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.
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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.
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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]
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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
VIRCO MFG. CORPORATION
By: /s/ Robert E. Dose
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Name: Robert E. Dose
Title: Vice President-Finance,
Secretary and Treasurer
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