Document:

exh10-1.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          Execution
Version

        

      

    

    

     

    Exhibit
10.1

     

     

    FIRST
AMENDMENT TO SENIOR SECURED

     

     

    REVOLVING
CREDIT AGREEMENT

     

    THIS
FIRST AMENDMENT TO SENIOR SECURED REVOLVING CREDIT AGREEMENT (this “Amendment”) is
effective as of this 15th day of June, 2009 (“Effective Date”), by and between
Advance Display Technologies, Inc., a Colorado corporation (the “Borrower”) and
DeGeorge Holdings Three LLC, a Delaware limited liability company (the “Lender”).

     

     

    RECITALS

     

    WHEREAS,
on November 6, 2008, Borrower and Lender entered into that certain Senior
Secured Revolving Credit Agreement (the “Loan Agreement”),
which among other things, established a revolving line of credit pursuant to
which Lender agreed to provide funding to Borrower in an aggregate principal
amount of up to Six Million Eight Hundred Ninety-Four Thousand Three Hundred
Sixty-Two Dollars ($6,894,362) (the “Initial Credit”);
and

     

    WHEREAS,
on May 21, 2009, Borrower made in favor of Lender a promissory note with an
aggregate face value of $950,000 (the “2009 Demand Note”),
and Borrower desires and Lender agrees that, subject to the conditions set forth
herein, such 2009 Demand Note shall be continued as a Loan under the amended
Revolving Credit Facility provided for herein; and

     

    WHEREAS,
the entire Initial Credit has now been borrowed under the Loan Agreement, but
Borrower and Lender desire to amend the Loan Agreement to, among other things,
increase the maximum amount of revolving credit available thereunder to Fifteen
Million Dollars ($15,000,000) (the “Revolving Credit
Facility”), the $8,105,638 increase in the principal amount that may be
borrowed under the Revolving Credit Facility being referred to herein as the
“Additional
Credit,” extend the maturity date of the Loan Agreement from November 6,
2009, to December 31, 2010, and make certain other revisions to the Loan
Agreement as more fully set forth herein; and

     

    WHEREAS,
the parties wish to cancel the 2009 Demand Note in exchange for including the
principal and accrued interest on the 2009 Demand Note as of the Effective Date
in the Revolving Credit Facility, whereupon the amount available under the
Revolving Credit Facility (the “Available Credit”)
shall be up to Seven Million One Hundred and Fourty-Nine Thousand One Hundred
and Thirty One Dollars ($7,149,131); and

     

    WHEREAS,
Lender is willing to make Loans up to the aggregate principal amount of the
Available Credit under the Revolving Credit Facility based on the
representations, warranties, covenants, terms and conditions set forth herein
and in the Loan Agreement, including but not limited to the issuance of a stock
purchase warrant in favor of Lender in the form attached hereto as Exhibit
A (the “Warrant”), and the reaffirmation of
the terms of the Loan Agreement, including but not limited to Borrower’s grant
to Lender of a first priority security interest in Borrower’s assets as security
for the repayment of the Obligations.

     

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    AGREEMENT

     

    NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained, the Loan Agreement is hereby amended as follows:

     

    1. Definitions.  Capitalized
terms used but not otherwise defined in this Amendment shall have the meanings
given to them in the Loan Agreement; provided, however, that to the
extent there are identically defined terms in this Amendment and the Loan
Agreement, the definitions provided herein shall govern and control the
interpretation of the Loan Agreement, as modified hereby.

     

    2. Amendments
to the Loan Agreement.  Subject to the satisfaction of the
conditions set forth in Section 3 hereof, the Loan Agreement is hereby amended
as follows:

     

    Section 1 (Commitment to
Lend).

     

    Section
1(a) is amended in its entirety and replaced with the following:

     

    (a)           As
evidenced by a convertible promissory note dated November 6, 2008 in favor of
Lender in the form attached hereto as Exhibit A (the “Revolving Note”),
Lender has made one or more loans to Borrower (each a “Loan” and collectively,
the “Loans”), in an aggregate unpaid principal amount of the Initial
Credit.  Subject to the terms and conditions of this Agreement and to
subsection (b) of this Section 1, and as evidenced by the New Revolving Note,
Lender may from time to time until December 31, 2010 (the “Maturity Date”), in
its sole discretion, make one or more Loans to Borrower in an aggregate unpaid
principal amount not exceeding at any time the Available Credit.

     

    Section
1(b) is amended by adding the following sentence at the end of the existing
Section 1(b):

     

    Each of
the Borrower and Lender agree that the 2009 Demand Note, having an aggregate
principal balance of $950,000 plus interest owing thereon through the Effective
Date in the aggregate amount of $6506.85, is hereby continued as a Loan
hereunder and under the New Revolving Note in the amount of $956,506.85, and
that such 2009 Demand Note is hereby cancelled.

     

    Section 3
(Interest).

     

    Section
3(b) is amended in its entirety and replaced with the following:

     

    (b)           Payment. Interest due
to be paid on the Initial Credit prior to November 6, 2009, shall be
payable  immediately upon the making of the first Loan to Borrower on
or after the Effective Date.  Interest on the Additional Credit shall
be payable (i) when

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    such Loan
shall be due (whether at maturity, by reason of notice of prepayment or
acceleration (including in accordance with Section 14) or otherwise) or upon
conversion in accordance with Section 8 hereof and (ii) in the case of all other
amounts due and payable under the Loan Documents, on demand.  Interest
at the Default Rate shall be payable on demand.

     

    Section 8
(Conversion).

     

    The first
paragraph of Section 8 is amended in its entirety and replaced with the
following:

     

    Conversion.  Subject
to the terms and conditions of the Revolving Note, Borrower agrees that Lender
may elect to convert all or any portion of any unpaid principal owed in relation
to the Initial Credit and the Revolving Note into shares of Borrower’s Series G
Preferred Stock (“Shares”) at a
conversion price of $110.00 per share, or $0.11 per common share equivalent (the
“Conversion
Price”), by delivering written notice of such conversion (a “Conversion Notice”)
to Borrower.  Upon conversion, certificates for the Shares so
purchased shall be delivered to Lender within three (3) Business Days of
Borrower’s actual receipt of the Conversion Notice.  In addition,
subject to the terms and conditions of the New Revolving Note, Borrower agrees
that Lender may elect to convert all or any portion of any unpaid principal owed
in relation to the Additional Credit and the New Revolving Note into shares of
Borrower’s Series G Preferred Stock (“Amendment Shares”) at
a conversion price of $84 per share, or $0.084 per common share
equivalent (the “Amendment Conversion
Price”), by delivering a Conversion Notice to Borrower.  Upon
conversion, certificates for the Amendment Shares so purchased shall be
delivered to Lender within three (3) Business Days of Borrower’s actual receipt
of the Conversion Notice.

     

    References
to “Shares” in clauses (a)(i)-(a)(v) and (b) of Section 8 shall be deemed to
refer to the Shares and the Amendment Shares, as applicable. References to any
series of stock of the Borrower shall refer to any series of stock in the
Borrower for which such first series was exchanged, taking into account the
necessary adjustment in the Conversion Price or Amendment Conversion Price, as
applicable.

     

    Section 12 (Borrower’s
Covenants).

     

    Clause
(b) of Section 12 is amended in its entirety and replaced with the
following:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (b)           Borrower
shall cause the authorization of (i) enough authorized shares of Common Stock to
issue all of the shares of Common Stock underlying the Shares and the Amendment
Shares into which the Loans may be converted pursuant to Section 8 hereof, (ii)
enough authorized Shares and Amendment Shares (or their economic equivalent in a
series of stock of the Borrower for which such shares are being exchanged) to
satisfy its obligations to convert the Loans to Shares and Amendment Shares at
such time as Lender may elect such conversion in accordance with Section 8
hereof, (iii) enough authorized shares of Borrower’s Series D Preferred Stock to
satisfy its obligations if the Warrant is exercised in full, and (iv) enough
authorized shares of Common Stock to issue all of the shares of Common Stock
into which the Borrower’s Series D Preferred Stock to be acquired in the
exercise of the Warrant may be converted, in each case, by no later than June
30, 2009.

     

    Clause
(c) of Section 12 is amended in its entirety and replaced with the
following:

     

    (c)           If
Lender proposes to sell any securities issued to the Lender, registered in
Lender’s name or acquired by Lender pursuant to any Loan Document in compliance
with Rule 144 promulgated by the Securities Exchange Commission (the “SEC”),
then, upon Lender's written request to Borrower, Borrower shall furnish to
Lender, within ten (10) days after receipt of such request, a written statement
confirming Borrower's compliance with the filing requirements of the SEC as set
forth in such rule or any successor rule, as it may be amended from time to
time.

     

    Section 14
(Acceleration).

     

    Section
14 is amended in its entirety and replaced with the following:

     

    Acceleration.  In
addition to Lender’s rights under Section 15 hereof, Borrower hereby agrees that
Lender may, in its sole discretion, elect to accelerate payment of all
principal, interest and other amounts, if any, that are outstanding under the
Loan Documents as of July 1, 2010 (the “Performance Date”) if
Borrower has not sold and delivered and Borrower has not executed any binding
agreements (the “Binding Agreements”)
with unaffiliated third-parties for the sale of SkyNetTM, the Borrower’s
proprietary digital display product, during the period beginning on the date
hereof and ending on the Performance Date (the “Performance
Period”).  If Borrower does not provide Lender with evidence
satisfactory to Lender of one or more closed sales of SkyNetTM or Binding
Agreements on or before the Performance

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Date,
then Lender may declare the Loans due and payable within thirty (30) days of
Lender’s written notice of acceleration (“Acceleration Notice”)
being delivered to Borrower (the “Acceleration
Date”).

     

    Section 20 (Definitional
Provisions).

     

    Section
20 is amended by adding the following new definitions in alphabetical order to
read in their entirety as follows:

     

    “2009
Demand Note” means the promissory note dated May 21, 2009 in an aggregate
principal amount of $950,000 made by Borrower in favor of Lender.

     

    “Additional
Credit” means the additional amount of credit made available under the Revolving
Line of Credit pursuant to the Amendment.

     

    “Amendment”
means the First Amendment to Senior Secured Revolving Credit Agreement,
effective as of June 15, 2009.

     

    “Available
Credit” means Seven Million One Hundred and Fourty-Nine Thousand One Hundred and
Thirty One Dollars ($7,149,131).

     

    “Effective
Date” means June 15, 2009.

     

    “Initial
Credit” means the initial amount of credit made available under the Revolving
Line of Credit pursuant to the Loan Agreement.

     

    “Maximum
Revolving Credit Amount” means Fifteen Million Dollars
($15,000,000).

     

    “New
Revolving Note” means the convertible promissory note dated June 15, 2009 made
by Borrower in favor of Lender in an aggregate principal amount not exceeding at
any time the Maximum Revolving Credit Amount in the form attached to the
Amendment as Exhibit B; provided, however, that all
references to the Revolving Note in the Loan Agreement shall be deemed to refer
to the New Revolving Note as well.

     

    “Warrant”
means the stock purchase warrants in favor of Lender in the form attached to the
Amendment as Exhibit A.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    3. Conditions to Effectiveness.
The effectiveness of this Amendment is subject to the Lender’s receipt of each
of the following, in form and substance reasonably satisfactory to
Lender:

     

    (a) a
certificate of the Secretary or an Assistant Secretary of Borrower, dated the
Effective Date, in form and substance reasonably satisfactory to
Lender;

     

    (b) the duly
executed New Revolving Note for Lender;

     

    (c) the duly
executed Warrant for Lender;

     

    (d) an
opinion of Davis, Graham, & Stubbs, dated the Effective Date for the making
of such Loans addressing such matters as Lender reasonably
requests;

     

    (e) a copy of
any Governmental Approval and other third-party consents or approvals required
by Borrower to execute, deliver and perform the Loan Documents to which it is a
party;

     

    (f) payment
of all fees, disbursements and expenses of Lender, payable in connection with
this Amendment based on invoices presented at least two Business Days prior to
the Effective Date;

     

    (g) results
of a recent search by a Person satisfactory to Lender of the Uniform Commercial
Code, judgment and tax lien filings which may have been filed with respect to
personal property of Borrower, and the results of such search shall be
satisfactory to Lender;

     

    (h) (i) such
UCC-1 financing statements and other documents as Lender may request, the filing
or recordation of which is necessary or appropriate in Lender’s reasonable
determination to create or perfect a security interest in the Collateral under
Applicable Law, and (ii) evidence of the filing or recordation of the same in
such offices as Lender shall have specified; and

     

    (i) such
instruments and other documents as Lender may request, the possession of which
is necessary or appropriate in Lender’s determination to create or perfect a
security interest in the Collateral under Applicable Law; and

     

    (j) no
Default or Event of Default exists.

     

    4. Miscellaneous.

     

    (a) No
failure or delay of any party hereto to exercise any right given to it hereunder
or under the Loan Agreement or any other Loan Document, or to insist on strict
compliance with any provision hereunder or thereunder, shall constitute a waiver
of such provision or of any other provision hereof or thereof, or a waiver of
any breach, and no waiver of any provision or breach of any provision shall
constitute a waiver of any other provision or

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     breach
or of any subsequent breach of the same provision.  No waiver shall be
effective unless in writing and signed by the party having the right to waive
such provision.

     

    (b) Borrower
acknowledges and confirms that all Collateral furnished in connection with the
Loan Agreement, continues to secure the Obligations and indebtedness thereunder,
including but not limited to indebtedness under the New Revolving
Note.

     

    (c) Except as
expressly modified herein, all terms and provisions of the Loan Agreement, and
all other documents, instruments and agreements executed and/or delivered in
connection with the Loan Agreement, shall remain unchanged and in full force and
effect; provided, however, in the event of any inconsistency, incongruity or
conflict between the terms of the Loan Agreement and the terms of this
Amendment, the terms of this Amendment shall govern and control.  This
Amendment is part of the Loan Agreement and constitutes a Loan Document
hereunder and thereunder. The Warrant and the New Revolving Note each constitute
a Loan Document under the Loan Agreement and under the Loan
Documents.  Each and every reference to the Loan Agreement in the Loan
Documents shall be deemed to refer to the Loan Agreement, as modified by this
Amendment.

     

    (d) Whether
or not any Loans are made hereunder, Borrower shall:

     

    (i) pay or
reimburse Lender for all transfer, documentary, stamp and similar taxes, and all
recording and filing fees and taxes, payable in connection with, arising out of,
or in any way related to, the execution, delivery and performance of this
Amendment, the Loan Agreement, the Revolving Note, the New Revolving Note or any
of the Loan Documents or the making of the Loans;

     

    (ii) pay or
reimburse Lender for all reasonable and documented out-of-pocket costs and
expenses (including reasonable fees and disbursements of legal counsel,
appraisers, accountants and other experts employed or retained by Lender)
incurred by Lender in connection with, arising out of, or in any way related to:
(i) the negotiation, preparation, execution and delivery of (A) this Amendment,
the Loan Agreement, the Revolving Note, the New Revolving Note or any of the
Loan Documents and (B) whether or not executed, any waiver, amendment or consent
thereunder or thereto; (ii) the administration of and any operations under the
Loan Documents; (iii) consulting with respect to any matter in any way arising
out of, related to, or connected with, the Loan Documents, including (A) the
protection or preservation of the Collateral, (B) the protection, preservation,
exercise or enforcement of any of the rights of Lender in, under or related to
the Collateral or the Loan Documents or (C) the performance of any of the
obligations of Lender under or related to the Loan Documents; (iv) protecting or
preserving the Collateral; or (v) protecting, preserving, exercising or
enforcing any of the rights of Lender in, under or related to the Collateral or
the Loan Documents, including defending the Security Interest as a valid,
perfected, first priority security interest in the Collateral;

     

    (iii) indemnify
and hold Lender (or a director, officer, manager, employee or agent of Lender)
harmless from and against all losses (including judgments, penalties and fines)
suffered, and pay or reimburse Lender for all reasonable and documented
out-of-pocket costs and expenses (including reasonable fees and disbursements of
legal counsel

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    and other
experts employed or retained by Lender) incurred by Lender in connection with,
arising out of, or in any way related to (i) any Loan Document Related Claim
(whether asserted by Lender or Borrower or any other Person), including the
prosecution or defense thereof and any litigation or proceeding with respect
thereto (whether or not, in the case of any such litigation or proceeding,
Lender is a party thereto), or (ii) any investigation, governmental or
otherwise, arising out of, related to, or in any way connected with, this
Amendment, the Loan Agreement, the Revolving Note, the New Revolving Note or any
of the Loan Documents or the relationships established thereunder, except that
the foregoing indemnity shall not be applicable to any loss suffered by Lender
to the extent such loss is determined by a judgment of a court that is binding
on Borrower and Lender, final and not subject to review on appeal, to be the
result of acts or omissions on the part of Lender constituting (x) willful
misconduct, (y) knowing violations of law or (z) in the case of claims by
Borrower against Lender, Lender’s failure to observe any other standard
applicable to it under any of the other provisions of this Amendment, the Loan
Agreement, the Revolving Note, the New Revolving Note or any of
the  Loan Documents or Applicable Law.

     

    (e) The Loan
Agreement as modified by this Amendment and the other Loan Documents constitute
the entire agreement between the parties hereto with respect to the subject
matter thereof, superseding all prior negotiations, correspondence,
understandings and agreements, if any, between the parties; no amendment or
modification of any Loan Document shall be binding on the parties unless made in
writing and duly executed by all parties.  There are no oral or
implied agreements and no oral or implied warranties between the parties hereto
other than those expressed herein.

     

    (f) This
Amendment and the exhibits attached hereto shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns.  This Amendment shall not be assignable by the Borrower
without the prior written consent of Lender.

     

    (g) The
section and other headings in this Amendment are for reference only and shall
not limit or otherwise affect any of the terms hereof.

     

    (h) Borrower
agrees to execute, acknowledge, seal and deliver, after the date hereof, without
additional consideration and at its own cost and expense, such further
assurances, instruments and documents, and to take such further actions, as
Lender shall request in order to fulfill the intent of this Amendment and the
transactions contemplated hereby, including, without limitation, one or more
deposit account control agreements.

     

    (i) Any
provision in this Amendment that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction.

     

    (j) Should
this Amendment be referred to an attorney for collection, whether or not
judgment has been confessed or suit has been filed, Borrower shall pay all of
Lender's actual costs, fees (including reasonable attorneys' fees) and expenses
resulting from such referral.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (k) This
Amendment and any amendments, waivers, consents or supplements hereto may be
executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so delivered shall be deemed an
original, but all of which counterparts shall constitute but one and the same
instrument.

     

    (l) This
Amendment is made in and shall be governed by and construed and interpreted in
accordance with the laws of the State of Colorado.

     

    (m) BORROWER
AND LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY
CLAIM RELATED TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.

     

    [Signature
Page Follows]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first written above.

     

     

    BORROWER:

     

     

     

    ADVANCE
DISPLAY TECHNOLOGIES, INC.

     

     

    By:    /s/ Matthew W.
Shankle

     

    Matthew W. Shankle,

     

    Chief Executive Officer

     

     

     

     

    LENDER:

     

     

     

    DeGeorge
Holdings Three LLC

     

     

    By:   /s/ Lawrence F.
DeGeorge

     

    Lawrence F. DeGeorge,
Manager

     

    

    
      
        
          Signature
Page to First Amendment to

          Senior
Secured Revolving Credit Agreement

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    EXHIBIT
A

     

     

    WARRANT

     

    

    
      
        
          A-1

        

         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    NEW
REVOLVING NOTE

    
      
        
          B-1exh10-2.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
10.2

    

    THIS
NOTE AND THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (II) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, BUT ONLY UPON LENDER FIRST
HAVING OBTAINED A WRITTEN OPINION OF BORROWER’S COUNSEL, OR OTHER COUNSEL
ACCEPTABLE TO BORROWER, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL
APPLICABLE PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE “BLUE SKY” OR
OTHER SIMILAR SECURITIES LAW.

    

    CONVERTIBLE
REVOLVING PROMISSORY NOTE

    

    

    $15,000,000

    June 15,
2009

    Denver,
Colorado

    

    THIS CONVERTIBLE REVOLVING PROMISSORY
NOTE (the “Note”) is executed
and delivered under and pursuant to the terms of that certain First Amendment of
even date herewith (the “Amendment”) to the
Senior Secured Revolving Credit Agreement (the “Loan Agreement”)
dated November 6, 2008, by and between ADVANCE DISPLAY TECHNOLOGIES, INC., a
Colorado corporation (the “Borrower”) and
DEGEORGE HOLDINGS THREE LLC, a Delaware limited liability company (the “Lender”).  For
purposes of this Note, all references to the Loan Agreement herein shall include
the terms sets forth in the Amendment. Capitalized terms not otherwise defined
herein shall have the meanings provided in the Loan Agreement.

    

    FOR VALUE
RECEIVED, Borrower hereby promises to pay to the order of Lender, at the office
of Lender located at 140 Intracoastal Pointe Drive, Suite 410, Jupiter, Florida,
33477, or at such other place as Lender may from time to time designate to
Borrower in writing, on or before December 31, 2010 (the “Maturity Date”),
unless payable sooner pursuant to the provisions of the Loan Agreement, the
principal sum of FIFTEEN
MILLION DOLLARS ($15,000,000) or, if less, the aggregate unpaid principal
amount of all Loans under the Revolving Credit Facility, as
follows:

     

    1. Interest.  The
aggregate outstanding principal amount of the Revolving Loans shall bear
interest in accordance with Section 3 of the Loan Agreement; provided, however, that in no
event shall interest exceed the maximum interest rate permitted by
law.  Upon and after the occurrence of an Event of Default, and during
the continuation thereof, interest shall be payable at the Default
Rate.

     

    2. Maximum
Revolving Credit Amount.  In the event the aggregate
outstanding principal balance of the Revolving Credit Facility hereunder exceeds
the Maximum Revolving Credit Amount, Borrower shall, without notice or demand of
any kind, immediately pay Lender

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    such amounts which are necessary to reduce the aggregate
outstanding principal to an amount which is equal to or less than the Maximum
Revolving Credit Amount

     

    3. Security
Interest.  This Note is the “New Revolving Note” referred to in
the Amendment and is secured by the liens granted pursuant to the Loan Agreement
and the other Loan Documents.  This Note is entitled to all of the
benefits of the Loan Agreement and is subject to all of the agreements, terms
and conditions of the Loan Agreement.

     

    4. Conversion.  Lender
shall have the right, at its sole discretion and in accordance with Section 8 of
the Loan Agreement, to convert the unpaid principal balance, if any, on this
Note, or such lesser portion thereof as Lender may elect, into Shares or
Amendment Shares, as applicable, at any time unless this Note is paid in full
pursuant to the terms of this Note and Section 8 of the Loan
Agreement.

     

    5. Event of
Default.  If a Default shall occur, which is not cured within
the Cure Period, then this Note may, as provided in the Loan Agreement, be
declared to be immediately due and payable, without notice, together with
reasonable attorneys’ fees.

     

    6. Waiver.  Except
for such notices as may be required under the terms of the Loan Agreement,
Borrower waives presentment, demand, notice, protest, and all other demands, or
notices, in connection with the delivery, acceptance, performance, default, or
enforcement of this Note, and assents to any extension or postponement of the
time of payment or any other indulgence.

     

    7. Replacement.  This
Note is given in replacement of and extinguishes the indebtedness (including any
accrued interest) evidenced by the promissory note defined as the 2009 Demand
Note in the Amendment, in favor of Lender’s affiliate, Lawrence F. DeGeorge
(“LFD”), and
executed by Borrower in favor of LFD, with an aggregate face value of
$950,000.

     

    8. Severability.  If
one or more provisions of this Note are held to be unenforceable under
applicable law, such provision shall be excluded from this Note and the balance
of the Note shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms.

     

    9. No
Impairment.  The Borrower will not, by any voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Borrower, but will at all times in good
faith assist in the carrying out of all the provisions of this Note and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Lender against impairment.

     

    10. Transfer;
Successors and Assigns.  The terms and conditions of this Note
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties.  This Note may not be transferred in violation
of any restrictive legend set forth hereon.  Each new Note issued upon
transfer of this Note shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with the Securities Act, unless in
the opinion of counsel for Borrower such legend is not required in order to
ensure compliance with the Securities Act.  Subject to the preceding
sentence, this Note may be transferred only upon

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    surrender
of the original Note for registration of transfer, duly endorsed, or accompanied
by a duly executed written instrument of transfer in form satisfactory to the
Borrower.  Thereupon, a new note for the same principal amount and
interest will be issued to, and registered in the name of, the
transferee.

     

    11. Loss of
Note.  Upon receipt by the Borrower of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Note or any Note
exchanged for it, and indemnity satisfactory to the Borrower (in case of loss,
theft or destruction) or surrender and cancellation of such Note (in the case of
mutilation), the Borrower will make and deliver in lieu of such Note a new Note
of like tenor.

     

    12. Miscellaneous.  The
Loans evidenced hereby have been made and/or issued and this Note has been
delivered at Lender’s main office set forth above.  This Note shall be
governed and construed in accordance with the laws of the State of Colorado, in
which state it shall be performed, and shall be binding upon Borrower, and its
legal representatives, successors, and assigns.  Wherever possible,
each provision of the Loan Agreement and this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of the Loan Agreement or this Note shall be prohibited by or be invalid under
such law, such provision shall be severable, and be ineffective to the extent of
such prohibition or invalidity, without invalidating the remaining provisions of
the Loan Agreement or this Note.  The term “Borrower” as used herein
shall mean the party signing this Note and such party and its successors and
assigns, shall be jointly and severally obligated hereunder.

     

    IN
WITNESS WHEREOF, Borrower has executed this Note as of the date set forth
above.

    

    ADVANCE
DISPLAY TECHNOLOGIES, INC.

    

    By:      
/s/ Matthew W.
Shankle    

    Name:  Matthew
W. Shankle

    Title:    Chief
Executive Officer

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