Document:

EXHIBIT
      10.39

     

    
      	
              James
                Morrison

            	
              Warrants
                Issued: 50,000

            
	
              Termination
                Date: July 24, 2011

            	 

    

     

    NEITHER
      THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
      OTHER
      APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER
      THIS
      WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED,
      TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION WHICH IS
      EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.

    

    THE
      SECURITIES REPRESENTED BY THIS WARRANT ARE SUBJECT TO A MASTER CONSULTING
      AGREEMENT DATED JULY 24, 2006 (THE “CONSULTING AGREEMENT”). 

    

    REDEEMABLE
      WARRANT

     

    To
      Purchase 50,000
      Shares
      of the Common Stock

     

    of

     

    SMARTVIDEO
      TECHNOLOGIES, INC.

     

    THIS
      CERTIFIES that, for value received, James Morrison
      (the
      "Holder"), is entitled, upon the terms and subject to the conditions hereinafter
      set forth, at any time on or after the date SmartVideo Technologies, Inc. (the
      “Company”) reaches the threshold of 200,000 paid subscribers to the [*****].
      (The 200,000 paid subscribers can come from any one of a number of sources,
      such
      as [*****], (the “Exercise Date”); and on or prior to the close of business on
      the date which is five (5) years after the date hereof (the "Termination Date"),
      to subscribe for and purchase from the Company, up to 50,000
      (Fifty
      Thousand)
      shares
      (the "Warrant Shares") of common stock, par value $.001 per share (the "Common
      Stock") of the Company. The purchase price of one share of Common Stock (the
      "Exercise Price") under this Warrant shall be the per share price equal to
      the
      closing sale price quoted on the OTC Bulletin Board or another nationally
      recognized trading system on July 24, 2006 or
      the
      date on which the 200,000 subscriber threshold is reached,
      whichever is lower. The Exercise Price and the number of shares for which the
      Warrant is exercisable shall be subject to adjustment as provided herein.

     

    
      	1.	
              Title
                to Warrant.
                Prior to the Termination Date and subject to compliance with applicable
                laws and the terms of this Warrant, this Warrant and all rights hereunder
                are transferable, in whole or in part, at the office or agency of
                the
                Company by the holder hereof in person or by duly authorized attorney,
                upon surrender of this Warrant together with the Assignment Form
                annexed
                hereto properly endorsed.

            

    

     

    
      	2.	
              Authorization
                of Shares.
                The Company covenants that all shares of Common Stock which may be
                issued
                upon the exercise of rights represented by this Warrant will, upon
                exercise of the rights represented by this Warrant, be duly authorized,
                validly issued, fully paid and nonassessable and free from all taxes,
                liens and charges in respect of the issue thereof (other than taxes
                in
                respect of any transfer occurring contemporaneously with such
                issue).

            

    

     

    
      	3.	
              Exercise
                of Warrant.
                

            

    

     

    (a) Except
      as
      provided in Section 4 herein, exercise of the purchase rights represented by
      this Warrant may be made at any time or times on or after the Exercise Date
      and
      before the close of business on the Termination Date by the surrender of this
      Warrant and the Notice of Exercise Form annexed hereto duly executed, at the
      office of the Company (or such other office or agency of the Company
      as

     

     

    *    
      Confidential Treatment has been requested for the marked portion and filed
      separately with the Commission.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    it
      may
      designate by notice in writing to the registered holder hereof at the address
      of
      such holder appearing on the books of the Company) and, except as set forth
      in
      subsection (b) hereof, upon payment of the Exercise Price of the shares thereby
      purchased by wire transfer or cashier’s check drawn on a United States bank, the
      holder shall be entitled to receive a certificate for the number of shares
      of
      Common Stock so purchased. Certificates for shares purchased hereunder shall
      be
      delivered to the holder hereof within twenty (20) business days after the date
      on which this Warrant shall have been exercised as aforesaid. This Warrant
      shall
      be deemed to have been exercised and such certificate or certificates shall
      be
      deemed to have been issued, and the Holder or any other person so designated
      to
      be named therein shall be deemed to have become a holder of record of such
      shares for all purposes, as of the date the Holder faxes a Notice of Exercise
      to
      the Company, provided that such fax notice is followed by delivery of the
      original notice and payment to the Company of the Exercise Price and all taxes
      required to be paid by the Holder, if any, pursuant to Section 6 prior to the
      issuance of such shares, have been paid within three (3) business days of such
      fax notice. If this Warrant shall have been exercised in part, the Company
      shall, at the time of delivery of the certificate or certificates representing
      Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of
      Holder to purchase the unpurchased shares of Common Stock called for by this
      Warrant, which new Warrant shall in all other respects be identical with this
      Warrant. 

     

    (b) Cashless
      Exercise. 
      Notwithstanding the foregoing, the Holder may, at its option, elect to exercise
      this Warrant, in whole or in part and at any time or from time to time, on
      a
      cashless basis, by surrendering this Warrant, with the purchase form appended
      hereto as Exhibit I duly executed by or on behalf of the Holder, at the
      principal office of the Company, or at such other office or agency as the
      Company may designate, by canceling a portion of this Warrant in payment of
      the
      Exercise Price payable in respect of the number of Warrant Shares purchased
      upon
      such exercise.  In the event of an exercise pursuant to this subsection
      1(b), the number of Warrant Shares issued to the Holder shall be determined
      according to the following formula:  

     

    X
      =
Y(A-B)

    A

     

    Where: 
      X =
               
the number of Warrant Shares that shall be issued to the Holder; 

     

    
      	
            	Y
              =	
              the
                number of Warrant Shares for which this Warrant is being exercised
                (which
                shall include both the number of Warrant Shares issued to the Holder
                and
                the number of Warrant Shares subject to the portion of the Warrant
                being
                cancelled in payment of the Exercise Price);

            

    

     

    
      	
            	A
              =	
              the
                Fair Market Value of one share of Common Stock;
                and

            

    

     

    
      	
            	B
              =	
              the
                Exercise Price then in effect.

            

    

     

    The
      Fair
      Market Value per share of Common Stock shall be determined as
      follows:

     

    If
      the
      Common Stock is listed on a national securities exchange, the OTC Bulletin
      Board
      or another nationally recognized trading system as of the Exercise Date, the
      Fair Market Value per share of Common Stock shall be deemed to be the average
      of
      the high and low reported sale prices per share of Common Stock thereon on
      the
      trading day immediately preceding the Exercise Date.

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    
      	4.	
              Redemption
                of Warrants.
                

            

    

     

    
      	
            	(a)	
              Procedures.
                Commencing at the close of business on July
                24, 2007
                the Company may, subject to the conditions set forth herein, redeem
                all,
                but not less than all, of this Warrant at a redemption price of $.10
                for
                each Warrant Share the Holder is entitled to purchase hereunder upon
                not
                less than thirty (30) days prior written notice (the “Redemption Notice”)
                to the Holder, provided that the average closing price of the Common
                Stock
                for the twenty (20) consecutive trading days ending three (3) days
                prior
                to the date of the Redemption Notice is at least $5.00, subject to
                adjustment for stock dividends, stock splits and other anti-dilution
                provisions as provided for in Section 12 of this Warrant. For purposes
                of
                this Section 4, “closing price” at any date shall be deemed to be: (i) the
                last sale price regular way as reported on the principal national
                securities exchange on which the Common Stock is listed or admitted
                to
                trading, or (ii) if the Common Stock is not listed or admitted to
                trading
                on any national securities exchange, the average of the closing bid
                and
                asked prices regular way for the Common Stock as reported by the
                Nasdaq
                National Market or Nasdaq SmallCap Market of the Nasdaq Stock Market,
                Inc.
                (“Nasdaq”) or (iii) if the Common Stock is not listed or admitted for
                trading on any national securities exchange, and is not reported
                by
                Nasdaq, the average of the closing bid and asked prices, as reported
                on
                the OTC Bulletin Board or if no such quotation is available, then
                the
                closing bid and asked prices in the over-the-counter market as furnished
                by the National Quotation Bureau, Inc., or if no such quotation is
                available, the fair market value of the Common Stock as determined
                in good
                faith by the Board of Directors of the Company. The Redemption Notice
                shall be deemed effective upon mailing and the time of mailing is
                the
                “Effective Date of the Notice.” The Redemption Notice shall state the
                redemption date not less than thirty (30) days from the Effective
                Date of
                the Notice (the “Redemption Date”). No Redemption Notice shall be mailed
                unless all funds necessary to pay for redemption of this Warrant
                shall
                have first been set aside by the Company so as to be and continue
                to be
                available therefor. The redemption price to be paid to the Holder
                will be
                $.10 for each Warrant Share to which the Holder would then be entitled
                upon exercise of this Warrant being redeemed, as adjusted from time
                to
                time as provided herein (the “Redemption Price”). In the event the number
                of shares of Common Stock issuable upon exercise of this Warrant
                being
                redeemed are adjusted pursuant to Section 12 hereof, then upon each
                such
                adjustment the Redemption Price will be adjusted by multiplying the
                Redemption Price in effect immediately prior to such adjustment by
                a
                fraction, the numerator of which is the number of shares of Common
                Stock
                issuable upon exercise of this Warrant being redeemed immediately
                prior to
                such adjustment and the denominator of which is the number of shares
                of
                Common Stock issuable upon exercise of this Warrant being redeemed
                immediately after such adjustment. The Holder may exercise this Warrant
                between the Effective Date of the Notice and the Redemption Date,
                such
                exercise being effective if done in accordance with Section 3 hereof,
                and
                if this Warrant, with the form of election to purchase duly executed,
                and
                the Exercise Price are actually received by the Company at its office
                located at 3505 Koger Boulevard, Suite 400 Duluth, GA 30096, no later
                than
                5:00 PM Atlanta, Georgia time on the Redemption Date. Notwithstanding
                the
                foregoing, following the Holder’s receipt of the Redemption Notice, the
                Holder may exercise this Warrant, without regard for the redemption
                rights
                provided to the Company hereunder. To the extent that the Holder
                elects to
                exercise the Warrant following receipt of the Redemption Notice,
                the
                Company shall not have the right to then redeem the Warrant
                Shares.

            

    

     

    
      	
            	(b)	
              Return
                of Warrant.
                If
                Holder does not wish to exercise this Warrant, the Holder should
                mail this
                Warrant to the Company at its office located at 3505 Koger Boulevard,
                Suite 400 Duluth, GA 30096 after receiving the Redemption Notice
                required
                by this Section. If the Redemption Notice shall have been so mailed,
                and
                if on or before the Effective Date of the Notice all funds necessary
                to
                pay for redemption of this Warrant shall have been set aside by the
                Company for the benefit of the Holder so as to be and continue to
                be
                available therefor, then, on and after such Redemption Date,
                notwithstanding that this Warrant subject to redemption shall not
                have
                been

            

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    surrendered
      for redemption, the obligation evidenced by this Warrant not so surrendered
      for
      redemption or effectively exercised shall be deemed no longer outstanding,
      and
      all rights with respect hereto shall forthwith cease and terminate, except
      only
      the right of the Holder to receive the Redemption Price for each share of Common
      Stock to which the Holder would be entitled if the Holder exercised this Warrant
      upon receiving the Redemption Notice of this Warrant. 

     

    
      	5.	
              No
                Fractional Shares or Scrip.
                No fractional shares or scrip representing fractional shares shall
                be
                issued upon the exercise of this Warrant. As to any fraction of a
                share
                which Holder would otherwise be entitled to purchase upon such exercise,
                the Company shall pay a cash adjustment in respect of such final
                fraction
                in an amount equal to the Exercise
                Price.

            

    

     

    
      	6.	
              Charges,
                Taxes and Expenses.
                Issuance of certificates for shares of Common Stock upon the exercise
                of
                this Warrant shall be made without charge to the holder hereof for
                any
                issue or Federal or State transfer tax or other incidental expense
                in
                respect of the issuance of such certificate, all of which taxes and
                expenses shall be paid by the Company, and such certificates shall
                be
                issued in the name of the holder of this Warrant or in such name
                or names
                as may be directed by the holder of this Warrant; provided, however,
                that
                in the event certificates for shares of Common Stock are to be issued
                in a
                name other than the name of the holder of this Warrant, this Warrant
                when
                surrendered for exercise shall be accompanied by the Assignment Form
                attached hereto duly executed by the holder hereof; and the Company
                may
                require, as a condition thereto, the payment of a sum sufficient
                to
                reimburse it for any transfer tax incidental
                thereto.

            

    

     

    
      	7.	
              Closing
                of Books.
                The Company will not close its stockholder books or records in any
                manner
                which prevents the timely exercise of this
                Warrant.

            

    

     

    
      	8.	
              Transfer,
                Division and Combination.
                

            

    

     

    
      	
            	(a)	
              the
                Holder (and its transferees and assigns), by acceptance of this Warrant,
                covenants and agrees that it is acquiring the Warrants evidenced
                hereby,
                and, upon exercise hereof, the Warrant Shares, for its own account
                as an
                investment and not with a view to the resale or distribution thereof.
                The
                Warrant Shares have not been registered under the Securities Act
                or any
                state securities laws and, prior to any such registration, no transfer
                of
                any Warrant Shares shall be permitted unless the Company has received
                notice of such transfer, at the address of its principal office set
                forth
                in the Exchange Agreement, in the form of assignment attached hereto,
                accompanied by an opinion of counsel reasonably satisfactory to the
                Company that an exemption from registration of such Warrants or Warrant
                Shares under the Securities Act is available for such transfer, except
                that no such opinion or notice shall be required after the registration
                for resale by the Holder of the Warrant Shares, as contemplated by
                the
                Consulting Agreement. Upon any exercise of the Warrants, certificates
                representing the Warrant Shares shall bear a restrictive legend
                substantially identical to that set forth on the face of this Warrant
                certificate. Any purported transfer of any Warrant or Warrant Shares
                not
                in compliance with the provisions of this section shall be null and
                void.

            

    

     

    
      	
            	(b)	
              This
                Warrant may be divided or combined with other Warrants upon presentation
                hereof at the aforesaid office of the Company, together with a written
                notice specifying the names and denominations in which new Warrants
                are to
                be issued, signed by Holder or its agent or attorney. Subject to
                compliance with Section 8(a), as to any transfer which may be involved
                in
                such division or combination, the Company shall execute and deliver
                a new
                Warrant or Warrants in exchange for the Warrant or Warrants to be
                divided
                or combined in accordance with such
                notice.

            

    

     

    
      	
            	(c)	
              The
                Company shall prepare, issue and deliver at its own expense (other
                than
                transfer taxes) the new Warrant or Warrants under this Section
                8.

            

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    
      	
            	(d)	
              The
                Company agrees to maintain, at its aforesaid office or the office
                of its
                transfer or registration agent, books for the registration and the
                registration of transfer of the
                Warrants.

            

    

     

    
      	9.	
              No
                Rights as Stockholder until Exercise.
                This Warrant does not entitle the holder hereof to any voting rights
                or
                other rights as a shareholder of the Company prior to the exercise
                hereof.
                Upon the surrender of this Warrant and the payment of the aggregate
                Exercise Price, the Warrant Shares so purchased shall be and be deemed
                to
                be issued to such holder as the record owner of such shares as of
                the
                close of business on the later of the date of such surrender or payment.
                

            

    

     

    
      	10.	
              Loss,
                Theft, Destruction or Mutilation of Warrant.
                The Company covenants that upon receipt by the Company of evidence
                reasonably satisfactory to it of the loss, theft, destruction or
                mutilation of this Warrant certificate or any stock certificate relating
                to the Warrant Shares, and in case of loss, theft or destruction,
                of
                indemnity or security reasonably satisfactory to it (which shall
                not
                exceed that customarily charged by the Company’s transfer agent), and upon
                surrender and cancellation of such Warrant or stock certificate,
                if
                mutilated, the Company will make and deliver a new Warrant or stock
                certificate of like tenor and dated as of such cancellation, in lieu
                of
                such Warrant or stock certificate.

            

    

     

    
      	11.	
              Saturdays,
                Sundays, Holidays, etc.
                If the last or appointed day for the taking of any action or the
                expiration of any right required or granted herein shall be a Saturday,
                Sunday or a legal holiday, then such action may be taken or such
                right may
                be exercised on the next succeeding day not a Saturday, Sunday or
                legal
                holiday.

            

    

     

    
      	12.	
              Adjustments
                of Exercise Price and Number of Warrant Shares.
                

            

    

     

    
      	
            	(a)	
              Stock
                Splits, etc.
                The number and kind of securities purchasable upon the exercise of
                this
                Warrant and the Exercise Price shall be subject to adjustment from
                time to
                time upon the happening of any of the following. In case the Company
                shall
                (i) pay a dividend in shares of Common Stock or make a distribution
                in
                shares of Common Stock to holders of its outstanding Common Stock,
                (ii)
                subdivide its outstanding shares of Common Stock into a greater number
                of
                shares of Common Stock, (iii) combine its outstanding shares of Common
                Stock into a smaller number of shares of Common Stock or (iv) issue
                any
                shares of its capital stock in a reclassification of the Common Stock,
                then the number of Warrant Shares purchasable upon exercise of this
                Warrant immediately prior thereto shall be adjusted so that the holder
                of
                this Warrant shall be entitled to receive the kind and number of
                Warrant
                Shares or other securities of the Company which he would have been
                entitled to receive had such Warrant been exercised in advance thereof.
                Upon each such adjustment of the kind and number of Warrant Shares
                or
                other securities of the Company which are purchasable hereunder,
                the
                holder of this Warrant shall thereafter be entitled to purchase the
                number
                of Warrant Shares or other securities resulting from such adjustment
                at an
                Exercise Price per Warrant Share or other security obtained by multiplying
                the Exercise Price in effect immediately prior to such adjustment
                by the
                number of Warrant Shares purchasable pursuant hereto immediately
                prior to
                such adjustment and dividing by the number of Warrant Shares or other
                securities of the Company resulting from such adjustment. An adjustment
                made pursuant to this paragraph shall become effective immediately
                after
                the effective date of such event retroactive to the record date,
                if any,
                for such event.

            

    

     

    
      	
            	(b)	
              Reorganization,
                Reclassification, Merger, Consolidation or Disposition of
                Assets.
                In case the Company shall reorganize its capital, reclassify its
                capital
                stock (other than a change in nominal value to no nominal value,
                or from
                no nominal value to nominal value, or as a result of a subdivision,
                combination or other event described in paragraph (a) of this Section),
                consolidate or merge with or into another corporation (where the
                Company
                is not the surviving corporation or where there is a change in or
                distribution with respect to the Common Stock of the Company), or
                sell,
                transfer or otherwise dispose of all or substantially all its property,
                assets or business to another corporation and, pursuant to the terms
                of
                such reorganization, reclassification,
                merger,

            

    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    consolidation
      or disposition of assets, shares of common stock of the successor or acquiring
      corporation, or any cash, shares of stock or other securities or property of
      any
      nature whatsoever (including warrants or other subscription or purchase rights)
      in addition to or in lieu of common stock of the successor or acquiring
      corporation ("Other Property"), are to be received by or distributed to the
      holders of Common Stock of the Company, then Holder shall have the right
      thereafter to receive, upon exercise of this Warrant, the number of shares
      of
      common stock of the successor or acquiring corporation or of the Company, if
      it
      is the surviving corporation, and Other Property receivable upon or as a result
      of such reorganization, reclassification, merger, consolidation or disposition
      of assets by a holder of the number of shares of Common Stock for which this
      Warrant is exercisable immediately prior to such event. In case of any such
      reorganization, reclassification, merger, consolidation or disposition of
      assets, the successor or acquiring corporation (if other than the Company)
      shall
      expressly assume the due and punctual observance and performance of each and
      every covenant and condition of this Warrant to be performed and observed by
      the
      Company and all the obligations and liabilities hereunder, subject to such
      modifications as may be deemed appropriate (as determined in good faith by
      resolution of the Board of Directors of the Company) in order to provide for
      adjustments of shares of Common Stock for which this Warrant is exercisable
      which shall be as nearly equivalent as practicable to the adjustments provided
      for in this Section 12. For purposes of this Section 12, "common stock of the
      successor or acquiring corporation" shall include stock of such corporation
      of
      any class which is not preferred as to dividends or assets over any other class
      of stock of such corporation and which is not subject to redemption and shall
      also include any evidences of indebtedness, shares of stock or other securities
      which are convertible into or exchangeable for any such stock, either
      immediately or upon the arrival of a specified date or the happening of a
      specified event and any warrants or other rights to subscribe for or purchase
      any such stock. The foregoing provisions of this Section 12 shall similarly
      apply to successive reorganizations, reclassifications, mergers, consolidations
      or disposition of assets.

     

    
      	13.	
              Voluntary
                Adjustment by the Company.
                The Company may at any time during the term of this Warrant, reduce
                the
                then current Exercise Price to any amount and for any period of time
                deemed appropriate by the Board of Directors of the
                Company.

            

    

     

    
      	14.	
              Notice
                of Adjustment.
                Whenever the number of Warrant Shares or number or kind of securities
                or
                other property purchasable upon the exercise of this Warrant or the
                Exercise Price is adjusted, as herein provided, the Company shall
                promptly
                mail by registered or certified mail, return receipt requested, to
                the
                holder of this Warrant notice of such adjustment or adjustments setting
                forth the number of Warrant Shares (and other securities or property)
                purchasable upon the exercise of this Warrant and the Exercise Price
                of
                such Warrant Shares (and other securities or property) after such
                adjustment, setting forth a brief statement of the facts requiring
                such
                adjustment and setting forth the computation by which such adjustment
                was
                made. Such notice, in the absence of manifest error, shall be conclusive
                evidence of the correctness of such
                adjustment.

            

    

     

    
      	15.	
              Notice
                of Corporate Action.
                If at any time:

            

    

     

    
      	
            	(a)	
              the
                Company shall take a record of the holders of its Common Stock for
                the
                purpose of entitling them to receive a dividend or other distribution,
                or
                any right to subscribe for or purchase any evidences of its indebtedness,
                any shares of stock of any class or any other securities or property,
                or
                to receive any other right, or

            

    

     

    
      	
            	(b)	
              there
                shall be any capital reorganization of the Company, any reclassification
                or recapitalization of the capital stock of the Company or any
                consolidation with or merger of the Company into, or any sale, transfer
                or
                other disposition of all or substantially all the property, assets
                or
                business of the Company to, another corporation
                or,

            

    

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    
      	(c)	
              there
                shall be a voluntary or involuntary dissolution, liquidation or winding
                up
                of the Company;

            

    

     

    then,
      in
      any one or more of such cases, the Company shall give to Holder (i) at least
      10
      days’ prior written notice of any record date for such dividend, distribution or
      right or for determining rights to vote in respect of any such reorganization,
      reclassification, merger, consolidation, sale, transfer, disposition,
      liquidation or winding up, and (ii) in the case of any such reorganization,
      reclassification, merger, consolidation, sale, transfer, disposition,
      dissolution, liquidation or winding up, at least 10 days’ prior written notice
      of the date when the same shall take place. Such notice in accordance with
      the
      foregoing clause also shall specify (i) the date on which any such record is
      to
      be taken for the purpose of such dividend, distribution or right, the date
      on
      which the holders of Common Stock shall be entitled to any such dividend,
      distribution or right, and the amount and character thereof, and (ii) the date
      on which any such reorganization, reclassification, merger, consolidation,
      sale,
      transfer, disposition, dissolution, liquidation or winding up is to take place
      and the time, if any such time is to be fixed, as of which the holders of Common
      Stock shall be entitled to exchange their shares of Common Stock for securities
      or other property deliverable upon such disposition, dissolution, liquidation
      or
      winding up. Each such written notice shall be sufficiently given if addressed
      to
      Holder at the last address of Holder appearing on the books of the Company
      and
      delivered in accordance with Section 17(d).

     

    
      	16.	
              Authorized
                Shares.
                The Company covenants that during the period the Warrant is outstanding,
                it will reserve from its authorized and unissued Common Stock a sufficient
                number of shares to provide for the issuance of the Warrant Shares
                upon
                the exercise of any purchase rights under this Warrant. The Company
                further covenants that its issuance of this Warrant shall constitute
                full
                authority to its officers who are charged with the duty of executing
                stock
                certificates to execute and issue the necessary certificates for
                the
                Warrant Shares upon the exercise of the purchase rights under this
                Warrant. The Company will take all such reasonable action as may
                be
                necessary to assure that such Warrant Shares may be issued as provided
                herein without violation of any applicable law or regulation, or
                of any
                requirements of the Principal Market upon which the Common Stock
                may be
                listed. 

            

    

     

    The
      Company shall not by any action, including, without limitation, amending its
      certificate of incorporation or through any reorganization, transfer of assets,
      consolidation, merger, dissolution, issue or sale of securities or any other
      voluntary action, avoid or seek to avoid the observance or performance of any
      of
      the terms of this Warrant, but will at all times in good faith assist in the
      carrying out of all such terms and in the taking of all such actions as may
      be
      necessary or appropriate to protect the rights of Holder against impairment.
      Without limiting the generality of the foregoing, the Company will (a) not
      increase the par value of any shares of Common Stock receivable upon the
      exercise of this Warrant above the amount payable therefor upon such exercise
      immediately prior to such increase in par value, (b) take all such action as
      may
      be necessary or appropriate in order that the Company may validly and legally
      issue fully paid and nonassessable shares of Common Stock upon the exercise
      of
      this Warrant, and (c) use its best efforts to obtain all such authorizations,
      exemptions or consents from any public regulatory body having jurisdiction
      thereof as may be necessary to enable the Company to perform its obligations
      under this Warrant.

     

    Before
      taking any action which would result in an adjustment in the number of shares
      of
      Common Stock for which this Warrant is exercisable or in the Exercise Price,
      the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    
      	17.	
              Miscellaneous.

            

    

     

    
      	
            	(a)	
              Jurisdiction.
                This Warrant shall be binding upon any successors or assigns of the
                Company. This Warrant shall constitute a contract under the laws
                of
                Delaware without regard to its
                conflict

            

    

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    of
      law,
      principles or rules, and be subject to arbitration pursuant to the terms set
      forth in the Exchange Agreement.

     

    
      	
            	(b)	
              Restrictions.
                The holder hereof acknowledges that the Warrant Shares acquired upon
                the
                exercise of this Warrant, if not registered, will have restrictions
                upon
                resale imposed by state and federal securities
                laws.

            

    

     

    
      	
            	(c)	
              Nonwaiver
                and Expenses.
                No course of dealing or any delay or failure to exercise any right
                hereunder on the part of the Holder shall operate as a waiver of
                such
                right or otherwise prejudice Holder’s rights, powers or remedies, except
                that all rights hereunder terminate on the Termination Date. If the
                Company fails to comply with any provision of this Warrant, the Company
                shall pay to the Holder such amounts as shall be sufficient to cover
                any
                costs and expenses including, but not limited to, reasonable attorneys’
                fees, including those of appellate proceedings, incurred by the Holder
                in
                collecting any amounts due pursuant hereto or in otherwise enforcing
                any
                of its rights, powers or remedies
                hereunder.

            

    

     

    
      	
            	(d)	
              Notices.
                Any notice, request or other document required or permitted to be
                given or
                delivered to the holder hereof by the Company shall be delivered
                in
                accordance with the notice provisions of the Exchange
                Agreement.

            

    

     

    
      	
            	(e)	
              Limitation
                of Liability.
                No provision hereof, in the absence of affirmative action by Holder
                to
                purchase shares of Common Stock, and no enumeration herein of the
                rights
                or privileges of Holder hereof, shall give rise to any liability
                of the
                Holder for the purchase price of any Common Stock or as a stockholder
                of
                the Company, whether such liability is asserted by the Company or
                by
                creditors of the Company.

            

    

     

    
      	
            	(f)	
              Remedies.
                The Holder, in addition to being entitled to exercise all rights
                granted
                by law, including recovery of damages, will be entitled to specific
                performance of its rights under this Warrant. The Company agrees
                that
                monetary damages would not be adequate compensation for any loss
                incurred
                by reason of a breach by it of the provisions of this Warrant and
                hereby
                agrees to waive the defense in any action for specific performance
                that a
                remedy at law would be adequate.

            

    

     

    
      	
            	(g)	
              Successors
                and Assigns.
                Subject to applicable securities laws, this Warrant and the rights
                and
                obligations evidenced hereby shall inure to the benefit of and be
                binding
                upon the successors of the Company and the successors and permitted
                assigns of the Holder. The provisions of this Warrant are intended
                to be
                for the benefit of all Holders from time to time of this Warrant
                and shall
                be enforceable by any such Holder or holder of Warrant
                Shares.

            

    

     

    
      	
            	(h)	
              Amendment.
                This Warrant may be modified or amended or the provisions hereof
                waived
                only with the written consent of the Company and the
                Holder.

            

    

     

    
      	
            	(i)	
              Severability.
                Wherever possible, each provision of this Warrant shall be interpreted
                in
                such manner as to be effective and valid under applicable law, but
                if any
                provision of this Warrant shall be prohibited by or invalid under
                applicable law, such provision shall be ineffective to the extent
                of such
                prohibition or invalidity, without invalidating the remainder of
                such
                provisions or the remaining provisions of this
                Warrant.

            

    

     

    
      	 	
              (j)

            	
              Headings.
                The headings used in this Warrant are for the convenience of reference
                only and shall not, for any purpose, be deemed a part of this
                Warrant.

            

    

     

     

    [Signature
      Page Follows]

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized.

     

     

    Dated:
      July
      24,
      2006

     

     

    SMARTVIDEO
      TECHNOLOGIES, INC.

     

     

    By:    
      /s/ Ronald A.
      Warren                                  

              
Ronald
      A.
      Warren

               Title:
      Secretary of the Corporation 

     

    

    Corporate
      Seal

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    NOTICE
      OF EXERCISE

     

    To: SmartVideo
      Technologies, Inc.

     

    
      	1.	
              The
                undersigned hereby elects to purchase ________ shares of Common Stock
                (the
                "Common Stock"), of SmartVideo Technologies, Inc. pursuant
                to the terms of the attached Warrant, and tenders herewith payment
                of the
                exercise price in full, together with all applicable transfer taxes,
                if
                any.

            

    

     

    
      	2.	
              Please
                issue a certificate or certificates representing said shares of Common
                Stock in the name of the undersigned or in such other name as is
                specified
                below:

            

    

     

    James Morrison

    2205
      Crestline Falls Place

    Las

      Vegas,
      NV 89134

     

     

    Dated:
      _______________,
      ____

     

    Authorized
      Holder's Signature:______________________________

     

    

    Holder's
      Name:

     

    Holder's
      Address:

    James Morrison

    2205
      Crestline Falls Place

    Las
      Vegas,
      NV 89134

    

    Social
      Security, Employer or Other Tax Identification

    Number
      of
      Holder:

     

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in an fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    ASSIGNMENT
      FORM

     

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

     

     

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      

     

     

    assigned
      to__________________________________________________________________________

     

     

    whose
      address
      is______________________________________________________________________

     

     

     

    Dated:
      _______________,
      ____

     

    

    Authorized
      Holder's Signature:___________________________________

    

    Holder's
      Name:     

    

    Holder's
      Address:

    James Morrison

    2205
      Crestline Falls Place

    Las
      Vegas,
      NV 89134

    

    Social
      Security, Employer or 

    Other
      Tax
      Identification Number of Holder: 

     

    

     

    Signature
      Guaranteed:__________________________________________________

     

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in an fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

    
      
        
        

      

      -11-EXHIBIT
      10.40

     

    
      	
              James
                Morrison

            	
              Warrants
                Issued: 25,000

            
	
              Termination
                Date: July 24, 2011

            	 

    

     

    NEITHER
      THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
      OTHER
      APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER
      THIS
      WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED,
      TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION WHICH IS
      EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.

    

    THE
      SECURITIES REPRESENTED BY THIS WARRANT ARE SUBJECT TO A MASTER CONSULTING
      AGREEMENT DATED JULY 24, 2006 (THE “CONSULTING AGREEMENT”). 

    

    REDEEMABLE
      WARRANT

     

    To
      Purchase 25,000
      Shares
      of the Common Stock

     

    of

     

    SMARTVIDEO
      TECHNOLOGIES, INC.

     

    THIS
      CERTIFIES that, for value received, James Morrison
      (the
      "Holder"), is entitled, upon the terms and subject to the conditions hereinafter
      set forth, at any time on or after the date of each [*****]
      referred
      to the Company by James Morrison, directly or indirectly, and executed, where
      revenue exceeds [*****]
      within
      six (6) months from the commencement of each such deal (the “Exercise Date”),
      and on or prior to the close of business on the date which is five (5) years
      after the date hereof (the "Termination Date"), to subscribe for and purchase
      from SmartVideo Technologies, Inc. (the "Company"), up to 25,000
      (Twenty
      Five Thousand)
      shares
      (the "Warrant Shares") of common stock, par value $.001 per share (the "Common
      Stock") of the Company. The purchase price of one share of Common Stock (the
      "Exercise Price") under this Warrant shall be the per share price equal to
      the
      closing sale price quoted on the OTC Bulletin Board or another nationally
      recognized trading system on July 24, 2006 or
      the
      date that the [*****]
      minimum
      revenue threshold is achieved,
      whichever is lower. The Exercise Price and the number of shares for which the
      Warrant is exercisable shall be subject to adjustment as provided herein.

     

    
      	1.	
              Title
                to Warrant.
                Prior to the Termination Date and subject to compliance with applicable
                laws and the terms of this Warrant, this Warrant and all rights hereunder
                are transferable, in whole or in part, at the office or agency of
                the
                Company by the holder hereof in person or by duly authorized attorney,
                upon surrender of this Warrant together with the Assignment Form
                annexed
                hereto properly endorsed.

            

    

     

    
      	2.	
              Authorization
                of Shares.
                The Company covenants that all shares of Common Stock which may be
                issued
                upon the exercise of rights represented by this Warrant will, upon
                exercise of the rights represented by this Warrant, be duly authorized,
                validly issued, fully paid and nonassessable and free from all taxes,
                liens and charges in respect of the issue thereof (other than taxes
                in
                respect of any transfer occurring contemporaneously with such
                issue).

            

    

     

    
      	3.	
              Exercise
                of Warrant.
                

            

    

     

    
      	
            	(a)	
              Except
                as provided in Section 4 herein, exercise of the purchase rights
                represented by this Warrant 

            

    

     

     

    *
      Confidential Treatment has been requested for the marked portion and filed
      separately with the Commission.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    may
      be
      made at any time or times on or after the Exercise Date and before the close
      of
      business on the
      Termination Date by the surrender of this Warrant and the Notice of Exercise
      Form annexed hereto duly executed, at the office of the Company (or such other
      office or agency of the Company as it may designate by notice in writing to
      the
      registered holder hereof at the address of such holder appearing on the books
      of
      the Company) and, except as set forth in subsection (b) hereof, upon payment
      of
      the Exercise Price of the shares thereby purchased by wire transfer or cashier’s
      check drawn on a United States bank, the holder shall be entitled to receive
      a
      certificate for the number of shares of Common Stock so purchased. Certificates
      for shares purchased hereunder shall be delivered to the holder hereof within
      twenty (20) business days after the date on which this Warrant shall have been
      exercised as aforesaid. This Warrant shall be deemed to have been exercised
      and
      such certificate or certificates shall be deemed to have been issued, and the
      Holder or any other person so designated to be named therein shall be deemed
      to
      have become a holder of record of such shares for all purposes, as of the date
      the Holder faxes a Notice of Exercise to the Company, provided that such fax
      notice is followed by delivery of the original notice and payment to the Company
      of the Exercise Price and all taxes required to be paid by the Holder, if any,
      pursuant to Section 6 prior to the issuance of such shares, have been paid
      within three (3) business days of such fax notice. If this Warrant shall have
      been exercised in part, the Company shall, at the time of delivery of the
      certificate or certificates representing Warrant Shares, deliver to the Holder
      a
      new Warrant evidencing the rights of Holder to purchase the unpurchased shares
      of Common Stock called for by this Warrant, which new Warrant shall in all
      other
      respects be identical with this Warrant. 

     

    (b) Cashless
      Exercise. 
      Notwithstanding the foregoing, the Holder may, at its option, elect to exercise
      this Warrant, in whole or in part and at any time or from time to time, on
      a
      cashless basis, by surrendering this Warrant, with the purchase form appended
      hereto as Exhibit I duly executed by or on behalf of the Holder, at the
      principal office of the Company, or at such other office or agency as the
      Company may designate, by canceling a portion of this Warrant in payment of
      the
      Exercise Price payable in respect of the number of Warrant Shares purchased
      upon
      such exercise.  In the event of an exercise pursuant to this subsection
      1(b), the number of Warrant Shares issued to the Holder shall be determined
      according to the following formula:  

     

    X
      =
Y(A-B)

    A

     

    Where: 
      X =
               
the number of Warrant Shares that shall be issued to the Holder; 

     

    
      	
            	Y
              =	
              the
                number of Warrant Shares for which this Warrant is being exercised
                (which
                shall include both the number of Warrant Shares issued to the Holder
                and
                the number of Warrant Shares subject to the portion of the Warrant
                being
                cancelled in payment of the Exercise Price);

            

    

     

    
      	
            	A
              =	
              the
                Fair Market Value of one share of Common Stock;
                and

            

    

     

    
      	
            	B
              =	
              the
                Exercise Price then in effect.

            

    

     

    The
      Fair
      Market Value per share of Common Stock shall be determined as
      follows:

     

    If
      the
      Common Stock is listed on a national securities exchange, the OTC Bulletin
      Board
      or another nationally recognized trading system as of the Exercise Date, the
      Fair Market Value per share of Common

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    Stock
      shall be deemed to be the average of the high and low reported sale prices
      per
      share of Common Stock thereon on the trading day immediately preceding the
      Exercise Date.

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    
      	4.	
              Redemption
                of Warrants.
                

            

    

     

    
      	
            	(a)	
              Procedures.
                Commencing at the close of business on July
                24, 2007
                the Company may, subject to the conditions set forth herein, redeem
                all,
                but not less than all, of this Warrant at a redemption price of $.10
                for
                each Warrant Share the Holder is entitled to purchase hereunder upon
                not
                less than thirty (30) days prior written notice (the “Redemption Notice”)
                to the Holder, provided that the average closing price of the Common
                Stock
                for the twenty (20) consecutive trading days ending three (3) days
                prior
                to the date of the Redemption Notice is at least $5.00, subject to
                adjustment for stock dividends, stock splits and other anti-dilution
                provisions as provided for in Section 12 of this Warrant. For purposes
                of
                this Section 4, “closing price” at any date shall be deemed to be: (i) the
                last sale price regular way as reported on the principal national
                securities exchange on which the Common Stock is listed or admitted
                to
                trading, or (ii) if the Common Stock is not listed or admitted to
                trading
                on any national securities exchange, the average of the closing bid
                and
                asked prices regular way for the Common Stock as reported by the
                Nasdaq
                National Market or Nasdaq SmallCap Market of the Nasdaq Stock Market,
                Inc.
                (“Nasdaq”) or (iii) if the Common Stock is not listed or admitted for
                trading on any national securities exchange, and is not reported
                by
                Nasdaq, the average of the closing bid and asked prices, as reported
                on
                the OTC Bulletin Board or if no such quotation is available, then
                the
                closing bid and asked prices in the over-the-counter market as furnished
                by the National Quotation Bureau, Inc., or if no such quotation is
                available, the fair market value of the Common Stock as determined
                in good
                faith by the Board of Directors of the Company. The Redemption Notice
                shall be deemed effective upon mailing and the time of mailing is
                the
                “Effective Date of the Notice.” The Redemption Notice shall state the
                redemption date not less than thirty (30) days from the Effective
                Date of
                the Notice (the “Redemption Date”). No Redemption Notice shall be mailed
                unless all funds necessary to pay for redemption of this Warrant
                shall
                have first been set aside by the Company so as to be and continue
                to be
                available therefor. The redemption price to be paid to the Holder
                will be
                $.10 for each Warrant Share to which the Holder would then be entitled
                upon exercise of this Warrant being redeemed, as adjusted from time
                to
                time as provided herein (the “Redemption Price”). In the event the number
                of shares of Common Stock issuable upon exercise of this Warrant
                being
                redeemed are adjusted pursuant to Section 12 hereof, then upon each
                such
                adjustment the Redemption Price will be adjusted by multiplying the
                Redemption Price in effect immediately prior to such adjustment by
                a
                fraction, the numerator of which is the number of shares of Common
                Stock
                issuable upon exercise of this Warrant being redeemed immediately
                prior to
                such adjustment and the denominator of which is the number of shares
                of
                Common Stock issuable upon exercise of this Warrant being redeemed
                immediately after such adjustment. The Holder may exercise this Warrant
                between the Effective Date of the Notice and the Redemption Date,
                such
                exercise being effective if done in accordance with Section 3 hereof,
                and
                if this Warrant, with the form of election to purchase duly executed, and
                the Exercise Price are actually received by the Company at its office
                located at 3505 Koger Boulevard, Suite 400 Duluth, GA 30096, no later
                than
                5:00 PM Atlanta, Georgia time on the Redemption Date. Notwithstanding
                the
                foregoing, following the Holder’s receipt of the Redemption Notice, the
                Holder may exercise this Warrant, without regard for the redemption
                rights
                provided to the Company hereunder. To the extent that the Holder
                elects to
                exercise the Warrant following receipt of the Redemption Notice,
                the
                Company shall not have the right to then redeem the Warrant
                Shares.

            

    

     

    
      	
            	(b)	
              Return
                of Warrant.
                If
                Holder does not wish to exercise this Warrant, the Holder should
                mail this
                Warrant to the Company at its office located at 3505 Koger Boulevard,
                Suite 400 Duluth, GA 30096 after receiving the Redemption Notice
                required
                by this Section. If the Redemption Notice shall have been so mailed,
                and
                if on or before the Effective Date of the Notice all funds necessary
                to
                pay for redemption of this Warrant shall have been set aside by the
                Company for the benefit of the Holder so as to be and continue to
                be
                available therefor, then, on and after such Redemption Date,
                notwithstanding that this Warrant subject to redemption shall not
                have
                been

            

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    surrendered
      for redemption, the obligation evidenced by this Warrant not so surrendered
      for
      redemption or effectively exercised shall be deemed no longer outstanding,
      and
      all rights with respect hereto shall forthwith cease and terminate, except
      only
      the right of the Holder to receive the Redemption Price for each share of Common
      Stock to which the Holder would be entitled if the Holder exercised this Warrant
      upon receiving the Redemption Notice of this Warrant. 

     

    
      	5.	
              No
                Fractional Shares or Scrip.
                No fractional shares or scrip representing fractional shares shall
                be
                issued upon the exercise of this Warrant. As to any fraction of a
                share
                which Holder would otherwise be entitled to purchase upon such exercise,
                the Company shall pay a cash adjustment in respect of such final
                fraction
                in an amount equal to the Exercise
                Price.

            

    

     

    
      	6.	
              Charges,
                Taxes and Expenses.
                Issuance of certificates for shares of Common Stock upon the exercise
                of
                this Warrant shall be made without charge to the holder hereof for
                any
                issue or Federal or State transfer tax or other incidental expense
                in
                respect of the issuance of such certificate, all of which taxes and
                expenses shall be paid by the Company, and such certificates shall
                be
                issued in the name of the holder of this Warrant or in such name
                or names
                as may be directed by the holder of this Warrant; provided, however,
                that
                in the event certificates for shares of Common Stock are to be issued
                in a
                name other than the name of the holder of this Warrant, this Warrant
                when
                surrendered for exercise shall be accompanied by the Assignment Form
                attached hereto duly executed by the holder hereof; and the Company
                may
                require, as a condition thereto, the payment of a sum sufficient
                to
                reimburse it for any transfer tax incidental
                thereto.

            

    

     

    
      	7.	
              Closing
                of Books.
                The Company will not close its stockholder books or records in any
                manner
                which prevents the timely exercise of this
                Warrant.

            

    

     

    
      	8.	
              Transfer,
                Division and Combination.
                

            

    

     

    
      	
            	(a)	
              the
                Holder (and its transferees and assigns), by acceptance of this Warrant,
                covenants and agrees that it is acquiring the Warrants evidenced
                hereby,
                and, upon exercise hereof, the Warrant Shares, for its own account
                as an
                investment and not with a view to the resale or distribution thereof.
                The
                Warrant Shares have not been registered under the Securities Act
                or any
                state securities laws and, prior to any such registration, no transfer
                of
                any Warrant Shares shall be permitted unless the Company has received
                notice of such transfer, at the address of its principal office set
                forth
                in the Exchange Agreement, in the form of assignment attached hereto,
                accompanied by an opinion of counsel reasonably satisfactory to the
                Company that an exemption from registration of such Warrants or Warrant
                Shares under the Securities Act is available for such transfer, except
                that no such opinion or notice shall be required after the registration
                for resale by the Holder of the Warrant Shares, as contemplated by
                the
                Consulting Agreement. Upon any exercise of the Warrants, certificates
                representing the Warrant Shares shall bear a restrictive legend
                substantially identical to that set forth on the face of this Warrant
                certificate. Any purported transfer of any Warrant or Warrant Shares
                not
                in compliance with the provisions of this section shall be null and
                void.

            

    

     

    
      	
            	(b)	
              This
                Warrant may be divided or combined with other Warrants upon presentation
                hereof at the aforesaid office of the Company, together with a written
                notice specifying the names and denominations in which new Warrants
                are to
                be issued, signed by Holder or its agent or attorney. Subject to
                compliance with Section 8(a), as to any transfer which may be involved
                in
                such division or combination, the Company shall execute and deliver
                a new
                Warrant or Warrants in exchange for the Warrant or Warrants to be
                divided
                or combined in accordance with such
                notice.

            

    

     

    
      	
            	(c)	
              The
                Company shall prepare, issue and deliver at its own expense (other
                than
                transfer taxes) the new Warrant or Warrants under this Section
                8.

            

    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    
      	
            	(d)	
              The
                Company agrees to maintain, at its aforesaid office or the office
                of its
                transfer or registration agent, books for the registration and the
                registration of transfer of the
                Warrants.

            

    

     

    
      	9.	
              No
                Rights as Stockholder until Exercise.
                This Warrant does not entitle the holder hereof to any voting rights
                or
                other rights as a shareholder of the Company prior to the exercise
                hereof.
                Upon the surrender of this Warrant and the payment of the aggregate
                Exercise Price, the Warrant Shares so purchased shall be and be deemed
                to
                be issued to such holder as the record owner of such shares as of
                the
                close of business on the later of the date of such surrender or payment.
                

            

    

     

    
      	10.	
              Loss,
                Theft, Destruction or Mutilation of Warrant.
                The Company covenants that upon receipt by the Company of evidence
                reasonably satisfactory to it of the loss, theft, destruction or
                mutilation of this Warrant certificate or any stock certificate relating
                to the Warrant Shares, and in case of loss, theft or destruction,
                of
                indemnity or security reasonably satisfactory to it (which shall
                not
                exceed that customarily charged by the Company’s transfer agent), and upon
                surrender and cancellation of such Warrant or stock certificate,
                if
                mutilated, the Company will make and deliver a new Warrant or stock
                certificate of like tenor and dated as of such cancellation, in lieu
                of
                such Warrant or stock certificate.

            

    

     

    
      	11.	
              Saturdays,
                Sundays, Holidays, etc.
                If the last or appointed day for the taking of any action or the
                expiration of any right required or granted herein shall be a Saturday,
                Sunday or a legal holiday, then such action may be taken or such
                right may
                be exercised on the next succeeding day not a Saturday, Sunday or
                legal
                holiday.

            

    

     

    
      	12.	
              Adjustments
                of Exercise Price and Number of Warrant Shares.
                

            

    

     

    
      	
            	(a)	
              Stock
                Splits, etc.
                The number and kind of securities purchasable upon the exercise of
                this
                Warrant and the Exercise Price shall be subject to adjustment from
                time to
                time upon the happening of any of the following. In case the Company
                shall
                (i) pay a dividend in shares of Common Stock or make a distribution
                in
                shares of Common Stock to holders of its outstanding Common Stock,
                (ii)
                subdivide its outstanding shares of Common Stock into a greater number
                of
                shares of Common Stock, (iii) combine its outstanding shares of Common
                Stock into a smaller number of shares of Common Stock or (iv) issue
                any
                shares of its capital stock in a reclassification of the Common Stock,
                then the number of Warrant Shares purchasable upon exercise of this
                Warrant immediately prior thereto shall be adjusted so that the holder
                of
                this Warrant shall be entitled to receive the kind and number of
                Warrant
                Shares or other securities of the Company which he would have been
                entitled to receive had such Warrant been exercised in advance thereof.
                Upon each such adjustment of the kind and number of Warrant Shares
                or
                other securities of the Company which are purchasable hereunder,
                the
                holder of this Warrant shall thereafter be entitled to purchase the
                number
                of Warrant Shares or other securities resulting from such adjustment
                at an
                Exercise Price per Warrant Share or other security obtained by multiplying
                the Exercise Price in effect immediately prior to such adjustment
                by the
                number of Warrant Shares purchasable pursuant hereto immediately
                prior to
                such adjustment and dividing by the number of Warrant Shares or other
                securities of the Company resulting from such adjustment. An adjustment
                made pursuant to this paragraph shall become effective immediately
                after
                the effective date of such event retroactive to the record date,
                if any,
                for such event.

            

    

     

    
      	
            	(b)	
              Reorganization,
                Reclassification, Merger, Consolidation or Disposition of
                Assets.
                In case the Company shall reorganize its capital, reclassify its
                capital
                stock (other than a change in nominal value to no nominal value,
                or from
                no nominal value to nominal value, or as a result of a subdivision,
                combination or other event described in paragraph (a) of this Section),
                consolidate or merge with or into another corporation (where the
                Company
                is not the surviving corporation or where there is a change in or
                distribution with respect to the Common Stock of the Company), or
                sell,
                transfer or otherwise dispose of all or substantially all its property,
                assets or business to another corporation and, pursuant to the terms
                of
                such reorganization, reclassification,
                merger,

            

    

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    consolidation
      or disposition of assets, shares of common stock of the successor or acquiring
      corporation, or any cash, shares of stock or other securities or property of
      any
      nature whatsoever (including warrants or other subscription or purchase rights)
      in addition to or in lieu of common stock of the successor or acquiring
      corporation ("Other Property"), are to be received by or distributed to the
      holders of Common Stock of the Company, then Holder shall have the right
      thereafter to receive, upon exercise of this Warrant, the number of shares
      of
      common stock of the successor or acquiring corporation or of the Company, if
      it
      is the surviving corporation, and Other Property receivable upon or as a result
      of such reorganization, reclassification, merger, consolidation or disposition
      of assets by a holder of the number of shares of Common Stock for which this
      Warrant is exercisable immediately prior to such event. In case of any such
      reorganization, reclassification, merger, consolidation or disposition of
      assets, the successor or acquiring corporation (if other than the Company)
      shall
      expressly assume the due and punctual observance and performance of each and
      every covenant and condition of this Warrant to be performed and observed by
      the
      Company and all the obligations and liabilities hereunder, subject to such
      modifications as may be deemed appropriate (as determined in good faith by
      resolution of the Board of Directors of the Company) in order to provide for
      adjustments of shares of Common Stock for which this Warrant is exercisable
      which shall be as nearly equivalent as practicable to the adjustments provided
      for in this Section 12. For purposes of this Section 12, "common stock of the
      successor or acquiring corporation" shall include stock of such corporation
      of
      any class which is not preferred as to dividends or assets over any other class
      of stock of such corporation and which is not subject to redemption and shall
      also include any evidences of indebtedness, shares of stock or other securities
      which are convertible into or exchangeable for any such stock, either
      immediately or upon the arrival of a specified date or the happening of a
      specified event and any warrants or other rights to subscribe for or purchase
      any such stock. The foregoing provisions of this Section 12 shall similarly
      apply to successive reorganizations, reclassifications, mergers, consolidations
      or disposition of assets.

     

    
      	13.	
              Voluntary
                Adjustment by the Company.
                The Company may at any time during the term of this Warrant, reduce
                the
                then current Exercise Price to any amount and for any period of time
                deemed appropriate by the Board of Directors of the
                Company.

            

    

     

    
      	14.	
              Notice
                of Adjustment.
                Whenever the number of Warrant Shares or number or kind of securities
                or
                other property purchasable upon the exercise of this Warrant or the
                Exercise Price is adjusted, as herein provided, the Company shall
                promptly
                mail by registered or certified mail, return receipt requested, to
                the
                holder of this Warrant notice of such adjustment or adjustments setting
                forth the number of Warrant Shares (and other securities or property)
                purchasable upon the exercise of this Warrant and the Exercise Price
                of
                such Warrant Shares (and other securities or property) after such
                adjustment, setting forth a brief statement of the facts requiring
                such
                adjustment and setting forth the computation by which such adjustment
                was
                made. Such notice, in the absence of manifest error, shall be conclusive
                evidence of the correctness of such
                adjustment.

            

    

     

    
      	15.	
              Notice
                of Corporate Action.
                If at any time:

            

    

     

    
      	
            	(a)	
              the
                Company shall take a record of the holders of its Common Stock for
                the
                purpose of entitling them to receive a dividend or other distribution,
                or
                any right to subscribe for or purchase any evidences of its indebtedness,
                any shares of stock of any class or any other securities or property,
                or
                to receive any other right, or

            

    

     

    
      	
            	(b)	
              there
                shall be any capital reorganization of the Company, any reclassification
                or recapitalization of the capital stock of the Company or any
                consolidation with or merger of the Company into, or any sale, transfer
                or
                other disposition of all or substantially all the property, assets
                or
                business of the Company to, another corporation
                or,

            

    

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    
      	
            	(c)	
              there
                shall be a voluntary or involuntary dissolution, liquidation or winding
                up
                of the Company;

            

    

     

    then,
      in
      any one or more of such cases, the Company shall give to Holder (i) at least
      10
      days’ prior written notice of any record date for such dividend, distribution or
      right or for determining rights to vote in respect of any such reorganization,
      reclassification, merger, consolidation, sale, transfer, disposition,
      liquidation or winding up, and (ii) in the case of any such reorganization,
      reclassification, merger, consolidation, sale, transfer, disposition,
      dissolution, liquidation or winding up, at least 10 days’ prior written notice
      of the date when the same shall take place. Such notice in accordance with
      the
      foregoing clause also shall specify (i) the date on which any such record is
      to
      be taken for the purpose of such dividend, distribution or right, the date
      on
      which the holders of Common Stock shall be entitled to any such dividend,
      distribution or right, and the amount and character thereof, and (ii) the date
      on which any such reorganization, reclassification, merger, consolidation,
      sale,
      transfer, disposition, dissolution, liquidation or winding up is to take place
      and the time, if any such time is to be fixed, as of which the holders of Common
      Stock shall be entitled to exchange their shares of Common Stock for securities
      or other property deliverable upon such disposition, dissolution, liquidation
      or
      winding up. Each such written notice shall be sufficiently given if addressed
      to
      Holder at the last address of Holder appearing on the books of the Company
      and
      delivered in accordance with Section 17(d).

     

    
      	16.	
              Authorized
                Shares.
                The Company covenants that during the period the Warrant is outstanding,
                it will reserve from its authorized and unissued Common Stock a sufficient
                number of shares to provide for the issuance of the Warrant Shares
                upon
                the exercise of any purchase rights under this Warrant. The Company
                further covenants that its issuance of this Warrant shall constitute
                full
                authority to its officers who are charged with the duty of executing
                stock
                certificates to execute and issue the necessary certificates for
                the
                Warrant Shares upon the exercise of the purchase rights under this
                Warrant. The Company will take all such reasonable action as may
                be
                necessary to assure that such Warrant Shares may be issued as provided
                herein without violation of any applicable law or regulation, or
                of any
                requirements of the Principal Market upon which the Common Stock
                may be
                listed. 

            

    

     

    The
      Company shall not by any action, including, without limitation, amending its
      certificate of incorporation or through any reorganization, transfer of assets,
      consolidation, merger, dissolution, issue or sale of securities or any other
      voluntary action, avoid or seek to avoid the observance or performance of any
      of
      the terms of this Warrant, but will at all times in good faith assist in the
      carrying out of all such terms and in the taking of all such actions as may
      be
      necessary or appropriate to protect the rights of Holder against impairment.
      Without limiting the generality of the foregoing, the Company will (a) not
      increase the par value of any shares of Common Stock receivable upon the
      exercise of this Warrant above the amount payable therefor upon such exercise
      immediately prior to such increase in par value, (b) take all such action as
      may
      be necessary or appropriate in order that the Company may validly and legally
      issue fully paid and nonassessable shares of Common Stock upon the exercise
      of
      this Warrant, and (c) use its best efforts to obtain all such authorizations,
      exemptions or consents from any public regulatory body having jurisdiction
      thereof as may be necessary to enable the Company to perform its obligations
      under this Warrant.

     

    Before
      taking any action which would result in an adjustment in the number of shares
      of
      Common Stock for which this Warrant is exercisable or in the Exercise Price,
      the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    
      	17.	
              Miscellaneous.

            

    

     

    
      	
            	(a)	
              Jurisdiction.
                This Warrant shall be binding upon any successors or assigns of the
                Company. This Warrant shall constitute a contract under the laws
                of
                Delaware without regard to its
                conflict

            

    

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    of
      law,
      principles or rules, and be subject to arbitration pursuant to the terms set
      forth in the Exchange Agreement.

     

    
      	
            	(b)	
              Restrictions.
                The holder hereof acknowledges that the Warrant Shares acquired upon
                the
                exercise of this Warrant, if not registered, will have restrictions
                upon
                resale imposed by state and federal securities
                laws.

            

    

     

    
      	
            	(c)	
              Nonwaiver
                and Expenses.
                No course of dealing or any delay or failure to exercise any right
                hereunder on the part of the Holder shall operate as a waiver of
                such
                right or otherwise prejudice Holder’s rights, powers or remedies, except
                that all rights hereunder terminate on the Termination Date. If the
                Company fails to comply with any provision of this Warrant, the Company
                shall pay to the Holder such amounts as shall be sufficient to cover
                any
                costs and expenses including, but not limited to, reasonable attorneys’
                fees, including those of appellate proceedings, incurred by the Holder
                in
                collecting any amounts due pursuant hereto or in otherwise enforcing
                any
                of its rights, powers or remedies
                hereunder.

            

    

     

    
      	
            	(d)	
              Notices.
                Any notice, request or other document required or permitted to be
                given or
                delivered to the holder hereof by the Company shall be delivered
                in
                accordance with the notice provisions of the Exchange
                Agreement.

            

    

     

    
      	
            	(e)	
              Limitation
                of Liability.
                No provision hereof, in the absence of affirmative action by Holder
                to
                purchase shares of Common Stock, and no enumeration herein of the
                rights
                or privileges of Holder hereof, shall give rise to any liability
                of the
                Holder for the purchase price of any Common Stock or as a stockholder
                of
                the Company, whether such liability is asserted by the Company or
                by
                creditors of the Company.

            

    

     

    
      	
            	(f)	
              Remedies.
                The Holder, in addition to being entitled to exercise all rights
                granted
                by law, including recovery of damages, will be entitled to specific
                performance of its rights under this Warrant. The Company agrees
                that
                monetary damages would not be adequate compensation for any loss
                incurred
                by reason of a breach by it of the provisions of this Warrant and
                hereby
                agrees to waive the defense in any action for specific performance
                that a
                remedy at law would be adequate.

            

    

     

    
      	
            	(g)	
              Successors
                and Assigns.
                Subject to applicable securities laws, this Warrant and the rights
                and
                obligations evidenced hereby shall inure to the benefit of and be
                binding
                upon the successors of the Company and the successors and permitted
                assigns of the Holder. The provisions of this Warrant are intended
                to be
                for the benefit of all Holders from time to time of this Warrant
                and shall
                be enforceable by any such Holder or holder of Warrant
                Shares.

            

    

     

    
      	
            	(h)	
              Amendment.
                This Warrant may be modified or amended or the provisions hereof
                waived
                only with the written consent of the Company and the
                Holder.

            

    

     

    
      	
            	(i)	
              Severability.
                Wherever possible, each provision of this Warrant shall be interpreted
                in
                such manner as to be effective and valid under applicable law, but
                if any
                provision of this Warrant shall be prohibited by or invalid under
                applicable law, such provision shall be ineffective to the extent
                of such
                prohibition or invalidity, without invalidating the remainder of
                such
                provisions or the remaining provisions of this
                Warrant.

            

    

     

    
      	 	
              (j)

            	
              Headings.
                The headings used in this Warrant are for the convenience of reference
                only and shall not, for any purpose, be deemed a part of this
                Warrant.

            

    

     

     

    [Signature
      Page Follows]

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized.

     

     

    Dated:
      July
      24,
      2006

     

     

    SMARTVIDEO
      TECHNOLOGIES, INC.

     

     

    By: /s/
      Ronald A.
      Warren                             
 

          
      Ronald A. Warren

          
      Title: Secretary of the Corporation 

     

    

     

    Corporate
      Seal

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    NOTICE
      OF EXERCISE

     

    To: SmartVideo
      Technologies, Inc.

     

    
      	1.	
              The
                undersigned hereby elects to purchase ________ shares of Common Stock
                (the
                "Common Stock"), of SmartVideo Technologies, Inc. pursuant
                to the terms of the attached Warrant, and tenders herewith payment
                of the
                exercise price in full, together with all applicable transfer taxes,
                if
                any.

            

    

     

    
      	2.	
              Please
                issue a certificate or certificates representing said shares of Common
                Stock in the name of the undersigned or in such other name as is
                specified
                below:

            

    

     

    James Morrison

    2205
      Crestline Falls Place

    Las
      Vegas,
      NV 89134

     

    Dated:
      _______________,
      ____

     

     

    Authorized
      Holder's Signature:_________________________________________

     

    

    Holder's
      Name:

     

    Holder's
      Address:

    James Morrison

    2205
      Crestline Falls Place

    Las
      Vegas,
      NV 89134

    

    Social
      Security, Employer or Other Tax Identification

    Number
      of
      Holder: 

     

     

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in an fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    ASSIGNMENT
      FORM

     

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

     

     

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      

     

     

    assigned
      to_________________________________________________________________________

     

     

    whose
      address
      is_____________________________________________________________________

     

     

    .

    Dated:
      ______________,
      ____

     

    

    Authorized
      Holder's Signature:__________________________________

    

    Holder's
      Name:

    

    Holder's
      Address:

    James Morrison

    2205
      Crestline Falls Place

    Las
      Vegas,
      NV 89134

    

    Social
      Security, Employer or 

    Other
      Tax
      Identification Number of Holder: 

     

     

    Signature
      Guaranteed:____________________________________________________

     

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in an fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

    
      
        
        

      

      -12-

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