EXHIBIT 2.5
NEW DEBT EXCHANGE AGREEMENT
THIS DEBT EXCHANGE AGREEMENT is made as of this 25th day of November,
2003, by and between Advance Display Technologies, Inc., a Colorado corporation
(the "Company"), and Xxxxxxxx X. XxXxxxxx (the "Lender").
RECITALS
WHEREAS, as of the date hereof, the Company is indebted to the Lender in
the amount of $1,008,985 pursuant to a series of demand promissory notes issued
by the Company to the Lender on and after January 25, 2002 (each, a "Note," and
collectively, the "Notes");
WHEREAS, the Company wishes to effect a transaction comprised of the
following transactions: (1) the conversion of all of the Series C Preferred
Stock into shares of the Company's Common Stock, $.001 par value per share
("Common Stock"), on a 1-for-1 basis (the "Conversion); (2) an investment from
one or more third parties of $1 million in exchange for shares of the Company's
newly-created Series D Preferred Stock; (3) the Company's acquisition of all of
the membership interests of Regent Theaters, LLC; and (4) the conversion of the
Company's outstanding debt into shares of the Company's newly-created Series E
Preferred Stock and Series F Preferred Stock (collectively, the "Transaction");
WHEREAS, in connection with the Transaction, the Lender wishes to exchange
the principal and interest outstanding under the Lender's Notes into shares of
the Company's Series E Preferred Stock ("Series E Shares") at a rate of $1.00
per Series E Share ("Exchange Price");
WHEREAS, the Board of Directors of the Company, after being fully advised
of the relationship of the parties, the terms of the proposed exchange and the
effect of such exchange, has authorized the issuance of 1,008,985 shares of
Series E Preferred Stock to the Lender in exchange for the cancellation of the
Notes.
NOW, THEREFORE, BE IT RESOLVED, that in consideration of the promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
AGREEMENT
1. AMOUNT OF INDEBTEDNESS; EXCHANGE PRICE. The parties agree that the
amount of principal and interest owed to the Lender under the Notes as of the
date hereof is $1,008,985. The Lender agrees that, notwithstanding anything to
the contrary in any of the Notes, the total principal and interest owed to the
Lender under the notes is $1,008,985 and no additional interest is due or
payable or may be exchanged for Series E Shares. The parties further agree and
acknowledge that the Exchange Price is the result of good faith negotiations
between the Company and the Lender.
2. CONVERSION. The Company and the Lender hereby agree to exchange
$1,008,985 of the principal and interest amount of the Notes for 1,008,985
Series E Preferred Shares ("Debt Exchange"). The Debt Exchange shall occur
simultaneously with, and its effectiveness shall be conditioned upon, the
closing of the Transaction.
3. CANCELLATION OF NOTES. At the Closing, the Lender shall deliver to the
Company such Lender's Note(s) which shall be marked "Cancelled."
4. LEGENDS. The certificate(s) representing the Series E Shares to be
issued in connection with the Debt Exchange shall bear the following legends:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.
5. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants that each of the Series E Shares that will be issued pursuant to the
Debt Exchange will be duly authorized, validly issued, fully paid and
nonassessable.
6. LENDER'S REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS. The
Lender hereby represents and warrants to, and covenants and agrees with, the
Company as follows:
(a) Lender has had complete and unrestricted access to all material
information about the Company, the Debt Exchange, and the Transaction which
could affect Lender's decision to agree to the Debt Exchange, including but not
limited to the Certificates of Designation enumerating the rights and
preferences of the Series E Preferred Shares and the Company's other Series of
Preferred Shares. As a result of Lender's access to all such material
information, Lender acknowledges that Lender is fully informed and knowledgeable
about the Company, its business, operations and plans, and has therefore made a
fair and reasoned decision to consent to the Debt Exchange.
(b) Lender acknowledges that an investment in the Series E Shares
involves a substantial degree of risk and is suitable only for persons with
adequate means who have no need for liquidity in their investments.
(c) Lender has knowledge and experience in financial and business
matters and is capable of evaluating the merits and risks of an investment in
the Series E Shares and the suitability of the investment for Lender.
(d) Lender is effecting the Debt Exchange for investment purposes only
and has no present intention to sell or exchange the Series E Shares, Lender has
adequate means for
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providing for his current needs in any foreseeable contingency, and Lender has
no need to sell the Series E Shares in the foreseeable future.
(e) Lender is an "accredited investor" as that term is defined in Rule
501 of Regulation D promulgated under the Securities Act of 1933, as amended.
(f) Lender acknowledges that no federal or state agency has made any
finding or determination as to the fairness of the Debt Exchange, nor any
recommendation or endorsement, of the issuance of the Series E Shares in the
Debt Exchange.
(g) Lender acknowledges that the Series E Shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), or the blue
sky laws of any state.
(h) Lender understands that, in issuing the Series E Shares in the Debt
Exchange, the Company has relied upon an exemption from registration provided in
the Act and upon all of the foregoing representations and warranties of Lender.
7. MISCELLANEOUS.
(a) Any provision of this Agreement may be amended or waived if such
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective;
(b) This Agreement constitutes the entire Agreement between and among
the parties with respect to the subject matter of this Agreement and supersedes
all prior agreements and understandings, both oral and written, between and
among the parties hereof and thereof. Without limiting the foregoing, the
Company and the Lender agrees that this Agreement supersedes and terminates the
Debt Exchange Agreement entered into on September 1, 2002 by and between the
Company and such Lender.
(c) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law;
(d) This Agreement shall be binding on and inure to the benefit of each
party hereto and his or its legal representatives, successors and assigns;
(e) This Agreement shall be governed by and construed in accordance with
the law of the State of Colorado, without regard to the conflicts of law rules
of such state;
(f) This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument;
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(g) The headings contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement; and
(h) In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
ADVANCE DISPLAY TECHNOLOGIES, INC.
By:/S/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: President
LENDER:
/S/ XXXXXXXX X. XXXXXXXX
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Xxxxxxxx X. XxXxxxxx
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