FORBEARANCE AGREEMENT
This
Forbearance Agreement (this "Agreement") is entered into as of
November 30, 2005, by and among BROADCAST
INTERNATIONAL, INC., a Utah
corporation (the "Company"), and the
PURCHASERS named on the signature pages
to this Agreement (each, a "Purchaser" and
collectively, the "Purchasers"),
with reference to the following facts:
A.
The Company and the
Purchasers are parties to, among others, the
following documents:
1. Securities Purchase
Agreement dated May 16, 2005 (the
"Purchase Agreement");
2. 6% Senior Secured
Convertible Notes Due 2008, each dated May
16, 2005, executed by the Company in favor of the Purchasers
(the "Notes"); and
3. Registration Rights
Agreement dated May 16, 2005 (the
"Registration Rights Agreement").
The above-referenced documents, all other
documents executed in connection
therewith and all other agreements between
or among the Company and one or
more of the Purchasers are hereinafter
collectively referred to as the
"Operative Documents".
B.
As of November 30,
2005, there could be owing under each Note 125%
of (1) the Principal Amount of such Note,
plus (2) accrued but unpaid interest
thereon should the Purchasers exercise
their rights and remedies under the
Operative Documents and accelerate the
payments due thereunder. Interest
continues to accrue on the Principal Amount
of each Note at the rate set forth
in the Notes. In addition, as of November 30,
2005, there is due and owing to
the Purchasers under the Registration
Rights Agreement, as partial Liquidated
Damages thereunder, the aggregate amount of
$156,000. The
foregoing amounts,
plus accruing interest and costs and
accrued and accruing attorneys' fees and
costs and various other collection costs,
are hereinafter referred to herein
as the "Existing Debt".
C.
An Event of Default
(the "Existing Default") has occurred and is
continuing under Section 4(a)(viii) of each
Note by virtue of the failure of
the Registration Statement required by the
Registration Rights Agreement to be
declared effective by the SEC. The Existing Default entitles each
Purchaser
to immediately enforce all of the rights
and remedies set forth in the
Operative Documents.
D.
The Company has
requested that the Purchasers forbear from
exercising their rights and remedies under
the Operative Documents, and the
Purchasers have agreed to do so, provided
that the Company enters into this
Agreement.
NOW,
THEREFORE, for good and valuable consideration, the parties
agree
as follows:
1.
Defined Terms.
Capitalized terms not
otherwise defined herein shall
have the same meanings as set forth in the
Operative Documents.
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2.
Acknowledgment of
Liability. As of the
date of this Agreement, the
Company owes the Purchasers an amount equal
to the Existing Debt.
The Company
reaffirms all of its obligations under the
Operative Documents and hereby
forever waives and relinquishes any and all
claims, off sets or defenses that
the Company may now have with respect to
the payment of sums due to the
Purchasers under the Operative Documents
and the performance of other
obligations thereunder.
3.
Forbearance.
The Company
acknowledges the Existing Default is an
existing and uncured Event of Default under
the Operative Documents which is
continuing to the date of this Agreement.
The Company further
acknowledges
and agrees that no Purchaser is in any way
agreeing to waive such Existing
Default as a result of this Agreement or
the performance by the parties of
their respective obligations hereunder or
under the Operative Documents.
Subject to the conditions contained herein
and performance by the Company of
all of the terms of this Agreement and the
Operative Documents after the date
hereof, the Purchasers shall, until the
earlier of (i) January 31, 2006, or
(ii) such date that there shall occur any
further Event of Default under this
Agreement or the Operative Documents (the
"Forbearance Period"), forbear from
exercising any remedies that they may have
against the Company as a result of
the occurrence of the Existing Default.
Such forbearance does
not apply to
any other Event of Default or other failure
by the Company to perform in
accordance with the Operative Documents or
this Agreement. This
forbearance
shall not be deemed a continuing waiver or
forbearance with respect to any
Event of Default of a similar nature that
may occur after the date of this
Agreement.
4.
Purchaser Expenses.
The Company shall
reimburse the Purchasers for
all expenses incurred by the Purchasers, at
any time on, before or after the
date hereof in connection with (i)
preparing and negotiating this Agreement;
and (ii) any matters contemplated by or
arising out of this Agreement or the
Operative Documents including, by way of
illustration only, any action taken
(a) to commence, prosecute, defend or
intervene in any litigation (adversary
proceeding or otherwise) or to file a
petition, complaint, answer, motion or
other pleading, (b) to take any other
action in or with respect to any suit,
case, motion, appeal or proceeding
(bankruptcy or otherwise), (c) to draft
documents in connection with any of the
foregoing or in connection with any
proposed modification or amendment of this
Agreement or the Operative
Documents, or any proposed waiver,
extension or refinance of the Existing
Debt, including, but not limited to, all
outside counsel fees incurred by the
Purchasers in connection with the
preparation and negotiation of this
Agreement and the Operative Documents, (d)
to attempt to enforce any rights of
the Purchasers to collect any part of the
Existing Debt, or (e) any matter
relating to the ongoing administration of
this Agreement or the Operative
Documents (collectively "Purchaser
Expenses"). Purchaser
Expenses shall also
include all expenditures by the Purchasers,
including payment made by the
Purchasers for taxes, insurance,
assessments, costs or expenses which the
Company is required to pay under this
Agreement or the Operative Documents,
but fails to pay; inside and outside
counsel fees and any expenses, costs and
charges relating to such expenditures
(including, without limitation, all fees
of legal assistants and other staff
employed by such attorneys) as well as all
other costs of collection; all
documentation fees; and all other expenses of
any kind whatsoever incurred by the
Purchasers in connection with the
documentation, negotiation, administration
and enforcement of this Agreement
and the Operative Documents, whether such
expenditures, fees and expenses are
incurred before, after or in connection
with the commencement of a Bankruptcy
Event, including any actions taken in
connection with cash collateral orders,
motions for relief from any stays,
preparation for any objections to plans of
reorganization and any other negotiations,
actions or appeals entered into,
taken or made in connection with the
reorganization, bankruptcy or liquidation
of the Company. With respect to Purchaser Expenses
owing by the Company to
the Purchasers, such amounts shall be paid
within ten (10) days of the
Company's receipt of notice from any
Purchaser of the existence and amount of
such Purchaser Expenses.
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5.
Forbearance Fee.
In consideration of
the Purchasers' execution of
this Agreement, in addition to any unpaid
Purchaser Expenses, the Company
shall, on or before January 31, 2006, pay
to each Purchaser an amount (the
"Forbearance Fee") equal to, at each
Purchaser's sole election, either (1) (a)
the outstanding Principal Amount of such
Purchaser's Note (plus all accrued
and unpaid interest thereon), multiplied by
(b) (i) 113% plus (ii) 2% for each
thirty (30) day period, pro rated for any
period less than thirty (30) days,
following the date of this Agreement until
the Forbearance Fee is paid in
full, plus (c) the amount of all Liquidated
Damages due to such Purchaser
under the Registration Rights Agreement as
of the date of payment of the
Forbearance Fee; or (2) the amount of all
Liquidated Damages due to such
Purchaser under the Registration Rights
Agreement as of the date of payment of
the Forbearance Fee. Each Purchaser shall notify the
Company on or before
January 20, 2006, of which Forbearance Fee
election (i.e., (1) or (2) above)
made by such Purchaser. If a Purchaser selects the
Forbearance Fee election
described in (1) above, and such
Forbearance Fee is paid in full in accordance
with the preceding sentence, then such
Purchaser shall surrender both its Note
and its AIR to the Company for
cancellation. Each
Purchaser agrees to not
exercise its AIR during the Forbearance
Period.
6.
Representations and
Warranties. The Company hereby represents and
warrants that:
(
