8-K

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):  August 15, 2006

BROADCAST INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Utah

0-13316

87-0395567

(State or other jurisdiction of

(Commission

(IRS Employer

incorporation or organization)

File No.)

Identification No.)

7050 Union Park Avenue, Suite 600, Salt Lake City, UT 84047

(Address of principal executive offices, including zip code)

(801) 562-2252

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

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))

BROADCAST INTERNATIONAL, INC.

FORM 8-K

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Current Report on Form 8-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking.  These statements are often, but not always, made through the use of words or phrases such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "management believes," "we believe," "we intend" and similar words or phrases.  Accordingly, these statements involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them.  A ny forward-looking statements are qualified in their entirety by reference to the risk factors contained in the Registrant’s annual and quarterly reports filed with the Securities and Exchange Commission.

SECTION 1.  REGISTRANT’S BUSINESS AND OPERATIONS

Item 1.01  Entry into a Material Definitive Agreement.

On August 15, 2006, Broadcast International, Inc. (the “Registrant”) entered into various material agreements with certain foreign corporations related to the acquisition of investment capital and licensing of technology.  These agreements are identified and summarized below, all of which were simultaneously closed on August 15, 2006.  The following summary of such agreements is not necessarily complete and is qualified in its entirety by reference to the complete text of such agreements, including any attachments thereto, all of which agreements have been filed by the Registrant with the Securities and Exchange Commission as exhibits to this Current Report on Form 8-K.

The Registrant entered into a Stock Purchase Agreement with Yang Lan Studio Ltd. (“YLS”), a Hong Kong corporation, dated August 15, 2006, providing for the sale of 666,667 restricted shares of the Registrant’s common stock to YLS at a purchase price of $1.50 per share for a total consideration of $1,000,000.  Pursuant to the Stock Purchase Agreement, the Registrant also issued warrants to YLS, including four classes of warrants (A Warrants, B Warrants, C Warrants and D Warrants), which give YLS the right to purchase an additional 5,500,000 shares of the Registrant’s common stock as described below.  The A and B Warrants expire one year after the effective date of a registration statement to be filed under the Securities Act of 1933, as amended (the “Securities Act”), to register the subsequent sale of shares received from exercise of the A and B Warrants. The C Warrants and D Warrants expire eigh teen months and twenty four months, respectively, after the effective date of the registration statement.   The A Warrants grant YLS the right to purchase up to 750,000 shares of common stock at an exercise price of $1.60 per share, the B Warrants grant YLS the right to purchase up to 750,000 shares of common stock at an exercise price of $1.75 per share, the C Warrants grant YLS the right to purchase up to 2,000,000 shares of common stock at an exercise price of $2.10 per share, and the D Warrants grant YLS the right to purchase up to 2,000,000 shares of common stock at an exercise price of $3.00 per share.  

The Stock Purchase Agreement contains certain covenants and provisions that may have an effect on the future ability of the Registrant to raise additional capital and to conduct its business operations.  The principal covenants and provisions are:

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(i)

The Registrant shall increase its authorized capital to accommodate the potential issuance of stock pursuant to the warrants.

(ii)

At such time as the Registrant has received at least $10 million in proceeds from the exercise of the warrants, the Registrant shall retire its convertible debt if not converted at such time.

(iii)

At such time as the Registrant has received at least $10 million in proceeds from the exercise of the warrants, for a period of three years thereafter, the Registrant will not issue any convertible debt.

(iv)

At such time as the Registrant has received at least $10 million in proceeds from the exercise of the warrants, the Registrant shall cancel any “reset features” related to any shares outstanding that could result in additional shares being issued.  In addition, for a period of three years, the Registrant shall not issue any new instruments, which may result in the issuance of additional common stock, if such new instruments have “reset features” causing more shares to be issued if the Registrant were to sell equity at prices less than the instruments conversion price.

(v)

The Registrant will not, for a period of three years, borrow funds in amounts greater than three times the Registrant’s EBITDA.

(vi)

The Registrant shall maintain a majority of qualified independent directors, as defined by the NASD, and the Registrant’s Audit and Compensation Committees of the Board shall include a majority of independent directors.

(vii)

YLS shall have a right of first refusal to participate in any future funding by the Registrant on a pro rata basis.

(viii)

At such time as the Registrant has received at least $10 million in proceeds from the exercise of the warrants, YLS is entitled to certain “price protection” anti-dilution rights and the Registrant may not effect any subsequent financing involving a “variable rate transaction” or an “MFN (Most Favored Nations) transaction” as such terms are defined in the Stock Purchase Agreement.

(ix)

The Registrant must retain Telperion Business Consultants as one of its investor relations firms for compensation of no less than $10,000 per month.

In connection with the Stock Purchase Agreement, the Registrant paid a $100,000 finder’s fee to Telperion Holdings LTD, based in the Cayman Islands.

The common stock issued and the warrants granted pursuant to the Stock Purchase Agreement are subject to the terms and conditions of a Registration Rights Agreement dated contemporaneously with the Stock Purchase Agreement, pursuant to which the Registrant is obligated to register with the Securities and Exchange Commission the resale of the shares of common stock issued as well as the subsequent sale of shares issuable upon exercise of the warrants pursuant to the Securities Act.  The Registrant is required to file a registration statement within thirty days of closing and have completed the registration process within six months of the date of the Registration Rights Agreement.  If either condition is not satisfied, the Registrant will be obligated to pay a penalty by issuing 657 shares of its common stock per day to YLS for every day the Registrant is in violation of either condition, up to a maximum of 500,000 shares.

The Registrant entered into a Stock Exchange Agreement with Sun Media Investment Holdings Ltd., a British Virgin Islands corporation (“Sun Media”), dated August 15, 2006, pursuant to which the Registrant issued 3,000,000 restricted shares of its common stock to Sun Media in exchange for 1,515,544 restricted shares of common stock of Sun New Media, Inc., a Minnesota corporation traded on the OTCBB.  The Stock Exchange Agreement also contains a covenant on the part of the Registrant to cause the appointment of Mr. Bruno Wu to the Registrant’s Board of Directors.  Mr. Wu is a principal and controlling shareholder of Sun Media and the Chairman of the Board of Sun New Media, Inc.  Both the

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Registrant and Sun Media have each agreed, pursuant to lock up agreements executed as part of the transaction, not to sell the shares of stock received in the transaction before January 1, 2008.  

The Registrant entered into a Technology License Agreement with YLS, dated August 15, 2006, pursuant to which the Registrant received a fully paid, perpetual, non-exclusive, world wide license to use and distribute certain flash based e-publishing reader technology.  In exchange for the license, the Registrant issued 4,000,000 restricted shares of its common stock to YLS.

The Registrant entered into a Technology License Agreement with Broadvision Global, Ltd., a British Virgin Islands corporation (“BGL”), dated August 15, 2006, pursuant to which the Registrant received a fully paid, perpetual, exclusive, world wide license (except for PR China) to use and distribute certain IPTV platform technology developed and licensed to BGL by Beijing Broadvision Information Technologies, Ltd. (“BBIT”).  In exchange for the license, the Registrant issued 1,000,000 restricted shares of its common stock to each of YLS and BBIT.

Item 3.02  Sales of Unregistered Securities

Pursuant to the above-described transactions, the Registrant issued to YLS, a foreign corporation, (i) 666,667 shares of its common stock and warrants to purchase 5,500,000 shares of its common stock in consideration of $1,000,000 and (ii) 4,000,000 shares of its common stock in exchange for the license to use and distribute certain flash based e-publishing reader technology.  The Registrant valued the technology license based upon the then prevailing fair market price of the common stock.  YLS is an accredited investor and was fully informed regarding its investment.  In the transactions, the Registrant relied on the exemption from registration under Regulation S promulgated under the Securities Act.

As described above, the Registrant issued 3,000,000 shares of its common stock to Sun Media, a foreign corporation, in exchange for 1,515,544 shares of Sun New Media, Inc. shares of common stock.  The Registrant valued the shares received based upon the then prevailing fair market price of the common stock.  Sun Media is an accredited investor and was fully informed regarding its investment.  In the transaction, the Registrant relied on the exemption from registration under Regulation S promulgated under the Securities Act.

As described above, the Registrant issued an aggregate of 2,000,000 shares of its common stock to YLS and BBIT, foreign corporations, in exchange for the license to use and distribute certain IPTV platform technology.  The Registrant valued the technology license based upon the then prevailing fair market price of the common stock.  YLS and BBIT are accredited investors and were fully informed regarding their investment.  In the transaction, the Registrant relied on the exemption from registration under Regulation S promulgated under the Securities Act..

On July 25, 2006, the Registrant issued a total of 75,000 shares of common stock to two individuals as compensation for consulting services to be performed for the Registrant.  The Registrant valued the services based upon the then prevailing fair market price of the common stock.  The individuals are accredited investors and were fully informed regarding their investment.  In the transaction, the Registrant relied on the exemptions from registration under the Securities Act set forth in Section 4(2) and Section 4(6) thereof.

ITEM 5.02(d) Appointment of Directors

On August 15, 2006, the Registrant’s Board of Directors unanimously voted to appoint Mr. Bruno Wu to the Board of Directors and to accept the resignation of Mr. Reed L. Benson from the Board of Directors.  Mr. Benson, a Board member since October, 2003, resigned from the Board to allow the

4

Board to appoint Mr. Wu pursuant to the Stock Exchange Agreement as described in Item 1.01 above.  Mr. Wu is a principal officer and controlling shareholder of Sun Media, with which the Registrant entered into the Stock Exchange Agreement.  Mr. Wu is also Chairman of the Board of Sun New Media Inc., a public company.  Mr. Benson continues as an officer and employee of the Registrant in his capacity of vice president, secretary and general counsel.

Except as described above, Mr. Wu does not have any understandings or relationships with third parties pursuant to which he was appointed to the Board nor has he had any prior relationship or transactions with the Registrant.  

SECTION 9.   FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01  Financial Statements and Exhibits

(c)

Exhibits:

10.1-

Stock Purchase Agreement dated August 15, 2006 between the Registrant and Yang Lan Studio Ltd.

10.2-

A Warrant dated August 15, 2006 issued to Yang Lan Studio Ltd.

10.3-

B Warrant dated August 15, 2006 issued to Yang Lan Studio Ltd.

10.4-

C Warrant dated August 15, 2006  issued to Yang Lan Studio Ltd.

10.5-

D Warrant dated August 15, 2006 issued to Yang Lan Studio Ltd.

10.6-

Registration Rights Agreement dated August 15, 2006 between the Registrant and Yang Lan Studio Ltd.

10.7-

Escrow Agreement dated August 15, 2006 among the Registrant, Yang Lan Studio Ltd. and DLA Piper Rudnick Gray Cary US, LLP

10.8-

Stock Exchange Agreement dated August 15, 2006 between the Registrant and Sun Media Investment Holdings Ltd.

10.9-

Technology License Agreement- e-publishing technology dated August 15, 2006 between the Registrant and Yang Lan Studio Ltd.

10.10-

Technology License Agreement- IPTV platform technology dated August 15, 2006 between the Registrant and Broadvision Global, Ltd.

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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:  August 21, 2006.

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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EX-10.1

STOCK PURCHASE AGREEMENT

BETWEEN

BROADCAST INTERNATIONAL, INC.

AND

YANG LAN STUDIO LTD.

DATED

August 15, 2006

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as of the 15^th day of August, 2006 between Broadcast International, Inc., a corporation organized and existing under the laws of the State of Utah (“Broadcast International” or the “Company”) and Yang Lan Studio Ltd., a Hong Kong Corporation (“Investor”).

PRELIMINARY STATEMENT:

WHEREAS, the Investor wishes to purchase from the Company, upon the terms and subject to the conditions of this Agreement, 666,667 shares of the Company’s common stock, $0.05 par value per share (the “Stock”), for the Purchase Price set forth in Section 2.1(a) hereof.  In addition, the Company will issue to the Investor Four Common Stock Purchase Warrants (the “Warrants”) to purchase up to an additional 5,500,000 shares of common stock of the Company at exercise prices as stated in the Warrants; and

WHEREAS, the parties intend to memorialize the purchase and sale of such Stock and the Warrants.

NOW, THEREFORE, in consideration of the mutual covenants and premises contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby conclusively acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I

INCORPORATION BY REFERENCE, SUPERSEDER AND DEFINITIONS

1.1

Incorporation by Reference. The foregoing recitals and the Exhibits and Schedules attached hereto and referred to herein, are hereby acknowledged to be true and accurate, and are incorporated herein by this reference.

1.2

Superseder. This Agreement, to the extent that it is inconsistent with any other instrument or understanding among the parties governing the affairs of the Company, shall supersede such instrument or understanding to the fullest extent permitted by law.  A copy of this Agreement shall be filed at the Company’s principal office.

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1.3

Certain Definitions. For purposes of this Agreement, the following capitalized terms shall have the following meanings (all capitalized terms used in this Agreement that are not defined in this Article 1 shall have the meanings set forth elsewhere in this Agreement):

1.3.1

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

1.3.2

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

1.3.3

“Affiliate” means a Person or Persons directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with the Person(s) in question.  The term “control,” as used in the immediately preceding sentence, means, with respect to a Person that is a corporation, the right to the exercise, directly or indirectly, of more than 50 percent of the voting rights attributable to the shares of such controlled corporation and, with respect to a Person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such controlled Person.

1.3.4

“Articles” means the Articles of Incorporation of the Company, as the same may be amended from time to time.

1.3.5

“Closing” shall mean the Closing of the transactions contemplated by this Agreement on the Closing Date.

1.3.6

“Closing Date” means the date on which the payment of the Purchase Price (as defined herein) by the Investor to the company is completed pursuant to this Agreement to purchase the Stock and Warrants, which shall occur on or before August 18, 2006.

1.3.7

“Common Stock” means shares of common stock of the Company, par value $0.05 per share.

1.3.8

"Escrow Agreement" shall mean the Escrow Agreement among the Company, the Investor and DLA Piper Rudnick Gray Cary U.S. LLP, as Escrow Agent, attached hereto as Exhibit C.

1.3.9

"Exempt Issuance" means the issuance of (a) shares of Common Stock or options to employees, officers, or directors of the Company pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise of any securities issued hereunder, and (c) securities issued pursuant to acquisitions or strategic transactions, provided any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

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1.3.10

"Material Adverse Effect" shall mean any adverse effect on the business, operations, properties or financial condition of the Company that is material and adverse to the Company and its subsidiaries and affiliates, taken as a whole and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to perform any of its material obligations under this Agreement or the Registration Rights Agreement or to perform its obligations under any other material agreement.

1.3.11

“Utah Act” means the Utah Revised Business Corporation Act, as amended.

1.3.12

“Person” means an individual, partnership, firm, limited liability company, trust, joint venture, association, corporation, or any other legal entity.

1.3.13

“Purchase Price” means the One Million ($1,000,000.00) US Dollars paid by the Investor to the Company for the Stock and the Warrants.

1.3.14

“Registration Rights Agreement" shall mean the registration rights agreement between the Investor and the Company attached hereto as Exhibit A.

1.3.15

"Registration Statement" shall mean the registration statement under the 1933 Act to be filed with the Securities and Exchange Commission for the registration of the Shares pursuant to the Registration Rights Agreement attached hereto as Exhibit A.

1.3.16

“SEC” means the Securities and Exchange Commission.

1.3.17

"SEC Documents" shall mean the Company's latest Form 10-K or 10-KSB as of the time in question, all Forms 10-Q or 10-QSB and 8-K filed thereafter, and the Proxy Statement for its latest fiscal year as of the time in question until such time as the Company no longer has an obligation to maintain the effectiveness of a Registration Statement as set forth in the Registration Rights Agreement.

1.3.18

"Shares" shall mean, collectively, the shares of Common Stock of the Company issued hereunder and those shares of Common Stock issuable to the Investor upon exercise of the Warrants.

1.3.19

“Subsequent Financing” shall mean any offer and sale of shares of Common Stock or debt that is initially convertible into shares of Common Stock or otherwise senior or superior to the Common Stock.

1.3.20

“Transaction Documents” shall mean this Agreement, all Schedules and Exhibits attached hereto and all other documents and instruments to be executed and delivered by the parties in order to consummate the transactions contemplated hereby, including, but not limited to the documents listed in Sections 3.2 and 3.3 hereof.

1.3.21

“Warrants” shall mean the Common Stock Purchase Warrants in the form attached hereto Exhibit B.

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ARTICLE II

SALE AND PURCHASE OF BROADCAST INTERNATIONAL, INC, STOCK AND WARRANTS PURCHASE PRICE

2.1

Sale of Stock and Issuance of Warrants.

(a)

Upon the terms and subject to the conditions set forth herein, and in accordance with applicable law, the Company agrees to sell to the Investor, and the Investor agrees to purchase from the Company, on the Closing Date 666,667 shares of Stock and the Warrants for the (the “Purchase Price”) of One Million Dollars ($1,000,000.00).  The Purchase Price shall be paid by the Investor to the Company on the Closing Date by a wire transfer or check of the Purchase Price into escrow to be held by the escrow agent pursuant to the terms of the Escrow Agreement.  The Company shall cause the Stock and the Warrants to be issued to the Investor upon the release of the Purchase Price to the Company by the escrow agent pursuant to the terms of the Escrow Agreement.  The Company shall register the shares of Common Stock pursuant to the terms and conditions of a Registration Rig hts Agreement attached hereto as Exhibit A.

(b)

Upon execution and delivery of this Agreement and the Company’s receipt of the Purchase Price from the Escrow Agent pursuant to the terms of the Escrow Agreement, the Company shall issue to the Investor the Warrants to purchase an aggregate of 5,500,000 shares of Common Stock at exercise prices as stated in the Warrants, all pursuant to the terms and conditions of the form of Warrants attached hereto as Exhibit B;

           (c)         The Sale and Purchase of Stock and Warrants herein is conditional upon:

(i)  execution of Stock Exchange Agreement by and between the Company and Sun Media Investment Holding Ltd.;

(ii) execution of Technology License regarding YL Studio Technology by and between the Company and the Investor; and

(iii) execution of Technology License Agreement regarding IPTV Platform Technology by and between the Company and Broadvision Global Limited.

2.2

Purchase Price.  The Purchase Price shall be delivered by the Investor in the form of a check or wire transfer made payable to the Company in United States Dollars from the Investor to the escrow agent pursuant to the Escrow Agreement on the Closing Date.

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ARTICLE III

CLOSING DATE AND DELIVERIES AT CLOSING

3.1

Closing Date.

The closing of the transactions contemplated by this Agreement (the “Closing”), unless expressly determined herein, shall be held at the offices of the Company, at 5:00 P.M. local time, on the Closing Date or on such other date and at such other place as may be mutually agreed by the parties, including closing by facsimile with originals to follow.  

3.2

Deliveries by the Company.  In addition to and without limiting any other provision of this Agreement, the Company agrees to deliver, or cause to be delivered, to the escrow agent under the Escrow Agreement, the following:

(a)

At or prior to Closing, an executed Agreement with all exhibits and schedules attached hereto;

(b)

At or prior to Closing, an executed Warrant in the name of the Investor in the form attached hereto as Exhibit B;

(c)

The executed Registration Rights Agreement;

(d)

Certifications in form and substance acceptable to the Company and the Investor from any and all brokers or agents involved in the transactions contemplated hereby as to the amount of commission or compensation payable to such broker or agent as a result of the consummation of the transactions contemplated hereby and from the Company or Investor, as appropriate, to the effect that reasonable reserves for any other commissions or compensation that may be claimed by any broker or agent have been set aside;

(e)

Evidence of approval of the Board of Directors and Shareholders of the Company of the Transaction Documents and the transactions contemplated hereby;

(f)

Certificate of the President and the Secretary of the Company as requested by the Investor;

(g)

Certificate of Existence or Authority to Transact Business of the Company issued by the Secretary of State for Utah;

(h)

An opinion from the Company’s counsel concerning the Transaction Documents and the transactions contemplated hereby in form and substance reasonably acceptable to Investor;

(i)

Stock Certificate in the name of Investor evidencing the Stock;

(j)

The executed Escrow Agreement; and

(k)

Copies of all executive employment agreements, all past and present financing documentation or other documentation where stock could potentially be issued or issued as payment, all past and present litigation documents and historical financials.

(l)

Such other documents or certificates as shall be reasonably requested by Investor or its counsel.

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3.3

Deliveries by Investor.  In addition to and without limiting any other provision of this Agreement, the Investor agrees to deliver, or cause to be delivered, to the escrow agent under the Escrow Agreement, the following:

(a)

A deposit in the amount of the Investor Funds;

(b)

The executed Agreement with all Exhibits and Schedules attached hereto;

(c)

The executed Registration Rights Agreement;

(d)

The executed Escrow Agreement; and

(e)

Such other documents or certificates as shall be reasonably requested by the Company or its counsel.

In the event any document provided to the other party in Paragraphs 3.2 and 3.3 herein are provided by facsimile, the party shall forward an original document to the other party within seven (7) business days.

3.4

Further Assurances.  The Company and the Investor shall, upon request, on or after the Closing Date, cooperate with each other (specifically, the Company shall cooperate with the Investor, and the Investor shall cooperate with the Company) by furnishing any additional information, executing and delivering any additional documents and/or other instruments and doing any and all such things as may be reasonably required by the parties or their counsel to consummate or otherwise implement the transactions contemplated by this Agreement.

3.5

Waiver.  The Investor may waive any of the requirements of Section 3.2 of this Agreement, and the Company at its discretion may waive any of the provisions of Section 3.3 of this Agreement.  The Investor may also waive any of the requirements of the Company under the Escrow Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF

BROADCAST INTERNATIONAL, INC.

The Company represents and warrants to the Investor as of the date hereof and as of Closing (which warranties and representations shall survive the Closing regardless of what examinations, inspections, audits and other investigations the Investor has heretofore made or may hereinafter make with respect to such warranties and representations) as follows:

4.1

Organization and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah, and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted and is duly qualified to do business in any other jurisdiction by virtue of the nature of the businesses conducted by it or the ownership or leasing of its properties, except

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where the failure to be so qualified will not, when taken together with all other such failures, have a Material Adverse Effect on the business, operations, properties, assets, financial condition or results of operation of the Company and its subsidiaries taken as a whole.

4.2

Articles of Incorporation and By-Laws.  The complete and correct copies of the Company’s Articles and By-Laws, as amended or restated to date which have been filed with the Securities and Exchange Commission  are a complete and correct copy of such document as in effect on the date hereof and as of the Closing Date.

4.3

Capitalization.

4.3.1

The authorized and outstanding capital stock of the Company is set forth in The Company’s Annual Report on Form 10-KSB, filed on March 31, 2006 with the Securities and Exchange Commission and updated on all subsequent SEC Documents.  All shares of capital stock have been duly authorized and are validly issued, and are fully paid and no assessable, and free of preemptive rights.

4.3.2

As of the date of this Agreement, the authorized capital stock of the Company consists of 40,000,000 shares of common Stock ($.05 par value) of which approximately 24,048,275 share of common Stock are issued and outstanding.  As of Closing, following the issuance by the Company of the Stock to the Investor, the authorized capital stock of the Company will consist of 40,000,000 shares of Common Stock ($.05 par value) of which approximately 25,398,275 shares of stock shall be issued and outstanding.  All outstanding shares of capital stock have been duly authorized and are validly issued, and are fully paid and nonassessable and free of preemptive rights.  All shares of capital stock described above to be issued have been duly authorized and when issued, will be validly issued, fully paid and nonassessable and free of preemptive rights. Schedule 4.3.2 hereby contains all shares and de rivatives currently and potentially outstanding.  The company hereby represents that any and all shares and current potentially dilutive events have been included in Schedule 4.3.2, including employment agreements, acquisition, consulting agreements, debts, payments, financing or business relationships that could be paid in equity, derivatives or resulting in additional equity issuances that could potentially occur.

4.3.3

Except pursuant to this Agreement and as set forth in Schedule 4.3 hereto, and as set forth in the Company’s SEC Documents, filed with the SEC, as of the date hereof and as of the Closing Date, there are not now outstanding options, warrants, rights to subscribe for, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any class of capital stock of the Company, or agreements, understandings or arrangements to which the Company is a party, or by which the Company is or may be bound, to issue additional shares of its capital stock or options, warrants, scrip or rights to subscribe for, calls or commitment of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, any shares of any class of its capital stock.  The Company agrees to inform the Investors in writing of a ny additional warrants granted prior to the Closing Date.

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4.3.4

The Company on the Closing Date (i) will have full right, power, and authority to sell, assign, transfer, and deliver, by reason of record and beneficial ownership, to the Investor, the Stock hereunder, free and clear of all liens, charges, claims, options, pledges, restrictions, and encumbrances whatsoever; and (ii) upon exercise of the Warrants, the Investor will acquire good and marketable title to the shares issuable thereunder, free and clear of all liens, charges, claims, options, pledges, restrictions, and encumbrances whatsoever, except as otherwise provided in this Agreement as to the limitation on the voting rights of such shares in certain circumstances.

4.4

Authority. The Company has all requisite corporate power and authority to execute and deliver this Agreement, the Stock, and the Warrants, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company is necessary to authorize this Agreement or to consummate the transactions contemplated hereby except as disclosed in this Agreement.  This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

4.5

No Conflict; Required Filings and Consents. The execution and delivery of this Agreement by the Company does not, and the performance by the Company of their respective obligations hereunder will not:  (i) conflict with or violate the Articles or By-Laws of the Company; (ii) conflict with, breach or violate any federal, state, foreign or local law, statute, ordinance, rule, regulation, order, judgment or decree (collectively, "Laws") in effect as of the date of this Agreement and applicable to the Company; or (iii) result in any breach of, constitute a default (or an event that with notice or lapse of time or both would become a default) under, give to any other entity any right of termination, amendment, acceleration or cancellation of, require payment under, or result  in the creation of a lien or encumbrance on any of the properties or assets of t he Company pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company is a party or by the Company or any of its properties or assets is bound.  Excluding from the foregoing are such violations, conflicts, breaches, defaults, terminations, accelerations, creations of liens, or incumbency that would not, in the aggregate, have a Material Adverse Effect.

4.6

Report and Financial Statements. The Company’s Annual Report on Form 10-KSB, filed on March 31, 2006 with the SEC contains the audited financial statements of the Company.  The Company has previously provided to the Investor the audited financial statements of the Company as of December 31, 2005 (collectively, the “Financial Statements”). Each of the balance sheets contained in or incorporated by reference into any such Financial Statements (including the related notes and schedules thereto) fairly presented the financial position of the Company, as of its date, and each of the statements of income and changes in stockholders’ equity and cash flows or equivalent statements in such Financial Statements (including any

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related notes and schedules thereto) fairly presents, changes in stockholders’ equity and changes in cash flows, as the case may be, of the Company, for the periods to which they relate, in each case in accordance with United States generally accepted accounting principles (“U.S. GAAP”) consistently applied during the periods involved, except in each case as may be noted therein, subject to normal year-end audit adjustments in the case of unaudited statements.  The books and records of the Company have been, and are being, maintained in all material respects in accordance with U.S. GAAP and any other applicable legal and accounting requirements and reflect only actual transaction.  

4.7

Compliance with Applicable Laws. The Company is not in violation of, or, to the knowledge of the Company is under investigation with respect to or has been given notice or has been charged with the violation of any Law of a governmental agency, except for violations which individually or in the aggregate do not have a Material Adverse Effect.  

4.8

Brokers. Except as set forth on Schedule 4.8, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or Commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.

4.9

SEC Documents. The Company acknowledges that the Company is a publicly held company and has made available to the Investor after demand true and complete copies of any requested SEC Documents. The Company has registered its Common Stock pursuant to Section 12(g) of the 1934 Act, and the Common Stock is quoted and traded on the OTC Bulletin Board of the National Association of Securities Dealers, Inc.  The Company has received no notice, either oral or written, with respect to the continued quotation or trading of the Common Stock on the OTC Bulletin Board. The Company has not provided to the Investor any information that, according to applicable law, rule or regulation, should have been disclosed publicly prior to the date hereof by the Company, but which has not been so disclosed. As of their respective dates, the SEC Documents complied in all material respects with the require ments of the 1934 Act, and rules and regulations of the SEC promulgated thereunder and the SEC Documents did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

4.10

Litigation. To the knowledge of the Company, no litigation, claim, or other proceeding before any court or governmental agency is pending or to the knowledge of the Company, threatened against the Company, the prosecution or outcome of which may have a Material Adverse Effect.

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4.11

Exemption from Registration. Subject to the accuracy of the Investor’s representations in Article V, except as required pursuant to the Registration Rights Agreement, the sale of the Common Stock and Warrants by the Company to the Investor will not require registration under the 1933 Act, but may require registration under Utah State securities law if applicable to the Investor.  Upon exercise of the Warrants in accordance with their terms, the shares underlying the Warrants will be duly and validly issued, fully paid, and non-assessable.  The Company is issuing the Stock and the Warrants in accordance with and in reliance upon the exemption from securities registration afforded, inter alia, by Rule 506 under Regulation D as promulgated by the SEC under the 1933 Act, and/or Section 4(2) and Regulation S of the 1933 Act.

4.12

No General Solicitation or Advertising in Regard to this Transaction. Neither the Company nor any of its Affiliates nor, to the knowledge of the Company, any Person acting on its or their behalf (i) has conducted or will conduct any general solicitation (as that term is used in Rule 502(c) of Regulation D as promulgated by the SEC under the 1933 Act) or general advertising with respect to the sale of the Stock or Warrants, or (ii) made any offers or sales of any security or solicited any offers to buy any security under any circumstances that would require registration of the Stock or Warrants, under the 1933 Act, except as required herein.

4.13

No Material Adverse Effect. Except as set forth in Schedule 4.13 attached hereto, since December 31 2005, no event or circumstance resulting in a Material Adverse Effect has occurred or exists with respect to the Company. No material supplier or customer has given notice, oral or written, that it intends to cease or reduce the volume of its business with the Company from historical levels. Since June 30, 2004, no event or circumstance has occurred or exists with respect to the Company or its businesses, properties, prospects, operations or financial condition, that, under any applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof by the Company but which has not been so publicly announced or disclosed in writing to the Investor.

4.14

Material Non-Public Information. The Company has not disclosed to the Investors any material non-public information that (i) if disclosed, would reasonably be expected to have a material effect on the price of the Common Stock or (ii) according to applicable law, rule or regulation, should have been disclosed publicly by the Company prior to the date hereof but which has not been so disclosed.

4.15

Internal Controls And Procedures. The Company maintains books and records and internal accounting controls which provide reasonable assurance that (i) all transactions to which the Company or any subsidiary is a party or by which its properties are bound are executed with management's authorization; (ii) the recorded accounting of the Company's consolidated assets is compared with existing assets at regular intervals; (iii) access to the Company's consolidated assets is permitted only in accordance with management's authorization; and (iv) all transactions to which the Company or any subsidiary is a party or by which its properties are bound are recorded as necessary to permit preparation of the financial statements of the Company in accordance with U.S. generally accepted accounting principles.

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4.16

Full Disclosure.  No representation or warranty made by the Company in this Agreement and no certificate or document furnished or to be furnished to the Investor pursuant to this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading.

4.17

 Independent Board.  As of the date of this Agreement, the Board of Directors of the Company consists of a minimum of five directors with a majority being independent as defined by the NASD.  At the Closing, the Board of Directors of the Company shall consist of Seven directors, four of whom shall be independent.  As of the date of this Agreement, the Audit and Compensation Committees of the Board of Directors of the Company are comprised, and at the Closing will be comprised, of independent directors.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

The Investor represents and warrants to the Company that:

5.1

Organization and Standing of the Investor. The Investor is a corporation  duly formed, validly existing and in good standing under the laws of Hong Kong.  The Investor was not formed for the purpose of investing solely in the Stock, the Warrants or the shares of Common Stock which are the subject of this Agreement.

5.2

Authorization and Power. The Investor has the requisite power and authority to enter into and perform this Agreement and to purchase the securities being sold to it hereunder. The execution, delivery and performance of this Agreement by the Investor and the consummation by the Investor of the transactions contemplated hereby have been duly authorized by all necessary partnership action where appropriate. This Agreement and the Registration Rights Agreement have been duly executed and delivered by the Investor and at the Closing shall constitute valid and binding obligations of the Investor enforceable against the Investor in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor s' rights and remedies or by other equitable principles of general application.

5.3

No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Investor of the transactions contemplated hereby or relating hereto do not and will not (i) result in a violation of such Investor's charter documents or bylaws where appropriate or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of any agreement, indenture or instrument to which the

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Investor is a party, or result in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to the Investor or its properties (except for such conflicts, defaults and violations as would not, individually or in the aggregate, have a Material Adverse Effect on such Investor). The Investor is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of such Investor’s obligations under this Agreement or to purchase the securities from the Company in accordance with the terms hereof, provided that for purposes of the representation made in this sentence, the Investor is assuming and relying upon the accuracy of the relevant representations and agreements of the Company herein.

5.4

Financial Risks. The Investor acknowledges that such Investor is able to bear the financial risks associated with an investment in the securities being purchased by the Investor from the Company and that it has been given full access to such records of the Company and the subsidiaries and to the officers of the Company and the subsidiaries as it has deemed necessary or appropriate to conduct its due diligence investigation. The Investor is capable of evaluating the risks and merits of an investment in the securities being purchased by the Investor from the Company by virtue of its experience as an investor and its knowledge, experience, and sophistication in financial and business matters and the Investor is capable of bearing the entire loss of its investment in the securities being purchased by the Investor from the Company.

5.5

Accredited Investor. The Investor is (i) an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated under the 1933 Act by reason of Rule 501(a)(3) and (6), (ii) experienced in making investments of the kind described in this Agreement and the related documents, (iii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement, and the related documents, and (iv) able to afford the entire loss of its investment in the securities being purchased by the Investor from the Company.

5.6

Brokers. Except as set forth in Schedule 4.8, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or Commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Investor.

5.7

Knowledge of Company. The Investor and such Investor’s advisors, if any, have been, upon request, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the securities being purchased by the Investor from the Company.  The Investor and such Investor’s advisors, if any, have been afforded the opportunity to ask questions of the Company and have received complete and satisfactory answers to any such inquiries.

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5.8

Risk Factors. The Investor understands that such Investor’s investment in the securities being purchased by the Investor from the Company involves a high degree of risk.  The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the securities being purchased by the Investor from the Company. The Investor warrants that such Investor is able to bear the complete loss of such Investor’s investment in the securities being purchased by the Investor from the Company.

5.9

Full Disclosure. No representation or warranty made by the Investor in this Agreement and no certificate or document furnished or to be furnished to the Company pursuant to this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading. Except as set forth or referred to in this Agreement, Investor does not have any agreement or understanding with any person relating to acquiring, holding, voting or disposing of any equity securities of the Company.

ARTICLE VI

COVENANTS OF THE COMPANY

6.1

Registration Rights. The Company shall cause the Registration Rights Agreement to remain in full force and effect according to the provisions of the Registration Rights Agreement and the Company shall comply in all material respects with the terms thereof.

6.2

Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, shares of Common Stock for the purpose of enabling the Company to issue the shares of Common Stock underlying the Warrants. Provided, however, the parties hereto acknowledge that if all of the issuance of stock were to be effected immediately, there would not be sufficient authorized capital available to satisfy all such issuances.  Therefore, the Company shall undertake to increase its authorized capital in order to satisfy all such potential issuances.

6.3

Compliance with Laws. The Company hereby agrees to comply in all respects with the Company's reporting, filing and other obligations under the Laws.

6.4

Exchange Act Registration. The Company (a) will continue its obligation to report to the SEC under Section 13 of the 1934 Act and will use its best efforts to comply in all respects with its reporting and filing obligations under the 1934 Act, and will not take any action or file any document (whether or not permitted by the 1934 Act or the rules thereunder) to terminate or suspend any such registration or to terminate or suspend its reporting and filing obligations under the 1934 until the Investors have disposed of all of their Shares.

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6.5

Corporate Existence; Conflicting Agreements. The Company will take all steps necessary to preserve and continue the corporate existence of the Company. The Company shall not enter into any agreement, the terms of which agreement would restrict or impair the right or ability of the Company to perform any of its obligations under this Agreement or any of the other agreements attached as exhibits hereto.

6.6

Convertible Debt. At such time as the Investor has exercised warrants sufficient to provide the Company with proceeds of such exercises in excess of $10 million , the Company shall pre pay all of its  convertible debt or force the conversion of such convertible debt to common stock   and in such event for a period of three years from the closing the Company will not issue any convertible debt.

6.7

Debt Limitation. The Company agrees for three years after Closing not to enter into any new borrowings of more than three times as much as the sum of the EBITDA from recurring operations over the past four quarters.

6.8

Reset Equity Deals.  At such time as the Investor has exercised warrants sufficient to provide the Company with proceeds from such exercises in excess of $10 million , the Company shall cause to be cancelled any and all reset features related to any shares outstanding that could result in additional shares being issued. For a period of three years from the closing the Company will not enter into any transactions that have any reset features that could result in additional shares being issued, without the consent of the Investor.

6.9

Independent Directors. The Company shall have caused the appointment of the majority of the board of directors to be qualified independent directors, as defined by the NASD, before Closing.  If at any time after Closing the board shall not be composed in the majority of qualified independent directors, the Company shall pay to the Investors, pro rata, as liquidated damages and not as a penalty, an amount equal to eighteen percent (18%) of the Purchase Price per annum, payable monthly in cash or Stock at the option of the Investor. Provided, however, the Company shall have 30 days following the time that the Board does not have a majority of independent directors to appoint sufficient independent directors to restore the Board’s independence before any damages shall accrue and in any event, such payment of liquidated damages shall continue only so long as the Board is not comprised of a majority of independent directors. The parties agree that the only damages payable for a violation of the terms of this Agreement with respect to which liquidated damages are expressly provided shall be such liquidated damages.  Nothing shall preclude the Investor from pursuing or obtaining specific performance or other equitable relief with respect to this Agreement.  The parties hereto agree that the liquidated damages provided for in this Section 6.10 constitute a reasonable estimate of the damages that may be incurred by the Investor by reason of the failure of the Company to appoint at least two independent directors in accordance with the provision hereof.

6.10

Independent Directors Become Majority of Audit and Compensation Committees.  The Company will cause the appointment of a majority of outside directors to the audit and compensation committees of the board of directors before Closing.  If at any time after Closing

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such independent directors do not compose the majority of the audit and compensation committees, the Company shall pay to the Investors, pro rata, as liquidated damages and not as a penalty, an amount equal to eighteen percent (18%) of the Purchase Price per annum, payable monthly in cash or Stock at the option of the Investor.  The parties agree that the only damages payable for a violation of the terms of this Agreement with respect to which liquidated damages are expressly provided shall be such liquidated damages.  Nothing shall preclude the Investor from pursuing other remedies or obtaining specific performance or other equitable relief with respect to this Agreement.  

6.11

Use of Proceeds. The Company will use the proceeds from the sale of the Stock and the Warrants (excluding amounts paid by the Company for legal and administrative fees in connection with the sale of such securities) for Fees, working capital and acquisitions.

6.12

Right of First Refusal. The Investor shall have the right to participate in any subsequent funding by the Company on a pro rata basis at One Hundred percent (100%) of the offering price.

6.13

Price Adjustment. From the date that the Investor has exercised warrants sufficient to provide the Company with proceeds from such exercises in excess of $10 million until such time as the Investor holds no warrants , if the Company closes on the sale of a note or notes, shares of Common Stock, or shares of any class of Stock at a price per share of Common Stock, or with a conversion right to acquire Common Stock at a price per share of Common Stock, that is less than the Purchase Price (as adjusted to the capitalization per share as of the Closing Date, following any stock splits, stock dividends, or the like) (collectively, the “Subsequent Purchase Price”), the Company shall make a post-Closing adjustment in the Purchase Price so that the effective price per share paid by the Investor is reduced to being equivalent to such lower purchase price after taking into account any prior exercises of the Warrant.

6.14

Insider Selling. The earliest any “Insiders” can start selling their shares in the public market shall be two years from Closing. Insiders shall include all officers and directors of the Company. Bruno Wu, Leon Frenkle and the Investor shall not be considered “Insiders”.

6.15

Employment and Consulting Contracts. For three years after the Closing Company must have a unanimous opinion from the Compensation Committee of the Board of Directors that any awards other than salary are usual, appropriate and reasonable for any officer, director, employee or consultant holding a similar position in other fully reporting public companies with independent majority boards with similar market capitalizations in the same industry with securities listed on the OTCBB, ASE, NYSE or NASDAQ.

6.16

Subsequent Equity Sales.  From the date that the Investor has exercised warrants sufficient to provide the Company with proceeds from such exercises in excess of $10 million until such time as the Investor holds no warrants, the Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent Financing involving a “Variable Rate Transaction” or an “MFN Transaction” (each as defined below).  The term “Variable Rate

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Transaction” shall mean a transaction in which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock.  The term “MFN Transaction” shall mean a trans action in which the Company issues or sells any securities in a capital raising transaction or series of related transactions which grants to an investor the right to receive additional shares based upon future transactions of the Company on terms more favorable than those granted to such investor in such offering.  Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages. Notwithstanding the foregoing, this Section 6.18 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction or MFN Transaction shall be an Exempt Issuance.

6.17

Amendment to Certificate of Incorporation.  At or before the annual meeting of the stockholders of the Company held after October 1, 2007 and in the event all of the A and B Warrants are exercised prior to such meeting, the Board of Directors shall propose and submit to the holders of the Common Stock for approval, an amendment to the Articles of Incorporation that provides substantially as follows:  

“The terms and conditions of any rights, options and warrants approved by the Board of Directors may provide that any or all of such terms and conditions may be waived or amended only with the consent of the holders of a designated percentage of a designated class or classes of capital stock of the Corporation (or a designated group or groups of holders within such class or classes, including but not limited to disinterested holders), and the applicable terms and conditions of any such rights, options or warrants so conditioned may not be waived or amended absent such consent.”.

6.18

Stock Splits. All forward and reverse stock splits shall effect all equity and derivative holders proportionately.

6.19

 Retention of Investor Relations / Public Relations.  The Company must retain Telperion Business Consultants  within 30 days after Closing Date as one of the Company’s investor relations firms for compensation of no less than $10,000 per month. If at any time after 30 days from the Closing, the Company shall not have retained an investor relations and public relations firm, the Company shall pay to the Investors, pro rata, as liquidated damages and not as a penalty, an amount equal to twenty eight percent (28%) per annum of the Purchase Price for the Shares still held by the Investor on such date, payable monthly in cash.  The parties agree that the only damages payable for a violation of the terms of this Agreement with respect to which

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liquidated damages are expressly provided shall be such liquidated damages Closing Date.  The parties hereto agree that the liquidated damages provided for in this Section 6.23 constitute a reasonable estimate of the damages that may be incurred by the Investor. Nothing shall preclude the Investor from pursuing or obtaining specific performance or other equitable relief with respect to this Agreement.

ARTICLE VII

COVENANTS OF THE INVESTOR

7.1

Compliance with Law. The Investor's trading activities with respect to shares of the Company's Common Stock will be in compliance with all applicable state and federal securities laws, rules and regulations and rules and regulations of any public market on which the Company's Common Stock is listed.  

7.2

Transfer Restrictions. The Investor’s acknowledge that (1) the Stock, Warrants and shares underlying the Warrants have not been registered under the provisions of the 1933 Act, and may not be transferred unless (A) subsequently registered thereunder or (B) the Investor shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the Stock, Warrants and shares underlying the Warrants to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; and (2) any sale of the Stock, Warrants and shares underlying the Warrants made in reliance on Rule 144 promulgated under the 1933 Act may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such securities under circumstances in which the seller, or the person through whom the sale is made, may be deemed to be an underwriter, as that term is used in the 1933 Act, may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder.

7.3

Restrictive Legend. The Investor acknowledges and agrees that the Stock, the Warrants and the Shares underlying the Warrants, and, until such time as the Shares underlying the Warrants have been registered under the 1933 Act and sold in accordance with an effective Registration Statement, certificates and other instruments representing any of the Shares, shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such securities):

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT."

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7.4

Amendment to Articles of Incorporation. Investor hereby agrees to vote any shares of capital stock that it may own directly or beneficially, for the amendment to the Articles of Incorporation referenced in Section 6.2.  Pending adoption of such amendment, Investor hereby agrees for itself and its successors and assigns that neither this Section 7.4 or Section 6.2 above, or any restriction on exercise of the Warrant shall be amended, modified or waived without the consent of the holders of a majority of the shares of Common Stock held by Persons who are not Affiliates of the Company, or the Investor or Affiliates of the Investor.

ARTICLE VIII

CONDITIONS PRECEDENT TO THE COMPANY’S OBLIGATIONS

The obligation of the Company to consummate the transactions contemplated hereby shall be subject to the fulfillment, on or prior to Closing Date, of the following conditions:

8.1

No Termination. This Agreement shall not have been terminated pursuant to Article X hereof.

8.2

Representations True and Correct. The representations and warranties of the Investor contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on as of the Closing Date.

8.3

Compliance with Covenants. The Investor shall have performed and complied in all material respects with all covenants, agreements, and conditions required by this Agreement to be performed or complied by it prior to or at the Closing Date.

8.4

No Adverse Proceedings. On the Closing Date, no action or proceeding shall be pending by any public authority or individual or entity before any court or administrative body to restrain, enjoin, or otherwise prevent the consummation of this Agreement or the transactions contemplated hereby or to recover any damages or obtain other relief as a result of the transactions proposed hereby.

ARTICLE IX

CONDITIONS PRECEDENT TO INVESTOR’S OBLIGATIONS

The obligation of the Investors to consummate the transactions contemplated hereby shall be subject to the fulfillment, on or prior to Closing Date unless specified otherwise, of the following conditions:

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9.1

No Termination. This Agreement shall not have been terminated pursuant to Article X hereof.

9.2

Representations True and Correct. The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on as of the Closing Date.

9.3

Compliance with Covenants . The Company shall have performed and complied in all material respects with all covenants, agreements, and conditions required by this Agreement to be performed or complied by it prior to or at the Closing Date.

9.4

No Adverse Proceedings. On the Closing Date, no action or proceeding shall be pending by any public authority or individual or entity before any court or administrative body to restrain, enjoin, or otherwise prevent the consummation of this Agreement or the transactions contemplated hereby or to recover any damages or obtain other relief as a result of the transactions proposed hereby.

ARTICLE X

TERMINATION, AMENDMENT AND WAIVER

10.

Termination. This Agreement may be terminated at any time prior to the Closing Date

10.1.1

by mutual written consent of the Investor and the Company;

10.1.2

by the Company upon a material breach of any representation, warranty, covenant or agreement on the part of the Investor set forth in this Agreement, or the Investor upon a material breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, or if any representation or warranty of the Company or the Investor, respectively, shall have become untrue, in either case such that any of the conditions set forth in Article VIII or Article IX hereof would not be satisfied (a "Terminating Breach"), and such breach shall, if capable of cure, not have been cured within five (5) business days after receipt by the party in breach of a notice from the non-breaching party setting forth in detail the nature of such breach.

10.

Effect of Termination. Except as otherwise provided herein, in the event of the termination of this Agreement pursuant to Section 10.1 hereof, there shall be no liability on the part of the Company or the Investor or any of their respective officers, directors, agents or other representatives and all rights and obligations of any party hereto shall cease; provided that in the event of a Terminating Breach, the breaching party shall be liable to the

STOCK PURCHASE AGREEMENT BETWEEN

BROADCAST INTERNATIONAL, INC. CORPORATION AND YANG LAN STUDIO LTD

PAGE 19 OF 27

non-breaching party for all costs and expenses incurred by the non-breaching party not to exceed $50,000.00.

10.3

Amendment. This Agreement may be amended by the parties hereto any time prior to the Closing Date by an instrument in writing signed by the parties hereto.

10.4

Waiver. At any time prior to the Closing Date, the Company or the Investor, as appropriate, may: (a) extend the time for the performance of any of the obligations or other acts of other party or; (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto which have been made to it or them; or (c) waive compliance with any of the agreements or conditions contained herein for its or their benefit.  Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party or parties to be bound hereby.

ARTICLE XI

GENERAL PROVISIONS

11.

Transaction Costs. Except as otherwise provided herein, each of the parties shall pay all of his or its costs and expenses (including attorney fees and other legal costs and expenses and accountants’ fees and other accounting costs and expenses) incurred by that party in connection with this Agreement.

11.2

Indemnification. The Investor agrees to indemnify, defend and hold the Company (following the Closing Date) and its officers and directors harmless against and in respect of any and all claims, demands, losses, costs, expenses, obligations, liabilities or damages, including interest, penalties and reasonable attorney’s fees, that it shall incur or suffer, which arise out of or result from any breach of this Agreement by such Investor or failure by such Investor to perform with respect to any of its representations, warranties or covenants contained in this Agreement or in any exhibit or other instrument furnished or to be furnished under this Agreement.  The Company agrees to indemnify, defend and hold the Investor harmless against and in respect of any and all claims, demands, losses, costs, expenses, obligations, liabilities or damages, including interest, penalties and re asonable attorney’s fees, that it shall incur or suffer, which arise out of, result from or relate to any breach of this Agreement or failure by the Company to perform with respect to any of its representations, warranties or covenants contained in this Agreement or in any exhibit or other instrument furnished or to be furnished under this Agreement.  In no event shall the Company or the Investors be entitled to recover consequential or punitive damages resulting from a breach or violation of this Agreement nor shall any party have any liability hereunder in the event of gross negligence or willful misconduct of the indemnified party.  In the event of a breach of this Agreement by the Company, the Investor shall be entitled to pursue a remedy of specific performance upon tender into the Court an

STOCK PURCHASE AGREEMENT BETWEEN

BROADCAST INTERNATIONAL, INC. CORPORATION AND YANG LAN STUDIO LTD

PAGE 20 OF 27

amount equal to the Purchase Price hereunder. The indemnification by the Investor shall be limited to $50,000.00.

11.3

Headings. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

11.4

Entire Agreement. This Agreement (together with the Schedule, Exhibits, Warrants and documents referred to herein) constitute the entire agreement of the parties and supersede all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof.  

11.5

Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been given (i) on the date they are delivered if delivered in person; (ii) on the date initially received if delivered by facsimile transmission followed by registered or certified mail confirmation; (iii) on the date delivered by an overnight courier service; or (iv) on the third business day after it is mailed by registered or certified mail, return receipt requested with postage and other fees prepaid as follows:

If to the Company:

Broadcast International Inc

7050 Union Park Ave.

Suite 600

Salt Lake City UT 84047

Attention: Rodney Tiede

With a copy to:

Broadcast International Inc

7050 Union Park Ave.

Suite 600

Salt Lake City UT 84047

Attn:  Reed Benson, Esq.

STOCK PURCHASE AGREEMENT BETWEEN

BROADCAST INTERNATIONAL, INC. CORPORATION AND YANG LAN STUDIO LTD

PAGE 21 OF 27

If to the Investor:

Yang Lan Studio Ltd.

Anson Xu

#387, Yongjia Road

Shanghai, 20031

P.R. China

11.6

Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any such term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

11.7

Binding Effect. All the terms and provisions of this Agreement whether so expressed or not, shall be binding upon, inure to the benefit of, and be enforceable by the parties and their respective administrators, executors, legal representatives, heirs, successors and assignees.

11.8

Preparation of Agreement. This Agreement shall not be construed more strongly against any party regardless of who is responsible for its preparation.  The parties acknowledge each contributed and is equally responsible for its preparation.

11.9

Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Utah, without giving effect to applicable principles of conflicts of law.

11.10

Jurisdiction. This Agreement shall be exclusively governed by and construed in accordance with the laws of the State of Utah. If any action is brought among the parties with respect to this Agreement or otherwise, by way of a claim or counterclaim, the parties agree that in any such action, and on all issues, the parties irrevocably waive their right to a trial by jury. Exclusive jurisdiction and venue for any such action shall be the Federal Courts serving the State of Utah. In the event suit or action is brought by any party under this Agreement to enforce any of its terms, or in any appeal therefrom, it is agreed that the prevailing party shall be entitled to reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or appellate court.

11.11

Preparation and Filing of Securities and Exchange Commission filings. The Investor shall reasonably assist and cooperate with the Company in the preparation of all filings with the SEC after the Closing Date due after the Closing Date.  

STOCK PURCHASE AGREEMENT BETWEEN

BROADCAST INTERNATIONAL, INC. CORPORATION AND YANG LAN STUDIO LTD

PAGE 22 OF 27

11.12

Further Assurances, Cooperation. Each party shall, upon reasonable request by the other party, execute and deliver any additional documents necessary or desirable to complete the transactions herein pursuant to and in the manner contemplated by this Agreement.  The parties hereto agree to cooperate and use their respective best efforts to consummate the transactions contemplated by this Agreement.

11.13

Survival. The representations, warranties, covenants and agreements made herein shall survive the Closing of the transaction contemplated hereby.

11.14

Third Parties. Except as disclosed in this Agreement, nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the parties hereto and their respective administrators, executors, legal representatives, heirs, successors and assignees.  Nothing in this Agreement is intended to relieve or discharge the obligation or liability of any third persons to any party to this Agreement, nor shall any provision give any third persons any right of subrogation or action over or against any party to this Agreement.

11.15

Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement herein, nor shall nay single or partial exercise of any such right preclude other or further exercise thereof or of any other right.  All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

11.16

Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.  

[SIGNATURES ON FOLLOWING PAGE]

STOCK PURCHASE AGREEMENT BETWEEN

BROADCAST INTERNATIONAL, INC. CORPORATION AND YANG LAN STUDIO LTD

PAGE 23 OF 27

IN WITNESS WHEREOF, the Investors and the Company have as of the date first written above executed this Agreement.

THE COMPANY:

BROADCAST INTERNATIONAL, INC

/s/ Rodney M. Tiede

By:

Rodney M. Tiede

Title:

President

INVESTOR:

YANG LAN STUDIO LTD.

/s/ Bruno Wu

By:

Bruno Wu

Title:

President

STOCK PURCHASE AGREEMENT BETWEEN

BROADCAST INTERNATIONAL, INC. CORPORATION AND YANG LAN STUDIO LTD

PAGE 24 OF 27

Exhibit A

Registration Rights Agreement

STOCK PURCHASE AGREEMENT BETWEEN

BROADCAST INTERNATIONAL, INC. CORPORATION AND YANG LAN STUDIO LTD

PAGE 25 OF 27

Exhibit B

Warrants

STOCK PURCHASE AGREEMENT BETWEEN

BROADCAST INTERNATIONAL, INC. CORPORATION AND YANG LAN STUDIO LTD

PAGE 26 OF 27

Exhibit C

Escrow Agreement

STOCK PURCHASE AGREEMENT BETWEEN

BROADCAST INTERNATIONAL, INC. CORPORATION AND YANG LAN STUDIO LTD

PAGE 27 OF 27

EX-10.2

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.

IN ADDITION, A STOCK PURCHASE AGREEMENT DATED AS OF AUGUST 15, 2006 (THE “PURCHASE AGREEMENT”), A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THIS WARRANT.

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

Broadcast International, Inc.

COMMON STOCK PURCHASE WARRANT “A”

Number of Shares:  750,000

Original Issue Date:  August 15 , 2006

Expiration Date:  August 15,  2011, or such earlier date as provided herein.

Exercise Price per Share: $1.60

Holder

Yang Lan Studio Ltd.

#387, Yongjia  Road,

Shanghai, 20031, P.R. China

Broadcast International, Inc, a company organized and existing under the laws of the State of Utah (the “Company”), hereby certifies that, for value received, YANG LAN STUDIO LTD., or its registered assigns (the “Warrant Holder”), is entitled, subject to the terms set forth below, to purchase from the Company up to Seven Hundred Fifty Thousand (750,000) shares (as adjusted from time to time as provided in Section 7, the “Warrant Shares”) of common stock, $.05 par value (the “Common Stock”), of the

Company at a price of One Dollar And Sixty Cents ($1.60) per Warrant Share (as adjusted from time to time as provided in Section 7, the “Exercise Price”), at any time and from time to time from and after the date thereof and through and including 5:00 p.m. New York City time on August 15, 2011 (or twelve months of effectiveness of a Registration Statement subsequent to the issuance hereof (such twelve months to be extended by one month for each month or portion of a month during which a Registration Statement’s effectiveness has lapsed or been suspended), whichever is shorter) (the “Expiration Date”), and subject to the following terms and conditions:

1.

Registration of Warrant.  The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Warrant Holder hereof from time to time.  The Company may deem and treat the registered Warrant Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Warrant Holder, and for all other purposes, and the Company shall not be affected by notice to the contrary.

2.

Investment Representation.  The Warrant Holder by accepting this Warrant represents that the Warrant Holder is acquiring this Warrant for its own account or the account of an affiliate for investment purposes and not with the view to any offering or distribution and that the Warrant Holder will not sell or otherwise dispose of this Warrant or the underlying Warrant Shares in violation of applicable securities laws.  The Warrant Holder acknowledges that the certificates representing any Warrant Shares will bear a legend indicating that they have not been registered under the United States Securities Act of 1933, as amended (the “1933 Act”) and may not be sold by the Warrant Holder except pursuant to an effective registration statement or pursuant to an exemption from registration requirements of the 1933 Act and in accordance with federal and state se curities laws.  If this Warrant was acquired by the Warrant Holder pursuant to the exemption from the registration requirements of the 1933 Act afforded by Regulation S thereunder, the Warrant Holder acknowledges and covenants that this Warrant may not be exercised by or on behalf of a Person during the one year distribution compliance period (as defined in Regulation S) following the date hereof.  “Person” means an individual, partnership, firm, limited liability company, trust, joint venture, association, corporation, or any other legal entity.

3.

Validity of Warrant and Issue of Shares.  The Company represents and warrants that this Warrant has been duly authorized and validly issued and warrants and agrees that all of Common Stock that may be issued upon the exercise of the rights represented by this Warrant will, when issued upon such exercise, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.  The Company further warrants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved a sufficient number of Common Stock to provide for the exercise of the rights represented by this Warrant.

4.

Registration of Transfers and Exchange of Warrants.

2

a.

Subject to compliance with the legend set forth on the face of this Warrant, the Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant with the Form of Assignment attached hereto duly completed and signed, to the Company at the office specified in or pursuant to Section 12.  Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Warrant Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance of such transferee of all of the rights a nd obligations of a Warrant Holder of a Warrant.

b.

This Warrant is exchangeable, upon the surrender hereof by the Warrant Holder to the office of the Company specified in or pursuant to Section 9 for one or more New Warrants, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased hereunder.  Any such New Warrant will be dated the date of such exchange.

5.

Exercise of Warrants.

a.

Upon surrender of this Warrant with the Form of Election to Purchase attached hereto duly completed and signed to the Company, at its address set forth in Section 12, and upon payment and delivery of the Exercise Price per Warrant Share multiplied by the number of Warrant Shares that the Warrant Holder intends to purchase hereunder, in lawful money of the United States of America, in cash or by certified or official bank check or checks, to the Company, all as specified by the Warrant Holder in the Form of Election to Purchase, the Company shall promptly (but in no event later than 7 business days after the Date of Exercise (as defined herein)) issue or cause to be issued  and cause to be delivered to or upon the written order of the Warrant Holder and in such name or names as the Warrant Holder may designate (subject to the restrictions on transfer described in the legend set forth on the fa ce of this Warrant), a certificate for the Warrant Shares issuable upon such exercise, with such restrictive legend as required by the 1933 Act.  Any person so designated by the Warrant Holder to receive Warrant Shares shall be deemed to have become holder of record of such Warrant Shares as of the Date of Exercise of this Warrant.

b.

A “Date of Exercise” means the date on which the Company shall have received (i) this Warrant (or any New Warrant, as applicable), with the Form of Election to Purchase attached hereto (or attached to such New Warrant) appropriately completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares so indicated by the Warrant Holder to be purchased.

c.

This Warrant shall be exercisable at any time and from time to time for such number of Warrant Shares as is indicated in the attached Form of Election To Purchase.  If less than all of the Warrant Shares which may be purchased under this Warrant are exercised at any time, the Company shall issue or cause to be issued, at its

3

expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares for which no exercise has been evidenced by this Warrant.

6.

Adjustment of Exercise Price and Number of Shares.  The character of the shares of stock or other securities at the time issuable upon exercise of this Warrant and the Exercise Price therefore, are subject to adjustment upon the occurrence of the following events, and all such adjustments shall be cumulative:

a.

Adjustment for Stock Splits, Stock Dividends, Recapitalizations, Etc.  The Exercise Price of this Warrant and the number of shares of Common Stock or other securities at the time issuable upon exercise of this Warrant shall be appropriately adjusted to reflect any stock dividend, stock split, combination of shares, reclassification, recapitalization or other similar event affecting the number of outstanding shares of stock or securities.

b.

Adjustment for Reorganization, Consolidation, Merger, Etc.  In case of any consolidation or merger of the Company with or into any other corporation, entity or person, or any other corporate reorganization, in which the Company shall not be the continuing or surviving entity of such consolidation, merger or reorganization (any such transaction being hereinafter referred to as a "Reorganization"), then, in each case, the holder of this Warrant, on exercise hereof at any time after the consummation or effective date of such Reorganization (the "Effective Date"), shall receive, in lieu of the shares of stock or other securities at any time issuable upon the exercise of the Warrant issuable on such exercise prior to the Effective Date, the stock and other securities and property (including cash) to which such holder would have been ent itled upon the Effective Date if such holder had exercised this Warrant immediately prior thereto (all subject to further adjustment as provided in this Warrant).

c.

Certificate as to Adjustments.  In case of any adjustment or readjustment in the price or kind of securities issuable on the exercise of this Warrant, the Company will promptly give written notice thereof to the holder of this Warrant in the form of a certificate, certified and confirmed by the Board of Directors of the Company, setting forth such adjustment or readjustment and showing in reasonable detail the facts upon which such adjustment or readjustment is based.

7.

Fractional Shares.  The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant.  The number of full Warrant Shares that shall be issuable upon the exercise of this Warrant shall be computed on the basis of the aggregate number of Warrants Shares purchasable on exercise of this Warrant so presented.  If any fraction of a Warrant Share would, except for the provisions of this Section 8, be issuable on the exercise of this Warrant, the Company shall, at its option, (i) pay an amount in cash equal to the Exercise Price multiplied by such fraction or (ii) round the number of Warrant Shares issuable, up to the next whole number.

8.

Call by the Company.  If, during the period from the date of six months and one day after the date of initial issuance of this Warrant to expiration date of the

4

Warrant, the closing public market price of the Company’s common stock is equal to or in excess of $4.00 for a period of thirty (30) consecutive Trading Days and there is an effective Registration Statement covering the shares of Common Stock underlying this Warrant (“Automatic Exercise”) during such thirty (30) consecutive day period, the Company shall provide the Holder with notice of such Automatic Exercise (“Automatic Exercise Notice”).  Upon receipt of the Automatic Exercise Notice, the Holder must (i) exercise, in whole, this Warrant within forty-five (45) days; or (ii) notify the Company of its intent to transfer this Warrant pursuant to Section 4 of this Warrant.  In the event Holder elects to transfer this Warrant pursuant to Section 4 of this Warrant, then the subsequent holder of this Warrant must exercise this Warrant on or b efore the forty-fifth (45) day after notification of intent to transfer this Warrant.  In the event that this Warrant is exercised, the Holder must deliver to the Company at its office at 7050 Union Park Ave Suite 600 Salt Lake City UT 84047  on or before 5:00 p.m., Eastern Time, on the required date, (i) Form of Election to Purchase properly executed and completed by Holder or an authorized officer thereof, (ii) a check or wire payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant.  If the Holder does not exercise this Warrant within forty-five (45) days from receipt of the Automatic Exercise Notice or, in the event that this Warrant has been transferred pursuant to Section 4 of this Warrant, the subsequent holder of this Warrant does not exercise this Warrant within forty-five (45) days after notification of intent to transfer this Warrant, then this Warr ant will expire.  

9.

Sale or Merger of the Company.  Upon a Change in Control, the restriction contained in Section 6 shall immediately be released and the Warrant Holder will have the right to exercise this Warrant concurrently with such Change in Control event.  For purposes of this Warrant, the term “Change in Control” shall mean a consolidation or merger of the Company with or into another company or entity in which the Company is not the surviving entity or the sale of all or substantially all of the assets of the Company to another company or entity not controlled by the then existing stockholders of the Company in a transaction or series of transactions.

10.

Notice of Intent to Sell or Merge the Company.  The Company will give Warrant Holder ten (10) business days notice before the event of a sale of all or substantially all of the assets of the Company or the merger or consolidation of the Company in a transaction in which the Company is not the surviving entity.

11.

Issuance of Substitute Warrant. In the event of a merger, consolidation, recapitalization or reorganization of the Company or a reclassification of Company shares of stock, which results in an adjustment to the number of shares subject to this Warrant and/or the Exercise Price hereunder, the Company agrees to issue to the Warrant Holder a substitute Warrant reflecting the adjusted number of shares and/or Exercise Price upon the surrender of this Warrant to the Company.

12.

Notice.  All notices and other communications hereunder shall be in writing and shall be deemed to have been given (i) on the date they are delivered if delivered in person; (ii) on the date initially received if delivered by facsimile

5

transmission followed by registered or certified mail confirmation; (iii) on the date delivered by an overnight courier service; or (iv) on the third business day after it is mailed by registered or certified mail, return receipt requested with postage and other fees prepaid as follows:

If to the Company:

Broadcast International, Inc.

7050 Union Park Ave. Suite 600

Salt Lake City Utah  84047

If to the Warrant Holder:

Yang Lan Studio Ltd.

#387, Yongjia Road,

Shanghai, 200031, P.R. China

13.

Miscellaneous.

a.

This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  This Warrant may be amended only by a writing signed by the Company and the Warrant Holder.

b.

Nothing in this Warrant shall be construed to give to any person or corporation other than the Company and the Warrant Holder any legal or equitable right, remedy or cause of action under this Warrant; this Warrant shall be for the sole and exclusive benefit of the Company and the Warrant Holder.

c.

This Warrant shall be governed by, construed and enforced in accordance with the internal laws of the State of Utah without regard to the principles of conflicts of law thereof.

d.

The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

6

e.

In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceablilty of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonably substitute therefore, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

f.

The Warrant Holder shall not, by virtue hereof, be entitled to any voting or other rights of a shareholder of the Company, either at law or equity, and the rights of the Warrant Holder are limited to those expressed in this Warrant.

[SIGNATURES ON FOLLOWING PAGE]

7

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by the authorized officer as of the date first above stated.

Broadcast International, Inc., a Utah corporation

By:    /s/ Rodney M,  Tiede                                   

Name:  Rodney M.  Tiede

Its:   President and Chief Executive Officer

8

FORM OF ELECTION TO PURCHASE

(To be executed by the Warrant Holder to exercise the right to purchase shares of Common Stock under the foregoing Warrant)

To:  Broadcast International, Inc.:

In accordance with the Warrant enclosed with this Form of Election to Purchase, the undersigned hereby irrevocably elects to purchase ______________ shares of Common Stock (“Common Stock”), $.05 par value, of Broadcast International,  Inc and encloses the warrant and $____ for each Warrant Share being purchased or an aggregate of $________________ in cash or certified or official bank check or checks, which sum represents the aggregate Exercise Price (as defined in the Warrant) together with any applicable taxes payable by the undersigned pursuant to the Warrant.

The undersigned requests that certificates for the shares of Common Stock issuable upon this exercise be issued in the name of:

(Please print name and address)

(Please insert Social Security or Tax Identification Number)

If the number of shares of Common Stock issuable upon this exercise shall not be all of the shares of Common Stock which the undersigned is entitled to purchase in accordance with the enclosed Warrant, the undersigned requests that a New Warrant (as defined in the Warrant) evidencing the right to purchase the shares of Common Stock not issuable pursuant to the exercise evidenced hereby be issued in the name of and delivered to:

(Please print name and address)

Dated:  

Name of Warrant Holder:

(Print)                                                                          .

(By:).                                                                           .                      

(Name:)                                                                       .

(Title:)                                                                        .      

Signature must conform in all respects to name of

Warrant Holder as specified on the face of the

Warrant

9

EX-10.3

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.

IN ADDITION, A STOCK PURCHASE AGREEMENT DATED AS OF AUGUST 15, 2006 (THE “PURCHASE AGREEMENT”), A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THIS WARRANT.

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

Broadcast International, Inc.

COMMON STOCK PURCHASE WARRANT “B”

Number of Shares:  750,000

Original Issue Date:  August 15, 2006

Expiration Date: August 15, 2011, or such earlier date as provided herein.

Exercise Price per Share: $1.75

Holder:

Yang Lan Studio Ltd.

#387, Yongjia Road,

Shanghai, 20031, P.R. China

Broadcast International, Inc, a company organized and existing under the laws of the State of Utah(the “Company”), hereby certifies that, for value received, YANG LAN STUDIO LTD. ., or its registered assigns (the “Warrant Holder”), is entitled, subject to

the terms set forth below, to purchase from the Company up to Seven Hundred Fifty Thousand (750,000) shares (as adjusted from time to time as provided in Section 7, the “Warrant Shares”) of common stock, $.05 value (the “Common Stock”), of the Company at a price of One Dollars and Seventy Five Cents ($1.75) per Warrant Share (as adjusted from time to time as provided in Section 7, the “Exercise Price”), at any time and from time to time from and after the date thereof and through and including 5:00 p.m. New York City time on August 15, 2011 (or twelve months of effectiveness of a Registration Statement subsequent to the issuance hereof (such twelve months to be extended by one month for each month or portion of a month during which a Registration Statement’s effectiveness has lapsed or been suspended), whichever is shorter) (the “Expiration Date”), and subject to the following terms and conditions:

1.

Registration of Warrant.  The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Warrant Holder hereof from time to time.  The Company may deem and treat the registered Warrant Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Warrant Holder, and for all other purposes, and the Company shall not be affected by notice to the contrary.

2.

Investment Representation.  The Warrant Holder by accepting this Warrant represents that the Warrant Holder is acquiring this Warrant for its own account or the account of an affiliate for investment purposes and not with the view to any offering or distribution and that the Warrant Holder will not sell or otherwise dispose of this Warrant or the underlying Warrant Shares in violation of applicable securities laws.  The Warrant Holder acknowledges that the certificates representing any Warrant Shares will bear a legend indicating that they have not been registered under the United States Securities Act of 1933, as amended (the “1933 Act”) and may not be sold by the Warrant Holder except pursuant to an effective registration statement or pursuant to an exemption from registration requirements of the 1933 Act and in accordance with federal and state se curities laws.  If this Warrant was acquired by the Warrant Holder pursuant to the exemption from the registration requirements of the 1933 Act afforded by Regulation S thereunder, the Warrant Holder acknowledges and covenants that this Warrant may not be exercised by or on behalf of a Person during the one year distribution compliance period (as defined in Regulation S) following the date hereof.  “Person” means an individual, partnership, firm, limited liability company, trust, joint venture, association, corporation, or any other legal entity.

3.

Validity of Warrant and Issue of Shares.  The Company represents and warrants that this Warrant has been duly authorized and validly issued and warrants and agrees that all of Common Stock that may be issued upon the exercise of the rights represented by this Warrant will, when issued upon such exercise, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.  The Company further warrants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved a sufficient number of Common Stock to provide for the exercise of the rights represented by this Warrant.

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4.

Registration of Transfers and Exchange of Warrants.

a.

Subject to compliance with the legend set forth on the face of this Warrant, the Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant with the Form of Assignment attached hereto duly completed and signed, to the Company at the office specified in or pursuant to Section 12.  Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Warrant Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance of such transferee of all of the rights a nd obligations of a Warrant Holder of a Warrant.

b.

This Warrant is exchangeable, upon the surrender hereof by the Warrant Holder to the office of the Company specified in or pursuant to Section 9 for one or more New Warrants, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased hereunder.  Any such New Warrant will be dated the date of such exchange.

5.

Exercise of Warrants.

a.

Upon surrender of this Warrant with the Form of Election to Purchase attached hereto duly completed and signed to the Company, at its address set forth in Section 12, and upon payment and delivery of the Exercise Price per Warrant Share multiplied by the number of Warrant Shares that the Warrant Holder intends to purchase hereunder, in lawful money of the United States of America, in cash or by certified or official bank check or checks, to the Company, all as specified by the Warrant Holder in the Form of Election to Purchase, the Company shall promptly (but in no event later than 7 business days after the Date of Exercise (as defined herein)) issue or cause to be issued  and cause to be delivered to or upon the written order of the Warrant Holder and in such name or names as the Warrant Holder may designate (subject to the restrictions on transfer described in the legend set forth on the fa ce of this Warrant), a certificate for the Warrant Shares issuable upon such exercise, with such restrictive legend as required by the 1933 Act.  Any person so designated by the Warrant Holder to receive Warrant Shares shall be deemed to have become holder of record of such Warrant Shares as of the Date of Exercise of this Warrant.

b.

A “Date of Exercise” means the date on which the Company shall have received (i) this Warrant (or any New Warrant, as applicable), with the Form of Election to Purchase attached hereto (or attached to such New Warrant) appropriately completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares so indicated by the Warrant Holder to be purchased.

c.

This Warrant shall be exercisable at any time and from time to time for such number of Warrant Shares as is indicated in the attached Form of Election To Purchase.  If less than all of the Warrant Shares which may be purchased under this

3

Warrant are exercised at any time, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares for which no exercise has been evidenced by this Warrant.

6.

Adjustment of Exercise Price and Number of Shares.  The character of the shares of stock or other securities at the time issuable upon exercise of this Warrant and the Exercise Price therefore, are subject to adjustment upon the occurrence of the following events, and all such adjustments shall be cumulative:

a.

Adjustment for Stock Splits, Stock Dividends, Recapitalizations, Etc.  The Exercise Price of this Warrant and the number of shares of Common Stock or other securities at the time issuable upon exercise of this Warrant shall be appropriately adjusted to reflect any stock dividend, stock split, combination of shares, reclassification, recapitalization or other similar event affecting the number of outstanding shares of stock or securities.

b.

Adjustment for Reorganization, Consolidation, Merger, Etc.  In case of any consolidation or merger of the Company with or into any other corporation, entity or person, or any other corporate reorganization, in which the Company shall not be the continuing or surviving entity of such consolidation, merger or reorganization (any such transaction being hereinafter referred to as a "Reorganization"), then, in each case, the holder of this Warrant, on exercise hereof at any time after the consummation or effective date of such Reorganization (the "Effective Date"), shall receive, in lieu of the shares of stock or other securities at any time issuable upon the exercise of the Warrant issuable on such exercise prior to the Effective Date, the stock and other securities and property (including cash) to which such holder would have been ent itled upon the Effective Date if such holder had exercised this Warrant immediately prior thereto (all subject to further adjustment as provided in this Warrant).

c.

Certificate as to Adjustments.  In case of any adjustment or readjustment in the price or kind of securities issuable on the exercise of this Warrant, the Company will promptly give written notice thereof to the holder of this Warrant in the form of a certificate, certified and confirmed by the Board of Directors of the Company, setting forth such adjustment or readjustment and showing in reasonable detail the facts upon which such adjustment or readjustment is based.

7.

Fractional Shares.  The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant.  The number of full Warrant Shares that shall be issuable upon the exercise of this Warrant shall be computed on the basis of the aggregate number of Warrants Shares purchasable on exercise of this Warrant so presented.  If any fraction of a Warrant Share would, except for the provisions of this Section 8, be issuable on the exercise of this Warrant, the Company shall, at its option, (i) pay an amount in cash equal to the Exercise Price multiplied by such fraction or (ii) round the number of Warrant Shares issuable, up to the next whole number.

4

8.

Call by the Company.  If, during the period from the date of six months and one day after the date of initial issuance of this Warrant to expiration date of the Warrant, the closing public market price of the Company’s common stock is equal to or in excess of $4.70 for a period of thirty (30) consecutive Trading Days and there is an effective Registration Statement covering the shares of Common Stock underlying this Warrant (“Automatic Exercise”) during such thirty (30) consecutive day period, the Company shall provide the Holder with notice of such Automatic Exercise (“Automatic Exercise Notice”).  Upon receipt of the Automatic Exercise Notice, the Holder must (i) exercise, in whole, this Warrant within forty-five (45) days; or (ii) notify the Company of its intent to transfer this Warrant pursuant to Section 4 of this Warrant.  In the event Holder e lects to transfer this Warrant pursuant to Section 4 of this Warrant, then the subsequent holder of this Warrant must exercise this Warrant on or before the forty-fifth (45) day after notification of intent to transfer this Warrant.  In the event that this Warrant is exercised, the Holder must deliver to the Company at its office at7050 Union Park Ave Suite 600 Salt Lake City UT 84047  , on or before 5:00 p.m., Eastern Time, on the required date, (i) Form of Election to Purchase properly executed and completed by Holder or an authorized officer thereof, (ii) a check or wire payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant.  If the Holder does not exercise this Warrant within forty-five (45) days from receipt of the Automatic Exercise Notice or, in the event that this Warrant has been transferred pursuant to Section 4 of this Warrant, the subsequent hol der of this Warrant does not exercise this Warrant within forty-five (45) days after notification of intent to transfer this Warrant, then this Warrant will expire.

9.

Sale or Merger of the Company.  Upon a Change in Control, the restriction contained in Section 6 shall immediately be released and the Warrant Holder will have the right to exercise this Warrant concurrently with such Change in Control event.  For purposes of this Warrant, the term “Change in Control” shall mean a consolidation or merger of the Company with or into another company or entity in which the Company is not the surviving entity or the sale of all or substantially all of the assets of the Company to another company or entity not controlled by the then existing stockholders of the Company in a transaction or series of transactions.

10.

Notice of Intent to Sell or Merge the Company.  The Company will give Warrant Holder ten (10) business days notice before the event of a sale of all or substantially all of the assets of the Company or the merger or consolidation of the Company in a transaction in which the Company is not the surviving entity.

11.

Issuance of Substitute Warrant. In the event of a merger, consolidation, recapitalization or reorganization of the Company or a reclassification of Company shares of stock, which results in an adjustment to the number of shares subject to this Warrant and/or the Exercise Price hereunder, the Company agrees to issue to the Warrant Holder a substitute Warrant reflecting the adjusted number of shares and/or Exercise Price upon the surrender of this Warrant to the Company.

5

12.

Notice.  All notices and other communications hereunder shall be in writing and shall be deemed to have been given (i) on the date they are delivered if delivered in person; (ii) on the date initially received if delivered by facsimile transmission followed by registered or certified mail confirmation; (iii) on the date delivered by an overnight courier service; or (iv) on the third business day after it is mailed by registered or certified mail, return receipt requested with postage and other fees prepaid as follows:

If to the Company:

Broadcast International, Inc.

7050 Union Park Ave. Suite 600

Salt Lake City Utah  84047

If to the Warrant Holder:

Yang Lan Studio Ltd..

#387, Yongjia Road,

Shanghai, 200031, P.R. China

13.

Miscellaneous.

a.

This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  This Warrant may be amended only by a writing signed by the Company and the Warrant Holder.

b.

Nothing in this Warrant shall be construed to give to any person or corporation other than the Company and the Warrant Holder any legal or equitable right, remedy or cause of action under this Warrant; this Warrant shall be for the sole and exclusive benefit of the Company and the Warrant Holder.

c.

This Warrant shall be governed by, construed and enforced in accordance with the internal laws of the State of Utah without regard to the principles of conflicts of law thereof.

6

d.

The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

e.

In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceablilty of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonably substitute therefore, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

f.

The Warrant Holder shall not, by virtue hereof, be entitled to any voting or other rights of a shareholder of the Company, either at law or equity, and the rights of the Warrant Holder are limited to those expressed in this Warrant.

[SIGNATURES ON FOLLOWING PAGE]

7

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by the authorized officer as of the date first above stated.

Broadcast International, Inc., a Utah corporation

By:     /s/ Rodney M. Tiede                                        

Name:  Rodney M. Tiede

Its:   President and Chief Executive Officer

8

FORM OF ELECTION TO PURCHASE

(To be executed by the Warrant Holder to exercise the right to purchase shares of Common Stock under the foregoing Warrant)

To Broadcast International, Inc.:

In accordance with the Warrant enclosed with this Form of Election to Purchase, the undersigned hereby irrevocably elects to purchase ______________ shares of Common Stock (“Common Stock”), $.05 par value, of Broadcast International  Inc and encloses the warrant and $____ for each Warrant Share being purchased or an aggregate of $________________ in cash or certified or official bank check or checks, which sum represents the aggregate Exercise Price (as defined in the Warrant) together with any applicable taxes payable by the undersigned pursuant to the Warrant.

The undersigned requests that certificates for the shares of Common Stock issuable upon this exercise be issued in the name of:

(Please print name and address)

(Please insert Social Security or Tax Identification Number)

If the number of shares of Common Stock issuable upon this exercise shall not be all of the shares of Common Stock which the undersigned is entitled to purchase in accordance with the enclosed Warrant, the undersigned requests that a New Warrant (as defined in the Warrant) evidencing the right to purchase the shares of Common Stock not issuable pursuant to the exercise evidenced hereby be issued in the name of and delivered to:

(Please print name and address)

Dated:  

Name of Warrant Holder:

(Print)

(By:)  

(Name:)  

(Title:)  

Signature must conform in all respects to name of

Warrant Holder as specified on the face of the

Warrant

9

EX-10.4

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.

IN ADDITION, A STOCK PURCHASE AGREEMENT DATED AS OF AUGUST 15, 2006 (THE “PURCHASE AGREEMENT”), A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THIS WARRANT.

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

Broadcast International, Inc.

COMMON STOCK PURCHASE WARRANT “C”

Number of Shares:  2,000,000

Original Issue Date:  August 15, 2006

Expiration Date: August 15, 2011 or such earlier date as provided herein.

Exercise Price per Share: $2.10

Holder:

Yang Lan Studio Ltd..

#387, Yongjia Road,

Shanghai, 20031, P.R. China

Broadcast International, Inc, a company organized and existing under the laws of the State of Utah (the “Company”), hereby certifies that, for value received, YANG LAN STUDIO LTD., or its registered assigns (the “Warrant Holder”), is entitled, subject to the terms set forth below, to purchase from the Company up to Two Million (2,000,000) shares (as adjusted from time to time as provided in Section 7, the “Warrant Shares”) of

common stock, $.05 par value (the “Common Stock”), of the Company at a price of Two Dollars and Ten Cents ($2.10) per Warrant Share (as adjusted from time to time as provided in Section 7, the “Exercise Price”), at any time and from time to time from and after the date thereof and through and including 5:00 p.m. New York City time on August 15, 2011 (or eighteen months of effectiveness of a Registration Statement subsequent to the issuance hereof (such eighteen months to be extended by one month for each month or portion of a month during which a Registration Statement’s effectiveness has lapsed or been suspended), whichever is shorter) (the “Expiration Date”), and subject to the following terms and conditions:

1.

Registration of Warrant.  The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Warrant Holder hereof from time to time.  The Company may deem and treat the registered Warrant Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Warrant Holder, and for all other purposes, and the Company shall not be affected by notice to the contrary.

2.

Investment Representation.  The Warrant Holder by accepting this Warrant represents that the Warrant Holder is acquiring this Warrant for its own account or the account of an affiliate for investment purposes and not with the view to any offering or distribution and that the Warrant Holder will not sell or otherwise dispose of this Warrant or the underlying Warrant Shares in violation of applicable securities laws.  The Warrant Holder acknowledges that the certificates representing any Warrant Shares will bear a legend indicating that they have not been registered under the United States Securities Act of 1933, as amended (the “1933 Act”) and may not be sold by the Warrant Holder except pursuant to an effective registration statement or pursuant to an exemption from registration requirements of the 1933 Act and in accordance with federal and state se curities laws.  If this Warrant was acquired by the Warrant Holder pursuant to the exemption from the registration requirements of the 1933 Act afforded by Regulation S thereunder, the Warrant Holder acknowledges and covenants that this Warrant may not be exercised by or on behalf of a Person during the one year distribution compliance period (as defined in Regulation S) following the date hereof.  “Person” means an individual, partnership, firm, limited liability company, trust, joint venture, association, corporation, or any other legal entity.

3.

Validity of Warrant and Issue of Shares.  The Company represents and warrants that this Warrant has been duly authorized and validly issued and warrants and agrees that all of Common Stock that may be issued upon the exercise of the rights represented by this Warrant will, when issued upon such exercise, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.  The Company further warrants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved a sufficient number of Common Stock to provide for the exercise of the rights represented by this Warrant.

4.

Registration of Transfers and Exchange of Warrants.

2

a.

Subject to compliance with the legend set forth on the face of this Warrant, the Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant with the Form of Assignment attached hereto duly completed and signed, to the Company at the office specified in or pursuant to Section 12.  Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Warrant Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance of such transferee of all of the rights a nd obligations of a Warrant Holder of a Warrant.

b.

This Warrant is exchangeable, upon the surrender hereof by the Warrant Holder to the office of the Company specified in or pursuant to Section 9 for one or more New Warrants, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased hereunder.  Any such New Warrant will be dated the date of such exchange.

5.

Exercise of Warrants.

a.

Upon surrender of this Warrant with the Form of Election to Purchase attached hereto duly completed and signed to the Company, at its address set forth in Section 12, and upon payment and delivery of the Exercise Price per Warrant Share multiplied by the number of Warrant Shares that the Warrant Holder intends to purchase hereunder, in lawful money of the United States of America, in cash or by certified or official bank check or checks, to the Company, all as specified by the Warrant Holder in the Form of Election to Purchase, the Company shall promptly (but in no event later than 7 business days after the Date of Exercise (as defined herein)) issue or cause to be issued  and cause to be delivered to or upon the written order of the Warrant Holder and in such name or names as the Warrant Holder may designate (subject to the restrictions on transfer described in the legend set forth on the fa ce of this Warrant), a certificate for the Warrant Shares issuable upon such exercise, with such restrictive legend as required by the 1933 Act.  Any person so designated by the Warrant Holder to receive Warrant Shares shall be deemed to have become holder of record of such Warrant Shares as of the Date of Exercise of this Warrant.

b.

A “Date of Exercise” means the date on which the Company shall have received (i) this Warrant (or any New Warrant, as applicable), with the Form of Election to Purchase attached hereto (or attached to such New Warrant) appropriately completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares so indicated by the Warrant Holder to be purchased.

c.

This Warrant shall be exercisable at any time and from time to time for such number of Warrant Shares as is indicated in the attached Form of Election To Purchase.  If less than all of the Warrant Shares which may be purchased under this Warrant are exercised at any time, the Company shall issue or cause to be issued, at its

3

expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares for which no exercise has been evidenced by this Warrant.

6.

Adjustment of Exercise Price and Number of Shares.  The character of the shares of stock or other securities at the time issuable upon exercise of this Warrant and the Exercise Price therefore, are subject to adjustment upon the occurrence of the following events, and all such adjustments shall be cumulative:

a.

Adjustment for Stock Splits, Stock Dividends, Recapitalizations, Etc.  The Exercise Price of this Warrant and the number of shares of Common Stock or other securities at the time issuable upon exercise of this Warrant shall be appropriately adjusted to reflect any stock dividend, stock split, combination of shares, reclassification, recapitalization or other similar event affecting the number of outstanding shares of stock or securities.

b.

Adjustment for Reorganization, Consolidation, Merger, Etc.  In case of any consolidation or merger of the Company with or into any other corporation, entity or person, or any other corporate reorganization, in which the Company shall not be the continuing or surviving entity of such consolidation, merger or reorganization (any such transaction being hereinafter referred to as a "Reorganization"), then, in each case, the holder of this Warrant, on exercise hereof at any time after the consummation or effective date of such Reorganization (the "Effective Date"), shall receive, in lieu of the shares of stock or other securities at any time issuable upon the exercise of the Warrant issuable on such exercise prior to the Effective Date, the stock and other securities and property (including cash) to which such holder would have been ent itled upon the Effective Date if such holder had exercised this Warrant immediately prior thereto (all subject to further adjustment as provided in this Warrant).

c.

Certificate as to Adjustments.  In case of any adjustment or readjustment in the price or kind of securities issuable on the exercise of this Warrant, the Company will promptly give written notice thereof to the holder of this Warrant in the form of a certificate, certified and confirmed by the Board of Directors of the Company, setting forth such adjustment or readjustment and showing in reasonable detail the facts upon which such adjustment or readjustment is based.

7.

Fractional Shares.  The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant.  The number of full Warrant Shares that shall be issuable upon the exercise of this Warrant shall be computed on the basis of the aggregate number of Warrants Shares purchasable on exercise of this Warrant so presented.  If any fraction of a Warrant Share would, except for the provisions of this Section 8, be issuable on the exercise of this Warrant, the Company shall, at its option, (i) pay an amount in cash equal to the Exercise Price multiplied by such fraction or (ii) round the number of Warrant Shares issuable, up to the next whole number.

8.

Call by the Company.  If, during the period from the date of six months and one day after the date of initial issuance of this Warrant to expiration date of the

4

Warrant, the closing public market price of the Company’s common stock is equal to or in excess of $5.70 for a period of thirty (30) consecutive Trading Days and there is an effective Registration Statement covering the shares of Common Stock underlying this Warrant (“Automatic Exercise”) during such thirty (30) consecutive day period, the Company shall provide the Holder with notice of such Automatic Exercise (“Automatic Exercise Notice”).  Upon receipt of the Automatic Exercise Notice, the Holder must (i) exercise, in whole, this Warrant within forty-five (45) days; or (ii) notify the Company of its intent to transfer this Warrant pursuant to Section 4 of this Warrant.  In the event Holder elects to transfer this Warrant pursuant to Section 4 of this Warrant, then the subsequent holder of this Warrant must exercise this Warrant on or b efore the forty-fifth (45) day after notification of intent to transfer this Warrant.  In the event that this Warrant is exercised, the Holder must deliver to the Company at its office at 7050 Union Park Ave Suite 600 Salt Lake City UT 84047   on or before 5:00 p.m., Eastern Time, on the required date, (i) Form of Election to Purchase properly executed and completed by Holder or an authorized officer thereof, (ii) a check or wire payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant.  If the Holder does not exercise this Warrant within forty-five (45) days from receipt of the Automatic Exercise Notice or, in the event that this Warrant has been transferred pursuant to Section 4 of this Warrant, the subsequent holder of this Warrant does not exercise this Warrant within forty-five (45) days after notification of intent to transfer this Warrant, then thi s Warrant will expire.

9.

Sale or Merger of the Company.  Upon a Change in Control, the restriction contained in Section 6 shall immediately be released and the Warrant Holder will have the right to exercise this Warrant concurrently with such Change in Control event.  For purposes of this Warrant, the term “Change in Control” shall mean a consolidation or merger of the Company with or into another company or entity in which the Company is not the surviving entity or the sale of all or substantially all of the assets of the Company to another company or entity not controlled by the then existing stockholders of the Company in a transaction or series of transactions.

10.

Notice of Intent to Sell or Merge the Company.  The Company will give Warrant Holder ten (10) business days notice before the event of a sale of all or substantially all of the assets of the Company or the merger or consolidation of the Company in a transaction in which the Company is not the surviving entity.

11.

Issuance of Substitute Warrant. In the event of a merger, consolidation, recapitalization or reorganization of the Company or a reclassification of Company shares of stock, which results in an adjustment to the number of shares subject to this Warrant and/or the Exercise Price hereunder, the Company agrees to issue to the Warrant Holder a substitute Warrant reflecting the adjusted number of shares and/or Exercise Price upon the surrender of this Warrant to the Company.

12.

Notice.  All notices and other communications hereunder shall be in writing and shall be deemed to have been given (i) on the date they are delivered if delivered in person; (ii) on the date initially received if delivered by facsimile

5

transmission followed by registered or certified mail confirmation; (iii) on the date delivered by an overnight courier service; or (iv) on the third business day after it is mailed by registered or certified mail, return receipt requested with postage and other fees prepaid as follows:

If to the Company:

Broadcast International, Inc.

7050 Union Park Ave. Suite 600

Salt Lake City Utah  84047

If to the Warrant Holder:

Yang Lan Studio Ltd.

#387, Yongjia Road,

Shanghai, 200031, P.R. China

13.

Miscellaneous.

a.

This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  This Warrant may be amended only by a writing signed by the Company and the Warrant Holder.

b.

Nothing in this Warrant shall be construed to give to any person or corporation other than the Company and the Warrant Holder any legal or equitable right, remedy or cause of action under this Warrant; this Warrant shall be for the sole and exclusive benefit of the Company and the Warrant Holder.

c.

This Warrant shall be governed by, construed and enforced in accordance with the internal laws of the State of Utah without regard to the principles of conflicts of law thereof.

d.

The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

e.

In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceablilty of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision

6

which shall be a commercially reasonably substitute therefore, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

f.

The Warrant Holder shall not, by virtue hereof, be entitled to any voting or other rights of a shareholder of the Company, either at law or equity, and the rights of the Warrant Holder are limited to those expressed in this Warrant.

[SIGNATURES ON FOLLOWING PAGE]

7

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by the authorized officer as of the date first above stated.

Broadcast International, Inc., a Utah corporation

By:    /s/ Rodney M. Tiede                                        

Name: Rodney M. Tiede

Its:   President and Chief Executive Officer

8

FORM OF ELECTION TO PURCHASE

(To be executed by the Warrant Holder to exercise the right to purchase shares of Common Stock under the foregoing Warrant)

To:  Broadcast International, Inc.:

In accordance with the Warrant enclosed with this Form of Election to Purchase, the undersigned hereby irrevocably elects to purchase ______________ shares of Common Stock (“Common Stock”), $.05 par value, of Broadcast International,  Inc and encloses the warrant and $____ for each Warrant Share being purchased or an aggregate of $________________ in cash or certified or official bank check or checks, which sum represents the aggregate Exercise Price (as defined in the Warrant) together with any applicable taxes payable by the undersigned pursuant to the Warrant.

The undersigned requests that certificates for the shares of Common Stock issuable upon this exercise be issued in the name of:

(Please print name and address)

(Please insert Social Security or Tax Identification Number)

If the number of shares of Common Stock issuable upon this exercise shall not be all of the shares of Common Stock which the undersigned is entitled to purchase in accordance with the enclosed Warrant, the undersigned requests that a New Warrant (as defined in the Warrant) evidencing the right to purchase the shares of Common Stock not issuable pursuant to the exercise evidenced hereby be issued in the name of and delivered to:

(Please print name and address)

Dated:  

Name of Warrant Holder:

(Print)

(By:)  

(Name:)  

(Title:)  

Signature must conform in all respects to name of

Warrant Holder as specified on the face of the

Warrant

9

EX-10.5

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.

IN ADDITION, A STOCK PURCHASE AGREEMENT DATED AS OF AUGUST 15, 2006 (THE “PURCHASE AGREEMENT”), A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THIS WARRANT.

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

Broadcast International , Inc.

COMMON STOCK PURCHASE WARRANT “D”

Number of Shares:  2,000,000

Original Issue Date:  August 15, 2006

Expiration Date: August 15, 2011or such earlier date as provided herein

Exercise Price per Share: $3.00

Holder:

Yang Lan Studio Ltd..

#387, Yongjia Road,

Shanghai, 20031, P.R. China

Broadcast International , Inc, a company organized and existing under the laws of the State of Utah (the “Company”), hereby certifies that, for value received, YANG LAN STUDIO LTD., or its registered assigns (the “Warrant Holder”), is entitled, subject to the terms set forth below, to purchase from the Company up to Two Million (2,000,000) shares (as adjusted from time to time as provided in Section 7, the “Warrant Shares”) of

common stock, $.05 par value (the “Common Stock”), of the Company at a price of Three Dollars and No Cents ($3.00) per Warrant Share (as adjusted from time to time as provided in Section 7, the “Exercise Price”), at any time and from time to time from and after the date thereof and through and including 5:00 p.m. New York City time on August 15, 2011 (or twenty four months of effectiveness of a Registration Statement subsequent to the issuance hereof (such twenty four months to be extended by one month for each month or portion of a month during which a Registration Statement’s effectiveness has lapsed or been suspended), whichever is shorter) (the “Expiration Date”), and subject to the following terms and conditions:

1.

Registration of Warrant.  The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Warrant Holder hereof from time to time.  The Company may deem and treat the registered Warrant Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Warrant Holder, and for all other purposes, and the Company shall not be affected by notice to the contrary.

2.

Investment Representation.  The Warrant Holder by accepting this Warrant represents that the Warrant Holder is acquiring this Warrant for its own account or the account of an affiliate for investment purposes and not with the view to any offering or distribution and that the Warrant Holder will not sell or otherwise dispose of this Warrant or the underlying Warrant Shares in violation of applicable securities laws.  The Warrant Holder acknowledges that the certificates representing any Warrant Shares will bear a legend indicating that they have not been registered under the United States Securities Act of 1933, as amended (the “1933 Act”) and may not be sold by the Warrant Holder except pursuant to an effective registration statement or pursuant to an exemption from registration requirements of the 1933 Act and in accordance with federal and state se curities laws.  If this Warrant was acquired by the Warrant Holder pursuant to the exemption from the registration requirements of the 1933 Act afforded by Regulation S thereunder, the Warrant Holder acknowledges and covenants that this Warrant may not be exercised by or on behalf of a Person during the one year distribution compliance period (as defined in Regulation S) following the date hereof.  “Person” means an individual, partnership, firm, limited liability company, trust, joint venture, association, corporation, or any other legal entity.

3.

Validity of Warrant and Issue of Shares.  The Company represents and warrants that this Warrant has been duly authorized and validly issued and warrants and agrees that all of Common Stock that may be issued upon the exercise of the rights represented by this Warrant will, when issued upon such exercise, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.  The Company further warrants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved a sufficient number of Common Stock to provide for the exercise of the rights represented by this Warrant.

4.

Registration of Transfers and Exchange of Warrants.

2

a.

Subject to compliance with the legend set forth on the face of this Warrant, the Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant with the Form of Assignment attached hereto duly completed and signed, to the Company at the office specified in or pursuant to Section 12.  Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Warrant Holder.  The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance of such transferee of all of the rights a nd obligations of a Warrant Holder of a Warrant.

b.

This Warrant is exchangeable, upon the surrender hereof by the Warrant Holder to the office of the Company specified in or pursuant to Section 9 for one or more New Warrants, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased hereunder.  Any such New Warrant will be dated the date of such exchange.

5.

Exercise of Warrants.

a.

Upon surrender of this Warrant with the Form of Election to Purchase attached hereto duly completed and signed to the Company, at its address set forth in Section 12, and upon payment and delivery of the Exercise Price per Warrant Share multiplied by the number of Warrant Shares that the Warrant Holder intends to purchase hereunder, in lawful money of the United States of America, in cash or by certified or official bank check or checks, to the Company, all as specified by the Warrant Holder in the Form of Election to Purchase, the Company shall promptly (but in no event later than 7 business days after the Date of Exercise (as defined herein)) issue or cause to be issued  and cause to be delivered to or upon the written order of the Warrant Holder and in such name or names as the Warrant Holder may designate (subject to the restrictions on transfer described in the legend set forth on the fa ce of this Warrant), a certificate for the Warrant Shares issuable upon such exercise, with such restrictive legend as required by the 1933 Act.  Any person so designated by the Warrant Holder to receive Warrant Shares shall be deemed to have become holder of record of such Warrant Shares as of the Date of Exercise of this Warrant.

b.

A “Date of Exercise” means the date on which the Company shall have received (i) this Warrant (or any New Warrant, as applicable), with the Form of Election to Purchase attached hereto (or attached to such New Warrant) appropriately completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares so indicated by the Warrant Holder to be purchased.

c.

This Warrant shall be exercisable at any time and from time to time for such number of Warrant Shares as is indicated in the attached Form of Election To Purchase.  If less than all of the Warrant Shares which may be purchased under this Warrant are exercised at any time, the Company shall issue or cause to be issued, at its

3

expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares for which no exercise has been evidenced by this Warrant.

6.

Adjustment of Exercise Price and Number of Shares.  The character of the shares of stock or other securities at the time issuable upon exercise of this Warrant and the Exercise Price therefore, are subject to adjustment upon the occurrence of the following events, and all such adjustments shall be cumulative:

a.

Adjustment for Stock Splits, Stock Dividends, Recapitalizations, Etc.  The Exercise Price of this Warrant and the number of shares of Common Stock or other securities at the time issuable upon exercise of this Warrant shall be appropriately adjusted to reflect any stock dividend, stock split, combination of shares, reclassification, recapitalization or other similar event affecting the number of outstanding shares of stock or securities.

b.

Adjustment for Reorganization, Consolidation, Merger, Etc.  In case of any consolidation or merger of the Company with or into any other corporation, entity or person, or any other corporate reorganization, in which the Company shall not be the continuing or surviving entity of such consolidation, merger or reorganization (any such transaction being hereinafter referred to as a "Reorganization"), then, in each case, the holder of this Warrant, on exercise hereof at any time after the consummation or effective date of such Reorganization (the "Effective Date"), shall receive, in lieu of the shares of stock or other securities at any time issuable upon the exercise of the Warrant issuable on such exercise prior to the Effective Date, the stock and other securities and property (including cash) to which such holder would have been ent itled upon the Effective Date if such holder had exercised this Warrant immediately prior thereto (all subject to further adjustment as provided in this Warrant).

c.

Certificate as to Adjustments.  In case of any adjustment or readjustment in the price or kind of securities issuable on the exercise of this Warrant, the Company will promptly give written notice thereof to the holder of this Warrant in the form of a certificate, certified and confirmed by the Board of Directors of the Company, setting forth such adjustment or readjustment and showing in reasonable detail the facts upon which such adjustment or readjustment is based.

7.

Fractional Shares.  The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant.  The number of full Warrant Shares that shall be issuable upon the exercise of this Warrant shall be computed on the basis of the aggregate number of Warrants Shares purchasable on exercise of this Warrant so presented.  If any fraction of a Warrant Share would, except for the provisions of this Section 8, be issuable on the exercise of this Warrant, the Company shall, at its option, (i) pay an amount in cash equal to the Exercise Price multiplied by such fraction or (ii) round the number of Warrant Shares issuable, up to the next whole number.

8.

Call by the Company.  If, during the period from the date of six months and one day after the date of initial issuance of this Warrant to expiration date of the

4

Warrant, the closing public market price of the Company’s common stock is equal to or in excess of $7.00 for a period of thirty (30) consecutive Trading Days and there is an effective Registration Statement covering the shares of Common Stock underlying this Warrant (“Automatic Exercise”) during such thirty (30) consecutive day period, the Company shall provide the Holder with notice of such Automatic Exercise (“Automatic Exercise Notice”).  Upon receipt of the Automatic Exercise Notice, the Holder must (i) exercise, in whole, this Warrant within forty-five (45) days; or (ii) notify the Company of its intent to transfer this Warrant pursuant to Section 4 of this Warrant.  In the event Holder elects to transfer this Warrant pursuant to Section 4 of this Warrant, then the subsequent holder of this Warrant must exercise this Warrant on or b efore the forty-fifth (45) day after notification of intent to transfer this Warrant.  In the event that this Warrant is exercised, the Holder must deliver to the Company at its office at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands, on or before 5:00 p.m., Eastern Time, on the required date, (i) Form of Election to Purchase properly executed and completed by Holder or an authorized officer thereof, (ii) a check or wire payable to the order of the Company, in an amount equal to the product of the Exercise Price multiplied by the number of Warrant Shares specified in the Exercise Notice, and (iii) this Warrant.  If the Holder does not exercise this Warrant within forty-five (45) days from receipt of the Automatic Exercise Notice or, in the event that this Warrant has been transferred pursuant to Section 4 of this Warrant, the subsequent holder of this Warrant does not exercise this Warrant within forty-five (45) days after notification of intent to transfe r this Warrant, then this Warrant will expire.  .

9.

Sale or Merger of the Company.  Upon a Change in Control, the restriction contained in Section 6 shall immediately be released and the Warrant Holder will have the right to exercise this Warrant concurrently with such Change in Control event.  For purposes of this Warrant, the term “Change in Control” shall mean a consolidation or merger of the Company with or into another company or entity in which the Company is not the surviving entity or the sale of all or substantially all of the assets of the Company to another company or entity not controlled by the then existing stockholders of the Company in a transaction or series of transactions.

10.

Notice of Intent to Sell or Merge the Company.  The Company will give Warrant Holder ten (10) business days notice before the event of a sale of all or substantially all of the assets of the Company or the merger or consolidation of the Company in a transaction in which the Company is not the surviving entity.

11.

Issuance of Substitute Warrant. In the event of a merger, consolidation, recapitalization or reorganization of the Company or a reclassification of Company shares of stock, which results in an adjustment to the number of shares subject to this Warrant and/or the Exercise Price hereunder, the Company agrees to issue to the Warrant Holder a substitute Warrant reflecting the adjusted number of shares and/or Exercise Price upon the surrender of this Warrant to the Company.

12.

Notice.  All notices and other communications hereunder shall be in writing and shall be deemed to have been given (i) on the date they are delivered if delivered in person; (ii) on the date initially received if delivered by facsimile

5

transmission followed by registered or certified mail confirmation; (iii) on the date delivered by an overnight courier service; or (iv) on the third business day after it is mailed by registered or certified mail, return receipt requested with postage and other fees prepaid as follows:

If to the Company:

Broadcast International, Inc.

7050 Union Park Ave. Suite 600

Salt Lake City Utah  84047

If to the Warrant Holder:

Yang Lan Studio Ltd.

#387, Yongjia Road,

Shanghai, 20031, P.R. China

13.

Miscellaneous.

a.

This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  This Warrant may be amended only by a writing signed by the Company and the Warrant Holder.

b.

Nothing in this Warrant shall be construed to give to any person or corporation other than the Company and the Warrant Holder any legal or equitable right, remedy or cause of action under this Warrant; this Warrant shall be for the sole and exclusive benefit of the Company and the Warrant Holder.

c.

This Warrant shall be governed by, construed and enforced in accordance with the internal laws of the State of Utah without regard to the principles of conflicts of law thereof.

d.

The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

e.

In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceablilty of the remaining

6

terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonably substitute therefore, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

f.

The Warrant Holder shall not, by virtue hereof, be entitled to any voting or other rights of a shareholder of the Company, either at law or equity, and the rights of the Warrant Holder are limited to those expressed in this Warrant.

[SIGNATURES ON FOLLOWING PAGE]

7

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by the authorized officer as of the date first above stated.

Broadcast International , Inc., a Utah corporation

By:  /s/ Rodney M. Tiede                                            

Name:  Rodney M. Tiede

Its:   President and Chief Executive Officer

8

FORM OF ELECTION TO PURCHASE

(To be executed by the Warrant Holder to exercise the right to purchase shares of Common Stock under the foregoing Warrant)

To:  Broadcast International, Inc.:

In accordance with the Warrant enclosed with this Form of Election to Purchase, the undersigned hereby irrevocably elects to purchase ______________ shares of Common Stock (“Common Stock”), $.05 par value, of Broadcast International,  Inc and encloses the warrant and $____ for each Warrant Share being purchased or an aggregate of $________________ in cash or certified or official bank check or checks, which sum represents the aggregate Exercise Price (as defined in the Warrant) together with any applicable taxes payable by the undersigned pursuant to the Warrant.

The undersigned requests that certificates for the shares of Common Stock issuable upon this exercise be issued in the name of:

(Please print name and address)

(Please insert Social Security or Tax Identification Number)

If the number of shares of Common Stock issuable upon this exercise shall not be all of the shares of Common Stock which the undersigned is entitled to purchase in accordance with the enclosed Warrant, the undersigned requests that a New Warrant (as defined in the Warrant) evidencing the right to purchase the shares of Common Stock not issuable pursuant to the exercise evidenced hereby be issued in the name of and delivered to:

(Please print name and address)

Dated:  

Name of Warrant Holder:

(Print)

(By:)  

(Name:)  

(Title:)  

Signature must conform in all respects to name of

Warrant Holder as specified on the face of the

Warrant

9

EX-10.6

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered into as of the 15^th day of August, 2006 by and among Broadcast International, Inc., a corporation organized and existing under the laws of the State of Utah (“Broadcast International” or the “Company”), and Yang Lan Studio Ltd.., a Hong Kong Corporation  (hereinafter referred to as the “Investor”). Unless defined otherwise, capitalized terms herein shall have the identical meaning as in the Stock Purchase Agreement.

PRELIMINARY STATEMENT

WHEREAS, pursuant to the Stock Purchase Agreement, of even date herewith, by and among the Company and the Investor, as part of the consideration, Investor shall receive Stock and Warrants, which upon exercise, in accordance with the terms of the Warrants, entitle the Investor to receive Shares of the Company; and

WHEREAS, the ability of the Investors to sell their Shares of Common Stock is subject to certain restrictions under the 1933 Act; and

WHEREAS, as a condition to the Stock Purchase Agreement, the Company has agreed to provide the Investor with a mechanism that will permit such Investor, subject to a market stand-off agreement, to sell its Shares of Common Stock in the future.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements, and subject to the terms and conditions herein contained, the parties hereto hereby agree as follows:

ARTICLE I

INCORPORATION BY REFERENCE, SUPERSEDER

1.1

Incorporation by Reference.  The foregoing recitals and the Exhibits attached hereto and referred to herein, are hereby acknowledged to be true and accurate, and are incorporated herein by this reference.

1.2

Superseder.  This Agreement, to the extent that it is inconsistent with any other instrument or understanding among the parties governing the affairs of the Company, shall supersede such instrument or understanding to the fullest extent permitted by law.  A copy of this Agreement shall be filed at the Company’s principal office.

ARTICLE II

DEMAND REGISTRATION RIGHTS

2.1

Registrable Securities. Means and includes the Stock and the Shares of the Company underlying the Warrants issued pursuant to the Stock Purchase Agreement and Warrants. As to any particular Registrable Securities, such securities will cease to be Registrable Securities when (a) they have been effectively registered under the 1933 Act and disposed of in accordance with the registration statement covering them, (b) they are or may be freely traded without registration pursuant to Rule 144 under the 1933 Act (or any similar provisions that are then in effect), or (c) they have been otherwise transferred and new certificates for them not bearing a restrictive legend have been issued by the Company and the Company shall not have "stop transfer" instructions against them.  "Shares" shall mean, collectively, the shares of Common Stock of the Company issued pursuant to the Stock Purchase Agreement and those shares of Common Stock of the Company issuable to the Investor upon exercise of the Warrants.

2.2

Registration of Registrable Securities. The Company shall prepare and file within thirty (30) days following the date hereof (the "Filing Date") a registration statement (the "Registration Statement") covering the resale of such number of shares of the Registrable Securities as the Investor shall elect by written notice to the Company, and absent such election, covering the resale of all of the shares of the Registrable Securities. The Company shall use its best efforts to cause the Registration Statement to be declared effective by the SEC on the earlier of (i) 120 days following the Closing Date with respect to the Registration Statement, (ii) ten (10) days following the receipt of a "No Review" or similar letter from the SEC or (iii) the first business day following the day the SEC determines the Registration Statem ent eligible to be declared effective (the "Required Effectiveness Date"). Nothing contained herein shall be deemed to limit the number of Registrable Securities to be registered by the Company hereunder. As a result, should the Registration Statement not relate to the maximum number of Registrable Securities acquired by (or potentially acquirable by) the holders of the Shares of the Company issued to the Investor pursuant to the Stock Purchase Agreement, the Company shall be required to promptly file a separate registration statement (utilizing Rule 462 promulgated under the 1933 Act, where applicable) relating to such Registrable Securities which then remain unregistered. The provisions of this Agreement shall relate to any such separate registration statement as if it were an amendment to the Registration Statement.

2.3

Demand Registration. Subject to the limitations of Section 2.2, at any time and from time to time, the Investor may request the registration under the 1933 Act of all or part of the Registrable Shares then outstanding (a "Demand Registration"). Subject to the conditions of Section 3, the Company shall use its best efforts to file such registration statement under the 1933 Act as promptly as practicable after the date any such request is received by the Company  and to cause such registration statement to be declared effective. The Company shall notify the Investor promptly when any such registration statement has been declared effective.  If more than eighty percent (80%) of the Shares issuable under the Stock Purchase Agreement have been registered or sold, this provision shall expire.

2.4

Registration Statement Form. Registrations under Section 2.2 and Section 2.3 shall be on the appropriate registration form of the SEC as shall permit the disposition of such Registrable Securities in accordance with the intended method or methods of disposition specified in the Registration Statement; provided, however, such intended method of disposition shall not include an underwritten offering of the Registrable Securities.

2.5

Expenses. The Company will pay all Registration expenses in connection with any registration required by under Sections 2.2 and Section 2.3 herein.

2.6

Effective Registration Statement. A registration requested pursuant to Sections 2.2 and Section 2.3 shall not be deemed to have been effected (i) unless a registration statement with respect thereto has become effective within the time period specified herein, provided that a registration which does not become effective after the Company filed a registration statement with respect thereto solely by reason of the refusal to proceed of any holder of Registrable Securities (other than a refusal to proceed based upon the advice of counsel in the form of a letter signed by such counsel and provided to the Company relating to a disclosure matter unrelated to such holder) shall be deemed to have been effected by the Company unless the holders of the Registrable Securities shall have elected to pay all Registration Expenses in connection with such registration, (ii) if, after it has become effective, such registration becomes subject to any stop order, injunction or other order or extraordinary requirement of the SEC or other governmental agency or court for any reason or (iii) if, after it has become effective, such registration ceases to be effective for more than the allowable Black-Out Periods (as defined herein).

2.7

Plan Of Distribution. The Company hereby agrees that the Registration Statement shall include a plan of distribution section reasonably acceptable to the Investor; provided, however, such plan of distribution section shall be modified by the Company so as to not provide for the disposition of the Registrable Securities on the basis of an underwritten offering.

2.8

Liquidated Damages.  If, after six (6) months from the date hereof, in the event the Company does not register Registrable Securities pursuant to the requirements of Section 2.2 herein, or if the Registration Statement filed pursuant to Section 2.2 herein is not declared effective, or if the Registrable Securities are registered pursuant to an effective Registration Statement and such Registration Statement or other Registration Statement(s) demanded by Investor including the Registrable Securities is not effective in the period from four months from the date hereof through two years following the date hereof,  the Company shall, for each such day issue to the Investor, as liquidated damages and not as a penalty, 657 shares of Stock for any such day, such issuance shall be made no later than the tenth business day of the calendar month next succeeding the month in which such day occurs. In addition, if the Company has not filed a registration statement within the thirty day period after closing as specified in Section 2.2, the Company shall, for each such day after thirty days from closing and until the filing of a registration statement, issue to the Purchaser, as liquidated damages and not as a penalty, 657 shares of Stock and for any such day, such payment shall be made no later than the tenth business day of the calendar month next succeeding the month in which such day occurs.  However, in no event shall the Company be required to pay any liquidated damages under this Section 2.8 in an amount exceeding 500,000 shares.

The parties agree that the only damages payable for a violation of the terms of this Agreement with respect to which liquidated damages are expressly provided shall be such liquidated damages.  Nothing shall preclude the Investor from pursuing or obtaining specific performance or other equitable relief with respect to this Agreement.

The parties hereto agree that the liquidated damages provided for in this Section 2.8 constitute a reasonable estimate of the damages that may be incurred by the Investor by reason of the failure of the Registration Statement(s) to be filed or declared effective in accordance with the provisions hereof.

The obligation of the Company terminates when the holder of shares of Registrable Securities no longer holds more than five percent (5%) of its shares of Registrable Securities.

ARTICLE III

INCIDENTAL REGISTRATION RIGHTS

3.1

Right To Include (“Piggy-Back”) Registrable Securities. Provided that the Registrable Securities have not been registered, if at any time after the date hereof but before the second anniversary of the date hereof, the Company proposes to register any of its securities under the 1933 Act (other than by a registration in connection with an acquisition in a manner which would not permit registration of Registrable Securities for sale to the public, on Form S-8, or any successor form thereto, on Form S-4, or any successor form thereto and other than pursuant to Section 2), on an underwritten basis (either best-efforts or firm-commitment), then, the Company will each such time give prompt written notice to all holders of Registrable Securities of its intention to do so and of such holders of Registrable Securities' rights under this Section 3.1. Upon the written req uest of any such holders of Registrable Securities made within ten (10) days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such holders of Registrable Securities and the intended method of disposition thereof), the Company will, subject to the terms of this Agreement, use its commercially reasonable best efforts to effect the registration under the 1933 Act of the Registrable Securities, to the extent requisite to permit the disposition (in accordance with the intended methods thereof as aforesaid) of such Registrable Securities so to be registered, by inclusion of such Registrable Securities in the registration statement which covers the securities which the Company proposes to register, provided that if, at any time after written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason eith er not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to each holders of Registrable Securities and, thereupon, (i) in the case of a  determination not to register, shall be relieved of this obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of any holder or holders of Registrable Securities entitled to do so to request that such registration be effected as a registration under Section 2, and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities, for the same period

as the delay in registering such other securities. No registration effected under this Section 3.1 shall relieve the Company of its obligation to effect any registration upon request under Section 2. The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 3.1. The right provided the Holders of the Registrable Securities pursuant to this Section shall be exercisable at their sole discretion and will in no way limit any of the Company's obligations to pay the Securities according to their terms.

3.2

Priority In Incidental Registrations. If the managing underwriter of the underwritten offering contemplated by this Section 3 shall inform the Company and holders of the Registrable Securities requesting such registration by letter of its belief that the number of securities requested to be included in such registration exceeds the number which can be sold in such offering, then the Company will include in such registration, to the extent of the number which the Company is so advised can be sold in such offering, (i) first securities proposed by the Company to be sold for its own account, and (ii) second Registrable Securities and (iii) securities of other selling security holders requested to be included in such registration.

ARTICLE IV

REGISTRATION PROCEDURES

4.1

Registration Procedures. If and whenever the Company is required to effect the registration of any Registrable Securities under the 1933 Act as provided in Section 2.2 and, as applicable, 2.3, the Company shall, as expeditiously as possible:

(i)

prepare and file with the SEC the Registration Statement, or amendments thereto, to effect such registration (including such audited financial statements as may be required by the 1933 Act or the rules and regulations promulgated thereunder) and thereafter use its commercially reasonable best efforts to cause such registration statement to be declared effective by the SEC, as soon as practicable, but in any event no later than the Required Effectiveness Date (with respect to a registration pursuant to Section 2.2); provided, however, that before filing such registration statement or any amendments thereto, the Company will furnish to the counsel selected by the holders of Registrable Securities which are to be included in such registration, copies of all such documents proposed to be filed;

(ii)

with respect to any registration statement pursuant to Section 2.2 or Section 2.3, prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities covered by such registration statement until the earlier to occur of thirty six (36) months after the date of this Agreement (subject to the right of the Company to suspend the effectiveness thereof for not more than 25 consecutive Trading Days or an aggregate of 25 Trading Days during each year (each a "Black-Out Period")) or such time as all of the securities which are the subject of such registration statement cease to be Registrable

Securities (such period, in each case, the "Registration Maintenance Period").  The Company must notify the Investor within twenty four (24) hours prior to any Black-Out Period;

(iii)

furnish to each holder of Registrable Securities covered by such registration statement such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the 1933 Act, in conformity with the requirements of the 1933 Act, and such other documents, as such holder of Registrable Securities and underwriter, if any, may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such holder of Registrable Securities;

(iv)

use its commercially reasonable best efforts to register or qualify all Registrable Securities and other securities covered by such registration statement under such other U.S. federal or state securities laws or U.S. state blue sky laws as any U.S. holder of Registrable Securities thereof shall reasonably request, to keep such registrations or qualifications in effect for so long as such registration statement remains in effect, and take any other action which may be reasonably necessary to enable such holder of Registrable Securities to consummate the disposition in such jurisdictions of the securities owned by such holder of Registrable Securities, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this subdivision (iv) be obligated to be so qualified or to consent to general service of process in any such jurisdiction;

(v)

use its commercially reasonable best efforts to cause all Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the U.S. holder of Registrable Securities thereof to consummate the disposition of such Registrable Securities;

(vi)

furnish to each holder of Registrable Securities a signed counterpart, addressed to such holder of Registrable Securities, and the underwriters, if any, of an opinion of counsel for the Company, dated the effective date of such registration statement (or, if such registration includes an underwritten public offering, an opinion dated the date of the closing under the underwriting agreement), reasonably satisfactory in form and substance to such holder of Registrable Securities) including that the prospectus and any prospectus supplement forming a part of the Registration Statement does not contain an untrue statement of a material fact or omits a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and

(vii)

notify the Investor and its counsel promptly and confirm such advice in writing promptly after the Company has knowledge thereof:

(a)

when the Registration Statement, the prospectus or any prospectus supplement related thereto or post-effective amendment to the Registration Statement has been filed, and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective;

(b)

of any request by the SEC for amendments or supplements to the Registration Statement or the prospectus or for additional information;

(c)

of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings by any Person for that purpose; and

(d)

of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation or threat of any proceeding for such purpose;

(viii)

notify each holder of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the 1933 Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material facts required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of any such holder of Registrable Securities promptly prepare and furnish to such holder of Registrable Securities a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue s tatement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; use its best efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible moment;

(ix)

otherwise use its commercially reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;

(x)

enter into such agreements and take such other actions as the Investors shall reasonably request in writing (at the expense of the requesting or benefiting Investors) in order to expedite or facilitate the disposition of such Registrable Securities; and

(xi)

use its commercially reasonable best efforts to list all Registrable Securities covered by such registration statement on any securities exchange on which any of the Registrable Securities are then listed.

The Company may require each holder of Registrable Securities as to which any registration is being effected to furnish the Company such information regarding such holder of Registrable Securities and the distribution of such securities as the Company may from time to time reasonably request in writing.

4.2

The Company will not file any registration statement pursuant to Section 2.2 or Section 2.3, or amendment thereto or any prospectus or any supplement thereto to which the Investors shall reasonably object, provided that the Company may file such documents in a form required by law or upon the advice of its counsel.

4.3

The Company represents and warrants to each holder of Registrable Securities that it has obtained all necessary waivers, consents and authorizations necessary to execute this Agreement and consummate the transactions contemplated hereby other than such waivers, consents and/or authorizations specifically contemplated by the Stock Purchase Agreement.

4.4

Each holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the occurrence of any event of the kind described in subdivision (viii) of Section 4.1, such Holder will forthwith discontinue such holder of Registrable Securities’ disposition of Registrable Securities pursuant to the Registration Statement relating to such Registrable Securities until such holder of Registrable Securities’ receipt of the copies of the supplemented or amended prospectus contemplated by subdivision (viii) of Section 4.1 and, if so directed by the Company, will deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the prospectus relating to such Registrable Securities current at the time of receipt of such notice.

ARTICLE V

UNDERWRITTEN OFFERINGS

5.1

Incidental Underwritten Offerings. If the Company at any time proposes to register any of its securities under the 1933 Act as contemplated by Section 3.1 and such securities are to be distributed by or through one or more underwriters, the Company will, if requested by any holder of Registrable Securities as provided in Section 3.1 and subject to the provisions of Section 3.2, use its commercially reasonable best efforts to arrange for such underwriters to include all the Registrable Securities to be offered and sold by such holder among the securities to be distributed by such underwriters.  In no event shall any Investor be deemed an underwriter for purposes of this Agreement.

5.2

Participation In Underwritten Offerings. No holder of Registrable Securities may participate in any underwritten offering under Section 3.1 unless such holder of Registrable Securities (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved, subject to the terms and conditions hereof, by the holders of a majority of Registrable Securities to be included in such underwritten offering and (ii) completes and executes all questionnaires, indemnities, underwriting agreements and other documents (other than powers of attorney) required under the terms of such underwriting arrangements. Notwithstanding the foregoing, no underwriting agreement (or other agreement in connection with such offering) shall require any holder of Registrable Securities to make a representation or warranty to or agreements with the Company or the underwrit ers other than representations and warranties contained in a writing furnished by such holder of Registrable Securities expressly for

use in the related registration statement or representations, warranties or agreements regarding such holder of Registrable Securities, such holder's Registrable Securities and such holder's intended method of distribution and any other representation required by law.

5.3

Preparation; Reasonable Investigation. In connection with the preparation and filing of each registration statement under the 1933 Act pursuant to this Agreement, the Company will give the holders of Registrable Securities registered under such registration statement, and their respective counsel and accountants, the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the SEC, and each amendment thereof or supplement thereto, and will give each of them such access to its books and records and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the reasonable opinion of such holders' and such underwriters' respective counsel, to conduct a reasonable investigation within the meani ng of the 1933 Act.

ARTICLE VI

INDEMNIFICATION

6.1

Indemnification by the Company. In the event of any registration of any securities of the Company under the 1933 Act, the Company will, and hereby does agree to indemnify and hold harmless the holder of any Registrable Securities covered by such registration statement, its directors and officers, each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such holder or any such underwriter within the meaning of the 1933 Act against any losses, claims, damages or liabilities, joint or several, to which such holder or any such director or officer or underwriter or controlling person may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any u ntrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the 1933 Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse such holder and each such director, officer, underwriter and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding, provided that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability, (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission mad e in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such holder or underwriter stating that it is for use in the preparation thereof and, provided further that the

Company shall not be liable to any Person who participates as an underwriter in the offering or sale of Registrable Securities or to any other Person, if any, who controls such underwriter within the meaning of the 1933 Act, in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of such Person's failure to send or give a copy of the final prospectus, as the same may be then supplemented or amended, within the time required by the 1933 Act to the Person asserting the existence of an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such Person if such statement or omission was corrected in such final prospectus or an amendment or supplement thereto. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such holder or any such director, officer, underwriter or controlling person and shall survive the transfer of such securities by such holder.

6.2

Indemnification by the Investor. The Company may require, as a condition to including any Registrable Securities in any registration statement filed pursuant to this Agreement, that the Company shall have received an undertaking satisfactory to it from the prospective holder of such Registrable Securities, to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 6.1) the Company, each director of the Company, each officer of the Company and each other Person, if any, who controls the Company within the meaning of the 1933 Act, with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omissi on was made in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such holder of Registrable Securities specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement. Any such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling person and shall survive the transfer of such securities by such Investor. The indemnification by the Investors shall be limited to Fifty Thousand ($50,000) Dollars.

6.3

Notices Of Claims, Etc. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Sections 6.1 and Section 6.2, such indemnified party will, if  claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action, provided that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Sections 6.1 and Section 6.2, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of s uch claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified, to the extent that the indemnifying party may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. No

indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement of any such action which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability, or a covenant not to sue, in respect to such claim or litigation. No indemnified party shall consent to entry of any judgment or enter into any settlement of any such action the defense of which has been assumed by an indemnifying party without the consent of such indemnifying party.

6.4

Other Indemnification. Indemnification similar to that specified in Sections 6.1 and Section 6.2 (with appropriate modifications) shall be given by the Company and each holder of Registrable Securities (but only if and to the extent required pursuant to the terms herein) with respect to any required registration or other qualification of securities under any Federal or state law or regulation of any governmental authority, other than the 1933 Act.

6.5

Indemnification Payments. The indemnification required by Sections 6.1 and Section 6.2 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 expense, loss, damage or liability is incurred.

6.6

Contribution. If the indemnification provided for in Sections 6.1 and Section 6.2 is unavailable to an indemnified party in respect of any expense, loss, claim, damage or liability referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such expense, loss, claim, damage or liability (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the holder of Registrable Securities or underwriter, as the case may be, on the other from the distribution of the Registrable Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also t he relative fault of the Company on the one hand and of the holder of Registrable Securities or underwriter, as the case may be, on the other in connection with the statements or omissions which resulted in such expense, loss, damage or liability, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the holder of Registrable Securities or underwriter, as the case may be, on the other in connection with the distribution of the Registrable Securities shall be deemed to be in the same proportion as the total net proceeds received by the Company from the initial sale of the Registrable Securities by the Company to the purchasers bear to the gain, if any, realized by all selling holders participating in such offering or the underwriting discounts and commissions received by the underwriter, as the case may be. The relative fault of the Company on the one hand and of the holder of Registrable Securities or underwriter, as the case may be, on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission to state a material fact relates to information supplied by the Company, by the holder of Registrable Securities or by the underwriter and the parties' relative intent, knowledge, access to information supplied by the Company, by the holder of Registrable Securities or by the underwriter and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission, provided that the foregoing contribution agreement shall not inure to the benefit of any indemnified party if indemnification would be unavailable to such indemnified party by reason

of the provisions contained herein, and in no event shall the obligation of any indemnifying party to contribute under this Section 6.6 exceed the amount that such indemnifying party would have been obligated to pay by way of indemnification if the indemnification provided for hereunder had been available under the circumstances.

The Company and the holders of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 6.6 were determined by pro rata allocation (even if the holders of Registrable Securities and any underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth herein, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.

Notwithstanding the provisions of this Section 6.6, no holder of Registrable Securities or underwriter shall be required to contribute any amount in excess of the amount by which (i) in the case of any such holder, the net proceeds received by such holder from the sale of Registrable Securities in the applicable Registration Statement or (ii) in the case of an underwriter, the total price at which the Registrable Securities purchased by it and distributed to the public were offered to the public exceeds, in any such case, the amount of any damages that such holder or underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

ARTICLE VII

RULE 144

7.1

Rule 144. The Company shall file in a timely manner the reports required to be filed by the Company under the 1933 Act and the 1934 Act (including but not limited to the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of Rule 144 adopted by the SEC under the 1933 Act) and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, will, upon the request of any holder of Registrable Securities, make publicly available other information) and will take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the 1933 Act within the limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any holder of Registrable Securities, the Company will deliver to such holder a written statement as to whether it has complied with the requirements of this Section 7.1.

ARTICLE VIII

MISCELLANEOUS

8.1

Amendments And Waivers. This Agreement may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the holder or holders of the sum of the fifty-one percent (51%) or more of the shares of (i) Registrable Securities issued at such time, plus (ii) Registrable Securities issuable upon exercise or conversion of the Securities then constituting derivative securities (if such Securities were not fully exchanged or converted in full as of the date such consent if sought). Each holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any consent authorized by this Section 8.1, whether or not such Registrable Securities shall have been marked to indicate such consent.

8.2

Nominees For Beneficial Owners. In the event that any Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its election, be treated as the holder of such Registrable Securities for purposes of any request or other action by any holder or holders of Registrable Securities pursuant to this Agreement or any determination of any number of percentage of shares of Registrable Securities held by a holder or holders of Registrable Securities contemplated by this Agreement. If the beneficial owner of any Registrable Securities so elects, the Company may require assurances reasonably satisfactory to it of such owner's beneficial ownership or such Registrable Securities.

8.3

Notices. Except as otherwise provided in this Agreement, all notices, requests and other communications to any Person provided for hereunder shall be in writing and shall be given to such Person (a) in the case of a party hereto other than the Company, addressed to such party in the manner set forth in the Stock Purchase Agreement or at such other address as such party shall have furnished to the Company in writing, or (b) in the case of any other holder of Registrable Securities, at the address that such holder shall have furnished to the Company in writing, or, until any such other holder so furnishes to the Company an address, then to and at the address of the last holder of such Registrable Securities who has furnished an address to the Company, or (c) in the case of the Company, at the address set forth on the signature page hereto, to the attention of its President, or at su ch other address, or to the attention of such other officer, as the Company shall have furnished to each holder of Registrable Securities at the time outstanding. Each such notice, request or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mail with first class postage prepaid, addressed as aforesaid or (ii) if given by any other means (including, without limitation, by fax or air courier), when delivered at the address specified above, provided that any such notice, request or communication shall not be effective until received.

8.4

Assignment. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto. In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the parties hereto

other than the Company shall also be for the benefit of and enforceable by any subsequent holder of any Registrable Securities. Each of the Holders of the Registrable Securities agrees, by accepting any portion of the Registrable Securities after the date hereof, to the provisions of this Agreement including, without limitation, appointment of the Investors' Representative to act on behalf of such Holder pursuant to the terms hereof which such actions shall be made in the good faith discretion of the Investors' Representative and be binding on all persons for all purposes.

8.5

Descriptive Headings. The descriptive headings of the several sections and paragraphs of this Agreement are inserted for reference only and shall not limit or otherwise affect the meaning hereof.

8.6

Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Utah, without giving effect to applicable principles of conflicts of law.

8.7

Jurisdiction. This Agreement shall be exclusively governed by and construed in accordance with the laws of the State of Utah. If any action is brought among the parties with respect to this Agreement or otherwise, by way of a claim or counterclaim, the parties agree that in any such action, and on all issues, the parties irrevocably waive their right to a trial by jury. Exclusive jurisdiction and venue for any such action shall be the State or Federal Courts serving the State of Utah. In the event suit or action is brought by any party under this Agreement to enforce any of its terms, or in any appeal therefrom, it is agreed that the prevailing party shall be entitled to reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or appellate court.

8.8

Entire Agreement. This Agreement embodies the entire agreement and understanding between the Company and each other party hereto relating to the subject matter hereof and supercedes all prior agreements and understandings relating to such subject matter.

8.9

Severability. If any provision of this Agreement, or the application of such provisions to any Person or circumstance, shall be held invalid, the remainder of this Agreement, or the application of such provision to Persons or circumstances other than those to which it is held invalid, shall not be affected thereby.

8.10

Binding Effect. All the terms and provisions of this Agreement whether so expressed or not, shall be binding upon, inure to the benefit of, and be enforceable by the parties and their respective administrators, executors, legal representatives, heirs, successors and assignees.

8.11

Preparation of Agreement. This Agreement shall not be construed more strongly against any party regardless of who is responsible for its preparation.  The parties acknowledge each contributed and is equally responsible for its preparation.  

8.12

Failure or Indulgence Not Waiver; Remedies Cumulative.  No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement herein, nor shall nay single or partial exercise of any such right preclude other or further exercise thereof or of any other right.  All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

8.13

Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.  

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the Investors and the Company have as of the date first written above executed this Agreement.

BROADCAST INTERNATIONAL, INC.

/s/ Rodney M. Tiede

By:

Rodney M. Tiede

Title:

President

INVESTOR

YANG LAN STUDIO LTD.

/s/ Bruno Wu

By:

Bruno Wu

Title:

President

EX-10.7

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (“Agreement”) is made as of August 15, 2006 by and between Broadcast International, Inc. (the “Company”); Yang Lan Studio Ltd.. (“YLS”); and DLA Piper Rudnick Gray Cary US, LLP (the "Escrow Agent").

WHEREAS, YLS is purchasing from the Company six hundred sixty-six thousand six hundred sixty-seven (666,667.00) shares of Common Stock of the Company, with such purchase price of One Million($1,000,000.00) Dollars (the “Funds”) to be utilized by the Company as part of the money needed by the Company for acquisitions, working capital and fees; and

WHEREAS, the Company and YLS desire to enter into this Agreement to provide that (i) the Company and YLS shall provide the executed Transaction Documents (as defined below) to the Escrow Agent as of the date of this Agreement, (ii) YLS shall provide the Funds to the Escrow Agent as of the date of this Agreement, (iii) the Escrow Agent shall thereafter hold the Funds and the Transaction Documents pending the closing or the issuance of  Stock in accordance with the terms and provisions of the  Stock Purchase Agreement by and between the Company and YLS (iv) the Escrow Agent shall either release the Funds to the Company upon the satisfaction of the items listed in Sections 3.2 of the  Stock Purchase Agreement of this Agreement or the Escrow Agent shall return the Funds to YLS upon the failure of Company, YLS and Escrow Agent to receive the confirmation of receipt by the Transfer Agent of instructions for the i ssuance of  Stock, and (v) the Escrow Agent shall either release to the Company and YLS the fully executed Transaction Documents in the event the Escrow Agent provides the Funds to the Company, or the Escrow Agent shall destroy the Transaction Documents in the event the Escrow Agent returns the Funds to YLS.

NOW, THEREFORE, in consideration of the covenants and mutual promises contained herein and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged and intending to be legally bound hereby, the parties agree as follows:

ARTICLE 1

TERMS OF THE ESCROW

1.1

The parties hereby agree to have the Peter Astiz of Piper Rudnick Gray Cary US of act as Escrow Agent whereby the Escrow Agent shall receive the Funds in escrow and distribute the same as set forth in this Agreement.  Any capitalized terms not defined herein shall have the meaning ascribed to them in the  Stock Purchase Agreement, dated an even date herewith between the Company and YLS (the “ Stock Purchase Agreement”), and the documents related thereto, with this Agreement being an exhibit to such  Stock Purchase Agreement.  The various documents and instruments to be delivered to the Escrow Agent and thereby to the parties in order to close the transaction are set forth in Section 3.2 and 3.3 of the

Purchase Agreement (collectively, the “Transaction Documents”).  The Escrow Agent hereby acknowledges that it is familiar with the terms and provisions of the Purchase Agreement.

1.2

Upon the execution of this Agreement, the Company and YLS shall deliver the executed Transaction Documents to the Escrow Agent as of the date of this Agreement and YLS shall submit a wire or check in the amount of the Funds to the Escrow Agent.  The Escrow Agent shall thereafter hold the Funds and the Transaction Documents until the first to occur of (a) such time that the Escrow Agent has received written instructions from YLS to release the funds from Escrow to the Company or (b) Outside Date.  Upon receipt of written instructions from YLS to release the funds from Escrow to the Company, the Escrow Agent shall deliver signed counterparts of the Transaction Documents to YLS and the Company and disburse the Funds to the Company.  If confirmation of the Transfer Instruction is not delivered by August 31^st, 2006, upon delivery thereon or thereafter to the Escrow Agent of written notice from YLS, the Escrow Agent shall immediately return the Funds and the Transaction Documents signed by YLS to YLS and return to the Company the Transaction Documents signed by the Company.

1.3

Upon the completion by the Escrow Agent of its obligations under Section 1.2, this Agreement shall terminate and the Escrow Agent shall have no further liability hereunder.

1.4

This Agreement may be altered or amended only with the written consent of all of the parties hereto.  In the event the Company or YLS attempts to change this Agreement in a manner, which, in the Escrow Agent’s discretion, shall be undesirable, the Escrow Agent may resign as Escrow Agent by notifying the Company and YLS in writing.  In the case of the Escrow Agent’s resignation, the only duty of the Escrow Agent, until receipt of a joint written notice from the Company and YLS (the “Transfer Instructions”) that a successor escrow agent has been appointed, shall be to hold and preserve the Funds and the Transaction Documents that are in its possession.  Upon receipt by the Escrow Agent of said notice from the Company and YLS of the appointment of a successor escrow agent, the name of a successor escrow account and a direction to transfer the Funds to such successor escrow account to be the reafter held by such successor escrow agent, the Escrow Agent shall promptly thereafter transfer the Funds and deliver the Transaction Documents to said successor escrow agent.  Immediately after said transfer of the Funds and delivery of the Transaction Documents to said successor escrow agent, the Escrow Agent shall furnish the Company and YLS with proof of such transfer.  The Escrow Agent is authorized to disregard any notices, requests, instructions or demands received by it from the Company and YLS after notice of resignation has been given, except only for the Transfer Instructions.

1.5

The Escrow Agent shall be reimbursed by the Company for any reasonable expenses incurred in the event there is a conflict between the parties and the Escrow Agent shall deem it necessary to retain counsel, upon whose advice the Escrow Agent may rely.  The Escrow Agent shall not be liable for any action taken or omitted by the Escrow Agent in good faith and in no event shall the Escrow Agent be liable or responsible except for the Escrow Agent’s own gross negligence or willful misconduct.  The Escrow Agent has made no representations or warranties to the Company or YLS in connection with this transaction. The Escrow Agent has no liability hereunder to either party other than to hold the Funds received

2

from YLS and to deliver the Funds under the terms hereof.  The Company and YLS each agrees to indemnify and hold harmless the Escrow Agent from and with respect to any suits, claims, actions or liabilities arising in any way out of this transaction, including the obligation to defend any legal action brought which in any way arises out of or is related to this Agreement.  The parties each and all acknowledge and recognize that the Escrow Agent has also served and shall continue to serve as the legal counsel to the Company and the parties each and all waive any claim of any conflict of interest as a result thereof.

1.6

The Escrow Agent shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by the Escrow Agent to be genuine and to have been signed or presented by the proper party or parties.  The Escrow Agent shall not be personally liable for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent while acting in good faith, and any act done or omitted by the Escrow Agent pursuant to the advice of the Escrow Agent's attorneys-at-law shall be conclusive evidence of such good faith.  

1.7

The Escrow Agent is hereby expressly authorized to disregard any and all warnings or orders given by any of the parties hereto or by any other person or corporation, excepting only the Transfer Instructions, the termination notice of YLS provided for in Section 1.2 above and/or orders or process of courts of law and is hereby expressly authorized to comply with and obey orders, judgments or decrees of any court.  In case the Escrow Agent obeys or complies with any such order, judgment or decree, including but not limited to the Transfer Instructions, then the Escrow Agent shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such decree or orders being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

1.8

The Escrow Agent shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

1.9

If the Escrow Agent reasonably requires other or further documents in connection with this Agreement, the necessary parties hereto shall join in furnishing such documents.

1.10

It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the Funds and/or the Transaction Documents held by the Escrow Agent hereunder, the Escrow Agent is authorized and directed in the Escrow Agent's sole discretion (a) to retain the Funds and the Transaction Documents in the Escrow Agent's possession, without liability to anyone, until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but the Escrow Agent shall be under no duty whatsoever to institute or defend any such proceedings or (b) to deliver the Funds and the Transaction Documents held by the Escrow Agent hereunder to a state or federal court having competent

3

subject matter jurisdiction and located in the District of Columbia in accordance with the applicable procedure therefor.

ARTICLE 2

MISCELLANEOUS

2.1  

No waiver of any breach of any covenant or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision herein contained.  No extension of time for performance of any obligation or act shall be deemed any extension of the time for performance of any other obligation or act.

2.2

This Agreement shall be binding upon and shall inure to the benefit of the permitted successors and assigns of the parties hereto.

2.3

This Agreement is the final expression of, and contains the entire agreement between, the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto.  This Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived, except by written instrument signed by the parties to be charged or by its agent duly authorized in writing or as otherwise expressly permitted herein.

2.4

Whenever required by the context of this Agreement, the singular shall include the plural and masculine shall include the feminine.  This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument.  Execution and delivery of this Agreement by exchange of facsimile copies bearing the facsimile signature of a party shall constitute a valid and binding execution and delivery of this Agreement by such party.  Such facsimile copies shall constitute enforceable original documents.

2.5

(a)

This Agreement shall be governed and construed in accordance with the laws of the State of Utah without regard to any applicable principles of conflicts of law.

(b)

ANY ACTION OR PROCEEDING SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY RIGHT ARISING OUT OF, THIS AGREEMENT SHALL BE BROUGHT AGAINST ANY OF THE PARTIES HERETO IN THE APPROPRIATE FEDERAL OR STATE COURT LOCATED IN THE STATE OF UTAH, WITH EACH PARTY HERETO AGREEING TO SUBJECT MATTER JURISDICTION, PERSONAL JURISDICTION AND VENUE IN SUCH COURT.  EACH OF THE PARTIES HERETO CONSENTS TO THIS JURISDICTION PROVISION IN ANY SUCH ACTION OR PROCEEDING AND WAIVES ANY OBJECTION TO VENUE LAID THEREIN.  PROCESS IN ANY ACTION OR PROCEEDING REFERRED TO IN THE PRECEDING SENTENCE MAY BE SERVED ON ANY PARTY HERETO ANYWHERE IN THE WORLD.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS RIGHTS TO TRIAL BY JURY.

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2.6

All notices and other communications hereunder shall be in writing (and shall be deemed given upon receipt) if delivered personally, telecopied (which is confirmed), mailed by registered or certified mail (return receipt requested), or delivered by a national overnight delivery service (e.g., Federal Express) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

If to the Company, to:
Broadcast International, Inc., 7050 Union Park Ave. Suite 600 Salt Lake City Utah 84047 Attn: Rodney Tiede If to YLS, to:
Yang Lan Studio Ltd.
.#387, Yongjia Road, Shanghai, 200031, P.R. China

If to the Escrow Agent:

DLA PIPER RUDNICK GRAY CARY US LLP

Attn:  Peter Astiz, Esq.

2.7

By signing this Agreement, the Escrow Agent becomes a party hereto only for the purpose of this Agreement; the Escrow Agent does not become a party to the Transaction Documents.

2.8

Each party acknowledges and agrees that this Agreement shall not be deemed prepared or drafted by any one party.  In the event of any dispute between the parties concerning this Agreement, the parties agree that any rule of construction, to the effect that any ambiguity in the language of the Agreement is to be resolved against the drafting party, shall not apply.

2.9

This Agreement may be executed in counterparts, each one of which will constitute an original and all of which taken together will constitute one document.  This Agreement may be executed by delivery of a signed signature page by fax to the other parties hereto and such fax execution and delivery will be valid in all respects.

[Signatures appear on the following page]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

ATTEST:  

 Broadcast International, Inc.

   /s/ Rodney Tiede                                     

By   /s/ Reed Benson     

Reed Benson,  Secretary

 Rodney Tiede, Chief Executive Officer

YANG LAN STUDIO LTD.

By:  /s/ Bruno Wu

Name: Bruno Wu, President

Witness: /s/ Chaucey Shey    

Chaucey Shey, Witness

ESCROW AGENT:

DLA PIPER RUDNICK GRAY CARY US, LLP

By:__________________________________

     ____________________, Partner

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EX-10.8

STOCK EXCHANGE AGREEMENT

This Stock Exchange Agreement dated August 15, 2006 (the “Agreement”) is effective as of the Effective Date (as defined below) by and between Broadcast International, Inc., a Utah corporation (“Broadcast”) and Sun Media Investment Holdings Ltd., a British Virgin Islands corporation (“Sun Media”).

BACKGROUND

WHEREAS, the Parties desire to effect an exchange of equity securities in each other to promote cooperation in pursuing joint business opportunities and to be able to share in the relative success of each Party through such equity participation.

AGREEMENT

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1.

1.01 ISSUANCE OF BROADCAST SHARES.  In consideration for Sun Media entering into this Agreement, Broadcast hereby issues to Sun Media 3,000,000 restricted shares of Broadcast’s Common Stock, par value $0.05 per share (the “Broadcast Shares”).  Broadcast shall deliver a stock certificate representing the Broadcast Shares to Sun Media within twenty (20) days of the Effective Date.  Broadcast will authorize and reserve, free of preemptive rights and other similar contractual rights of shareholders, a sufficient number of its authorized but unissued shares of its Common Stock for the issuance of the Broadcast Shares to Sun Media.

1.02  BOARD REPRESENTATION.  Broadcast agrees that in consideration of this Agreement, that it will nominate  Dr. Bruno Wu to join the Broadcast Board of Directors.  Immediately after the Effective Date, Dr. Wu shall be appointed to serve on the Board of Directors.  Each year thereafter for a period of three years, Dr. Wu shall be included with the Board of Directors’ slate of directors, which is to stand for election at Broadcast’s next annual shareholder meeting.

SECTION 2.

TRANSFER OF SUN MEDIA SHARES.   In consideration for Broadcast entering into this Agreement, Sun Media hereby transfers to Broadcast 1,515,544 restricted shares of Common Stock , par value $0.05 per share, in the capital of Sun New Media Inc., a Minnesota corporation traded on OTCBB (the “Sun Media Shares”).  Sun Media shall deliver a stock certificate representing the Sun Media Shares to Broadcast within twenty (20) days of the Effective Date.  

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SECTION 3

CONDITIONS PRECEDENT AND DELIVERABLES

The Parties shall procure the approval of  Sun Media’s Board of Directors being obtained for (i) Sun Media’s entry into this Agreement;  (ii) the transaction contemplated under this Agreement; and(iii) the transfer of Sun Media Shares hereunder(the “Sun Media Board Approvals”). Unless specifically waived by Sun Media, if any of the Sun Media Board Approvals shall not be obtained on or before September 1^st, 2006 or not waived in writing by a duly authorized representative of Sun Media by September 1^st, 2006, this Agreement shall ipso facto cease and determine and none of the Parties shall have any claim against the other for costs, damages, compensation or otherwise, save for any claim arising from an antecedent breach of this Agreement. The Parties’ obligation of confidentiality shall survive the termination of this Agreement.

Broadcast has delivered to Sun Media each of the following documents, the delivery of each of which is a condition to Sun Media’s obligations under this Agreement:

(a)

a copy of the  License Agreement regarding YL Studio Technologies executed by Broadcast;  Provided, however, in the event the License Agreement is not consummated for any reason, such failure to finalize the licensing relationship shall not constitute a breach of this Agreement.

(b)        a copy of the License Agreement regarding IPTV Platform Technology executed by Broadcast; Provided, however, in the event the License Agreement is not consummated for any reason, such failure to finalize the purchase referred to therein shall not constitute a breach of this Agreement.

(c)         a copy of the Stock Purchase Agreement executed by Broadcast; Provided, however, in the event the Sale and Purchase Agreement is not consummated for any reason, such failure to finalize the purchase referred to therein shall not constitute a breach of this Agreement.

(d)       a certificate executed by an officer of Broadcast certifying that the representations and warranties of Broadcast are true and correct and that all actions required to be taken by  Broadcast prior to the Effective Date have been or will be taken;

(e)

a copy of the resolutions of the Board authorizing the execution and performance of this Agreement;

(f)

a copy of the Broadcast’s current bylaws;

(g)

a copy of the Broadcast’s current articles of incorporation;

(h)

a copy of the stock certificate representing the Broadcast Shares to be issued to Sun Media on the Effective Date;

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(h)

a lock-up agreement executed by an officer of Broadcast  in the form attached hereto as Exhibit A; and

(i)

a copy of the Subscription Agreement executed by Broadcast.

Sun Media has delivered to the Broadcast each of the following documents, the delivery of which is a condition to the Broadcast’s obligations under this Agreement:

(i)

a certificate executed by an officer of Sun Media certifying that the representations and warranties of Sun Media are true and correct and that all actions required to be taken by  Sun Media prior to the Effective Date have been or will be taken;

(ii)

a copy of the resolutions of the Board authorizing the execution and performance of this Agreement;

(iii)

a copy of the Sun New Media’s current bylaws;

(iv)

a copy of the Sun New Media’s current articles of incorporation;

(v)

a copy of the stock certificate representing the Sun Media Shares to be issued to Broadcast on the Effective Date;

(vi)

a lock-up agreement executed by an officer of Sun Media in the form attached hereto as Exhibit B; and

(vii)

a copy of the Subscription Agreement executed by Sun Media.

SECTION 4.

REPRESENTATIONS AND WARRANTIES OF BROADCAST.   Broadcast hereby represents and warrants to Sun Media, except as disclosed in  Broadcast’s annual report on Form 10-KSB for the fiscal year ended December 31, 2005(the “Form 10-KSB”), its quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2006 ( “Form 10-Q”),  current reports on Form 8-K dated during calendar year 2005 filed by Broadcast with the Securities and Exchange Commission  (the “Commission”) (the Form 10-KSB, the Form 10-Q and the registration statement filed on Form S-1, reports, proxy statements and amendments thereto, the “SEC Documents”), as follows:

4.1

Organization and Qualification.  Broadcast is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and Broadcast is qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where the failure to so qualify would not individually or in the aggregate have a material adverse effect on, or a material adverse change in, or a group of such effects on or changes in, the business, operations, financial condition, results of operations, prospects, assets or liabilities (a “Material Adverse Effect”) on Broadcast or its Subsidiaries.

4.2

Subsidiaries.  As of the date hereof, Broadcast wholly-owns or has a greater than fifty percent (50%) ownership interest in the following subsidiaries: BI Acquisitions, Inc., a Utah

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corporation, and Interact Digital Devices, Inc., a California corporation (the “Subsidiaries”).  The Subsidiaries are corporations duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and the Subsidiaries are qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where the failure to so qualify would not individually or in the aggregate have a Material Adverse Effect on Broadcast or the Subsidiary.

4.3

Authorized and Outstanding Capital Stock.  Broadcast has authorized the issuance of 40,000,000 shares of Common Stock, $0.05 par value per share, of which approximately 24,048,275 shares are issued and outstanding as of April 26, 2006.  All shares of Common Stock have been duly authorized, have been validly issued, are fully paid and nonassessable and are free of any liens or encumbrances.  Except as disclosed in the SEC Documents, there are no authorized or outstanding capital stock, options, warrants, preemptive rights, rights of first refusal or other rights to purchase any capital stock of  Broadcast or any equity or debt securities convertible into or exchangeable or exercisable for capital stock of Broadcast.

4.4

Issuance and Delivery of the Broadcast Shares .  The issuance of the Broadcast Shares has been duly authorized.  The Broadcast Shares  are duly authorized, validly issued, fully paid and nonassessable.  No preemptive rights or other rights to subscribe for or purchase exists with respect to the issuance of the Shares.  No further approval or authority of the shareholders or the Board is required for the issuance of the Shares.  The offer and issuance of the Shares and the Option is in compliance with the Securities Act of 1933, as amended (the “Securities Act”) and all rules and regulations promulgated thereunder and all state securities laws, regulations and requirements.

4.5

Due Execution, Delivery and Performance of the Agreements.  Broadcast has full legal right, corporate power and authority to carry on its business as presently conducted and enter into this Agreement and to perform the transactions contemplated hereby.  The Subsidiaries have full legal right, corporate power and authority to carry on their business as presently conducted.  This Agreement has been duly authorized, executed and delivered by Broadcast.  The execution, delivery and performance of this Agreement by Broadcast and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of Broadcast or the Subsidiaries and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets or property of Broadcast or the Subsidiaries pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which Broadcast or the Subsidiaries are a party or by which Broadcast or the Subsidiaries or any of their assets or properties may be bound or affected, including, without limitation, any contract listed in the SEC Documents (as defined below), or any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other domestic or international governmental body applicable to  Broadcast or the Subsidiaries or any of their properties.  No consent, approval, authorization or other order of or registration, qualification, designation, declaration or filing with any court, regulatory body, administrative agency or other governmental body is required for the execution, delivery and performance of this Agreement or

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the consummation by Broadcast of the transactions contemplated hereby, except for compliance with the Blue Sky laws of any state of the United States and United States federal securities laws applicable to the issuance of the Broadcast Shares.  Assuming the valid execution hereof by Sun Media, this Agreement will constitute the legal, valid and binding obligation of the Broadcast, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as the indemnification agreements of  Broadcast in Section 10.4 hereof may be legally unenforceable.

4.6

No Actions or Violations.  There is no legal or governmental actions, suits, arbitrations, investigation or proceeding (each, an “Action”) pending or, to Broadcast’s knowledge, threatened to which Broadcast or the Subsidiaries are or may be a party (a) which seeks to prevent or restrain the transactions contemplated by this Agreement or to recover damages as a result of the consummation of such transactions or (b) which is reasonably likely to have a Material Adverse Effect on Broadcast or the Subsidiaries.  Neither Broadcast nor the Subsidiaries are subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.  No Action by  Broadcast or the Subsidiaries is currently pending, nor does Broadcast or the Subsidiaries intend to initiate any Action, that is reasonably likely to have a Material Adverse Effect o n Broadcast.  Broadcast is not in violation of any term of its articles of incorporation, as amended, or bylaws, as amended.

4.7

Investment Company.  Broadcast is not an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

4.8

 Registration Rights.  Except as disclosed on Schedule 4.8, no shareholder of Broadcast has or will have any right to  request or require Broadcast to register the sale of any shares owned by such shareholder under the Securities Act.

4.9

Books and Records.  The books, records and accounts of Broadcast and the Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, Broadcast and the Subsidiaries, respectively, all to the extent required by generally accepted accounting principles. Broadcast and the Subsidiaries each maintain a system of internal accounting controls sufficient to provide reasonable assurances that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

4.10

SEC Documents.

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(a)

Reports.  Broadcast has furnished to Sun Media prior to the date hereof copies of its SEC Documents.  Each of the SEC Documents, as of the Effective Date, does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  Neither Broadcast nor the Subsidiaries is a party to any material contract, agreement or other arrangement that was required to have been filed as an exhibit with the Commission that was not so filed.

(b)

Financial Statements.  Broadcast has provided Sun Media with copies of its audited financial statements (the “Audited Financial Statements”) for the fiscal year ended December 31, 2005, and its unaudited financial statements for the three (3)-month period ended March 31, 2006 (the “Balance Sheet Date”).  Since the Balance Sheet Date,  Broadcast has duly filed with the Commission all SEC Documents required to be filed by it under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Securities Act.  The audited and unaudited consolidated financial statements of the Broadcast included in the SEC Documents filed prior to the Effective Date fairly present, in conformity with United States generally accepted accounting principles (“GAAP”) (except as otherwise permitted by Form 10-Q) applied on a consistent bas is (except as may be indicated in the notes thereto), the consolidated financial position of Broadcast as at the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject to normal year-end audit adjustments in the case of unaudited interim financial statements).

4.11

Absence of Certain Changes Since Balance Sheet Date.  Since the Balance Sheet Date or as disclosed in the SEC Documents, the business and operations of Broadcast and the Subsidiaries have been conducted in the ordinary course consistent with past practice, and there has not been:

(a)

any declaration, setting aside or payment of any dividend or other distribution of the assets of the Broadcast or the Subsidiary with respect to any shares of its capital stock or any repurchase, redemption or other acquisition by the Broadcast or the Subsidiary of any outstanding shares of the Broadcast’s or the Subsidiary’s capital stock;

(b)

any damage, destruction or loss, whether or not covered by insurance, except for such occurrences that have not resulted, and are not expect to result, in a Material Adverse Effect on Broadcast or the Subsidiaries;

(c)

any waiver by Broadcast or the Subsidiaries of a valuable right or of a material debt owed to it, except for such waivers that have not resulted, and are not expected to result, individually or in the aggregate, in a Material Adverse Effect on Broadcast or the Subsidiaries;

(d)

any material change or amendment to, or any waiver of any material rights under a material contract or other arrangement, including, without limitation, any supply or service contract, or the termination of any such contract or arrangement, to which Broadcast or the Subsidiaries is a party or by which Broadcast, the Subsidiaries or any of Broadcast’s or the

- 6 -  

Subsidiaries’ assets or properties is bound or subject, except for changes, amendments or waivers that are expressly provided for or disclosed in this Agreement or that have not resulted, and are not expected to result, individually or in the aggregate, in a Material Adverse Effect on  Broadcast or the Subsidiaries;

(e)

any change by Broadcast or the Subsidiaries in its accounting principles, methods or practices or in the manner in which it keeps its accounting books and records, except any such change required by a change in GAAP; or

(f)

any other event or condition of any character, except for such events and conditions that have not resulted, and are not expected to result, individually or in the aggregate, in a Material Adverse Effect on Broadcast or the Subsidiaries.

4.12

Intellectual Property

(a)

Ownership or Right to Use.  Broadcast has sole title to and owns, or is licensed or otherwise possesses legally enforceable right to use, all patents or patent applications, software, know-how, registered or unregistered trademarks and service marks and any applications therefore, registered or unregistered copyrights, trade names, and any applications therefore, trade secrets or other confidential or proprietary information (the “Intellectual Property”) necessary to enable Broadcast and the Subsidiaries to carry on its business as currently conducted, except where any deficiency, or group of deficiencies, therein would not have a Material Adverse Effect on Broadcast or the Subsidiaries.  Broadcast covenants that it will, and that it will cause the Subsidiaries to, where Broadcast in the exercise of reasonable judgment deems it appropriate, use reasonable business efforts to seek copyrig ht and patent registration, and other appropriate intellectual property protection, for the Intellectual Property of  Broadcast and the Subsidiaries.

(b)

Licenses; Other Agreements.  Neither Broadcast nor the Subsidiaries is subject to any exclusive license (whether such exclusivity is temporary or permanent) to any material portion of the Intellectual Property of Broadcast or the Subsidiaries.  Neither  Broadcast nor the Subsidiaries is obligated to pay any royalties or other payments to third parties with respect to the marketing, sale, distribution, manufacture, license or use of any Intellectual Property, except as it may be so obligated in the ordinary course of its business, as disclosed in the SEC Documents or where the aggregate amount of such payments could not reasonably be expected to be material.

(c)

No Infringement.  Neither Broadcast nor the Subsidiaries has violated or infringed, nor is currently violating or infringing, and neither Broadcast nor the Subsidiaries has received any communication alleging that it has violated or infringed, any Intellectual Property of any other individual or entity, to the extent that any such violation or infringement, either individually or together with all other such violations and infringements, would have a Material Adverse Effect on  Broadcast or the Subsidiaries.

4.13

Title to Property and Assets.  Broadcast and the Subsidiaries each have all requisite corporate power and authority to own or lease its assets and other properties.  The material

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properties and assets of  Broadcast and the Subsidiaries are owned by  Broadcast and the Subsidiaries free and clear of all mortgages, deeds of trust, liens, charges, encumbrances and security interests except for statutory liens for the payment of current taxes that are not yet delinquent and liens, encumbrances and security interests that arise in the ordinary course of business and do not affect such properties and assets of Broadcast and the Subsidiaries.  With respect to leased property and assets, Broadcast and the Subsidiaries are each in compliance with such leases in all material respects.  

4.14

Tax Matters.  Except as set forth in the SEC Documents, Broadcast and the Subsidiaries have filed all material tax returns required to be filed, which returns are true, complete and correct in all material respects, and neither Broadcast nor the Subsidiaries is in default in the payment of such taxes, including penalties and interest, assessments, fees and other charges, shown thereon due or otherwise assessed, other than those being contested in good faith and for which adequate reserves have been provided or those currently payable without interest that were payable pursuant to such returns or any assessments with respect thereto.

4.15

Investment Intent.  Broadcast is acquiring the Sun Media Shares, in the ordinary course of its business and for its own account for investment only and with no present intention of distributing any of the Sun Media Shares or entering into any arrangement or understanding with any other person regarding the distribution of the Sun Media Shares.  

4.16

Accredited Investor.  Broadcast is an “accredited investor,” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act.

4.17

Restrictions on Transfer.  Broadcast acknowledges and understands that the Sun Media Shares, unless registered, constitute “restricted securities” under the Securities Act and may only be sold, offered, transferred, pledge or hypothecated in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Broadcast’s investment intent as expressed herein or pursuant to an effective registration statement under the Securities Act.  Broadcast understands and agrees that Sun Media shall cause the legend set forth below or a legend substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Sun Media Shares together with any other legends that may be required by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS OR, IN THE OPINION OF COUNSEL, SUCH

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OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

4.18

Sole Representations and Warranties.  Except for the representations and warranties contained in this Section 4, Broadcast makes no representation or warranty to Sun Media, express or implied, in connection with the transactions contemplated by this Agreement.

SECTION 5.

REPRESENTATIONS AND WARRANTIES OF SUN MEDIA.  

Sun Media hereby represents and warrants to Broadcast, except as disclosed in  Sun New Media’s annual report on Form 10-KSB for the fiscal year ended December 31, 2005 (the “ Sun Form 10-K”), its quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2006 ( “ Sun Form 10-Q”),  current reports on Form 8-K dated during calendar year 2006 filed by Sun New Media with the Securities and Exchange Commission  (the “Commission”) (the Form 10-KSB, the Form 10-Q, reports, proxy statements and amendments thereto, the “ Sun SEC Documents”), as follows:

5.1

Organization and Qualification.  Sun New Media is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and Sun New Media is qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where the failure to so qualify would not individually or in the aggregate have a material adverse effect on, or a material adverse change in, or a group of such effects on or changes in, the business, operations, financial condition, results of operations, prospects, assets or liabilities (a “Material Adverse Effect”) on Sun New Media or its Subsidiaries.

5.2

Subsidiaries.  As of the date hereof, Sun New Media wholly-owns or has a greater than fifty percent (50%) ownership interest in the following subsidiaries: Sun Media Holdings Ltd.(BVI),Sun Media Group Ltd,(BVI), China Focus Channel Development Co.Ltd.(HK), Lifestyle Magazines Publishing Pte. Ltd.(SG), Sun Global Marketing Network Ltd.(Cayman Islands), Magzone Multimedia Holdings Ltd., Sun Business Media Co.Ltd., China Sports TV Productions Ltd.(BVI) (the “Subsidiaries”).  The Subsidiaries are corporations duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and the Subsidiaries are qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where the failure to so qualify would not individually or in the aggregate have a Material Adverse Effect on Sun New Media or the Subsidiaries.

5.3

Authorized and Outstanding Capital Stock.  Sun New Media has authorized the issuance of 750,000,000 shares of Common Stock, $0.01.par value per share, of which approximately 88,073,874 shares are issued and outstanding as of the Effective Date.  All shares of Common Stock have been duly authorized, have been validly issued, are fully paid and nonassessable and are free of any liens or encumbrances.  Except as disclosed in the SEC Documents, there are no authorized or outstanding capital stock, options, warrants, preemptive

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rights, rights of first refusal or other rights to purchase any capital stock of  Sun New Media or any equity or debt securities convertible into or exchangeable or exercisable for capital stock of Sun New Media.

5.4

Delivery of the Sun Media Shares .  The Sun Media is the legal and beneficiary owner of the Sun Media Shares.  The Sun Media Shares are duly authorized, validly issued, fully paid and nonassessable.  No preemptive rights or other rights to subscribe for or purchase exists with respect to the issuance of the Shares.  No further approval or authority of the shareholders or the Board is required for the issuance of the Shares.  The offer and issuance of the Shares and the Option is in compliance with the Securities Act of 1933, as amended (the “Securities Act”) and all rules and regulations promulgated thereunder and all state securities laws, regulations and requirements.

5.5

Due Execution, Delivery and Performance of the Agreements.  Sun Media has full legal right, corporate power and authority to carry on its business as presently conducted and enter into this Agreement and to perform the transactions contemplated hereby.  The Subsidiaries have full legal right, corporate power and authority to carry on their business as presently conducted.  This Agreement has been duly authorized, executed and delivered by Sun Media.  The execution, delivery and performance of this Agreement by Sun Media and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of Sun Media and will not result in the creation of any lien, charge, security interest or encumbrance upon any assets or property of Sun Media pursuant to the terms or provisions of, or will not conflict with, result in the breach or violation of, or consti tute, either by itself or upon notice or the passage of time or both, a default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which Sun Media is a party or by which Sun Media ‘s assets or properties may be bound or affected, including, without limitation, any contract or any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other domestic or international governmental body applicable to  Sun Media‘s properties.

5.6

No Actions or Violations.  There is no legal or governmental actions, suits, arbitrations, investigation or proceeding (each, an “Action”) pending or, to Broadcast’s knowledge, threatened to which Sun New Media or the Subsidiaries are or may be a party (a) which seeks to prevent or restrain the transactions contemplated by this Agreement or to recover damages as a result of the consummation of such transactions or (b) which is reasonably likely to have a Material Adverse Effect on Sun New Media or the Subsidiaries.  Neither Sun New Media nor the Subsidiaries are subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.  No Action by  Sun New Media or the Subsidiaries is currently pending, nor does Sun New Media or the Subsidiaries intend to initiate any Action, that is reasonably likely to have a Mater ial Adverse Effect on Broadcast.  Sun New Media is not in violation of any term of its articles of incorporation, as amended, or bylaws, as amended.

- 10 -  

5.7

Investment Company.  Sun Media is not an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

5.8

Sun SEC Documents.

(a)

Reports.  Sun Media has furnished to Broadcast prior to the date hereof copies of its  Sun SEC Documents.  Each of the Sun SEC Documents, as of the Effective Date, does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  Neither Sun New Media nor the Subsidiaries is a party to any material contract, agreement or other arrangement that was required to have been filed as an exhibit with the Commission that was not so filed.

(b)

Financial Statements.  Sun Media has provided Broadcast with copies of Sun New Media’s audited financial statements (the “Audited Financial Statements”) for the fiscal year ended December 31, 2005, and its unaudited financial statements for the three (3)-month period ended March 31, 2006 (the “Balance Sheet Date”).  Since the Balance Sheet Date,  Sun NewMedia has duly filed with the Commission all SEC Documents required to be filed by it under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Securities Act.  The audited and unaudited consolidated financial statements of the Sun NewMedia included in the SEC Documents filed prior to the Effective Date fairly present, in conformity with United States generally accepted accounting principles (“GAAP”) (except as otherwise permitted by Form 10-Q) appl ied on a consistent basis (except as may be indicated in the notes thereto), the consolidated financial position of Sun New Media as at the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject to normal year-end audit adjustments in the case of unaudited interim financial statements).

5.9

Restrictions on Transfer.  Sun Media acknowledges and understands that the Shares, unless registered, constitute “restricted securities” under the Securities Act and may only be sold, offered, transferred, pledge or hypothecated in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Sun Media’s investment intent as expressed herein or pursuant to an effective registration statement under the Securities Act.  Sun Media understands and agrees that Broadcast shall cause the legend set forth below or a legend substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR

- 11 -  

OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS OR, IN THE OPINION OF COUNSEL, SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

5.18

Sole Representations and Warranties.  Except for the representations and warranties contained in this Section 5, Sun Media makes no representation or warranty to the Broadcast, express or implied, in connection with the transactions contemplated by this Agreement.

SECTION 6.

SURVIVAL.  Notwithstanding any investigation made by any party to this Agreement, all covenants, agreements, representations and warranties made by Broadcast and Sun Media herein and in the certificates delivered pursuant hereto shall survive the execution of this Agreement, the delivery to Sun Media of the Broadcast Shares and the delivery of the Sun Media Shares to Broadcast.

SECTION 7.

NOTICES.  All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed by first-class registered or certified airmail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows:

(a)

if to Broadcast, to:

Broadcast International, Inc.

Attention: Rod Tiede

7050 Union Park Ave. #600

Salt Lake City, Utah 84047

Fax:  (801) 562-1773

(b)

if to Sun Media, to:

Sun Media Investment Holdings Ltd.

Attention: Anson XU

                        #387, Yongjia Road, Shanghai,20031

                        P.R.China

                        Fax: 8621 64453377

- 12 -  

SECTION 8.

ASSIGNMENT.  None of the parties hereto may assign or delegate any of such party’s rights or obligations under or in connection with this Agreement, whether by operation of law, merger, acquisition, consolidation, share exchange, or otherwise, and any attempted assignment or delegation of such rights or obligations shall be void.  No person, including without limitation any person who purchases or otherwise acquires or receives any Broadcast Shares or Sun Media Shares, is an intended third party beneficiary of this Agreement, and no party to this Agreement shall have any obligation arising under this Agreement to any person other than the other parties hereto.   

SECTION 9.

CHANGES.  This Agreement may not be modified or amended except pursuant to an instrument in writing signed by Broadcast and Sun Media.

SECTION 10.

HEADINGS.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

SECTION 11.

SEVERABILITY.  In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

SECTION 12.

GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of Utah without regard to its conflicts of law principles and the federal law of the United States of America.

SECTION 13

COUNTERPARTS.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.

SECTION 14

EFFECTIVE DATE.  This Agreement shall be effective immediately upon the execution of this Agreement by both parties (the “Effective Date”).

(The remainder of this page intentionally left blank)

- 13 -  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

BROADCAST:

BROADCAST INTERNATIONAL, INC.

By: /s/ Rodney M. Tiede                                

Name:  Rodney M. Tiede                             

Title:  President                                            

SUN MEDIA:

SUN MEDIA INVESTMENT HOLDINGS LTD.

By: /s/ Bruno Wu                                   

Name: Bruno Wu                                          

Title:  President                                             

- 14 -  

EXHIBIT A

LOCK-UP AGREEMENT

In consideration of Sun Media Investment Holding Ltd. (“Sun  Media”) entering into the Stock Exchange Agreement between Sun Media and Broadcast International, Inc.  ( “Broadcast”), dated  August 15, 2006 (the “Agreement”), and for other good and valuable consideration, the receipt of which is hereby acknowledged, Broadcast agrees that Broadcast  will not offer, sell, contract to sell or otherwise dispose of any shares of Sun New Media Common Stock (the “Shares”) until January 1, 2008.

The undersigned hereby acknowledges that this Lock-Up Agreement is valid and binding notwithstanding any prior agreements relating to this matter and further agrees and consents to the entry of stop-transfer of any of the Shares held by the undersigned unless such transfer is in compliance with this Lock-Up Agreement.  The undersigned also understands that the delivery of this Lock-Up Agreement to Sun Media is a condition to Sun Media’s entering into the Agreement.

Broadcast International, Inc

/s/ Rodney M Tiede

By: Rodney M. Tiede

Its: President

Date: August 15, 2006

- 15 -  

EXHIBIT B

LOCK-UP AGREEMENT

In consideration of Broadcast International, Inc. (the “Broadcast”) entering into the Stock Exchange Agreement between the undersigned and Broadcast, dated August 15, 2006, (the “Agreement”), and for other good and valuable consideration, the receipt of which is hereby acknowledged, Sun Media agrees that Sun Media will not offer, sell, contract to sell or otherwise dispose of any shares of Broadcast Common Stock (collectively, the “Shares”) until January 1, 2008.

The undersigned hereby acknowledges that this Lock-Up Agreement is valid and binding notwithstanding any prior agreements relating to this matter and further agrees and consents to the entry of stop-transfer of any of the Broadcast Shares held by the undersigned unless such transfer is in compliance with this Lock-Up Agreement.  The undersigned also understands that the delivery of this Lock-Up Agreement to the Broadcast is a condition to the Broadcast’s entering into the Agreement.

SUN MEDIA INVESTMENT HOLDINGS LTD.

/s/ Bruno Wu

By:   Bruno Wu

Its:  President

Date: August 15, 2006

- 16 -  

EX-10.9

DATED  August 15,   2006

BY AND BETWEEN

YANG LAN STUDIO LTD。

AND

BROADCAST INTERNATIONAL INC.

TECHNOLOGY LICENSE AGREEMENT

THIS AGREEMENT is made this    15th day of   August 2006

BETWEEN

Yang Lan Studio Limited, a Company incorporated with limited liability under the laws of Hong Kong and having its principal business office at #387 Yongjia Rd Shanghai, P.R.China ("YL Studio"); (hereinafter referred to as the "Licensor");

AND

Broadcast International Inc., a Company incorporated with limited liability under the laws of Utah, USA and having its principal business office at 7050 Union Park Ave. #600 Salt Lake City, Utah 84047 ("BI") (hereinafter called (“Licensee”).

WHEREAS

(1)

 The Licensor is the legal owner of a flash-based e-publishing reader technology (the “YL Studio Technology”) as defined below.

(2)

The Licensor is willing to grant to the Licensee a non-exclusive permanent license to distribute the YL Studio Technology in the Territory in accordance with the terms herewith, and the Licensee is willing to accept such license and exercise such rights upon and subject to the terms and conditions contained herein.

1

NOW IT IS HEREBY AGREED as follows:

1.

DEFINITIONS

In this Agreement unless the subject or the context otherwise requires or admits the singular number shall include the plural number and vice versa and the expression “person” shall include a firm or corporation and the expressions set forth shall have the meanings as defined in this Agreement .

"Confidential Information" means any written or otherwise tangible information (which is either marked confidential or is, by its nature, intended to be exclusively for the knowledge of the recipient alone) which is proprietary and confidential to a Party.

“Effective Date” means the date the conditions set out in Clause 2.1 have been fulfilled or waived as the Parties may agree in writing

 “YL Studio Technology” means the flash-based e-publishing reader technology owned by the Licensor as described in the Annex I ;

"Parties"   means The Licensor and the Licensee and "Party" mean anyone of them.

“Territory” means worldwide.

"US$"  means United States Dollars, the lawful currency of the United States of America.

2.

EFFECTIVE DATE AND TERM

2.1

The grant of License hereunder is conditional upon

(a)

Approval by Licensor’s Board of Directors;

(b)

Approval by Licensee’s Board of Directors

(c)         Execution of the  Stock Exchange Agreement between Licensee and Sun Media Investment Holdings Ltd. ;

(d)        Execution of the  License  Agreement regarding IPTV Platform Technology  between Licensee and Broadvisioin Global Limited

(e)        Execution of the Stock Purchase Agreement between Licensor and Licensee;

2

Inspection of and satisfactory completion of due diligence and marketing surveys and investigations regarding the YL Studio Technology.

The Parties shall procure fulfilment of the conditions specified in the above.  Unless specifically waived by the Parties, if any of the above conditions shall not be fulfilled on or before September 1^st, 2006 or not waived in writing by a duly authorized representative of each Party by September 1^st, 2006, this Agreement shall ipso facto cease and determine and none of the Parties shall have any claim against the other for costs, damages, compensation or otherwise, save for any claim arising from an antecedent breach of this Agreement. The Parties’ obligation of confidentiality shall survive the termination of this Agreement.

2.2

This Agreement shall take effect as from the Effective Date and shall continue for an infinite period unless it is terminated by the Parties in accordance with the terms and conditions herein.

3.

GRANT OF LICENSE AND OBLIGATIONS OF THE LICENSOR

3.1

Licensor hereby grants to Licensee a non-exclusive license to: 1) utilize the YL Studio Technology for the e-publishing or other purposes. ; 2) distribute or sub-license the YL Studio Technology in the Territory with the same terms and conditions herein.

3.2

The Licensor shall promptly after the Effective Date, and thereafter as and when further required by the Licensee, disclose or deliver full details of YL Studio Technology including but not limit, the source code.

3.3

In addition to the grant of the license hereunder, the Licensor shall provide the Licensee with any necessary consent or authorization from any relevant third party and other necessary support upon the Licensee’s request to enable the Licensee to lawfully explore the rights licensed hereunder in the Territory.

4.

WARRANTIES

The Licensor warrants that:

(a)

it is the sole owner of the YL Studio Technology and that it has all necessary rights and powers to grant the rights and licenses hereunder to the Licensee;

(b)

the Licensee's use of the YL Studio Technology in accordance with the terms of this Agreement does not and will not infringe the intellectual

3

property rights of any other person or constitute a breach of any contract of agreement of Licensor.

5.

LICENSEE'S OBLIGATIONS

The Licensee shall use the YL Studio Technology in accordance with the specifications set forth herein and information supplied from time to time by the Licensor.

6.

CONFIDENTIALITY

6.1

Except as provided for herein, the Parties shall not use or divulge or allow to be divulged to any third party (other than its shareholders, officers, employees and advisors for purposes of performance or enforcement of this Agreement) any Confidential Information of the other Party disclosed to it.

6.2

The obligations in this Clause 6 shall not extend to information which is or comes into public domain or is required to be disclosed under any applicable laws or regulations.

7.

FURTHER IMPROVEMENTS

All additions, improvements modifications or developments of the YL Studio Technology made or discovered by the Licensor during the term of this Agreement shall forthwith be communicated to the Licensee and the Licensor shall fully disclose the nature and manner of employing the same and such additions, improvements, modifications and developments shall be considered part of the YL Studio Technology licensed hereunder.

8.

CONSIDERATION

8.1  

 In consideration of the rights and licences granted hereunder to the Licensee and the other advantages and benefits conferred on the Licensee under this Agreement, the Licensee shall issue to the Licensor four million(4,000,000) common shares in the capital of the Licensee (“Consideration Shares”) in accordance with clause 8.2.

8.2

The Consideration Shares shall be issued and allotted as follows:

Within 20 days of the Effective Date, the Licensee shall deliver to the Licensor :

(a)      a share certificate evidencing the Consideration Shares  issued in the name of Licensor and a directors’ resolutions approving the issuance

4

and allotment of the Consideration Shares to the Licensor or its nominee or such other approvals as may be necessary to effect such issuance;

8.3

The Licensor agrees that it will not offer, sell, contract to sell or otherwise dispose of any shares of Licensee’s common stock received by reason of this Agreement until January 1, 2008 and thereafter it shall not sell any greater number of shares of such common stock in any calendar month that exceeds 5% of the average daily trading volume for the 30 trading days immediately preceding the sale of such stock.

9 .

INFRINGEMENT

.

If either Party shall become aware of any infringement or threatened infringement of any of the rights licensed hereunder, it shall immediately notify the other Party and before the commencement of any proceedings in relation thereto the Parties shall consult each other as to the action to be taken.

10.

TERMINATION

10.1

If Licensee shall:-

(a)

suffer an order for the winding up or liquidation, or have an administration order placed on it; or

(b)

suffer a receiver to be appointed over any of its assets; or

(c)

commit any breach of this Agreement on its part contained herein and shall fail to remedy such breach within 30 days after written notice thereof from the Licensor specifying the nature of the breach

then and in any such case the Licensor shall be entitled at any time thereafter to terminate this Agreement forthwith by serving notice in writing upon the Licensee to that effect.

10.2

If Licensor shall:

(a)

suffer an order for the winding up or liquidation, or have an administration order placed on it;

(b)

suffer a receiver to be appointed over any of its assets; or

(c)

commit any breach of this Agreement on its part contained herein and shall fail to remedy such breach within 30 days after written notice thereof from the Licensee specifying the nature of the breach

5

then Licensee may continue use of the YL Studio Technology throughout the remainder of the term of this Agreement.

11.

MISCELLANEOUS

11.1

Waiver. Any waiver (whether express or implied) by any Party of any breach of any of the terms or conditions of this Agreement by the other Party shall not prejudice any remedy of the waiving Party in respect of any continuing or other breach of the terms or conditions hereof.

11.2

Assignability.  The rights and benefits of any provision of this Agreement shall not be assigned by any Party without the prior written consent of the other.

11.3

Notices. Any notice or written communication provided for in this Agreement by either Party to the other, including but not limited to any and all offers, agenda for meetings, writings, or notices to be given hereunder, shall be made in English by facsimile, or by courier service delivered letter, promptly transmitted or addressed to the appropriate Party.  The date of receipt of a notice or communication hereunder shall be deemed to be seven (7) days after the letter is given to the courier service in the case of a courier service delivered letter and two (2) working days after dispatch of a facsimile if evidenced by a transmission report.  All notices and communications shall be sent to the appropriate address set forth below, until the same is changed by notice given in writing to the other Party.

11.4

Further Assurances. The Parties shall do all things necessary including executing all further documents as may be required for the purposes of giving effect to or facilitating the giving of effect to any of the provisions of this Agreement.

11.5

Entire Agreement. This Agreement including the Appendices hereto constitute the entire and only understanding between the Parties concerning the subject matter hereof and any previous or contemporaneous understandings or agreements oral or written between the Parties are deemed to be cancelled and superseded hereby.

11.6

Severability. If any part of this Agreement shall be declared void or unenforceable by any Court or body of competent jurisdiction such part shall be deemed severable from the remainder of this Agreement which shall continue in all other respects valid and enforceable. The Parties mutually agree to co-operate in revising this Agreement as may be necessary to meet the requirements of law

6

and to substitute for an invalid Clause another to the same end and purpose insofar as legally permitted

12

GOVERNING LAW AND DISPUTE RESOLUTION

12.1

In the event any dispute arises in connection with the interpretation or implementation of this Agreement, the Parties shall attempt in the first instance to resolve such dispute through friendly consultations.  If the dispute is not resolved in this manner within sixty (60) days after the date on which one Party has served written notice on the other Party for the commencement of consultations, then either Party may refer the dispute to arbitration in accordance with the provisions of this clause

12.2

This Agreement shall be construed, interpreted and applied in accordance with, and shall be governed by, the laws applicable in Hong Kong.

7

AS WITNESS the hands of the Parties hereto the day and year first before written.

Yang Lan Studio Ltd.

Signed by   /s/ Bruno Wu        

Bruno Wu, President

for and on behalf of Yang Lan Studio  Ltd.                          

in the presence of /s/ Chaucey Shey

Chaucey Shey, Witness

Broadcast International Inc.

Signed  by  /s/ Rodney M. Tiede      

Rodney M. Tiede, President

for and on behalf of Broadcast International Inc.                      

in the presence of /s/ Reed L. Benson  

Reed L Benson,  Witness

8

ANNEX I

Description of YL Studio Technology

Editing and publishing systems of Flash e-magazine

The system is composed of 2 main parts:

I. manufacturing of Flash e-magazine

Three steps:

1. Content collection

2. Design originality

3. Integrating editing

II. Publishing platform of Flash e-magazine

Flash e-magazine publishing platform is built under P2P technology with P2P downloading rather than purely server multisession downloading for Flash e-magazine download. Instead of large website centralization on the internet, P2P returns the right to users by decentralization. In the P2P mode, flies are exchanged among uses in place of directly browsed and downloaded from the server.

The entire system is built on the Linux platform by Oracle database, and most of its function is realized by C++ and Java, which provides the system with outstanding expansibility, transferability, and stability.

The publishing platform comprises the following 7 parts:

1. Flash e-magazine unpackaged/packaged publishing subsystem

2. Website access load balancing subsystem

3. Registered uses management subsystem

4. Router distributing subsystem

5. Download resume subsystem

6. e-magazine registering management subsystem

7. Client reader

9

EX-10.10

DATED  August 15,  2006

BY AND BETWEEN

BROADVISION GLOBAL, LTD

AND

BROADCAST INTERNATIONAL INC.

TECHNOLOGY LICENCE AGREEMENT

THIS AGREEMENT is made this   15th   day of    August,     2006

BETWEEN

Broadvision Global Limited, a Company incorporated in the British Virgin Islands,and having its registered office at PO Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands IPTV Platform ; (hereinafter referred to as the "Licensor");

AND

Broadcast International Inc., a Company incorporated with limited liability under the laws of Utah, USA and having its principal business office at 7050 Union Park Ave. #600 Salt Lake City, Utah 84047 ("BI") (hereinafter called (“Licensee”).

WHEREAS

(1)

 The Licensor has received by exclusive license from Beijing Broadvision Information Technologies, Ltd. the right to distribute software comprising IPTV Platform Technologies (including Broadvision VOD, BroadVision Real Work and Broadvision WEBTV etc.) (the “IPTV Platform Technology”) as defined below.

(2)

The Licensor is willing to grant to the Licensee an exclusive permanent license to distribute the IPTV Platform Technology in the Territory in accordance with the terms herewith, and the Licensee is willing to accept such license and exercise such rights upon and subject to the terms and conditions contained herein.

1

NOW IT IS HEREBY AGREED as follows:

1.

DEFINITIONS

In this Agreement unless the subject or the context otherwise requires or admits the singular number shall include the plural number and vice versa and the expression “person” shall include a firm or corporation and the expressions set forth shall have the meanings as defined in this Agreement .

"Confidential Information" means any written or otherwise tangible information (which is either marked confidential or is, by its nature, intended to be exclusively for the knowledge of the recipient alone) which is proprietary and confidential to a Party.

“Effective Date” means the date the conditions set out in Clause 2.1 have been fulfilled or waived as the Parties may agree in writing

 “IPTV Platform Technology” means a software based system for implementing IPTV via the Internet ;

"Parties"   means The Licensor and the Licensee and "Party" mean anyone of them.

“Territory” means worldwide, excepting the P.R. China.

"US$"  means United States Dollars, the lawful currency of the United States of America.

2.

EFFECTIVE DATE AND TERM

2.1       The grant of License hereunder is conditional upon

(a)

Approval by Licensor’s Board of Directors;

(b)

Approval by Licensee’s Board of Directors.

(c)   Execution of the Share Exchange Agreement between Licensee and Sun Media Investment Holdings Ltd. ;

(d)   Execution of the Stock Purchase Agreement between Licensor and Licensee;

2

Inspection of and satisfactory completion of due diligence and marketing surveys and investigations regarding the IPTV PlatformIPTV Platform Technology.

The Parties shall procure fulfilment of the conditions specified in the above.  Unless specifically waived by the Parties, if any of the above conditions shall not be fulfilled on or before September 1^st, 2006 or not waived in writing by a duly authorized representative of each Party by September 1^st, 2006, this Agreement shall ipso facto cease and determine and none of the Parties shall have any claim against the other for costs, damages, compensation or otherwise, save for any claim arising from an antecedent breach of this Agreement. The Parties’ obligation of confidentiality shall survive the termination of this Agreement.

2.2    This Agreement shall take effect as from the Effective Date and shall continue for an infinite period unless it is terminated by the Parties in accordance with the terms and conditions herein.

3.

GRANT OF LICENSE AND OBLIGATIONS OF THE LICENSOR

3.1

Licensor hereby grants to Licensee an exclusive license to: 1) utilize the IPTV PlatformIPTV Platform Technology for use by the Licensee in its business for its customers or other purposes; 2) distribute or sub-license the IPTV Platform IPTV Platform Technology in the Territory with the same terms and conditions herein.

3.2    The Licensor shall promptly after the Effective Date, and thereafter as and when further required by the Licensee, disclose or deliver full details of IPTV PlatformIPTV Platform Technology including but not limit, the source code.

3.3

In addition to the grant of the license hereunder, the Licensor shall provide the Licensee with any necessary consent or authorization from any relevant third party and other necessary support upon the Licensee’s request to enable the Licensee to lawfully explore the rights licensed hereunder in the Territory.

4.

WARRANTIES

The Licensor warrants that:

(a)

it is a licensee of the IPTV PlatformIPTV Platform Technology and that it has all necessary rights and powers to grant the rights and licenses hereunder to the Licensee;

(b)

the Licensee's use of the IPTV PlatformIPTV Platform Technology in accordance with the terms of this Agreement does not and will not

3

infringe the intellectual property rights of any other person or constitute a breach of any contract of agreement of Licensor.

5.

LICENSEE'S OBLIGATIONS

The Licensee shall use the IPTV PlatformIPTV PLatform Technology in accordance with the specifications set forth herein and information supplied from time to time by the Licensor.

6.

CONFIDENTIALITY

6.1

Except as provided for herein, the Parties shall not use or divulge or allow to be divulged to any third party (other than its shareholders, officers, employees and advisors for purposes of performance or enforcement of this Agreement) any Confidential Information of the other Party disclosed to it.

6.2

The obligations in this Clause 6 shall not extend to information which is or comes into public domain or is required to be disclosed under any applicable laws or regulations.

7.

FURTHER IMPROVEMENTS

All additions, improvements modifications or developments of the IPTV Platform Technology made or discovered by the Licensor during the term of this Agreement shall forthwith be communicated to the Licensee and the Licensor shall fully disclose the nature and manner of employing the same and such additions, improvements, modifications and developments shall be considered part of the IPTV Platform Technology licensed hereunder.

8.

CONSIDERATION

8.1  

 In consideration of the rights and licences granted hereunder to the Licensee and the other advantages and benefits conferred on the Licensee under this Agreement, the Licensee shall issue to Yan Lan Studio, Ltd and Beijing Broadvision Information Technologies, Ltd the sum of two million(2,000,000) common shares in the capital of the Licensee (“Consideration Shares”), which Consideration Shares shall be issued in equal amounts to the above named designees, in accordance with clause 8.2.

8.2

The Consideration Shares shall be issued and allotted as follows:

Within 20 days of the Effective Date, the Licensee shall deliver to the Licensor :

4

(a)   a share certificate evidencing the Consideration Shares  issued in the name of Licensor and a directors’ resolutions approving the issuance and allotment of the Consideration Shares to the Licensor or its nominee or such other approvals as may be necessary to effect such issuance;

8.3

The Licensor agrees that it will not offer, sell, contract to sell or otherwise dispose of any shares of Licensee’s common stock received by reason of this Agreement until January 1, 2008 and thereafter it shall not sell any greater number of shares of such common stock in any calendar month that exceeds 5% of the average daily trading volume for the 30 trading days immediately preceding the sale of such stock.

9 .

INFRINGEMENT

.

If either Party shall become aware of any infringement or threatened infringement of any of the rights licensed hereunder, it shall immediately notify the other Party and before the commencement of any proceedings in relation thereto the Parties shall consult each other as to the action to be taken.

10.

TERMINATION

10.1

If Licensee shall:-

(a)

suffer an order for the winding up or liquidation, or have an administration order placed on it; or

(b)

suffer a receiver to be appointed over any of its assets; or

(c)

commit any breach of this Agreement on its part contained herein and shall fail to remedy such breach within 30 days after written notice thereof from the Licensor specifying the nature of the breach

then and in any such case the Licensor shall be entitled at any time thereafter to terminate this Agreement forthwith by serving notice in writing upon the Licensee to that effect.

10.2

If Licensor shall:

(a)

suffer an order for the winding up or liquidation, or have an administration order placed on it;

(b)

suffer a receiver to be appointed over any of its assets; or

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(c)

commit any breach of this Agreement on its part contained herein and shall fail to remedy such breach within 30 days after written notice thereof from the Licensee specifying the nature of the breach

then Licensee may continue use of the IPTV Platform Technology throughout the remainder of the term of this Agreement.

11.

MISCELLANEOUS

11.1

Waiver. Any waiver (whether express or implied) by any Party of any breach of any of the terms or conditions of this Agreement by the other Party shall not prejudice any remedy of the waiving Party in respect of any continuing or other breach of the terms or conditions hereof.

11.2

Assignability.  The rights and benefits of any provision of this Agreement shall not be assigned by any Party without the prior written consent of the other.

11.3

Notices. Any notice or written communication provided for in this Agreement by either Party to the other, including but not limited to any and all offers, agenda for meetings, writings, or notices to be given hereunder, shall be made in English by facsimile, or by courier service delivered letter, promptly transmitted or addressed to the appropriate Party.  The date of receipt of a notice or communication hereunder shall be deemed to be seven (7) days after the letter is given to the courier service in the case of a courier service delivered letter and two (2) working days after dispatch of a facsimile if evidenced by a transmission report.  All notices and communications shall be sent to the appropriate address set forth below, until the same is changed by notice given in writing to the other Party.

11.4

Further Assurances. The Parties shall do all things necessary including executing all further documents as may be required for the purposes of giving effect to or facilitating the giving of effect to any of the provisions of this Agreement.

11.5

Entire Agreement. This Agreement including the Appendices hereto constitute the entire and only understanding between the Parties concerning the subject matter hereof and any previous or contemporaneous understandings or agreements oral or written between the Parties are deemed to be cancelled and superseded hereby.

11.6

Severability. If any part of this Agreement shall be declared void or unenforceable by any Court or body of competent jurisdiction such part shall be deemed severable from the remainder of this Agreement which shall continue in

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all other respects valid and enforceable. The Parties mutually agree to co-operate in revising this Agreement as may be necessary to meet the requirements of law and to substitute for an invalid Clause another to the same end and purpose insofar as legally permitted

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GOVERNING LAW AND DISPUTE RESOLUTION

12.1

In the event any dispute arises in connection with the interpretation or implementation of this Agreement, the Parties shall attempt in the first instance to resolve such dispute through friendly consultations.  If the dispute is not resolved in this manner within sixty (60) days after the date on which one Party has served written notice on the other Party for the commencement of consultations, then either Party may refer the dispute to arbitration in accordance with the provisions of this clause 12.

12.2

This Agreement shall be construed, interpreted and applied in accordance with, and shall be governed by, the laws applicable in Hong Kong.

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AS WITNESS the hands of the Parties hereto the day and year first before written.

Broadvision Global Limited

Signed by /s/  Bruno Wu                      

Bruno Wu, President

for and on behalf of  Broadvision Global Limited                                 

in the presence of

/s/ Chaucey Shey               

Chaucey Shey, Witness

Broadcast International Inc.

Signed by /s/ Rodney Tiede                

Rodney M. Tiede, President

for and on behalf of Broadcast International Inc.         

in the presence of

/s/ Reed L. Benson       

Reed L. Benson, Witness

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