REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of May 16, 2005, by and among Broadcast International, Inc., a
Utah corporation (the "Company"), and the persons and entities listed on
Exhibit A hereto (each, a "Purchaser" and, collectively, the "Purchasers").
WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"),
the Company has agreed to issue and sell to the Purchasers the Company's 6%
Senior Secured Convertible Notes Due 2008 (the "Notes"), Warrants to purchase
shares of its Common Stock, and AIRs; and
WHEREAS, to induce the Purchasers to execute and deliver the Purchase
Agreement and to purchase the Notes, the Warrants and the AIRs, the Company
has agreed to provide certain registration rights under the Securities Act of
1933, as amended, with respect to the Conversion Shares, the Warrant Shares,
the PIK Interest Shares and the AIR Shares.
NOW, THEREFORE, in consideration of the representations, warranties and
agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which are hereby acknowledged by the parties,
the Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized terms used but not otherwise defined herein shall have
the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract
or otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"AIR Shares" shall have the meaning set forth in the definition of
"Registrable Securities."
"Blackout Period" shall have the meaning set forth in Section 3(m).
"Board" shall have the meaning set forth in Section 3(m).
"Business Day" means any day except Saturday, Sunday and any day
which is a legal holiday or a day on which banking institutions in the state
of Utah generally are authorized or required by law or other government
actions to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, $0.05 par value.
"Conversion Shares" shall have the meaning set forth in the
definition of "Registrable Securities."
"Effectiveness Date" means with respect to the Registration
Statement the earlier of (i) the 90th day following the Closing Date (or the
120th day following the Closing Date in the event that the Registration
Statement is "reviewed" by the Commission), before which the Company will use
its best efforts to cause the Registration Statement to become effective, and
(ii) the date which is within five (5) Business Days of the date on which the
Commission informs the Company (a) that the Commission will not review the
Registration Statement, or (b) that the Company may request the acceleration
of the effectiveness of the Registration Statement.
"Effectiveness Period" shall have the meaning set forth in Section
2.
"Event" shall have the meaning set forth in Section 8(d).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" means, collectively, each holder from time to time of
Registrable Securities including, without limitation, each Purchaser and its
assignees. To the extent this Agreement refers to an election, consent,
waiver, request or approval of or by the Holder, such reference shall mean an
election, consent, waiver, request or approval by the holders of at least 85%
in interest of the then-outstanding Registrable Securities (on an as exercised
basis).
"Indemnified Party" shall have the meaning set forth in Section
6(c).
"Indemnifying Party" shall have the meaning set forth in Section
6(c).
"Liquidated Damages" shall have the meaning set forth in Section
8(d).
"Losses" shall have the meaning set forth in Section 6(a).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"PIK Interest Shares" shall have the meaning set forth in the
Notes.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Registrable Securities" means (i) the shares of Common Stock
issued and issuable pursuant to the conversion of the Notes, and upon any
stock split, stock dividend, recapitalization or similar event with respect to
such shares of Common Stock and any other securities issued in exchange of or
replacement of such shares of Common Stock (collectively, the "Conversion
Shares"); until in the case of any of the Conversion Shares (a) a Registration
Statement covering such Conversion Share has been declared effective by the
Commission and continues to be effective during the Effectiveness Period, or
(b) such Conversion Share is sold in compliance with Rule 144 or may be sold
pursuant to Rule 144(k), after which time such Conversion Share shall not be a
Registrable Security; (ii) the shares of Common Stock issued and issuable
pursuant to the exercise of the Warrants, and upon any stock split, stock
dividend, recapitalization or similar event with respect to such shares of
Common Stock and any other securities issued in exchange of or replacement of
such shares of Common Stock (collectively, the "Warrant Shares"); until in the
case of any of the Warrant Shares (a) a Registration Statement covering such
Warrant Share has been declared effective by the Commission and continues to
be effective during the Effectiveness Period, or (b) such Warrant Share is
sold in compliance with Rule 144 or may be sold pursuant to Rule 144(k), after
which time such Warrant Share shall not be a Registrable Security; (iii) the
PIK Interest Shares, until in the case of any of the PIK Interest Shares (a) a
Registration Statement covering such PIK Interest Share has been declared
effective by the Commission and continues to be effective during the
Effectiveness Period, or (b) such PIK Interest Share is sold in compliance
with Rule 144 or may be sold pursuant to Rule 144(k), after which time such
PIK Interest Share shall not be a Registrable Security; and (iv) the shares of
Common Stock issued and issuable pursuant to the exercise of the AIRs, and
upon any stock split, stock dividend, recapitalization or similar event with
respect to such shares of Common Stock and any other securities issued in
exchange of or replacement of such shares of Common Stock (collectively, the
"AIR Shares"); until in the case of any of the AIR Shares (a) a Registration
Statement covering such AIR Share has been declared effective by the
Commission and continues to be effective during the Effectiveness Period, or
(b) such AIR Share is sold in compliance with Rule 144 or may be sold pursuant
to Rule 144(k), after which time such AIR Share shall not be a Registrable
Security.
"Registration Statement" means the registration statement,
including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement, for the Conversion Shares, the Warrant Shares, the PIK
Interest Shares and the AIR Shares required to be filed by the Company with
the Commission pursuant to this Agreement.
"Required Filing Date" means the thirtieth (30th) day immediately
following the Closing Date.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means any special counsel to Holder, for which Holder will
be reimbursed by the Company pursuant to Section 5 of this Agreement and
Section 8.1 of the Purchase Agreement.
"Warrant Shares" shall have the meaning set forth in the definition
of "Registrable Securities."
2. Registration. On or prior to the Required Filing Date, the Company
shall prepare and file with the Commission a Registration Statement covering
the resale of the Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration Statement shall be on
Form S-3 (except if the Company is not then eligible to register for resale
the Registrable Securities on Form S-3, in which case such registration shall
be on another appropriate form in accordance with the Securities Act and the
rules promulgated thereunder) and shall contain (except if otherwise directed
by the Purchasers) the "Plan of Distribution" substantially in the form
attached hereto as Exhibit B. The Company shall (i) not permit any securities
other than the Registrable Securities to be included in the Registration
Statement (except for securities which are subject to a written registration
rights agreement entered into by the Company prior to April 26, 2005, and
which are identified on Schedule 2.1(c) to the Purchase Agreement) that the
Company has a written obligation to include as of the date of this Agreement),
(ii) use its best efforts to cause the Registration Statement to be declared
effective under the Securities Act (including filing with the Commission a
request for acceleration of effectiveness in accordance with Rule 12dl-2
promulgated under the Exchange Act within five (5) Business Days of the date
that the Company is notified (orally or in writing, whichever is earlier) by
the Commission that the Registration Statement will not be "reviewed," or not
be subject to further review) as soon as possible after the filing thereof,
but in any event prior to the Effectiveness Date, and (iii) keep such
Registration Statement continuously effective under the Securities Act for a
period of two years from the Closing Date (the "Effectiveness Period").
3. Registration Procedures; Company's Obligations.
In connection with the registration of the Registrable Securities,
the Company shall:
(a) (i) Prepare and file with the Commission on or prior to the
Required Filing Date, a Registration Statement on Form S-3 (or if the Company
is not then eligible to register for resale the Registrable Securities on Form
S-3 such registration shall be on another appropriate form in accordance with
the Securities Act and the Rules promulgated thereunder) in accordance with
the method or methods of distribution thereof as specified by the Holder
(except if otherwise directed by the Holder), and use its best efforts to
cause the Registration Statement to become effective and remain effective as
provided herein, and (ii) in the event that the Commission does not permit the
inclusion of the AIR Shares in the Registration Statement contemplated by (i)
above, prepare and file with the Commission, within 30 calendar days following
the exercise of any AIR, an additional Registration Statement covering the AIR
Shares on Form S-3 (or if the Company is not then eligible to register for
resale the AIR Shares on Form S-3 such registration shall be on another
appropriate form in accordance with the Securities Act and the Rules
promulgated thereunder) in accordance with the method or methods of
distribution thereof as specified by the Holder (except if otherwise directed
by the Holder), and use its best efforts to cause such Registration Statement
to become effective and remain effective as provided herein; provided,
however, that not less than three (3) Business Days prior to the filing of any
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated therein
by reference), the Company shall (A) furnish to the Holder and any Special
Counsel, copies of all such documents proposed to be filed, which documents
(other than those incorporated by reference) will be subject to the timely
review of and comment by such Special Counsel, and (B) at the request of the
Holder cause its officers and directors, counsel and independent certified
public accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of such Special Counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file any Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holder or any Special Counsel shall
reasonably object in writing within three (3) Business Days of their receipt
thereof.
(b) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period in order to
register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or supplemented by
any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; (iii) respond promptly to any comments
received from the Commission with respect to the Registration Statement or any
amendment thereto and promptly provide the Holder true and complete copies of
all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by
the Holder set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
(c) Notify the Holder of Registrable Securities to be sold and
any Special Counsel promptly (and, in the case of (i)(A) below, not less than
three (3) Business Days prior to such filing and, in the case of (i)(C) below,
no later than the first Business Day following the date on which the
Registration Statement becomes effective) and (if requested by any such
Person) confirm such notice in writing no later than three (3) Business Days
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be
filed, (B) when the Commission notifies the Company whether there will be a
"review" of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement, and (C) with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission or any other Federal
or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of
the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of
any Proceeding for such purpose; and (v) of the occurrence of any event that
makes any statement made in the Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires any revisions to the Registration
Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any 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.
The Company shall promptly furnish to the Special Counsel, without
charge, (i) any correspondence from the Commission or the Commission's staff
to the Company or its representatives relating to any Registration Statement,
and (ii) promptly after the same is prepared and filed with the Commission, a
copy of any written response to the correspondence received from the
Commission.
(d) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of, (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any U.S. jurisdiction, at the earliest practicable moment.
(e) If requested by the Holder, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration
Statement such information as the Company reasonably agrees should be included
therein, and (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(f) Furnish to the Holder and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(g) Promptly deliver to the Holder and any Special Counsel,
without charge, as many copies of the Registration Statement, Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by the selling Holder in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto. Should the Holder offer or sell the Registrable
Securities, such Holder agrees to comply with all applicable securities laws.
(h) Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the selling Holder
and any Special Counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as the Holder reasonably requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or subject
the Company to any tax in any such jurisdiction where it is not then so
subject.
(i) Cooperate with the Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
to be sold pursuant to a Registration Statement and to enable such Registrable
Securities to be in such denominations and registered in such names as the
Holder may request at least two (2) Business Days prior to any sale of
Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(v), promptly prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an 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 light of the circumstances under which they were
made, not misleading.
(k) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on any securities
exchange, quotation system, market or over-the-counter bulletin board, if any,
on which the same securities issued by the Company are then listed as and when
required pursuant to the Purchase Agreement.
(l) Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than forty-five (45) days after the end
of any twelve (12) month period (or ninety (90) days after the end of any
twelve (12) month period if such period is a fiscal year) commencing on the
first day of the first fiscal quarter of the Company after the effective date
of the Registration Statement, which statement shall conform to the
requirements of Rule 158.
(m) If (i) there is material non-public information regarding the
Company which the Company's Board of Directors (the "Board") reasonably
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose and which the Company would be required to disclose
under the Registration Statement, then the Company may suspend effectiveness
of a Registration Statement and suspend the sale of Registrable Securities
under a Registration Statement one (1) time every three (3) months or three
(3) times in any twelve month period, provided that the Company may not
suspend its obligation for more than thirty (30) days in the aggregate in any
twelve month period if suspension is for any of the reasons listed above or
sixty (60) days in the aggregate in any twelve month period for any other
reason (each, a "Blackout Period"); provided, however, that no such suspension
shall be permitted for more than twenty (20) consecutive days, arising out of
the same set of facts, circumstances or transactions.
(n) Within two (2) Business Days after the Registration Statement
which includes the Registrable Securities is ordered effective by the
Commission, the Company shall deliver, and shall cause legal counsel for the
Company to deliver, to the transfer agent for such Registrable Securities
(with copies to the Holder whose Registrable Securities are included in such
Registration Statement) confirmation that the Registration Statement has been
declared effective by the Commission in the form attached hereto as Exhibit C.
4. Registration Procedures; Holder's Obligations
In connection with the registration of the Registrable Securities,
the Holder shall:
(a) If the Registration Statement refers to the Holder by name or
otherwise as the holder of any securities of the Company, have the right to
require (if such reference to the Holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force) the
deletion of the reference to the Holder in any amendment or supplement to the
Registration Statement that will be filed or prepared subsequent to the time
that such reference ceases to be required.
(b) (i) not sell any Registrable Securities under the
Registration Statement until it has received copies of the Prospectus as then
amended or supplemented as contemplated in Section 3(g) and notice from the
Company that such Registration Statement and any post-effective amendments
thereto have become effective as contemplated by Section 3(c), (ii) comply
with the prospectus delivery requirements of the Securities Act as applicable
to it in connection with sales of Registrable Securities pursuant to the
Registration Statement, and (iii) furnish to the Company information regarding
such Holder and the distribution of such Registrable Securities as is required
by law to be disclosed in the Registration Statement, and the Company may
exclude from such registration the Registrable Securities of the Holder if it
fails to furnish such information within a reasonable time prior to the filing
of each Registration Statement, supplemented Prospectus and/or amended
Registration Statement.
(c) upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v) or 3(m), forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until the Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing by the Company
that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
5. Registration Expenses
All reasonable fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Registration Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, the following: (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with each securities exchange
or other market on which Registrable Securities are required hereunder to be
listed, (B) with respect to filings required to be made with the Commission or
with the NASD pursuant to NASD Conduct Rule 2710, if required, and (C) in
compliance with state securities or Blue Sky laws); (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is requested by the holders of at least 85% of the Registrable
Securities included in the Registration Statement); (iii) messenger, telephone
and delivery expenses of the Company; (iv) fees and disbursements of counsel
for the Company; and (v) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions
contemplated by this Agreement, including, without limitation, the Company's
independent public accountants (including the expenses of any comfort letters
or costs associated with the delivery by independent public accountants of a
comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, and
the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder.
6. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Purchaser, its permitted assignees, officers, directors, agents, brokers
(including brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees, each Person who controls any such
Purchaser or permitted assignee (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
agents and employees of each such controlling Person, and the respective
successors, assigns, estate and personal representatives of each of the
foregoing, to the fullest extent permitted by applicable law, from and against
any and all claims, losses, damages, liabilities, penalties, judgments, costs
(including, without limitation, costs of investigation) and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, "Losses"), as incurred, arising out of or relating to any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus, as supplemented or amended, if
applicable, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except (i) to the extent, but only to the extent, that
such untrue statements or omissions are based solely upon information
regarding the Holder furnished in writing to the Company by the Holder
expressly for use therein, which information was reviewed and expressly
approved by the Holder or Special Counsel expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto, or (ii) as a result of the failure of the
Holder to deliver a Prospectus, as amended or supplemented, to a purchaser in
connection with an offer or sale. The Company shall notify the Holder promptly
of the institution, threat or assertion of any Proceeding of which the Company
is aware in connection with the transactions contemplated by this Agreement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of an Indemnified Party (as defined in
Section 6(c) hereof) and shall survive the transfer of the Registrable
Securities by the Holder.
(b) Indemnification by Purchaser. Each Purchaser and its
permitted assignees shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, and the respective
successors, assigns, estate and personal representatives of each of the
foregoing, to the fullest extent permitted by applicable law, from and against
any and all Losses, as incurred, arising out of or relating to any untrue or
alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus, as supplemented or amended, if applicable, or
arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus or form of prospectus or supplement thereto, in
the light of the circumstances under which they were made) not misleading, to
the extent, but only to the extent, that (i) such untrue statement or omission
is contained in or omitted from any information so furnished in writing by the
Holder or the Special Counsel to the Company specifically for inclusion in the
Registration Statement or such Prospectus, and (ii) such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus or such form of prospectus or, to the extent that such
information relates to the Holder or the Holder's proposed method of
distribution of Registrable Securities, was reviewed and expressly approved in
writing by the Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus Supplement. Notwithstanding anything to
the contrary contained herein, the Holder shall be liable under this Section
6(b) for only that amount as does not exceed the net proceeds to the Holder as
a result of the sale of Registrable Securities pursuant to such Registration
Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity pursuant
to Section 6(a) or 6(b) hereunder (an "Indemnified Party"), such Indemnified
Party promptly shall notify the Person from whom indemnity is sought (the
"Indemnifying Party) in writing, and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory
to the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to
the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have materially and adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall
have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (iii) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, which consent
shall not unreasonably be withheld, conditioned or delayed, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
All reasonable fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder or pursuant to applicable law).
(d) Contribution. If a claim for indemnification under Section
6(a) or 6(b) is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as
a result of any Losses shall be deemed to include, subject to the limitations
set forth in Section 6(c), any reasonable attorneys' or other reasonable fees
or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for under Section 6(a) or 6(b) was available to such
party in accordance with its terms. Notwithstanding anything to the contrary
contained herein, the Holder shall be liable or required to contribute under
this Section 6(d) for only that amount as does not exceed the net proceeds to
the Holder as a result of the sale of Registrable Securities pursuant to the
Registration Statement.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
7. Rule 144.
As long as the Holder owns Registrable Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act. As long as the Holder owns Registrable Securities, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Holder and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as the Holder may reasonably
request, all to the extent required from time to time to enable the Holder to
sell Conversion Shares, Warrant Shares, PIK Interest Shares and AIR Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act,
including providing any legal opinions of counsel to the Company referred to
in the Purchase Agreement. Upon the request of any Holder, the Company shall
deliver to such Holder a written certification of a duly authorized officer as
to whether it has complied with such requirements.
8. Miscellaneous.
(a) Remedies. The remedies provided in this Agreement and the
Purchase Agreement are cumulative and not exclusive of any remedies provided
by law. In the event of a breach by the Company or by the Holder of any of
their obligations under this Agreement, the Holder or the Company, as the case
may be, in addition to being entitled to exercise all rights granted by law
and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and the
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of
its Affiliates has as of the date hereof entered into, nor shall the Company
or any of its Affiliates, on or after the date of this Agreement, enter into,
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holder in this Agreement or otherwise conflicts with the
provisions hereof. Without limiting the generality of the foregoing, without
the written consent of the Holder, the Company shall not grant to any Person
the right to request the Company to register any securities of the Company
under the Securities Act if the rights so granted are inconsistent with the
rights granted to the Holder set forth herein, or otherwise prevent the
Company with complying with all of its obligations hereunder.
(c) No Piggyback on Registrations. Neither the Company nor any of
its security holders (other than the Holder in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement, (except
for securities which are subject to a written registration rights agreement
entered into by the Company prior to April 26, 2005, and which are identified
on Schedule 2.1(c) to the Purchase Agreement).
(d) Failure to File Registration Statement and Other Events. The
Company and the Holder agree that the Holder will suffer damages if the
Registration Statement is not filed on or prior to the Required Filing Date or
is not declared effective by the Commission on or prior to the Effectiveness
Date and maintained in the manner contemplated herein during the Effectiveness
Period or if certain other events occur. The Company and the Holder further
agree that it would not be feasible to ascertain the extent of such damages
with precision. Accordingly, if (i) the Registration Statement is not filed
on or prior to the Required Filing Date, or is not declared effective by the
Commission on or prior to the Effectiveness Date, or (ii) the Company fails to
file with the Commission a request for acceleration in accordance with Rule
12dl-2 promulgated under the Exchange Act within five (5) Business Days of the
date that the Company is notified (orally or in writing, whichever is earlier)
by the Commission that a Registration Statement will not be "reviewed," or not
subject to further review, or (iii) the Registration Statement is filed with
and declared effective by the Commission but thereafter ceases to be effective
or available as to all Registrable Securities for 30 days during the
Effectiveness Period, without being succeeded within a reasonable period by a
subsequent Registration Statement filed with and declared effective by the
Commission, or (iv) the Company suspends the use of the Prospectus forming a
part of such Registration Statement for more than thirty (30) days in any
period of 365 consecutive days if the Company suspends in reliance on its
ability to do so due to the existence of a development that, in the good faith
discretion of the Board, makes it appropriate to so suspend or which renders
the Company unable to comply with the Commission requirements, or the Company
suspends the use of the Prospectus forming a part of such Registration
Statement for more than sixty (60) days in any period of 365 consecutive days
for any other reason, or (v) during the Effectiveness Period, trading in the
Common Stock shall be suspended for any reason for more than three (3)
Business Days in the aggregate, or (vi) the Company breaches in a material
respect any covenant or other material term or condition in the Transaction
Documents (other than a representation or warranty contained therein) or any
other agreement, document, certificate or other instrument delivered in
connection with the transactions contemplated hereby and thereby, and such
breach continues for a period of thirty (30) days after written notice thereof
to the Company, or (vii) the Company has breached Section 3(n) of this
Agreement (any such failure or breach being referred to as an "Event"), the
Company shall pay as liquidated damages for such failure or breach and not as
a penalty (the "Liquidated Damages") to the Holder (or to its assignees, as
the case may be) an amount equal to two percent (2%) of the purchase price of
the Notes, Warrants and AIRs paid by the initial Holder pursuant to the
Purchase Agreement for each thirty (30) day period, pro rated for any period
less than thirty (30) days, following the Event until the applicable Event has
been cured. Payments to be made pursuant to this Section 8(d) shall be due and
payable in cash in arrears at the end of each thirty (30) day period. The
parties agree that the Liquidated Damages represent a reasonable estimate on
the part of the parties, as of the date of this Agreement, of the amount of
damages that may be incurred by the Holder if the Registration Statement is
not filed on or prior to the Required Filing Date or has not been declared
effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Period
or if any other Event as described herein has occurred.
(e) Consent to Jurisdiction; Waiver of Jury Trial. The Company
and each Purchaser (i) hereby irrevocably submit to the exclusive jurisdiction
of the United States District Court for the Northern District of Texas and the
courts of the State of Texas located in Dallas County for the purposes of any
suit, action or proceeding arising out of or relating to this Agreement or the
Purchase Agreement, (ii) hereby waive, and agree not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in
an inconvenient forum or that the venue of the suit, action or proceeding is
improper, and (iii) hereby waive any and all rights they may have to a trial
by jury with respect to any suit, action or proceeding based on, or arising
out of, under, or in connection with, this Agreement. The Company and each
Purchaser consent to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
in this Section 8(e) shall affect or limit any right to serve process in any
other manner permitted by law.
(f) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the
Company and the Purchasers.
(g) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified for notice prior to 5:00 p.m.,
Mountain Time, on a Business Day, (ii) the first Business Day after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified for notice later than 5:00 p.m.,
Mountain Time, on any date and earlier than 11:59 p.m., Mountain Time, on such
date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) actual receipt by the
party to whom such notice is required to be given.
(x) if to the Company:
Broadcast International, Inc.
0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx, President & CEO
Telecopier: (000) 000-0000
with a copy to:
Broadcast International, Inc.
0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
(y) if to any Purchaser:
At the address of such Purchaser set forth on Exhibit
A to this Agreement.
or to such other address or addresses or facsimile number or numbers as any
such party may most recently have designated in writing to the other parties
hereto by such notice.
(h) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of the Holder and its successors and
assigns. The Company may not assign this Agreement or any of its respective
rights or obligations hereunder without the prior written consent of the
Purchasers. Each Purchaser may assign its rights hereunder in the manner and
to the Persons as permitted under the Purchase Agreement.
(i) Assignment of Registration Rights. The rights of the Holder
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall
be assignable by each Holder to any transferee of the Holder of all or a
portion of the shares of Registrable Securities if: (i) the Holder 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) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws; (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section, the transferee or
assignee agrees in writing with the Company to be bound by all of the
provisions of this Agreement; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Agreement and
shall be for no less than 10% of the Registrable Securities. In addition, the
Holder shall have the right to assign its rights hereunder to any other Person
with the prior written consent of the Company, which consent shall not be
unreasonably withheld, conditioned or delayed. The rights to assignment shall
apply to the Holder (and to subsequent) successors and assigns. In the event
of an assignment pursuant to this Section 8(i), the Purchaser shall pay all
incremental costs and expenses incurred by the Company in connection with
filing a Registration Statement (or an amendment to the Registration
Statement) to register the shares of Registrable Securities assigned to any
assignee or transferee of the Purchaser.
(j) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original, and all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(k) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
principles of conflicts of law thereof. This Agreement shall not be
interpreted or construed with any presumption against the party causing this
Agreement to be drafted.
(l) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(m) Termination. This Agreement shall terminate on the date on
which all remaining Registrable Securities may be sold without restriction
pursuant to Rule 144(k) of the Securities Act.
(n) Severability. If any term, provision, covenant or restriction
of this Agreement is held to be invalid, illegal, void or unenforceable in any
respect, the remainder of the terms, provisions, covenants and restrictions
set forth herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties hereto shall use their
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.
(o) Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
[Remainder of page intentionally left blank. Signature pages to follow.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized persons as of the date first
indicated above.
BROADCAST INTERNATIONAL, INC.
/s/ Xxxxxx X. Xxxxx
By:_____________________________________
Name: Xxxxxx X. Xxxxx
Title: President & CEO
[Signatures of Purchasers to follow on next pages.]
PURCHASERS:
GRYPHON MASTER FUND, L.P.
By: Gryphon Partners, L.P., its General Partner
By: Gryphon Management Partners, L.P., its General Partner
By: Gryphon Advisors, L.L.C., its General Partner
By:_____________________________________________
X.X. Xxxx, XX, Authorized Agent
GSSF MASTER FUND, LP
By: Gryphon Special Situations Fund, LP, its General Partner
By: GSSF Management Partners, LP, its General Partner
By: GSSF, LLC, its General Partner
By: _______________________________________
X.X. Xxxx, XX, Authorized Agent
[insert other Purchasers]
EXHIBIT A
PURCHASERS
Gryphon Master Fund, L.P.
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx
With a copy to:
Xxxxxx X. Garden, P.C.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Attn: Xxxxxx X. Garden, Esq.
GSSF Master Fund, LP
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx
With a copy to:
Xxxxxx X. Garden, P.C.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Attn: Xxxxxx X. Garden, Esq.
[insert other Purchasers]
[insert other Purchasers]
EXHIBIT B
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
stockholders. The common stock may be sold in one or more transactions at
fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market prices, at varying prices determined at the
time of sale, or at negotiated prices. These sales may be effected at various
times in one or more of the following transactions, or in other kinds of
transactions:
.. transactions on any national securities exchange or U.S. inter-dealer
system of a registered national securities association on which the
common stock may be listed or quoted at the time of sale;
.. in the over-the-counter market;
.. in private transactions and transactions otherwise than on these
exchanges or systems or in the over-the-counter market;
.. in connection with short sales of the shares made after the date of this
prospectus;
.. by pledge to secure or in payment of debt and other obligations;
.. through the writing of options, whether the options are listed on an
options exchange or otherwise;
.. in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions in
standardized or over-the-counter options; or
.. through a combination of any of the above transactions.
The selling stockholders and their successors, including their
transferees, pledgees or donees or their successors, may sell the common stock
directly to purchasers or through underwriters, broker-dealers or agents, who
may receive compensation in the form of discounts, concessions or commissions
from the selling stockholders or the purchasers. These discounts, concessions
or commissions as to any particular underwriter, broker-dealer or agent may be
in excess of those customary in the types of transactions involved.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus.
We entered into a registration rights agreement for the benefit of the
selling stockholders to register the common stock under applicable federal and
state securities laws. The registration rights agreement provides for
cross-indemnification of the selling stockholders and us and our respective
directors, officers and controlling persons against specific liabilities in
connection with the offer and sale of the common stock, including liabilities
under the Securities Act. We will pay substantially all of the expenses
incurred by the selling stockholders incident to the offering and sale of the
common stock.
Each selling stockholder has been advised, and has acknowledged to us,
that the Commission currently takes the position that coverage of short sales
of shares of our common stock "against the box" made prior to the effective
date of the registration statement of which this prospectus is a part with any
security covered by this prospectus is a violation of Section 5 of the
Securities Act, as set forth in Item 65, Section 5 under Section A, of the
Manual of Publicly Available Telephone Interpretations, dated June 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.
Accordingly, each selling stockholder has agreed (on behalf of itself or any
person over which it has direct control) not to use any of the securities
covered by this prospectus to cover any short sales, hedging or similar
transactions with the same economic effect as a short sale, made prior to the
effective date of the registration statement. In addition, each selling
stockholder has agreed to comply with Regulation M under the federal
securities laws.
EXHIBIT C
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Name and address of Transfer Agent]
_________________
_________________
_________________
Attn: ____________
Re: Broadcast International, Inc.
Ladies and Gentlemen:
We are counsel to Broadcast International, Inc., a Utah corporation (the
"Company"), and have represented the Company in connection with that certain
Securities Purchase Agreement (the "Purchase Agreement"), dated as of May 16,
2005, by and among the Company and the purchasers (the "Purchasers" and the
"Holders") named therein pursuant to which the Company issued to the
Purchasers its 6% Senior Secured Convertible Notes Due 2008 and other
securities. Pursuant to the Purchase Agreement, the Company has also entered
into a Registration Rights Agreement with the Purchasers (the "Registration
Rights Agreement"), dated as of May 16, 2005, pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement), under the Securities Act of 1933, as
amended (the "1933 Act"). In connection with the Company's obligations under
the Registration Rights Agreement, on _________ __, 2005, the Company filed a
Registration Statement on Form S-3 (File No. 333-________) (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") relating
to the resale of the Registrable Securities which names the Holders as selling
stockholders thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and, accordingly, the
Registrable Securities are available for resale under the 1933 Act in the
manner specified in, and pursuant to the terms of, the Registration Statement.
Very truly yours,
By:
cc: [PURCHASERS]
