Exhibit 10.5

INVESTOR RIGHTS AGREEMENT

INVESTOR RIGHTS AGREEMENT dated as of December 23, 2010 (this “Agreement”), by
and between Broadcast International, Inc., a Utah corporation (the ”Company”),
and Castlerigg Master Investments Ltd., a fund advised by Sandell Asset
Management Corp. (the “Lender”).  

WHEREAS:

A.  

The Company has engaged Philadelphia Brokerage Corporation as placement agent
for the sale and issuance of up to $15,000,000 of the Company’s common stock,
par value $0.05 per share (the “Common Stock”), to qualified institutional
buyers and accredited investors (the “Private Offering”).

B.  

In connection with the Loan Restructuring Agreement dated as of December 16,
2010, by and between the parties hereto (the “Loan Restructuring Agreement”),
the Company has agreed, upon the terms and subject to the conditions set forth
in the Loan Restructuring Agreement, among other things, to (i) issue and sell
to the Lender (A) a number of shares of Common Stock equal to (1) $3,500,000,
divided by (2) the price per share of Common Stock paid by investors in the
Private Offering (the “Shares”), subject to reduction in accordance with the
terms of the Loan Restructuring Agreement, and (B) if required to be issued
pursuant to the terms of the Loan Restructuring Agreement, the Warrant, (ii)
amend and restate the Existing Note in the form and on the terms of the Amended
Note, in the face amount of $5,500,000 and which is convertible into shares of
Common Stock (as converted, the “Conversion Shares”), (iii) pay the Lender
$2,500,000 in cash and (iv) cancel the Existing Warrant, which was exercisable
for shares of Common Stock.

C.

In accordance with the terms of the Loan Restructuring Agreement, the Company
has agreed to provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the “1933 Act”), and applicable state
securities laws.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Lender hereby
agree as follows:

1.

Definitions.

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Loan Restructuring Agreement.  As used in
this Agreement, the following terms shall have the following meanings:

“1933 Act” has the meaning set forth in recitals to this Agreement.

“1934 Act” has the meaning set forth in Section 3(b).

“Additional Effective Date” means the date the Additional Registration Statement
is declared effective by the SEC.

“Additional Effectiveness Deadline” means the date which is thirty (30) calendar
days after the earlier of the Additional Filing Date and the Additional Filing
Deadline or in the event that the Registration Statement is subject to a full
review by the SEC, sixty (60) calendar days after the earlier of the Additional
Filing Date and the Additional Filing Deadline.

“Additional Filing Date” means the date on which the Additional Registration
Statement is filed with the SEC.

“Additional Filing Deadline” means the date six (6) months from any request by
the Lender for the filing of an Additional Registration Statement or the most
recent Additional Effective Date, as applicable.

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“Additional Registrable Securities” means, (i) any Cutback Shares not previously
included on a Registration Statement, (ii) the remainder of the Shares not
included in the Initial Registration Statement, (iii) 130% of the number of (a)
Conversion Shares issued or issuable upon conversion of the Amended Note,  (b)
Warrant Shares issued or issuable upon exercise of the Warrant (if required to
be issued pursuant to the Loan Restructuring Agreement) and (c) Additional
Warrant Shares (if any) issued or issuable upon exercise of Additional Warrants,
in each case, as of the Trading Day immediately preceding the applicable date of
determination, including, without limitation, those issuable as a result of any
adjustment of the number of Conversion Shares, Warrant Shares and/or Additional
Warrant Shares issuable under the Amended Note, the Warrant and the Additional
Warrants, as applicable, and (iv) any capital stock of the Company issued or
issuable with respect to the Shares, the Amended Note, the Conversion Shares,
the Warrant Shares (if the Warrant is required to be issued pursuant to the Loan
Restructuring Agreement), the Additional Warrant Shares (if any) or the Cutback
Shares as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on
conversion and/or redemption of the Amended Note, the Warrant and/or the
Additional Warrant Shares; provided , that the Lender has completed and
delivered to the Company selling stockholder information consistent with the
Lender’s obligations hereunder; and provided further , that Cutback Shares and
any capital stock of the Company issued or issuable with respect to the
foregoing shall cease to be Additional Registrable Securities upon the earliest
to occur of the following: (A) sale pursuant to a Registration Statement or Rule
144 under the 1933 Act (in which case, only such securities sold shall cease to
be Registrable Securities); or (B) becoming eligible for sale without
restriction or limitation pursuant to Rule 144.

“Additional Registration Statement” means a Registration Statement or
Registration Statements of the Company filed under the 1933 Act covering any
Additional Registrable Securities.

“Additional Required Registration Amount” means any Additional Registrable
Securities not previously included on a Registration Statement, all subject to
adjustment as provided in Section 2(f), without regard to any limitations on
conversions and/or redemptions of the Amended Note, the Warrant (if required to
be issued pursuant to the Loan Restructuring Agreement) or any Additional
Warrant.

“Additional Warrant Shares” means, collectively, the Registration Delay Warrant
Shares, the Public Information Failure Warrant Shares and the Suspension Warrant
Shares.

“Additional Warrants” means, collectively, the Registration Delay Warrants, the
Public Information Failure Warrants and the Suspension Warrants.

“Agreement” has the meaning set forth in preamble to this Agreement.

“Allowable Grace Period” has the meaning set forth in Section 3(p).

“Blue Sky Filing” has the meaning set forth in Section 6(a).

“Board Observer” has the meaning set forth in Section 11(a).

“Business Day” means any day other than Saturday, Sunday or any other day on
which commercial banks in the City of New York are authorized or required by law
to remain closed.

“Claims” has the meaning set forth in Section 6(a).

“Closing Date” has the meaning set forth in the Loan Restructuring Agreement.

“Common Stock” has the meaning set forth in the recitals to this Agreement.

“Common Stock Equivalents” means, collectively, Options and Convertible
Securities.

“Company” has the meaning set forth in the preamble to this Agreement.

“Conversion Shares” has the meaning set forth in the recitals to this Agreement.

“Convertible Securities” means any stock or securities (other than Options)
convertible into or exercisable or exchangeable for shares of Common Stock.

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“Cutback Shares” means any of the Initial Required Registration Amount (without
regard to clause (II) in the definition thereof) of Registrable Securities not
included in all Registration Statements previously declared effective hereunder
as a result of a limitation on the maximum number of shares of Common Stock of
the Company permitted to be registered by the staff of the SEC pursuant to Rule
415.  For the purpose of determining the Cutback Shares, in order to determine
any applicable Required Registration Amount, first the Conversion Shares shall
be excluded on a pro rata basis until all of the Conversion Shares have been
excluded.

“Effective Date” means the Initial Effective Date and the Additional Effective
Date, as applicable.

“Effectiveness Deadline” means the Initial Effectiveness Deadline and the
Additional Effectiveness Deadline, as applicable.

“Effectiveness Failure” has the meaning set forth in Section 2(g).

“Filing Deadline” means the Initial Filing Deadline and the Additional Filing
Deadline, as applicable.

“Filing Failure” has the meaning set forth in Section 2(g).

“Grace Period” has the meaning set forth in Section 3(p).

“Indemnified Damages” has the meaning set forth in Section 6(a).

“Indemnified Party” has the meaning set forth in Section 6(b).

“Indemnified Person” has the meaning set forth in Section 6(a).

“Initial Effective Date” means the date that the Initial Registration Statement
has been declared effective by the SEC.

“Initial Effectiveness Deadline” means the date that is 120 days following the
date on which the Initial Registration Statement is filed with the SEC, but in
any event not later than 120 days following the Initial Filing Deadline.

“Initial Filing Deadline” means the date that is sixty (60) days following the
date hereof.

“Initial Registrable Securities” for the Initial Registration Statement means
2.5 million of shares of Common Stock, comprised of, at the option of the
Lender, any combination of the Shares, the Conversion Shares, the Warrant Shares
and/or the Additional Warrant Shares, provided , that the Lender has completed
and delivered to the Company selling stockholder information consistent with
Lender’s obligations hereunder.

“Initial Registration Statement” means a Registration Statement or Registration
Statements of the Company filed under the 1933 Act covering the Initial
Registrable Securities.

“Initial Required Registration Amount” means the number of shares of Common
Stock including in the Initial Registrable Securities.

“Legal Counsel” has the meaning set forth in Section 2(d).

“Lender” means the Lender or any transferee or assignee thereof to whom the
Lender assigns its rights under this Agreement and who agrees to become bound by
the provisions of this Agreement in accordance with Section 10 and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 10.

“Loan Restructuring Agreement” has the meaning set forth in the recitals to this
Agreement.

“Maintenance Failure” has the meaning set forth in Section 2(g).

“Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.

“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

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 “Private Offering” has the meaning set forth in the recitals to this Agreement.

“Public Information Failure” has the meaning set forth in Section 8(d).

“Public Information Failure Warrant Shares” has the meaning set forth in Section
8(d).

“Public Information Failure Warrants” has the meaning set forth in Section 8(d).

“register,” “registered,” and “registration” refer to a registration effected by
preparing and filing one or more Registration Statements in compliance with the
1933 Act and pursuant to Rule 415 and the declaration or ordering of
effectiveness of such Registration Statement(s) by the SEC.

“Registrable Securities” means the Initial Registrable Securities and the
Additional Registrable Securities.

“Registration Delay Warrants” has the meaning set forth in Section 2(g).

“Registration Delay Warrant Shares” has the meaning set forth in Section 2(g).

“Registration Period” has the meaning set forth in Section 3(a).

“Registration Statement” means the Initial Registration Statement and the
Additional Registration Statement, as applicable.

“Reporting Period” has the meaning set forth in Section 9(a).

“Required Registration Amount” means either the Initial Required Registration
Amount or the Additional Required Registration Amount, as applicable.

“Rule 144” has the meaning set forth in Section 8.

“Rule 415” means Rule 415 promulgated under the 1933 Act or any successor rule
providing for offering securities on a continuous or delayed basis.

“SEC” means the United States Securities and Exchange Commission.

“Shares” has the meaning set forth in the recitals.

“Subscription Agreement” means the Subscription Agreement, dated as of the date
hereof, between the Company and the investors in the Private Offering in the
form attached hereto as Exhibit C.

“Suspension” has the meaning set forth in Section 8(e).

“Suspension Notice” has the meaning set forth in Section 8(e).

“Suspension Period” has the meaning set forth in Section 8(e).

“Suspension Warrant” has the meaning set forth in Section 8(e).

“Suspension Warrant Shares” has the meaning set forth in Section 8(e).

“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.

“Trigger Date” has the meaning set forth in Section 9(e).

“Violations” has the meaning set forth in Section 6(a).

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2.

Registration.

a.

Initial Mandatory Registration.  The Company shall prepare, and file with the
SEC, the Initial Registration Statement covering the resale of all of the
Initial Registrable Securities, which Initial Registration Statement shall also
include the shares issued in the Private Offering as contemplated by the
Subscription Agreement.  The Lender shall be treated equally to and have the
same rights with respect to the registration of the Initial Registrable
Securities as the investors in the Private Offering will have as to the shares
sold in the Private Offering, and all filing deadlines and reminders set forth
in the Subscription Agreement for the benefit of the investors in the Private
Offering will apply to and be for the benefit of the Lender.  By 9:30 a.m. New
York time on the Business Day following the Initial Effective Date, the Company
shall file with the SEC in accordance with Rule 424 under the 1933 Act the final
prospectus to be used in connection with sales pursuant to such Initial
Registration Statement.

b.

Additional Registrations.  At the request of the Lender, the Company shall
prepare, and, as soon as practicable but in no event later than the Additional
Filing Deadline, file with the SEC an Additional Registration Statement on Form
S-3 covering the resale of all of the Additional Registrable Securities not
previously registered on a Registration Statement hereunder.  To the extent the
staff of the SEC does not permit the Additional Required Registration Amount to
be registered on an Additional Registration Statement, the Company shall file
Additional Registration Statements successively trying to register on each such
Additional Registration Statement the maximum number of remaining Additional
Registrable Securities until the Additional Required Registration Amount has
been registered with the SEC.  In the event that Form S-3 is unavailable for
such a registration, the Company shall use such other form as is available for
such a registration on another appropriate form reasonably acceptable to the
Lender, subject to the provisions of Section 2(e).  Each Additional Registration
Statement prepared pursuant hereto shall register for resale at least that
number of shares of Common Stock equal to the Additional Required Registration
Amount determined as of the date such Additional Registration Statement is
initially filed with the SEC.  Each Additional Registration Statement shall
contain (except if otherwise directed by the Lender) the “Selling Stockholders”
and “Plan of Distribution” sections in substantially the form attached hereto as
Exhibit B.  The Company shall use its reasonable best efforts to have each
Additional Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the Additional Effectiveness Deadline.
 By 9:30 a.m. New York time on the Business Day following the Additional
Effective Date, the Company shall file with the SEC in accordance with Rule 424
under the 1933 Act the final prospectus to be used in connection with sales
pursuant to such Additional Registration Statement.

c.

Other Securities.  The Lender acknowledges and agrees that the shares of Common
Stock issued to the investors in the Private Offering and the shares of Common
Stock issuable upon exercise of the warrants issued in the Private Offering or
otherwise issuable pursuant to the Subscription Agreements will be included in
the Initial Registration Statement.   If the Company advises the Lender and the
investors in the Private Offering in writing that the total number of securities
to be included in such registration exceeds the amount that can be sold in (or
during the time of) such offering without delaying or jeopardizing the success
of such offering (including the price per share of the securities to be sold),
then the amount of securities to be offered for the account of the Lender and
the investors in the Private Offering shall be reduced pro rata on the basis of
the relative number of securities requested to be included in such registration
by each.  In no event shall the Company include any securities other than the
Registrable Securities and the foregoing securities of the investors in the
Private Offering in the Initial Registration Statement, and in no event shall
the Company include any securities other than the Additional Registrable
Securities and any of the foregoing securities of the investors in the Private
Offering that were not able to be included in the Initial Registration Statement
as provided above in any Additional Registration Statement, in each case,
without the prior written consent of the Lender.

d.

Legal Counsel.  Subject to Section 5 hereof, the Lender shall have the right to
select one legal counsel to review and oversee any registration pursuant to this
Section 2 (“Legal Counsel”), which shall be Winston & Strawn LLP or such other
counsel as thereafter designated by the Lender.  The Company shall reasonably
cooperate with Legal Counsel in performing the Company's obligations under this
Agreement.

e.

Ineligibility for Form S-3.  In the event that Form S-3 is not available for the
registration of the resale of Registrable Securities hereunder, the Company
shall (i) register the resale of the Registrable Securities on another
appropriate form reasonably acceptable to the Lender and (ii) undertake to
register the Registrable Securities on Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.

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f.

Sufficient Number of Shares Registered.  In the event the number of shares
available under a Registration Statement filed pursuant to Section 2(a) or
Section 2(b) is insufficient to cover all of the Registrable Securities required
to be covered by such Registration Statement, the Company shall amend the
applicable Registration Statement, or file a new Registration Statement (on the
short form available therefor, if applicable), or both, so as to cover at least
the Required Registration Amount as of the Trading Day immediately preceding the
date of the filing of such amendment or new Registration Statement, in each
case, as soon as practicable, but in any event not later than fifteen (15) days
after the necessity therefor arises.  The Company shall use its reasonable best
efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof.  For purposes of
the foregoing provision, the number of shares available under a Registration
Statement shall be deemed “insufficient to cover all of the Registrable
Securities” if at any time the number of shares of Common Stock available for
resale under the Registration Statement is less than the Required Registration
Amount.  The calculation set forth in the foregoing sentence shall be made
without regard to any limitations on the conversion and/or redemption of the
Amended Note and such calculation shall assume that the Amended Note is then
convertible into shares of Common Stock at the then prevailing Conversion Rate
(as defined in the Amended Note), assuming the initial outstanding principal
amount of the Amended Note remains outstanding through the scheduled maturity
date and assuming no conversions or redemptions of the Amended Note prior to the
scheduled maturity date.

g.

Effect of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.  If (i) a Registration Statement covering all of the Registrable
Securities required to be covered thereby and required to be filed by the
Company pursuant to this Agreement is (A) not filed with the SEC on or before
the respective Filing Deadline (a “Filing Failure”) or (B) not declared
effective by the SEC on or before the respective Effectiveness Deadline (an
“Effectiveness Failure”) or (ii) on any day after the Effective Date sales of
all of the Registrable Securities required to be included on such Registration
Statement cannot be made (other than during an Allowable Grace Period) pursuant
to such Registration Statement or otherwise (including, without limitation,
because of a failure to keep such Registration Statement effective, to disclose
such information as is necessary for sales to be made pursuant to such
Registration Statement, to register a sufficient number of shares of Common
Stock or to maintain the listing of the Common Stock (a “Maintenance Failure”)
then, as partial relief for the damages to the Lender by reason of any such
delay in or reduction of its ability to sell the applicable shares of Common
Stock (which remedy shall not be exclusive of any other remedies available at
law or in equity), the Company shall, on the 91st day following the Closing Date
or the 61st day following the initial filing of the Registration Statement, as
applicable, and each 121st day thereafter, as applicable, issue to the Lender
warrants (“Registration Delay Warrants”) to purchase a number of shares of
Common Stock equal to five percent (5%) of the aggregate number of Shares and
Warrant Shares (if the Warrant is required to be issued pursuant to the Loan
Restructuring Agreement) (“Registration Delay Warrant Shares”), with an exercise
price and on the same terms as the warrants issued to the investors in the
Private Offering pursuant to Section 10.c of the Subscription Agreement (which
Section may not be amended without the prior written consent of the Lender).
 Notwithstanding the foregoing, (i) no Registration Delay Warrants shall be
issuable pursuant to this Section 2(g) if (A) the relevant failure is a result
of an SEC review of the applicable Registration Statement where the SEC comments
relate solely to the application of Rule 415 by the SEC or (B) the relevant
failure is a result of a force majeure and (ii) in no event shall the Company be
required to issue to the Lender Registration Delay Warrants to purchase, in the
aggregate, a number of shares of Common Stock in excess of seventy-five percent
(75%) of the Shares and the Warrant Shares (if the Warrant is required to be
issued pursuant to the Loan Restructuring Agreement) (without giving effect to
any limitations on exercise thereof).  The Company shall use its best efforts to
include the sale of the Registration Delay Warrants and the Registration Delay
Warrant Shares in any Registration Statement filed pursuant to this Agreement
and any amendments or supplements thereto.  Notwithstanding anything set forth
herein to the contrary, at the Lender’s option, any Registration Delay Warrants
issuable hereunder may include a limitation on the exercise of the Registration
Delay Warrants to the extent that, after giving effect to such exercise, the
Lender, together with its affiliates, would beneficially own in excess of 9.90%
of the shares of Common Stock outstanding immediately after giving effect to
such exercise, and that the Lender shall have the right to increase or decrease
such amount from time to time to any other percentage with sixty-one (61) days’
prior notice.

3.

Related Obligations.

At such time as the Company is obligated to file a Registration Statement with
the SEC pursuant to Section 2(a), 2(b), 2(e) or 2(f), the Company will use its
reasonable best efforts to effect the registration of the Registrable Securities
in accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:

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a.

The Company shall promptly prepare and file with the SEC a Registration
Statement with respect to the Registrable Securities and use its reasonable best
efforts to cause such Registration Statement relating to the Registrable
Securities to become effective as soon as practicable after such filing (but in
no event later than the Effectiveness Deadline).  The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the date as of which the Lender may sell all of the Registrable
Securities covered by such Registration Statement without restriction or
limitation pursuant to Rule 144 (or any successor thereto) promulgated under the
1933 Act or (ii) the date on which the Lender shall have sold all of the
Registrable Securities covered by such Registration Statement (the “Registration
Period”).  The Company shall ensure that each Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein
(in the case of prospectuses, in the light of the circumstances in which they
were made) not misleading.  The term “best efforts” shall mean, among other
things, that the Company submit to the SEC, within two (2) Business Days after
the later of the date  that (i) the Company learns that no review of a
particular Registration Statement will be made by the staff of the SEC or that
the staff has no further comments on a particular Registration Statement, as the
case may be, and (ii) the Company receives the approval of Legal Counsel
pursuant to Section 3(c) (which approval is immediately sought), a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than two (2) Business Days after the submission of such request.  The
Company shall respond in writing to comments made by the SEC in respect of a
Registration Statement as soon as practicable, but in no event later than
fifteen (15) days after the receipt of comments by the SEC.

b.

The Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement.  In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by Regulation S-X promulgated by the
SEC or by reason of the Company filing a report on Form 8-K, Form 10-Q, Form
10-QSB, Form 10-K, Form 10-KSB, any amendment of any of the foregoing or any
analogous report under the Securities Exchange Act of 1934, as amended (the
“1934 Act”), the Company shall have incorporated such report by reference into
such Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement such
Registration Statement or the date on which updated information is required to
be included in such Registration Statement pursuant to Regulation S-X
promulgated by the SEC.

c.

The Company shall (A) permit Legal Counsel to review and comment upon (i) each
Registration Statement at least five (5) Business Days prior to its filing with
the SEC and (ii) all amendments and supplements to all Registration Statements
(except for Annual Reports on Form 10-K or Form 10-KSB, Quarterly Reports on
Form 10-Q or Form 10-QSB, Current Reports on Form 8-K, and any similar or
successor reports) within a reasonable number of days prior to their filing with
the SEC, and (B) not file any Registration Statement or amendment or supplement
thereto in a form to which Legal Counsel reasonably objects.  The Company shall
not submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the prior approval of
Legal Counsel, which consent shall not be unreasonably withheld.  The Company
shall furnish to Legal Counsel, without charge, (i) copies of any correspondence
from the SEC or the staff of the SEC to the Company or its representatives
relating to any Registration Statement, (ii) promptly after the same is prepared
and filed with the SEC, one copy of any Registration Statement and any
amendment(s) and supplement(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by the
Lender, and all exhibits and (iii) upon the effectiveness of any Registration
Statement, one copy of the prospectus included in such Registration Statement
and all amendments and supplements thereto.  The Company shall reasonably
cooperate with Legal Counsel in performing the Company's obligations pursuant to
this Section 3.

d.

The Company shall furnish to the Lender, without charge, (i) promptly after the
same is prepared and filed with the SEC, at least one copy of such Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by the
Lender, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as the Lender may reasonably request)
and (iii) such other documents, including copies of any preliminary or final
prospectus, as the Lender may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by the Lender.

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e.

The Company shall use its reasonable best efforts to (i) register and qualify,
unless an exemption from registration and qualification applies, the resale by
the Lender of the Registrable Securities covered by a Registration Statement
under such other securities or “blue sky” laws of all applicable jurisdictions
in the United States, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction.  The Company shall promptly notify Legal Counsel and the Lender of
the receipt by the Company of any notification with respect to the suspension of
the registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

f.

The Company shall notify Legal Counsel and the Lender in writing of the
happening of any event, as promptly as practicable after becoming aware of such
event, as a result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and, subject to Section 3(p), promptly prepare
a supplement or amendment to such Registration Statement to correct such untrue
statement or omission and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and the Lender (or such other number of copies as
Legal Counsel or the Lender may reasonably request).  The Company shall also
promptly notify Legal Counsel and the Lender in writing (i) when a prospectus or
any prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel and the
Lender by facsimile or e-mail on the same day of such effectiveness and by
overnight mail), (ii) of any request by the SEC for amendments or supplements to
a Registration Statement or related prospectus or related information, and (iii)
of the Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.

g.

The Company shall use its reasonable best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement, or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel and the Lender of the issuance of such order
and the resolution thereof or its receipt of actual notice of the initiation or
threat of any proceeding for such purpose.

h.

The Company shall hold in confidence and not make any disclosure of information
concerning the Lender provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement.  The Company agrees that it shall, upon learning that disclosure of
such information concerning the Lender is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to the Lender and allow the Lender, at the Lender’s expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.

i.

The Company shall use its best efforts either to (i) cause all of the
Registrable Securities covered by a Registration Statement to be listed on each
securities exchange or the Principal Market (as defined in the Loan
Restructuring Agreement) on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (ii) secure the
inclusion for quotation of all of the Registrable Securities on The NASDAQ
Global Select Market or (iii) if, despite the Company's best efforts, the
Company is unsuccessful in satisfying the preceding clauses (i) and (ii), to
secure the inclusion for quotation on The NASDAQ Global Market, The New York
Stock Exchange, The NASDAQ Capital Market or the American Stock Exchange for
such Registrable Securities.  The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(i).

j.

The Company shall cooperate with the Lender and, to the extent applicable,
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Lender may reasonably
request and registered in such names as the Lender may request.

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k.

If reasonably requested by the Lender, the Company shall as soon as practicable
(i) incorporate in a prospectus supplement or post-effective amendment such
information as the Lender reasonably requests to be included therein relating to
the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or make
amendments to any Registration Statement if reasonably requested by the Lender.

l.

The Company shall use its reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.

m.

The Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 1933 Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the applicable Effective Date of a Registration
Statement.

n.

The Company shall use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC in connection with any registration hereunder.

o.

Within two (2) Business Days after a Registration Statement which covers
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Lender)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.

p.

Notwithstanding anything to the contrary herein, at any time after the Effective
Date, the Company may delay the disclosure of material, non-public information
concerning the Company the disclosure of which at the time is not, in the good
faith opinion of the Board of Directors of the Company and its counsel, in the
best interest of the Company and, in the opinion of counsel to the Company,
otherwise required (a “Grace Period”); provided, that the Company shall promptly
(i) notify the Lender in writing of the existence of material, non-public
information giving rise to a Grace Period (provided that in each notice the
Company will not disclose the content of such material, non-public information
to the Lender) and the date on which the Grace Period will begin, and
(ii) notify the Lender in writing of the date on which the Grace Period ends;
and, provided further, that no Grace Period shall exceed twenty (20) consecutive
days and during any three hundred sixty five (365) day period and such Grace
Periods shall not exceed an aggregate of thirty (30) days and the first day of
any Grace Period must be at least five (5) Trading Days after the last day of
any prior Grace Period (each, an “Allowable Grace Period”).  For purposes of
determining the length of a Grace Period above, the Grace Period shall begin on
and include the date the Lender receive the notice referred to in clause (i) and
shall end on and include the later of the date the Lender receive the notice
referred to in clause (ii) and the date referred to in such notice.  The
provisions of Section 3(g) hereof shall not be applicable during the period of
any Allowable Grace Period.  Upon expiration of the Grace Period, the Company
shall again be bound by the first sentence of Section 3(f) with respect to the
information giving rise thereto unless such material, non-public information is
no longer applicable.  Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of the Lender in accordance with the terms of the Loan Restructuring
Agreement in connection with any sale of Registrable Securities with respect to
which the Lender has entered into a contract for sale, prior to the Lender’s
receipt of the notice of a Grace Period and for which the Lender has not yet
settled.  

q.

Neither the Company nor any Subsidiary (as defined in the Loan Restructuring
Agreement) or affiliate thereof shall identify the Lender as an underwriter in
any public disclosure or filing with the SEC or any Principal Market (as defined
in the Loan Restructuring Agreement); provided, however, that the foregoing
shall not prohibit the Company from including the disclosure found in the “Plan
of Distribution” section attached hereto as Exhibit B in the Registration
Statement.  

4.

Obligations of the Lender.

a.

At least five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify the Lender in writing of the
information the Company requires from the Lender if the Lender elects to have
any of the Lender’s Registrable Securities included in such Registration
Statement.  It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of the Lender that the Lender shall furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it,
as shall be reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.  

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b.

The Lender, by acceptance of the Registrable Securities, agrees to cooperate
with the Company as reasonably requested by the Company in connection with the
preparation and filing of any Registration Statement hereunder, unless the
Lender has notified the Company in writing of its election to exclude all of the
Registrable Securities from such Registration Statement.

c.

The Lender agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f), the Lender will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until the Lender’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or the first
sentence of 3(f) or receipt of notice that no supplement or amendment is
required.  Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended shares of Common Stock to a transferee of
the Lender in accordance with the terms of the Loan Restructuring Agreement in
connection with any sale of Registrable Securities with respect to which the
Lender has entered into a contract for sale prior to the Lender’s receipt of a
notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) and for which the Lender has not yet
settled.

d.

The Lender covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom in
connection with sales of Registrable Securities pursuant to the Registration
Statement.

5.

Expenses of Registration.

All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company.  The Company shall also
reimburse the Lender for the reasonable fees and disbursements of Legal Counsel
in connection with registration, filing or qualification pursuant to Sections 2
and 3 of this Agreement.

6.

Indemnification.

In the event any Registrable Securities are included in a Registration Statement
under this Agreement:

a.

To the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend the Lender, the directors, officers,
members, partners, employees, agents, representatives of, and each Person, if
any, who controls the Lender within the meaning of the 1933 Act or the 1934 Act
(each, an “Indemnified Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several, (collectively,
“Claims”) incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified Damages”), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon:
 (i) any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any amendment or supplement thereto or in any filing
made in connection with the qualification of the offering under the securities
or other “blue sky” laws of any jurisdiction in which Registrable Securities are
offered (“Blue Sky Filing”), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement or
(iv) any violation of this Agreement (the matters in the foregoing clauses (i)
through (iv) being, collectively, “Violations”).  Subject to Section 6(c), the
Company shall reimburse the Indemnified Persons, promptly as such expenses are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim.  Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a):  shall not apply to a
Claim by an Indemnified Person arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Indemnified Person expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(d).  Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Lender
pursuant to Section 10.

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b.

In connection with any Registration Statement in which the Lender is
participating, the Lender agrees to indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act, and each investor in the Private Offering with
shares covered by such Registration Statement (each, an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages directly arise out of any Violation, in each case to the
extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by the Lender
expressly for use in connection with such Registration Statement; and, subject
to Section 6(c), the Lender shall reimburse the Indemnified Party, promptly as
such expenses are incurred and are due and payable, for any legal or other
expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Lender, which consent shall not be unreasonably withheld or
delayed; provided, further, that the Lender shall be liable under this Section
6(b) for only that amount of a Claim or Indemnified Damages as does not exceed
the net proceeds to the Lender as a result of the sale of Registrable Securities
pursuant to such Registration Statement.  Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Lender pursuant to Section 10.  Notwithstanding the foregoing, the
Lender’s aggregate obligation to indemnify the Indemnified Parties shall be
limited to the net amount received by the Lender from the sale of the
Registrable Securities covered by such Registration Statement less the amount of
any other claims, damages or liabilities paid by the Lender in connection with
the Lender’s sale of such Registrable Securities.

c.

Promptly after receipt by an Indemnified Person or Indemnified Party under this
Section 6 of notice of the commencement of any action or proceeding (including
any governmental action or proceeding) involving a Claim, such Indemnified
Person or Indemnified Party shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person or the Indemnified Party, as
the case may be; provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the fees and expenses
of not more than one counsel for all such Indemnified Persons or Indemnified
Parties to be paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by such counsel
of the Indemnified Person or Indemnified Party and the indemnifying party would
be inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding.  In the case of an Indemnified Person, legal counsel
referred to in the immediately preceding sentence shall be selected by the
Lender.  The Indemnified Party or Indemnified Person shall cooperate reasonably
with the indemnifying party in connection with any negotiation or defense of any
such action or Claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified Party
or Indemnified Person which relates to such action or Claim.  The indemnifying
party shall keep the Indemnified Party or Indemnified Person fully apprised at
all times as to the status of the defense or any settlement negotiations with
respect thereto.  No indemnifying party shall be liable for any settlement of
any action, claim or proceeding effected without its prior written consent;
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent.  No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person of a release from all liability
in respect to such Claim or litigation, and such settlement shall not include
any admission as to fault on the part of the Indemnified Party.  Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made.  The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

d.

The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred.

e.

The indemnity agreements contained herein shall be in addition to  (i) any cause
of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

f.

The Company shall not permit any Subscription Agreement to be modified or
amended without the prior written consent of the Lender, which consent shall not
be unreasonably withheld or delayed.

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7.

Contribution.

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that:  (i) no
Person involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to contribution from any
Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the amount of net proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.

8.

Reports Under the 1934 Act.

With a view to making available to the Lender the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Lender to sell securities of the Company to
the public without registration (“Rule 144”), the Company agrees to:

a.

make and keep public information available, as those terms are understood and
defined in Rule 144;

b.

file with the SEC in a timely manner all reports and other documents required of
the Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and

c.

furnish or make available to the Lender, so long as the Lender owns Registrable
Securities, promptly upon request, (i) a written statement by the Company, if
true, that it has complied with the reporting requirements of Rule 144, the 1933
Act and the 1934 Act or confirm in writing that the Lender can sell the
Registrable Securities under Rule 144, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested to
permit the Lender to sell such securities pursuant to Rule 144 without
registration.

d.

At any time beginning on the date hereof and ending at such time that all of the
Registrable Securities can be sold either pursuant to a Registration Statement
or may be sold without restriction or limitation pursuant to Rule 144, if the
Company shall fail for any reason to satisfy the current public information
requirement under Rule 144 (a “Public Information Failure”) then, as partial
relief for the damages to any holder of Registrable Securities by reason of any
such delay in or reduction of its ability to sell the Registrable Securities
(which remedy shall not be exclusive of any other remedies available at law or
in equity), the Company shall, on the date on which such Public Information
Failure occurs, and each 30th day thereafter, as applicable, issue to the Lender
warrants (the “Public Information Failure Warrants”) to purchase a number of
shares of Common Stock equal to five percent (5%) of the aggregate number of
Shares and Warrant Shares (if the Warrant is required to be issued pursuant to
the Loan Restructuring Agreement) (the “Public Information Failure Warrant
Shares”), with an exercise price and on the same terms as the warrants issued to
the investors in the Public Offering pursuant to Section 10.c of the
Subscription Agreement (whether or not warrants are issuable thereunder).  The
Company shall use its best efforts to include the sale of the Public Information
Failure Warrant Shares in any Registration Statement filed pursuant to this
Agreement and any amendments or supplements thereto.  Notwithstanding anything
set forth herein to the contrary, at the Lender’s option, any Public Information
Failure Warrants issuable hereunder may include a limitation on the exercise of
the Public Information Failure Warrants to the extent that, after giving effect
to such exercise, the Lender, together with its affiliates, would beneficially
own in excess of 9.90% of the shares of Common Stock outstanding immediately
after giving effect to such exercise, and that the Lender shall have the right
to increase or decrease such amount from time to time to any other percentage
with sixty-one (61) days’ prior notice.

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e.

In the event (i) of any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of any Registration
Statement for amendments or supplements to such Registration Statement or
related prospectus or for additional information, (ii) of the issuance by the
SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of any Registration Statement or the initiation of
any proceedings for that purpose, (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Shares, Conversion Shares issued upon
conversion of the Amended Note, Warrant Shares issued upon exercise of the
Warrant (if required to be issued pursuant to the Loan Restructuring Agreement)
or Additional Warrant Shares issued upon exercise of any Additional Warrant for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, or (iv) of any event or circumstance which, upon the advice of its
counsel, necessitates the making of any changes in any Registration Statement or
prospectus, or any document incorporated or deemed to be incorporated therein by
reference, so that, in the case of such Registration Statement, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the prospectus, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, then the Company shall deliver (which delivery may occur
electronically) a certificate in writing to the Lender (the “Suspension Notice”)
to the effect of the foregoing and, upon receipt of such Suspension Notice, the
Lender will refrain from selling any Registrable Securities pursuant to such
 Registration Statement (a “Suspension”) until the Lender’s receipt of copies
(which may be provided electronically) of a supplemented or amended prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in any such prospectus.  In the event of any Suspension, the
Company shall use its reasonable commercial efforts to cause the use of the
prospectus so suspended to be resumed as soon as reasonably practicable within
twenty (20) Business Days after the delivery of a Suspension Notice to the
Lender.  In the event that any Suspension or Suspensions pursuant to clauses (i)
and/or (ii) above are in effect for an aggregate of more than fifteen (15) days
in a ninety (90)-day period, or any Suspension or Suspensions pursuant to clause
(iii) above is in effect for an aggregate of more than thirty (30) days in a
ninety (90)-day period, or any Suspension or Suspensions are in effect for an
aggregate of greater than forty-five (45) days in any 360-day period (each such
period, a “Suspension Period”), then, on the 16th, 31st or 46th day of each such
Suspension Period, as applicable, and on each 30th day thereafter while such
applicable Suspension is in effect, issue to the Lender a warrant (the
“Suspension Warrant”) to purchase an aggregate number of shares of Common Stock
equal to five percent (5%) of the aggregate number of Shares and Warrant Shares
(if the Warrant is required to be issued pursuant to the Loan Restructuring
Agreement) (“Suspension Warrant Shares”), with an exercise price and on the same
terms as the warrants issued to the investors in the Private Offering pursuant
to Section 11.c of the Subscription Agreement (which Section may not be amended
without the prior written consent of the Lender), until such Suspension
terminates.  In addition to and without limiting any other remedies (including,
without limitation, at law or at equity) available to the Lender, the Lender
shall be entitled to specific performance in the event that the Company fails to
comply with the provisions of this Section 8(e).

9.

Certain Covenants.

a.

Reporting Status.  Notwithstanding anything to the contrary contained in this
Agreement, until the date on which the Lender shall have sold all of the
Registrable Securities (the “Reporting Period”), or such earlier date as a
Change of Control (as defined in the Amended Note) shall occur, the Company
shall timely file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination.

b.

Financial Information.  The Company agrees to send the following to the Lender
during the Reporting Period (i) unless the following are filed with the SEC
through EDGAR and are available to the public through the EDGAR system, or are
otherwise made publicly available, (i) within one (1) Business Day after the
filing thereof with the SEC, a copy of its Annual Reports and Quarterly Reports
on Form 10-K, 10-KSB, 10-Q or 10-QSB, any interim reports or any consolidated
balance sheets, income statements, stockholders’ equity statements and/or cash
flow statements for any period other than annual, any Current Reports on Form
8-K and any registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile
or e-mailed copies of all press releases issued by the Company or any of its
Subsidiaries and (iii) copies of any notices and other information made
available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.

c.

Listing.  The Company shall promptly secure the listing of all of the
Registrable Securities upon each national securities exchange and automated
quotation system, if any, upon which the Common Stock is then listed (subject to
official notice of issuance) and shall maintain such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents.  The Company shall maintain the authorization of the Common Stock or
quotation on the Principal Market.  Neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably expected to result
in the delisting or suspension of the Common Stock on the Principal Market.  The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 9(c).

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d.

Pledge of Securities.  The Company acknowledges and agrees that the Amended
Note, the Shares, the Warrant (if required to be issued pursuant to the Loan
Restructuring Agreement), the Warrant Shares (if the Warrant is required to be
issued pursuant to the Loan Restructuring Agreement), any Additional Warrants,
any Additional Warrant Shares and/or Conversion Shares may be pledged by the
Lender in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by any such securities.  The pledge of the
Amended Note, the Shares, the Warrant (if required to be issued pursuant to the
Loan Restructuring Agreement), the Warrant Shares (if the Warrant is required to
be issued pursuant to the Loan Restructuring Agreement), any Additional
Warrants, any Additional Warrant Shares and/or Conversion Shares shall not be
deemed to be a transfer, sale or assignment of such securities under any
Transaction Document, and the Lender shall not be required to provide the
Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document; provided that the
Lender and its pledgee shall be required to comply with the provisions of
Section 5.2(f) of the Loan Restructuring Agreement in order to effect a sale,
transfer or assignment of any such securities to such pledgee.  The Company
hereby agrees to execute and deliver such documentation as a pledgee of the
Amended Note, the Shares, the Warrant (if required to be issued pursuant to the
Loan Restructuring Agreement), the Warrant Shares (if the Warrant is required to
be issued pursuant to the Loan Restructuring Agreement), any Additional
Warrants, any Additional Warrant Shares and/or Conversion Shares may reasonably
request in connection with a pledge of any such securities to such pledgee by
the Lender.

e.

Additional Issuances of Securities.  From the date hereof until the date when
all Registrable Securities are freely tradeable without restriction or
limitation pursuant to Rule 144 (the “Trigger Date”), and except as provided in
Section 2(c) with respect to any securities of investors in the Private Offering
that were not able to be included in the Initial Registration Statement as
provided in Section 2(c), the Company shall not, directly or indirectly, file
any registration statement with the SEC other than a Registration Statement.
 From the date hereof until the Trigger Date, and except pursuant to the Private
Offering, the Company shall not, (i) directly or indirectly, offer, sell, grant
any option to purchase, or otherwise dispose of (or announce any offer, sale,
grant or any option to purchase or other disposition of) any of its or its
Subsidiaries’ equity or equity equivalent securities, including, without
limitation, any debt, preferred stock or other instrument or security that is,
at any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for shares of Common Stock or Common Stock
Equivalents or (ii) be party to any solicitations, negotiations or discussions
with regard to the foregoing.

10.

Assignment of Registration Rights.

The rights under this Agreement shall be automatically assignable by the Lender
to any transferee of all or any portion of the Lender’s Registrable Securities
if:  (i) the Lender agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act or applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Loan Restructuring Agreement.

11.

Board Observer Rights.

a.

The Company shall permit one designee appointed by the Lender (the “Board
Observer”) to serve as an observer and attend all meetings of the Company’s
Board of Directors.  All costs and expenses (including travel) incurred by the
Board Observer in connection with his or her attendance at meetings of the
Company’s Board of Directors shall be reimbursed by the Company to such Board
Observer within three (3) Business Days after such Board Observer’s request for
such reimbursement.  The Company shall give any such Board Observer, at the same
time, on the same basis and in the same form as provided to the members of the
Board of Directors, (i) notice of any meeting of the Board of Directors and (ii)
copies of any materials or documents to be presented, discussed or used at such
meetings.  The Board Observer shall be entitled to consult with, and make
proposals and furnish advice to, the Company’s Board of Directors, and the
Company shall use reasonable best efforts to cause the officers of the Company
to take such proposals or advice seriously and give due consideration thereto,
provided, that nothing herein is intended to require compliance with any such
proposal or advice or to impose liability for any failure so to comply.  Except
to the extent access to such information could adversely affect the
attorney-client privilege between the Company and its counsel, the Board
Observer shall be provided with copies of all notices, minutes, consents and
forms of consents in lieu of meetings of the Company’s Board of Directors at the
same time or times as such notices, minutes, consents or forms are issued or
circulated by or to, or such other material is provided to, the members of the
Company’s Board of Directors.

14

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b.

The Board Observer may be excluded from any meetings of the Board of Directors,
and any meeting materials relating to the same may be redacted accordingly
before being furnished to the Board Observer, if, in the good faith
determination of the Board of Directors, (i) the subject matter to be discussed
at such meeting (or the portion thereof from which it proposes to exclude the
Board Observer) relates to disputes or negotiations relating to the Company and
the Lender in respect of this Agreement, the Loan Restructuring Agreement or
otherwise, or (ii) if access to such information or attendance at such meeting
could adversely affect the attorney-client privilege between the Company and its
counsel.  The Company will use its best efforts to ensure, and to cause its
Board of Directors to ensure, that any withholding of information or any
restriction on attendance is strictly limited only to the extent necessary as
set forth in the preceding sentence.  If, as a result of the death, disability,
retirement, resignation, removal or otherwise, the person designated by Lender
pursuant to this Section 12 shall no longer serve as the Board Observer, the
Lender shall be entitled to designate another individual to fill such capacity
and serve as the Board Observer.

c.

The Board Observer will be subject to and comply with all rules, practices and
procedures imposed by law, the applicable Principal Market and the Company’s
corporate governance, confidentiality and other employee policies, including
without limitation maintaining the confidentiality of all nonpublic information,
refraining from trading in the Company’s securities while in possession of
material, nonpublic information and generally complying with securities and
disclosure rules and regulations.  The Company is under no obligation to
disclose publicly material nonpublic information that is made available to the
Lender or the Board Observer, and as a result, the Lender and the Board Observer
may not be able to trade in the Company’s securities for indefinite periods of
time when in possession of material nonpublic information.  

d.

The rights of Lender to select a Board Observer pursuant to this Section 10, and
all related obligations of the Company with respect thereto, shall terminate as
of such time as the Lender beneficially owns less than 5% of the then-issued and
outstanding shares of Common Stock.

12.

Amendment.

Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Lender.
 Any amendment or waiver effected in accordance with this Section 12 shall be
binding upon the Lender and the Company.

13.

Miscellaneous.

a.

A Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities.  If the Company
receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company shall act upon the
basis of instructions, notice or election received from such record owner of
such Registrable Securities.

b.

Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same.  The addresses and facsimile numbers for such communications shall be:

If to the Company:  

Broadcast International, Inc.

7050 Union Park, Ave. #600

Salt Lake City, Utah 84047

Attention:  

James Solomon

Telephone:  

(801) 562-2252

Facsimile:  

(801) 562-1773

With a copy (which shall not constitute notice) to:

Holland & Hart LLP

222 South Main, Suite 2200

Salt Lake City, Utah 84101

Attention:  

David G. Angerbauer, Esq.

Telephone:  

(801) 799-5800

Facsimile:  

(801) 799-5700

15

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If to the Lender:

c/o Sandell Asset Management

40 West 57th St

26th Floor

New York, NY 10019

Attention:

Lee Iannarone

Telephone:

(212) 603-5700

Facsimile:  

(212) 603-5710

With a copy (which shall not constitute notice) to Legal Counsel

If to Legal Counsel:

Winston & Strawn LLP

200 Park Avenue

New York, New York 10166

Attention:

Bradley C. Vaiana, Esq.

Telephone:

(212) 294-2610

Facsimile:  

(212) 294-4700

If to the Lender, to its address and facsimile number set forth in the Loan
Restructuring Agreement, with copies to the Lender’s representative as set forth
in the Loan Restructuring Agreement, or to such other address and/or facsimile
number and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

c.

Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.

d.

All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions
other than Section 5-1401 of New York’s General Obligations Law) that would
cause the application of the laws of any jurisdictions other than the State of
New York.  Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
 EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

e.

If any provision of this Agreement is prohibited by law or otherwise determined
to be invalid or unenforceable by a court of competent jurisdiction, the
provision that would otherwise be prohibited, invalid or unenforceable shall be
deemed amended to apply to the broadest extent that it would be valid and
enforceable, and the invalidity or unenforceability of such provision shall not
affect the validity of the remaining provisions of this Agreement so long as
this Agreement as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties.  The parties will endeavor in
good faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).

16

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f.

This Agreement, the other Transaction Documents (as defined in the Loan
Restructuring Agreement) and the instruments referenced herein and therein
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein.  This Agreement, the other Transaction Documents and the instruments
referenced herein and therein supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

g.

Subject to the requirements of Section 10, this Agreement shall inure to the
benefit of and be binding upon the permitted successors and assigns of each of
the parties hereto.

h.

The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.

i.

This Agreement may be executed in more than one counterpart, each of which shall
be deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.

j.

Each party shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

k.

The language used in this Agreement will be deemed to be the language chosen by
the parties to express their mutual intent and no rules of strict construction
will be applied against any party.

l.

This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person other than the
Indemnified Persons and Indemnified Parties as contemplated by Sections 6 and 7.

* * * * * *

(Signature Page Follows)

17

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Lender and the Company have caused their respective
signature page to this Investor Rights Agreement to be duly executed as of the
date first written above.

 

COMPANY:

 

 

 

BROADCAST INTERNATIONAL, INC.

 

 

 

 

 

 

 

By:

  /s/ Rodney M. Tiede       
Name:  Rodney M. Tiede
Title:    President & CEO

 

 

(Signature Page to Investor Rights Agreement)

18

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IN WITNESS WHEREOF, the Lender and the Company have caused their respective
signature page to this Investor Rights Agreement to be duly executed as of the
date first written above.

 

LENDER:

 

 

 

CASTLERIGG MASTER INVESTMENTS LTD.

 

 

 

By Sandell Asset Management Corp., its investment manager

 

 

 

By:

  /s/ Richard Gashler               
Name:  Richard Gashler
Title:    General Counsel

 

 

19

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EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

[               ]

[               ]

[               ]

   

Re:

Broadcast International, Inc.

Ladies and Gentlemen:

[We are][I am] counsel to Broadcast International, Inc., a Utah corporation (the
“Company”), and have represented the Company in connection with that certain
Loan Restructuring Agreement (the “Loan Restructuring Agreement”) entered into
by and between the Company and Castlerigg Master Investments Ltd. (the “Lender”)
pursuant to which the Company issued to the Lender shares (the “Shares”) of the
Company's common stock, par value $0.05 per share (the “Common Stock”), [a
warrant to purchase shares of Common Stock (“Warrant Shares”)], and an Amended
and Restated Senior Convertible Note (the “Amended Note”) which is convertible
into Common Stock (the “Conversion Shares”).  Pursuant to the Loan Restructuring
Agreement, the Company also has entered into an Investor Rights Agreement with
the Lender (the “Investor Rights Agreement”) pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Investor Rights Agreement), including the Shares[, the Warrant Shares],
any Additional Warrant Shares and the Conversion Shares, under the Securities
Act of 1933, as amended (the “1933 Act”).  In connection with the Company's
obligations under the Investor Rights Agreement, on ____________ ___, 201_, the
Company filed a Registration Statement on Form S-3 (File No. 333-_____________)
(the “Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the Registrable Securities which names the Lender as a
selling stockholder thereunder.

In connection with the foregoing, [we][I] advise you that a member of the SEC's
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.

This letter shall serve as our standing instruction to you that the shares of
Common Stock are freely transferable by the Lender pursuant to the Registration
Statement.  You need not require further letters from us to effect any future
legend-free issuance or reissuance of shares of Common Stock to the Lender.  

Very truly yours,

[ISSUER'S COUNSEL]

By:_____________________

CC:

[LENDER]

A-1

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EXHIBIT B

SELLING STOCKHOLDERS

The shares of common stock being offered by the selling stockholders are those
previously issued to the selling stockholders and those issuable to the selling
stockholders upon conversion of a convertible note.  [For additional information
regarding the issuance of the convertible note, see “Private Placement of Shares
and Convertible Note” above.]  We are registering the shares of common stock in
order to permit the selling stockholders to offer the shares for resale from
time to time.  

The table below lists the selling stockholders and other information regarding
the beneficial ownership of the shares of common stock by the selling
stockholders.  The second column lists the number of shares of common stock
beneficially owned by the selling stockholders, based on their ownership of the
common shares and convertible note, as of [________, ______,] assuming
conversion of the convertible note held by the selling stockholders on that
date, without regard to any limitations on conversions or exercise.

The third column lists the shares of common stock being offered by this
prospectus by the selling stockholders.

In accordance with the terms of an investor rights agreement with the selling
stockholders, this prospectus generally covers the resale of at least 130% of
the sum of (i) the number of shares of common stock issued, (ii) the number of
shares of common stock issuable upon conversion of the warrants and (iii) the
number of shares of common stock issuable upon conversion of the convertible
note, in the case of each of clause (ii) and (iii), as of the Trading Day
immediately preceding the date on which the registration statement of which this
prospectus forms a part was initially filed with the SEC.  Because the
conversion price of the convertible note and the number of shares issuable upon
exercise of the warrants may be adjusted, the number of shares that will
actually be issued may be more or less than the number of shares being offered
by this prospectus.  The fourth column assumes the sale of all of the shares
offered by the selling stockholders pursuant to this prospectus.

The number of shares in the second column does not reflect this limitation.  The
selling stockholders may sell all, some or none of their shares in this
offering.  See “Plan of Distribution.”

Name of Selling Stockholder

Number of Shares of Common Stock Owned Prior to Offering

Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus

Number of Shares of Common Stock Owned After Offering

Castlerigg Master Investments Ltd. (1)

[________] (2)

[_________] (2)

0

 

(1)

Sandell Asset Management Corp. (“SAMC”) is the investment manager of Castlerigg
Master Investments Ltd. (“Castlerigg”). Thomas Sandell is the controlling person
of SAMC and may be deemed to share beneficial ownership of the shares
beneficially owned by Castlerigg. Castlerigg International Ltd. (“Castlerigg
International”) is the controlling shareholder of Castlerigg International
Holdings Limited (“International Holdings”) and Castlerigg GS Holdings, Ltd.
(“GS Holdings”).  International Holdings and GS Holdings are the beneficial
owners of Castlerigg Offshore Holdings, Ltd. (“Offshore Holdings”).  Offshore
Holdings is the controlling shareholder of Castlerigg.  Each of International
Holdings, GS Holdings, Offshore Holdings and Castlerigg International may be
deemed to share beneficial ownership of the shares beneficially owned by
Castlerigg Master Investments Ltd.

The business address of each of these entities is as follows: c/o Sandell Asset
Management Corp. 40 W. 57th Street, 26th Floor, New York, New York 10019.

SAMC, Mr. Sandell, International Holdings, GS Holdings, Offshore Holdings and
Castlerigg International each disclaims beneficial ownership of the securities
with respect to which indirect beneficial ownership is described.

(2)

Includes [_______] shares of common stock issuable upon conversion of the
convertible note and [___] shares of common stock issuable upon conversion of
the warrants, in each case, as of [_________], 20__.

B-1

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PLAN OF DISTRIBUTION

We are registering the shares of common stock previously issued and the shares
of common stock issuable upon conversion of the convertible note to permit the
resale of these shares of common stock by the holder of the common stock and the
convertible note from time to time on and after the date of this prospectus.  We
will not receive any of the proceeds from the sale by the selling stockholders
of the shares of common stock.  We will bear all fees and expenses incident to
our obligation to register the shares of common stock.

The selling stockholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents.  If the shares of
common stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or commissions or
agent's commissions.  The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
 These sales may be effected in transactions, which may involve crosses or block
transactions,

·

on any national securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale;

·

in the over-the-counter market;

·

in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;

·

through the writing of options, whether such options are listed on an options
exchange or otherwise;

·

ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

·

block trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction;

·

purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

·

an exchange distribution in accordance with the rules of the applicable
exchange;

·

privately negotiated transactions;

·

short sales;

·

sales pursuant to Rule 144;

·

broker-dealers may agree with the selling securityholders to sell a specified
number of such shares at a stipulated price per share;

·

a combination of any such methods of sale; and

·

any other method permitted pursuant to applicable law.

If the selling stockholders effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved).  In connection with sales of
the shares of common stock or otherwise, the selling stockholders may enter into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in positions they
assume.  The selling stockholders may also sell shares of common stock short and
deliver shares of common stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales.
 The selling stockholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.

The selling stockholders may pledge or grant a security interest in some or all
of the convertible note or shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time pursuant
to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933, as amended (the “1933
Act”), amending, if necessary, the list of selling stockholders to include the
pledgee, transferee or other successors in interest as selling stockholders
under this prospectus.  The selling stockholders also may transfer and donate
the shares of common stock in other circumstances in which case the transferees,
donees, pledgees or other successors in interest will be the selling beneficial
owners for purposes of this prospectus.

The selling stockholders and any broker-dealer participating in the distribution
of the shares of common stock may be deemed to be “underwriters” within the
meaning of the 1933 Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the 1933 Act.  At the time a particular offering
of the shares of common stock is made, a prospectus supplement, if required,
will be distributed which will set forth the aggregate amount of shares of
common stock being offered and the terms of the offering, including the name or
names of any broker-dealers or agents, any discounts, commissions and other
terms constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.

B-2

--------------------------------------------------------------------------------

Under the securities laws of some states, the shares of common stock may be sold
in such states only through registered or licensed brokers or dealers.  In
addition, in some states the shares of common stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.

There can be no assurance that any selling stockholder will sell any or all of
the shares of common stock registered pursuant to the registration statement, of
which this prospectus forms a part.

The selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person.  Regulation M may also restrict
the ability of any person engaged in the distribution of the shares of common
stock to engage in market-making activities with respect to the shares of common
stock.  All of the foregoing may affect the marketability of the shares of
common stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.

We will pay all expenses of the registration of the shares of common stock
pursuant to the investor rights agreement, estimated to be $[     ] in total,
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with state securities or “blue sky” laws; provided,
however, that a selling stockholder will pay all underwriting discounts and
selling commissions, if any.  We will indemnify the selling stockholders against
liabilities, including some liabilities under the 1933 Act, in accordance with
the investor rights agreements, or the selling stockholders will be entitled to
contribution.  We may be indemnified by the selling stockholders against civil
liabilities, including liabilities under the 1933 Act, that may arise from any
written information furnished to us by the selling stockholders specifically for
use in this prospectus, in accordance with the related investor rights
agreement, or we may be entitled to contribution.

Once sold under the registration statement, of which this prospectus forms a
part, the shares of common stock will be freely tradable in the hands of persons
other than our affiliates.

B-3

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EXHIBIT C

FORM OF SUBSCRIPTION AGREEMENT

[OMITTED]

C-1