Document:

Exhibit 10(e)

The rights and
remedies of Ronald D. Ordway under this instrument are subject to the terms and
conditions of that certain Debt Subordination Agreement dated as of February 27,
2006 between Ronald D. Ordway and Bank of America, N.A., as it may be amended
from time to time, which is incorporated herein by specific reference thereto
to the same extent as if fully set forth herein.

SUBORDINATED NOTE
AGREEMENT

$6,800,000.00

	
  State of Georgia

  	
  )

  	
  February 27, 2006

  
	
   

  	
  )

  	
   

  
	
  County of Dekalb

  	
  )

  	
   

  

 

FOR VALUE RECEIVED, the
undersigned, Video Display Corporation promises to pay to the order of Ronald
D. Ordway (together with any holder hereof, the “Holder”) at any such place the
principal sum of Six Million Eight Hundred Thousand and No/100 Dollars
($6,800,000.00) plus all accrued and unpaid interest on the unpaid balance of
such principal amount, at the rate of interest described below, installments as
follows:

	
  April 1, 2006

  	
   

  	
  $800,000

  	
   

  	
  August 1, 2006

  	
   

  	
  $1,000,000

  
	
  May 1, 2006

  	
   

  	
  $1,000,000

  	
   

  	
  September 1, 2006

  	
   

  	
  $1,000,000

  
	
  June 1, 2006

  	
   

  	
  $1,000,000

  	
   

  	
  October 1, 2006

  	
   

  	
  $1,000,000

  
	
  July 1, 2006

  	
   

  	
  $1,000,000

  	
   

  	
   

  	
   

  	
   

  

 

Interest on the unpaid
balance hereof shall accrue at an annual rate (computed on the basis of actual
days elapsed over a 360 day year) of the higher of six percent (6%) or the
prime rate plus 1⁄4 of one percent (.25%) which interest shall be paid monthly
until expiration of the Note. The prime rate for purposes of this Note shall be
determined on a month to month basis, using the consensus prime rate published
by the Wall Street Journal effective on the first day of each such month.

The rights and remedies of Ronald D. Ordway under this
instrument are subject to the terms and conditions of that certain Debt
Subordination Agreement dated as of February 27, 2006 between Ronald D.
Ordway and Bank of America, N.A., as it may be amended from time to time, which
is incorporated herein by specific reference thereto to the same extent as if
fully set forth herein.

The undersigned shall
have the right to repay the indebtedness represented by this Note in whole or
in part without premium or penalty.

The Holder is hereby
granted a lien on all assets of Video Display Corporation subordinated only to
those liens filed by Bank of America, N. A.

This Note supercedes any
and all demand notes outstanding between the lender, Ronald D. Ordway and the
borrower, Video Display Corporation.

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

 

This Note is executed
under the hand and seal of the undersigned on the date first above written.

	
  

  	
  BY:

  	
  VIDEO DISPLAY CORPORATION

  
	
   

  	
   

  	
  Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Michael D. Boyd

  	
   

  
	
   

  	
   

  	
  Michael D. Boyd

  
	
   

  	
   

  	
  Chief Financial OfficerExhibit 10(f)

  

 

June 9,
2006

Mr. Ronald D. Ordway

Mr. Michael D. Boyd

Video Display Corporation

1868 Tucker Industrial Road

Tucker, GA  30084

	
  Re:

  	
   

  	
  Video Display Corporation Senior Secured Debt
  Facilities

  

 

Dear Mr. Ordway &
Mr. Boyd:

 

RBC Centura Bank (“Bank”)
is pleased to extend this commitment to make the loans (“Loans”) described in
this letter to the Borrower identified below. The Loans will be made on the
terms and conditions set forth in this letter and any attachments to this
letter. Bank’s commitment set forth in this letter shall be referred to as the “Commitment”
and this letter shall be referred to as the “Commitment Letter.”

General
Terms

	
  Borrower

  	
   

  	
  Video Display Corporation and all existing and
  future subsidiaries.

  
	
   

  	
   

  	
   

  
	
  Loan Amounts

  	
   

  	
  Facility 1 - $8,500,000

  
	
   

  	
   

  	
  Facility 2 - $1,750,000

  
	
   

  	
   

  	
  Facility 3 - $1,500,000

  
	
   

  	
   

  	
  As provided below, this Commitment is conditioned
  upon Borrower obtaining a commitment from Regions Bank (“Regions”) for loans
  in the same amounts provided above and on the same terms generally as set
  forth herein (the “Regions Loans”).

  
	
   

  	
   

  	
   

  
	
  Type of Loan

  	
   

  	
  Facility 1 — This is a Revolving
  Line of Credit Facility.

  
	
   

  	
   

  	
  Facility 2 - This is a Revolving
  Line of Credit Facility.

  
	
   

  	
   

  	
  Facility 3 - This is an Equipment
  Term Loan Facility.

  
	
   

  	
   

  	
   

  
	
  Maturity

  	
   

  	
  Facility 1 — This Facility shall
  mature twenty-four (24) months from Closing, renewing annually for additional
  twelve (12) month terms.

  
	
   

  	
   

  	
  Facility 2 - This Facility shall mature
  twenty -four (24) months from Closing, renewing annually for additional
  twelve (12) month terms.

  
	
   

  	
   

  	
  Facility 3 - This Facility shall
  mature sixty (60) months from Closing.

  
	
   

  	
   

  	
   

  
	
  Purpose of Loans

  	
   

  	
  The Loans will be used to refinance all existing
  indebtedness of Borrower, except the Subordinated Shareholder Note. The
  availability under the Facility 1 and Facility 2 will also be used to finance
  working capital and for general corporate purposes.

  
	
   

  	
   

  	
   

  
	
  Interest Rate

  	
   

  	
  Interest on each Facility shall accrue at the RBC
  Centura 30-Day LIBOR plus the Applicable Margin as outlined in the
  Pricing Grid below, and shall be payable monthly via auto-debit.

  

 

 

 

	
  

  	
   

  	
  Tier

  	
  Fixed Charge Coverage Ratio

  	
  Applicable Margin

  
	
   

  	
   

  	
  I

  	
  Greater than 1.35, but less than 1.50

  	
  2.10% 

  
	
   

  	
   

  	
  II

  	
  Equal to/greater than 1.50 but less than 1.75

  	
  1.85% 

  
	
   

  	
   

  	
  III

  	
  Equal to/greater than 1.75

  	
  1.60% 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower may enter into interest rate swaps with
  Bank, subject to the terms and conditions set forth under an ISDA Agreement,
  to convert floating rate term borrowing to an effective fixed rate. The swaps
  would be cross-collateralized, and be subject to cross-default, with the
  Loans. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Required documentation prior to
  swap transaction includes: Execution of an ISDA Agreement between Borrower
  and Bank, delivery of certified copies of all resolutions required to
  authorize the signing, delivery and performance of swap agreement by Borrower

  
	
   

  	
   

  	
   

  
	
  Underwriting Fee

  	
   

  	
  Borrower shall pay to Bank a fee for the Loans equal
  to twenty-five (25) basis points (0.25%) of the initial amount of the Loans,
  which fee shall be fully earned upon execution hereof and shall be payable at
  the Closing of the Loans (or, if the Loans are not closed for any reason,
  then upon termination or expiration hereof). Bank acknowledges that Borrower
  has made a deposit of $29,375 toward such fee.

  
	
   

  	
   

  	
   

  
	
  Personal Guarantors

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  Unused Fee

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  Payment Terms

  	
   

  	
  Facility 1 - Borrower shall make
  monthly payments of all accrued interest, with all outstanding principal and
  accrued interest due at maturity.

  
	
   

  	
   

  	
  Facility 2 - Borrower shall make
  monthly payments of all accrued interest, with all outstanding principal and
  accrued interest due at maturity.

  
	
   

  	
   

  	
  Facility 3 - Borrower shall make
  monthly payments of principal based on a five (5) year commercial
  amortization ($25,000 each), plus all accrued interest, with all outstanding
  principal plus accrued interest due at maturity.

  
	
   

  	
   

  	
   

  
	
  Deposit Accounts

  	
   

  	
  Borrower will maintain all primary deposit and
  operating accounts with the Bank.

  
	
   

  	
   

  	
   

  
	
  Collateral

  	
   

  	
  The Loans will be secured by a valid, enforceable
  and perfected first priority lien and security interest in all tangible and
  intangible assets owned by Borrower, including, but not limited to, all
  inventory, accounts receivable, equipment, patents, trademarks and general
  intangibles. Borrower will also provide the Bank with a negative pledge
  agreement with a springing clause on all real property owned by Borrower, and
  assignments of rents and leases for said properties. All Loans will be
  cross-collateralized and cross defaulted.

  
	
   

  	
   

  	
   

  

Reporting Requirements and
Operating Covenants

	
  

  	
   

  	
   

  
	
  Financial Reporting

  	
   

  	
  So long as the Borrower is indebted to the Bank or
  any portion of the Loans remains outstanding, the Borrower shall submit to
  the Bank the following financial information (all in accordance with GAAP and
  to be satisfactory to Bank):

  
	
   

  	
   

  	
  (a) Quarterly, within forty-five (45) days of
  the end of each fiscal quarter, a compliance certificate signed by an officer
  of Borrower attesting to Borrower’s compliance with all financial and
  non-financial covenants. (b) Monthly, within forty-five (45) days of the
  end of each fiscal month, Borrower prepared consolidated financial
  statements, including balance sheets, an income statement and a

  

 

 

 

	
  

  	
   

  	
  statement of cash flows, together with an accounts
  receivable summary and inventory summary. (c) Annually, within one
  hundred fifty (150) days following the close of the fiscal year, Borrower’s
  audited consolidated financial statements, including balance sheets, an
  income statement and a statement of cash flows, accompanied by an unqualified
  audit opinion of Borrower’s independent certified public accountants (who
  shall be reasonably acceptable to Bank).

  (d) Annually, within thirty (30) days following the close of each fiscal
  year, Borrower’s internally prepared budget for the following year.

  
	
   

  	
   

  	
   

  
	
  Financial Covenants

  	
   

  	
  Borrower shall comply with the financial covenants
  below listed in this commitment letter. The financial covenants are as
  follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a) Borrower shall
  have a “Fixed Charge Coverage Ratio” of at least 1.15 to 1.00 at
  August 31, 2006, 1.25 to 1.00 at November 30, 2006, and 1.35 to
  1.00 at each fiscal quarter end thereafter. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Fixed Charge Coverage
  Ratio” shall be defined as the sum of Borrower’s EBITDA, plus its rent and
  lease expense, less its unfunded capital expenditures, less its cash taxes,
  divided by the sum of Borrower’s rent and lease expense, plus its current
  maturities of long term debt and capital lease obligations, plus its interest
  expense, plus its distributions, dividends and withdrawals.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “EBITDA” shall be defined
  as Borrower’s net income, plus its interest expense, plus its income tax
  expense, plus its depreciation and amortization.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  *For the fiscal quarters
  ending August 31, 2006 and November 30, 2006, the Fixed Charge
  Coverage Ratio shall be calculated on an annualized basis. Thereafter, the
  ratio shall be calculated on a trailing twelve-month basis.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b) Borrower shall
  have an “Asset Coverage Ratio” of not greater than 1.0 to 1.0 at each fiscal
  quarter end.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Asset Coverage Ratio”
  shall be defined as the total amount of Borrower’s Line of Credit outstanding
  under Facility 1 and Facility 2 made by both Bank and Regions Bank divided by
  the sum of Borrower’s accounts receivable, net of allowance for doubtful
  accounts, plus its inventory, net of reserves (capped at $20,000,000), less
  its accounts payable.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c) Borrower shall
  have a ratio of Adjusted Total Liabilities to Adjusted Tangible Net Worth of
  not greater than 1.50 to 1.0 at each fiscal quarter end.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Adjusted Total
  Liabilities” shall be defined as all of Borrower’s liabilities, in accordance
  with GAAP, including contingent liabilities, less its subordinated debt.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Adjusted Tangible Net
  Worth” shall be defined as Borrower’s shareholder equity, in accordance with
  GAAP, less its intangible assets, less its leasehold improvements and loans
  receivable from related parties, plus its subordinated debt.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d) Borrower shall
  have a quarterly EBITDA of not less than $642,000 at the quarter ending
  May 31, 2006, $1,453,000 at the quarter ending August 31, 2006,
  $2,165, at the quarter ending November 30, 2006, and $2,413,000 at the
  quarter ending February 28, 2007.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All financial covenants to be
  calculated in accordance with GAAP applied on a consistent basis.

  
	
   

  	
   

  	
   

  
	
  Operating Covenants

  	
   

  	
  The Loan Documents will contain affirmative and
  negative operating covenants relative to 

  

 

 

 

	
  

  	
   

  	
  Borrower and Borrower’s business. The covenants
  shall be of the type Bank deems necessary to better ensure repayment of the
  Loans and shall include limitations or prohibitions on fixed asset or new
  lease expenditures, encumbering of assets, loans or guarantees, payment of
  debts to third Persons, payment of dividends, sale or disposition of assets,
  mergers or change in control, investments, acquisitions, officer
  compensation, executive management changes, change of fiscal year, affiliate
  relations and supplier/customer relations, litigation, solvency and adverse
  changes. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Covenants specifically will include but not be
  limited to the following:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1)

  	
  Prohibitions
  on changes in executive management

  
	
   

  	
   

  	
  2)

  	
  Limitations
  on acquisitions

  
	
   

  	
   

  	
  3)

  	
  Limitations
  on additional indebtedness, including direct and indirect on Borrower
  orBorrower’s affiliates and subsidiaries

  
	
   

  	
   

  	
  4)

  	
  All shareholder and affiliated loans to be
  subordinated to the Loans

  

 

Loan Documentation And Other Closing Requirements

	
  Loan Documentation

  	
   

  	
  The Loans and Bank’s liens and security interests in
  the Collateral shall be evidenced by this Commitment Letter, and also shall
  be evidenced and supported by such additional loan documents (“Loan Documents”)
  as Bank and its counsel deem necessary in their sole discretion outlining
  terms and provisions acceptable to the Bank. The failure of Borrower and Bank
  to reach agreement on the Loan Documents shall not be deemed a breach by Bank
  of this Commitment. Unless Bank agrees otherwise in writing, completion of
  all Loan Documents is a condition of Closing the Loans.

  
	
   

  	
   

  	
   

  
	
  Insurance

  	
   

  	
  Borrower shall provide to Bank at Closing evidence
  satisfactory to Bank that the following insurance is in effect as of Closing:
  general liability insurance and workmen’s compensation insurance. The
  insurance shall be in amounts, with companies and on terms acceptable to
  Bank; it shall show Bank as a mortgagee or loss payee, as instructed by Bank;
  and it shall be continuously maintained in force by Borrower until the Loans
  are repaid in full.

  
	
   

  	
   

  	
   

  
	
  Taxes

  	
   

  	
  Borrower shall furnish to Bank no later than 5 days
  before Closing evidence satisfactory to Bank that all of Borrower’s income
  taxes and other governmental taxes, fees, charges or assessments have been
  paid through the most recent year.

  
	
   

  	
   

  	
   

  
	
  Opinion of Counsel

  	
   

  	
  On or prior to the Closing, Borrower will provide
  Bank with an opinion letter, in form and substance satisfactory to Bank, from
  an attorney acceptable to Bank.

  
	
   

  	
   

  	
   

  
	
  Charter Documents

  	
   

  	
  On or prior to the Closing, Borrower will provide
  Bank copies of its bylaws, articles of incorporation, resolutions authorizing
  the Loans and the transactions contemplated hereby and incumbency
  certificates, each in form and substance satisfactory and certified as true,
  correct and complete, to Bank. Bank shall have received from Borrower a
  certificate of the Secretary of State of the State of Georgia as to the good
  standing of Borrower.

  
	
   

  	
   

  	
   

  
	
  Fees and Expenses

  	
   

  	
  Upon Closing of the Loans (or if the Loans do not
  close for any reason, upon termination or expiration of this Commitment
  Letter), Borrower also shall pay all costs and expenses incident to the
  Loans, including recording fees, taxes, documentary tax fees or stamps,
  excise taxes and Bank’s and Borrower’s counsel fees.

  
	
   

  	
   

  	
   

  
	
  Additional Requirements

  	
   

  	
  Borrower shall satisfy all such other terms and
  conditions as Bank and its counsel deem necessary in their sole discretion to
  ensure the proper documentation of the Loans, the perfection of the liens and
  security interests in the Collateral and compliance with all laws and
  regulations applicable to Bank or Borrower relative to the Loans. These terms
  and

  

 

 

 

	
  

  	
   

  	
  conditions are not exhaustive, and this commitment
  is subject to certain other terms and closing conditions customarily required
  by Bank for similar transactions and may be supplemented prior to Closing
  based upon Bank’s investigation and/or as disclosure of Borrower’s
  circumstances so dictate.

  

Miscellaneous

	
  Conditions Precedent

  	
   

  	
  The obligations of Bank to close under this
  Commitment Letter are subject to the following, each of which must be
  satisfied to Bank’s sole satisfaction and in its sole discretion:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1)

  	
  Satisfactory review of
  Borrower’s 10-K annual report for the fiscal year ending February 28,
  2006.

   

  
	
   

  	
   

  	
  2)

  	
  No material adverse change
  in the financial condition of Borrower.

   

  
	
   

  	
   

  	
  3)

   

  	
  Formal legal review and
  determination by Bank and its counsel that securityinterests in the Borrower
  and other Collateral will be properly perfected in favor ofBank, and not be
  subject to preference or other lien perfection attack in the future.

  
	
   

  	
   

  	
  4)

  	
  Satisfactory review of the
  unsecured Subordinated Shareholder Note to be executed between Borrower and
  Ron Ordway i/a/o $6,000,000 terms shall include a minimum 15 year
  amortization and a maturity date no sooner than 06/30/2012.

  
	
   

  	
   

  	
  5)

   

  	
  Shareholder debt shall be
  subordinate to Bank’s interest via a subordinationagreement acceptable to
  Bank.

  
	
   

  	
   

  	
  6)

   

  	
  Borrower shall have closed
  on the Regions Loans pursuant to acceptabledocumentation.

  
	
   

  	
   

  	
  7)

  	
  Bank and Regions shall
  have entered into an intercreditor and collateral agency agreement setting
  forth the rights of the Bank and Regions with respect to the Loans and the
  Regions Loans and all Collateral for each (the Bank’s and Regions’ rights
  shall be pari passu); Bank shall be appointed
  as the collateral agent for administering the collateral and the exercise of
  the default rights and remedies

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Borrower Certification

  	
   

  	
  The acceptance of this Commitment shall constitute a
  certification by the person executing the acceptance that all material
  matters relating to Borrower have been disclosed to Bank and that there has
  been no material, adverse change in Borrower, to include its financial
  condition and operating condition. Bank has made this Commitment based upon
  the information supplied by Borrower and related parties. Without limiting
  the foregoing, Bank shall have the right to cancel this Commitment, whereupon
  Bank shall have no obligations hereunder, in the event of: (i) a
  material adverse change in the condition (financial, business or otherwise),
  operations or prospects of Borrower; (ii) a material change in the
  accuracy of the information, representations, exhibits or other materials
  submitted by Borrower in connection with its request for financing;
  (iii) loss of, damage to, a taking of, or the presence of any hazardous
  substances or asbestos at or on any collateral for the Loan (and Borrower
  must immediately notify Bank of any such event); (iv) Borrower or any
  principal thereof shall file or make or have filed or made against such
  person a petition in bankruptcy, an assignment for the benefit of creditors
  or an action for the appointment of a receiver, or shall become insolvent,
  however evidenced; or (v) there is a material change in the capital
  structure or a change in control of Borrower.

  
	
   

  	
   

  	
   

  
	
  No Change

  	
   

  	
  The obligation of Bank to make the Loans is
  conditioned upon there being no material adverse changes in the financial or
  operating condition of Borrower.

  
	
   

  	
   

  	
   

  
	
  Non-Assignability

  	
   

  	
  This Commitment is for the sole benefit of Borrower
  and no other Person shall have any rights under this Commitment against Bank,
  including any bankruptcy trustee or debtor in possession. This Commitment may
  not be assigned without the prior written consent of Bank.

  
	
   

  	
   

  	
   

  
	
  Confidentiality

  	
   

  	
  The information contained in this Commitment is
  confidential and proprietary information 

  

 

 

 

	
  

  	
   

  	
  for review only by Borrower. Borrower shall treat
  all information herein as confidential.

  
	
   

  	
   

  	
   

  
	
  Applicable Law

  	
   

  	
  This Commitment and the Loan Documents shall be
  governed by the laws of the State of Georgia without giving effect to the
  conflict provisions thereof.

  
	
   

  	
   

  	
   

  
	
  Acceptance

  	
   

  	
  This Commitment shall expire unless it has been
  accepted and returned to Bank on or before June 15, 2006.

  
	
   

  	
   

  	
   

  
	
  Closing Date

  	
   

  	
  Bank shall have no obligation to make the Loans if
  the Loans are not closed by June 30, 2006.

  

 

This Commitment Letter supercedes and replaces any
prior discussions, discussion sheets, term sheets relating these Loans. This
Commitment, when accepted, shall constitute the entire agreement between
Borrower and Bank, and it may not be altered or amended unless agreed to in
writing by Bank, or otherwise modified by the Loan Documents. This Commitment
letter shall survive closing of the Loans. This Commitment Letter and the Loan
Documents shall be applied and construed in harmony with each other to the end
that Bank is ensured repayment of the Loans in accordance with their respective
terms. To the extent of an irreconcilable conflict between this Commitment
Letter and the Loan Documents, the terms of the Loan Documents shall prevail.

Please indicate your acceptance of this Commitment and
the terms and conditions contained herein by executing the acceptance below and
returning the executed letter to Bank. RBC Centura Bank would like to express
our appreciation for the opportunity you have given us to be of service.

Sincerely,

RBC CENTURA BANK

	
  By: /s/ W. Brendan Chambers

  	
   

  
	
  Name:W. Brendan Chambers

  
	
  Title:Senior Vice President

  
	
   

  
	
  Accepted and Agreed To:

  
	
   

  
	
  VIDEO DISPLAY CORPORATION

  
	
   

  
	
  By: /s/ Ronald D. Ordway

  	
   

  
	
  Print Name: Ronald D. Ordway

  
	
  Title: Chief Executive Officer

  
	
   

  
	
  By: /s/ Michael D. Boyd

  	
   

  
	
  Print Name: Michael D. Boyd

  
	
  Title: Chief Financial Officer

  
	
   

  
	
  Date: June _9, 2006

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