Letter of Understanding Between Broadcast International, Inc. and Triage Capital Management for $1,000,000 Convertible Note and Warrants
Broadcast International, Inc. agrees to pay Triage Capital Management $1,000,000 by October 30, 2006, unless replaced by a formal convertible note agreement. The note will be convertible into Broadcast International's common stock at $1.50 per share, have a two-year term, and carry a 5% annual interest rate payable in stock with semi-annual payments. Triage will also receive warrants to purchase additional shares at specified prices and terms. The parties agree to finalize the formal convertible note security documents within five days of this letter.
LETTER OF UNDERSTANDING
FOR VALUE RECEIVED, the undersigned, BROADCAST INTERNATIONAL, INC
(“the Corporation or BI”), hereby agrees to pay the principal sum of ONE MILLION
DOLLARS, ($1,000,000) in lawful money of the United States of America on or before
October 30, 2006 unless this agreement is replaced as contemplated below.
This agreement is to be replaced by a formal CONVERTIBLE NOTE SECURITY
Agreement, terms to include;
1.
Convertible into BI’s common stock at $1.50
2.
Term of the note two year
3.
5% annual interest rate payable in common stock
4.
Semi Annual Payments
5.
BI shall grant to Triage warrants to purchase BI common stock with the
following terms:
# of shares of
Warrants
Common Stock
Exercise Price
Term
A Warrants
750,000
$1.60
1 year after
registration
B Warrants
750,000
$1.75
1 year after
registration
C Warrants
2,000,000
$2.10
18 months
after registration
D Warrants
2,000,000
$3.00
2 years after
registration
The Corporation agrees to complete the CONVERTIBLE NOTE SECURITY documents
with in 5 days of the LETTER OF UNDERSTANDING.
Dated 25th day of September 2006.
/s/ Rodney M. Tiede
Broadcast International
Rodney M Tiede
President/CEO
