THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE OF THE WARRANT REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT. SUCH SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER
THE SECURITIES ACT.
THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.
Broadcast International, Inc.
Series A Warrant
for the Purchase of Shares of Common Stock
(par value $0.05 per share)
No. A-___ ______ Shares
THIS CERTIFIES that, for value received, _____________, whose address is
_________________________ (together with any person or entity to which this
Series A Warrant (or any portion hereof) may be transferred, the "Holder"), is
entitled to subscribe for and purchase from Broadcast International, Inc., a
Utah corporation (the "Company"), upon the terms and conditions set forth
herein, ______ shares of the Company's common stock, par value $0.05 per share
("Common Stock"), at a price of $2.50 per share (the "Exercise Price"). As
used herein the term "this Warrant" shall mean and include this Series A
Warrant and any Common Stock or warrants hereafter issued as a consequence of
the exercise or transfer of this Series A Warrant in whole or in part.
The number of shares of Common Stock issuable upon exercise of the Warrants
(the "Warrant Shares") and the Exercise Price may be adjusted from time to
time as hereinafter set forth. The Warrant Shares are entitled to the
benefits, and subject to the obligations, set forth in the Registration Rights
Agreement among the Company, the Holder and certain other parties dated
concurrently herewith (the "Registration Rights Agreement").
1. Exercise Period. This Warrant may be exercised at any time or from
time to time during the period commencing at 10:00 A.M. Mountain time on May
__, 2005 and ending at 5:00 P.M. Mountain Time on May __, 2010 (the "Exercise
Period").
2. Procedure for Exercise; Effect of Exercise.
(a) Cash Exercise. This Warrant may be exercised, in whole or in
part, by the Holder during normal business hours on any business day during
the Exercise Period by (i) the presentation and surrender of this Warrant to
the Company at its principal executive office along with a duly executed
Notice of Exercise (in the form attached hereto) specifying the number of
Warrant Shares to be purchased, and (ii) delivery of payment to the Company of
the Exercise Price for the number of Warrant Shares specified in the Notice of
Exercise by cash, wire transfer of immediately available funds to a bank
account specified by the Company, or by certified or bank cashier's check.
(b) Cashless Exercise. This Warrant may also be exercised by the
Holder through a cashless exercise, as described in this Section 2(b). In such
case, this Warrant may be exercised, in whole or in part, by the Holder during
normal business hours on any business day during the Exercise Period by the
presentation and surrender of this Warrant to the Company at its principal
office along with a duly executed Notice of Exercise specifying the number of
Warrant Shares to be applied to such exercise. The number of shares of Common
Stock to be issued upon exercise of this Warrant pursuant to this Section 2(b)
shall equal the value of this Warrant (or the portion thereof being canceled)
computed as of the date of delivery of this Warrant to the Company using the
following formula:
X = Y(A-B)
-----
A
Where:
X = the number of shares of Common Stock to be issued to Holder
under this Section 2(b);
Y = the number of Warrant Shares identified in the Notice of
Exercise as being applied to the subject exercise;
A = the Current Market Price on such date; and
B = the Exercise Price on such date
For purposes of this Section 2(b), Current Market Price shall have the
definition provided in Section 6(g).
The Company acknowledges and agrees that this Warrant was issued on the date
set forth at the end of this Warrant. Consequently, the Company acknowledges
and agrees that, if the Holder conducts a cashless exercise pursuant to this
Section 2(b), the period during which the Holder held this Warrant may, for
purposes of Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), be "tacked" to the period during which the Holder
holds the Warrant Shares received upon such cashless exercise.
Notwithstanding the foregoing, the Holder may conduct a cashless exercise
pursuant to this Section 2(b) only after the first anniversary of the initial
issuance date of this Warrant, and then only in the event that a registration
statement covering the resale of the Warrant Shares is not then effective at
the time that the Holder wishes to conduct such cashless exercise.
(c) Company's Response; Effect of Exercise. Upon receipt by the
Company of a copy of a Notice of Exercise (including a copy received via
facsimile), the Company shall immediately send to the Holder, via facsimile, a
confirmation of receipt of such Notice of Exercise. Upon receipt by the
Company of this Warrant and the original Notice of Exercise, together with
proper payment of the Exercise Price, as provided in this Section 2, the
Company or its designated transfer agent (the "Transfer Agent"), as
applicable, shall, within three (3) business days following the date of
receipt by the Company of the original Notice of Exercise (so long as this
Warrant and the proper payment of the Exercise Price are received by the
Company on or before such third business day), issue and deliver to the
Depository Trust Company ("DTC") account on the Holder's behalf via the
Deposit Withdrawal Agent Commission System ("DWAC") as specified in the Notice
of Exercise, registered in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder shall be entitled.
Notwithstanding the foregoing to the contrary, the Company or its Transfer
Agent shall only be obligated to issue and deliver the shares to the DTC on
the Holder's behalf via DWAC if (A) a registration statement covering the
resale of the Warrant Shares has been declared effective by the Securities and
Exchange Commission, (B) the exercise of this Warrant is in connection with a
sale, and (C) the Holder has complied with the applicable prospectus delivery
requirements. If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the right of the Holder to purchase the balance of the
Warrant Shares subject to purchase hereunder. Upon receipt by the Company of
this Warrant and a Notice of Exercise, together with proper payment of the
Exercise Price, as provided in this Section 2, the Company agrees that such
Warrant Shares shall be deemed to be issued to the Holder as the record holder
of such Warrant Shares as of the close of business on the date on which this
Warrant has been surrendered and payment has been made for such Warrant Shares
in accordance with this Warrant and the Holder shall be deemed to be the
holder of record of the Warrant Shares, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such Warrant Shares shall not then be actually delivered to the
Holder.
3. Registration of Warrants; Transfer of Warrants. Any Warrants issued
upon the transfer or exercise in part of this Warrant shall be numbered and
shall be registered in a Warrant Register as they are issued. The Company
shall be entitled to treat the registered holder of any Warrant on the Warrant
Register as the owner in fact thereof for all purposes and shall not be bound
to recognize any equitable or other claim to or interest in such Warrant on
the part of any other person, and shall not be liable for any registration or
transfer of Warrants which are registered or to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration or transfer, or with the knowledge of such facts that its
participation therein amounts to bad faith. This Warrant shall be transferable
only on the books of the Company upon delivery thereof duly endorsed by the
Holder or by its duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment, or authority to transfer. In all
cases of transfer by an attorney, executor, administrator, guardian, or other
legal representative, duly authenticated evidence of his or its authority
shall be produced. Upon any registration of transfer, the Company shall
deliver a new Warrant or Warrants to the person entitled thereto. This Warrant
may be exchanged, at the option of the Holder thereof, for another Warrant, or
other Warrants of different denominations, of like tenor and representing in
the aggregate the right to purchase a like number of Warrant Shares, upon
surrender to the Company or its duly authorized agent.
4. Restrictions on Transfer. (a) The Holder, as of the date of issuance
hereof, represents to the Company that such Holder is acquiring the Warrants
for its own account and not with a view to the distribution thereof or of the
Warrant Shares. Notwithstanding any provisions contained in this Warrant to
the contrary, this Warrant and the related Warrant Shares shall not be
transferable except pursuant to the proviso contained in the following
sentence or upon the conditions specified in this Section 4, which conditions
are intended, among other things, to insure compliance with the provisions of
the Securities Act and applicable state law in respect of the transfer of this
Warrant or such Warrant Shares. The Holder by acceptance of this Warrant
agrees that the Holder will not transfer this Warrant or the related Warrant
Shares prior to delivery to the Company of an opinion of the Holder's counsel
(as such opinion and such counsel are described in Section 4(b) hereof) or
until registration of such Warrant Shares under the Securities Act has become
effective or after a sale of such Warrant or Warrant Shares has been
consummated pursuant to Rule 144 or Rule 144A under the Securities Act;
provided, however, that the Holder may freely transfer this Warrant or such
Warrant Shares (without delivery to the Company of an opinion of counsel) (i)
to one of its nominees, affiliates or a nominee thereof, (ii) to a pension or
profit-sharing fund established and maintained for its employees or for the
employees of any affiliate, (iii) from a nominee to any of the aforementioned
persons as beneficial owner of this Warrant or such Warrant Shares, (iv) to a
qualified institutional buyer, so long as such transfer is effected in
compliance with Rule 144A under the Securities Act, or (v) to an accredited
investor (as such term is defined in Regulation D under the Securities Act).
(b) The Holder, by its acceptance hereof, agrees that prior to
any transfer of this Warrant or of the related Warrant Shares (other than as
permitted by Section 4(a) hereof or pursuant to a registration under the
Securities Act), the Holder will give written notice to the Company of its
intention to effect such transfer, together with an opinion of such counsel
for the Holder, to the effect that the proposed transfer of this Warrant
and/or such Warrant Shares may be effected without registration under the
Securities Act. Upon delivery of such notice and opinion to the Company, the
Holder shall be entitled to transfer this Warrant and/or such Warrant Shares
in accordance with the intended method of disposition specified in the notice
to the Company.
(c) Each stock certificate representing Warrant Shares issued
upon exercise or exchange of this Warrant shall bear the following legend
unless the opinion of counsel referred to in Section 4(b) states such legend
is not required:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT. SUCH SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS
AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT."
The Holder understands that the Company may place, and may instruct any
transfer agent or depository for the Warrant Shares to place, a stop transfer
notation in the securities records in respect of the Warrant Shares.
5. Reservation of Shares. The Company shall at all times during the
Exercise Period reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of providing for the exercise of the
rights to purchase all Warrant Shares granted pursuant to the Warrants, such
number of shares of Common Stock as shall, from time to time, be sufficient
therefor. The Company covenants that all shares of Common Stock issuable upon
exercise of this Warrant, upon receipt by the Company of the full Exercise
Price therefor, and all shares of Common Stock issuable upon conversion of
this Warrant, shall be validly issued, fully paid, non-assessable, and free of
preemptive rights, and free from all taxes, claims, liens, charges and other
encumbrances.
6. Exercise Price Adjustments. The Exercise Price shall be subject to
adjustment from time to time as follows:
(a) (i) In the event that the Company shall (A) pay a dividend or
make a distribution to all its stockholders, in shares of Common Stock, on any
class of capital stock of the Company or any subsidiary which is not directly
or indirectly wholly owned by the Company, (B) split or subdivide its
outstanding Common Stock into a greater number of shares, or (C) combine its
outstanding Common Stock into a smaller number of shares, then in each such
case the Exercise Price in effect immediately prior thereto shall be adjusted
so that the Holder of a Warrant thereafter surrendered for Exercise shall be
entitled to receive the number of shares of Common Stock that such Holder
would have owned or have been entitled to receive after the occurrence of any
of the events described above had such Warrant been exercised immediately
prior to the occurrence of such event. An adjustment made pursuant to this
Section 6(a)(i) shall become effective immediately after the close of business
on the record date in the case of a dividend or distribution (except as
provided in Section 6(e) below) and shall become effective immediately after
the close of business on the effective date in the case of such subdivision,
split or combination, as the case may be. Any shares of Common Stock issuable
in payment of a dividend shall be deemed to have been issued immediately prior
to the close of business on the record date for such dividend for purposes of
calculating the number of outstanding shares of Common Stock under clauses
(ii), (iii) and (iv) below.
(ii) In the event that the Company shall commit to issue or
distribute New Securities (as defined in the Securities Purchase Agreement, of
even date herewith, among the Company, the Holder and certain other Purchasers
named therein), in any such case at a price per share less than the Current
Market Price per share on the earliest of (A) the date the Company shall enter
into a firm contract for such issuance or distribution, (B) the record date
for the determination of stockholders entitled to receive any such New
Securities, if applicable, or (C) the date of actual issuance or distribution
of any such New Securities (provided that the issuance of Common Stock upon
the exercise of New Securities that are rights, warrants, options or
convertible or exchangeable securities ("New Derivative Securities") will not
cause an adjustment in the Exercise Price if no such adjustment would have
been required at the time such New Derivative Security was issued), then the
Exercise Price in effect immediately prior to such earliest date shall be
adjusted so that the Exercise Price shall equal the price determined by
multiplying the Exercise Price in effect immediately prior to such earliest
date by the fraction:
(x) whose numerator shall be (I) the number of shares of Common Stock
outstanding on such date (on a fully-diluted basis after giving effect
to any securities (other than the Warrants) convertible or
exchangeable into Common Stock) plus (II) the number of shares of
Common Stock which the aggregate offering price of the total number of
New Securities so offered would have purchased at such Current Market
Price (such amount, with respect to any New Derivative Securities,
determined by multiplying the total number of shares of Common Stock
subject thereto by the exercise price of such New Derivative
Securities, and dividing the product so obtained by such Current
Market Price), and
(y) whose denominator shall be (I) the number of shares of Common
Stock outstanding on such date (on a fully-diluted basis after giving
effect to any securities (other than the Warrants) convertible or
exchangeable into Common Stock) plus (II) the number of additional
shares of Common Stock to be issued or distributed or receivable upon
exercise of any such New Derivative Security.
Such adjustment shall be made successively whenever any such New Securities
are issued. In determining whether any New Derivative Securities entitle the
holders to subscribe for or purchase shares of Common Stock at less than such
Current Market Price, and in determining the aggregate offering price of
shares of Common Stock so issued, there shall be taken into account any
consideration received by the Company for such Common Stock or New Derivative
Securities, the value of such consideration, if other than cash, to be
determined by the board of directors of the Company (the "Board of
Directors"), whose determination shall be conclusive and described in a
certificate filed with the records of corporate proceedings of the Company. If
any New Derivative Security to purchase or acquire Common Stock, the issuance
of which resulted in an adjustment in the Exercise Price pursuant to this
subsection (ii) shall expire and shall not have been exercised, the Exercise
Price shall immediately upon such expiration be recomputed to the Exercise
Price which would have been in effect had the adjustment of the Exercise Price
made upon the issuance of such New Derivative Security been made on the basis
of offering for subscription, purchase or issuance, as the case may be, only
of that number of shares of Common Stock actually purchased or issued upon the
actual exercise of such New Derivative Security.
(iii) In the event that the 30-day moving average closing
price of the Common Stock ending on the earlier of (A) the later of (1) the
Effectiveness Date (as defined in the Registration Rights Agreement), and (2)
the nine-month anniversary of the Closing Date (as defined in the Securities
Purchase Agreement, of even date herewith, among the Company, the Holder and
certain other Purchasers named therein), or (B) the one-year anniversary of
the Closing Date ((A) or (B) above, the "Reset Date"), is less than the
Exercise Price in effect immediately prior to the Reset Date, then the
Exercise Price shall be adjusted so that the Exercise Price immediately
following the Reset Date shall equal such 30-day moving average closing price
of the Common Stock. Notwithstanding the foregoing, in no event shall the
Exercise Price be adjusted pursuant to this subsection (iii) below $0.50,
subject to adjustment for stock splits, subdivisions, combinations and the
like effected after the initial issuance date of this Warrant.
(iv) In the event that the Company shall issue or distribute
New Securities, in any such case at a price per share less than $2.50 or that
would entitle the holders of the New Securities to subscribe for or purchase
shares of Common Stock at less than $2.50 per share (provided that the
issuance of Common Stock upon the exercise of New Derivative Securities will
not cause an adjustment in the Exercise Price if no such adjustment would have
been required at the time such New Derivative Security was issued), then the
Exercise Price in effect immediately prior thereto shall be adjusted so that
the Exercise Price shall equal the price at which the Company issues or
distributes such New Securities (or the price at which the holders of the New
Securities are entitled to subscribe for or purchase shares of Common Stock).
Each such adjustment shall be made successively whenever any such New
Securities are issued. In determining whether any New Derivative Securities
entitle the holders to subscribe for or purchase shares of Common Stock at
less than $2.50 per share, there shall be taken into account any consideration
received by the Company for such New Derivative Securities, the value of such
consideration, if other than cash, to be determined in good faith by the Board
of Directors, whose determination shall be conclusive and described in a
certificate filed with the records of corporate proceedings of the Company.
Notwithstanding the foregoing, in no event shall an adjustment be made under
this subsection (iv) if such adjustment would result in raising the
then-effective Exercise Price.
(v) No adjustment in the Exercise Price shall be required
unless the adjustment would require an increase or decrease of at least 1% in
the Exercise Price then in effect; provided, however, that any adjustments
that by reason of this Section 6(a) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 6(a) shall be made to the nearest cent or
nearest 1/100th of a share.
(vi) The Company from time to time may reduce the Exercise
Price by any amount for any period of time in the discretion of the Board of
Directors. A voluntary reduction of the Exercise Price does not change or
adjust the Exercise Price otherwise in effect for purposes of this Section
6(a).
(vii) In the event that, at any time as a result of an
adjustment made pursuant to Sections 6(a)(i) through 6(a)(v) above, the Holder
of any Warrant thereafter surrendered for exercise shall become entitled to
receive any shares of the Company other than shares of the Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
such Warrant shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Sections 6(a)(i) through 6(a)(vi) above, and the
other provisions of this Section 6(a) with respect to the Common Stock shall
apply on like terms to any such other shares.
(b) In case of any reclassification of the Common Stock (other than
in a transaction to which Section 6(a)(i) applies), any consolidation of the
Company with, or merger of the Company into, any other entity, any merger of
another entity into the Company (other than a merger that does not result in
any reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company), any sale or transfer of all or
substantially all of the assets of the Company or any compulsory share
exchange, pursuant to which share exchange the Common Stock is converted into
other securities, cash or other property (any such reclassification,
consolidation, merger, sale, transfer or exchange shall be referred to herein
as a "Reorganization Transaction"), there shall thereafter be deliverable upon
exercise of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Reorganization Transaction if such Warrant had been
exercised in full immediately prior to such Reorganization Transaction. In
case of any Reorganization Transaction, appropriate adjustment, as reasonably
determined in good faith by the Board of Directors shall be made in the
application of the provisions herein set forth with respect to the rights and
interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any such
shares or other securities or property thereafter deliverable upon exercise of
Warrants. The Company shall not effect any Reorganization Transaction unless
prior to or simultaneously with the consummation thereof the successor
corporation or other entity (if other than the Company) resulting from such
Reorganization Transaction or the corporation or other entity purchasing such
assets shall expressly assume, by a supplemental warrant or other
acknowledgment executed and delivered to the Holder, the obligation to deliver
to the Holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such Holder may be entitled to purchase, and
the due and punctual performance and observance of each and every covenant,
condition, obligation and liability under this Warrant to be performed and
observed by the Company in the manner prescribed herein. The provisions of
this Section 6(b) shall similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers or share exchanges.
(c) If:
(i) the Company shall take any action which would require an
adjustment in the Exercise Price pursuant to Section 6(a); or
(ii) the Company shall authorize the granting to the holders of
its Common Stock generally of rights, warrants or options to subscribe for or
purchase any shares of any class or any other rights, warrants or options; or
(iii) there shall be any reclassification or change of the Common
Stock (other than a subdivision or combination of its outstanding Common Stock
or a change in par value) or any consolidation, merger or statutory share
exchange to which the Company is a party and for which approval of any
stockholders of the Company is required, or the sale or transfer of all or
substantially all of the assets of the Company; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in each such case, the Company shall cause to be filed with the transfer
agent for the Warrants and shall cause to be mailed to each Holder at such
Holder's address as shown on the books of the transfer agent for the Warrants,
as promptly as possible, but at least 30 days prior to the applicable date
hereinafter specified, a notice stating (A) the date on which a record is to
be taken for the purpose of such dividend, distribution or granting of rights,
warrants or options, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution or rights, warrants or options are to be determined, or (B) the
date on which such reclassification, change, consolidation, merger, statutory
share exchange, sale, transfer, dissolution, liquidation or winding-up is
expected to become effective or occur, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon such
reclassification, change, consolidation, merger, statutory share exchange,
sale, transfer, dissolution, liquidation or winding up. Failure to give such
notice or any defect therein shall not affect the legality or validity of the
proceedings described in this Section 6(c).
(d) Whenever the Exercise Price is adjusted as herein provided, the
Company shall promptly file with the transfer agent for the Warrants a
certificate of an officer of the Company setting forth the Exercise Price
after the adjustment and setting forth a brief statement of the facts
requiring such adjustment and a computation thereof. The Company shall
promptly cause a notice of the adjusted Exercise Price to be mailed to each
Holder.
(e) In any case in which Section 6(a) provides that an adjustment
shall become effective immediately after a record date for an event and the
date fixed for such adjustment pursuant to Section 6(a) occurs after such
record date but before the occurrence of such event, the Company may defer
until the actual occurrence of such event (i) issuing to the Holder of any
Warrants exercised after such record date and before the occurrence of such
event the additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the Common
Stock issuable upon such exercise before giving effect to such adjustment, and
(ii) paying to such holder any amount in cash in lieu of any fraction pursuant
to Section 6(i).
(f) In case the Company shall take any action affecting the Common
Stock, other than actions described in this Section 6, which in the opinion of
the Board of Directors would materially adversely affect the exercise right of
the Holders, the Exercise Price may be adjusted, to the extent permitted by
law, in such manner, if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances.
(g) For the purpose of any computation under Section 2(b) or this
Section 6, the "Current Market Price" per share of Common Stock on any day
shall mean: (i) if the principal trading market for such securities is a
national or regional securities exchange, the closing price on such exchange
on such day; or (ii) if sales prices for shares of Common Stock are reported
by the NASDAQ National Market System (or a similar system then in use), the
last reported sales price (regular way) so reported on such day; or (iii) if
neither (i) nor (ii) above are applicable, and if bid and ask prices for
shares of Common Stock are reported in the over-the-counter market by NASDAQ
(or, if not so reported, by the National Quotation Bureau), the average of the
high bid and low ask prices so reported on such day. Notwithstanding the
foregoing, if there is no reported closing price, last reported sales price,
or bid and ask prices, as the case may be, for the day in question, then the
Current Market Price shall be determined as of the latest date prior to such
day for which such closing price, last reported sales price, or bid and ask
prices, as the case may be, are available, unless such securities have not
been traded on an exchange or in the over-the-counter market for 5 or more
days immediately prior to the day in question, in which case the Current
Market Price shall be determined by an Independent Financial Expert (and the
costs of such determination shall be bourne entirely by the Company). An
"Independent Financial Expert" shall mean a reputable accounting, appraisal or
investment banking firm that is, in the reasonable judgment of the Board of
Directors, qualified to perform the task for which such firm has been engaged
hereunder, is nationally recognized and disinterested and Independent with
respect to the Company and its affiliates and is reasonably acceptable to the
Holder. "Independent" shall mean any person or entity that (A) is in fact
independent, (B) does not have any direct financial interest or any material
indirect financial interest in the Company or any of its subsidiaries, or in
any affiliate of the Company or any of its subsidiaries (other than as a
result of holding securities of the Company in trading accounts), and (C) is
not an officer, employee, promoter, trustee, partner, director or person
performing similar functions for the Company or any of its subsidiaries or any
affiliate of the Company or any of its subsidiaries.
(h) Upon each adjustment of the Exercise Price (other than an
adjustment under Section 6(a)(iii) or (iv)), this Warrant shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of
shares (calculated to the nearest thousandth) obtained by dividing (i) the
product obtained by multiplying the number of shares purchasable upon exercise
of this Warrant prior to adjustment of the number of shares by the Exercise
Price in effect prior to adjustment of the Exercise Price, by (ii) the
Exercise Price in effect after such adjustment of the Exercise Price.
(i) The Company shall not be required to issue fractions of shares
of Common Stock or other capital stock of the Company upon the exercise of
this Warrant. If any fraction of a share would be issuable on the exercise of
this Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the Current
Market Price of such share of Common Stock on the date of exercise of this
Warrant.
7. Transfer Taxes. The issuance of any shares or other securities upon
the exercise of this Warrant, and the delivery of certificates or other
instruments representing such shares or other securities, shall be made
without charge to the Holder for any tax or other charge in respect of such
issuance. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
8. Loss or Mutilation of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
any Warrant (and upon surrender of any Warrant if mutilated), and upon
reimbursement of the Company's reasonable incidental expenses, the Company
shall execute and deliver to the Holder thereof a new Warrant of like date,
tenor, and denomination.
9. No Rights as a Stockholder. The Holder of any Warrant shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided in this Warrant.
10. Governing Law. This Warrant shall be construed in accordance with
the laws of the State of Texas applicable to contracts made and performed
within such State, without regard to principles of conflicts of law.
* * *
Dated: May __, 2005
BROADCAST INTERNATIONAL, INC.
By: __________________________________
Rodney M. Tiede, President & CEO
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the attached Warrant.)
FOR VALUE RECEIVED,_______________________________ hereby sells,
assigns, and transfers unto _______________________________ a Warrant to
purchase _____ shares of Common Stock, par value $0.05 per share, of Broadcast
International, Inc. (the "Company"), together with all right, title, and
interest therein, and does hereby irrevocably constitute and appoint
_______________________ attorney to transfer such Warrant on the books of the
Company, with full power of substitution.
Dated:____________________________
By:_____________________________________
Signature
The signature on the foregoing Assignment must correspond to the name as
written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
To: Broadcast International, Inc.
7050 Union Park Avenue, Suite 600
Salt Lake City, Utah 84047
Attention: President
NOTICE OF EXERCISE
The undersigned hereby exercises his or its rights to purchase _______
Warrant Shares covered by the within Warrant and tenders payment herewith in
the amount of $_________ by [tendering cash or delivering a certified check or
bank cashier's check, payable to the order of the Company] [surrendering
______ shares of Common Stock received upon exercise of the attached Warrant,
which shares have a Current Market Price equal to such payment] in accordance
with the terms thereof.
_______________________________________
_______________________________________
_______________________________________
(Print Name, Address and Social Security
or Tax Identification Number)
Holder requests delivery to be made: (check one)
[ ] By delivery of physical certificates in the name above and delivered to
the above address
[ ] Through Depository Trust Corporation
(Account__________________________)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the
Warrant Shares covered by the within Warrant be registered in the name of, and
delivered to, the undersigned at the address stated below.
Dated:_____________________________
By: _______________________________
Print Name
________________________________
Signature
Address:
_______________________________
_______________________________
_______________________________