EXHIBIT 2
DISPLAY TECHNOLOGIES, INC.
PROPOSED TERMS OF RJCP/RENAISSANCE
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GUARANTEE OF SOUTHTRUST DEBT
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Amount: $1,750,000 of SouthTrust debt on Remaining
Businesses.
Guarantors: Raymond James Capital Partners, L.P. ("RJCP") -
$1,500,000; Renaissance Entity ("Renaissance")
- $250,000 (Collectively, the "Guarantors")
Structure: All businesses but Ad Art will be segregated in a
modified credit agreement which will insulate the
remaining businesses (the "Remaining Businesses")
from the disposition of Ad Art. The Guarantors
must be satisfied that there are no potential
claims against the Remaining Businesses from the
creditors of Ad Art.
Priority: Guarantees will be released when SouthTrust debt on
Remaining Businesses is repaid. Guarantee will be
reduced as follows: (a) up to $500,000 released as
assets in Pool A are liquidated ($0.33 to release
guarantee out of each $1.00 of assets sold until
limit is reached); (b) up to $500,000 released as
assets in Pool B are liquidated ($0.50 to release
guarantee out of each $1.00 of assets sold until
limit is reached). Pool A will include Ad Art
assets not in the borrowing base including
University of Houston, LED TV, Dayton Dragons,
Holland Tunnel, Flash Electronics, etc. Pool B
will include Remaining Businesses assets such as
(i) receivables over 60 days, (ii) LaMan, and (iii)
Roseville sign. Of each $1.00 in cash received
from Pool B assets, $0.50 will be used to repay
SouthTrust debt and $0.50 will be retained in the
Remaining Businesses as operating capital.
Capital Structure: Total senior debt (includes SouthTrust revolver,
L/C and term loan plus BB&T and First Union notes)
associated with the Remaining Businesses will not
exceed $10.3 million, including $1.75 million
advance to bring payables current which will be
guaranteed by RJCP and Renaissance.
Contingent Note: DTEK will issue a contingent note to the Guarantors
evidencing the obligations of DTEK to the
Guarantors for the guarantee amount.
Other Conditions: DTEK will have 6 months to meet certain financial
ratios.
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Preferred Stock and
Subordinated Debt
Conversion Prices: Conversion prices will be reduced to $2.00 per
share.
Warrants: 2,575,000 @ $0.125 per share to RJCP.
425,000 @ $0.125 per share to Renaissance.
Options: 2,000,000 @ $0.125 per share for management post
closing.
Preferred Stock
Liquidation Preference: Modified such that $2.5 million of preferred stock
will be pari passu with subordinated debt.
Dividends: Subordinated debt and preferred stock will accrue
dividends for 6 months.
Resignation of Directors: All but Grant and Bell.
Resignation of DTEK
Officers: Brandner, Harris, Stewart, Long.
Severance terms as follows:
Bradner, Harris - six months at 50% of base
Payment equal to 50% of above
if forbearance agreement
extended for 6 months
Long - 1-2 months at 100%
Mel Stewart will enter into 1 year employment
agreement with JM Stewart at 50% of current base
Mutual release from claims, non-compete, no
disparaging remarks, etc.
New Board Members: Downing, Pecora, Pearson.
Counsel Fees: DTEK will pay the fees of counsel for the
Guarantors.
Closing: As soon as possible but no later than December 31,
2000.
