______________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
__________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): November 30, 2005
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BROADCAST INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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UTAH 0-13316 87-0395567
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
7050 UNION PARK AVENUE, SUITE 600
SALT LAKE CITY, UTAH 84047
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 562-2252
Former name or former address, if changed since last report: Not Applicable
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[ ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
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BROADCAST INTERNATIONAL, INC.
FORM 8-K
Item 1.01. Entry into a Material Definitive Agreement
On November 30, 2005, Broadcast International, Inc. (the "Company")
entered into a Forbearance Agreement dated as of November 30, 2005 with four
institutional funds regarding a default under the Company's outstanding senior
secured convertible notes (the "Notes"). The Notes bear interest at 6% per
annum and are due May 16, 2008. The Notes, together with warrants and
additional investment rights, were issued by the Company to the institutional
funds pursuant to a securities purchase agreement dated May 16, 2005 and
related agreements, including a registration rights agreement (collectively,
the "Note Transaction Agreements").
The Company has previously reported that it is in default of Section
4(a)(viii) of the Notes which specifies that it is an event of default if a
registration statement required by the registration rights agreement is not
declared effective by the SEC within 150 days following May 16, 2005. No
institutional holder of the Notes has elected to declare the Notes immediate
due and payable or to otherwise exercise any remedies under the Notes with
respect to the default.
Pursuant to the Forbearance Agreement, the Company acknowledged its
obligation in the aggregate amount of $156,000 as of November 30, 2005 owed to
the institutional holders under the liquidated damages provisions contained in
the registration rights agreement resulting from the registration statement
having not been declared effective by the SEC. These damages will continue on
a daily basis at the rate of approximately $2,000 per day until the
registration statement is declared effective.
Under the terms of the Forbearance Agreement, the institutional holders
agreed that they would forbear availing themselves of any remedies available
by reason of the default under Section 4(a)(viii) until January 31, 2006 or
such earlier time as there occurs another event of default under the
Forbearance Agreement or the Note Transaction Agreements (the "Forbearance
Period"). In consideration of entering into the Forbearance Agreement, the
Company agreed to reimburse the institutional holders for all expenses
incurred by them in connection with the Forbearance Agreement and any matters
contemplated by or arising out of the Forbearance Agreement or the Note
Transaction Agreements. The Company has also agreed to pay on or before
January 31, 2006 a "forbearance fee" equal to, at each institutional holder's
sole election, either (1)(a) the outstanding principal amount of the Note
(plus all accrued an 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 days, following November 30, 2005 until the forbearance fee is paid in
full, plus (c) the amount of all liquidated damages due to such institutional
holder 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
institutional holder under the registration rights agreement as of the date of
payment of the forbearance fee. If an institutional holder elects the
forbearance fee election described in (1) above, and such forbearance fee is
paid in full, then such institutional holder will surrender both its note and
its additional investment rights for cancellation. Each institutional holder
also agreed not to exercise its additional investment rights during the
Forbearance Period.
In the event the Company raises additional equity capital during the
Forbearance Period, the holders will have the option of requiring immediate
repayment of the Notes as described above, subject to a prepayment premium
between 13% and 17%, which is less than the 25% prepayment premium otherwise
originally provided for in the Notes. A copy of the Forbearance Agreement is
attached as an exhibit to this Current Report on Form 8-K, and the foregoing
is qualified in its entirety by reference to the terms and conditions of such
agreement.
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Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement
On November 30, 2005, the Company entered into the Forbearance Agreement
as described in Item 1.01 above. The Forbearance Agreement may cause the
increase or acceleration of the obligations represented by the Notes depending
upon the forbearance fee election to be made by the institutional holders.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
10.13 - Forbearance Agreement dated as of November 30, 2005 among
Broadcast International, Inc. and the Purchasers named on the
signature pages thereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 2, 2005.
BROADCAST INTERNATIONAL, INC.
a Utah corporation
By: /s/ Rodney M. Tiede
Name: Rodney M. Tiede
Title: President and Chief Executive
Officer
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