AllDigital Holdings, Inc (OTCBB:ADGL) signed a definitive agreement to acquire Broadcast International Inc. (OTCPK:BCST) from Elkhorn Partners L.P., Northwood Capital Partners, L.P., Porter Partners, L.P., ACT Capital Partners LP and others in a reverse merger transaction on January 6, 2013. Under the terms of the agreement, each outstanding share of AllDigital capital stock will be converted into the right to receive that number of shares of Broadcast International common stock as determined pursuant to the exchange ratio. All outstanding options to purchase AllDigital common stock will be assumed by Broadcast International and converted into options to purchase shares of Broadcast International common stock, in each case appropriately adjusted and all outstanding warrants to purchase shares of AllDigital common stock will be assumed by Broadcast International and converted into warrants to purchase shares of Broadcast International common stock, in each case appropriately adjusted based on the Exchange Ratio. No fractional shares of Broadcast International common stock will be issued in the Merger. Following the consummation of the transactions contemplated by the agreement, former stockholders of AllDigital are expected to own approximately 54% of the AllDigital Broadcasting, Inc., calculated on a fully-diluted basis, and current stockholders of Broadcast International are expected to own approximately 46% of the AllDigital Broadcasting, Inc., calculated on a fully-diluted basis. As part of the transaction, Broadcast International will seek shareholder approval for a reverse stock split to be effective prior to closing at a ratio of 1 post-reverse share for each 10 pre-reverse shares to begin to position the company for a transition to a major exchange such as NYSE MKT LLC (formerly AMEX) or the Nasdaq Capital Market. In case of termination, fees will be paid as $0.1 million and issuance of an amount of shares of common stock equal to 4% of the fully diluted common stock of the party which is obligated to pay the termination fee. On completion both the companies will be combined and the combined company will be called AllDigital Broadcasting, Inc. Corporate headquarters of AllDigital Broadcasting will be located in Irvine, California, with a satellite office in Salt Lake City, Utah.

Paul Summers, Chief Executive Officer of AllDigital will join as Chief Executive Officer of AllDigital Broadcasting. Tim Napoleon, co-founder of AllDigital will join as Chief Strategist, John Walpuck will hold the position of Chief Operating officer and Chief Financial Officer. The deal is subject to regulatory approvals, approval of the stockholders of Broadcast International and AllDigital, the declaration of the effectiveness by the Securities and Exchange Commission of the Registration Statement on Form S-4, reverse stock split, resignation and appointment of directors and officers, execution of employment agreement, dissenter's right limited and minimum amount of working capital. The transaction has been approved by Board of Directors of AllDigital Holdings and Broadcast International.

On April 10, 2013, the agreement was amended with respect to termination provisions and suspension of no-shop and related provisions. On July 2, 2013, second amendment agreement was signed, according to which, AllDigital shareholders will receive an adjusted number of shares of Broadcast International common stock representing 58% (adjusted up from 54%) of the post-closing shares of Broadcast common stock. The end date for completing merger, the date after which either party can terminate without cause, has been moved from July 31, 2013 to October 31, 2013. On August 26, 2013, third amendment was made to the agreement regarding the offering of Notes by AllDigital and Broadcast. The Merger Agreement requires as a condition to closing that Broadcast have post-merger financing commitments in place for the purchase of no less than $1.5 million, and no more than $3.5 million, of Broadcast common stock. The Amendment clarifies that the obligation of Broadcast to obtaining post-merger financing commitments at closing is reduced by the amount that AllDigital receives in the Note offering. At closing, AllDigital security holders are to receive a number of shares, options and warrants, as applicable, equal to 58% of the fully diluted capital stock of Broadcast immediately after closing (but prior to any financing).

Excel Management Systems and Philadelphia Brokerage Corporation acted as financial advisor for Broadcast International. Merriman Capital, Inc acted as financial advisor for AllDigital Holdings. Gregory E. Lindley of Holland & Hart LP acted as legal advisor for Broadcast International and Bryan T. Allen of Parr Brown Gee & Loveless acted as legal advisor for AllDigital Holdings. Broadcast agreed to pay Philadelphia Brokerage Corporation a fee equal to 2.75% of the enterprise value of Broadcast. Broadcast will issue Philadelphia Brokerage Corporation 7.21 million shares of Broadcast common stock if the merger is consummated. Broadcast paid Excel Management Systems a total of $20,500 in fees to prepare and deliver the fairness opinions. AllDigital has agreed to pay to Merriman a fee equal to 3% of the value of the consideration received by the shareholders and holders of AllDigital.

AllDigital Holdings, Inc (OTCBB:ADGL) cancelled the acquisition of Broadcast International Inc. (OTCPK:BCST) from Elkhorn Partners L.P., Northwood Capital Partners, L.P., Porter Partners, L.P., ACT Capital Partners LP and others in a reverse merger transaction on November 4, 2013.