DeGeorge Holdings Three, LLC
Exhibit
10.1
XxXxxxxx
Holdings Three, LLC
000
Xxxxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000
Event of Default and Company
Consent Letter
June 28,
2010
Xxxxx X.
Xxxxxxxxxx,
Chief
Operating Officer
Advance
Display Technologies, Inc.
0000
Xxxxx Xxxxx Xxx, Xxxxxxxx 00, Xxxxx X
Xxxxxxxxxx,
Xxxxxxxx 00000
Re: Notice
of Event of Default and Acceptance of Collateral in Partial Satisfaction of the
Obligations (Strict Foreclosure)
Dear Xx.
Xxxxxxxxxx:
We refer
to the Senior Secured Revolving Credit Agreement, dated November 6, 2008,
between XxXxxxxx Holdings Three, LLC (“DH3”) and Advance Display Technologies,
Inc. (“ADTI”), 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 “Agreement”). DH3 hereby notifies
you that an Event of Default has occurred and is continuing under Section 13(f)
of the Agreement by virtue of the fact that ADTI has been insolvent because: (a)
its total liabilities substantially exceed the value of its total Transferred
Assets; and (b) it is unable to pay all of its debts as they come
due.
As such,
DH3 is electing to exercise its Foreclosure Rights under Section 15 of the
Agreement, as well as all other rights and remedies that it is entitled to
exercise in accordance with the Loan Documents or under Applicable
Law. DH3’s decision to foreclose at this time is based upon its
need to preserve the value of the Collateral, which might otherwise be
irretrievably and materially diminished by ADTI’s insolvency.
On or
around May 17, 2010, DH3 and ADTI engaged an independent appraisal firm
(the “Appraiser”) to determine, among other things, the fair market value of
ADTI’s business enterprise for purposes of completing a
foreclosure. The appraisal of the Collateral by the Appraiser is
complete, and it is DH3’s intention to exercise its right to foreclose on the
Collateral as permitted by Section 15 of the Agreement and in accordance with
Applicable Law. ADTI’s Obligations under the Agreement are
substantially greater than the value of the Collateral and ADTI does not have
any other Transferred Assets that are not included in the Collateral that could
be leveraged to pay its Obligations under the Agreement. As such, in
accordance with Section 4-9-620(a) of the Uniform Commercial Code currently in
effect in Colorado (the “UCC”), DH3 will accept the
Collateral in partial satisfaction of the Obligations in a strict foreclosure
transaction scheduled to occur on or around June 28, 2010 (the “Strict Foreclosure”), and a
deficiency will be owed to DH3 for the balance of the Obligations left
outstanding. For such purposes, DH3 hereby directs ADTI to
transfer, assign, sell or convey, as the case may be, the Collateral to be set
forth in a strict foreclosure agreement between XXXX, XX0, and ADTI Media, LLC
(“ADTI Media”), a
Delaware limited liability company and wholly owned subsidiary of DH3, to ADTI
Media on the effective date (the “Effective Date”) of the Strict
Foreclosure. By its signature hereto, in accordance with
Section 4-9-620(a)(1) of the UCC, ADTI hereby consents to the Strict Foreclosure
contemplated hereby and agrees (i) to transfer, assign, sell and convey, as
applicable, such Collateral and all of ADTI’s rights and interest thereto, to
ADTI Media, and (ii) to cooperate fully with DH3 and ADTI Media in completing
the Strict Foreclosure by taking all action requested by DH3 or ADTI Media in
connection with such Strict Foreclosure on or after the Effective
Date.
DH3
hereby advises ADTI: (a) that no failure by it to exercise any right, remedy,
power or privilege under any of the Loan Documents or Applicable Law shall
constitute, or shall be construed as, a waiver thereof; and (b) that it reserves
its rights (i) fully to invoke any and all such rights, remedies, powers and
privileges under the Loan Documents and Applicable Law, and (ii) to require that
all Obligations bear interest at the rate specified in the
Agreement. Nothing in this letter shall constitute, or shall be
construed as, an acknowledgment or determination by DH3 that, except as
described herein, no Event of Default has occurred and is continuing or that any
such Event of Default has been waived.
All
capitalized terms not otherwise defined herein have the meaning given to them in
the Agreement.
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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 | |
| Name: Xxxxxxxx X. XxXxxxxx | |||
| Title: President | |||
AGREED
AND CONSENTED TO BY:
ADVANCE
DISPLAY TECHNOLOGIES, INC.
By: /s/ Xxxxx X.
Xxxxxxxxxx
Name:
Xxxxx X. Xxxxxxxxxx
Title:
Executive Vice President and
Chief
Operating Officer
