AGREEMENT AND RELEASE
Exhibit
10.3
EXECUTION
VERSION
AGREEMENT
AND RELEASE
This
AGREEMENT AND RELEASE (“Release Agreement”)
is made and entered into as of June 28, 2010, by and among ADVANCE DISPLAY
TECHNOLOGIES, INC., a Colorado corporation (“Company”) and
XXXXXXXX HOLDINGS THREE, LLC, a Delaware limited liability company (“Lender”).
Recitals
WHEREAS,
Lender is the holder of debt (the “Debt”) owed by
Company under that certain Senior Secured Revolving Loan Agreement dated as of
November 6, 2008, as amended by that certain First Amendment to Senior Secured
Revolving Credit Agreement, dated as of June 15, 2009 (as further amended,
modified or supplemented, the “Loan
Agreement”);
capitalized terms used herein but not defined herein have the meaning ascribed
to such term in the Loan Agreement;
WHEREAS,
Company, Lender and ADTI Media, LLC, a Delaware limited liability company and
wholly-owned subsidiary of Lender (“Assignee”) are
entering into an Agreement to Accept Collateral in Partial Satisfaction of
Obligations (Strict Foreclosure) (the “Foreclosure”), of
even date herewith (the “Strict Foreclosure
Agreement”), providing for Lender’s acceptance of the Transferred Assets
(as defined in the Strict Foreclosure Agreement) in partial satisfaction of the
Obligations owing to it under the Loan Documents, and the transfer of such
Transferred Assets by Company to Assignee in connection therewith;
and
WHEREAS,
the Lender desires to (i) forgive the aggregate amount of interest outstanding
under the Loan Documents as of the date hereof, (ii) reduce the interest rate
currently applicable under the Loan Documents to the Applicable Federal Rate in
existence at the time that the relevant Loan Documents are amended to reflect
such change, and (iii) to undertake certain other actions in exchange for the
release provided herein.
NOW
THEREFORE, in exchange for the consideration recited in this agreement the
sufficiency of which is hereby acknowledged by Company and Lender, each hereby
agree and covenant as follows:
Covenants
1. Effective
Date. This Release Agreement will be effective upon the date
first set above.
2. Consideration for the
Release. (a) In consideration of this Release Agreement and
Company’s full and complete release of any claims or potential claims described
herein, Lender hereby agrees to:
(A) forgive the aggregate amount of all
outstanding interest under the Loan Documents through the date hereof in the
amount of One Million Two Hundred Twenty Thousand Three Hundred Twenty Six
Dollars and Fifty Six Cents ($1,220,326.56);
(B) via amendments to the applicable
Loan Documents to be entered into at a later date, (i) reduce the interest rate
applicable under such Loan Documents to match the relevant Applicable Federal
Rate at the time such amendments become effective (the “Amended Rate”), which
such Amended Rate will be applicable retroactively to June 29, 2010 and (ii)
delete all references to the Default Rate therein.
(C) reimburse Company for all
reasonable costs and expenses that Company incurs in connection with Company’s
contemplated “deregistering” transaction (the “Deregistering
Transaction”), including but not limited to (i) the salary and benefits
of the Company’s sole remaining employee, Xxxxxxx X. Xxxxxxx, and (ii) the legal
fees and other administrative expenses incurred by Company in the Deregistering
Transaction; and
(D) cause Assignee to pay Company for
the benefit of its stockholders a royalty payment (a “Royalty Payment”)
equal to twenty percent (20%) of the Revenues generated by Assignee from the
Transferred Assets in each of the Assignee’s 2011, 2012 and 2013 fiscal
years.
(b) The following terms
apply to the making of Royalty Payments by the Assignee:
(i) A Royalty Payment will
be made to Company within thirty (30) days after completion of the audited
financial statements of Assignee with respect to its 2011, 2012 and 2013 fiscal
years. Any Royalty Payments made to the Company shall be used
first to pay Lender the remaining amount owed to it under the Loan Documents,
including all accrued and unpaid interest and fees thereon.
(ii) If, after making the
payment to Lender in accordance with (i) above, Company makes any distribution
of funds, property or other consideration to any stockholder after the date
hereof, whether as a dividend, the proceeds of liquidation or otherwise (a
“Distribution”)
and irrespective of whether such Distribution constitutes part of or is derived
from, directly or indirectly, a Royalty Payment hereunder, Company will require
that such stockholder, as a condition to receiving such Distribution, provide to
the Lender Parties (as defined below) a written release containing substantially
the same language set forth in Section 5 hereof.
For purposes of this Release Agreement,
(1) the matters set forth in Section 2(a) above are collectively referred to as
the “Consideration” and
(2) “Revenues”
shall, for any period, be determined in accordance with GAAP, even if Assignee
uses cash basis or income tax accounting in preparing its own financial
statements.
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3. Release by Company &
Covenant Not to Xxx. In exchange for the Consideration and
Lender’s release provided herein, Company on behalf of itself and any and all of
its respective
affiliates and subsidiaries and any and all directors, general and limited
partners, members, shareholders, officers, executives, employees, principals,
representatives, trustees, agents, attorneys, advisors, executors, heirs,
successors and assigns, past and present of any and all of the foregoing,
including without limitation, each of the current and former officers and
directors, hereby does, as of the date set forth below, unconditionally, fully
and irrevocably waive, remise, release, acquit, satisfy and forever discharge
Lender and Xxxxxxxx X. XxXxxxxx (“XxXxxxxx”) and any
and all of their respective affiliates (including, but not limited to,
Assignee), subsidiaries, officers, directors, general and limited partners,
members, shareholders, executives, employees, principals, representatives,
trustees, agents, attorneys, advisors, executors, heirs, successors and assigns,
past and present of any and all of the foregoing (collectively, the “Lender Parties”),
from and against any and all manner of rights, claims, judgments, demands,
actions, causes of action, controversies, losses, obligations, contracts,
covenants, agreements, promises, damages, costs, expenses and liabilities of
every kind and nature whatsoever at law or in equity, suspected or claimed,
known or unknown and whether or not discoverable, including but not limited to,
all damages, suits of whatever kind or nature, whether asserted individually,
collectively, or in a representative capacity, directly, derivatively,
vicariously, indirectly, by operation of law or otherwise, whether suspected or
claimed, known or unknown, which Company ever may have had, currently has, or
hereafter may have against any Lender Party arising out of or in any way
relating to (i) the Lender Parties’ various equity and debt investments in
Company, including, but not limited to, the amounts loaned to Company pursuant
to the Loan Documents, (ii) Lender’s declaration of a default under the Loan
Documents and the resulting Foreclosure on certain of Company’s assets, or any
other matter related to any of the Loan Documents or the Strict Foreclosure
Agreement, and (iii) XxXxxxxx’x service as a member of Company’s Board of
Directors. Without in any way limiting the generality of the
foregoing release, Company covenants not to xxx any of the Lender Parties with
respect to any of the aforementioned released claims.
4. Release by Lender Parties
& Covenant Not to Xxx. In exchange for Company’s release
provided herein, each Lender Party, jointly and severally shall and hereby does,
as of the date set forth below, unconditionally, fully and irrevocably waive,
remise, release, acquit, satisfy and forever discharge Company from and against
any and all manner of rights, claims, judgments, demands, actions, causes of
action, controversies, losses, obligations, contracts, covenants, agreements,
promises, damages, costs, expenses and liabilities of every kind and nature
whatsoever at law or in equity, suspected or claimed, known or unknown and
whether or not discoverable, including but not limited to, all damages, suits of
whatever kind or nature, whether asserted individually, collectively, or in a
representative capacity, directly, derivatively, vicariously, indirectly, by
operation of law or otherwise, whether suspected or claimed, known or unknown,
which any Lender Party ever may have had, currently has, or hereafter may have
against Company, arising out of or in any way relating to (i) the Debt, (ii) the
Loan Agreement (iii) the Strict Foreclosure Agreement and (iv) the other Loan
Documents (as defined in the Loan Agreement). Without in any way
limiting the generality of the foregoing release, each Lender Party covenants
not to xxx Company with respect to any of the aforementioned released
claims.
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5. Release by Stockholders
& Covenant Not to Xxx. Any stockholder that receives a
Distribution (each a “Stockholder”) shall,
on behalf of itself and, as applicable, any and all of its respective affiliates
and subsidiaries and any and all directors, general and limited partners,
members, shareholders, officers, executives, employees, principals,
representatives, trustees, agents, attorneys, advisors, executors, heirs,
successors and assigns, past and present of any and all of the foregoing (the
“Stockholder
Parties”), be deemed to have unconditionally, fully and irrevocably
waived, remised, released, acquitted, satisfied and forever discharged each of
the Lender Parties from and against any and all manner of rights, claims,
judgments, demands, actions, causes of action, controversies, losses,
obligations, contracts, covenants, agreements, promises, damages, costs,
expenses and liabilities of every kind and nature whatsoever at law or in
equity, suspected or claimed, known or unknown and whether or not discoverable,
including but not limited to, all damages, suits of whatever kind or nature,
whether asserted individually, collectively, or in a representative capacity,
directly, derivatively, vicariously, indirectly, by operation of law or
otherwise, whether suspected or claimed, known or unknown, which any Stockholder
Party ever may have had, has at the time of receiving a Distribution or may have
after receiving such Distribution, against any Lender Party arising out of or in
any way relating to (i) the Lender Parties’ various equity and debt investments
in Company, including, but not limited to, the amounts loaned to Company
pursuant to the Loan Documents, (ii) Lender’s declaration of a default under the
Loan Documents and the resulting Foreclosure on certain of Company’s assets, or
any other matter related to any of the Loan Documents or the Strict Foreclosure
Agreement, and (iii) XxXxxxxx’x service as a member of Company’s Board of
Directors. Without in any way limiting the generality of the
foregoing release, each Stockholder Party is deemed to have covenanted not to
xxx any of the Lender Parties with respect to any of the aforementioned released
claims.
6. Due
Authorization. Each signatory hereto represents and
warrants to each other signatory hereto as follows, where
applicable:
(a) it
has full power and authority to execute, deliver, and perform this Release
Agreement and the execution, delivery, and performance of this Release Agreement
has been authorized by all necessary corporate or other action on its behalf,
and this Release Agreement is a legal, valid, and binding obligation,
enforceable against it in accordance with its terms;
(b) the
execution and delivery of this Release Agreement and its obligations hereunder
will not conflict with, or result in any violation or default under, any
provision of any governing instrument applicable to it or any agreement or other
instrument to which it is a party or by which it or any of its properties are
based, or any permit, franchise, judgment, decree, statute, rule, or regulation
applicable to its business or properties;
(c) other
than as expressly provided for herein, no consent, approval, order or
authorization of, or filing with, any federal, state or local governmental
authority is required by it for the valid execution and delivery of this Release
Agreement and the performance of its obligations hereunder; and
(d) such
party is the sole owner of the claims released hereby and such party has not
sold, transferred, assigned, pledged, hypothecated, encumbered, suffered a lien
or judgment against, or granted any third party the right to acquire any of such
released claims.
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7. Miscellaneous. (a)
Entire
Agreement. This Release Agreement contains all of the terms
and conditions agreed upon by the parties relating to the subject matter of this
Release Agreement and supersedes all other prior agreements, negotiations,
correspondence, undertakings, and communications of the parties, oral or
written, respecting such subject matter. (b) Severability. If any provision
of this Release Agreement is held illegal, invalid or unenforceable, such
holding shall not affect any other provisions hereof. In the event
that any provision is held illegal, invalid, or unenforceable, such provision
shall be limited so as to affect the intent of the parties to the fullest extent
permitted by applicable law. (c) Governing Law; Jurisdiction. This
Release Agreement is made in and shall be governed by and construed and
interpreted in accordance with the laws of the State of Colorado, without giving
effect to any conflict or choice of law provision that would result in the
application of another state’s law. Each of the parties hereto hereby
submits to the non-exclusive jurisdiction of the State and Federal courts
located in the City and County of Denver and the State of Colorado with respect
to any action or proceeding relating to this Release Agreement. (d) Notices. Notices,
requests, consents and other communications, required or permitted hereunder,
shall be in writing and shall be hand delivered or mailed by registered or
certified mail, return receipt requested, addressed as follows, or to such other
address as may be provided by the respective parties to this Release
Agreement:
If to
Borrower, to:
S. Xxx
Xxxxx, Jr.,
Xxxxx
Xxxxxx & Xxxxxx LLP,
0000
Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000;
If to
Lender, to:
XxXxxxxx
Holdings Three, LLC
000 Xxxxx
Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx
Xxxxx, XX 00000.
Attention: Xxxxxxxx
X. XxXxxxxx
(e) Amendments. This
Release Agreement may be amended or modified only with the written consent of
each signatory. (f) Tax Effect. The
parties agree that they are solely responsible for any tax payments arising out
of this Release Agreement, and acknowledge that they bear the sole risk of and
liability for the tax effects of any payments made pursuant to this Release
Agreement, and for any other financial consequences of this Release Agreement.
(g) Counterparts. This
Release Agreement may be signed in any number of counterparts with the same
effect as if the signatures to each counterpart were upon a single instrument,
and all such counterparts together shall be deemed an original of this Release
Agreement.
(signature page
follows)
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IN WITNESS WHEREOF, the parties hereby
execute this Release Agreement, as of the date set forth below:
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XXXXXXXX
HOLDINGS THREE, LLC
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By:
XXXXXXXX HOLDINGS III LP
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By:
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/s/ Xxxxxxxx X. XxXxxxxx | |
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Xxxxxxxx
X. XxXxxxxx, President
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Date: June
28, 2010
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ADVANCE
DISPLAY TECHNOLOGIES, INC.
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By:
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/s/ Xxxxx X. Xxxxxxxxxx | |
| Xxxxx X. Xxxxxxxxxx, Executive Vice President and Chief Operating Officer | |||
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