Exhibit 4.1
Advance Display Technologies,
Inc.
WARRANT FOR THE PURCHASE OF
SHARES OF THE SERIES D CONVERTIBLE PREFERRED STOCK
No. 1 Shares
810,564 June
15, 2009
FOR VALUE RECEIVED, Advance Display
Technologies, Inc. (the “Company”), a Colorado
corporation, hereby certifies that DeGeorge Holdings Three LLC, a
Delaware limited liability company, or its successors, any
subsequent transferees or assignees are entitled to purchase from
the Company, at any time or from time to time prior to 5:00 P.M.,
New York City time then current, on June 15, 2013, 810,564 fully
paid and non-assessable shares of the Series D Convertible
Preferred Stock of the Company at the purchase price
of $0.084 (eight and four-tenths cents). Any
conversion of such stock is subject to the terms set forth in the
first two sentences of Section 2. (Hereinafter, (i) said
stock, together with any other equity securities which may be
issued by the Company with respect thereto or in substitution
therefor, is referred to as the “Series D Stock,” (ii)
the shares of the Series D Stock purchasable hereunder are referred
to as the “Warrant Shares,” (iii) the aggregate
purchase price payable hereunder for the Warrant Shares is referred
to as the “Aggregate Warrant Price,” (iv) the price
payable hereunder for each of the shares of the Warrant Shares is
referred to as the “Per Share Warrant Price” and (v)
this warrant and all warrants hereafter issued in exchange or
substitution for this warrant are referred to as
“Warrants.”) The Aggregate Warrant Price is
not subject to adjustment. The Per Share Warrant Price
is subject to adjustment as hereinafter provided; in the event of
any such adjustment, the number of Warrant Shares shall be adjusted
by dividing the Aggregate Warrant Price by the Per Share Warrant
Price in effect immediately after such adjustment.
(a) This Warrant may
be exercised, in whole at any time or in part from time to time
prior to 5:00 P.M., New York City time then current, on June 15,
2013 (the “Expiration Date”), by the holder of this
Warrant (the “Holder”) by the surrender of this Warrant
(with the subscription form at the end hereof duly executed) at the
address set forth in Subsection 10(a) hereof, together with proper
payment of the Aggregate Warrant Price, or the proportionate part
thereof if this Warrant is exercised in part. Payment
for the Warrant Shares shall be made by any method reasonably
acceptable to the Company. If this Warrant is exercised
in part, this Warrant must be exercised for a number of whole
shares of the Series D Stock, and the Holder is entitled to receive
a new Warrant covering the number of Warrant Shares in respect of
which this Warrant has not been exercised and setting forth the
proportionate part of the Aggregate Warrant Price applicable to
such Warrant Shares. Upon such exercise and surrender of
this Warrant, the Company will (i) issue a certificate or
certificates in the name of the Holder for the largest number of
whole shares of the Series D Stock to which the Holder shall be
entitled and, if this
Warrant is
exercised in whole, in lieu of any fractional share of the Series D
Stock to which the Holder shall be entitled, pay cash equal to the
fair market value of such fractional share (reasonably determined
by the Board of Directors of the Company acting in good faith and
reasonably acceptable to the Holder) and (ii) deliver the other
securities and properties receivable upon the exercise of this
Warrant, or the proportionate part thereof if this Warrant is
exercised in part, pursuant to the provisions of this
Warrant.
(b) In lieu of
exercising this Warrant in the manner set forth in paragraph 1(a)
above, this Warrant may be exercised in whole at any time or in
part from time to time on or prior to the Expiration Date by
surrender of the Warrant without payment of any other
consideration, commission or remuneration, together with the
cashless exercise subscription form at the end hereof, duly
executed. The number of shares to be issued in exchange
for the Warrant shall be the product of (x) the excess of the fair
market value (reasonably determined by the Board of Directors of
the Company acting in good faith and reasonably acceptable to the
Holder) of the Series D Stock on the date of surrender of the
Warrant and the exercise subscription form over the Per Share
Warrant Price and (y) the number of shares subject to issuance upon
exercise of the Warrant, divided by such value of the Series D
Stock on such date. Upon such exercise and surrender of
this Warrant, the Company will (i) issue a certificate or
certificates in the name of the Holder for the largest number of
whole shares of the Series D Stock to which the Holder shall be
entitled and, in lieu of any fractional share of the Series D Stock
to which the Holder shall be entitled, pay cash equal to the fair
market value of such fractional share (reasonably determined by the
Board of Directors of the Company acting in good faith and
reasonably acceptable to the Holder), and (ii) deliver the other
securities and properties receivable upon the exercise of this
Warrant, pursuant to the provisions of this Warrant.
2. Reservation of
Warrant Shares . Even though the Warrant Shares are
by their terms convertible into the Company's common stock, Holder
acknowledges that the Warrant Shares are not presently so
convertible because there is not a sufficient number of authorized
but unissued shares of the Company's common stock
. Holder further understands that Company has agreed to
submit to Company’s shareholders a resolution to increase the
number of authorized shares of the Company's common stock and to
reserve a portion of the newly authorized shares for the conversion
of the Warrant Shares into the Company's common stock. Company
agrees to use its best efforts to cause such shares of its common
stock to be authorized by the shareholders and available for
issuance upon conversion of the Warrant Shares. Holder
agrees that the Warrant Shares shall not be convertible into the
Company's common stock until such time that there are sufficient
shares of the Company's common stock available for
issuance. The Company agrees that, thereafter but prior
to the expiration of this Warrant, the Company will at all times
have authorized and in reserve, and will keep available, solely for
issuance or delivery upon the exercise of this Warrant, such number
of shares of the Series D Stock (and shares of any class or series
into which the Series D Stock is convertible) and such amount of
other securities and properties as from time to time shall be
deliverable to the Holder upon the exercise of this Warrant, free
and clear of all restrictions on sale or transfer (except such as
may be imposed under applicable federal and state securities laws)
and free and clear of all preemptive rights and all other rights to
purchase securities of the Company.
3. Protection Against
Dilution.
(a) If, at any time or
from time to time after the date of this Warrant, the Company shall
distribute to the holders of its outstanding Series D Stock (or
shares of any class or series into which the Series D Stock is
convertible), (i) securities, other than shares of Series D Stock,
or (ii) property, other than cash not out of earned surplus,
without payment therefor, with respect to Series D Stock (or shares
of any class or series into which the Series D Stock is
convertible), then, and in each such case, the Holder, upon the
exercise of this Warrant, shall be entitled to receive the
securities and property which the Holder would hold on the date of
such exercise if, on the date of this Warrant, the Holder had been
the holder of record of the number of shares of the Series D Stock
(or shares of any class or series into which the Series D Stock is
convertible) subscribed for upon such exercise and, during the
period from the date of this Warrant to and including the date of
such exercise, had retained such shares and the securities and
properties receivable by the Holder during such period. Notice of
each such distribution shall be forthwith mailed to the
Holder.
(b) If, at any time or
from time to time after the date of this Warrant, the Company shall
(i) pay a dividend or make a distribution on the Series D Stock (or
shares of any class or series into which the Series D Stock is
convertible) in Series D Stock, other capital stock or other
securities, (ii) subdivide its outstanding shares of Series D Stock
into a greater number of shares, (iii) combine its outstanding
shares of Series D Stock into a smaller number of shares or (iv)
issue by reclassification of its Series D Stock any shares of
capital stock of the Company (or any shares of any class or series
into which the Series D Stock is convertible), the Per Share
Warrant Price and Warrant Shares in effect immediately prior to
such action shall be adjusted so that the Holder of any Warrant
thereafter exercised shall be entitled to receive the number of
shares of Series D Stock or other capital stock or other securities
of the Company which he would have owned or been entitled to
received immediately following the happening of any of the events
described above had such Warrant been exercised immediately prior
thereto. An adjustment made pursuant to this (b) shall
become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination
or reclassification. If, as a result of an adjustment
made pursuant to this (b), the holder of any Warrant thereafter
surrendered for exercise shall become entitled to receive shares of
two or more classes of capital stock or shares of Series D Stock
and other capital stock of the Company, the Board of Directors
(whose reasonable determination shall be conclusive and shall be
described in a written notice to the Holder of any Warrant promptly
after such adjustment) shall determine the allocation of the
adjusted Per Share Warrant Price between or among shares of such
classes or capital stock or shares of Series D Stock and other
capital stock.
(c) Except as provided
in 3(e), in case the Company shall hereafter issue or sell any
shares of Series D Stock (or any shares of any class or series into
which the Series D Stock is convertible) for a consideration per
share less than the fair market value in effect immediately prior
to such issuance or sale, the Per Share Warrant Price shall be
adjusted as of the date of such issuance or sale so that the same
shall equal the price determined by dividing (i) the sum of (A) the
number of shares of Series D Stock outstanding immediately prior to
such issuance or sale multiplied by the Per Share Warrant Price
plus (B) the consideration received by
the Company upon such issuance or sale by (ii)
the total number of shares of Series D Stock outstanding after such
issuance or sale.
(d) Except as provided
in 3(e), in case the Company shall hereafter issue or sell any
rights, options, warrants or securities convertible into Series D
Stock entitling the holders thereof to purchase the Series D Stock
or to convert such securities into Series D Stock at a price per
share (determined by dividing (i) the total amount, if any,
received or receivable by the Company in consideration of the
issuance or sale of such rights, options, warrants or convertible
securities plus the total consideration, if any, payable to the
Company upon exercise or conversion thereof (the “Total
Consideration”) by (ii) the number of additional shares of
Series D Stock issuable upon exercise or conversion of such
securities) less than the then fair market value in effect on the
date of such issuance or sale, the Per Share Warrant Price shall be
adjusted as of the date of such issuance or sale so that the same
shall equal the price determined by dividing (i) the sum of (A) the
number of shares of Series D Stock outstanding on the date of such
issuance or sale multiplied by the Per Share Warrant Price plus (B)
the Total Consideration by (ii) the number of shares of Series D
Stock outstanding on the date of such issuance or sale plus the
maximum number of additional shares of Series D Stock issuable upon
exercise or conversion of such securities.
(e) No adjustment in
the Per Share Warrant Price shall be required in the case of (i)
the issuance of shares of Series D Stock upon the exercise of
options outstanding as of the date hereof which may be granted
under the Company’s official stock option plan as in effect
on the date hereof, or (ii) the issuance of shares pursuant to the
exercise of this Warrant.
(f) In case of any
consolidation or merger to which the Company is a party other than
a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity
of the property of the Company as an entirety or substantially as
an entirety, or in the case of any statutory exchange of securities
with another entity (including any exchange effected in connection
with a merger of any other corporation with the Company), the
Holder of this Warrant shall have the right thereafter to convert
such Warrant into the kind and amount of securities, cash or other
property which he would have owned or have been entitled to receive
immediately after such consolidation, merger, statutory exchange,
sale or conveyance had this Warrant been exercised immediately
prior to the effective date of such consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if
necessary, appropriate adjustment shall be made in the application
of the provisions set forth in this Section 3 with respect to the
rights and interests thereafter of the Holder of this Warrant to
the end that the provisions set forth in this Section 3 shall
thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock or other
securities or property thereafter deliverable on the exercise of
this Warrant. The above provisions of this 3(f) shall
similarly apply to successive consolidations, mergers, statutory
exchanges, sales or conveyances. Notice of any such
consolidation, merger, statutory exchange, sale or conveyance, and
of said provisions so proposed to be made, shall be mailed to the
Holder not less than twenty (20) days prior to such
event. A sale of all or substantially all of the assets
of the Company for a consideration consisting primarily of
securities shall be deemed a consolidation or merger for the
foregoing purposes.
(g) No adjustment in
the Per Share Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least $0.001
per share of Series D Stock; provided, however, that any
adjustments which by reason of this (g) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment; and provided further, however, that adjustments shall
be required and made in accordance with the provisions of this
Section 3 (other than this (g)) not later than such time as may be
required in order to preserve the tax-free nature of a distribution
to the Holder of this Warrant or Series D Stock. All
calculations under this Section 3 shall be made to the nearest cent
or to the nearest 1/100th of a share, as the case may
be. Anything in this Section 3 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Per Share Warrant Price, in addition to those
required by this Section 3, as it in its reasonable discretion
shall deem to be advisable in order that any stock
dividend
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