EXHIBIT 99.1
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SETTLEMENT AGREEMENT AND RELEASE
(INVESTMENT)
This Settlement Agreement and Release (the "Investment Settlement
Agreement"), is made and entered into as of this 1st of July 2004, by and
between Xxxxxxx Xxxxxxx ("Xxxxxxx") and Xxxx Xxxxxxxxx ("Xxxxxxxxx"),
collectively referred to as the "Regent Parties," on the one hand, and Advance
Display Technologies, Inc. ("ADTI"), Xxxx Xxxxxxxxx ("Xxxxxxxxx") and Xxxxxxxx
XxXxxxxx ("XxXxxxxx"), collectively referred to as the "ADTI Parties," on the
other hand, with reference to the following facts:
X. Xxxxxxxxx is a United States citizen and is a manager or officer of one
or more of the entities collectively referred to as "Regent" in the Theaters
Settlement Agreement executed concurrently herewith.
X. Xxxxxxx is a United States citizen and is a manager or officer of one or
more of the entities collectively referred to as "Regent" in the Theaters
Settlement Agreement executed concurrently herewith. Xxxxxxx served as a
director of ADTI from September 2, 2003 to April 7, 2004.
C. ADTI is a corporation organized under the laws of the State of Colorado.
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X. Xxxxxxxxx is a United States citizen and was a shareholder of ADTI at
all material times during the transaction(s) with respect to which this
Investment Settlement Agreement is being effected.
X. XxXxxxxx is a United States citizen and was a shareholder and director
of ADTI at all material times during the transaction(s) with respect to which
this Investment Settlement Agreement is being effected.
F. ADTI's historical business has been the development of fiber optic
display technologies for screen applications.
G. During the summer of 0000, Xxxxxxx X. Xxxxxxx, president of ADTI, and
Xxxxxxx and Colichman, the senior executives of Regent, negotiated an
arrangement whereby Regent Entertainment Partnership L.P. ("Regent L.P.") would
sell all unit interest(s) in Regent Theaters LLC ("Theaters") and Regent
Releasing LLC ("Releasing") to ADTI in exchange for consideration of $50,000 in
cash. Separately Jarchow, Colichman, Xxxxxxxxx and XxXxxxxx agreed to invest the
aggregate amount of $1,000,000 into ADTI through the purchase of preferred
stock, with Xxxxxxxxx investing $250,000, Colichman and Xxxxxxx investing
$250,000 ($125,000 each), and XxXxxxxx investing $500,000.
H. On November 4, 2003 and furtherance of the matters set forth herein, the
following documents, among others, were executed:
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(a) A Unit Purchase Agreement by and among Theaters, Releasing, ADTI, and
Regent L.P., whereunder ownership of all the membership interests in Theaters
and Releasing (the "Membership Interests") was transferred to ADTI for the
stated consideration;
(b) A Stock Purchase Agreement by and among Schneider, DeGeorge, Xxxxxxx
and Xxxxxxxxx (collectively, the "Purchasers") and ADTI, whereunder preferred
stock was purchased from ADTI by the Purchasers in exchange for the stated
investments; and
(c) A Shareholders Agreement, by and among ADTI and the Purchasers,
whereunder certain rights and obligations and restrictions of ADTI and the
Purchasers were set forth.
I. The agreements referred to in Recital H were executed contemporaneously
and in consideration of each other.
J. After the execution of the Unit Purchase Agreement and the utilization
by ADTI of sums invested by the Purchasers, the consideration to be paid to
Regent L.P. under the Unit Purchase Agreement was never fully paid, as XxXxxxxx
has to date paid only $100,000 of the $500,000 due from him under the Stock
Purchase Agreement.
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K. By letter to ADTI, Regent notified ADTI that Regent considered the Unit
Purchase Agreement to be null and void or, in the alternative, to have been
terminated for breach, specifically the failure to pay the consideration stated.
L. By assignment dated May 12, 2004 (the "Assignment"), ADTI, sua sponte,
reassigned the Membership Interests to Regent L.P. The Assignment contained a
quitclaim without any representations, warranties and indemnities on account of
action or inaction of ADTI and/or others during the time period that ADTI
controlled the operations of said theaters. The Assignment also contained
"Whereas" recitals referencing allegations by ADTI that the financial condition
of Theaters and Releasing had been misrepresented to ADTI. Such recitals were
and are unacceptable to Regent and the allegations were and are denied by
Regent.
M. The Regent Parties and the ADTI Parties (collectively, the "Parties")
have now agreed to settle their disputes with respect to the Stock Purchase
Agreement and related matters set forth herein (collectively, the "Investment
Disputes").
N. Concurrently herewith, ADTI and Regent have agreed to settle their
disputes related to the Unit Purchase Agreement (the "Theaters Disputes") and
have entered into the Theaters Settlement Agreement.
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O. Except as otherwise set forth herein or in the Theaters Settlement
Agreement, each of the referenced agreements (collectively, the "Settlement
Agreements") is entered into in consideration of the other.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth below, the Parties hereby stipulate and agree
as follows:
1. Subject to the promises, terms and releases contained herein, and in
complete satisfaction and settlement of all breaches alleged by Regent:
(a) ADTI agrees to pay Xxxxxxx the sum of $37,500 and Colichman the sum
of $37,500 (in the aggregate, the "Investment Settlement Amount") and the
effectiveness of this Investment Settlement Agreement is subject to the payment
of the Investment Settlement Amount within seven (7) days of execution hereof.
(b) Any and all shareholdings of Xxxxxxx and Xxxxxxxxx in ADTI to the
extent not previously voided or cancelled are hereby deemed cancelled and null
and void and any stock certificates representing shares of ADTI stock shall be
returned to ADTI forthwith.
(c) The Shareholders Agreement by and among the parties thereto is
hereby deemed null and void.
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2. The Parties hereby agree that (a) the terms of the Settlement Agreements
shall not be disclosed, directly or indirectly, by the Parties or their
attorneys, agents or representatives, to any third parties, other than
accountants and business advisors of the Parties, except as required by law,
governmental regulation or court order, or as necessary to enforce the terms of
the Settlement Agreements (the parties recognizing that copies of both
Settlement Agreements must be filed by ADTI with the SEC as an exhibit to a Form
8-K statement under the Securities Exchange Act of 1934), and (b) the
negotiations between the Parties leading up to the Settlement Agreements,
including all communications and information exchanges by the Parties, shall be
kept absolutely confidential and shall not be disclosed, directly or indirectly,
by the Parties or their attorneys, agents or representatives, to any third
parties, other than accountants and business advisors of the Parties, except as
required by law, governmental regulation or court order, or as necessary to
enforce the terms of the Settlement Agreements.
3. Upon the execution of the Settlement Agreements and the payment by ADTI
of the Theaters Settlement Amount, as defined in the Theaters Settlement
Agreement, and the Investment Settlement Amount (collectively, the "Settlement
Amounts"), the Parties and each of their affiliates shall each and do hereby
absolutely and irrevocably discharge and release one another, and each other's
respective officers, directors, financiers, employees, partners, accountants,
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attorneys, predecessors, parents and subsidiaries of and from any and all
liabilities, liens, debts, accounts, accountings, payments due, demands,
obligations, promises, acts, agreements, costs, and expenses (including
attorneys' fees), damages, claims, actions, causes of action, counterclaims and
cross-claims of whatever kind or nature, whether known or unknown, suspected or
unsuspected, which they each now or hereafter may own or hold, or have at any
time heretofore owned or held, which in any way, either directly or indirectly,
relate to, arise from or are in any way connected with the Investment Disputes,
subject only to the enforcement of the representations, warranties and covenants
set forth in Paragraph 5 of this Investment Settlement Agreement. The ADTI
Parties agree and affirm that they have no interest or ownership whatsoever in
Regent or any other entity owned or controlled by the Regent Parties, and agree
to release any claims to such interest or ownership. The matters within the
scope of the releases contained in this paragraph 3 are referred to collectively
as the "Released Matters."
4. Except for the representations, warranties and covenants set forth in
paragraph 5 hereof, the Parties intend and agree that the releases provided for
herein constitute a full and final accord and satisfaction and release of and
from the Released Matters. In furtherance of this intention and agreement, the
Parties recognize, acknowledge, and agree that each is familiar with and has
been advised
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by legal counsel concerning the legal effect of California Civil Code Section
1542, which provides as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor
at the time of executing the release, which if know by
him must have materially affected his settlement with the
debtor."
The Parties hereby knowingly, voluntarily and expressly waive and
relinquish any and all rights and/or benefits which any of them may have under
Civil Code Section 1542 or under any other analogous statute or common-law
principle in effect in California or in any other jurisdiction.
5. The Parties hereby warrant and represent that they are the lawful owners
of all right, title and interest in and to the Released Matters and that they
have not assigned or transferred or purported to assign or transfer to any
person or entity, any right, title or interest therein. A breach of this
paragraph 5 shall be deemed an independent breach and shall not constitute
grounds for rescission or failure of this Investment Settlement Agreement or the
Theaters Settlement Agreement.
6. Each of the Parties hereby agrees and acknowledges that it has been
represented by counsel of its own choosing in connection with the negotiation
and
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preparation of this Investment Settlement Agreement, has been fully informed by
its counsel as to the meaning and legal significance of this Investment
Settlement Agreement and, based upon such representation and advice, knowingly
and voluntarily agrees to be bound by the terms of this Investment Settlement
Agreement. Each Party further agrees and acknowledges that consent to the terms
of this Investment Settlement Agreement has been freely given and that none of
the Parties has done so under duress, coercion or undue influence of any kind or
nature, and the Parties hereby waive any and all right to seek rescission of
this Investment Settlement Agreement or any of the releases set forth herein on
such or similar grounds.
7. Any dispute that in any way arises under or relates to this Investment
Settlement Agreement (whether in contract, tort or both) shall be resolved
through binding arbitration administered by the American Arbitration Association
under its Commercial Rules of Arbitration, or through such other similar body or
tribunal as the Parties may mutually agree upon in writing; provided, however,
that, in order to ensure that the timeliness and cost savings of arbitration are
preserved, the Parties agree that no depositions will be allowed in any such
arbitration. Unless otherwise agreed by the Parties in writing, such arbitration
proceedings shall be conducted in any reasonably accessible forum in the
continental United States other than the states of California, Colorado and
Texas. The prevailing party in
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any such arbitration shall be entitled to recover its reasonable attorneys' fees
incurred therein.
8. This Investment Settlement Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, when taken
together, shall constitute one and the same agreement.
9. This Investment Settlement Agreement, together with the Theaters
Settlement Agreement, embodies the entire understanding of the Parties, and
there are no other agreements, understandings or representations, written or
oral, in effect between the Parties relating to the subject matter of the
Settlement Agreements. This Investment Settlement Agreement may be amended or
modified only by a written agreement executed by all of the Parties.
10. This Investment Settlement Agreement is subject to and contingent on
the execution of the Theaters Settlement Agreement and the payment by ADTI of
the Settlement Amounts under both Settlement Agreements. In the event the
Settlement Amounts are not paid in full, this Investment Settlement Agreement
shall be deemed null and void.
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IN WITNESS WHEREOF, the Parties have executed this Investment Settlement
Agreement , effective as of July 1, 2004.
ADVANCE DISPLAY TECHNOLOGIES, INC.
By: /S/XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx, President
/S/XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx
/S/XXXX XXXXXXXXX
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Xxxx Xxxxxxxxx
/S/XXXX X. XXXXXXXXX
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Xxxx X. Xxxxxxxxx
/S/XXXXXXXX X. XXXXXXXX
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Xxxxxxxx X. XxXxxxxx
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