CONVERTIBLE PROMISSORY
NOTE
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$100,000.00
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Dated: September 26,
2005
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FOR VALUE
RECEIVED , SmartVideo Technologies, Inc., a Delaware
corporation (the “Company”), hereby promises to pay to
Michael E. Criden, an individual and resident of the State of
Florida, with a mailing address of 11035 Marin Street, Coral
Gables, Florida 33156 or his assigns (the “Lender”) the
principal amount of One Hundred Thousand Dollars ($100,000.00),
together with interest accrued thereon calculated from the date
hereof in accordance with the provisions of this Note.
Interest from the
date hereof on the principal amount outstanding hereunder from time
to time until maturity, and after the maturity hereof until paid,
shall be payable at a rate of eight percent (8%) per annum.
Interest shall be calculated on a year of 360 days based upon
the actual number of days elapsed. After the occurrence of an Event
of Default, as defined below, until this Note is paid in full or
the Event of Default is satisfied or cured, as applicable, interest
on the principal amount outstanding from time to time shall be
payable at twelve percent (12%) per annum.
In addition, the
Company shall issue to the Lender, a Warrant to purchase 33,333
shares of Common Stock, par value $.001 per share at an exercise
price of $2.00 per share.
Except as
otherwise described herein, principal together with all accrued and
unpaid interest thereon shall be payable in a single installment
one year from the date of this Note. Principal and interest shall
be paid in lawful money of the United States of America in
immediately available funds at the address of Lender as first set
forth above or at such other place as Lender may from time to time
designate.
The unpaid
principal balance of this Note may be prepaid in whole or in part
at any time and from time to time without premium or penalty. Each
prepayment amount with respect to this Note shall be applied first
to the principal balance of this Note and then to the accrued and
unpaid interest of this Note.
Upon the closing
of the first capital raising transaction in which the Company
receives gross proceeds of at least Two Million Five Hundred
Thousand Dollars ($2,500,000.00) from the sale of its equity
securities as contemplated between the Company and Lender (a
“Qualified Financing”), the principal amount
outstanding under this Note shall convert into shares or units of
the equity securities sold in the Qualified Financing at a per
share sale price or unit sale price equal to the per share sale
price or unit sale price of the Qualified Financing (the
“Purchase Price”). Each dollar of principal amount then
outstanding under this Note shall constitute a dollar of Purchase
Price for the Qualified Financing equity securities. At the time of
conversion, Lender shall have the option of converting all accrued
and unpaid interest on the same terms as the conversion of
principal herein, alternatively the Company may pay accrued and
unpaid interest in cash at the time of conversion.
In the event the
Qualified Financing as contemplated by the Company and the Lender
does not occur, the Lender shall have the right to convert the into
shares of the Company’s
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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 in the Company̵
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