Exhibit 10.9
STOCK PURCHASE AND OPTION GRANT AGREEMENT
This Stock Purchase and Option Grant Agreement dated February 6, 2004
(the "Agreement") is effective as of the Effective Date (as defined below) by
and between Broadcast International, Inc., a Utah corporation (formerly Laser
Corp., a Utah corporation) (the "Company") and each of the individuals whose
names are set forth on Schedule A attached hereto (each, a "Purchaser" and
collectively, the "Purchasers").
BACKGROUND
WHEREAS Streamware Solutions AB ("Streamware") and Interact Devices,
Inc. ("IDI") are parties to that certain Partner Agreement entered into as of
April 26, 2002, and that certain Addendum I to Interact Devices, Inc. &
Streamware Solutions AB Partner Agreement entered into as of December 4, 2002
(together, the "Partner Agreement").
WHEREAS Streamware and IDI desire to amend and restate the Partner
Agreement by entering into that certain License Agreement by and between
Streamware and IDI of even date herewith (the "License Agreement").
WHEREAS Purchasers are certain shareholders, directors, officers and
affiliates of Streamware.
WHEREAS Purchasers have presented to Streamware the opportunity to
purchase the additional Shares (as defined below) and the Option (as defined
below) to be issued to Purchasers pursuant to this Agreement and have
disclosed the terms and conditions of such purchase.
WHEREAS Streamware has declined to purchase the Shares and the Option.
WHEREAS Streamware's amendment and restatement of the Partner Agreement
by entering into the License Agreement is conditioned upon Streamware and the
Company entering into a Stock Issuance and Option Grant Agreement between
Streamware and the Company of even date herewith and the Purchasers and the
Company entering into this Agreement.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. SHARE PURCHASE. The Company hereby sells to each Purchaser
the number of shares of the Company's Common Stock, par value $0.05 per share,
set forth opposite such Purchaser's name on Schedule A attached hereto (the
"Shares") at a per share price of $2.00 (the "Purchase Price"). The
Purchasers shall have the right to purchase up to 250,000 Shares in the
aggregate. Each Purchaser agrees to pay to the Company the aggregate Purchase
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Price set for opposite such Purchaser's name on Schedule A attached hereto by
cash, check or wire transfer (the "Purchase Price"). The Company shall
deliver a stock certificate representing the Shares to each Purchaser on the
Effective Date against delivery of the Purchase Price by such Purchaser. The
Company will authorize and reserve, free of preemptive rights and other
similar contractual rights of shareholders, a sufficient number of its
authorized but unissued shares of its Common Stock for the sale of the Shares
to Purchasers.
SECTION 2. GRANT OF OPTION.
2.1 Grant of Option. The Company hereby grants to each Purchaser a
fully-vested, non-qualified option (each, an "Option") to purchase the number
of shares of the Company's Common Stock, par value $0.05 per share (subject to
adjustment pursuant to Section 2.6) set for opposite each Purchaser's name on
Schedule A attached hereto (the "Option Shares"), at a per share exercise
price of $4.50 (the "Exercise Price"). The number of Option Shares to be
granted to each Purchaser is calculated by multiplying the number of Shares to
be purchased by such Purchaser by seven (7). The Options are granted to
Purchasers outside of, and are not subject to, the Broadcast International,
Inc. 2004 Long Term Incentive Plan (the "Plan").
2.2 Term. Each Purchaser shall have the right to exercise all or any
portion of the Option at any time prior to the two (2)-year anniversary of the
Effective Date by executing and delivering to the Company the exercise notice
substantially in the form attached hereto as Exhibit A (the "Exercise Notice")
and delivering to the Company payment of the Exercise Price.
2.3 Notice. The Company shall notify each Purchaser in writing of the
Company's proposed sale or transfer of substantially all of its assets or
capital stock to, merger into, or consolidation or share exchange with, any
other entity (the "Acquiring Entity"), or any other proposed acquisition of
the Company by any Acquiring Entity (a "Corporate Event") at least thirty (30)
days prior to the closing of such Corporate Event. If a Corporate Event
occurs, the Company shall require the Acquiring Entity to assume the
unexercised portion of the Options as a condition precedent to the Corporate
Event.
2.4 Reservation of Shares. The Company shall authorize and reserve,
free of preemptive rights and other similar contractual rights of
shareholders, a sufficient number of Option Shares.
2.5 Method of Exercise. Payment of the aggregate Exercise Price shall
be by any of the following, or a combination thereof, at the election of each
Purchaser:
(a) Cash; or
(b) Check.
2.6 Adjustment. In the event of a stock split, stock combination,
recapitalization, issuance of additional shares of capital stock, options or
warrants or other rights to acquire capital stock of the Company or a
Corporate Event (to the extent the Option is assumed by the Acquiring Entity)
(each, an "Adjustment Event"), the kind and number of Option Shares
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hereunder and the Exercise Price related thereto shall be adjusted so that
each Purchaser will be entitled to receive, upon exercise of the Option (or
any portion thereof), the kind and number of Option Shares or other securities
which such Purchaser would have received had such Purchaser exercised the
Option immediately prior to such Adjustment Event. An adjustment made
pursuant to this Section 2.6 shall become effective immediately after the
effective date of the Adjustment Event. Whenever the type or number of Option
Shares or the Exercise Price is adjusted pursuant to this Section 2.6, the
Company shall promptly mail by first class mail, postage prepaid, to each
Purchaser, notice of such adjustment or adjustments.
SECTION 3. DELIVERIES
The Company has delivered to each Purchaser each of the following
documents, the delivery of each of which is a condition to such Purchaser's
obligations under this Agreement:
(a) a certificate executed by an officer of the Company certifying that
the representations and warranties of the Company are true and correct and
that all actions required to be taken by the Company prior to the Effective
Date have been or will be taken;
(b) a certified copy of the resolutions of the Board of Directors of
the Company (the "Board") authorizing the execution and performance of this
Agreement;
(c) a certified copy of the Company's current bylaws;
(d) a certified copy of the Company's current articles of
incorporation;
(e) a copy of the executed stock certificate representing the Shares to
be issued to such Purchaser on the Effective Date;
(f) a lock-up agreement executed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ in the form
attached hereto as Exhibit B; and
(g) a copy of an executed stock issuance and option grant agreement
between the Company and Streamware.
Each Purchaser has delivered to the Company an executed lock up
agreement in the form attached hereto as Exhibit C, the delivery of which is a
condition to the Company's obligations under this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Purchasers, except as set forth on the
Schedule of Exceptions attached hereto as Exhibit D (the "Schedule of
Exceptions") or as disclosed in the Company's annual report on Form 10-K for
the fiscal year ended December 31, 2002 (the "Form 10-K"), its quarterly
reports on Form 10-Q for the fiscal quarters ended September 30, 2003, June
30, 2003 and March 31, 2003 (each, a "Form 10-Q"), its current report on Form
8-K dated October 15, 2003 and the amendment thereto dated December 11, 2003
(the "Form 8-K"), and its definitive information statement on Schedule 14C
dated December 23, 2003 and (the "Schedule 14C"), filed by the Company with
the Securities and Exchange Commission (the
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"Commission") (the Form 10-K, the Form 10-Qs, the Form 8-K, the Schedule 14C
and such registration statements, reports, proxy statements and amendments
thereto, the "SEC Documents"), as follows:
4.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and the Company is qualified to do business as a
foreign corporation in each jurisdiction in which qualification is required,
except where the failure to so qualify would not individually or in the
aggregate have a material adverse effect on, or a material adverse change in,
or a group of such effects on or changes in, the business, operations,
financial condition, results of operations, prospects, assets or liabilities
(a "Material Adverse Effect") on the Company or the Subsidiary.
4.2 Subsidiaries. As of the date hereof, the Company wholly-owns or
has a greater than fifty percent (50%) ownership interest in the following
subsidiaries: BI Acquisitions, Inc., a Utah corporation (the "Subsidiary").
The Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and the
Subsidiary is qualified to do business as a foreign corporation in each
jurisdiction in which qualification is required, except where the failure to
so qualify would not individually or in the aggregate have a Material Adverse
Effect on the Company or the Subsidiary.
4.3 Authorized and Outstanding Capital Stock. The Company has
authorized the issuance of 40,000,000 shares of Common Stock, $0.05 par value
per share, of which approximately 17,759,000 shares are issued and outstanding
as of the Effective Date. All shares of Common Stock have been duly
authorized, have been validly issued, are fully paid and nonassessable and are
free of any liens or encumbrances. The Plan provides for the granting of
options to the Company's employees, directors, consultants and advisors, to
purchase an aggregate of up to 6,000,000 shares of Common Stock, of which as
of the Effective Date, options to purchase an aggregate of approximately
3,950,000 shares of Common Stock are outstanding, none of which have been
exercised and 2,050,000 shares are available for grant. All shares of Common
Stock subject to issuance pursuant to the Plan, upon issuance, will be duly
authorized, validly issued, fully paid and nonassessable. The Company has
agreed to issue 1,000,000 shares of Common Stock and options to purchase a
total of 1,500,00 shares of Common Stock to Streamware pursuant to the Stock
Issuance and Option Grant Agreement between the Company and such persons of
even date herewith (the "Additional Shares and Options"). The Company has
issued to Meridel Limited, a Turks and Caicos corporation, and ▇▇▇▇▇▇ Holdings
Limited, a Turks and Caicos corporation, a convertible line of credit
promissory note dated December 23, 2003 in the amount of $1,000,000 (the
"Note"), which is convertible into a maximum of 1,000,000 shares of the
Company's Common Stock. Except for the Shares, the Option, the Additional
Shares and Options, the Note and the options described in this Section 4.3,
there are no authorized or outstanding capital stock, options, warrants,
preemptive rights, rights of first refusal or other rights to purchase any
capital stock of the Company or any equity or debt securities convertible into
or exchangeable or exercisable for capital stock of the Company.
4.4 Issuance and Delivery of the Shares and Option Shares and Grant and
Delivery of the Option. The issuance of the Shares and the Option Shares,
when issued, and the grant of the Option have been duly authorized. The
Shares and the Option Shares, when issued, are or, in the
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case of the Option Shares, when issued will be, duly authorized, validly
issued, fully paid and nonassessable. No preemptive rights or other rights to
subscribe for or purchase exists with respect to the issuance of the Shares or
the Option or will exist with respect to the issuance of the Option Shares,
when issued. No further approval or authority of the shareholders or the
Board is required for the issuance of the Shares or the Option Shares, when
issued, and the grant of the Option. The offer and issuance of the Shares and
the Option and the Option Shares is in compliance with the Securities Act of
1933, as amended (the "Securities Act") and all rules and regulations
promulgated thereunder and all state securities laws, regulations and
requirements.
4.5 Due Execution, Delivery and Performance of the Agreements. The
Company has full legal right, corporate power and authority to carry on its
business as presently conducted and enter into this Agreement and to perform
the transactions contemplated hereby. The Subsidiary has full legal right,
corporate power and authority to carry on its business as presently conducted.
This Agreement has been duly authorized, executed and delivered by the
Company. The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions herein contemplated will not
violate any provision of the organizational documents of the Company or the
Subsidiary and will not result in the creation of any lien, charge, security
interest or encumbrance upon any assets or property of the Company or the
Subsidiary pursuant to the terms or provisions of, or will not conflict with,
result in the breach or violation of, or constitute, either by itself or upon
notice or the passage of time or both, a default under any agreement,
mortgage, deed of trust, lease, franchise, license, indenture, permit or other
instrument to which the Company or the Subsidiary is a party or by which the
Company or the Subsidiary or any of their assets or properties may be bound or
affected, including, without limitation, any contract listed in the SEC
Documents (as defined below), or any statute or any authorization, judgment,
decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other domestic or international governmental body
applicable to the Company or the Subsidiary or any of their properties. No
consent, approval, authorization or other order of or registration,
qualification, designation, declaration or filing with any court, regulatory
body, administrative agency or other governmental body is required for the
execution, delivery and performance of this Agreement or the consummation by
the Company of the transactions contemplated hereby, except for compliance
with the Blue Sky laws of any state of the United States and United States
federal securities laws applicable to the issuance of the Shares and the
Option Shares, when issued, and the grant of the Option. Assuming the valid
execution hereof by Purchasers, this Agreement will constitute the legal,
valid and binding obligation of the Company, enforceable in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law) and except as the indemnification
agreements of the Company in Section 7.4 hereof may be legally unenforceable.
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4.6 No Actions or Violations. There is no legal or governmental
actions, suits, arbitrations, investigation or proceeding (each, an "Action")
pending or, to the Company's knowledge, threatened to which the Company or the
Subsidiary is or may be a party (a) which seeks to prevent or restrain the
transactions contemplated by this Agreement or to recover damages as a result
of the consummation of such transactions or (b) which is reasonably likely to
have a Material Adverse Effect on the Company or the Subsidiary. Neither the
Company nor the Subsidiary is subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. No Action by the Company or the Subsidiary is currently
pending, nor does the Company or the Subsidiary intend to initiate any Action,
that is reasonably likely to have a Material Adverse Effect on the Company.
The Company is not in violation of any term of its articles of incorporation,
as amended, or bylaws, as amended.
4.7 Investment Company. The Company is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940,
as amended.
4.8 Conflicting Registration Rights. Except as set forth in the
Schedule of Exceptions, no shareholder of the Company has or will have any
right (which has not been waived or has not expired by reason of lapse of time
following notification of the Company's intent to file the Registration
Statement (as defined below)) to request or require the Company to register
the sale of any shares owned by such shareholder under the Securities Act on
the Registration Statement.
4.9 Brokers. There is no broker, finder or other party that is entitled
to receive from the Company or the Subsidiary any brokerage or finder's fee or
other fee or commission as a result of any transactions contemplated by this
Agreement.
4.10 Books and Records. The books, records and accounts of the Company
and the Subsidiary accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and the Subsidiary, respectively, all to the extent
required by generally accepted accounting principles. The Company and the
Subsidiary each maintain a system of internal accounting controls sufficient
to provide reasonable assurances that (a) transactions are executed in
accordance with management's general or specific authorizations, (b)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and to
maintain asset accountability, (c) access to assets is permitted only in
accordance with management's general or specific authorization and (d) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
4.11 SEC Documents.
(a) Reports. The Company has furnished to each Purchaser prior to
the date hereof copies of its SEC Documents. Each of the SEC Documents, as of
the Effective Date, does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under
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which they were made, not misleading. Neither the Company nor the Subsidiary
is a party to any material contract, agreement or other arrangement that was
required to have been filed as an exhibit with the Commission that was not so
filed.
(b) Financial Statements. The Company has provided each Purchaser
with copies of its audited financial statements (the "Audited Financial
Statements") for the fiscal year ended December 31, 2002, and its unaudited
financial statements for the nine (9)-month period ended September 30, 2003
(the "Balance Sheet Date"). Since the Balance Sheet Date, the Company has
duly filed with the Commission all SEC Documents required to be filed by it
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the Securities Act. The audited and unaudited consolidated financial
statements of the Company included in the SEC Documents filed prior to the
Effective Date fairly present, in conformity with United States generally
accepted accounting principles ("GAAP") (except as otherwise permitted by Form
10-Q) applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of the Company as at the dates
thereof and the consolidated results of its operations and cash flows for the
periods then ended (subject to normal year-end audit adjustments in the case
of unaudited interim financial statements).
4.12 Absence of Certain Changes Since Balance Sheet Date. Except for
the acquisition of the Subsidiary by the Company on October 1, 2004, since the
Balance Sheet Date or as disclosed in the SEC Documents, the business and
operations of the Company and the Subsidiary have been conducted in the
ordinary course consistent with past practice, and there has not been:
(a) any declaration, setting aside or payment of any dividend or
other distribution of the assets of the Company or the Subsidiary with respect
to any shares of its capital stock or any repurchase, redemption or other
acquisition by the Company or the Subsidiary of any outstanding shares of the
Company's or the Subsidiary's capital stock;
(b) any damage, destruction or loss, whether or not covered by
insurance, except for such occurrences that have not resulted, and are not
expect to result, in a Material Adverse Effect on the Company or the
Subsidiary;
(c) any waiver by the Company or the Subsidiary of a valuable
right or of a material debt owed to it, except for such waivers that have not
resulted, and are not expected to result, individually or in the aggregate, in
a Material Adverse Effect on the Company or the Subsidiary;
(d) any material change or amendment to, or any waiver of any
material rights under a material contract or other arrangement, including,
without limitation, any supply or service contract, or the termination of any
such contract or arrangement, to which the Company or the Subsidiary is a
party or by which the Company, the Subsidiary or any of the Company's or the
Subsidiary's assets or properties is bound or subject, except for changes,
amendments or waivers that are expressly provided for or disclosed in this
Agreement or that have not resulted, and are not expected to result,
individually or in the aggregate, in a Material Adverse Effect on the Company
or the Subsidiary;
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(e) any change by the Company or the Subsidiary in its accounting
principles, methods or practices or in the manner in which it keeps its
accounting books and records, except any such change required by a change in
GAAP; or
(f) any other event or condition of any character, except for such
events and conditions that have not resulted, and are not expected to result,
individually or in the aggregate, in a Material Adverse Effect on the Company
or the Subsidiary.
4.13 Intellectual Property
(a) Ownership or Right to Use. The Company has sole title to and
owns, or is licensed or otherwise possesses legally enforceable right to use,
all patents or patent applications, software, know-how, registered or
unregistered trademarks and service marks and any applications therefore,
registered or unregistered copyrights, trade names, and any applications
therefore, trade secrets or other confidential or proprietary information (the
"Intellectual Property") necessary to enable the Company and the Subsidiary to
carry on its business as currently conducted, except where any deficiency, or
group of deficiencies, therein would not have a Material Adverse Effect on the
Company or the Subsidiary. The Company covenants that it will, and that it
will cause the Subsidiary to, where the Company in the exercise of reasonable
judgment deems it appropriate, use reasonable business efforts to seek
copyright and patent registration, and other appropriate intellectual property
protection, for the Intellectual Property of the Company and the Subsidiary.
(b) Licenses; Other Agreements. Except as set forth in the
Schedule of Exceptions, neither the Company nor the Subsidiary is subject to
any exclusive license (whether such exclusivity is temporary or permanent) to
any material portion of the Intellectual Property of the Company or the
Subsidiary. There are not outstanding any licenses or agreements of any kind
relating to the Intellectual Property of the Company or the Subsidiary.
Neither the Company nor the Subsidiary is obligated to pay any royalties or
other payments to third parties with respect to the marketing, sale,
distribution, manufacture, license or use of any Intellectual Property, except
as it may be so obligated in the ordinary course of its business, as disclosed
in the SEC Documents or where the aggregate amount of such payments could not
reasonably be expected to be material.
(c) No Infringement. Neither the Company nor the Subsidiary has
violated or infringed, nor is currently violating or infringing, and neither
the Company nor the Subsidiary has received any communication alleging that it
has violated or infringed, any Intellectual Property of any other individual
or entity, to the extent that any such violation or infringement, either
individually or together with all other such violations and infringements,
would have a Material Adverse Effect on the Company or the Subsidiary.
4.14 Title to Property and Assets. The Company and the Subsidiary each
have all requisite corporate power and authority to own or lease its assets
and other properties. Except as set forth in the Schedule of Exceptions, the
material properties and assets of the Company and the Subsidiary are owned by
the Company and the Subsidiary free and clear of all mortgages,
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deeds of trust, liens, charges, encumbrances and security interests except for
statutory liens for the payment of current taxes that are not yet delinquent
and liens, encumbrances and security interests that arise in the ordinary
course of business and do not affect such properties and assets of the Company
and the Subsidiary. With respect to leased property and assets, the Company
and the Subsidiary are each in compliance with such leases in all material
respects.
4.15 Tax Matters. Except as set forth in the SEC Documents, the
Company and the Subsidiary have filed all material tax returns required to be
filed, which returns are true, complete and correct in all material respects,
and neither the Company nor the Subsidiary is in default in the payment of
such taxes, including penalties and interest, assessments, fees and other
charges, shown thereon due or otherwise assessed, other than those being
contested in good faith and for which adequate reserves have been provided or
those currently payable without interest that were payable pursuant to such
returns or any assessments with respect thereto.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each
Purchaser, severally but not jointly, represents and warrants to the Company
as follows:
5.1 Due Execution, Delivery and Performance of the Agreements. Each
Purchaser has full legal right, power and authority to enter into this
Agreement and to perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by such Purchaser. The
execution, delivery and performance of this Agreement by by such Purchaser and
the consummation of the transactions herein contemplated will not violate
result in the creation of any lien, charge, security interest or encumbrance
upon any assets or property of such Purchaser pursuant to the terms or
provisions of, or will not conflict with, result in the breach or violation
of, or constitute, either by itself or upon notice or the passage of time or
both, a default under any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which such
Purchaser is a party or by which such Purchaser or any of its assets or
properties may be bound or affected or any statute or any authorization,
judgment, decree, order, rule or regulation of any court or any regulatory
body, administrative agency or other governmental body applicable to such
Purchaser or any of its properties. No consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental body is required for the execution, delivery and performance of
this Agreement or the consummation by such Purchaser of the transactions
contemplated hereby. Assuming the valid execution hereof by the Company, this
Agreement will constitute the legal, valid and binding obligation of such
Purchaser, enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of such Purchaser in Section 7.4
hereof may be legally unenforceable.
5.3 No Actions. There are no legal or governmental actions, suits or
proceedings pending or, to such Purchaser's knowledge, threatened to which
such Purchaser is or may be a party which seeks to prevent or restrain the
transactions contemplated by this Agreement or to recover damages as a result
of the consummation of such transactions.
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5.4 Nature of Purchaser. Such Purchaser is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions
with respect to investments in shares representing an investment decision like
that involved in the purchase of the Shares and the acquisition of the Option
Shares, when issued, and the Option, including investments in securities
issued by the Company. Such Purchaser is able to bear the economic risk of
loss of such Purchaser's entire investment in the Shares, the Option Shares
and the Option.
5.5 Review of Information. Such Purchaser has requested, received,
reviewed and considered all information it deems relevant in making an
informed decision to purchase the Shares and acquire the Option. Such
Purchaser has received and reviewed, and has been given the opportunity to ask
questions of the Company with respect to, the SEC Documents.
5.6 Investment Intent. Such Purchaser is purchasing the Shares, the
Option Shares, when issued, and the Option in the ordinary course of its
business and for its own account for investment only and with no present
intention of distributing any of the Shares, the Option Shares or the Option
or entering into any arrangement or understanding with any other person
regarding the distribution of the Shares, the Option Shares or the Option (it
being understood that the foregoing does not limit such Purchaser's right to
sell Shares and the Option Shares pursuant to the Registration Statement).
5.7 Accredited Investor. Such Purchaser, with the exception of ▇▇▇▇▇
▇▇▇▇▇▇▇, is an "accredited investor," as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
5.8 Restrictions on Transfer. Such Purchaser acknowledges and
understands that the Shares, unless registered, constitute "restricted
securities" under the Securities Act and may only be sold, offered,
transferred, pledge or hypothecated in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of such Purchaser's investment intent as expressed herein or pursuant
to an effective registration statement under the Securities Act. Such
Purchaser understands and agrees that the Company shall cause the legend set
forth below or a legend substantially equivalent thereto, to be placed upon
any certificate(s) evidencing ownership of the Shares together with any other
legends that may be required by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES
ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, SUCH
OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS
PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS OR, IN THE OPINION OF COUNSEL, SUCH
OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS
IN COMPLIANCE THEREWITH.
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5.9 Sole Representations and Warranties. Except for the
representations and warranties contained in this Section 5, such Purchaser
makes no representation or warranty to the Company, express or implied, in
connection with the transactions contemplated by this Agreement.
SECTION 6. SURVIVAL. Notwithstanding any investigation made by any
party to this Agreement, all covenants, agreements, representations and
warranties made by the Company and Purchasers herein and in the certificates
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to Purchasers of the Shares and the Option Shares, when issued, and
the delivery of the Option.
SECTION 7. REGISTRATION OF SHARES; COMPLIANCE WITH SECURITIES ACT
7.1 Registration Procedures and Expenses.
(a) Demand Registration. At any time following the one hundred
twenty day (120)-day anniversary of the Effective Date, each Purchaser shall
have the right to request that the Company prepare and file with the
Commission a registration statement on Form S-3 or other applicable form as
determined by the Company (the "Registration Statement") for the purpose of
registering the sale of the Shares and the Option Shares by such Purchaser
from time to time on the facilities of any securities exchange or trading
system on which the Common Stock of the Company is then traded or in
privately-negotiated transactions. The Company shall prepare and file the
Registration Statement with the Commission within thirty (30) days of the
Company's receipt of such Purchaser's written request of registration (the
"Registration Request"). The Registration Statement shall contain all
material non-public information disclosed to such Purchaser by the Company in
connection with the purchase of the Shares, the issuance of the Option Shares
and the grant of the Option. For purposes of this Section 7, the term
"Shares" and "Option Shares" shall include any other securities of the Company
issued in exchange for the Shares or the Option Shares, respectively, as a
dividend on the Shares and the Option Shares or in connection with a stock
split or other reorganization transaction, including, without limitation a
Corporate Event (as applicable to the Option and the Option Shares to the
extent the Option is assumed by the Acquiring Entity) affecting the Shares or
the Option Shares. The Company shall use its commercially reasonable efforts
to cause the Registration Statement to become effective (the "Registration
Effective Date") within sixty (60) days of the Company's receipt of the
Registration Request. The Company and such Purchaser shall bear equally, on a
dollar-for-dollar basis, all expenses incurred by the Company and Purchaser
(other than underwriting discounts, brokerage fees and commissions) in
connection with the registration of such Purchaser's Shares and Option Shares
pursuant to this Section 7.1(a); provided, however, that such Purchaser shall
bear all expenses incurred by the Company and such Purchaser in connection
with the registration if such Purchaser previously had the opportunity to
register an equivalent number of Shares and Options Shares under its
registration rights under Section 7.1(b) below, but elected not to do so.
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(b) Piggy-back Registration. If the Company shall determine to
register any of its securities either for its own account or the account of
any holders of its equity securities exercising their respective demand
registration rights, other than a registration relating solely to employee
benefit plans, or a registration relating to a corporate reorganization or
other transaction on Form S-4, or a registration on any registration form that
does not permit secondary sales, the Company shall on each such occasion:
(i) promptly give each Purchaser written notice thereof at least
thirty (30) days before the filing of the registration statement; and
(ii) include in such registration (and any related qualification under blue
sky laws or other compliance), and in any underwriting involved therein, all
the Shares and Option Shares specified in a written request made by each
Purchaser and received by the Company within fifteen (15) days after such
Purchaser's receipt of the written notice from the Company described in clause
(i) above. Such written request may specify all or a part of such Purchaser's
Shares and Option Shares.
If the registration of which the Company gives notice is for an underwritten
offering, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 7.1(b)(i). In such event, the right of each
Purchaser to registration pursuant to this Section 7.1(b) shall be conditioned
upon such Purchaser's participation in such underwriting. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 7.1(b) prior to the effectiveness of such registration whether or
not such Purchaser has elected to include securities in such registration.
The Company shall bear all expenses incurred by the Company and each Purchaser
(other than underwriting discounts, brokerage fees, commissions and the legal
fees of legal counsel to such Purchaser) in connection with the registration
of Shares and Option Shares pursuant to this Section 7.1(b).
7.2 Covenants of the Company
(a) The Company shall prepare and file with the Commission such
amendments and supplements to the Registration Statement (which term shall
also include for purposes of this and all other sections of this Agreement
other than Section 7.1 any registration statement prepared and filed by the
Company pursuant to Section 7.1(b)) and the prospectus forming a part thereof
as may be necessary to keep the Registration Statement effective until the
earlier of the date on which (i) all Shares and the Option Shares have been
disposed of pursuant to the Registration Statement, (ii) all Shares and the
Option Shares then held by all Purchasers may be sold under the provisions of
Rule 144 promulgated under the Securities Act ("Rule 144") without limitation
as to volume, whether pursuant to Rule 144(k) or otherwise, or (iii) the
Company has determined that all Shares and the Option Shares then held by all
Purchasers may be sold without restriction under the Securities Act and has
removed any stop transfer instructions relating to such Shares and Option
Shares and offered to cause to be removed any restrictive legends on the
certificates, if any, representing such Shares and Option Shares (the period
between the Registration Effective Date (which terms shall for purposes of
this Section 10.2 and Sections 7.3 and 7.4 include the date on which any
Registration Statement filed by the Company pursuant to Section 7.1(b) is
declared effective) and the earliest of such dates is referred to herein as
the "Registration Period"). At any time after the end of the Registration
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Period, the Company may withdraw the Registration Statement and its
obligations under this Section 7 (other than its obligations under Section
7.4) shall automatically terminate.
(b) The Company shall take all lawful action such that the
Registration Statement, any amendment thereto and the prospectus forming a
part thereof does not, on the Registration Effective Date, 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 light of the
circumstances under which they are made, not misleading. Upon becoming aware
of the occurrence of any event or the discovery of any facts during the
Registration Period that make any statement of a material fact made in the
Registration Statement or the related prospectus untrue in any material
respect or which material fact is omitted from the Registration Statement or
related prospectus that requires the making of any changes in the Registration
Statement or related prospectus so that it will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
are made, not misleading (taking into account any prior amendments or
supplements), the Company shall promptly notify each Purchaser, and, subject
to the provisions of Section 7.2(c), as soon as reasonably practicable prepare
and file with the Commission a supplement or post-effective amendment to the
Registration Statement or the related prospectus or file any other required
document so that the Registration Statement and such prospectus will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) The Company shall not be obligated to prepare and file a
post-effective amendment or supplement to the Registration Statement or the
prospectus constituting a part thereof during the continuance of a Blackout
Event. A "Blackout Event" shall mean any of the following: (i) the possession
by the Company of material information that is not ripe for disclosure in a
registration statement or prospectus, as determined in good faith by the Chief
Executive Officer of the Company (the "CEO") or the Board or that, if
disclosed, would be detrimental to the business and affairs of the Company or
(ii) any material engagement or activity by the Company which would, in the
good faith determination of the CEO or the Board, be adversely affected by
disclosure in a registration statement or prospectus at such time.
(d) At least ten (10) days prior to the filing with the Commission
of the Registration Statement (or any amendment thereto) or the prospectus
forming a part thereof (or any supplement thereto), the Company shall provide
draft copies thereof to each Purchaser and shall consider incorporating into
such documents such comments as each Purchaser (and its counsel) may propose
to be incorporated therein. Notwithstanding the foregoing, no prospectus
supplement, the form of which has previously been provided to a Purchaser,
need be delivered in draft form to such Purchaser.
(e) The Company shall promptly notify each Purchaser upon the
occurrence of any of the following events in respect of the Registration
Statement or the prospectus forming a part thereof: (i) the receipt of any
request for additional information from the Commission or any other federal or
state governmental authority, the response to which would require any
amendments or supplements to the Registration Statement or related prospectus;
(ii) the issuance
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by the Commission or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; or (iii) the receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(f) The Company shall furnish to each Purchaser with respect to
the Shares and the Option Shares registered under the Registration Statement
(and to each underwriter, if any, of such Shares and Option Shares) such
number of copies of prospectuses and such other documents as such Purchaser
may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Shares and the Option Shares by such
Purchaser pursuant to the Registration Statement.
(g) The Company shall file or cause to be filed such documents as
are required to be filed by the Company for normal Blue Sky clearance in
states of the United States specified in writing by Purchasers; provided,
however, that the Company shall not be required to qualify to do business or
consent to service of process in any jurisdiction in which it is not now so
qualified or has not so consented.
(h) With a view to making available to Purchasers the benefits of
Rule 144, the Company agrees, throughout the Registration Period and so long
as a Purchaser owns Shares or the Option Shares to:
(i) comply with the provisions of paragraph (c)(1) of Rule
144; and
(ii) file with the Commission in a timely manner all reports
and other documents required to be filed by the Company pursuant to Section 13
or 15(d) under the Exchange Act; and, if at any time it is not required to
file such reports but in the past had been required to or did file such
reports, it will, upon the request of a Purchaser, make available other
information as required by, and so long as necessary to permit sales of the
Shares and the Option Shares pursuant to, Rule 144.
7.3 Covenants of Purchasers.
(a) If at any time or from time to time after the Registration
Effective Date, the Company notifies Purchasers in writing that the
Registration Statement or the prospectus forming a part thereof (taking into
account any prior amendments or supplements thereto) contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
are made, not misleading, no Purchaser shall offer or sell any Shares or the
Option Shares or engage in any other transaction involving or relating to the
Shares or the Option Shares, from the time of the giving of notice with
respect to such untrue statement or omission until Purchasers receive written
notice from the Company that such untrue statement or omission no longer
exists or has been corrected or disclosed in an effective post-effective
amendment to the Registration Statement or a valid prospectus supplement to
the prospectus forming a part thereof.
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(b) In connection with the sale of any Shares or the Option Shares
pursuant to the Registration Statement, each Purchaser shall deliver to the
purchaser thereof the Registration Statement and the prospectus forming a part
of the Registration Statement and all relevant supplements thereto which have
been provided by the Company to such Purchaser on or prior to the applicable
delivery date, all in accordance with the requirements of the Securities Act
and the rules and regulations promulgated thereunder and any applicable Blue
Sky laws of any state of the United States.
(c) The Company may refuse to register (or permit its transfer
agent to register) any transfer of any Shares or the Option Shares not made in
accordance with this Section 7.3 and for such purpose may place stop order
instructions with its transfer agent with respect to the Shares.
(d) Each Purchaser will cooperate with the Company in all respects
in connection with the performance by the Company of its obligations under
Sections 7.1 and 7.2, including timely supplying all information reasonably
requested by the Company (which shall include all information regarding such
Purchaser, and any person who beneficially owns Shares or the Option Shares
held by such Purchaser within the meaning of Rule 13d-3 promulgated under the
Exchange Act, and the proposed manner of sale of the Shares and the Option
Shares required to be disclosed in the Registration Statement) and executing
and returning all documents reasonably requested in connection with the
registration and sale of the Shares and the Option Shares. Each Purchaser
hereby consents to be named as an underwriter in the Registration Statement,
if applicable, in accordance with current Commission policy and, if necessary,
to join in the request of the Company for the acceleration of the
effectiveness of the Registration Statement.
7.4 Indemnification. For the purpose of this Agreement, the term
"Registration Statement" shall include any final prospectus, exhibit,
supplement or amendment included in or relating to the Registration Statement
referred to in Sections 7.1 or 7.2.
(a) The Company agrees to indemnify and hold harmless each
Purchaser against any losses, claims, damages, liabilities or expenses, joint
or several, to which such Purchaser may become subject, under the Securities
Act, the Exchange Act, or any other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, as amended as of the Registration
Effective Date, including any information deemed to be a part thereof as of
the time of effectiveness pursuant to paragraph (b) of Rule 430A or Rule 434
promulgated under the Securities Act, or the prospectus, in the form first
filed with the Commission pursuant to Rule 424(b) promulgated under the
Securities Act, or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any
amendment or supplement thereto, (ii) the omission or alleged omission to
state in the Registration Statement as of the Registration Effective Date a
material fact required to be stated therein or necessary to make the
statements in the Registration Statement or any post-effective amendment or
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supplement thereto, or in the Prospectus or any amendment or supplement
thereto, not misleading, in each case in the light of the circumstances under
which the statements contained therein were made, or (iii) any inaccuracy in
the representations and warranties of the Company contained in this Agreement,
or any failure of the Company to perform its obligations hereunder, and will
reimburse such Purchaser for any legal and other expenses which are reasonably
incurred by such Purchaser in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon (1) an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company by
such Purchaser expressly for use therein, (2) the failure of such Purchaser to
comply with the covenants and agreements contained in Section 7.3 hereof
respecting the sale of the Shares and the Option Shares, (3) the inaccuracy of
any representations made by such Purchaser in this Agreement or (4) any
statement or omission in any Prospectus that is corrected or disclosed in any
subsequent Prospectus that was delivered to such Purchaser prior to the
pertinent sale or sales by such Purchaser.
(b) Each Purchaser will, severally and not jointly, indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act and the Exchange Act, against
any losses, claims, damages, liabilities or expenses to which the Company,
each of its directors, each of its officers who signed the Registration
Statement or controlling person may become subject, under the Securities Act,
the Exchange Act, or any other United States federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Purchaser) insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are
based upon (i) any failure of such Purchaser to comply with the covenants and
agreements contained in Section 7.3 hereof respecting the sale of the Shares
of the Option Shares, (ii) the inaccuracy of any representation made by such
Purchaser in this Agreement, or (iii) any (1) untrue or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or (2) omission or alleged
omission to state in the Registration Statement, the Prospectus or any
amendment or supplement thereto a material fact required to be stated therein
or necessary to make the statements in the Registration Statement or any
amendment or supplement thereto, or in the Prospectus or any amendment or
supplement thereto, not misleading, in each case in the light of the
circumstances under which they were made; provided, that such Purchaser's
indemnification obligation under this clause (iii) shall apply only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by such Purchaser expressly for
use therein, and will reimburse the Company, each of its directors, each of
its officers who signed the Registration Statement or controlling person for
any legal and other expense reasonably incurred by the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action.
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(c) Promptly after receipt by an indemnified party or parties
under this Section 7.4 of notice of the threat or commencement of any action,
such indemnified party or parties will, if a claim in respect thereof is to be
made against an indemnifying party or parties under this Section 7.4, promptly
notify the indemnifying party or parties in writing thereof; provided, the
omission so to notify the indemnifying party or parties will not relieve it
from any liability which it may have to any indemnified party for contribution
(except as provided in paragraph (d)) or otherwise under the indemnity
agreement contained in this Section 7.4 to the extent it is not prejudiced as
a result of such failure. In case any such action is brought against any
indemnified party or parties and such indemnified party or parties seeks or
intends to seek indemnity from an indemnifying party or parties, the
indemnifying party or parties will be entitled to participate in and assume
the defense thereof with counsel reasonably satisfactory to such indemnified
party or parties. Upon the indemnified party's or parties' receipt of notice
from the indemnifying party or parties of its election to assume the defense
of such action and approval by the indemnified party or parties of counsel,
the indemnifying party or parties will not be liable to such indemnified party
under this Section 7.4 for any legal or other expenses subsequently incurred
by such indemnified party or parties in connection with the defense thereof
unless the indemnifying party or parties shall not have employed counsel
reasonably satisfactory to the indemnified party or parties to represent the
indemnified party or parties within a reasonable time after notice of
commencement of action, in which case the reasonable fees and expenses of
counsel to the indemnified party or parties shall be at the expense of the
indemnifying party or parties.
(d) If the indemnification provided for in this Section 7.4 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party or parties under
paragraphs (a) or (b) of this Section 7.4 in respect to any losses, claims,
damages, liabilities or expenses referred to herein (subject to the limitation
of paragraph (c) of this Section 7.4), then the indemnifying party or parties
shall contribute to the amount paid or payable by such indemnified party or
parties as a result of any losses, claims, damages, liabilities or expenses
referred to herein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the applicable Purchasers from
the placement of the Shares and the Option Shares contemplated by this
Agreement or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but the
relative fault of the Company and the applicable Purchasers in connection with
the statements or omissions or inaccuracies in the representations and
warranties in this Agreement that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the applicable Purchasers on the other shall be deemed to be in the same
proportion as the fair market value of the Shares and the Option Shares sold
pursuant to the Registration Statement (determined at the time as the Shares
and the Option Shares were issued by the Company to the applicable Purchasers)
bears to the difference (the "Difference") between the fair market value of
the Shares and the Option Shares sold pursuant to the Registration Statement
(determined at the time as the Shares and the Option Shares were issued by the
Company to the applicable
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Purchasers) and the amount received by the applicable Purchasers from such
sale. The relative fault of the Company on the one hand and the applicable
Purchasers on the other shall be determined by reference to, among other
things, whether the untrue or alleged statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or the
alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by the applicable Purchasers and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement, omission or inaccuracy. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in paragraph (c) of this Section 7.4, any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
paragraph (c) of this Section 7.4 with respect to the notice of the threat or
commencement of any threat or action shall apply if a claim for contribution
is to be made under this paragraph (d); provided, however, that no additional
notice shall be required with respect to any threat or action for which notice
has been given under paragraph (c) for purposes of indemnification. The
Company and each Purchaser agree that it would not be just and equitable if
contribution pursuant to this Section 7.4 were determined solely by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this paragraph. Notwithstanding
the provisions of this Section 7.4, no Purchaser shall be required to
contribute any amount in excess of the amount by which the amount of any
damages that such Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission
exceeds the Difference. 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.
7.5 Information Available. So long as the Registration Statement is
effective covering the resale of Shares and the Option Shares then still owned
by any Purchaser, the Company will furnish to such Purchaser as soon as
practicable after available, one copy of its annual report to shareholders
(which annual report shall contain financial statements audited in accordance
with generally accepted accounting principles by a firm of certified public
accountants) and, upon written request, each of the SEC Documents.
SECTION 8. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:
(a) if to the Company, to:
Broadcast International, Inc.
Attention: ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇. #▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if Purchasers, to the address and facsimile number set forth
below each Purchaser's name on the signature page attached hereto.
SECTION 9. ASSIGNMENT. None of the parties hereto may assign or
delegate any of such party's rights or obligations under or in connection with
this Agreement, whether by operation of law, merger, acquisition,
consolidation, share exchange, or otherwise, and any attempted assignment or
delegation of such rights or obligations shall be void. Except as expressly
provided in Section 7.4 with respect to directors and controlling persons of
the Company and officers of the Company who signed the Registration Statement,
no person, including without limitation any person who purchases or otherwise
acquires or receives any Shares, the Option or any Option Shares, is an
intended third party beneficiary of this Agreement, and no party to this
Agreement shall have any obligation arising under this Agreement to any person
other than the other parties hereto and, to the extent expressly provided in
Section 7.4, directors and controlling persons of the Company and officers of
the Company who signed the Registration Statement.
SECTION 10. CHANGES. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and each
Purchaser; provided, however, that the Company shall have the right to amend
this Agreement by increasing the number Shares to be purchased by an existing
Purchaser and the number of Option Shares subject to such Purchaser's Option
set forth on Schedule A only with the prior written consent of such Purchaser.
SECTION 11. HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not
be deemed to be part of this Agreement.
SECTION 12. SEVERABILITY. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah without regard to
its conflicts of law principles and the federal law of the United States of
America.
SECTION 14. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.
SECTION 15 EFFECTIVE DATE. This Agreement shall be effective
immediately upon the entry of a final Order of the United States Bankruptcy
Court for the District of Utah, Central Division approving the License
Agreement (the "Effective Date").
-▇▇-
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ REMEDIES. In the event of a breach of Section
4.11(a) of this Agreement by the Company with respect to any SEC Document
filed with the Commission prior to October 15, 2003, each Purchaser agrees
that it will not seek to rescind its acquisition of the Shares or the Option
or its purchase of any Option Shares, provided that this Section 16 shall in
no way be construed to limit or restrict such Purchaser's ability or right to
seek any other remedy available at law or in equity, including damages, in the
event of the Company's breach of Section 4.11(a) or to seek rescission or any
other remedy available at law or in equity, including damages, in the event of
the Company's breach of any other provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
COMPANY:
BROADCAST INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
PURCHASER:
▇▇▇▇ ▇▇▇▇▇▇▇▇
/S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Address: ▇.▇. ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
PURCHASER:
▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Address: ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
PURCHASER:
▇▇▇▇ ▇▇▇▇▇
/S/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------
Address: ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
PURCHASER:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Address: ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
PURCHASER:
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
PURCHASER:
▇▇▇▇▇ ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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SCHEDULE A
Option Shares subject
Purchaser Number of Shares Purchase Price to Purchaser's Option
▇▇▇▇ ▇▇▇▇▇ 37,500 $ 75,000 262,500
▇▇▇▇ ▇▇▇▇▇ 25,000 $ 50,000 175,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 62,500 $125,000 437,500
▇▇▇▇ ▇▇▇▇▇▇▇▇ 50,000 $100,000 350,000
▇▇▇▇ ▇▇▇▇▇▇ 7,500 $ 15,000 52,500
▇▇▇▇▇ ▇▇▇▇▇▇▇ 5,000 $ 10,000 35,000
TOTAL 187,500 $375,000 1,312,500
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EXHIBIT A
OPTION EXERCISE NOTICE
Broadcast International, Inc.
_________________________
_________________________
Attn: Chief Executive Officer or President
SECTION 1. EXERCISE OF OPTION. Effective as of today, ___________,
20__ (the "Effective Date"), the undersigned ("Optionee") hereby elects to
exercise Optionee's option to purchase _________ shares of the Common Stock
(the "Option Shares") of Broadcast International, Inc. (the "Company") under
and pursuant to the Stock Purchase and Stock Option Agreement dated as of
February __, 2004 between Optionee and the Company (the "Option Agreement")
and the terms and conditions of this exercise notice (the "Agreement").
SECTION 2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that
Optionee has received, read and understood the Option Agreement and agrees to
abide by and be bound by its terms and conditions.
SECTION 3. RIGHTS AS SHAREHOLDER. Until the stock certificate
evidencing such Option Shares is issued (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Option Shares, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly following the exercise of the Option. No
adjustment will be made for a dividend or other right for which the record
date is prior to the date the stock certificate is issued.
SECTION 4. TAX CONSULTATION. Optionee understands that Optionee may
suffer adverse tax consequences as a result of Optionee's purchase or
disposition of the Option Shares. Optionee represents that Optionee has
consulted with any tax consultants Optionee deems advisable in connection with
the purchase or disposition of the Option Shares and that Optionee is not
relying on the Company for any tax advice.
SECTION 5. RESTRICTIONS ON TRANSFER. Optionee acknowledges and
understands that the Option Shares, unless registered, constitute "restricted
securities" under the Securities Act of 1933, as amended (the "Securities
Act"), and may only be sold, offered, transferred, pledge or hypothecated in
reliance upon a specific exemption therefrom, which exemption depends upon,
among other things, the bona fide nature of Optionee's investment intent as
expressed herein or pursuant to an effective registration statement under the
Securities Act. Optionee understands and agrees that in the event the Option
Shares are not registered, the Company shall cause the legend set forth below
or a legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Option Shares together with any
other legends that may be required by state or federal securities laws:
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES
ACT OR SUCH APPLICABLE STATE SECURITIES LAWS,
SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHE-
CATION IS PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS OR, IN THE OPINION OF
COUNSEL TO THE COMPANY, SUCH OFFER, SALE, TRANS-
FER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
SECTION 7. GOVERNING LAW; SEVERABILITY. This Agreement shall be
governed by and construed in accordance with the laws of the State of Utah.
Should any provision of this Agreement be determined by a court of law to be
illegal or unenforceable, the other provisions shall nevertheless remain
effective and shall remain enforceable.
SECTION 8. NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery
or upon deposit in the United States mail by certified mail, with postage and
fees prepaid, addressed to the other party at its address as shown below
beneath its signature, or to such other address as such party may designate in
writing from time to time to the other party.
SECTION 9. DELIVERY OF PAYMENT. Optionee herewith delivers to the
Company the full exercise price for the Option Shares in accordance with
Section 2.5 of the Option Agreement.
SECTION 10. ENTIRE AGREEMENT. The Option Agreement is incorporated
herein by reference. This Agreement and the Option Agreement constitute the
entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof.
OPTIONEE:
_________________________
_________________________
By:______________________
Its:_____________________
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EXHIBIT B
LOCK-UP AGREEMENT
In consideration of Streamware Solutions AB ("Streamware") entering into
the Stock Purchase and Option Grant Agreement between Streamware and Broadcast
International, Inc. (the "Company"), dated February __, 2004 (the
"Agreement"), and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the undersigned agrees that the undersigned will
not offer, sell, contract to sell or otherwise dispose of any shares of Common
Stock or other capital stock of the Company or any options, warrants or other
rights to purchase such shares now owned or hereinafter acquired by the
undersigned (collectively, the "Shares") until June 30, 2005.
The undersigned hereby acknowledges that this Lock-Up Agreement is valid
and binding notwithstanding any prior agreements relating to this matter and
further agrees and consents to the entry of stop-transfer of any of the Shares
held by the undersigned unless such transfer is in compliance with this
Lock-Up Agreement. The undersigned also understands that the delivery of this
Lock-Up Agreement to Streamware is a condition to Streamware's entering into
the Agreement.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________
Date:________________________
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EXHIBIT C
LOCK-UP AGREEMENT
In consideration of Broadcast International, Inc. (the "Company")
entering into the Stock Purchase and Option Grant Agreement between the
undersigned and the Company, dated February __, 2004 (the "Agreement"), and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the undersigned agrees that the undersigned will not offer,
sell, contract to sell or otherwise dispose of any shares of Common Stock or
other capital stock of the Company or any options, warrants or other rights to
purchase such shares now owned or hereinafter acquired by the undersigned
(collectively, the "Shares") until March 31, 2005.
The undersigned hereby acknowledges that this Lock-Up Agreement is valid
and binding notwithstanding any prior agreements relating to this matter and
further agrees and consents to the entry of stop-transfer of any of the Shares
held by the undersigned unless such transfer is in compliance with this
Lock-Up Agreement. The undersigned also understands that the delivery of this
Lock-Up Agreement to the Company is a condition to the Company's entering into
the Agreement.
_________________________________
Date:____________________________
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EXHIBIT D
SCHEDULE OF EXCEPTIONS
None.
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