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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 THE PAYEE
FIRST HAVING OBTAINED A WRITTEN OPINION OF MAKER'S COUNSEL, OR
OTHER COUNSEL
ACCEPTABLE TO MAKER, THAT THE PROPOSED DISPOSITION IS CONSISTENT
WITH ALL
APPLICABLE PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE
"BLUE SKY" OR
OTHER SIMILAR SECURITIES LAW.
REVOLVING 10% CONVERTIBLE, REDEEMABLE PROMISSORY NOTE
$______,000 JANUARY 11, 2005
FOR VALUE RECEIVED, ADVANCE DISPLAY TECHNOLOGIES, INC., a
Colorado
corporation ("MAKER"), promises to pay to the order of
_________________ or his
assigns ("PAYEE"), at such place as the Payee may designate in
writing, in
lawful money of the United States of America, the principal sum
of
______________________ Thousand Dollars ($____,000) (or so much
thereof as has
been advanced or re-advanced hereunder from time to time),
together with accrued
interest, on demand. Advances under this Note may be made, upon
request of Maker
at any time prior to conversion, redemption or repayment in full
of this Note
upon receipt by Payee of a request therefor signed by Maker. At
no time shall
the aggregate obligation of Maker to Payee exceed the principal
sum of this Note
plus accrued but unpaid interest on amounts previously received.
Maker may at
any time prior to conversion, redemption or repayment in full of
this Note repay
all or any part of said loans under this Note and subsequently
receive further
advances, consistent with the terms and conditions hereof.
1. INTEREST. The outstanding principal balance of this Note
shall accrue
interest at a fixed rate of ten percent (10%); provided,
however, that following
an Event of Default, the outstanding principal balance of this
Note shall bear
interest as provided in Section 6. Interest shall be calculated
on the basis of
a 360-day year.
2. INTEREST METHOD OF PAYMENT; APPLICATION. Payments (including
all
prepayments) received by Payee on this Note shall be applied
first to the
payment of accrued and unpaid interest and only thereafter to
the outstanding
principal balance of this Note.
3. CONVERSION.
(a) Conversion. Payee shall have the right to convert the
outstanding principal balance of and accrued interest on this
Note, or such
lesser portion thereof as Payee may elect, into Shares
("Shares") of Maker's
Series D Preferred Stock ("Series D") at any time unless this
Note is sooner
redeemed or paid in full.
<PAGE>
(b) Conversion Price; No Fractional Shares. Upon any conversion
of
this Note, the sum of the principal balance and accrued
interest, to be
converted shall be converted into Shares at $.0167 per Share.
Maker shall not
issue any fractional Shares upon conversion, and the number of
Shares issued to
Payee shall be rounded up to the nearest whole number.
(c) Mechanics of Conversion. Upon any conversion of this Note,
Payee
shall deliver to Maker at Maker's principal office this Note (or
of any
replacement Note), together with the written notice of election
to convert (the
"Notice of Conversion") attached hereto as Exhibit A and made a
part hereof.
Conversion shall be deemed to have been effected on the date
when such delivery
of the conversion notice is actually made. As promptly as
practicable
thereafter, Maker shall issue and deliver to or upon the written
order of Payee
a certificate or certificates for the number of Shares to which
the Payee is
entitled. Upon conversion of only a portion of the principal of
this Note, Maker
shall issue and deliver to, or upon the written order of Payee,
a new Note in
the principal amount of this Note not converted, which new Note
shall entitle
the holder to interest on the principal amount to the same
extent as if the
unconverted portion of this Note had not been surrendered for
conversion. Maker
covenants that all Shares, which may be issued upon conversion,
will, upon
issuance, be fully paid and nonassessable and free from all
taxes, liens and
charges caused or created by Maker with respect to the
issuance.
4. ANTI-DILUTION. In the event that Maker at any time after this
Note (i)
declares a dividend on the outstanding Series D payable in
Shares; (ii)
subdivides the outstanding number of Series D; (iii) combines
the outstanding
Series D into a smaller number of Shares; or (iv) issues any
Shares by
reclassification of the Series D (including any such
reclassification in
connection with a consolidation or merger in which Maker is the
surviving
entity), then, in any such event, the conversion price and the
number of Shares
issuable upon conversion of this Note, as provided in Section 3,
in effect at
(a) the record date for such dividend; or (b) the effective date
of such
subdivision, combination or reclassification, shall be
proportionately adjusted
so as to prevent the dilution of conversion rights that Payee
shall have been
entitled to prior to such issuance of shares, dividend,
subdivision, combination
or reclassification. Such adjustment shall be made successively
whenever any
event listed above shall occur
5. REDEMPTION AND PREPAYMENT.
(a) Notice to Payee. If Maker elects to redeem or pre-pay this
Note
(hereinafter individually and collectively referred to as a
"redemption"), it
shall furnish to Payee, at least forty-five (45) days (unless a
shorter period
shall be satisfactory to Payee) but not more than sixty (60)
days before a
redemption date, notice of the redemption date, the principal
amount of the Note
to be redeemed and the provision of this Note permitting or
requiring the
redemption.
(b) Form of Notice. Maker shall mail or cause to be mailed a
notice
of redemption to Payee which shall state:
(i) the redemption date;
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(ii) the redemption price;
(iii) that this Note called for redemption must be
surrendered
to the Ma
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