleration, or otherwise) shall constitute an event of default (“Event of
Default”) with respect to this Note. Upon an Event of Default, the interest rate payable in respect
of this Note shall increase from the date of the Event of Default from eight percent (8%) to twelve
percent (12%) until the Event of Default shall be satisfied or cured.

     The Company agrees to pay to Lender and reimburse Lender for any and all reasonable costs and
expenses, including attorney’s fees and court costs, if any, incurred by Lender in connection with
the enforcement or collection hereof, both before and after the commencement of any action to
enforce or collect this Note, but whether or not any such action is commenced by Lender. The
Company waives presentment, protest and demand, notice of protest, notice of dishonor and
nonpayment of this Note and expressly agrees that this Note or any payment hereunder may be
extended from time to time without in any way affecting the liability of the Company hereunder.

     The rights and remedies of Lender hereunder, shall be cumulative and concurrent and may be
pursued singularly, successively or together at the sole discretion of Lender, and may be exercised
as often as occasion therefor shall occur, and the failure to exercise any such right or remedy
shall in no event be construed as a waiver or release of the same or any other right or remedy.

     The Company hereby declares, represents, and warrants that the indebtedness evidenced hereby
is made for the purpose of acquiring or carrying on a business, professional, or commercial
activity.

     The Lender represents that he is an accredited investor as defined in Rule 501(a) of
Regulation D promulgated under the Exchange Act.

     After all principal of, and accrued interest at any time owed on, this Note have been paid in
full, or converted pursuant to the terms of this Note, this Note will be surrendered to the Company
for cancellation and will not be reissued.

-2-

 

     This Note may be assigned by Lender or any subsequent lender at anytime or from time to time,
provided, however, that without the prior written consent of the Company this Note
may not be assigned by Lender: (a) during the six (6) month period following the date hereof; or
(b) to any competitor of the Company. This Note shall inure to the benefit of and be enforceable by
Lender and Lender’s successors and assigns and any other person to whom Lender or any subsequent
lender may grant an interest in the Company’s obligations hereunder, and shall be binding and
enforceable against the Company and the Company’s successors and assigns. Upon any sale,
assignment, transfer or negotiation of this Note by Lender, the subsequent lender hereof shall
notify the Company of such sale, assignment, transfer or negotiation at the Company’s address shown
above, or at such other address as the Company may designate by written notice to Lender. Upon
receipt of that notice, the subsequent lender shall become a Lender of this Note and shall be
entitled to future payments of principal and interest and other distributions under this Note,
provided that the right to acquire shares or units of equity securities of the Company pursuant
hereto shall terminate.

     This Note shall be governed by and construed in accordance with the domestic laws of the State
of Georgia, without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Georgia or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Georgia. Notwithstanding any other provisions of
this Note or any other instrument or document executed in connection therewith, it is expressly
agreed and understood that the Company does not intend or expect to pay, nor does the Lender intend
or expect to charge, accept or collect any interest which, when added to any other charge upon the
principal, shall be in excess of the highest lawful rate allowable under the laws of the State of
Georgia. Should acceleration, prepayment or any other charges upon the principal or any portion
thereof result in the computation or earning of interest in excess of the highest lawful rate
allowable under the laws of the State of Georgia, any and all such excess is hereby waived and
shall be credited to the outstanding principal balance or returned to the Company.

     IN WITNESS WHEREOF, the undersigned have duly executed this Note, or have caused this Note to
be duly executed on their behalf, as of the day and year first hereinabove set forth.

	 	 	 	 	 
	 	SMARTVIDEO TECHNOLOGIES, INC.,

a Delaware corporation

 	 
	 	By:  	/s/ Richard E. Bennett, Jr.
 	 
	 	 	Richard E. Bennett, Jr. 	 
	 	 	President & CEO 	 
	 

-3-

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