exv10w1






EXHIBIT 10.1




AMENDMENT NO. 5 TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT



AMENDMENT NO. 5 dated as of July 30, 2010 (“Amendment”) between VIRCO MFG. CORPORATION, a
Delaware corporation (the “Borrower”), 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:



Section 1. Amendment to Section 5.11 of the Credit Agreement. Section 5.11 of the Credit Agreement
hereby is amended and restated in its entirety as follows:



Section 5.11 Minimum Net Income.



(a) For the fiscal year of the Borrower ended January 31, 2010, permit Net Income plus federal,
local and state income taxes as of the end of such fiscal year to be less than $(500,000), and for
any fiscal year of the Borrower thereafter, permit Net Income plus federal, local and state income
taxes as of the end of such fiscal year to be less than $1.00.



(b) For the six months ending July 31, 2010, permit Net Income plus federal, local and state income
taxes as of the end of such six-month period to be less than $(2,700,000).



Section 2. Amendment to Section 5.12 of the Credit Agreement. Section 5.12 of the Credit Agreement
is hereby amended and restated in its entirety as follows:



Section 5.12. Minimum Consolidated Fixed Charge Coverage Ratio.



Permit the Consolidated Fixed Charge Coverage Ratio (i) measured as of the end of each fiscal
quarter of each fiscal year (other than the fiscal quarter ended April 30, 2010), to be less than
2.50 to 1.00, and (ii) as of the end of the fiscal quarter ended April 30, 2010, to be less than
2.25 to 1.00. The foregoing notwithstanding, this Section 5.12 shall not apply to the fiscal
quarter ending July 31, 2010.



Section 3. Amendment to Section 5.13 of the Credit Agreement. The table appearing in Section 5.13
of the Credit Agreement hereby is amended by replacing the words “6.00 to 1.00” directly opposite
“Fiscal quarter ended July 31, 2010” with the following: “N/A.”



Section 4. Amendment to Annex A to the Credit Agreement. (a) The following definitions appearing
in Annex A to the Credit Agreement hereby are amended and restated as follows:



“Designated Finished Goods Advance Rate” means, at any date, a percentage equal to
(a) if such date is on or after March 1 and on or before July 31 of each year, 55% and (b) at all
other times, 45%.



Section 5. Amendment to Amended and Restated Line of Credit Note. The definition of “Applicable
Margin” set forth in the Amended and Restated Line of Credit Note amended and restated as of
January 29, 2010 is hereby amended and restated as follows:



“Applicable Margin” means the following percentages per annum: (i) when the principal
balance of this Note bears interest at the Base Rate, 1.00%, and (ii) when the principal balance of
this Note bears interest at the LIBOR Rate, 3.50%.



Section 6. 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 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 7. 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).



(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 8. Conditions to Effectiveness. This Amendment shall become effective on the date when the
following conditions precedent have been satisfied (the “Fifth Amendment Effective Date”):



(a) The Borrower, the Guarantor and the Bank shall have delivered an executed counterpart of this
Amendment.



(b) The Borrower and the Guarantor shall have delivered to the Bank a certificate, signed by a duly
appointed officer of such Person, dated as of the Fifth Amendment Effective Date, certifying as to
the incumbency of such officer, and attaching or making certifications that no changes have been
made to the copies last delivered to the Bank of, the Governing Documents of such Person and any
resolutions of such Person approving the execution of this Amendment.



(c) No Event of Default or Default shall have occurred and be continuing or would result after
giving effect to the transactions contemplated hereby.



(d) The representations and warranties set forth in Section 9 hereof shall be true and correct on
the Fifth Amendment Effective Date.



(e) 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.



(f) The Borrower shall have paid all reasonable out-of-pocket costs and expenses of the Bank, to
the extent invoices therefor have been presented.



(g) 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.



Section 9. Admissions and Acknowledgments. The Borrower and the 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 10. 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.



Section 11. 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 12. Interpretation. The Article and Section headings used in this Amendment are for
convenience of reference only and shall not affect the construction hereof.



Section 13. 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 14. 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 15. 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 16. 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 17. 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 18. 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 19. 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]



 









 




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 the Guarantor

 	 
	 	By:  	/s/ Robert E. Dose
 	 
	 	 	Name:  	Robert E. Dose 	 
	 	 	Title:  	Vice President - Finance, Secretary and      Treasurer 	 



 









 






	 	 	 	 	 



WELLS FARGO BANK, NATIONAL ASSOCIATION




					
	 	
 	 
	 	By:  	/s/ Mehdi Emrani
 	 
	 	 	Name:  	Mehdi Emrani 	 
	 	 	Title:  	Vice President