Attached files
| file | filename |
|---|---|
| EX-10.1 - ADVANCE DISPLAY TECHNOLOGIES INC | v189787_ex10-1.htm |
| EX-10.3 - ADVANCE DISPLAY TECHNOLOGIES INC | v189787_ex10-3.htm |
| EX-10.2 - ADVANCE DISPLAY TECHNOLOGIES INC | v189787_ex10-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): June 28, 2010
|
ADVANCE
DISPLAY TECHNOLOGIES, INC.
|
|
(Exact name of
registrant as specified in its
charter)
|
|
COLORADO
|
0-15224
|
84-0969445
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File
Number)
|
(I.R.S.
Employer
Identification
Number)
|
|
42230
Zevo Drive
|
Temecula,
California
|
92590
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code:
(951)
795-4446
(Former name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
|
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
¨
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
|
1.01.
|
Entry
into a Material Definitive
Agreement.
|
As
previously disclosed, Advance Display Technologies, Inc. (the “Company”) and
DeGeorge Holdings Three, LLC, a Delaware limited liability company (the
“Lender”), entered into a Senior Secured Revolving Credit Agreement, dated
November 6, 2008 (the “Agreement”), which was subsequently amended on June 15,
2009 (the “Amendment”). The Agreement was ratified and approved by
the Company’s shareholders on November 5, 2008. As amended, the
Agreement provides for $15,000,000 in revolving credit, secured by substantially
all of the Company’s tangible and intangible assets (the “Collateral”), with a
maturity date of December 31, 2010, provided, however, that all amounts owed
become immediately due and owing if there is an Event of Default, as defined in
the Agreement, or if the Company has not sold and delivered, or entered into a
binding agreement to sell, any of its proprietary digital display screens,
SkyNet™, by July 1, 2010 (the “Sales Condition”). While the Company
has installed a SkyNet™ screen inside of the Music Box Theater in Los Angeles
and has entered into an agreement with Times Square Tower Associates LLC to
install a SkyNet™ screen on a building located in Times Square in New York City
on a shared revenue basis, neither of these transactions meet the requirements
of the Sales Condition.
Under the
Agreement, the insolvency of the Company is one of the enumerated Events of
Default. In May of 2010, the Company determined that, in addition to
the impending risk that it would not meet the Sales Condition by July 1, 2010,
its continuing solvency was dependent on the extension of additional credit
under the Agreement, which extension the Lender was not obligated to
make. In light of the increasing risk that the Lender would declare
an Event of Default under the Agreement, on May 17, 2010, the Company and the
Lender jointly engaged an independent appraisal firm (the “Appraiser”) to
determine the fair market value of the Company’s collateral under the Agreement
(the “Appraisal”).
Because
the Lender is an affiliate of the Company’s controlling shareholder and a member
of its Board of Directors, on May 25, 2010, the Board appointed a special
committee of the Board (the “Committee”), comprised of Matthew W. Shankle and
James P. Martindale, to determine how the Company would manage its obligations
under the Agreement, including but not limited to the Company’s response to a
potential notice of default from the Lender.
On June
23, 2010, the Appraisal was delivered, estimating the Company’s total value at
approximately $7.6 million, substantially less than the approximately $14.2
million borrowed to date under the Agreement. Recognizing the
likelihood of a cutoff of further advances under the Agreement or an imminent
foreclosure by the Lender, the Committee entered into negotiations with the
Lender in an effort to preserve some value for the Company’s shareholders
notwithstanding the likelihood of either or both of those actions by the
Lender.
Following
these negotiations, on June 28, 2010, the Company received a letter from the
Lender (the “Default Letter”) declaring that the Lender was exercising its
foreclosure rights under the Agreement on the grounds that there was an Event of
Default under the Agreement because the Company was insolvent. Also
on June 28, 2010, the Company and the Lender executed an Agreement to Accept
Collateral in Partial Satisfaction of Obligations (the “Foreclosure Agreement”),
by which the Company consented to a strict foreclosure by the Lender on the
Collateral in accordance with the provisions of Section 4-9-602(a) of the
Colorado Uniform Commercial Code and other applicable law (the
“Foreclosure”). Pursuant to the Foreclosure Agreement, the Company
transferred the Collateral to ADTI Media, LLC, a Delaware limited liability
company and wholly-owned subsidiary of the Lender (“ADTI
Media”). Upon this transfer, the Company’s obligations to the Lender
under the Agreement were discharged in the amount of $7.6
million. After the Foreclosure, the Company still owed a deficiency
to the Lender in the amount of $7,883,195.41, the balance of principal and
interest outstanding under the Agreement after the foreclosure (the
“Balance”).
As a
result of the Committee’s negotiations with the Lender to preserve some value
for the Company and its shareholders, however, the Company also entered into
another agreement with the Lender on June 28, 2010 (the “Release
Agreement”). By the Release Agreement, the Lender agreed to: (a)
forgive the outstanding interest due under the Loan Documents in the amount of
$1,220,326.56; (b) reduce the interest rate under the Agreement going forward to
match the relevant federal rate at the time such amendments become effective,
with such amended rate being applicable retroactively to June 29, 2010, and
delete all references to the default rate; (c) reimburse the Company for all
reasonable costs and expenses it incurs in connection with the Company’s
contemplated plan to deregister the Company’s securities under the Securities
Exchange Act of 1934 if the Foreclosure occurred, including (i) the salary and
benefits of the Company’s sole remaining employee, Matthew W. Shankle, who is
expected to provide services to the Company in connection with such
deregistration, and (ii) the legal fees and other administrative expenses
incurred by the Company in effecting the deregistration; and (d) cause ADTI
Media to pay the Company a royalty payment equal to 20% of the revenues
generated by ADTI Media from the Collateral for the next three (3)
years. In exchange, the Company released the Lender, Mr. DeGeorge,
ADTI Media, and any and all of their respective affiliates, including, but not
limited to, subsidiaries, officers, directors, general and limited partners,
members, shareholders, executives, employees, trustees, executors, successors
and assigns, past and present of any and all of the foregoing (collectively, the
“Lender Parties”) from and against any and all claims that the Company may have
had, currently has, or may have in the future against any Lender
Party. Correspondingly, the Lender Parties released the Company from
and against any and all claims that they may have had, currently have, or may
have against the Company relating to the debt, the Agreement, and the
Foreclosure Agreement other than the Company’s continuing obligations with
respect to the balance still owed under the Agreement.
The
foregoing description of the terms of the Agreement, the Amendment, the Default
Letter, the Foreclosure Agreement and the Release Agreement are only summaries,
do not purport to be complete, and are qualified in their entirety by reference
to the actual text of the documents. The Agreement and the Amendment
were attached as exhibits to the Company’s Forms 8-K filed November 13, 2008,
and June 19, 2009, respectively. The Default Letter, the Foreclosure
Agreement and the Release Agreement are attached hereto as Exhibits 10.1, 10.2
and 10.3, respectively.
|
2.01.
|
Completion
of Acquisition or Disposition of
Assets.
|
The
information required by Item 2.01 is hereby incorporated by reference from Item
1.01.
|
2.04.
|
Triggering
Events That Accelerate or Increase a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet
Arrangement.
|
The
information required by Item 2.04 is hereby incorporated by reference from Item
1.01.
5.02
Departure of Directors or Certain Officers: Election of Directors; Appointment
of Certain Officers; Compensatory Arrangements of Certain Officers
(a) On
June 29, 2010, Rebecca L. McCall resigned from her positions as Vice President
of Accounting, Chief Accounting Officer and Secretary of the
Company. Ms. McCall is no longer an employee of the Company, having
terminated her employment on May 31, 2010.
(b) On
June 29, 2010, Matthew W. Shankle resigned from his positions as President and
Chief Executive Officer of the Company. Since April 5, 2010, Mr.
Shankle had been on a paid leave of absence to address personal issues arising
from medical problems of a family member. While Mr. Shankle was on
leave of absence, his duties were assumed by James P. Martindale, the Company’s
Executive Vice President and Chief Operating Officer.
(c) On
June 29, 2010, the Company appointed James P. Martindale, formerly the Executive
Vice President and Chief Operating Officer of the Company, as President and
Chief Executive Officer of the Company. Mr. Martindale’s background ,
equity ownership in the Company and other biographical information can be found
in the Company’s Form 10-K for the period ended June 30, 2009, which was filed
on October 13, 2009, and is incorporated herein by reference.
|
Item
9.01
|
Financial
Statements and Exhibits.
|
(d) Exhibits.
|
Exhibit
No.
|
Description
of Exhibit
|
|
|
10.1
|
Event
of Default and Company Consent Letter from DeGeorge Holdings Three, LLC
dated June 28, 2010.
|
|
|
10.2
|
Agreement
to Accept Collateral in Partial Satisfaction of Obligations (“Strict
Foreclosure”) between the Company, DeGeorge Holdings Three, LLC, and ADTI
Media, LLC dated June 28, 2010.
|
|
|
10.3
|
Agreement
and Release between the Company and DeGeorge Holdings Three, LLC dated
June 28, 2010.
|
|
|
10.4
|
Senior
Secured Revolving Credit Agreement between the Company and the DeGeorge
Holdings Three, LLC (filed as Exhibit 10.1 to the Company’s Form 8-K filed
November 13, 2008 and incorporated herein by
reference).
|
|
|
10.5
|
First
Amendment to the Senior Secured Revolving Credit Agreement between the
Company and DeGeorge Holdings Three, LLC (filed as Exhibit 10.1 to the
Company’s Form 8-K filed June 19, 2009 and incorporated herein by
reference).
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
Date: July
2, 2010
|
ADVANCE
DISPLAY TECHNOLOGIES, INC.
|
||
|
|
By:
|
/s/ James P. Martindale | |
|
James
P. Martindale, President and Chief Excutive Officer
|
|||
EXHIBIT
INDEX
|
Exhibit
No.
|
Description
of Exhibit
|
|
|
10.1
|
Event
of Default and Company Consent Letter from DeGeorge Holdings Three, LLC
dated June 28, 2010.
|
|
|
10.2
|
Agreement
to Accept Collateral in Partial Satisfaction of Obligations (“Strict
Foreclosure”) between the Company, DeGeorge Holdings Three, LLC, and ADTI
Media, LLC dated June 28, 2010.
|
|
|
10.3
|
Agreement
and Release between the Company and DeGeorge Holdings Three, LLC dated
June 28, 2010.
|