SENIOR SECURED REVOLVING CREDIT AGREEMENT Dated as of November 6, 2008 Between ADVANCE DISPLAY TECHNOLOGIES, INC. and DeGeorge Holdings Three LLC
EXHIBIT 10.1
Execution
Version
______________________________________________________
$6,894,362
Dated as
of November 6, 2008
Between
ADVANCE
DISPLAY TECHNOLOGIES, INC.
and
▇▇▇▇▇▇▇▇ Holdings Three
LLC
_______________________________________________________________
THIS
SENIOR SECURED REVOLVING CREDIT AGREEMENT (the “Agreement”), is made
this 6th day of
November, 2008, by and between Advance Display Technologies, Inc., a Colorado
corporation (the “Borrower”) and
▇▇▇▇▇▇▇▇ Holdings Three LLC, a Delaware limited liability company (the “Lender”).
RECITALS
WHEREAS,
Borrower and Lender have agreed to enter into this Agreement to establish a
revolving credit facility (the “Revolving Credit
Facility”) pursuant to which Lender will provide funding to Borrower in
an aggregate principal amount of up to Six Million Eight Hundred Ninety-Four
Thousand Three Hundred Sixty-Two Dollars ($6,894,362.00) (the “Maximum Revolving Credit
Amount”); and
WHEREAS,
Borrower has made in favor of Lender eight (8) promissory notes (the “Demand Notes”) with
an aggregate face value of $2,500,000 and Borrower desires and Lender agrees
that, subject to the conditions set forth herein, such Demand Notes shall be
continued as Loans under the Revolving Credit Facility provided for herein;
and
WHEREAS,
Lender is willing to make available the Loans under the Revolving Credit
Facility provided for herein based on the representations, warranties,
covenants, terms and conditions set forth herein, including but not limited to
Borrower’s grant of a first priority security interest in all of Borrower’s
assets to Lender as security for the repayment of the Obligations.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained, the parties agree as follows:
AGREEMENT
1. Commitment
to Lend.
(a) Subject
to the terms and conditions of this Agreement and to subsection (b) of this
Section 1, and as evidenced by a convertible promissory note of even date
herewith in favor of Lender in the form attached hereto as Exhibit
A (the “Revolving Note”),
Lender may from time to time until November 6, 2009 (the “Maturity Date”), in
its sole discretion, make one or more loans to Borrower (each a “Loan” and
collectively, the “Loans”), in an
aggregate unpaid principal amount not exceeding at any time the Maximum
Revolving Credit Amount.
(b) Each of
the Borrower and Lender agree that each of the Demand Notes (as set forth on
Schedule 1(b) attached hereto), having an aggregate principal balance of
$2,500,000 plus interest owing thereon through the date hereof in the aggregate
amount of $194,362, are hereby continued as Loans hereunder and under the
Revolving Note in the amount of $2,694,362, and that such Demand Notes are
hereby cancelled.
(c) In
the absence of an acceleration of the term of the Revolving Credit Facility, the
Revolving Credit Facility will expire and all principal, interest and other
amounts owed to Lender hereunder and under the other Loan Documents shall be
immediately due and payable on the Maturity Date, and Lender shall have no
further obligation with respect thereto after such date.
2. Manner
of Borrowing. At least two
(2) Authorized Representatives (as defined herein) of Borrower shall give Lender
notice (which shall be irrevocable) no later than 10:00 a.m. (Denver, Colorado
time) at least five (5) Business Days prior to the date on which Borrower
desires such Loan. For purposes of this Agreement, an “Authorized
Representative” shall be any one of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇
▇▇▇▇▇▇. Each such notice (the “Notice of Borrowing”)
shall be in substantially the form set forth on Schedule 2 and shall specify:
(i) the date on which Borrower desires such Loan; (ii) the aggregate amount of
the Loan to be made on such date, and (iii) a statement by the Authorized
Representative in which he or she certifies that: (x) the representations and
warranties set forth in Section 10 are true and complete as of such date; and
(y) Borrower is in compliance with the terms hereof and no condition or event
that constitutes a Default or an Event of Default has occurred or is continuing
since the date hereof. Lender shall provide written notice to
Borrower within two (2) Business Days of receipt of a Notice of Borrowing to
notify Borrower whether it has elected to provide such Loan. In the
event Lender elects to provide such Loan, it shall provide the requested amount
to Borrower in immediately available funds not later than 2:30 p.m. (Denver,
Colorado time) on the date requested in the Notice of
Borrowing. For the avoidance of doubt, Lender has no obligation
to make any Loans hereunder or under any other Loan Document.
3. Interest.
(a) Rates. Unless
an Event of Default is continuing, each Loan shall bear interest on the
outstanding principal amount thereof at a rate of ten percent (10%) per
annum. During an Event of Default (and whether before or after
judgment), each Loan (whether or not due) and, to the maximum extent permitted
by Applicable Law, each other amount due and payable under the Loan Documents
shall bear interest at a rate of fifteen percent (15%) per annum (the “Default
Rate”).
(b) Payment. Interest
shall be payable (i) when such Loan shall be due (whether at maturity, by reason
of notice of prepayment or acceleration (including in accordance with Section
14) or otherwise) or upon conversion in accordance with Section 8 hereof and
(ii) in the case of all other amounts due and payable under the Loan Documents,
on demand. Interest at the Default Rate shall be payable on
demand.
(c) Maximum Interest
Rate. Nothing contained in the Loan Documents shall require
Borrower at any time to pay interest at a rate exceeding the Maximum Permissible
Rate. If interest payable by Borrower on any date would exceed the
maximum amount permitted by the Maximum Permissible Rate, such interest payment
shall automatically be reduced to such maximum permitted amount, and interest
for any subsequent period, to the extent less than the maximum amount permitted
for such period by the Maximum Permissible Rate, shall be increased by the
unpaid amount of such reduction. Any interest actually received for
any period
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in excess
of such maximum amount permitted for such period shall be deemed to have been
applied as a prepayment of the Loans.
4. Repayment
of Principal. (a) The
Loans shall mature and become due and payable, and shall be repaid by the
Borrower upon the earliest to occur of (i) conversion of all amounts due
hereunder as provided in Section 8 hereof, (ii) a Default which is not cured
within the applicable Cure Period, or (iii) the Maturity
Date. Borrower may at any time prior to the Maturity Date repay the
amounts outstanding under the Revolving Credit Facility and subsequently receive
further Loans, consistent with the terms and conditions hereof.
(b) Borrower shall give
Lender notice of any prepayment no later than 11:00 a.m. (Denver, Colorado time)
two (2) Business Days before such prepayment. Each such notice of
prepayment shall specify (a) the date such prepayment is to be made and (b) the
amount to be prepaid. Amounts to be prepaid shall irrevocably be due
and payable on the date specified in the applicable notice of prepayment,
together with interest thereon as provided in Section 3(b).
5. Computation
of Interest. Interest shall be computed on the basis of a
365/366 day year and paid for the actual number of days elapsed. Interest for any
period shall be calculated from and including the first day thereof to but
excluding the last day thereof.
6. Payments
by Borrower.
(a) Time, Place and
Manner. All payments due to Lender under this Agreement, the
Revolving Note or the other Loan Documents shall, in the case of payments on
account of principal or interest on the Loans, be made directly to Lender at the
address found in Section 18. A payment shall not be deemed to have
been made on any day unless such payment has been received by Lender, at the
required place of payment, in Dollars in funds immediately available to Lender,
no later than 1:00 p.m. (Denver, Colorado time) on such
day.
(b) No
Reductions. All payments due to Lender under this Agreement,
the Revolving Note and the other Loan Documents shall be made by Borrower
without any reduction or deduction whatsoever, including any reduction or
deduction for any set-off, recoupment, counterclaim (whether sounding in tort,
contract or otherwise) or Tax.
(c) Extension of Payment
Dates. Whenever any payment to Lender under this Agreement,
the Revolving Note or the other Loan Documents would otherwise be due (except by
reason of acceleration) on a day that is not a Business Day, such payment shall
instead be due on the next succeeding Business Day, as the case may
be. If the date any payment under the Loan Documents is due is
extended (whether by operation of the Loan Documents, Applicable Law or
otherwise), such payment shall bear interest for such extended time at the rate
of interest applicable hereunder.
(d) Evidence of
Loans. Each Loan and Borrower’s obligation to repay that Loan
with interest in accordance with the terms of this Agreement shall be evidenced
by this Agreement, including but not limited to Section 1(b), the records of
Lender and the Revolving Note with respect to all Loans payable to the order of
Lender. The records of Lender shall be prima facie evidence of
Lender’s Loans and accrued interest thereon and of all payments made in respect
thereof.
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7. Taxes. Borrower shall
timely pay any Other Taxes to the relevant Governmental Authority in accordance
with Applicable Law. Borrower shall indemnify Lender within 10 days
after demand therefor, for the full amount of any Other Taxes paid by Lender and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to Borrower
by Lender shall be conclusive absent manifest error. As soon as practicable
after any such payment of Other Taxes by Borrower to a Governmental Authority,
Borrower shall deliver to Lender the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment reasonably
satisfactory to Lender.
8. Conversion. Subject
to the terms and conditions of the Revolving Note, Borrower agrees that Lender
may elect to convert all or any portion of the unpaid principal owed under this
Agreement and the Revolving Note into shares of Borrower’s Series G Preferred
Stock (“Shares”) at a
conversion price of $110.00 per share, or $0.11 per common share equivalent (the
“Conversion
Price”), by delivering written notice of such conversion (a “Conversion Notice”)
to Borrower. Upon conversion, certificates for the Shares so
purchased shall be delivered to Lender within three (3) Business Days of
Borrower’s actual receipt of the Conversion Notice.
(a) The
number and kind of securities purchasable upon the conversion and the Conversion
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(i) In case
of any reclassification or change of outstanding securities of the Shares or the
shares of Borrower’s common stock into which the Shares are themselves
convertible (the “Common Stock”) (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or in case
of any merger of Borrower with or into another corporation (other than a merger
with another corporation in which Borrower is a continuing corporation and which
does not result in any reclassification or change of outstanding securities
issuable upon conversion of the Revolving Note), or in case of any sale of all
or substantially all of the assets of Borrower, Lender shall have the right upon
conversion of the Revolving Note to receive, in lieu of Shares theretofore
issuable upon conversion of the Revolving Note, the kind and amount of shares of
stock, other securities, money and property receivable upon such
reclassification, change or merger by the holder of one Share or by the holder
of the Common Stock underlying the Shares. These provisions shall
similarly apply to successive reclassifications, changes, mergers and
transfers.
(ii) If
Borrower at any time while the Revolving Note remains outstanding and unexpired
shall subdivide or combine the Shares, the Conversion Price shall be
proportionately adjusted. In the case of a subdivision, the
Conversion Price shall be proportionately decreased and the number of Shares
shall be proportionately increased. In the case of a combination, the
Conversion Price shall be proportionately increased and the number of Shares
shall be proportionately decreased.
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(iii) If
Borrower at any time while the Revolving Note is outstanding and unexpired shall
pay a dividend or other distribution with respect to the Shares (except any
distribution specifically provided for in the foregoing paragraph (i) or (ii))
then the Conversion Price and the number of Shares into which the Revolving Note
may be converted shall be adjusted, from and after the date of determination of
stockholders entitled to receive such dividend or distribution to that price
determined by multiplying the Conversion Price in effect immediately prior to
such date of determination by a fraction (a) the numerator of which shall be the
total number of Shares of outstanding immediately prior to such dividend or
distribution and (b) the denominator of which shall be the total number of
Shares outstanding immediately after such dividend or distribution.
(iv) When
there is an adjustment in the Conversion Price and a corresponding increase in
the number of Shares that can be obtained by conversion, the adjustment to the
number of Shares shall be made by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Conversion Price by a fraction, the
numerator of which shall be the Conversion Price immediately prior to such
adjustment and the denominator of which shall be the Conversion Price
immediately thereafter, with the adjustment being made to the nearest whole
share.
(v) Whenever
the Conversion Price shall be adjusted, Borrower shall make a certificate signed
by its chief financial officer setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Conversion Price after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (by first
class mail, postage prepaid) to the Lender.
(b) Borrower
may not repay any portion of the principal to be converted to Shares by a
Conversion Notice after Borrower’s receipt thereof. In its
discretion, Borrower may also permit the conversion of some or all of the
accrued but unpaid interest to Shares but any such conversion may only be at the
Conversion Price stated herein. In the event of conversion of all
amounts due hereunder, this Agreement shall terminate and the parties shall have
no further obligations under this Agreement, the Revolving Note or the other
Loan Documents, except that Borrower shall be obligated to pay Lender,
immediately upon conversion, any interest accrued and unpaid or unconverted up
to and including the date of such conversion, and no more.
9. Security
Interest and Collateral.
(a) Borrower
hereby mortgages, pledges and assigns to Lender, and grants to Lender a
continuing security interest (the “Security Interest”)
in, and a continuing Lien upon, all of the property and assets of Borrower,
wherever located and whether now owned or hereafter acquired, including but not
limited to the property and assets listed on Exhibit
C (the “Collateral”).
(b) The
Security Interest secures payment and the performance of all Obligations,
whether now existing or hereafter incurred or arising, of every kind and
character, primary or secondary, direct or indirect, absolute or contingent,
sole, joint or several, and whether any amount due under the Loan Documents is
from time to time reduced and thereafter increased, or entirely extinguished and
thereafter reincurred, including, without limitation: (a) all
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Loans
under the Revolving Credit Facility; (b) all interest which accrues on amounts
due under the Revolving Credit Facility, until payment of such amounts in full,
including, without limitation, all interest provided for under this Agreement or
the Revolving Note; and (c) all other monies payable by Borrower, and all
obligations and agreements of Borrower to Lender, pursuant to this Agreement,
the Revolving Note or in the other Loan Documents.
(c) Borrower
agrees that the Security Interest shall, and that Borrower shall take all action
necessary, or that Lender may reasonably request, so that the Security Interest
shall at all times be valid, perfected and enforceable against Borrower and all
third parties, in accordance with the terms hereof, as security for the
Obligations, including, without limitation, the filing of Uniform Commercial
Code financing statements and any filing with the United States Patent and
Trademark Office or any foreign patent office, as applicable (which Borrower
authorizes Lender to file).
(d) The
Questionnaire is, as of the date hereof, correct and accurate in all material
respects.
(e) After the
occurrence and during the continuation of an Event of Default, Borrower shall
hold all proceeds of Collateral in trust for Lender, not commingle the same with
other property or funds of Borrower and, unless Lender shall have otherwise
instructed Borrower, deliver the same or cause the same to be delivered in the
exact form received, together with any necessary endorsements, to
Lender.
(f) Effective
upon the occurrence of an Event of Default, Borrower hereby designates and
appoints Lender and its designees as attorney in fact of Borrower, irrevocably
and with power of substitution, with authority to endorse Borrower’s name on any
notes, acceptances, checks, drafts, money orders, instruments or other evidences
of payment or proceeds of the Collateral that may come into Lender’s possession;
to execute proofs of claim and loss; to adjust and compromise any claims under
insurance policies; and to perform all other acts necessary and advisable, in
Lender’s sole discretion, to carry out and enforce this Agreement and the other
Loan Documents. All acts of said attorney or designee are hereby ratified and
approved by Borrower and said attorney or designee shall not be liable for any
acts of commission or omission nor for any error of judgment or mistake of fact
or law. This power of attorney is coupled with an interest and is irrevocable so
long as any of the Obligations remain unpaid or unperformed.
(g) Lender
shall have, with respect to the Collateral, in addition to all of its rights and
remedies under the Loan Documents, (a) the rights and remedies of a secured
party under the Uniform Commercial Code, whether or not the Uniform Commercial
Code would otherwise apply to the Collateral in question, and (b) the rights and
remedies of a secured party under all other Applicable Law.
10. Borrower’s
Representations and Warranties. To induce Lender to enter into
this Agreement, Borrower represents and warrants to Lender as
follows:
(a) Borrower
is a corporation duly organized, validly existing and in good standing under the
laws of Colorado with the power and authority to own and lease its properties
(as applicable) and to carry on its business as now being conducted and is
qualified and authorized to do business, in all jurisdictions in which the
character of its properties or the nature of its businesses requires such
qualification or authorization.
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(b) Except as
set forth in Schedule
10(b), Borrower is duly and validly authorized by all necessary corporate
action, has full power and authority to and has taken or caused to be taken all
necessary action to authorize it to execute and deliver this Agreement, the
Revolving Note and the other Loan Documents, and to perform and comply with the
terms, conditions, and agreements set forth herein and therein.
(c) Each of
this Agreement, the Revolving Note and the other Loan Documents will have been
duly executed and delivered by Borrower and is, or when so delivered will be, a
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally.
(d) Except as
set forth in Schedule
10(d), the execution of and performance under this Agreement, the
Revolving Note and the other Loan Documents and the borrowings hereunder and
thereunder by the Borrower will not violate: (i) any statute, regulation or
other provision of law; (ii) any order of a court or instrumentality of
government or regulatory entity or authority having jurisdiction over Borrower;
(iii) any provision of any organizational document of Borrower; or (iv) any
Contract to which Borrower is a party or by which Borrower or any of its
property is bound. Except as set forth in Schedule 10(d) there
are no provisions of any existing Contract of any kind binding on Borrower or
affecting its business or property that would prohibit the execution, delivery
or performance of the terms of this Agreement, the Revolving Note or the other
Loan Documents.
(e) Except as
set forth in Schedule
10(e), Borrower and its Subsidiary are in compliance with all (x)
Contracts and (y) laws, rules or regulations, orders, judgments, writs,
injunctions, decrees, determinations, awards of any applicable Governmental
Authority and all Governmental Approvals. No consent or approval of,
giving of notice to, registration with, or taking of any other action in respect
of any state, federal or other governmental authority or agency is required of
Borrower with respect to the execution, delivery and performance by Borrower of
its obligations under this Agreement, except for the filing of notices pursuant
to applicable state securities law, which filings will be made by the time
required thereby.
(f) Except as
set forth in Schedule
10(f), no additional Governmental Approvals are necessary in order to
carry on the business of the Borrower or its Subsidiary.
(g) Except as
set forth in Schedule
10(g), Borrower owns its property and assets free and clear of all Liens,
loans and encumbrances, except such encumbrances and Liens which arise in the
ordinary course of business and do not materially impair Borrower’s ownership or
use of such property or assets. Except as set forth in Schedule 10(g), with
respect to the property and assets it leases, Borrower is in compliance with
such leases and, to its knowledge, holds a valid leasehold interest free of any
Liens, claims or encumbrances.
(h) Borrower
owns or possesses sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information and
proprietary rights and processes necessary for its business, as conducted or
proposed to be conducted, without any conflict with, or infringement of, the
rights of others. Except as set forth in Schedule 10(h),
Borrower has not received and does not have any knowledge of any communications
alleging that it has violated or, by conducting its business, would violate any
of the patents, trademarks, service marks, trade names, copyrights, trade
secrets, or other proprietary
7
rights or
processes of any other person or entity. To its knowledge, none of
Borrower’s employees is obligated under any Contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of such employee’s best efforts to promote the interest
of Borrower or that would conflict with Borrower’s business, as conducted or
proposed to be conducted. Neither the execution or delivery of this
Agreement, nor the carrying on of Borrower’s business by the employees of
Borrower, nor the conduct of Borrower’s business as proposed, will, to
Borrower’s knowledge, conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any contract,
covenant or instrument under which any such employee is now
obligated.
(i) Except as
set forth on Schedule
10(i), there are not, in any court or before any arbitrator of any kind
or before or by any governmental or non-governmental body, any actions, suits or
proceedings pending (nor, to the knowledge of the Borrower and its Subsidiary,
threatened) against or in any other way relating to or affecting (a) the
Borrower or its Subsidiary of their respective businesses or properties or (b)
this Agreement or the other Loan Documents, in each case, as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, reasonably be expected to
result in a material adverse effect.
(j) Neither
Borrower nor its Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock. No part of the proceeds of the Revolving
Note shall be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, to purchase or carry Margin Stock and the making of
the Revolving Note does not and will not violate Regulation T, U or X of
the Board of Governors of the Federal Reserve System.
(k) Borrower
has filed or caused to be filed all federal, state and local tax returns
required to be filed by it and has paid or caused to be paid all Taxes shown to
be due and payable on such returns or on any assessments received by it, except
for Taxes that are subject to a good faith contest and for which adequate
reserves have been established in accordance with Generally Accepted Accounting
Principles (“GAAP”).
(l) Except as
set forth in Schedule
10(l), the Shares issuable upon exercise of Lender's rights under Section
8 have been duly and validly reserved and, when issued in accordance with the
provisions of this Agreement, will be validly issued, fully paid and
non-assessable, and will be free of any taxes, Liens, charges or encumbrances of
any nature whatsoever; provided, that the Shares issuable pursuant to this
Agreement may be subject to restrictions on transfer under state and/or federal
securities laws. The issuance of certificates for the Shares upon
exercise of Lender's rights under Section 8 shall be made without charge to
Lender for any issuance tax in respect thereof, or other cost incurred by
Borrower in connection with such exercise and the related issuance of the
Shares; provided, that Borrower shall not be required to pay any Tax which may
be payable in respect of any transfer and the issuance and delivery of any
certificate in a name other than that of Lender.
(m) Except as
set forth in Schedule
10(m), all issued and outstanding shares of Common Stock, the Shares or
any other outstanding securities of Borrower have been duly authorized and
validly issued and are fully paid and nonassessable.
(n) The
issuance of the Shares upon exercise of Lender’s rights under Section 8, and the
issuance of the Common Stock upon conversion of the Shares, will each constitute
a
8
transaction
exempt from (i) the registration requirements of Section 5 of the Act, in
reliance upon Section 4(2) thereof or other applicable exemptions, and (ii) the
qualification requirements of the applicable state securities laws.
(o) Borrower
does not own, directly or indirectly, any subsidiaries other than the
Subsidiary. The Pledged Shares represent 100% of all issued and outstanding
Equity Interests in the Subsidiary, and Borrower is the sole legal and
beneficial owner of the Share Pledge Collateral free and clear of any Lien
(other than the Lien created pursuant to this Agreement), adverse claim (as
defined in Section 8-102(a)(1) of the Uniform Commercial Code), restriction on
transfer, or other any other right, power or interest in favor of any person
(other than Lender). The Pledged Shares are duly authorized and validly issued,
fully paid and non-assessable.
11. Lender’s
Representations and Warranties. This
Agreement has been entered into by Borrower in reliance upon the following
representations and covenants of Lender:
(a) The right
to acquire the Shares or the Shares issuable upon exercise of Lender's rights
contained herein will be acquired for investment and not with a view to the sale
or distribution of any part thereof, and Lender has no present intention of
selling or engaging in any public distribution of the same except pursuant to a
registration or exemption.
(b) Lender
understands that the Shares issuable upon exercise of this Agreement have not
been not registered under the Securities Act of 1933, as amended (the “Act”) or
qualified under applicable state securities laws on the ground that the issuance
contemplated by this Agreement will be exempt from the registration and
qualifications requirements thereof.
(c) Lender is
an "accredited investor" within the meaning of Rule 501 of Regulation D, as
presently in effect, under the Act.
12. Borrower's
Covenants. Until all
Obligations and liabilities of Borrower to Lender under this Agreement, the
Revolving Note and the other Loan Documents have been paid and performed in
full, Borrower shall keep and perform the following covenants, and does hereby
covenant, agree and promise to Lender as follows:
(a) Borrower
shall, at all times during the term of the Revolving Credit Facility and at all
times that any Loans hereunder are outstanding, do the following:
(i) Maintain
adequate general public liability and other insurance on the Collateral securing
the Revolving Note (other than the patents and other intellectual property) in
an amount equal to fair market value of such Collateral, and Borrower will upon
request of Lender, deliver to Lender copies of the foregoing
policies.
(ii) Use any
and all amounts loaned under this Agreement in accordance with a budget or other
spending plan that is unanimously approved by Borrower’s Board of
Directors.
(iii) Promptly
furnish to Lender such information concerning the operations, business, affairs,
and financial condition of the Borrower as Lender may reasonably request from
time to time.
(iv) At all
times (a) maintain complete and accurate books and records, and (b) permit
Lender to examine and inspect all properties, books, operations and records
of
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Borrower
at any reasonable time and from time to time wherever such properties, books,
and records are located.
(v) Promptly
inform Lender of the occurrence of any Default or Event of Default
hereunder.
(vi) Remain a
corporation existing and governed by the laws of the State of Colarado, and will
not (A) dissolve or merge or consolidate with, or into, any Person, or (B)
change its name, identity or structure or organizational number from that
specified in the Questionnaire (or, if no such number is specified, adopt any
such number), unless, in any case, (1) Lender shall have had not less than ten
(10) Business Days prior notice thereof, and (2) thereafter the Security
Interest continues to comply with the requirements of this
Agreement.
(b) Borrower
shall cause the authorization of (i) enough authorized shares of Common Stock to
issue any of the shares of Common Stock underlying the Shares into which the
Loans may be converted pursuant to Section 8 hereof, and (ii) enough authorized
Shares to satisfy its obligations to convert the Loans to Shares at such time as
Lender may elect such conversion in accordance with Section 8 hereof, by no
later than June 30, 2009.
(c) If Lender
proposes to sell the Shares or the Common Stock into which the Shares are
convertible in compliance with Rule 144 promulgated by the Securities Exchange
Commission (the “SEC”), then, upon
Lender's written request to Borrower, Borrower shall furnish to Lender, within
ten (10) days after receipt of such request, a written statement confirming
Borrower's compliance with the filing requirements of the SEC as set forth in
such rule or any successor rule, as it may be amended from time to
time.
(d) Borrower
shall, and shall cause its Subsidiary to, pay all Taxes imposed upon it or any
of its properties or assets or in respect of any of its income, businesses or
franchises before any penalty or fine accrues thereon, and all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become a Lien upon any of its
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto, provided, however, that no such Taxes or claim
need be paid if they are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as adequate
reserves or other appropriate provisions, as shall be required in conformity
with GAAP shall have been made therefor.
(e) Borrower shall not
authorize or cause the Subsidiary to issue, and shall not accept, any capital
stock, any rights or options to acquire any capital stock, other securities or
Equity Interests, each in addition to or in substitution for the Share Pledge
Collateral, if such issuance would result in Borrower’s not having 100% direct
ownership of all Equity Interests in the Subsidiary, and, in the event that
Borrower shall at any time receive any additional Pledged Shares or, in
respect of the Pledged Shares, any shares, options, warrants, rights or other
similar property, including, without limitation, any certificate representing
any distribution in connection with any recapitalization, reclassification or
increase or reduction of capital, or issued in connection with any
reorganization of the Subsidiary (whether as an addition to, in substitution of,
or in exchange for, such Pledged Shares or otherwise), Borrower shall (i)
receive and hold the same in trust for Lender, as additional Share Pledge
Collateral, (ii) not
commingle the same with any of Borrower’s property, and (iii) deliver to
Lender any and all certificates or instruments evidencing the same, on or before
the close of business on the fifth (5th) day following the receipt thereof by
Borrower, in the identical form
received, with any
necessary endorsements or
10
with appropriate stock or
bond powers duly executed in blank, to be held by Lender, subject to the
terms of this Agreement, as additional Share Pledge Collateral.
(f) Borrower
shall not authorize or cause the Subsidiary to pay any Distributions (of
whatever form or nature) in respect of the Share Pledge Collateral, and, in the
event that Borrower shall at any time receive any Distribution, Borrower shall
(i) receive and hold all Distributions in trust for Lender, (ii) not commingle
any Distribution with any of its other funds or property, and (iii) deliver to
Lender, on or before the close of business on the fifth (5th) day following the
receipt thereof by Borrower, in the identical form received, all Distributions
in the identical form received, with any necessary endorsements or with
appropriate stock or bond powers duly executed in blank, with all such
Distributions being held as collateral security hereunder.
(g) Without
the prior written consent of Lender and except in the ordinary course of
business, Borrower shall not at any time during the term of this Agreement sell
(including any sale and leaseback), mortgage, pledge or otherwise encumber or
dispose of any of the Collateral securing the Revolving Note, or permit any new
Liens to be placed thereon.
13. Events of
Default. Any or all of the liabilities of Borrower to the
Lender in connection with the Revolving Credit Facility shall, at Lender’s
option, be due and payable upon the occurrence of any of the following events of
default (each of which shall be hereinafter referred to as an “Event of
Default”):
(a) Borrower
defaults in the payment of any principal of or interest on the Revolving Note
when the same becomes due and payable, whether at the Maturity Date or at
another time for such payment as is required by this Agreement or the Revolving
Note;
(b) any
representation and warranty in any Loan Document shall at any time prove to have
been incorrect or misleading in any material respect when made or deemed made by or on behalf of Borrower in or in
connection with any Loan Document or any
amendment or modification thereof or waiver
thereunder, and, if the circumstances giving rise to such false or misleading
representation or warranty that resulted from an inadvertent or unintentional
error are susceptible to being cured in all material respects, such false or
misleading representation or warranty shall not be cured in all material
respects within ten (10) Business Days after the date on which written notice
thereof shall have been given to Borrower by Lender (the “Cure Period”);
(c) Borrower
defaults in the performance of or compliance with any term contained herein
(other than those referred to in paragraph (a) of this Section 13) and such
default is not remedied within the Cure Period;
(d) issuance
of any injunction or of an attachment or judgment against any property of
Borrower securing the Revolving Note which is not discharged within ten (10)
Business Days after issuance;
(e) Borrower
or its Subsidiary is in default in the performance of or compliance with any
term or any evidence of any Indebtedness or of any mortgage, indenture or other
agreement relating thereto or any other condition exists (which default or
condition has not been cured or waived prior to any action being taken hereunder
or under the Revolving Note with respect to such default), and as a consequence
of such default or condition such Indebtedness has
11
become
due and payable before its stated maturity or before its regularly scheduled
dates of payment;
(f) the
insolvency of Borrower, or the filing of any bankruptcy, reorganization, debt
arrangement or other proceeding or case against Borrower under any bankruptcy or
insolvency law or commencement of any dissolution or liquidation proceeding
against Borrower, any of which is either consented to or acquiesced in by
Borrower or remains undismissed for thirty (30) days after the date of entry or
the commencement by Borrower of a voluntary case under the federal bankruptcy
laws or any state insolvency or similar laws, or the consent by Borrower to the
appointment of a receiver, liquidator, assignee, trustee, custodian or similar
official for Borrower or any of its property, as the case may be, or the making
by Borrower of any assignment for the benefit of creditors;
(g) any
material provision of a Loan Document shall cease to be valid, binding and
enforceable against Borrower or the Security Interest ceases to be a valid and
perfected first-priority security interest in the Collateral or any portion
thereof, and, if capable of being remedied, such default shall continue
unremedied for a period of 30 days after Lender gives notice to Borrower
requiring that such default be cured; or
(h) any
transfer, purchase, pledge, loan, impairment, exchange or sale of Borrower’s
assets except for sales of goods or services in the ordinary course of
business.
Borrower waives demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, and all other actions taken in reliance hereon and all other demands
and notices of any type.
14. Acceleration. In
addition to Lender’s rights under Section 15 hereof, Borrower hereby agrees that
Lender may, in its sole discretion, elect to accelerate payment of all
principal, interest and other amounts, if any, that are outstanding under the
Loan Documents as of July 1, 2009 (the “Performance Date”) if
Borrower has not sold and delivered and Borrower has not executed any binding
agreements (the “Binding Agreements”)
with unaffiliated third-parties for the sale of SkyNet™, the Borrower’s
proprietary digital display product, during the period beginning on the date
hereof and ending on the Performance Date (the “Performance
Period”). If Borrower does not provide Lender with evidence
satisfactory to Lender of one or more closed sales of SkyNet™ or Binding
Agreements on or before the Performance Date, then Lender may declare the Loans
due and payable within thirty (30) days of Lender’s written notice of
acceleration (“Acceleration Notice”)
being delivered to Borrower (the “Acceleration
Date”).
15. Foreclosure.
(a) If
Borrower is unable to pay all amounts outstanding on the Acceleration Date or
the Maturity Date, as applicable, or upon an Event of Default that is
continuing, Lender may, among other things, (i) elect to sell or seize all or
any portion of the Collateral subject to the conditions set forth in this
Section 15 (the “Foreclosure Right”),
or (ii) refinance the Loans by offering to enter into a new revolving credit or
installment loan agreement, the terms of which would be in Lender’s sole
discretion.
(b) In the
event Lender elects to exercise its Foreclosure Right, Borrower shall give Hilco
Trading LLC, or such other qualified appraiser of enterprises and intellectual
property as may be mutually selected by the parties (the “Appraiser”),
reasonable access to all of the Collateral, together with any agreements,
financial statements, or other documents reasonably
12
requested
by the Appraiser, which are necessary for the Appraiser to determine the fair
market value of the Collateral (the “Appraisal
Value”). To the extent practicable, the Appraiser shall
include separate valuations of individual assets in the Appraisal
Value. The Appraisal Value as determined by the Appraiser shall be
deemed final and the parties hereby waive any objection thereto.
(c) After the
Appraiser has determined the Appraisal Value and within a reasonable time
thereafter, Lender may elect to purchase all or any portion of the Collateral at
the Appraisal Value in exchange for the surrender of unpaid principal and
interest on the Loans or may elect to sell the Collateral in a private sale or
at a public auction. Any public auction of Collateral (the “Auction”) shall be
conducted in accordance with the Uniform Commercial Code, as
amended.
(d) All
proceeds received from the sale of the Collateral at any private sale or Auction
(the “Proceeds”), shall be
disbursed by Lender as follows:
(i) First,
the Proceeds shall be applied to the payment of all reasonable and documented
out-of-pocket costs and expenses incurred in connection with the sale of orother
realization upon Collateral, including reasonable attorneys’ fees and
disbursements;
(ii) Second,
to the payment of the other Obligations owing to Lender (with the Borrower
remaining liable for any deficiency); and
(iii) Third,
Lender shall disburse in immediately available funds any remaining Proceeds to
Borrower.
(e) Borrower waives (i) any
claim that, as to any part of the Collateral, an auction or private sale, should
Lender elect so to proceed, is, in and of itself, not a commercially reasonable
method of sale for such Collateral (ii) except as otherwise provided in this
Agreement, the Revolving Note or any of the Loan Documents, to the extent
permitted by Applicable Law, notice or judicial hearing in connection with
Lender’s taking possession or disposition of any of the Collateral including any
and all prior notice and hearing for any prejudgment remedy or remedies and any
such right that Borrower would otherwise have under Applicable Law, and all
other requirements as to the time, place and terms of sale or other requirements
with respect to the enforcement of Lender’s rights hereunder, (iii) all rights
(x) of redemption, appraisement, valuation, stay and extension or moratorium and
(y) to the marshalling of assets and (iv) all other rights the exercise of which
would, directly or indirectly, prevent, delay or inhibit the valid and lawful
enforcement of any of the rights or remedies under the Loan Documents or the
absolute sale of the Collateral, now or hereafter in force under any Applicable
Law, and Borrower, for itself and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waive the benefit of all such laws
and rights.
16. Conditions
to Initial Loan. The obligation of Lender to make its
initial Loan is subject to its receipt of each of the following, in form and
substance reasonably satisfactory to Lender:
(a) a
certificate of the Secretary or an Assistant Secretary of Borrower, dated the
requested date for the making of such Loan in form and substance reasonably
satisfactory to Lender;
13
(b) a duly
executed Revolving Note for Lender and a duly executed copy of each of the other
Loan Documents;
(c) a
completed copy of the Questionnaire;
(d) a share
certificate or share certificates representing the Pledged Shares, together with
a stock power or stock powers (undated and duly executed in blank) for the
Pledged Shares;
(e) an
opinion of Davis, Graham, & ▇▇▇▇▇▇, and such opinion dated the requested
date for the making of such Loans addressing such matters as Lender reasonably
requests;
(f) a copy of
any Governmental Approval and other third-party consents or approvals required
by Borrower to execute, deliver and perform the Loan Documents to which it is a
party;
(g) payment
of all fees, disbursements and expenses of Lender, payable at the closing based
on invoices presented at least two Business Days prior to closing;
(h) results
of a recent search by a Person satisfactory to Lender of the Uniform Commercial
Code, judgment and tax lien filings which may have been filed with respect to
personal property of Borrower, and the results of such search shall be
satisfactory to Lender;
(i) (i) such
UCC-1 financing statements and other documents as Lender may request, the filing
or recordation of which is necessary or appropriate in Lender’s reasonable
determination to create or perfect a security interest in the Collateral under
Applicable Law, and (ii) evidence of the filing or recordation of the same in
such offices as Lender shall have specified;
(j) evidence
of filing or recordation at the United States Patent and Trademark Office and
certain foreign patent offices, as applicable; provided that, Borrower shall
provide Lender with evidence that it has filed a notice of security interest for
the following patent applications: (x) P10514577-5 (filed in Brazil) and (y)
MX/a/2007/002300 (filed in Mexico) (together, the “Foreign Filings”)
within 15 Business Days from the date hereof, and Borrower may not request any
Loans hereunder after the initial Loan requested as of the date hereof until it
has provided Lender with evidence of such Foreign Filings; provided further, the
foregoing requirement may be waived by Lender, in its sole
discretion;
(k) evidence
in form and substance satisfactory to it that all of the requirements of Section
12(a) hereof shall have been satisfied; and
(l) such
instruments and other documents as Lender may request, the possession of which
is necessary or appropriate in Lender’s determination to create or perfect a
security interest in the Collateral under Applicable Law.
17. Conditions
to Each Loan. Borrower acknowledges that Lender will not make
any Loan requested to be made by it, including its initial Loan, without at
least the satisfaction of the following conditions:
14
(a) Lender
shall have received a Notice of Borrowing (except for the initial Loan) with
respect to such Loan complying with the requirements of Section 2;
(b) The
representations and warranties of Borrower to Lender shall be accurate on the
date hereof and on and as of the date of each Notice of Borrowing under the
Revolving Credit Facility with the same effect as though such representations
and warranties had been made on and as of such date;
(c) All
covenants and agreements required to be performed by Borrower under this
Agreement, the Revolving Note and the other Loan Documents shall have been
performed to the reasonable satisfaction of Lender as and when
required;
(d) On the
date hereof and on and as of the date of each Notice of Borrowing under the
Revolving Credit Facility no Default or Event of Default shall have
occurred;
(e) All legal
details and proceedings in connection with the transactions contemplated by this
Agreement shall be in form and substance reasonably satisfactory to Lender and
its counsel.
Except to the extent that Borrower
shall have disclosed in the Notice of Borrowing, or in a subsequent notice given
to Lender prior to 5:00 p.m. (Denver, Colorado time) on the Business Day
immediately preceding the requested date for the making of the requested Loan,
that a condition specified in clause (b), (c) or (d) above will not be fulfilled
as of the requested time for the making of such Loan, Borrower shall be deemed
to have made a representation and warranty as of the time of the making of such
Loan that the conditions specified in such clauses have been fulfilled as of
such time.
18. Notices. All
notices, consents, approvals, requests, demands and other communications which
are required or may be given hereunder shall be in writing and shall be duly
given if personally delivered, sent by telefax, telegram or overnight courier or
posted by U.S. registered or certified mail, return receipt requested, postage
prepaid and addressed to the other parties at the addresses set forth
below:
Lender:
▇▇▇▇▇▇▇▇
Holdings Three LLC
▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Borrower:
Advance
Display Technologies, Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer
Any party
may from time to time change the address to which notices to it are to be sent
by giving notice of such change to the other parties in the manner set forth
herein. Notices shall be
15
deemed
given on the next Business Day following the day such notice is posted or sent
by courier in the manner described above, and if sent by telefax or telegram, on
the date such notice is sent, and if delivered in person, on the date so
delivered. Any notice period shall commence on the day such notice is
deemed given.
19. Miscellaneous.
(a) No
failure or delay of any party hereto to exercise any right given to it
hereunder, or to insist on strict compliance with any provision hereunder, shall
constitute a waiver of such provision or of any other provision hereof, or a
waiver of any breach, and no waiver of any provision or breach of any provision
shall constitute a waiver of any other provision or breach or of any subsequent
breach of the same provision. No waiver shall be effective unless in
writing and signed by the party having the right to waive such
provision.
(b) All
covenants, agreements, representations and warranties made herein and in any
other instruments or documents delivered pursuant hereto shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect so long as any of the amounts due hereunder are outstanding and
unpaid.
(c) Whether
or not any Loans are made hereunder, Borrower shall:
(i) pay or
reimburse Lender for all transfer, documentary, stamp and similar taxes, and all
recording and filing fees and taxes, payable in connection with, arising out of,
or in any way related to, the execution, delivery and performance of this
Agreement, the Revolving Note or any of the Loan Documents or the making of the
Loans;
(ii) pay or
reimburse Lender for all reasonable and documented out-of-pocket costs and
expenses (including reasonable fees and disbursements of legal counsel,
appraisers, accountants and other experts employed or retained by Lender)
incurred by Lender in connection with, arising out of, or in any way related to:
(i) the negotiation, preparation, execution and delivery of (A) this Agreement,
the Revolving Note or any of the Loan Documents and (B) whether or not executed,
any waiver, amendment or consent thereunder or thereto; (ii) the administration
of and any operations under the Loan Documents; (iii) consulting with respect to
any matter in any way arising out of, related to, or connected with, the Loan
Documents, including (A) the protection or preservation of the Collateral, (B)
the protection, preservation, exercise or enforcement of any of the rights of
Lender in, under or related to the Collateral or the Loan Documents or (C) the
performance of any of the obligations of Lender under or related to the Loan
Documents; (iv) protecting or preserving the Collateral; or (v) protecting,
preserving, exercising or enforcing any of the rights of Lender in, under or
related to the Collateral or the Loan Documents, including defending the
Security Interest as a valid, perfected, first priority security interest in the
Collateral;
(iii) indemnify
and hold Lender (or a director, officer, manager, employee or agent of Lender)
harmless from and against all losses (including judgments, penalties and fines)
suffered, and pay or reimburse Lender for all reasonable and documented
out-of-pocket costs and expenses (including reasonable fees and disbursements of
legal counsel and other experts employed or retained by Lender) incurred by
Lender in connection with, arising out of, or in any way related to (i) any Loan
Document Related Claim (whether asserted by Lender or Borrower or any other
Person), including the prosecution or defense thereof and any litigation or
proceeding with respect thereto (whether or not, in the case of any such
litigation or proceeding, Lender is a party thereto), or (ii) any investigation,
governmental or otherwise,
16
arising
out of, related to, or in any way connected with, this Agreement, the Revolving
Note or any of the Loan Documents or the relationships established thereunder,
except that the foregoing indemnity shall not be applicable to any loss suffered
by Lender to the extent such loss is determined by a judgment of a court that is
binding on Borrower and Lender, final and not subject to review on appeal, to be
the result of acts or omissions on the part of Lender constituting (x) willful
misconduct, (y) knowing violations of law or (z) in the case of claims by
Borrower against Lender, Lender’s failure to observe any other standard
applicable to it under any of the other provisions of this Agreement, the
Revolving Note or any of the Loan Documents or Applicable
Law.
(d) This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof, superseding all prior negotiations,
correspondence, understandings and agreements, if any, between the parties; no
amendment or modification of this Agreement shall be binding on the parties
unless made in writing and duly executed by all parties. There are no
oral or implied agreements and no oral or implied warranties between the parties
hereto other than those expressed herein.
(e) This
Agreement and the exhibits attached hereto shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns. This Agreement shall not be assignable by the Borrower
without the prior written consent of Lender.
(f) The
section and other headings in this Agreement are for reference only and shall
not limit or otherwise affect any of the terms hereof.
(g) Borrower
agrees to execute, acknowledge, seal and deliver, after the date hereof, without
additional consideration and at its own cost and expense, such further
assurances, instruments and documents, and to take such further actions, as
Lender shall request in order to fulfill the intent of this Agreement and the
transactions contemplated hereby, including, without limitation, one or more
deposit account control agreements.
(h) Any
provision in this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction.
(i) Should
this Agreement be referred to an attorney for collection, whether or not
judgment has been confessed or suit has been filed, Borrower shall pay all of
Lender's actual costs, fees (including reasonable attorneys' fees) and expenses
resulting from such referral.
(j) This
Agreement and any amendments, waivers, consents or supplements hereto may be
executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so delivered shall be deemed an
original, but all of which counterparts shall constitute but one and the same
instrument.
(k) This
Agreement is made in and shall be governed by and construed and interpreted in
accordance with the laws of the State of Colorado.
(l) BORROWER
AND LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY
CLAIM RELATED TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
17
20. Definitional
Provisions. As used herein, the following terms have the
following meanings:
“Applicable
Law” means (i) all applicable common law and principles of equity and (ii) all
applicable provisions of all (A) constitutions, statutes, rules, regulations and
orders of governmental bodies, (B) Governmental Approvals and (C) orders,
decisions, judgments and decrees of all courts (whether at law or in equity or
admiralty) and arbitrators, in the case of each of (i) and (ii), having the
force of law.
“Business
Day” means all days other than Saturdays, Sundays and federal banking
holidays.
“Contract”
means (i) any agreement (whether bilateral or unilateral or executory or
non-executory and whether a Person entitled to rights thereunder is so entitled
directly or as a third-party beneficiary), including an indenture, lease or
license, (ii) any deed or other instrument of conveyance, (iii) any certificate
of incorporation or charter and (iv) any bylaw. Unless otherwise
specified, Contract means any of the foregoing to which the Borrower is a party
or which binds the Borrower or its property.
“Default”
means any condition or event that constitutes an Event of Default or that with
the giving of notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
“Distribution”
means (in each case whether or not in cash) all dividends (including stock
dividends) and interest on the Share Pledge Collateral.
“Dollars”
and the sign “$” mean lawful money of the United States of America.
“Equity
Interests” means, with respect to any Person, shares of capital stock of (or
other ownership or profit interests in) such Person, warrants, options or other
rights for the purchase or other acquisition from such Person of shares of
capital stock of (or other ownership or profit interests in) such person,
securities convertible into or exchangeable for shares of capital stock of (or
other ownership or profit interests in) such person or warrants, rights or
options for the purchase or other acquisition from such person of such shares
(or such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are authorized or otherwise existing on any
date of determination.
“Governmental
Authority” means the government of any federal, state, municipal or other
political subdivision in which Borrower’s facility is located, and any other
government or political subdivision thereof exercising jurisdiction over
Borrower’s facility, including all agencies and instrumentalities of such
governments and political subdivisions.
“Indebtedness” means, with respect to any
Person, any indebtedness of such Person (excluding accrued expenses and trade
payables), whether or not contingent (i) in respect of borrowed money, (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (for reimbursement agreements in respect thereof) or (iii) in respect of
banker’s acceptances.
18
“Liability”
of any Person means (in each case, whether with full or limited recourse),
without duplication, any indebtedness, liability, obligation, covenant or duty
of or binding upon, or any term or condition to be observed by or binding upon,
such Person or any of its assets, of any kind, nature or description, direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, whether arising under Contract, Applicable Law, or
otherwise, whether now existing or hereafter arising, and whether for the
payment of money or the performance or non-performance of any act.
“Lien”
means, with respect to any property or asset (or any income or profits
therefrom) of any Person (in each case whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise) (i) any mortgage, lien, pledge, attachment, levy or other security
interest of any kind thereupon or in respect thereof or (ii) any other
arrangement, express or implied, under which the same is subordinated,
transferred, sequestered or otherwise identified so as to subject the same to,
or make the same available for, the payment or performance of any Liability in
priority to the payment of the ordinary, unsecured creditors of such
Person. For the purposes of this Agreement, a Person shall be deemed
to own subject to a Lien any asset that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
“Loan
Documents” means (i) this Agreement and the Revolving Note and (ii) all other
agreements, documents and instruments executed pursuant to the instruments and
agreements listed in clause (i).
“Loan
Document Related Claim” means any claim (whether civil, criminal or
administrative and whether sounding in tort, contract or otherwise) in any way
arising out of, related to, or connected with, this Agreement, the Revolving
Note or the Loan Documents or the relationships established thereunder, whether
such claim arises or is asserted before or after the closing.
“Margin
Stock” means “margin stock” as defined in Regulation U.
“Maximum
Permissible Rate” means, with respect to interest payable on any amount, the
rate of interest on such amount that, if exceeded, could reasonably be expected
to, under Applicable Law, result in (i) civil or criminal penalties being
imposed on the payee or (ii) the payee’s being unable to enforce payment of (or,
if collected, to retain) all or any part of such amount or the interest payable
thereon.
“Obligations”
means all obligations of every nature of Borrower from time to time owed to
Lender under the Loan Documents, whether for principal, interest, fees,
expenses, indemnifications or otherwise.
“Other
Taxes” means all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made hereunder or under any other Loan Document or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
“Pledged Shares” means, at any time,
the ownership interests of Borrower in the Equity Interests in the Subsidiary at
such time, including all stock certificates representing the Pledged Shares and
any rights and interests acquired after the date hereof. The Pledged Shares
include, on the date hereof, 100 shares of the common stock (with par value of
$1 per share) of the Subsidiary held by Borrower and represented by stock
certificate No. 1.
19
“Questionnaire”
means the Security Questionnaire attached hereto as Exhibit
B.
“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.
“Share
Pledge Collateral” means (a) all of the Pledged Shares and all rights
(contractual and otherwise and whether constituting accounts, general
intangibles or investment property or financial assets) constituting, arising
under, connected with, or in any way related to the Pledged Shares, (b) all
stock dividends, options or rights of any nature whatsoever which may be now
outstanding or hereafter issued or granted by the Subsidiary to Borrower in
respect of the Pledged Shares, and the right to receive all monies and property
representing a Distribution in respect of the Pledged Shares, (c) all income
from any of the foregoing, and (d) all proceeds, products and accessions of and
to the foregoing.
“Subsidiary”
means ADTI Media Inc., a Colorado corporation.
“Tax”
means any federal, state or foreign tax, assessment or other governmental charge
or levy (including any withholding tax) upon a Person or upon its assets,
revenues, income or profits.
[Signature
Page Follows.]
20
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first written above.
BORROWER:
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ADVANCE
DISPLAY TECHNOLOGIES, INC.
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By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
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LENDER:
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▇▇▇▇▇▇▇▇
Holdings Three LLC
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By:
/s/ ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Manager
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EXHIBIT
A
REVOLVING
NOTE
EXHIBIT
B
SECURITY
AGREEMENT QUESTIONNAIRE
EXHIBIT
C
COLLATERAL