NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE HAVE 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
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY 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.
ADDITIONAL INVESTMENT RIGHT
To Purchase 6% Senior Secured Convertible Notes Due 2008
and Warrants to Purchase Common Stock of
Broadcast International, Inc.
THIS ADDITIONAL INVESTMENT RIGHT (this "Additional Investment Right")
CERTIFIES that, for value received, _____________ (the "Holder") is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date of issuance of this
Additional Investment Right (the "Initial Exercise Date") and on or prior to
the 90th calendar day following the date that the Registration Statement is
declared effective by the Commission (the "Termination Date"), but not
thereafter, to subscribe for and purchase from Broadcast International, Inc.,
a Utah corporation (the "Company"), up to (i) $_________ original principal
amount of Notes, each such Note to be in the form of Exhibit B attached to the
Securities Purchase Agreement (each such Note, an "Additional Note"), (ii)
____ Series A Warrants, each such Series A Warrant to be in the form of
Exhibit C-1 attached to the Securities Purchase Agreement (each such Series A
Warrant, an "Additional Series A Warrant"), and (iii) ____ Series B Warrants,
each such Series B Warrant to be in the form of Exhibit C-2 attached to the
Securities Purchase Agreement (each such Series B Warrant, an "Additional
Series B Warrant"). The Additional Notes, Additional Series A Warrants and
Additional Series B Warrants are referred to herein as the "Additional
Investment Right Securities". The exercise price payable to the Company upon
the exercise of this Additional Investment Right shall be $1.00 for each $1.00
of original principal amount of Additional Notes, 0.2 Additional Series A
Warrants, and 0.2 Additional Series B Warrants purchased and subscribed for
upon the exercise of this Additional Investment Right (the "Exercise Price").
By way of example, if the Holder exercises this Additional Investment Right
for a total of $100,000 in Exercise Price, it will receive (a) an Additional
Note in the original principal amount of $100,000, (b) 20,000 Additional
Series A Warrants, and (c) 20,000 Additional Series B Warrants. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth
in that certain Securities Purchase Agreement (the "Securities Purchase
Agreement"), dated May 16, 2005, among the Company and the Purchasers
signatory thereto.
1. Title to the Additional Investment Right. Prior to the Termination
Date and subject to compliance with applicable laws and Section 6 of this
Additional Investment Right, this Additional Investment Right and all rights
hereunder are transferable, in whole or in part, at the office or agency of
the Company by the Holder in person or by duly authorized attorney, upon
surrender of this Additional Investment Right together with the Assignment
Form annexed hereto properly endorsed. The transferee shall sign an investment
letter in form and substance reasonably satisfactory to the Company.
2. Authorization of Securities. The Company covenants that all
Additional Investment Right Securities which may be issued upon the exercise
of the purchase rights represented by this Additional Investment Right will,
upon exercise of the purchase rights represented by this Additional Investment
Right, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with such
issue).
3. Exercise of Additional Investment Right.
(a) Exercise of the purchase rights represented by this Additional
Investment Right may be made at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company
of a duly executed facsimile copy of the Notice of Exercise Form annexed
hereto (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of such Holder
appearing on the books of the Company); provided, however, within 5 Business
Days of the date said Notice of Exercise is delivered to the Company, the
Holder shall have surrendered this Additional Investment Right to the Company
and the Company shall have received payment of the aggregate Exercise Price
of the Securities thereby purchased by wire transfer or cashier's check drawn
on a United States bank. The original Additional Investment Right Securities
purchased hereunder shall be delivered to the Holder within 5 Business Days
from the delivery to the Company of the Notice of Exercise Form, surrender of
this Additional Investment Right and payment of the aggregate Exercise Price
as set forth above. This Additional Investment Right shall be deemed to have
been exercised on the later of the date the Notice of Exercise is delivered to
the Company by facsimile copy and the date the Exercise Price is received by
the Company. The Additional Investment Right Securities shall be deemed to
have been issued, and the Holder or any other person so designated to be named
therein shall be deemed to have become a holder of record of such Securities
for all purposes, as of the date the Additional Investment Right has been
exercised by payment to the Company of the Exercise Price and all taxes
required to be paid by the Holder, if any, pursuant to Section 4 prior to the
issuance of such Securities, have been paid.
(b) If this Additional Investment Right shall have been exercised
in part, the Company shall, at the time of delivery of the original Additional
Investment Right Securities, deliver to Holder a new Additional Investment
Right evidencing the rights of Holder to purchase the unpurchased Additional
Investment Right Securities called for by this Additional Investment Right,
which new Additional Investment Right shall in all other respects be identical
to this Additional Investment Right.
4. Charges, Taxes and Expenses. Issuance of the original Additional
Investment Right Securities shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the issuance
of such Securities, all of which taxes and expenses shall be paid by the
Company, and such Securities shall be issued in the name of the Holder or in
such name or names as may be directed by the Holder; provided, however, that
in the event the Additional Investment Right Securities are to be issued in a
name other than the name of the Holder, this Additional Investment Right when
surrendered for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder; and the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
5. Transfer, Division and Combination.
(a) Subject to compliance with any applicable securities laws and
the conditions set forth herein and in the Securities Purchase Agreement, this
Additional Investment Right and all rights hereunder are transferable, in
whole or in part, upon surrender of this Additional Investment Right at the
principal office of the Company, together with a written assignment of this
Additional Investment Right substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and
deliver a new Additional Investment Right or Additional Investment Rights in
the name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Additional Investment Right evidencing the portion of this Additional
Investment Right not so assigned, and this Additional Investment Right shall
promptly be cancelled. An Additional Investment Right, if properly assigned,
may be exercised by a new holder for the purchase of Additional Investment
Right Securities without having a new Additional Investment Right issued.
(b) This Additional Investment Right may be divided or combined
with other Additional Investment Rights upon presentation hereof at the
aforesaid office of the Company, together with a written notice specifying the
names and denominations in which new Additional Investment Rights are to be
issued, signed by the Holder or its agent or attorney. Subject to compliance
with Section 5(a), as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Additional
Investment Right or Additional Investment Rights in exchange for the
Additional Investment Right or Additional Investment Rights to be divided or
combined in accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Additional Investment Right or
Additional Investment Rights under this Section 5.
(d) The Company agrees to maintain, at its aforesaid office,
books for the registration and the registration of transfer of the Additional
Investment Rights.
(e) If, at the time of the surrender of this Additional
Investment Right in connection with any transfer of this Additional Investment
Right, the transfer of this Additional Investment Right shall not be
registered pursuant to an effective registration statement under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (i) that the
Holder or transferee of this Additional Investment Right, as the case may be,
furnish to the Company a written opinion of counsel (which opinion shall be in
form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer may be made without
registration under the Securities Act and under applicable state securities or
blue sky laws, (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance acceptable to the Company
and (iii) that the transferee be an "accredited investor" as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities
Act or a qualified institutional buyer as defined in Rule 144A(a) under the
Securities Act.
6. Loss, Theft, Destruction or Mutilation of Additional Investment
Right. The Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Additional Investment Right or any Additional Investment Right Security,
and in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Additional Investment Right,
shall not include the posting of any bond), and upon surrender and
cancellation of such Additional Investment Right or certificate, if mutilated,
the Company will make and deliver a new Additional Investment Right or
certificate of like tenor and dated as of such cancellation, in lieu of such
Additional Investment Right or certificate.
7. Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or
granted herein shall be a Saturday, Sunday or a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday, Sunday or legal holiday.
8. Miscellaneous.
(a) Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Additional Investment Right
shall be determined in accordance with the provisions of the Securities
Purchase Agreement.
(b) Restrictions. The Holder acknowledges that the Additional
Investment Right Securities acquired upon the exercise of this Additional
Investment Right, if not registered, will have restrictions upon resale
imposed by state and federal securities laws.
(c) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice Xxxxxx's rights, powers or
remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any
provision of this Additional Investment Right, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as shall
be sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Securities Purchase
Agreement.
(e) Limitation of Liability. No provision hereof, in the absence
of any affirmative action by Holder to exercise this Additional Investment
Right or purchase Additional Investment Right Securities, and no enumeration
herein of the rights or privileges of Holder, shall give rise to any liability
of Holder for the purchase price of any Common Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
(f) Remedies. Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Additional Investment Right.
The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this
Additional Investment Right and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(g) Successors and Assigns. Subject to applicable securities
laws, this Additional Investment Right and the rights and obligations
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Holder.
The provisions of this Additional Investment Right are intended to be for the
benefit of all Holders from time to time of this Additional Investment Right
and shall be enforceable by any such Holder or holder of Additional Investment
Right Securities.
(h) Amendment. This Additional Investment Right may be modified
or amended or the provisions hereof waived only with the written consent of
the Company and the Holder.
(i) Severability. Wherever possible, each provision of this
Additional Investment Right shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Additional Investment Right shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Additional Investment Right.
(j) Headings. The headings used in this Additional Investment
Right are for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Additional Investment Right.
********************
IN WITNESS WHEREOF, the Company has caused this Additional Investment
Right to be executed by its officer thereunto duly authorized.
Dated: May __, 2005
BROADCAST INTERNATIONAL, INC.
By:__________________________________________
Name: Xxxxxx X. Xxxxx
Title: President & CEO
NOTICE OF EXERCISE
To: Broadcast International, Inc.
(1) The undersigned hereby elects to purchase $________ original
principal amount of Additional Investment Right Notes, ____ Additional
Investment Right Series A Warrants and ____ Additional Investment Right Series
B Warrants of the Company pursuant to the terms of the attached Additional
Investment Right (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if
any.
(2) Please issue the original Additional Investment Right Securities
in the name of the undersigned or in such other name as is specified below:
_______________________________
The Additional Investment Right Securities shall be delivered to the
following:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor. The undersigned is an "accredited investor" as
defined in Regulation D under the Securities Act of 1933, as amended.
[BUYER]
By: ______________________________
Name:
Title:
Dated: ________________________
ASSIGNMENT FORM
(To assign the foregoing Additional Investment Right, execute
this form and supply required information.
Do not use this form to exercise the Additional Investment Right.)
FOR VALUE RECEIVED, the foregoing Additional Investment Right and all rights
evidenced thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as
it appears on the face of the Additional Investment Right, without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank or
trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to
assign the foregoing Additional Investment Right.
