EXHIBIT 2.3
SERIES C PREFERRED STOCK CONVERSION AGREEMENT
THIS SERIES C PREFERRED STOCK CONVERSION AGREEMENT is made as of this 25th
day of November, 2003, by and between Advance Display Technologies, Inc., a
Colorado corporation (the "Company"), and each of the undersigned holders of the
Company's Series C Preferred Stock (each a "Shareholder" and together the
"Shareholders").
RECITALS
WHEREAS, the Company currently has issued and outstanding 1,843,902 shares
of its Series C Preferred Stock, par value $.001 per share (the "Series C
Preferred"), and Shareholders own that number of shares of Series C Preferred
set forth opposite each Shareholder's name on EXHIBIT A attached hereto
("Conversion Shares");
WHEREAS, the Company wishes to effect a transaction comprised of the
following transactions: (1) the conversion of all of the Series C Preferred into
shares of the Company's Common Stock, $.001 par value per share ("Common
Stock"), on a 1-for-1 basis; (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; (3) the Company's acquisition of all of the membership interests of
Regent Theatres, LLC; and (4) the conversion of the Company's outstanding debt
into shares of the Company's newly-created Series E and Series F Preferred Stock
(collectively, the "Transaction");
WHEREAS, in connection with the Transaction, each Shareholder wishes to
convert all of Shareholder's Conversion Shares into shares of Common Stock on a
1-for-1 basis; and
WHEREAS, the Board of Directors of the Company, after being fully advised
of the relationship of the parties, the terms of the proposed conversion and the
effect of such conversion, has authorized the issuance of Common Stock to the
Shareholders in exchange for the surrender of the Conversion Shares.
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. CONVERSION. The Company and each Shareholder hereby agree to convert the
Conversion Shares into shares of Common Stock on a 1-for-1 basis (the
"Conversion"). The Conversion shall occur simultaneously with, and its
effectiveness is conditioned upon, the closing of the Transaction (the
"Closing").
2. SURRENDER OF SERIES C PREFERRED CERTIFICATES; ISSUANCE OF COMMON STOCK
CERTIFICATES. At the Closing, each Shareholder shall surrender Shareholder's
certificate(s) representing the Conversion Shares to the Company. Upon receipt
of such certificate(s), the
Company shall issue to such Shareholder a new certificate representing an amount
of shares of Common Stock as set forth opposite Shareholder's name on EXHIBIT A.
3. PIGGYBACK REGISTRATION RIGHTS. The shares of Common Stock issued in
connection with the Conversion shall have the registration rights described in
EXHIBIT B, which is incorporated by reference herein.
4. LEGENDS. Each certificate representing the shares of Common Stock to be
issued in connection with the Conversion 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.
THESE SECURITIES ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
CONTAINED IN THAT CERTAIN SERIES C PREFERRED STOCK CONVERSION AGREEMENT,
DATED NOVEMBER 25, 2003. SUCH AGREEMENT IS AVAILABLE FOR INSPECTION BY
PROVIDING WRITTEN REQUEST TO THE COMPANY.
5. SHAREHOLDER'S ACKNOWLEDGEMENT. Each Shareholder hereby acknowledges that
the Conversion is to be effected in lieu of any redemption provisions related to
the Series C Preferred as set forth in the Company's Articles of Incorporation,
as amended (the "Articles") and each Shareholder hereby waives any right or
claim to any benefit of such provisions. Each Shareholder further acknowledges
and agrees that, after the consummation of the Conversion, Shareholder shall no
longer be entitled to any of the rights and preferences of the Series C
Preferred as provided in the Articles or to any other special rights and
preferences.
6. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants that each of the shares of Common Stock that will be issued pursuant to
the Conversion will be duly authorized, validly issued, fully paid and
nonassessable.
7. SHAREHOLDER'S REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Each Shareholder hereby represents and warrants to, and covenants and agrees
with, the Company as follows:
(a) Shareholder has had complete and unrestricted access to all material
information about the Company, the Conversion, and the Transaction which could
affect Shareholder's decision to agree to the Conversion. As a result of
Shareholder's access to all such material information, Shareholder acknowledges
that Shareholder 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 Conversion.
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(b) Shareholder acknowledges that an investment in the Common Stock
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) Shareholder has knowledge and experience in financial and business
matters and is capable of evaluating the merits and risks of an investment in
the Common Stock and the suitability of the investment for Shareholder.
(d) Shareholder is participating in the Conversion for investment
purposes only and has no present intention to sell or exchange the Common Stock,
Shareholder has adequate means for providing for Shareholder's current needs in
any foreseeable contingency, and Shareholder has no need to sell the Common
Stock in the foreseeable future.
(e) Shareholder is an "accredited investor" as that term is defined in
Rule 501 of Regulation D promulgated under the Securities Act.
(f) Shareholder acknowledges that no federal or state agency has made
any finding or determination as to the fairness of the Conversion, nor any
recommendation or endorsement, of the issuance of the Common Stock in the
Conversion.
(g) Shareholder acknowledges that the Common Stock has not been
registered under the Securities Act, or the blue sky laws of any state.
(h) Shareholder understands that, in issuing the Common Stock in the
Conversion, the Company has relied upon an exemption from registration provided
in the Act and upon all of the foregoing representations and warranties of the
Shareholder.
8. 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
the Company and a majority of the Shareholders, or in the case of a waiver, by
the party against whom the waiver is to be effective;
(b) 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;
(c) This Agreement shall be binding on and inure to the benefit of each
party hereto and his or its legal representatives, successors and assigns;
(d) 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;
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(e) 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;
(f) 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;
(g) This Agreement, including the provisions contained in EXHIBIT A and
EXHIBIT B, 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 with respect to the subject matter hereof and thereof. Without limiting
the foregoing, the Company and each Shareholder agrees that this Agreement
supersedes and terminates the Series C Conversion Agreement entered into on
September 1, 2002 by and between the Company and such Shareholder. No provision
of this Agreement is intended to confer upon any person other than the parties
hereto any rights or remedies hereunder;
(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; and
(i) All notices and other communications required or permitted by this
Agreement shall be in writing and shall be mailed by United States first-class
mail, postage prepaid, sent by facsimile or delivered personally by hand or
courier addressed to such Shareholder or to the Company at such address or
facsimile number as each party shall have furnished in writing.
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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
SHAREHOLDERS:
/S/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
/S/ J. XXXXXXX XXXXXXX
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J. Xxxxxxx Xxxxxxx
/S/ XXXX X. XXXX, XX.
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Xxxx X. Xxxx, Xx.
/S/ XXXXXXX X. XXXXXX
------------------------------------
Xxxxxxx X. Xxxxxx
/S/ XXXXX X. XXXXX
------------------------------------
Xxxxx X. Xxxxx
/S/ XXXXX X. XXXXXXX
------------------------------------
Xxxxx X. Xxxxxxx
/S/ JAN E. XXXXX
------------------------------------
Jan E. Xxxxx
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/S/ XXXXX XXXX
Peregrine Investments
By: /S/ XXXXX XXXX
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Title: PRESIDENT
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/S/ XXXX XXXXXXXXX
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Xxxxxxxxx Holdings Co.
By: XXXX XXXXXXXXX
--------------------------------
Title: GEN. PART.
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/S/ XXXX X. XXXXXXXXX
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Xxxx X. Xxxxxxxxx
/S/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx
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