-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AbSnXrzfTGk7JK0YY+mnkF9evzZVnqccJJQq7D12c5aBPoBF6YxafYPq5cJOrEJx DPYR+aTswUO0MLKW2EtI4Q== 0000950129-05-000635.txt : 20050127 0000950129-05-000635.hdr.sgml : 20050127 20050127152454 ACCESSION NUMBER: 0000950129-05-000635 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20050121 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050127 DATE AS OF CHANGE: 20050127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIRCO MFG CORPORATION CENTRAL INDEX KEY: 0000751365 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC BUILDING AND RELATED FURNITURE [2531] IRS NUMBER: 951613718 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08777 FILM NUMBER: 05553666 BUSINESS ADDRESS: STREET 1: 2027 HARPERS WAY CITY: TORRANCE STATE: CA ZIP: 90501 BUSINESS PHONE: 3105330474 MAIL ADDRESS: STREET 1: P O BOX 44846 CITY: LOS ANGELES STATE: CA ZIP: 90044 8-K 1 v05002e8vk.htm FORM 8-K Virco Mfg. Corporation - January 21, 2005
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 21, 2005

Commission file number 1-8777

VIRCO MFG. CORPORATION

(Exact name of registrant as specified in its charter)
     
DELAWARE   95-1613718
     
(State or other jurisdiction of incorporation or organization)   (IRS Employer Identification No.)
     
2027 Harpers Way, Torrance, California   90501
     
(Address of principal executive officer)   (Zip Code)

Registrant’s telephone number, including area code (310) 533-0474

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

1

TABLE OF CONTENTS

Item 1.01 Entry into a Material Definitive Agreement
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant
Item 8.01 Other Events
Item 9.01(c) Financial Statements, Pro Forma Financial Information and Exhibits
SIGNATURES
INDEX TO EXHIBITS
Exhibit 99.1
Exhibit 99.2
Exhibit 99.3
Exhibit 99.4
Exhibit 99.5

Table of Contents

Item 1.01 Entry into a Material Definitive Agreement

On January 21, 2004, Virco Mfg Corporation (the “Company”) and Wells Fargo Bank, N.A. (the “Bank”) entered into Amendment No. 2 (the “Amendment”) to the Amended and Restated Credit Agreement between the Company and the Bank, dated as of January 27, 2004 (the “Credit Facility”).

The Amendment amended the Credit Facility to provide for a $20 million term loan and a $40 million revolving credit facility, with an interest rate equal to prime plus 1.5%, subject to reduction depending on the satisfaction of certain criteria set forth in the Amendment.

The Amendment eliminates certain leverage ratio and interest coverage ratio tests in the Credit Agreement, including:

  •   the “total liabilities to total tangible net worth” test set forth in Section 5.12 of the Credit Agreement;
 
  •   the “adjusted EBITDA coverage ratio” test set forth in Section 5.13 of the Credit Agreement; and
 
  •   the “Leverage Ratio” test set forth in Section 5.14 of the Credit Agreement.

In addition, the Amendment imposes an annual clean down, requiring the Company to reduce its outstanding obligations under the amended credit facility to $20 million or less for at least 75 consecutive calendar days per fiscal year of the Company (which, consistent with past practices, the Company intends to do in the fourth quarter of each fiscal year) and revises the Company’s Minimum EBITDA test to provide that the Company’s “Consolidated EBITDA”, measured as of the end of each fiscal quarter of each fiscal year, must not be less than the required amounts set forth in the following table for the applicable periods set forth below:

               
 
  Applicable Period     Amount  
 
As of the end of the first fiscal quarter of each fiscal year for the three month period then ended
    ($ 4,000,000 )  
 
As of the end of the second fiscal quarter of each fiscal year for the six month period then ended
    $ 6,000,000    
 
As of the end of the third fiscal quarter of each fiscal year for the nine month period then ended
    $ 15,000,000    
 
As of the end of each fiscal year for the twelve month period then ended
    $ 13,000,000    
 

2

Table of Contents

A copy of the Amendment is attached hereto as exhibit 99.2 and is incorporated herein in its entirety by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure required by this item is included in Item 1.01 and is incorporated herein by reference.

Item 8.01 Other Events.

On January 26, 2005, the Company issued a press release entitled “Virco Completes Financing Arrangement for Fiscal 2005”. A copy of the press release is attached hereto as Exhibit 99.1.

Item 9.01(c) Financial Statements, Pro Forma Financial Information and Exhibits.

(a) Financial Statements of Businesses Acquired.

     None.

(b) Pro Forma Financial Information.

     None.

(c) Exhibits.

  99.1   Press Release issued by Virco Mfg. Corporation on January 26, 2005.
 
  99.2   Amendment No. 2 to Amended and Restated Credit Agreement, dated as of January 21, 2005, between Virco Mfg. Corporation and Wells Fargo Bank, National Association.
 
  99.3   Restated Exhibit A-1 – Form of Line of Credit Note.
 
  99.4   Restated Exhibit A-2 – Form of Term Note.
 
  99.5   Restated Exhibit C – Compliance Certificate.

3

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  VIRCO MFG. CORPORATION
 		  
January 26, 2005  By:   /s/ Robert A. Virtue    
    Robert A. Virtue   
    Chief Executive Officer and
Chairman of the Board of Directors 		  

4

Table of Contents

INDEX TO EXHIBITS

     
Exhibit Number   Description
99.1
  Press Release issued by Virco Mfg. Corporation on January 26, 2005.
 
    
99.2
  Amendment No. 2 to Amended and Restated Credit Agreement, dated as of January 21, 2005, between Virco Mfg. Corporation and Wells Fargo Bank, National Association.
 
    
99.3
  Restated Exhibit A-1-Form of Line of Credit Note.
 
    
99.4
  Restated Exhibit A-2-Form of Term Note.
 
    
99.5
  Restated Exhibit C-Compliance Certificate.
EX-99.1 2 v05002exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE Contact: Robert A. Virtue, President & CEO Douglas A. Virtue, Executive Vice President Robert E. Dose, Chief Financial Officer Virco Mfg. Corporation (310) 533-0474 VIRCO COMPLETES FINANCING ARRANGEMENT FOR FISCAL 2005 Torrance, California - January 26, 2005: Virco Mfg. Corporation (AMEX: VIR) announced today that it has completed its financing arrangement for fiscal 2005 in the following letter to shareholders from Robert A. Virtue, President and CEO: We're again happy to report that our long relationship with Wells Fargo will continue with a newly restructured operating loan for 2005. Our line of credit will be increased from $57,500,000 to $60,000,000, providing additional liquidity for peak season inventories and receivables. Terms of our new loan can be reviewed on the SEC's EDGAR system. Early trends for bid results, incoming orders and margins continue to be encouraging. Because overall volume is relatively low at this time of year, a few large orders can skew results and create misleading trends. Nonetheless, we are seeing improvement in these three critical areas that suggest demand and prices will both show healthy improvement in 2005. Shipments for the fourth quarter continue to deliver disappointing margins, due to previously reported increases in raw material and freight costs. As these older orders work their way through the system we believe margins will gradually return to historical levels. Full margin recovery may not occur until the second or third quarters of 2005. We've repeatedly explained the importance of off-season financing as part of our ATS operating model, which builds versatile component inventories during winter and spring for peak summer assembly and delivery. In this key strategic activity, we believe that Wells Fargo has truly been a supportive partner to whom we extend our thanks. All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent the Company's intentions, plans, expectations and beliefs, and are subject to risks, uncertainties and other factors, many of which are outside the Company's control. These factors could cause actual results to differ materially from such forward-looking statements. For a written description of these factors, see the section titled "Management's Discussion and Analysis of Financial Conditions and Results of Operations" in the Company's Form 10-Q for the quarter ended October 31, 2004. The Company disclaims any intention or obligation to update these forward-looking statements. 6 EX-99.2 3 v05002exv99w2.txt EXHIBIT 99.2 EXHIBIT 99.2 AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT AMENDMENT NO. 2 dated as of January 21, 2005 ("Amendment") between VIRCO MFG. CORPORATION, a Delaware corporation (the "Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION (the "Bank"), and amends the Amended and Restated Credit Agreement dated as of January 27, 2004 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement") between the Borrower and the Bank. Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined. WHEREAS, subject to the satisfaction of the conditions set forth herein, the Borrower and the Bank have agreed to certain amendments to the Credit Agreement. NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. AMENDMENT TO SECTION 1.1(d) OF THE CREDIT AGREEMENT. Section 1.1(d) of the Credit Agreement hereby is amended and restated in its entirety as follows: (d) On the Closing Date, the Bank made a term loan to the Borrower in an aggregate principal amount of $12,500,000, of which amount $10,937,499.98 remains outstanding immediately prior to the Second Amendment Effective Date (the "Original Term Loan"). On the Second Amendment Effective Date, the Bank agrees to make an incremental term loan (the "Incremental Term Loan"; and, together with the Original Term Loan, the "Term Loan") to the Borrower in a single borrowing in an aggregate principal amount not to exceed $9,062,500,02. Borrower's obligation to repay the Term Loan shall be evidenced by a single promissory note substantially in the form of Exhibit A-2 attached hereto ("Term Note"), all terms of which are incorporated herein by this reference. Once the Term Loan has been repaid it may not be reborrowed. SECTION 2. AMENDMENT TO SECTION 5.12 OF THE CREDIT AGREEMENT. Section 5.12 of the Credit Agreement hereby is amended and restated in its entirety as follows: Section 5.12. Annual Clean Down. Permit the aggregate principal amount of the Obligations to exceed $20,000,000 for a period of 75 consecutive calendar days in any fiscal year of the Borrower. SECTION 3. AMENDMENT TO SECTION 5.13 OF THE CREDIT AGREEMENT. Section 5.13 of the Credit Agreement hereby is amended and restated in its entirety as follows: Section 5.13. Minimum Revenues. 7 Permit the Borrower's consolidated revenues, measured as of the end of each fiscal month of the Borrower, to be less than $180,000,000 for the twelve months then ended. SECTION 4. AMENDMENT TO SECTION 5.14 OF THE CREDIT AGREEMENT. Section 5.14 of the Credit Agreement hereby is amended and restated in its entirety as follows: Section 5.14 Minimum EBITDA. Permit Consolidated EBITDA, measured as of the end of each fiscal quarter of each fiscal year for the periods reflected below, to be less than the required amount set forth in the following table for the applicable period corresponding thereto:
APPLICABLE PERIOD AMOUNT ----------------- ----------- As of the end of the first fiscal quarter of each ($ 4,000,000) fiscal year for the three month period then ended As of the end of the second fiscal quarter of each $ 6,000,000 fiscal year for the six month period then ended As of the end of the third fiscal quarter of each $15,000,000 fiscal year for the nine month period then ended As of the end of each fiscal year for the twelve $13,000,000 month period then ended
SECTION 5. AMENDMENT TO SECTION 5.15 OF THE CREDIT AGREEMENT. Section 5.15 of the Credit Agreement hereby is amended and restated in its entirety as follows: Section 5.15 Intentionally Omitted. SECTION 6. AMENDMENT TO SECTION 7.2 OF THE CREDIT AGREEMENT. Section 7.2 of the Credit Agreement hereby is amended by deleting the Bank's contact details and inserting in lieu thereof the following: WELLS FARGO BANK, NATIONAL ASSOCIATION 333 South Grand Avenue, Suite 940 Los Angeles, California 90071 Attention: Art Brokx, Vice President 8 SECTION 7. AMENDMENTS TO ANNEX A TO THE CREDIT AGREEMENT. (a) The following definitions hereby are inserted in Annex A to the Credit Agreement in the proper alphanumerical order: "Amendment No. 2" means Amendment No. 2 to Amended and Restated Credit Agreement dated as of January 21, 2005 between the Borrower and the Bank. "Second Amendment Effective Date" means the first date on which all conditions set forth in Section 11 of Amendment No. 2 have been satisfied. (b) The following definitions set forth in Annex A to the Credit Agreement hereby are amended and restated in their entirety as follows: "Line of Credit Termination Date" means February 15, 2007. "Maximum Line of Credit Amount" means $40,000,000. "Term Loan Termination Date" means February 15, 2007. (c) The following definitions set forth in Annex A to the Credit Agreement hereby are deleted: Total Liabilities; Tangible Net Worth; Adjusted Consolidated EBITDA; Adjusted Consolidated EBITDA Coverage Ratio; Leverage Ratio; and Total Funded Debt. SECTION 8. RESTATEMENT OF EXHIBITS. Exhibit A-1 to the Credit Agreement hereby is restated in its entirety in the form of Restated Exhibit A-1 attached hereto; Exhibit A-2 to the Credit Agreement hereby is restated in its entirety in the form of Restated Exhibit A-2 attached hereto; and Exhibit C to the Credit Agreement hereby is restated in its entirety in the form of Restated Exhibit C attached hereto. SECTION 9. CONSENT TO AMENDMENTS. Each Guarantor hereby acknowledges and consents to this Amendment, and affirms and acknowledges that the Guaranty and each other Loan Document to which it is a party remains in full force and effect and that such Person remains obligated thereunder without defense, offset or counterclaim of any kind whatsoever, as if such Guaranty or other Loan Document were executed and delivered to the Bank on the date hereof. SECTION 10. REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter into this Amendment, the Borrower represents and warrants to the Bank that: (a) Representations and Warranties in Credit Agreement. Each of the representations and warranties of the Borrower and its Subsidiaries contained in the Credit Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with the Credit Agreement (i) were true and correct when made and (ii) after giving effect to this Amendment, continue to be true and correct on the date hereof (except to the extent that such representations and warranties relate expressly to an earlier date). 9 (b) Authority. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of its obligations under this Amendment (i) are within its power and authority, (ii) have been duly authorized by all necessary proceedings, (iii) do not and will not conflict with or result in any breach or contravention or any provision of law, statute, rule or regulation to which the Borrower is subject or any judgment, order, writ, injunction, license or permit applicable to the Borrower so as to materially adversely affect the assets, business or any activity of the Borrower, (iv) do not conflict with any provision of the certificate of incorporation or bylaws of the Borrower or any agreement or other instrument binding upon the Borrower, (v) do not and will not require any waivers, consents or approvals by any of its creditors which have not been obtained, or (vi) do not and will not require any approval which has not been obtained. (c) Enforceability of Obligations. This Amendment and the Credit Agreement, as amended hereby, constitute the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with its terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought. (d) No Event of Default. No Event of Default or Default has occurred and is continuing. SECTION 11. CONDITIONS TO EFFECTIVENESS. (1) This Amendment shall become effective on the date when the following conditions precedent have been satisfied: (a) The Borrower, each Guarantor and the Bank shall have delivered an executed counterpart of this Amendment. (b) The Bank shall have received each of the following documents, each duly executed by the parties thereto and in full force and effect: (i) a Line of Credit Note giving effect to the reduction in the Maximum Line of Credit Amount contemplated hereby; and (ii) a Term Note evidencing the Original Term Loan and the Incremental Term Loan to be made on the Second Amendment Effective Date. (c) The Borrower and each Guarantor shall have delivered to the Bank copies of the following documents, duly certified, or the following certificates, as applicable: (i) With respect to each such Person, resolutions of the Board of Directors of such Person authorizing (A) the execution and delivery of this Amendment and each other Loan Document contemplated hereby, the performance of 10 such Person's obligations under such Loan Documents and the Credit Agreement, as amended hereby, and, in the case of the Borrower, the incurrence of the incremental Indebtedness contemplated hereby, and, in the case of each Guarantor, confirming the continuing validity and enforceability of the Guaranty previously executed by such Guarantor for the benefit of the Bank, and (B) all other actions to be taken by such Person in connection with this Amendment; and (ii) With respect to each such Person, a certificate, signed by the Secretary or Assistant Secretary of such Person, dated as of the Second Amendment Effective Date certifying as to the (A) incumbency, and containing the specimen signature or signatures, of the Person or Persons authorized to execute this Amendment and each other Loan Document contemplated hereby, together with evidence of the incumbency of such Secretary or Assistant Secretary, and (B) authenticity and completeness of the certificate of incorporation and by-laws of such Person or, if any such governing document of such Person has not been amended, restated, supplemented, or otherwise modified since the Closing Date, the absence of any amendments, restatements, supplements, or modifications to such governing documents of such Person. (d) The Bank shall have received a closing fee of $60,000, such fee to be paid in immediately available funds. (e) No Event of Default or Default shall have occurred and be continuing or would result after giving effect to the transactions contemplated hereby. (f) The representations and warranties set forth in Section 10 hereof shall be true and correct on the effective date of this Amendment. (g) No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any Governmental Authority against the Borrower, any Guarantor or the Bank. (h) The Borrower shall have paid all reasonable out-of-pocket costs and expenses of the Bank, to the extent invoices therefor have been presented. (i) All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be in form and substance satisfactory to the Bank. (2) No later than February 25, 2005, the Bank shall have received (i) a duly executed amendment to the Mortgage delivered on the Closing Date signed by the record owner of the Real Property Collateral, together with customary Mortgage Related Documents relating thereto, in each case in form and substance reasonably acceptable to the Bank and (ii) either mortgage modification endorsements to, or date down endorsements to (or re-dated title insurance policies which replace), the existing title insurance policy issued on the Closing Date, in any case issued by a nationally 11 recognized title insurance company reasonably acceptable to the Bank, insuring the Lien of the Mortgage, as amended by such amendment, as a valid first priority Lien on the Real Property Collateral described therein, free of any other Liens except as permitted by the Loan Documents; and, the failure to deliver such amendment to the Mortgage and all such Mortgage Related Documents shall constitute an Event of Default under the Credit Agreement. SECTION 12. ADMISSIONS AND ACKNOWLEDGMENTS. The Borrower and each Guarantor expressly acknowledges and agrees with each of the following: (a) That such Person does not dispute the validity or enforceability of any of the Loan Documents or any of their respective obligations under any of the foregoing, or the validity, priority, enforceability, scope or extent of any charge, Lien, security interest or any other encumbrance of the Bank in, on or against any of the Collateral in any judicial, administrative or other proceeding; (b) That such Person shall not challenge or dispute the validity of any of its obligations under the Loan Documents to which it is party or any other obligations incurred by such Person pursuant to the Loan Documents; and (c) That the Indebtedness evidenced by the Loan Documents is secured by first priority, non-avoidable, perfected, valid and enforceable liens on and security interests in the Collateral, subject only to Permitted Liens. SECTION 13. REFERENCE TO AND EFFECT ON LOAN DOCUMENTS. (a) Upon the effectiveness of this Amendment, on and after the date hereof, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import, and each reference in the other Loan Documents to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended hereby; (b) Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Bank under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. (c) Nothing herein shall be deemed to entitle the Borrower or any Guarantor to a waiver, amendment, modification or other change of any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or difference circumstances. (d) This Amendment shall be a Loan Document for all purposes. 12 SECTION 14. BENEFITS OF AMENDMENT. The terms and provisions of this Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns to the extent contemplated by the Credit Agreement. SECTION 15. INTERPRETATION. The Article and Section headings used in this Amendment are for convenience of reference only and shall not affect the construction hereof. SECTION 16. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Amendment. Faxed signatures of this Amendment shall be binding for all purposes. SECTION 17. SEVERABILITY. If any provision of this Amendment shall be held to be invalid, illegal or unenforceable under applicable law in any jurisdiction, such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability, which shall not affect any other provisions hereof or the validity, legality and enforceability of such provision in any other jurisdiction. SECTION 18. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California. The arbitration provisions of Section 7.11 of the Credit Agreement are incorporated herein by reference. SECTION 19. EXPENSES. The Borrower agrees to pay the reasonable out-of-pocket expenses of the Bank, including but not limited to the reasonable fees, charges and disbursements, including but not limited to the fees, charges and disbursements of Gibson, Dunn & Crutcher LLP, special counsel for the Bank, incurred in connection with the preparation, negotiation, execution and delivery of this Amendment and any subsequent waiver, amendment or modification of the Credit Agreement or any other Loan Document and the security arrangements in connection herewith or therewith. SECTION 20. NO COURSE OF DEALING. The execution and delivery of this Amendment shall not establish a course of dealing among the Bank, the Borrower and the Guarantors or in any other way obligate the Bank to hereafter provide any further amendments, waivers, or consents of any kind to the Borrower and the Guarantors. SECTION 21. ARM'S LENGTH AGREEMENT. Each of the parties to this Amendment agrees and acknowledges that this Amendment has been negotiated in good faith, at arm's length, and not by any means forbidden by law. SECTION 22. ENTIRE AGREEMENT. This Amendment together with all other instruments, agreements, and certificates executed by the parties in connection herewith or with reference thereto, embody the entire understanding and agreement between the parties hereto and thereto with respect to the subject matter hereof and thereof and supercede all prior agreements, understandings, and inducements, whether express or implied, oral or written. 13 [signature pages follow] 14 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date first set forth above. VIRCO MFG.CORPORATION, as the Borrower By: /s/ Robert E.Dose ----------------------------------- Name: Robert E.Dose Title: Vice President-Finance Secretary and Treasurer VIRCO INC., as a Guarantor By: /s/ Robert E.Dose ----------------------------------- Name: Robert E.Dose Title: Vice President-Finance Secretary and Treasurer VIRCO MGMT.CORPORATION, as a Guarantor By: /s/ Robert E.Dose ----------------------------------- Name: Robert E.Dose Title: Vice President-Finance Secretary and Treasurer 1 WELLS FARGO BANK, NATIONAL ASSOCIATION, By: /s/ Art Brokx ----------------------------------- Name: Art Brokx Title: Vice President 2 EX-99.3 4 v05002exv99w3.txt EXHIBIT 99.3 EXHIBIT 99.3 RESTATED EXHIBIT A-1 FORM OF LINE OF CREDIT NOTE REVOLVING LINE OF CREDIT NOTE $40,000,000 Los Angeles, California January 21, 2005 FOR VALUE RECEIVED, the undersigned VIRCO MFG. CORPORATION ("Borrower") promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at 333 South Grand Avenue, Suite 940, Los Angeles, California 90071, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of Forty Million Dollars ($40,000,000), or so much thereof as may be advanced and be outstanding, with interest thereon, to be computed on each advance from the date of its disbursement as set forth herein. This Revolving Line of Credit Note (this "Note") replaces the Line of Credit Note originally issued on January 27, 2004 pursuant to the Amended and Restated Credit Agreement dated as of January 27, 2004 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement") between Borrower and Bank. Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined. Reference hereby is made to the Loan Documents for a description of the assets in which a Lien has been granted, the nature and extent of the security and the guaranties, the terms and conditions upon which the Liens and each guaranty were granted and the rights of the holder of this Note in respect thereof. DEFINITIONS: As used herein, the following terms shall have the meanings set forth after each, and any other term defined in this Note shall have the meaning set forth at the place defined: (a) "Applicable Margin" means, as of any date of determination, (i) 1.50% minus (ii) so long as no Default or Event of Default has occurred and is continuing or would result therefrom and the reduction in the outstanding principal amount of the Term Loan contemplated by this clause (ii) was not effected with the net cash proceeds from an Advance or a sale of assets (other than sales of inventory in the ordinary course of business) (A) if the aggregate principal amount of the Term Loan outstanding is less than $15,000,000 but greater than or equal to $10,000,000, 0.25%, (B) if the aggregate principal amount of the Term Loan outstanding is less than $10,000,000 but greater than or equal to $5,000,000, 0.50%, and (C) if the aggregate principal amount of the Term Loan outstanding is less than $5,000,000, 0.75%. (b) "Prime Rate" means at any time the rate of interest most recently announced within Bank at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Bank's base rates and serves as the basis upon which effective rates of interest are 3 calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Bank may designate. INTEREST: (a) Interest. The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) at a fluctuating rate per annum equal to the Prime Rate in effect from time to time plus the Applicable Margin. Each change in the Prime Rate shall become effective on the date such change is announced within Bank. (b) Payment of Interest. Interest accrued on this Note shall be payable on the first day of each month, commencing February 1, 2005. (c) Default Interest. From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the outstanding principal balance of this Note shall bear interest until paid in full at an increased rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to four percent (4%) above the rate of interest from time to time applicable to this Note. BORROWING AND REPAYMENT: (a) Borrowing and Repayment. Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of this Note and of any document executed in connection with or governing this Note; provided however, that the total outstanding borrowings under this Note shall not at any time exceed the principal amount set forth above or such lesser amount as shall at any time be available hereunder, as set forth in the Credit Agreement. The unpaid principal balance of this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less the amount of principal payments made hereon by or for any Borrower, which balance may be endorsed hereon from time to time by the holder. The outstanding principal balance of this Note shall be due and payable in full on Line of Credit Termination Date. (b) Advances. Advances hereunder, to the total amount of the principal sum stated above, may be made by the holder at the oral or written request of (i) Robert A. Virtue, Robert Dose, Doug Virtue or Bassey Yau, any one of them acting alone, who are authorized to request Advances and direct the disposition of any Advances until written notice of the revocation of such authority is received by the holder at the office designated above, or (ii) any person, with respect to Advances deposited to the credit of any deposit account of Borrower, which advances, when so deposited, shall be conclusively presumed to have been made to or for the benefit of Borrower regardless of the fact that persons other than those authorized to request Advances may have authority to draw against such account. The holder shall have no obligation to determine whether any person requesting an Advance is or has been authorized by Borrower. (c) Application of Payments. Each payment made on this Note shall be credited first, to any interest then due and second, to the outstanding principal balance hereof. PREPAYMENT: 4 (a) Borrower may prepay principal on any portion of this Note at any time, in any amount and without penalty. (b) The principal Indebtedness evidenced hereby shall be payable as follows and without set off, counterclaim or reduction of any kind: (i) the amount, if any, by which the LC Usage Amount at any time exceeds the lesser of the Maximum Line of Credit Amount or the Borrowing Base at such date shall be payable immediately; and (ii) the principal Indebtedness evidenced hereby shall be payable on the Line of Credit Termination Date. EVENTS OF DEFAULT: Any default in the payment or performance of any obligation under this Note, or any defined event of default under the Credit Agreement, shall constitute an "Event of Default" under this Note. MISCELLANEOUS: (a) Obligations Joint and Several. Should more than one person or entity sign this Note as a Borrower, the obligations of each such Borrower shall be joint and several. (b) Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of California. [Signature Page Follows] 5 IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above. VIRCO MFG. CORPORATION By: /s/ Robert E. Dose ---------------------------------- Name: Robert E. Dose Title: Vice President-Finance,Secretary and Treasurer EX-99.4 5 v05002exv99w4.txt EXHIBIT 99.4 EXHIBIT 99.4 RESTATED EXHIBIT A-2 FORM OF TERM NOTE TERM NOTE $20,000,000 Los Angeles, California January 21, 2005 FOR VALUE RECEIVED, the undersigned VIRCO MFG. CORPORATION ("Borrower") promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at 333 South Grand Avenue, Suite 940, Los Angeles, California 90071, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of $20,000,000, with interest thereon as set forth herein. This Term Note (this "Note") evidences the Original Term Loan and the Incremental Term Loan and replaces the Term Note originally issued on January 27, 2004 pursuant to the Amended and Restated Credit Agreement dated as of January 27, 2004 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement") between Borrower and Bank. Terms defined in the Credit Agreement and not otherwise defined herein are used herein as therein defined. Reference hereby is made to the Loan Documents for a description of the assets in which a Lien has been granted, the nature and extent of the security and the guaranties, the terms and conditions upon which the Liens and each guaranty were granted and the rights of the holder of this Note in respect thereof. DEFINITIONS: As used herein, the following terms shall have the meanings set forth after each, and any other term defined in this Note shall have the meaning set forth at the place defined: (a) "Applicable Margin" means, as of any date of determination, (i) 1.50% minus (ii) so long as no Default or Event of Default has occurred and is continuing or would result therefrom and the reduction in the outstanding principal amount of the Term Loan contemplated by this clause (ii) was not effected with the net cash proceeds from an Advance or a sale of assets (other than sales of inventory in the ordinary course of business) (A) if the aggregate principal amount of the Term Loan outstanding is less than $15,000,000 but greater than or equal to $10,000,000, 0.25%, (B) if the aggregate principal amount of the Term Loan outstanding is less than $10,000,000 but greater than or equal to $5,000,000, 0.50%, and (C) if the aggregate principal amount of the Term Loan outstanding is less than $5,000,000, 0.75%. (b) "Prime Rate" means at any time the rate of interest most recently announced within Bank at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Bank's base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Bank may designate. 1 INTEREST: (a) Interest. The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) at a fluctuating rate per annum equal to the Prime Rate in effect from time to time plus the Applicable Margin. Each change in the Prime Rate shall become effective on the date such change is announced within Bank. (b) Payment of Interest. Interest accrued on this Note shall be payable on the first day of each month, commencing February 1, 2004. (c) Default Interest. From and after the maturity date of this Note, or such earlier date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the outstanding principal balance of this Note shall bear interest until paid in full at an increased rate per annum (computed on the basis of a 360 day year, actual days elapsed) equal to four percent (4%) above the rate of interest from time to time applicable to this Note. REPAYMENT AND PREPAYMENT: (a) Repayment. The Term Loan evidenced hereby shall be payable as follows and without set off, counterclaim or reduction of any kind: (i) on or before October 15 of each year, not less than $5,000,000 aggregate principal amount of the principal Indebtedness evidenced hereby shall have been repaid; (ii) on the date of the consummation of any disposition of any assets of Borrower or any of its Subsidiaries (other than a disposition permitted by Section 5.6 of the Credit Agreement), an amount of the cash proceeds received in connection such disposition equal to the excess, if any, of the aggregate cash proceeds received in connection with all dispositions of assets (other than those permitted by Section 5.6 of the Credit Agreement) less (A) any fees, costs, commissions and expenses reasonably incurred in connection with such dispositions and (B) the taxes actually paid or to be payable by Borrower (as estimated by the chief financial officer of Borrower, giving effect to the overall tax position of Borrower), over $500,000, shall be payable in respect of the Indebtedness evidenced hereby; such payment shall be applied in the inverse order of the maturities due hereunder (and, Borrower acknowledges that nothing contained in this subclause (ii) shall permit Borrower or any of its Subsidiaries to sell or otherwise dispose of any assets other than in accordance with Section 5.6 of the Credit Agreement); and (iii) the principal Indebtedness evidenced hereby shall be payable on the Term Loan Termination Date. (b) Application of Payments. Each payment made on this Note shall be credited first, to any interest then due and second, to the outstanding principal balance hereof. (c) Prepayment. Borrower may prepay principal on any portion of this Note at any time, in any amount and without penalty. Any such prepayment shall be applied in the inverse order of the maturities due hereunder. 2 EVENTS OF DEFAULT: Any default in the payment or performance of any obligation under this Note, or any defined Event of Default under the Credit Agreement, shall constitute an "Event of Default" under this Note. MISCELLANEOUS: (a) Obligations Joint and Several. Should more than one person or entity sign this Note as a Borrower, the obligations of each such Borrower shall be joint and several. (b) Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of California. [Signature Page Follows] 3 IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above. VIRCO MFG. CORPORATION By: /s/ Robert E. Dose ------------------------------- Name: Robert E. Dose Title: Vice President-Finance, Secretary and Treasurer 4 EX-99.5 6 v05002exv99w5.txt EXHIBIT 99.5 \ EXHIBIT 99.5 RESTATED EXHIBIT C COMPLIANCE CERTIFICATE TO: WELLS FARGO BANK, NATIONAL ASSOCIATION This Compliance Certificate is delivered with reference to the Amended and Restated Credit Agreement dated as of January 27, 2004 (as the same may be amended, supplemented, replaced, renewed or otherwise modified from time to time, the "Credit Agreement"), between VIRCO MFG. CORPORATION, a Delaware corporation (the "Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank"). Terms defined in the Credit Agreement and not otherwise defined in this Compliance Certificate (this "Certificate") shall have the meanings defined for them in the Credit Agreement. Section references herein relate to the Credit Agreement unless stated otherwise. This Certificate is delivered in accordance with Section 4.3(f) of the Credit Agreement by the Chief Financial Officer of the Borrower. This Certificate is delivered with respect to the [fiscal quarter][fiscal month] ended _________________, _____ (the "Test Date"). Computations indicating compliance with respect to certain covenants set forth in the Credit Agreement are set forth below: I. Section 5.2 - Capital Expenditures. The maximum additional investment in fixed assets in any fiscal year is $5,000,000. The additional investment in fixed assets of Borrower for the fiscal year ended __________, 200_ is _____________. The additional consolidated investment in fixed assets of the Borrower and its Subsidiaries for the fiscal year ended ___________, 200_ [is/is not] greater than or equal to $5,000,000, as set forth in Section 5.2 of the Credit Agreement. II. Section 5.13 - Minimum Revenues. The minimum consolidated revenues of the Borrower for the twelve months ended on the Test Date is $180,000,000. The Borrower's consolidated revenues for the twelve months ended on the Test Date was $____________. The Borrower's consolidated revenues for the twelve months ended on the Test Date [is/is not] greater than or equal to $180,000,000, as set forth in Section 5.13 of the Credit Agreement. III. Section 5.14 - Minimum Consolidated EBITDA. The Consolidated EBITDA required by the Credit Agreement for the period ended on the Test Date is $__________. For the period contemplated for such Test Date, the Consolidated EBITDA of the Borrower was $_________, calculated as follows: A. Consolidated EBITDA for the period contemplated for such Test Date: (a) Net Income of the Borrower and its Subsidiaries for such period: $____________ 5 (b) Interest Expense for such period, to the extent deducted from Net Income: $____________ (c) income taxes for such period, to the extent deducted from Net Income: $____________ (d) depreciation and amortization for such period, to the extent deducted from Net Income: $____________ (e) gains from the sale of capital assets, during such period: $____________ (f) income or gain from extraordinary items, during such period: $____________ (g) income or gain from non-recurring items, during such period: $____________ Consolidated EBITDA (Item (a) plus the sum of Items (b), (c) and (d) minus the sum of Items (e), (f) and (g)): $____________ The Consolidated EBITDA set forth above [is/is not] more than or equal to the amount set forth in Section 5.14 of the Credit Agreement for the contemplated period ended on the Test Date. IV. The undersigned Chief Financial Officer of the Borrower certifies that the calculations made and the information contained herein are derived from the books and records of the Borrower and its Subsidiaries, as applicable, and that each and every matter contained herein correctly reflects those books and records in all material respects [if there has been a change in generally accepted accounting principles: and attached hereto as Schedule 1 is a reconciliation of the financial statements of the Borrower to GAAP]. V. To the best knowledge of the undersigned no Default or Event of Default has occurred, except for such conditions or events set forth on Schedule 1 attached hereto, specifying the nature and period of existence thereof and what action the Borrower has taken, is taking or proposes to take with respect thereto. Dated: _______________, _____ VIRCO MFG.CORPORATION By: ________________________ Name: Title: 6 -----END PRIVACY-ENHANCED MESSAGE-----