Exhibit 10.1
AMENDMENT NO. 8 TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
     AMENDMENT NO. 8 dated as of May 31, 2011 (“Amendment”) among VIRCO MFG.
CORPORATION, a Delaware corporation (the “Borrower”), VIRCO INC., a Delaware
corporation (the “Guarantor”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (the
“Bank”), amending the Second Amended and Restated Credit Agreement dated as of
March 12, 2008 (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:
     Amendment to Section 4.10 of the Credit Agreement. Section 4.10 of the
Credit Agreement is hereby amended and restated in its entirety as follows:
     “Section 4.10 Right to Inspect; Collateral Monitoring.
          Bank (through any of its officers, employees, or agents) shall have
the right, from time to time hereafter during regular business hours, to:
(i) inspect, audit and examine Borrower’s books and records and business
locations, and (ii) check, test and appraise the Collateral in order to verify
Borrower’s financial condition and/or the amount, quality, value, condition of,
or any other matter relating to the Collateral. In addition to all rights
granted to Bank hereunder and in the other Loan Documents, Borrower shall fully
cooperate with all reasonable requests for information from Bank’s employees,
agents, representatives, consultants and auditors at all times. Borrower shall
reimburse Bank (and hereby authorizes Bank to add the following costs and fees
to Borrower’s obligations hereunder and under the Loan Documents) all collateral
monitoring fees, audit fees, consulting fees, appraisal fees and attorneys’ fees
incurred by Bank.”
     Amendment to Article IV the Credit Agreement. Article IV of the Credit
Agreement is hereby amended by adding the following new Section 4.11:
     “Section 4.11. Bank’s Consultant.
          Bank shall select and engage, in its reasonable discretion, a
financial advisor and/or consultant (the “Consultant”) to advise Bank in
connection with Borrower’s compliance with the Loan Documents and repayment of
the Obligations. The scope of the Consultant’s duties shall be in the sole and
absolute discretion of Bank but shall include, without limitation, a focus on
the outlook for Borrower’s industry over the foreseeable future and the strength
and rationale of Borrower’s business plan, products, manufacturing processes and
cost structure in connection with Borrower’s potential future performance within
a changing market. Borrower agrees to fully cooperate with the Consultant, and
to provide the Consultant with full access to Borrower’s books and records,
facilities, officers, employees, accountants and advisors. Borrower consents to
Bank’s selection and engagement of the Consultant, and Borrower shall reimburse
Bank on demand for all fees and expenses of the Consultant. To the extent not
previously paid, Borrower agrees that Bank may debit any operating account of
Borrower for any and all fees, costs and expenses of the Consultant with same
day’s notice to Borrower.”
     Amendments to Annex A to the Credit Agreement.
     The following definitions hereby are inserted in Annex A to the Credit
Agreement in the proper alphanumerical order:

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          “Amendment No. 8” means Amendment No. 8 to Second Amended and Restated
Credit Agreement dated as of May 31, 2011 among the Borrower, the Guarantor and
the Bank.
          “Consultant” has the meaning set forth in Section 4.11.
          “Eighth Amendment Effective Date” means the first date on which all
conditions set forth in Section 5 of Amendment No. 8 have been satisfied.
     The following definitions appearing in Annex A to the Credit Agreement
hereby are amended and restated as follows:
          “Line of Credit Termination Date” means June 30, 2012.
          “Loan Documents” means this Agreement, the Bank Product Agreements,
the Guaranties, the Security Agreements, the Reaffirmation Agreement, the
Mortgages, any note or notes executed by Borrower in connection with this
Agreement and payable to Bank, and any other agreement entered into, now or in
the future, by Borrower, any Guarantor or any of their respective Affiliates and
Bank in connection with this Agreement or any of the foregoing agreements.
     Consent to Amendments. The 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 Guarantor 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.
     Representations and Warranties. To induce the Bank to enter into this
Amendment, the Borrower represents and warrants to the Bank that:
     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).
     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, and (v) do not and will
not require any waivers, consents or approvals by any of its creditors which
have not been obtained, or do not and will not require any approval which has
not been obtained.
     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 maybe brought.
     No Event of Default. No Event of Default or Default has occurred and is
continuing.
     Conditions to Effectiveness. This Amendment shall become effective on the
date when the following conditions precedent have been satisfied:

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     The Borrower, the Guarantor and the Bank shall have delivered an executed
counterpart of this Amendment.
     The Bank shall have received each of the following documents, each duly
executed by the parties thereto (as applicable) and in full force and effect:
          (1) a duly executed amendment to the Mortgage signed by the record
owner of the Real Property Collateral, together with customary Mortgage Related
Documents relating thereto, substantially in the form of Exhibit A attached
hereto and otherwise acceptable to the Bank in its reasonable discretion, (2) an
appraisal of all Real Property Collateral required hereby, and all improvements
thereon, issued by an appraiser acceptable to the Bank and in form, substance
and reflecting values satisfactory to the Bank, in its reasonable discretion,
and (3) 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
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
          An Intellectual Property Security Agreement, substantially in the form
of Exhibit B attached hereto and otherwise acceptable to the Bank in its
reasonable discretion, which shall be recorded in the appropriate federal
offices having jurisdiction over trademarks and patents.
     The Borrower and the Guarantor shall have delivered to the Bank a
certificate, signed by the Secretary or Assistant Secretary of such Person,
dated as of the Eighth Amendment Effective Date certifying as to the 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.
     No Event of Default or Default shall have occurred and be continuing or
would result after giving effect to the transactions contemplated hereby.
     The representations and warranties set forth in Section 5 hereof shall be
true and correct on the effective date of this Amendment.
     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, the Guarantor or the Bank.
     The Borrower shall have paid all reasonable out-of-pocket costs and
expenses of the Bank, to the extent invoices therefor have been presented.
     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.
     Admissions and Acknowledgments. Both the Borrower and the Guarantor
expressly acknowledges and agrees with each of the following:
     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;

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     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
     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.
     Reference to and Effect on Loan Documents.
     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.
     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.
     Nothing herein shall be deemed to entitle the Borrower or the 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.
     This Amendment shall be a Loan Document for all purposes.
     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.
     General Release. In consideration of the benefits provided to the Borrower
under the terms and provisions hereof, the Borrower and the Guarantor each
hereby agree as follows (“General Release”):
     The Borrower and the Guarantor hereunder, for themselves and on behalf of
their respective successors and assigns, each hereby release, acquit and forever
discharge the Bank, all of the Bank’s predecessors in interest, and all of the
Bank’s past and present officers, directors, attorneys, affiliates, employees
and agents, of and from any and all claims, demands, obligations, liabilities,
indebtedness, breaches of contract, breaches of duty or of any relationship,
acts, omissions, misfeasance, malfeasance, causes of action, defenses, offsets,
debts, sums of money, accounts, compensation, contracts, controversies,
promises, damages, costs, losses and expenses, of every type, kind, nature,
description or character, whether known or unknown, suspected or unsuspected,
liquidated or unliquidated, each as though fully set forth herein at length
(each, a “Released Claim” and collectively, the “Released Claims”), that the
Borrower or the Guarantor hereunder now has or may acquire as of the later of:
(i) the date this letter becomes effective through the satisfaction (or waiver
by the Bank) of all conditions hereto; or (ii) the date that the Borrower and
the Guarantor hereunder have executed and delivered this letter to the Bank
(hereafter, the “Release Date”), including without limitation, those Released
Claims in any way arising out of, connected with or related to any and all-prior
credit accommodations, if any, provided by the Bank, or any of the Bank’s
predecessors in interest, to the Borrower or the Guarantor hereunder, and any
agreements, notes or documents of any kind related thereto or the transactions
contemplated thereby or hereby, or any other agreement or document referred to
herein or therein.
     The Borrower and the Guarantor each hereby acknowledge, represent and
warrant to the Bank as follows:

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          The Borrower and the Guarantor each understand the meaning and effect
of Section 1542 of the California Civil Code which provides:
“Section 1542. GENERAL RELEASE; EXTENT. A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
          With regard to Section 1542 of the California Civil Code, the Borrower
and the Guarantor each agree to assume the risk of any and all unknown,
unanticipated or misunderstood defenses and Released Claims which are released
by the provisions of this General Release in favor of the Bank, and both the
Borrower and the Guarantor each hereby waive and release all rights and benefits
which they might otherwise have under Section 1542 of the California Civil Code
with regard to the release of such unknown, unanticipated or misunderstood
defenses and Released Claims.
     Each person signing below on behalf of the Borrower or the Guarantor
hereunder acknowledges that he or she has read each of the provisions of this
General Release. Each such person fully understands that this General Release
has important legal consequences, and each ‘such realizes that they are
releasing any and all Released Claims that the Borrower or the Guarantor may
have as of the Release Date. The Borrower and the Guarantor hereunder hereby
acknowledge that each of them has had an opportunity to obtain a lawyer’s advice
concerning the legal consequences of each of the provisions of this General
Release.
     The Borrower and the Guarantor hereunder hereby specifically acknowledge
and agree that: (i) none of the provisions of this General Release shall be
construed as or constitute an admission of any liability on the part of the
Bank; (ii) the provisions of this General Release shall constitute an absolute
bar to any Released Claim of any kind, whether any such Released Claim is based
on contract, tort, warranty, mistake or any other theory, whether legal,
statutory or equitable; and (iii) any attempt to assert a Released Claim barred
by the provisions of this General Release shall subject the Borrower and the
Guarantor hereunder to the provisions of applicable law setting forth the
remedies for the bringing of groundless, frivolous or baseless claims or causes
of action.
     Interpretation. The Article and Section headings used in this Amendment are
for convenience of reference only and shall not affect the construction hereof.
     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.
     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.
     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 this
reference.
     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 Pillsbury Winthrop Shaw Pittman 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

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modification of the Credit Agreement or any other Loan Document and the security
arrangements in connection herewith or therewith.
     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 Guarantor
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 Guarantor.
     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.
     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.
[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:           Name:           Title:           VIRCO INC.,
as the Guarantor
      By:           Name:           Title:           WELLS FARGO BANK, NATIONAL
ASSOCIATION, as the Bank
      By:           Name:           Title:      

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EXHIBIT A
THIS INSTRUMENT PREPARED BY:
Pillsbury Winthrop Shaw Pittman LLP
725 South Figueroa Street, 28th Floor
Los Angeles, CA 90017
Attn: Bradley E. Wolf
AND WHEN RECORDED MAIL TO:
Wells Fargo Bank, National Association
333 S. Grand Avenue, Suite 940
Los Angeles, CA 90071
Attn: Razia Damji
Loan No. 8079119402
 
MEMORANDUM OF MODIFICATION AGREEMENT
(SHORT FORM)
THIS MEMORANDUM OF MODIFICATION AGREEMENT (SHORT FORM) (“Agreement”) is made and
entered into as of May 31, 2011, by and between Wells Fargo Bank, National
Association (“Lender”), and VlRCO MFG. CORPORATION, a Delaware corporation
(“Borrower”).
R E C I T A L S :

A.   Pursuant to the terms of that certain Second Amended and Restated Credit
Agreement dated as of March 12, 2008 (as amended, restated, supplemented or
otherwise modified, the “Credit Agreement”), Lender made a loan to Borrower in
the principal amount of up to Forty-Five Million and No/100 Dollars
($45,000,000) (the “Loan”). The Loan is evidenced by that certain Amended and
Restated Revolving Line of Credit Note dated as of October 29, 2010, executed by
Borrower in favor of Lender, in the principal amount of the Loan (as amended,
restated, supplemented or otherwise modified, the “Note”), which Note amends and
restates in its entirety the Revolving Line of Credit Notes dated as July 30,
2010, January 29, 2010, March 27, 2009 and July 31, 2008 executed by Borrower in
favor of Lender, and is further evidenced by the documents described in the
Credit Agreement as “Loan Documents”. The Note is secured by, among other
things, that certain Mortgage with Absolute Assignment of Leases and Rents,
Security Agreement and Fixture Filing dated January 26, 2004 (as amended,
restated, supplemented or otherwise modified, the “Original Mortgage”) to and
for the benefit of Lender, which was recorded and filed in the Official Records
of the County of Faulkner, Arkansas (the “Official Records”) on January 28,
2004, as Document No 2004-1700 and re-recorded and filed February 27, 2004. as
Document No. 2004-3958, and modified by that certain Modification Agreement
(Secured Loan) executed by Borrower on January 27, 2005, which was recorded and
filed in the Official Records on February 3, 2005, as Document No. 2005-2338,
and by that certain Modification Agreement (Secured Loan) executed by Borrower
on December 8, 2005, which was recorded and filed in the Official Records on
December 15, 2005, as Document No. 2005-27794, and by that certain Modification
Agreement (Secured Loan) executed by Borrower on March 26, 2007, which was
recorded and filed in the Official Records on April 10, 2007, as Document
No. 2007-7273.   B.   The Original Mortgage was amended and restated by that
certain Amended and Restated Mortgage with Absolute Assignment of Leases and
Rents, Security Agreement and Fixture Filing dated March 12, 2008 (as amended,
restated, supplemented or otherwise modified, the “Amended and Restated
Mortgage”), and recorded and filed in the Official Records on March 18, 2008 as
Document No. 2008-4858, and re-recorded and filed October 16, 2008, as Document
No. 2008-20134; as modified by that certain Partial Release Deed dated
September 29, 2008 and recorded and filed in the Official Records on
October 6,2008 as Document No. 2008-19527.

 

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C.   The Amended and Restated Mortgage was amended and restated by that certain
Second Amended and Restated Mortgage with Absolute Assignment of Leases and
Rents, Security Agreement and Fixture Filing dated as of March 26, 2009 (as
amended, restated, supplemented or otherwise modified, the “Second Amended and
Restated Mortgage”), and recorded and filed in the Official Records on April 9,
2009 as Document No. 2009-6306.   D.   On July 31,2008, Borrower and Lender
entered into that certain Amendment No. 1 to Second Amended and Restated Credit
Agreement (the “First Modification Agreement”), which modified and amended
certain provisions of the Loan Documents.   E.   On March 27, 2009, Borrower and
Lender entered into that certain Amendment No. 2 to Second Amended and Restated
Credit Agreement (the “Second Modification Agreement”), which modified and
amended certain provisions of the Loan Documents.   F.   On January 29, 2010,
Borrower and Lender have entered into that certain Amendment No. 3 to Second
Amended and Restated Credit Agreement of even date herewith (the “Third
Modification Agreement”), pursuant to which Borrower and Lender agreed to modify
certain terms and provisions of the Loan Documents.   G.   On April 28, 2010,
Borrower and Lender have entered into that certain Amendment No. 4 to Second
Amended and Restated Credit Agreement of even date herewith (the “Fourth
Modification Agreement”), pursuant to which Borrower and Lender agreed to modify
certain terms and provisions of the Loan Documents.   H.   On July 30, 2010,
Borrower and Lender have entered into that certain Amendment No. 5 to Second
Amended and Restated Credit Agreement of even date herewith (the “Fifth
Modification Agreement”), pursuant to which Borrower and Lender agreed to modify
certain terms and provisions of the Loan Documents.   I.   October 29, 2010,
Borrower and Lender have entered into that certain Amendment No. 6 to Second
Amended and Restated Credit Agreement of even date herewith (the “Sixth
Modification Agreement”), pursuant to which Borrower and Lender agreed to modify
certain terms and provisions of the Loan Documents.   J.   On January 31, 2011,
Borrower and Lender have entered into that certain Amendment No. 7 to Second
Amended and Restated Credit Agreement of even date herewith (the “Seventh
Modification Agreement”), pursuant to which Borrower and Lender agreed to modify
certain terms and provisions of the Loan Documents.   K.   On May 31, 2011,
Borrower and Lender have entered into that certain Amendment No. 8 to Second
Amended and Restated Credit Agreement of even date herewith (the “Eighth
Modification Agreement”), pursuant to which Borrower and Lender agreed to modify
certain terms and provisions of the Loan Documents.   L.   Unless otherwise
defined, capitalized terms used herein shall have the meanings attributed to
such terms in the Loan Documents.

NOW, THEREFORE, the parties hereto agree as follows:
     Memorandum of Eighth Modification Agreement. This instrument is a
memorandum of the Eighth Modification Agreement, and the same is by this
reference incorporated herein and made a part hereof as if set forth herein in
its entirety.

 

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     Eighth Modification Agreement. Borrower and Lender entered into the Eighth
Modification Agreement pursuant to which, among other things, the Line of Credit
Termination Date was extended to June 30, 2012.
     Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same instrument.
[Signatures follow on next page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

            “LENDER”

WELLS FARGO BANK,
NATIONAL ASSOCIATION
      By:           Razia Damji        Its: Vice President        “BORROWER”

VIRCO MFG. CORPORATION,
a Delaware corporation
      By:           Robert E. Dose        Its: Vice President — Finance,
Secretary and Treasurer     

(ALL SIGNATURES MUST BE ACKNOWLEDGED)
SIGNATURE PAGE TO MEMORANDUM OF MODIFICATION

 

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STATE OF CALIFORNIA                             )
COUNTY OF   _______________________ )
On ____________________ before me, ____________________, a Notary Public,
personally appeared ____________________, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

            WITNESS my hand and official seal.         Signature         
(Seal)       

STATE OF CALIFORNIA                             )
COUNTY OF   _______________________ )
On ____________________ before me, ____________________, a Notary Public,
personally appeared ____________________, who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature______________________________________
(Seal)
NOTARY PAGE TO MEMORANDUM OF MODIFICATION

 

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EXHIBIT B
INTELLECTUAL PROPERTY SECURITY AGREEMENT
     This INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of May 31, 2011 (as
amended, restated, supplemented, replaced or otherwise modified from time to
time, the “Intellectual Property Security Agreement”), is made by VIRCO MFG.
CORPORATION, a Delaware corporation (the “Grantor”) in favor of WELLS FARGO
BANK, NATIONAL ASSOCIATION (the “Bank”).
WITNESSETH:
     WHEREAS, the Grantor is or will be a party to that certain Amendment No. 8
to Second Amended and Restated Credit Agreement dated as of May 31, 2011 (as it
may be amended, restated, supplemented or otherwise modified from time to time,
the “Amendment”), by and among Bank, the Grantor and Virco Inc., a Delaware
corporation, as Guarantor, amending the Second Amended and Restated Credit
Agreement dated as of March 12, 2008, which has subsequently been amended
pursuant to various amendments (as it may be further amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”)
between the Grantor and the Bank (capitalized terms used and not defined herein
have the meanings given such terms in the Credit Agreement, as amended by the
Amendment).
     WHEREAS, the Grantor is party to that certain Amended and Restated Security
Agreement dated as of January 27, 2004 (as it may be amended, restated,
supplemented or otherwise modified from time to time, the “Security Agreement”),
by and among Bank, the Grantor and each of the Grantor’s Subsidiaries signatory
thereto, as Subsidiary Guarantors (as such term is defined in the Security
Agreement).
     WHEREAS, under the terms of the Security Agreement, the Grantor and its
Subsidiary Guarantors have previously granted a security interest in certain
personal property, including, without limitation, certain intellectual property
of the Grantors and the Subsidiary Guarantors to the Bank pursuant to an
Intellectual Property Security Agreement dated as of January 27, 2004 (the
“Existing IP Security Agreement”).
     WHEREAS, under the terms of the Master Reaffirmation Agreement dated as of
March 12, 2008 (as it may be amended, restated, supplemented or otherwise
modified from time to time, the “Reaffirmation Agreement”) by and among the
Grantor, the Guarantors in effect at such time and the Bank, the Grantor
ratified and reaffirmed it obligations and pledge of collateral under the
Security Agreement, including, without limitation, the Existing IP Security
Agreement.
     WHEREAS, the Grantor has filed new patent and trademark applications and/or
has been granted new patents and trademark registrations since executing the
Security Agreement and the Existing IP Security Agreement.
     WHEREAS, pursuant to Section 6(b)(ii) of the Amendment, the Grantor has
agreed as a condition thereof to execute this Intellectual Property Security
Agreement for filing with the United States Patent and Trademark Office in order
to properly record the Bank’s security interest in the new patents, trademark
registrations and/or applications therefor referenced above and attached hereto
as Schedule 1 and Schedule 2.
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor agrees as follows:
     Section 1. Grant of Security. The Grantor hereby grants to the Bank a
security interest in and to all of the Grantor’s right, title, and interest in
and to the following as collateral security for the prompt and complete payment
and performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Grantor’s Obligations (as such term “Obligations” is defined
in the Credit Agreement) now or hereafter existing under or in respect of the
Loan Documents, whether direct or indirect, absolute or contingent, and whether
for principal, reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise:

 

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          1.1. Trademarks
               1.1.1 The Grantor’s United States and foreign trademarks, trade
names, trade styles, trade dress, corporate names, company names, business
names, fictitious business names, Internet domain names, service marks,
certification marks, collective marks, logos, and other source or business
identifiers, all registrations and applications to register any of the foregoing
including, but not limited to: (i) the U.S. trademark registrations and
applications referred to in Schedule 1 hereto (as such schedule may be amended
or supplemented from time to time), (ii) all rights to, and to obtain, any
extensions or renewals of any of the foregoing, (iii) all of the goodwill of the
business connected with the use of and symbolized by any of the foregoing,
(iv) the right to sue or otherwise recover for any and all past, present and
future infringements, dilutions, and other violations of any of the foregoing or
for any injury to goodwill, (v) all proceeds of the foregoing, including,
without limitation, licenses, royalties, income, payments, claims, damages, and
proceeds of suit, and (vi) all other rights of any kind whatsoever corresponding
thereto throughout the world (collectively, the “Trademarks”); and
               1.1.2 All licenses or agreements, whether written or oral,
providing for the grant by or to the Grantor of (i) any right to use any
Trademark, (ii) the right to sue or otherwise recover for any and all past,
present and future infringements and misappropriations of any of the foregoing,
(iii) all income, royalties, damages and other payments now and hereafter due
and/or payable with respect thereto (including, without limitation, payments
under all licenses entered into in connection therewith, and damages and
payments for past, present or future infringements thereof), (iv) all other
rights of any kind whatsoever of the Grantor accruing thereunder or pertaining
thereto, and (v) any and all proceeds of the foregoing.
          1.2. Patents
               1.2.1 The Grantor’s United States, foreign, and multinational
patents, certificates of invention, and patentable inventions (regardless of
whether reduced to practice) or similar industrial property rights, and
applications for any of the foregoing, including, but not limited to: (i) each
patent and patent application referred to in Schedule 2 hereto (as such schedule
may be amended or supplemented from time to time), (ii) all reissues, divisions,
continuations, continuations-in-part, extensions, renewals, and reexaminations
thereof, (iii) all inventions and improvements described therein, (iv) all
rights to sue or otherwise recover for any past, present, and future
infringements or other violations thereof, (v) all proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages, and proceeds of suit, and (vi) all other rights of any kind whatsoever
corresponding thereto throughout the world (collectively, the “Patents”); and
               1.2.2 All licenses or agreements, whether written or oral,
providing for the grant by or to the Grantor of (i) any right to use any Patent,
(ii) the right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations of any of the foregoing, (iii) all
income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments for
past, present or future infringements thereof), (iv) all other rights of any
kind whatsoever of the Grantor accruing thereunder or pertaining thereto, and
(v) any and all proceeds of the foregoing.
     Section 2. Recordation. The Grantor authorizes and requests that the
Commissioner of Patents and Trademarks and any other applicable government
officer record this Intellectual Property Security Agreement.
     Section 3. Execution in Counterparts. This Intellectual Property Security
Agreement may be executed in any number of counterparts (including by telecopy),
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
     Section 4. Governing Law. This Intellectual Property Security Agreement and
the rights and obligations of the parties hereunder shall be governed by, and
shall be construed and enforced in accordance with, the laws of the State of
California without regard to conflict of laws principles thereof.

 

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     Section 5. Conflict Provision. This Intellectual Property Security
Agreement has been entered into in conjunction with the provisions of the
Security Agreement, the Credit Agreement and the Amendment referenced herein.
The rights and remedies of each party hereto with respect to the security
interest granted herein are without prejudice to, and are in addition to those
set forth in, the Security Agreement, the Credit Agreement and the Amendment,
all terms and provisions of which are incorporated herein by reference. In the
event that any provisions of this Intellectual Property Security Agreement are
in conflict with the Security Agreement, the Credit Agreement or the Amendment,
the provisions of the Security Agreement, the Credit Agreement or the Amendment
shall govern.
[remainder of page intentionally left blank]

 

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     IN WITNESS WHEREOF, the parties hereto have caused this Intellectual
Property Security Agreement to be executed as of the date first above written by
their respective officers thereunto duly authorized.

            VIRCO MFG. CORPORATION,
as Grantor
      By:           Name:           Title:             WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Bank
      By:           Name:           Title:      

 

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SCHEDULE 1
TO INTELLECTUAL PROPERTY SECURITY AGREEMENT
TRADEMARKS

                  Serial No.   Filing Date U.S. Trademark   Registration No.  
Issue Date
PENDING TRADEMARKS
 
           
ANALOGY
    77/265,430     08/27/2007
GEM
    77/267,629     08/29/2007
PLANSCAPE
    85/163,638     10/28/2010
RECESS
    77/267,643     08/29/2007
REGISTERED TRADEMARKS
 
           
DESIGN ONLY
    3,010,383     11/01/2005
METAPHOR
    3,528,679     11/04/2008
PARAMETER
    3,887,535     12/07/2010
TELOS
    3,509,728     09/30/2008
TEXT
    3,633,057     06/02/2009
V VIRCO
    3,380,310     02/12/2008
VIRCO
    3,380,311     02/12/2008
ZUMA
    3,115,038     07/11/2006

 

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SCHEDULE 2
TO INTELLECTUAL PROPERTY SECURITY AGREEMENT
PATENTS

              Title   Application/Patent Number   Filing/Issue Date
Heat-Transfer Mechanism Including a Liquid-Metal Thermal Coupling
    20090316359     06/18/2008
Self-Leveling Furniture Leg Foot
    7,380,879     06/03/2008
Book Rack and Pencil Tray Combination
    7,281,476     10/16/2007
Student Desk Chair with Rockers Rails
    7,147,284     12/12/2006
Stackable Chair-Desk Frame
    7,059,670     06/13/2006
Molded and Laminated Curved Surface Composites
    6,706,382     03/16/2004
Office Furniture System
    6,592,194     07/15/2003
Molded and Laminated Curved Surface Composites
    6,534,165     03/18/2003
Enlarged Iron Cover with Rough Textured Inner Surface
    5,944,081     08/31/1999
Two-Part Table Top
    5,845,587     12/08/1998
Follower for File Drawer
    5,826,956     10/27/1998
Lateral File Anti-Tilt Mechanism with Pivotal Activator Rail
    5,411,327     05/02/1995
Desk with Floating Top
    D621,176     08/10/2010
Desk with Floating Top
    D621,175     08/10/2010
Desk Top Spacer
    D617,123     06/08/2010
Drawer Pull
    D616,721     06/01/2010
Grommet
    D606,844     12/29/2009
Task Chair
    D564,768     03/25/2008
Desk
    D563,697     03/11/2008
Table
    D560,085     01/22/2008
Table
    D560,084     01/22/2008
Desk
    D559,592     01/15/2008
Chair Bucket
    D549,018     08/21/2007
Chair Bucket
    D547,980     08/07/2007
Chair Frame
    D547,979     08/07/2007
Desk
    D546,097     07/10/2007
Chair
    D544,230     06/12/2007
Chair/Desk
    D542,039     05/08/2007
Rocking Chair
    D526,134     08/08/2006
Chair Desk Combination Frame
    D523,265     06/20/2006
Chair Desk Combination Frame
    D522,777     06/13/2006
Chair
    D522,265     06/06/2006

 

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          Title   Application/Patent Number   Filing/Issue Date
Chair
  D521,757   05/30/2006
Chair Desk Combination
  D521,751   05/30/2006
Chair Desk Combination
  D521,750   05/30/2006
Chair Seat
  D521,283   05/23/2006
Chair Desk Combination Frame
  D521,282   05/23/2006
Chair Back
  D520,782   05/16/2006
Chair
  D520,768   05/16/2006
Hanger
  D518,706   04/11/2006
Chair/Desk
  D514,829   02/14/2006
Task Chair
  D514,339   02/07/2006
Chair Seating Assembly
  D513,911   01/31/2006
Chair/Desk
  D513,892   01/31/2006
Rocking Chair Carriage Assembly
  D512,252   12/06/2005
Desk
  D510,670   10/18/2005
Hanger
  D510,258   10/04/2005
Stool
  D507,893   08/02/2005
Chair and Desk Combination
  D507,890   08/02/2005
Desk
  D507,710   07/26/2005
Pencil Tray
  D506,225   06/14/2005
Book Tray
  D505,581   05/31/2005
Chair and Desk Combination
  D505,002   05/17/2005
Task Chair
  D504,026   04/19/2005
Chair
  D503,559   04/05/2005
Chair
  D499,260   12/07/2004
Stool
  D488,630   04/20/2004
Desk with Two-Part Table Top
  D408,651   04/27/1999