SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT is made as of the 30 day of September, 1996, and is by and
between Daktronics, Inc., a South Dakota corporation (the "Borrower"), and
Norwest Bank Minnesota, National Association, a national banking association
(the "Bank").
REFERENCE IS HEREBY MADE to that certain Credit Agreement dated as of April 20,
1994, as amended by a First Amendment dated February 13, 1996 (as amended, the
"Credit Agreement"), made between the Borrower and the Bank. Capitalized terms
not otherwise defined herein shall have the respective meanings ascribed to them
in the Credit Agreement.
WHEREAS, the Borrower has requested the Bank to renew the Line to September 30,
1997; and,
WHEREAS, the Bank is willing to grant the Borrower's request, subject to the
provisions of this Second Amendment;
NOW, THEREFORE, in consideration of the premises and for other valuable
consideration received, it is agreed as follows:
1. Section 1.2 of the Credit Agreement is hereby amended by changing the
date referenced in said Section from "September 30, 1996" to "September
30, 1997."
2. Section 3.2 of the Credit Agreement is hereby amended by inserting the
following at the end of said Section:
Notwithstanding any other provisions set forth in this Section 3.2
or in the Revolving Note, commencing May 10, 1996, the Borrower
shall not be permitted to elect the LIBOR Rate Option until (i)
the Bank has determined, from its review of the Borrower's
financial statements and compliance certificates, that the
Borrower was in compliance with all of the covenants set forth in
Section 6.2 hereof as of October 31, 1996, (ii) the Bank has
furnished the Borrower with written notice of such determination,
and (iii) as of the date of such notification there exists no
event of default described in Section 7 hereof, nor does their
exist any event which, with the giving of notice or the passage of
time (or both), could become such an event of default.
3. Section 6.1(b) of the Credit Agreement is hereby amended by deleting the
term "45 days," where that term appears in said Section, and replacing
it with the term "30 days."
4. Section 6.1(c) of the Credit Agreement is hereby amended so that, when
read in its entirety, it provides as follows:
(C) Compliance Certificate and Gross Profit Margin Report. Provide
the Bank, within 30 days after the end of each month, (i) an
estimated gross profit margin report as of the end of such
month, and (ii) a compliance certificate in the form of
Exhibit C, signed by an officer of the Borrower, which (A)
attests to the accuracy of the financial statements, and (B)
certifies and demonstrates that the Borrower remains in
compliance with the covenants contained in this Agreement.
5. Section 6.2(a) is hereby amended by changing the first sentence of said
Section so that, when read in its entirety, it provides as follows:
Maintain its Tangible Net Worth at a level equal to or greater
than (i) $18,500,000.00 during the period commencing May 10, 1996
through and including April 30, 1997, and (ii) $19,500,000 at all
times after April 30, 1997.
6. Section 6.2(b) is hereby amended by changing the first sentence of said
Section so that, when read in its entirety, it provides as follows:
Maintain its ratio of total liabilities to Tangible Net Worth at a
level equal to or less than (i) 1.0 to 1.0 at all times during the
three-month period ending July 31, 1996, (ii) 1.20 to 1.0 at all
times during the six-month period ending January 31, 1997, and
(iii) 1.0 to 1.0 at all times after January 31, 1997.
7. Section 6.2(c) of the Credit Agreement is hereby amended by changing the
first sentence of said Section so that, when read in its entirety, it
provides as follows:
Maintain its ratio of current assets to current liabilities at a
level equal to or greater than (i) 1.80 to 1.0 at all times during
the three-month period ending July 31, 1996, and (ii) 1.4 to 1.0
at all times after July 31, 1996.
8. Section 6.2 of the Credit Agreement is hereby further amended by adding
the following as new Section 6.2(d):
(d) Net Profit. Achieve a net profit after taxes (determined in
accordance with Generally Accepted Accounting Principles) at a
level equal to or greater than (i) $300,000.00 for the
three-month period ending July 31, 1996, (ii) $600,000.00 for
the six-month period ending October 31, 1996, (iii)
$900,000.00 for the nine-month period ending January 31, 1997,
and (iv) $1,200,000.00 for the twelve-month period ending
April 30, 1997.
9. Simultaneously with the execution of this Second Amendment, the Borrower
shall execute and deliver to the Bank a new promissory note (which, for
purposes of this Second Amendment only, shall be referred to herein as
the "New Note") in the face amount of $10,000,000.00, and in form and
content acceptable to the Bank. The New Note shall replace, but shall
not be deemed payment or satisfaction of, the Revolving Note. All
references in the Credit Agreement to the "Revolving Note" shall be
deemed to mean the New Note.
10. The Borrower hereby represents and warrants to the Bank as follows:
A. As of the date of this Second Amendment, the outstanding
principal balance of the Revolving Note is $8,077,000.00, and
accrued but unpaid interest thereon equals $62,271,47.
B. The Credit Agreement and the Revolving Note constitute valid,
legal and binding obligations owed by the Borrower to the
Bank, subject to no counterclaim, defense, offset, abatement
or recoupment.
C. As of the date of this Second Amendment, except as expressly
waived in writing by the Bank, there exists no event of
default described in Section 7 of the Credit Agreement, nor
does there exist any event which, with the giving of notice or
the passage of time, or both, could become such an event of
default.
D. The execution, delivery and performance of this Second
Amendment and the New Note by the Borrower are within its
corporate powers, have been duly authorized, and are not in
contravention of law or the terms of the Borrower's Articles
of Incorporation or By-laws, or of any undertaking to which
the Borrower is a party or by which it is bound.
E. All financial statements delivered to the Bank by or on behalf
of the Borrower, including any schedules and notes pertaining
thereto, have been prepared in accordance with Generally
Accepted Accounting Principles consistently applied, and fully
and fairly present the financial condition of the Borrower at
the dates thereof and the results of operations for the
periods covered thereby, and there have been no material
adverse changes in the financial condition or business of the
Borrower from August 31, 1996 to the date hereof.
11. Upon request by the Bank, the Borrower shall deliver a Norwest Corporate
Certificate of Authority to the Bank dated as of the date of this Second
Amendment, and in form and content acceptable to the Bank.
12. Except as expressly modified by this Second Amendment, the Credit
Agreement remains unchanged and in full force and effect.
IN WITNESS WHEREOF, the Borrower and the Bank have executed this Second
Amendment as of the date first written above.
DAKTRONICS, INC. NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By: /s/ Xxxxxx Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxxx
Xxxxxxx X. Xxxxxxxxxxx,
Its: President Vice President
