CONVERTIBLE PROMISSORY
NOTE
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$150,000.00
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Dated: November 10,
2005
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FOR VALUE
RECEIVED , SmartVideo Technologies, Inc., a Delaware
corporation (the “Company”), hereby promises to pay to
GHS Holdings, Attn: Glenn Singer, an individual and resident of the
State of Florida, with a mailing address of 552 North Island Drive,
Golden Beach, Florida 33160 or his assigns (the
“Lender”) the principal amount of One Hundred Fifty
Thousand Dollars ($150,000.00), together with interest accrued
thereon calculated from the date hereof in accordance with the
provisions of this Note.
Interest from the
date hereof on the principal amount outstanding hereunder from time
to time until maturity, and after the maturity hereof until paid,
shall be payable at a rate of fifteen percent (15%) per annum.
Interest shall be calculated on a year of 360 days based upon
the actual number of days elapsed. After the occurrence of an Event
of Default, as defined below, until this Note is paid in full or
the Event of Default is satisfied or cured, as applicable, interest
on the principal amount outstanding from time to time shall be
payable at twenty-five percent (25%) per annum.
In addition, the
Company shall issue to the Lender, a Warrant to purchase 50,000
shares of Common Stock, par value $.001 per share at an exercise
price of $2.00 per share.
Except as
otherwise described herein, principal together with all accrued and
unpaid interest thereon shall be payable in a single installment
ninety (90) days from the date of this Note. Principal and
interest shall be paid in lawful money of the United States of
America in immediately available funds at the address of Lender as
first set forth above or at such other place as Lender may from
time to time designate.
The unpaid
principal balance of this Note may be prepaid in whole or in part
at any time and from time to time without premium or penalty. Each
prepayment amount with respect to this Note shall be applied first
to the principal balance of this Note and then to the accrued and
unpaid interest of this Note.
Upon the closing
of the first capital raising transaction in which the Company
receives gross proceeds of at least Two Million Five Hundred
Thousand Dollars ($2,500,000.00) from the sale of its equity
securities as contemplated between the Company and Lender (a
“Qualified Financing”), the principal amount
outstanding under this Note shall convert into shares or units of
the equity securities sold in the Qualified Financing at a per
share sale price or unit sale price equal to the per share sale
price or unit sale price of the Qualified Financing (the
“Purchase Price”). Each dollar of principal amount then
outstanding under this Note shall constitute a dollar of Purchase
Price for the Qualified Financing equity securities. At the time of
conversion, Lender shall have the option of converting all accrued
and unpaid interest on the same terms as the conversion of
principal herein, alternatively the Company may pay accrued and
unpaid interest in cash at the time of conversion.
In the event the
Qualified Financing as contemplated by the Company and the Lender
does not occur, the Lender shall have the right to convert the into
shares of the Company’s
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common stock at
a per share price equal to closing price on the date the conversion
notice is received by the Company. At the time of conversion,
Lender shall also have the option of converting all accrued and
unpaid interest on the same terms as the conversion of principal
herein. For purposes of this provision, the shares issuable on
conversion will be issued as restricted shares with the appropriate
restrictive legend(s) and shall have piggy-back registration rights
to be included i
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