Document:

EXHIBIT
10.8

 

Subscription
AGREEMENT

 

 

THIS
SUBSCRIPTION AGREEMENT (“Agreement”) is made and entered into as of this
31st day of
December 2004, by and between SmartVideo Technologies, Inc., (the “Company”), a
Delaware corporation, and ________________ (the “Purchaser”).

 

Background

 

The
Company has authorized the issuance, sale, and delivery to Accredited Investors
only of _______ units consisting of two (2) shares of common stock, par value
$0.001 (the “Shares”), of the Company and one (1) Common Stock Purchase Warrant.
The minimum investment is $50,000 although
subscriptions for less than that amount may be sold at the discretion of the
Company. The proceeds from the sale of the Shares will be used for Company
operations. The Purchaser will receive one (1) Warrant (the “Warrant”) to
purchase additional Shares of Common Stock, par value $0.001. The Warrant shall
have an exercise price of $3.50 per Share. The form of Warrant is attached
hereto as Exhibit “A”. (The Units, the Warrants, and the Warrant Shares
underlying the Warrants are hereinafter sometimes collectively referred to as
the “Securities”). The Company and Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Section 4(2) and/or Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “1933 Act”).

 

Agreement

 

For and
in consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Purchaser hereby agree as
follows:

 

Section
1    Sale
of Securities.

 

Section
1.1   Authorization,
Issuance, and Sale. The
Company agrees to issue, sell and deliver to Purchaser and Purchaser agrees to
purchase from the Company the number of Units set forth adjacent to the caption
“Securities Purchased” on the signature page to this Agreement at a purchase
price of Four Dollars and Fifty Cents ($4.50) per Unit (the “Purchase Price”)
for an aggregate amount of $_________. In addition, the Purchaser shall receive
a Common Stock Purchase Warrant to purchase ________ additional Shares at an
exercise price of $3.50 per Share of Common Stock, par value $0.001 purchased
pursuant to this Agreement. 

 

Section
1.2   Form
of Payment. Tender
of the aforesaid Funds, together with this Agreement shall be made by delivery
of same to the Company at SmartVideo Technologies, Inc., 1650 Oakbrook Drive,
Suite 405, Norcross, Georgia 30093 to the attention of Richard E. Bennett, Jr.,
CEO. Purchaser shall pay the Purchase Price for the Securities to be issued and
sold to Purchaser by a wire transfer, check, certified check or cashiers check
payable to SmartVideo Technologies, Inc. Wire transfers shall be in the form of
immediately available funds to an account designated in writing by the Company.
It is contemplated that the initial acceptance of the agreement shall occur
through the exchange of signature pages delivered via facsimile and the wire
transfer of the Purchase Price with originally signed documents to follow by
overnight delivery.

 

Section
1.3   Acceptance
of Agreement. The
Company shall have the right to accept or reject this Agreement, in whole or in
part, in its sole discretion. In the event that the Agreement is not accepted by
the Company, all Funds shall be returned to the undersigned without interest and
without deducting any of the expenses of the offering. 

 

Section
2    Purchaser’s
Representations and Warranties. 

 

As an
inducement to the Company to make an offer to the undersigned, the undersigned
hereby represents and warrants to the Company as follows:

 

	1.  	
      The
      undersigned is an “Accredited Investor” within the meaning of Rule 501(a),
      promulgated under the Securities Act of 1933 as amended (the “Securities
      Act”), and, together with his financial advisors, if any, have such
      knowledge and expertise in financial and business matters as to be capable
      of evaluating the merits and risks involved in an investment in the
      Shares.

 

	2.  	
      The
      address set forth at the end of this Agreement is the undersigned’s true
      and correct address, and he has no present intention of becoming a
      resident of any other state or jurisdiction.

 

	3.  	
      The
      undersigned has received and read or reviewed, and is familiar with the
      terms and conditions and other information set forth in this Agreement,
      and he confirms that all documents, records and books pertaining to the
      investment in the Company and requested by him, have been provided to the
      undersigned.

 

	4.  	
      The
      undersigned has had an opportunity to ask of the Company, or a person or
      persons acting on its behalf, any and all relevant questions of and
      receive answers from the Company in connection with any aspect of the
      Company and the terms and conditions of this investment, and has received
      answers which the undersigned considers to be responsive to such
      questions.

 

	5.  	
      The
      undersigned understands that the Shares, the Warrants and the shares of
      the Company’s common stock to be issued upon exercise of the Warrants have
      not been registered under the Securities Act in reliance on an exemption
      for private offerings and he further understands that he is purchasing
      Securities without being furnished any offering literature or prospectus
      other than this Agreement.

 

	6.  	
      The
      Securities for which the undersigned hereby subscribes, including the
      shares of common stock underlying the Warrants, are being acquired, or in
      the case of the shares underlying the Warrants, will be acquired, solely
      for his own account for investment and are not being purchased with a view
      to or for the resale, distribution, transfer, fractionalization or other
      disposition thereof, and the undersigned has no present plans to enter
      into such contract, undertaking, agreement or
  arrangements.

	 	 

	7.   	(a) The
      undersigned acknowledges and is aware of the
following:

 

(i)   
That
there are substantial restrictions on the transferability of the Securities;
that other than as set forth in this Agreement, the Securities will not be, and
investors in the Company will have no rights to require that the Securities be,
registered under the Securities Act, except as set forth in the Registration
Rights Agreement attached hereto as Exhibit “C.”

-2-

(ii)   That
there never has been any representation, guarantee, or warranty made to the
undersigned by any broker, the Company, its officers, directors, agents
(including without limitation, the Agents), or employees or any other person,
expressly or by implication, as to:

	(a)  	
      The
      approximate or exact length of time that he will be required to remain as
      owner of the Securities.

	(b)  	
      The
      percentage of profits and/or amount of or type of consideration, profit or
      loss (including tax credits and/or benefits) to be realized, if any, as a
      result of this investment.

	(c)  	
      The
      past performance or experience on the part of the Company, its personnel,
      affiliates, agents, employees or of any other person, will in any way
      indicate the predictable results of the ownership of
      Securities.

(iii) 
That the
Company will rely on the offer to purchase being made by the undersigned hereby
and that, accordingly, this offer may not be canceled, rescinded or otherwise
revoked by the undersigned.

(b) 
The
Purchaser is making the foregoing representations and warranties with the intent
that they may be relied upon by the Company in determining the suitability of
the sale of the Securities to the Purchaser for purposes of Federal and State
securities laws.

 

	8.  
      	The Purchaser further acknowledges that the Purchaser has
      been advised that the Securities being purchased by the Purchaser
      hereunder have not been registered under the provisions of the Securities
      Act and that the Company has represented to the Purchaser (assuming the
      veracity of the representations of the Purchaser made herein) that the
      Shares have been offered and sold by the Company in reliance upon an
      exemption from registration provided in Section 4(2) of the Securities Act
      and Regulation D thereunder.

	 	 

	9.  	
      In
      entering into this Agreement and in purchasing the Securities, the
      Purchaser further acknowledges that:

(a)  
The
Company has informed the Purchaser that the Securities have not been offered for
sale by means of general advertising or solicitation.

 

(b)  
The
Securities and the shares of common stock underlying the Warrants may not be
resold by the Purchaser in absence of registration under the Securities Act or
exemption from registration. In particular, the undersigned is aware that the
Securities and the shares of common stock underlying the Warrants will be
“restricted securities,” as such term is defined in Rule 144 promulgated under
the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144
until the conditions thereof are met.

 

(c)  
The
following legend shall be placed on the Certificate(s) evidencing the
Securities:

-3-

THE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.

(d) 
The
Company may place a stop transfer order on its transfer books against the
Securities. Such stop order will be removed, and further transfer of the
Securities will be permitted upon an effective registration of the respective
Securities, or the receipt by the Company of an opinion of counsel satisfactory
to the Company that such further transfer may be effected pursuant to an
applicable exemption from registration.

 

(e)  The
purchase of the Securities involves risks which the Purchaser has evaluated, and
the Purchaser is able to bear the economic risk of the purchase of such
securities and the loss of its entire investment.

 

	    10.  
      	The
      undersigned has completed the Investor Questionnaire attached hereto as
      Exhibit “D” and has delivered it herewith and represents and warrants that
      it is accurate and true in all respects and that it accurately and
      completely sets forth the financial condition of the undersigned on the
      date hereof. The undersigned has no reason to expect there will be any
      material adverse change in his financial
condition.

 

	    11.  
      	The
      undersigned has reached the age of majority in the state in which the
      undersigned resides, has adequate means of providing for the undersigned's
      current needs and personal contingencies, is able to bear the substantial
      economic risks of an investment in the Securities for an indefinite period
      of time, has no need for liquidity in such investment, and the undersigned
      is prepared to lose his entire investment in the
Securities.

 

	    12.  
      	The
      undersigned's overall commitment to investments that are not readily
      marketable is not, and his acquisition of Securities will not cause such
      overall commitment to become, disproportionate to his net
  worth.

 

	    13.  
      	The
      Purchaser acknowledges that the Purchaser has made his own investigation
      concerning the business and affairs of the
Company.

 

	    14.  
      	The
      undersigned understands that the Company shall have the right to accept or
      reject this subscription in whole or in part. Unless this subscription is
      accepted in whole or in part by the Company, this subscription shall be
      deemed rejected in whole.

 

-4-

 

	    15.  
      	It
      never has been represented, guaranteed or warranted by the Company, or any
      of its officers, directors, stockholders, employees or agents, or any
      other persons, whether expressly or by implication,
that:

(i)   
the
Company or the undersigned will realize any given percentage of profits and/or
amount or type of consideration, profit or loss as a result of the Company's
activities or the undersigned's investment in the Company; or

 

(ii)   the past
performance or experience of the management of the Company, or of any other
person, will in any way indicate the predictable results of the ownership of the
Purchased Securities or of the Company's activities.

 

	    16.  
      	Purchaser
      is able to bear the economic risks of the investment in the Purchased
      Securities, including the risk of a complete loss of Purchaser's
      investment therein.

 

	    17.  
      	Purchaser
      understands and agrees that the Securities will be issued and sold to
      Purchaser without registration under any state law relating to the
      registration of securities for sale, and will be issued and sold in
      reliance on the exemptions from registration under the Securities Act of
      1933 (the “1933 Act“) provided by Sections 3(b) and/or 4(2) thereof and
      the rules and regulations promulgated thereunder.

 

	    18.  
      	The
      Securities cannot be offered for sale, sold, or transferred by Purchaser
      other than pursuant to: (A) an effective registration under the 1933 Act
      or in a transaction otherwise in compliance with the 1933 Act; and (B)
      evidence satisfactory to the Company of compliance with the applicable
      securities laws of other jurisdictions. The Company shall be entitled to
      rely upon an opinion of counsel satisfactory to it with respect to
      compliance with the above laws.

 

	    19.  
      	Purchaser
      has had the opportunity to ask questions of and receive answers from the
      Company and any person acting on its behalf, and to obtain all material
      information reasonably available with respect to the Company and its
      affairs, and has received satisfactory answers to all such questions and
      received all documents and other information requested of the Company.
      

 

	    20.  
      	Purchaser
      has full power and authority to execute, deliver, and perform this
      Agreement without the consent or approval of any other person which has
      not been obtained on or prior to the date hereof.

 

	    21.  
      	This
      Agreement is the legal, binding, and valid obligation of Purchaser,
      enforceable against Purchaser in accordance with its
terms.

 

	    22.  
      	The
      information concerning Purchaser on the Investor Questionnaire, the form
      of which is attached as Exhibit C hereto, is true and correct in all
      material respects. 

 

The
foregoing representations and warranties are true and accurate as of the date
hereof and shall be true and accurate as of the date of delivery of the Funds to
the Company and shall survive such delivery.

 

If in any
respect such representations and warranties shall not be true and accurate prior
to delivery of the Funds pursuant to Paragraph I hereof, the undersigned shall
give written notice of such fact to the Company, specifying which
representations and warranties are not true and accurate and the reasons
therefor.

 

-5-

Section
3    Representations
of the Company

 

The
Company hereby represents and warrants to Purchaser as follows:

 

Section
3.1   Organization,
Standing, Power, and Authority. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. The Company has all requisite power and
authority to own, lease, and operate all properties and assets to be owned or
leased by it, and to conduct the business proposed to be conducted by it.

 

Section
3.2   Validity
and Authorization. The
execution, delivery and performance of this Agreement by the Company is a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, moratorium, reorganization or other similar laws and
legal and equitable principles limiting or affecting the rights of creditors
generally and/or (b) general principles of equity, regardless of whether
considered in a proceeding in equity or at law. 

 

Section
4.    General
Provisions

 

Section
4.1   Governing
Laws. This
Agreement shall be construed, administered, and enforced according to the laws
of the State of Delaware. The parties hereto agree that any appropriate state
court located in Fulton County, Georgia, or any Federal Court sitting in the
Northern District of Georgia, Atlanta Division, shall have exclusive
jurisdiction of any case or controversy arising under or in connection with this
Agreement and shall be a proper forum in which to adjudicate such case or
controversy.  The parties hereto consent to the jurisdiction of such
courts.

 

Section
4.2   Successors.
This
Agreement shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors, and permitted assigns of the parties. 

 

Section
4.3   Severability.
In the
event that any one or more of the provisions or portion thereof contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, the same shall not invalidate or otherwise affect
any other provisions of this Agreement, and this Agreement shall be construed as
if the invalid, illegal, or unenforceable provision or portion thereof had never
been contained herein.

 

Section
4.4   Entire
Agreement. This
Agreement expresses the entire understanding and agreement of the parties with
respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument.

 

Section
4.5   Headings.
Paragraph
headings used herein are for convenience of reference only and shall not be
considered in construing this Agreement.

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COMPANY
SIGNATURE PAGE

TO

 

SUBSCRIPTION
AGREEMENT

 

IN
WITNESS WHEREOF, the Company has caused this Subscription Agreement to be duly
executed as of the date first written above.

 

	 	 	 
	 	
      SMARTVIDEO
      TECHNOLOGIES, INC.

	 
 	 
 	 
 
		By:  	/s/ 
	 	
      

      Richard E. Bennett, Jr.
	 	President &
CEO

 

 

Corporate
Seal

 

 

 

 

[Signatures
of Purchaser on following pages.]

 

 

-7-

 

PURCHASER
SIGNATURE PAGE

TO

SUBSCRIPTION
AGREEMENT

 

IN
WITNESS WHEREOF, Purchaser has executed this Subscription Agreement as of this
____ day of December 2004.

 

	 	 	 
	 	PURCHASER:
      
	 
 	 
 	 
 
		By:  	/s/ 
	 	
      

      Purchaser Signature
	 	

 

	
       

       

       

      Purchaser’s
      Name, Address
and Facsimile Number 
	 
	
       

      Securities
      Purchased
	
       

      Units:
      

       

      A
      Unit Shall Consist of:

       

      Shares
      of Common Stock: 

       

      Warrant:

       

	
       

      Name
      in which Shares and
Warrants are to be
    registered:EXHIBIT
10.9

 

REGISTRATION
RIGHTS AGREEMENT

 

REGISTRATION
RIGHTS AGREEMENT (this
"Agreement"), dated
as of March 29, 2005, by and among SmartVideo Technologies, Inc., a Delaware
corporation, with headquarters located at 1650
Oakbrook Drive, Suite 405, Norcross, Georgia 30093 (the
"Company"), and
the investors listed on the Schedule of Buyers attached hereto (each, a
"Buyer" and
collectively, the "Buyers").

 

WHEREAS:

 

A.    In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the "Securities
Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell on the date hereof to each
Buyer (i) shares (the "Common
Shares") of the
Company's common stock, par value $0.001 per share (the "Common
Stock"), and
(ii) certain Warrants (the "Warrants") which
will be exercisable to purchase additional shares of Common Stock (as exercised,
the "Warrant
Shares") in
accordance with the terms of the Warrants.

 

B.    To induce
the Buyers to execute and deliver the Securities Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "1933
Act"), and
applicable state securities laws. 

 

NOW,
THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:

 

1.    Definitions.

 

As used
in this Agreement, the following terms shall have the following
meanings:

 

a.    "Business
Day" means
any day other than Saturday, Sunday or any other day on which commercial banks
in The City of New York are authorized or required by law to remain
closed.

 

b.    "Effective
Date" means
the date that the Registration Statement is first declared effective by the
SEC.

 

c.    "Investor" means a
Buyer, any transferee or assignee thereof to whom a Buyer assigns its rights
under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 and any transferee or assignee thereof to
whom a transferee or assignee assigns its rights under this Agreement and who
agrees to become bound by the provisions of this Agreement in accordance with
Section 9.

 

d.    "Person" means
an individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and governmental or any
department or agency thereof.

 

 

e.    "register,"
"registered," and
"registration" refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415, and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.

 

f.    "Registrable
Securities" means
(i) the Common Shares, (ii) the Warrant Shares issued or issuable upon exercise
of the Warrants and (iii) any shares of capital stock issued or issuable with
respect to the Common Shares, the Warrant Shares or the Warrants as a result of
any stock split, stock dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitations on exercise of the
Warrants.

 

g.    "Registration
Statement" means a
registration statement or registration statements of the Company filed under the
1933 Act covering the Registrable Securities.

 

h.    "Rule
415" means
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis.

 

i.    "SEC" means
the United States Securities and Exchange Commission.

 

Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement.

 

2.    Registration.

 

a.    Mandatory
Registration. The
Company shall prepare, and, as soon as practicable but in no event later than 45
days after the Closing Date (as defined in the Securities Purchase Agreement)
(the "Filing
Deadline"), file
with the SEC a Registration Statement on Form S-3 covering the resale of all of
the Registrable Securities. In the event that Form S-3 is unavailable for such a
registration (the Buyers acknowledge that such form is unavailable as of the
date hereof), the Company shall use such other form as is available for such a
registration, subject to the provisions of Section 2(c). The Registration
Statement prepared pursuant hereto shall register for resale at least 100% of
that number of shares of Common Stock equal to the number of Registrable
Securities as of the trading day immediately preceding the date the Registration
Statement is initially filed with the SEC, subject to adjustment as provided in
Section 2(d). The Company shall use its reasonable best efforts to have the
Registration Statement declared effective by the SEC as soon as practicable, but
in no event later than the date which is (i) in the event that the Registration
Statement is not subject to a full review by the SEC, 105 days after the Closing
Date, or (ii) in the event that the Registration Statement is subject to a full
review by the SEC, 135 days after the Closing Date (the "Effectiveness
Deadline").

 

b.    Allocation
of Registrable Securities. The
initial number of Registrable Securities included in any Registration Statement
and each increase in the number of Registrable Securities included therein shall
be allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement covering
such initial number of Registrable Securities or increase thereof is declared
effective by the SEC. In the event that an Investor sells or otherwise transfers
any of such Investor's Registrable Securities, each transferee shall be
allocated a pro rata portion of the then remaining number of Registrable
Securities included in such Registration Statement for such transferor. Any
shares of Common Stock included in a Registration Statement and which remain
allocated to any Person which ceases to hold any Registrable Securities covered
by such Registration Statement shall be allocated to the remaining Investors,
pro rata based on the number of Registrable Securities then held by such
Investors which are covered by such Registration Statement. In no event shall
the Company include any securities other than Registrable Securities on any
Registration Statement without the prior written consent of Buyers holding at
least a majority of the Registrable Securities.

 

-2-

 

c.    Ineligibility
for Form S-3. In the
event that Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale of
the Registrable Securities on Form SB-2, S-1 or another appropriate form
reasonably acceptable to the holders of at least a majority of the Registrable
Securities and (ii) undertake to register the Registrable Securities on Form S-3
as soon as such form is available, provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such time as a
Registration Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.

 

d.    Sufficient
Number of Shares Registered. In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or an
Investor's allocated portion of the Registrable Securities pursuant to Section
2(b), the Company shall amend the applicable Registration Statement, or file a
new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover at least 100% of the number of such
Registrable Securities as of the trading day immediately preceding the date of
the filing of such amendment or new Registration Statement, in each case, as
soon as practicable after the Company becomes aware of the necessity therefor.
The Company shall use its reasonable best efforts to cause such amendment and/or
new Registration Statement to become effective as soon as practicable following
the filing thereof. For purposes of the foregoing provision, the number of
shares available under a Registration Statement shall be deemed "insufficient to
cover all of the Registrable Securities" if at any time the number of shares of
Common Stock available for resale under such Registration Statement is less than
the number of Registrable Securities. The calculation set forth in the foregoing
sentence shall be made without regard to any limitations on the exercise of the
Warrants and such calculation shall assume that the Warrants are then
exercisable into shares of Common Stock.

 

e.    Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement. If (i)
a Registration Statement covering all the Registrable Securities required to be
covered thereby and required to be filed by the Company pursuant to this
Agreement is (A) not filed with the SEC on or before the Filing Deadline (a
"Filing
Failure") or (B)
not declared effective by the SEC on or before the Effectiveness Deadline (an
"Effectiveness
Failure") or (ii)
on any day after the Effective Date sales of all the Registrable Securities
required to be included on such Registration Statement cannot be made (other
than during an Allowable Grace Period (as defined in Section 3(r)) pursuant to
such Registration Statement or otherwise (including, without limitation, because
of a failure to keep such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement or to register sufficient shares of Common Stock or to maintain the
listing of the Common Stock)(a "Maintenance
Failure"), then,
as partial relief for the damages to any holder by reason of any such delay in
or reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Registrable Securities relating
to such Registration Statement: (I) on each of the day of a Filing Failure, an
Effectiveness Failure and the initial day of a Maintenance Failure, an amount in
cash equal to the product of (i) the aggregate Purchase Price (as such term is
defined in the Securities Purchase Agreement) of such Investor's Registrable
Securities included in such Registration Statement multiplied by (ii) 0.02, and
(II) on the earlier of last day of each 30 day period after a Filing Failure, an
Effectiveness Failure and the initial day of a Maintenance Failure, as the case
may be, or on the third Business Day after any such Filing Failure,
Effectiveness Failure or Maintenance Failure is cured, an amount in cash equal
to the product of (i) the aggregate Purchase Price of such Investor's
Registrable Securities included in such Registration Statement included in such
Registration Statement multiplied by (ii) 0.02. In the event the Company fails
to make any payments pursuant to this Section 2(e) in a timely manner, such
payments shall bear interest at the rate of 1.5% per month (prorated for partial
months) until paid in full.

 

-3-

 

3.    Related
Obligations.

 

At such
time as the Company is obligated to file a Registration Statement with the SEC
pursuant to Section 2(a) or 2(c), the Company will use its reasonable best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, pursuant thereto, the
Company shall have the following obligations:

 

a.    The
Company shall submit to the SEC, within five (5) Business Days after the Company
learns that no review of a particular Registration Statement will be made by the
staff of the SEC or that the staff of the SEC has no further comments on a
particular Registration Statement, as the case may be, a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than 48 hours after the submission of such request. The Company shall
keep each Registration Statement effective pursuant to Rule 415 at all times
until the earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated under the
1933 Act or (ii) the date on which the Investors shall have sold all the
Registrable Securities covered by such Registration Statement (the "Registration
Period"). The
Company shall ensure that each Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading.

 

b.    The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company filing a
report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the "1934
Act"), the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration
Statement.

 

-4-

c.    The
Company shall furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge, (i) promptly after the same is
prepared and filed with the SEC, at least one copy of such Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by an
Investor and not otherwise available on the EDGAR system, all exhibits and each
preliminary prospectus, (ii) upon the effectiveness of any Registration
Statement, ten (10) copies of the prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as such Investor may reasonably request) and (iii) such other documents,
including copies of any preliminary or final prospectus, as such Investor may
reasonably request from time to time in order to facilitate the disposition of
the Registrable Securities owned by such Investor.

 

e.    The
Company shall use its reasonable efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by Investors
of the Registrable Securities covered by a Registration Statement under such
other securities or "blue sky" laws of all applicable jurisdictions in the
United States, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify each Investor who holds Registrable Securities
of the receipt by the Company of any notification with respect to the suspension
of the registration or qualification of any of the Registrable Securities for
sale under the securities or "blue sky" laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

 

f.    The
Company shall notify each Investor in writing of the happening of any event, as
promptly as practicable after becoming aware of such event, as a result of which
the prospectus included in a Registration Statement, as then in effect, includes
an untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(provided that in no event shall such notice contain any material, nonpublic
information), and, subject to Section 3(r), promptly prepare a supplement or
amendment to such Registration Statement to correct such untrue statement or
omission, and deliver ten (10) copies of such supplement or amendment to each
Investor (or such other number of copies as such Investor may reasonably
request). The Company shall also promptly notify each Investor in writing (i)
when a prospectus or any prospectus supplement or post-effective amendment has
been filed, and when a Registration Statement or any post-effective amendment
has become effective (notification of such effectiveness shall be delivered to
each Investor by facsimile on the same day of such effectiveness and by
overnight mail), (ii) of any request by the SEC for amendments or supplements to
a Registration Statement or related prospectus or related information, and (iii)
of the Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.

 

-5-

 

g.    The
Company shall use its reasonable best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement, or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify each Investor who holds Registrable Securities being sold
of the issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such
purpose.

 

h.    The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

 

i.    The
Company shall use its reasonable best efforts either to (i) cause all the
Registrable Securities covered by a Registration Statement to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities covered by a
Registration Statement on the Nasdaq National Market, or (iii) if, despite the
Company's reasonable best efforts to satisfy the preceding clause (i) or (ii),
the Company is unsuccessful in satisfying the preceding clause (i) or (ii), to
secure the inclusion for quotation on The Nasdaq SmallCap Market for such
Registrable Securities and, without limiting the generality of the foregoing, to
use its reasonable best efforts to arrange for at least two market makers to
register with the National Association of Securities Dealers, Inc.
("NASD") as
such with respect to such Registrable Securities, or (iv) if, despite the
Company's best efforts, the Company is unsuccessful in satisfying the preceding
clauses (i)-(iii), to secure the inclusion for quotation of all Registrable
Securities on the NASD's OTC Bulletin Board. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section
3(k).

 

-6-

 

j.    The
Company shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such names as the
Investors may request.

 

k.    If
requested by an Investor, the Company shall (i) as soon as practicable
incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any
other terms of the offering of the Registrable Securities to be sold in such
offering; (ii) as soon as practicable make all required filings of such
prospectus supplement or post-effective amendment after being notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) as soon as practicable, supplement or make amendments to
any Registration Statement if reasonably requested by an Investor holding any
Registrable Securities.

 

l.    The
Company shall use its reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.

 

m.    The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 1933 Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of a Registration
Statement.

 

n.    The
Company shall otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the SEC in connection with any registration
hereunder.

 

o.    Within
two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall make every
reasonable effort to deliver, and shall make every reasonable effort to cause
legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
II.

 

p    Notwithstanding
anything to the contrary herein, at any time after the Registration Statement
has been declared effective by the SEC, the Company may delay the disclosure of
material, non-public information concerning the Company the disclosure of which
at the time is not, in the good faith opinion of the Board of Directors of the
Company and its counsel, in the best interest of the Company and, in the opinion
of counsel to the Company, otherwise required (a "Grace
Period");
provided, that the Company shall promptly (i) notify the Investors in writing of
the existence of a Grace Period in conformity with the provisions of this
Section 3(r)(provided that in each notice the Company will not disclose the
content of such material, non-public information to the Investors) and the date
on which the Grace Period will begin, and (ii) notify the Investors in writing
of the date on which the Grace Period ends; and, provided further, that no Grace
Period shall exceed fifteen (15) consecutive Business Days and during any three
hundred sixty five (365) day period such Grace Periods shall not exceed an
aggregate of (30) Business Days and the first day of any Grace Period must be at
least two (2) trading days after the last day of any prior Grace Period (each,
an "Allowable
Grace Period"). For
purposes of determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the Investors receive the notice referred to
in clause (i) and shall end on and include the later of the date the Investors
receive the notice referred to in clause (ii) and the date referred to in such
notice. The provisions of Section 3(g) hereof shall not be applicable during the
period of any Allowable Grace Period. Upon expiration of the Grace Period, the
Company shall again be bound by the first sentence of Section 3(f) with respect
to the information giving rise thereto unless such material, non-public
information is no longer applicable. Notwithstanding anything to the contrary,
the Company shall cause its transfer agent to deliver unlegended shares of
Common Stock to a transferee of an Investor in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale, and delivered a copy of the prospectus included as part of the applicable
Registration Statement, prior to the Investor's receipt of the notice of a Grace
Period and for which the Investor has not yet settled. 

 

-7-

 

4.    Obligations
Of The Investors.

 

a.    At least
seven (7) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing of the
information the Company requires from each such Investor if such Investor elects
to have any of such Investor's Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.

 

b.    Each
Investor, by such Investor's acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from such Registration
Statement.

 

c.    Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or the first
sentence of 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) and for which the Investor has not
yet settled.

 

-8-

d.    Each
Investor covenants and agrees that it will comply with any applicable prospectus
delivery requirements of the 1933 Act as applicable to it in connection with
sales of Registrable Securities pursuant to a Registration
Statement.

 

e.    At any
time that the Investor or any other Person shall have a beneficial ownership
interest (within the meaning of Rule 13d-3 under the 1934 Act), or a direct or
indirect pecuniary interest (within the meaning of Rule 16-a-1(a)(2) under the
1934 Act) in the Registrable Securities, the Investor and each such Person shall
not, directly or indirectly, make any short sale or maintain any short position,
establish or maintain a “put equivalent position” (within the meaning of Rule
16-a-1(h) under the 1934 Act), enter into any swap, derivative transaction or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock (whether any such
transaction is to be settled by delivery of Common Stock, other securities, cash
or other consideration) or any securities convertible into, exercisable for or
exchangeable for Common Stock of the Company.

 

5.    Expenses
of Registration.

 

All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company. All underwriting discounts
and selling commissions applicable to the sale of the Registrable Securities
shall be paid by the Investors.

 

6.    Indemnification.

 

In the
event any Registrable Securities are included in a Registration Statement under
this Agreement:

 

-9-

a.    To the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, partners,
members, employees, agents, representatives of, and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
an "Indemnified
Person"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys' fees, amounts paid in settlement or
expenses, joint or several (collectively, "Claims"),
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified
Damages"), to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("Blue
Sky Filing"), or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in the light of the circumstances under which
the statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any material violation
of this Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "Violations").
Subject to Section 6(c), the Company shall reimburse the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant to
Section 3(d); (ii) with respect to any preliminary prospectus, shall not inure
to the benefit of any such Person from whom the Person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any Person controlling such Person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(d), and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a violation and such Indemnified
Person, notwithstanding such advice, used it or failed to deliver the correct
prospectus as required by the 1933 Act and such correct prospectus was timely
made available pursuant to Section 3(d); (iii) shall not be available to the
extent such Claim is based on a failure of the Investor to deliver or to cause
to be delivered the prospectus made available by the Company, including a
corrected prospectus, if such prospectus or corrected prospectus was timely made
available by the Company pursuant to Section 3(d); and (iv) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.

 

-10-

 

b.    In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an
"Indemnified
Party"),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement; and,
subject to Section 6(c), such Investor will reimburse any legal or other
expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld or
delayed; provided, further, however, that an Investor shall be liable under this
Section 6(b) for only that amount of a Claim or Indemnified Damages as does not
exceed the net proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding anything to
the contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.

 

c.    Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of not
more than one counsel for such Indemnified Person or Indemnified Party to be
paid by the indemnifying party, if, in the reasonable opinion of the Indemnified
Person or the Indemnified Party, as the case may be, the representation by such
counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. The indemnifying party shall pay
for only one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall be selected by
Investors holding a majority-in-interest of the Registrable Securities included
in the Registration Statement to which the Claim relates, if the Investors are
entitled to indemnification hereunder, or the Company, if the Company is
entitled to indemnification hereunder, as applicable. In the case of an
Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Investors holding at least a majority in
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or Claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprized at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior written
consent, provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Indemnified Party or
Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such Claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

 

-11-

 

d.    The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.

 

e.    The
indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.

 

7.    Contribution.

 

To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (a) no Person involved
in the sale of Registrable Securities which Person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in
connection with such sale shall be entitled to contribution from any Person
involved in such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (b) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities pursuant to such Registration
Statement.

 

8.    Reports
Under The 1934 Act.

 

With a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that may
at any time permit the Investors to sell securities of the Company to the public
without registration ("Rule
144"), the
Company agrees to:

 

-12-

 

a.    make and
keep public information available, as those terms are understood and defined in
Rule 144;

 

b.   file with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and

 

c.    furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144, the 1933 Act and the 1934
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the Investors to sell
such securities pursuant to Rule 144 without registration.

 

9.    Assignment
of Registration Rights.

 

The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of such Investor's Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws; (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement.

 

10.    Amendment
of Registration Rights.

 

Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
then hold at least a majority of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company. No such amendment shall be effective to the extent
that it applies to less than all of the holders of the Registrable Securities.
No consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this
Agreement.

 

11.    Miscellaneous.

 

a.    A Person
is deemed to be a holder of Registrable Securities whenever such Person owns or
is deemed to own of record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act upon the basis
of instructions, notice or election received from the such record owner of such
Registrable Securities.

 

-13-

 

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

 

If to the
Company:

 

SmartVideo
Technologies, Inc.

1650
Oakbrook Drive, Suite 405

Norcross,
Georgia 30093

Telephone: (770)
729-8777

Facsimile: (678)
969-2791

Attention: Richard
E. Bennett, Jr.

 

with a
copy to:

 

Jenkens
& Gilchrist, LLP

12100
Wilshire Boulevard, 15th
Floor

Los
Angeles, California 90025-7120

Telephone: (310)
820-8800

Facsimile: (310)
820-8859

Attention: Jeffrey
Berg, Esq.

 

If to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers
attached hereto, with copies to such Buyer's representatives as set forth on the
Schedule of Buyers, or to such other address and/or facsimile number and/or to
the attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the effectiveness
of such change. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a courier or overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

 

c.    Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

 

d.    All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of
Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Delaware. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Fulton County, Georgia,
or any federal court sitting in the Northern District of Georgia, Atlanta
Division, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

-14-

 

e.    This
Agreement, the other Transaction Documents (as defined in the Securities
Purchase Agreement) and the instruments referenced herein and therein constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement, the other Transaction Documents and the instruments referenced herein
and therein supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.

 

f.    Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of
and be binding upon the permitted successors and assigns of each of the parties
hereto.

 

g.    The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

h.    This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.

 

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

 

-15-

j.    All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by Investors holding at least a majority of the Registrable Securities,
determined as if all of the Warrants held by Investors then outstanding have
been exercised for Registrable Securities without regard to any limitations on
exercise of the Warrants. 

 

k.    The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party. 

 

l.    This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

 

* * * * *
*

 

 

[Signature
Page Follows]

 

-16-

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

 

	 	 	 
	 	COMPANY:
	 	 	 
	 	SMARTVIDEO
      TECHNOLOGIES,
      INC.
	 
 	 
 	 
 
		By:  	/s/ 
	 	
      

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

 

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

 

 

BUYERS:

 

_______________________________________

 

By: _____________________________________________

Name:
 

Title:

 

 

	
       

      Buyer

	
       

      Nite
      Capital, LP

       

	
       

      Enable
      Capital Management, LLC

       

	
       

      Forte
      Capital Partners, LLC

       

	
       

      JR
      Squared, LLC

       

	
       

      Meadowbrook
      Opportunity Fund, LLC

       

	
       

      Dale
      Newberg

       

	
       

      Lewis
      Opportunity Fund LP

       

	
       

      Joseph
      Patrick Womack

       

	
       

      Kirby
      Pearson

       

	
       

      Robert
      J. Donnan

       

	
       

      Todd
      Rowan

       

	
       

      J.
      Mark Leho

       

	
       

      Jeffrey
      M. Charatz

       

	
       

      William
      F. Johnson

       

	
       

      William
      B. Bandy

       

	
       

      John
      P. Sorin

       

	
       

      Stuart
      & Lesley Mainse

       

	
       

      Justin
      A. Stanley, Jr.

       

 

 

	
      Buyer

	
       

      Scott
      N. Stoliar

       

	
       

      Harlan
      F. Stanley

       

	
       

      Ladasa
      Investments Inc.

       

	
       

      John
      G. Musgjerd

       

	
       

      Peter
      A. Wolf Irrevocable Trust

       

	
       

      Caroline
      E. Wolf Irrevocable Trust

       

	
       

      Alfred
      Guindi

       

	
       

      Frederick
      Schuler

       

	
       

      Thomas
      Bivens

       

	
       

      William
      J. Beaton, Jr.

       

	
       

      William
      J. Beaton, III Irrevocable Trust

       

	
       

      Randy
      D. Abeles

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