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 ▇▇▇▇▇ 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.
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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:
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Art Brokx, Vice President
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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).
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(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
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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
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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.
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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 ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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.
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[signature pages follow]
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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/ ▇▇▇▇▇▇ ▇.Dose
-----------------------------------
Name: ▇▇▇▇▇▇ ▇.Dose
Title: Vice President-Finance Secretary and
Treasurer
VIRCO INC.,
as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇.Dose
-----------------------------------
Name: ▇▇▇▇▇▇ ▇.Dose
Title: Vice President-Finance Secretary and
Treasurer
VIRCO MGMT.CORPORATION,
as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇.Dose
-----------------------------------
Name: ▇▇▇▇▇▇ ▇.Dose
Title: Vice President-Finance Secretary and
Treasurer
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▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION,
By: /s/ Art Brokx
-----------------------------------
Name: Art Brokx
Title: Vice President
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