ADVANCE DISPLAY TECHNOLOGIES, INC. Series G Preferred Stock SUBSCRIPTION AGREEMENT
Exhibit 4.1
ADVANCE
DISPLAY TECHNOLOGIES, INC.
_________________________________
Series
G Preferred Stock
_________________________________
ADVANCE DISPLAY TECHNOLOGIES,
INC.
Series
G Preferred Stock
THIS SUBSCRIPTION AGREEMENT (this
“Agreement”) is executed and delivered, as of the date set forth on the
signature page hereof (the “Subscription Date”), by and between Advance Display
Technologies, Inc., a Colorado corporation (“Company”), and the undersigned
subscriber (“Subscriber”).
1.
Subscription. Subject
to the terms and conditions set forth in this Agreement, Subscriber hereby
agrees to subscribe for the number of shares of Series G Preferred Stock of
Company (the “Shares”) at the times and in the manner set forth in the
Subscription Schedule on the signature page of this Agreement (the “Total
Subscription”).
2.
Price. The
purchase price for the Shares set forth on the signature page of this Agreement
(the “Purchase Price”) has been derived from the fair market value of the shares
of Company’s common stock into which the Shares are convertible. For
this purpose, the fair market value was calculated by reference to the $0.10
closing price of Company’s Common Stock on the last four trading days prior to
the Subscription Date, namely, February 20, 21, 22 and 25, 2008.
3.
Acceptance. Company,
in consideration of and in reliance on Subscriber’s representations, warranties,
covenants in this Agreement, and Subscriber’s agreement to pay the Total
Subscription Price set forth in the Subscription Schedule, hereby accepts the
subscription of Subscriber and agrees to issue the Shares to Subscriber, subject
to the terms and conditions of this Agreement.
4.
Issuance of
shares. Company shall issue the Shares to Subscriber within
ten (10) days of its receipt of payment in full for all of the Shares, provided,
however, that Company shall have no obligation to issue any Shares to Subscriber
unless and until Subscriber has made to Company, and Company has accepted, full
payment of Subscriber’s Total Subscription.
5.
Cancellation of Subscription
by Company. At any time prior to Company’s receipt and
acceptance of full payment for the Total Subscription, Company may elect to
terminate its obligations to deliver any of the Shares to Subscriber under this
Agreement by returning to the Subscriber all prior payments made by the
Subscriber toward the Total Subscription, together with interest at the prime
rate as published by the Wall Street Journal from the date of Company’s receipt
of such payments. In such an event, Company will be relieved of any
obligation to deliver the Shares and Subscriber shall have no further right or
obligation to purchase the Shares.
6.
Partial
Cancellation of Subscription by Company. At any time prior to
Company’s receipt and acceptance of full payment for the Total Subscription,
Company may, in its sole discretion, elect to cancel any part of the Total
Subscription, irrespective of whether Subscriber has previously paid some or all
of the Total Subscription to Company by delivering to Subscriber a written
notice of partial cancellation of the amount of the Subscription cancelled (the
“Cancelled Subscription”) and returning to the Subscriber all prior payments, if
any, made by the Subscriber toward the Cancelled Subscription, together with
interest at the prime rate as published by the Wall Street Journal from the date
of Company’s receipt of such payments. In such an event, Company
shall be obligated to sell, and Subscriber shall be obligated to buy, the Shares
attributable to the portion of the Total Subscription that was not cancelled
(the “Accepted Shares”). No later than ten (10) days after Company’s
receipt of payment from Subscriber for the Accepted Shares, the Company will
issue the Accepted Shares to Subscriber. Upon such payment and
delivery, the Company will be relieved of any obligation to deliver additional
Shares to Subscriber and Subscriber will have no further right or obligation to
purchase additional Shares under this Agreement.
7.
Underlying
Common Stock. Even though the Shares, like other shares of
Series G Preferred Stock are by their terms convertible into Common Stock at a
rate of 1000 shares of Common Stock for every share of Series G Preferred Stock,
Subscriber acknowledges that the Shares are not presently so convertible because
all authorized but unissued shares of Common Stock are already reserved for
issuances other than the Shares. Subscriber further understands that
Company has agreed to submit to Company’s shareholders a resolution to increase
the number of authorized shares of Common Stock from 175,000,000 to 250,000,000
and to reserve a portion of the newly authorized shares of Common Stock for the
conversion of the Shares into Common Stock. Subscriber agrees that
the Shares shall not be convertible into Common Stock until such time that there
are sufficient shares of Common Stock available for issuance. Company
agrees to make its best efforts to cause such shares of Common Stock to be
authorized by the shareholders and available for issuance upon conversion of the
Shares.
8.
Voting of the
Shares. Subscriber shall have no right to vote the Shares
prior to payment and acceptance of the Total Subscription or the Accepted
Subscription, as the case may be.
9.
Restrictions on
Transfer.
9.1 The
certificates representing the Shares will bear a legend in substantially the
following form:
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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 COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
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9.2 No
holder of the Shares may sell, transfer or dispose of any Shares (except
pursuant to an effective registration statement under the Securities Act)
without first delivering to Company an opinion of counsel (reasonably acceptable
in form and substance to Company) that neither registration nor qualification
under the Securities Act and applicable state securities laws is required in
connection with such transfer.
10. Subscriber’s
Representations, Warranties, Covenants and
Agreements. Subscriber hereby represents and warrants to, and
covenants and agrees with, Company as follows:
10.1 Subscriber
has been given adequate access to all information about Company and Subscriber’s
investment in Company that was material to Subscriber’s decision to invest
therein. Subscriber has reviewed the Certificate of Incorporation and
bylaws of Company as well as its recent filing with the U.S. Securities and
Exchange Commission. Subscriber acknowledges that Subscriber is fully
informed and knowledgeable about Company, its business (the “Business”),
management and personnel; that Subscriber has had discussions with Company
concerning the Business and has obtained information from Company; and that
Company has answered all questions that the undersigned had concerning the
Business. Subscriber has been furnished materials relating to
Company, the Business and the financial condition of Company and the offering of
the Shares that Subscriber has requested and has been afforded the opportunity
to ask questions and receive answers concerning an investment in
Company. Subscriber acknowledges that Subscriber has had the
opportunity to request such additional information from the President of
Company.
10.2 Subscriber
acknowledges that an investment in Company involves a substantial degree of risk
and is suitable only for persons with adequate means who have no need for
liquidity in their investments.
10.3 Subscriber
acknowledges that no market for the Shares exists nor is any such market
expected to develop and that, therefore, Subscriber’s investment in Company will
not be liquid.
10.4 Subscriber
has knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of an investment in Company and the suitability
of the investment for Subscriber.
10.5 Subscriber
is making this capital contribution for investment purposes only and has no
present intention to sell or exchange the Shares; Subscriber has adequate means
for providing for Subscriber’s current needs in any foreseeable contingency; and
Subscriber has no need to sell the Shares in the foreseeable
future.
10.6 Subscriber,
if a corporation, partnership, trust or other entity, is duly organized, and is
authorized and otherwise duly qualified to purchase and hold the Shares, and
such entity has its principal place of business at the address set forth on the
signature page hereof.
10.7 Subscriber
has the legal capacity to execute, deliver and perform this Agreement, and has
Subscriber’s residence at the address set forth on the signature page
hereof.
10.8 Subscriber
is an “accredited investor” as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended.
10.9 All
information that Subscriber has provided to Company concerning Subscriber,
Subscriber’s financial position and knowledge of financial and business matters,
or, in the case of a corporation, partnership, trust or other entity, the
knowledge of financial and business matters of the person making the investment
decision on behalf of such entity, including all information contained herein,
is true and complete as of the date set forth at the end hereof, and if there
should be any adverse change in such information prior to this subscription
being accepted, Subscriber will immediately provide Company with accurate and
complete information concerning any such change.
10.10 Subscriber
acknowledges that no federal or state agency has made any finding or
determination as to the fairness of this investment, nor any recommendation or
endorsement, of the investment in the Shares.
10.11 Subscriber
acknowledges that the Shares have not been registered under the Securities Act
of 1933, as amended (the “Act”), or the blue sky laws of any state.
10.12 Subscriber
understands that Company has relied upon an exemption from registration provided
in the Act and upon all of the foregoing representations and warranties of
Subscriber.
10.13 Subscriber
certifies, under penalties of perjury, (i) that the social security or Federal
taxpayer identification number shown on the signature page of this Agreement is
true and complete and (ii) that Subscriber is not subject to backup withholding
either because Subscriber has not been notified that he or she is subject to
backup withholding as a result of a failure to report all interest or dividends,
or the Internal Revenue Service has notified Subscriber that he or she is no
longer subject to backup withholding.
11. Confidential
Information. Subscriber acknowledges that the information,
observations and data obtained by him or her during the course of Subscriber’s
ownership of any interest in Company concerning the business and affairs of
Company are the property of Company, including information concerning
acquisition opportunities in or reasonably related to the Business of which
Subscriber becomes aware during such period. Therefore, Subscriber
agrees that he or she will not disclose to any unauthorized person or use for
Subscriber’s own account any of such information, observations or data without
the written consent of the President of Company unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Subscriber’s acts or
omissions. Subscriber agrees to deliver to Company on the date of
disposition of the Shares, or at any other time Company may request in writing,
all memoranda, notes, plans, records, reports and other documents (and copies
thereof) relating to the Business (including, without limitation, all
acquisition prospects, lists and contact information) which he or she may then
possess or have under Subscriber’s control.
12. Indemnification. Subscriber
agrees to indemnify and hold harmless Company, its directors, officers,
employees, stockholders and affiliates, and any person acting on behalf of
Company, from and against any and all damage, loss, liability, cost and expense
(including attorneys’ fees) which any of them may incur by reason of the failure
by Subscriber to fulfill any of the terms or conditions of this Agreement, or by
reason of any breach of the representations and warranties made by Subscriber
herein, or in any other document provided by Subscriber to
Company. All representations, warranties and covenants contained in
this Agreement, and the indemnification contained in this paragraph, shall
survive the acceptance of this subscription.
13. Headings. The
headings throughout this Agreement are for convenience of reference only, and
shall in no way be deemed to define, limit, or add to the meaning of any of the
provisions of this Agreement.
14. Counterparts. This
Agreement may be executed in counterparts, both of which when taken together
shall be deemed one original.
15. No
Waiver. Notwithstanding any of the representations,
warranties, acknowledgments or agreements made herein by Subscriber,
Subscriber does not thereby or in any other manner waive any of the rights
granted to him or her under federal or state securities laws.
16. Entire Agreement;
Modification. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and neither
this Agreement nor any of the provisions hereof shall be waived, changed,
discharged or terminated except by an instrument in writing signed by the party
against whom any waiver, change, discharge or termination is
sought.
17. Notice. Notices
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to be sufficiently given when sent by registered or certified
mail, postage prepaid, addressed to the other party at the address of such party
set forth on the signature page to this agreement, or to such other address
furnished by notice given in accordance with this paragraph.
18. Successors; Binding
Effect. Except as otherwise provided herein, this Agreement
shall be irrevocable and binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors, legal
representatives and assigns. If Subscriber is more than one person,
the obligations of Subscriber shall be joint and several and the agreements,
representations, warranties and acknowledgments herein contained shall be deemed
to be made by and be binding upon each such person and the person’s respective
heirs, executors, administrators, successors, legal representatives and
assigns.
19. Assignability. Subscriber
agrees not to transfer or assign this Agreement, or any of Subscriber’s interest
herein, without the written consent of Company, which consent may be withheld in
its sole discretion, and any such transfer or assignment in violation of this
Agreement shall be null and void ab initio. Further,
Subscriber agrees that the transfer or assignment of the Shares shall be made
only in accordance with this Agreement, Company’s Certificate of Incorporation
and applicable laws.
20. Applicable
Law. This Agreement and all rights and remedies hereunder
shall be governed by and construed in accordance with the laws of the State of
Colorado, without regard to the conflicts of laws thereof.
Subscription
Schedule
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Number of Shares subscribed
for
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Price per Share
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Total Subscription
Price
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Date(s) paid/due
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27,273
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$ | 110.00 | $ | 3,000,030 |
2-21-08
($500,0000)
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|||||
| 2-27-08 ($2,500,000) | ||||||||||
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9,091
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$ | 110.00 | $ | 1,000,010 |
Within
ten (10) days of Company’s request made no later than
2-24-09
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IN
WITNESS WHEREOF, the undersigned Subscriber does represent and certify under
penalty of perjury that the foregoing statements are true and correct and that
Subscriber has, by the following signature, executed this Agreement as of
February 25, 2008.
SUBSCRIBER:
Xxxxxxxx X. XxXxxxxx
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Address
for Notices:
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/S/ Xxxxxxxx X. XxXxxxxx
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Taxpayer
Identification or Social Security Number of Subscriber:
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Telephone:
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Subscription
Date:
February
25, 2008.
Agreed to
and accepted by Company as of February 25, 2008.
ADVANCE
DISPLAY TECHNOLOGIES, INC.
0000
Xxxxx Xxxxx Xxx, Xxxxx X
Xxxxxxxxxx,
XX 00000
(000)
000-0000
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By:
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/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, President
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