Document:

exhibit10_5.htm

SECOND AMENDMENT

 

TO

 

LOAN AGREEMENT

 

 

 

THIS SECOND AMENDMENT TO LOAN AGREEMENT (“Second Amendment”), is made and entered into as of this 15th day of November, 2011, by and between Daktronics, Inc. (“Borrower”) and Bank of America, N.A. (“Lender”).

 

RECITALS

 

	
A.  

	
On or about December 23, 2010, the parties entered into a Loan Agreement which described the terms and conditions under which Lender would make available to Borrower the Revolving Loan.  On or about February 1, 2011, the parties entered into a First Amendment to Loan Agreement.

 

	
B.  

	
The parties are in mutual agreement that the Loan Agreement should be amended as provided herein.

 

NOW, THEREFORE, based on the mutual covenants and other consideration contained herein, the parties agree to amend the Loan Agreement as follows:

 

	
1.  

	
Definitions.  The definition of Revolving Loan Maturity Date appearing in Section 1.1 Defined Terms is amended as follows:  “Revolving Loan Maturity Date”:  November 15, 2012.

 

	
2.  

	
Revolving Loan.  Section 2.1 Revolving Loan,  is amended to read as follows: “Upon the terms and subject to the conditions hereof, Lender agrees to make available a revolving loan (the “Revolving Loan”) to Borrower of Twenty Million and No/100 Dollars ($20,000,000.00) on the date of this Second Amendment.  Borrower may obtain advances, prepay and obtain new advances under the Revolving Loan, subject to the prepayment provisions of Section 2.2.  Lender also agrees to made available to the Foreign Subsidiaries letters of credit, multicurrency borrowings and bank guarantees (“Alternative Borrowing”), in an amount not to exceed the Revolving Loan amount, it being understood and agreed that the amount available to be borrowed under the Revolving Loan shall be correspondingly reduced by the face amount of all Alternative Borrowing issued.  Lender shall charge an origination fee equal to a per annum basis of 0.50% of the face amount of any international letters of credit issued hereunder, payable in advance quarterly on the last day of the prior calendar quarter, as well as charge its standard issuance, documentation and examination fees therefore.  All Alternative Borrowing shall have an expiration date no later than twenty four (24) months from the date of issuance.  Lender shall have no obligation to issue Alternative Borrowing, or to amend, extend, renew or replace any Alternative Borrowing, unless it is in form and substance acceptable to Lender.  The Alternative Borrowing shall be guaranteed by Borrower’s Guaranty dated December 23, 2010 and the reference therein to the Loan in the principal amount of $10,000,000.00 shall be deemed amended to the $20,000,000.00 Revolving Loan described herein.

 

	
3.  

	
Revolving Note.  The Revolving Loan as amended pursuant to Paragraphs 1 and 2 of this Second Amendment shall be evidenced by a Revolving Note dated of even date herewith.

 

	
4.  

	
Financial Covenants.  Section 5.11 Financial Covenants, is amended to delete the dividend restriction contained therein, and such section shall now read as follows:

 

“Basic Fixed Charge Coverage Ratio.  Maintain on a consolidated basis a Basic Fixed Charge Coverage Ratio of at least 2.0:1.0 tested on an annual basis as of the end of each fiscal year.  “Basic Fixed Charge Coverage Ratio” means the ratio of (a) EBITDA minus the sum of (i) any dividends or other distributions (with the exception of the special cash dividend of $0.50 per share of common stock to be paid at the end of the second quarter of fiscal year 2011), (ii) a reserve for maintenance capital expenditures in the amount of $6,000,000.00, and (iii) tax expense to (b) all required principal and interest payments with respect to Indebtedness (including but not limited to all payments with respect to capitalized lease obligations of Borrower.)  “EBITDA” means for any period of determination, the net income of Borrower before deductions for income taxes, interest expense, depreciation and amortization, all as determined in accordance with GAAP.  “Indebtedness” means all interest-bearing obligations, including those represented by bonds, debentures, or other debt securities, except principal reductions on the Revolving Note.

 

Funded Debt to EBITDA Ratio.  Maintain on a consolidated basis a ratio of Funded Debt to EBITDA not exceeding 1.00:1.0 tested on a fiscal quarterly basis.  “Funded Debt” means all interest bearing obligations, including those represented by bonds, debentures, or other debt securities, excluding any long-term contractual obligations related to marketing transactions whose source of payment is underlying advertising agreements.  This ratio will be calculated at the end of each reporting period for which Lender requires financial statements from Borrower, using the results of the twelve-month period ending with that reporting period.”

 

	
5.  

	
Borrower’s Reaffirmation of Agreements.  Borrower herein reaffirms with Lender its agreements and obligations under the Loan Agreement and other loan documents executed in connection therewith and acknowledges that except for the modifications made herein, in all other respects   the Loan Agreement and other related loan documents remain in full force and effect, and that a default hereunder shall constitute a default thereunder.

 

	
6.  

	
Waiver of Claims.  Borrower waives and releases all known or unknown, absolute or contingent, claims, defenses, set-offs or counterclaims against Lender or its shareholders, directors, officers, employees and agents existing as of the date of this Second Amendment.

 

	
7.  

	
Costs.  All attorneys’ fees and expenses incurred by Lender with respect to the preparation of this Second Amendment shall be paid by Borrower.

 

	
8.  

	
Acknowledgment.  Borrower hereby acknowledges receipt of a copy of this Second Amendment.

 

IMPORTANT:  READ BEFORE SIGNING.  THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.  NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.  YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

 

IN WITNESS WHEREOF, the parties have caused this Second Amendment to be duly executed as of the date first written above.

 

	
BORROWER:

	  	
BANK:

	
Daktronics, Inc.

	  	
Bank of America, N.A.

	  	  	  
	  	  	  
	
By: /s/ James B. Morgan

	  	
By:  /s/ Michael T. Letsch

	
Name: James B. Morgan

	  	
Name: Michael T. Letsch

	
Title: Chief Executive Officer

	  	
Title: Vice President

	  	  	  
	
By: /s/ William R. Retterath

	  	  
	
Name: William R. Retterath

	  	  
	
Title: Chief Financial Officerexhibit10_6.htm

  
 

 

 

REVOLVING NOTE

 

 

$20,000,000.00 Brookings, South Dakota

 

 November 15, 2011

 

 

FOR VALUE RECEIVED, Daktronics, Inc., a South Dakota corporation (“Borrower”), hereby promises to pay to the order of Bank of America, N.A., a national banking association, 317 – 6th Avenue, Des Moines, Iowa  50309 (“Lender), at or at such other place as Lender may from time to time designate in writing, in lawful money of the United States of America, the principal sum of Twenty Million and No/100 Dollars ($20,000,000.00) or so much thereof as may be advanced hereunder and to pay interest on the outstanding principal balance hereof from time to time at a fluctuating rate tied to the One-Month Reserve Adjusted Reuters London Inter-Bank Offering Rate (“LIBOR”), as determined on the first Business Day of each month, plus 1.50%.  Any principal of, and to the extent permitted by applicable law, any interest on this Note, which is not paid when due shall bear interest, from the date due until paid, at a rate per annum equal to the non-default rate plus 4%.

 

Interest shall be computed on the basis of actual days elapsed and a year of 360 days.  Interest only shall be paid on the first day of each month, commencing December 1, 2011, and continuing on the first day of each month thereafter.  The total unpaid principal amount and all interest thereon shall be payable on November 15, 2012, (the “Revolving Loan Maturity Date”).  THIS NOTE REQUIRES A BALLOON PAYMENT.

 

Borrower may borrow, repay and re-borrow hereunder in accordance with the terms and conditions of the Loan Agreement dated December 23, 2010, as amended by the First Amendment To Loan Agreement dated February 1, 2011, and the Second Amendment To Loan Agreement dated of even date herewith executed by Borrower and Lender (the “Loan Agreement”).  All capitalized terms not otherwise defined herein shall have the meanings given them in the Loan Agreement.  Borrower may prepay this Note in whole at any time, or in part from time to time, without penalty or premium.  No prepayment shall suspend any required payments of either principal or interest on this Note or reduce the amount of any scheduled payment.  All prepayments on this Note shall be applied to accrued but unpaid interest on the amount prepaid, then to principal, and any other sums due and unpaid to Lender under the Loan Documents, in such manner and order as Lender may elect in its discretion.  The credit available to Borrower under this Note will be reduced dollar for dollar by the face amount of all Alternative Borrowing.

 

Failure to exercise any option provided herein shall not constitute a waiver of the right to exercise the same in the event of any subsequent default.  Borrower agrees that if, and as often as, this Note is given to an attorney for collection or to defend or enforce any of Lender’s rights hereunder, Borrower will pay to Lender Lender’s reasonable attorneys’ fees together with all court costs and other expenses paid by Lender.

 

Borrower waives presentment, protest and demand, notice of protest, demand and of dishonor and nonpayment of this Note and any lack of diligence or delays in collection or enforcement of this Note.  Borrower agrees that this Note, or any payment hereunder, may be extended from time to time, and Borrower consents to the release of any party liable for the obligation evidenced by this Note, the release of any of the security for this Note, the acceptance of any other security therefor, or any other indulgence or forbearance whatsoever, all without notice to any party and without affecting the liability of Borrower.

 

A “Default” or “Event of Default” as described in the Loan Agreement shall constitute a default under this Note.  Any notice or demand to or upon Borrower or Lender under this Note shall be given as provided in the Loan Agreement.

 

THIS NOTE SHALL BE CONSTRUED UNDER AND GOVERNED BY THE LAWS OF THE STATE OF SOUTH DAKOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS OR PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS.  WHENEVER POSSIBLE, EACH PROVISION OF THIS NOTE AND ANY OTHER STATEMENT, INSTRUMENT OR TRANSACTION CONTEMPLATED HEREBY OR RELATING HERETO, SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER SUCH APPLICABLE LAW, BUT, IF ANY PROVISION OF THIS NOTE OR ANY OTHER STATEMENT, INSTRUMENT OR TRANSACTION CONTEMPLATED HEREBY OR RELATING HERETO SHALL BE HELD TO BE PROHIBITED OR INVALID UNDER SUCH APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS NOTE OR ANY OTHER STATEMENT, INSTRUMENT OR TRANSACTION CONTEMPLATED HEREBY OR RELATING HERETO.

 

AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR SOUTH DAKOTA CIRCUIT COURT SITTING IN SIOUX FALLS, SOUTH DAKOTA; AND BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.  IN THE EVENT BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

BORROWER AND LENDER EACH IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OF THE LOAN DOCUMENTS (AS DEFINED IN THE LOAN AGREEMENT) OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

DAKTRONICS, INC.

 

By: /s/ James B. Morgan

 

Name: James B. Morgan

 

Title: Chief Executive Officer

 

By: /s/ William R. Retterath

 

Name: William R. Retterath

 

Title: Chief Financial Officer

 

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