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BROADCAST INTERNATIONAL,
INC.
2008 EQUITY INCENTIVE PLAN

1.

PURPOSE.
 The purpose of this Plan is to provide incentives to attract, retain and
motivate eligible persons whose present and potential contributions are
important to the success of the Company, and any Parents and Subsidiaries that
exist now or in the future, by offering them an opportunity to participate in
the Company’s future performance through the grant of Awards.  Capitalized
terms not defined elsewhere in the text are defined in Section 27.

2.

SHARES
SUBJECT TO THE PLAN.

2.1

Number
of Shares Available.  Subject to Sections 2.5 and 21 and any other
applicable provisions hereof, the total number of Shares reserved and available
for grant and issuance pursuant to this Plan is 4,000,000.  The Company may
issue Shares that are authorized but unissued shares pursuant to the Awards
granted under the Plan.

2.2

Lapsed,
Returned Awards.  Shares subject to Awards, and Shares issued upon
exercise of Awards, will again be available for grant and issuance in connection
with subsequent Awards under this Plan to the extent such Shares: (i) are
subject to issuance upon exercise of an Option or SAR granted under this Plan
but which cease to be subject to the Option or SAR for any reason other than
exercise of the Option or SAR; (ii) are subject to Awards granted under this
Plan that are forfeited or are repurchased by the Company at the original issue
price; (iii) are subject to Awards granted under this Plan that otherwise
terminate without such Shares being issued; or (iv) are surrendered pursuant to
an Exchange Program.  Shares used to pay the exercise price of an Award or
to satisfy the tax withholding obligations related to an Award will become
available for future grant or sale under the Plan.  To the extent an Award
under the Plan is paid out in cash rather than Shares, such cash payment will
not result in reducing the number of Shares available for issuance under the
Plan.

2.3

Minimum
Share Reserve.  At all times the Company shall reserve and keep
available a sufficient number of Shares as shall be required to satisfy the
requirements of all outstanding Awards granted under this Plan and all other
outstanding but unvested Awards granted under this Plan.

2.4

Limitations.
 No more than 3,000,000 Shares shall be issued pursuant to the exercise of
ISOs.  

2.5

Adjustment
of Shares.  If the number of outstanding Shares is changed by a stock
dividend, recapitalization, stock split, reverse stock split, subdivision,
combination, reclassification or similar change in the capital structure of the
Company, without consideration, then (a) the number of Shares reserved for
issuance and future grant under the Plan set forth in Section 2.1, (b) the
Exercise Prices of and number of Shares subject to outstanding Options and SARs,
(c) the number of Shares subject to other outstanding Awards, (d) the maximum
number of shares that may be issued as ISOs set forth in Section 2.4, and (e)
the maximum number of Shares that may be issued to an individual or to a new
Employee in any one calendar year set forth in Section 3, shall be
proportionately adjusted, subject to any required action by the Board 


1








or
the stockholders of the Company and in compliance with applicable securities
laws; provided that fractions of a Share will not be issued.  

3.

ELIGIBILITY.
 ISOs may be granted only to Employees.  All other Awards may be
granted to Employees, Consultants, Directors and Outside Directors of the
Company or any Parent or Subsidiary of the Company; provided such Consultants,
Directors and Outside Directors render bona fide services not in connection with
the offer and sale of securities in a capital-raising transaction.

4.

ADMINISTRATION.

4.1

Committee
Composition; Authority.  This Plan will be administered by the
Committee or by the Board acting as the Committee.  Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan.
 The Committee will have the authority to: 

(a)

construe
and interpret this Plan, any Award Agreement and any other agreement or document
executed pursuant to this Plan; 

(b)

prescribe,
amend and rescind rules and regulations relating to this Plan or any Award; 

(c)

select
persons to receive Awards; 

(d)

determine
the form and terms and conditions, not inconsistent with the terms of the Plan,
of any Award granted hereunder.  Such terms and conditions include, but are
not limited to, the exercise price, the time or times when Awards may be
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Award or the Shares relating thereto, based in each case on such
factors as the Committee will determine; 

(e)

determine
the number of Shares or other consideration subject to Awards; 

(f)

determine
the Fair Market Value in good faith, if necessary; 

(g)

determine
whether Awards will be granted singly, in combination with, in tandem with, in
replacement of, or as alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent or Subsidiary of the
Company; 

(h)

grant
waivers of Plan or Award conditions; 

(i)

determine
the vesting, exercisability and payment of Awards; 

(j)

correct
any defect, supply any omission or reconcile any inconsistency in this Plan, any
Award or any Award Agreement; 

(k)

determine
whether an Award has been earned; 





2

 

 

 




(l)

determine
the terms and conditions of any, and to institute any Exchange Program; 

(m)

reduce
or waive any criteria with respect to Performance Factors; 

(n)

adjust
Performance Factors to take into account changes in law and accounting or tax
rules as the Committee deems necessary or appropriate to reflect the impact of
extraordinary or unusual items, events or circumstances to avoid windfalls or
hardships provided that such adjustments are consistent with the regulations
promulgated under Section 162(m) of the Code with respect to persons whose
compensation is subject to Section 162(m) of the Code; and 

(o)

make
all other determinations necessary or advisable for the administration of this
Plan.  

4.2

Committee
Interpretation and Discretion.  Any determination made by the Committee
with respect to any Award shall be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of the Plan
or Award, at any later time, and such determination shall be final and binding
on the Company and all persons having an interest in any Award under the Plan.
 Any dispute regarding the interpretation of the Plan or any Award
Agreement shall be submitted by the Participant or Company to the Committee for
review.  The resolution of such a dispute by the Committee shall be final
and binding on the Company and the Participant.  The Committee may delegate
to one or more executive officers the authority to review and resolve disputes
with respect to Awards held by Participants who are not Insiders, and such
resolution shall be final and binding on the Company and the Participant.
 

4.3

Section
162(m) of the Code and Section 16 of the Exchange Act.  When necessary
or desirable for an Award to qualify as “performance-based compensation” under
Section 162(m) of the Code the Committee shall include at least two persons who
are “outside directors” (as defined under Section 162(m) of the Code) and at
least two (or a majority if more than two then serve on the Committee) such
“outside directors” shall approve the grant of such Award and timely determine
(as applicable) the Performance Period and any Performance Factors upon which
vesting or settlement of any portion of such Award is to be subject.  When
required by Section 162(m) of the Code, prior to settlement of any such Award at
least two (or a majority if more than two then serve on the Committee) such
“outside directors” then serving on the Committee shall determine and certify in
writing the extent to which such Performance Factors have been timely achieved
and the extent to which the Shares subject to such Award have thereby been
earned.  Awards granted to Insiders must be approved by two or more
“non-employee directors” (as defined in the regulations promulgated under
Section 16 of the Exchange Act).  





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5.

OPTIONS.
 The Committee may grant Options to Participants and will determine whether
such Options will be Incentive Stock Options within the meaning of the Code
(“ISOs”) or Nonqualified Stock Options (“NQSOs”),
the number of Shares subject to the Option, the Exercise Price of the Option,
the period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following: 

5.1

Option
Grant.  Each Option granted under this Plan will identify the Option as
an ISO or an NQSO.  An Option may be, but need not be, awarded upon
satisfaction of such Performance Factors during any Performance Period as are
set out in advance in the Participant’s individual Award Agreement.  If the
Option is being earned upon the satisfaction of Performance Factors, then the
Committee will:  (x) determine the nature, length and starting date of any
Performance Period for each Option; and (y) select from among the Performance
Factors to be used to measure the performance, if any.  Performance Periods
may overlap and Participants may participate simultaneously with respect to
Options that are subject to different performance goals and other criteria.
 

5.2

Date
of Grant.  The date of grant of an Option will be the date on which the
Committee makes the determination to grant such Option, or a specified future
date.  The Award Agreement and a copy of this Plan will be delivered to the
Participant within a reasonable time after the granting of the Option.
 

5.3

Exercise
Period.  Options may be exercisable within the times or upon the
conditions as set forth in the Award Agreement governing such Option; provided,
however, that no Option will be exercisable after the expiration of ten (10)
years from the date the Option is granted; and provided further that no ISO
granted to a person who, at the time the ISO is granted, directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company (“Ten Percent Stockholder”) will be exercisable after the
expiration of five (5) years from the date the ISO is granted.  The
Committee also may provide for Options to become exercisable at one time or from
time to time, periodically or otherwise, in such number of Shares or percentage
of Shares as the Committee determines.  

5.4

Exercise
Price.  The Exercise Price of an Option will be determined by the
Committee when the Option is granted; provided that: (i) the Exercise Price of
an ISO will be not less than one hundred percent (100%) of the Fair Market Value
of the Shares on the date of grant and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than one hundred ten
percent (110%) of the Fair Market Value of the Shares on the date of grant.
 Payment for the Shares purchased may be made in accordance with Section
11.  The Exercise Price of a NQSO may not be less than one hundred percent
(100%) of the Fair Market Value per Share on the date of grant.  

5.5

Method
of Exercise.  Any Option granted hereunder will be exercisable
according to the terms of the Plan and at such times and under such conditions
as determined by the Committee and set forth in the Award Agreement.  An
Option may not be exercised for a fraction of a Share.  An Option will be
deemed exercised when the Company receives: (i) notice of exercise (in such form
as the Committee may specify from time to time) from the person entitled to
exercise the Option, and (ii) full payment for the Shares with respect to which
the 





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Option
is exercised (together with applicable withholding taxes).  Full payment
may consist of any consideration and method of payment authorized by the
Committee and permitted by the Award Agreement and the Plan.  Shares issued
upon exercise of an Option will be issued in the name of the Participant.
 Until the Shares are issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights as a stockholder will
exist with respect to the Shares, notwithstanding the exercise of the Option.
 The Company will issue (or cause to be issued) such Shares promptly after
the Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 2.5 of the Plan.  Exercising an
Option in any manner will decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.  

5.6

Termination.
 The exercise of an Option will be subject to the following (except as may
be otherwise provided in an Award Agreement): 

(a)

If
the Participant is Terminated for any reason except for the Participant’s death
or Disability, then the Participant may exercise such Participant’s Options only
to the extent that such Options would have been exercisable by the Participant
on the Termination Date no later than three (3) months after the Termination
Date (or such shorter time period or longer time period not exceeding five (5)
years as may be determined by the Committee, with any exercise beyond three (3)
months after the Termination Date deemed to be an NQSO), but in any event no
later than the expiration date of the Options.  

(b)

If
the Participant is Terminated because of the Participant’s death (or the
Participant dies within three (3) months after a Termination), then the
Participant’s Options may be exercised only to the extent that such Options
would have been exercisable by the Participant on the Termination Date and must
be exercised by the Participant’s legal representative, or authorized assignee,
no later than twelve (12) months after the Termination Date (or such shorter
time period or longer time period not exceeding five (5) years as may be
determined by the Committee), but in any event no later than the expiration date
of the Options.  

(c)

If
the Participant is Terminated because of the Participant’s Disability, then the
Participant’s Options may be exercised only to the extent that such Options
would have been exercisable by the Participant on the Termination Date and must
be exercised by the Participant (or the Participant’s legal representative or
authorized assignee) no later than twelve (12) months after the Termination Date
(with any exercise beyond (a) three (3) months after the Termination Date when
the Termination is for a Disability that is not a “permanent and total
disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12)
months after the Termination Date when the Termination is for a Disability that
is a “permanent and total disability” as defined in Section 22(e)(3) of the
Code, deemed to be exercise of an NQSO), but in any event no later than the
expiration date of the Options.  

5.7

Limitations
on Exercise.  The Committee may specify a minimum number of Shares that
may be purchased on any exercise of an Option, provided that such minimum number
will not prevent any Participant from exercising the Option for the full number
of Shares for which it is then exercisable.  





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5.8

Limitations
on ISOs.  With respect to Awards granted as ISOs, to the extent that
the aggregate Fair Market Value of the Shares with respect to which such ISOs
are exercisable for the first time by the Participant during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds one
hundred thousand dollars ($100,000), such Options will be treated as NQSOs.
 For purposes of this Section 5.8, ISOs will be taken into account in the
order in which they were granted.  The Fair Market Value of the Shares will
be determined as of the time the Option with respect to such Shares is granted.
 In the event that the Code or the regulations promulgated thereunder are
amended after the Effective Date to provide for a different limit on the Fair
Market Value of Shares permitted to be subject to ISOs, such different limit
will be automatically incorporated herein and will apply to any Options granted
after the effective date of such amendment.  

5.9

Modification,
Extension or Renewal.  The Committee may modify, extend or renew
outstanding Options and authorize the grant of new Options in substitution
therefor, provided that any such action may not, without the written consent of
a Participant, impair any of such Participant’s rights under any Option
previously granted.  Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code.  Subject to Section 18 of this Plan, by written notice to
affected Participants, the Committee may reduce the Exercise Price of
outstanding Options without the consent of such Participants; provided, however,
that the Exercise Price may not be reduced below the Fair Market Value on the
date the action is taken to reduce the Exercise Price.  

5.10

No
Disqualification.  Notwithstanding any other provision in this Plan, no
term of this Plan relating to ISOs will be interpreted, amended or altered, nor
will any discretion or authority granted under this Plan be exercised, so as to
disqualify this Plan under Section 422 of the Code or, without the consent of
the Participant affected, to disqualify any ISO under Section 422 of the Code


5.11

Termination
of Participant.  Except as may be set forth in the Participant’s Award
Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).  

6.

RESTRICTED
STOCK AWARDS.

6.1

Awards
of Restricted Stock.  A Restricted Stock Award is an offer by the
Company to sell to a Participant Shares that are subject to restrictions
(“Restricted Stock”).  The Committee will determine to whom
an offer will be made, the number of Shares the Participant may purchase, the
Purchase Price, the restrictions under which the Shares will be subject and all
other terms and conditions of the Restricted Stock Award, subject to the Plan.
 

6.2

Restricted
Stock Purchase Agreement.  All purchases under a Restricted Stock Award
will be evidenced by an Award Agreement.  Except as may otherwise be
provided in an Award Agreement, a Participant accepts a Restricted Stock Award
by signing and delivering to the Company an Award Agreement with full payment of
the Purchase Price, within thirty (30) days from the date the Award Agreement
was delivered to the Participant.  If the Participant does not accept such
Award within thirty (30) days, then the offer of such Restricted Stock Award
will terminate, unless the Committee determines otherwise.  





6




6.3

Purchase
Price.  The Purchase Price for a Restricted Stock Award will be
determined by the Committee and may be less than Fair Market Value on the date
the Restricted Stock Award is granted.  Payment of the Purchase Price must
be made in accordance with Section 11 of the Plan, and the Award Agreement.
 

6.4

Terms
of Restricted Stock Awards.  Restricted Stock Awards will be subject to
such restrictions as the Committee may impose or are required by law.
 These restrictions may be based on completion of a specified number of
years of service with the Company or upon completion of Performance Factors, if
any, during any Performance Period as set out in advance in the Participant’s
Award Agreement.  Prior to the grant of a Restricted Stock Award, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and (c)
determine the number of Shares that may be awarded to the Participant.
 Performance Periods may overlap and a Participant may participate
simultaneously with respect to Restricted Stock Awards that are subject to
different Performance Periods and having different performance goals and other
criteria.  

6.5

Termination
of Participant.  Except as may be set forth in the Participant’s Award
Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).  

7.

STOCK
BONUS AWARDS.

7.1

Awards
of Stock Bonuses.  A Stock Bonus Award is an award to an eligible
person of Shares (which may consist of Restricted Stock or Restricted Stock
Units) for services to be rendered or for past services already rendered to the
Company or any Parent or Subsidiary.  All Stock Bonus Awards shall be made
pursuant to an Award Agreement.  No payment from the Participant will be
required for Shares awarded pursuant to a Stock Bonus Award.  

7.2

Terms
of Stock Bonus Awards.  The Committee will determine the number of
Shares to be awarded to the Participant under a Stock Bonus Award and any
restrictions thereon.  These restrictions may be based upon completion of a
specified number of years of service with the Company or upon satisfaction of
performance goals based on Performance Factors during any Performance Period as
set out in advance in the Participant’s Stock Bonus Agreement.  Prior to
the grant of any Stock Bonus Award the Committee shall: (a) determine the
nature, length and starting date of any Performance Period for the Stock Bonus
Award; (b) select from among the Performance Factors to be used to measure
performance goals; and (c) determine the number of Shares that may be awarded to
the Participant.  Performance Periods may overlap and a Participant may
participate simultaneously with respect to Stock Bonus Awards that are subject
to different Performance Periods and different performance goals and other
criteria.  

7.3

Form
of Payment to Participant.  Payment may be made in the form of cash,
whole Shares, or a combination thereof, based on the Fair Market Value of the
Shares earned under a Stock Bonus Award on the date of payment, as determined in
the sole discretion of the Committee.  





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7.4

Termination
of Participation.  Except as may be set forth in the Participant’s
Award Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).  

8.

STOCK
APPRECIATION RIGHTS.

8.1

Awards
of SARs.  A Stock Appreciation Right (“SAR”) is an award
to a Participant that may be settled in cash, or Shares (which may consist of
Restricted Stock), having a value equal to (a) the difference between the Fair
Market Value on the date of exercise over the Exercise Price multiplied by (b)
the number of Shares with respect to which the SAR is being settled (subject to
any maximum number of Shares that may be issuable as specified in an Award
Agreement).  All SARs shall be made pursuant to an Award Agreement.
 

8.2

Terms
of SARs.  The Committee will determine the terms of each SAR including,
without limitation: (a) the number of Shares subject to the SAR; (b) the
Exercise Price and the time or times during which the SAR may be settled; (c)
the consideration to be distributed on settlement of the SAR; and (d) the effect
of the Participant’s Termination on each SAR.  The Exercise Price of the
SAR will be determined by the Committee when the SAR is granted, and may not be
less than Fair Market Value.  A SAR may be awarded upon satisfaction of
Performance Factors, if any, during any Performance Period as are set out in
advance in the Participant’s individual Award Agreement.  If the SAR is
being earned upon the satisfaction of Performance Factors, then the Committee
will: (x) determine the nature, length and starting date of any Performance
Period for each SAR; and (y) select from among the Performance Factors to be
used to measure the performance, if any.  Performance Periods may overlap
and Participants may participate simultaneously with respect to SARs that are
subject to different Performance Factors and other criteria.  

8.3

Exercise
Period and Expiration Date.  A SAR will be exercisable within the times
or upon the occurrence of events determined by the Committee and set forth in
the Award Agreement governing such SAR.  The SAR Agreement shall set forth
the expiration date; provided that no SAR will be exercisable after the
expiration of ten (10) years from the date the SAR is granted.  The
Committee may also provide for SARs to become exercisable at one time or from
time to time, periodically or otherwise (including, without limitation, upon the
attainment during a Performance Period of performance goals based on Performance
Factors), in such number of Shares or percentage of the Shares subject to the
SAR as the Committee determines.  Except as may be set forth in the
Participant’s Award Agreement, vesting ceases on such Participant’s Termination
Date (unless determined otherwise by the Committee).  Notwithstanding the
foregoing, the rules of Section 5.6 also will apply to SARs.  

8.4

Form
of Settlement.  Upon exercise of a SAR, a Participant will be entitled
to receive payment from the Company in an amount determined by multiplying (i)
the difference between the Fair Market Value of a Share on the date of exercise
over the Exercise Price; times (ii) the number of Shares with respect to which
the SAR is exercised.  At the discretion of the Committee, the payment from
the Company for the SAR exercise may be in cash, in Shares of equivalent value,
or in some combination thereof.  





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8.5

Termination
of Participation.  Except as may be set forth in the Participant’s
Award Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).  

9.

RESTRICTED
STOCK UNITS.

9.1

Awards
of Restricted Stock Units.  A Restricted Stock Unit
(“RSU”) is an award to a Participant covering a number of Shares
that may be settled in cash, or by issuance of those Shares (which may consist
of Restricted Stock).  All RSUs shall be made pursuant to an Award
Agreement.  

9.2

Terms
of RSUs.  The Committee will determine the terms of an RSU including,
without limitation: (a) the number of Shares subject to the RSU; (b) the time or
times during which the RSU may be settled; and (c) the consideration to be
distributed on settlement, and the effect of the Participant’s Termination on
each RSU.  An RSU may be awarded upon satisfaction of such Performance
Factors (if any) during any Performance Period as are set out in advance in the
Participant’s Award Agreement.  If the RSU is being earned upon
satisfaction of Performance Factors, then the Committee will: (x) determine the
nature, length and starting date of any Performance Period for the RSU; (y)
select from among the Performance Factors to be used to measure the performance,
if any; and (z) determine the number of Shares deemed subject to the RSU.
 Performance Periods may overlap and participants may participate
simultaneously with respect to RSUs that are subject to different Performance
Periods and different performance goals and other criteria.  

9.3

Form
and Timing of Settlement.  Payment of earned RSUs shall be made as soon
as practicable after the date(s) determined by the Committee and set forth in
the Award Agreement.  The Committee, in its sole discretion, may settle
earned RSUs in cash, Shares, or a combination of both.  

9.4

Termination
of Participant.  Except as may be set forth in the Participant’s Award
Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).  

10.

PERFORMANCE
SHARES.

10.1

Awards
of Performance Shares.  A Performance Share Award is an award to a
Participant denominated in Shares that may be settled in cash, or by issuance of
those Shares (which may consist of Restricted Stock).  Grants of
Performance Shares shall be made pursuant to an Award Agreement.  

10.2

Terms
of Performance Shares.  The Committee will determine, and each Award
Agreement shall set forth, the terms of each award of Performance Shares
including, without limitation: (a) the number of Shares deemed subject to such
Award; (b) the Performance Factors and Performance Period that shall determine
the time and extent to which each award of Performance Shares shall be settled;
(c) the consideration to be distributed on settlement, and the effect of the
Participant’s Termination on each award of Performance Shares.  In
establishing Performance Factors and the Performance Period the Committee will:
(x) determine the nature, length and starting date of any Performance Period;
(y) select from among the Performance 





9




Factors
to be used; and (z) determine the number of Shares deemed subject to the award
of Performance Shares.  Prior to settlement the Committee shall determine
the extent to which Performance Shares have been earned.  Performance
Periods may overlap and Participants may participate simultaneously with respect
to Performance Shares that are subject to different Performance Periods and
different performance goals and other criteria.  

10.3

Value,
Earning and Timing of Performance Shares.  Each Performance Share will
have an initial value equal to the Fair Market Value of a Share on the date of
grant.  After the applicable Performance Period has ended, the holder of
Performance Shares will be entitled to receive a payout of the number of
Performance Shares earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding Performance
Factors or other vesting provisions have been achieved.  The Committee, in
its sole discretion, may pay earned Performance Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Shares at the close of the applicable Performance Period) or
in a combination thereof.  

10.4

Termination
of Participant.  Except as may be set forth in the Participant’s Award
Agreement, vesting ceases on such Participant’s Termination Date (unless
determined otherwise by the Committee).  

11.

PAYMENT
FOR SHARE PURCHASES.  

Payment
from a Participant for Shares purchased pursuant to this Plan may be made in
cash or by check or, where expressly approved for the Participant by the
Committee and where permitted by law (and to the extent not otherwise set forth
in the applicable Award Agreement): 

(a)

by
cancellation of indebtedness of the Company to the Participant; 

(b)

by
surrender of shares of the Company held by the Participant that have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Award will be exercised or settled; 

(c)

by
waiver of compensation due or accrued to the Participant for services rendered
or to be rendered to the Company or a Parent or Subsidiary of the Company; 

(d)

by
consideration received by the Company pursuant to a broker-assisted and/or same
day sale (or other) cashless exercise program implemented by the Company in
connection with the Plan; 

(e)

by
any combination of the foregoing; or 

(f)

by
any other method of payment as is permitted by applicable law.  

12.

GRANTS
TO OUTSIDE DIRECTORS.

12.1

Types
of Awards.  Outside Directors are eligible to receive any type of Award
offered under this Plan except ISOs.  Awards pursuant to this Section 12
may be automatically 





10




made
pursuant to policy adopted by the Board, or made from time to time as determined
in the discretion of the Board.  

12.2

Eligibility.
 Awards pursuant to this Section 12 shall be granted only to Outside
Directors.  An Outside Director who is elected or re-elected as a member of
the Board will be eligible to receive an Award under this Section 12.

12.3

Vesting,
Exercisability and Settlement.  Except as set forth in Section 21,
Awards shall vest, become exercisable and be settled as determined by the Board.
 With respect to Options and SARs, the exercise price granted to Outside
Directors shall not be less than the Fair Market Value of the Shares at the time
that such Option or SAR is granted.  

13.

WITHHOLDING
TAXES.

13.1

Withholding
Generally.  Whenever Shares are to be issued in satisfaction of Awards
granted under this Plan, the Company may require the Participant to remit to the
Company an amount sufficient to satisfy applicable federal, state, local and
international withholding tax requirements prior to the delivery of Shares
pursuant to exercise or settlement of any Award.  Whenever payments in
satisfaction of Awards granted under this Plan are to be made in cash, such
payment will be net of an amount sufficient to satisfy applicable federal,
state, local and international withholding tax requirements.  

13.2

Sock
Withholding.  The Committee, in its sole discretion and pursuant to
such procedures as it may specify from time to time, may require or permit a
Participant to satisfy such tax withholding obligation, in whole or in part by
(without limitation) (i) paying cash, (ii) electing to have the Company withhold
otherwise deliverable cash or Shares having a Fair Market Value equal to the
minimum statutory amount required to be withheld, or (iii) delivering to the
Company already-owned Shares having a Fair Market Value equal to the minimum
statutory amount required to be withheld.  The Fair Market Value of the
Shares to be withheld or delivered will be determined as of the date that the
taxes are required to be withheld.  

14.

TRANSFERABILITY.
 Unless determined otherwise by the Committee, an Award may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution.  If the Committee
makes an Award transferable, such Award will contain such additional terms and
conditions as the Committee deems appropriate.  All Awards shall be
exercisable: (i) during the Participant’s lifetime only by (A) the Participant,
or (B) the Participant’s guardian or legal representative; and (ii) after the
Participant’s death, by the legal representative of the Participant’s heirs or
legatees 

15.

PRIVILEGES
OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.  

15.1

Voting
and Dividends.  No Participant will have any of the rights of a
stockholder with respect to any Shares until the Shares are issued to the
Participant.  After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any 





11




other
change in the corporate or capital structure of the Company will be subject to
the same restrictions as the Restricted Stock; provided, further, that the
Participant will have no right to retain such stock dividends or stock
distributions with respect to Shares that are repurchased at the Participant’s
Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2.
 

15.2

Restrictions
on Shares.  At the discretion of the Committee, the Company may reserve
to itself and/or its assignee(s) a right to repurchase (a “Right of
Repurchase”) a portion of any or all Unvested Shares held by a
Participant following such Participant’s Termination at any time within ninety
(90) days after the later of the Participant’s Termination Date and the date the
Participant purchases Shares under this Plan, for cash and/or cancellation of
purchase money indebtedness, at the Participant’s Purchase Price or Exercise
Price, as the case may be.  

16.

CERTIFICATES.
 All certificates for Shares or other securities delivered under this Plan
will be subject to such stock transfer orders, legends and other restrictions as
the Committee may deem necessary or advisable, including restrictions under any
applicable federal, state or foreign securities law, or any rules, regulations
and other requirements of the SEC or any stock exchange upon which the Shares
may be listed or quoted.  

17.

ESCROW;
PLEDGE OF SHARES.  To enforce any restrictions on a Participant’s
Shares, the Committee may require the Participant to deposit all certificates
representing Shares, together with stock powers or other instruments of transfer
approved by the Committee, appropriately endorsed in blank, with the Company or
an agent designated by the Company to hold in escrow until such restrictions
have lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates.  Any
Participant who is permitted to execute a promissory note as partial or full
consideration for the purchase of Shares under this Plan will be required to
pledge and deposit with the Company all or part of the Shares so purchased as
collateral to secure the payment of the Participant’s obligation to the Company
under the promissory note; provided, however, that the Committee may require or
accept other or additional forms of collateral to secure the payment of such
obligation and, in any event, the Company will have full recourse against the
Participant under the promissory note notwithstanding any pledge of the
Participant’s Shares or other collateral.  In connection with any pledge of
the Shares, the Participant will be required to execute and deliver a written
pledge agreement in such form as the Committee will from time to time approve.
 The Shares purchased with the promissory note may be released from the
pledge on a pro rata basis as the promissory note is paid.  

18.

REPRICING;
EXCHANGE AND BUYOUT OF AWARDS.  Except in connection with a (i)
Corporate Transaction or (ii) a stock dividend, recapitalization, stock split,
reverse stock split, subdivision, combination, reclassification or similar
change in the capital structure of the Company without consideration, the terms
of outstanding awards may not be amended to reduce the exercise price of
outstanding Options or SARs or cancel outstanding Options or SARS in exchange
for cash or other Awards (including Options or SARs) with an exercise price that
is less than the exercise price of the original Option or SAR without prior
stockholder approval.  

19.

SECURITIES
LAW AND OTHER REGULATORY COMPLIANCE.  An Award will not be
effective unless such Award is in compliance with all applicable federal and
state 





12




securities
laws, rules and regulations of any governmental body, and the requirements of
any stock exchange upon which the Shares may then be listed or quoted, as they
are in effect on the date of grant of the Award and also on the date of exercise
or other issuance.  Notwithstanding any other provision in this Plan, the
Company will have no obligation to issue or deliver certificates for Shares
under this Plan prior to: (a) obtaining any approvals from governmental agencies
that the Company determines are necessary or advisable; and/or (b) completion of
any registration or other qualification of such Shares under any state or
federal law or ruling of any governmental body that the Company determines to be
necessary or advisable.  The Company will be under no obligation to
register the Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company will have no liability
for any inability or failure to do so.  

20.

NO
OBLIGATION TO EMPLOY.  Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant’s employment or other relationship at any time.  

21.

CORPORATE
TRANSACTIONS.  

21.1

Assumption
or Replacement of Awards by Successor.  In the event of a Corporate
Transaction any or all outstanding Awards may be assumed or replaced by the
successor corporation, which assumption or replacement shall be binding on all
Participants.  In the alternative, the successor corporation may substitute
equivalent Awards or provide substantially similar consideration to Participants
as was provided to stockholders (after taking into account the existing
provisions of the Awards).  The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the Participant.  In the event such
successor or acquiring corporation (if any) refuses to assume, convert, replace
or substitute Awards, as provided above, pursuant to a Corporate Transaction,
then notwithstanding any other provision in this Plan to the contrary, such
Awards will expire on such transaction at such time and on such conditions as
the Board will determine; the Board (or, the Committee, if so designated by the
Board) may, in its sole discretion, accelerate the vesting of such Awards in
connection with a Corporate Transaction.  In addition, in the event such
successor or acquiring corporation (if any) refuses to assume, convert, replace
or substitute Awards, as provided above, pursuant to a Corporate Transaction,
the Committee will notify the Participant in writing or electronically that such
Award will be exercisable for a period of time determined by the Committee in
its sole discretion, and such Award will terminate upon the expiration of such
period.  Awards need not be treated similarly in a Corporate Transaction.
 

21.2

Assumption
of Awards by the Company.  The Company, from time to time, also may
substitute or assume outstanding awards granted by another company, whether in
connection with an acquisition of such other company or otherwise, by either;
(a) granting an Award under this Plan in substitution of such other company’s
award; or (b) assuming such award as if it had been granted under this Plan if
the terms of such assumed award could be applied to an Award granted under this
Plan.  Such substitution or assumption will be 





13




permissible
if the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant.  In the event the Company assumes an award granted
by another company, the terms and conditions of such award will remain unchanged
(except that the Purchase Price or the Exercise Price, as the case may be, and
the number and nature of Shares issuable upon exercise or settlement of any such
Award will be adjusted appropriately pursuant to Section 424(a) of the Code).
 

21.3

Outside
Directors’ Awards.  Notwithstanding any provision to the contrary
herein, in the event of a Corporate Transaction, the vesting of all Awards
granted to Outside Directors shall accelerate and such Awards shall become
exercisable (as applicable) in full prior to the consummation of such event at
such times and on such conditions as the Committee determines.  

22.

ADOPTION
AND STOCKHOLDER APPROVAL.  This Plan shall be submitted for the
approval of the Company’s stockholders, consistent with applicable laws, within
twelve (12) months before or after the date this Plan is adopted by the Board.
 

23.

TERM
OF PLAN/GOVERNING LAW.  Unless earlier terminated as provided
herein, this Plan will become effective on the Effective Date and will terminate
ten (10) years from the date this Plan is adopted by the Board.  This Plan
and all Awards granted hereunder shall be governed by and construed in
accordance with the laws of the State of Utah.

24.

AMENDMENT
OR TERMINATION OF PLAN.  The Board may at any time terminate or
amend this Plan in any respect, including, without limitation, amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan;
provided, however, that the Board will not, without the approval of the
stockholders of the Company, amend this Plan in any manner that requires such
stockholder approval; provided further, that a Participant’s Award shall be
governed by the version of this Plan then in effect at the time such Award was
granted.  

25.

NONEXCLUSIVITY
OF THE PLAN.  Neither the adoption of this Plan by the Board, the
submission of this Plan to the stockholders of the Company for approval, nor any
provision of this Plan will be construed as creating any limitations on the
power of the Board to adopt such additional compensation arrangements as it may
deem desirable, including, without limitation, the granting of stock awards and
bonuses otherwise than under this Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.  

26.

INSIDER
TRADING POLICY.  Each Participant who receives an Award shall comply
with any policy adopted by the Company from time to time covering transactions
in the Company’s securities by Employees, officers and/or directors of the
Company.  

27.

DEFINITIONS.
 As used in this Plan, and except as elsewhere defined herein, the
following terms will have the following meanings: 

“Award”
means any award under the Plan, including any Option, Restricted Stock, Stock
Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance
Shares.  





14




“Award
Agreement” means, with respect to each Award, the written or electronic
agreement between the Company and the Participant setting forth the terms and
conditions of the Award, which shall be in substantially a form (which need not
be the same for each Participant) that the Committee has from time to time
approved, and will comply with and be subject to the terms and conditions of
this Plan.  

“Board”
means the Board of Directors of the Company.  

“Code”
means the United States Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.  

“Committee”
means the Compensation Committee of the Board or those persons to whom
administration of the Plan, or part of the Plan, has been delegated as permitted
by law.  

“Company”
means Broadcast International, Inc., or any successor corporation.  

“Consultant”
means any person, including an advisor or independent contractor, engaged by the
Company or a Parent or Subsidiary to render services to such entity.  

“Corporate
Transaction” means the occurrence of any of the following events: (i)
any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Company’s
then-outstanding voting securities; (ii) the consummation of the sale or
disposition by the Company of all or substantially all of the Company’s assets;
(iii) the consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation or (iv) any other transaction which qualifies as a
“corporate transaction” under Section 424(a) of the Code wherein the
stockholders of the Company give up all of their equity interest in the Company
(except for the acquisition, sale or transfer of all or substantially all of the
outstanding shares of the Company).  

“Director”
means a member of the Board.  

“Disability”
means total and permanent disability as defined in Section 22(e)(3) of the Code,
provided, however, that except with respect to Awards granted as ISOs, the
Committee in its discretion may determine whether a total and permanent
disability exists in accordance with non-discriminatory and uniform standards
adopted by the Committee from time to time, whether temporary or permanent,
partial or total, as determined by the Committee.  

“Effective
Date” means the date this Plan is approved by the Company’s
stockholders, the date of which shall be within twelve (12) months before or
after the date this Plan is adopted by the Board.  





15




“Employee”
means any person, including Officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company.  Neither service as a Director nor
payment of a director’s fee by the Company will be sufficient to constitute
“employment” by the Company.  

“Exchange
Act” means the United States Securities Exchange Act of 1934, as
amended.  

“Exercise
Price” means, with respect to an Option, the price at which a holder may
purchase the Shares issuable upon exercise of an Option and with respect to a
SAR, the price at which the SAR is granted to the holder thereof.  

“Exchange
Program” means a program pursuant to which outstanding Awards are
surrendered, cancelled or exchanged for cash, the same type of Award or a
different Award (or combination thereof).  

“Fair
Market Value” means, as of any date, the value of a share of the
Company’s Common Stock determined as follows: 

(a)

if
such Common Stock is publicly traded and is then listed on a national securities
exchange, its closing price on the date of determination on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading as reported in The Wall Street Journal or such other source as the Board
or the Committee deems reliable; 

(b)

if
such Common Stock is publicly traded but is neither listed nor admitted to
trading on a national securities exchange, the average of the closing bid and
asked prices on the date of determination as reported in The OTC Bulletin Board
or such other source as the Board or the Committee deems reliable; or 

(c)

if
none of the foregoing is applicable, by the Board or the Committee in good
faith.  

“GAAP”
means generally accepted accounting principles.  

“Insider”
means an officer or director of the Company or any other person whose
transactions in the Company’s Common Stock are subject to Section 16 of the
Exchange Act.  

“Option”
means an award of an option to purchase Shares pursuant to Section 5 or Section
12 of the Plan.  

“Outside
Director” means a Director who is not an Employee of the Company or any
Parent or Subsidiary.  

“Parent”
means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of such corporations other than the
Company owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.  

“Participant”
means a person who holds an Award under this Plan.  





16




“Performance
Factors” means the factors selected by the Committee, which may include,
but are not limited to the, the following measures (whether or not in comparison
to other peer companies) to determine whether the performance goals established
by the Committee and applicable to Awards have been satisfied:

·

Net
revenue and/or net revenue growth;

·

Earnings
per share and/or earnings per share growth;

·

Earnings
before income taxes and amortization and/or earnings before income taxes and
amortization growth;

·

Operating
income and/or operating income growth;

·

Net
income and/or net income growth;

·

Total
stockholder return and/or total stockholder return growth;

·

Return
on equity;

·

Operating
cash flow return on income;

·

Adjusted
operating cash flow return on income;

·

Economic
value added;

·

Individual
business objectives;

·

Company
specific operational metrics; and

·

Any
of the foregoing may be based on GAAP or NonGAAP standards.

“Performance
Period” means the period of service determined by the Committee, not to
exceed five (5) years, during which years of service or performance is to be
measured for the Award.  

“Performance
Share” means an Award granted pursuant to Section 10 or Section 12 of
the Plan.  

“Plan”
means this Broadcast International, Inc. 2008 Equity Incentive Plan.  

“Purchase
Price” means the price to be paid for Shares acquired under the Plan,
other than Shares acquired upon exercise of an Option or SAR.  

“Restricted
Stock Award” means an award of Shares pursuant to Section 6 or Section
12 of the Plan, or issued pursuant to the early exercise of an Option.
 





17




“Restricted
Stock Unit” means an Award granted pursuant to Section 9 or Section 12
of the Plan.  

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

“Securities
Act” means the United States Securities Act of 1933, as amended.
 

“Shares”
means shares of the Company’s Common Stock and any successor security.
 

“Stock
Appreciation Right” means an Award granted pursuant to Section 8 and
Section 12 of the Plan.  

“Stock
Bonus” means an Award granted pursuant to Section 7 or Section 12 of the
Plan.  

“Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.  

“Termination”
or “Terminated” means, for purposes of this Plan with respect to a
Participant, that the Participant has for any reason ceased to provide services
as an employee, officer, director, consultant, independent contractor or advisor
to the Company or a Parent or Subsidiary of the Company.  An employee will
not be deemed to have ceased to provide services in the case of (i) sick leave,
(ii) military leave, or (iii) any other leave of absence approved by the
Committee; provided, that such leave is for a period of not more than 90 days,
unless reemployment upon the expiration of such leave is guaranteed by contract
or statute or unless provided otherwise pursuant to formal policy adopted from
time to time by the Company and issued and promulgated to employees in writing.
 In the case of any employee on an approved leave of absence, the Committee
may make such provisions respecting suspension of vesting of the Award while on
leave from the employ of the Company or a Parent or Subsidiary of the Company as
it may deem appropriate, except that in no event may an Award be exercised after
the expiration of the term set forth in the applicable Award Agreement.
 The Committee will have sole discretion to determine whether a Participant
has ceased to provide services and the effective date on which the Participant
ceased to provide services (the “Termination Date”).

“Unvested
Shares” means Shares that have not yet vested or are subject to a right
of repurchase in favor of the Company (or any successor thereto). 











18