Exhibit 10.3

FORM OF SERIES B WARRANT

THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT, (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT OR (III) AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT.  THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

BROADCAST INTERNATIONAL, INC.

COMMON STOCK PURCHASE WARRANT

Series B Warrant No.: B-____

Date of Issuance: _____ ___, 2012

This COMMON STOCK PURCHASE WARRANT certifies that _____________________, or its
permitted assignees is the registered holder (the “Holder”) of this Common Stock
Purchase Warrant (including any Common Stock Purchase Warrants issued in
exchange, transfer or replacement hereof, the “Warrant”) to purchase shares of
the common stock, par value $0.05 per share (the “Common Stock”), of Broadcast
International, Inc., a Utah corporation (the “Company”).  This Warrant is one of
a series of Common Stock Purchase Warrants (collectively, the “SPA Warrants”)
issued in connection with the private placement of securities offered to the
Holder and certain other investors pursuant to that certain Securities Purchase
Agreement, dated March 13, 2012 (the “Securities Purchase Agreement”) and this
Warrant was purchased as a unit with the Series A Warrants (as defined below)
and shares of Common Stock for an aggregate purchase price of $.25 per unit (the
“Unit Price”).  The Holder takes this Warrant subject to the terms and
restrictions set forth in the Transaction Documents (as defined in the
Securities Purchase Agreement) and shall be entitled to certain rights and
privileges as set forth in the Transaction Documents.

FOR VALUE RECEIVED, the Company hereby certifies that the Holder is entitled to
purchase from the Company a number to be determined in the future of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
(the “Warrant Shares”) at a purchase price per share set forth in Section 3
below, and otherwise subject to the terms, conditions and adjustments set forth
below in this Warrant and in the Transaction Documents.  The Holder is the
person or entity in whose name this Warrant is registered on the records of the
Company regarding registration and transfers of this Warrant (the “Warrant
Register”) and is the owner and holder thereof for all purposes, except as
described in Section 9 hereof.  Capitalized terms not defined herein shall have
the meaning as set forth in Section 23.

1.             Exercise of Warrant.  This Warrant will be exercisable at any
time, in the sole discretion of the Holder, commencing on the date hereof (the
“Commencement Date”).

2.             Expiration of Warrant.  This Warrant shall expire on  5:00 p.m.,
Mountain Standard time on the Expiration Date.
 
 
 

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3.             Warrant Price.  For purposes of this Warrant the “Warrant Price”
means $.05 per share, subject to adjustment as provided herein.

4.             Exercise of Warrant.  This Warrant shall be exercisable as
follows:

4.1           Manner of Exercise.  Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 4.3), this
Warrant may be exercised by the Holder on any day on or after the Commencement
Date, in whole or in part, by delivery (whether via facsimile or otherwise) of a
written notice, in the form attached hereto as Exhibit A (the “Exercise
Notice”), of the Holder’s election to exercise this Warrant. Within one (1)
Trading Day following an exercise of this Warrant as aforesaid, the Holder shall
deliver payment to the Company of an amount equal to the Warrant Price in effect
on the date of such exercise multiplied by the number of Warrant Shares as to
which this Warrant was so exercised (the “Aggregate Warrant Price”) in cash or
via wire transfer of immediately available funds if the Holder did not notify
the Company in such Exercise Notice that such exercise was made pursuant to a
Cashless Exercise (as defined in Section 4.6). The Holder shall not be required
to deliver the original of this Warrant in order to effect an exercise
hereunder. Execution and delivery of an Exercise Notice with respect to less
than all of the Warrant Shares shall have the same effect as cancellation of the
original of this Warrant and issuance of a new Warrant evidencing the right to
purchase the remaining number of Warrant Shares. Execution and delivery of an
Exercise Notice for all of the then-remaining Warrant Shares shall have the same
effect as cancellation of the original of this Warrant after delivery of the
Warrant Shares in accordance with the terms hereof. On or before the first (1st)
Trading Day following the date on which the Company has received an Exercise
Notice, the Company shall transmit by facsimile an acknowledgment of
confirmation of receipt of such Exercise Notice, in the form attached hereto as
Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer
Agent”). On or before the third (3rd) Trading Day following the date on which
the Company has received such Exercise Notice, the Company shall (X) provided
that the Transfer Agent is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program, upon the request of the Holder,
credit such aggregate number of shares of Common Stock to which the Holder is
entitled pursuant to such exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit/ Withdrawal at Custodian system, or (Y) if
the Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and deliver to the Holder or, at the Holder’s
instruction pursuant to the Exercise Notice, the Holder’s agent or designee, in
each case, sent by reputable overnight courier to the address as specified in
the applicable Exercise Notice, a certificate, registered in the Company’s share
register in the name of the Holder or its designee (as indicated in the
applicable Exercise Notice), for the number of shares of Common Stock to which
the Holder is entitled pursuant to such exercise. Upon delivery of an Exercise
Notice, the Holder shall be deemed for all corporate purposes to have become the
holder of record of the Warrant Shares with respect to which this Warrant has
been exercised, irrespective of the date such Warrant Shares are credited to the
Holder’s DTC account or the date of delivery of the certificates evidencing such
Warrant Shares (as the case may be). If this Warrant is submitted in connection
with any exercise pursuant to this Section 4.1 and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise, then, at the request of the
Holder, the Company shall as soon as practicable and in no event later than
three (3) Business Days after any exercise and at its own expense, issue and
deliver to the Holder (or its designee) a new Warrant (in accordance with
Section 9)) representing the right to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under this Warrant, less the
number of Warrant Shares with respect to which this Warrant is exercised. No
fractional shares of Common Stock are to be issued upon the exercise of this
Warrant, but rather the number of shares of Common Stock to be issued shall be
rounded up to the nearest whole number. The Company shall pay any and all taxes
and fees which may be payable with respect to the issuance and delivery of
Warrant Shares upon exercise of this Warrant. Notwithstanding the foregoing,
except in the case where an exercise of this Warrant is validly made pursuant to
a Cashless Exercise (as defined in Section 4.6), the Company’s failure to
deliver Warrant Shares to the Holder on or prior to the second (2nd) Trading Day
after the Company’s receipt of the Aggregate Warrant Price shall not be deemed
to be a breach of this Warrant.
 
 
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The Company’s obligations to issue and deliver Warrant Shares in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of Warrant Shares.  Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon exercise of
the Warrant as required pursuant to the terms hereof. Notwithstanding any
provision of this Warrant to the contrary, no more than the Maximum Eligibility
Number of Warrant Shares shall be exercisable hereunder.

4.2           Company’s Failure to Timely Deliver Securities.  If the Company
shall fail, for any reason or for no reason, to issue to the Holder within the
later of (i) three (3) Trading Days after receipt of the applicable Exercise
Notice (or four (4) Trading Days if the Exercise Notice is delivered after 5:00
P.M., Mountain Standard time, on the Exercise Date) and (ii) two (2) Trading
Days after the Company’s receipt of the Aggregate Warrant Price or valid notice
of a Cashless Exercise (or three (3) Trading Days if the Company receives the
Aggregate Warrant Price or valid notice of a Cashless Exercise after 5:00 P.M.,
Mountain Standard time, on the Exercise Date) (such later date, the “Share
Delivery Deadline”), a certificate for the number of shares of Common Stock to
which the Holder is entitled and register such shares of Common Stock on the
Company’s share register or to credit the Holder’s balance account with DTC for
such number of shares of Common Stock to which the Holder is entitled upon the
Holder’s exercise of this Warrant (as the case may be), and if on or after such
Share Delivery Deadline the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of all or any portion of the number of shares of Common Stock, or a sale
of a number of shares of Common Stock equal to all or any portion of the number
of shares of Common Stock, issuable upon such exercise that the Holder so
anticipated receiving from the Company, then, in addition to all other remedies
available to the Holder, the Company shall, within three (3) Business Days after
the Holder’s request and in the Holder’s discretion, either (i) pay cash to the
Holder in an amount equal to the Holder’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (including, without limitation, by any other Person
in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point
the Company’s obligation to so issue and deliver such certificate or credit the
Holder’s balance account with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s exercise hereunder (as the case
may be) (and to issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to so issue and deliver to the Holder a
certificate or certificates representing such shares of Common Stock or credit
the Holder’s balance account with DTC for the number of shares of Common Stock
to which the Holder is entitled upon the Holder’s exercise hereunder (as the
case may be) and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of shares of Common
Stock multiplied by (B) the lowest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date of the applicable Exercise
Notice and ending on the date of such issuance and payment under this clause
(ii).
 
 
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4.3           Limitations on Exercises.  Notwithstanding anything to the
contrary contained in this Warrant, this Warrant shall not be exercisable by the
Holder hereof to the extent (but only to the extent) that the Holder together
with any of its affiliates would beneficially own in excess of  4.99% (the
“Maximum Percentage”) of the Common Stock after giving effect to such exercise.
To the extent the above limitation applies, the determination of whether this
Warrant shall be exercisable (vis-à-vis other convertible, exercisable or
exchangeable securities owned by the Holder or any of its affiliates) and of
which such securities shall be exercisable (as among all such securities owned
by the Holder) shall, subject to such Maximum Percentage limitation, be
determined on the basis of the first submission to the Company for conversion,
exercise or exchange (as the case may be). No prior inability to exercise this
Warrant pursuant to this paragraph shall have any effect on the applicability of
the provisions of this paragraph with respect to any subsequent determination of
exercisability. For the purposes of this paragraph, beneficial ownership and all
determinations and calculations (including, without limitation, with respect to
calculations of percentage ownership) shall be determined in accordance with
Section 13(d) of the Securities Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the “1934 Act”). The provisions of this
paragraph shall be implemented in a manner otherwise than in strict conformity
with the terms of this paragraph to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Maximum
Percentage beneficial ownership limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such Maximum
Percentage limitation. The limitations contained in this paragraph shall apply
to a successor Holder of this Warrant. The holders of Common Stock shall be
third party beneficiaries of this paragraph and the Company may not waive this
paragraph without the consent of holders of a majority of its Common Stock. For
any reason at any time, upon the written or oral request of the Holder, the
Company shall within one (1) Business Day confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding, including by
virtue of any prior conversion or exercise of convertible or exercisable
securities into Common Stock, including, without limitation, pursuant to this
Warrant or securities issued pursuant to the Securities Purchase Agreement.  By
written notice to the Company, any Holder may increase or decrease the Maximum
Percentage to any other percentage not in excess of 9.99% specified in such
notice; provided that (i) any such increase will not be effective until the 61st
day after such notice is delivered to the Company, and (ii) any such increase or
decrease will apply only to the Holder sending such notice and not to any other
holder of SPA Warrants.

4.4           Shares to be Fully Paid.  The Company covenants and agrees that
all shares of Common Stock which may be issued upon the exercise of rights
presented by this Warrant will, upon issuance by the Company, be validly issued,
fully paid and nonassessable, and free from preemptive rights and free from all
taxes, liens and charges with respect thereto.

4.5           Company to Reaffirm Obligations.  The Company will, at the time of
each exercise of this Warrant, upon the written request of the Holder hereof,
acknowledge in writing its continuing obligation to afford to the Holder all
rights (including without limitation any rights to registration of the shares of
Common Stock issued upon exercise) to which the Holder shall continue to be
entitled after exercise in accordance with the terms of this Warrant; provided,
however, that if the Holder shall fail to make a request, the failure shall not
affect the continuing obligation of the Company to afford the rights to such
Holder.
 
4.6           Cashless Exercise.  In the event that an effective registration
statement is not on file for the resale of the Common Stock underlying this
Warrant (and which registration statement can then be used to actually resell
such shares of Common Stock), this Warrant may be exercised at any time by means
of a “cashless exercise” in which the Holder shall be entitled to receive a
certificate for the number of shares of Common Stock equal to the quotient
obtained by dividing [(A-B)(X)] by (A), where:
 
 
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(A) = the arithmetic average of the VWAPs of the Common Stock over the five (5)
trading days immediately preceding the date of such exercise;
 
(B) = the Warrant Price then in effect for the applicable Warrant Shares at the
time of such exercise; and
 
(X) = the total number of shares with respect to which this Warrant is then
being exercised.

For the avoidance of doubt, the “cashless exercise” provided by this Section 4.6
shall not be available in the event there is a then effective registration
statement on file for the resale of the Common Stock underlying this Warrant,
which registration statement can then be used by the Holder to actually resell
such shares of Common Stock.

5.             Adjustments.

5.1           Splits, Subdivisions, etc.  In the event that the Company should
at any time or from time to time, after the date first referenced above, fix a
record date for the effectuation of a split or subdivision of the outstanding
shares of Common Stock, or the determination of holders of Common Stock entitled
to receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly additional shares of Common
Stock (hereinafter referred to as “Common Stock Equivalents”) without payment of
any consideration by such holder for the additional shares of Common Stock or
the Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date (or
the date of such dividend, distribution, split or subdivision if no record date
is fixed), the Warrant Price shall be appropriately decreased so that the number
of shares of Common Stock issuable on exercise of this Warrant shall be
increased in proportion to such increase in the aggregate number of shares of
the Common Stock outstanding.

5.2           Combinations.  If the number of shares of Common Stock outstanding
at any time after the date first referenced above is decreased by a combination
of the outstanding shares of Common Stock, then, following the record date of
such combination, the Warrant Price shall be appropriately increased and the
number of shares of Common Stock issuable upon exercise of this Warrant shall be
decreased in proportion to such decrease in outstanding shares.

5.3           Replacement of Securities upon Reorganizations, etc. If after the
date hereof any Fundamental Transaction shall be effected, then, as a condition
of such Fundamental Transaction, lawful and fair provision shall be made whereby
the Holder of this Warrant shall thereafter have the right to purchase and
receive, upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of the shares of Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented thereby, such shares of stock, securities, or assets as may be
issued or payable with respect to or in exchange for the number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented by this Warrant, had such Fundamental Transaction not taken
place and in such event appropriate provision shall be made with respect to the
rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the Warrant Price and of the number of shares purchasable upon the exercise of
this Warrant) shall thereafter be applicable, as nearly as may be in relation to
any share of stock, securities, or assets thereafter deliverable upon the
exercise hereof.  The Company shall not effect any such Fundamental Transaction
unless prior to the consummation thereof the Successor Entity (if other than the
Company) resulting from such Fundamental Transaction, or the corporation
purchasing such assets in a Fundamental Transaction, shall assume by written
instrument executed and delivered to the Holder of this Warrant the obligation
to deliver to the Holder of this Warrant such shares of stock, securities, or
assets as, in accordance with the foregoing provisions, such holders may be
entitled to purchase.  Notwithstanding the foregoing, in the event of any
Fundamental Transaction, other than a Fundamental Transaction in which a
Successor Entity that is a publicly traded corporation whose stock is quoted or
listed for trading on a national exchange assumes this Warrant such that the
Warrant shall thereafter be exercisable for the publicly traded common stock of
such Successor Entity, then, at the written request of the Holder, if and only
if such request is delivered by notice in writing to the Company within thirty
(30) Business Days following the effective date of the Fundamental Transaction,
the Company (or the Successor Entity) shall purchase this Warrant from the
Holder by paying to the Holder, within five (5) Business Days after such request
(or, if later, on the effective date of the Fundamental Transaction), cash in an
amount per Warrant Share equal to the Transaction Value per share of Common
Stock outstanding, less the Warrant Price. No payment shall be required to be
made to the Holder if the Fundamental Transaction is not consummated.
 
 
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5.4           Black Scholes Value. Notwithstanding the foregoing and the
provisions of Section 5.3 above, in the event of the consummation of a
Fundamental Transaction that is (1) an all-cash transaction, (2) a “Rule 13e-3
transaction” as defined in Rule 13e-3 under the Exchange Act or (3) a
Fundamental Transaction involving a person or entity not traded on an Eligible
Market, at the request of the Holder delivered at any time commencing on the
earliest to occur of (x) the public disclosure of the Fundamental Transaction or
(y) the consummation of the Fundamental Transaction, through the date that is
ninety (90) days after the public disclosure of the consummation of such
Fundamental Transaction by the Company pursuant to a Current Report on Form 8-K
filed with the SEC, the Company or the Successor Entity (as the case may be)
shall purchase this Warrant from the Holder on the later of (i) the date of
consummation of the Fundamental Transaction and (ii) the fifth Trading Day
following the date of such request, in each case by paying to the Holder cash in
an amount equal to the Black Scholes Value.

5.5           INTENTIONALLY OMITTED

5.6           INTENTIONALLY OMITTED

5.7           INTENTIONALLY OMITTED

5.8           Notice of Adjustments.  Upon any adjustment of the terms of this
Warrant pursuant to this Section 5, then and in each such case the Company shall
promptly deliver a notice to the registered Holder of this Warrant, which notice
shall state the Warrant Price resulting from such adjustment and the changes, if
any, in the number of Warrant Shares or kind of securities or other property
purchasable at such price upon the exercise hereof, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.

5.9           Adjustment in Number of Securities.  Upon each adjustment of the
Warrant Price pursuant to the provisions of this Section 5, the number of
securities issuable upon the exercise of each Warrant shall be adjusted to the
nearest full amount by multiplying a number equal to the Warrant Price in effect
immediately prior to such adjustment by the number of Warrant Shares issuable
upon exercise of the Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Warrant Price.  Upon the occurrence of
any Dilutive Issuance (as defined in the Series A Warrant), the number of
Warrant Shares issuable upon exercise of this Warrant shall automatically be
increased to the Adjustment Share Amount (provided, that no adjustment shall be
made if such adjustment would result in a decrease in the number of Warrant
Shares issuable upon exercise of this Warrant).
 
 
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5.10          No Fractional Shares.  No fractional shares shall be issuable upon
exercise of this Warrant and the number of Warrant Shares to be issued shall be
rounded down to the nearest whole share.

5.11          Other Events. In the event that the Company (or any Subsidiary (as
defined in the Securities Purchase Agreement)) shall take any action to which
the provisions hereof are not strictly applicable, or, if applicable, would not
operate to protect the Holder from dilution or if any event occurs of the type
contemplated by the provisions of this Section 5.11 but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company’s board of directors shall in good faith determine and
implement an appropriate adjustment in the Warrant Price and the number of
Warrant Shares (if applicable) so as to protect the rights of the Holder,
provided that no such adjustment pursuant to this Section 5.11 will increase the
Warrant Price or decrease the number of Warrant Shares as otherwise determined
pursuant to this Section 5, provided further that if the Holder does not accept
such adjustments as appropriately protecting its interests hereunder against
such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be
final and binding and whose fees and expenses shall be borne by the Company.

5.12          Application. Without limiting Section 4.3 hereof, the provisions
of this Section 5 shall apply similarly and equally to successive transactions
or events covered hereby and shall be applied as if this Warrant (and any such
subsequent warrants) were fully exercisable without regard to any limitations on
the exercise of this Warrant (provided that the Holder shall continue to be
entitled to the benefit of the Maximum Percentage, applied however with respect
to shares of capital stock registered under the 1934 Act and thereafter
receivable upon exercise of this Warrant (or any such other warrant)).

6.             Reservation of Shares.  The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
free from all taxes, liens and charges with respect to the issue thereof, and
not subject to preemptive rights or other similar rights of stockholders of the
Company, solely for the purpose of issuing the shares of Common Stock underlying
this Warrant, such number of its shares of Common Stock as shall from time to
time be sufficient to effect the issuance or exercise thereof, and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to issue the Common Stock and effect the exercise of this Warrant, in
addition to such other remedies as shall be available to Holder, the Company
shall take such corporate action as may, in the opinion of its counsel, be
necessary to increase the number of authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including without limitation, using its best efforts to obtain the requisite
stockholder approval necessary to increase the number of authorized shares of
the Company’s Common Stock.  All shares of Common Stock issuable upon exercise
of this Warrant shall be duly authorized and, when issued upon exercise, shall
be validly issued and, in the case of shares, fully paid and nonassessable and
free from preemptive rights and free from taxes, liens and charges with respect
thereto.  In the event that the Company is prohibited from issuing shares of
Common Stock upon an exercise of this Warrant due to the failure by the Company
to have sufficient shares of Common Stock available out of the authorized but
unissued shares of Common Stock (such unavailable number of shares of Common
Stock, the “Authorization Failure Shares”), in lieu of delivering such
Authorization Failure Shares to the Holder, the Company shall pay cash in
exchange for the cancellation of such portion of this Warrant exercisable into
such Authorized Failure Shares at a price equal to the sum of (i) the product of
(x) such number of Authorization Failure Shares and (y) the Closing Sale Price
on the Trading Day immediately preceding the date such Authorization Failure
Shares would otherwise be required to be delivered to the Holder hereunder and
(ii) to the extent the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of Authorization Failure Shares, any brokerage commissions and other
out-of-pocket expenses, if any, of the Holder incurred in connection therewith.
 
 
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7.             No Impairment.  The Company will not, by amendment of its charter
or through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant but will at all times carry out all such
terms and take all such action as may be reasonably necessary or appropriate in
order to protect the rights of the holder of this Warrant against impairment.

8.             Restrictions on Transfer.

8.1           Restrictive Legends.  This Warrant and each Warrant issued upon
transfer or in substitution for this Warrant pursuant to Section 9, each
certificate for Common Stock issued upon the exercise of any Warrant and each
certificate issued upon the transfer of any such Common Stock shall be
transferable only upon satisfaction of the conditions specified in this Section
8.  Subject to the provisions of this Section 8, each of the foregoing
securities shall be stamped or otherwise imprinted with a legend reflecting the
restrictions on transfer set forth in this Warrant and any restrictions required
under the Securities Act of 1933, as amended (the “Securities Act”).

8.2           Notice of Proposed Transfer; Opinion of Counsel.  Prior to any
transfer of any securities which are not registered under an effective
registration statement under the Securities Act (“Restricted Securities”), the
Holder will give written notice to the Company of the Holder's intention to
affect a transfer and to comply in all other respects with this Section
8.2.  Each notice shall describe the manner and basic circumstances of the
proposed transfer, and, if such transfer is not being made pursuant to Rule 144
or Rule 144A of the Securities Act (or a successor rule thereto) (collectively,
“Rule 144”), shall designate counsel for the Holder.  The following provisions
shall then apply:

(a)           This Warrant and any Warrant shares issuable upon exercise hereof
(collectively, the “Securities”) may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) the Holder shall
have delivered to the Company (if requested by the Company) an opinion of
counsel to the Company, in a form reasonably acceptable to the Company, to the
effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C)
the Holder provides the Company with reasonable assurance that such Securities
can be sold, assigned or transferred pursuant to Rule 144; (ii) any sale of the
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the Person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the Securities and Exchange
Commission (the “SEC”) promulgated thereunder; and (iii) neither the Company nor
any other Person is under any obligation to register the Securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.

(b)           Certificates evidencing Securities shall not be required to
contain any legend (i) while a registration statement (including a Registration
Statement) covering the resale of such Securities is effective under the
Securities Act, (ii) following any sale of such Securities pursuant to Rule 144
(assuming the transferor is not an affiliate of the Company), (iii) if such
Securities are eligible to be sold, assigned or transferred under Rule 144
(provided that the Holder provides the Company with reasonable assurances that
such Securities are eligible for sale, assignment or transfer under Rule 144
which shall not include an opinion of counsel), (iv) in connection with a sale,
assignment or other transfer (other than under Rule 144), provided that the
Company provides the Company with an opinion of counsel to the Holder,
reasonably acceptable to the Company, to the effect that such sale, assignment
or transfer of the Securities may be made without registration under the
applicable requirements of the Securities Act or (v) if such legend is not
required under applicable requirements of the Securities Act (including, without
limitation, controlling judicial interpretations and pronouncements issued by
the SEC).
 
 
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8.3           Termination of Restrictions.  The restrictions imposed by this
Section 8 upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities: (a) which Restricted
Securities shall have been effectively registered under the Securities Act, or
(b) when, in the opinion of counsel for the Holder, which is reasonably
acceptable to the Company, or, alternatively, in the opinion of counsel to the
Company, such restrictions are no longer required in order to insure compliance
with the Act or Section 8 hereof.  Whenever such restrictions shall cease and
terminate as to any Restricted Securities, the Holder thereof shall be entitled
to receive from the Company, without expense (other than applicable transfer
taxes, if any), new securities of like tenor not bearing the applicable legends
required by Section 8.1 hereof.

9.             Ownership, Transfer and Substitution of Warrant.

9.1           Ownership of Warrant.  The Company may treat the person in whose
name this Warrant is registered in the Warrant Register maintained pursuant to
Section 9.2(b) hereof as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, except that, if and when any Warrant
is properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer thereof as the owner of such Warrant for all purposes,
notwithstanding any notice to the contrary.  Subject to Section 8 hereof, this
Warrant, if properly assigned, may be exercised by a new holder without a new
Warrant first having been issued.

 
9.2
Office; Transfer and Exchange of Warrant.

(a)           The Company will maintain its principal offices as the office
where notices, presentations and demands in respect of this Warrant may be made
upon it until the Company notifies the holder of this Warrant of any change of
location of the office.

(b)           The Company shall cause to be kept at its office maintained
pursuant to Section 9.2(a) hereof a Warrant Register for the registration and
transfer of this Warrant.  The names and addresses of holders of this Warrant,
the transfers thereof and the names and addresses of transferees of this Warrant
shall be registered in such Warrant Register.  The Person in whose name any
Warrant shall be so registered shall be deemed and treated as the owner and
holder thereof for all purposes of this Warrant, and the Company shall not be
affected by any notice or knowledge to the contrary.

(c)           Upon the surrender of this Warrant, properly endorsed, for
registration of transfer or for exchange at the office of the Company maintained
pursuant to Section 9.2(a) hereof, the Company at its expense will (subject to
compliance with Section 8 hereof, if applicable) execute and deliver to or upon
the order of the Holder thereof a new Warrant or Warrants of like tenor,
representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right
to purchase such portion of such Warrant Shares as is designated by the Holder
at the time of such surrender, in the name of such holder or as such holders as
is designated by the Holder at the time of such surrender.  In addition, upon
any transfer of this Warrant in part, each Warrant issued in exchange for this
Warrant shall be adjusted such that the transferee shall be deemed to have paid
such portion of the Unit Price (or deemed Unit Price) and received such portion
of the Shares issued pursuant to the Securities Purchase Agreement and/or
Warrant Shares issued hereunder, in each case, to the Holder (or deemed to have
been issued to the Holder) as allocated by the Holder in the written notice to
the Company with respect to such transfer.
 
 
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9.3           Replacement of Warrant.  Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, upon delivery of indemnity reasonably satisfactory to the Company in
form and amount or, in the case of any mutilation, upon surrender of this
Warrant for cancellation at the office of the Company maintained pursuant to
Section 9.2(a) hereof, the Company at its expense will execute and deliver, in
lieu thereof, a new Warrant of like tenor and dated the date hereof.

10.           No Rights or Liabilities as Stockholder.  No Holder shall be
entitled to vote or receive dividends or be deemed the holder of any shares of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value,
consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the shares of Common Stock purchasable
upon the exercise hereof shall have become deliverable, as provided herein.  In
addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 10, the Company shall provide the Holder with
copies of the same notices and other information given to the stockholders of
the Company generally, contemporaneously with the giving thereof to the
stockholders.

11.           Notices of Record Date, etc.  In case the Company shall take a
record of the holders of its Common Stock (or other stock or securities at the
time deliverable upon the exercise of this Warrant) for the purpose of entitling
or enabling them to receive any dividend or other distribution, or to receive
any right to subscribe for or purchase any shares of stock of any class or any
other securities, or to receive any other right; or of any capital
reorganization of the Company, any reclassification of the capital stock of the
Company, any consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
surviving entity), or any transfer of all or substantially all of the assets of
the Company; or of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will mail or
cause to be mailed to the registered holder of this Warrant a notice specifying,
as the case may be: (i) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (ii) the effective date on
which such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such other
stock or securities at the time deliverable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up.  Such notice shall be mailed at least ten (10) days
prior to the record date or effective date for the event specified in such
notice unless such prior notice is waived by the registered holder of this
Warrant.

12.           Notices.  Any notice or other communication in connection with
this Warrant shall be deemed to be given if in writing (or in the form of a
facsimile) addressed as hereinafter provided and actually delivered at said
address: (a) if to any Holder, at the registered address of such holder as set
forth in the Warrant Register kept at the office of the Company maintained
pursuant to Section 8.2(a) hereof, or (b) if to the Company, to the attention of
its Chief Executive Officer at its office maintained pursuant to Section 9.2(a)
hereof; provided, however, that the exercise of any Warrant shall be effective
in the manner provided in Section 4 hereof.
 
 
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13.           Payment of Taxes.  The Company will pay all documentary stamp
taxes attributable to the issuance of shares of Common Stock underlying this
Warrant upon exercise of this Warrant; provided, however, that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificate for shares of Common Stock
underlying this Warrant in a name other that of the Holder.  The Holder is
responsible for all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving shares of Common Stock underlying this
Warrant upon exercise hereof.

14.           Purchase Rights.  In addition to any adjustments pursuant to
Section 5 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without limitation, the
Maximum Percentage) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is
taken, the date as of which the record holders of shares of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights (provided,
however, to the extent that the Holder’s right to participate in any such
Purchase Right would result in the Holder exceeding the Maximum Percentage, then
the Holder shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a result of
such Purchase Right to such extent) and such Purchase Right to such extent shall
be held in abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Maximum Percentage).

15.           RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments
pursuant to Section 5 above, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to holders
of shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a
“Distribution”), at any time after the issuance of this Warrant, then, in each
such case, the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon the complete
exercise of this Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Maximum Percentage) immediately before the
date on which a record is taken for such Distribution, or, if no such record is
taken, the date as of which the record holders of shares of Common Stock are to
be determined for the participation in such Distribution (provided, however, to
the extent that the Holder’s right to participate in any such Distributions
would result in the Holder exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Distribution to such extent (or the
beneficial ownership of any such shares of Common Stock as a result of such
Distribution to such extent) and such Distribution to such extent shall be held
in abeyance for the benefit of the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Maximum Percentage).

16.           NONCIRCUMVENTION. The Company hereby covenants and agrees that the
Company will not, by amendment of its Articles of Incorporation (as defined in
the Securities Purchase Agreement), Bylaws (as defined in the Securities
Purchase Agreement) or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, and will at all times in
good faith carry out all the provisions of this Warrant and take all action as
may be required to protect the rights of the Holder. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the Warrant Price then in effect, (ii) shall take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock upon the exercise of this
Warrant, and (iii) shall, so long as any of the SPA Warrants are outstanding,
take all action necessary to reserve and keep available out of its authorized
and unissued shares of Common Stock, solely for the purpose of effecting the
exercise of the SPA Warrants, the maximum number of shares of Common Stock as
shall from time to time be necessary to effect the exercise of the SPA Warrants
then outstanding (without regard to any limitations on exercise).
 
 
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17.           Governing Law; Jurisdiction; Waiver of Jury Trial.

(a)           This Warrant shall be governed by, and construed in accordance
with, the internal laws of the State of New York without regard to the choice of
law principles thereof.  Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Warrant and the transactions contemplated
hereby.  Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same
methods as are specified for the giving of notices under this Warrant.  Each of
the parties hereto irrevocably consents to the jurisdiction of any such court in
any such suit, action or proceeding and to the laying of venue in such
court.  Each party hereto irrevocably waives any objection to the laying of
venue of any such suit, action or proceeding brought in such courts and
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.

(b)             EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL
BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT
COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

18.           Miscellaneous.  Any provision of this Warrant and the observance
of any term hereof may be amended, waived or modified (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the holders of greater than 50% of the
outstanding Warrants and Warrant Shares, on a combined and fully diluted basis,
issued to the Purchasers (as defined in the Securities Purchase Agreement).  If
one or more provisions of this Warrant are held to be unenforceable under
applicable law, such provisions shall be excluded from this Warrant, and the
balance of this Warrant shall be interpreted as if such provisions were so
excluded and shall be enforceable in accordance with its terms.  The section
headings in this Warrant are for purposes of convenience only and shall not
constitute a part hereof.

19.           Registration Rights.  The Warrant Shares for which this Warrant is
exercisable are entitled to the benefits of the Registration Rights Agreement
entered into of even date with the original issuance of this Warrant with the
original Holder thereof.

20.           CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly
drafted by the Company and the Holder and shall not be construed against any
Person as the drafter hereof.  The headings of this Warrant are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Warrant. Terms used in this Warrant but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date (as
defined in the Securities Purchase Agreement) in such other Transaction
Documents unless otherwise consented to in writing by the Holder.
 
 
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21.           DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Warrant Price, the Closing Sale Price or fair market value
or the arithmetic calculation of the Warrant Shares (as the case may be), the
Company or the Holder (as the case may be) shall submit the disputed
determinations or arithmetic calculations (as the case may be) via facsimile (i)
within two (2) Business Days after receipt of the applicable notice giving rise
to such dispute to the Company or the Holder (as the case may be) or (ii) if no
notice gave rise to such dispute, at any time after the Holder learned of the
circumstances giving rise to such dispute (including, without limitation, as to
whether any issuance or sale or deemed issuance or sale was an issuance or sale
or deemed issuance or sale of Excluded Securities). If the Holder and the
Company are unable to agree upon such determination or calculation (as the case
may be) of the Warrant Price, the Closing Sale Price, or fair market value or
the number of Warrant Shares (as the case may be) within three (3) Business Days
of such disputed determination or arithmetic calculation being submitted to the
Company or the Holder (as the case may be), then the Company shall, within two
(2) Business Days submit via facsimile (a) the disputed determination of the
Warrant Price, the Closing Sale Price, or fair market value (as the case may be)
to an independent, reputable investment bank selected by the Holder or (b) the
disputed arithmetic calculation of the Warrant Shares to the Company’s
independent, outside accountant. The Company shall cause at its expense the
investment bank or the accountant (as the case may be) to perform the
determinations or calculations (as the case may be) and notify the Company and
the Holder of the results no later than ten (10) Business Days from the time it
receives such disputed determinations or calculations (as the case may be). Such
investment bank’s or accountant’s determination or calculation (as the case may
be) shall be binding upon all parties absent demonstrable error.

22.           REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and
in addition to all other remedies available under this Warrant and the other
Transaction Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder to pursue actual damages for any failure by the Company to
comply with the terms of this Warrant. The Company covenants to the Holder that
there shall be no characterization concerning this instrument other than as
expressly provided herein. Amounts set forth or provided for herein with respect
to payments, exercises and the like (and the computation thereof) shall be the
amounts to be received by the Holder and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required. The Company shall provide all
information and documentation to the Holder that is requested by the Holder to
enable the Holder to confirm the Company’s compliance with the terms and
conditions of this Warrant (including, without limitation, compliance with
Section 16 hereof). The issuance of shares and certificates for shares as
contemplated hereby upon the exercise of this Warrant shall be made without
charge to the Holder or such shares for any issuance tax or other costs in
respect thereof, provided that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than the Holder or its agent on its
behalf.

23.           Definitions.

(a)           “Additional Right” means any right granted with respect to any
securities issued in connection with, or with respect to, any issuance or sale
(or deemed issuance or sale in accordance with Section 5.5) of shares of Common
Stock (other than rights of the type described in Section 14 and 15 hereof) that
could result in a decrease in the net consideration received by the Company in
connection with, or with respect to, such securities (including, without
limitation, any cash settlement rights, cash adjustment or other similar
rights).
 
 
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(b)            “Adjustment Share Amount” equals, with respect to any Dilutive
Issuance (as defined in the Series A Warrant), the greater of (I) zero and (II)
the difference of (i) the quotient of (x) the Unit Price (or deemed Unit Price)
of the Holder divided by (y) the difference of (A) the New Issuance Price (as
defined in the Series A Warrant) with respect to such Dilutive Issuance less (B)
$0.05 (as adjusted for any stock dividend, stock split, stock combination or
other similar transaction), less (ii) such number of shares of Common Stock
previously issued (or deemed to be previously issued) to the Holder either as
(x) Shares (as defined in the Securities Purchase Agreement) or (y) Warrant
Shares pursuant to this Warrant; provided, that upon any exercise of this
Warrant, the Unit Price (or deemed Unit Price) of the Holder for purposes of
this Warrant shall be automatically reduced by an amount equal to the product of
(1) the Unit Price (or deemed Unit Price) of this Warrant at such time and (2)
the quotient of (X) the number of Warrant Shares issued to the Holder in such
exercise and (Y) the number of Warrant Shares then issuable upon exercise of
this Warrant; provided further, that immediately following such adjustment to
the Unit Price, the number of Warrant Shares issued to the Holder in such
exercise shall not be deemed to have been previously issued to the Holder for
purposes of this definition.
 
(c)           “Black Scholes Consideration Value” means the value of the
applicable Option or Convertible Security (as the case may be) as of the date of
issuance thereof calculated using the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg utilizing (i) an underlying price
per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive
documents with respect to the issuance of such Option or Convertible Security
(as the case may be), (ii) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the remaining term of such Option or
Convertible Security (as the case may be) as of the date of issuance of such
Option or Convertible Security (as the case may be) (iii) a zero cost of borrow
and (iv) an expected volatility equal to the greater of 100% and the 100 day
volatility obtained from the HVT function on Bloomberg (determined utilizing a
365 day annualization factor) as of the Trading Day immediately following the
date of issuance of such Option or Convertible Security (as the case may be).
 
(d)           “Black Scholes Value” means the value of the unexercised portion
of this Warrant remaining on the date of the Holder’s request pursuant to
Section 5.4, which value is calculated using the Black Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying
price per share equal to the greater of (1) the highest Closing Sale Price of
the Common Stock during the period beginning on the Trading Day immediately
preceding the earliest to occur of (x) the public disclosure of the applicable
Fundamental Transaction, (y) the consummation of the applicable Fundamental
Transaction and (z) the date on which the Holder first became aware of the
applicable Fundamental Transaction and ending on the Trading Day of the Holder’s
request pursuant to Section 5.4 and (2) the sum of the price per share being
offered in cash in the applicable Fundamental Transaction (if any) plus the
value of the non-cash consideration being offered in the applicable Fundamental
Transaction (if any), (ii) a strike price equal to the Warrant Price in effect
on the date of the Holder’s request pursuant to Section 5.4, (iii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the
greater of (1) the remaining term of this Warrant as of the date of the Holder’s
request pursuant to Section 5.4 and (2) the remaining term of this Warrant as of
the date of consummation of the applicable Fundamental Transaction or as of the
date of the Holder’s request pursuant to Section 5.4 if such request is prior to
the date of the consummation of the applicable Fundamental Transaction, (iv) a
zero cost of borrow and (v) an expected volatility equal to the greater of 100%
and the 100 day volatility obtained from the HVT function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (x) the public disclosure of the
applicable Fundamental Transaction, (y) the consummation of the applicable
Fundamental Transaction and (z) the date on which the Holder first became aware
of the applicable Fundamental Transaction.
 
 
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(e)            “Bloomberg” means Bloomberg, L.P.
 
(f)             “Business Day” means any day other than Saturday, Sunday or
other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.
 
(g)            “Closing Sale Price” means, for any security as of any date, the
last closing trade price for such security on the Principal Market, as reported
by Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing trade price, then the last trade price
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last trade price of such security on the principal
securities exchange or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing does not apply, the last trade price
of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no last trade price is
reported for such security by Bloomberg, the average of the ask prices of any
market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and
the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 21.
All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during such period.
 
(h)            “Common Stock” means (i) the Company’s shares of common stock,
$0.05 par value per share, and (ii) any capital stock into which such common
stock shall have been changed or any share capital resulting from a
reclassification of such common stock.
 
(i)             “Common Stock Deemed Outstanding” means, at any given time, the
number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Sections
5.5(i) and 5.5(ii) hereof regardless of whether the Options or Convertible
Securities are actually exercisable at such time, but excluding any shares of
Common Stock owned or held by or for the account of the Company or issuable upon
conversion and exercise, as applicable, of the SPA Warrants.
 
(j)             “Convertible Securities” means any stock or other security
(other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.
 
(k)            “Dollar Volume Failure” means, with respect to a particular date
of determination, that the aggregate daily dollar trading volume (as reported on
Bloomberg) of the Common Stock on the Eligible Market on which the Common Stock
is listed or designated for quotation on each Trading Day over the thirty (30)
consecutive Trading Day period ending on the Trading Day immediately preceding
such date of determination is less than $500,000.
 
(l)             “Eligible Market” means The New York Stock Exchange, the NYSE
Amex, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market or the Principal Market.
 
(m)           “Excluded Securities” means any (A) capital stock, options or
convertible securities issued to directors, officers, employees or consultants
of the Company in connection with their service as directors of the Company,
their employment by the Company or their retention as consultants by the Company
pursuant to an employee benefit plan or other issuance, employment agreement or
option grant or similar agreement which has been approved by the Board of
Directors of the Company; (B) shares of Common Stock issued upon the conversion
or exercise of options or convertible securities issued prior to the date
hereof, provided such securities are not amended after the date hereof to
increase the number of shares of Common Stock issuable thereunder or to lower
the exercise or conversion price thereof; (C) Securities issued pursuant to this
Agreement and Common Stock issued upon the exercise or conversion of those
Securities; (D) shares of Common Stock issued or issuable by reason of a
dividend, stock split or other distribution on shares of Common Stock; and (E)
capital stock, options or convertible securities issued as consideration for an
acquisition or strategic transaction approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall only be a person
(or to the equity holders of a person) which is, itself or through its
subsidiaries, an operating company or an owner of an asset in a business
synergistic with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but shall not, for
the purposes of this clause, include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities .
 
 
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(n)            “Expiration Date” means  the earlier to occur of (x) the date
that is the seventy-eight (78) month anniversary of the Commencement Date and
(y) the tenth (10th) Trading Day after the Company delivers written notice to
the Holder (including reasonable documentation), executed by an executive
officer of the Company, certifying to the occurrence of (A) the Company’s
consummation of a Subsequent Financing (as defined in the Securities Purchase
Agreement), with net proceeds to the Company of at least $5 million and terms no
less favorable to the investors thereto than the terms of the Transaction
Documents or (B) after the Applicable Date (as defined in the Registration
Statement), (I) the VWAP of the Common Stock on each Trading Day during a period
of thirty (30) consecutive Trading Days exceeds $0.50 (as adjusted for stock
splits, recapitalizations and similar events), (II) on each Trading Day during a
period of thirty (30) consecutive Trading Days, no Dollar Volume Failure exists
and (III) no Current Public Information Failure (as defined in the Registration
Rights Agreement) has occurred and is continuing; provided, that, if such
expiration date would otherwise fall on a day other than a Business Day or on
which trading does not take place on the Principal Market (a “Holiday”), the
next date that is not a Holiday.
 
(o)           “Fundamental Transaction” means that (i) the Company or any of its
Subsidiaries shall, directly or indirectly, in one or more related transactions,
(1) consolidate or merge with or into (whether or not the Company or any of its
Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease,
license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other Person, or (3) allow any
other Person to make a purchase, tender or exchange offer that is accepted by
the holders of more than 50% of the outstanding shares of Voting Stock of the
Company (not including any shares of Voting Stock of the Company held by the
Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), or (4)
consummate a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with any other Person whereby such other Person acquires
more than 50% of the outstanding shares of Voting Stock of the Company (not
including any shares of Voting Stock of the Company held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement or other
business combination), or (5) reorganize, recapitalize or reclassify the Common
Stock, or (ii) any “person” or “group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations
promulgated thereunder) is or shall become the “beneficial owner” (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate
ordinary voting power represented by issued and outstanding Voting Stock of the
Company.
 
 
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(p)            “Maximum Eligibility Number” means initially zero and shall be
increased (such increase, an “Adjustment”) upon the occurrence of any Dilutive
Issuance to such number of shares of Common Stock equal to the Adjustment Share
Amount as of such time.
 
(q)           “Options” means any rights, warrants or options to subscribe for
or purchase shares of Common Stock or Convertible Securities.
 
(r)             “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more
than one such Person or Parent Entity, the Person or Parent Entity with the
largest public market capitalization as of the date of consummation of the
Fundamental Transaction.
 
(s)            “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity or a government or any department or agency
thereof.
 
(t)             “Principal Market” means the OTC Bulletin Board.
 
(u)           “Series B Warrants” means, collectively, all of the Series B
Warrants to purchase Common Stock issued by the Company pursuant to the terms of
the Securities Purchase Agreement, as may be amended from time in accordance
with the terms thereof, and all warrants issued in exchange therefor or
replacement thereof.
 
(v)           “Successor Entity” means the Person (or, if so elected by the
Holder, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Holder, the
Parent Entity) with which such Fundamental Transaction shall have been entered
into.
 
(w)           “Trading Day” means any day on which the Common Stock is traded on
the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded, provided that
“Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time) unless such day is otherwise designated
as a Trading Day in writing by the Holder.
 
(x)            “Transaction Value” shall mean the value on the effective date of
the Fundamental Transaction of the net pre-tax proceeds received or receivable
by the common stockholders of the Company in the Fundamental Transaction. Any
proceeds not constituting cash shall be valued at their fair market value (as
jointly determined by the Company and the Holder).  If the Company and the
Holder are unable to agree upon the fair market value of such non-cash asset,
then such dispute shall be resolved in accordance with the procedures in Section
21.
 
(y)            “Voting Stock” of a Person means capital stock of such Person of
the class or classes pursuant to which the holders thereof have the general
voting power to elect, or the general power to appoint, at least a majority of
the board of directors, managers or trustees of such Person (irrespective of
whether or not at the time capital stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
 
 
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(z)            “VWAP” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market (or, if
the Principal Market is not the principal trading market for such security, then
on the principal securities exchange or securities market on which such security
is then traded) during the period beginning at 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its
“Volume at Price” function or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at
9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by OTC Markets Group
Inc. (formerly Pink Sheets LLC). If VWAP cannot be calculated for such security
on such date on any of the foregoing bases, the VWAP of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 21. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during such period.
 

[Remainder of page intentionally left blank; signature pages follow.]
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase Warrant to
be duly executed as of the date first above written.
 

 
BROADCAST INTERNATIONAL, INC.
                 
 
By:
        Name:       Title:          

 
 

 
 
 

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EXHIBIT A

EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
 

BROADCAST INTERNATIONAL, INC.

Dated:____________

The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock (“Warrant Shares”) of Broadcast International,
Inc., a Utah corporation (the “Company”), evidenced by Series B Warrant to
Purchase Common Stock No. _______ (the “Warrant”). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Warrant.
 

Form of Warrant Price.  The Holder intends that payment of the Warrant Price
shall be made as:
 
 
____________
a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

 
 
____________
a “Cashless Exercise” with respect to _______________ Warrant Shares.

 
In the event that the Holder has elected a Cashless Exercise with respect to
some or all of the Warrant Shares to be issued pursuant hereto, the Holder
hereby represents and warrants that the arithmetic average of the VWAPs of the
Common Stock over the five (5) trading days immediately preceding the date of
this Exercise Notice was $________.
 
2.           Payment of Warrant Price. In the event that the Holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the Holder shall pay the Aggregate Warrant Price in the sum of
$___________________ to the Company in accordance with the terms of the Warrant.
 
3.           Delivery of Warrant Shares.  The Company shall deliver to Holder,
or its designee or agent as specified below, __________ Warrant Shares in
accordance with the terms of the Warrant.  Delivery shall be made to Holder, or
for its benefit, to the following address:
 
_______________________
_______________________
_______________________
_______________________
 

 
Date: _______________ __, ______
 
 
                                                                           
   Name of Registered Holder
 
By:                                                                     
Name:
Title:
 
 
 

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EXHIBIT B
 
ACKNOWLEDGMENT
 
The Company hereby acknowledges this Exercise Notice and hereby directs
______________ to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated March 13, 2012, from the
Company and acknowledged and agreed to by _______________.
 

  INTERWEST TRANSFER COMPANY                                  
 
By:
        Name:       Title:          

 
 
 
 
 
 

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